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What's in the Cards for Huntington (HBAN) in Q2 Earnings?
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Huntington Bancshares (HBAN - Free Report) is slated to report second-quarter 2022 results on Jul 21, before the opening bell. Although the company’s earnings are expected to have declined year over year, revenues are anticipated to have improved.
In the last reported quarter, the bank recorded an earnings surprise of 3.2%. This was supported by the TCF Financial acquisition, which contributed to average earning assets and fee income. Strength in capital market fees and net interest income (“NII”) drove the top line. However, declining capital ratios and credit quality were dampeners.
Huntington has a mixed earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in two and lagged the same in the other two of the trailing four quarters, the average beat being 1.78%.
Huntington Bancshares Incorporated Price and EPS Surprise
The Zacks Consensus Estimate for second-quarter earnings of 34 cents has been unchanged over the past month, reflecting bearish sentiments of analysts. Also, the figure indicates a 2.9% decline from the year-ago reported number. The consensus estimate of $1.70 billion for revenues suggests a year-over-year jump of 31.9%.
Key Factors at Play
Loans: Per the Fed’s latest data, there was considerable strength in commercial real estate loans and consumer loans in the second quarter, beside commercial and industrial loan growth. This is likely to have aided the company’s second-quarter performance, as the majority of its loan portfolio comprises total commercial loans (commercial and industrial lending, as well as commercial real estate lending).
As for the company’s consumer lending portfolio, growth in residential real estate loans is expected to have aided. Hence, the momentum in the commercial and consumer businesses, along with strong pipelines, is likely to have supported HBAN’s loan balances in the second quarter. This is likely to have driven an increase in interest-earnings assets.
The Zacks Consensus Estimate of $163.2 billion for average interest-earning assets in the quarter implies a marginal improvement on a sequential basis.
NII: The overall lending scenario continued to improve in the second quarter. Also, the Federal Reserve raised short-term rates by 125 basis points in the quarter. The policy rate, thus, reached 1.5-1.75%, the highest level since just before the March 2020 pandemic. Hence, boosted by higher short-term rates, improvement in the lending scenario and increased average earning assets, NIM and NII are anticipated to have been bolstered.
Yet, a decrease in accelerated Paycheck Protection Program loan fees, recognized upon forgiveness payments, is expected to have been a damper.
The consensus estimate for NII indicates a 4% rise to $1.19 billion from the prior quarter’s reported figure.
Non-Interest Revenues: Mortgage originations, both purchase and refinancing, continued to normalize in the second quarter. Mortgage banking revenues, which were propelled by low mortgage rates in the prior year, have been facing tough competition.
Mortgage rates increased in the second quarter. Hence, mortgage origination activities are estimated to have decreased dramatically, with rising rates discouraging refinancing activity. This is expected to have affected the company’s mortgage banking net revenues.
Mortgage banking fees in the to-be-reported quarter are estimated to be $48.2 million, suggesting a marginal dip on a sequential basis.
The Zacks Consensus Estimate for capital market fees is pegged at $43.2 million, indicating a marginal increase from the prior quarter’s reported figure.
Overall, the consensus mark of $505 million for non-interest income indicates a 1.2% sequential rise.
Expenses: Huntington’s investments in digital capabilities, marketing and hiring personnel to aid its revenue growth are anticipated to have pushed its costs up.
Nonetheless, Huntington completed its merger with TCF Financial, and management expects to achieve cost savings related to the merger in the second quarter of 2022. These initiatives are likely to have decreased expenses in the quarter under review.
Management expects non-GAAP expenses (excluding notable items) of $1 billion for second-quarter 2022.
Asset Quality: In the past quarters, HBAN had been releasing reserves that it built to cover losses from the effects of the coronavirus pandemic. However, in the first quarter, the company reported a provision from credit losses of $25 million. With the rise in loan balance and continued expectations of economic slowdown due to geopolitical and inflation concerns, the company is expected to have built reserves in the second quarter.
Key Developments
In a bid to enhance its digital capabilities, Huntington’s subsidiary, Huntington National Bank, acquired San Francisco’s Torana, a B2C payment fintech company, in May.The acquisition will also increase Huntington’s scale in business verticals like healthcare, public sector, insurance and the company’s National Settlements business, while being a leader in the commercial banking segment.
What Our Quantitative Model Reveals
Huntington does not have the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat this time around.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for Huntington is -1.47%.
Zacks Rank: Huntington currently has a Zacks Rank of 3.
Bank Stocks Worth a Look
Here are a couple of bank stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:
The Earnings ESP for Truist Financial (TFC - Free Report) is +0.68% and it carries a Zacks Rank #3 at present. The company is slated to report second-quarter 2022 results on Jul 19.
Over the past week, the Zacks Consensus Estimate for TFC’s quarterly earnings has been revised marginally downward.
Image: Bigstock
What's in the Cards for Huntington (HBAN) in Q2 Earnings?
Huntington Bancshares (HBAN - Free Report) is slated to report second-quarter 2022 results on Jul 21, before the opening bell. Although the company’s earnings are expected to have declined year over year, revenues are anticipated to have improved.
In the last reported quarter, the bank recorded an earnings surprise of 3.2%. This was supported by the TCF Financial acquisition, which contributed to average earning assets and fee income. Strength in capital market fees and net interest income (“NII”) drove the top line. However, declining capital ratios and credit quality were dampeners.
Huntington has a mixed earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in two and lagged the same in the other two of the trailing four quarters, the average beat being 1.78%.
Huntington Bancshares Incorporated Price and EPS Surprise
Huntington Bancshares Incorporated price-eps-surprise | Huntington Bancshares Incorporated Quote
The Zacks Consensus Estimate for second-quarter earnings of 34 cents has been unchanged over the past month, reflecting bearish sentiments of analysts. Also, the figure indicates a 2.9% decline from the year-ago reported number. The consensus estimate of $1.70 billion for revenues suggests a year-over-year jump of 31.9%.
Key Factors at Play
Loans: Per the Fed’s latest data, there was considerable strength in commercial real estate loans and consumer loans in the second quarter, beside commercial and industrial loan growth. This is likely to have aided the company’s second-quarter performance, as the majority of its loan portfolio comprises total commercial loans (commercial and industrial lending, as well as commercial real estate lending).
As for the company’s consumer lending portfolio, growth in residential real estate loans is expected to have aided. Hence, the momentum in the commercial and consumer businesses, along with strong pipelines, is likely to have supported HBAN’s loan balances in the second quarter. This is likely to have driven an increase in interest-earnings assets.
The Zacks Consensus Estimate of $163.2 billion for average interest-earning assets in the quarter implies a marginal improvement on a sequential basis.
NII: The overall lending scenario continued to improve in the second quarter. Also, the Federal Reserve raised short-term rates by 125 basis points in the quarter. The policy rate, thus, reached 1.5-1.75%, the highest level since just before the March 2020 pandemic. Hence, boosted by higher short-term rates, improvement in the lending scenario and increased average earning assets, NIM and NII are anticipated to have been bolstered.
Yet, a decrease in accelerated Paycheck Protection Program loan fees, recognized upon forgiveness payments, is expected to have been a damper.
The consensus estimate for NII indicates a 4% rise to $1.19 billion from the prior quarter’s reported figure.
Non-Interest Revenues: Mortgage originations, both purchase and refinancing, continued to normalize in the second quarter. Mortgage banking revenues, which were propelled by low mortgage rates in the prior year, have been facing tough competition.
Mortgage rates increased in the second quarter. Hence, mortgage origination activities are estimated to have decreased dramatically, with rising rates discouraging refinancing activity. This is expected to have affected the company’s mortgage banking net revenues.
Mortgage banking fees in the to-be-reported quarter are estimated to be $48.2 million, suggesting a marginal dip on a sequential basis.
The Zacks Consensus Estimate for capital market fees is pegged at $43.2 million, indicating a marginal increase from the prior quarter’s reported figure.
Overall, the consensus mark of $505 million for non-interest income indicates a 1.2% sequential rise.
Expenses: Huntington’s investments in digital capabilities, marketing and hiring personnel to aid its revenue growth are anticipated to have pushed its costs up.
Nonetheless, Huntington completed its merger with TCF Financial, and management expects to achieve cost savings related to the merger in the second quarter of 2022. These initiatives are likely to have decreased expenses in the quarter under review.
Management expects non-GAAP expenses (excluding notable items) of $1 billion for second-quarter 2022.
Asset Quality: In the past quarters, HBAN had been releasing reserves that it built to cover losses from the effects of the coronavirus pandemic. However, in the first quarter, the company reported a provision from credit losses of $25 million. With the rise in loan balance and continued expectations of economic slowdown due to geopolitical and inflation concerns, the company is expected to have built reserves in the second quarter.
Key Developments
In a bid to enhance its digital capabilities, Huntington’s subsidiary, Huntington National Bank, acquired San Francisco’s Torana, a B2C payment fintech company, in May.The acquisition will also increase Huntington’s scale in business verticals like healthcare, public sector, insurance and the company’s National Settlements business, while being a leader in the commercial banking segment.
What Our Quantitative Model Reveals
Huntington does not have the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat this time around.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for Huntington is -1.47%.
Zacks Rank: Huntington currently has a Zacks Rank of 3.
Bank Stocks Worth a Look
Here are a couple of bank stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:
The Earnings ESP for Truist Financial (TFC - Free Report) is +0.68% and it carries a Zacks Rank #3 at present. The company is slated to report second-quarter 2022 results on Jul 19.
Over the past week, the Zacks Consensus Estimate for TFC’s quarterly earnings has been revised marginally downward.
Citizens Financial Group (CFG - Free Report) is scheduled to release second-quarter 2022 earnings on Jul 19. The company, which carries a Zacks Rank #3 at present, has an Earnings ESP of +5.22%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
CFG’s quarterly earnings estimates have moved marginally downward over the past two months.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.