How did Huntington's second-quarter 2024 earnings compare with prior periods?

Net income attributable to Huntington was $474 million, or $0.30 per diluted share, compared with $419 million, or $0.26, in the first quarter of 2024 and $559 million, or $0.35, in the second quarter of 2023. The filing attributes the year-over-year decline to a higher cost of funds and higher deposit costs, partly offset by higher loan and securities yields.

What drove the change in net interest income and margin?

Fully taxable-equivalent net interest income decreased $32 million, or 2%, from the year-ago quarter, with net interest margin falling 12 basis points to 2.99%. The filing cites a higher interest rate environment that raised the cost of funds, along with $13.0 billion in average interest-bearing deposit growth. Compared with the first quarter, net interest income rose $25 million, or 2%.

What is the status of Huntington's credit quality?

Net charge-offs were $90 million, or 0.29% of average loans and leases, and the provision for credit losses was $100 million. Nonperforming assets rose to $780 million, or 0.63% of loans, leases, OREO and other NPAs, from $557 million a year earlier, mainly due to higher commercial real estate and commercial and industrial nonaccrual loans. The allowance for credit losses was $2.4 billion, or 1.95% of total loans and leases.

What was the credit linked note transaction?

During the second quarter, Huntington completed a $478 million Credit Linked Note transaction tied to an approximately $4 billion reference pool of on-balance sheet prime indirect auto loans. The transaction reduced risk-weighted assets by approximately $3.0 billion, a 76% reduction in the risk-weighting on the selected pool, as part of the company's capital optimization strategy.

What did management say about the outlook?

The CEO said the company expects higher revenues over the second half of 2024, with continued momentum into 2025 and beyond, supported by accelerated loan growth and continued deposit growth. The filing also notes that the company's CET1 ratio is estimated at 10.4% at June 30, 2024.

Huntington Bancshares 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed July 19, 2024. Cited figures are marked; the original filing is the authoritative source.

Huntington Bancshares Incorporated reported second-quarter 2024 earnings of $474 million^a, or $0.30 per diluted common share, up $0.04 per share from the first quarter and down $0.05 from the year-ago quarter.

Net interest income was $1,312 million^b, up $25 million from the prior quarter and down $34 million from the year-ago quarter, with net interest margin at 2.99%. Noninterest income rose $24 million, or 5%, from the prior quarter to $491 million, led by higher capital markets and advisory fees. Management highlighted accelerated loan growth, with average total loans and leases up $1.4 billion (1%) from the prior quarter to $123.4 billion, and average total deposits up $2.9 billion (2%) from the prior quarter.

Credit metrics were mixed. Net charge-offs were 0.29% of average loans and leases, versus 0.16% a year earlier, and the nonperforming asset ratio rose to 0.63% from 0.46% a year ago, driven by commercial real estate and commercial and industrial nonaccrual loans. Total noninterest expense was $1,117 million^c, including $6 million of FDIC deposit insurance special assessment.

Capital improved: the CET1 ratio rose to an estimated 10.4% from 10.2%, helped by a $478 million^d credit linked note transaction on an approximately $4 billion pool of prime indirect auto loans, which reduced risk-weighted assets by approximately $3.0 billion. Tangible book value per share reached $7.89.

The filing is furnished under Item 2.02, with the earnings press release (Exhibit 99.1) and Quarterly Financial Supplement (Exhibit 99.2) incorporated by reference. Management said it expects higher revenues in the second half of 2024, with continued momentum into 2025 and beyond.

02—Key points

Key Highlights

Net income attributable to Huntington of $474 million, or $0.30 per diluted share, up $55 million from the first quarter and down $85 million from the year-ago quarter.
Net interest margin of 2.99%, down from 3.01% in the prior quarter and 3.11% a year ago; net interest income rose $25 million from the prior quarter.
Noninterest income increased 5% from the prior quarter to $491 million, driven by capital markets and advisory fees of $73 million, up from $56 million.
Average total loans and leases of $123.4 billion, up $1.4 billion from the prior quarter; average total deposits of $153.5 billion, up $2.9 billion.
Net charge-offs of 0.29% of average loans and leases, up from 0.16% a year ago; nonperforming asset ratio of 0.63% versus 0.46% a year ago.
CET1 ratio of an estimated 10.4%, up from 10.2%, supported by a $478 million credit linked note transaction that reduced risk-weighted assets by approximately $3.0 billion.
Tangible book value per common share of $7.89, up $0.12 from the prior quarter and $0.56 from a year ago.

03—Questions

Frequently Asked Questions

How did Huntington's second-quarter 2024 earnings compare with prior periods?
Net income attributable to Huntington was $474 million, or $0.30 per diluted share, compared with $419 million, or $0.26, in the first quarter of 2024 and $559 million, or $0.35, in the second quarter of 2023. The filing attributes the year-over-year decline to a higher cost of funds and higher deposit costs, partly offset by higher loan and securities yields.
What drove the change in net interest income and margin?
Fully taxable-equivalent net interest income decreased $32 million, or 2%, from the year-ago quarter, with net interest margin falling 12 basis points to 2.99%. The filing cites a higher interest rate environment that raised the cost of funds, along with $13.0 billion in average interest-bearing deposit growth. Compared with the first quarter, net interest income rose $25 million, or 2%.
What is the status of Huntington's credit quality?
Net charge-offs were $90 million, or 0.29% of average loans and leases, and the provision for credit losses was $100 million. Nonperforming assets rose to $780 million, or 0.63% of loans, leases, OREO and other NPAs, from $557 million a year earlier, mainly due to higher commercial real estate and commercial and industrial nonaccrual loans. The allowance for credit losses was $2.4 billion, or 1.95% of total loans and leases.
What was the credit linked note transaction?
During the second quarter, Huntington completed a $478 million Credit Linked Note transaction tied to an approximately $4 billion reference pool of on-balance sheet prime indirect auto loans. The transaction reduced risk-weighted assets by approximately $3.0 billion, a 76% reduction in the risk-weighting on the selected pool, as part of the company's capital optimization strategy.
What did management say about the outlook?
The CEO said the company expects higher revenues over the second half of 2024, with continued momentum into 2025 and beyond, supported by accelerated loan growth and continued deposit growth. The filing also notes that the company's CET1 ratio is estimated at 10.4% at June 30, 2024.

04—Continue

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