Huntington Bancshares Earnings Call Shows Growth and Momentum

Huntington Bancshares ((HBAN)) has held its Q4 earnings call. Read on for the main highlights of the call.

Huntington Bancshares Earnings Call Highlights Strong Growth Amid Integration Risks

Huntington Bancshares’ latest earnings call struck an overall optimistic tone, emphasizing strong momentum in revenue, earnings, organic loan growth, and fee income, alongside solid credit performance and capital build. Management highlighted rapid and successful integration of recent acquisitions, particularly Veritex, and laid out a clear roadmap for bringing Cadence fully on board. While executives acknowledged higher expenses, rising criticized assets tied to acquired commercial real estate, and some pockets of loan softness, the overarching message was one of robust execution and confidence that growth drivers will outweigh integration and cost risks.

Strong Full-Year Financial Performance in 2025

Huntington reported a standout year for 2025, with revenue up 11% and adjusted earnings per share rising 16%. The bank delivered 290 basis points of positive operating leverage, underscoring its ability to grow revenues faster than expenses, a key metric watched by investors. Tangible book value per share climbed 19% year over year, reflecting both earnings power and disciplined capital management. Management framed these results as evidence that the franchise is scaling effectively while still investing for growth.

Robust Loan Growth, Led by Organic Production

Loan growth was a central theme, with Huntington showcasing both organic strength and acquired portfolios. Average loans rose $10.9 billion year over year, an 8.6% increase. Excluding Veritex, underlying average loan growth was a robust 14.4%. In 2025, the bank generated $10.1 billion in organic loan growth, outpacing the $9.5 billion contribution from Veritex. This balance between acquisition-fueled expansion and organic momentum suggests that Huntington is not relying solely on deals to grow its balance sheet.

Deposit Growth and Funding Discipline

On the funding front, Huntington reported healthy deposit trends and disciplined pricing. Average deposits grew 5.1% sequentially and 8.6% year over year, supporting loan growth without excessive reliance on higher-cost funding. Core end-of-period deposits excluding Veritex increased $5.5 billion, or 3.4%, over the year. Management highlighted a 35% cycle-to-date down beta and a 40% down beta in the final two weeks of the fourth quarter after the Federal Reserve rate cut, signaling the bank’s ability to reprice deposits downward as rates fall—an important lever for protecting margins.

Net Interest Income and Margin Momentum

Net interest income (NII) showed clear momentum, increasing $86 million sequentially in the quarter, up 5.6%, and more than 14% year over year. The net interest margin (NIM) reached 3.15% in the fourth quarter, ticking up 2 basis points from the prior quarter. This improvement reflects both the loan growth profile and effective management of funding costs. Management’s tone suggested continued confidence that margin can expand further as integration benefits and pricing discipline play through, though they acknowledged that the rate backdrop and competitive environment remain key swing factors.

Fee Income Strength and Strategic Fee Engines

Fee income emerged as a clear bright spot, with broad-based growth across business lines. Payments revenue rose 5% year over year, commercial payments grew 8%, and wealth management revenue increased 10%, or 16% when adjusted for a prior divestiture. Loan and deposit fees were particularly strong, climbing more than 20%. Looking ahead, management expects fee revenue to grow 13%–16% in 2026 and is modeling Cadence to add roughly $300 million of fee income. The call underscored fee businesses as an increasingly important earnings driver, helping diversify revenue away from pure interest spread income.

Successful Integration of Veritex and Progress on Cadence Synergies

Integration execution was a major focus, with management emphasizing how quickly Veritex has been brought into the fold. The Veritex conversion was completed in 187 days, and targeted cost synergies are already being realized, with the full run-rate expected by the second quarter. For Cadence, product and data mapping are underway and systems migration is targeted for midyear. Cost synergies from Cadence are expected to start accruing immediately after conversion and reach full run-rate by the fourth quarter, with about 75% of the total Cadence synergies realized in 2026. Management’s narrative positioned integration as a core competency and a key underpinning for future earnings leverage.

Solid Credit Metrics with Conservative Outlook

Credit quality remained a support for the story. Net charge-offs were low at 24 basis points, and the nonperforming asset ratio stood at 63 basis points. For 2026, the bank guided net charge-offs to a range of 25–35 basis points, while indicating that actual results are likely to be toward the lower end. This guidance, coupled with current asset quality, suggested that management sees no broad-based deterioration in the portfolio despite macro uncertainty and integration of new loan books.

Capital Generation and Shareholder Returns

Huntington continued to strengthen its capital position while returning a meaningful portion of earnings to shareholders. Adjusted CET1 increased over the year, and management aims to operate around the midpoint of a 9%–10% CET1 range. Tangible book value’s 19% year-over-year rise highlighted the bank’s underlying profitability and balance sheet discipline. The company returned 40% of earnings through dividends and signaled plans to add about $50 million per quarter in share repurchases after the Cadence acquisition closes. This balanced capital strategy suggests room for both growth and incremental shareholder returns.

Expense Base Growth and Guidance Complexity

Rising expenses and guidance complexity were acknowledged as key near-term challenges. Core baseline expenses were $4.871 billion, and for 2026 the bank expects core expenses to grow 10%–11% year over year when including Veritex. Cadence is projected to add roughly $1.1 billion to the expense base, which complicates visibility around exit run-rate and reinvestment levels. Management stressed that underlying Huntington expense growth is only in the mid-single digits, but the layering of acquired cost structures and synergies in transition may continue to create confusion among analysts trying to model the combined entity.

Uncertain Timing of Revenue Synergies

While cost synergies are being tracked and quantified, management was transparent that revenue synergies are largely not baked into the 2026 outlook. The company expects revenue benefits from partnerships and cross-selling to accelerate later in 2026 and into 2027, but the near-term contribution is modest and harder to forecast. That leaves some upside to current estimates, but also introduces uncertainty about how quickly the revenue potential of Veritex and Cadence will be realized in the income statement.

Rise in Criticized Assets Driven by Acquired CRE

Asset quality discussion included a notable rise in criticized assets, primarily tied to commercial real estate exposures acquired through Veritex. The criticized asset ratio climbed to 4.2%, with management pointing to these CRE loans as a concentration that warrants careful monitoring. While these assets were identified and vetted during diligence, investors will likely keep a close eye on whether this criticized pool stabilizes or develops into a more material credit issue, particularly against a backdrop of broader CRE concerns across the banking sector.

Pressure in Select Loan Segments

Despite overall strong loan growth, some specific portfolios saw pressure in the quarter. Equipment leasing balances declined by about $200 million, residential real estate loans were down a similar amount, and there was a seasonal decline of roughly $100 million in RV and marine lending. Management appeared to view these as manageable and, in some cases, seasonal or mix-related, but they underscore that not all categories are moving in lockstep and that growth is being led by other segments of the book.

Modest Purchase Accounting Accretion from Veritex

The final rate marks and loan-level accretion schedule for Veritex resulted in a modest reduction in expected Purchase Accounting Accretion, or PAA, and only modest accretion to tangible book value once one-time costs are excluded. This means investors should not expect outsized, one-off accounting benefits from the Veritex deal. Instead, the value of the transaction will come more from ongoing earnings contributions and synergy capture than from short-lived accounting uplift.

Competitive Deposit Environment and Beta Management

Management emphasized that the deposit market remains competitive, even as rate cuts begin to filter through the system. While Huntington achieved a 40% down beta in the latter part of the fourth quarter, sustaining favorable betas amid potential further Fed cuts is a strategic risk. How quickly and how much deposit costs can fall will be critical for NII and NIM progression. The call suggested that the bank is actively managing this trade-off between defending relationships and preserving margin as the rate cycle evolves.

Forward-Looking Guidance and Outlook for 2026

For 2026, Huntington provided detailed guidance that points to continued growth and operating leverage. On a stand-alone basis, the bank expects net interest income to rise 10%–13%, supported by loan growth of 11%–12% and deposit growth of 8%–9%, along with further net interest margin expansion. Purchase Accounting Accretion is projected to add roughly 7–10 basis points to NIM. Cadence is expected to contribute about $1.0–$1.85 billion of NII, including PAA, and approximately $300 million in fee revenue, helping drive total fee income growth of 13%–16%. Core expenses are forecast to increase 10%–11%, with underlying Huntington expense growth in the mid-single digits and 150–200 basis points of positive operating leverage overall. Veritex cost synergies should be fully reflected by the second quarter, and Cadence synergies by the fourth quarter, with around three-quarters of Cadence cost savings realized in 2026. Credit guidance calls for net charge-offs of 25–35 basis points, likely leaning toward the low end, an effective tax rate of 19%–20%, and an average fully diluted share count near 2.02 billion. Management anticipates loans outpacing deposits in the first quarter, followed by deposits tracking loan growth thereafter, and expects cash and securities to remain around 25% of assets, all while moving adjusted CET1 toward the midpoint of the 9%–10% target range and resuming share repurchases after the Cadence close.

In sum, Huntington Bancshares delivered a confident earnings call that balanced strong recent performance with a candid acknowledgment of integration and expense uncertainties. The bank is posting double-digit growth in revenue, EPS, and key balance sheet metrics, while keeping credit losses low and building capital. Yet the expansion comes with a materially larger expense base, higher criticized assets from acquired CRE, and a competitive deposit landscape that will test management’s execution. For investors, the story hinges on Huntington’s ability to convert its integration track record, loan and fee growth, and synergy plans into sustained, high-quality earnings as 2026 and 2027 unfold.