COLUMBUS, Ohio, July 25, 2018 /PRNewswire/ -- Huntington
Bancshares Incorporated (Nasdaq: HBAN; www.huntington.com) reported
net income for the 2018 second quarter of $355 million, an increase of 31% from the
year-ago quarter. Earnings per common share for the 2018
second quarter were $0.30, up 30%
from the year-ago quarter. Tangible book value per common
share as of 2018 second quarter-end was $7.27, an 8% year-over-year increase.
Return on average assets was 1.36%, return on average common equity
was 13.2%, and return on average tangible common equity was
17.6%.
"Our second quarter results demonstrate high quality earnings
driven by solid execution across the bank. We achieved or
exceeded all of our long-term financial goals for the third quarter
in a row, and remain on pace to deliver these goals on an annual
basis, two years ahead of expectations," said Steve Steinour, chairman, president, and
CEO.
"As reflected by the 7% annualized growth in average commercial
loans, the economies in our footprint continue to perform well,
with strength across geographies, industries, and business
stratifications. Average consumer loan growth was 9%
annualized, driven by seasonal strength in our home lending and RV
& marine lending businesses. Core deposit growth of 11%
annualized more than fully funded the quarter's loan growth, driven
by our successful strategy to lock in fixed-rate certificates of
deposit at attractive rates. We are encouraged by the outlook
for continued loan and deposit growth in coming quarters. Our
pipelines are steady, and customer sentiment remains strong."
Consistent with our 2018 CCAR capital plan, last week Huntington
announced that the Board declared a quarterly cash dividend on the
Company's common stock of $0.14 per
share, a $0.03 per share, or 27%,
increase compared with the prior quarter. The dividend is
payable on October 1, 2018, to
shareholders of record on September
17, 2018. Huntington also announced that the Board
authorized the repurchase of up to $1.068
billion of common shares over the four quarters through the
2019 second quarter. Purchases of common stock under the
authorization may include open market purchases, privately
negotiated transactions, and accelerated share repurchase (ASR)
programs. During the 2018 third quarter, the Company intends
to enter into an ASR for approximately $400
million of common stock.
"We were pleased with the recent DFAST and CCAR stress test
results which provided important industry comparisons, particularly
through the independently-modeled cumulative loan losses.
These results illustrated our strong earnings power and disciplined
enterprise risk management," Steinour said. "We are
allocating capital consistent with our stated priorities: to
support continued organic growth, to increase our quarterly
dividend, and to return additional capital to our owners via share
repurchases. This year will represent the eighth consecutive
year of increased dividends."
Specific 2018 Second Quarter
Highlights:
- Fully-taxable equivalent total revenue increased $45 million, or 4%, year-over-year
- Fully-taxable equivalent net interest income increased
$34 million, or 4%,
year-over-year
- Net interest margin of 3.29%, down 2 basis points from the
year-ago quarter
- Noninterest income increased $11
million, or 3%, year-over-year
- Noninterest expense decreased $42
million, or 6%, year-over-year, as the year-ago quarter
included $50 million of
acquisition-related expense
- Effective tax rate of 13.8%, down from 22.4% in the year-ago
quarter, primarily reflecting federal tax reform
- Average loans and leases increased $4.5
billion, or 7%, year-over-year, including a $3.4 billion, or 10%, increase in consumer loans
and a $1.2 billion, or 3%, increase
in commercial loans
- Average core deposits increased $3.1
billion, or 4%, year-over-year, driven by a $1.7 billion, or 9%, increase in money market
deposits and a $1.6 billion, or 77%,
increase in core certificates of deposit
- Net charge-offs equated to 0.16% of average loans and leases,
representing the sixteenth consecutive quarter below the average
through-the-cycle target range of 0.35% to 0.55%
- Nonperforming asset ratio of 0.57%, down from 0.61% a year
ago
- Common Equity Tier 1 (CET1) risk-based capital ratio of 10.53%,
up from 9.88% a year ago and above our 9% to 10% operating
guideline
- Tangible common equity (TCE) ratio of 7.78%, up from 7.41% a
year ago
- Tangible book value per common share (TBVPS) increased
$0.53, or 8%, year-over-year to
$7.27
Table 1 –
Earnings Performance Summary (GAAP)
|
|
|
2018
|
|
2017
|
(in millions,
except per share data)
|
Second
|
|
First
|
|
Fourth
|
|
Third
|
|
Second
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
Net Income
|
$
|
355
|
|
|
$
|
326
|
|
|
$
|
432
|
|
|
$
|
275
|
|
|
$
|
272
|
|
Diluted earnings per
common share
|
0.30
|
|
|
0.28
|
|
|
0.37
|
|
|
0.23
|
|
|
0.23
|
|
|
|
|
|
|
|
|
|
|
|
Return on average
assets
|
1.36
|
%
|
|
1.27
|
%
|
|
1.67
|
%
|
|
1.08
|
%
|
|
1.09
|
%
|
Return on average
common equity
|
13.2
|
|
|
13.0
|
|
|
17.0
|
|
|
10.5
|
|
|
10.6
|
|
Return on average
tangible common equity
|
17.6
|
|
|
17.5
|
|
|
22.7
|
|
|
14.1
|
|
|
14.4
|
|
Net interest
margin
|
3.29
|
|
|
3.30
|
|
|
3.30
|
|
|
3.29
|
|
|
3.31
|
|
Efficiency
ratio
|
56.6
|
|
|
56.8
|
|
|
54.9
|
|
|
60.5
|
|
|
62.9
|
|
|
|
|
|
|
|
|
|
|
|
Tangible book value
per common share
|
$
|
7.27
|
|
|
$
|
7.12
|
|
|
$
|
6.97
|
|
|
$
|
6.85
|
|
|
$
|
6.74
|
|
Cash dividends
declared per common share
|
0.11
|
|
|
0.11
|
|
|
0.11
|
|
|
0.08
|
|
|
0.08
|
|
Average diluted
shares outstanding
|
1,123
|
|
|
1,125
|
|
|
1,130
|
|
|
1,106
|
|
|
1,109
|
|
|
|
|
|
|
|
|
|
|
|
Average earning
assets
|
$
|
96,363
|
|
|
$
|
95,412
|
|
|
$
|
93,937
|
|
|
$
|
92,849
|
|
|
$
|
91,728
|
|
Average loans and
leases
|
71,887
|
|
|
70,484
|
|
|
68,940
|
|
|
68,276
|
|
|
67,345
|
|
Average core
deposits
|
75,386
|
|
|
73,392
|
|
|
73,946
|
|
|
73,549
|
|
|
72,291
|
|
|
|
|
|
|
|
|
|
|
|
Tangible common
equity / tangible assets ratio
|
7.78
|
%
|
|
7.70
|
%
|
|
7.34
|
%
|
|
7.42
|
%
|
|
7.41
|
%
|
Common equity Tier 1
risk-based capital ratio
|
10.53
|
|
|
10.45
|
|
|
10.01
|
|
|
9.94
|
|
|
9.88
|
|
|
|
|
|
|
|
|
|
|
|
NCOs as a % of
average loans and leases
|
0.16
|
%
|
|
0.21
|
%
|
|
0.24
|
%
|
|
0.25
|
%
|
|
0.21
|
%
|
NAL ratio
|
0.52
|
|
|
0.54
|
|
|
0.50
|
|
|
0.49
|
|
|
0.54
|
|
ALLL as a % of total
loans and leases
|
1.02
|
|
|
1.01
|
|
|
0.99
|
|
|
0.98
|
|
|
0.98
|
|
ACL as a % of total
loans and leases
|
1.15
|
|
|
1.13
|
|
|
1.11
|
|
|
1.10
|
|
|
1.11
|
|
Table 2 lists certain items that we believe are significant in
understanding corporate performance and trends (see Basis of
Presentation). There were no Significant Items in the 2018
second quarter.
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, 2018 –
net income
|
|
|
$
|
355
|
|
|
$
|
0.30
|
|
•
|
|
None
|
N/A
|
|
|
—
|
|
|
—
|
|
March 31, 2018 –
net income
|
|
|
$
|
326
|
|
|
$
|
0.28
|
|
•
|
|
None
|
N/A
|
|
|
—
|
|
|
—
|
|
December 31, 2017
– net income
|
|
|
$
|
432
|
|
|
$
|
0.37
|
|
•
|
|
Federal tax
reform-related estimated tax benefit (3)
|
N/A
|
|
|
123
|
|
|
0.11
|
|
September 30, 2017
– net income
|
|
|
$
|
275
|
|
|
$
|
0.23
|
|
•
|
|
Merger and
acquisition-related net expenses
|
$
|
(31)
|
|
|
(20)
|
|
|
(0.02)
|
|
June 30, 2017 –
net income
|
|
|
$
|
272
|
|
|
$
|
0.23
|
|
•
|
|
Merger and
acquisition-related net expenses
|
$
|
(50)
|
|
|
(33)
|
|
|
(0.03)
|
|
(1)
|
Favorable
(unfavorable) impact on net income.
|
(2)
|
EPS reflected on a
fully diluted basis.
|
(3)
|
Represents the
reasonable estimated impact of tax reform as of December 31, 2017.
The estimate could be adjusted in future periods during the
measurement period ending December 22, 2018.
|
Net Interest
Income, Net Interest Margin, and Average Balance
Sheet
|
|
Table 3 – Net
Interest Income and Net Interest Margin Performance Summary –
Continued NIM Stability as Asset Sensitivity of Balance Sheet
Offsets Declining Benefit From Purchase Accounting
Accretion
|
|
|
2018
|
|
2017
|
|
|
|
|
($ in
millions)
|
Second
|
|
First
|
|
Fourth
|
|
Third
|
|
Second
|
|
Change (%)
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
LQ
|
|
YOY
|
Net interest
income
|
$
|
784
|
|
|
$
|
770
|
|
|
$
|
770
|
|
|
$
|
758
|
|
|
$
|
745
|
|
|
2
|
%
|
|
5
|
%
|
FTE
adjustment
|
7
|
|
|
7
|
|
|
12
|
|
|
13
|
|
|
12
|
|
|
—
|
|
|
(42)
|
|
Net interest income -
FTE
|
791
|
|
|
777
|
|
|
782
|
|
|
771
|
|
|
757
|
|
|
2
|
|
|
4
|
|
Noninterest
income
|
336
|
|
|
314
|
|
|
340
|
|
|
330
|
|
|
325
|
|
|
7
|
|
|
3
|
|
Total revenue -
FTE
|
$
|
1,127
|
|
|
$
|
1,091
|
|
|
$
|
1,122
|
|
|
$
|
1,101
|
|
|
$
|
1,082
|
|
|
3
|
%
|
|
4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Change bp
|
Yield /
Cost
|
|
|
|
|
|
|
|
|
|
|
LQ
|
|
YOY
|
Total earning
assets
|
4.07
|
%
|
|
3.91
|
%
|
|
3.83
|
%
|
|
3.78
|
%
|
|
3.75
|
%
|
|
16
|
|
|
32
|
|
Total loans and
leases
|
4.49
|
|
|
4.32
|
|
|
4.23
|
|
|
4.20
|
|
|
4.15
|
|
|
17
|
|
|
34
|
|
Total
securities
|
2.71
|
|
|
2.62
|
|
|
2.64
|
|
|
2.55
|
|
|
2.55
|
|
|
9
|
|
|
16
|
|
Total
interest-bearing liabilities
|
1.05
|
|
|
0.82
|
|
|
0.73
|
|
|
0.68
|
|
|
0.61
|
|
|
23
|
|
|
44
|
|
Total
interest-bearing deposits
|
0.59
|
|
|
0.43
|
|
|
0.37
|
|
|
0.35
|
|
|
0.31
|
|
|
16
|
|
|
28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest rate
spread
|
3.02
|
|
|
3.09
|
|
|
3.10
|
|
|
3.10
|
|
|
3.14
|
|
|
(7)
|
|
|
(12)
|
|
Impact of
noninterest-bearing funds on margin
|
0.27
|
|
|
0.21
|
|
|
0.20
|
|
|
0.19
|
|
|
0.17
|
|
|
6
|
|
|
10
|
|
Net interest
margin
|
3.29
|
%
|
|
3.30
|
%
|
|
3.30
|
%
|
|
3.29
|
%
|
|
3.31
|
%
|
|
(1)
|
|
|
(2)
|
|
|
See Pages 7-9 of
Quarterly Financial Supplement for additional
detail.
|
Fully-taxable equivalent (FTE) net interest income for the 2018
second quarter increased $34 million,
or 4%, from the 2017 second quarter. This reflected the
benefit from the $4.6 billion, or 5%,
increase in average earning assets, partially offset by a two basis
point decrease in the FTE net interest margin (NIM) to 3.29%.
Average earning asset growth reflected a $4.5 billion, or 7%, increase in average loans
and leases. Average earning asset yields increased 32 basis
points year-over-year, driven by a 34 basis point improvement in
loan yields. Average funding costs increased 44 basis points,
although interest-bearing deposit costs only increased 28 basis
points. The cost of short-term borrowings and long-term debt
increased 104 basis points and 126 basis points,
respectively. Embedded within these yields and costs, FTE net
interest income during the 2018 second quarter included
$19 million, or approximately 8 basis
points, of purchase accounting impact compared to $34 million, or approximately 15 basis points, in
the year-ago quarter.
Compared to the 2018 first quarter, FTE net interest income
increased $14 million, or 2%,
primarily reflecting growth in average earning assets and the
impact of day count. Average earning assets increased
$1.0 billion, or 1%, sequentially,
driven by a $1.4 billion or 2%,
increase in average loans, partially offset by a $0.6 billion, or 2%, decrease in average
securities. The NIM decreased 1 basis point. Average
earning asset yields increased 16 basis points sequentially, driven
by a 17 basis point increase in loan yields. Average funding
costs increased 23 basis points, driven by higher cost of
short-term borrowings (up 35 basis points) and long-term debt (up
83 basis points). Average interest-bearing deposit costs
increased 16 basis points, while the benefit of noninterest-bearing
funding improved 6 basis points. Day count negatively
impacted the NIM by 1 basis point on a linked quarter basis.
The purchase accounting impact on the net interest margin was
approximately 8 basis points in the 2018 second quarter, unchanged
from the prior quarter.
Table 4 –
Average Earning Assets – Continued C&I Loan Growth Momentum
Reflects Underlying Economic Strength of the
Footprint
|
|
|
2018
|
|
2017
|
|
|
|
|
($ in
billions)
|
Second
|
|
First
|
|
Fourth
|
|
Third
|
|
Second
|
|
Change (%)
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
LQ
|
|
YOY
|
Commercial and
industrial
|
$
|
28.9
|
|
|
$
|
28.2
|
|
|
$
|
27.4
|
|
|
$
|
27.6
|
|
|
$
|
28.0
|
|
|
2
|
%
|
|
3
|
%
|
Commercial real
estate
|
7.4
|
|
|
7.3
|
|
|
7.2
|
|
|
7.2
|
|
|
7.1
|
|
|
—
|
|
|
4
|
|
Total
commercial
|
36.2
|
|
|
35.6
|
|
|
34.6
|
|
|
34.9
|
|
|
35.1
|
|
|
2
|
|
|
3
|
|
Automobile
|
12.3
|
|
|
12.1
|
|
|
12.0
|
|
|
11.7
|
|
|
11.3
|
|
|
1
|
|
|
8
|
|
Home
equity
|
9.9
|
|
|
10.0
|
|
|
10.0
|
|
|
10.0
|
|
|
10.0
|
|
|
(1)
|
|
|
—
|
|
Residential
mortgage
|
9.6
|
|
|
9.2
|
|
|
8.8
|
|
|
8.4
|
|
|
8.0
|
|
|
5
|
|
|
21
|
|
RV and marine
finance
|
2.7
|
|
|
2.5
|
|
|
2.4
|
|
|
2.3
|
|
|
2.0
|
|
|
7
|
|
|
31
|
|
Other
consumer
|
1.2
|
|
|
1.1
|
|
|
1.1
|
|
|
1.0
|
|
|
1.0
|
|
|
4
|
|
|
18
|
|
Total
consumer
|
35.7
|
|
|
34.9
|
|
|
34.3
|
|
|
33.4
|
|
|
32.3
|
|
|
2
|
|
|
10
|
|
Total loans and
leases
|
71.9
|
|
|
70.5
|
|
|
68.9
|
|
|
68.3
|
|
|
67.3
|
|
|
2
|
|
|
7
|
|
Total
securities
|
23.8
|
|
|
24.4
|
|
|
24.3
|
|
|
23.8
|
|
|
23.8
|
|
|
(2)
|
|
|
—
|
|
Held-for-sale and
other earning assets
|
0.7
|
|
|
0.6
|
|
|
0.7
|
|
|
0.8
|
|
|
0.6
|
|
|
24
|
|
|
12
|
|
Total earning
assets
|
$
|
96.4
|
|
|
$
|
95.4
|
|
|
$
|
93.9
|
|
|
$
|
92.8
|
|
|
$
|
91.7
|
|
|
1
|
%
|
|
5
|
%
|
|
See Page 7 of
Quarterly Financial Supplement for additional
detail.
|
Average earning assets for the 2018 second quarter increased
$4.6 billion, or 5%, from the
year-ago quarter, primarily reflecting a $4.5 billion, or 7%, increase in average loans
and leases. Average residential mortgage loans increased
$1.6 billion, or 21%, driven by an
increase in lending officers and expansion into the Chicago market. Average automobile loans
increased $0.9 billion, or 8%, driven
by $6.2 billion of new production
over the past year. Average commercial and industrial
(C&I) loans increased $0.9
billion, or 3%, reflecting growth in middle market, asset
finance, energy, and corporate banking. Average RV and marine
finance loans increased $0.6 billion,
or 31%, reflecting the success of the well-managed expansion of the
acquired business into 17 new states over the past two years.
Compared to the 2018 first quarter, average earning assets
increased $1.0 billion, or 1%,
reflecting the $1.4 billion, or 2%,
increase in average loans and leases. Average C&I loans
increased $0.6 billion, or 2%,
reflecting broad-based growth in middle market, asset finance,
energy, and specialty. Average residential mortgage loans
increased $0.5 billion, or 5%, driven
by seasonality and the expansion of our home lending
business. Average securities decreased $0.6 billion, or 2%, primarily due to runoff in
the portfolio.
Table 5 –
Average Liabilities – Money Market, Interest-bearing Demand
Deposits, and CDs Drive Year-Over-Year Core Deposit
Growth
|
|
|
2018
|
|
2017
|
|
|
|
Second
|
|
First
|
|
Fourth
|
|
Third
|
|
Second
|
|
Change (%)
|
($ in
billions)
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
LQ
|
|
YOY
|
Demand deposits -
noninterest-bearing
|
$
|
20.4
|
|
|
$
|
20.6
|
|
|
$
|
21.7
|
|
|
$
|
21.7
|
|
|
$
|
21.6
|
|
|
(1)
|
%
|
|
(6)
|
%
|
Demand deposits -
interest-bearing
|
19.1
|
|
|
18.6
|
|
|
18.2
|
|
|
17.9
|
|
|
17.4
|
|
|
3
|
|
|
10
|
|
Total demand
deposits
|
39.5
|
|
|
39.2
|
|
|
39.9
|
|
|
39.6
|
|
|
39.0
|
|
|
1
|
|
|
1
|
|
Money market
deposits
|
20.9
|
|
|
20.7
|
|
|
20.7
|
|
|
20.3
|
|
|
19.2
|
|
|
1
|
|
|
9
|
|
Savings and other
domestic deposits
|
11.1
|
|
|
11.2
|
|
|
11.3
|
|
|
11.6
|
|
|
11.9
|
|
|
(1)
|
|
|
(6)
|
|
Core certificates of
deposit
|
3.8
|
|
|
2.3
|
|
|
1.9
|
|
|
2.0
|
|
|
2.1
|
|
|
65
|
|
|
77
|
|
Total core
deposits
|
75.4
|
|
|
73.4
|
|
|
73.8
|
|
|
73.5
|
|
|
72.2
|
|
|
3
|
|
|
4
|
|
Other domestic
deposits of $250,000 or more
|
0.2
|
|
|
0.2
|
|
|
0.4
|
|
|
0.4
|
|
|
0.5
|
|
|
(2)
|
|
|
(49)
|
|
Brokered deposits and
negotiable CDs
|
3.7
|
|
|
3.3
|
|
|
3.4
|
|
|
3.6
|
|
|
3.8
|
|
|
11
|
|
|
(3)
|
|
Total
deposits
|
$
|
79.3
|
|
|
$
|
76.9
|
|
|
$
|
77.6
|
|
|
$
|
77.5
|
|
|
$
|
76.5
|
|
|
3
|
%
|
|
4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term
borrowings
|
$
|
3.1
|
|
|
$
|
5.2
|
|
|
$
|
2.8
|
|
|
$
|
2.4
|
|
|
$
|
2.7
|
|
|
(41)
|
%
|
|
15
|
%
|
Long-term
debt
|
9.2
|
|
|
9.0
|
|
|
9.2
|
|
|
8.9
|
|
|
8.7
|
|
|
3
|
|
|
6
|
|
Total debt
|
$
|
12.3
|
|
|
$
|
14.2
|
|
|
$
|
12.0
|
|
|
$
|
11.3
|
|
|
$
|
11.4
|
|
|
(13)
|
%
|
|
8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
interest-bearing liabilities
|
$
|
71.2
|
|
|
$
|
70.6
|
|
|
$
|
68.1
|
|
|
$
|
67.2
|
|
|
$
|
66.4
|
|
|
1
|
%
|
|
7
|
%
|
|
See Page 7 of
Quarterly Financial Supplement for additional
detail.
|
Average total interest-bearing liabilities increased
$4.8 billion, or 7%, from the
year-ago quarter. Average total deposits for the 2018 second
quarter increased $2.7 billion, or
4%, from the year-ago quarter, while average total core deposits
increased $3.1 billion, or 4%.
Average money market deposits increased $1.7
billion, or 9%, primarily reflecting growth in certain
specialty commercial deposits and continued shifting commercial
customer preferences for higher yielding deposit products.
Average core certificates of deposit (CDs) increased $1.6 billion, or 77%, reflecting initiatives to
grow fixed-rate, term consumer deposits in light of the rising
interest rate environment. Average demand deposits increased
$0.5 billion, or 1%, primarily driven
by a $0.3 billion, or 1%, increase in
average commercial demand deposits. Average long-term debt
increased $0.5 billion, or 6%,
reflecting the issuance of $2.0
billion and maturity of $1.3
billion of senior debt over the past four quarters.
Partially offsetting these increases, average savings and other
domestic deposits decreased $0.7
billion, or 6%, reflecting consumer customer migration into
higher yielding deposit products, such as money market and CDs.
Compared to the 2018 first quarter, average total core deposits
increased $2.0 billion, or 3%,
primarily reflecting a $1.5 billion,
or 65%, increase in average core CDs. Average demand deposits
increased $0.3 billion, or 1%,
primarily driven by a $0.2 billion,
or 2%, increase in average consumer demand deposits. Average
short-term borrowings decreased $2.1
billion, or 41%, as continued growth in core deposits
reduced reliance on wholesale funding.
Noninterest
Income
|
|
Table 6 –
Noninterest Income – OCR Strategy Continues to Drive Noninterest
Income Growth
|
|
|
2018
|
|
2017
|
|
|
|
Second
|
|
First
|
|
Fourth
|
|
Third
|
|
Second
|
|
Change (%)
|
($ in
millions)
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
LQ
|
|
YOY
|
Service charges on
deposit accounts
|
$
|
91
|
|
|
$
|
86
|
|
|
$
|
91
|
|
|
$
|
91
|
|
|
$
|
88
|
|
|
6
|
%
|
|
3
|
%
|
Cards and payment
processing income
|
56
|
|
|
53
|
|
|
53
|
|
|
54
|
|
|
52
|
|
|
6
|
|
|
8
|
|
Trust and investment
management services
|
42
|
|
|
44
|
|
|
41
|
|
|
39
|
|
|
37
|
|
|
(5)
|
|
|
14
|
|
Mortgage banking
income
|
28
|
|
|
26
|
|
|
33
|
|
|
34
|
|
|
32
|
|
|
8
|
|
|
(13)
|
|
Insurance
income
|
21
|
|
|
21
|
|
|
21
|
|
|
18
|
|
|
22
|
|
|
—
|
|
|
(5)
|
|
Capital markets
fees
|
21
|
|
|
19
|
|
|
23
|
|
|
22
|
|
|
17
|
|
|
11
|
|
|
24
|
|
Bank owned life
insurance income
|
17
|
|
|
15
|
|
|
18
|
|
|
16
|
|
|
15
|
|
|
13
|
|
|
13
|
|
Gain on sale of
loans
|
15
|
|
|
8
|
|
|
17
|
|
|
14
|
|
|
12
|
|
|
88
|
|
|
25
|
|
Securities gains
(losses)
|
—
|
|
|
—
|
|
|
(4)
|
|
|
—
|
|
|
—
|
|
|
NM
|
|
|
NM
|
|
Other
income
|
45
|
|
|
42
|
|
|
47
|
|
|
42
|
|
|
50
|
|
|
7
|
|
|
(10)
|
|
Total noninterest
income
|
$
|
336
|
|
|
$
|
314
|
|
|
$
|
340
|
|
|
$
|
330
|
|
|
$
|
325
|
|
|
7
|
%
|
|
3
|
%
|
|
See Pages 10-11 of
Quarterly Financial Supplement for additional
detail.
|
Reported noninterest income for the 2018 second quarter
increased $11 million, or 3%, from
the year-ago quarter, reflecting ongoing household / relationship
acquisition and execution of our Optimal Customer Relationship
(OCR) strategy. Trust and investment management services
increased $5 million, or 14%,
reflecting strong equity market performance. Other income
decreased $5 million, or 10%,
primarily reflecting a $3 million
unfavorable Visa Class B derivative fair value adjustment.
Compared to the 2018 first quarter, reported noninterest income
increased $22 million, or 7%.
Gain on sale of loans increased $7
million, or 88%, reflecting $5
million of gains on the sale of asset finance leases and the
seasonal increase in SBA loan sales. Service charges on
deposit accounts increased $5
million, or 6%, primarily reflecting seasonality in consumer
service charges.
Noninterest
Expense (see Basis of Presentation)
|
|
Table 7 –
Noninterest Expense (GAAP) – Seasonality Drives Linked Quarter
Increase in Overhead
|
|
|
2018
|
|
2017
|
|
|
|
Second
|
|
First
|
|
Fourth
|
|
Third
|
|
Second
|
|
Change (%)
|
($ in
millions)
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
LQ
|
|
YOY
|
Personnel
costs
|
$
|
396
|
|
|
$
|
376
|
|
|
$
|
373
|
|
|
$
|
377
|
|
|
$
|
392
|
|
|
5
|
%
|
|
1
|
%
|
Outside data
processing and other services
|
69
|
|
|
73
|
|
|
71
|
|
|
80
|
|
|
75
|
|
|
(5)
|
|
|
(8)
|
|
Net
occupancy
|
35
|
|
|
41
|
|
|
36
|
|
|
55
|
|
|
53
|
|
|
(15)
|
|
|
(34)
|
|
Equipment
|
38
|
|
|
40
|
|
|
36
|
|
|
45
|
|
|
43
|
|
|
(5)
|
|
|
(12)
|
|
Deposit and other
insurance expense
|
18
|
|
|
18
|
|
|
19
|
|
|
19
|
|
|
20
|
|
|
—
|
|
|
(10)
|
|
Professional
services
|
15
|
|
|
11
|
|
|
18
|
|
|
15
|
|
|
18
|
|
|
36
|
|
|
(17)
|
|
Marketing
|
18
|
|
|
8
|
|
|
10
|
|
|
17
|
|
|
19
|
|
|
125
|
|
|
(5)
|
|
Amortization of
intangibles
|
13
|
|
|
14
|
|
|
14
|
|
|
14
|
|
|
14
|
|
|
(7)
|
|
|
(7)
|
|
Other
expense
|
50
|
|
|
52
|
|
|
56
|
|
|
58
|
|
|
60
|
|
|
(4)
|
|
|
(17)
|
|
Total noninterest
expense
|
$
|
652
|
|
|
$
|
633
|
|
|
$
|
633
|
|
|
$
|
680
|
|
|
$
|
694
|
|
|
3
|
%
|
|
(6)
|
%
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average full-time
equivalent employees
|
15.7
|
|
|
15.6
|
|
|
15.4
|
|
|
15.5
|
|
|
15.9
|
|
|
1
|
%
|
|
(1)
|
%
|
Table 8 -
Impacts of Significant Items
|
|
|
2018
|
|
2017
|
|
Second
|
|
First
|
|
Fourth
|
|
Third
|
|
Second
|
($ in
millions)
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
Personnel
costs
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4
|
|
|
$
|
18
|
|
Outside data
processing and other services
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
6
|
|
Net
occupancy
|
—
|
|
|
—
|
|
|
—
|
|
|
14
|
|
|
14
|
|
Equipment
|
—
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
4
|
|
Deposit and other
insurance expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Professional
services
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
4
|
|
Marketing
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Amortization of
intangibles
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Other
expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
Total noninterest
expense
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
30
|
|
|
$
|
50
|
|
Table 9 -
Adjusted Noninterest Expense (Non-GAAP)
|
|
|
2018
|
|
2017
|
|
|
|
Second
|
|
First
|
|
Fourth
|
|
Third
|
|
Second
|
|
Change (%)
|
($ in
millions)
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
LQ
|
|
YOY
|
Personnel
costs
|
$
|
396
|
|
|
$
|
376
|
|
|
$
|
373
|
|
|
$
|
373
|
|
|
$
|
374
|
|
|
5
|
%
|
|
6
|
%
|
Outside data
processing and other services
|
69
|
|
|
73
|
|
|
71
|
|
|
76
|
|
|
69
|
|
|
(5)
|
|
|
—
|
|
Net
occupancy
|
35
|
|
|
41
|
|
|
36
|
|
|
41
|
|
|
39
|
|
|
(15)
|
|
|
(10)
|
|
Equipment
|
38
|
|
|
40
|
|
|
36
|
|
|
39
|
|
|
39
|
|
|
(5)
|
|
|
(3)
|
|
Deposit and other
insurance expense
|
18
|
|
|
18
|
|
|
19
|
|
|
19
|
|
|
20
|
|
|
—
|
|
|
(10)
|
|
Professional
services
|
15
|
|
|
11
|
|
|
18
|
|
|
13
|
|
|
14
|
|
|
36
|
|
|
7
|
|
Marketing
|
18
|
|
|
8
|
|
|
10
|
|
|
17
|
|
|
19
|
|
|
125
|
|
|
(5)
|
|
Amortization of
intangibles
|
13
|
|
|
14
|
|
|
14
|
|
|
14
|
|
|
14
|
|
|
(7)
|
|
|
(7)
|
|
Other
expense
|
50
|
|
|
52
|
|
|
56
|
|
|
58
|
|
|
56
|
|
|
(4)
|
|
|
(11)
|
|
Total noninterest
expense
|
$
|
652
|
|
|
$
|
633
|
|
|
$
|
633
|
|
|
$
|
650
|
|
|
$
|
644
|
|
|
3
|
%
|
|
1
|
%
|
|
See Page 10 of
Quarterly Financial Supplement for additional
detail.
|
Reported noninterest expense for the 2018 second quarter
decreased $42 million, or 6%, from
the year-ago quarter, primarily reflecting the $50 million of acquisition-related Significant
Items in the year-ago quarter. Personnel costs increased
$4 million, or 1%, primarily
reflecting increased incentive compensation and benefits costs,
partially offset by an $18 million
decrease in acquisition-related Significant Items. Other
expense decreased $10 million, or
17%, primarily reflecting a decrease in franchise taxes and
acquisition-related Significant Items in the year-ago quarter.
Reported noninterest expense increased $19 million, or 3%, from the 2018 first
quarter. Personnel costs increased $20
million, or 5%, reflecting the implementation of annual
merit increases and grant of annual long-term equity incentive
compensation, both in May. Marketing expense increased
$10 million, or 125%, reflecting the
timing of marketing campaigns and deposit promotions. Net
occupancy expense decreased $6
million, or 15%, due to seasonality.
Credit
Quality
|
|
Table 10 –
Credit Quality Metrics – NCOs and NALs Remain Near Cyclical
Lows
|
|
|
2018
|
|
2017
|
($ in
millions)
|
June 30,
|
|
March 31,
|
|
December
31,
|
|
September
30,
|
|
June 30,
|
Total nonaccrual
loans and leases
|
$
|
378
|
|
|
$
|
383
|
|
|
$
|
349
|
|
|
$
|
338
|
|
|
$
|
364
|
|
Total other real
estate
|
28
|
|
|
30
|
|
|
33
|
|
|
42
|
|
|
44
|
|
Other NPAs
(1)
|
6
|
|
|
7
|
|
|
7
|
|
|
7
|
|
|
7
|
|
Total nonperforming
assets
|
412
|
|
|
420
|
|
|
389
|
|
|
387
|
|
|
415
|
|
Accruing loans and
leases past due
90 days or more
|
132
|
|
|
106
|
|
|
115
|
|
|
119
|
|
|
136
|
|
NPAs + accruing loans
and lease past
due 90 days or more
|
$
|
544
|
|
|
$
|
526
|
|
|
$
|
504
|
|
|
$
|
506
|
|
|
$
|
551
|
|
|
|
|
|
|
|
|
|
|
|
NAL ratio
(2)
|
0.52
|
%
|
|
0.54
|
%
|
|
0.50
|
%
|
|
0.49
|
%
|
|
0.54
|
%
|
NPA ratio
(3)
|
0.57
|
|
|
0.59
|
|
|
0.55
|
|
|
0.56
|
|
|
0.61
|
|
(NPAs+90
days)/(Loans+OREO)
|
0.75
|
|
|
0.74
|
|
|
0.72
|
|
|
0.74
|
|
|
0.81
|
|
|
|
|
|
|
|
|
|
|
|
Provision for loan
and leases losses
|
$
|
48
|
|
|
$
|
68
|
|
|
$
|
57
|
|
|
$
|
50
|
|
|
$
|
31
|
|
Provision for
unfunded loan
commitments & letters of credit losses
|
8
|
|
|
(2)
|
|
|
8
|
|
|
(6)
|
|
|
(7)
|
|
Provision for credit
losses
|
$
|
56
|
|
|
$
|
66
|
|
|
$
|
65
|
|
|
$
|
43
|
|
|
$
|
25
|
|
|
|
|
|
|
|
|
|
|
|
Net
charge-offs
|
28
|
|
|
38
|
|
|
41
|
|
|
43
|
|
|
36
|
|
Net charge-offs /
Average total loans
|
0.16
|
%
|
|
0.21
|
%
|
|
0.24
|
%
|
|
0.25
|
%
|
|
0.21
|
%
|
|
|
|
|
|
|
|
|
|
|
Allowance for loans
and lease losses
|
$
|
741
|
|
|
$
|
721
|
|
|
$
|
691
|
|
|
$
|
675
|
|
|
$
|
668
|
|
Allowance for
unfunded loan
commitments and letters of credit
|
93
|
|
|
85
|
|
|
87
|
|
|
79
|
|
|
85
|
|
Allowance for credit
losses (ACL)
|
$
|
834
|
|
|
$
|
806
|
|
|
$
|
778
|
|
|
$
|
754
|
|
|
$
|
753
|
|
|
|
|
|
|
|
|
|
|
|
ALLL as a %
of:
|
|
|
|
|
|
|
|
|
|
Total loans and
leases
|
1.02
|
%
|
|
1.01
|
%
|
|
0.99
|
%
|
|
0.98
|
%
|
|
0.98
|
%
|
NALs
|
197
|
|
|
188
|
|
|
198
|
|
|
200
|
|
|
183
|
|
NPAs
|
180
|
|
|
172
|
|
|
178
|
|
|
175
|
|
|
161
|
|
|
|
|
|
|
|
|
|
|
|
ACL as a %
of:
|
|
|
|
|
|
|
|
|
|
Total loans and
leases
|
1.15
|
%
|
|
1.13
|
%
|
|
1.11
|
%
|
|
1.10
|
%
|
|
1.11
|
%
|
(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 performance remained strong. The
consumer portfolio metrics continue to reflect the expected results
associated with our focus on high quality borrowers. 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) increased $14 million, or 4%, from the year-ago quarter to
$378 million, or 0.52% of total loans
and leases. The year-over-year increase was centered in the
Commercial portfolio, with a slight decline evident across the
consumer portfolios. The increase in the commercial portfolio
was not centered in any geography or industry. A $16 million decline in OREO balances more
than offset the increase in NALs, resulting in a $3 million, or 1%, year-over-year decrease in
nonperforming assets (NPAs) to $412
million, or 0.57% of total loans and leases and OREO.
The decline in OREO assets reflected reductions in both commercial
and residential properties. On a linked quarter basis, NALs
decreased $5 million, or 1%, while
NPAs decreased $8 million, or 2%.
The provision for credit losses increased $31 million year-over-year to $56 million in the 2018 second quarter. Net
charge-offs (NCOs) decreased $8
million to $28 million.
NCOs represented an annualized 0.16% of average loans and leases in
the current quarter, down from 0.21% in both the prior and year-ago
quarters. NCOs were better across the portfolio in the 2018
second quarter, with Home Equity, Auto, and Other Consumer showing
particularly positive seasonal results. We continue to be
pleased with the net charge-off performance within each portfolio
and in total.
The allowance for loan and lease losses (ALLL) as a percentage
of total loans and leases remained relatively stable at 1.02%
compared to 0.98% a year ago, while the ALLL as a percentage of
period-end total NALs increased to 197% from 183% over the same
period. The increase in the ALLL is primarily the result of
loan growth and the continued migration of the acquired loan
portfolio into the originated portfolio. The allowance for
credit losses (ACL) as a percentage of total loans and leases
remained relatively stable at 1.15% compared to 1.11% a year ago,
while the ACL as a percentage of period-end total NALs increased to
221% from 207% over the same period. In addition to the ALLL
contribution, the ACL increased primarily as the result of
increased expectations on future line utilization within our
commercial portfolio. We believe the level of the ALLL and
ACL are appropriate given the low level of problem loans and the
current composition of the overall loan and lease portfolio.
Capital
|
|
Table 11 –
Capital Ratios – Capital Ratios Above Targeted Ranges, Support
Increased Capital Return
|
|
|
|
2018
|
|
2017
|
($ in
billions)
|
|
June 30,
|
|
March 31,
|
|
December
31,
|
|
September
30,
|
|
June 30,
|
Tangible common
equity / tangible
assets ratio
|
|
7.78
|
%
|
|
7.70
|
%
|
|
7.34
|
%
|
|
7.42
|
%
|
|
7.41
|
%
|
Common equity tier 1
risk-based
capital ratio (1)
|
|
10.53
|
%
|
|
10.45
|
%
|
|
10.01
|
%
|
|
9.94
|
%
|
|
9.88
|
%
|
Regulatory Tier 1
risk-based
capital ratio (1)
|
|
11.99
|
%
|
|
11.94
|
%
|
|
11.34
|
%
|
|
11.30
|
%
|
|
11.24
|
%
|
Regulatory Total
risk-based
capital ratio (1)
|
|
13.97
|
%
|
|
13.92
|
%
|
|
13.39
|
%
|
|
13.39
|
%
|
|
13.33
|
%
|
Total risk-weighted
assets (1)
|
|
$
|
83.0
|
|
|
$
|
81.4
|
|
|
$
|
80.3
|
|
|
$
|
78.6
|
|
|
$
|
78.4
|
|
(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 7.78% at
June 30, 2018, up 37 basis points from a year ago.
Common Equity Tier 1 (CET1) risk-based capital ratio was 10.53% at
June 30, 2018, up from 9.88% a year ago. The regulatory
Tier 1 risk-based capital ratio was 11.99% compared to 11.24% at
June 30, 2017.
The Company did not repurchase any common stock during the 2018
second quarter. Under the 2017 CCAR capital plan executed
over the past four quarters, the Company repurchased $308 million of common stock at an average cost
of $13.71 per share. In
addition, during the 2018 first quarter, $363 million of 8.5% Series A preferred equity
was converted into common equity, and subsequently $500 million of 5.7% Series E preferred equity
was issued.
Income Taxes
The provision for income taxes was $57
million in the 2018 second quarter compared to $79 million in the 2017 second quarter. The
effective tax rates for the 2018 second quarter and 2017 second
quarter were 13.8% and 22.4%, respectively. The 2018 second
quarter and 2017 second quarter included $5
million and $7 million,
respectively, of tax benefits related to stock-based
compensation.
At June 30, 2018, we had a net federal deferred tax
liability of $141 million and a net
state deferred tax asset of $24
million.
Expectations - 2018
Full-year revenues are expected to increase approximately 5% to
6%, while full-year noninterest expense is expected to decrease
approximately 3% to 4%. The full-year NIM is expected to
expand 2-4 basis points, as core NIM expansion more than offsets
the anticipated reduction in the benefit of purchase
accounting. The 2018 efficiency ratio is expected to
approximate 55.5% to 56.5%.
Average loans and leases are expected to increase approximately
5.5% to 6.5% on an annual basis. Average total deposits are
expected to increase approximately 3.5% to 4.5%, while average core
deposits are expected to increase 4.5% to 5.5%. While
pipelines are steady and customer sentiment remains strong, some of
our customers are monitoring international trade agreements and
tariffs that could have a dampening effect on economic growth.
Asset quality metrics are expected to remain better than our
average through-the-cycle target ranges, with some moderate
quarterly volatility.
The effective tax rate for the remainder of 2018 is expected to
be in the range of 15.5% to 16.5%.
Conference Call / Webcast Information
Huntington's senior management will host an earnings conference
call on July 25, 2018, 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 #13680951. 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 3, 2018 at (877) 660-6853
or (201) 612-7415; conference ID #13680951.
Please see the 2018 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.
About Huntington
Huntington Bancshares Incorporated is a regional bank holding
company headquartered in Columbus,
Ohio, with $105 billion of
assets and a network of 968 branches and 1,831 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.
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;
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, 2017, and
Quarterly Report on Form 10-Q for the quarter ended March 31, 2018, 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 in the Investor Relations
section of Huntington's website, http://www.huntington.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, and litigation
actions. 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, and goodwill impairment.
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, 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, and 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
2017 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.
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