Greetings and welcome to the Huntington Bancshares Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. You may be placed into questioning queue at any time by pressing star one on your telephone keypad, and we ask that you ask one question, one follow-up, then return to the queue. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Steve Steinour, Chairman and CEO. Please go ahead, Steve.
Good morning, everyone, and thanks for joining. Joining me on the line today are Brant Standridge, our President of Consumer and Regional Banking, Zachary Wasserman, Chief Financial Officer, and Brendan Lawlor, Chief Credit Officer. Before we begin, I'll ask you to note the forward-looking statements in our press release on pages two and three of the presentation we're referencing for this call. Now, beginning on slide four, two weeks ago, we were together to share with you details on our terrific earnings results from the third quarter. Last Monday, on the 20th, we closed the Veritex combination. Malcolm Holland and his team have done just an outstanding job partnering with our team to quickly get us to this point, and together, we are smoothly executing the integration.
As you saw in this morning's press release and on the heels of those important events, we are thrilled to be with you today to announce our partnership with Cadence. This is a very important milestone for our company, and it positions us to drive growth and to drive value creation even faster and at greater scale. There are four key reasons we're so excited about this partnership. First, through this combination, Huntington will become a multi-region powerhouse, the 10th largest bank in the country, with deeply rooted strength in our core markets, a strategic foothold in high-growth markets across the South, and immediate scale and density in Texas. Second, Cadence's footprint and businesses are highly complementary to Huntington's, and serve as a springboard for significant growth across our expanded markets.
Third, this combination offers compelling financial returns, including significant cost synergies that will further increase our top-tier return on capital. Lastly, this partnership reinforces the platform we've built to sustain robust competitive success over the long term. Our go-forward position as a top 10 bank enables a high level of investment that will drive acceleration in Texas and across our other markets. We believe the scale of this recurring investment capacity will reinforce our competitive advantages for the longer term. Turning to slide five, Cadence has more than 390 branches and 1 million customers across Texas and the South. Through this combination, we'll bring the full Huntington franchise to customers across 21 states while increasing the penetration of our national commercial businesses. Our footprint now covers half the U.S.
population with the Cadence addition and is oriented to states that are expected to grow 30% faster than the national average over the next five years. Our combined organization will serve a dynamic and growing customer base and have a presence in 12 of the top 25 fastest growing large MSAs and numerous fast growing smaller ones. We really like the markets that Cadence operates in, and they fit well into our operating model. Brant will talk more about this in a moment. Turning to slide six, as we've spoken about many times, our primary focus is on driving organic growth. We have a differentiated model that positions us to win with our customers. That model has also made us a partner of choice for other banks. We have rigorous criteria for pursuing any inorganic opportunities, and Cadence meets all of those criteria. First, this partnership is highly strategic.
Over its nearly 150-year history, Cadence has built strong roots in its core markets and a strategic presence in higher growth ones. Like Huntington, Cadence's teams have built generational relationships with customers, and the strength of those relationships has underpinned their consistent performance over time. This approach has resulted in a very attractive franchise position. Cadence holds top deposit share in many of the MSAs where they compete. Together, our combined deposit share will be top five in Houston and in Dallas. Cadence also brings expertise in specialty verticals that add to our expanding capabilities and provide access to a broader range of commercial clientele. Our organizations also have strong cultural alignment. Cadence's relationship-driven community-based approach aligns very well with our local delivery model and our people-first culture. Our partnership with Dan Rollins, Cadence's Chairman and CEO, and his leadership team is built on a common vision and common values.
Of course, any combination for us has to be financially attractive, and Cadence provides compelling financial benefits. Through the combination, we are increasing our outlook for pro forma 2027 ROTCE by 200 basis points to 18- 19%. We expect the deal to be accretive to 2027 EPS by approximately 10%. Zach will provide more detail on the financials in a moment. Before I turn the call over to Brant, let me give you some background on how this combination came together. I met Dan Rollins two years ago and connected with him at an event in June. He spent the day with our management team early in the month of July to start a more focused dialogue. Since then, we've had numerous meetings with various groups of directors and our executive management teams to get to know each other.
Our teams have been engaged in very detailed planning over these four months. We have made a focus of ensuring we understand their markets, their operating model, and their people. We have a strong line of sight on the actions needed to ensure a smooth conversion and how we'll drive significant success beyond that. For this reason, we have very high confidence in achieving our expense synergies and also in driving future revenue synergies as a combined organization. As in our previous combinations, we are very intentional in the way that we build relationships that underpin long-term successful partnerships. Dan and the entire Cadence senior management team have been and will continue to be outstanding partners throughout this integration process and beyond. We are delighted that Dan will join Huntington as Vice Chairman and Member of the Board.
He'll benefit from his wife's counsel and over four decades of banking experience. Now I'll hand it over to Brant, who'll dive deeper into how our proven operating model will integrate with Cadence to unlock even greater potential.
Thank you, Steve. I'd like to direct everyone's attention to slide seven. I'd like to start by echoing Steve's comments and express my own thanks to Dan and the team for their strong partnership and engagement throughout this process. As Steve noted, our teams have spent a considerable amount of time together, and there's been a particular focus on diligence and key leadership. In addition, we conducted a detailed review of the loan portfolio, underwriting policies, and portfolio management strategies, including collateral valuation. We also meticulously evaluated how our operating models will fit together, looking at every area of operational management. A key focus was on people and, in particular, how we will organize the leadership structure. Their support has helped us accelerate many of our planning activities, including key decisions around personnel, and positioned us to hit the ground running today.
As we've discussed before, we have a differentiated operating model that is grounded in delivering powerful national capabilities to our local markets with local leadership and an integrated tailored approach. We've proven the success of this model in markets such as Ohio, that has been in our franchise for many decades and where we have significant depth. We've also proven the effectiveness of the model in markets such as Illinois, Minnesota, and Colorado that came to us through partnerships like the one we completed with TCF in 2021. Since that combination, we've deployed our full franchise into these markets. We've invested for growth, and we have driven significant share gains and business expansion, driving revenues, frankly, much faster than each region's GDP. We also have a playbook for investing and growing organically, which is reflected in our rapid growth in North and South Carolina.
We're leveraging the deep capabilities of the franchise, harnessing our strength in marketing, and quickly building local brand awareness and customer acquisition. We are enthusiastic about the opportunity to bring the full Huntington franchise to Cadence markets. The financial opportunity is significant, and we believe our approach to delivering national scale and capabilities locally will unlock this opportunity in many powerful ways. I can turn to slide eight. Our partnership with Cadence adds powerful density in key markets and extends our growth reach. Cadence currently serves over a million customers, 1 million consumers, and 166,000 commercial clients. It has a terrific set of foundational markets where we can immediately benefit from deep local presence and density. In markets such as Mississippi and Alabama, Cadence has top 10 deposit market share.
These markets provide durable, low-cost deposits, and we see immediate opportunity to add and deepen customer relationships by delivering the full Huntington franchise with our broad suite of products, enhanced digital tools, and targeted marketing capabilities. This combination also gives us an important springboard in numerous attractive high-growth markets. In Texas, we'll add Austin and a significant presence across the Texas flats. I'll say more about Texas in a moment. We're also very excited to expand into rapidly growing markets such as Atlanta, Nashville, Orlando, and Tampa, and a number of others. Looking at these markets, we see immediate opportunities to accelerate the rollout of our middle market commercial and national specialty banking businesses, as well as extend the reach of our combined platform to new clientele in these areas.
We also see strong opportunities for value-added services to attach to Cadence's existing offerings in wealth and investment management and commercial payments. We will attract Cadence customers to the expanded range of our capital market services on the basis of our advice and guidance-led strategy. We believe there is a similar opportunity in the consumer space as we look to leverage Cadence's presence and expand our combined branch network and strong digital capabilities. We're excited by all the opportunities we see across the entire Cadence business, but we're particularly thrilled about this partnership because of the immediate scale it offers in one of the most dynamic economies in the world. Let's discuss our outlook for the combined Texas platform. Turning to slide nine, by combining Huntington, Veritex, and Cadence, we're building a powerful financial powerhouse in Texas, the eighth largest economy in the world.
The state is projected to lead U.S. population growth, adding 2.1 million people by 2031. Based on my own personal experience living in Texas for a time and the experience of other Huntington executives that have spent considerable parts of their career there, we know firsthand that Texas is a significant opportunity. The Texaplex, the triangle between Dallas and Fort Worth to the north, Houston to the southeast, and Austin and San Antonio to the southwest, is a juggernaut of economic growth, with approximately 190,000 new households migrating there each year and 53 Fortune 500 companies headquartered in the region. Our pro forma franchise immediately becomes a leading player in the state, with scale and density that position us for accelerated growth. We'll have 144 branches across the state, ranking number nine in Texas for branch count.
Our deposit base jumps to $26 billion, making us the number eight bank in Texas by deposits. As you can see, there's quite a tight grouping in the league table. With our current growth rate, we're going to expect to be in the top five soon. Importantly, as Steve mentioned, in both Dallas and Houston, we will be number five in terms of deposits. This scale and these markets will provide the springboard for further investment and market share expansion. As I noted, we're excited to have a strong presence in Austin for us to deploy our growth playbook. Cadence brings a significant scale in the Texaplex, and we will invest to augment that position with additional local branch presence and significant commercial middle market growth.
As you know, we closed our Veritex combination last week, and we could not be happier with the colleagues that have joined us and, frankly, the momentum our combined teams are already seeing in the market. This combination with Cadence is highly complementary with Veritex in several important ways. First of all, Veritex has strong density in Dallas, whereas Cadence has significant presence in Houston and Central Texas. Veritex has tremendous strength in commercial lending, while Cadence will increase our consumer bank presence. These two partnerships powerfully build out our Texaplex presence with a highly complementary customer composition. Now let me turn it over to Zach to unpack the financials in greater detail.
Thank you, Brant. Turning to slide 10. As Steve noted, we approach this transaction with discipline and a focus on shareholder value. We were drawn to Cadence because it's a compelling strategic, cultural, and financial fit. Strategically, Cadence is a premier regional franchise with deep roots and strong leadership across high-growth markets. By joining forces, we accelerate our growth trajectory across the combined footprint. Culturally, there is a remarkable alignment between our organizations. Cadence's customer-first business model, commitment to local communities, and track record of performance mirror Huntington's values and approach. The addition of Cadence's leadership, including Dan Rollins and two Cadence board members to Huntington's board, will further strengthen our ability to execute and deliver for our stakeholders. Financially, this transaction is designed to deliver compelling returns.
The deal is structured as an all-stock transaction, with Cadence shareholders receiving $2.475 Huntington shares for each Cadence share, resulting in pro forma ownership split of 77% Huntington and 23% Cadence. Let's spend a moment on key financial metrics. The aggregate consideration for the transaction is $7.4 billion, representing 1.7x tangible book value and 11.7 x 2026 consensus earnings per share, or importantly, 8.2 x Synergy-adjusted earnings per share. The transaction is expected to be accretive to 2027 earnings per share by 10% and to return on tangible common equity by 200 basis points. We project a pro forma tangible book value per share at close of $9.33. This suggests 7% dilution to the estimated first quarter 2026 TBV or just 2 percentage points from the third quarter level of $9.54.
The earn-back period is three years, reflecting the increased earnings power of the combined platform and cost synergy realization. I will highlight that, aligned to market convention, none of the reported financial metrics includes any revenue synergies, which we have high confidence in achieving. We anticipate minimal impacts to our capital ratios, with an expected adjusted CET1 at closing of 9.2%. We will maintain a strong balance sheet and financial flexibility to support ongoing growth and investment. We're committed to continuity and local leadership, and key operating centers in Tupelo, Birmingham, and Houston will remain important colleague locations. This structure ensures continuity, local leadership, preserving deep relationships, and sets us up for strong future growth. This combination creates a premier regional franchise, accelerates growth across our combined footprint, and delivers compelling financial returns for shareholders.
We expect the deal to close in the first quarter of 2026, subject to shareholder approval and regulatory approval from the OCC, as well as customary closing conditions. Turning to slide 11, this combination will unlock very significant scale efficiencies that will increase both earnings power and returns, as well as create the capacity to further accelerate investment into the business. We have identified $365 million in pre-tax cost synergies, representing 30% of Cadence's forecasted 2027 cash non-interest expense. Our teams have mapped out specific actions and timelines, and we have a high confidence in our ability to meet or exceed these estimates. For modeling purposes, we expect to realize 75% of these synergies in 2026, with full run rate in 2027. This efficiency gain will further bolster our top-tier ROTCE among regional banks. We are raising our medium-term financial target for 2027 ROTCE to 18%- 19%.
Turning to slide 12, we have a proven flywheel for value creation, and the robust growth we are delivering is a clear proof point. It all starts with our differentiated operating model. As Brant just noted, our approach is working both in our long-standing markets and in our new ones. We are confident we'll be able to drive the same level of success in partnership with Cadence. This differentiated model supports strong underlying customer acquisition and relationship deepening, winning share in our markets, empowering accelerating revenue and earnings growth. We have an intentional approach to plow back a portion of those economics into high-return investments with strong and proven ROI. This approach has powerful results.
Over the last five years, we have grown investments in our business by a remarkable 21% compound annual growth by leveraging our earnings power and consistently driving re-engineering of over 1% per year of our underlying operating costs. The growth of investments that I just mentioned is truly remarkable and we believe a major competitive differentiator. We've accomplished this while holding the growth of total non-investment operating expenses to less than 5% per year, a level far below our revenue growth carrier of 9.4% over the same timeframe. The scale efficiencies from this partnership will allow us to add even more investment, and those investments drive sustainable competitive advantage. We have the team, the capabilities, and the products to win today, and we're building to further distance ourselves at the head of the pack.
All of this is accomplished with strict adherence to our most important foundational principle, our aggregate moderate to low-risk appetite. Our partnership with Cadence reinforces this flywheel, and we believe we'll drive significant value long into the future. Now I'll turn it back to Steve for a few closing remarks.
Thank you, Zach. Turning to slide 13 as we close our comments today, I want to share two final thoughts. Over the years, Huntington has become nimble, adapting and evolving where needed, but steadfast in delivering the highest level of customer service, and the results speak for themselves: consistent top-tier financial performance and earnings growth over many years in a manner consistent with our aggregate moderate to low-risk appetite. Looking forward, the combination with Cadence creates a top 10 regional banking powerhouse that is well-positioned to grow in attractive markets and with a powerful platform for further investment. We're poised to deliver strong growth and top-tier returns long into the future. The flywheel created by the combination of these factors enables us to have a sustainable competitive advantage.
This partnership enhances our vision to be the leading people-first, customer-centered bank in the country, delivering significant value for our shareholders, customers, and communities. Finally, we're thrilled to welcome our new colleagues to Huntington. We have never been better positioned.
Thank you, Kevin. We are now going to open the line for Q&A. We ask that each participant ask one question followed by one follow-up question, and the IR team will be available for the rest of the day for any additional follow-ups.
Thank you. We'll now be conducting a question and answer session. If you'd like to be placed into the question queue, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. As a reminder, we ask that you please ask one question, one follow-up, then return to the queue. Our first question today is coming from Jon Arfstrom from RBC Capital Markets. Your line is now live.
Thanks. Good morning, guys.
Morning, Jon.
Yep, looks like a good deal. Zach, maybe a question for you on the cost synergy target. Anything to note on the size of the expense saves? Or do you view that as fairly typical? I know you said meet or exceed, but can you just talk through your level of confidence there?
Yep. Great question, Jon. Good morning. We think that the cost synergies, as I noted in the prepared remarks, are very achievable. We have a strong line of sight to it. The diligence process that both Brant and Steve highlighted was extraordinarily rigorous and not only went into a deep, deep review of things that would call out potential risks, but more importantly, to derive the action plan for us to really execute not only the cost synergies, but of course, the integration and, importantly, the growth synergies that will come from this. We've got a strong line of sight to this. The categories of cost synergy achievement are what you'd expect from a large combination like this: tech platform efficiencies, of course, org efficiencies that come from these kind of combinations, and a number of other sources of scale and benefits of automation on the Huntington side.
Strong confidence we'll meet them. If history is a guide and TCF is a great example, we exceeded these. Certainly, we will endeavor to do that as well.
Okay. Thank you. And then key drivers of the 200 basis point lift in the combined return expectations of the company, is that just Cadence? Are there other drivers? Is it revenue synergies? Can you just help us understand that big lift in return objectives?
Yeah. That's another good one. The short answer is none of the financial projections provided here today include any degree of revenue synergies. We do believe we'll see quite strong revenue synergies, and that'll be even more earnings power and revenue lift. To be clear, none of these projections include that at this time. You know, the main driver to the return on capital improvement is the efficiency opportunity that the cost synergies would represent. We think there'll be meaningful lift in efficiency, improvement in ROA, and all that will translate into 200 basis points of return on capital. One thing I would note is we are assuming in that that the gross benefit of the efficiency is more than just 200 basis points of ROTCE improvement.
We also intend to plow back, as I noted in my prepared remarks, a fair amount of that into investments, and the net of that will be 200 basis points of ROTCE, which, you know, if you go back, Jon, to our value creation model, we've talked about a lot: strong earnings, very significant growth in tangible book value per share at the high single digit to low double digit, and then a top-tier return on capital. That'll really be the model that we've got.
Okay. Yeah, investment plan was question three and four for me, but thank you, guys. Appreciate it.
Thanks, Jon.
Thank you. Next question is coming from Erika Najarian from UBS. Your line is now live.
Hey, good morning. Maybe I'll just ask Jon's question about the investment plan. Just the first part of this first question is, you know, the way you answered the question, Zach, on the ROTCE lift, it sounds like it's all numerator-driven versus capital-driven, particularly given your comments on the capital impact. Additionally, could you detail some of those investment plans if you could? Also, maybe just reassure some investors that we are sort of seeing the sentence that there are no branch closures, but you're getting 30% cost saves anyway.
Maybe I'll take the first part of that, and then some of my colleagues may want to tack on as well here. The investment plan that we have, and we'll come back with obviously in future conversations and detail it on a lot more clear basis, but I would estimate to be substantive, probably on the order of 1% efficiency plow back ultimately over the longer term, Erika. To answer your question on ROTCE, yes, it's effectively numerator-driven at this point. Our projections for capital, as I noted in the prepared remarks, at close, tangible book value per share, just about 2% lower than today's level, so not significantly different. The kind of upward continued trajectory of both tangible book value per share growth, but also just capital ratios generally, the kind of long-term trajectory of our capital and capital plan is really unchanged as a result of this.
In fact, the earnings power of this, the higher return on capital, we think will accelerate capital generation. I think very, very excited about the revenue synergy opportunities. Maybe Brant, do you want to tack on to that?
Yeah, it'd be great. Thank you, Erika, for the question. Two areas I would mention as it relates to the Cadence footprint. It presents markets where we can expand our branch presence and entire consumer franchise. The second area would be this creates a number of markets where we can expand, as we have been doing, our commercial banking franchise, including middle market banking and the specialty businesses. There are also areas in our core business that this will unlock and fuel additional investments, like mobile, like the work we're doing around our small business customers. There are a number of emerging payments areas that this unlocks additional investment capacity to explore.
Erika, this is Steve. I'll just finish off. You asked about confidence without branch closures and 30%. As we've said, we have very high confidence. We've had four months of very detailed planning here. Dan Rollins and team have just been exceptionally good partners. Brant and our teams here have gotten into this in great detail. This is the most advanced I've ever seen us or my predecessor be positioned at point of announcement to execute by far.
Steve, the follow-up question is for you. You've been CEO of Huntington for a very long time and have built a very strong culture. As you expand inorganically, how do you make sure ensuring that the Huntington culture is the prevailing culture of the pro forma company? How do you balance that with retaining the top talent and making sure that you're not being poached by opportunistic banks as this deal gets integrated?
That's a great question, Erika, as well. We are very intentional about the teams that we bring on in any combination like this. A lot of that groundwork has already been done in terms of selections. Over the next weeks, there'll be more internal communication around that. Cadence is a nearly 150-year-old company like Huntington in many, many respects, very customer service-focused, very much about communities. We align incredibly well culturally with them. We've had four months of significant interaction at multiple levels of the company to have this appreciation for their values and the nature of how they operate. We are highly confident in our ability to execute, including the cultural elements. We spent a lot of time on that. We'll begin that today. We'll be in Tupelo, Mississippi today. We've got 23 stops over the next two weeks that the management team will be doing.
We're going to touch more than half the colleagues in these first two weeks. Part of this will be with a view of engaging them, but also retaining the key colleagues, most of whom have already been contacted.
Erika, if I could just add to that, what Steve is describing is really a partnership approach to these opportunities. It's proven that that leads to less disruption, and the company, as you've noted, has been successful in executing this approach. TCF was a great example. Veritex is off to an excellent start. Also, as you look at the build-out of the commercial bank and the commercial verticals that we've been able to build, that is another example of where this partnership approach can be quite significant. The last comment I'll just reinforce is this has been a significant part of the diligence. Myself and Dan have actually traveled to a number of markets in the Huntington footprint so that team had a good understanding of our operating model and so that we could assure going in that we would have a high level of alignment through this process.
We feel confident that we can deliver in these markets, and we feel confident that we'll have key leaders in place that can assist in doing that.
Thank you. It was super helpful for you guys to refer to that in the prepared remarks, the partnership approach. Thank you.
Thank you.
Thank you. Next question is coming from Morgan Stanley. Your line is now live.
Hi, good morning all.
Good morning.
Good morning, guys. Steve, I wanted to get your thoughts on scale and how important it is in today's world, especially in high-growth markets like Texas. Maybe the other side of that question is, what does that mean for some of the other markets in the Southeast, like the Carolinas and Florida, where you're continuing to invest?
It's a great question. We have targeted growth in Texas, and that was the genesis of the Veritex partnership. We like Texas for lots of reasons, including its history of growth and the outlook. As we were very, very strong and substantial in the Midwest, as we looked at extending, Texas was the ideal next location for us to focus on since we've been investing in North and South Carolina and growing organically at a great rate in those two states. We feel very fortunate to have had the opportunity to combine with Veritex and now Cadence. That Texaplex complex that Brant Standridge described is illustrative of just the focus that we've had. This is exactly where we ideally would like to be with our distribution and our colleagues in terms of economic activity in the state of Texas.
It is really fortunate for us that Cadence chose us as a partner because they have strong share, lead share in Mississippi, strong share in a couple of other states, top 10 share, and they also have some very high-growth cities that we'll have footholds in. Much like we've done and we are doing in North and South Carolina, we expect to grow those organically in the years ahead. We are very, very optimistic about our ability to grow successfully in, frankly, in all these markets. We're excited and thrilled to be there.
On slide seven of the presentation, what we've tried to highlight is the model, the operating model that we've described can be successful in markets where we have a lot of scale, and it also can be quite successful in markets where we've historically had limited scale. Texas obviously will have a lot more scale now, and we can accelerate that growth, but it doesn't take away from the high-growth areas that we have where we have limited scale. This model works there and can create growth, and you see that highlighted on slide seven.
Great. Thanks for that. Maybe as a follow-up, can you talk a little bit more about the integration process? You just closed Veritex. Now you're buying Cadence, which is also in the process of integrating a couple of acquisitions. Does that make the integration process a little bit more challenging or maybe it takes a little bit longer? Can you just speak to that?
A couple of points I would make. This is Brant. First of all, as it relates to the organic plans that we have in North and South Carolina and other places, those are fully funded and we have dedicated teams, so those things continue. We have also dedicated resources to our integration planning and execution. Those resources have been obviously operational for quite some period of time, and the integration with Veritex is going quite well. In fact, we would plan to execute the conversion early first quarter. Steve mentioned this a number of times, but as it relates to Cadence, we also have a lot of early planning that's taken place. The technology, the integration teams have been meeting well in advance of today's announcement. We've had lots of conversations about operating model and key talent decisions, which will be helpful as we move into the integration.
We've also had a chance to take the timelines for both integrations and stack them on top of each other and have a level of confidence that we can effectively deliver both. The last comment I would make is the company has a history with the rigor that we display of executing these integrations both efficiently and seamlessly. I would expect we will do that in these two as well.
These have been purposefully sequenced, and you know we're going to be very busy, of course, and very focused. We're going to drive organic growth at peer-leading levels, and we're going to get these two integrations done very successfully. We have a lot on our plate. We're fully committed to delivering both.
I appreciate that. Thank you.
I think we have time for one more.
Thank you. Our final question today is coming from Ken Houston from Autonomous Research. Your line is now live.
Hey, guys. If I could clean up a couple of quick things. First of all, the loan rate mark, the $1.056 billion, do you have a general sense of what that expected life is for that piece of the accretion?
Yep. Ken, this is Zach. It's a great question. We're expecting a fairly short accretion path for that, about 40% of that coming back in 2026, roughly 35% in 2027, and most of the remaining in 2028.
Perfect. The next line, there's securities restructuring that happens day two. Is that included in the EPS accretion? How can we think about the magnitude of that and how you think about the earn-back on that piece of it?
Yep. A good question. The answer is yes. All of the economics anticipated from that are included in the numbers that we've shared today. Cadence had about $10 billion of securities, and our intention is to restructure about one-third of it, really to align with our ALM policies and our liquidity requirements for our securities portfolio. That will mean that much of the day-one mark on the securities portfolio, which was already included in Cadence's AOCI, will be traded for just ongoing yield lift, net net over the course of time. I think this is actually a positive NPV, although it does represent a modest drag in the near term on earnings per share. It's about $0.015 of lower earnings per share in 2027, but a longer net cash flow benefit out over the course of time, Ken, and again, included in the 10% EPS accretion that I've shared.
Thank you. We appreciate our question and answer session. I'd like to turn the floor back over for any further closing comments.
Thank you all for joining us, and really appreciate the interest. The IR team is available, but you can tell we are very excited about this opportunity to partner with Cadence. I emphasize the word partner. They are in great markets with scale. There's a lot of long-term growth in these markets that we're going to pursue, and I think will be an important part of the overall contribution to the bank as we grow in the years ahead. We're especially excited about what this positioning in Texas. This Texaplex is an incredible economic engine, and that's exactly where we're positioned as we go forward. Of course, pleased to be in the other markets with scale. Mississippi is the number one bank, as an example, and some of these exciting cities.
In aggregate, now we've got two very large regions, if you will, Texas in the South and the Midwest, both of which we're going to be operating at scale. I think we've got just a fabulous outlook. We've, again, never been better positioned. The returns exact as shared have set of 18- 19 and the EPS accretion in 2027. It all looks really, really good as we think about the back half of this decade. Thank you for your interest. Have a great day, everybody.
Thank you. That does conclude today's teleconference webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.