Acquisitions and Growth - Huntington completed the acquisition of Veritex Holdings, Inc. on October 20, 2025, valued at $1.7 billion, adding $12.0 billion in assets, including $9.3 billion in loans and $10.5 billion in deposits[20]. - On February 1, 2026, Huntington acquired Cadence Bank for approximately $8.1 billion, adding $54 billion in assets, including $37 billion in loans and $44 billion in deposits[21]. - As of December 31, 2025, Huntington operated over 1,000 branches in 14 states, which will increase to nearly 1,400 branches in 21 states post-Cadence merger[19]. Banking Operations and Services - Huntington's Consumer & Regional Banking segment offers a wide array of financial products, including deposits, lending, and investment management, emphasizing a "Fair Play" banking philosophy[23]. - The bank's competitive ranking in the top 10 MSAs as of June 30, 2025, shows a market share of 44% in Columbus, OH, and 12% in Cleveland, OH[38]. - Huntington's payments capabilities are expanding, with unique solutions like Huntington ChoicePay for diverse client segments[30]. Regulatory Compliance and Capital Requirements - Huntington's total consolidated assets are expected to exceed $250 billion following the Cadence acquisition, transitioning to Category III banking organization standards[45]. - The bank's comprehensive regulatory framework includes supervision by various federal and state regulators, impacting its operations and compliance[43]. - Huntington is subject to enhanced prudential standards due to its consolidated assets exceeding $100 billion, including liquidity and capital requirements[63]. - The company must maintain a Tier 1 Risk-Based Capital Ratio of 6.0% or greater and a Total Risk-Based Capital Ratio of 10.0% or greater to be considered well-capitalized[73]. - Huntington is required to hold a minimum outstanding eligible long-term debt amount of no less than 6% of total risk-weighted assets, 2.5% of total leverage exposure, or 3.5% of average total consolidated assets[68]. - The company is subject to a capital conservation buffer (SCB) of 2.5% to avoid restrictions on capital distributions and discretionary bonus payments[75]. - Huntington's liquidity coverage ratio (LCR) will require it to hold an amount of eligible high-quality liquid assets (HQLA) that equals or exceeds 100% of projected adjusted net cash outflows over a 30-day period when it becomes a Category III institution[65]. - The Federal Reserve's LFI Rating System emphasizes capital and liquidity planning, with ratings confidentially assessing capital planning, liquidity risk management, and governance[56]. - The company must comply with regulatory capital requirements under U.S. Basel III capital rules, which may require higher capital levels based on its size and risk profile[71]. - Huntington's capital ratios as of December 31, 2025, are expected to exceed revised well-capitalized standards if applied similarly to those of the Bank[73]. - The company is subject to periodic reporting and filing requirements to ensure financial safety and soundness[52]. - Failure to meet capital requirements could result in restrictions on capital distributions and regulatory actions that may adversely affect operations[74]. Financial Performance and Risks - As of December 31, 2025, Huntington's CET1 risk-based capital ratio was 10.4%, significantly above the minimum requirement of 4.5%[78]. - The Tier 1 risk-based capital ratio for Huntington was 12.0%, exceeding the minimum requirement of 6.0%[78]. - Huntington's total risk-based capital ratio stood at 14.2%, well above the minimum requirement of 8.0%[78]. - The Tier 1 leverage ratio for Huntington was 9.3%, surpassing the minimum requirement of 4.0%[78]. - Huntington's SCB requirement is 2.5%, which is the same as the previous year, indicating stability in capital planning[88]. - The Federal Reserve's proposed rule for the Basel III endgame aims to increase capital requirements for large banks, including Huntington, to better manage potential risks[80]. - Huntington is required to submit an annual capital plan to the Federal Reserve, which includes assessments of capital adequacy and planned capital actions[82]. - The Federal Reserve expects BHCs like Huntington to maintain sufficient capital to withstand adverse operating environments and continue operations[84]. - Huntington's ability to make capital distributions, including dividends, is contingent upon receiving dividends from its subsidiaries and meeting regulatory capital requirements[91]. Risk Management and Governance - The Bank is required to submit its own resolution plan to the FDIC, with the first full plan submitted on July 1, 2025, under new regulations[98]. - The Bank is required to maintain an Anti-Money Laundering (AML) compliance program, including policies and procedures, and undergo periodic independent audits to assess the effectiveness of its AML program[107]. - The Bank's total assets are currently subject to heightened governance and risk management standards set by the OCC, which apply to institutions with assets equal to or greater than $50 billion[105]. - The FDIC provides insurance coverage for certain deposits up to a maximum of $250,000 per depositor, funded through assessments on insured depository institutions[117]. - The FDIC has implemented a special assessment to recoup losses associated with bank failures, with a quarterly rate of 3.36 basis points starting from Q2 2024[121]. - The Bank received the highest possible CRA rating of "Outstanding" in its most recent examination, which is crucial for merger or acquisition applications[125]. - The Bank's insurance premiums may increase based on the FDIC's assessment of its risk profile[117]. - The OCC proposed to increase the threshold for heightened standards from $50 billion to $700 billion, which would exempt the Bank from these standards unless determined otherwise[106]. - The Bank must comply with the Bank Secrecy Act, which includes maintaining an AML program and reporting suspicious transactions[107]. - The CRA framework is subject to changes, with a final rule issued in October 2023 that may impose additional costs and change performance assessments[126]. - The Bank's cybersecurity and data privacy policies are in effect across all businesses and geographic locations, ensuring compliance with federal and state regulations[116]. Community Commitment and Employee Engagement - Huntington made a five-year commitment of $40 billion toward its Community Plan to support small businesses and improve financial opportunities, exceeding its commitment through 2025[141]. - In 2025, Huntington had an average of 20,424 full-time equivalent colleagues, with 85%, 83%, and 83% of them responding favorably on trust, culture, and engagement, respectively[145]. - Huntington colleagues completed over 500,000 training hours in 2025, supporting their development and career growth[150]. - The company offers a minimum hourly wage of $21 and competitive wages, along with various wellness programs to support physical, mental, and financial well-being[151]. - Huntington's Board of Directors consists of 12 members, including 10 independent directors, ensuring strong governance and oversight[137]. - The Chief Risk Officer provides regular updates on risk management issues, including climate-related credit risks, to the Board's Risk Oversight Committee[139]. - Huntington's Corporate Responsibility and Sustainability Executive is responsible for advancing the corporate responsibility strategy and ensuring regulatory compliance[138]. Economic and Operational Risks - Economic uncertainty, including inflation and rising interest rates, could adversely affect the company's business and financial condition[168]. - Changes in interest rates could reduce net interest income and negatively impact the value of loans and securities[172]. - Prolonged inflation may negatively impact profitability and stock price due to increased fixed costs and decreased consumer purchasing power[179]. - The company faces significant operational risks that could lead to financial loss and loss of confidence from customers and regulators[164]. - The company is expected to incur substantial costs related to the Cadence Merger and integration[180]. - Regulatory changes could require higher levels of capital and liquidity, impacting the company's ability to pay dividends and attract deposits[180]. - Cybersecurity risks, including data breaches, could adversely affect the company's operations and reputation[164]. - The company relies on third parties for key components of its business infrastructure, which presents additional risks[164]. - The primary source of liquidity for the company is a large supply of deposits from consumer and commercial customers, which is influenced by customer willingness and regulatory changes[182]. - The company relies on dividends from its bank subsidiary for liquidity needs, and any limitations on these dividends could adversely affect its ability to pay dividends on Preferred and Common Stock[183]. - Access to capital markets is crucial for meeting cash flow requirements; disruptions could hinder corporate expansion and operational activities[184]. - Rising interest rates and negative perceptions of the banking industry may impact the company's ability to raise additional capital on acceptable terms[185]. - A reduction in credit ratings could adversely affect access to capital and increase the cost of funds, impacting growth and profitability[186]. - Global economic instability and geopolitical matters could materially affect the company's financial condition and results of operations[187]. - Operational risks, including potential breaches of security systems, could disrupt business and adversely impact liquidity and financial condition[188]. - Cybersecurity risks have significantly increased, with potential for material losses and reputational harm due to cyber-attacks or information breaches[195]. - The company faces risks from third-party cybersecurity breaches, which may not be disclosed in a timely manner, potentially leading to significant liabilities[196]. - A successful cyber-attack could result in loss of customers, significant business disruption, and regulatory penalties, adversely impacting financial condition[197]. Goodwill and Accounting Risks - The book value of goodwill for Huntington was $6.0 billion as of December 31, 2025, which could impact the ability to pay dividends if impaired[212]. - Huntington faces significant operational risks, including fraud, unauthorized transactions, and system failures, which could lead to financial loss and litigation[198]. - The company relies on third-party service providers for key business infrastructure, which presents risks that could adversely affect service delivery and increase costs[208]. - Changes in accounting policies and standards could affect how Huntington reports its financial condition and results of operations[210]. - The banking industry is highly regulated, and compliance failures could result in fines and restrictions that adversely affect operations and capital base[217]. - Huntington's reliance on quantitative models for risk measurement may lead to inaccurate business decisions if the models are flawed or based on incorrect assumptions[204]. - The company is exposed to climate change risks that could disrupt operations and increase expenses due to regulatory changes and market shifts[213]. - AI usage in operations presents inherent risks, including potential legal and regulatory challenges, which could impact business outcomes[214]. - Acquisitions carry risks related to integration and the accuracy of assumptions made during the acquisition process, which could affect financial results[200]. Reputation and Consumer Relations - Negative public opinion and regulatory actions could adversely impact Huntington's ability to attract and retain customers[199]. - The company is under heightened regulatory oversight by the CFPB, affecting consumer and business banking products and services[218]. - Increased regulatory inquiries may lead to a greater number of investigations and enforcement actions, raising compliance costs[218]. - Potential revenue loss could occur due to required changes in business operations from regulatory developments[218]. - Regulatory actions could limit the products and services offered, impacting revenue generation[218]. - The company may face fines or penalties, which could further strain financial performance[218]. - Increased compliance costs may lead to higher prices for consumers, potentially reducing demand[218]. - The company is subject to scrutiny regarding sales practices of branch personnel, similar to actions taken against other financial institutions[218]. - Harm to the company's reputation could adversely affect its consumer businesses[218].
HUNTINGTON BANCS(HBANL) - 2025 Q4 - Annual Report