Neutral on Huntington Bancshares


We reaffirmed our long-term recommendation on Huntington Bancshares Incorporated (HBAN) at Neutral. This was based on the company's strong financials and its efficient capital deployment activities. However, a sluggish economic recovery and the existing low interest-rate environment will continue to keep the company’s top line under pressure in the near term.

Why This Stance?

Huntington Bancshares’ fourth-quarter 2013 earnings beat the Zacks Consensus Estimate. The company witnessed lower operating expenses and a partial improvement in its credit quality. However, a decline in the top line was a headwind for the quarter.

Huntington Bancshares’ efficient organic growth strategies are impressive. Both loan and deposit balances witnessed minimum year-over-year growth of 3% in 2013, amid a challenging environment.

Further, the company’s capital deployment activities reflect its efforts towards enhancing shareholder value. Following the Federal Reserve’s approval of its capital plan in Mar 2013, the company hiked its quarterly dividend by 25% in July 2013. Notably, the company also has an effective share repurchase program in place.

However, Huntington Bancshares’ top-line growth is expected to be sluggish in the next few quarters as the company is witnessing a declining net interest margin and rising costs in some of its major overheads. Moreover, the current disappointment in the mortgage market may continue to pose a threat to the company’s revenue in the near term.

Further, over the last 30 days, the Zacks Consensus Estimate for 2014 remained stable at 72 cents while for 2015 it declined 2.5% to 78 cents. As a result, Huntington Bancshares currently carries a Zacks Rank #3 (Hold).

Other Stocks to Consider

Some better-ranked Midwest Banks include First Citizens Banc Corp. (FCZA), First Financial Corp. (THFF) and Lakeland Financial Corp. (LKFN). All these stocks carry a Zacks Rank #1 (Strong Buy).

Read the Full Research Report on HBAN
Read the Full Research Report on LKFN
Read the Full Research Report on THFF
Read the Full Research Report on FCZA

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