Huntington National Bank 2008 Annual Report Download - page 28

2006
– $84.5 million ($0.35 per common share) reduction of provision for income taxes from the release of tax reserves as a
result of the resolution of the federal income tax audit for 2002 and 2003, and recognition of a federal tax loss carryback.
– $10.0 million ($0.03 per common share) pretax contribution to the Huntington Foundation.
– $4.8 million ($0.01 per common share) in severance and consolidation pretax expenses. This reflected fourth quarter
severance-related expenses associated with a reduction of 75 Regional Banking staff positions, as well as costs associated
with the retirements of a vice chairman and an executive vice president.
– $3.7 million ($0.01 per common share) of Unizan pretax merger costs, primarily associated with systems conversion
expenses.
– $3.5 million ($0.01 per common share) pretax negative impact associated with the refinancing of Federal Home Loan
Bank (FHLB) funding.
– $3.3 million ($0.01 per common share) pretax gain on the sale of MasterCard»stock.
– $3.2 million ($0.01 per common share) pretax negative impact associated with the write-down of equity method
investments.
– $2.3 million ($0.01 per common share) pretax unfavorable impact due to a cumulative adjustment to defer home equity
annual fees.
Table 4 reflects the earnings impact of the above-mentioned significant items for periods affected by this Results of Operations
discussion:
Table 4 — Significant Items Influencing Earnings Performance Comparison
(1)
(in thousands) After-tax EPS After-tax EPS After-tax EPS
2008 2007 2006
Net income — GAAP $(113,806) $ 75,169 $461,221
Earnings per share, after tax $(0.44) $ 0.25 $ 1.92
Change from prior year — $ (0.69) (1.67) 0.15
Change from prior year — % N.M.% (87.0)% 8.5%
Significant items — favorable (unfavorable) impact: Earnings
(2)
EPS
(3)
Earnings
(2)
EPS
(3)
Earnings
(2)
EPS
(3)
Aggegate impact of Visa IPO $ 25,087 $ 0.04 $ — $— $ — $—
Visa»anti-trust indemnification 16,995 0.03 (24,870) (0.05) — —
Deferred tax valuation allowance benefit
(4)
7,892 0.02 —— — —
Franklin Credit relationship (454,278) (0.81) (423,645) (0.91) — —
Net market-related losses (215,667) (0.38) (95,427) (0.10) (62,992) (0.17)
Merger/Restructuring costs (21,830) (0.04) (85,084) (0.18) (3,749) (0.01)
Asset impairment (12,400) (0.02) —— — —
Litigation losses —— (10,767) (0.02) — —
Reduction to federal income tax expense
(4)
—— — — 84,541 0.35
Gain on sale of MasterCard»stock —— — — 3,341 0.01
Huntington Foundation contribution —— — — (10,000) (0.03)
Severance and consolidation expenses —— — — (4,750) (0.01)
FHLB refinancing —— — — (3,530) (0.01)
Accounting adjustment for certain equity investments —— — — (3,240) (0.01)
Adjustment to defer home equity annual fees —— — — (2,254) (0.01)
N.M., not a meaningful value.
(1) See Significant Factors Influencing Financial Performance discussion.
(2) Pre-tax unless otherwise noted.
(3) Based upon the annual average outstanding diluted common shares.
(4) After-tax.
Net Interest Income / Average Balance Sheet
(This section should be read in conjunction with Significant Items 1, 2, and 4.)
Our primary source of revenue is net interest income, which is the difference between interest income from earning assets
(primarily loans, direct financing leases, and securities), and interest expense of funding sources (primarily interest bearing deposits
and borrowings). Earning asset balances and related funding, as well as changes in the levels of interest rates, impact net interest
income. The difference between the average yield on earning assets and the average rate paid for interest-bearing liabilities is the
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Management’s Discussion and Analysis Huntington Bancshares Incorporated