HUNTINGTON BANCSHARES DEP(HBANM) - 2025 Q4 - Annual Report

Acquisitions and Mergers - 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 in a transaction valued at approximately $8.1 billion, with Cadence having $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 increased to nearly 1,400 branches in 21 states post-Cadence merger[19]. Banking Segments and Services - Huntington's Consumer & Regional Banking segment offers a wide array of financial products, including deposits, lending, and investment management, aimed at enhancing customer relationships[23]. - The Commercial Banking segment serves mid-market to large corporate customers, providing a comprehensive set of banking products, including treasury management and capital markets[30]. Market Position and Customer Relations - Huntington's market share in Columbus, OH is 44% with deposits totaling $51.8 billion, ranking first in the area[38]. - The bank's Fair Play banking philosophy includes customer-friendly practices such as the $50 Safety Zone and 24-Hour Grace features, enhancing customer retention and acquisition[37]. Financial Condition and Capital Requirements - Huntington's total consolidated assets are expected to exceed $250 billion following the Cadence acquisition, transitioning the bank to Category III banking organization standards[45]. - Huntington is subject to enhanced prudential standards due to its consolidated assets exceeding $100 billion, including liquidity and capital requirements[63]. - Huntington must maintain a Tier 1 Risk-Based Capital Ratio of at least 6.0% and a Total Risk-Based Capital Ratio of at least 10.0% to be considered well-capitalized[73]. - The company is required to hold eligible high-quality liquid assets (HQLA) that equal or exceed 100% of projected adjusted net cash outflows over a 30-day period under the Liquidity Coverage Ratio (LCR)[65]. - 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% on a consolidated basis, 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 stable capital planning[88]. Regulatory Compliance and Oversight - The Federal Reserve's LFI Rating System emphasizes capital and liquidity, with ratings confidentially assessing capital planning, liquidity risk management, and governance[56]. - The company is subject to periodic reporting and filing requirements to ensure compliance with regulatory standards[52]. - The company is subject to supervision by the CFPB and state consumer protection laws, with increased enforcement focus from state authorities[129]. - Huntington's Corporate Responsibility and Sustainability Executive is responsible for advancing the corporate responsibility strategy and ensuring regulatory compliance[138]. - The banking industry is highly regulated, and compliance failures could result in fines and restrictions that adversely affect Huntington's operations and capital base[217]. Risk Management and Operational Challenges - Economic uncertainty, including persistent inflation and rising interest rates, could adversely affect the company's business and financial condition[168]. - The integration of the Cadence Merger may incur substantial costs and could be more difficult than anticipated, affecting future results[163]. - The company faces significant operational risks that could lead to financial loss and loss of confidence from customers and regulators[164]. - Cybersecurity risks, including data breaches and cyber-attacks, could disrupt operations and adversely affect financial condition and reputation[164]. - The company relies on third-party service providers for key business infrastructure, which presents risks that could adversely affect product delivery and operational efficiency[208]. Community Commitment and Employee Engagement - Huntington made a five-year commitment of $40 billion towards 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 employees, with 85%, 83%, and 83% of colleagues responding favorably on trust, culture, and engagement, respectively[144][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]. Environmental and Social Responsibility - The company is committed to environmental stewardship, focusing on reducing reliance on natural resources and transitioning to renewable energy sources[142]. - The company is exposed to climate change risks that could disrupt operations and affect customer relationships, prompting the establishment of a formal climate risk program[213]. Cybersecurity and Data Privacy - The Bank's cybersecurity and data privacy policies are in effect across all businesses, ensuring compliance with federal and state regulations[116]. - Cybersecurity risks have significantly increased, with potential for material losses and reputational harm due to cyber-attacks or information security breaches[195]. - A successful cyber-attack could result in loss of customers, business disruption, and regulatory fines, adversely impacting financial condition[197]. Regulatory Changes and Industry Impact - The Federal Reserve proposed rule for the Basel III endgame aims to increase capital requirements for large banks, including Huntington[80]. - Potential legislative or regulatory changes could significantly impact revenue and require operational adjustments[218]. - Increased regulatory scrutiny may lead to a greater number of investigations and enforcement actions, raising compliance costs[218].