01—Abstract
Summary
Summary of the 10-K filed February 17, 2023. Cited figures are marked; the original filing is the authoritative source.
Huntington Bancshares Incorporated (HBAN) reported 2022 net income of $2.2 billiona, a $943 million, or 73%, increase from the prior year, with diluted earnings per common share of $1.45, up 61%.
Net interest income rose $1.2 billionb, or 29%, to $5.3 billion, reflecting a 30 basis point increase in the FTE net interest margin to 3.25% and a $23.3 billion, or 17%, increase in average earning assets. The provision for credit losses increased $264 million to $289 million, driven by loan growth and near-term recessionary risk, and the ACL stood at $2.3 billion, or 1.90% of total loans and leases. Net charge-offs fell to $121 million, or 0.11% of average loans and leases, from $215 million, and nonperforming assets decreased to $594 million.
Balance sheet and capital metrics were mixed. Total assets reached $182.9 billionc, and total loans and leases rose $8.3 billion, or 7%, to $119.5 billion. Shareholders' equity fell $1.6 billion, or 8%, to $17.7 billion, primarily due to higher rates increasing accumulated other comprehensive loss, which reached $3.1 billion.
The tangible common equity to tangible assets ratio declined to 5.55%, while the CET1 risk-based capital ratio edged up to 9.36% from 9.33%. The company's stress capital buffer rose to 3.3% from 2.5%, and the board authorized up to $1.0 billiond of share repurchases through December 31, 2024.
The filing describes a baseline forecast assuming a mild recession in 2023, and it highlights completed 2022 acquisitions of Torana (now Huntington Choice Pay) and Capstone Partners, along with the full-year effect of the June 2021 TCF Financial Corporation acquisition. Management also plans to consolidate three business segments into a single Consumer & Regional Banking segment in the second quarter of 2023.
02—Key points
Key Highlights
- Net income of $2.2 billion, up 73% from the prior year; diluted EPS of $1.45, up 61%.
- Net interest income rose 29% to $5.3 billion, with the FTE net interest margin up 30 basis points to 3.25%.
- Noninterest income of $2.0 billion rose 5%, led by a 67% increase in capital markets fees, while mortgage banking income fell 53%.
- Noninterest expense fell 4% to $4.2 billion, reflecting a $606 million decrease in acquisition-related expenses.
- Credit quality remained solid, with net charge-offs of $121 million (0.11% of average loans) and nonperforming assets down 21% to $594 million, though the provision for credit losses rose to $289 million.
- Shareholders' equity declined 8% to $17.7 billion due to higher accumulated other comprehensive loss, and the tangible common equity ratio fell to 5.55%; CET1 ratio was 9.36%.
- The board authorized up to $1.0 billion in share repurchases through December 31, 2024, and declared a quarterly common dividend of $0.155 per share.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2022filed February 17, 2023Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $1.32B$1.11B | +18.4% |
| Interest Expense | $696.00M$89.00M | +682.0% |
| Net Income | $2.24B$1.29B | +72.8% |
| EPS (Basic) | $1.47$0.91 | +61.5% |
| EPS (Diluted) | $1.45$0.90 | +61.1% |
| Shares Outstanding (Basic) | 1.44B1.26B | +14.2% |
| Shares Outstanding (Diluted) | 1.47B1.29B | +13.9% |
05—Questions
Frequently Asked Questions
What drove the increase in Huntington's 2022 earnings?
Net interest income rose $1.2 billion, or 29%, to $5.3 billion, reflecting a $23.3 billion, or 17%, increase in average earning assets and a 30 basis point increase in the FTE net interest margin to 3.25%. The filing attributes the margin expansion to the higher rate environment, partially offset by higher funding costs and lower accelerated PPP loan fees. Lower acquisition-related expenses, which fell $606 million, also helped, although noninterest expense overall declined only 4%.
How did credit quality and loan loss provisioning change in 2022?
Net charge-offs fell 44% to $121 million, or 0.11% of average loans and leases, and nonperforming assets declined 21% to $594 million. The provision for credit losses rose $264 million to $289 million, primarily due to loan growth and a reduction in ACL coverage ratios during 2021. The ACL was $2.3 billion, or 1.90% of total loans and leases, at year-end, with the increase reflecting near-term recessionary risks.
Why did shareholders' equity decline and how is capital positioned?
Shareholders' equity decreased $1.6 billion, or 8%, to $17.7 billion, mainly because rising interest rates increased accumulated other comprehensive loss. The CET1 risk-based capital ratio increased slightly to 9.36% from 9.33%, and both the consolidated and Bank-level ratios exceeded well-capitalized standards. The tangible common equity to tangible assets ratio fell to 5.55% from 6.88%, and the stress capital buffer requirement rose to 3.3%.
What capital return actions did Huntington announce?
On January 18, 2023, the board declared a quarterly common stock dividend of $0.155 per share, payable April 3, 2023, and authorized repurchases of up to $1.0 billion of common shares through December 31, 2024, subject to Federal Reserve capital regulations. The filing estimates common dividend cash demands of about $224 million per quarter.
What strategic changes did Huntington make in 2022?
Huntington acquired Torana, now known as Huntington Choice Pay, a digital payments business, in May 2022, and Capstone Partners, a middle market investment bank, in June 2022. The company also plans to consolidate Consumer and Business Banking, Vehicle Finance, and RBHPCG into a single Consumer & Regional Banking segment in the second quarter of 2023, resulting in two major segments.
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