COLUMBUS, Ohio — In a discussion of Huntington Bancshares fourth-quarter results, management revealed that average consumer loans climbed by $500 million, driven largely by a $400 million uptick in average auto loans and leases.

Auto loans and leases are up 7 percent over the third quarter, according to officials.

"Fourth-quarter automobile loan production continued to reflect high credit quality metrics with an appropriate return," management explained. "Our recent expansion into Eastern Pennsylvania and the five New England states began to have a positive impact on volume. We expect our growth in these markets to become more evident over time as we further develop our dealership base."

Overall, auto loans and leases stood at $5.5 billion in the quarter, up from $5.1 billion in the previous period.

Continuing on, in a year-over-year view, the company reported that auto loans and leases are up $2.2 billion, or 66 percent.

"In early 2009, we transferred automobile loans to a trust in a securitization transaction. With the adoption of ASC 810 — Consolidation, that trust was consolidated as of January 1, 2010. At December 31, 2010, these securitized loans had a remaining balance of $0.5 billion. Underlying growth in automobile loans continued to be strong, reflecting a significant increase in loan originations, compared to the year-ago period. The growth has come while maintaining our commitment to excellent credit quality and appropriate return," management said.

Furthermore, Huntington reported that its non-interest income for the fourth quarter of 2010 versus the same period in 2009, was offset by a $2.2 million, or 17 percent, decline in auto operating lease income, which reflects the impact of a declining portfolio since the company exited this business in 2008.

Total non-interest income for the financial institution's various offerings was $264.2 billion, up $19.7 billion, or 8 percent, over the same period of 2009.

The company went on to say that non-interest expense for business lines was $434.6 million for the quarter, compared with $322.6 million in the year-ago period, up $112 million, or 35 percent.

That total was offset by a $2.3 million, or 22 percent, decline in automobile operating lease expense as this portfolio continued to run off.

Across the company's business lines, officials said credit quality performance for the quarter showed improvement. Total net charge-offs were down from the third quarter. The composition of the losses also shifted.

Management indicated that the slight increase in auto loan and lease net charge-off losses was "well within our expectations given the seasonality impact and is not an indication of any portfolio weakness."

The company explained, "We continue to see stable to improving delinquency trends across the entire loan and lease portfolio, with a significant opportunity for further improvement in the residential and home equity portfolios."

Moreover, management said, "Automobile loan delinquency rates continued to decline. Given the significant increase in new-automobile origination volume, we use a lagged delinquency measure to ensure that the underlying portfolio performance is consistent with our expectations. Based on the lagged analysis and the origination quality, we remain very comfortable with the ongoing performance of our automobile loan portfolio."

Auto loan and lease charge-offs came in at $7 million, or an annualized 0.51 percent of related average balances, up 26 percent from $5.6 million, or an annualized 0.43 percent in the third quarter.

"The increase from the prior quarter primarily reflected seasonal factors. We continued our strategy of originating high quality automobile loans. During the fourth quarter, we originated $795 million of loans, with an average FICO score of 764, with a continued emphasis on lower loan-to-value ratios. The level and quality of new production in 2010 position us well for continued future performance," management revealed.

Reporting results across all business lines, Huntington said net income came in at $122.9 million, or $0.05 per common share. Officials noted the quarter included a one-time reduction of $0.07 per common share for the "deemed dividend resulting from the previously announced repurchase of $1.4 billion in TARP capital in December."

For the full year, the company reported net income of $312.3 million, or $0.19 per common share.

"The current year includes a one-time reduction of $0.08 per common share for the deemed dividend resulting from the repurchase of $1.4 billion in TARP capital," officials noted.

This compares with a net loss of $3.1 billion, or $6.14 per common share, for full-year 2009, which included $2.6 billion pre-tax, or $4.89 per common share of goodwill impairment charges.

Discussing the company's complete results, Stephen Steinour, chairman and chief executive officer, said, "Fourth-quarter results capped a good year for Huntington. The hard work and progress we are making in organically growing our core business were clearly evident. Loan growth continued to gain traction and was broad based. Core deposit growth was again strong. This resulted in an increase in lower yield investment securities, which contributed to more of a decline in our net interest margin than we expected three months ago. But, strong earning asset growth resulted in an increase in total net interest income sufficient to overcome the expected decline in deposit service charge income. As a result, we reported another quarter of revenue growth.

"Credit quality again improved significantly, a trend we anticipate will continue. Importantly, we repaid our TARP capital and ended the quarter with strong regulatory capital and very strong common equity capital ratios," he added.

The total fully taxable equivalent revenue for the fourth quarter was $683.2 million, up 1 percent from the previous period. Officials said this was driven by a $6.4-million, or 2 percent, increase in fully taxable equivalent net interest income. This reflected 15-percent annualized growth in average earnings assets, including 6 percent annualized growth in average total loans and leases, and a net interest margin of 3.37 percent, down 8 basis points from the prior quarter. Total average core deposits grew 10 percent annualized, with non-interest bearing demand deposits increased at a 25 percent annualized rate.

Steinour went on to say, "Each of the last two years represented major milestones in positioning Huntington for long-term growth. 2009 was the year we aggressively addressed our credit issues. We said that represented the high water mark. Our results since then have shown more rapid improvement in credit quality than originally envisioned. 2010 was the year we addressed our capital issues, particularly our low relatively level of common equity. And we repurchased our TARP capital.

"From a quality of capital perspective, we have never felt better. As we enter 2011, we expect earnings will continue to grow. In the near term, and consistent with fourth-quarter performance, this will mostly reflect the benefit of lower credit costs. Yet, we are beginning to see positive results from our investments in growing the business. We believe this is going to be a year when Huntington breaks away even more from our peers in both financial performance, as well as delivering more innovative and customer friendly products and services to our customers," he concluded.