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HUNTINGTON BANCSHARES INC /MD/ (HBAN) Q3 2024 Earnings Summary

Executive Summary

  • HBAN delivered a solid Q3 2024: diluted EPS of $0.33, up $0.03 QoQ and down $0.02 YoY; total FTE revenue of $1.887B, up 4% QoQ and flat YoY as net interest income and fee revenues both expanded .
  • Net interest income rose 2.9% QoQ to $1.364B, with NIM at 2.98% (-1bp QoQ) and CFO reaffirmed full-year NII within prior guidance range, while guiding Q4 NII to be flat to up 1% YoY and sequentially $15–$25M lower vs Q3 due to timing of down beta vs falling variable yields .
  • Fee momentum was broad-based: capital markets & advisory +50% YoY to $78M, wealth +18% YoY to $93M, payments +4% YoY to $158M; CFO said capital markets beat internal expectations and expects sequential growth in Q4 .
  • Credit remained strong and stable: NCOs 0.30%, NPA ratio 0.62%, ACL 1.93% of loans; CET1 at 10.4%, adjusted CET1 8.9%, TBV/share up 10% QoQ to $8.65; management reiterated confidence in record NII in 2025 with accelerating down beta and hedge drag flipping to a benefit .
  • Strategic catalysts: merchant acquiring launched in October (in-sourced) with $50M revenue run-rate in 2025 (+$25M incremental, ~1pp to fee revenue growth), accelerating loan growth from new initiatives (Carolinas, Texas, fund finance, etc.), and rapid asset sensitivity reduction (>50% by YE24; >60% by mid-2025) .

What Went Well and What Went Wrong

What Went Well

  • Accelerating loan and sustained deposit growth with pipelines robust: end-of-period loans +$2.0B (+6% annualized QoQ); average deposits +$2.9B QoQ and +$8.3B YoY; management highlighted record regional banking loan production and late-stage commercial pipelines +68% YoY .
  • Broad-based fee revenue momentum: capital markets & advisory +50% YoY ($78M), wealth +18% YoY ($93M), payments +4% YoY ($158M); CFO: “12% year-over-year growth in fees is pretty outstanding” and expects sequential growth in Q4 .
  • Disciplined deposit cost management ahead of rate cuts: total cost of deposits declined intra-quarter, with September down 7bps as down beta actions were executed; CFO expects cumulative down beta in mid- to high-30s by Q4’25 .

What Went Wrong

  • Sequential NII trajectory for Q4: management guided Q4 NII to be $15–$25M lower sequentially (flat to up 1% YoY), reflecting timing lag as variable asset yields fall faster than deposit costs initially .
  • NIM edged down: net interest margin slipped to 2.98% (-22bps YoY), and CFO guided “a few basis points lower” into Q4 before rising in 2025 as down beta accelerates and hedge drag fades .
  • Nonaccruals and NPAs modestly higher vs prior year: NALs 0.58% (vs 0.49% YoY) and NPA ratio 0.62% (vs 0.52% YoY), with increases in C&I and CRE NALs; management continues to actively manage CRE, especially office exposure .

Financial Results

MetricQ3 2023Q2 2024Q3 2024
Diluted EPS ($)0.35 0.30 0.33
Total Revenue (FTE, $MM)1,888 1,816 1,887
Net Interest Income (FTE, $MM)1,379 1,325 1,364
Noninterest Income ($MM)509 491 523
Net Interest Margin (%)3.20 2.99 2.98
Efficiency Ratio (%)57.0 60.8 59.4
ROTCE (%)19.5 16.1 16.2

Segment and Fee Breakdown

Noninterest Income Component ($MM)Q3 2023Q2 2024Q3 2024
Payments & Cash Management152 154 158
Wealth & Asset Management79 90 93
Customer Deposit & Loan Fees80 83 86
Capital Markets & Advisory52 73 78
Mortgage Banking Income27 30 38
BOLI Income18 17 20
Gain on Sale of Loans2 2 7
Other Noninterest Income49 5 6
Total Noninterest Income509 491 523

Balance Sheet & Capital KPIs

KPIQ3 2023Q2 2024Q3 2024
Average Loans & Leases ($MM)120,784 123,376 124,507
Average Total Deposits ($MM)148,150 153,578 156,488
Ending Total Deposits ($MM)148,867 154,367 158,351
CET1 Ratio (%)10.1 10.4 10.4
Adjusted CET1 (%)8.0 8.6 8.9
TCE / Tangible Assets (%)5.7 6.0 6.4
TBV per Share ($)7.12 7.89 8.65
Cash & Contingent Borrowing Capacity ($B)——95

Credit Metrics

MetricQ3 2023Q2 2024Q3 2024
NCOs (% Avg Loans)0.24% 0.29% 0.30%
NPA Ratio (%)0.52 0.63 0.62
NAL Ratio (%)0.49 0.59 0.58
ACL / Loans (%)1.96 1.95 1.93

Segment Loans (Ending Balances)

Segment ($MM)Q3 2023Q2 2024Q3 2024
Consumer & Regional Banking66,202 69,328 70,742
Commercial Banking54,451 54,941 55,441
Total Loans & Leases120,853 124,422 126,387

Operating Expense

Metric ($MM)Q3 2023Q2 2024Q3 2024
GAAP Noninterest Expense1,090 1,117 1,130
Adjusted Noninterest Expense1,075 1,111 1,124

Other Relevant Q3 Press Releases

  • Quarterly cash dividend declared on common stock remained $0.155 per share .
  • The company decreased its prime rate on September 18 and November 7; schedule and earnings call details for Q3 were provided October 10 .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Interest Income (FY)FY 2024Within -2% to +2% range “Within prior guidance range” Maintained
NII (Q4 YoY)Q4 2024Not disclosedFlat to up ~1% YoY; sequentially $15–$25M lower vs Q3 New detail
NIMQ4 2024“Stable around ~3%” in 2H’24 “A few bps lower” into Q4, then rising throughout 2025 Lower near term, rising 2025
Loan Growth (YoY)Q4 20243–5% for FY ~4–5% YoY in Q4 More specific
Deposit Growth (YoY)Q4 20242–4% for FY; likely high end ~4–5% YoY in Q4; balances relatively flat QoQ Higher /
Core Fee Revenues (YoY)Q4 20245–7% for FY ~8–9% YoY in Q4 (ex-swaptions/CRT) Raised (for Q4)
Core Expenses (YoY)Q4 20244.5% FY growth ~3% YoY in Q4; exit at low single-digit run rate Lower exit rate
Tax RateQ4 2024Not disclosed~18–19% New detail
Down Beta (Cumulative)Through Q4 2025Not disclosedMid- to high-30s by Q4’25; mid-40s by Q4’26 New detail
Asset SensitivityYE 2024/Mid-2025~1/3 reduction by mid-2025 (Q2 call) >50% reduction by YE’24; >60% by mid-2025 Accelerated

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2024)Current Period (Q3 2024)Trend
Deposit Beta & NIMDown beta playbook beginning; NIM stable ~3% in 2H’24 Deposit costs fell intra-quarter; NIM a few bps lower in Q4 then rising in 2025; cumulative down beta mid–high 30s (’25) Executing down beta; NIM inflection 2025
Hedging ProgramForward-starting receive-fixed swaps added; hedge drag ~16bps in Q1; reducing through 2025 Hedge drag ~12bps Q3 → ~7bps Q4; flips to +5bps benefit by end-2025; added $1B more forward receivers Benefit increasing in 2025
Loan Growth InitiativesCarolinas, Texas, specialty verticals ramping; pipelines strong New initiatives added $700M; strong auto, mortgage, regional banking; late-stage commercial pipelines +68% YoY Accelerating
Capital Markets/FeesAdvisory choppy in Q1; expecting acceleration; payments +7% YoY; wealth +10% YoY Capital markets +50% YoY; wealth +18% YoY; payments +4% YoY; cap markets beat expectations; merchant in-sourcing tailwind Strengthening
Credit & CRECredit stable; CRE runoff; office exposure managed; ACL at top end peers Credit stable; NCOs 30bps; NALs/NPA slightly up YoY; CRE NALs mixed; confident auto super-prime quality Stable; vigilant on CRE
Liquidity & AOCILiquidity coverage >200% of uninsured deposits; AOCI recapture over time $95B liquidity & contingent capacity; 195% of uninsured deposits; adjusted CET1 8.9% Robust
Merchant AcquiringAnnounced plan to in-source in Q2; ~+$6M fees in Q3 expectation Full launch in October; $50M revenue 2025 (+$25M incremental, ~1pp to overall fee growth) Live; growth lever

Management Commentary

  • CEO: “We are very pleased to report outstanding results for the third quarter… performance set the foundation for continued organic growth and increased profitability into 2025 and beyond.”
  • CFO: “Net interest income increased by $39 million or 2.9% to $1.364 billion… we continue to project full year net interest income to be within our prior guidance range.”
  • CFO on fees: “Adjusted fee revenues… increased from 25% a year ago to 28% in Q3… within Capital Markets, revenue growth… increased by $26 million or 50% from the prior year.”
  • CFO on hedging and NIM: “Hedge drag… ~12bps in Q3… ~7bps in Q4… flips to a ~5bps benefit by end of 2025… expect sustained NIM expansion throughout 2025.”
  • CFO on merchant acquiring: “Next year can be ~$50 million in overall revenue… that's an extra $25 million… about 1% of the overall fee revenue base.”

Q&A Highlights

  • NII cadence: Q4 sequential NII expected $15–$25M lower (flat to +1% YoY) due to timing between falling variable yields and deposit cost reductions; 2025 expected record NII driven by NIM expansion and loan growth .
  • Deposit strategy: After strong deposit growth, balances expected relatively flat QoQ in Q4 as bank leans into down beta to lower funding costs; mix shifting from time to money market; commercial deposit growth accelerating (incl. mortgage servicing vertical) .
  • Asset sensitivity: Aggressive reduction via hedging (forward receivers) and securities duration; >50% reduction by YE’24 and >60% by mid-’25 .
  • Fees: Capital markets surpassed internal expectations in Q3; sequential growth expected in Q4; merchant acquiring in-house adds ~1pp to fee growth in 2025 .
  • Auto credit: Portfolio is prime/super-prime; delinquencies and charge-offs remain within historical levels; management confident in asset quality despite sector headlines .

Estimates Context

  • Wall Street consensus EPS and revenue estimates from S&P Global for Q3 2024 were unavailable at time of query due to provider limit constraints; therefore, we cannot quantify a beat/miss versus consensus. Values retrieved from S&P Global were unavailable at time of query.
  • Management indicated capital markets revenues exceeded their internal expectations in Q3, supporting upside to fee income relative to intra-quarter view .

Key Takeaways for Investors

  • Near-term NII dip in Q4 looks transitory; the set-up is for NIM expansion through 2025 as down beta accelerates and hedging flips to a tailwind, positioning HBAN for record NII next year .
  • Deposit cost control is gaining traction (September down 7bps), with balances expected to be flat QoQ in Q4, enabling funding-cost relief without sacrificing core relationship growth .
  • Fee growth is diversifying and durable (capital markets, payments, wealth); merchant acquiring in-sourcing adds a tangible 2025 revenue lever (~$50M), lifting fee revenue growth by ~1pp .
  • Credit remains well-managed within target ranges; watch CRE/office and “other consumer” loss rates, but overall NCOs are stable and reserves robust (ACL 1.93%) .
  • Capital and liquidity are strong (CET1 10.4%; adjusted CET1 8.9%; TBV/share +10% QoQ; liquidity ~195% of uninsured deposits), supporting loan growth and strategic investments .
  • Trading lens: Q4’s sequential NII softness is well-telegraphed; focus on signals of deposit down beta progress, NIM trajectory, fee momentum, and hedging updates in Q4 results/call .
  • Medium-term thesis: Growth from new geographies/verticals (Carolinas, Texas, fund finance) plus payments/merchant and capital markets can sustain top-line diversification and operating leverage into 2025 .
Citations: All data points are from HBAN’s Q3 2024 press release, 8-K exhibits, Quarterly Financial Supplement, and Q3 earnings call transcript: **[49196_HBAN_3402961_1]** **[49196_HBAN_3402961_2]** **[49196_HBAN_3402961_3]** **[49196_HBAN_3402961_4]** **[49196_HBAN_3402961_5]** **[49196_HBAN_3402961_6]** **[49196_HBAN_3402961_7]** **[49196_HBAN_3402961_8]** **[49196_HBAN_3402961_9]** **[49196_HBAN_3402961_10]** **[49196_HBAN_3402961_11]** **[49196_HBAN_3402961_12]** **[49196_HBAN_3402961_13]** **[49196_HBAN_3402961_14]** **[49196_HBAN_3402961_15]** **[49196_HBAN_3402961_16]** **[49196_HBAN_3402961_17]** **[49196_HBAN_3402961_18]** **[49196_HBAN_3402961_19]**; **[49196_0000049196-24-000089_hban20240930_8kex991.htm:0]** **[49196_0000049196-24-000089_hban20240930_8kex991.htm:1]** **[49196_0000049196-24-000089_hban20240930_8kex991.htm:2]** **[49196_0000049196-24-000089_hban20240930_8kex991.htm:3]** **[49196_0000049196-24-000089_hban20240930_8kex991.htm:4]** **[49196_0000049196-24-000089_hban20240930_8kex991.htm:5]** **[49196_0000049196-24-000089_hban20240930_8kex991.htm:6]** **[49196_0000049196-24-000089_hban20240930_8kex991.htm:7]** **[49196_0000049196-24-000089_hban20240930_8kex991.htm:8]** **[49196_0000049196-24-000089_hban20240930_8kex991.htm:9]** **[49196_0000049196-24-000089_hban20240930_8kex991.htm:10]** **[49196_0000049196-24-000089_hban20240930_8kex991.htm:11]** **[49196_0000049196-24-000089_hban20240930_8kex992.htm:0]** **[49196_0000049196-24-000089_hban20240930_8kex992.htm:1]** **[49196_0000049196-24-000089_hban20240930_8kex992.htm:2]** **[49196_0000049196-24-000089_hban20240930_8kex992.htm:3]** **[49196_0000049196-24-000089_hban20240930_8kex992.htm:4]** **[49196_0000049196-24-000089_hban20240930_8kex992.htm:5]** **[49196_0000049196-24-000089_hban20240930_8kex992.htm:6]** **[49196_0000049196-24-000089_hban20240930_8kex992.htm:7]** **[49196_0000049196-24-000089_hban20240930_8kex992.htm:8]** **[49196_0000049196-24-000089_hban20240930_8kex992.htm:9]** **[49196_0000049196-24-000089_hban20240930_8kex992.htm:10]** **[49196_0000049196-24-000089_hban20240930_8kex992.htm:11]** **[49196_0000049196-24-000089_hban20240930_8kex992.htm:12]** **[49196_0000049196-24-000089_hban20240930_8kex992.htm:13]** **[49196_0000049196-24-000089_hban20240930_8kex992.htm:14]** **[49196_0000049196-24-000089_hban20240930_8kex992.htm:15]** **[49196_0000049196-24-000089_hban20240930_8kex992.htm:16]** **[49196_0000049196-24-000089_hban20240930_8kex992.htm:17]** **[49196_0000049196-24-000089_hban20240930_8kex992.htm:18]** **[49196_0000049196-24-000089_hban20240930_8kex992.htm:19]** **[49196_0000049196-24-000089_hban20240930_8kex992.htm:20]** **[49196_0000049196-24-000089_hban20240930_8kex992.htm:21]** **[49196_0000049196-24-000089_hban20240930_8kex992.htm:23]**; Q2/Q1 comparative and guidance context from prior materials: **[49196_HBAN_3393635_3]** **[49196_HBAN_3393635_4]** **[49196_HBAN_3393635_8]** **[49196_HBAN_3393635_16]** **[49196_HBAN_3393635_19]**; **[49196_HBAN_3380113_4]** **[49196_HBAN_3380113_6]** **[49196_HBAN_3380113_18]** **[49196_HBAN_3380113_21]**. Additional Q3 PR scheduling details: **[49196_20241010CL28184:0]**. Prime rate changes: **[49196_20240918CL10195:0]** **[49196_20241107CL51289:0]**. ```

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