Huntington reports third-quarter net income of $721 million, or 33 cents per diluted share

Huntington Bancshares Incorporated (HBAN) reported third-quarter net income of $721 million, or 33 cents per diluted share, up from $629 million a year earlier, a regulatory filing showed Thursday.

Adjusted earnings, which exclude acquisition-related expenses and other Notable Items, were 38 cents per share, compared with 40 cents a year earlier, the company said in a news release.

The third quarter included the full quarter impact of the Cadence and Veritex acquisitions, the company said.

Here's how the company did:

• Net income: $721 million vs. $629 million a year earlier
• Diluted EPS: 33 cents vs. 41 cents a year earlier
• Adjusted EPS (non-GAAP): 38 cents vs. 40 cents a year earlier
• Total revenue: $2,791 million vs. $2,134 million a year earlier
• Adjusted ROTCE (non-GAAP): 16.6% vs. 17.4% a year earlier

Total revenue fell from $2,837 million in the second quarter, as noninterest income declined.

Net interest income was $2,069 million, up 1% from the prior quarter and up 37% from $1,506 million a year earlier.

Net interest margin, the difference between interest earned on assets and the cost of funding them, rose to 3.25%. That was up 4 basis points from the second quarter and 12 basis points from a year earlier.

Noninterest income decreased 8% from the second quarter to $722 million. The company said capital markets and advisory fees decreased to $122 million from $140 million, primarily due to lower underwriting and advisory fees.

Unfavorable valuation changes on strategic and other investments also reduced other noninterest income.

Compared with a year earlier, noninterest income rose 15% from $628 million. The company said the increase was primarily due to fees from the legacy business and the impact of Janney and TM Capital, in addition to higher syndication fees.

Noninterest expense was $1,772 million, down 2% from $1,809 million in the second quarter and up 42% from $1,246 million a year earlier. Acquisition-related expenses were $117 million before taxes, compared with $152 million in the prior quarter and $14 million a year earlier.

Excluding Notable Items, noninterest expense was $1,655 million, down $2 million from the prior quarter. Personnel costs decreased primarily due to lower salary, benefit, and incentive compensation expense.

The efficiency ratio, a non-GAAP measure of how much revenue goes to operating costs, was 61.2%. That compares with 61.5% in the second quarter and 57.4% a year earlier.

Average total loans and leases were $188.4 billion, down 0.4% from the prior quarter as commercial real estate and consumer loans declined, partly offset by higher commercial and industrial loans. From a year earlier, average loans rose $52.5 billion, or 39%, largely because of the Cadence and Veritex acquisitions.

Average total deposits were $223.8 billion, up 0.2% from the second quarter and up $59.0 billion, or 36%, from a year earlier. The average cost of total deposits was 1.90%, down 10 basis points from a year earlier.

Credit costs were mixed. The provision for credit losses was $123 million, down $9 million from the prior quarter and up $1 million from a year earlier.

Net charge-offs were $146 million, or an annualized 0.31% of average loans and leases. That was up from 0.25% in the prior quarter and 0.22% a year earlier.

Nonperforming assets totaled $1.7 billion at Sept. 30, up $110 million from June 30 and $901 million from a year earlier. The company said the increases were driven by commercial and industrial, commercial real estate and residential mortgage nonaccrual loans.

The common equity tier 1 ratio was 10.1% at Sept. 30, a preliminary figure, up from 10.0% in the prior quarter. Tangible book value per common share, a non-GAAP measure of equity net of intangible assets, was $9.47. That was down 18 cents, or 2%, from the prior quarter, largely because higher market interest rates weighed on accumulated other comprehensive income.

The company repurchased $100 million of common shares in the third quarter, bringing its year-to-date total to $409 million, or about 25 million shares. Cash dividends declared were 15.5 cents per common share, unchanged from the second quarter.

"Huntington delivered a solid quarter, reflecting disciplined execution and continued business momentum across the franchise," said Huntington chairman and chief executive officer Steve Steinour. "We are also seeing increasing benefits from our recent partnerships with Veritex and Cadence, and are achieving our targeted cost and revenue synergies."

The release did not include updated guidance figures. Steinour said the results "give us confidence that we are on track to meet our financial targets."

Huntington, a $288 billion asset regional bank holding company headquartered in Columbus, Ohio, had 25,898 average full-time equivalent employees in the quarter, down from 26,407 in the second quarter.

The company said it would host an earnings conference call at 9:00 a.m. Eastern Time on Thursday, Oct. 22.