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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 2023 results on Jul 21, before the opening bell. The company’s revenues are expected to have improved year over year, while its earnings are likely to have declined.
Before we analyze the factors that are likely to have impacted second-quarter earnings, let’s look at Huntington’s performance in the last quarter.
In the last reported quarter, the bank recorded an earnings surprise of 2.7%. The results benefited from notable increases in net interest income (NII) and non-interest income. However, a rise in expenses and higher provision for credit losses were headwinds.
Huntingtonhas an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average beat being 4.02%.
Huntington Bancshares Incorporated Price and EPS Surprise
The Zacks Consensus Estimate for HBAN’s second-quarter earnings of 34 cents per share has been revised 2.9% downward over the past month, reflecting the bearish sentiments of analysts. Further, the figure indicates a 5.6% decline from the year-ago reported number.
Nonetheless, the consensus estimate for revenues of $1.84 billion suggests a year-over-year increase of 4.8%.
Key Factors & Estimates for Q2
Loans: Lending activities gradually waned in the second quarter amid a challenging macroeconomic backdrop. Per Federal Reserve’s latest data, the demand for commercial and industrial loans, as well as commercial real estate loans, were soft in April and May.
Given HBAN’s significant exposure to commercial loans, the company’s loan growth in the quarter under review is likely to have been affected. This is likely to have negatively influenced the average earning asset balance for the second quarter.
Nonetheless, the Zacks Consensus Estimate for average earning assets of $171.35 billion indicates a 1.3% rise from the prior quarter’s reported figure.
NII: Federal Reserve hiked rates by 25 basis points in the to-be-reported quarter. With this, the policy rate now stands at a 15-year high of 5-5.25%. Such high interest rates are likely to have increased funding costs in the quarter under review.
Despite higher rates, rise in deposit costs and muted loan growth are expected to have negatively impacted the bank’s NII and net interest margin in the quarter.
The Zacks Consensus Estimate for NII is pegged at $1.35 billion, suggesting a sequential rise of 4.5%.
Non-Interest Income: The high inflation is expected to have increased card transactions, thereby supporting HBAN’s card and payment processing income in the quarter. The Zacks Consensus Estimate for card and payment processing income of $97 million implies a sequential increase of 4.3%.
In the to-be-reported quarter, mortgage rates continued to rise, with the rate on 30-year fixed mortgage reaching 6.71% in June, up from the 6.32% reported in the prior quarter. Thus, mortgage originations as well as refinancing continued to decline in the quarter.
These factors are likely to have weighed on HBAN’s mortgage banking income. Nonetheless, a favorable change in the valuation of mortgage servicing rights is expected to have aided such revenues. The Zacks Consensus Estimate for mortgage banking income is pegged at $31.23 million, suggesting an 20.1% sequential rise.
Global deal making continued to shrink in the second quarter, with deal volume and total deal value numbers crashing. Geopolitical tensions, inflation, high-interest rates and fears of a global recession are likely to have acted as headwinds for merger and acquisition deals. Thus, the company’s capital markets fees are likely to have been adversely impacted. Nonetheless, the Zacks Consensus Estimate for the metric is pegged at $62 million, implying a 5.1% rise sequentially.
The consensus estimate for service charges on deposit accounts for the second quarter is pegged at $84 million, hinting a rise of 1.2% on a sequential basis. Further, the consensus mark for trust and investment management fees is pegged at $63 million, indicating a sequential rise of 1.6%.
The consensus mark for insurance income of $34.3 million indicates 1% rise sequentially. The Zacks Consensus Estimate for Bank owned life insurance income is pegged at $16.1 million, suggesting a sequential rise of 1%.
The consensus estimate for leasing revenues is pegged at $27.5 million, indicating a sequential rise of 5.7%.
However, the Zacks Consensus Estimate for other non-interest income is pegged at $53 million, implying a decline of 51.4% sequentially.
Overall, the consensus mark for total non-interest income of $477 million indicates a 6.8% sequential fall.
Expenses: Huntington’s long-term investments in digital capabilities, marketing and hiring personnel to aid growth are anticipated to have raised its costs during the second quarter.
Asset Quality: Amid expectations of a worsening macroeconomic outlook and growing recession fears, HBAN is expected to have built reserves in the second quarter. The Zacks Consensus Estimate for total non-performing assets of $652 million implies a 12.8% jump from the prior quarter.
What Our Quantitative Model Reveals
Our proven model does not predict an earnings beat for Huntington this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here.
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 +0.29%.
Zacks Rank: Huntington currently has a Zacks Rank #5 (Strong Sell).
Stocks That Warrant a Look
First Citizens BancShares, Inc. (FCNCA - Free Report) and Byline Bancorp, Inc. (BY - Free Report) are a couple of stocks that you may want to consider, as these have the right combination of elements to post an earnings beat in their upcoming releases.
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What's in the Cards for Huntington (HBAN) in Q2 Earnings?
Huntington Bancshares (HBAN - Free Report) is slated to report second-quarter 2023 results on Jul 21, before the opening bell. The company’s revenues are expected to have improved year over year, while its earnings are likely to have declined.
Before we analyze the factors that are likely to have impacted second-quarter earnings, let’s look at Huntington’s performance in the last quarter.
In the last reported quarter, the bank recorded an earnings surprise of 2.7%. The results benefited from notable increases in net interest income (NII) and non-interest income. However, a rise in expenses and higher provision for credit losses were headwinds.
Huntingtonhas an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average beat being 4.02%.
Huntington Bancshares Incorporated Price and EPS Surprise
Huntington Bancshares Incorporated price-eps-surprise | Huntington Bancshares Incorporated Quote
The Zacks Consensus Estimate for HBAN’s second-quarter earnings of 34 cents per share has been revised 2.9% downward over the past month, reflecting the bearish sentiments of analysts. Further, the figure indicates a 5.6% decline from the year-ago reported number.
Nonetheless, the consensus estimate for revenues of $1.84 billion suggests a year-over-year increase of 4.8%.
Key Factors & Estimates for Q2
Loans: Lending activities gradually waned in the second quarter amid a challenging macroeconomic backdrop. Per Federal Reserve’s latest data, the demand for commercial and industrial loans, as well as commercial real estate loans, were soft in April and May.
Given HBAN’s significant exposure to commercial loans, the company’s loan growth in the quarter under review is likely to have been affected. This is likely to have negatively influenced the average earning asset balance for the second quarter.
Nonetheless, the Zacks Consensus Estimate for average earning assets of $171.35 billion indicates a 1.3% rise from the prior quarter’s reported figure.
NII: Federal Reserve hiked rates by 25 basis points in the to-be-reported quarter. With this, the policy rate now stands at a 15-year high of 5-5.25%. Such high interest rates are likely to have increased funding costs in the quarter under review.
Despite higher rates, rise in deposit costs and muted loan growth are expected to have negatively impacted the bank’s NII and net interest margin in the quarter.
The Zacks Consensus Estimate for NII is pegged at $1.35 billion, suggesting a sequential rise of 4.5%.
Non-Interest Income: The high inflation is expected to have increased card transactions, thereby supporting HBAN’s card and payment processing income in the quarter. The Zacks Consensus Estimate for card and payment processing income of $97 million implies a sequential increase of 4.3%.
In the to-be-reported quarter, mortgage rates continued to rise, with the rate on 30-year fixed mortgage reaching 6.71% in June, up from the 6.32% reported in the prior quarter. Thus, mortgage originations as well as refinancing continued to decline in the quarter.
These factors are likely to have weighed on HBAN’s mortgage banking income. Nonetheless, a favorable change in the valuation of mortgage servicing rights is expected to have aided such revenues. The Zacks Consensus Estimate for mortgage banking income is pegged at $31.23 million, suggesting an 20.1% sequential rise.
Global deal making continued to shrink in the second quarter, with deal volume and total deal value numbers crashing. Geopolitical tensions, inflation, high-interest rates and fears of a global recession are likely to have acted as headwinds for merger and acquisition deals. Thus, the company’s capital markets fees are likely to have been adversely impacted. Nonetheless, the Zacks Consensus Estimate for the metric is pegged at $62 million, implying a 5.1% rise sequentially.
The consensus estimate for service charges on deposit accounts for the second quarter is pegged at $84 million, hinting a rise of 1.2% on a sequential basis. Further, the consensus mark for trust and investment management fees is pegged at $63 million, indicating a sequential rise of 1.6%.
The consensus mark for insurance income of $34.3 million indicates 1% rise sequentially. The Zacks Consensus Estimate for Bank owned life insurance income is pegged at $16.1 million, suggesting a sequential rise of 1%.
The consensus estimate for leasing revenues is pegged at $27.5 million, indicating a sequential rise of 5.7%.
However, the Zacks Consensus Estimate for other non-interest income is pegged at $53 million, implying a decline of 51.4% sequentially.
Overall, the consensus mark for total non-interest income of $477 million indicates a 6.8% sequential fall.
Expenses: Huntington’s long-term investments in digital capabilities, marketing and hiring personnel to aid growth are anticipated to have raised its costs during the second quarter.
Asset Quality: Amid expectations of a worsening macroeconomic outlook and growing recession fears, HBAN is expected to have built reserves in the second quarter. The Zacks Consensus Estimate for total non-performing assets of $652 million implies a 12.8% jump from the prior quarter.
What Our Quantitative Model Reveals
Our proven model does not predict an earnings beat for Huntington this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here.
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 +0.29%.
Zacks Rank: Huntington currently has a Zacks Rank #5 (Strong Sell).
Stocks That Warrant a Look
First Citizens BancShares, Inc. (FCNCA - Free Report) and Byline Bancorp, Inc. (BY - Free Report) are a couple of stocks that you may want to consider, as these have the right combination of elements to post an earnings beat in their upcoming releases.
The Earnings ESP for FCNCA is +3.21% and the stock currently carries a Zacks Rank #3. It is slated to report second-quarter 2023 results on Aug 8. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for FCNCA’s second-quarter earnings has moved 4.3% south over the past 30 days.
BY currently has an Earnings ESP of +3.59% and a Zacks Rank #3. It is scheduled to release second-quarter 2023 results on Jul 27.
The Zacks Consensus Estimate for BY’s second-quarter earnings has remained unchanged over the past 60 days.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.