Why Huntington is going big in Texas with Cadence deal

• What's at stake: Huntington Bancshares is moving fast to achieve scale in Texas.
  
• Expert quote: "Our new Huntington footprint will expose us to a little more than half the U.S. population," said Brant Standridge, Huntington's president for consumer and regional banking. "It also happens to be the half that's growing faster, in fact it's projected to grow 30% faster." 
  
• Forward look: The deal is expected to close in the first quarter of 2026.

UPDATE: This story includes additional details about the deal and information from analysts' research notes.

Just a week after completing its acquisition of Dallas-based Veritex Holdings, Huntington Bancshares is moving to further expand its Texas presence. The Columbus, Ohio-based Huntington announced Monday that it has agreed to pay $7.4 billion in stock for the $53.3 billion-asset Cadence Bank.

Cadence has a sprawling footprint, covering the Deep South, along with parts of Florida and other Southeast markets, so the deal would move Huntington into a number of attractive, fast-growing markets, including Orlando, Nashville and Atlanta.

Still, it's Cadence's Texas operations, with 110 branches and $16 billion of deposits, that Huntington appears to prize the most.

On a conference call with analysts, Brant Standridge, Huntington's president for consumer and regional banking, called the Lone Star State's economy a "juggernaut," noting that the combination with Cadence adds meaningful scale in the so-called Texoplex region, bounded by Austin, Dallas-Fort Worth, Houston and San Antonio.

The deal would vault Huntington, currently Texas' 14th-largest bank, into the number-eight position, with 144 branches, $31 billion of loans and $26 billion of deposits.

"Our new Huntington footprint will expose us to a little more than half the U.S. population," Standridge told American Banker following the conference call. "It also happens to be the half that's growing faster, in fact it's projected to grow 30% faster."

"It gives us immediate scale in two of the most significant markets, frankly, in the world, Dallas and Houston," Standridge added. "We'll have top-five share in those two markets."

Chairman and CEO Steve Steinour called the acquisition "transformational."

"To have a five-share in Dallas and Houston and eight across the state, we are exactly where the dynamic growth in Texas is occurring," Steinour told American Banker. "We think we've got a really powerful economic engine in Texas and these other states that will propel [Huntington] in the decades ahead, not just in 2026 and 2027."

Following the merger, Huntington would have assets of $276 billion, loans and leases totaling $184 billion, and $220 billion of deposits.

Cadence, which operates out of dual headquarters in Houston and Tupelo, Mississippi, would help fill in the gap between Huntington's growing Texas franchise and its presence in the Carolinas, noted Alexander Yokum, senior vice president of equity research at CFRA Research. Huntington plans to build more than 50 branches in North Carolina and South Carolina over the next three years.

Huntington expects to close the transaction in the first quarter of 2026. Steinour said the approval process should be streamlined by the fact that Cadence has no bank holding company.

"We only need [Office of the Comptroller of the Currency] approval," Steinour said. "We'll have the application filed next Monday."

Monday's announcement was preceded by about four months of extensive due diligence, Steinour said. A key moment came on July 1, when Cadence Chairman and CEO Dan Rollins spent the day meeting with Huntington's senior leadership team.

"Dan got a good initial feel," Steinour said. "There's a lot of trust and camaraderie [within] the executive team. All that came through, and the operating model became clearer to him."

The $7.4 billion price tag works out to 1.7 times Cadence's tangible book value per share. Huntington is targeting $365 million in cost savings, which it expects to realize in 2026 and 2027.

Huntington is also projecting 10% earnings-per-share accretion in 2027, the first full year of operations for the combined company. It updated its near-term target for return on tangible common equity upwards from 16% to 17% — to 18% to 19%.

"We have strong line of sight on the actions needed to ensure a smooth conversion and how we'll drive significant success beyond that," Steinour said on the conference call.

Huntington's share price dropped by 2.4% on Monday, but RBC Capital Markets analyst Gerard Cassidy described the transaction's financial metrics as "fair."

"Huntington has been on the path of expanding in Texas and the Southeast and we believe this acquisition fits nicely into that expansion strategy," Cassidy wrote in a research note.

John Rodis, who covers Huntington for Janney Montgomery Scott, wrote in a research note that he was "a bit surprised" by the timing of the deal, coming so quickly on the heels of the Veritex purchase. "Given the new regulatory environment, we expect to see more large transactions with a focus on attractive bank franchises in key markets," Rodis added.

Investors had viewed Cadence as a takeout candidate, a sentiment that contributed to a runup in its stock price over the past four months, Stephen Scouten, who covers Cadence for Piper Sandler, wrote in a research note.

"This transaction seems logical to us given the size and scale of Cadence now fits well within the larger Huntington franchise," Scouten wrote. "We see this as a very successful outcome for CEO Dan Rollins, the Cadence leadership team, and the bank's shareholders."

In its current form, Cadence dates back to 2021, when Mississippi-based BancorpSouth, under Rollins' leadership, acquired Houston-based Cadence Bancorp for $2.8 billion.

Cadence struggled to meet key financial goals following the merger — its efficiency ratio rose 12 basis points between 2022 and 2024 — prompting Rollins to reorganize the company's senior management team last year.

Once the combination with Huntington is complete, Rollins will join the merged company as nonexecutive vice chairman of the board of directors. Two other Cadence representatives will also join Huntington's board.

"This is a defining moment for Cadence Bank and we're confident this alignment will create lasting value across our footprint and beyond," Rollins said Monday in a press release.