HUNTINGTON BANCS(HBANL) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Huntington Bancshares reported strong Q1 2025 financial performance, with net income of $527 million and an 11% rise in net interest income Executive Overview Huntington's Q1 2025 net income reached $527 million, driven by increased net interest income, asset growth, and strengthened capital Q1 2025 vs. Q1 2024 Financial Performance | Metric | Q1 2025 | Q1 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Net Interest Income | $1,426M | $1,287M | 11% | | Net Income Attributable to Huntington | $527M | $419M | 26% | | Diluted EPS | $0.34 | $0.26 | 31% | | Return on Average Total Assets | 1.04% | 0.89% | N/A | | Return on Average Tangible Common Equity | 16.7% | 14.2% | N/A | | Net Interest Margin (FTE) | 3.10% | 3.01% | N/A | - Total assets increased by $5.4 billion (3%) to $209.6 billion at March 31, 2025, compared to year-end 2024, driven by growth in loans and interest-earning deposits[24] - The CET1 risk-based capital ratio improved to 10.6% from 10.5% at year-end 2024, primarily due to earnings retention, which offset an increase in risk-weighted assets[25] - The economic environment is characterized by heightened uncertainty from tariff policies and steady interest rates, with expectations of a potential U.S. recession in the second half of 2025[28][29] Discussion of Results of Operations Q1 2025 net interest income rose 11% to $1.4 billion, noninterest income grew 6% to $494 million, and noninterest expense increased by 1% - FTE net interest income increased by $141 million (11%) YoY, driven by a $14.5 billion (8%) rise in average earning assets and a 9 basis point increase in FTE NIM to 3.10%[35] Q1 2025 Noninterest Income Breakdown (YoY) | Category | Q1 2025 | Q1 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Payments and cash management | $155M | $146M | 6% | | Wealth and asset management | $101M | $88M | 15% | | Capital markets and advisory | $67M | $56M | 20% | | Total Noninterest Income | $494M | $467M | 6% | Q1 2025 Noninterest Expense Breakdown (YoY) | Category | Q1 2025 | Q1 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Personnel costs | $671M | $639M | 5% | | Deposit and other insurance | $37M | $54M | (31)% | | Total Noninterest Expense | $1,152M | $1,137M | 1% | - The provision for credit losses for Q1 2025 was $115 million, an increase of $8 million (7%) from Q1 2024[39] Risk Management Huntington maintains a disciplined risk management framework, managing credit, market, and liquidity risks with a moderate-to-low appetite - The company's risk management is guided by a Board-approved Risk Appetite Statement, focusing on seven key risk categories: credit, market, liquidity, operational, compliance, strategic, and reputation[48] - Total loans and leases grew to $132.5 billion at March 31, 2025, a 2% increase from year-end 2024, with commercial loans comprising 57% and consumer loans 43% of the portfolio[52][53] - The CRE office portfolio totaled $1.6 billion (1% of total loans) and has an ACL reserve of approximately 11% as of March 31, 2025, reflecting proactive management of this sector[61] - The balance sheet is asset sensitive, meaning net interest income is expected to rise with increasing interest rates. A gradual 100 basis point rate increase is projected to increase NII by 0.5%[91][93] - Primary contingent liquidity sources totaled $107.4 billion at March 31, 2025, including significant unused borrowing capacity at the FRB ($67.2B) and FHLB ($15.8B)[125] Capital Huntington's capital ratios exceeded well-capitalized standards, with CET1 at 10.6% and shareholders' equity rising to $20.4 billion Regulatory Capital Ratios (Consolidated) | Ratio | March 31, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | CET1 risk-based capital | 10.6% | 10.5% | | Tier 1 risk-based capital | 11.9% | 11.9% | | Total risk-based capital | 14.3% | 14.3% | | Tier 1 leverage | 8.5% | 8.6% | - The increase in the CET1 ratio was driven by current period earnings, net of dividends, which was partially offset by an increase in risk-weighted assets from loan growth and a reduction in the CECL transitional amount[149] - On April 16, 2025, the Board of Directors approved a new share repurchase authorization of up to $1.0 billion of common shares[154] - Shareholders' equity increased by $694 million to $20.4 billion at March 31, 2025, compared to year-end 2024, primarily due to earnings and an improvement in accumulated other comprehensive income (AOCI)[152] Business Segment Discussion Huntington's Q1 2025 segment performance saw Consumer & Regional Banking net income down 8%, Commercial Banking down 2%, and Treasury / Other loss significantly narrowed Net Income by Business Segment (Q1 2025 vs Q1 2024) | Segment | Q1 2025 Net Income | Q1 2024 Net Income | Change (%) | | :--- | :--- | :--- | :--- | | Consumer & Regional Banking | $319M | $348M | (8)% | | Commercial Banking | $236M | $242M | (2)% | | Treasury / Other | ($28M) | ($171M) | 84% | | Total Huntington | $527M | $419M | 26% | - Consumer & Regional Banking saw an 8% decrease in net income due to a 5% rise in noninterest expense, which offset a 6% increase in noninterest income[163] - Commercial Banking's net income declined slightly by 2%. A 2% drop in net interest income was nearly offset by a 12% increase in noninterest income, driven by capital markets and advisory fees[165] - The Treasury / Other function's net loss narrowed significantly to $28 million from $171 million YoY, primarily due to a $162 million improvement in net interest income, reflecting the impact of hedging and funds transfer pricing[169] Financial Statements (Unaudited) This section presents Huntington's unaudited consolidated financial statements, including Balance Sheets, Income, Comprehensive Income, Equity, and Cash Flows Consolidated Balance Sheets As of March 31, 2025, total assets reached $209.6 billion, driven by loan and deposit growth, with total liabilities at $189.1 billion and equity at $20.4 billion Balance Sheet Highlights | (in millions) | March 31, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total Assets | $209,596 | $204,230 | | Net Loans and Leases | $130,242 | $127,798 | | Total Deposits | $165,337 | $162,448 | | Total Liabilities | $189,110 | $184,448 | | Total Shareholders' Equity | $20,434 | $19,740 | Consolidated Statements of Income Q1 2025 net interest income was $1.426 billion, leading to net income attributable to Huntington of $527 million, or $0.34 per diluted share Income Statement Summary (Three Months Ended) | (in millions) | March 31, 2025 | March 31, 2024 | | :--- | :--- | :--- | | Net Interest Income | $1,426 | $1,287 | | Provision for Credit Losses | $115 | $107 | | Total Noninterest Income | $494 | $467 | | Total Noninterest Expense | $1,152 | $1,137 | | Net Income Attributable to Huntington | $527 | $419 | Consolidated Statements of Comprehensive Income Q1 2025 comprehensive income attributable to Huntington was $960 million, comprising $527 million net income and $433 million positive other comprehensive income Comprehensive Income (Three Months Ended) | (in millions) | March 31, 2025 | March 31, 2024 | | :--- | :--- | :--- | | Net Income Attributable to Huntington | $527 | $419 | | Other Comprehensive Income (Loss) | $433 | ($203) | | Comprehensive Income Attributable to Huntington | $960 | $216 | Consolidated Statements of Changes in Shareholders' Equity Shareholders' equity increased to $20.43 billion by March 31, 2025, driven by $527 million in net income and $433 million in other comprehensive income - Total Huntington shareholders' equity grew by $694 million during Q1 2025, from $19.740 billion to $20.434 billion[197] Consolidated Statements of Cash Flows Q1 2025 saw net cash provided by operating activities of $513 million, net cash used in investing of $2.15 billion, and net cash provided by financing of $4.1 billion Cash Flow Summary (Three Months Ended March 31, 2025) | Activity | Net Cash Flow (in millions) | | :--- | :--- | | Operating Activities | $513 | | Investing Activities | ($2,150) | | Financing Activities | $4,100 | | Net Increase in Cash | $2,463 | Notes to Unaudited Consolidated Financial Statements These notes provide detailed disclosures supporting the consolidated financial statements, covering accounting policies, financial components, and segment reporting Quantitative and Qualitative Disclosures about Market Risk This section refers readers to the Market Risk section within the MD&A for detailed quantitative and qualitative disclosures on market risk - Disclosures regarding market risk for the current period are located in the Market Risk section of the MD&A in this report[381] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes in internal control over financial reporting - The CEO and CFO concluded that as of March 31, 2025, the company's disclosure controls and procedures were effective[382] - No changes in internal control over financial reporting occurred during Q1 2025 that have materially affected, or are reasonably likely to materially affect, these controls[383] PART II. OTHER INFORMATION Legal Proceedings The company is involved in routine legal and regulatory matters, with an estimated aggregate reasonably possible loss of $0 to $15 million beyond accrued liabilities - Information regarding legal proceedings is detailed in Note 15 under 'Litigation and Regulatory Matters'[385] - As of March 31, 2025, management estimates the aggregate range of reasonably possible loss for certain legal matters is between $0 and $15 million, in excess of any amounts already accrued[374] Risk Factors This section directs readers to the 2024 Annual Report on Form 10-K for a comprehensive discussion of potential risk factors - Readers are directed to the Risk Factors section in the 2024 Annual Report on Form 10-K for a comprehensive discussion of potential risks[386] Unregistered Sales of Equity Securities and Use of Proceeds This item is reported as not applicable for the current reporting period - This item is reported as 'Not Applicable'[387] Other Information On March 13, 2025, Marcy Hingst, General Counsel, adopted a Rule 10b5-1 trading plan for the sale of up to 54,800 common shares - Marcy Hingst, General Counsel, adopted a Rule 10b5-1 trading plan on March 13, 2025, for the potential sale of up to 54,800 shares of common stock[388] Exhibits This section provides an index of all exhibits filed with the Form 10-Q report, including corporate governance documents and certifications - The report includes an exhibit index listing documents such as Articles of Incorporation, Bylaws, CEO/CFO certifications (Rule 13a-14(a) and Section 1350), and Inline XBRL files[393]