HUNTINGTON BANCSHARES INC /MD/ Annual Report: A Year of Growth and Resilience

Huntington Bancshares navigated a dynamic economic landscape in 2023, delivering a robust performance marked by strategic growth, digital innovation, and careful risk management. Despite rising interest rates and economic uncertainty, the bank demonstrated resilience, maintaining a strong capital position and its commitment to customers and communities.

Business Overview Huntington Bancshares Inc. is a regional bank holding company primarily serving customers across the Midwest and Great Lakes regions of the United States. It offers commercial banking, consumer banking, and wealth management services. Huntington provides a full range of financial products, including commercial and industrial loans, commercial real estate loans, residential mortgages, auto loans, and other consumer loans. It also offers deposit products, treasury management, and investment services. The bank builds strong customer relationships through its extensive branch network, digital platforms, and personalized advisory services, aiming to be a leading regional bank in its markets.

Key Financial Highlights:

• Revenue Growth: Total revenue grew 8% to $7.5 billion. A 15% increase in Net Interest Income, reaching $6.2 billion, primarily drove this growth, benefiting from higher interest rates and a healthy expansion of the loan portfolio. However, non-interest income decreased slightly by 5% to $1.3 billion, mainly due to lower mortgage banking fees and capital markets activity.
• Profitability: Net income climbed 12% to $2.8 billion, with diluted earnings per share (EPS) rising to $1.95 from $1.74 last year. Effective cost management and strong net interest income performance drove this improvement, even with increased provisions for credit losses (money set aside for potential loan defaults).
• Balance Sheet Strength (Financial Health):
  • Total assets grew to $189 billion.
  • The loan portfolio expanded 7% to $135 billion, driven by growth in commercial and industrial lending and consumer loans.
  • Deposits remained stable at $155 billion, reflecting strong customer relationships.
  • Huntington maintained robust capital ratios, including a Common Equity Tier 1 (CET1) ratio of 10.5%. This is well above regulatory minimums and underscores the bank's financial stability.
  • A strong liquidity position, supported by a diverse deposit base and access to various funding sources (including wholesale funding markets and credit facilities), ensures the bank can meet its financial obligations and support growth. Robust cash reserves also provide operational flexibility.
• Shareholder Returns: Huntington returned value to shareholders by declaring quarterly dividends totaling $0.62 per share for the year. The bank also repurchased $500 million in common stock, further enhancing shareholder value.

Strategic Priorities & Growth Initiatives (Management Discussion Highlights):

• Digital Transformation: Huntington continued significant investments in digital platforms, leading to a 15% increase in active digital users. Enhancements included new mobile banking features, improved online account opening processes, and advanced budgeting tools, all designed to improve the customer experience.
• Customer-Centric Approach: The bank reinforced its focus on deepening customer relationships through personalized services and expanding advisory capabilities for both consumer and business clients.
• Market Expansion: Huntington pursued targeted growth in key metropolitan areas, leveraging its existing branch network while strategically expanding its digital reach to serve new customers.
• Community & ESG: The company highlighted its commitment to community development, including $2.5 billion in community lending and investments. Huntington also advanced its environmental sustainability goals, reducing operational emissions by 10% and increasing sustainable financing initiatives.

Competitive Position: Huntington operates in a highly competitive financial services industry, competing with national, regional, and community banks, credit unions, fintech companies, and other non-bank financial service providers. Its competitive advantages include a strong brand presence in core markets, a comprehensive suite of products and services, a customer-centric approach, and ongoing digital investments. The bank competes on product innovation, pricing, customer service, convenience, and technology.

Key Risks and Outlook (Future Outlook):

• Economic Uncertainty: The bank acknowledges the potential impact of persistent inflation, further interest rate fluctuations, and a possible economic slowdown on loan demand and overall credit quality.
• Interest Rate Risk: While higher rates boosted net interest income this year, the sensitivity of future earnings to potential shifts in interest rates remains a key area of focus.
• Credit Quality: While credit quality remains generally strong, non-performing assets increased slightly to 0.55% of total loans (from 0.48% last year). This indicates a need for continued vigilance if economic conditions deteriorate.
• Regulatory & Compliance: The evolving regulatory landscape continues to present challenges and compliance costs, requiring ongoing adaptation and investment.
• Cybersecurity: The persistent threat of cyberattacks and data breaches necessitates continuous investment in advanced security measures and robust data protection protocols.

Looking ahead, Huntington Bancshares remains cautiously optimistic for the upcoming year. The bank will continue to focus on careful risk management, digital innovation, and organic growth. Management anticipates ongoing pressure on deposit costs and potentially slower loan growth in a sustained higher interest rate environment. However, Huntington remains committed to delivering long-term value to shareholders and serving its communities.