Huntington National Bank 2014 Annual Report Download - page 37

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DISCUSSION OF RESULTS OF OPERATIONS
This section provides a review of financial performance from a consolidated perspective. It also includes a “Significant Items”
section that summarizes key issues important for a complete understanding of performance trends. Key consolidated balance sheet and
income statement trends are discussed. All earnings per share data are reported on a diluted basis. For additional insight on financial
performance, please read this section in conjunction with the “Business Segment Discussion.”
Significant Items
Definition of Significant Items
From time-to-time, revenue, expenses, or taxes are impacted by items judged by us to be outside of ordinary banking activities
and / or by items that, while they may be associated with ordinary banking activities, are so unusually large that their outsized impact
is believed by us at that time to be infrequent or short-term in nature. We refer to such items as Significant Items. Most often, these
Significant Items result from factors originating outside the company; e.g., regulatory actions / assessments, windfall gains, changes in
accounting principles, one-time tax assessments / refunds, litigation actions, etc. In other cases, they may result from our decisions
associated with significant corporate actions outside of the ordinary course of business; e.g., merger / restructuring charges,
recapitalization actions, goodwill impairment, etc.
Even though certain revenue and expense items are naturally subject to more volatility than others due to changes in market and
economic environment conditions, as a general rule volatility alone does not define a Significant Item. For example, changes in the
provision for credit losses, gains / losses from investment activities, asset valuation writedowns, etc., reflect ordinary banking
activities and are, therefore, typically excluded from consideration as a Significant Item.
We believe the disclosure of Significant Items provides a better understanding of our performance and trends to ascertain which
of such items, if any, to include or exclude from an analysis of our performance; i.e., within the context of determining how that
performance differed from expectations, as well as how, if at all, to adjust estimates of future performance accordingly. To this end,
we adopted a practice of listing Significant Items in our external disclosure documents; e.g., earnings press releases, investor
presentations, Forms 10-Q and 10-K.
Significant Items for any particular period are not intended to be a complete list of items that may materially impact current or
future period performance.
Significant Items Influencing Financial Performance Comparisons
Earnings comparisons among the three years ended December 31, 2014, 2013, and 2012 were impacted by a number of
Significant Items summarized below.
1. Franchise Repositioning Related Expense. Significant events relating to franchise repositioning related expense, and the
impacts of those events on our reported results, were as follows:
x During 2014, $28.0 million of franchise repositioning related expense was recorded for the consolidation of 26
branches and organizational actions. This resulted in a negative impact of $0.02 per common share in 2014.
x During 2013, $23.5 million of franchise repositioning related expense was recorded. This resulted in a negative
impact of $0.02 per common share in 2013.
2. Litigation Reserve. $20.9 million and $23.5 million of net additions to litigation reserves were recorded as other noninterest
expense in 2014 and 2012, respectively. This resulted in a negative impact of $0.02 per common share in 2014 and 2012.
3. Mergers and Acquisitions. During 2014, $15.8 million of net noninterest expense was recorded related to the acquisition of
24 Bank of America branches and Camco Financial. This resulted in a negative impact of $0.01 per common share in 2014.
4. Pension Curtailment Gain. During 2013, a $33.9 million pension curtailment gain was recorded in personnel costs. This
resulted in a positive impact of $0.03 per common share in 2013.
5. State deferred tax asset valuation allowance adjustment. During 2012, a valuation allowance of $21.3 million (net of tax)
was released for the portion of the deferred tax asset and state net operating loss carryforwards expected to be realized. This
resulted in a positive impact of $0.02 per common share in 2012. Additional information can be found in the Provision for
Income Taxes section within this MD&A.