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Huntington Bancshares Annual Report, Year Ended Dec 31, 2005

Filing Date
Filed February 23, 2006
Period End
December 31, 2005
In the record · 2016–202610-K1110-Q338-K254

HBAN filed 11 annual reports (10-K), 33 quarterly reports (10-Q) and 254 current reports (8-K) between 2016 and 2026.

  1. FY2016 annual report10-K · Feb ’17Feb ’17
  2. Leadership change8-K · Jun ’19Jun ’19
  3. Material agreement8-K · Aug ’21Aug ’21
  4. Material agreement8-K · Oct ’25Oct ’25

01—Abstract

Summary

Summary of the 10-K filed February 23, 2006. Cited figures are marked; the original filing is the authoritative source.

Huntington Bancshares Incorporated, a multi-state diversified financial holding company headquartered in Columbus, Ohio, reported 2005 net income of $412.1 milliona, or $1.77 per diluted common share, up 3% from $398.9 million, or $1.71 per share, in 2004.

Net interest income rose $51.0 millionb, or 6%, to $962.4 million, with the net interest margin unchanged at 3.33%. The increase was offset by a $186.3 million, or 23%, decline in non-interest income, driven largely by a $148.7 million decline in operating lease income as the automobile operating lease portfolio runs off, and by a $152.4 million, or 14%, decline in non-interest expense. Provision for credit losses rose $26.2 million, or 48%, to $81.3 million, reflecting higher non-performing assets and certain commercial credit downgrades in the fourth quarter.

The balance sheet ended the year at $32.76 billionc in total assets, with shareholders' equity of $2.56 billion. Average loans and leases grew 9.9% to $24.31 billion, led by consumer loans, while average investment securities declined 14.0%. Non-performing assets were $117.2 million, or 0.48% of loans and other real estate, up from $108.6 million.

The company repurchased 9.6 million shares in 2005 for $231.7 milliond and announced a new authorization of up to 15 million shares. The Federal Reserve Bank of Cleveland written agreement remained in effect at year end, while the OCC agreement with the Bank was terminated in October 2005. The filing also states that the pending Unizan Financial Corp. acquisition, approved by the Federal Reserve Board, was scheduled to close March 1, 2006.

The company remained well capitalized at both the holding company and bank level, with a Tier 1 risk-based capital ratio of 9.13% and a total risk-based capital ratio of 12.42% at December 31, 2005. Management indicated that the 2006 effective tax rate was expected to rise to a more typical rate just below 30%, and that the quarterly dividend was increased to $0.25 per share in January 2006, a payout ratio above the company's long-term 40%-50% target range.

02—Key points

Key Highlights

  1. Net income of $412.1 million, or $1.77 per diluted share, up from $398.9 million, or $1.71 per share, in 2004.
  2. Net interest income increased $51.0 million, or 6%, to $962.4 million; net interest margin held steady at 3.33%.
  3. Non-interest income fell $186.3 million, or 23%, mainly due to a $148.7 million decline in operating lease income as the legacy auto lease portfolio runs off.
  4. Non-interest expense decreased $152.4 million, or 14%, primarily reflecting a $128.1 million decline in operating lease expense.
  5. Provision for credit losses rose $26.2 million, or 48%, to $81.3 million on higher non-performing assets and fourth-quarter commercial credit downgrades.
  6. Total assets were $32.76 billion at year end; the company repurchased 9.6 million shares in 2005 and authorized up to 15 million additional shares.
  7. Capital remained above well-capitalized thresholds, with a Tier 1 risk-based capital ratio of 9.13% and total risk-based capital ratio of 12.42%.

03—Questions

Frequently Asked Questions

  1. How did Huntington's earnings change in 2005?

    Net income rose to $412.1 million, or $1.77 per diluted share, from $398.9 million, or $1.71 per share, in 2004. Growth in net interest income and lower non-interest expense were partly offset by lower non-interest income and a higher provision for credit losses.

  2. What is driving the decline in non-interest income and expense?

    The filing attributes most of the decline to the run-off of automobile operating leases originated before May 2002. Operating lease income fell $148.7 million and operating lease expense fell $128.1 million in 2005, as average operating lease assets dropped to $0.4 billion from $0.9 billion.

  3. What regulatory matters affected the company in 2005?

    The company entered formal written agreements with its regulators in March 2005. The OCC terminated its agreement with the Bank in October 2005, but the Federal Reserve Bank of Cleveland agreement remained in effect at year end. The SEC formal investigation was settled in June 2005 with a $7.5 million civil penalty, which had been expensed in 2004.

  4. Is the company's capital position sound, and what did it do with capital?

    Yes. The Tier 1 risk-based capital ratio was 9.13% and the total risk-based capital ratio was 12.42% at December 31, 2005, both well above well-capitalized minimums. The company repurchased 9.6 million shares for $231.7 million in 2005, and the quarterly dividend was raised to $0.25 per share in January 2006.

  5. What pending events did the filing disclose?

    The Federal Reserve Board approved the company's application to acquire Unizan Financial Corp., and the merger was scheduled to close March 1, 2006. Management also expected the 2006 effective tax rate to rise to just below 30% from 24.2% in 2005.

04—Continue

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