Detailed Narrative
Strategic Investments and Growth
Huntington continued to invest for long-term growth, hiring hundreds of bankers, expanding capabilities, and accelerating branch expansion plans in North and South Carolina. These investments are driving leading deposit and loan growth and contributing to expanded fee revenue in payments, wealth, and capital markets, positioning the company for outperformance. The company expects to add 1 to 2 new verticals every year, building on the success of new initiatives like the Financial Institutions Group and Aerospace and Defense.
Risk Management and Credit Quality
The company maintains an aggregate moderate-to-low risk appetite, resulting in consistent top-quartile credit performance for net charge-offs and an allowance for loan losses well above the peer median. Proactive management of a well-balanced and granular loan portfolio, with no outsized concentrations, provides confidence in the company's foundation. Management emphasizes active outreach to customers to address potential challenges and leverages data, including Generative AI, for continuous portfolio review.
Deposit Strategy and Performance
Huntington's deposit strategy focuses on acquiring and deepening primary bank relationships, leading to 3% growth in consumer and 4% in Business Banking primary relationships year-over-year. The company successfully lowered its overall cost of deposits by 13 basis points to 2.03% in Q1, outperforming expectations due to disciplined pricing and effective management of CD mix and duration. This included retaining a large majority of expiring CD customers at approximately 100 basis points lower rates.
Net Interest Margin Expansion and Hedging
Net interest margin increased by 7 basis points sequentially to 3.10%, driven primarily by strong deposit pricing performance and a 4 basis point benefit from the hedging program. Management expects NIM to remain relatively stable around 3.07% for the next three quarters of 2025 before rising in 2026. The company added $4 billion in floor spreads to its down rate risk hedges in Q1, maintaining a near-neutral asset sensitivity posture for the remainder of the year.
Capital Management and Shareholder Returns
Adjusted CET1 grew by 20 basis points to 8.9%, moving towards the 9% to 10% operating range. The Board approved a $1 billion multiyear share repurchase authorization, providing flexibility for capital deployment, though repurchases in 2025 are expected to be modest. The company's capital allocation strategy prioritizes high-return loan growth, followed by dividends, and then other uses including buybacks.