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Huntington Bancshares' profit eased in the third quarter as the Columbus, Ohio, bank continued to feel the effects of a shrinking net interest margin.
The $201 billion-asset Huntington posted net income of $517 million in the three months ended Sept. 30, down about 5% from the same period last year.
Net interest income fell 1% from a year ago to $1.36 billion, which the bank attributed to a 22-basis-point decrease in its net interest margin to 2.98% and an increase in average interest-bearing liabilities. It's the fourth consecutive quarterly margin decline.
"The lower NIM was primarily driven by higher cost of funds given the higher interest rate environment, $12.3 billion in average interest-bearing deposit growth and higher balances held at the Federal Reserve Bank, partially offset by higher loan and lease and investment security yields," Huntington said in a press release Thursday.
Still, net interest income rose 3% from the second quarter and management said the upward trend has legs, predicting spread income for the second half of 2024 would eclipse the $2.63 billion Huntington reported for the first six months of the year. It also forecast record net interest income in 2025. The net interest margin is also expected to resume growing, Chief Financial Officer Zach Wasserman said Thursday on a conference call with analysts.
"Over the past three quarters we have invested considerably into numerous new revenue producing opportunities and these investments are delivering organic growth trends," Chairman and CEO Steve Steinour said in the press release. "This outlook is supported by both our existing and new teams across the company and is expected to drive higher revenues over the second half of the year and with continued momentum into 2025 and beyond."
Huntington's spread income forecast echoes
Over the past year, Huntington has expanded into the Carolinas, announcing plans to
Noninterest income rose 3% from a year ago to $523 million. The increase was driven by solid gains in wealth and asset management, capital markets and advisory and mortgage banking revenues.
Noninterest expenses rose 4% to $1.13 billion, with the biggest increases in personnel costs and outside data processing.
Huntington reported average third-quarter deposits of $156.5 billion, up 5.6% from last year. Average loans and leases of $124.5 billion represented a 3% increase over the third quarter of 2023. Loan growth was driven primarily by consumer business lines, including auto and mortgage lending.
Auto lending has long been a core activity for Huntington. The company originated car loans totaling $2.4 billion in the third quarter, up $1 billion from last year.
While third-quarter net charge-offs of $93 million increased $20 million from the same period in 2023, they remained manageable, amounting to 0.30% of total loans and leases. Nonperforming assets totaled 0.62% of end-of-period loans and leases, up from the 0.52% Huntington reported at Sept. 30, 2023. Provisions for credit losses rose to $106 million from $99 million a year ago.
"Credit continues to perform very well, with stable net-charge offs and improved nonperforming asset and criticized asset ratios, consistent with our aggregate moderate-to-low risk appetite," Steinour said. "Our customers continue to show strength and resiliency, which supports our constructive outlook."
Huntington reported a Common Equity Tier 1 capital ratio of 10.4% at Sept. 30, in line with the second-quarter result and higher than the 10.1% ratio reported a year ago.
