What happened
Shares of Huntington Bancshares (HBAN 0.23%) are trading 7.3% down as of 11:00 a.m. ET today after reporting earnings results for the fourth quarter and full year of 2021.
So what
Huntington reported fourth-quarter earnings per share (EPS) of $0.26 on total revenue of $1.65 billion, missing on analyst estimates for both EPS and revenue. However, if you exclude one-time expenses related to Huntington's acquisition of TCF Financial and the exit of a distribution relationship, Huntington would have reported EPS of $0.36.
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"We enter 2022 increasingly confident in our outlook for growth in revenue and earnings," Huntington president and CEO Steve Steinour said in a statement. "Commercial lending should fuel balance sheet growth in the coming year, while areas of strategic focus such as capital markets, cards and payments, and wealth management should bolster fee income. We remain committed to delivering sustainable revenue growth, annual positive operating leverage, and top-quartile returns."
Investors seemed to be disappointed with Huntington's guidance for this year. Jefferies analyst Ken Usdin wrote in a research note that guidance implies lower pre-provision net revenue and net interest income going forward than analysts had initially expected.
Now what
Huntington trades at a pretty high valuation, just below 200% tangible book value, which is what a bank would be worth if it were liquidated. So any kind of decline from guidance is bound to hit the stock.
But the environment going forward still looks favorable for bank stocks. Huntington does expect to generate positive operating leverage by growing revenues faster than expenses in 2022, and hopefully the bank can continue to find synergies from its acquisition of TCF. Overall, I'd say I'm neutral on the stock right now.
