Good morning. My name is Carol and I will be your conference operator today.
At this time, I would
like to welcome everyone to the Huntington Bankshares 2nd Quarter Earnings there will be a question and
Thank
you. I would now like to turn the call over to Mark Smith, Director of Investor Relations.
Thank you, Carol, and welcome
Mark Move, Director of Investor Relations for Huntington. Copies of the slides we will be reviewing can be found on our IR website at www.huntingtonir.com or by following the Investor Relations link on www.huntington.com. This call is being recorded and will be available as a rebroadcast starting about 1 hour from
the close of the call.
Our presenters today are Steve Steinauer, Chairman, President and CEO and Mac McCullough, Chief Financial Officer Dan Newmayer, our Chief Credit Officer, will also be pating in the Q and A portion of today's call. As noted on slide 2, today's discussion, including the Q and 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 3 and an overview of the financials. Mac?
Thanks, Mark, and thanks to everyone for joining our call today. We appreciate your interest and support. It's an exciting time for Huntington, we saw continued solid execution in the second quarter of 2016, built on the strong foundation and momentum demonstrated in the first quarter. We believe we have a good story to share with you this morning. We have followed a contrarian path since 2009 focused on building a strong recognizable brand differentiated product set and industry leading customer service.
While others have pulled back with a focus on cost cutting, We invested in our franchise, built our fair play philosophy and our welcome culture. 2nd quarter results again provide proof that our strategy working and that we are executing at a high level. Turning to slide 3, let's review the financial highlights of our second quarter. Huntington reported earnings per common share of $0.19 inclusive of $0.02 per share of significant items related the cost associated with the integration of the pending FirstMerit acquisition. Tangible book value per share increased 9% to $7.29.
Reported return on tangible common equity was 11%, while reported return on assets was 0.96%. Fundamental trends were in line with our expectations. Compared to the second quarter of 2015, revenue grew by 1% despite an $8,000,000 impact from net MSR activity and the realization of a $5,000,000 gain on the securitization of auto loans in the 2nd quarter of 2015. Net interest income growth of 3% was largely responsible for reported revenue growth. We continue to believe that our ability to deliver consistent top line growth despite the challenging interest rate environment distinguishes Huntington from our peers.
Non interest expense increased $32,000,000 or 6 percent year over year including $21,000,000 incurred in relation to the integration of our pending acquisition of FirstMerit. Non interest expense adjusted for the FirstMerit integration expense increased 3% year over year. Our efficiency ratio by 260 basis points. While we remain above our long term efficiency goal of 56% to 59% improving operating efficiency continues to be the top priority for our management team. We remain confident that productivity improvements from the FirstMerit integration will significantly accelerate our ability to achieve this important financial goal.
Balance sheet growth continued to be strong. Average loans grew 8% year over year while average core deposits grew 5%. Working the 8th consecutive quarter of year over year core deposit growth being at least aggregate moderate to low risk profile. 2nd quarter net charge offs of 13 basis points remained well below our long term financial target of 35 to 55 basis points. Nonperforming assets decreased 7% linked quarter.
Tangible common equity ended the quarter at 7.96 percent, up 4 basis points year over year and 7 basis points linked quarter. And our CET1 ratio trended up 15 basis points year over year and 7 basis points quarter over quarter. Turning to slide 4 and diving in deeper to the income statement, the net interest income was up 3% from the year ago quarter, primarily reflecting strong earning asset growth of 8% which was partially offset by 14 basis points of net interest margin compression. Non interest income was down $11,000,000 or 4 percent from a year ago impacted by $8,000,000 of net MSR activity and a $5,000,000 gain on the securitization of auto loans in the second quarter of 2015. Reflecting the strength of new household acquisition out of our OCR strategy, service charges on deposit accounts increased 8%.
Card and payment processing income increased 9%. Trust service revenue in the quarter was impacted by the sale of our funds and fund servicing businesses as well as an ongoing shift in the product mix. Non interest expense increased $32,000,000 or 6 percent from a year ago, with FirstMerit integration expense accounting for $21,000,000 of the increase. After adjusting for FirstMerit integration expense, non interest expense increased 3%, primarily driven by salary expense, medical claims, and technology investments. Of note, we continue to see wage inflation given the relatively low unemployment levels in many of our markets.
Turning to slide 5, let's look at balance sheet trends. Disciplined with strong loan and lease growth continued in the 2nd quarter increasing 8% year over year. Growth was spread among many portfolios, but commercial banking and auto lending continued to lead the pack. Total lending increased 26% from the year ago quarter as production continued at record levels, while we maintained our long standing underwriting consistency and discipline. Slides 46 to 49 in the appendix show the underwriting does not change and our credit performance remains superior.
Our auto portfolio continues to demonstrate industry leading performance. Our C and I portfolio grew 8% driven by equipment finance, dealer floor plan and corporate banking. Average securities increased 15% primarily reflecting reinvestment of portfolio run off to LCR compliance securities and to a lesser extent growth in direct purchase municipal securities in our commercial banking segment. We remain above the 100% threshold for the liquidity coverage ratio. Strong growth in our low end securities portfolio amounted to an overall 8% increase in our average earning 5% over the 11% year over year including a 4% increase in non interest bearing demand deposits and a 28% increase in interest bearing demand deposits.
Our focus on new consumer checking household and commercial relationship account acquisition as well as relationship deepening continue to drive growth in demand deposits. Average total debt increased $1,700,000,000 or 23 percent as a result of the issuance of $3,100,000,000 in senior debt over the past five quarters. Which was partially offset by a $1,100,000,000 decrease in short term borrowings. Money markets deposits increased by 0 point 7000000000 dollars or 4% from the year ago quarter reflecting improved cross sell and targeted marketing. We also continued remixing our deposit base moving consumer deposits out of higher cost CDs and to other less expensive deposit products.
As a result, average core CDs decreased 600,000,000 or 24% year over year. The net interest margin was 3.06 percent for the 2nd quarter down 14 basis points from the year ago quarter. The decrease reflected a 4 basis point decrease in earning asset yield and a 14 basis point increase in funding cost Loan yields were only down 2 basis points year over year, while security yields declined 9 basis points. The increase in funding cost was almost entirely driven by the impact of the debt issuances over the past 4 quarters as the cost of deposits only increased one basis point year over year. On a linked quarter basis, the net interest margin decreased by 5 basis points, driven by a 3 basis point decrease in earning asset yield and a 4 basis point increase in the cost of interest bearing liabilities.
Recall that last quarter's NIM benefited from approximately 2 basis points of interest recoveries in the commercial real estate portfolio. Though modest further NIM compression is expected to continue given the rate environment, we continue to expect net interest margin at standalone Huntington to remain above 3% for the remaining 2 quarters of 2016. Slide 7 provides an update on our asset sensitivity positioning and how we manage interest rate risk. As shown in the chart on top, modeling for standalone Huntington projects that net interest income would benefit by 4.1% if interest rates were to gradually ramp 200 basis points in addition to increases already reflected in the current implied forward curve. This
is an
increase of roughly 50 basis points from a quarter ago as our asset swap book continue to mature. Though we expect additional runoff from our asset swap book in coming quarters, the portfolio is laddered and there are no cliffs looming on the horizon. As shown on the bottom in the up 200 basis point gradual ramp scenario. The chart on the bottom of the slide shows our 4,700,000,000 assets swap portfolio and $6,800,000,000 liability swap portfolio, including their respective average remaining lives and their impact on net interest income. The incremental benefit of the swaps was $19,000,000 in the 2016 second quarter, down slightly from 21,000,000 the first quarter of $26,000,000 in the year ago quarter.
75 percent of the $19,000,000 in swap benefit in the 2nd quarter was from liability swaps with the remainder coming from asset swaps. Turning to slide 8, we see our capital ratios which increased across the board on both the year over year and linked quarter basis. Tangible common equity ended the quarter at 7.96 percent, up 4 basis points year over year and 7 basis points linked quarter. During the quarter we issued an additional $200,000,000 of attractively priced fixed rate preferred equity on top of the $400,000,000 issued late in the first quarter. Referring to slide 9, we booked provision expense of $25,000,000 compared to net charge offs of $17,000,000.
This modest reserve build along with the reduction in NPLs led to a 151% NAL coverage ratio as noted in the chart on the right. The ACL as a percentage of loans fell 1 basis point to 1.33% due to portfolio growth. Asset quality metrics were favorable in the quarter as indicated on slide 10. NPAs fell in the quarter as new inflows were down substantially for prior periods. The criticized asset ratio down modestly falling 3.5 percent to 3.44.
New additions to criticized were offset by upgrades and pay downs. Delinquencies were also well controlled exhibiting continued reductions. Let me now turn the presentation over to Steve.
Thanks Mac. Want to use the next few slides to talk about our industry leading customer acquisition. Mac mentioned at the beginning of the call that we've taken a contrarian approach for the past several years, focusing on customer acquisition and relationship deepening through our Fairplay Banking philosophy. Slide 10 shows the fruits of our labor. And as you can see, Both consumer and business relationships are up substantially since 2009.
Consumer households have experienced an 8% compound annual growth since 2010, while business relationships have experienced 5% compound annual growth over the same time period. We can see the relationship growth flowing consumer revenues are up 5% over the same period. I want to call out particularly strong revenue growth on the consumer side over the last five quarters. We've not always seen the revenue benefit on the consumer side, but we've now overcome the headwind of the latest adjustments under our Fairplay philosophy philosophy implemented in the third quarter of 2014 and the investments in data and analytics we began in 2015 are starting to show results. We experienced 10% year over year growth in consumer household revenue in the second quarter of 2016, along with 5% linked quarter growth.
Now, these are very strong numbers and we're optimistic we can build on these in coming quarters. It's not just about relationship growth, but indeed the deepening of our existing relationships. For us, this strategy has remained consistent since put in place in 2009, and we continue to see progress. The next two slides show how we think about deepening relationships with our customers. As of quarter end, 52% of our consumer checking households use 6 or more products and services, up from 51% a year ago.
On the commercial side, 47% use 4 of our products or more of our products and services from 43% a year ago. These figures are important and ones we monitor closely. We believe the revenue The fair banking philosophy starts with doing the right thing for our customers, but that's just the beginning of any single customer relationship. To achieve the full potential on both sides, we have to better understand the individual customer needs and tailor our product services and experiences to fit those needs. So we're not just adding new customers.
We're making sure we can better serve and foster a mutually beneficial relationship with our total customer base, all of our existing relationships. Moving to the economy. Slide 14 contains what we feel be some of the more meaningful economic indicators for our footprint. The bottom left chart illustrates trends in unemployment rates across our six Midwestern States. And as you can see, the majority of our footprint has shown marked improvement in unemployment rates relative to the national average, and Ohio and Michigan, in particular, remain at or near their lowest level since the early 2000s.
The chart on the top of the at bottom right show coincident and leading economic indicators for the region. The bottom chart, which shows leading indexes for our footprint as of May shows that 5 of the 6 states in our footprint expect positive economic growth over the next 6 months. Slide 15 takes a deeper look at the trends and unemployment rates in our largest metropolitan markets. Many of the large MSAs, the footprint were near 15 year lows, unemployment rate at the end of May. Ohio, Indiana and Michigan, in particular, continue to outpace overall U.
S. Growth since the recovery. There's additional calls for optimism here in our home footprint. For capital disposable personal income growth, has outpaced the national average through the recovery and continued to do so through the second quarter. Housing markets in the footprint especially here in Ohio, I've shown to be far more stable than the national average.
Affordability in the Midwest is the best in the country The higher rate in the Midwest continues to be among the highest in the nation, and over 50% of net manufacturing jobs created in the country since the recession are in Ohio, Michigan and Indiana. 3 states have over 50% of the net manufacturing increase since the recession. Despite continued market volatility and global macroeconomic uncertainty, We remain confident in the economy in our footprint. Indeed, the average consumer remains confident in our footprint economy as consumer confidence in the Midwest is near the 2002 levels. Now we recognize the escalation of market and global volatility in recent months and a threat to compose the business here in our footprint, but effects so far have been modest.
Turning to Slide 16, operating leverage for the 1st 6 months of the year was slightly negative, which was consistent with our internal forecast. Recall this is almost exactly where we were at the end of the second quarter of 2015. We delivered positive operating leverage in 2015, which was our 3rd consecutive year of doing so and positive operating leverage remains an annual financial goal. So with that, let's turn to Slide 24 for some closing remarks and important messages. We remain focused on delivering This strategy entails reducing short term volatility, achieving top tier performance over the long term, and maintaining our aggregate moderate to low risk profile throughout.
Our DFAST stress loss estimates continue to reflect comparatively well, and for this year included FirstMerit loan portfolios. Our value proposition for both consumers and businesses continues to drive industry leading new customer acquisition. We've successfully built a strong and recognizable consumer brand with differentiated products and superior customer service. For the 3rd year in a row, we were recognized for leading customer satisfaction by JD Powell And Power and others. We continue to execute our strategies and refine or react when necessary.
We have invested and will continue to invest in our businesses, particularly around enhanced sales management, mobile and digital technologies, data analytics and optimizing our retail distribution network. Importantly, we plan to continue to manage our expenses appropriately within our revenue outlook. We expect growth within our core Midwest footprint local economies and the businesses and consumers with them. We are prudently managing certain industries or sectors potentially impacted by the market volatility and global macroeconomic uncertainty However, we believe these risks remain well contained. We see no evidence of near term deterioration or problems looming on the horizon.
Customer sentiment remains positive. Pressure on our NIM will remain a modest headwind in the near term, We continue to expect the NIM for standalone Huntington will remain above 3% for each quarter throughout 2016. We expect to grow revenue despite this pressure consistent with our 4% to 6% long term financial goal. Excluding significant items, net MSR activity and the impact of FirstMerit. We will continue to pace ongoing investments in our businesses consistent with our revenue outlook and consistent with our long term goal We continue to monitor our loan portfolio very closely and given the absolute low level of our credit metrics, and recent market and global economic volatility, we do expect some volatility in our credit metrics going forward.
And as we stated last quarter, anticipates that loan loss provisions for both ourselves and the broader industry will gradually begin to return to more normalized levels. Let me stress we do not see any material deterioration on the horizon. We're simply moving off cyclical lows and we'll gradually move back towards normal for both provisioning and net charge offs. We expect our net charge offs for the year will remain below our long term expected range of there's a high level of alignment between largest shareholder of Huntington. We have hold true retirement requirements on certain shares and are appropriately focused on driving sustained long term performance.
We're highly focused on our commitment to being good stewards of shareholder capital. Finally, before we move into the Q And A period, I'd like to tell you how pleased we are with the progress we're making with FirstMerit. We recently received sign off from the Department of Justice divestiture that resolves our concentration issue, which was primarily in the Canton Ohio market. We've identified the branch closures that will incurred coincident with the branch conversion in the first quarter of next year. We also continue to make progress in building out the organization for the combined entity Our systems conversion planning efforts continue to progress as our IT teams have completed all product mapping or the final stage of completing all data mapping.
Indeed, we're coding now for the conversion. Finally, we remain confident that the transaction will close in the 3rd of 2016. I'll now turn it back over to Mark so we can get to your questions. Thank you.
Thanks, Steve. Operator, we'll now take questions. We ask that as a courtesy of 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
Your first question today comes from Erika Najarian from Bank of America. Your line is open.
I apologize if you've already addressed it in the prepared remarks. There are a bunch of calls that are happening today. Very much, noting that you reiterated your goal for revenue growth and annual positive operating leverage. And I'm wondering how we should think of that $503,000,000 core run rate as we move into the second half of the year. And also as we think about core Huntington X FirstMerit for 2017.
I know it's a little too early, but you do have some peers that in the face of lower for even longer, did give a little bit more color on how they're thinking about expense management over the medium term? And just wanted to get your thoughts on that.
Yes. Hi, Erica, it's Max. So, as you think about the expense base in the 2nd quarter. You know, keep in mind, we're very focused on the FirstMerit integration. We have a lot of a lot of focus, a lot of attention going into that.
We're being very disciplined on how we approach the expenditures right now. And you know, I think that's a good base if you think about core Huntington as it relates to 2017 and beyond, we, with the focus we have on positive operating leverage, We go into each planning year, understanding the revenue environment. And in particular, we've been planning assuming a rate environment is flat and we've been building our expense base that allows us to achieve positive operating leverage. So, we're going to continue to take that approach going forward. You know, also keep in mind, we've got the cost takeouts from FirstMerit that will start to materialize in 2016 2017 and we're highly confident in terms of the cost takeout achievement that we put on the table.
Got it. And just a follow-up question on CCAR. Clearly, a lot of ink has been written about your, your quantitative results. And I'm wondering if you could share any insight in terms of how that process went and how the side was thinking about the timing of the deal close and whether or not that, those those results are really just sort of one time in your mind relative to the timing of when the deal was going to close?
Yeah, it's a good question, Erica. And, you know, clearly, we don't have, complete insights into what happens inside the black box. And we do think that the process is very different for a company that's going through an acquisition. That's included in the CCAR results. But let me just point out a few things that could help reconcile the numbers from a capital perspective.
So, you know, we knew going into this year's CCAR process, that we were below our peer group in terms of CET1, you know, probably to 120 basis points on average. And that really comes back to the fact that we were pretty aggressive in 2014 2015 and returning earnings to shareholders. Probably 76% on average across the 2 years. Also keep in mind that we did the Macquarie acquisition without issuing any any capital. So that put us in a lower starting point relative to the peers.
We also disclosed on announcement of FirstMerit that we had 100 basis point impact to CET1 because of the structure of the transaction. So that impacted as well. And then finally, you know, we know that as we went through a business combination in a severely adverse scenario inside the CCAR process, that it probably cost us 50 to 70 basis points of CET1. So, when you reconcile all those things, and consider everything that the starting position really is related to, going through the business combination. In the CCAR process.
And your next
question comes from Bob Ramsey with FBR Capital Markets. Your line is open.
Hey, good morning guys. I was wondering if you could touch a little bit on the personnel costs, the adjusted personnel costs number was higher than we were looking for. Was there much in terms of variable comp related the strong mortgage banking quarter in that number or what were some of the drivers of the sequential increase in a quarter that I guess seasonally usually would be a little bit better?
Yeah. Bob, there were a few things that impacted that. I think, you know, you did see merit increases come into effect in the quarter. You know, we also had some higher comp related to mortgage as you point out and then we have higher health care costs, which I pointed out in my comments, just some higher medical expense relative to prior years. But those are the primary things that impact that and I would say outside of the medical costs, nothing extraordinary.
Can you quantify the medical and the maybe the variable mortgage comp?
In the scheme of things, I think the medical might have been a couple of $1,000,000. And the mortgage comp, I don't really have a, but at my fingertips right now.
Okay. Okay. Fair enough. And then, you know, it was a real strong quarter for mortgage banking. I'm curious just how the pipeline looks headed into the third quarter and whether you think this is a level that we repeat in this third quarter possibly?
Yeah, pipelines are strong. You know, we're seeing good purchase volume, and of course refi is picking up as well. So really, really good quarter, as you point out, and, you know, in particular, if you think about year over year, the $8,000,000 MSR net impact $6,000,000 gain last year, $2,000,000 loss this year. So, the outlook is good just given where the pipeline is today.
Your next question comes from Jeffrey Elliot Autonomous. Your line is open.
Hello, good morning. Thank you for taking the questions. 2 more CCAR related questions. The I guess I have a question or a follow-up, but the first is you said in the presentation when you announced the first marriage deal that you were suspending the buyback? I think until the deal closed.
And then no announcement, no buyback ask for the full CCAR submission. So why that change? And then secondly, just wanted to clarify on the 4Q 'sixteen to 2Q 'eighteen, fifty percent total payout, do we now just think about that being from 3Q 'seventeen to 2Q 'eighteen for that shorter period? Thank you.
Yes, Jeff, it's Max. So, starting with the first question, you know, clearly as we went through CCAR this year, the most important, outcome for us was getting, the first merit deal through the process and getting approval for the deal itself. Of course, we're still waiting for approval. We expect that to happen in the third quarter. But we just thought it best to be a bit cautious and making sure that we get through the process because we can create so much more value by getting FirstMerit closed early and on time relative to the buyback that we had in for 2016 CCAR process.
What I would tell you going forward is that we'll take each year as it comes. Next year is a different process. We expect to be in a different position. Not quite sure what the economic scenarios that the Fed will give to us would look like. So, don't want to comment on what the future looks like, but, you know, that's basically our thought process around this year's process.
And are we expecting deal closing during 3Q?
We still expect to get the 3Q closing.
Thank you.
Your next question comes from Marty Mosby from Vining Sparks. Your line is open.
Thanks. Mac, you're increasing your asset sensitivity in a time when most of the market is expecting a lot less and rate hikes. You have a lot of banks that are moving the other direction. They've been asset sensitive throughout anticipating what the Fed was going to do now that they don't have that hope anymore. They're kind of swimming what I would call out of the pool of pain and trying to get as much as they can before the yield curve kind of collapses on the back end on them.
You're really going in the opposite direction and creating a lot of revenue headwinds when you're looking at about $10,000,000 from the peak of what you were getting
out of the swaps. Are you still committed to do this?
And do you feel like What's the behind the scenes driving you in this direction?
So just a few things to think about. So the asset sensitivity numbers that we publish are 200 basis point gradual increase scenario. If you think about where the rate curve is today and you think about a flat rate environment going forward over the next 12 months, we have maybe a basis point or 2 of margin at risk. So, I'm not totally uncomfortable with that position. Plus we've got the, the 1st merit, closing integration and I would say optimization of the 2 balance sheets as they come together.
So we have that entire process to work through as well. So that's the way I take a look at it. We feel good about the margin and where it's at today. We still believe that we're above 3% for the remainder of in core Huntington and you know if you take a look at FirstMerit excluding any impact from the accounting adjustments, it's actually additive to the margin. So, that's our perspective, Marty.
You're looking at issuing the debt, what are you matching that up against, on the asset side? So, kind of what is the kind of the is there a balance in securities and trying to not have any more asset sensitivity come from that initiative as well or are you matching against shorter term assets that will increase your assets and stick date?
Yes, it's primarily, funding the security and that's been a bit of the pressure that we've had on the margin over the past year. You know, today we're bringing securities on it, you know, probably close to 1.9 and the next issuance that we deal with if we issue debt today, we'd probably be in the 2 10 range, something like that swapped of loading. So, you can see where some of the pressure starts to build from a margin perspective. But having said that, we're at 115% elsewhere right now. We feel good about where we are from a securities perspective and really we're just replacing and also keeping in mind the amount of debt that we need from a rating agency perspective and an FDIC perspective.
Thanks.
You bet. Take care.
Your next question comes from Bill Carcache from Nomura. Your line is open.
Thank you. Good morning. You guys have been spot on and calling for used car prices to continue to hold up even when others have kind of taken the opposing view and really just based on the idea that new car payments continue to exceed used car payments by increasingly larger amounts and not everyone can afford a new car payment. And that's been the right view. And as we look at the market now though, it seems like there's increasingly more controversy around whether the Manheim Index can hold up from its current levels, can you share your updated thoughts on the sustainability of used car prices these levels and how important is that to the continued health of the market?
Sure, Bill. This is Dan. You
know, we plan, you know, won the Mannheim, you know, as he suggested, it has held up. And you know, we don't expect it to necessarily be sustained at those levels, but even when we look at a worst case scenario, I think we have a chart in the deck that shows what the Manheim has been over the last 10 or so years. I think it bottomed out in the 107 range briefly. And we have stressed the portfolio on our end going down to 100, which we don't think is really possible. But even at that level, the impact to us on our portfolio is about 9 basis points of charge offs.
Keep in mind, we have a different customer base than average. So with our prime super prime focus, we manage the probability default. We think that we will,
you know, our portfolio will have a much lower incidence of default
and therefore the impact of used car values
relative to the rest of
the market is not as significant. So, you know, we're very comfortable, you know, where we stand and even if the index were to fall, we think we're well positioned again. We have a differentiated model
from what many others would have.
Understood. Very helpful. Thank you.
Your next question comes
a quick question, just in terms of the merger costs, looks like I probably underestimated them this quarter, but can you just give us an estimate of sort of timing of when those might come in from quarter to quarter?
You know, Ken, so we're still tracking. We said about $420,000,000 when we announced the acquisition and I would I would tell you that we'd probably realize 75% of that in 2016 is the way I would think about it. Going to start to tick up from here. We're obviously very deep into the integration process. But you know that's that's how I would think about it from a timing perspective.
Okay. That does help actually. And then just a quick question. On the preferred stock dividend, was there any sort of unusual I think it was like $19,000,000 in total this quarter. I wonder if that would be that high given what you issued?
Yes. So, there
was a bit of a stub period related to, the first quarter payment for the period that it was without about $3,000,000.
Got you. So, on an all in basis, next quarter, what should the run rate be for pref?
It's going to be 6.25 times the $600,000,000 is the way to think about it. So about $17,000,000.
And there are no further questions in queue at this time. I'll turn the call back to Steve for closing remarks.
So, thank you. The 2nd quarter build upon a solid foundation we laid in the 1st quarter. Performance continues to be solid, delivering revenue growth despite challenging headwinds and our fundamentals remain solid and we're well positioned to continue to deliver through the remainder of the year. Pardon me say this before, and it remains true. Our strategies are working and our execution remains focused and strong.
We expect to continue to gain market share and improve share of wallet. We expect to generate annual revenue growth consistent with our term financial goals and manage our continued investments in our businesses consistent with the positive operating leverage annually. We expect modest growth in our economic footprint and continue the gradual transition to more normalized credit metrics which will be effectively managed. We've made significant progress in our integration planning for the FirstMerit acquisition. We look forward to completing the acquisition later this quarter following receipt of all regulatory approvals and our customary closing conditions.
Finally, I want to close by reiterating that our board and this management team are all long term shareholders. Our top priorities and include increasing primary relationships across our business segments, managing risks, reducing volatility and driving solid, consistent, long term performance. So thank you for your interest in Huntington. We appreciate you joining us today.
Have a great day.