UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 OR 15(d)

of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) July 23, 2015

 

 

HUNTINGTON BANCSHARES INCORPORATED

(Exact name of registrant as specified in its charter)

 

 

 

Maryland   1-34073   31-0724920

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

 

Huntington Center

41 South High Street

Columbus, Ohio

  43287
(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code (614) 480-8300

Not Applicable

(Former name or former address, if changed since last report.)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


Item  2.02. Results of Operations and Financial Condition.

On July 23, 2015, Huntington Bancshares Incorporated (“Huntington”) issued a news release announcing its earnings for the quarter ended June 30, 2015. Also on July 23, 2015, Huntington made a Quarterly Financial Supplement available on the Investor Relations section of its web site, www.huntington.com.

Huntington’s senior management will host an earnings conference call on July 23, 2015, at 10:00 a.m. (Eastern Time). The call may be accessed via a live Internet webcast at the Investor Relations section of Huntington’s web site, www.huntington-ir.com or through a dial-in telephone number at (844) 318-8148; Conference ID 11113310. Slides will be available in the Investor Relations section of Huntington’s web site, www.huntington.com about an hour prior to the call. A replay of the webcast will be archived in the Investor Relations section of Huntington’s web site, www.huntington.com. A telephone replay will be available approximately two hours after the completion of the call through July 30, 2015 at (855) 859-2056 or (404) 537-3406; conference ID 11113310.

The information contained or incorporated by reference in this Current Report on Form 8-K contains certain forward-looking statements, including certain plans, expectations, goals, projections, and statements, which are subject to numerous assumptions, risks, and uncertainties. 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.

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: (1) worsening of credit quality performance due to a number of factors such as the underlying value of collateral that could prove less valuable than otherwise assumed and assumed cash flows may be worse than expected; (2) 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; (3) movements in interest rates; (4) competitive pressures on product pricing and services; (5) success, impact, and timing of our business strategies, including market acceptance of any new products or services implementing our “Fair Play” banking philosophy; (6) changes in accounting policies and principles and the accuracy of our assumptions and estimates used to prepare our financial statements; (7) extended disruption of vital infrastructure; (8) the final outcome of significant litigation; (9) 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 (10) the outcome of judicial and regulatory decisions regarding practices in the residential mortgage industry, including among other things the processes followed for foreclosing residential mortgages. Additional factors that could cause results to differ materially from those described above can be found in Huntington’s 2014 Annual Report on Form 10-K, and documents subsequently filed by Huntington with the Securities and Exchange Commission. All forward-looking statements included in this document are based on information available at the time of the release. Huntington assumes no obligation to update any forward-looking statement.


The information contained or incorporated by reference in Item 2.02 of this Form 8-K shall be treated as “furnished” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

 

Item  9.01. Financial Statements and Exhibits.

The exhibits referenced below shall be treated as “furnished” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

 

(d) Exhibits.

 

Exhibit 99.1 – News release of Huntington Bancshares Incorporated, dated July 23, 2015.

Exhibit 99.2 – Quarterly Financial Supplement, June 2015.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

  HUNTINGTON BANCSHARES INCORPORATED

Date:    July 23, 2015

  By:  

/s/ Howell D. McCullough III

 
    Howell D. McCullough III  
   

Senior Executive Vice President

and Chief Financial Officer

 


EXHIBIT INDEX

 

Exhibit

No.

   Description
Exhibit 99.1    News release of Huntington Bancshares Incorporated, July 23, 2015.
Exhibit 99.2    Quarterly Financial Supplement, June 2015.


Exhibit 99.1

 

LOGO     LOGO

FOR IMMEDIATE RELEASE

July 23, 2015

Analysts: Mark Muth (mark.muth@huntington.com), 614.480.4720

Media: Maureen Brown (maureen.brown@huntington.com), 614.480.5512

HUNTINGTON BANCSHARES INCORPORATED REPORTS RECORD NET INCOME,

21% YEAR-OVER-YEAR INCREASE IN EARNINGS PER COMMON SHARE

COLUMBUS, Ohio – Huntington Bancshares Incorporated (NASDAQ: HBAN; www.huntington.com) reported net income for the 2015 second quarter of $196 million, or a $32 million increase from the year-ago quarter. Earnings per common share for the 2015 second quarter were $0.23, an increase of $0.04 from the year-ago quarter. Return on average assets was 1.16%, while return on average tangible common equity was 14.4%.

“We reported good quarterly earnings that are increasingly being driven by our differentiated strategy and disciplined execution,” said Steve Steinour, chairman, president and CEO. “I am pleased with the momentum we displayed this quarter in total revenue, posting growth of 9% year-over-year. Both net interest income and fee income contributed meaningfully to revenue performance. We received an immediate benefit to our earnings from Huntington Technology Finance, while robust mortgage lending volume drove growth in mortgage banking income. Our capital markets and treasury management businesses, among others, also produced strong results.”

“The success we are seeing on the revenue front provides us the important opportunity to invest further in our business, though we continue to pace these investments to ensure attainment of full-year positive operating leverage,” Steinour said. “We also remain pleased with the credit performance of our portfolio.”

The Board of Directors declared a quarterly cash dividend on the company’s common stock of $0.06 per common share. The dividend is payable October 1, 2015, to shareholders of record on September 17, 2015. During the 2015 second quarter, the company repurchased 8.8 million common shares at an average price of $11.20 per share.

Specific 2015 Second Quarter highlights compared with 2014 Second Quarter:

 

  $64 million, or 9%, increase in fully-taxable equivalent revenue, split evenly between a $32 million, or 7%, increase in fully-taxable equivalent net interest income and a $32 million, or 13%, increase in noninterest income

 

  $2.9 billion, or 6%, increase in average loans and leases

 

  $1.6 billion, or 14%, increase in average securities, including a net increase of $0.8 billion of direct purchase municipal instruments originated by our Commercial segment

 

  $4.4 billion, or 9%, increase in average total deposits, driven by a $3.6 billion, or 8%, increase in average core deposits

 

  Net charge-offs declined to 0.21% of average loans and leases, down from 0.25%

 

  $0.23, or 4%, increase in tangible book value per common share to $6.71; end of period dividend yield of 2.1%

 

1


Table 1 – Earnings Performance Summary

 

     2015     2014  

($ in millions, except per share data)

   Second
Quarter
    First
Quarter
    Fourth
Quarter
    Third
Quarter
    Second
Quarter
 
          

Net Income

   $ 196.2      $ 165.9      $ 163.6      $ 155.0      $ 164.6   

Diluted earnings per common share

     0.23        0.19        0.19        0.18        0.19   

Return on average assets

     1.16 %      1.02     1.00     0.97     1.07

Return on average common equity

     12.3        10.6        10.3        9.9        10.8   

Return on average tangible common equity

     14.4        12.2        11.9        11.4        12.4   

Net interest margin

     3.20        3.15        3.18        3.20        3.28   

Efficiency ratio

     61.7        63.5        66.2        65.3        62.7   

Tangible book value per common share

   $ 6.71      $ 6.62      $ 6.62      $ 6.53      $ 6.48   

Cash dividends declared per common share

     0.06        0.06        0.06        0.05        0.05   

Average diluted shares outstanding (000’s)

     820,238        823,809        825,338        829,623        834,687   

Average earning assets

   $ 62,569      $ 61,193      $ 60,010      $ 58,707      $ 57,077   

Average loans and leases (1)

     47,899        47,780        47,092        46,113        45,024   

Average core deposits

     49,192        48,777        47,638        46,119        45,611   

Tangible common equity / tangible assets ratio

     7.91 %      7.95     8.17     8.35     8.38

Common equity Tier 1 risk-based capital ratio

     9.65       9.51       N/A        N/A        N/A   

Tier 1 common risk-based capital ratio

     N/A        N/A        10.23        10.31        10.26   

NCOs as a % of average loans and leases

     0.21 %      0.20     0.20     0.26     0.25

NAL ratio

     0.75        0.76        0.63        0.70        0.71   

ACL as a % of total loans and leases

     1.34        1.38        1.40        1.47        1.50   

N/A denotes quarters in which the calculation did not apply

 

(1) Excludes loans held for sale; $1 billion of automobile loans were moved to held for sale at end of 2015 first quarter.

Table 2 lists certain items that Management believes are significant in understanding corporate performance and trends (see Basis of Presentation). There were no Significant Items in the 2015 second quarter. The quarter did contain $2 million of expenses related to the acquisition of Macquarie Equipment Finance, subsequently rebranded Huntington Technology Finance (“HTF”). Merger-related expense may be a Significant Item for the 2015 full year.

Table 2 – Significant Items Influencing Earnings

 

Three Months Ended    Pre-Tax
Impact
     After-Tax Impact  
(in millions, except per share)    Amount      Amount (1)      EPS (2)  

June 30, 2015 – net income (3)

      $ 196       $ 0.23   

March 31, 2015 – net income (3)

      $ 166       $ 0.19   

December 31, 2014 – net income

      $ 164       $ 0.19   

  

Addition to litigation reserves

   $ (12      (8      (0.01

  

Franchise repositioning related expense

     (9      (6      (0.01

September 30, 2014 – net income

      $ 155       $ 0.18   

  

Franchise repositioning related expense

   $ (19      (13      (0.02

  

Merger and acquisition related net expenses

     (3      (2      (0.00

June 30, 2014 – net income (4)

      $ 165       $ 0.19   

  

Merger and acquisition related net expenses

     (1      (1      (0.00

 

(1)  Favorable (unfavorable) impact on net income; 35% operating tax rate

 

2


(2)  EPS reflected on a fully diluted basis
(3)  2015 Second Quarter and 2015 First Quarter included $2 million and $3 million, respectively, of merger-related expense that was not a Significant Item for the quarter, but merger-related expense may be a Significant Item for the 2015 full year.
(4)  2014 Second Quarter included $1 million of merger-related expense that was not originally reflected as a Significant Item for the quarter, but merger and acquisition-related net expense was a Significant Item for the 2014 full year, and thus is included in this table.

Net Interest Income, Net Interest Margin, and Average Balance Sheet

Table 3 – Net Interest Income and Net Interest Margin Performance Summary – HTF Drives Linked Quarter NIM Expansion

 

     2015     2014              

($ in millions)

   Second
Quarter
    First
Quarter
    Fourth
Quarter
    Third
Quarter
    Second
Quarter
    Change (%)  
             LQ     YOY  

Net interest income

   $ 490.7     $ 467.7     $ 473.3     $ 466.3     $ 460.0       5     7

FTE adjustment

     8.0       7.6       7.5       7.5       6.6       5        20   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income - FTE

     498.6       475.2       480.8       473.8       466.7       5        7   

Noninterest income

     281.8       231.6       233.3       247.3       250.1       22        13   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenue - FTE

   $ 780.4     $ 706.9     $ 714.1     $ 721.2     $ 716.8       10     9
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
                                   Change bp  

Yield / Cost

                                 LQ     YOY  

Total earning assets

     3.45     3.38     3.41     3.44     3.53     7        (8

Total loans and leases

     3.65       3.56       3.60       3.66       3.75       9        (10

Total securities

     2.65       2.57       2.65       2.54       2.57       9        9   

Total interest-bearing liabilities

     0.36       0.32       0.32       0.33       0.34       3        1   

Total interest-bearing deposits

     0.22       0.22       0.23       0.23       0.25       0        (4

Net interest rate spread

     3.09       3.06       3.09       3.11       3.19       3        (10

Impact of noninterest-bearing funds on margin

     0.11       0.09       0.09       0.09       0.09       2        2   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest margin

     3.20     3.15     3.18     3.20     3.28     5        (8
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

See Pages 7-8 of Quarterly Financial Supplement for additional detail.

Fully-taxable equivalent (FTE) net interest income for the 2015 second quarter increased $32 million, or 7%, from the 2014 second quarter. This reflected the benefit from the $5.5 billion, or 10%, increase in average earning assets partially offset by an 8 basis point reduction in the FTE net interest margin (NIM) to 3.20%. Average earning asset growth included a $2.9 billion, or 6%, increase in average loans and leases, a $1.6 billion, or 14%, increase in average securities, and a $1.0 billion increase in average loans held-for-sale. The NIM contraction reflected an 8 basis point decrease related to the mix and yield of earning assets and 2 basis point increase in funding costs, partially offset by the 2 basis point increase in the benefit from noninterest-bearing funds.

Compared to the 2015 first quarter, FTE net interest income increased $23 million, or 5%. Average earning assets increased $1.4 billion, or 2%, sequentially, while the NIM increased 5 basis points. The increase in the NIM primarily reflected the addition of higher yielding assets from the HTF acquisition, which contributed 7 basis points to the NIM expansion, partially offset by continued pricing pressure across all asset classes. During the 2015 second quarter, FTE net interest income and the NIM also benefitted by $3 million and 2 basis points, respectively, from prepayment penalties within the securities portfolio.

 

3


Table 4 – Average Earning Assets – Automobile and C&I Continue to Provide Primary Sources of Loan Growth

 

     2015      2014               

(in billions)

   Second
Quarter
     First
Quarter
     Fourth
Quarter
     Third
Quarter
     Second
Quarter
     Change (%)  
                  LQ     YOY  

Average Loans and Leases

                   

Commercial and industrial

   $ 19.8       $ 19.1       $ 18.9       $ 18.6       $ 18.3         4     9

Commercial real estate

     5.2         5.2         5.1         5.0         5.0         0        3   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total commercial

     25.0         24.3         24.0         23.5         23.3         3        7   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Automobile

     8.1         8.8         8.5         8.0         7.3         (8     10   

Home equity

     8.5         8.5         8.5         8.4         8.4         0        2   

Residential mortgage

     5.9         5.8         5.8         5.7         5.6         1        4   

Other consumer

     0.5         0.4         0.4         0.4         0.4         6        18   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total consumer

     22.9         23.5         23.1         22.6         21.7         (3     5   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total loans and leases

     47.9         47.8         47.1         46.1         45.0         0        6   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total securities

     13.3         12.9         12.5         12.2         11.7         3        14   

Held-for-sale and other earning assets

     1.4         0.5         0.5         0.4         0.4         187        259   

Total earning assets

   $ 62.6       $ 61.2       $ 60.0       $ 58.7       $ 57.1         2     10
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

See Page 6 of Quarterly Financial Supplement for additional detail.

Average earning assets for the 2015 second quarter increased $5.5 billion, or 10%, from the year-ago quarter, driven by:

 

    $1.6 billion, or 9%, increase in average Commercial and Industrial (C&I) loans and leases, primarily reflecting the $0.8 billion of equipment finance leases acquired in the HTF transaction as well as growth in the international vertical and corporate banking.

 

    $1.6 billion, or 14%, increase in average securities, reflecting an increase of $1.8 billion of Liquidity Coverage Ratio (LCR) Level 1 qualified securities. The 2015 second quarter’s average balance also included $1.7 billion of direct purchase municipal instruments originated by our Commercial segment, up $0.8 billion from the year-ago quarter.

 

    $1.0 billion increase in average loans held-for-sale, primarily related to automobile loans that were securitized and sold late in the quarter.

 

    $0.7 billion, or 10%, increase in average Automobile loans, despite the impact of the previously mentioned automobile loan securitization. The 2015 second quarter represented the sixth consecutive quarter of greater than $1.0 billion in automobile loan originations.

Compared to the 2015 first quarter, average earning assets increased $1.4 billion, or 2%. This increase reflected a $0.9 billion increase in loans held-for-sale and a $0.7 billion, or 4%, increase in C&I loans, resulting from the $0.8 billion of equipment finance leases acquired in the HTF transaction, partially offset by a $0.7 billion decrease in automobile loans. The increase in loans held-for-sale and the decrease in the automobile loans were impacted by the movement of $1 billion of automobile loans to held for sale at the end of the 2015 first quarter as well as the subsequent securitization and sale of $750 million of automobile loans during the 2015 second quarter.

 

4


Table 5 – Average Liabilities –Robust Growth in Noninterest Bearing and Interest Bearing Demand Deposits Continues

 

     2015      2014         
     Second      First      Fourth      Third      Second      Change (%)  

(in billions)

   Quarter      Quarter      Quarter      Quarter      Quarter      LQ     YOY  

Average Deposits

                   

Demand deposits - noninterest bearing

   $ 15.9       $ 15.3       $ 15.2       $ 14.1       $ 13.5         4     18

Demand deposits - interest bearing

     6.6       $ 6.2       $ 5.9       $ 5.9       $ 5.9         7        11   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total demand deposits

     22.5         21.4         21.1         20.0         19.4         5        16   

Money market deposits

     18.8         19.4         18.4         17.9         17.7         (3     6   

Savings and other domestic deposits

     5.3         5.2         5.1         5.0         5.1         2        4   

Core certificates of deposit

     2.6         2.8         3.1         3.2         3.4         (6     (23
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total core deposits

     49.1         48.8         47.6         46.1         45.6         1        8   

Other domestic deposits of $250,000 or more

     0.2         0.2         0.2         0.2         0.3         (6     (30

Brokered deposits and negotiable CDs

     2.7         2.6         2.4         2.3         2.1         4        30   

Other deposits

     0.6         0.6         0.5         0.4         0.3         1        78   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total deposits

     52.6         52.1         50.8         49.0         48.3         1        9   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Short- and long-term borrowings

     7.3         6.3         6.6         7.2         6.3         17        16   

Total Interest-bearing liabilities

   $ 44.0       $ 43.1       $ 42.2       $ 42.0       $ 41.1         2     7
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

See Page 6 of Quarterly Financial Supplement for additional detail.

Average total deposits for the 2015 second quarter increased $4.4 billion, or 9%, from the year-ago quarter, including a $3.6 billion, or 8%, increase in average total core deposits. The growth in average total core deposits more than fully funded the year-over-year increase in average total loans and leases. The increase in total deposits included $0.7 billion of deposits acquired in the Bank of America branch acquisition. Average total interest-bearing liabilities increased $2.9 billion, or 7%, from the year-ago quarter. Year-over-year changes in total liabilities reflected:

 

    $2.4 billion, or 18%, increase in noninterest bearing deposits, reflecting a $2.1 billion, or 19%, increase in commercial noninterest bearing deposits and a $0.4 billion, or 15%, increase in consumer noninterest bearing deposits.

 

    $1.1 billion, or 6%, increase in money market deposits, reflecting continued banker focus across all segments on obtaining our customers’ full deposit relationship.

 

    $1.0 billion, or 16%, increase in short- and long-term borrowings, primarily reflecting a cost-effective method of funding LCR-related securities growth. The increase reflected the issuance of $1.0 billion and $0.8 billion of bank-level senior debt during the 2015 first quarter and 2014 second quarter, respectively, as well as $0.5 billion of debt assumed in the HTF acquisition, partially offset by a $0.6 billion reduction in short-term borrowings.

 

    $0.6 billion, or 30%, increase in brokered deposits and negotiable CDs, which were used to efficiently finance balance sheet growth while continuing to manage the overall cost of funds.

Partially offset by:

 

    $0.8 billion, or 23%, decrease in average core certificates of deposit due to the strategic focus on changing the funding sources to low- and no-cost demand deposits and money market deposits.

 

5


Compared to the 2015 first quarter, average total interest-bearing liabilities increased $0.9 billion, or 2%, primarily reflecting a $1.0 billion, or 17%, increase in short- and long-term borrowings related to the 2015 first quarter bank-level senior debt issuance. While not affecting average balances, $0.8 billion of bank-level senior debt was issued at the end of the 2015 second quarter.

Noninterest Income

Table 6 – Noninterest Income – Robust Mortgage Banking Income and Auto Securitization Gain Highlight Quarter

 

     2015      2014         
     Second      First      Fourth     Third      Second      Change (%)  

(in millions)

   Quarter      Quarter      Quarter     Quarter      Quarter      LQ     YOY  

Noninterest Income

                  

Service charges on deposit accounts

   $ 70.1       $ 62.2       $ 67.4      $ 69.1       $ 72.6         13     (3 )% 

Trust services

     26.6         29.0         28.8        28.0         29.6         (9     (10

Electronic banking

     30.3         27.4         28.0        27.3         26.5         10        14   

Mortgage banking income

     38.5         23.0         14.0        25.1         22.7         68        70   

Brokerage income

     15.2         15.5         16.1        17.2         17.9         (2     (15

Insurance income

     17.6         15.9         16.3        16.7         16.0         11        10   

Bank owned life insurance income

     13.2         13.0         15.0        14.9         13.9         1        (5

Capital markets fees

     13.2         13.9         13.8        10.2         10.5         (5     26   

Gain on sale of loans

     12.5         4.6         5.4        8.2         3.9         171        218   

Securities (losses) gains

     0.1         —           (0.1     0.2         0.5         NM        (83

Other income

     44.6         27.1         28.7        30.4         36.0         65        24   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Total noninterest income

   $ 281.8       $ 231.6       $ 233.3      $ 247.3       $ 250.1         22     13
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

See Pages 9-10 of Quarterly Financial Supplement for additional detail.

Noninterest income for the 2015 second quarter increased $32 million, or 13%, from the year-ago quarter. HTF contributed $12 million of noninterest income during the 2015 second quarter. The year-over-year increase primarily reflected:

 

    $16 million, or 70%, increase in mortgage banking income, including an 84% increase in origination and secondary marketing revenues, reflecting higher gain on sale margin and a 75% increase in volume sold, and a $7 million net benefit from MSR hedging activities.

 

    $9 million, or 218%, increase in gain on sale of loans, including the $5 million gain from the automobile loan securitization.

 

    $9 million, or 24%, increase in other income, primarily reflecting equipment operating lease income related to HTF.

 

    $4 million, or 14%, increase in electronic banking, due to higher card related income and underlying customer growth.

 

    $3 million, or 26%, increase in capital market fees, primarily related to customer foreign exchange and commodities derivatives products.

 

6


Partially offset by:

 

    $3 million, or 3%, decrease in service charges on deposit accounts as growth in commercial deposit service charges, coupled with a 7% increase in consumer checking households, partially offset the estimated $6 million quarterly run-rate decline from the late July 2014 implementation of changes in consumer products.

 

    $3 million, or 10%, decrease in trust services, primarily related to our fiduciary trust businesses moving to a more open architecture platform and a decline in assets under management in proprietary mutual funds following the 2014 second quarter transition of the fixed income Huntington Funds to a third party.

 

    $3 million, or 15%, decrease in brokerage income, primarily reflecting a shift from upfront commission income to trail options and an increase in the sale of new open architecture advisory products.

Compared to the 2015 first quarter, total noninterest income increased $50 million, or 22%. Other income increased $17 million, or 65%, including $12 million related to HTF. Mortgage banking income increased $16 million, or 68%, primarily driven by a $10 million increase in net MSR hedging activities as well as a $6 million, or 32%, increase in origination and secondary marketing income, reflecting a 48% increase in mortgage production volume as well as higher loan sales. Service charges on deposit accounts increased $8 million, or 13%, as the quarter benefitted from continued growth in consumer households and business relationships, as well as seasonality. Gain on sale of loans increased $8 million, or 171%, primarily reflecting a $5 million automobile loan securitization gain.

Noninterest Expense (see Basis of Presentation)

Table 7 – Noninterest Expense from Continuing Operations (GAAP) – Acquisitions and Personnel Drive Increase in Noninterest Expense

 

     2015      2014         
     Second
Quarter
     First
Quarter
     Fourth
Quarter
     Third
Quarter
     Second
Quarter
     Change (%)  

(in millions)

                  LQ     YOY  

Noninterest Expense

                   

Personnel costs

   $ 282.1       $ 264.9       $ 263.3       $ 275.4       $ 260.6         6     8

Outside data processing and other services

     58.5         50.5         53.7         53.1         54.3         16        8   

Net occupancy

     28.9         31.0         31.6         34.4         28.7         (7     1   

Equipment

     31.7         30.2         32.0         30.2         28.7         5        10   

Professional services

     12.6         12.7         15.7         13.8         17.9         (1     (30

Marketing

     15.0         13.0         12.5         12.6         14.8         16        1   

Deposit and other insurance expense

     11.8         10.2         13.1         11.6         10.6         16        11   

Amortization of intangibles

     10.0         10.2         10.7         9.8         9.5         (2     5   

Other expense

     41.2         36.1         50.9         39.5         33.4         14        23   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total noninterest expense

   $ 491.8       $ 458.9       $ 483.3       $ 480.3       $ 458.6         7     7
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

(in thousands)

                                               

Number of employees (Average full-time equivalent)

     12.3         11.9         11.9         11.9         12.0         3     2

 

7


Table 8 - Impacts of Significant Items

 

     2015      2014  
     Second
Quarter (1)
     First
Quarter (2)
     Fourth
Quarter
     Third
Quarter
     Second
Quarter (3)
 

(in millions)

              

Noninterest Expense

              

Personnel costs

   $ 0.3       $ 0.0       $ 2.2       $ 15.3       $ 0.0   

Outside data processing and other services

     0.8         0.1         0.3         0.3         0.6   

Net occupancy

     0.0         0.0         4.1         5.2         0.1   

Equipment

     0.0         0.0         2.0         0.1         0.0   

Professional services

     0.4         3.3         0.0         0.0         0.1   

Marketing

     0.0         0.0         0.0         0.8         0.0   

Other expense

     0.0         0.0         11.6         1.1         0.0   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total noninterest expense

   $ 1.5       $ 3.4       $ 20.3       $ 22.8       $ 0.8   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) Includes $2 million of merger-related expense that was not a Significant Item for the quarter, but is expected to be a Significant Item for the 2015 full year.
(2) Includes $3 million of merger-related expense that was not a Significant Item for the quarter, but is expected to be a Significant Item for the 2015 full year.
(3) Includes $1 million of merger-related expense that was not originally reflected as a Significant Item for the quarter, but was a Significant Item for the 2014 full year.

Table 9 - Adjusted Noninterest Expense (Non-GAAP)

 

     2015      2014         
     Second
Quarter
     First
Quarter
     Fourth
Quarter
     Third
Quarter
     Second
Quarter
     Change (%)  

(in millions)

                  LQ     YOY  

Noninterest Expense

                   

Personnel costs

   $ 281.8       $ 264.9       $ 261.1       $ 260.1       $ 260.6         6     8

Outside data processing and other services

     57.8         50.5         53.4         52.8         53.7         14        8   

Net occupancy

     28.9         31.0         27.4         29.2         28.6         (7     1   

Equipment

     31.7         30.2         30.0         30.1         28.7         5        10   

Professional services

     12.2         9.4         15.7         13.8         17.8         29        (32

Marketing

     15.0         13.0         12.5         11.8         14.8         16        1   

Deposit and other insurance expense

     11.8         10.2         13.1         11.6         10.6         16        11   

Amortization of intangibles

     10.0         10.2         10.7         9.8         9.5         (2     5   

Other expense

     41.2         36.1         39.2         38.4         33.4         14        23   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total noninterest expense

   $ 490.3       $ 455.5       $ 463.0       $ 457.5       $ 457.9         8     7
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

See Page 9 of Quarterly Financial Supplement for additional detail.

Reported noninterest expense for the 2015 second quarter increased $33 million, or 7%, from the year-ago quarter. HTF contributed $16 million of noninterest expense during the 2015 second quarter. Changes in reported noninterest expense primarily reflect:

 

    $22 million, or 8%, increase in personnel costs, related to an $18 million increase in salaries, reflecting the May implementation of annual merit increases and a 2% increase in the number of average full-time equivalent employees, and a $4 million increase in benefits expense. HTF accounted for $7 million of incremental personnel expense and 167 of the average full-time equivalent employees.

 

    $8 million, or 23%, increase in other expense, primarily reflecting $7 million of equipment operating lease expense from HTF.

 

    $4 million, or 8%, increase in outside data processing and other services expense, primarily related to technology investments.

 

8


Partially offset by:

 

    $5 million, or 30%, decrease in professional services expense as the year-ago quarter included $5 million of one-time consulting expense related to strategic planning.

Reported noninterest expense increased $33 million, or 7%, from the 2015 first quarter. On a reported basis, personnel costs increased $17 million, or 6%, as a result of annual merit increases implemented in May and a 3% increase in the number of average full-time equivalent employees, as well as the incremental $7 million of personnel expense related to HTF. Outside data processing and other services expense increased $8 million, or 16%, primarily related to ongoing technology investments. Other expense increased $5 million, or 14%, from the prior quarter, primarily reflecting equipment operating lease expense related to HTF.

Credit Quality

Table 10 – Credit Quality Metrics – Credit Dividend Continues as NCOs Remain Below the Long-Term Goal, and NPAs Ease Sequentially

 

     2015     2014  

($ in thousands)

   Jun. 30     Mar. 31     Dec. 31     Sep. 30     Jun. 30  

Total nonaccrual loans and leases

   $ 364,339      $ 364,413      $ 300,244      $ 325,765      $ 324,957   

Total other real estate, net

     29,232        33,951        35,039        36,270        34,695   

Other NPAs (1)

     2,440        2,440        2,440        2,440        2,440   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total nonperforming assets

   $ 396,011      $ 400,804      $ 337,723      $ 364,475      $ 362,092   

Accruing loans and leases past due 90 days or more

     106,878        112,935        130,481        142,126        137,008   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

NPAs + accruing loans and lease past due 90 days or more

   $ 502,889      $ 513,739      $ 468,204      $ 506,601      $ 499,100   

NAL ratio (2)

     0.75     0.76     0.63     0.70     0.71

NPA ratio (3)

     0.81        0.84        0.71        0.78        0.79   

(NPAs+90 days)/(Loans+OREO)

     1.03        1.08        0.98        1.08        1.08   

Provision for credit losses

   $ 20,419      $ 20,591      $ 2,494      $ 24,480      $ 29,385   

Net charge-offs

     25,375        24,432        22,975        30,023        28,643   

Net charge-offs / Average total loans

     0.21     0.20     0.20     0.26     0.25

Allowance for loans and lease losses

   $ 599,542      $ 605,126      $ 605,196      $ 631,036      $ 635,101   

Allowance for unfunded loan commitments and letters of credit

     55,371        54,742        60,806        55,449        56,927   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Allowance for credit losses (ACL)

   $ 654,913      $ 659,868      $ 666,002      $ 686,485      $ 692,028   

ACL as a % of:

          

Total loans and leases

     1.34     1.38     1.40     1.47     1.50

NALs

     180        181        222        211        213   

NPAs

     165        165        197        188        191   

 

(1) Other nonperforming assets includes 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, impaired loans held for sale, and net other real estate.

See Pages 11-14 of Quarterly Financial Supplement for additional detail.

Overall asset quality remains strong, with modest volatility based on the absolute low level of problem credits. Nonaccrual loans and leases (NALs) increased $39 million, or 12%, from the year ago quarter to $364 million, or 0.75% of total loans and leases, with the increase primarily associated with a small number of loan relationships. Nonperforming assets (NPAs) increased $34 million, or 9%, to $396 million, or 1.03% of total loans and leases, OREO, and other NPAs. NALs were essentially flat with the prior quarter, while NPAs decreased $5 million, or 1%, from the prior quarter due to a $5 million decrease in residential OREO.

The provision for credit losses decreased $9 million, or 31%, year-over-year to $20 million in the 2015 second quarter. Net charge-offs (NCOs) decreased $3 million, or 11%, to $25 million. NCOs represented an annualized 0.21% of average loans and leases in the current quarter, consistent with the prior quarter results and down from 0.25% in the year-ago quarter. We

 

9


continue to be pleased with the net charge-off performance across the entire portfolio. Consumer credit metrics continue to show an improving trend while the commercial portfolios continue to experience some quarter-to-quarter volatility based on the absolute low level of problem loans.

The period-end allowance for credit losses (ACL) as a percentage of total loans and leases decreased to 1.34% from 1.50% a year ago, while the ACL as a percentage of period-end total NALs declined to 180% from 213%. Management believes the level of the ACL is appropriate given the improvement in the credit quality of the overall loan and lease portfolio.

Capital

Table 11 – Capital Ratios – Capital Levels Support Continued Balance Sheet Growth and Capital Return to Shareholders

 

          2015     2014  

(in millions)

        Jun. 30     Mar. 31     Dec. 31     Sep. 30     Jun. 30  

Tangible common equity / tangible assets ratio

        7.91     7.95     8.17     8.35     8.38

Common equity tier 1 risk-based capital ratio(1)

   Basel III      9.65     9.51     N/A        N/A        N/A   

Tier 1 common risk-based capital ratio

   Basel I      N/A        N/A        10.23     10.31     10.26

Regulatory Tier 1 risk-based capital ratio(1)

   Basel III      10.41     10.22     N/A        N/A        N/A   
  

Basel I

     N/A        N/A        11.50     11.61     11.56

Regulatory Total risk-based capital ratio(1)

   Basel III      12.62     12.48     N/A        N/A        N/A   
  

Basel I

     N/A        N/A        13.56     13.72     13.67

Total risk-weighted assets(1)

   Basel III    $ 57,850      $ 57,840        N/A        N/A        N/A   
  

Basel I

     N/A        N/A      $ 54,479      $ 53,239      $ 53,035   

 

(1) June 30, 2015 figures are estimated and are presented on a Basel III basis, including the standardized approach for calculating risk-weighted assets.

N/A denotes quarters in which the calculation did not apply

See Pages 15-16 of Quarterly Financial Supplement for additional detail.

The tangible common equity to tangible assets ratio was 7.91% at June 30, 2015, down 47 basis points from a year ago. On a Basel III basis, Common Equity Tier 1 (CET1) risk-based capital ratio was 9.65% at June 30, 2015, and the regulatory Tier 1 risk-based capital ratio was 10.41%. On a Basel I basis, the Tier 1 common risk-based capital ratio was 10.26% at June 30, 2014, and the regulatory Tier 1 risk-based capital ratio was 11.56%. All capital ratios were impacted by the repurchase of 22.8 million common shares over the last four quarters.

During the 2015 second quarter, the company repurchased 8.8 million common shares at an average price of $11.20 per share under the $366 million repurchase authorization included in the 2015 CCAR capital plan.

Income Taxes

The provision for income taxes in the 2015 second quarter was $64 million and $57 million in the 2014 second quarter. The effective tax rates for the 2015 second quarter and 2014 second quarter were 24.6% and 25.9%, respectively. At June 30, 2015, we had a net federal deferred tax asset of $31 million and a net state deferred tax asset of $43 million.

 

10


Expectations – 2015

“We are bullish about the Midwest economy creating increasing opportunities for us with both our consumer and business customers,” Steinour said. “We saw momentum build across our businesses as loan and deposit growth accelerated in the back half of the quarter and our pipelines grew. We will continue to grow our loan portfolio prudently while remaining aligned with our aggregate moderate-to-low risk appetite. We also will deliver full-year positive operating leverage as we balance investment in the businesses for the long term, including digital technology, data analytics, and in-store branches, with the near-term revenue outlook.”

The commitment to positive operating leverage for full-year 2015, excluding Significant Items and net MSR activity, is both inclusive and exclusive of the impact of HTF. We continue to expect noninterest expense growth of 2-4% for the year, excluding Significant Items and the recurring expense related to HTF. On a reported basis, we expect quarterly noninterest expense will remain near the 2015 second quarter level for the remainder of 2015.

Overall, asset quality metrics are expected to remain near current levels across the portfolio. Moderate quarterly volatility is expected given the absolute low level of problem assets and credit costs. We anticipate NCOs will remain within or below our long-term normalized range of 35 to 55 basis points.

The effective tax rate for the remainder of 2015 is expected to be in the range of 24% to 27%.

Conference Call / Webcast Information

Huntington’s senior management will host an earnings conference call on July 23, 2015, at 10:00 a.m. (Eastern Daylight Saving 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 (844) 318-8148; Conference ID# 11113310. 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 July 30, 2015 at (855) 859-2056 or (404) 537-3406; conference ID# 11113310.

 

Please see the 2015 Second Quarter Quarterly Financial Supplement for additional detailed financial performance metrics. This document can be found on the Investor Relations section of Huntington’s website, www.huntington.com.

 

11


Forward-looking Statement

This document contains certain forward-looking statements, including certain plans, expectations, goals, projections, and statements, which are subject to numerous assumptions, risks, and uncertainties. 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.

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: (1) worsening of credit quality performance due to a number of factors such as the underlying value of collateral that could prove less valuable than otherwise assumed and assumed cash flows may be worse than expected; (2) 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; (3) movements in interest rates; (4) competitive pressures on product pricing and services; (5) success, impact, and timing of our business strategies, including market acceptance of any new products or services implementing our “Fair Play” banking philosophy; (6) changes in accounting policies and principles and the accuracy of our assumptions and estimates used to prepare our financial statements; (7) extended disruption of vital infrastructure; (8) the final outcome of significant litigation; (9) 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 (10) the outcome of judicial and regulatory decisions regarding practices in the residential mortgage industry, including among other things the processes followed for foreclosing residential mortgages. Additional factors that could cause results to differ materially from those described above can be found in Huntington’s 2014 Annual Report on Form 10-K, and documents subsequently filed by Huntington with the Securities and Exchange Commission. All forward-looking statements included in this document are based on information available at the time of the release. Huntington assumes no obligation to update any forward-looking statement.

Basis of Presentation

Use of Non-GAAP Financial Measures

This document may contain 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 fourth quarter earnings release, conference call slides, or the Form 8-K related to this document, all of which can be found on Huntington’s website at www.huntington-ir.com.

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 2014 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.

 

12


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 a 35% 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.

About Huntington

Huntington Bancshares Incorporated is a $69 billion asset regional bank holding company headquartered in Columbus, Ohio, with a network of more than 700 branches and almost 1,500 ATMs across six 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.

###

 

13



Exhibit 99.2

HUNTINGTON BANCSHARES INCORPORATED

Quarterly Financial Supplement

June 2015

Table of Contents

 

Quarterly Key Statistics

     1   

Year to Date Key Statistics

     2   

Consolidated Balance Sheets

     3   

Loans and Leases Composition

     4   

Deposits Composition

     5   

Consolidated Quarterly Average Balance Sheets

     6   

Consolidated Quarterly Net Interest Margin - Interest Income / Expense

     7   

Consolidated Quarterly Net Interest Margin - Yield

     8   

Selected Quarterly Income Statement Data

     9   

Quarterly Mortgage Banking Income

     10   

Quarterly Credit Reserves Analysis

     11   

Quarterly Net Charge-Off Analysis

     12   

Quarterly Nonaccrual Loans and Leases (NALs) and Nonperforming Assets (NPAs)

     13   

Quarterly Accruing Past Due Loans and Leases and Accruing Troubled Debt Restructured Loans

     14   

Quarterly Capital Under Current Regulatory Standards (Basel III) and Other Capital Data

     15   

Quarterly Common Stock Summary, Non-Regulatory Capital, and Other Data

     16   

Consolidated Year to Date Average Balance Sheets

     17   

Consolidated Year to Date Net Interest Margin - Interest Income / Expense

     18   

Consolidated Year to Date Net Interest Margin - Yield

     19   

Selected Year to Date Income Statement Data

     20   

Year to Date Mortgage Banking Income

     21   

Year to Date Credit Reserves Analysis

     22   

Year to Date Net Charge-Off Analysis

     23   

Year to Date Nonaccrual Loans and Leases (NALs) and Nonperforming Assets (NPAs)

     24   

Year to Date Accruing Past Due Loans and Leases and Accruing and Nonaccruing Troubled Debt Restructured Loans

     25   


Notes:

The preparation of financial statement data in conformity with accounting principles generally accepted in the United States (GAAP) requires management to make estimates and assumptions that affect amounts reported. Actual results could differ from those estimates. Certain prior period amounts have been reclassified to conform to the current period’s presentation.

Non-Regulatory Capital Ratios

In addition to capital ratios defined by banking regulators, the Company considers various other measures when evaluating capital utilization and adequacy, including:

 

    Tangible common equity to tangible assets,

 

    Tier 1 common equity to risk-weighted assets using Basel I definitions (through 4Q 2014), and

 

    Tangible common equity to risk-weighted assets using Basel I definition (through 4Q 2014) and Basel III definition (beginning 1Q 2015).

These non-regulatory capital ratios are viewed by management as useful additional methods of reflecting the level of capital available to withstand unexpected market conditions. Additionally, presentation of these ratios allows readers to compare the Company’s capitalization to other financial services companies. These ratios differ from capital ratios defined by banking regulators principally in that the numerator excludes preferred securities, the nature and extent of which varies among different financial services companies. These ratios are not defined in GAAP or federal banking regulations. As a result, these non-regulatory capital ratios disclosed by the Company may be considered non-GAAP financial measures.

Because there are no standardized definitions for these non-regulatory capital ratios, the Company’s calculation methods may differ from those used by other financial services companies. Also, there may be limits in the usefulness of these measures to investors. As a result, the Company encourages readers to consider the consolidated financial statements and other financial information contained in the related press release in their entirety, and not to rely on any single financial measure.


Huntington Bancshares Incorporated

Quarterly Key Statistics(1)

(Unaudited)

 

     2015     2014             Percent Changes vs.  

(dollar amounts in thousands, except per share amounts)

   Second     First     Second             1Q15     2Q14  

Net interest income

   $ 490,686      $ 467,685      $ 460,048               5     7

Provision for credit losses

     20,419        20,591        29,385               (1     (31

Noninterest income

     281,773        231,623        250,067               22        13   

Noninterest expense

     491,777        458,857        458,636               7        7   
  

 

 

   

 

 

   

 

 

          

 

 

   

 

 

 

Income before income taxes

     260,263        219,860        222,094               18        17   

Provision for income taxes

     64,057        54,006        57,475               19        11   
  

 

 

   

 

 

   

 

 

          

 

 

   

 

 

 

Net income

   $ 196,206      $ 165,854      $ 164,619               18     19
  

 

 

   

 

 

   

 

 

          

 

 

   

 

 

 

Dividends on preferred shares

     7,968        7,965        7,963               —          —     
  

 

 

   

 

 

   

 

 

          

 

 

   

 

 

 

Net income applicable to common shares

   $ 188,238      $ 157,889      $ 156,656               19     20
  

 

 

   

 

 

   

 

 

          

 

 

   

 

 

 

Net income per common share - diluted

   $ 0.23      $ 0.19      $ 0.19               21     21

Cash dividends declared per common share

     0.06        0.06        0.05               —          20   

Book value per common share at end of period

     7.61        7.51        7.17               1        6   

Tangible book value per common share at end of period

     6.71        6.62        6.48               1        4   
 

Average common shares - basic

     806,891        809,778        821,546               —          (2

Average common shares - diluted

     820,238        823,809        834,687               —          (2
 

Return on average assets

     1.16     1.02     1.07           

Return on average common shareholders’ equity

     12.3        10.6        10.8              

Return on average tangible common shareholders’ equity(2)

     14.4        12.2        12.4              

Net interest margin(3)

     3.20        3.15        3.28              

Efficiency ratio(4)

     61.7        63.5        62.7              

Noninterest Income/Total Revenue

     36.1        32.8        34.9              

Effective tax rate

     24.6        24.6        25.9              
 

Average loans and leases

   $ 47,899,416      $ 47,780,321      $ 45,023,793               —          6   

Average loans and leases - linked quarter annualized growth rate

     1.0     5.8     14.7           

Average earning assets

   $ 62,568,617      $ 61,192,878      $ 57,076,706               2        10   

Average total assets

     67,882,962        66,251,089        61,830,210               3        10   

Average core deposits(5)

     49,191,637        48,777,445        45,611,033               1        8   

Average core deposits - linked quarter annualized growth rate

     3.4     9.6     3.7           

Average shareholders’ equity

   $ 6,516,762      $ 6,416,066      $ 6,227,809               2        5   
 

Total assets at end of period

     68,845,648        68,002,661        63,797,113               1        8   

Total shareholders’ equity at end of period

     6,496,258        6,461,954        6,240,791               1        4   
 

Net charge-offs (NCOs)

     25,375        24,432        28,643               4        (11

NCOs as a % of average loans and leases

     0.21     0.20     0.25           

Nonaccrual loans and leases (NALs)

   $ 364,339      $ 364,413      $ 324,957               —          12   

NAL ratio

     0.75     0.76     0.71           

Nonperforming assets (NPAs)(6)

   $ 396,011      $ 400,804      $ 362,092               (1     9   

NPA ratio(6)

     0.81     0.84     0.79            (4     3   

Allowance for loan and lease losses (ALLL) as a % of total loans and leases at the end of period

     1.23        1.27        1.38              

ALLL plus allowance for unfunded loan commitments and letters of credit (ACL) as a % of total loans and leases at the end of period

     1.34        1.38        1.50              

ACL as a % of NALs

     180        181        213              

ACL as a % of NPAs

     165        165        191              

Tier 1 leverage ratio(7)(9)

     8.98        9.04        10.01              

Common equity tier 1 risk-based capital ratio

     9.65        9.51        N.A.              

Tier 1 common risk-based capital ratio(7)(9)

     N.A.        N.A.        10.26              

Tier 1 risk-based capital ratio(7)(9)

     10.41        10.22        11.56              

Total risk-based capital ratio(7)(9)

     12.62        12.48        13.67              

Tangible common equity / tangible asset ratio(8)

    
7.91
  
    7.95        8.38              

See Notes to the Quarterly Key Statistics.

 

1


Huntington Bancshares Incorporated

Year To Date Key Statistics(1)

(Unaudited)

 

     Six Months Ended June 30,             Change  

(dollar amounts in thousands, except per share amounts)

   2015     2014             Amount     Percent  

Net interest income

   $ 958,372      $ 897,554             $ 60,818        7

Provision for credit losses

     41,010        54,015               (13,005     (24

Noninterest income

     513,396        498,552               14,844        3   

Noninterest expense

     950,634        918,757               31,877        3   
  

 

 

   

 

 

          

 

 

   

 

 

 

Income before income taxes

     480,124        423,334               56,790        13   

Provision for income taxes

     118,063        109,572               8,491        8   
  

 

 

   

 

 

          

 

 

   

 

 

 

Net Income

   $ 362,061      $ 313,762             $ 48,299        15
  

 

 

   

 

 

          

 

 

   

 

 

 

Dividends on preferred shares

     15,933        15,927               6        —     
  

 

 

   

 

 

          

 

 

   

 

 

 

Net income applicable to common shares

   $ 346,128      $ 297,835             $ 48,293        16
  

 

 

   

 

 

          

 

 

   

 

 

 

Net income per common share - diluted

   $ 0.42      $ 0.36             $ 0.06        17

Cash dividends declared per common share

     0.12        0.10               0.02        20   
 

Average common shares - basic

     808,335        825,603               (17,268     (2

Average common shares - diluted

     822,023        838,546               (16,523     (2
 

Return on average assets

     1.09     1.04           

Return on average common shareholders’ equity

     11.5        10.3              

Return on average tangible common shareholders’ equity(2)

     13.3        12.4              

Net interest margin(3)

     3.17        3.28              

Efficiency ratio(4)

     62.6        64.5              

Noninterest Income/Total Revenue

     34.5        35.4              

Effective tax rate

     24.6        25.9              
 

Average loans and leases

   $ 47,840,198      $ 44,227,995               3,612,203        8   

Average earning assets

     61,884,548        56,024,814               5,859,734        10   

Average total assets

     67,071,533        60,767,252               6,304,281        10   

Average core deposits(5)

     48,985,386        45,403,965               3,581,421        8   

Average shareholders’ equity

     6,466,692        6,205,474               261,218        4   
 

Net charge-offs (NCOs)

     49,807        71,629               (21,822     (30

NCOs as a % of average loans and leases

     0.21     0.32            (0.12     (36

See Notes to the Annual and Quarterly Key Statistics.

 

2


Key Statistics Footnotes

 

(1)  Comparisons for all presented periods are impacted by a number of factors. Refer to Significant Items.
(2)  Net income excluding expense for amortization of intangibles for the period divided by average tangible common shareholders’ equity. Average tangible common shareholders’ equity equals average total common shareholders’ equity less average intangible assets and goodwill. Expense for amortization of intangibles and average intangible assets are net of deferred tax liability, and calculated assuming a 35% tax rate.
(3)  On a fully-taxable equivalent (FTE) basis assuming a 35% tax rate.
(4)  Noninterest expense less amortization of intangibles and goodwill impairment divided by the sum of FTE net interest income and noninterest income excluding securities gains (losses).
(5)  Includes noninterest-bearing and interest-bearing demand deposits, money market deposits, savings and other domestic deposits, and core certificates of deposit.
(6)  NPAs include other real estate owned.
(7)  June 30, 2015, figures are estimated.
(8)  Tangible common equity (total common equity less goodwill and other intangible assets) divided by tangible assets (total assets less goodwill and other intangible assets). Other intangible assets are net of deferred tax liability, and calculated assuming a 35% tax rate.
(9)  On January 1, 2015, we became subject to the Basel III capital requirements and the standardized approach for calculating risk-weighted assets in accordance with subpart D of the final capital rule. Ratios prior to January 1, 2015 were not retrospectively updated and are presented on a Basel 1 basis.
(N.A.)  Not applicable. See footnote 9 above.


Huntington Bancshares Incorporated

Consolidated Balance Sheets

 

     2015     2014             Percent Changes vs.  

(dollar amounts in thousands, except number of shares)

   June 30,     December 31,     June 30,             4Q14     2Q14  
     (Unaudited)           (Unaudited)                      

Assets

                 

Cash and due from banks

   $ 1,379,969      $ 1,220,565      $ 1,218,453               13     13

Interest-bearing deposits in banks

     71,409        64,559        69,634               11        3   

Trading account securities

     59,146        42,191        50,541               40        17   

Loans held for sale

     548,054        416,327        317,862               32        72   

Available-for-sale and other securities

     10,254,871        9,384,670        8,491,037               9        21   

Held-to-maturity securities

     3,304,160        3,379,905        3,621,995               (2     (9

Loans and leases(1)

     48,752,301        47,655,726        46,079,775               2        6   

Allowance for loan and lease losses

     (599,542     (605,196     (635,101            (1     (6
  

 

 

   

 

 

   

 

 

          

 

 

   

 

 

 

Net loans and leases

     48,152,759        47,050,530        45,444,674               2        6   
  

 

 

   

 

 

   

 

 

          

 

 

   

 

 

 

Bank owned life insurance

     1,735,627        1,718,436        1,693,991               1        2   

Premises and equipment

     615,436        616,407        622,289               —          (1

Goodwill

     678,369        522,541        505,448               30        34   

Other intangible assets

     62,705        74,671        81,460               (16     (23

Accrued income and other assets

     1,983,143        1,807,208        1,679,729               10        18   
  

 

 

   

 

 

   

 

 

          

 

 

   

 

 

 

Total assets

   $ 68,845,648      $ 66,298,010      $ 63,797,113               4     8
  

 

 

   

 

 

   

 

 

          

 

 

   

 

 

 

Liabilities and shareholders’ equity

                 

Liabilities

                 

Deposits(2)

   $ 53,473,179      $ 51,732,151      $ 48,748,765               3     10

Short-term borrowings

     1,511,444        2,397,101        3,627,409               (37     (58

Long-term debt

     5,854,584        4,335,962        4,094,352               35        43   

Accrued expenses and other liabilities

     1,510,183        1,504,626        1,085,796               —          39   
  

 

 

   

 

 

   

 

 

          

 

 

   

 

 

 

Total liabilities

     62,349,390        59,969,840        57,556,322               4        8   
  

 

 

   

 

 

   

 

 

          

 

 

   

 

 

 

Shareholder’s equity

                 
 

Preferred stock - authorized 6,617,808 shares-

                 

Series A, 8.50% fixed rate, non-cumulative perpetual convertible preferred stock, par value of $0.01, and liquidation value per share of $1,000

     362,507        362,507        362,507               —          —     
 

Series B, floating rate, non-voting, non-cumulative perpetual preferred stock, par value of $0.01, and liquidation value per share of $1,000

     23,785        23,785        23,785               —          —     
 

Common stock - Par value of $0.01

     8,050        8,131        8,182               (1     (2

Capital surplus

     7,109,493        7,221,745        7,279,244               (2     (2

Less treasury shares, at cost

     (17,043     (13,382     (9,071            27        88   

Accumulated other comprehensive loss

     (185,650     (222,292     (159,727            (16     16   

Retained (deficit) earnings

     (804,884     (1,052,324     (1,264,129            (24     (36
  

 

 

   

 

 

   

 

 

          

 

 

   

 

 

 

Total shareholders’ equity

     6,496,258        6,328,170        6,240,791               3        4   
  

 

 

   

 

 

   

 

 

          

 

 

   

 

 

 

Total liabilities and shareholders’ equity

   $ 68,845,648      $ 66,298,010      $ 63,797,113               4     8
  

 

 

   

 

 

   

 

 

          

 

 

   

 

 

 

Common shares authorized (par value of $0.01)

     1,500,000,000        1,500,000,000        1,500,000,000              

Common shares issued

     805,035,698        813,136,321        818,248,450              

Common shares outstanding

     803,065,757        811,454,676        817,002,296              

Treasury shares outstanding

     1,969,941        1,681,645        1,246,154              

Preferred shares issued

     1,967,071        1,967,071        1,967,071              

Preferred shares outstanding

     398,007        398,007        398,007              

 

(1)  See page 4 for detail of loans and leases.
(2)  See page 5 for detail of deposits.

 

3


Huntington Bancshares Incorporated

Loans and Leases Composition

(Unaudited)

 

     2015     2014  

(dollar amounts in millions)

   June 30,     March 31,     December 31,     September 30,     June 30,  

Ending Balances by Type:

                         

Commercial:(1)

                         

Commercial and industrial

   $ 20,003         41   $ 20,109         42   $ 19,033         40   $ 18,791         40   $ 18,899         41

Commercial real estate:

                         

Construction

     1,021         2        910         2        875         2        850         2        757         2   

Commercial

     4,192         9        4,157         9        4,322         9        4,141         9        4,233         9   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Commercial real estate

     5,213         11        5,067         11        5,197         11        4,991         11        4,990         11   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total commercial

     25,216         52        25,176         53        24,230         51        23,782         51        23,889         52   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Consumer:

                         

Automobile

     8,549         18        7,803         16        8,690         18        8,322         18        7,686         17   

Home equity

     8,526         17        8,492         18        8,491         18        8,436         18        8,405         18   

Residential mortgage

     5,987         12        5,795         12        5,831         12        5,788         12        5,707         12   

Other consumer

     474         1        430         1        414         1        395         1        393         1   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total consumer

     23,536         48        22,520         47        23,426         49        22,941         49        22,191         48   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total loans and leases

   $ 48,752         100   $ 47,696         100   $ 47,656         100   $ 46,723         100   $ 46,080         100
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Ending Balances by Business Segment:

                         

Retail and Business Banking

   $ 13,673         28   $ 13,515         28   $ 13,199         28   $ 13,136         28   $ 13,096         29

Commercial Banking

     12,980         27        13,066         28        12,362         26        11,919         26        11,846         26   

AFCRE

     15,609         32        14,812         31        15,640         33        15,229         33        14,762         32   

RBHPCG

     2,968         6        2,896         6        2,963         6        2,938         6        2,883         6   

Home Lending

     3,405         7        3,336         7        3,391         7        3,372         7        3,366         7   

Treasury / Other

     117         —          71         —          101         —          129         —          127         —     
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total loans and leases

   $ 48,752         100   $ 47,696         100   $ 47,656         100   $ 46,723         100   $ 46,080         100
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 
     2015     2014  
     Second     First     Fourth     Third     Second  

Average Balances by Business Segment:

                         

Retail and Business Banking

   $ 13,646         29   $ 13,523         28   $ 13,168         28   $ 13,100         28   $ 13,040         29

Commercial Banking

     12,808         27        12,140         26        12,389         27        11,702         25        11,292         25   

AFCRE

     15,071         31        15,779         33        15,160         32        14,926         32        14,460         32   

RBHPCG

     2,930         6        2,890         6        2,949         6        2,901         7        2,879         7   

Home Lending

     3,339         7        3,360         7        3,327         7        3,377         8        3,289         7   

Treasury / Other

     105         —          88         —          99         —          107         —          63         —     
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total loans and leases

   $ 47,899         100   $ 47,780         100   $ 47,092         100   $ 46,113         100   $ 45,023         100
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

 

(1)  As defined by regulatory guidance, there were no commercial loans outstanding that would be considered a concentration of lending to a particular industry or group of industries.

 

4


Huntington Bancshares Incorporated

Deposits Composition

(Unaudited)

 

     2015     2014  

(dollar amounts in millions)

   June 30,     March 31,     December 31,     September 30,     June 30,  

Ending Balances by Type:

                         

Demand deposits - noninterest-bearing

   $ 17,011         32   $ 15,960         30   $ 15,393         30   $ 14,754         29   $ 14,151         29

Demand deposits - interest-bearing

     6,627         12        6,537         13        6,248         12        6,052         12        5,921         12   

Money market deposits

     18,580         35        18,933         36        18,986         37        18,174         36        17,563         36   

Savings and other domestic deposits

     5,240         10        5,288         10        5,048         10        5,038         10        5,036         10   

Core certificates of deposit

     2,580         5        2,709         5        2,936         5        3,150         6        3,272         7   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total core deposits

     50,038         94        49,427         94        48,611         94        47,168         93        45,943         94   

Other domestic deposits of $250,000 or more

     178         —          189         —          198         —          202         1        241         —     

Brokered deposits and negotiable CDs

     2,705         5        2,682         5        2,522         5        2,357         5        2,198         5   

Deposits in foreign offices

     552         1        535         1        401         1        402         1        367         1   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total deposits

   $ 53,473         100   $ 52,833         100   $ 51,732         100   $ 50,129         100   $ 48,749         100
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total core deposits:

                         

Commercial

   $ 24,103         48   $ 23,061         47   $ 22,725         47   $ 21,753         46   $ 20,629         45

Consumer

     25,935         52        26,366         53        25,886         53        25,415         54        25,314         55   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total core deposits

   $ 50,038         100   $ 49,427         100   $ 48,611         100   $ 47,168         100   $ 45,943         100
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Ending Balances by Business Segment:

                         

Retail and Business Banking

   $ 29,983         56   $ 30,150         57   $ 29,350         57   $ 29,265         58   $ 28,836         59

Commercial Banking

     10,908         20        11,195         21        11,185         21        10,791         22        9,793         20   

AFCRE

     1,519         3        1,443         3        1,378         3        1,362         3        1,457         3   

RBHPCG

     7,265         14        6,707         13        6,728         13        5,898         11        6,124         12   

Home Lending

     340         1        350         —          327         1        269         1        284         1   

Treasury / Other(1)

     3,458         6        2,988         6        2,764         5        2,544         5        2,255         5   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total deposits

   $ 53,473         100   $ 52,833         100   $ 51,732         100   $ 50,129         100   $ 48,749         100
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 
     2015     2014  
     Second     First     Fourth     Third     Second  

Average Balances by Business Segment:

                         

Retail and Business Banking

   $ 30,126         57   $ 29,727         57   $ 29,481         58   $ 28,865         59   $ 29,108         60

Commercial Banking

     10,848         20        11,140         21        10,632         21        10,248         21        9,780         20   

AFCRE

     1,487         3        1,375         3        1,315         3        1,285         2        1,183         3   

RBHPCG

     6,780         13        6,736         13        6,389         12        5,958         12        5,859         12   

Home Lending

     388         1        321         1        323         1        294         1        296         1   

Treasury / Other(1)

     3,010         6        2,830         5        2,612         5        2,328         5        2,032         4   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total deposits

   $ 52,639         100   $ 52,129         100   $ 50,752         100   $ 48,978         100   $ 48,258         100
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

 

(1)  Comprised primarily of national market deposits.

 

5


Huntington Bancshares Incorporated

Consolidated Quarterly Average Balance Sheets

(Unaudited)

 

     Average Balances                      
     2015     2014             Percent Changes vs.  

(dollar amounts in millions)

   Second     First     Fourth     Third     Second             1Q15     2Q14  

Assets

                     

Interest-bearing deposits in banks

   $ 89      $ 94      $ 85      $ 82      $ 91               (5 )%      (2 )% 

Loans held for sale

     1,272        381        374        351        288               234        342   

Securities:

                     

Available-for-sale and other securities:

                     

Taxable

     7,916        7,664        7,291        6,935        6,662               3        19   

Tax-exempt

     2,028        1,874        1,684        1,620        1,290               8        57   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

          

 

 

   

 

 

 

Total available-for-sale and other securities

     9,944        9,538        8,975        8,555        7,952               4        25   

Trading account securities

     41        53        49        50        45               (23     (9

Held-to-maturity securities - taxable

     3,324        3,347        3,435        3,556        3,677               (1     (10
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

          

 

 

   

 

 

 

Total securities

     13,309        12,938        12,459        12,161        11,674               3        14   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

          

 

 

   

 

 

 

Loans and leases:(1)

                     

Commercial:

                     

Commercial and industrial

     19,819        19,116        18,880        18,581        18,262               4        9   

Commercial real estate:

                     

Construction

     970        887        822        775        702               9        38   

Commercial

     4,214        4,275        4,262        4,188        4,345               (1     (3
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

          

 

 

   

 

 

 

Commercial real estate

     5,184        5,162        5,084        4,963        5,047               —          3   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

          

 

 

   

 

 

 

Total commercial

     25,003        24,278        23,964        23,544        23,309               3        7   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

          

 

 

   

 

 

 

Consumer:

                     

Automobile

     8,083        8,783        8,512        8,012        7,349               (8     10   

Home equity

     8,503        8,484        8,452        8,412        8,376               —          2   

Residential mortgage

     5,859        5,810        5,751        5,747        5,608               1        4   

Other consumer

     451        425        413        398        382               6        18   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

          

 

 

   

 

 

 

Total consumer

     22,896        23,502        23,128        22,569        21,715               (3     5   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

          

 

 

   

 

 

 

Total loans and leases

     47,899        47,780        47,092        46,113        45,024               —          6   

Allowance for loan and lease losses

     (608     (612     (631     (633     (642            (1     (5
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

          

 

 

   

 

 

 

Net loans and leases

     47,291        47,168        46,461        45,480        44,382               —          7   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

          

 

 

   

 

 

 

Total earning assets

     62,569        61,193        60,010        58,707        57,077               2        10   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

          

 

 

   

 

 

 

Cash and due from banks

     926        935        929        887        872               (1     6   

Intangible assets

     745        593        602        583        591               26        26   

All other assets

     4,251        4,142        4,022        3,929        3,932               3        8   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

          

 

 

   

 

 

 

Total assets

   $ 67,883      $ 66,251      $ 64,932      $ 63,473      $ 61,830               2     10
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

          

 

 

   

 

 

 

Liabilities and shareholders’ equity

                     

Deposits:

                     

Demand deposits - noninterest-bearing

   $ 15,893      $ 15,253      $ 15,179      $ 14,090      $ 13,466               4     18

Demand deposits - interest-bearing

     6,584        6,173        5,948        5,913        5,945               7        11   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

          

 

 

   

 

 

 

Total demand deposits

     22,477        21,426        21,127        20,003        19,411               5        16   

Money market deposits

     18,803        19,368        18,401        17,929        17,680               (3     6   

Savings and other domestic deposits

     5,273        5,169        5,052        5,020        5,086               2        4   

Core certificates of deposit

     2,639        2,814        3,058        3,167        3,434               (6     (23
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

          

 

 

   

 

 

 

Total core deposits

     49,192        48,777        47,638        46,119        45,611               1        8   

Other domestic deposits of $250,000 or more

     184        195        201        223        262               (6     (30

Brokered deposits and negotiable CDs

     2,701        2,600        2,434        2,262        2,070               4        30   

Deposits in foreign offices

     562        557        479        374        315               1        78   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

          

 

 

   

 

 

 

Total deposits

     52,639        52,129        50,752        48,978        48,258               1        9   

Short-term borrowings

     2,153        1,882        2,683        3,193        2,788               14        (23

Long-term debt

     5,144        4,374        3,956        3,967        3,523               18        46   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

          

 

 

   

 

 

 

Total interest-bearing liabilities

     44,043        43,132        42,212        42,048        41,103               2        7   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

          

 

 

   

 

 

 

All other liabilities

     1,430        1,450        1,167        1,043        1,033               (1     38   

Shareholders’ equity

     6,517        6,416        6,374        6,292        6,228               2        5   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

          

 

 

   

 

 

 

Total liabilities and shareholders’ equity

   $ 67,883      $ 66,251      $ 64,932      $ 63,473      $ 61,830               2     10
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

          

 

 

   

 

 

 

 

(1)  Includes nonaccrual loans

 

6


Huntington Bancshares Incorporated

Consolidated Quarterly Net Interest Margin - Interest Income / Expense(1)

(Unaudited)

 

     Interest Income / Expense  
     2015      2014  

(dollar amounts in thousands)

   Second      First      Fourth      Third      Second  

Assets

              

Interest-bearing deposits in banks

   $ 19       $ 41       $ 50       $ 39       $ 8   

Loans held for sale

     10,546         3,520         3,566         3,487         3,072   

Securities:

              

Available-for-sale and other securities:

              

Taxable

     51,525         47,856         47,531         43,066         42,027   

Tax-exempt

     15,875         14,288         13,718         12,245         10,161   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total available-for-sale and other securities

     67,400         62,144         61,249         55,311         52,188   

Trading account securities

     104         155         128         107         79   

Held-to-maturity securities - taxable

     20,741         20,667         21,013         21,777         22,614   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total securities

     88,245         82,966         82,390         77,195         74,881   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Loans and leases:

              

Commercial:

              

Commercial and industrial

     180,992         158,917         161,530         163,765         161,173   

Commercial real estate:

              

Construction

     8,825         8,462         9,034         8,673         7,599   

Commercial

     36,329         38,197         37,789         38,542         45,690   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Commercial real estate

     45,154         46,659         46,823         47,215         53,289   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total commercial

     226,146         205,576         208,353         210,980         214,462   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Consumer:

              

Automobile

     64,575         70,140         71,449         68,786         63,543   

Home equity

     84,215         84,382         86,176         86,372         86,099   

Residential mortgage

     54,496         54,432         55,186         54,352         52,896   

Other consumer

     9,515         8,599         7,977         7,355         6,998   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total consumer

     212,801         217,553         220,788         216,865         209,536   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total loans and leases

     438,947         423,129         429,141         427,845         423,998   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total earning assets

   $ 537,757       $ 509,656       $ 515,147       $ 508,566       $ 501,959   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Liabilities

              

Deposits:

              

Demand deposits - noninterest-bearing

   $ —         $ —         $ —         $ —         $ —     

Demand deposits - interest-bearing

     984         693         588         601         571   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total demand deposits

     984         693         588         601         571   

Money market deposits

     10,435         10,226         10,261         10,407         10,548   

Savings and other domestic deposits

     1,775         1,914         2,091         2,050         2,179   

Core certificates of deposit

     5,161         5,282         5,764         5,909         6,938   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total core deposits

     18,355         18,115         18,704         18,967         20,236   

Other domestic deposits of $250,000 or more

     204         204         220         246         281   

Brokered deposits and negotiable CDs

     1,121         1,069         1,128         1,126         1,228   

Deposits in foreign offices

     185         179         156         121         102   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total deposits

     19,865         19,567         20,208         20,460         21,847   

Short-term borrowings

     731         542         820         878         720   

Long-term debt

     18,513         14,302         13,345         13,387         12,707   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total interest bearing liabilities

     39,109         34,411         34,373         34,725         35,274   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net interest income

   $ 498,648       $ 475,245       $ 480,774       $ 473,841       $ 466,685   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)  Fully-taxable equivalent (FTE) income and expense calculated assuming a 35% tax rate. See page 9 for the FTE adjustment.

 

7


Huntington Bancshares Incorporated

Consolidated Quarterly Net Interest Margin - Yield

(Unaudited)

 

     Average Rates(2)  
     2015     2014  

Fully-taxable equivalent basis(1)

   Second     First     Fourth     Third     Second  

Assets

          

Interest-bearing deposits in banks

     0.08     0.18     0.23     0.19     0.04

Loans held for sale

     3.32        3.69        3.82        3.98        4.27   

Securities:

          

Available-for-sale and other securities:

          

Taxable

     2.60        2.50        2.61        2.48        2.52   

Tax-exempt

     3.13        3.05        3.26        3.02        3.15   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total available-for-sale and other securities

     2.71        2.61        2.73        2.59        2.63   

Trading account securities

     1.00        1.17        1.05        0.85        0.70   

Held-to-maturity securities - taxable

     2.50        2.47        2.45        2.45        2.46   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total securities

     2.65        2.57        2.65        2.54        2.57   

Loans and leases:(2)(3)

          

Commercial:

          

Commercial and industrial

     3.61        3.33        3.35        3.45        3.49   

Commercial real estate:

          

Construction

     3.60        3.81        4.30        4.38        4.29   

Commercial

     3.41        3.57        3.47        3.60        4.16   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Commercial real estate

     3.45        3.62        3.60        3.72        4.17   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total commercial

     3.58        3.39        3.40        3.51        3.64   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Consumer:

          

Automobile

     3.20        3.24        3.33        3.41        3.47   

Home equity

     3.97        4.03        4.05        4.07        4.12   

Residential mortgage

     3.72        3.75        3.84        3.78        3.77   

Other consumer

     8.45        8.20        7.68        7.31        7.34   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total consumer

     3.73        3.74        3.80        3.82        3.87   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total loans and leases

     3.65        3.56        3.60        3.66        3.75   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total earning assets

     3.45     3.38     3.41     3.44     3.53
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities

          

Deposits:

          

Demand deposits - noninterest-bearing

     —       —       —       —       —  

Demand deposits - interest-bearing

     0.06        0.05        0.04        0.04        0.04   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total demand deposits

     0.02        0.01        0.01        0.01        0.01   

Money market deposits

     0.22        0.21        0.22        0.23        0.24   

Savings and other domestic deposits

     0.14        0.15        0.16        0.16        0.17   

Core certificates of deposit

     0.78        0.76        0.75        0.74        0.81   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total core deposits

     0.22        0.22        0.23        0.23        0.25   

Other domestic deposits of $250,000 or more

     0.44        0.42        0.43        0.44        0.43   

Brokered deposits and negotiable CDs

     0.17        0.17        0.18        0.20        0.24   

Deposits in foreign offices

     0.13        0.13        0.13        0.13        0.13   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total deposits

     0.22        0.22        0.23        0.23        0.25   

Short-term borrowings

     0.14        0.12        0.12        0.11        0.10   

Long-term debt

     1.44        1.31        1.35        1.35        1.44   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total interest-bearing liabilities

     0.36        0.32        0.32        0.33        0.34   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest rate spread

     3.09        3.06        3.09        3.11        3.19   

Impact of noninterest-bearing funds on margin

     0.11        0.09        0.09        0.09        0.09   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest margin

     3.20     3.15     3.18     3.20     3.28
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Commercial Loan Derivative Impact

(Unaudited)

 

     Average Rates (2)  
     2015     2014  

Fully-taxable equivalent basis(1)

   Second     First     Fourth     Third     Second  

Commercial loans(2)(3)

     3.38     3.18     3.20     3.30     3.42

Impact of commercial loan derivatives

     0.20        0.21        0.20        0.20        0.22   

Total commercial - as reported

     3.58     3.39     3.40     3.51     3.64
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average 30 day LIBOR

     0.18     0.17     0.16     0.15     0.15
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)  Fully-taxable equivalent (FTE) yields are calculated assuming a 35% tax rate. See page 9 for the FTE adjustment.
(2)  Loan, lease, and deposit average rates include impact of applicable derivatives, non-deferrable fees, and amortized fees.
(3)  Includes the impact of nonaccrual loans.

 

8


Huntington Bancshares Incorporated

Selected Quarterly Income Statement Data(1)

(Unaudited)

 

     2015      2014  

(dollar amounts in thousands, except per share amounts)

   Second      First      Fourth     Third      Second  

Interest income

   $ 529,795       $ 502,096       $ 507,625      $ 501,060       $ 495,322   

Interest expense

     39,109         34,411         34,373        34,725         35,274   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Net interest income

     490,686         467,685         473,252        466,335         460,048   

Provision for credit losses

     20,419         20,591         2,494        24,480         29,385   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Net interest income after provision for credit losses

     470,267         447,094         470,758        441,855         430,663   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Service charges on deposit accounts

     70,118         62,220         67,408        69,118         72,633   

Trust services

     26,550         29,039         28,781        28,045         29,581   

Electronic banking

     30,259         27,398         27,993        27,275         26,491   

Mortgage banking income

     38,518         22,961         14,030        25,051         22,717   

Brokerage income

     15,184         15,500         16,050        17,155         17,905   

Insurance income

     17,637         15,895         16,252        16,729         15,996   

Bank owned life insurance income

     13,215         13,025         14,988        14,888         13,865   

Capital markets fees

     13,192         13,905         13,791        10,246         10,500   

Gain on sale of loans

     12,453         4,589         5,408        8,199         3,914   

Securities gains (losses)

     82         —           (104     198         490   

Other income

     44,565         27,091         28,681        30,445         35,975   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Total noninterest income

     281,773         231,623         233,278        247,349         250,067   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Personnel costs

     282,135         264,916         263,289        275,409         260,600   

Outside data processing and other services

     58,508         50,535         53,685        53,073         54,338   

Net occupancy

     28,861         31,020         31,565        34,405         28,673   

Equipment

     31,694         30,249         31,981        30,183         28,749   

Professional services

     12,593         12,727         15,665        13,763         17,896   

Marketing

     15,024         12,975         12,466        12,576         14,832   

Deposit and other insurance expense

     11,787         10,167         13,099        11,628         10,599   

Amortization of intangibles

     9,960         10,206         10,653        9,813         9,520   

Other expense

     41,215         36,062         50,868        39,468         33,429   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Total noninterest expense

     491,777         458,857         483,271        480,318         458,636   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Income before income taxes

     260,263         219,860         220,765        208,886         222,094   

Provision for income taxes

     64,057         54,006         57,151        53,870         57,475   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Net income

   $ 196,206       $ 165,854       $ 163,614      $ 155,016       $ 164,619   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Dividends on preferred shares

     7,968         7,965         7,963        7,964         7,963   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Net income applicable to common shares

   $ 188,238       $ 157,889       $ 155,651      $ 147,052       $ 156,656   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Average common shares - basic

     806,891         809,778         811,967        816,497         821,546   

Average common shares - diluted

     820,238         823,809         825,338        829,623         834,687   

Per common share

             

Net income - basic

   $ 0.23       $ 0.19       $ 0.19      $ 0.18       $ 0.19   

Net income - diluted

     0.23         0.19         0.19        0.18         0.19   

Cash dividends declared

     0.06         0.06         0.06        0.05         0.05   

Revenue - fully-taxable equivalent (FTE)

             

Net interest income

   $ 490,686       $ 467,685       $ 473,252      $ 466,335       $ 460,048   

FTE adjustment

     7,962         7,560         7,522        7,506         6,637   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Net interest income(2)

     498,648         475,245         480,774        473,841         466,685   

Noninterest income

     281,773         231,623         233,278        247,349         250,067   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Total revenue(2)

   $ 780,421       $ 706,868       $ 714,052      $ 721,190       $ 716,752   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

 

(1)  Comparisons for presented periods are impacted by a number of factors. Refer to Significant Items.
(2)  On a fully-taxable equivalent (FTE) basis assuming a 35% tax rate.

 

9


Huntington Bancshares Incorporated

Quarterly Mortgage Banking Income

(Unaudited)

 

    2015     2014             Percent Changes vs.  

(dollar amounts in thousands, except as noted)

  Second     First     Fourth     Third     Second             1Q15     2Q14  

Mortgage banking income

                    

Origination and secondary marketing

  $ 26,350      $ 20,032      $ 12,940      $ 15,546      $ 14,289               32     84

Servicing fees

    10,677        10,842        8,004        10,786        10,873               (2     (2

Amortization of capitalized servicing

    (6,965     (6,979     (6,050     (6,119     (5,951            —          17   

Other mortgage banking income

    2,467        3,549        2,912        4,075        4,212               (30     (41
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

          

 

 

   

 

 

 

Subtotal

    32,529        27,444        17,806        24,288        23,423               19        39   

MSR valuation adjustment(1)

    14,525        (9,164     (7,080     989        (3,046            N.R.        N.R.   

Net trading gains (losses) related to MSR hedging

    (8,536     4,681        3,304        (226     2,340               N.R.        N.R.   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

          

 

 

   

 

 

 

Total mortgage banking income

  $ 38,518      $ 22,961      $ 14,030      $ 25,051      $ 22,717               68     70
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

          

 

 

   

 

 

 

Mortgage originations (in millions)

  $ 1,454      $ 980      $ 922      $ 997      $ 982               48     48

Capitalized mortgage servicing rights(2)

    163,808        145,909        155,598        161,900        159,860               12        2   

Total mortgages serviced for others (in millions)(2)

    15,722        15,569        15,637        15,593        15,560               1        1   

MSR % of investor servicing portfolio(2)

    1.04     0.94     1.00     1.04     1.03            11        1   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

          

 

 

   

 

 

 

Net impact of MSR hedging

                    

MSR valuation adjustment(1)

  $ 14,525      $ (9,164   $ (7,080   $ 989      $ (3,046            N.R.     N.R.

Net trading gains (losses) related to MSR hedging

    (8,536     4,681        3,304        (226     2,340               N.R.        N.R.   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

          

 

 

   

 

 

 

Net gain (loss) of MSR hedging

  $ 5,989      $ (4,483   $ (3,776   $ 763      $ (706            N.R.     N.R.
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

        

 

 

   

 

 

 

 

N.R. - Not relevant.
(1)  The change in fair value for the period represents the MSR valuation adjustment, net of amortization of capitalized servicing.
(2)  At period end.

 

10


Huntington Bancshares Incorporated

Quarterly Credit Reserves Analysis

(Unaudited)

 

     2015     2014  

(dollar amounts in thousands)

   Second     First     Fourth     Third     Second  

Allowance for loan and lease losses, beginning of period

   $ 605,126      $ 605,196      $ 631,036      $ 635,101      $ 631,918   

Loan and lease losses

     (46,970     (55,075     (56,252     (58,511     (58,827

Recoveries of loans previously charged off

     21,595        30,643        33,277        28,488        30,184   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loan and lease losses

     (25,375     (24,432     (22,975     (30,023     (28,643
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Provision for loan and lease losses

     19,790        26,655        (2,863     25,958        31,826   

Allowance of assets sold or transferred to loans held for sale

     1        (2,293     (2     —          —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Allowance for loan and lease losses, end of period

   $ 599,542      $ 605,126      $ 605,196      $ 631,036      $ 635,101   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Allowance for unfunded loan commitments and letters of credit, beginning of period

   $ 54,742      $ 60,806      $ 55,449      $ 56,927      $ 59,368   

Provision for (reduction in) unfunded loan commitments and letters of credit losses

     629        (6,064     5,357        (1,478     (2,441
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Allowance for unfunded loan commitments and letters of credit, end of period

   $ 55,371      $ 54,742      $ 60,806      $ 55,449      $ 56,927   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total allowance for credit losses, end of period

   $ 654,913      $ 659,868      $ 666,002      $ 686,485      $ 692,028   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Allowance for loan and lease losses (ALLL) as % of:

          

Total loans and leases

     1.23     1.27     1.27     1.35     1.38

Nonaccrual loans and leases (NALs)

     165        166        202        194        195   

Nonperforming assets (NPAs)

     151        151        179        173        175   

Total allowance for credit losses (ACL) as % of:

          

Total loans and leases

     1.34     1.38     1.40     1.47     1.50

Nonaccrual loans and leases

     180        181        222        211        213   

Nonperforming assets

     165        165        197        188        191   

 

11


Huntington Bancshares Incorporated

Quarterly Net Charge-Off Analysis

(Unaudited)

 

     2015     2014  

(dollar amounts in thousands)

   Second     First     Fourth     Third     Second  

Net charge-offs by loan and lease type:

          

Commercial:

          

Commercial and industrial

   $ 4,411      $ 11,403      $ 333      $ 12,587      $ 10,597   

Commercial real estate:

          

Construction

     164        (383     (1,747     2,171        (171

Commercial

     5,361        (3,629     1,565        (8,178     (2,020
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Commercial real estate

     5,525        (4,012     (182     (6,007     (2,191
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total commercial

     9,936        7,391        151        6,580        8,406   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Consumer:

          

Automobile

     3,442        4,248        6,024        3,976        2,926   

Home equity

     4,650        4,625        6,321        6,448        8,491   

Residential mortgage

     2,142        2,816        3,059        5,428        3,406   

Other consumer

     5,205        5,352        7,420        7,591        5,414   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total consumer

     15,439        17,041        22,824        23,443        20,237   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total net charge-offs

   $ 25,375      $ 24,432      $ 22,975      $ 30,023      $ 28,643   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net charge-offs - annualized percentages:

          

Commercial:

          

Commercial and industrial

     0.09     0.24     0.01     0.27     0.23

Commercial real estate:

          

Construction

     0.07        (0.17     (0.85     1.12        (0.10

Commercial

     0.51        (0.34     0.15        (0.78     (0.19
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Commercial real estate

     0.43        (0.31     (0.01     (0.48     (0.17
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total commercial

     0.16        0.12        —          0.11        0.14   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Consumer:

          

Automobile

     0.17        0.19        0.28        0.20        0.16   

Home equity

     0.22        0.22        0.30        0.31        0.41   

Residential mortgage

     0.15        0.19        0.21        0.38        0.24   

Other consumer

     4.61        5.03        7.20        7.61        5.66   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total consumer

     0.27        0.29        0.39        0.42        0.37   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net charge-offs as a % of average loans

     0.21     0.20     0.20     0.26     0.25
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

12


Huntington Bancshares Incorporated

Quarterly Nonaccrual Loans and Leases (NALs) and Nonperforming Assets (NPAs)

(Unaudited)

 

     2015     2014  

(dollar amounts in thousands)

   June 30,     March 31,     December 31,     September 30,     June 30,  

Nonaccrual loans and leases (NALs):

          

Commercial and industrial

   $ 149,713      $ 133,363      $ 71,974      $ 90,265      $ 75,274   

Commercial real estate

     43,888        49,263        48,523        59,812        65,398   

Automobile

     4,190        4,448        4,623        4,834        4,384   

Residential mortgage

     91,198        98,093        96,564        98,139        110,635   

Home equity

     75,350        79,246        78,560        72,715        69,266   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total nonaccrual loans and leases

     364,339        364,413        300,244        325,765        324,957   

Other real estate, net:

          

Residential

     25,660        30,544        29,291        30,661        31,761   

Commercial

     3,572        3,407        5,748        5,609        2,934   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total other real estate, net

     29,232        33,951        35,039        36,270        34,695   

Other NPAs(1)

     2,440        2,440        2,440        2,440        2,440   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total nonperforming assets

   $ 396,011      $ 400,804      $ 337,723      $ 364,475      $ 362,092   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Nonaccrual loans and leases as a % of total loans and leases

     0.75     0.76     0.63     0.70     0.71

NPA ratio(2)

     0.81        0.84        0.71        0.78        0.79   

(NPA+90days)/(Loan+OREO)(3)

     1.03        1.08        0.98        1.08        1.08   
     2015     2014  
     Second     First     Fourth     Third     Second  

Nonperforming assets, beginning of period

   $ 400,804      $ 337,723      $ 364,475      $ 362,092      $ 365,289   

New nonperforming assets

     125,105        162,862        87,022        102,834        123,601   

Returns to accruing status

     (46,120     (17,968     (20,024     (24,884     (23,000

Loan and lease losses

     (33,797     (41,574     (36,108     (36,387     (54,646

Payments

     (38,396     (30,578     (48,645     (29,121     (41,947

Sales

     (11,585     (9,661     (8,997     (10,059     (7,205
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Nonperforming assets, end of period

   $ 396,011      $ 400,804      $ 337,723      $ 364,475      $ 362,092   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)  Other nonperforming assets includes certain impaired investment securities.
(2)  Nonperforming assets divided by the sum of loans and leases, net other real estate owned, and other NPAs.
(3)  The sum of nonperforming assets and total accruing loans and leases past due 90 days or more divided by the sum of loans and leases and other real estate.

 

13


Huntington Bancshares Incorporated

Quarterly Accruing Past Due Loans and Leases and Accruing and Nonaccruing Troubled Debt Restructured Loans

(Unaudited)

 

     2015     2014  

(dollar amounts in thousands)

   June 30,     March 31,     December 31,     September 30,     June, 30  

Accruing loans and leases past due 90 days or more:

          

Commercial and industrial

   $ 6,621      $ 5,935      $ 4,937      $ 7,458      $ 9,977   

Commercial real estate

     10,920        16,351        18,793        26,285        27,267   

Automobile

     4,269        4,746        5,703        4,827        2,895   

Residential mortgage (excluding loans guaranteed by the U.S. Government)

     21,869        21,034        33,040        33,331        29,709   

Home equity

     11,713        11,132        12,159        14,809        14,912   

Other consumer

     846        727        837        638        607   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total, excl. loans guaranteed by the U.S. Government

     56,238        59,925        75,469        87,348        85,367   

Add: loans guaranteed by U.S. Government

     50,640        53,010        55,012        54,778        51,641   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total accruing loans and leases past due 90 days or more, including loans guaranteed by the U.S. Government

   $ 106,878      $ 112,935      $ 130,481      $ 142,126      $ 137,008   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ratios:

          

Excluding loans guaranteed by the U.S. Government, as a percent of total loans and leases

     0.12     0.13     0.16     0.19     0.19

Guaranteed by U.S. Government, as a percent of total loans and leases

     0.10        0.11        0.12        0.11        0.11   

Including loans guaranteed by the U.S. Government, as a percent of total loans and leases

     0.22        0.24        0.27        0.30        0.30   

Accruing troubled debt restructured loans:

          

Commercial and industrial

   $ 233,346      $ 162,207      $ 116,331      $ 89,783      $ 90,604   

Commercial real estate

     158,056        161,515        177,156        186,542        212,736   

Automobile

     24,774        25,876        26,060        31,480        31,833   

Home equity

     279,864        265,207        252,084        229,500        221,539   

Residential mortgage

     266,986        268,441        265,084        271,762        289,239   

Other consumer

     4,722        4,879        4,018        3,313        3,496   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total accruing troubled debt restructured loans

   $ 967,748      $ 888,125      $ 840,733      $ 812,380      $ 849,447   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Nonaccruing troubled debt restructured loans:

          

Commercial and industrial

   $ 46,303      $ 21,246      $ 20,580      $ 19,110      $ 6,677   

Commercial real estate

     19,490        28,676        24,964        28,618        24,396   

Automobile

     4,030        4,283        4,552        4,817        4,287   

Home equity

     26,568        26,379        27,224        25,149        22,264   

Residential mortgage

     65,415        69,799        69,305        72,729        81,546   

Other consumer

     160        165        70        74        120   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total nonaccruing troubled debt restructured loans

   $ 161,966      $ 150,548      $ 146,695      $ 150,497      $ 139,290   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

14


Huntington Bancshares Incorporated

Quarterly Capital Under Current Regulatory Standards (Basel III) and Other Capital Data

(Unaudited)

 

     2015     2015  

(dollar amounts in millions except per share amounts)

   June 30,     March 31,  

Common equity tier 1 risk-based capital ratio:(1)

    

Total shareholders’ equity

   $ 6,496      $ 6,462   

Regulatory capital adjustments:

    

Shareholders’ preferred equity

     (386     (386

Accumulated other comprehensive income offset

     186        161   

Goodwill and other intangibles, net of related taxes

     (701     (700

Deferred tax assets that arise from tax loss and credit carryforwards

     (15     (36
  

 

 

   

 

 

 

Common equity tier 1 capital

     5,580        5,501   

Additional tier 1 capital

    

Shareholders’ preferred equity

     386        386   

Qualifying capital instruments subject to phase-out

     76        76   

Other

     (22     (53
  

 

 

   

 

 

 

Tier 1 capital

     6,020        5,910   

LTD and other tier 2 qualifying instruments

     623        648   

Qualifying allowance for loan and lease losses

     655        660   

Other

     —          —     
  

 

 

   

 

 

 

Tier 2 capital

     1,278        1,308   

Total risk-based capital

   $ 7,298      $ 7,218   

Risk-weighted assets (RWA)(1)

     57,850        57,840   

Common equity tier 1 risk-based capital ratio(1)

     9.65     9.51
  

 

 

   

 

 

 

Other regulatory capital data:

    

Tier 1 leverage ratio(1)

     8.98     9.04

Tier 1 risk-based capital ratio(1)

     10.41        10.22   

Total risk-based capital ratio(1)

     12.62        12.48   

Tangible common equity / RWA ratio(1)

     9.32        9.25   

 

(1)  June 30, 2015, figures are estimated and are presented on a Basel III basis, including the standardized approach for calculating risk-weighted assets.

 

15


Huntington Bancshares Incorporated

Quarterly Common Stock Summary, Non-Regulatory Capital, and Other Data

(Unaudited)

Quarterly common stock summary

 

     2015     2014  

(dollar amounts in thousands, except per share amounts)

   Second     First     Fourth     Third     Second  

Common stock price, per share

          

High(1)

   $ 11.720      $ 11.300      $ 10.740      $ 10.300      $ 10.290   

Low(1)

     10.670        9.630        8.800        9.290        8.890   

Close

     11.310        11.050        10.520        9.730        9.540   

Average closing price

     11.192        10.559        9.972        9.790        9.406   

Dividends, per share

          

Cash dividends declared per common share

   $ 0.06      $ 0.06      $ 0.06      $ 0.05      $ 0.05   

Common shares outstanding

          

Average - basic

     806,891        809,778        811,967        816,497        821,546   

Average - diluted

     820,238        823,809        825,338        829,623        834,687   

Ending

     803,066        808,528        811,455        814,454        817,002   

Book value per common share

   $ 7.61      $ 7.51      $ 7.32      $ 7.24      $ 7.17   

Tangible book value per common share(2)

     6.71        6.62        6.62        6.53        6.48   

Common share repurchases

          

Number of shares repurchased

     8,834        4,949        3,605        5,438        12,095   

 

Non-regulatory capital

 

  

     2015     2014  

(dollar amounts in millions)

   June 30,     March 31,     December 31,     September 30,     June 30,  

Calculation of tangible equity / asset ratio:

          

Total shareholders’ equity

   $ 6,496      $ 6,462      $ 6,328      $ 6,284      $ 6,241   

Less: goodwill

     (678     (678     (523     (523     (505

Less: other intangible assets

     (63     (73     (75     (85     (81

Add: related deferred tax liability(2)

     22        25        26        30        28   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total tangible equity

     5,777        5,736        5,756        5,706        5,683   

Less: preferred equity

     (386     (386     (386     (386     (386
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total tangible common equity

   $ 5,391      $ 5,350      $ 5,370      $ 5,320      $ 5,297   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

   $ 68,846      $ 68,003      $ 66,298      $ 64,331      $ 63,797   

Less: goodwill

     (678     (678     (523     (523     (505

Less: other intangible assets

     (63     (73     (75     (85     (81

Add: related deferred tax liability(2)

     22        25        26        30        28   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total tangible assets

   $ 68,127      $ 67,277      $ 65,726      $ 63,753      $ 63,239   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Tangible equity / tangible asset ratio

     8.48     8.53     8.76     8.95     8.99

Tangible common equity / tangible asset ratio

     7.91        7.95        8.17        8.35        8.38   

Tier 1 leverage ratio(4)

     N.A.        N.A.        9.74        9.83        10.01   

Tier 1 risk-based capital ratio(4)

     N.A.        N.A.        11.50        11.61        11.56   

Total risk-based capital ratio(4)

     N.A.        N.A.        13.56        13.72        13.67   

Tangible common equity / risk-weighted assets ratio(4)

     N.A.        N.A.        9.86        9.99        9.99   

Other data:

          

Number of employees (Average full-time equivalent)

     12,274        11,914        11,875        11,946        12,000   

Number of domestic full-service branches(3)

     735        733        729        753        730   

 

(1)  High and low stock prices are intra-day quotes obtained from NASDAQ.
(2)  Other intangible assets are net of deferred tax liability, and calculated assuming a 35% tax rate.
(3)  Includes Regional Banking and The Huntington Private Client Group offices.
(4)  Ratios are calculated on the Basel I basis.
N.A.  On January 1, 2015, we became subject to the Basel III capital requirements and the standardized approach for calculating risk-weighted assets in accordance with subpart D of the final capital rule. See page 15 for Basel III capital ratios.

 

16


Huntington Bancshares Incorporated

Consolidated Year to Date Average Balance Sheets

(Unaudited)

 

     YTD Average Balances  
     Six Months Ended June 30,     Change  

(dollar amounts in millions)

   2015     2014     Amount     Percent  

Assets

        

Interest-bearing deposits in banks

   $ 91      $ 87      $ 4        5

Loans held for sale

     829        283        546        193   

Securities:

        

Available-for-sale and other securities:

        

Taxable

     7,791        6,452        1,339        21   

Tax-exempt

     1,952        1,203        749        62   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total available-for-sale and other securities

     9,743        7,655        2,088        27   

Trading account securities

     47        42        5        12   

Held-to-maturity securities - taxable

     3,335        3,730        (395     (11
  

 

 

   

 

 

   

 

 

   

 

 

 

Total securities

     13,125        11,427        1,698        15   
  

 

 

   

 

 

   

 

 

   

 

 

 

Loans and leases:(1)

        

Commercial:

        

Commercial and industrial

     19,469        17,948        1,521        8   

Commercial real estate:

        

Construction

     929        657        272        41   

Commercial

     4,244        4,317        (73     (2
  

 

 

   

 

 

   

 

 

   

 

 

 

Commercial real estate

     5,173        4,974        199        4   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total commercial

     24,642        22,922        1,720        8   
  

 

 

   

 

 

   

 

 

   

 

 

 

Consumer:

        

Automobile

     8,431        7,069        1,362        19   

Home equity

     8,494        8,358        136        2   

Residential mortgage

     5,835        5,494        341        6   

Other consumer

     438        385        53        14   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total consumer

     23,198        21,306        1,892        9   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total loans and leases

     47,840        44,228        3,612        8   

Allowance for loan and lease losses

     (610     (645     35        (5
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loans and leases

     47,230        43,583        3,647        8   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total earning assets

     61,885        56,025        5,860        10   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash and due from banks

     930        887        43        5   

Intangible assets

     670        563        107        19   

All other assets

     4,197        3,937        260        7   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

   $ 67,072      $ 60,767      $ 6,305        10
  

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities and shareholders’ equity

        

Deposits:

        

Demand deposits - noninterest-bearing

   $ 15,575      $ 13,330      $ 2,245        17

Demand deposits - interest-bearing

     6,380        5,860        520        9   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total demand deposits

     21,955        19,190        2,765        14   

Money market deposits

     19,084        17,664        1,420        8   

Savings and other domestic deposits

     5,220        5,027        193        4   

Core certificates of deposit

     2,726        3,523        (797     (23
  

 

 

   

 

 

   

 

 

   

 

 

 

Total core deposits

     48,985        45,404        3,581        8   

Other domestic deposits of $250,000 or more

     190        273        (83     (30

Brokered deposits and negotiable CDs

     2,651        1,927        724        38   

Deposits in foreign offices

     559        322        237        74   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total deposits

     52,385        47,926        4,459        9   

Short-term borrowings

     2,018        2,581        (563     (22

Long-term debt

     4,761        3,021        1,740        58   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total interest-bearing liabilities

     43,589        40,198        3,391        8   
  

 

 

   

 

 

   

 

 

   

 

 

 

All other liabilities

     1,441        1,034        407        39   

Shareholders’ equity

     6,467        6,205        262        4   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities and shareholders’ equity

   $ 67,072      $ 60,767      $ 6,305        10
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)  Includes nonaccrual loans.

 

17


Huntington Bancshares Incorporated

Consolidated Year to Date Net Interest Margin - Interest Income / Expense(1)

(Unaudited)

 

     YTD Interest Income / Expense  
     Six Months Ended June 30,  

(dollar amounts in thousands)

   2015      2014  

Assets

     

Interest-bearing deposits in banks

   $ 60       $ 14   

Loans held for sale

     14,066         5,675   

Securities:

     

Available-for-sale and other securities:

     

Taxable

     99,381         80,483   

Tax-exempt

     30,163         18,599   
  

 

 

    

 

 

 

Total available-for-sale and other securities

     129,544         99,082   

Trading account securities

     259         186   

Held-to-maturity securities - taxable

     41,408         45,934   
  

 

 

    

 

 

 

Total securities

     171,211         145,202   

Loans and leases:

     

Commercial:

     

Commercial and industrial

     339,909         318,189   

Commercial real estate:

     

Construction

     17,287         13,707   

Commercial

     74,526         86,861   
  

 

 

    

 

 

 

Commercial real estate

     91,813         100,568   
  

 

 

    

 

 

 

Total commercial

     431,722         418,757   
  

 

 

    

 

 

 

Consumer:

     

Automobile

     134,715         122,696   

Home equity

     168,597         170,733   

Residential mortgage

     108,928         103,730   

Other consumer

     18,114         13,492   
  

 

 

    

 

 

 

Total consumer

     430,354         410,651   
  

 

 

    

 

 

 

Total loans and leases

     862,076         829,408   
  

 

 

    

 

 

 

Total earning assets

   $ 1,047,413       $ 980,299   
  

 

 

    

 

 

 

Liabilities

     

Deposits:

     

Demand deposits - noninterest-bearing

   $ —         $ —     

Demand deposits - interest-bearing

     1,677         1,083   
  

 

 

    

 

 

 

Total demand deposits

     1,677         1,083   

Money market deposits

     20,661         21,488   

Savings and other domestic deposits

     3,690         4,638   

Core certificates of deposit

     10,443         15,325   
  

 

 

    

 

 

 

Total core deposits

     36,471         42,534   

Other domestic deposits of $250,000 or more

     407         570   

Brokered deposits and negotiable CDs

     2,190         2,474   

Deposits in foreign offices

     364         206   
  

 

 

    

 

 

 

Total deposits

     39,432         45,784   

Short-term borrowings

     1,273         1,242   

Long-term debt

     32,815         23,197   
  

 

 

    

 

 

 

Total interest-bearing liabilities

     73,520         70,223   
  

 

 

    

 

 

 

Net interest income

   $ 973,893       $ 910,076   
  

 

 

    

 

 

 

 

(1)  Fully-taxable equivalent (FTE) income and expense calculated assuming a 35% tax rate. See page 20 for the FTE adjustment.

 

18


Huntington Bancshares Incorporated

Consolidated Year to Date Net Interest Margin - Yield

(Unaudited)

 

     YTD Average Rates(2)  
     Six Months Ended June 30,  

Fully-taxable equivalent basis(1)

   2015     2014  

Assets

    

Interest-bearing deposits in banks

     0.13     0.03

Loans held for sale

     3.39        4.01   

Securities:

    

Available-for-sale and other securities:

    

Taxable

     2.55        2.49   

Tax-exempt

     3.09        3.09   
  

 

 

   

 

 

 

Total available-for-sale and other securities

     2.66        2.59   

Trading account securities

     1.10        0.89   

Held-to-maturity securities - taxable

     2.48        2.46   
  

 

 

   

 

 

 

Total securities

     2.61        2.54   
  

 

 

   

 

 

 

Loans and leases:(3)

    

Commercial:

    

Commercial and industrial

     3.47        3.53   

Commercial real estate:

    

Construction

     3.70        4.15   

Commercial

     3.49        4.00   
  

 

 

   

 

 

 

Commercial real estate

     3.53        4.02   
  

 

 

   

 

 

 

Total commercial

     3.48        3.63   
  

 

 

   

 

 

 

Consumer:

    

Automobile

     3.22        3.50   

Home equity

     4.00        4.12   

Residential mortgage

     3.73        3.78   

Other consumer

     8.33        7.08   
  

 

 

   

 

 

 

Total consumer

     3.73        3.88   
  

 

 

   

 

 

 

Total loans and leases

     3.61        3.75   
  

 

 

   

 

 

 

Total earning assets

     3.41     3.53
  

 

 

   

 

 

 

Liabilities

    

Deposits:

    

Demand deposits - noninterest-bearing

     —       —  
  

 

 

   

 

 

 

Demand deposits - interest-bearing

     0.05        0.04   

Total demand deposit

     0.02        0.01   

Money market deposits

     0.22        0.25   

Savings and other domestic deposits

     0.14        0.19   

Core certificates of deposit

     0.77        0.88   
  

 

 

   

 

 

 

Total core deposits

     0.22        0.27   

Other domestic deposits of $250,000 or more

     0.43        0.42   

Brokered deposits and negotiable CDs

     0.17        0.26   

Deposits in foreign offices

     0.13        0.13   
  

 

 

   

 

 

 

Total deposits

     0.22        0.27   

Short-term borrowings

     0.13        0.10   

Long-term debt

     1.38        1.54   
  

 

 

   

 

 

 

Total interest bearing liabilities

     0.34        0.35   
  

 

 

   

 

 

 

Net interest rate spread

     3.07        3.18   

Impact of noninterest-bearing funds on margin

     0.10        0.10   
  

 

 

   

 

 

 

Net interest margin

     3.17     3.28
  

 

 

   

 

 

 

Commercial Loan Derivative Impact

(Unaudited)

 

     YTD Average Rates  
     Six Months Ended June 30,  

Fully-taxable equivalent basis(1)

   2015     2014  

Commercial loans(2)(3)

     3.27     3.42

Impact of commercial loan derivatives

     0.21        0.21   
  

 

 

   

 

 

 

Total commercial - as reported

     3.48     3.63
  

 

 

   

 

 

 

Average 30 day LIBOR

     0.18     0.15

 

(1)  Fully-taxable equivalent (FTE) yields are calculated assuming a 35% tax rate. See page 20 for the FTE adjustment.
(2)  Loan and lease and deposit average rates include impact of applicable derivatives, non-deferrable fees, and amortized fees.
(3)  Includes the impact of nonacrrual loans.

 

19


Huntington Bancshares Incorporated

Selected Year to Date Income Statement Data(1)

(Unaudited)

 

     Six Months Ended June 30,      Change  

(dollar amounts in thousands, except per share amounts)

   2015      2014      Amount     Percent  

Interest income

   $ 1,031,891       $ 967,777       $ 64,114        7

Interest expense

     73,520         70,223         3,297        5   
  

 

 

    

 

 

    

 

 

   

 

 

 

Net interest income

     958,371         897,554         60,817        7   

Provision for credit losses

     41,010         54,015         (13,005     (24
  

 

 

    

 

 

    

 

 

   

 

 

 

Net interest income after provision for credit losses

     917,361         843,539         73,822        9   
  

 

 

    

 

 

    

 

 

   

 

 

 

Service charges on deposit accounts

     132,338         137,215         (4,877     (4

Trust services

     55,589         59,146         (3,557     (6

Electronic banking

     57,657         50,133         7,524        15   

Mortgage banking income

     61,479         45,807         15,672        34   

Brokerage income

     30,684         35,072         (4,388     (13

Insurance income

     33,532         32,492         1,040        3   

Bank owned life insurance income

     26,240         27,172         (932     (3

Capital markets fees

     27,097         19,694         7,403        38   

Gain on sale of loans

     17,042         7,484         9,558        128   

Securities gains (losses)

     82         17,460         (17,378     (100

Other income

     71,656         66,877         4,779        7   
  

 

 

    

 

 

    

 

 

   

 

 

 

Total noninterest income

     513,396         498,552         14,844        3   
  

 

 

    

 

 

    

 

 

   

 

 

 

Personnel costs

     547,051         510,077         36,974        7   

Outside data processing and other services

     109,043         105,828         3,215        3   

Net occupancy

     59,881         62,106         (2,225     (4

Equipment

     61,943         57,499         4,444        8   

Professional services

     25,320         30,127         (4,807     (16

Marketing

     27,999         25,518         2,481        10   

Deposit and other insurance expense

     21,954         24,317         (2,363     (10

Amortization of intangibles

     20,166         18,811         1,355        7   

Other expense

     77,277         84,474         (7,197     (9
  

 

 

    

 

 

    

 

 

   

 

 

 

Total noninterest expense

     950,634         918,757         31,877        3   
  

 

 

    

 

 

    

 

 

   

 

 

 

Income before income taxes

     480,123         423,334         56,789        13   

Provision for income taxes

     118,063         109,572         8,491        8   
  

 

 

    

 

 

    

 

 

   

 

 

 

Net income

   $ 362,060       $ 313,762       $ 48,298        15
  

 

 

    

 

 

    

 

 

   

 

 

 

Dividends on preferred shares

     15,933         15,927         6        —     
  

 

 

    

 

 

    

 

 

   

 

 

 

Net income applicable to common shares

   $ 346,127       $ 297,835       $ 48,292        16
  

 

 

    

 

 

    

 

 

   

 

 

 

Average common shares - basic

     808,335         825,603         (17,268     (2 )% 

Average common shares - diluted

     822,023         838,546         (16,523     (2

Per common share

          

Net income - basic

   $ 0.43       $ 0.36       $ 0.07        19   

Net income - diluted

     0.42         0.36         0.06        17   

Cash dividends declared

     0.12         0.10         0.02        20   

Revenue - fully taxable equivalent (FTE)

          

Net interest income

   $ 958,371       $ 897,554       $ 60,817        7   

FTE adjustment(2)

     15,522         12,522         3,000        24   
  

 

 

    

 

 

    

 

 

   

 

 

 

Net interest income

     973,893         910,076         63,817        7   

Noninterest income

     513,396         498,552         14,844        3   
  

 

 

    

 

 

    

 

 

   

 

 

 

Total revenue

   $ 1,487,289       $ 1,408,628       $ 78,661        6
  

 

 

    

 

 

    

 

 

   

 

 

 

 

(1)  Comparisons for presented periods are impacted by a number of factors. Refer to Significant Items.
(2)  On a fully-taxable equivalent (FTE) basis assuming a 35% tax rate.

 

20


Huntington Bancshares Incorporated

Year to Date Mortgage Banking Income

(Unaudited)

 

     Six Months Ended June 30,     Change  

(dollar amounts in thousands, except as noted)

   2015     2014     Amount     Percent  

Mortgage banking income

        

Origination and secondary marketing

   $ 46,382      $ 28,786      $ 17,596        61

Servicing fees

     21,519        21,812        (293     (1

Amortization of capitalized servicing

     (13,944     (11,933     (2,011     17   

Other mortgage banking income

     6,016        7,747        (1,731     (22
  

 

 

   

 

 

   

 

 

   

 

 

 

Subtotal

     59,973        46,412        13,561        29   

MSR valuation adjustment(1)

     5,361        (4,643     N.R.        N.R.   

Net trading gains (losses) related to MSR hedging

     (3,855     4,037        N.R.        N.R.   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total mortgage banking income

   $ 61,479      $ 45,806      $ 15,673        34
  

 

 

   

 

 

   

 

 

   

 

 

 

Mortgage originations (in millions)

   $ 2,434      $ 1,639      $ 795        49

Capitalized mortgage servicing rights(2)

     163,808        159,860        3,948        2   

Total mortgages serviced for others (in millions)(2)

     15,722        15,560        162        1   

MSR % of investor servicing portfolio

     1.04     1.03     0.01     1   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net impact of MSR hedging

        

MSR valuation adjustment(1)

   $ 5,361      $ (4,643     N.R.        N.R.   

Net trading gains (losses) related to MSR hedging

     (3,855     4,037        N.R.        N.R.   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net gain (loss) on MSR hedging

   $ 1,506      $ (606     N.R.        N.R.   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

N.R. - Not relevant.
(1)  The change in fair value for the period represents the MSR valuation adjustment, net of amortization of capitalized servicing.
(2)  At period end.

 

21


Huntington Bancshares Incorporated

Year to Date Credit Reserves Analysis

(Unaudited)

 

     Six Months Ended June 30,  

(dollar amounts in thousands)

   2015     2014  

Allowance for loan and lease losses, beginning of period

   $ 605,196      $ 647,870   

Loan and lease losses

     (102,045     (131,838

Recoveries of loans previously charged off

     52,238        60,209   
  

 

 

   

 

 

 

Net loan and lease losses

     (49,807     (71,629
  

 

 

   

 

 

 

Provision for loan and lease losses

     46,445        59,987   

Allowance of assets sold or transferred to loans held for sale

     (2,292     (1,127
  

 

 

   

 

 

 

Allowance for loan and lease losses, end of period

   $ 599,542      $ 635,101   
  

 

 

   

 

 

 

Allowance for unfunded loan commitments and letters of credit, beginning of period

   $ 60,806      $ 62,899   

Provision for (reduction in) unfunded loan commitments and letters of credit losses

     (5,435     (5,972
  

 

 

   

 

 

 

Allowance for unfunded loan commitments and letters of credit, end of period

   $ 55,371      $ 56,927   
  

 

 

   

 

 

 

Total allowance for credit losses

   $ 654,913      $ 692,028   
  

 

 

   

 

 

 

Allowance for loan and lease losses (ALLL) as % of:

    

Total loans and leases

     1.23     1.38

Nonaccrual loans and leases (NALs)

     165        195   

Nonperforming assets (NPAs)

     151        175   

Total allowance for credit losses (ACL) as % of:

    

Total loans and leases

     1.34     1.50

Nonaccrual loans and leases (NALs)

     180        213   

Nonperforming assets (NPAs)

     165        191   

 

22


Huntington Bancshares Incorporated

Year to Date Net Charge-Off Analysis

(Unaudited)

 

     Six Months Ended June 30,  

(dollar amounts in thousands)

   2015     2014  

Net charge-offs by loan and lease type:

    

Commercial:

    

Commercial and industrial

   $ 15,814      $ 19,203   

Commercial real estate:

    

Construction

     (219     747   

Commercial

     1,732        (3,925
  

 

 

   

 

 

 

Commercial real estate

     1,513        (3,178
  

 

 

   

 

 

 

Total commercial

     17,327        16,025   
  

 

 

   

 

 

 

Consumer:

    

Automobile

     7,690        7,568   

Home equity

     9,275        24,178   

Residential mortgage

     4,958        11,265   

Other consumer

     10,557        12,593   
  

 

 

   

 

 

 

Total consumer

     32,480        55,604   
  

 

 

   

 

 

 

Total net charge-offs

   $ 49,807      $ 71,629   
  

 

 

   

 

 

 

Net charge-offs - annualized percentages:

    

Commercial:

    

Commercial and industrial

     0.16     0.21

Commercial real estate:

    

Construction

     (0.05     0.23   

Commercial

     0.08        (0.18
  

 

 

   

 

 

 

Commercial real estate

     0.06        (0.13
  

 

 

   

 

 

 

Total commercial

     0.14        0.14   
  

 

 

   

 

 

 

Consumer:

    

Automobile

     0.18        0.21   

Home equity

     0.22        0.58   

Residential mortgage

     0.17        0.41   

Other consumer

     4.81        6.55   
  

 

 

   

 

 

 

Total consumer

     0.28        0.52   
  

 

 

   

 

 

 

Net charge-offs as a % of average loans

     0.21     0.32
  

 

 

   

 

 

 

 

23


Huntington Bancshares Incorporated

Year to Date Nonaccrual Loans and Leases (NALs) and Nonperforming Assets (NPAs)

(Unaudited)

 

     June 30,  

(dollar amounts in thousands)

   2015     2014  

Nonaccrual loans and leases (NALs):

    

Commercial and industrial

   $ 149,713      $ 75,274   

Commercial real estate

     43,888        65,398   

Automobile

     4,190        4,384   

Residential mortgage

     91,198        110,635   

Home equity

     75,350        69,266   
  

 

 

   

 

 

 

Total nonaccrual loans and leases

     364,339        324,957   

Other real estate, net:

    

Residential

     25,660        31,761   

Commercial

     3,572        2,934   
  

 

 

   

 

 

 

Total other real estate, net

     29,232        34,695   

Other NPAs(1)

     2,440        2,440   
  

 

 

   

 

 

 

Total nonperforming assets

   $ 396,011      $ 362,092   
  

 

 

   

 

 

 

Nonaccrual loans and leases as a % of total loans and leases

     0.75     0.71

NPA ratio(2)

     0.81        0.79   
     Six Months Ended June 30,  

(dollar amounts in thousands)

   2015     2014  

Nonperforming assets, beginning of period

   $ 337,723      $ 352,160   

New nonperforming assets

     287,967        241,405   

Returns to accruing status

     (64,088     (32,333

Loan and lease losses

     (75,371     (102,242

Payments

     (68,974     (81,180

Sales

     (21,246     (15,718
  

 

 

   

 

 

 

Nonperforming assets, end of period

   $ 396,011      $ 362,092   
  

 

 

   

 

 

 

 

(1)  Other nonperforming assets represent an investment security backed by a municipal bond.
(2)  Nonperforming assets divided by the sum of loans and leases, net other real estate owned, and other NPAs.

 

24


Huntington Bancshares Incorporated

Year to Date Accruing Past Due Loans and Leases and Accruing and Nonaccruing Troubled Debt Restructured Loans

(Unaudited)

 

     June 30,  

(dollar amounts in thousands)

   2015     2014  

Accruing loans and leases past due 90 days or more:

    

Commercial and industrial

   $ 6,621      $ 9,977   

Commercial real estate

     10,920        27,267   

Automobile

     4,269        2,895   

Residential mortgage (excluding loans guaranteed by the U.S. Government)

     21,869        29,709   

Home equity

     11,713        14,912   

Other consumer

     846        607   
  

 

 

   

 

 

 

Total, excl. loans guaranteed by the U.S. Government

     56,238        85,367   

Add: loans guaranteed by U.S. Government

     50,640        51,641   
  

 

 

   

 

 

 

Total accruing loans and leases past due 90 days or more, including loans guaranteed by the U.S. Government

   $ 106,878      $ 137,008   
  

 

 

   

 

 

 

Ratios:

    

Excluding loans guaranteed by the U.S. Government, as a percent of total loans and leases

     0.12     0.19

Guaranteed by U.S. Government, as a percent of total loans and leases

     0.10        0.11   

Including loans guaranteed by the U.S. Government, as a percent of total loans and leases

     0.22        0.30   

Accruing troubled debt restructured loans:

    

Commercial and industrial

   $ 233,346      $ 90,604   

Commercial real estate

     158,056        212,736   

Automobile

     24,774        31,833   

Home equity

     279,864        221,539   

Residential mortgage

     266,986        289,239   

Other consumer

     4,722        3,496   
  

 

 

   

 

 

 

Total accruing troubled debt restructured loans

   $ 967,748      $ 849,447   
  

 

 

   

 

 

 

Nonaccruing troubled debt restructured loans:

    

Commercial and industrial

   $ 46,303      $ 6,677   

Commercial real estate

     19,490        24,396   

Automobile

     4,030        4,287   

Home equity

     26,568        22,264   

Residential mortgage

     65,415        81,546   

Other consumer

     160        120   
  

 

 

   

 

 

 

Total nonaccruing troubled debt restructured loans

   $ 161,966      $ 139,290   
  

 

 

   

 

 

 

 

25

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