Huntington National Bank 2010 Annual Report Download - page 200

of construction. In cases where the carrying value exceeds the fair value of the collateral, an impairment
charge is recognized. During the year ended December 31, 2010, Huntington identified $80.4 million of
impaired loans for which the fair value is recorded based upon collateral value. For the year ended
December 31, 2010, nonrecurring fair value losses of $39.6 million were recorded within the provision for
credit losses.
Other real estate owned properties are valued based on appraisals and third party price opinions, less
estimated selling costs. During the year ended December 31, 2010, Huntington recorded $66.8 million of
OREO assets at fair value and recognized losses of $6.9 million, recorded within noninterest expense.
Fair values of financial instruments
The carrying amounts and estimated fair values of Huntington’s financial instruments at December 31,
2010 and 2009 are presented in the following table:
Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
December 31, 2010 December 31, 2009
(Dollar amounts in thousands)
Financial Assets:
Cash and short-term assets ..... $ 982,926 $ 982,926 $ 1,840,719 $ 1,840,719
Trading account securities...... 185,404 185,404 83,657 83,657
Loans held for sale ........... 793,285 793,285 461,647 461,647
Investment securities ......... 9,895,244 9,895,244 8,587,914 8,587,914
Net loans and direct financing
leases ................... 36,857,499 35,403,910 35,308,184 32,598,423
Derivatives ................. 346,133 346,133 287,756 287,756
Financial Liabilities:
Deposits................... (41,853,898) (41,993,567) (40,493,927) (40,753,365)
Short-term borrowings ........ (2,040,732) (1,982,545) (876,241) (857,254)
Federal Home Loan Bank
advances................. (172,519) (172,519) (168,977) (168,977)
Other long term debt ......... (2,144,092) (2,157,358) (2,369,491) (2,332,300)
Subordinated notes ........... (1,497,216) (1,377,851) (1,264,202) (989,989)
Derivatives ................. (239,240) (239,240) (238,947) (238,947)
The short-term nature of certain assets and liabilities result in their carrying value approximating fair
value. These include trading account securities, customers’ acceptance liabilities, short-term borrowings, bank
acceptances outstanding, FHLB advances, and cash and short-term assets, which include cash and due from
banks, interest-bearing deposits in banks, and federal funds sold and securities purchased under resale
agreements. Loan commitments and letters of credit generally have short-term, variable-rate features and
contain clauses that limit Huntington’s exposure to changes in customer credit quality. Accordingly, their
carrying values, which are immaterial at the respective balance sheet dates, are reasonable estimates of fair
value. Not all the financial instruments listed in the table above are subject to the disclosure provisions of
ASC Topic 820.
Certain assets, the most significant being operating lease assets, bank owned life insurance, and premises
and equipment, do not meet the definition of a financial instrument and are excluded from this disclosure.
Similarly, mortgage and nonmortgage servicing rights, deposit base, and other customer relationship intangi-
bles are not considered financial instruments and are not included above. Accordingly, this fair value
information is not intended to, and does not, represent Huntington’s underlying value. Many of the assets and
liabilities subject to the disclosure requirements are not actively traded, requiring fair values to be estimated
by Management. These estimations necessarily involve the use of judgment about a wide variety of factors,
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