Huntington Bancshares Inc at Goldman Sachs U.S. Financial Services Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Ryan Nash - Goldman Sachs - Analyst : Great. Thank you for the in-depth presentation, Steve. So maybe, Steve, since the last time we've heard from you, obviously, a lot of things -- there's been a lot of change, particularly on the political side, presumably a more business-friendly environment. As you think about the next year, maybe start off on talking about how you think the bank is positioned for the environment we're about to enter. Obviously, there's tons of good things going on at the company, as you just articulated? Stephen Steinour - Huntington Bancshares Inc - Chairman of the Board, President, Chief Executive Officer of Huntington and President and CEO of Huntington Bank Yes. Thank you, Ryan. First, the core is performing well. And I would relate that back to the second quarter of '23. We didn't choose to shrink or take an RWA diet. We thought we had great liquidity, peer-leading liquidity and strong capital, strong reserves, and we chose to play offense your words from the intro. And with that, we have been building momentum and building and you see this in the results in terms of core execution around revenue. We've been investing in the businesses, including the backroom, tech, marketing, et cetera, risk, as I mentioned. And so we are continuing -- it's almost like a snowball. We're gaining speed. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 11, 2024 / 2:20PM, HBAN.OQ - Huntington Bancshares Inc at Goldman Sachs U.S. Financial Services Conference We're gaining momentum as we go forward. And these investments -- Texas, North and South Carolina, three of the fastest-growing states in the country. We're really bullish about where we are with the colleagues we have, we have great colleagues who've joined us in those markets, and they're performing well ahead of expectations. These new verticals that we've added are doing well. And at the same time, we're investing in revenue-producing areas of the core in wealth and some of our regional banking areas like Chicago, et cetera. So I think Zach and the team have got us really well positioned for the foreseeable future, not just '25. We should be able to grow. We've been very disciplined over the last 1.5 decades that will continue, and we expect them ourselves that we will outperform.

Question: Ryan Nash - Goldman Sachs - Analyst : So you talked about peer-leading loan growth. It sounds like you're tracking now above the high end of what the original guide had been pipelines have been really, really strong. I think you had said mid-teens. You gave an interesting slide here on slide 5, just decomposing the growth, can you maybe just talk about how you're seeing such strong growth in a period where the industry is not? And can you maybe just talk about as you not only think about the fourth quarter but into next year, how you think about the evolution of these things, core growth, growth from new initiatives? And obviously, there's been some headwinds on [CREDC]. Stephen Steinour - Huntington Bancshares Inc - Chairman of the Board, President, Chief Executive Officer of Huntington and President and CEO of Huntington Bank Well, again, we were intentional about looking to expand when others not all, but many others. We're looking to restrain growth or even reduce growth for capital or liquidity or both. So that has given us some momentum. And to some extent, our activities are momentum oriented, and we have it. And the incremental investments we've made through the third quarter, our new loan production, about 35% of it was from these different new initiatives. That will increase as they mature and we traditionally would have thought we'd do 1.5, 2x GDP. We now think we're more likely to do 3-ish because of the new initiatives. They're not working from a base where they have amortization or run off they're all ground up. So it's a great place to play from. And as I said, we have momentum. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 11, 2024 / 2:20PM, HBAN.OQ - Huntington Bancshares Inc at Goldman Sachs U.S. Financial Services Conference I think we just chose to take a different pathway than some others. and it's proving fortunately for us, to have been a sound decision. I believe that will carry forward for a number of years. But I also want to make sure we're clear, we're going to continue to invest. We like this equation of trying to drive our core expense down and increase the amount of investment capacity, and we will make those investments. while delivering core positive operating leverage or positive operating leverage, but we will -- I think we're a flywheel, and we're going to continue that.

Question: Ryan Nash - Goldman Sachs - Analyst : Zach was in a perfect posture. I didn't want to interrupt him. Maybe to put a finer point on the point that Steve made. Obviously, positive operating leverage is the end goal for the company, Steve highlighted 10 of 12 years, you guys have been able to deliver it. How do you think about the balance in terms of investment versus growth. And you had been talking about '25 being a year where we could see a little bit of expense relief given the top line growth prospects, is that no longer the case?

Question: Ryan Nash - Goldman Sachs - Analyst : Spending a minute on deposits, I mean, either a message we've been hearing at the conference has been strong deposit growth in the near term. Maybe customers are sitting on a little bit of extra cash, but you guys have massively outperformed the industry in terms of deposits and maybe just talk a little bit about how you see not only do you see deposit growth, how do you see where the deposit growth is coming from? I think '24 was about a lot of consumer, you had been talking about commercial. So how are you feeling about deposit growth? And what do you see as the driver of it in ['25]?

Question: Ryan Nash - Goldman Sachs - Analyst : Does that -- maybe let's just spend one minute on NII. You guys -- you and Steve were talking about record NII into '25. I think you talked about improving in the first half, accelerating in the back half. Obviously, a lot of things have moved around. Maybe just talk about your degree of confidence in terms of what you've laid out. And I think you've given some color on the net interest margin. Can you maybe just talk about some of the moving pieces as we think about it with changing -- shifting rate and growth environment for the bank.

Question: Ryan Nash - Goldman Sachs - Analyst : Maybe one or two quick questions, Zach, before we go back over to Steve, in terms of -- you guys put some color in on the fourth quarter, outstanding loan growth, better deposit growth, NII to potentially be modestly up. There's a slide in there where you talked about fee income where we took out the roller to see it looks like it's going to be pretty robust. So can you maybe just put a finer point on all the pieces that you wanted to highlight for the fourth quarter, obviously, maybe wrap in how you're feeling about why you saw so much better success on deposit repricing?

Question: Ryan Nash - Goldman Sachs - Analyst : And one small follow-up. You highlighted deposit cost down 29 bps from the peak. You had one of the more conservative expectations in terms of the ability to reprice deposits down. It's gotten a little bit more upbeat last quarter. But curious, relative to your expectations, what has -- what have you been able to execute in a more aggressive fashion? How does that set you up for the rest of the easing cycle?

Question: Ryan Nash - Goldman Sachs - Analyst : Maybe to shift gears, you guys have had really strong capital. You've taken a conservative approach, but maybe holding a little dry powder for a lot of loan growth has not been a bad decision. Maybe, Steve, just talk about the capital priorities from here? And maybe, Zach, for you, now that you guys are seeing such robust loan growth. You had talked about reinstating the buyback at some point. Does it maybe make sense to hold a little extra dry powder in lieu of the strong loan growth that's happening is likely -- it sounds like it's going to continue? Stephen Steinour - Huntington Bancshares Inc - Chairman of the Board, President, Chief Executive Officer of Huntington and President and CEO of Huntington Bank I'll start, and then I'll pass it to you, Zach. First of all, we want to keep the company positioned with strong capital, strong reserves, strong capital as part of the overall aggregate moderate to low risk profile for the company. Having said that, our capital priority has always been organic growth. That hasn't changed in 15 years. We're delivering it now at an exceptional level. And we like what we see for the foreseeable future, not just '25 that we -- and believe we can continue to do this. There'll be some additional investment along the way. There may be some newer things that we do. We announced [Chris Wood] joining us to be part of our capital markets sponsor group to lead that activity just this past Monday. There'll be other investments and there'll be scaling of some of the existing investments. that we do going forward. But we really like the orientation of the company around organic growth and believe we've got it better locked in and better managed than any time in my 15 years with the company. Zach?

Question: Ryan Nash - Goldman Sachs - Analyst : Given all the organic growth that you're experiencing right now, that seems like the highest and best use of capital. But you guys have had a lot of success within organic use of capital, [First Merit, TCF Capstone] as examples. Where does that fall on the priority list, if at all? And given that the markets are a little bit more upbeat about we could see M&A coming back, do you foresee Huntington at some point participating in that? Stephen Steinour - Huntington Bancshares Inc - Chairman of the Board, President, Chief Executive Officer of Huntington and President and CEO of Huntington Bank I think the -- it's a better M&A environment that we're going into. Having said that, it's not going to be like, I don't think a light switch in the first quarter. You got to get the appointees in place for us. We've always looked at acquisition as an option with Macquarie, technical finance, the two bank deals you referenced plus Capstone. It is -- you look back at TCF, 45% expense takeout bulked us up in Michigan and Chicago. Two new great markets, Twin Cities, Colorado, great businesses, scale in equipment finance, number five, six, four, something like that. Number two, in distribution finance. These were -- and with cultures that -- these are community banks, and we think to ourselves largely that way. The culture -- so it just was a really compelling strategic fit. I think it's paid huge dividends for us. But we've done 2 in 15 years. Now we look all the time. We think about it all the time, but the priority is and will remain organic growth. If there's something compelling, maybe but it's got to be compelling. Right price got to stand the risk, the culture. All that has to line up. We're just -- we don't need it. We need to drive for the organic growth at the levels we're talking about even more.