Quarterly report pursuant to Section 13 or 15(d)

SEGMENT REPORTING

v3.7.0.1
SEGMENT REPORTING
 6 Months Ended
Jun. 30, 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 four major business segments: Consumer and Business Banking, Commercial Banking, Commercial Real Estate and Vehicle Finance (CREVF), Regional Banking and The Huntington Private Client Group, and (RBHPCG). 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 four 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 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.
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 announced a change within our executive leadership team, which became effective during the 2017 second quarter. As a result, the previously reported Home Lending segment is now 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 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 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. 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, and government public sector customers located primarily within our geographic footprint. The segment is divided into six business units: middle market, large corporate, specialty banking, asset finance, capital markets and treasury management.
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 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 and insurance services.
Listed below is certain operating basis financial information reconciled to Huntington’s June 30, 2017, December 31, 2016, and June 30, 2016, reported results by business segment:
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30,
Income Statements
Consumer & Business Banking
 
Commercial Banking
 
CREVF
 
RBHPCG
 
Treasury / Other
 
Huntington Consolidated
(dollar amounts in thousands)
 
 
 
 
 
2017
 
 
 
 
 
 
 
 
 
 
 
Net interest income
$
420,210

 
$
168,814

 
$
140,367

 
$
48,749

 
$
(33,628
)
 
$
744,512

Provision for (reduction in allowance) credit losses
17,000

 
(10,339
)
 
20,793

 
(2,477
)
 
1

 
24,978

Noninterest income
184,199

 
59,926

 
12,559

 
46,385

 
22,149

 
325,218

Noninterest expense
412,400

 
101,184

 
55,946

 
60,885

 
63,949

 
694,364

Income taxes
61,253

 
48,263

 
26,665

 
12,854

 
(70,388
)
 
78,647

Net income
$
113,756

 
$
89,632

 
$
49,522

 
$
23,872

 
$
(5,041
)
 
$
271,741

2016
 
 
 
 
 
 
 
 
 
 
 
Net interest income
$
284,896

 
$
106,971

 
$
95,617

 
$
35,499

 
$
(17,102
)
 
$
505,881

Provision for (reduction in allowance) credit losses
20,848

 
(5,630
)
 
9,740

 
(448
)
 
(1
)
 
24,509

Noninterest income
152,242

 
51,158

 
10,640

 
40,097

 
16,975

 
271,112

Noninterest expense
310,924

 
80,842

 
41,185

 
53,757

 
36,953

 
523,661

Income taxes
36,879

 
29,021

 
19,366

 
7,801

 
(38,784
)
 
54,283

Net income
$
68,487

 
$
53,896

 
$
35,966

 
$
14,486

 
$
1,705

 
$
174,540

 
Six Months Ended June 30,
Income Statements
Consumer & Business Banking
 
Commercial Banking
 
CREVF
 
RBHPCG
 
Treasury / Other
 
Huntington Consolidated
(dollar amounts in thousands)
 
 
 
 
 
2017
 
 
 
 
 
 
 
 
 
 
 
Net interest income
$
828,936

 
$
343,285

 
$
279,700

 
$
95,492

 
$
(72,926
)
 
$
1,474,487

Provision for credit losses
50,181

 
11,798

 
30,342

 
295

 
—

 
92,616

Noninterest income
354,970

 
117,573

 
23,768

 
94,395

 
46,975

 
637,681

Noninterest expense
824,048

 
201,382

 
108,635

 
123,934

 
143,787

 
1,401,786

Income taxes
108,387

 
86,687

 
57,572

 
22,980

 
(137,695
)
 
137,931

Net income
$
201,290

 
$
160,991

 
$
106,919

 
$
42,678

 
$
(32,043
)
 
$
479,835

2016
 
 
 
 
 
 
 
 
 
 
 
Net interest income
$
562,423

 
$
212,240

 
$
191,214

 
$
70,503

 
$
(27,433
)
 
$
1,008,947

Provision for (reduction in allowance) credit losses
30,750

 
29,423

 
(6,909
)
 
(1,173
)
 
—

 
52,091

Noninterest income
284,002

 
95,484

 
17,950

 
79,403

 
36,140

 
512,979

Noninterest expense
616,981

 
159,050

 
80,922

 
109,172

 
48,616

 
1,014,741

Income taxes
69,543

 
41,738

 
47,303

 
14,667

 
(64,011
)
 
109,240

Net income
$
129,151

 
$
77,513

 
$
87,848

 
$
27,240

 
$
24,102

 
$
345,854

 
Assets at
 
Deposits at
(dollar amounts in thousands)
June 30,
2017
 
December 31,
2016
 
June 30,
2017
 
December 31,
2016
Consumer & Business Banking
$
25,820,232

 
$
25,332,635

 
$
45,971,574

 
$
45,355,745

Commercial Banking
24,021,962

 
24,121,689

 
17,867,356

 
18,053,208

CREVF
24,431,788

 
23,576,832

 
1,943,670

 
1,893,072

RBHPCG
5,570,436

 
5,327,622

 
5,882,745

 
6,214,250

Treasury / Other
21,562,361

 
21,355,319

 
4,268,028

 
4,091,442

Total
$
101,406,779

 
$
99,714,097

 
$
75,933,373

 
$
75,607,717