COLUMBUS, Ohio, Jan. 23, 2020 /PRNewswire/ -- Huntington
Bancshares Incorporated (Nasdaq: HBAN; www.huntington.com) reported
2019 full year net income of $1.4
billion, an increase of 1% from the prior year.
Earnings per common share for the year were $1.27, up 6% from the prior year. Tangible
book value per common share as of 2019 year-end was $8.25, a 12% year-over-year increase.
Return on average assets for 2019 was 1.31%, return on average
common equity was 12.9%, and return on average tangible common
equity was 16.9%.
Net income for the 2019 fourth quarter was $317 million, a 5% decrease from the year-ago
quarter. Earnings per common share for the 2019 fourth
quarter were $0.28, down 3% from the
year-ago quarter. Return on average assets for the 2019
fourth quarter was 1.15%, return on average common equity was
11.1%, and return on average tangible common equity was 14.3%.
"We are pleased with our 2019 results, which included record net
income for the fifth consecutive year and annual positive operating
leverage on an adjusted basis for the seventh consecutive year,"
said Steve Steinour, chairman,
president, and CEO.
"Total revenue for 2019 increased 3% year-over-year driven by
fee income growth of 10% and organic balance sheet growth.
The revenue growth, coupled with our disciplined expense
management, allowed for continued investment in technology and our
businesses overall," Steinour said. "Average loans grew 4%,
balanced between commercial and consumer lending. In the 2019
fourth quarter, we experienced record origination activity in both
our home lending and auto finance businesses, while maintaining our
underwriting discipline. We remain focused on funding organic
loan growth with low-cost core deposits, highlighted by the 5%
increase in average consumer noninterest-bearing deposits for the
2019 full year."
"2019 was a challenging year for the industry, and Huntington
was not immune. We entered the year expecting multiple
interest rate increases but instead were impacted by multiple
interest rate reductions. There also were elevated levels of
macroeconomic uncertainty and significant market volatility.
We proactively managed revenue challenges and expense growth, while
continuing to invest in our businesses to drive long-term
performance. We further positioned our expense run-rate and
investment capacity for success in 2020 through our fourth quarter
actions, including the announced consolidation of 30 in-store
branches."
"Our local economies are growing, and our expectation for 2020
is for continued expansion. Building on the strong customer
sentiment, consumer lending should fuel balance sheet growth in the
coming year. Our commercial customers are performing well,
and we are seeing success in our strategies, though volatility and
uncertainty are restraining overall commercial loan growth.
The momentum across our businesses and focused execution, augmented
by the actions taken in 2019, set us up well entering 2020."
Full-year 2019 highlights compared with
2018:
- Fully-taxable equivalent total revenue increased $153 million, or 3%.
- Fully-taxable equivalent net interest income increased
$20 million, or 1%.
- Net interest margin decreased 7 basis points to 3.26%.
- Noninterest income increased $133
million, or 10%.
- Noninterest expense increased $74
million, or 3%.
- Efficiency ratio of 56.6%, down from 56.9%.
- Average loans and leases increased $2.7
billion, or 4%, including a $1.4
billion, or 4%, increase in consumer loans and a
$1.3 billion, or 4%, increase in
commercial loans.
- Average core deposits increased $2.8
billion, or 4%.
- Net charge-offs (NCOs) equated to 0.35% of average loans and
leases, up from 0.20%.
- Nonperforming asset (NPA) ratio of 0.66%, up from 0.52%.
- Common Equity Tier 1 (CET1) risk-based capital ratio of 9.88%,
up from 9.65% and consistent with our 9% to 10% operating
guideline.
- Tangible common equity (TCE) ratio of 7.88%, up from
7.21%.
- Tangible book value per common share (TBVPS) increased
$0.91, or 12%, to $8.25.
- Repurchased $441 million of
common stock (31.4 million shares at an average price of
$14.00 per share).
- Cash dividends on common stock increased for the ninth
consecutive year.
2019 Fourth Quarter highlights compared with
2018 Fourth Quarter:
- Fully-taxable equivalent total revenue decreased $12 million, or 1%.
- Fully-taxable equivalent net interest income decreased
$55 million, or 7%.
- Net interest margin decreased 29 basis points to 3.12%.
- Noninterest income increased $43
million, or 13%.
- Noninterest expense decreased $10
million, or 1%.
- Average loans and leases increased $1.3
billion, or 2%, including a $0.7
billion, or 2%, increase in commercial loans and a
$0.6 billion, or 2%, increase in
consumer loans.
- Average core deposits increased $0.6
billion, or 1%.
- NCOs equated to 0.39% of average loans and leases, up from
0.27%
- Repurchased $196 million of
common stock (13.1 million shares at an average price of
$14.96 per share).
- In December, Huntington announced the planned consolidation of
30 in-store branches. While the majority of the expense of these
actions was included in the 2019 fourth quarter, the consolidations
are expected to be completed in the 2020 first quarter.
Table 1 – Earnings Performance Summary
|
Full Year
|
|
2019
|
|
2018
|
(in millions,
except per share data)
|
2019
|
|
2018
|
|
Fourth
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
Net income
|
$
|
1,411
|
|
|
$
|
1,393
|
|
|
$
|
317
|
|
|
$
|
372
|
|
|
$
|
334
|
|
Diluted earnings per
common share
|
1.27
|
|
|
1.20
|
|
|
0.28
|
|
|
0.34
|
|
|
0.29
|
|
|
|
|
|
|
|
|
|
|
|
Return on average
assets
|
1.31
|
%
|
|
1.33
|
%
|
|
1.15
|
%
|
|
1.37
|
%
|
|
1.25
|
%
|
Return on average
common equity
|
12.9
|
|
|
13.4
|
|
|
11.1
|
|
|
13.4
|
|
|
12.9
|
|
Return on average
tangible common equity
|
16.9
|
|
|
17.9
|
|
|
14.3
|
|
|
17.3
|
|
|
17.3
|
|
Net interest
margin
|
3.26
|
|
|
3.33
|
|
|
3.12
|
|
|
3.20
|
|
|
3.41
|
|
Efficiency
ratio
|
56.6
|
|
|
56.9
|
|
|
58.4
|
|
|
54.7
|
|
|
58.7
|
|
|
|
|
|
|
|
|
|
|
|
Tangible book value
per common share
|
$
|
8.25
|
|
|
$
|
7.34
|
|
|
$
|
8.25
|
|
|
$
|
8.25
|
|
|
$
|
7.34
|
|
Cash dividends
declared per common share
|
0.58
|
|
|
0.50
|
|
|
0.15
|
|
|
0.15
|
|
|
0.14
|
|
Average diluted
shares outstanding
|
1,056
|
|
|
1,106
|
|
|
1,047
|
|
|
1,051
|
|
|
1,073
|
|
|
|
|
|
|
|
|
|
|
|
Average earning
assets
|
$
|
99,541
|
|
|
$
|
96,577
|
|
|
$
|
100,062
|
|
|
$
|
99,692
|
|
|
$
|
97,752
|
|
Average loans and
leases
|
74,978
|
|
|
72,246
|
|
|
75,103
|
|
|
75,096
|
|
|
73,822
|
|
Average core
deposits
|
79,197
|
|
|
76,403
|
|
|
79,690
|
|
|
79,335
|
|
|
79,078
|
|
|
|
|
|
|
|
|
|
|
|
Tangible common
equity / tangible assets ratio
|
7.88
|
%
|
|
7.21
|
%
|
|
7.88
|
%
|
|
8.00
|
%
|
|
7.21
|
%
|
Common equity Tier 1
risk-based capital ratio
|
9.88
|
|
|
9.65
|
|
|
9.88
|
|
|
10.02
|
|
|
9.65
|
|
|
|
|
|
|
|
|
|
|
|
NCOs as a % of
average loans and leases
|
0.35
|
%
|
|
0.20
|
%
|
|
0.39
|
%
|
|
0.39
|
%
|
|
0.27
|
%
|
NAL ratio
|
0.62
|
|
|
0.45
|
|
|
0.62
|
|
|
0.58
|
|
|
0.45
|
|
ALLL as a % of total
loans and leases
|
1.04
|
|
|
1.03
|
|
|
1.04
|
|
|
1.05
|
|
|
1.03
|
|
Net Interest Income, Net Interest Margin, and Average Balance
Sheet
Table 2 – Net Interest Income and Net Interest Margin
Performance Summary – Year-over-Year Net Interest Margin
Compression Outpaced Increase in Average Earning Assets
|
2019
|
|
2018
|
|
|
|
2019
|
|
2018
|
|
|
|
|
($ in
millions)
|
Full Year
|
|
Full Year
|
|
Change
YOY
|
|
Fourth
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
|
Change (%)
|
LQ
|
|
YOY
|
Net interest
income
|
$
|
3,213
|
|
|
$
|
3,189
|
|
|
1
|
%
|
|
$
|
780
|
|
|
$
|
799
|
|
|
$
|
833
|
|
|
(2)
|
%
|
|
(6)
|
%
|
FTE
adjustment
|
26
|
|
|
30
|
|
|
(13)
|
|
|
6
|
|
|
6
|
|
|
8
|
|
|
0
|
|
|
25
|
|
Net interest income -
FTE
|
3,239
|
|
|
3,219
|
|
|
1
|
|
|
786
|
|
|
805
|
|
|
841
|
|
|
(2)
|
|
|
(7)
|
|
Noninterest
income
|
1,454
|
|
|
1,321
|
|
|
10
|
|
|
372
|
|
|
389
|
|
|
329
|
|
|
(4)
|
|
|
13
|
|
Total revenue -
FTE
|
$
|
4,693
|
|
|
$
|
4,540
|
|
|
3
|
%
|
|
$
|
1,158
|
|
|
$
|
1,194
|
|
|
$
|
1,170
|
|
|
(3)
|
%
|
|
(1)
|
%
|
|
|
|
2019
|
|
2018
|
|
|
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
Full Year
|
|
Full Year
|
|
Change
YOY bp
|
|
Fourth
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
|
Change bp
|
Yield /
Cost
|
LQ
|
|
YOY
|
Total earning
assets
|
|
4.25
|
%
|
|
|
4.12
|
%
|
|
13
|
|
|
|
4.03
|
%
|
|
|
4.21
|
%
|
|
|
4.32
|
%
|
|
(18)
|
|
(29)
|
Total loans and
leases
|
|
4.73
|
|
|
|
4.58
|
|
|
15
|
|
|
|
4.47
|
|
|
|
4.67
|
|
|
|
4.76
|
|
|
(20)
|
|
(29)
|
Total
securities
|
|
2.76
|
|
|
|
2.72
|
|
|
4
|
|
|
|
2.68
|
|
|
|
2.74
|
|
|
|
2.84
|
|
|
(6)
|
|
(16)
|
Total
interest-bearing liabilities
|
|
1.34
|
|
|
|
1.06
|
|
|
28
|
|
|
|
1.24
|
|
|
|
1.36
|
|
|
|
1.23
|
|
|
(12)
|
|
1
|
Total
interest-bearing deposits
|
|
0.94
|
|
|
|
0.65
|
|
|
29
|
|
|
|
0.87
|
|
|
|
0.98
|
|
|
|
0.84
|
|
|
(11)
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest rate
spread
|
|
2.91
|
|
|
|
3.06
|
|
|
(15)
|
|
|
|
2.79
|
|
|
|
2.85
|
|
|
|
3.09
|
|
|
(6)
|
|
(30)
|
Impact of
noninterest-bearing funds on margin
|
|
0.35
|
|
|
|
0.27
|
|
|
8
|
|
|
|
0.33
|
|
|
|
0.35
|
|
|
|
0.32
|
|
|
(2)
|
|
1
|
Net interest
margin
|
|
3.26
|
%
|
|
|
3.33
|
%
|
|
(7)
|
|
|
|
3.12
|
%
|
|
|
3.20
|
%
|
|
|
3.41
|
%
|
|
(8)
|
|
(29)
|
|
See Pages 7-9 and
18-20 of Quarterly Financial Supplement for additional
detail.
|
Fully-taxable equivalent (FTE) net interest income for the 2019
fourth quarter decreased $55 million,
or 7%, from the 2018 fourth quarter. This reflected a 29
basis point decrease in the FTE net interest margin (NIM) to 3.12%,
partially offset by the benefit from a $2.3
billion, or 2%, increase in average earning assets.
The NIM compression primarily reflected a 29 basis point
year-over-year decrease in average earning asset yields. The
decrease in average earning asset yields was primarily driven by
the impact of lower interest rates in the quarter on loan
yields. Embedded within these yields and costs, FTE net
interest income during the 2019 fourth quarter included
$11 million, or approximately 4 basis
points, of purchase accounting impact compared to $17 million, or approximately 7 basis points, in
the year-ago quarter.
Compared to the 2019 third quarter, FTE net interest income
decreased $19 million, or 2%,
reflecting the NIM compression of 8 basis points. The NIM
compression reflected an 18 basis point decrease in average earning
asset yields and a 2 basis point decrease in the benefit from
noninterest-bearing funds, partially offset by a 12 basis point
decrease in average interest-bearing liability costs. The
decrease in earning asset yields was primarily driven by the impact
of lower interest rates in the quarter on loan yields. The
decrease in average interest-bearing liability costs primarily
reflects lower interest-bearing deposit costs (down 11 basis
points). The purchase accounting impact on the net interest
margin was approximately 4 basis points in the 2019 fourth quarter,
unchanged from the prior quarter.
Table 3 – Average Earning Assets – C&I and Residential
Mortgage Loan Growth Drive Year-over-Year Earning Asset
Growth
|
2019
|
|
2018
|
|
|
|
2019
|
|
2018
|
|
|
|
|
($ in
billions)
|
Full
|
|
Full
|
|
YOY
|
|
Fourth
|
|
Third
|
|
Fourth
|
|
Change (%)
|
Year
|
|
Year
|
|
Change
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
LQ
|
|
YOY
|
Commercial and
industrial
|
$
|
30.5
|
|
|
$
|
28.9
|
|
|
6
|
%
|
|
$
|
30.4
|
|
|
$
|
30.6
|
|
|
29.6
|
|
|
(1)
|
%
|
|
3
|
%
|
Commercial real
estate
|
6.9
|
|
|
7.2
|
|
|
(4)
|
|
|
6.8
|
|
|
6.9
|
|
|
6.9
|
|
|
(2)
|
|
|
(2)
|
|
Total
commercial
|
37.4
|
|
|
36.1
|
|
|
4
|
|
|
37.2
|
|
|
37.6
|
|
|
36.5
|
|
|
(1)
|
|
|
2
|
|
Automobile
|
12.3
|
|
|
12.3
|
|
|
0
|
|
|
12.6
|
|
|
12.2
|
|
|
12.4
|
|
|
3
|
|
|
1
|
|
Home
equity
|
9.4
|
|
|
9.9
|
|
|
(5)
|
|
|
9.2
|
|
|
9.4
|
|
|
9.8
|
|
|
(2)
|
|
|
(6)
|
|
Residential
mortgage
|
11.1
|
|
|
9.9
|
|
|
12
|
|
|
11.3
|
|
|
11.2
|
|
|
10.6
|
|
|
1
|
|
|
7
|
|
RV and
marine
|
3.5
|
|
|
2.8
|
|
|
21
|
|
|
3.6
|
|
|
3.5
|
|
|
3.2
|
|
|
1
|
|
|
11
|
|
Other
consumer
|
1.3
|
|
|
1.2
|
|
|
5
|
|
|
1.2
|
|
|
1.3
|
|
|
1.3
|
|
|
(2)
|
|
|
(5)
|
|
Total
consumer
|
37.6
|
|
|
36.2
|
|
|
4
|
|
|
37.9
|
|
|
37.5
|
|
|
37.3
|
|
|
1
|
|
|
2
|
|
Total loans and
leases
|
75.0
|
|
|
72.2
|
|
|
4
|
|
|
75.1
|
|
|
75.1
|
|
|
73.8
|
|
|
0
|
|
|
2
|
|
Total
securities
|
23.1
|
|
|
23.5
|
|
|
(2)
|
|
|
23.2
|
|
|
23.1
|
|
|
22.7
|
|
|
0
|
|
|
2
|
|
Held-for-sale and
other earning assets
|
1.5
|
|
|
0.8
|
|
|
79
|
|
|
1.8
|
|
|
1.5
|
|
|
1.3
|
|
|
17
|
|
|
41
|
|
Total earning
assets
|
$
|
99.5
|
|
|
$
|
96.6
|
|
|
3
|
%
|
|
$
|
100.1
|
|
|
$
|
99.7
|
|
|
$
|
97.8
|
|
|
0
|
%
|
|
2
|
%
|
|
See Pages 7 and 18
of Quarterly Financial Supplement for additional
detail.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average earning assets for the 2019 fourth quarter increased
$2.3 billion, or 2%, from the
year-ago quarter, primarily reflecting a $1.3 billion, or 2%, increase in average total
loans and leases. Average commercial and industrial (C&I)
loans increased $0.8 billion, or 3%,
reflecting growth in specialty banking, asset finance, and
corporate banking. Average residential mortgage loans
increased $0.8 billion, or 7%,
reflecting robust mortgage production in the second half of
2019. Average held-for-sale and other earning assets
increased $0.5 billion, or 41%,
primarily as a result of increased cash from the timing of the
securities portfolio repositioning and an increase in loans
held-for-sale. Average total securities increased
$0.5 billion, or 2%, primarily
reflecting the mark-to-market of the available-for-sale
portfolio. Partially offsetting these increases, average home
equity loans and lines of credit decreased $0.8 billion, or 6%, reflecting a shift in
consumer preferences.
Compared to the 2019 third quarter, average earning assets
increased $0.4 billion, or less than
1%, primarily reflecting a $0.4
billion, or 3%, increase in average automobile loans.
On June 14, 2019, Huntington
completed the sale of the Wisconsin retail branches, which included
$117 million of loans
held-for-sale.
Table 4 – Average Liabilities – Money Market Drives
Continued Year-over-Year Growth in Core Deposits
|
2019
|
|
2018
|
|
|
|
2019
|
|
2018
|
|
|
|
Full
|
|
Full
|
|
YOY
|
|
Fourth
|
|
Third
|
|
Fourth
|
|
Change (%)
|
($ in
billions)
|
Year
|
|
Year
|
|
Change
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
LQ
|
|
YOY
|
Demand deposits -
noninterest bearing
|
$
|
20.1
|
|
|
$
|
20.4
|
|
|
(2)
|
%
|
|
$
|
20.6
|
|
|
$
|
19.9
|
|
|
$
|
20.4
|
|
|
4
|
%
|
|
1
|
%
|
Demand deposits -
interest bearing
|
19.9
|
|
|
19.3
|
|
|
3
|
|
|
20.1
|
|
|
19.8
|
|
|
19.9
|
|
|
2
|
|
|
1
|
|
Total demand
deposits
|
39.9
|
|
|
39.7
|
|
|
1
|
|
|
40.8
|
|
|
39.7
|
|
|
40.2
|
|
|
3
|
|
|
1
|
|
Money market
deposits
|
23.8
|
|
|
21.4
|
|
|
11
|
|
|
24.6
|
|
|
24.3
|
|
|
22.6
|
|
|
1
|
|
|
9
|
|
Savings and other
domestic deposits
|
9.9
|
|
|
11.1
|
|
|
(11)
|
|
|
9.6
|
|
|
9.7
|
|
|
10.5
|
|
|
(1)
|
|
|
(9)
|
|
Core certificates of
deposit
|
5.6
|
|
|
4.2
|
|
|
33
|
|
|
4.8
|
|
|
5.7
|
|
|
5.7
|
|
|
(15)
|
|
|
(16)
|
|
Total core
deposits
|
79.2
|
|
|
76.4
|
|
|
4
|
|
|
79.7
|
|
|
79.3
|
|
|
79.1
|
|
|
0
|
|
|
1
|
|
Other domestic
deposits of $250,000 or more
|
0.3
|
|
|
0.3
|
|
|
14
|
|
|
0.3
|
|
|
0.3
|
|
|
0.3
|
|
|
(1)
|
|
|
(10)
|
|
Brokered deposits and
negotiable CDs
|
2.8
|
|
|
3.5
|
|
|
(20)
|
|
|
2.6
|
|
|
2.6
|
|
|
3.5
|
|
|
0
|
|
|
(26)
|
|
Total
deposits
|
$
|
82.3
|
|
|
$
|
80.2
|
|
|
3
|
%
|
|
$
|
82.6
|
|
|
$
|
82.2
|
|
|
$
|
82.9
|
|
|
0
|
%
|
|
0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term
borrowings
|
$
|
2.4
|
|
|
$
|
2.7
|
|
|
(11)
|
%
|
|
$
|
2.0
|
|
|
$
|
2.3
|
|
|
$
|
1.0
|
|
|
(16)
|
%
|
|
95
|
%
|
Long-term
debt
|
9.3
|
|
|
9.0
|
|
|
4
|
|
|
9.9
|
|
|
9.5
|
|
|
8.9
|
|
|
4
|
|
|
11
|
|
Total debt
|
$
|
11.7
|
|
|
$
|
11.7
|
|
|
0
|
%
|
|
$
|
11.9
|
|
|
$
|
11.8
|
|
|
$
|
9.9
|
|
|
1
|
%
|
|
20
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Interest-bearing liabilities
|
$
|
74.0
|
|
|
$
|
71.5
|
|
|
4
|
%
|
|
$
|
73.8
|
|
|
$
|
74.2
|
|
|
$
|
72.4
|
|
|
(1)
|
%
|
|
2
|
%
|
|
See Pages 7 and 18
of Quarterly Financial Supplement for additional
detail.
|
Average total interest-bearing liabilities for the 2019 fourth
quarter increased $1.4 billion, or
2%, from the year-ago quarter. Long-term debt increased
$1.0 billion, or 11%, as a result of
the issuance and maturity of $1.6
billion and $0.6 billion,
respectively, of long-term debt over the past three quarters.
Average short-term borrowings increased $1.0
billion, or 95%, as a result of the maturity of brokered
certificates of deposits (CDs) in the 2019 first quarter.
Average total deposits decreased $0.3
billion, or less than 1%, while average total core deposits
increased $0.6 billion, or 1%.
Savings and other domestic deposits decreased $1.0 billion, or 9%, primarily reflecting a
continued shift in consumer product mix. Average core CDs
decreased $0.9 billion, or 16%,
reflecting the maturity of the balances related to the 2018
consumer deposit growth initiatives. Average brokered
deposits and negotiable CDs decreased $0.9
billion, or 26%, reflecting the previously mentioned
brokered CD maturities. Average money market deposits
increased $2.0 billion, or 9%,
primarily reflecting growth driven by promotional pricing over the
past seven quarters and a continued shift in consumer product
mix. Average total demand deposits increased $0.5 billion, or 1%, primarily driven by consumer
noninterest-bearing demand deposit growth and commercial interest
checking growth.
Compared to the 2019 third quarter, average total
interest-bearing liabilities decreased $0.4
billion, or 1%. Average total core deposits
increased $0.4 billion, or less than
1%. Average total demand deposits increased $1.1 billion, or 3%, primarily driven by
commercial noninterest-bearing demand deposit growth.
Average core CDs decreased $0.9
billion, or 15%, reflecting the maturity of the balances
tied to the 2018 consumer deposit growth initiatives.
On June 14, 2019, Huntington
completed the sale of the Wisconsin retail branches, which included
$725 million of deposits.
Noninterest Income
Table 5 – Noninterest Income – Record Mortgage
Originations Fuel Growth in Mortgage Banking Income
|
2019
|
|
2018
|
|
|
|
2019
|
|
2018
|
|
|
|
Full
|
|
Full
|
|
YOY
|
|
Fourth
|
|
Third
|
|
Fourth
|
|
Change (%)
|
($ in
millions)
|
Year
|
|
Year
|
|
Change
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
LQ
|
|
YOY
|
Service charges on
deposit accounts
|
$
|
372
|
|
|
$
|
364
|
|
|
2
|
%
|
|
$
|
95
|
|
|
$
|
98
|
|
|
$
|
94
|
|
|
(3)
|
%
|
|
1
|
%
|
Card and payment
processing income
|
246
|
|
|
224
|
|
|
10
|
|
|
64
|
|
|
64
|
|
|
58
|
|
|
0
|
|
|
10
|
|
Trust and investment
management services
|
178
|
|
|
171
|
|
|
4
|
|
|
47
|
|
|
44
|
|
|
42
|
|
|
7
|
|
|
12
|
|
Mortgage banking
income
|
167
|
|
|
108
|
|
|
55
|
|
|
58
|
|
|
54
|
|
|
23
|
|
|
7
|
|
|
152
|
|
Capital markets
fees
|
123
|
|
|
108
|
|
|
14
|
|
|
31
|
|
|
36
|
|
|
34
|
|
|
(14)
|
|
|
(9)
|
|
Insurance
income
|
88
|
|
|
82
|
|
|
7
|
|
|
24
|
|
|
20
|
|
|
21
|
|
|
20
|
|
|
14
|
|
Bank owned life
insurance income
|
66
|
|
|
67
|
|
|
(1)
|
|
|
17
|
|
|
18
|
|
|
16
|
|
|
(6)
|
|
|
6
|
|
Gain on sale of loans
and leases
|
55
|
|
|
55
|
|
|
0
|
|
|
16
|
|
|
13
|
|
|
16
|
|
|
23
|
|
|
0
|
|
Net (losses) gains on
sales of securities
|
(24)
|
|
|
(21)
|
|
|
(14)
|
|
|
(22)
|
|
|
0
|
|
|
(19)
|
|
|
(100)
|
|
|
(16)
|
|
Other noninterest
income
|
183
|
|
|
163
|
|
|
12
|
|
|
42
|
|
|
42
|
|
|
44
|
|
|
0
|
|
|
(5)
|
|
Total noninterest
income
|
$
|
1,454
|
|
|
$
|
1,321
|
|
|
10
|
%
|
|
$
|
372
|
|
|
$
|
389
|
|
|
$
|
329
|
|
|
(4)
|
%
|
|
13
|
%
|
|
See Pages 10, 11,
21, and 22 of Quarterly Financial Supplement for additional
detail.
|
Noninterest income for the 2019 fourth quarter increased
$43 million, or 13%, from the
year-ago quarter. Mortgage banking income increased
$35 million, or 152%, primarily
reflecting higher volume and overall salable spreads and a
$12 million increase in income from
net mortgage servicing rights (MSR) risk management. Card and
payment processing income increased $6
million, or 10%, primarily reflecting increased account
activity. Trust and investment management services fees increased
$5 million, or 12%, primarily driven
by strong equity market performance.
Compared to the 2019 third quarter, total noninterest income
decreased $17 million, or 4%.
Securities losses were $22 million
compared to less than $1 million in
the 2019 third quarter, reflecting the losses related to the
$2 billion portfolio repositioning
completed in the 2019 fourth quarter. Capital markets fees
decreased $5 million, or 14%,
primarily reflecting decreased interest rate derivative and foreign
exchange activity.
Noninterest Expense
Table 6 – Noninterest Expense – Year-over-Year Variance
Driven by Continued Investment in Colleagues and Digital and Mobile
Technology
|
2019
|
|
2018
|
|
|
|
2019
|
|
2018
|
|
|
|
Full
|
|
Full
|
|
YOY
|
|
Fourth
|
|
Third
|
|
Fourth
|
|
Change (%)
|
($ in
millions)
|
Year
|
|
Year
|
|
Change
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
LQ
|
|
YOY
|
Personnel
costs
|
$
|
1,654
|
|
|
$
|
1,559
|
|
|
6
|
%
|
|
$
|
426
|
|
|
$
|
406
|
|
|
$
|
399
|
|
|
5
|
%
|
|
7
|
%
|
Outside data
processing and other services
|
346
|
|
|
294
|
|
|
18
|
|
|
89
|
|
|
87
|
|
|
83
|
|
|
2
|
|
|
7
|
|
Equipment
|
163
|
|
|
164
|
|
|
(1)
|
|
|
42
|
|
|
41
|
|
|
48
|
|
|
2
|
|
|
(13)
|
|
Net
occupancy
|
159
|
|
|
184
|
|
|
(14)
|
|
|
41
|
|
|
38
|
|
|
70
|
|
|
8
|
|
|
(41)
|
|
Professional
services
|
54
|
|
|
60
|
|
|
(10)
|
|
|
14
|
|
|
16
|
|
|
17
|
|
|
(13)
|
|
|
(18)
|
|
Amortization of
intangibles
|
49
|
|
|
53
|
|
|
(8)
|
|
|
12
|
|
|
12
|
|
|
13
|
|
|
0
|
|
|
(8)
|
|
Marketing
|
37
|
|
|
53
|
|
|
(30)
|
|
|
9
|
|
|
10
|
|
|
15
|
|
|
(10)
|
|
|
(40)
|
|
Deposit and other
insurance expense
|
34
|
|
|
63
|
|
|
(46)
|
|
|
10
|
|
|
8
|
|
|
9
|
|
|
25
|
|
|
11
|
|
Other noninterest
expense
|
225
|
|
|
217
|
|
|
4
|
|
|
58
|
|
|
49
|
|
|
57
|
|
|
18
|
|
|
2
|
|
Total noninterest
expense
|
$
|
2,721
|
|
|
$
|
2,647
|
|
|
3
|
%
|
|
$
|
701
|
|
|
$
|
667
|
|
|
$
|
711
|
|
|
5
|
%
|
|
(1)
|
%
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of employees
(Average full-time equivalent)
|
15.7
|
|
|
15.7
|
|
|
0
|
%
|
|
15.5
|
|
|
15.7
|
|
|
15.7
|
|
|
(1)
|
%
|
|
(1)
|
%
|
|
See Pages 10 and
21 of Quarterly Financial Supplement for additional
detail.
|
Noninterest expense for the 2019 fourth quarter decreased
$10 million, or 1%, from the year-ago
quarter. Net occupancy costs decreased $29 million, or 41%, primarily reflecting lower
branch and facility consolidation-related expense. The 2018
fourth quarter included $28 million
of consolidation-related expense. The 2019 fourth quarter included
$4 million of consolidation-related
expense for the previously announced consolidation of 30 in-store
branches and the disposal of other properties. Marketing
decreased $6 million, or 40%,
primarily reflecting pacing of marketing campaigns. Equipment
decreased $6 million, or 13%,
primarily reflecting lower branch and facility
consolidation-related expense. The 2018 fourth quarter
included $7 million of
consolidation-related expense versus $2
million in the 2019 fourth quarter. Personnel costs
increased $27 million, or 7%,
primarily reflecting the $15 million
of expense related to the previously announced position reductions
completed in the 2019 fourth quarter. Outside data processing
and other services expense increased $6
million, or 7%, primarily driven by higher technology
investment costs and $3 million of
expense related to a technology system decommission in the 2019
fourth quarter.
Noninterest expense increased $34
million, or 5%, from the 2019 third quarter. Personnel
costs increased $20 million, or 5%,
primarily reflecting the $15 million
of expense related to the previously announced position reductions
completed in the 2019 fourth quarter. Other noninterest
expense increased $9 million, or 18%,
primarily driven by a $4 million
final true-up of the earn out related to the Hutchinson, Shockey,
Erley & Co. (HSE) acquisition.
Credit Quality
Table 7 – Credit Quality Metrics – NCOs Near Low End of
Average Through-the-Cycle Target Range
|
2019
|
|
2018
|
($ in
millions)
|
December
31,
|
|
September
30,
|
|
June 30,
|
|
March 31,
|
|
December
31,
|
Total nonaccrual
loans and leases
|
$
|
468
|
|
|
$
|
438
|
|
|
$
|
425
|
|
|
$
|
417
|
|
|
$
|
340
|
|
Total other real
estate
|
11
|
|
|
12
|
|
|
14
|
|
|
18
|
|
|
23
|
|
Other NPAs
(1)
|
19
|
|
|
32
|
|
|
21
|
|
|
26
|
|
|
24
|
|
Total nonperforming
assets
|
498
|
|
|
482
|
|
|
460
|
|
|
461
|
|
|
387
|
|
Accruing loans and
leases past due 90+ days
|
171
|
|
|
163
|
|
|
152
|
|
|
147
|
|
|
170
|
|
NPAs + accruing loans
and lease past due 90+ days
|
$
|
669
|
|
|
$
|
645
|
|
|
$
|
612
|
|
|
$
|
608
|
|
|
$
|
557
|
|
NAL ratio
(2)
|
0.62
|
%
|
|
0.58
|
%
|
|
0.57
|
%
|
|
0.56
|
%
|
|
0.45
|
%
|
NPA ratio
(3)
|
0.66
|
|
|
0.64
|
|
|
0.61
|
|
|
0.61
|
|
|
0.52
|
|
(NPAs+90
days)/(Loans+OREO)
|
0.89
|
|
|
0.86
|
|
|
0.82
|
|
|
0.81
|
|
|
0.74
|
|
Provision for credit
losses
|
$
|
79
|
|
|
$
|
82
|
|
|
$
|
59
|
|
|
$
|
67
|
|
|
$
|
60
|
|
Net
charge-offs
|
73
|
|
|
73
|
|
|
48
|
|
|
71
|
|
|
50
|
|
Net charge-offs /
Average total loans
|
0.39
|
%
|
|
0.39
|
%
|
|
0.25
|
%
|
|
0.38
|
%
|
|
0.27
|
%
|
Allowance for loans
and lease losses (ALLL)
|
$
|
783
|
|
|
$
|
783
|
|
|
$
|
774
|
|
|
$
|
764
|
|
|
$
|
772
|
|
Allowance for
unfunded loan commitments and letters of credit
|
104
|
|
|
101
|
|
|
101
|
|
|
100
|
|
|
96
|
|
Allowance for credit
losses (ACL)
|
$
|
887
|
|
|
$
|
884
|
|
|
$
|
875
|
|
|
$
|
864
|
|
|
$
|
868
|
|
ALLL as %
of:
|
|
|
|
|
|
|
|
|
|
Total loans and
leases
|
1.04
|
%
|
|
1.05
|
%
|
|
1.03
|
%
|
|
1.02
|
%
|
|
1.03
|
%
|
NALs
|
167
|
|
|
179
|
|
|
182
|
|
|
183
|
|
|
228
|
|
NPAs
|
157
|
|
|
163
|
|
|
168
|
|
|
166
|
|
|
200
|
|
|
(1)
Other nonperforming assets include certain impaired securities
and/or nonaccrual loans held-for-sale.
|
(2)
Total NALs as a % of total loans and leases.
|
(3)
Total NPAs as a % of sum of loans and leases, other real estate
owned, and other NPAs.
|
See Pages 12-15
and 23-26 of Quarterly Financial Supplement for additional
detail.
|
Asset quality metrics remained in line with overall
expectations. The consumer portfolio metrics remained
relatively stable, reflecting normal seasonal impacts. The
commercial portfolio metrics reflected continued volatility in the
oil and gas portfolio, while the remainder of the commercial
portfolio has performed well.
Nonperforming assets (NPAs) increased to $498 million, or 0.66% of total loans and leases
and OREO, from $387 million, or
0.52%, a year ago. Nonaccrual loans and leases (NALs)
increased $128 million, or 38%, to
$468 million, or 0.62% of total loans
and leases. The year-over-year increase was primarily in the
C&I portfolio, particularly in the oil and gas portfolio.
OREO balances decreased $12 million,
or 52%, from the year-ago quarter. On a linked quarter basis,
NALs increased $30 million, or 7%,
while NPAs increased $16 million, or
3%.
The provision for credit losses increased $19 million year-over-year to $79 million. NCOs increased $23 million year-over-year to $73 million. The increase was driven by the
oil and gas portfolio, which made up approximately half of the
total commercial NCOs. Consumer NCOs remained flat.
NCOs represented an annualized 0.39% of average loans and leases in
the current quarter, unchanged from the prior quarter and up from
0.27% in the year-ago quarter. We remain confident in the
long-term performance of our credit portfolios.
The allowance for loan and lease losses (ALLL) increased by
$11 million from the year ago
quarter, increasing as a percentage of total loans and leases to
1.04% compared to 1.03% a year ago. The ALLL as a percentage
of period-end total NALs decreased to 167% from 228% over the same
period. The increase in the ALLL was primarily a result of
loan growth and portfolio management activity. We believe the
levels of the ALLL and ACL are appropriate given the low level of
problem loans and the current composition of the overall loan and
lease portfolio.
Capital
Table 8 – Capital Ratios – Managing Capital Ratios within
Targeted Ranges
|
|
2019
|
|
2018
|
($ in
billions)
|
|
December
31,
|
|
September
30,
|
|
June 30,
|
|
March 31,
|
|
December
31,
|
Tangible common
equity / tangible
assets ratio
|
|
7.88
|
%
|
|
8.00
|
%
|
|
7.80
|
%
|
|
7.57
|
%
|
|
7.21
|
%
|
Regulatory Common
Equity Tier 1 risk-
based capital ratio (1)
|
|
9.88
|
%
|
|
10.02
|
%
|
|
9.88
|
%
|
|
9.84
|
%
|
|
9.65
|
%
|
Regulatory Tier 1
risk-based capital ratio (1)
|
|
11.26
|
%
|
|
11.41
|
%
|
|
11.28
|
%
|
|
11.25
|
%
|
|
11.06
|
%
|
Regulatory Total
risk-based capital ratio (1)
|
|
13.04
|
%
|
|
13.29
|
%
|
|
13.13
|
%
|
|
13.11
|
%
|
|
12.98
|
%
|
Total risk-weighted
assets (1)
|
|
$
|
87.5
|
|
|
$
|
86.7
|
|
|
$
|
86.3
|
|
|
$
|
86.0
|
|
|
$
|
85.7
|
|
|
(1)
December 31, 2019 figures are estimated. Amounts are
presented on a Basel III standardized approach basis for
calculating risk-weighted assets.
|
See Pages 16-17 of
Quarterly Financial Supplement for additional
detail.
|
The tangible common equity to tangible assets ratio was 7.88% at
December 31, 2019, up 67 basis points from a year ago.
The regulatory Common Equity Tier 1 (CET1) risk-based capital ratio
was 9.88% at December 31, 2019, compared to 9.65% at
December 31, 2018. The regulatory Tier 1 risk-based
capital ratio was 11.26% compared to 11.06% at December 31,
2018. All capital ratios were impacted by the repurchase of
$441 million of common stock (31.4
million shares at an average price of $14.00 per share) over the last four quarters,
including $196 million repurchased
during the 2019 fourth quarter.
Income Taxes
The provision for income taxes was $55
million in the 2019 fourth quarter compared to $57 million in the 2018 fourth quarter. The
effective tax rates for the 2019 fourth quarter and 2018 fourth
quarter were 14.8% and 14.6%, respectively.
At December 31, 2019, the Company had a net federal
deferred tax liability of $221
million and a net state deferred tax asset of $38 million.
Expectations – 2020
Full-year revenue is expected to increase approximately 1.5% to
3.5%. Full-year noninterest expense is expected to increase
approximately 1% to 3%.
Average loans and leases are expected to increase approximately
3% to 4% on an annual basis. Average total deposits are
expected to increase approximately 3% to 4% on an annual basis.
Asset quality metrics are expected to remain strong, with net
charge-offs in the range of approximately 35 to 45 basis points,
with some moderate quarterly volatility.
The effective tax rate for 2020 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 January 23, 2020, at 9:00 a.m.
(Eastern Standard 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# 13697749. 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 January 31, 2020 at
(877) 660-6853 or (201) 612-7415; conference ID#
13697749.
Please see the 2019 Fourth Quarter Quarterly Financial
Supplement for additional detailed financial performance metrics.
This document can be found on the Investor Relations section of
Huntington's website, www.huntington.com.
About Huntington
Huntington Bancshares Incorporated is a regional bank holding
company headquartered in Columbus,
Ohio, with $109 billion of
assets and a network of 868 branches, including 12 Private Client
Group offices, and 1,448 ATMs across seven 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 vehicle finance, 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; reform of LIBOR; 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
2018 Annual Report on Form 10-K, as well as our subsequent
Securities and Exchange Commission ("SEC") filings, which are on
file with the SEC and available in the "Investor Relations" section
of our website, http://www.huntington.com, under the heading
"Publications and Filings."
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 our 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, and 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 our 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 which may be
described from time to time in Huntington's filings with the
Securities and Exchange Commission.
View original content to download
multimedia:http://www.prnewswire.com/news-releases/huntington-bancshares-incorporated-reports-record-annual-earnings-300991868.html
SOURCE Huntington Bancshares Incorporated