COLUMBUS, Ohio, April 23, 2020 /PRNewswire/ -- Huntington
Bancshares Incorporated (Nasdaq: HBAN; www.huntington.com) reported
net income for the 2020 first quarter of $48
million, a decrease of 87% from the year-ago quarter.
Earnings per common share for the 2020 first quarter were
$0.03, down 91% from the year-ago
quarter. Tangible book value per common share as of 2020
first quarter-end was $8.28, an 8%
year-over-year increase. Return on average assets was 0.17%,
return on average common equity was 1.1%, and return on average
tangible common equity was 1.8%. Results were impacted by
elevated credit provisioning related to the deteriorating economic
outlook.
CEO Commentary:
"At Huntington, our purpose is to look out for people. Our
sympathy is with all those impacted by COVID-19 and their families,
and our deep gratitude and sincere appreciation goes out to all the
healthcare workers, and all 'essential' workers, who are the heroes
on the front lines each and every day. During this
unprecedented time, we are proud to play an important role in the
collective efforts within our communities to help our colleagues,
customers, and others manage through the economic challenges that
have developed out of the COVID-19 public health crisis," said
Steve Steinour, chairman, president,
and CEO. "From the outset, our first priority has been the
health and safety of our colleagues and customers. With more
than 80 percent of our colleagues working from home and more than
700 colleagues redeployed to help in keys areas across the bank, I
am pleased with our ability to effectively adapt our businesses to
meet the current challenges and adjust to changing customer
needs. I am especially proud of our colleagues who have done
a wonderful job continuing to serve our customers through branch
locations and operations centers. And for all colleagues, we
acted quickly by adding new benefits such as paid emergency leave
and emergency childcare time off, as well as increased wellness and
safety provisions for our colleagues. We then rolled out
relief programs for customers to help them during these challenging
times, and lastly, we dedicated funding for vital community
organizations."
"In addition, as the nation's No. 1 SBA lender, we have a unique
opportunity to support and, in some cases, stabilize our small
business customers. As of April
16 when the SBA announced the fund had been exhausted, we
helped almost 26,000 small businesses with applications totaling
more than $6 billion of loans through
the SBA's Paycheck Protection Program. We similarly have
focused on aiding our medium and large business customers.
Over the past weeks, we have seen draws on commercial lines and
inflows of commercial deposits, as illustrated in the quarter-end
balances, as these businesses fortified their own balance
sheets."
"The many relief measures we implemented in the early days of
the pandemic have helped to reduce the economic burden on both
consumers and businesses. We suspended late fees, established
payment deferral programs, and suspended repossession and
foreclosure activity, among others," Steinour said. "Through
last Friday, we have helped more than 51,000 consumer, 3,000
business banking, and 700 commercial customers through our
deferral programs. Our relief programs will cost us revenue
in the near term, but these are long-term investments in our
customer relationships as a continuation of our Fair Play Banking
philosophy introduced a decade ago, which strengthened customer
loyalty and increased new customer acquisition. These actions
are consistent with our purpose, and we will continue to support
our customers and communities during these hard times."
Steinour concluded, "One of the most challenging aspects of this
crisis, aside from the incredible human toll, is the uncertainty of
not knowing how long it will last or how severe it will be.
Huntington has been preparing for an economic downturn for years
and entered this environment from a position of strength. We
have strong capital and robust liquidity, our overall asset quality
remains strong, and our core earnings power is solid. We have
a foundation of disciplined enterprise risk management. We
are being thoughtful, measured, and deliberate in our actions to
adapt to the challenging operating environment, as we continue to
make necessary investments for the future. We remain
optimistic about the opportunities ahead, for Huntington and for
our customers."
2020 First Quarter Highlights compared with
2019 First Quarter:
- Fully-taxable equivalent total revenue increased $9 million, or 1%.
- Fully-taxable equivalent net interest income decreased
$33 million, or 4%.
- Net interest margin decreased 25 basis points to 3.14%.
- Noninterest income increased $42
million, or 13%, driven by a $37
million, or 176%, increase in mortgage banking income.
- Noninterest expense decreased $1
million, or less than 1%.
- Efficiency ratio of 55.4%, down from 55.8%.
- Average loans and leases increased $0.9
billion, or 1%, year-over-year, including a $0.7 billion, or 2%, increase in average consumer
loans and a $0.2 billion, or less
than 1%, increase in average commercial loans.
- Average core deposits increased $0.5
billion, or 1%, year-over-year.
- Net charge-offs equated to 0.62% of average loans and leases,
up from 0.38%.
- Nonperforming asset ratio of 0.75%, up from 0.61%.
- Provision for credit losses increased $374 million year-over-year to $441 million.
- Allowance for loan and lease losses (ALLL) increased
$740 million to $1.5 billion, or 1.93% of total loans and leases;
allowance for credit losses (ACL) increased to $1.6 billion, or 2.05% of total loans and
leases.
- Common Equity Tier 1 (CET1) risk-based capital ratio of 9.47%,
down from 9.84% and consistent with our 9% to 10% operating
guideline.
- Tangible common equity (TCE) ratio of 7.52%, down from
7.57%.
- Tangible book value per common share increased $0.61, or 8%, to $8.28.
- Repurchased $88 million of common
stock (7.1 million shares at an average price of $12.38 per share).
Table 1 – Earnings Performance Summary
|
2020
|
|
2019
|
(in millions,
except per share data)
|
First
|
|
Fourth
|
|
Third
|
|
Second
|
|
First
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
Net Income
|
$
|
48
|
|
|
$
|
317
|
|
|
$
|
372
|
|
|
$
|
364
|
|
|
$
|
358
|
|
Diluted earnings per
common share
|
0.03
|
|
|
0.28
|
|
|
0.34
|
|
|
0.33
|
|
|
0.32
|
|
|
|
|
|
|
|
|
|
|
|
Return on average
assets
|
0.17
|
%
|
|
1.15
|
%
|
|
1.37
|
%
|
|
1.36
|
%
|
|
1.35
|
%
|
Return on average
common equity
|
1.1
|
|
|
11.1
|
|
|
13.4
|
|
|
13.5
|
|
|
13.8
|
|
Return on average
tangible common equity
|
1.8
|
|
|
14.3
|
|
|
17.3
|
|
|
17.7
|
|
|
18.3
|
|
Net interest
margin
|
3.14
|
|
|
3.12
|
|
|
3.20
|
|
|
3.31
|
|
|
3.39
|
|
Efficiency
ratio
|
55.4
|
|
|
58.4
|
|
|
54.7
|
|
|
57.6
|
|
|
55.8
|
|
|
|
|
|
|
|
|
|
|
|
Tangible book value
per common share
|
$
|
8.28
|
|
|
$
|
8.25
|
|
|
$
|
8.25
|
|
|
$
|
7.97
|
|
|
$
|
7.67
|
|
Cash dividends
declared per common share
|
0.15
|
|
|
0.15
|
|
|
0.15
|
|
|
0.14
|
|
|
0.14
|
|
Average diluted
shares outstanding
|
1,035
|
|
|
1,047
|
|
|
1,051
|
|
|
1,060
|
|
|
1,066
|
|
|
|
|
|
|
|
|
|
|
|
Average earning
assets
|
$
|
101,783
|
|
|
$
|
100,062
|
|
|
$
|
99,692
|
|
|
$
|
99,188
|
|
|
$
|
99,212
|
|
Average loans and
leases
|
75,696
|
|
|
75,103
|
|
|
75,096
|
|
|
74,932
|
|
|
74,775
|
|
Average core
deposits
|
79,528
|
|
|
79,690
|
|
|
79,335
|
|
|
78,723
|
|
|
79,033
|
|
|
|
|
|
|
|
|
|
|
|
Tangible common
equity / tangible assets ratio
|
7.52
|
%
|
|
7.88
|
%
|
|
8.00
|
%
|
|
7.80
|
%
|
|
7.57
|
%
|
Common equity Tier 1
risk-based capital ratio
|
9.47
|
|
|
9.88
|
|
|
10.02
|
|
|
9.88
|
|
|
9.84
|
|
|
|
|
|
|
|
|
|
|
|
NCOs as a % of
average loans and leases
|
0.62
|
%
|
|
0.39
|
%
|
|
0.39
|
%
|
|
0.25
|
%
|
|
0.38
|
%
|
NAL ratio
|
0.72
|
|
|
0.62
|
|
|
0.58
|
|
|
0.57
|
|
|
0.56
|
|
ACL as a % of total
loans and leases
|
2.05
|
|
|
1.18
|
|
|
1.18
|
|
|
1.17
|
|
|
1.15
|
|
Net Interest Income, Net Interest Margin, and Average Balance
Sheet
Table 2 – Net Interest Income and Net Interest Margin
Performance Summary – Year-over-Year Net Interest Margin
Compression Outpaced Increase in Average Earning Assets
|
2020
|
|
2019
|
|
|
|
|
($ in
millions)
|
First
|
|
Fourth
|
|
Third
|
|
Second
|
|
First
|
|
Change (%)
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
LQ
|
|
YOY
|
Net interest
income
|
$
|
790
|
|
|
$
|
780
|
|
|
$
|
799
|
|
|
$
|
812
|
|
|
$
|
822
|
|
|
1
|
%
|
|
(4)
|
%
|
FTE
adjustment
|
6
|
|
|
6
|
|
|
6
|
|
|
7
|
|
|
7
|
|
|
0
|
|
|
(14)
|
|
Net interest income -
FTE
|
796
|
|
|
786
|
|
|
805
|
|
|
819
|
|
|
829
|
|
|
1
|
|
|
(4)
|
|
Noninterest
income
|
361
|
|
|
372
|
|
|
389
|
|
|
374
|
|
|
319
|
|
|
(3)
|
|
|
13
|
|
Total revenue -
FTE
|
$
|
1,157
|
|
|
$
|
1,158
|
|
|
$
|
1,194
|
|
|
$
|
1,193
|
|
|
$
|
1,148
|
|
|
—
|
%
|
|
1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Change (bp)
|
Yield /
Cost
|
|
|
|
|
|
|
|
|
|
|
LQ
|
|
YOY
|
Total earning
assets
|
3.88
|
%
|
|
4.03
|
%
|
|
4.21
|
%
|
|
4.35
|
%
|
|
4.40
|
%
|
|
(15)
|
|
|
(52)
|
|
Total loans and
leases
|
4.29
|
|
|
4.47
|
|
|
4.67
|
|
|
4.80
|
|
|
4.85
|
|
|
(18)
|
|
|
(56)
|
|
Total
securities
|
2.64
|
|
|
2.68
|
|
|
2.74
|
|
|
2.79
|
|
|
2.86
|
|
|
(4)
|
|
|
(22)
|
|
Total
interest-bearing liabilities
|
0.98
|
|
|
1.24
|
|
|
1.36
|
|
|
1.39
|
|
|
1.35
|
|
|
(26)
|
|
|
(37)
|
|
Total
interest-bearing deposits
|
0.68
|
|
|
0.87
|
|
|
0.98
|
|
|
0.97
|
|
|
0.94
|
|
|
(19)
|
|
|
(26)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest rate
spread
|
2.90
|
|
|
2.79
|
|
|
2.85
|
|
|
2.96
|
|
|
3.05
|
|
|
11
|
|
|
(15)
|
|
Impact of
noninterest-bearing funds on margin
|
0.24
|
|
|
0.33
|
|
|
0.35
|
|
|
0.35
|
|
|
0.34
|
|
|
(9)
|
|
|
(10)
|
|
Net interest
margin
|
3.14
|
%
|
|
3.12
|
%
|
|
3.20
|
%
|
|
3.31
|
%
|
|
3.39
|
%
|
|
2
|
|
|
(25)
|
|
|
See Pages 6-8 of
Quarterly Financial Supplement for additional
detail.
|
Fully-taxable equivalent (FTE) net interest income for the 2020
first quarter decreased $33 million,
or 4%, from the 2019 first quarter. This reflected a 25 basis
point decrease in the FTE net interest margin (NIM) to 3.14%,
partially offset by the benefit from a $2.6
billion, or 3%, increase in average earning assets.
The NIM compression reflected a 52 basis point year-over-year
decrease in average earning asset yields and a 10 basis point
decrease in the benefit from noninterest-bearing funds, partially
offset by a 37 basis point decrease in average interest-bearing
liability costs. The decrease in earning asset yields was
primarily driven by the impact of lower interest rates in the
quarter on commercial and home equity loan yields. The
decrease in average interest-bearing liability costs primarily
reflects lower interest-bearing deposit costs (down 26 basis
points) and lower long-term debt costs (down 128 basis points),
both reflecting the impact of lower interest rates.
Compared to the 2019 fourth quarter, FTE net interest income
increased $10 million, or 1%,
reflecting NIM expansion of 2 basis points and a 2% increase in
average earning assets. The NIM expansion reflected a 26
basis point decrease in average interest-bearing liability costs
partially offset by a 15 basis point decrease in average earning
asset yields and a 9 basis point decrease in the benefit from
noninterest-bearing funds. The decrease in average
interest-bearing liability costs primarily reflects lower
interest-bearing deposit costs (down 19 basis points) and lower
long-term debt costs (down 80 basis points), both reflecting the
impact of lower interest rates. Long-term debt costs in the
2020 first quarter also benefited from approximately $10 million of derivative ineffectiveness.
The decrease in earning asset yields was primarily driven by the
impact of lower interest rates in the quarter on commercial and
home equity loan yields.
Table 3 – Average Earning Assets – Securities, Residential
Mortgage, and Automobile Loan Growth Drive Year-over-year Earning
Asset Growth
|
2020
|
|
2019
|
|
|
|
|
($ in
billions)
|
First
|
|
Fourth
|
|
Third
|
|
Second
|
|
First
|
|
Change (%)
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
LQ
|
|
YOY
|
Commercial and
industrial
|
$
|
30.8
|
|
|
$
|
30.4
|
|
|
$
|
30.6
|
|
|
$
|
30.6
|
|
|
$
|
30.5
|
|
|
2
|
%
|
|
1
|
%
|
Commercial real
estate
|
6.7
|
|
|
6.8
|
|
|
6.9
|
|
|
6.9
|
|
|
6.9
|
|
|
(1)
|
|
|
(2)
|
|
Total
commercial
|
37.6
|
|
|
37.2
|
|
|
37.6
|
|
|
37.5
|
|
|
37.4
|
|
|
1
|
|
|
0
|
|
Automobile
|
12.9
|
|
|
12.6
|
|
|
12.2
|
|
|
12.2
|
|
|
12.4
|
|
|
3
|
|
|
5
|
|
Home
equity
|
9.0
|
|
|
9.2
|
|
|
9.4
|
|
|
9.5
|
|
|
9.6
|
|
|
(2)
|
|
|
(6)
|
|
Residential
mortgage
|
11.4
|
|
|
11.3
|
|
|
11.2
|
|
|
11.0
|
|
|
10.8
|
|
|
1
|
|
|
6
|
|
RV and
marine
|
3.6
|
|
|
3.6
|
|
|
3.5
|
|
|
3.4
|
|
|
3.3
|
|
|
1
|
|
|
9
|
|
Other
consumer
|
1.2
|
|
|
1.2
|
|
|
1.3
|
|
|
1.3
|
|
|
1.3
|
|
|
(4)
|
|
|
(8)
|
|
Total
consumer
|
38.1
|
|
|
37.9
|
|
|
37.5
|
|
|
37.4
|
|
|
37.4
|
|
|
1
|
|
|
2
|
|
Total loans and
leases
|
75.7
|
|
|
75.1
|
|
|
75.1
|
|
|
74.9
|
|
|
74.8
|
|
|
1
|
|
|
1
|
|
Total
securities
|
24.4
|
|
|
23.2
|
|
|
23.1
|
|
|
22.9
|
|
|
23.1
|
|
|
5
|
|
|
5
|
|
Held-for-sale and
other earning assets
|
1.7
|
|
|
1.8
|
|
|
1.5
|
|
|
1.4
|
|
|
1.3
|
|
|
(6)
|
|
|
29
|
|
Total earning
assets
|
$
|
101.8
|
|
|
$
|
100.1
|
|
|
$
|
99.7
|
|
|
$
|
99.2
|
|
|
$
|
99.2
|
|
|
2
|
%
|
|
3
|
%
|
|
See Page 6 of
Quarterly Financial Supplement for additional
detail.
|
Average earning assets for the 2020 first quarter increased
$2.6 billion, or 3%, from the
year-ago quarter, primarily reflecting a $1.3 billion, or 5%, increase in average total
securities and a $0.9 billion, or 1%,
increase in average total loans and leases. The increase in
average total securities primarily reflected portfolio growth and
the mark-to-market of the available-for-sale portfolio.
Average residential mortgage loans increased $0.6 billion, or 6%, reflecting robust portfolio
mortgage production over the past four quarters. Average
automobile loans increased $0.6
billion, or 5%, driven by strong production over the past
two quarters. Partially offsetting these increases, average
home equity loans and lines of credit decreased $0.6 billion, or 6%, reflecting a shift in
consumer preferences.
Compared to the 2019 fourth quarter, average earning assets
increased $1.7 billion, or 2%,
primarily reflecting a $1.2 billion,
or 5%, increase in average total securities and a $0.6 billion, or 1%, increase in average total
loans and leases. The increase in average total securities
primarily reflected portfolio growth. Average commercial and
industrial (C&I) loans increased $0.5
billion, or 2%, reflecting growth in corporate banking,
asset finance, and dealer floorplan.
While not materially impacting average balances for the 2020
first quarter, period-end total loans increased $2.6 billion, or 3%, compared to 2019
year-end. This increase was driven by a $2.3 billion, or 7%, increase in commercial
loans, primarily reflecting draws on commercial lines of credit in
late March related to customer reaction to the COVID-19
pandemic.
On June 14, 2019, Huntington
completed the sale of the Wisconsin retail branches, which included
$117 million of loans
held-for-sale.
Table 4 – Average Liabilities – Money Market and
Interest-Bearing Demand Drive Continued Year-over-Year Growth in
Core Deposits
|
2020
|
|
2019
|
|
|
|
First
|
|
Fourth
|
|
Third
|
|
Second
|
|
First
|
|
Change (%)
|
($ in
billions)
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
LQ
|
|
YOY
|
Demand deposits -
noninterest-bearing
|
$
|
20.1
|
|
|
$
|
20.6
|
|
|
$
|
19.9
|
|
|
$
|
19.8
|
|
|
$
|
19.9
|
|
|
(3)
|
%
|
|
1
|
%
|
Demand deposits -
interest-bearing
|
21.2
|
|
|
20.1
|
|
|
19.8
|
|
|
19.7
|
|
|
19.8
|
|
|
5
|
|
|
7
|
|
Total demand
deposits
|
41.3
|
|
|
40.7
|
|
|
39.7
|
|
|
39.5
|
|
|
39.7
|
|
|
1
|
|
|
4
|
|
Money market
deposits
|
24.7
|
|
|
24.6
|
|
|
24.3
|
|
|
23.3
|
|
|
22.9
|
|
|
1
|
|
|
8
|
|
Savings and other
domestic deposits
|
9.6
|
|
|
9.6
|
|
|
9.7
|
|
|
10.1
|
|
|
10.3
|
|
|
1
|
|
|
(7)
|
|
Core certificates of
deposit
|
3.9
|
|
|
4.8
|
|
|
5.7
|
|
|
5.9
|
|
|
6.1
|
|
|
(18)
|
|
|
(35)
|
|
Total core
deposits
|
79.5
|
|
|
79.7
|
|
|
79.3
|
|
|
78.7
|
|
|
79.0
|
|
|
0
|
|
|
1
|
|
Other domestic
deposits of $250,000 or more
|
0.3
|
|
|
0.3
|
|
|
0.3
|
|
|
0.3
|
|
|
0.3
|
|
|
3
|
|
|
(4)
|
|
Brokered deposits and
negotiable CDs
|
2.9
|
|
|
2.6
|
|
|
2.6
|
|
|
2.7
|
|
|
3.4
|
|
|
11
|
|
|
(15)
|
|
Total
deposits
|
$
|
82.7
|
|
|
$
|
82.6
|
|
|
$
|
82.2
|
|
|
$
|
81.7
|
|
|
$
|
82.7
|
|
|
0
|
%
|
|
0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term
borrowings
|
$
|
3.4
|
|
|
$
|
2.0
|
|
|
$
|
2.3
|
|
|
$
|
3.2
|
|
|
$
|
2.3
|
|
|
72
|
%
|
|
46
|
%
|
Long-term
debt
|
10.1
|
|
|
9.9
|
|
|
9.5
|
|
|
8.9
|
|
|
9.0
|
|
|
2
|
|
|
12
|
|
Total debt
|
$
|
13.5
|
|
|
$
|
11.9
|
|
|
$
|
11.8
|
|
|
$
|
12.1
|
|
|
$
|
11.3
|
|
|
13
|
%
|
|
19
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
interest-bearing liabilities
|
$
|
76.1
|
|
|
$
|
73.8
|
|
|
$
|
74.2
|
|
|
$
|
74.0
|
|
|
$
|
74.1
|
|
|
3
|
%
|
|
3
|
%
|
|
See Page 6 of
Quarterly Financial Supplement for additional
detail.
|
Average total interest-bearing liabilities for the 2020 first
quarter increased $2.0 billion, or
3%, from the year-ago quarter. Average total debt
increased $2.2 billion, or 19%, to
fund the increase in the size of our securities portfolio as part
of our interest rate hedging strategy. Average total deposits
remained flat, while average total core deposits increased
$0.5 billion, or 1%. Average
money market deposits increased $1.8
billion, or 8%, reflecting growth driven by promotional
pricing and a continued shift in consumer product mix.
Average total demand deposits increased $1.5
billion, or 4%, primarily driven by
commercial interest-bearing demand deposit growth.
Partially offsetting these increases, average core certificates of
deposit (CDs) decreased $2.1 billion,
or 35%, reflecting the maturity of the balances related to the 2018
consumer deposit growth initiatives. Savings and other
domestic deposits decreased $0.7
billion, or 7%, primarily reflecting a continued shift in
consumer product mix. Average brokered deposits and
negotiable CDs decreased $0.5
billion, or 15%, reflecting the maturity of brokered CDs in
the 2019 first quarter.
Compared to the 2019 fourth quarter, average total
interest-bearing liabilities increased $2.3
billion, or 3%. Average total debt increased
$1.6 billion, or 14%, to fund the
increase in the size of our securities portfolio as part of our
interest rate hedging strategy. Average total demand deposits
increased $0.5 billion, or 1%,
primarily driven by commercial interest-bearing demand deposit
growth. Average core CDs decreased $0.9
billion, or 18%, reflecting the maturity of the balances
related to the 2018 consumer deposit growth initiatives.
While not materially impacting average balances for the 2020
first quarter, period-end total deposits increased $4.5 billion, or 5%, compared to 2019
year-end. This increase was driven by a $3.3 billion, or 8%, increase in demand deposits,
primarily reflecting commercial deposit inflows in late March and
seasonal government banking deposit inflows, and a $1.3 billion, or 51%, increase in brokered
deposits.
On June 14, 2019, Huntington
completed the sale of the Wisconsin retail branches, which included
$725 million of deposits.
Noninterest Income
Table 5 – Noninterest Income – Mortgage Banking and
Capital Markets Fuel Growth in Noninterest Income
|
2020
|
|
2019
|
|
|
|
First
|
|
Fourth
|
|
Third
|
|
Second
|
|
First
|
|
Change (%)
|
($ in
millions)
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
LQ
|
|
YOY
|
Service charges on
deposit accounts
|
$
|
87
|
|
|
$
|
95
|
|
|
$
|
98
|
|
|
$
|
92
|
|
|
$
|
87
|
|
|
(8)
|
%
|
|
0
|
%
|
Card and payment
processing income
|
58
|
|
|
64
|
|
|
64
|
|
|
63
|
|
|
56
|
|
|
(9)
|
|
|
4
|
|
Mortgage banking
income
|
58
|
|
|
58
|
|
|
54
|
|
|
34
|
|
|
21
|
|
|
0
|
|
|
176
|
|
Trust and investment
management services
|
47
|
|
|
47
|
|
|
44
|
|
|
43
|
|
|
44
|
|
|
0
|
|
|
7
|
|
Insurance
income
|
23
|
|
|
24
|
|
|
20
|
|
|
23
|
|
|
21
|
|
|
(4)
|
|
|
10
|
|
Capital markets
fees
|
33
|
|
|
31
|
|
|
36
|
|
|
34
|
|
|
22
|
|
|
6
|
|
|
50
|
|
Bank owned life
insurance income
|
16
|
|
|
17
|
|
|
18
|
|
|
15
|
|
|
16
|
|
|
(6)
|
|
|
0
|
|
Gain on sale of loans
and leases
|
8
|
|
|
16
|
|
|
13
|
|
|
13
|
|
|
13
|
|
|
(50)
|
|
|
(38)
|
|
Net (losses) gains on
sales of securities
|
0
|
|
|
(22)
|
|
|
0
|
|
|
(2)
|
|
|
0
|
|
|
NM
|
|
NM
|
Other noninterest
income
|
31
|
|
|
42
|
|
|
42
|
|
|
59
|
|
|
39
|
|
|
(26)
|
|
|
(21)
|
|
Total noninterest
income
|
$
|
361
|
|
|
$
|
372
|
|
|
$
|
389
|
|
|
$
|
374
|
|
|
$
|
319
|
|
|
(3)
|
%
|
|
13
|
%
|
|
See Pages 9-10 of
Quarterly Financial Supplement for additional
detail.
|
Total noninterest income for the 2020 first quarter increased
$42 million, or 13%, from the
year-ago quarter. Mortgage banking income increased
$37 million, or 176%, primarily
reflecting an 86% increase in salable mortgage originations, higher
secondary marketing spreads, and a $7
million increase in income from net mortgage servicing
rights (MSR) risk management. Capital markets fees increased
$11 million, or 50%, driven by an
increase in interest rate derivatives activity and $6 million of unfavorable commodities derivatives
mark-to-market adjustments in the year-ago quarter. Partially
offsetting these increases, other noninterest income decreased
$8 million, or 21%, primarily due to
lower fixed income brokerage income, mark-to-market decreases on
mutual funds, and valuation increases to our VISA swap derivative
liabilities. Gain on sale of loans and leases decreased
$5 million, or 38%, primarily due to
lower SBA loan sales.
Compared to the 2019 fourth quarter, total noninterest income
decreased $11 million, or 3%.
Other noninterest income decreased $11
million, or 26%, primarily as a result of mark-to-market
decreases on mutual funds, valuation increases to our VISA swap
derivative liabilities, and lower income on terminated
leases. Service charges on deposit accounts decreased
$8 million, or 8%, primarily
reflecting seasonality. Gain on sale of loans and leases
decreased $8 million, or 50%,
primarily due to seasonality of SBA loan sales and lower technology
lease sales. Cards and payment processing income decreased
$6 million, or 9%, primarily
reflecting seasonality and lower card usage late in the 2020 first
quarter. Partially offsetting these decreases, net gains on
sale of securities were less than $1
million in the 2020 first quarter compared to $22 million of net losses in the prior quarter,
related to the $2 billion portfolio
repositioning completed in the 2019 fourth quarter.
Noninterest Expense
Table 6 – Noninterest Expense – Disciplined Expense
Management while Continuing to Invest in Digital and Mobile
Technology
|
2020
|
|
2019
|
|
|
|
First
|
|
Fourth
|
|
Third
|
|
Second
|
|
First
|
|
Change (%)
|
($ in
millions)
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
LQ
|
|
YOY
|
Personnel
costs
|
$
|
395
|
|
|
$
|
426
|
|
|
$
|
406
|
|
|
$
|
428
|
|
|
$
|
394
|
|
|
(7)
|
%
|
|
0
|
%
|
Outside data
processing and other services
|
85
|
|
|
89
|
|
|
87
|
|
|
89
|
|
|
81
|
|
|
(4)
|
|
|
5
|
|
Equipment
|
41
|
|
|
42
|
|
|
41
|
|
|
40
|
|
|
40
|
|
|
(2)
|
|
|
3
|
|
Net
occupancy
|
40
|
|
|
41
|
|
|
38
|
|
|
38
|
|
|
42
|
|
|
(2)
|
|
|
(5)
|
|
Professional
services
|
11
|
|
|
14
|
|
|
16
|
|
|
12
|
|
|
12
|
|
|
(21)
|
|
|
(8)
|
|
Amortization of
intangibles
|
11
|
|
|
12
|
|
|
12
|
|
|
12
|
|
|
13
|
|
|
(8)
|
|
|
(15)
|
|
Marketing
|
9
|
|
|
9
|
|
|
10
|
|
|
11
|
|
|
7
|
|
|
0
|
|
|
29
|
|
Deposit and other
insurance expense
|
9
|
|
|
10
|
|
|
8
|
|
|
8
|
|
|
8
|
|
|
(10)
|
|
|
13
|
|
Other noninterest
expense
|
51
|
|
|
58
|
|
|
49
|
|
|
62
|
|
|
56
|
|
|
(12)
|
|
|
(9)
|
|
Total noninterest
expense
|
$
|
652
|
|
|
$
|
701
|
|
|
$
|
667
|
|
|
$
|
700
|
|
|
$
|
653
|
|
|
(7)
|
%
|
|
0
|
%
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average full-time
equivalent employees
|
15.4
|
|
|
15.5
|
|
|
15.7
|
|
|
15.8
|
|
|
15.7
|
|
|
(1)
|
%
|
|
(2)
|
%
|
|
See Page 9 of
Quarterly Financial Supplement for additional
detail.
|
Total noninterest expense for the 2020 first quarter decreased
$1 million, or less than 1%, from the
year-ago quarter. Other noninterest expense decreased
$5 million, or 9%, primarily as a
result of higher operational losses in the first quarter 2019.
Total noninterest expense decreased $49
million, or 7%, from the 2019 fourth quarter.
Personnel costs decreased $31
million, or 7%, primarily reflecting the $15 million of expense related to position
reductions completed in the 2019 fourth quarter as well as lower
incentive compensation and medical expenses. Other
noninterest expense decreased $7
million, or 12%, primarily as a result of a $4 million final true-up in the 2019 fourth
quarter of the earn out related to the Hutchinson, Shockey, Erley
& Co. (HSE) acquisition and reduced travel and business
development expense.
Table 7 – Credit Quality Metrics – CECL Implementation and
Economic Outlook Drive Increase in Allowance
|
2020
|
|
2019
|
($ in
millions)
|
March 31,
|
|
December
31,
|
|
September
30,
|
|
June 30,
|
|
March 31,
|
Total nonaccrual
loans and leases
|
$
|
558
|
|
|
$
|
468
|
|
|
$
|
438
|
|
|
$
|
425
|
|
|
$
|
417
|
|
Total other real
estate
|
10
|
|
|
11
|
|
|
12
|
|
|
14
|
|
|
18
|
|
Other NPAs
(1)
|
18
|
|
|
19
|
|
|
32
|
|
|
21
|
|
|
26
|
|
Total nonperforming
assets
|
586
|
|
|
498
|
|
|
482
|
|
|
460
|
|
|
461
|
|
Accruing loans and
leases past due 90+ days
|
167
|
|
|
171
|
|
|
163
|
|
|
152
|
|
|
147
|
|
NPAs + accruing loans
& leases past due 90+ days
|
$
|
753
|
|
|
$
|
669
|
|
|
$
|
645
|
|
|
$
|
612
|
|
|
$
|
608
|
|
NAL ratio
(2)
|
0.72
|
%
|
|
0.62
|
%
|
|
0.58
|
%
|
|
0.57
|
%
|
|
0.56
|
%
|
NPA ratio
(3)
|
0.75
|
|
|
0.66
|
|
|
0.64
|
|
|
0.61
|
|
|
0.61
|
|
(NPAs+90
days)/(Loans+OREO)
|
0.96
|
|
|
0.89
|
|
|
0.86
|
|
|
0.82
|
|
|
0.81
|
|
Provision for credit
losses
|
$
|
441
|
|
|
$
|
79
|
|
|
$
|
82
|
|
|
$
|
59
|
|
|
$
|
67
|
|
Net
charge-offs
|
117
|
|
|
73
|
|
|
73
|
|
|
48
|
|
|
71
|
|
Net charge-offs /
Average total loans
|
0.62
|
%
|
|
0.39
|
%
|
|
0.39
|
%
|
|
0.25
|
%
|
|
0.38
|
%
|
Allowance for loans
and lease losses (ALLL)
|
$
|
1,504
|
|
|
$
|
783
|
|
|
$
|
783
|
|
|
$
|
774
|
|
|
$
|
764
|
|
Allowance for
unfunded loan commitments and
letters of credit
|
99
|
|
|
104
|
|
|
101
|
|
|
101
|
|
|
100
|
|
Allowance for credit
losses (ACL)
|
$
|
1,603
|
|
|
$
|
887
|
|
|
$
|
884
|
|
|
$
|
875
|
|
|
$
|
864
|
|
ALLL as a %
of:
|
|
|
|
|
|
|
|
|
|
Total loans and
leases
|
1.93
|
%
|
|
1.04
|
%
|
|
1.05
|
%
|
|
1.03
|
%
|
|
1.02
|
%
|
NALs
|
270
|
|
|
167
|
|
|
179
|
|
|
182
|
|
|
183
|
|
NPAs
|
257
|
|
|
157
|
|
|
163
|
|
|
168
|
|
|
166
|
|
ACL as a %
of:
|
|
|
|
|
|
|
|
|
|
Total loans and
leases
|
2.05
|
%
|
|
1.18
|
%
|
|
1.18
|
%
|
|
1.17
|
%
|
|
1.15
|
%
|
NALs
|
287
|
|
|
190
|
|
|
202
|
|
|
206
|
|
|
207
|
|
NPAs
|
273
|
|
|
178
|
|
|
184
|
|
|
190
|
|
|
186
|
|
(1)
|
Other
nonperforming assets include certain impaired securities and/or
nonaccrual loans held-for-sale.
|
(2)
|
Total NALs as a %
of total loans and leases.
|
(3)
|
Total NPAs as a %
of sum of loans and leases, other real estate owned, and other
NPAs.
|
|
|
See Pages 11-14 of
Quarterly Financial Supplement for additional
detail.
|
Asset quality performance continues to be impacted by our oil
and gas portfolio. The consumer portfolio metrics continue to
reflect our focus on high quality borrowers. The commercial
portfolio metrics primarily reflected continued volatility in the
oil and gas portfolio, while the remainder of the commercial
portfolio has performed in line with expectations.
Nonperforming assets (NPAs) increased to $586 million, or 0.75% of total loans and leases
and OREO, from $461 million, or
0.61%, a year ago. Nonaccrual loans and leases (NALs)
increased $141 million, or 34%, to
$558 million, or 0.72% of total loans
and leases. The year-over-year increase was primarily in the
commercial portfolio, particularly the oil and gas portfolio.
OREO balances decreased $8 million,
or 44%, from the year-ago quarter. On a linked quarter basis,
NALs increased $90 million, or 19%,
while NPAs increased $88 million, or
18%. The oil and gas portfolio accounted for nearly all of the
linked-quarter increase in NALs.
The provision for credit losses increased $374 million year-over-year to $441 million in the 2020 first quarter. Net
charge-offs (NCOs) increased $46
million to $117 million.
The oil and gas portfolio accounted for approximately 27% of
the total commercial NCOs, while one large relationship in the coal
industry accounted for an additional 45%. Consumer NCOs were
down on both a year-over-year and linked quarter basis, consistent
with our expectations. NCOs represented an annualized 0.62%
of average loans and leases in the current quarter, up from 0.39%
in the prior quarter and up from 0.38% in the year-ago
quarter. We remain confident in the long-term performance of
our credit portfolios.
The allowance for loan and lease losses (ALLL) increased
$740 million from the year ago
quarter to $1.5 billion, or 1.93% of
total loans and leases. The ALLL as a percentage of
period-end total NALs increased to 270% from 183% over the same
period. The allowance for credit losses (ACL) increased
by $739 million from the year ago quarter to $1.6 billion, or 2.05% of total loans and
leases. The increase in the ACL was a result of the
$393 million increase from CECL
implementation on January 1, 2020, an
increase of $65 million in specific
reserves, and an increase of $258
million primarily related to the deteriorating economic
outlook resulting from the COVID-19 pandemic. We believe the
levels of the ALLL and ACL are appropriate given the low level of
problem loans and the current composition of the overall loan and
lease portfolio.
Capital
Table 8 – Capital Ratios – Ratios Remain within Targeted
Operating Ranges; Late Quarter Increase in the Balance Sheet Drives
Linked Quarter Decline in Capital Ratios
|
|
2020
|
|
2019
|
($ in
billions)
|
|
March 31,
|
|
December
31,
|
|
September
30,
|
|
June 30,
|
|
March 31,
|
Tangible common
equity / tangible assets ratio
|
|
7.52
|
%
|
|
7.88
|
%
|
|
8.00
|
%
|
|
7.80
|
%
|
|
7.57
|
%
|
Common equity tier 1
risk-based capital ratio (1)
|
|
9.47
|
%
|
|
9.88
|
%
|
|
10.02
|
%
|
|
9.88
|
%
|
|
9.84
|
%
|
Regulatory Tier 1
risk-based capital ratio (1)
|
|
10.81
|
%
|
|
11.26
|
%
|
|
11.41
|
%
|
|
11.28
|
%
|
|
11.25
|
%
|
Regulatory Total
risk-based capital ratio (1)
|
|
12.74
|
%
|
|
13.04
|
%
|
|
13.29
|
%
|
|
13.13
|
%
|
|
13.11
|
%
|
Total risk-weighted
assets (1)
|
|
$
|
90.2
|
|
|
$
|
87.5
|
|
|
$
|
86.7
|
|
|
$
|
86.3
|
|
|
$
|
86.0
|
|
(1)
|
March 31,
2020 figures are estimated. Amounts are presented on a Basel
III standardized approach basis for calculating risk-weighted
assets. The estimated March 31, 2020 capital ratios reflect
Huntington's election of a five-year transition to delay for two
years the full impact of CECL on regulatory capital, followed by a
three-year transition period.
|
|
|
See Pages 15-16 of
Quarterly Financial Supplement for additional
detail.
|
The tangible common equity to tangible assets ratio was 7.52% at
March 31, 2020, down 5 basis points from a year ago.
Common Equity Tier 1 (CET1) risk-based capital ratio was 9.47%,
down from 9.84% a year ago. The regulatory Tier 1 risk-based
capital ratio was 10.81% compared to 11.25% at March 31,
2019. All capital ratios were impacted by the year-over-year
balance sheet growth. The capital impact of the repurchase of
$504 million of common stock over the
last four quarters, including $88
million (7.1 million shares at an average price of
$12.38 per share) repurchased during
the 2020 first quarter, and cash dividends effectively offset
earnings on a year-over-year basis.
Income Taxes
The provision for income taxes was $10
million in the 2020 first quarter and $63 million in the 2019 first quarter. The
effective tax rates for the 2020 first quarter and 2019 first
quarter were 17.0% and 15.0%, respectively. The variance
between the 2020 first quarter and the 2019 first quarter provision
for income taxes and effective tax rates relates primarily to lower
pre-tax income and the impact of stock-based compensation.
At March 31, 2020, we had a net federal deferred tax
liability of $236 million and a net
state deferred tax asset of $35
million.
Expectations - 2020
Due to the rapidly evolving economic environment and the
elevated level of uncertainty related to the impact of the COVID-19
pandemic, the Company is withdrawing its previously announced
annual expectations for 2020. The previously announced 2020
expectations should no longer be relied upon.
Conference Call / Webcast Information
Huntington's senior management will host an earnings conference
call on April 23, 2020, at 9:00 a.m.
(Eastern Daylight Time). The call may be accessed via a live
Internet webcast at the Investor Relations section of Huntington's
website, www.huntington.com, or through a dial-in telephone number
at (877) 407-8029; Conference ID #13700076. 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
April 30, 2020 at (877) 660-6853 or (201) 612-7415;
conference ID #13700076.
Please see the 2020 First Quarter Quarterly Financial
Supplement for additional detailed financial performance metrics.
This document can be found on the Investor Relations section of
Huntington's website, http://www.huntington.com.
About Huntington
Huntington Bancshares Incorporated is a regional bank holding
company headquartered in Columbus,
Ohio, with $114 billion of
assets and a network of 839 full-service branches, including 12
Private Client Group offices, and 1,434 ATMs across seven
Midwestern states. Founded in 1866, The Huntington National
Bank and its affiliates provide consumer, small business,
commercial, treasury management, wealth management, brokerage,
trust, and insurance services. Huntington also provides vehicle
finance, equipment finance, national settlement, and capital market
services that extend beyond its core states. Visit
huntington.com for more information.
Caution regarding Forward-Looking Statements
This communication contains certain forward-looking statements,
including, but not limited to, certain plans, expectations, goals,
projections, and statements, which are not historical facts and are
subject to numerous assumptions, risks, and uncertainties.
Statements that do not describe historical or current facts,
including statements about beliefs and expectations, are
forward-looking statements. Forward-looking statements may be
identified by words such as expect, anticipate, believe, intend,
estimate, plan, target, goal, or similar expressions, or future or
conditional verbs such as will, may, might, should, would, could,
or similar variations. The forward-looking statements are
intended to be subject to the safe harbor provided by Section 27A
of the Securities Act of 1933, Section 21E of the Securities
Exchange Act of 1934, and the Private Securities Litigation Reform
Act of 1995.
While there is no assurance that any list of risks and
uncertainties or risk factors is complete, below are certain
factors which could cause actual results to differ materially from
those contained or implied in the forward-looking statements:
changes in general economic, political, or industry conditions; the
magnitude and duration of the COVID-19 pandemic and its impact on
the global economy and financial market conditions and our
business, results of operations, and financial condition;
uncertainty in U.S. fiscal and monetary policy, including the
interest rate policies of the Federal Reserve Board; volatility and
disruptions in global capital and credit markets; movements in
interest rates; reform of LIBOR; competitive pressures on product
pricing and services; success, impact, and timing of our business
strategies, including market acceptance of any new products or
services implementing our "Fair Play" banking philosophy; the
nature, extent, timing, and results of governmental actions,
examinations, reviews, reforms, regulations, and interpretations,
including those related to the Dodd-Frank Wall Street Reform and
Consumer Protection Act and the Basel III regulatory capital
reforms, as well as those involving the OCC, Federal Reserve, FDIC,
and CFPB; and other factors that may affect our future
results. Additional factors that could cause results to
differ materially from those described above can be found in our
2019 Annual Report on Form 10-K, as well as our subsequent
Securities and Exchange Commission ("SEC") filings, which are on
file with the SEC and available in the "Investor Relations" section
of our website, http://www.huntington.com, under the heading
"Publications and Filings."
All forward-looking statements speak only as of the date they
are made and are based on information available at that time.
We do not assume any obligation to update forward-looking
statements to reflect circumstances or events that occur after the
date the forward-looking statements were made or to reflect the
occurrence of unanticipated events except as required by federal
securities laws. As forward-looking statements involve
significant risks and uncertainties, caution should be exercised
against placing undue reliance on such statements.
Basis of Presentation
Use of Non-GAAP Financial Measures
This document contains GAAP financial measures and non-GAAP
financial measures where management believes it to be helpful in
understanding Huntington's results of operations or financial
position. Where non-GAAP financial measures are used, the
comparable GAAP financial measure, as well as the reconciliation to
the comparable GAAP financial measure, can be found in this
document, conference call slides, or the Form 8-K related to this
document, all of which can be found in the Investor Relations
section of Huntington's website, http://www.huntington.com.
Annualized Data
Certain returns, yields, performance ratios, or quarterly growth
rates are presented on an "annualized" basis. This is done
for analytical and decision-making purposes to better discern
underlying performance trends when compared to full-year or
year-over-year amounts. For example, loan and deposit growth
rates, as well as net charge-off percentages, are most often
expressed in terms of an annual rate like 8%. As such, a 2%
growth rate for a quarter would represent an annualized 8% growth
rate.
Fully-Taxable Equivalent Interest Income and Net Interest
Margin
Income from tax-exempt earning assets is increased by an amount
equivalent to the taxes that would have been paid if this income
had been taxable at statutory rates. This adjustment puts all
earning assets, most notably tax-exempt municipal securities and
certain lease assets, on a common basis that facilitates comparison
of results to results of competitors.
Earnings per Share Equivalent Data
Significant income or expense items may be expressed on a per
common share basis. This is done for analytical and
decision-making purposes to better discern underlying trends in
total corporate earnings per share performance excluding the impact
of such items. Investors may also find this information
helpful in their evaluation of our financial performance against
published earnings per share mean estimate amounts, which typically
exclude the impact of Significant Items. Earnings per share
equivalents are usually calculated by applying an effective tax
rate to a pre-tax amount to derive an after-tax amount, which is
divided by the average shares outstanding during the respective
reporting period. Occasionally, when the item involves
special tax treatment, the after-tax amount is disclosed
separately, with this then being the amount used to calculate the
earnings per share equivalent.
Rounding
Please note that columns of data in this document may not add
due to rounding.
Significant Items
From time to time, revenue, expenses, or taxes are impacted by
items judged by management to be outside of ordinary banking
activities and/or by items that, while they may be associated with
ordinary banking activities, are so unusually large that their
outsized impact is believed by management at that time to be
infrequent or short term in nature. We refer to such items as
"Significant Items". Most often, these Significant Items
result from factors originating outside the company – e.g.,
regulatory actions/assessments, windfall gains, changes in
accounting principles, one-time tax assessments/refunds, and
litigation actions. In other cases they may result from
management decisions associated with significant corporate actions
out of the ordinary course of business – e.g., merger/restructuring
charges, recapitalization actions, and goodwill impairment.
Even though certain revenue and expense items are naturally
subject to more volatility than others due to changes in market and
economic environment conditions, as a general rule volatility alone
does not define a Significant Item. For example, changes in
the provision for credit losses, gains/losses from investment
activities, and asset valuation write-downs reflect ordinary
banking activities and are, therefore, typically excluded from
consideration as a Significant Item.
Management believes the disclosure of "Significant Items", when
appropriate, aids analysts/investors in better understanding
corporate performance and trends so that they can ascertain which
of such items, if any, they may wish to include/exclude from their
analysis of the company's performance - i.e., within the context of
determining how that performance differed from their expectations,
as well as how, if at all, to adjust their estimates of future
performance accordingly. To this end, management has adopted
a practice of listing "Significant Items" in our external
disclosure documents (e.g., earnings press releases, quarterly
performance discussions, investor presentations, and Forms 10-Q and
10-K).
"Significant Items" for any particular period are not intended
to be a complete list of items that may materially impact current
or future period performance. A number of items could
materially impact these periods, including those which may be
described from time to time in Huntington's filings with the
Securities and Exchange Commission.
View original content to download
multimedia:http://www.prnewswire.com/news-releases/huntington-bancshares-incorporated-reports-2020-first-quarter-earnings-301045877.html
SOURCE Huntington Bancshares Incorporated