COLUMBUS, Ohio, April 19, 2017 /PRNewswire/ -- Huntington
Bancshares Incorporated (NASDAQ: HBAN; www.huntington.com) reported
net income for the 2017 first quarter of $208 million, a $37
million, or 21%, increase from the year-ago quarter.
Earnings per common share for the 2017 first quarter were
$0.17, down $0.03, or 15%, from the year-ago quarter.
Excluding approximately $71 million
pretax, or $0.04 per common share
after tax, of FirstMerit acquisition-related net expenses, adjusted
earnings per common share were $0.21. Tangible book value per share as of
2017 first quarter-end was $6.55, an
8% year-over-year decrease but a 2% increase from 2016
year-end. Return on average assets was 0.84%, return on
average common equity was 8.2%, and return on average tangible
common equity was 11.3%. Total revenue increased 40% over the
year-ago quarter.
"We had a good start to the year and are encouraged by the
momentum we're currently seeing," said Steve Steinour, chairman, president and
CEO. "Among our many accomplishments in the first quarter, we
successfully completed our data and systems conversion. We
are particularly pleased with our ability to retain customer
deposits."
"We delivered solid performance in the first quarter and
continue to manage the business for the long-term. Our
strategy has driven consistent organic growth over the past several
years," Steinour said. "We are seeing improving pipelines
across our business lines as we leverage our expanded capabilities
and markets to reach more customers and prospects than ever
before."
Specific 2017 First Quarter
Highlights:
- Completion of FirstMerit branch conversion and the conversion
of the majority of FirstMerit systems
- Consolidation of 110 branches (10% of prior quarter-end total
branches), including 101 branches related to the FirstMerit
conversion
- $300 million, or 40%,
year-over-year increase in fully-taxable equivalent revenue,
comprised of a $230 million, or 45%,
increase in fully-taxable equivalent net interest income and a
$71 million, or 29%, increase in
noninterest income
- Net interest margin of 3.30%, an increase of 19 basis points
from the year-ago quarter
- $216 million, or 44%,
year-over-year increase in noninterest expense, including a net
increase of $67 million of FirstMerit
acquisition-related expense
- $16.4 billion, or 32%,
year-over-year increase in average loans and leases, comprised of a
$9.4 billion, or 36%, increase in
commercial loans and a $6.9 billion,
or 28%, increase in consumer loans
- $8.6 billion, or 57%,
year-over-year increase in average securities, including a net
increase of $0.7 billion of direct
purchase municipal instruments in our Commercial Banking
segment
- $20.1 billion, or 39%,
year-over-year increase in average core deposits, driven by a
$9.0 billion, or 116%, increase in
interest-bearing demand deposits, a $6.7
billion, or 126%, increase in savings and other domestic
deposits, and a $5.4 billion, or 33%,
increase in noninterest-bearing demand deposits
- Net charge-offs equated to 0.24% of average loans and leases,
representing the twelfth consecutive quarter below the long-term
target range of 0.35% to 0.55%
- Nonperforming asset ratio of 0.68%, down from 0.72% a quarter
ago and 1.02% a year ago
- $0.57, or 8%, year-over-year
decrease in tangible book value per common share (TBVPS) to
$6.55
Table 1 – Earnings Performance Summary
|
2017
|
|
2016
|
($ in millions,
except per share data)
|
First
|
|
Fourth
|
|
Third
|
|
Second
|
|
First
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
Net Income
|
$
|
208
|
|
|
$
|
239
|
|
|
$
|
127
|
|
|
$
|
175
|
|
|
$
|
171
|
|
Diluted earnings per
common share
|
0.17
|
|
|
0.20
|
|
|
0.11
|
|
|
0.19
|
|
|
0.20
|
|
|
|
|
|
|
|
|
|
|
|
Return on average
assets
|
0.84
|
%
|
|
0.95
|
%
|
|
0.58
|
%
|
|
0.96
|
%
|
|
0.96
|
%
|
Return on average
common equity
|
8.2
|
|
|
9.4
|
|
|
5.4
|
|
|
9.6
|
|
|
10.4
|
|
Return on average
tangible common equity
|
11.3
|
|
|
12.9
|
|
|
7.0
|
|
|
11.0
|
|
|
11.9
|
|
Net interest
margin
|
3.30
|
|
|
3.25
|
|
|
3.18
|
|
|
3.06
|
|
|
3.11
|
|
Efficiency
ratio
|
65.7
|
|
|
61.6
|
|
|
75.0
|
|
|
66.1
|
|
|
64.6
|
|
|
|
|
|
|
|
|
|
|
|
Tangible book value
per common share
|
$
|
6.55
|
|
|
$
|
6.43
|
|
|
$
|
6.48
|
|
|
$
|
7.29
|
|
|
$
|
7.12
|
|
Cash dividends
declared per common share
|
0.08
|
|
|
0.08
|
|
|
0.07
|
|
|
0.07
|
|
|
0.07
|
|
Average diluted
shares outstanding (000's)
|
1,108,617
|
|
|
1,104,358
|
|
|
952,081
|
|
|
810,371
|
|
|
808,349
|
|
|
|
|
|
|
|
|
|
|
|
Average earning
assets
|
$
|
91,139
|
|
|
$
|
91,463
|
|
|
$
|
79,687
|
|
|
$
|
67,863
|
|
|
$
|
66,234
|
|
Average loans and
leases (1)
|
66,981
|
|
|
66,405
|
|
|
60,722
|
|
|
51,932
|
|
|
50,618
|
|
Average core
deposits
|
71,500
|
|
|
72,070
|
|
|
62,022
|
|
|
51,895
|
|
|
51,363
|
|
|
|
|
|
|
|
|
|
|
|
Tangible common
equity / tangible assets ratio
|
7.28
|
%
|
|
7.16
|
%
|
|
7.14
|
%
|
|
7.96
|
%
|
|
7.89
|
%
|
Common equity Tier 1
risk-based capital ratio
|
9.67
|
|
|
9.56
|
|
|
9.09
|
|
|
9.80
|
|
|
9.73
|
|
|
|
|
|
|
|
|
|
|
|
NCOs as a % of
average loans and leases
|
0.24
|
%
|
|
0.26
|
%
|
|
0.26
|
%
|
|
0.13
|
%
|
|
0.07
|
%
|
NAL ratio
|
0.60
|
|
|
0.63
|
|
|
0.61
|
|
|
0.88
|
|
|
0.97
|
|
ACL as a % of total
loans and leases
|
1.14
|
|
|
1.10
|
|
|
1.06
|
|
|
1.33
|
|
|
1.34
|
|
(1)
Excludes loans held for sale
|
Table 2 lists certain items that we believe are significant in
understanding corporate performance and trends (see Basis of
Presentation). There was one Significant Item in the 2017
first quarter: $71 million of
FirstMerit acquisition-related net expense.
Table 2 – Significant Items Influencing
Earnings
Three Months
Ended
|
Pre-Tax
Impact
|
|
After-Tax
Impact
|
($ in millions,
except per share)
|
Amount
|
|
Amount (1)
|
|
EPS
(2)
|
March 31, 2017 -
net income
|
|
|
$
|
208
|
|
|
$
|
0.17
|
|
•
|
|
Merger and
acquisition-related net expenses
|
$
|
(71)
|
|
|
(46)
|
|
|
(0.04)
|
|
December 31, 2016
- net income
|
|
|
$
|
239
|
|
|
$
|
0.20
|
|
•
|
|
Merger and
acquisition-related net expenses
|
$
|
(96)
|
|
|
(63)
|
|
|
(0.06)
|
|
•
|
|
Reduction to
litigation reserves
|
$
|
42
|
|
|
27
|
|
|
0.02
|
|
September 30, 2016
– net income
|
|
|
$
|
127
|
|
|
$
|
0.11
|
|
•
|
|
Merger and
acquisition-related net expenses
|
$
|
(159)
|
|
|
(107)
|
|
|
(0.11)
|
|
June 30, 2016 –
net income
|
|
|
$
|
175
|
|
|
$
|
0.19
|
|
•
|
|
Merger and
acquisition-related net expenses
|
$
|
(21)
|
|
|
(14)
|
|
|
(0.02)
|
|
March 31, 2016 –
net income
|
|
|
$
|
171
|
|
|
$
|
0.20
|
|
•
|
|
Merger and
acquisition-related net expenses
|
$
|
(6)
|
|
|
(4)
|
|
|
(0.01)
|
|
(1) Favorable
(unfavorable) impact on net income.
|
(2) EPS reflected
on a fully diluted basis.
|
Net Interest Income, Net Interest Margin, and Average Balance
Sheet
Table 3 – Net Interest Income and Net Interest Margin
Performance Summary – Purchase Accounting Accretion Drives
Year-over-Year NIM Expansion
|
2017
|
|
2016
|
|
|
|
|
($ in
millions)
|
First
|
|
Fourth
|
|
Third
|
|
Second
|
|
First
|
|
Change (%)
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
LQ
|
|
YOY
|
Net interest
income
|
$
|
730
|
|
|
$
|
735
|
|
|
$
|
625
|
|
|
$
|
506
|
|
|
$
|
503
|
|
|
(1)%
|
|
|
45%
|
|
FTE
adjustment
|
12
|
|
|
13
|
|
|
11
|
|
|
10
|
|
|
9
|
|
|
(8)
|
|
|
33
|
|
Net interest income -
FTE
|
742
|
|
|
748
|
|
|
636
|
|
|
516
|
|
|
512
|
|
|
(1)
|
|
|
45
|
|
Noninterest
income
|
312
|
|
|
334
|
|
|
302
|
|
|
271
|
|
|
242
|
|
|
(7)
|
|
|
29
|
|
Total revenue -
FTE
|
$
|
1,054
|
|
|
$
|
1,082
|
|
|
$
|
938
|
|
|
$
|
787
|
|
|
$
|
754
|
|
|
(3)%
|
|
|
40%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change bp
|
Yield /
Cost
|
|
|
|
|
|
|
|
|
|
|
LQ
|
|
YOY
|
Total earning
assets
|
3.70
|
%
|
|
3.60
|
%
|
|
3.52
|
%
|
|
3.41
|
%
|
|
3.44
|
%
|
|
10
|
|
|
26
|
|
Total loans and
leases
|
4.07
|
|
|
3.95
|
|
|
3.81
|
|
|
3.63
|
|
|
3.67
|
|
|
12
|
|
|
40
|
|
Total
securities
|
2.54
|
|
|
2.58
|
|
|
2.47
|
|
|
2.56
|
|
|
2.56
|
|
|
(4)
|
|
|
(2)
|
|
Total
interest-bearing liabilities
|
0.54
|
|
|
0.48
|
|
|
0.49
|
|
|
0.50
|
|
|
0.46
|
|
|
6
|
|
|
8
|
|
Total
interest-bearing deposits
|
0.26
|
|
|
0.23
|
|
|
0.22
|
|
|
0.23
|
|
|
0.24
|
|
|
3
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest rate
spread
|
3.16
|
|
|
3.12
|
|
|
3.03
|
|
|
2.91
|
|
|
2.98
|
|
|
4
|
|
|
18
|
|
Impact of
noninterest-bearing funds on margin
|
0.14
|
|
|
0.13
|
|
|
0.15
|
|
|
0.15
|
|
|
0.13
|
|
|
1
|
|
|
1
|
|
Net interest
margin
|
3.30
|
%
|
|
3.25
|
%
|
|
3.18
|
%
|
|
3.06
|
%
|
|
3.11
|
%
|
|
5
|
|
|
19
|
|
See Pages 6-8
of Quarterly Financial Supplement for additional
detail.
|
Note: 2016 third
quarter results reflect inclusion of FirstMerit since August 16,
2016.
|
Fully-taxable equivalent (FTE) net interest income for the 2017
first quarter increased $230 million,
or 45%, from the 2016 first quarter. This reflected the benefit
from the $24.9 billion, or 38%,
increase in average earning assets coupled with a 19 basis point
improvement in the FTE net interest margin (NIM) to 3.30%.
Average earning asset growth included a $16.4 billion, or 32%, increase in average loans
and leases and an $8.6 billion, or
57%, increase in average securities. The NIM expansion
reflected a 26 basis point increase in earning asset yields and a 1
basis point increase in the benefit from noninterest-bearing funds,
partially offset by an 8 basis point increase in funding
costs. FTE net interest income during the 2017 first quarter
included $36 million, or
approximately 16 basis points, of purchase accounting impact.
Compared to the 2016 fourth quarter, FTE net interest income
decreased $6 million, or 1%.
Average earning assets decreased $0.3
billion, or less than 1%, sequentially, while the NIM
increased 5 basis points. The increase in the NIM reflected a
10 basis point increase in earning asset yields and a 1 basis point
increase in the benefit from noninterest-bearing funds, partially
offset by a 6 basis point increase in the cost of interest-bearing
liabilities. The purchase accounting impact on the net
interest margin was approximately 16 basis points in the 2017 first
quarter compared to approximately 18 basis points in the prior
quarter.
Table 4 – Average Earning Assets – Commercial Drives
Year-over-year and Linked-quarter Loan Growth
|
2017
|
|
2016
|
|
|
|
|
($ in
billions)
|
First
|
|
Fourth
|
|
Third
|
|
Second
|
|
First
|
|
Change (%)
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
LQ
|
|
YOY
|
Commercial and
industrial
|
$
|
27.9
|
|
|
$
|
27.7
|
|
|
$
|
25.0
|
|
|
$
|
21.3
|
|
|
$
|
20.6
|
|
|
1
|
%
|
|
35
|
%
|
Commercial real
estate
|
7.4
|
|
|
7.2
|
|
|
6.4
|
|
|
5.2
|
|
|
5.2
|
|
|
2
|
|
|
41
|
|
Total
commercial
|
35.3
|
|
|
34.9
|
|
|
31.3
|
|
|
26.6
|
|
|
25.9
|
|
|
1
|
|
|
36
|
|
Automobile
|
11.1
|
|
|
10.9
|
|
|
11.4
|
|
|
10.1
|
|
|
9.7
|
|
|
2
|
|
|
14
|
|
Home
equity
|
10.1
|
|
|
10.1
|
|
|
9.3
|
|
|
8.4
|
|
|
8.4
|
|
|
—
|
|
|
19
|
|
Residential
mortgage
|
7.8
|
|
|
7.7
|
|
|
7.0
|
|
|
6.2
|
|
|
6.0
|
|
|
1
|
|
|
29
|
|
RV and marine
finance
|
1.9
|
|
|
1.8
|
|
|
0.9
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
NM
|
Other
consumer
|
0.9
|
|
|
1.0
|
|
|
0.8
|
|
|
0.6
|
|
|
0.6
|
|
|
(4)
|
|
|
60
|
|
Total
consumer
|
31.7
|
|
|
31.5
|
|
|
29.4
|
|
|
25.4
|
|
|
24.8
|
|
|
1
|
|
|
28
|
|
Total loans and
leases
|
67.0
|
|
|
66.4
|
|
|
60.7
|
|
|
51.9
|
|
|
50.6
|
|
|
1
|
|
|
32
|
|
Total
securities
|
23.6
|
|
|
22.4
|
|
|
18.2
|
|
|
15.3
|
|
|
15.1
|
|
|
5
|
|
|
57
|
|
Held-for-sale and
other earning assets
|
0.5
|
|
|
2.6
|
|
|
0.8
|
|
|
0.7
|
|
|
0.6
|
|
|
(81)
|
|
|
(17)
|
|
Total earning
assets
|
$
|
91.1
|
|
|
$
|
91.5
|
|
|
$
|
79.7
|
|
|
$
|
67.9
|
|
|
$
|
66.2
|
|
|
—
|
%
|
|
38
|
%
|
See Page 6 of
Quarterly Financial Supplement for additional
detail.
|
Note: 2016 third
quarter results reflect inclusion of FirstMerit since August 16,
2016.
|
Average earning assets for the 2017 first quarter increased
$24.9 billion, or 38%, from the
year-ago quarter, primarily reflecting the impact of the FirstMerit
acquisition. Average securities increased $8.6 billion, or 57%, which included $2.8 billion of direct purchase municipal
instruments in our commercial banking segment compared to
$2.1 billion in the year-ago
quarter. Average residential mortgage loans increased
$1.8 billion, or 29%, as we continue
to see increased demand for residential mortgage loans across our
footprint.
Compared to the 2016 fourth quarter, average earning assets
decreased $0.3 billion, or less than
1%. On a reported basis, average securities increased
$1.2 billion, or 5%, reflecting the
reinvestment of the proceeds from the 2016 fourth quarter
automobile loan securitization into securities qualifying as High
Quality Liquid Assets for the Liquidity Coverage Ratio (LCR).
Average loans and leases increased $0.6
billion, or 1%, primarily reflecting growth in automobile
loans and core middle market and small business C&I
lending. Average loans held for sale and other earnings
assets decreased $2.1 billion, or
80%, primarily reflecting the $1.5
billion automobile loan securitization and the balance sheet
optimization-related loan sales completed during the 2016 fourth
quarter.
Table 5 – Average Liabilities – Relationship-Focus
Continues to Drive Strong Year-over-year Core Deposit
Growth
|
2017
|
|
2016
|
|
|
|
First
|
|
Fourth
|
|
Third
|
|
Second
|
|
First
|
|
Change (%)
|
($ in
billions)
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
LQ
|
|
YOY
|
Demand deposits -
noninterest-bearing
|
$
|
21.7
|
|
|
$
|
23.2
|
|
|
$
|
20.0
|
|
|
$
|
16.5
|
|
|
$
|
16.3
|
|
|
(7)%
|
|
|
33
|
%
|
Demand deposits -
interest-bearing
|
16.8
|
|
|
15.3
|
|
|
12.4
|
|
|
8.4
|
|
|
7.8
|
|
|
10
|
|
|
116
|
|
Total demand
deposits
|
38.5
|
|
|
38.5
|
|
|
32.4
|
|
|
24.9
|
|
|
24.1
|
|
|
—
|
|
|
60
|
|
Money market
deposits
|
18.7
|
|
|
18.6
|
|
|
18.5
|
|
|
19.5
|
|
|
19.7
|
|
|
—
|
|
|
(5)
|
|
Savings and other
domestic deposits
|
12.0
|
|
|
12.3
|
|
|
8.9
|
|
|
5.4
|
|
|
5.3
|
|
|
(2)
|
|
|
126
|
|
Core certificates of
deposit
|
2.3
|
|
|
2.6
|
|
|
2.3
|
|
|
2.0
|
|
|
2.3
|
|
|
(11)
|
|
|
3
|
|
Total core
deposits
|
71.5
|
|
|
72.0
|
|
|
62.1
|
|
|
51.8
|
|
|
51.4
|
|
|
(1)
|
|
|
39
|
|
Other domestic
deposits of $250,000 or more
|
0.5
|
|
|
0.4
|
|
|
0.4
|
|
|
0.4
|
|
|
0.5
|
|
|
20
|
|
|
3
|
|
Brokered deposits and
negotiable CDs
|
4.0
|
|
|
4.3
|
|
|
3.9
|
|
|
2.9
|
|
|
2.9
|
|
|
(7)
|
|
|
37
|
|
Deposits in foreign
offices
|
—
|
|
|
0.2
|
|
|
0.2
|
|
|
0.2
|
|
|
0.3
|
|
|
(100)
|
|
|
(100)
|
|
Total
deposits
|
$
|
76.0
|
|
|
$
|
76.9
|
|
|
$
|
66.6
|
|
|
$
|
55.3
|
|
|
$
|
55.1
|
|
|
(1)%
|
|
|
38
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term
borrowings
|
$
|
3.8
|
|
|
$
|
2.6
|
|
|
$
|
1.3
|
|
|
$
|
1.0
|
|
|
$
|
1.1
|
|
|
44
|
%
|
|
231
|
%
|
Long-term
debt
|
8.5
|
|
|
8.6
|
|
|
8.5
|
|
|
7.9
|
|
|
7.2
|
|
|
(1)
|
|
|
18
|
|
Total debt
|
$
|
12.3
|
|
|
$
|
11.2
|
|
|
$
|
9.8
|
|
|
$
|
8.9
|
|
|
$
|
8.3
|
|
|
10
|
%
|
|
42
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
interest-bearing liabilities
|
$
|
66.5
|
|
|
$
|
64.9
|
|
|
$
|
56.3
|
|
|
$
|
47.8
|
|
|
$
|
47.0
|
|
|
3
|
%
|
|
42
|
%
|
See Page 6 of
Quarterly Financial Supplement for additional
detail.
|
Note: 2016 third
quarter results reflect inclusion of FirstMerit since August 16,
2016.
|
Average total deposits for the 2017 first quarter increased
$21.0 billion, or 38%, from the
year-ago quarter, while average total core deposits increased
$20.1 billion, or 39%. Average
total interest-bearing liabilities increased $19.5 billion, or 42%, from the year-ago
quarter. These increases primarily reflect the impact of the
FirstMerit acquisition. Average demand deposits increased
$14.4 billion, or 60%, comprised of a
$10.3 billion, or 67%, increase in
average commercial demand deposits and a $4.2 billion, or 47%, increase in average
consumer demand deposits. Average short-term borrowings
increased $2.6 billion, or 231%,
reflecting the maintenance of excess liquidity surrounding the
branch conversion. Average long-term debt increased
$1.3 billion, or 18%, reflecting the
issuance of $3.0 billion and maturity
of $1.0 billion of senior debt over
the past five quarters.
Compared to the 2016 fourth quarter, average total core deposits
decreased $0.6 billion, or 1%,
primarily reflecting the divestiture of $0.6
billion of deposits and thirteen branches in the 2016 fourth
quarter. Average demand deposits were flat as a $1.5 billion, or 10%, increase in average
interest-bearing demand deposits offset a $1.5 billion, or 7%, decrease in average
noninterest-bearing demand deposits. Average total debt
increased $1.1 billion, driven by an
increase in short-term borrowings of $1.2
billion, or 44%, reflecting the maintenance of excess
liquidity surrounding the branch conversion.
Noninterest Income (see Basis of Presentation)
Table 6 – Noninterest Income (GAAP) – Implementation of
FirstMerit-Related Revenue Enhancements Well Under Way
|
2017
|
|
2016
|
|
|
|
First
|
|
Fourth
|
|
Third
|
|
Second
|
|
First
|
|
Change (%)
|
($ in
millions)
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
LQ
|
|
YOY
|
Service charges on
deposit accounts
|
$
|
83
|
|
|
$
|
92
|
|
|
$
|
87
|
|
|
$
|
76
|
|
|
$
|
70
|
|
|
(9)%
|
|
|
19
|
%
|
Cards and payment
processing income
|
47
|
|
|
49
|
|
|
44
|
|
|
39
|
|
|
36
|
|
|
(4)
|
|
|
29
|
|
Mortgage banking
income
|
32
|
|
|
38
|
|
|
41
|
|
|
32
|
|
|
19
|
|
|
(16)
|
|
|
71
|
|
Trust and investment
management services
|
34
|
|
|
34
|
|
|
29
|
|
|
22
|
|
|
23
|
|
|
—
|
|
|
48
|
|
Insurance
income
|
15
|
|
|
16
|
|
|
16
|
|
|
16
|
|
|
16
|
|
|
(7)
|
|
|
(6)
|
|
Brokerage
income
|
16
|
|
|
17
|
|
|
15
|
|
|
15
|
|
|
16
|
|
|
(7)
|
|
|
2
|
|
Capital markets
fees
|
14
|
|
|
19
|
|
|
15
|
|
|
13
|
|
|
13
|
|
|
(24)
|
|
|
9
|
|
Bank owned life
insurance income
|
18
|
|
|
17
|
|
|
14
|
|
|
13
|
|
|
14
|
|
|
3
|
|
|
30
|
|
Gain on sale of
loans
|
13
|
|
|
25
|
|
|
8
|
|
|
9
|
|
|
5
|
|
|
(49)
|
|
|
138
|
|
Securities gains
(losses)
|
—
|
|
|
(2)
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
(100)
|
|
|
NM
|
|
Other
income
|
41
|
|
|
30
|
|
|
33
|
|
|
36
|
|
|
30
|
|
|
38
|
|
|
35
|
|
Total noninterest
income
|
$
|
312
|
|
|
$
|
334
|
|
|
$
|
302
|
|
|
$
|
271
|
|
|
$
|
242
|
|
|
(7)%
|
|
|
29
|
%
|
Table 7 - Impact of Significant Items
|
2017
|
|
2016
|
|
|
First
|
|
Fourth
|
|
Third
|
|
Second
|
|
First
|
|
($ in
millions)
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Service charges on
deposit accounts
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Cards and payment
processing income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Mortgage banking
income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Trust and investment
management services
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Insurance
income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Brokerage
income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Capital markets
fees
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Bank owned life
insurance income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Gain on sale of
loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Securities gains
(losses)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Other
income
|
2
|
|
|
(1)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total noninterest
income
|
$
|
2
|
|
|
$
|
(1)
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Table 8 - Adjusted Noninterest Income
(Non-GAAP)
|
2017
|
|
2016
|
|
|
|
First
|
|
Fourth
|
|
Third
|
|
Second
|
|
First
|
|
Change (%)
|
($ in
millions)
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
LQ
|
|
YOY
|
Service charges on
deposit accounts
|
$
|
83
|
|
|
$
|
92
|
|
|
$
|
87
|
|
|
$
|
76
|
|
|
$
|
70
|
|
|
(9)%
|
|
|
19
|
%
|
Cards and payment
processing income
|
47
|
|
|
49
|
|
|
44
|
|
|
39
|
|
|
36
|
|
|
(4)
|
|
|
29
|
|
Mortgage banking
income
|
32
|
|
|
38
|
|
|
41
|
|
|
32
|
|
|
19
|
|
|
(16)
|
|
|
71
|
|
Trust and investment
management services
|
34
|
|
|
34
|
|
|
29
|
|
|
22
|
|
|
23
|
|
|
—
|
|
|
48
|
|
Insurance
income
|
15
|
|
|
16
|
|
|
16
|
|
|
16
|
|
|
16
|
|
|
(7)
|
|
|
(6)
|
|
Brokerage
income
|
16
|
|
|
17
|
|
|
15
|
|
|
15
|
|
|
16
|
|
|
(7)
|
|
|
2
|
|
Capital markets
fees
|
14
|
|
|
19
|
|
|
15
|
|
|
13
|
|
|
13
|
|
|
(24)
|
|
|
9
|
|
Bank owned life
insurance income
|
18
|
|
|
17
|
|
|
14
|
|
|
13
|
|
|
14
|
|
|
3
|
|
|
30
|
|
Gain on sale of
loans
|
13
|
|
|
25
|
|
|
8
|
|
|
9
|
|
|
5
|
|
|
(49)
|
|
|
138
|
|
Securities gains
(losses)
|
—
|
|
|
(2)
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
(100)
|
|
|
—
|
|
Other
income
|
39
|
|
|
31
|
|
|
33
|
|
|
36
|
|
|
30
|
|
|
26
|
|
|
30
|
|
Total noninterest
income
|
$
|
310
|
|
|
$
|
335
|
|
|
$
|
302
|
|
|
$
|
271
|
|
|
$
|
242
|
|
|
(7)%
|
|
|
28
|
%
|
See
Pages 9-10 of Quarterly Financial Supplement for additional
detail.
|
Note: 2016 third
quarter results reflect inclusion of FirstMerit since August 16,
2016.
|
Reported noninterest income for the 2017 first quarter increased
$71 million, or 29%, from the
year-ago quarter, primarily reflecting the impact of the FirstMerit
acquisition. Service charges on deposit accounts increased
$13 million, or 19%, reflecting the
benefit of the FirstMerit acquisition and continued new customer
acquisition. Of the increase, $8
million was attributable to consumer deposit accounts, and
$6 million was attributable to
commercial deposit accounts. Mortgage banking income
increased $13 million, or 71%,
reflecting a 35% increase in mortgage origination volume and an
$8 million increase from net mortgage
servicing rights (MSR) hedging-related activities.
Compared to the 2016 fourth quarter, reported noninterest income
decreased $22 million, or 7%.
Gain on sale of loans decreased $12
million, or 49%, primarily reflecting the $11 million of gains related to the balance sheet
optimization strategy completed in the 2016 fourth quarter.
Service charges on deposit accounts decreased $8 million, or 9%, primarily reflecting a
$7 million seasonal decline in
service charges on consumer accounts. Mortgage banking income
decreased $6 million, or 16%,
primarily driven by a decline in net MSR activity. These
decreases were partially offset by an $11
million, or 38%, increase in other income, primarily
reflecting the $8 million unfavorable
impact during the prior quarter related to ineffectiveness of
derivatives used to hedge fixed-rate, long-term debt.
Noninterest Expense (see Basis of Presentation)
Table 9 – Noninterest Expense (GAAP) – Continued Focus on
Implementation of FirstMerit-Related Cost Savings
|
2017
|
|
2016
|
|
|
|
First
|
|
Fourth
|
|
Third
|
|
Second
|
|
First
|
|
Change (%)
|
($ in
millions)
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
LQ
|
|
YOY
|
Personnel
costs
|
$
|
382
|
|
|
$
|
360
|
|
|
$
|
405
|
|
|
$
|
299
|
|
|
$
|
285
|
|
|
6
|
%
|
|
34
|
%
|
Outside data
processing and other services
|
87
|
|
|
89
|
|
|
91
|
|
|
63
|
|
|
62
|
|
|
(2)
|
|
|
41
|
|
Equipment
|
47
|
|
|
60
|
|
|
41
|
|
|
32
|
|
|
33
|
|
|
(22)
|
|
|
43
|
|
Net
occupancy
|
68
|
|
|
49
|
|
|
41
|
|
|
31
|
|
|
31
|
|
|
37
|
|
|
115
|
|
Professional
services
|
18
|
|
|
23
|
|
|
47
|
|
|
21
|
|
|
14
|
|
|
(21)
|
|
|
35
|
|
Marketing
|
14
|
|
|
21
|
|
|
14
|
|
|
15
|
|
|
12
|
|
|
(35)
|
|
|
13
|
|
Deposit and other
insurance expense
|
20
|
|
|
16
|
|
|
15
|
|
|
12
|
|
|
11
|
|
|
27
|
|
|
79
|
|
Amortization of
intangibles
|
14
|
|
|
14
|
|
|
9
|
|
|
4
|
|
|
4
|
|
|
2
|
|
|
287
|
|
Other
expense
|
57
|
|
|
49
|
|
|
48
|
|
|
47
|
|
|
39
|
|
|
16
|
|
|
46
|
|
Total noninterest
expense
|
$
|
707
|
|
|
$
|
681
|
|
|
$
|
712
|
|
|
$
|
524
|
|
|
$
|
491
|
|
|
4
|
%
|
|
44
|
%
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of employees
(Average full-time equivalent)
|
16.3
|
|
|
16.0
|
|
|
14.5
|
|
|
12.4
|
|
|
12.4
|
|
|
2
|
%
|
|
31
|
%
|
Table 10 - Impacts of Significant Items
|
2017
|
|
2016
|
|
First
|
|
Fourth
|
|
Third
|
|
Second
|
|
First
|
($ in
millions)
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
Personnel
costs
|
$
|
20
|
|
|
$
|
(5)
|
|
|
$
|
76
|
|
|
$
|
5
|
|
|
$
|
—
|
|
Outside data
processing and other services
|
14
|
|
|
15
|
|
|
28
|
|
|
3
|
|
|
—
|
|
Equipment
|
6
|
|
|
20
|
|
|
5
|
|
|
—
|
|
|
—
|
|
Net
occupancy
|
23
|
|
|
7
|
|
|
7
|
|
|
—
|
|
|
—
|
|
Professional
services
|
4
|
|
|
9
|
|
|
34
|
|
|
11
|
|
|
4
|
|
Marketing
|
1
|
|
|
4
|
|
|
1
|
|
|
—
|
|
|
—
|
|
Deposit and other
insurance expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Amortization of
intangibles
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Other
expense
|
5
|
|
|
3
|
|
|
8
|
|
|
2
|
|
|
1
|
|
Total noninterest
expense
|
$
|
73
|
|
|
$
|
53
|
|
|
$
|
159
|
|
|
$
|
21
|
|
|
$
|
6
|
|
Table 11 - Adjusted Noninterest Expense
(Non-GAAP)
|
2017
|
|
2016
|
|
|
|
First
|
|
Fourth
|
|
Third
|
|
Second
|
|
First
|
|
Change (%)
|
($ in
millions)
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
LQ
|
|
YOY
|
Personnel
costs
|
$
|
362
|
|
|
$
|
365
|
|
|
$
|
329
|
|
|
$
|
294
|
|
|
$
|
285
|
|
|
(1)%
|
|
|
27
|
%
|
Outside data
processing and other services
|
73
|
|
|
73
|
|
|
63
|
|
|
60
|
|
|
62
|
|
|
—
|
|
|
18
|
|
Equipment
|
41
|
|
|
40
|
|
|
36
|
|
|
32
|
|
|
33
|
|
|
3
|
|
|
24
|
|
Net
occupancy
|
44
|
|
|
42
|
|
|
34
|
|
|
30
|
|
|
31
|
|
|
5
|
|
|
42
|
|
Professional
services
|
14
|
|
|
14
|
|
|
13
|
|
|
11
|
|
|
9
|
|
|
—
|
|
|
56
|
|
Marketing
|
13
|
|
|
17
|
|
|
14
|
|
|
15
|
|
|
12
|
|
|
(24)
|
|
|
8
|
|
Deposit and other
insurance expense
|
20
|
|
|
16
|
|
|
15
|
|
|
12
|
|
|
11
|
|
|
27
|
|
|
79
|
|
Amortization of
intangibles
|
14
|
|
|
14
|
|
|
9
|
|
|
4
|
|
|
4
|
|
|
2
|
|
|
287
|
|
Other
expense
|
52
|
|
|
47
|
|
|
40
|
|
|
46
|
|
|
38
|
|
|
11
|
|
|
37
|
|
Total noninterest
expense
|
$
|
634
|
|
|
$
|
628
|
|
|
$
|
553
|
|
|
$
|
503
|
|
|
$
|
485
|
|
|
1
|
%
|
|
31
|
%
|
See Page 9 of
Quarterly Financial Supplement for additional
detail.
|
Note: 2016 third
quarter results reflect inclusion of FirstMerit since August 16,
2016.
|
Reported noninterest expense for the 2017 first quarter
increased $216 million, or 44%, from
the year-ago quarter, primarily reflecting the impact of the
FirstMerit acquisition, including Significant Items.
Personnel costs increased $97
million, or 34%, primarily reflecting $20 million of acquisition-related personnel
expense and a 32% increase in average full-time equivalent
employees. Other expense increased $18
million, or 46%, including a $5
million increase in OREO and foreclosure expense as well as
the $4 million net increase in
acquisition-related expenses. Deposit and other insurance
expense increased $9 million, or 79%,
reflecting the larger assessment base as well as the FDIC Large
Institution Surcharge implemented during the 2016 third
quarter.
Reported noninterest expense increased $26 million, or 4%, from the 2016 fourth quarter,
including a $20 million net increase
in Significant Items. Personnel costs increased $22 million, or 6%, primarily related to the
$18 million gain on the settlement of
a portion of the FirstMerit pension plan liability during the 2016
fourth quarter. Other expense increased $8 million, or 16%, primarily reflecting the
$6 million benefit related to the
extinguishment of trust preferred securities in the 2016 fourth
quarter. Marketing expense decreased $8 million, or 35%, primarily reflecting the
$3 million net decrease in
acquisition-related expenses and the timing of advertising
campaigns.
Credit Quality
Table 12 – Credit Quality Metrics – NALs and NPAs Decrease
Sequentially, while NCOs Remain Better Than Long-Term
Expectations
|
2017
|
|
2016
|
($ in
millions)
|
March 31,
|
|
December
31,
|
|
September
30,
|
|
June 30,
|
|
March 31,
|
Total nonaccrual
loans and leases
|
$
|
401
|
|
|
$
|
423
|
|
|
$
|
404
|
|
|
$
|
461
|
|
|
$
|
499
|
|
Total other real
estate
|
50
|
|
|
51
|
|
|
71
|
|
|
29
|
|
|
26
|
|
Other NPAs
(1)
|
7
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total nonperforming
assets
|
458
|
|
|
481
|
|
|
475
|
|
|
490
|
|
|
525
|
|
Accruing loans and
leases past due 90 days or more
|
128
|
|
|
129
|
|
|
135
|
|
|
99
|
|
|
106
|
|
NPAs + accruing loans
and lease past due 90 days or more
|
$
|
586
|
|
|
$
|
610
|
|
|
$
|
610
|
|
|
$
|
589
|
|
|
$
|
631
|
|
NAL ratio
(2)
|
0.60
|
%
|
|
0.63
|
%
|
|
0.61
|
%
|
|
0.88
|
%
|
|
0.97
|
%
|
NPA ratio
(3)
|
0.68
|
|
|
0.72
|
|
|
0.72
|
|
|
0.93
|
|
|
1.02
|
|
(NPAs+90
days)/(Loans+OREO)
|
0.87
|
|
|
0.91
|
|
|
0.92
|
|
|
1.12
|
|
|
1.22
|
|
Provision for credit
losses
|
$
|
68
|
|
|
$
|
75
|
|
|
$
|
64
|
|
|
$
|
25
|
|
|
$
|
28
|
|
Net
charge-offs
|
39
|
|
|
44
|
|
|
40
|
|
|
17
|
|
|
9
|
|
Net charge-offs /
Average total loans
|
0.24
|
%
|
|
0.26
|
%
|
|
0.26
|
%
|
|
0.13
|
%
|
|
0.07
|
%
|
Allowance for loans
and lease losses
|
$
|
673
|
|
|
$
|
638
|
|
|
$
|
617
|
|
|
$
|
623
|
|
|
$
|
614
|
|
Allowance for
unfunded loan commitments and letters of credit
|
92
|
|
|
98
|
|
|
88
|
|
|
74
|
|
|
75
|
|
Allowance for credit
losses (ACL)
|
$
|
765
|
|
|
$
|
736
|
|
|
$
|
705
|
|
|
$
|
697
|
|
|
$
|
689
|
|
ACL as a %
of:
|
|
|
|
|
|
|
|
|
|
Total loans and
leases
|
1.14
|
%
|
|
1.10
|
%
|
|
1.06
|
%
|
|
1.33
|
%
|
|
1.34
|
%
|
NALs
|
190
|
|
|
174
|
|
|
174
|
|
|
151
|
|
|
138
|
|
NPAs
|
167
|
|
|
153
|
|
|
148
|
|
|
142
|
|
|
131
|
|
(1)
Other nonperforming assets include certain impaired investment
securities.
|
(2)
Total NALs as a % of total loans and leases.
|
(3)
Total NPAs as a % of sum of loans and leases and other real
estate.
|
See
Pages 11-14 of Quarterly Financial Supplement for additional
detail.
|
Overall asset quality remains strong, with some modest
volatility. The overall consumer credit metrics continue to
perform as expected, with slightly improved results compared to the
prior quarter. The commercial portfolios continue to
experience some quarter to quarter volatility, with the current
quarter reporting a significantly lower net loss despite limited
recoveries compared to prior periods. The modest volatility
is the result of the absolute low level of problem loans.
Nonaccrual loans and leases (NALs) decreased $97 million, or 20%, from the year-ago quarter to
$401 million, or 0.60% of total loans
and leases. The year-over-year decrease was centered in the
Commercial portfolio and was primarily associated with the improved
performance of a small number of energy sector loan relationships
that were added to NALs in the 2016 first quarter. While the
energy portfolio was a primary driver of the decrease in NALs over
the past year, that portfolio continues to represent less than 1%
of total loans outstanding. Nonperforming assets (NPAs)
decreased $67 million, or 13%, from
the year-ago quarter to $458 million,
or 0.68% of total loans and leases and OREO. NALs decreased
$21 million, or 5%, from the prior
quarter, while NPAs decreased $23
million, or 5%, from the prior quarter. The
linked-quarter decreases primarily resulted from pay-downs and NALs
that returned to accruing status.
The provision for credit losses increased $40 million year-over-year to $68 million in the 2017 first quarter. Net
charge-offs (NCOs) increased $31
million to $39 million
primarily as a result of material CRE recoveries in the year-ago
quarter as well as charge-offs on the acquired FirstMerit
portfolio. NCOs represented an annualized 0.24% of average
loans and leases in the current quarter, down from 0.26% in the
prior quarter but up from 0.07% in the year-ago quarter. We
continue to be pleased with the net charge-off performance within
each portfolio and in total.
The period-end allowance for credit losses (ACL) as a percentage
of total loans and leases decreased to 1.14% from 1.34% a year ago,
while the ACL as a percentage of period-end total NALs increased to
190% from 138%. We believe the level of the ACL is
appropriate given the improvement in the credit quality metrics and
the current composition of the overall loan and lease
portfolio. The year-over-year decline in the coverage ratios
is primarily a function of the purchase accounting impact
associated with the FirstMerit acquisition.
Capital
Table 13 – Capital Ratios – FirstMerit Acquisition
Effectively Deploys Capital
|
|
2017
|
|
2016
|
($ in
millions)
|
|
March 31,
|
|
December
31,
|
|
September
30,
|
|
June 30,
|
|
March 31,
|
Tangible common
equity / tangible assets ratio
|
|
7.28
|
%
|
|
7.16
|
%
|
|
7.14
|
%
|
|
7.96
|
%
|
|
7.89
|
%
|
Common equity tier 1
risk-based capital ratio (1)
|
|
9.67
|
%
|
|
9.56
|
%
|
|
9.09
|
%
|
|
9.80
|
%
|
|
9.73
|
%
|
Regulatory Tier 1
risk-based capital ratio (1)
|
|
11.04
|
%
|
|
10.92
|
%
|
|
10.40
|
%
|
|
11.37
|
%
|
|
10.99
|
%
|
Regulatory Total
risk-based capital ratio (1)
|
|
13.15
|
%
|
|
13.05
|
%
|
|
12.56
|
%
|
|
13.49
|
%
|
|
13.17
|
%
|
Total risk-weighted
assets (1)
|
|
$
|
78,082
|
|
|
$
|
78,263
|
|
|
$
|
80,513
|
|
|
$
|
60,721
|
|
|
$
|
59,798
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Figures are estimated and are presented on a Basel III
standardized approach basis.
|
See
Pages 15-16 of Quarterly Financial Supplement for additional
detail.
|
The tangible common equity to tangible assets ratio was 7.28% at
March 31, 2017, down 61 basis points from a year ago.
Common Equity Tier 1 (CET1) risk-based capital ratio was 9.67% at
March 31, 2017, down from 9.73% a year ago. The
regulatory Tier 1 risk-based capital ratio was 11.04% compared to
10.99% at March 31, 2016. Capital ratios were impacted
by the $1.3 billion of goodwill
created and the issuance of $2.8
billion of common stock as part of the FirstMerit
acquisition. The regulatory Tier 1 risk-based and total
risk-based capital ratios benefited from the issuance of
$200 million of Class D preferred
equity during the 2016 second quarter and the issuance of
$100 million of Class C preferred
equity during the 2016 third quarter in exchange for FirstMerit
preferred equity in conjunction with the acquisition. The
total risk-based capital ratio was impacted by the repurchase of
$20 million of trust preferred
securities during the 2016 third quarter and $40 million of trust preferred securities during
the 2016 fourth quarter, both of which were executed under the
de minimis clause of the Federal Reserve's CCAR rules.
In addition, $5 million of trust
preferred securities were acquired in the FirstMerit acquisition
and subsequently were redeemed. There were no common shares
repurchased over the past five quarters.
Income Taxes
The provision for income taxes in the 2017 first quarter was
$59 million, compared to $55 million in the 2016 first quarter. The
effective tax rates for the 2017 first quarter and 2016 first
quarter were 22.2% and 24.3%, respectively. At March 31,
2017, we had a net federal deferred tax asset of $91 million and a net state deferred tax asset of
$41 million.
Expectations - 2017
"We expect ongoing consumer and business confidence to translate
into private sector investment fueling continued economic
momentum," Steinour said. "We are seeing solid manufacturing and
infrastructure growth in the Midwest. Businesses are adding
jobs and investing more, and growth in our pipelines has
followed. We will continue to leverage our increased scale,
capabilities, and additional expertise. We are on pace to
meet our previously-announced commitments for $255 million of annualized cost savings and
$100 million of annualized revenue
enhancements from the FirstMerit acquisition."
We expect full-year revenue growth to be in excess of 20%. While
continuing to proactively invest in the franchise, we will manage
the expense base with respect to our annual goal to deliver
positive operating leverage. We remain on track to implement all
FirstMerit-related cost savings by the end of the 2017 third
quarter.
We expect average balance sheet growth, driven largely by the
FirstMerit acquisition, to be in excess of 20%. On a period-end
basis, we expect loan growth of 4% to 6%.
Overall, asset quality metrics are expected to remain near
current levels, although moderate quarterly volatility also is
expected, given the current low level of problem assets and credit
costs. We anticipate NCOs will remain below our long-term
normalized range of 35 to 55 basis points, while provision expense
will continue to normalize.
The effective tax rate for 2017 is expected to be in the range
of 24% to 27%, excluding Significant Items.
Conference Call / Webcast Information
Huntington's senior management will host an earnings conference
call on April 19, 2017, at 9:00 a.m.
(Eastern Daylight Time). The call may be accessed via a live
Internet webcast at the Investor Relations section of Huntington's
website, www.huntington.com, or through a dial-in telephone number
at (877) 407-8029; Conference ID #13657845. Slides will
be available in the Investor Relations section of Huntington's
website about an hour prior to the call. A replay of the
webcast will be archived in the Investor Relations section of
Huntington's website. A telephone replay will be available
approximately two hours after the completion of the call through
April 28, 2017 at (877) 660-6853
or (201) 612-7415; conference ID #13657845.
Please see the 2017 First Quarter Quarterly Financial
Supplement for additional detailed financial performance metrics.
This document can be found on Huntington's Investor Relations
website, www.huntington-ir.com.
Caution regarding Forward-Looking Statements
This communication contains certain forward-looking statements,
including, but not limited to, certain plans, expectations, goals,
projections, and statements, which are not historical facts and are
subject to numerous assumptions, risks, and uncertainties.
Statements that do not describe historical or current facts,
including statements about beliefs and expectations, are
forward-looking statements. Forward-looking statements may be
identified by words such as expect, anticipate, believe, intend,
estimate, plan, target, goal, or similar expressions, or future or
conditional verbs such as will, may, might, should, would, could,
or similar variations. The forward-looking statements are intended
to be subject to the safe harbor provided by Section 27A of the
Securities Act of 1933, Section 21E of the Securities Exchange Act
of 1934, and the Private Securities Litigation Reform Act of
1995.
While there is no assurance that any list of risks and
uncertainties or risk factors is complete, below are certain
factors which could cause actual results to differ materially from
those contained or implied in the forward-looking statements:
changes in general economic, political, or industry conditions;
uncertainty in U.S. fiscal and monetary policy, including the
interest rate policies of the Federal Reserve Board; volatility and
disruptions in global capital and credit markets; movements in
interest rates; competitive pressures on product pricing and
services; success, impact, and timing of our business strategies,
including market acceptance of any new products or services
implementing our "Fair Play" banking philosophy; the nature,
extent, timing, and results of governmental actions, examinations,
reviews, reforms, regulations, and interpretations, including those
related to the Dodd-Frank Wall Street Reform and Consumer
Protection Act and the Basel III regulatory capital reforms, as
well as those involving the OCC, Federal Reserve, FDIC, and CFPB;
the possibility that the anticipated benefits of the merger with
FirstMerit Corporation are not realized when expected or at all,
including as a result of the impact of, or problems arising from,
the integration of the two companies or as a result of the strength
of the economy and competitive factors in the areas where we do
business; diversion of management's attention from ongoing business
operations and opportunities; potential adverse reactions or
changes to business or employee relationships, including those
resulting from the completion of the merger with FirstMerit
Corporation; our ability to complete the integration of FirstMerit
Corporation successfully; and other factors that may affect our
future results. Additional factors that could cause results to
differ materially from those described above can be found in our
Annual Report on Form 10-K for the year ended December 31, 2016, which is on file with the
Securities and Exchange Commission (the "SEC") and available in the
"Investor Relations" section of our website,
http://www.huntington.com, under the heading "Publications and
Filings" and in other documents we file with the SEC.
All forward-looking statements speak only as of the date they
are made and are based on information available at that time. We do
not assume any obligation to update forward-looking statements to
reflect circumstances or events that occur after the date the
forward-looking statements were made or to reflect the occurrence
of unanticipated events except as required by federal securities
laws. As forward-looking statements involve significant risks and
uncertainties, caution should be exercised against placing undue
reliance on such statements.
Basis of Presentation
Use of Non-GAAP Financial Measures
This document contains GAAP financial measures and non-GAAP
financial measures where management believes it to be helpful in
understanding Huntington's results of operations or financial
position. Where non-GAAP financial measures are used, the
comparable GAAP financial measure, as well as the reconciliation to
the comparable GAAP financial measure, can be found in this
document, 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.
Annualized Data
Certain returns, yields, performance ratios, or quarterly growth
rates are presented on an "annualized" basis. This is done for
analytical and decision-making purposes to better discern
underlying performance trends when compared to full-year or
year-over-year amounts. For example, loan and deposit growth rates,
as well as net charge-off percentages, are most often expressed in
terms of an annual rate like 8%. As such, a 2% growth rate for a
quarter would represent an annualized 8% growth rate.
Fully-Taxable Equivalent Interest Income and Net Interest
Margin
Income from tax-exempt earning assets is increased by an amount
equivalent to the taxes that would have been paid if this income
had been taxable at statutory rates. This adjustment puts all
earning assets, most notably tax-exempt municipal securities and
certain lease assets, on a common basis that facilitates comparison
of results to results of competitors.
Earnings per Share Equivalent Data
Significant income or expense items may be expressed on a per
common share basis. This is done for analytical and decision-making
purposes to better discern underlying trends in total corporate
earnings per share performance excluding the impact of such items.
Investors may also find this information helpful in their
evaluation of the company's financial performance against published
earnings per share mean estimate amounts, which typically exclude
the impact of Significant Items. Earnings per share equivalents are
usually calculated by applying an 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.
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
2016 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.
About Huntington
Huntington Bancshares Incorporated is a regional bank holding
company headquartered in Columbus,
Ohio, with $100 billion of
assets and a network of 996 branches and 1,855 ATMs across eight
Midwestern states. Founded in 1866, The Huntington National Bank
and its affiliates provide consumer, small business, commercial,
treasury management, wealth management, brokerage, trust, and
insurance services. Huntington also provides auto dealer, equipment
finance, national settlement and capital market services that
extend beyond its core states. Visit huntington.com for more
information.
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SOURCE Huntington Bancshares Incorporated