Huntington Bancshares Inc Q1 2025 Earnings Call Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Erika Najarian - UBS - Analyst : My first question is for Zach. The net interest margin clearly came in higher than expectations. Sort of just wanted to unpack what you said. Should we think about flat net interest margin trends relative to the 3.10%, or should we take out the interest recoveries? And as we contemplate what you've said in the past and obviously the usual 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?

Question: Erika Najarian - UBS - Analyst : And my second question, if I may, is for Steve. I thought the $1 billion 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 best-in-class because, to your point, REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 17, 2025 / 3:00PM, HBAN.OQ - Q1 2025 Huntington Bancshares Inc Earnings Call you were able to zig when everyone else was zagging given your superior capital and risk management in '23. So is that just really a message of if tariff uncertainty continues to hit the banking sector, you wanted flexibility to support your stock because you see inherent higher value? I'm just trying to -- not to put words in your mouth, but in the over a decade that I've covered you, you've never been a huge fan of buybacks. So I just wanted to get your thought process on that. Stephen Steinour - Huntington Bancshares Inc - Chairman of the Board, President, Chief Executive Officer of Huntington and President and CEO of Huntington Bank Thank you, Erika. Since you've covered us a bit before, we've had a consistent approach to capital allocation for us to grow. 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 expect a buyback of it this year, and we've got a multi-year opportunity. And so depending on the economic situation, we're prepared now to do buybacks and expect that we will on some modest basis this year and then continuing as we go forward.

Question: John Pancari - Evercore ISI - Analyst : On the deposit cost progress in the quarter, definitely better than expected. Can you maybe give us a little bit of color on what -- where you're seeing that success? Is it tied in to the new efforts on the certain product side? Or is it programs that you've been pushing through and across the pricing programs across the product. Just if you could help us kind of in a better picture around the success on that front versus the competitive backdrop?

Question: John Pancari - Evercore ISI - Analyst : And then on loan growth, you indicated that the new initiatives 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? I mean, there's questions out there like you've got to 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 there are new businesses? And I know the margins have been competitive because of your funding dynamics. But how about the new loan yields? Is there any way to help us think about what yields these new papers coming on at.

Question: Ebrahim Poonawala - Bank of America Securities - Analyst : Just maybe one question is, you had 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? Did things start off extremely strong, and then March and maybe in 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. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 17, 2025 / 3:00PM, HBAN.OQ - Q1 2025 Huntington Bancshares Inc Earnings Call Stephen Steinour - Huntington Bancshares Inc - Chairman of the Board, President, Chief Executive Officer of Huntington and President and CEO of Huntington Bank We actually announced it at year-end. We have a very strong pipeline coming into the first quarter. And we also had activity that didn't close in the fourth quarter that's billed 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 had been deferred just a modest amount that, and it's largely equipment finance and tariff-related issues or concerns. But as you know, at 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 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, and we usually have a very strong fourth quarter.

Question: Manan Gosalia - Morgan Stanley - Analyst : Steve, can you expand on what you're hearing on the ground from clients since April 2? What is the sentiment? What are they telling you? And what actions are they taking in this environment? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 17, 2025 / 3:00PM, HBAN.OQ - Q1 2025 Huntington Bancshares Inc Earnings Call Stephen Steinour - Huntington Bancshares Inc - Chairman of the Board, President, Chief Executive Officer of Huntington and President and CEO of Huntington Bank There's a wide range of issues, if you will, to talk about in this regard. I'll try to do it in a summary fashion. We have customers that are not reliant on imports or exports. If anything, they feel more bullish because there's less potential less competition, certainly, that's 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 if you'll recall the auto dealers did very, very well, some of their best years in a COVID environment where they had more margin on due and used as well. So there are pockets of real strength here. There are other areas, large distribution finance, for example, where there's some import restriction being developed through tariffs, and that utilization has dropped off a bit. I mentioned equipment finance, where some of what we finance gets imported and decisions to defer have been made. But again, a broad spectrum, there are winners not just losers. I think the headlines suggest well everybody is impacted and in a negative way, that is not the case. There are a number of businesses that are going to do very well. And as you know, we have a very broadly diversified portfolio. So we'll have those that are going to be winners and some others that will be temporarily impacted.

Question: Jon Arfstrom - RBC Capital Markets - Analyst : Echo that on Tim, nice job. Thanks for everything. Steve, where are you the most focused right now in terms of risk management? You have obviously a strong record historically in risk. But what are you telling your teams to kind of double and triple check at this point? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 17, 2025 / 3:00PM, HBAN.OQ - Q1 2025 Huntington Bancshares Inc Earnings Call Stephen Steinour - Huntington Bancshares Inc - Chairman of the Board, President, Chief Executive Officer of Huntington and President and CEO of Huntington Bank Well, thanks for the question. My -- most of my career early on was in risk and credit risk specifically. So 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 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. 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. And 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 inquiry and review.

Question: David Long - Raymond James - Analyst : I understand that the credit market -- the credit metrics for you guys look real good right now. But specifically, what is the -- what has the uncertain backdrop impact been on your quantitative CECL model and overall reserve levels?

Question: David Long - Raymond James - Analyst : Got it. Second thing that I wanted to ask about was, what does 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 - Huntington Bancshares Inc - Chairman of the Board, President, Chief Executive Officer of Huntington and President and CEO of Huntington Bank As we announced 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. And I think it was last September, we announced we were planning to open 55 branches over five years in Carolinas. It looks like that will be closer to three, so that's a bit of acceleration, three years. 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 preexisting and the newer aspects of it.

Question: Matt O'Connor - Deutsche Bank - Analyst : I wanted to ask a question regarding slide 62, the criticized commercial loans. You guys are one of the few that give all this detail. And the credit overall is quite strong, but always looking for kind of early indicators of the inflection. And when I look at the upgrades to past, and the paydowns, they were both down a decent amount. I'm just wondering if you guys also view that as kind of like are early indicator of some short reflection? Or is it just a matter of seasonality, timing and things going to get so good? Or just elaborate on that chart because I thought it was pretty interesting. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 17, 2025 / 3:00PM, HBAN.OQ - Q1 2025 Huntington Bancshares Inc Earnings Call