Huntington Bancshares Inc (HBAN) Q2 2025 Earnings Call Highlights: Strong Growth and Strategic ...

Yahoo

4 days ago

Earnings Per Share (EPS): $0.34, including a $0.04 impact from securities repositioning and a notable item.
Adjusted EPS Growth: 27% year over year.
Return on Tangible Common Equity (ROTCE): 16.1%; adjusted ROTCE at 17.6%.
Average Loan Growth: $2.3 billion or 1.8% from the prior quarter; 7.9% year over year.
Average Deposit Growth: $1.8 billion or 1.1% from the prior quarter.
Common Equity Tier 1 (CET1): Reported at 10.5%; adjusted CET1 at 9%.
Tangible Book Value Per Share: Increased 16% year over year.
Net Charge-Offs: 20 basis points.
Allowance for Credit Losses: 1.86%.
Revenue Growth: 8% year over year.
Pre-Provision Net Revenue (PPNR) Growth: 8% reported; 15% adjusted year over year.
Net Interest Income Growth: 2.9% sequentially; 12% year over year.
Net Interest Margin (NIM): 3.11%, up 1 basis point from the prior quarter.
Non-Interest Income Growth: 7% year over year.
Payments Revenue Growth: 7% year over year.
Wealth Management Fee Growth: 13% year over year.
Capital Markets Growth: 15% year over year.
Non-Interest Expense: $1.2 billion for the quarter.
Full-Year Loan Growth Guidance: Increased to 6% to 8%.
Full-Year Deposit Growth Guidance: Increased to 4% to 6%.
Full-Year Net Interest Income Guidance: Increased to 8% to 9%.
Full-Year Fee Income Growth Guidance: 4% to 6%.
Full-Year Expense Growth Guidance: 5% to 6%.
Full-Year Net Charge-Off Guidance: Lowered to 20 to 30 basis points.
Warning! GuruFocus has detected 6 Warning Sign with HBAN.
Release Date: July 18, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Huntington Bancshares Inc (NASDAQ:HBAN) reported strong operating performance with robust organic growth in loans, deposits, and fees, exceeding their plans for the year.
The company is driving strong revenue and profit growth year over year, supported by earning asset growth, expanded net interest margin, and positive operating leverage.
Credit performance remains stable with a low level of losses, reflecting proactive management of loan portfolios and disciplined customer selection.
The acquisition of Veritex is expected to significantly accelerate growth in Texas, bringing new opportunities in commercial lending and capital markets.
Huntington Bancshares Inc (NASDAQ:HBAN) demonstrated strong liquidity with 2 times coverage of uninsured deposits and a 16% increase in tangible book value year over year.
Negative Points
Non-interest bearing deposits decreased, raising concerns about potential shifts in customer behavior towards higher-yielding products.
The growth from new initiatives slowed this quarter, which could indicate increased competition or market saturation.
There is uncertainty regarding the stability of the economic environment, which could impact the company's ability to hit the higher end of its net interest income guidance range.
The company faces potential headwinds from economic uncertainties and the competitive environment in deposit gathering.
Operating expenses are expected to increase due to higher incentive compensation and volume-related drivers, which could impact overall profitability.
Q & A Highlights
Q: Zach, regarding the new net interest income guidance range, what do you see as the threats to hitting the higher end of that range? A: Zachary Wasserman, CFO, mentioned that they are well on track to potentially hit the higher end of the range. He noted that the momentum in loans and stable net interest margin (NIM) are key factors. The primary concern would be the stability of the economic environment, but currently, there are no substantial threats anticipated.
Q: Can you provide feedback from internal and external partners on the Veritex acquisition announcement? A: Stephen Steinour, CEO, and Brant Standridge, President of Consumer and Regional Banking, reported positive feedback. Long-term shareholders encouraged strategic acquisitions, and the Veritex team is seen as a great fit. The acquisition is expected to enhance Huntington's presence in Texas, with Malcolm Holland joining as Chairman of Texas.
Q: Zach, can you discuss the differentiation in deposit trends among regional banks and how Huntington is managing deposit growth and costs? A: Zachary Wasserman, CFO, highlighted that deposit growth exceeded expectations, driven by primary bank relationships. Deposit costs trended down, and the expectation is for stable costs assuming no rate cuts. If rates decrease, there could be further opportunities to reduce costs.
Q: How are Veritex lenders reacting to Huntington's acquisition, and has it led to any inbound inquiries from other Texas teams? A: Brant Standridge, President of Consumer and Regional Banking, noted excitement among Veritex colleagues and customers due to Huntington's broader capabilities. The local structure and leadership in Texas are seen positively, and there have been inbound inquiries from other Texas teams.
Q: Zach, can you explain the change in the expense guide and whether higher net interest income would lead to higher expenses? A: Zachary Wasserman, CFO, explained that the primary driver of higher expenses is increased incentive compensation due to better revenue and profit outlooks. If net interest income reaches the higher end of the guidance range, expenses are expected to align with that.
Q: Can you provide an update on the buildout in the Carolinas and the outlook for branch openings? A: Brant Standridge, President of Consumer and Regional Banking, expressed optimism about growth in North and South Carolina. The economic performance in these regions is strong, and Huntington plans to open more than 20 branches next year, continuing to invest in these markets.
Q: How is Huntington managing its funding strategy, particularly regarding deposit growth and liquidity? A: Zachary Wasserman, CFO, explained that Huntington is optimizing funding and loan growth to drive the best net interest margin. The deposit gathering program is ongoing, and sequential growth is expected in Q4, with deposit growth expected to match loan growth over the longer term.
Q: How is Huntington addressing the increase in non-performing assets in the C&I sector? A: Brendan Lawlor, Chief Credit Officer, noted that criticized loans decreased, and the increase in non-performing assets was due to one-off transactions. Overall credit quality remains strong, with improvements in the deeper part of the criticized book.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.