Huntington Bancshares Incorporated

Greetings. Welcome to Huntington Bank Share's first quarter earnings call. At this time, all participant lines are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mark Murth, Director of Investor Relations.

Thanks, Sherry. Welcome. I'm Mark Moot, Director of Investor Relations for Huntington. Copies of the slides we will be reviewing can be found on the Investor Relations section of our website, www.huntington.com. The call is being recorded and will be available for replay starting about one hour from the close of the call. Our presenters today are Steve Steinhauer, Chairman, President, and CEO, Zach Wasserman, Chief Financial Officer, and Rich Pohle, Chief Credit Officer. As noted on slide two, Today's discussion, including the Q&A period, will contain forward-looking statements. Such statements are based on information and assumptions available at this time and are subject to changes, risks, and uncertainties, which may cause actual results to differ materially. We assume no obligation to update such statements. For a complete discussion of risks and uncertainties, please refer to this slide and material filed with the SEC, including our most recent forms 10-K, 10-Q, and 8-K filings. Let me now turn it over to Steve, where he'll start on slide three. Thanks, Mark, and thank you to everyone for joining the call today.

Before we begin, I'd like to express my sympathies to those of you who've lost family members or friends, or who've been directly impacted by the virus. We're open today with an overview of how we've reacted to the onset of the pandemic, both the challenges it has created, as well as the opportunities. Pandemic has caused unprecedented disruption around the world. Extreme market volatility has altered the global economic landscape, and the virus has changed the way we live our daily lives. Changed how business is conducted in the short term, probably the long term as well. For Huntington, I believe our purpose and our deeply rooted culture are an extraordinary asset. Our purpose of looking out for people has guided our planning and responses to the pandemic. From the beginning, we recognized the pandemic as first and foremost a public health crisis. Therefore, our priority has always been the safety and well-being of our colleagues and our customers. Many of our colleagues are on the front lines with our customers every day, and it's challenged us to serve our customers in new ways. To ensure their safety in our branches, we moved early to drive-thru only, with in-person meetings by appointment. closed all in-store branches and traditional branches which did not have a drive-thru. For most other colleagues, we implemented a work-from-home policy and now have more than 80% of our colleagues working remotely. This is possible because of the commitment and flexibility of our colleagues and because of the tremendous work by our technology teams to keep everyone connected and productive. We've benefited from the diligent work performed by our business continuity planning teams over the years. We've also increased our communication with colleagues, not only to keep them informed, but also to keep them engaged and in a position to help our customers. Finally, we added new benefits for our colleagues, such as emergency paid time off and other programs for those whose families were directly impacted by the virus, and we took actions to enhance the mental and physical well-being of our colleagues. It was clear immediately that our customers would face financial hardships because of the pandemic, We took swift action early and publicly, announcing a variety of relief measures that included loan payment deferrals, fee waivers, and the suspension of foreclosures and repossessions. These measures addressed our customers' critical short-term needs, but we believe they also demonstrated our purpose and action, showing our customers that we are there for them now and will continue to support them in the future. We believe it's in our best mutual interest to work with our customers during tough times, relationships are strengthened in these moments. Thousands of colleagues from across the bank mobilized to help small business and commercial customers access the SBA Paycheck Protection Program. And over the last three weeks, we've redeployed and trained over 700 colleagues to support the heavy volume of SBA applications. I'm pleased to say that we processed almost 26,000 applications in record time with a long volume of more than $6.1 billion. We were able to process almost every one of these applications into the SBA E-Trans system before it closed when funding was exhausted on April 16th. We entered 2020 with a relatively healthy economic backdrop across our footprint, and prospects for the national economy appear to be picking up. However, the pandemic has altered that trajectory for the foreseeable future, and we believe the economy will be challenged for some time. We try to assess what is in store for the economy now. We've informed our thinking with multiple potential economic scenarios. The best case is characterized by a deep V-shaped economy with a trough in the second quarter, followed by a relatively strong recovery later this year. A more likely scenario could be described as a long U-shaped recovery in which the trough extends later into the year and then the economy does not recover back to pre-COVID conditions activity levels until well into 2022. Over the course of the last two months, the economic outlook has progressively deteriorated. It appears that the reopening of the economy will be more protracted than initially expected. And a U-shaped recovery is the increasingly likely scenario. So given this highly uncertain environment and rapidly evolving outlook, we do not believe we can provide any meaningful expectations for the full year at this time. Therefore, we have withdrawn our formal 2020 full-year guidance. Our visibility is generally limited to the next few months, and the range of potential outcomes on the key metrics is quite wide. Instead, Zach will provide some near-term expectations later in the presentation. The conservative view on the economic outlook also informs our thinking on how we manage capital, liquidity, and credit. Zach and Rich will discuss our current metrics on these items later, but I'd like to discuss generally how we're thinking about risk management. As we've previously discussed over the past decade, we've fundamentally changed Huntington's Enterprise risk management. We believe it's now a strength of the company as compared to a clear weakness during the prior cycle. Slide 10 in the presentation details several of the key improvements we've implemented, but they all began with the establishment of our aggregate moderate to low risk appetite in 2009. and the alignment of our credit strategy and policy with that appetite. We also centralized credit underwriting and portfolio management, implemented credit concentration limits, and materially repositioned the balance sheet over time. We implemented a deep relationship focus across the bank, focusing on the primary bank relationships and exiting loan-only relationships that did not meet appropriate return hurdles. In subsequent years, we took action, such as tightening our consumer lending standards to focus on super prime customers across all our consumer lending products and tightened our underwriting on commercial real estate. We established conservative standards and policies for leveraged lending as well. We pointed out over time that the only comparison of potential loss for the sector is the Federal Reserve's DFAS stress test. As shown on slide 11, our model cumulative loan losses the Fed's severely adverse scenario are consistently among the best in the peer group. As we assess the current environment with respect to the credit impact, we've tried to be conservative, and you can see this in the level of provisioning and our allowance for credit losses. We're taking a similar conservative approach to capital. Our capital ratios are strong. We intend to maintain high capital ratios as a source of strength to support our customers' needs and to be positioned to take advantage of growth opportunities. Zach, let me turn it over to Zach.