Huntington National Bank 2004 Annual Report Download - page 121

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS HUNTINGTON BANCSHARES INCORPORATED
The following is a reconcilement of income tax expense to the amount computed at the statutory rate of 35%:
2004 2003 2002
(in thousands of dollars) Amount Rate Amount Rate Amount Rate
Income tax expense computed at the statutory rate $193,433 35.0% $183,396 35.0% $182,947 35.0%
Increases (decreases):
Tax-exempt interest income (7,640) (1.4) (6,381) (1.2) (3,528) (0.7)
Tax-exempt bank owned life insurance income (14,804) (2.7) (15,060) (2.9) (15,093) (2.9)
Asset securitization activities (6,278) (1.1) (5,211) (1.0) (8,244) (1.6)
Nondeductible goodwill —— — — 52,500 10.0
General business credits (7,768) (1.4) (11,176) (2.1) (2,100) (0.4)
Other, net (3,202) (0.6) (7,274) (1.4) (7,508) (1.3)
Income taxes $153,741 27.8% $138,294 26.4% $198,974 38.1%
The significant components of deferred assets and liabilities at December 31, are as follows:
At December 31,
(in thousands of dollars) 2004 2003
Deferred tax assets:
Allowance for loan losses $ 122,926 $153,060
Net operating loss 22,936 8,715
Fair value adjustments 6,791 —
Other 95,527 170,964
Total deferred tax assets 248,180 332,739
Deferred tax liabilities:
Lease financing 861,273 871,684
Pension and other employee benefits 31,822 3,037
Mortgage servicing rights 32,947 15,770
Fair value adjustments —5,078
Other 105,766 91,705
Total deferred tax liability 1,031,808 987,274
Net deferred tax liability $ 783,628 $654,535
At December 31, 2004, Huntington’s deferred tax asset related to loss and credit carry-forwards amounted to $22.9 million. This is
comprised of a net operating loss carry-forward for U.S. federal tax purposes, which will begin expiring in 2023, with the remaining
expiring in 2024. A valuation allowance is provided when it is more likely than not that some portion of the federal tax asset will not
be realized. In Management’s opinion, the results of future operations will generate sufficient taxable income to realize the deferred
tax assets. Consequently, Management has determined that a valuation allowance for deferred tax assets was not required as of
December 31, 2004 or 2003.
18. BENEFIT PLANS
Huntington sponsors the Huntington Bancshares Retirement Plan (the Plan), a non-contributory defined benefit pension plan
covering substantially all employees. The Plan provides benefits based upon length of service and compensation levels. The funding
policy of Huntington is to contribute an annual amount that is at least equal to the minimum funding requirements but not more
than that deductible under the Internal Revenue Code.
In addition, Huntington has an unfunded defined benefit post-retirement plan that provides certain health-care and life insurance
benefits to retired employees who have attained the age of 55 and have at least 10 years of vesting service under this plan. For any
employee retiring on or after January 1, 1993, post-retirement healthcare benefits are based upon the employee’s number of months of
service and are limited to the actual cost of coverage. Life insurance benefits are a percentage of the employee’s base salary at the time
of retirement, with a maximum of $50,000 of coverage.
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