Huntington Cut Its Outlook Right as the Fed Hiked. First Crack in Regional-Bank Margins?

Huntington Cut Its Outlook Right as the Fed Hiked. First Crack in Regional-Bank Margins?

Venkatesh Srinivasalu

Mon, September 21, 2026 at 2:40 AM GMT+3 3 min read

• HBAN 0.00%

Huntington Bancshares Incorporated (NASDAQ:HBAN) dropped 5.55% to $15.82 on September 16, 2026, close to its 52-week low. The price movement was triggered by a profit warning at a Barclays conference. Huntington brought down its 2027 EPS guidance from above $1.90 to the range of $1.75-$1.83, and its 2026 net interest income growth from 39%-43% to roughly 35%. What matters more than these numbers is the reason behind them. Deposit costs are rising, and loan pricing is tightening, and it landed on the day the Fed delivered its first interest rate hike since 2023. The drop therefore raises the question: is this an oversold bank or the opening crack in regional-bank margins?

The Bear's "First Crack" Read Has Teeth

A well-run bank has just lowered its guidance, citing intense competition for deposits and loans. If Huntington feels the margin pressure, then it is likely that its peers feel the same. This explains why Fifth Third shares slid 4.1% on the same afternoon alongside the whole financials group. The Fed's new hike makes the environment more unfavorable for the group in the near term. While rate increases eventually lift asset yields, banks must immediately offer higher deposit yields to retain balances, squeezing net interest margins in the near term. Furthermore, accelerated commercial real estate loan payoffs reduced total earning assets, though these early payoffs lower credit risk on the loan book.

Huntington Built a Cushion

The selloff leans too much into the reset. A move to $1.75-$1.83 from above $1.90 is a modest single-digit trim. Huntington sustains its profit as well as its operational performance. Loans reached $189 billion from $50 billion in 2015. Deposits touched $222 billion. And one of the company's biggest growth engines, value-added fee income, compounded at a 14% annual rate since mid-2024, with year-to-date growth near 32%. The income helps offset a notable portion of the spread pressure and offers a competitive edge against pure spread lenders.

The Rate Double-Edge

A higher-for-longer rate environment carries trade-offs for commercial banks. It drives up deposit expenses, reflecting the margin pressure Huntington reported. It also expands loan yields as credit assets reprice. Deposit beta determines the net effect by measuring how much of each benchmark rate increase the bank transfers to depositors. After the rate hikes, deposit costs typically rise further, so betting on a near-term peak takes some faith. A lower beta allows fee revenue to support earnings, whereas a higher beta keeps the squeeze sustained over multiple quarters.

Bottom Line

Trading at a 12-times multiple, with a fee engine that cushions a hit on the margin, Huntington Bancshares Incorporated (NASDAQ:HBAN) looks discounted relative to its fundamentals. Though Wells Fargo cut its PT on the stock to $21, it remains roughly a third above its current price, and the Overweight rating is upheld. Wait for the Q3 print and track deposit beta and the net interest margin. A steady margin with compounding fees makes 12x cheap. Insider Monkey data shows 56 funds held HBAN in the second quarter, up from 53, with short interest at a moderate 2.56% of float.

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