Huntington Bancshares: Can Strategic Execution Close the Valuation Gap?

Huntington Bancshares (HBAN) trades at a tangible book value (TBV) multiple of 1.2x—below its regional banking peers' average of 1.4x—a gap that has persisted despite the bank's consistent performance. With CFO Zach Wasserman set to present at Morgan Stanley's Global Financial Services Conference on June 11, investors will scrutinize whether management can articulate a clear path to narrow this valuation discount. This article dissects HBAN's strategic priorities, historical execution consistency, and near-term catalysts to determine if the stock offers a compelling entry point.

Valuation Context: Why the Discount Persists

HBAN's current TBV multiple of 1.2x, based on a March 2025 TBV per share of $12.66 and a stock price of $15.74, lags behind its peers' average of 1.4x. While the bank's fundamentals—such as a 3.10% net interest margin (NIM) and disciplined cost management—reflect operational strength, market skepticism persists. Key concerns include lingering CRE portfolio risks, geographic concentration in the Midwest, and slower deposit growth compared to peers.

Near-Term Catalysts: Three Pillars for Re-Rating

Wasserman's presentation will likely emphasize three themes to address investor concerns and justify a higher valuation:

1. Market Share Expansion in Core and New Markets

HBAN has steadily grown its Midwest footprint, but its recent expansion into North and South Carolina—markets with stronger economic demographics—could be a key growth lever. The bank's Q1 2025 results showed 5% loan growth in its commercial real estate (CRE) segment, while retail banking deposits rose 3%. Management's ability to convert geographic diversification into sustainable revenue growth will be critical.

Historical context: At the 2024 Barclays conference, HBAN highlighted a 3-year loan growth target of 5-7%, which it has largely met. Sustaining this momentum in 2025 could validate its regional leadership narrative.

2. CRE Portfolio Resilience

HBAN's CRE exposure (30% of loans) is a frequent investor concern, but data shows disciplined underwriting. Net charge-offs in Q1 2025 were just 26 basis points, and the allowance for loan losses remains at 1.87%—a conservative buffer. Wasserman may stress that CRE borrowers in HBAN's markets (e.g., healthcare facilities, industrial properties) have shown stronger cash flows than distressed sectors like retail.

3. Cost Management and Efficiency Gains

The bank's cost-to-income ratio improved to 55% in Q1 2025, below its 5-year average of 58%. Automation initiatives and branch rationalization have driven savings, freeing capital for reinvestment. A renewed focus on capital markets and wealth management—where fee income margins exceed traditional lending—could further boost returns.

Historical Execution: Consistency Builds Credibility

HBAN's track record in delivering on strategic goals is a key differentiator. For instance:
- 2023: The bank achieved 6% loan growth and a 3.05% NIM, despite rising rates.
- 2024: It maintained NIM stability at 3.0%+ while expanding wealth management revenue by 12%.

This consistency contrasts with peers like First Republic (now defunct) or Zions Bancorp, which faltered under stress. HBAN's conservative balance sheet—leverage ratios well below industry averages—supports its credibility.

Investment Thesis: Tactical Entry Ahead of the Catalyst

The stock's current valuation offers a compelling risk-reward. At 1.2x TBV, HBAN is trading at a 15% discount to its peers. If Wasserman's presentation convinces investors that the bank can:
1. Sustain 5-7% loan growth,
2. Mitigate CRE risks through selective underwriting, and
3. Expand fee-based income margins,

then a re-rating to 1.4x TBV (peers' average) would imply a ~16% upside to $18.50.

Risks to Consider

• CRE Exposure: A recession could strain borrowers in sectors like retail or office real estate.
• Deposit Costs: Competing for deposits in a high-rate environment may pressure NIM.
• Geographic Concentration: Midwest economic weakness could dampen loan demand.

Conclusion: A Buy on Catalyst-Driven Re-Rating

HBAN's valuation discount is its greatest opportunity. With a strong Q1 performance, disciplined execution history, and strategic initiatives aligned to drive growth, the June 11 presentation could be the catalyst to unlock value. Investors seeking a regional bank with a margin of safety and upside potential should consider a tactical position ahead of the event.

Recommendation: Buy HBAN at current levels, targeting 1.4x TBV over the next 12 months. Set a stop-loss below $14.50 to account for valuation compression risks.