Huntington Bancshares (HBAN 0.74%) reported earnings today -- and investors should be pleased with how things turned out for this regional bank.
While Huntington's revenue was essentially flat compared to the second quarter and down about 2% when compared to the third, this was due in large part to its mortgage banking income falling by almost 50% over the last year (a little over $20 million) -- a common theme across the banking sector.
Huntington was able to recognize a one-time gain due to changes in its pension plan, which allowed it to slash expenses by $35 million (or 8%). This resulted in the bank increasing its return on average assets from 1.19% in the third quarter of last year to 1.27% in the most recent quarter.
Yet not only did Huntington deliver strong results year over year -- but also over the second quarter of this year, as its net income jumped from $151 million to $178.5 million.
Huntington saw its net interest margin shrink from 3.38% to 3.34%, but that's actually a positive sign when you consider how other regional banks have fared in their net interest margins over the last year, as shown in the chart below:
|
3Q 2012 |
3Q 2013 |
Change | |
|---|---|---|---|
|
Huntington |
3.38% |
3.34% |
-0.04% |
|
KeyCorp (KEY 0.55%) |
3.23% |
3.11% |
-0.12% |
|
BB&T |
3.94% |
3.68% |
-0.26% |
|
M&T Bank |
3.77% |
3.61% |
-0.16% |
Source: Company Earnings Reports.
Although shrinking net interest margins have been pointed to as a reason for the drop in banks' earnings, Huntington was able to keep things relatively stable in that regard as it reduced the cost of its liabilities at an almost identical rate to the reduction in the yields on its assets.
This all led to growing return on common shareholders equity -- and Huntington led the charge, here, when compared to the other three banks noted above:
|
3Q 2012 |
3Q 2013 |
Change | |
|---|---|---|---|
|
Huntington |
11.9% |
12.3% |
0.4% |
|
KeyCorp |
8.6% |
10.6% |
2% |
|
BB&T |
9.9% |
10.2% |
0.3% |
|
M&T Bank |
12.4% |
11.1% |
-1.3% |
Source: Company Earnings Reports.
While KeyCorp also delivered strong growth in its return on shareholders equity, its tangible book value per share growth (which is the actual value available to shareholders) could not match the growth Huntington saw over the last year.
Huntington's tangible book value has grown by 7% and now stands at $6.10 per share, versus KeyCorp, which grew by 4%. This growth at Huntington was attributable to consistent, sustained results and a little over $16 million in share repurchases in the third quarter.
Of the results, Huntington's CEO Stephen Steinour said, "Huntington's third-quarter results continue to demonstrate that our uniquely positioned products and services are driving robust organic customer acquisition across our commercial and consumer customer base while delivering stable returns to shareholders."
He also concluded his remarks by noting, "overall, it was a solid quarter positioning Huntington for a good finish for 2013," and while that isn't the most exciting way to end a press release, with many banks seeing their profits fall, a bank that is able to stay the course and deliver results to shareholders is always encouraging to see.
