Huntington National Bank 2013 Annual Report Download - page 41

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2013 vs. 2012
Fully-taxable equivalent net interest income for 2013 increased $1.0 million, or less than 1%, from 2012. This reflected the
impact of 4% loan growth, a 5 basis point decrease in the NIM to 3.36%, as well as a 7% reduction in other earnings assets, the
majority of which were loans held for sale. The primary items impacting the decrease in the NIM were:
x 19 basis point negative impact from the mix and yield of earning assets primarily reflecting a decrease in consumer loan
yields.
x 3 basis point decrease in the benefit to the margin of non-interest bearing funds, reflecting lower interest rates on total interest
bearing liabilities from the prior year.
Partially offset by:
x 14 basis point positive impact from the mix and yield of deposits reflecting the strategic focus on changing the funding
sources from higher rate time deposits to no-cost demand deposits and low-cost money market deposits.
x 3 basis point positive impact from noncore funding primarily reflecting lower debt costs.
Average earning assets increased $0.9 billion, or 2%, from the prior year, driven by:
x $1.2 billion, or 8%, increase in average C&I loans and leases. This reflected the continued growth within the middle market
healthcare vertical, equipment finance, and dealer floorplan.
x $1.2 billion, or 25%, increase in average on balance sheet automobile loans, as the growth in originations, while below
industry levels, remained strong and our investments in the Northeast and upper Midwest continued to grow as planned.
Partially offset by:
x $0.8 billion, or 13%, decrease in average CRE loans, as acceptable returns for new originations were balanced against
internal concentration limits and increased competition for projects sponsored by high quality developers.
x $0.6 billion, or 52%, decrease in loans held-for-sale reflecting the impact of automobile loan securitizations completed in
2012.
While there was minimal impact on the full-year average balance sheet, $1.9 billion of net investment securities were purchased
during the 2013 fourth quarter. Our investment securities portfolio is evaluated under established asset/liability management
objectives. Additionally, $0.6 billion of direct purchase municipal instruments were reclassified on December 31, 2013 from C&I
loans to available-for-sale securities.
Average noninterest bearing deposits increased $0.7 billion, or 6%, while average interest-bearing liabilities decreased $0.3
billion, or 1%, from 2012, primarily reflecting:
x $1.7 billion, or 27%, decrease in average core certificates of deposit due to the strategic focus on changing the funding
sources to no-cost demand deposits and low-cost money market deposits.
x $0.6 billion, or 47%, decrease in short-term borrowings due to a focused effort to reduce collateralized deposits.
Partially offset by:
x $1.8 billion, or 13%, increase in money market deposits reflecting the strategic focus on customer growth and increased share
of wallet among both consumer and commercial customers.
While there was minimal impact on the full-year average balance sheet, average subordinated notes and other long-term debt
reflect the issuance of $0.5 billion and $0.8 billion of long-term debt in the 2013 fourth quarter and the 2013 third quarter,
respectively.