Huntington Bancshares: Can A Midwest Regional Keep Raising Its Payout

Huntington Bancshares (NASDAQ:HBAN | HBAN Price Prediction) has kept its dividend frozen for years, though a much larger funding base now gives it space to raise. That base is local deposits spread equally across customer types. Consumer banking chief Brant Standridge said during the July earnings call consumer and business deposits each represent 50% of total deposits. The Cadence Bank deal closed February 1, 2026, adding $36.9 billion in loans and $43.5 billion in deposits. Second-quarter net interest income reached $2.1 billion, up 8.5% sequentially. Commercial and industrial loans drove the growth, and commercial real estate balances modestly declined during the quarter, as planned.

Dividend Frozen Since 2021

The question about raising the payout runs into a long pause. Huntington has paid $0.155 per quarter on every record since December 2021. Before that, the payout rose from $0.01 in 2011 to $0.15 by 2019. At $15.16, the $0.62 annual dividend works out to a yield of about 4.09%. Measured against trailing diluted EPS of $1.30, the payout ratio is about 47.7%.

Huntington has the highest yield of the three and ties Regions for the lowest forward P/E. Investors have marked it down anyway: the stock is down 10.04% year to date.

Buybacks Come Before Any Raise

Bank dividends depend on regulatory capital. CET1 (high-quality common equity as a share of risk-weighted assets) has to stay above required minimums and stress buffers before cash goes out to shareholders. Huntington’s CET1 ratio slid to 10.2% from 10.4% after Cadence. Management is putting extra capital into buybacks first. The board approved a $3 billion authorization, and management plans at least $550 million of repurchases in 2026 and $1.1 to $1.2 billion in 2027. It calls the shares “extraordinarily undervalued.”

“Our strong balance sheet and industry leading liquidity and reserves position us to be a source of strength for our customers and outperformance for our shareholders.”

Three Pressure Points to Track

Margin. Management said in July:

“We believe Q2 is the trough for our NIM and expect expansion from here.”

The company forecast to a margin “into the mid to high 320s in the fourth quarter.”

Funding. Deposit costs rose six basis points, five of them from legacy Huntington. Management named the Midwest its most competitive market and described pricing this way: “It is competitive, but we still see it as being rational.”

Credit. Nonperforming assets rose to 0.72% from 0.61%. Even so, management expects net charge-offs in the lower half of the 25 to 35 basis point range. In the Fed’s severely adverse stress scenario, estimated loan losses came to 5.9% of average loans, which management called the second-lowest in its peer group.

Verdict: Room for a Raise, and January Shows When

Huntington can afford a higher dividend, and the numbers support a raise. Management’s 2027 EPS target of $1.90 to $1.93 would bring today’s dividend down to about 32.6% of earnings at the low end. That leaves room even with the buyback plan. Check the fourth-quarter results due in January. If the core efficiency ratio lands in the guided mid to low 54% range and CET1 holds at or above 10.2%, the case for keeping the dividend at $0.155 no longer holds up. If either falls short, expect the freeze to stretch into a sixth year.

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