8-K: Huntington Bancshares Reports Solid Q3 2024 Earnings, Driven by Revenue Growth and Strong Credit Quality

Huntington Bancshares Incorporated announced its third-quarter 2024 earnings, highlighting sequential growth in net interest income and fee revenues, along with sustained loan and deposit growth.

Summary

• Huntington Bancshares reported a net income of $517 million, or $0.33 per common share, for the third quarter of 2024.
• This represents an increase of $43 million, or $0.03 per share, from the previous quarter, but a decrease of $30 million, or $0.02 per share, compared to the same quarter last year.
• Net interest income rose by $39 million, or 3%, from the prior quarter, but decreased by $17 million, or 1%, year-over-year.
• Noninterest income increased by $32 million, or 7%, from the prior quarter, reaching $523 million.
• Average total loans and leases grew by $1.1 billion, or 1%, from the previous quarter, and $3.7 billion, or 3%, from the year-ago quarter, reaching $124.5 billion.
• Average total deposits increased by $2.9 billion, or 2%, from the prior quarter, and $8.3 billion, or 6%, from the year-ago quarter.
• The company's net charge-offs were 0.30% of average total loans and leases for the quarter.
• The nonperforming asset ratio stood at 0.62% at the end of the quarter.
• The allowance for credit losses was $2.4 billion, or 1.93% of total loans and leases, at quarter end.
• Cash and cash equivalents and available contingent borrowing capacity totaled $95 billion, representing 195% of estimated uninsured deposits.
• The Common Equity Tier 1 (CET1) risk-based capital ratio was 10.4%, unchanged from the prior quarter, while the tangible common equity (TCE) ratio increased to 6.4%.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive due to the sequential growth in key metrics and strong credit quality, although there are some year-over-year declines and increased nonperforming assets that temper the overall outlook.

Positives

• The company experienced sequential expansion of net interest income and fee revenues.
• There was sustained loan and deposit growth during the quarter.
• Credit quality remained strong.
• The tangible book value per share saw a significant increase.
• Huntington maintained its leading position in SBA 7(a) loan originations.
• The company's liquidity and capital are robust.

Negatives

• Net income decreased by $30 million, or $0.02 per share, compared to the same quarter last year.
• Net interest income decreased by $17 million, or 1%, year-over-year.
• Nonperforming assets increased to $784 million, or 0.62% of total loans and leases, OREO and other NPAs, compared to $634 million, or 0.52%, a year-ago.
• Net charge-offs increased to 0.30% of average loans and leases, up from 0.24% in the year-ago quarter.

Risks

• The company faces risks related to changes in general economic, political, or industry conditions.
• Deterioration in business and economic conditions, including inflation, supply chain issues, and labor shortages, could impact results.
• Pandemics and other catastrophic events could affect the global economy and financial markets.
• Bank failures and other volatility could lead to increased regulatory requirements and costs.
• Unexpected outflows of uninsured deposits could require the sale of investment securities at a loss.
• Changing interest rates could negatively impact the value of the investment portfolio.
• Cybersecurity risks and social media impacts on market perceptions are also concerns.

Future Outlook

Huntington anticipates accelerated loan growth to continue in the fourth quarter, supported by core businesses and new initiatives, which are tracking above plan. The company believes this growth momentum establishes a foundation for growing revenue and expanded profitability heading into 2025.

Management Comments

• Our third quarter results were highlighted by sequential revenue and profit expansion, said Steve Steinour, chairman, president, and CEO.
• We drove accelerated loan growth and sustained deposit gathering in the quarter, while actively executing our down-rate action plans.
• We are also pleased with a very strong performance in our value added fees businesses.
• Huntington continues to operate from a position of strength given disciplined management actions the company has sustained over many years.
• Our liquidity and capital are robust and support our continued focus on driving organic growth.
• We are continuing to acquire and deepen customer relationships, expanding in our existing business and new markets and verticals.
• Credit continues to perform very well, with stable net-charge offs and improved nonperforming asset and criticized asset ratios, consistent with our aggregate moderate-to-low risk appetite.
• Our customers continue to show strength and resiliency, which supports a constructive outlook.

Industry Context

This announcement reflects a trend in the banking industry where institutions are focusing on growing revenue through increased lending and fee-based services, while also managing credit risk and maintaining strong capital positions. The emphasis on digital banking and customer relationships is also a common theme.

Comparison to Industry Standards

• Huntington's CET1 ratio of 10.4% is within the range of other regional banks, such as KeyCorp (KEY) which reported a CET1 ratio of 10.2% in their most recent quarter.
• The tangible common equity ratio of 6.4% is comparable to peers like Fifth Third Bancorp (FITB), which reported a TCE ratio of 6.3% in their latest results.
• Huntington's net charge-off rate of 0.30% is slightly higher than some peers, such as PNC Financial Services (PNC) which reported a net charge-off rate of 0.25% in their recent quarter, indicating a slightly more aggressive lending strategy or different risk profile.
• The loan growth of 1% quarter-over-quarter is in line with the industry average, with some banks experiencing slightly higher or lower growth depending on their specific market focus and strategies.
• The deposit growth of 2% quarter-over-quarter is also within the range of industry norms, with some banks experiencing higher growth due to specific promotional activities or market conditions.

Stakeholder Impact

• Shareholders will be impacted by the earnings results and the company's future outlook.
• Employees may be affected by any changes in staffing or business strategies.
• Customers will benefit from the company's continued focus on customer relationships and new products and services.
• Suppliers and creditors will be impacted by the company's financial performance and stability.

Next Steps

• Huntington's senior management will host an earnings conference call on October 17, 2024, at 9:00 a.m. (Eastern Time).
• A replay of the webcast will be archived in the Investor Relations section of Huntington's website.
• A telephone replay will be available approximately two hours after the completion of the call through October 25, 2024.

Key Dates

Keywords

earnings, net interest income, noninterest income, loans, deposits, credit quality, capital, SBA loans, financial results, banking