Huntington National Bank 2015 Annual Report Download - page 48

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Total interest-bearing liabilities 163,784 139,321 156,029 0.37 0.34 0.43
Net interest income $ 1,982,852 $ 1,864,691 $ 1,731,948
Net interest rate spread 3.04 3.13 3.23
Impact of noninterest-bearing funds on
margin 0.11 0.10 0.13
Net interest margin 3.15% 3.23% 3.36%
(1) FTE yields are calculated assuming a 35% tax rate.
(2) For purposes of this analysis, nonaccrual loans are reflected in the average balances of loans.
(3) Yield/rates and amounts include the effects of hedge and risk management activities associated with the respective asset and
liability categories.
2015 vs. 2014
Fully-taxable equivalent net interest income for 2015 increased $118 million, or 6%, from 2014. This reflected the impact of
9% earning asset growth, partially offset by 7% interest-bearing liability growth and an 8 basis point decrease in the NIM to
3.15%.
Average earning assets increased $5.3 billion, or 9%, from the prior year, driven by:
• $1.8 billion, or 15%, increase in average securities, primarily reflecting additional investment in LCR Level 1
qualifying securities. The 2015 average balance also included $1.7 billion of direct purchase municipal instruments
originated by our Commercial segment, up from $1.0 billion in the year-ago period.
• $1.4 billion, or 8%, increase in average C&I loans and leases, primarily reflecting the $0.9 billion increase in asset
finance, including the $0.8 billion of equipment finance leases acquired in the Huntington Technology Finance
transaction at the end of the 2015 first quarter.
• $1.1 billion, or 14%, increase in average Automobile loans, as originations remained strong.
• $0.3 billion, or 6%, increase in average Residential mortgage loans.
Average noninterest-bearing demand deposits increased $2.4 billion, or 17%, while average total interest-bearing liabilities
increased $3.1 billion, or 7%, primarily reflecting:
• $1.5 billion, or 8%, increase in money market deposits, reflecting continued banker focus across all segments on
obtaining our customers’ full deposit relationship.
• $0.7 billion, or 11%, increase in average interest-bearing demand deposits. The increase reflected growth in both
consumer and commercial accounts.
• $0.7 billion, or 11%, increase in average total debt, reflecting a $2.1 billion, or 60%, increase in average long-term debt
partially offset by a $1.4 billion, or 51%, reduction in average short-term borrowings. The increase in average long-term
debt reflected the issuance of $3.1 billion of bank-level senior debt during 2015, including $0.9 billion during the 2015
fourth quarter, as well as $0.5 billion of debt assumed in the Huntington Technology Finance acquisition at the end of
the 2015 first quarter.
• $0.6 billion, or 29%, increase in brokered deposits and negotiated CDs, which were used to efficiently finance balance
sheet growth while continuing to manage the overall cost of funds.
Partially offset by:
• $0.7 billion, or 21%, decrease in average core certificates of deposit due to the strategic focus on changing the funding
sources to low- and no-cost demand deposits and money market deposits.
The primary items impacting the decrease in the NIM were:
• 6 basis point negative impact from the mix and yield on earning assets, primarily reflecting lower rates on loans and the
impact of an increase in total securities balances.
• 3 basis point negative impact from the mix and yield of total interest-bearing liabilities.
Partially offset by:
• 1 basis point increase in the benefit to the margin of noninterest-bearing funds.