Huntington National Bank 2007 Annual Report Download - page 87

–FASB STATEMENT NO. 160, Noncontrolling Interests in Consolidated Financial Statement s— an amendment of ARB No. 51
(Statement No. 160)
— Statement No. 160 was issued in December 2007. The statement requires that noncontrolling interests
in subsidiaries be initially measured at fair value and classified as a separate component of equity. The statement is effective for
fiscal year beginning on or after December 15, 2008. Earlier adoption is prohibited. The Company is currently assessing the
impact this Statement will have on its consolidated financial statements.
3. ACQUISITIONS
On July 1, 2007, Huntington completed its merger with Sky Financial Group, Inc. (Sky Financial) in a stock and cash transaction
valued at $3.5 billion. Sky Financial operated over 330 banking offices and over 400 ATMs and served communities in Ohio,
Pennsylvania, Indiana, Michigan, and West Virginia.
Under the terms of the merger agreement, Sky Financial shareholders received 1.098 shares of Huntington common stock, on a
tax-free basis, and a taxable cash payment of $3.023 for each share of Sky Financial common stock. The aggregate purchase price
was $3.5 billion, including $0.4 billion of cash and $3.1 billion of common stock and options to purchase common stock. The
value of the 129.6 million shares issued in connection with the merger was determined based on the average market price of
Huntington’s common stock over a 2-day period immediately before and after the terms of the merger were agreed to and
announced. The assets and liabilities of the acquired entity were recorded on the Company’s balance sheet at their fair values as of
July 1, 2007, the acquisition date.
The following table shows the excess purchase price over carrying value of net assets acquired, preliminary purchase price
allocation, and resulting goodwill:
(in thousands) July 1, 2007
Equity consideration $ 3,133,232
Cash consideration 357,031
Direct acquisition costs 36,501
Purchase price 3,526,764
Carrying value of tangible net assets acquired (1,111,393)
Excess of purchase price over carrying value of net assets acquired 2,415,371
Purchase accounting adjustments:
Loans and leases 192,142
Loans held for sale 137,511
Premises and equipment 51,083
Accrued income and other assets (33,762)
Accrued expenses and other liabilities 109,153
Goodwill and other intangible assets 2,871,498
Less other intangible assets:
Core deposit intangible (328,300)
Other identifiable intangible assets (80,450)
Other intangible assets (408,750)
Goodwill $ 2,462,748
Huntington is in the process of preparing valuations of acquired bank branches and operating facilities and will adjust goodwill
upon completion of the valuation process. Huntington does not expect any amount of goodwill from the Sky Financial merger to
be deductible for tax purposes.
Of the $408.8 million of acquired intangible assets, $328.3 million was assigned to core deposit intangible, and $80.5 million was
assigned to customer relationship intangibles. The core deposit and customer relationship intangibles are amortized using an
accelerated method of amortization based on the weighted-average useful lives of 8 and 14 years, respectively.
In 2007, exit costs liabilities of $59.3 million were recorded as purchase accounting adjustments and $30.8 million was charged
against the accrual. The key components of the liability were lease termination costs for Sky closed buildings of $21.0 million, Sky
employee termination benefits of $24.1 million and contract termination costs of $14.2 million. The employee termination benefits
included severance payments and related benefits for approximately 1,050 Sky employees terminated or notified of their pending
termination in connection with the merger.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS HUNTINGTON BANCSHARES INCORPORATED