Huntington Continues Strong Growth

• Huntington reports second-quarter earnings of 17 cents a share, beating the consensus estimate of 15 cents.
• Net interest margin increases by two basis points, bucking industry trend.
• Average loans grow at 21% pace during second quarter, including Fidelity acquisition; period-end loans grew 3%.

Updated with early market action and comment from Jefferies analyst Ken Usdin.

NEW YORK (TheStreet) -- Huntington Bancshares (HBAN) on Thursday reported that its average loans during the second quarter increased at an annualized pace of 21% from the first quarter.

The Columbus, Ohio, lender reported second-quarter earnings applicable to common shares of $144.7 million, or 17 cents a share, beating the 15-cent consensus estimate among analysts polled by Thomson Reuters.

In comparison, the company earned $153.3 million, or 17 cents a share, during the first quarter, and $145.9 million, or 16 cents a share, during the second quarter of 2011.

Huntington's shares were up over 2% in early trading, to $6.74.

Net interest income increased 3% sequentially, to $429 million, mainly reflecting Huntington's acquisition of the failed Fidelity Bank of Dearborn, Mich., which had roughly $818 million in total assets and $748 million in deposits. Huntington's net interest margin -- the difference between a bank's average yield on loans and investments and its average cost for deposits and borrowings -- expanded to 3.42% during the second quarter, from 3.40% in both the first quarter and the second quarter of 2011.

Second-quarter noninterest income totaled $253.8 million, declining from $285.3 million in the first quarter and $255.8 million in the second quarter of 2011. The first-quarter noninterest income included a $23 million auto loan securitization, and an $11.4 million bargain purchase gain from the Fidelity acquisition.

Second-quarter noninterest expense was $444.3 million, declining from $462.7 million the previous quarter, and $428.4 million a year earlier. The sequential expense decline reflected a $23 million addition to litigation reserves during the first quarter, which was partially offset by increases in costs for data processing and professional services, as well as a seasonal increase in marketing expenses, as well as $6.8 million in one-time integration expenses from the Fidelity acquisition.

Huntington's average loans increased at a 21% annualized pace during the second quarter, to $41.2 billion, reflecting in part the Fidelity acquisition. Period-end loans and leases grew 3% during the second quarter, to $40.0 billion. The Fidelity loans were included in the first-quarter period-end numbers, but not in the first quarter average loan numbers.

Period-end commercial and industrial loans grew 3% sequentially to $16.3 billion as of June 30, while commercial real estate loans declined 2% to $5.9 million.

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