Huntington Bancshares Incorporated · NASDAQ:HBAN
Huntington Bancshares — Q4 2021 Earnings Presentation
42 slides from Huntington Bancshares's earnings presentation, Jan 21, 2022
Slide 1: 2021 Fourth Quarter Earnings Review
2021 Fourth Quarter Earnings Review January 21, 2022 The Huntington National Bank is Member FDIC. ®, Huntington® and Huntington. Welcome.® are federally registered service marks of Huntington Bancshares Incorporated. ©2022 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: Huntington: A Purpose-Driven Company
Huntington: A Purpose-Driven Company Our Purpose Our Vision We make people’s lives Become the better, help businesses country’s leading thrive, and strengthen people-first, digitally the communities we powered bank serve Purpose Drives Performance Drive organic growth across all business segments
Slide 4: Key Messages
Key Messages Finished 2021 with record full-year revenue growth and broad-based 1 loan production 2 Cost savings on track for full realization 3 Executing on key initiatives to deliver sustainable revenue growth – robust pipelines coming into 2022 4 Confident in 2022 and beyond outlook 2021 Fourth Q
Slide 5: 2021 Full Year Highlights
2021 Full Year Highlights Executed on our People-First, Digitally Powered vision EPS ROTCE Efficiency Ratio GAAP Reported $0.90 11.3% 72.0% Adjusted $1.53 19.1% 60.2% Delivered robust household growth across consumer and business banking: Consumer households +44% YoY (4.5% standalone Huntington)
Slide 6: 2021 Fourth Quarter Financial Highlights
2021 Fourth Quarter Financial Highlights Robust loan growth, expense management, and capital return EPS ROTCE Efficiency Ratio GAAP Reported $0.26 13.2% 73.0% Adjusted $0.36 18.2% 61.7% Total ending loans +$1.4 billion QoQ (loans ex-PPP +$2.4 billion, or +2.2% QoQ) Commercial ending loans +$1.5
Slide 7: Loans and Leases
Loans and Leases Increased loan balances driven by robust production in commercial Total Loan and Lease Balances Highlights Average Balances Ending Balances Vs Linked Quarter Ending $109.9 $109.9 $111.9 $110.6 $111.9 Total loans increased $1.4 billion or 1.2%, $3.3 $2.0 $4.2 $2.5 $1.5 loans ex PPP
Slide 8: Deposits
Deposits Relatively stable with continued optimization of portfolio, growth on spot basis Total Deposit Balances Ending Deposits by Segment Average Balances Ending Balances $142.8 $143.3 Change vs Prior Quarter $142.3 $142.3 $141.9 $142.8 $141.9 $143.3 $4.6 $4.4 $3.8 Consumer + 2.1% $112.7 $61.1 $61
Slide 9: Net Interest Income
Net Interest Income C Net interest income decrease due to PPP, core NII stable Net Interest Income (FTE) Highlights $ in millions $1,167 Vs Linked Quarter Net Interest Income, ex PAA and PPP $1,138 Paycheck Protection Program (PPP) $36 $25 Purchase Accounting Accretion (PAA) $46 $29 Net interest i
Slide 10: Balance Sheet Management
Balance Sheet Management Dynamic liquidity and interest rate risk management Highlights Total Securities Average, $ in billions HBAN has a leading NIM among peers and is positioned to expand the margin as rates move higher $40.1 $36.0 Asset sensitivity has increased along with interest rates $30
Slide 11: Noninterest Income
Noninterest Income Continued growth in capital markets and wealth, offset by lower mortgage banking Noninterest Income Noninterest Income vs Prior Quarter $ in millions $535 $515 Capital Markets: +$7 18% BOLI: +$7 47% $444 Insurance: +$3 12% $409 $395 Trust & inv mgmt: +$2 3% Gain on sale: ($1) -50%
Slide 12: Noninterest Expense
Noninterest Expense Disciplined expense management, realizing expense synergies Noninterest Expense Highlights $ in millions Vs Linked Quarter $1,289 $1,221 Noninterest expense of $1.2 billion, a decrease of $1,072 $234 $68 million versus prior quarter $187 Noninterest expense excluding Notable
Slide 13: 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: 14.5% 14.2% $ in millions 13.6% 13.1% 1.9% 2.0% 1.9% 3.0% 2.2% 2.1% 2.5% 2.3% 1.8% 1
Slide 14: Asset Quality and Reserve Trends
Asset Quality and Reserve Trends Net charge-offs and non-performing assets continue to decline. Improving credit and economic outlook drive continued reserve release Net Charge-off Ratio Allowance for Credit Losses (ACL) $ in millions $2,322 $2,205 $2,107 $1,866 $1,741 0.55% 2.46% 2.33% 0.32% 2.15%
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 Targeting annual revenue growth slightly Tangible Positive above nominal GDP Common Equity Operating Leverage Managing annual expense growth
Slide 16: 2022 Outlook
2022 Outlook Delivering strong revenue and loan growth, realizing cost savings 4Q22 vs. 4Q21 Commentary Average Loans (ex-PPP) Driven mainly by commercial, as well as mortgage, Non-GAAP Up high single digits 4Q21 baseline = $107.9 billion auto and RV/marine Net Interest Income (ex-PPP, ex-PAA) Up hi
Slide 17: Huntington: Compelling Opportunity
Huntington: Compelling Opportunity Uniquely positioned to drive shareholder value Powerful Robust Growth Attractive Franchise Outlook Return Profile Top regional bank – scale and leading Driving sustainable revenue growth Improving financial performance market density in footprint through targ
Slide 18: Non-GAAP Reconciliation
Non-GAAP Reconciliation Tangible common equity, ROTCE ($ in millions) 4Q21 FY 2021 Average common shareholders’ equity $17,193 $14,569 Less: intangible assets and goodwill 5,570 4,108 Add: net tax effect of intangible assets 52 48 Average tangible common shareholders’ equity (A) $11,675 $10,509 Net
Slide 19: Non-GAAP Reconciliation
Non-GAAP Reconciliation Noninterest expense, Efficiency Ratio, NIM % Efficiency Ratio ($ in millions) – Pre-tax 1Q21 2Q21 3Q21 4Q21 FY 2021 Noninterest expense (GAAP) $793 $1,072 $1,289 $1,221 $4,375 Less: intangible amortization 10 11 13 14 48 Noninterest expense less amortization of intangibles (A
Slide 20: Non-GAAP Reconciliation
Non-GAAP Reconciliation EPS, ACL ratio ex. PPP loans Pre-tax impact After-tax impact Pre-tax impact After-tax EPS ($ in millions, except per share amounts) 4Q21 EPS FY 2021 EPS amount amount amount impact amount Earnings Per Share (GAAP) $0.26 $0.90 Add: TCF acquisition-related net expenses $177 $13
Slide 21: Appendix
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Slide 22: Basis of Presentation
Basis of Presentation Use of Non-GAAP Financial Measures This document contains GAAP financial measures and non-GAAP financial measures where management believes it to be helpful in understanding Huntington’s results of operations or financial position. Where non-GAAP financial measures are used, th
Slide 23: Basis of Presentation
Basis of Presentation Rounding Please note that columns of data in this document may not add due to rounding. Notable Items From time to time, revenue, expenses, or taxes are impacted by items judged by management to be outside of ordinary banking activities and/or by items that, while they may be a
Slide 24: Table of Contents
Table of Contents Revenue Synergies 25 Purchase Accounting Detail 26 Digital Metrics 27 Mortgage Banking Noninterest Income 28 Balance Sheet 29 Consumer Originations Detail 30 Wholesale Funding 33 Shares Outstanding 34 Credit Quality Review 35 Commercial Credit 36 Consumer Credit 37 Delinquencies 39
Slide 25: Revenue Synergy Opportunities
Revenue Synergy Opportunities Leveraging expertise and capabilities to expand and deepen relationships Expanded markets and increased capacity and scale Middle Market, Corporate and Deepening via enhanced treasury management and capital markets capabilities Specialty Expansion 1 Introduce comp
Slide 26: Impact of Purchase Accounting
Impact of Purchase Accounting Purchase Accounting Accretion (PAA) Summary Actuals Projected ($ in millions) 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 Loans and Leases $8 $25 $20 $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 27: 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) HBAN Standalone (Millions) Includes Checking, Savings, MMA TCF 3.20 +9% YoY 49% 49% 2.26 2.37 2.39 2.42 0.74 44% 40% 42% 2.46 4Q20 1Q21 2Q21
Slide 28: Mortgage Banking Noninterest Income Summary
Mortgage Banking Noninterest Income Summary $145 Mortgage Banking Income (MBI) Salable Production Mix $125 $2 $100 $90 $105 $5 47% $81 56% 51% 49% $85 $95 $95 $67 68% $84 $61 $65 $1 $69 $45 $60 3.85% 3.55% 2.38% 3.27% 53% 51% $25 3.01% 44% 49% $5 32% $(5) $(2) $(3) $(15) 4Q20 1Q21 2Q21 3Q21 4Q21 4Q2
Slide 29: Balance Sheet
Balance Sheet (2) Huntington Welcome: exe
Slide 30: Automobile – Production Trend
Automobile – Production Trend Originations 4Q21 3Q21 2Q21 1Q21 4Q20 3Q20 2Q20 1Q20 4Q19 Amount ($ in billions) $1.8 $1.8 $1.9 $1.4 $1.4 $1.7 $1.2 $1.6 $1.9 % new vehicles 40% 38% 47% 49% 54% 48% 36% 47% 52% Avg. LTV 84% 85% 84% 87% 86% 89% 90% 89% 88% Avg. FICO 776 772 770 771 774 777 770 778 781 Vi
Slide 31: Vehicle Finance – Origination Trends
Vehicle Finance – Origination Trends Auto Loans: 2021 2020 2019 2018 2017 2016 2015 2014 Originations ($ in billions) $6.9 $5.9 $6.1 $5.8 $6.2 $5.8 $5.2 $5.2 % new vehicles 43% 47% 46% 47% 50% 49% 48% 49% Avg. LTV(1) 85% 89% 90% 89% 88% 89% 90% 89% Avg. FICO 772 775 772 766 767 765 764 764 Weighted
Slide 32: Residential Mortgage and Home Equity Origination Trends
Residential Mortgage and Home Equity Origination Trends Residential Mortgage: 2021 2020 2019 2018 2017 2016 2015 2014 Originations ($ in billions) $6.6 $4.7 $2.9 $2.9 $2.7 $1.9 $1.5 $1.2 Avg. LTV 76% 77% 81% 83% 84% 84% 83% 83% Avg. FICO 768 767 761 758 760 751 756 754 Home Equity: 2021 2020 2019 20
Slide 33: Stable, Diversified Sources of Wholesale Funds
Stable, Diversified Sources of Wholesale Funds Historical issuance, smooth runoff profile and optimization of funding costs Wholesale Funding Issuances and Maturities Quarterly Wholesale Maturities through 2025 ($ in billions) ($ in billions) HoldCo Sr. 2.6 HoldCo Sub 0.3 Bank Sr. 2.0 0.1 1.6 1.3 0.
Slide 34: Change in Common Shares Outstanding
Change in Common Shares Outstanding Repurchased 43 million shares year-to-date $150 million remaining under share repurchase authorization of $800 million Share count in millions 4Q21 3Q21 2Q21 1Q21 4Q20 3Q20 2Q20 1Q20 Beginning shares outstanding 1,446 1,477 1,018 1,017 1,017 1,017 1,014 1,020
Slide 35: Credit Quality
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Slide 36: Commercial Credit Quality Review
Commercial Credit Quality Review Commercial and Industrial: 4Q21 3Q21 2Q21 1Q21 4Q20 Period end balance(1) ($ in billions) $41.7 $40.4 $41.9 $32.3 $33.2 30+ days PD and accruing 0.30% 0.18% 0.18% 0.03% 0.08% 90+ days PD and accruing 0.03% 0.02% 0.00% 0.00% 0.00% NCOs (annualized) 0.06% 0.28% 0.43% 0
Slide 37: Consumer Credit Quality Review
Consumer Credit Quality Review Home Equity: 4Q21 3Q21 2Q21 1Q21 4Q20 Period end balance ($ in billions) $10.6 $10.9 $11.3 $8.7 $8.9 30+ days PD and accruing 1.04% 0.57% 0.55% 0.47% 0.68% 90+ days PD and accruing 0.16% 0.09% 0.08% 0.11% 0.16% NCOs (annualized) -0.04% -0.08% -0.08% 0.02% 0.01% NALs 0.
Slide 38: Consumer Credit Quality Review, continued
Consumer Credit Quality Review, continued Automobile: 4Q21 3Q21 2Q21 1Q21 4Q20 Period end balance ($ in billions) $13.4 $13.3 $13.2 $12.8 $12.8 30+ days PD and accruing 0.76% 0.59% 0.52% 0.53% 0.90% 90+ days PD and accruing 0.05% 0.04% 0.03% 0.04% 0.07% NCOs (annualized) -0.03% -0.10% -0.13% 0.05% 0
Slide 39: Delinquencies
Delinquencies Commercial (30+ Days(1)) Commercial (90+ Days(1)) 0.33% 0.32% 0.26% 0.15% 0.03% 0.04% 0.12% 0.02% 0.02% 0.02% 4Q20 1Q21 2Q21 3Q21 4Q21 4Q20 1Q21 2Q21 3Q21 4Q21 Consumer (30+ Days(2)) Consumer (90+ Days(2)) 2.29% 1.09% 1.06% 1.88% 1.81% 1.49% 0.82% 1.30% 0.73% 1.26% 1.19% 0.63% 0.93% 0.
Slide 40: Criticized Commercial Loan Analysis
Criticized Commercial Loan Analysis End of Period ($ in millions) 4Q21 3Q21 2Q21 1Q21 4Q20 Criticized beginning-of-period $4,540 $4,488 $2,871 $2,830 $3,173 TCF Additions (Net) 0 0 1,745 0 0 Additions / increases 1,019 1,046 405 339 473 Advances 552 107 108 214 86 Upgrades to “Pass” (539) (532) (253
Slide 41: Notes
Notes Slide 5: (1) Ranked first in loan origination by volume for the 4th year in a row (2) For JD Power 2021 award information, visit jdpower.com/awards. Huntington received the highest score among regional banks in the J.D. Power 2021 U.S. Banking Mobile App Satisfaction Study of customers’ satisf
Slide 42: Notes
Notes Slide 32: (1) Originations are based on commitment amounts (2) FHFA Regional HPI ENC Season-Adj; U.S. and Census Division (3) Source: BLS.gov; average of monthly seasonally-adjusted unemployment rate for period Slide 36: (1) C&I loan balances include PPP balances Slide 39: (1) Amounts include
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