Huntington Bancshares Incorporated
CEO : Mr. Stephen D. Steinour
Quarterly earnings growth(YoY,%)
| Period | Revenue | Operating Income | EPS | Release Date |
|---|---|---|---|---|
| 2024 Q3 | 36.1% YoY | -6.0% | -5.7% | 2024-10-17 |
Zach Wasserman says,
Financial Performance
- Earnings per share reported at $0.33 for Q3, with notable items totaling $6 million having no impact on EPS.
- Return on Tangible Common Equity (ROTCE) was 16.2%, slightly adjusted to 16.3% when factoring out notable items.
- Pre-provision net revenue (PPNR) grew by 8.3% compared to the previous quarter, boosted by a 2.9% increase in net interest income and a 6.5% rise in fee revenues.
- Net interest income amounted to $1.364 billion, marking a 2.9% or $39 million increase, with expectations of record net interest income for 2025.
- Non-interest income rose by $32 million to $523 million, with a 12% increase in core underlying fee revenues.
Loan and Deposit Growth
- Average loan balances grew $3.7 billion (3.1%) year-over-year, with end-of-period loans showing a 1.6% increase, representing a 6.3% annualized growth rate.
- Deposits increased by $8.3 billion (5.6%) year-over-year; Q3 deposits grew by $2.9 billion (1.9%).
- Loan growth was driven by core businesses and new initiatives, totaling $700 million, including strong sectoral contributions.
- Deposit costs decreased by 7 basis points in September, aligning with a disciplined rate management strategy ahead of expected Fed rate cuts.
Guidance and Strategic Initiatives
- Loan growth for Q4 projected between 4% and 5% year-over-year, with similar expectations for deposit growth.
- Net interest income is expected to remain flat to up 1% in Q4 on a year-over-year basis; full-year guidance remains unchanged.
- Core fee revenues are anticipated to grow by 8% to 9% year-over-year in Q4, driven by growth in payments, wealth management, and capital markets.
- The merchant acquiring business is expected to add 1% to overall fee revenue growth in 2025.
Expenses and Capital Position
- GAAP non-interest expense increased by $13 million; core expenses aligned with expectations at $1.124 billion.
- Full-year core expense growth forecasted at approximately 4.5%, with Q4 expected to remain in the low single-digit year-over-year growth rate.
- Common Equity Tier-1 (CET1) ratio ended the quarter at 10.4%, with an adjusted CET1 ratio of 8.9%, growing 90 basis points from the previous year.
- Capital management strategy remains focused on maintaining capital ratios while supporting high-return loan growth.
Credit Quality and Risk Management
- Net charge-offs stable at 30 basis points for Q3, with allowance for credit losses decreasing by 2 basis points to 1.93%.
- Criticized asset ratio decreased by 9% from the prior quarter to 4.09%, while the non-performing asset ratio decreased by 1 basis point to 62 basis points.
- Credit performance aligns with expectations, with net charge-offs projected to remain stable in Q4.
Steve Steinour says,
Loan and Deposit Growth
- Huntington reported accelerated loan growth with average balances increasing by 3% from the previous year.
- End-of-period loans showed a significant annualized growth rate of 6.3%.
- Average deposit growth was robust, with an increase of $8.3 billion or 5.6% year-over-year.
- The bank has expanded into new geographies and commercial banking verticals to support this growth.
Net Interest Income and Fee Revenue
- The bank is executing a down beta playbook in response to declining Fed rates, aiming to deliver record net interest income in 2025.
- GAAP fee income increased by 3% year-over-year, with core fee revenues rising by an impressive 12%.
- Growth was driven by major focus areas: payments, wealth management, and capital markets.
- The merchant acquiring business is expected to add 1 percentage point to overall fee revenue growth.
Credit Performance
- Credit performance remained strong with stable net charge-offs and a reduction in non-performing and criticized assets.
- Consumer delinquency rates remained stable, with a focus on prime and super-prime exposures.
- Commercial customers displayed resilience with stable revenue and profitability trends through the rate cycle and inflationary changes.
Investment and Expansion Initiatives
- Significant investments have been made in the expansion of the company’s franchise and branch network into the Carolinas.
- There has been substantial investment in treasury management and in-house merchant acquiring capabilities.
- The commercial launch of the merchant acquiring business occurred in early October, following successful testing in September.
Outlook and Strategic Plans
- The company maintains a constructive outlook for sustained organic growth into 2025, buoyed by robust commercial lending pipelines.
- Late-stage commercial pipelines increased by 68% year-over-year as of the third quarter’s end.
- There is ongoing disciplined expense management coupled with a commitment to invest in revenue-producing initiatives.
| Period | Loan Growth | Deposit Growth | GAAP Fee Income Growth |
|---|---|---|---|
| Q3 2024 | 3% (average), 6.3% (annualized) | $8.3 billion or 5.6% | 3% |
Q & A sessions,
Net Interest Margin (NIM) and Interest Income Outlook
- Expectations for NIM are to be a few basis points lower into the fourth quarter, mainly due to a short-term timing impact before accelerating beta offsets the impacts on variable loans.
- The hedging program, which was dragging by about 12 basis points in Q3, is projected to reduce to 7 basis points in Q4 and flip to a 5 basis point benefit by the end of 2025.
- Anticipated record levels of net interest income (NII) in 2025 driven by NIM expansion and robust loan growth.
- Potential rate cuts: Forecast assumes a couple more rate cuts this quarter and five into next year, which could enhance short-term NIM and NII performance if fewer cuts occur.
Loan and Deposit Growth
- Average loan balances increased by $3.7 billion or 3.1% year-over-year, with new initiatives contributing $700 million in Q3 growth.
- Fourth-quarter loan growth is expected to be 4% to 5% year-over-year.
- Deposit growth continues strong, increasing by $8.3 billion or 5.6% year-over-year.
- Plans to optimize rates as the interest rate environment evolves, with deposit growth projected between 4% and 5% year-over-year in Q4.
Expense Management and Operating Leverage
- Expect core expense growth of approximately 4.5% for the full year, with a focus on driving efficiency and baseline expenses down.
- Continual process enhancements are targeting positive operating leverage and efficiency ratios through 2025.
- Strategic expenses align with investment in technology development, marketing, and new revenue initiatives while maintaining a low single-digit year-over-year expense growth rate exiting the year.
Asset Sensitivity and Credit Quality
- Projected reduction in asset sensitivity by more than 50% from Q2 by year-end 2024, moving to above 60% by mid-2025.
- Net charge-offs stabilized at 30 basis points in Q3, with allowance for credit losses at 1.93%, showing continuing strong credit quality.
- Continued dynamic management of the hedging program to achieve capital protection and NIM stabilization objectives.
Financial Performance Highlights
- Reported earnings per share of $0.33 in Q3, with no impact from $6 million in notable items.
- Return on tangible common equity (ROTCE) was 16.2% for Q3; adjusted ROTCE was 16.3%.
- Pre-provision net revenue increased by 8.3% from the prior quarter, driven by a 2.9% increase in net interest income and a 6.5% rise in fee revenues.
| Quarter | Loan Growth | Deposit Growth |
|---|---|---|
| Q3 2024 | 3.1% | 5.6% |
| Q4 2024 (Forecast) | 4% to 5% | 4% to 5% |
No bad stock 