Huntington National Bank 2007 Annual Report Download - page 65

Table 36 — Key Performance Indicators for Private Financial and Capital Markets Group
(in thousands unless otherwise noted) 2007 2006 Amount Percent Fourth Third Amount Percent
Twelve Months Ended
December 31, Change from 2006 2007 Change from 3Q07
Net income $38,937 $59,377 $(20,440) (34.4)% $ 5,479 $13,378 $(7,899) (59.0)%
Total average assets (in millions
of dollars) 2,505 2,087 418 20.0 2,878 2,803 75 2.7
Return on average equity 22.5% 40.1% (17.6)% (43.9) 11.1% 30.9% (19.8)% (64.1)
Total brokerage and insurance income $54,470 $43,156 $ 11,314 26.2 $14,385 $13,632 $ 753 5.5
Total assets under management (in billions) 16.3 12.2 4.1 33.6 16.3 16.5 (0.2) (1.2)
Total trust assets (in billions) 60.1 51.5 8.6 16.7 60.1 60.0 0.1 0.2
2007 FOURTH QUARTER VERSUS 2007 THIRD QUARTER
PFCMG contributed $5.5 million of the company’s net income for the 2007 fourth quarter. This compares with $13.4 million for
the 2007 third quarter, a decline of $7.9 million, or 59%. The $7.9 million decline primarily reflected: (1) $4.0 million increase to
the provision for credit losses due to the softening economy in our Midwest markets, and (2) $5.0 million increased losses due to
negative market value adjustments on the equity funds portfolio.
Net interest income increased $0.6 million, or 3%, primarily reflecting the favorable impact of a $42 million, or 4%, increase in
total average commercial loans, as well as a 5 basis point increase in the net interest margin.
Non-interest income decreased $5.8 million primarily reflecting: (1) $5.0 million increased losses in the equity funds portfolio, as
previously noted, (2) $3.6 million reduction in capital markets income as a result of an annual fee sharing adjustment for
commercial loan swaps. These declines were partially offset by: (1) $1.5 million increase in trust services income primarily
reflecting an 8.5% growth in Huntington Fund average asset balances, and (2) $0.6 billion increase in brokerage and insurance
income primarily reflecting increased fixed income commissions and increased sales of retail-life and wealth-transfer insurance
products.
Non-interest expense increased $2.9 million primarily reflecting: (1) $2.1 million increase in allocated corporate overhead,
including executive management severance costs, (2) $0.5 increased sales commissions, primarily from increased loan swap revenue
and a large public finance deal, and (3) $0.2 million increase in licensing fees.
Net charge-offs totaled $3.8 million, or an annualized 0.60% of average related loans and leases, for the 2007 fourth quarter
compared with $1.1 million, or an annualized 0.17%, in the 2007 third quarter. These increases reflected the softening economy in
our Midwest markets.
The ROA decreased to 0.76% from 1.89%, and the ROE decreased to 11.1% from 30.9%.
2007 VERSUS 2006
PFCMG contributed $38.9 million of the company’s net income in 2007, down from $59.4 million, or 34%, in 2006. This decrease
primarily reflected the negative market value adjustments to the equity funds portfolio, partially offset by the positive impact of
the Sky Financial acquisition to net interest income and non-interest income. Non-interest income was also positively impacted by
the acquisition of Unified Fund Services on December 31, 2006, and the growth of managed assets to $16.3 billion from
$12.2 billion. The ROA decreased to 1.55% from 2.85%, and the ROE decreased to 22.5% from 40.1%.
2006 VERSUS 2005
PFCMG contributed $59.4 million, or 13%, of the company’s net income in 2006, up from $50.8 million, or 17%, from 2005. This
increase primarily reflected a $25.5 million, or 12%, increase in fully-taxable equivalent revenue partially offset by a $1.6 million
increase in the provision for credit losses and an $10.7 million increase in total non-interest expense. These increases were largely
due to the Unizan acquisition. The ROA increased to 2.85% from 2.61%, and the ROE increased to 40.1% from 39.1%.
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MANAGEMENT’S DISCUSSION AND ANALYSIS HUNTINGTON BANCSHARES INCORPORATED