Huntington Bancshares Incorporated Reports Net Income of $150.7 Million, or $0.17 Per Common Share,

Huntington Bancshares Incorporated Reports Net Income of $150.7 Million, or $0.17 Per Common Share, for the 2013 Second Quarter, Relatively Unchanged from the Prior and Year-Ago Quarters

Specific highlights compared with 2012 Second Quarter:

  • $0.39, or 7%, increase in tangible book value per common share to $5.88

  • 1.08% return on average assets, down from 1.10%

  • $680.2 million of fully-taxable equivalent revenue, a 1% decrease

  • $3.2 million, or 1%, decrease in fully-taxable equivalent net interest income, reflecting a 3.38% fully-taxable equivalent net interest margin, down 4 basis points

  • $5.2 million, or 2%, decrease in noninterest income, reflecting a $4.7 million, or 12%, decrease in mortgage banking income

  • $1.6 million, or less than 1%, increase in noninterest expense

  • NCOs declined 59% and were an annualized 0.34% of total loans and leases

  • 23% decline in nonaccrual loans to 0.87% of total loans and leases, down from 1.19%

  • Estimated Basel III negative impact to Tier 1 common risk-based capital of 60 basis points

Specific highlights compared with 2013 First Quarter:

  • $2.1 million, or less than 1%, decrease in fully-taxable equivalent revenue, reflecting:

    • 4% annualized growth in average total loans and leases partially offset by a 4 basis point reduction to net interest margin

    • $3.6 million decrease in noninterest income as the prior quarter included a $7.6 million gain on the sale of Low Income Housing Tax Credit (LIHTC) investments and a $11.6 million, or 26%, decrease in mortgage banking income

  • $3.1 million, 1%, increase in noninterest expense

  • 10.0 million shares repurchased at an average price of $7.50 per share


COLUMBUS, Ohio--(BUSINESS WIRE)-- Huntington Bancshares Incorporated (NASDAQ: HBAN; www.huntington.com) reported 2013 second quarter net income of $150.7 million, a decrease of $2.1 million, or 1%, from the 2012 second quarter and a decrease of $1.1 million, or 1%, from the 2013 first quarter. Earnings per common share were $0.17, unchanged from the prior and year ago quarters.

The board of directors declared a quarterly cash dividend on its common stock of $0.05 per common share. The dividend is payable October 1, 2013, to shareholders of record on September 17, 2013.

Strategies Continue to Drive Business Performance

"Huntington had a good quarter that demonstrates progress in our strategic priorities," said Stephen D. Steinour, chairman, president and CEO of Huntington Bank. "I am extremely pleased that we have returned to pre-recession, normal credit levels ahead of our prior expectations. This reflects our disciplined and prudent lending approach. We also continue to experience double-digit household growth. Expenses were managed slightly below our expectations. Revenue was relatively unchanged as strategic growth overcame multiple environmental headwinds and the prior quarters' Low Income Housing Tax Credit related gains. Consumer lending and deposits have increased over the same quarter last year as consumer confidence in the recovery rises. Our commercial pipeline continues to be strong as business owners are seeing more signs of economic growth. Employment across our Midwest markets continues to improve with Ohio creating the largest month-to-month employment increase in the nation in May and Michigan coming in third."

"We remain on track to deliver sustainable levels of long-term profitability," added Steinour. "Our estimate for the negative impact from Basel III is approximately 90 basis points better than last year's estimate. Our existing strategic investments continue to mature. We are focused on expense management and a more robust continuous improvement effort across the enterprise."

Table 1 - Earnings Performance Summary

2013

2012

($ in millions, except per share data)

Second
Quarter

First
Quarter

Fourth
Quarter

Third
Quarter

Second
Quarter

Net Income

$

150.7

$

151.8

$

167.3

$

167.8

$

152.7

Diluted earnings per common share

0.17

0.17

0.19

0.19

0.17

Return on average assets

1.08

%

1.10

%

1.19

%

1.19

%

1.10

%

Return on average common equity

10.4

10.7

11.6

11.9

11.1

Return on average tangible common equity

12.0

12.4

13.5

13.9

13.1

Net interest margin

3.38

3.42

3.45

3.38

3.42

Efficiency ratio

64.0

63.3

62.3

64.5

62.8

Tangible book value per common share

$

5.88

$

5.91

$

5.78

$

5.71

$

5.49

Cash dividends declared per common share

0.05

0.04

0.04

0.04

0.04

Average diluted shares outstanding (000's)

843,840

848,708

853,306

863,588

867,551

Average earning assets

$

51,156

$

50,960

$

50,682

$

51,330

$

51,050

Average loans

41,280

40,864

40,397

40,120

41,179

Average core deposits

43,768

43,616

44,310

43,764

42,781

Tangible common equity / tangible assets ratio

8.78

%

8.92

%

8.76

%

8.74

%

8.41

%

Tier 1 common risk-based capital ratio

10.71

10.62

10.48

10.28

10.08

NCOs as a % of average loans and leases

0.34

%

0.51

%

0.69

%

1.05

%

0.82

%

NAL ratio

0.87

0.92

1.00

1.11

1.19

ACL as a % of total loans and leases

1.86

1.91

1.99

2.09

2.28

Significant Items Influencing Financial Performance Comparisons

From time-to-time, revenue, expenses, or taxes are impacted by items we judge 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 we believe their outsized impact at that time to be infrequent or short term in nature. We believe the disclosure of such "Significant Items," when appropriate, aids analysts/investors in better understanding corporate performance trends. (See Significant Items under the Basis of Presentation for a full discussion.)

Table 2 highlights the Significant Items impacting reported results for the prior five quarters. There were no significant items in the current quarter.

Table 2 - Significant Items Influencing Earnings Performance Comparisons

Three Months Ended

Impact

(in millions, except per share)

Amount (1)

EPS (2)

June 30, 2013 - net income

$150.7

$0.17

March 31, 2013 - net income

$151.8

$0.17

December 31, 2012 - net income

$167.3

$0.19

September 30, 2012 - net income

$167.8

$0.19

• State deferred tax valuation allowance benefit

19.5

0.02

June 30, 2012 - net income

$152.7

$0.17

(1)Favorable (unfavorable) impact on net income; after-tax unless otherwise noted
(2)EPS reflected on a fully diluted basis

Net Interest Income, Net Interest Margin, and Average Balance Sheet

Table 3 - Net Interest Income and Net Interest Margin Performance Summary

2013

2012

Second

First

Fourth

Third

Second

Change (%)

($ in millions)

Quarter

Quarter

Quarter

Quarter

Quarter

LQ

YOY

Net interest income

$

424.9

$

424.2

$

434.1

$

430.3

$

429.0

0

%

(1

)

%

FTE adjustment

6.6

5.9

5.5

5.3

5.7

11

15

Net interest income - FTE

431.5

430.1

439.5

435.6

434.7

0

(1

)

Noninterest income

248.7

252.2

297.7

261.1

253.8

(1

)

(2

)

Total revenue - FTE

$

680.2

$

682.3

$

737.2

$

696.6

$

688.5

(0

)

%

(1

)

%

Change bps

Yield / Cost

LQ

YOY

Total earning assets

3.68

%

3.75

%

3.80

%

3.79

%

3.89

%

(7

)

(21

)

Total loans and leases

3.95

4.03

4.13

4.12

4.18

(9

)

(24

)

Total securities

2.38

2.39

2.38

2.41

2.45

(0

)

(6

)

Total interest-bearing liabilities

0.42

0.45

0.50

0.58

0.63

(4

)

(22

)

Total interest-bearing deposits

0.36

0.38

0.42

0.48

0.51

(3

)

(16

)

Net interest rate spread

3.26

3.30

3.30

3.21

3.26

(4

)

0

Impact of noninterest-bearing funds on margin

0.12

0.12

0.15

0.17

0.16

0

(4

)

Net interest margin

3.38

%

3.42

%

3.45

%

3.38

%

3.42

%

(4

)

(4

)

See Page 9 of Quarterly Financial Supplement for additional rate detail.

Fully-taxable equivalent net interest income decreased $3.2 million, or 1%, from the 2012 second quarter. This reflected the impact of a 4 basis point decrease in the fully-taxable equivalent net interest margin (NIM) to 3.38% as average earning assets were essentially unchanged. The primary items impacting the decrease in the NIM were:

  • 21 basis point negative impact from the mix and yield of earning assets primarily reflecting a decrease in consumer loan yields.

Partially offset by:

  • 16 basis point positive impact from the mix and yield of deposits reflecting the strategic focus on changing the funding sources to no-cost demand deposits and low cost money markets deposits.

Compared to the 2013 first quarter, fully-taxable equivalent net interest income increased $1.4 million, or less than 1%, reflecting a $0.2 billion increase in average earnings assets as well as an additional day in the quarter, partially offset by a 4 basis point decrease in NIM. The primary items affecting the NIM were a 7 basis point negative impact from the mix and yield of earning assets, which was partially offset by a 3 basis point positive impact from the mix and yield of deposits.

Table 4 - Average Earning Assets - C&I and Automobile Continue To Drive Growth

2013

2012

Second

First

Fourth

Third

Second

Change (%)

(in billions)

Quarter

Quarter

Quarter

Quarter

Quarter

LQ

YOY

Average Loans and Leases

Commercial and industrial

$

17.0

$

17.0

$

16.5

$

16.3

$

16.1

0

%

6

%

Commercial real estate

5.0

5.3

5.5

5.7

6.1

(5

)

(17

)