Quarterly report pursuant to Section 13 or 15(d)

Segment Reporting

 v2.3.0.11
Segment Reporting
 6 Months Ended
Jun. 30, 2011
Segment Reporting [Abstract]  
SEGMENT REPORTING
18. SEGMENT REPORTING
During the 2010 fourth quarter, Huntington reorganized our business segments to better align certain business unit reporting with segment executives to accelerate cross-sell results and provide greater focus on the execution of strategic plans. We have four major business segments: Retail and Business Banking, Regional and Commercial Banking, Automobile Finance and Commercial Real Estate, and Wealth Advisors, Government Finance, and Home Lending. A Treasury / Other function includes our insurance business and other unallocated assets, liabilities, revenue, and expense. All periods have been reclassified to conform to the current period classification.
Segment results are determined based upon the Company’s management reporting system, which assigns balance sheet and income statement items to each of the business segments. The process is designed around the Company’s organizational and management structure and, accordingly, the results derived are not necessarily comparable with similar information published by other financial institutions. A description of each segment and table of financial results is presented below.
Retail and Business Banking: The Retail and Business Banking segment provides a wide array of financial products and services including but not limited to loans, deposits, investment, and treasury management services to our consumer and small business customers. Huntington serves customers primarily through our traditional banking network of over 600 branches as well as our convenience branches located in grocery stores and retirement centers in Ohio, Michigan, Pennsylvania, Indiana, West Virginia, and Kentucky. In addition to our extensive branch network, customers can access Huntington through online banking, mobile banking, 24-hour telephone banking, and over 1,300 ATMs.
Huntington has established a “Fair Play” banking philosophy and is building a reputation for meeting the banking needs of consumers in a manner which makes them feel supported and appreciated. In 2010, Huntington brought innovation to the checking account by providing consumers with a 24-hour grace period to correct a shortfall in an account and avoid the associated overdraft fees. Huntington believes customers are recognizing this and other efforts as key differentiators and it is earning us more customers and deeper relationships.
Business Banking is a dynamic and growing part of Huntington’s business and we are committed to being the bank of choice for small businesses in our markets. Business Banking is defined as companies with revenues less than $15 million and consists of approximately 130,000 businesses. Huntington continues to develop products and services that are designed specifically to meet the needs of small business. Huntington continues to look for ways to help companies find solutions to their capital needs, from our program helping businesses that had struggled in the economic downturn but are now showing several quarters of profitability, to our participation in the Small Business Administration programs. As of March 31, 2011, the SBA reported Huntington ranked first in our footprint and third in the nation in the number of SBA loans originated for the first six months of the SBA fiscal year.
Regional and Commercial Banking: This segment provides a variety of banking products and services to customers within our primary banking markets that generally have larger credit exposures and sales revenues compared with our Retail and Business Banking customers. Huntington products in this segment include commercial loans, international trade, treasury management, leasing, capital market services including interest rate risk protection products, and mezzanine investment capabilities. Regional and Commercial Banking also focuses on financial solutions for corporate and institutional customers including investment banking, sales and trading of securities, and retirement plan services. The Regional and Commercial Banking team has significantly expanded its equipment leasing capabilities, as well as focused on serving the commercial banking needs of key verticals including not-for-profit organizations, healthcare entities, and large corporations. Commercial bankers personally deliver these products and services directly and with cross-segment product partners. Huntington consistently strives to develop extensive relationships with clients creating defined relationship plans which identify needs and offer solutions.
The primary focus for Regional and Commercial Banking is our ability to gain a deeper relationship with our existing customers and to increase our market share through our unique customer solution strategy. This includes a comprehensive cross-sell approach to capture the untapped opportunities within our customer and prospect community. This strategy embodies a shift from credit-only focus, to a total customer solution approach with an increasing share-of-wallet.
The Regional and Commercial Banking business model includes eleven regional markets driven by local execution. These markets are supported by expertise in large corporate and middle market segments, by capabilities in treasury management and equipment finance, and by vertical strategies within the healthcare and not-for-profit industries.
The commercial portfolio includes a distribution across industries and segments which resembles the market demographics of our footprint. A strategic focus of Regional and Commercial Banking is to target underpenetrated markets within our footprint and capitalize on opportunities in industries such as not-for-profit and healthcare.
In addition, Regional and Commercial Banking expanded the leadership, investment, and capabilities for treasury management and equipment finance. With our investments in treasury management, Huntington differentiated itself through our implementation experience and the speed at which products and services are delivered to our customers. In equipment finance, Huntington distinguished itself through aggressive business development and local service delivery and by strategically aligning with our bank partners to drive market share. The increase in originations during the current period reflected the strategic decision to enter three new markets: business aircraft finance, rail industry finance, and lender finance.
Automobile Finance and Commercial Real Estate: This segment provides lending and other banking products and services to customers outside of our normal retail and commercial banking segments. Our products and services are delivered through highly specialized relationship-focused bankers and our cross segment product partners. Huntington creates well-defined relationship plans which identify needs where solutions are developed and customer commitments are obtained.
The Automotive Finance team services automobile dealerships, its owners, and consumers buying automobiles through these dealerships. Huntington has provided new and used automobile financing and dealer services throughout the Midwest since the early 1950s. This consistency in the market and our focus on working with strong dealerships, has allowed us to actively deepen relationships while building a strong reputation. Huntington has a dominant market share position within our Midwest footprint as evidenced by a #1 share in two of our core states: Ohio and Kentucky (AutoCount 2010). The Automotive team serves customers within our footprint and we have recently expanded into the New England area.
The Commercial Real Estate team serves professional real estate developers, and REITs. Huntington has a clear focus on experienced, well-managed, well-capitalized top tier real estate developers who are capable of operating in all economic phases of the real estate industry. Most of our customers are located within our footprint.
Wealth Advisors, Government Finance, and Home Lending: This segment consists of our wealth management, government banking, and home lending businesses. In wealth management, Huntington provides financial services to high net worth clients in our primary banking markets and Florida. Huntington Wealth Advisors delivers a comprehensive solution through a unified sales team providing private banking, investment, insurance, and trust services. Aligned with the eleven regional commercial banking markets, this coordinated service model delivers products and services directly and through the other segment product partners. A fundamental point of differentiation is our commitment to be in the market, working closely with clients and their other advisors to identify needs, offer solutions and provide ongoing advice in an optimal client experience.
The Government Finance Group provides financial products and services to government and other public sector entities in our primary banking markets. A locally based team of relationship managers works with clients to meet their public finance, brokerage, trust, lending, and treasury management needs.
Home Lending originates and services consumer loans and mortgages for customers who are generally located in our primary banking markets. Consumer and mortgage lending products are primarily distributed through the Retail and Business Banking segment, as well as through commissioned loan originators. Closely aligned, our Community Development group serves an important role as it focuses on delivering on our commitment to the communities Huntington serves.
The segment also includes the related businesses of investment management, investment servicing, custody, corporate trust and retirement plan services. Huntington Asset Advisors provides investment management services through a variety of internal and external channels, including advising the Huntington Funds, our proprietary family of funds. Huntington Asset Services offers administrative and operational support to fund complexes, including fund accounting, transfer agency, administration, and distribution services. Our retirement plan services business offers fully bundled and third party distribution of a variety of qualified and non-qualified plan solutions, and the national settlements business focuses on providing banking solutions to the litigation settlement market.
Listed below is certain operating basis financial information reconciled to Huntington’s June 30, 2011, December 31, 2010, and June 30, 2010, reported results by business segment:
                                                 
    Three Months Ended June 30,  
    Retail &     Regional &                              
Income Statements   Business     Commercial                     Treasury/     Huntington  
(dollar amounts in thousands)   Banking     Banking     AFCRE     WGH     Other     Consolidated  
 
                                               
2011
                                               
Net interest income
  $ 237,208       60,029       89,281       47,030       (30,211 )   $ 403,337  
Provision for credit losses
    34,664       1,458       (14,855 )     14,530       —       35,797  
Noninterest income
    106,414       31,389       16,146       66,841       34,977       255,767  
Noninterest expense
    236,638       48,241       42,177       86,807       14,546       428,409  
Income taxes
    25,312       14,602       27,337       4,387       (22,658 )     48,980  
 
                                   
Operating/reported net income (loss)
  $ 47,008     $ 27,117     $ 50,768     $ 8,147     $ 12,878     $ 145,918  
 
                                   
 
                                               
2010
                                               
Net interest income
  $ 214,266     $ 50,885       84,170       38,958       11,377     $ 399,656  
Provision for credit losses
    23,030       12,669       47,669       30,028       80,010       193,406  
Noninterest income
    103,899       28,274       20,156       87,190       30,124       269,643  
Noninterest expense
    223,653       39,192       35,023       89,378       26,564       413,810  
Income taxes
    25,019       9,554       7,572       2,360       (31,186 )     13,319  
 
                                   
Operating/reported net income (loss)
  $ 46,463     $ 17,744     $ 14,062     $ 4,382     $ (33,887 )   $ 48,764  
 
                                   
                                                 
    Six Months Ended June 30,  
    Retail &     Regional &                              
Income Statements   Business     Commercial                     Treasury/     Huntington  
(dollar amounts in thousands)   Banking     Banking     AFCRE     WGH     Other     Consolidated  
 
                                               
2011
                                               
Net interest income
  $ 473,053       117,467       177,130       95,930       (55,913 )   $ 807,667  
Provision for credit losses
    58,358       7,427       (10,071 )     29,468       —       85,182  
Noninterest income
    200,842       60,627       29,525       133,592       68,126       492,712  
Noninterest expense
    458,775       91,922       85,304       172,985       50,122       859,108  
Income taxes
    54,867       27,561       45,997       9,474       (54,174 )     83,725  
 
                                   
Operating/reported net income (loss)
  $ 101,895     $ 51,184     $ 85,425     $ 17,595     $ 16,265     $ 272,364  
 
                                   
 
                                               
2010
                                               
Net interest income
  $ 417,671       101,716       161,214     $ 76,885     $ 36,063     $ 793,549  
Provision for credit losses
    91,004       53,876       165,308       26,717       91,509       428,414  
Noninterest income
    198,544       53,667       37,256       157,401       63,627       510,495  
Noninterest expense
    438,430       74,746       74,048       173,253       51,426       811,903  
Income taxes
    30,374       9,366       (14,310 )     12,011       (62,215 )     (24,774 )
 
                                   
Operating/reported net income (loss)
  $ 56,407     $ 17,395     $ (26,576 )   $ 22,305     $ 18,970     $ 88,501  
 
                                   
                                                 
    Assets at     Deposits at  
    June 30,     December 31,     June 30,     June 30,     December 31,     June 30,  
(dollar amounts in millions)   2011     2010     2010     2011     2010     2010  
 
                                               
Retail & Business Banking
  $ 13,456     $ 13,088     $ 13,169     $ 28,325     $ 29,298     $ 28,467  
Regional & Commercial Banking
    9,223       8,720       8,137       3,539       3,538       2,850  
AFCRE
    13,296       13,233       12,834       819       753       761  
WGH
    6,748       6,971       6,299       7,708       7,449       6,784  
Treasury / Other
    10,327       11,808       11,332       1,011       816       987  
 
                                   
Total
  $ 53,050     $ 53,820     $ 51,771     $ 41,402     $ 41,854     $ 39,849