Huntington National Bank 2010 Annual Report Download - page 62

• $10.8 million, or 12%, decline in equipment costs, reflecting lower depreciation costs, as well as lower
repair and maintenance costs.
Provision for Income Taxes
(This section should be read in conjunction with Significant Items 3 and 7, and Note 17 of the Notes to
Consolidated Financial Statements.)
2010 versus 2009
The provision for income taxes was $40.0 million for 2010 compared with a benefit of $584.0 million in
2009. Both years included the benefits from tax-exempt income, tax-advantaged investments, and general
business credits. In 2010, we entered into an asset monetization transaction that generated a tax benefit of
$63.6 million. Also, in 2010, undistributed previously reported earnings of a foreign subsidiary of $142.3 mil-
lion were distributed and an additional $49.8 million of tax expense was recorded. State tax reserves of
$28.8 million ($18.7 million net of federal benefit) for 2010 were recorded.
The Franklin restructuring in 2009 resulted in a $159.9 million net deferred tax asset equal to the amount
of income and equity that was included in our operating results for 2009. During 2010, a $43.6 million 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 Franklin restructuring.
The IRS completed the audit of our consolidated federal income tax returns for tax years through 2007.
In addition, various state and other jurisdictions remain open to examination, including Ohio, Kentucky,
Indiana, Michigan, Pennsylvania, West Virginia and Illinois. Both the IRS and state tax officials, including
Ohio and Kentucky, have proposed adjustments to our previously filed tax returns. We believe that our tax
positions related to such proposed adjustments are correct and supported by applicable statutes, regulations,
and judicial authority, and intend to vigorously defend them. It is possible that the ultimate resolution of the
proposed adjustments, if unfavorable, may be material to the results of operations in the period it occurs.
However, although no assurance can be given, we believe that the resolution of these examinations will not,
individually or in the aggregate, have a material adverse impact on our consolidated financial position.
2009 versus 2008
The provision for income taxes was a benefit of $584.0 million for 2009 compared with a benefit of
$182.2 million in 2008. The tax benefit for both years included the benefits from tax-exempt income, tax-
advantaged investments, and general business credits. The tax benefit in 2009 was impacted by the pretax loss
combined with the favorable impacts of the Franklin restructuring in 2009 and the reduction of the capital loss
valuation reserve, offset by the nondeductible portion of the 2009 goodwill impairment.
RISK MANAGEMENT AND CAPITAL
Risk awareness, identification, reporting, and active management are key elements in overall risk
management. We manage risk to an aggregate moderate-to-low risk profile strategy through a control
framework and by monitoring and responding to potential risks. Controls include, among others, effective
segregation of duties, access, authorization and reconciliation procedures, as well as staff education and a
disciplined assessment process.
As a strategy, we have identified sources of risks and primary risks in coordination with each business
unit. We utilize Risk and Control Self-Assessments (RCSA) to identify exposure risks. Through this RCSA
process, we continually assess the effectiveness of controls associated with the identified risks, regularly
monitor risk profiles and material exposure to losses, and identify stress events and scenarios to which we may
be exposed. Our chief risk officer is responsible for ensuring that appropriate systems of controls are in place
for managing and monitoring risk across the Company. Potential risk concerns are shared with the Risk
Management Committee and the board of directors, as appropriate. Our internal audit department performs on-
going independent reviews of the risk management process and ensures the adequacy of documentation. The
results of these reviews are reported regularly to the audit committee of the board of directors.
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