Executive Summary / Key Takeaways

• Accelerated Organic Growth & Strategic Expansion: Huntington Bancshares is executing a differentiated growth strategy, significantly outpacing peers in loan and deposit growth by investing in new geographies (Carolinas, Texas) and specialized commercial verticals, culminating in the strategic acquisition of Veritex Holdings to accelerate Texas market penetration.
• Robust Financial Performance & Margin Expansion: The company delivered strong Q2 2025 results, with a 12% year-over-year increase in FTE Net Interest Income and a 12 basis point expansion in NIM to 3.11%, driven by effective balance sheet management, hedging activities, and disciplined deposit pricing.
• Fortified Credit Quality & Capital Position: Huntington maintains a disciplined, moderate-to-low risk appetite, reflected in top-tier credit performance with net charge-offs at a low 0.20% and a robust Allowance for Credit Losses of 1.86%. Capital ratios are strengthening, with adjusted CET1 reaching 9%, positioning the company for continued high-return loan growth and future capital distributions.
• Differentiated Fee Income Strategy: Strategic investments in payments, wealth management, and capital markets are yielding substantial returns, with these key areas growing 11% year-over-year and now comprising 66% of total fee income, providing a powerful and sustainable revenue diversification lever.
• Technological Edge & Operational Efficiency: Huntington leverages digitally powered solutions, enhanced modeling, and in-house capabilities like merchant acquiring to drive efficiency, improve customer experience, and manage risk, underpinning its competitive advantage and contributing to positive operating leverage.

The Resilient Regional Bank: A Blueprint for Growth

Huntington Bancshares Incorporated, a diversified regional bank holding company headquartered in Columbus, Ohio, has a rich history dating back to 1866. Over its long tenure, Huntington has evolved into a full-service commercial and consumer banking provider, committed to a "People-First, Customer-Centered" vision. This foundational philosophy, coupled with a long-standing aggregate moderate-to-low risk appetite, has shaped Huntington's strategic responses to market dynamics, particularly evident in its recent growth trajectory.

In 2023, a period when many banking peers retrenched due to liquidity and capital concerns, Huntington deliberately chose a different path: aggressive investment. This counter-cyclical strategy involved accelerating new customer acquisition, hiring hundreds of talented bankers, and expanding capabilities and expertise. These efforts have since translated into leading deposit growth and a significant expansion of its strategic fee revenue streams. The company's regional banking model, spanning 971 full-service branches across 11 states by June 2025, serves as a robust platform for this growth, allowing it to leverage its national franchise for scale and market share expansion.

Competitive Landscape and Strategic Positioning

Huntington operates in a competitive landscape dominated by larger national banks and other formidable regional players. Key publicly traded competitors include PNC Financial Services Group (PNC), Fifth Third Bancorp (FITB), Regions Financial Corporation (RF), and KeyCorp (KEY). Huntington holds a mid-tier position with approximately 1-2% national market share, but it is a regional leader, particularly in the Midwest. Its strategic positioning emphasizes a community-focused brand and extensive branch network, fostering higher customer loyalty and stable deposit bases.

Compared to PNC, Huntington trails in overall scale and digital capabilities, with PNC's larger network and AI-driven fraud detection offering greater efficiency. Huntington's revenue growth (5-7% year-over-year) also lags PNC's (8-10%), and its operating margins (22-24%) are lower than PNC's (30-32%). Similarly, while Huntington's offerings are qualitatively on par with Fifth Third Bancorp, FITB's streamlined digital processes lead to quantitatively lower operating costs, enabling materially faster processing times. Huntington's revenue growth is also slightly behind FITB's (6-8%). However, Huntington differentiates itself through specialized segments like Vehicle Finance, where it holds a strong regional presence, and its focus on integrated, relationship-based banking.

Against Regions Financial, Huntington is closely matched in commercial banking, though RF's conservative risk management strategy, evidenced by 10-15% lower default rates due to advanced analytics, provides greater stability. Huntington generally outperforms KeyCorp, demonstrating stronger revenue growth (5-7% vs. 4-6% for KEY) and a more diversified segment mix. Despite these competitive pressures, Huntington's organic growth has consistently outpaced its peer group, with loan balances outperforming the median by approximately 6% over the past year and deposit growth significantly exceeding industry averages since Q1 2023. This outperformance is a testament to its disciplined execution and strategic investments.

Technological Differentiation and Operational Excellence

Huntington's competitive edge is increasingly underpinned by its strategic investments in technology and digital solutions, which enhance operational efficiency, customer experience, and risk management. The company is actively transforming its operations through "digitally powered consumer and business financial solutions" and "leveraging partnerships and technology to grow customers and market share."

A prime example of this is the full commercial launch of its in-house merchant acquiring capabilities in October 2024. This strategic move is expected to add approximately 1 percentage point to overall fee revenue growth, demonstrating a direct, quantifiable benefit to the top line. This insourcing enhances control, streamlines processes, and allows for deeper integration with other payment and cash management services, driving efficiency and customer stickiness.

Beyond revenue generation, technology plays a crucial role in risk management and operational efficiency. Huntington employs "quantitative measurement capabilities that utilize external data sources, enhanced modeling technology, and internal stress testing processes" for credit risk management. This sophisticated analytical infrastructure allows for proactive identification, monitoring, and management of credit exposures, contributing to its consistent top-tier credit performance. The company's Model Risk Oversight Committee ensures rigorous evaluation and management of model risk, a critical aspect in a data-driven financial landscape.

Furthermore, Huntington actively manages cybersecurity risks through dedicated operations designed to detect, contain, and respond to threats effectively. This includes monitoring phishing campaigns and anomalous remote logins, reflecting a proactive defense-in-depth strategy. While specific quantitative metrics on cybersecurity's direct financial impact are not disclosed, the strategic intent is clear: minimize operational and financial losses from cyberattacks, thereby protecting the company's reputation and financial stability.

The company's commitment to technological advancement extends to its long-term vision. Management has indicated that "generative AI" will be leveraged for "more and more inquiry and review," suggesting future enhancements in data analysis and operational insights. While precise, directly comparable market share figures for all niche competitors are not publicly detailed, Huntington's focus on integrating technology into its core operations and expanding its digital footprint is a strategic response to the broader industry trend of digital transformation and the rise of fintech competitors. This technological roadmap aims to maintain its competitive moat by driving efficiency, improving customer acquisition and deepening, and enabling new revenue streams.

Financial Performance and Operational Momentum

Huntington's strategic investments are clearly translating into robust financial performance. For the six months ended June 30, 2025, the company reported net income attributable to Huntington of $1,063 million, a significant increase from $893 million in the prior year. This was supported by a 12% increase in FTE net interest income to $2,924 million, driven by a 7% increase in average earning assets and a 12 basis point expansion in the FTE Net Interest Margin (NIM) to 3.11%. This NIM improvement was primarily a result of effective net hedging activity and a decrease in funding costs.

Loan growth remains a key driver, with average loans and leases increasing by $9.8 billion (8%) year-over-year in Q2 2025, reaching $133.17 billion. This growth was broad-based, with commercial loans and leases up 10% and consumer loans up 6%. New initiatives, including expansion in Texas and the Carolinas, contributed $900 million (40%) of the Q2 2025 loan growth.

Deposit growth also remained strong, with average deposits increasing by $9.9 billion (6%) year-over-year, reaching $163.38 billion by June 30, 2025. This robust deposit franchise, with 71% of deposits insured, provides a stable and lower-cost funding base.

Fee income, a critical component of Huntington's diversified revenue strategy, demonstrated strong momentum. Despite a $58 million net loss on the sale of investment securities in Q2 2025 due to a repositioning, strategic fee income areas (payments, wealth, capital markets) collectively grew 11% year-over-year. These areas now represent a substantial 66% of the total fee income mix, up 6 percentage points in two years. Payments and cash management revenue increased 7%, wealth and asset management revenue grew 13%, and capital markets and advisory fees rose 15% year-over-year in Q2 2025.

Expense management remains disciplined, with noninterest expense increasing 7% year-over-year in Q2 2025, primarily due to higher personnel costs and technology-related expenses. However, management is focused on driving positive operating leverage, with the latest outlook for 2025 implying a larger amount of positive operating leverage than initially budgeted.

Credit Quality and Capital Strength

Huntington's long-standing commitment to a moderate-to-low risk appetite is consistently reflected in its top-tier credit performance. Net charge-offs (NCOs) were an annualized 0.20% of average loans and leases in Q2 2025, down from 0.29% in the prior year, largely benefiting from net recoveries in commercial real estate (CRE) loans. The Allowance for Credit Losses (ACL) stood at $2.5 billion (1.86% of total loans and leases), an increase of $69 million from year-end 2024, reflecting loan growth and a prudent approach to macroeconomic uncertainties.

While the CRE office portfolio remains an area of industry-wide uncertainty, Huntington's exposure is managed, with its predominantly suburban and multi-tenant office loans totaling $1.5 billion (1% of total loans) and supported by approximately 11% ACL reserves. Criticized assets decreased to 3.82% of the total loan book, with a 5% reduction in the substandard category, indicating proactive portfolio management.

Capital remains a core strength. The Common Equity Tier 1 (CET1) risk-based capital ratio was 10.5% at June 30, 2025, while the adjusted CET1 (inclusive of AOCI) reached 9%, hitting the lower bound of the company's targeted operating range of 9% to 10%. This improvement was driven by strong earnings, net of dividends, and an improvement in Accumulated Other Comprehensive Income (AOCI). The Board's approval of a $1 billion common share repurchase authorization in April 2025 provides flexibility for future capital deployment, though no shares have been repurchased under this authorization as of Q2 2025.

Outlook and Strategic Trajectory

Huntington's management has provided concrete guidance for 2025, reflecting confidence in its strategic initiatives and underlying business momentum. For the full year (stand-alone Huntington), the company expects:

• Average Loan Growth: Increased to 6% to 8%.
• Average Deposit Growth: Raised to 4% to 6%.
• Net Interest Income (NII): Growth of 8% to 9%, projecting a record NII year.
• Noninterest Income: Growth of 4% to 6%, with potential to reach the higher end based on capital markets performance.
• Noninterest Expense: Growth of 5% to 6%, driven by higher revenue and associated compensation, but still delivering positive operating leverage.
• Net Charge-offs: Lowered to 20 to 30 basis points.
• Effective Tax Rate: Approximately 19% in the second half of 2025.

For Q3 2025, Huntington anticipates approximately 1% sequential loan growth, relatively stable deposits, stable NII, and fee revenues around $550 million. Expenses are projected to be about $1.22 billion, primarily due to a new brand campaign.

The recently announced definitive merger agreement with Veritex Holdings, Inc. , expected to close in Q4 2025, is a significant accelerant to Huntington's organic growth strategy in Texas. This all-stock transaction, valued at approximately $1.90 billion, will expand Huntington's presence in Dallas/Fort Worth and Houston, leveraging Veritex's strong commercial banking franchise and local relationships. The acquisition is poised to accelerate commercial lending, capital markets, and fee income opportunities, while fast-tracking the build-out of a Texas consumer franchise. This move underscores Huntington's commitment to expanding its footprint in high-growth markets.

Risks and Considerations

While Huntington's outlook is robust, several risks warrant investor attention. Macroeconomic uncertainty, including persistent inflation, potential shifts in U.S. trade policies (tariffs), and geopolitical instability, could impact economic growth and credit quality. The CRE office sector remains a specific area of concern due to declining property values and demand. Changes in Federal Reserve interest rate policy, while currently modeled for, could affect NIM and MSR valuations. Regulatory changes, such as the ongoing evolution of the Community Reinvestment Act framework or potential new requirements, could also impact operational costs and strategic flexibility. Finally, the successful integration of the Veritex acquisition is crucial to realizing the anticipated synergies and growth benefits.

Conclusion

Huntington Bancshares is demonstrating a compelling investment thesis rooted in its proactive growth strategy, disciplined risk management, and expanding technological capabilities. By choosing to invest when others hesitated, the company has built significant momentum, reflected in its peer-leading loan and deposit growth and strong financial performance. The strategic acquisition of Veritex Holdings (VBTX) is set to further accelerate its expansion into attractive, high-growth markets, particularly Texas, reinforcing its national franchise.

The company's commitment to operational excellence, driven by investments in digital solutions and in-house capabilities like merchant acquiring, provides a sustainable competitive advantage and underpins its ability to generate positive operating leverage. With a strengthening capital position, top-tier credit quality, and a clear roadmap for continued revenue and profit expansion, Huntington is well-positioned to deliver sustained shareholder value. Its ability to consistently execute its strategy, adapt to evolving market conditions, and leverage its technological advancements will be key to realizing its full potential and outperforming in the dynamic banking landscape.