Huntington National Bank 2011 Annual Report Download - page 139

Huntington Bancshares Incorporated
Notes to Consolidated Financial Statements
1. SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations — Huntington Bancshares Incorporated (Huntington or the Company) is a multi-state
diversified regional bank holding company organized under Maryland law in 1966 and headquartered in
Columbus, Ohio. Through its subsidiaries, including its bank subsidiary, The Huntington National Bank (the
Bank), Huntington is engaged in providing full-service commercial, small business, consumer banking services,
mortgage banking services, automobile financing, equipment leasing, investment management, trust services,
brokerage services, customized insurance programs, and other financial products and services. Huntington’s
banking offices are located in Ohio, Michigan, Pennsylvania, Indiana, West Virginia, and Kentucky. Select
financial services and other activities are also conducted in various other states. International banking services
are available through the headquarters office in Columbus, Ohio and a limited purpose office located in Cayman
Islands and another in Hong Kong.
Basis of Presentation — The Consolidated Financial Statements include the accounts of Huntington and its
majority-owned subsidiaries and are presented in accordance with GAAP. All intercompany transactions and
balances have been eliminated in consolidation. Companies in which Huntington holds more than a 50% voting
equity interest or are a VIE in which Huntington i.) has the power to direct the activities of an entity that most
significantly impact the entity’s economic performance and ii.) has an obligation to absorb losses or the right to
receive benefits from the VIE which could potentially be significant to the VIE are consolidated. VIEs are legal
entities with insubstantial equity, whose equity investors lack the ability to make decisions about the entity’s
activities, or whose equity investors do not have the right to receive the residual returns of the entity if they
occur. VIEs in which Huntington does not hold the power to direct the activities of the entity that most
significantly impact the entity’s economic performance or does not have an obligation to absorb losses or the
right to receive benefits from the VIE which could potentially be significant to the VIE are not consolidated. For
consolidated entities where Huntington holds less than a 100% interest, Huntington recognizes minority interest
liability (included in shareholders’ equity) for the equity held by others and minority interest expense (included
in noninterest expense) for the portion of the entity’s earnings attributable to minority interests. Investments in
companies that are not consolidated are accounted for using the equity method when Huntington has the ability to
exert significant influence. Those investments in nonmarketable securities for which Huntington does not have
the ability to exert significant influence are generally accounted for using the cost method and are periodically
evaluated for impairment. Investments in private investment partnerships that are accounted for under the equity
method or the cost method are included in accrued income and other assets and Huntington’s proportional
interest in the equity investments’ earnings are included in other noninterest income.
The preparation of financial statements in conformity with GAAP requires Management to make estimates
and assumptions that significantly affect amounts reported in the Consolidated Financial Statements. Huntington
uses significant estimates and employs the judgments of Management in determining the amount of its allowance
for credit losses, income taxes and deferred tax assets, and fair value measurements of investment securities,
goodwill, pension, and other real estate owned. As with any estimate, actual results could differ from those
estimates.
Certain prior period amounts have been reclassified to conform to the current year’s presentation.
Securities — Securities purchased with the intention of recognizing short-term profits or which are actively
bought and sold are classified as trading account securities and reported at fair value. The unrealized gains or
losses on trading account securities are recorded in other noninterest income, except for gains and losses on
trading account securities used to hedge the fair value of MSRs, which are included in mortgage banking
income. Debt securities purchased in which Huntington has the positive intent and ability to hold to its maturity
are classified as held-to-maturity securities. Held-to-maturity securities are recorded at amortized cost. All other
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