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Huntington (HBAN) Q1 Earnings Meet Estimates, Revenues Rise

Zacks Equity Research

Huntington Bancshares HBAN reported first-quarter 2019 earnings per share of 32 cents, in line with the Zacks Consensus Estimate. The bottom line was up 14% from the prior-year quarter.

Results were supported by higher net interest income and fee income. Improvement in loans and deposits along with margin expansion were the tailwinds. However, results were adversely impacted by rise in operating expenses and higher provisions for credit losses.

The company reported net income of $358 million for the quarter, up 10% year over year.

Revenues & Loans Improve, Expenses Rise

Total revenues increased 5% year over year to $1.14 billion. However, it lagged the Zacks Consensus Estimate of $1.15 billion.

Net interest income (FTE basis) was $829 million, up 7% from the prior-year quarter. The rise was driven by an increase in average earnings assets. Also, net interest margin (NIM) expanded 9 basis points to 3.39%.

Non-interest income climbed 2% year over year to $319 million. The rise was mainly due to increase in card and payment processing income and gain on sale of loans and leases, partially offset by lower mortgage banking income.

Non-interest expenses increased 3% to $653 million. This was mainly due to higher personnel costs and outside data processing and other service costs.

As of Mar 31, 2019, average loans and leases at Huntington inched up 1% sequentially to $74.8 billion. However, average core deposits decreased marginally from the prior quarter to $79 billion.

Credit Quality Disappoints

Net charge-offs were $71 million or an annualized 0.38% of average total loans in the reported quarter, up from $38 million or an annualized 0.21% recorded a year ago. Also, the quarter-end allowance for credit losses increased 7% to $864 million.

Provision for credit losses inched up 2% on a year-over year basis to $67 million. In addition, total non-performing assets totaled $461 million as of Mar 31, 2019, up 10%.

Capital Ratios

Common equity tier 1 risk-based capital ratio and regulatory Tier 1 risk-based capital ratio were 9.84% and 11.25%, respectively, compared with 10.45% and 11.94% reported in the year-ago quarter.

Tangible common equity to tangible assets ratio was 7.57%, down from 7.70% as on Mar 31, 2018.

Capital Deployment

During the March-end quarter, the company repurchased 1.8 million shares at average cost of $13.64. Under the 2018 capital plan, share repurchase authorization of about $152 million remains outstanding.

Our Viewpoint

Huntington reported a decent quarter. The company, which has a solid franchise in the Midwest, is focused on capitalizing on its growth opportunities. Furthermore, it exhibits consistent efforts in increasing loan and deposit balances, aiding revenue growth. However, higher expenses and credit costs remain a concern.

Huntington Bancshares Incorporated Price, Consensus and EPS Surprise

Huntington Bancshares Incorporated Price, Consensus and EPS Surprise | Huntington Bancshares Incorporated Quote

Currently, Huntington carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Banks

UMB Financial’s UMBF first-quarter 2019 net operating earnings from continuing operations of $1.19 per share surpassed the Zacks Consensus Estimate of $1.10. The reported figure compared unfavorably with the prior-year quarter’s earnings of $1.18.

Reflecting top-line strength, Northern Trust Corporation’s NTRS first-quarter 2019 earnings per share of $1.48 outpaced the Zacks Consensus Estimate of $1.46. However, the bottom line compares unfavorably with the year-ago quarter’s figure of $1.58.

Fifth Third Bancorp FITB delivered a notable positive earnings surprise of 6.8% in first-quarter 2019. Adjusted earnings per share of 63 cents surpassed the Zacks Consensus Estimate of 59 cents. Further, including certain one-time items, the bottom line came in at $1.12, up 17% year over year.

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