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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
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DATE OF REPORT: OCTOBER 14, 1998
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HUNTINGTON BANCSHARES INCORPORATED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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Maryland 0-2525 31-0724920
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(STATE OR OTHER (COMMISSION FILE NO.) (IRS EMPLOYER
JURISDICTION OF IDENTIFICATION NUMBER)
INCORPORATION OR
ORGANIZATION)
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Huntington Center
41 South High Street
Columbus, Ohio 43287
(614) 480-8300
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER
INCLUDING AREA CODE OF REGISTRANT'S
PRINCIPAL EXECUTIVE OFFICES)
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ITEM 5. OTHER EVENTS.
On October 14, 1998, Huntington Bancshares Incorporated ("Huntington")
issued a news release announcing its earnings for the third quarter and nine
months ended September 30, 1998. The information contained in the news release,
which is attached as an exhibit to this report, is incorporated herein by
reference.
The information contained or incorporated by reference in this Current
Report on Form 8-K may contain forward-looking statements, including certain
plans, expectations, goals, and projections, which are subject to numerous
assumptions, risks, and uncertainties. Actual results could differ materially
from those contained or implied by such statements for a variety of factors,
including: changes in economic conditions; movements in interest rates;
competitive pressures on product pricing and services; success and timing of
business strategies; the nature and extent of legislative and regulatory actions
and reforms; and extended disruption of vital infrastructure.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
Exhibit 99 -- News release of Huntington Bancshares Incorporated, dated
October 14, 1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
HUNTINGTON BANCSHARES INCORPORATED
Date: November 3, 1998 By: /s/ Gerald R. Williams
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Gerald R. Williams, Executive Vice President
and Chief Financial Officer
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EXHIBIT INDEX
Exhibit No. Description Page
99 * News release of Huntington Bancshares
Incorporated issued on October 14, 1998.
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* Filed with this report.
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Exhibit 99
FOR IMMEDIATE RELEASE
SUBMITTED: OCTOBER 14, 1998
FOR FURTHER INFORMATION, CONTACT:
MEDIA ANALYSTS
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HILLARY JEFFERS (614) 480-5413 LAURIE COUNSEL (614) 480-3878
CHERI GRAY (614) 480-3803
HUNTINGTON BANCSHARES REPORTS THIRD QUARTER EARNINGS
AND ANNOUNCES STRATEGIC INITIATIVES
COLUMBUS, Ohio - Huntington Bancshares Incorporated (NASDAQ: HBAN;
www.huntington.com) today reported third quarter diluted earnings per share
(EPS) of $.42 and $1.27 for the nine months ended September 30, 1998.
Cash basis EPS was $.45 and $1.33 in these same periods.
The Huntington also announced several strategic actions that will
better position the company for future profitability and growth. During the past
several quarters, the company has moved to a common operating platform,
collapsed its subsidiary banks into a single interstate charter, completed two
significant acquisitions, and reduced the number of its operations and
processing centers from 32 to three. With the majority of the integration
process now complete, the company expects to realize significant efficiencies in
the ensuing quarters through lower personnel costs and by exiting
under-performing banking offices.
Accordingly, The Huntington today announced that it would eliminate
approximately 1,000 positions or 10% of its workforce within the next six to
nine months. The company also plans to close or sell approximately 39 banking
offices and outsource certain back-office functions such as its customer retail
lockbox and employee benefit administration. Once fully implemented, these
strategic actions are expected to add approximately $125 million in sustainable
pre-tax annual profit improvements. This announcement resulted from a six-month
company-wide initiative to identify efficiencies to improve cost control and
customer service.
(more)
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The Huntington plans to record a pre-tax $90 million restructuring charge during
the fourth quarter of 1998 to cover employee transition costs, banking office
and ATM closures, and other costs related to these strategic actions.
Improving returns on capital has also been a primary focus of The
Huntington. Consequently, the company has reduced the size of its investment
portfolio, has sold its out-of-market credit card portfolio, and is closing its
Pittsburgh indirect loan production office. The company also reactivated its
share repurchase program and is negotiating a sale/leaseback agreement related
to approximately $200 million of its real estate properties.
These actions will solidify the company's progress in achieving its
stated goals for a return on equity of at least 18% and an efficiency ratio
below 50%. "The Huntington is currently performing well, but we need to do
better," said Frank Wobst, chairman and chief executive officer of Huntington
Bancshares Incorporated. "After much deliberation and consideration for the
company's shareholders and employees, most of whom are shareholders, it was
apparent that these actions were necessary in order to deliver the returns the
marketplace has come to expect from The Huntington. We did not implement
across-the-board job cuts or enforce arbitrary numeric targets. Instead, we
concentrated on containing costs and focusing resources on areas of our company
with the highest growth potential. For example, we have decided to expand our
consumer lending capability in Florida and to selectively add new locations in
our important core markets."
Continued Wobst, "This restructuring builds upon the company's 24%
asset growth within the last 12 months and its move to a multi-state banking
charter with enterprise-wide common application systems and will allow The
Huntington to become a more focused organization committed to containing costs,
being more competitive among industry leaders, and better serving our
customers."
For the third quarter of 1998, Huntington reported net income of $88.8
million, return on average equity (ROE) of 16.43%, and return on average assets
(ROA) of 1.28%. For the nine months ended September 30, 1998, Huntington's net
income was $270.6 million, with ROE of 17.27% and ROA of 1.36%. Cash basis ROE
and ROA were as follows:
1998
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3RD QTR. YTD
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ROE 26.59% 22.71%
ROA 1.43% 1.45%
(more)
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Although commercial and retail loan growth remain firm, mortgage
refinance activity and the impact of the General Motors strike on automobile
dealer floor plan lending softened overall loan growth to 7%. Net interest
income totaled $251.5 million for the quarter. The third quarter net interest
margin of 4.18% remained relatively stable despite continued pressure on loan
pricing. The completion of the purchase of 60 Florida banking offices combined
with a successful third quarter promotion for demand deposits contributed to an
increase in core deposits of 16% from the third quarter last year.
Core non-interest income grew 23.0% to $104.0 million for the 1998
third quarter, compared with the same period last year. Particularly strong
growth was seen in electronic banking revenue, up 32.4% from the year-ago
quarter. Nearly eight percent of the company's deposit customer base now has an
account with The Huntington's Web Bank, with a goal of 10% by year-end 1999.
Insurance and brokerage income was up 32.1% from the year-ago quarter. This
increase is partly the result of a Huntington initiative to have at least one
employee licensed to sell investment products in each of the company's banking
offices; by year-end 1998, the company expects to have 1,100 licensed employees.
Off-balance sheet managed assets, namely insurance in force, trust assets,
proprietary mutual funds, and mortgage loans serviced totaled $21.2 billion and
are growing at an annualized rate of 24.9%.
Non-interest expense for the quarter was $211.9 million, compared with
$193.7 million, excluding merger-related charges, one year ago. Much of the
increase can be attributed to higher personnel and other costs associated with
the full-quarter impact of the Barnett branch acquisition. Approximately 800
employees were added in Florida as a result of the acquisition.
For the third quarter, the company maintained its loan loss reserve at
1.50% while credit quality improved. Non-performing loans as a percent of total
loans were .39% compared with .42% for the previous quarter. Coverage ratios
were 381.46% of non-performing loans and 296.69% of non-performing assets
compared with 357.97% and 280.64%, respectively, for the quarter ended June 30,
1998. Net charge-offs as a percent of average loans were .52% for the 1998 third
quarter.
The Huntington's average equity to average assets was 7.79% in the most
recent three month period. Tier 1 and total risk-based capital ratios were 7.37%
and 11.19%, respectively, at September 30, 1998.
(more)
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Huntington Bancshares is a regional bank holding company headquartered
in Columbus, Ohio with assets of $27 billion. Through its affiliated companies,
The Huntington has more than 132 years of serving the financial needs of its
customers.
The Huntington provides innovative products and services through its
more than 600 offices in Florida, Georgia, Indiana, Kentucky, Maryland,
Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, South Carolina,
Virginia and West Virginia. International banking services are made available
through the headquarters office in Columbus and additional offices located in
the Cayman Islands and Hong Kong. The Huntington also offers products and
services through its technologically-advanced, 24-hour telephone bank, a network
of more than 1,300 ATMs and its Web Bank at www.huntington.com.
For faxed copies of current news releases, please call our
fax-on-demand service, Company News on Call, at (800) 758-5804 extension 423276.
FORWARD-LOOKING STATEMENT DISCLOSURE:
This press release contains certain forward-looking statements, including
certain plans, expectations, goals, and projections, which are subject to
numerous assumptions, risks, and uncertainties. Actual results could differ
materially from those contained or implied by such statements for a variety of
factors including: changes in economic conditions; movements in interest rates;
competitive pressure on product pricing and services; success and timing of
business strategies; the nature and extent of legislative and regulatory actions
and reforms; and extended disruption of vital infrastructure.
###
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<TABLE>
HUNTINGTON BANCSHARES INCORPORATED
COMPARATIVE SUMMARY (CONSOLIDATED)
(in thousands, except per share amounts)
<CAPTION>
CONSOLIDATED RESULTS THREE MONTHS ENDED NINE MONTHS ENDED
OF OPERATIONS SEPTEMBER 30, SEPTEMBER 30,
- ---------------------------------------------- -------------------------- CHANGE -------------------------- CHANGE
1998 1997 % 1998 1997 %
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<S> <C> <C> <C> <C> <C> <C>
Interest Income $ 505,221 $ 502,821 0.5% $ 1,498,969 $ 1,481,713 1.2%
Interest Expense 253,706 245,663 3.3 745,177 714,046 4.4
----------- ----------- ----------- -----------
Net Interest Income 251,515 257,158 (2.2) 753,792 767,667 (1.8)
Provision for Loan Losses 24,160 28,351 (14.8) 70,936 81,562 (13.0)
Securities Gains 10,615 1,242 N.M. 28,020 6,944 N.M.
Non-Interest Income 104,026 94,855 9.7 301,696 247,385 22.0
Non-Interest Expense 211,877 244,910 (13.5) 614,997 614,576 0.1
Provision for Income Taxes 41,364 38,762 6.7 127,025 123,844 2.6
----------- ----------- ----------- -----------
NET INCOME $ 88,755 $ 41,232 115.3% $ 270,550 $ 202,014 33.9%
=========== =========== =========== ===========
OPERATING EARNINGS (1)
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Net Income $ 88,755 $ 87,466 1.5% $ 270,550 $ 248,248 9.0%
=========== =========== =========== ===========
Net Income per Common Share
Basic $0.42 $0.42 -- $1.28 $1.18 8.5%
Diluted $0.42 $0.41 2.4% $1.27 $1.17 8.5%
PER COMMON SHARE AMOUNTS (2)
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Net Income per Common Share
Basic $0.42 $0.20 110.0% $1.28 $0.96 33.3%
Diluted $0.42 $0.19 121.1% $1.27 $0.95 33.7%
Cash Dividends Declared $0.20 $0.18 11.1% $0.56 $0.50 12.0%
Shareholders' Equity (period end) $10.49 $9.26 13.3% $10.49 $9.26 13.3%
AVERAGE COMMON SHARES (2)
Basic 211,714 210,370 0.6% 211,565 209,618 0.9%
Diluted 213,496 213,056 0.2% 213,691 212,070 0.8%
KEY RATIOS
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Return On:
Average Total Assets 1.28% 0.65% 1.36% 1.08%
Average Shareholders' Equity 16.43% 8.41% 17.27% 14.48%
Efficiency Ratio 56.46% 55.11% 56.80% 55.26%
Net Interest Margin 4.18% 4.41% 4.24% 4.43%
Average Equity/Average Assets 7.79% 7.67% 7.86% 7.45%
Period-end Capital Ratios (3):
Tier I Risk-Based Capital 7.37% 8.86% 7.37% 8.86%
Total Risk-Based Capital 11.19% 11.95% 11.19% 11.95%
Tier I Leverage 6.52% 7.54% 6.52% 7.54%
</TABLE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT THREE MONTHS ENDED NINE MONTHS ENDED
OF CONDITION DATA SEPTEMBER 30, SEPTEMBER 30,
- ---------------------------------------------- -------------------------- CHANGE -------------------------- CHANGE
1998 1997 % 1998 1997 %
----------- ----------- ------ ----------- ----------- ------
<S> <C> <C> <C> <C> <C> <C>
Average Total Loans $18,958,304 $17,821,774 6.4% $18,152,311 $17,510,587 3.7%
Average Total Deposits $19,324,534 $17,474,530 10.6 $18,093,514 $17,067,858 6.0
Average Total Assets $27,514,506 $25,346,594 8.6 $26,643,196 $25,059,230 6.3
Average Shareholders' Equity $ 2,142,963 $ 1,943,843 10.2 $ 2,094,073 $ 1,865,665 12.2
ASSET QUALITY (PERIOD END)
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Non-performing loans $ 75,008 $ 78,454
Total non-performing assets $ 95,820 $ 92,216
Allowance for loan losses/total loans 1.50% 1.46%
Allowance for loan losses/non-performing loans 381.46% 328.71%
Allowance for loan losses and other real
estate/non-performing assets 296.69% 277.31%
</TABLE>
(1) Reported results as adjusted to exclude the impact of special charges.
(2) Adjusted for stock splits and stock dividends, as applicable.
(3) Estimated.
N.M. - Not Meaningful
