Huntington National Bank 2010 Annual Report Download - page 203

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The following table presents the fair values at December 31, 2010 and 2009 of Huntington’s derivatives
that are designated and not designated as hedging instruments. Amounts in the table below are presented gross
without the impact of any net collateral arrangements.
Asset derivatives included in accrued income and other assets
2010 2009
December 31,
(Dollar amounts in thousands)
Interest rate contracts designated as hedging instruments ............... $127,346 $ 85,984
Interest rate contracts not designated as hedging instruments ............ 263,015 255,692
Foreign exchange contracts not designated as hedging instruments ........ 2,845 —
Total contracts .............................................. $393,206 $341,676
Liability derivatives included in accrued expenses and other liabilities
2010 2009
December 31,
(Dollar amounts in thousands)
Interest rate contracts designated as hedging instruments ............... $ — $ 3,464
Interest rate contracts not designated as hedging instruments ............ 233,805 234,026
Foreign exchange contracts not designated as hedging instruments ........ 3,107 —
Total contracts .............................................. $236,912 $237,490
Fair value hedges are purchased to convert deposits and subordinated and other long-term debt from fixed-rate
obligations to floating rate. The changes in fair value of the derivative are, to the extent that the hedging
relationship is effective, recorded through earnings and offset against changes in the fair value of the hedged item.
The following table presents the change in fair value for derivatives designated as fair value hedges as
well as the offsetting change in fair value on the hedged item:
2010 2009 2008
(dollar amounts in thousands)
Year Ended December 31,
Interest rate contracts
Change in fair value of interest rate swaps hedging deposits(1) ........ $ 6,108 $ 1,430 $ 4,941
Change in fair value of hedged deposits(1) ....................... (6,744) 9,417 (5,215)
Change in fair value of interest rate swaps hedging subordinated
notes(2) ............................................... 19,319 (99,913) 113,083
Change in fair value of hedged subordinated notes(2) ............... (19,319) 99,913 (113,083)
Change in fair value of interest rate swaps hedging other long-term
debt(2) ................................................ 1,847 (6,201) 9,859
Change in fair value of hedged other long-term debt(2) .............. (1,847) 6,201 (9,859)
(1) Effective portion of the hedging relationship is recognized in Interest expense — deposits in the Consolidated State-
ments of Income. Any resulting ineffective portion of the hedging relationship is recognized in noninterest income in
the Consolidated Statements of Income.
(2) Effective portion of the hedging relationship is recognized in Interest expense — subordinated notes and other-long-
term debt in the Consolidated Statements of Income. Any resulting ineffective portion of the hedging relationship is
recognized in noninterest income in the Consolidated Statements of Income.
For cash flow hedges, interest rate swap contracts were entered into that pay fixed-rate interest in
exchange for the receipt of variable-rate interest without the exchange of the contract’s underlying notional
amount, which effectively converts a portion of its floating-rate debt to a fixed-rate debt. This reduces the
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