Huntington Bancshares Inc. (HBAN) is a regional bank holding company headquartered in Columbus, Ohio, with a rich history dating back to 1866. Over the past decades, the company has evolved into a diversified financial services institution, offering a comprehensive suite of banking, payments, wealth management, and risk management solutions to consumers, small and middle-market businesses, corporations, municipalities, and other organizations across its 12-state footprint.
Business Overview and History Huntington Bancshares' origins can be traced back to 1866 when it was founded as The Huntington National Bank. The company's early years were marked by steady growth, with the bank expanding its presence throughout Ohio and neighboring states. In 1966, Huntington Bancshares Incorporated was organized under Maryland law as a multi-state diversified regional bank holding company. The company's growth strategy included a series of strategic acquisitions, such as the purchase of Citizens Savings Bank in 1984, which expanded its presence in Ohio. In 1992, Huntington acquired Integrated Resources Life Insurance Company, diversifying its offerings to include insurance products.
Throughout the 1990s and 2000s, Huntington continued its expansion by acquiring several banks, including Huntington Bancshares Michigan, Huntington Bancshares Illinois, and most recently, Huntington Bancshares Wisconsin in 2022. In the early 2010s, the company made a strategic shift to become a people-first, digitally-powered bank, investing heavily in technology and digital capabilities to enhance customer service.
Huntington has faced challenges, including the impact of the late 2000s financial crisis, which highlighted the importance of maintaining a strong risk management and compliance framework. More recently, in 2023, the company faced a governance issue when its auditor, Ernst & Young, resigned and raised concerns about the company's governance, transparency, and internal controls. In response, Huntington formed a special committee to investigate the issues, which ultimately did not find evidence of fraud.
Today, Huntington Bancshares operates a network of 975 branches and private client group offices across 12 states, including Ohio, Colorado, Florida, Illinois, Indiana, Kentucky, Michigan, Minnesota, North Carolina, Pennsylvania, West Virginia, and Wisconsin. The company's diversified business model encompasses consumer and commercial banking, wealth management, and various specialty finance operations, including equipment financing, distribution finance, and investment management.
Financial Performance and Ratios Huntington Bancshares has demonstrated its financial resilience through various economic cycles. As of the latest reported quarter (Q3 2024), the company had total assets of $200.5 billion, up 6% from the prior year-end. Net income for the nine-month period ended September 30, 2024, was $1.41 billion, with a diluted earnings per share of $0.88.
The company's key financial ratios paint a picture of its financial health and stability. As of Q3 2024, Huntington Bancshares' return on average assets (ROAA) stood at 0.97%, return on average common equity (ROCE) was 10.2%, and the common equity Tier 1 (CET1) capital ratio was 10.4%, well above the regulatory minimum requirements.
For the most recent quarter, Huntington Bancshares reported revenue of $1,874,000,000 and net income of $517,000,000. The company's operating cash flow (OCF) for the quarter was -$310,000,000, while free cash flow (FCF) was -$480,000,000. Year-over-year, the company reported revenue growth of 10% and net income growth of 5% in the third quarter of 2024.
Liquidity and Solvency Huntington Bancshares maintains a strong liquidity position, with cash and cash equivalents of $12.6 billion as of September 30, 2024. The company's loan-to-deposit ratio was 78.2% at the end of the third quarter, indicating ample funding sources to support its lending activities.
In terms of solvency, Huntington Bancshares' debt-to-equity ratio stood at 0.79 as of Q3 2024, demonstrating its prudent leverage management. The company's interest coverage ratio, a measure of its ability to meet its interest obligations, was 4.57 for the nine-month period ended September 30, 2024, further reinforcing its financial stability.
The company's current ratio and quick ratio both stand at 0.32, reflecting its ability to meet short-term obligations.
Operational Resilience and Technological Advancements Huntington Bancshares has consistently invested in enhancing its operational efficiency and technological capabilities to better serve its customers. The company has made significant strides in digital banking, with a focus on improving the customer experience through features such as mobile banking, online account opening, and seamless payment solutions.
In addition, Huntington Bancshares has demonstrated its commitment to risk management and compliance, implementing robust systems and processes to navigate the complex regulatory landscape. This disciplined approach has enabled the company to maintain a moderate-to-low risk profile, as evidenced by its stable credit quality metrics.
Business Segments Huntington Bancshares operates through two main business segments: Consumer Regional Banking and Commercial Banking.
The Consumer Regional Banking segment primarily serves consumer customers through full-service banking centers and ATMs, mortgage banking, automobile financing, recreational vehicle and marine financing, personal and student lending, small business lending, and investment management and trust services. This segment reported net income of $1.10 billion for the first nine months of 2024, an increase of 14% compared to the same period in the prior year. Net interest income for this segment increased 10% to $3.01 billion, driven by a 5% increase in average loans and leases and a 16 basis point increase in net interest margin. Noninterest income increased 2% to $968 million, primarily due to increases in wealth and asset management revenue, payments and cash management revenue, mortgage banking income, and customer deposit and loan fees. Noninterest expense increased 4% to $2.36 billion, mainly due to higher personnel costs and outside data processing and other services.
The Commercial Banking segment serves the banking, cash management, and international needs of middle-market and large commercial customers. Services provided include commercial lending, commercial real estate lending, equipment leasing, capital markets, treasury management, and risk management. This segment reported net income of $853 million for the first nine months of 2024, a decrease of 9% compared to the same period in the prior year. Net interest income decreased 4% to $1.58 billion, primarily due to a 2% decrease in average loans and leases and an 8 basis point decrease in net interest margin driven by higher deposit rates. Noninterest income increased 2% to $490 million, mainly due to increases in capital markets and advisory fees, commitment and other loan fees, and payments and cash management fees. Noninterest expense increased 6% to $883 million, primarily due to higher personnel expense, incentive compensation, and outside data processing and other services.
Navigating Challenges and Seizing Opportunities Like many financial institutions, Huntington Bancshares has faced its share of challenges in recent years, including the COVID-19 pandemic, rising inflation, and interest rate volatility. However, the company's diversified business model, strong risk management practices, and adaptable workforce have allowed it to navigate these turbulent times effectively.
In the face of these challenges, Huntington Bancshares has also seized opportunities to expand its presence and capabilities. The company's strategic acquisitions, such as the TCF Financial Corporation deal in 2021, have bolstered its market share and enabled it to leverage synergies to drive organic growth. Additionally, the company has strategically invested in emerging technologies and innovation to stay ahead of the curve and meet the evolving needs of its customers.
Financial Guidance and Outlook Huntington Bancshares has provided guidance for the upcoming quarters and full year. For Q4 2023, the company expects loan growth of approximately 4% to 5% year-over-year and deposit growth of 4% to 5% year-over-year. Net interest income is expected to be flat to up 1% year-over-year in Q4 2023, with growth resuming in the first half of 2024 and accelerating in the second half, resulting in record net interest income for 2024.
The company anticipates core fee revenues, adjusted for certain items, to grow approximately 8% to 9% year-over-year in Q4 2023. Core expense growth is expected to be approximately 3% year-over-year for Q4 2023, with the full-year 2023 core expense growth guidance remaining at approximately 4.5%. The Q4 2023 tax rate is expected to be between 18% and 19%.
Huntington Bancshares reported earnings per common share of $0.33 for the third quarter, which included $6 million of notable items on a net basis that did not impact earnings per share. The company's pre-provision net revenue (PPNR) increased by 8.3% from the prior quarter, driven by an expansion in net interest income of 2.9% and a 6.5% increase in fee revenues from the prior quarter. The adjusted CET1 ratio, inclusive of AOCI, was 8.9% at the end of the quarter, up 90 basis points from a year ago.
Looking Ahead As Huntington Bancshares continues to navigate the dynamic financial services landscape, the company remains focused on delivering sustainable long-term growth and value creation for its shareholders. With its strong capital position, diversified revenue streams, and commitment to operational excellence, the company is well-positioned to capitalize on future opportunities and navigate any potential headwinds.
Overall, Huntington Bancshares' rich history, financial strength, and strategic vision make it a compelling investment proposition for those seeking exposure to a well-managed regional banking institution with a track record of resilience and adaptability.