Integration done, but deposit costs squeeze margins
- Huntington successfully completed the Cadence Bank systems conversion in mid-June.
- Adjusted earnings beat expectations, but net interest margin slipped to 3.21 percent.
- Management expects net interest income to track toward the lower end of guidance.
- Credit losses stayed calm for now, with net charge-offs remaining low.
Integration relief meets funding reality
Huntington successfully completed the Cadence Bank systems conversion in mid-June. This removes a major execution risk from the story. Management can now focus on delivering the targeted 365 million dollars in cost synergies by the end of 2026.
But as integration worries fade, funding costs take center stage. Rising deposit costs are squeezing margins. The bank reported a slight dip in net interest margin to 3.21 percent in the second quarter, and management warned that net interest income might hit the lower end of its expected range.
The bear case has shifted from broken systems to expensive deposits. If the bank cannot defend its margins while rates stay high, its long-term earnings targets look ambitious. Investors also need to see if the acquired Cadence loan portfolio will continue to perform well or if nonperforming assets will rise further.
The official Finn scorecard reflects this tension. With an overall score of 2.8 out of 5, the bank shows fair valuation but struggles with performance and financial health as it absorbs its new size.
Loans funded by deposits
Huntington makes most of its money the classic bank way. It gathers deposits, lends that money out, and keeps the spread between loan yields and deposit costs. That spread is called net interest income.
Fees add a second source of income. Huntington earns fees from payments, cash management, wealth management, capital markets advisory, mortgage banking, insurance, and other services. These fees help, but the bank is still highly tied to loan demand, deposit costs, and credit quality.
The strategy leans on a stable, low-cost core deposit base and a mix of branches and digital banking. Huntington operates about 970 full-service branches and private client offices, plus mobile and online channels.
Mergers and acquisitions are now central to the model. Huntington bought Veritex and Cadence, expanding its footprint and asset base. Cadence pushed total assets above 250 billion dollars, which brings tougher Category III banking standards after a transition period.
What Huntington sells
Consumer deposits
Checking, savings, and other deposit accounts are the base of the bank. They provide funding that can be cheaper and steadier than wholesale borrowing.
Consumer lending
Huntington offers residential mortgages, home equity lines, and secured loans for autos, RVs, and marine craft. These products tie earnings to household credit health.
Commercial lending
The bank lends to middle-market, large corporate, and institutional clients. Cadence and Veritex increased average loans in both main segments by 33 percent in early 2026.
Treasury management and payments
Commercial clients use Huntington for cash management, payments, and related services. These deepen client ties and can add fee income beyond loans.
Wealth, trust, brokerage, and insurance
These services give Huntington fee income from clients who need investing, trust, brokerage, or insurance products. They are useful add-ons, not the core earnings driver.
Capital markets and advisory
Huntington offers investment banking and capital markets advisory services to commercial clients. Results can vary with deal activity and market conditions.
Two main engines
The mix shown uses Q1 2026 net income from Huntington's two primary operating segments, excluding the Treasury and Other loss. That segment lost 269 million dollars in Q1 2026, mainly because of 263 million dollars in Cadence acquisition-related expenses.
What could break
Deposit cost pressure
High impact · High oddsHuntington relies on stable, low-cost deposits to fund loans. Customers are demanding higher deposit rates, which is shrinking the net interest margin. If funding costs do not stabilize soon, earnings will face further downward pressure.
Cadence credit surprise
High impact · Medium oddsThe bank bought a large loan book with Cadence. Nonperforming assets rose sharply in early 2026, largely tied to these acquired loans. If those problem loans turn into actual charge-offs, capital could take a hit.
Expense synergy delays
Medium impact · Medium oddsWith the systems conversion complete, Huntington must now deliver its targeted 365 million dollars in cost savings by late 2026. If these savings are delayed or smaller than expected, the combined bank will run with higher costs than planned.
Category III rule burden
Medium impact · High oddsCadence pushed Huntington above 250 billion dollars in total assets. That size brings tougher Category III banking standards after a transition period. Higher rules mean more compliance costs, more liquidity needs, and less balance sheet flexibility.
In one breath
What does Huntington Bancshares do?
Huntington is a regional bank holding company. It offers consumer banking, commercial banking, loans, deposits, wealth services, payments, and capital markets services.
Why does the Cadence Bank deal matter?
Cadence made Huntington larger and expanded its loan and deposit base. It also pushed total assets above 250 billion dollars, which brings tougher regulation.
What is the biggest risk for Huntington right now?
Rising deposit costs are squeezing the net interest margin. If the bank has to keep paying more to keep deposits, its earnings will drop.
