Annual report pursuant to Section 13 and 15(d)

Segment Reporting

Segment Reporting
12 Months Ended
Dec. 31, 2011
Segment Reporting [Abstract]  



During the 2010 fourth quarter, Huntington reorganized its 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 to consumer and small business customers including but not limited to checking accounts, savings accounts, money market accounts, certificates of deposit, consumer loans, and small business loans and leases. Other financial services available to consumer and small business customers include investments, insurance services, interest rate risk protection products, foreign exchange hedging, and treasury management services. Huntington serves customers primarily through our traditional banking network of over 600 branches as well as our convenience branches located in grocery stores 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, 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 September 30, 2011, the SBA reported that Huntington ranked first in our footprint and third in the nation in the number of SBA loans originated during the SBA fiscal year.



Regional and Commercial Banking: This segment provides a wide array of products and services to the middle market and large corporate client base located primarily within our core geographic banking markets. Huntington products in this segment include commercial lending, as well as depository and liquidity management products. Dedicated teams collaborate with our primary bankers to deliver complex and customized treasury management solutions, equipment and technology leasing, international services, capital markets services such as interest rate risk protection products, foreign exchange hedging and sales, trading of securities, mezzanine investment capabilities, and employee benefit programs (insurance, 401(k)). The Commercial Banking team specializes in serving a number of industry segments such as government entities, not-for-profit organizations, health-care entities, and large, publicly traded companies. 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 include financing for the purchase of automobiles by customers of automotive dealerships; financing for the purchase of new and used vehicle inventory by 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 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.


The Commercial Real Estate team serves professional real estate developers, REITs, and other customers with lending needs that are secured by commercial properties. 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 provides these services through a unified sales team, which consists of former private bankers, trust officers, and investment advisors; Huntington Asset Advisors, which provides investment management services; Huntington Asset Services, which offers administrative and operational support to fund complexes; and retirement plan 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, and 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.


Listed below is certain operating basis financial information reconciled to Huntington's 2011, 2010, and 2009 reported results by business segment:


      Retail &   Regional &   Former                  
Income Statements   Business   Commercial   Regional           Treasury / Huntington
(dollar amounts in thousands)   Banking   Banking   Banking     AFCRE   WGH Other Consolidated
Net interest income $ 932,385 $ 244,392 $ 1,176,777   $ 364,449 $ 199,536 $ (111,592) $ 1,629,170
Provision for credit losses   120,018   11,013   131,031     (8,939)   51,967   ---   174,059
Noninterest income   405,265   127,315   532,580     77,623   248,764   121,656   980,623
Noninterest expense   947,794   191,701   1,139,495     164,626   356,513   67,866   1,728,500
Provision for income taxes   94,443   59,147   153,590     100,234   13,937   (103,140)   164,621
Operating/reported net income $ 175,395 $ 109,846 $ 285,241   $ 186,151 $ 25,883 $ 45,338 $ 542,613
Net interest income $ 867,069 $ 211,511 $ 1,078,580   $ 338,312 $ 169,201 $ 32,712 $ 1,618,805
Provision for credit losses   157,994   104,705   262,699     184,757   95,586   91,505   634,547
Noninterest income   394,705   111,237   505,942     73,933   338,633   123,350   1,041,858
Noninterest expense   902,186   158,871   1,061,057     155,963   358,707   98,078   1,673,805
Provision (benefit) for income taxes   70,558   20,710   91,268     25,033   18,740   (95,077)   39,964
Operating/reported net income (loss) $ 131,036 $ 38,462 $ 169,498   $ 46,492 $ 34,801 $ 61,556 $ 312,347
Net interest income $ 810,658 $ 190,955 $ 1,001,613   $ 277,450 $ 164,335 $ (19,111) $ 1,424,287
Provision for credit losses   470,152   393,984   864,136     1,096,030   128,551   (14,046)   2,074,671
Noninterest income   415,471   95,705   511,176     63,929   267,695   162,844   1,005,644
Noninterest expense,                              
  excluding goodwill impairment   796,714   136,885   933,599     150,200   300,799   41,901   1,426,499
Goodwill impairment   ---   ---   2,573,818 (1)   ---   ---   33,126   2,606,944
Provision (benefit) for income taxes   (14,258)   (85,473)   (99,731)     (316,697)   937   (168,513)   (584,004)
Operating/reported net income (loss) $ (26,479) $ (158,736) $ (2,759,033)   $ (588,154) $ 1,743 $ 251,265 $ (3,094,179)
(1) Represents the 2009 first quarter goodwill impairment charge associated with the former Regional Banking segment. The allocation of this amount to the new business segments was not practical.

    Assets at     Deposits at
    December 31,     December 31,
(dollar amounts in millions)   2011     2010     2011     2010
Retail and Business Banking $ 13,889   $ 13,088   $ 27,536   $ 29,298
Regional and Commercial Banking   10,186     8,720     4,683     3,538
AFCRE   12,873     13,233     881     753
WGH   7,474     6,971     9,115     7,449
Treasury / Other   10,029     11,808     1,065     816
Total $ 54,451   $ 53,820   $ 43,280   $ 41,854