Huntington Bancshares Incorporated (NASDAQ:HBAN) Q4 2022 Earnings Call Transcript

Rich Pohle: I’ll add to that a little bit, Jon, if I can. So Capstone’s had a good performance thus far, have a very strong pipeline coming into the year. Obviously, multiples of change valuation is impacted by that. Timing becomes a little more uncertain. But we’re really pleased with that. The integration into the bank channels is going very, very well. The core businesses, foreign exchange, a record year, Institutional Sales & Trading. Commodities has had a very good performance. So a number of the businesses are doing very, very well at the core and expect that they’ll continue to so that the laggard is, as you would expect, the rates businesses given the inverted curve and but this is a very strategic growth for us. We’re continuing to invest in it and the integration of both Capstone and the combined efforts of our core teams and what you earn district at the Investor Day make us very bullish about ’23 and beyond.

Operator: The next question is from the line of Scott Siefers with Piper Sandler.

Scott Siefers: I just wanted I just wanted to ask one back on credit. Just sort of in light of your updated economic assumptions, what sort of additional reserving needs do you think Huntington might have? I mean you’re already starting with 190 plus reserve here. So I mean does that seem sufficient in light of what you’re thinking? Or would it continue to drift upward a bit?

Rich Pohle: Scott, it’s Rich. I’ll take that. So as you saw, we held our coverage levels flat in the second quarter then we had 2 incremental builds in Q3 and Q4. So the 190 coverage that we’re sitting with today, we think is fully reflective of the current economic scenario. Now where the reserve goes from there is really going to be a function in the short term where the economy is having we see significant degradation to react to that or that isn’t as bad will react there. So it’s hard to answer it. We go through that process every quarter in terms of looking at the economic scenario that’s in front of us and what the potential for improvement or degradation is, and we make the call at the end of the quarter based on all that.

So the near term is really going to depend on where the economy shapes up. I would say that longer term, as we’ve been past the downturn, however long it might be, we do think that we will bring the reserve coverage down over time. It’s just a question of the timing around that. And then year-end reserves that reflects this adjusted thinking in terms of the baseline economic scenario goes off in the comment and a problem.

Scott Siefers: Just the expense guidance for the full year. I’m presuming that includes the restructuring charges to which you alluded earlier. I know you said you’re talking in more detail about those later, but do you have maybe an approximate level of what we might expect just to get a sense for what the sort of underlying expense growth might look like from here on out?