Huntington National Bank 2008 Annual Report Download - page 75

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RESULTS FOR THE FOURTH QUARTER
Earnings Discussion
2008 fourth quarter results were a net loss of $417.3 million, or $1.20 per common share, compared with a net loss of
$239.3 million, or $0.65 per common share, in the year-ago quarter. Significant items impacting 2008 fourth quarter performance
included (see table below):
– $454.3 million pre-tax ($0.81 per common share) negative impact related to our relationship with Franklin consisting of:
– $438.0 million of provision for credit losses,
– $9.0 million of interest income reversals as the loans were placed on nonaccrual loan status, and
– $7.3 million of interest rate swap losses.
– $141.7 million pre-tax ($0.25 per common share) negative impact of net market-related losses consisting of:
– $127.1 million of securities losses, related to OTTI on certain investment securities,
– $12.6 million net negative impact of MSR hedging consisting of a $22.1 million net impairment loss reflected in
noninterest income, partially offset by a $9.5 million net interest income benefit, and
– $2.0 million of equity investment losses.
– $2.9 million ($0.01 per common share) increase to provision for income taxes, representing an increase to the previously
established capital loss carryforward valuation allowance related to the decline in value of Visa»shares held and the
reduction of shares resulting from the revised conversion ratio.
– $4.6 million pre-tax ($0.01 per common share) decline in other noninterest expense, representing a partial reversal of the
2007 fourth quarter accrual of $24.9 million for our portion of the bank guaranty covering indemnification charges against
Visa»following its funding of an escrow account for a portion of such indemnification.
Table 46 — Significant Items Impacting Earnings Performance Comparisons
(in millions, except per share amounts) Pre-tax EPS
(2)
Impact
(1)
Three Months Ended
December 31, 2008 — GAAP loss $ (417.3)
(2)
($1.20)
– Franklin relationship (454.3) (0.81)
– Net market-related losses (141.7) (0.25)
– Visa»-related deferred tax valuation allowance provision (2.9)
(2)
(0.01)
– Visa»indemnification 4.6 0.02
September 30, 2008 — GAAP earnings $ 75.1
(2)
$ 0.17
– Net market-related losses (47.1) (0.08)
– Visa»-related deferred tax valuation allowance provision (3.7)
(2)
(0.01)
December 31, 2007 — GAAP earnings ($239.3) ($0.65)
– Franklin relationship restructuring (423.6) (0.75)
– Net market-related losses (63.5) (0.11)
– Merger costs (44.4) (0.08)
– Visa»indemnification charge (24.9) (0.04)
– Increases to litigation reserves (8.9) (0.02)
(1) Favorable (unfavorable) impact on GAAP earnings; pre-tax unless otherwise noted
(2) After-tax
NET INTEREST INCOME,NET INTEREST MARGIN,LOANS AND AVERAGE BALANCE SHEET
(This section should be read in conjunction with Significant Item 2.)
Fully taxable equivalent net interest income decreased $8.3 million, or 2%, from the year-ago quarter. This reflected the unfavorable
impact of an 8 basis point decline in the net interest margin to 3.18%. Average earning assets increased $0.3 billion, or 1%,
reflecting a $1.3 billion, or 3%, increase in average total loans and leases, partially offset by declines in other earning assets, most
notably federal funds sold.
Table 47 details the $1.3 billion increase in average loans and leases.
73
Management’s Discussion and Analysis Huntington Bancshares Incorporated