Huntington Bancshares Incorporated Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Fair Values of Assets and Liabilities (Tables)

Fair Values of Assets and Liabilities (Tables)

12 Months Ended

Dec. 31, 2013

Fair Values of Assets and Liabilities [Abstract]

Assets and liabilities measured at fair value on a recurring basis

Assets and liabilities measured at fair value on a recurring basis at December 31, 2013 and 2012 are summarized below

Fair Value Measurements at Reporting Date Using									Netting		Balance at
(dollar amounts in thousands)			Level 1		Level 2		Level 3	Adjustments (1)			December 31, 2013
Assets
Mortgage loans held for sale		$	---	$	278,928	$	---	$	---	$	278,928

Trading account securities:
	Federal agencies: Mortgage-backed		---		---		---		---		---
	Federal agencies: Other agencies		---		834		---		---		834
	Municipal securities		---		2,180		---		---		2,180
	Other securities		32,081		478		---		---		32,559
			32,081		3,492		---		---		35,573

Available-for-sale and other securities:
	U.S. Treasury securities		51,604		---		---		---		51,604
	Federal agencies: Mortgage-backed (2)		---		3,566,221		---		---		3,566,221
	Federal agencies: Other agencies		---		319,888		---		---		319,888
	Municipal securities		---		491,455		654,537		---		1,145,992
	Private-label CMO		---		16,964		32,140		---		49,104
	Asset-backed securities		---		983,621		107,419		---		1,091,040
	Covered bonds		---		285,874		---		---		285,874
	Corporate debt		---		457,240		---		---		457,240
	Other securities		16,971		3,828		---		---		20,799
			68,575		6,125,091		794,096		---		6,987,762

Automobile loans			---		---		52,286		---		52,286

MSRs			---		---		34,236		---		34,236

Derivative assets			36,774		219,045		3,066		(58,856)		200,029

Liabilities

Derivative liabilities			22,787		124,123		676		(18,312)		129,274

Short-term borrowings			---		1,089		---		---		1,089


Fair Value Measurements at Reporting Date Using									Netting		Balance at
(dollar amounts in thousands)			Level 1		Level 2		Level 3	Adjustments (1)			December 31, 2012
Assets
Mortgage loans held for sale		$	---	$	452,949	$	---	$	---	$	452,949

Trading account securities:
	Federal agencies: Mortgage-backed		---		---		---		---		---
	Municipal securities		---		15,218		---		---		15,218
	Other securities		75,729		258		---		---		75,987
			75,729		15,476		---		---		91,205

Available-for-sale and other securities:
	U.S. Treasury securities		52,311		---		---		---		52,311
	Federal agencies: Mortgage-backed (2)		---		4,264,670		---		---		4,264,670
	Federal agencies: Other agencies (3)		---		359,626		---		---		359,626
	Municipal securities		---		439,772		61,228		---		501,000
	Private-label CMO		---		22,793		48,775		---		71,568
	Asset-backed securities		---		919,046		110,037		---		1,029,083
	Covered bonds		---		290,625		---		---		290,625
	Corporate debt		---		668,142		---		---		668,142
	Other securities		17,177		3,898		---		---		21,075
			69,488		6,968,572		220,040		---		7,258,100

Automobile loans			---		---		142,762		---		142,762

MSRs			---		---		35,202		---		35,202

Derivative assets			6,368		465,517		13,180		(99,368)		385,697

Liabilities

Derivative liabilities			6,813		228,312		478		(83,415)		152,188

Rollforward of financial instruments measured on a recurring basis and classified as Level 3

The tables below present a rollforward of the balance sheet amounts for the years ended December 31, 2013, 2012, and 2011 for financial instruments measured on a recurring basis and classified as Level 3. The classification of an item as Level 3 is based on the significance of the unobservable inputs to the overall fair value measurement. However, Level 3 measurements may also include observable components of value that can be validated externally. Accordingly, the gains and losses in the table below include changes in fair value due in part to observable factors that are part of the valuation methodology

			Level 3 Fair Value Measurements
			Year ended December 31, 2013
							Available-for-sale securities
											Asset-
					Derivative		Municipal		Private-		backed		Automobile
(dollar amounts in thousands)			MSRs		instruments		securities		label CMO		securities		loans
Balance, beginning of year		$	35,202	$	12,702	$	61,228	$	48,775	$	110,037	$	142,762
Total gains / losses:
	Included in earnings		(966)		(5,944)		2,129		(180)		(2,244)		(358)
	Included in OCI		---		---		9,075		1,703		35,139		---
Other (1)			---		---		600,435		---		---		---
Sales			---		---		---		(10,254)		(16,711)		---
Repayments			---		---		---		---		---		(90,118)
Settlements			---		(4,368)		(18,330)		(7,904)		(18,802)		---
Balance, end of year		$	34,236	$	2,390	$	654,537	$	32,140	$	107,419	$	52,286


Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets held at end of the reporting date		$	(966)	$	(5,944)	$	9,075	$	1,703	$	35,139	$	(358)

			Level 3 Fair Value Measurements
			Year ended December 31, 2012
							Available-for-sale securities
											Asset-
					Derivative		Municipal		Private		backed		Automobile
(dollar amounts in thousands)			MSRs		instruments		securities		label CMO		securities		loans
Balance, beginning of year		$	65,001	$	(169)	$	95,092	$	72,364	$	121,698	$	296,250
Total gains / losses:
	Included in earnings		(29,799)		10,617		---		(796)		(59)		(1,230)
	Included in OCI		---		---		(1,637)		8,245		23,138		---
Sales			---		---		(3,040)		(15,183)		(20,852)		---
Repayments			---		---		---		---		---		(152,258)
Settlements			---		2,254		(29,187)		(15,855)		(13,888)		---
Balance, end of year		$	35,202	$	12,702	$	61,228	$	48,775	$	110,037	$	142,762


Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets held at end of the reporting date		$	(29,799)	$	5,818	$	(1,637)	$	8,245	$	23,138	$	(1,230)



			Level 3 Fair Value Measurements
			Year ended December 31, 2011
							Available-for-sale securities
											Asset-
					Derivative		Municipal		Private		backed		Automobile
(dollar amounts in thousands)			MSRs		instruments		securities		label CMO		securities		loans
Balance, beginning of year		$	125,679	$	966	$	149,806	$	121,925	$	162,684	$	522,717
Total gains / losses:
	Included in earnings		(60,678)		211		---		(1,673)		(3,065)		(6,577)
	Included in OCI		---		---		---		349		2,070		---
Purchases			---		---		1,760		---		---		---
Sales			---		---		---		(20,958)		---		---
Repayments			---		---		---		---		---		(219,890)
Settlements			---		(1,346)		(56,474)		(27,279)		(39,991)		---
Balance, end of year		$	65,001	$	(169)	$	95,092	$	72,364	$	121,698	$	296,250


Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets held at end of the reporting date		$	(60,678)	$	(1,135)	$	---	$	(1,494)	$	595	$	(6,577)

	(1) Effective December 31, 2013 approximately $600.4 million of direct purchase municipal instruments were reclassified from C&I loans to available-for-sale securities.

Classification of gains and losses due to changes in fair value, recorded in earnings for Level 3 assets and liabilities

The tables below summarize the classification of gains and losses due to changes in fair value, recorded in earnings for Level 3 assets and liabilities for the years ended December 31, 2013, 2012, and 2011:

		Level 3 Fair Value Measurements
		Year ended December 31, 2013
						Available-for-sale securities
										Asset-
				Derivative		Municipal		Private		backed		Automobile
(dollar amounts in thousands)		MSRs		instruments		securities		label CMO		securities		loans
Classification of gains and losses in earnings:

Mortgage banking income (loss)	$	(966)	$	(5,944)	$	---	$	---	$	---	$	---
Securities gains (losses)		---		---		---		(336)		(1,466)		---
Interest and fee income		---		---		2,129		156		(778)		(3,569)
Noninterest income		---		---		---		---		---		3,211
Total	$	(966)	$	(5,944)	$	2,129	$	(180)	$	(2,244)	$	(358)

		Level 3 Fair Value Measurements
		Year ended December 31, 2012
						Available-for-sale securities
										Asset-
				Derivative		Municipal		Private		backed		Automobile
(dollar amounts in thousands)		MSRs		instruments		securities		label CMO		securities		loans
Classification of gains and losses in earnings:

Mortgage banking income (loss)	$	(29,799)	$	10,617	$	---	$	---	$	---	$	---
Securities gains (losses)		---		---		---		(1,614)		---		---
Interest and fee income		---		---		---		818		(59)		(6,950)
Noninterest income		---		---		---		---		---		5,720
Total	$	(29,799)	$	10,617	$	---	$	(796)	$	(59)	$	(1,230)

		Level 3 Fair Value Measurements
		Year ended December 31, 2011
						Available-for-sale securities
										Asset-
				Derivative		Municipal		Private		backed		Automobile
(dollar amounts in thousands)		MSRs		instruments		securities		label CMO		securities		loans
Classification of gains and losses in earnings:

Mortgage banking income (loss)	$	(60,678)	$	6,635	$	---	$	---	$	---	$	---
Securities gains (losses)		---		---		---		(2,551)		(4,159)		---
Interest and fee income		---		---		---		878		1,094		(11,645)
Noninterest income		---		(6,424)		---		---		---		5,068
Total	$	(60,678)	$	211	$	---	$	(1,673)	$	(3,065)	$	(6,577)

Assets and liabilities under the fair value option

The following table presents the fair value and aggregate principal balance of certain assets and liabilities under the fair value option:

			December 31, 2013						December 31, 2012
			Fair value		Aggregate				Fair value		Aggregate
			carrying		unpaid				carrying		unpaid
(dollar amounts in thousands)			amount		principal		Difference		amount		principal		Difference
Assets
	Mortgage loans held for sale	$	278,928	$	276,945	$	1,983	$	452,949	$	438,254	$	14,695
	Automobile loans		52,286		50,800		1,486		142,762		140,916		1,846
Liabilities

		Net gains (losses) from fair value changes
		Year ended December 31,
(dollar amounts in thousands)			2013		2012		2011

Assets
	Mortgage loans held for sale	$	(12,711)	$	4,284	$	13,842
	Automobile loans		(360)		(1,231)		(6,577)
Liabilities
	Securitization trust notes payable		---		(2,023)		(7,731)

		Gains (losses) included in fair value changes
		associated with instrument specific credit risk
		Year ended December 31,
(dollar amounts in thousands)			2013		2012		2011

Assets
	Automobile loans	$	2,207	$	2,749	$	6,610

Assets measured at fair value on a nonrecurring basis

For the year ended December 31, 2013, assets measured at fair value on a nonrecurring basis were as follows:

Fair Value Measurements Using

Quoted Prices

Significant

Total

In Active

Other

Gains/(Losses)

Markets for

Observable

Unobservable

For the

Fair Value at

Identical Assets

Inputs

Year Ended

(dollar amounts in thousands)

December 31,

(Level 1)

(Level 2)

(Level 3)

December 31,

2013

Impaired loans

114,256

---

114,256

(39,228)

Other real estate owned

27,664

---

27,664

4,302

Quantitative information about significant unobservable level 3 fair value measurement inputs

Quantitative Information about Level 3 Fair Value Measurements
(dollar amounts in thousands)		Fair Value at	Valuation	Significant	Range
		December 31, 2013	Technique	Unobservable Input	(Weighted Average)
MSRs	$	34,236	Discounted cash flow	Constant prepayment rate (CPR)	7% - 32% (12%)
				Spread over forward interest rate swap rates	-158 - 4,216 (1,069)

Derivative assets		3,066	Consensus Pricing	Net market price	-5.25% - 13.53% (1.3%)
Derivative liabilities		676		Estimated Pull thru %	50% - 89% (78%)

Municipal securities		654,537	Discounted cash flow	Discount rate	1.6% - 4.5% (2.4%)

Private-label CMO		32,140	Discounted cash flow	Discount rate	2.9% - 8.3% (6.3%)
				Constant prepayment rate (CPR)	12.0% - 31.6% (18.0%)
				Probability of default	0.1% - 4.0% (0.7%)
				Loss Severity	8.0% - 64.0% (38.2%)

Asset-backed securities		107,419	Discounted cash flow	Discount rate	3.7% - 15.5% (8.1%)
				Constant prepayment rate (CPR)	5.7% - 5.7% (5.7%)
				Cumulative prepayment rate	0.0% - 100% (16.6%)
				Constant default	1.4% - 4.0% (2.8%)
				Cumulative default	0.5% - 100% (18.2%)
				Loss given default	20% - 100% (93.7%)
				Cure given deferral	0.0% - 75% (35.8%)
				Loss severity	49.0% - 69.0% (63.5%)

Automobile loans		52,286	Discounted cash flow	Constant prepayment rate (CPR)	79.2%
				Discount rate	0.3% - 5.0% (1.5%)

Impaired loans		114,256	Appraisal value	NA	NA

Other real estate owned		27,664	Appraisal value	NA	NA

Carrying amounts and estimated fair values of financial instruments

			December 31, 2013				December 31, 2012
			Carrying		Fair		Carrying		Fair
(dollar amounts in thousands)			Amount		Value		Amount		Value
Financial Assets:
	Cash and short-term assets	$	1,058,175	$	1,058,175	$	1,333,727	$	1,333,727
	Trading account securities		35,573		35,573		91,205		91,205
	Loans held for sale		326,212		326,212		764,309		773,013
	Available-for-sale and other securities		7,308,753		7,308,753		7,566,175		7,566,175
	Held-to-maturity securities		3,836,667		3,760,898		1,743,876		1,794,105
	Net loans and direct financing leases		42,472,630		40,976,014		39,959,350		38,401,965
	Derivatives		200,029		200,029		385,697		385,697

Financial Liabilities:
	Deposits		47,506,718		48,132,550		46,252,683		46,330,715
	Short-term borrowings		552,143		543,552		589,814		584,671
	Federal Home Loan Bank advances		1,808,293		1,808,558		1,008,959		1,008,959
	Other long term debt		1,349,119		1,342,890		158,784		156,719
	Subordinated notes		1,100,860		1,073,116		1,197,091		1,183,827
	Derivatives		129,274		129,274		152,188		152,188

Estimated Fair Value Measurements at Reporting Date Using									Balance at
(dollar amounts in thousands)			Level 1		Level 2		Level 3		December 31, 2013

Financial Assets
	Loans held for sale	$	---	$	---	$	---	$	---
	Held-to-maturity securities		---		3,760,898		---		3,760,898
	Net loans and direct financing leases		---		---		40,976,014		40,976,014
Financial liabilities
	Deposits		---		42,279,542		5,853,008		48,132,550
	Short-term borrowings		---		---		543,552		543,552
	Federal Home Loan Bank advances		---		---		1,808,558		1,808,558
	Other long-term debt		---		---		1,342,890		1,342,890
	Subordinated notes		---		---		1,073,116		1,073,116

Estimated Fair Value Measurements at Reporting Date Using									Balance at
(dollar amounts in thousands)			Level 1		Level 2		Level 3		December 31, 2012

Financial Assets
	Loans held for sale	$	---	$	---	$	316,007	$	316,007
	Held-to-maturity securities		---		1,794,105		---		1,794,105
	Net loans and direct financing leases		---		---		38,259,203		38,259,203
Financial liabilities
	Deposits		---		39,136,127		7,194,588		46,330,715
	Short-term borrowings		---		---		584,671		584,671
	Other long-term debt		---		2,124		154,595		156,719
	Subordinated notes		---		---		1,183,827		1,183,827

- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

+ References + Details

- Definition

Tabular disclosure of the fair value of financial instruments, including financial assets and financial liabilities, and the measurements of those instruments, assets, and liabilities.

+ References + Details

- Definition

Tabular disclosure of the application of the fair value option for measurement and reporting of eligible financial assets and liabilities (as defined), as well as certain other eligible items (as defined) included in the statement of financial position, whether such option is elected for a single eligible item or a group of similar eligible items and is in addition to other disclosures concerning fair value which the company may be required to provide. Such disclosure might be expected to include: (1) for items included in the statement of financial position: (a) for each line item in the statement of financial position that includes an item or items for which the fair value option has been elected, provide the aggregate carrying amount of ineligible items included in each line item in the balance sheet, if any; (b) the difference between the aggregate fair value and the aggregate unpaid principal balance (assuming contractual principal amounts and fair value option elected) of: (i) loans and long-term receivables (other than securities otherwise reported at fair value) and (ii) long-term debt instruments; (c) for loans held as assets for which the fair value option has been elected: (i) the aggregate fair value of loans that are 90 days or more past due, (ii) if the policy is to recognize interest income separately from other changes in fair value, the aggregate fair value of loans in nonaccrual status, and (iii) the difference between the aggregate fair value and the aggregate unpaid principal balance for loans that are 90 days or more past due, in nonaccrual status, or both; (2) for items included in the income statement: (a) the amounts of gains and losses from fair value changes included in earnings and in which line in the income statement those gains and losses are reported whether or not combined with gains and losses from items required to be accounted for at fair value; (b) for loans and other receivables held as assets, the estimated amount of gains or losses included in earnings attributable to changes in instrument-specific credit risk; (c) for liabilities with fair values that have been significantly affected during the reporting period by changes in the instrument-specific credit risk, the estimated amount of gains and losses from fair value changes included in earnings that are attributable to changes in the instrument-specific credit risk; and (3) certain other disclosures as required or determined to be provided.

+ References + Details