Huntington Bancshares Incorporated (HBAN) Q3 2026 Earnings Call Transcript

Operator: Greetings, and welcome to the Huntington Bancshares Third Quarter 26 Earnings Conference Call. At this time, all participants are in a listen-only mode. Anyone should require operator assistance during the conference, please press. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Eric Edmund Wasserstrom, Director of Investor Relations.

Eric Edmund Wasserstrom: Thanks, Chris, and good morning, everyone. Thanks for joining us for our third quarter call. Our speakers for our presentation today are Stephen D. Steinour, Chairman and CEO; Brantley J. Standridge, President; and Zachary J. Wasserman, Chief Financial Officer. Unfortunately, he has become ill very unexpectedly, although I speak with him a little while ago and he is 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 will 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 in about 1 hour after the close of the call. With that, let me now turn it over to Steve.

Stephen D. Steinour: 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, the benefits of our investments and recent partnerships. Operating The operating environment is generally constructive, Evidenced by strong commercial pipelines and solid consumer spending trends. And 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 4 key messages I would like to leave you with. First, Huntington is a strategically well positioned national franchise with substantial scale markets expected to grow above the national average, a leading national commercial bank and 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 have 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 do not 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. And fourth, our aggregate moderate to low risk appetite remains fundamental to how we operate. Our liquidity position remains robust. Credit performance remains top tier, 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 to 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 have completed approximately $460 million 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, Brandt was recently elevated to the role of president of Huntington and now has responsibility for all of our revenue generating segments. Brant?

Brantley J. Standridge: Thank you, Stephen. Let's turn to slide 5. As we have 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 have now expanded the geographic model across 21 states, while continuing to grow our commercial business nationally. The combination of these 2 models, has led to achieving substantial scale, $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. 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 are investing in capabilities that will help shape the future of the bank. And allow us to remain an essential partner to our customers. At Money 20 earlier this week, we announced the 1.87 thousand studio. Our new AgenTic small business operating system. This adds to our already compelling value proposition for small businesses. In addition, we have 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 continued to win awards for our collaboration with some of the nation's leading fintechs, such as our partnership with Okta. 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. So 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 5 growth drivers. First, growing share across our core banking markets, while selectively investing in new growth markets. Our differentiated operating model 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 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. And finally, we will continue to drive efficiency, and sustained investment in growth. We are consistently reengineering 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. In our newer geographies where our business is much smaller, as in The Carolinas, our organic deposit and loan growth was substantial. At 50-40% year over year. Our national commercial businesses also continued to provide substantial growth. As an example, our corporate and specialty banking delivered $11 billion of year over year loan growth and $9 billion of year over year deposit growth demonstrating the magnitude of the growth opportunity and the advantages of our ecosystem based approach and deep industry expertise. The investments we have made in our value added fee services also continue to pay off. Our debt and equity capital markets businesses which have only just achieved full staffing and scale, grew revenues 35% year-to-year-to-date. In wealth, our focus on household acquisition and the expansion of our private banking and high net worth capabilities has generated a 28% growth in net flows. And in payments, we continue to provide capabilities to our corporate customer base helping to drive our treasury management revenue growth of 42% year-over-year. We have maintained disciplined balance sheet growth in line with our aggregate moderate to low risk appetite. Our securities portfolio has an average duration of 3.3 years. A decrease of 21% from the prior year enabling us to protect our capital position in a rising rate environment. Our credit losses remain low with year to date net charge offs of 27 basis points and our liquidity coverage remains robust with an unmodified LCR ratio of 111%. We delivered these outcomes while sustaining flat core operating expenses on a sequential basis with a similar expectation for flat in Q4. Nonetheless, we continue to invest. With our total investment dollars up 25% year over year, including meaningful increases in technology and marketing. In summary, customer acquisition and relationship deepening continue to drive sustainable growth and attractive risk adjusted returns. Now let me turn it over to Zachary to walk you through the financial performance for the period.

Zachary J. Wasserman: Thank you, Brant, and good morning, everyone. Our third quarter results reflect continued execution against the strategic priorities Brant just outlined and the expected financial outlook we provided in September. Let's review the principal drivers in more detail on the following slides. Turning to slide 9. Loan activity was led by commercial categories. And overall origination volumes improved as the quarter progressed. Consistent with the comments we made in September. As a result, period end loan balances increased 1.1%, while on an average basis, loans were lower by 0.4% from the prior period. Expanding on the trends for a moment, the growth was driven by C and I lending with strong contributions from corporate and specialty banking asset finance, and middle market banking. These gains were partially offset by lower balances in commercial real estate, auto loans, and residential mortgages. We also saw a normal seasonal decline in distribution finance balances. We remained disciplined in our underwriting criteria and pricing. Which reduced near term production but supported growth in relationships that met our risk adjusted return hurdles. Customer demand appears solid across the broader bank, and we expect sequential growth in the fourth quarter. Turning to slide 10. Average deposits increased approximately $500 million or 0.2%. On an end of period basis, deposit growth approximately equaling loan growth, consistent with our objective of core funding the balance sheet. Growth continued to be driven by customer acquisition and deepening of primary bank relationships. Consumer PBRs increased 4% Business banking PBRs increased 5%. And commercial PBRs increased 7% year over year. Our overall cost of deposits was 190 basis points, an increase of 2 basis points from the prior quarter. Importantly, the pace of deposit cost increases moderated significantly compared to the second quarter. Continued balance sheet optimization efforts helped improve our funding mix and offset impacts from the higher rate environment. We remain focused on full relationship economics, growing core deposits, and managing pricing at the customer and local market level. These actions support profitable growth while maintaining our strong funding profile. Turning to slide 11. Net interest income was approximately $2.1 billion, increasing $18 million or 0.9% from the prior quarter, And 37% from the prior year. Net interest margin increased 4 basis points to 3.25% reflecting higher asset yields, lower average fed cash, as well as continued optimization of our interest bearing liabilities. These benefits were partially offset by lower purchase accounting accretion as we expected and a modest hedge drag. We continue to optimize funding mix and liquidity across the bank, contributing to improved margin performance and supporting NIM expansion during the quarter as we had previously guided. Looking ahead, we expect net interest margin to remain relatively stable into the fourth quarter. Turning to slide 12. Our strong fee revenue performed in line with the expectations we outlined in September. And remains an important source of diversified capital light earnings growth. Value added fee revenues increased more than 15% year over year on a reported basis, inclusive of the Veritex and Cadence partnerships. Sustained investments to build capabilities in our core areas of fee growth, are driving substantial underlying momentum in the key drivers of long term growth. As you can see from the metrics on the right side of the slide. We are seeing increased treasury management penetration, growth in card payment volumes, increased merchant services adoption, expanding wealth relationships, and higher capital markets engagement. At the same time, we are deepening existing relationships and winning larger fee opportunities across the bank. We remain focused on driving fee growth that outpaces balance sheet growth and increases the mix of fee revenues over time. Moving to expenses on slide 13. Noninterest expense was $1.7 billion, essentially flat on a linked quarter basis, while delivering a 120 basis points of positive operating leverage on a trailing 4 quarter basis. We completed the cadence expense synergy actions during the quarter with the full run rate benefit beginning in the fourth quarter. We are also executing our expense reengineering initiatives across the bank. And we expect to reengineer approximately 1.5% of our baseline expenses this year. Creating additional capacity to invest in growth, while delivering strong operating leverage. Looking ahead, we expect to deliver equal to or greater than 100 basis points of positive operating leverage in 2026 on a full year basis. Turning to slide 14. Our capital management priorities remain unchanged. Our top priority remains supporting high return organic growth. next, we support a strong dividend yield and finally, we deploy excess capital where it creates the greatest value for shareholders, including our programmatic share repurchase program. Reported CET1 ended the quarter at 10.1%. Adjusted CET1 was 8.9%. Capital generation remained strong. And continues to support growth, investment, and shareholder returns. Year to date, we have repurchased approximately $460 million of common stock including $100 million during the third quarter and $50 million thus far in Q4. Tangible book value per share was $9.47, Representing a 10% compound annual growth rate over the past 3 years and reflecting strong value creation. We continue to expect Basel III implementation to be favorable to our capital position and currently estimate approximately 70 to 80 basis points of additional CET1 through risk weighted asset relief. Taken together, these factors provide additional capital flexibility supporting growth and shareholder returns. slide 15 summarizes how disciplined management of growth, expenses, capital, and integration execution create shareholder value. Importantly, our underlying earnings power drove 7% tangible book value per share growth in Q3 before shareholder distributions. That performance enabled us to sustain a 4% plus dividend yield and repurchase 6 million shares during the quarter. The business continues to generate very strong returns on capital. Adjusted return on tangible common equity was 16.6% for the quarter and 16.5% on a trailing 4 quarter basis. We continue to expect to trend to the 17% to 18% range in 2027, and 18% plus over the longer term. Turning to slide 16. Credit performance, including delinquency and criticized classification, was consistent with our expectations. Net charge offs were 31 basis points. Increase of 6 basis points from the prior quarter, primarily reflecting 1 commercial credit charge off. We continue to expect full year net charge offs to finish near the low end of our 25 to 35 basis point guidance range. The allowance for credit losses ended the quarter at 1.75%. Providing strong coverage relative to projected charge offs. Criticized assets increased to 4.26% from 4.18% in the prior quarter. And have remained relatively stable over the past 4 quarters, as we continue to risk rate and actively manage the acquired portfolios. The nonperforming asset ratio increased to 90 basis points from 85 basis points. As we stated last quarter, NPAs are elevated due to increases in government guaranteed loan categories which have very low loss content. Our disciplined underwriting standards, portfolio management efforts, and aggregate moderate to low risk appetite continue to position us well to sustain top tier credit performance over time. Turning to slide 17. This slide provides additional context for Huntington's reserve position. As noted, we maintain robust reserve coverage. And our reserve build has been 1 of the largest in the peer group over the past year. Taken together, these metrics reinforce our confidence in the strength of the balance sheet. The quality of the portfolio, and the adequacy of our reserve position. Supported by a lower pace of loan growth and continued improvement in the portfolio mix, including the reduction of our CRE concentration. Turning to our guidance on slide 18. Given where we are in the year, I will provide some color on what we are expecting for Q4 which modestly influences a few of the line items of the full year outlook. Customer activity remains solid, Our value added fee businesses continue to perform well, and partner cost and revenue synergies are being delivered as expected. Our loan growth remains on track to achieve about a 6% organic growth rate approximately 36% on a reported basis,. And as I noted earlier, we expect NIM to be approximately flat in Q4. These 2 factors support our full year NII growth expectation of approximately 35%. We remain focused on match funding our asset growth and optimizing our deposit mix. Based on the Q3 results, now expect full year deposit growth of about 32.5%. Fee income continues to be a powerful driver for us. We expect to generate fourth quarter fee revenue of approximately $750 million, plus or minus the normal variability around an estimate at this point in the quarter. This level indicates a full year growth rate of approximately 31%. We are executing our expense reengineering initiatives while investing in high return growth opportunities across the bank. We expect core expenses to be flat in Q4 versus the Q3 level. Credit performance remains consistent with our expectations, with full year net charge offs anticipated in a lower end of our 25% to 35 basis point guidance range. Looking ahead, we are tracking to our 2027 EPS guidance of $1.75 to 1.83. Concluding on slide 19. Our operating model represents a flywheel of value creation. That enables us to drive strong earnings power and value over time. With that, we will conclude our prepared remarks and move to Q&A.

Operator: At this time, we will be conducting a question and answer session. Thank you. Our first question comes from the line of Erika Najarian with UBS. Please proceed with your question.

Erika Najarian: Zachary, I hope you feel better if you are listening. My first question is you know, thank you for ripping the proverbial Band Aid off, in terms of earlier resetting the guidance at a September conference I guess, a 2 part question because clearly the stock at $15 relative to the $1.75 to $1.83 is less than 10 times. And so I think that what the market is asking and what the question that investors have is, you know, in terms of that track to 2027, number 1, are we done with the cuts? You know, obviously, you know, there is the economy and there is rates, but are we done with the cuts? And, you know, within that question, you know, what was. You know, other than the rate pass, what did you not quite get right? When you first set the 2027 bogey?

Stephen D. Steinour: Erika, thanks for the question. Steven, I will start and I will turn it over shortly to Eric. First, we are quite confident in the earnings outlook Eric will give you a couple of different ways to look at it in a minute. Second, in terms of what we did not get right, we I believe we are in a very. Not believe we are in a very different interest rate environment and a very inflationary environment. And we are in a much different competitive environment. You have seen us pull back in a number of areas. That we referenced in the second quarter call. I think Brent referenced indirect auto and home mortgage as 2. When we came into the year, we talked about wanting to adjust our commercial real estate exposure over a couple of years. that is happening much faster than we would have projected. Reflecting a competitive environment that is more significant this year than we have seen. And you are seeing it deposit pricing and in other ways as well. But that. Those would be the primary factors in terms of needing to make the adjustment we did at the at a recent conference. Eric, let me turn it to you in terms of layering in the outlook for next year.

Eric Edmund Wasserstrom: Thank you, Stephen. And hello, Erika. So I mean, think just to pick up on the tail end of Stephen's comments. Coming into the year, the expectation, I think, was for rate cuts and it was looking at that point as to be a very benign competitive environment. And what you have seen is now the opposite where you have seen rate hikes. And real intensification around competition in a few ways. And certainly, that is the environment that we are extrapolating into next year. We expect no diminution in the overall competitive environment. And so that characterizes how we are thinking about our guidance from here. And maybe just to do sort of a mathematical bridge, If I look at the consensus for this year, it looks like it is about $1.54. And for next year it is $1.76. So that is a $0.22 delta. So how do we bridge the $0.22? I think there is effectively 3 components to that. The first is we expect to realize about $150 million of incremental cost synergies as we anniversary the run rate benefits that we have achieved in terms of the cadence synergies late this year. So that is about $0.06 of delta. And our share repurchase program is about $0.02 So if I take $0.22 less $0.08 that gets me to $0.14 of core earnings growth. On a basis of $1.54 that is about an 8% to 9% growth rate. Which is imminently achievable for us certainly relative to our history. But maybe 1 way to pressure test that Erika might be to look at the low end of the guidance next year and see if that still hangs together. So what are we saying? We are saying 6% loan growth which we are tracking to currently and expect to continue and flat and flat NIMs. That would tell you NII of about 6% plus a percentage point or 2 of fee income generation would get you to revs of 7%, 8% and operating leverage of 300 basis points. If you back out the $150 million that I just mentioned and just take the low end of our secular expectation of 100 basis points, You are looking at PPNR growth we think next year of 9% to 10%. So we feel very, very confident about delivering the 1.75 to 1.83 next year. Erika, thanks for the question. I am sure this is on the minds of most. Thank you. And, Erika, that was a good bridge.

Erika Najarian: And sort of a follow-up question maybe for both Stephen and Brant. On the CRE side, were there just sort Of Deals And Relationships In Sort Of Your New Markets That Did not Quite Pass The Huntington test in terms of the pressure from this, or was it the rate environment? And as we think about the PPNR growth of 9% to 10%., did you sort of pressure test that against your conservatism vis a vis you know, how you think of growth.

Stephen D. Steinour: The answer is yes to the second question. And there was a fair amount of refinance activity as you, as you suggested, tied to a rate expectation. So we saw a fair amount of flow frankly, much more than we expected, in the month of July and August into Fannie Freddie Some of it went to debt funds. I would characterize that as loans that would be a low pass or criticized on the CRE side. So the debt funds were offering more flexibility than the perceived posture of us but most of it went to Freddie and Fannie. And it was not the new partnerships the majority of it came out of the existing franchise. Again, a good rate at a hike anticipation and an opportunity to lock in particularly the Freddie Fannie stuff. At that at that time. Now going forward with the. With rates up, the activity will slow and that is in our expectation and outlook for 27. The area we have been most focused on is the amount of construction commitments and that significantly reduced during the quarter. it is about percent for commercial real estate construction commitments. So over the course of the next couple of years, that. Those commitments will continue, but at a much more modest level. And we will manage it on that base. And we see this is just a risk management strategy on our part. Got it. Thank you.

Operator: Our next question comes from the line of Jon Arfstrom with RBC. Please proceed with your question.

Stephen D. Steinour: Good morning, Jon.

Jon Arfstrom: Good morning.

Stephen D. Steinour: Good morning. Just a follow-up on some of these comments about lending, Steven. You are flagging a more competitive, less rational environment. What changes that in your view? And, you know, you are lagging the h 8 data a little bit. I am assuming you are not happy with that. But what in your mind is the right pace of loan growth for your company? Given all the new markets? Well, Brant, add into this too, given his new responsibilities. But we. We are we are we are. Long term in our approach we are going to maintain our aggregate moderate to low risk appetite. We have all been talking about a k shaped economy that is getting more stressed with rising rates. And an expectation of further rate rises. Our own view, at least my view is that rates are going to be up for. Stay up for a while. At higher levels. So with that, that will put pressure on pricing commercial real estate and elsewhere. And that will have a. Over time, a dampening effect And I do not know when that may occur, but having been around this for 4.5 decades, I am a little more cautious perhaps. Than some of my peers at this moment. I do not see a tipping point. I do not think this is a 2006-2007 event, but there is just so much volatility in the markets today. And I do not recall the amount of challenges that we are seeing globally at any time in my career. So I am naturally, we are going to be sensitive to that in terms of how much volume we want to we wanna add. Additionally, with the competition, we are seeing areas where we are just not getting risk adjusted returns. And rather have capital and return it to shareholders than put it out at what we think would be very low returns, in some cases, not even meeting our minimum expectations. So, John, I am not calling for a downturn. But just trying to be cautious as we as we tighten up here with 17 years of recovery behind us. Brant, what do you want to add?

Brantley J. Standridge: Yes. John, I would just add a couple of things. 1, to reiterate Stephen's point, auto and specifically resi are 2 places that margins have gotten much tighter, obviously, the case of resi demand a little lower because of interest rates. But our pullback really reflects more of capital allocation discipline versus a change in the ultimate business. And just from a Q3 perspective, I would say loan balances were pretty much as we said and as we expected But we are also still tracking towards our guide for the full year 2026, which as you know would imply a strong fourth quarter. And you see the momentum for that strong fourth quarter in the end of period balances at the end of the quarter. Pipelines remain strong. In fact, in a number of our commercial businesses, the largest pipelines we seen. And so we feel confident about our ability to grow into the fourth quarter and also achieve the guidance that we have outlined for growth in 2027. And we are assuming that those competitive pressures that we are feeling in those 2 businesses continue into 2027. Should that change? And should that become more attractive, then we have obviously upside opportunity there. But we are assuming that, that will continue for the full year next year. Right.

Jon Arfstrom: Okay. I guess the follow-up on that and I think what you are saying is it is just a competitive issue. it is not a credit issue. And Stephen, you are not seeing anything from a credit point of view that is going to change your appetite? Is that fair?

Stephen D. Steinour: that is correct, Jon. You know, there is a. We are we are making a strategic credit capital allocation in terms of commercial real estate. And to adjust here, which we expect to continue to do over time. But you know, the businesses are. The other businesses are doing very well. And in terms of both real estate and indirect auto lending, that is just pricing and return. The capital allocation issue for us, referenced. We do not change our underwriting. We have not changed it in 17 years. You see the quarterly stats on the consumer side. So if it gets back to where the returns are adequate, then we will open it up. Alright. Thank you very much. Thank you.

Operator: Our next question comes from the line of Ken Usdin with Autonomous Research. Please proceed with your question.

Ken Usdin: Hey, thanks. Good morning. Just a follow-up bridge to I am good. Thanks. I am good. Just another follow-up on the bridge to 27 Just because there is a gap in belief between the PPNR and the EPS, it is hard to look this far out, but since you did on the walk, what is your outlook for credit look like in that? And maybe even just help with tax rate and could the buybacks be bigger even than what you have outlined as your expectation? Thanks.

Brendan Lawlor: Ken, this is Brendan. I will start with the credit outlook, and Eric can chip in at the end here. We continue to feel very confident in the both the construct and our execution around the credit portfolio. We have had very stable and strong performance for the last year. We have through 9 months this year, we are at 27 basis points of charge offs in the low end of our guided range, and we feel really good about overall composition of the portfolio. And we expect that to continue into 2027. And so, where I sit today, I think credit is a very stable part of the portfolio and, you know, feel pretty good about how that sets us up for 2027. Eric? Do you have anything?

Eric Edmund Wasserstrom: No. I think, Ken, you are very politely asking whether reserve release is part of our story for next year. And let's just say-- I am-- I think of this vigorously that it does not contemplate any reserve release in 2027. I think our expectation is that we will be building reserves as our portfolio grows.

Brendan Lawlor: Yep.

Eric Edmund Wasserstrom: Okay.

Ken Usdin: And then should we just expect, like, similar tax rate to continue? And then you guys have articulated the buyback, so I assume that is the path that you would expect to continue on?

Eric Edmund Wasserstrom: Yeah. I mean, no anticipated changes to our to our statutory for sure. In terms of share repurchases, you know, our expectation is that between this year and next year, to carry out a repurchase program of about $1.8 billion to $1.9 billion You saw us do the 100 million in the third. We have done 50 so far in the in the fourth. And it is our goal to continue execute against that plan. While also accreting capital higher as based largely on our very attractive return profile, which is nearly a 17% ROTCE. Yeah. Okay. Thank you.

Operator: Our next question comes from the line of John Pancari with Evercore ISI. Please proceed with your question.

John Pancari: Good morning. Good morning, All right. I appreciate all the discussion around competition and everything. Maybe if you could kind of talk about how that is interpreted on the-- on the personnel side. Maybe if you could update us on the banker retention of the Texas acquisitions and relationship retention. And competitive pressures there, have you been able to retain the bankers that you anticipated now that you have integrated the deals? Or has that impacted at all your pricing strategy in those markets?

Brantley J. Standridge: John, this is Brantley. I will take that. And first of all, I would say, as it relates to retention of both customers and bankers, it is within the expectations that we set at the beginning of this 1 of the things that we put a tremendous amount of focus on during the process leading up to the announcement was the identification of the leadership and the retention of the leadership. In fact, as we have described, we were able to bring several 100 leaders under the tent before the announcement so that they were sure about what their future looked like, and we were intentional about how to approach retention of those individuals. And I would say we have been very successful at retaining the top leadership within the Cadence organization. And then that is translated to achieving our expectations from a banker perspective. As it relates to customers, there is anytime you go through this, there are obviously going to be customers that may not fit the new organization, but none of that has been outside of our appetite. And we continue to see really significant opportunity in these new markets. And in fact, at Barclays, we shared that our expectations for revenue synergies were actually higher than what we had originally committed. So in short, John, we are feeling positive about where we are and very, very optimistic about the opportunities that these markets present to the company.

Stephen D. Steinour: And, John, we are continuing to invest and build out capabilities in a variety of these markets. And in different business lines. Brant, do you want to pick up on that in terms of some of the wealth and commercial capital markets Yes, absolutely.

Operator: And so, John, go back to your question about pricing and how do we think about it.

Brantley J. Standridge: 1 of the biggest revenue synergies is just the optimization of the Cadence deposit portfolio. And that continues to we continue to be in line with our expectations there. And as you saw in our relative performance from a deposit perspective, I think our results this quarter reflect the opportunity that, that has presented. As it relates to the revenue synergies, bringing other capabilities of the company into these new markets. Is still a big opportunity. So whether that is in the payments area, where you saw from our prepared remarks, we continue to have very strong growth in specifically very strong commercial growth or whether that is in wealth management where we continue to experience growth, not just in the new franchise, but in the core franchise. That is still an opportunity. We are adding resources as we speak in those markets. And then in our capital markets business, capabilities that we bring to the table for the new Cadence customer base is substantial. And that business overall is doing quite well. First and second quarter were both record quarters. If you look at the year over year performance, in the capital markets business, it is very strong. So we are we are as I said, we are very optimistic about our opportunity. And across really the South and Texas and what this partnership for us.

Stephen D. Steinour: John, we expect to continue to invest, add to the team's built further our capabilities to deliver locally in Texas and the South. As we go forward. We have had some great recruiting throughout the year. Particularly the commercial side and wealth businesses and that will continue that amongst the various businesses through 2027. And probably beyond. Okay. Great. Thanks for that. I appreciate all the detail.

John Pancari: And then on the funding side, I know in the prepared remarks, noted that the pace of deposit cost increases have moderated significantly recently. Maybe just give a little bit of color on what you are seeing and across what products? And maybe help us with the updated deposit cost outlook and maybe how you are thinking about the deposit beta as you look into the next several Fed actions? Thanks.

Brantley J. Standridge: Yes, John, I will start with that and then Eric can pick up on the beta component. First of all, just from a competitive environment, related to funding and deposits, I would say it is relatively stable since September still very competitive, but we believe rational. We look at deposit pricing across more than 50 rate regions. And we continue to optimize the pricing market by market. Where we have seen more pressure is really on CD pricing. We are seeing some aggressive action in CD pricing. If you look at pricing across our different geographies, I would say overall the Midwest is still the most competitive market we are in. If you just look at pure cost of a new deposit dollar, but more competitive really in MMA And we are seeing some pressure in Texas in the Southeast from a CD perspective. We continue to think about pricing at both the market level, a product level, a customer level and then the opportunity I mentioned, earlier on continuing to optimize the cadence portfolio. Our focus has been and will continue to be on generating new primary checking households. The vast majority of our deposit production actually comes from those checking households. And then clearly adding checking households adds to the non interest bearing component of our deposit base. We are seeing some excellent success as we have introduced digital across the Southeast and Texas we actually see total production of checking households year over year up 35% for the company. And that is comparing the Huntington history the Veritex history and the Cadence history to us would also share, and you saw this on Page 6 of our debt our I am sorry, Page 8 of our debt. What we are seeing with growth in the deposit verticals as we built out specialty in commercial businesses, we are still seeing really strong growth in our commercial deposit verticals, which provide another opportunity. And then lastly, just deposit balance production overall business and consumer for the company because of the addition of the new geographies up 26% year over year. So the new geographies, the new capabilities in commercial the opportunity that we have to optimize in cadence footprint combined with that long term focus on primary households.

Eric Edmund Wasserstrom: Give us confidence really as we go forward from a funding John, just to pick up on Brant's comments there. Of course, our overall objective is to core fund the organization and you saw that this quarter. With loan growth of about $2 billion and deposit growth of $2.2 billion. So really achieving the strategic objective of funding. As it relates specifically to beta as I indicated we are not anticipating any form of abatement in the competitive environment. And so embedded in our expectation is a beta of around 50 to 60%. And I guess the question is, you know, how well grounded is that expectation? And I would say there is a few things that give us some view that is a well pressure tested figure. First of course it is in fact what we are experiencing in the marketplace currently. At this very high level of rational but high level of competitive intensity. Secondly, intuitively you would anticipate that would be higher than prior upcycles. And so when we look back at the last upcycle, which was 22 to 24, our up beta was around 45%. So that does seem to substantiate that 50 to 60 is well grounded in a in a different and more competitive environment. And then lastly of course I was very interested in understand where we were relative to our peer set. Most of our peers either in their in their discussion on their quarter or when I did the arithmetic on their on their numbers generally look to be around 40 to 60% and I would anticipate that we would be at the higher end of the range given the specific complexion of our deposit base. So the net of that is that we feel that 60 is a very well grounded figure. Thanks, Eric. Appreciate it.

Operator: Our next question comes from line of Manan Gosalia with Morgan Stanley. Please proceed with your question.

Stephen D. Steinour: Hey, Manan.

Manan Gosalia: Hi. Can you hear me? Yeah. Now we can. Sorry. Go ahead. All right. Yes, I wanted to dig in a little bit more on the resiliency of the C and I loans. As you think about the demand from here and what might happen if rates rise further Where do you expect the demand to come from? And where do you expect the growth to come from? Is it Is it more from new geographies and new hires and share gains? Or is there all better demand coming because of AI even though rates might move higher? from here. Yeah.

Brantley J. Standridge: Manan, this is Brant, I will take that question. First of all, just from an environment perspective, I would say the environment for commercial customers is still constructive. We see strong engagement from our customers Their outlook is generally positive heading into 2026 and 2027. We are still seeing customers pursue growth opportunities We are still seeing customers execute on a number of strategic initiatives. And I would say CapEx spending is still strong. And as a result of that, our pipelines are still healthy, well diversified and frankly, just given a number of the factors, some of the strongest that we have seen. And as I stated earlier, in Jon's question, you see that in the growth in our balances and the momentum that we are carrying into the fourth quarter. As it relates to your question of where does that come from in the future? Is it geography? Or is it is it new verticals? Where is it? it is really both. And that is the beauty of the opportunity that we have in front of us is that we have multiple potential growth levers. That gives us the flexibility to pull back in businesses like auto and resi where the yields are not as we would like and still grow the balance sheet. At a level that is very acceptable. But we still have a lot of opportunity, both in our core footprint where we are growing and you saw and also in the new geographies with what I would call our core geographic banking model. But then we have the expansion of a national commercial bank that is in its early innings still. We have a number of our specialty verticals that are really beginning to gain traction. You see that in the growth that we outlined year over year. And we expect that to continue. And so given the number of kind of broad based opportunities we have, that is how we feel confident in our ability to continue to grow at the guidance that we provided.

Stephen D. Steinour: But, Manan, I will just add, we are the third or fourth largest bank equipment finance company. And the Build Back Better has accelerated depreciation and other tax attributes that are inducing investment. And we are just very well positioned to pick up on that on the equipment finance side. So our asset finance business is looking very good and strong going into the fourth quarter. As it has historically. Got it. Very, very helpful.

Manan Gosalia: And maybe just to follow-up on the NIM side. So you spoke about all the benefits you have on the deposit side. The curve is better. So, you know, you should be getting some more back book repricing as well. And you are you are getting strong loan growth. So I guess, you spoke about stable NIM, but is there a higher likelihood of NIM expanding from here given that rates are moving higher and the longer the curve is up?

Eric Edmund Wasserstrom: Yeah. Thanks, Manan. it is Eric. I would say that we are definitely anchoring our expectations in stable NIM. We are to your point modestly asset sensitive. And that does benefit us in an environment like the current 1 where you are seeing steepening. But I think as we think ahead, expect fairly significant benefit from fixed asset repricing But to the conversation that we just had, I think we are also taking a very conservative posture as it relates to our expectations around deposit costs. Deposit costs we are addressing both through the all of the mechanisms that Brant just described as well as well as the optimization that we are doing across the cadence footprint, which, of course, is 1 of the opportunities that we identified at the time of that of that partnership. And so I think really to the extent that there is upside it is going to be a function of the shape of the curve and the changes in the competitive environment. But those are not our baseline expectation and so we would anchor to a flat outlook from here. A level that, at a level that, relative to our history is very robust, you know, 3.25. Got it. Thank you.

Operator: Our next question comes from the line of Scott Siefers with TD Cowen. Please proceed with your question.

Analyst: Hey, so I definitely appreciate you guys addressing all these topics on the competitive environment. And I guess I would say, looks like based on what we see in the third quarter number specifically and some of the discussion here this morning, you are kind of having some success resolving those concerns. But 1 of the most frequent things I hear is there is just sort of skepticism around the competitive argument given that others seem to be impacted much less so than you all with kind of the exception being how much faster you all have grown in the last couple of years. I guess, just at a very top level or philosophically, in light of all you have said and what we can start to see in the numbers, can you sort of level set you know, where Huntington strives to play, from here as either leader middle of the pack, or laggard on pricing both on loans and deposits?

Brantley J. Standridge: Scott, I can start with that. I mean, what we want to do with our customers is exchange value for value. that is how we would ultimately think about it. And we obviously look at the decisions that we make from a deposit perspective and how we how we optimize funding within the company, with the objective of creating the mode. The appropriate NIM and funding cost for the for the company. But we also look at that from the perspective of the value of an overall relationship of the customers that, that represents. As it relates to asset pricing, we are very conscious of using the capital appropriately. And where there is where we find that we cannot achieve an appropriate return on our capital, we chosen to take less volume. And that is ultimately what you have seen happen over the course of last 6 months, specifically in auto and to a lesser degree in resi mortgage. So we would we want to create returns and ultimately a return on tangible at the levels that we have described. And being disciplined about how we price deposits and funding and then being disciplined about how we allocate capital on the asset side of the sheet. Is an important part of that equation.

Operator: Scott, maybe just to pick up on the last tail end of your question about know, how it is reflected in the numbers.

Eric Edmund Wasserstrom: In an environment that Brant just described and you know, and what we are doing in terms of being you know, very rational around risk adjusted return. We are growing organically at 6% and are generating a nearly 17% ROTCE where our peers are growing 7. That does not seem to me like a significant difference with respect to overall production, pretty relative to our history where we have massively outperformed the industry in terms of growth. Yeah. that is a and that is a good point. I appreciate that. Maybe as a follow on, was hoping. And maybe Eric best for you, just on the fee expectations, you know, any. Anytime there is a tweak cover small, you know, maybe a few weeks after the prior 1. It always generates a bunch of questions. So, mean, I think I have a sense for what might have changed in the last few weeks, but you know, what kind of caused the tweak lower for the full year fee guide? And then maybe you can sort of walk through the puts and takes you see to get to that sort of $57-ish number, implicit for the fourth quarter. Yeah. So look, I mean, the fee story continues to be a really, really strong 1 for us. We came into this year as a reminder thinking on a reported basis, we would be somewhere between 26.5% to 29.5% growth. And now we think we are going to be at 31%. So there is been significant outperformance on fees really across all areas of our strategic fee categories, but particularly capital markets, which has been an outstanding story for us. You know, at Barclays, we said we would be around $7.30 and we came in just a little bit underneath that. Of course, the primary delta being the massive move higher in rates over the course of the quarter. Which impacted some of our capital markets activity and to a lesser extent mortgage banking. But as we think about the fourth quarter, and the $750 million, recognizing that it is still a little earlier in the quarter, You know, we see several things contributing. First, capital markets continue to be strong and the underlying dynamics there are very healthy. We continue to give gain more customers across our corporate footprint and our attachment rates are improving. Payments had an extremely strong quarter this quarter. It was 3% sequential growth, right? So that is obviously annualizing to a 12% rate. So somewhat above the secular expectation that we have of high single digit. And wealth this quarter, we had 9% household growth. And on organic basis, 14% assets under management growth. So again, I think all of key strategic levers continue to work at a very significant level. So, you know, we have got, you know, we have got a pretty strong view on the on the 31%, notwithstanding all the fluidity in the rate and competitive environment. Yeah. Perfect. Alright. Thank you for all the color. Thank you.

Stephen D. Steinour: Let me close with 3 thoughts. I know we have gone over a little bit. Thank you, Chris, as well. You-- I interrupted you To do the wrap here. First, I think we are very strategically well positioned with substantial scale and high growth markets that we were not present in a year ago. And our value added fees are showing the investment and the returns we want to achieve. Second, we are disciplined in our execution and it is driving solid operating performance in a changing environment. Third, our partner integrations are delivering. We have got the cost synergies. They are fully achieved. Our revenue synergies are tracking ahead of original expectations. The partnerships are certainly expanding our growth runway of Texas and the South. And we are achieving all this while adhering to our aggregate moderate to low risk appetite, and you see that in some of the areas we are actually pulling back because we cannot get the return for the risk. Huntington today is a stronger, broader, and more capable company with an experienced management team that is been supplemented by the partnerships and the other investments we have made. We are very focused on execution and achieving or beating our objectives. But our outlook reflects the environment we see today, and we remain confident in our ability to deliver substantial long term shareholder value, including the EPS estimates for 2027. Finally, I want to thank our more than 25 thousand colleagues for everything they are doing. In a year of substantial change within the company their efforts to strengthen and bolster us are deeply appreciated. So thank you for your interest in the company. Have a great day, everybody.

Operator: This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.