Huntington Bancshares’ SWOT analysis: stock poised for growth amid challenges

Huntington Bancshares Incorporated (NASDAQ:HBAN), a prominent player in the U.S. banking sector with a market capitalization of $22.87 billion, has been navigating a complex financial landscape with a mix of strategic initiatives and operational challenges. This comprehensive analysis delves into the company’s recent performance, market position, and future prospects, offering insights for investors and market watchers alike. According to InvestingPro data, the stock is currently trading near its Fair Value, with a P/E ratio of 11.79 and revenue growth of 7.91% over the last twelve months.

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Financial Performance and Market Position

Huntington Bancshares has demonstrated robust financial performance in recent quarters, particularly in terms of loan growth and net interest margin (NIM) expansion. The company’s loan portfolio has grown by approximately 9% since March 2023, significantly outpacing its Mid-Cap Bank peers. InvestingPro analysis reveals that seven analysts have recently revised their earnings estimates upward for the upcoming period, suggesting growing confidence in the bank’s performance trajectory. This growth has been accompanied by a 14% increase in deposits over the same period, underscoring the bank’s strong market position and customer trust.

The bank’s net interest income (NII) has been trending towards the upper end of its guidance, with NIM performing better than expected. Analysts project that HBAN’s NIM will continue to expand into 2026, driven by fixed-rate asset repricing tailwinds and strong deposit growth. This positive trend in NIM is expected to contribute significantly to the bank’s overall profitability in the coming years.

However, fee income has been a point of concern, with recent reports indicating softer performance than anticipated. The bank’s management has projected fee income to be around $500 million for the first quarter of 2025, which may require close monitoring as it could impact overall revenue growth.

Strategic Initiatives and Expansion

A key strategic move for Huntington Bancshares has been its acquisition of VBTX, announced in July 2025. This acquisition is set to serve as a catalyst for the company’s expansion into the Texas market, increasing its total assets by 6% and doubling its loan presence in Texas from 5% to 11%. The bank’s strong financial foundation is evidenced by its impressive 55-year track record of maintaining dividend payments, demonstrating long-term stability and commitment to shareholder returns. While the initial benefits from this acquisition are expected to be minimal, it positions HBAN for long-term growth in a dynamic market.

The company has also implemented a significant share buyback program valued at $1 billion, representing approximately 5% of its outstanding shares. This move demonstrates management’s confidence in the company’s financial health and commitment to delivering shareholder value.

Operational Efficiency and Risk Management

Huntington Bancshares has shown improvements in operational efficiency, with increased revenues per employee and a reduction in branch count while simultaneously increasing deposits per branch. These efficiency gains have contributed to controlled expenses, which have helped mitigate the impact of lower fee income on overall profitability.

On the risk management front, the bank has reported an increase in criticized loans, particularly in commercial and industrial (C&I) and commercial real estate (CRE) sectors. The allowance for credit losses (ACL) ratio is based on an assumed unemployment rate of 4.1% in Q4, indicating a cautious approach to potential economic headwinds. The office portfolio, valued at $1.6 billion and representing 1% of total loans, carries an ACL of 11%, reflecting the bank’s prudent risk assessment in this sector.

Market Outlook and Analyst Perspectives

Analysts maintain a generally positive outlook on Huntington Bancshares, with several firms setting price targets above the current trading price. The consensus among analysts suggests that HBAN is well-positioned to benefit from ongoing productivity and efficiency improvements, benign credit conditions, and capital return potential. The stock’s RSI currently indicates oversold territory, potentially presenting an opportunity for value investors. With a return on equity of 11% and strong cash flow generation, the bank demonstrates solid fundamental strength.

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The bank’s management has indicated potential upward revisions to full-year guidance, driven by better-than-expected loan growth and NIM performance. This positive outlook is tempered by broader economic uncertainties and the potential for interest rate volatility, which could impact the bank’s performance in the medium term.

Bear Case

How might increasing criticized loans impact HBAN’s financial stability?

The rise in criticized loans, particularly in the C&I and CRE sectors, poses a potential risk to Huntington Bancshares’ financial stability. An increase in criticized loans often precedes a rise in non-performing assets and loan losses, which could negatively impact the bank’s profitability and capital ratios. If economic conditions deteriorate, HBAN may need to increase its loan loss provisions, directly affecting its bottom line. Moreover, a higher proportion of criticized loans could lead to increased regulatory scrutiny and potentially limit the bank’s ability to pursue growth opportunities or return capital to shareholders.

What risks does HBAN face in integrating its recent acquisition?

The acquisition of VBTX, while strategic for HBAN’s expansion into the Texas market, carries integration risks that could impact the bank’s performance. Merging different corporate cultures, aligning operational processes, and consolidating technology systems can be complex and costly. If not managed effectively, these challenges could lead to operational inefficiencies, customer attrition, or unexpected expenses. Additionally, the initial minimal benefits expected from the acquisition may put pressure on HBAN to accelerate synergies or pursue further acquisitions, potentially straining resources and increasing execution risk.

Bull Case

How could HBAN’s strong loan and deposit growth translate to long-term value?

Huntington Bancshares’ impressive loan and deposit growth, outpacing its peers, positions the bank for sustained long-term value creation. Strong loan growth, particularly if maintained with prudent risk management, can lead to increased interest income and market share gains. Robust deposit growth provides a stable and cost-effective funding base, supporting NIM expansion and reducing reliance on more expensive wholesale funding sources. This growth trajectory, if sustained, could result in improved economies of scale, enhanced profitability, and potentially higher valuations relative to peers. Furthermore, it demonstrates HBAN’s ability to attract and retain customers, which could lead to cross-selling opportunities and deeper customer relationships over time.

What potential benefits could arise from HBAN’s expansion into the Texas market?

HBAN’s expansion into the Texas market through the VBTX acquisition presents significant opportunities for growth and diversification. Texas boasts a robust and diverse economy, often outperforming national averages in terms of GDP growth and job creation. By doubling its loan presence in Texas, HBAN gains exposure to new customer segments and industries, potentially reducing its concentration risk in other regions. The expansion could also provide a platform for organic growth in a high-potential market, allowing HBAN to leverage its existing product offerings and banking expertise. Over time, this strategic move could contribute to increased revenue streams, improved geographic diversification, and enhanced overall financial performance for the bank.

SWOT Analysis

Strengths:

• Strong loan and deposit growth outpacing peers
• Improving net interest margin and income
• Efficient expense management and operational improvements
• Strategic expansion into the Texas market

Weaknesses:

• Lower than expected fee income performance
• Increasing criticized loans in C&I and CRE sectors
• Initial minimal benefits from recent acquisition

Opportunities:

• Potential for further market expansion and acquisitions
• Continued NIM expansion through 2026
• Cross-selling and deepening customer relationships in new markets
• Benefiting from industry consolidation trends

Threats:

• Economic uncertainty and potential downturn
• Interest rate volatility affecting NIM and asset values
• Intense competition in the banking sector
• Regulatory changes impacting operations or capital requirements

Analysts Targets

• Barclays: $19.00 (October 9th, 2025)
• Wolfe Research: $21.00 (July 3rd, 2025)
• Barclays: $19.00 (June 26th, 2025)
• Barclays: $19.00 (April 30th, 2025)
• Piper Sandler: $15.00 (April 21st, 2025)
• RBC Capital Markets: $18.00 (April 21st, 2025)

This analysis is based on information available up to October 13, 2025, and reflects the most recent data and analyst perspectives on Huntington Bancshares Incorporated.

InvestingPro: Smarter Decisions, Better Returns

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