Huntington Bancshares Incorporated · NASDAQ:HBAN
Huntington Bancshares — Q1 2024 Earnings Presentation
57 slides from Huntington Bancshares's earnings presentation, May 23, 2024
Slide 1: 2024 Second Quarter Investor Presentation
Welcome.® 2024 Second Quarter Investor Presentation May 23, 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 9 Capital Positioning 36 Position of Strength 9 Balance Sheet Management 37 Commercial Banking Overview 12 CET1 Comparison 39 Consumer & Regional Banking Overview 15 2024 Management Focus 18 Credit Overview 40 Asset Quality & Reserve 41 Financ
Slide 4: Overview
Overview (4) 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 $194B $153B $123B + 1.3% 26 bps Assets Deposits Loans and Leases YoY Loan Growth NCO Ratio LTM Established Market Leadership Compelling Results Industry Leading Consumer and Business Franchise MSA’s Top 5 Deposit Top 20 U.S. Bank Rank6
Slide 7: Winning with Differentiation
Winning with Differentiation Technology & Growth Culture Brand Opportunities Innovation • Top-tier Talent • Trust and NPS • Award Winning Digital • Strategic Growth Initiatives • Colleagues are • Local Model • Continuous Launch of our Brand Disruptive Products • TCF Revenue Synergies • Expertise and
Slide 8: Key Messages
Key Messages Executing organic growth strategies, leveraging position of strength, supported by robust 1 liquidity and capital base Delivering loan growth and sustaining momentum in deposit gathering with a 2 well-managed beta Driving sequential net interest income and fee income expansion from firs
Slide 9: 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 12.0% 1.97% +5.2% Peer Peer Peer Median 11.7% Median 1.66% Median -7.0%(2) Adj. NCO Liquidity(3) as % of CET1(1) Since 4Q21 Uninsured Deposits Peer 1 Peer 5 HBAN 205% Peer 2
Slide 10: Capitalizing on Position of Strength
Capitalizing on Position of Strength Loan Growth Deposit Growth Capital & Credit YoY (EOP) YoY (EOP) Liquidity Quality $1.6B $7.9B Adj. CET1(1) ACL: +1.3% +5.5% 8.5% 1.97% 4.3% CAGR 205% Uninsured Net Charge Offs (1Q22-1Q24) Core Deposits +4.9% Deposit Coverage 0.30% Sustaining new customer acquis
Slide 11: Segment Overview
Segment Overview (4) Huntington Welcome:
Slide 12: 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 21% and Specialty Top 10 Healthcare Lender(1) Market, Market Finance 36% Banking Corpo
Slide 13: Commercial Bank | Seizing Opportunity in the Carolinas
Commercial Bank | Seizing Opportunity in the Carolinas Well-positioned to gain share in attractive, high-growth markets Raleigh / Triad Durham 5 regions staffed with experienced bankers Charlotte Building on existing coverage of corporate and specialty banking Upstate S.C. Managing relationshi
Slide 14: Commercial Bank | Further Expanding Presence in Texas
Commercial Bank | Further Expanding Presence in Texas Increasing Resources to Gain Market Share Established, 10+ year presence, with demonstrated track record Building upon existing, national businesses operating across the state, including: Asset Finance Capital Markets / Capstone Corpora
Slide 15: Consumer & Regional Banking (CRB)
Consumer & Regional Banking (CRB) $112B $67B $308M $31B …With Established Scale and Scope(2) 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
Slide 16: CRB | Growing Primary Relationships Supports Core Deposit Base
CRB | Growing Primary Relationships Supports Core Deposit Base Strong Acquisition Growth Primary Relationships Earned through Product Innovation through Customer Focus 3.2M Huntington “Fair Play Banking” and Past Innovations 1 #1 In Customer Satisfaction with Mobile Checking Households Banking Apps
Slide 17: 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 18: 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 19: Financial Update
Financial Update (4) Huntington Welcome:
Slide 20: 2024 First Quarter Financial Performance
2024 First Quarter Financial Performance Key Metrics Highlights GAAP Adjusted(1) EPS $0.26 $0.28 GAAP EPS of $0.26; adjusted EPS of $0.28 excluding Notable Items Notable Items: $0.02, or $39 million, includes $32 GAAP Adjusted(1) million from updated estimates to the FDIC DIF special assessment
Slide 21: 2024 Outlook
2024 Outlook FY24 vs. FY23 Commentary Guidance as of Guidance as of 1/19/24 4/19/24 Average Loans Reflective of accelerated loan growth, while Up 3% - 5% Up 3% - 5% FY23 Baseline = $120.9 billion supporting capital accretion Average Deposits Acquiring and deepening primary bank Up 2% - 4% Up 2% - 4%
Slide 22: Net Interest Income | Driving Growth Over Time
Net Interest Income | Driving Growth Over Time Net Interest Income (FTE) and Net Interest Margin (NIM) Net Interest Income Net Interest Margin CAGR (1Q22-1Q24) 6.1% $1,412 $1,471 $1,418 $1,267 $1,357 $1,379 $1,327 $1,300 $1,154 3.52% Expect Sequential 3.42% 3.40% 3.15% 3.11% 3.20% 3.07% 3.01% Net In
Slide 23: Noninterest Income | Positioned for Expansion
Noninterest Income | Positioned for Expansion Fee Revenue Mix (1Q24) 1 Capital Markets & Advisory Capital Markets & Advisory Fees Expect sequential revenue increase quarterly throughout 2024 supported by $65 $62 $69 $52 $56 All Other pace of commercial loan originations as Noninterest Payments & C
Slide 24: Noninterest Income | Diversified Fee Revenues
Noninterest Income | Diversified Fee Revenues Noninterest Income Trends Total Noninterest Income by Category(1) 1Q23 2Q23 3Q23 4Q23 1Q24 Total noninterest income $512 $495 $509 $405 $467 Notable Items(1) $57 - - - - $18 $33 Notable Items (1Q23) $57 $52 $54 $44 Mark-to-market on pay-fixed swaptions $
Slide 25: Noninterest Expense | Disciplined Expense Management
Noninterest Expense | Disciplined Expense Management Noninterest Expense (NIE) Highlights NIE excluding Notable Items Notable Items vs Linked Quarter Reported NIE decreased $211 million $1,348 $39 million of Notable Items include $32 million $1,086 $1,090 $226 $1,137 from updated estimates to th
Slide 26: Loans and Leases | Growth led by Commercial
Loans and Leases | Growth led by Commercial Average Loan and Lease Balance Trend $120.4 $121.3 $120.8 $121.2 $121.9 $122.8 Expect Increasing Rate of +1.3% Loan Growth Throughout 2024 1Q23 2Q23 3Q23 4Q23 1Q24 3/31 2Q24 3Q24 4Q24 (EOP) Average Loan and Lease Balances QoQ Highlights Average Loan Yield
Slide 27: Loans and Leases | Loan Growth Focused for Return
Loans and Leases | Loan Growth Focused for Return Commercial Average Loan and Lease Balances Highlights vs Linked Quarter +0.5% Average balances increased $0.7 billion, or 1.0% $67.9 $68.7 $67.6 $68.3 $67.5 vs Prior Year Average balances increased $0.4 billion, or 0.5% 1Q23 2Q23 3Q23 4Q23 1Q24 C
Slide 28: Loan Yields | Benefitting From Fixed Rate Re-Pricing
Loan Yields | Benefitting From Fixed Rate Re-Pricing Loan Portfolio Composition (as of 1Q24) Highlights Both variable rate and short-term loan portfolios benefited from Other Fixed asset repricing 25% Variable Auto portfolio weighted-average life (WAL) less than 2 years RV / Marine 50% Residen
Slide 29: Deposits | Continued Sequential Growth
Deposits | Continued Sequential Growth Deposit Balance Trend Highlights ADB EOP Core balances expanding consistently since YE22 +3.1% ADB Core average consumer have increased for +5.5% EOP 16 consecutive months $149.7 $151.2 $150.7 $153.2 Sequential deposit beta increases are $146.1 $145.3 $14
Slide 30: Deposits | Growing Core Base and Managing Liquidity
Deposits | Growing Core Base and Managing Liquidity Highlights Deposit Growth vs. Total Deposit Beta(1) (4Q21 – 1Q24) Core balances represented majority of net growth since YE22, and core average consumer deposits 5 have increased for 16 consecutive months Peer 1 0 Deposit Growth (%) Peer 2 Peer 3
Slide 31: Deposits | Non-Interest Bearing (NIB) Deposit Trends
Deposits | Non-Interest Bearing (NIB) Deposit Trends Total Deposits – Ending Balances Pre-TCF $153 Total Deposits Acquisition $143 $142 $143 $147 $145 $146 $148 $145 $148 $149 $151 $99 $102 $94 $95 $87 Interest Bearing 30.6% 31.7% 31.4% 30.2% 29.8% 29.0% 27.9% 24.2% 29.4% 28.9% 28.9% 25.9% 25.3% 22.
Slide 32: Deposits | High Quality, Granular Deposit Franchise
Deposits | High Quality, Granular Deposit Franchise Leading Percent of Insured Deposits(1) Diversification by Business Lines (1Q24) HBAN 70% Consumer Bank 1 As of 1Q23 63% 53% BAC 63% Commercial Bank 2 62% 24% Bank 3 59% C 59% 13% 6% WFC 58% 3% Business Banking Other 1% JPM 58% Vehicle Wealth Financ
Slide 33: Deposits | Commercial Relationships Bolstered by Off Balance Sheet Liquidity Management Solutions
Deposits | Commercial 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 solutions for commercial customers $62.2 $62.7 $58.1 $60.0 Total
Slide 34: Securities Portfolio
Securities Portfolio Average Securities + Cash(1) Highlights Average Securities Cash Purchased $3.2 billion of securities at a 5.27% yield $54.4 $50.8 $52.6 $49.6 $50.8 Incremental growth in short duration Treasuries (HQLA) $7.7 $12.7 $10.8 $11.3 $11.0 Strategically lowered portfolio duration
Slide 35: 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 $88 $91 $93 $94 deposits highlighting the proactive approach to liquidity $11 $11 $10 $12 Cash risk management and strength of our granular de
Slide 36: Capital Positioning | Robust Capital Generation Power
Capital Positioning | Robust Capital Generation Power CET1 Ratio Highlights (1) CET1 Adj. AOCI Adj. for Cash Flow Hedges Target operating range 9–10% Capital Priorities include: 1) Fund Organic Growth 9.8% 10.1% 10.2% 10.2% 9.5% 2) Dividend 3) Buybacks/other 2.1% 1.6% 1.7% 1.6% 1.7% Targeting Ex
Slide 37: Balance Sheet Management
Balance Sheet Management Hedging Program Profile – Effective Swaps(1) Future Effective Swap Profile NIM Protection: Reduces volatility & $6.0 $6.0 $6.0 $6.0 $5.0 $5.5 $6.0 $6.0 supports a narrow $1.6 $5.0 $5.0 $5.0 Floor spreads corridor in lower rate $20.8 $21.7 $21.7 $21.7 $19.5 $16.8 $16.8 $16.8
Slide 38: Accumulated Other Comprehensive Income Dollars
Accumulated Other Comprehensive Income Dollars AOCI Outlook(1) Highlights $ in billions Projecting ~37% total AOCI accretion by YE26 Dynamically managing hedge position subject to risk profile and market conditions $3.6 $2.9 $2.7 $2.6 $2.2 Components of Fair Value (FV) Mark on Investment Securit
Slide 39: CET1 Comparison versus Peers
CET1 Comparison versus Peers CET1 (Reported and Adjusted for ACL)(1) Peers at 1Q24 12.5% 12.5% 12.0% 12.0% 12.0% 11.7% 11.7% 11.5% 11.5% 1.4% 1.0% 11.3% 11.3% CET1 + ACL 1.4% 1.6% 1.8% 1.4% 1.7% 1.2% 1.1% 1.2% 1.2% ACL Impact 11.1% 11.5% 10.6% 10.4% 10.2% 10.0% 10.3% 10.3% 10.4% 10.1% 10.1% CET1 Rep
Slide 40: Credit
Credit (4) Huntington Welcome:
Slide 41: Asset Quality and Reserve | Top Tier Reserve Profile
Asset Quality and Reserve | Top Tier Reserve Profile Net Charge-off Ratio Allowance for Credit Losses (ACL) Through the Cycle Target NCO Range (25 – 45 bps) HBAN Peer Median 2.17% 2.09% 2.01% 1.96%1.97%1.97% 1.89%1.87%1.87%1.89%1.90%1.90%1.93% 0.32% 0.31% 1.70% 0.28% 0.30% 2.00% 0.24% 1.80% 0.20% 0.
Slide 42: Commercial Real Estate (CRE) Overview
Commercial Real Estate (CRE) Overview CRE Loans as % of Total Loans (1Q24) Portfolio Characteristics Peer Median: 15% Well diversified portfolio with rigorous client selection Peer 1 9% CRE reserve coverage 4.6% vs peer median of 2% (4Q23) Peer 2 10% HBAN Office reserve coverage of >11% 10% 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 $50B in assets as of 3/31/2024(1) 5.0% HBAN 4.0% Bank 3 CRE Reserve Ratio (1Q24) 3.0% Bank 4 Bank 2 Bank 8 Bank 9 Bank 5 Bank 6 Bank 7 2.0% Bank 10 Bank 12 Bank 1 Bank
Slide 44: CRE | Multi Family Overview
CRE | Multi Family Overview Top 5 MSAs (1Q24) Management Approach Balance % of Total Metropolitan Statistical Area (MSA) ($ in millions) Multifamily Portfolio Sponsor-driven strategy focused on experienced Columbus, OH $336 7.2% owners and operators Detroit-Warren-Livonia, MI 248 5.3% Chicago-Joli
Slide 45: CRE | Leveraged Lending Overview
CRE | Leveraged Lending Overview Loan Portfolio Composition (1Q24) Highlights Minimal Exposure to leveraged lending All Other 97.6% $2.9 billion, or 2.4% of total loan balances, with a defined portfolio concentration limit HNB leveraged defined as: Senior leverage 3.0x, total leverage 4.0x T
Slide 46: Auto | Proven Track Record of Strategic Growth
Auto | Proven Track Record of Strategic Growth Optimize through the Cycle Calibrating production to balance growth and returns Indirect Auto Production ($B) and New Origination Yield 7.1% 7.2% $1.9 $1.9 6.9% 6.8% $1.8 $1.8 6.3% $1.7 $1.7 $1.8 $1.6 $1.6 $1.6 $1.6 5.9% $1.6 $1.5 $1.5 $1.4 $1.4 $1.4 $1
Slide 47: Auto | Strong Credit Performance Through the Cycle
Auto | Strong Credit Performance Through the Cycle Key Highlights of Credit Strength Auto % of Total Loans $13.6 $13.2 Strong Credit Quality $12.2 $12.5 $12.9 $12.9 $12.5 $12.7 $11.0 Auto Loans and % $8.7 $9.5 Industry knowledge and focus on of Total Loans $6.7 18.3% 18.8% 17.5% 16.7% 17.1% rigoro
Slide 48: Appendix
Appendix (4) Huntington Welcome:
Slide 49: Basis of Presentation
Basis of Presentation Use of Non-GAAP Financial Measures This document contains GAAP financial measures and non-GAAP financial measures where management believes it to be helpful in understanding Huntington’s results of operations or financial position. Where non-GAAP financial measures are used, th
Slide 50: Basis of Presentation
Basis of Presentation Rounding Please note that columns of data in this document may not add due to rounding. Notable Items From time to time, revenue, expenses, or taxes are impacted by items judged by management to be outside of ordinary banking activities and/or by items that, while they may be a
Slide 51: Non-GAAP Reconciliation
Non-GAAP Reconciliation Pre-Provision Net Revenue (PPNR), Earnings Per Share (EPS) Pre-Provision Net Revenue 1Q23 2Q23 3Q23 4Q23 1Q24 ($ in millions) Total revenue (GAAP) $1,921 $1,841 $1,877 $1,721 $1,754 FTE adjustment 9 11 11 11 13 Total revenue (FTE) A 1,930 1,852 1,888 1,732 1,767 Less: gain on
Slide 52: Non-GAAP Reconciliation
Non-GAAP Reconciliation Average Tangible Common Equity, ROTCE ($ in millions) 1Q23 2Q23 3Q23 4Q23 1Q24 Average common shareholders’ equity $15,973 $16,359 $16,256 $16,275 $16,819 Less: intangible assets and goodwill 5,759 5,734 5,722 5,710 5,697 Add: net tax effect of intangible assets 40 36 34 32 2
Slide 53: Non-GAAP Reconciliation
Non-GAAP Reconciliation Adjusted Noninterest Expense, Efficiency Efficiency Ratio ($ in millions) – Pre-tax 1Q23 2Q23 3Q23 4Q23 1Q24 Noninterest expense (GAAP) $1,086 $1,050 $1,090 $1,348 $1,137 Less: intangible amortization 13 13 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) 1Q23 2Q23 3Q23 4Q23 1Q24 Common Equity Tier 1 (A) $13,588 $13,885 $14,211 $14,212 $14,284 Add: accumulated other (2,755) (3,006) (3,622) (2,676) (2,879) Comprehensive income (loss) (AOCI) Less: cash flow hedge (44
Slide 55: Non-GAAP Reconciliation
Non-GAAP Reconciliation Tangible common equity ratio, Tangible book value per share Tangible Common Equity Ratio ($ in millions) 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 Huntington shareholders’ equity $18,452 $17,950 $17,136 $17,731 $18,758 $18,788 $18,483 $19,353 $19,322 Less: preferred stock
Slide 56: Notes
Notes Slide 6: (1) For J.D. Power 2023 award information, visit jdpower.com/awards (2) By number (units) of 7(a) loans nationally (3) Based on EOP loan balances since 2010 (4) Equipment Leasing & Financing Association, 2023, bank-owned firms, includes HTF portfolio in terms of annual production (5)
Slide 57: Notes
Notes Slide 23: (1) Represents total noninterest income excluding the impacts of CRT (2) Average contribution in percentage of total capital markets revenue from 2Q23-1Q24 (3) Treasury Management Fees, net of earnings credit rate Slide 24: (1) Notable items include $57 million related to the RPS sal
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