Huntington Bancshares Incorporated Management Discusses Q2 2012 Results - Earnings Call Transcript

Importantly, our net interest income increased $13.6 million, reflecting a 2 basis point increase in the margin and strong organic loan growth, as well as the impact of Fidelity Bank and the municipal lease portfolio purchases that occurred late in the first quarter.

Average total core deposits were up 13% annualized from the first quarter, about 1/2 of which related to the Fidelity acquisition. Noninterest expense decreased $18.4 million as the prior quarter included a $23.5 million increase to our litigation reserves.

The current quarter also reflected lower deposits and insurance -- other insurance costs of $5 million. It was negatively impacted by the $6.8 million of expenses related to Fidelity.

Turning to Slide 8. Steve will go into additional detail later in the call, but you can see that our OCR methodology is continuing to drive success throughout the company.

Turning to credit quality, our metrics were fairly stable. Net charge-offs to loans declined from 85 basis points to 82 basis points this quarter. Nonaccrual loans were up 1%, and our allowance for credit losses as a percentage of nonaccrual loans decreased to 192%, which we still believe will continue to compare favorably to our peers.

With regard to capital, our tangible common equity ratio rose 8 basis points to 8.41%. Our Tier 1 capital ratio decline reflected the impact of growth in risk-weighted assets, as well as our trust-preferred redemption that was completed this quarter. The Tier 1 and total risk-based capital ratios declined by 29 and 35 basis points, respectively.

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