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Speaker 1: Huntington Bank Shares stock down about one point eight percent
Speaker 1: as we speak. The company reported second quarter earnings this morning.
Speaker 1: It boosted its net interest income growth forecast for the
Speaker 1: full year. Earlier this week, though, the company also agreed
Speaker 1: to buy Veritec's holdings for one point nine billion dollars
Speaker 1: in stock that expands its presence in Dallas, Fort Worth
Speaker 1: and Houston. Back with us is Zach Wasserman, chief financial
Speaker 1: officer of Huntington Bank Shares. It's the holding company of
Speaker 1: the consumer and business regional bank, Huntington National Bank. It's
Speaker 1: got locations in a handful of states, including Ohio, Minnesota,
Speaker 1: North and South Carolina and more. Also with us Bloomberg
Speaker 1: News Senior editor Nina Trentman. She writes the Bloomberg CFO
Speaker 1: Briefing newsletter, which you should sign up for at Bloomberg
Speaker 1: dot com slash CFO Dash Briefing. Zach is in Columbus,
Speaker 1: Ninah in our Bloomberg studio, Zach, I want to start
Speaker 1: just with the deal for Veritex in Texas that will
Speaker 1: accelerate your operations in the state. What attracted you to
Speaker 1: this bank in particular and to the Texas market.
Speaker 3: You know, we're extraordinarily pleased with the opportunity to partner
Speaker 3: with Veritechs, And you know, a couple of things.
Speaker 2: I would say.
Speaker 3: One is the Texas market in particular is incredibly attractive.
Speaker 3: As you probably know, it's one of the fastest growing
Speaker 3: states in the country. It's the eighth largest economy in
Speaker 3: the world if it was a standalone country, and just
Speaker 3: the dynamism and the amount of business activity there is
Speaker 3: incredibly attractive.
Speaker 2: It's one of the.
Speaker 3: Reasons why we launched our own business there more than
Speaker 3: a decade ago, and we doubled down with a local
Speaker 3: expansion in early twenty twenty four.
Speaker 2: But Veritechs also is.
Speaker 3: An incredible platform for us to partner with. They're a
Speaker 3: top ten commercial bank in the state, and in particular
Speaker 3: focused on the two cities, as you noted before, the
Speaker 3: two MSA areas Dallas Fort Worth on one hand and
Speaker 3: then Houston and the other hand that.
Speaker 2: We really are focused on.
Speaker 3: So we not only see a great opportunity to combine
Speaker 3: our activities but to really build on that.
Speaker 2: One of the things we've talked a lot about is.
Speaker 3: That this is a springboard for us to grow organically,
Speaker 3: not only now in the short term, but really over
Speaker 3: the longer term in Texas. It'll make Texas our third
Speaker 3: largest state, to give you a sense, so we already
Speaker 3: will have a very meaningful present presence in that really
Speaker 3: great market.
Speaker 4: Zach, can you talk to us a little bit about
Speaker 4: how that deal came together. We know, of course many
Speaker 4: companies have been looking at deal making this year. Deal
Speaker 4: making is actually up compared to the prior year period,
Speaker 4: but still, of course there are deals that are not
Speaker 4: going through because of terrorists and uncertainty, and how far
Speaker 4: did that impact your deal and also how did it
Speaker 4: come together?
Speaker 3: Yeah, well, you know, so we have wanted to expand
Speaker 3: and sort of continue to grow into Texas for some time,
Speaker 3: and we've been therefore evaluating a lot of opportunities to
Speaker 3: do that, both organically, you know, as you as you
Speaker 3: probably know in North and South Carolina, we've we've just
Speaker 3: announced to a pretty significant organic expand and building fifty
Speaker 3: five branches and really doubling down building out our whole
Speaker 3: franchise there, and so we were looking at opportunities to
Speaker 3: do the same thing in Texas and obviously evaluating lots of.
Speaker 2: Different ways to do that.
Speaker 3: When we really began to talk with Veritexs and it
Speaker 3: came together pretty quickly. The first time we met with
Speaker 3: them to discuss a partnership in any specificity was in
Speaker 3: mid June, so just about a month ago, and it
Speaker 3: evolved quickly for us to see, Wow, these are not
Speaker 3: only incredibly strategic opportunities, but the organizations themselves share a
Speaker 3: tremendous affinity in terms of culture and mission, which, as
Speaker 3: you probably know, that is the sort of secret sauce
Speaker 3: to make an acquisition in banking successful. The cultures need
Speaker 3: to be aligned, the teams need to work together, and
Speaker 3: we saw that there was not only the strategic opportunity,
Speaker 3: but the cultures fit and then we were able to
Speaker 3: work together to find some of these growth opportunities that
Speaker 3: we could capture together. We said, Wow, this is a
Speaker 3: partnership that we really should move forward with, and so
Speaker 3: on Monday we were really pleased to be ably announce that.
Speaker 4: Just turning to your earnings, talk to us a bit
Speaker 4: about the past quarter. We spoke to you at the
Speaker 4: end of the last quarter and we're asking you, do
Speaker 4: you see any sign any signs of a recession in
Speaker 4: your business? How is your business doing? What are you
Speaker 4: hearing from clients now that we're three months later, How
Speaker 4: does that look?
Speaker 3: Yeah, the Q two results were just phenomenal, and then
Speaker 3: they really built strength throughout the quarter. To give you
Speaker 3: a sense, loans sequentially grew just under two percent. That's
Speaker 3: eight percent year over year. That was at the high
Speaker 3: end of our guidance range that we had given earlier.
Speaker 3: In the quarter, deposits grew one percent, fees were up
Speaker 3: seven percent year on year, spread revenue twelve percent. Ultimately,
Speaker 3: we saw pretexts earnings up sixteen percent and rings per
Speaker 3: share growing twenty.
Speaker 2: Five percent year on year. So it really was a
Speaker 2: bang up quarter.
Speaker 3: I will tell you, if you rewind the tape and
Speaker 3: you go back to April, I would have told you
Speaker 3: we had a lot of momentum. We felt pretty confident
Speaker 3: about how things where good would go, but there was
Speaker 3: clearly quite a bit of uncertainty in the market, and
Speaker 3: the capital markets were pretty volatile.
Speaker 2: You know.
Speaker 3: Fast forward to June and we saw strength build throughout
Speaker 3: the quarridor loan and customer activity really firmed up, particularly
Speaker 3: in mid May and into June, and now the third
Speaker 3: quarter is starting out with the bank. We just talked
Speaker 3: this morning with our analyst and investor community and we
Speaker 3: shared that, you know, through the first couple of weeks
Speaker 3: here in July, it's pretty strong actually, So all signs
Speaker 3: are pointing toward continued growth and certainly a very encouraging
Speaker 3: end of what was to start with a somewhat uncertain environment.
Speaker 5: Zach Shanali Bassak here, thanks for joining us today. You know,
Speaker 5: even with a lot of promising information coming out of
Speaker 5: this earning season for the biggest banks, for the regional banks,
Speaker 5: there seems to have been a pretty muted investor reception
Speaker 5: for firms even like yours that have boosted net interest
Speaker 5: income guidance. That should be a really good thing. What
Speaker 5: are masters telling you in terms of what else they
Speaker 5: want to see? Why the mouted reaction, even if things
Speaker 5: are looking pretty good.
Speaker 3: You know, it's hard to know what's on the mind
Speaker 3: of investors any given time, as I'm sure you know. Well, look,
Speaker 3: I think if you take a step back, the regional
Speaker 3: bank stocks have expanded a fair amount over the last month,
Speaker 3: so I think there's part of that sort of profit
Speaker 3: taking activity going on now as results come through, there's
Speaker 3: also obviously worries around how will different banks fare under
Speaker 3: this fairly wide cone of uncertainty, around where interest rates
Speaker 3: are going to go from here? Our rate's going to
Speaker 3: stay flat and could they even go higher or could
Speaker 3: they go lower. I'll tell you, for our for Huntington's sake,
Speaker 3: we have positioned the business to be pretty neutral and
Speaker 3: to effectively have the same outcome if we have zero
Speaker 3: rate cuts or if as many four rate cuts from here,
Speaker 3: and so I think, you know, that's one of the
Speaker 3: questions on the mind of analysts. I think another one
Speaker 3: is as low growth in the banking industry generally starts
Speaker 3: to pick up, which by the way, is an incredibly
Speaker 3: healthy sign, but as it happens across the industry broadly,
Speaker 3: what will that do to deposit cost competition and the
Speaker 3: kind of the benefits of interest rates coming down by
Speaker 3: around a percentage point relative to the peak of FED funds,
Speaker 3: you know, over the last number of quarters here. So
Speaker 3: I suspect those and many other things are on the
Speaker 3: mind of analysts, you know. For our part, I'll tell you,
Speaker 3: you know, we put our heads down and we run
Speaker 3: the business and and I think you know for what
Speaker 3: we believe pretty strongly is if we can keep posting that,
Speaker 3: you know, teens to hire earnings for share growth and
Speaker 3: revenue growth in the high single digits, that ultimately we'll
Speaker 3: see the stock prices continue to expand as they have
Speaker 3: been for the last several months.
Speaker 4: Zach, you talked about interest rates, which of course is
Speaker 4: a nice segue to to our next question. We've seen
Speaker 4: increasingly intense devey this week and in recent weeks about
Speaker 4: the future of mister Powell is head of the FED,
Speaker 4: with the Trump administration asking for ratcod wanting to remove him.
Speaker 4: We saw this big excitement earlier this week when The
Speaker 4: New York Times reported that Trump had written a letter
Speaker 4: and waived that in front of people in Congress. I'm
Speaker 4: just wondering for you, as a regional bank CFO. I
Speaker 4: know that your ps on Wall Street have expressed their
Speaker 4: support for an independent FED earlier this week when they
Speaker 4: reported earnings for you as a regional bank CFO, how
Speaker 4: does that look?
Speaker 3: You know, what we want is a well functioning monetary system.
Speaker 3: We want a predictable and stable environment. We want to
Speaker 3: understand that it's a fact based and you know, based
Speaker 3: on the kind of fundamentals of the economy in terms
Speaker 3: of how the decision making is happening. So far, that
Speaker 3: appears to be happening. I personally give the federal lotic credit.
Speaker 3: It was a very difficult environment they've been through, and
Speaker 3: they seem to have managed through over the last several
Speaker 3: years pretty well here and you know, that'll be where
Speaker 3: our focus is fundamentally coming back. You know, we run
Speaker 3: the business every day, We take the interest rate as
Speaker 3: given and we try to optimize around that.
Speaker 1: Nina, we're speaking with Zach wassonan chief financial officer of
Speaker 1: Huntington Bank Shares. Zach, since you do operate in these
Speaker 1: geographies including Texas, Ohio, Minnesota, North and South Carolina and more,
Speaker 1: you've got a nice regional view on where there is
Speaker 1: strength and weakness. Are you seeing any particular geographical weakness
Speaker 1: emerge anywhere?
Speaker 2: Really not, you know, I think pretty broad based growth.
Speaker 3: One of the things we shared today in the earnings
Speaker 3: results is that, like we've seen for the last several quarters,
Speaker 3: the growth we're seeing is very balanced between what we're
Speaker 3: calling our core all of the businesses we've been operating
Speaker 3: for for a long time, but also our new initiatives
Speaker 3: excuse me, the launches we're doing into North and South Carolina,
Speaker 3: into Texas.
Speaker 2: Recently we launched our business into South Florida and a number.
Speaker 3: Of new commercial specialties, and we're seeing a nice balance
Speaker 3: across them. So, you know, kind of across our traditional
Speaker 3: Midwest footprint, we're seeing strong growth in Michigan. I was
Speaker 3: just up with our Michigan based team earlier this week,
Speaker 3: and we're seeing six percent year over year loan growth.
Speaker 2: In that market.
Speaker 3: To give you a sense, in Columbus and in our
Speaker 3: central Ohio region where I'm based, we're seeing very strong
Speaker 3: economic conditions and a lot of expansion.
Speaker 2: And then of course in.
Speaker 3: Some of the new geographies that we've were growing into
Speaker 3: North and South Carolina, Texas, Florida, we're seeing a fair
Speaker 3: amount of expansion there also, so not really seeing any
Speaker 3: areas of weakness. And you know, again, as I noted,
Speaker 3: kind of the trend we're seeing month by month here
Speaker 3: is firming up pretty well.
Speaker 2: Zach.
Speaker 1: Thanks for joining us. It's good to see you again.
Speaker 1: Happy third quarter. I can't believe we're already there. Hope
Speaker 1: you have a good summer and do come back soon
Speaker 1: and join us once again. Zach Washerman, Chief financial Officer
Speaker 1: of Huntington Bank Shares, is the holding company of the
Speaker 1: consumer and business regional bank. Huntington National Bank locations include Ohio, Minnesota,
Speaker 1: North Carolina, and more. Stock right now down about two percent.
Speaker 1: The company did report results a little earlier in the day.
Speaker 2: Also with US.
Speaker 1: Bloomberg News Senior editor Nina Trentman. She does write the
Speaker 1: Bloomberg CFO Briefing newsletter. You should sign up for a
Speaker 1: Bloomberg dot com slash CFO Briefing