Huntington National Bank 2012 Annual Report Download - page 39

31
4. 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 2009, we sold these Visa®
stock shares, resulting in a $31.4 million pretax gain ($.04 per common share). This amount was recorded to noninterest
income. In 2011, a $6.4 million derivative loss due to an increase in the liability associated with the sale of these shares was
recorded to noninterest income.
5. Franklin Relationship. Our relationship with Franklin was acquired in the 2007 Sky Financial acquisition. Significant events
relating to this relationship, and the impacts of those events on our reported results, were as follows:
xDuring 2010, 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.
xDuring 2010, 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 commensurately increased $75.5 million ($0.07 per common share).
6. Early Extinguishment of Debt. The positive impact relating to the early extinguishment of debt on our reported results was
$9.7 million ($0.01 per common share) in 2011.
The following table reflects the earnings impact of the above-mentioned significant items for periods affected by this Results of
Operations discussion:
Table 3 - Significant Items Influencing Earnings Performance Comparison (1)
2012 2011 2010
(dollar amounts in thousands, except per share
amounts) After-tax EPS After-tax EPS After-tax EPS
N
et income - GAAP $ 641,022 $ 542,613 $ 312,347
Earnings per share, after-tax $ 0.71 $ 0.59 $ 0.19
Change from prior year - $ 0.12 0.40 6.33
Change from prior year - % 20 % 211 % N.
R
Significant items - favorable (unfavorable)
impact: Earnings (2) EPS (3)(4) Earnings (2) EPS (3)(4) Earnings (2) EPS (3)(4)
State deferred tax asset valuation allowance
adjustment(4) $ 21,251 $ 0.02 $ --- $ --- $ --- $ ---
Bargain purchase gain 11,217 0.01 --- --- --- ---
Litigation reserves addition (23,500) (0.02) (17,028) (0.01) --- ---
Visa®-related derivative loss --- --- (6,385) --- --- ---
N
et tax benefit recognize
d
(4) --- --- --- --- 38,222 0.05
Franklin-related loans transferred to held for
sale --- --- --- --- (75,500) (0.07)
Gain on early extinguishment of debt --- --- 9,697 0.01 --- ---
N
.R. - Not relevant, as denominator of calculation is a loss in prior period compared with income in current period.
(1)See Significant Items Influencing Financial Performance discussion.
(2)Pretax unless otherwise noted.
(3)Based upon the annual average outstanding diluted common shares.
(4)After-tax.