Huntington Reports Record Annual Net Income
YOUNGSTOWN, Ohio – Huntington Bancshares Inc., Columbus, holding company of Huntington National Bank, Thursday reported fourth-quarter net income of $167.3 million, or 19 cents per common share.
That exceeded Wall Street expectations by two cents a share, Frank Hierro said. Hierro is president of the bank’s Mahoning Valley region that consists of Trumbull, Mahoning and Columbiana counties in Ohio and Lawrence, Mercer and Erie counties in Pennsylvania.
Huntington also reported net income for 2012 set a record at $641 million, or 71 cents per common share, which is $98.4 million, or 18%, higher than 2011.
The fourth-quarter earnings compare to $167.8 million for the third quarter, also 19 cents a share, and fourth-quarter 2011 net income of $126.9 million, or 14 cents a share.
Huntington announced it would pay a 4-cent cash dividend on common shares payable April 15 to shareholders of record March 18.
The company said it would pay a quarterly cash dividend on its 8.50% Series A noncumulative perpetual convertible preferred stock of $21.25 per share. And it said it would pay a quarterly cash dividend of $7.51 per share on floating rate Series B noncumulative perpetual preferred stock. Both are payable April 15 to shareholders of record April 1.
Strategies that Steve Steinour, chairman, president and CEO, set in place two years ago are paying off, Hierro noted, on both the consumer and small-business banking segments.
The number of households with a Huntington checking account, for example, continues to grow with “Fair Play Banking” and the number of customers who opened such accounts -- both consumer and business -- set records in 2012, Hierro said. Over the last two years, the rate of customers opening and maintaining checking accounts is four times greater than before 2010.
Some key statistics to Huntington’s performance for the quarters ended Dec. 31 and Sept. 30, 2012, and Dec. 31, 2011:
- Return on average assets, 1.19%, 1.19%, 0.92%.
- Return on average common shareholders’ equity, 11.6%, 11.9%, 9.3%.
- Net interest margin, 3.45%, 3.38%, 3.38%.
- Efficiency ratio, 62.3%, 64.5%, 64.0%.
- Tier 1 leverage ratio, 10.34%, 10.29%, 10.28%.
- Tier 1 common risk-based capital ratio, 10.47%, 10.29%, 10.28%.
- Total risk-based capital ratio, 14.51%, 14.36%, 14.77%.
Net interest income for the fourth quarter was $434.1 million compared to $430.3 million for the third quarter and $415.0 million for the quarter ended Dec. 31, 2011.
Noninterest income for the quarter was $297.7 million compared to $261.1 the preceding quarter and $229.4 million the last quarter of 2011.
Noninterest expense -- which includes salaries and benefits, rents, premiums paid to the Federal Deposit Insurance Corp. -- was $470.6 million for the fourth quarter compared to $458.3 million for the third and $430.3 million the quarter ended Dec. 31, 2011. For the year, noninterest expense was $107.4 million, or 6%, above 2011’s. This reflects an increase in the number of employees, $5 million more spent on professional services including temporary regulatory related expenses and an acquisition that closed at the end of the first quarter.
The 2012 provision for credit losses fell $26.7 million, or 15%, from 2011. This reflected a $94.6 million, or 22%, decrease in net charge-offs to $342.5 million, Huntington said, or 0.85% of average total loan and leases. Of the 2012 net charge-offs, $34.6 million related to regulatory guidance requiring consumer loans be discharged under Chapter 7 bankruptcy to be written down to collateral value. Approximately 90% continue to make payments as scheduled. Criticized commercial loans declined by $537 million, or 25%, resulting in lower reserves.
Credit quality improved overall, Huntington reported, as reflected in the allowance for credit losses as a percentage of total loans fell to 1.99% fro, 2.60% at Dec. 31, 2011.
Looking to 2013, Steinour expects the Midwest economy, where most of Huntington’s offices are based, to outperform the national economy. Uncertainty in Washington is hindering growth, he said.
The CEO expects net income to “modestly grow over the course of 2013 after experiencing the usual first-quarter decline” and more growth in loans.
The commercial and industrial portfolio will also see growth this year, Steinour said, but the majority of that growth will occur in the second half.
Steinour expects modest growth in mortgage originations and home-equity loans. Commercial real estate loans will likely experience declines from current levels but remain in the $5.0 billion to $5.5 billion range.
And Steinour expects credit quality to continue to improve.
Copyright 2013 The Business Journal, Youngstown, Ohio.
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