Huntington Bancshares (HBAN): A Best-In-Breed Regional Bank

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SunTrust Banks, Inc. (NYSE:STI) is up over 50% year to date and still posts some of the most robust growth prospects of all the banks listed. This bank pays the lowest dividend yield at only 0.7%, but investors will be rewarded with superior growth; it’s expected to grow earnings by 16% annually over the next five years. To boot, SunTrust also trades at the lowest P/B ratio, at only 0.75x. Billionaire George Soros is the top fund owner of SunTrust after a 70% increase in his stake last quarter (check out George Soros’ newest picks).

PNC Financial Services (NYSE:PNC) is the largest of Huntington’s peers with a market value of close to $30 billion. Even with a top dividend yield of 2.9%, PNC trades with an industry-high forward P/E of 11.5x for no apparent reason, especially given the bank’s below-average 4% expected EPS growth rate over the next half-decade (annualized). PNC has managed to grow book value by the highest of the five banks at 10% over the last five years, but this has translated into no shareholder value creation, with the stock down over 20% during the same period. Billionaire Key Griffin was one of PNC’s top owners last quarter (see Ken Griffin’s latest picks).

KeyCorp (NYSE:KEY) operates in twice as many states as Huntington, and trades at one of the lowest P/B ratios (0.77x) of the stocks mentioned here. Even so, we find it hard to see the bank as a buy, with its forward-looking annual EPS growth rate being rather mediocre (5%), and its underperformance of the S&P 500 by 50% year to date. Besides SunTrust, KeyCorp pays the lowest dividend yield of the bunch at 2.4%. Billionaire Steve Cohen of SAC Capital was selling his KeyCorp stake last quarter, dumping 95% of his shares (see Steven Cohen’s top bets).

We believe that Huntington’s market position and turnaround story is compelling. The bank is making strides to better penetrate its current markets with recent acquisitions. We also believe that Huntington’s diverse product mix will help the bank withstand potential near-term economic weakness. There are a number of billionaire investors that like Huntington, including Ken Griffin, D.E. Shaw and Ray Dalio; each upped their stakes last quarter (check out Dalio’s top bets).

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