Huntington Bancshares (HBAN) is evidence that even the most optimistic management teams still carry a fair share of caution in their outlooks.

Several factors are encouraging businesses and consumers to consider borrowing, says Stephen Steinour, the $57 billion-asset company's chairman and chief executive.

Local and state governments in the Columbus, Ohio, company's markets are doing better. Downtown areas of cities like Cincinnati are going through revitalization and Detroit is likely to be stronger when it emerges from bankruptcy. Manufacturing is doing well.

Still, Steinour is quick to temper such optimism.

"There's a growing optimism, but I wouldn't call it robust," he says. "It's not like a Reaganesque period of time but it is getting stronger."

Steinour remains cautious because the U.S. economy still faces challenges that prevent a prolonged and sustained recovery. World events, like unrest in the Ukraine and disorganization in Washington, still cause hesitation. The burden of student debt could also impede the housing market.

"Consumers are feeling better … but there have been so many interruptions over the last five years," he says. "There are so many flash points, like we're not able to get into a consistent level of leadership in Washington. There's a lot of uncertainty and the consumer feels that."

As banks have reported second-quarter earnings, executives have expressed mixed feelings about their outlooks. Management at KeyCorp (KEY) was pleased with its loan growth but still cautioned analysts about the competitive lending environment. Bank of America (BAC) downplayed expectations for commercial loan growth. U.S. Bancorp (USB) boasted double-digit commercial loan growth, though management vowed to remain aggressive.

Steinour's sentiments fall more on the bullish side, with good reason. Huntington's earnings rose 9% from a year earlier, to $165 million, as revenue surged 5%, to $717 million. Average total loans rose 9%, to $45 billion, led by a 7% increase in commercial and industrial loans and a 39% jump in its automobile book.

"Overall, this strikes us as a solid" quarter for Huntington, Scott Siefers, an analyst at Sandler O'Neill, wrote in a research note. Ken Zerbe, an analyst at Morgan Stanley, noted during Huntington's conference call that the company had "very good growth" in net interest income.

The improved results are tied to a strategic plan Huntington has implemented in recent years, Steinour says. The company, which has emphasized gaining more market share and share of wallet, is adding about 100,000 consumer households annually.

Management has also focused on customer service. It also started bulking up in automobile lending in 2009 when other banks pulled back.

Though yields are tightening on auto loans as competition rises, customer loyalty has helped Huntington, Steinour says. The company, which may run into a self-imposed concentration cap in its auto portfolio, is considering doing a securitization.

"There's a loyalty quotient around our business," Steinour says. "Dealers find us to be very reliable. One of their concerns is how their customers get treated, so our award-winning customer service is very important to them."

Businesses are looking to borrow so they can grow organically or complete acquisitions, Steinour says. There is also a generational shift, where younger family members are not interested in taking over a business, creating a need for private-equity transactions, he adds.

Despite positives in Huntington's quarter, analysts still grilled executives on expenses, a common theme at regional banks. Noninterest expense rose 3%, to $459 million.

Management said there was nothing unusual for the quarter, adding that there were one-time items such as a consulting charge for strategic planning. Huntington sought help reviewing progress on its 2009 strategic plan.

"We wanted to take a step back, challenge ourselves, get a third-party lens to help us do some benchmarking," Steinour said during the conference call. He added that Huntington remains "committed to delivering positive operating leverage for the full year through top-line revenue growth and disciplined expense management."

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