Huntington Bancshares Incorporated HBAN reported third-quarter 2024 adjusted earnings per share (EPS) of 33 cents, which surpassed the Zacks Consensus Estimate of 30 cents. In the prior-year quarter, the company reported EPS of 35 cents.

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Shares of the company lost 4.2% in the pre-market trading despite the earnings beat. However, a full day’s trading session will depict a clearer picture.

Results have reflected improvements in fee income and average loan and deposit balances. The strong capital position was another positive. However, a fall in net interest income (NII) and elevated expenses were headwinds.

The company reported a net income attributable to common shareholders (GAAP basis) of $517 million in the quarter, down 5.5% year over year.

HBAN’s Revenues Stable, Expenses Rise

Total revenues (on a fully taxable-equivalent or FTE basis) remained stable year over year at $1.88 billion in the third quarter. The top line surpassed the Zacks Consensus Estimate of $1.86 billion.

NII (FTE basis) was $1.36 billion, down 1.1% from the prior-year quarter’s tally. The downside was due to a decline in the net interest margin (NIM) and an increase in average interest-bearing liabilities, partially offset by a rise in average earning assets. NIM contracted 22 basis points to 2.98% in the reported quarter.

Non-interest income moved up 2.8% year over year to $523 million. The upside was driven by a rise in payments and cash management revenues, wealth and asset management revenues, customer deposit and loan fees, capital markets and advisory fees, mortgage banking income, bank-owned life insurance income, gain on sale of loans, partially offset by lower other non-interest income. 

Non-interest expenses were up 3.7% year over year to $1.13 billion. The uptick was mainly due to a rise in personnel costs, outside data processing and other services, and marketing fees. 

The efficiency ratio was 59.4%, up from the year-ago quarter’s 55.9%. A rise in the efficiency ratio indicates a reduction in profitability.

HBAN’s Loans and Deposits Increase

As of Sept.30, 2024, average loans and leases at Huntington inched up nearly 1% sequentially to $124.51 billion. Average core deposits increased 1.6% to $149.73 billion.

HBAN’s Credit Quality Deteriorates

Net charge-offs were $93 million or an annualized 0.30% of average total loans and leases in the reported quarter, up from $79 million or 0.24% in prior-year quarter. The quarter-end allowance for credit losses increased 2.9% to $2.44 from the prior-year quarter.

Total non-performing assets were $784 million as of Sept. 30, 2024, up 23.7% from the prior-year quarter. In the third quarter, the company recorded a provision for credit losses of $106 million, which increased 7.1% from the year-ago quarter.

HBAN’s Capital Ratios Improve

The common equity tier 1 risk-based capital ratio was 10.4% in the third quarter, up from 10.1% in the year-ago period. The regulatory Tier 1 risk-based capital ratio was 12.1%, up from 11.9% in the comparable period in 2023. The tangible common equity to tangible assets ratio in the second quarter was 6.4%, up from 5.7% in the year-ago quarter.

Our View on HBAN

Huntington’s inorganic expansion moves are likely to bolster its revenue growth in the near term. Also, its efforts to expand its commercial banking capabilities and enhance its footprint in key growth markets will support its financials in the long run. However, its elevated non-interest expenses are expected to keep the bottom line under pressure in the upcoming period.

Huntington Bancshares Incorporated Price, Consensus and EPS Surprise

Huntington Bancshares Incorporated price-consensus-eps-surprise-chart | Huntington Bancshares Incorporated Quote

Currently, Huntington carries a Zacks Rank #3 (Hold). You can see  the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Banks

First Horizon Corporation’s FHN third-quarter adjusted earnings per share (excluding notable items) of 42 cents surpassed the Zacks Consensus Estimate of 38 cents. Moreover, the figure increased 55.6% year over year. 

FHN’s results benefited from a rise in NII and non-interest income. Also, an increase in deposits and lower provisions were other positives. However, a rise in expenses and a fall in loan balances were major headwinds.

Citizens Financial Group CFG reported third-quarter 2024 adjusted EPS of 79 cents, which matched the Zacks Consensus Estimate. The bottom line declined from 85 cents reported in the year-ago quarter.

CFG’s Results benefited from a rise in non-interest income, along with reduced expenses. Additionally, a strong capital position was a positive factor. However, lower NII and declining loan and deposit balances were major headwinds.

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