# Huntington Bancshares (HBAN) Financial Model Free Excel 3-statement financial model and company analysis for Huntington Bancshares. - Canonical: https://finamodel.com/companies/huntington-bancshares - Industry: Banking - Downloadable model: Yes - Excel download: https://finamodel.com/company-models/HBAN.xlsx ## Model Purpose This model provides a comprehensive equity valuation and forecasting tool for an equity research analyst covering Huntington Bancshares, focusing on net interest margin trajectory, loan growth, and the financial integration of the recent Veritex Holdings acquisition. ## Company Overview Huntington Bancshares Incorporated (HBAN) is a diversified regional bank holding company headquartered in Columbus, Ohio, providing commercial, consumer, and mortgage banking services. The company operates primarily through two main business segments: Consumer & Regional Banking and Commercial Banking. The business model is asset heavy, relying on gathering low cost deposits to fund commercial and consumer lending while generating fee income through wealth management and capital markets activities. Huntington holds a strong competitive position in the Midwest and is the nation's leading originator of Small Business Administration (SBA) loans by volume. A major recent event is the acquisition of Dallas based Veritex Holdings, which closed in January 2026, significantly expanding Huntington's footprint into the high growth Texas market and transforming it into a super regional bank. ## Revenue Deep Dive 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. ## Cost Structure ### Variable Costs / Interest Expense - **Line by line breakdown:** Interest on deposits, interest on short term borrowings, and interest on long term debt. - **Margin Range:** Net Interest Margin (NIM) typically ranges from 2.90% to 3.30%. In Q4 2025, NIM was 3.15%. - **Key Input Costs:** The Federal Funds rate and competitive pressure for retail deposits. ### Operating Expenses (Noninterest Expense) - **Personnel Costs:** The largest expense, covering salaries, benefits, and stock based compensation. - **Outside Data Processing and Equipment:** Costs for core banking systems and digital banking platforms. - **FDIC Assessment Fees:** Regulatory costs based on the bank's risk profile and asset base. - **Amortisation of Intangibles:** Significant due to historical M&A (TCF Financial, Veritex). - **Restructuring / One time charges:** Frequent due to M&A. Q4 2025 included $130 million in pre tax notable items primarily related to acquisition expenses. ### Margin Profile - **Efficiency Ratio:** Noninterest Expense divided by Total Revenue. Historically ranges from 58% to 64%. Q4 2025 saw an elevated efficiency ratio of 64.2% due to acquisition costs. - **Margin Trend:** NIM expanded in late 2025 due to optimized funding costs, while the efficiency ratio spiked temporarily due to integration expenses. ## Balance Sheet Structure - **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. ## Capital Expenditure & Investment - **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. ## Debt & Capital Structure - **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. ## Cash Flow Characteristics - **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. ## Sheet Structure 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. ## Key Financial Relationships 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)" ## Cross-Sheet Dependencies - 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. ## Sign Convention - 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. ## Things Most Likely to Go Wrong - "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." ## Validation Checks - "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." ## Key Assumptions (Default Values) | Assumption | Default Value | Unit | Rationale | |---|---|---|---| | Commercial Loan Growth | 8.0 | % | Reflects organic growth plus Veritex integration in Texas. | | Consumer Loan Growth | 2.0 | % | Slower growth expected in auto and mortgage lending. | | Net Interest Margin (NIM) | 3.15 | % | Based on Q4 2025 actual reported NIM. | | Noninterest Income Growth | 4.0 | % | Aligns with recent historical growth rates. | | Efficiency Ratio | 61.0 | % | Normalizing from Q4 2025 spike (64.2%) as integration costs fade. | | Net Charge Off (NCO) Ratio | 0.25 | % | Based on Q4 2025 actuals (0.24%) with slight normalization. | | ACL to Total Loans | 1.83 | % | Held flat to Q4 2025 actual reserve levels. | | Effective Tax Rate | 19.0 | % | Lower than statutory 21% due to tax advantaged investments. | | Target CET1 Ratio | 10.0 | % | Management target, slightly below Q4 2025 actual of 10.4%. | | Dividend Payout Ratio | 45.0 | % | Midpoint of historical management target range. | | Cost of Equity (Ke) | 10.0 | % | Standard assumption for regional bank valuation. | | Terminal ROTCE | 15.0 | % | Long term profitability assumption for residual income model. | ## Data Sources & Benchmarks - **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. ## Sources - 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 --- ## Frequently asked questions ### What kind of bank is Huntington Bancshares (HBAN)? Huntington Bancshares Incorporated (HBAN) is a diversified regional bank holding company headquartered in Columbus, Ohio. It provides commercial, consumer, and mortgage banking services primarily through its Consumer & Regional Banking and Commercial Banking segments, holding a strong competitive position in the Midwest. ### How does Huntington Bancshares (HBAN) generate its revenue? Huntington Bancshares generates revenue through two primary streams: Net Interest Income (NII) and Noninterest Income. NII is driven by average earning assets and net interest margin, while Noninterest Income includes fees from wealth and asset management, deposit services, and capital markets activities. ### What is the assumed Capital Expenditure as a percentage of revenue for Huntington Bancshares in a financial model? The financial model for Huntington Bancshares assumes Capital Expenditure (Capex) as a percentage of revenue is approximately 14.66%. This capex is heavily skewed toward technology growth, digital banking enhancements, and optimizing the branch network rather than traditional property and equipment. ### What are important considerations for valuing Huntington Bancshares (HBAN)? Key considerations for valuing Huntington Bancshares include its net interest margin trajectory, loan growth, and the financial integration of recent acquisitions like Veritex Holdings. The company's asset-heavy business model, reliance on low-cost deposits, and liquidity ratios are also crucial for a comprehensive valuation. ### Can I download an Excel financial model for Huntington Bancshares (HBAN)? Yes, an Excel financial model for Huntington Bancshares is available for download, providing a comprehensive equity valuation and forecasting tool. This model covers a forecast horizon from FY2026 to FY2030, focusing on key banking metrics and assumptions. ### How has the Veritex Holdings acquisition impacted Huntington Bancshares (HBAN)? The acquisition of Veritex Holdings, which closed in January 2026, significantly expanded Huntington's footprint into the high-growth Texas market. This strategic move transformed Huntington into a super regional bank and increased its total assets to approximately $225 billion post-acquisition. [Interactive forecast calculator](https://finamodel.com/companies/huntington-bancshares/forecast)