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HB

HUNTINGTON BANCSHARES INC /MD/ (HBANP)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered strong growth: diluted EPS $0.34 (flat QoQ, +31% YoY), total FTE revenue $1.935B (+10% YoY), NIM expanded to 3.10% (+7bps QoQ), and ROTCE 16.7% .
  • Deposit costs fell to 2.03% (down 13bps QoQ), driving margin outperformance; average loans grew 2% QoQ to $130.9B and average deposits rose 1% QoQ to $161.6B .
  • Full‑year guidance: loans +5–7% (maintained), deposits +3–5% (maintained), fee revenue +4–6% (maintained), expenses +3.5–4.5% (maintained), net charge‑offs 25–35bps (maintained); net interest income guidance raised to +5–7% for 2025; Q2 guide: avg loans +1–2% QoQ, expenses ≈$1.17B, NII up modestly with stable run‑rate NIM around ~3.07% .
  • Capital strengthened: CET1 10.6% (+10bps QoQ) and adjusted CET1 8.9% (+20bps QoQ); Board approved a new $1B multi‑year share repurchase authorization, a potential stock catalyst as capital approaches operating range .

What Went Well and What Went Wrong

What Went Well

  • Margin and funding execution: NIM rose to 3.10% as total deposit cost fell to 2.03% (−13bps QoQ), outperforming internal expectations due to disciplined pricing and accelerated down‑beta (achieved ~37% cumulative down‑beta in Q1) .
  • Broad‑based growth: Average loans +$2.7B QoQ (+2%), deposits +$2.2B QoQ (+1%); fee income +6% YoY, led by payments (+6% YoY), wealth (+15% YoY), and capital markets (+20% YoY) .
  • Credit quality: NCOs fell to 0.26% (−4bps QoQ) and NPA ratio decreased to 0.61% (−2bps QoQ), with ACL at 1.87% despite portfolio growth; management emphasized top‑quartile through‑cycle credit performance .

Management quotes:

  • “Our first quarter results were highlighted by continued profit growth driven by increased loans and deposits, expanded net interest margin, growth of fee revenues, and rigorous expense management.” — CEO Steve Steinour .
  • “We drove $31 million or 2.2% growth in net interest income… very pleased with the underlying 307 basis points of NIM in the quarter.” — CFO Zach Wasserman .

What Went Wrong

  • Sequential fee softness: Total noninterest income fell $65M QoQ to $494M on lower capital markets (−44% QoQ) and “other” income (−56% QoQ), partly due to investment valuation items; note Q1 seasonal trough .
  • FDIC insurance expense noise: Deposit and other insurance expense rose to $37M (vs $20M in Q4), with non‑recurring adjustments; notable items included updated DIF assessment estimates .
  • Criticized assets uptick: Criticized commercial loans increased to ~3.98%; timing effects deferred several upgrades to early April; commercial real estate balances declined $261M QoQ .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Total Revenue (FTE) ($USD Millions)$1,887 $1,968 $1,935
Net Interest Income ($USD Millions)$1,351 $1,395 $1,426
Noninterest Income ($USD Millions)$523 $559 $494
Diluted EPS ($)$0.33 $0.34 $0.34
Net Interest Margin (%)2.98% 3.03% 3.10%
Efficiency Ratio (%)59.4% 58.6% 58.9%
ROTCE (%)16.2% 16.4% 16.7%
Return on Average Assets (%)1.04% 1.05% 1.04%

Consensus estimates comparison:

  • Wall Street consensus via S&P Global was unavailable for HBANP due to mapping limitations; estimate comparison not provided (consensus unavailable via S&P Global for HBANP) [SpgiEstimatesError].

Segment and category breakdowns:

Noninterest Income Composition ($USD Millions)

CategoryQ3 2024Q4 2024Q1 2025
Payments & Cash Management$158 $162 $155
Wealth & Asset Mgmt$93 $93 $101
Customer Deposit & Loan Fees$86 $88 $86
Capital Markets & Advisory$78 $120 $67
Mortgage Banking$38 $31 $31
Leasing Revenue$19 $19 $14
Insurance Income$18 $22 $20
Net Gains (Losses) on Securities$— $(21) $—
Other Noninterest Income$33 $45 $20
Total Noninterest Income$523 $559 $494

Loan and Deposit KPIs

KPIQ3 2024Q4 2024Q1 2025
Avg Loans & Leases ($USD Billions)$124.5 $128.2 $130.9
Avg Total Deposits ($USD Billions)$156.5 $159.4 $161.6
Total Cost of Deposits (%)2.40% 2.16% 2.03%
CET1 Ratio (%)10.4% 10.5% 10.6%
TCE / Tangible Assets (%)6.4% 6.1% 6.3%
NCOs (% of Avg Loans)0.30% 0.30% 0.26%
NPA Ratio (%)0.62% 0.63% 0.61%
ACL (% of Total Loans & Leases)1.93% 1.88% 1.87%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Loans GrowthFY 20255–7% (prior range) 5–7% Maintained
Deposits GrowthFY 20253–5% (prior range) 3–5% Maintained
Net Interest Income (Dollar Growth)FY 2025Not disclosed in reviewed docs (CFO referenced prior) +5–7% (record full‑year NII) Raised
Fee Revenues GrowthFY 20254–6% (prior range) 4–6% Maintained
Expense GrowthFY 20253.5–4.5% (prior range) 3.5–4.5% Maintained
Net Charge‑OffsFY 202525–35bps (prior range) 25–35bps Maintained
Average Loans QoQQ2 2025N/A+1–2% QoQ New Q2 guide
Net Interest Income QoQQ2 2025N/AModest growth; NIM ~3.07% stable run rate New Q2 guide
Fee Revenues QoQQ2 2025N/AModest growth from seasonal Q1 low New Q2 guide
Expenses ($)Q2 2025N/A≈$1.17B; +~$20M QoQ (merit and revenue‑driven comp) New Q2 guide
Net Charge‑OffsQ2 2025N/AWithin full‑year range New Q2 guide
Share RepurchaseMulti‑yearN/A$1B authorization; modest 2025 expected New authorization

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024 and Q4 2024)Current Period (Q1 2025)Trend
Deposit costs and down‑betaTotal cost of deposits: 2.40% (Q3), 2.16% (Q4) ; disciplined pricing discussed in strategy materialsCost 2.03% (−13bps QoQ); accelerated down‑beta (~37% in Q1) and strong deposit growth Improving
NIM and hedgingNIM: 2.98% (Q3), 3.03% (Q4) ; hedge drag 8bps in Q4 referenced NIM 3.10%; hedge drag reduced to ~4bps, expected ~neutral mid‑year then ~4bps by Q4 Improving/stable
Loan growth and new initiativesAvg loans: $124.5B (Q3), $128.2B (Q4) Avg loans $130.9B; ~half of growth from new initiatives (FIG, mortgage servicing, funds finance, Carolinas/Texas) Positive
Capital markets & advisoryQ4 benefited from higher advisory fees YoY +20%, but QoQ −44%; pipeline quality strong; timing sensitive to macro Mixed (macro‑dependent)
Credit qualityNCOs 0.30% (Q3/Q4) ; NPA ratio 0.62% (Q3), 0.63% (Q4) NCOs 0.26%; NPA ratio 0.61%; criticized assets ~3.98%, timing defers upgrades Stable/solid
Tariffs/macro backdropMacro uncertainty rising into Q4 [industry context]Some deferrals in equipment finance and distribution finance; pockets of strength (USMCA trade, autos) Headwind pockets
Regional expansion (Carolinas/Texas)Ongoing build‑out; profitability achieved in Carolinas in 2024 per management Accelerating branch plan (target ~55 in ~3 years), continued hiring; strong pipelines Accelerating
AI/technology/data useSegmented pricing and data‑driven approach Increasing use of data; management highlights future Generative AI applications in portfolio review Building
Regulatory/FDICDIF special assessment notable in prior quarters FDIC expense noisy from non‑recurring adjustments; DIF estimate updates Normalizing over time

Management Commentary

  • Strategic positioning: “We are operating from a position of strength… disciplined approach to risk… top quartile credit performance… very well positioned to manage through the evolving economic outlook.” — CEO Steve Steinour .
  • Growth drivers: “Profit growth is supported by earning asset growth, expanded net interest margin, growth of value‑added fee revenues and disciplined expense management.” — CEO Steve Steinour .
  • Capital and buybacks: “Adjusted CET1 growing by 20bps… Board approved a $1 billion multiyear share repurchase authorization.” — CEO Steve Steinour .
  • NII/NIM dynamics: “Net interest margin was 3.1%… benefit from lower funding costs, hedging impact, and interest recoveries.” — CFO Zach Wasserman .
  • Outlook discipline: “We will remain dynamic as we calibrate to the most likely rate environment; neutrality on rate sensitivity through year end.” — CFO Zach Wasserman .

Q&A Highlights

  • Deposit pricing and beta: Management achieved accelerated down‑beta and lowered CD rates on retention, outperformed on both cost and volumes due to segmented, disciplined pricing .
  • Loan yields and new initiatives: New business yields consistent with overall production; wins driven by banker expertise and vertical model, not aggressive pricing; Carolinas profitable in 2024 .
  • Share repurchase rationale: $1B authorization provides flexibility to support capital deployment; modest repurchases expected in 2025; capital priorities remain growth, dividend, then buybacks .
  • Macro/tariffs: No material drop‑off; some deferrals in equipment/distribution finance; winners in USMCA‑exempt trade and autos; strong Q2 pipeline .
  • Criticized assets: QoQ uptick tied to timing (several upgrades slipped into April); expectation for flattish trend; low loss content in criticized book .
  • Hedging trajectory: Hedge drag improved in Q1 and expected ~neutral mid‑year, then ~4bps drag by Q4; asset sensitivity near neutral in 2025, rising in 2026 .

Estimates Context

  • S&P Global consensus estimates for HBANP were unavailable due to CIQ mapping limitations; consequently, explicit beat/miss vs consensus could not be determined from S&P Global for HBANP in Q1 2025 [SpgiEstimatesError].
  • Given raised full‑year NII guidance and lower deposit costs, sell‑side models may need to adjust upward NII and potentially NIM trajectory assumptions; fee revenue and expense ranges remain consistent with prior ranges .

Key Takeaways for Investors

  • Margin durability: Deposit cost declines (2.03%) and segmented pricing underpin NIM stability around ~3.07% run‑rate; hedging drag neutral mid‑year supports stable NIM in 2025 .
  • Growth momentum: Loans +2% QoQ (+7% YoY) and deposits +1% QoQ (+7% YoY) with ~half of loan growth from new initiatives; Q2 loan growth guided +1–2% QoQ .
  • Capital optionality: CET1 10.6% and adjusted CET1 8.9% trending towards operating range; $1B buyback authorization offers discretionary capital deployment; modest 2025 activity expected .
  • Fee trajectory: Q1 seasonal trough; payments/wealth solid YoY; watch capital markets/M&A timing amid macro; expect modest sequential fee growth in Q2 .
  • Credit resilience: NCOs at 26bps and NPA ratio at 61bps with ACL 1.87%; guidance for NCOs 25–35bps maintained; criticized assets timing suggests near‑term plateau .
  • Q2 setup: Modest NII growth, expenses ≈$1.17B, NIM stable; continued self‑funding of loan growth via deposit momentum .
  • Watch macro/tariffs: Some equipment/distribution finance deferrals; diversified portfolio and regional expansion (Carolinas/Texas) mitigate headwinds; pipeline remains strong .

Additional Q1 press release note:

  • Community initiative: Huntington continued its Detroit S.W.A.G. scholarship program (ninth year), awarding $115,000 in scholarships and educator grants; while not financially material, it reinforces community engagement .