Huntington Bancshares (HII) Q3 2025: Veritex Acquisition to Lift NIM by 3bps, Accelerating Texas Expansion

October 30, 2025 | By EarningsIQ Research

Huntington Bancshares delivered robust growth across loans, deposits, and fee income, with disciplined risk management and operating leverage setting the stage for further expansion. The imminent Veritex combination is positioned as a springboard for Texas growth and incremental margin gains, while management’s confidence is underpinned by strong pipelines and credit quality. Guidance was raised across revenue, NIM, and fee lines, with management signaling sustained momentum into 2026 and beyond.

Summary

• Texas Entry Catalyzes Growth: Veritex integration delivers immediate scale and margin lift, enabling full franchise rollout in key Texas markets.
• Operating Leverage Drives Efficiency: Expense discipline and revenue outperformance expand positive operating leverage beyond original targets.
• Fee Income Momentum Builds: Payments, wealth, and capital markets growth outpaces peers, fueling diversified revenue streams.

Performance Analysis

Huntington Bancshares posted broad-based growth in Q3 2025, with average loan balances up 2% sequentially and deposits rising 1%. The core franchise and expansion markets both contributed, with commercial lending, regional banking, and auto leading the way. Notably, new initiatives accounted for 40% of total loan growth, reflecting the impact of geographic and vertical expansion. Deposit gathering outpaced peers, aided by disciplined pricing and primary relationship focus, with cost of deposits declining even as balances grew.

Fee income was a standout, up 14% year over year, led by double-digit gains in payments, wealth management, and capital markets. Payments revenues jumped 20% in commercial segments, while wealth fees and assets under management both delivered low double-digit growth. Capital markets surged 21%, with advisory and syndications driving backlog and future visibility. Operating leverage reached over 250 basis points, well above the initial 1% target, as expense management and revenue growth combined to drive profitability. Tangible book value increased 10% year over year, and capital ratios improved, supporting both dividend yield and the resumption of systematic share repurchases.

• Loan Growth Engine: New initiatives and core businesses delivered $2.8B in average loan growth, with Texas and Carolinas leading expansion.
• Deposit Cost Discipline: Deposit costs declined by 2bps, reflecting granular pricing and primary account strategy amid a competitive market.
• Fee Income Diversification: Payments, wealth, and capital markets collectively grew 13% YoY, reinforcing non-interest income momentum.

Margin expansion was underpinned by both asset yield improvement and funding cost management, with NIM rising 2bps sequentially and further gains expected from Veritex accretion. Credit quality remained strong, with net charge-offs at 22bps and stable forward metrics, supporting management’s bullish outlook on risk-adjusted growth.

Executive Commentary

Strategic Positioning

1. Texas Scale and Veritex Integration

The Veritex acquisition, closing imminently, will make Huntington the fifth largest bank in Dallas and fourteenth in Texas, leapfrogging most regional peers. Management expects immediate scale benefits, one percentage point efficiency improvement, and a 30bps lift to return on tangible common equity (ROTCE). The integration plan is built on leveraging Veritex’s local relationships to deploy Huntington’s full consumer, small business, and digital suite, while layering in fee-generating capabilities like payments and wealth management. Branch build-out in Dallas, Fort Worth, and Houston will continue, with commercial banking expansion across Texas as a central pillar.

2. Operating Leverage and Investment Recycling

Huntington’s model centers on systematic cost reduction in baseline expenses (targeting 1% annually) and reinvesting those savings into growth levers such as technology, marketing, and talent. This approach has delivered over 250bps of positive operating leverage in 2025, with management guiding for at least 100 to 200bps annually going forward. The ability to fund growth without margin compression is a core competitive advantage, especially as investments in expansion markets and new verticals ramp up.

3. Fee-Based Revenue Acceleration

Payments, wealth management, and capital markets are now significant contributors to non-interest income, growing faster than the overall bank. Payments delivered 10% growth, with commercial payments up 20%, while wealth management grew 12% and capital markets 21%. Advisory and syndication backlogs signal continued strength, and the build-out of leveraged finance and private equity is set to add incremental upside. This diversification reduces reliance on spread income and positions Huntington to outperform across cycles.

4. Risk Management and Credit Discipline

Management emphasized 15 years of moderate to low aggregate risk appetite, with tight client selection and active portfolio management. The NDFI (non-depository financial institution) portfolio is less than 2% of total loans (excluding REITs and subscription lines), and recent sector issues were avoided due to a relationship-first approach. Credit metrics remain pristine, and leadership expects continued outperformance even in a more volatile macro environment.

5. Capital Allocation and Shareholder Returns

Capital priorities remain funding high-return loan growth and supporting a strong dividend. With CET1 ratios improving, management will resume systematic share buybacks (targeting $50M per quarter through 2026), with flexibility to increase activity if shares are undervalued. Over 45% of earnings have been returned via dividends, and tangible book value per share growth is targeted in the high single to low double digits.

Key Considerations

This quarter’s results reflect a business firing on all cylinders, with organic growth, disciplined risk, and strategic M&A combining to drive both near-term and long-term value creation. The following considerations are central to the investment thesis:

Key Considerations:

• Veritex Integration Execution: Seamless onboarding and synergy realization in Texas will be critical to achieving the projected margin and growth benefits.
• Fee Income Sustainability: Continued double-digit growth in payments, wealth, and capital markets is essential for maintaining revenue diversification and offsetting rate cycle headwinds.
• Deposit Cost Management: Primary relationship focus and granular pricing discipline must persist as competition for funding remains intense.
• Expense Control and Investment Balance: Ongoing ability to extract baseline costs and redeploy into growth initiatives underpins positive operating leverage targets.
• Credit Quality Vigilance: Active portfolio management and conservative risk appetite are vital as industry credit concerns rise, despite Huntington’s current clean book.

Risks

Key risks include integration missteps with Veritex, which could dilute the anticipated efficiency and margin gains if not executed as planned. Competitive intensity in expansion markets (Texas, Carolinas) may pressure growth if local incumbents and national banks defend share more aggressively. Credit normalization remains a sector-wide concern, though management’s long-term risk discipline provides a buffer. Macro volatility and regulatory changes could also impact funding costs and capital deployment strategies.

Forward Outlook

For Q4 2025, Huntington guided to:

• Standalone NIM up 1-2bps sequentially, plus 2-3bps from Veritex accretion
• Loan and deposit growth at the high end of prior guidance ranges

For full-year 2025, management raised guidance:

• Net interest income growth to 10-11% (from 8-9%)
• Fee income growth to 7% (from 4-6%)
• Expense growth at 6.5%, with positive operating leverage over 250bps

Management highlighted several factors that support the outlook:

• Strong loan pipelines and momentum in both core and expansion markets
• Robust fee business backlogs and continued investment in growth levers

Takeaways

Huntington’s Q3 performance underscores a scalable, diversified growth model, with the Veritex acquisition poised to accelerate both margin and franchise expansion in Texas. The bank’s ability to deliver positive operating leverage while investing heavily in growth is a distinct advantage, and fee income momentum adds resilience to the earnings base.

• Strategic Expansion: Veritex is a catalyst for Huntington’s Texas ambitions, with immediate scale and synergistic revenue opportunities across consumer and commercial lines.
• Margin and Efficiency: NIM expansion is underpinned by asset repricing and funding discipline, while expense control and investment recycling drive sustainable operating leverage.
• Growth Watch: Investors should monitor integration progress, fee income trajectory, and credit quality as key signals for sustained outperformance into 2026 and beyond.

Conclusion

Huntington Bancshares enters the final quarter of 2025 with strong momentum, leveraging disciplined growth, diversified fee streams, and strategic M&A to strengthen its franchise. The Veritex integration and ongoing investment in core and expansion markets position the bank for continued value creation, provided execution and risk management remain sharp.

Industry Read-Through

Huntington’s results reinforce a broader trend among high-performing regionals: disciplined risk management, cost efficiency, and targeted M&A are key differentiators in a competitive and volatile landscape. The ability to drive fee-based revenue growth in payments, wealth, and capital markets is increasingly critical as spread income faces cyclical headwinds. Texas and Southeast market expansion remains a battleground for regional banks, with scale and local relationships determining success. Peers should note the importance of granular deposit pricing and primary relationship capture, as funding cost management will remain a core challenge across the sector.

HII Financials Banking Texas Expansion Fee Income Operating Leverage Risk Management