All right, everybody, welcome back to the room and in the webcast. Without further delay, I wanted to kick off this next slot with Huntington. You all know them well. We both have Chairman and CEO, Steve Steinour, and CFO, Zach Wasserman, joining us. But Steve wanted to say a few things before we kick it off for the fireside chat. So Steve?
Good morning. Thanks, Erica, and to all of you. And thanks for allowing Zach and I to join you. So as I begin my comments, I'll ask you to note our forward-looking statements on slide two, and moving to slide three. We entered 2026 with strong momentum and a powerful model that delivers robust revenue and earnings growth, as well as top-tier returns. And our partnership with Cadence, which we successfully closed 10 days ago, will further accelerate these outcomes. So there are four key messages I want to highlight today. First, we built a unique and scalable super-regional bank model. Our model delivers industry expertise in 21 regional markets through locally led teams and across the country through our commercial bank and specialty businesses. Second, our focused execution is generating powerful organic growth across all facets of our business.
Third, we've proven expertise in seamlessly integrating new partners, a capability that creates meaningful economic value while ensuring seamless support for our customers. Fourth, these elements come together in a compelling flywheel for value creation that is accelerating as we expand our footprint and deploy our full suite of capabilities across our new markets. Turning to slide four. As we enter 2026, our 160th year in business, we're proud of our heritage, but we're even more energized and excited by the opportunities ahead. Our vision is to be the country's leading people-first, customer-centered bank, delivered through a differentiated and scalable operating model that we believe will deliver strong growth well into the future. With the Cadence partnership, our consumer and regional bank franchise now operates in 21 states, including many of the fastest growing in the country, and gives us substantial scale in Texas.
Our auto and RV marine businesses cover the nation. We also have a leading national commercial bank with 15 specialty verticals, a top five position in equipment finance and expanding value-added services, including capital markets and payments. Our delivery model is unique. Our bankers are in-market, lead with advice and guidance, and deliver award-winning customer service. This approach generates deep and durable customer relationships. Together with our robust digital capabilities and disciplined management of risk, these elements position Huntington for strong growth over the long term. Turning to slide five, the financial results that this model delivers are terrific. In 2025, we generated 11% revenue growth and 16% EPS growth.
We have significant we delivered significant operating leverage, positive operating leverage, excellent credit performance, resulting in a 16% return on capital and 19% growth in tangible book value per share. These outcomes reflect disciplined execution across the franchise and strongly validate our operating model. Turning to slide six, our ability to integrate partner organizations is a core differentiator for Huntington, and the past year demonstrates just how well our playbooks work. First, for Veritex, we completed the full systems conversion seamlessly three weeks ago, on schedule and with no disruption to colleagues or customers. It was a well-executed process. It only took us 187 days to go from announcement to systems migration.
We are very well down the path of achieving the cost synergies we identified at the Veritex announcement, and we expect to reach the full run rate by the second quarter of this year. Revenue synergies are already emerging as our new colleagues bring Huntington products, capabilities, and lending capacity to our new customers. We expect a similar outcome with Cadence. The merger is closed, and the integration is off to a fast start. Even before closing, we worked with Cadence executives, especially Dan Rollins and his leadership team, to identify and engage other leaders throughout the organization and make thoughtful decisions about the talent of the combined organization. We're also advancing system and data work. These efforts mean that cost synergy realization is already well underway. Together, these partnerships expand our reach, deepen our capabilities, and are a springboard for our growth.
Turning to slide seven, our combined presence in Texas is a major strategic advantage for Huntington, and it positions us for meaningful acceleration of growth and earnings in the years ahead. With Cadence and Veritex, we have significant scale and density across the state, one of the most dynamic economies in the country and by itself, the 8th largest economy in the world. Texas is projected to lead the nation in population growth over the next decade, and the economic engine of the Texaplex, this triangle between Dallas, Fort Worth, Houston, and San Antonio, Austin. The Texaplex is projected, will be the engine for growth, where it's the epicenter for the state's tremendous business formation and household migration. In the fourth quarter of 2025, Huntington standalone generated year-over-year growth of 23% in Texas, while Cadence generated growth of, of 17%.
Now, this scale, paired with Huntington's national capabilities, gives us a powerful platform for further investment. We've already started deploying our growth playbook. We are expanding customer loans and deposit relationships and accelerating our commercial banking growth. We also launched digital, consumer and small business customer acquisition and increasing penetration of value-added fee services in payments, wealth, and capital markets. In short, we are a powerhouse now in Texas. We have meaningful density today, substantial opportunity ahead, and every intention to further invest and accelerate growth. Pulling back for a moment on slide eight, our model is working across the franchise. The momentum from 2025 and 2026 to date strengthens our conviction in its durability. We execute with discipline, delivering powerful returns. As our performance compounds, so does our capacity to reinvest in talent, capabilities, technology, and markets.
That's what reinforces this foundation of our long-term growth model. Now, with that context, I'll turn it over to Zach to walk through how this momentum accelerates our flywheel of value creation in 2026 and beyond. Zach?
Thank you, Steve, and thanks to Erica and UBS for having us here today. I'd like to turn to slide nine now. As we bring these partners that Steve just mentioned into the franchise, the combined platform meaningfully strengthens that growth engine, both on day one and over the next number of years. From a revenue standpoint, Cadence and Veritex give us immediate scale in Texas, deeper customer relationships, and a meaningful consumer franchise, not to mention more than a million new customers. We're already seeing their impact in our pipelines, and our momentum will continue to grow as we deliver our full product offering to their markets.
On the profitability side, identified cost synergies create significant efficiencies, driving higher ROTCE, while also creating additional capacity to continue investing in the categories that are driving outperformance, technology, specialty verticals, fee services, expansion of markets, and other key growth areas. Many of the investments launched over the last couple of years are contributing significantly to our strong organic revenue growth as we enter 2026. Taken together, these drivers position us for strong, sustainable revenue growth, and we expect the strength of the underlying franchise to benefit from our recent acquisition of Janney Capital and revenue synergies from Cadence and Veritex, net of the additional investments that we'll put into them, to contribute to our financial performance in not only 2026, but importantly in 2027 and well beyond that.
We have now completed the close of the Cadence partnership, as Steve mentioned, and therefore completed the detailed bottom-up analysis of the fair value marks on the portfolio. The result of that, in terms of loan marks, was a meaningfully lower amount of interest rate discount than was previously estimated at the time of diligence. To give you a sense, at diligence, we expected to see a discount on loan rate marks of about $1.05 billion. Now, that's about half reduced to just over $500 million. This will mean much lower initial impact to capital. The tangible book value per share dilution from the partnership is now estimated to be 4.8% versus the original 7% with the same earn back over time.
Importantly, as the loan mark has come down, of course, you'd expect the accounting PAA accretion also to be lower. In this case, what we're seeing is a lower and longer PAA glide path, which we think is actually very beneficial. It'll mean a higher degree of consistency over time of the PAA and a higher quality of earnings over time for the company. We're confident in our ability to deliver between $1.90 and $1.93 of earnings per share in 2027. This will be expressed in greater detail in the following slide. Turning to slide 10, we now expect 2027 revenue of approximately $12.6 billion.
Looking at the chart on the right, you can see there's a reduction in the expected PAA contribution, as I just mentioned, and it will be about $100 million in the PNL versus what had previously been expected to be roughly $400 million. In isolation, this change would have reduced our $2 earnings per share outlook that we expressed in October to about $1.89 or $0.11 lower than that. However, the core Huntington business continues to exceed our expectations, and we expect this to mitigate some of that impact. First, the fee income contribution from Janney and the net revenue synergies from Cadence will add back a number of additional cents. Secondly, there'll be additional benefit coming through from share repurchase activity between now and 2027 as we achieve our 9.5% adjusted CET1 capital target.
Most significantly, as you can see from this slide, our core continues to generate very robust growth, in this case, earnings per share, in the teens year-over-year for not only 2026, but 2027. Focusing on the contribution from Cadence, we expect revenue synergies to accelerate into 2027 and 2028, and partly because of the decisions we've made to increase our investment now across the combined enterprise in the near term. This investment strategy has been a powerful driver of revenue growth for a number of returns-- or for a number of years, and will continue to power returns as we move forward....
Turning to slide 11, we have an extremely rigorous and intentional approach to, on one hand, drive systematic reengineering in baseline operating costs to create efficiencies, and on the other hand, to consistently grow investments in key areas of the business that enhance our competitive advantage and drive outsized revenue growth. Every year, we target to take out at least 1 percentage point of baseline expenses and then reinvest most of those savings into high-value revenue-generating initiatives. As you can see from this page, we exceeded those goals, and this reengineering effort has delivered tremendous results, reducing baseline operating costs by an average of 1.3% per year, which has created a cumulative $1.4 billion of expense savings since 2019, a 5 percentage point reduction in the baseline expense to revenue ratio.
Those efficiencies have fueled significant sustained growth in reinvestment back into our business, supporting a greater than 20% compound annual growth rate in investments over that period. The investment plowback ratio, or the ratio of investments to revenues, has nearly doubled over that period, from just over 4.5% in 2019 to over 8% last year. The ROI from the sustained high growth rate of investments is clearly visible in our results, with peer-leading customer acquisition, loan and deposit growth, driving strong spread and fee revenues, as well as earnings growth. We remain intently focused on maintaining this model and expect to continue to drive both these levels of cost reengineering and investment growth over our long-range planning horizon. The efficiencies from the Cadence and Veritex cost synergies will further increase investment capacity in 2026 and 2027.
We view this model as a key contributor to strengthening our competitive advantage long into the future. Slide 12 highlights how we've deployed this investment capacity to date and where we're headed next. Using 2019 as a baseline, we've more than tripled our high return investments, focused across four areas that strengthen long-term earnings power. Investments in personnel across all facets of our business, including de novo branch build, commercial bankers across our regional and specialty banking and national specialty verticals, payments and treasury management personnel, and a number of other areas. Technology development, both customer-facing and internal, including significant investments in customer-facing digital tools, marketing capabilities, including digital storefront, performance marketing, and precision customer acquisition programs, as well as powerful payments and treasury management capabilities, analytics, machine learning, agentic AI automation, among just a few, to name key categories.
Initiatives that expand our capabilities and reach, such as geographic expansion, specialty commercial verticals, capital markets businesses, and scaled national verticals. Looking ahead, we expect these investments to grow approximately 4 x the 2019 baseline in both 2026 and 2027, reflecting continued development in these areas and others. These investments are what power durable earnings growth well into the future, and they remain central to how we differentiate the Huntington model. Slide 13 outlines how we're looking at the investment and synergy opportunities at Veritex and Cadence. At a full annual run rate, the two partnerships are expected to deliver $435 million in total cost synergies.
Veritex synergies will reach their $70 million annual run rate next quarter, and we expect Cadence to achieve the full annual $365 million run rate in the fourth quarter of 2026. These cost synergies are projected to contribute approximately $340 million of benefit to the 2026 operating expenses, with just under an additional $100 million of benefit into 2027, creating meaningful additional earnings power and increasing capacity to fund strategic growth investments that, in turn, will generate further revenue expansion. In terms of the revenue opportunity, we've outlined on this slide several key areas where we believe Huntington can enhance the strong performance from both Veritex and Cadence.
We expect cumulative revenue synergies to reach $500 million over the next three years, with a $300 million run rate in 2028. Turn to slide 14. This page summarizes the revenue bridge from 2025 to 2026. Net interest income is the largest contributor, reflecting 10%-13% growth from core Huntington, including Veritex, plus 11 months of contribution from Cadence. Purchase accounting accretion is expected to be approximately $110 million. Fee revenue also grows meaningfully, driven by 13%-16% growth from the Huntington core, including Veritex, plus the new Janney Capital Markets teams, plus approximately $300 million from 11 months' contribution of Cadence. We also expect to realize $50 million-$75 million in revenue synergies this year.
Based on our confidence in the longer-term revenue synergy opportunity, we intend to accelerate an additional $30 million-$40 million of an incremental investment this year to accelerate revenue growth in 2027 and beyond. Slide 15 contains an expense walk for 2026 and reflects this updated expectation about the investment opportunity I just mentioned. We expect legacy Huntington to grow expenses between 5% and 6%, indicative of the strong revenue growth that we're achieving, including a full year of Veritex then of cost synergies. This figure increases to approximately 9%-10% year-over-year, with Janney adding about 1 additional percentage point. We anticipate Cadence to add $1.1 billion in expense this year. That figure includes cost synergies of approximately $270 million.
It also included, at initial expectation, about $30 million of investment plowback for revenue synergies. As noted on the slide, we now expect to add that $30 million-$40 million of additional investments I just mentioned, bringing that total to $60 million-$70 million. Slide 16 brings all of this together into earnings per share. We expect to deliver between $1.90 and $1.93 of earnings per share in 2027. There are multiple paths to achieve this range, but we wanted to offer some additional directional approximation on the categories that will drive that earnings growth. Our business continues to outperform and support enhanced earnings per share above prior estimates. We anticipate significant operational revenue growth while continuing to invest in the business. This results in stronger, more durable earnings mix that enhances our long-term trajectory.
Importantly, we expect to deliver 18%-19% return on tangible common equity and deliver robust, continued positive operating leverage with an excellent efficiency ratio. In conclusion, we have high conviction on delivering the projections we've just shared today and generating significant value for shareholders. The strength of our operating model, the momentum across our businesses, and the contributions from our enhanced footprint all reinforce our confidence in the sustainability of this long-term trajectory. We're executing against the plan we've laid out, reengineering baseline operating expenses, integrating our new partners with discipline, and expanding our revenue capacity, as well as continually reinvesting to strengthen our competitive position. The work we've done over the last several years positions us to deliver on these commitments and continue to drive peer-leading growth for the foreseeable future.
We have the strategy, the talent, and the financial strength to continue generating differentiated performance for many years to come. Our flywheel of value creation is accelerating. With that, let me turn it over to Erica to turn to Q&A.
Thank you so much for that. Quite a few pieces to unpack here, but Steve, I don't want to get lost the fact that just a few weeks ago, you delivered outstanding operational results for 2025. Like you mentioned, 11% revenue growth, nearly 300 basis points of adjusted positive operating leverage. As you move through integrating Cadence and Veritex, how should we think about the sustainability of that standalone performance?
Well, thank you, Erica, and again, thanks for hosting us. The 2025 was a significant year for us in terms of performance, but was also transformational in the context of both Veritex and Cadence coming into the company. So we believe we've got a huge set of opportunities now for a number of years in front of us with the scale we've achieved in Texas and in seven other southern states. Our local operating model, combined with the flywheel of reinvesting some of the economics that we'll achieve on both expense reduction and then the revenue potential, is enormous. I think we've got a very exciting future. There's a little bit of accounting on the PAA. Put it aside.
It doesn't matter, 'cause it all nets to zero at the end of the day anyway. We really feel terrific about the partnerships that we have with Cadence and Veritex, the ongoing leadership of Dan Rollins and Malcolm Holland, cementing our position in Texas and the South. So it's an exciting moment for us. We're really optimistic about this back half of the decade.
So speaking of excitement, you have consistently emphasized and finally delivered on organic growth. At the same time, you did recently announce these two bank acquisitions, and a capital markets acquisition. We've had a strong start to deal making in, you know, 2026, so let's just get this question out of the way now. How are you thinking about-
Not this one. Go ahead.
This one. Yes.
All right.
How are you thinking about M&A for Huntington in the near term?
Our strategy hasn't changed. We're gonna drive core growth as we have in the past, and that will continue. That's priority number one, and as I've said previously, if we don't deliver the core growth, we won't partner, we won't acquire. So priority one remains in place: drive core growth. We're not gonna do a merger of equal. We're not looking to go beyond the 21 states we're in now. We'd like to expand some of our fee businesses. That could be an area of opportunity for us. But we have a partner approach because we're local delivery. It's relationship, it's people. If you know, another partner opportunity approaches in the years ahead, we'll take a look at it. It's got to be a cultural fit.
It has to be strategic in terms of will it allow us to continue to drive revenue growth? It's not just about expenses, and obviously, it's got to be a financial fit. I mean, these numbers are very powerful. 500-600, 5%-6%, 500-600 basis points of improvement in operating leverage in a year? Remarkable. 18%-19% on equity. We're generating a lot of capital. We feel very fortunate. We've got great new colleagues. These banks were well run. and they're poised for us to sort of bring our capabilities. And so it's a very exciting moment. We're going to be a factor in Texas, but also in these other southern markets going forward.
Thank you, Steve. So Zach, for you, you laid out a path to $1.90-$1.93 in EPS. Clearly, the delta versus the original $2 guidance you provided in October is purchase accounting, right? Which is $0.11. So I'm going to just rewire this a little bit, this question a little bit. The difference between that original, you know, $2 is $0.07 to $0.10 . So if PAA is -$0.11, what's happening underneath the surface is better. Am I, i s that the right conclusion?
That is the right conclusion. You know, I think as we, as we noted, we think actually the outcome in terms of the purchase accounting at fair market value marks is actually a really favorable one. More capital upfront, higher quality of earnings going forward, and a more consistent level of PAA. Of course, it does mean that from an accounting perspective, there'll be about $0.11 reduction in what would've otherwise been the $2 per share of earnings in 2027. But as you noted, the core business is, is outperforming, and so we see $1.90-$1.93. That's, you know, as much as $0.04 upside. And really, we're seeing it across the board.
So the core loan and deposit engine continues to perform very well at the higher end of our high single-digit growth range on average over time for both loans and deposits. From a fee perspective, we continue to see acceleration. Last year, fees grew 7%. This year, core expectation was around 8%-9%, and we continue to see that accelerating. I think you saw from the presentation the expectation of 10%+ growth in fees as we go into next year. One of the most exciting areas that we've been focused on for a while is defining and getting ready to execute on revenue synergies, and that's one of the most compelling new areas that we see.
Again, $500 million of additional revenue growth over the next three years, of which a meaningful portion will begin to ramp up this year and into next year, throwing off good profitability into 2027, which also enables us to reinvest. You know, that flywheel of reinvestment back into the business, it's one of the reasons. I mean, the ROI from those investments is very evident in the revenue growth that we're delivering right now. And so net-net, includes above share repurchase capacity, which benefits from the higher return on capital and capital generations of the business. We'll see a, we think, a really strong and even stronger EPS outcome for 2027.
I just wanted to reemphasize what you said during your prepared remarks, which, you know, first of all, purchase accounting is a zero-sum game. It's either earnings or capital, right?
Right.
And given the sensitivity of the market sometimes on tangible book value dilution. When you announce a deal, just wanted to reemphasize that you now saying... Well, now it's closed, so the actual dilution is 4.5%, 4.8% versus the original 7%. So you have more capital.
That's correct, Erica.
Okay.
Yep.
Maybe if you could decompose a little bit how you're thinking about the growth synergies from these two deals?
Yeah. The one of the most exciting areas, as I noted, and we tried in the slide to highlight some of the key elements of that. In about a month, at another investor conference, Brant Standridge is going to join me, and we'll go a lot deeper into this. But just to keep it at a high level for now, a number of key areas. Probably the most compelling is providing the entirety of the Huntington product and services suite, both loan and deposit, and importantly, fee businesses, into the Cadence and Veritex markets and to their bankers, ultimately to their customers. That's going to be very significant. Think of all of the payments, wealth management, capital markets opportunities, ability to expand our specialty commercial businesses into those footprints.
Very meaningful opportunity to add to what was already a pretty good base, of course, at Cadence and Veritex, with the horsepower of a larger institution. Another really important one is funding cost optimization. The strength of the funding base and deposit gathering engine that we have at Huntington will give a pretty meaningful opportunity to improve NIMs in both Cadence and Veritex. We're expecting to see a meaningful contribution of that in 2026 and further into 2027, with NIMs rising last year for Huntington around 3.13. This year's NIM should be in the 3.30s. In 2027, 3.40s for NIM is our projection. So that's a meaningful growth lift. And then the scale benefits we're getting that continue to drive positive operating leverage net of investments is another meaningful one.
Really, really excited about that opportunity and continue to accelerate revenue growth into that business.
Great. Maybe just focusing on 2026 because your peers, both same size, larger, have been very bullish over the past day and a half. And, you know, Zach, you gave us one component of the NII growth of $2.4 billion-$2.5 billion. You know, in your 2026 revenue walk. Can you help us understand the other drivers? And I think it's interesting because you guys have been outgrowing your peers for some time now, and now the momentum for the industry is better. So, you know, maybe frame, you know, your growth relative to that context as well.
Sure. You know, really, really pleased with how we're seeing revenue growth come through for this year, and there are clearly multiple angles of that growth. We continue to see in the core Huntington franchise, high single-digit loan and deposit growth, and that's driven both from the core but also from a number of the new initiatives that we launched in 2023 and 2024. You know, this year, for example, we'll be opening a new branch location in North and South Carolina virtually every two weeks, and that'll be the same for next year as well. Our national commercial specialties continue to power strong growth, and on top of that, we'll of course add Veritex and the growth that they're seeing in Dallas and in Houston. So those two businesses together will grow loans between 10%-13%.
Then, of course, adding Cadence onto that will be a very significant amount of loan growth. We expect to see deposits throughout the course of Q2, Q3, Q4, after we get through the close process in Q1, to effectively grow the same or even faster than loan growth across the franchise, benefiting significantly from all the initiatives I just mentioned to you. We'll also see NIMs expand. As I mentioned just a minute ago, our projection for net interest margin this year is between is in the mid-3.30s, up from 3.13 last year. Fee businesses, you know, continue to be a very important part of our growth strategy. Payments, wealth management, capital markets are all really firing. We're seeing that continue to perform very, very well.
And those things together produce quite a bit of revenue growth this year.
Just because we touched on NII really quickly, what changed in the PAA schedule, you know, since the announcement?
Yeah. You know, when you do these estimations for loan yield marks and rate marks at the time of diligence, it's not surprisingly, a more top-down, kind of, by category level. What we do as we get into the actual close is much more bottom-up.
Yeah.
It's loan by loan rate analysis. It's also loan by loan maturity schedule, and that's really the primary methodological difference that came through with a lower rate mark. Again, lower discount, more capital upfront, different PAA schedule, more smooth PAA schedule over time, with no cliffs or drops across time.
We think this is really positive because it gives us a, a compound earnings trajectory to work from that doesn't have a cliff, Erica. So-
Yeah.
Plus the upfront capital. This is a home run transaction for us. When you look at those financial metrics that we're going to post and think about, you know, 4.8 capital dilute, we'll earn it back in the same timeframe or even shorter as we get more of these revenue synergies into the equation.
I, I agree with you, Steve. I think probably the more important thing that Zach just said is that deposits are pacing loan growth. Because, of course, you know, there is a, a concern that you were buying franchises that had, you know, less ideal deposit franchises relative to Huntington standalone. So I think that's quite a statement to make, you know, as we think about 2026.
Well, that's where our treasury management capabilities, you know, we do a lot with mobile. On a comparison basis, both very, very well-run banks, Cadence, Veritex, but they didn't have digital capabilities. More than half of our consumer customer acquisition's coming through digital. We are in a very different position on the deposit side than they were. And we've got great colleagues in these markets. They're excited. They love the products and capabilities we're bringing to them.
So, you know, speaking of excitement, you did call out the revenue synergies of $50 million-$75 million that you expect to reinvest. So what prompted that decision to reinvest those, most of that for this year?
You know, Erica, it really came down to our confidence and, and line of sight toward the initiatives that would drive those revenue opportunities. And, and the opportunity to effectively leverage additional revenue synergies to invest at an earnings neutral level in 2026, but to accelerate the delivery into 2027 and 2028, was very compelling to us. You know, it's, it's emblematic of the way we're, we're trying to operate the business, which is a steady and consistent level of reinvestment back into the business and just continue that flywheel. Investment begets revenue, begets profit, begets investment capacity, and continue to drive competitive advantage and at a much higher level than peer level in terms of revenue growth.
I thought one of the interesting takeaways from your many walks in the slide presentation is that, you know, share repurchase activity is offsetting investments. You know, tying that back, so you have more capital. Right? Less PAA, but more capital. Can you maybe just unpack the share repurchase sort of plans for the next, you know, two years?
Sure. And we're really pleased with the way we've operated the business from a capital return share and capital generation perspective, in that we've been deploying capital to our most important priority, which is loan growth, while also driving adjusted CET1 capital levels higher. As we get now very close to the middle of our 9%-10% adjusted CET1 operating range, it creates additional capacity now to add share repurchases back into the mix. So the expectation this year is approximately $200 million of share repurchases, deployed in a programmatic way, roughly $50 million per quarter, as we get on to 2027, and effectively be at that 9.5% adjusted CET1 level, and with a higher return on capital between 18%-19% from today's roughly 16.5%.
That'll create even more capacity for share repurchase, in 2027. Cumulatively, over the two years, we're expecting between 2% and 3% reduction in share count as we get into 2027, and that's the basis of the $0.03-$0.04 upside that I shared in that, in that earnings per share, reconciliation in the presentation.
Just to clarify one point that was, you know, a big discussion point in the market, which is the Cadence expense walk. You know, it's clear from your explanation, what's going on here, but I just wanted to make sure the audience also understood. The standalone expenses for Cadence was about $1.1 billion in 2025, which is in line with your guidance for the year. So that number, as you walked us through, includes synergies, but I think what the consensus may have gotten wrong was the starting point.
I think that's right, Erika. You know, Cadence was a growing enterprise, and it had also done a couple acquisitions in its own right-
Right
... over the course of 2024 and 2025. And so the standalone projection for Cadence cost base in 2026 was $1.22 billion, not the $1.1 billion you referenced. That was a budget actually that had just been created as recently as late January. It will inclusive of all the trends-
Yeah.
in the Cadence Bank business. So that's the starting point. From there, we'll get about $270 million of cost synergies. We'll also invest the roughly 30 or more million dollars into the revenue synergies and incur about $145 million of core deposit and tangible amortization costs. Non-cash, but accounting-related costs. So the net of those things is $1.1 billion. As we go into 2027, we'll see an additional roughly $100 million of cost synergies come in as the full run rate is manifested after the fourth quarter of this year.
So before I ask my last prepared question for Steve, I do want to remind the audience that we do have a capability to ask a question. If you scan your QR code, I'll receive it on this iPad, but we also have the old-fashioned way of mics going around the room. You know, Steve, there has been a very active bull-bear debate around Huntington shares right now, despite the beat and raise cadence of 2025, pun absolutely not intended. You know, the 53% efficiency ratio that you laid out for 2027, you know, 500-600 basis points in operating leverage, best-in-class ROTCE, obviously 18%-19%. You don't mince words. What are your words? In your words, what is the investment thesis for this stock?
Well, we have a, we have a compelling set of returns, that, that we're on the cusp of delivering. So... And we're very confident we're going to get the execution of, of, of the integration, including the conversion done at the middle of the year. So we have high confidence in it, and yet we have some who are skeptical about it, and there's also angst around, are we going to become some kind of acquisition machine?
Yeah.
And we've tried to address that, where we, you know, there may be acquisitions in the future, but they have to fit certain criteria or we're not interested. If you look at what Cadence has done for us, if a year ago, actually nine months ago, we said, "Well, we're only going to acquire one bank a year," we wouldn't have, we would, you know, Veritex was first. We wouldn't have had Cadence. We would miss the opportunity. I have no idea whether we'll find another partner in this year or next year or whenever, and these windows aren't open forever. So if we think there are great investments in terms of partnering to do that will benefit our shareholders, we'll take a look. Otherwise, we have a core engine that we'll just drive, and we have great growth prospects.
The local delivery model works. These national specialty businesses are really performing well. They've got great upside. Many of them are early stage. And this flywheel of reinvest is going to pay dividends for us, certainly through the rest of this decade. So we think the ... We think obviously the bears don't quite see it, and maybe it's on me to do a better job explaining it.
I think you did a good job on the stage today, so thank you for that. Any questions from the audience? Well, great. I think we'll end it there. Thank you, gentlemen, for joining us today.
Thanks, Erica.
Thanks, Erica.
Great to be with you.
Thank you.