Huntington Bancshares Financial Model

Huntington generates revenue through two primary streams rather than traditional product sales:

Net Interest Income (NII)

• Segment/Line Item: Net Interest Income (reported on a Fully Taxable Equivalent or FTE basis).
• Revenue Driver Formula: Average Earning Assets x Net Interest Margin (NIM).
• Historical Growth Rate: Highly cyclical, driven by Federal Reserve interest rate policy and loan demand. NII grew 14% year over year in Q4 2025 due to organic growth and the Veritex acquisition.
• Key Growth Levers and Headwinds: Loan volume growth (especially commercial and industrial loans), deposit beta (how fast deposit costs rise relative to benchmark rates), and the yield curve shape.
• Pricing Dynamics: Floating rate commercial loans reprice quickly, while fixed rate consumer loans and mortgages lag.
• Seasonality: Generally not highly seasonal, though day count in a quarter slightly impacts interest accruals.

Noninterest Income

• Segment/Line Item: Noninterest Income (includes wealth and asset management revenue, service charges on deposit accounts, card and payment processing income, and capital markets fees).
• Revenue Driver Formula: Assets Under Management x Fee Rate (for wealth), Transaction Volume x Fee per Transaction (for payments).
• Historical Growth Rate: 3% to 5% historically, with Q4 2025 showing a 4% year over year increase.
• Key Growth Levers and Headwinds: Equity market performance (drives AUM fees), consumer spending volumes, and regulatory pressure on overdraft and non sufficient funds fees.
• Revenue Recognition Notes: Recognized as services are performed or transactions are executed.

• Total Assets: Approximately $225 billion post Veritex acquisition.
• Key Asset Categories: Loans and Leases (the largest component, split between commercial and consumer), Investment Securities (available for sale and held to maturity), and Cash.
• Allowance for Credit Losses (ACL): A contra asset account representing expected lifetime credit losses. Stood at $2.7 billion or 1.83% of total loans at the end of 2025.
• Goodwill & Intangibles: Material percentage of assets due to the TCF and Veritex acquisitions.
• Working Capital Profile: Not applicable for banks. Banks manage liquidity ratios (e.g., Loan to Deposit ratio) rather than traditional working capital.
• PP&E: Minimal relative to total assets; consists mainly of branch real estate and corporate offices.

• Capex as % of Revenue: Minimal (typically 1% to 2%), focused on capitalized software, digital banking enhancements, and branch network optimization.
• Maintenance vs. Growth: Heavily skewed toward technology growth and digital transformation.
• M&A Pattern: Transformational and bolt on acquirer. Acquired TCF Financial in 2021 and Veritex Holdings in 2026.
• Typical Acquisition Multiple: Usually 1.5x to 2.0x tangible book value, paid primarily in stock.

• Capital Ratios: Common Equity Tier 1 (CET1) ratio was 10.4% at the end of 2025.
• Total Debt: Includes senior notes, subordinated debt, and Federal Home Loan Bank (FHLB) advances.
• Credit Rating: Investment grade (typically BBB+ to A- range depending on the agency).
• Maturity Profile: Laddered maturities for wholesale borrowings to manage refinancing risk.
• Interest Rate Profile: A mix of fixed rate debt and floating rate advances, managed via interest rate swaps.
• Share Repurchase Programme: Active but paused or moderated around major acquisitions.
• Dividend Policy: Strong dividend payer with a yield around 3.5% to 4.0% and a target payout ratio of 40% to 50% of earnings.

• Operating Cash Flow: Not a meaningful metric for banks. Cash flows are driven by deposit gathering and loan origination.
• Free Cash Flow: Replaced by "Free Cash Flow to Equity" or residual income in bank modelling, defined as Net Income minus the capital required to fund asset growth and maintain regulatory capital ratios.
• Major Non Cash Items: Provision for credit losses, depreciation, and amortization of intangibles.
• Cash Tax Rate: Often lower than the statutory 21% rate due to investments in low income housing tax credits and tax exempt municipal securities.

1. Assumptions: Hardcoded drivers for macroeconomic variables, interest rates, loan growth, deposit growth, and margin assumptions.
2. Summary & Scenarios: Dashboard showing EPS, Return on Tangible Common Equity (ROTCE), CET1 ratio, and toggle for base/bull/bear cases.
3. Average Balance Sheet: Tracks average balances for Earning Assets (Commercial Loans, Consumer Loans, Securities) and Interest Bearing Liabilities (Deposits, Borrowings). Calculates FTE yields and costs.
4. Income Statement: Projects Net Interest Income (using outputs from the Average Balance Sheet), Noninterest Income, Noninterest Expense, and Net Income.
5. Credit & Asset Quality: Models Net Charge Offs (NCOs), the Allowance for Credit Losses (ACL), and calculates the Provision for Credit Losses.
6. Period End Balance Sheet: Reconciles ending balances for all asset, liability, and equity accounts.
7. Capital & RWA: Calculates Risk Weighted Assets (RWA) and regulatory capital ratios (CET1, Tier 1 Capital) to determine excess capital available for dividends and buybacks.
8. Valuation: Dividend Discount Model (DDM) and Residual Income model based on projected dividend payouts and terminal ROTCE.

1. "Net Interest Income = (Average Earning Assets x Earning Asset Yield) - (Average Interest Bearing Liabilities x Cost of Funds)"
2. "Net Interest Margin (NIM) = Net Interest Income / Average Earning Assets"
3. "Provision for Credit Losses = Net Charge Offs + (Ending ACL - Beginning ACL)"
4. "Ending ACL = Ending Total Loans x Target ACL Percentage"
5. "Efficiency Ratio = Noninterest Expense / (Net Interest Income + Noninterest Income)"
6. "Return on Average Assets (ROAA) = Net Income / Average Total Assets"
7. "Return on Tangible Common Equity (ROTCE) = (Net Income - Preferred Dividends - Intangible Amortization) / Average Tangible Common Equity"
8. "Tangible Common Equity = Total Equity - Preferred Stock - Goodwill - Intangible Assets"
9. "CET1 Capital = Tangible Common Equity + Qualifying Adjustments (e.g., CECL phase in)"
10. "CET1 Ratio = CET1 Capital / Risk Weighted Assets"
11. "Risk Weighted Assets = Total Assets x Average Risk Weighting Percentage"
12. "Dividends Paid = Net Income - (Target CET1 Capital - Beginning CET1 Capital)"

• The Average Balance Sheet is the foundational sheet; it feeds the Income Statement to calculate Net Interest Income.
• The Credit & Asset Quality sheet calculates the Provision for Credit Losses, which flows into the Income Statement as an expense.
• Net Income from the Income Statement flows into the Period End Balance Sheet (Retained Earnings) and the Capital & RWA sheet.
• The Capital & RWA sheet determines how much capital is required to support loan growth. Any excess capital flows to the Valuation sheet as distributable dividends.
• Circularity risk exists if share repurchases are modeled to reduce equity, which increases the need for retained earnings, altering the share count and EPS. This should be broken using a circuit breaker toggle.

• Assets are positive.
• Liabilities and Equity are positive.
• Revenue (NII and Noninterest Income) is positive.
• Expenses (Noninterest Expense, Provision for Credit Losses, Taxes) are positive and subtracted in total income formulas.
• Net Charge Offs are positive.
• Dividends and Share Repurchases are positive numbers subtracted from Retained Earnings.

• "Failing to adjust Net Interest Income to a Fully Taxable Equivalent (FTE) basis will cause a mismatch with reported NIM figures; the model must gross up tax exempt income."
• "The Veritex acquisition closed in January 2026; historical data prior to Q1 2026 will not be comparable, requiring pro forma adjustments for loan and deposit base growth."
• "Provision for Credit Losses is not the same as Net Charge Offs; the model must calculate the change in the ACL reserve to accurately project the income statement provision."
• "Using a standard DCF for a bank is incorrect; the builder must use a Dividend Discount Model (DDM) or Residual Income model driven by regulatory capital constraints."
• "Deposit beta assumptions are critical; if the model assumes deposit costs fall as fast as the Fed Funds rate, it will artificially inflate NIM."
• "Goodwill and intangibles from the Veritex deal will depress GAAP ROE; the model must calculate ROTCE (Return on Tangible Common Equity) as the primary profitability metric."
• "The efficiency ratio calculation must exclude amortization of intangibles to match management's 'adjusted' reporting metrics."
• "Average balances differ from period end balances; interest income must be calculated on average balances, not period end balances."

• "NIM should remain in the 2.90% to 3.30% range based on historical performance; flag if outside this band."
• "Efficiency ratio should normalize to 58% to 62%; flag if it remains above 65% post integration."
• "CET1 ratio must remain above the regulatory minimum plus management buffer (target > 9.5%); flag if it drops below 9.0%."
• "ACL as a percentage of total loans should remain between 1.50% and 2.00% (currently 1.83%)."
• "Net Charge Offs should run between 0.15% and 0.35% of average loans in a base case scenario."
• "Balance sheet must balance: Total Assets = Total Liabilities + Equity in every period."
• "Dividend payout ratio should remain within the 40% to 50% target range."

• Filings: SEC EDGAR (Form 10-K, 10-Q), Huntington Investor Relations website for quarterly financial supplements and slide decks.
• Key Peers: Fifth Third Bancorp (FITB), KeyCorp (KEY), Citizens Financial Group (CFG), Regions Financial (RF).
• Industry Data: FDIC Quarterly Banking Profile, Federal Reserve H.8 data (Assets and Liabilities of Commercial Banks).
• Consensus Estimates: FactSet or Bloomberg for EPS and NIM consensus.

• Huntington Bancshares Q4 2025 Earnings Release and Financial Supplement (January 22, 2026)
• Huntington Bancshares 2024 Annual Report on Form 10-K
• Huntington Bancshares Q3 2025 Earnings Release
• Smartkarma Analysis on HBAN Q4 2025 Earnings
• Simply Wall St Analysis on HBAN Margins
• Trading Economics HBAN Financial Summary