EXHIBIT 99.1
FOR IMMEDIATE RELEASE
APRIL 18, 2002
CONTACTS:
Investors Media
Jay Gould (614) 480-4060 Jeri Grier (614) 480-5413
HUNTINGTON BANCSHARES ANNOUNCES
FIRST QUARTER 2002 EARNINGS OF $0.39 PER SHARE AND
OPERATING EARNINGS OF $0.31 PER SHARE EXCLUDING THE GAIN ON THE
SALE OF FLORIDA OPERATIONS AND RESTRUCTURING AND OTHER CHARGES
COLUMBUS, Ohio - Huntington Bancshares Incorporated (NASDAQ: HBAN;
www.huntington.com) today reported first quarter earnings of $97.7 million, or
$0.39 per common share. This compares with earnings of $65.6 million, or $0.26
per common share, in the fourth quarter and $67.9 million, or $0.27 per common
share, in the year-ago quarter.
First quarter 2002 results include the impact of the following items, all
associated with the strategic restructuring announced last July:
- - $175.4 million pretax gain on the sale of our Florida banking operations
($56.8 million after tax or $0.22 per share), and
- - $56.2 million pretax restructuring and other charges ($36.5 million after
tax or $0.14 per share). The first quarter of 2002 marks the last quarter to
reflect such charges related to the implementation of strategic initiatives
announced in July 2001, including the sale of the Florida banking
operations.
Excluding the impact of these items from first quarter 2002 results,
operating earnings were $77.5 million, or $0.31 per common share, in the first
quarter. This compares with fourth quarter 2001 operating earnings of $75.5
million, or $0.30 per common share, and $67.9 million, or $0.27 per common
share, in the year-ago quarter with comparisons to prior quarters benefiting by
$0.03 per share from the adoption of SFAS No. 142, Goodwill and Other Intangible
Assets.
"Operating results reflected a solid quarter for Huntington in a
difficult economic environment," said Thomas Hoaglin, chairman, president and
chief executive officer. "We completed several strategic initiatives that were
announced last July to improve long-term performance. Specifically, we closed
the sale of our Florida banking operations on February 15. And, consistent with
our announced intention to commence a significant share repurchase program upon
completion of this sale, on February 19 the Board authorized a 22 million share
repurchase program. Through the end of March we had repurchased 1.5 million
shares."
Hoaglin continued, "First quarter results, adjusted for the impact of
the sale of the Florida operations, demonstrated continued growth in loans and
core deposits, an efficiency ratio of 54.1%, stronger loan loss reserves and a
tangible common equity ratio of 9.03%. With these improvements, we believe this
is a good start for the year."
"Net charge-offs in both the commercial and consumer businesses as
well as non-performing asset levels remained high. The loan loss reserve to loan
ratio at quarter end was a strong 2.00%," Hoaglin added. "We are encouraged that
this was the second consecutive quarter where the inflow of new non-performing
loans declined. Also, consumer loan delinquencies over 30 days declined to 2.36%
from 3.21% at the end of last year."
BASIS OF DISCUSSION
- -------------------
Comparison of first quarter 2002 results to prior quarters is
impacted by a number of items. This includes the gain on the sale of Florida
banking operations in the 2002 first quarter, restructuring and other charges in
all periods, and two one-time items in the 2001 fourth quarter. Reported first
quarter 2002 results also include Florida operations for only half the quarter.
To better understand underlying trends, the following discussion is on an
operating basis, which excludes the impact of these items in all periods,
including the impact of the Florida transaction except where otherwise noted due
to immateriality. (Please refer to the schedules immediately following this
discussion, as well as the Quarterly Financial Review for schedules reconciling
reported with operating earnings and additional schedules excluding the impact
of the Florida operations.)
2
DISCUSSION OF RESULTS
First quarter 2002 operating results compared with 2001 fourth quarter
performance and excluding the impact of Florida operations from both periods
reflected:
- - $79.5 million of net income, or $0.32 per share,
- - 5% annualized growth in managed loans,
- - 6% annualized growth in core deposits,
- - 4.21% net interest margin,
- - 54.1% efficiency ratio,
- - $3.7 million decrease in loan loss provision expense, and
- - 9.03% tangible common equity ratio.
Net interest income declined $3.5 million from the fourth quarter
reflecting a 6 basis point decline in the net interest margin to 4.21%. The
decrease in the net interest margin was driven, in part, by the lagged impact of
repricing variable rate home equity lines in a period of declining interest
rates. This was only partially offset by a 4% annualized increase in earning
assets driven by loan growth. Compared with the year-ago quarter, net interest
income was up $14.6 million, or 7% with the net interest margin increasing 23
basis points from 3.98%.
Average managed loans increased 5% on an annualized basis in the
quarter. Reflecting the promotion of adjustable rate mortgage products,
residential real estate loans increased $213 million and represented 85% of the
quarter's average loan growth. Home equity lines and commercial real estate
loans increased at annualized rates of 13% and 16%, respectively. In contrast,
commercial loans and consumer installment loans declined 6% and 17% on an
annualized basis, respectively. Compared with the year-ago quarter, average
managed loans were up 4%.
3
Average core deposits increased 6% on an annualized basis from the
fourth quarter reflecting a successful deposit growth campaign in retail and
small business banking. Compared with the year-ago quarter, average core
deposits were up 8%.
Non-interest income, excluding securities gains, was up $0.7 million
from the fourth quarter. This was primarily driven by a $4.6 million increase in
mortgage banking income, reflecting a 60% increase in mortgage deliveries to the
secondary market. This was largely offset by a $4.5 million decrease in other
income reflecting lower securitization income and decreased sales of customer
derivative products. Non-interest income was up 19% from the year-ago quarter
also reflecting the benefit of increases in mortgage banking, as well as a 10%
increase in deposit service charges, a 19% increase in brokerage and insurance
fees, a 10% increase in trust income, and an 8% increase in other miscellaneous
fees.
Non-interest expense increased $1.6 million from the fourth quarter
driven by a $4.2 million increase in personnel costs reflecting, in part, the
FICA reset at the beginning of each year, a $1.7 million increase in outside
services expense, and a $1.9 million increase in marketing expense. Partially
offsetting these increases were a $3.0 million decrease in combined equipment
and occupancy expenses reflecting lower depreciation expense and a $2.3 million
reduction in amortization of non-Florida related intangibles. Non-interest
expense was down $4.8 million, or 2%, compared with the year-ago quarter
reflecting decreases across a number of expense categories only partially offset
by higher personnel costs and outside data processing and other services
expense.
Net charge-offs were $50.6 million in the first quarter and were
1.07% of average loans. This was down from $51.3 million and 1.11%, in the
fourth quarter. Excluding the impact of net charge-offs on exited portfolios for
which reserves were previously established, net charge-offs represented 1.00% of
average loans, down from 1.04% in the fourth quarter. The over 30-day
delinquency ratio for total loans, which averaged 2.32% for the last three
consecutive quarters including Florida operations, dropped to 1.89% at the end
of March. This included significant improvement in consumer loan delinquencies
over 30 days from 3.21% at the end of last year also including Florida
operations to 2.36% at the end of the first quarter.
4
Loan loss provision expense in the first quarter was $50.6 million,
equal to net charge-offs, and down $3.7 million from the fourth quarter. The
allowance for loan losses as a percent of period-end loans was 2.00% at March
31, 2002, up from 1.53% at the end of the year-ago quarter.
Non-performing assets at March 31, 2002, were $225.5 million, up
slightly from $220.4 million at the end of last year, and represented 1.17% of
period-end total loans and other real estate, unchanged from December 31, 2001.
Non-performing assets continue to be concentrated in the manufacturing and
services sectors reflecting weakness in Midwest manufacturing.
At March 31, 2002, the tangible equity to assets ratio was 9.03%.
Given the company's objective to repurchase $300-$400 million of shares in 2002,
this ratio is expected to end the year in the 7.5%-8.0% range.
2002 OUTLOOK
"Given that first quarter performance was in line with our
expectations, we remain comfortable with our previously stated 2002 earnings per
share guidance of $1.32-$1.36," Hoaglin said. "The key issue for the next few
quarters is credit quality with the main variable being the strength and timing
of the economic recovery and its impact on our markets and customers. In those
areas where we have more direct influence, such as loan and deposit growth,
revenue generation, and expense control, we remain confident of continued
progress."
CONFERENCE CALL / WEBCAST INFORMATION
Huntington's senior management will host an earnings conference call
today at 2:00 p.m. EDT, via a live Internet webcast at www.huntington-ir.com or
through a dial-in phone number at (800) 760-1355. Slides to be reviewed during
the conference call will be available for viewing at www.huntington-ir.com on
April 18, 2002, just prior to 2:00 p.m. EDT.
A replay of the webcast will be archived in the Investor Relations
section of Huntington's web site www.huntington.com. A phone dial-in replay will
be available through April 30, 2002, at (800) 642-1687; conference ID 3727820.
5
The supplemental financial tables as well as the slides for the
conference call will be filed, along with management's comments, with the
Securities and Exchange Commission on Form 8-K.
ABOUT HUNTINGTON
Huntington Bancshares Incorporated is a $25 billion regional bank
holding company headquartered in Columbus, Ohio. Through its affiliated
companies, Huntington has more than 136 years of serving the financial needs of
its customers. Huntington provides innovative retail and commercial financial
products and services through more than 300 regional banking offices in Indiana,
Kentucky, Michigan, Ohio and West Virginia. Huntington also offers retail and
commercial financial services online at www.huntington.com; through its
technologically advanced, 24-hour telephone bank; and through its network of
more than 900 ATMs. Selected financial service activities are also conducted in
other states including: Dealer Sales offices in Florida, Tennessee, Pennsylvania
and Arizona; Private Financial Group offices in Florida; and Mortgage Banking
offices in Florida, Maryland and New Jersey. International banking services are
made available through the headquarters office in Columbus and additional
offices located in the Cayman Islands and Hong Kong.
FORWARD-LOOKING STATEMENT
This press release contains certain forward-looking statements, including
certain plans, expectations, goals, and projections, which are subject to
numerous assumptions, risks, and uncertainties. A number of factors, including
but not limited to those set forth under the heading "Business Risks" included
in Item 1 of Huntington's Annual Report on Form 10-K for the year ended December
31, 2001, and other factors described from time to time in Huntington's other
filings with the Securities and Exchange Commission, could cause actual
conditions, events, or results to differ significantly from those described in
the forward-looking statements. All forward-looking statements included in this
news release are based on information available at the time of the release.
Huntington assumes no obligation to update any forward-looking statement.
###
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HUNTINGTON BANCSHARES INCORPORATED
KEY STATISTICS
($ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
- ------------------------------------------------------------------------------------------------------------------
OPERATING
-----------------------------------------------------
1Q02 4Q01 1Q01
- ------------------------------------------------------------------------------------------------------------------
Average loans - managed $21,676,613 $22,747,539 $22,061,281
Managed loan growth - linked quarter annualized NA 2% 2%
Average earning assets - reported $23,769,027 $24,881,812 $25,014,875
Average core deposits $16,300,959 $18,236,365 $17,265,382
Core deposit growth - linked quarter annualized NA 9% -4%
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
Net interest income $ 242,825 $ 255,238 $ 243,124
Provision for loan losses 55,781 58,275 33,464
Securities gains 457 89 2,078
Non-interest income 125,627 133,008 115,646
Non-interest expense 207,386 227,354 234,090
---------------------------------------------------
Income before income taxes 105,742 102,706 93,294
Income taxes 28,286 27,214 25,428
---------------------------------------------------
Net income $ 77,456 $ 75,492 $ 67,866
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
EPS $ 0.31 $ 0.30 $ 0.27
Net interest margin 4.14% 4.11% 3.93%
Efficiency ratio 55.7% 55.8% 62.0%
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
Net charge-offs (NCO's) $ 55,781 $ 56,146 $ 28,093
NCO's as a % of average loans 1.11% 1.04% 0.55%
NCO's - excl. runoff portfolios $ 52,034 $ 52,519 $ 28,093
NCO's as a % of average loans - excl. runoff portfolios 1.04% 0.98% 0.55%
Non-performing assets $ 225,530 $ 227,493 $ 124,886
Non-performing assets as a % of total
loans and other real estate (OREO) 1.17% 1.05% 0.60%
Allowance for loan losses and OREO as a % of
non-performing assets 171% 180% 239%
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OPERATING, EX. FLORIDA
-----------------------------------------------------
1Q02 4Q01 1Q01
- ------------------------------------------------------------------------------------------------------------------
Average loans - managed $20,297,574 $20,042,105 $19,661,660
Managed loan growth - linked quarter annualized 5% 0% 1%
Average earning assets - reported $22,389,988 $22,176,377 $22,613,259
Average core deposits $14,027,333 $13,712,713 $12,967,426
Core deposit growth - linked quarter annualized 6% 10% -3%
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
Net interest income $ 233,101 $ 236,596 $ 218,518
Provision for loan losses 50,595 54,281 29,709
Securities gains 457 89 2,078
Non-interest income 114,994 114,291 96,573
Non-interest expense 189,051 187,429 193,817
---------------------------------------------------
Income before income taxes 108,906 109,266 93,643
Income taxes 29,393 28,999 24,463
---------------------------------------------------
Net income $ 79,513 $ 80,267 $ 69,180
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
EPS $ 0.32 $ 0.32 $ 0.28
Net interest margin 4.21% 4.27% 3.98%
Efficiency ratio 54.1% 52.5% 60.2%
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
Net charge-offs (NCO's) $ 50,595 $ 51,311 $ 25,715
NCO's as a % of average loans 1.07% 1.11% 0.57%
NCO's - excl. runoff portfolios $ 46,848 $ 47,683 $ 25,715
NCO's as a % of average loans - excl. runoff portfolios 1.00% 1.04% 0.57%
Non-performing assets $ 225,530 $ 220,397 $ 117,032
Non-performing assets as a % of total
loans and other real estate (OREO) 1.17% 1.17% 0.63%
Allowance for loan losses and OREO as a % of
non-performing assets 171% 176% 238%
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HUNTINGTON BANCSHARES INCORPORATED
CONSOLIDATED RESULTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
- --------------------------------------------------------------------------------
THREE MONTHS ENDED
MARCH 31, 2002
- --------------------------------------------------------------------------------
REPORTED OPERATING
EARNINGS ADJUSTMENTS EARNINGS
- --------------------------------------------------------------------------------
(1)
Interest Income $393,595 $ --- $393,595
Interest Expense 150,770 --- 150,770
- --------------------------------------------------------------------------------
Net Interest Income 242,825 --- 242,825
Provision for Loan Losses 55,781 --- 55,781
Securities Gains 457 --- 457
Non-Interest Income 125,627 --- 125,627
Gain on Sale of Florida Operations 175,344 175,344 ---
Non-Interest Expense 207,386 --- 207,386
Special Charges 56,184 56,184 ---
- --------------------------------------------------------------------------------
Income Before Income Taxes 224,902 119,160 105,742
Income Taxes 127,175 98,889 28,286
- --------------------------------------------------------------------------------
NET INCOME $ 97,727 $ 20,271 $ 77,456
================================================================================
NET INCOME PER COMMON
SHARE -- DILUTED $ 0.39 $ 0.08 $ 0.31
================================================================================
- --------------------------------------------------------------------------------
THREE MONTHS ENDED
MARCH 31, 2001
- --------------------------------------------------------------------------------
REPORTED OPERATING
EARNINGS ADJUSTMENTS EARNINGS
- --------------------------------------------------------------------------------
Interest Income $517,975 $ --- $517,975
Interest Expense 274,851 --- 274,851
- --------------------------------------------------------------------------------
Net Interest Income 243,124 --- 243,124
Provision for Loan Losses 33,464 --- 33,464
Securities Gains 2,078 --- 2,078
Non-Interest Income 115,646 --- 115,646
Non-Interest Expense 234,090 --- 234,090
Special Charges --- --- ---
- --------------------------------------------------------------------------------
Income Before Income Taxes 93,294 --- 93,294
Income Taxes 25,428 --- 25,428
- --------------------------------------------------------------------------------
NET INCOME $ 67,866 $ --- $ 67,866
================================================================================
NET INCOME PER COMMON
SHARE -- DILUTED $ 0.27 $0.00 $ 0.27
================================================================================
(1) Includes $175.3 million of pre-tax gain on sale of Florida operations and
$56.2 million of pre-tax restructuring and special charges.
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HUNTINGTON BANCSHARES INCORPORATED
CONSOLIDATED COMPARATIVE SUMMARY - Operating Basis (1)
(in thousands, except per share amounts)
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CONSOLIDATED RESULTS OF OPERATIONS
- -----------------------------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED
MARCH 31, CHANGE
- ------------------------------------------------------------------
2002 2001 %
- -----------------------------------------------------------------------------------------------------------------------------------
Interest Income $393,595 $517,975 (24.0)%
Interest Expense 150,770 274,851 (45.1)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Interest Income 242,825 243,124 (0.1)
Provision for Loan Losses 55,781 33,464 66.7
Securities Gains 457 2,078 (78.0)
Non-Interest Income 125,627 115,646 8.6
Non-Interest Expense 207,386 234,090 (11.4)
- -----------------------------------------------------------------------------------------------------------------------------------
Income Before Income Taxes 105,742 93,294 13.3
Provision for Income Taxes 28,286 25,428 11.2
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NET INCOME $ 77,456 $ 67,866 14.1 %
=================================================================================
PER COMMON SHARE AMOUNTS
Net Income per Common Share
Basic $ 0.31 $ 0.27 14.8%
Diluted $ 0.31 $ 0.27 14.8%
Cash Dividends Declared $ 0.16 $ 0.20 (20.0)%
Book value at end of period $ 9.74 $ 9.58 1.6%
AVERAGE COMMON SHARES
Basic 250,749 250,998 (0.1)%
Diluted 251,953 251,510 0.2%
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KEY OPERATING RATIOS
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THREE MONTHS ENDED
MARCH 31,
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2002 2001
- -----------------------------------------------------------------------------------------------------------------------------------
Return On:
Average Total Assets 1.18% 0.97%
Average Shareholders' Equity 13.26% 11.53%
Efficiency Ratio 55.7% 62.0%
Net Interest Margin 4.14% 3.93%
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CONSOLIDATED STATEMENT OF CONDITION DATA
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CHANGE CHANGE
AVERAGE FOR THREE MONTHS --------------------- -------------------
ENDED MARCH 31, ACTUAL EX. FLA. AT MARCH 31, ACTUAL EX. FLA.
- ------------------------------------------------------------------------------ ---------------------------------------------------
2002 2001 % % 2002 2001 % %
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Loans - Reported $20,472,192 $20,703,769 (1.1) 5.0 $19,338,947 $20,870,648 (7.3) 5.4
Loans - Managed 21,676,613 22,061,281 (1.7) 3.9 20,529,523 22,210,181 (7.6) 4.3
Core Deposits(2) 16,300,959 17,265,382 (5.6) 8.1 14,679,775 17,450,116 (15.9) 11.8
Total Deposits 17,924,681 19,065,407 (6.0) 6.9 16,266,785 19,130,157 (15.0) 11.5
Assets - Reported 26,544,413 28,236,740 (6.0) (1.0) 24,745,954 28,441,188 (13.0) (1.9)
Shareholders' Equity 2,369,808 2,387,653 (0.7) (0.7) 2,433,938 2,405,256 1.2 1.2
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CAPITAL RATIOS AND ASSET QUALITY
- -----------------------------------------------------------------------------------------------------------------------------------
AT AT
MARCH 31, MARCH 31,
- -----------------------------------------------------------------------------------------------------------------------------------
2002 2001 2002 2001
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Tier I Risk-Based Capital(3) 10.26% 7.19% Non-performing loans (NPLs) $219,418 $110,855
Total Risk-Based Capital(3) 13.40% 10.31% Total non-performing assets (NPAs) $225,530 $124,886
Tier I Leverage(3) 9.72% 7.12% Allowance for loan losses/total loans 2.00% 1.45%
Average Equity/Assets 8.93% 8.46% Allowance for loan losses/NPLs 176% 272%
Tangible Equity/Assets 9.03% 6.01% Allowance for loan losses and other
real estate/NPAs 171% 239%
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(1) Income component excludes after-tax impact of the $56.8 million gain on
sale of Florida operations and $36.5 million restructuring and special
charges in 1Q '02.
(2) Core deposits include non-interest bearing and interest bearing demand
deposits, savings deposits, CDs under $100,000, and IRA deposits.
(3) Estimated.
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