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Huntington Bancshares Incorporated (HBAN - Free Report) has reported fourth-quarter 2023 earnings per share of 27 cents (excluding non-recurring items), surpassing the Zacks Consensus Estimate of 26 cents. However, the bottom line declined from the prior-year figure of 42 cents.
Results have reflected improvements in average loans and deposits. However, a fall in net interest income (NII) and elevated expenses were headwinds.
The company has reported a net income applicable to common shares of $215 million in the quarter, down 65% year over year.
Earnings for 2023 were $1.24 per share, which declined 14% year over year. Net income available to common shareholders was $1.81 billion, down 14% year over year.
Revenues Fall, Expenses Rise
Total revenues (on a fully taxable equivalent or FTE basis) declined 12% year over year to $1.73 billion in the fourth quarter. Also, the top line missed the consensus estimate of $1.75 billion.
NII (FTE basis) was $1.31 billion, down 10% from the prior-year quarter. The fall was due to a decline in the net interest margin (NIM), partially offset by an increase in average earning assets. NIM decreased 13 basis points to 3.05% in the reported quarter.
Non-interest income moved down 19% year over year to $405 million. The rise was largely due to a decline in capital markets and advisory fees, leasing revenues, and lower gain on the sale of loans.
Non-interest expenses were up 35% year over year to $1.34 billion. This was mainly due to a rise in almost all the components of non-interest expenses, except for a decrease in the amortization of intangibles and lease financing equipment depreciation.
The efficiency ratio was 77%, up from the year-ago quarter’s 54%. A rise in the efficiency ratio indicates a decrease in profitability.
As of Dec 31, 2023, average loans and leases at Huntington increased marginally on a sequential basis to $121.22 billion. Also, average core deposits increased to $144.38 billion.
Credit Quality Deteriorates
Net charge-offs were $94 million or an annualized 0.31% of average total loans and leases in the reported quarter, up from $50 million or 0.17% recorded in the prior year. The quarter-end allowance for credit losses increased 5.7% to $2.40 billion.
Further, total non-performing assets were $711 million as of Dec 31, 2023, up from $594 million in the prior-year quarter. Also, in the fourth quarter, the company recorded a provision for credit losses of $126 million compared with $91 million in the year-ago quarter.
Capital Ratios Solid
The common equity tier 1 risk-based capital ratio was 10.25% in the quarter compared with 9.36% in the year-ago period. The regulatory Tier 1 risk-based capital ratio was 11.98%, up from 10.90% in the comparable period in 2022. The tangible common equity to tangible assets ratio in the fourth quarter was 6.14%, up from 5.55% 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
Hancock Whitney Corp.’s (HWC - Free Report) fourth-quarter 2023 adjusted earnings per share of $1.26 beat the Zacks Consensus Estimate of $1.08. Adjusted earnings per share, however, compared unfavorably with the $1.65 registered in the year-ago quarter.
HWC’s results were impacted by declines in NII and non-interest income. Further, a slight decrease in loan balances, and increases in expenses and provisions acted as spoilsports.
Synovus Financial Corp.’s (SNV - Free Report) fourth-quarter adjusted earnings per share of 80 cents lagged the Zacks Consensus Estimate of 94 cents. Also, adjusted earnings compared unfavorably with the $1.35 earned in the year-ago quarter.
Results were adversely impacted by declines in NII and non-interest revenues. A slight reduction in loan balances, and increased expenses and provisions were other undermining factors. However, a modest increase in deposits provided some support to SNV’s quarterly performance.
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Huntington (HBAN) Q4 Earnings Beat Estimates, Revenues Dip Y/Y
Huntington Bancshares Incorporated (HBAN - Free Report) has reported fourth-quarter 2023 earnings per share of 27 cents (excluding non-recurring items), surpassing the Zacks Consensus Estimate of 26 cents. However, the bottom line declined from the prior-year figure of 42 cents.
Results have reflected improvements in average loans and deposits. However, a fall in net interest income (NII) and elevated expenses were headwinds.
The company has reported a net income applicable to common shares of $215 million in the quarter, down 65% year over year.
Earnings for 2023 were $1.24 per share, which declined 14% year over year. Net income available to common shareholders was $1.81 billion, down 14% year over year.
Revenues Fall, Expenses Rise
Total revenues (on a fully taxable equivalent or FTE basis) declined 12% year over year to $1.73 billion in the fourth quarter. Also, the top line missed the consensus estimate of $1.75 billion.
NII (FTE basis) was $1.31 billion, down 10% from the prior-year quarter. The fall was due to a decline in the net interest margin (NIM), partially offset by an increase in average earning assets. NIM decreased 13 basis points to 3.05% in the reported quarter.
Non-interest income moved down 19% year over year to $405 million. The rise was largely due to a decline in capital markets and advisory fees, leasing revenues, and lower gain on the sale of loans.
Non-interest expenses were up 35% year over year to $1.34 billion. This was mainly due to a rise in almost all the components of non-interest expenses, except for a decrease in the amortization of intangibles and lease financing equipment depreciation.
The efficiency ratio was 77%, up from the year-ago quarter’s 54%. A rise in the efficiency ratio indicates a decrease in profitability.
As of Dec 31, 2023, average loans and leases at Huntington increased marginally on a sequential basis to $121.22 billion. Also, average core deposits increased to $144.38 billion.
Credit Quality Deteriorates
Net charge-offs were $94 million or an annualized 0.31% of average total loans and leases in the reported quarter, up from $50 million or 0.17% recorded in the prior year. The quarter-end allowance for credit losses increased 5.7% to $2.40 billion.
Further, total non-performing assets were $711 million as of Dec 31, 2023, up from $594 million in the prior-year quarter. Also, in the fourth quarter, the company recorded a provision for credit losses of $126 million compared with $91 million in the year-ago quarter.
Capital Ratios Solid
The common equity tier 1 risk-based capital ratio was 10.25% in the quarter compared with 9.36% in the year-ago period. The regulatory Tier 1 risk-based capital ratio was 11.98%, up from 10.90% in the comparable period in 2022. The tangible common equity to tangible assets ratio in the fourth quarter was 6.14%, up from 5.55% 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
Hancock Whitney Corp.’s (HWC - Free Report) fourth-quarter 2023 adjusted earnings per share of $1.26 beat the Zacks Consensus Estimate of $1.08. Adjusted earnings per share, however, compared unfavorably with the $1.65 registered in the year-ago quarter.
HWC’s results were impacted by declines in NII and non-interest income. Further, a slight decrease in loan balances, and increases in expenses and provisions acted as spoilsports.
Synovus Financial Corp.’s (SNV - Free Report) fourth-quarter adjusted earnings per share of 80 cents lagged the Zacks Consensus Estimate of 94 cents. Also, adjusted earnings compared unfavorably with the $1.35 earned in the year-ago quarter.
Results were adversely impacted by declines in NII and non-interest revenues. A slight reduction in loan balances, and increased expenses and provisions were other undermining factors. However, a modest increase in deposits provided some support to SNV’s quarterly performance.