Huntington National Bank 2009 Annual Report Download - page 147

Declines in the value of debt and marketable equit
y
securities that are considered other-than-temporar
y
ar
e
recorded in non-interest income as securities losses
.
Huntin
g
ton evaluates its investment securities portfolio on a quarterl
y
basis for indicators of oth
-
er-t
h
an-temporar
yi
mpa
i
rment (OTTI). T
hi
s
d
eterm
i
nat
i
on requ
i
res s
ig
n
ifi
cant
j
u
dg
ment. Hunt
i
n
g
ton assesse
s
whether OTTI has occurred when the fair value of a debt securit
y
is less than the amortized cost basis at the
balance sheet date. Under these circumstances, OTTI is considered to have occurred (1) if Huntin
g
ton intend
s
to se
ll
t
h
e secur
i
t
y
; (2)
if i
t
i
s more
lik
e
ly
t
h
an not Hunt
i
n
g
ton w
ill b
e requ
i
re
d
to se
ll
t
h
e secur
i
t
yb
e
f
ore
recover
y
o
fi
ts amort
i
ze
d
cost
b
as
i
s; or (3) t
h
e present va
l
ue o
f
t
h
e expecte
d
cas
hfl
ows
i
s not su
ffi
c
i
ent t
o
recover the entire amortized cost basis. For securities that Huntin
g
ton does not expect to sell or it is not mor
e
l
ikel
y
than not to be required to sell, the OTTI is separated into credit and noncredit components. The credit-
re
l
ate
d
OTTI, represente
dby
t
h
e expecte
dl
oss
i
npr
i
nc
i
pa
l
,
i
s reco
g
n
i
ze
di
n non
i
nterest
i
ncome, w
hile
noncre
di
t-re
l
ate
d
OTTI
i
s reco
g
n
i
ze
di
not
h
er compre
h
ens
i
ve
i
ncome (
l
oss) (OCI). Noncre
di
t-re
l
ate
d
OTT
I
results from other factors, includin
g
increased liquidit
y
spreads and extension of the securit
y
. For securitie
s
w
hi
c
h
Hunt
i
n
g
ton
d
oes expect to se
ll
,a
ll
OTTI
i
s reco
g
n
i
ze
di
n earn
i
n
g
s. Presentat
i
on o
f
OTTI
i
sma
d
e
i
nt
he
i
ncome statement on a
g
ross
b
as
i
sw
i
t
h
are
d
uct
i
on
f
or t
h
e amount o
f
OTTI reco
g
n
i
ze
di
n OCI. Once a
n
other-than-temporar
y
impairment is recorded, when future cash flows can be reasonabl
y
estimated, future cash
flows are re-allocated between interest and principal cash flows to provide for a level-
y
ield on the securit
y.
Secur
i
t
i
es transact
i
ons are reco
g
n
i
ze
d
on t
h
e tra
d
e
d
ate (t
h
e
d
ate t
h
eor
d
er to
b
u
y
or se
ll i
s execute
d
). T
he
amortized cost of sold securities is used to compute realized
g
ains and losses. Interest and dividends o
n
secur
i
t
i
es,
i
nc
l
u
di
n
g
amort
i
zat
i
on o
f
prem
i
ums an
d
accret
i
on o
fdi
scounts us
i
n
g
t
h
ee
ff
ect
i
ve
i
nterest met
h
o
d
over t
h
e per
i
o
d
to matur
i
t
y
, are
i
nc
l
u
d
e
di
n
i
nterest
i
ncome.
Non-marketable equit
y
securities include stock acquired for re
g
ulator
y
purposes, such as Federal Home
Loan Ban
k
stoc
k
an
d
Fe
d
era
l
Reserve Ban
k
stoc
k
.T
h
ese secur
i
t
i
es are
g
enera
lly
accounte
df
or at cost an
d
ar
e
i
nc
l
u
d
e
di
n
i
n
v
estment secur
i
t
i
es
.
L
oan
s
an
d
Lea
s
e
s
—Loans an
ddi
rect
fi
nanc
i
n
gl
eases
f
or w
hi
c
h
Hunt
i
n
g
ton
h
as t
h
e
i
ntent an
d
a
bili
t
y
t
o
h
o
ld f
or t
h
e
f
oreseea
bl
e
f
uture (at
l
east 12 mont
h
s), or unt
il
matur
i
t
y
or pa
y
o
ff
, are c
l
ass
ifi
e
di
nt
h
e
b
a
l
anc
e
sheet as loans and leases. Loans and leases are carried at the principal amount outstandin
g
, net of unamortized
deferred loan ori
g
ination fees and costs and net of unearned income. Direct financin
g
leases are reported at th
e
a
gg
re
g
ate o
fl
ease pa
y
ments rece
i
va
bl
ean
d
est
i
mate
d
res
id
ua
l
va
l
ues, net o
f
unearne
d
an
dd
e
f
erre
di
ncome
.
Interest
i
ncome
i
s accrue
d
as earne
d
us
i
n
g
t
h
e
i
nterest met
h
o
db
ase
d
on unpa
id
pr
i
nc
i
pa
lb
a
l
ances. Hunt
i
n
g
to
n
defers the fees it receives from the ori
g
ination of loans and leases, as well as the direct costs of those
act
i
v
i
t
i
es. Hunt
i
n
g
ton a
l
so acqu
i
res
l
oans at a prem
i
um an
d
at a
di
scount to t
h
e
i
r contractua
l
va
l
ues
.
H
unt
i
n
g
ton amort
i
zes
l
oan
di
scounts,
l
oan prem
i
ums an
d
net
l
oan or
igi
nat
i
on
f
ees an
d
costs on a
l
eve
l
-
yi
e
ld
basis o
v
er the estimated li
v
es of the related loans.
Loans t
h
at Hunt
i
n
g
ton
h
as t
h
e
i
ntent to se
ll
or secur
i
t
i
ze are c
l
ass
ifi
e
d
as
h
e
ld f
or sa
l
e. Loans
h
e
ld f
o
r
sale (excludin
g
loans ori
g
inated or acquired with the intent to sale) are carried at the lower of cost or fair
v
alue. The fair value option was elected for mort
g
a
g
e loans held for sale to facilitate hed
g
in
g
of the loans
.
Fa
i
rva
l
ue
i
s
d
eterm
i
ne
db
ase
d
on co
ll
atera
l
va
l
ue an
d
preva
ili
n
g
mar
k
et pr
i
ces
f
or
l
oans w
i
t
h
s
i
m
il
ar
c
h
aracter
i
st
i
cs. Su
b
sequent
d
ec
li
nes
i
n
f
a
i
rva
l
ue are reco
g
n
i
ze
d
e
i
t
h
er as a c
h
ar
g
e-o
ff
or as non-
i
nteres
t
income, dependin
g
on the len
g
th of time the loan has been recorded as held for sale. When a decision is made
to sell a loan that was not ori
g
inated or initiall
y
acquired with the intent to sell, the loan is reclassified into
h
e
ld f
or sa
l
e
.
Residual values on leased automobiles and equipment are evaluated quarterl
y
for impairment. Impairmen
t
o
f
t
h
e res
id
ua
l
va
l
ues o
fdi
rect
fi
nanc
i
n
gl
eases
i
s reco
g
n
i
ze
dby
wr
i
t
i
n
g
t
h
e
l
eases
d
own to
f
a
i
rva
l
ue w
i
t
h
a
c
h
ar
g
etoot
h
er non-
i
nterest expense. Res
id
ua
l
va
l
ue
l
osses ar
i
se
if
t
h
e expecte
df
a
i
rva
l
ue at t
h
een
d
o
f
t
h
e
l
ease term is less than the residual value recorded at ori
g
inal lease, net of estimated amounts reimbursable b
y
t
h
e
l
essee. Future
d
ec
li
nes
i
nt
h
e expecte
d
res
id
ua
l
va
l
ue o
f
t
h
e
l
ease
d
equ
i
pment wou
ld
resu
l
t
i
n expecte
d
l
osses o
f
t
h
e
l
ease
d
e
q
u
ip
ment
.
139