Contact: |
||
Investors
|
Media | |
Jay Gould
|
Maureen Brown | |
Jay.Gould@huntington.com
|
Maureen.Brown@Huntington.com | |
(614) 480-4060
|
(614) 480-5512 | |
Todd Beekman |
||
Todd.Beekman@huntington.com |
||
(614) 480-3878 |
| $122.9 MILLION OF NET INCOME, UP 22% FROM $100.9 MILLION |
| EARNINGS PER COMMON SHARE OF $0.05, INCLUDING A ONE-TIME REDUCTION OF $0.07 PER COMMON SHARE FOR THE DEEMED DIVIDEND RESULTING FROM THE DECEMBER REPURCHASE OF $1.4 BILLION IN TARP CAPITAL |
| 10% ANNUALIZED GROWTH IN AVERAGE TOTAL CORE DEPOSITS |
| 1% GROWTH IN FULLY-TAXABLE EQUIVALENT REVENUE |
| 15% ANNUALIZED GROWTH IN EARNING ASSETS, INCLUDING 6% ANNUALIZED GROWTH IN AVERAGE LOANS AND LEASES |
| 3.37% NET INTEREST MARGIN, DOWN 8 BASIS POINTS, PRIMARILY REFLECTING GROWTH IN LOWER YIELD INVESTMENT SECURITIES |
| CONTINUED SIGNIFICANT IMPROVEMENT IN CREDIT QUALITY |
| 21% DECLINE IN NONACCRUAL LOANS, LOWEST ABSOLUTE LEVEL SINCE 2008 THIRD QUARTER |
| 166% ALLOWANCE FOR CREDIT LOSSES COVERAGE OF NONACCRUAL LOANS, UP FROM 140% |
| SIGNIFICANTLY STRENGTHENED COMMON EQUITY RATIOS AFTER TARP CAPITAL REPURCHASE COMPARED WITH SEPTEMBER 30, 2010 |
| 9.25% TIER 1 COMMON RISK-BASED CAPITAL, UP FROM 7.39% |
| 7.56% TANGIBLE COMMON EQUITY RATIO, UP FROM 6.20% |
2
| Net income of $122.9 million, up $22.0 million, or 22%, from $100.9 million, reflecting: |
| $32.2 million reduction in provision for credit losses as credit quality performance improved. |
| $5.3 million increase in net interest income, primarily reflecting growth in loans and investment securities. |
| $7.3 million increase in noninterest expenses primarily reflecting a $3.9 million increase in personnel costs related to investments in strategic initiatives, a $4.1 million increase associated with repurchase losses related to representations and warranties made on mortgage loans sold, and a $2.4 million increase in fraud losses. |
| $2.9 million decline in noninterest income primarily reflecting lower service charges on deposit accounts. |
| Earnings per common share of $0.05, including a one-time $0.07 per common share reduction for the deemed dividend resulting from the repurchase of our $1.4 billion in TARP capital. This compared to earnings of $0.10 per common share in the prior quarter. |
| Pre-tax, pre-provision income of $260.1 million, down $5.2 million, or 2%, reflecting higher noninterest expense and lower noninterest income, partially offset by growth in net interest income. |
3
| In connection with the redemption of our TARP Series B Preferred Stock, the accretion of the remaining issuance discount on the Series B Preferred Stock was accelerated and recorded as a deemed dividend and resulted in a corresponding reduction in retained earnings of $56.3 million. This resulted in a one-time, noncash reduction in net income attributable to common shareholders and a related $0.07 per common share reduction to basic and diluted earnings per share. |
Three Months Ended | Impact (1) | |||||||
(in millions, except per share) | Pre-tax | EPS (2) | ||||||
December 31, 2010 GAAP income |
$ | 122.9 | $ | 0.05 | ||||
Deemed dividend |
NA | (0.07 | ) | |||||
September 30, 2010 GAAP income |
$ | 100.9 | $ | 0.10 | ||||
None |
||||||||
December 31, 2009 GAAP loss |
$ | (369.7 | ) | $ | (0.56 | ) | ||
Gain on the early extinguishment of debt |
73.6 | 0.07 | ||||||
Deferred tax valuation allowance benefit |
11.3 | (2) | 0.02 |
(1) | Favorable (unfavorable) impact on GAAP earnings; pre-tax unless otherwise noted | |
(2) | After-tax; EPS reflected on a fully diluted basis | |
NA- | Not applicable |
4
2010 | 2009 | |||||||||||||||||||
Fourth | Third | Second | First | Fourth | ||||||||||||||||
(in millions) | Quarter | Quarter | Quarter | Quarter | Quarter | |||||||||||||||
Income (Loss) Before Income Taxes |
$ | 157.9 | $ | 130.6 | $ | 62.1 | $ | 1.6 | $ | (598.0 | ) | |||||||||
Add: Provision for credit losses |
87.0 | 119.2 | 193.4 | 235.0 | 894.0 | |||||||||||||||
Less: Securities (losses) gains |
(0.1 | ) | (0.3 | ) | 0.2 | (0.0 | ) | (2.6 | ) | |||||||||||
Add: Amortization of intangibles |
15.0 | 15.1 | 15.1 | 15.1 | 17.1 | |||||||||||||||
Less: Significant items (1) |
||||||||||||||||||||
Gain on early extinguishment of debt |
| | | | 73.6 | |||||||||||||||
Pre-Tax, Pre-Provision Income (1) |
$ | 260.1 | $ | 265.2 | $ | 270.5 | $ | 251.8 | $ | 242.1 | ||||||||||
Linked-quarter change amount |
$ | (5.2 | ) | $ | (5.2 | ) | $ | 18.6 | $ | 9.8 | $ | 4.9 | ||||||||
Linked-quarter change percent |
-1.9 | % | -1.9 | % | 7.4 | % | 4.0 | % | 2.1 | % |
(1) | See Basis of Presentation for definition |
| $1.0 billion, or 10%, increase in average investment securities, reflecting the deployment of cash from deposit growth into short- and intermediate-term securities, and |
| $0.6 billion, or 2%, increase in average total loans and leases. |
5
2010 | ||||||||||||||||
Fourth | Third | Change | ||||||||||||||
(in billions) | Quarter | Quarter | Amount | % | ||||||||||||
Average Loans and Leases |
||||||||||||||||
Commercial and industrial |
$ | 12.8 | $ | 12.4 | $ | 0.4 | 3 | % | ||||||||
Commercial real estate |
6.8 | 7.1 | (0.3 | ) | (4 | ) | ||||||||||
Total commercial |
19.6 | 19.5 | 0.1 | 1 | ||||||||||||
Automobile loans and leases |
5.5 | 5.1 | 0.4 | 7 | ||||||||||||
Home equity |
7.7 | 7.6 | 0.1 | 2 | ||||||||||||
Residential mortgage |
4.4 | 4.4 | 0.0 | 1 | ||||||||||||
Other consumer |
0.6 | 0.7 | (0.1 | ) | (12 | ) | ||||||||||
Total consumer |
18.2 | 17.7 | 0.5 | 3 | ||||||||||||
Total loans and leases |
$ | 37.8 | $ | 37.2 | $ | 0.6 | 2 | % | ||||||||
| Average commercial and industrial (C&I) loans increased $0.4 billion, or 3%. Fourth quarter results were consistent with our belief that there are opportunities for growth in the C&I segment. Of the $0.4 billion increase, $0.2 billion represented an increase in automobile dealer floor plan loans resulting from increased inventory purchases, as well as growth in automobile dealer relationships. The remaining increase reflected a combination of growth in our asset based lending business, as well as traditional business lending. We continue to be pleased with the quality of customers we attracted. The economic environment continued to cause many of our existing customers to be appropriately focused on maintaining a lower leverage position as exemplified by a continued low 42% level of line-of-credit utilization. We consider this a positive as the financial condition of our borrowers is of primary concern to generating long-term returns. We continue to be focused on expanding our customer base within our markets and are seeing an increasing C&I pipeline. |
| Average commercial real estate loans (CRE) declined $0.3 billion, or 4%, primarily as a result of our ongoing strategy to reduce our exposure to the commercial real estate market. The current quarter decline was consistent with the reduction in the third quarter and was primarily a result of continuing paydowns and charge-offs in the noncore CRE portfolio. It is important to note that the composition of the reduction is substantially more weighted toward paydowns in the current quarter compared to the prior quarter as a result of the workout strategies by our Special Assets Department. The portion of our CRE portfolio designated as core continued to perform as expected. |
| Average total consumer loans increased $0.5 billion, or 3%, led by a $0.4 billion, or 7%, increase in average automobile loans and leases. Fourth quarter automobile loan production continued to reflect high credit quality metrics with an appropriate return. Our recent expansion into Eastern Pennsylvania and the five New England states began to have a positive impact on volume. We expect our growth in these markets to become more evident over time as we further develop our dealership base. Average home equity loans increased $0.1 billion, or 2%, in the quarter. |
6
2010 | ||||||||||||||||
Fourth | Third | Change | ||||||||||||||
(in billions) | Quarter | Quarter | Amount | % | ||||||||||||
Average Deposits |
||||||||||||||||
Demand deposits noninterest bearing |
$ | 7.2 | $ | 6.8 | $ | 0.4 | 6 | % | ||||||||
Demand deposits interest bearing |
5.3 | 5.3 | (0.0 | ) | (0 | ) | ||||||||||
Money market deposits |
13.2 | 12.3 | 0.8 | 7 | ||||||||||||
Savings and other domestic deposits |
4.6 | 4.6 | 0.0 | 0 | ||||||||||||
Core certificates of deposit |
8.6 | 8.9 | (0.3 | ) | (3 | ) | ||||||||||
Total core deposits |
38.9 | 38.0 | 0.9 | 2 | ||||||||||||
Other domestic deposits of $250,000 or more |
0.7 | 0.7 | 0.0 | 7 | ||||||||||||
Brokered deposits and negotiable CDs |
1.6 | 1.5 | 0.1 | 5 | ||||||||||||
Other deposits |
0.4 | 0.5 | (0.0 | ) | (2 | ) | ||||||||||
Total deposits |
$ | 41.7 | $ | 40.6 | $ | 1.1 | 3 | % | ||||||||
| $0.9 billion, or 2%, growth in average total core deposits. The primary drivers of this growth were a 7% increase in average money market deposits, and 6% growth in average noninterest bearing demand deposits. Partially offsetting this growth was a 3% decline in average core certificates of deposit. |
7
Fourth Quarter | Change | |||||||||||||||
(in billions) | 2010 | 2009 | Amount | % | ||||||||||||
Average Loans and Leases |
||||||||||||||||
Commercial and industrial |
$ | 12.8 | $ | 12.6 | $ | 0.2 | 2 | % | ||||||||
Commercial real estate |
6.8 | 8.5 | (1.7 | ) | (20 | ) | ||||||||||
Total commercial |
19.6 | 21.0 | (1.5 | ) | (7 | ) | ||||||||||
Automobile loans and leases |
5.5 | 3.3 | 2.2 | 66 | ||||||||||||
Home equity |
7.7 | 7.6 | 0.1 | 2 | ||||||||||||
Residential mortgage |
4.4 | 4.4 | 0.0 | 0 | ||||||||||||
Other consumer |
0.6 | 0.8 | (0.2 | ) | (24 | ) | ||||||||||
Total consumer |
18.2 | 16.1 | 2.2 | 14 | ||||||||||||
Total loans and leases |
$ | 37.8 | $ | 37.1 | $ | 0.7 | 2 | % | ||||||||
| $2.2 billion, or 66%, increase in average automobile loans and leases. In early 2009, we transferred automobile loans to a trust in a securitization transaction. With the adoption of ASC 810 Consolidation, that trust was consolidated as of January 1, 2010. At December 31, 2010, these securitized loans had a remaining balance of $0.5 billion. Underlying growth in automobile loans continued to be strong, reflecting a significant increase in loan originations compared to the year-ago period. The growth has come while maintaining our commitment to excellent credit quality and an appropriate return. |
| $0.1 billion, or 2%, increase in average home equity loans, reflecting slightly higher line utilization and slower runoff experience, partially offset by lower origination volume. |
| $0.2 billion, or 2%, increase in average C&I loans, reflecting a combination of factors. This included a positive benefit of (1) $0.6 billion in reclassifications of certain CRE loans, primarily owner-occupied properties, to C&I loans at the end of 2009, (2) $0.3 billion of growth in automobile dealer floorplan loans, and (3) $0.1 billion of growth in asset based lending. These benefits were partially offset by a $0.5 billion reduction in traditional business loans, primarily in the first quarter of 2010, and a $0.3 billion reclassification in the 2010 first quarter of variable rate demand notes to municipal securities. We continue to believe there are opportunities for C&I growth in the coming quarters. |
| $1.7 billion, or 20%, decrease in average CRE loans reflecting the impact of 2009 reclassifications of certain CRE loans, primarily representing owner-occupied properties, to C&I loans, as well as our ongoing commitment to lower our overall CRE exposure. We continue to effectively execute our plan to reduce the CRE exposure while maintaining a commitment to our core CRE borrowers. The decrease in average balances is associated with the noncore portfolio, as we have maintained relatively consistent balances with good performance in the core portfolio. |
8
Fourth Quarter | Change | |||||||||||||||
(in billions) | 2010 | 2009 | Amount | % | ||||||||||||
Average Deposits |
||||||||||||||||
Demand deposits noninterest bearing |
$ | 7.2 | $ | 6.5 | $ | 0.7 | 11 | % | ||||||||
Demand deposits interest bearing |
5.3 | 5.5 | (0.2 | ) | (3 | ) | ||||||||||
Money market deposits |
13.2 | 9.3 | 3.9 | 42 | ||||||||||||
Savings and other domestic deposits |
4.6 | 4.7 | (0.0 | ) | (1 | ) | ||||||||||
Core certificates of deposit |
8.6 | 10.9 | (2.2 | ) | (20 | ) | ||||||||||
Total core deposits |
38.9 | 36.8 | 2.2 | 6 | ||||||||||||
Other domestic deposits of $250,000 or more |
0.7 | 0.7 | 0.1 | 10 | ||||||||||||
Brokered deposits and negotiable CDs |
1.6 | 2.4 | (0.8 | ) | (33 | ) | ||||||||||
Other deposits |
0.4 | 0.4 | 0.0 | 5 | ||||||||||||
Total deposits |
$ | 41.7 | $ | 40.2 | $ | 1.5 | 4 | % | ||||||||
| $2.2 billion, or 6%, growth in average total core deposits. The drivers of this change were a $3.9 billion, or 42%, growth in average money market deposits, and a $0.7 billion, or 11%, growth in average noninterest bearing demand deposits. These increases were partially offset by a $2.2 billion, or 20%, decline in average core certificates of deposit and a $0.2 billion, or 3%, decrease in average interest bearing demand deposits. |
| $0.8 billion, or 33%, decline in brokered deposits and negotiable CDs, primarily reflecting a reduction of noncore funding sources. |
9
2010 | ||||||||||||||||
Fourth | Third | Change | ||||||||||||||
(in millions) | Quarter | Quarter | Amount | % | ||||||||||||
Noninterest Income |
||||||||||||||||
Service charges on deposit accounts |
$ | 55.8 | $ | 65.9 | $ | (10.1 | ) | (15 | )% | |||||||
Mortgage banking income |
53.2 | 52.0 | 1.1 | 2 | ||||||||||||
Trust services |
29.4 | 27.0 | 2.4 | 9 | ||||||||||||
Electronic banking income |
28.9 | 28.1 | 0.8 | 3 | ||||||||||||
Insurance income |
19.7 | 19.8 | (0.1 | ) | (1 | ) | ||||||||||
Brokerage income |
17.0 | 16.6 | 0.4 | 2 | ||||||||||||
Bank owned life insurance income |
16.1 | 14.1 | 2.0 | 14 | ||||||||||||
Automobile operating lease income |
10.5 | 11.4 | (0.9 | ) | (8 | ) | ||||||||||
Securities (losses) gains |
(0.1 | ) | (0.3 | ) | 0.2 | 65 | ||||||||||
Other income |
33.8 | 32.6 | 1.3 | 4 | ||||||||||||
Total noninterest income |
$ | 264.2 | $ | 267.1 | $ | (2.9 | ) | (1 | )% | |||||||
| $10.1 million, or 15%, decrease in service charges on deposit accounts. This decline represented a decrease in personal NSF/OD service charges and reflected a combination of factors. These included the impact from the 2010 third quarter implementation of changes to Regulation E and introduction of our Fair Play banking philosophy, as well as the continued underlying decline in activity as customers better manage their account balances. As part of our Fair Play banking philosophy, in the third quarter we voluntary reduced certain NSF/OD fees and implemented our 24-Hour Grace overdrafts policy. The goal of our Fair Play banking philosophy is to introduce more customer friendly fee structures with the objective of accelerating the acquisition and retention of new households. Over the second half of 2010, the reduction in service charge income related to our 24- Hour Grace initiative was consistent with our expectations. Importantly, last year checking households grew 6.5%, which was 1%, more than expected. However, overall service charge income over the second half of the year was slightly lower than our 2010 mid-year expectations, as customers continued to better manage their account balances. |
| $2.4 million, or 9%, growth in trust services income, reflecting the increase in asset market values, and growth in new business and seasonal renewal fees. |
| $2.0 million, or 14%, increase in bank owned life insurance income. |
10
Fourth Quarter | Change | |||||||||||||||
(in millions) | 2010 | 2009 | Amount | % | ||||||||||||
Noninterest Income |
||||||||||||||||
Service charges on deposit accounts |
$ | 55.8 | $ | 76.8 | $ | (20.9 | ) | (27 | )% | |||||||
Mortgage banking income |
53.2 | 24.6 | 28.6 | 116 | ||||||||||||
Trust services |
29.4 | 27.3 | 2.1 | 8 | ||||||||||||
Electronic banking income |
28.9 | 25.2 | 3.7 | 15 | ||||||||||||
Insurance income |
19.7 | 16.1 | 3.6 | 22 | ||||||||||||
Brokerage income |
17.0 | 16.0 | 0.9 | 6 | ||||||||||||
Bank owned life insurance income |
16.1 | 14.1 | 2.1 | 15 | ||||||||||||
Automobile operating lease income |
10.5 | 12.7 | (2.2 | ) | (17 | ) | ||||||||||
Securities (losses) gains |
(0.1 | ) | (2.6 | ) | 2.5 | 96 | ||||||||||
Other income |
33.8 | 34.4 | (0.6 | ) | (2 | ) | ||||||||||
Total noninterest income |
$ | 264.2 | $ | 244.5 | $ | 19.7 | 8 | % | ||||||||
| $28.6 million, or 116%, increase in mortgage banking income. This reflected a $31.8 million increase in origination and secondary marketing income, as originations increased 62% from the year-ago quarter, partially offset by a $4.0 million decrease in net servicing revenues. |
| $3.7 million, or 15%, increase in electronic banking income, reflecting an increase in debit card transaction volume. |
| $3.6 million, or 22%, increase in insurance income, primarily reflecting an increase in title insurance income due to higher mortgage refinance activity. |
| $2.5 million benefit from lower securities losses in the current quarter compared with the year-ago quarter. |
| $2.1 million, or 15%, increase in insurance benefits associated with bank owned life insurance. |
| $2.1 million, or 8%, increase in trust services income, with half of the increase due to increases in asset market values, and the remainder reflecting growth in new business. |
| $20.9 million, or 27%, decline in service charges on deposit accounts, reflecting lower personal service charges due to a combination of factors including the implementation of the amendment to Regulation E, our Fair Play banking philosophy, and lower underlying activity levels. |
| $2.2 million, or 17%, decline automobile operating lease income reflecting the impact of a declining portfolio having exited that business in 2008. |
11
2010 | ||||||||||||||||
Fourth | Third | Change | ||||||||||||||
(in millions) | Quarter | Quarter | Amount | % | ||||||||||||
Noninterest Expense |
||||||||||||||||
Personnel costs |
$ | 212.2 | $ | 208.3 | $ | 3.9 | 2 | % | ||||||||
Outside data processing and other services |
40.9 | 38.6 | 2.4 | 6 | ||||||||||||
Net occupancy |
26.7 | 26.7 | (0.0 | ) | (0 | ) | ||||||||||
Deposit and other insurance expense |
23.3 | 23.4 | (0.1 | ) | (0 | ) | ||||||||||
Professional services |
21.0 | 20.7 | 0.3 | 2 | ||||||||||||
Equipment |
22.1 | 21.7 | 0.4 | 2 | ||||||||||||
Marketing |
16.2 | 20.9 | (4.8 | ) | (23 | ) | ||||||||||
Amortization of intangibles |
15.0 | 15.1 | (0.1 | ) | (1 | ) | ||||||||||
OREO and foreclosure expense |
10.5 | 12.0 | (1.5 | ) | (13 | ) | ||||||||||
Automobile operating lease expense |
8.1 | 9.2 | (1.0 | ) | (11 | ) | ||||||||||
Other expense |
38.5 | 30.8 | 7.8 | 25 | ||||||||||||
Total noninterest expense |
$ | 434.6 | $ | 427.3 | $ | 7.3 | 2 | % | ||||||||
(in thousands) |
||||||||||||||||
Number of employees (full-time equivalent) |
11.3 | 11.3 | 0.1 | 1 | % |
| $7.8 million, or 25%, increase in other expense, reflecting $4.1 million associated with increases in repurchase reserves related to representations and warranties losses made on mortgage loans sold and a $2.4 million increase in fraud losses. |
| $3.9 million, or 2%, increase in personnel costs, reflecting a combination of factors including higher salaries due to a 1% increase in full-time equivalent staff in support of strategic initiatives and higher sales commissions. |
| $2.4 million, or 6%, increase in outside data processing and other services, reflecting higher outside programming costs. |
| $4.8 million, or 23%, decrease in marketing expense, reflecting a reduction in branding and advertising activities to planned levels following a third quarter rollout emphasis. |
12
Fourth Quarter | Change | |||||||||||||||
(in millions) | 2010 | 2009 | Amount | % | ||||||||||||
Noninterest Expense |
||||||||||||||||
Personnel costs |
$ | 212.2 | $ | 180.7 | $ | 31.5 | 17 | % | ||||||||
Outside data processing and other services |
40.9 | 36.8 | 4.1 | 11 | ||||||||||||
Net occupancy |
26.7 | 26.3 | 0.4 | 2 | ||||||||||||
Deposit and other insurance expense |
23.3 | 24.4 | (1.1 | ) | (5 | ) | ||||||||||
Professional services |
21.0 | 25.1 | (4.1 | ) | (16 | ) | ||||||||||
Equipment |
22.1 | 20.5 | 1.6 | 8 | ||||||||||||
Marketing |
16.2 | 9.1 | 7.1 | 78 | ||||||||||||
Amortization of intangibles |
15.0 | 17.1 | (2.0 | ) | (12 | ) | ||||||||||
OREO and foreclosure expense |
10.5 | 18.5 | (8.0 | ) | (43 | ) | ||||||||||
Automobile operating lease expense |
8.1 | 10.4 | (2.3 | ) | (22 | ) | ||||||||||
Gain on early extinguishment of debt |
| (73.6 | ) | 73.6 | (100 | ) | ||||||||||
Other expense |
38.5 | 27.3 | 11.2 | 41 | ||||||||||||
Total noninterest expense |
$ | 434.6 | $ | 322.6 | $ | 112.0 | 35 | % | ||||||||
(in thousands) |
||||||||||||||||
Number of employees (full-time equivalent) |
11.3 | 10.3 | 1.1 | 10 | % |
| $73.6 million gain on early extinguishment of debt that reduced expenses in the year-ago quarter. |
| $31.5 million, or 17%, increase in personnel costs, primarily reflecting a 10% increase in full-time equivalent staff in support of strategic initiatives, as well as higher commissions and other incentive expenses, and the reinstatement of our 401(k) plan matching contribution. |
| $11.2 million, or 41%, increase in other expense, reflecting $5.9 million associated with increases in repurchase losses related to representations and warranties made on mortgage loans sold, as well as increased travel and miscellaneous fees. |
| $7.1 million, or 78%, increase in marketing expense, reflecting increases in branding and product advertising activities in support of strategic initiatives. |
| $4.1 million, or 11%, increase in outside data processing and other services, reflecting higher outside programming and other costs associated with the implementation of strategic initiatives, partially offset by lower Franklin-related servicing costs. |
| $8.0 million, or 43%, decline in OREO and foreclosure expense. |
| $4.1 million, or 16%, decrease in professional services, reflecting lower legal expenses. |
| $2.3 million, or 22%, decline in automobile operating lease expense as that portfolio continued to run-off. |
| $2.0 million, or 12%, decrease in the amortization of intangibles expense. |
13
14
2010 | 2009 | |||||||||||||||||||
Fourth | Third | Second | First | Fourth | ||||||||||||||||
(in millions) | Quarter | Quarter | Quarter | Quarter | Quarter | |||||||||||||||
Net Charge-offs |
||||||||||||||||||||
Commercial and industrial |
$ | 59.1 | $ | 62.2 | $ | 58.1 | $ | 75.4 | $ | 109.8 | ||||||||||
Commercial real estate |
44.9 | 63.7 | 81.7 | 85.3 | 258.1 | |||||||||||||||
Total commercial |
104.0 | 125.9 | 139.9 | 160.7 | 367.9 | |||||||||||||||
Automobile loans and leases |
7.0 | 5.6 | 5.4 | 8.5 | 12.9 | |||||||||||||||
Home equity |
29.2 | 27.8 | 44.5 | 37.9 | 35.8 | |||||||||||||||
Residential mortgage |
26.8 | 19.0 | 82.8 | 24.3 | 17.8 | |||||||||||||||
Other consumer |
5.3 | 6.3 | 6.6 | 7.0 | 10.3 | |||||||||||||||
Total consumer |
68.3 | 58.6 | 139.4 | 77.7 | 76.8 | |||||||||||||||
Total net charge-offs |
$ | 172.3 | $ | 184.5 | $ | 279.2 | $ | 238.5 | $ | 444.7 | ||||||||||
Net Charge-offs annualized percentages |
||||||||||||||||||||
Commercial and industrial |
1.85 | % | 2.01 | % | 1.90 | % | 2.45 | % | 3.49 | % | ||||||||||
Commercial real estate |
2.64 | 3.60 | 4.44 | 4.44 | 12.21 | |||||||||||||||
Total commercial |
2.13 | 2.59 | 2.85 | 3.22 | 7.00 | |||||||||||||||
Automobile loans and leases |
0.51 | 0.43 | 0.47 | 0.80 | 1.55 | |||||||||||||||
Home equity |
1.51 | 1.47 | 2.36 | 2.01 | 1.89 | |||||||||||||||
Residential mortgage |
2.42 | 1.73 | 7.19 | 2.17 | 1.61 | |||||||||||||||
Other consumer |
3.66 | 3.83 | 3.81 | 3.87 | 5.47 | |||||||||||||||
Total consumer |
1.50 | 1.32 | 3.19 | 1.83 | 1.91 | |||||||||||||||
Total net charge-offs |
1.82 | % | 1.98 | % | 3.01 | % | 2.58 | % | 4.80 | % | ||||||||||
MEMO: Franklin-Related Net Charge-offs |
||||||||||||||||||||
Commercial and industrial |
$ | (0.1 | ) | $ | (4.5 | ) | $ | (0.2 | ) | $ | (0.3 | ) | $ | 0.1 | ||||||
Home equity |
| 1.2 | 15.9 | 3.7 | | |||||||||||||||
Residential mortgage |
(4.4 | ) | 3.4 | 64.2 | 8.1 | 1.1 | ||||||||||||||
Total net charge-offs |
$ | (4.6 | ) | $ | 0.0 | $ | 80.0 | $ | 11.5 | $ | 1.2 | |||||||||
15
16
2010 | 2009 | |||||||||||||||||||
(in millions) | Dec. 31 | Sep. 30 | Jun. 30 | Mar. 31 | Dec. 31 | |||||||||||||||
Nonaccrual loans and leases (NALs): |
||||||||||||||||||||
Commercial and industrial |
$ | 346.7 | $ | 398.4 | $ | 429.6 | $ | 511.6 | $ | 578.4 | ||||||||||
Commercial real estate |
363.7 | 478.8 | 663.1 | 826.8 | 935.8 | |||||||||||||||
Residential mortgage |
45.0 | 83.0 | 86.5 | 373.0 | 362.6 | |||||||||||||||
Home equity |
22.5 | 21.7 | 22.2 | 54.8 | 40.1 | |||||||||||||||
Total nonaccrual loans and leases (NALs) |
777.9 | 981.8 | 1,201.3 | 1,766.1 | 1,917.0 | |||||||||||||||
Other real estate, net: |
||||||||||||||||||||
Residential |
31.6 | 65.8 | 71.9 | 68.3 | 71.4 | |||||||||||||||
Commercial |
35.2 | 57.3 | 67.2 | 84.0 | 68.7 | |||||||||||||||
Total other real estate, net |
66.8 | 123.1 | 139.1 | 152.3 | 140.1 | |||||||||||||||
Impaired loans held for sale (1) |
| | 242.2 | | 1.0 | |||||||||||||||
Total nonperforming assets (NPAs) |
$ | 844.8 | $ | 1,104.9 | $ | 1,582.7 | $ | 1,918.4 | $ | 2,058.1 | ||||||||||
Nonperforming Frankin assets |
||||||||||||||||||||
Residential mortgage |
$ | | $ | | $ | | $ | 298.0 | $ | 299.7 | ||||||||||
Home equity |
| | | 31.1 | 15.0 | |||||||||||||||
OREO |
9.5 | 15.3 | 24.5 | 24.4 | 23.8 | |||||||||||||||
Impaired loans held for sale (1) |
| | 242.2 | | | |||||||||||||||
Total nonperforming Franklin assets |
$ | 9.5 | $ | 15.3 | $ | 266.7 | $ | 353.5 | $ | 338.5 | ||||||||||
NAL ratio (2) |
2.04 | % | 2.62 | % | 3.25 | % | 4.78 | % | 5.21 | % | ||||||||||
NPA ratio (3) |
2.21 | 2.94 | 4.24 | 5.17 | 5.57 |
(1) | June 30, 2010, figure represents NALs associated with the transfer of Franklin-related residential mortgage and home equity loans to loans held for sale. December 31, 2009 figure represents impaired loans obtained in the Sky Financial acquisition. Held for sale loans are carried at the lower of cost or fair value less costs to sell. | |
(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 |
17
2010 | 2009 | |||||||||||||||||||
(in millions) | Dec. 31 | Sep. 30 | Jun. 30 | Mar. 31 | Dec. 31 | |||||||||||||||
Accruing loans and leases past due 90 days or more: |
||||||||||||||||||||
Total excluding loans guaranteed by the U.S. Government |
$ | 87.7 | $ | 95.4 | $ | 83.4 | $ | 113.2 | $ | 145.7 | ||||||||||
Loans guaranteed by the U.S. Government |
98.3 | 94.2 | 95.4 | 96.8 | 101.6 | |||||||||||||||
Total loans and leases |
$ | 185.9 | $ | 189.6 | $ | 178.8 | $ | 210.0 | $ | 247.3 | ||||||||||
Ratios (1) |
||||||||||||||||||||
Excluding loans guaranteed by the U.S. government |
0.23 | % | 0.25 | % | 0.23 | % | 0.31 | % | 0.40 | % | ||||||||||
Guaranteed by U.S. government |
0.26 | 0.26 | 0.26 | 0.26 | 0.28 | |||||||||||||||
Including loans guaranteed by the U.S. government |
0.49 | 0.51 | 0.49 | 0.57 | 0.68 | |||||||||||||||
Accruing restructured loans (ARLs): |
||||||||||||||||||||
Commercial |
$ | 171.8 | $ | 158.0 | $ | 141.4 | $ | 117.7 | $ | 157.0 | ||||||||||
Residential mortgages |
313.0 | 287.5 | 269.6 | 242.9 | 219.6 | |||||||||||||||
Other |
76.6 | 73.2 | 65.1 | 62.1 | 52.9 | |||||||||||||||
Total accruing restructured loans |
$ | 561.4 | $ | 518.7 | $ | 476.0 | $ | 422.7 | $ | 429.6 | ||||||||||
(1) | Percent of related loans and leases |
2010 | 2009 | |||||||||||||||||||
(in millions) | Dec. 31, | Sep. 30 | Jun. 30 | Mar. 31 | Dec. 31, | |||||||||||||||
Allowance for loan and lease losses (ALLL) |
$ | 1,249.0 | $ | 1,336.4 | $ | 1,402.2 | $ | 1,478.0 | $ | 1,482.5 | ||||||||||
Allowance for unfunded loan commitments
and letters of credit |
42.1 | 40.1 | 39.7 | 49.9 | 48.9 | |||||||||||||||
Allowance for credit losses (ACL) |
$ | 1,291.1 | $ | 1,376.4 | $ | 1,441.8 | $ | 1,527.9 | $ | 1,531.4 | ||||||||||
ALLL as a % of: |
||||||||||||||||||||
Total loans and leases |
3.28 | % | 3.56 | % | 3.79 | % | 4.00 | % | 4.03 | % | ||||||||||
Nonaccrual loans and leases (NALs) |
161 | 136 | 117 | 84 | 77 | |||||||||||||||
Nonperforming assets (NPAs) |
148 | 121 | 89 | 77 | 72 | |||||||||||||||
ACL as a % of: |
||||||||||||||||||||
Total loans and leases |
3.39 | % | 3.67 | % | 3.90 | % | 4.14 | % | 4.16 | % | ||||||||||
Nonaccrual loans and leases (NALs) |
166 | 140 | 120 | 87 | 80 | |||||||||||||||
Nonperforming assets (NPAs) |
153 | 125 | 91 | 80 | 74 |
18
2010 | 2009 | |||||||||||||||||||
(in millions) | Dec. 31, | Sep. 30 | Jun. 30 | Mar. 31 | Dec. 31, | |||||||||||||||
Tangible common equity / tangible assets ratio |
7.56 | % | 6.20 | % | 6.12 | % | 5.96 | % | 5.92 | % | ||||||||||
Tier 1 common risk-based capital ratio |
9.25 | % | 7.39 | % | 7.06 | % | 6.55 | % | 6.76 | % | ||||||||||
Regulatory Tier 1 risk-based capital ratio |
11.50 | % | 12.82 | % | 12.51 | % | 12.00 | % | 12.15 | % | ||||||||||
Excess over 6.0% (1) |
$ | 2,402 | $ | 2,916 | $ | 2,766 | $ | 2,545 | $ | 2,633 | ||||||||||
Regulatory Total risk-based capital ratio |
14.39 | % | 15.08 | % | 14.79 | % | 14.31 | % | 14.55 | % | ||||||||||
Excess over 10.0% (1) |
$ | 1,917 | $ | 2,172 | $ | 2,035 | $ | 1,828 | $ | 1,948 | ||||||||||
Total risk-w eighted assets |
$ | 43,678 | $ | 42,759 | $ | 42,486 | $ | 42,418 | $ | 42,816 |
(1) | Well-capitalized regulatory threshold |
19
20
| provision expense, which is excluded because its absolute level is elevated and volatile in times of economic stress; |
| investment securities gains/losses, which are excluded because in times of economic stress securities market valuations may also become particularly volatile; |
| amortization of intangibles expense, which is excluded because return on tangible common equity is a key metric used by Management to gauge performance trends; and |
| certain items identified by Management (see Significant Items below) which Management believes may distort the companys underlying performance trends. |
21
22
2010 | 2009 | Percent Changes vs. | ||||||||||||||||||
(dollar amounts in thousands, except per share amounts) | Fourth | Third | Fourth | 3Q10 | 4Q09 | |||||||||||||||
Net interest income |
$ | 415,294 | $ | 409,962 | $ | 374,064 | 1 | % | 11 | % | ||||||||||
Provision for credit losses |
86,973 | 119,160 | 893,991 | (27 | ) | (90 | ) | |||||||||||||
Noninterest income |
264,220 | 267,143 | 244,546 | (1 | ) | 8 | ||||||||||||||
Noninterest expense |
434,593 | 427,309 | 322,596 | 2 | 35 | |||||||||||||||
Income (loss) before income taxes |
157,948 | 130,636 | (597,977 | ) | 21 | N.R. | ||||||||||||||
Provision (benefit) for income taxes |
35,048 | 29,690 | (228,290 | ) | 18 | N.R. | ||||||||||||||
Net Income (loss) |
$ | 122,900 | $ | 100,946 | $ | (369,687 | ) | 22 | % | N.R. | ||||||||||
Dividends on preferred shares |
83,754 | 29,495 | 29,289 | 184 | 186 | |||||||||||||||
Net income (loss) applicable to common shares |
$ | 39,146 | $ | 71,451 | $ | (398,977 | ) | (45 | )% | N.R. | ||||||||||
Net income (loss) per common share diluted |
$ | 0.05 | $ | 0.10 | $ | (0.56 | ) | (50) | % | N.R. | ||||||||||
Cash dividends declared per common share |
0.01 | 0.01 | 0.01 | | | |||||||||||||||
Book value per common share at end of period |
5.35 | 5.39 | 5.10 | (1 | ) | 5 | ||||||||||||||
Tangible book value per common share at end of period |
4.66 | 4.55 | 4.21 | 2 | 11 | |||||||||||||||
Average common shares basic |
757,924 | 716,911 | 715,336 | 6 | 6 | |||||||||||||||
Average common shares diluted(2) |
760,582 | 719,567 | 715,336 | 6 | 6 | |||||||||||||||
Return on average assets |
0.90 | % | 0.76 | % | (2.80 | )% | ||||||||||||||
Return on average common shareholders equity |
3.8 | 7.4 | (39.1 | ) | ||||||||||||||||
Return on average common tangible shareholders equity(3) |
5.6 | 10.0 | (45.1 | ) | ||||||||||||||||
Net interest margin (4) |
3.37 | 3.45 | 3.19 | |||||||||||||||||
Efficiency ratio(5) |
61.4 | 60.6 | 49.0 | |||||||||||||||||
Effective tax rate (benefit) |
22.2 | 22.7 | (38.2 | ) | ||||||||||||||||
Average loans and leases |
$ | 37,800,546 | $ | 37,214,601 | $ | 37,089,197 | 2 | 2 | ||||||||||||
Average loans and leases linked quarter annualized growth rate |
6.3 | % | 1.4 | % | (8.1) | % | ||||||||||||||
Average earning assets |
$ | 49,290,186 | $ | 47,511,255 | $ | 46,847,132 | 4 | 5 | ||||||||||||
Average total assets |
54,146,249 | 52,716,881 | 52,458,276 | 3 | 3 | |||||||||||||||
Average core deposits (6) |
38,949,046 | 38,009,764 | 36,771,778 | 3 | 6 | |||||||||||||||
Average core deposits linked quarter annualized growth rate |
9.9 | % | 2.2 | % | 16.2 | % | ||||||||||||||
Average shareholders equity |
$ | 5,645,445 | $ | 5,519,638 | $ | 5,733,898 | 2 | (2 | ) | |||||||||||
Total assets at end of period |
53,819,642 | 53,246,776 | 51,554,665 | 1 | 4 | |||||||||||||||
Total shareholders equity at end of period |
4,980,542 | 5,567,403 | 5,336,002 | (11 | ) | (7 | ) | |||||||||||||
Net charge-offs (NCOs) |
172,251 | 184,514 | 444,747 | (7 | ) | (61 | ) | |||||||||||||
NCOs as a % of average loans and leases |
1.82 | % | 1.98 | % | 4.80 | % | ||||||||||||||
Nonaccrual loans and leases (NALs) |
$ | 777,948 | $ | 981,780 | $ | 1,916,978 | (21 | ) | (59 | ) | ||||||||||
NAL ratio |
2.04 | % | 2.62 | % | 5.21 | % | ||||||||||||||
Nonperforming assets (NPAs) |
$ | 844,752 | $ | 1,104,864 | $ | 2,058,091 | (24 | ) | (59 | ) | ||||||||||
NPA ratio |
2.21 | % | 2.94 | % | 5.57 | % | ||||||||||||||
Allowance for loan and lease losses (ALLL) as a % of
total loans and leases at the end of period |
3.28 | 3.56 | 4.03 | |||||||||||||||||
ALLL plus allowance for unfunded loan commitments
and letters of credit (ACL) as a % of total loans
and
leases at the end of period |
3.39 | 3.67 | 4.16 | |||||||||||||||||
ACL as a % of NALs |
166 | 140 | 80 | |||||||||||||||||
ACL as a % of NPAs |
153 | 125 | 74 | |||||||||||||||||
Tier 1 leverage ratio (7) |
9.41 | 10.54 | 10.09 | |||||||||||||||||
Tier 1 common risk-based capital ratio(7) |
9.25 | 7.39 | 6.76 | |||||||||||||||||
Tier 1 risk-based capital ratio (7) |
11.50 | 12.82 | 12.15 | |||||||||||||||||
Total risk-based capital ratio (7) |
14.39 | 15.08 | 14.55 | |||||||||||||||||
Tangible common equity / risk-weighted assets ratio |
9.22 | 7.63 | 7.04 | |||||||||||||||||
Tangible equity / tangible assets ratio(8) |
8.24 | 9.43 | 9.24 | |||||||||||||||||
Tangible common equity / tangible assets ratio(9) |
7.56 | 6.20 | 5.92 |
-23-
Year Ended December 31, | Change | |||||||||||||||
(dollar amounts in thousands, except per share amounts) | 2010 | 2009 | Amount | Percent | ||||||||||||
Net interest income |
$ | 1,618,805 | $ | 1,424,287 | $ | 194,518 | 14 | % | ||||||||
Provision for credit losses |
634,547 | 2,074,671 | (1,440,124 | ) | (69 | ) | ||||||||||
Noninterest income |
1,041,858 | 1,005,644 | 36,214 | 4 | ||||||||||||
Noninterest expense |
1,673,805 | 4,033,443 | (2,359,638 | ) | (59 | ) | ||||||||||
Income (loss) before income taxes |
352,311 | (3,678,183 | ) | 4,030,494 | N.R. | |||||||||||
Provision (benefit) for income taxes |
39,964 | (584,004 | ) | 623,968 | N.R. | |||||||||||
Net Income (loss) |
$ | 312,347 | $ | (3,094,179 | ) | $ | 3,406,526 | N.R. | ||||||||
Dividends on preferred shares |
172,032 | 174,756 | (2,724 | ) | (2 | ) | ||||||||||
Net income (loss) applicable to common shares |
$ | 140,315 | $ | (3,268,935 | ) | $ | 3,409,250 | N.R. | ||||||||
Net income (loss) per common share diluted |
$ | 0.19 | $ | (6.14 | ) | $ | 6.33 | 103 | % | |||||||
Cash dividends declared per common share |
0.04 | 0.04 | | | ||||||||||||
Average common shares basic |
726,934 | 532,802 | 194,132 | 36 | ||||||||||||
Average common shares diluted(2) |
729,532 | 532,802 | 196,730 | 37 | ||||||||||||
Return on average assets |
0.59 | % | (5.90 | )% | ||||||||||||
Return on average common shareholders equity |
3.7 | (80.8 | ) | |||||||||||||
Return on average tangible common shareholders equity(3) |
5.6 | (22.4 | ) | |||||||||||||
Net interest margin(4) |
3.44 | 3.11 | ||||||||||||||
Efficiency ratio(5) |
60.4 | 55.4 | ||||||||||||||
Effective tax rate (benefit) |
11.3 | (15.9 | ) | |||||||||||||
Average loans and leases |
$ | 37,273,057 | $ | 38,691,622 | $ | (1,418,565 | ) | (4) | % | |||||||
Average earning assets |
47,420,610 | 46,104,825 | 1,315,785 | 3 | ||||||||||||
Average total assets |
52,574,231 | 52,440,268 | 133,963 | | ||||||||||||
Average core deposits(6) |
38,011,856 | 34,913,694 | 3,098,162 | 9 | ||||||||||||
Average shareholders equity |
5,482,502 | 5,787,401 | (304,898 | ) | (5 | ) | ||||||||||
Net charge-offs (NCOs) |
874,474 | 1,476,587 | (602,113 | ) | (41 | ) | ||||||||||
NCOs as a % of average loans and leases |
2.35 | % | 3.82 | % | (1.47 | ) | (38 | ) |
N.R. Not relevant, as denominator of calculation is a loss in prior period compared with income in current period. | ||
Notes to the Quarterly Key Statistics and Annual Key Statistics | ||
(1) | Comparisons for all presented periods are impacted by a number of factors. Refer
to Significant Items. |
|
(2) | For all periods presented, the impact of the convertible preferred stock
issued in 2008 and the warrants issued to the U.S. Department of the Treasury in 2008 related to
Huntingtons participation in the voluntary Capital Purchase
Program was excluded from the diluted
share calculation because the result was more than basic earnings per common share (anti-dilutive)
for the periods. |
|
(3) | Net income (loss) excluding expense for amortization of intangibles for the period
divided by average tangible shareholders equity. Average tangible shareholders equity equals
average total 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. |
|
(4) | On a fully-taxable equivalent (FTE) basis assuming a 35% tax rate. |
|
(5) | 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). |
|
(6) | Includes noninterest-bearing and interest-bearing demand deposits, money market
deposits, savings and other domestic deposits, and core certificates of deposit. |
|
(7) | December 31, 2010, figures are estimated. Based on an interim decision by the
banking agencies on December 14, 2006, Huntington has excluded the impact of adopting ASC Topic
715, Compensation Retirement Benefits, from the regulatory capital calculations. |
|
(8) | Tangible equity (total 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) | 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. |
-24-