Huntington Bancshares Cuts 2027 Outlook as Margin, Loan Growth Pressures Mount

Key Points

• Huntington Bancshares lowered its 2027 EPS outlook to $1.75–$1.83 as higher funding costs, deposit competition and lending pressures weigh on net interest margin and loan growth.
• Organic loan growth has slowed to about 6% from 8%–9%, while commercial real estate paydowns, mortgage weakness and reduced indirect-auto production are creating additional headwinds. Net interest margin is expected to remain near the low-to-mid 3.20% range into 2027.
• Fee-based businesses, cost reductions and acquisition synergies are providing offsets. Huntington plans to increase its 2027 share-repurchase program by $200 million to $1.3–$1.4 billion as slower loan growth frees up capital.

Huntington Bancshares NASDAQ: HBAN said it has revised its 2027 earnings outlook as higher-for-longer interest rates, deposit pricing pressure and competition in selected lending categories weigh on net interest margin and loan growth expectations.

Speaking at the Barclays 2026 Global Financial Services Conference, Chairman and CEO Steve Steinour said the bank’s operating performance has remained solid despite an environment that has become “materially different and more challenging” than management expected at the start of the year. The company now expects 2027 earnings per share of $1.75 to $1.83, while planning to increase its share repurchase program by $200 million to between $1.3 billion and $1.4 billion next year.

Margin and Lending Pressures Drive Outlook Revision

Steinour said Huntington’s primary challenge has been a change in interest-rate and competitive conditions rather than a weakening in the company’s core franchise. Market expectations for Federal Reserve policy shifted from anticipated rate cuts to expectations for rate increases, raising funding costs and contributing to more intense competition for deposits, he said.

“The economics of incremental growth have become tighter than we anticipated at the start of the year,” Steinour said.

Chief Financial Officer Zach Wasserman said the bank’s organic loan growth run rate has declined to about 6%, from a prior range of roughly 8% to 9%. He attributed the change in part to accelerated commercial real estate paydowns, residential mortgage pressure and increased competition in indirect auto lending.

Wasserman said average daily loan balances are expected to decline by about one-half of 1% in the third quarter from the second quarter, though end-of-period loans are expected to rise sequentially. The company expects full-year loan growth of approximately 36% year over year and deposit growth of approximately 33%, both within its prior stated ranges.

In indirect auto, Steinour said Huntington has reduced production rather than accept returns below its underwriting thresholds. A year ago, the bank was originating roughly $850 million in auto loans at a mid-to-high-teens return, he said. Current production is closer to $500 million, with a 12% return representing the company’s minimum acceptable level.

Commercial real estate refinancing has also accelerated beyond expectations, according to Steinour. He said refinancing activity has been about twice what management expected, as borrowers move from floating-rate loans to fixed-rate financing and capital providers such as Fannie Mae and Freddie Mac increase refinancing activity.

Net Interest Margin Expected to Remain Relatively Flat

Wasserman said Huntington’s net interest margin, which was 3.21% in the second quarter, is expected to increase into the low-to-mid 3.20% range in the third quarter. However, the bank now expects margin to remain in that range in the fourth quarter and potentially through the latter half of 2027 under a lower-end operating scenario.

Higher yields on repricing loans and securities are helping offset funding pressures, but the company expects deposit costs to rise gradually as balances reprice. Wasserman said a change in the Federal Reserve’s policy stance, either higher or lower, could provide additional flexibility and support margins in the mid-to-high 3.20% range next year.

Fee Businesses and Cost Actions Provide Offsets

Huntington highlighted continued growth in its fee-based businesses, which Steinour said have expanded at a 14% compound annual growth rate since the second quarter of 2024 on an organic basis. Capital markets revenue has grown at a 30% compound annual rate, while wealth and private banking revenue has grown at a 10% rate and payments revenue at a 9% rate, according to the presentation.

Wasserman said fee revenue growth is expected to exceed the company’s original 2026 target by 4 percentage points. Third-quarter fee revenue is expected to be in the $730 million range, with growth expected to resume sequentially in the fourth quarter. Huntington expects high-single-digit to low-double-digit annual growth in fee revenue going forward.

The bank is also increasing its expense reengineering efforts. Management expects expenses for the current year to remain within its previously stated range, with a fourth-quarter efficiency ratio of roughly 55.5% to 56%.

Integration Progress and Capital Returns

Steinour said integrations of Veritex and Cadence are proceeding at or ahead of plan. Huntington achieved its $70 million Veritex cost-synergy target in the second quarter, while Cadence is tracking toward a $365 million run-rate target by the fourth quarter. The bank increased its cumulative revenue-synergy outlook from the two transactions to approximately $600 million through 2028, compared with its original $500 million estimate.

The company has repurchased approximately $360 million of shares year to date out of a planned $550 million for the current year. Wasserman said the planned 2027 buyback increase reflects lower expected loan growth and the resulting availability of additional capital.

Despite the revised outlook, management expects earnings per share to grow more than 20% from fiscal 2025 levels, tangible book value per share to increase more than 10% from current levels, and return on tangible common equity to reach the low-to-high 17% range in 2027. Wasserman said Huntington continues to target returns above 18% over the longer term.

About Huntington Bancshares (NASDAQ:HBAN)

Huntington Bancshares Incorporated is a regional bank holding company headquartered in Columbus, Ohio. Its principal subsidiary, The Huntington National Bank, provides banking and financial services to consumers, businesses, institutions and government entities.

The company offers consumer and commercial deposit accounts, lending products, mortgage banking, wealth management, investment services, insurance, payment solutions and treasury management. Its lending activities include residential mortgages, auto loans, consumer credit, small-business financing and commercial loans.

Founded in 1866, Huntington serves customers through branches, digital banking channels and business offices across the Midwest and other selected markets.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.