Huntington National Bank 2010 Annual Report Download - page 184

The significant components of deferred tax assets and liabilities at December 31, were as follows:
2010 2009
At December 31,
(Dollar amounts in thousands)
Deferred tax assets:
Allowances for credit losses ................................... $457,692 $555,276
Loss and other carryforwards .................................. 262,504 19,211
Fair value adjustments ....................................... 106,855 123,860
Accrued expense/prepaid ..................................... 39,685 42,478
Purchase accounting adjustments ............................... 11,773 —
Pension and other employee benefits ............................ 5,671 1,009
Loan acquisitions........................................... 605 159,895
Other ................................................... 19,704 4,738
Total deferred tax assets ...................................... 904,489 906,467
Deferred tax liabilities:
Lease financing ............................................ 87,735 154,088
Securities adjustments ....................................... 66,090 57,700
Purchase accounting adjustments ............................... 65,787 70,820
Mortgage servicing rights..................................... 43,541 62,867
Loan origination costs ....................................... 43,182 39,004
Operating assets ........................................... 15,161 15,163
Partnership investments ...................................... 8,429 13,563
Other ................................................... 4,441 11,832
Total deferred tax liabilities ................................... 334,366 425,037
Net deferred tax asset before valuation allowance................... 570,123 481,430
Valuation allowance .......................................... (31,817) (899)
Net deferred tax asset ........................................ $538,306 $480,531
At December 31, 2010, Huntington’s deferred tax asset related to loss and other carryforwards was
$262.5 million. This was comprised of net operating loss carryforward of $174.6 million, which will begin
expiring in 2023, an alternative minimum tax credit carryforward of $37.3 million, a general business credit
carryover of $18.8 million which will expire in 2029, and a capital loss carryforward of $31.8 million, which
will expire in 2015. In 2010, Huntington entered into an asset monetization transaction that generated a
$263.0 million capital loss. As a result of this transaction, a capital loss carryforward of $31.8 million was
generated, which will expire in 2015. A valuation allowance of $31.8 million has been established for the
capital loss carryforward because Management believes it is more likely than not that the realization of this
asset will not occur. The valuation allowance on this asset increased $30.9 million from 2009. In
Management’s opinion, the results of future operations will generate sufficient taxable income to realize the
net operating loss, alternative minimum tax credit carryforward, and general business credit carryforward.
Consequently, Huntington determined that a valuation allowance for these deferred tax assets was not required
as of December 31, 2010.
Health Care and Education Reconciliation Act of 2010
On March 23, 2010, the HCER Act was signed into law. The HCER Act includes a provision to repeal
the deduction for employer subsidies for retiree drug coverage under Medicare Part D. Under prior law, an
employer offering retiree prescription drug coverage that is at least as valuable as Medicare Part D was
entitled to a subsidy. Employers were able to deduct the entire cost of providing prescription drug coverage,
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