Huntington Cuts 2027 EPS Outlook to $1.75-$1.83 Amid Fed Hike
Huntington Bancshares lowered its earnings forecast on rising deposit costs, triggering a 5.5% stock drop as the Federal Reserve hiked rates.
Key points
- Huntington Bancshares cut its 2027 EPS guidance from above $1.90 to $1.75-$1.83, citing rising deposit costs and loan pricing pressure.
- The stock fell 5.55% to $15.82 on September 16, 2026, as the Federal Reserve implemented its first rate hike since 2023.
- Huntington’s fee income has grown at a 14% annual rate since mid-2024, helping to offset the compression in net interest margins.
Huntington Bancshares shares fell 5.55% to $15.82 on September 16, 2026, as the company lowered its 2027 earnings per share guidance to a range of $1.75 to $1.83. The stock slid near its 52-week low after executives cited intensifying competition for deposits and tighter loan pricing as the primary drivers of the revised outlook.
The guidance cut coincided with the Federal Reserve’s first interest rate hike since 2023, a move that immediately pressures bank margins. While higher rates eventually boost asset yields, banks must simultaneously raise deposit rates to retain balances, creating a near-term squeeze on net interest income that the company now expects to be lower than previously projected.
Margin pressure spreads to regional peers
The market interpreted Huntington’s profit warning as a sector-wide signal, with Fifth Third Bancshares shares dropping 4.1% in the same session. This reaction reflects a broader concern that regional banks are facing similar structural headwinds, where the cost of funding rises faster than the yield on new loan originations.
Accelerated payoffs in commercial real estate loans further complicated the balance sheet picture for the group. Although these early repayments reduce credit risk, they also shrink total earning assets, limiting the volume of income-generating loans available to offset the higher cost of deposits.
Fee income offsets spread compression
Despite the margin headwinds, Huntington maintains a substantial operational cushion through its non-interest revenue streams. The company’s value-added fee income has compounded at a 14% annual rate since mid-2024, with year-to-date growth reaching approximately 32%, providing a critical buffer against pure lending spread declines.
The balance sheet remains robust, with loans expanding to $189 billion and deposits reaching $222 billion. This scale allows the bank to leverage its fee-based model to sustain profitability even as the core banking spread narrows under the new rate environment.
Deposit beta dictates future earnings
The long-term impact of the rate hikes depends heavily on deposit beta, which measures how quickly banks pass rate increases on to depositors. A lower beta would allow fee revenue to support earnings, whereas a higher beta suggests the margin squeeze will persist over multiple quarters.
According to reporting on Yahoo Finance, the current environment favors banks with strong fee income over those relying solely on interest spreads. Huntington’s adjusted outlook reflects this reality, acknowledging that while credit risk may decrease, the economic cost of funding remains the primary constraint on near-term profitability.
