Adds CFO's comments on loan growth, M&A paragraph 9-12

By Ateev Bhandari and Saeed Azhar

Oct 17 (Reuters) - Huntington Bancshares HBAN.O reported a rise in its third-quarter profit on Friday, as the regional U.S. lender benefited from increased interest income and fees across all divisions.

Shares of the Columbus, Ohio-based bank were up 1.2% in late afternoon trading.

The results come amid renewed scrutiny of U.S. banks' credit quality after two auto-industry bankruptcies and revelations of credit fraud, which have dragged lender stocks lower in recent weeks.

Provision for credit losses was $122 million for the three months ended September 30, up from $106 million a year earlier.

Its net interest income - the difference between what a bank earns as interest on loans and pays out on deposits - jumped 11% to $1.51 billion during the period, reflecting lower funding costs.

The Federal Reserve cut interest rates last month for the first time this year, providing lenders and borrowers relief on the cost of capital. Huntington's results mirror those of peers Citizens CFG.N and PNC Financial PNC.N, whose profits also jumped on higher interest income.

Noninterest income climbed 20% from a year ago, led by a 21% jump in capital markets and advisory fees as dealmaking made a triumphant comeback during the quarter when markets hit multiple record highs.

Customer deposit and loan fees rose 19% to $102 million, benefiting from higher loan commitment fees.

"We came into this year's thinking that loans would grow about 5%, our latest outlook is 8%. We thought deposits would grow in the low single digits and we're seeing almost 6% growth," Huntington CFO Zach Wasserman said.

Huntington in July agreed to buy Texas-based smaller rival Veritex Holdings VBTX.O, in a $1.9 billion all-stock deal, as it looks to expand its presence in the state that is fast emerging as a major financial hub.

"We are closing the Veritex deal upcoming Monday - a springboard for additional growth in Texas," he said.

When asked if they are looking for more targets, Wasserman said: "If we can find another organization that wants to be our partner and is a good cultural fit and a good strategic fit, and of course the financials of an acquisition makes sense, then maybe."

"But generally speaking we are focused on what we can control and that is organic growth."

Net income attributable to the bank rose to $629 million, or 41 cents per share, from $517 million, or 33 cents per share, a year earlier.

Huntington's stock is down more than 5.5% year to date, compared with a 6.4% decline in the KBW Regional Banking index .KRX.

(Reporting by Ateev Bhandari in Bengaluru and Saeed Azhar in New York; Editing by Tasim Zahid and Lisa Shumaker)

((Ateev.Bhandari@thomsonreuters.com;))