Huntington Bancshares Incorporated

I would now like to turn the conference over to your host, Mr. Mark Muth, Director of Investor Relations. Please go ahead. Thank you, Melissa. Welcome.

I'm Mark Muth, 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. This call is being recorded and will be available as a rebroadcast starting about one hour from the close of the call. Our presenters today are Steve Stonauer, Chairman, President, and CEO, Zach Wasserman, Chief Financial Officer, and Rich Foley, 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 files. Let me now turn it over to Steve.

Thanks, Mark, and thank you to everyone for joining the call today. Slide three provides an overview of Huntington's strategy to build the leading people-first digitally-powered bank in the nation, which the board affirmed this year in our multi-year strategic planning process. Huntington's strategies are delivering long-term revenue growth. As our third quarter results demonstrate, we're driving revenue growth despite headwinds of the current environment. We're focused on acquiring new customers and deepening those relationships to gain both market share and share of wallet. We are investing in customer-centric products, services, and infrastructure that will drive sustainable growth and outperformance, both today and for the years to come. Huntington has built a competitive advantage with our consistently superior customer service and our differentiated products and services. We are committed to developing best-in-class digital capabilities like our mobile banking app, which has been honored by J.D. Power two years in a row, and our online banking, which was number two in this year's J.D. Power study. In the past few weeks, we introduced several new innovative products and features that will continue to serve our customers' needs and differentiate Huntington from our competition. First, we extended 24-hour grades to businesses, and we then introduced our no-fee overdrafts $50 safety zone for both consumers and businesses. Finally, earlier this week we announced our latest innovation, Huntington Lift Local Business, a $25 million microlending program that capitalizes on our best in the nation SBA lending expertise to better serve minority, women, and veteran-owned businesses. We've intentionally diversified business models, balanced between commercial and consumer, which provides diversification of revenue and credit risk. We have a proven track record of solid execution adjusting our operating plans to the environment in order to drive shareholder returns. This has allowed us to deliver seven consecutive years of positive operating leverage, and I expect 2020 will be our eighth. This focused execution has and will enable us to ensure investment in the products, people, and digital capabilities that will drive sustainable long-term growth and outperformance. Turning to slide four for an update on our digital and branch strategies, Following the completion of the first merit acquisition in 2016, we began the evolution of our consumer go-to-market strategy from being brand-centric to a powerful multi-channel model that includes leading digital channels. We introduced the Hub, which forms the backbone of our award-winning mobile app and our online banking platform. That evolution has accelerated this year with increased customer adoption of mobile and digital products and services, We are successfully driving digital sales and originations, as well as changing and expanding the branch experience to include virtual and digitally assisted delivery. Our branch sales activity is almost back to pre-COVID levels. It's about 95% today. But we're seeing an accelerating evolution in the way our customers use branches. Simpler transactions are rapidly moving into faster and easier mobile and digital venues. This transition is allowing our branch bankers to focus on providing more valuable advice and focusing on deepening our customer relationships, all ways of looking out for our customers. As we've discussed previously and as shown on the bottom of the slide, Huntington regularly evaluates and optimizes our branch distribution. Since the completion of the first May acquisition in 2016, we've reduced our branch count by 263 branches, or 24%. This includes the consolidation of 99 branches, or 9%, as part of the integration, the sale of 32 branches in Wisconsin, and the consolidation of an additional 132 branches, or 4% annually on average since 2016. Last month, we announced the planned consolidation of 27 additional branches, or 3%, in the 2021 first quarter. We're pleased with the high retention levels post-consolidation of deposits due to the strong foundational relationships with our customers and the close proximity to other Huntington branches as we maintained our brand share position in almost all markets. This thoughtful branch network optimization strategy allows us to continue to capitalize on our competitive advantages around convenience, our brand promise, and customer service. If you did not listen to Andy Harmony's presentation on our digital transformation, at an investor conference in early September, I encourage you to visit our investor relations website where you can listen to the replay and see the presentation materials. I believe our digital strategy and our execution of that strategy is generating industry-leading results. We delivered very strong third quarter results, including a record level of pre-tax, pre-provision earnings, thanks to continued solid execution across the bank in the face of the continued challenging operating environment. I'm particularly pleased with their year-over-year revenue growth, as earning asset growth more than offset an income compression to drive spread revenue modestly higher, while fee income growth was bolstered by the second consecutive quarter of record mortgage banking income. The performance of our home lending team was outstanding, as they originated more than $3.8 billion in mortgages for the second consecutive quarter. To frame that for you, our previous high watermark for any quarter was $2.5 billion of mortgage originations in the fourth quarter of last year. Our combined mortgage production over the past two quarters was greater than we did in all of 2018 and roughly the same as in all of 2019. So these accomplishments are the direct result of the successful build-out of this team and our investments in our digital mortgage lending platform over the past several years. We're well positioned to capitalize on the current mortgage environment, and the near-term outlook remains strong. Given the prolonged low interest rate outlook, we've implemented a comprehensive action plan to stabilize NIM near current levels over the long term. Zach will cover this and more in his remarks. We continue to closely manage our expenses. A significant portion of the year-over-year increase in expenses resulted from restructuring costs related to implementation of expense management program we announced last quarter and elevated variable costs to support our record home lending business volumes. As we've previously discussed, our efforts have been to manage expenses so that we can allocate investments to our strategic growth initiatives. Looking forward, we remain optimistic of the continuing economic recovery. The unprecedented level of government stimulus has supported both individuals and many companies, and we're very pleased with the number of customers exiting forbearance arrangements. Our consumer lending businesses, which as you've seen in our quarterly originations data provided for a decade, are focused on super prime customers, and they're performing very well. Mortgage, auto, and RV marine are all continuing to post strong originations. Commercial lending has been restrained by the economic uncertainty, many customers shepherding elevated levels of liquidity, paying down revolvers and putting off new investment spending. We continue to see improvement in commercial pipelines that we mentioned last quarter, and based on the conversations we've had with our customers, we expect these levels of elevated liquidity to persist for some time. We're cautiously optimistic that C&I loan growth will improve later this year and early next year. The timing of forgiveness around the PPP loans remains uncertain, but I would like to take a moment to share that Huntington was the nation's largest SBA 7 lender for the third consecutive year, and the SBA's fiscal year ended September 30th. We're the largest 7 lender in our footprint for the 12th year in a row. Small businesses are such a vital component of our economy and the nascent economic recovery as they consistently account for the lion's share of jobs created in our country. Particularly in this pandemic, these businesses deserve and need our support, and I hope these businesses are the focus of any future government stimulus package. Our third quarter credit metrics reflect stable to improving trends across most portfolios and include elevated charge-offs from the sale of more oil and gas loans. During the quarter, many customers successfully edited prior pandemic-related deferral programs. The underlying portfolio metrics reflect our continued expectation for outperformance through the cycle. Our credit loss reserves take into consideration the economic uncertainty that we continue to have with the virus, both in duration and severity. We believe we're adequately covered should the pandemic continue to prolong the economic recovery. Our capital ratios remain within our targeted ranges. This morning, we announced that the board declared the fourth quarter cash dividend at 15 cents per common share, unchanged from the prior quarter. We're currently finalizing our submission for the off-cycle seek car. We are seeking approval and expect to increase our capital return to shareholders in 2021. In closing, I'm encouraged by the momentum I can see building across our businesses. colleagues are actively engaging with our customers and prospects. Customer activity is improving month by month. We see improved debit card activity, sales activity in the branches. It's almost back to pre-COVID levels, and our pipelines have been replenished in many of our businesses over the past several months. We recently made some key additions to our commercial team, notably within our asset finance capital markets and corporate banking teams, and have conversations ongoing with additional revenue producers. We're receiving very, very positive feedback and early results from the new 24-hour grades for business and the $50 safety zone product features for consumers and businesses that we rolled out in September. Our credit quality through the early months of this pandemic has held up well, and we're confident in the quality of our loan portfolios. I'm conscious that the economic outlook remains somewhat uncertain in the near term, but overall, I like what I see and am optimistic about our outlook over time. Now, let me turn it over to Zach for an overview of financial performance.