Huntington Bancshares Incorporated · NASDAQ:HBAN
Huntington Bancshares — Investor Presentation (May 2023)
58 slides from Huntington Bancshares's investor presentation, May 22, 2023
Slide 1: 2023 Second Quarter Investor Presentation
Welcome.® 2023 Second Quarter Investor Presentation May 22, 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: Table of Contents
Table of Contents Huntington Overview 3 Noninterest Income 34 Segment Overview 10 Noninterest Expense 35 Commercial Banking Overview 11 Expense Management 36 Expanding Capital Markets 13 Strategic Investments 38 Climate Finance 14 Capital Positioning 39 Consumer Banking Overview 15 Strong Credit Qua
Slide 3: Overview
Overview (2) Huntington Welcome:
Slide 4: 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 5: Leading Midwest Regional Bank with Scaled, National Businesses
Leading Midwest Regional Bank with Scaled, National Businesses Compelling Results $185B $146B $120B Assets Deposits Loans and Leases ✓ Top 20 U.S. Bank by Deposits Established Market Leadership ✓ Top-tier return profile with 23.1% ROTCE (YTD annualized) Industry Leading Consumer and Business Franchi
Slide 6: Winning with Differentiation
Winning with Differentiation Technology & Growth Opportunities Culture Brand Innovation • Top-tier Talent • Trust and NPS • Award Winning Digital • Strategic Growth Initiatives • Colleagues are our • Local Model • Continuous Launch of Brand Disruptive Products • TCF Revenue Synergies • Expertise and
Slide 7: Delivering on Our Purpose
Delivering on Our Purpose Our Commitment to Environmental, Social, & Governance (ESG) Our commitment to ESG is a reaffirmation of our long-held commitment to do the right thing for our shareholders, customers, colleagues, and communities. 2022 ESG Report Recent ESG Recognition AA rated ESG program
Slide 8: Distinguished Brand a Key Source of Competitive Strength
Distinguished Brand a Key Source of Competitive Strength #1 Trust(1) #1 NPS (1) #1 Satisfaction(1) Trustworthiness Net Promoter Score Overall Customer Satisfaction HBAN HBAN HBAN Bank 1 Bank 1 Bank 2 Bank 2 Bank 3 Bank 1 Bank 3 Bank 5 Bank 5 Bank 4 Bank 2 Bank 3 Bank 5 Bank 4 Bank 6 Bank 6 Bank 7 Ba
Slide 9: Huntington – Operating from a Position of Strength
Huntington – Operating from a Position of Strength High Quality Robust Strong Disciplined Deposit Base Liquidity Capital Credit Core strategy Proactive approach to 9.6% CET1 reflecting Rigorous client acquiring and liquidity risk continued capital selection and deepening primary management g
Slide 10: Segment Overview
Segment Overview (2) Huntington Welcome:
Slide 11: Commercial Bank | Serving the Needs of Businesses and Institutions Across the Nation
Commercial Bank | Serving the Needs of Businesses and Institutions Across the Nation Proven Commercial Optimization and Growth... …With Significant Scale and Reach Where We Were (2010) Where We Are (2022) HBAN CML Relationships • Community bank, regionally • Super regional bank with broad focused on
Slide 12: Achieving Scale Across Diverse Set of Commercial Solutions
Achieving Scale Across Diverse Set of Commercial Solutions Focused on High Growth, High Return Businesses Middle Capital Market Markets Returns Corporate High Commercial Treasury Capital and Specialty Management Markets Real Estate Commercial Banking Banking Middle Market Asset Corporate Finance and
Slide 13: Expanding Capital Markets
Expanding Capital Markets Capital Market Fees ($M) Capital Market Capabilities $252 $269 Debt and Syndicated M&A / Equity Advisory / $151 Finance Capital Other $108 $123 $125 Markets $90 Public Fixed Income Financial Risk Finance / Sales and Management Municipal Trading Securities 2017 2018 2019 202
Slide 14: Climate Finance | Partner with Clients as They Reduce Their Carbon Footprint
Climate Finance | Partner with Clients as They Reduce Their Carbon Footprint Background Solutions Market Opportunity Market Approach • Large capital provider to renewable energy projects +$500M in funded exposure Scale and Expand • Energy Efficiency Scale: Continue building Renewable Energy • Wind &
Slide 15: Consumer Banking | Industry Leading Brand and Capabilities
Consumer Banking | Industry Leading Brand and Capabilities Midwest Leadership in Footprint… ...With Established Scale And Scope $429M YTD Fee #1 Branch Revenue Share Ohio and Michigan 3.6M 3.1M 1001 74% Consumer Digital Footprint Checking Branches in Customers Households 11 States Adoption* Recent A
Slide 16: Ongoing Targeted Investments in Key Enablers Drive Our Success
Ongoing Targeted Investments in Key Enablers Drive Our Success Investments in Fair Play Approach… 3.1M Brand Positioning and Marketing 1 Product Innovation Checking Households 2 #1 in the following areas among in market competitors1: 2022 Instant • Trust Access • NPS 2021 • Customer-Focused 3x 2018
Slide 17: Business Banking | Established Reputation as the Business Bank of Choice
Business Banking | Established Reputation as the Business Bank of Choice Established Scale and Scope1 Our Customers Business Checking • Privately-held companies Households • Wide variety of industries with specialties in SBA and 377K Practice Finance Customer • Revenues up to ~$20M Alignment 257K 36
Slide 18: Clear Path to Deliver Sustainable Revenue Growth
Clear Path to Deliver Sustainable Revenue Growth Illustrative Contribution of Medium-Term Revenue Growth Vehicle Finance Wealth Mgmt Deliver superior Payments credit performance Increasing through the cycle, Business BusinessBanking Banking penetration Grow share of utilizing technology wallet throu
Slide 19: Focused on Driving Value from TCF
Focused on Driving Value from TCF ✓ Executed close (< 6 months) and conversion (4 months post close) with pace and quality Delivering on ✓ Delivered cost synergies by Q2 2022, earlier than expected Commitments ✓ 2x Tech Dev Investment from 2019 to 2022 ✓ Generated top quartile returns and efficiency
Slide 20: Execution Driving Financial Outperformance Versus Peers
Execution Driving Financial Outperformance Versus Peers % Insured Deposits NIB Mix Shift (EOP) CET1 + ACL NCO 1Q23 1Q23 1Q23 LTM HBAN 69% Peer 1 Peer 6 Peer 7 Peer 1 HBAN 96.2% Peer 9 Peer 10 Top Quartile Peer 5 Peer 4 HBAN 11.2% HBAN 0.13% Peer 10 Peer 2 Peer 1 Peer 8 Peer 6 Peer 5 Peer 10 Peer 6 P
Slide 21: Financial Update
Financial Update (2) Huntington Welcome:
Slide 22: 2023 First Quarter Financial Performance
2023 First Quarter Financial Performance $0.43 $0.39 ROTCE EPS $0.32 $0.36 $0.38 GAAP Reported 23.1% $0.39 $0.35 $0.39 $0.42 $0.39 $0.29 Adjusted 22.7% (17.8% ex AOCI) $0.38 1Q22 2Q22 3Q22 4Q22 1Q23 EPS GAAP Notable Items Pre-Provision Net Revenue growth of 41% YoY; EPS increased 34% YoY Driving D
Slide 23: Driving Sustained Profitability
Driving Sustained Profitability Pre-Provision Net Revenue (PPNR) Highlights 100 0 Notable Items PPNR (GAAP) $908 $867 900 $828 Positive underlying trends in NII and fee $758 $10 $15 800 (-$16) income offset by expected seasonality impact 700 $646 $24 600 $46 +41% YoY PPNR growth of 41% driven by
Slide 24: Loans and Leases | Broad Based Commercial Loan Growth
Loans and Leases | Broad Based Commercial Loan Growth Average Loan and Lease Balances Highlights QoQ YoY vs Linked Quarter +8.3% Total Average loans up $1.5 billion, or 1.3% QoQ, or $117.0 $118.9 $120.4 1.3% 8.3% $111.1 $113.9 Loans $1.5 billion, or 1.3% ex PPP Average commercial up $1.5 billion
Slide 25: Deposits | Growth in Average Balances
Deposits | Growth in Average Balances Average Deposit Balances QoQ YoY $142.9 $145.0 $146.0 $145.7 $146.1 Total Deposits +0.3% +2.3% $3.8 $3.2 $4.3 $5.0 $5.0 $61.8 $63.9 $65.3 Total Core $65.1 $63.4 -2.6% +2.7% Commercial Total Core $77.3 $77.9 $76.4 $75.6 $77.7 +2.8% +0.4% Consumer 1Q22 2Q22 3Q22 4
Slide 26: High Quality, Granular Deposit Franchise
High Quality, Granular Deposit Franchise Leading Percent of Insured Deposits(1) Diversification by Business Lines.. Banks at 1Q23 HBAN 69% Bank 1 66% Consumer Bank 2 66% 50% WFC 63% 25% Commercial BAC 62% Bank 3 60% Bank 4 59% Bank 5 57% 14% 4% 6% Bank 6 57% Other Business Banking 1% Bank 7 56% Vehi
Slide 27: Cumulative Deposit Growth Above Peers
Cumulative Deposit Growth Above Peers Cumulative Growth Rate of Average Deposits since 4Q21 (1) HBAN Peer Median Top / Bottom Quartile HBAN has consistently grown deposits over 1.9% 2.6% 2.4% 2.7% 0.4% the course of last year, despite a more 0.3% -1.0% challenging industry -4.6% deposit environmen
Slide 28: 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) YoY 2019: Enhanced off balance sheet liquidity solutions for commercial customers Annually $55.8 $57.5 Total +23% $52.9 Pr
Slide 29: Diversified Sources of Liquidity
Diversified Sources of Liquidity Robust Level of Available Liquidity(1) Highlights $ in billions $84 Peer leading available liquidity as a percent of $10 uninsured deposits highlighting the proactive Cash $61 approach to liquidity risk management and $10 strength of our granular deposit base Conti
Slide 30: Net Interest Income | Driving Growth Over Time
Net Interest Income | Driving Growth Over Time 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) decreased $53 million (-3.6%) impacted by
Slide 31: Deposit Costs | Continued Disciplined Execution
Deposit Costs | Continued Disciplined Execution Deposit Cost vs Fed Funds Target Rate Current 3Q15-2Q19 Tightening Fed Cycle (+225) 2Q19-4Q21 Easing Fed Cycle (-225) Cycle 4.75 4.50 3.25 2.50 2.50 2.25 2.00 2.00 1.75 1.75 1.75 1.50 1.25 1.13 1.00 0.50 0.75 0.70 0.73 0.75 0.66 0.64 0.50 0.50 0.31 0.4
Slide 32: Balance Sheet Management Strategy
Balance Sheet Management Strategy Hedging Program Hedging Balance Update (EOP) $ in billions $27.2 Dynamic hedging strategy, designed to create laddered portfolios $24.1 $22.8 with respect to instruments, strikes, and durations $16.2 $17.5 ▪ Two key objectives of: 1) protecting capital over time,
Slide 33: Securities Portfolio
Securities Portfolio Average Securities + Cash(1) Highlights Average Securities Cash Average Securities Yield Securities duration 4.7 years; net of hedging 3.7 years $51.5 $49.6 $47.8 $47.5 $47.3 Securities yields increased 30 bps QoQ $8.8 $5.2 $4.9 $6.3 $7.7 New purchase yield of 5.03%, 14bps
Slide 34: Noninterest Income | Growth in Underlying Key Drivers
Noninterest Income | Growth in Underlying Key Drivers Noninterest Income Highlights vs Linked Quarter $499 $485 $498 $499 $512 Noninterest Income increased $13 million or 3% $57 Noninterest Income ex Notable Items decreased $44 million, impacted by seasonality, lower capital markets, leasing rev
Slide 35: Noninterest Expense | Disciplined Expense Management
Noninterest Expense | Disciplined Expense Management Noninterest Expense Highlights vs Linked Quarter Proactive reduction of expenses with completion of the $1,053 $1,053 $1,077 $1,086 $1,018 voluntary retirement program (VRP), branch consolidations in $46 $10 $15 $42 1Q, and execution of our orga
Slide 36: Pursuing Strategic Investments with Disciplined Expense Management
Pursuing Strategic Investments with Disciplined Expense Management 1 Grow Expenses Less than Revenue To Deliver Positive Operating Leverage Total Expenses: ~$4.2 Billion Continued Commitment to Growing Investment Capacity... (FY 2022) Increasing at ✓ Increasing as a % of total expense 2 a 2x rate vs
Slide 37: Disciplined Expense Management Driving Positive Operating Leverage
Disciplined Expense Management Driving Positive Operating Leverage Efficiency Initiatives Voluntary Operation Branch Organizational Retirement Accelerate Optimization Realignment Program ✓ Simplifying ✓ Closed 30 ✓ Focused on middle ✓ Consolidation of customer journeys locations (1Q23) & senior leve
Slide 38: Expense Improvement Supports Strategic Investments
Expense Improvement Supports Strategic Investments Operating Investments(1) Key Initiatives (2023) 1 Technology Development New consumer products (marketplace and deepening) CAGR 20% Expanded capabilities in wealth and advisory Commercial origination and servicing Enhanced payment capabiliti
Slide 39: Capital Positioning | Building Over the Year
Capital Positioning | Building Over the Year Common Equity Tier 1 (CET1) Ratio Highlights Target operating range 9 – 10% Strong Capital Position CET1 within target operating range at 9.55% ▪ CET1 continues to grow on reported basis (+19 bp QoQ) 9.55% ▪ Inclusive of AOCI, CET1 improved 43 bps QoQ 9
Slide 40: Strong Credit Quality
Strong Credit Quality Guided by Aggregate Moderate-to-Low Risk Appetite Diversified Portfolio Provides Protection Top Quartile ACL Through Economic Cycles 1Q23 Other RV/Marine Asset Finance Peer 1 6% 15% Home Equity 4% 9% Peer 2 14% Mid Market, HBAN HBAN 1.90% Consumer 44% Auto 11% Corp, Specially C
Slide 41: Tangible Book Value (TBV) per Share
Tangible Book Value (TBV) per Share Tangible Book Value per Share TBVPS Adjusted TBVPS, ex AOCI $9.23 $8.96 $8.67 $8.38 $8.42 $7.47 $7.32 $6.96 $6.82 $6.40 1Q22 2Q22 3Q22 4Q22 1Q23 See reconciliation on slide 58 (TBV per Share) 2023 Second Quarter Investor Presentation 41
Slide 42: CET1 Comparison versus Peers
CET1 Comparison versus Peers CET1 (Reported and Adjusted for ACL) Peers at 1Q23 Top tier total loss absorbing capacity versus peers 11.5% 11.3% 11.2% 11.1% 11.0% 11.0% 10.7% 10.5% 10.2% 1.3% 1.2% 1.3% 0.9% 10.1% 10.0% CET1 + ACL 1.6% 1.0% 1.4% 1.2% 1.1% 1.0% 1.5% ACL Impact 10.2% 10.0% 9.5% 9.8% 9
Slide 43: CCAR Modeled Loan Loss Rates
CCAR Modeled Loan Loss Rates HBAN’s modeled loss rates consistently among the lowest in peer rankings CCAR Cumulative Loan Losses as a % of Average Total Loans(1) 2020 2015 2016 2017 2018 2020 Resubmission 2022 HBAN 4.2% Peer 1 4.4% Peer 1 4.2% Peer 1 5.2% HBAN 5.1% Peer 1 5.9% Peer 1 5.7% Peer 1 4.
Slide 44: 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) $ in millions $2,168 $2,230 $2,271 $2,299 $2,109 0.17% 0.19% 0.15% 0.07% 0.03% 1.87% 1.87% 1.89% 1.90% 1.90% 1Q22 2Q22 3Q22 4Q22 1Q23 1Q22 2Q22 3Q22 4Q22 1Q23 ACL ACL as % of Total Loans & Lea
Slide 45: Historical Asset Quality and Reserve Trends
Historical Asset Quality and Reserve Trends Net Charge-off Ratio Key Highlights Through the Cycle Target NCO Range (25 – 45 bps) Strong Credit Quality 0.32% 0.28% Credit performance is a reflection of 0.20% rigorous customer selection 0.17% 0.19% 0.15% 0.12% NCOs normalizing from historic low 0.
Slide 46: Commercial Real Estate (CRE) Overview
Commercial Real Estate (CRE) Overview CRE Loans as % of Total Loans Portfolio Characteristics Peer Median: 15% Peers at 1Q23 Well diversified portfolio with rigorous client selection Peer 2 9% Peer 4 11% CRE reserve coverage 3% vs peer median of 2% (1Q23) HBAN 14% Office reserve coverage of 8%
Slide 47: Auto – Proven Track Record of Strategic Growth
Auto – Proven Track Record of Strategic Growth Optimize through the Cycle Know when to pull and press on production to maximize returns Indirect Auto Production ($B) and New Origination Yield $1.9 $1.9 $1.8 $1.8 6.3% $1.8 $1.7 $1.7 5.9% $1.6 $1.6 $1.6 $1.6 $1.5 $1.5 $1.4 $1.4 $1.4 $1.4 $1.4 $1.4 $1.
Slide 48: 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 $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 of Total Loans $6.7 18.3% 18.8% 16.4% 17.5% 16.7% 17.1%
Slide 49: 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% 2023 Second Quarter Investor Presentation 49
Slide 50: 2023 Outlook
2023 Outlook FY23 vs. FY22 Commentary Prior Guidance Updated Guidance As of 1/20/23 As of 4/20/23 Average Loans Driven mainly by commercial, with modest growth Up 5% - 7% Up 5% - 7% FY22 baseline = $115.3 billion in consumer Now expect to be consumer led, with continued Average Deposits Up 1% - 4% U
Slide 51: Appendix
Appendix (2) Huntington Welcome:
Slide 52: Disclaimer
Disclaimer CAUTION REGARDING FORWARD-LOOKING STATEMENTS The information contained or incorporated by reference in this presentation contains certain forward-looking statements, including, but not limited to, certain plans, expectations, goals, projections, and statements, which are not historical fa
Slide 53: Basis of Presentation
Basis of Presentation Use of Non-GAAP Financial Measures This document contains GAAP financial measures and non-GAAP financial measures where management believes it to be helpful in understanding Huntington’s results of operations or financial position. Where non-GAAP financial measures are used, th
Slide 54: Non-GAAP Reconciliation
Non-GAAP Reconciliation Pre-Provision Net Revenue (PPNR) Pre-Provision Net Revenue 1Q22 2Q22 3Q22 4Q22 1Q23 ($ in millions) Total revenue $1,645 $1,746 $1,902 $1,961 $1,921 FTE adjustment 8 6 8 9 9 Total revenue (FTE) A 1,653 1,752 1,910 1,970 1,930 Less: gain on sale of business line -- -- -- -- 57
Slide 55: Non-GAAP Reconciliation
Non-GAAP Reconciliation Average tangible common equity, ROTCE ($ in millions) 1Q22 2Q22 3Q22 4Q22 1Q23 Average common shareholders’ equity $16,898 $16,062 $16,150 $15,292 $15,973 Less: intangible assets and goodwill 5,584 5,613 5,781 5,771 5,759 Add: net tax effect of intangible assets 49 46 43 42 4
Slide 56: Non-GAAP Reconciliation
Non-GAAP Reconciliation Noninterest Expense, Efficiency Ratio, NIM% Efficiency Ratio ($ in millions) – Pre-tax 1Q22 2Q22 3Q22 4Q22 1Q23 Noninterest expense (GAAP) $1,053 $1,018 $1,053 $1,077 $1,086 Less: intangible amortization 14 13 13 13 13 Noninterest expense less amortization of intangibles (A)
Slide 57: Non-GAAP Reconciliation
Non-GAAP Reconciliation Earnings Per Share (EPS), Common Equity Tier 1 (CET1) EPS ($ in millions, except per share amounts) 1Q22 2Q22 3Q22 4Q22 1Q23 Earnings Per Share (GAAP), diluted $0.29 $0.35 $0.39 $0.42 $0.39 Acquisition-related expenses $46 $24 $10 $15 $-- Notable items, net of tax $37 $0.03 $
Slide 58: 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 Huntington shareholders’ equity $18,452 $17,950 $17,136 $17,731 $18,758 Less: preferred stock 2,167 2,167 2,167 2,167 2,484 Common shareholders’ e
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