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 17, 2013

 

 

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 17, 2013, Huntington Bancshares Incorporated (“Huntington”) issued a news release announcing its earnings for the quarter ended March 31, 2013. Also on April 17, 2013, 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 17, 2013, 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 21477583. 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.com . A telephone replay will be available two hours after the completion of the call through April 30, 2013, at (855) 859-2056 or (404) 537-3406; conference call ID 21477583.

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 economic conditions, including impacts from the implementation of the Budget Control Act of 2011, the American Taxpayer Relief Act of 2012, the Consolidated and Further Continuing Appropriations Act of 2013, as well as the continuing economic uncertainty in the US, the European Union, and other areas; (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 including those related to the Dodd-Frank Wall Street Reform and Consumer Protection Act, OCC, Federal Reserve, and CFPB; and (10) the outcome of judicial and regulatory decisions regarding practices in the residential mortgage industry, including among other things the processes followed for foreclosing residential mortgages. Additional factors that could cause results to differ materially from those described above can be found in Huntington’s 2012 Annual Report on Form 10-K, and documents subsequently filed by Huntington with the Securities and Exchange Commission. All forward-looking statements included in this document are based on information available at the time of the release. Huntington assumes no obligation to update any forward-looking statement.


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

Item 9.01. Financial Statements and Exhibits.

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

(d) Exhibits.

Exhibit 99.1 – News release of Huntington Bancshares Incorporated, dated April 17, 2013.

Exhibit 99.2 – Quarterly Financial Supplement, March 2013.


SIGNATURES

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

 

    HUNTINGTON BANCSHARES INCORPORATED
Date: April 17, 2013     By:   /s/ Donald R. Kimble
      Donald R. Kimble
      Senior Executive Vice President and Chief Financial Officer

EXHIBIT INDEX

 

Exhibit No.    Description
Exhibit 99.1    News release of Huntington Bancshares Incorporated, April 17, 2013.
Exhibit 99.2    Quarterly Financial Supplement, March 2013.

Exhibit 99.1

 

LOGO    LOGO

FOR IMMEDIATE RELEASE

Apr. 17, 2013

 

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 NET INCOME OF $151.8 MILLION, OR $0.17 PER COMMON SHARE, FOR

THE 2013 FIRST QUARTER, DOWN 1% FROM THE YEAR-AGO QUARTER AND DOWN

9% FROM THE PRIOR QUARTER

DECLARES 25% INCREASE IN QUARTERLY CASH DIVIDEND ON COMMON STOCK TO $0.05 PER SHARE

Specific highlights compared with 2012 First Quarter:

 

$0.58, or 11%, increase in tangible book value per common share to $5.91

 

1.10% return on average assets, down from 1.13%

 

$682.3 million of fully-taxable equivalent revenue, a 3% decrease

 

$8.9 million, or 2%, increase in fully-taxable equivalent net interest income, reflecting:

 

  3.42% fully-taxable equivalent net interest margin, up 2 basis points

 

  4% growth in average total loans

 

  5% growth in average core deposits

 

$33.1 million, or 12%, decrease in noninterest income, reflecting a $24.2 million, or 90%, decrease in gain on sale of loans

 

$19.9 million, or 4%, decrease in noninterest expense

 

Delivered positive operating leverage and a modest improvement in efficiency ratio

 

NCOs declined 38% and were an annualized 0.51% of total loans

 

19% decline in nonaccrual loans to 0.92% of total loans and leases, down from 1.15%

Specific highlights compared with 2012 Fourth Quarter:

 

$54.9 million, or 7%, decrease in fully-taxable equivalent revenue, reflecting:

 

  $9.4 million, or 2%, decrease in fully-taxable equivalent net interest income primarily due to fewer days in the quarter

 

  3.42% fully-taxable equivalent net interest margin, down 3 basis points

 

  5% annualized growth in average total loans

 

  $18.1 million decrease in gain on sale of loans

 

  $16.5 million decrease in mortgage banking income

 

$27.8 million, or 6%, decrease in noninterest expense

 

4.7 million shares repurchased at an average price of $7.07 per share


COLUMBUS, Ohio – Huntington Bancshares Incorporated (NASDAQ: HBAN; www.huntington.com ) reported 2013 first quarter net income of $151.8 million, a decrease of $1.5 million, or 1%, from the 2012 first quarter and a decrease of $15.5 million, or 9%, from the 2012 fourth quarter. Earnings per common share were $0.17, unchanged from the year ago quarter and down $0.02 from the prior quarter.

Huntington today announced two capital actions approved by the Board of Directors. First, they declared a quarterly cash dividend on the company’s common stock of $0.05 per common share. This represents a $0.01 per share, or 25%, increase from the prior quarter’s dividend. The dividend is payable July 1, 2013, to shareholders of record on June 17, 2013. Second, the Board also approved the repurchase of up to $227 million of common stock. The new repurchase authorization represents a $45 million, or 25%, increase from the recently completed common stock repurchase authorization. Both actions were proposed in the January 2013 capital plan, which received no objections from the Federal Reserve.

Strategies Continue to Drive Business Performance

“The year is off to a solid start,” said Stephen D. Steinour, chairman, president and chief executive officer. “This quarter’s results continue to demonstrate that our strategies are working. We have differentiated Huntington by investing in innovative products and customer services, including our Fair Play approach. As a result, we are continuing to see double digit household growth and recognition by national entities of our focus on outstanding customer service.”

“Huntington’s growth has occurred in a challenging economic and regulatory environment. While some companies are hesitant to invest in light of the uncertain economy, we will continue to look for areas where we can improve efficiency, continue to deliver positive operating leverage, and selectively invest in our businesses in order to drive our long-term profitability,” Steinour added.

Table 1 – Earnings Performance Summary

 

     2013     2012  
     First     Fourth     Third     Second     First  

($ in millions, except per share data)

   Quarter     Quarter     Quarter     Quarter     Quarter  

Net Income

   $ 151.8      $ 167.3      $ 167.8      $ 152.7      $ 153.3   

Diluted earnings per common share

     0.17        0.19        0.19        0.17        0.17   

Return on average assets

     1.10     1.19     1.19     1.10     1.13

Return on average common equity

     10.7        11.6        11.9        11.1        11.4   

Return on average tangible common equity

     12.4        13.5        13.9        13.1        13.5   

Net interest margin

     3.42        3.45        3.38        3.42        3.40   

Efficiency ratio

     63.3        62.3        64.5        62.8        63.8   

Tangible book value per common share

   $ 5.91      $ 5.78      $ 5.71      $ 5.49      $ 5.33   

Cash dividends declared per common share

     0.04        0.04        0.04        0.04        0.04   

Average diluted shares outstanding (000’s)

     848,708        853,306        863,588        867,551        869,164   

Average earning assets

   $ 50,960      $ 50,682      $ 51,330      $ 51,050      $ 49,767   

Average loans

     40,864        40,397        40,120        41,179        39,145   

Average core deposits

     43,616        44,310        43,764        42,781        41,387   

Tangible common equity / tangible assets ratio

     8.92     8.76     8.74     8.41     8.33

Tier 1 common risk-based capital ratio

     10.62        10.48        10.28        10.08        10.15   

NCOs as a % of average loans and leases

     0.51     0.69     1.05     0.82     0.85

NAL ratio

     0.92        1.00        1.11        1.19        1.15   

ACL as a % of total loans and leases

     1.91        1.99        2.09        2.28        2.37   

 

2


Significant Items Influencing Financial Performance Comparisons

From time-to-time, revenue, expenses, or taxes are impacted by items we judge to be outside of ordinary banking activities and/or by items that, while they may be associated with ordinary banking activities, are so unusually large that we believe their outsized impact at that time to be infrequent or short term in nature. We believe the disclosure of such “Significant Items,” when appropriate, aids analysts/investors in better understanding corporate performance trends. (See Significant Items under the Basis of Presentation for a full discussion.)

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

Table 2 – Significant Items Influencing Earnings Performance Comparisons

 

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

March 31, 2013 – net income

   $ 151.8      $ 0.17   

December 31, 2012 – net income

   $ 167.3      $ 0.19   

September 30, 2012 – net income

   $ 167.8      $ 0.19   

• State deferred tax valuation allowance benefit

     19.5        0.02   

June 30, 2012 – net income

   $ 152.7      $ 0.17   

March 31, 2012 – net income

   $ 153.3      $ 0.17   

• Bargain purchase gain, FDIC-assisted Fidelity Bank acquisition, pre-tax

     11.4        0.01   

• Addition to litigation reserves, pre-tax

     (23.5     (0.02

 

(1)  

Favorable (unfavorable) impact on net income; after-tax unless otherwise noted

(2)  

EPS reflected on a fully diluted basis

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

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

 

     2013     2012              
     First     Fourth     Third     Second     First     Change  

($ in millions)

   Quarter     Quarter     Quarter     Quarter     Quarter     LQ     YOY  

Net interest income

   $ 424.2      $ 434.1      $ 430.3      $ 429.0      $ 417.2        (2 )%      2

FTE adjustment

     5.9        5.5        5.3        5.7        3.9        8        51   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income—FTE

     430.1        439.5        435.6        434.7        421.1        (2     2   

Noninterest income

     252.2        297.7        261.1        253.8        285.3        (15     (12
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenue—FTE

   $ 682.3      $ 737.2      $ 696.6      $ 688.5      $ 706.5        (7 )%      (3 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
                                   Change bps  

Yield / Cost

                                 LQ     YOY  

Total earning assets

     3.75     3.80     3.79     3.89     3.91     (5     (16

Total loans and leases

     4.03        4.13        4.12        4.18        4.21        (9     (18

Total securities

     2.39        2.38        2.41        2.45        2.50        1        (12

Total interest-bearing liabilities

     0.45        0.50        0.58        0.63        0.68        (4     (23

Total interest-bearing deposits

     0.38        0.42        0.48        0.51        0.55        (4     (16

Net interest rate spread

     3.30        3.30        3.21        3.26        3.23        —          7   

Impact of noninterest-bearing funds on margin

     0.12        0.15        0.17        0.16        0.17        (3     (5
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest margin

     3.42     3.45     3.38     3.42     3.40     (3     2   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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

 

3


Fully-taxable equivalent net interest income increased $8.9 million, or 2%, from the 2012 first quarter. This reflected the benefit of a $1.2 billion, or 2%, increase in average earning assets, coupled with a 2 basis point increase in the fully-taxable equivalent net interest margin (NIM) to 3.42%. The primary items impacting the increase in the NIM were:

 

   

20 basis point reduction in the cost of subordinated notes and other long-term debt, reflecting the benefit of the redemption of $230 million of trust preferred securities in 2012.

 

   

17 basis point positive impact from the reduction in total deposit costs.

Partially offset by:

 

   

18 basis point negative impact from the mix and yield of loans.

 

   

11 basis point negative impact from the yield on total securities.

 

   

5 basis point lower impact from noninterest-bearing funds.

Compared to the 2012 fourth quarter, fully-taxable equivalent net interest income decreased $9.4 million, or 2%, reflecting the seasonal impact of a fewer number of days as well as a 3 basis point decrease in NIM, partially offset by a $0.3 billion increase in average earnings assets. The primary items affecting the NIM were a 5 basis point negative impact from the mix and yield of earning assets and a 3 basis point lower benefit from noninterest-bearing funds, which were partially offset by a 5 basis point positive impact from the reduction in total funding costs.

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

 

     2013      2012               
     First      Fourth      Third      Second      First      Change (%)  

(in billions)

   Quarter      Quarter      Quarter      Quarter      Quarter      LQ     YOY  

Average Loans and Leases

                   

Commercial and industrial

   $ 17.0       $ 16.5       $ 16.3       $ 16.1       $ 14.8         3     14

Commercial real estate

     5.3         5.5         5.7         6.1         5.9         (3     (10
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total commercial

     22.2         22.0         22.1         22.2         20.7         1        8   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Automobile

     4.8         4.5         4.1         5.0         4.6         8        6   

Home equity

     8.4         8.3         8.4         8.3         8.2         1        2   

Residential mortgage

     5.0         5.2         5.2         5.3         5.2         (3     (4

Other consumer

     0.4         0.4         0.4         0.5         0.5         (4     (15
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total consumer

     18.6         18.4         18.1         19.0         18.5         1        1   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total loans and leases

     40.9         40.4         40.1         41.2         39.1         1        4   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total securities

     9.3         9.4         9.3         9.3         9.3         (1     1   

Held-for-sale and other earning assets

     0.8         0.9         1.9         0.5         1.4         (14     (43

Total earning assets

   $ 51.0       $ 50.7       $ 51.3       $ 51.1       $ 49.8         1     2
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

See Page 6 of Quarterly Financial Supplement for additional detail.

Average earning assets increased $1.2 billion, or 2%, since the year-ago quarter, driven by:

 

   

$2.1 billion, or 14%, growth in average Commercial and Industrial (C&I) loans. This reflected the continued growth across most business lines, with particularly strong growth in equipment finance, dealer floorplan, and health care.

 

4


   

$0.3 billion, or 6%, increase in automobile loans. No automobile loans were transferred to held for sale during the 2013 first quarter, as the only currently planned securitization is expected to be in the second half of 2013.

Partially offset by:

 

   

$0.6 billion, or 10%, decrease in average Commercial Real Estate (CRE) loans. This reflected continued runoff of the noncore and core portfolios as acceptable returns for new core origination were balanced against internal concentration limits and increased competition, particularly pricing, for high quality developers and projects.

 

   

$0.2 billion, or 4%, decrease in residential mortgages due to payoffs and the mix of originations shifted towards more saleable loans.

Similar trends were seen when comparing against the 2012 fourth quarter. The $0.3 billion, or 1%, increase in average earning assets reflected a $0.4 billion, or 11% annualized, increase in C&I loans and a $0.3 billion, or 31% annualized, increase in automobile loans. These were partially offset by the $0.2 billion, or 13% annualized, decrease in CRE and $0.2 billion, or 14% annualized, decrease in residential mortgages. Compared with December 31, 2012, end-of-period residential mortgages increased 7% annualized, and we expect to keep a greater portion of mortgages on balance sheet.

Table 5 – Average Liabilities – Core Deposit Growth Offsets Reduction in Borrowings

 

     2013      2012               
     First      Fourth      Third      Second      First      Change (%)  

(in billions)

   Quarter      Quarter      Quarter      Quarter      Quarter      LQ     YOY  

Average Deposits

                   

Demand deposits - noninterest bearing

   $ 12.2       $ 13.1       $ 12.3       $ 12.1       $ 11.3         (7 )%      8

Demand deposits - interest bearing

     6.0         5.8         5.8         5.9         5.6         2        6   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total demand deposits

     18.1         19.0         18.1         18.0         16.9         (4     7   

Money market deposits

     15.0         14.7         14.5         13.2         13.1         2        14   

Savings and other domestic deposits

     5.1         5.0         5.0         5.0         4.8         2        6   

Core certificates of deposit

     5.3         5.6         6.1         6.6         6.5         (5     (18
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total core deposits

     43.6         44.3         43.8         42.8         41.4         (2     5   

Other domestic deposits of $250,000 or more

     0.4         0.4         0.3         0.3         0.3         0        4   

Brokered deposits and negotiable CDs

     1.7         1.8         1.9         1.4         1.3         (3     30   

Other deposits

     0.3         0.3         0.4         0.4         0.4         (1     (21
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total deposits

     46.0         46.8         46.3         44.9         43.5         (2     6   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Short and long-term borrowings

     2.8         2.4         3.1         4.3         4.6         15        (39

Total interest-bearing liabilities

   $ 36.6       $ 36.1       $ 37.0       $ 37.1       $ 36.8         2     (0 )% 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

See Page 6 of Quarterly Financial Supplement for additional detail.

Average liabilities increased $0.7 billion, or 1%, from the first quarter 2012, primarily reflecting:

 

   

$1.9 billion, or 14%, increase in money market deposits.

 

   

$0.9 billion, or 8%, increase in average noninterest bearing demand deposits.

Partially offset by:

 

   

$1.8 billion, or 39%, decrease in FHLB advances and short- and long-term borrowings.

 

   

$1.2 billion, or 18%, decrease in average core certificates of deposit.

 

5


Compared to the 2012 fourth quarter, the $0.7 billion, or 6% annualized, decrease in average total core deposits primarily reflected a $1.0 billion, or 29% annualized, decrease in average noninterest bearing deposits due to our continued effort to reduce collateralized deposits. This was partially offset by a $0.3 billion, or 8% annualized, increase in average money market deposits. Compared with December 31, 2012, end-of-period noninterest bearing deposits increased 5% annualized.

Noninterest Income

Table 6 – Noninterest Income – Lack of Securitization Drives Year Over Year Decline

 

     2013     2012              
     First     Fourth      Third      Second      First     Change (%)  

(in millions)

   Quarter     Quarter      Quarter      Quarter      Quarter     LQ     YOY  

Noninterest Income

                 

Service charges on deposit accounts

   $ 60.9      $ 68.1       $ 67.8       $ 66.0       $ 60.3        (11 )%      1

Mortgage banking income

     45.2        61.7         44.6         38.3         46.4        (27     (3

Trust services

     31.2        31.4         29.7         29.9         30.9        (1     1   

Electronic banking

     20.7        21.0         22.1         20.5         18.6        (1     11   

Brokerage Income

     18.0        17.4         16.5         19.0         19.3        3        (7

Insurance income

     19.3        17.3         17.8         17.4         18.9        11        2   

Gain on sale of loans

     2.6        20.7         6.6         4.1         26.8        (87     (90

Bank owned life insurance income

     13.4        13.8         14.4         14.0         13.9        (2     (4

Capital markets fees

     8.1        12.9         11.8         13.5         10.0        (38     (19

Securities (losses) gains

     (0.5     0.9         4.2         0.4         (0.6     (159     (17

Other income

     33.4        32.5         25.6         30.7         40.9        3        (18
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Total noninterest income

   $ 252.2      $ 297.7       $ 261.1       $ 253.8       $ 285.3        (15 )%      (12 )% 
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

In the 2013 first quarter, noninterest income decreased $33.1 million, or 12%, from the year-ago quarter, primarily reflecting:

 

   

$24.2 million, or 90%, decrease in gain on sale of loans related to the prior year’s automobile loan securitization.

 

   

$7.5 million, or 18%, decrease in other income related to the prior year’s $11.4 million bargain purchase gain from the FDIC-assisted Fidelity Bank acquisition and the $2.7 million decrease in operating lease income. 2013 first quarter other noninterest income included a $7.6 million gain on the sale of Low Income Housing Tax Credit investments.

Compared to the 2012 fourth quarter, the $45.4 million, or 15%, decrease in noninterest income reflected an $18.1 million, or 87%, decrease in gain on sale of loans related to the prior quarter’s automobile loan securitization, a $16.5 million, or 27%, decrease in mortgage banking income, a $7.2 million, or 11%, decrease in service charges on deposit accounts, and a $4.9 million, or 38%, decrease in capital markets activity. Lower than expected commercial customer transactions negatively impacted both capital markets revenue and service charges on commercial deposit accounts, more than offsetting the favorable impact from continued robust growth in total commercial customer relationship of 11.9% annualized during the quarter. The decrease in service charges on deposit accounts also reflects typical seasonality and the February implementation of a new posting order for consumer transaction accounts. The full-year impact from the new posting order, which was incorporated into previous 2013 guidance, is estimated to be between $25 million and $30 million. Consumer household checking account growth of 11.8% annualized during the quarter partially offset the unfavorable impact from the new posting order.

 

6


Noninterest Expense

Table 7 – Noninterest Expense – Meaningful Decreases in Other Expenses Drives Improvement

 

     2013      2012               
     First      Fourth      Third      Second     First      Change (%)  

(in millions)

   Quarter      Quarter      Quarter      Quarter     Quarter      LQ     YOY  

Noninterest Expense

                  

Personnel costs

   $ 258.9       $ 254.0       $ 247.7       $ 243.0      $ 243.5         2     6

Outside data processing and other services

     49.3         48.7         50.4         48.6        42.6         1        16   

Net occupancy

     30.1         29.0         27.6         25.5        29.1         4        4   

Equipment

     24.9         26.6         26.0         24.9        25.5         (6     (3

Deposit and other insurance expense

     15.5         16.3         15.5         15.7        20.7         (5     (25

Professional services

     7.2         22.5         17.5         15.0        10.7         (68     (33

Marketing

     11.0         16.5         16.8         17.4        13.6         (33     (19

Amortization of intangibles

     10.3         11.6         11.4         11.9        11.5         (11     (11

OREO and foreclosure expense

     2.7         4.2         5.0         4.1        5.0         (37     (46

Loss (Gain) on early extinguishment of debt

     —           —           1.8         (2.6     —           —          —     

Other expense

     33.0         41.2         38.6         40.7        60.5         (20     (45
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total noninterest expense

   $ 442.8       $ 470.6       $ 458.3       $ 444.3      $ 462.7         (6 )%      (4 )% 
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

(in thousands)

                                              

Number of employees (full-time equivalent)

     12.1         11.8         11.7         11.4        11.2         0     2

In the 2013 first quarter, noninterest expense decreased $19.9 million, or 4%, from the year-ago quarter, primarily reflecting:

 

   

$27.5 million, or 45%, decrease in other expense, reflecting a $2.1 million, or 73%, decrease to $0.8 million in operating lease expense as the automobile lease portfolio continues to run off and is expected to be essentially zero by the end of the year. The year ago quarter also included a $23.5 million addition to litigation reserves.

 

   

$5.2 million, or 25%, decrease in deposit and other insurance expense, reflecting lower insurance premiums.

 

   

$3.5 million, or 33%, decrease in professional services, reflecting a decrease in legal and outside consultant expenses.

Partially offset by:

 

   

$15.4 million, or 6%, increase in personnel costs, reflecting an increase in the number of full-time equivalent employees as well as increased salaries and benefits.

 

   

$6.7 million, or 16%, increase in outside data processing and other services primarily related to continued IT infrastructure investments.

Noninterest expense decreased $27.8 million, or 6%, from the prior quarter as professional services decreased $15.3 million, 68%, primarily reflecting the decline in regulatory-related expenses. Other expenses decreased $8.2 million, or 20%, due to lower litigation and travel expenses, while marketing decreased $5.5 million, or 33%, as the latest advertising campaign did not launch until late in the quarter. Personnel costs increased $4.9 million, or 2%, reflecting the approximately $8 million of costs related to the annual payroll tax resets, partially offset by approximately $5 million in lower commission expense due to lower levels of capital markets and other customer-related activities.

 

7


Credit Quality

Table 8 – Summary Credit Quality Metrics – Continued Improvement

 

     2013     2012  

($ in thousands)

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

Total nonaccrual loans and leases

   $ 380,311      $ 407,633      $ 445,046      $ 474,166      $ 467,558   

Total other real estate, net

     25,139        28,097        54,206        38,608        48,747   

Other NPAs (1)

     10,045        10,045        10,476        10,476        10,772   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total nonperforming assets (2)

   $ 415,495      $ 445,775      $ 509,728      $ 523,250      $ 527,077   

Accruing loans and leases past due 90 days or more

     108,423        110,316        108,219        95,555        60,557   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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

   $ 523,918      $ 556,091      $ 617,947      $ 618,805      $ 587,634   

NAL ratio (2)

     0.92     1.00     1.11     1.19     1.15

NPA ratio (3)

     1.01        1.09        1.26        1.31        1.29   

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

     1.48        1.59        1.75        1.76        1.68   

Provision for credit losses

   $ 29,592      $ 39,458      $ 37,004      $ 36,520      $ 34,406   

Net charge-offs

     51,687        70,130        105,095        84,245        82,992   

Net charge-offs / Average total loans

     0.51     0.69     1.05     0.82     0.85

Allow ance for loans and lease losses

   $ 746,769      $ 769,075      $ 789,142      $ 859,646      $ 913,069   

Allow ance for unfunded loan commitments and letters of credit

     40,855        40,651        53,563        50,978        50,934   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Allow ance for credit losses (ACL)

   $ 787,624      $ 809,726      $ 842,705      $ 910,624      $ 964,003   

ACL as a % of:

          

Total loans and leases

     1.91     1.99     2.09     2.28     2.37

NALs

     207        199        189        192        206   

NPAs

     190        182        165        174        183   

 

(1) Other nonperforming assets represent an investment security backed by a municipal bond.
(2) NPA’s related to Chapter 7 bankruptcy: 3Q12—$63.0 MM, 4Q12—$60.1 MM, and 1Q13—$59.9 MM
(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 through 14 of Quarterly Financial Supplement for additional detail.

Credit quality performance in the 2013 first quarter reflected continued improvement. Nonaccrual loans (NALs) declined $87.2 million, or 19%, from the 2012 first quarter and $27.3 million, or 7%, from the 2012 fourth quarter to $380.3 million, or 0.92% of total loans and leases. Nonperforming assets (NPAs) declined $111.6 million, or 21%, compared to the year-ago quarter and $30.3 million, or 7%, from the 2012 fourth quarter to $415.5 million, or 1.01% of total loans and leases, OREO, and other NPAs. The decreases primarily reflected meaningful improvement in commercial NALs.

The provision for credit losses decreased $4.8 million, or 14%, from the 2012 first quarter. Net charge-offs (NCOs) benefited from higher levels of recoveries than experienced over the last year and were $51.7 million, down 38% from $83.0 million in the year-ago quarter. NCOs were an annualized 0.51% of average loans and leases in the current quarter, down from 0.85% in the 2012 first quarter. Given the absolute low levels of NCOs, high levels of volatility are expected for the remainder of the year. The period-end allowance for credit losses (ACL) as a percentage of total loans and leases decreased to 1.91% from 2.37% a year ago, while the ACL as a percentage of period-end total NALs increased to 207% from 206%.

Total accruing loans and leases over 90 days past due, excluding loans guaranteed by the U.S. Government, were $108.4 million at March 31, 2013, down $1.9 million, or 2%, from the end of the prior quarter, and up $47.9 million, or 79%, from the end of the year-ago period. On this same basis, the over 90-day delinquency ratio was 0.26% at March 31, 2013, down one basis point from the end of the prior quarter and up 11 basis points from the end of the year-ago quarter.

Total troubled debt restructured loans were $913.7 million at March 31, 2013, up $38.1 million, or 4%, from December 31, 2012 and up $137.6 million, or 18%, from March 31, 2012.

 

8


Capital

Table 9 – Capital Ratios – TCE and Tier 1 Common Continue to Build

 

     2013     2012  

(in millions)

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

Tangible common equity / tangible assets ratio

     8.92     8.76     8.74     8.41     8.33

Tier 1 common risk-based capital ratio

     10.62     10.48     10.28     10.08     10.15

Regulatory Tier 1 risk-based capital ratio

     12.16     12.02     11.88     11.93     12.22

Excess over 6.0% (1)

   $ 2,953      $ 2,876      $ 2,831      $ 2,840      $ 2,906   

Regulatory Total risk-based capital ratio

     14.55     14.50     14.37     14.42     14.76

Excess over 10.0% (1)

   $ 2,181      $ 2,150      $ 2,104      $ 2,117      $ 2,224   

Total risk-weighted assets

   $ 47,937      $ 47,773      $ 48,147      $ 47,890      $ 46,716   

 

(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, 2013 was 8.92%, up 59 basis points from the year ago quarter. Our Tier 1 common risk-based capital ratio at quarter end was 10.62%, up from 10.15% at the end of the 2012 first quarter. The regulatory Tier 1 risk-based capital ratio at March 31, 2013 was 12.16%, down from 12.22% at March 31, 2012. The decline in the regulatory Tier 1 risk-based capital ratio primarily reflected the redemption of $230 million of trust preferred securities during 2012. All capital ratios were impacted by the repurchase of 28.1 million common shares over the last four quarters, of which 4.7 million were repurchased in the 2013 first quarter at an average price per share of $7.07.

Commenting on capital, Steinour said, “Reinvesting excess capital to grow the business organically remains our first priority. Importantly, through dividends and share repurchases, we have the flexibility, subject to market conditions and regulatory approval, to return a meaningful amount of our earnings to the owners of the company. We continue to evaluate other capital actions. As we have shown over the last several years, we will maintain a high level of discipline when considering M&A.”

Income Taxes

The provision for income taxes in the 2013 first quarter was $52.2 million, $54.3 million in the 2012 fourth quarter, and $52.2 million in the 2012 first quarter. The effective tax rates for the 2013 first quarter, 2012 fourth quarter, and 2012 first quarter were 25.6%, 24.5%, and 25.4%, respectively. At March 31, 2013, we had a net federal deferred tax asset of $116.9 million and a net state deferred tax asset of $37.4 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, 2013. As of March 31, 2013 and December 31, 2012, there was no disallowed deferred tax asset for regulatory capital purposes.

2013 Expectations

“We are starting to see positive signs in both our business and consumer customer bases as the economic recovery progresses. We believe the soundness of our strategies will continue to drive growth and improve our profitability. Our retail customers and our mortgage lending businesses are benefiting from recovering housing markets,” said Steinour. “Although a recent uptick among our business customers of drawing down cash balances to support working capital needs and to fund new projects has negative near-term implications on our balance sheet, we are encouraged by this activity as it suggests improving confidence among business owners and implies a more robust long-term economic outlook. Competition continues to pressure asset yields and more recently loan structure, but we will remain disciplined as we manage our aggregate moderate-to-low risk profile,” said Steinour.

 

9


Net interest income is expected to modestly grow over the course of 2013, as we anticipate an increase in total loans, excluding the impact of any future loan securitizations. However, those benefits to net interest income are expected to be mostly offset by downward NIM pressure. 2013 NIM is not expected to fall below the mid 3.30%’s due to continued deposit repricing and mix shift opportunities while maintaining a disciplined approach to loan pricing.

The C&I portfolio is expected to continue to see growth in 2013, although we expect growth will be more heavily weighted to the back half of the year as the economic recovery progresses. Our C&I sales pipeline remains robust with much of this reflecting the positive impact from our investments in specialized commercial verticals, focused OCR sales process and continued support of middle market and small business lending. While on-balance sheet loans are expected to increase, we will continue to evaluate the use of automobile loan securitizations due to our expectation of continued strong levels of originations. We currently anticipate one securitization in the second half of 2013. Residential mortgages and home equity loan balances are expected to increase modestly. CRE loans likely will experience declines from current levels but are expected to remain in the $5 billion range.

Excluding potential future automobile loan securitizations, we anticipate the increase in total loans will modestly outpace growth in total deposits. This reflects our continued focus on the overall cost of funds, the continued shift towards low- and no-cost demand deposits and money market deposit accounts.

Noninterest income over the course of the year, excluding the impact of any automobile loan sales and any net MSR impact, is expected to be at similar levels as 2012. The anticipated slowdown in mortgage banking activity is expected to be offset by continued growth in new customers, increased contribution from higher cross-sell, and the continued maturation of our previous strategic investments.

Noninterest expense in the 2013 first quarter was below our expected average quarterly run rate for the year. Second quarter expenses are expected to increase due to higher commission expense related to a more normal level of commercial customer-related activity, annual merit increases, higher marketing expense as we continue the launch of our new media campaign, and equipment related to our continued in-store expansion. We remain committed to posting positive operating leverage in 2013 as growth in total revenue is expected to outpace total expense growth.

Overall credit quality is expected to experience continued improvement, and NCOs while in the normalized range this quarter, are expected to remain volatile but reach normalized levels by the end of 2013. The level of provision for credit losses was at the low end of our long-term expectation, and we expect some quarterly volatility within each of the loan categories given the absolute low level of the provision for credit losses and the uncertain and uneven nature of the economic recovery.

We anticipate an effective tax rate for the remainder of 2013 to be in the range of 25% to 28%, primarily reflecting the impacts of tax-exempt income, tax advantaged investments, and general business credits.

 

10


Conference Call / Webcast Information

Huntington’s senior management will host an earnings conference call on Wednesday, April 17, 2013, 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 21477583. 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 two hours after the completion of the call through April 30, 2013 at (855) 859-2056; Conference ID 21477583.

Please see the 2013 First Quarter Quarterly Financial Supplement for additional detailed financial performance metrics. This document can be found at: http://www.investquest.com/iq/h/hban/ne/news/index.htm

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 economic conditions, including impacts from the implementation of the Budget Control Act of 2011, the American Taxpayer Relief Act of 2012, the Consolidated and Further Continuing Appropriations Act of 2013, as well as the continuing economic uncertainty in the US, the European Union, and other areas; (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 including those related to the Dodd-Frank Wall Street Reform and Consumer Protection Act, OCC, Federal Reserve, and CFPB; and (10) the outcome of judicial and regulatory decisions regarding practices in the residential mortgage industry, including among other things the processes followed for foreclosing residential mortgages. Additional factors that could cause results to differ materially from those described above can be found in Huntington’s 2012 Annual Report on Form 10-K, and documents subsequently filed by Huntington with the Securities and Exchange Commission. All forward-looking statements included in this document are based on information available at the time of the release. Huntington assumes no obligation to update any forward-looking statement.

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 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.

 

11


Even though certain revenue and expense items are naturally subject to more volatility than others due to changes in market and economic environment conditions, as a general rule volatility alone does not define a Significant Item. For example, changes in the provision for credit losses, gains/losses from investment activities, asset valuation write-downs, etc., reflect ordinary banking activities and are, therefore, typically excluded from consideration as a Significant Item.

Management believes the disclosure of “Significant Items”, when appropriate, aids analysts/investors in better understanding corporate performance and trends so that they can ascertain which of such items, if any, they may wish to include/exclude from their analysis of the company’s performance—i.e., within the context of determining how that performance differed from their expectations, as well as how, if at all, to adjust their estimates of future performance accordingly. To this end, Management has adopted a practice of listing “Significant Items” in its external disclosure documents (e.g., earnings press releases, quarterly performance discussions, investor presentations, Forms 10-Q and 10-K).

“Significant Items” for any particular period are not intended to be a complete list of items that may materially impact current or future period performance. A number of items could materially impact these periods, including those described in Huntington’s 2012 Annual Report on Form 10-K and other factors described from time to time in Huntington’s other filings with the Securities and Exchange Commission.

Annualized data

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

Fully-taxable equivalent interest income and net interest margin

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

Earnings per share equivalent data

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

Rounding

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

About Huntington

Huntington Bancshares Incorporated is a $56 billion regional bank holding company headquartered in Columbus, Ohio. The Huntington National Bank, founded in 1866, provides 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 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 1,400 ATMs. Through automotive dealership relationships within its six-state 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.

###

 

12

Exhibit 99.2

HUNTINGTON BANCSHARES INCORPORATED

Quarterly Financial Supplement

March 2013

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 Analysis

     7-8   

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 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 Generally Accepted Accounting Principles (“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 this press release in their entirety, and not to rely on any single financial measure.


Quarterly Key Statistics (1)

(Unaudited)

 

     2013     2012     Percent Changes vs.  

(dollar amounts in thousands, except per share amounts)

   First     Fourth     First     4Q12     1Q12  

Net interest income

   $ 424,170     $ 434,055     $ 417,209       (2 )%      2

Provision for credit losses

     29,592       39,458       34,406       (25     (14

Noninterest income

     252,209       297,651       285,320       (15     (12

Noninterest expense

     442,793       470,628       462,676       (6     (4
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     203,994       221,620       205,447       (8     (1

Provision for income taxes

     52,214       54,341       52,177       (4     —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 151,780     $ 167,279     $ 153,270       (9 )%      (1 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Dividends on preferred shares

     7,970       7,973       8,049       —          (1
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income applicable to common shares

   $ 143,810     $ 159,306     $ 145,221       (10 )%      (1 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income per common share - diluted

   $ 0.17     $ 0.19     $ 0.17       (11 )%      —  

Cash dividends declared per common share

     0.04       0.04       0.04       —          —     

Book value per common share at end of period

     6.53       6.41       5.97       2       9  

Tangible book value per common share at end of period

     5.91       5.78       5.33       2       11  

Average common shares - basic

     841,103       847,220       864,499       (1     (3

Average common shares - diluted

     848,708       853,306       869,164       (1     (2

Return on average assets

     1.10     1.19     1.13    

Return on average common shareholders’ equity

     10.7       11.6       11.4      

Return on average tangible common shareholders’ equity (2)

     12.4       13.5       13.5      

Net interest margin (3)

     3.42       3.45       3.40      

Efficiency ratio (4)

     63.3       62.3       63.8      

Noninterest Income/Total Revenue

     37.0       40.4       40.4      

Effective tax rate

     25.6       24.5       25.4      

Average loans and leases

   $ 40,863,921     $ 40,396,541     $ 39,144,688       1       4  

Average loans and leases - linked quarter annualized growth rate

     4.6     2.8     (3.8 )%     

Average earning assets

   $ 50,959,966     $ 50,682,461     $ 49,766,526       1       2  

Average total assets

     55,728,126       56,053,542       54,656,001       (1     2  

Average core deposits (5)

     43,615,639       44,309,913       41,387,049       (2     5  

Average core deposits - linked quarter annualized growth rate

     (6.3 )%      5.0     0.3    

Average shareholders’ equity

   $ 5,834,190     $ 5,842,493     $ 5,492,228       —          6  

Total assets at end of period

     56,054,966       56,153,185       55,876,654       —          —     

Total shareholders’ equity at end of period

     5,867,138       5,790,211       5,549,828       1       6  

Net charge-offs (NCOs)

     51,687       70,130       82,992       (26     (38

NCOs as a % of average loans and leases

     0.51     0.69     0.85    

Nonaccrual loans and leases (NALs)

   $ 380,311     $ 407,633     $ 467,558       (7     (19

NAL ratio

     0.92     1.00     1.15    

Nonperforming assets (NPAs) (6)

   $ 415,495     $ 445,775     $ 527,077       (7     (21

NPA ratio (6)

     1.01     1.09     1.29    

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

     1.81       1.89       2.24      

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

     1.91       1.99       2.37      

ACL as a % of NALs

     207       199       206      

ACL as a % of NPAs

     190       182       183      

Tier 1 leverage ratio (7)

     10.57       10.36       10.55      

Tier 1 common risk-based capital ratio (7)

     10.62       10.48       10.15      

Tier 1 risk-based capital ratio (7)

     12.16       12.02       12.22      

Total risk-based capital ratio (7)

     14.55       14.50       14.76      

Tangible common equity / tangible assets ratio (8)

     8.92       8.76       8.33      

See Notes to the Quarterly Key Statistics.

 

1


Notes to the Quarterly Key Statistics

 

(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, 2013, figures are estimated.

(8)  

Tangible common equity (total common equity less goodwill and other intangible assets) divided by tangible assets (total assets less goodwill and other intangible assets). Other intangible assets are net of deferred tax liability, and calculated assuming a 35% tax rate.

 

2


Huntington Bancshares Incorporated

Consolidated Balance Sheets

 

    2013     2012     Percent Changes vs  

(dollar amounts in thousands, except number of shares)

  March 31,     December 31,     March 31,     4Q12     1Q12  
    (Unaudited)           (Unaudited)              

Assets

         

Cash and due from banks

  $ 828,688     $ 1,262,806     $ 1,111,165       (34 )%      (25 )% 

Federal funds sold and securities purchased under resale agreements

    —          —          52       N.R.        N.R.   

Interest-bearing deposits in banks

    71,317       70,921       151,973       1       (53

Trading account securities

    86,520       91,205       59,663       (5     45  

Loans held for sale

    729,707       764,309       310,383       (5     135  

Available-for-sale and other securities

    7,504,639       7,566,175       8,909,733       (1     (16

Held-to-maturity securities

    1,693,074       1,743,876       621,798       (3     172  

Loans and leases (1)

    41,283,524       40,728,425       40,678,542       1       1  

Allowance for loan and lease losses

    (746,769     (769,075     (913,069     (3     (18
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loans and leases

    40,536,755       39,959,350       39,765,473       1       2  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Bank owned life insurance

    1,609,610       1,596,056       1,562,449       1       3  

Premises and equipment

    620,833       617,257       577,538       1       7  

Goodwill

    444,268       444,268       444,268       —          —     

Other intangible assets

    124,236       132,157       171,135       (6     (27

Accrued income and other assets

    1,805,319       1,904,805       2,191,024       (5     (18
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

  $ 56,054,966     $ 56,153,185     $ 55,876,654       —       —  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities and shareholders’ equity

         

Liabilities

         

Deposits (2)

  $ 46,867,141     $ 46,252,683     $ 45,008,964       1     4

Short-term borrowings

    732,705       589,814       1,504,086       24       (51

Federal Home Loan Bank advances

    183,491       1,008,959       56,938       (82     222  

Other long-term debt

    156,301       158,784       1,058,167       (2     (85

Subordinated notes

    1,188,674       1,197,091       1,494,263       (1     (20

Accrued expenses and other liabilities

    1,059,516       1,155,643       1,204,408       (8     (12
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities

    50,187,828       50,362,974       50,326,826       —          —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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

    8,401       8,441       8,659       —          (3

Capital surplus

    7,451,287       7,475,149       7,602,064       —          (2

Less treasury shares, at cost

    (11,141     (10,921     (10,234     2       9  

Accumulated other comprehensive loss

    (159,955     (150,817     (157,816     6       1  

Retained earnings

    (1,807,746     (1,917,933     (2,279,137     (6     (21
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total shareholders’ equity

    5,867,138       5,790,211       5,549,828       1       6  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities and shareholders’ equity

  $ 56,054,966     $ 56,153,185     $ 55,876,654       —       —  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Common shares authorized (par value of $0.01)

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

Common shares issued

    840,087,217       844,105,349       865,873,499      

Common shares outstanding

    838,757,987       842,812,709       864,674,530      

Treasury shares outstanding

    1,329,230       1,292,640       1,198,969      

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.

N.R- Not relevant, as denominator of calculation is a negative in prior period compared with a positive in current period, or as numberator of caculation is zero in the current period

 

3


Huntington Bancshares Incorporated

Loans and Leases Composition

 

    2013     2012  

(dollar amounts in millions)

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

Ending Balances by Type:

                   

Commercial: (1)

                   

Commercial and industrial

  $ 17,267       42   $ 16,971       42   $ 16,478       41   $ 16,322       41   $ 15,838       39

Commercial real estate:

                   

Construction

    574       1       648       2       541       1       591       1       597       1  

Commercial

    4,485       11       4,751       12       4,956       12       5,317       13       5,443       13  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Commercial real estate

    5,059       12       5,399       14       5,497       13       5,908       14       6,040       14  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total commercial

    22,326       54       22,370       56       21,975       54       22,230       55       21,878       53  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Consumer:

                   

Automobile

    5,036       12       4,634       11       4,276       11       3,808       10       4,787       12  

Home equity

    8,474       21       8,335       20       8,381       21       8,344       21       8,261       20  

Residential mortgage

    5,051       12       4,970       12       5,192       13       5,123       13       5,284       13  

Other consumer

    397       1       419       1       436       1       454       1       469       2  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total consumer

    18,958       46       18,358       44       18,285       46       17,729       45       18,801       47  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total loans and leases

  $ 41,284       100   $ 40,728       100   $ 40,260       100   $ 39,959       100   $ 40,679       100
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ending Balances by Business Segment:

                   

Retail and Business Banking

  $ 12,749       31   $ 12,644       31   $ 12,656       31   $ 12,714       32   $ 12,432       31

Regional and Commercial Banking

    11,166       27       10,679       26       10,463       26       10,420       26       9,936       24  

AFCRE

    11,526       28       11,396       28       11,019       27       10,892       27       11,698       29  

WGH

    5,767       14       5,887       15       6,053       16       5,904       15       5,968       14  

Treasury / Other

    76       —          122       —          69       —          29       —          645       2  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total loans and leases

  $ 41,284       100   $ 40,728       100   $ 40,260       100   $ 39,959       100   $ 40,679       100
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    2013     2012  
    First     Fourth     Third     Second     First  

Average Balances by Business Segment:

                   

Retail and Business Banking

  $ 12,693       31   $ 12,677       31   $ 12,703       32   $ 12,977       32   $ 12,420       32

Regional and Commercial Banking

    10,987       27       10,390       26       10,427       26       10,229       25       9,250       24  

AFCRE

    11,454       28       11,221       28       10,949       27       11,891       29       11,468       29  

WGH

    5,711       14       6,054       15       5,993       15       6,007       14       5,920       15  

Treasury / Other

    19       —          55       —          48       —          75       —          87       —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total loans and leases

  $ 40,864       100   $ 40,397       100   $ 40,120       100   $ 41,179       100   $ 39,145       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.

 

4


Huntington Bancshares Incorporated

Deposits Composition

 

    2013     2012  

(dollar amounts in millions)

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

Ending Balances by Type:

                   

Demand deposits - noninterest-bearing

  $ 12,757       27   $ 12,600       27   $ 12,680       27   $ 12,324       27   $ 11,797       26

Demand deposits - interest-bearing

    6,135       13       6,218       13       5,909       13       6,060       13       6,126       14  

Money market deposits

    15,165       32       14,691       32       14,926       32       13,756       30       13,169       29  

Savings and other domestic deposits

    5,174       11       5,002       11       4,949       11       4,961       11       4,954       11  

Core certificates of deposit

    5,170       11       5,516       12       5,817       12       6,508       14       6,920       15  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total core deposits

    44,401       94       44,027       95       44,281       95       43,609       95       42,966       95  

Other domestic deposits of $250,000 or more

    355       1       354       1       352       1       260       1       325       1  

Brokered deposits and negotiable CDs

    1,807       4       1,594       3       1,795       4       1,888       4       1,276       3  

Deposits in foreign offices

    304       1       278       1       313       —          319       —          442       1  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total deposits

  $ 46,867       100   $ 46,253       100   $ 46,741       100   $ 46,076       100   $ 45,009       100
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total core deposits:

                   

Commercial

  $ 18,502       42   $ 18,358       42   $ 19,207       43   $ 18,324       42   $ 17,101       40

Consumer

    25,899       58       25,669       58       25,074       57       25,285       58       25,865       60  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total core deposits

  $ 44,401       100   $ 44,027       100   $ 44,281       100   $ 43,609       100   $ 42,966       100
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ending Balances by Business Segment:

                   

Retail and Business Banking

  $ 28,719       61   $ 28,367       61   $ 28,220       60   $ 28,348       62   $ 27,935       62

Regional and Commercial Banking

    5,627       12       5,863       13       6,205       13       5,333       12       4,748       11  

AFCRE

    970       2       995       2       922       2       907       2       914       2  

WGH

    10,015       22       9,508       21       9,816       22       9,782       20       9,632       21  

Treasury / Other (1)

    1,536       3       1,520       3       1,578       3       1,706       4       1,780       4  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total deposits

  $ 46,867       100   $ 46,253       100   $ 46,741       100   $ 46,076       100   $ 45,009       100
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    2013     2012  
    First     Fourth     Third     Second     First  

Average Balances by Business Segment:

                   

Retail and Business Banking

  $ 28,331       62   $ 28,301       61   $ 28,248       61   $ 28,260       63   $ 27,452       63

Regional and Commercial Banking

    5,668       12       6,120       13       5,715       12       4,762       11       4,680       11  

AFCRE

    922       2       949       2       942       2       855       2       811       2  

WGH

    9,623       21       9,873       21       9,735       21       9,783       21       9,450       22  

Treasury / Other (1)

    1,469       3       1,524       3       1,658       4       1,197       3       1,072       2  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total deposits

  $ 46,013       100   $ 46,767       100   $ 46,298       100   $ 44,857       100   $ 43,465       100
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)  

Comprised primarily of national market deposits.

 

5


Huntington Bancshares Incorporated

Consolidated Quarterly Average Balance Sheets

(Unaudited)

 

     Average Balances              
     2013     2012     Percent Changes vs.  

(dollar amounts in millions)

   First     Fourth     Third     Second     First     4Q12     1Q12  

Assets

              

Interest-bearing deposits in banks

   $ 72     $ 73     $ 82     $ 124     $ 100       (1     (28 )% 

Loans held for sale

     709       840       1,829       410       1,265       (16     (44

Securities:

              

Available-for-sale and other securities:

              

Taxable

     6,964       7,131       8,014       8,285       8,171       (2     (15

Tax-exempt

     549       492       423       387       404       12       36  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total available-for-sale and other securities

     7,513       7,623       8,437       8,672       8,575       (1     (12

Trading account securities

     85       97       66       54       50       (12     70  

Held-to-maturity securities - taxable

     1,717       1,652       796       611       632       4       172  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Securities

     9,315       9,372       9,299       9,337       9,257       (1     1  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loans and leases: (1)

              

Commercial:

              

Commercial and industrial

     16,954       16,507       16,343       16,094       14,824       3       14  

Commercial real estate:

              

Construction

     598       576       569       584       598       4       —     

Commercial

     4,694       4,897       5,153       5,491       5,254       (4     (11
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Commercial real estate

     5,292       5,473       5,722       6,075       5,852       (3     (10
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total commercial

     22,246       21,980       22,065       22,169       20,676       1       8  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Consumer:

              

Automobile

     4,833       4,486       4,065       4,985       4,576       8       6  

Home equity

     8,395       8,345       8,369       8,310       8,234       1       2  

Residential mortgage

     4,978       5,155       5,177       5,253       5,174       (3     (4

Other consumer

     412       431       444       462       485       (4     (15
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total consumer

     18,618       18,417       18,055       19,010       18,469       1       1  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total loans and leases

     40,864       40,397       40,120       41,179       39,145       1       4  

Allowance for loan and lease losses

     (772     (783     (855     (908     (961     (1     (20
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loans and leases

     40,092       39,614       39,265       40,271       38,184       1       5  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total earning assets

     50,960       50,682       51,330       51,050       49,767       1       2  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cash and due from banks

     904       1,459       960       928       1,012       (38     (11

Intangible assets

     571       581       597       609       613       (2     (7

All other assets

     4,065       4,115       4,106       4,158       4,225       (1     (4
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

   $ 55,728     $ 56,054     $ 56,138     $ 55,837     $ 54,656       (1     2
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities and shareholders’ equity

              

Deposits:

              

Demand deposits - noninterest-bearing

   $ 12,165     $ 13,121     $ 12,329     $ 12,064     $ 11,273       (7     8

Demand deposits - interest-bearing

     5,977       5,843       5,814