01—Abstract
Summary
Summary of the 10-K filed February 17, 2016. Cited figures are marked; the original filing is the authoritative source.
Huntington Bancshares Incorporated, a multi-state diversified regional bank holding company headquartered in Columbus, Ohio, reported 2015 net income of $693 milliona, up 10% from the prior year, with diluted EPS of $0.81, up 13%.
Fully-taxable equivalent net interest income rose $118 millionb, or 6%, on 9% earning asset growth, while the net interest margin declined 8 basis points to 3.15%. Noninterest income rose $60 million, or 6%, to $1.0 billion, and noninterest expense rose $94 million, or 5%, to $2.0 billion. The provision for credit losses was $100 million, up 23%, as net charge-offs fell 30% to $88 million, though nonaccrual loans rose 24% to $372 million, centered in oil and gas exploration and production relationships.
Capital and balance sheet: total assets were $71.0 billionc at year-end 2015, and the Basel III CET1 ratio was 9.79%. The company repurchased 23.0 million common shares during 2015 and reported a tangible common equity to tangible assets ratio of 7.81%. Long-term debt grew to $7.07 billion from $4.34 billion, reflecting $3.1 billion of bank-level senior debt issued during the year.
Subsequent event: On January 26, 2016, Huntington agreed to acquire FirstMerit Corporation (assets of approximately $25.5 billiond) in a stock and cash transaction valued at about $3.4 billion, expected to close in the 2016 third quarter. Shareholders of FirstMerit will receive 1.72 Huntington shares and $5.00 in cash per share, and Huntington has ceased its share repurchases under the current authorization pending the deal.
02—Key points
Key Highlights
- Net income of $692.957 million in 2015, up 10% from 2014; diluted EPS of $0.81, up 13%
- Return on average total assets of 1.01% and return on average tangible common equity of 12.4%
- Net interest margin fell 8 basis points to 3.15% despite 9% earning asset growth; FTE net interest income rose 6% to $2.0 billion
- Noninterest income rose 6% to $1.0 billion, driven by cards and payment processing (up 35%) and mortgage banking (up 32%)
- Net charge-offs fell 30% to $88 million (0.18% of average loans), but nonaccrual loans rose 24% to $372 million, largely from oil and gas relationships
- Basel III CET1 ratio of 9.79% at December 31, 2015; the Bank remained well-capitalized
- Pending acquisition of FirstMerit Corporation for approximately $3.4 billion, expected to close in the 2016 third quarter
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2015filed February 17, 2016Financial Statements
FY2015 against FY2014
| Line item | FY2015FY2014 | Change |
|---|---|---|
| Interest Expense | $164.00M$139.32M | +17.7% |
| Net Income | $693.00M$632.39M | +9.6% |
| EPS (Basic) | $0.82$0.73 | +12.3% |
| EPS (Diluted) | $0.81$0.72 | +12.5% |
| Shares Outstanding (Basic) | 803.41M819.92M | −2.0% |
| Shares Outstanding (Diluted) | 817.13M833.08M | −1.9% |
05—Questions
Frequently Asked Questions
How did Huntington's profitability change in 2015?
Net income rose 10% to $693 million, and diluted EPS rose 13% to $0.81. Growth in net interest income and noninterest income was partly offset by higher noninterest expense, which rose 5% to $2.0 billion, and a 23% increase in the provision for credit losses to $100 million.
What is driving credit quality trends?
Net charge-offs decreased 30% to $88 million, and the company cited improvement in the CRE, home equity, and residential mortgage portfolios. Nonperforming assets rose 18% to $399 million, mainly from several large oil and gas exploration and production relationships added in the fourth quarter. The ACL was 1.33% of total loans, down from 1.40%.
What is the FirstMerit transaction?
Huntington agreed on January 26, 2016 to merge with FirstMerit Corporation, which reported about $25.5 billion in assets and 366 banking offices. Each FirstMerit share will convert into 1.72 Huntington shares plus $5.00 in cash, and the transaction is expected to close in the 2016 third quarter subject to regulatory and shareholder approvals.
How much capital did Huntington return to shareholders in 2015?
The company repurchased 23.0 million common shares at a weighted average price of $10.93 during 2015. Common dividends declared were $0.25 per share for the year, up from $0.21 in 2014, and the quarterly dividend was raised to $0.07 beginning in the fourth quarter of 2015.
How is the net interest margin trending?
The net interest margin declined 8 basis points to 3.15% in 2015. The company attributed the decline to a 6 basis point negative impact from the mix and yield on earning assets and a 3 basis point negative impact from funding costs, partly offset by a 1 basis point benefit from noninterest-bearing funds.
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