Huntington(HBAN) - 2024 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) This section presents Huntington Bancshares' unaudited consolidated financial statements, including balance sheets, income statements, and cash flows, for the period ending September 30, 2024 Consolidated Balance Sheet Highlights (Unaudited) | (in millions) | Sep 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total Assets | $200,535 | $189,368 | | Net Loans and Leases | $124,152 | $119,727 | | Total Deposits | $158,351 | $151,230 | | Long-term Debt | $15,656 | $12,394 | | Total Liabilities | $179,883 | $169,970 | | Total Shareholders' Equity | $20,652 | $19,398 | Consolidated Statement of Income Highlights (Unaudited) | (in millions, except EPS) | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $1,351 | $1,368 | $3,950 | $4,123 | | Provision for Credit Losses | $106 | $99 | $313 | $276 | | Noninterest Income | $523 | $509 | $1,481 | $1,516 | | Noninterest Expense | $1,130 | $1,090 | $3,384 | $3,226 | | Net Income Attributable to Huntington | $517 | $547 | $1,410 | $1,708 | | Diluted EPS | $0.33 | $0.35 | $0.88 | $1.09 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Huntington's financial condition and operating results for Q3 and the first nine months of 2024, covering performance, risk, and segment analysis Executive Overview Q3 2024 net income decreased to $517 million due to net interest margin compression, while total assets grew to $200.5 billion with strong capital ratios Q3 2024 vs Q3 2023 Financial Performance | Metric (in millions, except per share) | Q3 2024 | Q3 2023 | Change (%) | | :--- | :--- | :--- | :--- | | Net Interest Income | $1,351 | $1,368 | (1)% | | Provision for Credit Losses | $106 | $99 | 7% | | Noninterest Income | $523 | $509 | 3% | | Noninterest Expense | $1,130 | $1,090 | 4% | | Net Income Attributable to Huntington | $517 | $547 | (5)% | | Diluted EPS | $0.33 | $0.35 | (6)% | - Total assets increased by $11.2 billion (6%) to $200.5 billion at September 30, 2024, compared to year-end 2023, driven by growth in loans, investment securities, and deposits. The CET1 risk-based capital ratio improved to 10.4% from 10.2% at year-end 2023[12] - The economic environment is characterized by the Federal Reserve beginning a rate-cutting cycle in September 2024. While consumer spending remains resilient, the unemployment rate has risen to 4.1%, and economists anticipate either a soft landing or a short, shallow recession[14] Discussion of Results of Operations Q3 2024 operating results show a 1% decrease in net interest income due to NIM compression, a 7% rise in credit loss provision, and increases in noninterest income and expense - Quarterly FTE net interest income decreased by 1% YoY, reflecting a 22 basis point drop in FTE NIM to 2.98%, primarily due to higher funding costs offsetting higher yields on loans and securities[19] - The provision for credit losses for Q3 2024 was $106 million, a 7% increase from Q3 2023, and $313 million for the first nine months of 2024, up 13% from the prior year, reflecting increased charge-off activity[24] - Q3 2024 noninterest income increased 3% YoY to $523 million, mainly due to higher capital markets fees (+50%) and wealth management revenue (+18%), partially offset by a $43 million decrease in other noninterest income[26] - Q3 2024 noninterest expense rose 4% YoY to $1.1 billion, driven by a $62 million (10%) increase in personnel costs and an $18 million (12%) increase in outside data processing and other services[28] Risk Management and Capital Huntington manages an aggregate moderate-to-low risk appetite across seven pillars, maintaining strong liquidity and robust capital levels with a 10.4% CET1 ratio - The company classifies and aggregates risk into seven pillars: credit, market, liquidity, operational, compliance, strategic, and reputation, with a Board-defined risk appetite of aggregate moderate-to-low, through-the-cycle[30] Business Segment Discussion YTD 2024, Consumer & Regional Banking net income rose 14% to $1.1 billion, while Commercial Banking net income fell 9% to $853 million, and Treasury / Other reported an increased net loss Net Income by Business Segment (Nine Months Ended Sep 30) | Segment (in millions) | 2024 | 2023 | | :--- | :--- | :--- | | Consumer & Regional Banking | $1,098 | $966 | | Commercial Banking | $853 | $935 | | Treasury / Other | ($541) | ($193) | | Total Net Income | $1,410 | $1,708 | - Consumer & Regional Banking net income rose 14% YTD, benefiting from a 10% increase in net interest income due to loan growth and a 16 basis point NIM expansion[75] - Commercial Banking net income fell 9% YTD, as a 4% decrease in net interest income and a 6% rise in noninterest expense (from investments in expansion) offset a 2% increase in noninterest income[76] Additional Disclosures This section covers forward-looking statements, non-GAAP measures, and critical accounting policies, highlighting the Allowance for Credit Losses (ACL) sensitivity to macroeconomic forecasts - The Allowance for Credit Losses (ACL) is a critical accounting policy, with its estimation relying on macroeconomic forecasts; a 100% adverse scenario would hypothetically increase the ACL by approximately $0.8 billion as of September 30, 2024, excluding qualitative adjustments[83][84] Item 3. Quantitative and Qualitative Disclosures about Market Risk This section refers to the Market Risk discussion within Item 2 for quantitative and qualitative disclosures on market risk - Disclosures regarding market risk for the current period are provided in the Market Risk section of the MD&A in this report[204] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of September 30, 2024, with no material changes in internal control over financial reporting - The CEO and CFO concluded that as of September 30, 2024, the company's disclosure controls and procedures were effective[205] - No changes in internal control over financial reporting occurred during the quarter ended September 30, 2024, that have materially affected, or are reasonably likely to materially affect, these controls[206] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is involved in various legal and regulatory actions, with an estimated aggregate reasonably possible loss of $0 to $15 million - For legal matters where a range of possible loss can be estimated, management currently estimates the aggregate range of reasonably possible loss is $0 to $15 million at September 30, 2024, in excess of any amounts already accrued[201] Item 1A. Risk Factors This section refers to the risk factors detailed in the company's 2023 Annual Report on Form 10-K for material business impacts - The report refers to the risk factors detailed in the 2023 Annual Report on Form 10-K[208] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Huntington did not repurchase common stock in Q3 2024, with a $1.0 billion share repurchase authorization remaining fully available Share Repurchases in Q3 2024 | Period | Total Shares Purchased | Average Price Paid | Approx. Dollar Value Remaining Under Plan | | :--- | :--- | :--- | :--- | | July 2024 | 0 | $— | $1,000,000,000 | | August 2024 | 0 | $— | $1,000,000,000 | | September 2024 | 0 | $— | $1,000,000,000 | Item 5. Other Information Brendan Lawlor, Chief Credit Officer, adopted a Rule 10b5-1 trading plan on August 23, 2024, for selling shares from restricted and performance stock units - Brendan Lawlor, Chief Credit Officer, adopted a Rule 10b5-1 trading plan on August 23, 2024, for the sale of common stock underlying restricted and performance stock units[210] Item 6. Exhibits This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including CEO/CFO certifications and XBRL data files - The report includes an exhibit index listing documents such as Articles Supplementary, Bylaws, CEO/CFO certifications, and Inline XBRL data files[211][213]