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Huntington Bancshares Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: October 31, 2011 02:41PM
Huntington Bancshares Inc. (HBAN) filed Quarterly Report for the period ended 2011-09-30. Huntington Bancshares Inc. has a market cap of $4.72 billion; its shares were traded at around $5.47 with a P/E ratio of 10.94 and P/S ratio of 1.48. The dividend yield of Huntington Bancshares Inc. stocks is 2.93%.
Highlight of Business Operations:Total noninterest income increased $2.8 million, or 1%, from the prior quarter. This included an increase in other income of $15.1 million, or 33%, reflecting a $15.5 million gain on sale from the automobile securitization and a $2.8 million increase in market-related gains and capital markets income, which was partially offset by a $5.8 million decline in SBA servicing income. Service charges on deposit accounts and electronic banking income increased $4.5 million, or 7%, and $1.0 million, or 3%, respectively, primarily driven by new account growth. These benefits were partially offset by an $11.0 million decline in mortgage banking income, primarily driven by a negative $13.9 million linked quarter change in the net MSR valuation, the majority of which occurred over the last two weeks of the quarter.
Our emphasis on cross-sell, coupled with customers increasingly being attracted by the benefits offered through our Fair Play banking philosophy with programs such as 24-Hour Grace® on overdrafts and more recently the launch of Asterisk-Free Checking, are having a positive effect. The percent of consumer households with over four products at the end of the 2011 third quarter was 72.8%, up from 69.4% at the end of last year. For the first nine-month period of 2011, consumer checking account households grew at a 10.8% annualized rate, up from an annualized 6.8% in 2010. Total consumer checking account household revenue in the 2011 third quarter was $251.9 million, down $8.1 million, or 3%, from the 2011 second quarter. This was primarily driven by a decline in the FTP related net interest income on average deposits and lower average balances of core certificates of deposit. Total consumer checking account household revenue was up $12.3 million, or 5%, from the year-ago quarter.
By focusing on targeted relationships we are able to achieve higher product service distribution among our commercial relationships. Our expanded product offerings allow us to focus not only on the credit driven relationship, but leverage these relationships to generate a deeper share of wallet. The percent of commercial relationships with over four products at the end of the 2011 third quarter was 29.2%, up from 24.2% at the end of last year. For the first nine-month period of 2011, commercial relationships grew at a 8.6% annualized rate. Total commercial relationship revenue in the 2011 third quarter was $175.5 million, up $8.9 million, or 5%, from the 2011 second quarter, and $23.6 million, or 16%, higher than the year-ago quarter.
The net fair values of these derivative financial instruments, for which the gross amounts are included in accrued income and other assets or accrued expenses and other liabilities at September 30, 2011, December 31, 2010, and September 30, 2010, were $54.3 million, $46.3 million, and $38.8 million, respectively. The total notional values of derivative financial instruments used by Huntington on behalf of customers, including offsetting derivatives, were $10.7 billion, $9.8 billion, and $9.4 billion at September 30, 2011, December 31, 2010, and September 30, 2010, respectively. Huntingtons credit risks from interest rate swaps used for trading purposes were $330.9 million, $263.0 million, and $357.7 million at the same dates, respectively.
The total notional value of these derivative financial instruments at September 30, 2011, December 31, 2010, and September 30, 2010, was $1.4 billion, $2.6 billion, and $2.8 billion, respectively. The total notional amount at September 30, 2011, corresponds to trading assets with a fair value of $13.2 million and trading liabilities with a fair value of $0.7 million. Total MSR hedging gains and (losses) for the three-month periods ended September 30, 2011 and 2010, were $30.3 million and $24.3 million, respectively, and $39.1 million and $82.5 million for the nine-month periods ended September 30, 2011 and September 30, 2010, respectively. Included in total MSR hedging gains and losses for the three-month periods ended September 30, 2011 and 2010 were gains and (losses) related to derivative instruments of $30.2 million and $24.2 million, respectively, and $39.2 million and $81.9 million for the nine-month periods ended September 30, 2011, and September 30, 2010, respectively. These amounts are included in mortgage banking income in the Unaudited Condensed Consolidated Statements of Income.
Stocks Discussed: HBAN,