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Huntington Reports Record Third-Quarter Income
COLUMBUS, Ohio – Huntington Bancshares Inc., parent of Huntington Bank, reported net income of $167.8 million for the quarter ended Sept. 30 Thursday, or 19 cents per common share, a record high for its third-quarter earnings.
This compares to second-quarter net income of $152.7 million, or 17 cents per common share, and third-quarter 2011 net income of $135.7 million, or 16 cents per share.
In a conference call with reporters yesterday afternoon, Frank Hierro, president of the bank’s Mahoning Valley Region, pointed out that the 19 cents per share “beats Wall Street’s estimations of 17 cents a share.”
Huntington also announced its directors declared a cash dividend of four cents per common share. They also declared cash dividends of $21.25 per share of Series A preferred stock and $7.60 per share of Series B preferred stock. All dividends are payable Jan. 15, 2013, to shareholders of record Jan. 1.
Dividends paid on the preferred shares will run $8 million.
Primary drivers of the 10% increase over second-quarter results, Huntington said, were a $21 million, or 43% decrease in the provision for income taxes and a $7.2 million, or 3% increase in noninterest income (such as service fees, trust services, gains on securities, mortgage banking, brokerage and insurance income) partially offset by a $14 million, or 3% increase in noninterest expense (salaries, rents, outside data processing, amortization of intangibles, Federal Deposit Insurance Corp. fees, maintenance of repossessed properties).
Hitting all banks is their decreased income from processing electronic banking (credit and debit card) transactions because of the Dodd-Frank Act. The act caps the “swipe” fees financial institutions may charge. Huntington saw this source of income decline by a third, by $10.8 million, compared to the same quarter a year ago.
The performance of Huntington, which serves the Midwest, western Pennsylvania and northern Kentucky, benefited from the Midwest bouncing back faster from the Great Recession than the rest of the country, Hierro said. “Manufacturing is making a strong comeback and will drive [financial] growth in households,” he said.
Total revenues were $696.6 million for the quarter of which net interest income accounted for $430.3 million. Net interest income was up $1.3 million from the second quarter and $23.8 million better than the third quarter of 2011.
Total core deposits were $43.8 billion at Sept. 30, $1 billion higher than at June 30, and $3.8 billion ahead of where they stood Sept. 30, 2011. Total deposits were $46.3 billion, $44.9 billion and $42.3 billion on the same dates respectively.
Credit quality performance “reflected continued improvement”, Huntington said, reporting it increased its provision for credit losses by $500,000, or 1% higher than the sum set aside at the end of the second quarter.
Total net charge-offs were $105 million, or an annualized 1.05% of average total loans and leases. “This was up $20.9 million, or 25%, from $84.2 million, or an annualized 0.82%, in the prior quarter,” Huntington said. Of the net charge-offs recorded in the third quarter, Huntington noted, $33 million were related to Chapter 7 bankruptcy consumer loans,” and “regulatory guidance” mandates that banks write down to collateral value consumer debts discharged under Chapter 7.
Automobile loan and lease charge-offs were $4 million, residential-mortgage net charge-offs were $16.9 million and home-equity net charge-offs were $46.6 million.
Total nonperforming assets, which include loans 90 and more days past due) stood at $509.7 million. Nonaccrual loan and leases made up $445.0 million of that figure. Huntington has total assets of $56 billion.
Noninterest expense, which came to $458.3 million, included $247.7 million in salaries, wages and benefits (up $4.7 million from the second quarter and $20.9 million from the third quarter 2011). The $4.7 million increase quarter over quarter was attributed to “higher healthcare costs.”
Huntington increased its workforce across its footprint by a full-time equivalent of 300 during the third quarter, raising its FTE employees to 11,700. This compares to 11,200 a year ago.
Noninterest expense also included $4.4 million in expenses for early repayment of debt.
Huntington released its earnings before markets opened yesterday when its common shares traded at $6.97. They closed at $6.61 but rose slightly in early after-hours trading. Trading in Huntington common shares Thursday was heavy, 40.61 million, compared to its daily average of 9.58 million.
Published by The Business Journal, Youngstown, Ohio.