- Earnings Per Share (EPS): $0.34 for the fourth quarter.
- Return on Tangible Common Equity (ROTCE): 16.4% for the quarter.
- Average Loan Balances: Increased by $7 billion or 5.7% year-over-year.
- Average Deposits: Increased by $9.7 billion or 6.5% year-over-year.
- Common Equity Tier 1 (CET1): Ended the quarter at 10.5%, up 30 basis points from last year.
- Tangible Book Value Per Share: Increased by 6.9% year-over-year.
- Net Charge-Offs: 30 basis points, stable from the prior quarter.
- Allowance for Credit Losses: Ended the quarter at 1.88%.
- Net Interest Income: Increased by $45 million or 3.3% in the quarter, reflecting over 6% growth year-over-year.
- Net Interest Margin: 3.03% for the fourth quarter, up 5 basis points from the prior quarter.
- Non-Interest Income: Increased by $154 million from the prior year; core fee revenues increased by $96 million or 20%.
- Capital Markets Revenue: $120 million in the fourth quarter, up 74% from the prior year.
- Non-Interest Expense: Increased sequentially by $48 million; core expenses increased by $57 million from Q3.
- Criticized Asset Ratio: Improved to 3.76%.
- Non-Performing Asset Ratio: Ended the quarter at 63 basis points.
- Warning! GuruFocus has detected 8 Warning Signs with HBAN.
Release Date: January 17, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Huntington Bancshares Inc (NASDAQ:HBAN) reported strong fourth-quarter results, with record fee revenues and accelerated growth in loans and deposits.
- The company achieved a return on tangible common equity (ROTCE) of 16.4% for the quarter.
- Average loan balances increased by $7 billion or 5.7% year-over-year, reflecting strong production and contributions from existing and new businesses.
- Huntington Bancshares Inc (NASDAQ:HBAN) maintained strong credit performance, with net charge-offs stable at 30 basis points.
- The company is well-positioned to drive attractive and sustained revenue growth, with a focus on organic growth strategies and risk management.
Negative Points
- The net interest margin (NIM) is expected to be modestly lower in the first quarter of 2025, reflecting normal day count headwinds and a dynamic interest rate environment.
- Commercial real estate balances declined by $465 million, indicating challenges in this sector.
- The company faces uncertainty from trade, immigration, and tax policy, which could impact financial performance.
- Huntington Bancshares Inc (NASDAQ:HBAN) has a relatively high allowance for credit losses at 1.88%, which could indicate potential credit risks.
- The company is not likely to engage in share repurchases in the near term due to capital management priorities and regulatory considerations.
Q & A Highlights
Q: Can you talk about the confidence around the NII guidance range given the uncertainty from trade, immigration, and tax policy? A: Zachary Wasserman, CFO, expressed confidence in achieving the revenue growth within the guidance range. He noted that the company expects to manage the net interest margin (NIM) within a reasonable range, with loan growth driving revenue performance in 2025.
Q: You're growing loans faster than deposits this year. Can you talk about what's driving that and does it give you more room to flex on deposit costs? A: Wasserman explained that the company is intentionally driving strong deposit growth to support accelerating loan growth. He noted that the loan-to-deposit ratio has been managed to allow for this growth, and there is room to continue lowering deposit pricing.
Q: Can you provide details on the new money loan production yield versus your existing yield? A: Wasserman stated that the yields on new loans are consistent with existing spread levels, maintaining a stable NIM. He highlighted the benefit from fixed asset repricing due to the current yield curve.
Q: With CET1 at 10.5% and adjusted for AOCI at 8.7%, how do you see capital return, particularly regarding share buybacks? A: Wasserman indicated that the focus remains on funding high-return loan growth and driving CET1 into the 9% to 10% range. He suggested that share repurchases are unlikely in the near term but could resume as capital ratios improve.
Q: Can you elaborate on your NIM outlook for the full year, given the current rate environment? A: Wasserman expects the NIM to remain around 3% throughout 2025, with potential for increases in 2026. He cited benefits from fixed asset repricing and deposit cost reductions as key factors.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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