Huntington(US:HBAN)2025-10-28 19:29Financial Performance - For Q3 2025, Huntington reported net income of $629 million, or $0.41 per diluted common share, compared to $517 million, or $0.33 per diluted common share in Q3 2024, representing a 22% increase in net income [24]. - Net interest income for Q3 2025 was $1.5 billion, an increase of $155 million, or 11%, from the previous year, with FTE net interest income rising by $159 million, or 12% [25]. - Noninterest income reached $628 million, up $105 million, or 20%, driven by gains in various revenue streams including payments and cash management [27]. - The efficiency ratio improved to 57.4% in Q3 2025, down from 59.4% in Q3 2024, indicating better cost management [21]. - Return on average total assets increased to 1.19% in Q3 2025, compared to 1.04% in Q3 2024, reflecting improved profitability [21]. - Net income attributable to Huntington for the nine months ended September 30, 2025, was $1,692 million, an increase of $282 million, or 20%, compared to $1,410 million for the same period in 2024 [181]. Credit Losses and Provisions - The provision for credit losses rose by $16 million, or 15%, to $122 million in Q3 2025, with the allowance for credit losses increasing to $2.6 billion, or 1.86% of total loans and leases [26]. - Provision for credit losses for Q3 2025 was $122 million, an increase of $16 million, or 15%, compared to Q3 2024 [51]. - The provision for credit losses in Consumer & Regional Banking increased by $79 million, or 35%, primarily due to higher net charge-offs and loan growth [182]. - Net charge-offs (NCOs) were $75 million, or 0.22% of average total loans and leases, a decrease from $93 million, or 0.30%, in the same quarter last year [82]. - The total net charge-offs for the first nine months of 2025 were $227 million, compared to $275 million for the same period in 2024 [100]. Assets and Liabilities - Total assets increased to $210.2 billion, up $6.0 billion or 3% from December 31, 2024, driven by a $7.9 billion or 6% increase in loans and leases [28]. - Total liabilities rose to $187.9 billion, an increase of $3.5 billion or 2%, primarily due to a $2.8 billion or 2% increase in total deposits [28]. - Average assets for Q3 2025 were $209.7 billion, an increase of $11.4 billion, or 6%, from Q3 2024, driven by a 9% increase in average loans and leases [40]. - Total deposits increased by $2.8 billion, or 2%, to $165.2 billion at September 30, 2025, compared to $162.4 billion at December 31, 2024 [131]. Equity and Capital - Tangible common equity to tangible assets ratio improved to 6.8% from 6.1% year-over-year, reflecting increased earnings and improved AOCI [29]. - The CET1 risk-based capital ratio was 10.6% at September 30, 2025, slightly up from 10.5% at December 31, 2024 [29]. - Shareholders' equity totaled $22.2 billion at September 30, 2025, an increase of $2.5 billion, or 13%, compared to December 31, 2024 [171]. - The total risk-based capital ratio was 14.7% at September 30, 2025, compared to 14.3% at December 31, 2024 [166]. - The company has an active program for managing capital and believes current levels of regulatory capital and shareholders' equity are adequate [164]. Mergers and Acquisitions - Huntington completed the acquisition of Veritex Holdings, issuing approximately $1.7 billion in total consideration, with Veritex holding $12.8 billion in assets as of September 30, 2025 [17]. - Huntington announced a definitive merger agreement with Cadence Bank, valued at approximately $7.4 billion, expected to close in Q1 2026 [18]. Economic Environment - The labor market faced challenges with an unemployment rate of 4.3%, but consumer spending remained robust, indicating a transitional phase rather than a downturn [34]. - The Federal Reserve reduced the federal funds rate by 25 basis points in September 2025, marking the first adjustment since December 2024 [33]. - The company continues to assess macroeconomic uncertainties, including inflation and geopolitical instability, which may impact future credit quality and economic performance [91]. Noninterest Expenses - Noninterest expense was $1.2 billion, an increase of $116 million, or 10%, primarily due to higher personnel costs and acquisition-related expenses from the Veritex acquisition [27]. - Personnel costs increased by $73 million, or 11%, in Q3 2025, primarily due to higher incentive compensation and salary expenses [59]. Interest Rate Risk Management - The cumulative total deposit beta was 32% following the start of the current falling rate cycle in Q3 2024, impacting interest expense and overall deposit costs [106]. - The net interest income at risk (NII at Risk) for a +200 basis point shift in interest rates is projected to be 1.7% as of September 30, 2025, compared to 2.0% at December 31, 2024 [109]. - The Economic Value of Equity at Risk (EVE at Risk) showed a sensitivity of -7.7% for a +200 basis point shift in interest rates as of September 30, 2025, down from -12.6% at December 31, 2024 [113]. - The company utilized various derivative instruments, including interest rate swaps and floors, to manage interest rate risk and minimize fluctuations in earnings [114].