Huntington Bank returns to profitability in first quarterWritten by Duane Ramsey | | firstname.lastname@example.org
Huntington Bankshares Inc. (NASDAQ: HBAN) returned to profitability reporting a net income of nearly $40 million after five consecutive quarters of losses. Huntington reported net income of $39.7 million or one cent per common share, including a $38.2 million net tax benefit for the first quarter of 2010.
“Our first quarter results represented a significant step forward for Huntington. It was important that Huntington return to profitability as soon as possible,” said Stephen Steinour, chairman, president and CEO, in a teleconference April 21.
Steinour said it was a significant improvement for the first quarter, compared to a net loss of $369.7 million (56 cents per common share) in the fourth quarter of 2009.
“It’s an important day for Huntington, our customers and communities,” said Steinour.
“We expected a modest amount of growth, but we’re a year ahead of where most analysts expected us to be. We’re very pleased to have reached this goal faster than anticipated,” he said.
Steinour said that Huntington’s balance sheet and liquidity positions are strong while capital levels are solid. The bank expects credit trends to continue to improve and it expects to report a profit for full year 2010, he added.
“Maintaining a solid capital base is important to the stability of the company,” he said.
Huntington shed commercial real estate properties yet offered more consumer and small business loans during the first quarter. Average total loans and leases declined slightly as decreases in commercial loans primarily in real estate, were only partially offset by an increase in average total consumer loans.
Cash and investment securities were $10.3 billion on March 31, up 43 percent from a year ago. Period-end loans and leases represented 92 percent of deposits, significantly improved from 101 percent at the end of March 2009.
During last quarter, average total core deposits grew at a 5 percent annualized rate and were 13 percent higher than first quarter last year. The bank expects to continue to grow from the core business, Steinour said.
“Five consecutive quarters of growth in pre-tax, pre-provision earnings is a significant achievement during this challenging period,” he said.
Pre-tax, pre-provision earnings were $251.8 million in the first quarter of 2010, up four percent from the $242 million in fourth quarter 2009 and 12 percent higher than first quarter 2009. This quarter’s improvement was driven primarily by higher net interest income as the net interest margin increased to 3.47 from 3.19 percent in the prior quarter.
Steinour said Huntington needs a little more time before repaying its federal TARP aid.
“We want to see the economy stabilized. The small business community is more bullish on the economy but we’re less confident where the economy is in our region,” he said.
Did the bank’s return to profitability affect Huntington’s decision to purchase the naming rights for Lucas County Arena?
“The naming rights for the arena were not tied to profitability but were part of our marketing strategy,” Steinour said. “It was an opportunity for Hungtinton to make an investment that will help drive our business, help the community, and take advantage of years of positive exposure.”