Huntington National Bank 2008 Annual Report Download - page 68

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LINESOFBUSINESSDISCUSSION
This section reviews financial performance from a line of business perspective and should be read in conjunction with the
Discussion of Results of Operations, Note 24 of the Notes to Consolidated Financial Statements, and other sections for a full
understanding of consolidated financial performance.
We have three distinct lines of business: Regional Banking, AFDS, and the Private Financial, Capital Markets, and Insurance Group
(PFCMIG). A fourth segment includes our Treasury function and other unallocated assets, liabilities, revenue, and expense. Lines
of business results are determined based upon our management reporting system, which assigns balance sheet and income
statement items to each of the business segments. The process is designed around our organizational and management structure
and, accordingly, the results derived are not necessarily comparable with similar information published by other financial
institutions. An overview of this system is provided below, along with a description of each segment and discussion of financial
results.
Huntington Bancshares Incorporated
Regional Banking
- Retail banking
- Commercial banking
- Mortgage banking
- Operations and technology
services
Auto Finance and
Dealer Services Treasury/OtherPFCMIG
- Consumer auto loans and
leases
- Dealership inventory
financing
- Dealership real estate /
working capital
- Asset management
- Private banking
- Brokerage
- Capital markets
- Insurance
- Investment securities
- Bank owned life
insurance
- Franklin
- Other expenses not
directly allocated to other
business segments
During 2008, certain organizational changes resulted in the transfer of specific components to other lines of business. The primary
transfers in 2008 were: (a) the Insurance business to PFCMIG from Treasury/Other, (b) the Franklin assets to Treasury/Other from
Regional Banking, and (c) Operations and Technology Services to Regional Banking from Treasury/Other. Prior period amounts
have been reclassified to conform to the current period presentation.
ACQUISITION OF SKY FINANCIAL
The businesses acquired in the Sky Financial merger were fully integrated into each of the corresponding Huntington lines of
business as of July 1, 2007. The Sky Financial merger had the largest impact to Regional Banking, but also impacted PFCMIG and
Treasury/Other. For Regional Banking, the merger added two new banking regions and strengthened our presence in five regions
where Huntington previously operated. The merger did not significantly impact AFDS.
Methodologies were implemented to estimate the approximate effect of the acquisition for the entire company; however, these
methodologies were not designed to estimate the approximate effect of the acquisition to individual lines of business. As a result,
the effect of the acquisition to the individual lines of business is not quantifiable. In the following line of business discussions for
Regional Banking and PFCMIG, the discussion is primarily focused on the 2008 fourth quarter results compared with the 2008
third quarter results. We believe that this comparison provides the most meaningful analysis because: (a) the impacts of the Sky
Financial acquisition are included in both periods, and (b) the comparisons of the 2008 reported results to the 2007 reported
results are distorted as a result of the nonquantifiable impact of the Sky Financial acquisition to the Regional Banking and
PFCMIG lines of business, however this comparison is briefly discussed, and (c) the comparisons of the 2008 fourth quarter to the
2007 fourth quarter are distorted as a result of numerous significant adjustments (see “Significant Items” located within the
“Discussion of Results of Operations” section), including adjustments related to Franklin, during both the 2008 and 2007 fourth
quarters. As a result, we believe that a more meaningful analysis of our core activities is obtained by comparisons to the prior
quarter; as such, comparisons are less affected by the impact of the overall economic changes. As mentioned previously, AFDS was
not significantly impacted by the acquisition. As a result, the AFDS line of business discussion compares full-year 2008 reported
results with full-year 2007 reported results.
66
Management’s Discussion and Analysis Huntington Bancshares Incorporated