Huntington Bancshares (HBAN): A 2026 Outperformer in a Re-rating Regional Bank Sector?

The regional bank sector has entered a pivotal phase in 2025, driven by margin expansion, favorable macroeconomic conditions, and a surge in M&A activity. As interest rate cuts steepen the yield curve and loan demand rebounds, smaller banks-more sensitive to short-term rate changes- have reported net interest margin (NIM) levels not seen in four years. Against this backdrop, Huntington Bancshares (HBAN) stands out as a compelling case study in strategic acquisition integration and earnings resilience. With its $7.4 billion acquisition of Cadence Bank now in full swing, the company is poised to capitalize on cost synergies, revenue growth, and a broader sector re-rating.

Strategic Acquisition Integration: Cost Synergies and Revenue Expansion

Huntington's acquisition of Cadence Bank, finalized in late 2025, has been a cornerstone of its growth strategy. The deal, expected to be 10% accretive to earnings per share, targets $365 million in pre-tax cost synergies through operational efficiencies and cross-selling opportunities. CEO Steve Steinour has emphasized the "well-mapped" integration plan, which avoids branch closures while expanding Huntington's footprint into high-growth Southern markets like Texas, where it now holds the fifth-largest deposit market share in Dallas and Houston. This strategic alignment with Cadence's customer base and geographic reach underscores Huntington's ability to leverage scale without compromising customer experience.

Revenue growth metrics further reinforce this narrative. Huntington's full-year net interest income guidance has been raised to 10–11% from 8–9%, reflecting optimism about the combined entity's performance. The integration has also spurred digital investments and capital market additions, positioning the bank to capture long-term earnings tailwinds. For instance, Huntington plans to expand its presence in the Carolinas, with new branches in Winston Salem, Greensboro, and Kernersville, aiming for at least 55 branches in the region by 2027.

Sector Re-rating Drivers: Valuation Gaps and Macroeconomic Tailwinds

The regional bank sector's re-rating in 2025 has been fueled by a combination of factors. A steepening yield curve, driven by Federal Reserve rate cuts, has bolstered NIMs for smaller banks, while easing tariff pressures and sustained loan demand have further supported earnings. M&A activity has accelerated, with deals like Fifth Third's $10.9 billion acquisition of Comerica highlighting the sector's consolidation momentum. Huntington's own acquisition of Cadence aligns with this trend, as the valuation gap between large and small banks creates fertile ground for accretive deals.

For HBAN, the re-rating potential is amplified by its undervalued stock. Trading at $17.74 as of late 2025, the stock is below its fair value estimate of $19.85, implying a 10.6% upside. However, its price-to-earnings ratio of 13.2x-higher than the US banks sector average of 11.9x-leaves less margin for error if growth slows. This valuation discrepancy suggests that the market may be underestimating Huntington's ability to sustain earnings momentum through its integration efforts and geographic diversification.

Risks and Considerations

While Huntington's strategic moves are promising, challenges remain. The Cadence acquisition faced legal hurdles, with lawsuits alleging incomplete disclosures in the joint proxy statement. Though Huntington and Cadence issued supplemental disclosures to mitigate delays, such risks highlight the complexities of large-scale integrations. Additionally, the bank's higher P/E ratio means any slowdown in earnings growth could disproportionately impact its stock price.

Conclusion: A 2026 Outperformer?

Huntington Bancshares' disciplined approach to acquisition integration, combined with the regional bank sector's favorable macroeconomic and valuation dynamics, positions it as a strong candidate for outperformance in 2026. The $365 million in cost synergies from the Cadence deal, coupled with expanded market share in Texas and the Carolinas, provides a clear path to sustained earnings growth. As the sector continues to re-rate, Huntington's ability to balance scale with operational efficiency could differentiate it from peers. Investors, however, should monitor integration progress and macroeconomic headwinds to ensure the bank's long-term trajectory remains intact.