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| Huntington Bancshares Announces First Quarter 2002 Earnings of $0.39 Per Share And Operating Earnings of $0.31 Per Share Excluding the Gain on the Sale Of Florida Operations and Restructuring and Other Charges |
COLUMBUS, Ohio, April 18 /PRNewswire-FirstCall/ -- Huntington Bancshares Incorporated (Nasdaq: HBAN; http://www.huntington.com) today reported first quarter earnings of $97.7 million, or $0.39 per common share. This compares with earnings of $65.6 million, or $0.26 per common share, in the fourth quarter and $67.9 million, or $0.27 per common share, in the year-ago quarter. First quarter 2002 results include the impact of the following items, all associated with the strategic restructuring announced last July: * $175.4 million pretax gain on the sale of our Florida banking operations ($56.8 million after tax or $0.22 per share), and * $56.2 million pretax restructuring and other charges ($36.5 million after tax or $0.14 per share). The first quarter of 2002 marks the last quarter to reflect such charges related to the implementation of strategic initiatives announced in July 2001, including the sale of the Florida banking operations. Excluding the impact of these items from first quarter 2002 results, operating earnings were $77.5 million, or $0.31 per common share, in the first quarter. This compares with fourth quarter 2001 operating earnings of $75.5 million, or $0.30 per common share, and $67.9 million, or $0.27 per common share, in the year-ago quarter with comparisons to prior quarters benefiting by $0.03 per share from the adoption of SFAS No. 142, Goodwill and Other Intangible Assets. "Operating results reflected a solid quarter for Huntington in a difficult economic environment," said Thomas Hoaglin, chairman, president and chief executive officer. "We completed several strategic initiatives that were announced last July to improve long-term performance. Specifically, we closed the sale of our Florida banking operations on February 15. And, consistent with our announced intention to commence a significant share repurchase program upon completion of this sale, on February 19 the Board authorized a 22 million share repurchase program. Through the end of March we had repurchased 1.5 million shares." Hoaglin continued, "First quarter results, adjusted for the impact of the sale of the Florida operations, demonstrated continued growth in loans and core deposits, an efficiency ratio of 54.1%, stronger loan loss reserves and a tangible common equity ratio of 9.03%. With these improvements, we believe this is a good start for the year." "Net charge-offs in both the commercial and consumer businesses as well as non-performing asset levels remained high. The loan loss reserve to loan ratio at quarter end was a strong 2.00%," Hoaglin added. "We are encouraged that this was the second consecutive quarter where the inflow of new non-performing loans declined. Also, consumer loan delinquencies over 30 days declined to 2.36% from 3.21% at the end of last year." Basis of Discussion Comparison of first quarter 2002 results to prior quarters is impacted by a number of items. This includes the gain on the sale of Florida banking operations in the 2002 first quarter, restructuring and other charges in all periods, and two one-time items in the 2001 fourth quarter. Reported first quarter 2002 results also include Florida operations for only half the quarter. To better understand underlying trends, the following discussion is on an operating basis, which excludes the impact of these items in all periods, including the impact of the Florida transaction except where otherwise noted due to immateriality. (Please refer to the schedules immediately following this discussion, as well as the Quarterly Financial Review for schedules reconciling reported with operating earnings and additional schedules excluding the impact of the Florida operations.) Discussion of Results First quarter 2002 operating results compared with 2001 fourth quarter performance and excluding the impact of Florida operations from both periods reflected: * $79.5 million of net income, or $0.32 per share, * 5% annualized growth in managed loans, * 6% annualized growth in core deposits, * 4.21% net interest margin, * 54.1% efficiency ratio, * $3.7 million decrease in loan loss provision expense, and * 9.03% tangible common equity ratio. Net interest income declined $3.5 million from the fourth quarter reflecting a 6 basis point decline in the net interest margin to 4.21%. The decrease in the net interest margin was driven, in part, by the lagged impact of repricing variable rate home equity lines in a period of declining interest rates. This was only partially offset by a 4% annualized increase in earning assets driven by loan growth. Compared with the year-ago quarter, net interest income was up $14.6 million, or 7% with the net interest margin increasing 23 basis points from 3.98%. Average managed loans increased 5% on an annualized basis in the quarter. Reflecting the promotion of adjustable rate mortgage products, residential real estate loans increased $213 million and represented 85% of the quarter's average loan growth. Home equity lines and commercial real estate loans increased at annualized rates of 13% and 16%, respectively. In contrast, commercial loans and consumer installment loans declined 6% and 17% on an annualized basis, respectively. Compared with the year-ago quarter, average managed loans were up 4%. Average core deposits increased 6% on an annualized basis from the fourth quarter reflecting a successful deposit growth campaign in retail and small business banking. Compared with the year-ago quarter, average core deposits were up 8%. Non-interest income, excluding securities gains, was up $0.7 million from the fourth quarter. This was primarily driven by a $4.6 million increase in mortgage banking income, reflecting a 60% increase in mortgage deliveries to the secondary market. This was largely offset by a $4.5 million decrease in other income reflecting lower securitization income and decreased sales of customer derivative products. Non-interest income was up 19% from the year-ago quarter also reflecting the benefit of increases in mortgage banking, as well as a 10% increase in deposit service charges, a 19% increase in brokerage and insurance fees, a 10% increase in trust income, and an 8% increase in other miscellaneous fees. Non-interest expense increased $1.6 million from the fourth quarter driven by a $4.2 million increase in personnel costs reflecting, in part, the FICA reset at the beginning of each year, a $1.7 million increase in outside services expense, and a $1.9 million increase in marketing expense. Partially offsetting these increases were a $3.0 million decrease in combined equipment and occupancy expenses reflecting lower depreciation expense and a $2.3 million reduction in amortization of non-Florida related intangibles. Non-interest expense was down $4.8 million, or 2%, compared with the year-ago quarter reflecting decreases across a number of expense categories only partially offset by higher personnel costs and outside data processing and other services expense. Net charge-offs were $50.6 million in the first quarter and were 1.07% of average loans. This was down from $51.3 million and 1.11%, in the fourth quarter. Excluding the impact of net charge-offs on exited portfolios for which reserves were previously established, net charge-offs represented 1.00% of average loans, down from 1.04% in the fourth quarter. The over 30-day delinquency ratio for total loans, which averaged 2.32% for the last three consecutive quarters including Florida operations, dropped to 1.89% at the end of March. This included significant improvement in consumer loan delinquencies over 30 days from 3.21% at the end of last year also including Florida operations to 2.36% at the end of the first quarter. Loan loss provision expense in the first quarter was $50.6 million, equal to net charge-offs, and down $3.7 million from the fourth quarter. The allowance for loan losses as a percent of period-end loans was 2.00% at March 31, 2002, up from 1.53% at the end of the year-ago quarter. Non-performing assets at March 31, 2002, were $225.5 million, up slightly from $220.4 million at the end of last year, and represented 1.17% of period-end total loans and other real estate, unchanged from December 31, 2001. Non-performing assets continue to be concentrated in the manufacturing and services sectors reflecting weakness in Midwest manufacturing. At March 31, 2002, the tangible equity to assets ratio was 9.03%. Given the company's objective to repurchase $300-$400 million of shares in 2002, this ratio is expected to end the year in the 7.5%-8.0% range. 2002 Outlook "Given that first quarter performance was in line with our expectations, we remain comfortable with our previously stated 2002 earnings per share guidance of $1.32-$1.36," Hoaglin said. "The key issue for the next few quarters is credit quality with the main variable being the strength and timing of the economic recovery and its impact on our markets and customers. In those areas where we have more direct influence, such as loan and deposit growth, revenue generation, and expense control, we remain confident of continued progress." Conference Call / Webcast Information Huntington's senior management will host an earnings conference call today at 2:00 p.m. EDT, via a live Internet webcast at http://www.huntington-ir.com or through a dial-in phone number at (800) 760-1355. Slides to be reviewed during the conference call will be available for viewing at http://www.huntington-ir.com on April 18, 2002, just prior to 2:00 p.m. EDT. A replay of the webcast will be archived in the Investor Relations section of Huntington's web site http://www.huntington.com. A phone dial-in replay will be available through April 30, 2002, at (800) 642-1687; conference ID 3727820. The supplemental financial tables as well as the slides for the conference call will be filed, along with management's comments, with the Securities and Exchange Commission on Form 8-K. About Huntington Huntington Bancshares Incorporated is a $25 billion regional bank holding company headquartered in Columbus, Ohio. Through its affiliated companies, Huntington has more than 136 years of serving the financial needs of its customers. Huntington provides innovative retail and commercial financial products and services through more than 300 regional banking offices in Indiana, Kentucky, Michigan, Ohio and West Virginia. Huntington also offers retail and commercial financial services online at http://www.huntington.com; through its technologically advanced, 24-hour telephone bank; and through its network of more than 900 ATMs. Selected financial service activities are also conducted in other states including: Dealer Sales offices in Florida, Tennessee, Pennsylvania and Arizona; Private Financial Group offices in Florida; and Mortgage Banking offices in Florida, Maryland and New Jersey. International banking services are made available through the headquarters office in Columbus and additional offices located in the Cayman Islands and Hong Kong. Forward-looking Statement This press release contains certain forward-looking statements, including certain plans, expectations, goals, and projections, which are subject to numerous assumptions, risks, and uncertainties. A number of factors, including but not limited to those set forth under the heading "Business Risks" included in Item 1 of Huntington's Annual Report on Form 10-K for the year ended December 31, 2001, and other factors described from time to time in Huntington's other filings with the Securities and Exchange Commission, could cause actual conditions, events, or results to differ significantly from those described in the forward-looking statements. All forward-looking statements included in this news release are based on information available at the time of the release. Huntington assumes no obligation to update any forward-looking statement. Huntington Bancshares Incorporated Key Statistics ($ in thousands, except per share amounts) Operating 1Q02 4Q01 1Q01 Average loans - managed $21,676,613 $22,747,539 $22,061,281 Managed loan growth - linked quarter annualized NA 2% 2% Average earning assets - reported $23,769,027 $24,881,812 $25,014,875 Average core deposits $16,300,959 $18,236,365 $17,265,382 Core deposit growth - linked quarter annualized NA 9% -4% Net interest income $242,825 $255,238 $243,124 Provision for loan losses 55,781 58,275 33,464 Securities gains 457 89 2,078 Non-interest income 125,627 133,008 115,646 Non-interest expense 207,386 227,354 234,090 Income before income taxes 105,742 102,706 93,294 Income taxes 28,286 27,214 25,428 Net income $77,456 $75,492 $67,866 EPS $0.31 $0.30 $0.27 Net interest margin 4.14% 4.11% 3.93% Efficiency ratio 55.7% 55.8% 62.0% Net charge-offs (NCO's) $55,781 $56,146 $28,093 NCO's as a % of average loans 1.11% 1.04% 0.55% NCO's - excl. runoff portfolios $52,034 $52,519 $28,093 NCO's as a % of average loans - excl. runoff portfolios 1.04% 0.98% 0.55% Non-performing assets $225,530 $227,493 $124,886 Non-performing assets as a % of total loans and other real estate (OREO) 1.17% 1.05% 0.60% Allowance for loan losses and OREO as a % of non-performing assets 171% 180% 239% Operating, Ex. Florida 1Q02 4Q01 1Q01 Average loans - managed $20,297,574 $20,042,105 $19,661,660 Managed loan growth - linked quarter annualized 5% 0% 1% Average earning assets - reported $22,389,988 $22,176,377 $22,613,259 Average core deposits $14,027,333 $13,712,713 $12,967,426 Core deposit growth - linked quarter annualized 6% 10% -3% Net interest income $233,101 $236,596 $218,518 Provision for loan losses 50,595 54,281 29,709 Securities gains 457 89 2,078 Non-interest income 114,994 114,291 96,573 Non-interest expense 189,051 187,429 193,817 Income before income taxes 108,906 109,266 93,643 Income taxes 29,393 28,999 24,463 Net income $79,513 $80,267 $69,180 EPS $0.32 $0.32 $0.28 Net interest margin 4.21% 4.27% 3.98% Efficiency ratio 54.1% 52.5% 60.2% Net charge-offs (NCO's) $50,595 $51,311 $25,715 NCO's as a % of average loans 1.07% 1.11% 0.57% NCO's - excl. runoff portfolios $46,848 $47,683 $25,715 NCO's as a % of average loans - excl. runoff portfolios 1.00% 1.04% 0.57% Non-performing assets $225,530 $220,397 $117,032 Non-performing assets as a % of total loans and other real estate (OREO) 1.17% 1.17% 0.63% Allowance for loan losses and OREO as a % of non-performing assets 171% 176% 238% HUNTINGTON BANCSHARES INCORPORATED CONSOLIDATED RESULTS OF OPERATIONS (in thousands, except per share amounts) Three Months Ended March 31, 2002 Reported Operating Earnings Adjustments Earnings (1) Interest Income $393,595 $--- $393,595 Interest Expense 150,770 --- 150,770 Net Interest Income 242,825 --- 242,825 Provision for Loan Losses 55,781 --- 55,781 Securities Gains 457 --- 457 Non-Interest Income 125,627 --- 125,627 Gain on Sale of Florida Operations 175,344 175,344 --- Non-Interest Expense 207,386 --- 207,386 Special Charges 56,184 56,184 --- Income Before Income Taxes 224,902 119,160 105,742 Income Taxes 127,175 98,889 28,286 Net Income $97,727 $20,271 $77,456 Net Income per Common Share -- Diluted $0.39 $0.08 $0.31 Three Months Ended March 31, 2001 Reported Operating Earnings Adjustments Earnings Interest Income $517,975 $--- $517,975 Interest Expense 274,851 --- 274,851 Net Interest Income 243,124 --- 243,124 Provision for Loan Losses 33,464 --- 33,464 Securities Gains 2,078 --- 2,078 Non-Interest Income 115,646 --- 115,646 Non-Interest Expense 234,090 --- 234,090 Special Charges --- --- --- Income Before Income Taxes 93,294 --- 93,294 Income Taxes 25,428 --- 25,428 Net Income $67,866 $--- $67,866 Net Income per Common Share -- Diluted $0.27 $0.00 $0.27 (1) Includes $175.3 million of pre-tax gain on sale of Florida operations and $56.2 million of pre-tax restructuring and special charges. HUNTINGTON BANCSHARES INCORPORATED CONSOLIDATED COMPARATIVE SUMMARY - Operating Basis (1) (in thousands, except per share amounts) Consolidated Results of Operations Three Months Ended March 31, Change 2002 2001 % Interest Income $393,595 $517,975 (24.0)% Interest Expense 150,770 274,851 (45.1) Net Interest Income 242,825 243,124 (0.1) Provision for Loan Losses 55,781 33,464 66.7 Securities Gains 457 2,078 (78.0) Non-Interest Income 125,627 115,646 8.6 Non-Interest Expense 207,386 234,090 (11.4) Income Before Income Taxes 105,742 93,294 13.3 Provision for Income Taxes 28,286 25,428 11.2 Net Income $77,456 $67,866 14.1 % Per Common Share Amounts Net Income per Common Share Basic $0.31 $0.27 14.8 % Diluted $0.31 $0.27 14.8 % Cash Dividends Declared $0.16 $0.20 (20.0)% Book value at end of period $9.74 $9.58 1.6 % Average Common Shares Basic 250,749 250,998 (0.1)% Diluted 251,953 251,510 0.2 % Key Operating Ratios Three Months Ended March 31, 2002 2001 Return On: Average Total Assets 1.18% 0.97% Average Shareholders' Equity 13.26% 11.53% Efficiency Ratio 55.7% 62.0% Net Interest Margin 4.14% 3.93% Consolidated Statement of Condition Data Average for Three Months Change Ended March 31, Actual Ex. Fla. 2002 2001 % % Loans - Reported $20,472,192 $20,703,769 (1.1) 5.0 Loans - Managed 21,676,613 22,061,281 (1.7) 3.9 Core Deposits (2) 16,300,959 17,265,382 (5.6) 8.1 Total Deposits 17,924,681 19,065,407 (6.0) 6.9 Assets - Reported 26,544,413 28,236,740 (6.0) (1.0) Shareholders' Equity 2,369,808 2,387,653 (0.7) (0.7) Change Ex. At March 31, Actual Fla. 2002 2001 % % Loans - Reported $19,338,947 $20,870,648 (7.3) 5.4 Loans - Managed 20,529,523 22,210,181 (7.6) 4.3 Core Deposits (2) 14,679,775 17,450,116 (15.9) 11.8 Total Deposits 16,266,785 19,130,157 (15.0) 11.5 Assets - Reported 24,745,954 28,441,188 (13.0) (1.9) Shareholders' Equity 2,433,938 2,405,256 1.2 1.2 Capital Ratios and Asset Quality At March 31, 2002 2001 Tier I Risk-Based Capital (3) 10.26% 7.19% Total Risk-Based Capital (3) 13.40% 10.31% Tier I Leverage (3) 9.72% 7.12% Average Equity/Assets 8.93% 8.46% Tangible Equity/Assets 9.03% 6.01% At March 31, 2002 2001 Non-performing loans (NPLs) $219,418 $110,855 Total non-performing assets (NPAs) $225,530 $124,886 Allowance for loan losses/total loan 2.00% 1.45% Allowance for loan losses/NPLs 176% 272% Allowance for loan losses and other real estate/NPAs 171% 239% (1) Income component excludes after-tax impact of the $56.8 million gain on sale of Florida operations and $36.5 million restructuring and special charges in 1Q '02. (2) Core deposits include non-interest bearing and interest bearing demand deposits, savings deposits, CDs under $100,000, and IRA deposits. (3) Estimated.SOURCE Huntington Bancshares Incorporated
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