Huntington Bancshares Incorporated · NASDAQ:HBAN
Huntington Bancshares — Investor Presentation (November 2012)
84 slides from Huntington Bancshares's investor presentation, Nov 16, 2012
Slide 1: 2012 Fourth Quarter Investor Handout
2012 Fourth Quarter Investor Handout 1 November 16, 2012
Slide 2: Table of Contents
Table of Contents Long Term Strategy 3 OCR Performance Review 6 Financial Review 14 Significant items impacting comparisons 20 Income Statement 21 Revenue Growth 24 Mortgage banking income 23 Net interest margin 25 Balance Sheet 27 Investment Securities 28 Loan Portfolio Overview 31 Total Commercial
Slide 3: Long Term Strategy
, =f soe A ng Term Strategy pe Dae 39 aus Lo ce aii eae ae res eee! een
Slide 4: Our "Break Away" Strategic Plan
Optimize Current Franchise Profitability / pricing Cross-sell / share-of-wallet Launch new brand Invest in capabilities and begin hiring Our "Break Away" Strategic Plan 4 Lay the Foundation Capital and liquidity Organiza-tional changes Build management depth Credit and Risk management Invest in the
Slide 5: Important Messages
Important Messages Executing our long-term strategic plan: Growth of meaningful consumer and commercial relationships Continued increased cross sell, 4+ products & services Strategic initiatives are increasingly adding to revenue Continuously looking for improving efficiencies / effectiveness of exp
Slide 6: OCR Performance Review
OCR Performance Review 6
Slide 7: OCR Drives Higher Customer Profitability
OCR Drives Higher Customer Profitability Clearly outlined activities by segment Defined accountability for relationships, by segment Aligned goals and incentives at all levels and in all business segments One relationship management system - MAX Weekly executive results tracking, accountability, and
Slide 8: Consumer Checking Account Household Growth
Consumer Checking Account Household Growth 12.7% annualized linked quarter growth, 12.1% full year growth 75.9% with 4+ products or services penetration 3Q12 revenue of $246 MM, down $4 MM LQ, down $6 MM YoY Consumer Checking Households 12.1% (000s) 8 (1) Includes 3,034 new consumer checking account
Slide 9: Consumer Checking Household Revenue
Consumer Checking Household Revenue ($MM) 9 Pre-Reg E 3Q12 adjusted for debit card interchange fee impact exceeds pre-"Fair Play" and Reg E level Includes net interest income and noninterest income Post-Durbin
Slide 10: Product Penetration - 4+ Services / HH
Product Penetration - 4+ Services / HH Not Just More Households... But More Products and Services to Drive Total Revenue 25 potential products or services counted: checking, savings, online bill pay, mortgage, brokerage account, insurance, etc. Product Penetration - 1 Services / HH Product Penetrati
Slide 11: Commercial Relationship Growth
Commercial Relationship(1) Growth Commercial Relationships 9.9% Checking account required Includes 1,262 new commercial relationships related to the Fidelity Bank transaction 7.9% annualized linked quarter growth, 9.9% full year growth 33.5% with 4+ products or services penetration 3Q12 revenue of $
Slide 12: Commercial Relationship Revenue
Migration from credit dependent to relationship based / cross-sell culture Revenue mix has improved dramatically 12 Commercial Relationship(1) Revenue ($MM) +36.3% (1) Checking account
Slide 13: Product Penetration - Commercial Relationships
Product Penetration - 2-3 Services / Relationship Commercial Relationship (1) Product Penetration Product Penetration - 4+ Services / Relationship Deepening relationships and accelerating product or service cross-sell Product Penetration - 1 Services / Relationship 13 (1) Checking account
Slide 14: Financial Review
Financial Review 14
Slide 15: Third quarter performance highlights
1.14% return on average assets... at low end of LT target of 1.1-1.35% 13.5% return on average tangible common equity $474 MM reported net income, or $0.52 EPS, up from $0.45 YTD 3Q11 $65 MM, or 12%, increase in pretax income vs. YTD 3Q11 $49 MM, or 7%, increase in noninterest income $66 MM, or 5%,
Slide 16: Continued customer growth and OCR success
16 Continued customer growth and OCR success Consumer: 13% annualized growth in 3Q12 and 12% growth since 3Q11 75.9% with 4+ products or services penetration, up from 72.8% in 3Q11 Commercial: 8% annualized growth in 3Q12 and 10% growth since 3Q11 33.5% with 4+ products or services penetration, up f
Slide 17: Continued customer growth and OCR success
Continued customer growth and OCR (1) success Consumer checking account households 12.7% linked quarter annualized growth and 12.1% growth since 3Q 2011 75.9% with 4+ products or services penetration, up from 72.8% in 3Q11 Commercial relationships 7.9% linked quarter annualized growth and 9.9% growt
Slide 18: Quarterly Performance Highlights
Quarterly Performance Highlights 3Q12 2Q12 1Q12 4Q11 3Q11 EPS $0.19 $0.17 $0.17 $0.14 $0.16 Cash dividends declared per common share $0.04 $0.04 $0.04 $0.04 $0.04 Book value per common share at end of period $6.34 $6.13 $5.97 $5.82 $5.83 Tangible book value per common share at end of period $5.71 $5
Slide 19: Quarterly Earnings Analysis
Quarterly Earnings Analysis 19 Refer to appendix slide "Significant Items Impacting Financial Performance Comparisons - Reconciliation
Slide 20: Significant Items Impacting Financial Performance Comparisons - Reconciliation
Significant Items Impacting Financial Performance Comparisons - Reconciliation 2012 - 2011 Quarterly 20
Slide 21: Income Statement
Income Statement 21
Slide 22: 3Q Summary Income Statement & Notables
3Q Summary Income Statement & Notables 22 Noninterest Income $6.3 MM, or 16% LQ, increase in mortgage banking income $3.8 MM increase in securities gains. Agency debt and asset-backed securities were sold, and the proceeds were reinvested in the Held-to-Maturity (HTM) portfolio... End of period HTM
Slide 23: Mortgage Banking Income Summary
Mortgage Banking Income Summary ($MM) 3Q12 2Q12 1Q12 4Q11 3Q11 Origination and secondary marketing $40.9 $30.2 $31.3 $21.2 $15.6 Servicing fees 11.3 11.6 11.8 12.0 12.1 Amortization of capitalized servicing (8.4) (9.1) (9.3) (8.8) (9.6) Other mortgage banking income 5.0 4.8 5.0 3.7 3.8 Sub-total 48.
Slide 24: Revenue Growth
Revenue Growth (1) (1) Revenue is FTE (2) Annualized Revenue Earnings Power (2) Revenue Trends 24
Slide 25: Net Interest Income and Margin
Net Interest Income and Margin (1) (1) Fully-taxable equivalent basis Net Interest Margin (FTE) Average Earning Asset Mix 25 Net Interest Income ($MM) , by quarter 406.5 415.0 417.2 429.0 430.3 Change 3Q12 vs. 2Q12: Deposits, rate & mix 6 bps Swap & other A/L management (4) Earning Asset, yield & mi
Slide 26: Net Interest Income at Risk
Net Interest Income at Risk (1) Forward Curve +2%, +1%, & -1% Gradual Change in Rates Managing Interest Rate Risk Estimated impact on annualized net interest income over the next 12-month period assuming a gradual change in rates over the next 12-month period above and beyond any rate change already
Slide 27: Balance Sheet
Balance Sheet 27
Slide 28: Investment Securities
Investment Securities 28
Slide 29: Securities Mix & Yield
Securities Mix & Yield Securities Portfolio Yield Securities Portfolio Mix 29
Slide 30: Securities Overview
Securities Overview (1) - 9/30/12 30 Portfolio Duration of 2.5 years ($MM)
Slide 31: Loan Portfolio Overview
Loan Portfolio Overview 31
Slide 32: Total Commercial Loans
Total Commercial Loans 32
Slide 33: Total Commercial Loans - Granularity
Total Commercial Loans - Granularity EOP Outstandings - $22.0 Billion (1) 926 3% 35,007 97% (1) 9/30/12 Loans by Dollar Size # of Loans by Size $5 MM - < $10 MM 469 $10 MM - < $25 MM 381 $25 MM - < $50 MM 69 > $50 MM 7 Total 926 33
Slide 34: Commercial Loans - Risk Grade Distribution
Commercial Loans - Risk Grade Distribution PD Risk Grades (Moody's or Regulatory Definition) Percent of End of Period Balances ($B) $20.6 $19.7 26% 11% 16% 33% 25% 8% $20.5 15% 7% $22.0 34 24% 34% 32% 18% 34% 41% 15% 33% 45% Change 9/12 vs. 12/09
Slide 35: Commercial and Industrial: $16.5 Billion
Diversified by sector and geographically within our Midwest footprint Focus on middle market companies with $25-$500 MM in sales Lend to defined relationship oriented clients where we understand our client's market / industry and their durable competitive advantage Underwrite to historical cash flow
Slide 36: C&I - Auto Industry
C&I - Auto Industry (1) Outstandings ($MM) 3Q12 (4) 2Q12 (4) 1Q12 4Q11 3Q11 Suppliers (2) Domestic $ 180 $ 178 $ 178 $ 145 $ 153 Foreign 18 18 19 18 20 Total suppliers 199 198 $ 197 163 173 Dealers Floorplan-domestic 839 846 831 781 625 Floorplan-foreign 474 485 478 388 289 Total floorplan 1,312 1,3
Slide 37: Not Leading with Rate: New Loan Rates Stable
Not Leading with Rate: New Loan Rates Stable 37 C&I Yields (%) 4.25 4.00 3.75 3.50 3.25 3.00 0.50 0.25 0.00 3.90 3.99 4.01 4.01 4.13 3.44 3.14 3.50 3.68 3.38
Slide 38: Commercial Real Estate: $5.8 Billion
Commercial Real Estate: $5.8 Billion (1) CRE - Core ($3.9 Billion) Long-term meaningful relationships... many have been customers for 20+ years with opportunities for additional cross-sell Primarily Midwest footprint projects generating adequate return on capital Proven CRE participants... 28+ years
Slide 39: CRE - Portfolio Composition
CRE - Portfolio Composition Permanent 25% Mini-perm Traditional 48% Construction 10% Non Project Loans 8% Lines / Letters of Credit 2% Permanent Qualified 8% Mini-perm Traditional - Typically 2- to 5-year term loans to allow properties to reach stabilized operating levels after construction, rehab,
Slide 40: CRE - Core vs. Noncore
CRE - Core vs. Noncore ($MM) O/S ACL Criticized NALs Prior Charge-offs(1) ACL Credit Mark (2) 6/30/12 Core Total $4,207 $108 $491 $42 $ 16 2.57% 2.94% Noncore SAD 694 142 418 169 191 20.46 37.63 Noncore Other 1,007 61 124 9 34 6.02 9.10 Noncore Total 1,701 203 542 178 225 11.91 22.21 CRE Total $5,90
Slide 41: CRE - Maturity Schedule By Loan Type
CRE - Maturity Schedule By Loan Type - 9/30/12 ($MM) Within 12 Mos. 1 - 2 Years 2 - 5 Years 5+ Years Total Construction $ 212 $ 161 $ 118 $51 $ 541 Lines / letters of credit 68 6 10 7 91 Non project loans 102 44 183 110 439 Mini-perm traditional 1,176 478 902 103 2,659 Permanent qualified 139 93 151
Slide 42: Total Consumer Loans and Leases
Total Consumer Loans and Leases 42
Slide 43: Indirect Auto: $4.3 Billion
Indirect Auto: $4.3 Billion (1) Deep local relationships with high quality Dealers Consistently in the market for over 50 years #1 Bank in the U.S. in Dealer Satisfaction, with dominant market position in the Midwest with over 2,700 dealers Floorplan and dealership real estate lending, core deposit
Slide 44: Auto Loans - Production and Credit Quality Overview
Auto Loans - Production and Credit Quality Overview 3Q12 3Q12 2Q12 1Q12 4Q11 3Q11 2Q11 1Q11 4Q10 Originations Amount ($MM) $1,055 $1,055 $1,126 $962 $ 782 $ 980 $ 1,018 $ 795 $ 796 % new vehicles 45% 45% 43% 47% 57% 56% 52% 44% 48% Avg. LTV 89% 89% 88% 88% 87% 88% 89% 88% 88% Avg. FICO 759 759 758 7
Slide 45: Home Equity: $8.4 Billion
Home Equity: $8.4 Billion (1) Credit Quality Trends 3Q12 (2) 2Q12 (2) 1Q12 4Q11 3Q11 Period end balance ($MM) $8,380 $8,344 $8,261 $8,215 $8,079 30+ days PD & accruing 1.10% 1.02% 1.03% 1.18% 1.17% 90+ days PD & accruing 0.25% 0.22% 0.24% 0.25% 0.25% NCOs (3) 2.23% 1.01% 1.15% 1.15% 1.31% NALs 0.62%
Slide 46: Residential Mortgages: $5.2 Billion
Focused on geographies within our Midwest footprint Traditional product mix... very limited nontraditional exposure as we never originated sub-prime, payment option ARMs, or negative amortization loans $452 MM of Interest Only loans... targeted within executive relocation activities $252 MM of Alt-A
Slide 47: Credit Quality Review
Credit Quality Review 47
Slide 48: Credit Quality Trends Overview
Credit Quality Trends Overview 3Q12 2Q12 1Q12 4Q11 3Q11 3Q10 Net charge-off ratio 1.05% 0.82% 0.85% 0.85% 0.92% 1.98% 90+ days PD and accruing(1) 0.27 0.24 0.15 0.19 0.16 0.25 NAL ratio (2) 1.11 1.19 1.15 1.39 1.45 2.62 NPA ratio (3) 1.26 1.31 1.29 1.51 1.57 2.94 Criticized asset ratio (4) 5.45 6.01
Slide 49: Total Commercial Loan - Delinquencies
Total Commercial Loan - Delinquencies All delinquencies represent accruing purchased impaired loans acquired in the Fidelity transaction. Under the applicable accounting guidance (ASC 310-30), the loans were recorded at fair value upon acquisition and remain in accruing status. 90+ Days 30+ Days 49
Slide 50: Consumer Loan Delinquencies
Consumer Loan Delinquencies (1,2) End of period; delinquent but accruing as a % of related outstandings at EOP (2) 2Q12 includes loans acquired in the FDIC-assisted Fidelity Bank acquisition on March 31, 2012 (3) Excludes GNMA FAS 140 government guaranteed (3) (3) 90+ Days 30+ Days 50
Slide 51: Net Charge-Offs
Net Charge-Offs ($MM) ($MM) Consumer Loans Commercial Loans (2) (1) 51 (1) (1) Includes $33.0 MM related to Chapter 7 bankruptcy loans
Slide 52: Nonperforming Asset Trends
Nonperforming Asset Trends ($MM) ($MM) 10% (8)% (18)% (3)% (19)% NPA Inflows NPAs - EOP (4)% (27)% (15)% (38)% 23% 52 3Q12 vs. % Chg 3Q10 -54% 3Q11 -17% 2Q12 -3% (30)%
Slide 53: Nonperforming Asset Flow Analysis
($MM) 3Q12 2Q12 1Q12 4Q11 3Q11 NPA beginning-of-period $523.3 $527.1 $590.3 $614.0 $652.9 Additions / increases 211.0 (1) 221.0 134.6 (2) 189.1 153.6 Return to accruing status (46.0) (39.4) (32.1) (30.7) (25.8) Loan and lease losses (78.3) (74.5) (75.4) (79.1) (80.0) OREO gains (losses) (0.7) (0.5)
Slide 54: Total Commercial Loans - Criticized Loan Flow Analysis
($MM) 3Q12 2Q12 1Q12 4Q11 3Q11 Criticized beginning-of-period $2,054 $1,977 $2,147 $2,291 $2,379 Additions / increases 218 526 (1) 210 291 357 Advances 35 31 25 42 46 Upgrades to "Pass" (177) (202) (137) (139) (252) Paydowns (242) (227) (217) (280) (181) Charge-offs (57) (50) (51) (58) (58) Criticiz
Slide 55: Provision, NCO, and ACL
Provision, NCO, and ACL ($MM) (1) End of period Allowance for Credit Losses vs. NALs (1) Loan Loss Provision vs. Net Charge-offs 55 % Chg. % Chg. 3Q12 vs. LLP NCO 3Q10 -69% -43% 3Q11 -15% 16% 2Q12 1% 25% (1) Includes $33.0 MM related to Chapter 7 bankruptcy loans (1)
Slide 56: Continued Improvement in Credit Quality
56 Nonaccrual Loans Ratio (%) LLR / NAL Coverage (%) LLR / Loans (%) Change in Nonaccrual Loans Ratio from 9/30/11 Continued Improvement in Credit Quality
Slide 57: Deposits
Deposits 57
Slide 58: Deposits
Deposits ($B) Avg. Total Deposits - Rate / Mix Core CD Maturities & Avg. Maturity Rate Rate 0.77% 0.61% 0.55% 0.51% 0.48% Estimates 58
Slide 59: Total Core Deposit Trends
Total Core Deposit Trends Annualized Grow th ‘Average (SB) 3Q12v 4Q11v 3Q12v 3Q12 2Q12 3Q11 3Q11 Commercial Demand deposits - non-interest bearing JERI} 12% B% 43% Demand deposits - interest bearing 14 2 58 6 Other core deposits ) 7.0 64 5 16 Total 18.7 2 79 29 Consumer Demand deposits - non-interes
Slide 60: Capital
Capital 60
Slide 61: Capital
3Q12 2Q12 1Q12 4Q11 3Q11 Tang. common equity/ tang. assets 8.74% 8.41% 8.33% 8.30% 8.22% Tang. equity/tang. assets 9.43 9.10 9.03 9.02 8.88 Tier 1 common risk-based capital 10.28 10.08 10.15 10.00 10.17 Tier 1 leverage 10.29 10.34 10.55 10.28 10.24 Tier 1 risk-based capital 11.88 11.93 12.22 12.11 1
Slide 62: Capital Ratios
Capital Ratios (1) End-of-period 4Q10 - Raised $920 MM of common equity and repurchased $1.4 B of TARP related preferred shares (2) 62
Slide 63: Strong Capital and Liquidity Profile
63 Loans / Deposits (%) Tangible Common Equity Ratio (%) Tier 1 Common Risk - Based Ratio (%) Securities as % of Earning Assets(1) Strong Capital and Liquidity Profile (1) Average Balances
Slide 64: Franchise and Leadership
Franchise and Leadership 64
Slide 65: Huntington Bancshares Overview
Huntington Bancshares Overview Midwest financial services holding company Founded - 1866 Headquarters - Columbus, Ohio Total assets - $56 Billion Employees (1) - 11,731 Franchise: Footprint 6 states: OH, MI, PA, IN, WV, KY 699 branches / 1,381 ATMs Retail and Business Banking 5 Areas - Mortgage bank
Slide 66: A Strong Regional Presence
A Strong Regional Presence Source: SNL Financial, company presentations and filings FDIC deposit data as of June 30, 2012 Deposits - Top 12 MSAs MSA Rank BBs(2) Deposits Share Columbus, OH 1 89 $13,171 27.8% Cleveland, OH 5 86 4,212 8.4 Detroit, MI 7 64 4,538 4.7 Toledo, OH 1 40 2,409 24.2 Pittsburg
Slide 67: Combined Giant Eagle / Meijer In-Store Strategy
Combined Giant Eagle / Meijer In-Store Strategy 67 Current 4Q12 1H13 2H13 1H14 2H14 1H15 Giant Eagle 3 14 4 0 0 0 Meijer 6 17 0 3 0 2 New Openings 9 31 4 3 0 2 Total Opened 83 92 123 127 130 130 132 Total Opened >2 Yrs 0 4 23 32 65 92 123 Opened as of 1H12 Opening 2H12 Opening 2013 Opening 2014 Open
Slide 68: Leadership Team
Leadership Team Leadership Team Business Segments 68
Slide 69: Business Segment Overview
Business Segment Overview 69
Slide 70: Business Segment Loans & Deposits - 3Q12
Business Segment Loans & Deposits - 3Q12 Average Total Deposits - $46.3 B Average Total Loans - $40.1B AFCRE $10.9B 27% Retail & Business Banking $12.7B 32% Treasury / Other $0.0B 0% Regional & Comm'l Banking $10.4B 26% WGH $6.0B 15% AFCRE $0.9B 2% Treasury / Other $1.7B 4% Retail & Business Banking
Slide 71: Total Loans and Leases - By Business Segment
Total Loans and Leases - By Business Segment ($B) Retail & Business Banking Regional & Comm'l Banking AFCRE WGH Treas. / Other Total C&I $3.4 $10.0 $2.1 $0.8 $0.1 $16.3 CRE 0.4 0.4 4.7 0.2 0.0 5.7 Total commercial 3.8 10.4 6.8 1.0 0.1 22.1 Automobile loans & leases 0.0 0.0 4.1 0.0 (0.0) 4.1 Home equ
Slide 72: Total Deposits - By Business Segment
Total Deposits - By Business Segment ($B) Retail & Business Banking Regional & Comm'l Banking AFCRE WGH Treas. / Other Total DDA-noninterest bearing $4.9 $3.3 $0.5 $ 3.4 $0.2 $12.3 DDA-interest bearing 4.6 0.1 0.0 1.1 0.0 5.8 Money market deposits 7.8 2.1 0.3 4.3 0.0 14.5 Savings and other domestic
Slide 73: Business Segment Contribution
Business Segment Contribution ($MM) 9 Mo. 2012 2011 2010 Retail & Business Banking $73.0 $175.4 $131.0 Regional & Commercial Banking 72.9 109.9 38.5 AFCRE 173.6 186.2 46.5 WGH 58.9 25.9 34.8 Treasury / Other 95.5 45.3 61.6 Total Net Income $473.7 $542.6 $312.3 73
Slide 74: Business Segment Overview
Business Segment Overview Commercial Banking Executive - Jim Dunlap 11 Region Presidents Middle Market Commercial Banking Specialty Banking Large Corporate Health-care Not-for-Profit Equipment Finance International Services Treasury Management Capital Markets Derivatives Foreign Exchange Securities
Slide 75: Business Segment Overview
Business Segment Overview Wealth Advisors, Government Finance, and Home Lending Executive - Dan Benhase Wealth Advisors Trust / Portfolio Management Private Banking Retail Brokerage Government Finance Public Funds - Treasury Services and Lending Corporate Trust National Settlement Home Lending Mortg
Slide 76: Commercial Banking Regions
11 Commercial Banking Regions Greater Akron/Canton Mahoning Valley Central Ohio NW Ohio S. Ohio/KY Greater Cleveland Central Indiana West Michigan East Michigan West Virginia Pittsburgh Jim Dunlap 76
Slide 77: Regional Banking Presidents
Experience - Yrs Experience - Yrs Region Appointed Banking HBAN Jim Dunlap West Michigan 1Q06 32 32 Mike Fezzey East Michigan 4Q10 2 2 Susie Shipley Pittsburgh 4Q12 24 <1 Frank Hierro Mahoning Valley 1Q00 33 28 Jim Kunk Central Ohio 1Q94 30 30 Mike Newbold Central Indiana 4Q06 34 7 Mark Reitzes Sout
Slide 78: Retail and Business Banking Areas
5 Retail and Business Banking Areas Central Northwest West Northeast East Mary Navarro 78
Slide 79: Retail & Business Banking Executives
Experience - Yrs Experience - Yrs Area Appointed Banking HBAN Jim Baron Branch Sales & Service 4Q10 32 7 Jonathan Greenwood Central Retail Area 2Q11 26 18 Kevin Grose West Retail Area 1Q12 22 20 Loretta Stanton Northeast Retail Area 2Q10 21 21 Robert Soroka East Retail Area 2Q09 26 8 Tracey Bailey N
Slide 80: Safe Harbor Disclosures
Safe Harbor Disclosures 80
Slide 81: Use of non-GAAP financial measures
Use of non-GAAP financial measures This document may contain GAAP financial measures and non-GAAP financial measures where management believes it to be helpful in understanding Huntington's results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP f
Slide 82: Significant Items
Significant Items From time to time, revenue, expenses, or taxes are impacted by items judged by Management to be outside of ordinary banking activities and/or by items that, while they may be associated with ordinary banking activities, are so unusually large that their outsized impact is believed
Slide 83: Forward-looking statements
This document contains certain forward-looking statements, including certain plans, expectations, goals, projections, and statements, which are subject to numerous assumptions, risks, and uncertainties. Forward-looking statements may be identified by words such as expect, anticipate, believe, intend
Slide 84: 84
84
Huntington Bancshares — Investor Presentation (November 2012) on 6ix