Executive Summary / Key Takeaways

• Huntington Bancshares is executing a strategic shift towards accelerated organic growth through targeted investments in new geographies and specialty commercial verticals, leveraging its long-standing foundation of disciplined risk management and robust capital and liquidity.
• Recent financial results demonstrate strong momentum, with peer-leading loan and deposit growth, expanding net interest income, and robust fee revenue performance, validating the effectiveness of the investment strategy.
• The company's disciplined approach to credit and liquidity management, evidenced by stable credit metrics, high ACL coverage, and ample funding sources, provides resilience against macroeconomic uncertainty and differentiates it from peers.
• Management's 2025 guidance forecasts continued growth across key financial metrics, including record net interest income, positive operating leverage, and stable credit quality, signaling confidence in sustained performance despite potential economic headwinds.
• Investments in technology, including digital capabilities, data analytics, and specialized platforms like the insourced merchant acquiring business, are enhancing operational efficiency, supporting risk management, and enabling new revenue streams, contributing to the company's competitive positioning.

A Regional Powerhouse Forging a Path of Differentiated Growth

Huntington Bancshares Incorporated, rooted in a history stretching back to 1866 through its banking subsidiary, stands today as a diversified regional bank holding company headquartered in Columbus, Ohio. Operating across a multi-state footprint primarily in the Midwest and East Coast, Huntington has built its identity around a "People-First, Customer-Centered" vision, serving a broad base of commercial and consumer clients with a full suite of financial products and services. For decades, a cornerstone of Huntington's operational philosophy has been its aggregate moderate-to-low risk appetite, a principle that has guided its strategic decisions and portfolio management through various economic cycles.

In recent years, particularly starting around 2023, Huntington embarked on a deliberate strategic acceleration. Recognizing opportunities in a dynamic market where some peers were retrenching, Huntington leveraged its position of strength – characterized by robust liquidity and capital – to invest aggressively in organic growth initiatives. This included expanding its physical presence and teams in attractive, high-growth geographies like North and South Carolina and Texas, and launching new specialty commercial banking verticals such as Funds Finance, Healthcare Asset-Based Lending, Native American Financial Services, Aerospace and Defense, and Financial Institutions Group. These investments were not merely about expanding footprint but about adding talented bankers with deep local and industry expertise to drive new customer acquisition and deepen relationships.

The competitive landscape for Huntington is intense, marked by the presence of national banking giants like JPMorgan Chase (JPM), Bank of America (BAC), and Wells Fargo (WFC), as well as formidable regional peers such as PNC Financial Services (PNC) and U.S. Bancorp (USB). While national players benefit from immense scale, vast branch networks, and significant technology budgets, Huntington strategically positions itself by emphasizing its regional focus, personalized service, and deep community ties. Its investment in targeted geographies and specialized verticals allows it to compete effectively by offering tailored solutions and building strong relationships, aiming to capture market share in specific niches where its expertise and service model provide an edge. Against regional peers, Huntington seeks to differentiate through its consistent risk management, strong capital position, and proactive investment in growth initiatives, which has enabled it to achieve peer-leading organic growth momentum.

Technology plays a crucial role in enabling Huntington's strategy and enhancing its competitive standing, even if it doesn't possess a single, proprietary "breakthrough" technology like some fintech firms. The company is actively investing in "technology development" and "data and automation capabilities" to improve operational efficiency, enhance the customer experience, and support its growth initiatives. Specific applications of technology are evident across its business segments. In its large and efficient auto lending business, a "custom scorecard" contributes to disciplined underwriting and low default rates. The recent decision to bring its "merchant acquiring model" in-house, which completed its commercial launch in October 2024, is expected to add a tangible 1 percentage point to overall fee revenue growth at scale, creating a new, technology-enabled revenue stream. Furthermore, sophisticated "financial simulation models" are employed for rigorous market risk management, including NII at Risk and EVE at Risk analysis, providing critical insights for balance sheet management and hedging strategies. While precise, directly comparable quantitative metrics on the speed or cost advantages of all its digital services versus every competitor are not publicly detailed, management's focus on these investments is aimed at driving efficiency ratio improvements and supporting digital acquisition and retention. These technological applications, integrated across its regional banking platform and specialized businesses, enhance operational effectiveness, support risk management, and enable new revenue streams, contributing to Huntington's competitive moat and financial performance.

Performance Momentum and Financial Strength

Huntington's strategic investments and disciplined execution are clearly translating into tangible financial results. The first quarter of 2025 demonstrated strong performance, with net income attributable to Huntington increasing by a significant 26% year-over-year to $527 million. This growth was underpinned by an 11% year-over-year increase in net interest income, reaching $1.43 billion, and a 6% rise in noninterest income to $494 million. The expansion in net interest income was primarily driven by an 8% increase in average earning assets and a 9 basis point improvement in the FTE Net Interest Margin to 3.10%, benefiting from a decrease in funding costs, strategic hedging impacts, and higher interest recoveries. This marked the fourth consecutive quarter of net interest income dollar growth by the fourth quarter of 2024, signaling a clear upward trajectory from earlier trough levels.

The momentum is visible across key business drivers. Average loans grew by approximately $9 billion year-over-year in Q1 2025, an 8% increase, supported by both core businesses and accelerating contributions from new initiatives, which represented roughly half of the total loan growth in the quarter. Average deposit growth also remained robust, increasing by nearly $11 billion year-over-year in Q1 2025, or 11%. This deposit gathering success, fueled by a focus on acquiring and deepening primary bank relationships (consumer PBRs up 3%, business banking PBRs up 4% year-over-year), has allowed Huntington to self-fund its loan growth and manage its loan-to-deposit ratio effectively, strengthening its liquidity position. As of March 31, 2025, total deposits stood at $165.3 billion, up 2% from year-end 2024, with insured deposits comprising a solid 71%.

Fee income, a strategic area of focus, also showed strong performance, increasing 6% year-over-year in Q1 2025. This growth was led by wealth and asset management revenue, which rose 15% due to increases in trust and management account fees and higher assets under management, and capital markets and advisory fees, which climbed 20% driven by commercial loan production-related capital market activities. This builds on the momentum seen in Q4 2024, where core fee revenues (adjusted for notable items) increased an impressive 20% year-over-year, with capital markets setting a new quarterly record.

Expense management reflects the balance between investment and efficiency. Noninterest expense increased by a modest 1% year-over-year in Q1 2025, with higher personnel costs (up 5%) partially offset by a significant 31% decrease in deposit and other insurance expense due to a lower impact from the FDIC DIF special assessment compared to the prior year. The company's stated objective is to maintain positive operating leverage, driving revenue growth faster than expense growth.

Capital and liquidity remain pillars of strength. At March 31, 2025, the CET1 risk-based capital ratio was 10.6%, up from 10.5% at year-end 2024, driven by earnings net of dividends, partially offset by CECL adjustments and increased risk-weighted assets. The tangible common equity to tangible assets ratio also improved to 6.3% from 6.1%. Huntington and its bank subsidiary maintain capital ratios well in excess of regulatory well-capitalized standards. Liquidity is robust, supported by the strong deposit base, $15.3 billion in cash and cash equivalents (up $2.5 billion from year-end 2024), a $44.6 billion investment securities portfolio, and significant secured borrowing capacity ($107.4 billion in pledged loans at March 31, 2025).

The recent approval of a $1 billion share repurchase authorization further underscores the company's capital strength and flexibility.

Outlook and Risk Considerations

Looking ahead, Huntington's management is confident in its ability to sustain performance and deliver against its 2025 guidance, despite acknowledging a period of heightened economic uncertainty influenced by factors such as changes in tariff policies, persistent inflation, and mixed economic data. The company's full-year 2025 guidance forecasts robust growth: average loan balances are expected to increase by 5% to 7%, and average deposits by 3% to 5%. Net interest income is projected to grow by 5% to 7% on a dollar basis, reaching a record level for the full year, supported by a relatively stable NIM around 3.07% for the remainder of the year under most interest rate scenarios, with expectations for rising NIMs in 2026. Fee revenues are anticipated to grow by 4% to 6%, driven by continued momentum in key businesses and contributions from new initiatives like merchant acquiring. Expense growth is guided at 3.5% to 4.5%, reflecting continued investment balanced with efficiency efforts, targeting positive operating leverage for the year. Credit quality is expected to remain strong, with net charge-offs projected to be between 25 and 35 basis points, consistent with the company's through-the-cycle target range and reflecting its disciplined risk management.

Key assumptions underpinning this outlook include the continued successful execution of organic growth strategies, effective management of deposit costs in a dynamic rate environment, and the resilience of credit quality. Management utilizes multiple macroeconomic forecasts, including a baseline scenario projecting unemployment to remain around 4.1-4.2% and GDP growth to moderate, along with scenarios incorporating higher uncertainty and potential recession risks, to inform its ACL and overall risk management.

While the outlook is positive, several risks could impact performance. Macroeconomic uncertainty, particularly the potential for a recession in the latter half of 2025 depending on trade policies and other factors, could pressure loan demand, credit quality, and fee income. Changes in interest rates, while partially hedged, could still impact net interest income and the value of the investment portfolio. Risks in the commercial real estate sector, particularly the office portfolio, remain an area of focus, although Huntington's exposure is managed with specific reserves and a focus on suburban, multi-tenant properties. Competitive pressures could intensify, impacting pricing and market share. Regulatory changes, including potential impacts from proposed capital planning rules or future FDIC special assessments, could increase costs and affect capital requirements. Operational risks, including cybersecurity threats, also remain pertinent.

Huntington mitigates these risks through its long-standing disciplined risk management framework, robust capital and liquidity buffers, diversified business model, proactive portfolio management, and ongoing investments in technology and controls.

Conclusion

Huntington Bancshares is demonstrating compelling performance driven by a clear and effectively executed strategy. By leveraging its foundational strengths in risk management, capital, and liquidity, the company is successfully pursuing accelerated organic growth through targeted investments in new geographies and specialty businesses. Recent financial results, marked by peer-leading loan and deposit growth, expanding revenues, and stable credit quality, validate this approach and position Huntington favorably within the competitive banking landscape. While macroeconomic uncertainty and specific sector risks persist, management's disciplined approach and positive 2025 guidance, forecasting record net interest income and positive operating leverage, underscore confidence in the company's trajectory. For investors, Huntington presents a story of a regional bank actively transforming itself, using its solid foundation and strategic investments, including in technology, to drive differentiated performance and long-term value creation.