Huntington Bancshares Inc 2026 Q3 Earnings Call

Thanks, Christine, and good morning, everyone. Thanks for joining us for our third quarter call. Our speakers for our presentation today are Steve Steinour, Chairman and CEO, Brant Standridge, President, and Zach Wasserman, Chief Financial Officer. Unfortunately, Zach has become ill very unexpectedly, although I did speak with him a little while ago and he's sounding quite good. But he will not be participating in the Q&A portion of today's call. So I will be joining in his stead, and also joining us for Q&A will be our Chief Credit Officer, Brendan Lawlor. Earnings documents, which include our forward-looking statements, disclaimer, and non-GAAP information, and copies of the slides we'll be referencing are available on the investor relations section of our website, which is www.ir.huntington.com. As a reminder, this call is being recorded and a replay will be available starting about one hour after the close of the call.

With that, let me now turn it over to Steve.

Thanks, Eric. Good morning, and thank you for joining us. Starting on slide 3, we delivered solid operating performance in the third quarter, reflecting continued execution across our core businesses and the benefits of our investments and recent partnerships. The operating environment is generally constructive, evidenced by strong commercial pipelines and solid consumer spending trends. Our expectation is that conditions for the rest of this year and next remain supportive of healthy levels of customer activity. Although higher interest rates and elevated prices for energy and other inputs could dampen growth in the future years or potentially further exacerbate the K shape of the consumer economy. In the midst of this, our teams continue to acquire and deepen relationships across the bank. While macroeconomic conditions may change, our strategy has not.

We remain disciplined in maximizing our risk-adjusted returns, optimizing the balance sheet, realizing expense efficiencies, and continuing to invest for long-term growth. There are four key messages I'd like to leave you with. First, Huntington is a strategically well-positioned national franchise with substantial scale in markets expected to grow above the national average, a leading national commercial bank, and has a broad set of value-added fee businesses. These capabilities support sustained organic growth and earnings expansion. Second, we are delivering solid operating performance in a fluid environment. Our C&I growth remains very strong, driven by the continued expansion of our national commercial strategy. We've made prudent decisions to protect credit performance and returns by scaling back in certain asset classes where risk-adjusted pricing has compressed to levels we don't consider to be rational.

This has impacted the growth of certain loan portfolios but supported our return on tangible common equity. Third, our partnerships continue to perform very well. Cost synergies have been achieved as planned, revenue synergies are tracking, and the partnerships are expanding our ability to acquire customers and deepen relationships across Texas and the South. Fourth, our aggregate moderate to low risk appetite remains fundamental to how we operate. Our liquidity position remains robust, credit performance remains top tier, and we are allocating capital only where opportunities meet our risk-adjusted return hurdles. Together, these capabilities and our focused execution support revenue and earnings growth, improving returns, tangible book value growth, and substantial long-term shareholder value creation. Slide 4 shows our expectations for the drivers of value creation over this year and next.

We expect 2027 EPS to grow more than 20% from 2025 while steadily increasing ROTCE into the 17%-18% range. We expect tangible book value per share to increase by more than 10% from the 2025 level, reflecting continued earnings generation and disciplined capital management. We've completed approximately $460 million of share repurchases year to date. We continue to expect to return substantial capital to our shareholders over the next several quarters. These outcomes reflect the strength of our core franchise, continued growth in our value-added fee businesses, partner synergies, operating efficiency, and disciplined capital management. Let me now turn the call over to Brant Standridge. As you are all probably aware, Brant was recently elevated to the role of President of Huntington and now has responsibility for all of our revenue-generating segments.

Brant? Thank you, Steve. Let's turn to slide 5.

As we've outlined on previous calls, we have developed a differentiated operating model that combines the power of a local relationship-focused geographic banking model with the expertise and scale of a national commercial business. We've now expanded the geographic model across 21 states while continuing to grow our commercial business nationally. The combination of these two models has led to achieving substantial scale with $191 billion in loans and $225 billion in deposits. We are taking a similar approach with geography, having combined Midwest leadership with meaningful and growing scale in Texas and the South. We are now present in 12 of the top 25 fastest growing MSAs in the country, positioning us squarely in some of the nation's most attractive markets.

Our value-added capabilities have broadened across a full range of services, including an expansive payment suite, a comprehensive wealth and private banking platform, and a full service capital markets business. Our commercial bank brings a specialized ecosystem of capabilities serving customers across all 50 states. These capabilities, combined with deep industry expertise across specialized verticals, create a differentiated growth opportunity and help us expand customer relationships across the company. Across all elements of the company, we operate with an aggregate moderate to low risk appetite. This combination of operating scale and risk management discipline is what enables us to sustain strong, balanced growth. The differentiated capabilities that we continue to build across our major business lines support our long-term competitive advantage. Let me share some examples with you. Turning to slide 6, our culture remains a competitive advantage. It is what allows us to attract and retain top talent.

Our people are the drivers of innovation and execution across the bank. We're investing in capabilities that will help shape the future of the bank and allow us to remain an essential partner to our customers. At Money20/20 earlier this week, we announced the 1866 Studio, our new agentic small business operating system. This adds to our already compelling value proposition for small businesses. In addition, we've built functionalities that meet our customers' critical needs, such as family and team banking and AI-powered savings goal functionality. We are also investing to expand our commercial capabilities. As an example, we have substantially increased our capabilities in asset-backed finance and securitization, putting our ability to distribute assets and support customer needs on par with industry leaders. Our focus on innovation continues to gain external recognition.

We offer a leading digital experience as the top-rated mobile banking app among regional bank peers, and we continue to win awards for our collaboration with some of the nation's leading fintechs, such as our partnership with Octane. Perhaps most significantly, we continue to earn customer recognition for service, satisfaction, and trust, elements that form the core of successful relationships with our customers. Turning to slide 7. How do we achieve the financial objectives that we have outlined and continue to create sustainable growth? To be clear, we have our heads down and we are laser-focused on five growth drivers. First, growing share across our core banking markets while selectively investing in new growth markets. Our differentiated operating model, it works and is driving significant share gains in our legacy markets.

Introducing this model in our new markets from Texas through the Carolinas has created an enhanced platform for growth. From a consumer and small business perspective, our digital deposit acquisition capabilities have already created an opportunity for growth across Texas and the South. Second, we are driving scale and growth through our national commercial banking expansion. Our industry ecosystem approach, our national reach, and our specialized expertise enhance our value proposition to commercial customers in our banking footprint and across the country. We have been, and we will continue to invest in people and capabilities that expand our reach. Third, we will leverage expanded capabilities in payments, wealth, and capital markets to deepen customer relationships. Our integrated approach to sales and servicing, which we call optimal customer relationship, provides an opportunity to increase the depth and importance of our relationship to our customers.

Our geographic expansion and the growth of our national commercial businesses significantly increases the scale of the opportunity set to deploy these capabilities. Fourth, we will maintain balance sheet growth aligned to our aggregate moderate to low risk appetite. This is grounded in our emphasis on primary customer relationships, disciplined pricing, rigorous client selection, and intentional capital allocation. Finally, we will continue to drive efficiency and sustained investment in growth. We are consistently re-engineering our baseline expenses, which helps fund the investments that drive our competitive advantage and sustain our long-term growth. Turning to slide 8. Let me give some examples of how this quarter's results capture these priorities. In our legacy banking markets, we grew loans by 6% and deposits by 3% year-over-year, levels that substantially outpace economic expansion in these regions. This growth reflects the effectiveness of the execution of our differentiated approach.