Huntington (HBAN) Q3 2026 Earnings Call Transcript

Huntington Bancshares reported Q3 adjusted EPS of $0.38 and net interest income of $2.09 billion, up 37% year over year, while net interest margin rose 4 bps sequentially to 3.25%. Average loans declined 0.4% sequentially as the bank reduced CRE and other lending where risk-adjusted returns were inadequate; net charge-offs increased 6 bps to 31 bps, primarily due to one commercial credit charge-off. Management reaffirmed 2027 EPS guidance of $1.75–$1.83, more than 20% above 2025, and plans $1.8–$1.9 billion of share repurchases across 2026–2027, while cautioning that competition and elevated rates remain headwinds.

Analysis

The key read-through is not headline EPS growth but the quality and composition of the 2027 bridge. Huntington’s willingness to walk from poorly priced CRE, auto and mortgage lending should protect risk-adjusted returns, but it shifts growth dependence toward C&I and acquired-franchise cross-sell. CRE runoff to Fannie Mae, Freddie Mac and debt funds may reduce future credit exposure while intensifying price competition for the remaining high-quality borrowers. Fee growth and deposit-relationship gains are the more durable upside; capital-markets fees remain rate- and activity-sensitive.

Near term, stable NIM is a more credible base case than rate-driven expansion: management’s 50–60% deposit-beta assumption leaves limited room for higher asset yields to flow through if deposit competition persists. The 2027 EPS target also relies on synergy realization and buybacks, not reserve releases, which improves earnings quality but leaves execution risk. Verify acquisition-related run-rate costs and the reported-versus-adjusted CET1 bridge; estimated Basel relief is not equivalent to realized excess capital. The contrarian point: slower balance-sheet growth may be a deliberate return-protection choice, not franchise deterioration, but the market may be underpricing how much earnings depend on execution rather than broad-based loan demand.

Key Decisions for Investors

• Avoid chasing an immediate post-call move. Consider a modest long HBAN / short regional-bank ETF (KRE) pair on a pullback, targeting the next 1–3 months of integration and fee-income updates; this isolates company execution from sector beta. Reassess if management lowers the 2027 EPS range or organic loan growth falls below its stated trajectory.
• Track Q4 deposit costs and NIM as the near-term thesis test: stable NIM despite continued pricing competition supports the guide; deposit costs accelerating or NIM compressing would challenge it and weaken the long.
• Treat the planned repurchases and Basel III capital relief as upside, not the base case. Before assigning value, verify realized regulatory treatment, the adjusted-to-reported CET1 reconciliation, and buyback pace; a delay or weaker capital buffer would constrain returns.
• Monitor criticized CRE and construction commitments alongside charge-offs over the next 6–18 months. A sustained deterioration—not a single charge-off or low-loss guaranteed-loan NPA move—would falsify the view that selective runoff is containing risk.