01—Abstract
Summary
Summary of the 8-K filed April 19, 2024. Cited figures are marked; the original filing is the authoritative source.
Huntington Bancshares Incorporated reported 2024 first-quarter net income attributable to Huntington of $419 milliona, or $0.26 per diluted common share, compared with $243 million, or $0.15, in the prior quarter and $602 million, or $0.39, in the year-ago quarter.
Excluding after-tax Notable Items, primarily the FDIC Deposit Insurance Fund special assessment, adjusted earnings per common share were $0.28b. Return on average assets was 0.89%, return on average common equity was 9.2%, and return on average tangible common equity was 14.2%. Management said its outlook for the year remains unchanged and that it expects loan growth to accelerate over the course of the year.
Balance sheet trends were steady. Average total deposits rose $1.1 billionc, or 1%, from the prior quarter and $4.6 billion, or 3%, from the year-ago quarter, and ending total deposits reached $153.2 billion. Average total loans and leases increased $701 million, or 1%, sequentially to $121.9 billion.
Net interest income fell $29 milliond, or 2%, from the prior quarter and $122 million, or 9%, from the year-ago quarter, as net interest margin declined to 3.01% from 3.40% a year earlier, reflecting higher cost of funds. Noninterest income rose $62 million, or 15%, sequentially to $467 million, largely because the prior quarter included a $74 million mark-to-market loss on pay-fixed swaptions. Credit metrics were mixed.
Net charge-offs were 0.30% of average loans and leases, versus 0.19% a year earlier, and nonperforming assets rose to $738 million, or 0.60% of total loans and leases, OREO and other NPAs. The allowance for credit losses was $2.4 billion, or 1.97% of total loans and leases. The CET1 risk-based capital ratio was stable at 10.2%, and the tangible common equity ratio was 6.0%.
02—Key points
Key Highlights
- Diluted EPS of $0.26 versus $0.15 in the prior quarter and $0.39 a year earlier; adjusted EPS of $0.28 excluding $0.02 of after-tax Notable Items.
- Net interest income of $1.287 billion, down 2% sequentially and 9% year-over-year; net interest margin of 3.01%, down from 3.40% a year earlier.
- Noninterest income of $467 million, up 15% sequentially, driven by the absence of the prior quarter's $74 million pay-fixed swaption mark-to-market loss.
- Ending total deposits of $153.2 billion, up 1% sequentially and 5% year-over-year; average core deposits of $145.0 billion.
- Average total loans and leases of $121.9 billion, up 1% sequentially and 1% year-over-year, led by commercial and industrial growth.
- Net charge-offs of 0.30% of average loans and leases; nonperforming assets of $738 million (0.60%), up from $578 million a year earlier.
- CET1 risk-based capital ratio of 10.2% (estimated), stable versus the prior quarter; tangible common equity ratio of 6.0%.
03—Questions
Frequently Asked Questions
What drove the change in first-quarter 2024 earnings?
Net income attributable to Huntington was $419 million, or $0.26 per diluted share, up from $243 million ($0.15) in the fourth quarter of 2023 and down from $602 million ($0.39) in the first quarter of 2023. The sequential increase reflects the absence of the prior quarter's $214 million FDIC special assessment, which was $32 million in the current quarter, and higher noninterest income. Adjusted EPS, excluding Notable Items, was $0.28.
How did net interest margin and net interest income perform?
Net interest margin was 3.01%, down 6 basis points from the prior quarter and 39 basis points from the year-ago quarter. Management attributed the decline mainly to higher cost of funds in a higher interest rate environment and an increase in deposits held at the Federal Reserve Bank, partially offset by higher loan and investment yields. Net interest income was $1.287 billion, down 2% sequentially and 9% year-over-year.
What is the outlook for loan growth and credit quality?
Management said its outlook for the year remains unchanged and expects accelerating loan growth over the course of the year, carrying into 2025. Credit quality was described as performing very well, with net charge-offs stable sequentially at 0.30%. Nonaccrual loans rose to $716 million, or 0.58% of total loans and leases, driven by an increase in commercial nonaccrual loans.
How strong is Huntington's liquidity and capital position?
Cash and cash equivalents plus available contingent borrowing capacity totaled $94 billion at March 31, 2024, equal to 205% of uninsured deposits. The CET1 risk-based capital ratio was 10.2%, unchanged from December 31, 2023, and the tangible common equity ratio was 6.0%, a decrease of 10 basis points from the prior quarter. The filing notes that 75% of the cumulative CECL deferral had been phased in as of March 31, 2024.
04—Continue