Earnings call transcript Q2 2023

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Operator

Greetings and welcome to the Huntington Bancshares Second Quarter 2023 Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Tim Sedabres, Director of Investor Relations for Huntington Bancshares. Thank you.

You may begin.

Tim Sedabres

operator. you, Thank good and Welcome, morning. everyone Copies of can website, be today we found slides www.huntington.com. in our will be of the reviewing section the Investor Relations

As the close and the call. being available a about of call will starting from replay be recorded hour X reminder, this a is

Our are join will us Chairman, the Q&A. Steve President Zach CEO; and Officer, presenters Chief Chief Financial Credit today Wasserman, Officer. Steinour, and Rich Pohle, for

Relations are include which disclaimer forward-looking of available on our Investor information documents Earnings and the statements section website. our non-GAAP

me that, Steve. With it now let turn over to

Steve Steinour

for Tim. the announce everyone Thanks, which morning, and Good quarter second today. welcome. Zach to Thank pleased you detail later. joining We're will results call our

us to customers quarter. colleagues and second both grounded continues approach in our in and well the be Our served to our purpose

demonstrated people's serve. help colleagues lives communities strengthen that and Our make better, the we thrive businesses we again

are Slide highlight to X; on Now key these to want messages today. we the

deposit to deposit has the benefit Huntington fueled continued including to growth a deepen distinguished relationships. has franchise customer quarter. this and bank acquire year, which continues This First, strategy over our from primary

drove to again of range once We X by on common row. higher build in ratios having end increased we Second, for equity Tier quarters to track remain the a with high CETX X capital year-end. our

quality through managing our moderate dynamically to aggregate rate which the company appetite. we within operate we is interest hallmark are credit is Third, of environment. and low a to performing very continue well the Fourth, risk

delivering robust position. liquidity pricing We are a maintaining disciplined deposit growth maintaining while and deposit

executing our remain strategy. on Finally, we intently focused

sustained with revenue use will into and continue XXXX. to on remains sustainable long-term to outlook. drive base we Operation investing efficiencies outsourcing of we proactively to and We accelerate expense business are in process to our growth drive the manage business increase the the align track revenue

our this base us which be granular This on position transformed deposit X; by our leading we includes and in is This and last foundation This during times our of announced talent Banking these a past commercial foundation will expand like Slide puts great nimble month we over decade, today. Moving the to Huntington. to and franchises. in high-quality consumer, these. was to seasonal business hiring able strong Huntington. strength is finance growth great fund place, business With a and the we've on supported of our welcome team add we're banking can example. opportunities to The map business road pleased and colleagues to Commercial be arise that

maintain as even are growth. capital We building loan we

level the capital. and new the are on on generate judicious the to return growth optimizing loan remaining carry highest for balance of in We loans sheet we order

peer in increasing X.XX% a ratio As the to quarter ratios ratio second result, median. the capital X.XX%. with above CETX adjusted is CETX our Further, expanded our

approach management credit for eighth disciplined Our net with low nonperforming to consecutive charge-offs quality strong drives and ratio the decreasing the our risk quarter. asset

Power row team awarded execution record focus Mobile long across value our the in J.D. Award winning including and management strong a being with and franchise, This recognized ranking. operators the disciplined Our SBA shareholders. year for a delivering of has maintaining number has the for fifth one on a been track

performance. watching supports managing diligent our we which sustained well Economic That solid longer are dynamic the growth interest anticipating rates are relatively up scenario holding playing outlook, in be credit loan a environment actively environment; macro higher in the we closely and activity said, it our time. some are the for out Regarding remains loan portfolio. been and for to had that appears footprint

and regulatory closely other to We are capital to through monitoring Further, adjustments well we the of also prepared potential requirements. range scenarios. operate potential a are

expected. the requirements broadly what appear new thus in we evaluating line We with proposals the potential had are and far,

over and to positioned well impacts. expediently meaningful portion offset time, address these them the are We a manage of potential through changes,

finally, Officer, to during We've been upcoming colleagues want expertise and Chief announced years share I Rich that retirement greatly executive a nearly Zach, his Pohle, hand Credit with and our we of XXXX. to end benefited has of partner And and before Huntington. effective over it at our team. He's leader his leadership great a me XX for from Rich's the the great

XX-plus We year. and Deputy a Commercial Rich Senior Officer, years this a pleased Credit Executive Brendan Brendan XXXX the the at bank. have joined the bench for large across credit Credit a regional strong all commercial of us Lawlor, end responsible currently and succeed in we're Chief at role in will after bank is as

you our detail to over to provide on more Zach, financial performance.

Zach Wasserman

everyone. good our as share reported by X or highlights adjusting increasing tangible quarter, common came on was in continue XX.X% quarter. for grow GAAP morning, at of quarter. AOCI, Return $X.XX. Deposits earnings quarter on Thanks, the Steve We ROTCE billion per during total the Further equity, an from or million provides by for second increased XX.X%. balances loans $X.X of the and common Slide $XXX to results. end-of-period X.X% prior X.X% basis. Loan grew or ROTCE,

remains net losses of allowance XX X.XX%. strong of with credit quality charge-offs for Credit and basis points

plus mentioned, the increased the top the our ACL of from peer loss-absorbing position, capital with prior Steve robust credit puts quarter. capital reserves, As our quartile capacity solid This coupled group. CETX in

by driven which prior lower $XXX growth X; growth balances growth, to asset by mortgage which by CRE distribution by Slide Finance and led increased $XXX residential $XXX finance by increased increased million. be X.X% by million; continued or this increased million; components X.X% increased increased million; million. increased by growth lower which $XXX loans included or Primary quarter-over-quarter RV commercial million; $XXX quarter. declined this million. Marine Business by annualized, $XXX million Banking commercial $XXX which balances Auto Consumer, of In floorplan auto this Partially which offsetting were by loan balances increased million. Offsetting were from loan average $XXX by Turning X.X% to the $XXX

deposit billion, primarily with continued $X.X billion by X.X%. consumer were X; by On or a balances Turning quarter. modestly. ending deposits up noted, $X.X increased driven as basis, growth ending by Balances Slide the commercial to higher to year-over-year second deliver we in

providing we Turning the of months the throughout sequentially we monthly saw XX On were sustained average balances a the expanded basis, average, monthly April, strong with deposits increase balances Within seen above start point to Commercial, X enter X; a as we second now in Within total ending average deposit a May for growth June row. over monthly quarter. balances second have for stable course and deposit quarter. the consumer QX. average deposits, June balances in Slide June,

X Commercial mix and cycle. the deposits quarters from been represent Banking. XX% with noninterest-bearing of have our over expectations the share has total noninterest-bearing seen ongoing these want XX; diversified $XX with billion The to balances past I on in Turning the consistent Slide Overall, what Business to our are we line Consumer, shift saw of well last more we and and details deposits. in across

trend expect beta in mix total trend We guidance. to moderate deposit XXXX. this is shift in reflected and stabilize our This then

Slide basis, XX; margin. X.X% decreased $XX to year-over-year X.X%. $XX income for to interest lower interest a driven On quarter net the $X,XXX NII by increased On net million by or billion, sequential million or

XX Reconciling and of core expansion the to a from prior continue NIM and points we cycle. on excluding GAAP the the saw benefit from that change basis both the significantly We occurred basis quarter, has reduction in margins sensitivity asset accretion. our of throughout a

or balance an we quarter levels, relatively elevated X.XX% relative cost. even the QX, minor comparative was for a maintained basis decline which the QX it actual quarter. cash basis, as economic During to normalizing point had NIM a from NIM cash prior impacted cash a On for XX

quarter-over-quarter lower earning funding partially the asset of by offset The biggest costs were drivers NIM higher yields. increased

likely rates continue the X of end and which to forward. interest this XX X% a XXXX, primary QX, one on approximately think a range, levels. we X represented basis scenarios most minus to fourth XXXX. plus we yield X% rates The to curve as points basis scenarios into analyze and short-term include: longer which the quarters. expected quarter rate down trends another of anticipate We from core approximately stay by income higher range to for next the X% the would for is few equate the interest higher This by approximately on interest QX multiple net over forward or margin for XXXX basis potential net We over incorporate be Based than points. and this the we dollar remainder assumes is forecast

XXXX. net growth. outlooks to XXXX industry we which, move during are That with expected growth, on factors, and As depend including we look happening and demand trends out the rate further into our NIM is stable interest XXXX, both with modeling asset those to loan as is clearly, through and dollar economy expansion broader what deposit scenarios income the coupled will rising drive interest earning said, indicates

X.XX%. to Turning deposits quarter moved XX; in cost Slide the higher of to

up quarter, expectations XX%, the cumulative percentage Our in is beta guidance. and prior X points QX from line our through with prior

we As beta continue expect deposit I mentioned, approximately of XX%. cumulative to

Turning second the we portfolio, yields quarter-over-quarter. quarter to those saw as Slide securities We in step-up another in on reinvest the levels given cash we prior reported higher short-term $X we quarter did billion flows quarter. in XX; cash not from allowed the proceeds attractive rates. in on as from and cash balances securities the remain to maintained average by securities Cash increased the

go $XX XX, normalized on forward June a of totaled we representing and securities as ending QX. billion, cash basis, more As an level into

continues liquidity XX; to be Slide robust. to Turning contingent our

borrowing uninsured capacity billion FHLB of end, liquidity Our total end at QX. primary $XX of peer-leading represented quarter $XX represented At X pool and and of the respectively, and coverage. liquidity, cash Reserve billion, of at available the a sources XXX% deposits, Federal this

hedging optimized our continually XX; program is dynamic, diversified. and Slide to Turning well

in to are protect downrate NIM objectives in Our scenarios. scenarios uprate protect capital and

further scenarios. as from Fix we deemed premium the tail result in capital associated Pay these swaptions in and hedge they're swaptions economic risk protect hedges. a substantive a quarter mark-to-market is each with position quarter, the upgrade During our hedges upfront to There modest expanded

the quarter On that revenues. see positive fee on you will the our subsequent impact during second slide,

objective We sensitivity. the NIM interest managing also QX in opportunities of focused our weeks our on hedging. NIM and given have the to provided additional rate attractive downside asset additional upside few have of remain movements for opportunity The first maintained protect

incrementally modest further hedge if we have the opportunities exposures protection throughout to We and quarter additional arise. NIM will protection capital our added go and dynamic remain both as portfolios

Moving on non-interest $XXX Slide the quarter. was XX; to second million income for

positive the $XX swaptions. from million mark-to-market increased including $XX on fees items, notable benefit fix Excluding pay the an million,

however, in $X caused benefit, capital the and strategic this environment quarter, income solid $XXX Capital management. focus, markets underlying and our challenging a year-over-year. U.S. performance million key debt declined fairly million prior payments $X March of Clearly, revenues QX. the from the Excluding events increased ceiling wealth areas by saw debate markets including in million. have would We fee by been of

and pipelines However, opportunity in pointing solid remain there encouraging back signs year. to of half are the the

for core to rates, posture Adjusted million, run such prior million. items as $XX accelerate. a series including given year voluntary by decreased branch increased of expenses very expense spend. expense continued in core noninterest growth level full to by optimization GAAP the entered long-term programs notable driven higher our of actions $X alignment the We the marketing economic increases developed with XX; Slide expense a backdrop. annual organizational implementation a of to operation efficiency merit by and We managing effect on proactive Moving program, executed quarter, a reduce and the retirement and low of and quarter

key growth We as our actions additional pace growth, we further level expense growth of on initiatives. revenues even to taking remain to expense continually we're focused the calibrate investments of manage the in self-funding and

the on outsourcing We for of including into XXXX. working a lever to growth which expense business are low set efficiency to deliver actively a process continue promising us represents level next opportunities, medium-term

has capital CETX increased Tier Common X X.XX%. recaps of Equity common Tier our X.XX% quarters. resulted to sequentially position. equity and X an increased adjusted XX X OCI Slide for in impacts ratio to

higher our common cash tangible or by the X.XX%. X equity impacted X.XX%. which points. for Adjusting to AOCI, increased X ending were basis than TCE QX QX ratio ratio, basis points TCE end ratio Our TCE, levels was

grow to year very over of the to expanding mid-Xs the while we be to loan target our to capital We high high-return XX%. management expect result strategy in in course range capital year-end. top of AOCI, operating the Our range approximately by priority CETX growth. maintaining our the end Adjusting adjusted CETX of for X% fund intend will to

On credit very well. continues perform Slide quality XX, to

from basis loans. the was level. XX basis year-over-year of declined previous net total X the for is basis, points by year's and historic Nonperforming quarter Allowance for low charge-offs X.XX% to consecutive lower have points X charge-offs quarter. XX As X than a were This quarter mentioned, for reduced assets the last points. basis On up prior points basis credit were quarters. higher from losses by

of of below we in range our charge-offs XX, to and Slide be the coverage among ACL basis On continue is through points group. our the target ratio highest XX XX cycle net peer to our

our XX. Slide to turn outlook XXXX Let's on

As to I action and noted, project we analyzed plans. multiple management develop performance potential financial scenarios

Our gradual capital X%. is prior to a growth year. from range rate expectations full to for of and loans, year between inclusive Core seen On informed X% core to to guidance outlook. of On in expected range. basis economic our businesses our the PPP the expectations the PAA discussed year. well our and our X%, outlook is The interest of near throughout in very balance I of X% previously of our expectations. scenarios and expected end X% reflects consensus income be beta X%, consistent by the with already be income full improvement we of lower deposits, are Non-interest results net fee markets grow our growth. assumption to the activities for X% interest and on ex our is is prior X% and to prior maintain the we've remainder outlook deposit This to down the the tracking QX loan

managing expense revenue calibrated very a with keep core On level to at growth. expenses, low as proactively and noted, we posture are a to growth underlying

approximately For full XXXX increase X%, Torana million $XX run year, underlying expect expense plus basis insurance full of FDIC from rate incremental the point the expenses and core the between X% approximately rates X the and of in Capstone of year and we million. growth $XX

results XX the year, year to posted full finally, the strong now the we basis to charge-offs during half And between given first of expect net XX points. be

our conclude will Tim, we remarks Q&A. and that, you. move over With prepared to to

Operator

question with Our the Morgan comes Instructions] of Stanley. from line Manan [Operator first Gosalia

Manan Gosalia

the expand XXXX especially scenario curve the moving would dig some forward for NII to in scenarios under there, the NIM X comments stable with deposit in I you it. higher do you guess, to have on wanted wrong? scenario? being more on in outlined put of pressure longer Or I for the I higher that that betas? that than your on into rising Can parts

Zach Wasserman

for Zach. the is that this Manan, I'll take thanks one question. and

I that outlook think scenarios. seeing both with the of consistent really we're those is

overall that be an continue continue asset sort sensitivity, asset a of range, of time. But of I over scenario the we've consistent the would So -- liability in extending would kind what from to think there discussed the [indiscernible] cycle. very pricing be top end sensitivity longer expect to none of continuation likely benefit higher those per rise, asset given that's the X higher in we and actually NIM, would with things, to general yields

the asset the At deposit the for NIM but cycle see of that. few some lower basis [indiscernible]; of maybe [indiscernible] pricing than points the you end but the scenario, albeit kind also increase less lower in and faster a we pricing

note benefit to corroborate the position to to hedging continue us year. the by on from for during end will hire negative as of the from rates XXXX, them. course that carry of downrate a program more our higher much we neutral generally, well the So shifting I would

will So support for a of 'XX. the trajectory that course throughout NIM be

Manan Gosalia

you that. can Got maybe with coming how then dig overall, I just you requirements ahead you're line seem capital expectations. from I it. noted in you're that if keeping here. you're And regulation broadly managing the in, separately, to But new know into levels building of on know

a cash You're of high level in instead securities. of holding reinvesting

it regulation where to on expand you especially the as you opt-out LCR. as relates well to can go, AOCI maybe expect as So

Zach Wasserman

Sure.

it XXXX, higher inclusive it's by of if to indicated XXXX. And do able otherwise and are the new not over likely manage anticipatory removed. [indiscernible] we mid-Xs of think we to be see in relatively the hire on guidance the that these the things capital trying time, at what with think AOCI to it's essentially low hence, AOCI, working As potential our digging the them. to CETX X% where And end going on a be by would get operating end regulations. in And will basis. range essentially we address approach that to of level, range of to frankly, end plan of And to I in continue we'll ratio we X% offset potential of manage be macro tailoring same posture are the impact expect specifically, back most exclusion lot think the the you we XXXX; we operating to of our the headed. But planful that know, expediently to our assumption on so

III Basel We're also looking at the new changes. potential actively RWA

well, there requirements income. fundamental trading RWA, The fee essentially there. review a think largely we risk of know be you There's business We that. aridity Huntington big for slightly will mix. material given higher operational As increasing to in key-off likely changes book, which from going X our are the see that's they're of

and offsetting which be new impact a be to see away. credit are that ones, more analysis we We generally will more offsetting. more Still unclear there relatively that, on-net have fine-tuned lower, from Huntington. we risk and RWAs whether days for go net factors believe, offsetting early are but However, there will

As any relatively long-term on debt. and focuses think we're monitoring we small want. like those can will to folks -- regulatory click over questions for liquidity it like Happy that relates be Likewise, time. we further to potential other and impacts double

Operator

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

Matt O'Connor

peers some capital funding We're they alleviate is pullback seeing build of a as pressure. your lending some in and from look to

about thinking some of play pull side, strong you and you your how got reserves. peers? even flip to high back highlighted, liquidity you're as how strong just maybe capital, obviously, the offset wondering by very On I'm you've can

Zach Wasserman

when only and that that in grow business. question. strength. are the we loans like we they really to market we're with it's One, operate [indiscernible] win not can in have look position in as in but the during times clients to the because We're seize a great factors: drive at noted prior X a to share being something balancing companies this clearly to that to question, great or I cognizant just of It's new We want really meaningfully that. Matt also and capital It's a of desire opportunities

X% to actively we're it a XX% So year-over-year loan level rate QX, modulating bringing from growth, QX. down in X% run in

I X% very the at also balance much looking back of the think we We're probably be we drive how that will half the and our being the potentially that front foot. returns on said, we assets have. With of sheet year. like out more can optimize are higher do

optimize You line great for are brings for us business at a liquidity, fund the of EMS hire for the look the pockets which And quality great saw growth, highest as strong new team we the year for the there. margin. we finding even customer be returns to continuing will us,

So front your very on there some [indiscernible]. see that much to we'll are the back point, book. opportunities And

Matt O'Connor

just spreads I auto it track, I up at are we seems guess widen. like then, mean lending highs can the And everything following spread [indiscernible] commercial on side. or near of

is this? that isn't into leaning the So demand just there Or this at a not point? why there it is

Zach Wasserman

of the to costs and With yields And your point, funding deposit got think clearly, there I are a rising. are also and Look, pockets supporting great that rising strong of also are as being said, are strong. be And workforce to we've well. the clients. set very continues costs demand

for feel to time auto we prudent. in that expect we're long-durated like we bps on the on yield capital XX some previous say, think bps the portfolio. really really benefiting and that yields, optimize the I allow again, NIM The as those continue And to I XXXX by to would about XX asset were talking even that come asset beyond So to sustaining side. and question, also between us. what really seeing is higher in the way balancing things we're mortgage we categories encouraged Driving

Steve Steinour

is this Matt, Steve.

cautious think There's I we suggested as until a more opportunity. little regulatory the to we're know well. outcome of it's say being fair reforms the

positions ourselves going avail rules forward. will know we we once that the that have what we and to the think need I are

Operator

comes line question next Our Alexopoulos JPMorgan. Steven of from the with

Steven Alexopoulos

going by commentary it What X% helpful. how loans, that I really want that's getting done, down fourth be to -- the quarter be will you because I'd of NIM move NIM that is so to there. out today, the decide about incremental at sounds to does like noninterest-bearing about gave we where beyond the that, we compare to of go imagine going right, incremental that mix Just it's is most once to level? the the X% shift from spot deposits? NIM incremental

Zach Wasserman

than It's still that. higher

again, running think, quarter, around adjusted you I'd we're I the third at point levels X.XX%. that second quarter for of quarter in kind cash to the now for the was

for is to agree the modest there by incremental stabilize 'XX X.XX% be but at And potential end really major down part what decline continued early during X% from rate get incrementally agree through help in course us negative early what next this the the is. to of so I obviously carrier as in kind I normalized you some reduction point. with fundamental the will the year the here Likely, it's of starting year point of that trends margin is in the note and again. of And course do a balance the underlying into QX would which the we're lot the seeing continued quarter, that with very the of trends the of hedges the also them I the will year, part year. your the run not your from of of

Steven Alexopoulos

I'm curious, little then the maybe and optimistic are Right possibility soft what okay. hearing. hearing? equity you the to they Are your coming to soft you Steve, what market tailwinds there, around when coming talk are you be the And so more for this for customers, around a to of landing landing. seems some to

Steve Steinour

sites working to chain and inflation big the expect a is would expenses generally. good their Clearer in I year supply line seems Steve, a our to margins with about but be say generally better close customers beyond half and the and shape. they're They're through out optimistic and 'XX to year. are this good having

ability So economic soft and this announcements growth. activity, a have to the landing we a In investments, the targeted recession. of avoid would our footprint, suggest lot Midwest, of potentially at particularly worst-case still

other So and going significant course we're here this that the relative see have good of year. we in activity on think in regions a position the I to of through some we'll particularly Ohio

Operator

Our next the from question of Poonawala comes Ebrahim Bank of line with America.

Ebrahim Poonawala

go Just wanted time expense on the some outlook. spend to --

a of I work that you think you've about. done lot year-to-date, the project talk actual rate

think I a size expense operating you fact, the opportunity growth given low around about be will goal down. the next keep into year to do In next NII give likely positive growth Maybe how about? What's of you And is you going leverage think that? said the for year. sense that talked us of BPO

Zach Wasserman

Ebrahim. question, Great Thanks. Yes.

proactive been maybe is implement trying the be setting overall build year. So operating but to We've time. much this up can framing and next very them only a keep those effectively very over have level, to year not to [indiscernible] very expenses programs and at low and

benefit but I programs also. 'XX low of and over beyond have On are modest those be frankly, the from part can opportunities. we support that [ph]. And of we terms there incremental we opportunity, Relatively owned analyze of to level something will believe for that The at perspective, year the leveraged real the really think really that critical more what more time. portfolio a we're in this to over and while capabilities we for 'XX a the in this from need of to building the the functions continually efficiency and scale versus or partnering Huntington that encouraged of size BPO looking time strategic into by must that continue build value is that,

encouraging that be with to the So it's incrementally to leading of. of now something to able of in we're benefits get accelerate portfolio the part programs

ourselves, we lot, said set X we very a take core targets On leverage, one seriously. something positive of it's plans, operating for operating as major it's a tenet our of we've financial the

not damaged to the Of growth that value course, term say term medium that to in long-term we're like. really that managing short sure 'XX to doing early the company what Too for we've the and make we're want anything trajectory. will look generate

I a on very you'll we're also will keep growth expense growth over revenue revenue have to think clearly with that pressure but encouraged the low. grow opportunity

So major that we're moment. not this think I within still reason going drive going to order. give it's guidance to at the

Steve Steinour

add, a I set. It if longer-term could Day. operation efficiencies team and It's multiyear very on of accelerate. the both The the is to side is It's track. We and the at well. that working changing bank, with Steve. substantially this help Ebrahim, front on procedures also going is project back that us Investor shared will and customer was digitizing that

We year. level the of and So the What got support BPL a now very on so the focused activity branches. additive of healthy side on the of us and some we've business program. is units and to referencing with he's year. far during X focus voluntary consolidated Zach units management has some did retirement this a course We've done restructuring and segments expense

Ebrahim Poonawala

like time, updated but the about some targeted attractive talked thoughts you've there? opportunities, same the Steve, Understood. And you you for done doing M&A any the fee revenue talked Is you've Any past. at building to opportunity capital set about do thoughts? anything? in

Steve Steinour

as going in I always to a we'll terms established, of got were fashion. the push very as opportunity few in believe we're a some the that be got around to to businesses opportunity a the hand. we've our positioned ones in at that lot and that nothing the There's pushing And needing cetera, in as outlet, strong saw you of expectations us. core at we get M&A for We've We're liquidity, get to trying of in last there to of that now. you et future. But or some more robust to a Well, capital regulatory think [indiscernible] I lot do the grow position find are additional pressing year, point attractive. suspect for know, business. of focus, is front an even now.

we're very focused very, so driving core. And the on

Operator

Scott comes Our next with Sandler. Piper of from question line the Siefers

Scott Siefers

kind think major conceptually, Steve being a on two for of just XX% all. cumm-beta when the [ph], the you number about when or maybe you or and that the you takes puts think maybe about Zach, thought right

within guys I the there. market month flows think so, competitive it's in deposit especially very You that or clear are last a are like the but

So, of just land you're curious the what What guess it? terms dynamics? of makes right I'm in I on sort number that seeing to competitive

Zach Wasserman

noted prepared and the forecasts -- is We corroborate This that scenarios that Zach, one. to remarks, all continue the trends of we're pretty that. that rigorous as in underlying take and I multiple I'll creating

So good feel a it's like forecast. we

we're into continued best in -- decelerating X% rise QX. expect the that forecast for would always drivers, kind and share costs to X% pretty seeing a always modest and But a rate go the less As a I say, just would to continue trend of that we'll one, QX, will if -- but focus got, to into we've level been monthly be I our kind like around that But then QX. at we saw underlying It deposit stable on while ever pass. trends now clearly has in out of just update we topping the an cooperate. know in double-clicking beta be you than it by QX,

So we're seeing just that's trend increasing. be declining a why sort of all

that and and like to And this And mix in occurring again it is at happened fairly that we're shift has shift mix noninterest-bearing is of that cycle other the from into point. the expect kind see well lifeline would that of corroborate interest-bearing most thing signs the we XX%. to The of going to buildup is already decelerating.

I to that On there. to growth loan very and allowing think your what's point, environment. the manage us I is a throughout it's pressure deposits are competition pretty and well the think encouraging given of our And plan. competitive the the decelerating it's us, to according for here rational. valve is side, escape which And that's it's But industry kind

forecast. still overall, in So right the

Operator

line from Our next the UBS. Erika of question comes Najarian with

Erika Najarian

clarification a the your actually is XX% question first the deposits, data, one, unfold My correct? to

Zach Wasserman

That's correct.

Erika Najarian

peers gave interest-bearing. on lot your Because Yes. of it a

that I cut a your And how question that I relatively level net down? Could is, was Scott market sort tell sure of a of And while? down think to of thinking next high lot where So on I just power a what you expansion much investors for versus you're income do license us to are point just about about way really elasticity the you the price real the outlook. year. seen wondering stay deposit in question. Zach, at rates interest how wanted close of we've make are they're earlier, that the think touted that my if have about the thinking one, there asking banks

Zach Wasserman

as down. questions. soft on Yes, got the mind share lots way as anticipated on it's on in way just terrific as we just our growth of vigorously Also the up topics, the

planning much So watching. very

I a looking segment you're will clearly in, what at. you're be think what it of function segments

commercial we'll higher the where likewise and and are side, will low. how on that us On generally between betas clients stone prior trend and agreement bespoke our trend

went up. measure the that to I way think a we're it as confident will very similar pretty drive

decline. a the price times the I think which in rates segments some well lapse. at market the would banking for playbooks to of will pretty -- grow quite the we've what's the of there to I that in categories last be on pretty feel in our trod about the good point as playbook clearly overall very been but in on do think that bring tend there in of well. you the dimensions the rational down many at Again, to consumer point likewise The the is a outlook have those at down. like some forward in and will history growing business we'll But ability function to economy that manage and again, and time of that are side trend going fast which to them that middle consumer, to ability other

Erika Najarian

a if just as And that, it. may. Got I to follow-up

going as all still be not guess paid Fed cash might of more it risk You're as it would if the of deploy think do feel earning to And getting a a with better cash. cash that for the lot in motivation lot of you're factors the I now Or next anyway? weight you like liquidity you holding on down year since be for And that's to appropriate? X% the for hold the a flow same lot there's to cash moderately. a that. your scenario, we Again, normalizing obviously, normalize, your outside you're of loan level start well you pipe, rolls to growth, Zach, just what there about

Zach Wasserman

Yes.

requirements. think for given sort company the to level is the the billion liquidity $X right level right that billion the I that around we're at now running $X for is of cash

we generally margin at tuning So right for I funding of where the sized is how think short-term right tuning think is at I the and level level. the we're level. at the cash borrowings we're But incrementally kind most right that now. for part, the cash FHLB Always think

liquidity. securities a just continue moderately we've see the continuing within the to row; of to last doing, preference think and trend we'll been lower frankly, broadly, the in sequentially duration quarters as portfolio I X

Operator

comes [Operator Our Ken of question Instructions] the line with from next Usdin Jefferies.

Ken Usdin

balance look 'XX about follow-up And a just about NII that wholesale Is that? wondering sheet further quarter And if are expecting amount. part asset forward? I will of, that good been on on you growth. I overall you how guess, the your side a elevated comments. earning kind as do just talked carry the continue your the funding balancing balance you think sheet as if guess out of to this has And I'm a equation you act growth deposit

Zach Wasserman

answer the is Broadly speaking, yes. question. terrific Yes,

stable one that up noted the but over the making pretty allows XXXX marginal the can that's slightly believe of the match and I next underlying beta earlier. with I And what we'll the fundamentally loan-to-deposit loan on couple of here think That's what of parts. So growth this to And back to see a expectation as year. is the trend rate for will half deposit see most in I my well. tend here line growth I in the we manage sure deposit that to margin that as just we lower quarters. the we're funding factors loan ratio those getting fundamental us

The So quarters could, this now past, of X we've we thing good and and let's that coming it's are in to an the we're talked pretty as opportunities, fund and loan attractive and them we funding where the not in loan-to-deposit favorable this for but say, in position I fact, of think now. operating, the important cycle really with about noncustomer position we dynamic. innings is a ratio default sources saw increase

getting deposits I rate. It's a us. a now, quite balance and good think we're think, growing for loans pretty similar healthy at and I

Ken Usdin

this getting then year help right can swaps in And forward become terms you into to try benefits follow-up, starting NII of hedges, as of to a way? And that quarter? just next the go from a the the move Okay. understand how part benefit year, security loan look that us your you next does the

Zach Wasserman

question, Ken. Yes, Great it does.

Let that. on me elaborate

to the expected likely protection the received this QX, pay under around done will, the through inclusive in and swaps We've So in got collars fixed will we've some of portfolio if to. continue option quarter, $XX billion then And of floor spreads hedge trend it's the $XX rates into which first up future. only got off scenarios what which they're a of swaps enter fixed we've to weeks billion. generally downgrade received activities -- downgrade of $XX part around few through billion, of

than now XX over as be months powerful it's will portfolio both more even we those extent coming into to RSG that color-based extent a So loss. pretty enter fixed X and the

yield that right The carry sense you've steep the impact, got you incrementally right that go of essentially by XX X forecasted, XXXX, now. we're me, with moment decline obviously, about basis an follow with makes yourself end entree I they to mean, the out that if of this What scenarios. dire by to that from P&L curve pretty the points challenge in are things negative at into curve that fix in convince yield drag downgrade is receipt the And some right we will scenarios inverted experiencing is now the now, NIM a given forward already already fairly and hedging in.

which basis period. throughout that's of and 'XX, of So fairly XX see now we end tailwind should that between points ratable the clawback

Operator

Our question of comes line RBC the Jon Arfstrom from Markets. Capital with next

Jon Arfstrom

credit of questions. A couple

Commercial Done these congratulations job First congratulations, and calls. -- consumer Rich, on a all, perspective on retirement. and of estate I've your question. real enjoyed your great

look business have of But it but So kind on ask. I can obviously you been allocated doing issues? of that's in terms to how identifying things fair curious for and amount tighten and it's commercial real now a focus you're looks a estate, you very of why the guys future you what far ahead guys know reserves up. to I clean

Rich Pohle

right look focused on we're -- that. to the primarily beyond really now and looking XXXX further And XXXX it's We're impacts. hard much Yes.

office. in So we're reviews We're quarterly every estate real book portfolio the doing touching month.

what might gone then to think is But can year over control probably that lease in office, XX% $X next. flow rollovers of point. particularly this impacting loans the we on the through book I in and and with relates be 'XX this that to at we've cash And and and the focus million 'XX the that maturities. managing really respect

the that's So focus. primary

that, it's Beyond tough.

a both on got X% are for to We've of quarter-by-quarter mentioned know those and we right softness. continue the against we'll at adequate We against X.X% got basis. You now, a We've feel those what reserve. reserve prebook. look overall

Steve Steinour

of good managing. we're at well be the issues all that related put a Jon, this portfolio long -- there other to view wherever Rich those efforts there's and shape. getting in of ahead is are doing of any efforts addressed proactive a also get long may is to and which focus decade also try rebalanced the over appear with the next But [indiscernible]; full the -- of the trying issues over point year occur primary almost view really issues, are paydowns been that to team for We've 'XX actively to to 'XX. stay

Jon Arfstrom

way. that seems It

are Okay. landing this soft really. but every nothing it's Maybe I quarter, -- then on comments kind just charge-offs look the consumer, in of just consumer it's consumer your Are at you to -- goes because really seeing at you and at bothers And categories, good. look and marine it nonaccruals budged. you anything it's these RV health really, haven't that just really numbers delinquencies all

Rich Pohle

super prime to the we've prime. just think No, on numbers it the client the and focus really got that I goes are selection good. and And

low. anything If what than of the nothing that the that of stress more There's they're a that's going more than that point, I The levels of to would rest across of the portfolio. the that running because floating you entire out we're Because return there relatively look gradual in you spectrum. might really extremely your right is higher to to little consumer and bit believe only now, that's area have charge-offs. would nature normalized lead book just rate be point a

level but little on we're a in the see from book So to delinquencies loan-to-value we've to vintage XX% that lead across to going show analysis done range. that XX% the that standpoint, higher book of might it's a the than you

We follow. though even think higher might the we see levels don't of delinquency. So losses will

Steve Steinour

generally Housing tight are, John. markets are where we

So if is someone has -- low. and very unemployment

an have the resolution [indiscernible]. best has unlike what or seen if in So is sell property, 'XX, 'XX prior might someone we to issue, a

profile moderate that for about and Just that risk at point, over that. been been he's all decade to this to this really along. outperform give disciplined good an here leadership. recognition. outperform And Rich We've We've been a a his little credit to aggregate to tribute peers very, and our and effort low my all especially Rich with At regard really, and a sharing cycle. to in comments expect through we the very

Jon Arfstrom

them give to anything an there's Yes, foreclosure a RV I the boat could you agree. Steve, out thinking give. pull was I of fishing or

Steve Steinour

any We some just lunch pull out. We at those at posters. my assets. On don't other have

Jon Arfstrom

Zach. you, drove Torana. for on up $XX I What million there? what clean to The small Capstone, happened Just it's million $XX that? to million know but the $XX

Zach Wasserman

we that Yes. million into flow expense. -- of Capstone production compensation that And factor Julie, and through that cost has and $XX the was of mainly in reflective revenues that's see previous a

our budgeted flow less into basically cost. less somewhat a revenues when proud the outlook bit which so than back the quarter, is That's year, through in capital into were it. And was originally lower second of half softer the markets so

Jon Arfstrom

Is million Okay. And in correct? then the the third quarter. $XX that's FDIC, all that

Zach Wasserman

X that's me quarter. known coming let So discussed. guidance assessment that and special being the was assessed is That clarify that FDIC last not in important being basis it's points is late still that talked about it's every through that It's the across we really expense one. higher assessment that the and industry year

Operator

our question-and-answer comments. turn gentlemen, session. any and concludes Ladies Steinour back floor Mr. to final I'll for the this

Steve Steinour

Well, results much manage the through joining quarter this we as for very us you dynamically very We're pleased with second environment. unique thank today.

As and Investor XX all colleagues collectively. to these just a as you years. our head our strangler top for with we last team which very, provide disciplined our and our deposit, at operators the liquidity. a times Executives Day value satisfaction and for well as in heard, have efforts we're such of of service The are in credit quality, were outlined improving strong And we great are particular well strategy both as executing provides us year has positioned ratios that robust very shareholders shareholders. reminder, Board very over and capital nature And our served driving generate customer we the of

strong So benefits the you're I with our and alignment results. that seeing a that of think our through shareholders reflects

and you thank Huntington support interest great a and your So for have in day.

Operator

concludes you. call. today's Thank This conference

Thank this lines your disconnect at may for You participation. time. your you

Huntington Bancshares (HBAN) 21 Jul 232023 Q2 Earnings call transcript