Huntington National Bank 2008 Annual Report Download - page 31

The following table details the estimated merger-related impacts on our reported loans and deposits:
Table 7 — Average Loans/Leases and Deposits — Estimated Merger-Related Impacts
(in millions) 2007 2006 Amount Percent
Merger-
Related Amount Percent
(1)
Twelve Months
Ended
December 31, Change Non-merger-related
Loans/Leases
Commercial and industrial $10,636 $ 7,323 $3,313 45.2% $2,388 $ 925 9.5%
Commercial real estate 6,807 4,542 2,265 49.9 1,986 279 4.3
Total commercial 17,443 11,865 5,578 47.0 4,374 1,204 7.4
Automobile loans and leases 4,118 4,088 30 0.7 216 (186) (4.3)
Home equity 6,173 4,970 1,203 24.2 1,193 10 0.2
Residential mortgage 4,939 4,581 358 7.8 556 (198) (3.9)
Other consumer 529 439 90 20.5 72 18 3.5
Total consumer 15,759 14,078 1,681 11.9 2,037 (356) (2.2)
Total loans and leases $33,202 $25,943 $7,259 28.0% $6,411 $ 848 2.6%
Deposits
Demand deposits — noninterest bearing $ 4,438 $ 3,530 $ 908 25.7% $ 915 $ (7) (0.2)%
Demand deposits — interest bearing 3,129 2,138 991 46.4 730 261 9.1
Money market deposits 6,173 5,604 569 10.2 498 71 1.2
Savings and other domestic time deposits 4,001 3,060 941 30.8 1,297 (356) (8.2)
Core certificates of deposit 8,057 5,050 3,007 59.5 2,315 692 9.4
Total core deposits 25,798 19,382 6,416 33.1 5,755 661 2.6
Other deposits 5,268 4,802 466 9.7 672 (206) (3.8)
Total deposits $31,066 $24,184 $6,882 28.5% $6,427 $ 455 1.5%
(1) Calculated as non-merger related / (prior period + merger-related)
The $0.8 billion, or 3%, non-merger-related increase in total average loans compared with the prior year primarily reflected a
$1.2 billion, or 7%, increase in average total commercial loans. This increase was the result of strong growth in both C&I loans
and CRE loans across substantially all regions. This was partially offset by a $0.4 billion, or 2%, decrease in average total consumer
loans reflecting declines in automobile loans and leases and residential mortgages. These declines reflect weaker demand, a softer
economy, as well as the continued impact of competitive pricing. In addition to these factors, loan sales contributed to the decline
in residential mortgages.
Average other earning assets increased $0.6 billion, primarily reflecting the increase in average trading account securities. The
increase in these assets reflected a change in our strategy to use trading account securities to hedge the change in fair value of our
MSRs.
The $0.5 billion, or 1%, increase in total non-merger-related average deposits primarily reflected a $0.7 billion, or 3%, increase in
average total core deposits as interest bearing demand deposits grew $0.3 billion, or 9%. While there was also strong growth in
core certificates of deposit, this was partially offset by the decline in savings and other domestic deposits, as customers transferred
funds from lower rate to higher rate accounts. In 2007, we reduced our dependence on noncore funds (total liabilities less core
deposits and accrued expenses and other liabilities) to 30% of total assets, down from 33% in 2006.
Table 8 shows average annual balance sheets and fully taxable equivalent net interest margin analysis for the last five years. It
details average balances for total assets and liabilities, as well as shareholders’ equity, and their various components, most notably
loans and leases, deposits, and borrowings. It also shows the corresponding interest income or interest expense associated with
each earning asset and interest bearing liability category along with the average rate with the difference resulting in the net interest
spread. The net interest spread plus the positive impact from the noninterest bearing funds represents the net interest margin.
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Management’s Discussion and Analysis Huntington Bancshares Incorporated