HUNTINGTON BANCSHARES INC MD

Previous wording

For the first quarter of 2024, we reported net income of $419 million, or $0.26 per diluted common share, compared with $602 million, or $0.39 per diluted common share, in the year-ago quarter. The first quarter of 2024 reported net income was negatively impacted by the recognition of additional FDIC DIF special assessment expense totaling $32 million, or $25 million after tax ($0.02 per common share), based on updated FDIC estimates to recover the costs associated with the 2023 bank failures, and staffing efficiency related expense of $7 million, or $5 million after tax. The year-ago quarter reported net income was positively impacted by the sale of our RPS business resulting in a $57 million gain, or $44 million after tax ($0.03 per common share), and negatively impacted by voluntary retirement program and organization realignment expense of $42 million, or $34 million after tax ($0.02 per common share).

Current wording

For the second quarter of 2024, we reported net income of $474 million, or $0.30 per diluted common share, compared with $559 million, or $0.35 per diluted common share, in the year-ago quarter.

Previous wording

Net interest income was $1.3 billion for the first quarter of 2024, a decrease of $122 million, or 9%, from the year-ago quarter. FTE net interest income, a non-GAAP financial measure, decreased $118 million, or 8%, from the year-ago quarter. 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.

Current wording

Net interest income was $1.3 billion for the second quarter of 2024, a decrease of $34 million, or 3%, from the year-ago quarter. FTE net interest income, a non-GAAP financial measure, decreased $32 million, or 2%, from the year-ago quarter. The decrease in FTE net interest income primarily reflected a 12 basis point decrease in the FTE NIM to 2.99% and a $7.8 billion, or 6%, increase in average interest-bearing liabilities, partially offset by a $3.2 billion, or 2%, increase in average earning assets.

Previous wording

The provision for credit losses increased $22 million, or 26%, from the year-ago quarter to $107 million in the first quarter of 2024. The ACL increased $116 million from the year-ago quarter to $2.4 billion in the first quarter of 2024, or 1.97% of total loans and leases, compared to $2.3 billion, or 1.90% of total loans and leases. The increase in the total ACL was driven by a combination of loan and lease growth and modest builds in overall coverage ratios that are reflective of the current macroeconomic environment and changes in various risk profiles intended to capture uncertainty not addressed within the quantitative reserve.

Current wording

The provision for credit losses increased $8 million, or 9%, from the year-ago quarter to $100 million in the second quarter of 2024. The ACL increased $81 million from the year-ago quarter to $2.4 billion in the second quarter of 2024, or 1.95% of total loans and leases, compared to $2.3 billion, or 1.93% of total loans and leases, for the year-ago quarter. The increase in the total ACL was driven by a combination of loan and lease growth and modest builds in overall coverage ratios that are reflective of the current macroeconomic environment.

Previous wording

Noninterest income of $467 million, decreased $45 million, or 9%, from the year-ago quarter, primarily due to the $57 million gain associated with the sale of the RPS business recognized in the year-ago quarter included within other noninterest income, and a decrease in capital markets and advisory fees, partially offset by increases in payments and cash management revenue and wealth and asset management revenue. Noninterest expense of $1.1 billion, increased $51 million, or 5%, from the year-ago quarter, primarily due to the aforementioned $32 million of FDIC DIF special assessment expense and an increase in outside data processing and other services.

Current wording

Noninterest income was $491 million, a decrease of $4 million, or 1%, from the year-ago quarter, primarily due to the $18 million favorable mark-to-market on pay-fixed swaptions recognized in the year-ago quarter included within other noninterest income, partially offset by an increase in capital markets and advisory fees. Noninterest expense was $1.1 billion, an increase of $67 million, or 6%, from the year-ago quarter, primarily due to increases in personnel costs and outside data processing and other services.

Previous wording

Total assets at March 31, 2024 were $193.5 billion, an increase of $4.2 billion, or 2%, compared to December 31, 2023. The increase in total assets was primarily driven by increases in interest-earning deposits with banks of $2.5 billion, or 28%, total investment securities of $1.2 billion, or 3%, and loans and leases of $785 million, or 1%. Total liabilities at March 31, 2024 were $174.1 billion, an increase of $4.2 billion, or 2%, compared to December 31, 2023. The increase in total liabilities was primarily driven by increases in long-term debt of $2.5 billion, or 20%, and total deposits of $2.0 billion, or 1%, partially offset by a decrease in short-term borrowings of $438 million, or 71%.

Current wording

Total assets at June 30, 2024 were $196.3 billion, an increase of $6.9 billion, or 4%, compared to December 31, 2023. The increase in total assets was primarily driven by increases in interest-earning deposits with banks of $2.7 billion, or 31%, loans and leases of $2.4 billion, or 2%, and total investment securities of $1.5 billion, or 4%. Total liabilities at June 30, 2024 were $176.7 billion, an increase of $6.8 billion, or 4%, compared to December 31, 2023. The increase in total liabilities was primarily driven by increases in long-term debt of $4.1 billion, or 33%, and total deposits of $3.1 billion, or 2%.

Previous wording

The tangible common equity to tangible assets ratio decreased slightly to 6.0% at March 31, 2024, compared to 6.1% at December 31, 2023, primarily due to higher tangible assets and a change in AOCI driven by changes in interest rates, partially offset by current period earnings, net of dividends. CET1 risk-based capital ratio was 10.2% at both March 31, 2024 and December 31, 2023, as an increase in risk-weighted assets, driven by loan growth, and the CECL transitional amount, was offset by current period earnings, net of dividends.

Current wording

The tangible common equity to tangible assets ratio decreased slightly to 6.0% at June 30, 2024, compared to 6.1% at December 31, 2023, primarily due to higher tangible assets and a change in AOCI driven by changes in interest rates, partially offset by current period earnings, net of dividends. CET1 risk-based capital ratio was 10.4% at June 30, 2024, compared to 10.2% at December 31, 2023. The increase in CET1 is primarily due to current period earnings, net of dividends, partially offset by the CECL transitional amount and a modest increase in risk-weighted assets. The increase in risk-weighted assets was driven by loan growth, partially offset by the impact of a CLN transaction. Huntington completed a $478 million CLN transaction during the second quarter of 2024 related to an approximately $4 billion reference pool of on-balance sheet prime indirect auto loans as part of the Company's capital optimization strategy.

Previous wording

Our quarterly results reflect continued execution of our growth strategy and leveraging the strength of our balance sheet, delivered through sustained organic deposit and loan growth. We have continued our disciplined approach to managing credit quality consistent with our aggregate moderate-to-low, through-the-cycle risk appetite. With our disciplined and proactive approach, we believe Huntington is well positioned to perform well through the dynamic environment. We remain focused on delivering profitable growth and driving value for our shareholders.

Current wording

Our quarterly results reflect continued execution of our growth strategy and leveraging the strength of our balance sheet, delivered through increasing deposit and loan balances, in addition to expanding net interest income and noninterest income. We have continued our disciplined approach to managing credit quality consistent with our aggregate moderate-to-low, through-the-cycle risk appetite. With our disciplined and proactive approach, we believe Huntington is positioned to perform well through the dynamic environment. We remain focused on delivering profitable growth and driving value for our shareholders.

Previous wording

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.”

Current wording

This section provides a review of financial performance on a consolidated basis. Key unaudited interim consolidated balance sheet and unaudited interim 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.”

Previous wording

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.

Current wording

Net interest income for the second quarter of 2024 decreased $34 million, or 3%, from the second quarter of 2023. FTE net interest income, a non-GAAP financial measure, for the second quarter of 2024 decreased $32 million, or 2%, from the second quarter of 2023. The decrease in FTE net interest income primarily reflected a 12 basis point decrease in the FTE NIM to 2.99% and a $7.8 billion, or 6%, increase in average interest-bearing liabilities, partially offset by a $3.2 billion, or 2%, increase in average earning assets. The lower NIM was primarily driven by higher cost of funds given the higher interest rate environment and a $13.0 billion, or 12%, increase in interest-bearing deposits, partially offset by higher loan and lease and investment security yields.

Previous wording

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%.

Current wording

Average assets for the second quarter of 2024 were $194.6 billion, an increase of $3.8 billion, or 2%, from the second quarter of 2023, primarily due to increases in average loans and leases of $2.0 billion, or 2%, and average total securities of $1.3 billion, or 3%. The increase in average loans and leases was driven by growth in average consumer loans of $1.8 billion, or 3%, and average commercial loans and leases of $267 million.

Previous wording

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.

Current wording

Average liabilities for the first six-month period of 2024 increased $3.9 billion, or 2%, from the year-ago period, primarily due to an increase in average deposits, partially offset by a decrease in average borrowings. Total average deposits increased $6.3 billion, or 4%, due to an increase in average interest-bearing deposits of $12.6 billion, or 11%, partially offset by a decrease in noninterest-bearing deposits of $6.3 billion, or 17%. The increase in average interest-bearing deposits was driven by 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 borrowings decreased $2.8 billion, or 15%, driven by a decrease in short-term FHLB borrowings.

Previous wording

Average shareholders’ equity for the first quarter of 2024 increased $982 million, or 5%, from the first quarter of 2023 primarily due to earnings.

Current wording

Average shareholders’ equity for the first six-month period of 2024 increased $695 million, or 4%, from the year-ago period primarily due to earnings, net of dividends.

Previous wording

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.

Current wording

The provision for credit losses for the second quarter of 2024 was $100 million, an increase of $8 million, or 9%, compared to the second 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, partially offset by an increase in the coverage ratio in the prior year quarter. Provision for credit losses for the first six-month period of 2024 was $207 million, an increase of $30 million, or 17%, compared to the year-ago period. The increase over the prior year-to-date period reflects increased charge-off activity in the Commercial portfolio in the current year and an increase in loan growth in 2024 driving allowance builds, partially offset by a modest reduction in overall coverage ratios in 2024. Overall coverage ratios remain reflective of the current macroeconomic environment including recognition of near-term recessionary risks.

Previous wording

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.

Current wording

Noninterest income for the second quarter of 2024 was $491 million, a decrease of $4 million, or 1%, from the year-ago quarter. Other noninterest income decreased $28 million, or 85%, primarily due to an $18 million favorable mark-to-market on pay-fixed swaptions recognized in the second quarter of 2023 and $9 million of contra-revenue related to premium costs and mark-to-market associated with credit risk transfer transactions, inclusive of the CLN transaction, recognized in the second quarter of 2024. Partially offsetting these decreases, capital markets and advisory fees increased $11 million, or 18%, primarily due to higher merger and acquisition advisory service fees. Payments and cash management revenue increased $8 million, or 5%, reflecting higher debit card transaction revenue and commercial treasury management revenue. Wealth and asset management revenue increased $7 million, or 8%, reflecting higher fixed annuity commissions and an increase in assets under management.

Previous wording

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.

Current wording

Noninterest expense for the first six-month period of 2024 increased $118 million, or 6%, from the year-ago period. Personnel costs increased $40 million, or 3%, primarily due to increases in salary, incentive compensation, and benefit expense, partially offset by a $35 million decrease in severance expense related to staffing efficiencies. Deposit and other insurance expense increased $36 million, or 84%, primarily due to $38 million of additional expense attributable to the FDIC DIF special assessment. Outside data processing increased $32 million, or 11%, primarily due higher technology and data expense. Professional services increased $14 million, or 38%, driven by an increase in consulting fees.

Previous wording

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.

Current wording

The provision for income taxes in the second quarter of 2024 was $106 million, compared to $134 million in the second quarter of 2023. The provision for income taxes for the six-month periods ended June 30, 2024 and June 30, 2023 was $192 million and $278 million, respectively. All 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. The effective tax rate for the second quarter of 2024 and second quarter of 2023 was 18.2% and 19.3%, respectively. The effective tax rates for the six-month periods ended June 30, 2024 and June 30, 2023 were 17.5% and 19.2%, respectively. The variance between the second quarter of 2024 compared to the second quarter of 2023, and the six-month period ended June 30, 2024 compared to the six-month period ended June 30, 2023 provision for income taxes and effective tax rates related primarily to lower pretax income and discrete tax benefits.

Previous wording

The net federal deferred tax asset was $686 million, and the net state deferred tax asset was $114 million at March 31, 2024.

Current wording

The net federal deferred tax asset was $693 million, and the net state deferred tax asset was $114 million at June 30, 2024.

Previous wording

At March 31, 2024, our loans and leases totaled $122.8 billion, representing a $785 million, or 1%, increase compared to $122.0 billion at December 31, 2023.

Current wording

At June 30, 2024, our loans and leases totaled $124.4 billion, representing a $2.4 billion, or 2%, increase compared to $122.0 billion at December 31, 2023.

Previous wording

(2) Amounts include $3.5 billion and $3.3 billion of auto dealer services loans at March 31, 2024 and December 31, 2023, respectively.

Current wording

(2) Amounts include $3.9 billion and $3.3 billion of auto dealer services loans at June 30, 2024 and December 31, 2023, respectively.

Previous wording

At March 31, 2024, our $12.3 billion CRE portfolio had an associated ACL of 4.6%. With remote work options leading to increased vacancy rates and underutilization of office space across the country, the office sector continues to be an area of uncertainty. Our office portfolio, which is predominantly suburban and multi-tenant loans, totaled $1.8 billion, or 1%, of total loans and leases, as of March 31, 2024. We have established ACL reserves of approximately 12% for our CRE office portfolio. At March 31, 2024, there was $76 million of outstanding balances in the office portfolio that were 30 or more days past due.

Current wording

Our CRE portfolio totaled $11.9 billion at June 30, 2024, a decrease of $489 million, or 4%, compared to December 31, 2023, driven by loan pay-offs and low demand for new originations. The CRE portfolio had an associated allowance coverage of 4.5% and 4.2% at June 30, 2024 and December 31, 2023, respectively. With remote work options leading to increased vacancy rates and underutilization of office space across the country, the office sector continues to be an area of uncertainty. Our office portfolio, which is predominantly suburban and multi-tenant loans, totaled $1.7 billion, or 1% of total loans and leases, as of June 30, 2024, compared to $1.8 billion, or 1% of total loans and leases, at December 31, 2023. We have established ACL reserves of approximately 12% for our CRE office portfolio as of June 30, 2024, compared to approximately 10% at December 31, 2023. At June 30, 2024, there was $68 million of outstanding balances in the office portfolio that were 30 or more days past due.

Previous wording

Credit quality performance in the first quarter of 2024 reflected NCOs of $92 million, or 0.30% of average total loans and leases, annualized, an increase of $35 million, compared to $57 million, or 0.19%, in the year-ago quarter. The increase was primarily due to a $26 million increase in commercial NCOs to $55 million in the first quarter of 2024. NPAs increased from December 31, 2023 by $27 million, or 4%, primarily driven by an increase in commercial NALs.

Current wording

Credit quality performance in the second quarter of 2024 reflected NCOs of $90 million, or 0.29% of average total loans and leases, annualized, an increase of $41 million, compared to $49 million, or 0.16%, in the year-ago quarter. The increase was primarily due to a $30 million increase in commercial NCOs to $57 million in the second quarter of 2024. NPAs increased from December 31, 2023 by $69 million, or 10%, primarily driven by a $54 million increase in commercial real estate NALs.

Previous wording

Commercial loans and leases are placed on nonaccrual status at 90-days past due, or earlier if repayment of principal and interest is in doubt. Of the $540 million of commercial related NALs at March 31, 2024, $264 million, or 49%, represented loans and leases that were less than 30-days past due, demonstrating our continued commitment to proactive credit risk management.

Current wording

Commercial loans and leases are placed on nonaccrual status at 90-days past due, or earlier if repayment of principal and interest is in doubt. Of the $553 million of commercial related NALs at June 30, 2024, $258 million, or 47%, represented loans and leases that were less than 30-days past due, demonstrating our continued commitment to proactive credit risk management.

Previous wording

The baseline scenario used in the March 31, 2024 ACL determination assumes softening of the labor market is underway and will continue through early 2025 causing the unemployment rate to gradually increase, peaking at 4.1% in 2025 before marginally improving to 4.0% by 2026. The overnight federal funds rate is forecasted to have peaked during the third quarter of 2023, remaining at this terminal level through mid-2024 as the Federal Reserve continues to address inflation levels and tightness in the labor market. The Federal Reserve is expected to complete a total of four 25 basis points cuts by the end of 2024. Further subsequent cuts of 25 basis points per quarter are expected in 2025 and 2026 until reaching 3% by the second half of 2026. Inflation is forecasted to drop from 2.9% in first quarter 2024, approaching the Federal Reserve target level of 2% by fourth quarter 2024. The GDP forecast for the second quarter of 2024 into 2025 is broadly consistent with year end, a result of elevated interest rates and tightening credit conditions. GDP is now forecasted to be 2.0% by the fourth quarter of 2025.

Current wording

The baseline scenario used in the June 30, 2024 ACL determination assumes softening of the labor market is underway and will continue through early 2025 causing the unemployment rate to gradually increase, peaking at 4.1% in 2025 before marginally improving to 4.0% by 2026. The Federal Reserve is projected to complete two 25 basis points cuts by the end of 2024. Further cuts of 25 basis points per quarter are expected in 2025 and 2026 until reaching 3% by 2027. Inflation is forecasted to approach the Federal Reserve’s target level of 2% by the end of 2024. The GDP is forecasted to slow from 2.3% in the second quarter to 1.5% by the end of 2024, reflecting volatility throughout 2024. GDP is then forecasted to show more stability throughout 2025, ending the fourth quarter of 2025 at 1.8%.

Previous wording

Management continues to assess the uncertainty in the macroeconomic environment, including ongoing risks in the commercial real estate environment, current inflation levels, political uncertainty, and geopolitical instability, considering multiple macroeconomic forecasts that reflect a range of possible outcomes. While we have incorporated estimates of economic uncertainty into our ACL, the ultimate impact of specific challenges in the commercial real estate industry, recent inflation levels, higher interest rates, and the significant conflicts on-going around the world will have on the economy remains unknown.

Current wording

Management continues to assess the uncertainty in the macroeconomic environment, including ongoing risks in the commercial real estate environment, current inflation levels, political uncertainty, and geopolitical instability, considering multiple macroeconomic forecasts that reflect a range of possible outcomes. While we have incorporated estimates of economic uncertainty into our ACL, the ultimate impact that specific challenges will have on the economy remains unknown, including those related to the commercial real estate industry, recent inflation levels, higher interest rates, and the significant conflicts on-going around the world.

Previous wording

The ACL was $2.4 billion, or 1.97% of total loans and leases at March 31, 2024, consistent with December 31, 2023. The marginal absolute increase in the total ACL was driven by loan and lease portfolio growth during first quarter of 2024. The ACL coverage ratio at March 31, 2024 is reflective of the current macro-economic environment and changes in various risk profiles intended to capture uncertainty not addressed within the quantitative reserve.

Current wording

The ACL was $2.4 billion, or 1.95% of total loans and leases, at June 30, 2024, broadly consistent with December 31, 2023. The marginal absolute increase in the total ACL was driven by loan and lease portfolio growth during the first half of 2024. The marginal reduction in the ACL coverage ratio at June 30, 2024 is reflective of the current macro-economic environment and changes in various risk profiles intended to capture uncertainty not addressed within the quantitative reserve.

Previous wording

NCOs were an annualized 0.30% of average loans and leases in the first quarter of 2024, up from 0.19% in the year-ago quarter. NCOs for commercial loans and leases were higher, with annualized net charge-offs of 0.32% in the first quarter of 2024, compared to 0.17% in the year-ago quarter, reflecting the continued normalization of net charge-offs. NCOs for consumer loans were modestly higher, with annualized net charge-offs of 0.28% in the first quarter of 2024, compared to 0.21% in the year-ago quarter.

Current wording

NCOs were an annualized 0.29% of average loans and leases in the second quarter of 2024, up from 0.16% in the year-ago quarter, reflecting the continued normalization of net charge-offs. NCOs for commercial loans and leases and consumer loans were higher, with annualized commercial loan and lease net charge-offs of 0.33% in the second quarter of 2024, compared to 0.16% in the year-ago quarter, and annualized consumer loan net charge-offs of 0.24% in the second quarter of 2024, compared to 0.17% in the year-ago quarter.

Previous wording

A key driver of our interest rate risk profile is our interest-bearing deposit repricing sensitivity assumptions to changes in interest rates, otherwise known as deposit beta. In addition, our interest expense is impacted by the composition of both interest-bearing and noninterest-bearing deposits in relation to our total deposits. Accordingly, we consider the impacts from both interest-bearing and noninterest-bearing deposits on our total deposit beta. Our cumulative to-date total deposit beta (total cost of deposits) is 43% within the current cycle, which started in March 2022.

Current wording

A key driver of our interest rate risk profile is our interest-bearing deposit repricing sensitivity assumptions to changes in interest rates, otherwise known as deposit beta. In addition, our interest expense is impacted by the composition of both interest-bearing and noninterest-bearing deposits in relation to our total deposits. Accordingly, we consider the impacts from both interest-bearing and noninterest-bearing deposits on our total deposit beta. Our cumulative to-date total deposit beta (total cost of deposits) is 45% within the current cycle, which started in March 2022.

Previous wording

The NII at Risk shows that the balance sheet is asset sensitive at both March 31, 2024, and December 31, 2023. The primary drivers to the change in sensitivity include market rates, mortgage prepayment assumptions, deposit modeling assumptions, projected balance sheet composition over the simulation horizon, and hedging activity.

Current wording

The NII at Risk shows that the balance sheet is asset sensitive at both June 30, 2024, and December 31, 2023. The primary drivers to the change in sensitivity include current and projected balance sheet composition over the simulation horizon and hedging activity.

Previous wording

The change in sensitivity from December 31, 2023 was driven primarily by market rates, mortgage prepayment assumptions, deposit modeling assumptions, actual balance sheet composition, and hedging activity.

Current wording

The change in sensitivity from December 31, 2023 was driven primarily by market rates, ongoing balance sheet modeling assumption enhancements, and changes to actual balance sheet composition.

Previous wording

(5)Forward starting floor spreads effecting starting from April 2024 to September 2024

Current wording

(5)Forward starting floor spreads effective starting from August 2024 to September 2024.

Previous wording

(7)Forward starting swaps effective starting from April 2024 to March 2025.

Current wording

(7)Forward starting swaps effective starting April 2024 to March 2025.

Previous wording

At March 31, 2024, we had a total of $534 million of capitalized MSRs representing the right to service $33.3 billion in mortgage loans.

Current wording

At June 30, 2024, we had a total of $543 million of capitalized MSRs representing the right to service $33.4 billion in mortgage loans.

Previous wording

Our largest source of liquidity on a consolidated basis is core deposits, which provide stable and lower-cost funding. Core deposits were $147.3 billion at March 31, 2024 which comprised 96% of total deposits, compared to $145.5 billion, and 96% of total deposits, at December 31, 2023. The $1.8 billion, or 1%, increase in core deposits, compared to December 31, 2023, was primarily driven by an increase in consumer core deposits. Our core deposits come from a base of primary bank customer relationships, and we continue to focus on acquiring and deepening those relationships resulting in our granular and diversified deposit base.

Current wording

Our largest source of liquidity on a consolidated basis is core deposits, which provide stable and lower-cost funding. Core deposits were $147.5 billion at June 30, 2024 which comprised 96% of total deposits, compared to $145.5 billion, and 96% of total deposits, at December 31, 2023. The $2.1 billion, or 1%, increase in core deposits, compared to December 31, 2023 was primarily driven by an increase in money market deposits. Our core deposits come from a base of primary bank customer relationships, and we continue to focus on acquiring and deepening those relationships resulting in our granular and diversified deposit base.

Previous wording

Non-core deposits consist primarily of brokered money market balances. Non-core deposits were $6.0 billion, or 4% of total deposits, at March 31, 2024, compared to $5.8 billion, or 4% of total deposits, at December 31, 2023. Non-core deposits were below our established liquidity risk metric limits at March 31, 2024.

Current wording

Non-core deposits consist primarily of brokered money market balances. Non-core deposits were $6.9 billion, or 4% of total deposits, at June 30, 2024, compared to $5.8 billion, or 4% of total deposits, at December 31, 2023. Non-core deposits were below our established liquidity risk metric limits at June 30, 2024.

Previous wording

(2)Represents consolidated Huntington uninsured deposits, determined by adjusting the amounts reported in the Bank Call Report (FFIEC 031) by inter-company deposits, which are not customer deposits and are therefore eliminated through consolidation. As of March 31, 2024, the Bank Call Report uninsured deposit balance was $50.4 billion, which includes $4.6 billion of inter-company deposits. As of December 31, 2023, the Bank Call Report uninsured deposit balance was $49.8 billion, which includes $4.6 billion of inter-company deposits.

Current wording

(2)Represents consolidated Huntington uninsured deposits, determined by adjusting the amounts reported in the Bank Call Report (FFIEC 031) by inter-company deposits, which are not customer deposits and are therefore eliminated through consolidation. As of June 30, 2024, the Bank Call Report estimated uninsured deposit balance was $52.0 billion, which includes $5.6 billion of inter-company deposits. As of December 31, 2023, the Bank Call Report estimated uninsured deposit balance was $49.8 billion, which includes $4.6 billion of inter-company deposits.

Previous wording

Cash and cash equivalents were $12.2 billion and $10.1 billion at March 31, 2024 and December 31, 2023, respectively. The $2.1 billion increase in cash and cash equivalents is primarily due to an increase in interest-bearing deposits at the Federal Reserve Bank to support short-term liquidity.

Current wording

Cash and cash equivalents were $12.5 billion and $10.1 billion at June 30, 2024 and December 31, 2023, respectively. The $2.4 billion increase in cash and cash equivalents is primarily due to an increase in interest-bearing deposits at the Federal Reserve Bank to support short-term liquidity.

Previous wording

Total investment securities were $42.4 billion at March 31, 2024, compared to $41.2 billion at December 31, 2023. The $1.2 billion increase in securities compared to December 31, 2023, was primarily due to increased investment in U.S. Treasury securities. At March 31, 2024, the duration of the investment securities portfolio was 4.2 years, or 3.5 years net of hedging. Securities are pledged to secure borrowing capacity with the FHLB and the Federal Reserve, discussed further in the Bank Liquidity and Sources of Funding section below. At March 31, 2024, investment securities with market value of $5.9 billion were unpledged.

Current wording

Total investment securities were $42.6 billion at June 30, 2024, compared to $41.2 billion at December 31, 2023. The $1.5 billion increase in securities compared to December 31, 2023, was primarily due to increased investment in U.S. Treasury securities. At June 30, 2024, the duration of the investment securities portfolio was 4.0 years, or 3.4 years net of hedging. Securities are pledged to secure borrowing capacity with the FHLB and the Federal Reserve, discussed further in the Bank Liquidity and Sources of Funding section below. At June 30, 2024, investment securities with a market value of $4.8 billion were unpledged.

Previous wording

Sources of wholesale funding include non-core deposits (other domestic deposits of $250,000 or more, negotiable CDs, brokered and other deposits), short-term borrowings, and long-term debt. Our wholesale funding totaled $21.0 billion at March 31, 2024, compared to $18.8 billion at December 31, 2023. The increase from year end is primarily due to increases in collateralized borrowings and senior notes, partially offset by a decrease in repurchase agreements.

Current wording

Sources of wholesale funding include non-core deposits (other domestic deposits of $250,000 or more, negotiable CDs, brokered and other deposits), short-term borrowings, and long-term debt. Our wholesale funding totaled $23.5 billion at June 30, 2024, compared to $18.8 billion at December 31, 2023. The increase from year end is primarily due to increases in FHLB borrowings and collateralized borrowings.

Previous wording

Our primary sources of funding for the Bank are consumer and commercial core deposits. At March 31, 2024, these core deposits funded 76% of total assets (120% of total loans and leases). To the extent we are unable to obtain sufficient liquidity through core deposits and cash and cash equivalents, we may meet our liquidity needs through sources of wholesale funding and asset securitization or sale.

Current wording

Our primary sources of funding for the Bank are consumer and commercial core deposits. At June 30, 2024, these core deposits funded 75% of total assets (119% of total loans and leases). To the extent we are unable to obtain sufficient liquidity through core deposits and cash and cash equivalents, we may meet our liquidity needs through sources of wholesale funding and asset securitization or sale.

Previous wording

The Bank maintains borrowing capacity at both the FHLB and the Federal Reserve secured by pledged loans and securities. The Bank does not consider borrowing capacity at the Federal Reserve a primary source of funding; however, it could be used as a potential source of liquidity in a stressed environment or during a market disruption. At March 31, 2024, the Bank’s available contingent borrowing capacity at the FHLB and Federal Reserve totaled $81.9 billion, compared to $83.0 billion at December 31, 2023. The amount of available contingent borrowing capacity may fluctuate based on the level of borrowings outstanding and level of assets pledged.

Current wording

The Bank maintains borrowing capacity at both the FHLB and the Federal Reserve secured by pledged loans and securities. The Bank does not consider borrowing capacity at the Federal Reserve a primary source of funding; however, it could be used as a potential source of liquidity in a stressed environment or during a market disruption. At June 30, 2024, the Bank’s available contingent borrowing capacity at the FHLB and Federal Reserve totaled $82.0 billion, compared to $83.0 billion at December 31, 2023. The amount of available contingent borrowing capacity may fluctuate based on the level of borrowings outstanding and level of assets pledged.