Huntington National Bank 2007 Annual Report Download - page 103

The significant components of deferred assets and liabilities at December 31, was as follows:
(in thousands) 2007 2006
At December 31,
Deferred tax assets:
Allowances for credit losses $170,231 $132,085
Loss and other carry-forwards 36,500 37,872
Fair value adjustments 33,238 40,971
Partnerships investments 22,257 5,327
Operating assets 30,286 21,291
Accrued expense/prepaid 41,446 30,995
Other 51,239 29,628
Total deferred tax assets 385,197 298,169
Deferred tax liabilities:
Lease financing 413,227 547,488
Pension and other employee benefits 21,154 34,133
Purchase accounting adjustments 27,913 13,978
Mortgage servicing rights 38,732 32,123
Loan origination costs 16,793 19,497
Other 56,256 57,556
Total deferred tax liability 574,075 704,775
Net deferred tax liability before valuation allowance 188,878 406,606
Valuation allowance 35,852 37,315
Net deferred tax liability $224,730 $443,921
At December 31, 2007, Huntington’s deferred tax asset related to loss and other carry-forwards was $36.5 million. This was
comprised of a net operating loss carry-forward of $0.1 million for U.S. federal tax purposes, which will begin expiring in 2023, an
alternative minimum tax credit carry-forward of $0.5 million, and a capital loss carry-forward of $35.9 million, which will expire
in 2010. A valuation allowance in the amount of $35.9 million has been established for the capital loss carry-forward because
management believes it is more likely than not that realization will not occur. The valuation allowance on this asset decreased
$1.4 million from 2006 to 2007 as a result of the unexpected realization of capital gains. In Management’s opinion the results of
future operations will generate sufficient taxable income to realize the net operating loss and the alternative minimum tax credit
carry-forward. Consequently, management has determined that a valuation allowance for deferred tax assets was not required as of
December 31, 2007 or 2006 relating to these carry-forwards.
At December 31, 2007 and 2006, federal income taxes had not been provided on $90.1 million and $30.8 million of undistributed
earnings of foreign subsidiaries that have been reinvested for an indefinite period of time. If the earnings had been distributed, an
additional $20.4 million and $11.1 million of tax expense would have resulted in 2007 and 2006, respectively.
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. There was no minimum required contribution to the Plan in 2007.
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 health-care 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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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS HUNTINGTON BANCSHARES INCORPORATED