Huntington Bancshares (HBAN) Q1 2026: Fee Revenue Surges 18% as Partnerships Accelerate Earnings Power

April 23, 2026 | By EarningsIQ Research

Huntington Bancshares delivered a standout Q1, powered by double-digit fee revenue growth and disciplined cost control, as integration of recent partnerships begins to compound core earnings power. Management’s tone signaled confidence in achieving higher returns and efficiency milestones, even as guidance was tempered for net interest income. With fee-based businesses and synergy realization outpacing expectations, the bank’s model is pivoting toward higher-value, less rate-sensitive growth engines.

Summary

• Fee Revenue Acceleration: Payments, wealth, and capital markets outperformed, driving faster-than-expected fee growth.
• Synergy Realization on Track: Integration of Cadence, Veritex, and recent acquisitions is already compounding returns.
• Expense Discipline Tightened: Cost actions and efficiency programs are being dialed up to offset macro headwinds.

Performance Analysis

Huntington’s Q1 performance was characterized by robust organic growth, exceptional fee income, and disciplined expense management. On an adjusted basis, fee income rose 18% year over year, led by payments (up 21%), wealth management (up 19%), and a record quarter in capital markets (up nearly 60% organically). These fee businesses now represent an increasingly material share of revenue, helping to offset more modest net interest income (NII) growth as loan expansion moderates toward the midpoint of prior guidance.

Deposit growth remained strong, with core deposits up 2.3% quarter over quarter, reflecting continued primary relationship acquisition and successful integration of acquired funding bases. Operating expenses, normalized for one-time items and the absorption of new partners, increased only modestly, as Huntington continues to deliver positive operating leverage. The bank’s efficiency ratio is on track to reach the mid to low 54% level by Q4, reflecting both cost synergies and ongoing reengineering initiatives.

• Fee Income Outperformance: Broad-based client activity and new capabilities drove fee revenue above plan in every major vertical.
• Deposit Franchise Strength: Relationship-led deposit gathering, including digital expansion in the South, is fueling core funding.
• Expense Flexibility Demonstrated: Targeted cost actions, including $50 million in baseline tuning, are being deployed to maintain operating leverage.

Balance sheet strength remains a differentiator, with liquidity and capital ratios well above peers and regulatory minimums, enabling both continued investment and increased capital return.

Executive Commentary

Strategic Positioning

1. Multi-Engine Growth Model

Huntington’s strategy is anchored in a super-regional bank model, with multiple growth engines spanning commercial verticals, value-added fee services, and geographic expansion. Recent investments in the Carolinas, Texas, and the South, along with specialty business build-outs, are designed to diversify and stabilize revenue through cycles.

2. Synergy Realization and Integration Discipline

Integration of Cadence, Veritex, Janney, and TM Capital is proceeding on schedule, with cost and revenue synergies already contributing to results. The Veritex conversion is complete, Cadence is on track for June, and both are expected to be fully accretive within 2026. Dedicated teams and early onboarding of 6,000+ new colleagues and 1.5 million customers are laying the groundwork for durable growth.

3. Fee-Based Business Expansion

Payments, wealth management, and capital markets are now clear power alleys, with double-digit growth and record performance in Q1. New product capabilities and cross-sell opportunities from recent partnerships are accelerating revenue synergies, with management raising its fee income growth target to 31-33% for the year.

4. Expense and Efficiency Levers

Ongoing cost discipline is a core element of Huntington’s value creation flywheel. The bank has removed over 1% of its cost base annually for six consecutive years, and current actions are focused on accelerating efficiency programs and reprioritizing investments for higher near-term impact. AI-driven process transformation and targeted investment in digital and talent are supporting both productivity and customer-facing innovation.

5. Capital Allocation and Shareholder Returns

Strong capital generation is enabling both reinvestment and increased capital return. The board approved a new $3 billion buyback authorization, with $550 million planned for 2026 and expectations for $1.1–1.2 billion in 2027, pending Basel III Endgame benefits. Dividend support and high-return loan growth remain top priorities, with selective M&A off the table for now.

Key Considerations

Huntington’s Q1 results highlight a business model shifting toward higher-value, less rate-sensitive growth, with fee income and synergy realization offsetting macro headwinds in net interest income. The bank’s operational flexibility and capital strength provide levers to manage through potential volatility.

Key Considerations:

• Fee Revenue Momentum: Outperformance in payments, wealth, and capital markets is structurally lifting earnings power and reducing rate sensitivity.
• Deposit and Loan Mix Optimization: Growth is being managed for profitability, with a focus on reducing commercial real estate exposure and matching loan growth to core funding.
• Expense Management Playbook: Flexibility to accelerate efficiency programs and modulate investments allows Huntington to defend margins even if macro conditions soften.
• Capital Return Upside: Basel III Endgame is expected to unlock additional share repurchase capacity in 2027, further enhancing shareholder value.
• Integration Execution Risk: While integration is on track, ongoing talent retention and culture alignment remain critical to realizing full synergy potential.

Risks

Huntington faces potential headwinds from slower-than-expected loan growth, persistent deposit competition, and margin compression as the industry navigates a more uncertain macro backdrop. Commercial real estate exposure, while being actively reduced, remains an area of vigilance. Integration risk persists, particularly around talent retention and culture fit in newly acquired businesses, though management reports strong progress to date.

Forward Outlook

For Q2 2026, Huntington guided to:

• Net interest margin in the high 320s, reflecting higher Fed cash balances and modestly higher deposit costs.
• Continued strong fee income growth, with the full run-rate benefit of Veritex synergies realized.

For full-year 2026, management tightened guidance:

• Fee income growth raised to 31-33%.
• Expense growth narrowed to the lower half of the 32.5-33.5% range, inclusive of higher variable costs from fee revenue outperformance.
• Efficiency ratio targeted at mid to low 54% by Q4.

Management emphasized that organic growth, synergy capture, and expense discipline will offset lower NII, and that the bank remains on track for its 2027 EPS and ROTCE targets.

• Q4 will reflect the full benefit of cost synergies and provide a clear view of go-forward earnings power.
• Basel III changes expected to unlock further capital return in 2027.

Takeaways

Huntington’s model is pivoting to higher-value, fee-driven growth, with integration synergies and cost discipline compounding core earnings power. Capital strength and flexibility in expense management provide levers to navigate macro uncertainty and defend returns. Execution on integration and retention will be critical to sustaining momentum into 2027.

• Fee Engine Drives Outperformance: Payments, wealth, and capital markets are now central to the bank’s growth narrative, reducing reliance on spread income.
• Integration Is a Springboard, Not a Drag: Synergy realization is ahead of plan, and management is confident in delivering full run-rate benefits by year-end.
• Expense and Capital Levers Remain Intact: Flexibility in cost structure and capital return plans provide downside protection and upside optionality as macro conditions evolve.

Conclusion

Huntington’s Q1 results mark a strategic inflection, with fee-based businesses and synergy capture driving higher returns and efficiency. With disciplined execution and capital strength, the bank is positioned to deliver on its elevated 2027 targets, though ongoing integration and macro vigilance are necessary watchpoints.

Industry Read-Through

Huntington’s outperformance in fee income and disciplined expense management signal a broader pivot for super-regional banks toward diversified, less rate-sensitive revenue streams. Integration of specialty businesses and digital expansion in growth markets is a playbook likely to be echoed across the sector as traditional NII levers face pressure. Capital return flexibility, enabled by regulatory tailwinds, will become a key differentiator for banks with strong balance sheets and execution track records. Peers lagging in fee business development or integration discipline risk falling behind in both valuation and earnings power as the cycle evolves.

HBAN Financials Banking Fee Income Partnerships Capital Return Expense Management