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) April 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 April 16, 2014, Huntington Bancshares Incorporated (“Huntington”) issued a news release announcing its earnings for the quarter ended March 31, 2014. Also on April 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 April 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 17270512. 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 April 30, 2014, at (855) 859-2056 or (404) 537-3406; conference call ID 17270512.

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 2013 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 April 16, 2014.
Exhibit 99.2   

   Quarterly Financial Supplement, March 2014.


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: April 16, 2014     By:  

/s/ Richard A. Cheap

      Richard A. Cheap
      Secretary


EXHIBIT INDEX

 

Exhibit No.    Description
Exhibit 99.1    News release of Huntington Bancshares Incorporated, April 16, 2014.
Exhibit 99.2    Quarterly Financial Supplement, March 2014.

Exhibit 99.1

 

LOGO

FOR IMMEDIATE RELEASE

April 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 2014 FIRST QUARTER NET

INCOME OF $149 MILLION AND EARNINGS PER COMMON SHARE OF $0.17

AVERAGE LOANS GROW MORE THAN 6% FROM THE PRIOR YEAR

Specific highlights compared with the 2013 First Quarter:

 

  Earnings per common share stable at $0.17, net income down 3% to $149 million

 

  $0.41, or 7%, increase in tangible book value per common share to $6.31

 

  $5 million, or 1%, increase in fully-taxable equivalent revenue

 

  $13 million, or 3%, increase in fully-taxable equivalent net interest income to $443 million, reflecting:

 

    8% average earning asset growth, and

 

    3.27% fully-taxable equivalent net interest margin (NIM), down 15 basis points

 

  $8 million, or 3%, decrease in noninterest income, reflecting:

 

    $22 million, or 49%, decrease in mortgage banking income, and

 

    $17 million increase in securities gains, related to repositioning the portfolio for Liquidity Coverage Ratio

 

  $17 million, or 4%, increase in noninterest expense, including $13 million of one-time merger-related expenses and a $9 million increase in litigation reserves

 

  1.01% return on average assets, down from 1.12%

 

  Nonaccrual loans declined to 0.74% of total loans and leases, down from 0.92%

 

  Tier 1 Common Ratio of 10.63%, up from 10.62%

Specific highlights compared with the 2013 Fourth Quarter:

 

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

 

  $5 million, or 1%, increase in fully-taxable equivalent net interest income, reflecting:

 

    4% average earning asset growth, and

 

    3.27% fully-taxable equivalent net interest margin (NIM), down 1 basis point

 

  $1 million, or less than 1%, decrease in noninterest income

 

  $14 million, or 3%, increase in noninterest expense

 

  14.6 million common shares repurchased at an average price of $9.32 per share

 

1


COLUMBUS, Ohio – Huntington Bancshares Incorporated (NASDAQ: HBAN; www.huntington.com ) reported 2014 first quarter net income of $149 million, a decrease of $4 million, or 3%, from the 2013 first quarter and a decrease of $9 million, or 6%, from the 2013 fourth quarter. Earnings per common share were $0.17, unchanged from the year-ago quarter and a $0.01 decrease from the prior quarter.

Huntington today announced two capital actions approved by the Board of Directors. First, the Board declared a quarterly cash dividend on the company’s common stock of $0.05 per common share. The dividend is payable July 1, 2014, to shareholders of record on June 17, 2014. Second, the Board approved the repurchase of up to $250 million of common stock through the first quarter of 2015. The new repurchase authorization represents a $23 million, or 10%, increase from the recently completed common stock repurchase authorization. Both actions were proposed in the January 2014 capital plan, which received no objections from the Federal Reserve. Purchases of common stock may include open market purchases, privately negotiated transactions, and accelerated repurchase programs.

Strategies Continue to Drive Business Performance

“Huntington continued to deliver solid financial performance in the first quarter with strong balance sheet growth that drove increased net interest income year over year,” said Stephen D. Steinour, chairman, president and CEO of Huntington Bancshares. “We also invested in key businesses and our distribution network for future growth. We are particularly pleased that we have been able to proceed with our ongoing investments, while controlling expenses across the enterprise and achieving positive operating leverage.”

“During the quarter, we saw significant increases in C&I and auto lending,” added Steinour. “Our customer base once again expanded, and we completed the acquisition and conversion of one bank. Last week, we announced the acquisition of 11 additional branches in Michigan, one of our key markets. Also during the quarter, we moved up to become the largest SBA lender in the country by number of loans, and introduced mobile deposit for consumers. Huntington was also named one of the best commercial and business banks in the country by Greenwich Associates.”

“We also announced the hiring of Howell D. “Mac” McCullough III as our CFO,” added Steinour. “During his 30-year banking career, Mac has extensive experience in strategic planning, driving organic revenue, disciplined expense management, online and mobile banking, investor relations and mergers and acquisitions. He also shares Huntington’s belief in customer advocacy and the creation of innovative products, where he has a proven track record.”

 

2


Table 1 – Earnings Performance Summary

 

     2014     2013  

($ in millions, except per share data)

   First
Quarter
    Fourth
Quarter
    Third
Quarter
    Second
Quarter
    First
Quarter
 

Net Income

   $ 149.1      $ 158.2      $ 178.8      $ 151.0      $ 153.3   

Diluted earnings per common share

     0.17        0.18        0.20        0.17        0.17   

Return on average assets

     1.01     1.09     1.27     1.08     1.12

Return on average common equity

     9.9        10.5        12.3        10.4        10.7   

Return on average tangible common equity

     11.3        12.1        14.2        12.1        12.4   

Net interest margin

     3.27        3.28        3.34        3.38        3.42   

Efficiency ratio

     66.4        63.4        60.3        63.7        62.9   

Tangible book value per common share

   $ 6.31      $ 6.26      $ 6.09      $ 5.87      $ 5.90   

Cash dividends declared per common share

     0.05        0.05        0.05        0.05        0.04   

Average diluted shares outstanding (000’s)

     842,677        842,324        841,025        843,840        848,708   

Average earning assets

   $ 54,961      $ 53,012      $ 51,247      $ 51,156      $ 50,960   

Average loans

     43,423        43,139        41,994        41,279        40,864   

Average core deposits

     45,195        44,747        43,773        43,768        43,616   

Tangible common equity / tangible assets ratio

     8.63     8.82     9.01     8.76     8.91

Tier 1 common risk-based capital ratio

     10.63       10.90        10.85        10.71        10.62   

NCOs as a % of average loans and leases

     0.40     0.43     0.53     0.34     0.51

NAL ratio

     0.74        0.75        0.78        0.87        0.92   

ACL as a % of total loans and leases

     1.56        1.65        1.72        1.86        1.91   

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 five quarters. This quarter contained two significant items: $12 million net pre-tax negative impact related to the Camco Financial acquisition and related branch divestiture and a $9 million addition to litigation reserves. There were no significant events during the quarters ended June 30, 2013 and March 31, 2013.

Table 2 – Significant Items Influencing Earnings Performance Comparisons

 

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

March 31, 2014 – net income

     $ 149      $ 0.17   

• Camco Financial acquisition, net

   $ (12     (8     (0.01

• Addition to litigation reserves

   $ (9     (6     (0.01

December 31, 2013 – net income

     $ 158      $ 0.18   

• Franchise repositioning related expense

   $ (7     (5     (0.01

 

3


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

September 30, 2013 – net income

     $ 179      $ 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

     $ 153      $ 0.17   

 

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

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

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

 

     2014     2013        
     First
Quarter
    Fourth
Quarter
    Third
Quarter
    Second
Quarter
    First
Quarter
    Change  

($ in millions)

             LQ     YOY  

Net interest income

   $ 437.5     $ 430.6     $ 424.9     $ 424.9     $ 424.2       2 %     3

FTE adjustment

     5.9       8.2       6.6       6.6       5.9       (28 )     (0 )
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income - FTE

     443.4       438.8       431.5       431.5       430.1       1       3  

Noninterest income

     248.5       249.9       253.8       251.9       256.6       (1 )     (3 )
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenue - FTE

   $ 691.9     $ 688.7     $ 685.3     $ 683.4     $ 686.7       0     1
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
                                   Change bp  

Yield / Cost

                                 LQ     YOY  

Total earning assets

     3.53 %     3.58 %     3.64 %     3.68 %     3.75 %     (5 )     (22 )

Total loans and leases

     3.75       3.77       3.87       3.95       4.03       (2 )     (28 )

Total securities

     2.52       2.60       2.41       2.38       2.39       (9 )     13  

Total interest-bearing liabilities

     0.36       0.42       0.42       0.42       0.45       (6 )     (9 )

Total interest-bearing deposits

     0.28       0.32       0.33       0.36       0.38       (4 )     (10 )

Net interest rate spread

     3.17       3.15       3.20       3.26       3.30       2       (13 )

Impact of noninterest-bearing funds on margin

     0.10       0.13       0.14       0.12       0.12       (2 )     (2 )
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest margin

     3.27 %     3.28 %     3.34 %     3.38 %     3.42 %     (1 )     (15 )
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

See Page 8 of Quarterly Financial Supplement for additional rate detail.

Fully-taxable equivalent (FTE) net interest income increased $13 million, or 3%, from the 2013 first quarter. This reflected the benefit from the $2.6 billion, or 6%, of average loan growth and a $1.4 billion, or 14%, increase in other earnings assets, the majority of which were investment securities that meet the requirements for high quality liquid assets (HQLA) as proposed in the Liquidity Coverage Ratio (LCR) rules issued by the regulators last October. This was partially offset by the 15 basis point decrease in the FTE net interest margin (NIM) to 3.27%. The 22 basis point negative impact on NIM from the mix and yield of earning assets was partially offset by the 7 basis point reduction in funding costs.

 

4


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

 

     2014      2013         
     First
Quarter
     Fourth
Quarter
     Third
Quarter
     Second
Quarter
     First
Quarter
     Change (%)  

(in billions)

                  LQ     YOY  

Average Loans and Leases

                   

Commercial and industrial

   $ 17.6      $ 17.7       $ 17.0       $ 17.0       $ 17.0         (0 )%     4

Commercial real estate

     4.9        4.9         4.9         5.0         5.3         (0 )     (7 )
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total commercial

     22.5        22.6         21.9         22.0         22.2         (0 )     1  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Automobile

     6.8        6.5         6.1         5.3         4.8         4       40  

Home equity

     8.3        8.3         8.3         8.3         8.4         (0 )     (1 )

Residential mortgage

     5.4        5.3         5.3         5.2         5.0         1       8  

Other consumer

     0.4        0.4         0.4         0.5         0.4         0       (6 )
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total consumer

     20.9        20.6         20.1         19.2         18.6         2       12  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total loans and leases

     43.4        43.1         42.0         41.3         40.9         1       6  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total securities

     11.2        9.5        8.8        9.1        9.3        18       20  

Held-for-sale and other earning assets

     0.4        0.4        0.4        0.8        0.8        (8 )     (54 )

Total earning assets

   $ 55.0      $ 53.0      $ 51.2      $ 51.2      $ 51.0        4 %     8
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

See Page 6 of Quarterly Financial Supplement for additional detail.

Average loans and leases increased $2.6 billion, or 6%, from the prior year, driven by:

 

    $2.0 billion, or 40%, increase in average Automobile loans, as originations remained strong and our investments throughout the Northeast and upper Midwest continued to grow as planned.

 

    $0.7 billion, or 4%, increase in average Commercial and Industrial (C&I) loans and leases. This reflected the continued growth within the international specialty vertical, Business Banking, and dealer floorplan.

Partially offset by:

 

    $0.4 billion, or 7%, decrease in average Commercial Real Estate (CRE) loans. This decrease reflected continued runoff of the noncore portfolio, while originations in core portfolio outpaced runoffs in the most recent quarter.

 

5


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

 

     2014      2013         
     First
Quarter
     Fourth
Quarter
     Third
Quarter
     Second
Quarter
     First
Quarter
     Change (%)  

(in billions)

                  LQ     YOY  

Average Deposits

                   

Demand deposits - noninterest bearing

   $ 13.2      $ 13.3       $ 13.1       $ 12.9       $ 12.2         (1 )%      8

Demand deposits - interest bearing

     5.8        5.8         5.8         5.9         6.0         0       (3 )
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total demand deposits

     19.0        19.1         18.9         18.8         18.1         (1 )     5  

Money market deposits

     17.6        16.8         15.7         15.1         15.0         5       17  

Savings and other domestic deposits

     5.0        4.9         5.0         5.1         5.1         1       (2 )

Core certificates of deposit

     3.6        3.9         4.2         4.8         5.3         (8 )     (32 )
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total core deposits

     45.2        44.7         43.8         43.8         43.6         1       4  

Other domestic deposits of $250,000 or more

     0.3        0.3         0.3         0.3         0.4         3       (21 )

Brokered deposits and negotiable CDs

     1.8        1.4         1.6         1.8         1.7         27       5  

Other deposits

     0.3        0.4         0.4         0.3         0.3         (7 )     (3 )
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total deposits

     47.6        46.8         46.0         46.2         46.0         2       3  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Short and long-term borrowings

     4.9        3.7        3.0        2.7        2.8        31       75  

Total Interest-bearing liabilities

   $ 39.3      $ 37.2      $ 35.9      $ 36.1      $ 36.6        6 %     7
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

See Page 6 of Quarterly Financial Supplement for additional detail.

Average noninterest bearing deposits increased $1.0 billion, or 8%, while average interest-bearing liabilities increased $2.6 billion, or 7%, from the 2013 first quarter, primarily reflecting:

 

    $2.6 billion, or 17%, increase in money market deposits reflecting the strategic focus on customer growth and increased share of wallet among both consumer and commercial customers.

 

    $2.1 billion, or 75%, increase in short- and long-term borrowings, which were used to efficiently finance growth in loans and HQLA securities while continuing to lower the overall cost of funds.

Partially offset by:

 

    $1.7 billion, or 32%, decrease in average core certificates of deposit due to the strategic focus on changing the funding sources to no-cost demand deposits and lower cost money market deposits.

 

6


Noninterest Income

Table 6 – Noninterest Income – Mortgage Banking Drove Declines

 

     2014      2013        
     First
Quarter
     Fourth
Quarter
     Third
Quarter
     Second
Quarter
    First
Quarter
    Change (%)  

(in millions)

                LQ     YOY  

Noninterest Income

                 

Service charges on deposit accounts

   $ 64.6      $ 70.0      $ 72.9      $ 68.0     $ 60.9       (8 )%     6

Mortgage banking income

     23.1        24.3        23.6        33.7       45.2       (5 )     (49 )

Trust services

     29.6        30.7        30.5        30.7       31.2       (4 )     (5 )

Electronic Banking

     23.6        24.3        24.3        23.3       20.7       (3 )     14  

Insurance income

     16.5        15.6        17.3        17.2       19.3       6       (14 )

Brokerage Income

     17.1        15.1        16.5        19.5       18.0       13       (5 )

Bank owned life insurance income

     13.3        13.8        13.7        15.4       13.4       (4 )     (1 )

Capital markets fees

     9.2        12.3        12.8        12.2       7.8       (25 )     17  

Gain on sale of loans

     3.6        7.1        5.1        3.3       2.6       (50 )     36  

Securities (losses) gains

     17.0        1.2        0.1        (0.4 )     (0.5 )     1270       NR   

Other income

     31.0        35.4         37.0         28.9        38.0       (12 )     (18 )
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total noninterest income

   $ 248.5      $ 249.9       $ 253.8       $ 251.9      $ 256.6       (1 )%      (3 )% 
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

NR-Not relevant

In the 2014 first quarter, noninterest income decreased $8 million, or 3%, from the year-ago quarter, primarily reflecting:

 

    $22 million, or 49%, decrease in mortgage banking income primarily driven by 41% reduction in volume, lower gain on sale margin, and a higher percentage of originations held on the balance sheet.

 

    $7 million, or 18%, decrease in other income as the year-ago quarter included a $9 million gain on the sale of Low Income Housing Tax Credit (LIHTC) investments.

Partially offset by:

 

    $17 million increase in securities gains as we adjusted the mix of our securities portfolio to prepare for the LCR.

 

    $4 million, or 6%, increase in service charges on deposit accounts reflecting 7% consumer household and 3% commercial relationship growth and changing customer usage patterns. This more than offset the negative impact of the February 2013 implementation of a new posting order for consumer transaction accounts.

 

    $3 million, or 14%, increase in electronic banking due to continued consumer household growth.

Compared to the 2013 fourth quarter, noninterest income decreased $1 million, or 1%, reflecting typical seasonality within service charges on deposit accounts, which decreased $5 million. Other linked quarter changes were a $4 million decrease in gain on sale of loans from reduced SBA loan sales, a $4 million decrease in other income, and a $3 million decrease in capital market fees related to customer derivatives. These were partially offset by a $16 million increase in securities gains.

 

7


Huntington early adopted ASU 2014-01 Accounting for Investments in Qualified Affordable Housing Projects during the first quarter. This changed the method of recognition for eligible investments from an effective yield approach to a proportional amortization approach. The guidance was applied on a full retrospective basis to all prior periods. The current quarter impact was a $5 million increase in noninterest income, a $3 million increase to income tax expense, and a $1 million increase to net income. The year-ago quarter impact was a $4 million increase in noninterest income, a $3 million increase to income tax expense, and a $1 million increase to net income.

Noninterest Expense

Table 7 – Noninterest Expense – Decreases When Considering Significant Items

 

     2014      2013         
     First      Fourth      Third      Second      First      Change (%)  

(in millions)

   Quarter      Quarter      Quarter      Quarter      Quarter      LQ     YOY  

Noninterest Expense

                   

Personnel costs

   $ 249.5      $ 249.6      $ 229.3      $ 263.9      $ 258.9        (0 )%     (4 )% 

Outside data processing and other services

     51.5        51.1        49.3        49.9        49.3        1       5  

Net occupancy

     33.4        32.0        35.6        27.7        30.1        5       11  

Equipment

     28.8        28.8        28.2        24.9        24.9        (0 )     16  

Marketing

     10.7        13.7        12.3        14.2        11.0        (22 )     (3 )

Deposit and other insurance expense

     13.7        10.1        11.2        13.5        15.5        36       (11 )

Amortization of intangibles

     9.3        10.3        10.4        10.4        10.3        (10 )     (10 )

Professional services

     12.2        11.6        12.5        9.3        7.2        6       70  

Other expense

     51.0        39.0        34.6        32.1        35.7        31       43  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total noninterest expense

   $ 460.1      $ 446.0      $ 423.3      $ 445.9      $ 442.8        3     4
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

(in thousands)

                                               

Number of employees (Average full-time equivalent)

     11.8        11.9        11.7        11.4        11.2        (1 )%     6

In the 2014 first quarter, noninterest expense increased $17 million, or 4%, from the year-ago quarter. When adjusting for the $22 million of Significant Items, noninterest expense decreased $4 million. The $17 million increase in the reported noninterest expenses primarily reflects:

 

    $15 million, or 43%, increase in other expense, reflecting a $9 million addition to litigation reserves and a $3 million goodwill impairment.

 

    $5 million, or 70%, increase in professional services, including $2 million of one-time merger related expenses.

 

    $4 million, or 16%, increase in equipment expense, reflecting increased depreciation on technology investments.

 

    $3 million, or 11%, increase in net occupancy, reflecting $2 million of one-time merger related expenses.

 

    $2 million, or 5%, increase in outside data processing and other services, reflecting $4 million of one-time merger related expenses.

 

8


Partially offset by:

 

    $9 million, or 4%, decrease in personnel costs, primarily reflecting the curtailment of the pension as of the end of 2013 that was partially offset by $2 million of one-time merger related expenses.

Noninterest expense of $460 million for the 2014 first quarter included $22 million of Significant Items and was up $14 million, or 3%, from the 2013 fourth quarter noninterest expense of $446 million, which included a $7 million Significant Item. After excluding the impact of Significant Items from both quarters, noninterest expense was essentially unchanged as the remaining $4 million increase in deposit and other insurance was largely offset by the remaining $3 million decline in marketing.

Credit Quality

Table 8 – Summary Credit Quality Metrics – Addition of Camco Offsets Positive Trends

 

     2014     2013  

($ in thousands)

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

Total nonaccrual loans and leases

   $ 327,158     $ 322,056     $ 333,106      $ 363,547      $ 380,312  

Total other real estate, net

     35,691       27,664       29,154        21,066        25,139  

Other NPAs (1)

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

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total nonperforming assets (2)

   $ 365,289     $ 352,160     $ 374,259     $ 396,699     $ 415,496  

Accruing loans and leases past due 90 days or more

     98,412       76,209       94,966       94,123       108,423  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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

   $ 463,701     $ 428,369     $ 469,225     $ 490,822     $ 523,919  

NAL ratio (3)

     0.74 %     0.75 %     0.78     0.87     0.92

NPA ratio (4)

     0.82       0.82       0.88        0.95        1.01  

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

     1.17       1.20       1.29        1.38        1.48  

Provision for credit losses

   $ 24,630     $ 24,331     $ 11,400     $ 24,722     $ 29,592  

Net charge-offs

     42,986       46,447       55,742       34,790       51,687  

Net charge-offs / Average total loans

     0.40 %     0.43 %     0.53 %     0.34 %     0.51

Allowance for loans and lease losses

   $ 631,918      $ 647,870      $ 666,030      $ 733,076      $ 746,769   

Allowance for unfunded loan commitments and letters of credit

     59,368        62,899        66,857        44,223        40,855   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Allowance for credit losses (ACL)

   $ 691,286     $ 710,769     $ 732,887     $ 777,299     $ 787,624  

ACL as a % of:

          

Total loans and leases

     1.56     1.65     1.72     1.86     1.91

NALs

     211        221        220        214        207   

NPAs

     191        202        196        196        190   

 

(1) Other nonperforming assets represent an investment security backed by a municipal bond.
(2) Includes $76.8 million at March 31, 2014; $75.5 at December 31, 2013; $57.9 at September 30, 2013; $59.6 million at June 30, 2013; $59.9 million at March 31, 2013; related to Chapter 7 bankruptcy loans
(3) Total NALs as a % of total loans and leases
(4) Total NPAs as a % of sum of loans and leases, impaired loans held for sale, and net other real estate.

See Pages 11-14 of Quarterly Financial Supplement for additional detail.

Most credit quality-related metrics in the 2014 first quarter reflected continued improvement that were partially offset by the addition of the Camco portfolio. Nonaccrual loans and leases (NALs) decreased $53 million, or 14%, compared to a year ago to $327 million, or 0.74%, of total loans and leases. Nonperforming assets (NPAs) decreased $50 million, or 12%, to $365 million, or 0.82%, of total loans and leases, OREO, and other NPAs and included $12 million of Camco related NPAs.

The provision for credit losses decreased $5 million, or 17%, compared to the year ago quarter due to the continued decline in classified, criticized, and nonaccrual loans. Net charge-offs (NCOs) decreased $9 million, or 17%, to $43 million primarily related to the continued improvement of the CRE portfolio. NCOs were an annualized 0.40% of average loans and leases in the current quarter compared to 0.51% in the year-ago quarter.

 

9


The period-end allowance for credit losses (ACL) as a percentage of total loans and leases decreased to 1.56% from 1.91% a year ago, while the ACL as a percentage of period-end total NALs increased to 211% from 207%. The decrease in the ACL as a percent of total loans is consistent with the improved credit quality metrics and the impact of the CAMCO portfolio.

Capital

Table 9 – Capital Ratios – Tier 1 Common Stable

 

     2014     2013  

(in millions)

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

Tangible common equity / tangible assets ratio

     8.63     8.82     9.01     8.76     8.91

Tier 1 common risk-based capital ratio

     10.63     10.90     10.85     10.71     10.62

Regulatory Tier 1 risk-based capital ratio

     11.99     12.28     12.36     12.24     12.16

Excess over 6.0% (1)

   $ 3,051      $ 3,121      $ 3,096      $ 3,000      $ 2,953   

Regulatory Total risk-based capital ratio

     14.19     14.57     14.67     14.57     14.55

Excess over 10.0% (1)

   $ 2,134      $ 2,271      $ 2,274      $ 2,197      $ 2,181   

Total risk-weighted assets

   $ 50,931      $ 49,690      $ 48,687      $ 48,080      $ 47,937   

 

(1) “Well-capitalized” regulatory threshold

See Page 15 of Quarterly Financial Supplement for additional detail.

The tangible common equity to tangible assets ratio at March 31, 2014, was 8.63%, down 28 basis points from a year ago. Our Tier 1 common risk-based capital ratio was 10.63%, up from 10.62% a year ago. Huntington estimates the negative impact to Tier 1 common risk-based capital from the 2015 first quarter implementation of the Federal Reserve’s revised Basel III capital rules will be no greater than the previously communicated 60 bp estimate. The company continues to work to mitigate this potential impact.

The regulatory Tier 1 risk-based capital ratio at March 31, 2014, was 11.99%, down slightly from 12.16% a year ago. The decrease in the regulatory Tier 1 risk-based capital ratio reflected the redemption of $50 million of qualifying preferred securities on December 31, 2013 and an increase in risk-weighted assets caused by organic balance sheet growth as well as assets acquired from Camco. These declines were offset by the increase in retained earnings. All capital ratios were impacted by the repurchase of 27 million common shares over the last four quarters, 15 million of which were repurchased during the 2014 first quarter, as well as the issuance of 9 million common shares in the Camco acquisition.

Income Taxes

The provision for income taxes in the 2014 first quarter was $52 million and $55 million in the 2013 first quarter. The effective tax rates for the 2014 first quarter and 2013 first quarter were 25.9% and 26.5%, respectively. At March 31, 2014, we had a net federal deferred tax asset of $124 million and a net state deferred tax asset of $42 million. Based on both positive and negative evidence and our level of forecasted future taxable income, there was no impairment to the net federal and net state deferred tax assets at March 31, 2014. As of March 31, 2014 and March 31, 2013, there was no disallowed deferred tax asset for regulatory capital purposes.

 

10


2014 Expectations

“Our loan pipelines are strong, and we see signs that our customers are more confident in the economy,” said Steinour. “Our Midwestern markets are recovering with downward unemployment trends and ongoing investments by manufacturers and other businesses. Notwithstanding these tailwinds, we continue to face a challenging regulatory and competitive environment.”

Net interest income is expected to increase moderately. 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 portfolio balances are expected to continue to grow. Residential mortgages, home equity, and CRE loan balances are expected to increase modestly.

We anticipate the increase in total loans will outpace growth in total deposits modestly. 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 and securities gains, is expected to be slightly higher than current seasonally low levels. Beginning in July, we anticipate a change in our consumer checking accounts that is estimated to impact service charges on deposits negatively by $6 million per quarter.

Noninterest expense is expected to be slightly higher than current levels, excluding the net $22 million of negative impact from Significant Items we experienced in the 2014 first quarter. The 2014 second quarter is expected to be negatively impacted by annual peak marketing expenses, a full quarter’s inclusion of Camco, and annual merit increases to personnel expense. We are committed to delivering positive operating leverage for the 2014 full year.

NPAs are expected to show continued improvement. NCOs are within 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 the remainder of 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.

 

11


Conference Call / Webcast Information

Huntington’s senior management will host an earnings conference call on April 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# 17270512. 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 April 31, 2014 at (855) 859-2056 or (404) 537-3406; conference ID# 17270512.

Please see the 2014 First 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 2013 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.

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.

 

12


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 2013 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.

Rounding

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

About Huntington

Huntington Bancshares Incorporated is a $60 billion asset 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.

###

 

13

Exhibit 99.2

HUNTINGTON BANCSHARES INCORPORATED

Quarterly Financial Supplement

March 2014

Table of Contents

 

Quarterly Key Statistics

     1  

Key Statistics Footnotes

     2  

Consolidated Balance Sheets

     3  

Loans and Leases Composition

     4  

Deposits Composition

     5  

Consolidated Quarterly Average Balance Sheets

     6  

Consolidated Quarterly Net Interest Margin—Interest Income / Expense

     7  

Consolidated Quarterly Net Interest Margin—Yield

     8  

Selected Quarterly Income Statement Data

     9  

Quarterly Mortgage Banking Income

     10  

Quarterly Credit Reserves Analysis

     11  

Quarterly Net Charge-Off Analysis

     12  

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

     13  

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

     14  

Quarterly Common Stock Summary, Capital, and Other Data

     15  


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, 2013.


Huntington Bancshares Incorporated

Quarterly Key Statistics (1)

(Unaudited)

 

     2014     2013     Percent Changes vs.  

(dollar amounts in thousands, except per share amounts)

   First     Fourth     First     4Q13     1Q13  

Net interest income

   $ 437,506     $ 430,649     $ 424,170       2 %     3 %

Provision for credit losses

     24,630       24,331       29,592       1       (17

Noninterest income

     248,485       249,892       256,616       (1     (3

Noninterest expense

     460,121       446,010       442,791       3       4  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     201,240       210,200       208,403       (4     (3

Provision for income taxes

     52,097       52,029       55,129       —         (6
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 149,143     $ 158,171     $ 153,274       (6 )%     (3 )%
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Dividends on preferred shares

     7,964       7,965       7,970       —          (0
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income applicable to common shares

   $ 141,179     $ 150,206     $ 145,304       (6 )%     (3 )%
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income per common share—diluted

   $ 0.17     $ 0.18     $ 0.17       (6 )%     —   %

Cash dividends declared per common share

     0.05       0.05       0.04       —          25  

Book value per common share at end of period

     6.99       6.86       6.52       2       7  

Tangible book value per common share at end of period

     6.31       6.26       5.90       1       7  

Average common shares—basic

     829,659       830,590       841,103       —          (1

Average common shares—diluted

     842,677       842,324       848,708       —          (1

Return on average assets

     1.01 %     1.09 %     1.12 %    

Return on average common shareholders’ equity

     9.9       10.5       10.7      

Return on average tangible common shareholders’ equity (2)

     11.3       12.1       12.4      

Net interest margin (3)

     3.27       3.28       3.42      

Efficiency ratio (4)

     66.4       63.4       62.9      

Noninterest Income/Total Revenue

     35.9       36.3       36.9      

Effective tax rate

     25.9       24.8       26.5      

Average loans and leases

   $ 43,423,355     $ 43,138,336     $ 40,863,921       1       6  

Average loans and leases—linked quarter annualized growth rate

     2.6 %     10.9 %     4.6 %    

Average earning assets

   $ 54,961,237     $ 53,011,850     $ 50,959,966       4       8  

Average total assets

     59,692,484       57,648,191       55,728,126       4       7  

Average core deposits (5)

     45,194,597       44,747,659       43,615,639       1       4  

Average core deposits—linked quarter annualized growth rate

     4.0 %     8.9 %     (6.3 )%    

Average shareholders’ equity

   $ 6,182,891     $ 6,055,738     $ 5,834,190       2       6  

Total assets at end of period

     61,145,753       59,467,175       56,044,750       3       9  

Total shareholders’ equity at end of period

     6,176,234       6,090,153       5,856,921       —          6  

Net charge-offs (NCOs)

     42,986       46,447       51,687       (8     (17

NCOs as a % of average loans and leases

     0.40 %     0.43 %     0.51 %    

Nonaccrual loans and leases (NALs)

   $ 327,158     $ 322,056     $ 380,311       2       (14

NAL ratio

     0.74 %     0.75 %     0.92 %    

Nonperforming assets (NPAs) (6)

   $ 365,289     $ 352,160     $ 415,495       4       (12

NPA ratio (6)

     0.82 %     0.82 %     1.01 %     —          (19

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

     1.42       1.50       1.81      

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

     1.56       1.65       1.91      

ACL as a % of NALs

     211       221       207      

ACL as a % of NPAs

     191       202       190      

Tier 1 leverage ratio (7)

     10.32       10.67       10.57      

Tier 1 common risk-based capital ratio (7)

     10.63       10.90       10.62      

Tier 1 risk-based capital ratio (7)

     11.99       12.28       12.16      

Total risk-based capital ratio (7)

     14.19       14.57       14.55      

Tangible common equity / tangible assets ratio (8)

     8.63       8.82       8.91      

See Notes to the Quarterly Key Statistics.

 

1


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)   March 31, 2014, 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.

 

2


Huntington Bancshares Incorporated

Consolidated Balance Sheets

 

    2014     2013     Percent Changes vs.  

(dollar amounts in thousands, except number of shares)

  March 31,     December 31,     March 31,     4Q13     1Q13  
    (Unaudited)           (Unaudited)              

Assets

         

Cash and due from banks

  $ 973,264     $ 1,001,132     $ 828,688       (3 )%     17 %

Interest-bearing deposits in banks

    71,231       57,043       71,317       25       —     

Trading account securities

    40,439       35,573       86,520       14       (53

Loans held for sale

    295,312       326,212       729,707       (9     (60

Available-for-sale and other securities

    7,754,790       7,308,753       7,504,639       6       3  

Held-to-maturity securities

    3,734,723       3,836,667       1,693,074       (3     121  

Loans and leases (1)

    44,353,908       43,120,500       41,283,524       3       7  

Allowance for loan and lease losses

    (631,918     (647,870     (746,769     (2     (15
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loans and leases

    43,721,990       42,472,630       40,536,755       3       8  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Bank owned life insurance

    1,681,898       1,647,170       1,609,610       2       4  

Premises and equipment

    628,966       634,657       620,833       (1     1  

Goodwill

    505,448       444,268       444,268       14       14  

Other intangible assets

    90,757       93,193       124,236       (3     (27

Accrued income and other assets

    1,646,935       1,609,877       1,795,103       2       (8
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

  $ 61,145,753     $ 59,467,175     $ 56,044,750       3 %     9 %
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities and shareholders’ equity

         

Liabilities

         

Deposits (2)

  $ 49,348,753     $ 47,506,718     $ 46,867,141       4 %     5 %

Short-term borrowings

    1,398,393       552,143       732,705       153       91  

Federal Home Loan Bank advances

    333,233       1,808,293       183,491       (82     82  

Other long-term debt

    1,842,684       1,349,119       156,301       37       1,079  

Subordinated notes

    980,735       1,100,860       1,188,674       (11     (17

Accrued expenses and other liabilities

    1,065,721       1,059,888       1,059,517       1       1  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities

    54,969,519       53,377,021       50,187,829       3       10  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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

    8,290       8,322       8,401       —          (1

Capital surplus

    7,372,024       7,398,515       7,451,287       —          (1

Less treasury shares, at cost

    (8,793     (9,643     (11,141     (9     (21

Accumulated other comprehensive loss

    (201,747     (214,009     (159,955     (6     26  

Retained earnings

    (1,379,832     (1,479,323     (1,817,963     (7     (24
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total shareholders’ equity

    6,176,234       6,090,154       5,856,921       1       5  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities and shareholders’ equity

  $ 61,145,753     $ 59,467,175     $ 56,044,750       3 %     9 %
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Common shares authorized (par value of $0.01)

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

Common shares issued

    828,989,905       832,217,098       840,087,217      

Common shares outstanding

    827,771,805       830,963,427       838,757,987      

Treasury shares outstanding

    1,218,100       1,253,671       1,329,230      

Preferred shares issued

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

Preferred shares outstanding

    398,007       398,007       398,007      

 

(1)   See page 4 for detail of loans and leases.
(2)   See page 5 for detail of deposits.

 

3


Huntington Bancshares Incorporated

Loans and Leases Composition

 

    2014     2013  

(dollar amounts in millions)

  March 31,     December 31,     September 30,     June 30,     March 31,  

Ending Balances by Type:

                   

Commercial: (1)

                   

Commercial and industrial

  $ 18,046       41 %   $ 17,594       41 %   $ 17,335       41 %   $ 17,113       41 %   $ 17,267       42 %

Commercial real estate:

                   

Construction

    692       2       557       1       544       1       607       1       574       1  

Commercial

    4,339       10       4,293       10       4,328       10       4,286       10       4,485       11  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Commercial real estate

    5,031       12       4,850       11       4,872       11       4,893       11       5,059       12  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total commercial

    23,077       53       22,444       52       22,207       52       22,006       52       22,326       54  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Consumer:

                   

Automobile

    6,999       16       6,639       15       6,317       15       5,810       14       5,036       12  

Home equity

    8,373       19       8,336       19       8,347       20       8,369       20       8,474       21  

Residential mortgage

    5,542       12       5,321       12       5,307       12       5,168       12       5,051       12  

Other consumer

    363       —          380       2       378       1       387       2       397       1  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total consumer

    21,277       47       20,676       48       20,349       48       19,734       48       18,958       46  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total loans and leases

  $ 44,354       100 %   $ 43,120       100 %   $ 42,556       100 %   $ 41,740       100 %   $ 41,284       100 %
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ending Balances by Business Segment: (2)

                   

Retail and Business Banking

  $ 13,027       29 %   $ 12,710       30 %   $ 12,639       30 %   $ 12,605       30 %   $ 12,711       31 %

Commercial Banking

    10,962       25       10,735       25       10,988       26       10,755       26       10,791       26  

AFCRE

    14,125       32       13,568       31       12,841       30       12,433       30       11,848       29  

RBPCG

    2,875       7       2,850       7       2,833       7       2,830       7       2,830       7  

Home Lending

    3,229       7       3,206       7       3,214       8       3,127       7       3,028       7  

Treasury / Other

    136       —          51       —          41       —          (10     —          76       —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total loans and leases

  $ 44,354       100 %   $ 43,120       100 %   $ 42,556       100 %   $ 41,740       100 %   $ 41,284       100 %
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
                2013  
    First     Fourth     Third     Second     First  

Average Balances by Business Segment: (2)

                   

Retail and Business Banking

  $ 12,807       29 %   $ 12,675       29 %   $ 12,589       30 %   $ 12,643       31 %   $ 12,646       31 %

Commercial Banking

    10,861       25       11,122       26       10,780       26       10,690       26       10,625       26  

AFCRE

    13,679       32       13,216       31       12,558       30       11,999       29       11,769       29  

RBPCG

    2,840       7       2,835       7       2,825       7       2,826       7       2,840       7  

Home Lending

    3,198       7       3,223       7       3,184       8       3,099       8       2,953       7  

Treasury / Other

    38       —          68       —          58       —          22       —          31       —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total loans and leases

  $ 43,423       100 %   $ 43,139       100 %   $ 41,994       100 %   $ 41,279       100 %   $ 40,864       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.
(2)   During the first quarter of 2014, we reorganized our business segments.

 

4


Huntington Bancshares Incorporated

Deposits Composition

 

     2014     2013  

(dollar amounts in millions)

   March 31,     December 31,     September 30,     June 30,     March 31,  

Ending Balances by Type:

                         

Demand deposits—noninterest-bearing

   $ 14,314        29 %   $ 13,650        29 %   $ 13,421        29 %   $ 13,491        29 %   $ 12,757        27  

Demand deposits—interest-bearing

     5,970        12       5,880        12       5,856        13       5,977        13       6,135        13  

Money market deposits

     17,693        36       17,213        36       16,212        34       15,131        33       15,165        32  

Savings and other domestic deposits

     5,115        10       4,871        10       4,946        11       5,054        11       5,174        11  

Core certificates of deposit

     3,557        7       3,723        8       4,108        9       4,353        9       5,170        11  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total core deposits

     46,649        94       45,337        95       44,543        96       44,006        95       44,401        94  

Other domestic deposits of $250,000 or more

     289        1       274        1       268        1       283        1       355        1  

Brokered deposits and negotiable CDs

     2,074        4       1,580        3       1,366        3       1,695        4       1,807        4  

Deposits in foreign offices

     337        1       316        1       387        —          347        —          304        1  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total deposits

   $ 49,349        100 %   $ 47,507        100 %   $ 46,564        100 %   $ 46,331        100 %   $ 46,867        100  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total core deposits:

                         

Commercial

   $ 20,507        44 %   $ 19,982        44 %   $ 19,526        44 %   $ 18,922        43 %   $ 18,502        42  

Consumer

     26,142        56       25,355        56       25,017        56       25,084        57       25,899        58  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total core deposits

   $ 46,649        100 %   $ 45,337        100 %   $ 44,543        100 %   $ 44,006        100 %   $ 44,401        100  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Ending Balances by Business Segment: (2)

  

                   

Retail and Business Banking

   $ 29,370        62 %   $ 28,294        60 %   $ 28,163        61 %   $ 28,209        61 %   $ 28,718        61  

Commercial Banking

     10,217        22       10,188        21       9,969        21       9,079        20       9,210        20  

AFCRE

     1,203        3       1,171        2       1,125        2       1,068        2       1,019        2  

RBPCG

     6,267        9       6,094        13       5,876        13       6,195        13       5,983        13  

Home Lending

     281        1       330        1       278        1       388        1       400        1  

Treasury / Other

     2,011        4       1,430        3       1,153        2       1,392        3       1,537        3  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total deposits

   $ 49,349        100 %   $ 47,507        100 %   $ 46,564        100 %   $ 46,331        100 %   $ 46,867        100  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 
     2014     2013     2013  
     First     Fourth     Third     Second     First  

Average Balances by Business Segment: (2)

  

                   

Retail and Business Banking

   $ 28,633        60 %   $ 28,424        61 %   $ 28,156        61 %   $ 28,339        61 %   $ 28,324        62  

Commercial Banking

     10,060        21       9,861        21       9,604        21       9,017        20       9,221        20  

AFCRE

     1,142        2       1,114        2       1,064        2       1,002        2       975        2  

RBPCG

     5,906        12       5,937        13       5,535        12       5,954        13       5,638        12  

Home Lending

     257        1       293        1       335        1       412        1       385        1  

Treasury / Other

     1,591        3       1,145        2       1,276        3       1,463        3       1,470        3  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total deposits

   $ 47,589        100 %   $ 46,774        100 %   $ 45,970        100 %   $ 46,187        100 %   $ 46,013        100  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

 

(1)   Comprised primarily of national market deposits.
(2)   During the first quarter of 2014, we reorganized our business segments.

 

 

5


Huntington Bancshares Incorporated

Consolidated Quarterly Average Balance Sheets

(Unaudited)

 

     Average Balances              
     2014     2013     Percent Changes vs.  

(dollar amounts in millions)

   First     Fourth     Third     Second     First     4Q13     1Q13  

Assets

              

Interest-bearing deposits in banks

   $ 83     $ 71     $ 54     $ 84     $ 72       17  %     15 %

Loans held for sale

     279       322       379       678       709       (13     (61

Taxable

     6,240       5,818       6,040       6,729       6,964       7       (10

Tax-exempt

     1,115       548       565       591       549       103       103  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total available-for-sale and other securities

     7,355       6,366       6,605       7,320       7,513       16       (2

Trading account securities

     38       76       76       84       85       (50     (55

Held-to-maturity securities—taxable

     3,783       3,038       2,139       1,711       1,717       25       120  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Securities

     11,176       9,480       8,820       9,115       9,315       18       20  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loans and leases: (1)

              

Commercial and industrial

     17,631       17,671       17,032       17,033       16,954       —          4  

Commercial real estate:

              

Construction

     612       573       565       586       598       7       2  

Commercial

     4,289       4,331       4,345       4,429       4,694       (1     (9
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Commercial real estate

     4,901       4,904       4,910       5,015       5,292       —          (7
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total commercial

     22,532       22,575       21,942       22,048       22,246       —          1  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Automobile

     6,786       6,502       6,075       5,283       4,833       4       40  

Home equity

     8,340       8,346       8,341       8,263       8,395       —          (1

Residential mortgage

     5,379       5,331       5,256       5,225       4,978       1       8  

Other consumer

     386       385       380       460       412       —          (6
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total consumer

     20,891       20,564       20,052       19,231       18,618       2       12  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total loans and leases

     43,423       43,139       41,994       41,279       40,864       1       6  

Allowance for loan and lease losses

     (649     (668     (717     (746     (772     (3     (16
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loans and leases

     42,774       42,471       41,277       40,533       40,092       1       7  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total earning assets

     54,961       53,012       51,247       51,156       50,960       4       8  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cash and due from banks

     904       846       944       940       904       7       —     

Intangible assets

     535       542       552       563       571       (1     (6

All other assets

     3,941       3,917       3,889       3,976       4,065       1       (3
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

   $ 59,692     $ 57,649     $ 55,915     $ 55,889     $ 55,728       %     7 %
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities and shareholders’ equity

              

Deposits:

              

Demand deposits—noninterest-bearing

   $ 13,192     $ 13,337     $ 13,088     $ 12,879     $ 12,165       (1 )%      8 %

Demand deposits—interest-bearing

     5,775       5,755       5,763       5,927       5,977       —          (3
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total demand deposits

     18,967       19,092       18,851       18,806       18,142       (1     5  

Money market deposits

     17,648       16,827       15,739       15,069       15,045       5       17  

Savings and other domestic deposits

     4,967       4,912       5,007       5,115       5,083       1       (2

Core certificates of deposit

     3,613       3,916       4,176       4,778       5,346       (8     (32
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total core deposits

     45,195       44,747       43,773       43,768       43,616       1       4  

Other domestic deposits of $250,000 or more

     284       275       268       324       360       3       (21

Brokered deposits and negotiable CDs

     1,782       1,398       1,553       1,779       1,697       27       5  

Deposits in foreign offices

     328       354       376       316       340       (7     (4
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total deposits

     47,589       46,774       45,970       46,187       46,013       2       3  

Short-term borrowings

     883       629       710       701       762       40       16  

Federal Home Loan Bank advances

     1,499       851       549       757       686       76       119  

Subordinated notes and other long-term debt

     2,503       2,244       1,753       1,292       1,348       12       86  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total interest-bearing liabilities

     39,282       37,161       35,894       36,058       36,644       6       7  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

All other liabilities

     1,035       1,095       1,054       1,064       1,085       (5     (5

Shareholders’ equity

     6,183       6,056       5,879       5,888       5,834       2       6  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities and shareholders’ equity

   $ 59,692     $ 57,649     $ 55,915     $ 55,889     $ 55,728       %     7 %
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)   Includes nonaccrual loans.

 

6


Huntington Bancshares Incorporated

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

(Unaudited)

 

     Interest Income / Expense  
     2014      2013  

(dollar amounts in thousands)

   First      Fourth      Third      Second      First  

Assets

              

Interest-bearing deposits in banks

   $ 6      $ 7      $ 9      $ 57      $ 29  

Loans held for sale

     2,603        3,586        3,699        5,739        5,702  

Securities:

              

Available-for-sale and other securities:

              

Taxable

     38,456        34,554        35,280        38,538        40,185  

Tax-exempt

     8,439        8,696        5,700        5,829        5,438  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total available-for-sale and other securities

     46,895        43,250        40,980        44,367        45,623  

Trading account securities

     107        79        43        126        106  

Held-to-maturity securities—taxable

     23,320        18,378        12,220        9,778        9,838  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total securities

     70,322        61,708        53,243        54,272        55,567  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Loans and leases:

              

Commercial:

              

Commercial and industrial

     157,016        159,686        160,285        161,543        162,396  

Commercial real estate:

              

Construction

     6,108        5,916        5,650        5,829        6,045  

Commercial

     41,171        43,906        45,525        46,214        46,978  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Commercial real estate

     47,278        49,822        51,175        52,043        53,023  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total commercial

     204,294        209,508        211,460        213,586        215,419  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Consumer:

              

Automobile

     59,153        60,080        58,216        52,159        51,013  

Home equity

     84,634        86,460        86,131        85,796        86,991  

Residential mortgage

     50,834        50,225        50,111        49,912        49,353  

Other consumer

     6,514        6,447        6,677        7,649        7,168  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total consumer

     201,136        203,212        201,135        195,516        194,525  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total loans and leases

     405,430        412,720        412,595        409,102        409,944  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total earning assets

   $ 478,361      $ 478,020      $ 469,546      $ 469,169      $ 471,242  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Liabilities

              

Deposits:

              

Demand deposits—noninterest-bearing

   $ —         $ —         $ —         $ —         $ —     

Demand deposits—interest-bearing

     512        630        636        617        642  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total demand deposits

     512        630        636        617        642  

Money market deposits

     10,940        11,296        10,211        8,886        8,438  

Savings and other domestic deposits

     2,459        2,925        3,134        3,416        3,818  

Core certificates of deposit

     8,387        10,330        11,094        13,410        15,710  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total core deposits

     22,299        25,181        25,075        26,329        28,608  

Other domestic deposits of $250,000 or more

     289        271        300        406        465  

Brokered deposits and negotiable CDs

     1,246        1,385        2,145        2,746        2,823  

Deposits in foreign offices

     104        122        136        110        140  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total deposits

     23,938        26,959        27,656        29,591        32,036  

Short-term borrowings

     150        129        158        179        234  

Federal Home Loan Bank advances

     453        306        197        272        301  

Subordinated notes and other long-term debt

     10,408        11,781        10,049        7,603        8,578  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total interest bearing liabilities

     34,949        39,175        38,060        37,645        41,149  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net interest income

   $ 443,391      $ 438,845      $ 431,486      $ 431,524      $ 430,093  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)   Fully-taxable equivalent (FTE) income and expense calculated assuming a 35% tax rate. See page 9 for the FTE adjustment.

 

7


Huntington Bancshares Incorporated

Consolidated Quarterly Net Interest Margin—Yield

(Unaudited)

 

     Average Rates (2)  
     2014     2013  

Fully-taxable equivalent basis (1)

   First     Fourth     Third     Second     First  

Assets

          

Interest-bearing deposits in banks

     0.03 %     0.04 %     0.07 %     0.27 %     0.16 %

Loans held for sale

     3.74       4.46       3.89       3.39       3.22  

Securities:

          

Available-for-sale and other securities:

          

Taxable

     2.47       2.38       2.34       2.29       2.31  

Tax-exempt

     3.03       6.34       4.04       3.94       3.96  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total available-for-sale and other securities

     2.55       2.72       2.48       2.42       2.43  

Trading account securities

     1.12       0.42       0.23       0.60       0.50  

Held-to-maturity securities—taxable

     2.47       2.42       2.29       2.29       2.29  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total securities

     2.52       2.60       2.41       2.38       2.39  

Loans and leases: (2)(3)

          

Commercial:

          

Commercial and industrial

     3.56       3.54       3.68       3.75       3.83  

Commercial real estate:

          

Construction

     3.99       4.04       3.91       3.93       4.05  

Commercial

     3.84       3.97       4.10       4.13       4.00  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Commercial real estate

     3.86       3.98       4.08       4.09       4.01  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total commercial

     3.63       3.63       3.77       3.83       3.87  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Consumer:

          

Automobile

     3.54       3.67       3.80       3.96       4.28  

Home equity

     4.12       4.11       4.10       4.16       4.20  

Residential mortgage

     3.78       3.77       3.81       3.82       3.97  

Other consumer

     6.84       6.64       6.98       6.66       7.05  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total consumer

     3.89       3.93       3.99       4.07       4.22  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total loans and leases

     3.75       3.77       3.87       3.95       4.03  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total earning assets

     3.53 %     3.58 %     3.64 %     3.68 %     3.75 %
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities

          

Deposits:

          

Demand deposits—noninterest-bearing

     —   %     —   %     —   %     —   %     —   %

Demand deposits—interest-bearing

     0.04       0.04       0.04       0.04       0.04  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total demand deposits

     0.01       0.01       0.01       0.01       0.01  

Money market deposits

     0.25       0.27       0.26       0.24       0.23  

Savings and other domestic deposits

     0.20       0.24       0.25       0.27       0.30  

Core certificates of deposit

     0.94       1.05       1.05       1.13       1.19  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total core deposits

     0.28       0.32       0.32       0.34       0.37  

Other domestic deposits of $250,000 or more

     0.41       0.39       0.44       0.50       0.52  

Brokered deposits and negotiable CDs

     0.28       0.39       0.55       0.62       0.67  

Deposits in foreign offices

     0.13       0.14       0.14       0.14       0.17  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total deposits

     0.28       0.32       0.33       0.36       0.38  

Short-term borrowings

     0.07       0.08       0.09       0.10       0.12  

Federal Home Loan Bank advances

     0.12       0.14       0.14       0.14       0.18  

Subordinated notes and other long-term debt

     1.66       2.10       2.29       2.35       2.54  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total interest-bearing liabilities

     0.36       0.42       0.42       0.42       0.45  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest rate spread

     3.17       3.15       3.20       3.26       3.30  

Impact of noninterest-bearing funds on margin

     0.10       0.13       0.14       0.12       0.12  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest margin

     3.27 %     3.28 %     3.34 %     3.38 %     3.42 %
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Commercial Loan Derivative Impact

(Unaudited)

                              
     Average Rates (2)  
     2014     2013  

Fully-taxable equivalent basis (1)

   First     Fourth     Third     Second     First  

Commercial loans (2)(3)

     3.37 %     3.47 %     3.58 %     3.57 %     3.58 %

Impact of commercial loan derivatives

     0.25       0.17       0.19       0.26       0.29  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total commercial—as reported

     3.63 %     3.63 %     3.77 %     3.83 %     3.87 %
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average 30 day LIBOR

     0.16 %     0.17 %     0.19 %     0.20 %     0.20 %

 

(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.

 

8


Huntington Bancshares Incorporated

Selected Quarterly Income Statement Data(1)

(Unaudited)

 

     2014      2013  

(dollar amounts in thousands, except per share amounts)

   First      Fourth      Third      Second     First  

Interest income

   $ 472,455      $ 469,824      $ 462,911      $ 462,582      $ 465,319  

Interest expense

     34,949        39,175        38,060        37,645       41,149  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Net interest income

     437,506        430,649        424,851        424,937       424,170  

Provision for credit losses

     24,630        24,331        11,400        24,722       29,592  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Net interest income after provision for credit losses

     412,876        406,318        413,451        400,215       394,578  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Service charges on deposit accounts

     64,582        69,992        72,918        68,009       60,883  

Mortgage banking income

     23,089        24,327        23,622        33,659       45,248  

Trust services

     29,565        30,711        30,470        30,666       31,160  

Electronic banking

     23,642        24,251        24,281        23,346       20,713  

Insurance income

     16,496        15,556        17,269        17,187       19,252  

Brokerage income

     17,071        15,116        16,532        19,545       17,995  

Bank owned life insurance income

     13,307        13,817        13,740        15,421       13,442  

Capital markets fees

     9,194        12,332        12,825        12,229       7,834  

Gain on sale of loans

     3,570        7,144        5,063        3,348       2,616  

Securities gains (losses)

     16,970        1,239        98        (409     (509

Other income

     30,999        35,406        36,951        28,918       37,984  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total noninterest income

     248,485        249,891        253,769        251,919       256,618  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Personnel costs

     249,477        249,554        229,326        263,862       258,895  

Outside data processing and other services

     51,490        51,071        49,313        49,897       49,265  

Net occupancy

     33,433        31,984        35,591        27,656       30,114  

Equipment

     28,750        28,774        28,192        24,947       24,880  

Marketing

     10,686        13,704        12,270        14,239       10,971  

Deposit and other insurance expense

     13,718        10,056        11,155        13,461       15,490  

Amortization of intangibles

     9,291        10,320        10,362        10,362       10,320  

Professional services

     12,231        11,567        12,487        9,341       7,192  

Other expense

     51,045        38,979        34,640        32,100       35,666  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total noninterest expense

     460,121        446,009        423,336        445,865       442,793  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Income before income taxes

     201,240        210,200        243,884        206,269       208,403  

Provision for income taxes

     52,097        52,029        65,047        55,269       55,129  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Net income

   $ 149,143      $ 158,171      $ 178,837      $ 151,000      $ 153,274  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Dividends on preferred shares

     7,964        7,965        7,967        7,967       7,970  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Net income applicable to common shares

   $ 141,179      $ 150,206      $ 170,870      $ 143,033      $ 145,304  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Average common shares—basic

     829,659        830,590        830,398        834,730       841,103  

Average common shares—diluted

     842,677        842,324        841,025        843,840       848,708  

Per common share

             

Net income—basic

   $ 0.17      $ 0.18      $ 0.21      $ 0.17      $ 0.17  

Net income—diluted

     0.17        0.18        0.20        0.17       0.17  

Cash dividends declared

     0.05        0.05        0.05        0.05       0.04  

Revenue—fully-taxable equivalent (FTE)

             

Net interest income

   $ 437,506      $ 430,649      $ 424,851      $ 424,937      $ 424,170  

FTE adjustment

     5,885        8,196        6,634        6,587       5,923  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Net interest income (2)

     443,391        438,845        431,485        431,524       430,093  

Noninterest income

     248,485        249,891        253,769        251,919       256,618  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total revenue (2)

   $ 691,876      $ 688,736      $ 685,254      $ 683,443      $ 686,711  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

 

(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.

 

9


Huntington Bancshares Incorporated

Quarterly Mortgage Banking Income

(Unaudited)

 

    2014     2013     Percent Changes vs.  

(dollar amounts in thousands, except as noted)

  First     Fourth     Third     Second     First     4Q13     1Q13  

Mortgage banking income

             

Origination and secondary marketing

  $ 14,497     $ 14,201     $ 15,568     $ 27,917     $ 27,330       2 %     (47 )%

Servicing fees

    10,939       10,809       10,868       10,898       11,241       1       (3

Amortization of capitalized servicing

    (5,982     (6,062     (6,783     (7,998     (7,903     (1     (24

Other mortgage banking income

    3,535       3,397       3,685       4,470       4,654       4       (24
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Subtotal

    22,989       22,345       23,338       35,287       35,322       3       (35

MSR valuation adjustment (1)

    (1,597     3,458       173       14,127       17,798       (146     (109

Net trading gains (losses) related to MSR hedging

    1,697       (1,476     110       (15,755     (7,872     (215     (122
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total mortgage banking income

  $ 23,089     $ 24,327     $ 23,621     $ 33,659     $ 45,248       (5 )%     (49 )%
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Mortgage originations (in millions)

  $ 657     $ 841     $ 1,176     $ 1,282     $ 1,119       (22 )%      (41 )% 

Capitalized mortgage servicing rights (2)

    163,279       162,301       158,776       155,522       139,927       1       17  

Total mortgages serviced for others (in millions) (2)

    15,614       15,239       15,231       15,213       15,367       2       2  

MSR % of investor servicing portfolio (2)

    1.05     1.07     1.04     1.02     0.91     (2     15  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net impact of MSR hedging

             

MSR valuation adjustment (1)

  $ (1,597   $ 3,458     $ 173     $ 14,127     $ 17,798       (146 )%     (109 )%

Net trading gains (losses) related to MSR hedging

    1,697       (1,476     110       (15,755     (7,872     (215     (122
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net gain (loss) of MSR hedging

  $ 100     $ 1,982     $ 283     $ (1,628   $ 9,926       (95 )%     (99 )%