01—Abstract
Summary
Summary of the 10-Q filed July 30, 2024. Cited figures are marked; the original filing is the authoritative source.
Huntington Bancshares Incorporated reported net income attributable to Huntington of $474 milliona, or $0.30 per diluted common share, for the second quarter of 2024, compared with $559 million, or $0.35, in the year-ago quarter.
For the six months ended June 30, 2024, net income was $893 millionb, compared with $1.16 billion in the prior-year period. Net interest income was $1.3 billion, down $34 million, or 3%, as the FTE net interest margin fell 12 basis points to 2.99% amid higher cost of funds. Noninterest income was $491 million, down $4 million, or 1%, while noninterest expense rose $67 million, or 6%, to $1.1 billion, driven by personnel costs and outside data processing.
The provision for credit losses was $100 millionc, and net charge-offs were an annualized 0.29% of average loans and leases, up from 0.16% a year earlier. The balance sheet grew, with total assets of $196.3 billion at June 30, 2024, up $6.9 billion, or 4%, from December 31, 2023, and total deposits of $154.4 billion. The allowance for credit losses was $2.4 billion, or 1.95% of total loans and leases.
Nonperforming assets rose $69 milliond, or 10%, from year-end, mainly from commercial real estate nonaccrual loans. The CET1 risk-based capital ratio increased to 10.4% from 10.2% at December 31, 2023. In the second quarter, the company completed a $478 million credit-linked note transaction referencing an approximately $4 billion pool of prime indirect auto loans, which reduced risk-weighted assets by approximately $3.0 billion.
The Board declared a quarterly common dividend of $0.155 per share on July 17, 2024. The company repurchased no shares under its current authorization during the first half of 2024 and does not expect to use the program through 2024, citing the use of organic capital for loan growth and proposed regulatory capital changes.
02—Key points
Key Highlights
- Second-quarter 2024 net income attributable to Huntington was $474 million, or $0.30 per diluted share, down from $559 million, or $0.35, a year earlier.
- FTE net interest margin declined 12 basis points to 2.99%, as higher cost of funds offset higher loan and investment security yields; FTE net interest income fell $32 million, or 2%.
- Noninterest expense increased $67 million, or 6%, to $1.1 billion, primarily from higher personnel costs and outside data processing; the quarter included $6 million of FDIC DIF special assessment expense.
- Credit quality showed increased charge-offs: net charge-offs were 0.29% of average loans and leases, versus 0.16% a year earlier, with commercial net charge-offs at 0.33% annualized; nonaccrual loans and leases were 0.59% of total loans and leases.
- Capital ratios strengthened: the CET1 risk-based capital ratio was 10.4% at June 30, 2024, up from 10.2% at year-end 2023, and the tangible common equity to tangible assets ratio was 6.0%.
- The $478 million credit-linked note transaction reduced risk-weighted assets by approximately $3.0 billion, a 76% reduction in the risk-weighting on the selected pool of assets.
- Management does not expect to use the $1.0 billion share repurchase authorization through 2024, and the Federal Reserve set the indicative stress capital buffer requirement at 2.5%, effective October 1, 2024.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2024filed July 30, 2024Financial Statements
Q2 FY2024 against Q2 FY2023
| Line item | Q2 FY2024Q2 FY2023 | Change |
|---|---|---|
| Revenue | $360.00M$332.00M | +8.4% |
| Net Income | $474.00M$559.00M | −15.2% |
| EPS (Basic) | $0.30$0.36 | −16.7% |
| EPS (Diluted) | $0.30$0.35 | −14.3% |
| Shares Outstanding (Basic) | 1.45B1.45B | +0.3% |
| Shares Outstanding (Diluted) | 1.47B1.47B | +0.6% |
05—Questions
Frequently Asked Questions
Why did Huntington's earnings decline in the second quarter of 2024?
Net income attributable to Huntington fell to $474 million from $559 million a year earlier. Net interest income declined $34 million, or 3%, as the FTE net interest margin dropped 12 basis points to 2.99% due to higher cost of funds, and noninterest expense rose $67 million, or 6%. Noninterest income also declined $4 million, or 1%, mainly because of an $18 million favorable swaption mark-to-market in the prior-year quarter.
How is credit quality trending?
Net charge-offs were $90 million, or an annualized 0.29% of average loans and leases, compared with $49 million, or 0.16%, a year earlier. The provision for credit losses was $100 million, up $8 million, or 9%. Total nonperforming assets were $780 million, up $69 million, or 10%, from December 31, 2023, primarily from a $54 million increase in commercial real estate nonaccrual loans. The allowance for credit losses was $2.4 billion, or 1.95% of total loans and leases.
What is the company's capital position and dividend outlook?
The CET1 risk-based capital ratio was 10.4% at June 30, 2024, and the Bank's CET1 ratio was 10.3%. The Board declared a quarterly common dividend of $0.155 per share on July 17, 2024, payable October 1, 2024. Preferred dividends are expected to total approximately $36 million per quarter. The company stated that it repurchased no shares during the first six months of 2024.
What was the credit-linked note transaction?
During the second quarter of 2024, the Bank issued $478 million of unsecured credit-linked notes that transfer a portion of the risk of losses on a $4.0 billion reference pool of auto-secured loans to third-party investors. The transaction reduced risk-weighted assets by approximately $3.0 billion. The notes have a weighted average contractual interest rate of 6.98% as of June 30, 2024.
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