Greetings, and welcome to the Huntington Bancshares 2024 Third Quarter Earnings Review. At this time, all participants will be in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Tim Sedabres, Director of Investor Relations. Please go ahead.

Thank you, operator. Welcome, everyone, and good morning. Copies of the slides we will be reviewing today can be found on the Investor Relations section of our website, www.huntington.com. As a reminder, this call is being recorded and a replay will be available starting about one hour from the close of the call. Our presenters today are Steve Steinour, Chairman, President and CEO; and Zach Wasserman, Chief Financial Officer. Brendan Lawlor, Chief Credit Officer, will join us for the Q&A. Earnings documents, which include our forward-looking statements disclaimer and non-GAAP information, are available on the Investor Relations section of our website. With that, let me now turn it over to Steve.

Thanks, Tim. Good morning, everyone, and welcome. Thank you for joining the call today. We are very pleased to report outstanding results for the third quarter, which Zach will detail later. 2024 continues to be a dynamic year and our year-to-date results demonstrate Huntington's strength and consistent performance. These strong results reflect the dedication of our nearly 20,000 colleagues across the bank who live our purpose every day as we make people's lives better, help businesses thrive, and strengthen the communities we serve. Now on to Slide 4. There are five key messages we want to share with you today. First, we are driving accelerated loan growth along with sustained deposit growth. These results are supported by our core businesses, as well as the successful execution of new initiatives, including expanded geographies and commercial banking verticals. Second, we are actively executing our down beta playbook as the market enters a declining Fed rate cycle. We are dynamically managing the balance sheet and coupled with our growth outlook, we expect to deliver record net interest income in 2025. Third, we continue to drive fee revenues higher with sustained momentum across our three major focus areas: payments, wealth management, and capital markets. Fourth, our credit performance remained strong during the quarter with stable net charge-offs as well as lower non-performing and criticized assets. This is a direct result of our consistent disciplined credit management and our aggregate moderate to low risk appetite. Finally, our performance during the quarter set the foundation for continued organic growth and increased profitability into 2025 and beyond. I will move us on to Slide 5 to recap our performance. We delivered accelerated loan growth in the quarter with average balances growing by 3% from a year-ago. End-of-period loans increased at a 6.3% annualized rate. Average deposit growth…

Thanks, Steve, and good morning, everyone. Slide 6 provides highlights of our third quarter results. We reported earnings per common share of $0.33. The quarter included $6 million of notable items on a net basis and did not have an impact to earnings per share. Return on tangible common equity or ROTCE came in at 16.2% for the quarter. Adjusted for notable items, ROTCE was 16.3%. Pre-provision net revenue or PPNR increased by 8.3% from the prior quarter. This was driven by net interest income, which expanded by 2.9% and fee revenues, which increased by 6.5% from the prior quarter. Average loan balances increased by $3.7 billion or 3.1% versus last year. Average deposits continued to grow, increasing by $8.3 billion or 5.6% on a year-over-year basis. Credit quality remains strong with net charge-offs of 30 basis points. Allowance for credit losses decreased by 2 basis points and ended the quarter at 1.93%. Adjusted CET1 ended the quarter at 8.9% and increased roughly 30 basis points from last quarter. Supported by earnings, as well as the recapture of AOCI from lower rates, tangible book value per share has increased by 21.5% year-over-year. Turning to Slide 7. Consistent with our plan and prior guidance, year-over-year average loan growth is accelerating. Q3 loan growth was 3.1% year-over-year, rising from last quarter's 1.7% growth and the 1.3% we posted in Q1. Average loan balances increased sequentially by $1.1 billion. Excluding runoff from commercial real estate, loans increased by $1.6 billion or 1.3%. As Steve mentioned, end-of-period loans increased by 1.6% and represented a 6.3% annualized growth rate. Loan growth in the quarter was supported by strong contributions from core businesses and from new initiatives. Our new initiatives collectively represented $700 million of growth in the quarter and included Carolinas, Texas, fund finance, healthcare…

Thank you, Zach. Operator, we will now take questions. We ask that as a courtesy to your peers, each person ask only one question and one related follow-up and then if that person has additional questions, he or she can add themselves back into the queue. Thank you.

Thank you. At this time, we'll be conducting a question-and-answer session. [Operator Instructions] And our first question is from the line of Manan Gosalia with Morgan Stanley. Please proceed with your questions.

Hey, good morning.

Good morning, Manan.

Good morning. So the guidance for 4Q NII I think implies that NII should be flat to slightly down versus 3Q. Can you talk about what's driving that? Is that just a timing difference between those floating rate asset yields coming down and deposit costs coming down?

Thanks, Manan. This is Zach. I'll take that one. And the short answer to the question is, yes. Just a short timing difference between the really powerful and very effective actions we've seen on reducing deposit costs, which you saw some of the trends we illustrated in the third quarter. Those will continue into the fourth quarter, just not fully offsetting on a short-term basis the reductions in variable yields. I think we'll exit Q4 having a positive run rate benefit from deposit costs relative to asset yields; but in the early part of the quarter assuming, again, two more rate cuts, which is our forecast here, will likely be a little lower quarter-to-quarter.

Got it. And can you share more color on the deposit growth there? It looks like you continue to grow deposits faster than loans this quarter. Is that mostly coming from new account growth? And I guess the question there is, why not pay down some of the higher cost CDs to help NII and have deposits grow a little bit slower than loans given that you pre-funded a lot of the loan growth in the first half of the year?

A terrific question, Manan, and that is effectively the plan. We're really pleased to see how much deposit growth we've seen throughout the course of this year, obviously, very significantly faster than the industry average overall. And that really puts us in a pretty strong position now with having brought down loan-to-deposit ratio and just given how strong that deposit gathering has been to now turn and drive down beta and to begin to decelerate deposit growth even as loan growth is accelerating. So if you look at the guidance we've given for deposits into the fourth quarter, I would expect the balances to be relatively flat actually quarter-to-quarter even if they still grow year-on-year and that's really an indication that we're doing exactly what you just said, leveraging that position to really drive funding costs lower.

Got it. Thank you.

Our next question is from the line of Ebrahim Poonawala with Bank of America. Please proceed with your questions.

Hey, good morning.

Good morning, Ebrahim.

Two things. One, I guess Zach, just wanted to follow-up. I think you mentioned NII, I guess you have the guidance for fourth quarter and then did you mean to say that the growth accelerates from the 4Q versus 3Q level as we think about first half 2025 and then get even faster through the course of 2025? If you could just clarify that. And with that, what's the sensitivity to rate cuts, right? Like we had very strong retail sales so the market's actively recalibrating what the Fed may or may not do. Just talk to us whether getting three to four cuts versus not getting those cuts means much in terms of your NII outlook?

Yes. Great question, EP. Appreciate the chance to unpack and clarify a bit. So, our general expectations for NIM are to be a few basis points lower into the fourth quarter really driven by what I was talking about from Manan's question earlier, just a short timing impact before which -- before accelerating beta starts to fully offset and more than offset the variable -- impacts on variable loans. I will note as well that one of the major benefits we'll have to NIM here is our hedging program. And just for the facts, we had around 12 basis points of hedge dragging in the second quarter -- sorry, in the third quarter. That's going to reduce, if you look at the forward yield curve, down to 7 basis points in Q4 and flip over the course of 2025 to a 5 basis point benefit by the end of 2025. So beta accelerating and the hedge drag continually reducing and then beginning to be a hedge benefit as you go throughout the course of next year really are the drivers of why we expect to see sustained NIM expansion from the Q4 level into Q1, into Q2, and Q3 and then continuing on from there. So expect to see nice upward drift in NIM from the Q4 level throughout the course of 2025. And when you couple that with the really robust loan growth we're driving, that will be what drives NII higher over the course of 2025. We expect, as I noted in my prepared remarks, record NII dollars in 2025 really driven by those two factors.

Understood.

And then just -- I'll expand a bit on your question on sensitivities. So I think your point is very well noted. It's a pretty dynamic environment here for sure. And while our underlying forecast assumes a couple of more rate cuts this quarter and then five into next year, you could very well not see those as you noted. I think in the short term for us if you saw less rate cuts, you'd see an even better NIM performance and an even better NII dollar performance. Of course, as you know well, what would also matter a lot is the reason why you're not seeing those rate reductions and what that would imply about customer and market beliefs about where rates are going. And so in the longer term, that would be uncertain impact, but in the short term, it would be universally positive for us to have less rate cuts. If there's more, I think again it kind of matters why. I do think, for example, EP, earlier this year when we saw market expectations for rate reductions really accelerate a lot, that was very helpful to drive the actions around down beta. And so, if you did see more rate reductions, while it might produce a little bit of short-term headwinds, but over the longer term it might actually be even better for down rate deposit pricing. And so, again, sort of a little uncertain over the short -- over the long-term there if rates are even faster down.

That's helpful. And I guess just one thing. You talked earlier about traction in Carolinas, just how loan growth was evolving. Talk to us in terms of deposit growth. You did hire sort of a big team on the mortgage side. Are we seeing mortgage rates pull back? But either that team or just the overall deposit-gathering strategy beyond promotional rates, where do you see deposit growth coming from?

Yes. I mean, what we've seen with deposit performance throughout the year is consumer has been really, really strong. But over the course of the last several quarters, commercial now starting to really catch-up. And I think that's driven both by our core commercial business, but also by some of the new verticals and new markets. The mortgage service vertical in particular has been doing really well through driving a couple of billion dollars of incremental deposits in the third quarter and, as I think we've noted before, that could grow -- continue to grow longer term here as well. So it's -- commercial is now beginning to accelerate and I think as we have an outlook for 2025, I would expect -- we're generally expecting continued deposit growth with the mix being slightly more commercial than consumer as we go into next year.

Noted. Thank you.

Our next question comes from the line of Jon Arfstrom with RBC Capital Markets. Please proceed with your questions.

Hey, thanks. Good morning, guys.

Good morning, Jon.

A couple -- one clarification I think, maybe a simple question. But you're saying fourth quarter NII around $1.330 billion, $1.340 billion, something like that. Am I reading that right?

We are expecting between $15 million to $25 million lower sequentially, Jon. That will be around flat to up 1% on a year-over-year basis. Again, assuming not only the [indiscernible], but another 225 sort of in the last few months of this year.

Okay. That's helpful. Thank you for that. And then kind of a simple question, funny question. But on Slide 10, I kind of want to joke about the scaling of that, but the fourth quarter 2025 bar chart implies higher NII. Is there -- odd question. Is there any scaling to that, Zach, or what kind of an acceleration do you expect in NII growth throughout the year?

I'm expecting pretty steady NII dollar growth from Q1 to Q2, from Q2 to Q3, and continuing on, Jon. I think kind of the path of NIM [indiscernible] we're starting now to get into a bit of overly level precision at this point given all the uncertainties. But generally speaking, I'm expecting to see nice sustained NIM expansion in Q1, Q2, Q3, and a bit topping out into Q4, but we'll see where the rate environment is at that point. And the dollars really be pretty steady growth throughout the year as lending sustains at a fairly solid level. It's probably the best way I can answer your question.

Yes. Okay. Good. If I can squeeze one more. And I apologize for doing this. But the merchant acquiring, you're saying 1% growth to overall fee revenues. Are you saying that could be a $200 million business? Is that [Multiple Speakers]

Currently -- a little bit off. We make roughly $25 million on a run rate annual basis for merchant acquiring in the old outsourced model that we have. As we in-source that business, we're thinking next year could be fill the $50 million in terms of overall revenue, which is that's an extra $25 million, sort of about 1% of the overall fee revenue base as you go into next year.

Yes. Okay. All right. Thank you for clarifying this.

Yes. Good questions.

Our next question is from the line of Erika Najarian with UBS. Please proceed with your questions.

Good morning, Erika.

Erika, perhaps your line may be muted. Your line for questions.

Can you hear me?

Yes, we can hear you now. Go ahead.

Apologies. Sorry about that. So Zach, as you can imagine, everybody is asking about the blank box on 4Q 2025 for Slide 10. So maybe I'll ask it this way. So consensus wants to fill that box that would imply 8% year-over-year growth from your implied fourth quarter 2024. So I'm assuming that has loan growth and also the NIM inflection. So with that -- with consensus filling that box in at up 8% quarter-over-quarter, are they in the right ballpark as we think about your loan growth momentum and the dynamics of your balance sheet?

I'm not going to give you that level of guidance precision at this point in the year, Erika. As you know, we will give guidance as we get into the early part of next year. But I don't think that's directionally wrong, frankly. I think we're expecting to see NIMs rise throughout the course of 2025. I mentioned earlier, I see NIM above 3% in the second half of next year. If you compare that to where we'll be this year, that will be a nice NIM expansion off of our forecast for Q4. So that will drive some year-over-year growth. And then our current run rate on loan growth is around 6% on an annualized pace right now and there's nothing that indicates we will not be able to sustain that pace into next year. In fact the fourth quarter looks outstanding in terms of loan growth and the momentum we've got across the business. And so, those are relatively good underlying drivers to get to the number you're talking about without being overly clear on guidance at this point.

That's helpful. Thank you. And on the expense run rate, I think, Zach, what you and Steve have been talking about in terms of investments really showed through with regards to your 3% year-over-year, quarter-over-quarter -- sorry, year-over-year fourth quarter guide for fourth quarter relative to the run-rate for this year. And we're seeing it in the loan growth. As we think about next year with the caveat that Huntington under this management team and Board is constantly investing, should we expect more of a harvest year so to speak in that perhaps that fourth quarter run rate year-over-year is more sustainable rather than the 5%, 5.5%?

Yes. Great question. In the area of expenses, it's something we're incredibly rigorously focused on and this year is playing out pretty much exactly like we expected, hitting the roughly 4.5% year-over-year growth, decelerating throughout the year as you noted. And really, Erika, staying focused on the model that we've got, driving efficiencies and baseline expenses. You saw us take another series of actions in the third quarter, all those are continuing on. It's a fairly continual process of driving our engineering to enable us to really drive the offensive expense categories that are investment related, technology development, marketing, additions of people to go and drive some new great revenue producing initiatives. The plan for 2025 is the same as we've had before, drive for positive operating leverage. I do expect, a little bit to the point of your last question, to have a pretty solid revenue growth trajectory. And so I don't intend to -- we collectively don't intend to be in harvest mode. We want to keep driving for growth, but certainly to drive very solid improvement, a positive operating leverage and efficiency ratio and then just to sustain that as we go forward.

Got it. Thank you so much.

Thanks, Erika.

Our next question is from the line of Matt O'Connor with Deutsche Bank. Please proceed with your questions. Matt O’Connor: Good morning. Question on fee revenues. It came in a decent amount better than you expected with the intra-quarter guide. I assume a lot of that swing is the capital markets and maybe the loan sale. But just anything else that surprised you that you'd want to call out? I mean all the categories actually did pretty well. So I guess, I'm just wondering was that kind of better than what you thought a month ago? Thanks.

Yes. Great question, Matt. And it was primarily capital markets that you noted in the basis of your question saw -- we were expecting to see a pretty solid Q3 for capital markets, but it beat our expectations even better than that. Overall really, really pleased with the execution of the sustained level of performance we're seeing in the three key areas of focus. 12% year-over-year growth in fees is pretty outstanding from our perspective. The outlook for Q4 is likewise pretty solid, particularly in capital markets, I think we'll see another really good quarter of sequential growth in the cap markets. We'll also continue to drive a good underlying household acquisition and net flows and then payments really chugging along here, particularly with the addition of merchant acquiring should be a nice lift on tailwind to growth. Matt O’Connor: Okay. And then on the credit risk transfer or the CRTs as you call it. Now that you've got – you are approaching your targeted capital level even including AOCI and you've got all the funding and all those positives, is that something that you're looking to do less of going forward or unwind them?

Yes. Great question. On the plan to grow capital, we feel really good about how that's going and as we've noted a number of times, the primary and most significant driver of our plan to continue to drive capital higher is just core organic earnings and strong return on capital. We look at these CRT transactions as really tactical as opportunistic. They're kind of an interesting innovation in the marketplace for sure that offer great low return on capital for certain asset classes. Just look back to the transaction we did in the second quarter, we unlocked 17 basis points of capital for less than 3% cost of capital, just $7 million plus transaction costs. So very, very efficient. So it's possible we'll be opportunistic in the future on these, but they're really -- we see them in that light, opportunistic and the core is really the underlying return on capital and organic earnings.

Got it. Okay. Thank you.

Thank you.

[Operator Instructions] Our next question is from the line of Sean Sorahan with Evercore ISI. Please proceed with your questions.

Good morning. I was hoping you could address your trends and strategy in the auto business. Production stepped up again linked-quarter in 3Q. Can you talk about the growth outlook there a little bit? And then maybe shifting to credit, there was a big update mid-quarter from an auto peer and you saw a little bit of a step-up in 3Q this quarter. Can you address expected credit trends giving shifting auto values? Thanks.

Yes. Sean, thanks for the question. This is Zach. I'll take the first part and then Brendan will tack on to the second part around credit. So really pleased actually with what we're seeing in the auto lower production area. Auto for us is a terrific asset to lean into at times like this when the general expectation for rates is to be reducing. A nice fixed asset class, got about a two-year duration. Remember this is prime and super-prime credit quality, so very solid underlying returns and also incredibly efficient business for us. It's a 10% efficiency ratio business for us that is very, very optimizable. We can put in pricing in the market on Friday, see the impacts of it over the weekend, dial it back in again the next Tuesday as we go into the next week. And so really, really optimizable and precision return calibration for us here. So, we like this one. I think the production levels for the fourth quarter look to be around the same as the third quarter here. So I think we've hit a nice run rate at this point and then we'll see where it goes out into the course of next year. But for right now, nice fixed asset that we're getting very significant fixed asset repricing benefits coming through into the NIM. Maybe Brendan, over to you on credit.

Sure. Sean, this is Brendan. And given our history in this industry, we have the ability to utilize our custom scorecard to really drive the customer selection that Zach was referencing. And that continues to be a strength for us. We've seen late-stage delinquency and charge-offs have remained right within our historical levels. So we're not seeing broad deterioration at all here. And frankly, with our deep industry expertise and we're traditionally lower than the peer set when it comes to charge-offs or delinquencies and that trend continues this quarter. So, we feel real confident in this book.

Sean, we've been -- this is Steve. We've been very disciplined. We got 15 years of quarterly track record here. It's an area of continued focus and discipline, as well as we refined the model a number of times during the course of the -- that period of time. So we like what we're seeing. We're very confident in it and obviously with the disciplines we have, super-prime prime, we're not going to see what you alluded to from the auto institution.

Got it. Very helpful. Thank you. And then Zach, shifting over to the hedge program slide, it's always helpful. I noted the received fixed balance in the back half of 2025 came down a bit this quarter versus last. Can you update us on any adjustments made there in the quarter and then maybe highlight any future adjustments you're thinking about? Thanks.

Thanks for bringing that question up, Sean. So what we tried to illustrate on that slide is really the continued dynamic management of asset sensitivity really bringing down asset sensitivity a lot, a third reduction in sensitivity just in the third quarter alone, we'll get to 50% reduction from Q2 by the end of this year and then to 60% by the middle of next year. And one of the things we try to highlight all the time in this is we're very dynamic. So we're continually looking at the most efficient way to really do those two objectives of protecting capital and maximizing and stabilizing NIM. So, we'll always make adjustments here as we deem it most efficient. An example of that. We just did another $1 billion of forward-starting receivers just in the early part of this quarter that are really starting out into the second half of 2025 that will just continue to drive asset sensitivity lower at the time we really want it. So, we're always doing this. Really primarily at this point the game plan vis-a-vis asset sensitivity is gradually allow the pay fix swaptions to reduce and to expire, put on more forward-starting receivers when we see nice opportunities in the market to do that, gradually lengthen the duration in our U.S. treasury securities portfolio, and really optimize the kind of funding mix for lower structurally fixed funding, more structurally variable funding, and optimize lower levels of Fed cash. And so, those are really the components that drive the overall reduction in asset sensitivity.

Perfect. Thank you.

Ladies and gentlemen, we have reached the end of the question-and-answer session. I would now like to turn the call back to Mr. Steinour for closing remarks.

Thank you for joining us today. In closing, we delivered exceptional results for the third quarter highlighted by the successful execution of organic growth initiatives. Net interest income expanded, fee revenues grew strongly, expenses were well managed, and credit remained stable. Our strategy is working well and our investments in the franchise are delivering returns. We remain in an attractive competitive position and we continue to seize opportunities to add talented bankers across our businesses. Collectively, the Board, executives, and our colleagues are a Top 10 shareholder. So, we have strong alignment to deliver sustained value creation for our shareholders. As a reminder, we have an Investor Day scheduled in the New Year on February 6 and you're invited to that. And finally, thank you to all our Huntington colleagues for driving these outstanding results. Thank you very much for joining us today. Have a great day.

This concludes today’s conference. You may disconnect your lines at this time. Thank you for your participation.