HUNTINGTON BANCSHARES INC MD
For the period ended Mar 31, 2024. Filed Apr 30, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2024 · Filed Apr 30, 2024
Extracted filing text, with the paragraph anchors used by the comparison.
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Discussion of Results of Operations
This section provides a review of financial performance on a consolidated basis. Key unaudited consolidated balance sheet and unaudited income statement trends are discussed. All earnings per share data are reported on a diluted basis. For additional insight on financial performance, please read this section in conjunction with the “Business Segment Discussion.”
8 Huntington Bancshares Incorporated
Average Balance Sheet / Net Interest Income
The following tables detail the change in our average balance sheet and the net interest margin.
| Table 2 - Consolidated Quarterly Average Balance Sheet and Net Interest Margin Analysis | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Three Months Ended March 31, 2024 · Three Months Ended March 31, 2023 | |||||||||||||||||
| Average · Interest Income · Yield/ · Average · Interest Income · Yield/ · Change in Average Balances | |||||||||||||||||
| (dollar amounts in millions) · Balances · (FTE) (1) · Rate (2) · Balances · (FTE) (1) · Rate (2) · Amount · Percent | |||||||||||||||||
| Assets: | |||||||||||||||||
| Interest-earning deposits with banks | $9,761 | $134 | 5.50% | $6,350 | $76 | 4.81% | $3,411 | 54% | |||||||||
| Securities: | |||||||||||||||||
| Trading account securities | 133 | 2 | 5.15 | 21 | — | 5.37 | 112 | NM | |||||||||
| Available-for-sale securities: | |||||||||||||||||
| Taxable | 22,515 | 296 | 5.26 | 21,368 | 232 | 4.34 | 1,147 | 5 | |||||||||
| Tax-exempt | 2,676 | 34 | 5.05 | 2,640 | 29 | 4.40 | 36 | 1 | |||||||||
| Total available-for-sale securities | 25,191 | 330 | 5.24 | 24,008 | 261 | 4.35 | 1,183 | 5 | |||||||||
| Held-to-maturity securities—taxable | 15,567 | 95 | 2.44 | 16,977 | 102 | 2.41 | (1,410) | (8) | |||||||||
| Other securities | 724 | 9 | 5.23 | 886 | 10 | 4.35 | (162) | (18) | |||||||||
| Total securities | 41,615 | 436 | 4.19 | 41,892 | 373 | 3.56 | (277) | (1) | |||||||||
| Loans held for sale | 458 | 7 | 6.51 | 450 | 7 | 5.85 | 8 | 2 | |||||||||
| Loans and leases: (3) | |||||||||||||||||
| Commercial: | |||||||||||||||||
| Commercial and industrial | 50,625 | 801 | 6.26 | 49,028 | 686 | 5.60 | 1,597 | 3 | |||||||||
| Commercial real estate | 12,563 | 240 | 7.56 | 13,682 | 233 | 6.80 | (1,119) | (8) | |||||||||
| Lease financing | 5,081 | 79 | 6.13 | 5,209 | 68 | 5.25 | (128) | (2) | |||||||||
| Total commercial | 68,269 | 1,120 | 6.49 | 67,919 | 987 | 5.82 | 350 | 1 | |||||||||
| Consumer: | |||||||||||||||||
| Residential mortgage | 23,710 | 227 | 3.83 | 22,327 | 190 | 3.41 | 1,383 | 6 | |||||||||
| Automobile | 12,553 | 158 | 5.05 | 13,245 | 129 | 3.94 | (692) | (5) | |||||||||
| Home equity | 10,072 | 195 | 7.77 | 10,258 | 181 | 7.14 | (186) | (2) | |||||||||
| RV and marine | 5,892 | 74 | 5.04 | 5,366 | 58 | 4.42 | 526 | 10 | |||||||||
| Other consumer | 1,434 | 42 | 11.91 | 1,305 | 36 | 11.18 | 129 | 10 | |||||||||
| Total consumer | 53,661 | 696 | 5.20 | 52,501 | 594 | 4.57 | 1,160 | 2 | |||||||||
| Total loans and leases | 121,930 | 1,816 | 5.92 | 120,420 | 1,581 | 5.27 | 1,510 | 1 | |||||||||
| Total earning assets | 173,764 | 2,393 | 5.54 | 169,112 | 2,037 | 4.89 | 4,652 | 3 | |||||||||
| Cash and due from banks | 1,493 | 1,598 | (105) | (7) | |||||||||||||
| Goodwill and other intangible assets | 5,697 | 5,759 | (62) | (1) | |||||||||||||
| All other assets | 11,619 | 10,568 | 1,051 | 10 | |||||||||||||
| Allowance for loan and lease losses | (2,267) | (2,143) | (124) | (6) | |||||||||||||
| Total assets | $190,306 | $184,894 | $5,412 | 3% | |||||||||||||
| Liabilities and shareholders’ equity: | |||||||||||||||||
| Interest-bearing deposits: | |||||||||||||||||
| Demand deposits—interest-bearing | $38,488 | $200 | 2.09% | $40,654 | $132 | 1.32% | $(2,166) | (5)% | |||||||||
| Money market deposits | 46,100 | 413 | 3.61 | 37,301 | 172 | 1.87 | 8,799 | 24 | |||||||||
| Savings and other domestic deposits | 16,595 | 10 | 0.24 | 19,877 | 3 | 0.07 | (3,282) | (17) | |||||||||
| Core certificates of deposit (4) | 13,867 | 160 | 4.64 | 5,747 | 43 | 3.01 | 8,120 | 141 | |||||||||
| Other domestic deposits of $250,000 or more | 461 | 5 | 4.18 | 252 | 2 | 2.45 | 209 | 83 | |||||||||
| Negotiable CDs, brokered and other deposits | 5,307 | 69 | 5.19 | 4,815 | 54 | 4.56 | 492 | 10 | |||||||||
| Total interest-bearing deposits | 120,818 | 857 | 2.85 | 108,646 | 406 | 1.52 | 12,172 | 11 | |||||||||
| Short-term borrowings | 1,300 | 19 | 5.95 | 4,371 | 60 | 5.56 | (3,071) | (70) | |||||||||
| Long-term debt | 13,777 | 217 | 6.30 | 11,047 | 153 | 5.52 | 2,730 | 25 | |||||||||
| Total interest-bearing liabilities | 135,895 | 1,093 | 3.23 | 124,064 | 619 | 2.02 | 11,831 | 10 | |||||||||
| Demand deposits—noninterest-bearing | 29,910 | 37,498 | (7,588) | (20) | |||||||||||||
| All other liabilities | 5,239 | 5,056 | 183 | 4 | |||||||||||||
| Total liabilities | 171,044 | 166,618 | 4,426 | 3 | |||||||||||||
| Total Huntington shareholders’ equity | 19,213 | 18,231 | 982 | 5 | |||||||||||||
| Non-controlling interest | 49 | 45 | 4 | 9 | |||||||||||||
| Total equity | 19,262 | 18,276 | 986 | 5 | |||||||||||||
| Total liabilities and equity | $190,306 | $184,894 | $5,412 | 3% | |||||||||||||
| Net interest rate spread | 2.31 | 2.87 | |||||||||||||||
| Impact of noninterest-bearing funds on margin | 0.70 | 0.53 | |||||||||||||||
| Net interest margin/NII (FTE) | $1,300 | 3.01% | $1,418 | 3.40% | |||||||||||||
(1)FTE yields are calculated assuming a 21% tax rate.
(2)Yield/rates include the impact of applicable derivatives. Loan and lease and deposit average yield/rates also include impact of applicable non-deferrable and amortized fees.
(3)For purposes of this analysis, NALs are reflected in the average balances of loans and leases.
(4)Includes consumer certificates of deposit of $250,000 or more.
2024 1Q Form 10-Q 9
Quarterly Net Interest Income
Net interest income for the first quarter of 2024 decreased $122 million, or 9%, from the first quarter of 2023. FTE net interest income, a non-GAAP financial measure, for the first quarter of 2024 decreased $118 million, or 8%, from the first quarter of 2023. The decrease in FTE net interest income primarily reflected a 39 basis point decrease in the FTE NIM to 3.01% and a $11.8 billion, or 10%, increase in average interest-bearing liabilities, partially offset by a $4.7 billion, or 3%, increase in average earning assets. The lower NIM was primarily driven by higher cost of funds with the higher interest rate environment and an increase in deposits held at the Federal Reserve Bank, partially offset by higher loan and lease and investment security yields.
Quarterly Average Balance Sheet
Average assets for the first quarter of 2024 increased $5.4 billion, or 3%, to $190.3 billion from the first quarter of 2023, primarily due to increases in average interest-earning deposits with banks of $3.4 billion, or 54%, and average loans and leases of $1.5 billion, or 1%. The increase in average loans and leases was driven by growth in average consumer loans of $1.2 billion, or 2%, and average commercial loans and leases of $350 million, or 1%.
Average liabilities for the first quarter of 2024 increased $4.4 billion, or 3%, from the first quarter of 2023, primarily due to an increase in average deposits. Average deposits increased $4.6 billion, or 3%, primarily due to an increase in average interest-bearing deposits of $12.2 billion, or 11%, partially offset by a decrease in noninterest-bearing deposits of $7.6 billion, or 20%. The increase in average interest-bearing deposits was primarily due to increases in average money market deposits and certificates of deposits, partially offset by decreases in savings and other domestic deposits and interest-bearing demand deposits.
Average shareholders’ equity for the first quarter of 2024 increased $982 million, or 5%, from the first quarter of 2023 primarily due to earnings.
Provision for Credit Losses
(This section should be read in conjunction with the “Credit Risk” section.)
The provision for credit losses for the first quarter of 2024 was $107 million, an increase of $22 million, or 26%, compared to the first quarter of 2023. The increase in provision expense over the prior year quarter reflects increased charge-off activity in the current quarter, primarily in the Commercial portfolio compared to the year ago quarter.
The components of the provision for credit losses were as follows:
| Table 3 - Provision for Credit Losses | ||
|---|---|---|
| Three Months Ended | ||
| (dollar amounts in millions) | March 31, 2024 | March 31, 2023 |
| Provision for loan and lease losses | $117 | $78 |
| Provision (benefit) for unfunded lending commitments | (10) | 7 |
| Total provision for credit losses | $107 | $85 |
10 Huntington Bancshares Incorporated
Noninterest Income
The following table reflects noninterest income for each of the periods presented:
| Table 4 - Noninterest Income | |||
|---|---|---|---|
| Three Months Ended | |||
| March 31, | March 31, | Change | |
| (dollar amounts in millions) | 2024 | 2023 | Percent |
| Payments and cash management revenue | $146 | $137 | 7% |
| Wealth and asset management revenue | 88 | 80 | 10 |
| Customer deposit and loan fees | 77 | 76 | 1 |
| Capital markets and advisory fees | 56 | 65 | (14) |
| Leasing revenue | 22 | 26 | (15) |
| Mortgage banking income | 31 | 26 | 19 |
| Insurance income | 19 | 19 | — |
| Bank owned life insurance income | 16 | 16 | — |
| Gain on sale of loans | 5 | 3 | 67 |
| Net gains on sales of securities | — | 1 | — |
| Other noninterest income | 7 | 63 | (89) |
| Total noninterest income | $467 | $512 | (9)% |
Noninterest income for the first quarter of 2024 was $467 million, a decrease of $45 million, or 9%, from the year-ago quarter. Other noninterest income decreased $56 million, or 89%, primarily due to a $57 million gain on the sale of our RPS business recognized in the first quarter of 2023. Capital markets and advisory fees decreased $9 million, or 14%, primarily due to lower advisory fees. Partially offsetting these decreases, payments and cash management revenue increased $9 million, or 7%, reflecting higher debit card transaction revenue and commercial treasury management revenue, and wealth and asset management revenue increased $8 million, or 10%, reflecting higher assets under management and fixed annuity commissions.
Noninterest Expense
The following table reflects noninterest expense for each of the periods presented:
| Table 5 - Noninterest Expense | |||
|---|---|---|---|
| Three Months Ended | |||
| March 31, | March 31, | Change | |
| (dollar amounts in millions) | 2024 | 2023 | Percent |
| Personnel costs | $639 | $649 | (2)% |
| Outside data processing and other services | 166 | 151 | 10 |
| Deposit and other insurance expense | 54 | 20 | 170 |
| Equipment | 70 | 64 | 9 |
| Net occupancy | 57 | 60 | (5) |
| Marketing | 28 | 25 | 12 |
| Professional services | 25 | 16 | 56 |
| Amortization of intangibles | 12 | 13 | (8) |
| Lease financing equipment depreciation | 4 | 8 | (50) |
| Other noninterest expense | 82 | 80 | 3 |
| Total noninterest expense | $1,137 | $1,086 | 5% |
| Number of employees (average full-time equivalent) | 19,719 | 20,198 | (2)% |
2024 1Q Form 10-Q 11
Noninterest expense for the first quarter of 2024 was $1.1 billion, an increase of $51 million, or 5%, from the year-ago quarter. Deposit and other insurance expense increased $34 million primarily due to the recognition of additional FDIC DIF special assessment expense totaling $32 million based on updated FDIC estimates to recover the costs associated with the 2023 bank failures. Outside data processing and other services increased $15 million, or 10%, reflecting higher technology and data expense. Professional services increased $9 million, or 56%, largely due to an increase in consulting fees. Partially offsetting these increases, personnel costs decreased $10 million, or 2%, primarily reflecting a $35 million reduction in severance expense related to staffing efficiencies, partially offset by higher salary and benefit expense.
Provision for Income Taxes
The provision for income taxes in the first quarter of 2024 was $86 million, compared to $144 million in the first quarter of 2023. Both periods included the benefits from general business credits, tax-exempt income, tax-exempt bank owned life insurance income, and investments in qualified affordable housing projects. Theeffective tax rate for the first quarter of 2024 and first quarter of 2023 were 16.8% and 19.2%, respectively. The variance between the first quarter of 2024 compared to the first quarter of 2023 provision for income taxes and effective tax rates related primarily to lower pretax income and discrete tax benefits, while the 2023 first quarter reflected the benefit of capital losses recognized.
The net federal deferred tax asset was $686 million, and the net state deferred tax asset was $114 million at March 31, 2024.
We file income tax returns with the IRS and various state, city, and foreign jurisdictions. Federal income tax audits have been completed for tax years through 2016. Also, with few exceptions, the Company is no longer subject to state and local income tax examinations for tax years before 2019.
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.