00:00I want to start with expenses. I was taking a look at the transcript of your earnings call,
00:04and this definitely was a hot topic of conversations. Basically,
00:07you're anticipating core expenses to rise 10 to 11 percent. Explain the jump to us.
00:15The expense base that we have this year has largely not included one of the combinations,
00:22one of our partnerships, an acquisition of a company called Veritex. And then in two weeks,
00:28there'll be another combination, a company called Cadence. So as we try to project full-year
00:35earnings, it's a little messy right now in terms of an October close for Cadence versus an annual
00:41run right and a close to occur in a couple of weeks for Cadence. So we'll sort that out with
00:48the analysts and answer their questions. We gave them clear guidance on our EPS expectation for 27,
00:56our 26 efficiency ratio, our operating leverage. They'll be able to work it back.
01:02But we don't typically give exact numbers for any of our guidance elements.
01:08Well, let's talk a little bit more about Veritex and Cadence, bring them into the fold. What does
01:14that mean in terms of your footprint when you think about different regions in the United States? What
01:18does that unlock for you? Well, for 160 years, Huntington has largely been a Midwest bank.
01:23We have extensions in the Colorado and the upper Midwest. But Veritex and Cadence position us
01:29very strongly in Texas and in the South. Now, we've expanded recently in North and South Carolina
01:35and certain other markets. But this is a big move for us. And we're thrilled. We've got great partners,
01:42outstanding executive teams and new colleagues coming to the company. These are both well-run banks,
01:48well-regarded, and we'll be able to bring a lot more product and capability to them. And part of the expense
01:54number reflects our intent to invest and to deliver our full capabilities, which at our scale are much
02:01greater than what either of those other two institutions could offer their customers.
02:07I am curious.
02:07Okay. I am curious, Stephen, at least with regards to commercial lending, business lending here,
02:14are you seeing more competition in that space, not so much from other banks, but other, I guess,
02:19non-bank companies, if you will?
02:21Right. Well, there's been non-bank financials coming into the space now for close to a dozen years
02:28on a gradual basis. It's accelerated recently. We see some of it, but we're very large. We're very
02:35diversified. And we've been making investments since 2023 when Silicon Valley had its issues.
02:42That was a moment of investment and growth for us. We were atypical to our regional peers.
02:47And we've added a lot of capacity. We've added positions and teams. North, South Carolina,
02:53the two combinations I referenced earlier, eight new states. So we just have a core dynamic that's
02:59very strong. We're growing in every market. Plus, we have the investments and the opportunities from
03:05these investments. How's the consumer holding up right now, Stephen, particularly when it comes
03:09to loan growth for your business? Are they, A, are they still borrowing? And two, more importantly,
03:14when those folks are coming in the door looking for loans, is the quality of that borrower still up
03:20to snuff? Well, our credit policies haven't changed whatsoever in the last number of years.
03:28So we are still quite active in our lending. But it's a K-shaped situation. And so I really feel
03:35the low moderate income households are challenged. There have been multiple years of higher inflation
03:42and wages have not kept up. So there's a squeeze going in at that level. But sort of mass, mass
03:51affluent and above, generally are performing in line with expectations. Auto had a pretty good year in
03:5625, expected to do reasonably the same in 26. Generally, the business customers we have,
04:03the half million small businesses, they're generally doing OK. Not great, not like the go-go years,
04:10but good. Yeah. Yeah. And to your point, I mean, it's definitely been an uneven economy
04:14out there. I do want to talk about what some of your priorities are in 2026, because you've got a
04:21lot on the boil. We talked about Veritex. We talked about Cadence, bringing those into the fold,
04:25expanding your footprint. What would you say is your top priority as you get deeper into this year?
04:32Our top priority hasn't changed. It's grow the core. Organic growth is what we're looking to achieve.
04:38We've had outstanding growth now for three years. We're starting this quarter very strong,
04:44equivalent to where we were last year. And we're optimistic about how the year sets up. We do a
04:48lot of equipment finance. We do a lot of business with small, medium-sized businesses. And then we
04:54have these 15 specialty verticals that do business nationally. So we're the fourth or fifth largest
05:00equipment finance company in the country. As on-shoring, re-shoring, as robotics and other
05:07automation have been pursued, that's all great business for us. So we have a very diversified
05:13portfolio. It looks like we're hitting on all cylinders as we come into this year.
Comments