War worries prompt Huntington to boost reserves by $4B

• Key insight: The decision to stash an extra $4 billion at the Federal Reserve cushions Huntington against war-related disruption.
  
• What's at stake: The downside of the more cautious stance is that it shaves five basis points off Huntington's expected net interest margin for 2026.
  
• Expert quote: "We want to ensure that we're always in that incredibly strong position of strength." — Chief Financial Officer Zach Wasserman

This is a developing story. It will be updated.

Huntington Bancshares has boosted its Federal Reserve cash balance by $4 billion due to unease over the war with Iran.

The move, which Huntington executives disclosed Thursday, reflects greater caution regarding the war's potential economic effects than other bank CEOs have expressed during earnings season.

"I don't like what's happening in the Middle East," Huntington CEO Steve Steinour told American Banker on Thursday. "It's affecting countries around the world."

Steinour characterized the decision to boost the Columbus, Ohio-based company's reserves as "prudent," but it also carried an opportunity cost.

The $285.4 billion-asset Huntington could have deployed those funds into higher-yielding loans. Carrying extra cash shaved five basis points off the bank's expected 2026 net interest margin, Chief Financial Officer Zach Wasserman told analysts.

"We genuinely have no concern whatsoever about our own liquidity or our customers' confidence in us," Wasserman said on the company's quarterly earnings call. "With that being said, the environment could change quickly. We want to ensure that we're always in that incredibly strong position of strength."

The war is approaching its two-month anniversary. And while most banks — including Huntington — say it has not significantly disrupted the economy, the potential for greater dislocation increases as the conflict continues.

Overall economic conditions across Huntington's 21-state footprint remain "consistent with prior quarters," Steinour said. He added that some customer segments, particularly lower-income consumers, "continue to feel pressure from the cumulative impacts of inflation."

A longer war could fuel additional inflation, Steinour predicted. If the conflict is resolved in the next few weeks, "we'll pull the money back," he said.

Huntington reported first-quarter earnings per share of $0.25, topping analysts' expectations by three cents, according to S&P Capital IQ. Stripping out merger-related costs from Huntington's acquisition of Cadence Bank, which closed in February, the company's earnings per share totaled $0.37 cents.

Net income totaled $523 million, which was down 1% from the same period last year, primarily due to expenses related to the company's acquisitions of Cadence and Dallas-based Veritex Holdings over the last six months.

Revenue totaled $2.59 billion, up 34% from the first quarter of 2025, driven by the two acquisitions.

"At the core, this was a solid quarter for the company with decent core sequential loan and deposit growth and very strong fee trends," RBC Capital Markets analyst Jon Arfstrom wrote in a research note.