COLUMBUS, Ohio, Oct. 23, 2018 /PRNewswire/ -- Huntington
Bancshares Incorporated (Nasdaq: HBAN; www.huntington.com) reported
net income for the 2018 third quarter of $378 million, an increase of 37% from the
year-ago quarter. Earnings per common share for the 2018
third quarter were $0.33, up 43% from
the year-ago quarter. Tangible book value per common share as
of 2018 third quarter-end was $7.06,
a 3% year-over-year increase. Return on average assets was
1.42%, return on average common equity was 14.3%, and return on
average tangible common equity (ROTCE) was 19.0%.
"We delivered solid results again in the third quarter including
record revenue and ROTCE above our long-term goal for the fourth
consecutive quarter," said Steve
Steinour, chairman, president, and CEO. "Continued
strong capital generation fuels our organic growth, supports our
increased dividend, and allows us to return additional capital to
our shareholders via share repurchases."
"We have built sustainable competitive advantages in our key
businesses that are driving high performance, and we expect to do
so in the future," Steinour said. "In the third quarter, we
improved our funding composition with average core deposits
increasing 6% year-over-year, characterized by growth in both
consumer and commercial deposits. Also, the recently released
FDIC data shows that we gained deposit market share in our largest
markets.
"Average loan growth remained strong at 7% year-over-year.
Average consumer loans increased 10%, illustrating continued
momentum in residential mortgage, RV and marine, and automobile
lending. Average commercial loan balances increased 3%
year-over-year, impacted by anticipated commercial real estate loan
payoffs in the quarter. We remain optimistic for the rest of
the year, as commercial originations picked up at the end of the
quarter, and our local economies remain vibrant.
"The third quarter marked the end of the 2018 fiscal year for
the U.S. Small Business Administration, during which Huntington
earned the distinction of being the largest SBA 7(a) lender in the
nation and the largest in our footprint for the tenth consecutive
year."
During the 2018 third quarter, Huntington increased the
quarterly dividend $0.03 per share,
or 27%, to $0.14 per common
share. Huntington also repurchased $691 million of common shares in the quarter,
which represents 65% of the total repurchase included in our 2018
CCAR capital plan. Included in the quarter's share repurchase
activity is completion of the previously announced $400 million accelerated share repurchase
(ASR).
Specific 2018 Third Quarter
Highlights:
- Fully-taxable equivalent total revenue increased $51 million, or 5%, year-over-year
- Fully-taxable equivalent net interest income increased
$39 million, or 5%,
year-over-year
- Net interest margin of 3.32%, up 3 basis points from the
year-ago quarter
- Noninterest income increased $12
million, or 4%, year-over-year
- Noninterest expense decreased $29
million, or 4%, year-over-year, as the year-ago quarter
included $31 million of
acquisition-related expense
- Efficiency ratio of 55.3%, down from 60.5% in the year-ago
quarter
- Effective tax rate of 14.1%, down from 24.7% 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 $3.3 billion, or 10%, increase in consumer loans
and a $1.2 billion, or 3%, increase
in commercial loans
- Average core deposits increased $4.1
billion, or 6%, year-over-year, driven by a $2.9 billion, or 141%, increase in core
certificates of deposit and a $1.2
billion, or 6%, increase in money market deposits
- Net charge-offs equated to 0.16% of average loans and leases,
representing the seventeenth consecutive quarter below the average
through-the-cycle target range of 0.35% to 0.55%
- Nonperforming asset ratio of 0.55%, down from 0.56% a year
ago
- Common Equity Tier 1 (CET1) risk-based capital ratio of 9.89%,
down from 9.94% a year ago and within our 9% to 10% operating
guideline
- Tangible common equity (TCE) ratio of 7.25%, down from 7.42% a
year ago
- Tangible book value per common share (TBVPS) increased
$0.21, or 3%, year-over-year to
$7.06
Table 1 –
Earnings Performance Summary (GAAP)
|
|
2018
|
|
2017
|
(in millions,
except per share data)
|
Third
|
|
Second
|
|
First
|
|
Fourth
|
|
Third
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
Net Income
|
$
|
378
|
|
|
$
|
355
|
|
|
$
|
326
|
|
|
$
|
432
|
|
|
$
|
275
|
|
Diluted earnings per
common share
|
0.33
|
|
|
0.30
|
|
|
0.28
|
|
|
0.37
|
|
|
0.23
|
|
|
|
|
|
|
|
|
|
|
|
Return on average
assets
|
1.42
|
%
|
|
1.36
|
%
|
|
1.27
|
%
|
|
1.67
|
%
|
|
1.08
|
%
|
Return on average
common equity
|
14.3
|
|
|
13.2
|
|
|
13.0
|
|
|
17.0
|
|
|
10.5
|
|
Return on average
tangible common equity
|
19.0
|
|
|
17.6
|
|
|
17.5
|
|
|
22.7
|
|
|
14.1
|
|
Net interest
margin
|
3.32
|
|
|
3.29
|
|
|
3.30
|
|
|
3.30
|
|
|
3.29
|
|
Efficiency
ratio
|
55.3
|
|
|
56.6
|
|
|
56.8
|
|
|
54.9
|
|
|
60.5
|
|
|
|
|
|
|
|
|
|
|
|
Tangible book value
per common share
|
$
|
7.06
|
|
|
$
|
7.27
|
|
|
$
|
7.12
|
|
|
$
|
6.97
|
|
|
$
|
6.85
|
|
Cash dividends
declared per common share
|
0.14
|
|
|
0.11
|
|
|
0.11
|
|
|
0.11
|
|
|
0.08
|
|
Average diluted
shares outstanding
|
1,104
|
|
|
1,123
|
|
|
1,125
|
|
|
1,130
|
|
|
1,106
|
|
|
|
|
|
|
|
|
|
|
|
Average earning
assets
|
$
|
96,753
|
|
|
$
|
96,363
|
|
|
$
|
95,412
|
|
|
$
|
93,937
|
|
|
$
|
92,849
|
|
Average loans and
leases
|
72,751
|
|
|
71,887
|
|
|
70,484
|
|
|
68,940
|
|
|
68,276
|
|
Average core
deposits
|
77,680
|
|
|
75,386
|
|
|
73,392
|
|
|
73,946
|
|
|
73,549
|
|
|
|
|
|
|
|
|
|
|
|
Tangible common
equity / tangible assets ratio
|
7.25
|
%
|
|
7.78
|
%
|
|
7.70
|
%
|
|
7.34
|
%
|
|
7.42
|
%
|
Common equity Tier 1
risk-based capital ratio
|
9.89
|
|
|
10.53
|
|
|
10.45
|
|
|
10.01
|
|
|
9.94
|
|
|
|
|
|
|
|
|
|
|
|
NCOs as a % of
average loans and leases
|
0.16
|
%
|
|
0.16
|
%
|
|
0.21
|
%
|
|
0.24
|
%
|
|
0.25
|
%
|
NAL ratio
|
0.50
|
|
|
0.52
|
|
|
0.54
|
|
|
0.50
|
|
|
0.49
|
|
ALLL as a % of total
loans and leases
|
1.04
|
|
|
1.02
|
|
|
1.01
|
|
|
0.99
|
|
|
0.98
|
|
ACL as a % of total
loans and leases
|
1.17
|
|
|
1.15
|
|
|
1.13
|
|
|
1.11
|
|
|
1.10
|
|
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
third 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)
|
September 30, 2018
– net income
|
|
|
$
|
378
|
|
|
$
|
0.33
|
|
•
|
None
|
N/A
|
|
—
|
|
|
—
|
|
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)
|
|
|
|
|
|
|
|
|
|
|
|
|
(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.
|
Net Interest
Income, Net Interest Margin, and Average Balance
Sheet
|
Table 3 – Net
Interest Income and Net Interest Margin Performance Summary –
Inherent Asset Sensitivity
Drove NIM Expansion
|
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
|
|
|
($ in
millions)
|
Third
|
|
Second
|
|
First
|
|
Fourth
|
|
Third
|
|
Change (%)
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
LQ
|
|
YOY
|
Net interest
income
|
$
|
802
|
|
|
$
|
784
|
|
|
$
|
770
|
|
|
$
|
770
|
|
|
$
|
758
|
|
|
2%
|
|
6%
|
FTE
adjustment
|
8
|
|
|
7
|
|
|
7
|
|
|
12
|
|
|
13
|
|
|
14
|
|
(38)
|
Net interest income -
FTE
|
810
|
|
|
791
|
|
|
777
|
|
|
782
|
|
|
771
|
|
|
2
|
|
5
|
Noninterest
income
|
342
|
|
|
336
|
|
|
314
|
|
|
340
|
|
|
330
|
|
|
2
|
|
4
|
Total revenue -
FTE
|
$
|
1,152
|
|
|
$
|
1,127
|
|
|
$
|
1,091
|
|
|
$
|
1,122
|
|
|
$
|
1,101
|
|
|
2%
|
|
5%
|
|
|
|
|
|
|
|
|
|
|
|
Change (bp)
|
Yield /
Cost
|
|
|
|
|
|
|
|
|
|
|
LQ
|
|
YOY
|
Total earning
assets
|
4.16
|
%
|
|
4.07
|
%
|
|
3.91
|
%
|
|
3.83
|
%
|
|
3.78
|
%
|
|
9
|
|
38
|
Total loans and
leases
|
4.60
|
|
|
4.49
|
|
|
4.32
|
|
|
4.23
|
|
|
4.20
|
|
|
11
|
|
40
|
Total
securities
|
2.73
|
|
|
2.71
|
|
|
2.62
|
|
|
2.64
|
|
|
2.55
|
|
|
2
|
|
18
|
Total
interest-bearing liabilities
|
1.13
|
|
|
1.05
|
|
|
0.82
|
|
|
0.73
|
|
|
0.68
|
|
|
8
|
|
45
|
Total
interest-bearing deposits
|
0.73
|
|
|
0.59
|
|
|
0.43
|
|
|
0.37
|
|
|
0.35
|
|
|
14
|
|
38
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest rate
spread
|
3.03
|
|
|
3.02
|
|
|
3.09
|
|
|
3.10
|
|
|
3.10
|
|
|
1
|
|
(7)
|
Impact of
noninterest-bearing funds on margin
|
0.29
|
|
|
0.27
|
|
|
0.21
|
|
|
0.20
|
|
|
0.19
|
|
|
2
|
|
10
|
Net interest
margin
|
3.32
|
%
|
|
3.29
|
%
|
|
3.30
|
%
|
|
3.30
|
%
|
|
3.29
|
%
|
|
3
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See Pages 7-9 of
Quarterly Financial Supplement for additional
detail.
|
Fully-taxable equivalent (FTE) net interest income for the 2018
third quarter increased $39 million,
or 5%, from the 2017 third quarter. This reflected the
benefit from the $3.9 billion, or 4%,
increase in average earning assets and a three basis point increase
in the FTE net interest margin (NIM) to 3.32%. Average
earning asset yields increased 38 basis points year-over-year,
driven by a 40 basis point improvement in loan yields.
Average interest-bearing liability costs increased 45 basis points,
although interest-bearing deposit costs only increased 38 basis
points. The cost of short-term borrowings and long-term debt
increased 103 basis points and 113 basis points,
respectively. The benefit from noninterest-bearing funds
increased 10 basis points versus the year-ago quarter. On a
year-over-year basis, NIM was negatively impacted by 2 basis points
as a result of the impact of federal tax reform on the FTE
adjustment. Embedded within these yields and costs, FTE net
interest income during the 2018 third quarter included $17 million, or approximately 7 basis points, of
purchase accounting impact compared to $27
million, or approximately 12 basis points, in the year-ago
quarter.
Compared to the 2018 second quarter, FTE net interest income
increased $19 million, or 2%,
primarily reflecting a three basis point increase in NIM.
Average earning asset yields increased 9 basis points sequentially,
driven by an 11 basis point increase in loan yields. Average
interest-bearing liability costs increased 8 basis points,
primarily driven by a 14 basis point increase in average
interest-bearing deposit costs. The benefit of
noninterest-bearing funding improved 2 basis points linked
quarter. The purchase accounting impact on the net interest
margin was approximately 7 basis points in the 2018 third quarter,
down 1 basis point from the prior quarter.
Table 4 –
Average Earning Assets – Broad-based Consumer and C&I Loan
Growth Reflects Underlying
Economic Strength of the Footprint
|
|
2018
|
|
2017
|
|
|
|
|
($ in
billions)
|
Third
|
|
Second
|
|
First
|
|
Fourth
|
|
Third
|
|
Change (%)
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
LQ
|
|
YOY
|
Commercial and
industrial
|
$
|
28.9
|
|
|
$
|
28.9
|
|
|
$
|
28.2
|
|
|
$
|
27.4
|
|
|
$
|
27.6
|
|
|
0%
|
|
4%
|
Commercial real
estate
|
7.2
|
|
|
7.4
|
|
|
7.3
|
|
|
7.2
|
|
|
7.2
|
|
|
(3)
|
|
(1)
|
Total
commercial
|
36.0
|
|
|
36.2
|
|
|
35.6
|
|
|
34.6
|
|
|
34.9
|
|
|
(1)
|
|
3
|
Automobile
|
12.4
|
|
|
12.3
|
|
|
12.1
|
|
|
12.0
|
|
|
11.7
|
|
|
1
|
|
6
|
Home
equity
|
9.9
|
|
|
9.9
|
|
|
10.0
|
|
|
10.0
|
|
|
10.0
|
|
|
(1)
|
|
(1)
|
Residential
mortgage
|
10.2
|
|
|
9.6
|
|
|
9.2
|
|
|
8.8
|
|
|
8.4
|
|
|
6
|
|
22
|
RV and marine
finance
|
3.0
|
|
|
2.7
|
|
|
2.5
|
|
|
2.4
|
|
|
2.3
|
|
|
13
|
|
31
|
Other
consumer
|
1.2
|
|
|
1.2
|
|
|
1.1
|
|
|
1.1
|
|
|
1.0
|
|
|
6
|
|
18
|
Total
consumer
|
36.7
|
|
|
35.7
|
|
|
34.9
|
|
|
34.3
|
|
|
33.4
|
|
|
3
|
|
10
|
Total loans and
leases
|
72.8
|
|
|
71.9
|
|
|
70.5
|
|
|
68.9
|
|
|
68.3
|
|
|
1
|
|
7
|
Total
securities
|
23.2
|
|
|
23.8
|
|
|
24.4
|
|
|
24.3
|
|
|
23.8
|
|
|
(3)
|
|
(3)
|
Held-for-sale and
other earning assets
|
0.8
|
|
|
0.7
|
|
|
0.6
|
|
|
0.7
|
|
|
0.8
|
|
|
18
|
|
6
|
Total earning
assets
|
$
|
96.8
|
|
|
$
|
96.4
|
|
|
$
|
95.4
|
|
|
$
|
93.9
|
|
|
$
|
92.8
|
|
|
0%
|
|
4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See Page 7 of
Quarterly Financial Supplement for additional
detail.
|
Average earning assets for the 2018 third quarter increased
$3.9 billion, or 4%, from the
year-ago quarter, primarily reflecting a $4.5 billion, or 7%, increase in average loans
and leases. Average residential mortgage loans increased
$1.8 billion, or 22%, driven by an
increase in lending officers and expansion into the Chicago market. Average commercial and
industrial (C&I) loans increased $1.2
billion, or 4%, reflecting growth in middle market, asset
finance, energy, and corporate banking. Average RV and marine
finance loans increased $0.7 billion,
or 31%, reflecting the success of the well-managed expansion of the
acquired business into 17 new states over the past two years.
Average automobile loans increased $0.7
billion, or 6%, driven by continued strong originations
while consistently increasing pricing over the past year.
Average securities decreased $0.6
billion, or 3%, primarily due to runoff in the portfolio
partially offset by continued growth in direct purchase municipal
instruments in our commercial banking segment.
Compared to the 2018 second quarter, average earning assets
increased $0.4 billion, or less than
1%, primarily reflecting the $0.9
billion, or 1%, increase in average loans and leases.
Average residential mortgage loans increased $0.6 billion, or 6%, driven by seasonality and
the expansion of our home lending business. Average
securities decreased $0.6 billion, or
3%, due to runoff in the portfolio.
Table 5 –
Average Liabilities – Continued Growth in Core Deposits Drove
Reduction in Wholesale Funding
|
|
2018
|
|
2017
|
|
|
|
Third
|
|
Second
|
|
First
|
|
Fourth
|
|
Third
|
|
Change (%)
|
($ in
billions)
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
LQ
|
|
YOY
|
Demand deposits -
noninterest-bearing
|
$
|
20.2
|
|
|
$
|
20.4
|
|
|
$
|
20.6
|
|
|
$
|
21.7
|
|
|
$
|
21.7
|
|
|
(1)%
|
|
(7)%
|
Demand deposits -
interest-bearing
|
19.6
|
|
|
19.1
|
|
|
18.6
|
|
|
18.2
|
|
|
17.9
|
|
|
2
|
|
9
|
Total demand
deposits
|
39.8
|
|
|
39.5
|
|
|
39.2
|
|
|
39.9
|
|
|
39.6
|
|
|
1
|
|
0
|
Money market
deposits
|
21.5
|
|
|
20.9
|
|
|
20.7
|
|
|
20.7
|
|
|
20.3
|
|
|
3
|
|
6
|
Savings and other
domestic deposits
|
11.4
|
|
|
11.1
|
|
|
11.2
|
|
|
11.3
|
|
|
11.6
|
|
|
3
|
|
(1)
|
Core certificates of
deposit
|
4.9
|
|
|
3.8
|
|
|
2.3
|
|
|
1.9
|
|
|
2.0
|
|
|
30
|
|
141
|
Total core
deposits
|
77.7
|
|
|
75.4
|
|
|
73.4
|
|
|
73.9
|
|
|
73.5
|
|
|
3
|
|
6
|
Other domestic
deposits of $250,000 or more
|
0.3
|
|
|
0.2
|
|
|
0.2
|
|
|
0.4
|
|
|
0.4
|
|
|
17
|
|
(34)
|
Brokered deposits and
negotiable CDs
|
3.5
|
|
|
3.7
|
|
|
3.3
|
|
|
3.4
|
|
|
3.6
|
|
|
(3)
|
|
(1)
|
Total
deposits
|
$
|
81.5
|
|
|
$
|
79.3
|
|
|
$
|
76.9
|
|
|
$
|
77.7
|
|
|
$
|
77.5
|
|
|
3%
|
|
5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term
borrowings
|
$
|
1.7
|
|
|
$
|
3.1
|
|
|
$
|
5.2
|
|
|
$
|
2.8
|
|
|
$
|
2.4
|
|
|
(44)%
|
|
(28)%
|
Long-term
debt
|
8.9
|
|
|
9.2
|
|
|
9.0
|
|
|
9.2
|
|
|
8.9
|
|
|
(3)
|
|
(0)
|
Total debt
|
$
|
10.6
|
|
|
$
|
12.3
|
|
|
$
|
14.2
|
|
|
$
|
12.0
|
|
|
$
|
11.3
|
|
|
(14)%
|
|
(6)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
interest-bearing liabilities
|
$
|
71.9
|
|
|
$
|
71.2
|
|
|
$
|
70.6
|
|
|
$
|
68.1
|
|
|
$
|
67.2
|
|
|
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 third
quarter increased $4.0 billion, or
5%, from the year-ago quarter, while average total core deposits
increased $4.1 billion, or 6%.
Average core certificates of deposit (CDs) increased $2.9 billion, or 141%, reflecting initiatives
during the past three quarters to grow fixed-rate, term consumer
deposits in light of the rising interest rate environment.
Average money market deposits increased $1.2
billion, or 6%, primarily reflecting growth in consumer
balances and continued shifting commercial customer preferences for
higher yielding deposit products. Average demand deposits
increased $0.2 billion, or less than
1%, primarily driven by a $0.2
billion, or 5%, increase in average consumer
noninterest-bearing demand deposits. Average short-term
borrowings decreased $0.7 billion, or
28%, as continued growth in core deposits reduced reliance on
wholesale funding.
Compared to the 2018 second quarter, average total core deposits
increased $2.3 billion, or 3%.
Average core CDs increased $1.1
billion, or 30%, as a result of continued initiatives to
grow fixed-rate, term consumer deposits in light of the rising
interest rate environment. Average money market deposits
increased $0.6 billion, or 3%,
primarily driven by a $0.5 billion,
or 4%, increase in average consumer money market deposits.
Average short-term borrowings decreased $1.4
billion, or 44%, as continued growth in core deposits
reduced reliance on wholesale funding.
Noninterest
Income
|
|
|
|
|
Table 6 –
Noninterest Income – Household / Relationship Growth and OCR
Strategy Continued to Drive
Noninterest Income Growth
|
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
|
|
Third
|
|
Second
|
|
First
|
|
Fourth
|
|
Third
|
|
Change (%)
|
($ in
millions)
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
LQ
|
|
YOY
|
Service charges on
deposit accounts
|
$
|
93
|
|
|
$
|
91
|
|
|
$
|
86
|
|
|
$
|
91
|
|
|
$
|
91
|
|
|
2%
|
|
2%
|
Cards and payment
processing income
|
57
|
|
|
56
|
|
|
53
|
|
|
53
|
|
|
54
|
|
|
2
|
|
6
|
Trust and investment
management services
|
43
|
|
|
42
|
|
|
44
|
|
|
41
|
|
|
39
|
|
|
2
|
|
10
|
Mortgage banking
income
|
31
|
|
|
28
|
|
|
26
|
|
|
33
|
|
|
34
|
|
|
11
|
|
(9)
|
Insurance
income
|
19
|
|
|
21
|
|
|
21
|
|
|
21
|
|
|
18
|
|
|
(10)
|
|
6
|
Capital markets
fees
|
22
|
|
|
21
|
|
|
19
|
|
|
23
|
|
|
22
|
|
|
5
|
|
0
|
Bank owned life
insurance income
|
19
|
|
|
17
|
|
|
15
|
|
|
18
|
|
|
16
|
|
|
12
|
|
19
|
Gain on sale of loans
and leases
|
16
|
|
|
15
|
|
|
8
|
|
|
17
|
|
|
14
|
|
|
7
|
|
14
|
Securities gains
(losses)
|
(2)
|
|
|
—
|
|
|
—
|
|
|
(4)
|
|
|
—
|
|
|
NM
|
|
NM
|
Other
income
|
44
|
|
|
45
|
|
|
42
|
|
|
47
|
|
|
42
|
|
|
(2)
|
|
5
|
Total noninterest
income
|
$
|
342
|
|
|
$
|
336
|
|
|
$
|
314
|
|
|
$
|
340
|
|
|
$
|
330
|
|
|
2%
|
|
4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See Pages 10-11 of
Quarterly Financial Supplement for additional
detail.
|
Reported noninterest income for the 2018 third quarter increased
$12 million, or 4%, from the year-ago
quarter, and increased $6 million, or
2%, compared to the 2018 second quarter. The growth
represents ongoing household / relationship acquisition and
execution of our strategies including our Optimal Customer
Relationship (OCR) strategy.
Noninterest
Expense (see Basis of Presentation)
|
Table 7 –
Noninterest Expense (GAAP) – Continued Strong Expense
Control
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
|
|
Third
|
|
Second
|
|
First
|
|
Fourth
|
|
Third
|
|
Change (%)
|
($ in
millions)
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
LQ
|
|
YOY
|
Personnel
costs
|
$
|
388
|
|
|
$
|
396
|
|
|
$
|
376
|
|
|
$
|
373
|
|
|
$
|
377
|
|
|
(2)%
|
|
3%
|
Outside data
processing and other services
|
69
|
|
|
69
|
|
|
73
|
|
|
71
|
|
|
80
|
|
|
0
|
|
(14)
|
Net
occupancy
|
38
|
|
|
35
|
|
|
41
|
|
|
36
|
|
|
55
|
|
|
9
|
|
(31)
|
Equipment
|
38
|
|
|
38
|
|
|
40
|
|
|
36
|
|
|
45
|
|
|
0
|
|
(16)
|
Deposit and other
insurance expense
|
18
|
|
|
18
|
|
|
18
|
|
|
19
|
|
|
19
|
|
|
0
|
|
(5)
|
Professional
services
|
17
|
|
|
15
|
|
|
11
|
|
|
18
|
|
|
15
|
|
|
13
|
|
13
|
Marketing
|
12
|
|
|
18
|
|
|
8
|
|
|
10
|
|
|
17
|
|
|
(33)
|
|
(29)
|
Amortization of
intangibles
|
13
|
|
|
13
|
|
|
14
|
|
|
14
|
|
|
14
|
|
|
0
|
|
(7)
|
Other
expense
|
58
|
|
|
50
|
|
|
52
|
|
|
56
|
|
|
58
|
|
|
16
|
|
0
|
Total noninterest
expense
|
$
|
651
|
|
|
$
|
652
|
|
|
$
|
633
|
|
|
$
|
633
|
|
|
$
|
680
|
|
|
(0)%
|
|
(4)%
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average full-time
equivalent employees
|
15.8
|
|
|
15.7
|
|
|
15.6
|
|
|
15.4
|
|
|
15.5
|
|
|
1%
|
|
2%
|
Table 8 -
Impacts of Significant Items
|
|
|
|
|
|
2018
|
|
2017
|
|
Third
|
|
Second
|
|
First
|
|
Fourth
|
|
Third
|
($ in
millions)
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
Personnel
costs
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4
|
|
Outside data
processing and other services
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
Net
occupancy
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14
|
|
Equipment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
Deposit and other
insurance expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Professional
services
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
Marketing
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Amortization of
intangibles
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Other
expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total noninterest
expense
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
31
|
|
Table 9 -
Adjusted Noninterest Expense (Non-GAAP)
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
|
|
Third
|
|
Second
|
|
First
|
|
Fourth
|
|
Third
|
|
Change (%)
|
($ in
millions)
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
LQ
|
|
YOY
|
Personnel
costs
|
$
|
388
|
|
|
$
|
396
|
|
|
$
|
376
|
|
|
$
|
373
|
|
|
$
|
373
|
|
|
(2)%
|
|
4%
|
Outside data
processing and other services
|
69
|
|
|
69
|
|
|
73
|
|
|
71
|
|
|
76
|
|
|
0
|
|
(9)
|
Net
occupancy
|
38
|
|
|
35
|
|
|
41
|
|
|
36
|
|
|
41
|
|
|
9
|
|
(7)
|
Equipment
|
38
|
|
|
38
|
|
|
40
|
|
|
36
|
|
|
38
|
|
|
0
|
|
0
|
Deposit and other
insurance expense
|
18
|
|
|
18
|
|
|
18
|
|
|
19
|
|
|
19
|
|
|
0
|
|
(5)
|
Professional
services
|
17
|
|
|
15
|
|
|
11
|
|
|
18
|
|
|
13
|
|
|
13
|
|
31
|
Marketing
|
12
|
|
|
18
|
|
|
8
|
|
|
10
|
|
|
17
|
|
|
(33)
|
|
(29)
|
Amortization of
intangibles
|
13
|
|
|
13
|
|
|
14
|
|
|
14
|
|
|
14
|
|
|
0
|
|
(7)
|
Other
expense
|
58
|
|
|
50
|
|
|
52
|
|
|
56
|
|
|
58
|
|
|
16
|
|
0
|
Total noninterest
expense
|
$
|
651
|
|
|
$
|
652
|
|
|
$
|
633
|
|
|
$
|
633
|
|
|
$
|
649
|
|
|
(0)%
|
|
0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See Page 10 of
Quarterly Financial Supplement for additional
detail.
|
Reported noninterest expense for the 2018 third quarter
decreased $29 million, or 4%, from
the year-ago quarter, primarily reflecting the $31 million of acquisition-related Significant
Items in the year-ago quarter. Outside data processing and
other services decreased $11 million,
or 14%, reflecting the $4 million
decrease in acquisition-related Significant Items and the benefit
of a debit card-related vendor migration completed in the year-ago
quarter. Marketing expense decreased $5 million, or 29%, reflecting the timing of
marketing campaigns and deposit promotions. Personnel costs
increased $11 million, or 3%,
primarily reflecting performance-based incentive compensation and
increased benefits costs, partially offset by a $4 million decrease in acquisition-related
Significant Items.
Reported noninterest expense decreased $1
million, or less than 1%, from the 2018 second
quarter. Personnel costs decreased $8
million, or 2%, primarily reflecting the grant of annual
long-term equity incentive compensation in the 2018 second
quarter. Marketing expense decreased $6 million, or 33%, reflecting the timing of
marketing campaigns and deposit promotions. Operational
losses and franchise tax expense, both within other expense,
partially offset these decreases.
Credit
Quality
|
Table 10 –
Credit Quality Metrics – NCOs and NALs Remain Near Cyclical
Lows
|
|
|
|
|
|
2018
|
|
2017
|
($ in
millions)
|
September
30,
|
|
June 30,
|
|
March 31,
|
|
December
31,
|
|
September
30,
|
Total nonaccrual
loans and leases
|
$
|
370
|
|
|
$
|
378
|
|
|
$
|
383
|
|
|
$
|
349
|
|
|
$
|
338
|
|
Total other real
estate
|
27
|
|
|
28
|
|
|
30
|
|
|
33
|
|
|
42
|
|
Other NPAs
(1)
|
6
|
|
|
6
|
|
|
7
|
|
|
7
|
|
|
7
|
|
Total nonperforming
assets
|
403
|
|
|
412
|
|
|
420
|
|
|
389
|
|
|
387
|
|
Accruing loans and
leases past due
90 days or
more
|
154
|
|
|
132
|
|
|
106
|
|
|
115
|
|
|
119
|
|
NPAs + accruing loans
and lease past
due 90 days or
more
|
$
|
557
|
|
|
$
|
544
|
|
|
$
|
526
|
|
|
$
|
504
|
|
|
$
|
506
|
|
|
|
|
|
|
|
|
|
|
|
NAL ratio
(2)
|
0.50
|
%
|
|
0.52
|
%
|
|
0.54
|
%
|
|
0.50
|
%
|
|
0.49
|
%
|
NPA ratio
(3)
|
0.55
|
|
|
0.57
|
|
|
0.59
|
|
|
0.55
|
|
|
0.56
|
|
(NPAs+90
days)/(Loans+OREO)
|
0.76
|
|
|
0.75
|
|
|
0.74
|
|
|
0.72
|
|
|
0.74
|
|
|
|
|
|
|
|
|
|
|
|
Provision for loan
and leases losses
|
$
|
49
|
|
|
$
|
48
|
|
|
$
|
68
|
|
|
$
|
57
|
|
|
$
|
50
|
|
Provision for
unfunded loan
commitments &
letters of credit losses
|
4
|
|
|
8
|
|
|
(2)
|
|
|
8
|
|
|
(6)
|
|
Provision for credit
losses
|
$
|
53
|
|
|
$
|
56
|
|
|
$
|
66
|
|
|
$
|
65
|
|
|
$
|
43
|
|
|
|
|
|
|
|
|
|
|
|
Net
charge-offs
|
29
|
|
|
28
|
|
|
38
|
|
|
41
|
|
|
43
|
|
Net charge-offs /
Average total loans
|
0.16
|
%
|
|
0.16
|
%
|
|
0.21
|
%
|
|
0.24
|
%
|
|
0.25
|
%
|
|
|
|
|
|
|
|
|
|
|
Allowance for loans
and lease losses
|
$
|
761
|
|
|
$
|
741
|
|
|
$
|
721
|
|
|
$
|
691
|
|
|
$
|
675
|
|
Allowance for
unfunded loan
commitments and
letters of credit
|
97
|
|
|
93
|
|
|
85
|
|
|
87
|
|
|
79
|
|
Allowance for credit
losses (ACL)
|
$
|
858
|
|
|
$
|
834
|
|
|
$
|
806
|
|
|
$
|
778
|
|
|
$
|
754
|
|
|
|
|
|
|
|
|
|
|
|
ALLL as a %
of:
|
|
|
|
|
|
|
|
|
|
Total loans and
leases
|
1.04
|
%
|
|
1.02
|
%
|
|
1.01
|
%
|
|
0.99
|
%
|
|
0.98
|
%
|
NALs
|
206
|
|
|
197
|
|
|
188
|
|
|
198
|
|
|
200
|
|
NPAs
|
189
|
|
|
180
|
|
|
172
|
|
|
178
|
|
|
175
|
|
|
|
|
|
|
|
|
|
|
|
ACL as a %
of:
|
|
|
|
|
|
|
|
|
|
Total loans and
leases
|
1.17
|
%
|
|
1.15
|
%
|
|
1.13
|
%
|
|
1.11
|
%
|
|
1.10
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 $32 million, or 9%, from the year-ago quarter to
$370 million, or 0.50% of total loans
and leases. The year-over-year increase was centered in the
C&I portfolio with no specific industry or geographic
trends. The commercial real estate portfolio was relatively
flat, while there was a decline in the residential portfolio.
A $15 million decline in OREO
balances partially offset the increase in NALs, resulting in a
modest 4% year-over-year increase in nonperforming assets (NPAs) to
$403 million, or 0.55% 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 $8
million, or 2%, while NPAs decreased $9 million, or 2%.
The provision for credit losses increased $10 million year-over-year to $53 million in the 2018 third quarter. Net
charge-offs (NCOs) decreased $14
million to $29 million.
The decrease was a direct result of lower charge-off activity in
the commercial portfolio resulting in a net recovery position in
the 2018 third quarter. Consumer charge-offs have remained
consistent over the past year. NCOs represented an annualized
0.16% of average loans and leases in the current quarter,
consistent with the prior quarter and down from 0.25% in the
year-ago quarter. We continue to be pleased with the net
charge-off performance within each portfolio and in total.
The allowance for loan and lease losses (ALLL) as a percentage
of total loans and leases increased to 1.04% compared to 0.98% a
year ago, while the ALLL as a percentage of period-end total NALs
increased to 206% from 200% over the same period. The
increase in the ALLL is primarily the result of loan growth and the
continued migration of the acquired loan portfolio into the
originated portfolio. The allowance for credit losses (ACL)
as a percentage of total loans and leases increased to 1.17%
compared to 1.10% a year ago. We believe the level of the
ALLL and ACL are appropriate given the low level of problem loans
and the current composition of the overall loan and lease
portfolio.
Capital
|
Table 11 –
Capital Ratios – Share Repurchase Activity Demonstrates Strong
Capital Management
|
|
|
|
|
|
|
|
2018
|
|
2017
|
($ in
billions)
|
|
September
30,
|
|
June 30,
|
|
March 31,
|
|
December
31,
|
|
September
30,
|
Tangible common
equity / tangible
assets
ratio
|
|
7.25
|
%
|
|
7.78
|
%
|
|
7.70
|
%
|
|
7.34
|
%
|
|
7.42
|
%
|
Common equity tier 1
risk-based
capital ratio
(1)
|
|
9.89
|
%
|
|
10.53
|
%
|
|
10.45
|
%
|
|
10.01
|
%
|
|
9.94
|
%
|
Regulatory Tier 1
risk-based
capital ratio
(1)
|
|
11.33
|
%
|
|
11.99
|
%
|
|
11.94
|
%
|
|
11.34
|
%
|
|
11.30
|
%
|
Regulatory Total
risk-based
capital ratio
(1)
|
|
13.36
|
%
|
|
13.97
|
%
|
|
13.92
|
%
|
|
13.39
|
%
|
|
13.39
|
%
|
Total risk-weighted
assets (1)
|
|
$
|
83.6
|
|
|
$
|
83.0
|
|
|
$
|
81.4
|
|
|
$
|
80.3
|
|
|
$
|
78.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 7.25% at
September 30, 2018, down 17 basis points from a year
ago. Common Equity Tier 1 (CET1) risk-based capital ratio was
9.89% at September 30, 2018, down from 9.94% a year ago.
The regulatory Tier 1 risk-based capital ratio was 11.33% compared
to 11.30% at September 30, 2017.
Consistent with the 2018 CCAR capital plan, the Company
repurchased $691 million of common
stock during the 2018 third quarter at an average cost of
$15.82 per share. Included in
the quarter's share repurchase activity, the Company completed the
previously announced $400 million
ASR. As contemplated in our 2018 CCAR capital plan, the ASR
effectively offset the impact of the $363
million Series A preferred equity conversion in the 2018
first quarter.
Income Taxes
The provision for income taxes was
$62 million in the 2018 third quarter
compared to $90 million in the 2017
third quarter. The effective tax rates for the 2018 third
quarter and 2017 third quarter were 14.1% and 24.7%, respectively,
with the year-over-year decrease primarily reflecting the impact of
federal tax reform. The 2018 third quarter and 2017 third
quarter included $3 million and
$1 million, respectively, of tax
benefits related to stock-based compensation. The 2018 third
quarter also included $3 million of
tax benefits related to the Tax Cuts and Jobs Act.
The provision for income taxes and the effective tax rate for
the nine months ended September 30,
2018 was $178 million and
14.4%, respectively.
At September 30, 2018, we had a net federal deferred tax
liability of $111 million and a net
state deferred tax asset of $26
million.
Expectations - 2018
Full-year revenues are expected to
increase approximately 4.0% to 4.5%. During the 2018 fourth
quarter, the company expects to realize approximately $20 million of securities losses related to
portfolio restructuring. Full-year noninterest expense is
expected to decrease approximately 2.0% to 2.5%. During the
2018 fourth quarter, the company expects to realize approximately
$40 million of expense due to the
previously announced branch and corporate facility
consolidations. 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 56.5% to
57.0%.
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%.
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 full year 2018 is expected to be in
the range of 14.5% to 15.0%.
Conference Call / Webcast Information
Huntington's
senior management will host an earnings conference call on
October 23, 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 #13683722. 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 November 2,
2018 at (877) 660-6853 or (201) 612-7415; conference ID
#13683722.
Please see the 2018 Third 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 $106 billion of assets and a network of 970
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.
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 2017 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 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, 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 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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