Huntington Bancshares (HBAN): Veritex Deal, Loan Acceleration and the Profitability Test

Opening: Deal and Guidance Change Force a Reassessment#

Huntington Bancshares announced an all-stock acquisition of Veritex valued at roughly $1.9 billion, while raising full-year targets for loan growth to 6%–8% and net interest income (NII) growth to 8%–9%. Those two developments — a material M&A step into Texas and an upward revision to core net-interest guidance — create a sharp contrast: management is committing capital and people to accelerate growth at the same time it is promising to preserve margins and capital ratios. That tension is the defining investment question for HBAN today: can Huntington convert a fast-expanding loan book and a bolt-on acquisition into sustainable profitability without prolonged tangible-book-value (TBV) dilution or credit slippage?

Financial performance: growth, margins and the earnings quality check#

Huntington’s consolidated FY2024 results show revenue of $11.96 billion and net income of $1.94 billion, reflecting a YoY revenue increase of +10.96% from $10.78 billion in 2023 and a small net income decline of -0.56% versus the prior year (2023: $1.95 billion). These headline moves mask divergent trends: revenue and net interest income expansion have driven top-line momentum, while operating expenses and a shifting mix of interest-earning assets have compressed some operating ratios compared with the outsized margins recorded in the immediate post‑pandemic period. Huntington’s FY2024 operating income of $2.40 billion implies an operating margin of ~20.07%, and the FY2024 net margin is ~16.22% — stable, but below the peak margins the bank recorded in 2022 when core net yields and noninterest income patterns offered a more favorable mix.

A closer look at trends demonstrates the source of the mixed picture. Net interest income expansion — reflected in the company raising NII guidance into the high single digits for the year — has been the primary driver of revenue growth, while fee income and other noninterest sources have played a complementary role. At the same time, Huntington’s cash-flow profile and free-cash-flow generation remain healthy: FY2024 free cash flow was $1.67 billion, while net cash provided by operating activities totaled $1.81 billion. Those cash-flow metrics indicate earnings are, to an important degree, backed by operating cash rather than pure accounting accruals, but the acceleration in investing outflows in 2024 requires explanation and monitoring.

For reference and verification, FY2024 consolidated figures are taken from Huntington’s FY financial statements (filed 2025-02-14). Short-term Q2 2025 operational metrics cited later in this report (loan growth, NIM and quarter EPS) are derived from the company’s Q2 disclosures summarized in market commentary and press coverage following the quarter.Zacks

Income-statement trend table (2021–2024)#

These figures show a clear expansion in absolute revenue as Huntington rebuilt and re-priced its asset base after 2021–2022, but also reveal compression in operating and net margins from the elevated levels recorded in 2022. The margin compression primarily reflects a different mix of interest-earning assets, elevated operating expenses tied to strategic initiatives, and heavier investment in growth channels.

Balance sheet and liquidity: scale increased, capital ratios remain a focus#

Huntington’s balance sheet expanded through FY2024 to $204.23 billion in total assets, up from $189.37 billion at year-end 2023 — a +7.85% increase. Cash and cash equivalents rose meaningfully to $13.33 billion at year-end 2024 (2023: $10.32 billion), reflecting the bank’s larger investment and liquidity positioning. Total stockholders’ equity was $19.74 billion, implying an equity-to-assets ratio of ~9.66% and an FY2024 return-on-assets (ROA) of approximately 0.95% (net income divided by average assets using year-end totals). Independently computed FY2024 return-on-equity (ROE) using year-end totals yields ~9.83% (1.94B / 19.74B), a touch below the TTM ROE metrics shown in some market summaries, reflecting timing differences between calendar-year earnings and rolling‑period denominators.

Investors should pay attention to two balance-sheet dynamics. First, total debt increased to $16.57 billion in 2024 from $13.01 billion in 2023, raising leverage metrics modestly; second, Huntington’s net-debt position remained manageable with reported net debt of $3.24 billion. Importantly, the bank’s 2024 investing activities show a swing to net cash used in investing of -$12.12 billion (versus -$3.00 billion in 2023), a change driven largely by incremental purchases of securities and short-term investments to manage interest-rate exposure and liquidity. That shift is consistent with a bank managing duration and preparing to support loan growth and deposit funding strategies, but it also consumed free cash flow in the year.

Balance-sheet trend table (2021–2024)#

The trend confirms Huntington has been growing assets and rebalancing liquidity while maintaining a shareholder-equity base that has risen in absolute terms. What matters going forward is the quality of asset growth — loan composition, credit underwriting and deposit stability — particularly as the bank integrates Veritex’s franchise.

The Veritex acquisition: rationale, structure and immediate financial implications#

In July 2025 Huntington agreed to buy Veritex in an all-stock transaction valued at approximately $1.9 billion via an exchange ratio of 1.95 HBAN shares per Veritex share (reported market equivalent ~$33.91 per Veritex share on the pricing date). Veritex brings approximately $13 billion in assets, $9 billion in loans and $11 billion in deposits, and about 30 branches concentrated in Dallas–Fort Worth and Houston. The strategic rationale is straightforward: the deal buys immediate deposit scale and local commercial relationships in two of the fastest-growing Texas metros, accelerating Huntington’s market entry and cross-sell runway without the slower path of pure organic branch and team buildout.

Management has communicated that the transaction is expected to be modestly accretive to earnings and neutral to regulatory capital at close, while causing a slight initial dilution to tangible book value per share that management believes will be recovered quickly — management has publicly referenced a payback period on the order of roughly one year driven by deposit funding savings and revenue synergies. The all-stock structure preserves Huntington’s cash and limits immediate leverage pressure, but it transfers some dilution risk to existing shareholders and places a premium on rapid integration and cross-sell execution.

There are material execution and regulatory risks embedded in the storyline. Industry reporting flagged investigatory attention to the deal process and pricing — a factor that could extend review timelines and delay the realization of synergies. Even if regulators approve, the near-term impact on TBV and the mechanical earnings accretion depend on loan-deposit mix migration, retention of core commercial relationships, and the pace of technology and product integration.

Capital-allocation implications and cash-flow dynamics#

Huntington’s capital allocation in 2024 shows a continued commitment to dividends and selective buybacks: dividends paid totaled $1.05 billion in FY2024, and common-stock repurchases were $410 million. The dividend per share of $0.62 yields ~3.48% on the current price of $17.80, a metric consistent with the bank’s stated payout philosophy and the data in the dividend history through 2025. The buyback cadence moderated versus prior years, and the Veritex all-stock structure further suggests management is prioritizing growth and balance-sheet flexibility over large cash repurchases in the near term.

From an investor perspective, the critical capital-allocation question is whether the expected return on the Veritex deployment will exceed the company’s cost of capital and the dilution implicit in the share exchange. Management’s one-year payback claim is ambitious but not impossible given the deposit base and immediate commercial relationships; realization of that payback depends heavily on cross-sell rates and retention of Veritex deposit balances at pre-close pricing assumptions. Huntington’s FY2024 net cash used in investing (-$12.12 billion) also indicates the bank is actively managing liquidity and securities positions, which affects available retained cash for future acquisitions or buybacks.

Profitability trajectory and operating leverage#

Huntington’s operating margins have compressed from the elevated levels of 2022 as the bank scales revenue and reinvests in growth initiatives. FY2024 operating income of $2.40 billion and net income of $1.94 billion produced an operating margin of ~20.07% and net margin of ~16.22%. The company’s FY-to-FY revenue acceleration (+10.96%) shows that the top line is growing faster than near-term net income, an expected pattern when investing in growth and when noninterest costs step up to support sales and origination activity.

Importantly, the bank has signaled that operating leverage remains intact: management expects revenue growth (driven by NII expansion and loan growth) to outpace expense increases even as incentive compensation and integration costs push near-term expense guidance to 5%–6% for full-year 2025. Sustained operating-leverage improvement will be the single most important metric to watch; if adjusted EPS continues to outpace GAAP EPS over time due to genuine revenue mix improvements rather than one-time accounting items, the strategic case strengthens materially.

Credit quality, provisioning and risk profile#

Public data for FY2024 and Q2 2025 emphasize stable credit metrics and disciplined underwriting even as loan balances accelerate. Huntington reported modest provisioning and continues to highlight selective origination in commercial and specialty verticals. However, rapid geographic expansion — particularly into Texas through Veritex — and faster loan-growth targets introduce underwriting and concentration risks that deserve active monitoring. Key indicators to watch include nonperforming assets, allowance for credit losses relative to loans, and vintage performance of new originations in higher-yielding specialty segments such as auto and fund finance.

Additionally, the timing and outcome of regulatory reviews related to the Veritex transaction are a source of short-term uncertainty. Any delay or request for remedies could push the close beyond management’s targeted early-Q4 timeline and temporarily mute the near-term accretion thesis. Management asserts the deal was structured to be neutral to regulatory capital at close; nonetheless, regulatory process outcomes can influence integration timing and near-term earnings.

Competitive positioning and strategic context#

Huntington’s strategy blends organic growth (loan origination in C&I, auto and specialty lending) with targeted geographic expansion via M&A. The Veritex transaction materially improves the bank’s presence in Texas, creating scale in Dallas–Fort Worth and Houston and a ready deposit base to support commercial lending. Huntington’s stated advantage is the combination of local commercial relationships with centralized product platforms and digital capabilities; if the bank can successfully cross-sell treasury, payments and fee-based services into Veritex relationships, the incremental revenue per deposit-dollar could be meaningful.

That said, the Texas commercial-banking market is fiercely competitive, with well-capitalized local and national players. Huntington will be entering crowded markets where customer switching costs, local relationships and speed-to-market matter. Execution on local leadership continuity (management has retained senior Veritex leaders for the market role) and on digital platform integration will determine whether Huntington captures a disproportionate share of the opportunity or simply buys scale at modest margins.

Key takeaways and what this means for investors#

Huntington’s path over the next 12–18 months is clear in strategic intent: accelerate core loan growth, use a targeted acquisition to enter a high-growth market, and manage expenses and capital to protect profitability. The company’s FY2024 financials show growing revenue, solid free cash flow, and reasonable leverage — but also margin compression versus 2022 peaks and a need to prove that new investment and M&A drive sustainable operating leverage.

The Veritex deal is the most consequential near-term variable. It delivers deposit depth and commercial relationships that can materially shorten market-entry timelines in Texas, and management projects quick payback and modest accretion. Execution risk and regulatory review timelines are the main contingencies; if integration delivers cross-sell and deposit-stability outcomes close to management’s plan, the acquisition supports the bank’s raised loan and NII guidance and helps protect ROTCE. Conversely, slower integration, customer attrition or regulatory concessions would postpone TBV recovery and raise the cost of the acquisition.

Operationally, the metrics to watch are quarterly loan growth (composition and vintage performance), net interest margin stability as new loans reprice, adjusted EPS progression relative to GAAP EPS, and credit metrics (nonperforming assets and allowance coverage) as new originations season. From a capital-allocation lens, the interplay between dividend policy, opportunistic repurchases and M&A appetite will reveal management’s priorities for shareholder return versus franchise growth.

Conclusion: a growth tilt with execution-dependent payoff#

Huntington has shifted from steady organic growth to a more assertive growth posture. The combination of raised loan/NII guidance and the $1.9 billion Veritex acquisition changes the investment calculus: upside now depends materially on integration execution, deposit retention and the bank’s ability to convert a larger loan base into demonstrable operating leverage without sacrificing credit quality. The balance-sheet expansion, robust free-cash-flow generation and a sustained dividend provide a foundation, but the next several quarters will determine whether Huntington’s strategic repositioning translates into durable profit expansion or into a longer recovery of tangible book value.

Management commentary, FY2024 filings (filed 2025-02-14), and market coverage of Q2 2025 results and the Veritex transaction form the factual basis for the figures and forward implications in this report.Zacks

What this means for institutional and sophisticated investors is simple: the bank is now a play on execution (integration and credit) as much as it is on interest-rate dynamics and loan growth. Monitor quarterly loan composition, NIM trends, adjusted EPS progression and regulatory developments around the transaction — those will decide if Huntington’s stepped-up growth strategy is value-accretive in practice or merely promising on paper.