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) October 17, 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 October 17, 2014, Huntington Bancshares Incorporated (“Huntington”) issued a news release announcing its earnings for the quarter ended September 30, 2014. Also on October 17, 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 October 17, 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 3483034. 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 October 31, 2014, at (855) 859-2056 or (404) 537-3406; conference call ID 3483034.

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 October 17, 2014.
Exhibit 99.2   

   Quarterly Financial Supplement, September 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:   October 17, 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, October 17, 2014.
Exhibit 99.2    Quarterly Financial Supplement, September 2014.

Exhibit 99.1

 

LOGO

FOR IMMEDIATE RELEASE

October 17, 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 THIRD QUARTER NET

INCOME OF $155 MILLION AND EARNINGS PER COMMON SHARE OF $0.18

DISCIPLINED EXECUTION DRIVES $36 MM, OR 5%, YEAR-OVER-YEAR REVENUE GROWTH

Specific highlights:

 

  20% increase in common dividend to $0.06 per share

 

  $4.1 billion, or 10%, year-over-year increase in average loans and leases

 

  Third quarter 2014 acquisition and integration of 24 Bank of America branches with $0.7 billion in deposits

 

  $22.8 million of Significant Items: expenses related to the previously disclosed organizational actions, the Bank of America branch acquisition, the Camco acquisition, and planned consolidation of 26 branches by year end

 

  Net charge-offs declined to 0.26% of average loans and leases, down from 0.53% in the year-ago quarter

 

  5.4 million common shares repurchased at an average price of $9.70 per share

 

  0.97% return on average assets, 9.9% return on average common equity

COLUMBUS, Ohio – Huntington Bancshares Incorporated (NASDAQ: HBAN; www.huntington.com ) reported 2014 third quarter net income of $155 million, or $0.18 per common share. Net income was negatively impacted by $23 million of expense-related Significant Items and decreased $24 million, or 13%, from the 2013 third quarter. Compared to the 2014 second quarter, net income was similarly impacted and decreased $10 million, or 6%. Earnings per common share were $0.20 in the year-ago quarter and $0.19 in the prior quarter.

The Board of Directors declared a quarterly cash dividend on the company’s common stock of $0.06 per common share. The dividend is payable January 2, 2015, to shareholders of record on December 19, 2014.

Performance Summary: Disciplined Growth Overcomes Interest Rate Pressures

“We continued to deliver solid year-over-year revenue growth through the third quarter, while maintaining a disciplined balance sheet. Performance highlights include ongoing strength in commercial and auto lending, which support our expectation of a strong back half of the year driven by solid demand and a quality pipeline,” said Steve Steinour, chairman, president and CEO. “We are also pleased with deposit growth, which is in part supported by our improved distribution network that saw 50 in-store locations attain break-even or better status in the past quarter, and also the successful conversion of 24 Michigan branches furthering our presence in new markets in our service area. Furthermore, our decision in the quarter to consolidate 26 branches by year end provides a visible illustration of our ongoing optimization of our distribution channels.”

 

1


Steinour continued, “among other key highlights, we also are pleased with Huntington’s No. 1 ranking in the country for total number of Small Business Administration 7(a) loans for its fiscal year that concluded in September. We continue to prioritize SBA lending as an integral component of our overall business lending strategy and are gratified to attain a top national ranking, particularly since we only make SBA loans within our core six-state footprint.”

Table 1 – Earnings Performance Summary

 

     2014     2013  

($ in millions, except per share data)

   Third
Quarter
    Second
Quarter
    First
Quarter
    Fourth
Quarter
    Third
Quarter
 

Net Income

   $ 155.0     $ 164.6     $ 149.1     $ 158.2     $ 178.8  

Diluted earnings per common share

     0.18        0.19        0.17        0.18        0.20   

Return on average assets

     0.97     1.07     1.01     1.09     1.27

Return on average common equity

     9.9        10.8        9.9        10.5        12.3   

Return on average tangible common equity

     11.4        12.4        11.3        12.1        14.2   

Net interest margin

     3.20        3.28        3.27        3.28        3.34   

Efficiency ratio

     65.3        62.7        66.4        63.4        60.3   

Tangible book value per common share

   $ 6.53      $ 6.48      $ 6.31      $ 6.26      $ 6.09   

Cash dividends declared per common share

     0.05        0.05        0.05        0.05        0.05   

Average diluted shares outstanding (000’s)

     829,623        834,687        842,677        842,324        841,025   

Average earning assets

   $ 58,707      $ 57,077      $ 54,961      $ 53,012      $ 51,247   

Average loans

     46,113        45,024        43,423        43,139        41,994   

Average core deposits

     46,119        45,611        45,195        44,747        43,773   

Tangible common equity / tangible assets ratio

     8.35     8.38     8.63     8.82     9.01

Tier 1 common risk-based capital ratio

     10.31        10.26        10.60        10.90        10.85   

NCOs as a % of average loans and leases

     0.26     0.25     0.40     0.43     0.53

NAL ratio

     0.70        0.71        0.74        0.75        0.78   

ACL as a % of total loans and leases

     1.47        1.50        1.56        1.65        1.72   

Table 2 lists certain items that Management believes are significant in understanding corporate performance and trends (see Basis of Presentation). This quarter contained two Significant Items: 1) the franchise repositioning related expense for the consolidation of 26 branches and the previously announced organizational actions, and 2) the net expenses related to acquisition of the 24 Bank of America branches and Camco Financial.

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)  

September 30, 2014 – net income

     $ 155      $ 0.18   

• Franchise repositioning related expense

   $ (19     (13     (0.02

• Merger and acquisition related net expenses

     (3     (2     (0.00

June 30, 2014 – net income

     $ 165      $ 0.19   

March 31, 2014 – net income

     $ 149      $ 0.17   

• Camco Financial acquisition

   $ (12     (8     (0.01

• Addition to litigation reserves

     (9     (6     (0.01

December 31, 2013 – net income

     $ 158      $ 0.18   

• Franchise repositioning related expense

   $ (7     (5     (0.01

September 30, 2013 – net income

     $ 179      $ 0.20   

• Pension curtailment gain

   $ 34        22        0.03   

• Franchise repositioning related expense

     (17     (11     (0.01

 

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

 

2


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

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

 

     2014     2013        
     Third     Second     First     Fourth     Third     Change (%)  

($ in millions)

   Quarter     Quarter     Quarter     Quarter     Quarter     LQ     YOY  

Net interest income

   $ 466.3     $ 460.0     $ 437.5     $ 430.6     $ 424.9       1 %     10

FTE adjustment

     7.5       6.6       5.9       8.2       6.6       13       13  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income - FTE

     473.8       466.7       443.4       438.8       431.5       2       10  

Noninterest income

     247.3       250.1       248.5       249.9       253.8       (1 )     (3 )
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenue - FTE

   $ 721.2     $ 716.8     $ 691.9     $ 688.7     $ 685.3       1     5
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
                                   Change bps  

Yield / Cost

                                 LQ     YOY  

Total earning assets

     3.44     3.53     3.53     3.58 %     3.64 %     (9 )     (20 )

Total loans and leases

     3.66       3.75       3.75       3.77       3.87       (9 )     (21 )

Total securities

     2.54       2.57       2.52       2.60       2.41       (3 )     12  

Total interest-bearing liabilities

     0.33       0.34       0.36       0.42       0.42       (2 )     (9 )

Total interest-bearing deposits

     0.23       0.25       0.28       0.32       0.33       (2 )     (10 )

Net interest rate spread

     3.11       3.19       3.17       3.16       3.22       (9 )     (12 )

Impact of noninterest-bearing funds on margin

     0.10       0.10       0.10       0.13       0.14       —         (4 )
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest margin

     3.20     3.28     3.27     3.28 %     3.34 %     (8 )     (14 )
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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

Fully-taxable equivalent (FTE) net interest income increased $41 million, or 10%, from the 2013 third quarter. This reflected the benefit from the $7.5 billion, or 15%, increase in average earnings assets, including a $4.1 billion, or 10%, increase in average loans and leases and a $3.3 billion, or 38%, increase in average securities. This earning asset growth was partially offset by the 14 basis point decrease in the FTE net interest margin (NIM) to 3.20%. The NIM contraction reflected a 20 basis point decrease related to the mix and yield of earning assets and 3 basis point reduction in benefit from the impact of noninterest-bearing funds, partially offset by the 9 basis point reduction in funding costs.

Compared to the 2014 second quarter, FTE net interest income increased $7 million, or 6% annualized. While the NIM decreased 8 basis points, earning assets increased $1.6 billion, or 11% annualized. 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 Activity Continue To Drive Growth

 

     2014      2013         
     Third      Second      First      Fourth      Third      Change (%)  

(in billions)

   Quarter      Quarter      Quarter      Quarter      Quarter      LQ     YOY  

Average Loans and Leases

                   

Commercial and industrial

   $ 18.6      $ 18.3       $ 17.6       $ 17.7       $ 17.0         2 %     9 %

Commercial real estate

     5.0        5.0         4.9         4.9         4.9         (2 )     1  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total commercial

     23.5        23.3         22.5         22.6         21.9         1       7  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Automobile

     8.0        7.3         6.8         6.5         6.1         9       32  

Home equity

     8.4        8.4         8.3         8.3         8.3         —         1  

Residential mortgage

     5.7        5.6         5.4         5.3         5.3         2       9  

Other consumer

     0.4        0.4         0.4         0.4         0.4         4       5  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total consumer

     22.6        21.7         20.9         20.6         20.1         4       13  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total loans and leases

     46.1        45.0         43.4         43.1         42.0         2       10  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total securities

     12.2        11.7         11.2        9.5         8.8        4       38  

Held-for-sale and other earning assets

     0.4        0.4         0.4        0.4         0.4        14       —    

Total earning assets

   $ 58.7       $ 57.1       $ 55.0      $ 53.0       $ 51.2        3 %     15 %
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

See Page 6 of Quarterly Financial Supplement for additional detail.

Average earning assets increased $7.5 billion, or 15%, from the year-ago quarter, driven by:

 

    $3.3 billion, or 38%, increase in average securities, reflecting $2.7 billion of Liquidity Coverage Ratio (LCR) Level 1 qualified securities and $1.2 billion of direct purchase municipal instruments, which in the year-ago quarter were classified as Commercial and Industrial (C&I) loans.

 

    $1.9 billion, or 32%, increase in average Automobile loans, as originations remained strong and we continued to portfolio all of the production.

 

    $1.6 billion, or 9%, increase in average C&I loans and leases, reflecting growth in trade finance in support of our middle market and corporate customers, business banking, and automobile dealer floorplan lending.

 

    $0.5 billion, or 9%, increase in average Residential mortgage loans as a result of a decrease in the rate of payoffs due to lower levels of refinancing and the Camco acquisition.

 

4


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

 

     2014      2013               

(in billions)

   Third
Quarter
     Second
Quarter
     First
Quarter
     Fourth
Quarter
     Third
Quarter
     Change (%)  
                  LQ     YOY  

Average Deposits

                   

Demand deposits - noninterest bearing

   $ 14.1       $ 13.5       $ 13.2       $ 13.3       $ 13.1         5     8

Demand deposits - interest bearing

     5.9         5.9         5.8         5.8         5.8         (1 )     3  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total demand deposits

     20.0         19.4         19.0         19.1         18.9         3       6  

Money market deposits

     17.9         17.7         17.6         16.8         15.7         1       14  

Savings and other domestic deposits

     5.0         5.1         5.0         4.9         5.0         (1 )     —    

Core certificates of deposit

     3.2         3.4         3.6         3.9         4.2         (8 )     (24 )
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total core deposits

     46.1         45.6         45.2         44.7         43.8         1       5  

Other domestic deposits of $250,000 or more

     0.2         0.3         0.3         0.3         0.3         (15 )     (17 )

Brokered deposits and negotiable CDs

     2.3         2.1         1.8         1.4         1.6         9       46  

Other deposits

     0.4         0.3         0.3         0.4         0.4         19       —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total deposits

     49.0         48.3         47.6         46.8         46.0         1       7  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Short- and long-term borrowings

     7.2         6.3         4.9         3.7         3.0         13       138  

Total Interest-bearing liabilities

   $ 42.0       $ 41.1       $ 39.3       $ 37.2       $ 35.9         2     17
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

See Page 6 of Quarterly Financial Supplement for additional detail.

Average total core deposits increased $2.3 billion, or 5%, from the year-ago quarter, including a $1.0 billion, or 8%, increase in noninterest bearing deposits. Average interest-bearing liabilities increased $6.2 billion, or 17%, from the year-ago quarter, reflecting:

 

    $4.1 billion, or 138%, 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. While no additional long-term debt was issued in the 2014 third quarter, this increase included $2.1 billion of bank-level debt and $0.4 billion of parent-level debt issued during the prior four quarters.

 

    $2.2 billion, or 14%, increase in money market deposits, reflecting the strategic focus on customer growth and increased share-of-wallet among both consumer and commercial customers.

 

    $0.7 billion, or 46%, increase in brokered deposits and negotiated CDs, which are a cost-effective method of funding incremental LCR related securities growth.

Partially offset by:

 

    $1.0 billion, or 24%, 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.

While not having a meaningful impact on the 2014 third quarter average balance, the mid-September completion of the acquisition of the 24 Bank of America branches added approximately $0.7 billion to period-end deposits.

 

5


Noninterest Income

Table 6 – Noninterest Income

 

     2014      2013               

(in millions)

   Third
Quarter
     Second
Quarter
     First
Quarter
     Fourth
Quarter
     Third
Quarter
     Change (%)  
                  LQ     YOY  

Noninterest Income

                   

Service charges on deposit accounts

   $ 69.1       $ 72.6       $ 64.6       $ 70.0       $ 72.9         (5 )%     (5 )% 

Mortgage banking income

     25.1         22.7         23.1         24.3         23.6         10       6  

Trust services

     28.0         29.6         29.6         30.7         30.5         (5 )     (8 )

Electronic Banking

     27.3         26.5         23.6         24.3         24.3         3       12  

Insurance income

     16.7         16.0         16.5         15.6         17.3         5       (3 )

Brokerage Income

     17.2         17.9         17.2         15.2         16.6         (4 )     3  

Bank owned life insurance income

     14.9         13.9         13.3         13.8         13.7         7       8  

Capital markets fees

     10.2         10.5         9.2         12.3         12.8         (2 )     (20 )

Gain on sale of loans

     8.2         3.9         3.6         7.1         5.1         109       62  

Securities (losses) gains

     0.2         0.5         17.0         1.2         0.1         (60 )     102  

Other income

     30.4         36.0         30.9         35.4         36.8         (15 )     (17 )
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total noninterest income

   $ 247.3       $ 250.1       $ 248.5       $ 249.9       $ 253.8         (1 )%      (3 )% 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Noninterest income decreased $6 million, or 3%, from the year-ago quarter, primarily reflecting:

 

    $6 million, or 17%, decrease in other income, primarily related to commercial loan fees and early lease terminations.

 

    $4 million, or 5%, decrease in service charges on deposit accounts, reflecting the late July 2014 implementation of changes in consumer products that were partially offset by an 11% increase in consumer households and changing customer usage patterns.

 

    $3 million, or 20%, decrease in capital markets fees related to lower interest rate derivative sales.

Partially offset by:

 

    $3 million, or 62%, increase in gain on sale of loans related to strong SBA production and relatively higher premiums.

 

    $3 million, or 12%, increase in electronic banking due to higher card related income and underlying customer growth.

 

6


Noninterest Expense (see Basis of Presentation)

Table 7 – Noninterest Expense from Continuing Operations (GAAP)

 

     2014      2013         
     Third      Second      First      Fourth      Third      Change %  

(in millions)

   Quarter      Quarter      Quarter      Quarter      Quarter      LQ     YOY  

Noninterest Expense

                   

Personnel costs

   $ 275.4       $ 260.6       $ 249.5       $ 249.6       $ 229.3         6     20

Outside data processing and other services

     53.1         54.3         51.5         51.1         49.3         (2 )     8  

Net occupancy

     34.4         28.7         33.4         32.0         35.6         20       (3 )

Equipment

     30.2         28.7         28.8         28.8         28.2         5       7  

Marketing

     12.6         14.8         10.7         13.7         12.3         (15 )     2  

Deposit and other insurance expense

     11.6         10.6         13.7         10.1         11.2         10       4  

Amortization of intangibles

     9.8         9.5         9.3         10.3         10.4         3       (5 )

Professional services

     13.8         17.9         12.2         11.6         12.5         (23 )     10  

Other expense

     39.5         33.4         51.0         39.0         34.6         18       14  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total noninterest expense

   $ 480.3       $ 458.6       $ 460.1       $ 446.0       $ 423.3         5     13
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

(in thousands)

                                               

Number of employees (full-time equivalent)

     11.9         12.0         11.8         11.8         12.1         —       (1 )% 

Table 8 – Impacts of Significant Items:

 

     2014      2013  

(in millions)

   Third
Quarter
     Second
Quarter
     Third
Quarter
 

Personnel costs

   $ 15.3       $ —         $ (27.3

Outside data processing and other services

     0.3         —           0.5   

Net occupancy

     5.2         —           7.9   

Equipment

     0.1         —           1.5   

Marketing

     0.8         —           —     

Other expense

     1.1         —           —     
  

 

 

    

 

 

    

 

 

 

Total noninterest expense adjustments

   $ 22.8       $ —         $ (17.4
  

 

 

    

 

 

    

 

 

 

Table 9 – Adjusted Noninterest Expense (Non-GAAP):

 

     2014      2013               
     Third      Second      Third      Change %     Change $  

(in millions)

   Quarter      Quarter      Quarter      LQ     YOY     LQ     YOY  

Personnel costs

   $ 260.1       $ 260.6       $ 256.6         (0 )%     1   $ (0.5   $ 3.4  

Outside data processing and other services

     52.8         54.3         48.8         (3 )     8       (1.6     3.9  

Net occupancy

     29.2         28.7         27.7         2       6       0.5        1.6  

Equipment

     30.1         28.7         26.7         5       13       1.3        3.4  

Marketing

     11.8         14.8         12.3         (20 )     (4 )     (3.0     (0.5 )

Deposit and other insurance expense

     11.6         10.6         11.2         10       4       1.0        0.5  

Amortization of intangibles

     9.8         9.5         10.4         3       (5 )     0.3        (0.5 )

Professional services

     13.8         17.9         12.5         (23 )     10       (4.1     1.3  

Other expense

     38.4         33.4         34.6         15       11       5.0        3.7  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total adjusted noninterest expense

   $ 457.6       $ 458.6       $ 440.8         (0 )%     4   $ (1.0   $ 16.8  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Reported noninterest expense increased $57 million, or 13%, from the year-ago quarter, reflecting:

 

    $46 million, or 20%, increase in personnel costs. Excluding the impact of Significant Items, personnel costs increased $3 million, or 1%, related to annual compensation increases.

 

7


    $5 million, or 14%, increase in other expense. Excluding the impact of Significant Items, other expenses increased $4 million, or 11%, primarily reflecting higher OREO and loss expense.

 

    $4 million, or 8%, increase in outside data processing and other services as we continue to invest in technology supporting our products, services, and our Continuous Improvement initiatives.

Noninterest expense increased $22 million, or 5%, from the 2014 second quarter. When adjusting for the $23 million of Significant Items in the 2014 third quarter, noninterest expense decreased $1 million. On a reported basis, personnel costs increased $15 million, or 6%, reflecting the franchise repositioning actions. Other expense increased $6 million, or 18%, reflecting higher OREO and loss expense. Net occupancy expense increased $6 million, or 20%, primarily related to $5 million of franchise repositioning actions. Partially offsetting these increases was a $4 million, or 23%, decrease in professional services primarily related to reduced consulting expense.

Credit Quality

Table 10 – Summary Credit Quality Metrics

 

     2014     2013  

($ in thousands)

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

Total nonaccrual loans and leases

   $ 325,765     $ 324,957     $ 327,158     $ 322,056     $ 333,106  

Total other real estate, net

     36,270       34,695       35,691       27,664       29,154  

Other NPAs (1)

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

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total nonperforming assets

   $ 364,475     $ 362,092     $ 365,289     $ 352,160     $ 374,260  

Accruing loans and leases past due 90 days or more

     87,348       85,367       98,412       76,209       94,966  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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

   $ 451,823     $ 447,459     $ 463,701     $ 428,369     $ 469,226  

NAL ratio (2)

     0.70 %     0.71 %     0.74 %     0.75 %     0.78

NPA ratio (3)

     0.78       0.79       0.82       0.82       0.88  

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

     1.08       1.08       1.17       1.20       1.29  

Provision for credit losses

   $ 24,480     $ 29,385     $ 24,630     $ 24,331     $ 11,400  

Net charge-offs

     30,023       28,643       42,986       46,447       55,742  

Net charge-offs / Average total loans

     0.26 %     0.25 %     0.40 %     0.43 %     0.53

Allowance for loans and lease losses

   $ 631,036     $ 635,101     $ 631,918     $ 647,870     $ 666,030  

Allowance for unfunded loan commitments and letters of credit

     55,449       56,927       59,368       62,899       66,857  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Allowance for credit losses (ACL)

   $ 686,485     $ 692,028     $ 691,286     $ 710,769     $ 732,887  

ACL as a % of:

          

Total loans and leases

     1.47 %     1.50 %     1.56 %     1.65 %     1.72

NALs

     211       213       211       221       220  

NPAs

     188       191       191       202       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 $7 million, or 2%, compared to a year ago to $326 million, or 0.70% of total loans and leases. Nonperforming assets (NPAs) decreased $10 million, or 3%, to $364 million, or 0.78% of total loans and leases, OREO, and other NPAs.

The provision for credit losses increased $13 million, or 115%, compared to the year-ago quarter reflecting the prior year’s implementation of enhancements to our allowance for loan and lease losses (ALLL) model. Net charge-offs (NCOs) decreased $26 million, or 46%, to $30 million consistent with our expectations. The consumer portfolios drove the bulk of the year over year decline. NCOs equated to an annualized 0.26% of average loans and leases in the current quarter compared to 0.53% in the year-ago quarter.

 

8


The period-end allowance for credit losses (ACL) as a percentage of total loans and leases decreased to 1.47% from 1.72% a year ago, while the ACL as a percentage of period-end total NALs decreased to 211% from 220%. The decrease in the ACL as a percent of total loans is consistent with the improved credit quality metrics.

Capital

Table 11 – Capital Ratios

 

     2014     2013  

(in millions)

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

Tangible common equity / tangible assets ratio

     8.35     8.38     8.63     8.82     9.01

Tier 1 common risk-based capital ratio

     10.31     10.26     10.60     10.90     10.85

Regulatory Tier 1 risk-based capital ratio

     11.61     11.56     11.95     12.28     12.36

Excess over 6.0% (1)

   $ 2,987      $ 2,949      $ 3,042      $ 3,121      $ 3,096   

Regulatory Total risk-based capital ratio

     13.72     13.67     14.13     14.57     14.67

Excess over 10.0% (1)

   $ 1,980      $ 1,946      $ 2,111      $ 2,271      $ 2,274   

Total risk-weighted assets

   $ 53,239      $ 53,035      $ 51,120      $ 49,690      $ 48,687   

 

(1) “Well-capitalized” regulatory threshold

See Page 15 of Quarterly Financial Supplement for additional detail.

The tangible common equity to tangible assets ratio at September 30, 2014, was 8.35%, down 66 basis points from a year ago. Our Tier 1 common risk-based capital ratio was 10.31%, down from 10.85% a year ago. The regulatory Tier 1 risk-based capital ratio at September 30, 2014, was 11.61%, down from 12.36% a year ago. Huntington estimates the negative impact to Tier 1 common risk-based capital from the 2015 first quarter implementation of the Federal Reserve’s revised Basel III capital rules will be approximately 40 bps on a fully phased-in basis.

The decreases in the capital ratios were due to balance sheet growth and share repurchases that were partially offset by increased retained earnings and the stock issued in the Camco acquisition. Specifically, all capital ratios were impacted by the repurchase of 32.1 million common shares over the last four quarters, 5.4 million of which were repurchased during the 2014 third 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 third quarter was $54 million and $65 million in the 2013 third quarter. The effective tax rates for the 2014 third quarter and 2013 third quarter were 25.8% and 26.7%, respectively. At September 30, 2014, we had a net federal deferred tax asset of $71 million and a net state deferred tax asset of $48 million. As of September 30, 2014 and September 30, 2013, there was no disallowed deferred tax asset for regulatory capital purposes.

 

9


Expectations – Fourth Quarter 2014

“We continue to be pleased with our healthy lending pipeline and the strength of the economies within our footprint. We are looking forward to a solid finish for 2014, as we remain on track to deliver another year with positive operating leverage. We are not expecting a near-term improvement in the interest rate environment. However, we are committing to delivering positive operating leverage again in 2015 as we will continue to prudently manage expenses in alignment with our revenue growth outlook.”

Net interest income is expected to increase slightly in fourth quarter 2014. 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.

Noninterest income, excluding the impact of any net MSR activity, is expected to remain near the current quarter’s level.

Noninterest expense, excluding Significant Items, is expected to remain near the current quarter’s adjusted level. Fourth quarter 2014 is expected to include approximately $10 million of Significant Items related to the already announced franchise repositioning activities. 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.

Overall, asset quality metrics are expected to remain near current levels, although moderate quarterly volatility also is expected, given the absolute low level of problem assets and credit costs. 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 October 17, 2014, at 10:00 a.m. (Eastern Time). The call may be accessed via a live Internet webcast at the Investor Relations section of Huntington’s web site, www.huntington.com or through a dial-in telephone number at (877) 684-3807; Conference ID# 3483034. Slides will be available the Investor Relations section of Huntington’s web site, www.huntington.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 November 1, 2014, at (855) 859-2056 or (404) 537-3406; conference ID# 3483034.

Please see the 2014 Third Quarter Quarterly Financial Supplement for additional detailed financial performance metrics. This document can be found at the Investor Relations section of Huntington’s web site, www.huntington.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 third 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.

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

 

11


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 1,500 ATMs. Through automotive dealership relationships within its six-state retail banking franchise area and selected other Midwest and Northeast 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

September 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

(Unaudited)

 

     2014     2013     Percent Changes vs.  

(dollar amounts in thousands, except per share amounts)

   Third     Second     Third     2Q14     3Q13  

Net interest income

   $ 466,335      $ 460,048      $ 424,852        1     10

Provision for credit losses

     24,480        29,385        11,400        (17     115   

Noninterest income

     247,349        250,067        253,767        (1     (3

Noninterest expense

     480,318        458,636        423,336        5        13   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     208,886        222,094        243,883        (6     (14

Provision for income taxes

     53,870        57,475        65,047        (6     (17
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 155,016      $ 164,619      $ 178,836        (6 )%      (13 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Dividends on preferred shares

     7,964        7,963        7,967        —          —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income applicable to common shares

   $ 147,052      $ 156,656      $ 170,869        (6 )%      (14 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income per common share—diluted

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

Cash dividends declared per common share

     0.05        0.05        0.05        —          —     

Book value per common share at end of period

     7.24        7.17        6.70        1        8   

Tangible book value per common share at end of period

     6.53        6.48        6.09        1        7   

Average common shares—basic

     816,497        821,546        830,398        (1     (2

Average common shares—diluted

     829,623        834,687        841,025        (1     (1

Return on average assets

     0.97     1.07     1.27    

Return on average common shareholders’ equity

     9.9        10.8        12.3       

Return on average tangible common shareholders’
equity (2)

     11.4        12.4        14.2       

Net interest margin (3)

     3.20        3.28        3.34       

Efficiency ratio (4)

     65.3        62.7        60.3       

Noninterest Income/Total Revenue

     34.3        34.9        36.7       

Effective tax rate

     25.8        25.9        26.7       

Average loans and leases

   $ 46,112,829      $ 45,023,793      $ 41,994,204        2        10   

Average loans and leases—linked quarter annualized growth rate

     9.7     14.7     6.9    

Average earning assets

   $ 58,707,474      $ 57,076,706      $ 51,247,215        3        15   

Average total assets

     63,472,782        61,830,210        55,914,791        3        14   

Average core deposits (5)

     46,118,771        45,611,033        43,773,153        1        5   

Average core deposits—linked quarter annualized growth rate

     4.5     3.7     —      

Average shareholders’ equity

   $ 6,292,157      $ 6,227,809      $ 5,879,479        1        7   

Total assets at end of period

     64,330,629        63,797,113        56,638,732        1        14   

Total shareholders’ equity at end of period

     6,284,210        6,240,791        5,952,060        1        6   

Net charge-offs (NCOs)

     30,023        28,643        55,742        5        (46

NCOs as a % of average loans and leases

     0.26     0.25     0.53    

Nonaccrual loans and leases (NALs)

   $ 325,765      $ 324,957      $ 333,106        —          (2

NAL ratio

     0.70     0.71     0.78    

Nonperforming assets (NPAs) (6)

   $ 364,475      $ 362,092      $ 374,260        1        (3

NPA ratio (6)

     0.78     0.79     0.88     (1     (11

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

     1.35        1.38        1.57       

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

     1.47        1.50        1.72       

ACL as a % of NALs

     211        213        220       

ACL as a % of NPAs

     188        191        196       

Tier 1 leverage ratio (7)

     9.83        10.01        10.85       

Tier 1 common risk-based capital ratio (7)

     10.31        10.26        10.85       

Tier 1 risk-based capital ratio (7)

     11.61        11.56        12.36       

Total risk-based capital ratio (7)

     13.72        13.67        14.67       

Tangible common equity / tangible assets ratio (8)

     8.35        8.38        9.01       

See Notes to the Quarterly Key Statistics.

 

1


Huntington Bancshares Incorporated

Year To Date Key Statistics (1)

(Unaudited)

 

     Nine Months Ended September 30,     Change  

(dollar amounts in thousands, except per share amounts)

   2014     2013     Amount     Percent  

Net interest income

   $ 1,363,889      $ 1,273,959      $ 89,930        7

Provision for credit losses

     78,495        65,714        12,781        19   

Noninterest income

     745,901        762,304        (16,403     (2

Noninterest expense

     1,399,075        1,311,994        87,081        7   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     632,220        658,555        (26,335     (4

Provision for income taxes

     163,442        175,445        (12,003     (7
  

 

 

   

 

 

   

 

 

   

 

 

 

Net Income

   $ 468,778      $ 483,110      $ (14,332     (3 )% 
  

 

 

   

 

 

   

 

 

   

 

 

 

Dividends on preferred shares

     23,891        23,904        (13     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income applicable to common shares

   $ 444,887      $ 459,206      $ (14,319     (3 )% 
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income per common share—diluted

   $ 0.53      $ 0.54      $ (0.01     (2 )% 

Cash dividends declared per common share

     0.15        0.14        0.01        7   

Average common shares—basic

     820,884        835,410        (14,526     (2

Average common shares—diluted

     833,927        844,524        (10,597     (1

Return on average assets

     1.02     1.16    

Return on average common shareholders’ equity

     10.2        11.2       

Return on average tangible common shareholders’ equity (2)

     11.7        12.9       

Net interest margin (3)

     3.25        3.38       

Efficiency ratio (4)

     64.7        62.3       

Noninterest Income/Total Revenue

     35.0        37.1       

Effective tax rate

     25.9        26.6       

Average loans and leases

   $ 44,863,177      $ 41,383,537      $ 3,479,640        8

Average earning assets

     56,928,862        51,122,168        5,806,693        11   

Average total assets

     61,679,006        55,844,746        5,834,260        10   

Average core deposits (5)

     45,644,852        43,719,823        1,925,028        4   

Average shareholders’ equity

     6,234,686        5,867,457        367,228        6   

Net charge-offs (NCOs)

     101,652        142,219        (40,567     (29

NCOs as a % of average loans and leases

     0.30     0.46     (0.16     (34

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)   September 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)

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

Assets

          

Cash and due from banks

   $ 879,862      $ 1,001,132      $ 1,107,658        (12 )%      (21 )% 

Interest-bearing deposits in banks

     72,898        57,043        63,100        28        16   

Trading account securities

     66,460        35,573        74,167        87        (10

Loans held for sale

     410,932        326,212        345,621        26        19   

Available-for-sale and other securities

     8,721,804        7,308,753        6,446,681        19        35   

Held-to-maturity securities

     3,496,493        3,836,667        2,236,121        (9     56   

Loans and leases (1)

     46,723,374        43,120,500        42,555,833        8        10   

Allowance for loan and lease losses

     (631,036     (647,870     (666,030     (3     (5
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loans and leases

     46,092,338        42,472,630        41,889,803        9        10   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Bank owned life insurance

     1,703,692        1,647,170        1,633,247        3        4   

Premises and equipment

     613,214        634,657        639,632        (3     (4

Goodwill

     522,541        444,268        444,268        18        18   

Other intangible assets

     85,324        93,193        103,512        (8     (18

Accrued income and other assets

     1,665,071        1,609,876        1,654,922        3        1   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

   $ 64,330,629      $ 59,467,174      $ 56,638,732        8     14
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities and shareholders’ equity

          

Liabilities

          

Deposits (2)

   $ 50,129,837      $ 47,506,718      $ 46,564,046        6     8

Short-term borrowings

     1,530,938        552,143        660,932        177        132   

Federal Home Loan Bank advances

     1,658,112        1,808,293        333,352        (8     397   

Other long-term debt

     2,590,212        1,349,119        904,668        92        186   

Subordinated notes

     976,264        1,100,860        1,111,598        (11     (12

Accrued expenses and other liabilities

     1,161,056        1,059,888        1,112,076        10        4   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities

     58,046,419        53,377,021        50,686,672        9        15   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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

     8,161        8,322        8,315        (2     (2

Capital surplus

     7,243,879        7,398,515        7,387,033        (2     (2

Less treasury shares, at cost

     (12,938     (9,643     (10,893     34        19   

Accumulated other comprehensive loss

     (182,016     (214,009     (230,767     (15     (21

Retained earnings

     (1,159,168     (1,479,324     (1,587,920     (22     (27
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total shareholders’ equity

     6,284,210        6,090,153        5,952,060        3        6   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities and shareholders’ equity

   $ 64,330,629      $ 59,467,174      $ 56,638,732        8     14
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Common shares authorized (par value of $0.01)

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

Common shares issued

     816,091,946        832,217,098        831,516,546       

Common shares outstanding

     814,453,953        830,963,427        830,144,646       

Treasury shares outstanding

     1,637,993        1,253,671        1,371,900       

Preferred shares issued

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

Preferred shares outstanding

     398,007        398,007        398,007       

 

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

 

4


Huntington Bancshares Incorporated

Loans and Leases Composition

(Unaudited)

 

    2014     2013  

(dollar amounts in millions)

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

Ending Balances by Type:

                   

Commercial: (1)

                   

Commercial and industrial

  $ 18,791        40   $ 18,899        41   $ 18,046        41   $ 17,594        41   $ 17,335        41

Commercial real estate:

                   

Construction

    850        2        757        2        692        2        557        1        544        1   

Commercial

    4,141        9        4,233        9        4,339        10        4,293        10        4,328        10   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Commercial real estate

    4,991        11        4,990        11        5,031        12        4,850        11        4,872        11   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total commercial

    23,782        51        23,889        52        23,077        53        22,444        52        22,207        52   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Consumer:

                   

Automobile

    8,322        18        7,686        17        6,999        16        6,639        15        6,317        15   

Home equity

    8,436        18        8,405        18        8,373        19        8,336        19        8,347        20   

Residential mortgage

    5,788        12        5,707        12        5,542        12        5,321        12        5,307        12   

Other consumer

    395        1        393        1        363        —          380        2        378        1   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total consumer

    22,941        49        22,191        48        21,277        47        20,676        48        20,349        48   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total loans and leases

  $ 46,723        100   $ 46,080        100   $ 44,354        100   $ 43,120        100   $ 42,556        100
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ending Balances by Business Segment: (2)

                   

Retail and Business Banking

  $ 13,136        28   $ 13,096        29   $ 13,027        29   $ 12,710        30   $ 12,639        30

Commercial Banking

    11,919        26        11,846        26        10,962        25        10,735        25        10,988        26   

AFCRE

    15,229        33        14,762        32        14,125        32        13,568        31        12,841        30   

RBHPCG

    2,938        6        2,883        6        2,875        7        2,850        7        2,833        7   

Home Lending

    3,372        7        3,366        7        3,229        7        3,206        7        3,214        8   

Treasury / Other

    129        —          127        —          136        —          51        —          41        —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total loans and leases

  $ 46,723        100   $ 46,080        100   $ 44,354        100   $ 43,120        100   $ 42,556        100
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    2014     2013  
    Third     Second     First     Fourth     Third  

Average Balances by Business Segment: (2)

                   

Retail and Business Banking

  $ 13,100        28   $ 13,040        29   $ 12,807        29   $ 12,675        29   $ 12,589        30

Commercial Banking

    11,702        25        11,292        25        10,861        25        11,122        26        10,780        26   

AFCRE

    14,926        32        14,460        32        13,679        32        13,216        31        12,558        30   

RBHPCG

    2,901        8        2,879        7        2,840        7        2,835        7        2,825        7   

Home Lending

    3,377        7        3,289        7        3,198        7        3,223        7        3,184        8   

Treasury / Other

    107        —          63        —          38        —          68        —          58        —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total loans and leases

  $ 46,113        100   $ 45,023        100   $ 43,423        100   $ 43,139        100   $ 41,994        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)

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

Ending Balances by Type:

                   

Demand deposits—noninterest-bearing

  $ 14,754        29   $ 14,151        29   $ 14,314        29   $ 13,650        29   $ 13,421        29

Demand deposits—interest-bearing

    6,052        12        5,921        12        5,970        12        5,880        12        5,856        13   

Money market deposits

    18,174        36        17,563        36        17,693        36        17,213        36        16,212        34   

Savings and other domestic deposits

    5,038        10        5,036        10        5,115        10        4,871        10        4,946        11   

Core certificates of deposit

    3,150        6        3,272        7        3,557        7        3,723        8        4,108        9   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total core deposits

    47,168        93        45,943        94        46,649        94        45,337        95        44,543        96   

Other domestic deposits of $250,000 or more

    202        1        241        —          289        1        274        1        268        1   

Brokered deposits and negotiable CDs

    2,357        5        2,198        5        2,074        4        1,580        3        1,366        3   

Deposits in foreign offices

    402        1        367        1        337        1        316        1        387        —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total deposits

  $ 50,129        100   $ 48,749        100   $ 49,349        100   $ 47,507        100   $ 46,564        100
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total core deposits:

                   

Commercial

  $ 21,753        46   $ 20,629        45   $ 20,507        44   $ 19,982        44   $ 19,526        44

Consumer

    25,415        54        25,314        55        26,142        56        25,355        56        25,017        56   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total core deposits

  $ 47,168        100   $ 45,943        100   $ 46,649        100   $ 45,337        100   $ 44,543        100
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ending Balances by Business Segment: (2)

                   

Retail and Business Banking

  $ 29,265        58   $ 28,836        59   $ 29,370        60   $ 28,294        60   $ 28,163        61

Commercial Banking

    10,791        22        9,793        20        10,217        21        10,188        21        9,969        21   

AFCRE

    1,362        3        1,457        3        1,203        2        1,171        2        1,125        2   

RBHPCG

    5,898        11        6,124        12        6,267        12        6,094        13        5,876        13   

Home Lending

    269        1        284        1        281        1        330        1        278        1   

Treasury / Other (1)

    2,544        5        2,255        5        2,011        4        1,430        3        1,153        2   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total deposits

  $ 50,129        100   $ 48,749        100   $ 49,349        100   $ 47,507        100   $ 46,564        100
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    2014     2013  
    Third     Second     First     Fourth     Third  

Average Balances by Business Segment: (2)

                   

Retail and Business Banking

  $ 28,865        59   $ 29,108        60   $ 28,633        60   $ 28,424        61   $ 28,156        61

Commercial Banking

    10,248        21        9,780        20        10,060        21        9,861        21        9,604        21   

AFCRE

    1,285        2        1,183        2        1,142        2        1,114        2        1,064        2   

RBHPCG

    5,958        12        5,859        12        5,906        12        5,937        13        5,535        12   

Home Lending

    294        1        296        1        257        1        293        1        335        1   

Treasury / Other (1)

    2,328        5        2,032        4        1,591        3        1,145        2        1,276        3   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total deposits

  $ 48,978        100   $ 48,258        100   $ 47,589        100   $ 46,774        100   $ 45,970        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)

   Third     Second     First     Fourth     Third     2Q14     3Q13  

Assets

              

Interest-bearing deposits in banks

   $ 82      $ 91      $ 83      $ 71      $ 54        (10 )%      52

Loans held for sale

     351        288        279        322        379        22        (7

Securities:

              

Available-for-sale and other securities:

              

Taxable

     6,935        6,662        6,240        5,818        6,040        4        15   

Tax-exempt

     1,620        1,290        1,115        548        565        26        187   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total available-for-sale and other securities

     8,555        7,952        7,355        6,366        6,605        8        30   

Trading account securities

     50        45        38        76        76        11        (34

Held-to-maturity securities—taxable

     3,556        3,677        3,783        3,038        2,139        (3     66   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total securities

     12,161        11,674        11,176        9,480        8,820        4        38   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loans and leases: (1)

              

Commercial:

              

Commercial and industrial

     18,581        18,262        17,631        17,671        17,032        2        9   

Commercial real estate:

              

Construction

     775        702        612        573        565        10        37   

Commercial

     4,188        4,345        4,289        4,331        4,345        (4     (4
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Commercial real estate

     4,963        5,047        4,901        4,904        4,910        (2     1   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total commercial

     23,544        23,309        22,532        22,575        21,942        1        7   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Consumer:

              

Automobile

     8,012        7,349        6,786        6,502        6,075        9        32   

Home equity

     8,412        8,376        8,340        8,346        8,341        —          1   

Residential mortgage

     5,747        5,608        5,379        5,331        5,256        2        9   

Other consumer

     398        382        386        385        380        4        5   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total consumer

     22,569        21,715        20,891        20,564        20,052        4        13   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total loans and leases

     46,113        45,024        43,423        43,139        41,994        2        10   

Allowance for loan and lease losses

     (633     (642     (649     (668     (717     (1     (12
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loans and leases

     45,480        44,382        42,774        42,471        41,277        2        10   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total earning assets

     58,707        57,077        54,961        53,012        51,247        3        15   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cash and due from banks

     887        872        904        846        944        2        (6

Intangible assets

     583        591        535        542        552        (1     6   

All other assets

     3,929        3,932        3,941        3,917        3,889        —          1   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

   $ 63,473      $ 61,830      $ 59,692      $ 57,649      $ 55,915        3     14
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities and shareholders’ equity

              

Deposits:

              

Demand deposits—noninterest-bearing

   $ 14,090      $ 13,466      $ 13,192      $ 13,337      $ 13,088        5     8

Demand deposits—interest-bearing

     5,913        5,945        5,775        5,755        5,763        (1     3   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total demand deposits

     20,003        19,411        18,967        19,092        18,851        3        6   

Money market deposits

     17,929        17,680        17,648        16,827        15,739        1        14   

Savings and other domestic deposits

     5,020        5,086        4,967        4,912        5,007        (1     —     

Core certificates of deposit

     3,167        3,434        3,613        3,916        4,176        (8     (24
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total core deposits

     46,119        45,611        45,195        44,747        43,773        1        5   

Other domestic deposits of $250,000 or more

     223        262        284        275        268        (15     (17

Brokered deposits and negotiable CDs

     2,262        2,070        1,782        1,398        1,553        9        46   

Deposits in foreign offices

     374        315        328        354        376        19        (1
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total deposits

     48,978        48,258        47,589        46,774        45,970        1        7   

Short-term borrowings

     1,092        939        883        629        710        16        54   

Federal Home Loan Bank advances

     2,489        1,977        1,499        851        549        26        353   

Subordinated notes and other long-term debt

     3,579        3,395        2,503        2,244        1,753        5        104   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total interest-bearing liabilities

     42,048        41,103        39,282        37,161        35,894        2        17   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

All other liabilities

     1,043        1,033        1,035        1,095        1,054        1        (1

Shareholders’ equity

     6,292        6,228        6,183        6,056        5,879        1        7   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities and shareholders’ equity

   $ 63,473      $ 61,830      $ 59,692      $ 57,649      $ 55,915        3     14
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(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)

   Third      Second      First      Fourth      Third  

Assets

              

Interest-bearing deposits in banks

   $ 39       $ 8       $ 6       $ 7       $ 9   

Loans held for sale

     3,487         3,072         2,603         3,586         3,699   

Securities:

              

Available-for-sale and other securities:

              

Taxable

     43,066         42,027         38,456         34,554         35,280   

Tax-exempt

     12,245         10,161         8,438         8,696         5,700   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total available-for-sale and other securities

     55,311         52,188         46,894         43,250         40,980   

Trading account securities

     107         79         107         79         43   

Held-to-maturity securities—taxable

     21,777         22,614         23,320         18,379         12,220   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total securities

     77,195         74,881         70,321         61,708         53,243   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Loans and leases:

              

Commercial:

              

Commercial and industrial

     163,765         161,173         157,016         159,686         160,285   

Commercial real estate:

              

Construction

     8,673         7,599         6,108         5,916         5,650   

Commercial

     38,542         45,690         41,171         43,905         45,525   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Commercial real estate

     47,215         53,289         47,279         49,821         51,175   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total commercial

     210,980         214,462         204,295         209,507         211,460   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Consumer:

              

Automobile

     68,786         63,543         59,153         60,080         58,216   

Home equity

     86,372         86,099         84,634         86,460         86,131   

Residential mortgage

     54,352         52,896         50,834         50,225         50,111   

Other consumer

     7,355         6,998         6,494         6,447         6,677   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total consumer

     216,865         209,536         201,115         203,212         201,135   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total loans and leases

     427,845         423,998         405,410         412,719         412,595   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total earning assets

   $ 508,566       $ 501,959       $ 478,340       $ 478,020       $ 469,546   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Liabilities

              

Deposits:

              

Demand deposits—noninterest-bearing

   $ —         $ —         $ —         $ —         $ —     

Demand deposits—interest-bearing

     601         571         512         630         636   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total demand deposits

     601         571         512         630         636   

Money market deposits

     10,407         10,548         10,940         11,296         10,211   

Savings and other domestic deposits

     2,050         2,179         2,459         2,925         3,134   

Core certificates of deposit

     5,909         6,938         8,387         10,330         11,094   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total core deposits

     18,967         20,236         22,298         25,181         25,075   

Other domestic deposits of $250,000 or more

     246         281         289         271         300   

Brokered deposits and negotiable CDs

     1,126         1,228         1,246         1,385         2,145   

Deposits in foreign offices

     121         102         104         122         136   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total deposits

     20,460         21,847         23,937         26,959         27,656   

Short-term borrowings

     292         270         150         129         158   

Federal Home Loan Bank advances

     982         621         453         306         197   

Subordinated notes and other long-term debt

     12,991         12,536         10,409         11,781         10,049   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total interest bearing liabilities

     34,725         35,274         34,949         39,175         38,060   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net interest income

   $ 473,841       $ 466,685       $ 443,391       $ 438,845       $ 431,486   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(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)

   Third     Second     First     Fourth     Third  

Assets

          

Interest-bearing deposits in banks

     0.19     0.04     0.03     0.04     0.07

Loans held for sale

     3.98        4.27        3.74        4.46        3.89   

Securities:

          

Available-for-sale and other securities:

          

Taxable

     2.48        2.52        2.47        2.38        2.34   

Tax-exempt

     3.02        3.15        3.03        6.34        4.04   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total available-for-sale and other securities

     2.59        2.63        2.55        2.72        2.48   

Trading account securities

     0.85        0.70        1.12        0.42        0.23   

Held-to-maturity securities—taxable

     2.45        2.46        2.47        2.42        2.29   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total securities

     2.54        2.57        2.52        2.60        2.41   

Loans and leases: (2)(3)

          

Commercial:

          

Commercial and industrial

     3.45        3.49        3.56        3.54        3.68   

Commercial real estate:

          

Construction

     4.38        4.29        3.99        4.04        3.91   

Commercial

     3.60        4.16        3.84        3.97        4.10   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Commercial real estate

     3.72        4.17        3.86        3.98        4.08   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total commercial

     3.51        3.64        3.63        3.63        3.77   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Consumer:

          

Automobile

     3.41        3.47        3.54        3.67        3.80   

Home equity

     4.07        4.12        4.12        4.11        4.10   

Residential mortgage

     3.78        3.77        3.78        3.77        3.81   

Other consumer

     7.31        7.34        6.82        6.64        6.98   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total consumer

     3.82        3.87        3.89        3.93        3.99   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total loans and leases

     3.66        3.75        3.75        3.77        3.87   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total earning assets

     3.44     3.53     3.53     3.58     3.64
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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

     0.23        0.24        0.25        0.27        0.26   

Savings and other domestic deposits

     0.16        0.17        0.20        0.24        0.25   

Core certificates of deposit

     0.74        0.81        0.94        1.05        1.05   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total core deposits

     0.23        0.25        0.28        0.32        0.32   

Other domestic deposits of $250,000 or more

     0.44        0.43        0.41        0.39        0.44   

Brokered deposits and negotiable CDs

     0.20        0.24        0.28        0.39        0.55   

Deposits in foreign offices

     0.13        0.13        0.13        0.14        0.14   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total deposits

     0.23        0.25        0.28        0.32        0.33   

Short-term borrowings

     0.11        0.12        0.07        0.08        0.09   

Federal Home Loan Bank advances

     0.15        0.12        0.12        0.14        0.14   

Subordinated notes and other long-term debt

     1.45        1.48        1.66        2.10        2.29   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total interest-bearing liabilities

     0.33        0.34        0.36        0.42        0.42   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest rate spread

     3.11        3.19        3.17        3.16        3.22   

Impact of noninterest-bearing funds on margin

     0.09        0.09        0.10        0.12        0.12   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest margin

     3.20     3.28     3.27     3.28     3.34
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

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

Fully-taxable equivalent basis (1)

   Third     Second     First     Fourth     Third  

Commercial loans (2)(3)

     3.30     3.42     3.37     3.39     3.50

Impact of commercial loan derivatives

     0.20        0.22        0.25        0.24        0.27   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total commercial—as reported

     3.51     3.64     3.63     3.63     3.77
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average 30 day LIBOR

     0.15     0.15     0.16     0.17     0.19

 

(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)

   Third      Second      First      Fourth      Third  

Interest income

   $ 501,060       $ 495,322       $ 472,455       $ 469,824       $ 462,912   

Interest expense

     34,725         35,274         34,949         39,175         38,060   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net interest income

     466,335         460,048         437,506         430,649         424,852   

Provision for credit losses

     24,480         29,385         24,630         24,331         11,400   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net interest income after provision for credit losses

     441,855         430,663         412,876         406,318         413,452   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Service charges on deposit accounts

     69,118         72,633         64,582         69,992         72,918   

Mortgage banking income

     25,051         22,717         23,089         24,327         23,621   

Trust services

     28,045         29,581         29,565         30,711         30,470   

Electronic banking

     27,275         26,491         23,642         24,251         24,282   

Insurance income

     16,729         15,996         16,496         15,556         17,269   

Brokerage income

     17,155         17,905         17,167         15,151         16,636   

Bank owned life insurance income

     14,888         13,865         13,307         13,816         13,740   

Capital markets fees

     10,246         10,500         9,194         12,332         12,825   

Gain on sale of loans

     8,199         3,914         3,570         7,144         5,063   

Securities gains (losses)

     198         490         16,970         1,239         98   

Other income

     30,445         35,975         30,903         35,373         36,845   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total noninterest income

     247,349         250,067         248,485         249,892         253,767   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Personnel costs

     275,409         260,600         249,477         249,554         229,326   

Outside data processing and other services

     53,073         54,338         51,490         51,071         49,313   

Net occupancy

     34,405         28,673         33,433         31,983         35,591   

Equipment

     30,183         28,749         28,750         28,775         28,191   

Marketing

     12,576         14,832         10,686         13,704         12,271   

Deposit and other insurance expense

     11,628         10,599         13,718         10,056         11,155   

Amortization of intangibles

     9,813         9,520         9,291         10,320         10,362   

Professional services

     13,763         17,896         12,231         11,567         12,487   

Other expense

     39,468         33,429         51,045         38,979         34,640   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total noninterest expense

     480,318         458,636         460,121         446,009         423,336   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Income before income taxes

     208,886         222,094         201,240         210,201         243,883   

Provision for income taxes

     53,870         57,475         52,097         52,029         65,047   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net income

   $ 155,016       $ 164,619       $ 149,143       $ 158,172       $ 178,836   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Dividends on preferred shares

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

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net income applicable to common shares

   $ 147,052       $ 156,656       $ 141,179       $ 150,207       $ 170,869   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Average common shares—basic

     816,497         821,546         829,659         830,590         830,398   

Average common shares—diluted

     829,623         834,687         842,677         842,324         841,025   

Per common share

              

Net income—basic

   $ 0.18       $ 0.19       $ 0.17       $ 0.18       $ 0.21   

Net income—diluted

     0.18         0.19         0.17         0.18         0.20   

Cash dividends declared

     0.05         0.05         0.05         0.05         0.05   

Revenue—fully-taxable equivalent (FTE)