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Huntington Bancshares Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: October 31, 2012 03:36PM
Huntington Bancshares Inc. (HBAN) filed Quarterly Report for the period ended 2012-09-30.
Highlight of Business Operations:Fully-taxable equivalent net interest income for the first nine-month period of 2012 increased $65.8 million, or 5%, from the comparable year-ago period. This reflected the benefit of a 5% increase in average total earning assets. The fully-taxable equivalent net interest margin increased to 3.40% from 3.39%. The increase in average earning assets reflected a combination of factors including:
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 Asterisk-Free Checking, are having a positive effect. The percent of consumer households with over four products at the end of the 2012 third quarter was 75.9%, up from 73.5% at the end of last year. For the first nine-month period of 2012, consumer checking account households grew at a 12.7% annualized rate. Total consumer checking account household revenue in the 2012 third quarter was $246.0 million, down $3.8 million, or 2%, from the 2012 second quarter. Total consumer checking account household revenue was down $5.9 million, or 2%, from the year-ago quarter due to the Durbin amendment.
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 utilizing over four products at the end of the 2012 third quarter was 33.5%, up from 29.2% from the prior year. For the first nine-month period of 2012, commercial relationships grew at a 7.9% annualized rate. Total commercial relationship revenue in the 2012 third quarter was $175.7 million, down $13.5 million, or 7%, from the 2012 second quarter, and up $0.2 million, or 1.7%, higher than the year-ago quarter. This was primarily driven by capital markets activities.
$7.4 million, or 27%, increase in capital markets related income, including a $3.8 million, or 53%, increase in institutional brokerage income driven by stronger underwriting fees and fixed-income commissions compared to the prior year, a $3.3 million, or 28%, increase in sales of customer interest rate protection products, and a $0.3 million, or 4%, increase in foreign exchange revenue.
The improved results for 2012 were largely driven by an increase in mortgage banking revenue attributable to increased mortgage loan originations and the positive impact of net MSR hedge activity. Growth in loan and deposit balances was also very strong, as average loan balances increased 12% and average deposit balances increased 25%, with core deposits increasing by 37%. In the wealth management group, brokerage income declined $4.7 million, or 13%, from the prior period as a result of a reduction in annuity product sales partially offset by an increase in sales of market-linked certificates of deposit. Trust and asset management income was flat the first nine months of 2011, although total trust assets increased to $66.1 billion.
Stocks Discussed: HBAN,