Dan Rollins, CEO, Cadence Bank at the NYSE, Jan. 25, 2022.
Source: NYSE
Huntington Bancshares agreed to buy smaller rival Cadence Bank in an all-stock deal valued at $7.4 billion on Monday, underscoring a broader push by regional lenders to grow their footprint and compete with larger banks.
Dealmaking has gathered pace under the Trump administration, which has pledged to simplify and speed up merger approvals, while analysts say the highly fragmented U.S. banking system leaves ample room for consolidation.
Regional lenders are also pursuing mergers to diversify revenue, strengthen balance sheets and expand in faster-growing markets as they strive to compete with larger rivals.
The Cadence deal, valued at $39.77 per share, will create a top-ten bank with assets of $276 billion and deposits of $220 billion, Huntington said. The combined bank will have $184 billion in loans and leases.
Huntington said it will issue 2.475 shares for each outstanding share of Cadence common stock.
Cadence shares were last up about 2% before the bell on the news, paring some gains. Huntington shares fell 4%.
Expansion drive
“This partnership will extend the reach of our full franchise to 21 states – stretching from the Midwest to the South to Texas – and into new, high-growth markets for which we have a powerful playbook,” Huntington CEO Steve Steinour said.
The bank raised its medium-term performance targets, citing expense synergies and enhanced earnings potential from the deal, and now expects return on tangible common equity (ROTCE) of 18% to 19%, up from its previous target of 16% to 17%.
ROTCE is a key measure of how effectively a bank is using its core capital to grow profits for its shareholders.
The deal will see Huntington expand to 21 states in the U.S. with a foothold in high-growth markets, including Houston, Dallas, Fort Worth and Austin.
“Huntington has been on the path to expanding in Texas and the Southeast and we believe this acquisition fits nicely into that expansion strategy,” analysts at RBC Capital Markets wrote in a note.
Earlier this month, rival Fifth Third agreed to buy regional lender Comerica in the year’s largest bank deal so far, valued at $10.9 billion.
The Wall Street Journal was the first to report the deal, which is expected to close in the first quarter of 2026.
Evercore and BofA Securities served as financial advisors to Huntington, while Keefe, Bruyette & Woods advised Cadence on the deal.
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