Quarterly report pursuant to Section 13 or 15(d)

SEGMENT REPORTING

v3.5.0.2
SEGMENT REPORTING
 9 Months Ended
Sep. 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.
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.
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 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 - 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 wealth investment advisors. 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 September 30, 2016, December 31, 2015, and September 30, 2015, reported results by business segment:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30,
Income Statements
Retail & Business Banking
 
Commercial Banking
 
AFCRE
 
RBHPCG
 
Home Lending
 
Treasury/Other
 
Huntington Consolidated
(dollar amounts in thousands)
 
 
 
 
 
 
2016
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
$
334,752

 
$
137,216

 
$
126,468

 
$
46,838

 
$
15,508

 
$
(35,392
)
 
$
625,390

Provision for credit losses
10,142

 
23,816

 
25,616

 
1,657

 
2,573

 
1

 
63,805

Noninterest income
146,973

 
68,733

 
7,946

 
31,612

 
30,187

 
16,964

 
302,415

Noninterest expense
317,092

 
98,007

 
44,772

 
48,654

 
31,311

 
172,411

 
712,247

Income taxes
54,072

 
29,444

 
22,409

 
9,849

 
4,134

 
(95,159
)
 
24,749

Net income
$
100,419

 
$
54,682

 
$
41,617

 
$
18,290

 
$
7,677

 
$
(95,681
)
 
$
127,004

2015
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
$
260,059

 
$
100,939

 
$
95,858

 
$
36,200

 
$
13,045

 
$
(10,646
)
 
$
495,455

Provision (reduction in allowance) for credit losses
(3,829
)
 
9,322

 
12,599

 
3,547

 
838

 
(1
)
 
22,476

Noninterest income
124,138

 
65,906

 
5,774

 
26,411

 
11,639

 
19,251

 
253,119

Noninterest expense
282,180

 
75,589

 
38,770

 
41,092

 
39,871

 
49,006

 
526,508

Income taxes
37,046

 
28,677

 
17,592

 
6,290

 
(5,609
)
 
(36,994
)
 
47,002

Net income
$
68,800

 
$
53,257

 
$
32,671

 
$
11,682

 
$
(10,416
)
 
$
(3,406
)
 
$
152,588

 
Nine Months Ended September 30,
Income Statements
Retail & Business Banking
 
Commercial Banking
 
AFCRE
 
RBHPCG
 
Home Lending
 
Treasury/Other
 
Huntington Consolidated
(dollar amounts in thousands)
 
 
 
 
 
 
2016
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
$
871,727

 
$
339,839

 
$
317,624

 
$
125,076

 
$
42,941

 
$
(62,870
)
 
$
1,634,337

Provision (reduction in allowance) for credit losses
43,887

 
53,378

 
18,727

 
157

 
(252
)
 
(1
)
 
115,896

Noninterest income
396,020

 
192,232

 
25,787

 
84,423

 
64,158

 
52,774

 
815,394

Noninterest expense
882,732

 
280,564

 
127,305

 
136,406

 
83,375

 
216,606

 
1,726,988

Income taxes
119,395

 
69,345

 
69,083

 
25,527

 
8,392

 
(157,753
)
 
133,989

Net income
$
221,733

 
$
128,784

 
$
128,296

 
$
47,409

 
$
15,584

 
$
(68,948
)
 
$
472,858

2015
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
$
764,370

 
$
277,731

 
$
286,062

 
$
102,377

 
$
36,936

 
$
(13,650
)
 
$
1,453,826

Provision (reduction in allowance) for credit losses
22,840

 
12,989

 
14,692

 
7,834

 
5,132

 
(1
)
 
63,486

Noninterest income
352,585

 
191,391

 
22,021

 
84,818

 
62,273

 
53,427

 
766,515

Noninterest expense
813,631

 
208,702

 
112,803

 
149,806

 
115,072

 
77,128

 
1,477,142

Income taxes
98,169

 
86,601

 
63,206

 
10,344

 
(7,348
)
 
(85,907
)
 
165,065

Net income
$
182,315

 
$
160,830

 
$
117,382

 
$
19,211

 
$
(13,647
)
 
$
48,557

 
$
514,648


 
Assets at
 
Deposits at
(dollar amounts in thousands)
September 30,
2016
 
December 31,
2015
 
September 30,
2016
 
December 31,
2015
Retail & Business Banking
$
21,953,770

 
$
15,746,086

 
$
45,082,371

 
$
30,875,607

Commercial Banking
25,407,115

 
17,022,387

 
16,434,367

 
11,424,778

AFCRE
24,961,203

 
17,856,368

 
1,772,332

 
1,651,702

RBHPCG
5,522,867

 
4,291,403

 
8,705,359

 
7,690,581

Home Lending
3,520,201

 
3,080,690

 
500,198

 
361,881

Treasury / Other
19,400,256

 
13,021,367

 
4,910,469

 
3,290,430

Total
$
100,765,412

 
$
71,018,301

 
$
77,405,096

 
$
55,294,979