Huntington National Bank 2009 Annual Report Download - page 114

capital are char
g
ed (credited) with a four-
y
ear movin
g
avera
g
e FTP rate. The intent of the FTP methodolo
gy
is to eliminate all interest rate risk from the business se
g
ments b
y
providin
g
matched duration fundin
g
o
f
assets and liabilities. The result is to centralize the financial impact, mana
g
ement, and reportin
g
of interest rat
e
and liquidit
y
risk in the Treasur
y
/Other function where it can be monitored and mana
g
ed. The denominator in
net
i
nterest mar
gi
nca
l
cu
l
at
i
on
h
as
b
een mo
difi
e
d
to a
dd
t
h
e amount o
f
net
f
un
d
s prov
id
e
dby
eac
hb
us
i
ness
se
g
ment
f
or a
ll
per
i
o
d
s presente
d.
In 2009, a compre
h
ens
i
ve rev
i
ew o
f
our FTP met
h
o
d
o
l
o
gy
resu
l
te
di
nc
h
an
g
es to var
i
ous assumpt
i
ons
,
includin
g
liquidit
y
premiums. FTP rates char
g
ed to business se
g
ments holdin
g
commercial loans, and credite
d
to se
g
ments holdin
g
indeterminate maturit
y
and time deposits, were impacted most. Business se
g
ment financia
l
per
f
ormance
f
or 2009 re
fl
ect t
h
e met
h
o
d
o
l
o
gy
c
h
an
g
es,
h
owever,
fi
nanc
i
a
l
per
f
ormance
f
or 2008 was no
t
restate
d
to re
fl
ect t
h
ese c
h
an
g
es as t
h
ec
h
an
g
es
f
or t
h
at
y
ear were not mater
i
a
l
.T
h
e
i
mpact o
f
t
his
methodolo
gy
chan
g
e to 2009 financial performance was a $291.1 million increase in the net interest mar
g
i
n
f
or Treasury/Ot
h
er compare
d
w
i
t
h
resu
l
ts un
d
er t
h
e prev
i
ous met
h
o
d
o
l
ogy, an
d
an aggregate
d
ecrease to t
h
e
net
i
nterest mar
gi
no
f
t
h
eot
h
er
fi
ve
b
us
i
ness se
g
ments
by
t
h
e same amount. As a resu
l
to
f
t
hi
sc
h
an
g
e,
business se
g
ment performance for net interest income comparisons between 2009 and 2008 are affected.
F
ee S
h
arin
g
Our business se
g
ments operate in cooperation to provide products and services to our customers. Revenue
i
s recor
d
e
di
nt
h
e
b
us
i
ness se
g
ment respons
ibl
e
f
or t
h
ere
l
ate
d
pro
d
uct or serv
i
ce. Fee s
h
ar
i
n
gi
s recor
d
e
d
to
a
ll
ocate port
i
ons o
f
suc
h
revenue to ot
h
er
b
us
i
ness se
g
ments
i
nvo
l
ve
di
nse
lli
n
g
to or prov
idi
n
g
serv
i
ce t
o
customers. The most si
g
nificant revenues for which fee sharin
g
is recorded relate to customer derivatives and
b
ro
k
era
g
e serv
i
ces, w
hi
c
h
are recor
d
e
dby
PFG an
d
s
h
are
d
pr
i
mar
ily
w
i
t
h
Reta
il
an
d
Bus
i
ness Ban
ki
n
g
an
d
Commerc
i
a
l
Ban
ki
n
g
. Resu
l
ts o
f
operat
i
ons
f
or t
h
e
b
us
i
ness se
g
ments re
fl
ect t
h
ese
f
ee s
h
ar
i
n
g
a
ll
ocat
i
ons.
E
x
p
ense Allocation
Business se
g
ment results are determined based upon our mana
g
ement reportin
g
s
y
stem, which assi
g
n
s
b
a
l
ance s
h
eet an
di
ncome statement
i
tems to eac
h
o
f
t
h
e
b
us
i
ness se
g
ments. T
h
e process
i
s
d
es
ig
ne
d
aroun
d
our or
g
an
i
zat
i
ona
l
an
d
mana
g
ement structure an
d
, accor
di
n
gly
,t
h
e resu
l
ts
d
er
i
ve
d
are not necessar
ily
comparable with similar information published b
y
other financial institutions
.
The mana
g
ement accountin
g
process used to develop the business se
g
ment reportin
g
utilized variou
s
estimates and allocation methodolo
g
ies to measure the performance of the business se
g
ments. Expenses ar
e
a
ll
ocate
d
to
b
us
i
ness se
g
ments us
i
n
g
a two-p
h
ase approac
h
.T
h
e
fi
rst p
h
ase cons
i
sts o
f
measur
i
n
g
an
d
ass
ig
n
i
n
g
un
i
t costs (act
i
v
i
t
y
-
b
ase
d
costs) to act
i
v
i
t
i
es
i
nc
id
ent to pro
d
uct or
igi
nat
i
on an
d
serv
i
c
i
n
g
.T
h
es
e
activit
y
-based costs are then extended, based on volumes, with the resultin
g
amount allocated to busines
s
se
g
ments which own the related products. The second phase consists of the allocation of overhead costs to all
fi
ve
b
us
i
ness se
g
ments
f
rom Treasur
y
/Ot
h
er. Dur
i
n
g
2009, we
i
mp
l
emente
d
a
f
u
ll
-a
ll
ocat
i
on met
h
o
d
o
l
o
gy,
where all Treasur
y
/Other expenses, except those related to servicin
g
Franklin assets, reported “Si
g
nifican
t
Items” (excludin
g
the
g
oodwill impairment), and a small residual of other unallocated expenses, are allocate
d
to t
h
eot
h
er
fi
ve
b
us
i
ness se
g
ments. Pr
i
or to t
hi
s
i
mp
l
ementat
i
on, on
ly
certa
i
n expenses were a
ll
ocate
d
to t
he
fi
ve
b
us
i
ness se
g
ments. Bus
i
ness se
g
ment
fi
nanc
i
a
l
per
f
ormance
f
or 2009 re
fl
ect t
h
e
i
mp
l
ementat
i
on,
h
owever
,
fi
nanc
i
a
l
per
f
ormance
f
or 2008 was not restate
dd
ue to
i
mpract
i
ca
bili
t
y
. As a resu
l
to
f
t
hi
sc
h
an
g
e,
b
us
i
nes
s
se
g
ment performance comparisons for noninterest expense between 2009 and 2008 are affected
.
Treasur
y
/Ot
h
er
T
h
e Treasur
y
/Ot
h
er
f
unct
i
on
i
nc
l
u
d
es revenue an
d
expense re
l
ate
d
to assets,
li
a
bili
t
i
es, an
d
equ
i
t
y
no
t
di
rect
ly
ass
ig
ne
d
or a
ll
ocate
d
to one o
f
t
h
e
fi
ve
b
us
i
ness se
g
ments. Assets
i
nc
l
u
d
e
i
nvestment secur
i
t
i
es,
b
an
k
owned life insurance, and the loans and OREO properties acquired throu
g
h the 2009 first quarter Franklin
restructur
i
n
g
.T
h
e
fi
nanc
i
a
li
mpact assoc
i
ate
d
w
i
t
h
our FTP met
h
o
d
o
l
o
gy
,as
d
escr
ib
e
d
a
b
ove,
i
sa
l
so
i
nc
l
u
d
e
d.
Net
i
nterest
i
ncome
i
nc
l
u
d
es t
h
e
i
mpact o
f
a
d
m
i
n
i
ster
i
n
g
our
i
nvestment secur
i
t
i
es port
f
o
li
os an
d
t
h
ene
t
i
mpact o
fd
er
i
vat
i
ves use
d
to
h
e
dg
e
i
nterest rate sens
i
t
i
v
i
t
y
. Non
i
nterest
i
ncome
i
nc
l
u
d
es m
i
sce
ll
aneous
f
ee
106