Why did Huntington's earnings decline in 2000?

Net income fell to $328.4 million from $422.1 million, largely because 1999 included a $70.6 million after-tax gain on the sale of the credit card portfolio, and 2000 included $32.5 million of after-tax special charges. On an operating basis, earnings were $360.9 million, down from $414.4 million. The filing attributes the net interest income decline mainly to higher funding costs from rising market interest rates and a shift in the core deposit mix toward higher-rate accounts.

How is the credit quality of the loan portfolio?

The allowance for loan losses was $297.9 million, or 1.45% of total loans, unchanged from year-end 1999. Net loan losses were 0.40% of average loans in both 2000 and 1999. Accruing loans past due 90 days or more rose to $80.3 million from $61.3 million. Management expects net charge-offs to be above 2000 levels in 2001 and total non-performing assets to increase further.

What did Huntington say about its 2001 outlook?

The filing states that non-interest expense in 2001 is expected to increase from the fourth-quarter 2000 level and that the 2001 effective tax rate is expected to remain under 30%. It also expects charge-offs and non-performing assets to rise as economic conditions adversely affect corporate borrowers. A $4.2 million pre-tax loss on a money market fund sale, announced March 7, 2001, will be reflected in first-quarter 2001 results.

How much capital does Huntington hold, and is it adequate?

At December 31, 2000, the Tier 1 risk-based capital ratio was 7.19%, the total risk-based capital ratio was 10.46%, and the Tier 1 leverage ratio was 6.93%. These exceed the well-capitalized levels of 6%, 10%, and 5%, respectively. Average shareholders' equity was $2.3 billion, and book value per share was $9.43, compared with $8.67 a year earlier.

What dividends and share repurchases did Huntington make in 2000?

Cash dividends declared were $0.76 per share in 2000, up 12% from 1999 on a restated basis, and totaled about $189.2 million. The company repurchased approximately 8.8 million shares during 2000 and had about 15.3 million shares remaining under its authorization at year-end. It had not repurchased shares since September 30, 2000, as management reviewed its capital strategy.

HBAN 10-K FY2000 Annual Report — Revenue, Net Income, EPS

01—Abstract

Summary

Summary of the 10-K filed March 8, 2001. Cited figures are marked; the original filing is the authoritative source.

Huntington Bancshares Incorporated, a multi-state financial holding company headquartered in Columbus, Ohio, reported 2000 net income of $328.4 million^a, or $1.32 per diluted share, down from $422.1 million, or $1.65 per share, in 1999.

Excluding after-tax special charges of $32.5 million^b and, in 1999, a $70.6 million gain on the sale of its credit card portfolio, operating earnings were $360.9 million, or $1.45 per share, versus $414.4 million, or $1.62 per share, in 1999. Return on average equity on an operating basis was 15.84% for 2000, compared with 19.31% in 1999. Net interest margin fell to 3.73% from 4.11%, as funding costs rose faster than asset yields.

Total assets declined to $28.6 billion^c at year-end 2000 from $29.0 billion, reflecting a balance sheet repositioning that included $1.4 billion of automobile loan securitizations and the sale of about $1.7 billion of lower-yielding fixed-income securities. Management expects net charge-offs to exceed 2000 levels in 2001 and says non-performing assets are expected to increase as economic conditions deteriorate for corporate borrowers. Non-interest expense is expected to rise in 2001 from the fourth-quarter level, and the company expects its 2001 effective tax rate to remain under 30%.

The company's Tier 1 risk-based capital ratio was 7.19%^d and its total risk-based capital ratio was 10.46% at December 31, 2000, both above regulatory well-capitalized thresholds. Huntington acquired Empire Banc Corporation in June 2000 and J.

Rolfe Davis Insurance Agency in August 2000, both accounted for as purchases. Shareholders received cash dividends of $0.76 per share in 2000, up 12% from 1999, after a 10% stock dividend.

02—Key points

Key Highlights

Net income of $328.4 million, or $1.32 per diluted share, in 2000, versus $422.1 million, or $1.65 per share, in 1999
Operating earnings of $360.9 million, or $1.45 per share, excluding special charges and the 1999 credit card portfolio sale gain
Net interest income fell to $942.4 million from $1,041.8 million, and net interest margin declined to 3.73% from 4.11%, driven by higher funding costs
Total assets of $28.6 billion at year-end 2000, down from $29.0 billion, after a balance sheet repositioning including $1.4 billion of automobile loan securitizations
Allowance for loan losses of $297.9 million, or 1.45% of total loans; non-performing assets of $105.4 million, or 0.51% of loans and other real estate
Tier 1 risk-based capital ratio of 7.19% and total risk-based capital ratio of 10.46% at December 31, 2000
Acquired Empire Banc Corporation ($506 million in assets) in June 2000 and J. Rolfe Davis Insurance Agency in August 2000

03—Questions

Frequently Asked Questions

Why did Huntington's earnings decline in 2000?
Net income fell to $328.4 million from $422.1 million, largely because 1999 included a $70.6 million after-tax gain on the sale of the credit card portfolio, and 2000 included $32.5 million of after-tax special charges. On an operating basis, earnings were $360.9 million, down from $414.4 million. The filing attributes the net interest income decline mainly to higher funding costs from rising market interest rates and a shift in the core deposit mix toward higher-rate accounts.
How is the credit quality of the loan portfolio?
The allowance for loan losses was $297.9 million, or 1.45% of total loans, unchanged from year-end 1999. Net loan losses were 0.40% of average loans in both 2000 and 1999. Accruing loans past due 90 days or more rose to $80.3 million from $61.3 million. Management expects net charge-offs to be above 2000 levels in 2001 and total non-performing assets to increase further.
What did Huntington say about its 2001 outlook?
The filing states that non-interest expense in 2001 is expected to increase from the fourth-quarter 2000 level and that the 2001 effective tax rate is expected to remain under 30%. It also expects charge-offs and non-performing assets to rise as economic conditions adversely affect corporate borrowers. A $4.2 million pre-tax loss on a money market fund sale, announced March 7, 2001, will be reflected in first-quarter 2001 results.
How much capital does Huntington hold, and is it adequate?
At December 31, 2000, the Tier 1 risk-based capital ratio was 7.19%, the total risk-based capital ratio was 10.46%, and the Tier 1 leverage ratio was 6.93%. These exceed the well-capitalized levels of 6%, 10%, and 5%, respectively. Average shareholders' equity was $2.3 billion, and book value per share was $9.43, compared with $8.67 a year earlier.
What dividends and share repurchases did Huntington make in 2000?
Cash dividends declared were $0.76 per share in 2000, up 12% from 1999 on a restated basis, and totaled about $189.2 million. The company repurchased approximately 8.8 million shares during 2000 and had about 15.3 million shares remaining under its authorization at year-end. It had not repurchased shares since September 30, 2000, as management reviewed its capital strategy.

04—Continue

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