HUNTINGTON BANCSHARES DEP(US:HBANM)2024-10-29 16:56PART I. FINANCIAL INFORMATION This section presents the unaudited consolidated financial statements and management's discussion and analysis of financial condition and results of operations Financial Statements (Unaudited) This section presents the unaudited consolidated financial statements for Huntington Bancshares Incorporated as of September 30, 2024, and for the three and nine months then ended Consolidated Balance Sheets As of September 30, 2024, total assets increased to $200.5 billion, up 6% from $189.4 billion at year-end 2023, driven by growth in loans, investment securities, and cash Consolidated Balance Sheet Highlights (in millions) | Account | Sep 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total Assets | $200,535 | $189,368 | | Net loans and leases | $124,152 | $119,727 | | Total investment securities (AFS + HTM) | $44,162 | $41,055 | | Goodwill | $5,561 | $5,561 | | Total Liabilities | $179,883 | $169,970 | | Total deposits | $158,351 | $151,230 | | Long-term debt | $15,656 | $12,394 | | Total Shareholders' Equity | $20,606 | $19,353 | Consolidated Statements of Income For Q3 2024, net income attributable to Huntington was $517 million, a 5% decrease from Q3 2023, primarily due to lower net interest income and higher noninterest expense Income Statement Summary (in millions) | Metric | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $1,351 | $1,368 | $3,950 | $4,123 | | Provision for credit losses | $106 | $99 | $313 | $276 | | Total noninterest income | $523 | $509 | $1,481 | $1,516 | | Total noninterest expense | $1,130 | $1,090 | $3,384 | $3,226 | | Net income attributable to Huntington | $517 | $547 | $1,410 | $1,708 | | Net income per common share—diluted | $0.33 | $0.35 | $0.88 | $1.09 | Consolidated Statements of Comprehensive Income Comprehensive income attributable to Huntington was $1.32 billion for Q3 2024, a significant improvement from a loss in Q3 2023, driven by positive changes in other comprehensive income Comprehensive Income (in millions) | Metric | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 | | :--- | :--- | :--- | :--- | :--- | | Net income attributable to Huntington | $517 | $547 | $1,410 | $1,708 | | Other comprehensive income (loss), net of tax | $807 | $(616) | $572 | $(524) | | Comprehensive income (loss) attributable to Huntington | $1,324 | $(69) | $1,982 | $1,184 | Consolidated Statements of Changes in Shareholders' Equity Total Huntington shareholders' equity increased from $19.35 billion at the beginning of 2024 to $20.61 billion at the end of Q3 2024, driven by net income and positive other comprehensive income - For the nine months ended September 30, 2024, shareholders' equity increased by $1.25 billion196 Key Changes in Shareholders' Equity - YTD 2024 (in millions) | Description | Amount | | :--- | :--- | | Beginning Balance (Jan 1, 2024) | $19,353 | | Net Income | $1,410 | | Other Comprehensive Income | $572 | | Common Dividends Declared | $(687) | | Preferred Dividends Declared | $(107) | | Ending Balance (Sep 30, 2024) | $20,606 | Consolidated Statements of Cash Flows For the nine months ended September 30, 2024, net cash provided by operating activities was $331 million, with a net increase in cash and cash equivalents of $2.46 billion Cash Flow Summary - YTD 2024 vs YTD 2023 (in millions) | Activity | YTD 2024 | YTD 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $331 | $1,759 | | Net cash provided by (used in) investing activities | $(7,335) | $312 | | Net cash provided by financing activities | $9,460 | $2,660 | | Increase in cash and cash equivalents | $2,456 | $4,731 | Notes to Unaudited Consolidated Financial Statements This section provides detailed disclosures supporting the consolidated financial statements, covering basis of presentation, accounting standards, and breakdowns of key financial accounts Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition, results of operations, and cash flows, including an executive overview and risk management Executive Overview In Q3 2024, Huntington reported net income of $517 million, a 5% decrease year-over-year, with total assets growing 6% to $200.5 billion Q3 2024 vs Q3 2023 Performance | Metric | Q3 2024 | Q3 2023 | Change | | :--- | :--- | :--- | :--- | | Net Income | $517M | $547M | -5% | | Diluted EPS | $0.33 | $0.35 | -6% | | Net Interest Income | $1.4B | $1.4B | -1% | | Net Interest Margin (FTE) | 2.98% | 3.20% | -22 bps | | Noninterest Income | $523M | $509M | +3% | | Noninterest Expense | $1.1B | $1.1B | +4% | - Total assets increased by $11.2 billion (6%) to $200.5 billion at September 30, 2024, compared to December 31, 2023, driven by growth in loans, investment securities, and deposits25 - The CET1 risk-based capital ratio improved to 10.4% at September 30, 2024, from 10.2% at year-end 202326 - The economic environment is characterized by the Federal Reserve starting a rate-cutting cycle, a softening labor market with the unemployment rate at 4.1%, and resilient but slowing consumer spending2930 Discussion of Results of Operations This section details the components of Huntington's operational results, including net interest income, provision for credit losses, noninterest income, and noninterest expense Risk Management and Capital Huntington manages risk through a multi-faceted approach with a Board-defined aggregate moderate-to-low, through-the-cycle risk appetite, covering seven pillars - The company's risk appetite is defined by the Board of Directors as aggregate moderate-to-low, through-the-cycle56 - Risk is classified and managed across seven pillars: credit, market, liquidity, operational, compliance, strategic, and reputation57 Business Segment Discussion Huntington operates through Consumer & Regional Banking and Commercial Banking segments, with Consumer & Regional Banking net income rising 14% and Commercial Banking net income falling 9% YTD 2024 Net Income by Business Segment (YTD 2024 vs YTD 2023, in millions) | Segment | YTD 2024 Net Income | YTD 2023 Net Income | Change | | :--- | :--- | :--- | :--- | | Consumer & Regional Banking | $1,098 | $966 | +14% | | Commercial Banking | $853 | $935 | -9% | | Treasury / Other | $(541) | $(193) | -180% | | Total Net Income | $1,410 | $1,708 | -17% | Additional Disclosures This section contains important supplementary information, including forward-looking statements, non-GAAP financial measures, and critical accounting policies like Allowance for Credit Losses - The company provides a safe harbor statement for forward-looking statements, noting numerous risks and uncertainties such as economic conditions, interest rate changes, and regulatory impacts171172 - Non-GAAP measures like Fully-Taxable Equivalent (FTE) basis and tangible common equity ratios are used by management for a more insightful comparison of performance174175177 - A critical accounting policy is the Allowance for Credit Losses (ACL). A sensitivity analysis using a 100% adverse economic scenario (e.g., unemployment at 8.0% in 2025) would hypothetically increase the ACL by approximately $0.8 billion, excluding qualitative adjustments185186 Quantitative and Qualitative Disclosures about Market Risk This section refers to the 'Market Risk' section within Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations, for market risk disclosures - Disclosures for this item are located in the Market Risk section of the MD&A, which covers changes in market risk exposures since the 2023 Annual Report on Form 10-K376 Controls and Procedures Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of September 30, 2024 - The CEO and CFO concluded that as of September 30, 2024, the company's disclosure controls and procedures were effective377 - No material changes to internal control over financial reporting occurred during the third quarter of 2024378 PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, other disclosures, exhibits, and signatures Legal Proceedings Huntington is routinely involved in legal and regulatory matters, with an estimated aggregate range of reasonably possible loss between $0 and $15 million - The company is involved in routine legal and regulatory actions in the ordinary course of business367 - Management estimates an aggregate range of reasonably possible loss between $0 and $15 million as of September 30, 2024, in excess of any accrued liability for those matters where an estimate is possible370 Risk Factors This section directs readers to the risk factors discussed in Part I, 'Item 1A. Risk Factors' of the company's 2023 Annual Report on Form 10-K - For a detailed discussion of risk factors, readers are referred to the company's 2023 Annual Report on Form 10-K381 Unregistered Sales of Equity Securities and Use of Proceeds During Q3 2024, Huntington did not repurchase any common shares and does not expect to utilize its share repurchase program through 2024 Issuer Purchases of Equity Securities (Q3 2024) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Approx. Dollar Value Remaining Under Program | | :--- | :--- | :--- | :--- | | July 2024 | 0 | $— | $1,000,000,000 | | August 2024 | 0 | $— | $1,000,000,000 | | September 2024 | 0 | $— | $1,000,000,000 | - The company does not expect to utilize its share repurchase program through 2024, prioritizing capital for loan growth and potential regulatory changes155 Other Information On August 23, 2024, Brendan Lawlor, Chief Credit Officer, adopted a Rule 10b5-1(c) trading plan for the sale of vested equity awards - Brendan Lawlor, Chief Credit Officer, adopted a Rule 10b5-1 trading plan on August 23, 2024, for the sale of vested equity awards383384 Exhibits This section provides an index of all exhibits filed with or furnished as part of this quarterly report, including certifications by the CEO and CFO and interactive data files Signatures The report is duly signed and authorized by Stephen D. Steinour, Chairman, President, and Chief Executive Officer, and Zachary Wasserman, Chief Financial Officer, on October 29, 2024