Huntington National Bank 2004 Annual Report Download - page 32

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MANAGEMENT’S DISCUSSION AND ANALYSIS HUNTINGTON BANCSHARES INCORPORATED
Table 2 — Selected Annual Income Statements
Year Ended December 31,
Change from 2003 Change from 2002
(in thousands, except per share amounts) 2004 Amount % 2003 Amount % 2002 2001 2000
Interest income $1,347,315 $ 41,559 3.2% $1,305,756 $ 12,561 1.0% $1,293,195 $1,654,789 $1,833,388
Interest expense 435,941 (20,829) (4.6) 456,770 (86,851) (16.0) 543,621 939,501 1,163,278
Net interest income 911,374 62,388 7.3 848,986 99,412 13.3 749,574 715,288 670,110
Provision for credit losses 55,062 (108,931) (66.4) 163,993 (30,433) (15.7) 194,426 257,326 61,464
Net interest income after provision for
credit losses 856,312 171,319 25.0 684,993 129,845 23.4 555,148 457,962 608,646
Operating lease income 287,091 (202,607) (41.4) 489,698 (167,376) (25.5) 657,074 691,733 623,835
Service charges on deposit accounts 171,115 3,275 2.0 167,840 14,276 9.3 153,564 165,012 161,426
Trust services 67,410 5,761 9.3 61,649 (402) (0.6) 62,051 60,298 53,613
Brokerage and insurance income 54,799 (3,045) (5.3) 57,844 (4,265) (6.9) 62,109 75,013 60,530
Bank owned life insurance income 42,297 (731) (1.7) 43,028 (95) (0.2) 43,123 41,123 39,544
Other service charges and fees 41,574 128 0.3 41,446 (1,442) (3.4) 42,888 48,217 43,883
Mortgage banking 32,296 (25,884) (44.5) 58,180 26,147 81.6 32,033 54,518 32,772
Securities gains 15,763 10,505 N.M. 5,258 356 7.3 4,902 723 37,101
Gain on sales of automobile loans 14,206 (25,833) (64.5) 40,039 40,039 N.M. — — —
Gain on sale of branch offices — (13,112) N.M. 13,112 13,112 N.M. — — —
Gain on sale of Florida operations ——— — (182,470) N.M. 182,470 — —
Merchant services gain ——— — (24,550) N.M. 24,550 — —
Other 92,047 988 1.1 91,059 14,119 18.4 76,940 63,305 70,498
Total non-interest income 818,598 (250,555) (23.4) 1,069,153 (272,551) (20.3) 1,341,704 1,199,942 1,123,202
Personnel costs 485,806 38,543 8.6 447,263 29,226 7.0 418,037 454,210 396,230
Operating lease expense 236,478 (156,792) (39.9) 393,270 (125,700) (24.2) 518,970 558,626 494,800
Net occupancy 75,941 13,460 21.5 62,481 2,942 4.9 59,539 76,449 75,197
Outside data processing and other services 72,115 5,997 9.1 66,118 (1,250) (1.9) 67,368 69,692 62,011
Equipment 63,342 (2,579) (3.9) 65,921 (2,402) (3.5) 68,323 80,560 78,069
Professional services 36,876 (5,572) (13.1) 42,448 9,363 28.3 33,085 32,862 22,721
Marketing 26,489 (1,001) (3.6) 27,490 (421) (1.5) 27,911 31,057 34,884
Telecommunications 19,787 (2,192) (10.0) 21,979 (682) (3.0) 22,661 27,984 26,225
Printing and supplies 12,463 (546) (4.2) 13,009 (2,189) (14.4) 15,198 18,367 19,634
Amortization of intangibles 817 1 0.1 816 (1,203) (59.6) 2,019 41,225 39,207
Restructuring reserve (releases) charges (1,151) 5,515 (82.7) (6,666) (55,639) N.M. 48,973 79,957 —
Loss on early extinguishment of debt — (15,250) N.M. 15,250 15,250 N.M. — — —
Other 93,281 12,501 15.5 80,780 (11,283) (12.3) 92,063 91,438 34,153
Total non-interest expense 1,122,244 (107,915) (8.8) 1,230,159 (143,988) (10.5) 1,374,147 1,562,427 1,283,131
Income before income taxes 552,666 28,679 5.5 523,987 1,282 0.2 522,705 95,477 448,717
Provision (benefit) for income taxes (3) 153,741 15,447 11.2 138,294 (60,680) (30.5) 198,974 (39,319) 126,299
Income before cumulative effect of change
in accounting principle 398,925 13,232 3.4 385,693 61,962 19.1 323,731 134,796 322,418
Cumulative effect of change in accounting
principle, net of tax(1) — 13,330 N.M. (13,330) (13,330) N.M. — — —
Net income $ 398,925 $ 26,562 7.1% $ 372,363 $ 48,632 15.0% $ 323,731 $ 134,796 $ 322,418
Average common shares — basic 229,913 512 0.2% 229,401 (12,878) (5.3)% 242,279 251,078 248,709
Average common shares — diluted 233,856 2,274 1.0 231,582 (12,430) (5.1) 244,012 251,716 249,570
Per common share:
Income before cumulative effect of change
in accounting principle — basic $1.74 $0.06 3.6% $1.68 $0.34 25.4% $1.34 $0.54 $1.30
Net income — basic 1.74 0.12 7.4 1.62 0.28 20.9 1.34 0.54 1.30
Income before cumulative effect of change
in accounting principle — diluted 1.71 0.04 2.4 1.67 0.34 25.6 1.33 0.54 1.29
Net income — diluted 1.71 0.10 6.2 1.61 0.28 21.1 1.33 0.54 1.29
Cash dividends declared 0.75 0.08 11.9 0.67 0.03 4.7 0.64 0.72 0.76
Net interest income — fully taxable
equivalent — FTE
Net interest income $ 911,374 $ 62,388 7.3% $ 848,986 $ 99,412 13.3% $ 749,574 $ 715,288 $ 670,110
Tax equivalent adjustment(2) 11,653 1,969 20.3 9,684 4,479 86.1 5,205 6,352 8,310
Net interest income — FTE $ 923,027 $ 64,357 7.5% $ 858,670 $ 103,891 13.8% $ 754,779 $ 721,640 $ 678,420
N.M., not a meaningful value.
(1) Due to adoption of FASB Interpretation No. 46 for variable interest entities.
(2) Calculated assuming a 35% tax rate.
(3) 2001 reflects a $32.5 million reduction related to the insurance of $400 million REIT subsidiary preferred stock, of which $50 million was sold to the public.
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