Huntington Looking Good After a Solid Quarter

Midwest regional bank Huntington Bancshares' (Nasdaq: HBAN  ) profits jumped by a whopping 22% during the first quarter. The period was marked by a fall in provision for credit losses as well as noticeably higher revenues generated by its mortgage banking business.

Impressive growth
Huntington's net interest income rose by 3% to $417.2 million from a year ago and a modest 1% on a sequential basis. The rise came from a $0.6 billion or 1% rise in average earning assets and also an increase in its net interest margin on a sequential basis. In fact, the net interest margin has gone up in the last two quarters -- from 3.34% in the third quarter of 2011 to 3.40% at present. This is indicative of the fact that the bank is managing its funds much more effectively than before.

However, its non-interest income grew by an impressive 20% to $285.3 million. The gain reflected a $22.3 million rise in its mortgage banking revenues as well as another $11.4 million coming in from its acquisition of Michigan-based Fidelity Bank.

The rise in revenue, coupled with a 30% fall in provision for loan losses from a year ago, helped Huntington's net income rise to $153 million from $126 million in the year-ago period.

A growing trend...
The rise in the bank's net interest income during the quarter can also be attributed to the fact that Huntington was able to grow its total loans and leases by 6% from a year ago, which includes a 12% rise in total commercial lending.

As we all know, low long-term interest rates have haunted U.S. banks for quite some time now, but these banks have somewhat managed to counteract these pressures by growing their loan books. Peer PNC Financial (NYSE: PNC  ) , which saw its first-quarter profits fall by 2.5% last week, increased its loans by $17 billion to $176 billion -- although much of this growth was an outcome of its acquisition of RBC Bank. Similarly, fellow Midwest bank US Bancorp (NYSE: USB  ) , whose profits jumped by a staggering 28%, witnessed a 6.4% rise in average loans. This was comprised of a 17% rise in commercial borrowing and a 26% rise in commercial and commercial-real-estate commitments. Loan growth is certainly a bright sign for these banks.

Creditworthy
As I've mentioned before, Huntington's loan loss provisions fell. On the whole, the bank's credit quality improved and its net charge-offs declined by 50% to $83 million. At the same time, its nonperforming assets declined by 24% to $527 million.

Plus, its Tier 1 capital ratio also rose a hair to 12.2%, indicating a pretty strong capital position.

All in all, Huntington posted a pretty strong quarter to kick off 2012. To follow the Ohio-based regional bank in 2012, you can use the Fool's free My Watchlist service.

Earnings season is here in full force, and earnings reports provide a great peek into how a business is performing, as well as how it might deliver over several years. Make sure to check out our free report, "5 Stocks Investors Need to Watch This Earnings Season."

Fool contributor Shubh Datta doesn't own any shares in the companies mentioned above. The Motley Fool owns shares of Huntington Bancshares and PNC Financial Services Group. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Read/Post Comments (0) | Recommend This Article (7)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1868483, ~/Articles/ArticleHandler.aspx, 9/21/2014 12:05:00 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 1 day ago Sponsored by:
DOW 17,279.74 13.75 0.08%
S&P 500 2,010.40 -0.96 -0.05%
NASD 4,579.79 -13.64 -0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/19/2014 4:00 PM
HBAN $10.08 Down -0.13 -1.27%
Huntington Bancsha… CAPS Rating: ****
PNC $87.89 Down -0.05 -0.06%
PNC Financial Serv… CAPS Rating: ****
USB $43.23 Up +0.20 +0.46%
US Bancorp CAPS Rating: ****

Advertisement