Huntington Bancshares CEO Steve Steinour is crediting “gritty,” resilient business owners and superprime consumer customers for driving what may be the best credit quality results in the $178.8 billion-asset company’s history.
Huntington, in Columbus, Ohio, reported 3 basis points of net charge-offs on Thursday — along with a record $539 million quarterly profit.
Historically, Huntington has targeted a range between 35 to 55 basis points for net charge-offs, a measure of the difference between gross charge-offs and recoveries against total loans.
“We’re 156 years old, so there may have been a better quarter sometime, but not anything of recent vintage,” Steinour said Thursday. Nonperforming assets fell for a fourth consecutive quarter to $682 million, or 0.59% of total loans.
“It’s looking pretty good,” Steinour said.
Indeed, despite gathering economic storm clouds
“When you get out and start talking to companies, you’ll hear obviously [about] inflation and recession risk,” Steinour said. “They’re starting to manage it, deal with it. Pass on inflationary costs. Find ways to get more efficient. These are scrappy businesses. It’s been two years of pandemic, followed by this. … They’re generally better managed, more liquid, better capitalized. At least in the Midwest, where most of our business is, they’re gritty. They’re tough. This was a Rust Belt 12 years ago.”
Steinour’s cautiously optimistic take came two days after Bruce Van Saun, CEO of the $226.7 billion-asset Citizens Financial Group, said his Providence, Rhode Island, company was moving to
JPMorgan Chase CEO Jamie Dimon voiced concern about a
Unlike some of its peers, the Dallas bank says the U.S. economy is strong, clients are upbeat and lending momentum continues.
For his part, Steinour expects Huntington’s solid financial performance to extend through the remainder of 2022. The company is projecting average loan growth in the high single digits, with growth in noninterest income expected to range in the low-to-mid single digits.
“We see 2022 coming together quite well, as we drive sustainable profitability and highlight the earnings power of the company,” Chief Financial Officer Zach Wasserman said Thursday on a conference call with analysts.
Huntington reported robust loan growth in virtually all its commercial and consumer business lines Thursday, as well as strong results from its
Huntington completed its acquisition of Capstone June 16.
On the consumer side, Huntington saw mortgage banking dip by 34% year over year as rising interest rates have had a predictably cooling effect on home loan originations. At the same time, production of vehicle finance and recreational vehicle and marine loans has held steady.
Across its consumer portfolios, borrowers’ average FICO credit scores range from 776 to 814, creating a firewall against significant credit problems, Steinour said.
“Superprime is a low default probability, and it's secured,” Steinour said. “If the world turns upside down, maybe it's undersecured, but you know you’re going to get some of it back.”
Huntington completed its acquisition of Detroit-based TCF Financial in June 2021. Since then, it has purchased Capstone and Digital Payments Torana, a San Francisco-based business-to-consumer payments technology company,
“We have a lot of opportunity to achieve with TCF. So, our expectation is just to continue to focus on that,” Steinour said Thursday on the conference call. “We're able to do things, if we choose to, but our focus will be to continue to drive the revenue opportunity from the TCF combination.”
On that score, 12 months made a significant difference for Huntington.
A year ago, the company reported a $15 million loss, driven by more than $560 million of costs connected to the TCF deal.
