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 20, 2016
  _______________________________________________________________
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):
ý
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 20, 2016 , Huntington Bancshares Incorporated (“Huntington”) issued a news release announcing its earnings for the quarter and year ended March 31, 2016 . Also on April 20, 2016 , Huntington made a Quarterly Financial Supplement available on the Investor Relations section of its web site, www.huntington-ir.com . Copies of Huntington's news release and quarterly financial supplement are attached hereto as Exhibit 99.1 and Exhibit 99.2, respectively, and are incorporated by reference in this Item 2.02.
Huntington’s senior management will host an earnings conference call on April 20, 2016 , at 9:00 a.m. (Eastern Daylight Time). The call may be accessed via a live Internet webcast at the Investor Relations section of Huntington’s web site, www.huntington-ir.com or through a dial-in telephone number at (844) 318-8148 ; Conference ID 76819136 . Slides will be available in the Investor Relations section of Huntington’s web site, 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-ir.com . A telephone replay will be available approximately two hours after the completion of the call through April 29, 2016 at (855) 859-2056 or (404) 537-3406 ; conference ID 76819136 .
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 or adverse legal developments in the proceedings, (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 our 2015 Annual Report on Form 10-K and documents subsequently filed by us with the Securities and Exchange Commission.

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 20, 2016 .
Exhibit 99.2 – Quarterly Financial Supplement, March 2016 .





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 20, 2016
 
By:
 
/s/ Howell D. McCullough III
 
 
 
 
 
Howell D. McCullough III
 
 
 
 
 
Chief Financial Officer






EXHIBIT INDEX
Exhibit
No.
 
Description
 
 
Exhibit 99.1
 
News release of Huntington Bancshares Incorporated, dated April 20, 2016.
 
 
Exhibit 99.2
 
Quarterly Financial Supplement, March 2016.





Exhibit 99.1
 
FOR IMMEDIATE RELEASE
April 20, 2016
Analysts: Mark Muth (mark.muth@huntington.com), 614.480.4720
Media: Brent Wilder (brent.wilder@huntington.com), 614.480.5875
HUNTINGTON BANCSHARES INCORPORATED REPORTS 2016 FIRST QUARTER EARNINGS
INCLUDING 7% YEAR-OVER-YEAR REVENUE GROWTH AND 5% YEAR-OVER-YEAR EPS GROWTH
COLUMBUS, Ohio – Huntington Bancshares Incorporated (NASDAQ: HBAN; www.huntington.com) reported net income for the 2016 first quarter of $171 million , a $5 million , or 3% , increase from the year-ago quarter. Earnings per common share for the 2016 first quarter were $0.20 , up $0.01, or 5%, from the year-ago quarter. Return on average assets was 0.96% , while return on average tangible common equity was 11.9% . Total revenue increased 7% over the year-ago quarter.
“We are pleased to have delivered solid performance for the 2016 first quarter with strong year-over-year gains on revenue and EPS, positioning us well for the year ahead,” said Steve Steinour, chairman, president, and CEO. “Year-over-year performance benefited from core deposit and fee income growth within our disciplined, risk-balanced approach to the business. Small business and middle-market lending in the first quarter reflected ongoing optimism in the continuing strength of our regional economy, despite headwinds within certain sectors and continued global macroeconomic uncertainty and volatility."
"As we reflect on our performance, we are grateful for a series of recent independent recognitions our colleagues earned through their commitment to our customers,” Steinour said. “We are honored to have again received the TNS Choice Award for Consumer Retail Banking for its 20-state Central Region for the fourth time in the past five years. Also in recent weeks, Huntington received multiple Greenwich Excellence Awards, with Greenwich Associates announcing five categories of distinction for our small business banking practice and naming Huntington the only Midwest bank recognized for ‘Likelihood to Recommend’ wealth and investment services. This customer-driven feedback helps us realize our commitment of doing the right thing and investing in our communities."
“Furthermore, progress in our integration efforts toward the proposed acquisition of FirstMerit announced early in the first quarter is on pace,” Steinour said. “Our goal is to complete the acquisition in the third quarter. We remain enthusiastic about the combination, as FirstMerit is expected to be immediately accretive to earnings, excluding merger-related expenses, and underlying franchise value.”
The Board of Directors declared a quarterly cash dividend on the company’s common stock of $0.07 per common share. The dividend is payable July 1, 2016, to shareholders of record on June 17, 2016.
Specific 2016 First Quarter highlights compared with 2015 First Quarter :
$47 million , or 7% , increase in fully-taxable equivalent revenue, comprised of a $37 million , or 8% , increase in fully-taxable equivalent net interest income and a $10 million , or 4% , increase in noninterest income
Net interest margin of 3.11% , a decrease of 4 basis points
$32 million , or 7% , increase in noninterest expense, including $6 million of FirstMerit acquisition-related expense during the 2016 first quarter and $3 million of Huntington Technology Finance merger-related expense during the year-ago quarter
$2.8 billion , or 6% , increase in average loans and leases, primarily driven by a $1.5 billion , or 8% , increase in Commercial and Industrial loans and a $0.9 billion , or 11% , increase in Automobile loans
$2.1 billion , or 17% , increase in average securities, including a net increase of $0.7 billion of direct purchase municipal instruments in our Commercial Banking segment

1



$2.6 billion , or 5% , increase in average core deposits, driven by a $1.6 billion , or 26% , increase in interest-bearing demand deposits and a $1.1 billion , or 7% , increase in noninterest-bearing demand deposits
Net charge-offs declined to 0.07% of average loans and leases, down from 0.20% , benefiting from a large Commercial Real Estate recovery
$0.50, or 8% , increase in tangible book value per common share (TBVPS) to $7.12 ; end of period dividend yield of 2.9%
Table 1 – Earnings Performance Summary
 
2016
 
2015
($ in millions, except per share data)
First
 
Fourth
 
Third
 
Second
 
First
Quarter
 
Quarter
 
Quarter
 
Quarter
 
Quarter
Net Income
$
171

 
$
178

 
$
153

 
$
196

 
$
166

Diluted earnings per common share
0.20

 
0.21

 
0.18

 
0.23

 
0.19

 
 
 
 
 
 
 
 
 
 
Return on average assets
0.96
%
 
1.00
%
 
0.87
%
 
1.16
%
 
1.02
%
Return on average common equity
10.4

 
10.8

 
9.3

 
12.3

 
10.6

Return on average tangible common equity
11.9

 
12.4

 
10.7

 
14.4

 
12.2

Net interest margin
3.11

 
3.09

 
3.16

 
3.20

 
3.15

Efficiency ratio
64.6

 
63.7

 
69.1

 
61.7

 
63.5

 
 
 
 
 
 
 
 
 
 
Tangible book value per common share
$
7.12

 
$
6.91

 
$
6.88

 
$
6.71

 
$
6.62

Cash dividends declared per common share
0.07

 
0.07

 
0.06

 
0.06

 
0.06

Average diluted shares outstanding (000’s)
808,349

 
810,143

 
814,326

 
820,238

 
823,809

 
 
 
 
 
 
 
 
 
 
Average earning assets
$
66,234

 
$
64,961

 
$
63,323

 
$
62,569

 
$
61,193

Average loans and leases (1)
50,618

 
49,827

 
49,046

 
47,899

 
47,780

Average core deposits
51,363

 
51,585

 
50,891

 
49,192

 
48,777

 
 
 
 
 
 
 
 
 
 
Tangible common equity / tangible assets ratio
7.89
%
 
7.82
%
 
7.89
%
 
7.92
%
 
7.95
%
Common equity Tier 1 risk-based capital ratio
9.73

 
9.79

 
9.72

 
9.65

 
9.51

 
 
 
 
 
 
 
 
 
 
NCOs as a % of average loans and leases
0.07
%
 
0.18
%
 
0.13
%
 
0.21
%
 
0.20
%
NAL ratio
0.97

 
0.74

 
0.72

 
0.75

 
0.76

ACL as a % of total loans and leases
1.34

 
1.33

 
1.32

 
1.34

 
1.38

(1)
Excludes loans held for sale; $1 billion of automobile loans were moved to held for sale at end of 2015 first quarter.
Table 2 lists certain items that we believe are significant in understanding corporate performance and trends (see Basis of Presentation). There was one Significant Item in the 2016 first quarter : $6 million of acquisition-related expense due to the pending acquisition of FirstMerit Corporation.

2



Table 2 – Significant Items Influencing Earnings
Three Months Ended
Pre-Tax
Impact
 
After-Tax Impact
($ in millions, except per share)
Amount
 
Amount  (1)
 
EPS (2)
March 31, 2016 – net income
 
 
$
171

 
$
0.20

 
Merger and acquisition-related net expenses
$
(6
)
 
(4
)
 
(0.01
)
December 31, 2015 - net income
 
 
$
178

 
$
0.21

 
Franchise repositioning-related expense
$
(8
)
 
(5
)
 
(0.01
)
 
Merger and acquisition-related net gains (3)

 

 

September 30, 2015 – net income
 
 
$
153

 
$
0.18

 
Addition to litigation reserves
$
(38
)
 
(25
)
 
(0.03
)
 
Merger and acquisition-related net expenses
(5
)
 
(3
)
 

June 30, 2015 – net income
 
 
$
196

 
$
0.23

 
Merger and acquisition-related net expenses
$
(2
)
 
(1
)
 

March 31, 2015 – net income
 
 
$
166

 
$
0.19

 
Merger and acquisition-related net expenses
$
(3
)
 
(2
)
 

(1)
Favorable (unfavorable) impact on net income.
(2)
EPS reflected on a fully diluted basis.
(3)
Noninterest income and noninterest expense was recorded related to the integration of Huntington Technology Finance (HTF) and the sale of Huntington Asset Advisors (HAA), Huntington Asset Services (HASI), and Unified Financial Securities (Unified), resulting in a net gain less than $1 million.
Net Interest Income, Net Interest Margin, and Average Balance Sheet
Table 3 – Net Interest Income and Net Interest Margin Performance Summary – Net Recoveries Provide Modest NIM Expansion Sequentially
 
2016
 
2015
 
 
 
 
($ in millions)
First
Quarter
 
Fourth
Quarter
 
Third
Quarter
 
Second
Quarter
 
First
Quarter
 
Change (%)
LQ
 
YOY
Net interest income
$
503

 
$
497

 
$
495

 
$
491

 
$
468

 
1
 %
 
7
%
FTE adjustment
9

 
8

 
8

 
8

 
8

 
13

 
13

Net interest income - FTE
512

 
505

 
504

 
499

 
475

 
1

 
8

Noninterest income
242

 
272

 
253

 
282

 
232

 
(11
)
 
4

Total revenue - FTE
$
754

 
$
778

 
$
757

 
$
780

 
$
707

 
(3
)%
 
7
%
 
 
 
 
 
 
 
 
 
 
 
Change bp
Yield / Cost
 
 
 
 
 
 
 
 
 
 
LQ
 
YOY
Total earning assets
3.44
%
 
3.37
%
 
3.42
%
 
3.45
%
 
3.38
%
 
7

 
6

Total loans and leases
3.67

 
3.59

 
3.65

 
3.65

 
3.56

 
8

 
11

Total securities
2.56

 
2.58

 
2.59

 
2.65

 
2.57

 
(2
)
 
(1
)
Total interest-bearing liabilities
0.46

 
0.41

 
0.39

 
0.36

 
0.32

 
5

 
14

Total interest-bearing deposits
0.24

 
0.23

 
0.22

 
0.22

 
0.22

 
1

 
2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest rate spread
2.98

 
2.96

 
3.03

 
3.09

 
3.06

 
2

 
(8
)
Impact of noninterest-bearing funds on margin
0.13

 
0.13

 
0.13

 
0.11

 
0.09

 

 
4

Net interest margin
3.11
%
 
3.09
%
 
3.16
%
 
3.20
%
 
3.15
%
 
2

 
(4
)
See Pages 6-8 of Quarterly Financial Supplement for additional detail.
Fully-taxable equivalent (FTE) net interest income for the 2016 first quarter increased $37 million , or 8% , from the 2015 first quarter . This reflected the benefit from the $5.0 billion , or 8% , increase in average earning assets

3



partially offset by a 4 basis point reduction in the FTE net interest margin (NIM) to 3.11% . Average earning asset growth included a $2.8 billion , or 6% , increase in average loans and leases and a $2.1 billion , or 17% , increase in average securities. The NIM contraction reflected a 14 basis point increase in funding costs, partially offset by a 6 basis point increase in earning asset yields and a 4 basis point increase in the benefit from noninterest-bearing funds. In the 2016 first quarter, the NIM benefited by approximately 2 basis points as a result of recoveries of previously charged-off loans in the Commercial Real Estate (CRE) portfolio.
Compared to the 2015 fourth quarter , FTE net interest income increased $7 million , or 1% . Average earning assets increased $1.3 billion , or 2% , sequentially, and the NIM increased 2 basis points. The increase in the NIM reflected a 7 basis point increase in earning asset yields, partially offset by a 5 basis point increase in the cost of interest-bearing liabilities, in large part a result of senior debt financing.
Table 4 – Average Earning Assets – C&I and Automobile Loans Continue to Drive Loan Growth
 
2016
 
2015
 
 
 
 
($ in billions)
First
Quarter
 
Fourth
Quarter
 
Third
Quarter
 
Second
Quarter
 
First
Quarter
 
Change (%)
LQ
 
YOY
Commercial and industrial
$
20.6

 
$
20.2

 
$
19.8

 
$
19.8

 
$
19.1

 
2
 %
 
8
 %
Commercial real estate
5.2

 
5.3

 
5.3

 
5.2

 
5.2

 
(1
)
 
1

Total commercial
25.9

 
25.5

 
25.1

 
25.0

 
24.3

 
2

 
6

Automobile
9.7

 
9.3

 
8.9

 
8.1

 
8.8

 
5

 
11

Home equity
8.4

 
8.5

 
8.5

 
8.5

 
8.5

 

 
(1
)
Residential mortgage
6.0

 
6.1

 
6.0

 
5.9

 
5.8

 
(1
)
 
4

Other consumer
0.6

 
0.5

 
0.5

 
0.5

 
0.4

 
5

 
35

Total consumer
24.8

 
24.4

 
23.9

 
22.9

 
23.5

 
2

 
5

Total loans and leases
50.6

 
49.8

 
49.0

 
47.9

 
47.8

 
2

 
6

Total securities
15.1

 
14.5

 
13.7

 
13.3

 
12.9

 
4

 
17

Held-for-sale and other earning assets
0.5

 
0.6

 
0.6

 
1.4

 
0.5

 
(17
)
 

Total earning assets
$
66.2

 
$
65.0

 
$
63.3

 
$
62.6

 
$
61.2

 
2
 %
 
8
 %
See Page 6 of Quarterly Financial Supplement for additional detail.
Average earning assets for the 2016 first quarter increased $5.0 billion , or 8% , from the year-ago quarter. The increase was driven by:
$2.1 billion , or 17% , increase in average securities, primarily reflecting the reinvestment of cash flows and additional investment in Liquidity Coverage Ratio (LCR) Level 1 qualifying securities and a $0.6 billion increase in direct purchase municipal instruments in our Commercial Banking segment.
$1.5 billion , or 8% , increase in average Commercial and Industrial (C&I) loans and leases, primarily reflecting the $0.8 billion of equipment finance leases acquired in the HTF transaction at the end of the 2015 first quarter, as well as organic growth in equipment finance leases, automobile dealer floorplan lending, and corporate banking.
$0.9 billion , or 11% , increase in average Automobile loans. The 2016 first quarter represented the ninth consecutive quarter of greater than $1.0 billion in Automobile loan originations, while maintaining our underwriting consistency and discipline.
Compared to the 2015 fourth quarter , average earning assets increased $1.3 billion , or 2% . This increase reflected a $0.8 billion increase in average loans and leases, primarily comprised of a $0.5 billion in average C&I loans and a $0.4 billion increase in average Automobile loans, and a $0.5 billion increase in average securities.

4



Table 5 – Average Liabilities – Robust Demand Deposit Growth Continues to Drive Core Deposit Growth
 
2016
 
2015
 
 
 
First
 
Fourth
 
Third
 
Second
 
First
 
Change (%)
($ in billions)
Quarter
 
Quarter
 
Quarter
 
Quarter
 
Quarter
 
LQ
 
YOY
Demand deposits - noninterest-bearing
$
16.3

 
$
17.2

 
$
17.0

 
$
15.9

 
$
15.3

 
(5
)%
 
7
 %
Demand deposits - interest-bearing
7.8

 
6.9

 
6.6

 
6.6

 
6.2

 
12

 
26

Total demand deposits
24.1

 
24.1

 
23.6

 
22.5

 
21.5

 

 
12

Money market deposits
19.7

 
19.8

 
19.5

 
18.8

 
19.4

 
(1
)
 
2

Savings and other domestic deposits
5.3

 
5.2

 
5.2

 
5.3

 
5.2

 
3

 
3

Core certificates of deposit
2.3

 
2.4

 
2.5

 
2.6

 
2.8

 
(7
)
 
(19
)
Total core deposits
51.4

 
51.5

 
50.8

 
49.2

 
48.9

 

 
5

Other domestic deposits of $250,000 or more
0.5

 
0.4

 
0.2

 
0.2

 
0.2

 
7

 
133

Brokered deposits and negotiable CDs
2.9

 
2.9

 
2.8

 
2.7

 
2.6

 
(1
)
 
11

Other deposits
0.3

 
0.4

 
0.5

 
0.6

 
0.6

 
(34
)
 
(53
)
Total deposits
$
55.1

 
$
55.2

 
$
54.3

 
$
52.7

 
$
52.3

 
(1
)%
 
5
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Short-term borrowings
$
1.1

 
$
0.5

 
$
0.8

 
$
2.2

 
$
1.9

 
118
 %
 
(39
)%
Long-term debt
7.2

 
6.8

 
6.0

 
5.1

 
4.4

 
6

 
65

Total debt
$
8.3

 
$
7.3

 
$
6.8

 
$
7.3

 
$
6.3

 
14
 %
 
34
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total interest-bearing liabilities
$
47.0

 
$
45.5

 
$
44.3

 
$
44.0

 
$
43.1

 
3
 %
 
9
 %
See Page 6 of Quarterly Financial Supplement for additional detail.
Average total deposits for the 2016 first quarter increased $2.9 billion , or 5% , from the year-ago quarter, including a $2.6 billion , or 5% , increase in average total core deposits. Average total interest-bearing liabilities increased $3.9 billion , or 9% , from the year-ago quarter. Year-over-year changes in total liabilities reflected:
$2.1 billion, or 34%, increase in average total debt, reflecting the issuance of $4.1 billion of senior debt over the past five quarters, including $1.0 billion issued during the 2016 first quarter, as well as debt assumed in the HTF acquisition at the end of the 2015 first quarter, partially offset by a $0.7 billion , or 39% , decrease in average short-term borrowings.
$2.7 billion, or 12% , increase in average demand deposits, including a $1.6 billion , or 26% , increase in average interest-bearing demand deposits and a $1.1 billion , or 7% , increase in average noninterest-bearing demand deposits. The increase in average total demand deposits was comprised of a $1.7 billion, or 13%, increase in average commercial demand deposits and a $0.9 billion, or 12%, increase in average consumer demand deposits.
Partially offset by:
$0.5 billion , or 19% , decrease in average core certificates of deposit due to the continued strategic focus on changing the funding sources to low- and no-cost demand, savings, and money market deposits.
Compared to the 2015 fourth quarter , average interest-bearing demand deposits increased $0.9 billion , or 12% , mostly offset by a $0.8 billion , or 5% , decrease in average noninterest-bearing demand deposits. Average total debt increased $1.0 billion, or 14%, reflecting the senior debt issuances in the 2016 first and 2015 fourth quarters, as well as fluctuations in short-term borrowings as part of normal balance sheet management.

5



Noninterest Income
Table 6 – Noninterest Income – New Customer Acquisition and Customer Relationship Deepening Continue to Drive Growth in Noninterest Income
 
2016
 
2015
 
 
 
First
 
Fourth
 
Third
 
Second
 
First
 
Change (%)
($ in millions)
Quarter
 
Quarter
 
Quarter
 
Quarter
 
Quarter
 
LQ
 
YOY
Service charges on deposit accounts
$
70

 
$
73

 
$
75

 
$
70

 
$
62

 
(4
)%
 
13
 %
Cards and payment processing income
36

 
38

 
37

 
36

 
33

 
(3
)
 
12

Mortgage banking income
19

 
31

 
19

 
39

 
23

 
(41
)
 
(19
)
Trust services
23

 
25

 
25

 
27

 
29

 
(10
)
 
(21
)
Insurance income
16

 
16

 
16

 
18

 
16

 
4

 
2

Brokerage income
16

 
14

 
15

 
15

 
16

 
7

 

Capital markets fees
13

 
14

 
13

 
13

 
14

 
(6
)
 
(6
)
Bank owned life insurance income
14

 
13

 
13

 
13

 
13

 
1

 
4

Gain on sale of loans
5

 
10

 
6

 
12

 
5

 
(47
)
 
18

Securities gains (losses)

 

 

 

 

 
(100
)
 
NM

Other income
30

 
37

 
35

 
39

 
22

 
(19
)
 
37

Total noninterest income
$
242

 
$
272

 
$
253

 
$
282

 
$
232

 
(11
)%
 
4
 %
See Pages 9-10 of Quarterly Financial Supplement for additional detail.
Noninterest income for the 2016 first quarter increased $10 million , or 4% , from the year-ago quarter. The year-over-year increase primarily reflected:
$8 million , or 37% , increase in other income, primarily reflecting equipment operating lease income related to HTF.
$8 million , or 13% , increase in service charges on deposit accounts, reflecting the benefit of continued new customer acquisition including a 4% increase in consumer checking households and a 2% increase in commercial checking relationships.
$4 million , or 12% , increase in cards and payment processing income, due to higher card related income and underlying customer growth.
Partially offset by:
$6 million , or 21% , decrease in trust services, primarily related to the sale of HAA, HASI, and Unified, and the transition of the remaining Huntington Funds at the end of the 2015 fourth quarter.
$4 million , or 19% , decrease in mortgage banking income, primarily as a result of a 5% reduction in mortgage volume and a $2 million impact from net MSR activity.
Compared to the 2015 fourth quarter , total noninterest income decreased $30 million , or 11% . Mortgage banking income decreased $13 million , or 41% , primarily driven by a $7 million decrease in net MSR activity and a $5 million, or 22%, decrease in origination and secondary marketing income. Other income decreased $7 million , or 19% , primarily related to lower loan syndication fees and income related to asset finance. Gain on sale of loans decreased $5 million , or 47% , due to seasonally strong SBA loan sales in the prior quarter.

6



Noninterest Expense (see Basis of Presentation)
Table 7 – Noninterest Expense from Continuing Operations (GAAP) – Organic and HTF-related Personnel Expense Drives Growth in Noninterest Expense
 
2016
 
2015
 
 
 
First
 
Fourth
 
Third
 
Second
 
First
 
Change (%)
($ in millions)
Quarter
 
Quarter
 
Quarter
 
Quarter
 
Quarter
 
LQ
 
YOY
Personnel costs
$
285

 
$
289

 
$
286

 
$
282

 
$
265

 
(1
)%
 
8
 %
Outside data processing and other services
62

 
64

 
59

 
59

 
51

 
(3
)
 
22

Equipment
33

 
32

 
31

 
32

 
30

 
3

 
8

Net occupancy
31

 
33

 
29

 
29

 
31

 
(4
)
 
1

Marketing
12

 
12

 
12

 
15

 
13

 
2

 
(5
)
Professional services
14

 
13

 
12

 
13

 
13

 
4

 
6

Deposit and other insurance expense
11

 
11

 
12

 
12

 
10

 
1

 
10

Amortization of intangibles
4

 
4

 
4

 
10

 
10

 
(2
)
 
(64
)
Other expense
39

 
42

 
82

 
41

 
36

 
(6
)
 
8

Total noninterest expense
$
491

 
$
499

 
$
527

 
$
492

 
$
459

 
(2
)%
 
7
 %
(in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of employees (Average full-time equivalent)
12.4

 
12.4

 
12.4

 
12.3

 
11.9

 
 %
 
4
 %
Table 8 - Impacts of Significant Items
 
2016
 
2015
 
First
 
Fourth
 
Third
 
Second
 
First
($ in millions)
Quarter
 
Quarter
 
Quarter
 
Quarter
 
Quarter
Personnel costs
$
1

 
$
2

 
$
3

 
$

 
$

Outside data processing and other services

 
2

 
2

 
1

 

Equipment

 

 

 

 

Net occupancy

 
5

 

 

 

Marketing

 

 

 

 

Professional services
4

 
1

 

 
1

 
3

Other expense
1

 

 
38

 

 

Total noninterest expense
$
6

 
$
10

 
$
43

 
$
2

 
$
3

Table 9 - Adjusted Noninterest Expense (Non-GAAP)
 
2016
 
2015
 
 
 
First
 
Fourth
 
Third
 
Second
 
First
 
Change (%)
($ in millions)
Quarter
 
Quarter
 
Quarter
 
Quarter
 
Quarter
 
LQ
 
YOY
Personnel costs
$
285

 
$
287

 
$
283

 
$
282

 
$
265

 
(1
)%
 
8
 %
Outside data processing and other services
62

 
62

 
57

 
58

 
50

 

 
24

Equipment
33

 
32

 
31

 
32

 
30

 
3

 
10

Net occupancy
31

 
28

 
29

 
29

 
31

 
11

 

Marketing
12

 
12

 
12

 
15

 
13

 

 
(8
)
Professional services
9

 
12

 
12

 
12

 
9

 
(25
)
 

Deposit and other insurance expense
11

 
11

 
12

 
12

 
10

 

 
10

Amortization of intangibles
4

 
4

 
4

 
10

 
10

 

 
(60
)
Other expense
38

 
41

 
43

 
41

 
36

 
(7
)
 
6

Total noninterest expense
$
485

 
$
488

 
$
483

 
$
490

 
$
456

 
(1
)%
 
6
 %
See Page 9 of Quarterly Financial Supplement for additional detail.

7



Reported noninterest expense for the 2016 first quarter increased $32 million , or 7% , from the year-ago quarter. Changes in reported noninterest expense primarily reflect:
$20 million , or 8% , increase in personnel costs, primarily reflecting a $16 million increase in salaries and a $4 million increase in benefits expense. These increases are the result of the May 2015 implementation of annual merit increases, the addition of HTF, and a 4% increase in the number of average full-time equivalent employees, largely related to the build-out of the in-store strategy.
$11 million , or 22% , increase in outside data processing and other services expense, primarily related to ongoing technology investments.
Partially offset by:
$6 million , or 64% , decrease in amortization of intangibles reflecting the full amortization of the core deposit intangible from the Sky Financial acquisition at the end of the 2015 second quarter.
Reported noninterest expense decreased $8 million , or 2% , from the 2015 fourth quarter . Personnel expense decreased $3 million , or 1% , primarily related to lower commissions and lower Significant Items in the 2016 first quarter.
Credit Quality
Table 10 – Credit Quality Metrics – NALs Increase Sequentially, while NCOs Remain Better than the Long-Term Expectations
 
2016
 
2015
($ in thousands)
March 31,
 
Dec. 31,
 
Sept. 30,
 
June 30,
 
March 31,
Total nonaccrual loans and leases
$
498,734

 
$
371,581

 
$
356,477

 
$
364,339

 
$
364,413

Total other real estate, net
26,132

 
27,342

 
24,910

 
29,232

 
33,951

Other NPAs (1)

 

 

 
2,440

 
2,440

Total nonperforming assets
524,866

 
398,923

 
381,387

 
396,011

 
400,804

Accruing loans and leases past due 90 days or more
105,812

 
105,790

 
105,608

 
106,878

 
112,935

NPAs + accruing loans and lease past due 90 days or more
$
630,678

 
$
504,713

 
$
486,995

 
$
502,889

 
$
513,739

NAL ratio (2)
0.97
%
 
0.74
%
 
0.72
%
 
0.75
%
 
0.76
%
NPA ratio (3) (4)
1.02

 
0.79

 
0.77

 
0.81

 
0.84

(NPAs+90 days)/(Loans+OREO)
1.22

 
1.00

 
0.98

 
1.03

 
1.08

Provision for credit losses
$
27,582

 
$
36,468

 
$
22,476

 
$
20,419

 
$
20,591

Net charge-offs
8,552

 
21,823

 
16,163

 
25,375

 
24,432

Net charge-offs / Average total loans
0.07
%
 
0.18
%
 
0.13
%
 
0.21
%
 
0.20
%
Allowance for loans and lease losses
$
613,719

 
$
597,843

 
$
591,938

 
$
599,542

 
$
605,126

Allowance for unfunded loan commitments and letters of credit
75,325

 
72,081

 
64,223

 
55,371

 
54,742

Allowance for credit losses (ACL)
$
689,044

 
$
669,924

 
$
656,161

 
$
654,913

 
$
659,868

ACL as a % of:
 
 
 
 
 
 
 
 
 
Total loans and leases
1.34
%
 
1.33
%
 
1.32
%
 
1.34
%
 
1.38
%
NALs
138

 
180

 
184

 
180

 
181

NPAs
131

 
168

 
172

 
165

 
165

(1)
Other nonperforming assets include certain impaired investment securities.
(2)
Total NALs as a % of total loans and leases.
(3)
Total NPAs as a % of sum of loans and leases and net other real estate.
(4)
Excludes nonaccruing troubled debt restructured home equity loans previously transferred to held-for-sale.
See Pages 11-14 of Quarterly Financial Supplement for additional detail.
Overall asset quality remains strong, with modest volatility based on the absolute low level of problem credits. Nonaccrual loans and leases (NALs) increased $134 million , or 37% , from the year-ago quarter to $499 million , or 0.97% of total loans and leases. The increase was exclusively centered in the Commercial portfolio and was primarily associated with a small number of energy sector loan relationships. Nonperforming assets (NPAs)

8



increased $124 million , or 31% , from the year-ago quarter to $525 million , or 1.02% of total loans and leases and net OREO. NALs increased $127 million , or 34% , from the prior quarter, while NPAs increased $126 million , or 32% , from the prior quarter. The majority of the linked-quarter increase resulted from downgrades in oil and gas exploration and production (E&P) and coal sector loan relationships. The E&P and coal portfolios combined represented less than 1% of total loans outstanding at quarter end.
The provision for credit losses increased $7 million , or 34% , year-over-year to $28 million in the 2016 first quarter . Net charge-offs (NCOs) decreased $16 million , or 65% , to $9 million . NCOs represented an annualized 0.07% of average loans and leases in the current quarter, down from 0.18% in the prior quarter and 0.20% in the year-ago quarter. We continue to be pleased with the net charge-off performance across the entire portfolio. Commercial charge-offs were positively impacted by one large recovery in the CRE portfolio and broader continued successful workout strategies, while consumer charge-offs remain within our expected range.
Overall consumer credit metrics, led by the Residential Mortgage and Home Equity portfolios, continue to show an improving trend, while the commercial portfolios continue to experience some quarter-to-quarter volatility based on the absolute low level of problem loans.
The period-end allowance for credit losses (ACL) as a percentage of total loans and leases decreased to 1.34% from 1.38% a year ago, while the ACL as a percentage of period-end total NALs decreased to 138% from 181% . We believe the level of the ACL is appropriate given the improvement in the credit quality metrics and the current composition of the overall loan and lease portfolio.
Capital
Table 11 – Capital Ratios – Preferred Equity Issuance Augments Regulatory Capital Ratios
 
 
2016
 
2015
($ in millions)
 
March 31,
 
Dec. 31,
 
Sept. 30,
 
June 30,
 
March 31,
Tangible common equity / tangible assets ratio
 
7.89
%
 
7.82
%
 
7.89
%
 
7.92
%
 
7.95
%
Common equity tier 1 risk-based capital ratio (1)
 
9.73
%
 
9.79
%
 
9.72
%
 
9.65
%
 
9.51
%
Regulatory Tier 1 risk-based capital ratio (1)
 
10.99
%
 
10.53
%
 
10.49
%
 
10.41
%
 
10.22
%
Regulatory Total risk-based capital ratio (1)
 
13.17
%
 
12.64
%
 
12.70
%
 
12.62
%
 
12.48
%
Total risk-weighted assets (1)
 
$
59,798

 
$
58,420

 
$
57,839

 
$
57,850

 
$
57,840

(1)
Figures are estimated and are presented on a Basel III basis, including the standardized approach for calculating risk-weighted assets.
See Pages 15-16 of Quarterly Financial Supplement for additional detail.
The tangible common equity to tangible assets ratio was 7.89% at March 31, 2016 , down 6 basis points from a year ago. Common Equity Tier 1 (CET1) risk-based capital ratio was 9.73% at March 31, 2016 , up from 9.51% a year ago. The regulatory Tier 1 risk-based capital ratio was 10.99% compared to 10.22% at March 31, 2015 . All capital ratios were impacted by the repurchase of 18.1 million common shares over the last four quarters under the $366 million repurchase authorization included in the 2015 CCAR capital plan. In the announcement of the pending FirstMerit acquisition, we stated our intention to forgo the remaining $166 million of share repurchase capacity under our 2015 CCAR capital plan. As a result, we did not repurchase any common shares during the 2016 first quarter. The regulatory Tier 1 risk-based and total risk-based capital ratios benefited from the issuance of $400 million of preferred equity during the 2016 first quarter.
Income Taxes
The provision for income taxes in the 2016 first quarter was $55 million and $54 million in the 2015 first quarter . The effective tax rates for the 2016 first quarter and 2015 first quarter were 24.3% and 24.6% , respectively. At March 31, 2016 , we had a net federal deferred tax liability of $19 million and a net state deferred tax asset of $42 million.
Expectations
“The Midwest regional economy where we do business continues to perform well,” Steinour said. “Although we are mindful of headwinds created by market volatility, global macroeconomic uncertainty, and downturns within pockets of the economy, we do not see evidence that these factors have significantly dampened the prospects of our core customers and communities."

9



Excluding Significant Items, net MSR activity, and the incremental impact of the pending FirstMerit acquisition, our goals for full-year 2016 performance remain consistent with our long-term financial goals of 4-6% revenue growth and annual positive operating leverage. Overall, asset quality metrics are expected to remain near current levels. Moderate quarterly volatility also is expected, given the quickly evolving macroeconomic conditions, commodities and currency market volatility, and current low level of problem assets and credit costs. We anticipate NCOs will remain below our long-term normalized range of 35 to 55 basis points.
Conference Call / Webcast Information
Huntington’s senior management will host an earnings conference call on April 20, 2016 , at 9:00 a.m. (Eastern Daylight Time). The call may be accessed via a live Internet webcast at the Investor Relations section of Huntington’s website, www.huntington.com, or through a dial-in telephone number at (844) 318-8148; Conference ID# 76819136. Slides will be available in the Investor Relations section of Huntington’s website about an hour prior to the call. A replay of the webcast will be archived in the Investor Relations section of Huntington’s website. A telephone replay will be available approximately two hours after the completion of the call through April 29, 2016 at (855) 859-2056 or (404) 537-3406; conference ID# 76819136.
Please see the 2016 First Quarter Quarterly Financial Supplement for additional detailed financial performance metrics. This document can be found on Huntington's Investor Relations website, www.huntington-ir.com.
Caution regarding Forward-Looking Statements
This communication contains certain forward-looking statements, including, but not limited to, certain plans, expectations, goals, projections, and statements about the benefits of the proposed transaction with FirstMerit, the merger parties’ plans, objectives, expectations and intentions, the expected timing of completion of the transaction with FirstMerit, and other statements that are not historical facts. Such statements are subject to numerous assumptions, risks, and uncertainties. Statements that do not describe historical or current facts, including statements about beliefs and expectations, are forward-looking statements. 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. The forward-looking statements are intended to be subject to the safe harbor provided by Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of 1995.
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: 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; movements in interest rates; competitive pressures on product pricing and services; success, impact, and timing of Huntington’s and FirstMerit’s respective business strategies, including market acceptance of any new products or services implementing Huntington’s “Fair Play” banking philosophy; 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 the regulatory approval process associated with the merger; the possibility that the proposed transaction with FirstMerit does not close when expected or at all because required regulatory, shareholder or other approvals are not received or other conditions to the closing are not satisfied on a timely basis or at all; the possibility that the anticipated benefits of the transaction are not realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy and competitive factors in the areas where Huntington and FirstMerit do business; the possibility that the transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events; diversion of management’s attention from ongoing business operations and opportunities; potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the transaction; Huntington’s ability to complete the acquisition and integration of FirstMerit successfully; and other factors that may affect future results of Huntington and FirstMerit. Additional factors that could cause results to differ materially from those described above can be found in Huntington’s Annual Report on Form 10-K for the year ended December 31, 2015, which is on file with the Securities and Exchange Commission (the “ SEC ”) and available in the “Investor Relations” section of Huntington’s website, http://www.huntington.com, under the heading “Publications and Filings” and in other documents Huntington files with the SEC, and in FirstMerit’s Annual Report on Form 10-K for the year ended December 31, 2015, which is on file with the SEC and available in the “Investors” section of FirstMerit’s website, http://www.firstmerit.com, under the heading “Publications & Filings” and in other documents FirstMerit files with the SEC.

10



All forward-looking statements speak only as of the date they are made and are based on information available at that time. Neither Huntington nor FirstMerit assumes any obligation to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements were made or to reflect the occurrence of unanticipated events except as required by federal securities laws. As forward-looking statements involve significant risks and uncertainties, caution should be exercised against placing undue reliance on such statements.
Important Additional Information
In connection with the proposed transaction with FirstMerit, Huntington has filed with the SEC a Registration Statement on Form S-4 that includes a Joint Proxy Statement of Huntington and FirstMerit and a Prospectus of Huntington, as well as other relevant documents concerning the proposed transaction. The registration statement has not yet become effective and the Joint Proxy Statement included therein is in preliminary form. The proposed transaction involving Huntington and FirstMerit will be submitted to FirstMerit’s stockholders and Huntington’s stockholders for their consideration. This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. STOCKHOLDERS OF HUNTINGTON AND STOCKHOLDERS OF FIRSTMERIT ARE URGED TO READ THE REGISTRATION STATEMENT AND THE JOINT PROXY STATEMENT/PROSPECTUS REGARDING THE TRANSACTION AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY CONTAIN IMPORTANT INFORMATION. Stockholders may obtain a free copy of the definitive joint proxy statement/prospectus, as well as other filings containing information about Huntington and FirstMerit, without charge, at the SEC’s website (http://www.sec.gov). Copies of the joint proxy statement/prospectus and the filings with the SEC that are incorporated by reference in the joint proxy statement/prospectus can also be obtained, without charge, by directing a request to Huntington Investor Relations, Huntington Bancshares Incorporated, Huntington Center, HC0935, 41 South High Street, Columbus, Ohio 43287, (800) 576-5007 or to FirstMerit Corporation, Attention: Thomas P. O’Malley, III Cascade Plaza, Akron, Ohio 44308, (330) 384-7109.
Participants in the Solicitation
Huntington, FirstMerit, and certain of their respective directors, executive officers and employees may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction. Information regarding Huntington’s directors and executive officers is available in its definitive proxy statement, which was filed with the SEC on March 10, 2016, and certain of its Current Reports on Form 8-K. Information regarding FirstMerit’s directors and executive officers is available in its definitive proxy statement, which was filed with SEC on March 6, 2015, and certain of its Current Reports on Form 8-K. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, are contained in the joint proxy statement/prospectus and other relevant materials filed with the SEC. Free copies of this document may be obtained as described in the preceding paragraph.
Basis of Presentation
Use of Non-GAAP Financial Measures
This document contains GAAP financial measures and non-GAAP financial measures where management believes it to be helpful in understanding Huntington’s results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in this fourth quarter earnings release, conference call slides, or the Form 8-K related to this document, all of which can be found on Huntington’s website at www.huntington-ir.com .
Significant Items
From time to time, revenue, expenses, or taxes are impacted by items judged by Management to be outside of ordinary banking activities and/or by items that, while they may be associated with ordinary banking activities, are so unusually large that their outsized impact is believed by Management at that time to be infrequent or short term in nature. We refer to such items as “Significant Items”. Most often, these Significant Items result from factors originating outside the Company – e.g., regulatory actions/assessments, windfall gains, changes in accounting principles, one-time tax assessments/refunds, litigation actions, etc. In other cases they may result from Management decisions associated with significant corporate actions out of the ordinary course of business – e.g., merger/restructuring charges, recapitalization actions, goodwill impairment, etc.
Even though certain revenue and expense items are naturally subject to more volatility than others due to changes in market and economic environment conditions, as a general rule volatility alone does not define a

11



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 2015 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 $73 billion asset regional bank holding company headquartered in Columbus, Ohio, with a network of more than 750 branches and more than 1,500 ATMs across six Midwestern states. Founded in 1866, The Huntington National Bank and its affiliates provide consumer, small business, commercial, treasury management, wealth management, brokerage, trust, and insurance services. Huntington also provides auto dealer, equipment finance, national settlement and capital market services that extend beyond its core states. Visit huntington.com for more information.
###

12


Exhibit 99.2
HUNTINGTON BANCSHARES INCORPORATED
Quarterly Financial Supplement
March 31, 2016
Table of Contents
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 




Notes:
The preparation of financial statement data in conformity with accounting principles generally accepted in the United States (GAAP) requires management to make estimates and assumptions that affect amounts reported. Actual results could differ from those estimates. Certain prior period amounts have been reclassified to conform to the current period’s presentation.
Non-Regulatory Capital Ratios
In addition to capital ratios defined by banking regulators, the Company considers various other measures when evaluating capital utilization and adequacy, including:
Tangible equity to tangible assets,
Tangible common equity to tangible assets, and
Tangible common equity to risk-weighted assets using Basel III 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.




Huntington Bancshares Incorporated
Quarterly Key Statistics(1)
(Unaudited)
 
Three months ended
 
 
 
 
 
 
March 31,
 
December 31,
 
March 31,
 
 
Percent Changes vs.
(dollar amounts in thousands, except as noted)
2016
 
2015
 
2015
 
 
4Q15
 
1Q15
Net interest income (3)
$
512,225


$
505,336


$
475,245

 
 
1
 %
 
8
 %
FTE adjustment
(9,159
)
 
(8,425
)
 
(7,560
)
 
 
9

 
21

Net interest income
503,066

 
496,911

 
467,685

 
 
1

 
8

Provision for credit losses
27,582

 
36,468

 
20,591

 
 
(24
)
 
34

Noninterest income
241,867

 
272,215

 
231,623

 
 
(11
)
 
4

Noninterest expense
491,080

 
498,766

 
458,857

 
 
(2
)
 
7

Income before income taxes
226,271

 
233,892

 
219,860

 
 
(3
)
 
3

Provision for income taxes
54,957

 
55,583

 
54,006

 
 
(1
)
 
2

Net income
171,314

 
178,309

 
165,854

 
 
(4
)
 
3

Dividends on preferred shares
7,998

 
7,972

 
7,965

 
 

 

Net income applicable to common shares
$
163,316

 
$
170,337

 
$
157,889

 
 
(4
)%
 
3
 %
 
 
 
 
 
 
 
 
 
 
 
Net income per common share - diluted
$
0.20

 
$
0.21

 
$
0.19

 
 
(5
)%
 
5
 %
Cash dividends declared per common share
0.07

 
0.07

 
0.06

 
 

 
17

Tangible book value per common share at end of period
7.12

 
6.91

 
6.62

 
 
3

 
8

 
 
 
 
 
 
 
 
 
 
 
Number of common shares repurchased

 
2,490

 
4,949

 
 
(100
)
 
(100
)
Average common shares - basic
795,755

 
796,095

 
809,778

 
 

 
(2
)
Average common shares - diluted
808,349

 
810,143

 
823,809

 
 

 
(2
)
Ending common shares outstanding
796,689

 
794,929

 
808,528

 
 

 
(1
)
 
 
 
 
 
 
 
 
 
 
 
Return on average assets
0.96
 %
 
1.00
%
 
1.02
%
 
 


 
 
Return on average common shareholders’ equity
10.4

 
10.8

 
10.6

 
 


 
 
Return on average tangible common shareholders’ equity(2)
11.9

 
12.4

 
12.2

 
 


 
 
Net interest margin(3)
3.11

 
3.09

 
3.15

 
 


 
 
Efficiency ratio(4)
64.6

 
63.7

 
63.5

 
 


 
 
Effective tax rate
24.3

 
23.8

 
24.6

 
 


 
 
 
 
 
 
 
 
 
 
 
 
 
Average total assets ( millions )
$
71,596

 
$
70,801

 
$
66,235

 
 
1

 
8

Average earning assets ( millions )
66,234

 
64,961

 
61,193

 
 
2

 
8

Average loans and leases ( millions )
50,618

 
49,827

 
47,780

 
 
2

 
6

Average loans and leases - linked quarter annualized growth rate
6.4
 %
 
6.4
%
 
5.8
%
 
 


 


Average total deposits ( millions )
$
54,979

 
$
55,338

 
$
52,129

 
 
(1
)
 
5

Average core deposits(5) ( millions )
51,363

 
51,585

 
48,777

 
 

 
5

Average core deposits - linked quarter annualized growth rate
(1.7
)%
 
5.4
%
 
9.6
%
 
 


 
 
Average shareholders’ equity ( millions )
$
6,755

 
$
6,636

 
$
6,416

 
 
2

 
5

Average tangible common shareholders' equity ( millions )
5,610

 
5,536

 
5,461

 
 
1

 
3

 
 
 
 
 
 
 
 


 
 
Total assets at end of period ( millions )
72,645

 
71,018

 
67,984

 
 
2

 
7

Total shareholders’ equity at end of period ( millions )
7,158

 
6,595

 
6,462

 
 
9

 
11

 
 
 
 
 
 
 
 
 
 
 
NCOs as a % of average loans and leases
0.07
 %
 
0.18
%
 
0.20
%
 
 
 
 
 
NAL ratio
0.97

 
0.74

 
0.76

 
 
 
 
 
NPA ratio(6)
1.02

 
0.79

 
0.84

 
 


 


Allowance for loan and lease losses (ALLL) as a % of total loans and leases at the end of period
1.19

 
1.19

 
1.27

 
 
 
 
 
ALLL plus allowance for unfunded loan commitments and letters of credit (ACL) as a % of total loans and leases at the end of period
1.34

 
1.33

 
1.38

 
 
 
 
 
ACL as a % of NALs
138

 
180

 
181

 
 
 
 
 
ACL as a % of NPAs
131

 
168

 
165

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common equity tier 1 risk-based capital ratio(7)
9.73

 
9.79

 
9.51

 
 
 
 
 
Tangible common equity / tangible asset ratio(8)
7.89

 
7.82

 
7.95

 
 
 
 
 
See Notes to the Annual and 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 applicable to common shares 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 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, 2016, 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
 
March 31,
 
December 31,
 

(dollar amounts in thousands, except number of shares)