Huntington National Bank 2007 Annual Report Download - page 25

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loans sold to others as substantially all of its loans have been retained. The following table details our loan relationship
with Franklin after the restructuring on December 28, 2007:
Table 2 — Commercial Loans to Franklin
(in thousands of dollars) Franklin Tribeca Subtotal
Participated
to others Total
Variable rate, term loan (Facility A) $ 600,000 $400,000 $1,000,000 $(175,303) $ 824,697
Variable rate, subordinated term loan (Facility B) 318,937 91,133 410,070 (73,994) 336,076
Fixed rate, junior subordinated term loan (Facility C) 125,000 — 125,000 (8,224) 116,776
Line of credit facility
(1)
1,033 — 1,033 — 1,033
Other variable rate term loans 4,327 44,537 48,864 (22,269) 26,595
Subtotal 1,049,297 535,670 1,584,967 $(279,790) $1,305,177
Participated to others (194,045) (85,745) (279,790)
Total principal owed to Huntington 855,252 449,925 1,305,177
Amounts charged off (116,776) — (116,776)
Total book value of loans $ 738,476 $449,925 $1,188,401
(1) The line of credit facility was not included in the restructuring.
The restructuring resulted in a total debt forgiveness of $300 million, of which Huntington forgave $280 million, which
was recorded as a charge-off in 2007. In addition, we charged off our portion of the fixed-rate term loan of $117 million
in 2007. These two loan charge-offs were reduced by the unamortized discount associated with the loan and by other
amounts received from Franklin.
3. UNIZAN ACQUISITION.— The merger with Unizan was completed on March 1, 2006. At the time of acquisition, Unizan had
assets of $2.5 billion, including $1.6 billion of loans and core deposits of $1.5 billion. Unizan results were included in our
consolidated results for ten months of 2006. As a result, performance comparisons between 2006 and 2005 are affected.
Significant activity related to the Unizan acquisition is indicated in the “Results of Operations” section.
4. BALANCE SHEET RESTRUCTURING.— In 2006, we utilized the excess capital resulting from the favorable resolution to certain
federal income tax audits to restructure certain under-performing components of the balance sheet. Our actions included
the review of $2.1 billion of securities for potential sale, the refinancing of a portion of our FHLB funding, and the sale of
approximately $100 million of mortgage loans. The review of securities for sale resulted in an initial impairment of
$57.3 million, which was recorded as a securities loss. The completion of this review resulted in an additional $9.0 million
of securities losses, as well as $6.8 million of other-than-temporary impairment on certain sub-prime mortgage backed
securities not included in the initial review. Total securities losses as a result of these actions totaled $73.1 million. The
refinancing of FHLB funding and the sale of mortgage loans resulted in total charges of $4.4 million, resulting in total
balance sheet restructuring costs of $77.5 million ($0.21 per common share).
5. MORTGAGE SERVICING RIGHTS (MSRS)AND RELATED HEDGING.— Included in net market-related losses are net losses or gains
from our MSRs and the related hedging. Additional information regarding MSRs is located under the “Market Risk”
heading of the “Risk Management and Capital” section. Net income included the following net impact of MSR hedging
activity (see Table 10):
(amounts in thousands except per common share)
Net interest
income
Non-interest
income
Pretax
income
Net
income
Per
common
share
2007 $5,797 $(24,784) $(18,987) $(12,342) $(0.04)
2006 36 3,586
(1)
3,622 2,354 0.01
2005 1,688 (9,006) (7,318) (4,757) (0.02)
(1) Includes $5.1 million related to the positive impact of adopting SFAS No 156.
6. OTHER NET MARKET-RELATED LOSSES.— Other net market-related losses include losses and gains related to the following
market-driven activities: gains and losses from public equity investing included in other non-interest income, net securities
gains and losses, net gains and losses from the sale of loans held-for-sale, and the impact from the extinguishment of debt.
23
MANAGEMENT’S DISCUSSION AND ANALYSIS HUNTINGTON BANCSHARES INCORPORATED