Huntington National Bank 2015 Annual Report Download - page 172

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The significant components of deferred tax assets and liabilities at December 31, were as follows:
At December 31,
(dollar amounts in thousands) 2015 2014
Deferred tax assets:
Allowances for credit losses $ 238,415 $ 233,656
Fair value adjustments 121,642 119,512
Net operating and other loss carryforward 61,492 161,548
Accrued expense/prepaid 44,733 48,656
Purchase accounting adjustments 41,917 13,839
Partnership investments 21,614 24,123
Market discount 11,781 12,215
Pension and other employee benefits 2,405 —
Tax credit carryforward 1,823 30,825
Other 11,645 9,477
Total deferred tax assets 557,467 653,851
Deferred tax liabilities:
Lease financing 261,078 202,298
Loan origination costs 114,488 103,025
Mortgage servicing rights 48,514 47,748
Operating assets 46,685 50,266
Securities adjustments 19,952 27,856
Purchase accounting adjustments 6,944 17,299
Pension and other employee benefits — 9,677
Other 5,463 5,178
Total deferred tax liabilities 503,124 463,347
Net deferred tax asset before valuation allowance 54,343 190,504
Valuation allowance (3,620) (73,057)
Net deferred tax asset $ 50,723 $ 117,447
At December 31, 2015, Huntington’s net deferred tax asset related to loss and other carryforwards was $63 million. This was
comprised of federal net operating loss carryforwards of $3 million, which will begin expiring in 2023, $45 million of state net
operating loss carryforwards, which will begin expiring in 2016, an alternative minimum tax credit carryforward of $1 million, which
may be carried forward indefinitely, a general business credit carryforward of $1 million, which will begin expiring in 2031, and a
capital loss carryforward of $13 million, which expires in 2018.
In prior periods, Huntington established a valuation allowance against deferred tax assets for federal capital loss carryforwards,
state deferred tax assets, and state net operating loss carryforwards. The federal valuation allowance was based on the uncertainty of
forecasted federal taxable income expected of the required character in order to utilize the capital loss carryforward. The state
valuation allowance was based on the uncertainty of forecasted state taxable income expected in applicable jurisdictions in order to
utilize the state deferred tax assets and state net operating loss carryforwards. Based on current analysis of both positive and negative
evidence and projected forecasted taxable income of the appropriate character and/or within applicable jurisdictions, the Company
believes that it is more likely than not the federal capital loss carryforward, and portions of the state deferred tax assets and state net
operating loss carryforwards will be realized. As a result of this analysis, there is no federal capital loss carryforward valuation
allowance remaining at December 31, 2015 compared to $69 million at December 31, 2014, and the state valuation allowance of $4
million at December 31, 2015 was essentially unchanged compared to $4 million at December 31, 2014.
At December 31, 2015 retained earnings included approximately $12 million of base year reserves of acquired thrift institutions,
for which no deferred federal income tax liability has been recognized. Under current law, if these bad debt reserves are used for
purposes other than to absorb bad debt losses, they will be subject to federal income tax at the current corporate rate. The amount of
unrecognized deferred tax liability relating to the cumulative bad debt deduction was approximately $4 million at December 31, 2015.