Huntington auto originations remain flat

Huntington Auto Finance ’s originations in the fourth quarter were flat on a year-over-year basis for the second consecutive quarter while RV and marine originations increased. Auto originations clocked in at $1.2 billion, declining 14.3% quarter over quarter but remaining flat YoY , according to the company’s earnings presentation. Estimated yield on new originations came in at 7.2%, an increase of 10 basis points (bps) QoQ and 130 bps YoY. New-vehicle loans accounted for 43% of the bank’s auto originations, up compared with 35% in the second quarter and 39% during the same period last year, according to the presentation. Weighted average loan-to-value ratios ticked down 2 percentage points QoQ and 1 percentage point YoY to 84%. Full-year 2023 originations declined 14.8% YoY to $5.2 billion, according to the presentation. Auto outstandings fell to $12.6 billion at the end of Q4, declining 1% sequentially and 5.3% YoY, according to the earnings supplement. Net interest margin on the auto portfolio increased 31 bps QoQ and 108 bps YoY to 4.82%. Huntington’s auto portfolio accounts for 10% of the bank’s consumer balance sheet, Senior Executive Vice President and Chief Financial Officer Zach Wasserman said on the company’s earnings call today. Credit quality across the bank’s portfolio remains strong, Wasserman said, but performance deteriorated slightly on the auto portfolio. Accounts 30 to 89 days past due came in at 0.96% in Q4, an increase of 10 bps on a linked quarter basis and 7 bps YoY, according to the presentation. Ninety-day delinquencies ticked up 1 bps QoQ but remained flat YoY. Net charge-offs (NCO) rose 13 bps sequentially and 15 bps YoY to 0.27%, according to the presentation. Full-year NCOs increased to 0.16% YoY, according to the supplement. Allowance for credit losses came in at $142 million for a coverage ratio of 1.13%, flat QoQ and up 6 bps YoY. Meanwhile, Huntington closed a $3 billion credit risk transfer transaction during the fourth quarter of on-balance-sheet prime indirect loans as a part of its capital optimization strategy, according to the earnings release. The risk weight moved from 100% to 20% on the pool of assets selected and reduced the risk-weighted assets by about $2.4 billion. Marine, RV originations up Huntington’s RV and marine originations grew in 2023, clocking in at $1.6 billion for the full year, an increase of 6.7% compared with full-year 2022, according to the presentation. New production yields were 7.7% in Q4. Outstandings at the end of the year were recorded at $5.9 billion, down 0.6% QoQ but up 9.7% YoY, according to the supplement. Net interest margin in Q4 increased 17 bps sequentially and 68 bps YoY to 5.13%. Consumer loan growth was partially led by RV and marine activity, Wasserman said. As with auto, delinquencies increased within RV and marine. Thirty-day delinquencies rose 5 bps sequentially and 2 bps YoY to 0.44%, according to the presentation. Accounts 90-plus days past due increased 3 bps QoQ and 1 bps YoY to 0.06%. Net charge-offs came in at 0.34%, up 18 bps QoQ and 19 bps YoY. Allowance for credit loss coverage ratio was unchanged QoQ and declined 20 bps YoY to 2.5%, or $148 million, according to the supplement. Shares of Huntington Bancshares Inc. [ Nasdaq: HBAN ] were trading at $12.72 at market close today, up 3.9% from market open. Huntington has a market capitalization of $18.4 billion. Early -bird registration is now available for the second annual Auto Finance Summit East May 1-3, which gathers lenders, dealers and fintech innovators in an event designed to bring the power of technology to a cross section of industry players. Early-bird pricing ends March 15. Visit AutoFinance.Live to learn more.

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