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Huntington Bancshares Incorporated (HBAN - Free Report) has reported second-quarter 2023 earnings per share of 35 cents, surpassing the Zacks Consensus Estimate of 34 cents. The metric remained flat from the prior-year figure.
The results have benefited from increases in net interest income (NII) and non-interest income. However, a rise in expenses and higher provision for credit losses were headwinds.
The company has reported a net income applicable to common shares of $519 million in the quarter, up 1.6% year over year.
Revenues Rise, Expenses Escalate
Total revenues (on a fully-taxable equivalent or FTE basis) climbed 5.7% year over year to $1.85 billion in the second quarter. Also, the top line surpassed the consensus estimate of $1.84 billion.
NII (FTE basis) was $1.36 billion, up 6.7% from the prior-year quarter. The upside was driven by an increase in average earning assets partially offset by a decline in net interest margin (NIM). NIM decreased 4 basis points to 3.11% in the quarter under review.
Non-interest income moved up 2.1% year over year to $495 million. The rise mainly stemmed from higher card and payment processing income, capital market fees, and income from trust and investment management services partially offset by lower service charges on deposit accounts, mortgage banking income and leasing revenues.
Non-interest expenses were up 3.1% year over year to $1.05 billion. This was majorly due to a rise in personnel costs, equipment expenditures, marketing fees, professional services as well as deposit and other insurance expenses.
The efficiency ratio was 55.9%, down from the prior-year quarter’s 57.3%. A decline in the ratio indicates a rise in profitability.
As of Jun 30, 2023, average loans and leases at Huntington improved 1% on a sequential basis to $121.35 billion. However, average total deposits declined marginally to $145.6 billion.
Credit Quality Deteriorates
Net charge-offs were $49 million or an annualized 0.16% of average total loans and leases in the reported quarter, up from $8 million or 0.03% recorded in the prior year. The quarter-end allowance for credit losses increased 8% to $2.34 billion. In the second quarter, the company recorded a provision for credit losses of $92 million compared with $67 million in the year-ago quarter.
Nonetheless, total non-performing assets were $557 million as of Jun 30, 2023, down from $682 million in the prior-year quarter.
Capital Ratios Solid
The common equity tier 1 risk-based capital ratio was 9.82% in the quarter compared with 9.05% in the year-ago period. The regulatory Tier 1 risk-based capital ratio was 11.58%, up from 10.63% in the comparable period in 2022. The tangible common equity to tangible assets ratio in the second quarter was 5.80%, flat from the prior-year quarter.
Our Viewpoint
Huntington’s elevated non-interest expenses are likely to keep the bottom line under pressure in the upcoming period. Also, declining mortgage banking income is another woe.
Huntington Bancshares Incorporated Price, Consensus and EPS Surprise
Commerce Bancshares Inc.’s (CBSH - Free Report) second-quarter 2023 earnings per share of $1.02 surpassed the Zacks Consensus Estimate of 93 cents. The bottom line increased 10.9% from the prior-year quarter.
Results of CBSH benefited from an increase in NII driven by a rise in loan balance and higher interest rates. Also, non-interest income grew during the quarter.
Synovus Financial Corp. (SNV - Free Report) reported second-quarter 2023 adjusted earnings per share of $1.16, which surpassed the Zacks Consensus Estimate of $1.14. However, the bottom line declined marginally from the prior-year quarter’s reported number.
Higher interest rates and decent loan growth supported NII of SNV. However, results were adversely impacted by a rise in provisions due to a challenging operating backdrop and higher expenses.
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Huntington's (HBAN) Q2 Earnings Beat Estimates, Costs Rise
Huntington Bancshares Incorporated (HBAN - Free Report) has reported second-quarter 2023 earnings per share of 35 cents, surpassing the Zacks Consensus Estimate of 34 cents. The metric remained flat from the prior-year figure.
The results have benefited from increases in net interest income (NII) and non-interest income. However, a rise in expenses and higher provision for credit losses were headwinds.
The company has reported a net income applicable to common shares of $519 million in the quarter, up 1.6% year over year.
Revenues Rise, Expenses Escalate
Total revenues (on a fully-taxable equivalent or FTE basis) climbed 5.7% year over year to $1.85 billion in the second quarter. Also, the top line surpassed the consensus estimate of $1.84 billion.
NII (FTE basis) was $1.36 billion, up 6.7% from the prior-year quarter. The upside was driven by an increase in average earning assets partially offset by a decline in net interest margin (NIM). NIM decreased 4 basis points to 3.11% in the quarter under review.
Non-interest income moved up 2.1% year over year to $495 million. The rise mainly stemmed from higher card and payment processing income, capital market fees, and income from trust and investment management services partially offset by lower service charges on deposit accounts, mortgage banking income and leasing revenues.
Non-interest expenses were up 3.1% year over year to $1.05 billion. This was majorly due to a rise in personnel costs, equipment expenditures, marketing fees, professional services as well as deposit and other insurance expenses.
The efficiency ratio was 55.9%, down from the prior-year quarter’s 57.3%. A decline in the ratio indicates a rise in profitability.
As of Jun 30, 2023, average loans and leases at Huntington improved 1% on a sequential basis to $121.35 billion. However, average total deposits declined marginally to $145.6 billion.
Credit Quality Deteriorates
Net charge-offs were $49 million or an annualized 0.16% of average total loans and leases in the reported quarter, up from $8 million or 0.03% recorded in the prior year. The quarter-end allowance for credit losses increased 8% to $2.34 billion. In the second quarter, the company recorded a provision for credit losses of $92 million compared with $67 million in the year-ago quarter.
Nonetheless, total non-performing assets were $557 million as of Jun 30, 2023, down from $682 million in the prior-year quarter.
Capital Ratios Solid
The common equity tier 1 risk-based capital ratio was 9.82% in the quarter compared with 9.05% in the year-ago period. The regulatory Tier 1 risk-based capital ratio was 11.58%, up from 10.63% in the comparable period in 2022. The tangible common equity to tangible assets ratio in the second quarter was 5.80%, flat from the prior-year quarter.
Our Viewpoint
Huntington’s elevated non-interest expenses are likely to keep the bottom line under pressure in the upcoming period. Also, declining mortgage banking income is another woe.
Huntington Bancshares Incorporated Price, Consensus and EPS Surprise
Huntington Bancshares Incorporated price-consensus-eps-surprise-chart | Huntington Bancshares Incorporated Quote
Currently, Huntington carries a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
Commerce Bancshares Inc.’s (CBSH - Free Report) second-quarter 2023 earnings per share of $1.02 surpassed the Zacks Consensus Estimate of 93 cents. The bottom line increased 10.9% from the prior-year quarter.
Results of CBSH benefited from an increase in NII driven by a rise in loan balance and higher interest rates. Also, non-interest income grew during the quarter.
Synovus Financial Corp. (SNV - Free Report) reported second-quarter 2023 adjusted earnings per share of $1.16, which surpassed the Zacks Consensus Estimate of $1.14. However, the bottom line declined marginally from the prior-year quarter’s reported number.
Higher interest rates and decent loan growth supported NII of SNV. However, results were adversely impacted by a rise in provisions due to a challenging operating backdrop and higher expenses.