Huntington National Bank 2013 Annual Report Download - page 118

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Fair Value Measurements — The Company records or discloses certain of its assets and liabilities at fair value. Fair value is
defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most
advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Fair
value measurements are classified within one of three levels in a valuation hierarchy based upon the transparency of inputs to the
valuation of an asset or liability as of the measurement date. The three levels are defined as follows:
Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2 – inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs
that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value measurement.
A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to
the fair value measurement.
Segment Results — Accounting policies for the business segments are the same as those used in the preparation of the
Consolidated Financial Statements with respect to activities specifically attributable to each business segment. However, the
preparation of business segment results requires Management to establish methodologies to allocate funding costs and benefits,
expenses, and other financial elements to each business segment. Changes are made in these methodologies as appropriate.
Statement of Cash Flows — Cash and cash equivalents are defined as cash and due from banks which includes amounts on
deposit with the Federal Reserve and federal funds sold and securities purchased under resale agreements.
Transactions with Related Parties — In the normal course of business, we may enter into transactions with various related
parties. These transactions occur at prevailing market rates and terms and include funding arrangements, transfers of financial assets,
administrative and operational support, and other miscellaneous services.
2. ACCOUNTING STANDARDS UPDATE
ASU 2011-04 — Fair Value Measurement (Topic 820), Amendments to Achieve Common Fair Value Measurement and
Disclosure Requirements in U.S. GAAP and IFRSs. The ASU amends Topic 820 to add both additional clarifications to existing
fair value measurement and disclosure requirements and changes to existing principles and disclosure guidance. Clarifications were
made to the relevancy of the highest and best use valuation concept, measurement of an instrument classified in an entity’s
shareholders’ equity and disclosure of quantitative information about the unobservable inputs for level 3 fair value measurements.
Changes to existing principles and disclosures included measurement of financial instruments managed within a portfolio, the
application of premiums and discounts in fair value measurement, and additional disclosures related to fair value measurements. The
updated guidance was effective for our quarterly and annual financial statements for 2012 (See Note 19). The amendments did not
have a material impact on Huntington’s Consolidated Financial Statements.
ASU 2011-05 — Other Comprehensive Income (Topic 220), Presentation of Comprehensive Income. The ASU amends Topic
220 to require an entity to present the total of comprehensive income, the components of net income, and the components of other
comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive
statements. An entity is also required to present on the face of the financial statements reclassification adjustments for items that are
reclassified from other comprehensive income to net income in the statement(s) where the components of net income and the
components of other comprehensive income are presented. The amendments do not change items that must be reported in other
comprehensive income or when an item of other comprehensive income must be reclassified to net income, only the format for
presentation. Other than the deferral of the requirements related to reclassifications, the updated guidance was effective for our
quarterly and annual financial statements for 2012. Also see ASU 2013-02.
ASU 2011-10 — Property, Plant, and Equipment (Topic 360): Derecognition of In-Substance Real Estate. The ASU amends
Topic 360 to clarify that when a reporting entity ceases to have a controlling financial interest (as described in ASC 810
“Consolidation”) in a subsidiary that is in-substance real estate as a result of default on the subsidiary’s nonrecourse debt, the
reporting entity should apply the guidance in Subtopic 360-20 to determine whether it should derecognize the in-substance real estate.
The amendments were effective for our financial statements beginning in the third quarter of 2012. The amendments did not have a
material impact on Huntington’s Consolidated Financial Statements.