HUNTINGTON BANCSHARES INC /MD/ (HBAN) Q2 2024 Earnings Summary

Executive Summary

• Q2 delivered sequential revenue and EPS growth: Total revenue (FTE) rose to $1.816B from $1.767B and diluted EPS increased to $0.30 from $0.26; year-over-year comparisons remain below 2023 levels given funding costs and mix shifts .
• Operating metrics improved: efficiency ratio fell to 60.8% (from 63.7%), while NIM was essentially stable at 2.99% (down 2 bps q/q); average loans and deposits both increased q/q, supporting NII expansion off the Q1 trough .
• Credit remained solid within normalized ranges (NCOs 29 bps; ACL 1.95%), CET1 strengthened to 10.4%; liquidity remained robust with $95B of cash/borrowing capacity covering 204% of estimated uninsured deposits .
• Outlook/guidance unchanged: management reiterated FY24 guides (loan growth 3–5%, deposit growth 2–4%, NII -2% to +2%, fee growth 5–7%, core expenses +4.5%, NCOs 25–35 bps) and expects NIM around ~3% with sequential NII growth in 2H24; deposit down-beta mid-to-high 20s over the first year when cuts begin .

What Went Well and What Went Wrong

• What Went Well

  • Revenue and EPS inflected higher sequentially on both NII and fees; CEO highlighted organic growth investments and robust capital/liquidity as enablers of accelerating loan growth and higher 2H revenue momentum: “expected to drive higher revenues over the second half of the year” .
  • Fee engines performed: payments (+5% y/y), wealth (+8% y/y), and capital markets (+30% q/q) supported noninterest income growth to $491M (from $467M) .
  • Credit quality stable: NCOs improved to 29 bps (from 30 bps), ACL coverage remained strong at 1.95%; CCAR losses were “second best” among peers and SCB at the 2.5% minimum .

• What Went Wrong

  • NIM edged down 2 bps to 2.99% as higher cash balances/funding costs offset loan yield gains; NIM remains below year-ago levels given elevated deposit costs (interest-bearing deposit cost +88 bps y/y) .
  • Efficiency still elevated vs prior year (60.8% vs 55.9% y/y) on higher personnel and tech/data spend; core expenses up y/y despite sequential decline in GAAP costs .
  • Nonperformers drifted up (NPA ratio 0.63% vs 0.46% y/y) with increases in CRE/C&I NALs; management flagged continued industry “sloppiness” in CRE office albeit manageable given granularity and reserve posture .

Financial Results

Segment/Fees Breakdown (selected fee lines)

Key KPIs

Notes: Q2 liquidity: cash and equivalents plus contingent capacity of $95B (204% uninsured deposits) .

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• CEO: “Our solid capital levels and robust liquidity profile enable us to continue to deliver accelerated loan growth… expected to drive higher revenues over the second half of the year, with continued momentum into 2025 and beyond.”
• CFO: “Net interest margin was 2.99% for the second quarter… we see net interest margin relatively stable over the next 2 quarters at or around the 3% level.”
• CFO (deposit beta): “Our general working assumption will be in the mid- to high 20s percent down beta range over [the] first year.”
• CFO (capital optimization): 2Q24 CLN on prime indirect auto reduced RWA by ~$3B with <3% cost, unlocking ~17 bps of CET1 .
• CFO (CCAR): “Our SCB improved to the 2.5% minimum, and our modeled stress CET1 ratio was the second best in our peer group.”

Q&A Highlights

• Deposit down-beta: Expect mid-to-high 20% down-beta over first year of cuts, already executing early “down-beta playbook” via product/pricing mix and CD duration .
• NII/NIM path: With two 2024 cuts, management targets the middle of the -2% to +2% NII range; NIM ~3% with puts/takes from funding costs and variable yields offset by fixed-rate repricing and hedge drag reduction .
• Loan growth drivers: ~$600M q/q growth from new initiatives (fund finance, Carolinas, Texas, healthcare ABL, Native American Financial Services), plus auto floorplan and regional/business banking .
• Auto credit: Super-prime book; default frequency focus; used-car values a modest factor; ample room to grow; not a buffer for growth but compelling opportunity .
• Expenses: FY24 core expense +4.5%; Q3 around $1.140B; pace normalizes into 2025 as growth investments annualize .
• CLN economics: <3% capital cost; ~$4B reference pool; ~76% RWA reduction on pool; ~17 bps CET1 uplift .

Estimates Context

• Wall Street consensus (S&P Global) was unavailable due to an S&P Global request limit issue at retrieval time; therefore, we cannot provide a vs-consensus comparison for Q2’24 EPS or revenue at this time. If you want, we can refresh once access is restored and update beat/miss analysis.

Key Takeaways for Investors

• The inflection is real: revenue and EPS grew sequentially, led by both NII and fees, with NIM ~3% and efficiency improving; management reaffirmed FY targets and mid-range NII trajectory with two cuts .
• Loan growth momentum is building where HBAN invested (new verticals/geographies) while CRE balances decline; this should support continued NII expansion despite stable-to-slightly lower NIM .
• Fee engines are working (payments, wealth, capital markets) and merchant acquiring insourcing adds incremental tailwind in 2H .
• Credit normalization remains manageable with strong reserve levels; CCAR results/SCB validate conservative risk appetite and capital resilience .
• Balance-sheet hedging and capital optimization (CRT/CLN) reduce sensitivity and lift CET1, supporting growth while preparing for a down-rate cycle .
• Tactical rate playbook: early down-beta execution and mix shifts position HBAN to capture deposit repricing benefits as cuts commence, a lever underappreciated by the market .
• Near-term catalyst path: sustained sequential NII growth, fee momentum, stable credit, and evidence of down-beta traction should be stock-supportive as Street confidence builds in 2H trajectory .

Additional Detail and Data Sources

• Q2’24 8-K earnings materials (Ex-99.1/99.2) for performance, balance sheet, and credit tables .
• Q2’24 call transcript for outlook, hedging, deposit beta, and CLN/CRT details .
• Q1’24 and Q4’23 8-Ks and calls for prior-quarter trend/guidance references .
• Dividends press releases and common dividend level .