HUNTINGTON BANCSHARES INC /MD/

Overview

Our business segments are based on our internally aligned segment leadership structure, which is how management monitors results and assesses performance. We have two business segments: Consumer & Regional Banking and Commercial Banking. All other items not included within our two business segments are reported within the Treasury / Other function, which primarily includes technology and operations and other unallocated assets, liabilities, revenue, and expense.

Business segment results are determined based on our management practices, which assign balance sheet and income statement items to each of the business segments. The process is designed around our organizational and management structure and, accordingly, the results derived are not necessarily comparable with similar information published by other financial institutions.

Revenue Sharing

Revenue is recorded in the business segment responsible for the related product or service. Fee sharing is recorded to allocate portions of such revenue to other business segments involved in selling to or providing service to customers. Results of operations for the business segments reflect these fee-sharing allocations.

Expense Allocation

The management process that develops the business segment reporting utilizes various estimates and allocation methodologies to measure the performance of the business segments. Expenses are allocated to business segments using a two-phase approach. The first phase consists of measuring and assigning unit costs (activity-based costs) to activities related to product origination and servicing. These activity-based costs are then extended, based on volumes, with the resulting amount allocated to business segments that own the related products. The second phase consists of the allocation of overhead costs to the business segments from Treasury / Other. We utilize a full-allocation methodology, where all Treasury / Other expenses, except reported acquisition-related expenses, if any, and a small amount of other residual unallocated expenses, are allocated to the business segments.

Funds Transfer Pricing (FTP)

We use an active and centralized FTP methodology to attribute appropriate net interest income to the business segments. The intent of the FTP methodology is to transfer interest rate risk from the business segments by providing modeled duration funding of assets and liabilities. The result is to centralize the financial impact, management, and reporting of interest rate risk in the Treasury / Other function where it can be centrally monitored and managed. The Treasury / Other function charges (credits) an internal cost of funds for assets held in (or pays for funding provided by) each business segment. The FTP rate is based on prevailing market interest rates for comparable duration assets (or liabilities). The primary components of the FTP rate include a base (market) rate, a liquidity premium, contingent liquidity and collateral charges, and option cost.

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Net Income (Loss) by Business Segment

Net income (loss) for our business segments and Treasury/Other function for the past three years is presented in the following table.

Consumer & Regional Banking

Consumer & Regional Banking reported net income of $1.5 billion in 2025, a decrease of $50 million, or 3%, compared to the year-ago period. Segment net interest income increased $57 million, or 1%, primarily due to a $5.2 billion, or 8%, increase in average loans and leases, which includes the loans acquired in the Veritex acquisition. The provision for credit losses increased $25 million, or 9%, driven by a combination of current year loan and lease growth and increased charge-off activity. Noninterest income increased $123 million, or 9%, mostly due to increased wealth and asset management revenue, payments and cash management revenue due to increased merchant acquiring and card transaction revenue, and a gain on the sale of a portion of the trust and custody business that also reduced total trust assets. Noninterest expense increased $219 million, or 7%, primarily due to the allocation of higher indirect expenses in addition to higher direct personnel costs.

2025 Form 10-K 91

Commercial Banking

Commercial Banking reported net income of $1.1 billion in 2025, a decrease of $28 million, or 2%, compared to the year-ago period. Segment net interest income increased $27 million, or 1%, driven by a $6.9 billion, or 13%, increase in average loans and leases, which includes the loans acquired in the Veritex acquisition, and a $7.0 billion, or 18%, increase in average deposits, which includes the deposits acquired in the Veritex acquisition. This was partially offset by a 33 basis point decrease in NIM driven by the lower rate environment. The provision for credit losses increased $18 million, or 13%, due primarily to loan and lease growth, partially offset by lower net charge-offs and a lower ACL coverage ratio. Noninterest income increased $45 million, or 6%, primarily due to increases in customer deposit and loan fees, capital markets and advisory fees, and payments and cash management revenue. Noninterest expense increased $92 million, or 8%, primarily due to an increase in allocated overhead expense.

Treasury / Other

The Treasury / Other function includes revenue and expense related to assets, liabilities, derivatives (including mark-to-market of interest rate swaps, as applicable), and equity not directly assigned or allocated to one of the business segments. Assets include investment securities and bank owned life insurance.

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Net interest income includes the impact of administering our investment securities portfolios, the net impact of derivatives used to hedge interest rate sensitivity, and the financial impact associated with our FTP methodology, as described above. Noninterest income includes miscellaneous fee income not allocated to other business segments, such as bank owned life insurance income and securities and trading asset gains or losses. Noninterest expense includes certain corporate administrative expenses, acquisition-related expenses, if any, and other miscellaneous expenses not allocated to other business segments. The provision for income taxes for the business segments is calculated at a statutory 21% tax rate, although our overall effective tax rate is lower.

Treasury / Other reported a net loss of $376 million in 2025, compared to a net loss of $725 million in the year-ago period. The decrease in net loss was primarily due to lower net interest loss, partially offset by acquisition-related expenses recognized, lower noninterest income, and a decrease in benefit for income taxes. Net interest loss decreased $562 million primarily due to the net impact of FTP credits assigned to each business segment and hedging. Noninterest expense increased $142 million primarily due to acquisition-related expenses recognized in the current year. The benefit for income taxes decreased $38 million primarily due to a decrease in pre-tax loss, partially offset by a reduction in the Company’s effective tax rate as a result of the remeasurement of deferred tax assets for change in certain state tax laws which were enacted in the second quarter of 2025.