COLUMBUS, Ohio, July 21,
2017 /PRNewswire/ -- Huntington Bancshares Incorporated
(NASDAQ: HBAN; www.huntington.com) reported net income for the 2017
second quarter of $272 million, a
$97 million, or 56%, increase from
the year-ago quarter. Earnings per common share for the 2017
second quarter were $0.23, up
$0.04, or 21%, from the year-ago
quarter. Excluding approximately $50
million pretax of FirstMerit acquisition-related net
expenses, or $0.03 per common share
after tax, adjusted earnings per common share were $0.26. Tangible book value per share as of
2017 second quarter-end was $6.74, an
8% year-over-year decrease and a 3% increase from 2017 first
quarter-end. Return on average assets was 1.09%, return on
average common equity was 10.6%, and return on average tangible
common equity was 14.4%. Total revenue increased 37% over the
year-ago quarter.
"We are very pleased with our record second quarter earnings,
which illustrates tangible progress to deliver top tier regional
bank performance," said Steve
Steinour, chairman, president, and CEO. "The improved
earnings power of the company is a result of the successful
integration combined with organic growth. The recent results
of the annual DFAST and CCAR exercises demonstrate our disciplined
underwriting and risk management to maintain our aggregate
moderate-to-low risk profile."
"We remain focused on core deposit growth, and actively manage
our balance sheet in the face of rising short-term interest
rates. Loan growth in the second quarter benefited from
strong consumer loan production, particularly residential mortgage
and auto," Steinour said.
"With the FirstMerit integration nearly complete, we are focused
on growing revenues through deepening existing customer
relationships, gaining market share via new customer acquisition,
and executing on the revenue enhancement opportunities from the
acquisition. The successful conversion, particularly with
respect to consumer deposit retention, positioned us to re-examine
our physical distribution network for additional efficiencies,
resulting in the recently-announced consolidation of 38 branches
and 7 drive-through convenience locations to be completed during
the 2017 third quarter."
Huntington today also announced the Board authorized the
repurchase of up to $308 million of
common shares over the four quarters through the 2018 second
quarter. The share repurchase plan was proposed in the 2017
CCAR capital plan, which received no objections from the Federal
Reserve. Purchases of common stock under the authorization
may include open market purchases, privately negotiated
transactions, and accelerated repurchase programs.
Specific 2017 Second Quarter
Highlights:
- $295 million, or 37%,
year-over-year increase in fully-taxable equivalent revenue,
comprised of a $241 million, or 47%,
increase in fully-taxable equivalent net interest income and a
$54 million, or 20%, increase in
noninterest income
- Net interest margin of 3.31%, an increase of 25 basis points
from the year-ago quarter
- $171 million, or 33%,
year-over-year increase in noninterest expense, including a net
increase of $29 million of FirstMerit
acquisition-related expense
- $15.4 billion, or 30%,
year-over-year increase in average loans and leases,
comprised on an $8.5 billion, or
32%, increase in commercial loans and a $6.9
billion, or 27%, increase in consumer loans
- $8.5 billion, or 56%,
year-over-year increase in average securities, including a net
increase of $0.6 billion of direct
purchase municipal instruments in our Commercial Banking
segment
- $20.4 billion, or 39%,
year-over-year increase in average core deposits, driven by a
$9.0 billion, or 107%, increase in
interest-bearing demand deposits, a $6.5
billion, or 120%, increase in savings and other domestic
deposits, and a $5.1 billion, or 31%,
increase in noninterest-bearing demand deposits
-
- Consumer deposits from FirstMerit customers and branches
increased 2% between August 2016 and
June 2017
- Net charge-offs equated to 0.21% of average loans and leases,
representing the thirteenth consecutive quarter below the long-term
target range of 0.35% to 0.55%
- Nonperforming asset ratio of 0.61%, down from 0.68% a quarter
ago and 0.93% a year ago
-
- Automobile loans continue to perform well, with net charge-offs
down 16 basis points sequentially to 0.29% and nonaccrual loans
down 22% to $4 million, or 0.03% of
Automobile loans
- $0.55, or 8%, year-over-year
decrease, but $0.19, or 3%,
linked-quarter increase in tangible book value per common share
(TBVPS) to $6.74
Table 1 – Earnings Performance Summary
|
2017
|
|
2016
|
($ in millions,
except per share data)
|
Second
|
|
First
|
|
Fourth
|
|
Third
|
|
Second
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
Net Income
|
$
|
272
|
|
|
$
|
208
|
|
|
$
|
239
|
|
|
$
|
127
|
|
|
$
|
175
|
|
Diluted earnings per
common share
|
0.23
|
|
|
0.17
|
|
|
0.20
|
|
|
0.11
|
|
|
0.19
|
|
|
|
|
|
|
|
|
|
|
|
Return on average
assets
|
1.09
|
%
|
|
0.84
|
%
|
|
0.95
|
%
|
|
0.58
|
%
|
|
0.96
|
%
|
Return on average
common equity
|
10.6
|
|
|
8.2
|
|
|
9.4
|
|
|
5.4
|
|
|
9.6
|
|
Return on average
tangible common equity
|
14.4
|
|
|
11.3
|
|
|
12.9
|
|
|
7.0
|
|
|
11.0
|
|
Net interest
margin
|
3.31
|
|
|
3.30
|
|
|
3.25
|
|
|
3.18
|
|
|
3.06
|
|
Efficiency
ratio
|
62.9
|
|
|
65.7
|
|
|
61.6
|
|
|
75.0
|
|
|
66.1
|
|
|
|
|
|
|
|
|
|
|
|
Tangible book value
per common share
|
$
|
6.74
|
|
|
$
|
6.55
|
|
|
$
|
6.43
|
|
|
$
|
6.48
|
|
|
$
|
7.29
|
|
Cash dividends
declared per common share
|
0.08
|
|
|
0.08
|
|
|
0.08
|
|
|
0.07
|
|
|
0.07
|
|
Average diluted
shares outstanding (000's)
|
1,108,527
|
|
|
1,108,617
|
|
|
1,104,358
|
|
|
952,081
|
|
|
810,371
|
|
|
|
|
|
|
|
|
|
|
|
Average earning
assets
|
$
|
91,728
|
|
|
$
|
91,139
|
|
|
$
|
91,463
|
|
|
$
|
79,687
|
|
|
$
|
67,863
|
|
Average loans and
leases
|
67,345
|
|
|
66,981
|
|
|
66,405
|
|
|
60,722
|
|
|
51,932
|
|
Average core
deposits
|
72,291
|
|
|
71,500
|
|
|
72,070
|
|
|
62,022
|
|
|
51,895
|
|
|
|
|
|
|
|
|
|
|
|
Tangible common
equity / tangible assets ratio
|
7.41
|
%
|
|
7.28
|
%
|
|
7.16
|
%
|
|
7.14
|
%
|
|
7.96
|
%
|
Common equity Tier 1
risk-based capital ratio
|
9.88
|
|
|
9.74
|
|
|
9.56
|
|
|
9.09
|
|
|
9.80
|
|
|
|
|
|
|
|
|
|
|
|
NCOs as a % of
average loans and leases
|
0.21
|
%
|
|
0.24
|
%
|
|
0.26
|
%
|
|
0.26
|
%
|
|
0.13
|
%
|
NAL ratio
|
0.54
|
|
|
0.60
|
|
|
0.63
|
|
|
0.61
|
|
|
0.88
|
|
ACL as a % of total
loans and leases
|
1.11
|
|
|
1.14
|
|
|
1.10
|
|
|
1.06
|
|
|
1.33
|
|
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
second quarter: $50 million of
FirstMerit acquisition-related net expense.
Table 2 – Significant Items Influencing
Earnings
Three Months
Ended
|
Pre-Tax
Impact
|
|
After-Tax
Impact
|
($ in millions,
except per share)
|
Amount
|
|
Amount (1)
|
|
EPS
(2)
|
June 30, 2017 –
net income
|
|
|
$
|
272
|
|
|
$
|
0.23
|
|
•
|
|
Merger and
acquisition-related net expenses
|
$
|
(50)
|
|
|
(33)
|
|
|
(0.03)
|
|
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)
|
|
(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 Aids
Year-over-Year NIM Expansion
|
2017
|
|
2016
|
|
|
|
($ in
millions)
|
Second
|
|
First
|
|
Fourth
|
|
Third
|
|
Second
|
|
Change (%)
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
LQ
|
|
YOY
|
Net interest
income
|
$
|
745
|
|
|
$
|
730
|
|
|
$
|
735
|
|
|
$
|
625
|
|
|
$
|
506
|
|
|
2
|
%
|
|
47
|
%
|
FTE
adjustment
|
12
|
|
|
12
|
|
|
13
|
|
|
11
|
|
|
10
|
|
|
(0)
|
|
|
20
|
|
Net interest income -
FTE
|
757
|
|
|
742
|
|
|
748
|
|
|
636
|
|
|
516
|
|
|
2
|
|
|
47
|
|
Noninterest
income
|
325
|
|
|
312
|
|
|
334
|
|
|
302
|
|
|
271
|
|
|
4
|
|
|
20
|
|
Total revenue -
FTE
|
$
|
1,082
|
|
|
$
|
1,054
|
|
|
$
|
1,082
|
|
|
$
|
938
|
|
|
$
|
787
|
|
|
3
|
%
|
|
37
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Change bp
|
Yield /
Cost
|
|
|
|
|
|
|
|
|
|
|
LQ
|
|
YOY
|
Total earning
assets
|
3.75
|
%
|
|
3.70
|
%
|
|
3.60
|
%
|
|
3.52
|
%
|
|
3.41
|
%
|
|
5
|
|
|
34
|
|
Total loans and
leases
|
4.15
|
|
|
4.07
|
|
|
3.95
|
|
|
3.81
|
|
|
3.63
|
|
|
8
|
|
|
52
|
|
Total
securities
|
2.55
|
|
|
2.54
|
|
|
2.58
|
|
|
2.47
|
|
|
2.56
|
|
|
1
|
|
|
(1)
|
|
Total
interest-bearing liabilities
|
0.61
|
|
|
0.54
|
|
|
0.48
|
|
|
0.49
|
|
|
0.50
|
|
|
7
|
|
|
11
|
|
Total
interest-bearing deposits
|
0.31
|
|
|
0.26
|
|
|
0.23
|
|
|
0.22
|
|
|
0.23
|
|
|
5
|
|
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest rate
spread
|
3.14
|
|
|
3.16
|
|
|
3.12
|
|
|
3.03
|
|
|
2.91
|
|
|
(2)
|
|
|
23
|
|
Impact of
noninterest-bearing funds on margin
|
0.17
|
|
|
0.14
|
|
|
0.13
|
|
|
0.15
|
|
|
0.15
|
|
|
3
|
|
|
2
|
|
Net interest
margin
|
3.31
|
%
|
|
3.30
|
%
|
|
3.25
|
%
|
|
3.18
|
%
|
|
3.06
|
%
|
|
1
|
|
|
25
|
|
See Pages 7-9 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
second quarter increased $241
million, or 47%, from the 2016 second quarter. This
reflected the benefit from the $23.9
billion, or 35%, increase in average earning assets coupled
with a 25 basis point improvement in the FTE net interest margin
(NIM) to 3.31%. Average earning asset growth included a
$15.4 billion, or 30%, increase in
average loans and leases and an $8.5
billion, or 56%, increase in average securities. The
NIM expansion reflected a 34 basis point increase in earning asset
yields and a 2 basis point increase in the benefit from
noninterest-bearing funds, partially offset by an 11 basis point
increase in funding costs. FTE net interest income during the
2017 second quarter included $34
million, or approximately 15 basis points, of purchase
accounting impact.
Compared to the 2017 first quarter, FTE net interest income
increased $15 million, or 2%.
Average earning assets increased $0.6
billion, or less than 1%, sequentially, while the NIM
increased 1 basis point. The increase in the NIM reflected a
5 basis point increase in earning asset yields and a 3 basis point
increase in the benefit from noninterest-bearing funds, partially
offset by a 7 basis point increase in the cost of interest-bearing
liabilities. The purchase accounting impact on the net
interest margin was approximately 15 basis points in the 2017
second quarter compared to approximately 16 basis points in the
prior quarter.
Table 4 – Average Earning Assets – Residential Mortgage,
Automobile, and RV and Marine Drive Linked-quarter Loan
Growth
|
2017
|
|
2016
|
|
|
|
|
($ in
billions)
|
Second
|
|
First
|
|
Fourth
|
|
Third
|
|
Second
|
|
Change (%)
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
LQ
|
|
YOY
|
Commercial and
industrial
|
$
|
28.0
|
|
|
$
|
27.9
|
|
|
$
|
27.7
|
|
|
$
|
25.0
|
|
|
$
|
21.3
|
|
|
0
|
%
|
|
31
|
%
|
Commercial real
estate
|
7.1
|
|
|
7.4
|
|
|
7.2
|
|
|
6.4
|
|
|
5.2
|
|
|
(4)
|
|
|
35
|
|
Total
commercial
|
35.1
|
|
|
35.3
|
|
|
34.9
|
|
|
31.3
|
|
|
26.6
|
|
|
(1)
|
|
|
32
|
|
Automobile
|
11.3
|
|
|
11.1
|
|
|
10.9
|
|
|
11.4
|
|
|
10.1
|
|
|
2
|
|
|
12
|
|
Home
equity
|
10.0
|
|
|
10.1
|
|
|
10.1
|
|
|
9.3
|
|
|
8.4
|
|
|
(1)
|
|
|
18
|
|
Residential
mortgage
|
8.0
|
|
|
7.8
|
|
|
7.7
|
|
|
7.0
|
|
|
6.2
|
|
|
3
|
|
|
29
|
|
RV and marine
finance
|
2.0
|
|
|
1.9
|
|
|
1.8
|
|
|
0.9
|
|
|
—
|
|
|
9
|
|
|
NM
|
Other
consumer
|
1.0
|
|
|
0.9
|
|
|
1.0
|
|
|
0.8
|
|
|
0.6
|
|
|
7
|
|
|
60
|
|
Total
consumer
|
32.3
|
|
|
31.7
|
|
|
31.5
|
|
|
29.4
|
|
|
25.4
|
|
|
2
|
|
|
27
|
|
Total loans and
leases
|
67.3
|
|
|
67.0
|
|
|
66.4
|
|
|
60.7
|
|
|
51.9
|
|
|
1
|
|
|
30
|
|
Total
securities
|
23.8
|
|
|
23.6
|
|
|
22.4
|
|
|
18.2
|
|
|
15.3
|
|
|
0
|
|
|
56
|
|
Held-for-sale and
other earning assets
|
0.6
|
|
|
0.5
|
|
|
2.6
|
|
|
0.8
|
|
|
0.7
|
|
|
22
|
|
|
(6)
|
|
Total earning
assets
|
$
|
91.7
|
|
|
$
|
91.1
|
|
|
$
|
91.5
|
|
|
$
|
79.7
|
|
|
$
|
67.9
|
|
|
1
|
%
|
|
35
|
%
|
See Page 7 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 second quarter increased
$23.9 billion, or 35%, from the
year-ago quarter, primarily reflecting the impact of the FirstMerit
acquisition. Average securities increased $8.5 billion, or 56%, which included $2.9 billion of direct purchase municipal
instruments in our commercial banking segment compared to
$2.3 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 2017 first quarter, average earning assets
increased $0.6 billion, or less than
1%. Average loans and leases increased $0.4 billion, or less than 1%, primarily
reflecting growth in residential mortgage, automobile, and RV and
marine loans partially offset by a decline in average commercial
real estate loans. Total commercial lending was negatively
impacted by anticipated FirstMerit-related runoff.
Table 5 – Average Liabilities – Interest-bearing Demand
and Money Market Deposits Drive Linked-quarter Core Deposit
Growth
|
2017
|
|
2016
|
|
|
|
Second
|
|
First
|
|
Fourth
|
|
Third
|
|
Second
|
|
Change (%)
|
($ in
billions)
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
LQ
|
|
YOY
|
Demand deposits -
noninterest-bearing
|
$
|
21.6
|
|
|
$
|
21.7
|
|
|
$
|
23.2
|
|
|
$
|
20.0
|
|
|
$
|
16.5
|
|
|
(1)
|
%
|
|
31
|
%
|
Demand deposits -
interest-bearing
|
17.4
|
|
|
16.8
|
|
|
15.3
|
|
|
12.4
|
|
|
8.4
|
|
|
4
|
|
|
107
|
|
Total demand
deposits
|
39.0
|
|
|
38.5
|
|
|
38.5
|
|
|
32.4
|
|
|
24.9
|
|
|
1
|
|
|
56
|
|
Money market
deposits
|
19.2
|
|
|
18.7
|
|
|
18.6
|
|
|
18.5
|
|
|
19.5
|
|
|
3
|
|
|
(2)
|
|
Savings and other
domestic deposits
|
11.9
|
|
|
12.0
|
|
|
12.3
|
|
|
8.9
|
|
|
5.4
|
|
|
(1)
|
|
|
120
|
|
Core certificates of
deposit
|
2.1
|
|
|
2.3
|
|
|
2.6
|
|
|
2.3
|
|
|
2.0
|
|
|
(8)
|
|
|
7
|
|
Total core
deposits
|
72.2
|
|
|
71.5
|
|
|
72.0
|
|
|
62.1
|
|
|
51.8
|
|
|
1
|
|
|
39
|
|
Other domestic
deposits of $250,000 or more
|
0.5
|
|
|
0.5
|
|
|
0.4
|
|
|
0.4
|
|
|
0.4
|
|
|
2
|
|
|
19
|
|
Brokered deposits and
negotiable CDs
|
3.8
|
|
|
4.0
|
|
|
4.3
|
|
|
3.9
|
|
|
2.9
|
|
|
(5)
|
|
|
30
|
|
Deposits in foreign
offices
|
—
|
|
|
—
|
|
|
0.2
|
|
|
0.2
|
|
|
0.2
|
|
|
—
|
|
|
(100)
|
|
Total
deposits
|
$
|
76.5
|
|
|
$
|
76.0
|
|
|
$
|
76.9
|
|
|
$
|
66.6
|
|
|
$
|
55.3
|
|
|
1
|
%
|
|
38
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term
borrowings
|
$
|
2.7
|
|
|
$
|
3.8
|
|
|
$
|
2.6
|
|
|
$
|
1.3
|
|
|
$
|
1.0
|
|
|
(29)
|
%
|
|
160
|
%
|
Long-term
debt
|
8.7
|
|
|
8.5
|
|
|
8.6
|
|
|
8.5
|
|
|
7.9
|
|
|
2
|
|
|
11
|
|
Total debt
|
$
|
11.4
|
|
|
$
|
12.3
|
|
|
$
|
11.2
|
|
|
$
|
9.8
|
|
|
$
|
8.9
|
|
|
(7)
|
%
|
|
28
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
interest-bearing liabilities
|
$
|
66.4
|
|
|
$
|
66.5
|
|
|
$
|
64.9
|
|
|
$
|
56.3
|
|
|
$
|
47.8
|
|
|
(0)
|
%
|
|
39
|
%
|
See Page 7 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 second quarter increased
$21.1 billion, or 38%, from the
year-ago quarter, while average total core deposits increased
$20.4 billion, or 39%. Average
total interest-bearing liabilities increased $18.5 billion, or 39%, from the year-ago
quarter. These increases primarily reflect the impact of the
FirstMerit acquisition. Average demand deposits increased
$14.1 billion, or 56%, comprised of a
$9.9 billion, or 62%, increase in
average commercial demand deposits and a $4.2 billion, or 46%, increase in average
consumer demand deposits. Average long-term debt increased
$0.8 billion, or 11%, reflecting the
issuance of $2.0 billion and maturity
of $1.6 billion of senior debt over
the past five quarters.
Compared to the 2017 first quarter, average total core deposits
increased $0.8 billion, or 1%,
primarily reflecting a $0.6 billion,
or 3%, increase in money market deposits and a $0.5 billion, or 1%, increase in average demand
deposits. Average total debt decreased $0.9 billion, or 7%, driven by a $1.1 billion, or 29%, decrease in short-term
borrowings, reflecting the maintenance of excess liquidity
surrounding the branch conversion during the 2017 first
quarter.
Noninterest Income (see Basis of Presentation)
Table 6 – Noninterest Income (GAAP) – Deposit Service
Charges and Card and Payment Processing Income Continue to Drive
Fee Income Growth
|
2017
|
|
2016
|
|
|
|
Second
|
|
First
|
|
Fourth
|
|
Third
|
|
Second
|
|
Change (%)
|
($ in
millions)
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
LQ
|
|
YOY
|
Service charges on
deposit accounts
|
$
|
88
|
|
|
$
|
83
|
|
|
$
|
92
|
|
|
$
|
87
|
|
|
$
|
76
|
|
|
5
|
%
|
|
16
|
%
|
Cards and payment
processing income
|
52
|
|
|
47
|
|
|
49
|
|
|
44
|
|
|
39
|
|
|
11
|
|
|
34
|
|
Mortgage banking
income
|
32
|
|
|
32
|
|
|
38
|
|
|
41
|
|
|
32
|
|
|
2
|
|
|
2
|
|
Trust and investment
management services
|
32
|
|
|
34
|
|
|
34
|
|
|
29
|
|
|
22
|
|
|
(5)
|
|
|
43
|
|
Insurance
income
|
16
|
|
|
15
|
|
|
16
|
|
|
16
|
|
|
16
|
|
|
4
|
|
|
(1)
|
|
Brokerage
income
|
16
|
|
|
16
|
|
|
17
|
|
|
15
|
|
|
15
|
|
|
3
|
|
|
12
|
|
Capital markets
fees
|
17
|
|
|
14
|
|
|
19
|
|
|
15
|
|
|
13
|
|
|
19
|
|
|
29
|
|
Bank owned life
insurance income
|
15
|
|
|
18
|
|
|
17
|
|
|
14
|
|
|
13
|
|
|
(13)
|
|
|
22
|
|
Gain on sale of
loans
|
12
|
|
|
13
|
|
|
25
|
|
|
8
|
|
|
9
|
|
|
(6)
|
|
|
30
|
|
Securities gains
(losses)
|
0
|
|
|
(0)
|
|
|
(2)
|
|
|
1
|
|
|
1
|
|
|
NM
|
|
|
NM
|
|
Other
Income
|
44
|
|
|
41
|
|
|
30
|
|
|
33
|
|
|
36
|
|
|
9
|
|
|
22
|
|
Total noninterest
income
|
$
|
325
|
|
|
$
|
312
|
|
|
$
|
334
|
|
|
$
|
302
|
|
|
$
|
271
|
|
|
4
|
%
|
|
20
|
%
|
Table 7 - Impact of Significant Items
|
2017
|
|
2016
|
|
|
Second
|
|
First
|
|
Fourth
|
|
Third
|
|
Second
|
|
($ 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
|
|
|
|
Second
|
|
First
|
|
Fourth
|
|
Third
|
|
Second
|
|
Change (%)
|
($ in
millions)
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
LQ
|
|
YOY
|
Service charges on
deposit accounts
|
$
|
88
|
|
|
$
|
83
|
|
|
$
|
92
|
|
|
$
|
87
|
|
|
$
|
76
|
|
|
5
|
%
|
|
16
|
%
|
Cards and payment
processing income
|
52
|
|
|
47
|
|
|
49
|
|
|
44
|
|
|
39
|
|
|
11
|
|
|
34
|
|
Mortgage banking
income
|
32
|
|
|
32
|
|
|
38
|
|
|
41
|
|
|
32
|
|
|
2
|
|
|
2
|
|
Trust and investment
management services
|
32
|
|
|
34
|
|
|
34
|
|
|
29
|
|
|
22
|
|
|
(5)
|
|
|
43
|
|
Insurance
income
|
16
|
|
|
15
|
|
|
16
|
|
|
16
|
|
|
16
|
|
|
4
|
|
|
(1)
|
|
Brokerage
income
|
16
|
|
|
16
|
|
|
17
|
|
|
15
|
|
|
15
|
|
|
3
|
|
|
12
|
|
Capital markets
fees
|
17
|
|
|
14
|
|
|
19
|
|
|
15
|
|
|
13
|
|
|
19
|
|
|
29
|
|
Bank owned life
insurance income
|
15
|
|
|
18
|
|
|
17
|
|
|
14
|
|
|
13
|
|
|
(13)
|
|
|
22
|
|
Gain on sale of
loans
|
12
|
|
|
13
|
|
|
25
|
|
|
8
|
|
|
9
|
|
|
(6)
|
|
|
30
|
|
Securities gains
(losses)
|
—
|
|
|
—
|
|
|
(2)
|
|
|
1
|
|
|
1
|
|
|
NM
|
|
|
NM
|
|
Other
Income
|
44
|
|
|
39
|
|
|
31
|
|
|
33
|
|
|
36
|
|
|
13
|
|
|
22
|
|
Total noninterest
income
|
$
|
325
|
|
|
$
|
310
|
|
|
$
|
335
|
|
|
$
|
302
|
|
|
$
|
271
|
|
|
5
|
%
|
|
20
|
%
|
See Pages 10-11 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 second quarter
increased $54 million, or 20%, from
the year-ago quarter, primarily reflecting the impact of the
FirstMerit acquisition. Card and payment processing income
increased $13 million, or 34%, due to
higher credit and debit card related income and underlying customer
growth. Service charges on deposit accounts increased
$12 million, or 16%, reflecting the
benefit of the FirstMerit acquisition and continued new customer
acquisition. Of the increase, $6
million was attributable to consumer deposit accounts, and
$6 million was attributable to
commercial deposit accounts.
Compared to the 2017 first quarter, reported noninterest income
increased $13 million, or 4%.
Card and payment processing income increased $5 million, or 11%, reflecting seasonally higher
credit and debit card related income and underlying customer
growth.
Noninterest Expense (see Basis of Presentation)
Table 9 – Noninterest Expense (GAAP) – Continued Focus on
Implementation of FirstMerit-Related Cost Savings
|
2017
|
|
2016
|
|
|
|
Second
|
|
First
|
|
Fourth
|
|
Third
|
|
Second
|
|
Change (%)
|
($ in
millions)
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
LQ
|
|
YOY
|
Personnel
costs
|
$
|
392
|
|
|
$
|
382
|
|
|
$
|
360
|
|
|
$
|
405
|
|
|
$
|
299
|
|
|
3
|
%
|
|
31
|
%
|
Outside data
processing and other services
|
75
|
|
|
87
|
|
|
89
|
|
|
91
|
|
|
63
|
|
|
(14)
|
|
|
19
|
|
Equipment
|
43
|
|
|
47
|
|
|
60
|
|
|
41
|
|
|
32
|
|
|
(8)
|
|
|
35
|
|
Net
occupancy
|
53
|
|
|
68
|
|
|
49
|
|
|
41
|
|
|
31
|
|
|
(22)
|
|
|
71
|
|
Professional
services
|
18
|
|
|
18
|
|
|
23
|
|
|
47
|
|
|
21
|
|
|
(1)
|
|
|
(15)
|
|
Marketing
|
19
|
|
|
14
|
|
|
21
|
|
|
14
|
|
|
15
|
|
|
35
|
|
|
28
|
|
Deposit and other
insurance expense
|
20
|
|
|
20
|
|
|
16
|
|
|
15
|
|
|
12
|
|
|
2
|
|
|
68
|
|
Amortization of
intangibles
|
14
|
|
|
14
|
|
|
14
|
|
|
9
|
|
|
4
|
|
|
(1)
|
|
|
296
|
|
Other
expense
|
60
|
|
|
57
|
|
|
49
|
|
|
48
|
|
|
47
|
|
|
5
|
|
|
27
|
|
Total noninterest
expense
|
$
|
694
|
|
|
$
|
707
|
|
|
$
|
681
|
|
|
$
|
712
|
|
|
$
|
524
|
|
|
(2)
|
%
|
|
33
|
%
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of employees
(Average full-time equivalent)
|
16.1
|
|
|
16.3
|
|
|
16.0
|
|
|
14.5
|
|
|
12.4
|
|
|
(1)
|
%
|
|
30
|
%
|
Table 10 - Impacts of Significant Items
|
2017
|
|
2016
|
|
Second
|
|
First
|
|
Fourth
|
|
Third
|
|
Second
|
($ in
millions)
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
Personnel
costs
|
$
|
18
|
|
|
$
|
20
|
|
|
$
|
(5)
|
|
|
$
|
76
|
|
|
$
|
5
|
|
Outside data
processing and other services
|
6
|
|
|
14
|
|
|
15
|
|
|
28
|
|
|
3
|
|
Equipment
|
4
|
|
|
6
|
|
|
20
|
|
|
5
|
|
|
—
|
|
Net
occupancy
|
14
|
|
|
23
|
|
|
7
|
|
|
7
|
|
|
—
|
|
Professional
services
|
4
|
|
|
4
|
|
|
9
|
|
|
34
|
|
|
11
|
|
Marketing
|
—
|
|
|
1
|
|
|
4
|
|
|
1
|
|
|
—
|
|
Deposit and other
insurance expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Amortization of
intangibles
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Other
expense
|
4
|
|
|
5
|
|
|
3
|
|
|
8
|
|
|
2
|
|
Total noninterest
expense
|
$
|
50
|
|
|
$
|
73
|
|
|
$
|
53
|
|
|
$
|
159
|
|
|
$
|
21
|
|
Table 11 - Adjusted Noninterest Expense
(Non-GAAP)
|
2017
|
|
2016
|
|
|
|
Second
|
|
First
|
|
Fourth
|
|
Third
|
|
Second
|
|
Change (%)
|
($ in
millions)
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
LQ
|
|
YOY
|
Personnel
costs
|
$
|
374
|
|
|
$
|
362
|
|
|
$
|
365
|
|
|
$
|
329
|
|
|
$
|
294
|
|
|
3
|
%
|
|
27
|
%
|
Outside data
processing and other services
|
69
|
|
|
73
|
|
|
73
|
|
|
63
|
|
|
60
|
|
|
(5)
|
|
|
15
|
|
Equipment
|
39
|
|
|
41
|
|
|
40
|
|
|
36
|
|
|
32
|
|
|
(5)
|
|
|
22
|
|
Net
occupancy
|
38
|
|
|
44
|
|
|
42
|
|
|
34
|
|
|
30
|
|
|
(14)
|
|
|
27
|
|
Professional
services
|
14
|
|
|
14
|
|
|
14
|
|
|
13
|
|
|
11
|
|
|
0
|
|
|
27
|
|
Marketing
|
19
|
|
|
13
|
|
|
17
|
|
|
14
|
|
|
15
|
|
|
46
|
|
|
27
|
|
Deposit and other
insurance expense
|
20
|
|
|
20
|
|
|
16
|
|
|
15
|
|
|
12
|
|
|
2
|
|
|
68
|
|
Amortization of
intangibles
|
14
|
|
|
14
|
|
|
14
|
|
|
9
|
|
|
4
|
|
|
(1)
|
|
|
296
|
|
Other
expense
|
56
|
|
|
52
|
|
|
47
|
|
|
40
|
|
|
46
|
|
|
8
|
|
|
22
|
|
Total noninterest
expense
|
$
|
644
|
|
|
$
|
634
|
|
|
$
|
628
|
|
|
$
|
553
|
|
|
$
|
503
|
|
|
2
|
%
|
|
28
|
%
|
See Page 10 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 second quarter
increased $171 million, or 33%, from
the year-ago quarter, primarily reflecting the impact of the
FirstMerit acquisition, including Significant Items.
Personnel costs increased $93
million, or 31%, primarily reflecting a $13 million net increase in acquisition-related
personnel expense and a 30% increase in average full-time
equivalent employees. Deposit and other insurance expense
increased $8 million, or 68%,
reflecting the larger assessment base and the FDIC Large
Institution Surcharge implemented during the 2016 third
quarter.
Reported noninterest expense decreased $13 million, or 2%, from the 2017 first quarter,
including a $23 million net decrease
in Significant Items. Net occupancy costs decreased
$15 million, or 22%, reflecting a
$9 million net decrease in
acquisition-related expenses and the branch consolidations
completed during the 2017 first quarter. Partially offsetting
those decreases, personnel costs increased $10 million, or 3%, reflecting the implementation
of annual merit increases and grant of annual long-term equity
incentive compensation, both in May, partially offset by a
$2 million net decrease in
acquisition-related expenses.
Credit Quality
Table 12 – Credit Quality Metrics – NALs and NPAs Decrease
Sequentially, while NCOs Remain Better Than Long-Term
Expectations
|
2017
|
|
2016
|
($ in
millions)
|
June 30,
|
|
March 31,
|
|
December
31,
|
|
September
30,
|
|
June 30,
|
Total nonaccrual
loans and leases
|
$
|
364
|
|
|
$
|
401
|
|
|
$
|
423
|
|
|
$
|
404
|
|
|
$
|
461
|
|
Total other real
estate
|
44
|
|
|
50
|
|
|
51
|
|
|
71
|
|
|
29
|
|
Other NPAs
(1)
|
7
|
|
|
7
|
|
|
7
|
|
|
—
|
|
|
—
|
|
Total nonperforming
assets
|
415
|
|
|
458
|
|
|
481
|
|
|
475
|
|
|
490
|
|
Accruing loans and
leases past due 90 days or more
|
136
|
|
|
128
|
|
|
129
|
|
|
135
|
|
|
99
|
|
NPAs + accruing loans
and lease past due 90 days or more
|
$
|
551
|
|
|
$
|
586
|
|
|
$
|
610
|
|
|
$
|
610
|
|
|
$
|
589
|
|
NAL ratio
(2)
|
0.54
|
%
|
|
0.60
|
%
|
|
0.63
|
%
|
|
0.61
|
%
|
|
0.88
|
%
|
NPA ratio
(3)
|
0.61
|
|
|
0.68
|
|
|
0.72
|
|
|
0.72
|
|
|
0.93
|
|
(NPAs+90
days)/(Loans+OREO)
|
0.81
|
|
|
0.87
|
|
|
0.91
|
|
|
0.92
|
|
|
1.12
|
|
Provision for credit
losses
|
$
|
25
|
|
|
$
|
68
|
|
|
$
|
75
|
|
|
$
|
64
|
|
|
$
|
25
|
|
Net
charge-offs
|
36
|
|
|
39
|
|
|
44
|
|
|
40
|
|
|
17
|
|
Net charge-offs /
Average total loans
|
0.21
|
%
|
|
0.24
|
%
|
|
0.26
|
%
|
|
0.26
|
%
|
|
0.13
|
%
|
Allowance for loans
and lease losses
|
$
|
668
|
|
|
$
|
673
|
|
|
$
|
638
|
|
|
$
|
617
|
|
|
$
|
623
|
|
Allowance for
unfunded loan commitments and letters of credit
|
85
|
|
|
92
|
|
|
98
|
|
|
88
|
|
|
74
|
|
Allowance for credit
losses (ACL)
|
$
|
753
|
|
|
$
|
765
|
|
|
$
|
736
|
|
|
$
|
705
|
|
|
$
|
697
|
|
ACL as a %
of:
|
|
|
|
|
|
|
|
|
|
Total loans and
leases
|
1.11
|
%
|
|
1.14
|
%
|
|
1.10
|
%
|
|
1.06
|
%
|
|
1.33
|
%
|
NALs
|
207
|
|
|
190
|
|
|
174
|
|
|
174
|
|
|
151
|
|
NPAs
|
181
|
|
|
167
|
|
|
153
|
|
|
148
|
|
|
142
|
|
(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 12-15 of
Quarterly Financial Supplement for additional
detail.
|
Overall asset quality remains strong. The overall consumer
credit metrics continue to perform as expected, with improvement in
the Indirect Auto portfolio compared to the prior quarter mostly
due to seasonality. The commercial portfolios have performed
consistently, with some quarter to quarter volatility as a result
of the absolute low level of problem loans.
Nonaccrual loans and leases (NALs) decreased $96 million, or 21%, from the year-ago quarter to
$364 million, or 0.54% of total loans
and leases. The year-over-year decrease was centered in the
Commercial portfolio, 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 $75 million, or 15%, from
the year-ago quarter to $415 million,
or 0.61% of total loans and leases and OREO. NALs decreased
$37 million, or 9%, from the prior
quarter, while NPAs decreased $43
million, or 9%, 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 of $25
million in the 2017 second quarter was consistent with the
$25 million provision in the year ago
quarter. Net charge-offs (NCOs) increased $19 million to $36
million primarily as a result of Consumer charge-offs on the
acquired FirstMerit portfolio. NCOs represented an annualized
0.21% of average loans and leases in the current quarter, down from
0.24% in the prior quarter but up from 0.13% in the year-ago
quarter. We continue to be pleased with the net charge-off
performance within each portfolio and in total.
The period-end allowance for credit losses (ACL) as a percentage
of total loans and leases decreased to 1.11% from 1.33% a year ago,
while the ACL as a percentage of period-end total NALs increased to
207% from 151% over the same period. We believe the level of
the ACL is appropriate given the consistent improvement in the
credit quality metrics and the current composition of the overall
loan and lease portfolio. The year-over-year decline in the
coverage ratios is primarily a function of the purchase accounting
impact associated with the FirstMerit acquisition.
Capital
Table 13 – Capital Ratios – Reinstating Share Repurchase
as Capital Ratios Within Targeted Ranges
|
|
2017
|
|
2016
|
($ in
millions)
|
|
June 30,
|
|
March 31,
|
|
December
31,
|
|
September
30,
|
|
June 30,
|
Tangible common
equity / tangible assets ratio
|
|
7.41
|
%
|
|
7.28
|
%
|
|
7.16
|
%
|
|
7.14
|
%
|
|
7.96
|
%
|
Common equity tier 1
risk-based capital ratio (1)
|
|
9.88
|
%
|
|
9.74
|
%
|
|
9.56
|
%
|
|
9.09
|
%
|
|
9.80
|
%
|
Regulatory Tier 1
risk-based capital ratio (1)
|
|
11.24
|
%
|
|
11.11
|
%
|
|
10.92
|
%
|
|
10.40
|
%
|
|
11.37
|
%
|
Regulatory Total
risk-based capital ratio (1)
|
|
13.33
|
%
|
|
13.26
|
%
|
|
13.05
|
%
|
|
12.56
|
%
|
|
13.49
|
%
|
Total risk-weighted
assets (1)
|
|
$
|
78,369
|
|
|
$
|
77,559
|
|
|
$
|
78,263
|
|
|
$
|
80,513
|
|
|
$
|
60,721
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Figures are
estimated and are presented on a Basel III standardized approach
basis.
|
See Pages 16-17 of
Quarterly Financial Supplement for additional
detail.
|
The tangible common equity to tangible assets ratio was 7.41% at
June 30, 2017, down 55 basis points from a year ago.
Common Equity Tier 1 (CET1) risk-based capital ratio was 9.88% at
June 30, 2017, up from 9.80% a year ago. The regulatory
Tier 1 risk-based capital ratio was 11.24% compared to 11.37% at
June 30, 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 $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 second quarter was
$79 million, compared to $54 million in the 2016 second quarter. The
effective tax rates for the 2017 second quarter and 2016 second
quarter were 22.4% and 23.7%, respectively. At June 30,
2017, we had a net federal deferred tax asset of $41 million and a net state deferred tax asset of
$37 million.
Expectations - 2017
"Economic activity remained relatively steady across our markets
over the first half of the year, and we expect economic activity
will modestly improve during the second half as ongoing consumer
and business confidence fuel private sector investment," Steinour
said. "The interest rate environment also remains favorable given
the recent short-term interest rate hikes by the Federal Reserve,
although the flattening seen on the intermediate term portion of
the yield curve has dampened some of the benefits from the rate
increases."
"Irrespective of the macroeconomic backdrop, our focus for the
second half of the year is continuing to drive improved returns as
we execute on core fundamentals across the Company. In
addition, we will realize the remaining cost savings from the
FirstMerit acquisition, and continue to capitalize on
acquisition-related revenue enhancement opportunities."
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 consistent with our economic outlook. We
remain committed to our annual goal to deliver positive operating
leverage. We also 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 July 21, 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 #13664890. 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
August 4, 2017 at (877) 660-6853
or (201) 612-7415; conference ID #13664890.
Please see the 2017 Second Quarter Quarterly Financial
Supplement for additional detailed financial performance metrics.
This document can be found on the Investor Relations section of
Huntington's website, http://www.huntington.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; 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, and Quarterly Report on Form 10-Q for the quarter
ended March 31, 2017, which are 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 $101 billion of
assets and a network of 996 branches and 1,860 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