Outlook for 2026: Is HBAN a Buy Now?

This comprehensive research report, current as of January 9, 2026, synthesizes a vast array of financial data, macroeconomic indicators, and strategic developments to construct a robust investment thesis. The core argument rests on a "Structural Alpha" premise: Huntington is undergoing a fundamental metamorphosis from a steady, Midwest-centric lender into a dynamic, high-growth super-regional powerhouse with a dominating presence in the "Texaplex" (Dallas-Fort Worth, Houston, Austin) and the broader Sunbelt. This transformation is catalyzed by the successfully integrated acquisition of Veritex Holdings and the pending, shareholder-approved merger with Cadence Bank.

Financially, Huntington is positioned in the "Goldilocks" zone of the 2026 economic cycle. As the Federal Reserve pivots to a rate-cutting regime—lowering the target range to 3.50%-3.75% in December 2025 with further cuts projected—Huntington benefits from a unique asset-liability profile. Unlike peers who may suffer immediate net interest margin (NIM) compression, Huntington’s extensive portfolio of fixed-rate assets, originated during the zero-rate era, is set to reprice upward, providing a structural tailwind to revenue that counteracts falling benchmark rates.

Valuation analysis reveals a distinct asymmetry. Trading in the $17.50–$18.15 range, the stock commands a price-to-earnings (P/E) multiple of approximately 12.35x, a discount relative to high-quality peers like Fifth Third Bancorp (14.05x). This valuation fails to fully price in the accretive nature of the M&A activity, the projected 16.5% stock price appreciation by late 2026, and the safety provided by a 3.52% dividend yield backed by 55 years of consecutive payments.

While risks related to merger integration, litigation, and potential macroeconomic softening persist, the weight of evidence suggests these are manageable. The convergence of technical breakout patterns, insider confidence, and institutional accumulation signals that the market is beginning to wake up to the "New Huntington." This report provides an exhaustive roadmap for investors to navigate this opportunity.

The Macroeconomic Superstructure of 2026

To understand the specific investment case for Huntington Bancshares, one must first deconstruct the macroeconomic stage on which it operates. The banking environment in 2026 is defined by the transition from restrictive monetary policy to a "neutral" stance, and the divergent economic realities of different U.S. regions.

The Federal Reserve’s Pivot and the "Rangebound" Rate Reality

The defining macroeconomic narrative of late 2025 and early 2026 is the Federal Reserve's decisive pivot. After a prolonged battle against inflation, the Federal Open Market Committee (FOMC) initiated a cutting cycle in late 2025. By December 10, 2025, the central bank had lowered the federal funds rate by 25 basis points to a target range of 3.50% to 3.75%. This move was driven by a dual acknowledgment: inflation, while still slightly above the 2% target, is trending downward, and the labor market has shown signs of softening, necessitating insurance cuts to protect the "maximum employment" mandate.

For 2026, the consensus among fixed income strategists is for a "rangebound" interest rate environment. The forecast suggests the Fed will continue to ease rates gradually, aiming for a terminal rate closer to 3.00% by year-end. Consequently, the 10-year Treasury yield is expected to oscillate between 3.75% and 4.25%. This creates a specific operating environment for regional banks:

• Deposit Cost Relief: The era of spiraling deposit costs is ending. As the Fed funds rate declines, banks can aggressively lower the rates paid on high-yield savings and certificates of deposit (CDs). This immediate reduction in interest expense is a powerful lever for margin expansion, particularly for banks like Huntington with a granular, consumer-heavy deposit base.
• The Steepening Yield Curve: As short-term rates fall faster than long-term rates (which are held up by term premiums and fiscal deficits), the yield curve is expected to dis-invert and steepen. This "bull steepener" is the classic signal for banking profitability, as it widens the spread between the cost of short-term borrowing (deposits) and the yield on long-term lending (mortgages, CRE).

The "Soft Landing" vs. Labor Market Nuance

The economic outlook for 2026 is cautiously optimistic, described by Federal Reserve officials as expanding at a "moderate pace". Thomas Barkin, President of the Richmond Fed, noted in January 2026 that while unemployment has ticked up, it remains historically low, and the economy has proven remarkably resilient against recessionary predictions.

However, this aggregate resilience masks underlying fragility in certain sectors. Lower-income consumers are facing stress from exhausted savings and high credit card rates. This necessitates a banking partner with a prime/super-prime customer base—a criterion Huntington meets with its high average FICO scores in auto and mortgage lending. The "soft landing" scenario allows banks to grow loan balances without incurring the catastrophic credit losses associated with a deep recession.

Regional Divergence: The Sunbelt Premium

A critical macroeconomic driver for 2026 is the continued economic outperformance of the "Sunbelt" relative to the "Rust Belt." Markets in Texas and the Southeast are projected to grow 30% faster than the national average over the next five years. This divergence is driven by favorable tax policies, demographic shifts, and corporate relocations. For a bank like Huntington, historically tethered to the slow-growth Midwest (Ohio, Michigan), this creates a strategic imperative: migrate capital to where the growth is. The failure to do so results in a valuation penalty; successful execution of this migration results in a "growth premium." This macroeconomic reality is the foundational logic behind the Cadence and Veritex acquisitions.

Strategic Metamorphosis: The M&A Supercycle

The years 2025 and 2026 will be recorded in Huntington’s corporate history as the era of "The Great Pivot." Through aggressive M&A, the bank is fundamentally altering its DNA.

The Cadence Bank Merger: A Transformational Event

On January 6, 2026, a watershed moment occurred when shareholders of both Huntington Bancshares and Cadence Bank (NYSE: CADE) overwhelmingly approved their merger. Scheduled to close on February 1, 2026, this all-stock transaction, valued at approximately $7.4 billion, is not merely an accumulation of assets but a strategic conquest of geography.

Strategic Rationale & Geographic Dominance:

Cadence Bank brings to the table a franchise with $53 billion in assets and over 390 locations spanning the high-growth markets of the South and Texas.

• The "Texaplex" Foothold: The merger catapults Huntington into the upper echelon of Texas banking. Post-close, Huntington will hold the #5 deposit market share in both Dallas-Fort Worth and Houston, and the #8 share statewide.
• Southeast Expansion: Beyond Texas, the deal delivers immediate scale in Atlanta, Nashville, Orlando, and Tampa—cities that are magnets for millennial migration and business formation. It also establishes Huntington as the #1 bank in Mississippi.
• Commercial Synergy: Cadence has a strong reputation in energy lending and middle-market commercial and industrial (C&I) lending. Combining this with Huntington’s national leadership in Small Business Administration (SBA) lending and vehicle finance creates a comprehensive commercial banking juggernaut capable of serving a client through their entire lifecycle, from startup to IPO.

Deal Economics and Shareholder Value:

The terms of the deal involve Huntington issuing 2.475 shares of common stock for each outstanding share of Cadence.

• Accretion: The transaction is projected to be 10% accretive to Earnings Per Share (EPS) by 2027. This is a massive figure in banking M&A, where 3-5% is common.
• Valuation Discipline: Management secured the deal at an implied valuation of 8.2x synergy-adjusted 2026 EPS. Buying dollar bills for 80 cents is a hallmark of disciplined capital allocation.
• Tangible Book Value (TBV) Dilution: The deal is 7% dilutive to TBV, with an earn-back period of three years. While dilution is never ideal, a 3-year earn-back is considered the "gold standard" for acceptable risk in bank M&A.

Litigation and Closing Certainty:

As is common with large public mergers, the deal attracted "strike suits." Two lawsuits were filed in New York Supreme Court in December 2025 alleging disclosure deficiencies. However, Huntington proactively issued supplemental disclosures regarding the fairness opinion and financial modeling to moot these claims. The shareholder approvals on Jan 6, 2026, effectively signal that these legal hurdles have been cleared, paving the way for a smooth close on Feb 1, 2026.

The Veritex Acquisition: The Precursor to Dominance

Preceding the Cadence mega-merger, Huntington closed the acquisition of Veritex Holdings, a $1.9 billion all-stock transaction focused on the Dallas metro area.

• Integration Timeline: The systems conversion for Veritex is scheduled for Q1 2026. Successful execution here will serve as a proof-of-concept for the larger Cadence integration.
• Immediate Financial Impact: The Veritex deal is expected to improve the efficiency ratio by 1 full percentage point and lift Return on Tangible Common Equity (ROTCE) by 30 basis points in 2025 alone.
• Strategic Signal: This deal signaled to the market that Huntington was serious about Texas. It allowed the bank to digest a smaller bite ($13 billion in assets) before tackling the larger Cadence meal, reducing operational risk.

The "Texaplex" Strategy: Why Geography Matters

The combined impact of these two deals is the creation of a "Texaplex" engine. The "Texaplex" (Dallas, Houston, Austin, San Antonio) is an economic super-region that, if it were a country, would have a GDP rivaling major European nations. By shifting its weighted average footprint toward this region, Huntington structurally increases its organic growth rate.

• Loan Demand: Commercial loan demand in Texas is robust, driven by energy transition projects, infrastructure spending, and tech sector growth.
• Deposit Gathering: While competitive, the Texas deposit market offers access to large corporate treasury accounts, an area where Huntington’s sophisticated treasury management platform can win share from local community banks.

Operational & Financial Deep Dive

A rigorous examination of Huntington's financial statements reveals a bank that is operating with high efficiency and robust profitability, even before the full synergy benefits of the M&A wave are realized.

Income Statement Dynamics

Net Interest Income (NII):

NII remains the primary revenue driver. In Q3 2025, NII increased 11% year-over-year. The outlook for 2026 is even stronger.

• Growth Guidance: Management raised 2025 NII growth guidance to 10-11%, and analysts project continued expansion into 2026.
• The Repricing Tailwind: A critical, often overlooked factor is the "fixed asset repricing" phenomenon. Huntington holds billions in auto loans and mortgages originated at 3-4% yields in 2020-2021. As these loans mature or pay off, the cash is recycled into new loans yielding 6-7% (even accounting for Fed cuts). This creates a natural, structural lift to NII that is independent of Fed policy. Analysts forecast a 10 basis point margin expansion in both 2026 and 2027 solely from this dynamic.

Non-Interest Income (Fee Income):

Fee income is the "quality" revenue that commands a higher valuation multiple. Huntington is excelling here.

• Wealth Management: The bank's wealth management division has been recognized with the "Wealth for Good" award for the second consecutive year. This division grew revenue by 12% year-over-year in Q3 2025. The strategy involves deploying these award-winning advisory capabilities into the newly acquired Cadence customer base—a classic revenue synergy play.
• Capital Markets: Revenue in this segment rose 21% year-over-year. As the economy stabilizes in 2026, M&A advisory and loan syndication fees are expected to rebound, providing further upside.

Operating Leverage:

The bank is generating positive operating leverage, meaning revenue is growing faster than expenses. Management has guided for ~250 basis points of positive operating leverage. This discipline ensures that the growth from M&A translates directly to the bottom line.

Balance Sheet Strength and Asset Quality

Investors in 2026 are rightfully paranoid about credit quality, specifically in Commercial Real Estate (CRE). Huntington’s balance sheet is a fortress relative to peers.

• CRE Exposure: Huntington has actively de-risked. CRE represents only 7.8% of total loans, and crucially, office exposure is a negligible 1.0%. While peers grapple with potential office defaults, Huntington is largely immune.
• Auto Finance: The indirect auto portfolio (12% of loans) is often cited as a risk. However, the credit metrics tell a different story. The average FICO score is 774 (Super Prime). Furthermore, the portfolio has performed well through the 2024-2025 cycle, validating the underwriting standards.
• Reserves: The Allowance for Credit Losses (ACL) stands at 1.86% of total loans. This is a conservative coverage ratio that provides a significant buffer against any unforeseen economic deterioration. Net charge-offs (NCOs) remain historically low at 0.22%.

Competitive Landscape & Peer Analysis

To validate the "Buy" thesis, we must benchmark Huntington against its peers. The key competitors in the super-regional space include Fifth Third Bancorp (FITB), KeyCorp (KEY), PNC Financial (PNC), and Regions Financial (RF).

Valuation Comparison

The market currently misprices Huntington relative to its quality and growth profile.

Analysis:

• The Discount: HBAN trades at a roughly 1.5-turn discount to FITB on a P/E basis. This discount persists despite HBAN having a superior growth catalyst in the Cadence merger.
• Book Value: The market is paying 1.6x book for FITB but only 1.4x for HBAN. As Huntington proves the integration success of Veritex/Cadence, this multiple gap should close, driving stock price appreciation independent of earnings growth.
• Yield Safety: While KeyCorp offers a slightly higher yield, Huntington’s payout ratio (46%) is more conservative, offering better safety and room for future hikes.

Strategic Positioning

Compared to KeyCorp, which has a heavier reliance on investment banking (volatile), and Fifth Third, which is highly exposed to the Midwest consumer, Huntington’s new profile is more balanced. The entry into Texas gives it a growth engine that KeyCorp and Fifth Third largely lack. This diversification reduces the bank's correlation to the industrial cycles of the Midwest.

Valuation Architectures

We employ a triangulation approach to value HBAN stock, utilizing Dividend Discount Models (DDM), P/E Multiples, and Analyst Consensus.

P/E Multiple Expansion

• Current State: Trading at ~12.35x 2025 earnings ($1.45 est).
• Future State: Applying a peer-average multiple of 13.5x to the projected 2026 EPS of $1.89.
• Calculation: $1.89 \times 13.5 = $25.51$.
• Implication: This suggests a potential upside of nearly 40% over the next 12-18 months if the bank executes on its earnings targets and re-rates to the peer average.

Intrinsic Value (InvestingPro Models)

Quantitative models from InvestingPro, which utilize a mix of 17 valuation metrics (DCF, DDM, etc.), pinpoint the "Fair Value" of HBAN at $19.85 - $19.90. This represents an immediate "margin of safety" upside of approximately 10-15% from current levels, purely based on existing fundamentals without factoring in the full future synergy value of Cadence.

Dividend Analysis

For income investors, the dividend is a key component of total return.

• Yield: 3.52%.
• Growth: Dividends have been paid for 55 years. With the payout ratio at a healthy 46%, and earnings set to grow by double digits, we forecast a dividend hike in late 2026.
• Total Return: Combining a conservative 15% price appreciation target with a 3.5% yield results in an expected annual total return of ~18.5%, significantly outperforming the broader S&P 500 historical average.

Technical Analysis & Market Sentiment

While fundamentals dictate the long-term destination, technicals dictate the entry point. The charts for HBAN are screaming "Buy."

Trend and Momentum

• Moving Averages: HBAN is trading above its 20, 50, and 200-day moving averages. This "bullish alignment" confirms that the trend is positive across all timeframes. The 200-day moving average at $17.23 acts as a formidable floor of support.
• RSI: The Relative Strength Index (14-day) is hovering around 63-65. This is bullish but not overbought (which would be >70). It implies there is still "fuel in the tank" for the current rally before a consolidation is needed.
• MACD: The MACD indicator is positive (0.11), signaling accelerating upward momentum.

Support and Resistance

• Support Zone: $17.12 - $17.60. Any pullback into this zone is a technical buying opportunity.
• Resistance Zone: $18.30 - $18.50. A breakout above $18.50 would likely trigger a rapid move toward the psychological $20.00 level.

Insider and Analyst Sentiment

• Analyst Upgrades: In late December 2025, RBC Capital raised its price target to $20.00. Barclays followed suit, also raising to $20.00. This consensus shift indicates institutional backing.
• Insider Activity: There has been some insider selling (e.g., Kowalski selling ~$44k). However, these amounts are relatively small and likely related to tax planning or routine diversification rather than a lack of confidence. The overwhelming institutional accumulation offsets these minor insider sales.

Risk Assessment and Mitigation

A comprehensive report must candidly address risks.

Integration Risk

The primary risk is operational. Integrating two banks (Veritex and Cadence) simultaneously is complex. Cultural clashes or IT failures could lead to deposit runoff.

• Mitigation: Huntington has a strong track record of M&A integration (e.g., the TCF Financial merger). The "step-ladder" approach (Veritex first, then Cadence) reduces the risk of a "big bang" failure.

Litigation Risk

The lawsuits mentioned regarding the Cadence merger are a standard feature of U.S. corporate law.

• Mitigation: The issuance of supplemental disclosures has effectively neutralized the plaintiffs' claims. The shareholder vote on Jan 6, 2026, proceeded without issue, rendering this risk largely moot.

Macroeconomic Reversal

If the U.S. economy enters a deep recession in 2026, credit losses would spike.

• Mitigation: Huntington’s low office CRE exposure and high-FICO consumer book provide a better defensive buffer than peers. The bank is "recession-resistant" compared to pure-play commercial lenders or subprime consumer lenders.

Conclusion: The Confirmation of the Buy Signal

The synthesis of evidence leads to a singular conclusion: Huntington Bancshares (HBAN) is a Strong Buy.

The bank is at the intersection of three powerful positive vectors:

1. Macro Tailwinds: Falling rates reduce deposit costs, while fixed asset repricing boosts yields.
2. Strategic Transformation: The Cadence/Veritex acquisitions solve the growth problem, repositioning the bank into the booming Sunbelt.
3. Valuation Dislocation: The market is pricing HBAN as a slow-growth Midwest bank (12x P/E), ignoring its new reality as a high-growth super-regional (warranting 14-15x P/E).

Recommendation for Individual Investors:

• Action: Initiate a full position at current market prices ($17.50 - $18.15).
• Time Horizon: 12-24 months.
• Price Target: $22.50 (Conservative) / $25.00 (Bull Case).
• Stop Loss: A weekly close below $16.50 would invalidate the technical breakout thesis.

In the evolving landscape of 2026, Huntington Bancshares offers a rare combination of safety (dividend, credit quality) and explosive potential (Texaplex growth, repricing alpha). It is, unequivocally, a stock to own now.

Source

• Federal Reserve - Federal Reserve Issues FOMC Statement December 10, 2025
• Federal Reserve Bank of Richmond - Speech by President Thomas Barkin January 6, 2026
• Huntington Bancshares (Investor Relations) - Huntington Bancshares and Cadence Bank Shareholders Approve Pending Merger January 6, 2026
• Huntington Bancshares (Investor Relations) - Huntington Bank Completes Merger with Veritex Deepening Commitment to Texas October 20, 2025
• Huntington Bancshares (Investor Relations) - Huntington Bancshares Incorporated Reports 2025 Third-Quarter Earnings October 17, 2025
• Huntington Commercial Bank - 2026 Commercial Industry Outlook Report January 2026
• Morningstar - Why 2026 Could Be a Banner Year for Regional Bank Stocks December 30, 2025
• DBRS Morningstar - Morningstar DBRS Confirms Huntington Bancshares Inc.'s Long-Term Issuer Rating at A, Changes Trend to Positive Following Announced Acquisition of Cadence Bank January 2026
• Investing.com (citing RBC Capital) - Huntington Bancshares Stock Price Target Raised to $20 by RBC Capital January 2026
• Finviz (citing Barclays) - Barclays Raises Huntington Bancshares (HBAN) PT to $20 Citing Continued 2026 Sector Outperformance January 7, 2026
• Zacks Investment Research - Huntington Strengthens Texas Presence with Veritex Acquisition January 2026
• Banking Dive - Huntington's $7.4B Cadence Deal Gets Regulatory Sign-Off December 23, 2025
• Investing.com - Huntington Bancshares Issues Supplemental Disclosures on Cadence Merger Litigation January 2026