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Huntington (HBAN) Down 1.7% Since Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Huntington Bancshares Incorporated (HBAN - Free Report) . Shares have lost about 1.7% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Huntington Misses on Q1 Earnings, Revenues Surge
Huntington reported adjusted earnings per share of $0.21, missing the Zacks Consensus Estimate by $0.01. Also, the figure was 15% below the prior-year quarter. The reported earnings exclude FirstMerit acquisition-related net expenses of $0.04 per share.
Huntington Bancshares’ revenues displayed growth. The quarter witnessed continual growth in both loan and deposit balances. However, elevated expenses and higher provision for credit losses were the primary headwinds.
After considering the non-recurring items, net income jumped nearly 19.1% year over year to $208 million.
Revenues, Loans & Deposits Rise, Costs Increase
The company’s total revenue on a fully taxable-equivalent (FTE) basis was $1.05 billion in the quarter. Moreover, the number was up 40% year over year.
Net interest income was $742 million on a FTE basis, up 45% from the prior-year quarter. The rise was driven by an increase in average earnings assets, along with a 19 bps expansion in NIM to 3.30%.
Non-interest income climbed 29% year over year to $312 million. The rise was due to growth in almost all components of income. Excluding the impact of certain non-recurring items, non-interest income was $310 million, up 28% year over year.
Non-interest expense surged 44% year over year to $707 million. The increase was due to a rise in all components of expenses. Excluding the impact of certain non-recurring items, non-interest expenses increased 31% year over year.
As of Mar 31, 2017, average loans and leases at Huntington Bancshares jumped 32% year over year to $66.9 billion. Also, average total deposits surged 38% year over year to $76.0 billion.
Credit Quality: A Mixed Bag
Net charge-offs were $39 million or an annualized 0.24% of average total loans in the reported quarter, up from $9 million or an annualized 0.07% of average total loans in the year-ago quarter.
Moreover, provision for credit losses more than doubled on a year-over year basis to $68 million.
However, total non-performing assets totaled $458 million as of Mar 31, 2017, down from $525 million as of Mar 31, 2016. In addition, the quarter-end allowance for credit losses, as a percentage of total loans and leases, declined to 1.14% from 1.34% in the prior-year quarter.
Capital Ratios Declined
Huntington came under the Basel III capital rules, beginning first-quarter 2015.
Common equity tier 1 risk-based capital ratio and regulatory Tier 1 risk-based capital ratio were 9.67% and 11.04%, respectively, compared with 9.73% and 10.99% in the year-ago quarter.
Tangible common equity to tangible assets ratio was 7.28%, down from 7.89% as of Mar 31, 2016.
Outlook for 2017
Including the synergies of FirstMerit acquisition, total revenue for full-year 2017 is anticipated to be over 20%. Management expects to implement all FirstMerit-related cost savings by third-quarter 2017.
Management is targeting positive operating leverage for 2017.
Management projects core margin expansion due to the interest rate hikes.
Average balance-sheet growth is estimated over 20%, driven mainly by the acquisition. On a period-end basis, loan growth is anticipated in the range of 4–6%.
Overall, asset quality metrics are likely to remain stable with moderate quarterly volatility, given the current low level of problem assets and credit costs.
Management expects lower non-performing assets inflows on a sequential basis.
Management anticipates net charge offs to remain below the long-term normalized range of 35–55 bps, while provision expenses are expected to continue normalizing.
Excluding certain items, the effective tax rate for 2017 is anticipated in the range of 24–27%.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
Huntington Bancshares Incorporated Price and Consensus
At this time, Huntington's stock has a subpar Growth Score of 'D', though it is lagging a bit on the momentum front with an 'F'. However, the stock was allocated a grade of 'B' on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for value based on our styles scores.
Outlook
The stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.
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Huntington (HBAN) Down 1.7% Since Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Huntington Bancshares Incorporated (HBAN - Free Report) . Shares have lost about 1.7% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Huntington Misses on Q1 Earnings, Revenues Surge
Huntington reported adjusted earnings per share of $0.21, missing the Zacks Consensus Estimate by $0.01. Also, the figure was 15% below the prior-year quarter. The reported earnings exclude FirstMerit acquisition-related net expenses of $0.04 per share.
Huntington Bancshares’ revenues displayed growth. The quarter witnessed continual growth in both loan and deposit balances. However, elevated expenses and higher provision for credit losses were the primary headwinds.
After considering the non-recurring items, net income jumped nearly 19.1% year over year to $208 million.
Revenues, Loans & Deposits Rise, Costs Increase
The company’s total revenue on a fully taxable-equivalent (FTE) basis was $1.05 billion in the quarter. Moreover, the number was up 40% year over year.
Net interest income was $742 million on a FTE basis, up 45% from the prior-year quarter. The rise was driven by an increase in average earnings assets, along with a 19 bps expansion in NIM to 3.30%.
Non-interest income climbed 29% year over year to $312 million. The rise was due to growth in almost all components of income. Excluding the impact of certain non-recurring items, non-interest income was $310 million, up 28% year over year.
Non-interest expense surged 44% year over year to $707 million. The increase was due to a rise in all components of expenses. Excluding the impact of certain non-recurring items, non-interest expenses increased 31% year over year.
As of Mar 31, 2017, average loans and leases at Huntington Bancshares jumped 32% year over year to $66.9 billion. Also, average total deposits surged 38% year over year to $76.0 billion.
Credit Quality: A Mixed Bag
Net charge-offs were $39 million or an annualized 0.24% of average total loans in the reported quarter, up from $9 million or an annualized 0.07% of average total loans in the year-ago quarter.
Moreover, provision for credit losses more than doubled on a year-over year basis to $68 million.
However, total non-performing assets totaled $458 million as of Mar 31, 2017, down from $525 million as of Mar 31, 2016. In addition, the quarter-end allowance for credit losses, as a percentage of total loans and leases, declined to 1.14% from 1.34% in the prior-year quarter.
Capital Ratios Declined
Huntington came under the Basel III capital rules, beginning first-quarter 2015.
Common equity tier 1 risk-based capital ratio and regulatory Tier 1 risk-based capital ratio were 9.67% and 11.04%, respectively, compared with 9.73% and 10.99% in the year-ago quarter.
Tangible common equity to tangible assets ratio was 7.28%, down from 7.89% as of Mar 31, 2016.
Outlook for 2017
Including the synergies of FirstMerit acquisition, total revenue for full-year 2017 is anticipated to be over 20%. Management expects to implement all FirstMerit-related cost savings by third-quarter 2017.
Management is targeting positive operating leverage for 2017.
Management projects core margin expansion due to the interest rate hikes.
Average balance-sheet growth is estimated over 20%, driven mainly by the acquisition. On a period-end basis, loan growth is anticipated in the range of 4–6%.
Overall, asset quality metrics are likely to remain stable with moderate quarterly volatility, given the current low level of problem assets and credit costs.
Management expects lower non-performing assets inflows on a sequential basis.
Management anticipates net charge offs to remain below the long-term normalized range of 35–55 bps, while provision expenses are expected to continue normalizing.
Excluding certain items, the effective tax rate for 2017 is anticipated in the range of 24–27%.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
Huntington Bancshares Incorporated Price and Consensus
Huntington Bancshares Incorporated Price and Consensus | Huntington Bancshares Incorporated Quote
VGM Scores
At this time, Huntington's stock has a subpar Growth Score of 'D', though it is lagging a bit on the momentum front with an 'F'. However, the stock was allocated a grade of 'B' on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for value based on our styles scores.
Outlook
The stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.