A full-court press to ease customer worries helped Huntington Bancshares maintain its deposits and its relationships last month during the banking crisis.
In the wake of
Chairman and CEO Steve Steinour attributed the result to a longstanding policy of offering big depositors off-balance-sheet alternatives for parking their excess cash. That was in addition to a proactive calling effort that began early March 13, hard on the heels of the sudden failures of Silicon Valley Bank and
"There was a concerted effort," Steinour said Thursday in an interview. "When Silicon Valley and then Signature failed inside of 40 hours, we assumed our customers would like to hear from us."
Though the $189 billion-asset Huntington may have been unshaken by the turmoil that saw the Federal Reserve
"The speed of the run on [Silicon Valley and Signature] was a surprise," Steinour said Thursday on a subsequent conference call with investor analysts. "It was faster than I can ever recall."
As a result, Huntington, which reported first-quarter earnings on Thursday, is more focused than ever on maximizing liquidity. It's also a little more conservative in its outlook for the remainder of 2023. Where Huntington was looking for loan growth at the high end of its previously released 5% to 7% guidance, Chief Financial Officer Zach Wasserman said Thursday that portfolio expansion would be closer to 5% to 6%.
Both Wasserman and Steinour said Huntington planned to build common equity Tier 1 capital, currently 9.55%, to the high end of its 9% to 10% target operating range, ruling out share buybacks for now.
"We're very focused on building capital throughout 2023," Wasserman said on the earnings conference call.
The March crisis also spurred Huntington to go to even greater lengths to ensure its liquidity position. Wasserman, who called liquidity "a key risk that the company has been focused on managing for more than a decade,” said that over the last week Huntington had added $19 billion in cash and borrowing capacity from the Fed and Federal Home Loan Bank System. Its cash and borrowing capacity is now up to $84 billion.
"We purposely create exceptionally robust pools of contingent liquidity to cover any potential issue," Wasserman said.
Huntington reported on Thursday that its first-quarter net income totaled $602 million, down 7% from the fourth quarter, but up 31% on a year-over-year basis. Average loans grew by 8.3%, to $120.4 billion from a year earlier, while average deposits rose 2.3% to $146.1 billion. Since the end of 2022, average deposits are up about $400 million, or 0.4%.
Huntington reported solid credit quality, with net charge-offs totaling 0.19% of total loans, while nonperforming assets declined for a seventh consecutive quarter, falling to $578 million, or 0.63% of total loans, leases and other real estate owned.
Huntington's first-quarter numbers were bolstered by a $57 million gain on the sale of its 401(k) advisory and retirement plan servicing business to Atlanta-based OneDigital Investment Advisors, which it announced earlier this month. As part of the deal, OneDigital will gain $5.6 billion of assets under management. It will also add Huntington's entire team of 18 advisors, Steinour said.
Rather than walking away from the space, Huntington plans to stay involved as a strategic partner to OneDigital and refer clients to the insurance and human resources platform.
"We fell behind, which isn't what we like for our customer experience," Steinour said Thursday in explaining the decision to sell. "This wasn't a big enough business to invest in. … OneDigital has far more advanced and sophisticated technology. It's a win-win for our customers."
Steinour said Huntington's first-quarter results position it well to take advantage of opportunities to grow and add market share.
"We intend to be opportunistic," Steinour said. "We've got a lot of organic-growth opportunities in the business lines. … We see this in aggregate as a moment to take market share. That's what we're driving toward."
