On May 7, 2014, we issued an updated research report on
Huntington Bancshares Incorporated
). This commercial and consumer banking services provider recently
reported impressive first-quarter 2014 results.
Results were aided by top-line growth and lower provision for
credit losses. Further, loan and deposit balances exhibited growth.
However, the quarter witnessed higher expenses. Though the company
shows stability in its fundamentals, we remain cautious due to the
current economic uncertainty across the industry.
Huntington reported first-quarter 2014 adjusted earnings of 19
cents per share, beating the year-ago quarter earnings by 11.76%.
We view Huntington as a sound asset for yield-seeking investors. In
Mar 2014, the company's 2014 Capital Plan got the Federal Reserve's
approval. The plan included a 20% increase in the common stock
dividend and the repurchase of up to $250 million of common stock.
Huntington's proposed capital actions represent an 11% increase in
the capital return to shareholders from the prior year. Such a
shareholder-friendly approach will boost investors' confidence in
Given its robust liquidity position, Huntington is well positioned
to expand via acquisitions. During first-quarter 2014, the company
completed the acquisition of Camco Financial which should fortify
its presence in several existing operational locations and help it
to expand into new areas with substantial growth potential.
Further, Huntington is set to strengthen its Michigan branch
network by acquiring 11 branches in central and east Michigan from
Bank of America Corp. We believe that such efforts will help the
company gain significant market share and thereby enhance its
profitability in the long run.
Despite strong fundamentals, we believe there are certain issues
that may pressurize the company's financials in the near term.
These include absence of credible improvement in the mortgage
market, declining net interest margin due to a low interest rate
environment, increased cost structure and the prevailing stringent
Following the first-quarter results, the Zacks Consensus Estimate
over the past 30 days declined around 1.4% to 71 cents per share
for 2014. Also, the same for 2015 dipped about 1.3% to 77 cents per
share, over the same time frame.
Huntington currently carries a Zacks Rank #3 (Hold).
Key Picks from the Sector
Some better-ranked Midwest banks include
Chemical Financial Corporation
MidWest One Financial Group, Inc.
First Citizens Banc Corp.
). While Chemical Financial and MidWest One Financial sport a Zacks
Rank #1 (Strong Buy), First Citizen Banc carries a Zacks Rank #2
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CHEMICAL FINL (CHFC): Free Stock Analysis
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