Huntington National Bank 2015 Annual Report Download - page 40

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Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations
INTRODUCTION
We are a multi-state diversified regional bank holding company organized under Maryland law in 1966 and headquartered in
Columbus, Ohio. Through the Bank, we have 150 years of servicing the financial needs of our customers. Through our subsidiaries,
we provide full-service commercial and consumer banking services, mortgage banking services, automobile financing, equipment
leasing, investment management, trust services, brokerage services, insurance service programs, and other financial products and
services. Our 777 branches and private client group offices are located in Ohio, Michigan, Pennsylvania, Indiana, West Virginia, and
Kentucky. Selected financial services and other activities are also conducted in various other states. International banking services are
available through the headquarters office in Columbus, Ohio and a limited purpose office located in the Cayman Islands. Our foreign
banking activities, in total or with any individual country, are not significant.
This MD&A provides information we believe necessary for understanding our financial condition, changes in financial
condition, results of operations, and cash flows. The MD&A should be read in conjunction with the Consolidated Financial
Statements, Notes to Consolidated Financial Statements, and other information contained in this report. The forward-looking
statements in this section and other parts of this report involve assumptions, risks, uncertainties, and other factors, including
statements regarding our plans, objectives, goals, strategies, and financial performance. Our actual results could differ materially from
the results anticipated in these forward-looking statements as result of factors set forth under the caption "Forward-Looking
Statements" and those set forth in Item 1A.
Our discussion is divided into key segments:
• Executive Overview – Provides a summary of our current financial performance and business overview, including our
thoughts on the impact of the economy, legislative and regulatory initiatives, and recent industry developments. This section
also provides our outlook regarding our expectations for the next several quarters.
• Discussion of Results of Operations – Reviews financial performance from a consolidated Company perspective. It also
includes a Significant Items section that summarizes key issues helpful for understanding performance trends. Key
consolidated average balance sheet and income statement trends are also discussed in this section.
• Risk Management and Capital – Discusses credit, market, liquidity, operational, and compliance risks, including how these
are managed, as well as performance trends. It also includes a discussion of liquidity policies, how we obtain funding, and
related performance. In addition, there is a discussion of guarantees and/or commitments made for items such as standby
letters of credit and commitments to sell loans, and a discussion that reviews the adequacy of capital, including regulatory
capital requirements.
• Business Segment Discussion – Provides an overview of financial performance for each of our major business segments and
provides additional discussion of trends underlying consolidated financial performance.
• Results for the Fourth Quarter – Provides a discussion of results for the 2015 fourth quarter compared with the 2014 fourth
quarter.
• Additional Disclosures – Provides comments on important matters including forward-looking statements, critical accounting
policies and use of significant estimates, and recent accounting pronouncements and developments.
A reading of each section is important to understand fully the nature of our financial performance and prospects.
EXECUTIVE OVERVIEW
2015 Financial Performance Review
In 2015, we reported net income of $693 million, or a 10% increase from the prior year. Earnings per common share for the
year were $0.81, up 13% from the prior year. This resulted in a 1.01% return on average assets and a 12.4% return on average tangible
common equity. In addition, we grew our base of consumer and business customers as we increased 2015 average earning assets by
$5.3 billion, or 9%, over the prior year. Our strategic business investments and OCR sales approach continued to generate positive
results in 2015. (Also, see Significant Items Influencing Financial Performance Comparisons within the Discussion of Results of
Operations.)
Fully-taxable equivalent net interest income was $2.0 billion in 2015, an increase of $118 million, or 6%, compared with 2014.
This reflected the impact of 9% earning asset growth, 7% interest-bearing liability growth, and an 8 basis point decrease in the NIM to
3.15%. The earning asset growth reflected a $3.2 billion, or 7%, increase in average loans and leases and a $1.8 billion, or 15%,
increase in average securities. The increase in average loans and leases primarily reflected growth in C&I related to the acquisition of
Huntington Technology Finance and automobile loans, as originations remained strong. The increase in average securities primarily
reflected the additional investment in LCR Level 1 qualifying securities and the ongoing origination of direct purchase municipal
instruments. The increase in interest-bearing liabilities primarily reflected growth in money market deposits related to continued