Huntington Bancshares' second-quarter average loans were up 1% from the first quarter and 2% from the second quarter of 2023. Average deposits rose by 2% from the first quarter and 6% from their June 30, 2023, level.
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Huntington Bancshares reported a $474 million second-quarter profit Friday, thanks in part to big growth in a loan segment where other banks have been pulling back.
Indirect auto loan originations — where banks offer loans indirectly to car buyers, with auto dealers acting as intermediaries — reached $2.1 billion for the quarter, up 31% from the three-month period ending March 31.
Huntington's growth comes as a number of competitors, including Toronto-based BMO Financial Group, Fifth Third Bancorp in Cincinnati and Citizens Financial Group in Providence, Rhode Island, have scaled back their involvement or pulled out of the market altogether.
The $196.3 billion-asset Huntington has shown no reluctance to pick up the slack.
"We see [indirect auto] as a terrific opportunity," Chairman and CEO Steve Steinour said Friday on a conference call with analysts.
Auto lending is one of the Columbus, Ohio-based bank's oldest and most stalwart business lines. Indirect auto loans make up about 11% of Huntington's $124.4 billion loan portfolio.
"It's a super-prime book with very low defaults," Steinour said on the conference call. Net charge-offs amounted to 20 basis points of the annualized auto loan portfolio in the second quarter, according to the company.
Huntington Bancshares Chairman and CEO Steve Steinour
"We're coming up on a century [of auto lending]," Steinour said in a subsequent interview. "We're supportive of our customers. We have a multigenerational relationship with many of our dealers."
Huntington reported quarterly net interest income of $1.3 billion, up about 2% from the quarter ending March 31, but down 2% from the second quarter of 2023. Though its second-quarter spread income result was better than some analysts expected, Huntington reiterated guidance that it released last month, which calls for a full-year decline of 1% to 4% from year-end 2023.
Huntington's net interest income outlook emerged as an issue last month, after Chief Financial Officer Zach Wasserman said he expected a full-year decline. Previous guidance had targeted a 2% decrease, but it also allowed for the possibility for a 2% increase over the year-end 2023 level of $5.45 billion. Huntington's net interest income totaled $2.6 billion through the first six months of 2024.
Friday's earnings report appeared to reassure investors, who had been spooked by the earlier change in guidance. Shares in Huntington were up more than 3% in midday trading at $14.76.
Steinour said on the conference call he expects the bank's net interest income to "continue growing sequentially from its first quarter trough."
Huntington's second-quarter net income was 13% higher than its first-quarter result, but down 15% from the same period in 2023, when it reported a $559 million profit.
In December, Steinour said the bank would invest significantly in expansion, including in the Carolinas and Texas, as well as by launching several new business lines. Those initiatives produced about $600 million in loan growth in the second quarter, Wasserman said Friday on the conference call.
In the interview that followed, Steinour said that he expects significant additional growth from the added geographies and business lines. "It will definitely grow," Steinour said. "I'm very pleased with the quality of our new colleagues and their activities, the clients they're bringing to us. Our client base is expanding, our customer base is expanding. They're performing very well."
Huntington reported second-quarter average loans totaling $123.4 billion, up 1% from the first quarter and 2% from the second quarter of 2023. "We're seeing some very encouraging signs there," Wasserman said. "Pipelines are growing, and we had a solid performance in the second quarter."
Average deposits totaled $153.6 billion, rising 2% from the first quarter and 6% from their June 30, 2023, level.
Huntington's net charge-offs totaled 0.29% of average loans and leases for the second quarter, and the bank said it expects them to range between 0.25% and 0.35% in the second half of 2024.
This story has been updated with comments from Huntington's earnings conference call and an interview.
Update
This story has been updated with comments from Huntington's earnings call and an interview with CEO Steve Steinour.
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