Huntington National Bank 2009 Annual Report Download - page 151

life. Premises and equipment is evaluated for impairment whenever events or chan
g
es in circumstances
indicate that the carr
y
in
g
amount of the asset ma
y
not be recoverable
.
Ban
k
Owne
d
Li
f
e Insuranc
e
— Hunt
i
n
g
ton’s
b
an
k
owne
d lif
e
i
nsurance po
li
c
i
es are carr
i
e
d
at t
h
e
i
r cas
h
s
urrender value. Huntin
g
ton reco
g
nizes tax-exempt income from the periodic increases in the cash surrende
r
value of these policies and from death benefits. A portion of cash surrender value is supported b
y
holdin
g
si
n
s
eparate accounts. Hunt
i
n
g
ton
h
as a
l
so purc
h
ase
di
nsurance
f
or t
h
ese po
li
c
i
es to prov
id
e protect
i
on o
f
t
he
va
l
ue o
f
t
h
e
h
o
ldi
n
g
sw
i
t
hi
nt
h
ese separate accounts. T
h
e cas
h
surren
d
er va
l
ue o
f
t
h
epo
li
c
i
es excee
d
st
he
value of the underl
y
in
g
holdin
g
s in the separate accounts covered b
y
these insurance policies b
y
approximatel
y
$9.1 million at December 31
,
2009.
Deri
v
ati
v
e Financial Instruments — A variet
y
of derivative financial instruments, principall
y
interest rat
e
s
waps, are use
di
n asset an
dli
a
bili
t
y
mana
g
ement act
i
v
i
t
i
es to protect a
g
a
i
nst t
h
er
i
s
k
o
f
a
d
verse pr
i
ce o
r
i
nterest rate movements. T
h
ese
i
nstruments prov
id
e
fl
ex
ibili
t
yi
na
dj
ust
i
n
g
Hunt
i
n
g
ton’s sens
i
t
i
v
i
t
y
to c
h
an
g
e
s
in interest rates without exposure to loss of principal and hi
g
her fundin
g
requirements
.
Der
iv
at
iv
e
fi
nanc
i
a
li
nstruments are recor
d
e
di
nt
h
e conso
lid
ate
db
a
l
ance s
h
eet as e
i
t
h
er an asset or
a
liabilit
y
(in other assets or other liabilities, respectivel
y
) and measured at fair value, with chan
g
es to fair valu
e
recorded throu
g
h earnin
g
s unless specific criteria are met to account for the derivative usin
g
hed
g
e accountin
g.
Huntin
g
ton also uses derivatives, principall
y
loan sale commitments, in hed
g
in
g
its mort
g
a
g
e loan interest
rate
l
oc
k
comm
i
tments an
di
ts mort
g
a
g
e
l
oans
h
e
ld f
or sa
l
e. Mort
g
a
g
e
l
oan sa
l
e comm
i
tments an
d
t
h
ere
l
ate
d
i
nterest rate
l
oc
k
comm
i
tments are carr
i
e
d
at
f
a
i
rva
l
ue on t
h
e conso
lid
ate
db
a
l
ance s
h
eet w
i
t
h
c
h
an
g
es
i
n
f
a
ir
value reflected in mort
g
a
g
e bankin
g
revenue. Huntin
g
ton also uses certain derivative financial instruments to
o
ff
set c
h
anges
i
nva
l
ue o
fi
ts res
id
ent
i
a
l
mortgage
l
oan serv
i
c
i
ng assets. T
h
ese
d
er
i
vat
i
ves cons
i
st pr
i
mar
il
yo
f
f
orwar
di
nterest rate a
g
reements, an
df
orwar
d
mort
g
a
g
e secur
i
t
i
es. T
h
e
d
er
i
vat
i
ve
i
nstruments use
d
are not
d
es
ig
nate
d
as
h
e
dg
es. Accor
di
n
gly
, suc
hd
er
i
vat
i
ves are recor
d
e
d
at
f
a
i
rva
l
ue w
i
t
h
c
h
an
g
es
i
n
f
a
i
rva
l
u
e
reflected in mort
g
a
g
e bankin
g
income.
For those derivatives to which hed
g
e accountin
g
is applied, Huntin
g
ton formall
y
documents the hed
g
in
g
relationship and the risk mana
g
ement ob
j
ective and strate
gy
for undertakin
g
the hed
g
e. This documentatio
n
id
ent
ifi
es t
h
e
h
e
dgi
n
gi
nstrument, t
h
e
h
e
dg
e
di
tem or transact
i
on, t
h
e nature o
f
t
h
er
i
s
kb
e
i
n
gh
e
dg
e
d
,an
d,
un
l
ess t
h
e
h
e
dg
e meets a
ll
o
f
t
h
ecr
i
ter
i
a to assume t
h
ere
i
sno
i
ne
ff
ect
i
veness, t
h
e met
h
o
d
t
h
at w
ill b
e use
d
t
o
assess the effectiveness of the hed
g
in
g
instrument and how ineffectiveness will be measured. The method
s
ut
ili
ze
d
to assess retrospect
i
ve
h
e
dg
ee
ff
ect
i
veness, as we
ll
as t
h
e
f
requenc
y
o
f
test
i
n
g
,var
yb
ase
d
on t
h
et
y
p
e
o
fi
tem
b
e
i
n
gh
e
dg
e
d
an
d
t
h
e
d
es
ig
nate
dh
e
dg
e per
i
o
d
. For spec
ifi
ca
lly d
es
ig
nate
df
a
i
rva
l
ue
h
e
dg
es o
f
certa
in
fixed-rate debt, Huntin
g
ton utilizes the short-cut method when certain criteria are met. For other fair value
hed
g
es of fixed-rate debt, includin
g
certificates of deposit, Huntin
g
ton utilizes the re
g
ression method t
o
eva
l
uate
h
e
dg
ee
ff
ect
i
veness on a quarter
ly b
as
i
s. For
f
a
i
rva
l
ue
h
e
dg
es o
f
port
f
o
li
o
l
oans, t
h
ere
g
ress
i
on
method is used to evaluate effectiveness on a dail
y
basis. For cash flow hed
g
es, the re
g
ression method i
s
applied on a quarterl
y
basis. For hed
g
in
g
relationships that are desi
g
nated as fair value hed
g
es, chan
g
es in th
e
f
a
i
rva
l
ue o
f
t
h
e
d
er
i
vat
i
ve are, to t
h
e extent t
h
at t
h
e
h
e
dgi
n
g
re
l
at
i
ons
hi
p
i
se
ff
ect
i
ve, recor
d
e
d
t
h
rou
gh
earn
i
n
g
san
d
o
ff
set a
g
a
i
nst c
h
an
g
es
i
nt
h
e
f
a
i
rva
l
ue o
f
t
h
e
h
e
dg
e
di
tem. For cas
hfl
ow
h
e
dg
es, c
h
an
g
es
i
nt
he
fair value of the derivative are, to the extent that the hed
g
in
g
relationship is effective, recorded as othe
r
comprehensive income and subsequentl
y
reco
g
nized in earnin
g
s at the same time that the hed
g
ed item i
s
reco
g
n
i
ze
di
n earn
i
n
g
s. An
y
port
i
on o
f
a
h
e
dg
et
h
at
i
s
i
ne
ff
ect
i
ve
i
s reco
g
n
i
ze
di
mme
di
ate
ly
as ot
h
er
non
i
nterest
i
ncome. W
h
en a cas
hfl
ow
h
e
dg
e
i
s
di
scont
i
nue
db
ecause t
h
eor
igi
na
lly f
orecaste
d
transact
i
on
is
not probable of occurrin
g
,an
y
net
g
ain or loss in other comprehensive income is reco
g
nized immediatel
y
a
s
ot
h
er non
i
nterest
i
ncome
.
Like other financial instruments, derivatives contain an element of credit risk, which is the possibilit
y
tha
t
Hunt
i
n
g
ton w
ill i
ncur a
l
oss
b
ecause a counterpart
yf
a
il
s to meet
i
ts contractua
l
o
blig
at
i
ons. Not
i
ona
l
va
l
ues o
f
interest rate swaps and other off-balance sheet financial instruments si
g
nificantl
y
exceed the credit risk
associated with these instruments and re
p
resent contractual balances on which calculations of amounts to b
e
exc
h
an
g
e
d
are
b
ase
d
. Cre
di
t exposure
i
s
li
m
i
te
d
to t
h
e sum o
f
t
h
ea
gg
re
g
ate
f
a
i
rva
l
ue o
f
pos
i
t
i
ons t
h
at
h
av
e
b
ecome
f
avora
bl
e to Hunt
i
n
g
ton,
i
nc
l
u
di
n
g
an
y
accrue
di
nterest rece
i
va
bl
e
d
ue
f
rom counterpart
i
es. Potent
i
a
l
14
3