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Huntington (HBAN) Q2 Earnings Beat on Revenue Growth, Loans Up
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Huntington Bancshares Incorporated (HBAN) has reported second-quarter 2022 adjusted earnings per share of 36 cents. This excludes one cent per share of after-tax acquisition-related expenses. The reported figure surpassed the Zacks Consensus Estimate of 34 cents. The company reported 35 cents in the comparable period last year.
The second-quarter 2022 results reflect full-quarter benefits from the TCF acquisition completed in June 2021. Strength in fee income and net interest income (NII) drove the top line.
Management noted, “The second quarter was marked by robust loan growth, increased average deposit balances, and 6% sequential revenue growth, benefited by higher interest rates. We achieved our targeted expense level as we completed the TCF cost synergies and delivered sustained positive operating leverage.”
The company has reported a net income applicable to common shares of $511 million in the quarter against a net loss of $58 million in the year-ago quarter.
Revenues Rise, Expenses Fall
Total revenues (on a fully-taxable equivalent or FTE basis) climbed 36% year over year to $1.75 billion in the second quarter. Also, the top line surpassed the consensus estimate of $1.70 billion.
NII (FTE basis) was $1.26 million, up 50% from the prior-year quarter. The upside resulted from an increase in the net interest margin (NIM), which rose to 3.15% from 2.66%, and higher average earning assets.
Non-interest income climbed 9% year over year to $485 million. The upside mainly stemmed from increased service charges on deposit accounts, card and payment processing, leasing revenues, and capital market fees.
Non-interest expenses were down 5% on a year-over-year basis to $1.01 billion. This was chiefly due to lower professional services costs, outside data processing and other service costs, and net occupancy expenses.
The efficiency ratio was 57.3%, down from the prior-year quarter’s 83.1%. A decline in the ratio indicates a rise in profitability.
As of Jun 30, 2022, average loans and leases at Huntington improved 3% on a sequential basis to $113.9 billion. Average total deposits rose 1% from the prior quarter to $145 billion.
Credit Quality Strengthens
Net charge-offs were $8 million or an annualized 0.03% of average total loans in the reported quarter, down from $62 million or 0.28% recorded in the prior year.
Also, the quarter-end allowance for credit losses fell 6.6% to $2.16 billion. In the second quarter, the company reported a provision from credit losses of $67 million compared with $211 million in the prior-year quarter. In addition, total non-performing assets were $682 million as of Jun 30, 2022, down from $1.01 billion in the prior-year quarter.
Capital Ratios Fall
Common equity tier 1 risk-based capital ratio and regulatory Tier 1 risk-based capital ratio were 9.05% and 10.63%, respectively, compared with 9.98% and 12.25% reported in the year-ago quarter. The tangible common equity to tangible assets ratio was 5.80%, down from 7.15% as of Jun 30, 2021.
Our Viewpoint
Huntington put up a decent performance in the second quarter. The momentum in average earning asset growth will drive NII in the upcoming quarters. Huntington’s acquisition of Capstone Partners and Torana will expand its fee income earning capabilities.
M&T Bank Corporation (MTB - Free Report) reported net operating earnings per share of $3.10 for second-quarter 2022, meeting the Zacks Consensus Estimate. However, the bottom line compares unfavorably with the $3.45 per share reported in the year-ago period.
A rise in NII on net interest margin expansion and balance sheet strength drove MTB’s results. Yet a rise in expenses was a key undermining factor.
Truist Financial’s (TFC - Free Report) second-quarter 2022 adjusted earnings of $1.20 per share surpassed the Zacks Consensus Estimate of $1.17. However, TFC’s bottom line declined 22.6% from the prior-year quarter.
TFC’s results were aided by average loan growth and higher rates, which drove NII. However, lower non-interest income and a rise in provisions were the major headwinds.
Citizens Financial Group (CFG - Free Report) reported second-quarter 2022 underlying earnings per share of $1.14, surpassing the Zacks Consensus Estimate of $1.02. However, the bottom line fell 22% from the year-ago quarter.
CFG’s results reflect NII growth on the rise in loan balances. Further, strong balance sheet growth, backed by an improving economy, was a tailwind. Citizens Financial closed the Investors Bancorp acquisition on Apr 6, 2022. However, a rise in expenses was a spoilsport.
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Huntington (HBAN) Q2 Earnings Beat on Revenue Growth, Loans Up
Huntington Bancshares Incorporated (HBAN) has reported second-quarter 2022 adjusted earnings per share of 36 cents. This excludes one cent per share of after-tax acquisition-related expenses. The reported figure surpassed the Zacks Consensus Estimate of 34 cents. The company reported 35 cents in the comparable period last year.
The second-quarter 2022 results reflect full-quarter benefits from the TCF acquisition completed in June 2021. Strength in fee income and net interest income (NII) drove the top line.
Management noted, “The second quarter was marked by robust loan growth, increased average deposit balances, and 6% sequential revenue growth, benefited by higher interest rates. We achieved our targeted expense level as we completed the TCF cost synergies and delivered sustained positive operating leverage.”
The company has reported a net income applicable to common shares of $511 million in the quarter against a net loss of $58 million in the year-ago quarter.
Revenues Rise, Expenses Fall
Total revenues (on a fully-taxable equivalent or FTE basis) climbed 36% year over year to $1.75 billion in the second quarter. Also, the top line surpassed the consensus estimate of $1.70 billion.
NII (FTE basis) was $1.26 million, up 50% from the prior-year quarter. The upside resulted from an increase in the net interest margin (NIM), which rose to 3.15% from 2.66%, and higher average earning assets.
Non-interest income climbed 9% year over year to $485 million. The upside mainly stemmed from increased service charges on deposit accounts, card and payment processing, leasing revenues, and capital market fees.
Non-interest expenses were down 5% on a year-over-year basis to $1.01 billion. This was chiefly due to lower professional services costs, outside data processing and other service costs, and net occupancy expenses.
The efficiency ratio was 57.3%, down from the prior-year quarter’s 83.1%. A decline in the ratio indicates a rise in profitability.
As of Jun 30, 2022, average loans and leases at Huntington improved 3% on a sequential basis to $113.9 billion. Average total deposits rose 1% from the prior quarter to $145 billion.
Credit Quality Strengthens
Net charge-offs were $8 million or an annualized 0.03% of average total loans in the reported quarter, down from $62 million or 0.28% recorded in the prior year.
Also, the quarter-end allowance for credit losses fell 6.6% to $2.16 billion. In the second quarter, the company reported a provision from credit losses of $67 million compared with $211 million in the prior-year quarter. In addition, total non-performing assets were $682 million as of Jun 30, 2022, down from $1.01 billion in the prior-year quarter.
Capital Ratios Fall
Common equity tier 1 risk-based capital ratio and regulatory Tier 1 risk-based capital ratio were 9.05% and 10.63%, respectively, compared with 9.98% and 12.25% reported in the year-ago quarter. The tangible common equity to tangible assets ratio was 5.80%, down from 7.15% as of Jun 30, 2021.
Our Viewpoint
Huntington put up a decent performance in the second quarter. The momentum in average earning asset growth will drive NII in the upcoming quarters. Huntington’s acquisition of Capstone Partners and Torana will expand its fee income earning capabilities.
Currently, Huntington carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Huntington Bancshares Incorporated Price, Consensus and EPS Surprise
Huntington Bancshares Incorporated price-consensus-eps-surprise-chart | Huntington Bancshares Incorporated Quote
Performance of Other Banks
M&T Bank Corporation (MTB - Free Report) reported net operating earnings per share of $3.10 for second-quarter 2022, meeting the Zacks Consensus Estimate. However, the bottom line compares unfavorably with the $3.45 per share reported in the year-ago period.
A rise in NII on net interest margin expansion and balance sheet strength drove MTB’s results. Yet a rise in expenses was a key undermining factor.
Truist Financial’s (TFC - Free Report) second-quarter 2022 adjusted earnings of $1.20 per share surpassed the Zacks Consensus Estimate of $1.17. However, TFC’s bottom line declined 22.6% from the prior-year quarter.
TFC’s results were aided by average loan growth and higher rates, which drove NII. However, lower non-interest income and a rise in provisions were the major headwinds.
Citizens Financial Group (CFG - Free Report) reported second-quarter 2022 underlying earnings per share of $1.14, surpassing the Zacks Consensus Estimate of $1.02. However, the bottom line fell 22% from the year-ago quarter.
CFG’s results reflect NII growth on the rise in loan balances. Further, strong balance sheet growth, backed by an improving economy, was a tailwind. Citizens Financial closed the Investors Bancorp acquisition on Apr 6, 2022. However, a rise in expenses was a spoilsport.