Annual report pursuant to Section 13 and 15(d)

SEGMENT REPORTING

v3.8.0.1
SEGMENT REPORTING
12 Months Ended
Dec. 31, 2017
Segment Reporting [Abstract]  
SEGMENT REPORTING
SEGMENT REPORTING
Huntington's business segments are based on the internally-aligned segment leadership structure, which is how management monitors results and assesses performance. The Company has four major business segments: Consumer and Business Banking, Commercial Banking, Vehicle Finance, Regional Banking and The Huntington Private Client Group (RBHPCG). The Treasury / Other function includes technology and operations, other unallocated assets, liabilities, revenue, and expense.
Business segment results are determined based upon Huntington's management reporting system, which assigns balance sheet and income statement items to each of the business segments. The process is designed around the 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 costs (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. Huntington utilizes 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.
Huntington uses an active and centralized FTP methodology to attribute appropriate net interest 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 is to centralize 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). A new methodology for establishing FTP rates was adopted in 2017, therefore, prior period amounts have been restated to reflect the new methodology.
Huntington announced a change in the executive leadership team, which became effective at the end of 2017. As a result, Commercial Real Estate is now included as an operating unit in the Commercial Banking segment. During the 2017 second quarter, the previously reported Home Lending segment was 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 the 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. 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, real estate and government public sector customers located primarily within our geographic footprint. The segment is divided into six business units: Middle Market, Specialty Banking, Asset Finance, Capital Markets/ Institutional Corporate Banking, Commercial Real Estate and Treasury Management.
Vehicle Finance - Our products and services include providing financing to consumers for the purchase of automobiles, light-duty trucks, recreational vehicles and marine craft at franchised and other select dealerships, and providing financing to franchised dealerships for the acquisition of new and used inventory. 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 also 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.
Listed below is certain financial information reconciled to Huntington’s December 31, 2017, December 31, 2016, and December 31, 2015, reported results by business segment:
Income Statements
(dollar amounts in millions)
Consumer & Business Banking
 
Commercial Banking
 
Vehicle Finance
 
RBHPCG
 
Treasury / Other
 
Huntington
Consolidated
2017
 
 
 
 
 
 
 
 
 
 
 
Net interest income
$
1,555

 
$
899

 
$
424

 
$
184

 
$
(60
)
 
$
3,002

Provision (benefit) for credit losses
110

 
28

 
63

 

 

 
201

Noninterest income
735

 
278

 
14

 
188

 
92

 
1,307

Noninterest expense
1,647

 
474

 
150

 
243

 
200

 
2,714

Provision (benefit) for income taxes
187

 
236

 
79

 
45

 
(339
)
 
208

Net income (loss)
$
346

 
$
439

 
$
146

 
$
84

 
$
171

 
$
1,186

2016
 
 
 
 
 
 
 
 
 
 
 
Net interest income
$
1,224

 
$
725

 
$
345

 
$
152

 
$
(77
)
 
$
2,369

Provision (benefit) for credit losses
68

 
79

 
47

 
(3
)
 

 
191

Noninterest income
650

 
244

 
14

 
177

 
65

 
1,150

Noninterest expense
1,338

 
398

 
118

 
229

 
325

 
2,408

Provision (benefit) for income taxes
164

 
172

 
68

 
36

 
(232
)
 
208

Net income (loss)
$
304

 
$
320

 
$
126

 
$
67

 
$
(105
)
 
$
712

2015
 
 
 
 
 
 
 
 
 
 
 
Net interest income
$
995

 
$
560

 
$
262

 
$
125

 
$
9

 
$
1,951

Provision (benefit) for credit losses
45

 
16

 
39

 

 

 
100

Noninterest income
566

 
214

 
13

 
174

 
72

 
1,039

Noninterest expense
1,192

 
343

 
93

 
241

 
107

 
1,976

Provision (benefit) for income taxes
113

 
145

 
50

 
21

 
(108
)
 
221

Net income (loss)
$
211

 
$
270

 
$
93

 
$
37

 
$
82

 
$
693


 
Assets at
December 31,
 
Deposits at
December 31,
(dollar amounts in millions)
2017
 
2016
 
2017
 
2016
Consumer & Business Banking
$
26,220

 
$
25,333

 
$
45,643

 
$
45,356

Commercial Banking
32,118

 
31,566

 
21,235

 
19,597

Vehicle Finance
17,865

 
16,132

 
358

 
349

RBHPCG
5,821

 
5,328

 
6,057

 
6,214

Treasury / Other
22,161

 
21,355

 
3,748

 
4,092

Total
$
104,185

 
$
99,714

 
$
77,041

 
$
75,608