Good morning. My name is Chris and I will be your conference operator today. At this time, I would like to welcome everyone to the Huntington Bancshares’ Fourth Quarter Earnings 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. Mark Muth, Director of Investor Relations. You may begin your conference.

Thank you, Chris. Welcome, I’m Mark Muth, Director of Investor Relations for Huntington. Copies of the slides we will be reviewing can be found on our IR website at www.huntington-ir.com or by following the Investor Relations link on www.huntington.com. This call is being recorded and will be available for rebroadcast starting about an hour from the close of the call. Our presenters today are Steve Steinour, Chairman, President and CEO; and Mac McCullough, our Chief Financial Officer; Dan Neumeyer, our Chief Credit Officer will also be participating in the Q&A portion of today’s call. As noted on Slide 1, today’s discussion including the Q&A period will contain forward-looking statements such statements are based on information and assumptions available at this time and are subject to changes, risks and uncertainties, which may cause actual results to differ materially. We assume no obligation to update such statements. For a complete discussion of risks and uncertainties, please refer to this slide and material filed with the SEC including our most recent forms 10-K, 10-Q and 8-K filings. Let’s get started by turning to Slide 2 into and an overview of the financials. Mac?

Thanks Mark. And good morning and thank you for joining us today. We appreciate your interest in Huntington. We have great results to share with you today and we are very pleased with how we are positioned for 2016. For the past six years, Huntington’s customer-centric strategy has resulted in growth in market share and in share of wallet through execution of our distinctive fair play philosophy, our welcome culture, and our superior customer service. 2015 was a year of continued disciplined execution of this strategy, producing solid results and delivering on our commitments to our customers, colleagues, communities and most importantly to our shareholders. We continue to invest in our colleagues and in the capabilities we need to continue to be an industry leader in customer experience, including digital, data analytics and cyber security. We also continue to optimize our custom-centric distribution strategy, including the accelerated buildout about in-store strategy in Michigan. In addition in 2015, we returned approximately $400 million of capital or more than 55% of net income to shareholders via dividends and buybacks. Slide 2 shows some of the financial highlights for the year. Earnings per common share of $0.81, was up 13% from 2014, while tangible book value per share increased 4% to $6.91. Full year return on tangible common equity was 12.4%, which was modestly below our long-term financial goal of 13% to 15%. Return on assets was $1.01 for the full year. We are very pleased with our core fundamentals for the full year including revenue growth of 6%, average loan growth of 7% and average core deposit growth of 9%, and we delivered a positive operating leverage for the third consecutive year. Slide 3 shows some of the financial highlights for the fourth quarter. Earnings per common share of $0.21, was up…

Thank you, Mac. Our fair play banking philosophy, our welcome culture, and our optimal customer relationship or OCR focus continues to drive, we believe to be industry-leading customer acquisitions. Slide 11 illustrates these long-term trends in consumer and commercial customer acquisition. We’ve increased our consumer checking households and our business checking relationships by 8% and 5% compounded annual growth rates since 2010. While the law of large numbers might be beginning to weigh on these growth rates, the underlying customer growth rates remain impressive. And these robust customer growth rates have allowed us to post the associated revenue growth you can see in the two lower charts on the slide. We’re particularly pleased with the recent trend visible in the chart on the bottom left as the past three quarters have shown improved momentum in the consumer household revenue metrics as we’ve lapped the last fee change we implemented under our fair play philosophy and continued to realize the benefit of the underlying customer growth. You’ve heard me say this before but our focus remains on growing revenues. We will continue to grow revenues despite the challenging environment. Although the slides have been slightly redesigned from what you are used to seeing Slide 12 and Slide 13 illustrate the continued success of OCR strategy and deepening our consumer and commercial relationships. As we’ve stated before our strategy is not about gaining market share – our strategy is about gaining market share and share of wallet. Now this strategy is built around increasing the number of products and services we provide to our customers, knowing that this will translate both into more loyal stickier customers, as well as revenue growth. As of year-end, almost 52 % of our consumers checking households use six or more products and services and that’s up…

Thanks Steve. Operator, we will now take questions. We ask that as a courtesy to your peers, each person ask only one question and one related follow-up, and then if that person has additional questions, he or she can add themselves back into the queue. Thank you.

[Operator Instructions] Your first question comes from the line of Ken Houston of Jefferies. Your line is open.

Thanks. Good morning, guys.

Hi, Ken.

Good morning, Ken.

Steve, if I could ask you to talk a little bit more about your comment about credits. This quarter obviously you put up a bigger reserve than we had seen in a while and you mentioned a couple specific things. Charge-offs, however, are just remarkably low. So just in terms of the outlook, how – can you talk to us just about where you’d expect that volatility to start to come from, and should we also expect you to continue to have to start building reserves going forward? And why would that be the case? Thanks.

Hey Ken, this is Dan. Actually, the outlook is very strong and we feel very good about charge-offs entering into 2016. The one area that we’ve seen some volatility in is kind of the whole commodities and oil and gas arena. To remind you, we have very modest exposure there. Where all the volatility has been is in the ENP space we have less that, we have 0.5% of our total loan in that area, although we did build reserves this quarter based on that book, the majority of the provision increase was aligned with that very small portfolio because we know there’s a lot of volatility and we want to continue to take a conservative stance. In terms of the charge-off outlook, I expect to remain below our long-term stated range.

And Ken, I think the other thing is we’ve had remarkable recoveries on CRE and we won’t see that continuing into 2016, so we would naturally see some increase in charge-offs there.

Yes, okay. So just to play that forward just one more, so then how do we think about if you’re really confident about the loss forecast, and this was a specific reserve action, then should we anticipate you needing to build reserves incrementally, or is this more just about charge-off normalization to both of your points?

Since we’ve been at these very low levels, we’ve said we’re going to move towards normalization. And I guess that’s the – that’s kind of the same comment I would have, is we’ve been at a historical lows with change in the cycle and with the loan growth. Yes, I think you will see some level of reserve build. This quarter was probably a little bit more pronounced because we did have a particular focus on our small ENP book.

Understood. Thanks, guys.

So Ken, clearly, below our long-term range of 35 to 55. We’ll probably see some increase towards that range, but we’ll definitely be below it.

Yes. Okay, that’s helpful. Thank you.

Your next question comes from line of John Pancari of Evercore ISI. Your line is open.

Hi, good morning. It’s Steve Moss actually for John here.

Hi, Steve.

On credit one more time, with regard to the inflows you had this quarter on criticized assets and commercial loans, how much of that was tied to commodities?

Well, the majority of the increase in the nonaccrual loans were – as we said, we moved two reserve base loans to nonaccrual. The criticized category was actually much more stable. There was a very slight uptick in that category, but that obviously would be included in the NALs.

Okay. And then turning to, on the commercial loan yield side, commercial loan yields declined 10 basis points here during the quarter. Just wondering, where is the new money yields versus the fourth quarter book yield on the commercial loan book?

You know, Steve, it’s going to be mixed across the portfolio and I would tell you that we continue to see the same demand that we have seen historically in terms of the, our customers wanting to borrow. It’s just a matter of us being more disciplined and making sure that we bring onto the balance sheet what we feel comfortable with. Clearly, we still see pressure on pricing, maybe less pressure on structure, but still some pressure on structure. And we’re just being disciplined in terms of what we do.

Okay. And I guess to follow that up on the liability side, just wondering, you know, are we nearing a plateau on the increase in total interest bearing liabilities, or should that trend continue?

Well, we’ve done a great job of growing households and commercial operating accounts. And we’re going to continue to see that, I believe, because of the, the philosophy we have around customer service, our fair play strategy. So I would expect that we’re going to continue to grow households and we’ll still see good noninterest bearing growth along with that.

Okay, thank you very much.

Your next question comes from the line of Scott Siefers of Sandler, O’Neill & Partners. Your line is open.

Good morning, guys.

Good morning, Scott.

Two questions on overall loan growth. You guys give a lot of color on what’s going on in the markets. I expect I know the answer to the first one, but Steve, if you can offer any additional thoughts on just any changes you’re seeing in overall loan demand within the footprint. And then specifically I was hoping you guys could update us as well on your thoughts on your appetite for auto production, whether it’s given pricing concerns or just any other pressures, perhaps building in the market.

Scott, happy to try and answer on the first part. From what we can tell, and we’ve talked to businesses in all of our markets over the last couple of weeks in particular, through multiple channels. And there’s generally a bullishness. And you see that reflected in some of the economic statistics we’ve provided you. But when you take it down to the customer level, it’s very positive, very encouraging. So we’re – and our pipelines would reflect that. We have a good pipeline for this time of year on the commercial side. And your second question, Scott, was?

Appetite for auto production, just any changes, if it’s decrease due to pricing pressures or maybe any other emerging pressures, still feeling very good about that space.

I think the team has done a pretty good job. We essentially were flat year-over-year with origination and that reflected efforts to maintain yield. More recently, we’ve been able to increase the yield on new production. So we’re back above the 3% level.

Okay,

We like the asset class. There’s no change in outlook for it. We just remain very disciplined in it. You get to see that discipline as we release it every quarter in terms of the different credit and other metrics.

Okay. Great. Thank you guys very much.

Thanks, Scott. Thank you.

Your next question comes from the line of Bob Ramsey of FBR. Your line is open.

Hi, good morning. I was just curious, how much of the provision this quarter was specific to those two energy credits that you highlighted?

$10 million

I’m sorry? I didn’t quite catch that. Did you say $9 million?

It was $10 million. That applied not just to the two credits, but that was our reserve base loan portfolio in total, we added $10 million. So we now have a 6% reserve on our reserve base lending portfolio.

Got it. Perfect. Thank you. And are these – are any of the loans in that portfolio snicks, or are these, I guess, more direct lending relationships?

No. Actually, our strategies are all, pretty much all tier national credit. Our target is larger well capitalized firms that have generally had access to the capital markets, have sophisticated hedging strategies, et cetera. So this is largely a tier national credit book.

Got it.

We have no oilfield services either, as a reminder.

Perfect. All first lien, I take it?

Yes

All right. Thank you

Your next question comes from the line of David Darst of Guggenheim Securities. Your line is open.

Hi, good morning.

Hi, David

I guess with the swaps that are rolling off this year, that would be about eight basis points to your commercial yield. I guess is that the key driver behind some of the margin compression, or is there anything you can do to offset that? Or would it be volume?

Yes. David, it’s certainly a component of pressure to the margin. I would tell you that a good portion of it continues to be LCR and how we’re funding LCR with wholesale funds. But, you know, this is all built into our plan around the expectations for 2016. So we’re comfortable with that guidance of staying at 3% or above in 2016. And again, we’re letting these swaps roll off so we can become more asset sensitive over time and we feel very comfortable with that strategy.

Okay, and if you had another 25 basis points midyear, would that give you enough to stabilize the core commercial yields, ex swaps.

I’m not sure about the commercial, but I think across the entire portfolio, another 25 basis points would certainly give us some relief from that pressure.

Okay, great. Thank you.

Thank you.

Our next question comes from the line of Geoffrey Elliott from Autonomous Research. Your line is open.

Hello again. Another question on credit, what are the sorts of early indicators that you typically look at to see whether the cycle might be turning?

Well, obviously we look at delinquencies and all the kind of traditional measurements. But as we’re kind of even a step beyond that as we’re talking to our customers and looking for the signals that did obviously, we’re looking at job formation and interest rates and, you know, and the manufacturing base within our footprint, which continues to be strong. But in terms of the metrics, we try to look at the, you know, the early indicators, which are downgrades within the portfolio, including credit migration within the pass rated loan category and delinquencies are the primary measures. But again, before we even get to that point, we’re trying to stay in touch with our customers and look at the key indicators that they are watching. And as Steve indicated earlier, right now in our region, the indicators are actually quite positive.

So I guess to follow-up how should we reconcile the indicators being quite positive with the message that you are kind of incrementally more cautious on credit as we go through 2016 for Huntington and for the industry?

Well, I think there’s a lot of uncertainty out there right now. And that is – we always take a conservative stance. If we have questions in the economy, we’re going to – going to take a more cautious approach. But I would say that there’s a Stark contrast today between what you see in the news and the way our customers and then folks in our region are feeling. But nonetheless, we are paying attention to the warning signs and clearly, you know, the energy and commodities businesses are quite volatile and that goes into our thinking.

And I think that’s the key, right? Because we’re at a very low level in terms of charge-offs and nonperforming assets and we will see more volatility in 2016. So off of this low level is it likely that we see a trend towards the upside that’s likely? We’re very comfortable with how we’re positioned.

Great. Thank you.

Thanks. because if we continue to manage this risk profile with an aggregate, moderate to low position and we’re coming off of a very severe cycle with absolute lows. So, we’re not overly concerned about it. In fact, we like the – we very much like the geography we’re in and what we’re hearing from our customers.

Your next question comes from the line of Andy Stapp of Hilliard Lyons. Your line is open.

Good morning.

Hi, Andy.

Hi, Andy.

All of my questions have been answered, but I just want to make sure you said you have no exposure to oilfield service companies?

That’s correct. It would be negligible. There would probably be a couple of small deals out there that you could classify as oilfield services, but we have – as a strategy, we have specifically avoided that and within our energy vertical, we have zero exposure.

Okay, great. Thank you.

Your next question comes from the line of John Arfstrom of RBC Capital Markets. Your line is open.

Thanks. Good morning guys.

Hi, John.

Mac, a question for you on your guidance. It’s a bit of a propeller head question, but I’ll ask it this way. This 3%, keeping the margin above 3%, are you talking about end of the year or full-year average for that?

I would say both, John.

Okay, hopeful. And then the other part is on the buyback, you have a tremendous amount of room left, given your share price, just curious how you’re thinking about the buyback versus other uses of capital. Thanks?

Yes. So we did slow the buyback down as the quarter progressed, wanted to keep our powder dry. We fully intend to use the remainder of the buyback over the next two quarters. And we’ve talked about how we use capital in terms of supporting the core growth and supporting the dividend. And after that comes share buybacks and M&A activity. But obviously at this price, we like our – we like the price very well.

And do you plan to exhaust it, Mac? Or is this – is that just too big of a bite?

Obviously, it will depend on market conditions and where we go from here, but, certainly that is possible for us to use the entire authorization.

Okay, thank you.

Thanks, John.

[Operator Instructions] Your next question comes from the line of Terry McEvoy of Stephens. Your line is open.

Hi. Thanks. Good morning.

Hi, Terry.

Hi, Terry.

Hi. Just – first question, service charges on deposit accounts, it was nice to see that 8% year-over-year growth in the fourth quarter and up positive, I believe, for 2015. Looking ahead with no regulatory changes at all on fees, do you think the growth in that revenue line should be at or above the piece of new checking account or deposit relationship growth in the deposit base?

Terry, there are two components in that line, right. There’s the commercial, the treasury management revenue and then there’s the retail side. Keep in mind that in the third quarter of 2014, we made our last fair play adjustment of $6 million. So you’re seeing the first full quarter of kind of year-over-year growth off of the consumer side of the business reflecting the great job we do in bringing new households to the bank. And also tell you that treasury management had a great year in terms of product capability, penetrating the customer base, and fee growth. So, you know, certainly encouraged by what we see this quarter and definitely expect the trends to remain intact, especially relative to what you saw previous to this quarter.

And then just a follow-up question for Steve. You talked about contingency plans, should the revenue growth in 2016 not attractive your kind of outlook that you discussed today. Could you just shed a little bit of light on, I’m guessing that’s on the expense side, where you see some opportunities if that does happen to be the case this year.

Well, we continue to invest in the business. That’s part of the plan. We’ve been investing every year. We pace that investment and taper it off. And then there are other categories of expenses that that we would look to and some of that would be some of the business expansion in terms of people and related. Certainly, if we didn’t see the revenue, the incentives and commissions would be adjusted. I think we may adjust some of our discretionary investments in a number of areas that we routinely want to look at. An example might be marketing. So hopefully that gives you – there is a smorgasbord that we’re working with. We do this routinely. It’s part of what we deliver to our board. If for some reason the economy starts changing, then we have a series of levels of contingent adjustments.

Thank you, both.

Thank you.

Thanks, Terry.

[Operator Instruction] Your next question comes from the line of Peter Winter of Sterne Agee. Your line is open.

Good morning.

Hi, Peter.

Good morning, Peter.

Mac, I just want to go back to the comment, the wanting to keep the powder dry. Can you just talk about the M&A environment right now and also, can you talk about what your financial parameters are for a bank acquisition?

So we’re obviously always looking for acquisitions. I think we’ve been very consistent in how we talk about it. I would say for us, there’s really no change in terms of activity. We look at core banking franchises. We look at opportunities like MacQuarie that we had this year and continue to look into six to eight-footprint contiguous states. So I say, Peter, there’s really no change in how we see the environment or really how we approach the environment.

Have you seen an increase in maybe willingness of sellers, given what’s been going on recently in the lower for longer kind of rate environment?

It’s probably too early to make that call. I would say it’s been consistent in terms of what we see happening.

Got it. Okay, thanks.

Okay. Thanks Peter.

There are no further questions at this time. I return the call to our presenters.

Well, we’re very pleased with our fourth quarter and certainly the full-year 2015 results. We delivered 13% annual growth in earnings per share and 4% annual growth in tangible book value per share. 2015 results reflected a 12.4% return on tangible common equity, and a one-on-one return on tangible – return on assets. As we enter 2016, I’m optimistic, equally optimistic, I should say, with regard to the year ahead. Our strategies are working. Our investments continue to drive results and our execution remains focused and strong focused and strong. We’re gaining market share and we’re taking share of wallet. So we expect to generate annual revenue growth consistent with our long-term financial goals, and we’ll manage our continued investments in our businesses to the revenue environment. We continue to work toward becoming more efficient and improving returns. Finally, I want to close by reiterating that our board and this management team are all long-term shareholders. Our top priorities include managing risk, reducing volatility, and driving solid consistent long-term performance. So I want to thank you for your interest in Huntington. We appreciate you joining us today. Have a great day.

This concludes today conference call. You may now disconnect.