COLUMBUS, Ohio, April 25, 2019 /PRNewswire/ -- Huntington
Bancshares Incorporated (Nasdaq: HBAN; www.huntington.com) reported
net income for the 2019 first quarter of $358 million, an increase of 10% from the
year-ago quarter. Earnings per common share (EPS) for the
2019 first quarter were $0.32, up 14%
from the year-ago quarter. Tangible book value per common
share as of 2019 first quarter-end was $7.67, an 8% year-over-year increase.
Return on average assets was 1.35%, return on average common equity
was 13.8%, and return on average tangible common equity (ROTCE) was
18.3%.
"We had a solid start to the year and are encouraged by the
strong balance sheet growth in the first quarter, reflecting the
underlying growth of the economies in our footprint," said
Steve Steinour, chairman, president,
and CEO. "Huntington is performing well as EPS increased 14%
and total revenue increased 5% from the year-ago quarter. We
are executing on our strategies and continue to make meaningful
investments to drive organic revenue growth and to better serve our
customers with enhanced digital technology."
"Average loan growth of 6% year-over-year was driven by both
consumer and commercial lending. Commercial and industrial
lending remained strong in the first quarter, building on momentum
from year-end. Average deposits increased 8% year-over-year
as we remain focused on funding growth with core deposits."
"Overall economic activity in our footprint continues to reflect
a favorable outlook for both consumers and businesses. Our
balance sheet growth expectations for 2019 remain unchanged.
Our commercial loan pipelines are steady, and we are seeing the
normal seasonal build in our consumer pipelines. Competition
for loans and deposits is rational. We do not foresee a
recession in the near term; however, our core earnings power,
strong capital, aggregate moderate-to-low risk appetite, and
long-term strategic alignment position us to withstand economic
headwinds," Steinour said.
2019 First Quarter Highlights compared with
2018 First Quarter:
- Fully-taxable equivalent total revenue increased $57 million, or 5%.
- Fully-taxable equivalent net interest income increased
$52 million, or 7%.
- Net interest margin increased 9 basis points to 3.39%.
- Noninterest income increased $5
million, or 2%.
- Noninterest expense increased $20
million, or 3%.
- Efficiency ratio of 55.8%, down from 56.8%.
- Average loans and leases increased $4.3
billion, or 6%, year-over-year, including a $2.5 billion, or 7%, increase in consumer loans
and a $1.8 billion, or 5%, increase
in commercial loans.
- Average core deposits increased $5.6
billion, or 8%, year-over-year, driven by a $3.8 billion, or 164%, increase in core
certificates of deposit and a $2.3
billion, or 11%, increase in money market deposits.
- Net charge-offs equated to 0.38% of average loans and leases,
up from 0.21%.
- Nonperforming asset ratio of 0.61%, up from 0.59%.
- Common Equity Tier 1 (CET1) risk-based capital ratio of 9.84%,
down from 10.45% and within our 9% to 10% operating guideline.
- Tangible common equity (TCE) ratio of 7.57%, down from
7.70%.
- Tangible book value per common share increased $0.55, or 8%, to $7.67.
- Repurchased $25 million of common
stock (1.8 million shares at an average price of $13.64 per share).
Table 1 – Earnings Performance Summary (GAAP)
|
2019
|
|
2018
|
(in millions,
except per share data)
|
First
|
|
Fourth
|
|
Third
|
|
Second
|
|
First
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
Net Income
|
$
|
358
|
|
|
$
|
334
|
|
|
$
|
378
|
|
|
$
|
355
|
|
|
$
|
326
|
|
Diluted earnings per
common share
|
0.32
|
|
|
0.29
|
|
|
0.33
|
|
|
0.30
|
|
|
0.28
|
|
|
|
|
|
|
|
|
|
|
|
Return on average
assets
|
1.35
|
%
|
|
1.25
|
%
|
|
1.42
|
%
|
|
1.36
|
%
|
|
1.27
|
%
|
Return on average
common equity
|
13.8
|
|
|
12.9
|
|
|
14.3
|
|
|
13.2
|
|
|
13.0
|
|
Return on average
tangible common equity
|
18.3
|
|
|
17.3
|
|
|
19.0
|
|
|
17.6
|
|
|
17.5
|
|
Net interest
margin
|
3.39
|
|
|
3.41
|
|
|
3.32
|
|
|
3.29
|
|
|
3.30
|
|
Efficiency
ratio
|
55.8
|
|
|
58.7
|
|
|
55.3
|
|
|
56.6
|
|
|
56.8
|
|
|
|
|
|
|
|
|
|
|
|
Tangible book value
per common share
|
$
|
7.67
|
|
|
$
|
7.34
|
|
|
$
|
7.06
|
|
|
$
|
7.27
|
|
|
$
|
7.12
|
|
Cash dividends
declared per common share
|
0.14
|
|
|
0.14
|
|
|
0.14
|
|
|
0.11
|
|
|
0.11
|
|
Average diluted
shares outstanding
|
1,066
|
|
|
1,073
|
|
|
1,104
|
|
|
1,123
|
|
|
1,125
|
|
|
|
|
|
|
|
|
|
|
|
Average earning
assets
|
$
|
99,212
|
|
|
$
|
97,752
|
|
|
$
|
96,753
|
|
|
$
|
96,363
|
|
|
$
|
95,412
|
|
Average loans and
leases
|
74,775
|
|
|
73,822
|
|
|
72,751
|
|
|
71,887
|
|
|
70,484
|
|
Average core
deposits
|
79,033
|
|
|
79,078
|
|
|
77,680
|
|
|
75,386
|
|
|
73,392
|
|
|
|
|
|
|
|
|
|
|
|
Tangible common
equity / tangible assets ratio
|
7.57
|
%
|
|
7.21
|
%
|
|
7.25
|
%
|
|
7.78
|
%
|
|
7.70
|
%
|
Common equity Tier 1
risk-based capital ratio
|
9.84
|
|
|
9.65
|
|
|
9.89
|
|
|
10.53
|
|
|
10.45
|
|
|
|
|
|
|
|
|
|
|
|
NCOs as a % of
average loans and leases
|
0.38
|
%
|
|
0.27
|
%
|
|
0.16
|
%
|
|
0.16
|
%
|
|
0.21
|
%
|
NAL ratio
|
0.56
|
|
|
0.45
|
|
|
0.50
|
|
|
0.52
|
|
|
0.54
|
|
ALLL as a % of total
loans and leases
|
1.02
|
|
|
1.03
|
|
|
1.04
|
|
|
1.02
|
|
|
1.01
|
|
Net Interest Income, Net Interest Margin, and Average Balance
Sheet
Table 2 – Net Interest Income and Net Interest Margin
Performance Summary – Inherent Asset Sensitivity Drove NIM
Expansion
|
2019
|
|
2018
|
|
|
|
|
($ in
millions)
|
First
|
|
Fourth
|
|
Third
|
|
Second
|
|
First
|
|
Change (%)
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
LQ
|
|
YOY
|
Net interest
income
|
$
|
822
|
|
|
$
|
833
|
|
|
$
|
802
|
|
|
$
|
784
|
|
|
$
|
770
|
|
|
(1)
|
%
|
|
7
|
%
|
FTE
adjustment
|
7
|
|
|
8
|
|
|
8
|
|
|
7
|
|
|
7
|
|
|
(13)
|
|
|
—
|
|
Net interest income -
FTE
|
829
|
|
|
841
|
|
|
810
|
|
|
791
|
|
|
777
|
|
|
(1)
|
|
|
7
|
|
Noninterest
income
|
319
|
|
|
329
|
|
|
342
|
|
|
336
|
|
|
314
|
|
|
(3)
|
|
|
2
|
|
Total revenue -
FTE
|
$
|
1,148
|
|
|
$
|
1,170
|
|
|
$
|
1,152
|
|
|
$
|
1,127
|
|
|
$
|
1,091
|
|
|
(2)
|
%
|
|
5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Change (bp)
|
Yield /
Cost
|
|
|
|
|
|
|
|
|
|
|
LQ
|
|
YOY
|
Total earning
assets
|
4.43
|
%
|
|
4.34
|
%
|
|
4.16
|
%
|
|
4.07
|
%
|
|
3.91
|
%
|
|
9
|
|
|
52
|
|
Total loans and
leases
|
4.85
|
|
|
4.76
|
|
|
4.60
|
|
|
4.49
|
|
|
4.32
|
|
|
9
|
|
|
53
|
|
Total
securities
|
2.86
|
|
|
2.84
|
|
|
2.73
|
|
|
2.71
|
|
|
2.62
|
|
|
2
|
|
|
24
|
|
Total
interest-bearing liabilities
|
1.35
|
|
|
1.23
|
|
|
1.13
|
|
|
1.05
|
|
|
0.82
|
|
|
12
|
|
|
53
|
|
Total
interest-bearing deposits
|
0.94
|
|
|
0.84
|
|
|
0.73
|
|
|
0.59
|
|
|
0.43
|
|
|
10
|
|
|
51
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest rate
spread
|
3.08
|
|
|
3.11
|
|
|
3.03
|
|
|
3.02
|
|
|
3.09
|
|
|
(3)
|
|
|
(1)
|
|
Impact
of noninterest-bearing funds on margin
|
0.31
|
|
|
0.30
|
|
|
0.29
|
|
|
0.27
|
|
|
0.21
|
|
|
1
|
|
|
10
|
|
Net interest
margin
|
3.39
|
%
|
|
3.41
|
%
|
|
3.32
|
%
|
|
3.29
|
%
|
|
3.30
|
%
|
|
(2)
|
|
|
9
|
|
See Pages 6-8 of
Quarterly Financial Supplement for additional
detail.
|
Fully-taxable equivalent (FTE) net interest income for the 2019
first quarter increased $52 million,
or 7%, from the 2018 first quarter. This reflected the
benefit from the $3.8 billion, or 4%,
increase in average earning assets coupled with a 9 basis point
increase in the FTE net interest margin (NIM) to 3.39%.
Average earning asset yields increased 52 basis points
year-over-year, driven by a 53 basis point improvement in loan
yields. Average interest-bearing liability costs increased 53
basis points, primarily driven by a 51 basis point increase in
average interest-bearing deposit costs. The cost of
short-term borrowings and long-term debt increased 94 basis points
and 106 basis points, respectively. The benefit from
noninterest-bearing funds improved 10 basis points versus the
year-ago quarter. Embedded within these yields and costs, FTE
net interest income during the 2019 first quarter included
$15 million, or approximately 6 basis
points, of purchase accounting impact compared to $19 million, or approximately 8 basis points, in
the year-ago quarter.
Compared to the 2018 fourth quarter, FTE net interest income
decreased $12 million, or 1%,
primarily reflecting the NIM compression of 2 basis points, more
than offsetting the benefit from the $1.5
billion, or 1%, increase in average earning assets.
Average earning asset yields increased 9 basis points sequentially,
driven by a 9 basis point increase in loan yields. Average
interest-bearing liability costs increased 12 basis points,
primarily driven by a 10 basis point increase in average
interest-bearing deposit costs. The benefit of
noninterest-bearing funding improved 1 basis point linked
quarter. The purchase accounting impact on the net interest
margin was approximately 6 basis points in the 2019 first quarter,
down 1 basis point from the prior quarter. The 2018 fourth
quarter included an approximately 2 basis point impact from higher
commercial interest recoveries.
Table 3 – Average Earning Assets – Broad-based Consumer
and C&I Loan Growth Reflects Underlying Economic Strength of
the Footprint
|
2019
|
|
2018
|
|
|
|
|
($ in
billions)
|
First
|
|
Fourth
|
|
Third
|
|
Second
|
|
First
|
|
Change (%)
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
LQ
|
|
YOY
|
Commercial and
industrial
|
$
|
30.5
|
|
|
$
|
29.6
|
|
|
$
|
28.9
|
|
|
$
|
28.9
|
|
|
$
|
28.2
|
|
|
3
|
%
|
|
8
|
%
|
Commercial real
estate
|
6.9
|
|
|
6.9
|
|
|
7.2
|
|
|
7.4
|
|
|
7.3
|
|
|
(1)
|
|
|
(6)
|
|
Total
commercial
|
37.4
|
|
|
36.5
|
|
|
36.0
|
|
|
36.2
|
|
|
35.6
|
|
|
2
|
|
|
5
|
|
Automobile
|
12.4
|
|
|
12.4
|
|
|
12.4
|
|
|
12.3
|
|
|
12.1
|
|
|
0
|
|
|
2
|
|
Home
equity
|
9.6
|
|
|
9.8
|
|
|
9.9
|
|
|
9.9
|
|
|
10.0
|
|
|
(2)
|
|
|
(4)
|
|
Residential
mortgage
|
10.8
|
|
|
10.6
|
|
|
10.2
|
|
|
9.6
|
|
|
9.2
|
|
|
2
|
|
|
18
|
|
RV and
marine
|
3.3
|
|
|
3.2
|
|
|
3.0
|
|
|
2.7
|
|
|
2.5
|
|
|
2
|
|
|
33
|
|
Other
consumer
|
1.3
|
|
|
1.3
|
|
|
1.2
|
|
|
1.2
|
|
|
1.1
|
|
|
(1)
|
|
|
15
|
|
Total
consumer
|
37.4
|
|
|
37.3
|
|
|
36.7
|
|
|
35.7
|
|
|
34.9
|
|
|
0
|
|
|
7
|
|
Total loans and
leases
|
74.8
|
|
|
73.8
|
|
|
72.8
|
|
|
71.9
|
|
|
70.5
|
|
|
1
|
|
|
6
|
|
Total
securities
|
23.1
|
|
|
22.7
|
|
|
23.2
|
|
|
23.8
|
|
|
24.4
|
|
|
2
|
|
|
(5)
|
|
Held-for-sale and
other earning assets
|
1.3
|
|
|
1.3
|
|
|
0.8
|
|
|
0.7
|
|
|
0.6
|
|
|
3
|
|
|
131
|
|
Total earning
assets
|
$
|
99.2
|
|
|
$
|
97.8
|
|
|
$
|
96.8
|
|
|
$
|
96.4
|
|
|
$
|
95.4
|
|
|
1
|
%
|
|
4
|
%
|
See Page 6 of
Quarterly Financial Supplement for additional
detail.
|
Average earning assets for the 2019 first quarter increased
$3.8 billion, or 4%, from the
year-ago quarter, primarily reflecting a $4.3 billion, or 6%, increase in average loans
and leases. Average commercial and industrial (C&I) loans
increased $2.3 billion, or 8%,
reflecting growth in corporate banking, asset finance, dealer
floorplan, and middle market banking. Average residential
mortgage loans increased $1.6
billion, or 18%, driven by the successful expansion of our
home lending business over the past two years. Average RV and
marine loans increased $0.8 billion,
or 33%, primarily reflecting the success of the well-managed
geographic expansion over the past two years, while maintaining our
commitment to super prime originations. Held-for-sale and
other earning assets increased $0.7
billion, or 131%, primarily due to the inclusion of deposits
in Federal Reserve Bank balances. These balances were treated
as non-earning assets prior to the fourth quarter 2018. As of
March 31, 2019, approximately $126
million of loans were included in held-for-sale related to
the previously-announced sale of our Wisconsin branches, which is expected to close
in the 2019 second quarter. Average securities decreased
$1.2 billion, or 5%, primarily due to
runoff in the portfolio in 2018.
Compared to the 2018 fourth quarter, average earning assets
increased $1.5 billion, or 1%,
primarily reflecting the $1.0
billion, or 1%, increase in average loans and leases.
Average C&I loans increased $1.0
billion, or 3%, reflecting growth in corporate banking,
asset finance, dealer floorplan, and broad-based growth across the
specialty lending verticals. Average securities increased
$0.5 billion, or 2%, primarily
reflecting the timing of purchases in anticipation of future cash
flows.
Table 4 – Average Liabilities – Growth in Core Deposits
Drove Reduction in Wholesale Funding
|
2019
|
|
2018
|
|
|
|
First
|
|
Fourth
|
|
Third
|
|
Second
|
|
First
|
|
Change (%)
|
($ in
billions)
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
LQ
|
|
YOY
|
Demand deposits -
noninterest-bearing
|
$
|
19.9
|
|
|
$
|
20.4
|
|
|
$
|
20.2
|
|
|
$
|
20.4
|
|
|
$
|
20.6
|
|
|
(2)
|
%
|
|
(3)
|
%
|
Demand deposits -
interest-bearing
|
19.8
|
|
|
19.9
|
|
|
19.6
|
|
|
19.1
|
|
|
18.6
|
|
|
0
|
|
|
6
|
|
Total demand
deposits
|
39.7
|
|
|
40.3
|
|
|
39.8
|
|
|
39.5
|
|
|
39.2
|
|
|
(1)
|
|
|
1
|
|
Money market
deposits
|
22.9
|
|
|
22.6
|
|
|
21.5
|
|
|
20.9
|
|
|
20.7
|
|
|
2
|
|
|
11
|
|
Savings and other
domestic deposits
|
10.3
|
|
|
10.5
|
|
|
11.4
|
|
|
11.1
|
|
|
11.2
|
|
|
(2)
|
|
|
(8)
|
|
Core certificates of
deposit
|
6.1
|
|
|
5.7
|
|
|
4.9
|
|
|
3.8
|
|
|
2.3
|
|
|
6
|
|
|
164
|
|
Total core
deposits
|
79.0
|
|
|
79.1
|
|
|
77.6
|
|
|
75.4
|
|
|
73.4
|
|
|
0
|
|
|
8
|
|
Other domestic
deposits of $250,000 or more
|
0.3
|
|
|
0.3
|
|
|
0.3
|
|
|
0.2
|
|
|
0.2
|
|
|
(3)
|
|
|
36
|
|
Brokered deposits and
negotiable CDs
|
3.4
|
|
|
3.5
|
|
|
3.5
|
|
|
3.7
|
|
|
3.3
|
|
|
(3)
|
|
|
3
|
|
Total
deposits
|
$
|
82.7
|
|
|
$
|
82.9
|
|
|
$
|
81.4
|
|
|
$
|
79.3
|
|
|
$
|
76.9
|
|
|
0
|
%
|
|
8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term
borrowings
|
$
|
2.3
|
|
|
$
|
1.0
|
|
|
$
|
1.7
|
|
|
$
|
3.1
|
|
|
$
|
5.2
|
|
|
131
|
%
|
|
(56)
|
%
|
Long-term
debt
|
9.0
|
|
|
8.9
|
|
|
8.9
|
|
|
9.2
|
|
|
9.0
|
|
|
1
|
|
|
0
|
|
Total debt
|
$
|
11.3
|
|
|
$
|
9.9
|
|
|
$
|
10.6
|
|
|
$
|
12.3
|
|
|
$
|
14.2
|
|
|
14
|
%
|
|
(20)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
interest-bearing liabilities
|
$
|
74.1
|
|
|
$
|
72.4
|
|
|
$
|
71.9
|
|
|
$
|
71.2
|
|
|
$
|
70.6
|
|
|
2
|
%
|
|
5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See Page 6 of
Quarterly Financial Supplement for additional
detail.
|
Average total interest-bearing liabilities for the 2019 first
quarter increased $3.6 billion, or
5%, from the year-ago quarter. Average total deposits
increased $5.8 billion, or 8%, from
the year-ago quarter, while average total core deposits increased
$5.6 billion, or 8%. Average
core certificates of deposit increased $3.8
billion, or 164%, reflecting consumer deposit growth
initiatives primarily in the first three quarters of 2018.
Average money market deposits increased $2.3
billion, or 11%, reflecting the shift in promotional pricing
to consumer money market accounts in mid-2018. Average
interest-bearing demand deposits increased $1.1 billion, or 6%, primarily driven by the
shift in commercial balances from noninterest-bearing to
interest-bearing checking. Savings and other domestic
deposits decreased $0.9 billion, or
8%, primarily reflecting a continued shift in consumer product
mix. Average noninterest-bearing demand deposits decreased
$0.6 billion, or 3%, primarily driven
by the aforementioned shift in commercial checking balances,
partially offset by continued growth in consumer
noninterest-bearing checking. Average short-term borrowings
decreased $2.9 billion, or 56%, as
growth in core deposits reduced reliance on wholesale
funding. As of March 31, 2019, approximately
$845 million of deposits are
held-for-sale associated with the previously-mentioned pending
Wisconsin branch sale (included in
total deposits in Table 4 above).
Compared to the 2018 fourth quarter, average total
interest-bearing liabilities increased $1.7
billion, or 2%. Average short-term borrowings increased
$1.3 billion, or 131%, as loan growth
and seasonality in deposits drove increased borrowings in the
quarter.
Noninterest Income
Table 5 – Noninterest Income – Modest Year-over-Year
Growth, While Linked Quarter Comparisons Impacted by Normal
Seasonality
|
2019
|
|
2018
|
|
|
|
First
|
|
Fourth
|
|
Third
|
|
Second
|
|
First
|
|
Change (%)
|
($ in
millions)
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
LQ
|
|
YOY
|
Service charges on
deposit accounts
|
$
|
87
|
|
|
$
|
94
|
|
|
$
|
93
|
|
|
$
|
91
|
|
|
$
|
86
|
|
|
(7)
|
%
|
|
1
|
%
|
Card and payment
processing income
|
56
|
|
|
58
|
|
|
57
|
|
|
56
|
|
|
53
|
|
|
(3)
|
|
|
6
|
|
Trust and investment
management services
|
44
|
|
|
42
|
|
|
43
|
|
|
42
|
|
|
44
|
|
|
5
|
|
|
0
|
|
Mortgage banking
income
|
21
|
|
|
23
|
|
|
31
|
|
|
28
|
|
|
26
|
|
|
(9)
|
|
|
(19)
|
|
Capital markets
fees
|
22
|
|
|
34
|
|
|
26
|
|
|
26
|
|
|
21
|
|
|
(35)
|
|
|
5
|
|
Insurance
income
|
21
|
|
|
21
|
|
|
19
|
|
|
21
|
|
|
21
|
|
|
0
|
|
|
0
|
|
Bank owned life
insurance income
|
16
|
|
|
16
|
|
|
19
|
|
|
17
|
|
|
15
|
|
|
0
|
|
|
7
|
|
Gain on sale of loans
and leases
|
13
|
|
|
16
|
|
|
16
|
|
|
15
|
|
|
8
|
|
|
(19)
|
|
|
63
|
|
Securities gains
(losses)
|
0
|
|
|
(19)
|
|
|
(2)
|
|
|
0
|
|
|
0
|
|
|
NM
|
|
NM
|
Other
income
|
39
|
|
|
44
|
|
|
40
|
|
|
40
|
|
|
40
|
|
|
(11)
|
|
|
(3)
|
|
Total noninterest
income
|
$
|
319
|
|
|
$
|
329
|
|
|
$
|
342
|
|
|
$
|
336
|
|
|
$
|
314
|
|
|
(3)
|
%
|
|
2
|
%
|
See Pages 9-10 of
Quarterly Financial Supplement for additional
detail.
|
Total noninterest income for the 2019 first quarter increased
$5 million, or 2%, from the year-ago
quarter. Gain on sale of loans and leases increased
$5 million, or 63%, primarily
reflecting the gain on the sale of asset finance leases and higher
SBA sales. Mortgage banking income decreased $5 million, or 19%, primarily reflecting net
mortgage servicing rights (MSR) risk management-related activities
and lower origination volume.
Compared to the 2018 fourth quarter, total noninterest income
decreased $10 million, or 3%.
Securities losses were less than $1
million compared to $19
million in the prior quarter, reflecting the portfolio
repositioning completed in the 2018 fourth quarter. Capital
market fees decreased $12 million, or
35%, primarily driven by $6 million
of unfavorable commodities derivatives mark-to-market adjustments
related to a commercial customer default and decreased interest
rate derivative and syndication activity. Service charges on
deposit accounts decreased $7
million, or 7%, primarily reflecting seasonality.
Other income decreased $5 million, or
11%, primarily reflecting lower income on terminated asset finance
leases.
Noninterest Expense
Table 6 – Noninterest Expense – Continued Thoughtful
Investment in Colleagues and Digital Technology
|
2019
|
|
2018
|
|
|
|
First
|
|
Fourth
|
|
Third
|
|
Second
|
|
First
|
|
Change (%)
|
($ in
millions)
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
LQ
|
|
YOY
|
Personnel
costs
|
$
|
394
|
|
|
$
|
399
|
|
|
$
|
388
|
|
|
$
|
396
|
|
|
$
|
376
|
|
|
(1)
|
%
|
|
5
|
%
|
Outside data
processing and other services
|
81
|
|
|
83
|
|
|
69
|
|
|
69
|
|
|
73
|
|
|
(2)
|
|
|
11
|
|
Net
occupancy
|
42
|
|
|
70
|
|
|
38
|
|
|
35
|
|
|
41
|
|
|
(40)
|
|
|
2
|
|
Equipment
|
40
|
|
|
48
|
|
|
38
|
|
|
38
|
|
|
40
|
|
|
(17)
|
|
|
0
|
|
Deposit and other
insurance expense
|
8
|
|
|
9
|
|
|
18
|
|
|
18
|
|
|
18
|
|
|
(11)
|
|
|
(56)
|
|
Professional
services
|
12
|
|
|
17
|
|
|
17
|
|
|
15
|
|
|
11
|
|
|
(29)
|
|
|
9
|
|
Marketing
|
7
|
|
|
15
|
|
|
12
|
|
|
18
|
|
|
8
|
|
|
(53)
|
|
|
(13)
|
|
Amortization of
intangibles
|
13
|
|
|
13
|
|
|
13
|
|
|
13
|
|
|
14
|
|
|
0
|
|
|
(7)
|
|
Other
expense
|
56
|
|
|
57
|
|
|
58
|
|
|
50
|
|
|
52
|
|
|
(2)
|
|
|
8
|
|
Total noninterest
expense
|
$
|
653
|
|
|
$
|
711
|
|
|
$
|
651
|
|
|
$
|
652
|
|
|
$
|
633
|
|
|
(8)
|
%
|
|
3
|
%
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average full-time
equivalent employees
|
15.7
|
|
|
15.7
|
|
|
15.8
|
|
|
15.7
|
|
|
15.6
|
|
|
0
|
%
|
|
1
|
%
|
See Page 9 of
Quarterly Financial Supplement for additional
detail.
|
Total noninterest expense for the 2019 first quarter increased
$20 million, or 3%, from the year-ago
quarter. Personnel costs increased $18
million, or 5%, primarily reflecting strategic hiring, the
implementation of annual merit increases in the 2018 second
quarter, and increased benefits costs. Outside data
processing and other services increased $8
million, or 11%, primarily driven by higher technology
investment costs. Deposit and other insurance expense
decreased $10 million, or 56%, due to
the discontinuation of the FDIC surcharge in the 2018 fourth
quarter.
Total noninterest expense decreased $58
million, or 8%, from the 2018 fourth quarter. Net
occupancy decreased $28 million, or
40%, reflecting $28 million of branch
and facility consolidation-related expense in the 2018 fourth
quarter. Equipment decreased $8
million, or 17%, reflecting $7
million of branch and facility consolidation-related expense
in the 2018 fourth quarter. Marketing expense decreased
$8 million, or 53%, reflecting the
timing of marketing campaigns and deposit promotions.
Personnel costs decreased $5 million,
or 1%, primarily reflecting lower performance-based incentive
compensation.
Table 7 – Credit Quality Metrics – NCOs Near Low End of
Average Through-the-Cycle Target Range
|
2019
|
|
2018
|
($ in
millions)
|
March 31,
|
|
December
31,
|
|
September
30,
|
|
June 30,
|
|
March 31,
|
Total nonaccrual
loans and leases
|
$
|
417
|
|
|
$
|
340
|
|
|
$
|
370
|
|
|
$
|
378
|
|
|
$
|
383
|
|
Total other real
estate
|
18
|
|
|
23
|
|
|
27
|
|
|
28
|
|
|
30
|
|
Other NPAs
(1)
|
26
|
|
|
24
|
|
|
6
|
|
|
6
|
|
|
7
|
|
Total nonperforming
assets
|
461
|
|
|
387
|
|
|
403
|
|
|
412
|
|
|
420
|
|
Accruing loans and
leases past due 90 days or more
|
147
|
|
|
170
|
|
|
154
|
|
|
132
|
|
|
106
|
|
NPAs + accruing loans
and lease past due 90 days or more
|
$
|
608
|
|
|
$
|
557
|
|
|
$
|
557
|
|
|
$
|
544
|
|
|
$
|
526
|
|
NAL ratio
(2)
|
0.56
|
%
|
|
0.45
|
%
|
|
0.50
|
%
|
|
0.52
|
%
|
|
0.54
|
%
|
NPA ratio
(3)
|
0.61
|
|
|
0.52
|
|
|
0.55
|
|
|
0.57
|
|
|
0.59
|
|
(NPAs+90
days)/(Loans+OREO)
|
0.81
|
|
|
0.74
|
|
|
0.76
|
|
|
0.75
|
|
|
0.74
|
|
Provision for credit
losses
|
$
|
67
|
|
|
$
|
60
|
|
|
$
|
53
|
|
|
$
|
56
|
|
|
$
|
66
|
|
Net
charge-offs
|
71
|
|
|
50
|
|
|
29
|
|
|
28
|
|
|
38
|
|
Net charge-offs /
Average total loans
|
0.38
|
%
|
|
0.27
|
%
|
|
0.16
|
%
|
|
0.16
|
%
|
|
0.21
|
%
|
Allowance for loans
and lease losses (ALLL)
|
$
|
764
|
|
|
$
|
772
|
|
|
$
|
761
|
|
|
$
|
741
|
|
|
$
|
721
|
|
Allowance for
unfunded loan commitments and letters of credit
|
100
|
|
|
96
|
|
|
97
|
|
|
93
|
|
|
85
|
|
Allowance for credit
losses (ACL)
|
$
|
864
|
|
|
$
|
868
|
|
|
$
|
858
|
|
|
$
|
834
|
|
|
$
|
806
|
|
ALLL as a %
of:
|
|
|
|
|
|
|
|
|
|
Total loans and
leases
|
1.02
|
%
|
|
1.03
|
%
|
|
1.04
|
%
|
|
1.02
|
%
|
|
1.01
|
%
|
NALs
|
183
|
|
|
228
|
|
|
206
|
|
|
197
|
|
|
188
|
|
NPAs
|
166
|
|
|
200
|
|
|
189
|
|
|
180
|
|
|
172
|
|
(1) Other nonperforming assets include
certain impaired investment 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 11-14 of
Quarterly Financial Supplement for additional
detail.
|
Overall asset quality performance remained consistent with prior
periods although there was some volatility in the commercial
portfolio. The consumer portfolio metrics continue to reflect
our focus on high quality borrowers, and a modest seasonal impact
evident across our portfolios. The commercial portfolios show
higher net charge-offs (NCOs) and nonaccrual loans and leases
(NALs) in the first quarter associated with a small number of
specific borrowers, but has generally performed consistently, with
some quarter-to-quarter volatility as a result of the absolute low
level of problem loans.
Nonperforming assets (NPAs) increased to $461 million, or 0.61% of total loans and leases
and OREO. Nonaccrual loans and leases increased $34 million, or 9%, from the year-ago quarter to
$417 million, or 0.56% of total loans
and leases. The year-over-year increase was centered in the
C&I portfolio, partially offset by a decrease in the commercial
real estate, residential mortgage, and home equity
portfolios. OREO balances decreased $12 million, or 40%, primarily reflecting a
continued reduction in residential properties. On a
year-over-year basis, there is also an increase in Other NPAs
associated with the investment portfolio. On a linked quarter
basis, NALs increased $77 million, or
23%, while NPAs increased $74
million, or 19%.
The provision for credit losses increased $1 million year-over-year to $67 million in the 2019 first quarter. Net
charge-offs increased $33 million to
$71 million. The increase was
centered in two specific commercial credit relationships.
Consumer charge-offs have remained consistent over the past
year. NCOs represented an annualized 0.38% of average loans
and leases in the current quarter, up from 0.27% in the prior
quarter and up from 0.21% in the year-ago quarter. We remain
confident in the long-term performance of our credit
portfolios.
The allowance for loan and lease losses as a percentage of total
loans and leases increased to 1.02% compared to 1.01% a year ago,
while the ALLL as a percentage of period-end total NALs decreased
to 183% from 188% over the same period. The increase in the
ALLL is primarily the result of loan growth. We believe the
level of the ALLL and ACL are appropriate given the low level of
problem loans and the current composition of the overall loan and
lease portfolio.
Capital
Table 8 – Capital Ratios – Managing Capital Ratios within
Targeted Ranges
|
|
2019
|
|
2018
|
($ in
billions)
|
|
March 31,
|
|
December
31,
|
|
September
30,
|
|
June 30,
|
|
March 31,
|
Tangible common
equity / tangible assets ratio
|
|
7.57
|
%
|
|
7.21
|
%
|
|
7.25
|
%
|
|
7.78
|
%
|
|
7.70
|
%
|
Common equity tier 1
risk-based capital ratio (1)
|
|
9.84
|
%
|
|
9.65
|
%
|
|
9.89
|
%
|
|
10.53
|
%
|
|
10.45
|
%
|
Regulatory Tier 1
risk-based capital ratio (1)
|
|
11.25
|
%
|
|
11.06
|
%
|
|
11.33
|
%
|
|
11.99
|
%
|
|
11.94
|
%
|
Regulatory Total
risk-based capital ratio (1)
|
|
13.11
|
%
|
|
12.98
|
%
|
|
13.36
|
%
|
|
13.97
|
%
|
|
13.92
|
%
|
Total risk-weighted
assets (1)
|
|
$
|
86.0
|
|
|
$
|
85.7
|
|
|
$
|
83.6
|
|
|
$
|
83.0
|
|
|
$
|
81.4
|
|
(1) March 31, 2019 figures
are estimated. Amounts are presented on a Basel III
standardized approach basis for calculating risk-weighted
assets.
|
|
See Pages 15-16 of
Quarterly Financial Supplement for additional
detail.
|
The tangible common equity to tangible assets ratio was 7.57% at
March 31, 2019, down 13 basis points from a year ago.
Common Equity Tier 1 (CET1) risk-based capital ratio was 9.84%,
down from 10.45% a year ago. The regulatory Tier 1 risk-based
capital ratio was 11.25% compared to 11.94% at March 31,
2018. All capital ratios were impacted by the repurchase of
60.5 million common shares over the last four quarters. The
Company repurchased $25 million of
common stock during the 2019 first quarter at an average cost of
$13.64 per share. There is
$152 million of share repurchase
authorization remaining under the 2018 Capital Plan.
Income Taxes
The provision for income taxes was $63
million in the 2019 first quarter compared to $59 million in the 2018 first quarter. The
effective tax rates for the 2019 first quarter and 2018 first
quarter were 15.0% and 15.3%, respectively. The 2019 first
quarter and 2018 first quarter included $2
million and $3 million,
respectively, of tax benefits related to stock-based
compensation.
At March 31, 2019, we had a net federal deferred tax
liability of $159 million and a net
state deferred tax asset of $35
million.
Expectations - 2019
With the assumption of no interest rate hikes in 2019, full-year
revenue is expected to increase approximately 4% to 7%. The
full-year NIM is expected to remain relatively flat on a GAAP basis
versus 2018, inclusive of the anticipated reduction in the benefit
of purchase accounting and the cost of the hedging strategy we
began implementing in the 2019 first quarter. The full-year
core NIM is expected to expand modestly. Full-year
noninterest expense is expected to increase approximately 2% to
4%.
Average loans and leases are expected to increase approximately
4% to 6% on an annual basis. Average total deposits are
expected to increase approximately 4% to 6% on an annual basis.
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 2019 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 April 25, 2019, 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 #13688990. 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
May 10, 2019 at (877) 660-6853 or (201) 612-7415;
conference ID #13688990.
Please see the 2019 First 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 $108 billion of
assets and a network of 898 full-service branches, including 12
Private Client Group offices, and 1,727 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 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; 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 BCFP;
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 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 which may be described from
time to time in Huntington's filings with the Securities and
Exchange Commission.
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