Huntington(US:HBAN)2024-01-19 17:44Financial Performance - The company reported GAAP earnings per common share of $0.15 and adjusted EPS of $0.27 for the fourth quarter, impacted by notable items totaling $226 million [17] - Net interest income decreased by $52 million or 3.8% to $1.327 billion, with net interest margin declining to 3.07% [20] - Average loan balances increased by 2% year-over-year, with total commercial loans rising by $125 million for the quarter [18][37] Business Line Performance - The auto business and distribution finance showed strong growth, with distribution finance increasing by $225 million and auto floorplan rising by $359 million [18] - Consumer growth was led by residential mortgage, which increased by $295 million, while auto loan balances declined [18] - Wealth and asset management revenue benefited from a realignment, with advisory households growing 11% year-over-year and assets under management up 16% [27] Market Performance - The company added over $3 billion in deposits and increased loans by $2.5 billion for the full year, indicating strong market performance [8][14] - Average deposits increased by $1.5 billion or 1% from the prior quarter, with cumulative deposit beta ending the year at 41% [19][37] Company Strategy and Industry Competition - The company is focused on leveraging its strengths to increase growth in both deposits and loans, with expectations for accelerated revenue growth in 2024 [36] - The company has expanded into the Carolinas and added key specialty verticals in Commercial Banking, positioning itself for growth [35] - The management emphasized maintaining a moderate-to-low risk appetite while pursuing growth opportunities [36] Management Commentary on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to outperform the industry on credit through the cycle, with credit trends normalizing as expected [7] - The outlook for 2024 includes expectations for loan growth between 3% and 5% and deposits growth between 2% and 4% [31] - Management noted that net interest income for the full year is expected to range between down 2% to up 2%, depending on the rate scenario [31] Other Important Information - The company maintained a strong capital position, with reported common equity Tier 1 increasing to 10.3% [47] - Non-interest income decreased by $104 million to $405 million for the fourth quarter, but core fees increased by $5 million quarter-over-quarter [28] - The company is actively managing its hedging strategy to protect net interest margin in down rate scenarios [44] Q&A Session Summary Question: What is the outlook for loan growth and expenses? - Management indicated that the loan growth guidance reflects market share gains and underlying growth, with expenses expected to increase by 4.5% due to strategic investments [64][67] Question: How will deposit costs behave as the Fed begins to cut rates? - Management expects deposit costs and beta to trend at a decelerating rate through the pause period until rate reductions occur [69] Question: What is the company's strategy regarding capital management and potential buybacks? - Management stated that share repurchases are an important part of the value creation model and will resume once capital ratios reach the target range of 9% to 10% [100][101]