01—Abstract
Summary
Summary of the 8-K filed March 6, 2024. Cited figures are marked; the original filing is the authoritative source.
Huntington Bancshares Incorporated filed a Form 8-K on March 6, 2024, furnishing slides for a presentation by Chief Financial Officer Zach Wasserman at the RBC Capital Markets 2024 Global Conference.
The information is furnished under Item 7.01 and is not deemed filed for Section 18 purposes. The company's stated key messages are high-quality loan growth, disciplined credit management, a strong capital position, and a granular deposit base, with the goal of driving earnings growth through 2024 and further expansion into 2025. The slides set out a full-year 2024 average loan growth outlook of +3%a to +5%, with loan growth expected to increase throughout 2024.
Growth drivers include auto floorplan, regional and business banking, distribution finance, and new markets and verticals, as well as auto and RV/marine in consumer lending. The company expects net interest income to rise sequentially, with growth accelerating through 2024, supported by a fixed asset repricing opportunity of roughly $13 to $15 billionb across FY24 with about 350 basis points of yield pickup. Consumer and commercial expansion into the Carolinas and Texas is also highlighted, with loans of $3 billion and $6 billion, respectively, at December 31, 2023.
On capital and credit, the slides report a CET1 ratio of 10.25%c as of 4Q23, an adjusted CET1 ratio of 8.58% excluding AOCI impacts, and an ACL-adjusted CET1 ratio of 11.98%. Adjusted return on average tangible common equity ex-AOCI was 15.0% for FY 2023.
Commercial real estate is 10.2%d of total loans, with a CRE reserve coverage of 4.2% and office loans at 1.5% of total loans. Approximately 70% of deposits are insured, and the company notes that core balances made up the majority of net deposit growth since year-end 2022.
02—Key points
Key Highlights
- Full-year 2024 average loan growth outlook of +3% to +5%, with increasing loan growth expected throughout 2024
- Expects sequential net interest income increases with growth accelerating through 2024, supported by roughly $13 to $15 billion of fixed asset repricing at about 350 basis points of yield pickup
- CET1 ratio of 10.25% at 4Q23; adjusted CET1 ratio of 8.58% excluding AOCI; 11.98% when adjusted for ACL
- Adjusted return on average tangible common equity ex-AOCI of 15.0% for FY 2023 (13.7% unadjusted ex-AOCI, 17.6% before ex-AOCI)
- Commercial real estate at 10.2% of total loans ($12.4 billion), with CRE reserve coverage of 4.2% and office loans at 1.5% of total loans with roughly 10% reserve coverage
- Approximately 70% of deposits are insured, with core balances driving the majority of net deposit growth since year-end 2022
- Expansion initiatives in the Carolinas (loans of $3 billion) and Texas (loans of $6 billion) at December 31, 2023, including a new middle market office in Dallas
03—Questions
Frequently Asked Questions
What is the company's loan growth outlook for 2024?
Huntington expects full-year 2024 average loan growth of +3% to +5%, with loan growth increasing throughout the year. Drivers include auto floorplan, regional and business banking, distribution finance, new markets and verticals, auto, and RV/marine.
How is net interest income expected to trend?
The company expects sequential increases in net interest income, with the growth rate accelerating throughout 2024. The outlook depends on the level of interest rates and the pace of loan growth, and includes a fixed asset repricing opportunity of roughly $13 to $15 billion across FY24 at about 350 basis points of yield pickup.
How strong is Huntington's capital position?
As of 4Q23, the CET1 ratio was 10.25%. Excluding AOCI impacts and cash flow hedges, the adjusted CET1 ratio was 8.58%, and adjusted for ACL the ratio was 11.98%.
What is the company's exposure to commercial real estate and office loans?
Commercial real estate represented 10.2% of total loans, or $12.4 billion, with CRE reserve coverage of 4.2%. Office loans were 1.5% of total loans, predominantly suburban and multi-tenant, with reserve coverage of approximately 10%.
What is the company's deposit profile?
Approximately 70% of deposits are insured. Core balances represented the majority of net deposit growth since year-end 2022, and core average consumer deposits had increased for 15 consecutive months, according to the slides.
04—Continue