Huntington Bancshares Incorporated Q3 FY2025 earnings call

• Executing growth strategy with excellent results, outpacing peers in loan and deposit growth, driving PPNR expansion. • Achieving top-tier profitability and returns due to revenue generation and operating leverage. • Excited about Veritex acquisition, set to close next Monday, bringing immediate scale in Texas with cost and revenue synergies. • Foundational organic growth strategies leveraging national scale and local market relationships driving loan and deposit growth. • Strong credit performance with net charge-offs at 22 basis points and stable allowance for credit losses.

Loan growth accelerated to 9.2% year over year, led by commercial lending and new initiatives. New initiatives accounted for $1.2 billion (40% of total loan growth), driven by Texas expansion and commercial verticals. Core loan growth included contributions from corporate/specialty banking, auto, regional banking, middle market, and asset finance, partially offset by seasonal distribution finance inventories and commercial real estate decline. Average deposit balances increased by $1.4 billion or 0.8%, with cost of deposits declining by two basis points. Focus on growing households and deepening relationships with disciplined pricing. Revenue grew 14% YOY, adjusted PPNR 16%, tangible book value up 10%, adjusted ROTC above 17%. CET1 at 9.2%, up 30 basis points, net charge-offs at 22 basis points, allowance for credit losses 1.86%.

• Standalone loan growth expected at high end of 8% for full year 2025, inclusive of Veritex, ADB growth 9-9.5%. • Deposits: Standalone at high end of prior growth guidance 5.5%, inclusive of Veritex 6.5-7%. • Net interest income: Standalone full-year guidance increased to 10-11% from prior 8-9% due to better loan growth and higher NIM. • NIM: Standalone Q4 expected to rise 1-2 basis points from Q3, and anticipate rise of at least 10 basis points in 2026 from fixed asset repricing. • Fee income: Standalone full-year guidance increased to ~7% from prior 4-6%. • Expense growth: Standalone expected 6.5% driven by volume and incentive compensation, operating leverage outlook more than 2.5 percentage points efficiency ratio improvement. • Credit: Anticipate charge-offs at or below midpoint of range. • Tax rate: Full year expected 17.5-18%.

• Economic and policy uncertainty. • Isolated credit quality issues in the industry, though overall industry derisked since GFC. • Competitive landscape in expansion markets.

Q: On loan growth outlook, can you talk a little bit more about the pipelines and core trends continuing to accelerate?

A: Zachary Wasserman said there's a lot of momentum coming into the fourth quarter with approximately 1.5% sequential growth, and confidence in core business areas like regional banking, commercial specialty business, equipment and asset finance, consumer auto, and other consumer lending, with mid to high single digits YOY growth expected in 2026.

Q: On credit quality, what are you seeing and how do you feel about credit in general?

A: Stephen Steinour stated they've had an exceptional year in credit performance, with tight underwriting standards and active portfolio management mitigating risks, and Brendan Lawlor added NDFI portfolio exposure is ~2% of total loans with diversity and active management.

Q: On operating leverage comments, how do you see this trending?

A: Zachary Wasserman explained sustainable expense management with 1% baseline expense reduction annually funneled into offensive investments, expecting 1-2% operating leverage annually.

Q: On M&A and strategic focus, can you talk about M&A conversations?

A: Stephen Steinour emphasized focus on organic growth from prior investments and Veritex integration, with no immediate M&A plans beyond current focus.

Q: On NII and NIM, how do you see the outlook?

A: Zachary Wasserman discussed NII growth driven by loan growth and NIM expansion, with fixed asset repricing a key driver, expecting 10 basis points NIM expansion in 2026 from fixed asset repricing.

Q: On deposit growth and pricing, what's driving that and betas?

A: Zachary Wasserman said deposit team execution is driving it with 40% beta in last two weeks of Q3, and marginal funding is accretive to NIM.

Q: On loan growth and tax bill impact, what do you see?

A: Stephen Steinour noted strong Q4 asset finance and positive outlook for 2026 despite tariff and order delay impacts.

Q: On return on tangible equity, how do you get to the target?

A: Zachary Wasserman explained focus on dual approach of tangible book value growth and strong returns, with medium-term targets subject to review.