Huntington National Bank 2014 Annual Report Download - page 152

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146
A summary of key assumptions and the sensitivity of the automobile loan servicing rights value to changes in these assumptions
at December 31, 2014 and 2013 follows:
December 31, 2014 December 31, 2013
Decline in fair value due Decline in fair value due
10% 20% 10% 20%
adverse adverse adverse adverse
(dollar amounts in thousands) Actual change change Actual change change
Constant prepayment rate (annualized) 14.62 % $ (305) $ (496) 14.65 % $ (584) $ (1,183)
Spread over forward interest rate swap rates 500 bps (2) (4) 500 bps (7) (15)
Servicing income, net of amortization of capitalized servicing assets was $7.7 million, $10.3 million, and $8.7 million for the
years ended December 31, 2014, 2013, and 2012, respectively. The unpaid principal balance of automobile loans serviced for third
parties was $0.8 billion, $1.6 billion, and $2.5 billion at December 31, 2014, 2013, and 2012, 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,
2014, 2013, and 2012:
Year Ended December 31,
(dollar amounts in thousands) 2014 2013 2012
SBA loans sold with servicing retained $ 214,760 $ 178,874 $ 209,540
Pretax gains resulting from above loan sales (1) 24,579 19,556 22,916
(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, 2014
and 2013:
(dollar amounts in thousands) 2014
2013
Carrying value, beginning of year $ 16,865 $ 15,147
N
ew servicing assets create
d
7,269 6,105
Amortization and other (5,598) (4,387)
Carrying value, end of year $ 18,536 $ 16,865
Fair value, end of year $ 20,495 $ 16,865
Weighted-average life (years) 3.5 3.5
A summary of key assumptions and the sensitivity of the SBA loan servicing rights value to changes in these assumptions at
December 31, 2014 and 2013 follows:
December 31, 2014 December 31, 2013
Decline in fair value due Decline in fair value due
10% 20% 10% 20%
adverse adverse adverse adverse
(dollar amounts in thousands) Actual change change Actual change change
Constant prepayment rate (annualized) 5.60 % $ (211) $ (419) 5.90 % $ (221) $ (438)
Discount rate 1,500 bps (563) (1,102) 1,500 bps (446) (873)
Servicing income, net of amortization of capitalized servicing assets was $7.4 million, $6.3 million, and $5.7 million in 2014,
2013, and 2012, respectively. The unpaid principal balance of SBA loans serviced for third parties was $898.0 million, $885.4 million
and $758.3 million at December 31, 2014, 2013 and 2012, respectively.