Huntington Bancshares Q1 2025 Earnings Call Transcript

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Provided by Quartr
April 17, 2025
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Operator

Greetings. And welcome to the Huntington Bancshares first quarter twenty twenty five earnings conference call. At this time, all participants will be in listen only mode. The question and answer session will follow the formal presentation. As a reminder, this conference is being recorded.

Operator

I would now like to turn the conference over to your host, Tim Sedavers, director of investor relations. Please go ahead.

Timothy Sedabres
Timothy Sedabres
Executive VP & Head of Investor Relations at Huntington Bancshares

Thank you, operator. Welcome, everyone, and good morning. Copies of the slides we will be reviewing today can be found on the Investor Relations section of our website, www.huntington.com. As a reminder, this call is being recorded, and a replay will be available starting about one hour from the close of the call. Our presenters today are Steve Steinour, Chairman, President and CEO and Zach Wasserman, Chief Financial Officer.

Timothy Sedabres
Timothy Sedabres
Executive VP & Head of Investor Relations at Huntington Bancshares

Brendan Lawler, Chief Credit Officer, will join us for the Q and A. Earnings documents, which include our forward looking statements disclaimer and non GAAP information are available on the Investor Relations section of our website. With that, let me now turn it over to Steve.

Stephen Steinour
Stephen Steinour
Chairman, President & CEO at Huntington Bancshares

Thanks, Tim. Good morning, everyone, and welcome. Thank you for joining the call today. We delivered exceptional results for the first quarter. I'll share a few highlights upfront and then Zach will take you through the numbers.

Stephen Steinour
Stephen Steinour
Chairman, President & CEO at Huntington Bancshares

Before we turn to the quarter, let me share a couple of thoughts on recent market volatility and our overall approach to managing the company through a period of economic uncertainty. I've seen quite a number of economic disruptions over my more than four decades in banking. And believe me, we have a robust playbook for managing through periods like this. Based on the current environment, we feel confident in our overall strategy for 2025 and continue to execute against it. We continue to drive progress against our objectives every day.

Stephen Steinour
Stephen Steinour
Chairman, President & CEO at Huntington Bancshares

Now with that being said, we recognize that the probability of adverse economic scenarios has increased in recent weeks, and those scenarios in turn could create additional headwinds within our industry. Regardless of the path the economy takes, we are well positioned and expect to continue outperforming our peers. Our long standing aggregate moderate to low risk appetite has proven to help us deliver strong and more predictable results through the cycle. Even in the best of times, we are steadfast in our approach to credit and risk management. And this has resulted in consistent top quartile credit performance for net charge offs.

Stephen Steinour
Stephen Steinour
Chairman, President & CEO at Huntington Bancshares

We also maintain an allowance for loan losses that is well above the peer median. Our foundation of management begins with disciplined client selection. We are intentional with whom we do business and in our selection of the geographies, industries and exposures we want to underwrite and hold. We ensure broad diversification and adhere to strict limits with no outsized concentrations. As you've seen in our commercial real estate portfolio, we have a well balanced and granular loan portfolio, which we rigorously and proactively manage.

Stephen Steinour
Stephen Steinour
Chairman, President & CEO at Huntington Bancshares

All of this provides us with confidence in the foundation of the company, and it allows us to capitalize on opportunities where others sometimes cannot. Two years ago in 2023, when many banks pulled back due to liquidity, capital, or credit concerns, we chose to invest. We took a different road. We demonstrated breakout performance, and we invested for long term growth. We took share and accelerated new customer acquisition.

Stephen Steinour
Stephen Steinour
Chairman, President & CEO at Huntington Bancshares

We hired hundreds of talented bankers, added capabilities and expertise and executed very well. And those efforts are now helping us deliver leading deposit and loan growth. We also expanded our three focused areas of fee revenue, and we're seeing good results in those areas as well. Huntington has never been better positioned. Now on to slide four, there are four key messages we wanna leave you with today.

Stephen Steinour
Stephen Steinour
Chairman, President & CEO at Huntington Bancshares

First, we sustained the momentum from year end through the first quarter with robust loan growth and continued deposit growth. The business is performing exceptionally well. And through the first quarter, we are ahead of our plans for the year. I'd like to thank all of my colleagues and teammates for their extraordinary efforts this quarter and everything they do for our customers and company every day. Second, we're driving revenue and profit growth year over year consistent with the strategy we shared at Investor Day.

Stephen Steinour
Stephen Steinour
Chairman, President & CEO at Huntington Bancshares

Profit growth is supported by our earning asset growth, expanded net interest margin, growth of value added fee revenues and disciplined expense management. Third, credit performance continues to be strong. We are proactively managing all of our loan portfolios. Fourth, our strong financial foundation enables us to operate through a range of potential economic scenarios. Turning to Slide five, I'll recap our performance in the first quarter.

Stephen Steinour
Stephen Steinour
Chairman, President & CEO at Huntington Bancshares

We grew average loans by almost $9,000,000,000 year over year supported by both core businesses and new initiatives. Average deposit growth continued and increased by almost $11,000,000,000 year over year. Our deposit strategy remains focused on acquiring and deepening primary bank relationships, and we grew primary bank relationships by 3% in consumer and 4% in business banking over the previous year. Importantly, we are maintaining disciplined deposit pricing while delivering this growth. Our investments in value added fee revenues continue to deliver with fee income increasing over 6% year over year led by payments, wealth, and capital markets.

Stephen Steinour
Stephen Steinour
Chairman, President & CEO at Huntington Bancshares

We are continuing to invest in these areas. For example, in capital markets, we're excited to welcome Chris Wood to lead the continued build out of our leveraged finance program and private equity coverage. We invested in talent and launched two new verticals, Financial Institutions Group and Aerospace and Defense. In North and South Carolina, we are accelerating our branch expansion plans. We're excited to bring the entire Huntington franchise to this region.

Stephen Steinour
Stephen Steinour
Chairman, President & CEO at Huntington Bancshares

These investments will drive long term value creation for shareholders and contribute to the medium term goals. Our capital levels improved as well with adjusted CET1 growing by 20 basis points from the prior quarter to 8.9%. In anticipation of reaching our operating range, the board approved a $1,000,000,000 multiyear share repurchase authorization, which provides us flexibility for capital deployment. Turning to Slide six, let me take a moment to share the top level revenue and PPNR trends we've delivered. 10% year over year revenue growth and 24% year over year PPNR growth.

Stephen Steinour
Stephen Steinour
Chairman, President & CEO at Huntington Bancshares

As I said, the business is performing very well and continuing to build momentum. We are optimistic about Huntington's future and the opportunities that lie ahead. As a reminder, the board and management are collectively a top 10 shareholder and we are fully aligned and committed to our investors to drive outperformance and additional shareholder value. With that, I'll ask Zach to provide an overview of the financial performance.

Zachary Wasserman
Zachary Wasserman
CFO & Senior EVP at Huntington Bancshares

Thanks, Steve, good morning, everyone.

Zachary Wasserman
Zachary Wasserman
CFO & Senior EVP at Huntington Bancshares

Slide seven provides highlights of our first quarter results. We reported earnings per common share of $0.34 Return on tangible common equity or ROTCE came in at 16.7% for the quarter. As Steve noted, pre provision net revenue, PPNR, expanded by 24 year over year to $783,000,000 Adjusted for notable items, PPNR rose 18% year over year. Average loan balances grew by $2,700,000,000 or 2.1% from the prior quarter. Average deposits increased by $2,200,000,000 or 1.4% versus prior quarter.

Zachary Wasserman
Zachary Wasserman
CFO & Senior EVP at Huntington Bancshares

Reported CET1 ended the quarter at 10.6%, increasing approximately 40 basis points from last year. Tangible book value per share has increased by over 13% year over year. We continue to demonstrate strong credit performance with net charge offs of 26 basis points. Allowance for credit losses ended the quarter at 1.87%. Turning to Slide eight, consistent with our plan and prior guidance, loan balances grew for the sixth consecutive quarter, driven by commercial loans, increased $2,200,000,000 or 3.1 percent from the prior quarter.

Zachary Wasserman
Zachary Wasserman
CFO & Senior EVP at Huntington Bancshares

Year over year, loans grew 7.3%, driven by continued production in the core business and contributions from the new initiatives. During the quarter, growth from new initiatives continued to accelerate from the prior quarter and represented $1,300,000,000 or approximately half of the total growth. The primary drivers of new initiative loan growth in the quarter included Financial Institutions Group, Mortgage Servicing, Funds Finance, North and South Carolina and Texas. Of the remaining $1,400,000,000 of loan growth from existing businesses, we delivered six ninety seven million dollars from corporate and specialty banking, dollars $439,000,000 from regional banking, commercial and industrial, dollars $2.00 9,000,000 from seasonally higher balances within distribution finance and $3.00 $1,000,000 from auto. Offsetting a portion of this growth was lower commercial real estate balances, which declined by $261,000,000 Turning to Slide nine.

Zachary Wasserman
Zachary Wasserman
CFO & Senior EVP at Huntington Bancshares

Since the first quarter of twenty twenty three, we have consistently delivered deposit growth well above levels and our positive momentum continued into the first quarter of twenty twenty five. Average balances increased by 2,200,000,000 or 1.4% driven by continued household growth. We lowered our overall cost of deposits in the quarter by 13 basis points to 2.03%. This outperformed the expectations we shared in January and reflects our disciplined deposit pricing. On to Slide 10.

Zachary Wasserman
Zachary Wasserman
CFO & Senior EVP at Huntington Bancshares

During the quarter, we drove $31,000,000 or 2.2% growth in net interest income. This reflects almost 11% growth year over year and the fourth consecutive quarter of net interest income dollar growth. Net interest margin was 3.1% for the first quarter, up seven basis points from the prior quarter. The increase in interest margin from the prior quarter included two basis points higher spread net of free funds, a one basis point reduction from higher cash balances, a four basis point benefit from lower drag from the hedging program and a three basis point benefit from interest recoveries and other smaller items. We were very pleased with the performance of the underlying three zero seven basis points of NIM in the quarter, which beat our earlier expectations, primarily as a result of strong performance in deposit beta.

Zachary Wasserman
Zachary Wasserman
CFO & Senior EVP at Huntington Bancshares

Turning to Slide 11. Our level of cash and securities at quarter end remained at 28% of total assets, consistent with the prior quarter, and we held modestly higher cash balances in the quarter. We have continued to reinvest cash flows into treasuries, which now represent 20% of our total securities portfolio, up 8% from a year ago. As I have previously stated, we expect to manage the duration of the portfolio at approximately the current range. Turning to Slide 12.

Zachary Wasserman
Zachary Wasserman
CFO & Senior EVP at Huntington Bancshares

We continue to manage our hedging program to both protect net interest margin from a lower rate environment as well as protect capital from potential higher rates. Over the last twelve months, we have reduced our asset sensitivity to a near neutral level. During the first quarter, we added to our down rate risk hedges with approximately $4,000,000,000 in floor spreads. We continue to analyze multiple potential rate scenarios and will remain dynamic as we continue to calibrate to the most likely rate environment. Moving to Slide 13.

Zachary Wasserman
Zachary Wasserman
CFO & Senior EVP at Huntington Bancshares

On a GAAP basis, non interest income increased by 6% or $27,000,000 from the prior year. We continue to see solid growth driven by payments, wealth management and capital markets. As a reminder, the first quarter is generally a seasonal low for fee revenues and we expect fee revenues to grow over the course of the year. Moving to Slide 14. Within payments, saw 6% growth year over year in the first quarter, driven by a 15% increase in commercial payment revenues.

Zachary Wasserman
Zachary Wasserman
CFO & Senior EVP at Huntington Bancshares

Treasury management fees grew 10% as we continue to penetrate and deepen within our customer base and benefited from an increasing contribution from our new merchant acquiring model. Moving to wealth management on Slide 15. Fees increased by 15 on a year over year basis. AUM continued to grow, increasing 6% from the prior year with wealth advisory households up 11% year on year. We've gathered approximately $1,400,000,000 in net flows over the last year as we continue to execute our strategy to deepen our advisory penetration into our customer base.

Zachary Wasserman
Zachary Wasserman
CFO & Senior EVP at Huntington Bancshares

Moving to Slide 16, capital markets grew 20% year over year, supported by commercial loan production related capital markets activity, including notable strength in underwriting and syndications. Turning to Slide 17. GAAP non interest expense decreased sequentially by 26,000,000 driven by lower personnel expense, primarily because of a seasonal reduction in incentives and revenue driven compensation. Slide 18 recaps our capital position. We continue to drive common equity Tier one higher and our capital management strategy remains focused on our top priority to fund high return loan growth, while continuing to drive adjusted CET1 inclusive of AOCI into our operating range of 9% to 10% over time.

Zachary Wasserman
Zachary Wasserman
CFO & Senior EVP at Huntington Bancshares

As Steve stated in his remarks, the Board approved a $1,000,000,000 share repurchase program, which provides Huntington flexibility in our expected capital distribution plan over the next several years. The timing of repurchases will be discretionary and depend on a number of factors, including the macroeconomic and interest rate environment as well as the pace of loan growth. We would expect any repurchases in 2025 to be modest. Turning to Slide 19. Credit quality continues to outperform.

Zachary Wasserman
Zachary Wasserman
CFO & Senior EVP at Huntington Bancshares

Net charge offs decreased four basis points in the quarter. Allowance for credit losses was 1.87%, lower by one basis point from the prior quarter and up $32,000,000 sequentially, reflecting strong loan portfolio growth and continued solid credit performance. Turning to Slide 20, the criticized asset ratio increased to 3.98%. The non performing asset ratio ended the quarter two basis points lower at 61 basis points. Let's turn to Slide 21 for our outlook for 2025.

Zachary Wasserman
Zachary Wasserman
CFO & Senior EVP at Huntington Bancshares

Clearly, there is more uncertainty in the economic outlook for 2025 today than there was at the beginning of the year. As Steve noted earlier, we run the business with a highly dynamic approach where we continually analyze multiple potential economic scenarios and ensure that we have action plans ready not only to manage but to outperform in all of them. The business performed exceptionally well in Q1, and we have momentum going into Q2. Based on our results thus far in 2025, our full year guidance is the best estimate for how we will perform this year. On loans, we continue to expect growth within the prior range of 5% to 7%.

Zachary Wasserman
Zachary Wasserman
CFO & Senior EVP at Huntington Bancshares

Based on the robust performance in Q1 and the momentum that is carrying into Q2, we are well on track to achieve that objective, notwithstanding the less certain economic outlook. In a less volatile economic environment, we would likely have increased our guidance. On deposits, we expect to drive growth within the prior range of 3% to 5% as we focus on growing primary banking relationships and new households. For net interest income, we're increasing our guidance on a dollar basis to plus 5% to 7% based on our strong first quarter performance and benefiting from a stronger NIM. As noted previously, this level would reflect record net interest income on a full year basis.

Zachary Wasserman
Zachary Wasserman
CFO & Senior EVP at Huntington Bancshares

Fee revenues are tracking within the 4% to 6% prior range. Expense growth is also tracking to the prior range of 3.5% to 4.5%, driven by sustained investments and revenue producing initiative and overall growth in the business. On credit, we continue to expect net charge offs for the year to be between twenty five and thirty five basis points. I will also share some color on expectations for the second quarter. We expect sequential average loan growth between 12%.

Zachary Wasserman
Zachary Wasserman
CFO & Senior EVP at Huntington Bancshares

Deposits are expected to grow as well as we focus on self funding our loan growth. We expect net interest income to grow modestly into the second quarter driven by earning asset growth and a relatively stable run rate NIM. Fee revenues are expected to grow modestly from their seasonal Q1 low. We expect expenses of approximately $1,170,000,000 with the sequential increase of approximately $20,000,000 driven approximately half from the full quarter impact of annual merit and the remainder from higher expected revenue driven compensation from growing fee revenues. Lastly, we expect Q2 net charge offs within our full year range.

Zachary Wasserman
Zachary Wasserman
CFO & Senior EVP at Huntington Bancshares

Turning to Slide 22. In closing, we remain focused on driving long term shareholder value creation. Our performance is driven by our culture and our purpose. We operate a powerful franchise that is both scaled and diversified with multiple sustainable growth levers from a position of strength. Risk management is deeply embedded in our culture.

Zachary Wasserman
Zachary Wasserman
CFO & Senior EVP at Huntington Bancshares

Throughout the years, we have consistently demonstrated top tier performance in stressed environments as measured by DFAST and CCAR data. Our focus on adjusted CET1 inclusive of AOCI demonstrates the rigor of our capital management approach. Our liquidity remains top tier in the industry. The organic growth we are driving continues to significantly outpace our peer group and support the attractive revenue and profit growth we are delivering. With that, we will conclude our prepared remarks.

Zachary Wasserman
Zachary Wasserman
CFO & Senior EVP at Huntington Bancshares

And before we move to Q and A, let me take a moment and thank Tim Sedabres for his leadership of our Investor Relations program over the past four years. Many of you know him well, given his strong relationships and his counsel has been of great value to us. Tim will be taking on a new role within our finance organization as part of his development plan, leading our corporate forecasting and profitability team. We look forward to accepting our new head of IR in the coming weeks. Tim, thank you and over to you for questions and answers.

Timothy Sedabres
Timothy Sedabres
Executive VP & Head of Investor Relations at Huntington Bancshares

Thank you, Zach. Operator, we will now take questions. We ask that as a courtesy to your peers, each person ask only one question and one related follow-up. And then if that person has additional questions, he or she can add themselves back into the queue. Thank you.

Operator

Thank you, Tim. At this time, we'll be conducting a question and answer session. If you like to ask a question, you may press star one from your telephone keypad and a confirmation tone will indicate your line is in the question queue. You may press star two if you like to withdraw your question from the queue. For participants that are using speaker equipment, it may be necessary to pick up the handset before pressing the star keys.

Operator

And please ask if ask one question and one follow-up. And if you have any additional questions as time allows, you place yourself back into the queue. One moment while we poll for questions. Thank you. The first question today are from the line of Erica Najarian with UBS.

Operator

Please proceed with your question.

Erika Najarian
Erika Najarian
Managing Director & Equity Research Analyst at UBS Group

Hi. Good morning. Just my first question good morning. My first question is for Zach. The net interest margin clearly came in higher than expectations.

Erika Najarian
Erika Najarian
Managing Director & Equity Research Analyst at UBS Group

Sort of just wanted to unpack, you know, what you said. Should we think about flat net interest margin trends relative to the 03/10, or should we take out the interest recoveries? And as we contemplate what you've said in the past and obviously the neutral rate positioning that you showed us, should we then apply sort of that flat net interest margin thought process for the rest of the year?

Zachary Wasserman
Zachary Wasserman
CFO & Senior EVP at Huntington Bancshares

Morning, Erica. Great to hear you, and thanks for the question. And so let me unpack a bit of that. So for the first quarter, as I noted in the prepared remarks, really the big driver of the outperformance for us was deposit pricing. And frankly, the team's executed exceptionally well and beat our own internal plan.

Zachary Wasserman
Zachary Wasserman
CFO & Senior EVP at Huntington Bancshares

If you just think about that topic for a second, through the fourth quarter of last year, we'd achieved a cumulative deposit beta of down 24%. And our expectations as we went into this year was to see continued sort of gradual improvement on that down beta getting to the high 30s by the end of twenty twenty five. We achieved actually 37% just in the first quarter. So it was a significant acceleration of that performance and just really, really great results. And that's really primarily what drove us above what we expected to be flat to the three zero three roughly level we were at in Q4.

Zachary Wasserman
Zachary Wasserman
CFO & Senior EVP at Huntington Bancshares

As I think about the kind of run rate from here, to the second part of your question, we're looking at our current run rate as around three zero seven, Erica, to answer your question. And I see under most scenarios here, and there's clearly a wider range of scenarios that one might think about at

Zachary Wasserman
Zachary Wasserman
CFO & Senior EVP at Huntington Bancshares

this point. But there are

Zachary Wasserman
Zachary Wasserman
CFO & Senior EVP at Huntington Bancshares

most scenarios of either zero cuts or as many as three or four that are in the curve right now, pretty consistent within a few basis points outcome around that three zero seven for the remainder of this year. So pretty flat within the reasonable range of three zero seven for the next three quarters. I continue to model numerous scenarios, as you know, out of the longer term. And all those really continue to indicate the opportunity for us to see rising NIMs of 2026 aligned to what we talked about at length at our Investor Day a couple of months ago. So pretty similar kind of shape of that curve, just phase shifted up a little bit to three zero seven in the near term.

Erika Najarian
Erika Najarian
Managing Director & Equity Research Analyst at UBS Group

And my second question, if I may, is for Steve. I thought the $1,000,000,000 in buyback authorization is interesting. It's pretty clear from the performance in the quarter and your outlook that your business momentum continues to be, you know, best in class because to your point, you were able to zig when everyone else was zagging given your, you know, superior capital and risk management in '23. So is that just really a message of, you know, if tariff uncertainty continues to hit the banking sector, you wanted flexibility to support your stock because you see inherent higher value? And I'm just trying to, you know, not to put words in your mouth, but in the over decade that I've covered you, you're you've never been a huge fan of buybacks.

Erika Najarian
Erika Najarian
Managing Director & Equity Research Analyst at UBS Group

So I just wanted to get your thought process on that.

Stephen Steinour
Stephen Steinour
Chairman, President & CEO at Huntington Bancshares

Thank you, Erica. Doc, since you've covered us a bit before, we've had a consistent approach to capital allocation. First, the growth, and we're getting really good growth now, as you pointed out, best in class. Second to the dividend and third to other uses, including buybacks. We we expect to buy back bit this year, and we've got a multiyear opportunity.

Stephen Steinour
Stephen Steinour
Chairman, President & CEO at Huntington Bancshares

And so depending on the economic situation, we we're we're prepared now to to do buybacks and and and expect that we will on some modest basis this year and and then continuing as we go forward.

Erika Najarian
Erika Najarian
Managing Director & Equity Research Analyst at UBS Group

Got it. I'll reach you. Thank you.

Stephen Steinour
Stephen Steinour
Chairman, President & CEO at Huntington Bancshares

Thank you.

Operator

Our

Operator

next questions are from the line of John Pancari with Evercore ISI. Please proceed with your question.

John Pancari
Senior Managing Director & Senior Research Analyst at Evercore ISI

Morning.

Stephen Steinour
Stephen Steinour
Chairman, President & CEO at Huntington Bancshares

Morning, John.

John Pancari
Senior Managing Director & Senior Research Analyst at Evercore ISI

On the

John Pancari
Senior Managing Director & Senior Research Analyst at Evercore ISI

the deposit cost progress in the quarter, definitely better than expected. Could you maybe give us a little bit of color what, where you're seeing that success? Is it tied into the new efforts on the certain product side? Or is it programs that that you've been pushing through and across the, you know, pricing programs across the products? Just if you could help us get a, you know, a better picture around the success on that front versus the competitive backdrop.

John Pancari
Senior Managing Director & Senior Research Analyst at Evercore ISI

Thanks.

Zachary Wasserman
Zachary Wasserman
CFO & Senior EVP at Huntington Bancshares

Yep. Good question, John. This is Zach. I'll take it. You know, in general, I would characterize the outcome of that really as a function of the consistent plan we've had around down beta.

Zachary Wasserman
Zachary Wasserman
CFO & Senior EVP at Huntington Bancshares

So not really any sort of change in that strategy, just a great execution of it and outperformance of it. Just if I remind you of the five key levers that we had highlighted as integral to our down beta plan over the last several quarters, The first was decreasing the mix of CDs within the overall funding base. And secondly, shortening their duration, thereby setting us up to be ready to see a higher beta on that product set over time. That continues to work very well. I will note, by the way, in the CD area, we're seeing historical CDs expire, and we're retaining the large majority of those customers at significantly lower rates, something like approximately 100 basis points lower.

Zachary Wasserman
Zachary Wasserman
CFO & Senior EVP at Huntington Bancshares

And that's a meaningful piece of that overall deposit cost reduction. The third part of our downgraded plan was as we acquired in volume, acquiring that in money market as opposed to time deposit. And that really, again, kind of a high beta product allows us to continue to manage through for potential future interest rate reductions. Fourth, we reduced our go to market pricing. I think as we've talked about a number of times in the past, we are incredibly segmented in terms of how we think about deposit pricing in the consumer and business world very much on a regional basis, in the commercial world looking at industry segments and size bands.

Zachary Wasserman
Zachary Wasserman
CFO & Senior EVP at Huntington Bancshares

And we look almost every day, if not certainly every week, at where is the competitive pricing. And we have purposely reduced our pricing within that overall sphere. And then lastly, fifth, selectively reducing pricing on existing segments. And we had a lot of confidence as we came into the year that we would be able to execute our overall beta plan very, very well. And we challenged ourselves, to some degree, to go even harder than that.

Zachary Wasserman
Zachary Wasserman
CFO & Senior EVP at Huntington Bancshares

To the team's credit, they really performed very, very well. And the last thing I'll say is, to some degree, you may remember when we set Q1 guidance, we also expected deposits to be about flat actually quarter to quarter. And not only did we outperform on deposit costs, we actually outperformed on volume as well and grew that. I think it's just another testament to the deposit franchise is incredibly strong.

John Pancari
Senior Managing Director & Senior Research Analyst at Evercore ISI

Great. Thank you, Zach. I appreciate the color there. Then on loan growth, I know you indicated that the new initiatives are they generated about half of the loan growth in the quarter. And can you help us a little bit in terms of what new yields you're bringing the paper on?

John Pancari
Senior Managing Director & Senior Research Analyst at Evercore ISI

I mean, there's questions out there like, are you you've gotta win that share from someone. And, therefore, is it pricing that's getting you there? Or is it just getting stepping up the focus in these areas where you haven't had before since they're new businesses? And and I know the margins have been competitive because of your funding dynamics. But how about the new loan yields?

John Pancari
Senior Managing Director & Senior Research Analyst at Evercore ISI

Is there any way to help us think about what yields these new this new paper is coming on at?

John Pancari
Senior Managing Director & Senior Research Analyst at Evercore ISI

Yes.

Zachary Wasserman
Zachary Wasserman
CFO & Senior EVP at Huntington Bancshares

It's a great question, John. And the short answer, I will unpack it in more detail, but the short answer is the new yields are coming on pretty consistent with our overall production yields, not leveraging any kind of overly aggressive pricing to win there. We are seeing we've talked about this a lot. We have hired extraordinarily experienced bankers who have deep productivity and relationships.

Zachary Wasserman
Zachary Wasserman
CFO & Senior EVP at Huntington Bancshares

And the model we have to bring the expertise of a large bank down to a local level in the Carolinas and Texas, and then separately the expertise, the deep, deep expertise of our industry vertical specialist banking leaders, is really what's causing us to win here, not pricing. And in fact, when I look at the return on capital of those deals through our capital approval committees, they look very attractive. Just as an indication, we talked about the fact that The Carolinas achieved profitability last year during the year. It's a great sense of how the pricing is going. So not leveraging overall pricing there and seeing a lot of good strength.

Zachary Wasserman
Zachary Wasserman
CFO & Senior EVP at Huntington Bancshares

And I think when we look at the outcome of BIM, that's a testament to that. We're not seeing any kind of degradation in our run rate NIM even as we really accelerate loan growth throughout the last part of last year as of your and the guidance would continue grow right now as well.

John Pancari
Senior Managing Director & Senior Research Analyst at Evercore ISI

Alright. Thank you, Zach, and good luck to him. Best of luck in the new role.

Stephen Steinour
Stephen Steinour
Chairman, President & CEO at Huntington Bancshares

Thanks, John.

Operator

Our

Operator

next question is from the line of Ebrahim Poonawala with Bank of America. Please proceed with your question.

Ebrahim Poonawala
Ebrahim Poonawala
Managing Director - Head of North American Banks Research at Bank of America Merrill Lynch

Hey. Good morning.

Stephen Steinour
Stephen Steinour
Chairman, President & CEO at Huntington Bancshares

Morning, Ebrahim.

Ebrahim Poonawala
Ebrahim Poonawala
Managing Director - Head of North American Banks Research at Bank of America Merrill Lynch

Just maybe one question is, you had a very, very strong first quarter. I think head and shoulders above most of your peers. Just talk to us in terms of how things evolved during the quarter, Steve, maybe did things start off extremely strong and then March and maybe even the last couple of weeks? Have you seen that weakness that we all worry about in terms of the economy and clients being on the sidelines? Or just how would you describe how the quarter evolved?

Stephen Steinour
Stephen Steinour
Chairman, President & CEO at Huntington Bancshares

We we as we announced at at year end, we had a very strong pipeline coming into to the first quarter. And we also had activity that didn't close in the fourth quarter that's filled into the first. So we had a good start. January was a very good month, but we've had each of the months have been very good. There hasn't been a tail off per se, but some of the activity that we actually thought would fund in the first quarter has been deferred, just a modest amount of it.

Stephen Steinour
Stephen Steinour
Chairman, President & CEO at Huntington Bancshares

And that is largely in equipment finance and tariff related issues or concerns. But as you know, we had a really good first quarter. Our pipeline going into the second quarter, again, with high probability close, is almost the same level as it was in the first quarter. So our second quarter, unless something dramatically happens, should be reasonably strong as well. So we're not seeing you know, a a a material drop off by any stretch, and things that are being deferred have the potential to be stacked into the second half of this year.

Stephen Steinour
Stephen Steinour
Chairman, President & CEO at Huntington Bancshares

And and, you know, we're we usually have a very strong fourth quarter.

Ebrahim Poonawala
Ebrahim Poonawala
Managing Director - Head of North American Banks Research at Bank of America Merrill Lynch

That's helpful, Steve. And I guess the other component to growth is you picked up a lot of talent. I'm just wondering, is there an amount of growth that's coming from the bankers that you've hired bringing on their books of business, which should happen no matter what? Is there a component of that that we should keep in mind when we think about Huntington's loan or deposit growth?

Stephen Steinour
Stephen Steinour
Chairman, President & CEO at Huntington Bancshares

Absolutely. Our our new colleagues remember, there's roughly an average twenty year tenure on them, and they are outstanding. We just had our board session in Charlotte to meet the entire teams in in the North and South Carolina. They, you know, obviously, very enthused by our directors about what's what's been accomplished and encouragement to do more. So we're they're an important part of the overall results, and we expect that they'll have runway now for years.

Stephen Steinour
Stephen Steinour
Chairman, President & CEO at Huntington Bancshares

But I would also suggest the core is performing very, very well. And our colleagues in the more traditional business lines, if you will, just are doing a great job. Our commercial real estate, which has run off quite a bit in last year, is stabilizing. And we expect to have a stable, if not modest growth, pre this year. So it's all coming together as planned.

Stephen Steinour
Stephen Steinour
Chairman, President & CEO at Huntington Bancshares

We shared these expectations at the Investor Day just roughly sixty days ago, and we're executing against it. And we're not changing our plan now. We're all in force, and we're gonna continue to execute.

John Pancari
Senior Managing Director & Senior Research Analyst at Evercore ISI

Excellent. Thank you.

Stephen Steinour
Stephen Steinour
Chairman, President & CEO at Huntington Bancshares

Thank you. You're welcome.

Operator

Our

Operator

next question is from

Operator

the line of

Operator

Manan Kaushalia with Morgan Stanley. Please proceed with your question.

Manan Gosalia
Manan Gosalia
Analyst at Morgan Stanley

Hi. Good morning, all.

Stephen Steinour
Stephen Steinour
Chairman, President & CEO at Huntington Bancshares

Hi, man.

Manan Gosalia
Manan Gosalia
Analyst at Morgan Stanley

Steve, can you expand on what you're hearing on the ground from clients since April 2? You know, what is the sentiment? What are they telling you? And what actions are they taking in this environment?

Stephen Steinour
Stephen Steinour
Chairman, President & CEO at Huntington Bancshares

There's a wide range of of of of issues, if you will, to to to talk about in this regard. I'll try to do it in a summary fashion. We have, customers that are are not reliant on imports or exports. If anything, they feel more bullish because there's less potential, less competition, certainly less price competition as a result of the interim tariff activity. We've got a lot of trade that goes on between Canada and Mexico that is exempt because of USMCA and so no effect.

Stephen Steinour
Stephen Steinour
Chairman, President & CEO at Huntington Bancshares

If you'll recall that auto dealers did very, very well, some of their best years in a COVID environment where they had more margin on new and used as well. So there are pockets of real strength here. There are other areas, like distribution finance, for example, where there's some import restriction being dealt through tariffs, and utilization has dropped off a bit. I mentioned equipment finance where some of what we finance gets imported and and and decisions to defer have been made. But, again, a broad spectrum, there are winners, not just losers.

Stephen Steinour
Stephen Steinour
Chairman, President & CEO at Huntington Bancshares

I think the headlines suggest, well, everybody's impacted and in a negative way. That is not the case. There are a number of businesses that are gonna do very well. And as you know, we have a very broadly diversified portfolio, so we'll have those that are are gonna be winners and and some others that will be temporarily impacted.

Manan Gosalia
Manan Gosalia
Analyst at Morgan Stanley

Very helpful. And then maybe as a follow-up, you saw a pretty strong loan growth this quarter. You noted that you would have increased the guide in normal circumstances. But then you also said you're not really expecting a drop off in loan growth in the second quarter. So your guide would then imply a pretty meaningful slowdown in loan growth in the second half of the year relative to what you're seeing right now.

Manan Gosalia
Manan Gosalia
Analyst at Morgan Stanley

So are you just being more conservative here? And if not, what would cause you to pull back on loan growth in in in this environment?

Stephen Steinour
Stephen Steinour
Chairman, President & CEO at Huntington Bancshares

We're we're we have had an aggregate moderate to low risk appetite for a decade and a half. That hasn't changed, and that's not going to change. So we run the company with that in mind. It's our policies, our credit processes, etcetera. And we will be consistent in generating new business.

Stephen Steinour
Stephen Steinour
Chairman, President & CEO at Huntington Bancshares

We're being a bit cautious with that second half guide and hopefully overly cautious because this could be an exceptional year. We've got a very strong start. We're confident in the second quarter. If if things come together with the individual tariff negotiations with a variety of countries, I think we'll have an opportunity to beat that guy.

Manan Gosalia
Manan Gosalia
Analyst at Morgan Stanley

Got it. Thank you, and all the very best, Tim.

Timothy Sedabres
Timothy Sedabres
Executive VP & Head of Investor Relations at Huntington Bancshares

Thanks, Tom.

Stephen Steinour
Stephen Steinour
Chairman, President & CEO at Huntington Bancshares

Thank you.

Operator

Our next question comes from the line of John Armstrong with RBC Capital Markets. Please proceed with your question.

Jon Arfstrom
Jon Arfstrom
Managing Director - Associate Director of US Research at RBC Capital Markets

Hey. Thanks. Good morning.

Stephen Steinour
Stephen Steinour
Chairman, President & CEO at Huntington Bancshares

Morning, John.

Jon Arfstrom
Jon Arfstrom
Managing Director - Associate Director of US Research at RBC Capital Markets

Echo that on Tim. Nice job. Thanks for everything. Steve, where are you the most focused right now in terms of risk management? You you have a, obviously, a strong record historically in risk.

Jon Arfstrom
Jon Arfstrom
Managing Director - Associate Director of US Research at RBC Capital Markets

But what what are you telling your teams to kinda double and triple check at this point?

Stephen Steinour
Stephen Steinour
Chairman, President & CEO at Huntington Bancshares

Well, good morning, John, and thanks for the question. You know, my my most of my career early on was at risk and credit risk specifically. So we are we are we've been very, very diligent on portfolio management now for a number of years, and we will continue to do that. But the things of stale information, things that might reflect some challenge with our customers, our view is we're here to support our customers. And so if there's bad news, we want to hear it, and we want to be in a position to help them get through it.

Stephen Steinour
Stephen Steinour
Chairman, President & CEO at Huntington Bancshares

And so it's a very constructive view, and that's both consumers and business. And so there's an active outreach effort, if you will, that with an extra alert around the environment that we're emphasizing. There's no one particular portfolio of unique focus. I would say the portfolio management efforts are and have been broad based and will continue. As we get more capabilities in terms of data and use of data, think of what's coming with generative AI, we'll do more and more at query and review.

Jon Arfstrom
Jon Arfstrom
Managing Director - Associate Director of US Research at RBC Capital Markets

Okay. Good. That's good. And then, Zach, for you, just on the noninterest income guide for modest growth sequentially. It looks like in your materials, you're pointing to the year over year growth rates.

Jon Arfstrom
Jon Arfstrom
Managing Director - Associate Director of US Research at RBC Capital Markets

And I'm just curious how you want us to think about that modest growth. And I guess I'm particularly interested in capital markets and what kind of a bounce back you expect there. Yes.

Zachary Wasserman
Zachary Wasserman
CFO & Senior EVP at Huntington Bancshares

Great question, John. Just in the area of fees, will note that we feel really, really good about the strategy and where this is going over the moderate term. 11% year over year growth in those key fee areas of focus payments, wealth management, capital markets is in line with what we discussed at Investor Day and just the underlying trends there look exceptionally good. As you go to Q2, we are expecting to be higher quarter to quarter, as I noted. The amount of that will be a function of kind of where we land in the equity market levels to some degree that affects our wealth management income and cap markets.

Zachary Wasserman
Zachary Wasserman
CFO & Senior EVP at Huntington Bancshares

What's interesting in the cap market space, and I think we've discussed this at Mike before, about twothree of that business is commercial loan production related. And we are expecting to have a solid quarter of growth in commercial loan production, and that should flow through into cap markets activities. We noted in the presentation that the strength in risk management activities, for example, and loan syndication. So that should continue. We should see that continue to track higher.

Zachary Wasserman
Zachary Wasserman
CFO & Senior EVP at Huntington Bancshares

Obviously, M and A advisory is the one that is the most sensitive probably of any of our businesses to uncertainty. And we did come into Q1 expecting to have a somewhat stronger Q1 than that ultimately came to pass. We saw some delays of deal making activity. And I think that's going to be, to some degree, what happens there in the function of how this uncertainty in the economy resolves. If I talk to our M and A advisory team, they're still pretty bullish on the year, I will say.

Zachary Wasserman
Zachary Wasserman
CFO & Senior EVP at Huntington Bancshares

I mean, the pipeline looks good, not only good in terms of size but in terms of quality. The companies that are in it are very high quality and should be able to transact. And to some degree, it's just going to come down to things closing a couple of weeks before the quarter or potentially pushing it out. So I do expect to see growth. So I pulled back maybe last year, John, to answer your question you didn't ask, but it's related.

Zachary Wasserman
Zachary Wasserman
CFO & Senior EVP at Huntington Bancshares

In that fee guide of 4% to 6%, I think the biggest puts and takes for us that will push us to the top end versus the bottom of that range is really that M and A advisory world, what happens with cap markets. And so that'll be what we have to watch here. But strategically, the team are executing exceptionally well, and look, look, we've got somebody's trying to be behind us.

Jon Arfstrom
Jon Arfstrom
Managing Director - Associate Director of US Research at RBC Capital Markets

Okay.

Stephen Steinour
Stephen Steinour
Chairman, President & CEO at Huntington Bancshares

John, just to add add a bit, we had a record number of of had caps on a record number of initiatives in in the first quarter. So the year is set up very well. Obviously, current activities will will cause some some delay, but but this could be a very strong capital markets year for us on the IV side as well.

Jon Arfstrom
Jon Arfstrom
Managing Director - Associate Director of US Research at RBC Capital Markets

K. Alright. Thanks, guys. Appreciate it.

Stephen Steinour
Stephen Steinour
Chairman, President & CEO at Huntington Bancshares

Thanks, John.

Operator

Our next question comes from the line of David Long with Raymond James. Please proceed with your questions.

David Long
David Long
Managing Director at Raymond James Financial

Good morning, everyone.

Stephen Steinour
Stephen Steinour
Chairman, President & CEO at Huntington Bancshares

Good morning, Raymond.

David Long
David Long
Managing Director at Raymond James Financial

I under I understand that the credit mark the credit metrics for you guys look real good right now. But, specifically, what is the what what is the uncertain backdrop's impact been on your quantitative CECL model and overall reserve levels?

Brendan Lawlor
Brendan Lawlor
Executive VP & Chief Credit Officer at Huntington Bancshares

David, this is Brendan. I'll take that. First of all, we model many different scenarios as we try to come up with the reserve on a quarterly basis as we think about the economic environment and the component of it.

Brendan Lawlor
Brendan Lawlor
Executive VP & Chief Credit Officer at Huntington Bancshares

We're a Moody's shop. And so we use a baseline scenario, a somewhat positive scenario, which at this point doesn't look much different than the baseline scenario. And then we also incorporate a downside scenario. We will weigh the output that comes out of our modeling to derive the quantitative. And what we've seen over the last quarter is that as the scenarios from Moody's have softened, we have seen much more of the risk being picked up through the quantitative modeling that we've done.

Brendan Lawlor
Brendan Lawlor
Executive VP & Chief Credit Officer at Huntington Bancshares

And so that's where we then will step in and provide the qualitative side of it to get to the strong reserve coverage that we have posted and been pretty consistent with. So I feel really good about

Brendan Lawlor
Brendan Lawlor
Executive VP & Chief Credit Officer at Huntington Bancshares

the position we're sitting in at

Brendan Lawlor
Brendan Lawlor
Executive VP & Chief Credit Officer at Huntington Bancshares

this point. And we look forward to as this evolves, we'll reevaluate every quarter through that same lens.

Stephen Steinour
Stephen Steinour
Chairman, President & CEO at Huntington Bancshares

David, as you'll recall, we have typically top tier or even best in all the DFAST prior tests. So there's a consistency in terms of stress credit risk within the portfolio. It's one of the reasons for the last fifteen years we've released quarterly data on the consumer book. And that those trends are consistent now for that period of time. If anything, they've they've actually become a bit more conservative over time.

Stephen Steinour
Stephen Steinour
Chairman, President & CEO at Huntington Bancshares

So we feel very good about the the credit foundation within the the the company and optimistic about future performance. The modeling we do would reflect that.

David Long
David Long
Managing Director at Raymond James Financial

Got it. Thank you for that color. Second thing that I wanted to

David Long
David Long
Managing Director at Raymond James Financial

ask about was what does

David Long
David Long
Managing Director at Raymond James Financial

the pipeline look like for continuing to build out in the Carolinas and Texas and the newer verticals? As well as are there any new geographies or new verticals planned for the rest of the year?

Stephen Steinour
Stephen Steinour
Chairman, President & CEO at Huntington Bancshares

Well, as we announced it at the Investor Day, we expect to add one to two new verticals every year. We had an accelerated effort early on. But we do expect to add verticals this year. I think it was last September we announced we were planning to open 55 branches over five years in the Carolinas. Looks like that will be closer to three, so that's a bit of acceleration, three years.

Stephen Steinour
Stephen Steinour
Chairman, President & CEO at Huntington Bancshares

And we're continuing to look to increase our capabilities in a variety of our markets. We're adding colleagues in Chicago, a substantial number of colleagues as an example. So we're pressing forward, building out the franchise in multiple ways, both the preexisting and the newer aspects of it.

David Long
David Long
Managing Director at Raymond James Financial

Got it. So it

David Long
David Long
Managing Director at Raymond James Financial

sounds like you guys continue to play offense despite any increase in uncertainty in the economic backdrop?

Stephen Steinour
Stephen Steinour
Chairman, President & CEO at Huntington Bancshares

Well, we are very cognizant of what's going on around us. We have contingent plans. We've got a range of opportunities both on the expense and management side that are well laid out internally. So we and our board know what we'll do under various scenarios. But we are going to continue to execute the plan.

Stephen Steinour
Stephen Steinour
Chairman, President & CEO at Huntington Bancshares

We've delivered great growth. We are optimistic that we're going to get through this challenging period of uncertainty. And the country is going to be in good shape, the economy is good shape, and we're going to move forward. There will be pockets of issues, no doubt. But that's why we have such a well diversified and actively managed portfolio.

David Long
David Long
Managing Director at Raymond James Financial

Great. Thanks, Steven. Thanks for taking taking the questions.

Stephen Steinour
Stephen Steinour
Chairman, President & CEO at Huntington Bancshares

Thanks, Dave.

David Long
David Long
Managing Director at Raymond James Financial

Thanks.

Zachary Wasserman
Zachary Wasserman
CFO & Senior EVP at Huntington Bancshares

Thank you.

Operator

Our next questions are from the line of Matt O'Connor with Deutsche Bank. Please proceed with your question.

Matthew O'Connor
Matthew O'Connor
Managing Director at Deutsche Bank

Morning. I wanna ask a question regarding slide 62, the criticized commercial loans. You guys are one of the few that give all this detail, and, I mean, the credit overall is is quite strong, but always looking for kind of early indicators of an inflection. And when I look at the upgrades to pass and the pay downs, they were both down a decent amount. I'm just wondering if you guys also view that as kind of like a third early indicator of some sort of reflection?

Matthew O'Connor
Matthew O'Connor
Managing Director at Deutsche Bank

Or is it just a matter of seasonality, timing, things going to get so good? Or just elaborate on that chart because I thought it pretty interesting.

Brendan Lawlor
Brendan Lawlor
Executive VP & Chief Credit Officer at Huntington Bancshares

Sure, Matt. This is Brendan. I'll take that. We spent a lot of time talking about that as the quarter evolved. And really what you're seeing picked up specifically in that line item of the upgrades passed.

Brendan Lawlor
Brendan Lawlor
Executive VP & Chief Credit Officer at Huntington Bancshares

There were several transactions that were slated to close as we got closer to the end of the month of March that really just drifted into April. And they just didn't the refinancing or the support that they were bringing in, it drifted over into the first two weeks of the month. And so what we've seen is for the quarter we had an 8% increase in current class overall. I'd say to you about onethree of that got picked up, would have if it had closed two weeks earlier, would have been picked up in this number. So it was a little bit of timing, frankly, than anything else.

Brendan Lawlor
Brendan Lawlor
Executive VP & Chief Credit Officer at Huntington Bancshares

And that's what gives us comfort that even the strong position that we're sitting in from here, I think we're going probably be flattish for the remainder of this year.

Stephen Steinour
Stephen Steinour
Chairman, President & CEO at Huntington Bancshares

As you know, Matt, we've come down very substantially over the last year. At some point, we'll plateau. I don't think we're at the plateau yet. I'm a little more bullish on our ability to manage the book than than than than what Brendan just related, but it will plateau. And we we don't believe we have significant loss content in the grid or class at this stage.

Stephen Steinour
Stephen Steinour
Chairman, President & CEO at Huntington Bancshares

President and I review the top 50 every month and and have a a confidence in that modest loss expectation. Thank you for the question.

Matthew O'Connor
Matthew O'Connor
Managing Director at Deutsche Bank

Thank you. That's helpful.

Operator

Next question is from the line of Ken Houston with Autonomous Research. Please proceed with your question.

Analyst

Hey. Good morning, guys. This is Ben on from Ken's team. Zach, a question for you. Can you just talk about how you expect the drag from the hedging program to traject throughout the rest of the year, just given this new rate curve?

Analyst

You got the four basis point benefit to NIM this quarter. And then just how you think of using that hedging program out into the rest of the year and out into the medium term just to manage the rate sensitivity of the bank just given the volatility in the rate curve? Yes.

Stephen Steinour
Stephen Steinour
Chairman, President & CEO at Huntington Bancshares

You got it, Ben. Excellent question. Thanks. So in terms of hedging, maybe I'll answer your second one first, more strategically how we can do it, and I'll come back to the nuances around the hedge trajectory. We've been very intentional, I think, as we've been coming through in the discussions we've had in the last several quarters of gradually reducing our asset sensitivity as rates reach their peak and as we now expect to have a likely a down trajectory, but still with a fair amount of uncertainty around whether that will happen and when.

Stephen Steinour
Stephen Steinour
Chairman, President & CEO at Huntington Bancshares

And so we think this sort of neutral positioning that we're at now is really very optimal. It's our general I will say we look at it every single month, and we read it rigorously, and we dynamically manage it. So it could change. But at this point, our posture is to maintain that neutrality through the end of this calendar year. As you go out into 'twenty six, at this point less declarative, I would say.

Stephen Steinour
Stephen Steinour
Chairman, President & CEO at Huntington Bancshares

I'm expecting probably a regrowth in asset sensitivity as we go into 2026. But at this point we've got a fair line of sight to the rest of this year, and it's pretty neutral. And that neutrality is really what kind of underlies the statements I made earlier. I think it was Erica who asked this in terms of just the potential range of scenarios around NIM. We see a pretty flat NIM outcome, looked at a few bps of the three zero seven run rate NIM we generated in Q1 for the rest of this year, and then rising into next year, and it's sort of supported by that neutral position.

Stephen Steinour
Stephen Steinour
Chairman, President & CEO at Huntington Bancshares

So then we get to the trajectory this year. In the fourth quarter, last just two quarters ago, we had an eight basis point drag from hedging. As we came into the first quarter, our guidance had indicated, and actually what comes back exactly, was a four basis point reduction of that. So the benefit of four bps in Q1, and it left us with a hedge drag of four bps in the quarter. Well, we expect that to get down to about neutral by the middle of this year.

Stephen Steinour
Stephen Steinour
Chairman, President & CEO at Huntington Bancshares

We could get back all four bps It might be a little bit more leaking into Q3. We'll see. It'll be dependent on what really happens, obviously, with Fed fund actions here. But effectively neutral.

Stephen Steinour
Stephen Steinour
Chairman, President & CEO at Huntington Bancshares

And then probably a little bit of drag coming back in by the end of the year. If you take the implied forward from March 31, it would be something like four bps of drag by Q4 of 'twenty five. And so you can imagine your modified sort of a U shape, right, a four bp drag going down to roughly zero and then going back up to four. So that's why I think about it just, you know, sort of the beginning of this year to the run rate exit of this year. It's about neutral.

Stephen Steinour
Stephen Steinour
Chairman, President & CEO at Huntington Bancshares

It's not that much delta between that. But, again, if rates are different, we'll see obviously a different result there. It's just if I if I share one last thought with you, if you if you look out at 26, it looks about flat to that four, maybe even reducing a little bit as you go out from there. So I think most of the action will occur this year, and then it'll be about neutral to go out into '26.

Analyst

Great. Thank you for all the color.

Stephen Steinour
Stephen Steinour
Chairman, President & CEO at Huntington Bancshares

Welcome. Good question.

Operator

Thank you. Ladies and gentlemen, we've reached the end of the question and answer session. I'd like to turn the call back to mister Steve Steinhauer for closing remarks.

Stephen Steinour
Stephen Steinour
Chairman, President & CEO at Huntington Bancshares

Thank you for joining us today. In closing, our teams continue to deliver exceptional results highlighted by our leading loan and deposit growth and PPNR growth. Looking forward into 2025, while the economic outlook is less certain, we have momentum, and we feel confident in our strategy. We have experienced management teams and contingency playbooks to deploy to manage through various economic scenarios. We've never been better positioned.

Stephen Steinour
Stephen Steinour
Chairman, President & CEO at Huntington Bancshares

We've never been better positioned, and we're confident in our ability to continue to drive outperformance. So finally, thank you to the nearly 20,000 Huntington colleagues who would not be able to take care of our customers and drive this level of performance, outstanding performance, without your efforts. Thank you for your interest in Huntington today. Have a great one.

Operator

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

Executives
Analysts
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Key Takeaways

  • Delivered exceptional Q1 results with average loans up $9 billion and average deposits up $11 billion year-over-year, keeping the business ahead of plan.
  • Generated 10% revenue growth and 24% PPNR expansion year-over-year, supported by net interest margin expansion and fee income up 6% led by payments, wealth and capital markets.
  • Maintained top-quartile credit performance with net charge-offs at 26 bps and an allowance for credit losses of 1.87%, reflecting disciplined client selection and proactive portfolio management.
  • Strengthened capital ratios to CET1 of 10.6% (adjusted 8.9%) and secured a $1 billion multiyear share repurchase authorization to balance growth, dividends and buybacks.
  • Remain confident in our strategy despite economic uncertainty, driving long-term growth through talent investments, new verticals and a robust risk-management playbook.
A.I. generated. May contain errors.
Earnings Conference Call
Huntington Bancshares Q1 2025
00:00 / 00:00

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