Huntington Bancshares Incorporated · NASDAQ:HBAN
Huntington Bancshares — Q1 2020 Earnings Presentation
34 slides from Huntington Bancshares's earnings presentation, Apr 23, 2020
Slide 1: 2020 First Quarter Earnings Review
2020 First Quarter Earnings Review April 23, 2020 The Huntington National Bank is Member FDIC. ®, Huntington® and Huntington. Welcome.® are federally registered service marks of Huntington Bancshares Incorporated. ©2020 Huntington Bancshares Incorporated. Disclaimer CAUTION REGARDING FORWARD‐LOOKING
Slide 2: Pandemic Update: Living our Purpose
Pandemic Update: Living our Purpose Amid the current COVID‐19 pandemic, we are living our purpose to make people’s lives better, help businesses thrive, and strengthen the communities we serve. We recognize this is a health crisis, first and foremost, but it has also created enormous economic challe
Slide 3: Pretax, Pre-Provision Earnings (PTPP)
Pretax, Pre‐Provision Earnings (PTPP) Solid growth in PPTP in face of challenging environment illustrates underlying earnings power; PTPP exceeds elevated credit provisioning Year‐Over‐Year Change ($ in millions) 1Q20 1Q19 $ % Net interest income (FTE) $796) $829) ($33)) ‐4%) Noninterest income $361
Slide 4: Average Non-Equity Funding
Average Non‐Equity Funding Money market and interest‐bearing demand drive continued year‐over‐year growth in core deposits Average Quarterly Growth Year‐over‐Year Average Growth Linked Quarter Borrowings & Other: +$2.2 16% Borrowings & Other: +$1.5 11% MMA: +$1.8 8% DDA‐Int. Bearing: +$1.1 5% DDA‐In
Slide 5: Strong Capital Management
Strong Capital Management 1Q20 CET1 and total risk‐based capital ratios above peer median 1Q20 Total Risk‐Based Capital Ratio Dividend Yield (as of 4/17/20) 13.6% 8.9% Peer Median: 6.5% 13.3% Peer Median: 12.6% 7.9% 7.4% 7.0% 12.9% 6.8% 6.5% 12.7% 5.8% 12.6% 12.6% 12.5% 12.5% 12.3% 5.4% 4.7% 4.5% 11
Slide 6: Strong Credit Risk Management
Strong Credit Risk Management 1Q20 ACL coverage above peer median 1Q20 ACL as % of Total Loans and Leases 1Q20 ACL as % of 2018 DFAST Severely 3.19% Adverse Cumulative Losses(1) Peer Median: 1.76% 44% Peer Median: 34% 42% 38% 35% 2.13% 2.05% 33% 1.89% 1.83% 31% 1.76% 1.73% 28% 1.66% 1.56% 1.47% 1.47
Slide 7: Credit Quality – NPAs and TDRs
Credit Quality – NPAs and TDRs Proactive and conservative approach to identifying impaired loans Nonaccrual Loans and Leases Q/Q Trend in Nonperforming Assets 1Q20 4Q19 0.75% (NALs): Change 0.61% 0.61% 0.64% 0.66% $46 $47 $44 $56 Commercial and Industrial $396 $323 $73) $195 $415 $413 $438 $442 $391
Slide 8: Leveraged Lending Portfolio
Leveraged Lending Portfolio $2.97B in outstanding balances Outstandings by Industry HNB Leveraged Lending Definition • Aggregate exposure greater than $5MM • Senior leverage 2.5x, total leverage 4.0x 23% • Greater than $500MM revenue: Senior leverage 3.0x • Includes collateral test 42% • Includes bo
Slide 9: Near-Term Outlook
Near‐Term Outlook Withdrawing prior 2020 expectations due to uncertain economic outlook 2Q20 Expectations (vs. 1Q20) • Average commercial loan growth of 4‐5% linked‐quarter reflecting full quarter impact of recent $3.2B CML line draws but excluding $6B SBA PPP lending (both CML line draws and PPP ex
Slide 10: Reconciliation
Reconciliation Tangible common equity and ROTCE ($ in millions) 1Q20 4Q19 1Q19 Average common shareholders’ equity $10,433 $10,681 $9,953 Less: intangible assets and goodwill 2,217 2,228 2,265 Add: net tax effect of intangible assets 48 50 58 Average tangible common shareholders’ equity (A) $8,264 $
Slide 11: Appendix Basis of Presentation
Appendix 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
Slide 12: Basis of Presentation
Basis of Presentation Rounding Please note that columns of data in this document may not add due to rounding. Significant 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
Slide 13: Income Statement
Income Statement Net Interest Income Year‐over‐year net interest margin compression outpaced increase in average earning assets $ in millions $840.00 Net Interest Income (FTE) 3.80% $830.00 3.70% $829 $820.00 3.60% $819 $810.00 3.50% $805 -4% 3.39% $800.00 3.40% $790.00 3.31% $796 $786 3.30% $780.00
Slide 14: Net Interest Margin (FTE)
Net Interest Margin (FTE) NIM down 25 basis points year‐over‐year reflecting lower market interest rates and inherent asset sensitivity of balance sheet Net Interest Margin Trends Components of Cost of Interest‐Bearing Liabilities 4.40% 4.35% 4.21% 4.03% 3.88% 3.98% 3.91% 3.39% 3.59% 3.50% 3.31% 3.2
Slide 15: Deposit Repricing Overview
Deposit Repricing Overview CD and MMA Promo Rate Maturities Monthly Interest‐Bearing Deposit Cost 1.00% 1.01% 0.98% 3Q20 0.95% 1Q20 0.91% 0.90% $2.8 B Avg Cost: $4.9 B 0.80% 1.62% Avg Cost: 0.77% 0.74% 2.12% 2Q20 $3.4 B Avg Cost: 0.53% 1.77% Jun19 Jul19 Aug19 Sep19 Oct19 Nov19 Dec19 Jan20 Feb20 Mar2
Slide 16: Noninterest Expense
Noninterest Expense Disciplined expense management while continuing to invest in digital and mobile technology Change in Quarterly Noninterest Expense Year‐over‐Year Total Expense Outside data processing: +$4 5% $701 Marketing: +$2 29% ‐0% Personnel costs: +$1 0% $653 $652 Equipment: +$1 3% Deposit
Slide 17: Tax Rate Summary
Tax Rate Summary Reported vs. FTE adjusted ($ in millions) 1Q20 4Q19 1Q19 Reported (GAAP) Income before income taxes $58 $372 $421 Provision for income taxes $10 $55 $63 Effective tax rate 17.0% 14.8% 15.0% FTE Adjustment Income before income taxes $6 $6 $7 Provision for income taxes $6 $6 $7 Adjust
Slide 18: Average Deposit Composition
Average Deposit Composition: $82.7 Billion 1Q20 average balances Average Balance by Type Average Balance by Segment 0% 3% 4% 5% 0% 7% 24% 12% 26% 62% 30% 26% Demand ‐ Noninterest Bearing $20.1B Consumer and Business Banking: $51.3B Demand ‐ Interest Bearing $21.2B Commercial Banking: $21.5B Money Ma
Slide 19: Average Loan Composition
Average Loan Composition: $75.7 Billion 1Q20 average balances Average Balance by Type Average Balance by Segment 2% 8% 5% 41% 29% 15% 27% 12% 9% 17% 36% C&I $30.8B Commercial Real Estate $6.7B Consumer and Business Banking: $21.6B Auto $12.9B Commercial Banking: $27.2B Home Equity $9.0B Vehicle Fina
Slide 20: Change in Common Shares Outstanding
Change in Common Shares Outstanding Repurchased $88 million of common shares in 1Q20 o Represents 7.1 million common shares at an average cost of $12.38 per share Share count in millions 1Q20 4Q19 3Q19 2Q19 1Q19 4Q18 3Q18 Beginning shares outstanding 1,020 1,033 1,038 1,046 1,047 1,062 1,104 Emplo
Slide 21: AFS and HTM Securities Overview
AFS and HTM Securities Overview(1) March 31, 2020 December 31, 2019 March 31, 2019 ($mm) % of Remaining % of Remaining % of Remaining AFS Portfolio Carry Value Portfolio Life to Maturity Yield(3) Carry Value Portfolio Life to Maturity Yield(3) Carry Value Portfolio Life to Maturity Yield(3) U.S. Tre
Slide 22: Commercial and Industrial: $33.0 Billion
Commercial and Industrial: $33.0 Billion Diversified by sector and geographically within our Midwest footprint; asset finance and specialty lending in extended footprint Strategic focus on middle market companies with $20 ‐ $500 million in sales and Business Banking customers with <$20 million i
Slide 23: Commercial Real Estate: $7.0 Billion
Commercial Real Estate: $7.0 Billion Long‐term, meaningful relationships with opportunities for additional cross‐sell o Primarily Midwest footprint projects generating adequate return on capital o Proven CRE participants… 28+ years average CRE experience o >80% of the loans have personal guarantee
Slide 24: Auto Loans – Origination Trends
Auto Loans – Production and Credit Quality 1Q20 4Q19 3Q19 2Q19 1Q19 4Q18 3Q18 2Q18 Originations Amount ($ in billions) $1.6 $1.9 $1.6 $1.3 $1.2 $1.4 $1.4 $1.6 % new vehicles 47% 52% 46% 40% 42% 49% 45% 47% Avg. LTV 89% 88% 90% 92% 90% 90% 91% 89% Avg. FICO 778 781 773 766 764 767 763 766 Portfolio P
Slide 25: Home Equity: $9.0 Billion
Home Equity: $9.0 Billion Focused on geographies within our Midwest footprint with relationship customers Focused on high quality borrowers… portfolio as of 1Q20: o Average weighted FICO scores of 750+ o Average weighted LTVs of <85% for junior liens and <75% for 1st‐liens o Approximately 55% ar
Slide 26: Residential Mortgages: $11.4 Billion
Residential Mortgages: $11.4 Billion Traditional product mix focused on geographies within our Midwest footprint Early identification of at‐risk borrowers. “Home Savers” program has a 75% success rate Credit Quality Review 1Q20 4Q19 3Q19 2Q19 1Q19 Period end balance ($ in billions) $11.4 $11.4 $
Slide 27: RV and Marine: $3.6 Billion
RV and Marine: $3.6 Billion Indirect origination via established dealers with 2017‐2018 expansion into new states, primarily in the Southeast and the West Centrally underwritten with focus on super prime borrowers Underwriting aligns with Huntington’s origination standards and risk appetite o
Slide 28: Credit Quality Review
Credit Quality Review Credit Quality Trends Overview 1Q20 4Q19 3Q19 2Q19 1Q19 Net charge‐off ratio 0.62% 0.39% 0.39% 0.25% 0.38% 90+ days PD and accruing 0.21 0.23 0.22 0.20 0.20 NAL ratio(1) 0.72 0.62 0.58 0.57 0.56 (2) NPA ratio 0.75 0.66 0.64 0.61 0.61 Criticized asset ratio(3) 3.59 3.64 3.62 3.4
Slide 29: Consumer Loan Delinquencies
Consumer Loan Delinquencies(1) 30+ Days 90+ Days 1.13% 1.15% 1.11% 1.06% 1.07% 2.49% 2.50% 2.41% 2.40% 2.10% 1.32% 1.34% 1.36% 1.22% 1.22% 0.41% 0.42% 0.41% 0.39% 0.39% 0.95% 0.88% 0.79% 0.84% 0.84% 0.81% 0.81% 0.87% 0.80% 0.16% 0.16% 0.16% 0.14% 0.13% 0.67% 0.06% 0.06% 0.07% 0.05% 0.06% 1Q19 2Q19 3
Slide 30: Net Charge-Offs
Net Charge‐Offs Total Commercial Loans Total Consumer Loans ($ in millions) ($ in millions) NCOs NCOs Annualized % Annualized % 0.89% 0.41% 0.39% 0.38% 0.35% 0.31% 0.40% 0.38% 0.35% $83 0.20% $38 $37 $35 $34 $30 $38 $36 $33 $18 1Q19 2Q19 3Q19 4Q19 1Q20 1Q19 2Q19 3Q19 4Q19 1Q20 2020 First Quarter Ear
Slide 31: Criticized Commercial Loan Analysis
Criticized Commercial Loan Analysis End of Period ($ in millions) 1Q20 4Q19 3Q19 2Q19 1Q19 Criticized beginning‐of‐period $2,394 $2,365 $2,256 $2,216 $2,054 Additions / increases 510 479 523 524 462 Advances 187 109 106 129 93 Upgrades to “Pass” (100) (174) (153) (236) (97) Paydowns (435) (359) (303
Slide 32: Huntington Bancshares Overview
Huntington Bancshares Overview $114 billion asset regional bank holding company Consolidated Ohio Retail Footprint Products Branches: 827 Branches: 394 Deposits: $86.8 billion Deposits: $55.3 billion Consumer Loans(1): $110.5 billion Loans(1): $40.0 billion Business Banking Commercial Wealth Managem
Slide 33: Notes
Notes Slide 8: (1) The estimated March 31, 2020 capital ratios reflect Huntington’s election of a five‐year transition to delay for two years the full impact of CECL on regulatory capital, followed by a three‐year transition period Slide 9: Peer group includes CFG, CIT, CMA, FITB, KEY, MTB, PNC, RF,
Slide 34: Notes
Notes Slide 54: (1) RV/Marine LTV based on wholesale value Slide 56: (1) NALs divided by total loans and leases (2) NPAs divided by the sum of loans and leases, net other real estate owned, and other NPAs (3) Criticized assets = commercial criticized loans + consumer loans >60 DPD + OREO; Total crit
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