Skip to main content
  • Second-quarter earnings of 16 cents a share beats analysts' consensus estimate by a penny.
  • Quarterly dividend raised to four cents a share from one cent.
  • Strong Deposit Growth.
  • Credit provision down 28% from previous quarter.



) --

Huntington Bancshares

(HBAN) - Get Huntington Bancshares Incorporated Report

on Thursday raised its quarterly dividend to four cents a share from one cent, after reporting second quarter earnings that came in ahead of analysts' estimates.

The company reported second-quarter net income of $145.9 million, or 16 cents a share, compared to $126.4 million, or 14 cents a share in the first quarter and $48.8 million, or three cents a share, in the second quarter of 2010.

Huntington CEO Stephen Steinour

The consensus estimate among analysts polled by

Thomson Reuters

was for Huntington to report second-quarter earnings of 15 cents a share.

CEO Stepen Steinour said the company's improved numbers "addressing credit quality early in the financial downturn, the increasing contribution from strategic investments, improving customer product penetration, and aspects of our 'Fair Play' banking philosophy that are gaining traction every day."

In discussing the dividend increase, Steinour said "Generating an appropriate return for our shareholders is a key objective," and that "disciplined management of capital is important, with dividends being just one component." The company plans to target dividend payouts in a "range of 20%-30%," he said.

Total loans were $38.5 billion as of June 30, increasing 4% from June 2010. Key growth areas were commercial and industrial loans, which totaled $13.4 billion and increased 9% year-over-year, and automobile loans, which were up 28% to $6 billion. Residential mortgage loans were flat year-over-year, at $4.6 billion, and commercial real estate loans declined 15% to $6.2 billion.

Credit costs continued to decline, with a second-quarter provision for credit losses of $35.8 million, compared to $49.4 million the previous quarter and $193.4 million a year earlier. This was Huntington's lowest credit provision since the first quarter of 2007.

TheStreet Recommends

The company's loan loss reserves declined $62.1 during the second quarter, directly boosting earnings and following a $115.8 million reserve release the previous quarter.

Loan loss reserves covered 2.74% of total loans as of June 30. The annualized second-quarter ratio of net charge-offs -- loan losses less recoveries -- to average loans was 1.01%, improving from 1.73% the previous quarter and 3.01% a year earlier.

The company's ratio of nonperforming assets to total assets was 1.67% as of June 30, improving from 1.80% in March and 4.24% in June 2010.

Huntington's Tier 1 common risk-based capital ratio was 9.92 as of June 30, rising from 9.75% in March and 7.04% in June 2010.

When asked about the company's eventual compliance with the enhanced Basel III capital standards,


, Steinour said that Huntington's "capital components are largely in line Basel III, so Basel III for us will not be an event."

Steinour was upbeat about the company's deposit growth, with two key programs, including 24-Hour Grace for checking account overdrafts and Huntington's new "Asterisk-Free Checking" program feeding an annualized 9.9% growth rate for coveted consumer checking accounts during the first half of 2011.

Huntington has seen its shares decline 8% this year through Wednesday's market close at $6.31. The shares trade for 9.3 times the 2012 consensus earnings estimate of 68 cents a share. Based on the increased quarterly payout of four cents, the shares have a forward dividend yield of 2.54%.


Written by Philip van Doorn in Jupiter, Fla.

To contact the writer, click here:

Philip van Doorn


To follow the writer on Twitter, go to


To submit a news tip, send an email to:


Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.