Huntington tempers outlook due to higher rates, lower yields

• Key takeaway: Huntington Chairman and CEO Steve Steinour says the company's long-term prognosis remains healthy despite near-term turbulence.
• Supporting data: The bank's commercial real estate and indirect auto lending portfolios both saw declines in the first half of 2026. 
• Expert quote: "What we won't do is change our credit discipline, and we're going to be very disciplined about our risk-adjusted returns." — Steinour

Huntington Bancshares is downsizing its profitability expectations due to a tough, one-two combination: Higher-for-longer interest rates pushing deposit costs up and fierce competitive headwinds putting downward pressure on loan yields.

The operating environment "is materially different and more challenging than we had anticipated at the beginning of the year," Steve Steinour, the bank's chairman and CEO, said Wednesday during a presentation at the Barclays Global Financial Services Conference in New York.

"We got caught with a different expectation in the interest-rate environment and the competitive dynamic," Steinour added. "We've now, I think, right-sized that. My expectation for the company is that we will outperform going forward."

Still, that anticipated outperformance will be measured against a lower baseline.

Though Huntington largely maintained its guidance for fee income, loan growth and deposit growth, the Columbus, Ohio-based bank reduced its full-year 2026 projection for net interest income growth to 35%, down from a previous range of 39% to 43%. It also shrank its guidance for revenue growth from 37% to 34%.

Looking forward to 2027, Huntington is now targeting full-year earnings per share of $1.75 to $1.83, a step down from the previous estimate of between $1.90 and $1.93.

Shares in Huntington were trading down about 5.5% on Wednesday afternoon amid a broader market sell-off. But Keefe Bruyette & Woods analyst Chris McGratty raised the possibility that the scaled-back goals may ultimately boost the stock's price.

"A clearing event could drive shares higher," McGratty wrote in a research note, pointing to market skepticism regarding the company's original 2027 earnings-per-share estimate.

Huntington had hoped to use 2026 to showcase significantly enhanced franchise value created by two recent acquisitions in Texas and its ongoing expansion in the Carolinas.

But Steinour said the $284 billion-asset Huntington has been under pressure throughout the year, as heightened competition made it tougher to add loans to its commercial real estate portfolio as well as in indirect auto lending — one of the long-established pillars of the company's business model.

Within both sectors, Huntington's determination to preserve yields led to a lending fall-off. Commercial real estate loan balances declined by $800 million in the second quarter and are expected to fall further in the second half of 2026. Meanwhile, auto loan balances declined by 4.3% in the first six months of 2026.

There was a "meaningful acceleration in terms of the competitive environment in indirect auto that caused us to want to reduce production," Chief Financial Officer Zach Wasserman said at the Barclays conference.

Huntington is sticking to its guns and maintaining in-house lending standards, even as conditions on the outside have shifted, Steinour said.

"What we won't do is change our credit discipline, and we're going to be very disciplined about our risk-adjusted returns," the CEO said.

Downward pressure on loan originations, aggravated by increased upward pressure on deposit costs, has carried over into the third quarter, accelerating past the point where it could be offset by a combination of fee-income growth and cost-cutting, according to Wasserman.

As a result, Huntington felt the need to recalibrate its forecasts for 2026 and 2027, Steinour said.

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The headwinds Huntington has faced may grow a little stronger following the Federal Reserve's decision Wednesday to raise its benchmark interest rate by 0.25 percentage points. A short time later, Huntington announced that it was raising its prime rate from 6.75% to 7%.

Over the longer term, though, Huntington remains well-positioned to capitalize on opportunities in Texas, the Carolinas and its legacy Midwest markets, Steinour insisted. Indeed, the company is predicting $600 million in revenue synergies from its recent acquisitions of Dallas-based Veritex Holdings and Houston-based Cadence Bank.

"Management remains confident in the long-term strategic benefits of the recent acquisitions and the company's ability to drive organic growth and strong returns," RBC Capital Markets analyst Jon Arfstrom wrote Wednesday in a research note.