Huntington National Bank 2009 Annual Report Download - page 39

Essentiall
y
,Re
g
ional Bankin
g
has been divided into the new se
g
ments of Retail and Business Bankin
g,
Commercial Bankin
g
, and Commercial Real Estate
.
Each of these three new se
g
ments is considered a separate reportin
g
unit. The remainin
g
Re
g
iona
l
Bankin
gg
oodwill amount of
$
314.5 million was reallocated on a relative fair value basis at the end of th
e
2
009 first quarter to Retail and Business Bankin
g
, Commercial Bankin
g
, and Commercial Real Estate resultin
g
in
g
oodwill balances to those reportin
g
units of
$
309.5 million,
$
5.0 million and
$
0 respectivel
y.
T
h
e Step 1 resu
l
ts o
f
t
h
e annua
li
mpa
i
rment test
i
n
di
cate
d
t
h
at t
h
e PFG an
d
Insurance un
i
ts passe
dbya
su
b
stant
i
a
l
mar
gi
n. T
h
e Reta
il
an
d
Bus
i
ness Ban
ki
n
g
un
i
ta
l
so passe
d
,
h
owever, on
ly by
am
i
n
i
ma
l
amount
.
T
h
rou
gh
ana
ly
s
i
s, we were con
fid
ent t
h
at
h
a
d
t
h
e Reta
il
an
d
Bus
i
ness Ban
ki
n
g
un
i
t
f
a
il
e
d
Step 1 at Octo
b
er 1
,
2
009, no additional
g
oodwill impairment would have been recorded. The assumptions and methodolo
g
ie
s
ut
ili
ze
di
nt
h
e annua
l
assessment were cons
i
stent w
i
t
h
t
h
ose use
di
nt
h
e
fi
rst
q
uarter assessment as
di
scusse
d
a
b
ove. Overa
ll
,
f
a
i
rva
l
ues
f
or t
h
e report
i
n
g
un
i
ts
i
mprove
d
s
ig
n
ifi
cant
ly d
ue to
i
mprovements
i
n mar
k
e
t
com
p
ara
bl
es com
p
are
d
w
i
t
h
t
h
e 2009
fi
rst
q
uarter
.
Step 2 was requ
i
re
df
or on
ly
t
h
e Commerc
i
a
l
Ban
ki
n
g
report
i
n
g
un
i
tas
i
t was
d
eterm
i
ne
di
n Step 1 t
h
at
its carr
y
in
g
value exceeded its fair value. Upon completion of Step 2, we determined that the Commercia
l
Ban
ki
n
gg
oo
d
w
ill
carr
yi
n
g
va
l
ue excee
d
e
di
ts
i
mp
li
e
df
a
i
rva
l
ue o
fg
oo
d
w
ill
;t
h
ere
f
ore, no
g
oo
d
w
ill
i
mpa
i
rment was recor
d
e
df
or t
hi
sun
i
taso
f
Octo
b
er 1. T
h
e most s
ig
n
ifi
cant Step 2 a
dj
ustment was t
h
e20
%
mark-to-fair-value discount on the loan
p
ortfolio.
Due to t
h
e current econom
i
cenv
i
ronment an
d
ot
h
er uncerta
i
nt
i
es,
i
t
i
s
p
oss
ibl
et
h
at our est
i
mates an
d
assumptions ma
y
adversel
y
chan
g
e in the future. If our market capitalization decreases or the liquidit
y
di
scount on our
l
oan port
f
o
li
o
i
mproves s
ig
n
ifi
cant
ly
w
i
t
h
out a concurrent
i
ncrease
i
n mar
k
et cap
i
ta
li
zat
i
on,
we ma
yb
e requ
i
re
d
to recor
d
a
ddi
t
i
ona
lg
oo
d
w
ill i
mpa
i
rment
l
osses
i
n
f
uture per
i
o
d
s, w
h
et
h
er
i
n connect
i
o
n
with our next annual impairment testin
g
in the 2010 third quarter or prior to that, if an
y
chan
g
es constitute
a
tr
igg
er
i
n
g
event. It
i
s not poss
ibl
eatt
hi
st
i
me to
d
eterm
i
ne
if
an
y
suc
hf
uture
i
mpa
i
rment
l
oss wou
ld
resu
l
t,
h
owever, an
y
suc
hf
uture
i
mpa
i
rment
l
oss wou
ld b
e
li
m
i
te
d
as t
h
e rema
i
n
i
n
gg
oo
d
w
ill b
a
l
ance was on
ly
$0.4 billion at December 31
,
2009.
FRANKLIN L
O
AN
S
RE
S
TR
UC
T
U
RIN
G
TRAN
S
A
C
TI
ON
(This section should be read in con
j
unction with Note 5 o
f
the Notes to the Consolidated Financia
l
Statements
).
Fran
kli
n
i
s a spec
i
a
l
t
y
consumer
fi
nance compan
y
pr
i
mar
ily
en
g
a
g
e
di
n serv
i
c
i
n
g
per
f
orm
i
n
g
, reper
f
orm
-
i
n
g
,an
d
nonper
f
orm
i
n
g
res
id
ent
i
a
l
mort
g
a
g
e
l
oans. Pr
i
or to Marc
h
31, 2009, Fran
kli
n owne
d
a port
f
o
li
oo
f
loans secured b
y
first- and second-liens on 1-4 famil
y
residential properties. These loans
g
enerall
y
fell outsid
e
the underwritin
g
standards of the Federal National Mort
g
a
g
e Association (“FNMA” or “Fannie Mae”) and th
e
Fe
d
era
l
Home Loan Mort
g
a
g
e Corporat
i
on (“FHLMC” or “Fre
ddi
e Mac”), an
di
nvo
l
ve e
l
evate
d
cre
di
tr
i
s
k
as
a resu
l
to
f
t
h
e nature or a
b
sence o
fi
ncome
d
ocumentat
i
on,
li
m
i
te
d
cre
di
t
hi
stor
i
es,
high
er
l
eve
l
so
f
consumer
debt, and/or past credit difficulties (“nonprime loans”). At December 31, 2008, our total loans outstandin
g
to
Franklin were
$
650.2 million, all of which were placed on nonaccrual status. Additionall
y
, the specifi
c
allowance for loan and lease losses for the Franklin portfolio was
$
130.0 million, resultin
g
in our net exposur
e
to Franklin at December 31
,
2008
,
of
$
520.2 million
.
On Marc
h
31, 2009, we entere
di
nto a transact
i
on w
i
t
h
Fran
kli
nw
h
ere
by
a Hunt
i
n
g
ton w
h
o
lly
-owne
d
REIT subsidiar
y
(REIT) indirectl
y
acquired an 83% ownership ri
g
ht in a trust which holds all the underl
y
in
g
consumer
l
oans an
d
ot
h
er rea
l
estate owne
d
(OREO) propert
i
es t
h
at were
f
ormer
l
yco
ll
atera
lf
or t
h
e Fran
klin
commerc
i
a
ll
oans. T
h
e equ
i
t
yi
nterests prov
id
e
d
to Fran
kli
n
by
t
h
e REIT were p
l
e
dg
e
dby
Fran
kli
nas
collateral for the Franklin commercial loans
.
As a result of the restructurin
g
, on a consolidated basis, the
$
650.2 million nonaccrual commercial loan
to Franklin at December 31, 2008, is no lon
g
er reported. Instead, we now report the loans secured b
y
first
-
an
d
secon
d
- mort
g
a
g
es on res
id
ent
i
a
l
propert
i
es an
d
OREO propert
i
es
b
ot
h
o
f
w
hi
c
hh
a
d
prev
i
ous
ly b
een
assets o
f
Fran
kli
nor
i
ts su
b
s
idi
ar
i
es an
d
were p
l
e
dg
e
d
to secure our
l
oan to Fran
kli
n. At t
h
et
i
me o
f
t
h
e
31