Banks
Huntington lifts net interest income 37% on its acquisitions but warns deposit competition is tougher than expected
The Columbus-based lender beat profit forecasts and kept its 2027 targets, but now expects to pass on 50% to 60% of rate moves to depositors, above the 45% it paid in the last tightening cycle.
HedgeWeekly News Desk ·
Huntington Bancshares earned an adjusted 38 cents a share in the third quarter, ahead of the 35-cent consensus, as its purchases of Cadence and Veritex lifted net interest income 37% from a year earlier to about $2.1 billion. Reported earnings were 33 cents a share, down from 41 cents a year ago, after $125 million of pre-tax notable items. Revenue rose about 31% to $2.79 billion, and net interest margin widened 4 basis points to 3.25%.
Growth slowed inside the enlarged bank. Average loans slipped 0.4% from the second quarter, though period-end balances rose 1.1% on commercial and industrial lending, and average deposits edged up 0.2%. Management told analysts it had stepped back from indirect auto loans, residential mortgages and some commercial property lending where pricing no longer met its return hurdles, and that some property borrowers had refinanced into Fannie Mae, Freddie Mac and debt funds.
Chief executive Steve Steinour described competition as more intense than the bank had expected. Huntington now assumes a deposit beta of 50% to 60%, with pricing pressure concentrated in certificates of deposit in Texas and the Southeast and money market accounts in the Midwest; the deposit cost rose 2 basis points to 1.90%. Net charge-offs rose to 31 basis points on one commercial loan, nonperforming assets to 0.90%, and the CET1 ratio stood at 10.1%. The bank reaffirmed 2027 adjusted earnings of $1.75 to $1.83 a share and plans $1.8 billion to $1.9 billion of buybacks across 2026 and 2027.
Why it matters: a deposit beta of 50% to 60% is above the roughly 45% Huntington paid through the 2022 to 2024 rate rises, a sign that funding costs for regional lenders may rise faster in this cycle than the last. With guidance calling for a flat fourth-quarter margin, the bank's 2027 target leans on about $150 million of further Cadence cost savings, buybacks and core growth rather than wider spreads. Investors will watch whether peers report similar pressure on CD and money market pricing in Texas, the Southeast and the Midwest.