Huntington(US:HBAN)2024-07-19 15:03Financial Data and Key Metrics Changes - The company reported earnings per common share of $0.30 for Q2 2024, with a notable item of $6 million related to the FDIC Deposit Insurance Fund Special Assessment, which did not impact EPS [11] - Average loan balances increased by $2 billion year-over-year, with annualized loan growth of 4.7% for the quarter [9][39] - Average deposit balances grew by $8 billion or 5.5% over the past year, with a net interest margin of 2.99% for the second quarter, reflecting a decrease of 2 basis points from Q1 [9][17] Business Line Data and Key Metrics Changes - Total commercial loans increased by $689 million, with commercial growth excluding commercial real estate totaling $1.1 billion for the quarter [13] - Consumer loans saw average balances grow by $757 million or 1.4% for the quarter, with notable increases in auto loans and residential mortgages [14] - Fee revenues increased, driven by capital markets, payments, and wealth management, with payments revenue up $8 million or 5% year-over-year [20][46] Market Data and Key Metrics Changes - The company achieved strong credit performance with net charge-offs of 29 basis points, remaining within the lower half of the through-the-cycle target range of 25 to 45 basis points [23] - The criticized asset ratio declined by 7% from the prior quarter, indicating broad-based improvements across commercial portfolios [50] - The allowance for credit losses decreased by 2 basis points to 1.95%, reflecting a modestly improved economic outlook [12][23] Company Strategy and Development Direction - The company is focused on executing organic growth strategies and leveraging its strong liquidity and capital base to drive growth in new geographies and businesses [7] - The capital management strategy aims to drive capital ratios higher while funding high-return loan growth, with an adjusted CET1 target range of 9% to 10% [22][130] - The company is actively managing its asset sensitivity in anticipation of potential rate cuts, with plans to reduce asset sensitivity by approximately one-third by mid-next year [19][83] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the broader economy holding up and highlighted growth opportunities from new initiatives and geographies despite a muted customer loan demand environment [37] - The outlook for full-year loan growth remains unchanged, with expectations for continued acceleration in loan growth and sustained deposit growth [24][125] - Management noted that credit quality is stable and performing well, with a focus on maintaining a moderate to low-risk appetite [36][136] Other Important Information - The company reported a tangible book value per share increase of nearly 8% year-over-year [12] - Non-interest income increased by $24 million to $491 million for the second quarter, reflecting a recovery from the seasonal first quarter low [47] - Core expenses are expected to grow at a low single-digit rate year-over-year by the end of the year, with a forecast of 4.5% core expense growth for the full year [21][128] Q&A Session Summary Question: How is the company managing downside deposit beta in anticipation of rate cuts? - Management indicated that they are implementing a down beta playbook, reducing acquisition rates and shifting the mix from time deposits to money market accounts [26][76] Question: What is the outlook for loan growth and competitive dynamics? - Management noted that loan growth is accelerating, with strong pipelines and a focus on new growth initiatives, despite a competitive environment [39][67] Question: Can the company sustain fee income growth at the upper end of the 5% to 7% range? - Management expressed confidence in sustaining fee income growth, driven by strong performance in capital markets, payments, and wealth management [142]