Huntington Bancshares Incorporated : Barclay's Conference Transcipt
HBAN
The Huntington National Bank_Barclays Global Financial Services Conference 2021_September 13, 2021
Jason Goldberg:
I am Jason Goldberg, and I cover the US large‐cap bank stocks here at Barclays.
Welcome to our 19th Annual Global Financial Services Conference. Next up,
very pleased to have Huntington Bancshares. From the company, we have Zach
Wasserman, Chief Financial Officer.
Jason Goldberg:
Before I turn over to Zach, just keep in mind in the upper right‐hand corner of
your screen there were a few buttons. One of them is Ask a Question. Feel free
to type in your question. Keep in mind the questions do take a little bit of time
to get to me, so the earlier you ask them, the greater the chances I will get them
before Zack is done. Also in the top right‐hand corner is a button called Survey.
If you click on that, you're able to answer our traditional automated response
questions and, time permitting, we'll take a look at those. Worst‐case scenario
we'll publish them tonight. Zach, please take it away.
Zach Wasserman:
Good morning. Thanks, Jason, and thanks to Barclays for hosting us today. I
want to start off with a welcome to everyone listening today. We really
appreciate your interest and support of Huntington. For today's event, I'm
joined by Tim Sedabres, our Head of Investor Relations.
Zach Wasserman:
Before we get started, I will be referencing our slide presentation. So, before we
get started, let's look at slide two. Please review this slide regarding forward‐
looking statements we'll make today. This morning, I'll start by sharing a couple
updates related to our strategy and recent initiatives, and then I'll turn it over to
Jason for Q&A.
Zach Wasserman:
Moving to slide three, at Huntington we're focused on building the leading
people‐first digitally powered bank in the nation. The recent acquisition of TCF
continues to be additive to and aligned with this overall strategy. TCF bolsters
our ability to drive organic growth across the bank through both increased
market density, and the addition of key growth markets. The incremental scale
it provides further allows us to leverage the investments we've made to date,
and support our commitment to delivering sustainable, top‐quartile financial
returns for shareholders. Slide four summarizes the three key points I want to
cover today. First, Huntington's Fair Play Banking philosophy is the foundation
of our consumer and business banking offerings. We were an early innovator in
the space, dating back over 10 years ago when we introduced to Asterisk‐free
Checking and 24‐Hour Grace. We have continued to innovate with launches of
new and disruptive products. This strategy is yielding measurable results, as
evidenced by strong new household acquisition, reduced attrition, and
continued deepening of customer relationships with Huntington. Secondly, in
the commercial bank, we have a comprehensive solution set for customers and
we are driving growth across all groups. This includes middle market and
corporate banking, as well as numerous specialty areas of expertise, including
healthcare, asset‐based lending, franchise lending, technology and telecom
equipment finance, and inventory finance.
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Zach Wasserman:
Additionally, we're extending relationships with our customers with strong
adoption of our treasury management and capital markets capabilities. Third
and finally, we're focused on successfully completing the TCF integration. We're
on track for timely completion of integration activities, including our targeted
cost savings, and we are underway with the execution of revenue synergy
opportunities. The bulk of system conversions are slated for Columbus Day
weekend next month. The branch divestiture is set to close this upcoming
weekend, and the branch consolidations will occur in a phased approach
through the end of October.
Zach Wasserman:
Let's turn to slide five, which gives an overview of our five primary businesses
and our strategies for each. In all of these we benefit from scale, competitive
positioning, and our expertise. The collective nature of these groups provides
comprehensive banking solutions for customers, ranging from consumers to
business owners, all the way up to large corporations.
Zach Wasserman:
Looking at our consumer business first, we're leveraging the market leadership
of our Fair Play philosophy and continuing to bring to market innovative and
disruptive products. Additionally, we're focused on deepening customer
relationships across the space. We're advancing our digital roadmap with added
features and functionality that makes it easier to do business with us and,
importantly, supports customer acquisition and new product origination. We're
very pleased that our continued digital progress was recognized again by J.D.
Power with our third consecutive award for top US banking mobile app
satisfaction study, amongst regional banks.
Zach Wasserman:
In business banking, we start as the number one SBA lender in the nation. This
expertise coupled with our Fair Play and enhanced digital capabilities continues
to fuel growth and outstanding customer satisfaction. We've leveraged our
digital leadership in the consumer space, and applied that to our business
banking platform as well with improved digital product origination, account
management, and self‐servicing. We're also expanding our practice finance
capabilities, which builds on the SBA experience we have. Additionally, we see
significant traction and further opportunity with tailored treasury management
and merchant acquiring offerings for business banking customers. We're
committed to meeting our customers where they are and serving not only their
needs through products and services, but through ease of use and seamless
interoperability, as well.
Zach Wasserman:
Looking at commercial banking next, we go to market with a full set of offerings
across the commercial bank to serve a range of customers across all size
spectrums. Additionally, we have expertise in specialty verticals as well as our
asset based lending capital markets, equipment finance, and inventory finance
capabilities. As we go forward, our commercial opportunity is threefold. First, to
move up market in the middle‐market and mid‐corporate spaces. We've proven
we have the right teams, products, and expertise to compete and win, and our
increased scale substantially enhances this opportunity. With a larger balance
sheet, our ability to secure a lead or agent role with our up‐market customers
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has greatly improved, which also supports deeper relationships, including
treasury management, capital markets, and other solutions. This comprehensive
approach drives sustainable and attractive return on capital at the customer and
product level.
Zach Wasserman:
Secondly, our opportunity is to continue to leverage and further expand the
expertise we have, including our specialty commercial verticals. Many of these
areas continue to have substantial runway and we expect them to fuel
continued market share growth. Third, excuse me, we have an overarching
focus on digital transformation to further enhance our capabilities and improve
the customer experience. Smooth and intuitive digital‐first client onboarding
enables accelerated adoption of our other digital servicing capabilities, account
management, and treasury management products. Digital loan origination
capabilities not only drive incremental business, but also improve internal cost
efficiency and operational quality. Advanced analytics supports our ability to
provide bankers insights to help clients optimize their own financial
performance, leading to exceptional experiences, loyalty, and deeper
relationships.
Zach Wasserman:
In wealth management, we have a comprehensive platform, inclusive of private
banking, trust, and investment management. We're seeing substantial
momentum in this business, with record net asset flows and sales. Our teams
have done a great job leveraging our brand and our presence in many of our
markets where we have a deep history. That success is what makes us excited
about the opportunity to take this business to our expanded growth markets in
areas such as the Twin Cities in Minnesota, Denver, and Chicago. Our
relationship model works well, especially when coupled with a customer doing
business with other areas of the bank, such as commercial business, and owners
of our middle‐market and business banking clients. Our strategy expands on
that to optimize our go‐to‐market approach across channels and digitally
engage with all of our customers, ranging from mass affluent through high‐net‐
worth. Looking next at the payments vertical, while we go to market through
our commercial business and consumer groups, we think about payments
capabilities holistically across the bank. Our combined opportunity here is very
substantial given the size and scale of our businesses, looking at all of the
payment related revenue streams across the company. We're continuing to
advance our treasury management products and capabilities and further
penetrating adoption and utilization. Additionally, we're digitizing and
simplifying the customer experience. On the card side, we continue to refine our
offerings for consumer and businesses, and we have terrific and just really
strong debit card penetration, as evidenced by our number 14 ranking
nationally, as the largest debit card programs are ranked. We are also focused
on expanding our credit card business with refreshed products and improved
digital user experience.
Zach Wasserman:
Moving to the next slide, on slide six, and looking at our consumer banking
strategy in particular, you can see that it's founded on our Fair Play Banking
philosophy. As a reminder, we were an early leader. We launched Fair Play back
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in 2010, and we have a long track record of demonstrated success. 24‐Hour
Grace was the first of its kind in the industry with a simple and transparent
feature to help customers avoid an overdraft. I say this to remind everyone of
our deep history in looking out for our customers. While others have recently
reached the same conclusion as we did many years ago, our culture at
Huntington reflects this mindset. We've continued to innovate in this regard,
launching Standby Cash and Early Pay, two new features, just last quarter.
Again, to give our customers increased flexibility, to tap a small dollar, digitally‐
enabled line of credit with no fees or interest, paid back within 90 days with
auto‐pay. And secondly, to receive their direct deposit up to two days early.
Zach Wasserman:
Adding these compelling products and capabilities is our leading market share
density and comprehensive channels. We have market‐leading convenience
with top five market share in almost 70% of our MSA, 69 to be precise, across
the footprint, compared to 52% at our typical peers. We have strong digital
capabilities, including online origination across the product set. The
combination of these factors demonstrates Huntington's value proposition and
drives exceptional household growth metrics, which as you can see from
Zach Wasserman:
...in the slide are up 7% annualized year‐to‐date for consumer, and 8% year‐to‐
date for business.
Zach Wasserman:
Turning to the next slide, on slide seven, I'd like to give you a deeper view into
our priorities for the commercial business. We have three primary themes in
our commercial strategy: driving acquisition and deepening, amplifying
experience and capabilities, and extending digital transformation. Under this
umbrella, we have six primary strategic priorities to drive growth of all our
commercial relationships.
Zach Wasserman:
Number one is market expansion, including taking the Huntington brand and
expertise to new growth markets, such as the Twin Cities, Denver, as well as our
expanded efforts in Chicago.
Zach Wasserman:
Second, we're leveraging the substantial size and scale of the combined
equipment and inventory finance business group we now benefit from. This
group has grown over 50% with the acquisition of GCF.
Zach Wasserman:
Third, corporate banking includes our move up‐market in the mid‐corporate and
middle‐market space, as well as leveraging sector‐based expertise through our
industry vertical groups in healthcare, asset‐based lending, franchise, and tech
and telecom. As we look out, we continue to seek new opportunities to add
bankers and teams with expertise that aligns with these targeted industry
verticals.
Zach Wasserman:
Fourth, in capital markets, we want to drive incremental fee revenue through
deeper penetration into the customer base and to continue to add expanded
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expertise and capabilities. This initiative closely aligns with our focus for
corporate banking and up‐market positioning.
Zach Wasserman:
Fifth, growing share‐of‐wallet with treasury management. This is both through
increased new acquisition and expansion of existing relationships. We're also
enhancing the technology‐enabled solutions and accelerating capabilities such
as real‐time payments and API enablement, which allows our more
sophisticated corporate customers to integrate into their banking and liquidity
data feeds on their own side.
Zach Wasserman:
Finally, digital transformation, which is designed to improve both the customer
experience as well as operational efficiency and includes enhancements to
onboarding, lending, and transactional activities. Through our existing
investment program, we've directed substantial resources toward this digital
roadmap and established best‐practice agile‐development approaches within
the business.
Zach Wasserman:
On slide eight, I want to transition now and outline five select opportunities we
see for revenue synergies that are being created as part of the TCF acquisition,
many of which are already well underway in their execution. First, middle
market expansion. We see substantial opportunity to grow share within the
vibrant commercial activity hubs in the Twin Cities, Denver, and Chicago. This
initiative is gaining traction with key leadership personnel in place and growing
banker teams to go after these markets.
Zach Wasserman:
Second, deploying our consumer product set to the legacy TCF customers.
We've added 1.5 million customers from TCF, all of whom will receive the
upgraded product capabilities and digital offerings in just over a month when
we convert systems. The opportunity to bring fair play to these customers and
to further expand and strengthen relationships is very substantial. In many
cases, TCF was under‐penetrated in some of the areas where Huntington has a
strong offering, such as mortgage, home equity, and debit card.
Zach Wasserman:
Third, business banking expansion. Similar to our middle‐market work, we see
the opportunity to bring our leading SBA platform and business banking
program broadly to the TCF markets. There are over 2 million small businesses
in Minnesota, Colorado, and Illinois, and we believe we can capture more than
our fair share with our expertise and offerings. We're building out SBA banker
teams as we speak to go after these opportunities.
Zach Wasserman:
Fourth, wealth management expansion. The addition of legacy TCF markets
brings tremendous opportunity for our private banking, trust, and investment
teams. The size and the wealth in these markets provides us with a great deal of
runway to leverage that infrastructure and expertise to go after this wealth
management business. Just last month, we were pleased to announce we added
a leader for our wealth efforts in the Twin Cities, and we continue to build out
that team.
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Huntington Bancshares Incorporated published this content on 16 September 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 16 September 2021 13:51:06 UTC.