01—Abstract
Summary
Summary of the 10-K filed February 18, 2022. 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 full-year 2021 net income attributable to the company of $1.3 billiona, a 59% increase from the prior year, with diluted EPS of $0.90, up 30%.
Results were shaped by the June 9, 2021 acquisition of TCF Financial Corporation in an all-stock transaction valued at $7.2 billionb. Total revenue rose 24% to $6.0 billion, net interest income rose 27% to $4.1 billion, and noninterest expense rose 57% to $4.4 billion, largely reflecting the acquisition and $701 million of TCF acquisition-related expenses. The provision for credit losses fell to $25 million from $1.0 billion-plus in 2020, reflecting improved macroeconomic forecasts, partially offset by a $294 million initial provision tied to TCF.
Balance sheet growth was substantial, with total assets of $174.1 billionc at December 31, 2021, loans and leases of $111.9 billion (up 37%), and total deposits of $143.3 billion. Shareholders' equity grew 49% to $19.3 billion, largely from $7.2 billion of equity issued in the acquisition. Regulatory capital ratios declined from the prior year but remained above well-capitalized standards, with the CET1 risk-based capital ratio at 9.33% (down 67 basis points) after $650 million of share repurchases during 2021.
Net charge-offs were $215 milliond, or 0.22% of average loans, down from $449 million, and nonperforming assets rose 33% to $750 million, largely due to TCF. Management highlighted that the company enters 2022 with strong momentum, while noting risks including COVID-19, the expected reversal of low interest rates over 2022, LIBOR transition, cybersecurity, and ongoing integration of TCF. The company declared a quarterly common dividend of $0.155 per share in January 2022 and retained an $800 million share repurchase authorization running through the second quarter of 2022, of which $150.1 million remained available at year-end.
02—Key points
Key Highlights
- Net income of $1.3 billion for 2021, up 59%; diluted EPS of $0.90, up 30%, after TCF acquisition-related expenses of $701 million pretax ($0.44 per share after tax).
- Total revenue increased 24% to $6.0 billion; net interest income rose 27% to $4.1 billion, while the FTE net interest margin declined 5 basis points to 2.94%.
- Provision for credit losses fell $1.0 billion, or 98%, to $25 million, reflecting improved macroeconomic forecasts and partly offset by a $294 million TCF initial provision.
- Noninterest income rose 19% to $1.9 billion; noninterest expense rose 57% to $4.4 billion, primarily due to the TCF acquisition.
- Total assets reached $174.1 billion and loans and leases reached $111.9 billion, up 37%; shareholders' equity grew 49% to $19.3 billion.
- CET1 risk-based capital ratio was 9.33% at year-end, down 67 basis points, after repurchasing $650 million of common stock during 2021; all capital ratios exceeded well-capitalized standards.
- Net charge-offs fell to $215 million (0.22% of average loans) from $449 million; nonperforming assets rose 33% to $750 million, largely driven by TCF.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2021filed February 18, 2022Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $1.11B$884.00M | +25.9% |
| Interest Expense | $89.00M$423.00M | −79.0% |
| Net Income | $1.29B$817.00M | +58.5% |
| EPS (Basic) | $0.91$0.71 | +28.2% |
| EPS (Diluted) | $0.90$0.69 | +30.4% |
| Shares Outstanding (Basic) | 1.26B1.02B | +24.1% |
| Shares Outstanding (Diluted) | 1.29B1.03B | +24.6% |
05—Questions
Frequently Asked Questions
What was the main driver of Huntington's 2021 earnings growth?
Net income rose 59% to $1.3 billion, driven by higher net interest income from a $31.7 billion (29%) increase in average earning assets, largely from the June 2021 TCF acquisition, and a sharp decline in the provision for credit losses to $25 million from the prior year's elevated COVID-related provision. These benefits were partially offset by $701 million of TCF acquisition-related expenses.
How did the TCF acquisition affect Huntington's balance sheet and capital?
The all-stock TCF acquisition, valued at $7.2 billion and closed June 9, 2021, added approximately $3.4 billion of goodwill and drove loans and leases up $30.3 billion to $111.9 billion. Shareholders' equity increased $6.3 billion, primarily from the $7.2 billion of equity issued in the transaction, while regulatory capital ratios declined because goodwill and intangibles are deducted from capital.
What are the key risks the filing highlights for investors?
The filing identifies COVID-19 effects on credit and operations, the expected reversal of near-zero interest rates over 2022 and their impact on net interest income and margins, the transition away from LIBOR, cybersecurity and operational risk, and the difficulty of integrating TCF and realizing expected cost savings. It also notes heightened regulatory scrutiny and the possibility that a future goodwill impairment could limit the bank's ability to pay dividends to the parent.
What capital return actions did Huntington take and what remains authorized?
During 2021 Huntington repurchased $650 million of common stock (43.1 million shares at a weighted average price of $15.07) and paid common dividends of $0.605 per share for the year. The board authorized up to $800 million of repurchases from the third quarter of 2021 through the second quarter of 2022, with $150.1 million remaining at year-end. In January 2022 the board declared a quarterly common dividend of $0.155 per share.
06—Continue