COLUMBUS, Ohio, Oct. 25, 2017 /PRNewswire/ -- Huntington
Bancshares Incorporated (NASDAQ: HBAN; www.huntington.com) reported
net income for the 2017 third quarter of $275 million, a $148
million, or 116%, increase from the year-ago quarter.
Earnings per common share for the 2017 third quarter were
$0.23, up $0.12, or 109%, from the year-ago quarter.
Excluding approximately $31 million
pretax of FirstMerit acquisition-related net expenses, or
$0.02 per common share after tax,
adjusted earnings per common share were $0.25. Tangible book value per common share
as of 2017 third quarter-end was $6.85, a 6% year-over-year increase. Return
on average assets was 1.08%, return on average common equity was
10.5%, and return on average tangible common equity was
14.1%. Total revenue increased 17% over the year-ago
quarter.
"We earned record net income for the second consecutive quarter
as we continue to achieve our long-term financial goals and to
deliver sector-leading returns for our shareowners while
maintaining our aggregate moderate-to-low risk appetite," said
Steve Steinour, chairman, president,
and CEO. "The 2017 third quarter marked the one-year
anniversary of the largest acquisition in Huntington's history, and
we have substantially completed the integration. We fully
implemented $255 million of
annualized cost savings, and continue to execute on the
deal-related revenue synergies. Consistent execution of our
core organic growth strategies, coupled with the realization of
these acquisition economics, are the key drivers of third quarter
results."
"Huntington's strategic focus on consumers, small- and
medium-sized businesses, and auto finance has positioned us to grow
through the ongoing industry headwinds in corporate banking.
The third quarter results illustrated continued momentum in
residential mortgage, automobile, and RV and marine consumer
lending as well as asset finance. The third quarter also
marked the end of the 2017 fiscal year for the U.S. Small Business
Administration, during which Huntington earned the distinction of
being the second largest SBA 7(a) lender in the nation for the
third year in a row and the largest in our footprint for the tenth
consecutive year," Steinour said.
"As a result of the meaningful relationships we developed with
our consumer and business customers, Huntington enjoys a very
granular deposit base. We are pleased with the quarter's
deposit growth while carefully balancing our deposit costs in the
face of rising interest rates."
Last week Huntington announced that the Board declared a
quarterly cash dividend on the company's common stock of
$0.11 per share, which represents a
$0.03 per share, or 38%, increase
over the prior quarter. The dividend is payable on
January 2, 2018, to shareholders of
record on December 18, 2017.
Specific 2017 Third Quarter
Highlights:
- $162 million, or 17%,
year-over-year increase in fully-taxable equivalent revenue,
comprised of a $135 million, or 21%,
increase in fully-taxable equivalent net interest income and a
$28 million, or 9%, increase in
noninterest income
- Net interest margin of 3.29%, an increase of 11 basis points
from the year-ago quarter
- $32 million, or 4%,
year-over-year decrease in noninterest expense, including a net
decrease of $128 million of
FirstMerit acquisition-related expense
- $7.6 billion, or 12%,
year-over-year increase in average loans and leases, comprised of a
$4.0 billion, or 14%, increase in
consumer loans and a $3.5 billion, or
11%, increase in commercial loans
- $5.6 billion, or 31%,
year-over-year increase in average securities, including a net
increase of $0.3 billion of direct
purchase municipal instruments in our Commercial Banking
segment
- $11.5 billion, or 19%,
year-over-year increase in average core deposits, driven by a
$5.5 billion, or 45%, increase in
interest-bearing demand deposits, a $2.7
billion, or 30%, increase in savings and other domestic
deposits, and a $1.7 billion, or 8%,
increase in noninterest-bearing demand deposits
- Net charge-offs equated to 0.25% of average loans and leases,
representing the fourteenth consecutive quarter below the long-term
target range of 0.35% to 0.55%
- Nonperforming asset ratio of 0.56%, down from 0.61% a quarter
ago and 0.72% a year ago
- Repurchase of $123 million of
common stock (9.6 million shares at an average cost of $12.75 per share)
- $0.37, or 6%, year-over-year
increase in tangible book value per common share (TBVPS) to
$6.85
Table 1 – Earnings Performance Summary (GAAP)
|
2017
|
|
2016
|
($ in millions,
except per share data)
|
Third
|
|
Second
|
|
First
|
|
Fourth
|
|
Third
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
Net Income
|
$
|
275
|
|
|
$
|
272
|
|
|
$
|
208
|
|
|
$
|
239
|
|
|
$
|
127
|
|
Diluted earnings per
common share
|
0.23
|
|
|
0.23
|
|
|
0.17
|
|
|
0.20
|
|
|
0.11
|
|
|
|
|
|
|
|
|
|
|
|
Return on average
assets
|
1.08
|
%
|
|
1.09
|
%
|
|
0.84
|
%
|
|
0.95
|
%
|
|
0.58
|
%
|
Return on average
common equity
|
10.5
|
|
|
10.6
|
|
|
8.2
|
|
|
9.4
|
|
|
5.4
|
|
Return on average
tangible common equity
|
14.1
|
|
|
14.4
|
|
|
11.3
|
|
|
12.9
|
|
|
7.0
|
|
Net interest
margin
|
3.29
|
|
|
3.31
|
|
|
3.30
|
|
|
3.25
|
|
|
3.18
|
|
Efficiency
ratio
|
60.5
|
|
|
62.9
|
|
|
65.7
|
|
|
61.6
|
|
|
75.0
|
|
|
|
|
|
|
|
|
|
|
|
Tangible book value
per common share
|
$
|
6.85
|
|
|
$
|
6.74
|
|
|
$
|
6.55
|
|
|
$
|
6.43
|
|
|
$
|
6.48
|
|
Cash dividends
declared per common share
|
0.08
|
|
|
0.08
|
|
|
0.08
|
|
|
0.08
|
|
|
0.07
|
|
Average diluted
shares outstanding
|
1,106
|
|
|
1,109
|
|
|
1,109
|
|
|
1,104
|
|
|
952
|
|
|
|
|
|
|
|
|
|
|
|
Average earning
assets
|
$
|
92,849
|
|
|
$
|
91,728
|
|
|
$
|
91,139
|
|
|
$
|
91,463
|
|
|
$
|
79,687
|
|
Average loans and
leases
|
68,276
|
|
|
67,345
|
|
|
66,981
|
|
|
66,405
|
|
|
60,722
|
|
Average core
deposits
|
73,549
|
|
|
72,291
|
|
|
71,500
|
|
|
72,070
|
|
|
62,022
|
|
|
|
|
|
|
|
|
|
|
|
Tangible common
equity / tangible assets ratio
|
7.42
|
%
|
|
7.41
|
%
|
|
7.28
|
%
|
|
7.16
|
%
|
|
7.14
|
%
|
Common equity Tier 1
risk-based capital ratio
|
9.94
|
|
|
9.88
|
|
|
9.74
|
|
|
9.56
|
|
|
9.09
|
|
|
|
|
|
|
|
|
|
|
|
NCOs as a % of
average loans and leases
|
0.25
|
%
|
|
0.21
|
%
|
|
0.24
|
%
|
|
0.26
|
%
|
|
0.26
|
%
|
NAL ratio
|
0.49
|
|
|
0.54
|
|
|
0.60
|
|
|
0.63
|
|
|
0.61
|
|
ACL as a % of total
loans and leases
|
1.10
|
|
|
1.11
|
|
|
1.14
|
|
|
1.10
|
|
|
1.06
|
|
Table 2 lists certain items that we believe are significant in
understanding corporate performance and trends (see Basis of
Presentation). There was one Significant Item in the 2017
third quarter: $31 million of
FirstMerit acquisition-related net expense.
Table 2 – Significant Items Influencing
Earnings
Three Months
Ended
|
Pre-Tax
Impact
|
|
After-Tax
Impact
|
($ in millions,
except per share)
|
Amount
|
|
Amount (1)
|
|
EPS
(2)
|
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)
|
|
March 31, 2017 –
net income
|
|
|
$
|
208
|
|
|
$
|
0.17
|
|
-
|
|
Merger and
acquisition-related net expenses
|
$
|
(71)
|
|
|
(46)
|
|
|
(0.04)
|
|
December 31, 2016
– net income
|
|
|
$
|
239
|
|
|
$
|
0.20
|
|
-
|
|
Merger and
acquisition-related net expenses
|
$
|
(96)
|
|
|
(63)
|
|
|
(0.06)
|
|
-
|
|
Reduction to
litigation reserves
|
$
|
42
|
|
|
27
|
|
|
0.02
|
|
September 30, 2016
– net income
|
|
|
$
|
127
|
|
|
$
|
0.11
|
|
-
|
|
Merger and
acquisition-related net expenses
|
$
|
(159)
|
|
|
(107)
|
|
|
(0.11)
|
|
|
(1) Favorable
(unfavorable) impact on net income.
|
(2) EPS reflected
on a fully diluted basis.
|
Net Interest Income, Net Interest Margin, and Average Balance
Sheet
Table 3 – Net Interest Income and Net Interest Margin
Performance Summary – Purchase Accounting Accretion Continues to
Boost NIM, although Benefit is Declining
|
2017
|
|
2016
|
|
|
|
|
($ in
millions)
|
Third
|
|
Second
|
|
First
|
|
Fourth
|
|
Third
|
|
Change (%)
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
LQ
|
|
YOY
|
Net interest
income
|
$
|
758
|
|
|
$
|
745
|
|
|
$
|
730
|
|
|
$
|
735
|
|
|
$
|
625
|
|
|
2%
|
|
|
21
|
|
FTE
adjustment
|
12
|
|
|
12
|
|
|
12
|
|
|
13
|
|
|
11
|
|
|
—
|
|
|
9
|
|
Net interest income -
FTE
|
771
|
|
|
757
|
|
|
742
|
|
|
748
|
|
|
636
|
|
|
2
|
|
|
21
|
|
Noninterest
income
|
330
|
|
|
325
|
|
|
312
|
|
|
334
|
|
|
302
|
|
|
2
|
|
|
9
|
|
Total revenue -
FTE
|
$
|
1,101
|
|
|
$
|
1,082
|
|
|
$
|
1,054
|
|
|
$
|
1,082
|
|
|
$
|
938
|
|
|
2%
|
|
|
17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change bp
|
Yield /
Cost
|
|
|
|
|
|
|
|
|
|
|
LQ
|
|
YOY
|
Total earning
assets
|
3.78
|
%
|
|
3.75
|
%
|
|
3.70
|
%
|
|
3.60
|
%
|
|
3.52
|
%
|
|
3
|
|
|
26
|
|
Total loans and
leases
|
4.20
|
|
|
4.15
|
|
|
4.07
|
|
|
3.95
|
|
|
3.81
|
|
|
5
|
|
|
39
|
|
Total
securities
|
2.55
|
|
|
2.55
|
|
|
2.54
|
|
|
2.58
|
|
|
2.47
|
|
|
—
|
|
|
8
|
|
Total
interest-bearing liabilities
|
0.68
|
|
|
0.61
|
|
|
0.54
|
|
|
0.48
|
|
|
0.49
|
|
|
7
|
|
|
19
|
|
Total
interest-bearing deposits
|
0.35
|
|
|
0.31
|
|
|
0.26
|
|
|
0.23
|
|
|
0.22
|
|
|
4
|
|
|
13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest rate
spread
|
3.10
|
|
|
3.14
|
|
|
3.16
|
|
|
3.12
|
|
|
3.03
|
|
|
(4)
|
|
|
7
|
|
Impact of
noninterest-bearing funds on margin
|
0.19
|
|
|
0.17
|
|
|
0.14
|
|
|
0.13
|
|
|
0.15
|
|
|
2
|
|
|
4
|
|
Net interest
margin
|
3.29
|
%
|
|
3.31
|
%
|
|
3.30
|
%
|
|
3.25
|
%
|
|
3.18
|
%
|
|
(2)
|
|
|
11
|
|
|
See Pages 7-9
of Quarterly Financial Supplement for additional
detail.
|
Note: 2016 third
quarter results reflect inclusion of FirstMerit since August 16,
2016.
|
Fully-taxable equivalent (FTE) net interest income for the 2017
third quarter increased $135 million,
or 21%, from the 2016 third quarter. This reflected the
benefit from the $13.2 billion, or
17%, increase in average earning assets coupled with an 11 basis
point improvement in the FTE net interest margin (NIM) to
3.29%. Average earning asset growth included a $7.6 billion, or 12%, increase in average loans
and leases and a $5.6 billion, or
31%, increase in average securities. The NIM expansion
reflected a 26 basis point increase in earning asset yields and a 4
basis point increase in the benefit from noninterest-bearing funds,
partially offset by a 19 basis point increase in funding
costs. FTE net interest income during the 2017 third quarter
included $27 million, or
approximately 12 basis points, of purchase accounting impact.
Compared to the 2017 second quarter, FTE net interest income
increased $14 million, or 2%.
Average earning assets increased $1.1
billion, or 1%, sequentially, while the NIM decreased 2
basis points. The decrease in the NIM reflected a 7 basis
point increase in the cost of interest-bearing liabilities,
partially offset by a 3 basis point increase in earning asset
yields and a 2 basis point increase in the benefit from
noninterest-bearing funds. The purchase accounting impact on
the net interest margin was approximately 12 basis points in the
2017 third quarter compared to approximately 15 basis points in the
prior quarter.
Table 4 – Average Earning Assets – Residential Mortgage,
Automobile, and RV and Marine Continued to Drive Linked-quarter
Loan Growth
|
2017
|
|
2016
|
|
|
|
|
($ in
billions)
|
Third
|
|
Second
|
|
First
|
|
Fourth
|
|
Third
|
|
Change (%)
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
LQ
|
|
YOY
|
Commercial and
industrial
|
$
|
27.6
|
|
|
$
|
28.0
|
|
|
$
|
27.9
|
|
|
$
|
27.7
|
|
|
$
|
25.0
|
|
|
(1)%
|
|
|
11%
|
|
Commercial real
estate
|
7.2
|
|
|
7.1
|
|
|
7.4
|
|
|
7.2
|
|
|
6.4
|
|
|
2
|
|
|
13
|
|
Total
commercial
|
34.9
|
|
|
35.1
|
|
|
35.3
|
|
|
34.9
|
|
|
31.3
|
|
|
(1)
|
|
|
11
|
|
Automobile
|
11.7
|
|
|
11.3
|
|
|
11.1
|
|
|
10.9
|
|
|
11.4
|
|
|
3
|
|
|
3
|
|
Home
equity
|
10.0
|
|
|
10.0
|
|
|
10.1
|
|
|
10.1
|
|
|
9.3
|
|
|
—
|
|
|
8
|
|
Residential
mortgage
|
8.4
|
|
|
8.0
|
|
|
7.8
|
|
|
7.7
|
|
|
7.0
|
|
|
5
|
|
|
20
|
|
RV and marine
finance
|
2.3
|
|
|
2.0
|
|
|
1.9
|
|
|
1.8
|
|
|
0.9
|
|
|
13
|
|
|
151
|
|
Other
consumer
|
1.0
|
|
|
1.0
|
|
|
0.9
|
|
|
1.0
|
|
|
0.8
|
|
|
7
|
|
|
28
|
|
Total
consumer
|
33.4
|
|
|
32.3
|
|
|
31.7
|
|
|
31.5
|
|
|
29.4
|
|
|
4
|
|
|
14
|
|
Total loans and
leases
|
68.3
|
|
|
67.3
|
|
|
67.0
|
|
|
66.4
|
|
|
60.7
|
|
|
1
|
|
|
12
|
|
Total
securities
|
23.8
|
|
|
23.8
|
|
|
23.6
|
|
|
22.4
|
|
|
18.2
|
|
|
—
|
|
|
31
|
|
Held-for-sale and
other earning assets
|
0.8
|
|
|
0.6
|
|
|
0.5
|
|
|
2.6
|
|
|
0.8
|
|
|
24
|
|
|
(1)
|
|
Total earning
assets
|
$
|
92.8
|
|
|
$
|
91.7
|
|
|
$
|
91.1
|
|
|
$
|
91.5
|
|
|
$
|
79.7
|
|
|
1%
|
|
|
17%
|
|
|
See Page 7 of
Quarterly Financial Supplement for additional
detail.
|
Note: 2016 third
quarter results reflect inclusion of FirstMerit since August 16,
2016.
|
Average earning assets for the 2017 third quarter increased
$13.2 billion, or 17%, from the
year-ago quarter, primarily reflecting the impact of the FirstMerit
acquisition. Average securities increased $5.6 billion, or 31%, which included a
$0.3 billion increase in direct
purchase municipal instruments in our commercial banking
segment. Average residential mortgage loans increased
$1.4 billion, or 20%, as we continue
to see the benefits associated with the ongoing expansion of our
home lending business. Average RV and marine finance loans
increased $1.4 billion, or 151%,
reflecting the success of the well-managed expansion of the
acquired business into 17 new states over the past year.
Compared to the 2017 second quarter, average earning assets
increased $1.1 billion, or 1%.
Average loans and leases increased $0.9
billion, or 1%, primarily reflecting growth in residential
mortgage, automobile, and RV and marine loans partially offset by a
decline in average commercial and industrial loans. Average
commercial and industrial loans were negatively impacted by the
seasonal decline in automobile floorplan lending, a reduction in
mortgage warehouse lending, and continued runoff in corporate
banking, partially offset by growth in asset finance.
Table 5 – Average Liabilities – Money Market and
Interest-bearing Demand Deposits Drive Linked-quarter Core Deposit
Growth
|
2017
|
|
2016
|
|
|
|
Third
|
|
Second
|
|
First
|
|
Fourth
|
|
Third
|
|
Change (%)
|
($ in
billions)
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
LQ
|
|
YOY
|
Demand deposits -
noninterest-bearing
|
$
|
21.7
|
|
|
$
|
21.6
|
|
|
$
|
21.7
|
|
|
$
|
23.2
|
|
|
$
|
20.0
|
|
|
1%
|
|
|
8%
|
|
Demand deposits -
interest-bearing
|
17.9
|
|
|
17.4
|
|
|
16.8
|
|
|
15.3
|
|
|
12.4
|
|
|
2
|
|
|
45
|
|
Total demand
deposits
|
39.6
|
|
|
39.0
|
|
|
38.5
|
|
|
38.5
|
|
|
32.4
|
|
|
1
|
|
|
22
|
|
Money market
deposits
|
20.3
|
|
|
19.2
|
|
|
18.7
|
|
|
18.6
|
|
|
18.5
|
|
|
6
|
|
|
10
|
|
Savings and other
domestic deposits
|
11.6
|
|
|
11.9
|
|
|
12.0
|
|
|
12.3
|
|
|
8.9
|
|
|
(3)
|
|
|
30
|
|
Core certificates of
deposit
|
2.0
|
|
|
2.1
|
|
|
2.3
|
|
|
2.6
|
|
|
2.3
|
|
|
(5)
|
|
|
(11)
|
|
Total core
deposits
|
73.5
|
|
|
72.2
|
|
|
71.5
|
|
|
72.0
|
|
|
62.1
|
|
|
2
|
|
|
19
|
|
Other domestic
deposits of $250,000 or more
|
0.4
|
|
|
0.5
|
|
|
0.5
|
|
|
0.4
|
|
|
0.4
|
|
|
(10)
|
|
|
13
|
|
Brokered deposits and
negotiable CDs
|
3.6
|
|
|
3.8
|
|
|
4.0
|
|
|
4.3
|
|
|
3.9
|
|
|
(6)
|
|
|
(9)
|
|
Deposits in foreign
offices
|
—
|
|
|
—
|
|
|
—
|
|
|
0.2
|
|
|
0.2
|
|
|
-
|
|
(100)
|
|
Total
deposits
|
$
|
77.5
|
|
|
$
|
76.5
|
|
|
$
|
76.0
|
|
|
$
|
76.9
|
|
|
$
|
66.6
|
|
|
1%
|
|
|
17%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term
borrowings
|
$
|
2.4
|
|
|
$
|
2.7
|
|
|
$
|
3.8
|
|
|
$
|
2.6
|
|
|
$
|
1.3
|
|
|
(11)%
|
|
|
83%
|
|
Long-term
debt
|
8.9
|
|
|
8.7
|
|
|
8.5
|
|
|
8.6
|
|
|
8.5
|
|
|
3
|
|
|
5
|
|
Total debt
|
$
|
11.3
|
|
|
$
|
11.4
|
|
|
$
|
12.3
|
|
|
$
|
11.2
|
|
|
$
|
9.8
|
|
|
(1)%
|
|
|
15%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
interest-bearing liabilities
|
$
|
67.2
|
|
|
$
|
66.4
|
|
|
$
|
66.5
|
|
|
$
|
64.9
|
|
|
$
|
56.3
|
|
|
1%
|
|
|
19%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See Page 7 of
Quarterly Financial Supplement for additional
detail.
|
Note: 2016 third
quarter results reflect inclusion of FirstMerit since August 16,
2016.
|
Average total deposits for the 2017 third quarter increased
$11.0 billion, or 17%, from the
year-ago quarter, while average total core deposits increased
$11.5 billion, or 19%. Average
total interest-bearing liabilities increased $10.9 billion, or 19%, from the year-ago
quarter. These increases primarily reflect the impact of the
FirstMerit acquisition. Average demand deposits increased
$7.2 billion, or 22%, comprised of a
$5.1 billion, or 24%, increase in
average commercial demand deposits and a $2.1 billion, or 20%, increase in average
consumer demand deposits. Average long-term debt increased
$0.5 billion, or 5%, reflecting the
issuance of $2.7 billion and maturity
of $1.6 billion of senior debt over
the past five quarters.
Compared to the 2017 second quarter, average total core deposits
increased $1.3 billion, or 2%,
primarily reflecting a $1.1 billion,
or 6%, increase in money market deposits and a $0.6 billion, or 1%, increase in average demand
deposits.
Noninterest Income (see Basis of Presentation)
Table 6 – Noninterest Income (GAAP) – Record Quarter in
Capital Markets Fees Augments Continued Momentum in Card and
Payment Processing Income
|
2017
|
|
2016
|
|
|
|
Third
|
|
Second
|
|
First
|
|
Fourth
|
|
Third
|
|
Change (%)
|
($ in
millions)
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
LQ
|
|
YOY
|
Service charges on
deposit accounts
|
$
|
91
|
|
|
$
|
88
|
|
|
$
|
83
|
|
|
$
|
92
|
|
|
$
|
87
|
|
|
4
|
%
|
|
4
|
%
|
Cards and payment
processing income
|
54
|
|
|
52
|
|
|
47
|
|
|
49
|
|
|
44
|
|
|
2
|
|
|
21
|
|
Mortgage banking
income
|
34
|
|
|
32
|
|
|
32
|
|
|
38
|
|
|
41
|
|
|
4
|
|
|
(17)
|
|
Trust and investment
management services
|
34
|
|
|
33
|
|
|
34
|
|
|
34
|
|
|
29
|
|
|
2
|
|
|
15
|
|
Insurance
income
|
14
|
|
|
16
|
|
|
15
|
|
|
16
|
|
|
16
|
|
|
(12)
|
|
|
(12)
|
|
Brokerage
income
|
14
|
|
|
16
|
|
|
16
|
|
|
17
|
|
|
15
|
|
|
(11)
|
|
|
(2)
|
|
Capital markets
fees
|
22
|
|
|
17
|
|
|
14
|
|
|
19
|
|
|
15
|
|
|
29
|
|
|
47
|
|
Bank owned life
insurance income
|
16
|
|
|
15
|
|
|
18
|
|
|
17
|
|
|
14
|
|
|
7
|
|
|
14
|
|
Gain on sale of
loans
|
14
|
|
|
12
|
|
|
13
|
|
|
25
|
|
|
8
|
|
|
16
|
|
|
85
|
|
Securities gains
(losses)
|
(0)
|
|
|
0
|
|
|
(0)
|
|
|
(2)
|
|
|
1
|
|
|
NM
|
|
NM
|
Other
Income
|
38
|
|
|
44
|
|
|
40
|
|
|
29
|
|
|
33
|
|
|
(13)
|
|
|
15
|
|
Total noninterest
income
|
$
|
330
|
|
|
$
|
325
|
|
|
$
|
312
|
|
|
$
|
334
|
|
|
$
|
302
|
|
|
2
|
%
|
|
9
|
%
|
Table 7 - Impact of Significant Items
|
2017
|
|
2016
|
|
|
Third
|
|
Second
|
|
First
|
|
Fourth
|
|
Third
|
|
($ in
millions)
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Service charges on
deposit accounts
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Cards and payment
processing income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Mortgage banking
income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Trust and investment
management services
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Insurance
income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Brokerage
income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Capital markets
fees
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Bank owned life
insurance income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Gain on sale of
loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Securities gains
(losses)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Other
Income
|
—
|
|
|
—
|
|
|
2
|
|
|
(1)
|
|
|
—
|
|
|
Total noninterest
income
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
(1)
|
|
|
$
|
—
|
|
|
Table 8 - Adjusted Noninterest Income
(Non-GAAP)
|
2017
|
|
2016
|
|
|
|
Third
|
|
Second
|
|
First
|
|
Fourth
|
|
Third
|
|
Change (%)
|
($ in
millions)
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
LQ
|
|
YOY
|
Service charges on
deposit accounts
|
$
|
91
|
|
|
$
|
88
|
|
|
$
|
83
|
|
|
$
|
92
|
|
|
$
|
87
|
|
|
4
|
%
|
|
4
|
%
|
Cards and payment
processing income
|
54
|
|
|
52
|
|
|
47
|
|
|
49
|
|
|
44
|
|
|
2
|
|
|
21
|
|
Mortgage banking
income
|
34
|
|
|
32
|
|
|
32
|
|
|
38
|
|
|
41
|
|
|
4
|
|
|
(17)
|
|
Trust and investment
management services
|
34
|
|
|
33
|
|
|
34
|
|
|
34
|
|
|
29
|
|
|
2
|
|
|
15
|
|
Insurance
income
|
14
|
|
|
16
|
|
|
15
|
|
|
16
|
|
|
16
|
|
|
(12)
|
|
|
(12)
|
|
Brokerage
income
|
14
|
|
|
16
|
|
|
16
|
|
|
17
|
|
|
15
|
|
|
(11)
|
|
|
(2)
|
|
Capital markets
fees
|
22
|
|
|
17
|
|
|
14
|
|
|
19
|
|
|
15
|
|
|
29
|
|
|
47
|
|
Bank owned life
insurance income
|
16
|
|
|
15
|
|
|
18
|
|
|
17
|
|
|
14
|
|
|
7
|
|
|
14
|
|
Gain on sale of
loans
|
14
|
|
|
12
|
|
|
13
|
|
|
25
|
|
|
8
|
|
|
16
|
|
|
85
|
|
Securities gains
(losses)
|
(0)
|
|
|
0
|
|
|
(0)
|
|
|
(2)
|
|
|
1
|
|
|
NM
|
|
NM
|
Other
Income
|
38
|
|
|
44
|
|
|
39
|
|
|
31
|
|
|
33
|
|
|
(14)
|
|
|
15
|
|
Total noninterest
income
|
$
|
330
|
|
|
$
|
325
|
|
|
$
|
310
|
|
|
$
|
335
|
|
|
$
|
302
|
|
|
2
|
%
|
|
9
|
%
|
|
See Pages 10-11 of
Quarterly Financial Supplement for additional
detail.
|
Note: 2016 third
quarter results reflect inclusion of FirstMerit since August 16,
2016.
|
Reported noninterest income for the 2017 third quarter increased
$28 million, or 9%, from the year-ago
quarter, primarily reflecting the impact of the FirstMerit
acquisition. Card and payment processing income increased
$9 million, or 21%, due to higher
credit and debit card related income and underlying customer
growth. Capital markets fees increased $7 million, or 47%, reflecting our ongoing
strategic focus on expanding the business. The 2017 third
quarter revenues represented a record quarter for our capital
markets business. Gain on sale of loans increased
$6 million, or 85%, as a result of
continued expansion of our SBA lending business. Other income
increased $5 million, or 15%,
primarily reflecting a $5 million
benefit from derivative ineffectiveness and a $3 million increase in servicing income.
These increases were partially offset by a $7 million, or 17%, decrease in mortgage banking
income, driven by lower spreads on origination volume.
Compared to the 2017 second quarter, reported noninterest income
increased $5 million, or 2%.
Capital markets fees increased $5
million, or 29%, as a result of the previously-mentioned
expansion of the business. Conversely, other income decreased
$6 million, or 13%, primarily
reflecting a decrease in loan syndication fees.
Noninterest Expense (see Basis of Presentation)
Table 9 – Noninterest Expense (GAAP) – All Planned
FirstMerit-Related Cost Savings Fully Implemented
|
2017
|
|
2016
|
|
|
|
Third
|
|
Second
|
|
First
|
|
Fourth
|
|
Third
|
|
Change (%)
|
($ in
millions)
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
LQ
|
|
YOY
|
Personnel
costs
|
$
|
377
|
|
|
$
|
392
|
|
|
$
|
382
|
|
|
$
|
360
|
|
|
$
|
405
|
|
|
(4)%
|
|
|
(7)%
|
|
Outside data
processing and other services
|
80
|
|
|
75
|
|
|
87
|
|
|
89
|
|
|
91
|
|
|
6
|
|
|
(13)
|
|
Equipment
|
45
|
|
|
43
|
|
|
47
|
|
|
60
|
|
|
41
|
|
|
6
|
|
|
11
|
|
Net
occupancy
|
55
|
|
|
53
|
|
|
68
|
|
|
49
|
|
|
41
|
|
|
5
|
|
|
33
|
|
Professional
services
|
15
|
|
|
18
|
|
|
18
|
|
|
23
|
|
|
47
|
|
|
(16)
|
|
|
(68)
|
|
Marketing
|
17
|
|
|
19
|
|
|
14
|
|
|
21
|
|
|
14
|
|
|
(10)
|
|
|
18
|
|
Deposit and other
insurance expense
|
19
|
|
|
20
|
|
|
20
|
|
|
16
|
|
|
15
|
|
|
(9)
|
|
|
24
|
|
Amortization of
intangibles
|
14
|
|
|
14
|
|
|
14
|
|
|
14
|
|
|
9
|
|
|
(2)
|
|
|
55
|
|
Other
expense
|
58
|
|
|
60
|
|
|
57
|
|
|
49
|
|
|
48
|
|
|
(3)
|
|
|
21
|
|
Total noninterest
expense
|
$
|
680
|
|
|
$
|
694
|
|
|
$
|
707
|
|
|
$
|
681
|
|
|
$
|
712
|
|
|
(2)%
|
|
|
(4)%
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average full-time
equivalent employees
|
15.5
|
|
|
15.9
|
|
|
16.3
|
|
|
16.0
|
|
|
14.5
|
|
|
(3)%
|
|
|
7
|
%
|
Table 10 - Impacts of Significant Items
|
2017
|
|
2016
|
|
Third
|
|
Second
|
|
First
|
|
Fourth
|
|
Third
|
($ in
millions)
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
Personnel
costs
|
$
|
4
|
|
|
$
|
18
|
|
|
$
|
20
|
|
|
$
|
(5)
|
|
|
$
|
76
|
|
Outside data
processing and other services
|
3
|
|
|
6
|
|
|
14
|
|
|
15
|
|
|
28
|
|
Equipment
|
7
|
|
|
4
|
|
|
6
|
|
|
20
|
|
|
5
|
|
Net
occupancy
|
14
|
|
|
14
|
|
|
23
|
|
|
7
|
|
|
7
|
|
Professional
services
|
2
|
|
|
4
|
|
|
4
|
|
|
9
|
|
|
34
|
|
Marketing
|
—
|
|
|
—
|
|
|
1
|
|
|
4
|
|
|
1
|
|
Deposit and other
insurance expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Amortization of
intangibles
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Other
expense
|
—
|
|
|
4
|
|
|
5
|
|
|
3
|
|
|
8
|
|
Total noninterest
expense
|
$
|
31
|
|
|
$
|
50
|
|
|
$
|
73
|
|
|
$
|
53
|
|
|
$
|
159
|
|
Table 11 - Adjusted Noninterest Expense
(Non-GAAP)
|
2017
|
|
2016
|
|
|
|
Third
|
|
Second
|
|
First
|
|
Fourth
|
|
Third
|
|
Change (%)
|
($ in
millions)
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
LQ
|
|
YOY
|
Personnel
costs
|
$
|
373
|
|
|
$
|
374
|
|
|
$
|
362
|
|
|
$
|
365
|
|
|
$
|
329
|
|
|
—
|
%
|
|
13
|
%
|
Outside data
processing and other services
|
76
|
|
|
69
|
|
|
73
|
|
|
73
|
|
|
63
|
|
|
10
|
|
|
21
|
|
Equipment
|
39
|
|
|
39
|
|
|
41
|
|
|
40
|
|
|
36
|
|
|
—
|
|
|
8
|
|
Net
occupancy
|
41
|
|
|
38
|
|
|
44
|
|
|
42
|
|
|
34
|
|
|
8
|
|
|
21
|
|
Professional
services
|
13
|
|
|
14
|
|
|
14
|
|
|
14
|
|
|
13
|
|
|
(7)
|
|
|
—
|
|
Marketing
|
17
|
|
|
19
|
|
|
13
|
|
|
17
|
|
|
14
|
|
|
(11)
|
|
|
21
|
|
Deposit and other
insurance expense
|
19
|
|
|
20
|
|
|
20
|
|
|
16
|
|
|
15
|
|
|
(9)
|
|
|
24
|
|
Amortization of
intangibles
|
14
|
|
|
14
|
|
|
14
|
|
|
14
|
|
|
9
|
|
|
(2)
|
|
|
55
|
|
Other
expense
|
58
|
|
|
56
|
|
|
52
|
|
|
47
|
|
|
40
|
|
|
4
|
|
|
45
|
|
Total noninterest
expense
|
$
|
650
|
|
|
$
|
644
|
|
|
$
|
634
|
|
|
$
|
628
|
|
|
$
|
553
|
|
|
1
|
%
|
|
18
|
%
|
|
See Page 10 of
Quarterly Financial Supplement for additional
detail.
|
Note: 2016 third
quarter results reflect inclusion of FirstMerit since August 16,
2016.
|
Reported noninterest expense for the 2017 third quarter
decreased $32 million, or 4%, from
the year-ago quarter, primarily reflecting the year-over-year
decrease in FirstMerit acquisition-related Significant Items.
Personnel costs decreased $28
million, or 7%, primarily reflecting a $72 million net decrease in acquisition-related
personnel expense partially offset by a 7% increase in average
full-time equivalent employees. Professional services
decreased $32 million, or 68%,
reflecting the net decrease in Significant Items. Outside
data processing and other services decreased $12 million, or 13%, reflecting the $24 million net decrease in Significant Items
partially offset by higher card and data processing expense from
increased usage. Partially offsetting these decreases, other
expense increased $10 million, or
21%, primarily reflecting a $5
million increase in donations and sponsorships and a
$3 million equipment lease residual
impairment. The 2017 third quarter noninterest expense also
included approximately $12 million of
nonrecurring net expense not included in Significant Items from
personnel, operational, and efficiency improvement efforts, as well
as from the previously-announced consolidation of 38 full-service
branches, 7 drive-through only locations, and 3 corporate
offices.
Reported noninterest expense decreased $14 million, or 2%, from the 2017 second quarter,
including a $20 million net decrease
in Significant Items. Personnel costs decreased $15 million, or 4%, primarily reflecting a
$14 million net decrease in
acquisition-related expenses.
Credit Quality
Table 12 – Credit Quality Metrics – NALs and NPAs Continue
to Trend Favorably, while NCOs Remain Better Than Long-Term
Expectations
|
2017
|
|
2016
|
($ in
millions)
|
September
30,
|
|
June 30,
|
|
March 31,
|
|
December
31,
|
|
September
30,
|
Total nonaccrual
loans and leases
|
$
|
338
|
|
|
$
|
364
|
|
|
$
|
401
|
|
|
$
|
423
|
|
|
$
|
404
|
|
Total other real
estate
|
42
|
|
|
44
|
|
|
50
|
|
|
51
|
|
|
71
|
|
Other NPAs
(1)
|
7
|
|
|
7
|
|
|
7
|
|
|
7
|
|
|
—
|
|
Total nonperforming
assets
|
387
|
|
|
415
|
|
|
458
|
|
|
481
|
|
|
475
|
|
Accruing loans and
leases past due 90 days or more
|
119
|
|
|
136
|
|
|
128
|
|
|
129
|
|
|
135
|
|
NPAs + accruing loans
and lease past due 90 days or more
|
$
|
506
|
|
|
$
|
551
|
|
|
$
|
586
|
|
|
$
|
610
|
|
|
$
|
610
|
|
NAL ratio
(2)
|
0.49
|
%
|
|
0.54
|
%
|
|
0.60
|
%
|
|
0.63
|
%
|
|
0.61
|
%
|
NPA ratio
(3)
|
0.56
|
|
|
0.61
|
|
|
0.68
|
|
|
0.72
|
|
|
0.72
|
|
(NPAs+90
days)/(Loans+OREO)
|
0.74
|
|
|
0.81
|
|
|
0.87
|
|
|
0.91
|
|
|
0.92
|
|
Provision for credit
losses
|
$
|
44
|
|
|
$
|
25
|
|
|
$
|
68
|
|
|
$
|
75
|
|
|
$
|
64
|
|
Net
charge-offs
|
43
|
|
|
36
|
|
|
39
|
|
|
44
|
|
|
40
|
|
Net charge-offs /
Average total loans
|
0.25
|
%
|
|
0.21
|
%
|
|
0.24
|
%
|
|
0.26
|
%
|
|
0.26
|
%
|
Allowance for loans
and lease losses
|
$
|
675
|
|
|
$
|
668
|
|
|
$
|
673
|
|
|
$
|
638
|
|
|
$
|
617
|
|
Allowance for
unfunded loan commitments and letters of credit
|
79
|
|
|
85
|
|
|
92
|
|
|
98
|
|
|
88
|
|
Allowance for credit
losses (ACL)
|
$
|
754
|
|
|
$
|
753
|
|
|
$
|
765
|
|
|
$
|
736
|
|
|
$
|
705
|
|
ACL as a %
of:
|
|
|
|
|
|
|
|
|
|
Total loans and
leases
|
1.10
|
%
|
|
1.11
|
%
|
|
1.14
|
%
|
|
1.10
|
%
|
|
1.06
|
%
|
NALs
|
223
|
|
|
207
|
|
|
190
|
|
|
174
|
|
|
174
|
|
NPAs
|
195
|
|
|
181
|
|
|
167
|
|
|
153
|
|
|
148
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Other nonperforming assets include certain impaired investment
securities.
|
(2)
Total NALs as a % of total loans and leases.
|
(3)
Total NPAs as a % of sum of loans and leases and other real
estate.
|
See Pages 12-15 of
Quarterly Financial Supplement for additional
detail.
|
Overall asset quality remains strong. The overall consumer
credit metrics continue to perform as expected, with the
anticipated seasonal impact evident in the retail portfolios.
The commercial portfolios have performed consistently, with some
quarter to quarter volatility as a result of the absolute low level
of problem loans.
Nonaccrual loans and leases (NALs) decreased $66 million, or 16%, from the year-ago quarter to
$338 million, or 0.49% of total loans
and leases. The year-over-year decrease was centered in the
Commercial portfolio, primarily associated with the improved
performance of a small number of energy sector loan relationships
that were added to NALs in the 2016 first quarter. While the
energy portfolio was a primary driver of the decrease in NALs over
the past year, that portfolio continues to represent less than 1%
of total loans outstanding. Nonperforming assets (NPAs)
decreased $89 million, or 19%, from
the year-ago quarter to $387 million,
or 0.56% of total loans and leases and OREO. NALs decreased
$26 million, or 7%, from the prior
quarter, while NPAs decreased $28
million, or 7%, from the prior quarter. The
linked-quarter decreases primarily resulted from workout activities
that resulted in pay-downs and NALs that returned to accruing
status.
The provision for credit losses decreased $20 million year-over-year to $44 million in the 2017 third quarter. Net
charge-offs (NCOs) increased $3
million to $43 million
reflecting an increase in consumer net charge-offs, partially
offset by a decrease in commercial net charge-offs. NCOs
represented an annualized 0.25% of average loans and leases in the
current quarter, up from 0.21% in the prior quarter but down from
0.26% in the year-ago quarter. We continue to be pleased with
the net charge-off performance within each portfolio and in
total.
The period-end allowance for credit losses (ACL) as a percentage
of total loans and leases increased to 1.10% from 1.06% a year ago,
while the ACL as a percentage of period-end total NALs increased to
223% from 174% over the same period. We believe the level of
the ACL is appropriate given the consistent improvement in the
credit quality metrics and the current composition of the overall
loan and lease portfolio.
Capital
Table 13 – Capital Ratios – Share Repurchases Returning
Capital
|
|
2017
|
|
2016
|
($ in
billions)
|
|
September
30,
|
|
June 30,
|
|
March 31,
|
|
December
31,
|
|
September
30,
|
Tangible common
equity / tangible assets ratio
|
|
7.42
|
%
|
|
7.41
|
%
|
|
7.28
|
%
|
|
7.16
|
%
|
|
7.14
|
%
|
Common equity tier 1
risk-based capital ratio (1)
|
|
9.94
|
%
|
|
9.88
|
%
|
|
9.74
|
%
|
|
9.56
|
%
|
|
9.09
|
%
|
Regulatory Tier 1
risk-based capital ratio (1)
|
|
11.30
|
%
|
|
11.24
|
%
|
|
11.11
|
%
|
|
10.92
|
%
|
|
10.40
|
%
|
Regulatory Total
risk-based capital ratio (1)
|
|
13.39
|
%
|
|
13.33
|
%
|
|
13.26
|
%
|
|
13.05
|
%
|
|
12.56
|
%
|
Total risk-weighted
assets (1)
|
|
$
|
78.6
|
|
|
$
|
78.4
|
|
|
$
|
77.6
|
|
|
$
|
78.3
|
|
|
$
|
80.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 7.42% at
September 30, 2017, up 28 basis points from a year ago.
Common Equity Tier 1 (CET1) risk-based capital ratio was 9.94% at
September 30, 2017, up from 9.09% a year ago. The
regulatory Tier 1 risk-based capital ratio was 11.30% compared to
10.40% at September 30, 2016. All capital ratios were
impacted by the repurchase of $123
million of common stock at an average cost of $12.75 per share during the 2017 third quarter,
as well as the the balance sheet optimization-related loan sales
and automobile loan securitization completed during the 2016 fourth
quarter. The total risk-based capital ratio also was impacted
by the repurchase of $40 million of
trust preferred securities during the 2016 fourth quarter, which
was executed under the de minimis clause of the Federal
Reserve's CCAR rules.
Income Taxes
The provision for income taxes in the 2017 third quarter was
$90 million, compared to $25 million in the 2016 third quarter. The
effective tax rates for the 2017 third quarter and 2016 third
quarter were 24.7% and 16.3%, respectively. The variance
between the 2017 third quarter and 2016 third quarter provision for
income taxes and effective tax rates relate primarily to the effect
of Significant Items.
At September 30, 2017, we had a net federal deferred tax
asset of $29 million and a net state
deferred tax asset of $35
million.
Expectations - 2017
"We remain optimistic on the near-term economic outlook,"
Steinour said. "Consumer and business optimism remain high
across our footprint. Labor markets are strong, and we
continue to see inflationary pressures, particularly labor
inflation. The resurgence in manufacturing has benefited the
Midwest more than any other region in the country. Consumer
spending remains solid. These factors support our expectation
for continued economic growth across our footprint, though the
recent translation into business investment has been somewhat
uneven, tempering our outlook."
"We expect full year loan growth of 3% to 4% on a period-end
basis. Consumer loan growth has remained steady throughout
2017. Consistent with our experiences over the past several
years, we expect commercial loan growth for the remainder of the
year to outpace what we experienced year-to-date. Our
commercial pipelines remain strong; however, the commercial lending
environment is extremely competitive on both structures and
rates. We have reduced our 2017 loan growth expectations from
previous guidance, particularly in commercial real estate, to
remain consistent with our aggregate moderate-to-low risk appetite
and to ensure appropriate returns on capital. We are
committed to remaining disciplined in all operating
environments."
We expect to achieve our annual goal to deliver positive
operating leverage for the fifth consecutive year. We expect
full-year revenue growth of approximately 23% (+22% on an adjusted,
non-GAAP basis excluding Significant Items) and full-year
noninterest expense growth of approximately 13% (+18% on an
adjusted, non-GAAP basis excluding Significant Items). We
also expect to achieve our previously communicated 2017 fourth
quarter noninterest expense target of $639
million, including deposit intangible amortization.
We expect average balance sheet growth, driven largely by the
FirstMerit acquisition, to be in excess of 20%.
Overall, asset quality metrics are expected to remain near
current levels, although moderate quarterly volatility also is
expected, given the current low level of problem assets and credit
costs. We anticipate NCOs will remain below our long-term
normalized range of 35 to 55 basis points.
The effective tax rate for 2017 is expected to be in the range
of 24% to 26%, excluding Significant Items.
Conference Call / Webcast Information
Huntington's senior management will host an earnings conference
call on October 25, 2017, at 9:00 a.m.
(Eastern Daylight Time). The call may be accessed via a live
Internet webcast at the Investor Relations section of Huntington's
website, www.huntington.com, or through a dial-in telephone number
at (877) 407-8029; Conference ID #13671112. 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 3, 2017 at
(877) 660-6853 or (201) 612-7415; conference ID
#13671112.
Please see the 2017 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.
Caution regarding Forward-Looking Statements
This communication contains certain forward-looking statements,
including, but not limited to, certain plans, expectations, goals,
projections, and statements, which are not historical facts and are
subject to numerous assumptions, risks, and uncertainties.
Statements that do not describe historical or current facts,
including statements about beliefs and expectations, are
forward-looking statements. Forward-looking statements may be
identified by words such as expect, anticipate, believe, intend,
estimate, plan, target, goal, or similar expressions, or future or
conditional verbs such as will, may, might, should, would, could,
or similar variations. The forward-looking statements are intended
to be subject to the safe harbor provided by Section 27A of the
Securities Act of 1933, Section 21E of the Securities Exchange Act
of 1934, and the Private Securities Litigation Reform Act of
1995.
While there is no assurance that any list of risks and
uncertainties or risk factors is complete, below are certain
factors which could cause actual results to differ materially from
those contained or implied in the forward-looking statements:
changes in general economic, political, or industry conditions;
uncertainty in U.S. fiscal and monetary policy, including the
interest rate policies of the Federal Reserve Board; volatility and
disruptions in global capital and credit markets; movements in
interest rates; competitive pressures on product pricing and
services; success, impact, and timing of our business strategies,
including market acceptance of any new products or services
implementing our "Fair Play" banking philosophy; the nature,
extent, timing, and results of governmental actions, examinations,
reviews, reforms, regulations, and interpretations, including those
related to the Dodd-Frank Wall Street Reform and Consumer
Protection Act and the Basel III regulatory capital reforms, as
well as those involving the OCC, Federal Reserve, FDIC, and CFPB;
the possibility that the anticipated benefits of the merger with
FirstMerit Corporation are not realized completely or when
expected, including as a result of the impact of, or problems
arising from, the strength of the economy and competitive factors
in the areas where we do business; and other factors that may
affect our future results. Additional factors that could cause
results to differ materially from those described above can be
found in our Annual Report on Form 10-K for the year ended
December 31, 2016, and Quarterly
Reports on Form 10-Q for the quarters ended March 31, 2017 and June
30, 2017, which are on file with the Securities and Exchange
Commission (the "SEC") and available in the "Investor Relations"
section of our website, http://www.huntington.com, under the
heading "Publications and Filings" and in other documents we file
with the SEC.
All forward-looking statements speak only as of the date they
are made and are based on information available at that time. We do
not assume any obligation to update forward-looking statements to
reflect circumstances or events that occur after the date the
forward-looking statements were made or to reflect the occurrence
of unanticipated events except as required by federal securities
laws. As forward-looking statements involve significant risks and
uncertainties, caution should be exercised against placing undue
reliance on such statements.
Basis of Presentation
Use of Non-GAAP Financial Measures
This document contains GAAP financial measures and non-GAAP
financial measures where management believes it to be helpful in
understanding Huntington's results of operations or financial
position. Where non-GAAP financial measures are used, the
comparable GAAP financial measure, as well as the reconciliation to
the comparable GAAP financial measure, can be found in this
document, conference call slides, or the Form 8-K related to this
document, all of which can be found 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, litigation actions,
etc. In other cases they may result from Management decisions
associated with significant corporate actions out of the ordinary
course of business – e.g., merger/restructuring charges,
recapitalization actions, goodwill impairment, etc.
Even though certain revenue and expense items are naturally
subject to more volatility than others due to changes in market and
economic environment conditions, as a general rule volatility alone
does not define a Significant Item. For example, changes in the
provision for credit losses, gains/losses from investment
activities, asset valuation write-downs, etc., reflect ordinary
banking activities and are, therefore, typically excluded from
consideration as a Significant Item.
Management believes the disclosure of "Significant Items", when
appropriate, aids analysts/investors in better understanding
corporate performance and trends so that they can ascertain which
of such items, if any, they may wish to include/exclude from their
analysis of the company's performance - i.e., within the context of
determining how that performance differed from their expectations,
as well as how, if at all, to adjust their estimates of future
performance accordingly. To this end, Management has adopted a
practice of listing "Significant Items" in its external disclosure
documents (e.g., earnings press releases, quarterly performance
discussions, investor presentations, Forms 10-Q and 10-K).
"Significant Items" for any particular period are not intended
to be a complete list of items that may materially impact current
or future period performance. A number of items could materially
impact these periods, including those described in Huntington's
2016 Annual Report on Form 10-K and other factors described from
time to time in Huntington's other filings with the Securities and
Exchange Commission.
About Huntington
Huntington Bancshares Incorporated is a regional bank holding
company headquartered in Columbus,
Ohio, with $102 billion of
assets and a network of 958 branches and 1,860 ATMs across eight
Midwestern states. Founded in 1866, The Huntington National Bank
and its affiliates provide consumer, small business, commercial,
treasury management, wealth management, brokerage, trust, and
insurance services. Huntington also provides auto dealer, equipment
finance, national settlement and capital market services that
extend beyond its core states. Visit huntington.com for more
information.
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SOURCE Huntington Bancshares Incorporated