Huntington’s Growth Engine Hits a Higher-for-Longer Wall
A reset 2027 EPS target, a stock in drawdown, and a CEO choosing to shrink some loans to defend returns.
HBAN · Earnings Call · 2026-10-22
The Guide Cut Is the Story
Huntington’s third quarter was, on the surface, more of the same: net interest income of roughly $2.1 billion, a 3.25% net interest margin, fee revenue up more than 15% year over year, and adjusted return on tangible common equity of 16.6%. The quarter itself did not break the franchise. The guidance did.
The call kept returning to a single admission: the environment Huntington underwrote for 2027 is not the environment it got. “We are in a very different interest rate environment and a very inflationary environment. And we are in a much different competitive environment.” — Stephen D. Steinour, Chairman and Chief Executive Officer · 2026-10-22 That is CEO Stephen Steinour explaining why the company reset its 2027 EPS target to $1.75-$1.83 from the $1.90-$1.93 it had defended as recently as July.
The market had already voted. The shares are down 9.6% over the last 90 trading days and 18.7% from the February peak, leaving them at roughly $15, or less than 10x the new EPS guide. The sell-side pressed management on whether the cuts were finished. Eric Wasserstrom, the head of investor relations, gave the cleanest answer:
We expect no diminution in the overall competitive environment. And so that characterizes how we are thinking about our guidance from here.
That is not a throwaway line. It is the entire reset in one sentence. The company is no longer assuming that competition fades enough to bail out the original bridge.
This is where the company’s own keyword trail matters. The top keyword on Huntington’s Q3 call is competitive environment, followed by low risk appetite. Neither is new. In July, Brant Standridge described deposits as “competitive, but we still see it as being rational” — Brant Standridge, President of Consumer and Regional Banking · 2026-07-23. In April, Steinour was already warning that “there is increasing concern about the impact of inflation and the consequence of what's going on in the Middle East. So we're just trying to be a little more cautious” — Stephen Steinour, Chairman, President and CEO · 2026-04-23. The difference now is that caution has moved from the risk section of the call to the earnings bridge. The competitive environment is no longer a backdrop; it is the reason the 2027 number moved.
Discipline or Demand Destruction?
Huntington is doing something that sounds good in a credit cycle and bad in a growth story: it is walking away from loans. Management explicitly says it has pulled back in indirect auto and residential mortgages because risk-adjusted pricing has compressed to levels it does not consider rational. Commercial real estate construction commitments are also coming down faster than planned. “What we want to do with our customers is exchange value for value.” — Brantley J. Standridge, President · 2026-10-22 That is Brant framing the pullback as pricing discipline, not fear.
The defense is coherent. Huntington’s low risk appetite has been a 15-year operating principle, and the credit numbers remain strong: net charge-offs of 31 basis points, full-year guidance at the low end of 25-35 basis points, and an allowance for credit losses at 1.75%. The CEO was blunt that this is not a credit call: “I do not see a tipping point. I do not think this is a 2006-2007 event.” — Stephen D. Steinour, Chairman and Chief Executive Officer · 2026-10-22 The problem is that when a bank with a growth reputation starts shrinking select loan categories, the market has to decide whether that is discipline or demand destruction. Huntington says it is the former. The tape says investors are not fully convinced.
The growth offset is supposed to come from new geographies and the national commercial build-out. Corporate and specialty banking delivered $11 billion of year-over-year loan growth and $9 billion of deposit growth; the company is now in 12 of the top 25 fastest-growing MSAs and has meaningful Texas and Southeast expansion. “We have multiple potential growth levers. That gives us the flexibility to pull back in businesses like auto and resi where the yields are not as we would like and still grow the balance sheet.” — Brantley J. Standridge, President · 2026-10-22 That is the bull case in one breath: not every loan is worth winning, and the new markets can replace the old ones.
But the rate backdrop cuts both ways. Globally, Fed rate hike is one of the hottest market keywords, and Huntington is modestly asset-sensitive, so higher rates help asset yields. They also keep deposit competition alive. Management guided to a 50-60% deposit beta, with the cost of deposits at 190 basis points and up only 2 basis points sequentially. The company’s beta assumption is plausible, but it is also a bet that competitors stay rational while funding loan growth. That is exactly the assumption the market is questioning.
The last filed quarter shows why the franchise still has earnings power: effective revenue of $4.2 billion, up 38% year over year, with deposits of $222.5 billion. The efficiency ratio was 43.4%. Those are strong numbers. They are also flattered by the Veritex and Cadence partnerships, which is why management keeps stressing organic loan growth of about 6% rather than the reported 36%.
The K-Shaped Consumer and the Fee Bridge
The other leg of the story is fees. Value-added fee revenue grew more than 15% year over year, treasury management revenue rose 42%, wealth net flows grew 28%, and capital markets revenue was up 35% year to date. Management expects roughly $750 million of fee revenue in Q4, implying full-year growth of about 31%. That is a real diversification win, and it is why the stock can still earn a mid-teens ROTCE even with spread revenue under pressure.
The consumer is the wildcard. Huntington added K shape to its vocabulary this quarter, warning that higher rates and elevated energy prices could further exacerbate the split between affluent and stretched households. At the same time, checking household production is up 35% year over year and digital acquisition in the new markets is strong. That is a strange combination: good customer acquisition, but a more cautious consumer backdrop. It fits the larger picture of a bank that is still growing relationships while becoming more selective about what it puts on the balance sheet.
The valuation is the tension. Price-to-book of 1.2x is not demanding for a bank with this deposit base and fee mix. But cheap banks can stay cheap when the earnings guide is moving the wrong way. The stock is down 18.7% from its February peak; the market is not waiting for the 2027 recovery to be proven. It is asking whether the 2027 number can be trusted after a reset.
What Would Change the Tape
Management’s answer is execution: hold the line on credit, keep reengineering expenses, and let the Texas and Southeast build-out compound. The company bought back $460 million of stock year to date and expects $1.8-$1.9 billion of repurchases across this year and next. Basel III is expected to add 70-80 basis points of CET1 relief. That is real capital flexibility. But buybacks do not fix a competitive environment that management itself says will not improve.
The catalyst path is narrow but clear. First, deposit betas need to come in at or below the 50-60% guide as the rate cycle progresses. Second, loan growth needs to reaccelerate in Q4 without another leg down in auto or CRE. Third, the fee run rate needs to hold near $750 million per quarter. If those three happen, the 2027 EPS bridge looks less like a hope and more like a plan. If they do not, the market will keep treating Huntington as a growth bank that has lost its growth premium.
The stock is not expensive. But the story is no longer about whether Huntington can grow; it is about whether it can grow at a price that earns its cost of capital. That is a harder question, and the Q3 call did not fully answer it.