Huntington Bancshares (HBAN) Q3 2026 earnings review
Huntington's lending spread widens, but fee income and credit slip
Huntington Bancshares, the Ohio-based regional bank, widened its lending spread this quarter while its fee businesses cooled off. Net interest margin rose 0.04 percentage points from last quarter to 3.25%, above what the company's own plan pointed to, because it paid down expensive wholesale debt. However, noninterest fee income fell 8% from last quarter on lower investment banking activity, pulling profit per share excluding one-offs down a penny to $0.38.
| Ending loans, stripping acquired balances at close | +5.3% from a year ago, by our math (+39% total) |
|---|---|
| Profit per share, excluding one-offs | $0.38 −5% from a year ago ($0.39 last quarter) |
| Net interest margin (lending spread) | 3.25% +0.04 percentage points from last quarter |
| Financial targets outlook | Unchanged on track, implies +41% Q4 revenue by our math |
⚖️ Verdict: 🔴 Bearish
The story got worse because the fee engine that was supposed to cover softer lending income stumbled, while loan defaults kept climbing. One bright spot: operating expenses excluding one-offs held flat even as marketing spend jumped 73% to promote the newly converted southern branches.
The question now is whether fourth-quarter earnings can reach the level needed to support management's $1.90 to $1.93 per-share profit target for 2027. Either the remaining Cadence cost savings and a fee rebound lift fourth-quarter profit above $0.42 per share, or rising loan write-offs and sluggish revenue force a reset. Fourth-quarter results and the 2027 outlook in January will settle it.
🐂 Bull Case
Lending Spread Rebounded on Wholesale Funding Paydowns
Huntington's net interest margin — the spread between what the bank earns on loans and securities and what it pays on deposits and debt — rose 0.04 percentage points from last quarter to 3.25%. That beat the low-3.20s plan management set three months ago. The company pointed to "reinvestment into higher yielding investment securities, and a decrease in average total borrowings" as the main drivers.
- Yield on investment securities: 3.59%, up 0.12 percentage points from last quarter
- Average total borrowings: down $3.6 billion, or 16%, from last quarter
- Average cost of total deposits: 1.90%, up 0.02 percentage points from last quarter
- Net interest income on a tax-equivalent basis: $2.09 billion, up 1% from last quarter
The spread recovery matters because management had cut its full-year lending income plan in each of the prior two quarters. Paying down expensive debt lifted the margin even though deposit costs crept up again. However, shrinking the balance sheet to protect the spread kept total lending income growth to just 1% from last quarter, below the pace needed for the full-year floor by our math.
What to watch: fourth-quarter net interest margin against the mid-to-high 3.20s target. Hitting that range while growing the loan book would show the spread recovery does not depend on shrinking assets.
Operating Costs Held Steady During Southern Marketing Push
We are "achieving our targeted cost and revenue synergies" from the Veritex and Cadence acquisitions, chief executive Steve Steinour said. Operating expenses excluding one-offs (such as $117 million of merger charges) edged down $2 million from last quarter to $1.655 billion. That kept the bank's efficiency ratio — operating expenses as a share of revenue, excluding intangible amortization — at 61.2%, down 0.3 percentage points from last quarter.
Savings from the June computer systems conversion of Cadence Bank paid for a marketing push across the new southern branches. Outside data processing costs fell $14 million (down 0.4 percentage points of tax-equivalent revenue by our math), and staff pay and benefits dropped $15 million. Those cuts covered a $22 million, or 73%, jump in marketing spend for "higher levels of expense in our expanding geographic areas".
What to watch: fourth-quarter operating expenses excluding one-offs and the resulting core efficiency ratio. Management targets a mid-to-low 54% ratio once all $435 million of annual merger savings take effect in the fourth quarter.
Positives this quarter didn't test
Two standing drivers from prior quarters continued in the background without a definitive new test in the earnings release.
- Texas and southern branch expansion: marketing spend jumped 73% from last quarter to support the new regions, but the release does not break out loan or deposit growth by state; the quarterly filing or presentation will test regional traction.
- Share buyback pace: the bank bought back $100 million of common stock in the third quarter, bringing the nine-month total to $409 million (about 25 million shares); finishing the $550 million full-year plan requires $141 million in the fourth quarter.
🐻 Bear Case
Fee Income Dropped as Capital Markets Cooled
Over the past two quarters, management relied on noninterest fee income — charges for payments, wealth management, and investment banking — to make up for a softer lending outlook. In the third quarter, that fee engine stepped back. Noninterest income fell 8% from last quarter to $722 million, or 7% to $730 million excluding an $8 million charge on an acquired equity security.
The company blamed "lower underwriting and advisory fees" and "unfavorable valuation changes for strategic investment and other investments". Capital markets and advisory fees dropped 13%, or $18 million, from last quarter to $122 million, while mortgage banking income fell 15% to $45 million. Payments and cash management was the lone bright spot, rising 3% to $211 million.
This pullback matters because management's ~37% full-year total revenue plan needed fees to beat their own 31%–33% target to cover a shortfall in lending income. Instead, third-quarter fees landed right at the bottom of the $730–752 million quarterly pace implied by the full-year fee plan by our math. Total revenue fell 1.6% from last quarter to $2.79 billion.
What to watch: fourth-quarter capital markets and advisory fees. A rebound above the second quarter's $140 million peak would show the third-quarter drop was deal-timing noise rather than a peak in commercial dealmaking.
Loan Defaults Rose While Loss Reserves Shrank
Steinour said the quarter's results aligned with Huntington's "aggregate moderate-to-low risk profile". Yet problem loans and actual loan write-offs both climbed again, while the bank trimmed its loss cushion. Nonperforming assets — loans not paying interest plus foreclosed property — rose $110 million, or 7%, from last quarter to $1.72 billion, reaching 0.90% of total loans and real estate.
- Annualized net charge-offs (loans written off for good): 0.31% of average loans, up from 0.25% last quarter and 0.22% a year ago
- Net charge-offs in dollars: $146 million, versus a $123 million provision added to reserves
- Allowance for credit losses (the reserve cushion): 1.75% of total loans, down from 1.78% last quarter and 1.86% a year ago
- Reserve coverage of nonperforming assets: 195%, down from 210% last quarter and 312% a year ago
Because the $123 million credit provision was $23 million smaller than actual loan write-offs, Huntington released reserves to boost pre-tax profit while nonaccrual loans grew across business, commercial real estate, and mortgage lending. Annualized charge-offs of 0.31% also crossed into the upper half of management's 0.25%–0.35% full-year plan, contradicting last quarter's expectation to stay in the bottom half.
What to watch: the nonaccrual loan ratio and net charge-offs in the fourth quarter. A charge-off reading above 0.35% would force higher credit provisions in 2027 and undercut the earnings bridge.
Share Dilution and Bond Losses Cut Per-Share Value
Huntington paid for the Veritex and Cadence acquisitions with stock, and the resulting share count jump continues to weigh on per-share results. Net income rose 15% from a year ago to $721 million (and 33% to $819 million excluding one-offs). Yet GAAP profit per share fell 20% from a year ago to $0.33, and profit per share excluding one-offs slipped 5% to $0.38.
Average diluted shares stood at 2.047 billion, up 38% from 1.485 billion a year ago. The $100 million third-quarter buyback retired only about 5 million shares, barely denting the 562 million shares added over the past year. Meanwhile, tangible book value per share (net asset value excluding goodwill) fell 2% from last quarter to $9.47, down from $9.54 a year ago, as bond losses widened.
What to watch: fourth-quarter tangible book value per share and profit per share excluding one-offs. Management needs per-share earnings to climb past $0.42 in the fourth quarter to put its $1.90–1.93 target for 2027 within reach.
Risks this quarter didn't answer
Four standing concerns from our prior analysis depend on fourth-quarter results or disclosures not included in the earnings release.
- Fourth-quarter earnings launchpad for 2027: management rests its $1.90–1.93 per-share 2027 profit target on the fourth quarter's exit pace, which remains one quarter away.
- Dollar revenue synergies: Steinour said the bank is achieving targeted revenue synergies, but the release gives no dollar figure against the $50–75 million 2026 goal.
- Acquired customer attrition and loan runoff: average loans dipped 0.4% from last quarter on commercial real estate and auto declines, and consumer segment average deposits fell 2.1%; the call and filing will clarify how much was deliberate pruning.
- Cadence-inherited Donelon lawsuit: trial on the $350 million compensatory damages claim is scheduled for November 4, 2026, with no update in the release.
👓 Other Themes
Higher Interest Rates Cut Tangible Book Value
Market interest rates rose during the third quarter, reducing the market value of Huntington's $34.6 billion available-for-sale bond portfolio. Those unrealized bond losses — recorded in accumulated other comprehensive income — widened by $761 million from last quarter to $2.97 billion. Huntington said the "decline in accumulated other comprehensive income from higher market interest rates" trimmed its tangible common equity ratio by 0.2 percentage points to 6.9%.
💲 Other KPIs
Average deposits edged up 0.2% ($413 million) from last quarter to $223.8 billion, while period-end deposits rose 1.0% ($2.2 billion) to $224.7 billion. Stripping out the $54.0 billion of deposits acquired at close from Cadence and Veritex, period-end deposits grew 3.3% ($5.5 billion) from a year ago by our math, as commercial inflows offset consumer time-deposit runoff.
Average loans dipped 0.4% ($806 million) from last quarter to $188.4 billion as the bank ran down commercial real estate (down $854 million) and auto loans (down $311 million). However, period-end loans rose 1.1% ($2.0 billion) to $191.4 billion on late-quarter business lending. Stripping out $46.2 billion of loans acquired at close, period-end loans grew 5.3% from a year ago by our math.
Huntington's primary regulatory capital ratio (CET1, which measures core equity against risk-weighted assets) ticked up 0.1 percentage points from last quarter to 10.1%, as retained profit outweighed the $100 million stock buyback. Including unrealized bond losses, the adjusted CET1 ratio slipped 0.1 percentage points to 8.9%, down from 9.2% a year ago.
🔮 Guidance
Unchanged. Chief executive Steve Steinour said the regional bank remains "on track to meet our financial targets" and is achieving its targeted cost and revenue synergies. The earnings release includes no numerical outlook table, as management gives detailed percentage ranges on its conference call. By our math, hitting the ~37% full-year revenue plan now requires fourth-quarter revenue excluding one-offs to jump 9% from the third quarter, up 41% from a year ago.
❓ Key Questions
How much did partnerships add to revenue in dollars?
Steinour said the bank is achieving its targeted revenue synergies, but the release gives no dollar figure. Against a $50–75 million target for 2026 and $300 million-plus by 2028, investors need the exact dollar contribution booked through September.
Did management change any full-year 2026 percentage targets?
The earnings release gives only a general statement of confidence. With nine-month lending income and third-quarter fees trailing the pace needed for the ~37% full-year revenue target by our math, did management revise its component ranges on the call?
What drove the $110 million jump in nonperforming assets?
Nonperforming assets rose 7% from last quarter to $1.72 billion, and annualized loan write-offs climbed to 0.31%. How much of the increase came from legacy Huntington borrowers versus acquired Cadence and Veritex loans?
Why did consumer segment deposits drop $3.2 billion?
Average deposits in Consumer and Regional Banking fell 2.1% from last quarter to $149.4 billion, while time deposits across the bank dropped $3.0 billion. Was this planned runoff of high-rate Cadence certificates of deposit, and has that runoff finished?