We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Huntington (HBAN) Q3 Earnings & Revenues Beat, Costs Up
Read MoreHide Full Article
Huntington Bancshares Incorporated (HBAN - Free Report) reported third-quarter 2023 earnings per share of 35 cents, surpassing the Zacks Consensus Estimate of 32 cents. However, the bottom line declined 10.3% from the prior-year figure.
Results benefited from an increase in non-interest income. It also reported lower provision for credit losses despite a challenging economic backdrop. However, a fall in net interest income (NII) and elevated expenses were headwinds.
The company reported a net income applicable to common shares of $510 million in the quarter, down 9.7% year over year.
Revenues Fall, Expenses Climb up
Total revenues (on a fully taxable equivalent or FTE basis) declined 1.2% year over year to $1.89 billion in the third quarter. However, the top line surpassed the consensus estimate of $1.82 billion.
NII (FTE basis) was $1.38 billion, down 2.3% from the prior-year quarter. The fall was due to a decline in net interest margin (NIM) and an increase in average interest-bearing liabilities, partially offset by an increase in average earning assets. NIM decreased 22 basis points to 3.20% in the reported quarter.
Non-interest income moved up 2.2% year over year to $509 million. The rise was largely due to an increase in almost all the components of non-interest income, except for a decrease in capital market fees and gain on the sale of loans.
Non-interest expenses were up 3.5% year over year to $1.09 billion. This was mainly due to a rise in almost all the components of non-interest expenses, except for a decrease in amortization of intangibles, lease financing equipment depreciation and other expenses.
The efficiency ratio was 57%, up from the year-ago quarter’s 54.4%. A rise in the efficiency ratio indicates a decrease in profitability.
As of Sep 30, 2023, average loans and leases at Huntington decreased marginally on a sequential basis to $120.78 billion. However, average total deposits increased 1.8% to $148.15 billion.
Credit Quality Deteriorates
Net charge-offs were $73 million or an annualized 0.24% of average total loans and leases in the reported quarter, up from 44 million or 0.15% recorded in the prior year. The quarter-end allowance for credit losses increased 6.2% to $2.37 billion. Further, total non-performing assets were $634 million as of Sep 30, 2023, up from $627 million in the prior-year quarter.
Nonetheless, in the third quarter, the company recorded a provision for credit losses of $99 million compared with $106 million in the year-ago quarter.
Capital Ratios Solid
The common equity tier 1 risk-based capital ratio was 10.10% in the quarter compared with 9.27% in the year-ago period. The regulatory Tier 1 risk-based capital ratio was 11.88%, up from 10.84% in the comparable period in 2022. The tangible common equity to tangible assets ratio in the third quarter was 5.70%, up from 5.32% in the year-ago quarter.
Our Viewpoint
Huntington’s inorganic expansion moves are likely to bolster its revenue growth in the near term. Its elevated non-interest expenses are likely to keep the bottom line under pressure in the upcoming period. Further, any deterioration in the balance sheet might affect its financials.
Huntington Bancshares Incorporated Price, Consensus and EPS Surprise
Bank OZK’s (OZK - Free Report) third-quarter 2023 earnings per share of $1.49 beat the Zacks Consensus Estimate of $1.44. The bottom line reflects a rise of 38% from the year-earlier quarter.
OZK’s results were positively impacted by an improvement in NII, driven by higher rates and robust loan and deposit balances. However, rising expenses, a decline in non-interest income and an increase in provision for credit losses were concerns.
Fifth Third Bancorp (FITB - Free Report) reported third-quarter 2023 adjusted earnings per share (EPS) of 92 cents, surpassing the Zacks Consensus Estimate of 82 cents. In the prior-year quarter, the company reported an EPS of 93 cents.
Results were aided by a rise in non-interest income and deposit balance. However, a fall in NII limited its revenue growth. Higher expenses and a decline in average loan and lease balance were undermining factors for FITB.
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Huntington (HBAN) Q3 Earnings & Revenues Beat, Costs Up
Huntington Bancshares Incorporated (HBAN - Free Report) reported third-quarter 2023 earnings per share of 35 cents, surpassing the Zacks Consensus Estimate of 32 cents. However, the bottom line declined 10.3% from the prior-year figure.
Results benefited from an increase in non-interest income. It also reported lower provision for credit losses despite a challenging economic backdrop. However, a fall in net interest income (NII) and elevated expenses were headwinds.
The company reported a net income applicable to common shares of $510 million in the quarter, down 9.7% year over year.
Revenues Fall, Expenses Climb up
Total revenues (on a fully taxable equivalent or FTE basis) declined 1.2% year over year to $1.89 billion in the third quarter. However, the top line surpassed the consensus estimate of $1.82 billion.
NII (FTE basis) was $1.38 billion, down 2.3% from the prior-year quarter. The fall was due to a decline in net interest margin (NIM) and an increase in average interest-bearing liabilities, partially offset by an increase in average earning assets. NIM decreased 22 basis points to 3.20% in the reported quarter.
Non-interest income moved up 2.2% year over year to $509 million. The rise was largely due to an increase in almost all the components of non-interest income, except for a decrease in capital market fees and gain on the sale of loans.
Non-interest expenses were up 3.5% year over year to $1.09 billion. This was mainly due to a rise in almost all the components of non-interest expenses, except for a decrease in amortization of intangibles, lease financing equipment depreciation and other expenses.
The efficiency ratio was 57%, up from the year-ago quarter’s 54.4%. A rise in the efficiency ratio indicates a decrease in profitability.
As of Sep 30, 2023, average loans and leases at Huntington decreased marginally on a sequential basis to $120.78 billion. However, average total deposits increased 1.8% to $148.15 billion.
Credit Quality Deteriorates
Net charge-offs were $73 million or an annualized 0.24% of average total loans and leases in the reported quarter, up from 44 million or 0.15% recorded in the prior year. The quarter-end allowance for credit losses increased 6.2% to $2.37 billion. Further, total non-performing assets were $634 million as of Sep 30, 2023, up from $627 million in the prior-year quarter.
Nonetheless, in the third quarter, the company recorded a provision for credit losses of $99 million compared with $106 million in the year-ago quarter.
Capital Ratios Solid
The common equity tier 1 risk-based capital ratio was 10.10% in the quarter compared with 9.27% in the year-ago period. The regulatory Tier 1 risk-based capital ratio was 11.88%, up from 10.84% in the comparable period in 2022. The tangible common equity to tangible assets ratio in the third quarter was 5.70%, up from 5.32% in the year-ago quarter.
Our Viewpoint
Huntington’s inorganic expansion moves are likely to bolster its revenue growth in the near term. Its elevated non-interest expenses are likely to keep the bottom line under pressure in the upcoming period. Further, any deterioration in the balance sheet might affect its financials.
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 #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
Bank OZK’s (OZK - Free Report) third-quarter 2023 earnings per share of $1.49 beat the Zacks Consensus Estimate of $1.44. The bottom line reflects a rise of 38% from the year-earlier quarter.
OZK’s results were positively impacted by an improvement in NII, driven by higher rates and robust loan and deposit balances. However, rising expenses, a decline in non-interest income and an increase in provision for credit losses were concerns.
Fifth Third Bancorp (FITB - Free Report) reported third-quarter 2023 adjusted earnings per share (EPS) of 92 cents, surpassing the Zacks Consensus Estimate of 82 cents. In the prior-year quarter, the company reported an EPS of 93 cents.
Results were aided by a rise in non-interest income and deposit balance. However, a fall in NII limited its revenue growth. Higher expenses and a decline in average loan and lease balance were undermining factors for FITB.