Huntington National Bank 2007 Annual Report Download - page 61

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TREASURY/OTHER
The Treasury function includes revenue and expense related to assets, liabilities, and equity not directly assigned or allocated to
one of the other three business segments. Assets in this segment include insurance, investment securities, and bank owned life
insurance.
Net interest income includes the impact of administering our investment securities portfolios and the net impact of derivatives
used to hedge interest rate sensitivity. Non-interest income includes miscellaneous fee income not allocated to other business
segments such as bank owned life insurance income, insurance revenue, and any investment securities and trading assets gains or
losses. Non-interest expense includes certain corporate administrative, merger, and other miscellaneous expenses not allocated to
other business segments. The provision for income taxes for the other business segments is calculated at a statutory 35% tax rate,
though our overall effective tax rate is lower. As a result, Treasury/Other reflects a credit for income taxes representing the
difference between the actual lower effective tax rate and the statutory tax rate used to allocate income taxes to the other segments.
NET INCOME BY BUSINESS SEGMENT
The company reported net income of $75.2 million for 2007. This compared with $461.2 million for 2006, a decrease of
$386.1 million. The breakdown of 2007 net income by business segment is as follows:
– Regional Banking: $103.1 million ($237.7 million decrease from 2006)
– Dealer Sales: $42.4 million ($17.4 million decrease from 2006)
– PFCMG: $38.9 million ($20.4 million decrease from 2006)
– Treasury/Other: $109.2 million loss ($110.5 million decrease from 2006)
Regional Banking
(This section should be read in conjunction with Significant Items 1, 2, 3, and 9.)
OBJECTIVES,STRATEGIES,AND PRIORITIES
Our Regional Banking line of business provides traditional banking products and services to consumer, small business, and
commercial customers located in its 13 operating regions within the six states of Ohio, Michigan, Pennsylvania, Indiana, West
Virginia, and Kentucky. It provides these services through a banking network of over 600 branches, and almost 1,400 ATMs, along
with Internet and telephone banking channels. It also provides certain services outside of these six states, including mortgage
banking and equipment leasing. Each region is further divided into retail and commercial banking units. Retail products and
services include home equity loans and lines of credit, first mortgage loans, direct installment loans, small business loans, personal
and business deposit products, as well as sales of investment and insurance services. At December 31, 2007, Retail Banking
accounted for 51% and 80% of total Regional Banking loans and deposits, respectively. Commercial Banking serves middle market
and large commercial banking relationships, which use a variety of banking products and services including, but not limited to,
commercial loans, international trade, cash management, leasing, interest rate protection products, capital market alternatives,
401(k) plans, and mezzanine investment capabilities. The commercial loans relating to Franklin are included within Commercial
Banking.
We have a business model that emphasizes the delivery of a complete set of banking products and services offered by larger banks,
but distinguished by local decision-making about the pricing and the offering of these products. Our strategy is to focus on
building a deeper relationship with our customers by providing a “Simply the Best” service experience. This focus on service
requires continued investments in state-of-the-art platform technology in our branches, award-winning retail and business websites
for our customers, extensive development of associates, and internal processes that empower our local bankers to serve our
customers better. We expect the combination of local decision-making and “Simply the Best” service will result in a competitive
advantage and drive revenue and earnings growth.
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MANAGEMENT’S DISCUSSION AND ANALYSIS HUNTINGTON BANCSHARES INCORPORATED