Huntington Bancshares Inc Q2 2025 Earnings Call Transcript

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

Question: Jon Arfstrom - RBC Capital Markets Inc - Analyst : Thanks. Good morning. Zach, a question for you on the new net interest income guidance range. It feels like you have enough momentum to hit the higher end of that range, but curious, in your mind, what you see as the threats to hitting that higher end.

Question: Jon Arfstrom - RBC Capital Markets Inc - Analyst : Okay. Thank you on that. And then, Steve or Brant, can you give us some of the feedback you've heard, maybe pro and con, from internal and external partners on the Veritex acquisition announcement? I think some expected you to be acquisitive; others did not, given the core momentum. But just curious what kind of feedback -- it may be positive or negative -- that you've received. Thank you.

Question: Erika Najarian - UBS AG - Analyst : Yes. My first question is for Zach. Zach, it seems like we're observing -- excuse me -- differentiation in deposit trends this quarter among regional banks. And I guess the question I have is, given your loan growth, it was notable that deposit costs -- interest-bearing deposit costs went down 2 basis points. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 18, 2025 / 1:00PM, HBAN.OQ - Q2 2025 Huntington Bancshares Inc Earnings Call I guess maybe talk a little bit about the competition (technical difficulty) seeing against perhaps some of the organic growth initiatives that I'm guessing are helping and how we should think about deposit growth and deposit cost trends, again, like in absence of any rate cuts and what beta you could see if the Fed does cut.

Question: Erika Najarian - UBS AG - Analyst : Thank you. And my second question would be for Steve and Brant. I think Jon asked about the feedback from the community and investors, and I'm wondering sort of what the feedback was from the lenders. I think Steve had a really good quote on Monday about a Texas bank for Texas businesses or something like that. And I guess I'm wondering how the Veritex lender embraced Huntington coming from out of state so to speak. And also, you've mentioned that as you make impacts in the community, you started getting inbound inquiries. And I guess I'm also wondering as a follow-up to that if that deal sort of also started maybe some inbound inquiries with other Texas teams. Brant Standridge - Huntington Bancshares Inc - Senior Executive Vice President, President - Consumer and Regional Banking Erika, I'll start, and Steve may add to that. First of all, as Steve mentioned, we were there the last two days, and we had a chance to meet with many of the Veritex colleagues. I will say that the general reaction from that group is excitement. Having Huntington will bring more capabilities to the table. They have a great customer base that they've established deep relationships with, and now there's a view that potentially they can do quite a bit more for those customers. There's also been quite a bit of customer outreach on the part of the Veritex colleagues. And from the customers, there's a view that there will be more opportunity to expand a larger balance sheet, more capabilities. There's also a level of excitement around our local structure. This is an organization that's obviously been headquartered in Texas, and now with our regional structure and regional Presidents in Texas, Malcolm as the Chairman of our Texas organization, that creates a level of comfort, a level of sense that that team will own the success of our Texas business. And I think there's a great deal of optimism as to what the collective team and what we can do in this partnership together to really expand there in Texas. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 18, 2025 / 1:00PM, HBAN.OQ - Q2 2025 Huntington Bancshares Inc Earnings Call

Question: Manan Gosalia - Morgan Stanley & Co Ltd - Analyst : Hi. Good morning. Zach, I was wondering if you can unpack the change in the expense guide. I think you mentioned incentive compensation being higher and that's, I guess, fair given the better top line. But if NII reaches the higher end of your guidance range, is it fair to assume that expenses will reach the higher end too?

Question: Manan Gosalia - Morgan Stanley & Co Ltd - Analyst : Got it. And then, secondly, on loan growth, to maybe nitpick on what is a good story. The growth from the new initiatives slowed this quarter. Is it getting more competitive as some of your peers ramp up? Is it just the base effect, or maybe I'm just reading too much into a one-quarter number? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 18, 2025 / 1:00PM, HBAN.OQ - Q2 2025 Huntington Bancshares Inc Earnings Call

Question: Ebrahim Poonawala - Bofa Merrill Lynch Asset Holdings Inc - Analyst : Good morning. Maybe I guess, given all the Texas focus, maybe I was wondering if you or Brant could spend some time on just -- give us a mark to market on Carolinas in terms of the buildout. Are we still looking to hire new bankers, kind of the timeline of new branch openings? Yeah, just would love to know how all of that is gaining traction and outlook there. Brant Standridge - Huntington Bancshares Inc - Senior Executive Vice President, President - Consumer and Regional Banking Ebrahim, it is a very good question. We remain incredibly optimistic about Texas, North Carolina, and South Carolina. In fact, as you know, if you look at the performance of those markets from an economic perspective, those combined are outpacing the rest of the country in job growth and population growth by almost 2x. And so we're going to continue to invest in both. We continue to look for really strong bankers to support what we're doing in North and South Carolina, and we feel good about where we are today. We are continuing to build out our branch network. We opened two already. We have several more opening between now and the end of the year. And next year will be our big year for that. We'll have more than 20 open next year. So we continue to invest there. Obviously, we've talked a lot about Texas this weekend and the investment. And this will create a springboard for potentially more.

Question: Ken Usdin Usdin - Autonomous US - Analyst : Hey. Good morning. Just a quick question on the NII for the 3Q; it's stable. So we've [got a day back], and then there's a lot of balance sheet momentum. Just wondering what's driving the flat potential result for the third quarter and why that could -- why it wouldn't be better. What's the negative as an offset?

Question: Ken Usdin Usdin - Autonomous US - Analyst : Okay. And then just one on the fees and similar, you mentioned towards the low end but with capital markets, a bit of a flex factor. Can you just talk about the growth drivers that you're seeing on the fee side aside from the plus or the minus around capital markets? Thanks.

Question: Peter Winter - D.A. Davidson & Co - Analyst : Good Morning. I realize you guys are focused on generating top-quartile profitability, and you have very strong ROTCE, and you had strong positive operating leverage this quarter, but how are you thinking about the efficiency ratio over the medium term? It has been stable the past five quarters,

Question: Peter Winter - D.A. Davidson & Co - Analyst : Got it. Thanks, Steve. And then if I could ask, credit is strong, but there was a $76 million increase in non-performing assets on the C&I side. I was just wondering what drove the increase and if you could just talk about how criticized loans are tracking this quarter?

Question: Christopher McGratty - Keefe Bruyette & Woods Inc - Analyst : Great. Good morning. Thanks for the question. Zach, on the operating leverage, I think in your prepared remarks, you talked about you're getting more than you thought at the beginning of the year. I'm interested; does this narrative get easier, harder, about the same as you kind of go into next year?

Question: Christopher McGratty - Keefe Bruyette & Woods Inc - Analyst : Great. And as my follow-up, I'm interested in just deposit pricing differences in your legacy and new markets, trying to think about funding the growth initiatives, the 60-40 that you're kind of running with now, is there notable differences in your Midwest markets versus your Southeast?

Question: Matt O'Connor - Deutsche Bank Securities Inc. - Analyst : Good morning. Just want to ask about the targeted capital levels kind of more medium term. You've got to the low end of your range, including AOCI. I know you just got not buy back stock until the deal closes. But how do you think more medium term, whether it's the lower end or the higher end of that 9% to 10% -- you screen real well in CCAR. There's positive drivers there for others this past cycle. So how do you feel good about yours going forward? There's maybe some relief from the rating agencies. So how do you think about that 9% to 10% in light of all that? Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 18, 2025 / 1:00PM, HBAN.OQ - Q2 2025 Huntington Bancshares Inc Earnings Call