Huntington National Bank 2010 Annual Report Download - page 46

2. Goodwill Impairment. The impacts of goodwill impairment on our reported results were as follows:
• During the 2009 first quarter, bank stock prices, including ours, experienced a steep decline. Our stock
price declined 78% from $7.66 per share at December 31, 2008, to $1.66 per share at March 31, 2009.
Given this significant decline, we conducted an interim test for goodwill impairment. As a result, we
recorded a noncash $2,602.7 million ($4.88 per common share) pretax charge. (See Goodwill discussion
located within the Critical Accounting Policies and Use of Significant Estimates section for additional
information.)
• During the 2009 second quarter, a pretax goodwill impairment of $4.2 million ($0.01 per common
share) was recorded relating to the sale of a small payments-related business in July 2009.
3. Franklin Relationship. Our relationship with Franklin was acquired in the Sky Financial acquisition
in 2007. Significant events relating to this relationship, and the impacts of those events on our reported results,
were as follows:
• On March 31, 2009, we restructured our relationship with Franklin. As a result of this restructuring, a
nonrecurring net tax benefit of $159.9 million ($0.30 per common share) was recorded in the 2009 first
quarter. Also, and although earnings were not significantly impacted, commercial NCOs increased
$128.3 million as the previously established $130.0 million Franklin-specific ALLL was utilized to
writedown the acquired mortgages and OREO collateral to fair value.
• During the 2010 first quarter, a $38.2 million ($0.05 per common share) net tax benefit was recognized,
primarily reflecting the increase in the net deferred tax asset relating to the assets acquired from the
March 31, 2009 restructuring.
• During the 2010 second quarter, the portfolio of Franklin-related loans ($333.0 million of residential
mortgages and $64.7 million of home equity loans) was transferred to loans held for sale. At the time
of the transfer, the loans were marked to the lower of cost or fair value less costs to sell of
$323.4 million, resulting in $75.5 million of charge-offs, and the provision for credit losses commensu-
rately increased $75.5 million ($0.07 per common share).
• During the 2010 third quarter, the remaining Franklin-related residential mortgage and home equity
loans were sold at essentially book value.
4. Early Extinguishment of Debt. The positive impacts relating to the early extinguishment of debt on
our reported results were: $141.0 million ($0.18 per common share) in 2009 and $23.5 million ($0.04 per
common share) in 2008. These amounts were recorded to noninterest expense.
5. Preferred Stock Conversion. During the 2009 first and second quarters, we converted 114,109 and
92,384 shares, respectively, of Series A 8.50% Non-cumulative Perpetual Preferred (Series A Preferred Stock)
stock into common stock. As part of these transactions, there was a deemed dividend that did not impact net
income, but resulted in a negative impact of $0.11 per common share for 2009. (See Capital discussion
located within the Risk Management and Capital section for additional information.)
6. Visa».Prior to the Visa»IPO occurring in March 2008, Visa»was owned by its member banks,
which included the Bank. As a result of this ownership, we received Class B shares of Visa»stock at the time
of the Visa»IPO. In the 2009 second quarter, we sold these Visa»stock shares, resulting in a $31.4 million
pretax gain ($.04 per common share). This amount was recorded in noninterest income.
Table 3 — Visa»impacts
Earnings EPS Earnings EPS Earnings EPS
2010 2009 2008
(Dollar amounts in millions, except per share
amounts)
Gain related to sale of Visa»stock(1) ............ $— $— $31.4 $0.04 $25.1 $0.04
Visa»indemnification liability(2) ............... —— — — 17.0 0.03
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