Huntington Bancshares Inc (HBAN) 2012 Q4 法說會逐字稿

Good morning.

My name is Kyle and I'll be your conference operator today.

At this time, I'd like to welcome everyone to the Huntington Bancshares conference call.

All lines have been placed on mute to prevent any background noise.

After the speakers' remarks, there will be a question-and-answer session.

(Operator Instructions)

Thank you, Mr. Beekman, you may begin your conference.

Thank you, Kyle, and welcome.

I'm Todd Beekman, the Director of Investor Relations for Huntington.

Copies of the slide that we will be reviewing can be found on our website at www.huntington.com.

This call is also being recorded and be available for rebroadcast starting about an hour after the close of the call.

Please call Investor Relations at 614-480-5676 if you have difficulties receiving the slides or more information on the replay.

Slides 2 and 3 note several aspects of the basis of today's presentation.

I encourage you to read these but might point out one key disclosure.

This presentation will reference non-GAAP financial measures and in that regard, I would direct you to the comparable GAAP financial measures and reconciliation to the comparable GAAP financial measures within the presentation, the additional earnings-related material we released this morning and the related 8-K filed today, all of which can be found on our website.

Turning to slide 4, today's discussion, including the Q&A period, may contain forward-looking statements.

Such statements are based on information and assumptions available at this time and are subject to change, risks and uncertainties, which may cause actual results to differ materially.

We assume no obligation to update such statements.

For a complete discussion of risk, uncertainties, please refer to this slide, the material filed with the SEC, and our most recent 10-K, 10-Q, and 8-K filings.

Now turning to today's presentation.

As noted on slide 5, participating today are Steve Steinour, our Chairman, CEO and President; Don Kimble, Chief Financial Officer; and Dan Neumeyer, Chief Credit Officer.

Steve?

Thank you.

Welcome.

I'll begin with a review of some of the quarters and full-year highlights.

Don will review the financial performance and we will be followed by Dan, who will provide a brief update on credit.

Don will then provide you with an update on our continued household and commercial relationship growth and then close with a discussion of our 2013 expectations.

Turning to slide 7. The fourth quarter, like all of 2012, was a very solid quarter for Huntington.

For the second quarter in a row, we earned just over $167 million, or $0.19 per share, which is up from $0.14 in the fourth quarter of 2011.

This equates to a 1.19% return on assets and a 13.5% return on tangible common equity.

This quarter's performance was driven by a $41 million, or a 6% increase in revenue, as we continued to manage our balance sheet in this difficult yield curve environment.

Loans increased an average of 3% annualized and net interest margin expanded 7 basis points, 5 of which we view as temporary benefits, which mostly relate to the Fidelity acquisition earlier in the year.

Our Mortgage business continues to prosper and had a very strong quarter, growing revenue by $17 million.

As we announced earlier in the quarter, we completed our second auto loan securitization in 2012.

Turning to the full year, we're pleased with our year's financials results.

In September of 2010, when our year-to-date ROA was just 49 basis points, we told you that our long-term goal for ROA was 1.1% to 1.35%.

For 2012, Huntington earned a 1.15% on ROA and EPS of $0.71, a 20% increase from the previous year.

This has been achieved through a significant amount of hard work by all of my Huntington colleagues as we've continued to execute our long-term strategic plan.

In 2012, we were able to grow revenue by over $204 million.

The cornerstone of our strategy has been to invest in the franchise, to grow market share, and grow share of wallet.

This has led to a steady loan growth and a significant improvement in our overall deposit mix.

Average core deposits increased 8% and total demand deposits, which we view as critical relationship accounts, increased 27%.

This growth resulted in a 3 basis point NIM expansion and a 5% increase in net interest income.

Non-interest income increased by $117 million as mortgage banking posted a record year.

We completed two auto loan securitizations and our expanded customer base drove growth in service charges on deposits as well as allowing us to make up nearly half of the electronic banking income lost to the Durbin Amendment.

Non-interest expense increased $107 million.

Much of that investment has been in people.

Since the end of 2011, we added over 550 full-time equivalent employees, a 5% increase as we opened 37 net new branches, expanded our infrastructure, particularly in risk management, and continued to round out our product offerings with the launch of several new commercial verticals.

Don will go into additional detail later but I want to take a moment to say that as we've seen the economy slow from our previously expected base, we've moderated our pace of planned investment in 2013, so that we can drive positive operating leverage in 2013 as we did in 2012.

Turning to slide 8, Don will provide additional detail later in the call but you can see that our OCR methodology is continuing to drive success throughout the Company.

Consumer households and commercial relationships continue to grow at a pace well above that of our Midwest footprint and importantly, customers are building deeper relationships with Huntington.

Turning to credit quality.

Net charge-offs decreased by $95 million this year, which included the third quarter's $33 million of Chapter 7 related loans.

The full-year net charge-off ratio was 85 basis points down from 1.12% in 2011.

Not quite at our long-term goal of 33 to 55 basis points but another year of progress like this one will nearly get us there.

Even with the addition of $63 million related to Chapter 7 consumer loans, nonaccrual loans were down $133.5 million, or 25% over the course of the year.

Our allowance for credit losses as a percentage of nonaccrual loans increased 12 percentage points to 199%.

With regard to capital, 2012 was the first year we participated in the Federal Reserve's Capital Program.

Over the course of the year, we actively managed our capital within the restrictions they set forth, redeeming $230 million of higher cost TRUPs and buying back over 23 million, or over 2.5% of our total shares.

Both our tangible common equity ratio and Tier 1 common risk-based capital ratio increased 46 and 47 basis points, respectively.

Turning to slide 9, for other highlights, the backbone of our strategy is convenience and service.

This year, we were recognized by two prominent names in the business for just that.

Money Magazine named Huntington as one of the Best Banks in America.

This is the second year in a row that we received this recognition from Money Magazine.

More recently, JD Power ranked us highest in Small Business Banking Satisfaction in their 2012 study.

We've continued to look for opportunities to optimize the balance sheet and improve the franchise.

In 2012, we completed the securitization of $2.3 billion in auto loans, successfully acquired and integrated Fidelity Bank and opened 37 net new branches, which includes the consolidation of nearly 5% of our traditional branch network.

While we expect the environment to be difficult, we have and will continue to actively manage and to drive growth and deliver solid profitability.

Let me turn the presentation over to Don Kimble to review the detailed financial performance.

Don?

Thanks, Steve.

Slide 10 provides a summary of our quarterly earnings trends.

Many of these performance metrics will be discussed later in the presentation.

So turning to slide 11 we show a summary income statement for the full year and for the recent quarters.

We adjust the revenue and expenses for items like the gain on the Fidelity acquisition and the first quarter's additional litigation reserve.

We also show the impact of the tax benefit recognized last quarter.

As shown, we produced positive operating leverage for both the full year and linked quarter.

On a reported basis, revenues for the full year were up $200 million, or 8%.

Expenses were up $107 million, or 6%.

On the adjusted basis, revenues increased by $181 million, or 7%, and expenses increased by $91 million, or 5%, resulting in a positive operating leverage of 1.6%.

Slide 12 displays the trends of our net interest income and margin.

The right side displays a 7 basis point increase in our net interest margin to 3.45% for the quarter, which reflected the impact of a 1 basis point improvement in earning asset yield.

This includes about 5 basis points of temporary benefits, primarily related to the purchase accounting accretion.

It also includes a 6 basis point increase, resulting from the reduction of deposit rates and the improvement in deposit mix.

On to slide 13, on the right, we have shown continued improvement in our deposit mix.

The improved deposit mix reflects the success of Fair Play banking on growing consumer DDA as well as our focus on growing commercial demand deposits.

This improving mix rate contributed to the 19 basis point decline in average rate paid on total deposits over the last five quarters.

On the left side of the slide, you can see the maturity schedule of our CD portfolio and that another wave of higher cost CDs are expected to mature in the second quarter of 2013.

Slide 14 provides a summary income statement and some color on items impacting linked quarter performance.

Items of note included $17.1 million linked quarter improvement in mortgage banking revenues.

This improvement reflected better secondary marketing gains as origination volumes remained relatively stable at about $1.2 billion for the quarter.

We also recorded a $10 million positive net MSR benefit this quarter compared to a $4 million net MSR cost last quarter.

This quarter also included $17 million of securitization gains as we completed the $1 billion auto loan sale earlier in the fourth quarter.

Non-interest expenses increased by $12 million this quarter, reflecting a $5 million increase to professional services related to temporary regulatory cost.

We would expect these costs to decline significantly in 2013.

Our personnel costs were up $6 million this quarter.

Much of this related to increases in commission expense.

Headcount also increased by about 1% this quarter, primarily related to our in-store expansion.

Other expenses increased $3 million linked quarter which reflects increased litigation operating losses for the current quarter.

Slide 15 reflects trends in capital.

The tangible common equity ratio increased slightly to 8.76%.

The Tier 1 common risk-based capital ratio increased to 10.47% from 10.28% in the end of last quarter.

These ratios reflected the impact of repurchasing 13.2 million common shares this quarter for $83 million.

The Tier 1 and total risk-based capital ratios increased by 13 and 15 basis points, respectively.

Now let me turn the presentation over to Dan for credit trends.

Dan?

Thanks, Don.

Slide 16 provides an overview of our credit quality trends.

Credit quality trends in the fourth quarter were very positive, led by the net charge-off ratio which fell to 69 basis points on an annualized basis, compared to 105 basis points in the prior quarter.

The prior quarter did include the 33 basis point effect of the regulatory guidance related to Chapter 7 bankruptcy consumer loans.

Loans past due greater than 90 days and still accruing were stable in the quarter and remain very well controlled.

You'll recall that the second quarter uptick in past dues were caused by the acquired Fidelity portfolio.

Fidelity loans include accruing purchased impaired loans which were recorded at fair value upon acquisition and will remain in accruing status.

The nonaccrual loan ratio showed continued modest improvement in the quarter, falling to 1% of total loans.

The NPA ratio showed similar improvement due to a sizeable reduction in commercial OREO balances in the quarter.

The criticized asset ratio also showed fairly significant improvement, falling from 5.45% to 4.79%.

The allowance for loan and lease loss and the allowance for credit loss to loan ratios fell in the quarter to 1.89% and 1.99%, respectively, down from 1.96% and 2.09% in the prior quarter, reflecting continued asset quality improvement.

The ALLL and ACL coverage ratios both increased modestly due to the healthy reduction in non-performing assets in the quarter.

Slide 17 shows the trends in our non-performing assets.

The chart on the left demonstrates a continued reduction in our NPAs, falling 13% in the quarter.

The chart on the right shows that the non-performing asset inflows which fell in the quarter to 43 basis points of beginning-of-period loans.

Slide 18 provides a reconciliation of our non-performing asset flows.

NPAs fell by 13% in the quarter compared to a 3% reduction in the prior quarter.

This represents the largest quarterly reduction in the past year and was the result of lower inflows, along with healthy payments and asset sales, which included a meaningful reduction in commercial OREO.

Turning to slide 19.

We provide a similar analysis of commercial criticized loan flows.

This quarter saw a similar level of inflow as the prior quarter with upgrades, paydowns, and charge-offs contributing to a 12% reduction for the quarter.

Moving to slide 20.

Commercial loan delinquencies remain elevated in both the 30- and 90-day categories over what we had shown from the second quarter of 2011 through the first quarter of 2012.

The increase is due to the addition of the Fidelity portfolio.

All of the 90-day delinquencies are related to the Fidelity purchase impaired loans, which again, are recorded at fair value upon acquisition and remain in accruing status.

However, delinquencies remain very well controlled in the aggregate.

Slide 21 outlines consumer loan delinquencies, which are in line with expectations and reveal a generally improving trend.

In aggregate, 30-day consumer delinquencies showed modest improvement quarter-over-quarter as depicted in the chart on the left.

The residential portfolio showed noticeable improvement in the quarter while auto and home equity were up very modestly.

90-day delinquencies continued their overall decline with auto flat quarter-to-quarter, and residential and home equity both down.

Reviewing slide 22, the loan loss provision of $39.5 million was up $2.5 million from the prior quarter and was less than net charge-offs by $30.6 million.

The ratio of the allowance for credit loss to nonaccrual loans rose from 189% to 199% due to the previously noted reduction in non-performers.

The ACL to loans was lower at 1.99% compared to 2.09% last quarter.

Most of the major credit metrics showed continued improvement and therefore, we believe these coverage levels remain adequate and appropriate.

In summary, we remain very pleased with this quarter's results.

We expect continued improvement in our credit metrics and expect to move towards normalized charge-off levels by the end of 2013.

Let me turn the presentation back over to Don.

Thanks Dan.

Turning to slide 23, our Fair Play banking philosophy, coupled with our optimal customer relationship, or OCR approach, is driving continued new customer growth and strength in product penetration.

This slide recaps the continued strong upward trend in consumer checking account households.

For the year, consumer checking account households grew at a rate of 12.2%.

Our four-plus products, or service penetration, grew to 78.3% and increased almost 5 percentage points since this time last year.

For the fourth quarter, related revenue was $251 million, up $5 million from the third quarter 2012.

The current quarter is also up $21 million, or 9% from a year ago, clearly demonstrating the connection between the household growth and driving our topline revenues.

Turning to slide 24, commercial relationships grew 9% from a year ago.

At the end of the fourth quarter, 35% of our commercial relationships utilized four or more products or services.

This is 1.5% higher than last quarter and almost a 4% increase from a year ago.

Related commercial revenue is up $14 million, or 9% from last year.

Turning to slide 25, we provide our first look at 2013 expectations.

While we expect to see strong growth in the Midwest economy compared to the broader country, we do believe customer sentiment is negatively influenced by uncertainty that continues in Washington.

This will weigh heavily on the overall US economy.

Nevertheless, we continue to benefit from the strength in the Midwest and believe our strategy will continue to drive an improved profitability.

With regard to interest rates, we expect the interest rate environment will remain relatively stable, with the opportunities for deposit repricing a mix shift, we expect net interest margin to remain fairly stable.

We do not expect it to fall below the mid 3.30%s.

Modest total loan growth, excluding any future impacts of additional auto securitization is expected to continue.

C&I pipeline is robust yet, with the uncertainty, we do not expect this to translate to strong growth until the second half of the year.

Auto loan originations remain strong and with the relative impact of securitizations coming closer to its full phase and impact, this should translate to absolute growth in the indirect portfolio.

Commercial real estate balances should stabilize in 2013 between the $5 billion and $5.5 billion level.

Other consumer loan categories should reflect modest growth, as we've started to substitute some shorter duration mortgage loan balances for securities purchases.

Deposit balances will reflect continued growth in low cost deposits, resulting in total deposit growth in line with to slightly less than total loan growth.

Non-interest income is expected to be relatively stable as the expected slowdown in mortgage banking will be offset by the benefit of our growth in new relationships and increased cross-sell successes.

For 2013, we continue to anticipate positive operating leverage and modest improvement in our overall expense efficiency ratio.

We continue to focus on efficiencies and as a result of our expectations for the economy, we have moderated the pace and size of our planned investments.

On the credit front, we expect to see improvement from current levels and there could be some quarterly volatility given the uncertain and uneven nature of the economic recovery.

The level of provision expense for 2012 is at the lower level of our long-term expectation.

With the outlook for continued improvement, this should keep the provision levels relatively low.

2013 presents a number of challenges for Huntington and the banking industry overall.

We believe we are positioned for measured growth and improvement in sustainable, long-term profitability, despite these challenges.

We are committed to our strategy and believe this will drive long-term differentiated performance.

Thanks for your interest in Huntington.

Operator?

We'll now take questions.

We ask that as a courtesy to your peers, each person ask only one question and one related follow-up.

Then if that person has additional questions, he or she can add themselves back into the queue.

Thank you.

(Operator Instructions)

Craig Siegenthaler from Credit Suisse.

So do you expect total loan balances to grow in 2013 if we include your estimate for two auto securitizations?

Our outlook would have modest growth including the impact of the auto securitizations.

Keep in mind that we are getting closer to that two years of doing auto securitizations and so it should start to plateau the impact, of the impact for those sales.

Got it.

Then if loan demand this year, let's say, is a little weaker in C&I and commercial real estate than you planned, would you consider holding more residential mortgages and more indirect auto loans to temporary support higher earning asset growth versus buying more securities?

We would but the caveat to your question, Craig -- this is Steve, we're optimistic that the economy will perform reasonably well but could, in fact, pop if we can get through this set of issues in Washington.

So we think we're well positioned to participate in an expansion should we be able to get into that mode.

Got it and Steve, my only point is it appears you may have a loan growth hedge that some of your competitors might not to actually have decent loan growth in a difficult environment if things don't work out great this year.

Well, we've tried to be realistic but on the conservative side as we've given guidance.

There's a wide range of GDP estimates out there given the current Washington uncertainties.

So you can go from a negative to a strong positive 3%-plus and that's why we're hedging.

Steven Alexopoulos from JPMorgan.

Start on the expenses.

If we looked at 2012, core expenses were up around $90 million, just above that.

When we think about 2013 and your comments to moderate the pace of investments, how much of an increase in operating expenses should we be thinking about based on what you know at this point, including your contractual obligations to open new branches, et cetera?

Yes, this is Don.

We currently expect our quarterly expense run rate to be relatively flat or modestly below the fourth quarter level, excluding any unusual one-time items or unforeseen regulatory or legal issues.

This does reflect the decision we have to moderate the size and pace of some of our previously planned investments and in light of the challenging economic outlook.

We will continue to invest in our franchise but just at a little slower pace.

Okay, Don, should we expect you guys to cut maybe a little more deeper into variable expenses early in the year to match some of the revenue pressure you might see, given your outlook on the economy?

We really haven't commented on timing.

There are several areas of seasonal changes to expenses and for instance, there are some payroll tax issues that hit in the first quarter and we tend to see some seasonal fluctuations in marketing and other expenses.

But what we're focused on is the longer-term guidance and outlook.

Okay.

Just to follow-up on the guidance, were you talking about the margin not falling below the mid-3.30%s?

Most banks here are talking about running out of room to further lower deposit cost, that being a cause of incremental pressure as we move through the year.

Why is that dynamic any different for you guys?

It is a challenge but I would say that we are getting a lot of benefit from our change in our mix in our deposits.

We still believe that we have some room to pull down our overall deposit cost.

We have about $4.1 billion of CDs that have an average rate today of 1.2%, the current go to rate is in the 20 basis point range.

So we think that there is a lot of opportunity there as well.

Historically, our average cost of funds for deposits are higher than our peers.

We think that we have a little bit more of a lever to pull as a result of that.

We probably have a bit less pressure on the investment portfolio.

Do you want to comment on those as well?

Steve usually teases me about having the lowest yielding investment portfolio of my peer group but we try to keep the duration fairly short there.

So we think that we'll have less fall off from our current yield there than many of our peers as well, which will be a relative benefit for us compared to our peers.

Bob Ramsey.

I was hoping maybe you could just give a little bit more clarity around the net interest income expectation.

I know you all said in the guidance that you expect the benefits of growth to be largely offset by NIM pressure but you also talked about net interest income growing over 2013 after seasonal weakness in the first quarter.

So does that mean that in the first quarter, you'd be a little bit lower and then build from that level but in total in 2013, you expect to be roughly in line with 2012?

Is that the right way to interpret that?

As far as the overall net interest income, we do expect that to have -- that to show increase for the full year over year.

As far as the seasonal trends, we do note that with the shorter day count in the first quarter that we tend to see a slight reduction then but on a full-year basis, it should be up year over year.

Okay, so up, so how are you getting up year over year if the benefits of growth are mitigated by the margin pressure?

We're saying that they do mitigate but they don't eliminate.

So they would have a slightly lower margin than what our current run rate is but we expect the asset growth to more than offset that impact.

Got you and the five temporary benefits that you all highlighted.

Does that disappear in full in the first quarter or is there any -- does it take a little bit longer for those to phase out and where are you entering the first quarter?

We would expect to see about 1 basis point of contribution throughout 2013 from that accretion.

Ken Usdin.

This is actually Brian from Ken's team.

I was wondering if you could comment on your near-term outlook for mortgage banking revenues.

It's obviously in pretty strong quarter, even ex the hedging results.

Can they continue to run at the $45 million to $50 million level per quarter in the first half of '13?

We haven't commented specifically as far as the range.

We do think there is opportunity near term.

We expect the first half of 2013 to be strong, maybe not quite as strong as the fourth quarter this year.

But we are continuing to see that we can get net flows plus the benefit from our servicing portfolio as well.

So we think that we have a few more quarters left as far as higher than normalized production.

Can you just comment on how gain on non-sale margins trended during the current quarter and just how the pipeline also trended and closed the year?

The margins themselves were in line with prior quarters and as rates did increase at the end of the year, we did see some pressure on the secondary gains associated with that and pipelines continue to remain strong for us.

Josh Levin.

You talked about you think the economy could pop so in that bullish scenario, where the economy pops, maybe rates move up sooner rather than later.

If that were to happen, have you -- how do you think about how your deposits are going to behave in that environment and what that means for asset sensitivity?

Do you feel like you have a good handle on modeling how deposits will behave or is it just -- are we just in unchartered waters here?

We do believe that we have a handle around our deposit levels and flows that we have current -- we spent a lot of time and effort in deepening the relationships, with both our commercial and our consumer category -- our customers so that's resulted in some strong growth for us from a deposit perspective.

We know that there will be some excess liquidity that our customers are maintaining in the form of deposits today that will see some pressure when the economy does start to pick up.

But we do believe that our liquidity position and overall deposit outlook is consistent with our expectations for the economic growth occurring in the second half of the year.

Why don't you comment on our position vis-a-vis ALCO?

Certainly.

From an ALCO perspective, or Asset-Liability Management perspective, we continue to maintain our interest rate sensitivity position to slightly asset sensitive.

So if we do see a pop in rates, we think that we are positioned to benefit slightly from that change but our outlook today assumes rates will remain flat and very low throughout 2013.

Okay, my second question is you've talked about the fiscal cliff and lingering uncertainty as inhibiting loan growth.

But do you have a sense when you talk to your customers, what specifically do they need to see from Washington to give them confidence to start actually investing and thus borrowing?

There's -- we look at our pipelines and our sales activity weekly so we have, we think, a reasonably good insight.

We have very strong activities.

We have strong pipelines but we've seen, for now, a number of months deferrals on closing loans, on fundings and reflecting a restraint on investment and expansion by a number of businesses.

It ranged from things like fiscal cliff a couple weeks ago, now sequestration has been pushed down for two months so there needs to be some confidence around a plan before I think there's this potential for robust growth to pop, if you will.

I think just to highlight that, too, as far as our C&I portfolio.

We saw an increase as of period end balances compared to the last quarter of over $400 million.

So I think that's starting to show that there was some sense of getting some closure on some of those transactions at the end of the year maybe for tax reasons or others.

But we think that does position us well going into the first quarter.

David Long.

My question is regarding commercial real estate.

Looking at some of your peers, they've started growing that part of their business.

The federal data has showed growth in the fourth quarter and just want to see where you guys stand there?

It looks like your guidance is for it to be relatively flat through the year.

I know you guys have added a lot of resources to C&I.

Would you be looking to do that in CRE here at this point?

We would not expect to add a lot of resources and at the end of 2009, we bisected the commercial real estate book between a core and a non-core.

We indicated then and continued with -- it's in the broader investor pack that break out.

We've got about $1.6 billion or so of non-core remaining as of year-end but we had fairly high pay-downs of non-core in the fourth quarter.

We had about $250 million when you get into the investor pack, so there was actually reasonably good underlying core activity because of the balances reducing less than the non-core pay-offs.

This is an area that the bank experienced significant problems with in $8 million and $9 million.

Therefore, we've put a hard cap in terms of how much exposure and concentration we want to manage.

Therefore, the $5 to $5.5 [billion] range is where we expect to be in '13 and it's roughly 100% of capital.

(Operator Instructions)

Erika Penala.

This is Russell Gunther on for Erika.

Hi, Russell.

I have a quick question just back to the securitization you mentioned an expectation to complete two of them in '13.

Any sense for the magnitude relative to the level you saw in '12?

We haven't provided any specific guidance as far as the size and the timing that we're still working through some of those issues as we walk through our plans.

But we -- our outlook does assume the continuation of two securitization transactions in 2013.

Okay, great and then just circling back to the normalized charge-off levels you expect to approach in the fourth quarter.

I think, previously, you've said that's around 35 basis points, is that still a good range and it's --?

Actually, it's 35 to 55 and so by the end of the year, we expect to be at the upper range of that, and continued progress after that, but by the fourth quarter, we're pretty confident in our ability to hit the upper end of that range.

Okay, great, that helps and then just last question on the expenses.

Could you give us a sense for the type of investments, the planned investments that you were making that you're pulling back?

What specifically are you scaling back?

It's more in just the timing and size of some of those investments.

So we have a number of strategic initiatives that we have been investing in and we've just been slowing the pace and nature of those.

John Moran.

So Ohio continues to attract a lot of talk or attention for being a particularly competitive market.

Any comments anecdotally that you guys care to share on pricing structure, competition in the market?

Well, we're in six states.

There's no difference in any of the six states to Ohio for that matter or the other ones.

We're in competitive markets, for sure, but that would be true in all of them, all of the states.

Maybe if I can just add a little color to that as well.

As Steve said, we continue to remain very disciplined as far as pricing and it's very consistent across all states.

I think one area that reaffirms that is just taking a look at our C&I yields, absent the impact of the hedging.

You can see, for instance, this last quarter, our C&I yields declined by 2 basis points despite the fact that LIBOR was down by 2 or 3 basis points during that same time period.

The temporary benefits that we talked about really didn't impact the C&I yield that much, more of the portfolio from Fidelity was related to residential real estate and commercial real estate as opposed to C&I.

So we are and continue to remain very disciplined and believe that will be something that will maintain prospectively.

Thanks, that's helpful.

Just a second one, if I could.

On the rate of customer acquisition household growth on the consumer side and also on commercial, the pace of new acquisition seems to be slowing here as we went through '12.

Would you guys attribute that broader uncertainty and would it be reasonable to expect that, that will tick back up if we get past some of the stuff down in Washington that you alluded to?

Or do you think that the initial thrust here with OCR and some of the different approaches that you guys took led to real rapid acquisition that now is naturally dwindling a bit here in terms of growth rate?

Well, when we unveiled our Fair Play strategy in late 2010, we didn't project double digit growth rates, so we've exceeded expectations significantly in terms of what we've been able to deliver.

There is seasonality to the consumer side.

We think to a certain extent, as we've shared, the business side has also been impacted somewhat in terms of deferred decisions.

So we expect to maintain strong relationship growth and continue with what we think is a successful and -- strategy.

There are no further questions at this time.

Thank you very much for your interest in Huntington.

If you've got any more questions, please feel free to call the IR department.

Have a good day.

This concludes today's conference call.

You may now disconnect.