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    Huntington Bancshares Inc (HBAN)

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    Business Description

    Huntington Bancshares Incorporated (HBAN) is a multi-state diversified regional bank holding company headquartered in Columbus, Ohio. The company provides a wide range of commercial and consumer banking services through its subsidiaries, including deposits, lending, payments, mortgage banking, and various financing options . HBAN operates through two main business segments: Consumer & Regional Banking and Commercial Banking, offering products and services such as investment management, trust, brokerage, and insurance . The company emphasizes a "Fair Play" banking philosophy with innovative products like 24-Hour Grace® and Asterisk-Free Checking® .

    1. Consumer & Regional Banking - Offers financial products and services to consumer and business customers, including deposits, lending, payments, mortgage banking, dealer financing, investment management, trust, brokerage, and insurance.

    2. Commercial Banking - Provides services to mid-market to large corporate clients, including wealth management, trust, insurance, payments, and treasury management capabilities.

    Q4 2024 Summary

    Initial Price$14.61October 1, 2024
    Final Price$16.27December 31, 2024
    Price Change$1.66
    % Change+11.36%

    What went well

    • Huntington is experiencing robust loan growth, with pipelines 50% higher this year compared to last, reflecting positive borrower sentiment and expectations for 2025 and beyond.
    • The company achieved record asset finance in the fourth quarter, indicating unlocking of customer investments and increased financing activities, contributing to strong core growth.
    • Huntington prioritizes top quartile organic growth, having made significant investments leading to strong performance, and remains confident in future growth opportunities, focusing on organic growth over M&A.

    What went wrong

    • Stress capital buffer at minimum level: Huntington Bancshares' stressed capital buffer remains at the minimum 2.5%, and they do not plan to increase it. This may raise concerns about their ability to withstand potential economic stress, especially amid geopolitical volatility.
    • Ongoing investments leading to net expense growth: The company has made significant investments in regional expansions and new verticals, resulting in net expense growth. While they are focused on organic growth, these continuous investments could strain resources and impact profitability if expected returns do not materialize.
    • Uncertainty regarding regulatory changes: With the new administration and changes in regulatory leadership, there is uncertainty about potential regulatory adjustments. Huntington anticipates a more pro-business environment but acknowledges that if expected regulatory changes do not develop, it could pose challenges for the bank.

    Q&A Summary

    1. NII Guidance Confidence
      Q: How confident are you in NII guidance amid uncertainties?
      A: Management expressed strong confidence in achieving the Net Interest Income (NII) growth within their projected range, despite uncertainties in trade, immigration, and tax policy. They believe they can manage Net Interest Margin (NIM) to remain approximately flat in 2025, even with varying interest rate scenarios from no cuts to up to 2 or 3 rate cuts.

    2. Loan Growth vs Deposit Growth
      Q: Why are loans growing faster than deposits in 2025?
      A: Loans are projected to grow between 5% to 7%, driven by both core and new initiatives, sustaining current run rates. Deposits are expected to grow 3% to 5%, intentionally slower to manage the loan-to-deposit ratio, which ended Q4 at 79%, allowing flexibility in deposit pricing and supporting NIM.

    3. Loan Yields on New Production
      Q: What are new loan yields versus existing yields?
      A: New loans are being produced at yields consistent with overall spreads, supporting a stable NIM. The mix of fixed and variable rate loans is about 50/50, aligning with movements in the yield curve.

    4. Capital and Share Buybacks
      Q: Will you resume share buybacks given capital levels?
      A: With a Common Equity Tier 1 (CET1) ratio of 10.5% and adjusted for Accumulated Other Comprehensive Income (AOCI) at 8.7%, the bank aims to reach 9% to 10% adjusted CET1 in the first half of 2025. Due to expected loan growth and capital needs, share repurchases are unlikely in the near term.

    5. Provisioning Outlook
      Q: Will you release or build loan loss reserves in 2025?
      A: Management expects the Allowance for Credit Losses (ACL) coverage ratio to potentially decrease over time if the economy performs well, even as loan growth continues. The ACL ratio stood at 1.88%, higher than the CECL day 1 ratio of 1.70%.

    6. NIM Outlook
      Q: What's the NIM outlook for the full year 2025?
      A: The bank expects Net Interest Margin (NIM) to remain approximately 3%, flat throughout 2025. Factors include continued benefits from fixed asset repricing (about 10 basis points), decreasing deposit costs, and modest impacts from hedging activities.

    7. Securities Repositioning
      Q: Will you do more securities repositioning?
      A: They do not plan significant further repositioning. The recent sale of $1 billion in securities was tactical, optimizing capital and achieving a less than 2-year payback.

    8. Investment Cycle
      Q: Where are you in your investment cycle?
      A: The bank continues to invest in core markets, new geographies, and verticals, seeing significant momentum and returns. They are not at the end of the investment cycle and plan to pursue additional opportunities that make sense.

    9. Potential for M&A
      Q: Are you considering acquisitions?
      A: While the priority is organic growth, they are open to mergers and acquisitions if opportunities align strategically. They have capacity for bolt-on acquisitions but remain focused on driving top-quartile organic growth.

    10. Borrower Sentiment
      Q: How is borrower sentiment affecting growth?
      A: Borrowers are positive post-election, expecting growth in 2025 and beyond. This optimism led to record asset finance in Q4, reflecting increased investments and confidence.

    11. Fee Income Outlook
      Q: What's the outlook for fee income growth?
      A: Management expects high single-digit to low double-digit growth in payments, wealth management, and capital markets fees over the long term. Fee strategies support the core business and are driven by both growth and deeper penetration.

    12. Stress Tests Participation
      Q: Will you participate in stress tests to adjust SCB?
      A: With a Stress Capital Buffer (SCB) at the minimum 2.5%, they do not plan to participate in voluntary stress tests this year.

    13. Regulatory Changes
      Q: How will new regulatory leadership affect you?
      A: The new administration is expected to be pro-business, potentially leading to more stability, less uncertainty on liquidity and capital, and a constructive dialogue with regulators.

    Guidance Changes

    Quarterly guidance for Q1 2025:

    • Average Loan Balances: expected to grow by approximately 2% (no prior guidance)
    • Average Deposits: expected to remain relatively stable (no prior guidance)
    • Net Interest Income (NII): expected to decline by approximately 2% to 3% (no prior guidance)
    • Fee Revenues: expected to normalize to approximately $500 million (no prior guidance)
    • Expenses: expected to decline by approximately 2% (no prior guidance)

    Annual guidance for FY 2025:

    • Loan Growth: expected to increase by 5% to 7% (no prior guidance)
    • Deposit Growth: expected to increase by 3% to 5% (no prior guidance)
    • Net Interest Income (NII): expected to grow by 4% to 6% (no prior guidance)
    • Noninterest Income: expected to grow by 4% to 6% (no prior guidance)
    • Expense Growth: expected to grow by 3.5% to 4.5% (no prior guidance)
    • Net Charge-Offs: expected to be between 25 and 35 basis points (no prior guidance)
    • Effective Tax Rate: expected to be approximately 19% (no prior guidance)
    • Positive Operating Leverage: expected (no prior guidance)

    Key Metrics

    View all financials →

    Executive Team

    NamePositionStart DateShort Bio
    Stephen D. SteinourChairman, President, and CEOJanuary 14, 2009Stephen D. Steinour has served as the Chairman, President, and CEO of Huntington Bancshares Incorporated and as President and CEO of Huntington Bank since January 14, 2009. He has over 40 years of experience in the banking industry and serves on several boards, including Bath & Body Works, Inc. .
    Amit DhingraExecutive Vice President, Chief Enterprise Payments OfficerMarch 2024Amit Dhingra has served as Executive Vice President, Chief Enterprise Payments Officer at Huntington Bancshares Incorporated since March 2024. He previously held various leadership positions at Huntington, including Executive Vice President, Head of Enterprise Payments .
    Marcy C. HingstSenior Executive Vice President and General CounselOctober 2023Marcy C. Hingst has served as the Senior Executive Vice President and General Counsel of Huntington Bancshares Incorporated and the Huntington National Bank since October 2023. Her responsibilities also include leadership for Public Affairs, Corporate Insurance, and ESG .
    Helga S. HoustonSenior Executive Vice President and Chief Risk OfficerJanuary 2012Helga S. Houston has served as Senior Executive Vice President and Chief Risk Officer at Huntington Bancshares Incorporated since January 2012. She previously worked at Bank of America, serving in various business and risk capacities .
    Scott D. KleinmanSenior Executive Vice President and President of Commercial BankingJuly 1, 2022Scott D. Kleinman has served as Senior Executive Vice President and President of Commercial Banking at Huntington Bancshares Incorporated since July 1, 2022. He is responsible for Specialty Banking, Corporate Banking, Capital Markets, and Asset Finance .
    Kendall KowalskiExecutive Vice President and Chief Information OfficerFebruary 2014Kendall Kowalski has served as Executive Vice President and Chief Information Officer at Huntington Bancshares Incorporated since February 2014. Prior to joining Huntington, he was a Senior Vice President at JPMorgan Chase .
    Brendan LawlorExecutive Vice President and Chief Credit OfficerDecember 2023Brendan Lawlor has served as Executive Vice President and Chief Credit Officer at Huntington Bancshares Incorporated since December 2023. He previously held various executive positions at KeyBank .
    Prashant NateriExecutive Vice President and Chief Corporate Operations OfficerMarch 2024Prashant Nateri has served as Executive Vice President and Chief Corporate Operations Officer at Huntington Bancshares Incorporated since March 2024. He previously held the role of Chief Transformation Officer .
    Brant J. StandridgeSenior Executive Vice President and President of Consumer and Regional BankingApril 2023Brant J. Standridge has served as Senior Executive Vice President and President of Consumer and Regional Banking at Huntington Bancshares Incorporated since April 2023. He previously served as Chief Retail Community Banking Officer for Truist Financial Corporation .
    Rajeev SyalSenior Executive Vice President and Chief Human Resources OfficerSeptember 2015Rajeev Syal has served as Senior Executive Vice President and Chief Human Resources Officer at Huntington Bancshares Incorporated since September 2015. He has over 35 years of global financial services experience .
    Zachary J. WassermanChief Financial Officer and Senior Executive Vice PresidentNovember 2019Zachary J. Wasserman has served as Chief Financial Officer and Senior Executive Vice President at Huntington Bancshares Incorporated since November 2019. He previously held senior financial roles at Visa, Inc. and American Express Company .
    Donnell WhiteSenior Vice President and Chief Diversity, Equity and Inclusion OfficerOctober 2023Donnell White has served as Senior Vice President and Chief Diversity, Equity and Inclusion Officer at Huntington Bancshares Incorporated since October 2023. He previously held positions as Chief Diversity Officer and Director of Strategic Partnerships at TCF National Bank .

    Questions to Ask Management

    1. "Given that you have reduced your asset sensitivity by more than 50% since Q2, how would your net interest income and margin be impacted if interest rates do not decline as the forward curve suggests?"
    2. "With the expectation that the merchant acquiring business will add approximately 1% to overall fee revenue growth next year, what challenges do you foresee in achieving this target, and how will you address potential competitive pressures?"
    3. "Your projection for net interest income shows acceleration in 2025; can you provide more details on the factors driving this growth and how sensitive it is to rate movements?"
    4. "As you accelerate loan growth, particularly in auto loans, how are you ensuring that credit quality remains strong, and what steps are you taking to mitigate risks in the event of a downturn?"
    5. "With plans to increase the average duration of new securities purchases, how are you managing the potential risks associated with longer durations in a volatile interest rate environment?"

    Share Repurchase Program

    Program DetailsProgram 1
    Approval DateJanuary 18, 2023
    End Date/DurationDecember 31, 2024
    Total additional amount$1.0 billion
    Remaining authorization$1.0 billion
    DetailsThe program is part of Huntington's capital management framework, aiming to balance dividends, share repurchases, and capital retention for growth. Due to economic conditions, active utilization is not expected through 2024.

    Past Guidance

    Q3 2024 Earnings Call

    • Issued Period: Q3 2024
    • Guided Period: Q4 2024 and FY 2025
    • Guidance:
      1. Loan Growth: Expected to be approximately 4% to 5% year-over-year in Q4 2024 .
      2. Deposit Growth: Expected to increase between 4% and 5% year-over-year in Q4 2024 .
      3. Net Interest Income (NII): Expected to be flat to up 1% year-over-year in Q4 2024, with growth resuming in 2025 .
      4. Net Interest Margin (NIM): Sustained expansion expected into 2025 .
      5. Core Fee Revenues: Expected to grow 8% to 9% year-over-year in Q4 2024 .
      6. Core Expenses: Expected to grow 3% year-over-year in Q4 2024 .
      7. Credit Quality: Net charge-offs similar to Q3 2024 .
      8. Tax Rate: Expected between 18% and 19% in Q4 2024 .
      9. Capital Management: CET1 ratio targeted at 9% to 10% .

    Q2 2024 Earnings Call

    • Issued Period: Q2 2024
    • Guided Period: FY 2024
    • Guidance:
      1. Loan Growth: Expected to accelerate, with a run rate of 4.7% annualized .
      2. Deposit Growth: Sustained growth trend, with a 7.9% cumulative increase since the rate cycle start .
      3. Net Interest Income (NII): Expected to grow sequentially, with a Q2 increase of $25 million .
      4. Net Interest Margin (NIM): Expected to remain stable around 3% .
      5. Fee Income: Expected to grow 5% to 7% for the full year .
      6. Core Expenses: Expected to grow 4.5% for the full year .
      7. Credit Quality: Net charge-offs at 29 basis points in Q2 .
      8. Capital Management: CET1 ratio targeted at 9% to 10% .
      9. Economic Outlook: Preparing for potential rate cuts by year-end .

    Q1 2024 Earnings Call

    • Issued Period: Q1 2024
    • Guided Period: FY 2024
    • Guidance:
      1. Loan Growth: Expected between 3% and 5% for the full year .
      2. Deposit Growth: Expected between 2% and 4% .
      3. Net Interest Income (NII): Expected between down 2% to up 2% .
      4. Net Interest Margin (NIM): Expected to be slightly lower .
      5. Core Noninterest Income Growth: Expected 5% to 7% .
      6. Core Expense Growth: Expected 4.5% .
      7. Net Charge-Offs: Expected between 25 and 35 basis points .
      8. Fee Income Growth: Expected 5% to 7% .
      9. Capital Management: CET1 ratio targeted at 9% to 10% .

    Q4 2023 Earnings Call

    • Issued Period: Q4 2023
    • Guided Period: FY 2024
    • Guidance:
      1. Loan Growth: Expected between 3% and 5% .
      2. Deposit Growth: Expected between 2% and 4% .
      3. Net Interest Income: Expected between down 2% to up 2% .
      4. Noninterest Income: Expected to increase 5% to 7% .
      5. Core Expenses: Expected to increase 4.5% .
      6. Tax Rate: Expected to be 19% .
      7. Net Charge-Offs: Expected between 25 and 35 basis points .
      8. Net Interest Margin (NIM): Expected between 3% and 3.1% .
      9. Capital Management: CET1 ratio targeted at 9% to 10% .

    Competitors

    Competitors mentioned in the company's latest 10K filing.

    • Other banks and financial services companies such as savings and loans, credit unions, and finance and trust companies .
    • Mortgage banking companies .
    • Equipment and automobile financing companies, including captive automobile finance companies .
    • Insurance companies .
    • Mutual funds .
    • Investment advisors .
    • Brokerage firms .
    • Non-bank lenders both within and outside of primary market areas .
    • Financial Technology Companies, or FinTechs, providing nontraditional competition .

    Latest news

    Recent developments and announcements about HBAN.

    Financial Reporting

      Earnings Call

      ·
      7 days ago

      Huntington Bancshares (HBAN) recently released its earnings call transcript, providing key insights into its financial performance and strategic outlook for 2025. Below is a summary of the key points:

      Financial Performance

      • Earnings Per Share (EPS): Reported $0.34 per share for Q4 2024.
      • Loan Growth: Average loan balances increased by 5.7% year-over-year, with $7 billion in growth. This includes $1.1 billion from new initiatives, such as expansions in North and South Carolina and Texas .
      • Deposit Growth: Deposits grew by 6.5% year-over-year, with a focus on noninterest-bearing deposits, which now make up 18.6% of total deposits.
      • Net Interest Margin (NIM): NIM for Q4 was 3.03%, up 5 basis points from the prior quarter.
      • Fee Revenue: Record fee revenues were achieved, with payments, wealth management, and capital markets showing strong growth. Capital markets revenue increased by 74% year-over-year, reaching $120 million in Q4.

      Management’s Forward Guidance for 2025

      • Loan Growth: Expected to grow between 5% and 7% for the full year.
      • Deposit Growth: Anticipated to increase by 3% to 5%, with a focus on managing deposit costs.
      • Net Interest Income: Projected to grow by 4% to 6%, reflecting record levels on a full-year basis.
      • Noninterest Income: Expected to grow by 4% to 6%, driven by payments, wealth management, and capital markets.
      • Expense Growth: Forecasted at 3.5% to 4.5%, with positive operating leverage anticipated.
      • Credit Quality: Net charge-offs are expected to remain between 25 and 35 basis points.

      Strategic Initiatives and Market Conditions

      • Geographic Expansion: Investments in new markets, including North and South Carolina and Texas, are yielding strong results. These regions are already profitable on a direct expense basis.
      • New Business Verticals: Huntington launched two new specialty verticals—Aerospace & Defense and Financial Institutions Group (FIG)—to complement its existing eight verticals.
      • Loan-to-Deposit Ratio: Currently at 79%, providing flexibility to grow loans faster than deposits while managing deposit costs .
      • Capital Management: The CET1 ratio stands at 10.5%, with an adjusted CET1 ratio of 8.7%. The bank aims to increase this to its target range of 9% to 10% by mid-2025, prioritizing high-return loan growth over share repurchases in the near term.

      Analyst Questions and Management Responses

      • Loan Growth Sustainability: Management emphasized confidence in sustaining peer-leading loan growth, supported by strong pipelines and borrower sentiment .
      • Fee Revenue Independence: While fee revenue is broadly correlated with loan growth, areas like wealth management are less dependent on lending activity and are expected to grow sustainably.
      • Capital Strategy: Share repurchases are unlikely in the near term as the bank focuses on building its CET1 ratio and funding loan growth.

      Key Takeaways from Analyst Q&A

      • Analysts inquired about the sustainability of loan and deposit growth, the impact of macroeconomic conditions, and the bank’s ability to manage deposit costs. Management highlighted its strategic focus on organic growth, disciplined risk management, and leveraging its strong capital position to drive long-term value .

      Huntington’s strong Q4 performance and strategic initiatives position it well for continued growth in 2025, with a focus on balancing loan and deposit growth, managing costs, and expanding fee revenue streams.