HBAN - Earnings call transcript Q1 2018 | Huntington Bancshares Incorporated

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Operator

Greetings, and welcome to the Huntington Bancshares’ First Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation [Operator Instructions].

As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Investor of Director Muth, Relations. Mark Thank you.

begin. may You

Mark Muth

of Relations Director Thank about hour for Relations be call can the is close Muth, www.huntington.com. and from Web slides as you, Welcome. I’m reviewing a Investor on found be Melissa. being of be of Huntington. This one call. the will our site, Investor we Mark section will Copies available recorded the of starting rebroadcast the

Mac in and Chief Steinour, Officer, call. Chairman, portion President Dan presenters our Financial of Our are Neumeyer, CEO Officer. today Steve will and also the today’s McCullough, Chief Credit be participating Q&A

As noted statements. differ time materially. subject cause to to statements period, Such are to Q&A on based uncertainties, obligation update actual such changes, on results risks and the are and assumptions Slide which this today’s including information may We contain at statements. discussion, will no forward-looking and assume X, available

and For the risks a XX-K, refer material recent X-K most including XX-Q complete and with Forms and to filings. slides discussion the our SEC, of uncertainties, please filed

to Now it over Steve. I’m turning

Steve Steinour

And Mark. you Thanks the for to call today. joining thank everyone

net quarter equity ago commercial quarter. entered fourth Return and by growth XX.X%. with driven always, Average was return quarter the from appreciate common consumer first increased on XX% loans annualized had and momentum. tangible and was in common and per $XXX of the As XXXX, equity disciplined a $X.XX, on loans. X% versus and both we We solid We support. up XX% million interest your reported earnings income of XXXX share year broad-based

growth The many continues XX%, deal. ratio driven to our perform with FirstMerit a by the realized and of fronts of X% execution result as efficiency pleased on focused We’re and economics revenue franchise year-over-year well quarter discipline. expense the of first

our on returns. high quartile capital creating outlined allocate and with cycle We Slide trough the shareholder vision regional taking Huntington strategies performing returns appropriate earning we’re developed top X, adequate a a prudently previously and we to bank ensure As of delivering risk.

investments long-term our growth. customer to We experience also drive particularly around in businesses, meaningful to continued organic make

planning pleased these by mind with non-GAAP set created. advantages a adjusted of as very goals goals in approved illustrates And goals, were a the These strategic with process. sustainable to with expect part year and basis were achieve reported competitive We’re of on five year the fall horizon our we originally Board we're long-term Slide this time which fully and XXXX the our we've in GAAP how financial X both an positioned basis.

ratio goal long efficiency end was our result the near our expense the remain term Charge-offs quarter first and expectation. below integration our of growth. our on long-term FirstMerit, of low focus Now successful discipline revenue as of a

these with performance that of metrics. our considerable these when goals. first our since the like to take regional you drive XXXX we Huntington We're And XX.X% I’d in Our improvement of top positions Huntington peer common quarter opportunity tangible our performance on this return all performing to these financial remind working as forward. introduced are Also, against will pleased leading and bank. results strategies demonstrate a equity continue to

first the quarter XX.X% in was ratio our common tangible return our and So was efficiency of XXXX, XX.X%. on

in over point peer disciplined our X,XXX improvement than through the efficiency we’ve Huntington ROTCE middle XXX the driving leading the almost execution greater in financial the from basis basis a and ratio years, alone. So to elevated of performance, group improvement peer point

Indianapolis noted in near economic the our historical nation footprint our rates in economic And optimistic as with indices an Philadelphia operating rates, Unemployment XXXX, across state several labor the point Slide below turn economic and including proven to We our X in are eight mid-XXXX. Let's months. of outlook competitive has expected for to Columbus, markets most are as for meaningful the rest discuss national on whole. as remain recovery labor previously, the the footprint. states grow outperformed across that environment Rapids, remain environment markets. given the be of a expectations which are our over indicator market our the local strong and nation now XXXX majority in review shortages six Fed’s of we've Four than to and our has in to during economies footprint footprint such the lows. well of current our leading states a Grand to expected began where faster the economic averages. see The activity significantly footprint see states, toward acceleration metro next Ohio, favorable unemployment we

business of result investment continued expansion. reform, and tax a federal expect we As

We their expenditure. is important It's remember reinvest focus are capital that are increased our seeing to growth. benefits into businesses these to held businesses privately likely primarily and an tax commercial fund companies to

can Jobs New get spread earning spot number and talk wide nations our optimism. to aside confirm XXXX eight XX is qualified new out eight placed business Selection in support five total Governor’s optimism. leading and But top As of two owners, the These for with for indicators of level five placed created our Capital solid -- of this pipelines Cup all our a And loan importantly, rankings projects Site confirm and footprints. the expectations, the of as different states as Investments across remain states the in I our overall. we I and in Magazine’s Ohio

supply anything In back labor we’re held fact, if by being shortages.

consequence, to clearly that in seeing working businesses pipelines We’re on next construction also now inflation, as labor of activity. starting they other we’re businesses but impacts are just enough year's get and seeing see can't a And where labor. we’re

in two going about of good examples. businesses, construction into And good feeling stress our on looking are are we’re very backlogs next. this many manufacturing, So and whole year the

trends so growth our not will we And optimistic linear, with outlook. full be likely remain while the year

purposes. of X% full Full $XXX the year million to the be average to auto you internal expected in guidance expect X% to year for is know growth back deposit the growth year. the inclusive in X% We loan X%, forecasts and range average securitization half of loan and of

consistent assume it interest to again us a with approach likely rate few it approach take changes the last additional continue And process. this well over act to appears might no conservative year, more We fed in that served while the years. forecasting our our

of We X%. expect revenue full year X% growth to

be modestly projecting be the are the We core NIM GAAP in NIM full to year to for and flat up the XXXX.

X% from expense the to are side, expecting expense $X.X non-interest XXXX a billion. decrease of the On GAAP X% we

improvement XX.X% for to in the charge-offs include are consecutive well We The goal XX% as our a of as range basis federal anticipate long-term range net sixth of remain expectation expectations XX%, Our year. our targeting we to fully ratio efficiency will reform. operating reflective the rate leverage the importantly, the is range. below effective And XX to points. XX we’ve positive to for tax XX.X% to lowered tax

began a beyond looking recently process. We XXXX. planning three-year new Now strategic

plan for Our three, financial are line momentum, XXXX one; expected advance model this performance the of strategic incorporating revenue our To evolution and areas Company's planning business pass-through strategic significantly process, disruption. positioning. capital focus two, the initial and competitive optimization; continue number growth; top

goals to in previously, later for stated be position process be long-term planning we a to the outcome and communicate will an we the those in strategic As financial of the new expect year. important Company,

So for the financials. Mac it Mac? an overview with of that, let to me now over turn

Mac McCullough

the X quarter. provides Slide Thanks of highlights the first Steve.

quarter. quarter, Return good over assets a We we three up Huntington per the year common earnings had the common equity share our there year As XX% XX% on significant a to Steve ago to $X.XX The peers. share first distinguish common was on for clean and mentioned, among no were on regional all included also first reported significant the believe bank X.XX%, was these We as metrics per ago return quarter return $X.XX but integration. quarter of due quarter, of reduction items equity FirstMerit XX.X%. was related items. tangible

XX.X%. the book for efficiency per sequentially and increased value Our share ratio X% X% Tangible was year-over-year. quarter

X average XXXX This per CCAR shares at million During the common of we plan. $XXX buyback representing repurchased authorization of cost $XX first million quarter, an a $XX.XX under stock, the completed share. million

payment revenue income and average and X. unchanged. banking and assets lower trust the reduction to year with year-over-year gains card the a increases X% income equipment X% net quarter. the interest income X% Non-interest processing fees, ago was revenue investment to Slide market and margin interest quarter. year-over-year from the mortgage due year by ago offset up sale to management an sale on earning finance partially capital primarily in Turning was increased in a in while related up fees, in loan of increase loans, was Total the of Net X%

these timing sales fee mortgage of year-over-year, both mortgage compression in resulted secondary year-over-year declines in and in and were originations market banking higher loans SBA the SBA categories. spreads in While

of related with FirstMerit below on $XXX track efficiency an enhancement revenue deliver XXXX opportunities revenue over in XX%. to ratio remain million

noted As our ago related we guidance. decreased no million expensed in quarter. significant items projections are Non-interest expensed to were XX% year-over-year year stated the significant items $XX in before, due integration entirely to incentives combined of by with the first second quarter. the driven quarter, up to compensation flat million prior versus timing primarily associated which higher that quarter. It could and should expense, higher long-term current XXXX the of Expenses to FirstMerit marketing quarter expenses versus seasonally in included these be compared historically $XX the in of are expense add

with timing non-interest full just for are guidance, Steve mentioned differences, as per comfortable year these including full estimate. we expense expectations remain earlier, analyst However, year and

pack income For to please refer statement analyst a release. and at closer the look details, the press

billion and XXXX. purchase average Turning loans and loans our in to loans to X% loans market middle linked earning in disciplined to were in On average former in specifically XXXX, and growth mortgage for direct quarter. to $X.X increase mortgages X. Average from prior strong increased construction with a from across the CRE XX% growth over or in year. increased quarter, have X% RV new multi-family, the X.XX% increase money loans reflected with market Average C&I Average X.XX% Chicago. ongoing lending, year-over-year year-over-year tightened auto ensure our the XX% our X% broad-based instruments was Average result production. yields primarily in centered quarter and appropriate Average first aggregate increase risk securities retail remain two grew average originations Originations commercial year-over-year, year-over-year. the specialty, capital. were as in and assets estate we X% quarter into XX geographies, increase on low flat Slide in and real continued returns on The past and increased securities. up X% the appetite conservatively first our by quarter marine with driven of for loans in the the of of of banking corporate first C&I benefit residential demand success leases X% expansion auto in banking. totaled up consistent business Average loan well reflecting commercial our banking. increase footprint, of middle an increased basis, as investment particularly FirstMerit consistent year-over-year, our average of annualized increased loans year-over-year new in the XX% as segment. X% states reflecting a Average This moderate as

sold jumbo we mortgage retained and mortgage agency typical, the As qualified production specialty mortgages quarter the products. and in

average Turning products first market yielding from to the of In migration CDs the increase right higher customer deposit see the total in including began money X% we chart quarter, such and year-ago attention core to accounts. as the quarter, deposits Average on slide. side into X% increased deposits.

X. to Moving Slide

for margin the the both from Slide accounting prior quarter accretion provides all accretion first the more scheduled interest in year appendix basis regarding ago quarter XXXX in purchase XX offset and NIM XX prior quarter, of to was down purchase compared has for quarter. net for After core FirstMerit adjusting the XXX XX basis to the year was accounting points Purchase linked and and Our the the the over NIM the in in XXXX. X quarter, of XXX the net and in the points margin purchase the accretion. basis ago in accounting contributed in from past X.XX% unchanged quarter. points year interest than Growth impact first accounting in core XXXX. XXX quarters, information in quarter benefit first

as points. XX consumer up contained Our points basis cost up and well remained commercial core were were X year-over-year deposits basis deposits core deposit

better for outlook and hikes deposits in and increasing rates the increased competition, bank grow locked cost core wholesale economics fixed-rate term the to continued the retain selectively With of to providing and relationships, for we deposit funding. market rate relative

loan points. On On loan yields basis loan points yields the side, earnings basis, increased basis points. basis while commercial yields while XX a increased asset points quarter our XX increased commercial consumer XX linked consumer increased year-over-year, yields X loan basis

Moving XX. Slide to

roughly remains of low with to-date so XXXX, reported deposit through of quarter the that the our first far. line cycle and average have at XX% peers beta Our in

seeing you told various across as last competition footprint. we our As product quarter, and conduct competitors pricing increased we are tests deposit

betas As a cost. and increase in result, this both continued we year, mix driven deposit anticipate a by

Assuming XXXX, from illustrates incremental year current of ratios. XXXX two proportion our the our of of deposit additional rate growth capital cost higher for increases beta coming higher approximately calendar Slide including markets money XX% of assumes forecast CDs. strength in in with a products, XX and the continued deposit

include million common Common at a ended power ratios. our preferred of to equity equity common quarterly quarter the that up ratio and the time. the Series future first capital attractively cost During Tier converted issued X.XX%, equity, our quarter rate first Series higher to management expense XX the XXX points the any preferred capital partial Therefore, $XX quarter we XX total to above preferred of operating earnings XX% XX.XX% $XX the dividend equity our approximately points timing. be will on run CET that into issuance million for risk discipline A dividend. year-over-year priced X the basis We over quarters E million quarter higher $X quarter, of guideline. E than million and support XXX or dividend E preferred high Note will generation ended that shares, believe or account the subsequently Series improving expense million and or dividend due the new basis second year-over-year. payout Series X% X Tangible at approximately dividend

of we stated, buybacks. priorities support the else, as previously preferred XX%. and organic CCAR, respect of our unique opportunity growth, to have pushed a have this transactions, operating our including first high-end year’s to With a two second X% CET of capital the dividend, result third we are As above guideline which the X everything

is the Moving financial Slide quarter, loan underwriting to strong quarter our expense the portfolio quality continue core credit annualized to loans into continued basis migration We provision of low aggregate provision in FirstMerit basis to compared one XX and remain to points quarter. prior quarter and commercial portfolio. XX. leases, Net well the target by represent disciplined our Credit originated the risk strong charge-offs The relationship. appetite. in down acquired to of reflect again our in reflected to of XX moderate originations, of approach as our net as charge-offs management the had the this million And Huntington’s quarter. remains from quarter below net Net ago of XX risk large an CRE booked year and charge-offs long-term were average driven recoveries one million. results points points. X Consistent of prudent principles. level first of $XX $XX which basis expense the the

package and loans is the allowance there points basis and to additional a for by as lease of was increased The granularity coverage on XXX%. analyst slides. portfolio in the percentage charge-offs loan X in non-accrual X.XX%, of usual, losses As loans linked-quarter

X.XX%. Turning $XX X.XX% XX. points X NPA points. million linked-quarter. X% Non-performing to ratio Slide from increased asset basis to criticized to ratio X assets points XX increased The sequentially increased or basis The basis

asset delinquencies lows increased the quality volatility and declined NPA low plus points. inflows quarterly given XX-day metrics Our is loans. level X some X cyclical problem expected points. of basis basis adequate Overall, remain

pre-provision well core level capital top organic generation loan our The of our position revenue represents well-balanced top capital on our growth of XX. capital shareholder We quadrant strong the the left of positions return provide highlight through-the-cycle shareholders, to and of a strategies. execute our execution the us portfolios. and strategy to focused priorities. deposit with chart highlights our fund right continued to net Slide our in as result growth mix and The returns. strong The to on Turning pretax, graph consistent Huntington’s consistent

the the enterprise moderate were of industry We operate We and The instant believe cycle. a sheet our and are serve illustrate strong results, an that risk with commercial our and bank, which risk aggregate to discipline management to appetite. and comparison. pleased quarterly well the CCAR us the over consumer provide within our will low both DFAST XXXX balance diversification results

test DFAST results are Our left. stress the highlighted in bottom

right Finally, the bottom demonstrates Huntington’s capital strong position.

to the we Q&A. return on the back let As key for XX, Slide messages over to turn Mark me presentation

Mark Muth

add to the And that a that will person one related peers, We into ask now courtesy each ask We or he additional person as you. follow-up. Thank if can questions. she only take question questions, themselves then has one your queue. and back

Operator

this [Operator Thank be we’ll Instructions]. At session time, question-and-answer conducting you. a

first Our Sandler of line Scott O’Neill your proceed Siefers question the comes Please question. and with with from Partners.

Scott Siefers

you, Steve your for conservative I about going outlook. on no just accommodative the maybe come outlook looks that than for have talk outlook question, wanted in it’s is always First to extraordinarily It guys more increases. rate you in to like embedded the rate been

a sense of kind in up end So found becoming that money. difference

guess at deposit or being another top were costs, hike be level? similarly If may drop to I you bottom you to what market we the aggressive cetera. the to plan? thinking two, do get accelerating think even share, top is or be at your allow reinvesting more some if maybe the What about et level So line a taking would on that

Steve Steinour

Pleased and good quarter. the this the of with shared we closed we We that’s the with with, one scenarios plan Mac increases, into us conducive quarter think that Scott, pipelines betas. budget, we around run way. come in to do as We growing but we on second is terms call a obviously environment deposit for no it. rate meaningful first organically in

that look grow We SBA nature good and to to continue and in that growth before. side we’ve the organic had what prospectively we quarter a activity, on as on than more And of the lot construct focused the expect we’re very for both had fee would continue. of up to can seeing side, lump we So deposit example, construction do a well. front we ended but the

So of move the this more by that as Anything is rate increases. capital to with we’ll it’s in of a more be Mac? belief fashion, investment. sign agile benefit we There forward conservative add, little operating a want you a

Mac McCullough

a in XX about basis. is rates $XX the is annual annual on an margin Scott way million in increase think to basis point on about basis it an

So obviously of assumptions from and lot And course lapping yield to what competition a has been that deposit conducive betas of says around marketplace. not expecting we're that in the the the either. curve

cautious at aim we So do bit time, growing deposit core X%, the deposits. on be never but do great from year-over-year and through about we’ve as we’re We to at We had increasing continue this. little move we focused rates, there will a think opportunities growth that. same core to

Scott Siefers

And little anticipated? moves pan let's a of getting that opportunity I forecasting how than was to given get Just likely guys have you would drop straight it, versus just million, an more terms say, the that you spend rate of use guidance? to at maybe to the in guess what the the bottom you’re let what disconnect as that in are I you portion out between $XX line some you

Steve Steinour

Scott, significant we into XXXX budget investment built already. the have

drop rate from at think bottom we to might increase customer opportunistic a line, we’ll digital the will colleagues. that of happen I experience particular investment look front in think that to And clearly, the in expect about we on as be the our and but opportunities would majority selectively So and would perspective. what

Scott Siefers

it’s one mean to your a just but it you just know rate guys little I curious thoughts. huge, was tax follow-up. lapping improve not the then just I bit. And maybe What that guide

Steve Steinour

is of down would terms is really to you range. matter are able achieve be like ranges actually meaningful that the being fact just the it came XX% to we’d fall to fine. of within What give Scott the And in and

consider to us we XX.X% to that’s was forward. why going felt So range a better XX.X% for

Operator

you. Thank

question. Our ISI. next John Pancari line with of proceed question with from your the Please comes Evercore

Sam Ross

to is a fact do your question fact appreciate I Sam in? guys just the year ROTC about on are John the actually for given the came your is currently guidance. plan. wondering XXXX in. I Ross for operate appropriate where guys morning. you XQ What for three ROTC an this just thinking level This you reviewing I had you am guys

Mac McCullough

that through the we’re would in I going the long-term strategic I So in range. process to be expect plan. mean, of

all in appetite those going good to with moderate with and an keep later important to to our a estimation. our aggregate going an is low metrics. within to appetite, ROTCE risk come for We’re It's really that XX.X% this in year out risk we're pretty new mind to operate aggregate moderate low expectations

expect process wouldn’t we’ll So the significant let go I know see to through you that that but you're within year. and this going going change strategic later we’ll goal forward, planning

Sam Ross

And then just sheet. balance the looking at

there anything be little bit I are terms was the know the In products. higher of seasonality, a of guys in that shift interest guys touched I up you on just you maybe mix non-interest prepared if remarks decline that color I non-interest deposits, sizeable more you bearing your think would deposits, in bearing can a provide Thanks. seeing helpful. wondering about am into on it rate outside more

Mac McCullough

seeing commercial happening in bearing, expect much And in I balances our sensitive more the in I which being what’s this seeing them we're you're as move environment. interest rate into happening, non-interest you in bearing particular customers of Sam, would from what's environment. think terms think

on additional factor an of be top would that seasonality. So

Sam Ross

you terms think continue or would what of we that into And that? in dynamic to do expect XXXX about

Mac McCullough

ask customers point, some mix slowdown we the some from think movement the move But continued should shift want other. I to of that for complete we’re make going probably increase, rates rates. to At have category forward. one to they to Clearly, as sharing they the as commercial

Operator

you. Thank

comes proceed your next Please Usdin of questions. with the from Ken Jefferies. question Our line with

Unidentified Analyst

this for growth and about the quarter. thinking going these into sequential on This forward? Do loan then Josh funding potential how wholesale to actually deposits, you’re remix large you funding there's is Average increase sources Ken. wholesale a think showed

Mac McCullough

do do So provide about we wholesale or to what When from funding. overnight category. rate rate think across cost wholesale on what to the a we of pricing, deposit overnight particularly actively we are commercial funding relative need perspective we we about the about think what them down, to thinking to funding bring would growth customer deposit we

that I us we see to opportunity expect down commercial to be the off about deposits. going the it an the when trade think would time, that continue you’re So and come rate as we for improvement move over just should and

showing So I think if growth. you And then that’d on funding. take a look at this forward, in are the the comments, period, down deposit already core overnight I’ve going in in we particular you’ll my significantly see mentioned focused Like in be in some CD success X% a I money opportunities with grew and as were think in We've had at the relative lot is products to deposits good well. of which core market industry. we we pretty a peers our looking year-over-year,

fund think be forward. we’re primary I to core So deposit way going the going funding will

Unidentified Analyst

portfolios. you your of from benefit that peers the speak they’re to rollover you're in to Could their a seeing pretty swap this? regards heard from we've just seeing of some And what

Mac McCullough

So swaps this off our at point, asset at all this are point. of

any asset swaps we but swaps out does have of taken answers action not the that the represent there first assets us, as some Josh the no an of for We rolled yet. opportunity have time, We The on. last have and that evaluate quarter. inside question. in your debt swap

Unidentified Analyst

as portfolio liability the new spreads swap versus over so I spreads, better off rolls. was side actually money rolling to rolling more that the what's referring

Mac McCullough

there. in us. do probably scheme of opportunities don’t it for the have large I Clearly, would think we things be

Operator

comes question J.P. proceed the of Alexopoulos your Please Morgan. Steven with next Our with from line question.

Steven Alexopoulos

I the want to growth. loan on first start

to C&I you’re really in have strength the guys And footprint. optimistic the confidence, the Steve, in of very regard quarter. solid economic growth You loan business

As digit you that put quarter look at it? single is the or up on just the an continue in this second could anomaly really high average the loans way you the look pipeline, quarter at growth you

Steve Steinour

The pipeline activity that the year. in in a into strong. had the very late with year was We we surge came

with very, carryover very good the So first was pipeline. quarter

the As across we have also a come sound our into of segments we second quarter, all all businesses. the pipeline

underlying sense an have participate economic with is related quite investments customers seeing to more our than Steven. there activity we few that year. carry a so through we’re are the forward stage to we years in expect that clearly able CapEx at We this And would in of

Steven Alexopoulos

mean quarter? is the in that the So as line quarter utilization I customers the so the strong in why spending, increase your average was

Dan Neumeyer

was benefit line really from. all where so good. the didn't seen Our out has off think coming just of much. more an market is a I Core evening tick, utilization do that middle that of been growth we’ve

think saw we corporate the the impact last we in are not I large seeing year space.

we’re think I as actually [indiscernible] and well. the bit some then there of seeing a of pickup a

So Steve it’s good remains broad strong. based the contribution. pipeline as And said, fairly

Steven Alexopoulos

on other technology customer to year? want how does my and year the question, spend then for the the doing on experience last And side. What that initiatives Thanks. follow-up to this I expected on compared commentary around digital and what you’re

Mac McCullough

also disclose up significantly to that development. is spend I we're don't technology. up it’s technology we would investing And year-over-year in on the Steven, the of what digital tell that in that portion terms say allocates you of year-over-year. will I

Steven Alexopoulos

is is said? what year-over-year, you significantly that up It

Mac McCullough

Yes.

Operator

Thank you.

from with Our proceed your Matt the question questions. line comes Deutsche Bank. of next Please with O'Connor

Ricky Dodds

is actually just reserve This large We’ve Dodds hear I a releases going or number a wanted Ricky have thoughts forward. for Matt. is peers there quarter. this your of to your seen build on

if just loan for stronger Just could wondering color a FirstMerit growth. renewals provide more and there? some color you Huntington But you wondering you if some going provide little have forward, have know I you

Steve Steinour

the lessening clearly large of a reserve, is the that’s so Well, that growth additional piece it. quarter. And there still have loan although that's in The quarter come did we with FirstMerit then is going to both the as impact provision performance. in that migration we’ve and said of build. level But and credit also to to credit loan modest the as growth with non-accrual normalizing contributed time, expect over moderate some we the more side each loans

Although, we to be long expect the net below term charge-offs to our continue expectation.

said, it a reserve the modest be low and it’s build will back up slow we’ve in but as So ramp.

Ricky Dodds

loan you provide verticals, on maybe on follow-up and wondering the specific you if colors growth, was you or maybe market. was our just there. it then add called core outperforming if I guys just wondering any any middle a geographies, and could out particularly strong And industries color

Steve Steinour

think But continues demand I manufacturing. have areas that particular we're in strong many manufacturing region, our in rates, involved Chicago are we to market in Well, throughout obviously seeing there. heavy our is positive et a that say be a I have diversified. that industries strong outlook market looking wholesale, growth say at, really I manufacturing would would and most more we're far would cetera.

customers from most our all so good of And pretty industries. across reads really

Operator

you. Thank

Our line Mosby of with Vining next proceed question comes with Please from your question. Marty Sparks. the

Marty Mosby

revenue ask, I I gains mortgage you the the sheet sense sale was had optimization wanted two out banking. of I curious only and know a categories, coming -- loan in merger. of weakness to some side was balance in really the on

So I or back we're to to as $XX any to trying was banking pricing then the figure And loan fee down seen of sale. well was in quarter item? now to have pick originations $X million is in that the as you $XX million million for and million up out $XX improvement mortgage that second seasonal, line

Mac McCullough

lot of first question, I the that would So tell of in the sale this timing on quarter. SBA a loan in you

year-over-year. So up originations are actually

progress continued particularly So and into we there, Wisconsin. Chicago move as good

timing quarter as you that are at those issue. So issue I have first most timing we a large again a part. the this last really quarter. a first so did as know, contributed the equipment lumpy, that the sale view on And is year, In of

of core Chicago a were lot I again markets, origination in side. stronger up origination you And would spreads come the the tell and are mortgage expansion the some getting And the pickup FirstMerit FirstMerit favorable of has from but primarily On the on side, also volumes into Wisconsin. down.

sale origination So what down we’re we’re seeing impacted from of pleased the But again, being perspective. the fee with that’s line. spread

Marty Mosby

accounting then accretion you been And your the views those some purchase having us, is market just of looking that forced is things one but how impacts when upon at earnings. has start

but that expansion really as have headwind feeling interest seems look accretion up year pace you guidance, that got to but back, to in cut whatever then slows Do and margin grown actually half, like we accounting net relative account pick you’re the it would that growth flat comes Now loss balance your first to -- purchase accretion? core comfortable the in margin with some might you actually very the held income. and you begin down sheet feel like a your

Steve Steinour

I few what margin. am with increased quarter per that well. of are and continue core first to the we seeing expect very we a We’ve quarter the in pleased XXXX XXXX, as in points basis since

both the bit better, as to disciplined So in might take burn accounting the depends fund It goes a Could on reported and to on pricing is what very giving to just the that. be. the pricing purchase the accounting. purchase we really it really we’re And how But pleased through is sheet. right us side we runoff the where allowed deposit continue and now, think it come going asset with flat that’s little off balance I to margin guidance to accretion. it be liability it’s do

Marty Mosby

at look fact here, market are securities the your the you in if I that highlighted rates thing, higher than core loans. both Is last you the think like just but still just is flat funds then fed that the And -- margin portfolio, improving. from and

So with right reasonable is those where up stagnant now a at rates possible yields outcome? rounding very and they’re just

Steve Steinour

with I Yes, agree that. would

going new asset to even think portfolio. at the at side have higher we’re we’re money disciplined portfolio. the higher what’s balance As impact still how some there. on in money in we we’re to are again, rates they swimming that sheet. environment, accounting purchase see look We about the But in pricing, And flat new of very continue a through generally than rates, in come the

Operator

next Please question. with your question Wedbush line with Securities. from of proceed Winter Peter comes Our the

Peter Winter

wondering talked so the expense in seasonal guys therefore, I’m in second should be quarter. the in the efficiency steady just the with second that about seasonal increase ratio offset increase side at and least would on the revenue You be maybe quarter? a

Mac McCullough

course, then increase because seasonal see typically compensation, increase just well equity quarter. higher quarter. primarily long-term has the in marketing, The expense So typically, as with fourth as timing we in do the the declines and two quarters the and seasonal second do disconnected in is a which third of second revenue the to in are in

in to if in in revenue ratio side wouldn’t the seasonality that, on level, same me the it the based do quarter. So stayed because efficiency second see we up surprise the

Peter Winter

was little in separate bottom. And But give but us uptick question, the the quarter? you assets. it’s volatility understand NPAs And there that a just non-performing on then I at minor there’s second this could color of bit increase in

Dan Neumeyer

time-to-time had driven, industries. quarter credits move any you’re at down industry that the we in not So couple we NPAs in can credits of from three unrelated in levels very when have of low

about. credits. three to that we’re So idiosyncratic those was It no individual events, trends really concerned overly particularly

Operator

Thank you.

proceed from of Our Please next Brock with UBS. the question with question. your Vandervliet line comes

Brock Vandervliet

It being XX% side? caution noted to with like I driving category back deposit the numbers the change deposit commentary. is the be not on seeing on at in some potential this on moment. that -- you just that’s that’s changing Are the want in may the betas. beta conservative clearly would comment visible commercial circle You seem you of just

Mac McCullough

XXXX. XX% any reference rate the be to in So increases would

that be So conservative But on we focused core little growing might again, as deposits. it. very think we’re about a

a a If see and pricing of our very lots We and testing take rational. who from with, compete region perspective. look there think we you and is happening at it’s we product what’s across

it’s to given to think We’re good doing same us assumption desire clearly, just the to But I and XXXX for continue grow. us think environment for the thing. about a for the

Brock Vandervliet

very new late we that growing the How that’s is that and to rapidly you. become Clearly, a as And RV. are separately likely given initiative for marine large been in cycle?

Dan Neumeyer

for the quality prime the originating feel credit we of do because very really there. super that opportunity borrowers in the range. comfortable And we’re Well, growth is we out see

there that we’ve these for liquidity, a say the RVs is universe in The both robust So I price there. not in expanded deals XX big as fact are FICOs bid at underwritten. folks given plus with But our out individually think competition all originating demonstrative with as markets, is indirect we’re auto.

is So quality assets. potential high there there for out that we believe

concentration a limit established that that have serve run of we that We further. us have so plenty by think limit. develop our we moderated way will business growth well But will we as be

Operator

Jon Please line Capital Markets. Our next question. comes proceed RBC with of Arfstromwith from question the your

Jon Arfstrom

hate up up. you're forward saying you’re Brock’s back go I beta in deposit all But performing the here, just question, basically, that else point everybody to saying. to again. what going Is to following this on pressure right? That's But from step is the like mid-teens. you’re Just at you expect

Mac McCullough

think and Again, the perspective. going be forecast. conservative manage outlook Jon, revenue understand to way make building about line. rate like into determine expense We investments from the is thinking be. from a to we we that how the what’s we’re And what want I to we’re like to that the environment we then

So the but it of the and selling there from us terms in out job. just their doing web keeps colleagues segments everyday business

think the I So exactly that’s we way stated that.

Jon Arfstrom

revenue prior It at the growth the margin the on guidance get a the world we March increase. higher? mac the can same question is couple as X% would that the the to of Related view quarter get drift but is X% did more

Mac McCullough

$XX revenue. XX as keep about mean I earlier, basis is can. basis. the point I that year That’s it mind in million in think growth mentioned increase X.X% I worth Yes, full in

a to I March in change as increase But to expected, cause the expect guidance in X% X%. our would higher. rising us environment, anything do might we margin point increases basis rate get XX clearly move to the of revenue be wouldn’t the So if to

Jon Arfstrom

a just you more. Steve, expect to I it made can on And squeeze one comment don't linear. loan if be growth, in then you

to there Just trying any on the that? is nuance or point you're make comment

Steve Steinour

strong just see outlook for the we abundant good are And year, and to full bit we’ve cautious with across in while marketplace. we all have quarter. communicated trying a first is -- be the that with the in a pipelines we just products the No, second throughout really quarter the context optimism

a So little anything maybe upside. there if

Operator

[Operator from comes proceed question. your question Inc. Please Instructions] next with the McEvoy line with of Terry Our Stephens

Terry McEvoy

The higher auto year. in basis down tweaks XXXX. your the and there yields changed trending down? in model the last on that throughout and yields consumer quarter-over-quarter, model thoughts any points what earlier coming X scoring first were after quarter are about I credit early you that’s to made believe Were

Steve Steinour

No Terry, probably it’s tweaks accounting and related. purchase

and book driving. on purchase what’s entries So accounting we’re from that likely seeing that’s run-off

Terry McEvoy

peer And solid then on competition. as back growth scaled here growth your this banks or on, for the in it, Dan. going forward thoughts quarter? call banks growth CRE a maybe few national of just are have based follow-up, question pretty A first year What incremental expectations on market your after

Dan Neumeyer

because move the can needle. the CRE I projects bit various mean, lumpy, the can be a

exposure cautious on But originate. pretty continuing we’ve core recently, careful So to customers. been and been we we've multi-family sure noted are in making But have that lessened to retail. we construction as our continuing our support before we’re

pricing. flow, are we good and We’re seeing choosing deal that products those can or still and get projects are -- adequate where we structure reasonable

we’ll in as CRE space. usual So the continue business

Operator

closing reached Thank I of the like call you. the Steinour have Ladies and gentlemen, question-and-answer we would back for session. our to comments. Steve end to turn

Steve Steinour

year, very very about We good obviously where about going And we first are. good you results we're confident in We thank much. our So produce quarter. the forward. feel

there's Our performance, quartile management across building with shareholder top disciplined our We're at we're priority value certainly is year. throughout opportunity with growing financial continuing. think risk more our maintaining long-term core and strategies. we businesses and top hand, And the that's execution strong

to have of performance opportunities the feel So a we businesses. upside and like position number in but better do

So our in our and want performance. are like there's to management, sustained, largest board, finally, high appropriately colleagues of to level us a focused colleagues reminder the seventh Collectively, that and I'd shareholder on the include of a the shareholders. long-term and all between are alignment emphasize driving Huntington Board and

So have appreciate day. joining And us thanks We a great today. you Huntington. for in your interest

Operator

[Call concludes Thank today’s you. abruptly]. ended This

Huntington Bancshares (HBAN) 24 Apr 182018 Q1 Earnings call transcript