Huntington Bancshares (NASDAQ:HBAN) reported solid third-quarter results, emphasizing its strong positioning in the current banking landscape during an earnings call. The company reported GAAP earnings per share of $0.35 and adjusted EPS of $0.36 for the quarter. Key messages from the call highlighted strong credit quality, consistent deposit growth, and focus on the company's core strategy.
Key takeaways from the call include:
- The bank reported average deposits increase by $2.6 billion or 1.8%, while loan balances decreased by $561 million or 0.5%.
- Net interest income increased by $22 million, driven by a rising net interest margin.
- The company is implementing cost management programs and proactively managing expenses.
- The bank's credit quality remains strong, with net charge-offs of 24 basis points.
- The bank aims to drive growth through existing and new capabilities and maintain its position as a strong regional bank.
InvestingPro data shows that Huntington Bancshares has a market cap of $13.96B, a P/E ratio of 6.53, and a 1-year price total return of -29.57%. The company's revenue for LTM2023.Q3 was $7224M with a growth of 6.24%. These metrics reflect the bank's financial position and performance in the market.
During the earnings call, the bank outlined its future plans, including rigorous management of deposit and loan pricing, improving net interest margin in a higher interest rate environment, and a focus on fee revenue growth in capital markets, payments, and wealth management. The bank also highlighted its commitment to disciplined expense management and credit management.
Huntington Bancshares' executives emphasized their focus on driving efficiency in core expenses and striking a balance between short-term and medium-term goals. The bank has implemented various cost-cutting measures, including business process offshoring, branch optimization, and driving efficiencies across the bank and corporate real estate portfolio. Despite an anticipated increase in expenses in the short term, the bank expects a decrease in expense growth rate by the end of 2024.
InvestingPro Tips suggests that Huntington Bancshares has high earnings quality, with free cash flow exceeding net income and consistently increasing earnings per share. The company has raised its dividend for 12 consecutive years, which is a testament to its financial stability and commitment to return value to shareholders. For more such insights, consider exploring InvestingPro.
The bank's CEO, Steve Steinour, discussed the cautious outlook for loan demand in the upcoming year due to the uncertain economic outlook and external factors. Despite this, Steinour stated that the bank's businesses are doing well and they expect to see growth in certain areas such as distribution finance, equipment finance, asset-based lending, and small business support.
The company also discussed its focus on driving capital higher, with a goal to increase the adjusted CET1 ratio to their operating range of 9% to 10%. The bank's CFO, Zach Wasserman, provided details on the bank's swaption portfolio, stating that the instruments are designed to protect against significant up-rate scenarios and have resulted in gains thus far.
Steinour expressed confidence about the bank's reserve and stated that they plan to bring the coverage ratio down to 160 over time. He also highlighted the bank's plans for growth in the coming years, indicating a need to invest in systems and additional talent and capabilities. Steinour emphasized that the size of the business is not the only determinant of success, but rather the business model itself. The bank aims to drive consistent strong performance and shareholder value in the future.
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