The paragraph introduces the Huntington Bancshares Incorporated First Quarter 2025 Earnings Conference Call. Tim Sedabres, Director of Investor Relations, starts the call by informing participants that the call is being recorded and that slides are available on their website. Presenters include Stephen Steinour, Chairman, President, and CEO, and Zach Wasserman, CFO, with Brendan Lawlor, Chief Credit Officer joining for the Q&A. Stephen Steinour then begins by highlighting the company's exceptional results for the first quarter and discusses the company's strategy and confidence in navigating economic uncertainty and market volatility, drawing on his extensive experience in banking.

The paragraph highlights Huntington Bancshares Incorporated's strong financial strategy and performance. Despite economic uncertainties, the company has maintained a moderate to low-risk appetite, leading to consistent top quartile credit performance and a robust allowance for loan losses. They focus on diversification and careful selection of business and geographic areas, resulting in a balanced loan portfolio. While others withdrew in 2023, Huntington invested in long-term growth by acquiring new customers and hiring talent. Their efforts have sustained momentum into the first quarter, with strong loan and deposit growth, and expanded fee revenue areas.

In the first quarter, the business exceeded its performance expectations, driven by revenue and profit growth aligned with its strategic goals. The company achieved this through increased earning asset growth, net interest margin expansion, and disciplined expense management. Credit performance was strong, with proactive loan portfolio management. Average loans grew by almost $9 billion, and deposits increased by nearly $11 billion year over year, with a focus on primary bank relationships. Fee income rose over 6%, supported by payments, wealth, and capital markets. The company continues to invest in talent and expansion, with new initiatives in capital markets and branch expansion in North and South Carolina.

The paragraph discusses the financial performance and strategic actions of Huntington Bancshares Incorporated. The company has improved its capital levels, with an adjusted CET1 ratio of 8.9% and a $1 billion share repurchase authorization approved by the board. The company achieved 10% year-over-year revenue growth and a 24% increase in pre-provision net revenue (PPNR), with earnings per share reported at $0.34. Loan and deposit balances rose from the previous quarter, and the CET1 ratio increased to 10.6%. Tangible book value per share grew by over 13% year over year, while the allowance for credit losses stood at 1.87%. The management and board, being top ten shareholders, are aligned with investor goals to drive long-term value. Strong credit performance was demonstrated with net charge-offs at 26 basis points.

The paragraph reports on the company's financial performance, highlighting steady growth in loan balances for the sixth consecutive quarter, primarily driven by commercial loans and new initiatives. Year-over-year loan growth was 7.3%, with new initiatives contributing $1.3 billion, half of the total growth. Existing businesses added $1.4 billion, despite a $261 million decline in commercial real estate balances. Deposits grew by $2.2 billion, with a reduced overall cost of deposits to 2.03%. Additionally, net interest income rose by $31 million during the quarter, marking a 2.2% increase, with net interest margin improving to 3.1%.

The article discusses the financial performance of a company over the past quarter, highlighting a rise in interest margin attributed to higher spreads, reduced hedging program drag, and interest recoveries, with a significant contribution from deposit beta performance. It outlines the company’s stable cash and securities levels, increased investment in treasuries (now 20% of the portfolio), and adjustments to the hedging program to balance interest rate risks. Additionally, the company achieved a 6% increase in non-interest income, driven by growth in payments, wealth management, and capital markets, despite the first quarter typically being a low period for fee revenues. Payments showed a 6% year-over-year growth during this quarter.

The paragraph outlines the financial performance and strategic initiatives of Huntington Bancshares Incorporated. Key highlights include a 15% increase in commercial payment revenues and a 10% growth in treasury management fees. Wealth management fees increased by 15%, with a noted 6% rise in assets under management and a 11% rise in Wealth Advisory households. Capital markets saw a 20% growth, supported by commercial loan activities. Non-interest expenses dropped by $26 million due to lower incentive and compensation costs. The company's capital management strategy focuses on loan growth, with plans for a $1 billion share repurchase program approved by the Board. Credit quality remains strong, with a slight decrease in net charge-offs and allowance for credit losses.

The paragraph discusses the financial performance and outlook of a business, highlighting strong loan portfolio growth, credit performance, and a decrease in non-performing asset ratio. For 2025, there is more economic uncertainty, but the company remains prepared with dynamic strategies. The business showed strong performance in Q1, and momentum is expected to continue into Q2. The full-year guidance anticipates loan growth of 5% to 7%, deposit growth of 3% to 5%, and increased net interest income by 5% to 7%. Fee revenues and expenses are expected to align with prior growth ranges, while net charge-offs are projected to be between 25 and 35 basis points.

In the second quarter, the company anticipates a 1-2% growth in average loans, with deposit growth aimed at self-funding these loans. Net interest income and fee revenues are expected to modestly increase, with expenses projected at approximately $1.17 billion due to annual merit impacts and revenue-driven compensation. Net charge-offs are expected within the full-year range. The company emphasizes its strong, diversified franchise, robust risk management, and superior performance in stressed environments. Their organic growth outpaces peers and supports revenue and profit growth. Tim Sedabres will transition to a new role in finance, leading the corporate forecasting and profitability team, as they welcome a new Head of Investor Relations soon.

In the paragraph, Tim Sedabres hands over to the operator for a Q&A session, with the guideline that each person should ask one question and a related follow-up, and can rejoin the queue for further questions. The first question, from Erika Najarian of UBS, is directed at Zach Wasserman regarding the higher-than-expected net interest margin. She asks whether they should consider a flat net interest margin trend relative to the 3.10, factoring in interest recoveries, and apply this thought process for the rest of the year. Zach responds by explaining that the first quarter's outperformance was largely due to effective deposit pricing management by his team, achieving a cumulative deposit beta of 37% in the first quarter, exceeding their expectations.

The paragraph discusses a notable improvement in performance, with the current run rate being approximately 3.07. This figure is expected to remain stable for the next three quarters, indicating a potentially positive future in rising Net Interest Margins (NIMs) by 2026. Erika Najarian questions Steve about a $1 billion buyback authorization, highlighting the company's strong business momentum and superior capital and risk management. She inquires whether the buyback strategy is to maintain stock flexibility amidst potential tariff uncertainties, noting Steve's historical hesitation towards buybacks.

In the paragraph, Stephen Steinour discusses the company's consistent approach to capital allocation, prioritizing growth, dividends, and share buybacks. He indicates they are prepared for modest buybacks this year and foresee a multiyear opportunity for it, depending on economic conditions. The conversation then shifts to John Pancari from Evercore ISI, who asks Zach Wasserman about the success in managing deposit costs, which exceeded expectations. Wasserman attributes the success to the company's consistent down beta strategy, including reducing and shortening the duration of CDs within the funding base, allowing for better execution and performance amidst the competitive landscape.

The paragraph discusses strategies related to deposits and pricing, noting that the company has successfully retained customers by offering lower rates on expiring CDs, contributing to reduced deposit costs. They are focusing on acquiring deposits through money markets instead of time deposits, allowing flexibility in managing interest rate fluctuations. The company has segmented its approach to deposit pricing by region, industry, and business size, adjusting prices to remain competitive. Additionally, there are efforts to selectively reduce pricing in certain segments. The team has exceeded initial plans for managing deposit costs and volumes, achieving growth and maintaining a strong deposit franchise. John Pancari acknowledges this success and shifts the topic to loan growth, noting new initiatives generating about half of the loan growth for the quarter.

In the paragraph, Zach Wasserman discusses the consistent yields of new loans, which align with their overall production yields. He emphasizes that the bank is not using aggressive pricing strategies to win market share. Instead, their success is attributed to the expertise and relationships of experienced bankers and industry specialists in the Carolinas and Texas. He highlights the profitability in these regions and assures no degradation in returns despite accelerated loan growth. John Pancari concludes by thanking Zach and wishing Tim good luck in his new role.

In the paragraph, Ebrahim Poonawala from Bank of America asks about the performance of a company during its first quarter, noting its success compared to peers and inquiring about any potential economic weaknesses affecting it. Stephen Steinour responds, explaining that the company started the year with a strong pipeline, benefiting from activities spilling over from the previous quarter. Each month of the quarter was strong, with only minor deferrals mainly related to equipment finance and tariff issues. Steinour is optimistic about the second quarter, expecting it to be similarly strong unless unforeseen issues arise. He mentions that some deferred activities might occur in the latter half of the year and that they typically experience a strong fourth quarter. Poonawala also queries if the recent talent acquisition contributed to growth through new business from incoming bankers.

Stephen Steinour highlights the strong performance and tenure of new colleagues at Huntington Bancshares, particularly in North and South Carolina, emphasizing their importance in the company's overall success. He notes that traditional business lines and commercial real estate are stabilizing and seeing modest growth, aligning with expectations shared at a recent Investor Day. The company's plan remains unchanged, and they are committed to executing it. In response to Manan Gosalia's question about client sentiment since April second, Steinour mentions a variety of client perspectives. Some clients not reliant on imports or exports feel more optimistic due to reduced competition and tariff activity.

The paragraph discusses the impact of the USMCA on trade between Canada and Mexico, noting that some areas like auto dealerships have thrived even during COVID, while others like large distribution and finance face challenges due to import restrictions and tariffs. Despite headlines suggesting widespread negative impacts, many businesses are doing well, and the speaker's company has a diversified portfolio with both winners and temporarily impacted businesses. The company has seen strong loan growth this quarter and, while cautious about further growth, maintains a moderate to low-risk appetite. They plan to generate new business consistently while being conservative with loan growth projections for the latter half of the year.

The paragraph is a portion of a financial earnings call where Stephen Steinour discusses the organization's approach to risk management. He emphasizes the importance of diligent portfolio management and their commitment to supporting customers, both consumers and businesses, by being proactive and receptive to potential challenges they may face. There's an active effort on gathering fresh data and utilizing generative AI to enhance their inquiry and review processes. Jon Arfstrom acknowledges this approach positively and also asks Zach about the guidance on non-interest income for modest sequential growth.

In the article paragraph, Zach Wasserman addresses a question about the modest year-over-year growth rates, particularly focusing on capital markets. He notes that there's an 11% growth in key fee areas like payments, wealth management, and capital markets, which aligns with Investor Day discussions. As for Q2, he expects higher growth, partly dependent on equity market levels affecting management income and capital markets. Wasserman highlights that two-thirds of their capital markets business is tied to commercial loan production, which is anticipated to grow and positively influence capital markets activities. Risk management and loan syndication activities are expected to strengthen, while mergers and acquisitions (M&A) advisory is sensitive to economic uncertainty. Despite delays in deal-making in Q1, the M&A pipeline still looks promising, according to their advisers.

The paragraph is a discussion among financial professionals regarding company performance and market conditions. Zach Wasserman expresses optimism about the quality of companies involved and anticipates growth, despite potential timing issues with transactions closing either before or after the quarter ends. Wasserman highlights the importance of mergers and acquisitions and capital markets in determining the company's success within a 4% to 6% fee guidance range. Brendan Lawlor responds to David Long's question about how uncertain economic conditions impact their quantitative CECL model and reserve levels, mentioning they use multiple scenarios and collaborate with Moody's to assess the economic environment. Overall, the team seems confident about strategic execution and the potential for a strong capital market year.

The paragraph discusses the process of using different scenarios, including baseline, positive, and downside, to conduct quantitative modeling, with a focus on maintaining strong reserve coverage. Stephen Steinour mentions the consistency and conservative nature of stress credit risk management over the past fifteen years, particularly in the consumer book, and expresses confidence in the company's credit foundation and future performance. In response to David Long's question, Steinour also mentions plans to expand in the Carolinas and Texas, as well as add one to two new verticals each year, following announcements made during an Investor Day.

The paragraph features a conversation during a financial discussion where Stephen Steinour and David Long talk about a plan to accelerate the opening of new branches in the Carolinas from five years to three years, along with expanding capabilities in other markets like Chicago. Despite economic uncertainties, they are committed to executing their growth plans, having contingent plans in place. Matt O'Connor from Deutsche Bank then asks about details on criticized commercial loans, noting that while the overall status is strong, there's a decrease in loan upgrades and pay downs, which he implies might be early indicators of potential issues.

The paragraph involves a discussion between Brendan Lawlor, Stephen Steinour, and Matt O'Connor about financial metrics reflecting their business's performance. Brendan explains that certain transactions slated to close at the end of March were delayed into April, affecting their quarterly results, which showed an 8% increase in a specific metric. He indicates that this delay caused some of the anticipated improvements to shift into the next month's numbers, attributing it primarily to timing rather than underlying issues. Stephen adds that despite a substantial decline over the past year, they haven't yet reached a plateau but are confident in managing potential losses. They regularly review their top fifty transactions and maintain a modest loss expectation. Matt finds this explanation helpful, and the conversation then moves to the next question by Ben from Ken's team.

In the paragraph, Zach Wasserman discusses the bank's hedging strategy in response to interest rate changes. He explains that they have been intentionally reducing asset sensitivity as interest rates peak and are now maintaining a neutral position due to uncertainty about future rate trajectories. This neutral stance is expected to continue through the end of the year, with potential changes in asset sensitivity anticipated by 2026. The bank aims to maintain a stable net interest margin (NIM) close to the 3.07% rate achieved in the first quarter for the remainder of the year. This strategy is dynamic and subject to monthly review but is currently seen as optimal amidst rate volatility.

The paragraph discusses anticipated changes in hedge basis points (bps) moving into 2025. In the fourth quarter two quarters ago, there was an eight basis point drag from hedging, which reduced to four basis points in the first quarter of this year. It is expected to reach a neutral position by mid-year, with the possibility of regaining all four basis points in the second quarter or into the third quarter, depending on Federal Reserve actions. The hedge is projected to be approximately neutral by the end of the current year, followed by a potential four basis point drag in the fourth quarter of 2025, forming a U-shaped trajectory. By 2026, the drag is expected to remain flat or even decrease slightly. Stephen Steinour concludes the session with closing remarks.

The paragraph highlights Huntington Bancshares Incorporated's continued success in loan and deposit growth, expressing confidence in their strategy and management team's ability to handle various economic conditions. They emphasize being well-positioned for future challenges and thank their nearly twenty thousand employees for their contributions to the company's performance. The section concludes the conference call.

This summary was generated with AI and may contain some inaccuracies.