Huntington Bancshares Inc Q3 2024 Earnings Call Summary

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

Question: Manan Gosalia - Morgan Stanley - Analyst : Hey, good morning.

Question: Manan Gosalia - Morgan Stanley - Analyst : Good morning, Tim. So the guidance for 4Q NII, I think, implies that NII should be flat to slightly down versus 3Q. Can you talk about what's driving that? Is that just a timing difference between those floating rate asset yields coming down and deposit costs coming down?

Question: Manan Gosalia - Morgan Stanley - Analyst : Got it. And can you share more color on the deposit growth there? It looks like you continue to grow deposits faster than loans this quarter. Is that mostly coming from new account growth? And I guess the question there is, why not pay down some of the high-cost REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 17, 2024 / 1:00PM, HBAN.OQ - Q3 2024 Huntington Bancshares Inc Earnings Call CDs to help NII and have deposits grow a little bit slower than launch given that you prefunded a lot of the loan growth in the first half of the year?

Question: Manan Gosalia - Morgan Stanley - Analyst : Got it. Thank you.

Question: Ebrahim Poonawala - BofA Global Research - Analyst : Hey. Good morning. Two things. One, I guess, Zach, I just wanted to follow up. I think you mentioned NII. I guess you have the guidance for fourth quarter. And then did you mean to say that the growth accelerates from the 4Q versus 3Q level as we think about first half '25 and then get even faster through the course of '25? If you could just clarify that. And with that, what's the sensitivity to rate cuts, right? Like, we had very some retail sales to the markets actively recalibrating what the Fed may or may not do. Just talk to us whether getting three to four cuts versus not getting those cuts means much in terms of your NII outlook?

Question: Ebrahim Poonawala - BofA Global Research - Analyst : Understood.

Question: Ebrahim Poonawala - BofA Global Research - Analyst : That's helpful. And I guess just one thing you talked earlier about traction in Carolinas, just how loan growth was evolving. Talk to us in terms of deposit growth, you did hire a sort of a big team on the mortgage side. We see mortgage rates pulled back. But either that team or just the overall deposit gathering strategy beyond promotional rates, where do you see deposit growth coming from?

Question: Ebrahim Poonawala - BofA Global Research - Analyst : Noted. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 17, 2024 / 1:00PM, HBAN.OQ - Q3 2024 Huntington Bancshares Inc Earnings Call

Question: Jon Arfstrom - RBC Capital Markets - Analyst : Hey. Thanks. Good morning, guys. A couple -- one clarification. I think maybe a simple question, but you're saying fourth quarter NII around $1 billion, [$1.330 billion, $1.340 billion], something like that. Am I reading that right?

Question: Jon Arfstrom - RBC Capital Markets - Analyst : Okay. That's helpful. Thank you for that. And then kind of a simple question, funny question. But on slide 10, I kind of want to joke about the scaling of that, but the fourth quarter '25 bar chart implies higher NII. Is there -- odd question, is there any scale into that, Zach? Or what kind of an acceleration do you expect in NII growth throughout the year?

Question: Jon Arfstrom - RBC Capital Markets - Analyst : Yeah. Okay, good. If I can squeeze one more, and I apologize for doing this, but the merchant acquiring, you're saying 1% growth to overall fee revenues. Are you saying that could be a $200 million business? Is that (multiple speakers) --

Question: Jon Arfstrom - RBC Capital Markets - Analyst : Yes. Okay. All right. Thank you for clarifying this. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 17, 2024 / 1:00PM, HBAN.OQ - Q3 2024 Huntington Bancshares Inc Earnings Call

Question: Erika Najarian - UBS Equities - Analyst : Can you hear me?

Question: Erika Najarian - UBS Equities - Analyst : Apologies. Sorry about that. So Zach, as you can imagine, everybody is asking about the blank box on 4Q '25 for slide 10. So maybe I'll ask it this way. So consensus wants to fill that box. That would imply 8% year-over-year growth from your implied fourth quarter 2024. So I'm assuming that has loan growth and also the NIM inflection. So with that -- with consensus filling that box in at up 8% quarter-over-quarter, are they in the right ballpark as we think about your loan growth momentum and the dynamics of your balance sheet?

Question: Erika Najarian - UBS Equities - Analyst : No, that's helpful. Thank you. And on the expense run rate, I think, Zach, what you and Steve have been talking about in terms of investments really showed through with regards to your 3% year-over-year quarter-over-quarter -- sorry, year-over-year fourth quarter guide for fourth quarter, relative to the run rate for this year, and we're seeing it in the loan growth. As we think about next year, with the caveat that Huntington under this management team and Board is constantly investing, should we expect more of a harvest year, so to speak, in that -- perhaps that fourth quarter run rate year-over-year is more sustainable rather than the 5%, 5.5%?

Question: Erika Najarian - UBS Equities - Analyst : Got it. Thank you so much. Stephen Steinour - Huntington Bancshares Inc - Chairman of the Board, President, Chief Executive Officer of Huntington and President and CEO of Huntington Bank Thanks, Erika.

Question: Matt O'Connor - Deutsche Bank - Analyst : Good morning. Question on the revenues, came in a decent amount better than you expected with the intra-quarter guide. I assume a lot of that swing is the capital markets and maybe the loan sale. But just anything else that surprised you that you want to call out? I mean, all the categories actually did pretty well. So I guess I'm just wondering what was kind of better than what you thought a month ago? Thanks. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 17, 2024 / 1:00PM, HBAN.OQ - Q3 2024 Huntington Bancshares Inc Earnings Call

Question: Matt O'Connor - Deutsche Bank - Analyst : Okay. And then on the credit risk transfer, the CRTs, as you call it, now that you've got -- you're approaching your targeted capital level, even including AOCI and you've got all the funding and all those positives. If they got something that you're looking to do less of going forward or unwind them?

Question: Matt O'Connor - Deutsche Bank - Analyst : Got it. Okay. Thank you.

Question: Sean Sorahan - Evercore ISI - Analyst : Good morning. I was hoping you could address the trends and strategy in the auto business. Production stepped up again late quarter in 3Q. Can you talk about the growth outlook there a little bit? And then maybe shifting to credit. There was a big update mid quarter from an auto peer, and you saw a little bit of a step-up in DCs this quarter. Can you address expected credit trends given shifting auto values? Thanks. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 17, 2024 / 1:00PM, HBAN.OQ - Q3 2024 Huntington Bancshares Inc Earnings Call

Question: Sean Sorahan - Evercore ISI - Analyst : Got it. Very helpful. Thank you. And then Zach, shifting over to the hedge program slide. It's always helpful. I noted you received fixed balance in the back half of '25 came down a bit this quarter versus last. Can you update us on any adjustments made there in the quarter? And then maybe highlight any future adjustments you're thinking about? Thanks.

Question: Sean Sorahan - Evercore ISI - Analyst : Perfect. Thank you.