Huntington Bancshares Incorporated · NASDAQ:HBAN
Huntington Bancshares — Q1 2022 Earnings Presentation
45 slides from Huntington Bancshares's earnings presentation, Apr 21, 2022
Slide 1: 2022 First Quarter Earnings Review
2022 First Quarter Earnings Review April 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 Focused execution driving record Q1 performance and continued 1 momentum; delivering on strategic revenue-producing initiatives 2 Expense saves ahead of schedule for full realization in 2Q Excellent credit quality; reflecting Huntington’s consistent disciplined 3 approach and aggregate
Slide 5: 2022 First Quarter Highlights
2022 First Quarter Highlights Executing on strategic priorities, adding capabilities, driving profitable growth Delivering TCF Revenue Strategic Capstone Awards & Results Synergies Execution Acquisition Accolades Record PPNR Driving incremental top- Fair Play evolution – Top tier middle mark
Slide 6: Pre-Provision Net Revenue
Pre-Provision Net Revenue C Strategic initiatives and delivering results supporting a record PPNR quarter Driving sustainable profitability, delivering positive operating leverage Pre-Provision Net Revenue (PPNR) $ in millions PPNR expansion over 2500 $2,343 the course of the year $800.00 $1,996 $2,
Slide 7: 2022 First Quarter Financial Performance
2022 First Quarter Financial Performance Robust loan growth, lower expenses, excellent credit quality EPS ROTCE Efficiency Ratio GAAP Reported $0.29 15.8% 62.9% Adjusted $0.32 17.1% 60.1% Total average loans +$1.7 billion, or 1.5% QoQ (loans ex-PPP +$2.6 billion, or +2.4% QoQ) ▪ Commercial average
Slide 8: Loans and Leases
Loans and Leases Average loan balances increased +1.5% QoQ; loans ex PPP +2.4% Total Loan and Lease Balances Highlights Vs Linked Quarter Average $109.7 $111.1 $111.3 $112.8 $109.5 $109.6 Total loans increased $1.7 billion or 1.5%, $3.3 $2.0 $1.0 $1.5 $0.6 $2.5 loans ex PPP increased $2.6 billion
Slide 9: Deposits
Deposits Increasing deposit balances, higher on average and ending basis Total Average Deposit Balances Ending Deposits by Segment $142.3 $142.3 $142.9 $141.9 $143.3 $147.0 Change vs Prior Quarter $4.4 $3.8 $3.5 Core Commercial + 4.1% $61.2 $61.5 $64.0 Core Consumer + 2.0% $76.3 $77.9 $79.4 Total De
Slide 10: Net Interest Income
Net Interest Income C Net interest income expansion driven by higher earning assets and higher NIM Net Interest Income (FTE) Highlights $ in millions Vs Linked Quarter Net Interest Income, ex PAA and PPP Paycheck Protection Program (PPP) $1,167 $1,138 $1,154 $1,200.00 Net interest income increased
Slide 11: Balance Sheet Management
Balance Sheet Management Dynamic hedging strategy; positioned for higher rates while managing downside Asset Sensitivity (+100 bp ramp) Highlights NII at risk +100 HBAN has a leading NIM among peers and is positioned 4.6% to expand the margin as rates move higher Hedging: Continued modest pace o
Slide 12: Noninterest Income
Noninterest Income Continued growth in key areas, offset by mortgage pressure and seasonality Noninterest Income ($ in millions) 1Q22 vs. 4Q21 vs. 1Q21 $ in millions $535 Deposit service charges 97 (4) 41% $515 $499 Card and payments 86 (7) 32% $444 Mortgage banking income 49 (12) -51% $395 Trust an
Slide 13: Noninterest Expense
Noninterest Expense Disciplined expense management and cost synergies drive sequential expense reductions Noninterest Expense Highlights $ in millions Vs Linked Quarter $1,289 $1,221 Noninterest expense of $1.05 billion, a reduction of $1,072 $234 $1,053 $168 million or 14% from prior quarter $187
Slide 14: Capital Positioning and Management
Capital Positioning and Management Managing capital consistent with our aggregate moderate-to-low risk profile and target operating range Total Risk-Based Capital Ratios(1) Highlights 15.3% Dividend of $0.155 per common share in 1Q22 14.2% 13.6% 1.9% 13.1% 13.0% 1.9% Peer leading dividend yield
Slide 15: Asset Quality and Reserve Trends
Asset Quality and Reserve Trends Record low net charge-offs and continued reduction in nonperforming assets Net Charge-off Ratio Allowance for Credit Losses (ACL) $ in millions $2,322 $2,205 $2,107 $2,109 0.32% 0.28% $1,741 0.20% 2.33% 2.17% 0.12% 2.06% 2.17% 1.92% 1.88% 0.07% 2.09% 2.01% 1.89% 1.87
Slide 16: Focus on Achieving Medium-Term Financial Goals
Focus on Achieving Medium-Term Financial Goals Driving organic revenue growth and profitability to deliver top quartile financial performance Return on Targeting annual revenue growth slightly Tangible Positive above nominal GDP Common Equity Operating Leverage Managing annual expense growth rel
Slide 17: 2022 Outlook – Standalone Huntington
2022 Outlook – Standalone Huntington Strong PPNR expansion driven by revenue and loan growth; realizing cost savings 4Q22 vs. 4Q21 Commentary Prior Guidance Updated Guidance As of 1/21/22 As of 4/21/22 Average Loans (ex-PPP) Driven mainly by commercial, as well as Non-GAAP Up high single digits Up h
Slide 18: Uniquely Positioned to Drive Substantial Value Creation
Uniquely Positioned to Drive Substantial Value Creation People-First, Digitally-Powered with best-in-class capabilities Top regional bank with scale and leading market density Powerful Strength in 11-state footprint and select national commercial & consumer franchises Franchise Market-leadin
Slide 19: Non-GAAP Reconciliation
Non-GAAP Reconciliation Pre-Provision Net Revenue (PPNR) Pre-Provision Net Revenue ($ in millions) 2017 2018 2019 2020 2021 4Q21 1Q22 Total Revenue $4,309 $4,510 $4,667 $4,815 $5,991 $1,647 $1,645 FTE adjustment 50 30 26 21 25 6 8 Total revenue (FTE) a 4,359 4,540 4,693 4,836 6,016 1,653 1,653 Less:
Slide 20: Non-GAAP Reconciliation
Non-GAAP Reconciliation Tangible common equity, ROTCE ($ in millions) 1Q22 Average common shareholders’ equity $16,898 Less: intangible assets and goodwill 5,584 Add: net tax effect of intangible assets 49 Average tangible common shareholders’ equity (A) $11,364 Net income available to common $432 A
Slide 21: Non-GAAP Reconciliation
Non-GAAP Reconciliation Noninterest expense, Efficiency Ratio, NIM % Efficiency Ratio ($ in millions) – Pre-tax 1Q21 2Q21 3Q21 4Q21 1Q22 Noninterest expense (GAAP) $793 $1,072 $1,289 $1,221 $1,053 Less: intangible amortization 10 11 13 14 14 Noninterest expense less amortization of intangibles (A) $
Slide 22: Non-GAAP Reconciliation
Non-GAAP Reconciliation EPS, ACL ratio ex. PPP loans Pre-tax impact After-tax impact EPS ($ in millions, except per share amounts) 1Q22 amount amount Earnings Per Share (GAAP) $0.29 Add: Acquisition-related net expenses $46 $37 0.03 Adjusted Earnings Per Share (Non-GAAP) $0.32 ACL ratio ex. PPP loan
Slide 23: Appendix
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Slide 24: 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 25: 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 26: Table of Contents
Table of Contents Capstone 27 Revenue Synergies 28 Purchase Accounting Detail 29 Digital Metrics 30 Mortgage Banking Noninterest Income 31 Balance Sheet 32 Consumer Originations Detail 33 Balance Sheet Overview 36 Wholesale Funding 37 Shares Outstanding 38 Credit Quality Review 39 Commercial Credit
Slide 27: Adding Capstone Capabilities to Huntington
Adding Capstone Capabilities to Huntington Positions Huntington as a full-service corporate and investment banking provider for the middle market Capstone Overview Strategic Rationale Top tier leader in Middle Market M&A; in Enterprise Value < $500 million Scale in key verticals; fills significa
Slide 28: Revenue Synergy Opportunities
Revenue Synergy Opportunities Leveraging expertise and capabilities to expand and deepen relationships Expanded markets and increased capacity and scale Middle Market, Corporate and Deepening via enhanced treasury management and capital markets capabilities Specialty Expansion 1 Introduce comp
Slide 29: Impact of Purchase Accounting
Impact of Purchase Accounting Purchase Accounting Accretion (PAA) Summary Actuals Projected ($ in millions) 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 Loans and Leases $8 $25 $20 $16 $9 $7 $7 $5 Long-term Debt 1 7 4 4 4 3 3 3 Deposits 1 4 1 -- -- -- -- -- Other (0) (0) 0 (1) 0 0 0 0 Subtotal: Net Inter
Slide 30: 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 TCF 3.26 3.20 49% 49% 2.37 2.39 2.42 40% 42% 40% 1Q21 2Q21 3Q21 4Q21 1Q22 1Q21 2Q21 3Q21 4Q21 1Q22
Slide 31: Mortgage Banking Noninterest Income Summary
Mortgage Banking Noninterest Income Summary $145 Mortgage Banking Income (MBI) Salable Production Mix $125 $2 $105 $100 $5 47% $81 51% 49% 49% $85 $95 68% $67 $84 $61 $65 $1 $49 $69 $45 $60 $4 3.55% $45 3.27% 53% 51% 51% $25 3.01% 49% $5 2.38% 2.45% 32% $(2) $(3) $(15) 1Q21 2Q21 3Q21 4Q21 1Q22 1Q21
Slide 32: Balance Sheet
Balance Sheet (@) Huntington Welcome: exe
Slide 33: Automobile – Production Trend
Automobile – Production Trend Originations 1Q22 4Q21 3Q21 2Q21 1Q21 4Q20 3Q20 2Q20 1Q20 Amount ($ in billions) $1.7 $1.8 $1.8 $1.9 $1.4 $1.4 $1.7 $1.2 $1.6 % new vehicles 41% 40% 38% 47% 49% 54% 48% 36% 47% Avg. LTV 84% 84% 85% 84% 87% 86% 89% 90% 89% Avg. FICO 774 776 772 770 771 774 777 770 778 Vi
Slide 34: Vehicle Finance – Origination Trends
Vehicle Finance – Origination Trends Auto Loans: 2022 YTD 2021 2020 2019 2018 2017 2016 2015 Originations ($ in billions) $1.7 $6.9 $5.9 $6.1 $5.8 $6.2 $5.8 $5.2 % new vehicles 41% 43% 47% 46% 47% 50% 49% 48% Avg. LTV(1) 84% 85% 89% 90% 89% 88% 89% 90% Avg. FICO 774 772 775 772 766 767 765 764 Weigh
Slide 35: Residential Mortgage and Home Equity Origination Trends
Residential Mortgage and Home Equity Origination Trends Residential Mortgage: 2022 YTD 2021 2020 2019 2018 2017 2016 2015 Originations ($ in billions) $1.4 $6.6 $4.7 $2.9 $2.9 $2.7 $1.9 $1.5 Avg. LTV 76% 76% 77% 81% 83% 84% 84% 83% Avg. FICO 766 768 767 761 758 760 751 756 Home Equity: 2022 YTD 2021
Slide 36: Balance Sheet Overview
Balance Sheet Overview Securities and hedging balance update Average Securities Highlights $42.6 Securities portfolio increased $2.6 billion versus prior $40.0 $35.9 quarter, with a focus on short duration securities $30.7 $12.4 $14.6 New purchase yield of 2.63%, a 75 basis point increase $26.2
Slide 37: Stable, Diversified Sources of Wholesale Funds
Stable, Diversified Sources of Wholesale Funds Historical issuance, smooth runoff profile and optimization of funding costs Wholesale Funding Issuances and Maturities Quarterly Wholesale Maturities through 2025 ($ in billions) ($ in billions) HoldCo Sr. 2.6 HoldCo Sub Bank Sr. 0.8 0.7 0.7 0.7 0.5 0.
Slide 38: Change in Common Shares Outstanding
Change in Common Shares Outstanding Share count in millions 1Q22 4Q21 3Q21 2Q21 1Q21 4Q20 3Q20 2Q20 Beginning shares outstanding 1,438 1,446 1,477 1,018 1,017 1,017 1,017 1,014 Employee equity compensation 1 1 3 0 1 - - 3 Share repurchases - (10) (33) - - 0 - - TCF Acquisition - - - 458 - - - - Endi
Slide 39: Credit Quality
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Slide 40: Commercial Credit Quality Review
Commercial Credit Quality Review Commercial and Industrial: 1Q22 4Q21 3Q21 2Q21 1Q21 Period end balance(1) ($ in billions) $42.2 $41.7 $40.4 $41.9 $32.3 30+ days PD and accruing 0.17% 0.30% 0.18% 0.18% 0.03% 90+ days PD and accruing 0.02% 0.03% 0.02% 0.00% 0.00% NCOs (annualized) -0.22% 0.06% 0.28%
Slide 41: Consumer Credit Quality Review
Consumer Credit Quality Review Home Equity: 1Q22 4Q21 3Q21 2Q21 1Q21 Period end balance ($ in billions) $10.3 $10.6 $10.9 $11.3 $8.7 30+ days PD and accruing 0.62% 0.89% 0.57% 0.55% 0.47% 90+ days PD and accruing 0.11% 0.16% 0.09% 0.08% 0.11% NCOs (annualized) -0.03% -0.04% -0.08% -0.08% 0.02% NALs
Slide 42: Consumer Credit Quality Review, continued
Consumer Credit Quality Review, continued Automobile: 1Q22 4Q21 3Q21 2Q21 1Q21 Period end balance ($ in billions) $13.5 $13.4 $13.3 $13.2 $12.6 30+ days PD and accruing 0.66% 0.76% 0.59% 0.52% 0.53% 90+ days PD and accruing 0.04% 0.05% 0.04% 0.03% 0.04% NCOs (annualized) 0.01% -0.03% -0.10% -0.13% 0
Slide 43: Delinquencies
Delinquencies Commercial (30+ Days(1)) Commercial (90+ Days(1)) 0.33% 0.32% 0.30% 0.26% 0.12% 0.03% 0.04% 0.04% 0.02% 0.02% 1Q21 2Q21 3Q21 4Q21 1Q22 1Q21 2Q21 3Q21 4Q21 1Q22 Consumer (30+ Days(2)) Consumer (90+ Days(2)) 2.05% 1.19% 1.88% 1.81% 1.06% 1.49% 0.82% 1.30% 0.73% 1.18% 1.18% 0.63% 0.93% 0.
Slide 44: Criticized Commercial Loan Analysis
Criticized Commercial Loan Analysis End of Period ($ in millions) 1Q22 4Q21 3Q21 2Q21 1Q21 Criticized beginning-of-period $4,711 $4,540 $4,488 $2,871 $2,830 TCF Additions (Net) 0 0 0 1,745 0 Additions / increases 727 1,019 1,046 405 339 Advances 162 552 107 108 214 Upgrades to “Pass” (512) (539) (53
Slide 45: Notes
Notes Slide 10: (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 11: (1) Denominator effect is the im
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