Quarterly report pursuant to Section 13 or 15(d)

SEGMENT REPORTING

v3.7.0.1
SEGMENT REPORTING
 3 Months Ended
Mar. 31, 2017
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: Consumer and Business Banking, Commercial Banking, Commercial Real Estate and Vehicle Finance (CREVF), 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.
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.
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).
We recently announced a reorganization among our executive leadership team, which will become effective during the 2017 second quarter. As a result, management is currently evaluating the business segment structure which may impact how we monitor future results and assess performance.
Consumer and Business Banking - The Consumer 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, credit cards, and small business loans. Other financial services available to consumer and small business customers include mortgages, 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 254,000 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.
Commercial Real Estate and Vehicle Finance - 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 - 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 also provides corporate trust services and institutional and mutual fund custody services.
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 Consumer and Business Banking and Regional Banking and The Huntington Private Client Group segments, as well as through commissioned loan originators. Home Lending earns interest on portfolio loans held-for-sale, 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 March 31, 2017, December 31, 2016, and March 31, 2016, reported results by business segment:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31,
Income Statements
Consumer & Business Banking
 
Commercial Banking
 
CREVF
 
RBHPCG
 
Home Lending
 
Treasury / Other
 
Huntington Consolidated
(dollar amounts in thousands)
 
 
 
 
 
 
2017
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
$
393,496

 
$
174,563

 
$
139,333

 
$
46,649

 
$
15,215

 
$
(39,281
)
 
$
729,975

Provision for credit losses
31,294

 
22,137

 
9,549

 
2,771

 
1,887

 
—

 
67,638

Noninterest income
146,790

 
69,487

 
11,209

 
36,170

 
23,981

 
24,826

 
312,463

Noninterest expense
374,083

 
114,970

 
50,359

 
52,162

 
34,655

 
81,193

 
707,422

Income taxes
47,218

 
37,430

 
31,722

 
9,760

 
929

 
(67,775
)
 
59,284

Net income
$
87,691

 
$
69,513

 
$
58,912

 
$
18,126

 
$
1,725

 
$
(27,873
)
 
$
208,094

2016
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
$
264,529

 
$
105,350

 
$
95,597

 
$
34,923

 
$
12,985

 
$
(10,318
)
 
$
503,066

Provision (reduction in allowance) for credit losses
12,177

 
35,054

 
(16,649
)
 
(725
)
 
(2,274
)
 
(1
)
 
27,582

Noninterest income
120,257

 
58,916

 
7,311

 
24,717

 
11,503

 
19,163

 
241,867

Noninterest expense
280,121

 
92,995

 
40,206

 
40,503

 
24,593

 
12,662

 
491,080

Income taxes
32,371

 
12,676

 
27,773

 
6,952

 
759

 
(25,574
)
 
54,957

Net income
$
60,117

 
$
23,541

 
$
51,578

 
$
12,910

 
$
1,410

 
$
21,758

 
$
171,314

 
Assets at
 
Deposits at
(dollar amounts in thousands)
March 31,
2017
 
December 31,
2016
 
March 31,
2017
 
December 31,
2016
Consumer & Business Banking
$
21,747,257

 
$
21,831,681

 
$
45,802,879

 
$
44,724,252

Commercial Banking
24,233,720

 
24,236,490

 
19,041,629

 
18,053,208

CREVF
23,953,670

 
23,576,832

 
1,890,433

 
1,893,072

RBHPCG
5,280,791

 
5,213,530

 
5,981,930

 
6,214,250

Home Lending
3,524,718

 
3,502,069

 
349,765

 
631,494

Treasury / Other
21,305,350

 
21,353,495

 
4,355,874

 
4,091,441

Total
$
100,045,506

 
$
99,714,097

 
$
77,422,510

 
$
75,607,717