HUNTINGTON BANCSHARES INC /MD/ Q4 FY2024 earnings call

Key Messages: 1. Drove record fee revenues and accelerated loan/deposit growth, with sequential growth in spread and fee revenues. 2. Executing down beta action plans and lowering deposit pricing to manage net interest margin. 3. Strong credit performance due to disciplined client selection and portfolio management. 4. Driving profit momentum into 2025 and beyond. 2024 Performance: 2024 was a breakout year with growing average deposits by over $7.5B and loans by over $3.5B; fee revenue businesses (payments, wealth management, capital markets) performed exceptionally well. Growth Opportunities: Focus on organic growth strategy, driving revenues, and consistent risk management; numerous growth levers in existing and new markets, including expanded geographies and new capabilities.

Loans: Average loan balances increased by $7 billion or 5.7% vs last year. Fourth quarter loan growth was 5.7% y-o-y, with sequential increase of $3.7 billion or 2.9%. New initiatives contributed $1.1 billion (30% of total net loan growth). Deposits: Average deposits increased by $9.7 billion or 6.5% vs last year. Fourth quarter average deposits rose $2.9 billion or 1.9%, led by commercial customers; non-interest-bearing deposits grew by ~$800 million, and overall cost of deposits was lowered by 24 basis points to 2.16%. Net Interest Income: Drove $45 million or 3.3% growth in Q4, up over 6% y-o-y; net interest margin was 3.03% in Q4, up 5 basis points from prior quarter. Non-Interest Income: GAAP non-interest income increased by $154 million y-o-y. Core underlying fee revenues increased by $96 million or 20%. Fee revenues as a percentage of total revenue increased to 28% from 26% the prior year, with payments, wealth management, and capital markets showing strong growth.

2025 Outlook: - Loan growth expected 5%-7%, deposit growth 3%-5%. - Net interest income growth 4%-6%, non-interest income growth 4%-6%. - Expense growth 3.5%-4.5%, net charge-offs 25-35 basis points, effective tax rate ~19%. First quarter expected: average loan growth ~2%, deposits relatively stable, net interest income lower by ~2%-3%, fee revenues normalizing, expenses lower.

• Interest Rate Risks: Dynamic interest rate environment impacts net interest margin and hedging strategies. - Regulatory Risks: Uncertainty around regulatory changes affecting banking operations. - Credit Risks: Potential changes in credit scenarios affecting charge-offs and reserves.

Q: Manan Gosalia of Morgan Stanley asks about confidence in NII guidance range and macro factors.

A: Zach Wasserman discusses confidence in driving revenue growth within the range, influenced by loan growth and NIM management.

Q: John Pancari of Evercore asks about new money loan production yield.

A: Zach Wasserman talks about consistent yields and fixed asset repricing.

Q: Ebrahim Poonawala of Bank of America asks about loan-to-deposit ratio and incremental margin.

A: Zach Wasserman discusses loan-to-deposit ratio, marginal spreads, and NIM expectations.

Q: Brian Foran of Truist asks about loan/deposit growth guide and investments.

A: Zach Wasserman and Steve Steinour discuss loan growth, deposit management, and investment focus.

Q: Jon Arfstrom of RBC Capital Markets asks about borrower sentiment and core growth.

A: Steve Steinour talks about positive borrower sentiment and core growth drivers.

Q: Nathan Stein of Deutsche Bank asks about NIM outlook and securities repositioning.

A: Zach Wasserman discusses NIM outlook and strategic securities repositioning.

Q: Erika Najarian of UBS asks about investment cycle and stress test.

A: Steve Steinour and Zach Wasserman talk about investment cycle and stress test participation.

Q: Brian Foran of Truist asks about provisioning and reserve.

A: Zach Wasserman discusses reserve strategy and potential reserve release.