Huntington National Bank 2012 Annual Report Download - page 189

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The net fair values of these derivative financial instruments, for which the gross amounts are included in accrued income and
other assets or accrued expenses and other liabilities at December 31, 2012 and 2011, were $63.4 million and $53.2 million,
respectively. The total notional values of derivative financial instruments used by Huntington on behalf of customers, including
offsetting derivatives, were $12.0 billion and $10.6 billion at December 31, 2012 and 2011, respectively. Huntington’s credit risks
from interest rate swaps used for trading purposes were $296.1 million and $309.5 million at the same dates, respectively.
Derivatives used in mortgage banking activities
Huntington also uses certain derivative financial instruments to offset changes in value of its residential MSRs. These derivatives
consist primarily of forward interest rate agreements and forward mortgage securities. The derivative instruments used are not
designated as hedges. Accordingly, such derivatives are recorded at fair value with changes in fair value reflected in mortgage
banking income. The following table summarizes the derivative assets and liabilities used in mortgage banking activities:
At December 31,
(dollar amounts in thousands) 2012 2011
Derivative assets:
Interest rate lock agreements $ 13,180 $ 6,770
Forward trades and options 763 1
Total derivative assets 13,943 6,771
Derivative liabilities:
Interest rate lock agreements (33) (109)
Forward trades and options (2,158) (7,927)
Total derivative liabilities (2,191) (8,036)
Net derivative asset (liability) $ 11,752 $ (1,265)
The total notional value of these derivative financial instruments at December 31, 2012 and 2011, was $2.3 billion and $1.7
billion, respectively. The total notional amount at December 31, 2012 corresponds to trading assets with a fair value of $6.4 million
and trading liabilities with a fair value of $1.0 million. Total MSR hedging gains for the years ended December 31, 2012, 2011, and
2010, were $31.3 million, $42.1 million, and $55.0 million, respectively. Included in total MSR hedging gains for the years ended
December 31, 2012, 2011, and 2010 were gains and (losses) related to derivatives instruments of $31.2 million, $42.2 million, and
$64.6 million, respectively. These amounts are included in mortgage banking income in the Consolidated Statements of Income.
21. VIEs
Consolidated VIEs
Consolidated VIEs at December 31, 2012 consisted of automobile loan and lease securitization trusts formed in 2009 and 2006.
Huntington has determined the trusts are VIEs. Huntington has concluded that it is the primary beneficiary of these trusts because it
has the power to direct the activities of the entity that most significantly affect the entity’s economic performance and it has either the
obligation to absorb losses of the entity that could potentially be significant to the VIE or the right to receive benefits from the entity
that could potentially be significant to the VIE.