Huntington Bancshares Incorporated · NASDAQ:HBAN
Huntington Bancshares — Bank of America Merrill Lynch Future of Financials 2018 Conference
24 slides from Huntington Bancshares's conference presentation, Nov 5, 2018
Slide 1: Welcome - Huntington Bancshares Incorporated
Exhibit 99.1 Welcome Huntington Bancshares Incorporated Bank of America Merrill Lynch Future of Financials 2018 Conference November 5, 2018 ©2018 Huntington Bancshares Incorporated. All rights reserved. (Nasdaq: HBAN)
Slide 2: Disclaimer: Caution Regarding Forward-Looking Statements
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: Important Messages
Important Messages Building long-term shareholder value Consistent organic growth Maintain aggregate moderate-to-low risk appetite Minimize earnings volatility through the cycle Disciplined capital allocation Focus on top quartile financial performance relative to peers Strategic focus on Cu
Slide 4: 2018 September YTD Financial Highlights
2018 September YTD Financial Highlights Delivered top tier performance Midwest economies continue to perform Financial Results YTD 2018 well, with low unemployment, population Average loans increased $4.2 Billion, or 6%, year-over-year growth, and strong consumer & business confidence. Average c
Slide 5: Industry-leading Profitability Metrics
Industry-leading Profitability Metrics 2018 YTD Efficiency Ratio 2018 YTD ROTCE Peer 1 53.1% Peer 4 19.6% Peer 2 54.1% Peer 3 18.1% Peer 3 55.9% HBAN 18.0% HBAN 56.2% Peer 5 17.8% Peer 4 57.3% Peer 7 17.6% Peer 5 58.5% Peer 11 17.1% Peer 6 58.6% Peer 9 16.2% Peer 7 59.7% Peer 2 15.6% Peer 8 60.0% Pe
Slide 6: On Pace to Achieve All Long-Term Financial Goals in 2018
On Pace to Achieve All Long-Term Financial Goals in 2018 Long-Term YTD YTD 2015(1) Financial Goal (GAAP) (non-GAAP)(2) Revenue (FTE) Growth (Y/Y) 6% 4% - 6% 4% 4% Positive Operating Expense Growth (Y/Y) 5% (7%) 0% Leverage Efficiency Ratio 64% 56% - 59% 56% 56% NCO 18 bp 35 - 55 bp 18 bp 18 bp ROTCE
Slide 7: 2018 Full-Year Expectations
2018 Full-Year Expectations 2018 Outlook Average Loan Growth 5.5% - 6.5% Balance Average Deposit Growth 3.5% - 4.5% Sheet Average Core Deposit Growth 4.5% - 5.5% Revenue 4.0% - 4.5% Net Interest Margin (GAAP) (1) Up 2 bp - 4 bp Income Noninterest Expense (2.0%) - (2.5%) Statement Efficiency Ratio 56
Slide 8: Strategic Plan History - 2009
Strategic Plan History - 2009 Execution of strategic plans delivered results Themes Outcomes Disciplined risk management ✔ Industry-leading customer acquisition Fair Play consumer strategy ✔ Focus on deepening Optimal Customer relationships Relationship (OCR) strategy ✔ Customer-centric produc
Slide 9: Commercial Business Expansion
Commercial Business Expansion Commercial industry vertical expansion resulted in significant revenue growth $ in millions +18% $617 $646 CAGR $525 $412 $242 $247 $280 $125 $130 $186 +7% $260 $278 $140 $155 $140 $130 $130 $132 $145 $189 CAGR 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018E Core Mid
Slide 10: Strategic Plan History - 2014
Strategic Plan History - 2014 Execution of strategic plans delivered results Themes Outcomes Build scale ✔ Improved scale through organic growth and acquisition Strategic acquisition (FMER & Macquarie) Technology platform ✔ Accelerated achievement of investment long-term financial goals Data
Slide 11: FirstMerit Acquisition
FirstMerit Acquisition Deal economics driven by scale, density, and efficiency Achieved 42% FMER Cost Savings Deposit Market Share Rankings Illustrate (10% of Pro Forma Expenses) Franchise Density(1) % of Company MSAs Company Top 3 Ranking #1 Ranking Wells Fargo & Co. 65.5% 21.4% Bank of America Cor
Slide 12: 2018 Strategic Plan Overview
2018 Strategic Plan Overview Driving towards sustained top quartile performance Top-Line Revenue Growth Business Model Capital Evolution & Optimization Disruption Themes Continue to differentiate based on superior Customer Experience Deepen customer relationships Extend local advantage Drive
Slide 13: Technology Enables Our Strategy
Technology Enables Our Strategy 35% increase in technology development in 2018, 40% increase planned in 2019 Flexible Scale & Security ✔ Next generation data center and cyber – secure, flexible, and scalable cloud-based infrastructure Efficient Deployment ✔ Automation and DevOps – efficient deli
Slide 14: Leveraging Data & Analytics
Leveraging Data & Analytics Deep customer insights inform Customer Experience improvements Leveraging customer behaviors and perceptions: ✔ Enhance customer experience ✔ Segmentation-driven tailored experiences ✔ Focused product development ✔ Optimize staffing for customer service, expense, and co
Slide 15: End-to-End Digital Transformation
End-to-End Digital Transformation Technology enhancements driving modernized delivery model Improving and Simplifying Sales and Service Strategically Positioned Transforming Branch Next Gen Acquisition for Digital Future Efficiency and Deepening Reducing time to open Improved, real-time an accou
Slide 16: New Long-Term Financial Goals
New Long-Term Financial Goals Prior Long-Term New Long-Term Financial Goal Financial Goal Revenue (FTE) Growth (Y/Y) 4% - 6% 4% - 6% Positive Operating Positive Operating Expense Growth (Y/Y) Leverage Leverage Efficiency Ratio 56% - 59% 53% - 56% NCO 35 - 55 bp 35 - 55 bp ROTCE 15% - 17% (1) 17% - 2
Slide 17: Attractive Capital Return Profile and Priorities
Attractive Capital Return Profile and Priorities Targeting 70-80% total payout, including up to 45% dividend payout 112% 84% 70-80% 73% 68% 58% 30-35% 56% 47% 47% 38% 43% 23% 24% 21% 40-45% 43% 39% 34% 29% 30% 22% 26% YTD L-T 2012 2013 2014 2015 2016 2017 Target Dividend Payout Share Repurchase Payo
Slide 18: 2019 Full-Year Expectations
2019 Full-Year Expectations 2019 Outlook Average Loan Growth 4% - 6% Balance Sheet Average Deposit Growth 4% - 6% Revenue 5% - 8% Income Statement Noninterest Expense 3% - 5% Credit Net Charge-offs < 35 bp 18 Note: All metrics presented on a GAAP basis
Slide 19: Important Messages
Important Messages Building long-term shareholder value Consistent organic growth Maintain aggregate moderate-to-low risk appetite Minimize earnings volatility through the cycle Disciplined capital allocation Focus on top quartile financial performance relative to peers Strategic focus on Cu
Slide 20: Appendix
Appendix 20
Slide 21: Huntington's Peer Group
Huntington’s Peer Group Price / Total Total Total Market Dividend $ in millions Assets Deposits Loans Capitalization Consensus Consensus Tangible Yield 2018E 2019E Book PNC Financial Services Group, Inc. $380,080 $264,884 $223,053 $59,940 11.9x 11.2x 1.8x 2.9% BB&T Corporation 222,885 154,556 146,69
Slide 22: Reconciliation: Revenue, Noninterest Income, and Noninterest Expense Growth
Reconciliation Revenue, Noninterest Income, and Noninterest Expense Growth ($ in millions) GAAP Adjustment (1) Adjusted 2018 YTD Net interest income (FTE) $2,378 -- $2,378 2018 YTD Noninterest income $992 -- $992 2018 YTD Total Revenue $3,370 -- $3,370 2017 YTD Net interest income (FTE) $2,271 -- $2
Slide 23: Use of Non-GAAP Financial Measures
Do we consolidate this and Basis of Presentation next slide? 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 n
Slide 24: Basis of Presentation
Basis of Presentation Significant 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 associated with ordinary banking activities, are so unusually large that their outsiz
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