Huntington National Bank 2013 Annual Report Download - page 97

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Contingent Liabilities
We are parties to various claims, litigation, and legal proceedings resulting from ordinary business activities relating to our
current and/or former operations. We estimate and provide for potential losses that may arise out of litigation and regulatory
proceedings to the extent that such losses are probable and can be reasonably estimated. Significant judgment is required in making
these estimates and our final liabilities may ultimately be more or less than the current estimate. Our total estimated liability in respect
of litigation and regulatory proceedings is determined on a case-by-case basis and represents an estimate of probable losses after
considering, among other factors, the progress of each case or proceeding, our experience and the experience of others in similar cases
or proceedings, and the opinions and views of legal counsel. Litigation exposure represents a key area of judgment and is subject to
uncertainty and certain factors outside of our control.
Income Taxes
The calculation of our provision for income taxes is complex and requires the use of estimates and judgments. We have two
accruals for income taxes: (1) our income tax payable represents the estimated net amount currently due to the federal, state, and local
taxing jurisdictions, net of any reserve for potential audit issues and any tax refunds, and the net receivable balance is reported as a
component of accrued income and other assets in our consolidated balance sheet; (2) our deferred federal and state income tax and
related valuation accounts, reported as a component of accrued income and other assets, represents the estimated impact of temporary
differences between how we recognize our assets and liabilities under GAAP, and how such assets and liabilities are recognized under
federal and state tax law.
In the ordinary course of business, we operate in various taxing jurisdictions and are subject to income and non-income taxes. The
effective tax rate is based in part on our interpretation of the relevant current tax laws. We believe the aggregate liabilities related to
taxes are appropriately reflected in the consolidated financial statements. We review the appropriate tax treatment of all transactions
taking into consideration statutory, judicial, and regulatory guidance in the context of our tax positions. In addition, we rely on various
tax opinions, recent tax audits, and historical experience.
From time-to-time, we engage in business transactions that may affect our tax liabilities. Where appropriate, we have obtained
opinions of outside experts and have assessed the relative merits and risks of the appropriate tax treatment of business transactions
taking into account statutory, judicial, and regulatory guidance in the context of the tax position. However, changes to our estimates of
accrued taxes can occur due to changes in tax rates, implementation of new business strategies, resolution of issues with taxing
authorities regarding previously taken tax positions, and newly enacted statutory, judicial, and regulatory guidance. Such changes
could affect the amount of our accrued taxes and could be material to our financial position and / or results of operations. (See Note 17
of the Notes to Consolidated Financial Statements.)
Deferred Tax Assets
At December 31, 2013, we had a net federal deferred tax asset of $97.9 million and a net state deferred tax asset of $39.7 million.
A valuation allowance is provided when it is more-likely-than-not that some portion of the deferred tax asset will not be realized. All
available evidence, both positive and negative, was considered to determine whether, based on the weight of that evidence,
impairment should be recognized. Our forecast process includes judgmental and quantitative elements that may be subject to
significant change. If our forecast of taxable income within the carryforward periods available under applicable law is not sufficient to
cover the amount of net deferred tax assets, such assets may be impaired. Based on our analysis of both positive and negative evidence
and our ability to offset the net deferred tax assets against our forecasted future taxable income, there was no impairment of the net
deferred tax assets at December 31, 2013, for regulatory capital purposes.
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