Huntington National Bank 2007 Annual Report Download - page 95

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reserves constitute the total allowances for credit losses (ACL). A summary of the transactions in the allowances for credit losses
and details regarding impaired loans and leases follows for the three years ended December 31:
(in thousands) 2007 2006 2005
Year Ended December 31,
Allowance for loan and leases losses, beginning of year (ALLL) $ 272,068 $ 268,347 $ 271,211
Acquired allowance for loan and lease losses 188,128 23,785 —
Loan and lease losses (517,943) (119,692) (115,848)
Recoveries of loans previously charged off 40,312 37,316 35,791
Net loan and lease losses (477,631) (82,376) (80,057)
Provision for loan and lease losses 628,802 62,312 83,782
Economic reserve transfer
(1)
—— (6,253)
Allowance for assets sold and securitized
(2)
—— (336)
Allowance for loans transferred to held-for-sale (32,925) ——
Allowance for loan and lease losses, end of year $ 578,442 $ 272,068 $ 268,347
Allowance for unfunded loan commitments and letters of credit, beginning of year (AULC) $ 40,161 $ 36,957 $ 33,187
Acquired AULC 11,541 325
Provision for unfunded loan commitments and letters of credit losses 14,826 2,879 (2,483)
Economic reserve transfer
(1)
—— 6,253
Allowance for unfunded loan commitments and letters of credit, end of year $ 66,528 $ 40,161 $ 36,957
Total allowances for credit losses (ACL) $ 644,970 $ 312,229 $ 305,304
Recorded balance of impaired loans, at end of year
(3)
:
With specific reserves assigned to the loan and lease balances
(4)
$1,318,518 $ 35,212 $ 41,525
With no specific reserves assigned to the loan and lease balances 33,062 25,662 14,032
Total $1,351,580 $ 60,874 $ 55,557
Average balance of impaired loans for the year
(3)
$ 424,797 $ 65,907 $ 29,441
Allowance for loan and lease losses on impaired loans
(3)
142,058 7,612 14,526
(1) During 2005, the economic reserve associated with unfunded loan commitments was transferred from the ALLL to the AULC. This transfer had no impact on net income.
(2) In conjunction with the automobile loan sales and securitizations in 2005, an allowance for loan and lease losses attributable to the associated loans sold was included as a component of the
loan’s carrying value upon their sale.
(3) Includes impaired commercial and industrial loans and commercial real estate loans with outstanding balances greater than $500,000. A loan is impaired when it is probable that Huntington
will be unable to collect all amounts due according to the contractual terms of the loan agreement. Impaired loans are included in non-performing assets. The amount of interest recognized in
2007, 2006 and 2005 on impaired loans while they were considered impaired was $0.9 million, less than $0.1 million, and less than $0.1 million, respectively. The recovery of the investment in
impaired loans with no specific reserves generally is expected from the sale of collateral, net of costs to sell that collateral.
(4) The loans to Franklin, classified as troubled debt restructuring, are included in impaired loans at the end of the year.
8. GOODWILL AND OTHER INTANGIBLE ASSETS
Changes to the carrying amount of goodwill by line of business for the years ended December 31, 2007 and 2006, were as follows:
(in thousands)
Regional
Banking
Dealer
Sales PFCMG
Treasury/
Other
Huntington
Consolidated
Balance, January 1, 2006 $ 199,971 $— $ 12,559 $ — $ 212,530
Goodwill acquired during the period 335,884 — 22,462 — 358,346
Balance, December 31, 2006 535,855 — 35,021 — 570,876
Goodwill acquired during the period 2,370,804 — 56,946 61,845 2,489,595
Adjustments (504) — (4,450) 3,816 (1,138)
Balance, December 31, 2007 $2,906,155 $— $87,517 $65,661 $3,059,333
The change in goodwill for 2007, primarily related to the acquisitions of Sky Financial and Archer-Meek-Weiler, and the
finalization of purchase accounting adjustments from the acquisitions made late in 2006. There were no impairment losses for each
of the three years ended December 31, 2007, 2006, and 2005. In accordance with FASB Statement No. 142, Goodwill and Other
Intangible Assets, goodwill is not amortized, but is evaluated for impairment on an annual basis at October 1st of each year or
whenever events or changes in circumstances indicate that the carrying value may not be recoverable.
93
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS HUNTINGTON BANCSHARES INCORPORATED