Huntington National Bank 2007 Annual Report Download - page 32

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Provision for Credit Losses
(This section should be read in conjunction with Significant Items 1, 2, 3, and the Credit Risk section.)
The provision for credit losses is the expense necessary to maintain the ALLL and the AULC at levels adequate to absorb our
estimate of probable inherent credit losses in the loan and lease portfolio and the portfolio of unfunded loan commitments.
The provision for credit losses in 2007 was $643.6 million, up from $65.2 million in 2006, primarily reflecting a $405.8 million
increase in the 2007 fourth-quarter provision related to Franklin. The remainder of the increase reflected the continued weakness
in our Midwest markets, most notably among our borrowers in eastern Michigan and northern Ohio, and within the residential
real estate development portfolio.
The provision for credit losses in 2006 was $65.2 million, down $16.1 million from 2005. The decrease reflected a decline in the
transaction component of the ALLL at year-end compared with that at the end of 2005, due to a general improvement in the
underlying risk of the loan portfolio. These improvements were reflected in the decline in the ALLL as a percent of period-end
total loans and leases to 1.04% at December 31, 2006, from 1.10% in 2005.
Non-Interest Income
(This section should be read in conjunction with Significant Items 1, 3, 4, 5, 6, and 9.)
Table 8 reflects non-interest income for the three years ended December 31, 2007:
Table 8 — Non-Interest Income
(in thousands of dollars) 2007 Amount % 2006 Amount % 2005
Change from 2006 Change from 2005
Twelve Months Ended December 31,
Service charges on deposit accounts $254,193 $ 68,480 36.9% $185,713 $ 17,879 10.7% $167,834
Trust services 121,418 31,463 35.0 89,955 12,550 16.2 77,405
Brokerage and insurance income 92,375 33,540 57.0 58,835 5,216 9.7 53,619
Other service charges and fees 71,067 19,713 38.4 51,354 7,006 15.8 44,348
Bank owned life insurance income 49,855 6,080 13.9 43,775 3,039 7.5 40,736
Mortgage banking 29,804 (11,687) (28.2) 41,491 13,158 46.4 28,333
Securities losses (29,738) 43,453 (59.4) (73,191) (65,136) N.M. (8,055)
Other income 79,819 (40,203) (33.5) 120,022 24,975 26.3 95,047
Sub-total before automobile operating lease income 668,793 150,839 29.1 517,954 18,687 3.7 499,267
Automobile operating lease income 7,810 (35,305) (81.9) 43,115 (89,900) (67.6) 133,015
Total non-interest income $676,603 $115,534 20.6% $561,069 $(71,213) (11.3)% $632,282
N.M., not a meaningful value.
30
MANAGEMENT’S DISCUSSION AND ANALYSIS HUNTINGTON BANCSHARES INCORPORATED