• Earnings Per Share (EPS): $0.33 for the third quarter.
• Return on Tangible Common Equity (ROTCE): 16.2% for the quarter; adjusted ROTCE was 16.3%.
• Pre-Provision Net Revenue (PPNR): Increased by 8.3% from the prior quarter.
• Net Interest Income: Increased by 2.9% to $1.364 billion.
• Net Interest Margin (NIM): 2.98% for the third quarter.
• Average Loan Balances: Increased by $3.7 billion or 3.1% year-over-year.
• Average Deposits: Increased by $8.3 billion or 5.6% year-over-year.
• Net Charge-Offs: 30 basis points.
• Allowance for Credit Losses: Decreased by 2 basis points to 1.93%.
• Adjusted Common Equity Tier 1 (CET1): 8.9%, increased by 30 basis points from last quarter.
• Tangible Book Value Per Share: Increased by 21.5% year-over-year.
• Noninterest Income: Increased by $32 million to $523 million.
• Core Fee Revenues: Increased by 12% year-over-year.
• Noninterest Expense: Increased by $13 million; core expenses at $1.124 billion.
• Common Equity Tier 1 (CET1): 10.4%.
• Criticized Asset Ratio: Decreased by 9% to 4.09%.
• Nonperforming Asset Ratio: Declined by 1 basis point to 62 basis points.

• Warning! GuruFocus has detected 9 Warning Signs with HBAN.

Release Date: October 17, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Huntington Bancshares Inc (NASDAQ:HBAN) reported strong third-quarter results with accelerated loan growth and sustained deposit growth.
• The company is actively managing its balance sheet and expects to deliver record net interest income in 2025.
• Fee revenues increased by 12% year-over-year, driven by payments, wealth management, and capital markets.
• Credit performance remained strong with stable net charge-offs and lower nonperforming and criticized assets.
• The company announced a successful expansion into the Carolinas, which is tracking better than initial expectations.

Negative Points

• Net interest income for the fourth quarter is expected to be flat to slightly down compared to the third quarter.
• There is a short-term timing difference between reducing deposit costs and the reduction in variable loan yields.
• The company is facing a dynamic interest rate environment, which could impact net interest income projections.
• Despite strong deposit growth, there is a need to manage high-cost CDs to optimize net interest income.
• The company is experiencing a seasonal decline in distribution finance, impacting loan growth.

Q & A Highlights

Q: Can you explain the guidance for 4Q NII, which seems to imply it should be flat to slightly down versus 3Q? A: Zachary Wasserman, CFO, explained that the flat to slightly down NII is due to a timing difference between reducing deposit costs and the reduction in variable yields. The expectation is that deposit costs will continue to decrease into the fourth quarter, but the early part of the quarter might see a slight dip due to anticipated rate cuts.

Q: Why not pay down some high-cost CDs to help NII and have deposits grow slower than loans? A: Wasserman noted that the plan is to leverage strong deposit growth to drive down funding costs. The strategy is to decelerate deposit growth while accelerating loan growth, with expectations for flat deposit balances quarter-to-quarter, allowing for optimization of rates.

Q: How does the sensitivity to rate cuts affect your NII outlook? A: Wasserman stated that fewer rate cuts would result in better NIM and NII performance. However, the impact also depends on the reasons behind the rate cuts and market expectations. More rate cuts could create short-term headwinds but might benefit long-term deposit pricing.

Q: Can you provide more details on the merchant acquiring business and its expected impact on fee revenues? A: Wasserman mentioned that the merchant acquiring business, now in-sourced, is expected to generate approximately $50 million in revenue next year, doubling from the previous outsourced model, contributing about 1% to overall fee revenue growth.

Q: What are the trends and strategy in the auto business, and how do you view credit trends given shifting auto values? A: Wasserman highlighted that auto loans are a strong asset class for Huntington, with prime and super prime credit quality. Brendan Lawlor, Chief Credit Officer, added that delinquency and charge-off rates remain stable, reflecting disciplined customer selection and strong credit management.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.