Auto loans in Huntington will be lukewarm “until next year”

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Supply chain disruptions are holding back auto lending at Huntington Bancshares, and conditions in this sector will remain challenging in 2022, said chief executive officer Steve Steinour.

“We don’t expect the auto to be a tailwind next year,” Steinour told analysts on a conference call Thursday. Supply chain issues are expected to persist “until next year,” he said.

Auto loans accounted for 26% of the company’s $ 50.4 billion in consumer loans and leases in Columbus, Ohio, as of September 30. Auto assemblies totaled $ 1.8 billion in the third quarter, but would have been higher if manufacturers hadn’t had such a hard time getting computer chips for new vehicles, according to Steinour.

“There’s no question we could have done better with more inventory,” Steinour said in an interview before the conference call. “I was talking to a dealership with four Cadillac dealers yesterday. He does not have a new car on any of the lots. Absolutely, we could have done better. … The world we live in is such that it will take time to overcome these supply constraints.

The story was much the same in Huntington’s RV and marine business, where creations totaled $ 1.3 billion in the first nine months of 2021. “These are supply constraints,” Steinour said. “Demand exceeds supply. If they could have made more boats or recreational vehicles, they could have sold them.

Huntington completed its $ 6 billion acquisition of Detroit-based TCF Financial in June, adding $ 36 billion in loans to its balance sheet. Excluding Paycheck Protection Program loans, loan growth in the third quarter was stable compared to the previous quarter. CFO Zachary Wasserman said on the conference call that he expected only “modest” growth in loans in the fourth quarter.

The mixed forecast is due in part to the fact that hundreds of Huntington’s bankers who had focused on completing the TCF merger and the systems conversion that followed only recently returned to their normal, revenue-generating roles. , not giving them enough time to fuel the fourth trimester. results, according to Steinour.

“It’s harder to do business between Thanksgiving and New Years if it’s not already underway,” Steinour said. Nonetheless, “we are very optimistic for the year 2022” due to the stronger outlook in commercial real estate, small business lending and commercial and industrial.

Huntington’s assets of $ 173.9 billion on Thursday reported third-quarter profit of $ 377 million or $ 0.22 per share on revenue of $ 1.7 billion. Those results included $ 234 million of pre-tax expenses related to the TCF deal, which subtracted about $ 0.13 per share from the company’s bottom line.

“Our third quarter results demonstrated a solid start for Huntington’s combined revenue generation potential following the TCF acquisition,” said Steinour.

Huntington reported a loss of $ 15 million for the quarter ending June 30, mainly due to more than $ 560 million in costs related to the merger.

Although Huntington has consolidated 188 branches as part of the TCF integration process, Steinour said it continues to work to optimize its distribution channels. And with more transactions moving to digital channels, Huntington plans to close another 62 branches – 6% of its existing network – in the first quarter.

About 40% of new deposit accounts were opened online in the third quarter, up from 28% a year earlier. Meanwhile, digital connections topped 145 million for the three months ending September 30.

“Our strategy is centered on supporting clients who think where and when they want and meeting them through their preferred channel,” said Steinour.

With the completion of the TCF deal and the conversion of the system to its credit, Huntington is focusing directly on growing its core business. While the company will consider non-bank transactions, another full bank acquisition is low on the priority list.

“We think we have huge income here,” Steinour said.

Huntington shares closed at $ 15.92 on Thursday, virtually unchanged.

Scott Seifers, who covers Huntington for Piper Sander, wrote in a research note Thursday that the company’s results represented “another noisy quarter,” but that the positives outweigh the negatives.

“We consider this to be a solid performance,” Seifers wrote.


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