CMA - Huntington Bancorp Shifting To A Growth Footing (Rating Upgrade)

2024-06-26 15:53:33 ET

Summary

• Huntington Bancorp is driving new growth opportunities by hiring executives and loan officers from established rivals to attack new geographies and lending verticals.
• Huntington is leaning into disruption and faster-growing markets, expanding into new verticals like fund finance, asset-backed lending and healthcare, and new geographies like Texas and the Carolinas.
• The bank's core footprint may have more to offer than commonly believed as reshoring brings new plants and jobs to the Midwest.
• A "higher for longer" rate environment is creating some near-term earnings challenges, but 5% long-term core earnings growth is still attainable, supporting a fair value of $15 to $16.

Generating growth is still a challenge for most banks in 2024, but I think there’s a developing growth story at Huntington Bancorp ( HBAN ) that’s worth watching more closely. Management has shown a surprising willingness to reposition the bank toward new growth opportunities, including hiring away executives and loan officers to build up their capabilities in new geographies and market verticals, and management’s ongoing focus on customer service has the bank well-positioned in terms of customer satisfaction metrics like J.D. Power’s Net Promoter Score....

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