Huntington Bancshares Incorporated · NASDAQ:HBAN
Huntington Bancshares — Q3 2024 Earnings Presentation
57 slides from Huntington Bancshares's earnings presentation, Sep 3, 2024
Slide 1: 2024 Third Quarter Investor Presentation
Welcome.® 2024 Third Quarter Investor Presentation September 3, 2024 The Huntington National Bank is Member FDIC. ®, Huntington® and Huntington. Welcome.® are federally registered service marks of Huntington Bancshares Incorporated. ©2024 Huntington Bancshares Incorporated.
Slide 2: Disclaimer
Disclaimer CAUTION REGARDING FORWARD-LOOKING STATEMENTS The information contained or incorporated by reference in this presentation contains certain forward-looking statements, including, but not limited to, certain plans, expectations, goals, projections, and statements, which are not historical fa
Slide 3: Table of Contents
Table of Contents Huntington Overview 4 Capital Strategy 8 Capital Positioning 35 Position of Strength 8 Balance Sheet Management 36 Commercial Banking Overview 11 CET1 Comparison 38 Consumer & Regional Banking Overview 14 2024 Management Focus 16 Credit Overview 39 Asset Quality & Reserve 40 Financ
Slide 4: Overview
Overview (2) Huntington Welcome:
Slide 5: Huntington: A Purpose-Driven Company
Huntington: A Purpose-Driven Company OUR PURPOSE OUR VISION We make people’s lives To be the leading better, help businesses People-First, thrive, and strengthen the Digitally Powered Bank communities we serve Purpose and Vision Linked to Business Strategies Guided by Through-the-Cycle Aggregate Mod
Slide 6: Leading Midwest Regional Bank with Scaled, National Businesses
Leading Midwest Regional Bank with Scaled, National Businesses $196B $154B + 4.3% $124B + 2.6% 29 bps Assets Deposits YoY Deposit Growth Loans and Leases YoY Loan Growth NCO Ratio 2Q24 Established Market Leadership Compelling Results Industry Leading Consumer and Business Franchise MSA’s Top 5 Depos
Slide 7: Key Messages
Key Messages Executing organic growth strategies, leveraging position of strength, supported by robust 1 liquidity and capital base Expanding net interest income dollars driven by accelerating loan growth and sustained 2 deposit growth Driving fee revenues higher with major focus on acceleration of
Slide 8: Operating from a Position of Strength
Operating from a Position of Strength Deposits / Capital Credit Liquidity CET1 + ACL ACL Deposit Growth % of Loans Since 4Q21 12.2% 1.95% +7.9% Peer Peer Peer Median 12.1% Median 1.67% Median -7.2%(2) Adj. NCO Liquidity(3) as % of CET1(1) Since 4Q21 Uninsured Deposits Peer 1 Peer 8 HBAN 204% Peer 2
Slide 9: Capitalizing on Position of Strength
Capitalizing on Position of Strength Loan Growth Deposit Growth Capital & Credit YoY (ADB) YoY (ADB) Liquidity Quality $2.0B $8.0B Adj. CET1(1) ACL: +1.7% +5.5% 8.6% 1.95% +4.7% 2Q24 204% Uninsured Net Charge Offs Core Deposits +4.9% QoQ annualized Deposit Coverage(2) 0.29% Sustaining new customer
Slide 10: Segment Overview
Segment Overview (2) Huntington Welcome:
Slide 11: Commercial Bank | Comprehensive Strategy to Drive Organic Growth
Commercial Bank | Comprehensive Strategy to Drive Organic Growth Broad Product Set Combined with Deep Expertise $55B Loan Portfolio Specialty Banking Corporate Top 5 Franchise Lender(1) Middle Middle Asset CRE 22% and Specialty Top 10 Healthcare Lender(1) Market, Market Finance Corporate Banking
Slide 12: Seizing Opportunity and Adding Talented Colleagues
Seizing Opportunity and Adding Talented Colleagues Recent Expansions New Verticals Recent Expansion Initiatives Native Mortgage HOA, Title, Fund Healthcare American Servicing & Escrow Finance ABL Financial Deposits Deposits Services Offering new and High growth industry Financing gaming, exist
Slide 13: Expanding Deposit Focused Specialty Banking Expertise
Expanding Deposit Focused Specialty Banking Expertise Provides cash and Provides cash and Mortgage HOA, Title, treasury management, treasury management Servicing tri-party agreements, and escrow services to & Escrow Deposits and escrow services granular deposit base Deposits 14 colleague team
Slide 14: Consumer & Regional Banking (CRB)
Consumer & Regional Banking (CRB) $111B $69B $322M $31B …With Established Scale and Scope Deposits Consumer & Fee Wealth Business Loans Revenue(1) Advisory AUM #1 ~970 Leading Midwest Consumer and National Specialty Franchises Branch Share in Ohio and Branches in 11 States Michigan 3.2M 4.3M 379K Co
Slide 15: CRB | Growing Our Local Advantage through Enhanced Regional Banking Model
CRB | Growing Our Local Advantage through Enhanced Regional Banking Model 2023 Regional Banking Enhancements Regional Banking Model brings localized delivery and service differentiation, building on Strong Regional P&L accountability Local Advantage in existing geographies Eliminated dotted Aligned
Slide 16: 2024 Management Focus
2024 Management Focus Operate Leverage strong capital base to support balance sheet growth from Position of Strength Seize opportunities to attract talented bankers in new verticals and regions Accelerate high-quality loan growth with attractive return profile Drive Revenue Power fee revenue
Slide 17: Financial Update
Financial Update (2) Huntington Welcome:
Slide 18: 2024 Second Quarter Financial Performance
2024 Second Quarter Financial Performance Key Metrics GAAP Highlights EPS $0.30 GAAP EPS of $0.30 GAAP GAAP Adjusted(1) Notable Item: $6.2M FDIC DIF Special Assessment ROTCE 16.1% 16.2% Expanding profit across multiple metrics (ROTCE ex-AOCI) 12.6% 12.8% PPNR up 11.0% QoQ Loan QoQ YoY Adju
Slide 19: 2024 Outlook
2024 Outlook As of FY24 vs. FY23 Commentary Guidance as of Guidance as of 6/10/24 7/19/24 Average Loans Expect sustained sequential loan growth, Up 3% - 4% Up 3% - 4% FY23 Baseline = $120.9 billion inclusive of lower CRE balances Acquiring and deepening primary bank Average Deposits Up 3% - 4% Up 3%
Slide 20: Net Interest Income | Positioned for Expansion
Net Interest Income | Positioned for Expansion Net Interest Income (FTE) and Net Interest Margin (NIM) Highlights Net Interest Income Spread revenues expanded in 2Q24 as expected and are N… Net Interest Margin forecasted to continue expanding $1,357 $1,379 $1,327 Projecting continued sequential
Slide 21: Noninterest Income | Strategic Fee Revenue Focus Areas
Noninterest Income | Strategic Fee Revenue Focus Areas Fee Revenue Mix (2Q24) 1 Capital Markets & Advisory Capital Markets & Advisory Fees Expect sequential revenue increase quarterly throughout 2024 supported by $62 $69 $73 $52 $56 All Other pace of commercial loan originations as Noninterest Pay
Slide 22: Bolstering Payments through Expanded Merchant Acquiring
Bolstering Payments through Expanded Merchant Acquiring Prior In-house Model: Projected Outcome Out-sourced Model: Customer Penetration Provided Referrals to Integrated Capabilities with Third-party Service Banking Product Set >2x Outsourced sales and Create multi-channel acquisitions and servic
Slide 23: Noninterest Income | Diversified Fee Revenues
Noninterest Income | Diversified Fee Revenues Noninterest Income Trends Total Adjusted Noninterest Income by Category(1) 2Q23 3Q23 4Q23 1Q24 2Q24 Total Noninterest Income (GAAP) $495 $509 $405 $467 $491 Mark-to-market on pay-fixed swaptions $18 $33 $(74) - - $51 All Other(3) $52 $54 $44 CRTs(2) - -
Slide 24: Noninterest Expense | Disciplined Expense Management
Noninterest Expense | Disciplined Expense Management Noninterest Expense (NIE) Highlights Notable Items vs Linked Quarter NIE excluding Notable Items Reported NIE decreased $20 million $1,600 $1,400 $1,348 Adjusted NIE increased $13 million, or 1.2% driven by $1,090 $1,137 $1,117 higher personne
Slide 25: Loans and Leases | Balanced and Diversified Growth
Loans and Leases | Balanced and Diversified Growth Cumulative Loan Growth vs. Peers - Average Highlights Average balances Increased 1.2% QoQ, or 4.7% annualized +2.5% YoY growth accelerated to 1.7% in 2Q24 vs 1.2% Huntington in 1Q24 Peer Median Drivers of FY 2024 loan growth: 1Q23 2Q23 3Q23
Slide 26: Loans and Leases | Loan Growth Optimized for Return
Loans and Leases | Loan Growth Optimized for Return Commercial Average Loan and Lease Balances Highlights vs Linked Quarter +0.4% Average balances increased $0.7 billion, or 1.0% $68.7 $68.3 $69.0 $67.5 $67.6 vs Prior Year Average balances increased $0.3 billion, or 0.4% 2Q23 3Q23 4Q23 1Q24 2Q24
Slide 27: Loan Yields | Benefitting From Fixed Rate Re-Pricing
Loan Yields | Benefitting From Fixed Rate Re-Pricing Loan Portfolio Composition (as of 2Q24) Highlights Both variable rate and short-term loan portfolios benefited from Other Fixed asset repricing 24% Auto portfolio weighted-average life (WAL) less than 2 years Variable RV / Marine 50% Residen
Slide 28: Deposits | Continued Sequential Growth
Deposits | Continued Sequential Growth Deposit Balance Trend Highlights ADB EOP Core balances expanding consistently since YE22 +5.5% ADB Core average consumer have increased for +4.3% EOP 6 consecutive quarters $153.2 $153.6 $154.4 Balanced growth in consumer and commercial $148.0 $148.2 $148
Slide 29: Deposits | Differentiated Deposit Growth Compared to Peers
Deposits | Differentiated Deposit Growth Compared to Peers Cumulative Growth Rate of Deposits since 4Q21 - Average HBAN Peer Median (1) Top / Bottom Quartile(1) +7.9% +5.2% +5.9% +4.1% +1.9% +2.6% +2.4% +2.7% +2.3% +0.0% +0.4% 0.0% 0.2% -1.4% -4.5% -3.9% -5.0% -6.0% -6.7% -6.4% -7.0% -7.2% 4Q21 1Q22
Slide 30: Deposits | Non-Interest Bearing (NIB) Deposit Trends
Deposits | Non-Interest Bearing (NIB) Deposit Trends Deposit Balance - Average Highlights Interest Bearing Total deposit balances up 5.5% YoY Non-Interest Bearing $148.2 $149.7 $150.7 $153.6 NIB dollar decline slowing $145.6 Slowing mix-shift rate of change Leading penetration with TM relati
Slide 31: High Quality, Granular Deposit Franchise
High Quality, Granular Deposit Franchise Leading Percent of Insured Deposits(1) Diversification by Business Lines (2Q24) Banks at 2Q24 HBAN 70% Consumer Bank 1 62% BAC 62% 52% 24% Commercial Bank 2 62% Bank 3 59% C 58% 12% 6% WFC Business Banking Other 5% 1% 58% JPM 57% Vehicle Wealth Finance Bank 4
Slide 32: Commercial Deposit Relationships Bolstered by Off Balance Sheet Liquidity Management Solutions
Commercial Deposit Relationships Bolstered by Off Balance Sheet Liquidity Management Solutions Commercial Off B/S Overview Total Commercial Banking Segment Liquidity (Average) 2019: Enhanced off balance sheet liquidity YoY Annually $64.5 solutions for commercial customers $62.2 $62.7 Total +11% $58.
Slide 33: Securities Portfolio
Securities Portfolio Securities + Cash(1) - Average Highlights Cash Purchased $3.5 billion of securities at a 5.28% yield Securities $54.4 $52.6 $55.2 Incremental growth in short duration Treasuries (HQLA) $50.8 $50.8 $12.7 $11.0 $12.2 Securities yields of 4.29% increased 10bps QoQ and $10.8 $
Slide 34: Diversified Sources of Liquidity
Diversified Sources of Liquidity Robust Level of Available Liquidity(1) Highlights $ in billions Peer leading available liquidity as a percent of uninsured $91 $93 $94 $95 deposits highlighting the proactive approach to liquidity $11 $10 $12 $13 Cash risk management and strength of our granular de
Slide 35: Capital Positioning | Robust Capital Generation Power
Capital Positioning | Robust Capital Generation Power CET1 Ratio Highlights Target operating range 9-10% AOCI Adj. for Cash Flow Hedges Capital Priorities include: (1) CET1 Adj. 1) Fund Organic Growth 10.2% 10.2% 10.4% 2) Dividend 9.8% 10.1% 3) Buybacks/other 1.6% 1.7% 1.8% 1.7% 2.1% Expect to d
Slide 36: Balance Sheet Hedging Program Overview
Balance Sheet Hedging Program Overview Hedging Program Profile – Effective Swaps(1) Future Effective Swap Profile $6.0 $6.0 $6.0 NIM Protection: $5.0 $6.0 $5.5 $6.0 $6.0 Reduces volatility & $5.0 $5.0 $5.0 supports a narrow $20.1 $21.9 $22.4 $22.7 Floor Spreads corridor in lower rate $19.5 $16.8 $16
Slide 37: Accumulated Other Comprehensive Income Dollars
Accumulated Other Comprehensive Income Dollars AOCI Outlook(1) Highlights $ in billions Projecting ~35% total AOCI accretion by YE26 Dynamically managing hedge position subject to risk profile and market conditions $3.6 $2.9 $2.9 $2.7 $2.3 Components of Fair Value (FV) Mark $1.9 on Investment Se
Slide 38: CET1 Comparison versus Peers
CET1 Comparison versus Peers CET1 (Reported and Adjusted for ACL)(1) Peers at 2Q24 12.8% 12.8% 12.5% 12.2% 12.1% 12.1% 12.1% 1.2% 1.3% 11.8% 11.8% 11.6% 1.0% 11.4% CET1 + ACL 1.8% 1.5% 1.4% 1.8% 1.4% 1.3% 1.0% 1.2% ACL Impact 11.6% 11.5% 11.5% 10.4% 10.6% 10.7% 10.3% 10.4% 10.5% 10.6% 10.2% CET1 Rep
Slide 39: Credit
Credit (2) Huntington Welcome:
Slide 40: Asset Quality and Reserve | Top Tier Reserve Profile
Asset Quality and Reserve | Top Tier Reserve Profile Consistent top-tier credit performance, with Robust Client Selection loss coverage higher than peer median and Underwriting Consumer – 44% of total loans Net Charge-off Ratio Prime, super-prime focus with ~770 HBAN Peer Median Through the Cycle
Slide 41: Asset Quality | Criticized and NPA Ratios
Asset Quality | Criticized and NPA Ratios Criticized Asset Ratio 5.0 0% 4.8 0% 4.6 0% 4.81% 4.4 0% 4.62% 4.66% 4.2 0% 4.48% 4.47% 4.0 0% 4.34% 4.31% 4.07% 3.97% 3.97% 3.8 0% 3.6 0% 3.58% 3.4 0% 3.2 0% 3.44% 3.51% 3.50% 3.0 0% 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 NPA
Slide 42: Commercial Real Estate (CRE) Overview
Commercial Real Estate (CRE) Overview CRE Loans as % of Total Loans(1) Portfolio Characteristics Peer Median: 15% Peers at 2Q24 Well diversified portfolio with rigorous client selection Peer 1 9% CRE reserve coverage 4.5% vs peer median of 2.6% (2Q24) HBAN 10% Office reserve coverage of 12% Pe
Slide 43: CRE | Low Concentration and Top Tier Reserve Coverage
CRE | Low Concentration and Top Tier Reserve Coverage CRE Reserve Ratio vs. CRE as % of Total Loans Includes U.S. Listed Banks over $50B in assets as of 6/30/2024(1) 5.0% HBAN 4.0% Bank 3 CRE Reserve Ratio (2Q24) Bank 2 3.0% Bank 4 Bank 9 Bank 8 Bank 5 Bank 7 Bank 10 2.0% Bank 6 Bank 21 Bank 16 Bank
Slide 44: Commercial Real Estate (CRE) – Multi Family Overview
Commercial Real Estate (CRE) – Multi Family Overview Top 5 MSAs (2Q24) Management Approach Balance % of Total Metropolitan Statistical Area (MSA) ($ in millions) Multifamily Portfolio Sponsor-driven strategy focused on experienced Columbus, OH $346 7.6% owners and operators Chicago-Joliet-Napervil
Slide 45: Minimal Exposure to Leveraged Lending
Minimal Exposure to Leveraged Lending Loan Portfolio Composition (2Q24) Highlights $2.9 billion, or 2.3% of total loan balances, with a defined All Other portfolio concentration limit 97.7% HNB leveraged defined as: Senior leverage 3.0x, total leverage 4.0x The portfolio is built around our re
Slide 46: Auto – Proven Track Record of Strategic Growth
Auto – Proven Track Record of Strategic Growth Optimize through the Cycle Calibrating production to balance growth and returns Indirect Auto Production ($B) and New Origination Yield 7.1% 7.2% 6.9% 6.8% 6.8% 7.0 % 2.5 0 6.3% 5.9% $2.1 2.0 0 $1.9 $1.9 6.0 % $1.8 $1.8 $1.8 $1.7 $1.7 4.8% $1.6 $1.6 4.6
Slide 47: Auto | Strong Credit Performance Through the Cycle
Auto | Strong Credit Performance Through the Cycle Auto Loans Key Highlights of Credit Strength Auto % of Total Loans $13.6 $13.2 $12.2 $12.5 $12.9 $12.9 $12.5 $12.7 $13.2 Strong Credit Quality $11.0 Auto Loans and % $8.7 $9.5 Industry knowledge and focus on of Total Loans $6.7 18.3% 18.8% 16.4% 1
Slide 48: Appendix
Appendix (2) Huntington Welcome:
Slide 49: Basis of Presentation
Basis of Presentation Use of Non-GAAP Financial Measures This document contains GAAP financial measures and non-GAAP financial measures where management believes it to be helpful in understanding Huntington’s results of operations or financial position. Where non-GAAP financial measures are used, th
Slide 50: Basis of Presentation
Basis of Presentation Rounding Please note that columns of data in this document may not add due to rounding. Notable Items From time to time, revenue, expenses, or taxes are impacted by items judged by management to be outside of ordinary banking activities and/or by items that, while they may be a
Slide 51: Non-GAAP Reconciliation
Non-GAAP Reconciliation Pre-Provision Net Revenue (PPNR) Pre-Provision Net Revenue 2Q23 3Q23 4Q23 1Q24 2Q24 ($ in millions) Total revenue (GAAP) $1,841 $1,877 $1,721 $1,754 $1,803 FTE adjustment 11 11 11 13 13 Total revenue (FTE) A 1,852 1,888 1,732 1,767 1,816 Less: net gain / (loss) on securities
Slide 52: Non-GAAP Reconciliation
Non-GAAP Reconciliation Average Tangible Common Equity, ROTCE ($ in millions) 2Q23 3Q23 4Q23 1Q24 2Q24 Average common shareholders’ equity $16,359 $16,256 $16,275 $16,819 $16,861 Less: intangible assets and goodwill 5,734 5,722 5,710 5,697 5,685 Add: net tax effect of intangible assets 36 34 32 29 2
Slide 53: Non-GAAP Reconciliation
Non-GAAP Reconciliation Adjusted Noninterest Expense, Efficiency Efficiency Ratio ($ in millions) – Pre-tax 2Q23 3Q23 4Q23 1Q24 2Q24 Noninterest expense (GAAP) $1,050 $1,090 $1,348 $1,137 $1,117 Less: intangible amortization 13 12 12 12 12 Noninterest expense less amortization of intangibles (A) $1,
Slide 54: Non-GAAP Reconciliation
Non-GAAP Reconciliation Common Equity Tier 1 (CET1) CET1 – AOCI Impact ($ in millions) 2Q23 3Q23 4Q23 1Q24 2Q24 Common Equity Tier 1 (A) $13,885 $14,211 $14,212 $14,283 $14,521 Add: accumulated other (3,006) (3,622) (2,676) (2,879) (2,911) Comprehensive income (loss) (AOCI) Less: cash flow hedge (61
Slide 55: Non-GAAP Reconciliation
Non-GAAP Reconciliation Tangible common equity ratio, Tangible book value per share Tangible Common Equity Ratio ($ in millions) 2Q23 3Q23 4Q23 1Q24 2Q24 Huntington shareholders’ equity $18,788 $18,483 $19,353 $19,322 $19,515 Less: preferred stock 2,484 2,484 2,394 2,394 2,394 Common shareholders’ e
Slide 56: Notes
Notes Slide 6: (1) All stats as of 2Q24 (EOP) unless otherwise noted. (2) By number (units) of 7(a) loans nationally. (3) Based on EOP loan balances since 2010. (4) S&P Global market share data as of 6/30/2023 – Peers include: CFG, CMA, FITB, KEY, MTB, PNC, RF, TFC, USB, ZION. (5) Equipment Leasing
Slide 57: Notes
Notes Slide 23: (1) Non-GAAP; excludes effect of MTM on PF Swaptions and CRTs (“Credit Risk Transfers”) (2) CRTs include CLN (“Credit Linked Note”) executed in 2Q24 related to an ~$4 billion portfolio of prime auto loans. The transaction reduced risk-weighted assets by ~$3.0 billion, benefitting CET
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