HUNTINGTON BANCSHARES INC /MD/ Q1 FY2024 earnings call

• Executing organic growth strategies with top-tier liquidity and capital metrics.
• Loan growth expected to accelerate, with deposit gathering maintaining momentum.
• Expect sequential increases in net interest income and fee revenues supported by loan growth and balance sheet management.
• Rigorously managing credit with moderate to low risk appetite.
• Added banking talent in Carolinas and Texas, and launched new commercial specialty verticals.

Loan balances increased $701 million or 0.6% quarter-over-quarter, with commercial loans up $691 million, including distribution finance ($352M) and auto floor plan ($313M), while CRE declined $31M. Consumer loans were flat, with residential mortgage up $137M. Deposit balances grew $7.9 billion, or 5.5% over the past year. Capital remains strong with common equity tier 1 at 10.2% and adjusted common equity tier 1 at 8.5%. Liquidity is top tier with uninsured deposit coverage at 205%. Credit quality was stable with net charge-offs at 30 basis points. Primary bank relationships grew 2% in consumer and 4% in business year-over-year.

• Loan growth expected to accelerate to 3%-5% full year.
• Deposit growth range 2%-4%, likely at higher end.
• Net interest income range down 2% to up 2% full year.
• Core non-interest income growth 5%-7% full year.
• Core expense growth forecast at 4.5% full year.

• Macro environment uncertainties impacting growth.
• Interest rate volatility affecting net interest margin and funding costs.
• Credit risks in office commercial real estate, though portfolio is granular and well-reserved.

Q: Can you expand on the lower end of the NII guide and deposit betas?

A: Zach Wasserman noted the timing of rate cuts being pushed out has extended the period before substantive deposit beta downgrade actions, leading to slightly higher funding costs but strong deposit growth supporting loan acceleration.

Q: How does the competitive dynamic look for deposits?

A: Zach Wasserman stated the competitive market remains transparent, with pricing strategy focused on fair and appropriate pricing to drive deposit growth from customer acquisition.

Q: Any updates on debit card interchange reform?

A: Zach Wasserman said no substantive update, with the proposal potentially affecting around $90M annualized, but likely to be altered, and not in 2024 guidance.