UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 OR 15(d)

of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) January 16, 2014

 

 

HUNTINGTON BANCSHARES INCORPORATED

(Exact name of registrant as specified in its charter)

 

 

 

Maryland   1-34073   31-0724920

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

 

Huntington Center

41 South High Street

Columbus, Ohio

  43287
(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code (614) 480-8300

Not Applicable

(Former name or former address, if changed since last report.)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


Item 2.02. Results of Operations and Financial Condition.

On January 16, 2014, Huntington Bancshares Incorporated (“Huntington”) issued a news release announcing its earnings for the quarter ended December 31, 2013. Also on January 16, 2014, Huntington made a Quarterly Financial Supplement available on its web site, www.huntington-ir.com .

Huntington’s senior management will host an earnings conference call January 16, 2014, at 10:00 a.m. (Eastern Time). The call may be accessed via a live Internet webcast at www.huntington-ir.com or through a dial-in telephone number at 877-684-3807, conference ID 25841052. Slides will be available at www.huntington-ir.com just prior to the call. A replay of the web cast will be archived in the Investor Relations section of Huntington’s web site at www.huntington-ir.com . A telephone replay will be available two hours after the completion of the call through January 30, 2014, at (855) 859-2056 or (404) 537-3406; conference call ID 25841052.

The information contained or incorporated by reference in this Current Report on Form 8-K contains certain forward-looking statements, including certain plans, expectations, goals, projections, and statements, which are subject to numerous assumptions, risks, and uncertainties. Forward-looking statements may be identified by words such as expect, anticipate, believe, intend, estimate, plan, target, goal, or similar expressions, or future or conditional verbs such as will, may, might, should, would, could, or similar variations.

While there is no assurance that any list of risks and uncertainties or risk factors is complete, below are certain factors which could cause actual results to differ materially from those contained or implied in the forward-looking statements: (1) worsening of credit quality performance due to a number of factors such as the underlying value of collateral that could prove less valuable than otherwise assumed and assumed cash flows may be worse than expected; (2) changes in general economic, political, or industry conditions; uncertainty in U.S. fiscal and monetary policy, including the interest rate policies of the Federal Reserve Board; volatility and disruptions in global capital and credit markets; (3) movements in interest rates; (4) competitive pressures on product pricing and services; (5) success, impact, and timing of our business strategies, including market acceptance of any new products or services implementing our “Fair Play” banking philosophy; (6) changes in accounting policies and principles and the accuracy of our assumptions and estimates used to prepare our financial statements; (7) extended disruption of vital infrastructure; (8) the final outcome of significant litigation; (9) the nature, extent, timing, and results of governmental actions, examinations, reviews, reforms, regulations, and interpretations, including those related to the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Basel III regulatory capital reforms, as well as those involving the OCC, Federal Reserve, FDIC, and CFPB; and (10) the outcome of judicial and regulatory decisions regarding practices in the residential mortgage industry, including among other things the processes followed for foreclosing residential mortgages. Additional factors that could cause results to differ materially from those described above can be found in Huntington’s 2012 Annual Report on Form 10-K, and documents subsequently filed by Huntington with the Securities and Exchange Commission. All forward-looking statements included in this document are based on information available at the time of the release. Huntington assumes no obligation to update any forward-looking statement.


The information contained or incorporated by reference in Item 2.02 of this Form 8-K shall be treated as “furnished” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

 

Item 9.01. Financial Statements and Exhibits.

The exhibits referenced below shall be treated as “furnished” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

(d) Exhibits.

Exhibit 99.1 – News release of Huntington Bancshares Incorporated, dated January 16, 2014.

Exhibit 99.2 – Quarterly Financial Supplement, December 2013.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    HUNTINGTON BANCSHARES INCORPORATED
Date: January 16, 2014     By:   /s/ David S. Anderson
     

David S. Anderson

     

Interim Chief Financial Officer

EXHIBIT INDEX

 

Exhibit No.    Description
Exhibit 99.1    News release of Huntington Bancshares Incorporated, January 16, 2014.
Exhibit 99.2    Quarterly Financial Supplement, December 2013.

Exhibit 99.1

 

LOGO     LOGO

FOR IMMEDIATE RELEASE

Jan. 16, 2014

 

Analysts:     Todd Beekman (todd.beekman@huntington.com), 614.480.3878
    Mark Muth (mark.muth@huntington.com), 614.480.4720
Media:     Maureen Brown (maureen.brown@huntington.com), 614.480.5512

HUNTINGTON BANCSHARES INCORPORATED

REPORTS 2013 NET INCOME OF $639 MILLION AND EARNINGS PER COMMON

SHARE OF $0.72, UP $0.01 FROM THE PRIOR YEAR

Specific highlights compared with 2012:

 

    $0.49, or 8%, increase in tangible book value per common share to $6.27

 

    Delivered positive operating leverage and a modest improvement in efficiency ratio

 

    $1 million increase in fully-taxable equivalent net interest income to $1,732 million reflecting:

 

    3.36% fully-taxable equivalent net interest margin (NIM), down 5 basis points, and

 

    4% average loan growth

 

    $100 million, or 9%, decrease in noninterest income, reflecting;

 

    $64 million, or 34%, decrease in mortgage banking income,

 

    $40 million, or 69%, decrease in gain on sale, related to auto loan securitizations

 

    $78 million, or 4%, decrease in noninterest expense including:

 

    $34 million one-time, non-cash gain related to pension curtailment,

 

    $24 million of franchise repositioning expense related to branch consolidations, severance, and facility optimization

 

    1.13% return on average assets, down from 1.15%

 

    Nonaccrual loans declined to 0.75% of total loans and leases from 1.00%

 

    Tier 1 Common Ratio of 10.90%, up from 10.48%

2013 Fourth Quarter specific highlights compared with 2012 Fourth Quarter:

 

    $9 million, or 6%, decrease in net income to $158 million, and $0.01 decrease in earnings per common share to $0.18

 

    1.09% return on average assets, down from 1.19%

 

    Fully-taxable equivalent net interest income of $439 million, relatively unchanged, reflecting:

 

    3.28% fully-taxable equivalent net interest margin (NIM), down 17 basis points, and

 

    5% average earning asset growth

 

    $25 million, or 5%, decrease in noninterest expense

 

1


COLUMBUS, Ohio – Huntington Bancshares Incorporated (NASDAQ: HBAN; www.huntington.com ) reported 2013 full-year net income of $639 million, relatively unchanged from the prior year. Earnings per common share for the year were $0.72, an increase of $0.01 from the prior year.

Net income for the 2013 fourth quarter was $158 million, a decrease of $9 million, or 6%, from the 2012 fourth quarter. Earnings per common share for the 2013 fourth quarter were $0.18, a decrease of $0.01 from the year-ago quarter.

Huntington today also announced that the Board of Directors declared a quarterly cash dividend on its common stock of $0.05 per common share. The dividend is payable April 1, 2014, to shareholders of record on March 18, 2014.

Strategies Continue to Drive Business Performance

“We are pleased with our year-end results, which demonstrate again that our strategies are working,” said Stephen D. Steinour, chairman, president and CEO of Huntington Bancshares. “In 2013, we grew our base of consumer and business customers, while achieving positive operating leverage. Huntington’s performance in the second half of 2013 demonstrates strong business momentum, positioning us well for 2014.”

“Highlights of our financial strength in 2013 include a strong balance sheet, ongoing deposit growth and quality loan growth in commercial and auto lending,” added Steinour. “Our deposit and lending growth is the result of focused execution and key strategic investments made over the last four years. We have done all of this while decreasing expenses by 4 percent, year over year, as the result of disciplined expense management.”

Table 1 – Earnings Performance Summary

 

     Full Year     2013     2012  

($ in millions, except per share data)

  

2013

   

2012

   

Fourth Quarter

   

Third Quarter

   

Fourth Quarter

 

Net Income

   $ 638.7      $ 641.0      $ 157.8      $ 178.5      $ 167.3   

Diluted earnings per common share

     0.72        0.71        0.18        0.20        0.19   

Return on average assets

     1.13     1.15     1.09     1.27     1.19

Return on average common equity

     11.0        11.5        10.5        12.3        11.6   

Return on average tangible common equity

     12.7        13.5        12.1        14.1        13.5   

Net interest margin

     3.36        3.41        3.28        3.34        3.45   

Efficiency ratio

     62.9        63.4        63.7        60.6        62.3   

Tangible book value per common share

   $ 6.27      $ 5.78      $ 6.27      $ 6.10      $ 5.78   

Cash dividends declared per common share

     0.19        0.16        0.05        0.05        0.04   

Average diluted shares outstanding (000’s)

     843,974        863,402        842,324        841,025        853,306   

Average earning assets

   $ 51,598      $ 50,709      $ 53,012      $ 51,247      $ 50,682   

Average loans

     41,826        40,210        43,139        41,994        40,397   

Average core deposits

     43,979        43,066        44,747        43,773        44,310   

Tangible common equity / tangible assets ratio

     8.83     8.76     8.83     9.02     8.76

Tier 1 common risk-based capital ratio

     10.90        10.48        10.90        10.85        10.48   

NCOs as a % of average loans and leases

     0.45     0.85     0.43     0.53     0.69

NAL ratio

     0.75        1.00        0.75        0.78        1.00   

ACL as a % of total loans and leases

     1.65        1.99        1.65        1.72        1.99   

 

2


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 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 two years. This quarter contained one significant item: the previously announced $7 million of additional expense related to the consolidation of 22 branches, severance, and facilities optimization. There were no significant events during the quarters ended June 30, 2013, March 31, 2013, and December 31, 2012

Table 2 – Significant Items Influencing Earnings Performance Comparisons

 

Twelve Months Ended    Pre-Tax Impact     After-Tax Impact  
(in millions, except per share)    Amount     Amount (1)
    EPS (2)  

December 31, 2013 – net income

     $ 639      $ 0.72   

•   Franchise repositioning related expense

     (24     (16     (0.02

•   Pension curtailment gain

     34        22        0.03   

December 31, 2012 – net income

     $ 641      $ 0.71   

•   State deferred tax valuation allowance benefit

     N.A.        20        0.02   

•   Bargain purchase gain, FDIC-assisted Fidelity Bank acquisition

     11        7        0.01   

•   Addition to litigation reserves

     (24     (15     (0.02

(1)        Favorable (unfavorable) impact on net income; 35% tax rate

      

(2)        EPS reflected on a fully diluted basis

N.A. = Not applicable

      
Three Months Ended    Pre-Tax Impact     After-Tax Impact  
(in millions, except per share)    Amount     Amount  (1)     EPS (2)  

December 31, 2013 – net income

     $ 158      $ 0.18   

•   Franchise repositioning related expense

   $ (7     (5     (0.01

September 30, 2013 – net income

     $ 178      $ 0.20   

•   Pension curtailment gain

     34        22        0.03   

•   Franchise repositioning related expense

     (17     (11     (0.01

June 30, 2013 – net income

     $ 151      $ 0.17   

March 31, 2013 – net income

     $ 152      $ 0.17   

December 31, 2012 – net income

     $ 167      $ 0.19   

 

(1)   Favorable (unfavorable) impact on net income; 35% tax rate
(2)   EPS reflected on a fully diluted basis

 

3


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

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

 

     2013     2012           2013     2012  

($ in millions)

   Full
Year
    Full
Year
    Change
YOY
    Fourth
Quarter
    Third
Quarter
    Fourth
Quarter
 

Net interest income

   $ 1,704.6      $ 1,710.5        (0 )%    $ 430.6      $ 424.9      $ 439.5   

FTE adjustment

     27.3        20.4        34        8.2        6.6        5.5   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income - FTE

     1,731.9        1,730.9        0        438.8        431.5        439.5   

Noninterest income

     998.0        1,097.9        (9     246.6        250.5        297.7   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenue - FTE

   $ 2,729.9      $ 2,828.8        (3 )%    $ 685.5      $ 682.0      $ 737.2   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Yield / Cost

                                    

Total earning assets

     3.66     3.85     (19 )bp      3.58     3.64     3.80

Total loans and leases

     3.93        4.19        (26     3.77        3.87        4.13   

Total securities

     2.45        2.43        2        2.60        2.41        2.38   

Total interest-bearing liabilities

     0.43        0.60        (17     0.42        0.42        0.50   

Total interest-bearing deposits

     0.35        0.49        (14     0.32        0.33        0.42   

Net interest rate spread

     3.23        3.25        (2     3.15        3.20        3.30   

Impact of noninterest-bearing funds on margin

     0.13        0.16        (3     0.13        0.14        0.15   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest margin

     3.36     3.41     (5 )bp      3.28     3.34     3.45
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

See Pages 9 & 19 of Quarterly Financial Supplement for additional rate detail.

Fully-taxable equivalent (FTE) net interest income increased $1 million, or less than 1%, from the prior year. This reflected the impact of 4% loan growth, a 5 basis point decrease in the fully-taxable equivalent net interest margin (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:

 

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

 

    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:

 

    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.

 

    3 basis point positive impact from noncore funding primarily reflecting lower debt costs.

 

4


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

 

     2013      2012            2013      2012  

(in billions)

   Full
Year
     Full
Year
     YOY
Change
    Fourth
Quarter
     Third
Quarter
     Fourth
Quarter
 

Average Loans and Leases

                

Commercial and industrial

   $ 17.2       $ 15.9         8   $ 17.7       $ 17.0       $ 16.5   

Commercial real estate

     5.0         5.8         (13     4.9         4.9         5.5   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Total commercial

     22.2         21.7         2        22.6         21.9         22.0   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Automobile

     5.7         4.5         25        6.5         6.1         4.5   

Home equity

     8.3         8.3         (0     8.3         8.3         8.3   

Residential mortgage

     5.2         5.2         0        5.3         5.3         5.2   

Other consumer

     0.4         0.5         (4     0.4         0.4         0.4   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Total consumer

     19.6         18.5         6        20.6         20.1         18.4   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Total loans and leases

     41.8         40.2         4        43.1         42.0         40.4   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Total securities

     9.2         9.3         (1     9.5         8.8         9.4   

Held-for-sale and other earning assets

     0.6         1.2         (50     0.4         0.4         2.5   

Total earning assets

   $ 51.6       $ 50.7         2   $ 53.0       $ 51.2       $ 50.7   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

See Pages 7 & 17 of Quarterly Financial Supplement for additional detail.

Average earning assets increased $0.9 billion, or 2%, from the prior year, driven by:

 

    $1.2 billion, or 8%, increase in average Commercial and Industrial (C&I) loans and leases. This reflected the continued growth within the middle market healthcare vertical, equipment finance, and dealer floorplan.

 

    $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:

 

    $0.8 billion, or 13%, decrease in average Commercial Real Estate (CRE) loans. This decrease reflected continued runoff of the noncore portfolio and a slight reduction of the core portfolio, as acceptable returns for new core originations were balanced against internal concentration limits and increased competition for projects sponsored by high quality developers.

 

    $0.6 billion, or 52%, decrease in loans held-for-sale reflecting the impact of automobile loan securitizations completed in 2012.

$1.9 billion of net investment securities were purchased during the 2013 fourth quarter. The vast majority of the increase consisted of high quality liquid assets purchased in advance of the implementation of the proposed Basel 3 Liquidity Coverage Ratio. While there was minimal impact on the full-year average balance sheet, $0.6 billion of direct purchase municipal instruments were reclassified on December 31, 2013 from C&I loans to available-for-sale securities.

 

5


Table 5 – Average Liabilities – Noninterest Bearing Deposit Growth Continues and Customers Move from CDs to Money Market Deposits

 

     2013      2012            2013      2012  

(in billions)

   Full
Year
     Full
Year
     YOY
Change
    Fourth
Quarter
     Third
Quarter
     Fourth
Quarter
 

Average Deposits

                

Demand deposits - noninterest bearing

   $ 12.9       $ 12.2         6   $ 13.3       $ 13.1       $ 13.1   

Demand deposits - interest bearing

     5.9         5.8         1        5.8         5.8         5.8   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Total demand deposits

     18.7         18.0         4        19.1         18.9         19.0   

Money market deposits

     15.7         13.9         13        16.8         15.7         14.7   

Savings and other domestic deposits

     5.0         4.9         2        4.9         5.0         5.0   

Core certificates of deposit

     4.5         6.2         (27     3.9         4.2         5.6   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Total core deposits

     44.0         43.1         2        44.7         43.8         44.3   

Other domestic deposits of $250,000 or more

     0.3         0.3         (6     0.3         0.3         0.4   

Brokered deposits and negotiable CDs

     1.6         1.6         1        1.4         1.6         1.8   

Other deposits

     0.3         0.4         (7     0.4         0.4         0.3   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Total deposits

     46.2         45.4         2        46.8         46.0         46.8   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Short and long-term borrowings

     3.1         3.1         (2     3.7         3.0         2.4   

Total Interest-bearing liabilities

   $ 36.4       $ 36.7         (1 )%    $ 37.2       $ 35.9       $ 36.1   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

See Pages 7 & 17 of Quarterly Financial Supplement for additional detail.

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:

 

    $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.

 

    $0.6 billion, or 47%, decrease in short-term borrowings due to a focused effort to reduce collateralized deposits.

Partially offset by:

 

    $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.

Within average total interest-bearing liabilities, average subordinated notes and other long-term debt increased $0.9 billion, or 63%, from the year-ago quarter, reflecting 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.

 

6


Noninterest Income

Table 6 – Noninterest Income – Mortgage Banking and Lack of Auto Securitizations Drove Declines

 

     2013      2012            2013      2012  

(in millions)

   Full
Year
     Full
Year
     YOY
Change
    Fourth
Quarter
     Third
Quarter
     Fourth
Quarter
 

Noninterest Income

                

Service charges on deposit accounts

   $ 271.8       $ 262.2         4   $ 70.0       $ 72.9       $ 68.1   

Mortgage banking income

     126.9         191.1         (34     24.3         23.6         61.7   

Trust services

     123.0         121.9         1        30.7         30.5         31.4   

Electronic Banking

     92.6         82.3         13        24.3         24.3         21.0   

Insurance income

     69.3         71.3         (3     15.6         17.3         17.3   

Brokerage Income

     69.2         72.2         (4     15.1         16.5         17.4   

Bank owned life insurance income

     56.4         56.0         1        13.8         13.7         13.8   

Capital markets fees

     45.2         48.2         (6     12.3         12.8         12.7   

Gain on sale of loans

     18.2         58.2         (69     7.1         5.1         20.7   

Securities (losses) gains

     0.4         4.8         (91     1.2         0.1         0.9   

Other income

     125.1         129.7         (4     32.1         33.7         32.8   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Total noninterest income

   $ 998.0       $ 1,097.9         (9 )%    $ 246.6       $ 250.5       $ 297.7   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

In 2013, noninterest income decreased $100 million, or 9%, from the prior year, primarily reflecting:

 

    $64 million, or 34%, decrease in mortgage banking income primarily driven by 9% reduction in volume, lower gain on sale margin, and a higher percentage of originations held on the balance sheet.

 

    $40 million, or 69%, decrease in gain on sale of loans as no auto loan securitizations occurred in 2013 compared to $2.3 billion of auto loan securitizations in 2012.

 

    $5 million, or 4%, decrease in other income as the prior year included an $11 million bargain purchase gain associated with the FDIC-assisted Fidelity Bank acquisition partially offset by an increase in fees associated with commercial loan activity.

 

    $4 million, or 91%, decrease in security gains as the prior year had certain securities designated as available-for-sale that were sold and the proceeds from those sales were reinvested into the held-to-maturity portfolio.

Partially offset by:

 

    $10 million, or 4%, increase in service charges on deposit accounts reflecting 8% consumer household and 6% commercial relationship growth and changing customer usage patterns. This more than offset the approximately $28 million negative impact of the February 2013 implementation of a new posting order for consumer transaction accounts.

 

    $10 million, or 13%, increase in electronic banking due to continued consumer household growth.

 

7


Noninterest Expense

Table 7 – Noninterest Expense – Decreases Even When Considering Significant Items

 

     2013      2012           2013      2012  

(in millions)

   Full
Year
     Full
Year
    YOY
Change
    Fourth
Quarter
     Third
Quarter
     Fourth
Quarter
 

Noninterest Expense

               

Personnel costs

   $ 1,001.6       $ 988.2        1   $ 249.6       $ 229.3       $ 254.0   

Outside data processing and other services

     199.5         190.3        5        51.1         49.3         48.7   

Net occupancy

     125.3         111.2        13        32.0         35.6         29.0   

Equipment

     106.8         102.9        4        28.8         28.2         26.6   

Marketing

     51.2         64.3        (20     13.7         12.3         16.5   

Deposit and other insurance expense

     50.2         68.3        (27     10.1         11.2         16.3   

Amortization of intangibles

     41.4         46.5        (11     10.3         10.4         11.6   

Professional services

     40.6         65.8        (38     11.6         12.5         22.5   

Loss (Gain) on early extinguishment of debt

     —           (0.8     (100     —           —           —     

Other expense

     141.4         199.2        (29     39.0         34.6         45.4   
  

 

 

    

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Total noninterest expense

   $ 1,758.0       $ 1,835.9        (4 )%    $ 446.0       $ 423.3       $ 470.6   
  

 

 

    

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

(in thousands)

                                       

Number of employees (Average full-time equivalent)

     12.0         11.5        4        11.8         12.1         11.8   

In 2013, noninterest expense decreased $78 million, or 4%, from the prior year. When adjusting for the net $34 million of Significant Items, noninterest expense decreased $44 million as we actively managed the pace and size of investment. The decrease in the reported noninterest expenses primarily reflects:

 

    $58 million, or 29%, decline in other expense, reflecting a reduction in litigation expense, mortgage repurchases and warranty expense, OREO and foreclosure costs, and reduction in operating lease expense.

 

    $25 million, or 38%, decrease in professional services, reflecting a decrease in outside consultant expenses and legal services, primarily collections.

 

    $18 million, or 27%, decrease in deposit and other insurance expense due to lower insurance premiums.

 

    $13 million, or 20%, decrease in marketing, primarily reflecting lower levels of advertising, and reduced promotional offers.

 

    $5 million, or 11%, decrease due to the continued amortization of core deposit intangibles.

Partially offset by:

 

    $14 million, or 13%, increase in net occupancy, reflecting $12 million of franchise repositioning expense related to branch consolidation and facilities optimization.

 

    $13 million, or 1%, increase in personnel costs, primarily reflecting the $39 million increase in salaries due to a 4% increase in the number of full-time equivalent employees as employee count mainly in technology and consumer areas and $7 million of franchise repositioning expense related to branch consolidation and severance expenses. This was partially offset by the $34 million one-time, non-cash gain related to the pension curtailment.

 

8


    $9 million, or 5%, increase in outside data processing as we continue to invest in technology supporting our products, services, and our Continuous Improvement initiatives.

 

    $4 million, or 4%, increase in equipment including $2 million of branch consolidation and facilities optimization related expenses.

Noninterest expense for the 2013 fourth quarter increased $23 million, or 5%, from the prior quarter. When adjusting for the aforementioned Significant Items, noninterest expense was relatively unchanged.

Credit Quality

Table 8 – Summary Credit Quality Metrics – Nonaccrual Loans Continue Their Steady Decline

 

     2013     2012  

($ in thousands)

   Dec. 31     Sep. 30     Jun. 30     Mar. 31     Dec. 31  

Total nonaccrual loans and leases

   $ 322,056      $ 333,106      $ 363,546      $ 380,311      $ 407,633   

Total other real estate, net

     27,664        29,154        21,066        25,139        28,097   

Other NPAs (1)

     2,440        12,000        12,087        10,045        10,045   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total nonperforming assets

   $ 352,160      $ 374,260      $ 396,699      $ 415,495      $ 445,775   

Accruing loans and leases past due 90 days or more

     76,209        94,966        94,123        108,423        110,316   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

NPAs + accruing loans and lease past due 90 days or more

   $ 428,369      $ 469,226      $ 490,822      $ 523,918      $ 556,091   

NAL ratio (2)

     0.75     0.78     0.87     0.92     1.00

NPA ratio (3)

     0.82        0.88        0.95        1.01        1.09   

(NPAs+90 days)/(Loans+OREO) (4)

     1.20        1.29        1.38        1.48        1.59   

Provision for credit losses

   $ 24,331      $ 11,400      $ 24,722      $ 29,592      $ 39,458   

Net charge-offs

     46,447        55,742        34,790        51,687        70,130   

Net charge-offs / Average total loans

     0.43     0.53     0.34     0.51     0.69

Allowance for loans and lease losses

   $ 647,870      $ 666,030      $ 733,076      $ 746,769      $ 769,075   

Allowance for unfunded loan commitments and letters of credit

     62,899        66,857        44,223        40,855        40,651   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Allowance for credit losses (ACL)

   $ 710,769      $ 732,887      $ 777,299      $ 787,624      $ 809,726   

ACL as a % of:

          

Total loans and leases

     1.65     1.72     1.86     1.91     1.99

NALs

     221        220        214        207        199   

NPAs

     202        196        196        190        182   

 

(1) Other nonperforming assets includes certain impaired investment securities.
(2) Total NALs as a % of total loans and leases
(3) Total NPAs as a % of sum of loans and leases, impaired loans held for sale, and net other real estate.
(4) The sum of nonperforming assets and total accruing loans and leases past due 90 days or more divided by the sum of loans and leases and other real estate.

See Pages 12-15 and 22-25 of Quarterly Financial Supplement for additional detail.

Most credit quality related metrics in 2013 reflected continued improvement. Nonaccrual loans and leases (NALs) declined $86 million, or 21%, from 2012 to $322 million, or 0.75% of total loans and leases. Nonperforming assets (NPAs) declined $94 million, or 21%, compared to a year-ago to $352 million, or 0.82% of total loans and leases, OREO, and other NPAs. The decreases primarily reflected meaningful improvement in both CRE and C&I NALs.

The provision for credit losses decreased $57 million, or 39%, from 2012 due to the continued decline in classified, criticized, and nonaccrual loans and included the implementation of enhancements to our allowance for loan and lease losses (ALLL) model. Net charge-offs (NCOs) decreased $154 million, or 45%, from the prior year to $189 million. NCOs were an annualized 0.45% of average loans and leases in the current year compared to 0.85% in 2012. Within the consumer portfolio, NCOs related to Chapter 7 bankruptcy loans amounted to $23 million in 2013 and $35 million in 2012.

 

9


The period-end allowance for credit losses (ACL) as a percentage of total loans and leases decreased to 1.65% from 1.99% a year ago, while the ACL as a percentage of period-end total NALs increased to 221% from 199%.

Capital

Table 9 – Capital Ratios – Tier 1 Common Continues to Increase

 

     2013     2012  

(in millions)

   Dec 31.     Sep. 30     Jun. 30     Mar. 31     Dec. 31,  

Tangible common equity / tangible assets ratio

     8.83     9.02     8.78     8.92     8.76

Tier 1 common risk-based capital ratio

     10.90     10.85     10.71     10.62     10.48

Regulatory Tier 1 risk-based capital ratio

     12.28     12.36     12.24     12.16     12.02

Excess over 6.0% (1)

   $ 3,121      $ 3,096      $ 3,000      $ 2,953      $ 2,876   

Regulatory Total risk-based capital ratio

     14.57     14.67     14.57     14.55     14.50

Excess over 10.0% (1)

   $ 2,271      $ 2,274      $ 2,197      $ 2,181      $ 2,150   

Total risk-weighted assets

   $ 49,690      $ 48,687      $ 48,080      $ 47,937      $ 47,773   

 

(1) “Well-capitalized” regulatory threshold

See Page 16 of Quarterly Financial Supplement for additional detail.

The tangible common equity to tangible assets ratio at December 31, 2013, was 8.83%, up 7 basis points from a year ago. Our Tier 1 common risk-based capital ratio at year end was 10.90%, up from 10.48% at the end of 2012.

The regulatory Tier 1 risk-based capital ratio at December 31, 2013, was 12.28%, up from 12.02% at December 31, 2012. The increase in the regulatory Tier 1 risk-based capital ratio reflected the increase in retained earnings, partially offset by redemption of $50 million of qualifying preferred securities since September 30, 2013 and growth in risk-weighted assets. All capital ratios were impacted by the repurchase of 17 million common shares over the last four quarters, none of which were repurchased during the 2013 fourth quarter. Although Huntington has the ability to repurchase up to $136 million additional shares of common stock through the first quarter of 2014, we intend to continue disciplined repurchase activity consistent with our annual capital plan, our capital return objectives, and market conditions especially as those conditions impact the trading price of our common stock.

Income Taxes

The provision for income taxes in 2013 was $216 million and $184 million in 2012. The effective tax rates for 2013 and 2012 were 25.3% and 22.3%, respectively. At December 31, 2013, the net federal deferred tax asset was $98 million, and the net state deferred tax asset was $40 million. Based on both positive and negative evidence and the level of forecasted future taxable income, there was no impairment to the net federal and net state deferred tax assets at December 31, 2013. As of December 31, 2013, there was no disallowed deferred tax asset for regulatory capital purposes.

 

10


Summary of 2013 Fourth Quarter

Net income for the 2013 fourth quarter was $158 million, a decrease of $9 million, or 6%, from the 2012 fourth quarter, as a $52 million, or 7%, decrease in FTE total revenue more than offset a $25 million, or 5%, decrease in noninterest expense and $15 million, or 38%, decrease in the provision for credit losses.

FTE net interest income of $439 million was relatively unchanged from the year-ago quarter, reflecting a $2 billion, or 5%, increase in average earnings assets offset by a 17 basis point decrease in NIM. The average earning asset growth primarily reflected the $3 billion, or 7%, increase in average loans partially offset by the $1 billion, or 62%, decrease in average loans held for sale. Average securities were relatively unchanged. Of the 17 basis point decrease in NIM, 5 basis points reflected temporary benefits in the year-ago quarter, with the majority related to an increase in the purchase accounting accretion on the Fidelity Bank acquired loan portfolio. Noninterest income decreased $51 million, or 17%, from the year-ago quarter, primarily reflecting a $37 million, or 61%, decrease in mortgage banking income and a $17 million automobile loan securitization gain in the year-ago quarter. Noninterest expense decreased $25 million, or 5%, reflecting the Company’s continued disciplined expense management. The 2013 fourth quarter also included $7 million of franchise repositioning expense related to the previously disclosed consolidation of 22 branches, severance, and facilities optimization.

2014 Expectations

“We look forward to solid financial performance in 2014, based on our successful strategies and focused execution,” said Steinour. “Although we again expect to face the headwinds of the yield curve, the regulatory environment, and the uncertainty of Washington, we believe our business model will continue to overcome these challenges and deliver strong performance.”

Net interest income is expected to moderately increase. We anticipate an increase in earning assets as total loans moderately grow and investment securities remain near current levels. However, those benefits to net interest income are expected to be mostly offset by continued downward pressure on NIM. While we are maintaining a disciplined approach to loan pricing, asset yields remain under pressure but the continued opportunity of deposit repricing remains, albeit closer to current levels.

The C&I portfolio is expected to see growth consistent with the anticipated increase in customer activity. Our C&I loan pipeline remains robust with much of this reflecting the positive impact from our investments in specialized commercial verticals, automotive dealer relationships, focused OCR sales process, and continued support of middle market and small business lending. Automobile loan originations remain strong, and we currently do not anticipate any automobile securitizations in the near future. Residential mortgages, home equity, and CRE loan balances are expected to increase modestly.

We anticipate the increase in total loans will modestly outpace growth in total deposits. This reflects our continued focus on the overall cost of funds, through the issuance of long-term debt, as well as the continued shift towards low- and no-cost demand deposits and money market deposit accounts.

Noninterest income, excluding the impact of any net MSR activity, is expected to be slightly lower than recent levels, due to the anticipated decline in mortgage banking revenues and the continued refinement of products under our Fair Play philosophy.

 

11


Noninterest expense, excluding the net $10 million of benefit from Significant Items we experienced in 2013, are expected to remain around current levels. We are committed to delivering positive operating leverage for the 2014 full year.

NPAs are expected to show continued improvement. This year, NCOs represented the mid-point of our expected normalized range of 35 to 55 basis points. The level of provision for credit losses was below our long-term expectation, and we continue to expect moderate quarterly volatility.

The effective tax rate for 2014 is expected to be in the range of 25% to 28%, primarily reflecting the impacts of tax-exempt income, tax-advantaged investments, and general business credits.

Conference Call / Webcast Information

Huntington’s senior management will host an earnings conference call on Thursday, January 16, 2014, at 10:00 a.m. (Eastern Time). The call may be accessed via a live Internet webcast at www.huntington-ir.com or through a dial-in telephone number at (877) 684-3807; Conference ID# 25841052. Slides will be available at www.huntington-ir.com about an hour prior to the call. A replay of the webcast will be archived in the Investor Relations section of Huntington’s web site, www.huntington.com. A telephone replay will be available approximately two hours after the completion of the call through January 31, 2014 at (855) 859-2056 or (404) 537-3406; conference ID# 25841052.

 

Please see the 2013 Fourth Quarter Quarterly Financial Supplement for additional detailed financial performance metrics. This document can be found at: http://www.huntington-ir.com

Forward-looking Statement

This document contains certain forward-looking statements, including certain plans, expectations, goals, projections, and statements, which are subject to numerous assumptions, risks, and uncertainties. Forward-looking statements may be identified by words such as expect, anticipate, believe, intend, estimate, plan, target, goal, or similar expressions, or future or conditional verbs such as will, may, might, should, would, could , or similar variations.

While there is no assurance that any list of risks and uncertainties or risk factors is complete, below are certain factors which could cause actual results to differ materially from those contained or implied in the forward-looking statements: (1) worsening of credit quality performance due to a number of factors such as the underlying value of collateral that could prove less valuable than otherwise assumed and assumed cash flows may be worse than expected; (2) changes in general economic, political, or industry conditions; uncertainty in U.S. fiscal and monetary policy, including the interest rate policies of the Federal Reserve Board; volatility and disruptions in global capital and credit markets; (3) movements in interest rates; (4) competitive pressures on product pricing and services; (5) success, impact, and timing of our business strategies, including market acceptance of any new products or services implementing our “Fair Play” banking philosophy; (6) changes in accounting policies and principles and the accuracy of our assumptions and estimates used to prepare our financial statements; (7) extended disruption of vital infrastructure; (8) the final outcome of significant litigation; (9) the nature, extent, timing, and results of governmental actions, examinations, reviews, reforms, regulations, and interpretations, including those related to the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Basel III regulatory capital reforms, as well as those involving the OCC, Federal Reserve, FDIC, and CFPB; and (10) the outcome of judicial and regulatory decisions regarding practices in the residential mortgage industry, including among other things the processes followed for foreclosing residential mortgages. Additional factors that could cause results to differ materially from those described above can be found in Huntington’s 2012 Annual Report on Form 10-K, and documents subsequently filed by Huntington with the Securities and Exchange Commission. All forward-looking statements included in this document are based on information available at the time of the release. Huntington assumes no obligation to update any forward-looking statement.

 

12


Basis of Presentation

Use of Non-GAAP Financial Measures

This document may contain GAAP financial measures and non-GAAP financial measures where management believes it to be helpful in understanding Huntington’s results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in this fourth quarter earnings release, conference call slides, or the Form 8-K related to this document, all of which can be found on Huntington’s website at www.huntington-ir.com .

Significant Items

From time to time, revenue, expenses, or taxes are impacted by items judged by Management 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 Management 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 Management decisions associated with significant corporate actions out 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 write-downs, etc., reflect ordinary banking activities and are, therefore, typically excluded from consideration as a Significant Item.

Management believes the disclosure of “Significant Items”, when appropriate, aids analysts/investors in better understanding corporate performance and trends so that they can ascertain which of such items, if any, they may wish to include/exclude from their analysis of the Company’s performance - i.e., within the context of determining how that performance differed from their expectations, as well as how, if at all, to adjust their estimates of future performance accordingly. To this end, Management has adopted a practice of listing “Significant Items” in its external disclosure documents (e.g., earnings press releases, quarterly performance discussions, 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. A number of items could materially impact these periods, including those described in Huntington’s 2012 Annual Report on Form 10-K and other factors described from time to time in Huntington’s other filings with the Securities and Exchange Commission.

Annualized Data

Certain returns, yields, performance ratios, or quarterly growth rates are presented on an “annualized” basis. This is done for analytical and decision-making purposes to better discern underlying performance trends when compared to full-year or year-over-year amounts. For example, loan and deposit growth rates, as well as net charge-off percentages, are most often expressed in terms of an annual rate like 8%. As such, a 2% growth rate for a quarter would represent an annualized 8% growth rate.

Fully-Taxable Equivalent Interest Income and Net Interest Margin

Income from tax-exempt earning assets is increased by an amount equivalent to the taxes that would have been paid if this income had been taxable at statutory rates. This adjustment puts all earning assets, most notably tax-exempt municipal securities and certain lease assets, on a common basis that facilitates comparison of results to results of competitors.

Earnings per Share Equivalent Data

Significant income or expense items may be expressed on a per common share basis. This is done for analytical and decision-making purposes to better discern underlying trends in total corporate earnings per share performance excluding the impact of such items. Investors may also find this information helpful in their evaluation of the Company’s financial performance against published earnings per share mean estimate amounts, which typically exclude the impact of Significant Items. Earnings per share equivalents are usually calculated by applying a 35% effective tax rate to a pre-tax amount to derive an after-tax amount, which is divided by the average shares outstanding during the respective reporting period. Occasionally, when the item involves special tax treatment, the after-tax amount is disclosed separately, with this then being the amount used to calculate the earnings per share equivalent.

 

13


Rounding

Please note that columns of data in this document may not add due to rounding.

About Huntington

Huntington Bancshares Incorporated is a $59 billion regional bank holding company headquartered in Columbus, Ohio. The Huntington National Bank, founded in 1866, and its affiliates provide full-service commercial, small business, and consumer banking services; mortgage banking services; treasury management and foreign exchange services; equipment leasing; wealth and investment management services; trust services; brokerage services; customized insurance brokerage and service programs; and other financial products and services. The principal markets for these services are Huntington’s six-state retail banking franchise: Ohio, Michigan, Pennsylvania, Indiana, West Virginia, and Kentucky. The primary distribution channels include a banking network of more than 700 traditional branches and convenience branches located in grocery stores and retirement centers, and through an array of alternative distribution channels including internet and mobile banking, telephone banking, and more than 1,500 ATMs. Through automotive dealership relationships within its six-state retail banking franchise area and selected other Midwest and New England states, Huntington also provides commercial banking services to the automotive dealers and retail automobile financing for dealer customers.

###

 

14

Table of Contents

Exhibit 99.2

HUNTINGTON BANCSHARES INCORPORATED

Quarterly Financial Supplement

December 2013

Table of Contents

 

Quarterly Key Statistics

     1  

Annual Key Statistics

     2  

Key Statistics Footnotes

     3  

Consolidated Balance Sheets

     4  

Loans and Leases Composition

     5  

Deposits Composition

     6  

Consolidated Quarterly Average Balance Sheets

     7  

Consolidated Quarterly Net Interest Margin - Interest Income / Expense

     8  

Consolidated Quarterly Net Interest Margin - Yield

     9  

Selected Quarterly Income Statement Data

     10  

Quarterly Mortgage Banking Income

     11  

Quarterly Credit Reserves Analysis

     12  

Quarterly Net Charge-Off Analysis

     13  

Quarterly Nonaccrual Loans and Leases (NALs) and Nonperforming Assets (NPAs)

     14  

Quarterly Accruing Past Due Loans and Leases and Accruing Troubled Debt Restructured Loans

     15  

Quarterly Common Stock Summary, Capital, and Other Data

     16  

Consolidated Annual Average Balance Sheets

     17  

Consolidated Annual Net Interest Margin - Interest Income / Expense

     18  

Consolidated Annual Net Interest Margin - Yield

     19  

Selected Annual Income Statement Data

     20  

Annual Mortgage Banking Income

     21  

Annual Credit Reserves Analysis

     22  

Annual Net Charge-Off Analysis

     23  

Annual Nonaccrual Loans and Leases (NALs) and Nonperforming Assets (NPAs)

     24  

Annual Accruing Past Due Loans and Leases and Accruing and Nonaccruing Troubled Debt Restructured Loans

     25  


Table of Contents

Notes:

The preparation of financial statement data in conformity with accounting principles generally accepted in the United States (GAAP) requires management to make estimates and assumptions that affect amounts reported. Actual results could differ from those estimates. Certain prior period amounts have been reclassified to conform to the current period’s presentation.

Non-Regulatory Capital Ratios

In addition to capital ratios defined by banking regulators, the Company considers various other measures when evaluating capital utilization and adequacy, including:

 

    Tangible common equity to tangible assets,

 

    Tier 1 common equity to risk-weighted assets using Basel I and Basel III definitions, and

 

    Tangible common equity to risk-weighted assets using Basel I definition.

These non-regulatory capital ratios are viewed by management as useful additional methods of reflecting the level of capital available to withstand unexpected market conditions. Additionally, presentation of these ratios allows readers to compare the Company’s capitalization to other financial services companies. These ratios differ from capital ratios defined by banking regulators principally in that the numerator excludes preferred securities, the nature and extent of which varies among different financial services companies. These ratios are not defined in GAAP or federal banking regulations. As a result, these non-regulatory capital ratios disclosed by the Company may be considered non-GAAP financial measures.

Because there are no standardized definitions for these non-regulatory capital ratios, the Company’s calculation methods may differ from those used by other financial services companies. Also, there may be limits in the usefulness of these measures to investors. As a result, the Company encourages readers to consider the consolidated financial statements and other financial information contained in the related press release in their entirety, and not to rely on any single financial measure. Basel III Tier 1 common capital ratio estimates are based on management’s current interpretation, expectations, and understanding of the final U.S. Basel III rules adopted by the Federal Reserve Board and released on July 2, 2012.


Table of Contents

Huntington Bancshares Incorporated

Quarterly Key Statistics (1)

(Unaudited)

 

     2013     2012     Percent Changes vs.  

(dollar amounts in thousands, except per share amounts)

   Fourth     Third     Fourth     3Q13     4Q12  

Net interest income

   $ 430,649     $ 424,852     $ 434,055       1 %     (1 )%

Provision for credit losses

     24,331       11,400       39,458       113       (38

Noninterest income

     246,628       250,503       297,651       (2     (17

Noninterest expense

     446,009       423,336       470,628       5       (5
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     206,937       240,619       221,620       (14     (7

Provision for income taxes

     49,114       62,132       54,341       (21     (10
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 157,823     $ 178,487     $ 167,279       (12 )%     (6 )%
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Dividends on preferred shares

     7,965       7,967       7,973       —          (0
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income applicable to common shares

   $ 149,858     $ 170,520     $ 159,306       (12 )%     (6 )%
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income per common share - diluted

   $ 0.18     $ 0.20     $ 0.19       (10 )%     (5 )%

Cash dividends declared per common share

     0.05       0.05       0.04       —          25  

Book value per common share at end of period

     6.88       6.72       6.41       2       7  

Tangible book value per common share at end of period

     6.27       6.10       5.78       3       8  

Average common shares - basic

     830,590       830,398       847,220       —          (2

Average common shares - diluted

     842,324       841,025       853,306       —          (1

Return on average assets

     1.09 %     1.27 %     1.19 %    

Return on average common shareholders’ equity

     10.5       12.3       11.6      

Return on average tangible common shareholders’ equity (2)

     12.1       14.1       13.5      

Net interest margin (3)

     3.28       3.34       3.45      

Efficiency ratio (4)

     63.7       60.6       62.3      

Noninterest Income/Total Revenue

     36.0       36.7       40.4      

Effective tax rate

     23.7       25.8       24.5      

Average loans and leases

   $ 43,138,336     $ 41,994,204     $ 40,396,541       3       7  

Average loans and leases - linked quarter annualized growth rate

     10.9 %     6.9 %     2.8 %    

Average earning assets

   $ 53,011,850     $ 51,247,215     $ 50,682,461       3       5  

Average total assets

     57,648,191       55,914,791       56,053,542       3       3  

Average core deposits (5)

     44,747,659       43,773,153       44,309,913       2       1  

Average core deposits - linked quarter annualized growth rate

     8.9 %     —   %     5.0 %    

Average shareholders’ equity

   $ 6,055,738     $ 5,879,479     $ 5,842,493       3       4  

Total assets at end of period

     59,476,344       56,648,251       56,153,185       5       6  

Total shareholders’ equity at end of period

     6,099,323       5,961,579       5,790,211       —          5  

Net charge-offs (NCOs)

     46,447       55,742       70,130       (17     (34

NCOs as a % of average loans and leases

     0.43 %     0.53 %     0.69 %    

Nonaccrual loans and leases (NALs)

   $ 322,056     $ 333,106     $ 407,633       (3     (21

NAL ratio

     0.75 %     0.78 %     1.00 %    

Nonperforming assets (NPAs) (6)

   $ 352,160     $ 374,260     $ 445,775       (6     (21

NPA ratio (6)

     0.82 %     0.88 %     1.09 %     (7     (25

Allowance for loan and lease losses (ALLL) as a % of total loans and leases at the end of period

     1.50       1.57       1.89      

ALLL plus allowance for unfunded loan commitments and letters of credit (ACL) as a % of total loans and leases at the end of period

     1.65       1.72       1.99      

ACL as a % of NALs

     221       220       199      

ACL as a % of NPAs

     202       196       182      

Tier 1 leverage ratio (7)

     10.67       10.85       10.36      

Tier 1 common risk-based capital ratio (7)

     10.90       10.85       10.48      

Tier 1 risk-based capital ratio (7)

     12.28       12.36       12.02      

Total risk-based capital ratio (7)

     14.57       14.67       14.50      

Tangible common equity / tangible assets ratio (8)

     8.83       9.02       8.76      

See Notes to the Quarterly Key Statistics.

 

1


Table of Contents

Huntington Bancshares Incorporated

Annual Key Statistics (1)

(Unaudited)

 

     Year Ended December 31,     Change  

(dollar amounts in thousands, except per share amounts)

   2013     2012     Amount     Percent  

Net interest income

   $ 1,704,608     $ 1,710,524     $ (5,916     —   %

Provision for credit losses

     90,045       147,388       (57,343     (39

Noninterest income

     997,995       1,097,857       (99,862     (9

Noninterest expense

     1,758,003       1,835,876       (77,873     (4
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     854,555       825,117       29,438       4  

Provision for income taxes

     215,814       184,095       31,719       17  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net Income

   $ 638,741     $ 641,022     $ (2,281     —   %
  

 

 

   

 

 

   

 

 

   

 

 

 

Dividends on preferred shares

     31,869       31,989       (120     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income applicable to common shares

   $ 606,872     $ 609,033     $ (2,161     —   %
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income per common share - diluted

   $ 0.72     $ 0.71     $ 0.01       1 %

Cash dividends declared per common share

     0.19       0.16       0.03       19  

Average common shares - basic

     834,205       857,962       (23,757     (3

Average common shares - diluted

     843,974       863,402       (19,428     (2

Return on average assets

     1.13 %     1.15 %    

Return on average common shareholders’ equity

     11.0       11.5      

Return on average tangible common shareholders’ equity (2)

     12.7       13.5      

Net interest margin (3)

     3.36       3.41      

Efficiency ratio (4)

     62.9       63.4      

Noninterest Income/Total Revenue

     36.6       38.8      

Effective tax rate

     25.3       22.3      

Average loans and leases

   $ 41,825,842     $ 40,210,186     $ 1,615,657       4 %

Average earning assets

     51,598,472       50,709,060       889,412       2  

Average total assets

     56,299,313       55,673,599       625,715       1  

Average core deposits (5)

     43,978,894       43,065,687       913,207       2  

Average shareholders’ equity

     5,914,914       5,671,455       243,459       4  

Net charge-offs (NCOs)

     188,666       342,462       (153,796     (45

NCOs as a % of average loans and leases

     0.45 %     0.85 %     (0.40     (47

See Notes to the Annual and Quarterly Key Statistics.

 

2


Table of Contents

Key Statistics Footnotes

 

(1)   Comparisons for all presented periods are impacted by a number of factors. Refer to Significant Items.
(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 (losses).
(5)   Includes noninterest-bearing and interest-bearing demand deposits, money market deposits, savings and other domestic deposits, and core certificates of deposit.
(6)   NPAs include other real estate owned.
(7)   December 31, 2013, figures are estimated.
(8)   Tangible common equity (total common equity less goodwill and other intangible assets) divided by tangible assets (total assets less goodwill and other intangible assets). Other intangible assets are net of deferred tax liability, and calculated assuming a 35% tax rate.

 

3


Table of Contents

Huntington Bancshares Incorporated

Consolidated Balance Sheets

 

     2013     2012     Percent Changes vs.  

(dollar amounts in thousands, except number of shares)

   December 31,     September 30,     December 31,     3Q13     4Q12  
     (Unaudited)     (Unaudited)                    

Assets

          

Cash and due from banks

   $ 1,001,132     $ 1,107,658     $ 1,262,806       (10 )%     (21 )%

Interest-bearing deposits in banks

     57,043       63,100       70,921       (10     (20

Trading account securities

     35,573       74,167       91,205       (52     (61

Loans held for sale

     326,212       345,621       764,309       (6     (57

Available-for-sale and other securities

     7,308,753       6,446,681       7,566,175       13       (3

Held-to-maturity securities

     3,836,667       2,236,121       1,743,876       72       120  

Loans and leases (1)

     43,120,500       42,555,833       40,728,425       1       6  

Allowance for loan and lease losses

     (647,870     (666,030     (769,075     (3     (16
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loans and leases

     42,472,630       41,889,803       39,959,350       1       6  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Bank owned life insurance

     1,647,170       1,633,247       1,596,056       1       3  

Premises and equipment

     634,657       639,632       617,257       (1     3  

Goodwill

     444,268       444,268       444,268       —          —     

Other intangible assets

     93,193       103,512       132,157       (10     (29

Accrued income and other assets

     1,619,046       1,664,441       1,904,805       (3     (15
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

   $ 59,476,344     $ 56,648,251     $ 56,153,185       5 %     6 %
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities and shareholders’ equity

          

Liabilities

          

Deposits (2)

   $ 47,506,718     $ 46,564,046     $ 46,252,683       2 %     3 %

Short-term borrowings

     552,143       660,932       589,814       (16     (6

Federal Home Loan Bank advances

     1,808,293       333,352       1,008,959       442       79  

Other long-term debt

     1,349,119       904,668       158,784       49       750  

Subordinated notes

     1,100,860       1,111,598       1,197,091       (1     (8

Accrued expenses and other liabilities

     1,059,888       1,112,076       1,155,643       (5     (8
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities

     53,377,021       50,686,672       50,362,974       5       6  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Shareholder’s equity

          

Preferred stock - authorized 6,617,808 shares-

          

Series A, 8.50% fixed rate, non-cumulative perpetual convertible preferred stock, par value of $0.01, and liquidation value per share of $1,000

     362,507        362,507        362,507       —          —     

Series B, floating rate, non-voting, non-cumulative perpetual preferred stock, par value of $0.01, and liquidation value per share of $1,000

     23,785       23,785       23,785       —          —     

Common stock - Par value of $0.01

     8,322       8,315       8,441       —          (1

Capital surplus

     7,398,515       7,387,033       7,475,149       —          (1

Less treasury shares, at cost

     (9,643     (10,893     (10,921     (11     (12

Accumulated other comprehensive loss

     (214,009     (230,767     (150,817     (7     42  

Retained earnings

     (1,470,154     (1,578,401     (1,917,933     (7     (23
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total shareholders’ equity

     6,099,323       5,961,579       5,790,211       2       5  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities and shareholders’ equity

   $ 59,476,344     $ 56,648,251     $ 56,153,185       5 %     6 %
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Common shares authorized (par value of $0.01)

     1,500,000,000       1,500,000,000       1,500,000,000      

Common shares issued

     830,963,427       831,516,546       844,105,349      

Common shares outstanding

     832,217,098       830,144,646       842,812,709      

Treasury shares outstanding

     1,253,671       1,371,900       1,292,640      

Preferred shares issued

     1,967,071       1,967,071       1,967,071      

Preferred shares outstanding

     398,007       398,007       398,007      

 

(1)   See page 5 for detail of loans and leases.
(2)   See page 6 for detail of deposits.

 

4


Table of Contents

Huntington Bancshares Incorporated

Loans and Leases Composition

 

     2013     2012  

(dollar amounts in millions)

   December 31,     September 30,     June 30,     March 31,     December 31,  
     (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)               

Ending Balances by Type:

                        

Commercial: (1)

                        

Commercial and industrial

   $ 17,594        41 %   $ 17,335        41 %   $ 17,113       41 %   $ 17,267        42 %   $ 16,971        42 %

Commercial real estate:

                        

Construction

     557        1       544        1       607       1       574        1       648        2  

Commercial

     4,293        10       4,328        10       4,286       10       4,485        11       4,751        12  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Commercial real estate

     4,850        11       4,872        11       4,893       11       5,059        12       5,399        14  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total commercial

     22,444        52       22,207        52       22,006       52       22,326        54       22,370        56  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Consumer:

                        

Automobile

     6,639        15       6,317        15       5,810       14       5,036        12       4,634        11  

Home equity

     8,336        19       8,347        20       8,369       20       8,474        21       8,335        20  

Residential mortgage

     5,321        12       5,307        12       5,168       12       5,051        12       4,970        12  

Other consumer

     380        2       378        1       387       2       397        1       419        1  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total consumer

     20,676        48       20,349        48       19,734       48       18,958        46       18,358        44  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total loans and leases

   $ 43,120        100 %   $ 42,556        100 %   $ 41,740       100 %   $ 41,284        100 %   $ 40,728        100 %
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Ending Balances by Business Segment:

                        

Retail and Business Banking

   $ 12,742        30 %   $ 12,673        30 %   $ 12,642       30 %   $ 12,749        31 %   $ 12,644        31 %

Regional and Commercial Banking

     10,763        25       11,397        27       11,119       27       11,166        27       10,679        26  

AFCRE

     13,590        32       12,484        29       12,119       29       11,526        28       11,396        28  

WGH

     5,974        13       5,961        14       5,868       14       5,767        14       5,887        15  

Treasury / Other

     51        —          41        —          (8     —          76        —          122        —     
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total loans and leases

   $ 43,120        100 %   $ 42,556        100 %   $ 41,740       100 %   $ 41,284        100 %   $ 40,728        100 %
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 
     2013     2012  
     Fourth     Third     Second     First     Fourth  

Average Balances by Business Segment:

                        

Retail and Business Banking

   $ 12,726        29 %   $ 12,633        30 %   $ 12,688       31 %   $ 12,693        31 %   $ 12,677        31 %

Regional and Commercial Banking

     11,153        26       11,150        27       11,058       27       10,987        27       10,390        26  

AFCRE

     13,238        31       12,239        29       11,683       28       11,454        28       11,221        28  

WGH

     5,977        14       5,923        14       5,837       14       5,711        14       6,054        15  

Treasury / Other

     45        —          49        —          14       —          19        —          55        —     
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total loans and leases

   $ 43,139        100 %   $ 41,994        100 %   $ 41,280       100 %   $ 40,864        100 %   $ 40,397        100 %
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

 

(1)   As defined by regulatory guidance, there were no commercial loans outstanding that would be considered a concentration of lending to a particular industry or group of industries.

 

5


Table of Contents

Huntington Bancshares Incorporated

Deposits Composition

 

     2013     2012  

(dollar amounts in millions)

   December 31,     September 30,     June 30,     March 31,     December 31,  
     (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)               

Ending Balances by Type:

                         

Demand deposits - noninterest-bearing

   $ 13,650        29 %   $ 13,421        29 %   $ 13,491        29 %   $ 12,757        27 %   $ 12,600        27 %

Demand deposits - interest-bearing

     5,880        12       5,856        13       5,977        13       6,135        13       6,218        13  

Money market deposits

     17,213        36       16,212        34       15,131        33       15,165        32       14,691        32  

Savings and other domestic deposits

     4,871        10       4,946        11       5,054        11       5,174        11       5,002        11  

Core certificates of deposit

     3,723        8       4,108        9       4,353        9       5,170        11       5,516        12  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total core deposits

     45,337        95       44,543        96       44,006        95       44,401        94       44,027        95  

Other domestic deposits of $250,000 or more

     274        1       268        1       283        1       355        1       354        1  

Brokered deposits and negotiable CDs

     1,580        3       1,366        3       1,695        4       1,807        4       1,594        3  

Deposits in foreign offices

     316        1       387        —          347        —          304        1       278        1  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total deposits

   $ 47,507        100 %   $ 46,564        100 %   $ 46,331        100 %   $ 46,867        100 %   $ 46,253        100 %
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total core deposits:

                         

Commercial

   $ 19,982        44 %   $ 19,526        44 %   $ 18,922        43 %   $ 18,502        42 %   $ 18,358        42 %

Consumer

     25,355        56       25,017        56       25,084        57       25,899        58       25,669        58  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total core deposits

   $ 45,337        100 %   $ 44,543        100 %   $ 44,006        100 %   $ 44,401        100 %   $ 44,027        100 %
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Ending Balances by Business Segment:

                         

Retail and Business Banking

   $ 28,314        60 %   $ 28,200        61 %   $ 28,209        61 %   $ 28,719        61 %   $ 28,367        61 %

Regional and Commercial Banking

     6,942        15       6,191        13       5,639        12       5,627        12       5,863        13  

AFCRE

     1,164        2       1,084        2       1,021        2       970        2       995        2  

WGH

     9,657        20       9,935        22       10,069        22       10,015        22       9,508        21  

Treasury / Other (1)

     1,430        3       1,154        2       1,393        3       1,536        3       1,520        3  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total deposits

   $ 47,507        100 %   $ 46,564        100 %   $ 46,331        100 %   $ 46,867        100 %   $ 46,253        100 %
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 
     2013     2012  
     Fourth     Third     Second     First     Fourth  

Average Balances by Business Segment:

                         

Retail and Business Banking

   $ 28,450        61 %   $ 28,172        61 %   $ 28,345        61 %   $ 28,331        62 %   $ 28,301        61 %

Regional and Commercial Banking

     6,353        14       5,912        13       5,506        12       5,668        12       6,120        13  

AFCRE

     1,104        2       1,018        2       954        2       922        2       949        2  

WGH

     9,722        21       9,593        21       9,919        22       9,623        21       9,873        21  

Treasury / Other (1)

     1,145        2       1,275        3       1,463        3       1,469        3       1,524        3  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total deposits

   $ 46,774        100 %   $ 45,970        100 %   $ 46,187        100 %   $ 46,013        100 %   $ 46,767        100 %
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

 

(1)   Comprised primarily of national market deposits.

 

6


Table of Contents

Huntington Bancshares Incorporated

Consolidated Quarterly Average Balance Sheets

(Unaudited)

 

     Average Balances              
     2013     2012     Percent Changes vs.  

(dollar amounts in millions)

   Fourth     Third     Second     First     Fourth     3Q13     4Q12  

Assets

              

Interest-bearing deposits in banks

   $ 71     $ 54     $ 84     $ 72     $ 73       31 %     (3 )%

Loans held for sale

     322       379       678       709       840       (15     (62

Securities:

              

Available-for-sale and other securities:

              

Taxable

     5,818       6,040       6,728       6,964       7,131       (4     (18

Tax-exempt

     548       565       591       549       492       (3     11  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total available-for-sale and other securities

     6,366       6,605       7,319       7,513       7,623       (4     (16

Trading account securities

     76       76       84       85       97       —          (22

Held-to-maturity securities - taxable

     3,038       2,139       1,711       1,717       1,652       42       84  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Securities

     9,480       8,820       9,114       9,315       9,372       7       1  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loans and leases: (1)

              

Commercial:

              

Commercial and industrial

     17,671       17,032       17,033       16,954       16,507       4       7  

Commercial real estate:

              

Construction

     573       565       586       598       576       1       (1

Commercial

     4,331       4,345       4,429       4,694       4,897       —          (12
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Commercial real estate

     4,904       4,910       5,015       5,292       5,473       —          (10
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total commercial

     22,575       21,942       22,048       22,246       21,980       3       3  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Consumer:

              

Automobile

     6,502       6,075       5,283       4,833       4,486       7       45  

Home equity

     8,346       8,341       8,263       8,395       8,345       —          —     

Residential mortgage

     5,331       5,256       5,225       4,978       5,155       1       3  

Other consumer

     385       380       461       412       431       1       (11
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total consumer

     20,564       20,052       19,232       18,618       18,417       3       12  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total loans and leases

     43,139       41,994       41,280       40,864       40,397       3       7  

Allowance for loan and lease losses

     (668     (717     (746     (772     (783     (7     (15
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loans and leases

     42,471       41,277       40,534       40,092       39,614       3       7  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total earning assets

     53,012       51,247       51,156       50,960       50,682       3       5  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cash and due from banks

     846       944       940       904       1,459       (10     (42

Intangible assets

     542       552       563       571       581       (2     (7

All other assets

     3,917       3,889       3,976       4,065       4,115       1       (5
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

   $ 57,649     $ 55,915     $ 55,889     $ 55,728     $ 56,054       3 %     3 %
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities and shareholders’ equity

              

Deposits:

              

Demand deposits - noninterest-bearing

   $ 13,337     $ 13,088     $ 12,879     $ 12,165     $ 13,121       2 %     2 %

Demand deposits - interest-bearing

     5,755       5,763       5,927       5,977       5,843       —          (2
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total demand deposits

     19,092       18,851       18,806       18,142       18,964       1       1  

Money market deposits

     16,827       15,739       15,069       15,045       14,749       7       14  

Savings and other domestic deposits

     4,912       5,007       5,115       5,083       4,960       (2     (1

Core certificates of deposit

     3,916       4,176       4,778       5,346       5,637       (6     (31
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total core deposits

     44,747       43,773       43,768       43,616       44,310       2       1  

Other domestic deposits of $250,000 or more

     275       268       324       360       359       3       (23

Brokered deposits and negotiable CDs

     1,398       1,553       1,779       1,697       1,756       (10     (20

Deposits in foreign offices

     354       376       316       340       342       (6     4  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total deposits

     46,774       45,970       46,187       46,013       46,767       2       —     

Short-term borrowings

     629       710       701       762       1,012       (11     (38

Federal Home Loan Bank advances

     851       549       757       686       42       55       1,926  

Subordinated notes and other long-term debt

     2,244       1,753       1,292       1,348       1,374       28       63  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total interest-bearing liabilities

     37,161       35,894       36,058       36,644       36,074       4       3  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

All other liabilities

     1,095       1,054       1,064       1,085       1,017       4       8  

Shareholders’ equity

     6,056       5,879       5,888       5,834       5,842       3       4  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities and shareholders’ equity

   $ 57,649     $ 55,915     $ 55,889     $ 55,728     $ 56,054       3 %     3 %
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)   Includes nonaccrual loans.

 

7


Table of Contents

Huntington Bancshares Incorporated

Consolidated Quarterly Net Interest Margin - Interest Income / Expense (1)

(Unaudited)

 

     Interest Income / Expense  
     2013      2012  

(dollar amounts in thousands)

   Fourth      Third      Second      First      Fourth  

Assets

              

Interest-bearing deposits in banks

   $ 7      $ 9      $ 57      $ 29      $ 51  

Loans held for sale

     3,586        3,699        5,739        5,702        6,675  

Securities:

              

Available-for-sale and other securities:

              

Taxable

     34,554        35,280        38,538        40,185        41,335  

Tax-exempt

     8,696        5,700        5,829        5,438        4,968  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total available-for-sale and other securities

     43,250        40,980        44,367        45,623        46,303  

Trading account securities

     79        43        126        106        245  

Held-to-maturity securities - taxable

     18,378        12,220        9,778        9,838        9,244  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total securities

     61,708        53,243        54,272        55,567        55,792  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Loans and leases:

              

Commercial:

              

Commercial and industrial

     159,686        160,285        161,543        162,396        163,644  

Commercial real estate:

              

Construction

     5,916        5,650        5,829        6,045        6,075  

Commercial

     43,906        45,525        46,214        46,978        52,543  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Commercial real estate

     49,822        51,175        52,043        53,023        58,618  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total commercial

     209,508        211,460        213,586        215,419        222,262  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Consumer:

              

Automobile

     60,080        58,216        52,159        51,013        50,930  

Home equity

     86,460        86,131        85,796        86,991        88,541  

Residential mortgage

     50,225        50,111        49,912        49,353        52,440  

Other consumer

     6,447        6,677        7,649        7,168        7,774  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total consumer

     203,212        201,135        195,516        194,525        199,685  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total loans and leases

     412,720        412,595        409,102        409,944        421,947  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total earning assets

   $ 478,020      $ 469,546      $ 469,169      $ 471,242      $ 484,465  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Liabilities

              

Deposits:

              

Demand deposits - noninterest-bearing

   $ —         $ —         $ —         $ —         $ —     

Demand deposits - interest-bearing

     630        636        617        642        734  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total demand deposits

     630        636        617        642        734  

Money market deposits

     11,296        10,211        8,886        8,438        9,843  

Savings and other domestic deposits

     2,925        3,134        3,416        3,818        4,150  

Core certificates of deposit

     10,330        11,094        13,410        15,710        17,144  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total core deposits

     25,181        25,075        26,329        28,608        31,871  

Other domestic deposits of $250,000 or more

     271        300        406        465        553  

Brokered deposits and negotiable CDs

     1,385        2,145        2,746        2,823        3,141  

Deposits in foreign offices

     122        136        110        140        152  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total deposits

     26,959        27,656        29,591        32,036        35,717  

Short-term borrowings

     129        158        179        234        363  

Federal Home Loan Bank advances

     306        197        272        301        129  

Subordinated notes and other long-term debt

     11,781        10,049        7,603        8,578        8,732  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total interest bearing liabilities

     39,175        38,060        37,645        41,149        44,941  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net interest income

   $ 438,845      $ 431,486      $ 431,524      $ 430,093      $ 439,524  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)   Fully-taxable equivalent (FTE) income and expense calculated assuming a 35% tax rate. See page 10 for the FTE adjustment.

 

8


Table of Contents

Huntington Bancshares Incorporated

Consolidated Quarterly Net Interest Margin - Yield

(Unaudited)

 

     Average Rates (2)  
     2013     2012  
     Fourth     Third     Second     First     Fourth  

Fully-taxable equivalent basis (1)

          

Assets

      

Interest-bearing deposits in banks

     0.04 %     0.07 %     0.27 %     0.16 %     0.28 %

Loans held for sale

     4.46       3.89       3.39       3.22       3.18  

Securities:

      

Available-for-sale and other securities:

      

Taxable

     2.38       2.34       2.29       2.31       2.32  

Tax-exempt

     6.34       4.04       3.94       3.96       4.03  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total available-for-sale and other securities

     2.72       2.48       2.42       2.43       2.43  

Trading account securities

     0.42       0.23       0.60       0.50       1.01  

Held-to-maturity securities - taxable

     2.42       2.29       2.29       2.29       2.24  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total securities

     2.60       2.41       2.38       2.39       2.38  

Loans and leases: (2)(3)

      

Commercial:

      

Commercial and industrial

     3.54       3.68       3.75       3.83       3.88  

Commercial real estate:

      

Construction

     4.04       3.91       3.93       4.05       4.13  

Commercial

     3.97       4.10       4.13       4.00       4.20  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Commercial real estate

     3.98       4.08       4.09       4.01       4.19  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total commercial

     3.63       3.77       3.83       3.87       3.96  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Consumer:

      

Automobile

     3.67       3.80       3.96       4.28       4.52  

Home equity

     4.11       4.10       4.16       4.20       4.24  

Residential mortgage

     3.77       3.81       3.82       3.97       4.07  

Other consumer

     6.64       6.98       6.66       7.05       7.16  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total consumer

     3.93       3.99       4.07       4.22       4.33  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total loans and leases

     3.77       3.87       3.95       4.03       4.13  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total earning assets

     3.58 %     3.64 %     3.68 %     3.75 %     3.80 %
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities

      

Deposits:

      

Demand deposits - noninterest-bearing

     —   %     —   %     —   %     —   %     —   %

Demand deposits - interest-bearing

     0.04       0.04       0.04       0.04       0.05  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total demand deposits

     0.01       0.01       0.01       0.01       0.02  

Money market deposits

     0.27       0.26       0.24       0.23       0.27  

Savings and other domestic deposits

     0.24       0.25       0.27       0.30       0.33  

Core certificates of deposit

     1.05       1.05       1.13       1.19       1.21  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total core deposits

     0.32       0.32       0.34       0.37       0.41  

Other domestic deposits of $250,000 or more

     0.39       0.44       0.50       0.52       0.61  

Brokered deposits and negotiable CDs

     0.39       0.55       0.62       0.67       0.71  

Deposits in foreign offices

     0.14       0.14       0.14       0.17       0.18  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total deposits

     0.32       0.33       0.36       0.38       0.42  

Short-term borrowings

     0.08       0.09       0.10       0.12       0.14  

Federal Home Loan Bank advances

     0.14       0.14       0.14       0.18       1.20  

Subordinated notes and other long-term debt

     2.10       2.29       2.35       2.54       2.55  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total interest-bearing liabilities

     0.42       0.42       0.42       0.45       0.50  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest rate spread

     3.15       3.20       3.26       3.30       3.30  

Impact of noninterest-bearing funds on margin

     0.13       0.14       0.12       0.12       0.15  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest margin

     3.28 %     3.34 %     3.38 %     3.42 %     3.45 %
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Commercial Loan Derivative Impact                               
(Unaudited)             
     Average Rates (2)  
     2013     2012  
     Fourth     Third     Second     First     Fourth  

Fully-taxable equivalent basis (1)

          

Commercial loans (2)(3)

     3.47     3.58 %     3.57 %     3.58 %     3.72 %

Impact of commercial loan derivatives

     0.17       0.19        0.26       0.29       0.24  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total commercial - as reported

     3.63 %     3.77 %     3.83 %     3.87 %     3.96 %
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average 30 day LIBOR

     0.17 %     0.19 %     0.20 %     0.20 %     0.21 %

 

(1)   Fully-taxable equivalent (FTE) yields are calculated assuming a 35% tax rate. See page 10 for the FTE adjustment.
(2)   Loan, lease, and deposit average rates include impact of applicable derivatives, non-deferrable fees, and amortized fees.
(3)   Includes the impact of nonaccrual loans.

 

9


Table of Contents

Huntington Bancshares Incorporated

Selected Quarterly Income Statement Data(1)

(Unaudited)

 

     2013     2012  

(dollar amounts in thousands, except per share amounts)

   Fourth      Third      Second     First     Fourth  

Interest income

   $ 469,824      $ 462,912      $ 462,582     $ 465,319     $ 478,995  

Interest expense

     39,175        38,060        37,645       41,149       44,940  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Net interest income

     430,649        424,852        424,937       424,170       434,055  

Provision for credit losses

     24,331        11,400        24,722       29,592       39,458  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Net interest income after provision for credit losses

     406,318        413,452        400,215       394,578       394,597  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Service charges on deposit accounts

     69,992        72,918        68,009       60,883       68,083  

Mortgage banking income

     24,327        23,621        33,659       45,248       61,711  

Trust services

     30,711        30,470        30,666       31,160       31,388  

Electronic banking

     24,251        24,282        23,345       20,713       21,011  

Insurance income

     15,556        17,269        17,187       19,252       17,268  

Brokerage income

     15,116        16,532        19,546       17,995       17,415  

Bank owned life insurance income

     13,816        13,740        15,421       13,442       13,767  

Capital markets fees

     12,332        12,825        12,229       7,834       12,694  

Gain on sale of loans

     7,144        5,063        3,348       2,616       20,690  

Securities gains (losses)

     1,239        98        (410     (509     863  

Other income

     32,144        33,685        25,655       33,575       32,761  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Total noninterest income

     246,628        250,503        248,655       252,209       297,651  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Personnel costs

     249,554        229,326        263,862       258,895       253,952  

Outside data processing and other services

     51,071        49,313        49,898       49,265       48,699  

Net occupancy

     31,983        35,591        27,656       30,114       29,008  

Equipment

     28,775        28,191        24,947       24,880       26,580  

Marketing

     13,704        12,271        14,239       10,971       16,456  

Deposit and other insurance expense

     10,056        11,155        13,460       15,490       16,327  

Amortization of intangibles

     10,320        10,362        10,362       10,320       11,647  

Professional services

     11,567        12,487        9,341       7,192       22,514  

Other expense

     38,979        34,640        32,100       35,666       45,445  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Total noninterest expense

     446,009        423,336        445,865       442,793       470,628  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Income before income taxes

     206,937        240,619        203,005       203,994       221,620  

Provision for income taxes

     49,114        62,132        52,354       52,214       54,341  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Net income

   $ 157,823      $ 178,487      $ 150,651     $ 151,780     $ 167,279  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Dividends on preferred shares

     7,965        7,967        7,967       7,970       7,973  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Net income applicable to common shares

   $ 149,858      $ 170,520      $ 142,684     $ 143,810     $ 159,306  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Average common shares - basic

     830,590        830,398        834,730       841,103       847,220  

Average common shares - diluted

     842,324        841,025        843,840       848,708       853,306  

Per common share

            

Net income - basic

   $ 0.18      $ 0.21      $ 0.17     $ 0.17     $ 0.19  

Net income - diluted

     0.18        0.20        0.17       0.17       0.19  

Cash dividends declared

     0.05        0.05        0.05       0.04       0.04  

Revenue - fully-taxable equivalent (FTE)

            

Net interest income

   $ 430,649      $ 424,852      $ 424,937     $ 424,170     $ 434,055  

FTE adjustment

     8,196        6,634        6,587       5,923       5,470  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Net interest income (2)

     438,845        431,486        431,524       430,093       439,525  

Noninterest income

     246,628        250,503        248,655       252,209       297,651  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Total revenue (2)

   $ 685,473      $ 681,989      $ 680,179     $ 682,302     $ 737,176  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

 

(1) Comparisons for presented periods are impacted by a number of factors. Refer to Significant Items.
(2) On a fully-taxable equivalent (FTE) basis assuming a 35% tax rate.

 

10


Table of Contents

Huntington Bancshares Incorporated

Quarterly Mortgage Banking Income

(Unaudited)

 

     2013     2012     Percent Changes vs.  

(dollar amounts in thousands, except as noted)

   Fourth     Third     Second     First     Fourth     3Q13     4Q12  

Mortgage banking income

              

Origination and secondary marketing

   $ 14,201     $ 15,568     $ 27,917     $ 27,330     $ 44,497       (9 )%     (68 )%

Servicing fees

     10,809       10,868       10,898       11,241       11,491       (1     (6

Amortization of capitalized servicing

     (6,062     (6,783     (7,998     (7,903     (9,116     (11     (34

Other mortgage banking income

     3,397       3,685       4,470       4,654       4,828       (8     (30
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Subtotal

     22,345       23,338       35,287       35,322       51,700       (4     (57

MSR valuation adjustment (1)

     3,458       173       14,127       17,798