Huntington National Bank 2014 Annual Report Download - page 113

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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 the 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 a controlling financial interest, or are
a VIE in which Huntington has the power to direct the activities of an entity that most significantly impact the entity’s economic
performance and 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 non-controlling interest (included in shareholders’ equity) for the equity held by others and non-controlling
profit or loss (included in noninterest expense) for the portion of the entity’s earnings attributable to other’s 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. 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. Investment interests accounted for under the cost and equity methods
are periodically evaluated for impairment.
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 utilizes processes that involve the use of
significant estimates and the judgments of Management in determining the amount of its allowance for credit losses, income taxes
deferred tax assets, and contingent liabilities, as well as fair value measurements of investment securities, derivatives, goodwill,
pension assets and liabilities, mortgage servicing rights, and loans held for sale. 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.
Resale and Repurchase Agreements — Securities purchased under agreements to resell and securities sold under agreements to
repurchase are treated as collateralized financing transactions and are recorded at the amounts at which the securities were acquired or
sold plus accrued interest. The fair value of collateral either received from or provided to a third party is continually monitored and
additional collateral is obtained or requested to be returned to Huntington in accordance with the agreement.
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
debt and equity securities are classified as available-for-sale and other securities. Unrealized gains or losses on available-for-sale and
other securities are reported as a separate component of accumulated OCI in the Consolidated Statements of Changes in Shareholders’
Equity. Credit-related declines in the value of debt and marketable equity securities that are considered other-than-temporary are
recorded in noninterest income.