10-Q
Table of Contents


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
QUARTERLY PERIOD ENDED September 30, 2015
Commission File Number 1-34073
Huntington Bancshares Incorporated
 
Maryland
31-0724920
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
41 South High Street, Columbus, Ohio 43287
Registrant’s telephone number (614) 480-8300
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days.     x  Yes    ¨  No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     x  Yes    ¨  No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
 
Large accelerated filer
x
Accelerated filer
¨
 
 
 
 
Non-accelerated filer
¨  (Do not check if a smaller reporting company)
Smaller reporting company
¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     ¨  Yes    x  No
There were 796,659,440 shares of Registrant’s common stock ($0.01 par value) outstanding on September 30, 2015
.


Table of Contents

HUNTINGTON BANCSHARES INCORPORATED
INDEX
 
 
 

2
Table of Contents

Glossary of Acronyms and Terms
The following listing provides a comprehensive reference of common acronyms and terms used throughout the document:
 
ABL
  
Asset Based Lending
 
 
ACL
  
Allowance for Credit Losses
 
 
AFCRE
  
Automobile Finance and Commercial Real Estate
 
 
AFS
  
Available-for-Sale
 
 
ALCO
  
Asset-Liability Management Committee
 
 
ALLL
  
Allowance for Loan and Lease Losses
 
 
ARM
  
Adjustable Rate Mortgage
 
 
ASC
  
Accounting Standards Codification
 
 
ASU
  
Accounting Standards Update
 
 
ATM
  
Automated Teller Machine
 
 
AULC
  
Allowance for Unfunded Loan Commitments
 
 
Basel III
  
Refers to the final rule issued by the FRB and OCC and published in the Federal Register on October 11, 2013
 
 
C&I
  
Commercial and Industrial
 
 
Camco Financial
  
Camco Financial Corp.
 
 
CCAR
  
Comprehensive Capital Analysis and Review
 
 
CDO
  
Collateralized Debt Obligations
 
 
CDs
  
Certificate of Deposit
 
 
CET1
  
Common equity tier 1 on a transitional Basel III basis
 
 
CFPB
  
Bureau of Consumer Financial Protection
 
 
CFTC
  
Commodity Futures Trading Commission
 
 
CMO
  
Collateralized Mortgage Obligations
 
 
CRE
  
Commercial Real Estate
 
 
Dodd-Frank Act
  
Dodd-Frank Wall Street Reform and Consumer Protection Act
 
 
DTA/DTL
  
Deferred Tax Asset/Deferred Tax Liability
 
 
EFT
  
Electronic Fund Transfer
 
 
EPS
  
Earnings Per Share
 
 
EVE
  
Economic Value of Equity
 
 
FASB
  
Financial Accounting Standards Board
 
 
Fannie Mae
  
(see FNMA)
 
 
FDIC
  
Federal Deposit Insurance Corporation
 
 
FDICIA
  
Federal Deposit Insurance Corporation Improvement Act of 1991
 
 
FHA
  
Federal Housing Administration
 
 
FHLB
  
Federal Home Loan Bank
 
 
FHLMC
  
Federal Home Loan Mortgage Corporation
 
 
FICO
  
Fair Isaac Corporation
 
 

3
Table of Contents

FNMA
  
Federal National Mortgage Association
 
 
FRB
  
Federal Reserve Bank
 
 
Freddie Mac
  
(see FHLMC)
 
 
FTE
  
Fully-Taxable Equivalent
 
 
FTP
  
Funds Transfer Pricing
 
 
GAAP
  
Generally Accepted Accounting Principles in the United States of America
 
 
GNMA
  
Government National Mortgage Association, or Ginnie Mae
 
 
HAMP
  
Home Affordable Modification Program
 
 
 
HARP
  
Home Affordable Refinance Program
 
 
 
HIP
  
Huntington Investment and Tax Savings Plan
 
 
 
HQLA
  
High Quality Liquid Asset
 
 
 
HTM
  
Held-to-Maturity
 
 
 
IRS
  
Internal Revenue Service
 
 
 
LCR
  
Liquidity Coverage Ratio
 
 
 
LIBOR
  
London Interbank Offered Rate
 
 
 
LGD
  
Loss-Given-Default
 
 
 
LIHTC
  
Low Income Housing Tax Credit
 
 
 
LTV
  
Loan to Value
 
 
 
Macquarie
  
Macquarie Equipment Finance, Inc. (U.S. operations)
 
 
 
MD&A
  
Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
 
 
MSA
  
Metropolitan Statistical Area
 
 
 
MSR
  
Mortgage Servicing Rights
 
 
 
NAICS
  
North American Industry Classification System
 
 
 
NALs
  
Nonaccrual Loans
 
 
 
NII
  
Net Interest Income
 
 
 
NIM
  
Net Interest Margin
 
 
 
NCO
  
Net Charge-off
 
 
 
NPA
  
Nonperforming Asset
 
 
 
N.R.
  
Not relevant. Denominator of calculation is a gain in the current period compared with a loss in the prior period, or vice-versa
 
 
 
OCC
  
Office of the Comptroller of the Currency
 
 
 
OCI
  
Other Comprehensive Income (Loss)
 
 
 
OCR
  
Optimal Customer Relationship
 
 
 
OLEM
  
Other Loans Especially Mentioned
 
 
 
OREO
  
Other Real Estate Owned
 
 
 
OTTI
  
Other-Than-Temporary Impairment
 
 
 
Plan
  
Huntington Bancshares Retirement Plan
 
 
 
Problem Loans
  
Includes nonaccrual loans and leases (Table 15), troubled debt restructured loans (Table 16), accruing loans and leases past due 90 days or more (aging analysis section of Footnote 3), and Criticized commercial loans (credit quality indicators section of Footnote 3).
 
 
 

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Table of Contents

RBHPCG
  
Regional Banking and The Huntington Private Client Group
 
 
 
RCSA
  
Risk and Control Self-Assessments
 
 
 
REIT
  
Real Estate Investment Trust
 
 
 
ROC
  
Risk Oversight Committee
 
 
 
RWA
  
Risk-Weighted Assets
 
 
 
SAD
  
Special Assets Division
 
 
 
SBA
  
Small Business Administration
 
 
 
SEC
  
Securities and Exchange Commission
 
 
 
SERP
  
Supplemental Executive Retirement Plan
 
 
 
SRIP
  
Supplemental Retirement Income Plan
 
 
 
SSFA
  
Simplified Supervisory Formula Approach
 
 
 
TCE
  
Tangible Common Equity
 
 
 
TDR
  
Troubled Debt Restructured Loan
 
 
 
TRUPS
 
Trust Preferred Securities
 
 
 
U.S. Treasury
  
U.S. Department of the Treasury
 
 
 
UCS
  
Uniform Classification System
 
 
 
UDAP
  
Unfair or Deceptive Acts or Practices
 
 
 
UPB
  
Unpaid Principal Balance
 
 
 
USDA
  
U.S. Department of Agriculture
 
 
 
VIE
  
Variable Interest Entity
 
 
 
XBRL
  
eXtensible Business Reporting Language
 
 
 





5
Table of Contents

PART I. FINANCIAL INFORMATION
When we refer to “we”, “our”, and “us” in this report, we mean Huntington Bancshares Incorporated and our consolidated subsidiaries, unless the context indicates that we refer only to the parent company, Huntington Bancshares Incorporated. When we refer to the “Bank” in this report, we mean our only bank subsidiary, The Huntington National Bank, and its subsidiaries.
 
Item 2: 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 149 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 756 branches 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 and another limited purpose office located in Hong Kong. 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 included in our 2014 Form 10-K should be read in conjunction with this MD&A as this discussion provides only material updates to the 2014 Form 10-K. This MD&A should also be read in conjunction with the Unaudited Condensed Consolidated Financial Statements, Notes to Unaudited Condensed Consolidated Financial Statements, and other information contained in this report.
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 2015 fourth quarter.
•
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.
•
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.


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EXECUTIVE OVERVIEW
Summary of 2015 Third Quarter Results Compared to 2014 Third Quarter
For the quarter, we reported net income of $152.6 million, or $0.18 per common share, compared with $155.0 million, or $0.18 per common share, in the year-ago quarter (see Table 1).
Fully-taxable equivalent net interest income was $503.6 million, up $29.8 million, or 6%. The results reflected the benefit from a $4.6 billion, or 8%, increase in average earning assets, partially offset by a 4 basis point reduction in the net interest margin to 3.16%. Average earning asset growth included a $2.9 billion, or 6%, increase in average loans and leases and a $1.6 billion, or 13%, increase in average securities. The net interest margin contraction reflected a 2 basis point decrease related to the mix and yield of earning assets and a 6 basis point increase in funding costs, partially offset by a 4 basis point increase in the benefit from noninterest-bearing funds.
The provision for credit losses was $22.5 million, down $2.0 million, or 8%. Net charge-offs decreased $13.9 million, or 46%, to $16.2 million. NCOs represented an annualized 0.13% of average loans and leases in the current quarter, down from 0.26%. Current quarter results were positively impacted by several recoveries in the C&I and CRE portfolios, as a result of successful workout strategies. We continue to be pleased with the net charge-off performance across the entire portfolio, as consumer charge-offs remain within our expected range. Overall consumer credit metrics continue to show an improving trend while the commercial portfolios continue to experience some quarter-to-quarter volatility based on the absolute low level of problem loans.
Noninterest income was $253.1 million, up $5.8 million, or 2%. This reflected an increase in other income of $10.0 million, or 33%, primarily due to equipment operating lease income earned by Huntington Technology Finance. In addition, service charges on deposit accounts increased $6.0 million, or 9%, reflecting the benefit of continued new customer acquisition. Electronic banking increased $3.6 million, or 13%, due to higher card related income and underlying customer growth. These increases were partially offset by a decrease in mortgage banking income of $6.1 million, or 24%, including a decrease from net MSR hedging-related activities, and a decrease in trust services of $3.1 million, or 11%.
Noninterest expense was $526.5 million, up $46.2 million, or 10%. This reflected an increase in other expense of $42.3 million, or 107%, primarily due to the $38.2 million increase to litigation reserves, as well as $5.5 million related to Huntington Technology Finance operating lease expense. In addition, personnel costs increased $10.9 million, or 4%, reflecting a $24.2 million increase in salaries related to both annual merit increases and a 4% increase in the number of average full-time equivalent employees, partially offset by the $12.5 million change in Significant Items. Also, outside data processing increased $5.5 million, or 10%, primarily related to technology investments. These increases were partially offset by a decrease in amortization expense of $5.9 million, or 60%, reflecting the full amortization of the core deposit intangible from the Sky Financial acquisition and a decrease in net occupancy costs of $5.3 million, or 16%, reflecting Significant Items in the year ago quarter related to franchise repositioning actions.
The tangible common equity to tangible assets ratio was 7.89% at September 30, 2015, down 46 basis points. On a Basel III basis, the CET1 risk-based capital ratio was 9.72% at September 30, 2015, and the regulatory tier 1 risk-based capital ratio was 10.49%. All capital ratios were impacted by the repurchase of 24.2 million common shares over the last four quarters. On a Basel I basis, the tier 1 common risk-based capital ratio was 10.31% at September 30, 2014, and the regulatory tier 1 risk-based capital ratio was 11.61%.
Business Overview
General
Our general business objectives are: (1) grow net interest income and fee income, (2) deliver positive operating leverage, (3) increase primary relationships across all business segments, (4) continue to strengthen risk management and reduce volatility and (5) maintain strong capital and liquidity positions.
Our fundamentals remain solid as a result of our strategic investments, innovative products, and improved sales management and productivity. The quarter was in line with our expectations. We remained disciplined in lending, and we continued to experience strong average core deposit growth in the quarter. Our focus on growing noninterest bearing checking accounts from both consumers and businesses and cross-selling other products is working.
We drove year-over-year revenue growth through ongoing focus on our net interest margin and notable loan growth primarily within equipment finance and auto finance. We have also carefully managed expenses within the current revenue environment, while materially investing in the business.


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Economy
Since the economic recovery began in 2008, economic activity in the key footprint states of Ohio, Michigan, and Indiana, which account for approximately 90% of our business as measured by deposits, has grown faster than the national average. This outperformance has persisted through the past three months and, based on the Philadelphia Federal Reserve Bank's state leading indices, is expected to continue for the next six months.
Unemployment rates in most of our footprint states continue to trend positively, and most are in line with or better than the national average. The one outlier is the state of West Virginia, which continues to struggle with the impact of lower coal prices. The current and year-ago unemployment rates for our ten largest deposit markets, which account for more than 80% of our total deposit franchise, continue to trend favorably.
Legislative and Regulatory
Regulatory reforms continue to be adopted, including the 2015 first quarter implementation of the Basel III regulatory capital requirements.
Basel III Regulatory Capital Requirements—In 2013, the Federal Reserve voted to adopt final capital rules implementing Basel III requirements for U.S. Banking organizations, which were effective for us beginning January 1, 2015. The final rules establish an integrated regulatory capital framework and implement in the United States the Basel III regulatory capital reforms from the Basel Committee on Banking Supervision and certain changes required by the Dodd-Frank Act. Consistent with the international Basel framework, the final rule includes a new regulatory minimum ratio of common equity tier 1 capital to risk-weighted assets. The rule also raises the minimum ratio of tier 1 capital to risk-weighted assets and includes a minimum leverage ratio of 4%. The Basel III capital rules establish two methodologies for calculating risk-weighted assets, the advanced and standardized approaches. We are subject to the standardized approach for calculating risk-weighted assets. The implementation of the Basel III capital requirements is transitional and phases-in through the end of 2018.
Conforming Covered Activities to Implement the Volcker Rule—On December 10, 2013, the Federal Reserve, the OCC, the FDIC, the CFTC and the SEC issued final rules to implement the Volcker Rule contained in section 619 of the Dodd-Frank Act, and established July 21, 2015, as the end of the conformance period. The Volcker Rule prohibits an insured depository institution and any company that controls an insured depository institution (such as a bank holding company), and any of their subsidiaries and affiliates (referred to as “banking entities”) from: (i) engaging in “proprietary trading” and (ii) investing in or sponsoring certain types of funds (“covered funds”) subject to certain limited exceptions. These prohibitions impact the ability of U.S. banking entities to provide investment management products and services that are competitive with nonbanking firms generally and with non-U.S. banking organizations in overseas markets. The rule also effectively prohibits short-term trading strategies by any U.S. banking entity if those strategies involve instruments other than those specifically permitted for trading. Because the Company has over $50 billion in assets, it is subject to Volcker enhanced compliance requirements. As such the company has completed Volcker Rule due diligence, built its compliance program, and implemented training and on-going reporting requirements. Huntington believes it has achieved required conformance and will deliver the required attestation on or before March 31, 2016.
Expectations – 2015

We remain committed to delivering positive operating leverage for the full year. We anticipate that modest performance improvement within the fourth quarter will contribute to positive operating leverage. We will remain highly disciplined with expense management to achieve our goal.
The commitment to positive operating leverage for full-year 2015, excluding Significant Items and net MSR activity, is both inclusive and exclusive of the impact of Huntington Technology Finance. We continue to expect noninterest expense growth of 2% to 4% for the year, excluding Significant Items and the recurring expense related to Huntington Technology Finance. We expect 2015 fourth quarter noninterest expense, excluding Significant Items, will remain consistent with the 2015 second and third quarters' adjusted noninterest expense levels.
Overall, asset quality metrics are expected to remain near current levels across the portfolio. Moderate quarterly volatility is expected given the absolute low level of problem assets and credit costs. We anticipate NCOs will remain within or below our long-term normalized range of 35 to 55 basis points.
The effective tax rate for the remainder of 2015 is expected to be in the range of 24% to 27%.


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DISCUSSION OF RESULTS OF OPERATIONS
This section provides a review of financial performance from a consolidated perspective. It also includes a “Significant Items” section that summarizes key issues important for a complete understanding of performance trends. Key Unaudited Condensed Consolidated Balance Sheet and Unaudited Condensed Statement of Income trends are discussed. All earnings per share data are reported on a diluted basis. For additional insight on financial performance, please read this section in conjunction with the “Business Segment Discussion.”
 

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Table 1 - Selected Quarterly Income Statement Data (1)
(dollar amounts in thousands, except per share amounts)

 
 
 
 
 
 
 
 
 
Three months ended
 
September 30,

 
June 30,
 
March 31,
 
December 31,
 
September 30,
 
2015
 
2015
 
2015
 
2014
 
2014
Interest income
$
538,477

 
$
529,795

 
$
502,096

 
$
507,625

 
$
501,060

Interest expense
43,022

 
39,109

 
34,411

 
34,373

 
34,725

Net interest income
495,455

 
490,686

 
467,685

 
473,252

 
466,335

Provision for credit losses
22,476

 
20,419

 
20,591

 
2,494

 
24,480

Net interest income after provision for credit losses
472,979

 
470,267

 
447,094

 
470,758

 
441,855

Service charges on deposit accounts
75,157

 
70,118

 
62,220

 
67,408

 
69,118

Trust services
24,972

 
26,550

 
29,039

 
28,781

 
28,045

Electronic banking
30,832

 
30,259

 
27,398

 
27,993

 
27,275

Mortgage banking income
18,956

 
38,518

 
22,961

 
14,030

 
25,051

Brokerage income
15,059

 
15,184

 
15,500

 
16,050

 
17,155

Insurance income
16,204

 
17,637

 
15,895

 
16,252

 
16,729

Bank owned life insurance income
12,719

 
13,215

 
13,025

 
14,988

 
14,888

Capital markets fees
12,741

 
13,192

 
13,905

 
13,791

 
10,246

Gain on sale of loans
5,873

 
12,453

 
4,589

 
5,408

 
8,199

Securities gains (losses)
188

 
82

 
—

 
(104
)
 
198

Other income
40,418

 
44,565

 
27,091

 
28,681

 
30,445

Total noninterest income
253,119

 
281,773

 
231,623

 
233,278

 
247,349

Personnel costs
286,270

 
282,135

 
264,916

 
263,289

 
275,409

Outside data processing and other services
58,535

 
58,508

 
50,535

 
53,685

 
53,073

Net occupancy
29,061

 
28,861

 
31,020

 
31,565

 
34,405

Equipment
31,303

 
31,694

 
30,249

 
31,981

 
30,183

Professional services
11,961

 
12,593

 
12,727

 
15,665

 
13,763

Marketing
12,179

 
15,024

 
12,975

 
12,466

 
12,576

Deposit and other insurance expense
11,550

 
11,787

 
10,167

 
13,099

 
11,628

Amortization of intangibles
3,913

 
9,960

 
10,206

 
10,653

 
9,813

Other expense
81,736

 
41,215

 
36,062

 
50,868

 
39,468

Total noninterest expense
526,508

 
491,777

 
458,857

 
483,271

 
480,318

Income before income taxes
199,590

 
260,263

 
219,860

 
220,765

 
208,886

Provision for income taxes
47,002

 
64,057

 
54,006

 
57,151

 
53,870

Net income
152,588

 
196,206

 
165,854

 
163,614

 
155,016

Dividends on preferred shares
7,968

 
7,968

 
7,965

 
7,963

 
7,964

Net income applicable to common shares
$
144,620

 
$
188,238

 
$
157,889

 
$
155,651

 
$
147,052

Average common shares—basic
800,883

 
806,891

 
809,778

 
811,967

 
816,497

Average common shares—diluted
814,326

 
820,238

 
823,809

 
825,338

 
829,623

Net income per common share—basic
$
0.18

 
$
0.23

 
$
0.19

 
$
0.19

 
$
0.18

Net income per common share—diluted
0.18

 
0.23

 
0.19

 
0.19

 
0.18

Cash dividends declared per common share
0.06

 
0.06

 
0.06

 
0.06

 
0.05

Return on average total assets
0.87
%
 
1.16
%
 
1.02
%
 
1.00
%
 
0.97
%
Return on average common shareholders’ equity
9.3

 
12.3

 
10.6

 
10.3

 
9.9

Return on average tangible common shareholders’ equity (2)
10.7

 
14.4

 
12.2

 
11.9

 
11.4

Net interest margin (3)
3.16

 
3.20

 
3.15

 
3.18

 
3.20

Efficiency ratio (4)
69.1

 
61.7

 
63.5

 
66.2

 
65.3

Effective tax rate
23.5

 
24.6

 
24.6

 
25.9

 
25.8

Revenue—FTE
 
 
 
 
 
 
 
 
 
Net interest income
$
495,455

 
$
490,686

 
$
467,685

 
$
473,252

 
$
466,335

FTE adjustment
8,168

 
7,962

 
7,560

 
7,522

 
7,506


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Net interest income (3)
503,623

 
498,648

 
475,245

 
480,774

 
473,841

Noninterest income
253,119

 
281,773

 
231,623

 
233,278

 
247,349

Total revenue (3)
$
756,742

 
$
780,421

 
$
706,868

 
$
714,052

 
$
721,190

(1)
Comparisons for presented periods are impacted by a number of factors. Refer to the “Significant Items” for additional discussion regarding these key factors.
(2)
Net income excluding expense for amortization of intangibles for the period divided by average tangible common shareholders’ equity. Average tangible common shareholders’ equity equals average total common shareholders’ equity less average intangible assets and goodwill. Expense for amortization of intangibles and average intangible assets are net of deferred tax liability, and calculated assuming a 35% tax rate.
(3)
On a fully-taxable equivalent (FTE) basis assuming a 35% tax rate.
(4)
Noninterest expense less amortization of intangibles and goodwill impairment divided by the sum of FTE net interest income and noninterest income excluding securities gains.

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Table 2 - Selected Year to Date Income Statement Data (1)
(dollar amounts in thousands, except per share amounts)
 
 
 
 
 
 
 
 
Nine Months Ended September 30,
 
Change
 
2015
 
2014
 
Amount
 
Percent
Interest income
$
1,570,368

 
$
1,468,837

 
$
101,531

 
7
 %
Interest expense
116,542

 
104,948

 
11,594

 
11

Net interest income
1,453,826

 
1,363,889

 
89,937

 
7

Provision for credit losses
63,486

 
78,495

 
(15,009
)
 
(19
)
Net interest income after provision for credit losses
1,390,340

 
1,285,394

 
104,946

 
8

Service charges on deposit accounts
207,495

 
206,333

 
1,162

 
1

Trust services
80,561

 
87,191

 
(6,630
)
 
(8
)
Electronic banking
88,489

 
77,408

 
11,081

 
14

Mortgage banking income
80,435

 
70,857

 
9,578

 
14

Brokerage income
45,743

 
52,227

 
(6,484
)
 
(12
)
Insurance income
49,736

 
49,221

 
515

 
1

Bank owned life insurance income
38,959

 
42,060

 
(3,101
)
 
(7
)
Capital markets fees
39,838

 
29,940

 
9,898

 
33

Gain on sale of loans
22,915

 
15,683

 
7,232

 
46

Securities gains (losses)
270

 
17,658

 
(17,388
)
 
(98
)
Other income
112,074

 
97,323

 
14,751

 
15

Total noninterest income
766,515

 
745,901

 
20,614

 
3

Personnel costs
833,321

 
785,486

 
47,835

 
6

Outside data processing and other services
167,578

 
158,901

 
8,677

 
5

Net occupancy
88,942

 
96,511

 
(7,569
)
 
(8
)
Equipment
93,246

 
87,682

 
5,564

 
6

Professional services
37,281

 
43,890

 
(6,609
)
 
(15
)
Marketing
40,178

 
38,094

 
2,084

 
5

Deposit and other insurance expense
33,504

 
35,945

 
(2,441
)
 
(7
)
Amortization of intangibles
24,079

 
28,624

 
(4,545
)
 
(16
)
Other expense
159,013

 
123,942

 
35,071

 
28

Total noninterest expense
1,477,142

 
1,399,075

 
78,067

 
6

Income before income taxes
679,713

 
632,220

 
47,493

 
8

Provision for income taxes
165,065

 
163,442

 
1,623

 
1

Net income
514,648

 
468,778

 
45,870

 
10

Dividends declared on preferred shares
23,901

 
23,891

 
10

 
—

Net income applicable to common shares
$
490,747

 
$
444,887

 
$
45,860

 
10
 %
Average common shares—basic
805,851

 
820,884

 
(15,033
)
 
(2
)%
Average common shares—diluted
819,458

 
833,927

 
(14,469
)
 
(2
)
Per common share
 
 
 
 
 
 
 
Net income per common share—basic
$
0.61

 
$
0.54

 
$
0.07

 
13
 %
Net income per common share—diluted
0.60

 
0.53

 
0.07

 
13

Cash dividends declared
0.18

 
0.15

 
0.03

 
20

Revenue—FTE
 
 
 
 
 
 
 
Net interest income
$
1,453,826

 
$
1,363,889

 
$
89,937

 
7
 %
FTE adjustment
23,690

 
20,028

 
3,662

 
18

Net interest income (2)
1,477,516

 
1,383,917

 
93,599

 
7

Noninterest income
766,515

 
745,901

 
20,614

 
3

Total revenue (2)
$
2,244,031

 
$
2,129,818

 
$
114,213

 
5
 %
 
(1)
Comparisons for presented periods are impacted by a number of factors. Refer to the “Significant Items” for additional discussion regarding these key factors.
(2)
On a fully taxable equivalent (FTE) basis assuming a 35% tax rate.


12
Table of Contents

Significant Items
Definition of Significant Items
From time-to-time, revenue, expenses, or taxes are impacted by items judged by us to be outside of ordinary banking activities and / or by items that, while they may be associated with ordinary banking activities, are so unusually large that their outsized impact is believed by us at that time to be infrequent or short-term in nature. We refer to such items as Significant Items. Most often, these Significant Items result from factors originating outside the Company; e.g., regulatory actions / assessments, windfall gains, changes in accounting principles, one-time tax assessments / refunds, litigation actions, etc. In other cases, they may result from our decisions associated with significant corporate actions outside of the ordinary course of business; e.g., merger / restructuring charges, recapitalization actions, goodwill impairment, etc.
Even though certain revenue and expense items are naturally subject to more volatility than others due to changes in market and economic environment conditions, as a general rule volatility alone does not define a Significant Item. For example, changes in the provision for credit losses, gains / losses from investment activities, asset valuation writedowns, etc., reflect ordinary banking activities and are, therefore, typically excluded from consideration as a Significant Item.
We believe the disclosure of Significant Items provides a better understanding of our performance and trends to ascertain which of such items, if any, to include or exclude from an analysis of our performance; i.e., within the context of determining how that performance differed from expectations, as well as how, if at all, to adjust estimates of future performance accordingly. To this end, we adopted a practice of listing Significant Items in our external disclosure documents; e.g., earnings press releases, investor presentations, Forms 10-Q and 10-K.
Significant Items for any particular period are not intended to be a complete list of items that may materially impact current or future period performance.
Significant Items Influencing Financial Performance Comparisons
Earnings comparisons were impacted by the Significant Items summarized below:

1.
Franchise Repositioning Related Expense. During the 2014 third quarter, $19.3 million of franchise repositioning related expense was recorded for the consolidation of 26 branches and organizational actions. This resulted in a negative impact of $0.02 per common share.

2.
Merger and Acquisition. Significant events relating to mergers and acquisitions, and the impacts of those events on our reported results, were as follows:

•
During the 2015 third quarter, $4.8 million of noninterest expense was recorded related to the acquisition of Huntington Technology Finance and the pending transition of the Huntington Funds and the sale of Huntington Asset Advisors, which is expected to be completed during the 2015 fourth quarter.

•
As previously disclosed, the 2015 second quarter and 2015 first quarter included $1.5 million and $3.4 million, respectively, of Huntington Technology Finance merger-related noninterest expense that was not originally reported as a Significant Item for the quarter. As a result of 2015 third quarter activity, merger related expense has been identified as a Significant Item for the 2015 full year and, as such, these amounts are now included as Significant Items.

•
During the 2014 third quarter, $3.5 million of noninterest expense was recorded related to the acquisition of 24 Bank of America branches and Camco Financial.

•
During the 2014 second quarter, $0.8 million of noninterest expense was recorded related to the acquisition of 24 Bank of America branches.

•
During the 2014 first quarter, $12.6 million of noninterest expense and $0.8 million of noninterest income was recorded related to the acquisition of Camco Financial. This net $11.8 million resulted in a negative impact of $0.01 per common share.

3.
Litigation Reserve. $38.2 million and $9.0 million of net additions to litigation reserves were recorded as other noninterest expense during the 2015 third quarter and 2014 first quarter, respectively. This resulted in a negative impact of $0.03 and $0.01 per common share during the 2015 third quarter and 2014 first quarter, respectively.


13
Table of Contents

The following table reflects the earnings impact of the above-mentioned Significant Items for periods affected by this Results of Operations discussion:
 
Table 3 - Significant Items Influencing Earnings Performance Comparison
(dollar amounts in thousands, except per share amounts)
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
September 30, 2015
 
June 30, 2015
 
September 30, 2014
 
After-tax
 
EPS (2)(3)
 
After-tax
 
EPS (2)(3)
 
After-tax
 
EPS (2)(3)
Net income
$
152,588

 
 
 
$
196,206

 
 
 
$
155,016

 
 
Earnings per share, after-tax
 
 
$
0.18

 
 
 
$
0.23

 
 
 
$
0.18

Significant Items—favorable (unfavorable) impact:
Earnings (1)
 
EPS (2)(3)
 
Earnings (1)
 
EPS (2)(3)
 
Earnings (1)
 
EPS (2)(3)
Net additions to litigation reserves
$
(38,186
)
 
$
(0.03
)
 
$
—

 
$
—

 
$
—

 
$
—

Mergers and acquisitions, net
(4,839
)
 
—

 
(1,501
)
 
—

 
(3,490
)
 
—

Franchise repositioning related expense
—

 
—

 
—

 
—

 
(19,333
)
 
(0.02
)
 
 
Nine Months Ended
 
September 30, 2015
 
September 30, 2014
 
After-tax
 
EPS (2)(3)
 
After-tax
 
EPS (2)(3)
Net income
$
514,648

 
 
 
$
468,778

 
 
Earnings per share, after-tax
 
 
$
0.60

 
 
 
$
0.53

Significant Items—favorable (unfavorable) impact:
Earnings (1)
 
EPS (2)(3)
 
Earnings (1)
 
EPS (2)(3)
Net additions to litigation reserves
$
(38,186
)
 
$
(0.03
)
 
$
(9,000
)
 
$
(0.01
)
Merger and acquisition, net
(9,691
)
 
(0.01
)
 
(16,088
)
 
(0.01
)
Franchise repositioning related expense
—

 
—

 
(19,333
)
 
(0.02
)
 
(1)
Pretax unless otherwise noted.
(2)
Based on average outstanding diluted common shares.
(3)
After-tax.

Net Interest Income / Average Balance Sheet
The following tables detail the change in our average balance sheet and the net interest margin:
 
Table 4 - Consolidated Quarterly Average Balance Sheets
(dollar amounts in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average Balances
 
 
 
 
 
Three Months Ended
 
Change
 
September 30,
 
June 30,
 
March 31,
 
December 31,
 
September 30,
 
3Q15 vs. 3Q14
 
2015
 
2015
 
2015
 
2014
 
2014
 
Amount
 
Percent
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing deposits in banks
$
89

 
$
89

 
$
94

 
$
85

 
$
82

 
$
7

 
9
 %
Loans held for sale
464

 
1,272

 
381

 
374

 
351

 
113

 
32

Securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
Available-for-sale and other securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
Taxable
8,310

 
7,916

 
7,664

 
7,291

 
6,935

 
1,375

 
20

Tax-exempt
2,136

 
2,028

 
1,874

 
1,684

 
1,620

 
516

 
32

Total available-for-sale and other securities
10,446

 
9,944

 
9,538

 
8,975

 
8,555

 
1,891

 
22

Trading account securities
52

 
41

 
53

 
49

 
50

 
2

 
4

Held-to-maturity securities—taxable
3,226

 
3,324

 
3,347

 
3,435

 
3,556

 
(330
)
 
(9
)
Total securities
13,724

 
13,309

 
12,938

 
12,459

 
12,161

 
1,563

 
13

Loans and leases: (1)
 
 
 
 
 
 
 
 
 
 
 
 
 

14
Table of Contents

Commercial:
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
19,802

 
19,819

 
19,116

 
18,880

 
18,581

 
1,221

 
7

Commercial real estate:
 
 
 
 
 
 
 
 
 
 
 
 
 
Construction
1,101

 
970

 
887

 
822

 
775

 
326

 
42

Commercial
4,193

 
4,214

 
4,275

 
4,262

 
4,188

 
5

 
—

Commercial real estate
5,294

 
5,184

 
5,162

 
5,084

 
4,963

 
331

 
7

Total commercial
25,096

 
25,003

 
24,278

 
23,964

 
23,544

 
1,552

 
7

Consumer:
 
 
 
 
 
 
 
 
 
 
 
 
 
Automobile
8,879

 
8,083

 
8,783

 
8,512

 
8,012

 
867

 
11

Home equity
8,526

 
8,503

 
8,484

 
8,452

 
8,412

 
114

 
1

Residential mortgage
6,048

 
5,859

 
5,810

 
5,751

 
5,747

 
301

 
5

Other consumer
497

 
451

 
425

 
413

 
398

 
99

 
25

Total consumer
23,950

 
22,896

 
23,502

 
23,128

 
22,569

 
1,381

 
6

Total loans and leases
49,046

 
47,899

 
47,780

 
47,092

 
46,113

 
2,933

 
6

Allowance for loan and lease losses
(609
)
 
(608
)
 
(612
)
 
(631
)
 
(633
)
 
24

 
(4
)
Net loans and leases
48,437

 
47,291

 
47,168

 
46,461

 
45,480

 
2,957

 
7

Total earning assets
63,323

 
62,569

 
61,193

 
60,010

 
58,707

 
4,616

 
8

Cash and due from banks
1,555

 
926

 
935

 
929

 
887

 
668

 
75

Intangible assets
739

 
745

 
593

 
602

 
583

 
156

 
27

All other assets
4,296

 
4,251

 
4,142

 
4,022

 
3,929

 
367

 
9

Total assets
$
69,304

 
$
67,883

 
$
66,251

 
$
64,932

 
$
63,473

 
$
5,831

 
9
 %
Liabilities and Shareholders’ Equity:
 
 
 
 
 
 
 
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
 
 
 
 
 
 
Demand deposits—noninterest-bearing
$
17,017

 
$
15,893

 
$
15,253

 
$
15,179

 
$
14,090

 
$
2,927

 
21
 %
Demand deposits—interest-bearing
6,604

 
6,584

 
6,173

 
5,948

 
5,913

 
691

 
12

Total demand deposits
23,621

 
22,477

 
21,426

 
21,127

 
20,003

 
3,618

 
18

Money market deposits
19,512

 
18,803

 
19,368

 
18,401

 
17,929

 
1,583

 
9

Savings and other domestic deposits
5,224

 
5,273

 
5,169

 
5,052

 
5,020

 
204

 
4

Core certificates of deposit
2,534

 
2,639

 
2,814

 
3,058

 
3,167

 
(633
)
 
(20
)
Total core deposits
50,891

 
49,192

 
48,777

 
47,638

 
46,119

 
4,772

 
10

Other domestic time deposits of $250,000 or more
217

 
184

 
195

 
201

 
223

 
(6
)
 
(3
)
Brokered deposits and negotiable CDs
2,779

 
2,701

 
2,600

 
2,434

 
2,262

 
517

 
23

Deposits in foreign offices
492

 
562

 
557

 
479

 
374

 
118

 
32

Total deposits
54,379

 
52,639

 
52,129

 
50,752

 
48,978

 
5,401

 
11

Short-term borrowings
844

 
2,153

 
1,882

 
2,683

 
3,193

 
(2,349
)
 
(74
)
Long-term debt
6,066

 
5,139

 
4,374

 
3,956

 
3,967

 
2,099

 
53

Total interest-bearing liabilities
44,272

 
44,038

 
43,132

 
42,212

 
42,048

 
2,224

 
5

All other liabilities
1,442

 
1,435

 
1,450

 
1,167

 
1,043

 
399

 
38

Shareholders’ equity
6,573

 
6,517

 
6,416

 
6,374

 
6,292

 
281

 
4

Total liabilities and shareholders’ equity
$
69,304

 
$
67,883

 
$
66,251

 
$
64,932

 
$
63,473

 
$
5,831

 
9
 %
(1)
For purposes of this analysis, NALs are reflected in the average balances of loans.


15
Table of Contents

Table 5 - Consolidated Quarterly Net Interest Margin Analysis
 
 
 
 
 
 
 
 
 
 
 
Average Yield Rates (2)
 
Three Months Ended
 
September 30,
 
June 30,
 
March 31,
 
December 31,
 
September 30,
Fully-taxable equivalent basis (1)
2015
 
2015
 
2015
 
2014
 
2014
Assets:
 
 
 
 
 
 
 
 
 
Interest-bearing deposits in banks
0.06
%
 
0.08
%
 
0.18
%
 
0.23
%
 
0.19
%
Loans held for sale
3.81

 
3.32

 
3.69

 
3.82

 
3.98

Securities:
 
 
 
 
 
 
 
 
 
Available-for-sale and other securities:
 
 
 
 
 
 
 
 
 
Taxable
2.51

 
2.60

 
2.50

 
2.61

 
2.48

Tax-exempt
3.12

 
3.13

 
3.05

 
3.26

 
3.02

Total available-for-sale and other securities
2.63

 
2.71

 
2.61

 
2.73

 
2.59

Trading account securities
0.97

 
1.00

 
1.17

 
1.05

 
0.85

Held-to-maturity securities—taxable
2.46

 
2.50

 
2.47

 
2.45

 
2.45

Total securities
2.59

 
2.65

 
2.57

 
2.65

 
2.54

Loans and leases: (3)
 
 
 
 
 
 
 
 
 
Commercial:
 
 
 
 
 
 
 
 
 
Commercial and industrial
3.58

 
3.61

 
3.33

 
3.35

 
3.45

Commercial real estate:
 
 
 
 
 
 
 
 
 
Construction
3.52

 
3.60

 
3.81

 
4.30

 
4.38

Commercial
3.43

 
3.41

 
3.57

 
3.47

 
3.60

Commercial real estate
3.45

 
3.45

 
3.62

 
3.60

 
3.72

Total commercial
3.55

 
3.58

 
3.39

 
3.40

 
3.51

Consumer:
 
 
 
 
 
 
 
 
 
Automobile
3.23

 
3.20

 
3.24

 
3.33

 
3.41

Home equity
4.01

 
3.97

 
4.03

 
4.05

 
4.07

Residential mortgage
3.71

 
3.72

 
3.75

 
3.84

 
3.78

Other consumer
8.88

 
8.45

 
8.20

 
7.68

 
7.31

Total consumer
3.75

 
3.73

 
3.74

 
3.80

 
3.82

Total loans and leases
3.65

 
3.65

 
3.56

 
3.60

 
3.66

Total earning assets
3.42

 
3.45

 
3.38

 
3.41

 
3.44

Liabilities:
 
 
 
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
 
 
Demand deposits—noninterest-bearing
—

 
—

 
—

 
—

 
—

Demand deposits—interest-bearing
0.07

 
0.06

 
0.05

 
0.04

 
0.04

Total demand deposits
0.02

 
0.02

 
0.01

 
0.01

 
0.01

Money market deposits
0.23

 
0.22

 
0.21

 
0.22

 
0.23

Savings and other domestic deposits
0.14

 
0.14

 
0.15

 
0.16

 
0.16

Core certificates of deposit
0.80

 
0.78

 
0.76

 
0.75

 
0.74

Total core deposits
0.23

 
0.22

 
0.22

 
0.23

 
0.23

Other domestic time deposits of $250,000 or more
0.43

 
0.44

 
0.42

 
0.43

 
0.44

Brokered deposits and negotiable CDs
0.17

 
0.17

 
0.17

 
0.18

 
0.20

Deposits in foreign offices
0.13

 
0.13

 
0.13

 
0.13

 
0.13

Total deposits
0.22

 
0.22

 
0.22

 
0.23

 
0.23

Short-term borrowings
0.09

 
0.14

 
0.12

 
0.12

 
0.11

Long-term debt
1.44

 
1.44

 
1.31

 
1.35

 
1.35

Total interest-bearing liabilities
0.39

 
0.36

 
0.32

 
0.32

 
0.33

Net interest rate spread
3.03

 
3.09

 
3.06

 
3.09

 
3.11

Impact of noninterest-bearing funds on margin
0.13

 
0.11

 
0.09

 
0.09

 
0.09

Net interest margin
3.16
%
 
3.20
%
 
3.15
%
 
3.18
%
 
3.20
%
 
(1)
FTE yields are calculated assuming a 35% tax rate.

16
Table of Contents

(2)
Loan, lease, and deposit average rates include impact of applicable derivatives, non-deferrable fees, and amortized fees.
(3)
For purposes of this analysis, NALs are reflected in the average balances of loans.

2015 Third Quarter versus 2014 Third Quarter
Fully-taxable equivalent net interest income for the 2015 third quarter increased $29.8 million, or 6%, from the 2014 third quarter. This reflected the benefit from the $4.6 billion, or 8%, increase in average earning assets partially offset by a 4 basis point reduction in the FTE net interest margin to 3.16%. Average earning asset growth included a $2.9 billion, or 6%, increase in average loans and leases and a $1.6 billion, or 13%, increase in average securities. The NIM contraction reflected a 2 basis point decrease related to the mix and yield of earning assets and 6 basis point increase in funding costs, partially offset by the 4 basis point increase in the benefit from noninterest-bearing funds.
Average earning assets for the 2015 third quarter increased $4.6 billion, or 8%, from the year-ago quarter, driven by:
•
$1.6 billion, or 13%, increase in average securities, primarily reflecting the reinvestment of cash flows and additional investment in LCR Level 1 qualifying securities. The 2015 third quarter average balance also included $1.8 billion of direct purchase municipal instruments originated by our Commercial segment, up from $1.2 billion in the year-ago quarter.
•
$1.2 billion, or 7%, increase in average C&I loans and leases, primarily reflecting the $0.8 billion of equipment finance leases acquired in the Huntington Technology Finance transaction at the end of the 2015 first quarter, as well as growth in corporate banking and automobile dealer floorplan lending.
•
$0.9 billion, or 11%, increase in average Automobile loans. The 2015 third quarter represented the seventh consecutive quarter of greater than $1.0 billion in originations.
•
$0.3 billion, or 7%, increase in average Commercial Real Estate loans, primarily Construction loans.
Average total deposits for the 2015 third quarter increased $5.4 billion, or 11%, from the year-ago quarter, including a $4.8 billion, or 10%, increase in average total core deposits. The growth in average total core deposits more than fully funded the year-over-year increase in average earning assets. The increase in average total deposits included $0.7 billion of deposits acquired in the Bank of America branch acquisition late in the 2014 third quarter. Average total interest-bearing liabilities increased $2.2 billion, or 5%, from the year-ago quarter. Year-over-year changes in total liabilities reflected:
•
$3.6 billion, or 18%, increase in demand deposits, reflecting a $2.7 billion, or 22%, increase in commercial demand deposits and a $0.9 billion, or 12%, increase in consumer demand deposits.
•
$1.6 billion, or 9%, increase in money market deposits, reflecting continued banker focus across all segments on obtaining our customers’ full deposit relationship.
•
$0.5 billion, or 23%, increase in brokered deposits and negotiable CDs, which were used to efficiently finance balance sheet growth while continuing to manage the overall cost of funds.
Partially offset by:
•
$0.6 billion, or 20%, 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.
•
$0.3 billion, or 3%, decrease in average short- and long-term borrowings, reflecting a $2.3 billion, or 74%, reduction in short-term borrowings partially offset by a $2.1 billion, or 53%, increase in long-term debt. The increase in long-term debt reflected the issuance of $1.0 billion, $0.8 billion, and $0.5 billion of bank-level senior debt during the 2015 first quarter, 2015 second quarter, and 2015 third quarter, respectively, as well as $0.5 billion of debt assumed in the Huntington Technology Finance acquisition at the end of the 2015 first quarter.
2015 Third Quarter versus 2015 Second Quarter
Compared to the 2015 second quarter, FTE net interest income increased $5.0 million, or 1%. Average earning assets increased $0.8 billion, or 1%, sequentially, while the NIM decreased 4 basis points. The decrease in the NIM reflected a 3 basis point decrease in earning asset yields due to continued pricing pressure across several asset classes and a 3 basis point increase in the cost of interest-bearing liabilities, partially offset by a 2 basis point increase in the benefit from noninterest bearing funds.

17
Table of Contents

Compared to the 2015 second quarter, average earning assets increased $0.8 billion, or 1%. This increase reflected a $0.8 billion increase in automobile loans and a $0.4 billion increase in average securities, partially offset by a $0.8 billion decrease in loans held-for-sale. The decrease in loans held-for-sale was impacted by the securitization and sale of $750 million of automobile loans in the last month of the 2015 second quarter.
Compared to the 2015 second quarter, average noninterest bearing deposits increased $1.1 billion, or 7%, and while average total interest-bearing liabilities increased $0.2 billion, or 1%, reflecting a $1.3 billion, or 61%, decrease in short-term borrowings partially offset by a $0.9 billion, or 18%, increase in long-term debt related to the 2015 second quarter and 2015 third quarter bank-level senior debt issuances.

Table 6 - Consolidated YTD Average Balance Sheets and Net Interest Margin Analysis
(dollar amounts in millions)
 
 
 
 
 
 
 
 
 
 
 
 
YTD Average Balances
 
YTD Average Rates (2)
 
Nine Months Ended September 30,
 
Change
 
Nine Months Ended September 30,
Fully-taxable equivalent basis (1)
2015
 
2014
 
Amount
 
Percent
 
2015
 
2014
Assets:
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing deposits in banks
$
90

 
$
85

 
$
5

 
6
 %
 
0.11
%
 
0.08
%
Loans held for sale
706

 
306

 
400

 
131

 
3.49

 
3.99

Securities:
 
 
 
 


 


 
 
 
 
Available-for-sale and other securities:
 
 
 
 


 


 
 
 
 
Taxable
7,966

 
6,615

 
1,351

 
20

 
2.54

 
2.49

Tax-exempt
2,014

 
1,344

 
670

 
50

 
3.10

 
3.06

Total available-for-sale and other securities
9,980

 
7,959

 
2,021

 
25

 
2.65

 
2.59

Trading account securities
49

 
45

 
4

 
9

 
1.06

 
0.87

Held-to-maturity securities—taxable
3,299

 
3,671

 
(372
)
 
(10
)
 
2.47

 
2.46

Total securities
13,328

 
11,675

 
1,653

 
14

 
2.60

 
2.54

Loans and leases: (3)
 
 
 
 


 


 
 
 
 
Commercial:
 
 
 
 


 


 
 
 
 
Commercial and industrial
19,581

 
18,161

 
1,420

 
8

 
3.51

 
3.50

Commercial real estate:
 
 
 
 


 


 
 
 
 
Construction
987

 
697

 
290

 
42

 
3.64