01—Abstract
Summary
Summary of the 10-K filed February 18, 2010. Cited figures are marked; the original filing is the authoritative source.
Huntington Bancshares Incorporated reported a 2009 net loss of $3,094.2 milliona, or $6.14 per common share, compared with a net loss of $113.8 million, or $0.44 per share, in 2008.
The result was driven mainly by a noncash goodwill impairment charge of $2,606.9 millionb recorded in 2009, along with a sharp rise in the provision for credit losses to $2,074.7 million from $1,057.5 million. Nonaccrual loans rose to $1,917.0 million from $1,502.1 million, and nonperforming assets were $2,058.1 million, or 5.57% of related assets. The allowance for credit losses increased to 4.16% of period-end loans and leases, from 2.30% a year earlier.
The company says 2009 was one of the most challenging years for the banking industry, with credit quality under pressure in its Midwest markets. Management states that 2009 represented the peak for credit losses and NPAs in this cycle, while expecting a challenging 2010 for credit quality. The company raised $1.7 billionc of capital during 2009, including $1.3 billion of common equity, which raised the tangible common equity ratio to 5.92% from 4.04% and the Tier 1 common equity ratio to 6.69% from 5.05%.
Common shares outstanding increased 95% during the year, and the common dividend was cut to $0.01d per share per quarter. The filing also details significant regulatory and funding developments. The three major rating agencies lowered the ratings of both the parent company and The Huntington National Bank during 2009.
The bank remained well-capitalized, but it could not pay dividends to the parent without regulatory approval. Management also cited pending legislation and ongoing federal programs, including TARP, as factors that could affect the business.
02—Key points
Key Highlights
- Net loss of $3,094.2 million ($6.14 per share) for 2009, versus a net loss of $113.8 million ($0.44 per share) in 2008.
- Goodwill impairment charges totaled $2,606.9 million in 2009, including a $2,602.7 million charge in the first quarter.
- Provision for credit losses rose to $2,074.7 million from $1,057.5 million; net charge-offs were $1,476.6 million.
- Nonperforming assets were $2,058.1 million, or 5.57% of related assets, versus $1,636.6 million, or 3.97%, at year-end 2008.
- Allowance for credit losses was $1,531.4 million, or 4.16% of period-end loans and leases, up from 2.30%.
- Raised $1.7 billion of capital in 2009, including $1.3 billion of common equity; tangible common equity ratio rose to 5.92% from 4.04%.
- Quarterly common dividend reduced to $0.01 per share; the Bank could not pay dividends to the parent company without regulatory approval at December 31, 2009.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2009filed February 18, 2010Financial Statements
FY2009 against FY2008
| Line item | FY2009FY2008 | Change |
|---|---|---|
| Interest Expense | $813.86M$1.27B | −35.7% |
| Net Income | -$3.09B-$113.81M | −2618.8% |
| EPS (Basic) | $-6.14$-0.44 | −1295.5% |
| EPS (Diluted) | $-6.14$-0.44 | −1295.5% |
| Shares Outstanding (Basic) | 532.80M366.15M | +45.5% |
| Shares Outstanding (Diluted) | 532.80M366.15M | +45.5% |
05—Questions
Frequently Asked Questions
Why did Huntington report such a large net loss in 2009?
The loss was primarily driven by a $2,606.9 million goodwill impairment charge, most of which was recorded in the first quarter after the company's stock price declined 78%. Credit costs also rose sharply, with the provision for credit losses reaching $2,074.7 million.
How did credit quality change during 2009?
Nonaccrual loans and leases increased to $1,917.0 million from $1,502.1 million, and nonperforming assets rose to $2,058.1 million. Management noted a 12% decline in NPAs in the fourth quarter of 2009 compared with the third quarter, and said 2009 was expected to be the peak for credit losses in this cycle.
Did Huntington strengthen its capital position?
Yes. The company raised $1.7 billion of capital in 2009, including $1.3 billion of common equity through common stock offerings, discretionary equity issuance programs, and preferred stock conversions. The Tier 1 common equity ratio increased to 6.69% from 5.05%.
What are the main regulatory and rating developments?
During 2009, Moody's, Standard and Poor's, and Fitch lowered the credit ratings of both the parent company and the bank, with negative outlooks. The Bank remained well-capitalized, but it could not pay dividends to the parent without regulatory approval, and the company does not anticipate receiving Bank dividends in 2010.
What is the outlook for dividends and share repurchases?
The quarterly common dividend was reduced to $0.01 per share in the first quarter of 2009. As a condition of TARP participation, the company may not repurchase shares without Treasury approval, and the 2006 Repurchase Program was terminated on February 18, 2009.
06—Continue