Huntington National Bank 2014 Annual Report Download - page 121

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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 2013-11— Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss
Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. The ASU requires that an unrecognized tax benefit, or
a portion of an unrecognized tax benefit, be presented in the financial statements as a reduction to a deferred tax asset for a net
operating loss carryforward, a similar tax loss, or a tax credit carryforward. However, unrecognized tax benefits should be presented
in the financial statements as a liability and should not be combined with deferred tax assets in circumstances where availability or
legal requirement and intent to settle additional incomes taxes is not met. The amendments were applied prospectively and were
effective for interim and annual reporting periods beginning January 1, 2014. The amendments did not have a material impact to
Huntington’s Consolidated Financial Statements.
ASU 2014-01— Investments (Topic 323): Accounting for Investments in Qualified Affordable Housing Projects.
The amendments in ASU 2014-01 permit entities to make an accounting policy election to account for investments in qualified
affordable housing projects using the proportional amortization method if certain conditions are met. Under the proportional
amortization method, an entity recognizes the net investment performance in the income statement as a component of income tax
expense (benefit). Huntington elected to early adopt the amended guidance during the first quarter of 2014. The guidance was
applied retrospectively to all prior periods presented. The adoption resulted in an immaterial adjustment reducing retained earnings at
the beginning of 2010. The impact to current period net income was not material. See discussion on Low Income Housing Tax Credit
Partnerships in Note 19 for further information on this topic.
ASU 2014-04— Receivables (Topic 310): Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans
upon Foreclosure. The ASU clarifies that an in substance repossession or foreclosure occurs upon either the creditor obtaining legal
title to the residential real estate property or the borrower conveying all interest in the residential real estate property to the creditor to
satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. The amendments are
effective for annual periods, and interim reporting periods within those annual periods, beginning after December 15, 2014. The
amendments may be adopted using either a modified retrospective transition method or a prospective transition method. Management
does not believe the amendments will have a material impact to Huntington’s Consolidated Financial Statements.