01—Abstract
Summary
Summary of the 10-K filed February 16, 2024. Cited figures are marked; the original filing is the authoritative source.
Huntington Bancshares Incorporated, a multi-state diversified regional bank holding company headquartered in Columbus, Ohio, reported net income of $1.95 billiona for 2023, a decrease of $287 million, or 13%, from 2022.
Diluted earnings per common share were $1.24b, down 14%. Results were weighed down by a $214 million FDIC DIF special assessment tied to the 2023 bank failures and $69 million of staffing and corporate consolidation expense. Net interest income rose 3% to $5.4 billion, while noninterest income fell 3% to $1.9 billion and noninterest expense rose 9% to $4.6 billion.
Total assets were $189.4 billionc at year-end, and total deposits were $151.2 billion, with core deposits at 96% of the total. Capital and credit metrics were stable. The CET1 risk-based capital ratio rose to 10.25% from 9.36%, supported by earnings and a synthetic credit risk transfer on an approximately $3 billion portfolio of prime indirect auto loans.
The allowance for credit losses reached $2.4 billiond, or 1.97% of total loans and leases, and net charge-offs were 0.23% of average loans and leases, up from 0.11% in 2022. Nonperforming assets rose 20% to $711 million. The company's Consumer & Regional Banking segment earned $1.3 billion and Commercial Banking earned $1.2 billion, while Treasury / Other posted a net loss of $543 million.
The filing states that the company does not expect to use its share repurchase program through 2024, citing organic capital needs for loan growth and proposed regulatory capital changes. The quarterly common dividend was declared at $0.155 per share, and management stated it believes liquidity and capital are sufficient for the next 12 months and beyond.
02—Key points
Key Highlights
- Net income attributable to Huntington was $1.95 billion, down $287 million (13%) from 2022; diluted EPS was $1.24, down 14%.
- Net interest income rose $166 million (3%) to $5.4 billion, driven by higher earning asset yields and a $8.3 billion (5%) increase in average earning assets.
- Noninterest expense rose $373 million (9%) to $4.6 billion, including the $214 million FDIC DIF special assessment.
- CET1 risk-based capital ratio increased to 10.25% from 9.36%, and the tangible common equity to tangible assets ratio reached 6.14%, up 59 basis points.
- Provision for credit losses rose 39% to $402 million; NCOs were 0.23% of average loans and leases versus 0.11% in 2022.
- Nonperforming assets increased $117 million (20%) to $711 million, primarily from commercial and industrial and commercial real estate nonaccrual loans.
- No share repurchases were made under the $1.0 billion authorization in 2023, and the company does not expect to use the program through 2024.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2023filed February 16, 2024Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $1.40B$1.32B | +6.2% |
| Interest Expense | $3.48B$696.00M | +399.6% |
| Net Income | $1.95B$2.24B | −12.8% |
| EPS (Basic) | $1.26$1.47 | −14.3% |
| EPS (Diluted) | $1.24$1.45 | −14.5% |
| Shares Outstanding (Basic) | 1.45B1.44B | +0.4% |
| Shares Outstanding (Diluted) | 1.47B1.47B | +0.2% |
05—Questions
Frequently Asked Questions
Why did Huntington's net income decline in 2023 despite higher net interest income?
Net interest income grew 3% to $5.4 billion, but noninterest expense rose 9% to $4.6 billion, largely due to the $214 million FDIC DIF special assessment related to the 2023 bank failures. Noninterest income also fell 3%, and the provision for credit losses rose 39% to $402 million, so net income attributable to Huntington fell 13% to $1.95 billion.
How strong is Huntington's capital position at year-end 2023?
The CET1 risk-based capital ratio was 10.25%, up from 9.36%, and the total risk-based capital ratio was 14.17%. The filing states that both the consolidated company and the Bank exceeded well-capitalized standards and met the applicable capital buffer requirements. The increase was driven by earnings and a decline in risk-weighted assets, partly offset by dividends.
Is credit quality deteriorating at Huntington?
Credit metrics weakened modestly. Net charge-offs were 0.23% of average loans and leases, up from 0.11%, and nonperforming assets rose 20% to $711 million. The ACL was $2.4 billion, or 1.97% of total loans and leases, compared with 1.90% a year earlier, and the company described the increase as reflecting the current macroeconomic environment.
Will Huntington repurchase shares in 2024?
The filing states that Huntington did not repurchase any shares in 2023 under its $1.0 billion authorization and does not expect to use the program through 2024. Management cited organic capital needs for funding loan and lease growth and proposed changes to regulatory capital requirements, while noting it may resume repurchases at its discretion.
What dividend did Huntington declare for 2024?
On January 17, 2024, the Board declared a quarterly common stock dividend of $0.155 per share, payable April 1, 2024, to shareholders of record on March 18, 2024. The company estimated common dividend cash demands of about $224 million per quarter.
06—Continue