Huntington Bancshares Incorporated · NASDAQ:HBAN
Huntington Bancshares — Q4 2022 Earnings Presentation
49 slides from Huntington Bancshares's earnings presentation, Jan 20, 2023
Slide 1: 2022 Fourth Quarter Earnings Review
Welcome.® 2022 Fourth Quarter Earnings Review January 20, 2023 The Huntington National Bank is Member FDIC. ®, Huntington® and Huntington. Welcome.® are federally registered service marks of Huntington Bancshares Incorporated. ©2023 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 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 4: Key Messages
Key Messages Finished 2022 with fourth consecutive quarter of record PPNR, and record full 1 year revenue; results driven by focused and disciplined execution on strategic growth initiatives and acquisition synergies Delivered full year diversified loan growth, ex. PPP, of 10%, funded by high qualit
Slide 5: Track Record of Financial Performance & Execution
Track Record of Financial Performance & Execution Pre-Provision Net Revenue (PPNR) Strategic Execution 4.0 0 Notable Items 110 0 Notable Items PPNR (GAAP) PPNR (GAAP) $908 ✓ Adjusted PPNR growth of 36% YoY; over 900 3.5 0 $3.2 $867 bps of positive operating leverage 900 $0.1 $758 $10 $15 ✓ Benefitti
Slide 6: 2022 Fourth Quarter Financial Performance
2022 Fourth Quarter Financial Performance $0.43 $0.39 ROTCE EPS $0.36 $0.32 $0.36 GAAP Reported 26.0% $0.42 $0.35 $0.42 $0.26 $0.29 Adjusted 26.5% (19.8% ex AOCI) $0.43 4Q21 1Q22 2Q22 3Q22 4Q22 EPS GAAP Notable Items Total deposits +$1.6 billion, or +1.1% QoQ, with average deposits up $3.4B or +2.
Slide 7: Loans and Leases | Broad Based Loan Growth
Loans and Leases | Broad Based Loan Growth Average Loan and Lease Balances Highlights vs Linked Quarter +8.6% Average loans up $1.9 billion, or 1.7% QoQ, or $117.0 $118.9 QoQ YoY $111.1 $113.9 $2.1 billion, or 1.7% ex PPP $109.5 Total Commercial up 2.7% QoQ 1.7% 8.6% Loans Driven by growth in
Slide 8: Deposits | Maintaining High Quality Deposit Base
Deposits | Maintaining High Quality Deposit Base +2.4% ADB +3.2% EOP $147.9 $147.0 $146.0 $146.3 $145.4 $145.7 $145.0 $143.3 $142.9 $142.3 0.03% 0.03% 0.07% 0.25% 0.64% 4Q21 1Q22 2Q22 3Q22 4Q22 ADB EOP Total cost of deposits Highlights vs Linked Quarter vs Prior Year Ending total deposits up $1.6
Slide 9: Net Interest Income | Continued Expansion
Net Interest Income | Continued Expansion Net Interest Income (FTE)(1) Highlights Net Interest Income, ex PAA and PPP Purchase Accounting Accretion (PAA) & vs Linked Quarter $ in millions Paycheck Protection Program (PPP) (2) Net interest income (FTE) increased $59 million (+4%) reflecting higher
Slide 10: Deposit Costs | Stable Core Deposit Base
Deposit Costs | Stable Core Deposit Base Deposit Cost vs Fed Funds Target Rate Current 3Q15-2Q19 Tightening Fed Cycle (+225) 2Q19-4Q21 Easing Fed Cycle (-225) Cycle 4.50 3.25 2.50 2.50 2.25 2.00 2.00 1.75 1.75 1.75 1.50 1.25 1.00 0.50 0.75 0.55 0.64 0.70 0.73 0.75 0.66 0.64 0.50 0.50 0.31 0.44 0.51
Slide 11: Balance Sheet Management Strategy
Balance Sheet Management Strategy Proactive management to protect net interest income Securities portfolio positioned to capitalize on against volatile rate backdrop higher yields while protecting capital Dynamic and prudent hedging strategy, managing both Securities yields increased 52 bps down
Slide 12: Noninterest Income | Growth in Strategic Areas
Noninterest Income | Growth in Strategic Areas Noninterest Income Highlights vs Linked Quarter $515 $499 $499 Capital markets higher $10 million, or 14%, driven by higher $485 $498 advisory fees All other noninterest income increased $8 million driven by income on terminated lease Deposit serv
Slide 13: Noninterest Expense | Disciplined Expense Management
Noninterest Expense | Disciplined Expense Management Noninterest Expense Highlights vs Linked Quarter $1,221 Noninterest expense of $1,077 million, increased $24 million $1,053 $1,053 $1,077 or 2.3% $187 $1,018 $46 $10 $15 $24 Adjusted noninterest expense, excluding Notable Items, up $19 million
Slide 14: Capital Positioning | Dynamic Management
Capital Positioning | Dynamic Management Common Equity Tier 1 (CET1) Ratio Highlights Target operating range 9 – 10% CET1 within target operating range at 9.44% Capital Priorities Remain: 1. Fund Organic Growth 2. Dividend 9.44% 3. Buybacks/other 9.33% 9.27% 9.22% 9.05% Dividend of $0.155 per
Slide 15: Asset Quality and Reserve | Strong Reserve Profile
Asset Quality and Reserve | Strong Reserve Profile Net Charge-off Ratio Allowance for Credit Losses (ACL) $ in millions $2,168 $2,230 $2,271 $2,107 $2,109 0.15% 0.17% 0.12% 0.07% 0.03% 1.89% 1.87% 1.87% 1.89% 1.90% 4Q21 1Q22 2Q22 3Q22 4Q22 4Q21 1Q22 2Q22 3Q22 4Q22 ACL ACL as % of Total Loans & Lease
Slide 16: Historical Asset Quality and Reserve Trends
Historical Asset Quality and Reserve Trends Net Charge-off Ratio Key Highlights Through the Cycle Target NCO Range (25 – 45 bps) Strong Credit Quality 0.32% 0.28% Recent performance is a reflection of 0.20% strong customer selection and the 0.15% 0.17% favorable impact of COVID related 0.12% 0.07%
Slide 17: Medium-Term Financial Targets
Medium-Term Financial Targets PPNR ROTCE Positive Growth Operating 6 – 9% 20%+ Leverage ROTCE ex-AOCI 17% – 19% CET1 Ratio: 9 – 10% Operating Net Charge-offs: 25 – 45 bps through the cycle Assumptions Tax Rate: 19 – 21% 2022 Fourth Quarter Earnings Review 17
Slide 18: 2023 Outlook
2023 Outlook FY23 vs. FY22 Commentary Guidance As of 1/20/23 Average Loans Driven mainly by commercial, with modest growth in Up 5% - 7% FY22 baseline = $115.3 billion consumer Average Deposits Led by continued acquisition and deepening of Up 1% - 4% FY22 baseline = $144.9 billion customer and prima
Slide 19: Uniquely Positioned to Drive Substantial Value Creation
Uniquely Positioned to Drive Substantial Value Creation People-First, Digitally-Powered with best-in-class capabilities Top regional bank with scale and leading market density Powerful Strength in 11-state footprint and select national commercial & consumer franchises Franchise Market-leadin
Slide 20: Non-GAAP Reconciliation
Non-GAAP Reconciliation Pre-Provision Net Revenue (PPNR) Pre-Provision Net Revenue 2019 2020 2021 2022 4Q21 1Q22 2Q22 3Q22 4Q22 ($ in millions) Total revenue $4,667 $4,815 $5,991 $7,254 $1,647 $1,645 $1,746 $1,902 $1,961 FTE adjustment 26 21 25 31 6 8 6 8 9 Total revenue (FTE) A 4,693 4,836 6,016 7,
Slide 21: Non-GAAP Reconciliation
Non-GAAP Reconciliation Average tangible common equity, ROTCE ($ in millions) 4Q21 1Q22 2Q22 3Q22 4Q22 Average common shareholders’ equity $17,193 $16,898 $16,062 $16,150 $15,292 Less: intangible assets and goodwill 5,570 5,584 5,613 5,781 5,771 Add: net tax effect of intangible assets 52 49 46 43 4
Slide 22: Non-GAAP Reconciliation
Non-GAAP Reconciliation Average tangible common equity, ROTCE ($ in millions) 2019 2020 2021 2022 Average common shareholders’ equity $10,356 $10,618 $14,569 $16,096 Less: intangible assets and goodwill 2,246 2,201 4,108 5,688 Add: net tax effect of intangible assets 54 44 48 47 Average tangible com
Slide 23: Non-GAAP Reconciliation
Non-GAAP Reconciliation Noninterest Expense, Efficiency Ratio, NIM% Efficiency Ratio ($ in millions) – Pre-tax 4Q21 1Q22 2Q22 3Q22 4Q22 Noninterest expense (GAAP) $1,221 $1,053 $1,018 $1,053 $1,077 Less: intangible amortization 14 14 13 13 13 Noninterest expense less amortization of intangibles (A)
Slide 24: Non-GAAP Reconciliation
Non-GAAP Reconciliation EPS, Tangible Book Value (TBV) per Share EPS ($ in millions, except per share amounts) 4Q21 1Q22 2Q22 3Q22 4Q22 Earnings Per Share (GAAP), diluted $0.26 $0.29 $0.35 $0.39 $0.42 Acquisition-related expenses $187 $46 $24 $10 $15 Acquisition-related expenses, net of tax $139 $0.
Slide 25: Non-GAAP Reconciliation
Non-GAAP Reconciliation Tangible common equity ratio ($ in millions) 4Q21 1Q22 2Q22 3Q22 4Q22 Huntington shareholders’ equity $19,297 $18,452 $17,950 $17,136 $17,731 Less: preferred stock 2,167 2,167 2,167 2,167 2,167 Common shareholders’ equity $17,130 $16,285 $15,783 $14,969 $15,564 Less: goodwill
Slide 26: Appendix
Appendix (2) Huntington Welcome:
Slide 27: Basis of Presentation
Basis of Presentation Use of Non-GAAP Financial Measures This document contains GAAP financial measures and non-GAAP financial measures where management believes it to be helpful in understanding Huntington’s results of operations or financial position. Where non-GAAP financial measures are used, th
Slide 28: Basis of Presentation
Basis of Presentation Rounding Please note that columns of data in this document may not add due to rounding. Notable Items From time to time, revenue, expenses, or taxes are impacted by items judged by management to be outside of ordinary banking activities and/or by items that, while they may be a
Slide 29: Table of Contents
Table of Contents Purchase Accounting Detail 30 Digital Metrics 31 Mortgage Banking Noninterest Income 32 Balance Sheet 33 Balance Sheet Management 34 Wholesale Funding 35 Auto Originations and Growth Detail 36 Consumer Originations 37 Shares Outstanding 41 Tangible Book Value 42 Credit Quality Revi
Slide 30: Impact of Purchase Accounting
Impact of Purchase Accounting Purchase Accounting Accretion (PAA) Summary Actuals Projected ($ in millions) 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 Loans and Leases $20 $16 $13 $12 $10 $5 $4 $4 $4 Long-term Debt 4 4 4 3 3 3 3 3 3 Deposits 1 -- -- -- -- -- -- -- -- Other 0 (1) (1) 0 (2) 0 0 0 0
Slide 31: 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 3.20 3.26 3.28 3.34 3.36 42% 42% 40% 38% 37% 4Q21 1Q22 2Q22 3Q22 4Q22 4Q21 1Q22 2Q22 3Q22 4Q22
Slide 32: Mortgage Banking Noninterest Income Summary
Mortgage Banking Noninterest Income Summary Mortgage Banking Income (MBI) Salable Production Mix $100 2.38% 2.45% 11% 10% 18% $80 2.02% 1.75% 52% 48% $61 1.71% $60 $49 $3 $44 $11 89% 90% $40 $16 $25 82% $58 $26 $1 48% 52% $20 $38 $9 $28 $25 $16 $- 4Q21 1Q22 2Q22 3Q22 4Q22 4Q21 1Q22 2Q22 3Q22 4Q22 MB
Slide 33: Balance Sheet
Balance Sheet (2) Huntington Welcome:
Slide 34: Balance Sheet Management
Balance Sheet Management Asset Sensitivity (+100 bp ramp) NII at risk +100 2.2% 0.1% 2.0% 0.2% (0.5%) Rate curve Balance driving Explicit sheet mix higher NII hedging actions 3Q22 Hedging Mix and Higher Base 4Q22 Other Income Loan Portfolio Composition (as of 12/31/2022) Fixed 31% Variable (<=1month
Slide 35: Stable, Diversified Sources of Wholesale Funds
Stable, Diversified Sources of Wholesale Funds Historical issuance, smooth runoff profile and optimization of funding costs Wholesale Funding Issuances and Maturities Quarterly Wholesale Maturities through 2025 ($ in billions) ($ in billions) HoldCo Sr HoldCo Sub Bank Sr Bank Sub 2021 $0.5 $0.5 ($0.
Slide 36: Auto – Production Trend
Auto – Production Trend Originations 4Q22 3Q22 2Q22 1Q22 4Q21 3Q21 2Q21 1Q21 4Q20 Amount ($ in billions) $1.2 $1.4 $1.8 $1.7 $1.8 $1.8 $1.9 $1.4 $1.4 % new vehicles 39% 35% 38% 41% 40% 38% 47% 49% 54% Avg. LTV 85% 84% 84% 84% 84% 85% 84% 87% 86% Avg. FICO 779 777 778 774 776 772 770 771 774 Vintage
Slide 37: Auto – Proven Track Record of Strategic Growth
Auto – Proven Track Record of Strategic Growth Optimize through the Cycle Know when to pull and press on production to maximize returns Indirect Auto Production ($B) and Average Yield $1.9 $1.9 5.9% $1.8 $1.8 $1.8 $1.7 $1.7 $1.6 $1.6 $1.6 $1.6 $1.5 $1.4 $1.4 $1.4 $1.4 $1.4 $1.4 $1.3 $1.2 $1.2 $1.2 4
Slide 38: 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 $13.4 $13.2 $12.2 $12.5 $12.9 $12.9 Strong Credit Quality $11.0 Auto Loans and % $8.7 $9.5 • Industry knowledge and focus on $6.7 18.8% rigorous customer selection drives of Total Loans 1
Slide 39: Vehicle Finance – Origination Trends
Vehicle Finance – Origination Trends Auto Loans: 2022 2021 2020 2019 2018 2017 2016 2015 Originations ($ in billions) $6.1 $6.9 $5.9 $6.1 $5.8 $6.2 $5.8 $5.2 % new vehicles 38% 43% 47% 46% 47% 50% 49% 48% Avg. LTV(1) 84% 85% 89% 90% 89% 88% 89% 90% Avg. FICO 777 772 775 772 766 767 765 764 Weighted
Slide 40: Residential Mortgage and Home Equity Origination Trends
Residential Mortgage and Home Equity Origination Trends Residential Mortgage: 2022 2021 2020 2019 2018 2017 2016 2015 Originations ($ in billions) $5.4 $6.6 $4.7 $2.9 $2.9 $2.7 $1.9 $1.5 Avg. LTV 81% 76% 77% 81% 83% 84% 84% 83% Avg. FICO 765 768 767 761 758 760 751 756 Home Equity: 2022 2021 2020 20
Slide 41: Change in Common Shares Outstanding
Change in Common Shares Outstanding Share count in millions 4Q22 3Q22 2Q22 1Q22 4Q21 3Q21 2Q21 1Q21 Beginning shares outstanding 1,443 1,443 1,439 1,438 1,446 1,477 1,018 1,017 Employee equity compensation 0 0 4 1 1 3 0 1 Share repurchases - - - - (10) (33) - - TCF Acquisition - - - - - - 458 - Endi
Slide 42: Tangible Book Value (TBV) per Share
Tangible Book Value (TBV) per Share Tangible Book Value per Share Reported Adjusted (ex-AOCI) $8.67 $8.96 $8.22 $8.38 $8.42 $8.06 $7.47 $6.96 $6.82 $6.40 4Q21 1Q22 2Q22 3Q22 4Q22 See reconciliation on slide 24 (TBV per Share) 2022 Fourth Quarter Earnings Review 42
Slide 43: Credit Quality
Credit Quality (2) Huntington Welcome:
Slide 44: Commercial Credit Quality Review
Commercial Credit Quality Review Commercial and Industrial: 4Q22 3Q22 2Q22 1Q22 4Q21 Period end balance(1) ($ in billions) $45.1 $44.1 $43.4 $42.2 $41.7 30+ days PD and accruing 0.15% 0.33% 0.33% 0.17% 0.30% 90+ days PD and accruing 0.05% 0.07% 0.03% 0.02% 0.03% NCOs (annualized) 0.08% 0.15% -0.04%
Slide 45: Consumer Credit Quality Review
Consumer Credit Quality Review Home Equity: 4Q22 3Q22 2Q22 1Q22 4Q21 Period end balance ($ in billions) $10.4 $10.4 $10.4 $10.3 $10.6 30+ days PD and accruing 0.91% 0.71% 0.68% 0.62% 0.89% 90+ days PD and accruing 0.14% 0.11% 0.12% 0.11% 0.16% NCOs (annualized) -0.04% -0.07% -0.08% -0.03% -0.04% NAL
Slide 46: Consumer Credit Quality Review, continued
Consumer Credit Quality Review, continued Automobile: 4Q22 3Q22 2Q22 1Q22 4Q21 Period end balance ($ in billions) $13.2 $13.4 $13.6 $13.5 $13.4 30+ days PD and accruing 0.89% 0.71% 0.78% 0.66% 0.76% 90+ days PD and accruing 0.07% 0.05% 0.05% 0.04% 0.05% NCOs (annualized) 0.12% 0.07% 0.00% 0.01% -0.0
Slide 47: Delinquencies
Delinquencies Commercial (30+ Days(1)) Commercial (90+ Days(1)) 0.43% 0.39% 0.33% 0.32% 0.30% 0.26% 0.19% 0.07% 0.15% 0.05% 0.12% 0.04% 0.04% 0.03% 0.03% 0.02% 0.02% 0.02% 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 Consumer (30+ Days(2)) Consumer (90+ D
Slide 48: Criticized Commercial Loan Analysis
Criticized Commercial Loan Analysis End of Period ($ in millions) 4Q22 3Q22 2Q22 1Q22 4Q21 Criticized beginning-of-period $3,843 $4,206 $4,385 $4,711 $4,540 Additions / increases 859 735 824 727 1,019 Advances 167 248 224 162 552 Upgrades to “Pass” (484) (666) (527) (512) (539) Paydowns (638) (652)
Slide 49: Notes
Notes Slide 5: (1) 2021 Brand Tracking Market Study (2) For J.D. Power 2022 award information, visit jdpower.com/awards (3) Forbes 2022 America’s Best Large Employers – Ranked #7 for Banking and Financial Services Slide 9: (1) 4Q21 - $25M PAA and $29M PPP, 1Q22 - $19M PAA and $17M PPP, 2Q22 - $16M P
Huntington Bancshares — Q4 2022 Earnings Presentation on 6ix