Huntington National Bank 2013 Annual Report Download - page 149
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143
A summary of key assumptions and the sensitivity of the automobile loan servicing rights value to changes in these assumptions
at December 31, 2013 and 2012 follows:
December 31, 2013 December 31, 2012
Decline in fair value due
to
Decline in fair value due
to
10% 20% 10% 20%
adverse adverse adverse adverse
(dollar amounts in thousands) Actual change change Actual change change
Constant prepayment rate (annualized) 14.65 % $ (584) $ (1,183) 13.80 % $ (880) $ (1,771)
Spread over forward interest rate swap rates 500 bps (7) (15) 500 bps (18) (36)
Servicing income, net of amortization of capitalized servicing assets, amounted to $10.3 million, $8.7 million, and $2.0 million
for the years ended December 31, 2013, 2012, and 2011, respectively. The unpaid principal balance of automobile loans serviced for
third parties was $1.6 billion, $2.5 billion, and $0.9 billion at December 31, 2013, 2012, and 2011, respectively.
Small Business Association (SBA) Portfolio
The following table summarizes activity relating to SBA loans sold with servicing retained for the years ended December 31,
2013, 2012, and 2011:
Year Ended December 31,
(dollar amounts in thousands) 2013 2012 2011
SBA loans sold with servicing retained $ 178,874 $ 209,540 $ 234,803
Pretax gains resulting from above loan sales (1) 19,556 22,916 21,488
(1) Recorded in noninterest income
Huntington has retained servicing responsibilities on sold SBA loans and receives annual servicing fees on the outstanding loan
balances. SBA loan servicing rights are accounted for using the amortization method. A servicing asset is established at fair value at
the time of the sale using a discounted future cash flow model. The servicing asset is then amortized against servicing income.
Impairment, if any, is recognized when carrying value exceeds the fair value as determined by calculating the present value of
expected net future cash flows.
The following tables summarize the changes in the carrying value of the servicing asset for the years ended December 31, 2013
and 2012:
(dollar amounts in thousands) 2013 2012
Carrying value, beginning of year $ 15,147 $ 12,022
N
ew servicing assets create
d
6,105 6,947
Amortization and other (4,387) (3,822)
Carrying value, end of year $ 16,865 $ 15,147
Fair value, end of year $ 16,865 $ 15,147
Weighted-average life (years) 3.5 3.5