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) July 18, 2014

HUNTINGTON BANCSHARES INCORPORATED

(Exact name of registrant as specified in its charter)

 

Maryland   1-34073   31-0724920

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

Huntington Center

41 South High Street

Columbus, Ohio 43287

(Address of principal executive offices) (Zip Code)

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

Not Applicable

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

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

 

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

 

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

 

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

 

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


Item 2.02. Results of Operations and Financial Condition.

On July 18, 2014, Huntington Bancshares Incorporated (“Huntington”) issued a news release announcing its earnings for the quarter ended June 30, 2014. Also on July 18, 2014, Huntington made a Quarterly Financial Supplement available on its web site, www.huntington-ir.com .

Huntington’s senior management will host an earnings conference call July 18, 2014, at 10:00 a.m. (Eastern Time). The call may be accessed via a live Internet webcast at www.huntington-ir.com or through a dial-in telephone number at 877-684-3807, conference ID 62273675. Slides will be available at www.huntington-ir.com just prior to the call. A replay of the web cast will be archived in the Investor Relations section of Huntington’s web site at www.huntington-ir.com . A telephone replay will be available two hours after the completion of the call through August 1, 2014, at (855) 859-2056 or (404) 537-3406; conference call ID 62273675.

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

While there is no assurance that any list of risks and uncertainties or risk factors is complete, below are certain factors which could cause actual results to differ materially from those contained or implied in the forward-looking statements: (1) worsening of credit quality performance due to a number of factors such as the underlying value of collateral that could prove less valuable than otherwise assumed and assumed cash flows may be worse than expected; (2) changes in general economic, political, or industry conditions; uncertainty in U.S. fiscal and monetary policy, including the interest rate policies of the Federal Reserve Board; volatility and disruptions in global capital and credit markets; (3) movements in interest rates; (4) competitive pressures on product pricing and services; (5) success, impact, and timing of our business strategies, including market acceptance of any new products or services implementing our “Fair Play” banking philosophy; (6) changes in accounting policies and principles and the accuracy of our assumptions and estimates used to prepare our financial statements; (7) extended disruption of vital infrastructure; (8) the final outcome of significant litigation; (9) the nature, extent, timing, and results of governmental actions, examinations, reviews, reforms, regulations, and interpretations, including those related to the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Basel III regulatory capital reforms, as well as those involving the OCC, Federal Reserve, FDIC, and CFPB; and (10) the outcome of judicial and regulatory decisions regarding practices in the residential mortgage industry, including among other things the processes followed for foreclosing residential mortgages. Additional factors that could cause results to differ materially from those described above can be found in Huntington’s 2013 Annual Report on Form 10-K, and documents subsequently filed by Huntington with the Securities and Exchange Commission. All forward-looking statements included in this document are based on information available at the time of the release. Huntington assumes no obligation to update any forward-looking statement.


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

Item 9.01. Financial Statements and Exhibits.

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

 

(d) Exhibits.

 

Exhibit 99.1   

   News release of Huntington Bancshares Incorporated, dated July 18, 2014.
Exhibit 99.2   

   Quarterly Financial Supplement, June 2014.


SIGNATURES

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

 

      HUNTINGTON BANCSHARES INCORPORATED
Date:   July 18, 2014     By:  

/s/ Howell D. McCullough III

        Howell D. McCullough III
        Senior Executive Vice President and Chief Financial Officer

EXHIBIT INDEX

 

Exhibit No.    Description
Exhibit 99.1    News release of Huntington Bancshares Incorporated, July 18, 2014.
Exhibit 99.2    Quarterly Financial Supplement, June 2014.

Exhibit 99.1

 

LOGO

FOR IMMEDIATE RELEASE

July 18, 2014

 

Analysts: Todd Beekman (todd.beekman@huntington.com), 614.480.3878
     Mark Muth (mark.muth@huntington.com), 614.480.4720

Media:     Maureen Brown (maureen.brown@huntington.com), 614.480.5512

HUNTINGTON BANCSHARES INCORPORATED REPORTS 2014 SECOND QUARTER NET

INCOME OF $165 MILLION AND EARNINGS PER COMMON SHARE OF $0.19

STRATEGIC EXECUTION DRIVES 5% YEAR-OVER-YEAR REVENUE GROWTH

Specific highlights:

 

  12% year-over-year increase in earnings per common share to $0.19

 

  9% year-over-year increase in net income to $165 million

 

  1.07% return on average assets, 10.8% return on average common equity

 

  $3.7 billion, or 9%, year-over-year increase in average loans and leases

 

  Efficiency ratio improved to 62.7% compared to 63.7% in the year-ago quarter

 

  Net chargeoffs declined to 0.25% of average loans and leases, down from 0.34% in the year-ago quarter

 

  12.1 million common shares repurchased at an average price of $9.17 per share

COLUMBUS, Ohio – Huntington Bancshares Incorporated (NASDAQ: HBAN; www.huntington.com ) reported 2014 second quarter net income of $165 million, an increase of $14 million, or 9%, from the 2013 second quarter and an increase of $15 million, or 10%, from the 2014 first quarter. Earnings per common share were $0.19, an increase of $0.02 from both the year-ago and prior quarters.

The Board of Directors declared a quarterly cash dividend on the company’s common stock of $0.05 per common share. The dividend is payable October 1, 2014, to shareholders of record on September 17, 2014.

Performance Summary: Disciplined Growth Overcomes Market Pressures

“We are very pleased with our second quarter performance, which reflects our steadfast focus on executing our strategies,” said Steve Steinour, chairman, president and CEO. “We have been able to grow both total revenue and net interest income year over year. Net interest income was particularly noteworthy, as average loan growth of 9 percent allowed us to overcome continued pressure on the net interest margin from the low, flat yield curve. We also returned 97% of earnings to common shareholders, including $111 million of stock buybacks during the quarter, which demonstrates our belief in the future prospects of the company and our commitment to return capital to our shareholders.”

“Average loans increased $3.7 billion from the second quarter of 2013, driven by growth in commercial and auto lending, reflecting heightened consumer and business confidence in the economy,” said Steinour. “During the quarter, we announced and received approval from the OCC for the purchase of an additional 24 branches in Michigan, which is targeted to

 

1


close in September. Also during the second quarter, retail banking customers surveyed by J.D. Power rated Huntington the “Highest Customer Satisfaction with Retail Banking in the North Central Region. ” Additionally, Huntington was the number one SBA lender in the country for the first nine months of the SBA’s fiscal year, even though we only lend in our six-state footprint. We also gave customers more convenience and ability to manage their money during the quarter with the rollout of the Quick Balance feature to our mobile banking – only the second bank in the country to offer this feature.”

Table 1 – Earnings Performance Summary

 

     2014     2013  

($ in millions, except per share data)

   Second
Quarter
    First
Quarter
    Fourth
Quarter
    Third
Quarter
    Second
Quarter
 

Net Income

   $ 164.6      $ 149.1      $ 158.2      $ 178.8      $ 151.0   

Diluted earnings per common share

     0.19        0.17        0.18        0.20        0.17   

Return on average assets

     1.07     1.01     1.09     1.27     1.08

Return on average common equity

     10.8        9.9        10.5        12.3        10.4   

Return on average tangible common equity

     12.4        11.3        12.1        14.2        12.1   

Net interest margin

     3.28        3.27        3.28        3.34        3.38   

Efficiency ratio

     62.7        66.4        63.4        60.3        63.7   

Tangible book value per common share

   $ 6.48      $ 6.31      $ 6.26      $ 6.07      $ 5.87   

Cash dividends declared per common share

     0.05        0.05        0.05        0.05        0.05   

Average diluted shares outstanding (000’s)

     834,687        842,677        842,324        841,025        843,840   

Average earning assets

   $ 57,077      $ 54,961      $ 53,012      $ 51,247      $ 51,156   

Average loans

     45,024        43,423        43,139        41,994        41,280   

Average core deposits

     45,611        45,195        44,747        43,773        43,768   

Tangible common equity / tangible assets ratio

     8.38     8.63     8.82     9.01     8.76

Tier 1 common risk-based capital ratio

     10.26        10.60        10.90        10.85        10.71   

NCOs as a % of average loans and leases

     0.25     0.40     0.43     0.53     0.34

NAL ratio

     0.71        0.74        0.75        0.78        0.87   

ACL as a % of total loans and leases

     1.50        1.56        1.65        1.72        1.86   

Table 2 lists certain items that Management believes are significant in understanding corporate performance and trends (see Basis of Presentation).

Table 2 – Significant Items Influencing Earnings

 

Three Months Ended

(in millions, except per share)

   Pre-Tax Impact     After-Tax Impact  
   Amount     Amount  (1)     EPS  (2)  

June 30, 2014 – net income

     $ 165      $ 0.19   

March 31, 2014 – net income

     $ 149      $ 0.17   

• Camco Financial acquisition, net

   $ (12     (8     (0.01

• Addition to litigation reserves

     (9     (6     (0.01

 

  Huntington National Bank received the highest numerical score among retail banks in the North Central Region in the proprietary J.D. Power 2014 Retail Banking Satisfaction Study SM . Based on 80,445 total responses measuring providers in the North Central region (IN, KY, MI, OH, & WV) and measures opinions of consumers with their primary banking provider. Proprietary study results are based on experiences and perceptions of consumers surveyed January 2014. Your experiences may vary. Visit jdpower.com.

 

2


     Pre-Tax Impact     After-Tax Impact  
     Amount     Amount  (1)     EPS (2)  

December 31, 2013 – net income

     $ 158      $ 0.18   

• Franchise repositioning related expense

   $ (7     (5     (0.01

September 30, 2013 – net income

     $ 179      $ 0.20   

• Pension curtailment gain

   $ 34        22        0.03   

• Franchise repositioning related expense

     (17     (11     (0.01

June 30, 2013 – net income

     $ 151      $ 0.17   

 

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

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

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

 

     2014     2013        
     Second     First     Fourth     Third     Second     Change (%)  

($ in millions)

   Quarter     Quarter     Quarter     Quarter     Quarter     LQ     YOY  

Net interest income

   $ 460.0      $ 437.5      $ 430.6      $ 424.9      $ 424.9        5     8

FTE adjustment

     6.6        5.9        8.2        6.6        6.6        13        1   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income - FTE

     466.7        443.4        438.8        431.5        431.5        5        8   

Noninterest income

     250.1        248.5        249.9        253.8        251.9        1        (1
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenue - FTE

   $ 716.8      $ 691.9      $ 688.7      $ 685.3      $ 683.4        4     5
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
                                   Change bps  

Yield / Cost

                                 LQ     YOY  

Total earning assets

     3.53     3.53     3.58     3.64     3.68     (0     (15

Total loans and leases

     3.75        3.75        3.77        3.87        3.95        (0     (20

Total securities

     2.57        2.52        2.60        2.41        2.38        5        18   

Total interest-bearing liabilities

     0.34        0.36        0.42        0.42        0.42        (2     (7

Total interest-bearing deposits

     0.25        0.28        0.32        0.33        0.36        (3     (10

Net interest rate spread

     3.18        3.17        3.15        3.20        3.26        1        (8

Impact of noninterest-bearing funds on margin

     0.10        0.10        0.13        0.14        0.12        (1     (3
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest margin

     3.28     3.27     3.28     3.34     3.38     1        (10
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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

Fully-taxable equivalent (FTE) net interest income increased $35 million, or 8%, from the 2013 second quarter. This reflected the benefit from the $5.9 billion, or 12%, increase in average earnings assets, including a $3.7 billion, or 9%, increase in average loans and leases and a $2.6 billion, or 28%, increase in average securities. This earning asset growth was partially offset by the 10 basis point decrease in the FTE net interest margin (NIM) to 3.28%. The NIM contraction reflected a 15 basis point decrease related to the mix and yield of earning assets partially offset by the 5 basis point reduction in funding costs. During the 2014 second quarter, net interest income and the NIM benefitted by $5 million and 4 basis points, respectively, from the unexpected pay-off of an acquired commercial real estate loan.

 

3


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

 

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

(in billions)

                  LQ     YOY  

Average Loans and Leases

                   

Commercial and industrial

   $ 18.3       $ 17.6       $ 17.7       $ 17.0       $ 17.0         4     7

Commercial real estate

     5.0         4.9         4.9         4.9         5.0         3        1   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total commercial

     23.3         22.5         22.6         21.9         22.0         3        6   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Automobile

     7.3         6.8         6.5         6.1         5.3         8        39   

Home equity

     8.4         8.3         8.3         8.3         8.3         0        1   

Residential mortgage

     5.6         5.4         5.3         5.3         5.2         4        7   

Other consumer

     0.4         0.4         0.4         0.4         0.5         (1     (17
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total consumer

     21.7         20.9         20.6         20.1         19.2         4        13   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total loans and leases

     45.0         43.4         43.1         42.0         41.3         4        9   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total securities

     11.7         11.2         9.5         8.8         9.1         4        28   

Held-for-sale and other earning assets

     0.4         0.4         0.4         0.4         0.8         5        (50

Total earning assets

   $ 57.1       $ 55.0       $ 53.0       $ 51.2       $ 51.2         4     12
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

See Page 6 of Quarterly Financial Supplement for additional detail.

Average loans and leases increased $3.7 billion, or 9%, from the prior year, driven by:

 

    $2.1 billion, or 39%, increase in average Automobile loans, as originations remained strong and we continued to portfolio all of the production.

 

    $1.2 billion, or 7%, increase in average Commercial and Industrial (C&I) loans and leases, reflecting growth in the specialty lending verticals, automobile dealer floorplan lending, and business banking.

 

    $0.4 billion, or 7%, increase in average residential mortgage loans as a result of increased customer demand for Adjustable Rate Mortgages (ARMs).

 

4


Table 5 – Average Liabilities – Focus on Core Customer Relationships and Reducing Funding Costs Continues to Drive Shift in Funding Mix

 

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

(in billions)

                  LQ     YOY  

Average Deposits

                   

Demand deposits - noninterest bearing

   $ 13.5       $ 13.2       $ 13.3       $ 13.1       $ 12.9         2     5

Demand deposits - interest bearing

     5.9       $ 5.8       $ 5.8       $ 5.8       $ 5.9         3        0   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total demand deposits

     19.4         19.0         19.1         18.9         18.8         2        3   

Money market deposits

     17.7         17.6         16.8         15.7         15.1         0        17   

Savings and other domestic deposits

     5.1         5.0         4.9         5.1         5.0         2        1   

Core certificates of deposit

     3.4         3.6         3.9         4.2         4.8         (5     (28
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total core deposits

     45.6         45.2         44.7         43.8         43.8         1        4   

Other domestic deposits of $250,000 or more

     0.3         0.3         0.3         0.3         0.3         (8     (19

Brokered deposits and negotiable CDs

     2.1         1.8         1.4         1.6         1.8         16        16   

Other deposits

     0.3         0.3         0.4         0.4         0.3         (4     0   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total deposits

     48.3         47.6         46.8         46.0         46.2         1        4   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Short- and long-term borrowings

     6.3         4.9         3.7         3.0         2.7         29        130   

Total Interest-bearing liabilities

   $ 41.1       $ 39.3       $ 37.2       $ 35.9       $ 36.1         5     14
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

See Page 6 of Quarterly Financial Supplement for additional detail.

Average total core deposits increased $1.9 billion, or 4%, from the year-ago quarter, including a $0.6 billion, or 5%, increase in noninterest bearing deposits. Average interest-bearing liabilities increased $5.0 billion, or 14%, from the 2013 second quarter, reflecting:

 

    $3.6 billion, or 130%, increase in short- and long-term borrowings, which were used to efficiently finance balance sheet growth while continuing to manage the overall cost of funds. Included in the increase are $2.1 billion of bank-level debt and $0.4 billion of parent-level debt issued over the past year.

 

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

Partially offset by:

 

    $1.3 billion, or 28%, decrease in average core certificates of deposit due to the strategic focus on changing the funding sources to no-cost demand deposits and lower cost money market deposits.

 

5


Noninterest Income

Table 6 – Noninterest Income – Continued Momentum in Electronic Banking and Service Charges on Deposit Accounts Largely Offset Mortgage Banking Declines

 

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

(in millions)

                 LQ     YOY  

Noninterest Income

                  

Service charges on deposit accounts

   $ 72.6       $ 64.6       $ 70.0       $ 72.9       $ 68.0        12     7

Mortgage banking income

     22.7         23.1         24.3         23.6         33.7        (2     (33

Trust services

     29.6         29.6         30.7         30.5         30.7        0        (4

Electronic Banking

     26.5         23.6         24.3         24.3         23.3        12        13   

Insurance income

     16.0         16.5         15.6         17.3         17.2        (3     (7

Brokerage Income

     17.8         17.1         15.1         16.5         19.5        4        (9

Bank owned life insurance income

     13.9         13.3         13.8         13.7         15.4        4        (10

Capital markets fees

     10.5         9.2         12.3         12.8         12.2        14        (14

Gain on sale of loans

     3.9         3.6         7.1         5.1         3.3        10        17   

Securities (losses) gains

     0.5         17.0         1.2         0.1         (0.4     (97     NR   

Other income

     36.0         31.0         35.4         37.0         28.9        16        25   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Total noninterest income

   $ 250.1       $ 248.5       $ 249.9       $ 253.8       $ 251.9        1     (1 )% 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

NR-Not relevant

Noninterest income decreased $2 million, or less than 1%, from the year-ago quarter, primarily reflecting:

 

    $11 million, or 33%, decrease in mortgage banking income, reflecting a 49% reduction in origination and secondary marketing revenue as originations decreased 23% and gain-on-sale margins compressed.

Partially offset by:

 

    $7 million, or 25%, increase in other income primarily related to commercial loan fees and credit card fees, as our new credit card products were launched last year.

 

    $5 million, or 7%, increase in service charges on deposit accounts reflecting 8% consumer household and 1% commercial relationship growth and changing customer usage patterns.

Compared to the 2014 first quarter, noninterest income increased $2 million, or less than 1%. This increase reflected typical seasonality within service charges on deposit accounts, which increased $8 million, or 12%, and a $3 million, or 12%, increase in electronic banking. These were mostly offset by a $16 million, or 97%, decrease in securities gains.

 

6


Noninterest Expense

Table 7 – Noninterest Expense – Expense Discipline Remains a Focus

 

     2014      2013         
     Second      First      Fourth      Third      Second      Change (%)  

(in millions)

   Quarter      Quarter      Quarter      Quarter      Quarter      LQ     YOY  

Noninterest Expense

                   

Personnel costs

   $ 260.6       $ 249.5       $ 249.6       $ 229.3       $ 263.9         4     (1 )% 

Outside data processing and other services

     54.3         51.5         51.1         49.3         49.9         6        9   

Net occupancy

     28.7         33.4         32.0         35.6         27.7         (14     4   

Equipment

     28.7         28.8         28.8         28.2         24.9         (0     15   

Marketing

     14.8         10.7         13.7         12.3         14.2         39        4   

Deposit and other insurance expense

     10.6         13.7         10.1         11.2         13.5         (23     (21

Amortization of intangibles

     9.5         9.3         10.3         10.4         10.4         2        (8

Professional services

     17.9         12.2         11.6         12.5         9.3         46        92   

Other expense

     33.4         51.0         39.0         34.6         32.1         (35     4   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total noninterest expense

   $ 458.6       $ 460.1       $ 446.0       $ 423.3       $ 445.9         (0 )%      3
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

(in thousands)

                                               

Number of employees (Average full-time equivalent)

     12.0         11.8         11.8         12.1         12.1         1     (1 )% 

Noninterest expense increased $13 million, or 3%, from the year-ago quarter, reflecting:

 

    $9 million, or 92%, increase in professional services, $5 million of which is one-time consulting expense related to strategic planning.

 

    $4 million, or 9%, increase in outside data processing and other services, reflecting higher debit and credit card processing costs and other technology expense.

 

    $4 million, or 15%, increase in equipment expense, reflecting technology investments and the near-complete rollout of enhanced ATMs.

Partially offset by:

 

    $3 million, or 1%, decrease in personnel costs, reflecting the curtailment of the pension plan at the end of 2013 partially offset by annual compensation increases.

Noninterest expense decreased $1 million, or less than 1%, from the 2014 first quarter. When adjusting for the $22 million of Significant Items in the 2014 first quarter, noninterest expense increased $21 million. Personnel costs increased $11 million, or 4%, primarily reflecting the implementation of compensation and benefits increases. Marketing increased $4 million, or 39%, due to the seasonal increase in campaigns and promotions. Net occupancy expense decreased $5 million, or 14%, primarily related to the prior quarter’s snow removal expenses, as well as $2 million of one-time expenses related to the Camco acquisition and conversion. Other expense decreased $18 million, or 35%, as the 2014 first quarter included the $9 million addition to litigation reserves and a $3 million goodwill impairment.

 

7


Credit Quality

Table 8 – Summary Credit Quality Metrics – Positive Credit Trends Continue

 

     2014     2013  

($ in thousands)

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

Total nonaccrual loans and leases

   $ 324,957      $ 327,158      $ 322,056      $ 333,106      $ 363,547   

Total other real estate, net

     34,695        35,691        27,664        29,154        21,066   

Other NPAs (1)

     2,440        2,440        2,440        12,000        12,087   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total nonperforming assets

   $ 362,092      $ 365,289      $ 352,160      $ 374,259      $ 396,699   

Accruing loans and leases past due 90 days or more

     85,367        98,412        76,209        94,966        94,123   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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

   $ 447,459      $ 463,701      $ 428,369      $ 469,225      $ 490,822   

NAL ratio (2)

     0.71     0.74 %       0.75 %       0.78 %       0.87 %  

NPA ratio (3)

     0.79        0.82        0.82        0.88        0.95   

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

     1.08        1.17        1.20        1.29        1.38   

Provision for credit losses

   $ 29,385      $ 24,630      $ 24,331      $ 11,400      $ 24,722   

Net charge-offs

     28,642        42,986        46,447        55,742        34,790   

Net charge-offs / Average total loans

     0.25     0.40 %       0.43 %       0.53 %       0.34 %  

Allowance for loans and lease losses

   $ 635,101      $ 631,918      $ 647,870      $ 666,030      $ 733,076   

Allowance for unfunded loan commitments and letters of credit

     56,927        59,368        62,899        66,857        44,223   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Allowance for credit losses (ACL)

   $ 692,029      $ 691,286      $ 710,769      $ 732,887      $ 777,299   

ACL as a % of:

          

Total loans and leases

     1.50     1.56 %       1.65 %       1.72 %       1.86 %  

NALs

     213        211        221        220        214   

NPAs

     191        191        202        196        196   

 

(1) Other nonperforming assets includes certain impaired investment securities.
(2) Total NALs as a % of total loans and leases.
(3) Total NPAs as a % of sum of loans and leases, impaired loans held for sale, and net other real estate.

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

Nonaccrual loans and leases (NALs) decreased $39 million, or 11%, compared to a year ago to $325 million, or 0.71% of total loans and leases. Nonperforming assets (NPAs) decreased $35 million, or 9%, to $362 million, or 0.79% of total loans and leases, OREO, and other NPAs.

The provision for credit losses increased $5 million, or 16%, compared to the year-ago quarter reflecting the substantial loan growth during the current quarter tempered by the slight improvement in asset quality measures. Net charge-offs (NCOs) decreased $6 million, or 18%, to $29 million consistent with our expectations. The consumer portfolios drove the bulk of the quarterly decline, continuing the positive trend exhibited over the past three quarters. NCOs equated to an annualized 0.25% of average loans and leases in the current quarter compared to 0.34% in the year-ago quarter.

The period-end allowance for credit losses (ACL) as a percentage of total loans and leases decreased to 1.50% from 1.86% a year ago, while the ACL as a percentage of period-end total NALs decreased to 213% from 214%. The decrease in the ACL as a percent of total loans is consistent with the improved credit quality metrics.

 

8


Capital

Table 9 – Capital Ratios – Active Capital Management and Balance Sheet Growth Reduce Capital Ratios

 

     2014     2013  

(in millions)

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

Tangible common equity / tangible assets ratio

     8.38     8.63     8.82     9.01     8.76

Tier 1 common risk-based capital ratio

     10.26     10.60     10.90     10.85     10.71

Regulatory Tier 1 risk-based capital ratio

     11.56     11.95     12.28     12.36     12.24

Excess over 6.0% (1)

   $ 2,949      $ 3,042      $ 3,121      $ 3,096      $ 3,000   

Regulatory Total risk-based capital ratio

     13.67     14.13     14.57     14.67     14.57

Excess over 10.0% (1)

   $ 1,946      $ 2,111      $ 2,271      $ 2,274      $ 2,197   

Total risk-weighted assets

   $ 53,035      $ 51,120      $ 49,690      $ 48,687      $ 48,080   

 

(1) “Well-capitalized” regulatory threshold

See Page 15 of Quarterly Financial Supplement for additional detail.

The tangible common equity to tangible assets ratio at June 30, 2014, was 8.38%, down 38 basis points from a year ago. Our Tier 1 common risk-based capital ratio was 10.26%, down from 10.71% a year ago. The regulatory Tier 1 risk-based capital ratio at June 30, 2014, was 11.56%, down from 12.24% a year ago.

The decreases in the capital ratios were due to balance sheet growth and share repurchases that were partially offset by retained earnings and the stock issued in the Camco acquisition. Specifically, all capital ratios were impacted by the repurchase of 28.7 million common shares over the last four quarters, 12.1 million of which were repurchased during the 2014 second quarter. The decrease in the regulatory Tier 1 risk-based capital ratio also reflected the redemption of $50 million of qualifying preferred securities on December 31, 2013. These declines were offset partially by the increase in retained earnings as well as the issuance of 8.7 million common shares in the Camco acquisition.

Income Taxes

The provision for income taxes in the 2014 second quarter was $57 million and $55 million in the 2013 second quarter. The effective tax rates for the 2014 second quarter and 2013 second quarter were 25.9% and 26.8%, respectively. At June 30, 2014, we had a net federal deferred tax asset of $82 million and a net state deferred tax asset of $47 million. As of June 30, 2014 and June 30, 2013, there was no disallowed deferred tax asset for regulatory capital purposes.

Expectations

“We are optimistic about the continued growth in our local economies and the growing benefit from previous investments, which are driving our robust pipelines,” said Steinour. “Nevertheless, the rate environment and competitive pressures will continue to be challenging. We remain committed to achieving positive operating leverage for the 2014 full year and will continue to manage the franchise proactively in concert with our outlook.”

 

9


Net interest income is expected to increase modestly. We anticipate an increase in earning assets as total loans moderately grow and investment securities increase modestly. However, those benefits to net interest income are expected to be partially offset by continued downward pressure on NIM. We continue to maintain a disciplined approach to loan and deposit pricing; however, asset yields remain under pressure, and the opportunity to reduce funding costs further is diminishing.

Noninterest income, excluding the impact of any net MSR activity, is expected to remain near the current quarter’s level. In July, we will implement the previously announced change in our consumer service charges on deposits that is expected to have an approximate quarterly negative impact of $6 million. We expect that continued organic consumer household and business relationship growth coupled with the completion of the Michigan branch acquisitions will help offset this reduction.

Noninterest expense, excluding one-time items, is expected to remain near the current quarter’s reported level. We will continue to look for ways to reduce expenses, while not impacting our previously announced growth strategies and our high level of customer service.

Asset quality metrics are expected to trend favorably, although moderate quarterly volatility also is expected given the absolute low level of problem assets and credit costs. NPAs are expected to show continued improvement. We anticipate NCOs will remain within or below our long-term normalized range of 35 to 55 basis points.

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

Conference Call / Webcast Information

Huntington’s senior management will host an earnings conference call on July 18, 2014, at 10:00 a.m. (Eastern Time). The call may be accessed via a live Internet webcast at www.huntington-ir.com or through a dial-in telephone number at (877) 684-3807; Conference ID# 62273675. Slides will be available at www.huntington-ir.com about an hour prior to the call. A replay of the webcast will be archived in the Investor Relations section of Huntington’s web site, www.huntington.com. A telephone replay will be available approximately two hours after the completion of the call through August 1, 2014, at (855) 859-2056 or (404) 537-3406; conference ID# 62273675.

Please see the 2014 Second Quarter Quarterly Financial Supplement for additional detailed financial performance metrics. This document can be found at: http://www.huntington-ir.com

 

10


Forward-looking Statement

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

While there is no assurance that any list of risks and uncertainties or risk factors is complete, below are certain factors which could cause actual results to differ materially from those contained or implied in the forward-looking statements: (1) worsening of credit quality performance due to a number of factors such as the underlying value of collateral that could prove less valuable than otherwise assumed and assumed cash flows may be worse than expected; (2) changes in general economic, political, or industry conditions; uncertainty in U.S. fiscal and monetary policy, including the interest rate policies of the Federal Reserve Board; volatility and disruptions in global capital and credit markets; (3) movements in interest rates; (4) competitive pressures on product pricing and services; (5) success, impact, and timing of our business strategies, including market acceptance of any new products or services implementing our “Fair Play” banking philosophy; (6) changes in accounting policies and principles and the accuracy of our assumptions and estimates used to prepare our financial statements; (7) extended disruption of vital infrastructure; (8) the final outcome of significant litigation; (9) the nature, extent, timing, and results of governmental actions, examinations, reviews, reforms, regulations, and interpretations, including those related to the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Basel III regulatory capital reforms, as well as those involving the OCC, Federal Reserve, FDIC, and CFPB; and (10) the outcome of judicial and regulatory decisions regarding practices in the residential mortgage industry, including among other things the processes followed for foreclosing residential mortgages. Additional factors that could cause results to differ materially from those described above can be found in Huntington’s 2013 Annual Report on Form 10-K, and documents subsequently filed by Huntington with the Securities and Exchange Commission. All forward-looking statements included in this document are based on information available at the time of the release. Huntington assumes no obligation to update any forward-looking statement.

Basis of Presentation

Use of Non-GAAP Financial Measures

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

Significant Items

From time to time, revenue, expenses, or taxes are impacted by items judged by Management to be outside of ordinary banking activities and/or by items that, while they may be associated with ordinary banking activities, are so unusually large that their outsized impact is believed by Management at that time to be infrequent or short term in nature. We refer to such items as “Significant Items”. Most often, these Significant Items result from factors originating outside the Company – e.g., regulatory actions/assessments, windfall gains, changes in accounting principles, one-time tax assessments/refunds, litigation actions, etc. In other cases they may result from Management decisions associated with significant corporate actions out of the ordinary course of business – e.g., merger/restructuring charges, recapitalization actions, goodwill impairment, etc.

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

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

“Significant Items” for any particular period are not intended to be a complete list of items that may materially impact current or future period performance. A number of items could materially impact these periods, including those described in Huntington’s 2013 Annual Report on Form 10-K and other factors described from time to time in Huntington’s other filings with the Securities and Exchange Commission.

 

11


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 $64 billion asset regional bank holding company headquartered in Columbus, Ohio. The Huntington National Bank, founded in 1866, and its affiliates provide full-service commercial, small business, and consumer banking services; mortgage banking services; treasury management and foreign exchange services; equipment leasing; wealth and investment management services; trust services; brokerage services; customized insurance brokerage and service programs; and other financial products and services. The principal markets for these services are Huntington’s six-state retail banking franchise: Ohio, Michigan, Pennsylvania, Indiana, West Virginia, and Kentucky. The primary distribution channels include a banking network of more than 700 traditional branches and convenience branches located in grocery stores and retirement centers, and through an array of alternative distribution channels including internet and mobile banking, telephone banking, and more than 1,400 ATMs. Through automotive dealership relationships within its six-state retail banking franchise area and selected other Midwest and New England states, Huntington also provides commercial banking services to the automotive dealers and retail automobile financing for dealer customers.

###

 

12

Exhibit 99.2

HUNTINGTON BANCSHARES INCORPORATED

Quarterly Financial Supplement

June 2014

 

 

Table of Contents

 

Quarterly Key Statistics

     1  

Year To Date Key Statistics

     2  

Consolidated Balance Sheets

     4  

Loans and Leases Composition

     5  

Deposits Composition

     6  

Consolidated Quarterly Average Balance Sheets

     7  

Consolidated Quarterly Net Interest Margin—Interest Income / Expense

     8  

Consolidated Quarterly Net Interest Margin—Yield

     9  

Selected Quarterly Income Statement Data

     10  

Quarterly Mortgage Banking Income

     11  

Quarterly Credit Reserves Analysis

     12  

Quarterly Net Charge-Off Analysis

     13  

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

     14  

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

     15  

Quarterly Common Stock Summary, Capital, and Other Data

     16  

Consolidated Year To Date Average Balance Sheets

     17  

Consolidated Year To Date Net Interest Margin—Interest Income / Expense

     18  

Consolidated Year To Date Net Interest Margin—Yield

     19  

Selected Year To Date Income Statement Data

     20  

Year To Date Mortgage Banking Income

     21  

Year To Date Credit Reserves Analysis

     22  

Year To Date Net Charge-Off Analysis

     23  

Year To Date Nonaccrual Loans and Leases (NALs) and Nonperforming Assets (NPAs)

     24  

Year To Date Accruing Past Due Loans and Leases and Accruing and Nonaccruing Troubled Debt Restructured Loans

     25  


Notes:

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

Non-Regulatory Capital Ratios

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

 

    Tangible common equity to tangible assets,

 

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

 

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

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

Because there are no standardized definitions for these non-regulatory capital ratios, the Company’s calculation methods may differ from those used by other financial services companies. Also, there may be limits in the usefulness of these measures to investors. As a result, the Company encourages readers to consider the consolidated financial statements and other financial information contained in the related press release in their entirety, and not to rely on any single financial measure. Basel III Tier 1 common capital ratio estimates are based on management’s current interpretation, expectations, and understanding of the final U.S. Basel III rules adopted by the Federal Reserve Board and released on July 2, 2013.


Huntington Bancshares Incorporated

Quarterly Key Statistics (1)

(Unaudited)

 

     2014     2013     Percent Changes vs.  

(dollar amounts in thousands, except per share amounts)

   Second     First     Second     1Q14     2Q13  

Net interest income

   $ 460,048     $ 437,506     $ 424,937       5 %     %

Provision for credit losses

     29,385       24,630       24,722       19       19  

Noninterest income

     250,067       248,485       251,919       1       (1

Noninterest expense

     458,636       460,121       445,865       —         3  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     222,094       201,240       206,269       10       8  

Provision for income taxes

     57,475       52,097       55,269       10       4  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 164,619     $ 149,143     $ 151,000       10 %     %
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Dividends on preferred shares

     7,963       7,964       7,967       —          —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income applicable to common shares

   $ 156,656     $ 141,179     $ 143,033       11 %     10  %
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income per common share—diluted

   $ 0.19     $ 0.17     $ 0.17       12 %     12  %

Cash dividends declared per common share

     0.05       0.05       0.05       —          —     

Book value per common share at end of period

     7.17       6.99       6.49       3       11  

Tangible book value per common share at end of period

     6.48       6.31       5.87       3       10  

Average common shares—basic

     821,546       829,659       834,730       (1     (2

Average common shares—diluted

     834,687        842,677       843,840       (1     (1

Return on average assets

     1.07 %     1.01 %     1.08 %    

Return on average common shareholders’ equity

     10.8       9.9       10.4      

Return on average tangible common shareholders’ equity (2)

     12.4       11.3       12.1      

Net interest margin (3)

     3.28       3.27       3.38      

Efficiency ratio (4)

     62.7       66.4       63.7      

Noninterest Income/Total Revenue

     34.9       35.9       36.9      

Effective tax rate

     25.9       25.9       26.8      

Average loans and leases

   $ 45,023,793     $ 43,423,355     $ 41,280,065       4       9  

Average loans and leases—linked quarter annualized growth rate

     14.7 %     2.6 %     4.1 %    

Average earning assets

   $ 57,076,706     $ 54,961,237     $ 51,156,168       4       12  

Average total assets

     61,830,210       59,692,484       55,889,271       4       11  

Average core deposits (5)

     45,611,033       45,194,597       43,768,948       1       4  

Average core deposits—linked quarter annualized growth rate

     3.7 %     4.0 %     1.4 %    

Average shareholders’ equity

   $ 6,227,809     $ 6,182,891     $ 5,888,206       1       6  

Total assets at end of period

     63,797,113       61,145,753       56,103,819       4       14  

Total shareholders’ equity at end of period

     6,240,791       6,176,234       5,773,647       1       8  

Net charge-offs (NCOs)

     28,643       42,986       34,790       (33     (18

NCOs as a % of average loans and leases

     0.25 %     0.40 %     0.34 %    

Nonaccrual loans and leases (NALs)

   $ 324,957     $ 327,158     $ 363,546       (1     (11

NAL ratio

     0.71 %     0.74 %     0.87 %    

Nonperforming assets (NPAs) (6)

   $ 362,092     $ 365,289     $ 396,699       (1     (9

NPA ratio (6)

     0.79 %     0.82 %     0.95 %     (4     (17

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

     1.38       1.42       1.76      

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

     1.50       1.56       1.86      

ACL as a % of NALs

     213       211       214      

ACL as a % of NPAs

     191       191       196      

Tier 1 leverage ratio (7)

     10.01       10.32       10.64      

Tier 1 common risk-based capital ratio (7)

     10.26       10.60       10.71      

Tier 1 risk-based capital ratio (7)

     11.56       11.95       12.24      

Total risk-based capital ratio (7)

     13.67       14.13       14.57      

Tangible common equity / tangible assets ratio (8)

     8.38       8.63       8.76      

See Notes to the Quarterly Key Statistics.

 

1


Huntington Bancshares Incorporated

Year To Date Key Statistics (1)

(Unaudited)

 

     Six Months Ended June 30,     Change  

(dollar amounts in thousands, except per share amounts)

   2014     2013     Amount     Percent  

Net interest income

   $ 897,554     $ 849,107     $ 48,447       6 %

Provision for credit losses

     54,015       54,314       (299     (1

Noninterest income

     498,552       508,537       (9,985     (2

Noninterest expense

     918,757       888,658       30,099       3  
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     423,334       414,672       8,662       2  

Provision for income taxes

     109,572       110,398       (826     (1
  

 

 

   

 

 

   

 

 

   

 

 

 

Net Income

   $ 313,762     $ 304,274     $ 9,488       3 %
  

 

 

   

 

 

   

 

 

   

 

 

 

Dividends on preferred shares

     15,927       15,937       (10     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income applicable to common shares

   $ 297,835     $ 288,337     $ 9,498       3 %
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income per common share—diluted

   $ 0.36     $ 0.34     $ 0.02       6 %

Cash dividends declared per common share

     0.10       0.09       0.01       11  

Average common shares—basic

     825,603       837,917       (12,314     (1

Average common shares—diluted

     838,546        846,274       (7,707     (1

Return on average assets

     1.04 %     1.10 %    

Return on average common shareholders’ equity

     10.3       10.6      

Return on average tangible common shareholders’ equity (2)

     12.4       12.9      

Net interest margin (3)

     3.28       3.40      

Efficiency ratio (4)

     64.5       63.3      

Noninterest Income/Total Revenue

     35.4       37.1      

Effective tax rate

     25.9       26.6      

Average loans and leases

   $ 44,227,995     $ 41,073,143     $ 3,154,852       8 %

Average earning assets

     56,024,815       51,058,609       4,966,206       10  

Average total assets

     60,767,252       55,809,144       4,958,109       9  

Average core deposits (5)

     45,403,965       43,692,717       1,711,248       4  

Average shareholders’ equity

     6,205,474       5,861,347       344,127       6  

Net charge-offs (NCOs)

     71,629       86,477       (14,848     (17

NCOs as a % of average loans and leases

     0.32 %     0.42 %     (0.10     (23

See Notes to the Annual and Quarterly Key Statistics.

 

2


Key Statistics Footnotes

 

(1)   Comparisons for all presented periods are impacted by a number of factors. Refer to Significant Items.

 

(2)   Net income excluding expense for amortization of intangibles for the period divided by average tangible common shareholders’ equity. Average tangible common shareholders’ equity equals average total common shareholders’ equity less average intangible assets and goodwill. Expense for amortization of intangibles and average intangible assets are net of deferred tax liability, and calculated assuming a 35% tax rate.

 

(3)   On a fully-taxable equivalent (FTE) basis assuming a 35% tax rate.

 

(4)   Noninterest expense less amortization of intangibles and goodwill impairment divided by the sum of FTE net interest income and noninterest income excluding securities gains (losses).

 

(5)   Includes noninterest-bearing and interest-bearing demand deposits, money market deposits, savings and other domestic deposits, and core certificates of deposit.

 

(6)   NPAs include other real estate owned.

 

(7)   June 30, 2014, figures are estimated.

 

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

 

3


Huntington Bancshares Incorporated

Consolidated Balance Sheets

 

    2014     2013     Percent Changes vs.  

(dollar amounts in thousands, except number of shares)

  June 30,     December 31,     June 30,     4Q13     2Q13  
    (Unaudited)           (Unaudited)              

Assets

         

Cash and due from banks

  $ 1,218,453     $ 1,001,132     $ 993,906       22 %     23 %

Interest-bearing deposits in banks

    69,634       57,043       76,715       22       (9

Trading account securities

    50,541       35,573       80,927       42       (38

Loans held for sale

    317,862       326,212       458,275       (3     (31

Available-for-sale and other securities

    8,491,037       7,308,753       6,815,658       16       25  

Held-to-maturity securities

    3,621,995       3,836,667       2,172,229       (6     67  

Loans and leases (1)

    46,079,775       43,120,500       41,739,847       7       10  

Allowance for loan and lease losses

    (635,101     (647,870     (733,076     (2     (13
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loans and leases

    45,444,674       42,472,630       41,006,771       7       11  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Bank owned life insurance

    1,693,991       1,647,170       1,620,604       3       5  

Premises and equipment

    622,289       634,657       626,745       (2     (1

Goodwill

    505,448       444,268       444,268       14       14  

Other intangible assets

    81,460       93,193       113,874       (13     (28

Accrued income and other assets

    1,679,729       1,609,876       1,693,847       4       (1
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

  $ 63,797,113     $ 59,467,174     $ 56,103,819       7 %     14 %
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities and shareholders’ equity

         

Liabilities

         

Deposits (2)

  $ 48,748,765     $ 47,506,718     $ 46,331,434       3 %     5 %

Short-term borrowings

    1,252,409       552,143       630,405       127       99  

Federal Home Loan Bank advances

    2,883,173       1,808,293       983,420       59       193  

Other long-term debt

    2,602,869       1,349,119       155,126       93       1,578  

Subordinated notes

    983,310       1,100,860       1,114,368       (11     (12

Accrued expenses and other liabilities

    1,085,796       1,059,888       1,115,419       2       (3
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities

    57,556,322       53,377,021       50,330,172       8       14  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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

    8,182        8,322        8,310       (2     (2

Capital surplus

    7,279,244       7,398,515       7,390,041       (2     (1

Less treasury shares, at cost

    (9,071     (9,643     (10,719     (6     (15

Accumulated other comprehensive loss

    (159,727     (214,009     (283,736     (25     (44

Retained earnings

    (1,264,129     (1,479,324     (1,716,541     (15     (26
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total shareholders’ equity

    6,240,791       6,090,153       5,773,647       2       8  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities and shareholders’ equity

  $ 63,797,113     $ 59,467,174     $ 56,103,819       7 %     14 %
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Common shares authorized (par value of $0.01)

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

Common shares issued

    818,248,450       832,217,098       831,030,258      

Common shares outstanding

    817,002,296       830,963,427       829,674,914      

Treasury shares outstanding

    1,246,154       1,253,671       1,355,344      

Preferred shares issued

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

Preferred shares outstanding

    398,007       398,007       398,007      

 

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

 

4


Huntington Bancshares Incorporated

Loans and Leases Composition

(Unaudited)

 

    2014     2013  

(dollar amounts in millions)

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

Ending Balances by Type:

                   

Commercial: (1)

                   

Commercial and industrial

  $ 18,899       41 %   $ 18,046       41 %   $ 17,594       41 %   $ 17,335       41 %   $ 17,113       41 %

Commercial real estate:

                   

Construction

    757       2       692       2       557       1       544       1       607       1  

Commercial

    4,233       9       4,339       10       4,293       10       4,328       10       4,286       10  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Commercial real estate

    4,990       11       5,031       12       4,850       11       4,872       11       4,893       11  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total commercial

    23,889       52       23,077       53       22,444       52       22,207       52       22,006       52  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Consumer:

                   

Automobile

    7,686       17       6,999       16       6,639       15       6,317       15       5,810       14  

Home equity

    8,405       18       8,373       19       8,336       19       8,347       20       8,369       20  

Residential mortgage

    5,707       12       5,542       12       5,321       12       5,307       12       5,168       12  

Other consumer

    393       1       363       —          380       2       378       1       387       2  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total consumer

    22,191       48       21,277       47       20,676       48       20,349       48       19,734       48  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total loans and leases

  $ 46,080       100 %   $ 44,354       100 %   $ 43,120       100 %   $ 42,556       100 %   $ 41,740       100 %
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ending Balances by Business Segment: (2)

                   

Retail and Business Banking

  $ 13,096       29 %   $ 13,027       29 %   $ 12,710       30 %   $ 12,639       30 %   $ 12,605       30 %

Commercial Banking

    11,846       26       10,962       25       10,735       25       10,988       26       10,755       26  

AFCRE

    14,762       33       14,125       32       13,568       31       12,841       30       12,433       30  

RBHPCG

    2,883       5       2,875       7       2,850       7       2,833       7       2,830       7  

Home Lending

    3,366       7       3,229       7       3,206       7       3,214       8       3,127       7  

Treasury / Other

    127       —          136       —          51       —          41       —          (10     —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total loans and leases

  $ 46,080       100 %   $ 44,354       100 %   $ 43,120       100 %   $ 42,556       100 %   $ 41,740       100 %
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
          2013  
    Second     First     Fourth     Third     Second  

Average Balances by Business Segment: (2)

                   

Retail and Business Banking

  $ 13,040       29 %   $ 12,807       29 %   $ 12,675       29 %   $ 12,589       30 %   $ 12,643       31 %

Commercial Banking

    11,292       25       10,861       25       11,122       26       10,780       26       10,690       26  

AFCRE

    14,460       32       13,679       32       13,216       31       12,558       30       11,999       29  

RBHPCG

    2,879       7       2,840       7       2,835       7       2,825       7       2,826       7  

Home Lending

    3,289       7       3,198       7       3,223       7       3,184       8       3,099       8  

Treasury / Other

    63       —          38       —          68       —          58       —          22       —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total loans and leases

  $ 45,023       100 %   $ 43,423       100 %   $ 43,139       100 %   $ 41,994       100 %   $ 41,279       100 %
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)   As defined by regulatory guidance, there were no commercial loans outstanding that would be considered a concentration of lending to a particular industry or group of industries.
(2)   During the first quarter of 2014, we reorganized our business segments.

 

5


Huntington Bancshares Incorporated

Deposits Composition

(Unaudited)

 

     2014     2013  

(dollar amounts in millions)

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

Ending Balances by Type:

                         

Demand deposits—noninterest-bearing

   $ 14,151        29 %   $ 14,314        29 %   $ 13,650        29 %   $ 13,421        29 %   $ 13,491        29 %

Demand deposits—interest-bearing

     5,921        12       5,970        12       5,880        12       5,856        13       5,977        13  

Money market deposits

     17,563        36       17,693        36       17,213        36       16,212        34       15,131        33  

Savings and other domestic deposits

     5,036        10       5,115        10       4,871        10       4,946        11       5,054        11  

Core certificates of deposit

     3,272        7       3,557        7       3,723        8       4,108        9       4,353        9  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total core deposits

     45,943        94       46,649        94       45,337        95       44,543        96       44,006        95  

Other domestic deposits of $250,000 or more

     241        —          289        1       274        1       268        1       283        1  

Brokered deposits and negotiable CDs

     2,198        5       2,074        4       1,580        3       1,366        3       1,695        4  

Deposits in foreign offices

     367        1       337        1       316        1       387        —          347        —     
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total deposits

   $ 48,749        100 %   $ 49,349        100 %   $ 47,507        100 %   $ 46,564        100 %   $ 46,331        100 %
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total core deposits:

                         

Commercial

   $ 20,629        45 %   $ 20,507        44 %   $ 19,982        44 %   $ 19,526        44 %   $ 18,922        43 %

Consumer

     25,314        55       26,142        56       25,355        56       25,017        56       25,084        57  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total core deposits

   $ 45,943        100 %   $ 46,649        100 %   $ 45,337        100 %   $ 44,543        100 %   $ 44,006        100 %
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Ending Balances by Business Segment: (2)

  

                   

Retail and Business Banking

   $ 28,836        60 %   $ 29,370        62 %   $ 28,294        60 %   $ 28,163        61 %   $ 28,209        61 %

Commercial Banking

     9,793        20       10,217        22       10,188        21       9,969        21       9,079        20  

AFCRE

     1,457        3       1,203        3       1,171        2       1,125        2       1,068        2  

RBHPCG

     6,124        11       6,267        9       6,094        13       5,876        13       6,195        13  

Home Lending

     284        1       281        1       330        1       278        1       388        1  

Treasury / Other

     2,255        5       2,011        4       1,430        3       1,153        2       1,392        3  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total deposits

   $ 48,749        100 %   $ 49,349        100 %   $ 47,507        100 %   $ 46,564        100 %   $ 46,331        100 %
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 
     2014     2013  
     Second     First     Fourth     Third     Second  

Average Balances by Business Segment: (2)

  

                   

Retail and Business Banking

   $ 29,108        60 %   $ 28,633        60 %   $ 28,424        61 %   $ 28,156        61 %   $ 28,339        61 %

Commercial Banking

     9,780        20       10,060        21       9,861        21       9,604        21       9,017        20  

AFCRE

     1,183        2       1,142        2       1,114        2       1,064        2       1,002        2  

RBHPCG

     5,859        12       5,906        12       5,937        13       5,535        12       5,954        13  

Home Lending

     296        1       257        1       293        1       335        1       412        1  

Treasury / Other

     2,032        4       1,591        3       1,145        2       1,276        3       1,463        3  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total deposits

   $ 48,258        100 %   $ 47,589        100 %   $ 46,774        100 %   $ 45,970        100 %   $ 46,187        100 %
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

 

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

 

6


Huntington Bancshares Incorporated

Consolidated Quarterly Average Balance Sheets

(Unaudited)

 

     Average Balances              
     2014     2013     Percent Changes vs.  

(dollar amounts in millions)

   Second     First     Fourth     Third     Second     1Q14     2Q13  

Assets

              

Interest-bearing deposits in banks

   $ 91     $ 83     $ 71     $ 54     $ 84       10  %     8 %

Loans held for sale

     288       279       322       379       678       3       (58

Securities:

              

Taxable

     6,662       6,240       5,818       6,040       6,728       7       (1

Tax-exempt

     1,290       1,115       548       565       591       16       118  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total available-for-sale and other securities

     7,952       7,355       6,366       6,605       7,319       8       9  

Trading account securities

     45       38       76       76       84       18       (46

Held-to-maturity securities—taxable

     3,677       3,783       3,038       2,139       1,711       (3     115  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Securities

     11,674       11,176       9,480       8,820       9,114       4       28  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loans and leases: (1)

              

Commercial and industrial

     18,262       17,631       17,671       17,032       17,033       4       7  

Commercial real estate:

              

Construction

     702       612       573       565       586       15       20  

Commercial

     4,345       4,289       4,331       4,345       4,429       1       (2
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Commercial real estate

     5,047       4,901       4,904       4,910       5,015       3       1  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total commercial

     23,309       22,532       22,575       21,942       22,048       3       6  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Automobile

     7,349       6,786       6,502       6,075       5,283       8       39  

Home equity

     8,376       8,340       8,346       8,341       8,263       —          1  

Residential mortgage

     5,608       5,379       5,331       5,256       5,225       4       7  

Other consumer

     382       386       385       380       461       (1     (17
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total consumer

     21,715       20,891       20,564       20,052       19,232       4       13  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total loans and leases

     45,024       43,423       43,139       41,994       41,280       4       9  

Allowance for loan and lease losses

     (642     (649     (668     (717     (746     (1     (14
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loans and leases

     44,382       42,774       42,471       41,277       40,534       4       9  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total earning assets

     57,077       54,961       53,012       51,247       51,156       4       12  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cash and due from banks

     872       904       846       944       940       (4     (7

Intangible assets

     591       535       542       552       563       10       5  

All other assets

     3,932       3,941       3,917       3,889       3,976       —          (1
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

   $ 61,830     $ 59,692     $ 57,649     $ 55,915     $ 55,889       %     11 %
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities and shareholders’ equity

              

Deposits:

              

Demand deposits—noninterest-bearing

   $ 13,466     $ 13,192     $ 13,337     $ 13,088     $ 12,879       2     5 %

Demand deposits—interest-bearing

     5,945       5,775       5,755       5,763       5,927       3       —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total demand deposits

     19,411       18,967       19,092       18,851       18,806       2       3  

Money market deposits

     17,680       17,648       16,827       15,739       15,069       —          17  

Savings and other domestic deposits

     5,086       4,967       4,912       5,007       5,115       2       (1

Core certificates of deposit

     3,434       3,613       3,916       4,176       4,778       (5     (28
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total core deposits

     45,611       45,195       44,747       43,773       43,768       1       4  

Other domestic deposits of $250,000 or more

     262       284       275       268       324       (8     (19

Brokered deposits and negotiable CDs

     2,070       1,782       1,398       1,553       1,779       16       16  

Deposits in foreign offices

     315       328       354       376       316       (4     —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total deposits

     48,258       47,589       46,774       45,970       46,187       1       4  

Short-term borrowings

     939       883       629       710       701       6       34  

Federal Home Loan Bank advances

     1,977       1,499       851       549       757       32       161  

Subordinated notes and other long-term debt

     3,395       2,503       2,244       1,753       1,292       36       163  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total interest-bearing liabilities

     41,103       39,282       37,161       35,894       36,058       5       14  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

All other liabilities

     1,033       1,035       1,095       1,054       1,064       —          (3

Shareholders’ equity

     6,228       6,183       6,056       5,879       5,888       1       6  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities and shareholders’ equity

   $ 61,830     $ 59,692     $ 57,649     $ 55,915     $ 55,889       %     11 %
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)   Includes Nonaccrual Loans

 

7


Huntington Bancshares Incorporated

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

(Unaudited)

 

     Interest Income / Expense  
     2014      2013  

(dollar amounts in thousands)

   Second      First      Fourth      Third      Second  

Assets

              

Interest-bearing deposits in banks

   $ 8      $ 6      $ 7      $ 9      $ 57  

Loans held for sale

     3,072        2,603        3,586        3,699        5,739  

Securities:

              

Available-for-sale and other securities:

              

Taxable

     42,028        38,456        34,554        35,280        38,538  

Tax-exempt

     10,161        8,440        8,696        5,700        5,829  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total available-for-sale and other securities

     52,188        46,896        43,250        40,980        44,367  

Trading account securities

     79        107        79        43        126  

Held-to-maturity securities—taxable

     22,614        23,320        18,378        12,220        9,778  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total securities

     74,882        70,323        61,708        53,243        54,271  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Loans and leases:

              

Commercial:

              

Commercial and industrial

     161,174        157,016        159,686        160,285        161,543  

Commercial real estate:

              

Construction

     7,599        6,108        5,916        5,650        5,829  

Commercial

     45,690        41,171        43,908        45,525        46,214  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Commercial real estate

     53,288        47,278        49,824        51,175        52,043  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total commercial

     214,462        204,294        209,510        211,460        213,586  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Consumer:

              

Automobile

     63,543        59,153        60,080        58,216        52,159  

Home equity

     86,099        84,634        86,460        86,131        85,796  

Residential mortgage

     52,896        50,834        50,225        50,111        49,912  

Other consumer

     6,998        6,534        6,447        6,677        7,650  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total consumer

     209,536        201,156        203,212        201,135        195,517  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total loans and leases

     423,998        405,450        412,722        412,595        409,103  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total earning assets

   $ 501,959      $ 478,382      $ 478,022      $ 469,546      $ 469,170  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Liabilities

              

Deposits:

              

Demand deposits—noninterest-bearing

   $ —         $ —         $ —         $ —         $ —     

Demand deposits—interest-bearing

     571        512        630        636        617  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total demand deposits

     571        512        630        636        617  

Money market deposits

     10,548        10,940        11,296        10,211        8,886  

Savings and other domestic deposits

     2,179        2,459        2,925        3,134        3,416  

Core certificates of deposit

     6,938        8,387        10,330        11,094        13,410  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total core deposits

     20,235        22,299        25,181        25,075        26,329  

Other domestic deposits of $250,000 or more

     281        289        271        300        406  

Brokered deposits and negotiable CDs

     1,228        1,246        1,385        2,145        2,746  

Deposits in foreign offices

     102        104        122        136        110  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total deposits

     21,846        23,938        26,959        27,656        29,591  

Short-term borrowings

     270        150        129        158        179  

Federal Home Loan Bank advances

     621        453        306        197        272  

Subordinated notes and other long-term debt

     12,536        10,408        11,781        10,049        7,603  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total interest bearing liabilities

     35,274        34,949        39,175        38,060        37,645  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net interest income

   $ 466,685      $ 443,391      $ 438,845      $ 431,486      $ 431,524  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

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

 

8


Huntington Bancshares Incorporated

Consolidated Quarterly Net Interest Margin—Yield

(Unaudited)

 

     Average Rates (2)  
     2014     2013  

Fully-taxable equivalent basis (1)

   Second     First     Fourth     Third     Second  

Assets

          

Interest-bearing deposits in banks

     0.04 %     0.03 %     0.04 %     0.07 %     0.27 %

Loans held for sale

     4.27       3.74       4.46       3.89       3.39  

Securities:

          

Available-for-sale and other securities:

          

Taxable

     2.52       2.47       2.38       2.34       2.29  

Tax-exempt

     3.15       3.03       6.34       4.04       3.94  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total available-for-sale and other securities

     2.63       2.55       2.72       2.48       2.42  

Trading account securities

     0.70       1.12       0.42       0.23       0.60  

Held-to-maturity securities—taxable

     2.46       2.47       2.42       2.29       2.29  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total securities

     2.57       2.52       2.60       2.41       2.38  

Loans and leases: (2)(3)

          

Commercial:

          

Commercial and industrial

     3.49       3.56       3.54       3.68       3.75  

Commercial real estate:

          

Construction

     4.29       3.99       4.04       3.91       3.93  

Commercial

     4.16       3.84       3.97       4.10       4.13  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Commercial real estate

     4.17       3.86       3.98       4.08       4.09  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total commercial

     3.64       3.63       3.63       3.77       3.83  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Consumer:

          

Automobile

     3.47       3.54       3.67       3.80       3.96  

Home equity

     4.12       4.12       4.11       4.10       4.16  

Residential mortgage

     3.77       3.78       3.77       3.81       3.82  

Other consumer

     7.34       6.84       6.64       6.98       6.66  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total consumer

     3.87       3.89       3.93       3.99       4.07  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total loans and leases

     3.75       3.75       3.77       3.87       3.95  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total earning assets

     3.53 %     3.53 %     3.58 %     3.64 %     3.68 %
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities

          

Deposits:

          

Demand deposits—noninterest-bearing

     —   %     —   %     —   %     —   %     —   %

Demand deposits—interest-bearing

     0.04       0.04       0.04       0.04       0.04  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total demand deposits

     0.01       0.01       0.01       0.01       0.01  

Money market deposits

     0.24       0.25       0.27       0.26       0.24  

Savings and other domestic deposits

     0.17       0.20       0.24       0.25       0.27  

Core certificates of deposit

     0.81       0.94       1.05       1.05       1.13  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total core deposits

     0.25       0.28       0.32       0.32       0.34  

Other domestic deposits of $250,000 or more

     0.43       0.41       0.39       0.44       0.50  

Brokered deposits and negotiable CDs

     0.24       0.28       0.39       0.55       0.62  

Deposits in foreign offices

     0.13       0.13       0.14       0.14       0.14  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total deposits

     0.25       0.28       0.32       0.33       0.36  

Short-term borrowings

     0.12       0.07       0.08       0.09       0.10  

Federal Home Loan Bank advances

     0.12       0.12       0.14       0.14       0.14  

Subordinated notes and other long-term debt

     1.48       1.66       2.10       2.29       2.35  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total interest-bearing liabilities

     0.34       0.36       0.42       0.42       0.42  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest rate spread

     3.19       3.17       3.15       3.20       3.26  

Impact of noninterest-bearing funds on margin

     0.09       0.10       0.13       0.14       0.12  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest margin

     3.28 %     3.27 %     3.28 %     3.34 %     3.38 %
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Commercial Loan Derivative Impact           
(Unaudited)                               
     Average Rates (2)  
     2014     2013  

Fully-taxable equivalent basis (1)

   Second     First     Fourth     Third     Second  

Commercial loans (2)(3)

     3.46 %     3.37 %     3.47 %     3.58 %     3.57 %

Impact of commercial loan derivatives

     0.18       0.25       0.17       0.19       0.26  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total commercial—as reported

     3.64 %     3.63 %     3.63 %     3.77 %     3.83 %
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average 30 day LIBOR

     0.15 %     0.16 %     0.17 %     0.19 %     0.20 %

 

(1)   Fully-taxable equivalent (FTE) yields are calculated assuming a 35% tax rate. See page 9 for the FTE adjustment.
(2)   Loan, lease, and deposit average rates include impact of applicable derivatives, non-deferrable fees, and amortized fees.
(3)   Includes the impact of nonaccrual loans.

 

9


Huntington Bancshares Incorporated

Selected Quarterly Income Statement Data(1)

(Unaudited)

 

     2014      2013  

(dollar amounts in thousands, except per share amounts)

   Second      First      Fourth      Third      Second  

Interest income

   $ 495,322      $ 472,455      $ 469,824      $ 462,912      $ 462,582  

Interest expense

     35,274        34,949        39,175        38,060        37,645  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net interest income

     460,048        437,506        430,649        424,852        424,937  

Provision for credit losses

     29,385        24,630        24,331        11,400        24,722  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net interest income after provision for credit losses

     430,663        412,876        406,318        413,452        400,215  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Service charges on deposit accounts

     72,633        64,582        69,992        72,918        68,009  

Mortgage banking income

     22,717        23,089        24,327        23,621        33,659  

Trust services

     29,581        29,565        30,711        30,470        30,666  

Electronic banking

     26,491        23,642        24,251        24,282        23,345  

Insurance income

     15,996        16,496        15,556        17,269        17,187  

Brokerage income

     17,831        17,071        15,116        16,532        19,546  

Bank owned life insurance income

     13,865        13,307        13,816        13,740        15,421  

Capital markets fees

     10,500        9,194        12,332        12,825        12,229  

Gain on sale of loans

     3,914        3,570        7,144        5,063        3,348  

Securities gains (losses)

     490        16,970        1,239        98        (410

Other income

     36,049        30,999        35,407        36,950        28,919  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total noninterest income

     250,067        248,485        249,891        253,768        251,919  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Personnel costs

     260,600        249,477        249,554        229,326        263,862  

Outside data processing and other services

     54,338        51,490        51,071        49,313        49,898  

Net occupancy

     28,673        33,433        31,983        35,591        27,656  

Equipment

     28,749        28,750        28,775        28,191        24,947  

Marketing

     14,832        10,686        13,704        12,271        14,239  

Deposit and other insurance expense

     10,599        13,718        10,056        11,155        13,460  

Amortization of intangibles

     9,520        9,291        10,320        10,362        10,362  

Professional services

     17,896        12,231        11,567        12,487        9,341  

Other expense

     33,429        51,045        38,979        34,640        32,100  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total noninterest expense

     458,636        460,121        446,009        423,336        445,865  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Income before income taxes

     222,094        201,240        210,200        243,884        206,269  

Provision for income taxes

     57,475        52,097        52,029        65,047        55,269  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net income

   $ 164,619      $ 149,143      $ 158,171      $ 178,837      $ 151,000  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Dividends on preferred shares

     7,963        7,964        7,965        7,967        7,967  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net income applicable to common shares

   $ 156,656      $ 141,179      $ 150,206      $ 170,870      $ 143,033  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Average common shares—basic

     821,546        829,659        830,590        830,398        834,730  

Average common shares—diluted

     834,687         842,677        842,324        841,025        843,840  

Per common share

              

Net income—basic

   $ 0.19      $ 0.17      $ 0.18      $ 0.21      $ 0.17  

Net income—diluted

     0.19        0.17        0.18        0.20        0.17  

Cash dividends declared

     0.05        0.05        0.05        0.05        0.05  

Revenue—fully-taxable equivalent (FTE)

              

Net interest income

   $ 460,048      $ 437,506      $ 430,649      $ 424,852      $ 424,937  

FTE adjustment

     6,637        5,885        8,196        6,634        6,587  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net interest income (2)

     466,685        443,391        438,845        431,486        431,524  

Noninterest income

     250,067        248,485        249,891        253,768        251,919  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total revenue (2)

   $ 716,752      $ 691,876      $ 688,736      $ 685,254      $ 683,443  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

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

 

10


Huntington Bancshares Incorporated

Quarterly Mortgage Banking Income

(Unaudited)

 

    2014     2013     Percent Changes vs.  

(dollar amounts in thousands, except as noted)

  Second     First     Fourth     Third     Second     1Q14     2Q13  

Mortgage banking income

             

Origination and secondary marketing

  $ 14,289     $ 14,497     $ 14,201     $ 15,568     $ 27,917       (1 )%     (49 )%

Servicing fees

    10,873       10,939       10,809       10,868       10,898       (1     —     

Amortization of capitalized servicing

    (5,951     (5,982     (6,062     (6,783     (7,998     (1     (26

Other mortgage banking income

    4,213       3,535       3,397       3,685       4,470       19       (6
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Subtotal

    23,424       22,989       22,345       23,338       35,287       2       (34

MSR valuation adjustment (1)

    (3,046     (1,597     3,458       173       14,127       91       (122

Net trading gains (losses) related to MSR hedging

    2,340       1,697       (1,476     110       (15,755     38       (115
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total mortgage banking income

  $ 22,718     $ 23,089     $ 24,327     $ 23,621     $ 33,659       (2 )%     (33 )%
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Mortgage originations (in millions)

  $ 982     $ 657     $ 841     $ 1,176     $ 1,282       49     (23 )% 

Capitalized mortgage servicing rights (2)

    159,860       163,279       162,301       158,776       155,522       (2     3  

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

    15,560       15,614       15,239       15,231       15,213       —          2  

MSR % of investor servicing portfolio (2)

    1.03     1.05     1.07     1.04     1.02     (2     1