Huntington's Profits Off 16% in Fourth Quarter

In results reflecting some of the more severe ills plaguing the banking industry, Huntington Bancshares on Wednesday reported $52.5 million in fourth-quarter net earnings, down 16% from last year's profits for the same period.

Kemper Securities' Thomas Maier said the mortgage banking operation of the Columbus, Ohio-based company moved into a losing position in the middle of the year. At that time, many on Wall Street revised their earnings expectations downward.

"The large mortgage banking business makes them vulnerable in two areas: margin compression and the shrinking of the mortgage banking business," Mr. Maier said.

Huntington, with $18 billion of assets, has a balance sheet that is particularly liability-sensitive, he added. Its margins underwent severe pressure as the Federal Reserve Board hiked interest rates during the latter half of 1994.

"I expected a tough quarter for them," said Smith Barney's Henry C. "Chip" Dickson. "They absolutely had margin compression because they have liability sensitivity. Their loan growth is far outstripping their deposit growth," he added. Huntington's net interest margin was 4.54% in the fourth quarter, down from 4.89% reported Sept. 30.

"Market conditions, especially rising interest rates, have adversely impacted not only net interest revenue but also fee income," said Frank Wobst, the bank's chairman and chief executive. "We anticipate similar factors . . . to continue to influence the first half of 1995," he added.

Huntington showed earnings for the full year of $242.6 million, up 2.4% from 1993.