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Huntington Bancshares Incorporated Reports Record Net Income Of $167.8 Million, Or $0.19 Per Common Share, For The 2012 Third Quarter, Up 10% From The Prior Quarter And Up 17% From The Year-Ago Quarter

Huntington Bancshares Incorporated (NASDAQ: HBAN; www.huntington.com) reported 2012 third quarter net income of $167.8 million, up $15.1 million, or 10%, from $152.7 million in the prior quarter. Earnings per common share in the current quarter were $0.19, up $0.02 from the prior quarter. Net income in the year-ago quarter was $143.4 million, or $0.16 per common share.

Huntington today also announced that the board of directors declared a quarterly cash dividend on its common stock of $0.04 per common share. The dividend is payable January 2, 2013, to shareholders of record on December 18, 2012.

Summary Performance Discussion

“We are pleased with the quarter’s financial results which reflect steady growth in a number of key strategic areas including loans, deposits, and customer relationships. This demonstrates the continued benefits from successfully executing our strategic plan. This quarter was negatively impacted by an increase in healthcare and regulatory costs,” said Stephen D. Steinour, chairman, president and chief executive officer. “At the core of our strategic plan remains a differentiated approach to banking, coupled with investing in products and services that are driving growth and improvement in the stability of our long-term profitability.”

Net income in the third quarter was $167.8 million, up $15.1 million, or 10%, from $152.7 million in the prior quarter. The primary drivers of the increase were a $21.0 million, or 43%, decrease in provision for income taxes and a $7.2 million, or 3%, increase in noninterest income that were partially offset by a $14.0 million, or 3%, increase in noninterest expense. The decrease in provision for income taxes reflected the only significant item for the quarter, a $19.5 million state deferred tax valuation allowance benefit.

Net interest income increased $0.8 million, or less than 1%, from the prior quarter. This reflected a $0.3 billion, or 1% (2% annualized), increase in average earning assets and a 4 basis point decrease in the fully-taxable equivalent net interest margin (NIM) to 3.38%. The linked-quarter decrease in the NIM reflected the negative impact of a 10 basis point decline of the yield on earnings assets, 6 basis points of which were related to the yield on loans. This was partially offset by the benefit of a 6 basis point reduction in total funding costs. Average noninterest bearing deposits increased $0.3 billion, or 8% annualized, and represented 27% of total deposits.

The $0.3 billion increase in average earning assets was driven by the $1.4 billion increase in average loans held for sale and a $0.2 billon, 6% annualized, increase in average commercial and industrial loans (C&I). That was partially offset by the $0.9 billion decrease in average automobile loans, reflecting the prior quarter’s reclassification of $1.3 billion of automobile loans into held for sale, and a $0.4 billion decrease in commercial real estate loans.

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