8-K: Huntington Bancshares Reports Mixed Q1 2024 Results Amidst Deposit Growth and Special Assessment Impact

Huntington Bancshares reported a first-quarter net income of $419 million, or $0.26 per common share, reflecting growth in deposits and loans but impacted by a special FDIC assessment.

Summary

• Huntington Bancshares Incorporated announced its financial results for the first quarter of 2024, with net income at $419 million, or $0.26 per common share.
• This represents an increase of $176 million from the previous quarter but a decrease of $183 million compared to the same quarter last year.
• Adjusted earnings per common share were $0.28, excluding a $0.02 per share impact from notable items, primarily the FDIC Deposit Insurance Fund special assessment.
• Net interest income decreased by $29 million from the prior quarter and $122 million from the year-ago quarter.
• Noninterest income increased by $62 million from the prior quarter, reaching $467 million.
• Average total deposits increased by $1.1 billion from the prior quarter and $4.6 billion from the year-ago quarter.
• Average total loans and leases increased by $701 million from the prior quarter and $1.5 billion from the year-ago quarter.
• The net charge-off rate was 0.30% of average total loans and leases for the quarter.
• The Common Equity Tier 1 (CET1) risk-based capital ratio remained stable at 10.2%.

Sentiment

Score: 6

Explanation: The sentiment is moderately positive due to deposit and loan growth, but tempered by lower net interest income and the impact of the FDIC special assessment. The forward-looking statements are positive, but the current results are mixed.

Positives

• Huntington experienced sustained deposit and loan growth during the first quarter.
• Ending core deposits increased by $1.8 billion, reflecting strong consumer deposit gathering.
• The company's credit quality remained strong, with stable net charge-offs compared to the prior quarter.
• Huntington received 7 awards from Coalition Greenwich for 2023 in Excellence and Best Brand for both middle market and business banking.
• Huntington was recognized by Newsweek as one of America's 500 Most Responsible Companies for the fifth consecutive year.

Negatives

• Net interest income decreased both from the prior quarter and the year-ago quarter.
• Reported earnings per share were lower compared to the same quarter last year.
• The company incurred a $32 million expense related to the FDIC deposit insurance fund special assessment.
• Tangible common equity (TCE) ratio decreased slightly from the prior quarter.

Risks

• The company faces risks related to changes in economic, political, and industry conditions.
• Deterioration in business and economic conditions, including inflation and supply chain issues, could impact results.
• The impact of pandemics and recent bank failures could lead to increased regulatory requirements and costs.
• Unexpected outflows of uninsured deposits could require the sale of investment securities at a loss.
• Rising interest rates could negatively impact the value of the investment portfolio.
• Cybersecurity risks and volatility in capital markets are also potential concerns.

Future Outlook

Huntington expects to accelerate loan growth throughout the year and into 2025, supporting revenue and profitability.

Management Comments

• Our first quarter results were highlighted by sustained organic growth, with deposit and loan balances continuing to expand as we enter the new year, said Steve Steinour, chairman, president, and CEO.
• Our outlook for the year remains unchanged as we look to accelerate organic growth.
• We foresee accelerating loan growth over the course of the year as new teams and expanded markets continue to see substantive opportunities in addition to our existing markets.
• We expect this growth momentum will carry through the year and into 2025, further supporting our revenue and profitability outlook.

Industry Context

The results reflect the broader banking industry's challenges with net interest income compression due to higher funding costs and the impact of regulatory changes, such as the FDIC special assessment. However, Huntington's deposit growth and credit quality are positive indicators in the current environment.

Comparison to Industry Standards

• Huntington's net interest margin of 3.01% is lower than some peers, reflecting the impact of higher funding costs, but is in line with regional banks facing similar pressures.
• The CET1 ratio of 10.2% is within the range of other regional banks, indicating a stable capital position.
• The net charge-off rate of 0.30% is relatively low, suggesting strong credit quality compared to some competitors.
• Companies like KeyCorp and Fifth Third Bancorp, which also operate in the Midwest, have reported similar challenges with net interest income, but Huntington's deposit growth is a positive differentiator.
• Compared to larger national banks, Huntington's results show a focus on regional growth and relationship banking, which is reflected in its core deposit growth.

Stakeholder Impact

• Shareholders may be concerned about the decrease in net interest income and lower earnings compared to the previous year.
• Employees may benefit from the company's focus on growth and new opportunities.
• Customers may experience improved services and products as the company invests in new capabilities.
• Creditors may view the company's strong capital position and liquidity as positive indicators.

Next Steps

• Huntington will continue to focus on executing key growth initiatives.
• The company will invest in new revenue-producing opportunities and expand its presence in key markets.
• Management will monitor credit quality and maintain a disciplined approach to risk management.

Key Dates

Keywords

Huntington Bancshares, earnings, financial results, net income, deposits, loans, credit quality, FDIC, capital ratio, interest income