Huntington Bancshares Incorporated · NASDAQ:HBAN
Huntington Bancshares — Q3 2021 Earnings Presentation
40 slides from Huntington Bancshares's earnings presentation, Oct 28, 2021
Slide 1: 2021 Third Quarter Earnings Review
2021 Third Quarter Earnings Review October 28, 2021 The Huntington National Bank is Member FDIC. ®, Huntington® and Huntington. Welcome.® are federally registered service marks of Huntington Bancshares Incorporated. ©2021 Huntington Bancshares Incorporated.
Slide 2: Disclaimer
Disclaimer CAUTION REGARDING FORWARD-LOOKING STATEMENTS This communication contains certain forward-looking statements, including, but not limited to, certain plans, expectations, goals, projections, and statements, which are not historical facts and are subject to numerous assumptions, risks, and u
Slide 3: Building the Leading People-First, Digitally Powered Bank
Building the Leading People-First, Digitally Powered Bank Creating a sustainable competitive advantage with focused investment in customer experience, product differentiation, and key growth initiatives We are a Purpose-driven company Our Purpose is to make people’s lives better, help businesses t
Slide 4: 2021 Third Quarter Highlights
2021 Third Quarter Highlights Driving organic growth while delivering on transaction economics Core system conversion and branch consolidations completed subsequent to quarter-end TCF Finalized majority of actions driving achievement of all projected cost synergies Integration Revenue synergy
Slide 5: TCF Integration Update
TCF Integration Update Delivering on expense synergies and accelerated revenue synergy initiatives Jun 9: Dec 13: Transaction Oct 9-11: Announced closed Core system acquisition consolidation Shareholder Regulatory Phase 1 approval approval branch Branch Oct: Phase 2 & 3 closures Divestiture branch c
Slide 6: 2021 Third Quarter Financial Highlights
2021 Third Quarter Financial Highlights Solid core business performance and reflects full-quarter benefit from acquisition EPS ROTCE Efficiency Ratio GAAP Reported $0.22 11.5% 74.9% Adjusted $0.35 17.9% 61.2% Reported ending loan balances down $1.3 billion versus prior quarter, impacted by PPP for
Slide 7: Loans and Leases
Loans and Leases Increasing momentum in production and pipelines Total Loan and Lease Balances Loan and Lease Walk from Prior Quarter Average Balances Ending Balances $109.9 $111.9 $110.6 $3.3 $4.2 $2.5 ($1.7) $0.2 $0.1 $87.4 $5.0 $106.6 $107.7 $108.1 $111.9 $110.6 $82.4 2Q21 3Q21 2Q21 3Q21 2Q21 End
Slide 8: Deposits
Deposits Ending balances stable, impacted by branch divestiture Total Deposit Balances Deposit Walk from Prior Quarter Average Balances Ending Balances $142.3 $142.8 $141.9 $0.3 $112.7 $(0.8) $(0.4) $142.8 $141.9 2Q21 Average 3Q21 2Q21 Ending 3Q21 2Q21 Ending Divestiture CDs All Other 3Q21 Ending Hi
Slide 9: Net Interest Income
Net Interest Income C Net interest income, NIM increased versus prior quarter driven by acquired assets Net Interest Income (FTE) Highlights $ in millions Vs Linked Quarter $1,167 $36 4.2 0% Net interest income supported by average earning $46 asset growth and purchase accounting accretion $978 4.
Slide 10: Noninterest Income
Noninterest Income Full quarter acquisition impact, strength in strategic focus areas Noninterest Income Highlights $ in millions $535 Vs Linked Quarter Noninterest income totaled $535 million, an increase of $91 million or 20%, versus prior quarter primarily reflecting the full quarter impact fro
Slide 11: Noninterest Expense
Noninterest Expense Full quarter of TCF expenses, focused on realizing expense synergies Noninterest Expense Highlights $ in millions Vs Linked Quarter $1,289 Noninterest expense of $1.3 billion, an increase of $1,072 $234 $217 million versus prior quarter driven by a full quarter impact of TCF ex
Slide 12: Capital Positioning and Management
Capital Positioning and Management Managing capital consistent with our aggregate moderate-to-low risk appetite and target operating range Total Risk-Based Capital Ratios(1) Highlights 15.3% Share Repurchase Update: 14.4% 14.5% 14.2% $ in millions 13.6% 1.9% 2.0% 2.0% 1.9% 3.0% 2.2% 2.5% 2.5% 2.3% 1
Slide 13: Allowance for Credit Losses (ACL)
Allowance for Credit Losses (ACL) Improving credit metrics and economic outlook drives continued reserve release Allowance for Credit Losses (ACL) Highlights $ in millions $2,322 Multiple scenarios utilized while using August baseline $2,205 as foundation $1,878 $1,866 $1,741 $117 million reserv
Slide 14: Asset Quality and Reserve Trends
Asset Quality and Reserve Trends Underlying asset quality trends positive, continuing proactive portfolio management Net Charge-off Ratio ACL and ALLL Ratios 0.56% 0.55% 2.31% 2.29% 2.17% 2.08% 1.99% 0.32% 2.21% 2.22% 0.28% 2.12% 0.20% 1.98% 1.91% 3Q20 4Q20 1Q21 2Q21 3Q21 3Q20 4Q20 1Q21 2Q21 3Q21 AC
Slide 15: Focus on Achieving Medium-Term Financial Goals
Focus on Achieving Medium-Term Financial Goals Driving organic revenue growth across all businesses to deliver top quartile financial performance Return on Tangible Efficiency Positive CET1 Common Equity Ratio Operating Ratio Leverage 17%+ 56% 9 – 10% Targeting annual revenue growth slightly above
Slide 16: Non-GAAP Reconciliation
Non-GAAP Reconciliation Tangible common equity, ROTCE ($ in millions) 3Q21 Average common shareholders’ equity $17,428 Less: intangible assets and goodwill 5,577 Add: net tax effect of intangible assets 55 Average tangible common shareholders’ equity (A) $11,905 Net income available to common $333 A
Slide 17: Non-GAAP Reconciliation
Non-GAAP Reconciliation Noninterest expense, Efficiency Ratio, EPS Efficiency Ratio ($ in millions) – Pre-tax 1Q21 2Q21 3Q21 Noninterest expense (GAAP) $793 $1,072 $1,289 Less: intangible amortization 10 11 13 Noninterest expense less amortization of intangibles (A) $783 $1,062 $1,276 Total Revenue
Slide 18: Non-GAAP Reconciliation
Non-GAAP Reconciliation ACL ratio ex. PPP loans ACL ratio ex. PPP loans 9/30/20 PPP 9/30/20 12/31/20 PPP 12/31/20 3/31/21 PPP 3/31/21 ($ in millions) GAAP Adj. ex. PPP GAAP Adj. ex. PPP GAAP Adj. ex. PPP Allowance for credit losses (ACL) (C) $1,878 $3 $1,875 $1,866 $3 $1,863 $1,741 $3 $1,738 Total l
Slide 19: Appendix
j/ \/ \. ie x Ss 2 Se 2 E fol =
Slide 20: Basis of Presentation
Basis of Presentation Use of Non-GAAP Financial Measures This document contains GAAP financial measures and non-GAAP financial measures where management believes it to be helpful in understanding Huntington’s results of operations or financial position. Where non-GAAP financial measures are used, th
Slide 21: Basis of Presentation
Basis of Presentation Rounding Please note that columns of data in this document may not add due to rounding. Notable Items From time to time, revenue, expenses, or taxes are impacted by items judged by management to be outside of ordinary banking activities and/or by items that, while they may be a
Slide 22: Table of Contents
Table of Contents Revenue Synergies 23 Purchase Accounting Detail 24 Digital Metrics 25 Mortgage Banking Noninterest Income 26 Balance Sheet 27 Investment Securities 28 Consumer Originations Detail 29 Wholesale Funding 32 Shares Outstanding 33 Credit Quality Review 34 Commercial Credit 35 Consumer C
Slide 23: Revenue Synergy Opportunities
Revenue Synergy Opportunities Leveraging expertise and capabilities to expand and deepen relationships Expanded markets and increased capacity and scale Middle Market, Mid-Corporate and Deepening via enhanced treasury management and capital markets capabilities Specialty Expansion 1 Introduce
Slide 24: Impact of Purchase Accounting
Impact of Purchase Accounting Purchase Accounting Accretion (PAA) Summary Actuals Projected ($ in millions) 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 Loans and Leases $8 $25 $24 $13 $8 $7 $7 Long-term Debt 1 7 4 4 4 3 3 Deposits 1 4 1 -- -- -- -- Other (0) (0) 0 0 0 0 0 Subtotal: Net Interest Income 10 36
Slide 25: Consumer and Business Banking Digital Metrics
Consumer and Business Banking Digital Metrics Digital Engagement Digital Originations Average Monthly Active Digital Users(1) New Consumer Deposit Accounts(3) (Millions) Includes Checking, Savings, MMA +8% YoY 2.42 49% 49% 2.39 44% 2.37 40% 2.26 28% 2.23 3Q20 4Q20 1Q21 2Q21 3Q21 3Q20 4Q20 1Q21 2Q21
Slide 26: Mortgage Banking Noninterest Income Summary
Mortgage Banking Noninterest Income Summary $145 Mortgage Banking Income (MBI) Salable Production Mix $122 $125 $2 $120 $100 $105 $90 $5 47% $81 54% 56% 51% $85 $95 $95 $67 68% $84 $65 $69 $45 4.67% $25 3.85% 53% 3.55% 46% 44% 49% 3.27% $5 3.01% 32% $(2) $(3) $(15) 3Q20 4Q20 1Q21 2Q21 3Q21 3Q20 4Q20
Slide 27: Balance Sheet
Balance Sheet (2) Huntington Welcome: exe
Slide 28: Securities Overview
Securities Overview Securities serve a dual purpose; liquidity and interest rate risk management Total Ending Securities Highlights $ in billions Securities Securities portfolio increased $3.7 billion versus prior quarter, with a $38.8 $35.1 focus on short duration securities $27.7 Mix of net pu
Slide 29: Automobile – Production Trend
Automobile – Production Trend Originations 3Q21 2Q21 1Q21 4Q20 3Q20 2Q20 1Q20 4Q19 3Q19 Amount ($ in billions) $1.8 $1.9 $1.4 $1.4 $1.7 $1.2 $1.6 $1.9 $1.6 % new vehicles 38% 47% 49% 54% 48% 36% 47% 52% 46% Avg. LTV 85% 84% 87% 86% 89% 90% 89% 88% 90% Avg. FICO 772 770 771 774 777 770 778 781 773 Vi
Slide 30: Vehicle Finance – Origination Trends
Vehicle Finance – Origination Trends Auto Loans: 2021 YTD 2020 2019 2018 2017 2016 2015 2014 Originations ($ in billions) $5.1 $5.9 $6.1 $5.8 $6.2 $5.8 $5.2 $5.2 % new vehicles 44% 47% 46% 47% 50% 49% 48% 49% Avg. LTV(1) 85% 89% 90% 89% 88% 89% 90% 89% Avg. FICO 771 775 772 766 767 765 764 764 Weigh
Slide 31: Residential Mortgage and Home Equity Origination Trends
Residential Mortgage and Home Equity Origination Trends Residential Mortgage: 2021 YTD 2020 2019 2018 2017 2016 2015 2014 Originations ($ in billions) $5.1 $4.7 $2.9 $2.9 $2.7 $1.9 $1.5 $1.2 Avg. LTV 76% 77% 81% 83% 84% 84% 83% 83% Avg. FICO 768 767 761 758 760 751 756 754 Home Equity: 2021 YTD 2020
Slide 32: Stable, Diversified Sources of Wholesale Funds
Stable, Diversified Sources of Wholesale Funds Historical issuance, smooth runoff profile and optimization of funding costs Wholesale Funding Issuances and Maturities Quarterly Wholesale Maturities through 2025 ($ in billions) ($ in billions) HoldCo Sr. HoldCo Sub 2.0 1.9 0.3 Bank Sr. 1.6 0.1 1.3 1.
Slide 33: Change in Common Shares Outstanding
Change in Common Shares Outstanding Repurchased 33.4 million shares as of September 30, 2021 $300 million remaining under share repurchase authorization of $800 million Share count in millions 3Q21 2Q21 1Q21 4Q20 3Q20 2Q20 1Q20 4Q19 Beginning shares outstanding 1,477 1,018 1,017 1,017 1,017 1,01
Slide 34: Credit Quality
j/ \/ \. > £ : To e?: 5 Ss oe} 2: ~ s re} & o =
Slide 35: Commercial Credit Quality Review
Commercial Credit Quality Review Commercial and Industrial: 3Q21 2Q21 1Q21 4Q20 3Q20 Period end balance(1) ($ in billions) $40.4 $41.9 $32.3 $33.2 $32.6 30+ days PD and accruing 0.18% 0.18% 0.03% 0.08% 0.09% 90+ days PD and accruing 0.02% 0.00% 0.00% 0.00% 0.00% NCOs (annualized) 0.28% 0.43% 0.35% 0
Slide 36: Consumer Credit Quality Review
Consumer Credit Quality Review Home Equity: 3Q21 2Q21 1Q21 4Q20 3Q20 Period end balance ($ in billions) $10.9 $11.3 $8.7 $8.9 $8.9 30+ days PD and accruing 0.57% 0.55% 0.47% 0.68% 0.47% 90+ days PD and accruing 0.09% 0.08% 0.11% 0.16% 0.12% NCOs (annualized) -0.08% -0.08% 0.02% 0.01% -0.02% NALs 0.8
Slide 37: Consumer Credit Quality Review, continued
Consumer Credit Quality Review, continued Automobile: 3Q21 2Q21 1Q21 4Q20 3Q20 Period end balance ($ in billions) $13.3 $13.2 $12.8 $12.8 $12.9 30+ days PD and accruing 0.59% 0.52% 0.53% 0.90% 0.69% 90+ days PD and accruing 0.04% 0.03% 0.04% 0.07% 0.07% NCOs (annualized) -0.10% -0.13% 0.05% 0.21% 0.
Slide 38: Delinquencies
Delinquencies Commercial (30+ Days(1)) Commercial (90+ Days(1)) 0.33% 0.26% 0.19% 0.12% 0.15% 0.02% 0.02% 0.02% 0.02% 0.03% 3Q20 4Q20 1Q21 2Q21 3Q21 3Q20 4Q20 1Q21 2Q21 3Q21 Consumer (30+ Days(2)) Consumer (90+ Days(2)) 2.29% 2.28% 1.18% 1.09% 1.06% 1.88% 1.49% 1.26% 1.30% 0.73% 1.11% 0.63% 0.93% 0.
Slide 39: Criticized Commercial Loan Analysis
Criticized Commercial Loan Analysis End of Period ($ in millions) 3Q21 2Q21 1Q21 4Q20 3Q20 Criticized beginning-of-period $4,488 $2,871 $2,830 $3,173 $3,601 TCF Additions (Net) 0 1,745 0 0 0 Additions / increases 1,046 405 339 473 355 Advances 107 108 214 86 120 Upgrades to “Pass” (532) (253) (148)
Slide 40: Notes
Notes Slide 9: (1) Disclosed PPP impact only refers to legacy Huntington PPP. Legacy TCF PPP deferred fees were zeroed out as part of the purchase accounting process, and all TCF PPP loans have a purchase accounting discount that is included in PAA metrics Slide 12: (1) September 30, 2021 figures ar
Huntington Bancshares — Q3 2021 Earnings Presentation on 6ix