Quarterly report pursuant to Section 13 or 15(d)

SEGMENT REPORTING

v3.8.0.1
SEGMENT REPORTING
 9 Months Ended
Sep. 30, 2017
Segment Reporting [Abstract]  
SEGMENT REPORTING
SEGMENT REPORTING
Our business segments are based on our internally-aligned segment leadership structure, which is how we monitor results and assess performance. We have four major business segments: Consumer and Business Banking, Commercial Banking, Commercial Real Estate and Vehicle Finance (CREVF), Regional Banking and The Huntington Private Client Group (RBHPCG). The Treasury / Other function includes our technology and operations, other unallocated assets, liabilities, revenue, and expense.
Business segment results are determined based upon our management reporting system, which assigns balance sheet and income statement items to each of the business segments. The process is designed around our organizational and management structure and, accordingly, the results derived are not necessarily comparable with similar information published by other financial institutions. Additionally, because of the interrelationships of the various segments, the information presented is not indicative of how the segments would perform if they operated as independent entities.
Revenue is recorded in the business segment responsible for the related product or service. Fee sharing is recorded to allocate portions of such revenue to other business segments involved in selling to, or providing service to customers. Results of operations for the business segments reflect these fee-sharing allocations.
The management accounting process that develops the business segment reporting utilizes various estimates and allocation methodologies to measure the performance of the business segments. Expenses are allocated to business segments using a two-phase approach. The first phase consists of measuring and assigning unit (activity-based) costs to activities related to product origination and servicing. These activity-based costs are then extended, based on volumes, with the resulting amount allocated to business segments that own the related products. The second phase consists of the allocation of overhead costs to all four business segments from Treasury / Other. We utilize a full-allocation methodology, where all Treasury / Other expenses, except reported Significant Items, and a small amount of other residual unallocated expenses, are allocated to the four business segments.
The management accounting policies and processes utilized in compiling segment financial information are highly subjective and, unlike financial accounting, are not based on authoritative guidance similar to GAAP. As a result, reported segment results are not necessarily comparable with similar information reported by other financial institutions. Furthermore, changes in management structure or allocation methodologies and procedures result in changes in reported segment
financial data. Accordingly, certain amounts have been reclassified to conform to the current period presentation.
We use an active and centralized Funds Transfer Pricing (FTP) methodology to attribute appropriate income to the business segments. The intent of the FTP methodology is to transfer interest rate risk from the business segments by providing matched duration funding of assets and liabilities. The result centralizes the financial impact, management, and reporting of interest rate risk in the Treasury / Other function where it can be centrally monitored and managed. The Treasury / Other function charges (credits) an internal cost of funds for assets held in (or pays for funding provided by) each business segment. The FTP rate is based on prevailing market interest rates for comparable duration assets (or liabilities).
We announced a change in our executive leadership team, which became effective during the second quarter of 2017. As a result, the previously-reported Home Lending segment is now included as an operating unit in the Consumer and Business Banking segment. Additionally, the Insurance operating unit previously included in Commercial Banking was realigned to RBHPCG during second quarter. Prior period results have been reclassified to conform to the current period presentation.
Consumer and Business Banking - The Consumer and Business Banking segment, including Home Lending, provides a wide array of financial products and services to consumer and small business customers including but not limited to checking accounts, savings accounts, money market accounts, certificates of deposit, mortgage loans, consumer loans, credit cards, and small business loans and investment products. Other financial services available to consumer and small business customers include insurance, interest rate risk protection, foreign exchange, and treasury management. Business Banking is defined as serving companies with revenues up to $20 million and consists of approximately 254,000 businesses. Home Lending supports origination and servicing of consumer loans and mortgages for customers who are generally located in our primary banking markets across all segments.
Commercial Banking - Through a relationship banking model, this segment provides a wide array of products and services to the middle market, large corporate, and government public sector customers located primarily within our geographic footprint. The segment is divided into six business units: Middle Market, Large Corporate, Specialty Banking, Asset Finance, Capital Markets and Treasury Management.
Commercial Real Estate and Vehicle Finance - This segment provides lending and other banking products and services to customers outside of our traditional retail and commercial banking segments. Our products and services include providing financing for the purchase of automobiles, light-duty trucks, recreational vehicles and marine craft at franchised dealerships, financing the acquisition of new and used vehicle inventory of franchised automotive dealerships, and financing for land, buildings, and other commercial real estate owned or constructed by real estate developers, automobile dealerships, or other customers with real estate project financing needs. Products and services are delivered through highly specialized relationship-focused bankers and product partners.
Regional Banking and The Huntington Private Client Group - The core business of The Huntington Private Client Group is The Huntington Private Bank, which consists of Private Banking, Wealth & Investment Management, and Retirement Plan Services. The Huntington Private Bank provides high net-worth customers with deposit, lending (including specialized lending options), and banking services. The Huntington Private Bank delivers wealth management and legacy planning through investment and portfolio management, fiduciary administration, and trust services. This group also provides retirement plan services to corporate businesses. The Huntington Private Client Group provides corporate trust services and institutional and mutual fund custody services and insurance services.
Listed in the table below is certain operating basis financial information reconciled to Huntington’s September 30, 2017, December 31, 2016, and September 30, 2016, reported results by business segment.
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30,
Income Statements
Consumer & Business Banking
 
Commercial Banking
 
CREVF
 
RBHPCG
 
Treasury / Other
 
Huntington Consolidated
(dollar amounts in thousands)
 
 
 
 
 
2017
 
 
 
 
 
 
 
 
 
 
 
Net interest income
$
426,752

 
$
171,448

 
$
139,870

 
$
49,596

 
$
(29,233
)
 
$
758,433

Provision for (reduction in allowance) credit losses
24,089

 
9,580

 
9,705

 
216

 
—

 
43,590

Noninterest income
189,378

 
59,121

 
10,969

 
46,215

 
24,414

 
330,097

Noninterest expense
415,874

 
100,003

 
55,354

 
58,237

 
50,960

 
680,428

Income taxes
61,658

 
42,345

 
30,022

 
13,076

 
(57,157
)
 
89,944

Net income
$
114,509

 
$
78,641

 
$
55,758

 
$
24,282

 
$
1,378

 
$
274,568

2016
 
 
 
 
 
 
 
 
 
 
 
Net interest income
$
349,283

 
$
143,023

 
$
126,489

 
$
41,971

 
$
(35,376
)
 
$
625,390

Provision for (reduction in allowance) credit losses
12,724

 
23,788

 
25,615

 
1,663

 
15

 
63,805

Noninterest income
177,234

 
54,744

 
8,001

 
45,339

 
17,097

 
302,415

Noninterest expense
349,470

 
87,892

 
44,331

 
57,473

 
173,081

 
712,247

Income taxes
57,513

 
30,130

 
22,590

 
9,861

 
(95,345
)
 
24,749

Net income
$
106,810

 
$
55,957

 
$
41,954

 
$
18,313

 
$
(96,030
)
 
$
127,004

 
Nine Months Ended September 30,
Income Statements
Consumer & Business Banking
 
Commercial Banking
 
CREVF
 
RBHPCG
 
Treasury / Other
 
Huntington Consolidated
(dollar amounts in thousands)
 
 
 
 
 
2017
 
 
 
 
 
 
 
 
 
 
 
Net interest income
$
1,255,617

 
$
514,900

 
$
419,556

 
$
145,089

 
$
(102,242
)
 
$
2,232,920

Provision for credit losses
74,270

 
21,378

 
40,047

 
510

 
1

 
136,206

Noninterest income
544,445

 
176,609

 
34,750

 
140,610

 
71,364

 
967,778

Noninterest expense
1,242,152

 
301,385

 
163,989

 
182,171

 
192,517

 
2,082,214

Income taxes
169,274

 
129,061

 
87,594

 
36,056

 
(194,110
)
 
227,875

Net income
$
314,366

 
$
239,685

 
$
162,676

 
$
66,962

 
$
(29,286
)
 
$
754,403

2016
 
 
 
 
 
 
 
 
 
 
 
Net interest income
$
911,706

 
$
355,263

 
$
317,704

 
$
112,473

 
$
(62,809
)
 
$
1,634,337

Provision for credit losses
43,474

 
53,212

 
18,706

 
490

 
14

 
115,896

Noninterest income
459,732

 
150,228

 
25,951

 
126,245

 
53,238

 
815,394

Noninterest expense
967,417

 
246,941

 
125,254

 
166,645

 
220,731

 
1,726,988

Income taxes
126,191

 
71,868

 
69,893

 
25,054

 
(159,017
)
 
133,989

Net income
$
234,356

 
$
133,470

 
$
129,802

 
$
46,529

 
$
(71,299
)
 
$
472,858

 
Assets at
 
Deposits at
(dollar amounts in thousands)
September 30,
2017
 
December 31,
2016
 
September 30,
2017
 
December 31,
2016
Consumer & Business Banking
$
25,989,043

 
$
25,332,635

 
$
45,694,477

 
$
45,355,745

Commercial Banking
24,199,091

 
24,121,689

 
20,795,143

 
18,053,208

CREVF
24,723,324

 
23,576,832

 
2,052,274

 
1,893,072

RBHPCG
5,695,880

 
5,327,622

 
5,944,240

 
6,214,250

Treasury / Other
21,380,788

 
21,355,319

 
3,958,979

 
4,091,442

Total
$
101,988,126

 
$
99,714,097

 
$
78,445,113

 
$
75,607,717