Huntington Earnings: Strong Loan Growth and NII Guidance Upgraded, but Expense Outlook Also Higher

Key Morningstar Metrics for Huntington Bancshares

• Fair Value Estimate: $14.90
• Morningstar Rating: ★★
• Morningstar Economic Moat Rating: None
• Morningstar Uncertainty Rating: Medium

What We Thought of Huntington Bancshares’ Earnings

Huntington Bancshares HBAN posted slightly disappointing second-quarter results, with earnings per share of $0.34, up 15% from a year ago. Expenses increased 7% from a year ago. The stock was trading down around 2% on July 18 after the release.

Why it matters: We think the market is disappointed by the bank’s outsized expense growth this quarter. On a core basis, Huntington is executing well on its organic expansion and expanding its loan book faster than regional peers. The bank increased its 2025 net interest income guidance by 2.5% at the midpoint.

• Huntington grew average loans by about 8% year over year, which demonstrates successful organic growth that’s resisting pressure in the current lending environment. Management upgraded its 2025 average loan growth guidance to 6%-8% from 5%-7%.
• The 7% expense growth was mostly driven by higher incentive-related compensation, with total personnel expense 5% higher from a year ago. The bank now expects 2025 expenses to grow at 5%-6%, 1.5 percentage points higher than prior guidance at the midpoint.

The bottom line: We plan to increase our $14.90 fair value estimate for no-moat-rated Huntington by a low-to-mid-single-digit percentage as we incorporate second-quarter results and updated guidance. We assess the shares as slightly overvalued.

• We plan to incorporate stronger loan growth in 2025 and better net interest income than we previously expected into our updated model. This will be partially offset by higher expenses in 2025.

Coming up: The acquisition of Veritex, planned for the fourth quarter, should bolster Huntington’s expansion efforts in Texas, particularly in the commercial middle market. This acquisition is much smaller than the previous FirstMerit and TCF deals.

• From our initial analysis, we believe the deal is somewhat expensive. We think the upside will be mostly from revenue synergies, which are generally harder to realize than cost synergies.