Quarterly report pursuant to Section 13 or 15(d)

SEGMENT REPORTING

v3.5.0.2
SEGMENT REPORTING
 6 Months Ended
Jun. 30, 2016
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 five major business segments: Retail and Business Banking, Commercial Banking, Automobile Finance and Commercial Real Estate (AFCRE), Regional Banking and The Huntington Private Client Group (RBHPCG), and Home Lending. 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 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 five 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 five business segments.
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 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).
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. Other financial services available to consumer and small business customers include investments, 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 165,000 businesses.
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 seven business units: middle market, large corporate, specialty banking, asset finance, capital markets, treasury management, and insurance.
Automobile Finance and Commercial Real Estate - 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 vehicles by customers at franchised automotive 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 - Regional Banking and The Huntington Private Client Group is closely aligned with our eleven regional banking markets. The Huntington Private Client Group is organized into units consisting of The Huntington Private Bank, The Huntington Trust, and The Huntington Investment Company. Our private banking, trust, and investment functions focus their efforts in our Midwest footprint and Florida.
Home Lending - 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. Home lending earns interest on loans held in the warehouse and portfolio, earns fee income from the origination and servicing of mortgage loans, and recognizes gains or losses from the sale of mortgage loans. Home Lending supports the origination and servicing of mortgage loans across all segments.
Listed below is certain operating basis financial information reconciled to Huntington’s June 30, 2016, December 31, 2015, and June 30, 2015, reported results by business segment:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30,
Income Statements
Retail & Business Banking
 
Commercial Banking
 
AFCRE
 
RBHPCG
 
Home Lending
 
Treasury/Other
 
Huntington Consolidated
(dollar amounts in thousands)
 
 
 
 
 
 
2016
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
$
270,745

 
$
101,760

 
$
95,602

 
$
40,502

 
$
14,417

 
$
(17,145
)
 
$
505,881

Provision (reduction in allowance) for credit losses
21,549

 
(5,194
)
 
9,726

 
(1,021
)
 
(551
)
 
—

 
24,509

Noninterest income
128,903

 
64,918

 
10,589

 
27,588

 
22,321

 
16,793

 
271,112

Noninterest expense
279,286

 
92,121

 
42,331

 
50,863

 
26,455

 
32,605

 
523,661

Income taxes
34,585

 
27,913

 
18,947

 
6,387

 
3,792

 
(37,341
)
 
54,283

Net income
$
64,228

 
$
51,838

 
$
35,187

 
$
11,861

 
$
7,042

 
$
4,384

 
$
174,540

2015
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
$
256,921

 
$
94,397

 
$
95,042

 
$
27,751

 
$
16,353

 
$
222

 
$
490,686

Provision (reduction in allowance) for credit losses
19,401

 
(3,027
)
 
3,498

 
1,596

 
(1,049
)
 
—

 
20,419

Noninterest income
112,938

 
70,361

 
11,574

 
37,964

 
31,976

 
16,960

 
281,773

Noninterest expense
260,487

 
76,373

 
37,855

 
63,221

 
41,639

 
12,202

 
491,777

Income taxes
31,490

 
31,994

 
22,842

 
314

 
2,709

 
(25,292
)
 
64,057

Net income
$
58,481

 
$
59,418

 
$
42,421

 
$
584

 
$
5,030

 
$
30,272

 
$
196,206

 
Six months ended June 30,
Income Statements
Retail & Business Banking
 
Commercial Banking
 
AFCRE
 
RBHPCG
 
Home Lending
 
Treasury/Other
 
Huntington Consolidated
(dollar amounts in thousands)
 
 
 
 
 
 
2016
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
$
535,433

 
$
202,623

 
$
191,171

 
$
79,781

 
$
27,433

 
$
(27,494
)
 
$
1,008,947

Provision (reduction in allowance) for credit losses
33,745

 
29,562

 
(6,891
)
 
(1,500
)
 
(2,825
)
 
—

 
52,091

Noninterest income
246,462

 
123,499

 
17,840

 
55,395

 
33,971

 
35,812

 
512,979

Noninterest expense
552,530

 
182,549

 
82,534

 
100,860

 
52,063

 
44,205

 
1,014,741

Income taxes
68,467

 
39,904

 
46,679

 
12,536

 
4,258

 
(62,604
)
 
109,240

Net income
$
127,153

 
$
74,107

 
$
86,689

 
$
23,280

 
$
7,908

 
$
26,717

 
$
345,854

2015
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
$
505,571

 
$
169,315

 
$
190,204

 
$
54,575

 
$
31,630

 
$
7,076

 
$
958,371

Provision for credit losses
26,553

 
3,808

 
2,115

 
4,240

 
4,294

 
—

 
41,010

Noninterest income
208,696

 
125,254

 
16,249

 
78,388

 
50,634

 
34,175

 
513,396

Noninterest expense
516,851

 
132,790

 
74,033

 
121,849

 
77,427

 
27,684

 
950,634

Income taxes
59,802

 
55,290

 
45,607

 
2,406

 
190

 
(45,232
)
 
118,063

Net income
$
111,061

 
$
102,681

 
$
84,698

 
$
4,468

 
$
353

 
$
58,799

 
$
362,060


 
Assets at
 
Deposits at
(dollar amounts in thousands)
June 30,
2016
 
December 31,
2015
 
June 30,
2016
 
December 31,
2015
Retail & Business Banking
$
15,977,841

 
$
15,746,086

 
$
31,095,956

 
$
30,875,607

Commercial Banking
17,947,824

 
17,022,387

 
10,353,358

 
11,424,778

AFCRE
20,942,630

 
17,856,368

 
1,692,868

 
1,651,702

RBHPCG
4,476,036

 
4,291,403

 
8,161,115

 
7,690,581

Home Lending
3,464,385

 
3,080,690

 
335,403

 
361,881

Treasury / Other
11,145,301

 
13,021,367

 
3,404,765

 
3,290,430

Total
$
73,954,017

 
$
71,018,301

 
$
55,043,465

 
$
55,294,979