HUNTINGTON BANCSHARES DEP(HBANM) - 2025 Q2 - Quarterly Report

Glossary of Acronyms and Terms This section provides a comprehensive reference of common acronyms and terms used throughout the document - This section provides a comprehensive reference of common acronyms and terms used throughout the document, such as ACL (Allowance for Credit Losses), AFS (Available-for-Sale), CECL (Current Expected Credit Losses), CET1 (Common Equity Tier 1), NII (Net Interest Income), and NIM (Net Interest Margin)[10][11][12] PART I. FINANCIAL INFORMATION This part presents the company's unaudited financial statements, management's discussion and analysis, and related disclosures Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition, results of operations, and key trends for the reported periods Introduction This introduction outlines Huntington Bancshares Incorporated's business as a multi-state diversified regional bank holding company - Huntington Bancshares Incorporated is a multi-state diversified regional bank holding company, organized in Maryland in 1966 and headquartered in Columbus, Ohio[14] - Through its bank subsidiary, The Huntington National Bank, the company provides full-service commercial and consumer deposit, lending, and other banking and financial services across 971 full-service branches and private client group offices in 13 states as of June 30, 2025[14] Executive Overview This overview highlights the definitive merger agreement with Veritex Holdings, Inc., updated deposit categories, key financial performance metrics, balance sheet changes, and the prevailing economic and regulatory landscape - Huntington announced a definitive merger agreement with Veritex Holdings, Inc. on July 14, 2025, in a 100% stock transaction valued at approximately $1.9 billion, expected to close in Q4 2025[16][233] - Veritex had $12.5 billion in assets, $9.5 billion in loans, and $10.4 billion in deposits as of June 30, 2025[16][233] - The company updated its deposit categories in Q4 2024 to align with strategic management, now reporting demand deposits (noninterest-bearing and interest-bearing), money market, savings, and time deposits[17] Selected Quarterly Income Statement Data (Three Months Ended June 30, 2025 vs. 2024) | Metric (amounts in millions, except per share data) | June 30, 2025 | June 30, 2024 | Change Amount | Change Percent | | :------------------------------------------------ | :------------ | :------------ | :------------ | :------------- | | Net income attributable to Huntington | $536 | $474 | $62 | 13% | | Net income per common share—diluted | $0.34 | $0.30 | $0.04 | 13% | | Net interest income | $1,467 | $1,312 | $155 | 12% | | Noninterest income | $471 | $491 | $(20) | (4)% | | Noninterest expense | $1,197 | $1,117 | $80 | 7% | | Return on average total assets | 1.04% | 0.98% | | | | Net interest margin | 3.11% | 2.99% | | | | Efficiency ratio | 59.0% | 60.8% | | | Selected Year-to-Date Income Statement Data (Six Months Ended June 30, 2025 vs. 2024) | Metric (amounts in millions, except per share data) | June 30, 2025 | June 30, 2024 | Change Amount | Change Percent | | :------------------------------------------------ | :------------ | :------------ | :------------ | :------------- | | Net income attributable to Huntington | $1,063 | $893 | $170 | 19% | | Net income per common share—diluted | $0.68 | $0.56 | $0.12 | 21% | | Net interest income | $2,893 | $2,599 | $294 | 11% | | Noninterest income | $965 | $958 | $7 | 1% | | Noninterest expense | $2,349 | $2,254 | $95 | 4% | | Return on average total assets | 1.04% | 0.93% | | | | Net interest margin | 3.11% | 3.00% | | | | Efficiency ratio | 58.9% | 62.2% | | | - Q2 2025 net income was impacted by a $900 million investment securities repositioning, which decreased pre-tax net income by $58 million ($46 million after tax)[22] Consolidated Balance Sheet Highlights (June 30, 2025 vs. December 31, 2024) | Metric (amounts in billions) | June 30, 2025 | Dec 31, 2024 | Change Amount | Change Percent | | :------------------------- | :------------ | :----------- | :------------ | :------------- | | Total assets | $207.7 | $204.2 | $3.5 | 2% | | Loans and leases | $135.0 | $130.0 | $4.9 | 4% | | Investment securities | $44.8 | $43.7 | $1.1 | 2% | | Total liabilities | $186.8 | $184.4 | $2.3 | 1% | | Long-term debt | $17.5 | $16.4 | $1.1 | 7% | | Total deposits | $163.4 | $162.4 | $0.9 | 1% | | Tangible common equity to tangible assets ratio | 6.6% | 6.1% | | | | CET1 risk-based capital ratio | 10.5% | 10.5% | | 0% | - The increase in total assets was primarily driven by increases in loans and leases ($4.9 billion, 4%) and investment securities ($1.1 billion, 2%), partially offset by a decrease in interest-earning deposits with banks ($2.5 billion, 21%)[26] - The tangible common equity to tangible assets ratio increased to 6.6% at June 30, 2025, compared to 6.1% at December 31, 2024, primarily due to an increase in tangible common equity from current period earnings, net of dividends, and an improvement in AOCI[27] - Huntington's general business objectives include delivering a differentiated operating model, building a people-first/customer-centered bank, achieving top quartile performance, expanding product offerings, leveraging its regional banking model, anticipating customer needs, maintaining positive operating leverage and disciplined capital management, and providing stability through disciplined risk management[28] - The market remains challenging with fluid tariff impacts, extended negotiation deadlines, and uncertainty regarding the 'One Big Beautiful Bill Act' (OBBBA)[30][32] - The Federal Reserve held rates steady in H1 2025 due to inflation above 2% but has discussed restarting rate cuts, while the labor market remains strong with unemployment at 4.1%[30] - The CFPB's December 2024 final rule on overdraft fees was overturned in May 2025, and 67 guidance documents were rescinded, requiring financial institutions to reassess compliance programs[33][34] - Federal banking agencies proposed rescinding the October 2023 CRA final rule, which would have materially changed the CRA framework and imposed additional costs[35] Discussion of Results of Operations This section details the company's financial performance, including net interest income growth, changes in noninterest income and expense, and the provision for credit losses - Huntington's results of operations for Q2 and YTD 2025 showed significant growth in net interest income, driven by increased earning assets and an expanded net interest margin, despite a decrease in noninterest income due to investment securities repositioning, while noninterest expenses rose due to higher personnel and technology costs, and the provision for credit losses saw a modest increase[22][23][25][52] Consolidated Quarterly Average Balance Sheet and Net Interest Margin Analysis (Three Months Ended June 30, 2025 vs. 2024) | Metric (amounts in millions) | June 30, 2025 | June 30, 2024 | Change Amount | Change Percent | | :------------------------- | :------------ | :------------ | :------------ | :------------- | | Net interest income (FTE) | $1,483 | $1,325 | $158 | 12% | | FTE Net Interest Margin | 3.11% | 2.99% | 0.12% | | | Average earning assets | $191,092 | $178,062 | $13,030 | 7% | | Average interest-bearing liabilities | $153,221 | $140,308 | $12,913 | 9% | | Average loans and leases | $133,171 | $123,376 | $9,795 | 8% | | Average total deposits | $163,429 | $153,578 | $9,851 | 6% | Consolidated Year-to-Date Average Balance Sheet and Net Interest Margin Analysis (Six Months Ended June 30, 2025 vs. 2024) | Metric (amounts in millions) | June 30, 2025 | June 30, 2024 | Change Amount | Change Percent | | :------------------------- | :------------ | :------------ | :------------ | :------------- | | Net interest income (FTE) | $2,924 | $2,625 | $299 | 11% | | FTE Net Interest Margin | 3.11% | 3.00% | 0.11% | | | Average earning assets | $189,703 | $175,913 | $13,790 | 8% | | Average interest-bearing liabilities | $152,114 | $138,101 | $14,013 | 10% | | Average loans and leases | $132,023 | $122,653 | $9,370 | 8% | | Average total deposits | $162,519 | $152,153 | $10,366 | 7% | - The increase in FTE net interest income for Q2 2025 was primarily due to a $13.0 billion (7%) increase in average earning assets and a 12 basis point increase in FTE NIM to 3.11%, partially offset by a $12.9 billion (9%) increase in average interest-bearing liabilities[40] - The higher NIM was driven by net hedging activity and a lower cost of funds, partially offset by a decrease in yields on earning assets[40][48] Provision for Credit Losses (Three and Six Months Ended June 30, 2025 vs. 2024) | Metric (amounts in millions) | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :------------------------- | :------ | :------ | :------- | :------- | | Provision for loan and lease losses | $134 | $114 | $239 | $231 | | Provision (benefit) for unfunded lending commitments | $(31) | $(16) | $(18) | $(26) | | Provision (benefit) for securities | $0 | $2 | $(3) | $2 | | Total provision for credit losses | $103 | $100 | $218 | $207 | - Total provision for credit losses increased by $3 million (3%) to $103 million in Q2 2025 compared to Q2 2024, and by $11 million (5%) to $218 million on a year-to-date basis[24][52] Noninterest Income (Three and Six Months Ended June 30, 2025 vs. 2024) | Metric (amounts in millions) | Q2 2025 | Q2 2024 | Change Percent (QoQ) | YTD 2025 | YTD 2024 | Change Percent (YoY) | | :------------------------- | :------ | :------ | :------------------- | :------- | :------- | :------------------- | | Payments and cash management revenue | $165 | $154 | 7% | $320 | $300 | 7% | | Wealth and asset management revenue | $102 | $90 | 13% | $203 | $178 | 14% | | Customer deposit and loan fees | $95 | $83 | 14% | $181 | $160 | 13% | | Capital markets and advisory fees | $84 | $73 | 15% | $151 | $129 | 17% | | Mortgage banking income | $28 | $30 | (7)% | $59 | $61 | (3)% | | Leasing revenue | $10 | $19 | (47)% | $24 | $41 | (41)% | | Insurance income | $19 | $18 | 6% | $39 | $37 | 5% | | Net gains (losses) on sales of securities | $(58) | $0 | NM | $(58) | $0 | NM | | Other noninterest income | $26 | $24 | 8% | $46 | $52 | (12)% | | Total noninterest income | $471 | $491 | (4)% | $965 | $958 | 1% | - Total noninterest income decreased by $20 million (4%) in Q2 2025, primarily due to a $58 million net loss on sale of investment securities and a decrease in leasing revenue, partially offset by increases in wealth and asset management revenue, customer deposit and loan fees, payments and cash management revenue, and capital markets and advisory fees[25][56] Noninterest Expense (Three and Six Months Ended June 30, 2025 vs. 2024) | Metric (amounts in millions) | Q2 2025 | Q2 2024 | Change Percent (QoQ) | YTD 2025 | YTD 2024 | Change Percent (YoY) | | :------------------------- | :------ | :------ | :------------------- | :------- | :------- | :------------------- | | Personnel costs | $722 | $663 | 9% | $1,393 | $1,302 | 7% | | Outside data processing and other services | $182 | $165 | 10% | $352 | $331 | 6% | | Equipment | $68 | $62 | 10% | $135 | $132 | 2% | | Net occupancy | $54 | $51 | 6% | $119 | $108 | 10% | | Marketing | $28 | $27 | 4% | $57 | $55 | 4% | | Deposit and other insurance expense | $20 | $25 | (20)% | $57 | $79 | (28)% | | Professional services | $22 | $26 | (15)% | $44 | $51 | (14)% | | Amortization of intangibles | $11 | $12 | (8)% | $22 | $24 | (8)% | | Lease financing equipment depreciation | $2 | $4 | (50)% | $6 | $8 | (25)% | | Other noninterest expense | $88 | $82 | 7% | $164 | $164 | 0% | | Total noninterest expense | $1,197 | $1,117 | 7% | $2,349 | $2,254 | 4% | - Total noninterest expense increased by $80 million (7%) in Q2 2025, primarily due to higher personnel costs ($59 million, 9%) and outside data processing and other services ($17 million, 10%)[25][60] Provision for Income Taxes and Effective Tax Rate (Three and Six Months Ended June 30, 2025 vs. 2024) | Metric (amounts in millions) | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :------------------------- | :------ | :------ | :------- | :------- | | Provision for income taxes | $96 | $106 | $218 | $192 | | Effective tax rate | 15.0% | 18.2% | 16.8% | 17.5% | - The provision for income taxes decreased by $10 million in Q2 2025, resulting in a lower effective tax rate of 15.0% (vs. 18.2% in Q2 2024)[62] - The decrease in the effective tax rate was primarily due to the remeasurement of deferred tax assets for changes in certain state tax laws enacted in Q2 2025[62] Risk Management This section outlines the company's comprehensive risk management framework, covering credit, market, liquidity, operational, and compliance risks, along with related financial metrics and strategies - Huntington's risk management program is guided by its Risk Governance Framework and Board-approved Risk Appetite Statement, covering seven key risk categories: credit, market, liquidity, operational, compliance, strategic, and reputation[65] - The company focuses on early identification, monitoring, and management of risks through policies, processes, and quantitative measurement capabilities, consistent with a moderate-to-low risk appetite[67][70] Loan and Lease Portfolio Composition (June 30, 2025 vs. December 31, 2024) | Loan Type (amounts in millions) | June 30, 2025 | % of Total | Dec 31, 2024 | % of Total | | :---------------------------- | :------------ | :--------- | :----------- | :--------- | | Commercial and industrial | $60,723 | 45% | $56,809 | 43% | | Commercial real estate | $10,698 | 8% | $11,078 | 9% | | Lease financing | $5,516 | 4% | $5,454 | 4% | | Residential mortgage | $24,527 | 19% | $24,242 | 19% | | Automobile | $15,382 | 11% | $14,564 | 11% | | Home equity | $10,221 | 8% | $10,142 | 8% | | RV and marine | $5,907 | 4% | $5,982 | 5% | | Other consumer | $1,986 | 1% | $1,771 | 1% | | Total loans and leases | $134,960 | 100% | $130,042 | 100% | - Total loans and leases increased by $4.9 billion (4%) to $135.0 billion at June 30, 2025, compared to December 31, 2024[68] - The Commercial Real Estate (CRE) portfolio decreased by $380 million (3%) to $10.7 billion at June 30, 2025, with an associated allowance coverage of 3.9%[79] - The office portfolio, predominantly suburban and multi-tenant, totaled $1.5 billion (1% of total loans) with ACL reserves of approximately 11%[80] Nonaccrual Loans and Leases (NALs) and Nonperforming Assets (NPAs) (June 30, 2025 vs. December 31, 2024) | Metric (amounts in millions) | June 30, 2025 | Dec 31, 2024 | | :------------------------- | :------------ | :----------- | | Total nonaccrual loans and leases | $842 | $783 | | Total nonperforming assets | $852 | $822 | | NALs as a % of total loans and leases | 0.62% | 0.60% | | NPA ratio | 0.63% | 0.63% | - NPAs increased by $30 million (4%) from December 31, 2024, primarily driven by increases in commercial and industrial, commercial real estate, and residential mortgage, partially offset by a $31 million decrease in other NPAs[83] Allowance for Credit Losses (ACL) (June 30, 2025 vs. December 31, 2024) | Metric (amounts in millions) | June 30, 2025 | Dec 31, 2024 | | :------------------------- | :------------ | :----------- | | Total ALLL | $2,331 | $2,244 | | AULC | $184 | $202 | | Total ACL | $2,515 | $2,446 | | Total ALLL as a % of Total loans and leases | 1.73% | 1.73% | | Total ACL as % of Total loans and leases | 1.86% | 1.88% | - The ACL increased by $69 million to $2.5 billion at June 30, 2025, driven by loan and lease growth, partially offset by a slight reduction in the ACL coverage ratio[99][277] - The baseline economic scenario for ACL determination assumes tariffs impact global trade and weaken the U.S. economy, with weak near-term GDP growth and increasing unemployment (to 4.4% by Q4 2025 and 4.9% by end of 2026)[88][279] Net Charge-off Analysis (Three and Six Months Ended June 30, 2025 vs. 2024) | Metric (annualized percentages) | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :---------------------------- | :------ | :------ | :------- | :------- | | Net charge-offs as a % of average loans and leases | 0.20% | 0.29% | 0.23% | 0.30% | | Commercial NCOs | 0.16% | 0.33% | 0.20% | 0.33% | | Consumer NCOs | 0.25% | 0.24% | 0.27% | 0.26% | - Net Charge-offs (NCOs) decreased to an annualized 0.20% of average loans and leases in Q2 2025 (from 0.29% in Q2 2024), largely due to net recoveries in commercial real estate loans[83][102] - Huntington is primarily exposed to interest rate risk and secondarily to price risk from trading securities, foreign exchange, and equity investments[105] - Market risk is measured using financial simulation models (NII at Risk and EVE at Risk) that consider yield curve changes, interest rate volatility, and balance sheet characteristics[106][109] Net Interest Income at Risk (NII at Risk) (June 30, 2025 vs. December 31, 2024) | Basis point change scenario | NII at Risk (%) (June 30, 2025) | NII at Risk (%) (Dec 31, 2024) | | :------------------------ | :------------------------------ | :----------------------------- | | +200 | 1.5% | 2.0% | | +100 | 0.6% | 0.8% | | Base | — | — | | -100 | -0.7% | -0.5% | | -200 | -1.9% | -1.3% | - The balance sheet is asset-sensitive at both June 30, 2025, and December 31, 2024, with changes in sensitivity driven by current and projected balance sheet composition and market rates[113] Economic Value of Equity at Risk (EVE at Risk) (June 30, 2025 vs. December 31, 2024) | Basis point change scenario | EVE at Risk (%) (June 30, 2025) | EVE at Risk (%) (Dec 31, 2024) | | :------------------------ | :------------------------------ | :----------------------------- | | -200 | 0.7% | 5.9% | | -100 | 2.0% | 4.3% | | +100 | -3.9% | -5.8% | | +200 | -9.0% | -12.6% | - Huntington uses derivative instruments (interest rate swaps, swaptions, floors, forward contracts) to manage interest rate risk and minimize earnings fluctuations[117] - Mortgage Servicing Rights (MSRs) totaled $567 million at June 30, 2025, representing the right to service $33.9 billion in mortgage loans[126][127] - MSR fair values are sensitive to interest rate movements, and hedging strategies are employed to reduce risk[126][127] - Liquidity risk is managed to ensure adequate, stable, and cost-effective funds to meet financial obligations, supported by core earnings, strong capital ratios, and credit quality[130] Deposit Composition (June 30, 2025 vs. December 31, 2024) | Deposit Type (amounts in millions) | June 30, 2025 | % of Total | Dec 31, 2024 | % of Total | | :------------------------------- | :------------ | :--------- | :----------- | :--------- | | Demand deposits—noninterest-bearing | $28,656 | 18% | $29,345 | 18% | | Demand deposits—interest-bearing | $45,468 | 28% | $43,378 | 27% | | Money market deposits | $60,998 | 37% | $60,730 | 37% | | Savings deposits | $15,112 | 9% | $14,723 | 9% | | Time deposits | $13,146 | 8% | $14,272 | 9% | | Total deposits | $163,380 | 100% | $162,448 | 100% | | Insured deposits | $115,386 | 71% | $112,394 | 69% | | Uninsured deposits | $47,994 | 29% | $50,054 | 31% | - Total deposits increased by $932 million (1%) to $163.4 billion at June 30, 2025, driven by increases in demand, savings, and money market deposits, partially offset by lower time deposits[135] - Wholesale funding increased by $1.3 billion to $24.9 billion at June 30, 2025, primarily due to a $1.1 billion increase in long-term debt resulting from the issuance of $1.5 billion of senior bank notes and a $415 million CLN transaction completed during the 2025 first quarter, partially offset by repayments[140] Selected Contingent Liquidity Sources (Bank Level) (June 30, 2025 vs. December 31, 2024) | Metric (amounts in millions) | June 30, 2025 | Dec 31, 2024 | | :------------------------- | :------------ | :----------- | | Unused secured borrowing capacity: FRB | $67,776 | $70,020 | | Unused secured borrowing capacity: FHLB | $15,924 | $15,524 | | Unpledged investment securities (at market value) | $10,917 | $5,786 | | Interest-earning deposits held at FRB | $8,583 | $11,162 | | Primary contingent liquidity sources | $103,200 | $102,492 | - The Bank's primary contingent liquidity sources totaled $103.2 billion at June 30, 2025, sufficient to meet obligations[148] - The parent company had cash and cash equivalents of $3.6 billion at June 30, 2025, and declared a quarterly common stock dividend of $0.155 per share, totaling approximately $226 million per quarter[150][152] Credit Ratings and Outlook (June 30, 2025) | Entity/Instrument | Moody's | S&P | Fitch | DBRS Morningstar | Outlook | | :---------------- | :------ | :-- | :---- | :--------------- | :------ | | Huntington Bancshares Inc. Senior unsecured notes | Baa1 | BBB+ | A- | A | Stable | | Huntington Bancshares Inc. Subordinated notes | Baa1 | BBB | BBB+ | A (low) | Stable | | The Huntington National Bank Senior unsecured notes | A3 | A- | A- | A (high) | Stable | | The Huntington National Bank Long-term deposits | A1 | NR | A | A (high) | Stable | - Operational risk is the risk of loss from human error, third-party failures, inadequate internal systems, noncompliance, or external influences like fraud and disasters[160] - Huntington manages operational risks through various committees (e.g., Operational Risk, Legal/Regulatory/Compliance, Fraud Risk, AI Risk) and a Model Risk Oversight Committee, which report to the Risk Management Committee[161] - Cybersecurity is a critical component, with active operations designed to detect, contain, and respond to cybersecurity threats and incidents in a prompt and effective manner, employing defense-in-depth strategies and internal training[163][164][165] - Financial institutions are subject to numerous federal and state laws and regulations, including anti-money laundering, lending limits, client privacy, fair lending, and community reinvestment[167] - Huntington ensures compliance through a dedicated team of experts and mandatory colleague training on broad-based laws and regulations[167] Capital This section details the company's capital management objectives, regulatory capital ratios, shareholders' equity, and share repurchase program - Huntington's primary capital objective is to maintain appropriate capital levels to support operations, absorb losses, protect depositors, fund growth, and provide shareholder returns, consistent with its Board-approved risk appetite[168] Regulatory Capital Data (Consolidated and Bank Level) (June 30, 2025 vs. December 31, 2024) | Metric | June 30, 2025 | Dec 31, 2024 | | :-------------------------- | :------------ | :----------- | | Consolidated: | | | | CET1 risk-based capital ratio | 10.5% | 10.5% | | Tier 1 risk-based capital ratio | 11.8% | 11.9% | | Total risk-based capital ratio | 14.1% | 14.3% | | Tier 1 leverage ratio | 8.5% | 8.6% | | Bank: | | | | CET1 risk-based capital ratio | 11.4% | 11.6% | | Tier 1 risk-based capital ratio | 12.2% | 12.4% | | Total risk-based capital ratio | 13.9% | 14.1% | | Tier 1 leverage ratio | 8.8% | 8.9% | - Huntington and the Bank maintained capital ratios in excess of the well-capitalized standards established by the Federal Reserve at June 30, 2025[173] - The consolidated CET1 risk-based capital ratio remained at 10.5% at June 30, 2025, as current period earnings (net of dividends) were offset by an increase in risk-weighted assets due to loan growth, partially offset by a CLN transaction and investment securities repositioning[173] - Shareholders' equity totaled $20.9 billion at June 30, 2025, an increase of $1.2 billion (6%) from December 31, 2024, primarily driven by an improvement in accumulated other comprehensive income and earnings (net of dividends)[176] - On April 16, 2025, the Board approved a repurchase authorization of up to $1.0 billion of common shares, with no expiration date[178][424] - No shares have been repurchased under the current authorization as of June 30, 2025[178][423] Business Segment Discussion This section analyzes financial performance across the Consumer & Regional Banking, Commercial Banking, and Treasury / Other business segments, detailing their respective contributions and trends - Huntington operates through two business segments: Consumer & Regional Banking and Commercial Banking, with unallocated items reported in the Treasury / Other function[179] - Segment results are determined based on internal management practices, including revenue sharing, a two-phase expense allocation approach (activity-based costs and overhead), and a centralized Funds Transfer Pricing (FTP) methodology to attribute net interest income and centralize interest rate risk[180][181][183][184] Net Income (Loss) by Business Segment (Six Months Ended June 30, 2025 vs. 2024) | Segment (amounts in millions) | June 30, 2025 | June 30, 2024 | | :-------------------------- | :------------ | :------------ | | Consumer & Regional Banking | $616 | $716 | | Commercial Banking | $552 | $526 | | Treasury / Other | $(105) | $(349) | | Net income attributable to Huntington | $1,063 | $893 | Consumer & Regional Banking Key Performance Indicators (Six Months Ended June 30, 2025 vs. 2024) | Metric (amounts in millions) | June 30, 2025 | June 30, 2024 | Change Amount | Change Percent | | :------------------------- | :------------ | :------------ | :------------ | :------------- | | Net income attributable to Huntington | $616 | $716 | $(100) | (14)% | | Net interest income | $1,957 | $1,963 | $(6) | 0% | | Provision for credit losses | $185 | $122 | $63 | 52% | | Noninterest income | $666 | $630 | $36 | 6% | | Total noninterest expense | $1,659 | $1,565 | $94 | 6% | | Total average loans/leases | $72,601 | $67,771 | $4,830 | 7% | | Total average deposits | $111,558 | $110,041 | $1,517 | 1% | | Net interest margin | 3.48% | 3.53% | (0.05)% | (1)% | | NCOs | $118 | $96 | $22 | 23% | - Net income for Consumer & Regional Banking decreased by $100 million (14%) in H1 2025, primarily due to a $63 million (52%) increase in provision for credit losses and higher noninterest expense, partially offset by a $36 million (6%) increase in noninterest income[188] Commercial Banking Key Performance Indicators (Six Months Ended June 30, 2025 vs. 2024) | Metric (amounts in millions) | June 30, 2025 | June 30, 2024 | Change Amount | Change Percent | | :------------------------- | :------------ | :------------ | :------------ | :------------- | | Net income attributable to Huntington | $552 | $526 | $26 | 5% | | Net interest income | $1,026 | $1,050 | $(24) | (2)% | | Provision for credit losses | $33 | $85 | $(52) | (61)% | | Noninterest income | $339 | $309 | $30 | 10% | | Total noninterest expense | $620 | $594 | $26 | 4% | | Total average loans/leases | $59,201 | $54,666 | $4,535 | 8% | | Total average deposits | $43,002 | $36,211 | $6,791 | 19% | | Net interest margin | 3.34% | 3.71% | (0.37)% | (10)% | | NCOs | $34 | $86 | $(52) | (60)% | - Net income for Commercial Banking increased by $26 million (5%) in H1 2025, driven by a $52 million (61%) decrease in provision for credit losses and a $30 million (10%) increase in noninterest income, partially offset by a $24 million (2%) decrease in net interest income[190] Treasury / Other Key Performance Indicators (Six Months Ended June 30, 2025 vs. 2024) | Metric (amounts in millions) | June 30, 2025 | June 30, 2024 | Change Amount | Change Percent | | :------------------------- | :------------ | :------------ | :------------ | :------------- | | Net interest loss | $(90) | $(414) | $324 | 78% | | Noninterest income | $(40) | $19 | $(59) | (311)% | | Total noninterest expense | $70 | $95 | $(25) | (26)% | | Net loss attributable to Huntington | $(105) | $(349) | $244 | 70% | - Treasury / Other reported a net loss of $105 million in H1 2025, a $244 million (70%) improvement from a $349 million net loss in H1 2024[196] Additional Disclosures This section provides important disclosures regarding forward-looking statements, non-GAAP financial measures, critical accounting policies, and recent accounting standards updates - This report contains forward-looking statements subject to numerous assumptions, risks, and uncertainties, and readers should exercise caution against undue reliance[197][200] - Forward-looking statements are identified by words like 'expect,' 'anticipate,' 'believe,' 'intend,' and 'estimate,' and are intended to be subject to the safe harbor provided by Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of 1995[197] - Factors that could cause actual results to differ materially from forward-looking statements include changes in general economic, political, or industry conditions; deterioration in business and economic conditions; changes in U.S. trade policies; impacts of catastrophic events; cybersecurity risks; and uncertainties in U.S. fiscal and monetary policy[199] - The document includes non-GAAP financial measures (e.g., FTE basis, non-regulatory capital ratios) to provide additional insight into operations and financial position[201][203][205] - FTE basis assumes a 21% federal statutory tax rate and helps compare revenue arising from both taxable and tax-exempt sources[203] - Non-regulatory capital ratios, such as tangible common equity to tangible assets, are used to evaluate capital adequacy but differ from regulatory definitions and may not be comparable across companies[204][205][206] - Critical accounting policies include the allowance for credit losses (ACL) and goodwill, requiring significant judgment and assumptions about uncertain matters[208] - The ACL is estimated by projecting probability of default, loss given default, and exposure at default, conditional on economic parameters like unemployment rates and GDP, using statistically-based models and a probability-weighted approach with multiple economic scenarios[209][211][212] - Huntington adopted ASU 2023-07 (Segment Reporting) effective for the year ended December 31, 2024, with no material impact on consolidated financial statements[231] - ASU 2023-09 (Income Taxes) will be effective for fiscal years beginning after December 15, 2024, requiring enhanced tabular rate reconciliation and disaggregation of income tax disclosures, but is not expected to have a material impact[232] Item 1. Financial Statements (Unaudited) This item presents the company's unaudited consolidated balance sheets, statements of income, comprehensive income, changes in shareholders' equity, and cash flows Consolidated Balance Sheets This section presents the company's consolidated financial position, detailing assets, liabilities, and shareholders' equity at period-end Consolidated Balance Sheets (June 30, 2025 vs. December 31, 2024) | Asset (amounts in millions) | June 30, 2025 | Dec 31, 2024 | | :------------------------ | :------------ | :----------- | | Total assets | $207,742 | $204,230 | | Cash and due from banks | $1,776 | $1,685 | | Interest-earning deposits with banks | $9,171 | $11,647 | | Trading account securities | $481 | $53 | | Available-for-sale securities | $28,330 | $27,273 | | Held-to-maturity securities | $15,965 | $16,368 | | Loans and leases | $134,960 | $130,042 | | Allowance for loan and lease losses | $(2,331) | $(2,244) | | Net loans and leases | $132,629 | $127,798 | | Goodwill | $5,561 | $5,561 | | Servicing rights and other intangible assets | $647 | $677 | | Liabilities & Equity | | | | Total liabilities | $186,772 | $184,448 | | Total deposits | $163,380 | $162,448 | | Short-term borrowings | $576 | $199 | | Long-term debt | $17,467 | $16,374 | | Total Huntington shareholders' equity | $20,928 | $19,740 | Consolidated Statements of Income This section presents the company's consolidated financial performance, including net interest income, noninterest income and expense, and net income for the reported periods Consolidated Statements of Income (Three and Six Months Ended June 30, 2025 vs. 2024) | Metric (amounts in millions, except per share data, share count in thousands) | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :------------------------------------------------------------ | :------ | :------ | :------- | :------- | | Total interest income | $2,556 | $2,476 | $5,045 | $4,856 | | Total interest expense | $1,089 | $1,164 | $2,152 | $2,257 | | Net interest income | $1,467 | $1,312 | $2,893 | $2,599 | | Provision for credit losses | $103 | $100 | $218 | $207 | | Total noninterest income | $471 | $491 | $965 | $958 | | Total noninterest expense | $1,197 | $1,117 | $2,349 | $2,254 | | Income before income taxes | $638 | $586 | $1,291 | $1,096 | | Provision for income taxes | $96 | $106 | $218 | $192 | | Net income attributable to Huntington | $536 | $474 | $1,063 | $893 | | Net income per common share—diluted | $0.34 | $0.30 | $0.68 | $0.56 | Consolidated Statements of Comprehensive Income This section presents the company's consolidated comprehensive income, including net income and other comprehensive income components Consolidated Statements of Comprehensive Income (Three and Six Months Ended June 30, 2025 vs. 2024) | Metric (amounts in millions) | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :------------------------- | :------ | :------ | :------- | :------- | | Net income attributable to Huntington | $536 | $474 | $1,063 | $893 | | Other comprehensive income (loss), net of tax | $187 | $(32) | $620 | $(235) | | Comprehensive income attributable to Huntington | $723 | $442 | $1,683 | $658 | - Other comprehensive income (loss) significantly improved, showing a gain of $187 million in Q2 2025 compared to a loss of $32 million in Q2 2024, primarily due to unrealized gains on available-for-sale securities and net changes related to cash flow hedges[223][297] Consolidated Statements of Changes in Shareholders' Equity This section details the changes in the company's consolidated shareholders' equity, including net income, other comprehensive income, and dividends Consolidated Statements of Changes in Shareholders' Equity (Six Months Ended June 30, 2025 vs. 2024) | Metric (amounts in millions) | June 30, 2025 | June 30, 2024 | | :------------------------- | :------------ | :------------ | | Balance, beginning of period | $19,782 | $19,398 | | Net income | $1,073 | $904 | | Other comprehensive income (loss), net of tax | $620 | $(235) | | Cash dividends declared: Common | $(460) | $(458) | | Cash dividends declared: Preferred | $(54) | $(71) | | Total equity, end of period | $20,970 | $19,563 | - Total equity increased by $1.2 billion to $20.97 billion at June 30, 2025, from $19.78 billion at the beginning of the period, driven by net income and other comprehensive income[225] Consolidated Statements of Cash Flows This section presents the company's consolidated cash flows from operating, investing, and financing activities Consolidated Statements of Cash Flows (Six Months Ended June 30, 2025 vs. 2024) | Activity (amounts in millions) | June 30, 2025 | June 30, 2024 | | :--------------------------- | :------------ | :------------ | | Net cash provided by operating activities | $1,067 | $779 | | Net cash used in investing activities | $(4,645) | $(4,454) | | Net cash provided by financing activities | $1,090 | $6,092 | | (Decrease) increase in cash and cash equivalents | $(2,488) | $2,417 | | Cash and cash equivalents at end of period | $10,359 | $12,546 | - Net cash provided by operating activities increased to $1.07 billion in H1 2025 from $779 million in H1 2024[226] - Net cash used in investing activities increased to $4.65 billion in H1 2025 from $4.45 billion in H1 2024, primarily due to net loan and lease activity[226] - Net cash provided by financing activities significantly decreased to $1.09 billion in H1 2025 from $6.09 billion in H1 2024, mainly due to lower net proceeds from long-term debt issuance and a smaller increase in deposits[226] Notes to Unaudited Consolidated Financial Statements This section provides detailed disclosures and explanations supporting the unaudited consolidated financial statements - This section provides detailed disclosures and explanations for the unaudited consolidated financial statements, covering accounting policies, recent updates, pending acquisitions, investment securities, loans and leases, credit loss allowances, mortgage servicing rights, borrowings, comprehensive income, shareholders' equity, earnings per share, revenue recognition, fair value measurements, derivative instruments, variable interest entities, commitments, contingent liabilities, and segment reporting[229] Note 1 - Basis of Presentation This note outlines the basis of presentation for the interim unaudited consolidated financial statements, adhering to SEC rules and GAAP - The interim Unaudited Consolidated Financial Statements reflect all normal recurring accruals necessary for a fair statement of financial position, results of operations, and cash flows, prepared according to SEC rules and GAAP[229] Note 2 - Accounting Standards Update This note details the adoption of ASU 2023-07 and the expected impact of ASU 2023-09 on segment reporting and income tax disclosures - Huntington adopted ASU 2023-07 (Segment Reporting) effective for the year ended December 31, 2024, with retrospective application, which did not result in a material impact[231] - ASU 2023-09 (Income Taxes) will be effective for fiscal years beginning after December 15, 2024, requiring enhanced tabular rate reconciliation and disaggregation of income tax disclosures, but is not expected to have a material impact[232] Note 3 - Pending Acquisition This note discloses the definitive merger agreement with Veritex Holdings, Inc., including transaction details and expected closing timeline - On July 14, 2025, Huntington announced a definitive merger agreement with Veritex Holdings, Inc., a Dallas, Texas-based bank holding company[16][233] - Under the agreement, Huntington will issue 1.95 shares for each outstanding Veritex share in a 100% stock transaction, valued at approximately $1.9 billion based on Huntington's July 11, 2025 closing price[16][233] - Veritex had $12.5 billion in assets, $9.5 billion in loans, and $10.4 billion in deposits as of June 30, 2025, with the merger expected to close in Q4 2025, subject to regulatory and stockholder approvals[16][233] Note 4 - Investment Securities and Other Securities This note provides details on the composition, fair value, and pledged status of the company's investment securities portfolio Total Available-for-Sale Securities (June 30, 2025 vs. December 31, 2024) | Metric (amounts in millions) | June 30, 2025 | Dec 31, 2024 | | :------------------------- | :------------ | :----------- | | Amortized Cost | $31,081 | $30,743 | | Fair Value | $28,330 | $27,273 | | Gross Gains | $44 | $13 | | Gross Losses | $(2,795) | $(3,483) | Total Held-to-Maturity Securities (June 30, 2025 vs. December 31, 2024) | Metric (amounts in millions) | June 30, 2025 | Dec 31, 2024 | | :------------------------- | :------------ | :----------- | | Amortized Cost | $15,965 | $16,368 | | Fair Value | $14,089 | $14,086 | | Gross Gains | $24 | $3 | | Gross Losses | $(1,900) | $(2,285) | - Total investment securities were $44.8 billion at June 30, 2025, an increase of $1.1 billion from December 31, 2024, primarily due to an improvement in unrealized losses on AFS securities and an increase in trading securities[144] - The duration of the investment securities portfolio, net of hedging, was 4.1 years at June 30, 2025[144] - At June 30, 2025, the carrying value of investment securities pledged to secure public and trust deposits, trading account liabilities, U.S. Treasury demand notes, security repurchase agreements, and to support borrowing capacity, totaled $32.9 billion[244] Note 5 - Loans and Leases This note details the composition of the loan and lease portfolio, nonaccrual loans, and modifications to borrowers experiencing financial difficulty Total Loans and Leases (June 30, 2025 vs. December 31, 2024) | Loan Type (amounts in millions) | June 30, 2025 | Dec 31, 2024 | | :---------------------------- | :------------ | :----------- | | Commercial loan and lease portfolio | $76,937 | $73,341 | | Consumer loan portfolio | $58,023 | $56,701 | | Total loans and leases | $134,960 | $130,042 | | Allowance for loan and lease losses | $(2,331) | $(2,244) | | Net loans and leases | $132,629 | $127,798 | - Total loans and leases increased by $4.9 billion to $135.0 billion at June 30, 2025, compared to December 31, 2024[68][248] - Lease financing receivables totaled $5.5 billion at June 30, 2025, with future lease rental payments of $5.2 billion due from customers[251] Nonaccrual Loans and Leases (NALs) (June 30, 2025 vs. December 31, 2024) | Loan Class (amounts in millions) | June 30, 2025 | Dec 31, 2024 | | :----------------------------- | :------------ | :----------- | | Commercial and industrial | $489 | $457 | | Commercial real estate | $138 | $118 | | Residential mortgage | $93 | $83 | | Total nonaccrual loans and leases | $842 | $783 | - Total NALs increased to $842 million at June 30, 2025, from $783 million at December 31, 2024[254] Loans Modified to Borrowers Experiencing Financial Difficulty (Six Months Ended June 30, 2025 vs. 2024) | Modification Type (amounts in millions) | YTD 2025 | YTD 2024 | | :------------------------------------ | :------- | :------- | | Interest rate reduction | $92 | $85 | | Term extension | $460 | $375 | | Payment deferral | $11 | $4 | | Combo - interest rate reduction and term extension | $12 | $64 | | Total loans modified | $575 | $528 | - Loans and leases totaling $108.3 billion were pledged to the FRB and FHLB for access to contingent funding sources at June 30, 2025[273] Note 6 - Allowance for Credit Losses This note details the allowance for credit losses activity, its composition, and the economic assumptions used for its determination Allowance for Credit Losses (ACL) Activity (Three and Six Months Ended June 30, 2025 vs. 2024) | Metric (amounts in millions) | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :------------------------- | :------ | :------ | :------- | :------- | | ALLL balance, beginning of period | $2,263 | $2,280 | $2,244 | $2,255 | | Loan and lease charge-offs | $(111) | $(145) | $(244) | $(273) | | Recoveries | $45 | $55 | $92 | $91 | | Provision for loan and lease losses | $134 | $114 | $239 | $231 | | ALLL balance, end of period | $2,331 | $2,304 | $2,331 | $2,304 | | AULC balance, end of period | $184 | $119 | $184 | $119 | | ACL balance, end of period | $2,515 | $2,423 | $2,515 | $2,423 | - The ACL increased by $69 million to $2.5 billion at June 30, 2025, compared to December 31, 2024, driven by loan and lease growth, partially offset by a modest reduction in overall coverage ratios[277] - The commercial ACL increased by $44 million to $1.7 billion, and the consumer ACL increased by $25 million to $843 million, both primarily due to loan growth[278] - The ACL determination incorporates a baseline economic scenario assuming tariffs weaken the U.S. economy, leading to weak GDP growth, increasing unemployment, and Federal Reserve rate cuts[279] Note 7 - Mortgage Loan Sales and Servicing Rights This note provides information on residential mortgage loan sales with servicing retained and changes in mortgage servicing rights Residential Mortgage Loans Sold with Servicing Retained (Three and Six Months Ended June 30, 2025 vs. 2024) | Metric (amounts in millions) | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :------------------------- | :------ | :------ | :------- | :------- | | Residential mortgage loans sold with servicing retained | $1,168 | $983 | $2,177 | $1,794 | | Pretax gains from loan sales | $23 | $19 | $42 | $32 | | Total servicing, late, and other ancillary fees | $26 | $25 | $53 | $51 | Changes in Mortgage Servicing Rights (MSRs) (Three and Six Months Ended June 30, 2025 vs. 2024) | Metric (amounts in millions) | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :------------------------- | :------ | :------ | :------- | :------- | | Fair value, beginning of period | $564 | $534 | $573 | $515 | | New servicing assets created | $20 | $11 | $40 | $21 | | Change in fair value due to: Time decay | $(7) | $(7) | $(14) | $(13) | | Change in fair value due to: Payoffs | $(10) | $(7) | $(17) | $(12) | | Change in fair value due to: Changes in valuation inputs or assumptions | $0 | $12 | $(15) | $32 | | Fair value, end of period | $567 | $543 | $567 | $543 | | Related loans serviced for third parties, unpaid principal balance, end of period | $33,925 | $33,404 | $33,925 | $33,404 | - MSRs totaled $567 million at June 30, 2025, representing the right to service $33.9 billion in mortgage loans[126][284] Note 8 - Borrowings This note details the company's short-term and long-term borrowings, including recent issuances and their impact on debt composition Short-term Borrowings (June 30, 2025 vs. December 31, 2024) | Metric (amounts in millions) | June 30, 2025 | Dec 31, 2024 | | :------------------------- | :------------ | :----------- | | Securities sold under agreements to repurchase | $131 | $142 | | Other borrowings | $445 | $57 | | Total short-term borrowings | $576 | $199 | Long-term Debt Composition (June 30, 2025 vs. December 31, 2024) | Debt Type (amounts in millions) | June 30, 2025 | Dec 31, 2024 | | :---------------------------- | :------------ | :----------- | | Parent Company Senior Notes | $5,503 | $5,836 | | Parent Company Subordinated Notes | $1,370 | $1,341 | | Bank Senior Notes | $3,185 | $1,654 | | Bank Subordinated Notes | $391 | $515 | | FHLB Advances | $4,715 | $4,696 | | Auto Loan Securitization Trust | $796 | $1,023 | | Credit Linked Notes | $1,014 | $821 | | Other | $493 | $488 | | Total long-term debt | $17,467 | $16,374 | - Total long-term debt increased by $1.1 billion to $17.5 billion at June 30, 2025, from $16.4 billion at December 31, 2024[291] - During Q1 2025, the Bank issued $1.0 billion of fixed-to-floating rate senior notes and $500 million of floating interest rate senior notes, both due April 12, 2028[293] - The Bank also completed a $415 million unsecured Credit Linked Note (CLN) transaction in Q1 2025, transferring a portion of credit risk on an initial $3.5 billion auto-secured loan reference pool to third-party investors[294] Note 9 - Other Comprehensive Income This note details the components of other comprehensive income and accumulated other comprehensive income, including unrealized gains and losses Other Comprehensive Income (OCI) (Three and Six Months Ended June 30, 2025 vs. 2024) | Metric (amounts in millions) | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :------------------------- | :------ | :------ | :------- | :------- | | Unrealized gains (losses) on AFS securities, net of hedges | $97 | $(70) | $352 | $(198) | | Net change related to cash flow hedges on loans | $83 | $37 | $260 | $(36) | | Translation adjustments, net of hedges | $6 | $0 | $7 | $(2) | | Change in accumulated unrealized losses for pension and other post-retirement obligations | $1 | $1 | $1 | $1 | | Total other comprehensive income (loss), net of tax | $187 | $(32) | $620 | $(235) | Accumulated Other Comprehensive Income (AOCI) Activity (Six Months Ended June 30, 2025 vs. 2024) | Metric (amounts in millions) | June 30, 2025 | June 30, 2024 | | :------------------------- | :------------ | :------------ | | Balance, beginning of period | $(2,866) | $(2,676) |\ | Period change | $620 | $(235) |\ | Balance, end of period | $(2,246) | $(2,911) | - AOCI improved significantly, with a period change of $620 million in H1 2025 compared to a loss of $235 million in H1 2024, primarily driven by unrealized gains on AFS securities and cash flow hedges[300] - Net losses recognized in AOCI that are expected to be reclassified into earnings within the next 12 months totaled $23 million at June 30, 2025[368] Note 10 - Shareholders' Equity This note provides details on the company's preferred stock outstanding and the overall changes in shareholders' equity Preferred Stock Outstanding (June 30, 2025 vs. December 31, 2024) | Preferred Series | Shares Outstanding | Carrying Amount (June 30, 2025) | Carrying Amount (Dec 31, 2024) | | :--------------- | :----------------- | :------------------------------ | :----------------------------- | | Series B | 35,500 | $23 million | $23 million | | Series F | 5,000 | $494 million | $494 million | | Series G | 5,000 | $494 million | $494 million | | Series H | 500,000 | $486 million | $486 million | | Series I | 7,000 | $175 million | $175 million | | Series J | 325,000 | $317 million | $317 million | | Total | 877,500 | $1,989 million | $1,989 million | Dividends Declared on Preferred Shares (Three and Six Months Ended June 30, 2025 vs. 2024) | Metric (amounts in millions) | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :------------------------- | :------ | :------ | :------- | :------- | | Total cash dividends declared on preferred shares | $27 | $35 | $54 | $71 | - Total Huntington shareholders' equity was $20.9 billion at June 30, 2025, an increase of $1.2 billion (6%) from December 31, 2024[176][220] Note 11 - Earnings Per Share This note presents the company's basic and diluted earnings per common share for the reported periods Basic and Diluted Earnings Per Share (Three and Six Months Ended June 30, 2025 vs. 2024) | Metric (amounts in millions, except per share data) | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :------------------------------------------------ | :------ | :------ | :------- | :------- | | Net income available to common shareholders | $509 | $439 | $1,009 | $822 | | Basic earnings per common share | $0.35 | $0.30 | $0.69 | $0.57 | | Diluted earnings per common share | $0.34 | $0.30 | $0.68 | $0.56 | | Average common shares—diluted (thousands) | 1,480,996 | 1,474,259 | 1,481,541 | 1,473,797 | - Diluted EPS increased to $0.34 in Q2 2025 from $0.30 in Q2 2024, and to $0.68 YTD 2025 from $0.56 YTD 2024[309] Note 12 - Revenue from Contracts with Customers This note details net revenue generated from contracts with customers, categorized by major revenue streams and contract characteristics Net Revenue from Contracts with Customers by Segment (Six Months Ended June 30, 2025 vs. 2024) | Major Revenue Streams (amounts in millions) | YTD 2025 | YTD 2024 | | :---------------------------------------- | :------- | :------- | | Payments and cash management revenue | $290 | $276 | | Wealth and asset management revenue | $203 | $178 | | Customer deposit and loan fees | $116 | $110 | | Capital markets and advisory fees |