Huntington Bancshares Stock

Welcome to day 3 of Barclays 2026 Global Financial Services Conference. I'm very pleased that you could join us this morning. We have almost a full day of presentations today as well. We go through 2:45, concluding with Goldman Sachs. From the -- kicking us off today, very pleased to have Huntington. From the company is Steve Steinour, Chairman and CEO; and Zach Wasserman, Chief Financial Officer. Steve is going to kick us off with some remarks and some slides they put out the deck this morning, and then we're going to do some Q&A.

So, Steve, please kick us off.

Jason, thank you very much, and thank you for 31 great years, and thank you to Barclays as well for hosting us. Welcome to everyone who's joining us today. This morning, I want to walk you through where Huntington stands today, how the operating environment has evolved over the course of this year, how our management team has responded and why we remain confident in the earnings power and long-term value creation of our franchise.

So let's begin on Slide 3. There are 4 key messages that will frame the discussion today. First, Huntington is a strategically well-positioned national franchise with scale in markets that are expected to sustainably grow above the national average and numerous value-added fee businesses. We expect to drive strong organic growth through the decade and beyond. Second, we're driving solid operating performance amidst an operating environment that is materially different and more challenging than we had anticipated at the start of the year. Third, our integrations of Veritex and Cadence are tracking at or ahead of our expectations. And fourth, all of these factors support our ability to deliver robust long-term value creation for our shareholders.

Turning to Slide 4. Today, Huntington is a super regional bank positioned for strong organic growth. We operate a powerhouse consumer and regional banking franchise across 21 states alongside a leading national commercial bank and have a comprehensive set of payment solutions, a full spectrum wealth management platform and capital markets businesses with broad capabilities. Across all the elements of the franchise, we operate with an aggregate moderate to low-risk appetite. This combination of operating scale and risk management discipline is what enables us to sustain strong risk-adjusted growth.

Turning to Slide 5. Our company looks fundamentally different than it did a decade ago, and that's the outgrowth of deliberate execution of our strategic vision and substantial investments. In 2015, we had a strong share in the Midwest with $50 billion in loans and $55 billion in deposits. Our national presence, however, was very limited to auto finance and a few specialty verticals, and our fee businesses were largely nascent. Looking today, we have an expanded geography and substantial scale with $189 billion in loans and $222 billion in deposits, combining Midwest leadership with meaningful and growing scale in Texas and the South. We're now present in 12 of the top 25 fastest-growing MSAs in the country, positioning us squarely in some of the nation's most attractive markets.

And we have a leading national presence, including asset finance and 17 national specialty commercial lending and deposit verticals and commercial clients across all 50 states. Our value-added capabilities have broadened across a full range of services, including an expansive payment suite, a wealth and private banking platform and a full-service capital markets business spanning advisory and investment banking, risk management and capital raising and distribution. This is the result of sustained investment, organic expansion and disciplined partner integrations. And it's produced a franchise with greater customer relevance, multiple sources of organic growth and greater fee diversification. And these factors position Huntington to deliver sustained revenue growth with top-tier returns and value creation.

Now on to Slide 6. Our franchise investments are resulting in a highly differentiated performance for several years now, our organic loan and deposit growth has meaningfully outpaced peers. This has been driven by the expansion of our national specialty verticals, accelerating performance from our consumer and regional bank and our organic expansion into the Carolinas as well as Texas prior to our recent partnerships. This is clear evidence of our powerful investments in organic growth engines. Building on that same investment story, Slide 7 shows that the growth engine is not limited to lending and deposit gathering. We've also broadened and accelerated strategic value-added fee businesses, which have grown at a 14% CAGR since the second quarter of 2024 on an entirely organic basis excluding the benefits of any acquisition. Unpacking this performance for a moment.

In capital markets, we added a strong base of capabilities, expanding in syndicated and leveraged finance, debt and equity capital markets, and financial sponsor coverage, driving a 30% CAGR. In Wealth and Private Banking, continued platform and capability investments have driven 10% growth in households, resulting in a 37% increase in AUM and a revenue CAGR of 10%. And in payments, several initiatives, including bringing merchant acquiring in-house and expanding corporate treasury management capabilities, have driven a 9% revenue CAGR. Over the last several years, fee growth has meaningfully outpaced the organic growth in our balance sheet, a reflection of the sustained investment we've made in capabilities across these businesses and one that increasingly positions Huntington as a trusted resource for our customers. As a result, our expectation is to drive high single to low double-digit growth rates across all of these areas going forward.

Turning to Slide 8. Another significant area of management focus this year has been on our integrations of Veritex and Cadence, and that's been a huge success for us. We converted both banks onto our systems on an accelerated time frames with minimal issues, and we're achieving or exceeding the synergies we've targeted. Cost synergies are on schedule with the $70 million target from Veritex achieved in Q2 and Cadence tracking toward $365 million run rate by the fourth quarter. More significantly, revenue synergies are tracking better than our original forecast with our cumulative outlook now at approximately $600 million through 2028 compared with our original expectation of $500 million. It's also important to recognize future earnings growth associated with these partnerships. Our focused execution will provide additional earnings power and investment capacity beyond the franchise performance we're discussing today.

And turning to Slide 9 for a discussion of our performance year-to-date. Our execution against the priorities we laid out at the start of the year remains solid, even as the environment around us has changed. The key takeaway is that most of our key operational drivers are tracking in line or better than our expectations coming into the year. However, the impact of interest rates and competitive dynamics on deposit costs and asset yields have constrained our NIM expansion to a level below our original expectations. So double-click on this for a moment. Balance sheet growth is on track with loan growth of approximately 36% year-over-year and deposit growth of approximately 33%, levels consistent with our growth expectations coming into the year.

Fee income growth has accelerated to approximately 32% year-over-year, well ahead of our original 26.5% to 29.5%. And as we just discussed, our partner synergies are at or above goal. Where the expectation has changed is around net interest margin. We came into the year expecting significant NIM expansion, supported by a favorable yield curve and rational pricing conditions. Instead, higher short-term rates and elevated loan and deposit pricing competition have moderated NIM expansion even as we continue executing against the Cadence deposit cost optimization. We've navigated this change in environment by managing the things we can control. And I want to spend the next few slides explaining that change in the environment and our response to it in more detail as well as our updated expectations.

So turning to Slide 10. There are 2 significant changes to the deposit pricing environment over the past several months. The first is the outlook for reference rates. As you all know, the market implied Fed funds path has shifted sharply higher since the start of the year, swinging from expectations of rate cuts to expectations for rate hikes. That flatter, higher-for-longer rate path has elevated deposit costs above the level we had anticipated at the start of the year. Compounding that dynamic is that deposit demand has intensified industry-wide. And as a result, we've seen our effective cost of deposits inflect higher beginning in the first quarter after a long period of improvement and has continued to increase through the course of this year, including by another few basis points after we reported the second quarter. Amidst all of this, we continue to win customers, deepen relationships and grow deposits across the franchise. The change, however, is that the economics of incremental growth have become tighter than we anticipated at the start of the year.

Turning to Slide 11. We're seeing similar dynamics impact both loan origination volume and yields. For example, industry loan growth has accelerated sharply from around 3% in June of last year to 7% in June of this year. This appetite for loan growth is evident across various asset classes. For example, indirect auto is a product area where increased competition is compressing risk-adjusted returns as some large bank competitors have been ramping production at the expense of spreads. Rather than expand our credit box or cut yields to chase volume, we've held our underwriting and return standards. We've chosen to accept lower production where incremental spreads did not justify the additional lending, thereby conceding some origination volume but sustaining our overall returns for the portfolio. Commercial real estate is another area of pressure.

We've seen payoffs in this portfolio accelerate as underwriting, deal structure and pricing from some private -- from some banks and private credit sources have moved to levels we consider uneconomic. In addition to that, the permanent capital providers, Fannie, Freddie, are also in an accelerated refinance mode. And while this is creating a headwind to our growth, we view it as constructive to the desired risk profile of our commercial real estate portfolio. As we've discussed, we intended to lower the concentration of commercial real estate loan portfolio over the course of several years. We announced that at the beginning of the year. But it's currently happening at a much faster pace than we envisioned.

Turning to Slide 12. So what have we done to mitigate these pressures? First, we've not compromised our disciplined risk-adjusted returns. Second, across the balance sheet, we've continued to optimize loan mix and deposit pricing, and we've successfully driven fee-based revenues, including treasury management and capital markets. And we accelerated our expense reengineering program for this year with expectations of additional expense control in '27. For example, we've increased our cost reengineering target for '26 and more than doubled it for next year.

So what has changed more recently? In Q3, the factors I noted on the prior 2 slides, deposit cost pressure and asset yield compression have persisted beyond what we had recently anticipated and accelerating paydowns in commercial real estate have increased. Now this has reduced our loan growth and net interest income outlook for this year beyond the level we -- that could be offset by further fee growth or additional efficiency actions. For this reason, we're recalibrating our outlook for this year and '27 to reflect the current operating environment. We continue to see strong demand across the franchise, and we remain disciplined in growing and allocating capital where returns meet our hurdles. This discipline supports credit quality, protects risk-adjusted returns and allows us to keep investing in the capabilities that drive long-term value creation.

Turning to Slide 13 for a discussion of our updated outlook for '27. With what we're seeing in Q3, we're revising our '27 EPS target range to $1.75 to $1.83. The revised range reflects the current pricing dynamics, the near-term actions we're taking to mitigate some of the funding and asset yield pressures and contemplates a wider range of operating outcomes than what we considered even a few months ago. Our outlook today reflects the continuation of prevailing macro and competitive conditions, sustained core funding and stable credit. With slightly lower expected loan growth, we expect to upsize our share repurchase program by an additional $200 million to $1.3 billion to $1.4 billion next year. While our path to our prior target range still exists, we believe it's more critical to protect the long-term strength of the franchise, preserve the customer experience that differentiates Huntington and continue investing in the competitive advantages that support our organic growth.

So taking a step back for a moment on Slide 14. Our revised outlook indicates substantial earnings growth, strong returns and significant tangible book value accretion and programmatic capital return. We expect EPS to grow more than 20% versus fiscal year '25 while steadily increasing our ROTCE. Tangible book value per share is expected to grow more than 10% off of today's level. And on capital return, we've completed approximately $360 million of share repurchases year-to-date of the planned $550 million for this year. And as I noted, we're upsizing the program for '27. These metrics, even updated to reflect our revised earnings expectation, still represent significant value creation.

So concluding on Slide 15, the events of this year have not changed our value creation model, the same flywheel that has transformed Huntington over the last decade remains intact. The flywheel has powered some remarkable outcomes, including de novo geographic expansion of our commercial, along with our consumer and regional banks into attractive new markets such as the Carolinas, our commercial verticals, which are continuing to gain momentum in the market as they mature and award-winning digital platform that serves as a source of customer acquisition and engagement. And following the integrations of our recent partnerships, our flywheel is helping to drive $600 million of anticipated revenue synergies and our ability to invest in high-growth markets across Texas and the South.

In closing, we're confident in the franchise we've built. It's more diversified, more capable and more relevant to our customers by far than it was a decade ago. We're navigating a more challenging operating environment with discipline, and we remain committed to delivering long-term growth, enhanced returns and outstanding shareholder value creation.

Zach and I now look forward to taking your questions. So Jason, back to you.

Thanks, Steve. I guess you took us through why you're making these changes to the 2027 earnings guidance. Can you maybe just help us understand what's driving the magnitude of that revision?

Well, the environment has evolved progressively with cumulative pressures increasing over the course of the year. In the third quarter, yet again, we saw incremental pressures that we've come to recognize we're not going to -- as a result, we've come to recognize we're not going to achieve the full year earnings expectations that we previously set. And that's primarily a function of the interest rate environment and the competitive environment that I noted in my prepared remarks. But we've also made choices of how we want to allocate capital and risk returns versus risk and returns.

So the '27 EPS guidance reflects cumulatively what we've seen. And we've tried to be very thoughtful about how that may continue to manifest itself going into next year. We've taken expense actions. We've done deposit pricing and loan optimization. We've adjusted the mix, and we'll continue to do a number of these things. What we won't do is change our credit discipline. And we're going to be very disciplined about our risk-adjusted returns. We believe that continuing to invest in the businesses, particularly in these newer businesses and markets, will pay huge dividends for us going forward. The strategies are working. The core execution is strong. As we talked about, we're delivering the loan deposit fee growth at or above the levels we expected as we came into the year.

And we still expect to drive significant EPS and tangible book value growth going forward for '27. So the things we can control directly, we think we are responding to. And we're going to have a 17-plus percent return on equity next year at these levels.

Maybe Zach could be a little more specific.

Thanks, Steve. Good morning, everybody, and Jason, thanks for having us. I think as Steve noted in his prepared remarks and just now in that question, clearly, over the course of this year, we've seen a gradual increase in headwinds against the net interest margin outlook for the business, not only in '26, but also forecasting out into '27. And our objective has been to continually offset those and solve for those pressures not only this year, but into next year. And it's been a variety of factors we've done to do that.

One, very much focused on deposit cost optimization. We've discussed over time the fact that cadence coming into our business represent the opportunity to optimize deposits, and we've been leaning into that, optimizing where we're generating loan growth accelerating fee growth strategies, which have accelerated fee growth above our plan this year and would then carry on into 2027. And as Steve noted, very significantly increasing the expense reengineering plan. And those largely offsetted the -- those pressures as we were operating throughout the year. What we saw in the third quarter and really as we saw the results for July, late in July into early August, and we saw again in August, another step down in terms of several factors. One was lending volumes.

And as Steve noted, an acceleration of the pressures in CRE and residential mortgage and a meaningful acceleration in terms of the competitive environment in terms of indirect auto that caused us to want to reduce production. To give you a sense of magnitude, my expectation now for the third quarter is we'll see lending volumes on an ADB basis, on an average basis, actually lower by about 0.5% in the third quarter versus the second quarter. That will be the first time we've seen ADB decline sequentially in a number of quarters. Now we did see lending production increase and firm up in the back half of this quarter as we're operating right now in September. I do expect on an end-of-period basis to actually be higher in the third quarter versus the second quarter.

And seasonally, typically, the fourth quarter for us is a very strong quarter, and I expect to see, again, sequential growth there. However, the run rate of our organic loan growth had been between 8% and 9%. It's running right now around 6%. And so we think it's prudent at this point to plan for that level, at least at the low end as we think about next year.

The other factor that we continue to see, as Steve noted, was pricing in both the deposit and loan yield environments, which is making us believe that planning on a more flat NIM path, again, at least at the lower end is appropriate as we go into not only the back half of this year, but next year. And then lastly, I would say, as we considered adjusting the earnings expectations for 2027, what was critical to us is that we had very, very strong confidence in our ability to achieve those results and hence, capturing a wider range of the interest rate environment, a wider range of the outlook and potentialities around the competitive environment and of course, the geopolitical and other environments that are affecting the industry at this point to factor those in into a wider range of potential results.

Jason, if you don't mind, I'll just add a little color to it. So commercial real estate, rates going up, you would expect to see a surge in refinance activity where you could to go from floating generally with us to fixed. And so we expected a certain amount of that. We're seeing twice 2x what we expected to see. And that's from both the legacy Huntington as well as our new partnerships. We're very big in auto. We've been very disciplined for decades in this. A year ago, we were generating about $850 million in auto loans at a mid-high teens return.

Now we're probably 500-ish at a 12% return, and that's our absolute and we're not going to go below that. Yet the new sales and new sale volumes are essentially the same. So there's been a market dynamic shift that has occurred. Again, a couple of large banks buying the market. Typically, we would see that for 1 quarter, maybe 2 over a period of time. We're now in the third quarter, no signs of abating. I don't know that, that changes in the foreseeable future. And so as we put the lower end of this range together, it's with a view of some continued pressure, particularly in certain asset classes.

I guess, Steve, in your remarks, you talked about the Cadence and Veritex synergies running in line to better than expected. The one thing is, maybe these issues are more prevalent in kind of a heritage Huntington footprint. Is that a fair characterization?

Well, it's really a NIM expectation that's adjusting. The volumes are generally in line with -- with the exception of commercial real estate, auto and resi mortgage, those 3 asset classes in line with. We're going to have a $7.5 billion commercial origination quarter this year, which will be one of the higher ones. And our fourth quarter looks good, but we're swimming against the tide of refinance or lower consumer activities, including, in some cases, the books actually declining on the consumer side as well.

So the core is performing well. The partnerships are performing very well. We increased the revenue outlook -- synergy outlook for Cadence and Veritex. We have a number of areas that are off to very strong starts in Cadence in particular. And we're optimistic about how this will come together. It's just we've got a 5 to 10 basis point NIM change.

Got it. And then maybe, Zach, we can maybe unpack a bit the 2026 guide. You pointed to $1.52 to $1.54. Maybe as we think about the back half of the year, setting the stage for next year, you talked about 36% loan growth, 33% deposit growth, slightly lower than the 2Q guide. Maybe expand upon what's changed.

Sure. Well, as I noted, I think kind of the organic run rate that we're seeing in loan growth has gone from around 8% to 9%, and that was what we saw throughout the course of '25 entering '26, running around 6% right now. That should leave us on a full year basis, inclusive of the impact of the 2 partnerships running with loans at around 36% year-on-year growth.

To be clear, that's within the growth range that we had originally set for the year. With that being said, if you would ask me coming into Q3, based on what we're seeing throughout the early part of the year, our expectation was to be above the growth range for loans. And so this is a modest reduction back into that growth range. From a deposit perspective, I would expect to land at about 33% growth year-on-year, which again was within the growth range we've given before. Ultimately, our approach to deposit gathering is to core fund loan and asset growth. And if loans are going to be a little lower, we'll bring deposit gathering down a little lower. But again, those are both within the ranges we had set.

Ultimately, from our perspective, this is a capital allocation decision. And we want to be very, very disciplined stewards of capital. If we're not seeing the appropriate returns of the margin, we will modestly bring down loan growth a match fund with deposit growth and ensure that the overall return on capital profile of the company is maintained. And as Steve noted, our expectation is to gradually improve that.

I think you've talked to -- I didn't see a NIM on the slide, but in the past, you talked to a NIM rising in the back half of the year to low to mid-3.20s. I guess how are you thinking about that now?

Yes. When we came into the -- in the third quarter call in July, I noted that we were expecting our NIM, which was 3.21 in Q2 to rise into Q3 and then to further continue to rise thereafter. We are seeing the increase into Q3. So that's encouraging into the low to mid-3.20s. However, it's my expectation now will be at least at the lower end scenario at that same level, low to mid-3.20s in Q4 and continue to track at that level as we go into the back half of next year. The drivers are very similar to what we've been discussing over time. We're benefiting from fixed asset repricing given the higher yield curve, both in terms of loans and importantly, securities, where we're seeing securities cash flow being reinvested at higher rates.

However, our expectation is that this interest rate environment will continue to drive a gradual increase in deposit costs over the course of time, and those things will largely offset each other in that lower scenario. There are clearly scenarios, and we think it will be favorable if the Fed changes interest rate posture, frankly, either higher or lower would benefit us in terms of the flexibility and the mechanisms to drive optimization. And so that -- there are scenarios where NIM is higher into the mid- to high 3.20s potentially as we go into next year, and that's the source of that range.

Got it. And then maybe anything on fee income or expenses to call out.

Yes. Fee income has been an area, as I noted, that we've really leaned into and worked to accelerate our growth initiatives. The teams are executing exceptionally well. We're seeing on an organic basis, not including acquisitions, double-digit year-over-year growth in revenues driven by payments, wealth management and capital markets, exceptional execution by the team.

In fact, our outlook for this year is 4% higher fee growth then we set our targets initially as we came into 2026. Our expectation for the third quarter, we're seeing another strong quarter in fee growth this quarter. We'll end somewhere in the [ 7 30s ] in terms of fee revenue for Q3. Q3 is seasonally lower than Q2. Our expectation we'll see that rise again on a sequential dollar basis into Q4 and continue to drive high single to low double-digit year-over-year growth in fee revenues, which is also consistent with our expectation as we go into next year.

On expenses, the overall expense model continues to be executed very well, underlying very rigorous expense discipline. We're reengineering baseline operating costs, as Steve noted in the prepared remarks, increasing that reengineering program meaningfully in both 2026 and for 2027, and we've got now full line of sight to the 2027 program. That should drive overall expenses this year to stay within the range we've given before, 32.5% to 33.5% and should end Q4 with an efficiency ratio of somewhere in the 55.5% to 56% range.

Got it. I want to run through '27 EPS. But before I do that, Steve, maybe back to you. You talked about just a more competitive environment that you're operating in, and you talked about deposit costs, asset yields, loan originations and select categories impacting results due to competition. From like a long-term perspective, how confident are you that Huntington can compete in this more competitive landscape?

We're quite confident we can compete. We're choosing to allocate capital versus follow the industry in certain categories. And I think the end result that we expect to be in line with our commercial real estate concentration around year-end, about 1 year, 1.5 years sooner than we expect, will put us in a position where we'll be more front-footed in '27 and beyond.

But we're facing a capital allocation set of decisions, and we think we're making prudent ones in that, increasing the buyback, particularly with where the stock is trading right now versus deploying it for marginal returns given this current competitive dynamic. You've been around a long time. You see these cycles. And so we're going to be a little tighter with what we're doing at the low end of the cycle or if we felt -- which we don't, but if we felt there was a significant risk change on the near-term horizon and then open it up when we see a lot of opportunities. If you look at the last few years, our loan growth has been more than double the averages. Our fee growth has been excellent. And so there's a timing issue on the capital allocation, risk and return phenomenon. It's -- I think it's -- as it's been in the past, it will be present for a short period of time.

And -- but we are really well poised. The franchise is in great shape, core franchise. We really like the partnerships and how they position us. I spent a lot of time in Texas, Brant, Dan and some of the rest of the management team, we're off to a very good start in some of these markets, Texas, in particular.

Got it. So Zach, $1.75 to $1.83 the guide for next year. I guess within that range, you have loans up between 6% and at the low end, 7% to 8% at the high end. Maybe kind of what pushes you to the high end, low end?

Yes. Great question, Jason. What we're seeing in overall loan production tends to be quite encouraging, frankly, particularly in the commercial and industrial categories. We're seeing strong growth in production in our large market corporate verticals, which, as Steve has noted in a number of occasions, are not mature. We've built a number of new specialty verticals. There's significant continued growth to be garnered there.

In our broad middle market franchise, we're seeing strong performance across most of our regions, and we're really encouraged by, for example, some of the new geographies that we'll be entering into benefiting from revenue synergy opportunities and investments as well. And our regional banking teams focused on the smaller end of the middle market franchise are performing exceptionally well. We're seeing great performance there. Clearly, where there's some incremental headwinds is in commercial real estate, residential mortgage and indirect auto. And that's really the thing that would drive the difference between the range. And ultimately, if those environments and those sectors change, we could see ourselves back to the historical run rate of something like 7%, 8%, could potentially even be higher, but with the range we've given is somewhere between 7% and 8% at the high end, 6% run rate at the low end is our thought process and feel like that's a really appropriate range, as Steve noted, to optimize capital allocation for returns.

I guess, similarly, on net interest margin, low to mid-3.20s on the low end, mid- to high-3.20s on the upper end. Maybe kind of walk us through what determines which end?

Yes. Look, as I noted before, I think the -- on one hand, if the environment continues to be this uncertain interest rate path, with no changes in Fed funds, we would expect to see kind of a continual gradual increase in deposit costs. This is effectively back book pricing, just sort of gradually resetting and of course, a relatively competitive front book environment as the industry seeks to gather core loans to fund core deposits, excuse me, to fund loan growth, although that would be offset by the benefits coming through fixed asset repricing on both loans and securities, and that's the sort of relatively flat path in the low to mid-3.20s.

To the extent that the environment is somewhat more favorable, as I said a minute ago, we do think that if there's changes in Fed fund policy, that actually opens up opportunity. So we'll, of course, see what happens today, for example. And that's one of the contributing factors that could take us to the higher end, right?

I guess you're originally pointing to an 18% to 19% ROTCE for next year. Now you're talking 17% to 18%. Is 17% to 18% the right way to think about it looking out? Or is this a higher return franchise?

Yes. Look, as we're running right now, we're in the high 16s. I think it will be roughly 17% as we exit the year. Our expectation for next year and the range we've given in terms of earning expectation would correlate to low 17% return on capital to higher 17% return on capital. That's the ROTCE outcome of that range.

As I think about the business model longer term, I believe that we can and should be targeting 18% plus over the longer term for Huntington. If you think about the drivers of that continual gradual increase, it's balance sheet optimization. We're continuing to find ways to make the balance sheet work harder, drive a higher fundamental ROA out of the balance sheet. Secondly, it's fee income businesses that are growing faster than the balance sheet that are capital-light and are accretive to return on capital. And then third, it's positive operating leverage. We've shown the ability to continually drive positive operating leverage into the business, even while we're driving industry-leading growth rate and investments that are offensive that really drive sustainable competitive advantage and help to sustain our flywheel of value creation.

So from our perspective, the model of driving high revenue growth very strong sustainable earnings growth at a great return on capital that compounds tangible book value is a very powerful value creation model and one that we think from our perspective, that's where we're staying disciplined. We will drive that, and we will see the value creation outcomes from it.

And just to add on to that, Jason, we've invested a lot in certain regional markets, South Carolina, for example, the partnerships have positioned us in 8 new states. We're bringing a lot more services and capabilities to the customer base there, and they are growing dynamically much faster than the core Midwest, where we've had pretty good results. On top of that, we now have an additional 9 new national verticals, none of which are mature. We should be able to drive performance at a high level, higher level, increasingly higher level for the foreseeable future.

I mean what gives you confidence to step up the buyback at the same time, you're kind of bringing down earnings expectations? Just how do we think about the buyback contribution next year?

Yes. Our capital allocation priorities are very well defined and have not changed. And first and foremost, it's fund high-return organic growth; secondly, support our dividend and over the longer term, grow that dividend at the growth rate of earnings. And third, all other uses, including share repurchases.

As I noted just a minute ago, from our perspective, this calibration of loan growth is all about capital allocation discipline. And to the extent that loans will be modestly lower in terms of loan growth, that will mean that there's more excess capital available. And in that scenario, we want to provide that back to shareholders. And that's effectively what we're doing. That lower loan growth should equate to roughly $200 million more capital released, and our intention is to put that back into the share repurchase program. We're well down the track of a programmatic share repurchase program this year, and our expectation is to continue that program as we go into next year.

Got it. And I guess maybe, Steve, in conclusion, you brought down the earnings expectations for next year. I think consensus is already kind of below the $1.90 to $1.93. And I think you kind of lagged as maybe people thought you weren't going to get to that $1.90 to $1.93. Now that you've kind of maybe reset the expectations. Just what do you think kind of catalyzes stronger performance from here?

So well, we have -- first of all, we're the only bank, I think, out there that's talking about '27 with specifics. So we have -- we've been on this track now treadmill for a while in terms of expectations then to answer your question, we have some engines that are just early stage. We only completed the conversion in Cadence at the end of June. July, August are typically slow months. We haven't seen what they can do yet. We have a lot of investment we're putting in there. There's very little wealth. There's very little treasury management capability in these markets. That's all being injected with the hiring that's going on now.

So I'm very, very optimistic about what we'll do in those markets in addition to the Carolinas, which are going very well and building out quickly. And then we've got these national businesses. The core itself is performing very, very well. If we look at the core -- just the core this year, greater than 10% PPNR growth. So credit is performing well. We expect that to continue. As we came into the year, there's a lot of concern, could we convert banks without losing focus? Did we understand the credit? We've almost like checked everything off that. We got caught with a different expectation of the interest rate environment and the competitive dynamics. We've now, I think, rightsized that. And our expectation is to outperform. My expectation of the company is that we will outperform going forward.

Great. On that note, please join me in thanking Steve and Zach for their time today.

Greetings, and welcome to the Huntington Bancshares Second Quarter 2026 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Eric Wasserstrom.

Thank you, operator. Good morning, and welcome, everyone, to our second quarter call. Our presenters today are Steve Steinour, Chairman, President and CEO; Brant Standridge, President of Consumer and Regional Banking; and Zach Wasserman, Chief Financial Officer; Brendan Lawlor, Chief Credit Officer, will join us for Q&A.

Earnings documents, which include our forward-looking statements disclaimer and non-GAAP information and copies of the slides we will be reviewing today are available on the Investor Relations section of our website, which is www.ir.huntington.com. As a reminder, this call is being recorded, and a replay will be available starting about 1 hour after the close of the call.

With that, let me now turn it over to Steve.

Thanks, Eric. Good morning, and thank you for joining us. Starting on Slide 3. We delivered an exceptional quarter marked by strong organic growth, expanding revenue and profitability and the successful completion of the Cadence systems conversion. We achieved these results while continuing to invest in our businesses, technology and support areas. These accomplishments reflect exceptional preparation, coordination and execution from thousands of colleagues.

And I want to thank our colleagues for their tremendous work. They managed a complex conversion while continuing to serve customers, generate growth and deliver another strong quarter. The operating environment remains constructive. Visibility on economic trends has improved since last quarter. Customer activity remained steady across our footprint and commercial demand is broad-based. Our clients continue to take a long-term approach to investment decisions. Huntington is now at an inflection point. Our core businesses are performing at a high level. Our conversions are complete, and we are positioned to capture the benefits of our investments as well as the recent partnerships and expanded footprint.

We continue to view Texas and the South as a springboard to significant future growth now and for the long term. We have a terrific team of new leaders and colleagues who are excited about the opportunities ahead and are already delivering additional revenue. We are laser focused on the continuing integration of our colleagues and working together as one team on behalf of our customers and shareholders. All of these efforts create a clear path toward accelerating organic growth in revenue, earnings and increasing tangible book value in the years ahead.

There are 4 key messages I'd like to leave you with. First, we have strategically repositioned our company with substantial operating scale across regions and capabilities, creating multiple growth engines for the long term. Second, we are laser-focused on generating organic growth and are well positioned to expand across the franchise. Third, we are delivering on our commitments on partner cost and revenue synergies. And fourth, our execution is powering robust long-term value creation. We are growing revenue and earnings, expanding ROTCE, increasing tangible book value and generating capital that allows us to invest in the franchise while increasing shareholder value.

On Slide 4, our strategy continues to produce leading results, reflecting the strength of our core franchise, contributions from our investments and partnerships and benefits of disciplined execution across the company. The outcomes reinforce our confidence in achieving our '27 ROTCE target of 18% to 19%.

Turning to Slide 5. The core franchise continues to perform at a very high level. Since 2024, we've delivered peer-leading organic loan and deposit growth while completing 2 bank combinations and conversions as well as making substantial progress on the integration work that is expanding our earnings power and long-term growth opportunities.

Turning to Slide 6. Our culture remains one of the most important competitive advantages and has been acknowledged through the numerous awards that we have won. While driving the integration of Veritex and Cadence, we've received several new awards, including United States Best Digital Bank for consumers by Euromoney, J.D. Power Best Mobile Banking app and website experience for customer satisfaction, Forbes as the Best Place to Work and 15 Coalition Greenwich's Best Bank awards, including #1 for overall satisfaction, #1 for ease of doing business with, and #1 for trust. I am very proud of what our colleagues have delivered for our customers and shareholders.

With that, I'll now hand it over to Brant to discuss the successful Cadence conversion, which he has led and the many opportunities ahead as we continue realizing the benefits of the partnerships. Brant, thank you for your outstanding leadership, and thank you to our colleagues across Huntington and Cadence. Your dedication, teamwork and focus on serving customers continues to be outstanding.

Thank you, Steve. Turning to Slide 7. Last month, we successfully completed the Cadence systems conversion with strong engagement from both customers and colleagues. I want to reiterate our thanks to colleagues across the entire company for the dedication and preparation that made this possible. The conversion was completed just 235 days after announcement and reflects the strength of our integration playbook, our disciplined execution and the deployment of AI-enabled tools to automate a number of the manual processes.

Importantly, our customers and colleague engagement remains strong. And in a result that very few banks achieve, we actually grew deposits during the conversion weekend and the weeks that followed. This outcome demonstrates both the quality of the customer experience and the trust customers place in our franchise and in our colleagues that continue to serve them. During this conversion process, we trained and transitioned 4,500 colleagues onto Huntington systems.

We onboarded hundreds of thousands of customers to Huntington platforms, converted ATM and ITM locations, completed signage changes across more than 4,000 signs and provided early customized treasury products, onboarding and training to over 6,000 high-value commercial customers. These are tangible examples of the detailed planning and thoughtful execution that went into the conversion. With this major operational milestone now behind us, our focus shifts from conversion to growth.

Turning to Slide 8. We remain on track to attain the $365 million in cost synergies in the fourth quarter, and the revenue opportunity is developing as we planned. Let me highlight just a few examples. One of our core objectives is to bring Huntington's broader capabilities, larger balance sheet and specialized expertise to customers across the entire Cadence footprint. We are already seeing meaningful proof points.

For example, our pipelines reflect expanding client commitments by nearly $1 billion across energy, commercial real estate and our auto floor plan businesses, including more than $500 million of additional commitments in energy and CRE and approximately $440 million of auto floor plan pipelines. These opportunities simply were not available prior to combining the franchises.

Capital Markets is another strong example. Since closing, we've completed more than 10 transactions with customers in the Cadence footprint, generating approximately $12 million of fees while building a robust pipeline of future opportunities. We're increasingly being brought into larger, more advisory client discussions where our scale and capabilities and expertise allow us to capture additional economics and strengthen our customer relationships.

Payments is developing similarly. Our merchant services, treasury management and commercial card capabilities have created new revenue opportunities while helping us deepen primary operating relationships with customers. Another encouraging proof point is how the Cadence franchise is performing from a deposit perspective. Since closing, production has remained in line with our targets as we successfully transitioned the franchise towards Huntington's relationship-based model.

We're retaining approximately 80% of maturing CD balances. We've reduced higher cost wholesale funding and broker deposits, and we're increasing the growth of checking accounts. We also remain disciplined with pricing. With our pricing analytics capabilities, we're able to optimize rates at the local market level allowing us to remain competitive and protect customer relationships. Another key area of synergy is digital deposit acquisition. Since February, new checking household acquisition across the cadence footprint has almost doubled from approximately 3,100 households per month to 5,900 households per month.

It's important to note, this is before we have undertaken any of the planned and substantive marketing investment in these regions and is an early proof point of the power of Huntington's digital deposit acquisition capabilities. Now, as we enter the third quarter, we're excited to begin the ramp-up of our marketing activities to drive further engagement and activity. These results reinforce a point we've long emphasized. Our objective is not simply to gather deposits. Our objective is to grow profitable primary bank relationships.

That's why household growth, checking account growth and customer engagement metrics are so important to us. Those relationships ultimately create opportunities across payments, wealth, treasury management, lending and capital markets. At the same time, we're adding experienced bankers across high-growth markets, including Dallas, Houston, Fort Worth, Austin, Nashville and Atlanta, while expanding the private bank, specialty banking and treasury management capabilities through the Cadence footprint.

Taken together, these results reinforce what attracted us to Cadence in the first place. This partnership was never simply about cost synergies. It was about a springboard for growth across Texas in the South. While we're still early in realizing the full opportunity, the customer activity, production trends revenue synergies, deposit performance and pipeline we're seeing today reinforce our confidence in the long-term growth and earnings potential of the combined franchise.

With that, I'll turn it over to Zach to discuss the quarter's financial results in detail.

Thank you, Brant. Turning to Slide 9. Our second quarter results demonstrate strong execution across the company. I want to underscore 3 key ideas. First, the core franchise continues to perform exceptionally well. We delivered another quarter of strong organic loan and deposit growth, expanded fee revenues and demonstrated excellent credit performance, all reflecting our disciplined approach to growth. Second, integration execution is translating into financial benefits with Veritex cost saves achieved, Cadence cost synergies on track and revenue synergies building as expected.

Third, we continue to make meaningful progress toward our financial targets. Adjusted PPNR increased 12% quarter-over-quarter. Net interest income increased 8.5%. Value-added fee revenues increased 15%, and we generated 210 basis points of positive operating leverage on a trailing 12-month basis. As we move through the back half of the year, we expect the fourth quarter to provide a clear view of the earnings power of the combined organization, supported by continued growth, expense discipline and synergy realization.

Slide 10 demonstrates why we have such strong conviction in this outlook. Our results underscore our tremendous revenue momentum. Growth continues to be driven by the 3 factors: first, organic loan growth remains strong and broad-based across the franchise. Second, deposit growth continues to outpace loan growth providing ample core funding to support future expansion. Third, our investments in value-added fee services continue to produce strong returns.

Payments, wealth management and capital markets each generated excellent growth that we expect to continue for many years to come as we sustain our investment in these capabilities. This revenue growth, combined with our focus on generating operating efficiencies is driving high PPNR growth. These elements form the core of our value creation flywheel. Our differentiated model generates peer-leading revenue growth.

That increasing revenue, coupled with sustained reengineering of our baseline operating expenses enables us to maintain a high growth rate of investment back into the business. These ongoing investments create sustainable and increasing competitive differentiation. This creates a virtuous cycle, enabling us to continue to deliver high revenue growth, superior profitability and generate substantial capital returns to our shareholders.

Let me now walk through the drivers of the quarter's results. Turning to Slide 11. Broad-based loan growth continued in the quarter. Average loans increased $15 billion or 8.6% sequentially into the second quarter. Normalizing for the day count effect of the Cadence balance sheet in the first quarter, average loans increased [indiscernible] or 1.2%, an outstanding level of continued organic expansion. This growth was led by commercial and industrial categories with significant contributions from corporate and specialty.

We drove particularly strong activity from the financial institutions group, industrials, diversified businesses, corporate mortgage finance and Native American financial services with additional contributions from asset finance and middle market C&I. Commercial real estate balances modestly declined during the quarter as planned and auto production was lower.

Turning to Slide 12. Q2 was another quarter of robust deposit growth as we core fund our balance sheet. Average deposits increased $18.8 billion or 9.2% sequentially into the second quarter. Normalizing for Cadence day count in Q1, Deposits grew organically $4 billion or 1.8% sequentially, outpacing loan growth.

Importantly, the growth continues to be driven by customer acquisition and deepening of primary bank relationships which supports solid core funding. Primary banking relationships increased across each of our customer segments with consumer PBRs growing 4%, Business Banking PBRs growing 5% and Commercial PBRs growing 8% year-over-year. Deposit costs increased 6 basis points during the quarter, including approximately 1 basis point from the full quarter impact of Cadence and 5 basis points from the legacy Huntington franchise.

Our deposit strategy remains disciplined, focused on driving valuable and granular funding that enables us to sustain our high growth rate while maintaining attractive spreads. As Brant discussed, we are also seeing encouraging results from our early optimization efforts within the Cadence footprint, including strong retention of maturing CDs and production trends that are tracking in line with our expectations. With the conversion successfully behind us, we are now positioned to execute on optimization across the combined deposit portfolio.

Turning to Slide 13. This combination of strong core funded asset growth generated $2.1 billion in net interest income, a sequential increase of 8.5%. As we look out over the remainder of the year, we expect loans to grow sequentially each quarter going forward, funded by continued expansion in core deposits. Pipelines continue to support our conviction in our continued revenue momentum over the back half of 2026 and into next year.

Turning to net interest margin on Slide 14. Our NIM increased 10 basis points year-over-year and declined 3 basis points sequentially. The year-over-year increase reflects the migration of our assets into higher-yielding categories, combined with yield expansion, while the quarter-over-quarter decline reflected the full quarter impact of the Cadence balance sheet and higher funding costs.

We believe Q2 is the trough for our NIM and expect expansion from here driven by 3 factors: first, we expect to benefit from additional fixed asset repricing. Second, toward the end of the quarter, we released the additional liquidity we had intentionally added in the first quarter. While the prior addition of this liquidity was appropriate from a risk management position and neutral to NII dollars, it did create a temporary drag on NIM, which we've now alleviated. And third, as I noted, we see meaningful opportunities for optimization within the Cadence deposit portfolio. These actions will partially mitigate further increases in overall deposit costs.

Turning to Slide 15. Fee income continues to be a significant source of strength across all categories and an important contributor to our growth flywheel. We grew value-added fee revenues more than 60% year-over-year. Excluding the impact of Cadence and the acquisition of the Janney Capital Markets business, as well as last year's sale of our Corporate Trust business, value-added fee revenues grew approximately 30% on an organic basis year-over-year, reflecting exceptionally strong underlying core momentum.

In our key strategic areas of focus, payments grew 10% year-over-year. Wealth Management grew 12% year-over-year. Capital Markets grew 46% year-over-year and loan and deposit fees grew 19% year-over-year. Importantly, these businesses are benefiting from both strong organic growth and the additional opportunities created by our new partnerships. We believe this strength contributes to a powerful revenue and earnings profile that is increasingly diversified with growing emphasis on capital-light recurring fee revenues that support our ability to deliver sustained growth over time.

Moving to expenses on Slide 16. Noninterest expense was $1.8 billion, up $35 million from the prior quarter. Excluding one-time items, noninterest expense was $1.7 billion, up $145 million sequentially, driven primarily by the full quarter impact of the Cadence expense base. Other drivers included $27 million of increased personnel costs due to higher incentive and performance-based compensation, the full quarter impact of merit changes and day count.

We remain on track to achieve the combined $435 million of run rate expense synergies from Veritex and Cadence cumulatively by the fourth quarter. Importantly, in addition to those partnership-driven expense synergies, our ongoing expense efficiency reengineering program is continuing to drive meaningful benefit. This year, we're on track to deliver more than 1.5% expense reduction to our baseline operating expenses, well in excess of our long-term 1% per year target.

This creates additional investment capacity to fuel long-term growth. As noted, these combined actions drove 210 basis points of positive operating leverage over the past year while we continue to invest across our franchise. We are tracking toward our targeted Q4 core efficiency ratio in the mid- to low 54% range.

Turning to Slide 17. Our capital position remains strong, supporting organic growth, a solid dividend yield and increased capital return through share repurchases. We've consistently grown tangible book value at our targeted high single-digit to low double-digit pace over the last few years. Year-to-date, we have completed $310 million of our $550 million planned share repurchase program for 2026. We expect to repurchase an additional $1.1 billion to $1.2 billion in 2027.

Slide 18 summarizes how we create shareholder value through disciplined management of growth, expenses, capital and integration execution. Our underlying earnings power generated 13% tangible book value per share growth before distributions, enabling us to sustain a 3% dividend yield and repurchased $160 million of shares in the quarter. Year-to-date share repurchases have reduced outstanding shares by approximately 1%.

The business continues to generate very strong return on capital. Adjusted return on tangible common equity was 16.7% on a trailing 4-quarter basis and 17.5% in Q2. The power of the core businesses augmented by the partnerships and integration position us to drive the next phase of value creation with ROTCE forecasted in the 18% to 19% range.

Turning to Slide 19. Credit performance remained strong and consistent with our expectations. Net charge-offs continued to trend near the low end of our guided range, and we hold substantial reserve coverage. Our criticized asset ratio declined during the quarter and we expect that trend to continue as we execute our normal credit management strategies. NPAs remain elevated due to increases in government guaranteed loan categories, which have virtually no loss content and downgrades of select commercial credits. Importantly, we continue to see stable trends across the broader portfolio. We're very pleased with credit performance and remain confident in maintaining top-tier credit outcomes.

Turning to Slide 20. This year's CCAR results again reinforced the strength and consistency of our credit profile under the Federal Reserve's severely adverse scenario. Huntington delivered a top-tier outcome on modeled credit losses with cumulative loan losses of 5.9% of average loans, which is second lowest in our regional peer group and an improvement from 6.1% in the 2024 cycle.

Just as importantly, our allowance remains strong relative to the Fed's modeled stress losses, underscoring the resilience of the balance sheet. The strength of our franchise has been validated time and again in the Fed stress tests. The results demonstrate the strength of our through-the-cycle approach to credit and capital management as well as the durability of our financial performance while supporting continued capacity to fund organic growth and return excess capital over time.

Turning to Slide 21. The trends on this slide demonstrate the strength of our operating model. We expect continued revenue momentum supported by loan and deposit growth, strong fee income, cost and revenue synergy realization and ongoing efficiency enhancement. As those factors come together, as I noted earlier, we expect the fourth quarter to provide a clear view of the earnings power of the combined company and a solid launch point for 2027.

We expect this strong revenue formation, combined with expense synergies and our continued focus on efficiency to drive solid PPNR growth. As I noted, we're on track to achieve a core efficiency ratio in the mid- to low 54% range by the fourth quarter. The outcome of all of these measures is that we anticipate continued high tangible book value per share growth while returning capital to shareholders.

Turning to Slide 22. Over the last year, we've transformed the franchise and successfully entered new markets, building scale in regions that will support strong secular growth opportunities for many years to come. This positions us to drive significant value creation over short and longer-term horizons. We continue to march toward the expectations we've set for 2027. These include EPS growth of approximately 30% from the 2025 level, driven by a combination of strong organic growth, expanding fee income and increasing revenue synergy realization.

Similarly, continued operating leverage, expense discipline and full synergy capture support further profitability improvement and our expected progression to the 18% to 19% ROTCE. Combined with ongoing tangible book value per share growth and meaningful share repurchases, we believe these factors create a clear line of sight to our 2027 earnings objective of $1.90 to $1.93 per share.

Turning to Slide 23 for our full year outlook. As we look at the balance of 2026, the key message is that we expect continued momentum and progress toward our 2026 and 2027 goals. We continue to manage dynamically and have multiple growth levers to achieve our objectives. Looking at net interest income, we expect continued NII expansion driven by high-quality loan growth and core deposit funding with some incremental pressure on funding costs.

Our outlook for average loans is now tracking at or above the high end of the range reflecting continued end market demand, particularly among commercial customers. We also expect continued strong deposit growth to core fund this expansion, driven by growth in our primary bank relationships. Based on these expectations, we expect to be at the bottom end of the NII range or perhaps modestly below it.

Turning to noninterest income. Performance across payments, wealth and capital markets remains very strong. Based on year-to-date performance and pipeline activity, we continue to view the business as tracking to the high end of or potentially above our guidance range. These expectations support our revenue growth outlook, and we're tracking toward the overall level of revenue growth embedded in our full year guidance, while maintaining our discipline around pricing, credit and capital allocation.

On expenses, we continue to execute against our expense synergy targets and remain on track to achieve the $435 million of annualized run rate cost synergies by the fourth quarter. We're accomplishing this while continuing to invest in attractive growth opportunities and reengineer our core expense base. The strength in our fee income streams create some modest upward pressure on expenses which we intend to mitigate through management actions. Credit performance remains excellent, and we now expect net charge-offs to be in the lower half of our 25 to 35 basis point charge-off range.

Our tax rate will also likely come in a bit better than our current full year outlook, given the strong performance in the first half of the year. And we expect to repurchase at least $550 million of stock in total this year. The key takeaway here is that the fundamental drivers of our earnings outlook remain intact, and we're excited about the trajectory of our business as we enter the second half of the year and look forward into 2027.

Turning to Slide 24. Our operating model continues to perform, generating strong revenue, earnings, tangible book value per share growth and strong ROTCE. This supports the investments we make in our capabilities, which enable our long-term competitive vibrancy and the substantial value we create for shareholders.

With that, we'll conclude our prepared remarks and move to Q&A.

Thank you, Zach. We will now take questions.

[Operator Instructions] Our first question comes from the line of Erika Najarian with UBS.

Good morning. So I do have to say that and it's -- the stock opened down 5, it's still down 5. I think -- the Street is feeling a little bit some sort of way that you put in your slide that your outlook is unchanged, but that your net interest income outlook, you said, that it was going to be at the low end or below. So maybe just unpacking that dynamic. You mentioned sort of incremental pressure on deposit costs. Could you maybe sort of break down what's happening from a competitive dynamic standpoint versus some of the deposit cost optimization?

Because I know that the revenue synergies that you've been flagging had been very much based on some of the deposit cost optimization of that Cadence base. So help us walk through what you're assuming for deposit specifically without a Fed rate hike and how you expect the margin to perform with a rate hike?

Sure. Thanks, Erika, and it's great to be with you. I'll address some of the various points you've raised in your comments in question that I think Brant will tack on as well. So look, on the guidance, I'll just share our overall revenue outlook continues to be very robust. And ultimately, our objective is driving overall revenue growth. We're seeing on spread, the mix is sort of shifting more toward volume driven, but we're expecting to see quite strong loan growth here as we go into the back half of the year.

Remember that the second half of the year is typically our strongest sequential period in terms of loan growth, and we're seeing quite a bit of strong pipelines and indication that we'll see solid loan growth. I do expect to see NIMs also expand into the third and fourth quarter, driven by the factors we discussed. And so that will help us to drive a very strong spread revenue growth. The other thing that's balancing that importantly is continued outperformance on fees.

We continue to see fees grow even stronger than our expectation. And just as I noted, that we might be at the lower end or potentially just a touch below on the NII, we expect to be at the higher end or above on fees. So we think the net of those things will continue to allow us to track toward that approximately 37% overall revenue growth this year.

On deposit costs, what I would tell you is, look, we're not expecting any change in the competitive environment. It is competitive, but we're also seeing great opportunity to drive volume growth and to ultimately drive optimization within the overall combined deposit base, particularly now that we've gotten through the Cadence systems conversion. So really confident about our ability to execute on that. Maybe, Brant, do you want to pick up.

Yes. Erika, this is Brant. If I could just tag on and to highlight the points Zach just made, it is competitive, but we still see it as being rational. And as you know, and we've discussed in the past, we look at pricing across 56 different rate regions in our new expanded footprint, and we have a very granular view of it. And we're still seeing similar pricing to what we saw in the first quarter. And we're still seeing the Midwest be the most competitive market we're in.

And obviously, the Carolinas, the Southeast and Texas would slightly trail that. And as Zach described, we have a number of levers that give us confidence going forward. First of all, our focus has been and still is on consumer and business primary bank acquisition and we're seeing acquisition rates that are exceeding our expectations. In fact, with the addition of the Cadence footprint, checking household acquisition is actually up 31% year-over-year.

And just as a point of context, 50% of our deposits are consumer, 50% of our deposits are business. And so when you look at the opportunities in both -- I'll just start with the business side. And one of the areas that gives us a lot of leverage into the future is the national commercial deposit verticals that have been created and expanded. In fact, if you just look at our mortgage servicing vertical that we stood up a little over a year ago. That group added [indiscernible] in deposits just this past quarter. So that is one example.

On the consumer side, we're seeing production expectations in the Cadence footprint be above our expectations. In fact, digital acquisition and the new footprint is up 60% just since September -- I mean since January. And then when you talk about the cost component, we are seeing the mix change that we had anticipated. You referenced revenue synergies. And one of the components of the revenue synergies was the mix change. We are seeing now our concentration of liquid deposits, savings, checking, MMA, now be 80% of our volume versus 40%.

And then not to forget about this, but we have been investing in the Carolinas, we opened 2 branches this time last year. We've opened 8 since the beginning of this year, and those branches have generated over $300 million in new deposits and frankly, are about double the expectations that we had originally set for those.

And lastly, I mentioned Colorado, and we've also invested specifically in Chicago and those markets on a combined basis just over the course of the last year have generated over $800 million in growth. So we do look at pricing on a very granular basis. And then as it relates to our ability to respond to either a rising rate environment or a falling rate environment, this data that we have around the front book and the back book really gives us the ability to be nimble no matter what that environment would be.

Erika, this is Steve. I'll just come on top of the responses from Zach and Brant for a minute. We've got a possible or more likely rising rate environment. We chose to front-end load a bit, and we've got rising expectations, as you heard from Zach, second half loan generation is typically much better than the first half and fourth quarter is our best quarter, typically. So we're getting ahead of it, and that's a conscious decision. And very, very pleased to have the conversion behind us because now we can focus on running the core as -- with the benefit of the entire franchise.

Got it. And my follow-up question is -- and I have to ask it this way, given that there are not many stocks that I cover that are less than 10x next year's earnings. So the jumping off point to the $1.90 and $1.93 really matters. So Zach, you mentioned higher PPNR at 4Q '26 on Slide 21. The Street on an operating basis is at $1.34 billion. Is the Street in the right place? I mean, granted, there's puts and takes in terms of a little -- maybe a little adjustment to NII and PPNR for 4Q '26?

Yes. I appreciate it. Look, I'm not going to talk specifically about consensus. I'll share with you our outlook, and you all can interpret that and create models. But what I'll tell you is, our expectations for growth into 2027 are unchanged. We continue to be marching toward those objectives. And I'd really tell you that they are threefold in our view. One is the earnings per share of $1.90 to $1.93. The second is return on tangible common equity and generating significant positive return on capital between 18% and 19%.

And importantly, continue to drive capital accretion on a tangible book value per share basis of greater than 10%. And we're on track for that. If I think about the back half of the year, I think Q4 will really be the strongest quarter from an earnings perspective, and it will be incrementally driven by significant run rate cost synergies from Cadence, which were now that the conversion is through really executing through the course of this quarter, Q3, it will be fully in the run rate into Q4. That will be the biggest sequential driver of increased profitability into the fourth quarter.

And so I expect the Q4 EPS to be very strong. By my calculus, it will imply low teens year-over-year growth in terms of that trended Q4 level into the full year 2027 earnings per share, which is well within the current earnings growth trend we've got. And if I double-click into that and just share my view of how the model would work for that, high single digits loan and deposit growth, a stable to rising NIM, strong spread revenue, therefore, continued extraordinarily good fee revenue and I hope we can unpack more of that in this call because we are seeing, as I noted, outperformance on fee revenue. We expect to see high single digit to likely low double-digit fee revenue growth.

On expenses, we're expecting to see between 400 and 500 basis points of total operating leverage, and that will be a function of the full run rate of the cost synergies and another year of baseline reengineering of our cost base. One of the things that I shared in the prepared remarks, but I'll just elaborate here. For the last 7 years, we've generated 1.3% on average per year reduction in OpEx of the company. 2026 is actually more than that, 1.6%. Next year will be more again, and we already have that program defined. The operating actions are already part of our plan.

You couple that then with stable credit, and a lower share count from all the share repurchases we're doing, that's the ingredients to get to a teens level EPS growth. So from our perspective, there's a lot of the year left to play out here in 2026, but we're continuing to drive toward that extraordinarily strong Q4 and then into '27.

Erika, it's Steve. Just to emphasize a couple of points. We're 17.5% on equity during a quarter where we had the biggest conversion in our history, and we think it was very successful conversion by the way. So strong performance with the growth metrics and the returns, and the operating leverage came through. I think we adjusted -- we moved the efficiency ratio improved by 1% during the quarter. Now this was a really busy quarter, 5,000 new colleagues, 1,400,000 customer accounts, 400-plus branch and office locations. So converting. And we did this 140 days after closing.

So the team has done, I think, a tremendous job delivering on an accelerated basis, a really high-quality conversion, putting us in a position now to accelerate in the back half of the year and beyond as we go forward in one suite of systems. So we feel really good about where we are. There's opportunity for us in multiple areas in terms of driving further revenue and the operating expenses that we said we would take out. We've got them frankly nailed. So we'll deliver the...

Our next question comes from the line of Manan Gosalia with Morgan Stanley.

Maybe on the NII guide for the year. As we look at the underlying pieces, loan growth is coming in better than last quarter. Deposit growth is running higher than loan growth. So you're clearly prefunding some loan growth from the second half of the year. You've also released liquidity, so I guess relative to last quarter, what is tracking more negatively that drives you to the low end or below the low end of the NII guide? Is it deposit costs? Is it loan spreads?

Yes. Thanks, Manan. This is Zach. I'll take that. Look, the biggest single change in our outlook around NIM is deposit cost and the pricing environment around that. By the way, that's not overly surprising. If you see -- now in the industry, we're seeing quite frankly, a quite healthy environment of banks now regrowing and getting back to loan growth, which is clearly good for the economy.

And that then also means the need to core fund that and some incremental competition on deposits. And further, the interest rate environment is probably even bigger change going from an expectation of 4 to as many as 7 rate reductions over a 2-year period, now to an expectation of 1 to maybe 2 hikes here over the over the coming periods. So that's not surprising to see that delta.

Manan, the way we think about it, and we've tried to really be clear about this as we talk about it is we have multiple levers. We dynamically optimize the business and are continually driving ultimately to the goal, which is revenue growth, earnings growth. And so as there's slightly lower NIM trajectory, there's also better loan growth trajectory, better fee growth trajectory, ways to optimize that.

I will tell you as well, look, getting to the conversion and through that period for Cadence now unlocks the opportunity for us to really go in and manage that deposit base as well and is a nuance and granular way as we can. And that gives us a lot of confidence we'll see a benefit from that as we go throughout the course of the second half of the year.

And Manan, to the point that Zach was making, as we go through the quarter and as we went through the first and second quarter, where we have a large significant focus on creating outstanding revenue and earnings per share growth, but we also are looking closely at return. And we're doing that at the individual deposit level and at the individual asset class level.

And one example of a place that we've seen a lot of spread compression is in the auto business. And so as a result of that, we pulled down auto volumes in the first and second quarter because they didn't meet our return threshold. So it really, as Zach pointed out, not only can we optimize across a number of revenue and expense opportunities, but we are also optimizing from a return perspective just based on what we're seeing in competition on either the asset or deposit side.

Got it. And then if I think about -- I guess, to the jumping off point for 2027, if we do like a mid-teens -- or sorry, low teens EPS growth rate gets us to about $0.42, $0.43 of EPS, so maybe about $1.65 or so annual run rate. So as you think about the bridge between that and the $1.90 to $1.93, what would be the 2 or 3 biggest drivers that would get you there?

Yes. Thanks, Manan. Look, I think I sort of enunciated these a lot in Erika's question earlier. I think we'd see high single-digit to low double-digit overall revenue growth, which is really very much balanced between spread and fee revenues with fees continue to outperform and grow the fastest in the revenue mix. I think expenses, we're expecting to see very strong expense management actions into the -- into 2027, as I mentioned, between 400 and 500 basis points of positive operating leverage.

The credit continues to be very stable. We've seen charge-offs this year be within a very tight range. Our expectation is next year, something very similar to that. And by the way, if that continues and if the economy continues to be resilient, which it appears to do, that will give us the opportunity to gradually reduce ACL coverage likely.

And then you've got lower share count, and we're seeing meaningful opportunity to repurchase shares. If we see the stock at this point is extraordinarily undervalued and are therefore, leaning into share repurchases, and you'll see the benefit of that coming through into lower share count. So those are the kind of building blocks to get you to that.

And Manan, if I could just add one example. As you look forward to 2027, one of the areas is the springboard that we have in Texas. It's one of the fastest-growing economies, as you know, in the world. It is -- there's a lot of folks investing there, a lot of organizations investing there. But we're not only investing but we have scale. 12 months ago, we were not in the top 400 banks in Texas. Today, we're top 8. We had no presence in Dallas and Houston. Today, we're top 5. We had no branches. Today, we have 140.

We had only a handful of colleagues revenue producing there. Now we have 955 and we had just less than $5 billion in loans. Now we have $31 billion and $26 billion in deposits. And so, it's a dynamic growing market that we have this massive springboard. And we're not only investing but we have scale and frankly, a model that combines national expertise with local that's appreciated by the market.

Our next question comes from the line of Jon Arfstrom with RBC Capital Markets.

Other side of this, on the fee income guide, can you talk a little bit more about your confidence in the higher end of that or above and what's driving it? Just kind of what's the other side of the revenue guide?

Sure. Thanks, Jon. This is Zach, I'll take that. Look, on fees, we continue to be really, really pleased with how the business is performing. Let me just -- I'll reiterate a couple of statistics. In the first quarter, organically year-over-year growth was 18%, and this quarter accelerated to 30% organic growth. Over the medium term, as we do long-range planning, we typically plan for high single digits to low double digits.

But frankly, in the near term, I'm expecting very sustainable double-digit growth now for quite some period of time based on what's happening. And really underlying that, the reason why we're seeing that is really several things. One is significant investment over time that we put into each of our core fee businesses. Payments, we've been building out very significant treasury management, commercial payments, merchant acquiring, and a lot of new innovative payment products.

And so we're seeing, particularly given the growth we're seeing in our commercial banking business, generally, lots of opportunity then to penetrate payments opportunities. I will tell you that as we think about the Cadence's revenue synergy, that's going to be one of the biggest building blocks over time for what we see there.

The second is wealth. We've been building out the wealth teams very robustly in a lot of individual markets throughout the country and also really working to better knit together wealth with our core banking business. And what that's driving is just what we talked about in a number of our Investor Days, which is penetration of the customer base.

We've almost doubled the percentage of our customers who are using wealth services over the last several years, and we continually generate household growth in the very high single digits to low double digits over a number of quarters now, which drives AUM growth as well into that double-digit level. So that's a very sustainable growth rate at that level.

And then cap markets, I will tell you, just we are incredibly proud and thankful for the work of the Capital Markets team because they've been just doing exceptionally well. And really what that does is it rides on the commercial banking activity that we've got. All of our capital markets businesses are really key toward supporting our commercial banking activity. And so as that is robust, that's the fundamental underpinning of that.

We've also been building out new capabilities. The team at this time last year was not doing anywhere near as much loan syndication, for example, as they're doing now, which is a major driver of revenue growth amongst many others. Over time, I will note that we've shown the ability in cap markets to really effectively add bolt-on M&A as well and the Capstone and the TM Janney teams are just doing phenomenal to add to ultimately that organic growth rate. So we see all of these as really the sustainable ingredients to grow fees as a percent of revenue. And to help us to outperform not only this year but into next as well.

Jon, as we come into the second half, pipelines look really good as well. So -- we've had a very busy quarter with the conversion-related activities, delivering the results that are published today. But we've also maintained this effort in terms of growing customer relationships. And you got a sense of that from Brant earlier, and it's reflected in the pipeline. So one of the issues we've had historically is, could we keep the organic growth rate intact as we move forward with these partnerships. And I think we've answered that call. We're looking forward to the second half.

Yes. Okay. I did want to ask on that, and maybe you just answered it, Steve. But it's hard to tell maybe the growth was a little slower this quarter in terms of the organic growth. But just -- is that fair or not? Or are you satisfied with that 1.2% core loan growth?

Well, it's a little slower, but about 1 point of that is our indirect auto. As you think about the first 2 quarters of the year, it's probably around $2 billion of lower production than we would typically have because we don't like the returns. So the emphasis and discipline around returns because we're not going to change the risk profile, has moderated the growth. Now we've seen this before. It typically runs a couple of quarters and then somebody fills up, maybe it goes a little bit longer this time, but it will -- this is a business that will revert to the norm, and we'll be back to historical production in the foreseeable future in that category.

The rest of it is performing reasonably well. We had a fair amount of runoff, a little more than we expected. We've talked before in the earnings call that we wanted to see some balancing of our commercial real estate between 10% and 11% of total and our construction commitments reduced a bit. That is happening faster than we expected. So it's those 2 small headwinds that are restraining the overall net, but both of those are temporary and like where this positions us on both a risk and return perspective over time.

Our next question comes from the line of John Pancari with Evercore ISI.

In the interest of time, I'm just going to ask one question. On your NII outlook again on the qualification of lower end or below that, I hear you on the drivers of the pressure that you -- in the answer to Manan's question. Could you maybe talk about your confidence in this updated NII guide and that it will not be negatively revised again?

What gives you that confidence? Is it the fact that -- I know, Steve, you noted that some of the loan growth was prefunded. Is it that factor? When it comes to deposit pricing competition, I know the industry is certainly seeing some intensifying pressure there. So -- but I think this is key here and part of what's influencing your stock's multiple. So we'd love the get your confidence on that front?

Yes. Great question, John. Thank you. Look, there's a lot of the year left to play out, and we are proven to be very dynamic operators to help us to achieve our goals. So that's what gives us the confidence. We've got all of the tools at our disposal to achieve the objectives that we've set. We're growing loan volume. We're core funding that with deposits.

As you noted, we actually grew faster in deposits than loans in the second quarter that would obviously allow us to do the reverse as we go into the second half of the year if we choose to. We're seeing a strong opportunity to optimize in the combined deposit base of the organization. And frankly, it is not our expectation that anything really meaningfully changes in terms of the environment.

It will remain competitive, but we've got lots of tools at our disposal. And I think Brant really effectively illustrated that in some of his earlier comments. So look, ultimately, the goal is revenue growth and not just NII revenue growth, but total revenue growth. So we feel very good about the multiple levers we've got, the multiple paths to achieve to achieve our goals.

And I would say it's revenue growth and the returns. So there's a balance to this equation, translating to earnings and high levels of return, John. And so, 17.5% on equity now, goal of 18% to 19%, we've got the expenses. The revenue synergies look good, really good. So we're sitting here with the confidence and we'll navigate wherever we see modest issues emerge like we did with this auto thing. We don't -- we're not going to trade off return with volumes. So the team is now positioned post the conversion for us to grow in these next couple of quarters and beyond. And we like how we're setting up for the second half.

Our last question comes from the line of Ken Usdin with Autonomous Research.

Just want to try to hone a little bit more still into the NII. So you got loan and deposit growth in the second half, clear from the guidance. The size of the balance sheet, though was definitely smaller than people thought and it is kind of tough to understand average quarter. Can you give us kind of a range as you can for where the AEA will be for the 4Q exit that implies that NII again?

Yes. I think -- part of what I think you're seeing in the average earning assets for the quarter was the actions we've taken to optimize liquidity and to bring down some of the cash -- elevated cash levels. And so that probably obfuscated some of the trends. Look, I think what I'd point you back toward is the loan and deposit guidance, ultimately my expectation for cash and securities here as we exit this quarter is very much to what we were running last Q4, if you want to use that as a modeling input. And the objective function that we've got here at this point is to continue to drive, as I noted, strong loan and deposit growth. My general expectation is in the sort of 2% to 3% per quarter range.

So you mentioned in the slide deck that you expect organic -- I think you said deposit growth dollars should outgrow loan growth dollars from here. So is it fair to say that now that you've reset the balance sheet, that average earning assets should grow pretty close to what deposit growth grows?

I think it's a reasonable assumption. I think -- look, our expectation is, we'll see deposit and loan growth growing quite well relative to each other. And I think the difference between those growth rates won't be overly notable here as we go into the back half of the year. Our objective over time is to match fund. We feel like the loan-to-deposit ratio is in a great spot.

Okay. And sorry, one more, just on deposit costs, given that there's still some things to work on post conversion now, I know you mentioned that there's a little bit of an upward bias. But like can you give us any sense of where June 30 spot deposit costs were versus the average? And then just what type of upward pressure you would see, assuming there's no rate cut to -- at least to give a common basis maybe to talk about it in -- no rate hike, I meant.

I want to be careful like getting overly precise here. As we noted, we expect to see the overall NIM and we're managing ultimately NII dollars and NIM is an important element of that. We expect the NIM just to rise modestly into the low 3.20s in the third quarter. And then into the mid- to high 3.20s in the fourth quarter.

And that will be some modest several basis points of incremental deposit pricing, but offset by, as I noted, opportunities to optimize within the combined deposit base and fixed asset repricing and the optimization of liquidity. So those are the kind of ingredients overall. And we will drive toward that dynamically to achieve the overall revenue objectives we've set.

Ladies and gentlemen, we have reached the end of the question-and-answer session. I would like to turn the call back to Mr. Steinour for closing remarks.

Thank you, operator. Over the last several years, we've transformed Huntington into a stronger, more diversified super regional bank. We've expanded into attractive growth markets, broadened our business mix, added new capabilities and reduced risk through greater geographic and revenue diversification. And this has resulted in excellent financial performance, growing tangible book value and returning substantial capital to shareholders, while our aggregate moderate to low risk appetite has been maintained.

So we believe the company is very well positioned for continued growth and the recent partnerships further strengthen that long-term opportunity. I'd like to close with 3 key points. First, the core franchise is performing at a high level. We're seeing strong momentum in loans, deposits and our value-added fee businesses with capital markets, wealth and payments, all contributing to durable earnings growth.

Second, the integration has progressed very smoothly. The June conversion was a major milestone in both the core franchise and new regions are performing very well. So this gives us confidence in the cost synergy path and it increases the opportunity to deepen customer relationships across the broader platform. With the Cadence conversion now complete, we're encouraged by growing pipelines and seeing increasing opportunities to convert that activity into revenue synergies as we previously committed.

Third, we remain on track to deliver our financial targets. The path to '27 is clear, organic revenue growth, disciplined expense management, synergy realization and strong capital generation. The fourth quarter will provide a clearer view of the earnings power of the go-forward franchise. We've got strong momentum, a clear plan and a team that executes. So I want to thank our colleagues for an exceptional quarter, and thank you all for joining us today.

And this concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.

Good morning. I'm Manan Gosalia the large-cap and mid-cap banks analyst here at Morgan Stanley. And on behalf of the entire Morgan Stanley Financials team, I would like to welcome you all to the 17th Annual Morgan Stanley Financials Conference. We've got a great lineup today. We have a record 136 companies in attendance.

And kicking off our conference, I'm delighted to have with us today Zach Wasserman, Huntington's Chief Financial Officer; Brant Standridge, President of Consumer and Regional Banking at Huntington. Zach and Brant, thanks so much for joining us.

Manan, thank you so much for having us.

All right. Perfect. Brant, let's get right to it. We have -- we're seeing a strong jobs market out there, resilient consumer on the one hand. On the other hand, we have higher energy prices, stickier inflation, so maybe set the stage, what are you seeing out there in the environment?

Well, from a macro environment, we're seeing something similar to what you described in that the overall outlook is positive. We're not seeing any deterioration from a credit perspective. Our pipelines are still strong, and behavior from both a commercial and consumer perspective seems very rational. Sentiment from our customers is also positive, both business customers and consumer customers and specifically, our business customers have become very resilient in dealing with tariffs and supply chain disruptions, and so seem to be doing quite well.

One area that you called out that we are clearly watching is the impact that rising energy prices and food prices have on ultimately the consumer and middle income and lower income consumers are specifically hit more by that impact than others. And so we're specifically watching that. But today, we're not seeing really any signs of major deterioration. And we believe, based on our posture and risk appetite that we're in a fantastic position as we go forward.

Got it. Perfect. So things are going well. You're specifically watching out for a few risk, but you're not seeing anything there. So maybe let's bring it to Huntington specifically. Huntington has consistently outgrown peers across loans, across fees, deposits. And you've done that for several years in a row now. So I guess what differentiates your model that enables you to consistently drive this growth? And I guess the second part of the question is how sustainable is it from here?

Well, I'll start. First of all, it starts by bringing in and providing to our customers across both consumer and business and exceptional experience. And we've been fortunately recognized in J.D. Power for consumer as being one of the top 1, 2 or 3 for the last number of years of the top 20 banks in the country from satisfaction perspective. We've been fortunate that Greenwich has recognized us this past year with over 15 awards and including Best Bank for overall satisfaction.

And so it starts with an exceptional customer experience. We're very focused on having deep relationships with our customers. That is supported and augmented by the fact that we've added a lot of expertise and capability over the last number of years and we bring that to our customers in a highly integrated fashion and make it simple for them. Our local teams are challenged to build deep relationships locally and then we integrate the expertise of our national teams with those local organizations and local teams.

And then lastly, as it relates to our customers, we want to build trust. And we want to have relationships that are grounded in that. And so one of the things that we've been very focused on for many years is being consistent for our customers and putting the company in a position that they can count on us regardless of the cycle that we may be at.

If I'd just tack on to that, just to share that how our operating model is also differentiated. The way we think about it is we want to create a model that will generate high and strong levels of total shareholder return, but also allow us to continue to invest to be competitively not only surviving, but thriving in the industry over time. And so the way we do that is to couple high single-digit to low double-digit revenue growth with a continual reengineering of our baseline operating costs. In the last 6 years, we've taken out 1.3% per year of our operating expenses.

This year, in fact, 2026 will be the 7th consecutive year of doing that. And those things together then fuel the ability to drive significant investment back into the business. When I say investment, I mean technology development, marketing, the ability to build the branch channel, the ability to add people to the organization to build out business lines, new geographies. Collectively, that pool of investments now represents 9 percentage points of revenue much more plow back than any other large regional bank, which supports that large and high level of sustainable revenue growth.

So it's been a 20% CAGR in investments for 7 years in a row. And ultimately, the outcome of that is last year is a great emblematic picture of that. It was 11% revenue growth, 16% earnings growth, 19% book value per share growth, all at a 16.5% return on capital. We think that model is incredibly differentiated. And the fact that we have been able to continue it for this will now be the 7th year in a row, demonstrate the sustainability of it.

Are there any differences in, I guess, what's been driving the growth over the last 7 to 8 years versus what's driving the organic growth today?

It's a very consistent model. Ultimately, we think about the legs of the stool for us to drive growth. We've got our core business. All of our -- when I say core, I mean the business lines we've been operating for a number of years in our core Midwest footprint for those businesses that really operate geographically, consumer and our smaller end of middle market. And then our large corporate business, which is national and key specialty lines, that is growing equal to or even faster than the average in the industry. But on top of that then, you've also got a number of new growth initiatives that we have powered with that investment capacity that I just mentioned earlier.

Last couple of years, we've launched into new states, North Carolina, South Carolina and Texas. We've built 8 new commercial specialty verticals. And all of these business lines are very still growing and have not reached maturity. Last year, those really represented 2 legs of the stool. 50% of the growth came from the core, 50% from the new initiatives. That's what powered 10% year-on-year loan growth last year. Now as we think going forward, there's another powerful leg of the stool, which is really the opportunity to drive significant organic growth within the Cadence and Veritex's footprints and customer bases. We've talked about a $500 million revenue synergy over the next 3 years, of which $50 million to $75 million this year. That will represent about a 1% lift in overall revenue growth in a sustainable basis. So we think there's multiple growth engines and quite a bit of sustainable long-term opportunity there.

So let's talk about that integration. You put out your slide deck last night. Veritex integration is completed, Cadence is on track. Can you give us more of an update on how these integrations are going and where you stand on some of the key execution metrics like customer and banker retention?

Yes, we're -- first of all, they're going quite well. You mentioned Veritex, and we were able to do that in really record time. And we've completely converted Veritex. We have achieved the cost synergies that we outlined for Veritex, and we are in the early stages but very, very encouraged by what we're seeing from a revenue synergy perspective. Obviously, Veritex was very focused in Dallas. We have a top 5 share there, and we have excellent momentum. We've been able to attract additional bankers to what is now a significant platform in the market. And so we're very pleased with where we are.

As it relates to Cadence, we were able to close the beginning of February. We intend and will convert in 2 weeks. And there's been no real major surprises there. We've been very pleased with how the work leading up to the conversion process has gone. We've had multiple mock conversions. We feel very positive about the experience that we're going to create for our customers. We have had numerous levels of reach out and communication to those customers to make sure that, that transition is positive as it can be. And we're pleased with what we're seeing. We've been very fortunate that we've been able to retain key talent. In fact, we offered at the beginning approximately 1,000 colleagues that were in significant revenue-generating roles, retention programs and we've had less than 10 of those that have left since announcement.

So that level of retention of key talent has actually exceeded our expectations. We are on track and have very clear line of sight to the cost synergies associated with Cadence, and we will deliver those. You'll see those in the fourth quarter. And we also have very clear site into the revenue synergies. The most substantial of those revenue synergies is what we do with the deposit business, specifically the rationalization of pricing and also the massive digital opportunity that exists in the Cadence footprint. And we launched digital in April in the Cadence footprint. And what we're seeing thus far gives us a lot of optimism about the future. Then there's a number of businesses where we're already seeing very, very strong momentum. Capital markets working with the Cadence commercial teams, now Huntington commercial teams.

And then we're seeing that in our dealer business, we're seeing really strong uptake with our more sophisticated treasury and cash management platform. Merchant has been a real tailwind for us. So we feel very positive about how the conversion is going. We -- the retention of both customers and colleagues is exceeded our expectations. And as Zach alluded to earlier, it's a fantastic platform and springboard for us to continue to grow. And last comment I would make on it is, now that we have a sizable platform in a number of really key markets, we've been able to add talent on top of the talent that we are partnering with. So we've added teams in Austin, San Antonio. We just hired a leader in Nashville. We're adding bankers in Atlanta and have hired a team there. And so this creates a fantastic platform for us to grow, and we're very pleased with where we are right now.

Right. Perfect. So high retention and you're hiring new teams from outside the bank. Maybe bring this to the numbers here. I think you mentioned Zach, you just mentioned about $500 million of revenue synergies. There's about $435 million, I believe, in expense synergies from the combined acquisitions. Can you just round that out with the...

Sure. I'll start on the cost side, and then Brent can touch on the revenue side. As was alluded to a second ago, a complete line of sight to deliver on the cost synergies, $70 million from Vertex. That was delivered fully in this quarter that we're in right now, Q2 and then $365 million from Cadence. We're on track for that as well. All the decisions and actions needed to execute that are underway. Once we get through the conversion, we'll be able to fully deliver those actions, and we'll see that full run rate in the fourth quarter.

So by the fourth quarter, $435 million of cumulative cost synergies, that's going to be very powerful to drive earnings power and return. It will move efficiency from the roughly 58% level last year down to the low to mid 54% level by Q4 of this year, and we expect that to further decline to approximately 53% by next year. That's a primary driver of the 200 basis points of increase in return on capital. And of course, there's really exciting revenue synergies that my partner can elaborate on.

Yes. We have identified $500 million in revenue synergies over the next 3 years. We will realize $50 million to $75 million of that in this year and then in next year more than 100. And so we're very much on track. I mentioned a few of the big opportunities that we have that are right in front of us, including the big opportunity that we have in digital. In fact, just to share one statistics related to that, we opened up Huntington online account opening or digital account opening in the Cadence footprint in April.

If you compare our productivity in April to the digital production of Cadence, it's 10x. And so that's without really any significant marketing dollars yet into the market and that's also without having converted and displaying the Huntington brand in the market. So we're really pleased with where we are. That's one example. We also see a number of examples across the commercial bank, specifically in capital markets, the wealth opportunity and really bringing wealth resources across the Cadence footprint is a very large opportunity. And then payments, this now creates a big opportunity with a large customer base to bring our payments capabilities in both treasury and merchant and card and other areas to that customer base, and we're already seeing very strong uptake.

So you're already seeing a lot of synergies on the revenue side, and there's a lot more to come once the conversions are done?

That's right. I mean, the conversion certainly getting everyone on one platform, certainly unlocks a lot of potential and we're able to move forward. I mean, in order to really drive the deposit opportunity, we needed to get past the conversion, which we will. The early signs are positive. A number of the synergies related to our wealth business payments business, we're seeing traction from the outreach that we've had, but we need to get on the same system in order to start really realizing that. So the conversion in a couple of weeks really opens up the opportunity in a significant way.

Perfect. So let's bring this to the present moment here. What are you seeing across your core customers today in terms of activity, demand, overall momentum? I think back at earnings, you moved your loan growth guide from maybe the high end of the midpoint. So as you see some of these trends, how did that inform your decision to guide to this 2026 growth to the midpoint rather than the high end of the range?

Yes. Maybe I could start with where we're seeing growth, and Zach could add to the guidance and the numbers. One, our commercial business and regional banking business is seeing strong growth, and that's continuing. We are obviously seeing from the 8 new specialty verticals and the specialty verticals, a substantial amount of growth. And those businesses are really in the early stages of their maturity. So they have a lot of growth opportunity related to that. And so we're seeing really positive momentum in all of the businesses.

And when you look at our expansion into North and South Carolina and also the increased platform we now have in Texas, all of those present really strong growth for us. Clearly, as it relates to cadence, we knew that there would be some remixing or optimization that we would do. That was determined in due diligence. We knew exactly what we were going to do. And this is the actions that we've taken and that we talked about have very much been in line with that thought process going in.

Just to expand on that and bring it back to guidance a little bit. I mean, as Brant was talking about earlier, the environment overall is setting up very favorably. Frankly, if you ask me today, sitting in June, how are we seeing the world it's more favorable than when we were sitting in April, providing guidance. With that being said, what we're seeing on the ground is very much supportive of achieving all of the financial targets that we've given already. We're seeing, as we noted, very strong pipelines, customer demand looks quite strong. Customer behaviors all told, look very normal and kind of pricing and the macro environment looks very rational and predictable. All that's setting up very well for us to continue to achieve the goals that we've set.

I'm going to double-click into deposit costs in just a second, but maybe before that, you also revised the fee growth guide up at earnings. How should we think about fee growth from here? You have strong verticals and payments, wealth, capital markets, how sustainable is that strength as we go forward?

We feel that it's very sustainable, and we have been consistently investing in the 3 businesses specifically that you just mentioned. All 3 of those are growing double digits. We are really pleased with the momentum that we're seeing in our capital markets business and the acquisition that we made there at the end of last year is really proving to be helpful and you're seeing that. You saw that in the first quarter and we feel very strong about our momentum.

We've made a couple of major announcements in our wealth business as it relates to investment. We're investing in our broker platform, broker-dealer platform, and we're also making a significant investment in upgrading our trust platform. So we will continue to invest in very strong growth in the wealth business. And then as it relates to our payments business, it is an area of significant focus. And so our partnerships offer opportunity for us to bring payments to a whole new customer base. We're continuing to innovate and add new capabilities like merchant a little over a year ago and additional payments and transmission capabilities for our customers. And so we feel very strong about our ability to grow fees overall, but specifically in those businesses, we see those continuing to grow at the rate they've been growing.

If I just bring that back to the operating model points I made before, the objective around value-added services is twofold. One is drive capital-light revenue streams that are very profitable. But secondly, of course, strategically, further wrap our arms around our customers and develop even stronger primacy and a broader breadth of services for our customers, and ultimately to see the percentage of the revenue base of the company that is fees grow.

Today, we're approximately 28% of the revenue pool is fees. And I would expect that to approach 30% as we go throughout the course of the remainder of this decade. That's with fees sustainably growing faster than the balance sheet faster than spread revenue. That's even as NIM is continue to expand. And really, if you think about it, as Brant said, it's these 3 core power alleys that are really driving that. In the last 3 years, payments, wealth management capital markets collectively have grown revenue at 11%. And that's very consistent over time, really driven by fundamentally penetrating the opportunity. And as Brant said, both investing organically and in certain cases, inorganically to support that.

So the other side of it is the spread revenue. And Zach, maybe if you can help us connect the deposit cost back to the updated guidance. I think at earnings, you spoke about NIM going to the high 320s. So help us connect what are you seeing on the deposit cost side with what you're seeing on the [indiscernible]

Yes. I continue to see the same picture for NIM that we described in April, fundamentally seeing us exit this year in the high 320s and continue to expand into next year. Two primary drivers for that. One is fixed asset repricing, and we continue to benefit from that. In fact, just based on the way the long end of the yield curve has moved over the last several months, it's even a larger benefit than had been the case before and more sustainable out into '27 as well.

And the second thing is really optimizing cadence deposit costs, and Brant alluded to that earlier. There's really kind of 2 big categories of that. One is a shorter-term opportunity that will execute into the third quarter after we get through conversion, which is really optimizing certain higher cost buckets of both core and wholesale funding. And then there's a longer-term opportunity that we'll execute over the course of the remainder of this year and into next year, in a deliberate way around deposit beta and acquisition pricing. I will say, on top of that, there will likely be another benefit, which is if the environment generally stays stable, which it is, there'll be an opportunity for us to reduce the elevated levels of liquidity that we put on to the balance sheet in the second quarter to be ready to be opportunistically seizing opportunities. But thankfully, the world is pretty stable, and that doesn't look necessary. That will provide some additional uplift for NIM over the course of the next couple of years.

So all that kind of brings it back together to say, rising into the end of this year, rising into the end of next year. Likely NIM in the second quarter and third quarter will be variable, plus or minus a few basis points as we go throughout that optimization. And all of this sort of sets up to continue to support the net interest income guidance that we've given.

Anything to say on, I guess, the competitive aspect of deposits? Increasingly, what we're hearing banks talk about certain geographies getting more competitive. I guess what are you seeing across the different geographies? And I guess, are there any markets that you're choosing to emphasize or deemphasize here?

Well, it is competitive. There's obviously more asset growth in the industry and as a result of that, more need for deposits. And so for sure, that is the case. But we've been quite successful in competing in markets like the Midwest that are very competitive successfully. And we would -- we believe going forward, we can do the exact same thing in the Midwest and the new markets that we serve. A couple of data points I would mention to you. I mean, first of all, our focus for deposit generation is on generating new checking customers.

And we've been very, very fortunate that we've been able to generate in the first quarter, 4% consumer checking household growth, 7% regional banking checking household growth and then 6% commercial checking household growth. So when you have a base of your customers growing, that certainly supports the deposit growth of the company, not just today but over the long term. Then we also look at our markets across the footprint and we have that divided into 56 distinct pricing regions. We look at competition in each of those regions. And so as we're attracting new balances, we're optimizing across markets based on what we see the competitive environment being in an individual market. We believe Texas is a big opportunity for us. If we just look at pricing competitively in Texas versus the Midwest and parts of the south, it is not the most competitive market we're in.

In fact, the Midwest is priced more aggressively than Texas. And the interesting thing about our position in Texas is that we're entering with significant scale. We'll have more than $26 billion of deposits in the state, a top 5 share in Dallas and a top 5 share in Houston. And that's significantly more scale than most of our regional bank competitors entering the market. I would also mention that in our core Midwest footprint, as you know, there's some disruption taking place. And so that creates opportunity for us, and we're seeing significant deposit growth as a result. So we're very optimistic on the guidance that Zach just described and believe that even though the market is competitive, for sure, that we can continue to compete as we have from a deposit perspective.

Perfect. And then maybe another question for both of you on the deposit side. There's a thesis out there that stable coin and AI-based technology will disrupt banking in various ways. One of that is around deposit flows. How are you thinking about the risk both by stable coin? And what do you think they mean for your deposit base?

Yes. Maybe I'll start on that one. Firstly, in terms of digital assets and stable coin, we think it's a very exciting opportunity and one that will present great opportunities for the banking industry to innovate new products and services. With that being said, it's also clearly very early days. And so we'll have to see where it goes. Fundamentally, if you ask yourself the question, why would you anticipate a digital asset-related financial services product to proliferate, 3 primary reasons. One, it's very efficient. And so presumably, the pricing will be attractive. Secondly, it's real time and for certain use cases, that's quite a valuable feature. And lastly, it's programmable. It's very digitally native.

And if I was going to be innovating, for example, a new agentic payments capability that leveraged AI tools, I might very well think about doing that on a blockchain rail to take advantage of the smart contract nature of it. I do think that if you start to tick down the list, what are some interesting value propositions that add value for customers, most of the time, those don't actually need a coin to be part of them. It's really just leveraging tokenized money movement, tokenized deposits. And so I do think that I'm very encouraged by the fact that several industry consortiums within banking are now coming together to set standards for tokenized deposit, money movement and that will now label kind of a new bastion of innovation. We ourselves at Huntington, have announced we're part of 3 of these consortiums leaning in quickly building the infrastructure to make sure we're ready to address client needs.

And any thoughts on what that might mean for deposit costs down the line across the banking system?

Look, I think there's been a lot of sort of hypothesis around what could happen with stable coins, are they a competitive threat? Would AI-based deposit sorting represent a threat? In my mind, those are a bit overblown and certainly well ahead of themselves in reality. I think to some degree, the way I think about it is, it comes down to -- these will represent at the margin money market like yield opportunities likely for customers. But the core low-cost funding base of great companies like Huntington work that is incredibly granular. Our average checking account is around $10,000 in size. There's just -- it's not very relevant to conceive of overly optimized outcomes there. My sense is this will be at the margin.

And importantly as well, as I noted, it's an exciting technology. And over time, the banks have already shown the ability to innovate and leverage these technologies and ultimately find ways to generate returns. So I'm pretty sanguine about it. It will just represent another instance of needing to lean in and adopt new technologies and ensure that we can meet customer demands.

And Manon, if I could add to that, as Zach described, the area where we're really focused is being in a position where the advantage is from a money movement perspective that this technology brings to customers that we're able to bring to customers. And so if we're able to bring the capabilities of the efficiency and speed of that money movement, then their relationship stays intact.

The other comment I would make is, as you think about a relationship that an individual has with a financial institution like Huntington, it's about more than just the deposit. It's about the advice that they received. It's about other services. It's about access to other capabilities. And so that is core to what we do and how we engage customers, and we believe creates a level of distinction.

Great. So we just focused on AI and the impact on deposits, maybe zooming out a little bit. How are you approaching AI across the organization today and where are you seeing the most meaningful areas of focus and momentum there?

Significant focus. So I think we've kind of come to the topic of AI with a fundamental belief that this is one of the most transformational technologies that we've seen enter the world in a long time, maybe ever. Ultimately, AI will touch almost every element of society, every element of commercial activity and certainly every element of banking. And so we're leaning in very aggressively here. And importantly, we are seeing the continued almost exponential growth of the power of the models.

Just, I was -- we were at Silicon Valley, meaning a lot of the big hyperscalers last year. We went again just about a month ago, and it was really quite dramatic to see the developments and that exponential curve is not stopping. And so we want to continue to lean in really heavily. For us, 4 big focus areas. One is agentic process transformation. I talked earlier about our systematic approach to reengineer the baseline cost of the company and take out between 1% and 1.5% of the cost base each year. This year, about 1/3 of that program will be driven by agentic process transformation. My expectation is that next year, that will double as a percent and the year after being virtually the totality of the program going forward. So a big focus on driving that. The second, though, and frankly, more exciting is around new product development and customer-facing tools, leveraging AI. And I think this is earlier days but getting a larger share of the mind within the company because that really is critical to be able to ensure that our products are leveraging this so we can add customer value there.

The third and really important one is around elevating the skill set and providing tooling to all of our colleagues. And there's a significant effort underway for training and providing tooling out to drive productivity much more broadly and elevated customer servicing. And then lastly is around data. And I feel incredibly fortunate that we have invested significantly in the data infrastructure for the company for a long time. And therefore, the data quality is extraordinarily good within Huntington, what the focus is now is putting context around that data. So it can be even more powerfully used with AI across the entire enterprise. So a lot of momentum and expect to see significant growing benefits.

And if I could just add 2 things. One, we view AI as an opportunity to take a lot of friction out of the customer experience. And everything that we do, we try to put the customer at the center and design around the customer. And so this will give us an opportunity to take a lot of friction out. The second is the speed of innovation, especially as it relates to using AI to drive the creation of new products and software development the ability to determine a need for a customer and then deliver that need, AI really brings a completely different level of speed.

Got it. So maybe -- are you seeing any -- I guess, where are you seeing the measurable impact on the P&L from AI? And as we think about the financial contribution and some material financial contribution there, like, I guess, how long is the time frame to that?

Yes. I noted just a minute ago, seeing a growing share of agentic process transformation, driving efficiencies within the base. There are several big areas that are in focus, the software development life cycle, and we're spending approximately $550 million this year on technology development in new tech. So clearly, as you can get efficiencies in that. That's a pretty scalable area to drive savings.

The second is in operational processes broadly across the company. Third, risk management functions like BSA/AML, are a growing focus and I think will contribute meaningfully over time. It's really almost every kind of main process when the company is going to be ultimately touched and reengineered with AI. What is, as I noted, more exciting, frankly, is the revenue lift that we expect to get from it over time, and that's something that we'll expect to see generated over the coming years.

Perfect. Maybe, Zach, bringing this all together, you the deck yesterday spoke about $1.90 to $1.93 2027 EPS guide. Help us understand how these pieces contribute to that? And how confident are you in that target at this point?

Sure. We continue to be very confident in the delivery of the financials this year. in the guidance we've given this year and the $1.90 to $1.93 earnings per share next year and the 18% to 19% return on capital, which is a 2% increase in return on tangible common equity as we go into next year. And frankly, as we noted kind of the earlier part of the session, we think you're going to see much of that in the fourth quarter. The fourth quarter is going to be a very significant delivery of all the major efficiencies and a scaling contribution of the revenue synergies that you'll see effectively that run rate earnings coming through from the fourth quarter.

Look, what are the ingredients? It's $435 million of run rate cost synergies. It's meaningful in growing revenue synergies, and it's the organic business that continues to drive high single to low double-digit revenue growth and double-digit earnings growth. So we get a lot of questions of, can you walk and chew gum at the same time? Can you continue that organic growth while also integrating partners? Can you continue to be as successful in the future as you have? And the answer is yes. And we're delivering it. Q4 was excellent. Q1 was an incredibly strong quarter. This quarter, Q2 is going to be another example of that. And so I think what we're heads down is focused on delivering those results and have every confidence we're going to do it.

So you've laid out some very significant targets for 2027, earnings growth, ROTCE. The stock has underperformed. The peer group over the last few months. I guess, I get a lot of questions on it, but maybe to get your take on it. What do you think explains that share price performance? And what do you think needs to happen to see that.

I'll tell you, management and the Board of Huntington is a top 10 shareholder. And so we feel this very viscerally and are very frustrated by it. With that being said, the questions that I get from investors are primarily threefold. As I mentioned just a second ago, can you continue your organic success while also integrating partners? The answer, full stop is yes. And we're delivering that. The second is you've set forth some pretty ambitious targets. How likely is it that you'll actually achieve them? The answer is we have multiple levers to get to those performance levels, and we have every confidence in achieving them just as I mentioned.

And the last is, would you do further M&A? And the reality is, as responsible fiduciaries, we can never foreclose that opportunity. There could be something that comes up. With that being said, it's not our focus. We're focused on organic growth and the amount of -- we always said that the partnerships are in service of creating long-term organic growth opportunities. And the opportunity now that we're presented with a leading share in Texas, one of the fastest growing and most vibrant economies in the country. Strong presence in great markets throughout the South, another 1.5 million customers to which we can focus on deepening customer relationships. There's a tremendous organic growth opportunity in front of us, and we have every intention of driving that.

All right. With that, we're out of time. Brant, Zach, thank you. Thank you for joining us.

Okay. Great. All right. Good afternoon, everyone. Thanks for joining us for the last session of the day here with Huntington Bancshares. I'm Ken Usdin, the large-cap banks analyst at Autonomous. Very excited to be joined by Steve Steinour, who's the Chairman and CEO of the bank. Steve's led the company since 2009 and has helped turn the business into a $285 billion asset, high-performing super regional bank with a growing national presence.

Before we go, if you have any questions, just a reminder, you can put them through the Pigeonhole app, and thanks for being here with us today, and thanks to Steve. Steve is going to start us off with just a couple of minutes of an intro, and then we're going to sit down and do the normal fireside chat. So Steve, over to you.

Thank you. Good afternoon, and thanks, Ken. Thank you to Sanford Bernstein and Autonomous for hosting us today. We've had the opportunity to share an updated presentation overnight that provides a clear overview of who we are, how we operate and how our differentiated model has consistently delivered peer-leading performance.

And for those of you who are newer to the Huntington story, I want to spend a few minutes grounding you on who we are, how we grow and how we create long-term value for shareholders. We're very proud of our 160-year history, which is a testament to the deep roots we have with our customers and in the communities we serve, and we're extraordinarily excited about what lies ahead. We're guided by a clear vision to be the leading people-first customer-centered bank in the country.

We've built a scaled operating model that delivers our expertise and capabilities to people and businesses nationally and in the local markets we serve through a relationship-based approach. We win through this differentiated approach, which is oriented around building long-standing deep and multidimensional customer relationships. We lead with advice and insight. We integrate expertise and innovative capabilities to make everyday banking simple. We earn trust by being consistent and dependable through economic cycles.

In fact, we are the #1 rated trust bank in the country. We organize our teams to deliver leading bank capabilities through local, empowered and nationally integrated teams, and we compound that value by reinvesting in capabilities, innovation and service to deliver better outcomes for our customers. This approach is central to our unique culture and has been acknowledged through numerous awards that we've won, including Forbes as Best Place to Work, 15 Coalition Greenwich Best Awards, including overall satisfaction, ease of doing business and #1 for trust, most importantly. And today, we picked up a J.D. Power award for Best Digital Bank of the large banks in the country. So team is doing a good job.

So what has this approach accomplished? We're now a top 10 commercial bank with $189 billion loan portfolio supported by $223 billion deposit base, and we've achieved significant density in the Midwest and have a growing presence in the most attractive high-growth areas in Texas and the South.

So there are 5 key messages I want to leave you with today and explain how our operating philosophy creates a flywheel of significant value creation. First, our operating model is clearly differentiated. We'll come back to this, I'm sure, in the Q&A. This structure creates multiple growth engines across consumer and regional banking as well as our national commercial bank and has resulted in peer-leading loan, deposit and fee income growth.

Second, we continuously invest in growth and our investments drive consumer and business customer acquisition, deepen relationships and increase the scale of our businesses. The resulting revenue and earnings growth expands our capacity to reinvest, further reinforcing our competitive advantage and accelerating value creation in sort of a virtuous cycle. Now this flywheel is at the core of our strategy, and you can see the benefits in our results. Last year alone, we generated 11% revenue growth, 16% adjusted earnings growth and ROTCE of 16%, along with 19% tangible book value growth.

Third, we have a disciplined and proven approach to acquisition and integration, which is reflected in our partnership approach. It's a very different model. We bring new partners into Huntington in a way that enhances culture, retains talent and delivers both cost and revenue synergies. These synergies expand our investment capacity, allowing us to reinvest in the franchise and further accelerate organic growth. Our approach drives long-term organic growth of the combined franchise on a greater trajectory than either bank would achieve independently.

Fourth, all of this is executed with an aggregate moderate to low-risk appetite, which we've maintained for more than 1.5 decades. Risk management is foundational to our operating model. It enables us to grow consistently, protect the balance sheet and perform across a wide range of economic environments. We maintain a highly diversified loan portfolio, the quality of which is evident in our low net charge-offs over the last decade and consistently best-in-class CCAR results. We hold leading liquidity across the banking sector. For example, our ratio of insured to total deposits is 69%, while our unmodified liquidity ratio -- coverage ratio is 118%.

We have the best liquidity profile of any large bank in the country, bar none. We view our long-standing risk discipline as a competitive advantage, not a constraint. And fifth, when you put these elements together, you get robust earnings power and growth, improving ROTCE and strong tangible book value growth. This growth fuels investment funds, builds further competitive advantage that drives increasing returns and creating this flywheel of value creation. Now this model has and will continue to produce very strong financial performance.

As we look ahead to '27, we're projecting 30% growth in earnings per share relative to '25, a return on tangible common equity of 18% to 19% and growth in tangible book value per share at over 10%. In short, we believe Huntington is very well positioned to deliver durable growth, strong returns and drive long-term shareholder value, and we're very excited about the opportunities ahead. So with that, Ken, why don't we get into the questions?

Great. Thanks, Steve, for that intro. And if I pulled a couple of the most important points out of that, we've got Huntington with one of the best-in-class organic growth stories and the goal to get to an 18% to 19% ROTCE, but stock lagged for the last 6 months or so. What's your perception of what's missing in the investor community from the story to start?

Sure. Great question. Thank you. there are several things. First, we've had 2 partnerships, 2 acquisitions, Veritex, which was announced in the third -- fourth quarter, and Cadence, which was announced in the fourth quarter. And that combination has led us to a question about whether we can maintain organic growth while at the same time, driving the integrations. So that's one.

Now we've already converted Veritex. That was done in January, and we're 3 weeks away from the Cadence conversion. So we're moving along at pace, and we will address that question of can we grow, can we manage 2 combinations while we're also delivering organic growth. Second is could we handle the economics that are implied by both of these acquisitions at the same time. So we've got a 70% expense takeout in Veritex. That is locked in. We've achieved that. And then we've got a $365 million expense takeout in Cadence, and we have that very zeroed in. We will achieve that. So by the fourth quarter of this year, we'll be showing that $435 million of expense reduction. So we see that as extraordinary value creation. And at the same time, the core will perform very, very well.

Now in addition to the expense reduction, the synergies we're getting there, we also have revenue synergies. And we've talked about a 3-year incremental $500 million of revenue synergies. We're off to a strong start. It's early. We have not yet converted Cadence, as I mentioned, but we have already started to see growth from these revenue synergies. I'll give you a couple of examples.

Our capital markets business is off to a very strong start in Texas and in other markets in the South. We opened in April our digital capabilities in the South, and we're running about 10x in the first 6 weeks, 10x the consumer customer acquisition rate that Cadence managed to average over time. That's before the brand changes, before the signage changes, before we really start the marketing campaign. So we're very -- with both those examples and there are others, we're very encouraged by what we see.

We said $500 million over 3 years. First year would be $50 million to $75 million of incremental revenue. I think we have that in the bag, and you'll see that this year as well. And it will just continue to step up as we go forward. We've got a great group of colleagues. We've retained the management in these institutions, haven't lost one of our senior managers, and we're very, very bullish about what we're going to be able to deliver here.

Got it. So let's talk about that growth and the flywheel you talked about. You've you've had several different angles of expansion, right? You've got the commercial adds that you've made over time. You've got the consumer adds that you've made over time, fee businesses that you've both built and also acquired, partnerships that we just walked through. How do you break out like where these vectors are going to drive the incremental growth? And how is that different than what we've seen in the past from us?

Sure. Well, we have very, very significant growth levers. Since 2023, we've opened 8 new specialty verticals in the commercial bank as an example. None of them are mature. They all have terrific growth opportunities in front of them. And right now, they're contributing about 30% of the loan growth as of the first quarter. So they're off to strong starts. They're not mature. They don't have a denominator effect to replace. And so just terrific growth. And we've got great teams of colleagues throughout those specialty and generally throughout the commercial business. So that's going very, very well. We've also launched in North and South Carolina, de novo. We've got 8 branches open. We're off to a really, really good start. We're well ahead of pro formas. And we're opening a branch every other week in North and South Carolina now. So that build-out of 55 branches will occur between this year and next. We'll complete it and again, off to a strong start. We really like what we see in the Carolinas and what the teams are doing. We've got great new colleagues there.

And then we've had this wonderful opportunity to pivot. Cadence was majority Texas. Veritex was 100% Texas, right? So we have a 5% share in Dallas. We have a 5% share in Houston. We have an 8% share in Texas overall, and we're in important markets in the South. Atlanta, Tampa, Orlando, Nashville, Birmingham, just a few. And we have #1 share in Mississippi.

So we have a lot to work with in markets, regions that are growing faster than any of these states that we're in, in the Midwest. So the population growth in Dallas and Houston, both between 100,000 and 200,000 people every year. That's more than these states see in multiple years. And we've got a 5% share to work with. So we've got really good colleagues who joined us. There's a lot of cultural alignment within the firm and -- the firms. And we're bringing to them a lot of product, a lot of capability, a best-in-class set of digital tools. They're enthusiastically embracing us and what we're going to do, and we're also attracting a lot of new talent. We're going to continue to invest. We will build out these markets and drive organic growth throughout the South in Texas.

So as you mentioned in your intro, you have this great organic loan growth that's been above peer average. And as you just kind of walk through some of the drivers, what's your relative confidence that, that is, in fact, sustainable and more insulated from the whims of what the economy might give us?

Well, we definitely believe it's sustainable. First of all, we've got 8 new ones. We've got multiple states that we're now in that we weren't in that are going very, very well. Texas is an incredible economy in its own right, eighth largest in the world, growing very significantly, and we're very well positioned to move forward, and we'll invest there. But these -- again, from North, South Carolina, the southern states we're in, Georgia, Northern Florida, Alabama, #1 share in Mississippi, we've got a lot to work with, and we've got great colleagues. So we've got enough scale to continue to invest and build out, and that's what we plan to do.

Our capabilities, our products, our services, again, off to a good start. It's very early innings. But the embrace we're getting with our colleagues, the customers I've met, been in all the states, most of the markets, very, very strong. There's a lot of things -- Cadence itself, the old BancorpSouth has been around for 150 years. They have long-standing relationships, lots of stickiness, lots of opportunity for us to continue to build.

And we've got scale in these businesses. We're #4 or #5 in equipment finance, #2 in distribution finance, #1 SBA lender. There are a whole series of things that we're quite large in. And we've got very significant capabilities in payments, which neither bank had. So you think about the partnerships, the same with wealth. And our capital markets is going very strongly. And you heard from some of the other banks that have reported, particularly large banks, how strong their capital markets is. We have a great first quarter with capital markets. I think that will continue for the foreseeable future.

Great. And so that's the left side of the balance sheet or the lending side, at least let's talk about the deposit side. You had good growth in the first quarter. Deposit costs were going down. And then here we are in a little bit of a higher for longer environment. Can you talk to us about the ability, your belief in your ability to continue to grow deposits and the relative cost of that as we look ahead?

There's no question we'll be able to grow deposits in my mind. First of all, we -- the core markets we've had, the legacy markets in the Midwest, we're growing deposits. We reported first quarter growth of 4% consumers, 7% business banking, 6% commercial. That will continue -- the deposit growth will continue. In addition to that, of the 8 new specialty verticals, 2 of them are deposit-oriented and they're national in scale. And as I mentioned, the Carolinas, the launch of the branches and the position physically within those markets will be terrific. But neither Cadence nor Veritex had, if you will, a cross-sell orientation.

And so what we will bring to them with our optimal customer relationship, it's a form of cross-sell, giving the customers what they need to help meet their needs, I think, will in significantly to our benefit from deposits, from treasury management, we're seeing great uptake already in our commercial card, our merchant, and we're just getting started as examples. Our treasury management capabilities are vastly more significant than either of those banks had. And as I said, the digital -- I won't repeat it, but our digital capabilities are extraordinarily strong. So no question in my mind, we'll grow deposits. But the yield curve has changed. The outlook has changed. The cost of deposits will change a bit as a consequence of that.

So fourth quarter last year, early this year, we're still looking at rate decreases by the Fed. Now it's flat to flat or maybe even an uptick next year. So massive change. And obviously, what's going in the Middle East and the inflation that we're seeing, gas at the price, food and others, this may stay with us for a while and create a combination of factors, including more lending that the banks are doing now that will make deposit pricing a bit more challenging.

Right. Right. I think a general expectation at this point for the industry. So I want to come back and juxtapose the organic growth comments that you made and your throughput on that. And then the partnership M&A comments you made and the ability to also manage that as well. So you've been a consistent acquirer over the course of the past. Is this any change that we're seeing in your view of acquisitions and to your view of inorganic growth? And after now we've gotten the Veritex and Cadence deals done, how are you thinking about M&A from here?

Our priority has been organic growth. We've had 4 bank acquisitions in 15 years. So if it's 1 every 4 years, I don't think of that as an acquisition machine by a long stretch. We have a lot before us to do organically in Texas and the South and continuing to ramp up North and South Carolina along those lines. And so you're going to see us continue to invest and grow in those markets in that -- on that basis as we'll continue to invest in the Midwest markets where we're also getting growth. Our acquisitions of Veritex and Cadence give us a unique sort of breakout position. For many, many years, we were focused on building out the Midwest.

Well, we're 1, 2 or 3 in everything in Ohio and Michigan now, and we're growing significantly in Chicago and Minneapolis. There's only so much more room. We'll continue to grow, but we don't have the demographic and economic growth on new business formation that the South has and certainly the Texas has. So we're excited to be there. We don't feel we need to acquire. If we stay on a 1 every 4 years, I don't think that puts us out of bounds in any stretch. And what we've chosen to do over time is a view that the acquisitions will make us better, stronger and provide better returns than either of the banks could do independently.

And we call it a partnership because we want to bring the company in and not just do an expense play. We want the relationships maintained, colleagues maintained, the customers maintained so we can build on. And with the management teams in place, staying in place, that gives us that unique leverage. So as we transition out of Veritex, we're selling now. As we transition out of Cadence, and it will take a couple of weeks post conversion, we'll be selling and the revenue build will be achieved as it was with TCF. So we think we've got a very unique model. It's working well, but it augments and it has to add to the core growth. That's the emphasis. Grow the core organically. Grow the core will always be our priority.

Got it. And so coming back to that point about the selling part as you get through the conversions and move on to the other side of it, you talked about the synergies. You talked about the $500 million over a couple of years. You talked about tracking pretty well. So I guess, talk us through the sequencing of that, like the ramp that you expect, the confidence that you get as you get to these pivot moments and any anecdotes maybe that you have about, yes, this is growing, this is building, we're really seeing the throughput.

Sure. Well, there's always the show-me stuff when you do something like this. So we absolutely have the expense side of this. There's no question about that. The revenue side, strong start. And what we try to do is focus our colleagues on maintaining customer relationships through conversions. And then it's not quite flip a switch, but it start to gear them up. You can't flip a switch. We've got a lot of other product capabilities. We have different processes. We prioritize what we want to try and bring to our customer base. For example -- and I said there were a number of areas where we're seeing early signs of success. Our merchant business is going very well now in these Veritex markets.

They didn't have merchant. It's a layup to offer it. We have -- we're #4 or 5 in equipment finance in the country. We have a branch small business product that's same-day approval, next-day funding called BEST. It's off to a great start. Now it's not large dollars, but it starts to show the cross-sell, the optimal customer relationship extension, and it builds confidence in the sales force. We're very, very strong in home equity lending. We're a force in direct auto as we are in indirect auto. So we'll put the -- we'll harvest the branches. We've got great mortgage colleagues in the South now as well. And housing is growing dynamically there, particularly in Texas. So that will be opportunistic.

And then we're the largest SBA lender in the country. We pushed our SBA capabilities and other small business into these regional markets. And we'll have a lot of activity that will flow into us and around our branches, helping and supporting those small businesses. And then these national businesses are going great guns. Look at it this way. The one way I think about it, we've got 40-some relationship managers in our health care banking. We've just added several hundred RMs in Texas and the South. We have an integrated model of delivery. So we bring our national expertise in locally. Most of our competitors, when they bring their specialty businesses in, take the customer out of the local market. We don't do that.

We want the relationship with the CEO, the C-suite, all of that to stay intact. And we've designed the program. So our national teams work well locally. They get the benefit of the local relationships to leverage up and get access they might not otherwise have or see opportunities that they wouldn't otherwise get. And we see multiple examples of this literally every week because we've got so many people in the field now that have some sense of what we're looking for, and that only gets refined. That's one of the reasons our capital markets business is off to a great start. We've got -- I think we've got either a half dozen energy deals done or lined up in terms of capital markets activity already. And that's pre-conversion. It's from a Feb 1 close to not even June. So a very strong start. We like what we see a lot. We've got a lot of work to do to phase it up, phase -- ramp it up. But we've got -- we have a track record of doing that. We learn. We get a lot of input from our partners about pacing, and we adjust to that.

One last point on the 2 companies, then Veritex and Cadence. That point about the learning, guys, you -- obviously, with any deal or with any situation, with any build-out, you kind of do learn, you take away, you grow, you figure things out. What's been your biggest observations about things you get from the 2 companies and things you can further optimize as you move forward?

First of all, we got great colleagues. We really have great colleagues. Everybody says they are culturally aligned. But when you look at the cultures of Texas and the South, family, God, community, military, U.S.A. that's it. You could repeat the same in the Midwest. And so we're like them, they're like us stuff is really significant with our teams working together. Huge asset in these combinations for us as we go forward.

We've been really warmly received, and you're never quite sure how that will go off. And so we've got very high engagement. We were out -- we spent a week in the field just thanking colleagues every year. We call it Colleague Appreciation Week. We just had that 2 weeks ago. We're out in all the markets, 32 stops, multiple teams going out. The embrace we have felt, the engagement we've seen and the customer interactions we've had around that just been outstanding. So we're very, very bullish on acceptance and coming into the company.

There's an eagerness to get the conversion behind and move forward. So I credit the local management teams and the rest of our teams in how they're integrating so effectively together, working well as one team together. That's been better than we thought. We had some uncertainty, North-South, other things, none of that. And so much better. Now we have long and deep diligence that we do.

With Cadence, we've had, I don't know, how many management meetings and one-offs. So in terms of negative surprises, we haven't seen any. In fact, Zach and I were just -- our CFO, just looking at where we were with Cadence and Veritex, and we're ahead in both. And that was based on yesterday's look as of a couple of weeks ago. So we're not -- we don't -- we wouldn't expect surprises because we have so much communication along the way, and we haven't been. The real positive is this eagerness to get on with it and bring our capabilities, which we love, of course.

Got it. So let's step back out to a bigger, broader lens. And we've been talking with a lot of the banks that have attended the conference is just -- you see a lot now more of the country than you even did 6 to 9 months ago. And so how would you just characterize the economy backdrop and what you're hearing when you're actually out in the field and talking to clients, whether it's in the Midwest, Texas, Southeast. How is the vibe in terms of the feel at this moment?

There's a consistency to the vibe. The business community generally status quo to what it had been. As of the end of the quarter, I was worried about what might happen because of what's going on in the Middle East. It's been better than I would have -- better than I did expect. And so we've got a number of sectors that are doing very, very well. And we've only got a few, I think, that are more challenged. If you think about those catering -- if you go back to the consumer, if you're a low moderate income consumer, it's been a tough couple of years, and it just got a lot harder. Energy, food -- a lot harder. So of course, hearts go out, but the businesses that serve them also get impacted significantly.

So we have -- so we see some revenue challenges like quick service restaurants, franchise lending, which we do a bit of. But by and large, our portfolio looks really good. And that's what we're hearing from our customers. That's what we're seeing. And we're a prime, super prime consumer lender. So that looks good. And we think of that as lower risk anyway and 90-plus percent secured. And so we're not seeing a lot of change. Credit is holding in.

Yes. And one of the things you mentioned on the April call was that you had gotten a little more concerned about the world that we live in, and you guys took a few steps just to take on some excess liquidity, which is earnings neutral, but you kind of made some commentary about that. And so how does that manifest in terms of your concern about the business at all? Or was it just being extra prepared? And has that view changed?

This had nothing to do with our business. This was geopolitical. You got a war in Europe, now a war in the Middle East. We got a government transition going on in Venezuela and one possibly happening in Cuba. We got a lot of foreign geopolitical issues coming at us, and some of them are coming with economic consequences. So of course, we're worried about that. I'm surprised more of my peers didn't pile into a little more liquidity. We've got the best deposit franchise in the country, I think, certainly one of them and a very strong deposit ratio, as I referenced earlier.

But when we get periods where there's significant negative change, I get concerned, will markets function as they have in the past. And we've seen disruption in '08, '09, we saw it pandemic, we saw at Silicon Valley. And so I want to make sure we're in a position of relative strength with liquidity on sheet. So if there's a moment to do something, we're prepared to do it. But we didn't see draws and as I said a minute ago, Cadence and Veritex is performing very, very well. This is all about a geopolitical outlook, maybe too conservative. But I'd rather be on that side than the other side.

Yes. Understood. And as that relates to then your business, as you've talked about already in a few different spots, it seems like your outlook and your backdrop for commercial activity, consumer activity sales sounds pretty sanguine.

We have very good pipelines. And the nice thing about this liquidity, just to close it out, if we don't need it, we'll just return it. right? It's a couple of bps in NIM. It's like nominal cost, no cost. So when we're confident we're on the other side of this, we'll ramp it back down. But pipelines look really good. Activity is strong. And as we complete this conversion and get -- we've got 6,000 colleagues that are conversion focused. The entire Cadence and Veritex team is now -- the Veritex team is helping the Cadence team. And we got a couple of thousand colleagues in the Midwest. This is their prime focus, 3 weeks away from our Super Bowl. So we're really looking forward to transitioning that and moving forward. And I think it only gets better from here. Pipelines again look very strong.

Got it. Your higher quality portfolio on the consumer side, you walked by before. Do you see any stresses on the consumer as it affects Huntington? Obviously, you mentioned the lower income cohort. That's a commentary, I think that's running through a lot of bank commentary. In what way, shape or form do you -- are you concerned at all about it as it would affect Huntington?

We're 90-plus percent secured. Loss will be triggered off of unemployment. Unemployment continues to be quite low by historical standards. Remember, '08, '09, we had 10% unemployment, in Ohio, 14%. That's how the models are geared. And so we really like what we see on the consumer side. The biggest issue for us is we got a very small FHA portfolio. But FHA just suspended their post-pandemic support and delinquencies are going up there that's the government guaranteed. You got to carry it for a while and then do the put. So I don't see that as risk other than there'll be a little headline delinquency moment.

Yes. So talked a little bit about the industry dynamics. And when you think about just the landscape today, what competitive pressures or considerations do you guys think about the most when you think about planning and strategy and trying to outdo and outgrow the competitive landscape?

Sure. Well, there's a lot of competitors -- there's been competition throughout. I started 4.5 decades ago, there were 16,000 banks, right? So that was a lot of competition back then. But we have different things coming at us today. Number one worry right now is cyber and what's happening on that front. And so there's a whole series of things we and others are doing, both for ourselves and the industry as a whole. Beyond that, we've got a lot of opportunity with AI, and that's how we think about it. It's certainly a threat, but opportunity. We've been working for years to get our data in great shape.

We've had a lot of the plumbing done. I think we did Snowflake 5 years, 6 years ago, for example, in terms of data lake. So we've got colleagues who are building agentic tools so we can standardize our adoption. We're multi-cloud, multi-region. We've got a lot of diversification. And the crown jewels are -- we keep in on-prem primarily deposit system. So I think we've got a relatively unique position to play from. We've got a lot of expertise on the Board. We've got 2 very senior cyber executives, former executives on the Board. We've had them for years, had a tech committee for 14 years.

So we've got work to do to be sure, but we see AI as really transformational, and we're embracing it. After that, you know fintechs. And so being an effective partner and choosing those wisely, we do partner. Sometimes we invest in. And occasionally, we've acquired. But we'll continue to build with partners. That's particularly true in payments, somewhat true in wealth, not so much in capital markets.

Okay. Got it. Talking about the flywheel that you mentioned and the investments in cyber, of course, just being one of the things that's taking up and escalating part of the budget. But more importantly, when you talk about creating that growth flywheel and investing to generate that growth, how do you think about what the right magnitude of investment is, what the right spend is, how you're spending it and ensuring that you're, in fact, both more than just keeping the lights on, but pushing that agenda while also protecting that path towards higher returns and operating leverage.

Right. So we've been doing this flywheel since 2019. And I think it's on Page 10 of the -- Page 14 in the deck. You'll see a level of a core expense reduction that's become part of the discipline. Zach and my partners have done just a great job, and it's hard to do. You can get it the first couple of years, kind of easy. It gets hard to do 6 years in. But we are continuing on that approach, and that gives us an excess then to reinvest. And there are always criteria around balancing out how much is tech, how much is marketing, what are the new businesses we're going to do. The branch builds would be an example. Longer-term payback, not typically something that would compete head-to-head with like the commercial specialties.

But as we think about it over time and the relative position of the company strategically and where we want to be, you make those trade-off decisions. Now we've said all along, we'll modulate our investment rate tied to the revenue creation. We've had terrific revenue growth over the period of time, more than 10%. I think it was 11% last year. It's allowing us to meaningfully reinvest. We've got about $550 million of reinvestment now that's going on annually, and we're trying to grow that at a double-digit rate every year and parse it out. And then that keeps that flywheel moving.

Got it. And at the same point, I would think that as you guys talked about on the April call, this generating a little bit more flexibility to be either aggressive and push some things forward or as you did talk about last quarter, maybe be a little bit more deliberate about pushing things out. How do you kind of make those calls on forward back? And do you feel like you've got a better mechanism to kind of decide here's where we should be directionally like shifting our initiatives at any given time?

Well, we're always trying to play forward 6 to 12 months. If you think about some of the silliness we might have seen in our career, there was one CEO that said, I'm going to keep investing to expand because everybody else is until the music stops. Well, that feels kind of silly to me. We should be looking forward 6 to 12 and trying to project where we think things will be and then tuning it as we go. We did that in the first quarter. We pulled back a bit on loan growth, and we did that. We also modulated our expense investment. We have terrific fee income growth, and we got to the same net bottom line.

But that was us thinking with what's going on in the Middle East, it may be changing. If anything, I want to be on the too conservative side versus miss the movie. We're a top 10 shareholder bank management colleagues and directors. And so we're trying to take this risk management of the enterprise into a constant forward stance. So we're scanning, we're using different forums. We've got great directors who give us insight and advice, some of whom operate global networks.

So -- and kind of bringing some -- a lot of this together as you've grown the bank, gotten bigger, invested, built for the future, cyber technology, a couple of partners and deals built in. How do you think about what's changed in terms of execution risk at Huntington and how you manage that differently today versus historically?

Well, the geography alone is a factor. It gets more complicated. So we're a big believer fundamentally that we're a people business. It's about relationships. It starts with our colleagues knowing each other. So we're spending more time with our senior colleagues, not just our executive team, senior colleagues getting around. There are more meetings than we used to have. So people get -- colleagues get to know each other. That's one.

We like to spend time with customers and listen to them. And so there's -- I would say, 60% of my time is on the road. And our revenue executives, I don't want to see them in the office. And so the fact that they're out and about with other colleagues and customers, prospects is a very strong signal to me. That gives us insight into perhaps what we have opportunities to do better or more of, and we try to dynamically adjust.

Yes. One question that's come in, I think, is relevant in this point is as you get bigger and prepare to cross at least current barrier for Category III, what do you have to consider in terms of once you get past the deals and move forward, either in terms of preparation for that, if any, that you've already not done, whether that's cost or whether that's infrastructure as you get to the bank to a bigger stage?

Yes, great question. We articulated this a couple of years ago, we were investing for Category III, recognizing we would cross it someday. Now that may get redefined with the current administration. But we're substantially good to go as of this quarter as a result of prior investment.

Yes. Okay. So let's talk a little bit more just about credit and the credit environment. So you talked already about just obviously, the relatively low risk profile of the company. Anything they're being just incrementally watchful for? I know we touched on the lower-end consumer, and I know where you guys stand in terms of that high quality on the consumer side. But as you just amass, again, these anecdotes, what, if anything, does you just keep your eyes open for?

So there's more micro views. What's the multifamily housing market in Austin doing, for example, it has slowed meaningfully, things that we wouldn't have historically. So there's a deeper view into different markets than we would have had historically. So our first, second and third lines are doing more. They're doing more with risk correlation. They're doing more sensitivity analysis, and we're using it more than we would have just a couple of years ago as examples. There's a lot of effort to make sure the credit culture of the company is commonly understood and embraced. And if it's not, then that generally means there's an exit. There's a lot of accountability in the company.

Yes. A broader topic on the commercial side has been everything that circulates the private credit environment, private capital and NBFI. You and others have given good disclosures, have expressed your confidence. How do you think any differently, if at all, just about how the private markets evolve and banks interaction with it from a Huntington perspective?

Well, I think the sectors we've chosen to play, and there are a number of things we chose not to be involved with, and we're -- we think we're in pretty good shape as a consequence of that. So the strategy -- before we do something new, there's a strategy. There's a risk assessment with that. And so as we look at the NBFI, we like what we're seeing with the REITs. We like what we're seeing in a number of the areas, NBFI that we're involved with, and we're going to grow those. And -- but these fundamental disciplines will stay in place. I think the private credit market, as it cycles out of its retail deposit investor-led focus, there's clearly a market for it. I don't know what size. It's smaller. That's an opportunity for the banks, maybe an opportunity for us as well. And yet there's a role for it to play.

Yes. And so one question from your perspective as the regulatory environment has been obviously pretty beneficial for banks and the capital rules have recently gotten proposed on Basel III. You guys have talked about it being a nice benefit for you guys, presuming it goes through as planned. Anything in either the proposal or in other things coming down the pike in terms of the regulatory front that you'd like to see either altered or changed? Or are you generally okay with what's on the table?

Well, we'd like to see B-III complete, right? This has been overhang since Dodd-Frank almost, right? The liquidity rules, the ILST needs to be tailored. And I think all of us would agree with that, right? So some of the mandatory assumptions like no access to the Fed window for 30 days or other limits just don't make sense. And having said that, obviously, you got to be conscious of liquidity and stress when you think back to Silicon Valley, but I think we've overcorrected a number of things. And I think this administration is intending to adjust those.

And in my career, since -- almost half a century, the banks have never been stronger, better capital, better discipline in terms of credit risk management and overall risk management, much, much more Board challenge. So the self-governance side is very strong it appears to me. So naturally, the regulators should be backing off because it can be an economic engine for America if we're less fettered.

Got it. So last question, coming full circle to kind of where we started. We started talking about a little bit of the stock's recent underperformance, and we've talked through a lot of the fundamental issues. So one thing that kind of comes back as a debate on the stock is you guys have talked a couple of times about -- you mentioned the growth to get up to '27, $1.90 to $1.93 of EPS. How confident are you that you will continue to plan to achieve that outcome?

Look, we have a lot of levers. We talked about a number of them here. We have more than that, and we're off to a very good start. We're getting this conversion behind us this quarter. That will start the revenue momentum. As we indicated, it looks really good for this year and the build. So as I sit here today, with everything -- the change in interest rates, everything else on the horizon, I feel really good about we're going to get to $1.90, $1.92, which is what we committed to for '27. And I really think we've got great potential beyond that. It's exciting to see what's -- how we're positioning ourselves in Texas and the South, how these specialty businesses are coming on and the core performance has not lagged.

And that was one of the issues we touched on early on. Can we do both? And we're demonstrating we're doing both. And so I just feel very fortunate to work with a great group of colleagues, highly committed. Obviously, a lot of work getting done, a lot of pressure, but there's a lot to go for as well. If we're a leader in AI, which we are positioned to be one of the bank leaders, coming through what we've just achieved, we're 16.5% on equity today, take the expenses out, that's 17% plus, 18% to 19% is a target, we should be able to get there. And then we have AI on top of it. And I don't -- we don't see a lot of demand for stablecoin or digital assets right now.

But if that happens, we'll be positioned for that as well. That we will seek to find an opportunity. So -- and that's the benefit of the great team I get to work with. For sure, there are challenges, but there are also opportunities. And just as we've proven with Silicon Valley in that moment where most banks took diets, that was a breakout moment for us. We find opportunities because we have this deeply ingrained aggregate mark to low-risk appetite. And we're very, very clear with our customer focus, and it comes through with trust and these other awards. So the franchise is reasonably well positioned. We're at like a screaming buy moment from my perspective. I hope some others agree with that. Great to be with you, Ken. Thank you very much.

Great. Thanks, Steve. Thanks, Steve, for joining us today and for presenting with us. Really appreciate it.

Absolutely. Thank you.

Greetings, and welcome to the Huntington Bancshares First Quarter 2026 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Eric Wasserstrom, Director of Investor Relations. Please go ahead.

Thank you, operator, and good morning, everyone. Welcome to our first quarter call. Our presenters today are Steve Steinour, Chairman, President and CEO; and Zach Wasserman, Chief Financial Officer. Brant Standridge, President of Consumer and Regional Banking; and Brendan Lawlor, Chief Credit Officer, will join us for the Q&A.

Earnings documents, which include our forward-looking statements disclaimer and non-GAAP information and copies of the slides we'll be reviewing are available on the Investor Relations section of our website, which is www.ir.huntington.com. As a reminder, this call is being recorded, and a replay will be available starting about 1 hour after the close of the call.

With that, let me now turn it over to Steve.

Thanks, Eric. Good morning, and thank you for joining us. We delivered an outstanding first quarter by all measures, driven by disciplined execution across the franchise that is translating into strong profitability and returns. The essential question that we, our peers across the industry and our customers, all face in this moment is about the outlook for the economy. So let me open with our perspective.

We're operating in a dynamic global environment, with geopolitical developments adding complexity to the outlook. We're watching these factors closely. And currently, we characterize conditions across our footprint as remaining consistent with prior quarters. We see broad-based strength across commercial end markets. Our clients are taking a thoughtful long-term approach to decisions, and we're not seeing any signs of a material shift in underlying demand.

The consumer story is a bit more mixed with middle and upper-income consumers continuing to spend in a manner supportive of the overall economy, while lower income households continue to feel pressure from the cumulative impacts of inflation.

Importantly, these factors do not change our outlook for performance this year. We delivered a strong first quarter. Pipelines for the second quarter are healthy and customer activity continues to be steady. What differentiates Huntington in this environment is the flexibility and resilience of our operating model. We are a well versified super regional banks supported by strong capital, liquidity and credit fundamentals, and we are well positioned to perform in a range of scenarios.

As we look ahead, we believe the firm is approaching an inflection point where strong core performance, combined with the benefits of our new partnerships, will drive higher returns and accelerate our earnings and tangible book value growth.

There are 5 key messages I'd like to leave with you. First, we operate a differentiated super regional bank model with multiple growth engines. And that model is working exceptionally well. We've continued to invest in strategic areas, including our Carolinas expansion, the build-out of our vertical specialty businesses, partnerships with Cadence and Veritex and the Janney and TM Capital acquisitions, which will support durable earnings generation for years to come.

Second, our core continues to perform very well. Organic growth remains the foundation of our strategy with strong performance across our businesses and geographies and standout results in value-added services including record capital markets performance in the first quarter.

Third, our balance sheet grounded in our aggregate moderate to lowest appetite provides us the confidence and flexibility to perform well in an uncertain future. We have very strong liquidity as well as good capital and reserves and remain vigilant in our outlook. Consistent with this, we made the decision to temporarily build additional liquidity, improving our already peer-leading liquidity position.

Fourth, our partner integrations are on track to deliver expected cost and revenue synergies from Veritex and Cadence, and we remain excited about the extraordinary growth opportunities we continue to see in our core and across Texas and the South. We also successfully integrated the Janney and TM Capital acquisition, which became accretive within 3 months and contributed to a record quarter for our Capital Markets businesses, reflecting strong execution by the team.

And fifth, our earnings power generates significant capital, gross tangible book value and supports consistent shareholder returns. That strength enables us to reinvest in the franchise while returning excess capital in a value-creating way. We bought back shares in Q1 and continued buying quarter-to-date.

Turning to Slide 4. On an adjusted basis, we generated 9% earnings per share growth, 36% PPNR growth and 9% tangible book value growth. Importantly, over the last 5 quarters, we have consistently delivered ROTCE at the target range we set at our 2025 Investor Day of 16% to 17% on a rolling 12-month basis. Building on that performance, we raised our ROTCE target to 18% to 19%, driven by expected synergies from our partnerships, growth in high-return value-added services as well as continuing capital return. We remain confident in our ability to deliver that level of profitability in 2027.

Slide 5 highlights the strength of our balance sheet. Our liquidity, capital and credit profile put us in a position of strength to deliver consistent performance across a wide range of operating environments. Liquidity is a clear point of differentiation. We added cash to our balance sheet this quarter, and available contingent liquidity now represents approximately 173% of uninsured deposits. 69% of our total deposits are insured and our unmodified liquidity coverage ratio is 118%. All of these metrics are well above peer median.

Capital remains strong. Our adjusted CET1 ratio is well above regulatory minimums and within our 9% to 10% operating range. We expect Basel III end game to be beneficial to our regulatory capital position. As you know, we manage credit with rigor and conservatism. Our reserve levels remain well above peers, while net charge-offs continued to trend well below the Permian.

Taken together, this balance sheet strength enables consistent performance throughout economic cycles and the ability to selectively capture organic growth opportunities.

Turning to Slide 6. We remain exceptionally focused on disciplined, rigorous execution of the integration of our partnerships, which is proceeding very well. Importantly, our core business continues to perform at a very high level as we execute this integration.

Dedicated integration teams are operating with clarity and discipline across 3 priorities: first, welcoming new colleagues and customers into the franchise. This includes aligning regional leadership, expanding specialty banking and targeted fee capabilities and successfully onboarding over 6,000 new colleagues and 1.5 million new customers.

Second, executing the operational and systems integration is advancing on schedule. The Veritex conversion was completed in the first quarter, and we're on track for the Cadence conversion in June.

And third and most exciting, we are delivering the expenses and revenue synergies we've committed to. Cost initiatives are tracking on schedule, and we're already seeing revenue benefits as customers adopt more of the Huntington platform, particularly through deeper engagement across capital markets and payments, increased card usage and new consumer account openings. Because of this focus on realizing the synergies, combined with the continued outstanding performance of our historical core, we are approaching an inflection point where execution will compound earnings power and higher returns, engaging our flywheel that drives powerful long-term value creation.

And with that, I'll turn it to Zach to discuss the quarter's financial results in detail.

Thank you, Steve, and good morning, everyone. Turning to Slide 7, I'll cover our financial performance. We delivered another quarter of exceptional execution and profitability in Q1, reflecting strong underlying performance across the franchise. For the quarter, earnings per common share was $0.25. On an adjusted basis, excluding acquisition-related expenses and other notable items, EPS was $0.37, up 9% year-over-year.

Growth was driven by strong organic execution across the company and contributions from recent partnerships. That performance translated into higher net interest income and strong fee revenue generation. Fee revenues were a particular bright spot for the quarter exceeding our plan and reflecting strong customer activity trends across the businesses. We also managed our expenses with discipline, targeting baseline efficiencies and continuing investments that drive future revenue growth initiatives.

Pre-provision net revenue increased 36% on an adjusted basis. Cadence and Veritex were not included in the prior year quarter and there, in addition, meaningfully increased average balances and revenue. Overall, the quarter demonstrated our ability to drive strong organic growth while simultaneously integrating our recent partnerships and executing against our cost and revenue synergy objectives. I'll review the drivers of this performance in detail on the next several pages.

Turning to loan growth on Slide 8. We delivered solid organic momentum again in the quarter. Excluding the addition of Cadence, on an end-of-period basis, loan balances increased 1.5% or $2.2 billion reflecting solid fundamental performance across the franchise. Organic growth was driven by continued strength in our core markets and commercial verticals. Within commercial, we saw meaningful contributions from our corporate specialty banking verticals, including financial institutions, tech and telecom and industrials, as well as growth from asset finance and middle market banking across both legacy and new geographies.

Overall, our first quarter performance demonstrates consistent organic execution, highlighting the durability and breadth of our multiple growth engines and supporting continued earnings expansion.

Turning to deposits on Slide 9. We delivered solid deposit growth while maintaining disciplined pricing. On an end-of-period basis, excluding cadence, core deposits increased $3.8 billion or 2.3% quarter-over-quarter, driven by continued growth in mary banking relationships in both consumer and commercial. This reflects our sustained focus on relationship-led deposit gathering.

Cadence deposits contributed materially to growth this quarter, and we intentionally optimize select acquired funding categories, consistent with our plan and prior guidance. Overall, our deposit strategy continues to support revenue growth and provide robust core funding for organic loan growth.

On to Slide 10. Turning to net interest income. We delivered strong dollar growth and continued margin expansion in the first quarter. Net interest income increased $301 million or 18.7% sequentially and and was up 33% year-over-year. Net interest margin was 3.24%, up 9 basis points from the prior quarter. The increase in NIM was driven by lower funding costs, reduced hedge drag in purchase accounting, partially offset by lower free funds benefit and higher Fed cash balances.

As Steve mentioned, during the quarter, we elected to add approximately $4 billion of higher cash balances at the Fed to further strengthen our liquidity profile. This has a negligible impact on revenues. However, the denominator effect of holding higher cash will reduce the reported NIM calculation. I'll cover this in more detail in our guidance outlook.

Moving to fee income on Slide 11. We had an absolutely outstanding quarter of fee income generation. This performance reflects continued underlying momentum across our core fee businesses with contributions from both organic activity and recent acquisitions. On an adjusted basis, excluding all acquisition and divestiture activity this year and last, fee income grew 18% year-over-year.

Payments revenue increased 21% year-over-year, supported by continued client activity and product penetration. On an organic basis, excluding the impact of acquisitions, overall payments grew approximately 10%, primarily driven by growth in commercial payments.

Wealth Management revenue grew 19%, driven by ongoing household acquisition and positive assets under management net inflows. Excluding M&A and the impact of lower revenue from our corporate institutional custody and trust business, underlying growth was approximately 10%, reflecting strong and broad-based client engagement.

Capital Markets delivered its strongest revenue quarter on record and beat our initial plan, with broad-based contributions across loan syndications, advisory, debt capital markets, fixed income sales and trading and rate hedging as well as the inclusion of recently acquired capabilities. This was a truly phenomenal quarter of performance for our capital markets teams, with revenue, excluding the impact of all acquisitions, growing nearly 60% year-over-year.

Loan and deposit fees also continued to trend of robust growth, supported by our commercial lending activity. These fees were up 28% year-over-year, driven by strong loan commitment fees. Excluding acquisition-related impacts, loan and deposit fee growth was approximately 18%.

Moving to expenses on Slide 12. On a normalized basis, excluding onetime costs and the impact of absorbing Cadence's expense base as well as Janney and TM Capital, operating expenses increased just $20 million sequentially. This reflects continued cost discipline and ongoing expense reengineering, which are core elements of our value creation flywheel. These efficiencies are supporting sustained reinvestment in the business while also enabling delivery of strong positive operating leverage, which was 220 basis points this quarter on a trailing 4-quarter basis, excluding onetime items.

And to provide more detail on a very important area of investment for the moment, we have a comprehensive enterprise-wide AI program underway that is gaining momentum and already contributing to productivity and efficiency across the company. We're applying AI in 5 key areas. The first is in technology, where we're rapidly improving the software delivery life cycle. The second is in a genetic process transformation where we're driving efficiencies in major processes throughout the company. The third is in customer-facing use cases, where we're identifying opportunities to embed AI into key products and services going forward. The fourth is in colleague productivity and training where we're expanding significantly the tool set for our colleagues and increasing their readiness to deploy AI in their day-to-day work. And lastly is in our data and platforms to support future customer-facing capabilities. This investment in activity is disciplined, focused on generating real operating outcomes. And we see AI as an increasingly important enabler of expense efficiency and operating leverage over time.

Turning to Slide 13. Our capital position remains strong, supporting organic growth solid dividend yield and increased capital return through share repurchases. Over the past year, we've increased adjusted CET1 by 30 basis points and continue to manage adjusted capital to our 9% to 10% operating range.

Our capital priorities remain unchanged, funding high-return loan growth, supporting our dividend and then all other uses, including returning excess capital to shareholders. As noted at a conference in March, we increased our 2026 share repurchase plans to $550 million. This reflected our expectation of strong capital generation as well as lower-than-expected upfront dilution from the Cadence marks.

Year-to-date repurchases have totaled more than $250 million, with $150 million in the first quarter and more than $100 million thus far in Q2. In total, that represents retiring approximately 15 million shares.

Finally, including our strong capital generation and confidence in our outlook, the Board approved a new $3 billion share repurchase authorization, replacing the prior program.

Turning to Slide 14. We are creating shareholder value through disciplined execution as reflected in our ability to consistently generate returns at our targeted levels. Today, we are operating at a return on tangible common equity that is consistent with the 16% to 17% range we outlined at our 2025 Investor Day, demonstrating the strength of our underlying earnings power and the delivery of our commitments.

As we complete the Cadence integration and we realize targeted synergies, we are well positioned to further expand returns. This positions the business to increase return on tangible common equity by 200 basis points in 2027 to a range of 18% to 19%. This reinforces the power of our operating leverage, capital generation and disciplined management approach.

Turning to Slide 15. Credit performance remains stable and well controlled across the portfolio. Net charge-offs were 26 basis points, reflecting continued strong credit outcomes. Forward-looking credit metrics also remain stable, with the criticized asset ratio at 4.3%, well within our historical range. The non-performing asset ratio was 72 basis points, consistent with our expectations post merger with the Cadence portfolio.

Let's turn to Slide 16 for our outlook for 2026. As we look ahead, our plan is broadly tracking within our range of expectations, and the underlying fundamentals of the franchise remains solid. Organic growth is strong. Cost and revenue synergies are tracking as expected, and the Cadence integration remains firmly on plan. Importantly, we continue to have strong line of sight to 2 important milestones.

The first key milestone is our Q4 performance that will fully include the run rate benefits of the cost synergies from both Veritex and Cadence and where we expect to deliver a Q4 efficiency ratio in the mid- to low 54% level, a clarification and improvement from the prior guidance of less than 55%. This is indicative of the significant expense efficiencies we are driving. This reflects our ongoing reengineering of baseline operating expenses as well as the benefits of the cost synergies. As we've noted, Veritex cost synergies will fully be reflected in the run rate in the second quarter with Cadence reaching full run rate in the fourth quarter. The Q4 efficiency ratio will also benefit from incremental targeted cost management actions we're now taking. I'll expand on those more in a moment.

The second key milestone is our 2027 earnings per share projection of $1.90 to $1.93 with a return on tangible common equity of between 18% and 19%. We're fully on track to deliver these results. As we update our outlook for this year, the macro environment is certainly more uncertain now. As Steve noted, we're not yet seeing material impacts in our business. However, it is clear our customers across all segments are also watching the environment cautiously. Hence, at the margin, economic growth this year will likely be lower than originally forecasted.

Starting with net interest income, we now expect to be at the low end of our guided range. This reflects 2 primary dynamics. First, on loan growth, we're fine-tuning our plan to reflect the current environment and actively managed portfolio mix. And we now expect growth to track closer to the midpoint of our range versus the high end of the range earlier in the year.

Second, on funding. We continue to drive strong deposit growth. Q1 was yet again another quarter of approximately 2% sequential growth. And our outlook throughout the remainder of 2026 is for continued strong organic growth. We are consistently acquiring new primary bank customers at peer-leading rates and gathering core funding as we deepen those relationships, supported by highly analytical and segmented pricing management capabilities. The environment continues to be competitive, while also rational and predictable. We expect to hold and improve on deposit costs. However, the improvement we're seeing is modestly less than our prior assumption. This reinforces our focus on optimizing loan growth rather than pursuing volume at the expense of marginal returns.

Additionally, as mentioned earlier, we have elected to carry approximately $4 billion of incremental Fed cash which has no material impact on actual net interest income dollars, but does reduce reported NIM.

Putting these factors together, we now expect 2026 NIM to trend into the high 3.20s compared to our prior expectation in the mid-3.30s, 5 basis points of this change is related to the higher Fed cash balances, which reduced the NIM metric with de minimis impact on revenue. Approximately 2 to 3 basis points of the impact is from the combination of asset optimization and deposit costs.

As we work through the integration and optimization of the Cadence portfolio, we would also expect some quarter-to-quarter variability in reported NIM, though the full year trajectory remains consistent with this outlook. And as before, we continue to forecast a rising NIM in the back half of this year and further increases into 2027. While these dynamics move our NII outlook to the low end of our range, we're largely offsetting the impact to earnings through 2 factors: first, we're generating outstanding fee income growth. We have made extensive investments in payments, Wealth management and capital markets, and our teams are executing exceptionally well. Based on our current pipeline of activity, we're raising our expectations for fee revenue growth by 4 percentage points to 31% to 33%.

And second, we are calibrating expense growth with the revenue environment. As we've consistently said, if revenue conditions were to soften, we will modulate expenses accordingly. Against this backdrop, we're accelerating targeted efficiency initiatives and rephasing select investments. As a result, we're tightening our 2026 expense growth range to the lower half of the 32.5% to 33.5% range.

Importantly, this is inclusive of higher variable costs from the projected higher fee revenues. All of this will likely result in full year operating leverage that is modestly lower than our initial guidance. And we now expect it to be in the range of 400 to 450 basis points for this year. Importantly, as I indicated earlier, we expect to exit 2026 with a fourth quarter efficiency ratio in the mid- to low 54% level.

One last item to call out. Our share count for 2Q will be approximately 2,055 million shares, including the first full quarter impact from the Cadence partnership. We continue to anticipate share repurchases totaling at least $550 million this year, including the approximately $250 million we've completed year-to-date.

Concluding on Slide 17. Our operating model continues to perform, generating strong revenue, earnings and tangible book value growth. This supports the investments we're making in our capabilities, which will enable our long-term competitive vibrancy and substantial value creation we create for shareholders.

With that, we'll conclude our prepared remarks and move to Q&A.

Thank you, Zach. We will now take questions. We ask that as a courtesy to your peers, each person ask one question and one related follow-up question. If you have additional questions, please return to the queue. Thank you.

[Operator Instructions] Our first question is from Jon Arfstrom with RBC Capital Markets.

Just a couple of guidance clarification questions. Zach, can you talk a little bit more about the balance sheet optimization project? Just kind of why you're pursuing it the overall goal, the time line and then how you measure success with the strategy of what you're pursuing?

Yes. Great question, John. Thank you. And as I noted in the prepared remarks, what we're doing is a few things really primarily to calibrate against what we see as the economic environment, which continues to be supportive generally of the plan, but at the margin is a little softer in terms of economic growth outlook. And so it's more realistic for us to forecast loan growth in the midpoint of the range. And as we do that, as you noted, we're looking to further optimize the balance sheet. I would characterize that the strings in loan growth is quite broad-based. One area, though, that we continue to see the opportunity to tune lower is commercial real estate, in particular, construction within commercial real estate. So that's a long-term strategic expectation of seeing that reduce as a percent of the overall loan base, and certainly, that's an area that we will optimize further in light of this environment.

The other dynamic is, clearly, we will want to continue to match fund the loan growth with core deposit growth. And my expectation is we will continue to see deposits growing at or above the growth of loans on a sequential basis from here. But clearly, there's an opportunity to calibrate that level and to really make sure we're being very judicious about managing the NIM ultimately as well. So those are really the primary drivers. And they noted that will bring NII to the low end of our growth range, offset, however, by stronger fees of lower expenses and a profit neutral outcome for this year.

Okay. Fair enough. And then -- there's so many questions to ask here. But I just -- I wanted to ask about the authorization, the $3 billion buyback authorization. Why that size? What's the plan for utilizing that? It's just a big gap between $3 billion in the recently updated $550 million plan?

Yes. Great question, Jon. This is Zach. I'll take that one as well. A couple of things I'd say. Firstly, I think what we're seeing now emerge in the industry as a best practice is to have an evergreen authorization that's extent for a period of time. So part of this is just ensuring that we can have a good functioning program over a multiple year time period.

With that being said, I would also highlight that our guidance we've given is for approximately $550 million of share repurchases this year. And next year, $1.1 billion to $1.2 billion. So already, you're north of the $1 billion that we had before in terms of an authorization.

The last thing I'll say, and we may touch on this with further questions, so I'll be brief. But clearly, Basel III represents an opportunity. And we'll work through what that is over the course of time, but our expectation is that, that would represent additional share repurchase opportunity in 2027.

Our next question is from Erika Najarian with UBS.

I guess this is a 2-parter. Zach, maybe if you could just further unpack the incremental cost actions. Heard you loud and clear that you're -- you would always modulate the expense outlook to reflect the revenue environment. But I'm wondering if sort of what the cost savings that you identified incrementally are. And to that, and Steve, we're hearing from some of your smaller peers, that they have been able to higher way Cadence producers. And talked about a culture clash. And obviously, those are your rivals. So I wanted to hear from you -- yourself in terms of the retention.

Great questions, Erika. I'll take the first one, and then we'll pass it over to Brant to take the second one. So in terms of cost efficiencies, look, couple of things I'd say. One is, and I noted that you highlighted in your question, but we really are genuinely very committed to this management of positive operating leverage, delivery of the efficiency ratio improvements that we've talked about for the fourth quarter and into 2027 and continuing this approach of very rigorous disciplined reengineering of our baseline costs. We've taken out more than 1% of the cost base each year for 6 years in a row. This will be the seventh consecutive year of doing that, but also reinvesting significantly to the business.

And so I would characterize what we're talking, we're doing now is very much tuning. We're bringing the growth of expenses down to the low end of the range, and that's inclusive by the way of incremental expenses that will come from higher fee revenues. The baseline kind of tuning action that we did for expenses was about $50 million. And generally, what we look at when we do those kind of things is twofold.

One, can we accelerate our efficiency programs. And frankly, we are. What we're seeing is very encouraging momentum, particularly in a genetic process transformation. And so we're leaning into that, and we'll see incremental benefit here.

The second thing is looking at our overall investment program and seeing where there are valuable but slightly longer payback maybe less critical investments that we can rephase. And so that's really the approach. Again, pretty marginal in the grand scheme of our overall expense growth this year. But important for us to demonstrate that discipline and that's the actions we're taking. We don't believe it has any substantive impact on our growth this year or expectations for next year.

I'll stop there and turn it over to Brant to address the other question.

Erika, this is Brant. Thank you for the question on talent. First of all, we operate today in a number of markets that are very competitive from a talent perspective. And when you think about a partnership like with Cadence, turnover is something that we expect and at plan at some level. And in some cases, it's initiated by us. I would share that overall retention remains very, very strong. We have been successful at retaining leadership and that's translated to the teams. Our leaders on the ground and our leadership has been very focused from the beginning on communicating and delivering an outstanding colleague value proposition. And it's focused on very fast decisions on talent and or early on, support as we go through the process and providing those bankers with even more capability to serve their customers.

I would also note that we've been successful in hiring new talent to support these teams. And you may have saw this week, we made some pretty significant announcements in both Austin and Dallas that support that effort. We feel very good about where we are with talent and our opportunities going forward.

This is Steve. I'll comment over the top, Erika, and maybe pick a little bit up on Jon's question. We're in a position now where we've got clear line of sight to full expense synergies. Revenue synergies are off to a very good start. These are calibration moves at least the way we think about it and very, very confident in our ability to get to our 2027 run rate. So we're turning off a lot of capital at these return levels, and they'll support the buyback complemented with the new capital revs.

In the context of the the cost actions we've always said as we see the situation requiring some level of adjustment, we'll adjust. We're -- while our customers are generally in the same position they were 90 days ago in terms of confidence in activities this year. Loan growth has been good. There is increasing concern about the impact of inflation and the consequence of what's going on in the Middle East. So we're just trying to be a little more cautious, get ahead of it, stay ahead of it. And we think these are prudent actions in a variety of ways.

In terms of our colleagues, we have great colleagues that have joined us from Veritex and Cadence. And some of the businesses that, a couple of these groups have been doing are not really in line with our credit philosophy. And so there's an adjustment. And if -- and so we're not going to compromise on our credit views. And so that creates a little bit of a friction for some colleagues. It's going to result in us being positioned where we want to be over time with the portfolio as a whole.

These are marginal areas in terms of the adjustments overall. And we're -- we have a tremendous amount of hiring. We announced some of it this week. There's a fair amount more already in the pipeline. So more to come. We're going to be net investing. We are even more pleased and confident of the springboard that we characterize Texas as and the management team and I have been in Dallas and Houston for the last couple of weeks, we really are excited about what we're seeing there. So quite optimistic about our future. Thank you, both.

And if I could just ask my second question. And given the stock reaction to begin, I just have to compound this. So first that, could you give us more detail on what the potential RWA deflation is going to be under the revised standardized approach for Basel III end game? And just to compound this, I guess I'm scratching my head a little bit, the stock is underperforming the BKX and you essentially told us your earnings outlook is the same. You're still growthy, but you're continuing to balance growth and profitability. You gave us upside on buyback. You connected the Basel III opportunity to the buyback. So again, I'm sorry to compound this question. What do you all think the market is not fully understanding about your story?

Thanks, Erika. I'll note with humor, and I think that was the third question, but I'll take it anyway. It's a great question. In terms of Basel III, obviously, the teams continue to kind of dive in and really analyze this. But from what we can see at this point, it's fairly constructive. And obviously, we're pleased that the proposal is out, and I think the industry can kind of work through it and get to finality with the Federal Reserve here.

The RWA delta that we see at this point under a standardized approach is about 7.7% to be precise, so in the range of 7.5% to 8% reduction in RWA. That should represent approximately 80 basis points of reported CET1 benefit. The drivers of that are all the typical categories that you're likely seeing from any others of the mortgage book, the retail loans, commercial, industrial, et cetera. And so quite positive.

Clearly, more needs to take place here before this is finalized before we have certainty of the implementation date but very constructive. One thing I will highlight, and we've talked about this a lot, that we already have moved to an internal capital management framework that is inclusive of AOCI. And so whereas there will be a phase-in in AOCI on a reported basis, that really won't affect the way we kind of think about capital, our capital management plan. So this really is quite a net benefit for us.

And presuming that the economy is in a sound position and the outlook continues to be good, our expectation is it would represent a pretty meaningful opportunity to increase capital distributions, both in the terms of -- in form of share repurchases, and dividends and that, sort of, underlying the point I made to the question earlier.

Look, in terms of how the market is valuing the company, a couple of things I would say. One is, we, of course, are very, very frustrated that the fundamental exceptionally good performance of the company is not being represented in the valuation of the company. With that being said, we also can only focus on what we can control.

And for us, the delivery of what we talked about at our last conference, over the next -- between 2025, 2027, 30% earnings per share growth, an increase in 200 basis points of return on capital to a peer-leading level, a 53% efficiency, which will represent meaningful improvement and repositioning -- continuing to position the franchise for very significant long-term growth. We think as those results are delivered -- and importantly, by the fourth quarter when you really see the run rate of that, that will be so manifestly obvious that the valuation of the company can only recover from there.

Our next question is from Manan Gosalia with Morgan Stanley.

On the NII guide, how much of this is coming from lower spreads on loans and higher deposit costs given that you're competing in basically highly competitive growth markets?

Yes. Thanks for the question, Manan. I'd say the revenue outlook is really a function of both the lower loan growth coming through as we discussed. And that will be kind of north -- at the middle of the range as opposed to we were tracking to the high end, frankly, before. And also modestly lower net interest margin. Probably, what I've discussed is margin trending into the high 3.20s relative to the mid-3.30s we were discussing before, that's, call it, 7 to 8 basis points lower, of which 5 basis points is just the kind of calculus based on higher -- holding higher cash balances.

2 to 3 bps being, sort of, a lower core NIM from a slightly higher deposit cost trajectory. We still expect to see deposit costs go down, to be clear, just not as rapidly, and slightly lower asset yields as we optimize. So that's really the kind of the core part of that and the outcome is a function of both of those things.

So Brant, anyway, tap on to that in terms of what we're seeing in deposits.

Yes. Manan, you mentioned deposit competition. Obviously, it's competitive, but we view it as rational and we're used to competing. The Midwest is one of the most competitive regions from a deposit perspective and Huntington has been successful for a number of years. And in fact, this quarter, our focus has been for many years and continues to be on driving primary customer household growth. And we've been able to successfully do that at a rate of 3% to 5% a year for many years. This puts us at the very top of the industry. That top quartile customer growth translates to very strong in leading deposit growth.

And with the growth initiatives and efforts in the new partnerships, we have a number of new levers that create opportunity for us. Our new markets and branch expansion in the Carolinas is turning to be quite successful. In fact, our first 7 branches now with less than a year, have $215 million in new deposits. We've just turned on digital in the South. And have done so already in Texas.

And in fact, just in the Veritex footprint in the first 2 months, deposit production is up 30% year-over-year. We ran our first deposit growth campaign in the new Cadence footprint, and we're seeing year-over-year increase in production of 160%. And in the commercial bank, we have a number of 2 new deposit verticals that are contributing significant growth and 1 very scaled deposit vertical that continues to grow. So it is competitive. We're watching it very, very closely, but we have a number of levers that allow us to continue to expand our deposit base with the foundation of growing new customers.

Got it. That's great. And then as my follow-up, it's good to see that you're recalibrating the expenses based on the macro environment. I was wondering if you could unpack a little bit what flexibility you have on the expense side. As you think about that $1.90 to $1.93 EPS for 2027, if some of these macro headwinds continue what opportunity you have to continue to recalibrate the expenses?

Yes. Thanks, Manan. This is Zach. I'll take it. As we come into every year, we develop a pretty rigorous and clear expense contingency management plan so that if revenues outperform, where we'll manage and accelerate investments or if revenues are slightly lower, where we will modulate them. And that was -- we've actually just deployed that plan just now. And certainly, there are further increments of that plan that are possible. We have a very strong ability to pull the levers of the business from an expense perspective to manage through.

The question we will always ask ourselves, of course, is what's the best posture to ensure the long-term value creation plan, the long-term growth of the company. With that being said, our default would be to offset and to manage positive operating leverage. And the ways we would do that are very much indicative of what I said. There are generally ways that you can continue to allocate more resources to efficiency programs maybe than we had previously done and shift resources to that. And that would be the first area that we got.

The second is really just dialing back kind of overall expenses just hunting for opportunities in every area. And then the last is around investments. And to the extent that the revenue diminution that 1 would see hypothetically is economic driven, then clearly, that's very prudent to pull back the pace of investments spending in that. And so those are the kind of the typical modus operandi.

And the answer we have quite a bit of flexibility to be able to do that. At this point, to be clear, we're not seeing that environment come through. And our expectations for this year are within percentage points of where they had been before. And the outlook for next year is likewise very much consistent to what we had planned before.

Manan, we've done an extraordinary amount of investing in the last 3 years in the company and yet manage the core expenses quite dynamic. What we're talking about is just tuning the rate of investment at this stage. But we have multiple levels, planned levels of reduction should -- at some point, there's going to be a downturn, should that downturn occur. We don't think it's this year, not in the foreseeable future, but we're -- we have a recession readiness playbook, and that includes what we're going to do on the expense side, when it occurs.

Our next question is from John Pancari with Evercore.

On the net interest income from your updated guide. On the loan side, I know you noted the optimization impact. Can you give us a little bit of color on loan pricing and spreads? Has that impacted your outlook at all? And then on the cash at the Fed in that component of the updated margin expectation, what drove that change in the need of cash at the Fed? Wouldn't that have already been something that would have been baked into your expectation?

Thanks, John. I'll address that. So in terms of of loan optimization and spreads. As I noted, I think a little earlier, not seeing any significant spread movements. I think in -- for really high quality commercial borrowers in competitive markets, we're seeing some modest spread compression. I'd characterize it on the range of between 5 and 15 basis points, but really not overly significant. And we really look at forward pipeline, there isn't an expectation of further changes from here.

And so clearly, I think we and the whole industry is really driving for loan growth carefully calibrating deposit growth to match that, being very judicious about marginal spreads. The environment looks quite rational. I would also call it predictable, which is enabling us to to really kind of calibrate here effectively, we believe. And so that's what we're seeing on the ground.

In terms of the cash, look, I think -- so no, that level of cash had not been included in our prior plan, and we increased cash levels and therefore, it's a modest change. Again, a neutral revenue change. So not anything that economically really is impactful at all.

And look, I think I would encourage you to consider that as just another example of Huntington with very disciplined, ensuring that we're always in a position of strength. Liquidity, we know is is a really critical risk pillar. It's the one that could move the fastest. We genuinely have no concern whatsoever about our own liquidity or our customers' confidence in us. With that being said, the environment could change quickly, and we want to be ensure that we're always in that incredibly strong position of strength. I'd lastly just highlight that unmodified LCR of 118% is one of the highest in the industry, let alone for large banks. And so this is just more of that strength.

And John, the Middle East issues are what drove us to that decision.

Got it. All right. And then secondly, on the capital front, I appreciate the priorities that you mentioned in your commentary earlier and I appreciate the buyback color. I guess, Steve, if you could just maybe update us on your thoughts around potential incremental M&A interest. Obviously, you are very busy integrating the 2 deals. But can you update us on how you're thinking about potential incremental opportunities that may come around just given the regulatory backdrop? And if you do have interest, how can we think about the size of a potential deal on the whole bank side, if there was something you would pursue?

John, I was waiting for that question. Thank you, for it. Our stance hasn't changed. We're consistent on this issue. The primary focus for us is driving organic growth. We are really, really pleased with what we're seeing develop. But it's early in Texas and the South. And so we are spending a lot of time in those markets. The underlying franchise, the historic core franchise is performing exceptionally well.

So there was a question of whether we could do 2 of these partnerships and integrate them and drive the core? We're answering that question, I think, very, very strongly. We're going to continue to focus on the core. There's not a reason to change our focus. We've always said if we can't drive the core, we will not pursue inorganic opportunities, and that hasn't changed.

In terms of scale, I don't see us doing anything big. If you look at a company that's going to be somewhere around $300 billion and it's 5%, 10%, maybe someday, perhaps, but nothing imminent. And we can grow -- we can -- we grow the 5% level, just driving the core and that's the focus. We're going to get to those 2027 returns and deliver the goods. And that's our priority.

Our next question is from Ken Usdin with Autonomous Research.

This is [ Ben Razzak ] on in place of Ken. I wanted to ask on fee income. Can you just walk through the raised expectations for the fee income guide and what drove some of that better performance in payments, Wealth and capital markets? And then like what types of growth rates should we expect out of these businesses on a go-forward basis once the acquisitions are fully integrated? And then did you include any revenue synergies in the fee income outlook?

Thanks, Ben. I counted 3 questions in there, but I'll address them all. They're all on the topic of fees, so they're fair game. Look, just as I said in some of the prepared remarks, really, really strong fee performance in the quarter. And effectively, what you're seeing is us pull that through and just continue to forecast the really exceptional performance we're seeing right now, which we have a lot of confidence in. Every one of our businesses is exceeding the plan. So payments doing exceptionally well. Wealth continues to grow just really, really sustainably with customer acquisition, with asset gathering, and, of course, capital markets. We just I really -- I personally want to congratulate our capital markets team on an absolute phenomenal quarter, both organically, 60% year-on-year growth, but also the welcoming of TM Capital in January, and we're thrilled to have our new colleagues contributing meaningfully as well.

And I would say that the broad ponderance of other fees continues to perform pretty well. Also loan and deposit fees, which are clearly calibrated to the activity we've got going on in our commercial lending primarily are really growing well also. So what you saw us do in terms of an increase in the guidance is really a function of those things continuing. I will say we are very encouraged by the early progress on revenue synergies. And we've discussed in a mid-quarter conference this year that we expect somewhere between $50 million and $75 million of revenue synergies in our plan for this year. Well, that was largely already in our guidance.

So I wouldn't characterize the increases really being driven by that. But certainly, we are expecting to see that. And already starting to see progress in cap markets and payments and I think Wealth coming alongside that over time also. So really good.

As you think about the long term, and I direct you back to a couple of things. One, in our Investor Day in 2025, we talked about high single-digit fee growth, growing faster than the balance sheet generally, growing as a percentage of of the revenue base of the company and that the 3 major power alleys for fee growth growing in the double digits. That continues to be our general long-term assumption. However, I will say that over the next couple of years, I'd expect even faster growth than that. And that's really driven by the revenue synergies, which are weighted heavily toward fee revenues. I might...

Ben, this is Brant. Just to add to Zach's comments. First of all, from a revenue synergy perspective, the 3 areas, cap markets payments and Wealth is the place we're seeing a lot of significant early wins. In some cases, it's because there's new product capability that we offer in either payments or cap markets that were not offered for Cadence and Veritex customers in the past, and that creates an opportunity.

And in some cases, the scale of those is much greater. For example, in the Wealth business, we now have across the South and across Texas, access to a much larger group of advisers that can serve even more of the customers. In the Wealth business, specifically, we've just in the last month announced a major platform upgrade. In fact, we are upgrading both of our Wealth platforms that really make us best in class. We have seen over the course of the last year, one, AUM growth that's north of 13%. Now the market has helped, but net flows have actually doubled year-over-year. So we're seeing very strong growth in the Wealth business. Early results from a payments perspective, especially as it relates to Cadence and Veritex have been very, very strong, and Zack mentioned earlier, the record quarter from a capital markets perspective. So we feel great about the long-term trajectory of those 3 businesses. There are places that we're investing, and they're absolutely at the center of our revenue synergy opportunity and [indiscernible] springboard that we have with the Veritex and Cadence partnership.

See, Ben, you've taken advantage of Erika's precedents. So -- thank you for the question.

Our next question is from David Chiaverini with Jefferies.

This is Brian [indiscernible] on for Dave. Just a follow-up on the revenue synergy discussion from the prior question. I think you talked about reinvesting a portion of those synergies back into the business. Is that still the plan? And I guess could you talk about which areas you're looking to grow with those synergy dollars?

Brian, I'll take that question. Yes, we do have reinvestment. That's one of the advantages of these partnerships is our ability to be able to do that. I would mention a couple of areas. One is in the form of bankers and teams. And we made an announcement this week where we've expanded our middle market presence in Austin and also adding to regional banking and middle market banking in Texas. We will be adding more capabilities across the footprint with more teams. So that's 1 example of how we're reinvesting back.

Another example is digital. We've been able to launch digital now in Texas beginning of this year. Cadence, at the Southern footprint, we've been able to launch just this month. And this will give us the ability to substantially upgrade and reimagine, reengineer the digital capabilities that we offer customers today. We have leading capabilities. We intend to make them even better. So those would be 2 very large examples of things that we will do to invest back in the business. We're going to continue to invest in our payments business and ensure that we have world-class products and capabilities to serve the growing commercial and regional bank that we have within the company.

And then lastly, I just mentioned earlier, the major platform upgrades that we're doing in the Wealth business to continue to support its growth. Those would be some of the examples of things that we're doing to invest back in the business.

Our next question is from Chris McGratty with KBW.

This is Sean calling on for Chris. Really appreciate the color you guys have given so far this morning. just a quick 1 on credit and underwriting and reserve expectations from here? Saw you reiterated the [ 25, 35 ] NCO guy? Kept your reserve comfortably above peers. But is there any industries you guys are watching? Or anything in terms of how we should think about the rest of the year?

Thanks, Sean, for the question. This is Brant, and I'll take that. You noted the strong credit quarter that we've had and the peer -- the top quartile peer reserve that we have as well, and I think that positions us for the future. As we look out over the horizon, 1 of the areas that we've talked about being a little bit more measured in is commercial real estate and particularly on the construction side. And that's an area that over time, we will reduce our exposure to. But it will be in an organic fashion over the next 2-plus years. So it's a place for watching. We're always vigilant on the entire portfolio. But we feel good about our positioning, and this quarter is just another example of that. Good question, Chris.

Thank you very much. And let me conclude with 3 key thoughts. First, we continue to have tremendous organic growth momentum across our franchise. This is evident in our strong core loan and deposit growth and then the outstanding contributions from our strategic value-added fee services, payments, Wealth Management and capital markets, which are all contributing meaningfully to the results.

And second, our integration activities are fully on track. Veritex is fully integrated and the Cadence systems migration in June marks the final major milestone in that process. So we're focused on delivering the cost synergies from these partnerships, which we expect to accelerate in the third quarter to be fully run rated in our earnings power in the fourth quarter. Executing against these commitments is a key priority for us ahead of other strategic actions.

And third, we are firmly on track to deliver our key financial targets. We continue to see a clear path on 2027 EPS target of $1.90 to $1.93, driven by organic revenue growth, disciplined expense management and realization of the cost and revenue synergies from these partnerships. Fourth quarter of this year will provide a clear view of the earnings power of our go-forward franchise. We've got strong momentum, a clear plan and a team that knows how to execute, and we are performing at a very high level.

So finally, let me say thank you to the more than 25,000 colleagues for everything you do to serve our customers and strengthen the franchise every day. Thank you all for your interest in Huntington. Have a great day.

This concludes today's conference. You may disconnect your lines at this time. Thank you again for your participation.

Thank you for being here. I'm pleased to have Huntington here. We have -- Brant is going to start with some opening comments. Zach will come in and follow up with a few others, and then we'll do some Q&A. Brant, thank you for being here.

Okay. Well, thank you very much, and good morning to everyone. And Jon, thank you and RBC for hosting us today. We very much appreciate it.

As Jon mentioned, I'm Brant Standridge, the President of the Consumer and Regional Bank here at Huntington, and I'm joined by my colleague, Zach Wasserman, who is our CFO. And our goal today is to share a brief update on our model and the progress we're making on the partnership integrations and then hand it over to Zach. After prepared remarks, Jon is going to lead us in Q&A.

So before we begin, if I could direct you to Slide 2 regarding forward-looking statements. So let's begin on Slide 3. We entered 2026 with strong momentum. Our model is working, delivering robust revenue, earnings and tangible book value growth and producing top-tier returns. And with the Veritex and Cadence partnerships now successfully closed, we've added the capacity to further springboard that momentum as we move forward.

There are 4 key messages Zach and I want to leave you with today. First, we've built a highly differentiated super regional bank model with multiple engines for growth. And we believe that to be differentiated. Second, our focused execution is translating into powerful organic growth across the franchise. We're growing relationships, expanding wallet share and consistently delivering results across every major line of business.

Third, we have a disciplined approach to integrating new partners. Our playbook drives both cost and revenue synergies and we execute in a way that preserves what matters most, supporting our customers and bringing new colleagues into our culture with care. Fourth, our model is delivering outstanding earnings growth, which will support substantial capital return and tangible book value expansion over the near, medium and long term.

When you bring those elements together, you create a flywheel of powerful value creation. Disciplined execution drives results, results increase our capacity to invest in talent, capabilities and markets and that reinvestment strengthens the franchise and accelerates growth again. That's the engine behind our value creation story. And frankly, we're still in the early innings.

Slide 5 is a double-click into our commercial bank. Over the past few years, we've built one of the most dynamic and fastest-growing commercial banks in the country. At year-end, inclusive of Veritex and before the close of our partnership with Cadence, we serve customers nationally with meaningful scale at roughly $70 billion in loans and $51 billion in deposits.

Our model is centered on advice, guidance and deep expertise. We have 17 unique verticals holistically serving distinct industries with specialized banking services. And our commercial banking is supported by an expansive set of value-added capabilities, including capital markets and payments. This combination of national scale, specialized knowledge and value-added capabilities allows us to serve a customer set that ranges from private middle market companies to large corporates. Our bankers operate in market, know their clients and provide award-winning service that builds durable high-quality relationships.

Slide 6 is a similar look into our consumer and regional bank. The key distinguishing feature of this segment is our differentiated local delivery model. We bring the full breadth, scope and national scale of our commercial capabilities, including our 17 unique verticals to our local markets through in-market teams serving consumer small business and middle-market customers.

Our model operates with local leadership and our leaders have accountability to integrate the entire Huntington franchise. We have 21 regional presidents across our footprint, each with decision-making authority and full P&L responsibility. This structure brings the entire Huntington platform to customers through local bankers who know their markets and are empowered to act. Our bankers are in the market, lead with advice and are expected to align the whole bank to support the local customers' goals. When you combine this model with strong digital capabilities and disciplined risk management, it drives consistent high growth.

Now turning to Slide 7. Driven by the approach that I've just described on the last 2 slides, our core business continues to perform exceptionally well. Excluding the impact of closing the Cadence partnership last month, our core delivered $1.2 billion of loan growth and $1.3 billion of deposit growth. Both of these metrics put us on a track to achieve our stand-alone 2026 guidance of 11% to 12% loan growth and 8% to 9% deposit growth.

Our momentum is broad-based across customer segments, products and geographies. Regional banking, middle market banking and our specialty lending verticals and asset finance have all been strong contributors so far this quarter, with Texas leading our expansion geographies. On the funding side, deposit gathering remains strong, driven by continued gains in primary relationships in both the business and consumer segments. Our pipelines are healthy across consumer and commercial lending, providing good visibility into the next several months of growth and reinforcing our confidence in our 2026 outlook. In summary, our core momentum continues to be driven by consistent customer acquisition, deeper relationships and disciplined execution across products, regions and customer segments, exactly what our model is designed to deliver.

Turning to Slide 8. Our ability to integrate partner organizations is a core differentiator for Huntington and the past year shows how effectively our playbook works. Let's start with Veritex. The integration is complete. It was efficient and well executed, moving from announcement to systems migration in 187 days. We're on track to achieve the identified cost synergies with the full run rate in place by the second quarter. Early customer and colleague engagement is already driving revenue synergies.

Turning to Cadence, we expect a similar outcome. Talent decisions were completed early, creating clarity for our new colleagues and enabling us to retain the highest performing bankers. In fact, retention has been tracking at the top end of our expectations. Additionally, systems integration planning is progressing as expected, giving us clear line of sight into cost synergy capture. These 2 partnerships expand our reach, add scale to our model and springboard our growth trajectory across highly attractive markets.

Slide 9 outlines how our partnerships translate into real earnings power and investment capacity. As we noted last month, these 2 partnerships are expected to deliver $435 million of cost synergies at full annual run rate. Veritex will reach its $70 million annual run rate by next quarter and Cadence is on track to deliver its $365 million run rate in the fourth quarter.

These synergies are projected to reduce 2026 operating expenses by approximately $340 million with an additional $100 million of benefit in 2027. This expansion in earnings power directly increases our capacity to reinvest in the growth initiatives that drive our outperformance. In summary, disciplined execution drives durable savings and supports earnings momentum, which strengthens our ability to invest and compound performance across the franchise.

Slide 10 details how these partnerships translate into sustainable revenue growth. We see 4 primary categories of revenue synergies, and we are already seeing early traction. First, we're bringing the full Huntington platform into our partnership markets. We're seeing early momentum around this.

For example, some Cadence customers are already taking advantage of our greater lending capacity, reflecting the strength of our balance sheet and the breadth of our capabilities. We're also generating incremental fee revenue in value-added services from the Cadence customer base in areas like merchant acquiring, capital markets, our dealer floor plan business, equipment finance and wealth management.

In Texas, this momentum is accelerating as our presence has significantly expanded, enabling us to win more. A clear example is our auto business. A number of Cadence customers had long-standing banking relationships, but frankly, didn't have access to a full suite of auto-oriented products, including our floor plan. As we introduce that capability in those capabilities, where Huntington, as you all know, has deep expertise. We're seeing strong traction with the auto dealers we already bank.

More resources in the market allows our team to compete more effectively, widen the funnel and drive deeper deposit and product penetration. We're also beginning to deepen Cadence's customer relationships and early evidence is encouraging, including deposit growth across Cadence markets, all of this expansion is supported by our marketing and digital acquisition capabilities, which we believe to be industry-leading.

In Texas, we have density and priority in the largest markets. And we're using our marketing and digital acquisition engine to widen the top of the funnel and improve conversion. We also intend to continue investing to drive growth into the future. We're doing this in the form of technology and product development. We're adding bankers with specialized capabilities. And over time, we will be increasing our branch density in select markets and cities in the cadence footprint just as we're doing in the Carolinas.

These type of investments create durable enterprise-wide revenue expansion. As you can see, we've identified several categories where Huntington can enhance performance across both franchises. We expect cumulative revenue synergies to exceed $500 million over the next 3 years, reaching $300 million in 2028 and continuing to grow from there.

Putting it all together, execution across our core franchise remains focused. Momentum is accelerating in our new partnership markets, and we have clear line of sight to both the expense savings and revenue synergies. These are the key drivers to accelerate our flywheel of value creation. With that, I'll turn it over to Zach to cover the financial outlook.

Thank you, Brant, and good morning, everybody. It's great to be with you. Turning to Slide 11. As Brant just discussed, the core franchise continues to perform very well. On a stand-alone basis, excluding cadence, first quarter net interest income is tracking within our stand-alone guidance range of 10% to 13%.

In terms of fees, notwithstanding that the first quarter tends to be the seasonally lowest nominal dollar amount of the year core performance, excluding Cadence, is tracking to the 13% to 16% annual growth guidance, reflecting broad-based momentum across payments, wealth and capital markets. Lastly, core expenses, excluding Cadence, which are seasonally higher in the first quarter, remained in line with our expectation of 10% to 11% growth for the full year.

Importantly, we expect revenue growth to significantly outpace expense growth throughout the year. As a result, we remain confident in our ability to deliver 150 to 200 basis points of core operating leverage and 500 to 600 basis points of total operating leverage in 2026, reflecting both the operating expense discipline embedded in the base and the incremental contribution from cost synergies from Cadence.

As we expect -- and we expect to exit the fourth quarter of 2026 with an efficiency ratio below 55%. When we include Cadence, the earnings profile of the combined company becomes even more powerful. For the full year, Cadence is expected to contribute approximately $1.8 billion of net interest income, $300 million of fee revenue and approximately $1.1 billion of operating expenses. The performance we're delivering continues to reflect our fundamental operating principles. Execution remains rigorous and focused core revenue growth is robust, and we maintain strict adherence to our aggregate moderate to low risk appetite.

We have a clear line of sight to sustain growth expanding earnings power and meaningful operating leverage in 2026 and 2027, supporting our path to our 2027 EPS target of $1.90 to $1.93. As we noted last month, one element contributing to our confidence in the 2027 earnings outlook is our share repurchase program. Based on the strength of our earnings trajectory and capital generation, I'm excited to announce that we've decided to both accelerate and upsize our share repurchase activity for 2026.

Let me expand on that on the following slide. Slide 12 captures how all the dynamics we've just covered, our strong core performance, our ability to capture cost synergies and our investment in revenue synergies translates into meaningful shareholder value creation. First, the earnings trajectory is extraordinarily strong. Our 2027 earnings per share target represents more than 30% growth from the earnings we delivered in 2025, driven by sustained organic growth across loans, deposits and fee businesses combined with expanding operating leverage and disciplined credit management. This reflects the combined momentum of the core franchise and the incremental contribution from Cadence.

Second, that earnings growth drives higher returns and improved efficiency. We expect to expand our ROTCE to 18% to 19%, putting us in the top tier of the peer group. As a result, we expect internal capital generation to support high single-digit to low double-digit tangible book value per share growth through 2027 and beyond while maintaining an attractive dividend payout.

Third, we remain focused on returning capital to shareholders as capital generation continues to accelerate, we expect to increase capital return through share repurchases. To date, we've repurchased $150 million of shares just in the last couple of weeks and we now expect to return approximately $550 million of repurchases in 2026, well above our initial expectation for this year that we set earlier of $200 million. The increase in share repurchase capacity is driven by the fact that our book value dilution at close of the Cadence transaction was substantially better than our initial expectation.

For 2027, we expect to receive a new share repurchase authorization to expand our existing $1 billion program and increased repurchases to between $1.1 billion and $1.2 billion. This will bring total planned repurchases for the 2 years to about $1.7 billion. This would represent retiring approximately 2% of shares in 2026 and roughly 4.5% to 5% cumulatively by the end of 2027. These repurchases will contribute to our earnings per share growth and support our confidence in the $1.90 to $1.93 target for 2027 without impeding our ability to allocate capital toward our top priority funding high-return organic growth.

Taken together, these dynamics reflect the strength of our earnings power, improving return profile and which fuels meaningful internal capital generation. In turn, that accretes tangible book value growth, supports our dividend yield and enables increasing total shareholder return over time.

Turning to Slide 13. I'll close by bringing this all together. Our model is working across the franchise and the momentum we're delivering reinforces our confidence in the durability of our revenue and earnings growth. As performance compounds, our capacity to reinvest expands and that reinvestment strengthens the competitive differentiation and market opportunities, which power long-term growth.

We're executing against the plan, integrating partners with discipline and reengineering the cost base to further expand investment capacity and support operating leverage. The outcomes we've shared today are direct outputs of this model. We're delivering peer earnings growth, peer-leading earnings growth, returning capital to shareholders and generating strong value creation. With that, I'll turn it over to Jon for Q&A.

Right. Thank you, Zach. Brant, let's start with you in your comments. You talked about strong core franchise performance and growth. The integration work is obviously ramping up. What gives you confidence your team can continue that pace of organic growth without being disrupted?

Well, first of all, we view the partnerships as a springboard for growth, not a substitute for it. And so there is a significant amount of focus inside of the company on ensuring that we're organically growing. We're proving that in the results. If you look at the results that the team provided in this presentation, you'll see that we had very, very strong growth quarter in fourth quarter, and we're off to a very strong start to this year as well. So the results would indicate that.

As it relates to the integrations, we have dedicated teams that are assigned to doing that. That way, our frontline colleagues that are engaged, frankly, with either Cadence or Veritex or our frontline colleagues in the core of the organization aren't really focused on the integrations. They're focused on delivering for their customers every day. The growth levers that we have in the company are widespread.

So we have a number of different places that we can continue to grow and invest. And then the core continues to perform well. Fundamentally, what's driving our core and many of these new investments is the model that we described, which is working. It was in Texas at the end of last week and had an opportunity to meet a brand-new customer who had just joined us. And it was a relationship that started with a trust relationship. It's now a wealth relationship, now a full middle market banking relationship.

And in talking to that customer, why did you choose Huntington is really the model. One, you could bring all the product specialties and the capabilities to the table, but you did it in an integrated way with people locally that I know. And so the model fundamentally across the board is working.

Okay. On that topic of being in Texas, can you talk a little bit about attrition? You mentioned it in your comments, but it obviously is something that people are talking about.

Well, listen, any time there's disruption in the market, you want to take advantage of that, and we've absolutely done that ourselves. That's something that we plan for, and it starts with really our approach, which is about partnership. Both Malcolm and Dan will be engaged with Huntington for a very long time into the future. And their leadership and connection is really important to us and also to the teams that are engaged.

We also started early in the talent planning process. And in fact, in both organizations, we had mapped the organization and the key leaders before announcement. In the case of Cadence, which was larger, the top 100 or approximate leaders were all determined before closing. In fact -- I mean, for announcement, in fact, we spoke to a number of them before announcement. And then we announced October 27, but by December 15, all 6,500 colleagues knew their status with the company.

We think that certainty, frankly, takes out a lot of the challenge that you might have during a period like that. It's also good for the customers because you can say to the customers person that you've known and worked with for a long time is going to be there. To just give you some statistics, we had 1,000 revenue producers that we identified that we offered retention to. I will tell you that retention included, obviously, protected covenants for us.

We had 5 people that didn't accept the retention package. And out of the 6,500 cadence colleagues we have had 66 people turnover since announcement. And of the 66 folks, half of that, you would say, is regretted attrition because we did have some teams that we didn't have capacity for that thankfully have been able to find homes in other places. But overall, it's going very, very well, and it is our intention that we care for the people first and that leads to a more stable experience as time goes on.

Okay. And then just one more on the market competition. We've had another bunch of Texas and Southeastern banks up here talking about increased competition. What are you seeing in those markets?

Well, I mean, our markets have been competitive for some period of time, and these markets are competitive as well. We feel very strong about our 2026 guidance from a deposit and loan growth perspective, as I said earlier, and our start to the year would indicate that, that is still the case. I would share with you from a deposit perspective, it is intense, but it's -- but I don't view it as irrational. And if you look at the core of our deposit growth specifically, it's really 2 things I would point to.

Number one, we've been focused for many years on growing the number of primary bank relationships we have for both consumer and business, and we see leading growth rates in both of those. That is core to our deposit growth. And then we've also, over time, developed a lot of capability in how we managed the deposit portfolio. We have a very granular analytical view of pricing across our 20 now 2-state footprint.

We also have a granular view of all the pricing and the back book of our deposit portfolio and understand the sensitivities of those customers. And so that analytical rigorous focus on managing the portfolio and combined with a focus on generating new households has led to very strong deposit growth, and we believe we can be very, very successful in these new markets as well.

So nothing you can't handle.

That's right.

Okay. Zach. Thanks for the buyback update. It's pretty comprehensive, $150 million quarter-to-date. Another $400 million for the rest of the year, $1.1 billion, $1.2 billion next year. What's driving that level of activity? I think you talked about $0.03 to $0.04 contribution in the bridge to 2027. Talk about why that level of activity and what's driving it.

Yes. We're really, really pleased, as I said, to be able to have started that program now officially. We've talked for some time that given the strength of the earnings profile, given the capital strength of the firm that we had anticipated to begin this program as soon as we completed the close of Cadence, and that's exactly what we've done. And in fact, as I noted in my prepared remarks, the cadence partnership came through finally on legal day 1 with a lower level of book value dilution, it was about $350 million less.

We put every dollar of that into the share repurchase program, and we're pleased to have done that. So cumulatively, it's going to be, as I said, about 5 percentage points of the stock already. It's just under 0.5 point of the stock has been retired just in the last -- in the last month. So really, really pleased with that.

And all of that, though, with our top priority is to grow high return organic loan growth. And as we noted, not only growing already this year, but a lot of confidence we're going to keep that going through 2026 and with strong line of sight that, that will continue beyond that, particularly driven by revenue synergies.

Okay. Good. And on the topic of synergies, talk to us a little bit briefly, I guess, about how you expect the synergies to flow through in '26 and '27 kind of the timing and magnitude.

Sure. I'll take that one. In terms of -- so as Brant noted, I think the integration process is well underway. The decisions and planning necessary to achieve the cost synergies have all been completed, and now we're just in the process of executing those activities and seeing the realized through Veritex's cost synergies fully in the run rate by Q2, Cadence fully in the run rate by Q4. That should be a very meaningful lift for efficiency.

We expect to exit this year in Q4, as I mentioned, below 55% efficiency and further drive that down into 2027 with another $100 million on a full year basis being realized in terms of cost synergies in FY '27. From a revenue synergy perspective, expecting to between $50 million and $75 million this year, which will help us self-fund the investments to drive further expansion of that revenue synergy program growing to $150 million in revenues in '27, $300 million of additional revenue synergies in 2028, all with increasing profitability across that time.

Okay. Good. And then you touched on the full year guidance and your comfort in the range on the full year. Anything you want to touch on what you're seeing so far quarter-to-date in the first quarter?

Q1 looks really good. We came into the year with a lot of momentum. Loan pipelines look very strong. There was obvious opportunities to continue to drive deposit volumes and costs expected to see net interest margins expand and net interest revenues continue to grow.

And so everything we're seeing in the first quarter continues to track to our full year guidance. Credit looks terrific. Obviously, we're watching very carefully the current market volatility. But as of now, we're not seeing any impact on our business. And our customers look quite resilient.

Brant, are you seeing anything from a customer point of view?

I would echo what Zach just described, we're not seeing that at this point. I mean our commercial customers, for example, have had a number of kind of external shocks, so to speak, starting with tariffs a year ago. And so they've learned to adjust and they seem to be doing so in the environment that we're in now, and we're obviously watching it very closely. On the consumer front, there were some impacts to consumers and volumes in some of our consumer businesses because of weather in January, but we're not seeing anything that would alarm us at this point. But with the world today. We're watching it closely.

Okay. Just in the final minute, maybe for either you, maybe start with you Zach, if you'd like. But it's been bumpy for the last month or so. And when you step back and you think about some of the market reaction, how do you articulate the Huntington investment thesis? I think you would say it's an overreaction, and you may be -- you're trying to put a bottom in here, but how would you articulate the thesis?

Fundamentally, the model that we are running, we believe, generate significant value. We're a highly differentiated super regional bank. We have multiple growth levers for long-term sustainable earnings growth and revenue growth at a top-tier return. And all of that accretes to growing tangible book value, growing capital return for shareholders.

Just look at what the information we shared today represents 30% growth in earnings, a top-tier return, which continues to expand and 5% of the shares bought back of the company on top of a really attractive dividend yield. So what we -- our role is to drive that performance, and we believe very strongly we're going to achieve it.

I can't add a lot to that. I would simply say the investments that we've made, the enhancements that we've made to our model, the performance that we are delivering to the market we believe, is good for investors today and good for investors for the long term, and we believe over time, our stock will reflect that.

Yes. Okay. We're out of time, but thank you guys for being here.

Pleasure to be here too.

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 with the fireside chat. So Steve?

Good morning. Thanks, Erika, 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 2. And moving to Slide 3. We entered '26 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 4 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 have 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 4. As we enter '26, 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. And our auto and RV marine businesses cover the nation. We also have a leading national commercial bank with 15 specialty verticals, a top 5 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. So 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 5. The financial results that this model delivers are terrific. In '25, 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 6. 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 3 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 7. 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 eighth 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 '25, Huntington stand-alone generated year-over-year growth of 23% in Texas, while Cadence generated growth 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 8. Our model is working across the franchise. The momentum from 2025 and '26 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. And that's what reinforces this foundation of our long-term growth model.

Now in that -- with that context, I'll turn it over to Zach to walk through how this momentum accelerates our flywheel of value creation in '26 and beyond. Zach?

Thank you, Steve, and thanks to Erika and UBS for having us here today. I'd like to turn to Slide 9 now. As we bring these partners that Steve just mentioned into the franchise, the combined platform meaningfully strengthens that growth engine, both on day 1 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 1 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 $1.050 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 will 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 on 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 P&L 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. And 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-on-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 -- 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 heading next. Using 2019 as a baseline, we've more than tripled our high-return investments focused across 4 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 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.

And 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 4x 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 2 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 $0.5 billion over the next 3 years with a $300 million run rate in 2028.

Turning to Slide 14. This page summarizes the revenue bridge from 2025 to 2026. Net interest income is the largest contributor, reflecting between 10% and 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 a 13% to 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 between $50 million and $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 to $40 million of 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% to 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 to $40 million of additional investments I just mentioned, bringing that total to $60 million to $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% to 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 Erika 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 stand-alone performance?

Well, thank you, Erika. And again, thanks for hosting us. '25 was a significant year for us in terms of performance, but it 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 7 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 because it all nets to 0 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 by the way, delivered on organic growth. At the same time, you did recently announce these 2 bank acquisitions and the capital markets acquisition. We've had a strong start to deal making in 2026. So let's just get this question out of the way now. How are you thinking about...

Not this one...

This one, yes. How are you thinking about M&A for Huntington in the near term?

Our strategy hasn't changed. We're going to drive core growth as we have in the past, and that will continue. That's priority #1. And as I've said previously, if we don't deliver the core growth, we won't partner, we won't acquire. So priority 1 remains in place, drive core growth. We're not going to 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 of local delivery, it's relationship, it's people.

If 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 to 600 -- 5% to 6%, 500 to 600 basis points of improvement in operating leverage in a year, remarkable, and 18% to 19% on equity, we're generating a lot of capital. And 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 to $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 $2 is $0.07 to $0.10. So if PAA is minus $0.11, what's happening underneath the surface is better. Am I -- is that the right conclusion?

That is the right conclusion. I think as we noted, we think actually the outcome in terms of the purchase accounting at fair 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, what would have otherwise been the $2 per share of earnings in 2027. But as you noted, the core business is outperforming. And so we see $1.90 to $1.93. That's 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% to 9%, and we continue to see that accelerating. I think you saw from the presentation, the expectation of 10% plus 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, $0.5 billion of additional revenue growth over the next 3 years, of which a meaningful portion will begin to ramp up this year and into next year, throwing off good profitability into '27, which also enables us to reinvest 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, inclusive of share repurchase capacity, which benefits from the higher return on capital and capital generations of the business, we'll see, we think, a really strong and even stronger EPS outcome for '27.

And I just wanted to reemphasize what you said during your prepared remarks, which, first of all, purchase accounting is a zero-sum game. It's either earnings or capital, right? And given the sensitivity of the market sometimes on tangible book value dilution when you announced the deal, I just wanted to reemphasize that you're now seeing -- well, now it's closed. So the actual dilution is 4.8% versus the original 7%. So you have more capital.

That's correct.

Okay. Maybe if you could decompose a little bit how you're thinking about the growth synergies from these 2 deals.

Yes. 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 the 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. So 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 1.5 days. And Zach, you gave us one component of the NII growth of $2.4 billion to $2.5 billion 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 maybe frame your growth relative to that context as well.

Sure. 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 '24. This year, for example, we'll be opening a new branch location in North and South Carolina virtually every 2 weeks, and that will be the same for next year as well. Our national commercial specialties community 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 2 businesses together will grow loans between 10% and 13%. And of course, adding Cadence on to 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 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.

So just because we touched on NII really quickly, what changed in the PAA schedule since the announcement?

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. It's loan-by-loan rate analysis. It's also a 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, a more smooth PAA schedule over time with no cliffs or drops across time.

We think this is really positive because it gives us a compound earnings trajectory to work from. It doesn't have a cliff, Erika. So 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 4.8% capital dilutive, we'll earn it back in the same time frame or even shorter as we get more of these revenue synergies into the equation.

And I agree with you, Steve. I think probably the more important thing that Zach just said is that deposits outpacing loan growth because, of course, there is a concern that you were buying franchises that had less ideal deposit franchises relative to Huntington stand-alone. So I think that's quite a statement to make as we think about 2026.

Well, that's where our treasury management capabilities. We do a lot with mobile on a comparison basis, both very well-run banks, Cadence and Veritex, but they didn't have digital capabilities. More than half of our consumer customer acquisitions coming through digital. So 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 speaking of excitement, you did call out the revenue synergies of $50 million to $75 million that you expect to reinvest. So what prompted that decision to reinvest those -- most of that for this year?

Erika, it really came down to our confidence and line of sight toward the initiatives that would drive those revenue opportunities 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. It's emblematic of the way 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 a much higher level than peer level in terms of revenue growth.

So I thought one of the interesting takeaways from your many walks in the slide presentation is that share repurchase activity is offsetting investments. Tying that back, you have more capital, right, less VA, but more capital. Can you maybe just unpack the share repurchase sort of plans for the next 2 years?

Sure. And we're really pleased with the way we've operated the business from a capital return and 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 our -- the middle of our 9% to 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 out into 2027 and effectively be at that 9.5% adjusted CET1 level and with a higher return on capital between 18% and 19% from today's roughly 16.5% that will create even more capacity for share repurchase in '27. Cumulatively over the 2 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 to $0.04 upside that I shared in that earnings per share reconciliation in the presentation.

And just to clarify one point that was a big discussion point in the market, which is the Cadence expense walk. So it's clear from your explanation what's going on here, but I just wanted to make sure the audience also understood. The stand-alone 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. Cadence was a growing enterprise, and it also done a couple of acquisitions in its own right over the course of 2024 and 2025. And so the stand-alone 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, inclusive of all the trends in the Cadence 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 million or more million into the revenue synergies and incur about $145 million of core deposit intangible amortization costs, noncash, 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 give the 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.

Steve, there has been a very active bull-bear debate around Huntington shares right now despite the beat and raise cadence of 2025 absolutely not intended. The 53% efficiency ratio that you laid out for 2027, 500 to 600 basis points in operating leverage, best-in-class ROTCE, obviously, 18% to 19%. You don't miss words. What are your words? In your words, what is the investment thesis for the stock?

Well, we have a compelling set of returns that we're on the cusp of delivering. So -- and we're very confident we're going to get the execution 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. But there's also angst around are we going to become some kind of acquisition machine. And we've tried to address that. There may be acquisitions in the future, but they have to fit certain criteria or that we're not interested.

And if you look at what Cadence has done for us, if a year ago, actually 9 months ago, we said, well, we're only going to acquire bank a year, we wouldn't have -- 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 the next -- this year, 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. And otherwise, we have a core engine that will 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're -- 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.

Thanks, Erika.

Great to be with you.

Thank you.

Greetings, and welcome to the Huntington Bancshares Fourth Quarter 2025 Earnings Conference Call and Webcast. [Operator Instructions] As a reminder, this conference is being recorded.

It's now my pleasure to turn the call over to Eric Wasserstrom, Director of Investor Relations. Eric, please go ahead.

Thank you. Good morning, and welcome, everyone, to our fourth quarter call. Our presenters today are Steve Steinour, Chairman, President and CEO; Brant Standridge, our President of Consumer and Regional Banking; and Zach Wasserman, Chief Financial Officer; Brendan Lawlor, Chief Credit Officer, will join us for the Q&A.

Earnings documents, which include our forward-looking statements disclaimer and non-GAAP information, and copies of the slides we'll be reviewing today are available on the Investor Relations section of our website, which is www.ir.huntington.com.

As a reminder, this call is being recorded, and a replay will be available starting about 1 hour after the close of the call.

With that, let me now turn it over to Steve.

Thanks, Eric. Good morning, and thank you for joining us. Beginning on Slide 3, as we enter 2026 the year of Huntington's 160th anniversary, it's a moment of pride but even more a moment of anticipation. Our heritage and deeply rooted values continue to guide us yet it's the opportunity ahead that energizes us. We're focused on becoming the country's leading people-first, customer-centered bank, and that ambition is taking shape across the franchise. Nearly every part of Huntington is performing at a high level, creating powerful momentum as we look to the future.

We've developed a differentiated operating model. Beginning next month, our Consumer & Regional Banking franchise will have a presence in 21 states, many of the fastest-growing in the country. our local delivery of national capabilities is a franchise defining competitive advantage. We also have a leading national commercial bank, which includes the fifth largest equipment finance lender in the nation, 15 unique specialty finance verticals as well as an expanding set of capital markets capabilities. These functions make us a premier provider to companies ranging from small and middle-market businesses to large corporate entities. Our approach is entirely customer-centric. Our business lines lead with advice and guidance, deliver award-winning customer service and are supported by top-tier digital capabilities. And we adhere to our aggregate moderate to low-risk profile.

In summary, our vision and values guide how our colleagues support our customers. These attributes, combined with our scalable business model and recent positioning in the most attractive states will enable growth far into the future.

Slide 4 illustrates the core components of our model and how they drove excellent full year results for 2025. We have activated a flywheel of value creation in which our operating model drives sustainable high growth, enabling us to accelerate reinvestment and strengthening our competitive advantage. In '25 this model delivered truly outstanding results, 11% revenue growth, 16% adjusted EPS growth, 290 basis points of positive operating leverage and strong credit performance. All of this drove powerful capital generation.

Slide 5 summarizes our key messages. First, our focused execution is generating significant organic growth. Second, we have proven expertise in integrating new partner banks. And third, we're delivering exceptional profitability and value creation to our shareholders. We are driving outstanding revenue, earnings, tangible book value growth and returns while investing for growth in the years ahead.

As shown on Slide 6, our organic growth engine remains exceptionally strong. We delivered another year of significant above peer cumulative organic loan and deposit growth. And as Zach will talk to in a moment, our value-added fee services are showing a similar trend. These outcomes reflect how our teams are executing with discipline across all of our customer segments. This quarter, we delivered strong growth in primary bank relationships, up 4% year-over-year in Consumer Banking and 7% in Business Banking. We are focused on deepening customer relationships and expanding wallet share while maintaining diversified portfolios.

Slide 7 highlights some of the strategic investments we made in 2025 that accelerate our flywheel and enhance our long-term growth trajectory. We continued our branch build-out in North and South Carolina and expanded our middle market banking in Texas. We added new commercial verticals, and the Veritex and Cadence partnerships augment our scale and density in states that are projected to grow roughly 30% faster than the national average. We also added to our platform and capabilities.

With the addition of TM Capital and Janney Capital Markets, we expanded the breadth of our financial advisory as well as increased our categories of fixed income trading. Additionally, we added functionalities and services within our Commercial Payments platform. We executed several integrated partnerships to deliver new fintech solutions for our consumer and small business customers, and we continued our investment in industry-leading digital capabilities. These initiatives expand the breadth of customers we serve, deepen our relationships and help accelerate our fee revenue growth.

In summary, 2025 was an extraordinary year for Huntington. Our outstanding financial results reflect the substantial investments we've made in our capabilities over the past several years and we intend to continue investing across all elements of our franchise going forward. These investments and our recent partnerships position us to sustain strong growth well into the future.

With that, let me turn it over to Brant to share some updates on the partnership integrations.

All right. Thank you, Steve. Starting on Slide 8. I want to share our differentiated and proven approach to partnerships. Our approach is collaborative and transparent, designed to align around our common objectives, creating a strong foundation for long-term value creation. We're able to quickly identify and engage the leaders and make thoughtful decisions around the talent of the combined organization. Our objective is to create a welcoming environment for our new colleagues.

We work with rigor and speed mobilizing dedicated teams to migrate our partners' entire organization to Huntington platforms. We thoughtfully sequence the activities to minimize customer disruption and operational risk. We found that this approach creates an experience that is as frictionless as possible for both colleagues and customers. We are also intentional about approaching key customer product migrations with a people-first white glove process. We actually like to call it the green glove process. We will quickly deploy the full suite of Huntington capabilities including products, balance sheet capacity, value-added services and digital capabilities. This approach for our new customer-facing colleagues enables them to stay engaged with their customers throughout the entire process expanding their existing relationships and growing new ones.

For their customers, it ensures continuity of service while gaining exposure to the expanded set of capabilities we can offer. This approach drives economic value by empowering and engaging our partners, being thoughtful and focused in our talent management and retention efforts, deploying the full breadth of our capabilities developing deeper lending relationships and value-added services and moving quickly to migrate systems, we're able to realize substantial cost and revenue synergies.

Turning to Slide 9. Let me give you an update on how we've applied this approach to our partnerships with Veritex and Cadence. We've spent extensive time in the market with our new colleagues, aligning the local leadership structure and demonstrating our culture. For example, with Cadence, we undertook a 22 city tour right after the announcement to get to know our new colleagues and learn about their customers and the markets they serve. We undertook similar meetings with Veritex and have frequent senior leader connectivity and end market engagement. We could not be more excited to welcome these new colleagues to Huntington.

Engagement with the leadership and colleagues of our partners is fundamental to our ability to execute integration activities quickly and effectively and get to the critical focus of value creation. We have undertaken a thoughtful approach to our combined organization's talent decisioning with a lot of input from the Cadence management team and completed this work well in advance of closing. This creates certainty for our new colleagues and provides immediate line of sight to a large percentage of our cost synergies. We've made significant progress on systems integration.

For Veritex, we substantially completed this process last weekend. This concludes what has been an extremely efficient and well executed conversion that's only taken 187 days since announcement. We can say with confidence that Veritex is now integrated into Huntington.

For Cadence, we're already advanced in our product and data mapping and expect systems migration to occur midyear. This would also represent a highly expedited time frame. Because of these actions, we are already realizing our targeted cost synergies from Veritex, which we expect to be fully included in our run rate by the second quarter. For Cadence, we expect to begin realizing the identified cost benefits immediately upon closing and reach the full run rate in the fourth quarter of this year.

As we deploy the full Huntington franchise in our new markets, we expect to begin benefiting from revenue synergies. This is already the case at Veritex, and we expect this to accelerate now that we are operating on the Huntington platform, and our new colleagues have access to the full array of our product platform and capabilities. We would expect a similar pattern at Cadence with some revenue synergies achieved early after close, and acceleration in the second half of the year and into 2027 following the systems migration.

We are excited about how these two partnerships will springboard our growth in Texas and across a number of new markets for us. We see extensive opportunities in these areas and across the totality of our expanded footprint, and we intend to invest to drive market growth, density and share of customers' wallet.

With that, let me turn it over to Zach to discuss the quarter's financial results in detail.

Thank you, Brant, and good morning, everyone.

Beginning on Slide 11, I'll cover our financial performance. We delivered exceptional profitability in the fourth quarter and for the full year of 2025, supported by strong organic loan and deposit growth, expanding fee revenues improving margins, positive operating leverage and excellent credit. For the quarter, earnings per common share was $0.30. On an adjusted basis, excluding acquisition-related expenses and other notable items, EPS was $0.37, up 9% year-over-year. I'll review the drivers of this performance in detail on the next several pages.

Turning to Slide 11. Average loans grew 14.4% year-over-year, excluding the addition of the Veritex portfolio, average loans grew $10.9 billion or 8.6% year-over-year. This growth was well balanced between core and new initiatives. New initiatives accounted for $1.8 billion in the period and contributed nearly half of the total organic loan growth for the year. Key contributors included our organic expansion into Texas and North and South Carolina, as well as strong performance in our Funds Finance and Financial Institutions Group commercial verticals of the remaining $1.4 billion in loan growth in the fourth quarter, from the core we delivered $500 million from corporate and specialty banking, $400 million from regional banking, $400 million from auto, $400 million from floorplan businesses and $200 million from commercial real estate. These gains were partially offset by a $200 million decline in equipment leasing, a $200 million decline in residential real estate balances and a seasonal decline of $100 million in RV marine loans.

All told, in 2025, we generated organic loan growth of $10.1 billion, which exceeded the $9.5 billion of loans added through our Veritex partnership. This performance underscores the exceptional execution by our colleagues across the company. The businesses are firing on all cylinders, and our teams continue to deliver outstanding organic growth.

Turning to deposits on Slide 12. Average deposits increased 5.1% quarter-over-quarter and 8.6% year-over-year. On an end-of-period basis, excluding Veritex, core deposits grew $5.5 billion year-over-year or 3.4%. We continue to drive strong volume growth while maintaining disciplined pricing throughout the rate cycle, resulting in a 35% cycle to date down beta. This performance is enabled by our sustained focus on growing primary banking relationships across both the Consumer and Commercial segments.

Veritex deposits contributed meaningfully to this quarter's growth, while we optimized select acquired funding categories as planned. Together, these dynamics underscore the depth and quality of our relationship-oriented deposit gathering capabilities and the effectiveness of our funding strategy. We continue to execute well on our down beta plan. Similar to the third quarter, we quickly implemented actions after the Fed rate reduction in December to achieve a 40% down beta in the last 2 weeks of the fourth quarter. The deposit environment remains competitive. However, our approach to optimizing volume growth and pricing is working. Our goal remains to maximize revenue growth and ensure robust core funding for our continued strong organic loan growth. We will continue to manage our asset yields and funding costs to optimize this outcome.

On to Slide 13. Our NII dollar growth and margin expansion continued to demonstrate powerful momentum. During the quarter, we drove $86 million or 5.6% sequential growth in net interest income. This represents over 14% growth on a year-over-year basis. Net interest margin was 3.15% for the fourth quarter, up 2 basis points from the prior quarter and aligned to our outlook. This is largely driven by contributions from Veritex's core NIM.

Expanding on that for a moment. As we've noted, Veritex closed in October, and the final rate marks and detailed loan-level accretion schedule was updated at that time. This update resulted in a modest reduction in expected PAA and modest accretion to tangible book value, excluding onetime costs. The updated schedule is noted in the appendix of the presentation for your reference.

Moving to fee income on Slide 14. Our fee businesses were strong across virtually every area. Year-over-year, payments grew 5%. Commercial payment revenues continue to be the primary engine of this growth, up 8% year-over-year. Wealth management grew 10%. Adjusted for the sale of a portion of our corporate institutional custody and trust business last quarter, it grew 16%. This was powered by continued household acquisition and assets under management net inflows.

Capital markets performed well, delivering its second strongest revenue quarter of all time, trailing only the fourth quarter of 2024. Some advisory deals did push from the fourth quarter to close early in 2026 and so our first quarter is off to a very good start. Loan and deposit fees are up over 20%, driven by strong loan commitment fees. Based on our solid commercial lending pipelines, we expect this trend to continue over the next several quarters. Clearly, momentum in the fee businesses remain strong, and we anticipate broad-based growth going forward. On the next slide, I'll step back for just a moment to reflect on the multiyear trajectory of these businesses.

Turning to Slide 15. On a full year basis, our fee income businesses have been growing at a steady high single-digit CAGR since 2023, and we see this CAGR as sustainable over our long-term planning horizon. As we've highlighted many times, we view three businesses: payments, wealth management; and capital markets as having long-term strategic growth opportunities. The financial performance of these businesses validates our strategy, which is focused on expanding where we believe we can offer these value-added services to our customers in a manner that enhances our relationship and meets their needs.

Moving to expenses on Slide 16. On a core basis, excluding onetime costs and the impact of absorbing Veritex's expense base, Huntington's operating expenses were up just $7 million sequentially or just about 1/2 of 1%. This reflects our cost discipline and focus on continuous expense reengineering essential elements of our value creation flywheel. We set out in early 2025 to deliver positive operating leverage for the year, and we delivered results well above that budget. Coming into the year, our plan assumed approximately 100 basis points of positive operating leverage. This was a solid achievable planning target given our growth agenda and the level of strategic investment we intended to sustain as we drove significant outperformance on revenues over the course of the year, we delivered a much wider 290 basis points of adjusted operating leverage while accelerating investments across our enterprise. This outcome is an expression of the model we've been building toward and will drive substantial value creation.

Slide 17 recaps our capital position. Over the last year, we drove adjusted CET1 higher. Our capital management strategy remains focused on our top priority of funding high-return loan growth, then supporting our strong dividend yield, and finally, capital return in all other uses. As we have noted, we intend to continue driving adjusted CET1 toward the midpoint of our 9% to 10% operating range. Given our projections for strong capital generation, we expect to have capacity to add approximately $50 million per quarter of repurchases to the mix of distribution in 2026 following the close of our partnership with Cadence.

Slide 18 gives an overview of how the flywheel of our operating and economic model is generating powerful returns and driving shareholder value. In 2025, we grew adjusted ROTCE by 40 basis points through robust PPNR expansion while simultaneously increasing our capital base. We have grown tangible book value 19% year-over-year, while returning 40% of earnings through dividends. And as noted, we intend to initiate programmatic share repurchases in the near term.

Turning to Slide 19. Credit quality continues to perform very well. with net charge-offs of 24 basis points. Forward-looking credit metrics remain stable. The criticized asset ratio rose to 4.2% primarily due to Veritex's commercial real estate loans that we identified during diligence and remains within our historical range. The nonperforming asset ratio was 63 basis points and has trended within our expected range for several quarters.

Let's turn to Slide 20 for our outlook for 2026. We're providing guidance for Huntington on a stand-alone basis. But given that we're only a few days away from closing our partnership with Cadence we thought it would be helpful to give an initial view of how this might contribute to our 2026 results. Naturally, we will refine this outlook after the close.

Starting with net interest income, we expect growth on a stand-alone basis between 10% and 13%, supported by 11% to 12% growth in loans and 8% to 9% growth in deposits. We anticipate further net interest margin expansion this year driven primarily by lower hedge drag and fixed asset repricing. We expect the NII contribution from Cadence this year to be approximately between $1.85 billion to $1.9 billion, including PAA. We will update this outlook inclusive of PAA later in the first quarter after we've had the opportunity to do the analysis post closing.

In terms of earning assets, our cash plus securities portfolio is currently about 25% and of total assets, and we expect to remain approximately at this level post closing. On the topic of quarterly expectations for deposit and loan growth, we're expecting to see loans grow faster than deposits in the first quarter as we continue to optimize the funding we have received from Veritex and begin the integration of Cadence. After that, in Q2, Q3 and Q4, we expect to see deposits growing at a level consistent with loan growth as our normal organic process of core funding loans continues. We expect to exit 2026 with our deposit growth in dollar terms, equaling our asset growth giving us strong funding momentum heading into 2027.

Moving to noninterest income. We expect fee revenues to grow between 13% and 16%. This represents the continued strong contributions from our three core value-added services, further growth in our loan commitment fees and the contribution from the new Capital Markets teams at TM Capital & Janney, that we added at the year-end 2025. We expect Cadence to add approximately $300 million in fee revenue. We plan to provide an update on our expected revenue synergies later in the first quarter. We anticipate core expenses will grow 10% to 11%, and we expect to deliver a baseline of 150 to 200 basis points of operating leverage. This outlook includes the expected cost synergies we've targeted from Veritex, which we expect to be fully in the run rate of our cost base by the second quarter.

We estimate Cadence will increase our expense base by approximately $1.1 billion. Similar to Veritex, we expect to begin realizing cost synergies almost immediately after closing with the full benefits run rating into expenses in the fourth quarter. We expect net charge-offs for the year to be between 25 and 35 basis points. Given our current starting point, we think losses will likely be at the lower end and normalize closer to the midpoint of that range over time. The combination with Cadence doesn't change this view.

The effective tax rate for the year is expected to be between 19% and 20%. The fully diluted average share count for the year, inclusive of Cadence-related issuance is expected to be approximately [ 2.020 billion shares ]. For the first quarter, we expect a weighted average share count to be approximately 1.9 billion. Cadence's anticipated February 1 close, will result in a partial quarter impact to several income statement and balance sheet items. Also, with the addition of Cadence, we have a new class of preferred shares, which we have addressed in the footnote in the updated appendix slide.

Pulling back, let me conclude our guidance discussion with a few observations. First, our current 2026 forecast for Huntington's stand-alone growth in NII, in assets, deposits and fees generally exceeds the growth we've experienced in these categories in 2025, while our expected operating leverage is at the top end of our typical range. This underscores our focus on delivering strong organic growth even as we move through our integration with Cadence.

Second, we are executing against our integration plans. As noted, we expect to realize the cost synergies from Veritex in the second quarter and from cadence in the fourth quarter. In terms of the revenue synergies, we have already begun to benefit from incremental lending and capital markets activity with former Veritex customers. And Cadence bankers are already actively engaged with their customers to educate them about the broader product platform and capabilities that we will be able to offer. We believe this will contribute to incremental revenue growth in the back half of 2026 and into 2027.

Turning to Slide 21. We remain confident in our long-term trajectory. Our operating model and the momentum across the franchise give us conviction in the sustainability of our targets for the medium and longer term. The investments we're making position Huntington for continued outperformance.

Concluding on Slide 23, our flywheel of value creation is working and poised to accelerate. Our differentiated business model drive strong growth and profitability. As our profitability expands and we generate efficiency through cost reengineering, we increase our capacity to invest as we drive robust investment back into our business we grow our competitive advantage. That competitive advantage drives further market differentiation and customer expansion, driving revenue growth and sustainable share gains in a virtuous cycle.

Looking ahead to 2026, we believe the benefits of our strong organic growth and recent partnerships will enable further expansion of our investment capacity over the next several years. This will increasingly distinguish us from our peer set and drive substantial shareholder value.

With that, we'll conclude our prepared remarks and move to Q&A.

Thank you, Zach. We will now take questions. [Operator Instructions] Thank you.

[Operator Instructions] Our first question today is coming from Erika Najarian from UBS.

The first question is -- just a clarifying question on the expense trajectory, both the baseline and the cadence addition and how we layer on the cost savings. So given that you gave the guidance on stand-alone, I'm guessing the baseline for core expenses would be $4.825-ish billion, which excludes 2 months of Veritex, and then we layer on the stand-alone growth. I guess the other part of the question is that $1.1 billion is equal to 11 months of Cadence based on consensus '26. And so I'm wondering, particularly as I think about Brant's comments if we then layer on the cost saves. And then I just have a follow-up.

Sure. I'm not sure exactly what your question was there, Erika, but I'll take it into just unpack where the expense guidance is. Fundamentally, what we see at this point is underlying Huntington expense growth in the mid-single digits, aligned to generate 1.5 to 2 points of operating leverage. And then with Veritex bringing in the entirety of the Veritex cost base. And also, I would note the two small capital markets businesses that we added on January 1, those at about 1 point of total Huntington expense growth, obviously, more revenues as well. But that piece comes in.

And so the totality of all of that together is the a 10% to 11% year-on-year growth, which generates really positive operating leverage, 150 basis points to 200 basis points, clearly on top of the 300 basis points operating leverage we generated in 2025. And then Cadence is the $1.1 billion added on, as you noted, it's 11 months of expenses. It represents the full completion of the cost synergy program for both Veritex and Cadence by Q2 and Q4, respectively. And aligned to the previous guidance we've given about 75%, 3/4 of the Cadence cost synergies accruing in 2026.

I think what is also in there, clearly, I tried to highlight this in some of my prepared remarks, is continued investment back into the business. And we think that, that is a terrific model not only to drive the kind of revenue performance we're achieving in '26, but even more importantly, over the longer term and continue to drive the competitive and share gains that we've got. So all of that is embedded in that and we think it's the right model, at the right posture at this point.

Got it. That's clear. So that addition includes both cost saves and investments back into the business. .

And the second follow-up question I had, maybe this is more for Steve and Brant. I thought it was notable that when you talk about Veritex and Cadence, you say, the word partnership very intentional. Maybe talk about how your approach has been generating more goodwill in order to perhaps [ bring ] revenue synergies and cost synergies and perhaps a better time line than other traditional acquisitions that are perhaps not treated as partnerships.

Erika, great question, and I'm going to let Brant answer this for the most part because he's been on point driving this literally from the outset. But the format of the partnership has been incredibly beneficial to us. And we have great partners in both [indiscernible], their teams. And because we've been able to work together very tightly, and Brant will expand on this significantly, we are in a much better position with confidence on both the expense and the revenue synergy side.

So Brant, over to you.

Erika, thank you for the question. One of the things that partnership has allowed us to do is to really move with greater speed and rigor on some of the key decisions. And as it relates to Board decisions, management decisions, all of our colleague decisions, organizational structure decisions, all of those have been decided and communicated. That creates a high level of certainty for the colleagues of both Veritex and Cadence. It creates a lot of familiarity for them. And frankly, gives us a lot of confidence in our ability to deliver on the value creation given that we've created so much certainty for them so quickly.

The other component, as you know, a large percentage of the cost synergies are revolved around people. And so moving quickly to decide on our make all the key people decisions in the case of Cadence gives us a line of sight to the majority of our cost synergies there. So that partnership approach is clearly gives us some advantage or a lot of advantages when we think about both cost and revenue synergies.

And the teams have just been outstanding. The collaboration here, phenomenal. We are very impressed with the quality of the teams. And both these banks are well run. So these are not sort of fixed or up turnarounds. This is bringing our capabilities, products, et cetera, terrific teams, which, as Zach pointed out, we will be further investing it to drive the revenue growth in the years ahead.

Our next question today is coming from Jon Arfstrom from RBC Capital Markets.

Zach, I think you're going to get a work out this morning, but on expenses. But anything you can do to give us a little tighter range on expected first quarter expenses or early '26 expenses just to help set this up.

Here I will give you a quarterly guidance, Jon, do appreciate it. Look, if I take a step back, for us, what's important is driving for positive operating leverage. And as we've noted sort of a number of times, even in the prepared remarks highlighted this for 2025, we come into the year thinking somewhere between 100 and 200 basis points of operating leverage as a -- is a really good level. It supports the long-term earnings growth rate that we want to achieve. It also is the right balance for us as we execute that flywheel model, driving reengineering into baseline costs, reinvesting deeply back into the business to really power continued long-term revenue growth. And so I think that's the approach that we're taking, and we think it's the right one, as I noted before.

I will also highlight, if you look at that guidance slide, I mean just stare at that plus Cadence call, the marginal profitability that we're adding as we bring Cadence into the business is really significant, 50% marginal efficiency ratio, and that's even before the full cost synergies. So all of this for us, adds up to an earnings growth trajectory that continues to meet our objectives and generate ultimately the long-term financial commitments that we've signed, importantly, including that 18% to 19% rhetoric capital.

Okay. All right. Just another question here just for clarification. On Slide 20, you talk about the revenue-producing initiatives that are embedded in the expense guide. How material are those? And then what revenue synergies, if any, from Veritex and Cadence is included in the guide?

Yes. Good question again. And the answer is very little of the revenue synergies are baked into the guidance at this point. This continues to be aligned to the longer-term objectives that we've said and we discussed at the Cadence partnership announcement call. I think as Brant highlighted in his prepared remarks, our expectation is to share a deep dive around where we expect the revenue synergies to be later this quarter in a further conference and then to layer that on and provide some guidance around that. So a lot more to come there, and we're very excited about it.

If you think about the investments into the business, we've been growing investments back into the company at about a 20% clip for 5 years in a row, and our expectation is to continue to be the same. And the focus areas for those investments really continue to be digital technology development and capabilities across all areas of our business, marketing to acquire different customers. There's going to be a terrific opportunity to deploy digital acquisition across the new partnered acquired footprints and then people to build out the businesses that we've been growing, and we'll continue to do that.

Next question is coming from Ken Usdin from Autonomous Research.

Zach, can you just back to Slide 20, do you have the starting point FY '25 baseline for core expenses that the 10%, 11% is built on?

Sure. It's $4.871 billion, Ken.

Yes. Exactly. Okay. Great. And then the second question is, I guess there's a little back and forth today about the cost base still being a little bit higher. But I wanted just to ask, if I look back at the October deck, when you talked about $2 of pro forma EPS in '27. I just want to make sure that there might be some timing differences in terms of how much you're reinvesting and how much things all come together. So we're still tracking towards that $2 a pro forma EPS that you guys had suggested back in October in the merger deck.

Yes. It's a terrific question, Ken. I love that question because it kind of comes back to ultimately the value creation model that we're trying to drive here is where our focus is. And the answer is yes. We continue to be on track for the fundamental drivers of that earnings power. If you think about it, the way I think about it is, first of all, three major drivers of value creation from the partnership, seamless integration and retention of talent kind of continuing the momentum of the underlying businesses. I will note that both Veritex in the period after a close before conversion, was performing exceptionally well, driving above expectations, loan and deposit and revenue growth. And Cadence, likewise, we haven't even closed. We were expecting that just a week from now. They just reported their results this morning. And those likewise feet expectations continue to show very strong underlying growth. And so our partnership model, we just enable that to continue.

Secondly, it's the cost synergies, and we have full line of sight to achieve or beat them. And then lastly, it's these revenue synergies, which are not in this guidance yet, but really will be powerful as we add those on. We continue to finalize the plans to go and achieve them. And so those are kind of the fundamental building blocks.

As I think about the EPS. Look, we've generated 16% earnings per share growth in '25. The guidance I've given here on Page 20 applies somewhere in the kind of mid- to high teens for underlying organic EPS in '26. You should expect the same kind of growth in earnings power as we go into '27. And on top of that, you'll get the full run rate of the cost synergies, that's probably something on the order of a dime. And then revenue synergies. And of course, the PAA will be what it is ultimately and what would give guidance on that when it's finalized.

Our next question today is coming from Matt O'Connor from Deutsche Bank.

You [indiscernible] the expense impact from the capital market deals. You said it added about 1% to the expense base. Have that on the fee side with a rough acuity contribution from the capital market deals? .

Yes, it's coming in somewhere for $80 million and $90 million of expense above revenues.

Okay. And then I just maybe talk about some of the other drivers of the fees because obviously my model could have been wrong, but the fee guys seen a lot better than I had even adjusting for $80 million to $90 million. So maybe some details in terms of what are the key drivers of that growth. .

Absolutely. Fundamentally, if you think about fees this year -- in last year '25, we generated 7% growth in core fees, and it was in those three major feed driving categories. We talk a lot of payments, cap markets and wealth management. As we go into 2026, our expectation was to see acceleration of all of those categories, something on the order of 1% to 2% acceleration. And we've got a strong line of sight to delivering that. As we've noted, it's been a locus of a lot of investment over time. So we're seeing that come through now in terms of acceleration of revenue growth. And then on top of that, you will add the $80 million to $90 million of revenues from the two new small capital markets divisions that are joining us close Veritex. And so that's really the kind of the ingredients that get us to this guide and have strong line of sight and confidence to deliver. .

Our next question today is coming from Ebrahim Poonawala from Bank of America.

This is [indiscernible] on for EP. Just maybe another one on the expense side. I was curious if you can talk about the level of investments that you guys have embedded into that underlying Huntington expense growth that you've mentioned at the mid-single digit, anything new there? Any new investments or acceleration in spend that's kind of embedded? .

Yes. Good question, [indiscernible]. Thanks for the follow-up. I'll highlight that we -- we expect to grow investments at around 20% back into the business as we go into this upcoming year. And again, as I see before, kind of the focus of that is always threefold. Digital and technology capabilities across the business; secondly, marketing and last people to build out the business. So I think about the kind of the initiatives that, that will power we're still early days in a lot of the major new growth initiatives we've been talking about for the last couple of years, new commercial specialty verticals, both lending and deposit oriented new geographies that we've been growing into organically in North and South Carolina, Texas, all of those will be focused for continued investment.

We've talked about in the Carolinas, for example, the expectation in 2026 is to open a new branch there almost every 2 weeks. And so of course, that will be an area that we're investing in. And then I think Brant highlighted earlier, one of the biggest areas that we see opportunity to really capture revenue synergies from the combined franchise is in digital acquisition and customer acquisition across the footprint. And so there's funding in the investment plan to go after that.

Got it. That's helpful. And then I think just a quick follow-up to clarify. I know you said you'll provide more details post the close, but just curious what level of PAA is embedded into the NII guide?

Yes. It's somewhere between 7 and 10 basis points of NIM aligned to the prior expectations we have. Again, I think we've highlighted that in the Cadence earnings call, Cadence announcement call, and we'll update that as we get through the close here in the next month. .

Next question is coming from Manan Gosalia from Morgan Stanley.

Zach, in your comments on the investment spend just now, you didn't mention AI. Is there any AI-related investment spend in there? And I guess the broader question there is, just given that there's a lot going on this year with the acquisitions, that's probably driving a lot of your investment spend. Would you say that 2026 is the high point for investment spend that you plan to make? .

Thanks, Manan, great questions, both. And to answer the second one first. The answer is no, and the investments are not a high point here. In fact, investing into the business is the flywheel of value creation that we've talked about. We will always want to grow investments at a at a fast clip. And just think about the model in on for a second, look back the last 6 years, revenue growth CAGR, 10% investment growth CAGR, just about 20%, and earnings growth in the teens. And so that model is a sustainable long-term model, and we just keep driving it, and it's powered by not only earnings growth, but also disciplined reengineering of our cost base, something on the order of 1% per year. And so that's the model we expect to sustain in perpetuity, and that's what's driving our competitive success.

If you just move to AI, absolutely, there's significant investment happening in AI. I wouldn't characterize the nature of the driver of our investment growth is because of AI, but certainly, AI is growing along with those other investments as well. And we're seeing use cases across the organization really exponentially increase at this point, driving cost savings, driving productivity, driving a better customer experience in a lot of different ways. And, of course, more efficient technology engineering.

Zach, referenced digital and technology, the AI was included in that.

Our next question is coming from Steven Chubak from Wolfe Research.

It's actually -- this is Derek on for Steven Chubak. First question we had was on the credit guidance. And it looks like the year-on-year increase, like our assumption is a lot of that is like kind of the seasoning of the loans you've put on the last year. But just curious if that's right. And just sort of what would cause you to fall on like one end of the guidance -- one end of the guidance range versus the other?

You sound a little -- could you repeat it. I think you referenced seasoning as the reason for the guide.

Yes. I'm sorry, that's right.

If that was the case, let me just say that Yes, there's a little bit of that in there. But I mean, the reality is the performance this year was just exceptional. And as you look back over the history, we've been trending between that 25 to 35 basis point range. for some time, and that's really the basis of our guide. And as Zach said in his prepared remarks that we would be really in the lower end of that range. And so that's really the expectation for '26.

That's helpful. And then just as a follow-up question on the deposit beta. You mentioned the 40% beta in the last 2 weeks of the quarter. Just curious as we're thinking about two more rate cuts, if that's also the right level to be thinking about with incremental cuts on the way down.

Yes, yes. That's also a terrific question. It's an area of a lot of focus, as you know. And our expectation is to continue to get a solid down beta, something in the high 30s to 40% aligned with the guidance we've given. I'll tell you that beta in and of itself, it's not our objective function. Our objective function is core funding loan growth really powering the ability to continue to drive peer-leading both loan growth and revenue growth with a great marginal return on capital, and that model is working exceptionally well. And you see -- it's, of course, a competitive environment, but the ability of the teams to execute on both volume growth and disciplined pricing continues to be very strong. .

Our next question is coming from Chris McGratty from KBW.

Going back to the tech conversation for a second. This quarter, a lot of focus, tech wallet, growth rate percent of revenues. Any -- I heard you on the one of the three things that you're really investing in, but do you have dollars around what you're put in the tech and the rate of growth?

Yes. Great question, Ken. We're smiling here because -- Chris, I'm sorry, because we're -- our expectation is in some of the conferences later this year maybe this quarter, really double-click into the investments to share with you more guidance on it.

So I won't steal that thunder and give you a number today. But certainly, it's a powerful growth. And we've seen -- in our view, we're investing in technology in exactly the right places. It's all about customer-facing capabilities, driving both our value-added services, but also customer acquisition, digital marketing.

The question that we just got a second ago in terms of beta, the amount of MarTech capabilities that we've built over the last several years, is really what's enabling us to achieve these dual results of great deposit volume and pricing. And so those are the kind of things that we put our technology investments against -- I'll come back to you with more details here in the sort order as we go to these conferences.

Understand. Yes, we'll wait for that. And then on kind of the balance sheet. A lot of times, you do acquisitions, companies have certain portfolios that maybe don't fit strategically. As you kind of evaluate both portfolio. Is there any tweaking that you presume might happen in the next couple of quarters as you get some other companies a little bit better?

Chris, as we looked at both partnerships and combined what that would do for the portfolios, we like them on a whole. And there's not, say, an exit portfolio there's a little more commercial real estate construction than we would prefer, and we'll manage that in due course, nothing special with that. And -- but we've got some great growth areas that we're looking for that will offset anything we end up doing on the construction side. .

Next question is coming from Brian Foran from Truist.

I'm going to apologize in advance, I'm still on the struggle bus with the guidance. So on expenses, I guess the way I'm trying to think about it is, if I understand the math right, you plan on reporting something like $6.5 billion of expenses this year, maybe $6.46 billion to $6.5 billion, if I take the guide literally. And then as I think about the exit from the year, pushing that up would be the 12th month of Cadence, pushing that down would be the cost saves, but then maybe pushing that back up is how much of the cost saves are reinvested over the course of the year? So is there any way to relate -- because people have really different takeaways. Some people are like we're going to exit the year with like $6.6 billion, and some people are like we're going to exit the year at $6.2 billion. Like is there any way to talk to an exit run rate of dollars of annualized expenses for the whole thing pro forma?

I don't have that right in front of me, to be honest with you, Brian. My guidance that you would see -- look like I think we're on a full year to see an efficiency ratio of around 55%, and we'll continue to see that improve as we go into '27. The growth rate of expenses relative to revenue should be should be very attractive as we get through Q4. And all the kind of goes back to that question, which we're talking before, are we on track for the earnings power in '27? And the answer is yes. .

Okay. Maybe I'd like to try the same question on loan growth because time myself in the same set of knots like we get to the back half of the year everything is integrated. We're not talking about the year-over-year, we're talking about quarter-over-quarter annualized. So Veritex and Cadence aren't in there. But I don't know if the cadence number for loans is just where they are today or has some assumption in it. But like you kind of put this all together, would you expect to be like still at 9% annualized loan growth exiting the year like where you are today before the acquisitions? Would you expect it to be slower as you do the integrations faster as you recognize revenue synergies? Like any kind of -- again, I understand the difficulty of doing a guide on what you're going to report when things are partial year impacts. But once we get through that, any way to talk to like what you expect the core loan growth rate to look like in the back half of '26, again, linked quarter annualized, not year-over-year? .

Yes, yes. Good question, for sure. Look, the way I think about it is our underlying loan momentum has been in the 8% to 9% range -- as we thought about Huntington's stand-alone in 2026, our expectation was around the same amount. And in our long-range plan, we say long-range plan in the next few years after that 3 years, was it a similar growth rate. One of the strategic themes and rationales for us entering the partnership with Cadence and then also with Veritex was that they would expose Huntington to even faster organic growth opportunities over the course of time and great new opportunities to invest and build the business from there as well. And so that 8% to 9% to me is the minimum. We would expect to see revenue synergies, growth synergies, lift that, particularly in the near term. And of course, not giving '27 guidance this morning. But I think that kind of fundamental growth power is at or as we get into the latter part of '26 and beyond. .

Our next question is a follow-up from the line of Ebrahim Poonawala from Bank of America.

Steve, just a big picture question beyond all the guidance-related questions. It feels like there's a lot going on at the bank in terms of banker hiring a couple of deal integrations. As we look forward, just talk to us in terms of how you feel about just the integration of all this over the next 6 to 12 months? And I think there's an expectation that Huntington could still be on the lookout for additional deals. How should shareholders think about the potential for more M&A over the next maybe 6 months?

Ebrahim, thank you for the question. We sort of thought that one would come even a little earlier initially. But the -- let's start with -- we've got two partners, and they are performing exceptionally well with us. The teams are doing great work together [indiscernible] and their teams and our teams have come together in a very fundamentally sound and strong fashion, and we're off to a great start. We've just completed -- we are completing the Veritex conversion as we speak, started over the weekend. We will close with Cadence in 2 weeks. As you heard from Brant, the -- or management and personnel decisions are made and communicated. We're moving very quickly with that.

At the same time, the core of the company is performing well, and that's our primary focus, drive the core results. So we're completing these integrations. They don't end at a conversion, but we're completing these conversions over the course of this year, maybe this year, a little bit more in terms of culture. But rapidly, so we can get at the revenue opportunities that we've talked about. We've used this term springboard on purpose. We think we have great growth potential in these markets. They're much better on average than the markets we've been operating it. And Texas is very unique, and we come together with a #5 share.

So we've never been in these markets or markets like these before. So very optimistic. We're very focused on driving organic growth and executing these integrations extraordinarily well. And the partnerships are facilitating that, and we're aligned at creating shareholder value.

As to other M&A, maybe someday, we've been clear, I think it was the Goldman conference. We're not going to do [indiscernible], we're not going to go to auctions. They have to be strategic in nature where they're adding value and revenue growth for us, and they have to meet financial and risk metrics. And if someone approaches us with something of that nature, then we would take a look at it. But we're very focused on driving the organic growth of the business, and that's priority 1, 2 and 3 for us. We like the position we're coming into '26 with and the momentum we have, and we're ecstatic about the quality of the partners. These are two really good banks, great people coming into Huntington. I think we've got a terrific back half of the decade just with these combinations.

Got it. And while I have you, maybe Zach, just clarifying the 55% efficiency ratio you believe, hopefully, [indiscernible]

Your voice cut out a little bit EP there at the end. I think you said, am I confident we'll hit 55% efficiency ratio. Is that right? .

Yes. Yes, for '25 or '26.

Yes. Very, very confident. .

We reached end of our question-and-answer session. I'd like to turn the floor back over for any further or closing comments.

Well, thank you all for joining us today. We didn't mean to confuse you. And I hope we've sorted some of that out in the discussion. We're performing very well. We're coming off an extraordinary year. We've got a lot of momentum and very clear objectives as we move into '26. We've never been better positioned for the future. and we're excited about that. And our 20,000 colleagues and soon to be 25,000 are going to do everything we can to create shareholder value and build the franchise for years and years to come. We look forward to welcoming these 5,000 new colleagues coming to us from Cadence in the next couple of weeks.

Thanks for your interest. We'll be back to you in next quarter for more details on the models and appreciate again your support. Have a great day.

Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.

All right. Up next, we are pleased to have Huntington joining us once again. It's been a busy year for Huntington, starting with driving best-in-class loan and deposit growth as it continued to expand its footprint across the Carolinas and Texas. And more recently, it's two announced acquisitions of Veritex and Cadence should position the bank well for the next few years. Here to tell us more about the story. We're pleased to have Chairman, President and CEO, Steve Steinour; CFO, Zach Wasserman. The team is going to give -- go through some slides and before we get into Q&A. So let me turn it over to Steve.

Well, thanks, Ryan, and your team. I appreciate the opportunity to be with you along with Zach. We're very pleased to share an update on Huntington's accomplishments. And following the presentation, we'll have an engaged Q&A.

But before we get started, we ask you to review Slides 2 through 4, which apply to forward-looking statements we're going to make today.

Moving on to Slide 5, there's an overview of how we think about value creation, and it starts with a differentiated operating model, which powers sustained above peer growth. We believe this is the strategically important aspect of how we're driving this growth. And we have our specialty banking verticals in support of both the regional banking teams as well as the business they do nationally. This growth allows us to reinvest our capabilities that compound our competitive advantage and drive powerful operating leverage.

We've got a disciplined capital allocation and robust risk management that's been in place for many years that protects the balance sheet and enables us to capitalize on periods of industry disruption or consolidation. And our focus on execution and proven track record of integration with TCF as a precedent gives us confidence that our partnerships with Veritex and Cadence will compound our organic growth trajectory.

Slide 6 is four key messages, which we'll address in more detail. First, the organic growth remains our foundation. I'm just going to repeat that, so we all understand it. Organic growth remains our foundation. We're performing extremely well at our core, and we're not going to lose our focus on that. Our fourth quarter results will be consistent with prior quarters as Zach shared during our last earnings call. We're on track.

Second, our proven integration track record gives us confidence in the intentionally sequenced integration of Veritex followed by Cadence, and we're well underway under this process.

And third, we view M&A as a springboard for organic growth, not as an alternative to it. Our two recent partnerships help create a platform that will sustain above peer growth trajectory long into the future. Importantly, this focus on growth is within our aggregate moderate to low risk appetite. And then finally, we have a unique and compelling flywheel for value creation.

If we go to Slide 7, our organic growth remains outstanding. Since the third quarter of last year, our loan and deposit growth has significantly outpaced peers and quarter-to-date, our performance has maintained this trend. This performance is supported by our -- by contributions from across our franchise from both legacy and newer markets from middle market banking and our national specialty banking verticals and from both consumer and commercial customers. There has been no disruption to our focus on execution. On the basis of our current pipelines, we expect to maintain strong momentum coming into 2026.

Now turning to Slide 8. Our strategy has not changed. Our focus is on organic growth. Periodically, we expand our organic growth opportunity set through partnerships. When we do this is with a partner that is aligned with our culture, advances our strategic priorities and is undertaken in a disciplined financial manner.

Importantly, we've developed a playbook that enables us to seamlessly integrate a partner without disrupting our core mission of growing organically, including the partner's legacy markets.

This focus on growth opportunity has enabled us to outperform initial financial forecasts. Our partnership with TCF provides an example of this.

At the time we announced -- at the time of the announcement, we expect to earn back tangible book value dilution in about 3 years, driven by forecasted cost synergies. In reality, we achieved that earn back in roughly 1.5 years, well ahead of plan and that outperformance came from three key areas. First, we exceeded our cost synergy targets. Second, we captured revenue synergies that were part of our vision, but not embedded in the original deal model. And third, and most importantly, we accelerated results through our ongoing and unwavering execution across the combined footprint, driving strong performance throughout the entire enterprise.

This next slide shows how TCF amplified the performance of our combined company, both in our legacy markets and in the augmented ones. The takeaway is simple. We had strong performance everywhere.

So Slide 9 gives an overview of how we accomplished the accelerated earn-back with TCF and improved our company's overall growth trajectory. Before partnering with TCF, Huntington grew a little over 4% annually a level above peer median of 2.7%. After the combination, our growth rate rose to 5% annually, a rate of increase that was much stronger than the increase in the peer median. This acceleration in our growth rate was driven by several factors, including the density of the TCF market, the TCF partnership created for us in certain deposit markets like Michigan, and the growth platform and scale created for us in cities like Chicago and Denver. So we're going to double-click on that for a moment.

So turning to Slide 10, on the left side of the slide, you can see the loan growth we've experienced in several regions that were augmented by TCF. And since the time of TCF integration in 2021, we've grown loans in these markets, at rates that are -- that at rates that are higher than the level of the predecessor organization and substantially faster than their local economies. Importantly, this outcome is equally true in markets we enter entirely organically.

On the right side of the slide, you can see the loan growth rates in North and South Carolina and Texas since we made the decision to enter these markets on a de novo basis in 2023. These data points underscore how the combination of our differentiated model and focus on execution drives improved growth across a broad range of environments.

For this reason, you can understand why we're so excited about our partnership with Cadence given the breadth of attractive market it adds to our combined organization.

Slide 11 provides a view of our pro forma franchise. And through this combination, Huntington will become a multi-region powerhouse, the tenth 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 and particularly in that [ Texaplex ] region. Dallas, Fort Worth, Houston, San Antonio, Austin, that triangle. 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.

The Cadence and Veritex's partnerships are really attractive for us in many ways. They bring significant growth markets and immediate scale in places with very strong demographic tailwinds. As an example, we'll have #8 deposit share in Texas, particularly focused within [ Texaplex ], where there's about 200,000 new households are migrating each year. And this partnership reinforces the platform we've built to sustain robust competitive success over the long term.

With our capabilities and products, we see real opportunity to accelerate growth. There are several areas where we can create momentum together, building on our strengths and amplifying theirs. Slide 12 summarizes the four broad categories of revenue synergies. We expect with cadence. First, the Cadence bankers will be able to offer this full suite of Huntington products and capabilities to the more than 1.3 million customers. supported by our digital marketing capabilities. Second, by meeting a more expanded set of customer needs, we're going to build deeper and more optimized customer relationships, the OCR playbook will be put in place. Third, we'll be able to offer our strategic value-added capabilities, including payments, wealth management and capital markets to the Cadence customer and prospect base. And lastly, by virtue of all these dynamics, we're going to attract new customers across these legacy markets and beyond.

Turning to Slide 13. Our strong growth story and history of successful partnership underscores that we have a powerful flywheel for value creation. The flywheel begins with our focus on uniting our colleagues with our purpose-driven culture, getting hearts and minds, aligning expectations of teamwork through goals and incentives very important to us, and we're off to a great start. It continues with our differentiated growth model that's characterized by service delivery through local bankers with local relationships and introducing our national capabilities when beneficial to our local customers. And our specialty businesses will grow organically on a national basis as well. And this approach generates sustainable above peer revenue profitability and growth. That profitability combined with continued reengineering of our expense base allows us to invest in our capabilities, and these capabilities drive sustainable long-term competitive advantage.

So concluding on Slide 14, we believe our flywheel creates sustainable long-term competitive advantage. It drives strong PPNR and earnings expansion and top-tier returns on capital, and it generates substantial value for our customers, our colleagues and our shareholders. So with that, Ryan, let me turn it over to you, please.

Great. And thank you for prepared remarks, Steve. That's great. So maybe, Steve, we'll start off with some high-level questions. You've been able to deliver best-in-class loan growth in a relatively slower growth environment and most of your financial metrics continue to be best-in-class. Maybe just talk a little bit about, one, what has driven this? And can this success continue into 2026?

Well, we certainly think the foundation that's been built over the years, OCR, aggregate moderate to low-risk appetite, gives us a strong platform. But we saw with the combination, the partnership with TCF and ability to really get to another scale of operations. And we chose to invest when others weren't, post Silicon Valley, that ramped up both our specialty banking verticals in a very powerful way when that continues today, and they're not mature. But it also allowed us to operate in a number of new regions, North and South Carolina and Texas, that set up an expansion opportunity. And all of this is done with -- at the same time, we were reconfiguring our local model, our operating model locally and putting more emphasis on local delivery at a time when cost cuts and other things were happening and many of our competitors were pulling out.

So those three combination of factors, I think, put us in an extraordinary advantage position. We continue to benefit from that today. And I think we've got a very strong operating model to go forward with both locally and nationally, and we've got momentum in all these businesses. We're very optimistic about what we've been able to achieve.

These partnerships, and I can't emphasize that word enough partnerships, Dan Rollins has been spectacular. And so has Malcolm Holland. We got record time to close with Veritex. We're off to a great start. The commercial pipeline looks very strong. We're going to convert on January 17 on that MLK weekend when we expect to close cadence on Feb 1, and then convert on June 10. And so by the end of the first half, we're on common systems, platforms and an ability to go forward with standard goals and operating procedures.

Makes total sense. So Steve, when I think back, you laid out a strategy to expand in Carolinas and Texas at your Investor Day. And obviously, between recent announcements, of expansion. Others have branch expansion plans, there's a lot of banks that are attempting to grow in these areas, right? So how is all this activity changing the competitive dynamics in the markets that you're growing into?

All of our markets are competitive. We have the big [ 4 G-SIBs ] that we overlap in different markets on a combined basis and even the next year. Think of PMC, Truist, USB. So they're very competitive. The opportunity set for us in the South and Texas is one we've never experienced, right? At best, the Midwest markets grow at national average. Now we're in markets that are growing much faster, expecting to grow 35% or more above national average for the back half of the decade. This is a wonderful new dynamic that we'll have to be able to operate in. And we're doing well on these -- in the core Midwest markets. We're growing significantly. We expect to continue to do that and take share. And the strategy of being deep with share -- deep in these markets, establish the brand, get our reputation out and be attractive to colleagues and customers has proven to be a successful track record over the last 1.5 decades. And we'll extend that now into the south in Texas.

We're going to get to Zach shorts, but just a couple more here for you, Steve. So you talked about -- you announced two acquisitions in reasonably short order, one in July with Veritex and more recently, Cadence in late October. Talk about the strategies in place to embed Huntington's operating model in to these banks. You referenced some of it in the slides and talk about what you're doing to retain the top talent at these institutions.

Well, first of all, these are partnerships. And so the ability to combine these companies is led, not just by the Huntington team but by the Veritex and Cadence team. Malcolm Holland has been just a tremendous partner. He's got an ongoing very active role. We'll be announcing some things in golf in the near future that are coming because of Malcolm and his relationships and focus, along with other activities, the Veritex's commercial loan pipeline is surprisingly strong to me at this point in advance of a conversion 30 days out. This is -- it's. I haven't seen this often in my career. And then Dan Rollins has just been spectacular. Literally, the 3, 4 months we had in conversation and planning to get things right, have advanced our actual plans very significantly. And he's been deeply involved along with his team, just great partners. So as we sit here today, the organization decisions are done.

The people -- there are over 5,000 people that have been -- that as of the end of this week, will have been notified. The system conversion activities are well underway. Now we'll do MCI for Veritex this weekend, and the activities for Cadence are in a parallel stream to set up that conversion as we go forward. And all of this happens because there's an ongoing interest, if you will. And we're very delighted both Malcolm and Dan, and largely, their teams are going to be with us going forward.

Now so as I said, you've obviously done two deals in relatively short order, expanded the footprint. And maybe just as you think about the potential for further M&A, right, what are your guardrails for future M&A in terms of strategic or financial metrics? And how should investors interpret your appetite for additional deals over the next 12 to 24 months.

So our approach has always been we must grow organically in order to earn the right to potentially partner. And I come back to that word. If we can't grow organically as we expect to, we won't partner. We'll just put a full stop on it. The core has to perform well. And that will be consistent over years. That's not just a '26 perspective.

Secondly, if we do any further M&A, it will be with partners. It's highly unlikely we're going to show up in an auction. We're not interested in MOEs. We're not looking to go beyond the geography that Cadence gives us. The strategy that works so well for us over the years in the Midwest is what we're looking to employ, share of market, share of wallet, go deep, where we are, and we've got plenty to work on. Texas itself is the seventh largest economy in the world. There's plenty for us to do. So we're not going to be trying to go national or West Coast or in Northeast or other stuff. It's just get better and do more where we are in this expanded footprint.

And I think, again, because of the partnerships, we're going to have a lot of opportunity going forward. to attract new colleagues and build our customer base. And so this organic thrust is really important to us.

Awesome. So a lot of opportunity out there for you guys.

I think so.

So Steve, I noted earlier you've had best-in-class loan and deposit growth, looks like that's continued into the quarter. We'll hit that next act. How will you sustain this organic loan and deposit growth while integrating these deals? Is there any risk that your integration efforts distract you from your organic strategy?

Short answer is no. They're better not be because I'm holding our team accountable delivering it, and I will hold them accountable. The emphasis we have on organic growth transcends the M&A. And we talk about that as we look to partner -- we're quite clear with our executive team that they have -- we have to deliver the organic growth. And the plans are and the activities are there to support it, as we talked about in the first quarter.

Now Veritex and Cadence are sequential, right? So we'll complete Veritex in the middle of January in terms of the conversion activities and then move on in more full scale to Cadence as we go forward. But our playbook in terms of how we operate locally is well established. We will execute that playbook. You'll hear us talk about OCR in the South and in Texas as we go forward, as we've done for the last 15 years.

So we're not trying to do something new. We will bring a lot of additional product and service capabilities and business lines into our Cadence and Veritex customer base. We're much deeper in payments, wealth, capital markets than they are. As you'd expect, because we're a multiple of their size. But we have great new colleagues joining us. And there -- many of them have come from environments from Veritex, so they're larger banks, so they know how to sell the capabilities we're going to be bringing. And in Cadence, we just have a terrific group of colleagues. And the fact that we have the leadership aligned the first 2 weeks after we announced Cadence, we visited 22 markets, we saw almost 2/3 of the colleagues. This is about hearts and minds and getting our new colleagues to feel embraced to feel welcome and stay with us and deliver the service and support that those customers are looking for and get us through the conversion and then we move on. And we really get after the growth post conversion.

Zach, I appreciate your patience and waiting for us to get to your part...

Whenever you're ready.

I'm always ready. So maybe just to start off, you guys obviously gave loan to deposit growth updates. You gave some commentary on full year. Maybe just give a little bit of color on, one, what you're seeing in the quarter? And then two, how is it setting Huntington up for 2023?

Sure. So we probably provide a bit of an update on quarter-to-date to continue to see strong loan growth sequentially into the fourth quarter at or above the high end of the growth range we provided before. The components of that growth that we're seeing come through in Q4, very similar to the components and contribution we've seen throughout this year, which is both our core business, about 60% of the growth coming from the core but also benefiting from the new initiatives that we've been driving for a number of years now and about 40% of the growth coming in that way.

Pipelines, I will tell you, as we look at the end of this quarter and into the early part of next quarter, continue to also be very strong to indicate for us that this is a pretty sustainable environment. So feel good about where that's tracking.

So maybe just to dig in back to some of the pieces. Deposit growth and yet another outstanding quarter of growth. You're now saying high end of the full year range. Maybe just talk about what is driving that? And how sustainable do you think it is given competition and pricing pressure across all the banks?

Likewise, continue to see deposit gathering, which is aligned with our plan and our objectives. And so we very much just an indication of the team executing very well. Fundamentally, our objective over the long term is to match fund loan growth with core deposit growth, and that's a foundational element of our strategy.

For us, it really all comes from, first and foremost, customer acquisition that is well above industry rates, very strong levels of customer acquisition across every one of our major customer segments. And then deepening, deepening customer relationships with not only additional deposit products, but further depth across loan and value-added services as well. So that program is executing exceptionally well.

I will tell you, the environment is, as Steve noted, every one of our markets is competitive and it will remain so. With that being said, our teams are executing on both volume growth and on pricing discipline. In the last 2 weeks of September, we had a 40% down beta after the Fed action in late September. We'll see what happens today. I'm sure we're all waiting to see. But my expectation is we'll see something similar here in the second 2 weeks of December as well. So strong execution across the board.

Got it. That's super helpful. You reiterated the 7% fee income guidance, including Veritex, you gave a specific number. So even I could understand what that means. But maybe just help us understand some of the moving pieces within there. Obviously, there was tougher comps because capital markets was so strong last year. Maybe just walk us through some of the moving pieces within there.

Our value-added services fee businesses have been a real bright spot throughout the rest of the course of this year. And over the moderate term, we're expecting to see very strong continued growth. Longer term, our objective is to grow those in the high single-digit growth rate, really powered by three core areas: payments, wealth management and capital markets, all of which are growing not only high single digits but often low double digits in terms of year-over-year growth in revenue. That program continues to execute exceptionally well. We're seeing in payments, strong commercial payment activity, treasury management in wealth management, it's all underpinned by very strong levels of household growth that's driving net flows and in AUM gathering. And then the capital markets business continues to power ahead, really continuing to couple to strong commercial lending activity. And so outlook there looks on track for the fourth quarter and solid into '26.

So Steve didn't make it easy on you into 2026 with one deal closing and then converting another deal closing and then converting. So obviously, there's going to be -- it's going to be a messy year. Well, I know we'll get formal guidance early next year and revisions once [indiscernible] closes. Just any broad strokes on your expectations or how we should think about into 2026.

Look, we're trying to be pretty clear on our Investor Day, the focus of the organization is on long-term value creation and really driving that through sustainable above-market rates of earnings. And so my expectation will see another strong year for loan and deposit production, the value-added fee services will continue to grow very well. Our expense management program is executing exceptionally well. This year, 250 basis points of positive operating leverage. We'll continue to see the outlook for positive operating leverage will go into next year, that should drive strong profitability.

I will tell you, and as Steve noted this in some of his remarks, that the executional quotient around these partnerships is extraordinarily disciplined and high we've closed already the Veritex partnership. It's scheduled to convert about a month from now. We will expect to close cadence on February 1 and then to convert that in June. And it's just the sequence of that activity alongside uninterrupted organic growth has really been exceptionally well executed.

So Zach, when I think about Huntington has had tremendous success in terms of managing your funding cost even while growing at a really fast pace. As you think about optimizing your overall funding cost, how do you expect to leverage Cadence and Veritex deposit franchises to both improve the funding mix? And obviously reduce the cost of funding.

Yes. There's a real opportunity there. And I think there's both a kind of a short-term one to -- in the case of Veritex, they had a couple of relatively higher cost sources of funding that we can optimize within the Huntington funding base. But more importantly, longer term, these are great deposit markets. And I think you heard Steve talked about that earlier, just depth, very sticky granular deposit relationships. In many cases, multi-generational deposit relationships that we think will really endure to our favor.

One of the things that we know well and we're very adept at deploying is the full Huntington playbook. We've got a very broad set of services and products, extraordinarily good digital capabilities. And so over time, we'll also see the benefit of that coming through in terms of additional deposit gathering, acquisition of primary bank relationships and augmenting what was already a pretty strong base with the capabilities of a larger bank.

Right. Ryan, just to add, we also have a set of teams that have come together and have come to us. And -- so those teams know how to operate together. So we have -- we've got to do some product training and some other stuff, but they're going to hold their customer base, and they're going to be able to offer that base a wider array of new capabilities. And they're excited by this. They're excited by this. And we hear that and then those capabilities will put us in a competitively advantaged position in those markets. And they like that. I mean we're getting -- when we did a debt placement this week off of Veritex customer, where the colleague knew the call and we got in the lineup. So there are a whole series of things that are happening on an accelerated basis because of the nature of the partnerships, the quality of the people, and they want to help their customers. And we're going to put them in a position where they can do that.

So Steve, sort of a hallmark of your tenure as CEO has been the ability to generate positive operating leverage almost every single year that you've been in charge. How do you guys maintain positive operating leverage and expense flexibility during this integration. Obviously, lots of different moving pieces going on. Maybe just talk through that and Steve, if you have any comments. Go ahead Zach.

Happy to take all the tough ones. Look, I think the model for expense management, we've discussed many times in different forums. It all starts with a commitment to drive positive operating leverage. We support that by systematically driving reengineering into the baseline operating cost of the company, that allow us to funnel outsized resources into investment categories of expenses like technology development, marketing, building out new teams and verticals.

The facts would show in the last 6 years between 2019 and 2026 -- or 2025, excuse me, we have reengineered more than 1% of the cost base of the company out. Every single year, it's almost $1.2 billion. And we've deployed every dollar of that into investments. Investments growing more than 20% CAGR over that period of time. It puts us in an extraordinarily strong position now in terms of the capabilities and breadth of services that we have. All of that within an expense growth rate of only 6.5% and revenue at 9.5%. So that model is working very, very well.

As we go into the cadence and Veritex partnerships, we obviously know that part of the value creation opportunity is incremental efficiency. As Steve noted, we already have line of sight toward both of those efficiency goals now just in execution mode, that will generate meaningful additional lift in efficiency that will then further power that ability to reinvest back in the business.

Yes. This is very exciting. I'm sorry to come on top, but I'm obviously excited about what we have in front of us.

Nobody wants there for me.

I could say that, too. But the -- those early years you were referring to positive operating leverage, we were like bootstrapping and we were thrift-like we've now got a revenue engine, and we're in a much better growth markets. It's very exciting. Like if we could do it in the Midwest, why can't we do it because the markets that are much more much faster growth. And so I look at this and think we've got the rest of this decade. We're in really good shape and very optimistic. And the company now has the products and capabilities, technology, digital and otherwise, the things we didn't have in those early years in the '09, '10, '11, '12, sort of thing. When we got into that model.

So there's a financial discipline that Zach has heightened. And at the same time, we've done that with, I think, smart investment in a contrarian moment, but we expect to have positive operating leverage as we go forward.

And Slide 12 talks about your ability to unlock revenue synergies. You've outlined the potential for these. Maybe just talk a little bit about when will these begin to contribute? And is there any investment needed to start to see these revenue synergies kicking in?

I think we're to see them right away. In fact, I mean, Interestingly, the very second day after we had closed the Veritex partnership, we already saw capital markets activities coming through from Veritex customers. So these will begin to endure quite quickly. And as we come into early next year, my expectation will share some detailed guidance with you around that. But they'll be meaningful and I think lift our growth rate. You saw some of the facts in Steve's presentation earlier, a meaningful lift to long-term sustainable organic growth from the TCF partnership. The same will be even more true now with incredibly strong markets that will come to us from these two partners.

Whenever we see deals like this, I think investors worry what could happen in terms of customer retention. And maybe just talk a little bit about what assumptions you made about customer attrition post merger? And what actions are you taking to outperform these assumptions?

So there's always a risk of customer attrition. And so that's a focal point from diligence on and the planning builds on the prior experiences and plans, and we just try to keep getting better and better with it. But it starts with, can we get the hearts and minds, can met the engagement of our new colleagues. And that's why the partnership is so important.

The message is that Malcolm and Dan said right from the start with us and the management team, we're incredibly positive, and we're seeing that by interim surveys. So it's up to us now to continue to build that trust, the transparency. The reason we did the notification to all the colleagues now as we wanted them to know their status before Christmas and the holiday season versus after. So they had assurances where that's appropriate, 80%, roughly 80% got those assurances. So we're trying to do things that are sensitive and build, again, trust show the care and concern and therefore, the allegiance to us that they, in turn, will bring about the customer base.

So we're going to have good conversions. We have to have good conversions. And again, this is where the partnering is so helpful. The tech teams at Cadence are working very closely with our tech teams now on making sure we get good conversions with Cadence. So we're in an execution mode. We build we build on -- we learn and build and get better, hopefully, as we go forward and do things better for both our new colleagues and customers.

Zach, maybe just talk a little bit about category 3 designation, how it will impact both your expenses and capital strategy? And are you prepared for all the requirements that come with this?

We're fully down the track of preparation will be complete by the middle of 2026, well in advance of becoming Category 3. We discussed at length over the course of the last 2 years, investing in data and automation. A lot of that was with a mind toward building the capabilities necessary. So there's no incremental expense run rate that we'll see from here as a result of that.

So as we wrap up here, you can see we're very confident. We're excited. We've got great new partners. The core is performing well. These new markets are extraordinary especially banking investments we've made are all coming about. We've got all the ingredients. It's up to us to deliver it. but we think we have a great second half to this decade in front of us, and we're very, very confident. Appreciate the interest today. Happy holidays, everybody. Thanks so much, Ryan.

Absolutely. And please join me in thanking the Huntington team.

Greetings and welcome to the Huntington Bancshares Conference Call. [Operator Instructions] 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; Zach 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 2 and 3 of the presentation we're referencing for this call.

Now beginning on Slide 4. 2 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 4 key reasons we're so excited about this partnership. First, through this combination, Huntington will become a multi-region powerhouse, 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. And 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 5. Cadence has more than 390 branches and 1 million customers across Texas and the South. And 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 5 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 6. 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, and 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 5 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 customer -- Cadence's relationship-driven community-based approach aligns very well with our local delivery model and our people-first culture. And 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% to 19%, and 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 2 years ago and connected with him at an event in June. And then 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 4 lots. We've made a focus of ensuring we understand their markets, their operating model and their people. and we have 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 are very -- 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. And we're delighted that Dan will join Huntington as Vice Chairman and member of the Board, will benefit from his wise counsel and over 4 decades of banking experience.

Now I'll hand it over to Brant, who will 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 7. But 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.

If I could turn to Slide 8. Our partnership with Cadence adds powerful density in key markets and extends our growth reach. Cadence currently serves over 1 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 Texaplex. 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.

And 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 the immediate scale it offers in one of the most dynamic economies in the world. So let's discuss our outlook for the combined Texas platform.

Turning to Slide 9. 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 #9 in Texas for branch count. Our deposit base jumps to $26 billion, making us the #8 bank in Texas by deposits. And as you can see, there's quite a tight grouping in the league table. So with our current growth rate, we're going to expect to be in the top 5 soon. Importantly, as Steve mentioned, in both Dallas and Houston, we will be #5 in terms of deposits. This scale in these markets will provide the springboard for further investment in 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 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 2 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 approached 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 2 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 11.7x 2026 consensus earnings per share or importantly, 8.2x 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 3 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 include 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 pretax cost synergies, representing 30% of Cadence's forecasted 2027 cash noninterest expense. Our teams have mapped out specific actions and time lines, and we have a high confidence in our ability to meet or exceed these estimates. For modeling process, 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% to 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 and powering 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 5 years, we have grown investments in our business by a remarkable 21% compound annual growth by leveraging our earnings power and consistently driving reengineering 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 noninvestment operating expenses to less than 5% per year, a level far below our revenue growth CAGR of 9.4% over the same time frame. The scale efficiencies from this partnership will allow us to add even more investments. 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 will 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 2 final thoughts. Over the years, Huntington has become nimble, adapting and evolving where needed to 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. I request 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.

[Operator Instructions] Our first question today is coming from Jon Arfstrom from RBC Capital Markets.

Yes, 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?

Yes. Great question, Jon. And we think 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 risk, but more importantly, to drive 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. So we've got 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. So strong confidence we'll meet them. History is a guide and TCF is a great example. We exceeded these. And so certainly, we will endeavor to do that as well.

Yes. Okay. 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?

It's another good one. And the short answer is, none of the financial projections that we provided here today include any degree of revenue synergies. We do believe we'll see quite strong revenue synergies and that will be even more earnings power and revenue lift. But to be clear, none of these projections include that at this time. 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. All of 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. But 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 if you go back, Jon, to our value accretion 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 will really be the model that we've got.

Investment plan was question 3 and 4 for me, but thank you guys, appreciate it.

Next question is coming from Erika Najarian from UBS.

Maybe I'll just ask Jon's question about the investment plan. So just -- the first part of this first question is the way you answered the question, Zach, on the ROTCE, 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? And also maybe just reassure some investors that were -- are sort of seeing the sentence that there are no branch closures, but you're getting 30% cost saves anyway?

Yes. Maybe I'll take the first part of that and some of my colleagues may want to tack on as well here. But the investment plan that we have, and we'll come back with, obviously, in future conversations in detail 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. And 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 and 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. And I've been very, very excited about the revenue synergy opportunities. Maybe, Brant, you want to tack on to that.

Yes, it would 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, this will unlock and fuel additional investments like mobile, like the work we're doing around our small business customers. And 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 the branch closures and 30%. And as we've said, we have very high confidence. We've had 4 months of very detailed planning here. Dan Rollins and team have just been exceptionally good partners. And 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.

And 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 entry at the Huntington culture is the prevailing culture of the pro forma company? And 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?

Well, that's a great question, Erika, as well. And we are very intentional about the teams that we bring on in any combination like this. And a lot of that groundwork has already been done in terms of selections. And over the next weeks, there will be more internal communication around that. Cadence is nearly a 150-year-old company like Huntington in many, many respects, very customer service focused, very much about communities, and we align incredibly well culturally with them. Again, we've had 4 months of significant interaction at multiple levels of the company to have this appreciation for their values and the nature of how they operate. And so we're highly confident in our ability to execute, including the cultural elements. We spend a lot of time on that. And we'll begin that today. We'll be in Tupelo, Mississippi today. We've got 23 stops over the next 2 weeks, that the management team will be doing. We're going to touch more than half the colleagues in these first 2 weeks. And 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. And 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. And 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. And 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, that team had a good understanding of our operating model and that -- so that we could assure going in that we would have a high level of alignment through this process. So 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.

I know it's super helpful for you guys to refer to that in the prepared remarks, the partnership approach.

Next question is coming from Manan Gosalia from Morgan Stanley.

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. And then 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. And as we -- we're 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 2 states. So we feel very fortunate to have had the opportunity to combine with Veritex and now Cadence. The Texaplex complex that Brant 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. And much like we've done -- we are doing in North and South Carolina, we expect to grow those organically in the years ahead. So very, very optimistic about our ability to grow successfully in -- frankly, in all these markets, and we're excited and thrilled to be there.

Manan, on Slide 7 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. And so 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 7.

Great. And then maybe as a follow-up. Can you talk a little bit more about the integration process? You disclosed 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?

Manan, 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. And so those things continue. We have also dedicated resources to our integration planning and execution. And those resources are -- 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. And we've also had a chance to take the time lines for both integrations and stack them on top of each other and have a level of confidence that we can effectively deliver. 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. And I would expect we will do that in these 2 as well.

So these have been purposely sequenced, Manan, and we're going to be very busy, of course, and very focused. We've got -- we're going to drive organic growth at peer-leading levels. And we're going to get these 2 integrations done very successfully. So we have a lot on our plate. We're fully committed to delivering both.

Kevin, I think we have time for one more.

Our final question today is coming from Ken Usdin from Autonomous Research.

If I could clean up a couple of quick things. First of all, the loan rate mark, the $1.56 billion. Do you have a general sense of what that expected life is for that piece of the accretion?

Yes. 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 '27 and most of the remaining in 2028.

Perfect. And then the next line, there's securities restructuring that happens day 2. Is that included in the EPS accretion? And how can we think about like the magnitude of that and how you think about the earn back on that piece of it?

Yes. Good question. And 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 3 -- about 1/3 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 1 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.

We've reached the end of our question-and-answer session. I'd like to turn the floor back over for any further or closing comments.

Well, 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, and 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 we are exactly -- that's exactly where we're positioned as we go forward.

Of course, pleased to be in the other markets with scale, Mississippi is #1 bank as an example and some of these exciting cities. In aggregate, now we are -- we've got 2 very large regions, if you will, Texas and the South and the Midwest, both of which we're going to be operating at scale. And I think we've got just a fabulous outlook. We've, again, never been better positioned. The returns that Zach has shared of 18% to 19% and the EPS accretion in '27, it all looks really, really good as we think about the back half of this decade. So thank you for your interest. Have a great day, everybody.

Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.

Greetings, and welcome to the Huntington Bancshares Third Quarter 2025 Earnings Call. [Operator Instructions]. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Eric Wasserstrom, Director of Investor Relations. Eric, please go ahead.

Thank you, and good morning, everyone. Welcome to our third quarter call. Our presenters today are Steve Steinour, Chairman, President and CEO; and Zach Wasserman, Chief Financial Officer; Brendan Lawlor, Chief Credit Officer, will join us for the Q&A.

Earnings documents, which include our forward-looking statements disclaimer and non-GAAP information and copies of the slides we'll be reviewing are available on the Investor Relations section of our website, which is www.ir.huntington.com. As a reminder, this call is being recorded, and a replay will be available starting about 1 hour after the close of the call.

With that, let me now turn it over to Steve.

Thanks, Eric. Good morning, everyone, and welcome. We delivered another outstanding quarter. The business is performing exceptionally well across all fronts. We have tremendous momentum, and we are poised to accelerate from here. I'll cover the highlights and then Zach will take you through the details.

Turning to Slide 5. There are 3 key messages that we'd like you to take away from this call. First, we continue to execute our growth strategy with excellent results, all elements of our model are contributing to this growth, and we will continue investing to generate a high level of growth into the foreseeable future.

Second, we are achieving top-tier profitability and returns as an outgrowth of our revenue generation and strong positive operating leverage.

And third, we are poised to further accelerate our growth in Texas. We look forward to welcoming our Veritex colleagues and customers the Huntington next Monday. The partnership and interim planning efforts led by Malcolm Holland and team have positioned us for a fast start, initiating the springboard we envisioned, so we're very excited for what lies ahead.

Slide 6 illustrates the outcomes of these key messages. Our foundational organic growth strategy is to deliver our national scale capabilities and expertise through local market relationships. You can see the results of that on the top of this slide. We have massively outpaced our peers on both loan and deposit growth, the outcome of which is the phenomenal pace of our PPNR expansion. And given our rigorous adherence to our risk management principles, we have not deviated from our aggregate moderate to low risk appetite while driving this performance.

Slide 7 illustrates how this operational approach creates value. we drive powerful growth. This growth enables us to invest to compound our competitive advantage. The investment results in meaningful operating leverage, and we maintain disciplined capital allocation and robust risk management to both protect our balance sheet and enable us to take advantage of moments of disruption.

All of this enables us to drive long-term shareholder value, as evidenced in this quarter's results, we grew revenue 14% year-over-year, adjusted PPNR 16% and tangible book value by 10% while generating an adjusted ROTC above 17%. And as Zach will discuss in a few moments, we are again raising our financial guidance for the year.

We also have extensive experience in integrating acquisitions and in mobilizing the combined organization to execute on the cost and revenue synergies that we identify. Based on this experience, we are very confident in the seamless integration of Veritex, which will springboard our growth in Texas. We remain extremely excited by our partnership with Veritex. When we closed this combination on Monday, we will achieve immediate scale in Texas.

By our estimate, we will become the 14th largest depository in the state and the fifth largest in Dallas, ahead of nearly all of our regional bank peers, including pro forma for recently announced transactions. We will execute on the cost synergies we've identified, which we expect to drive 1 percentage point improvement in our efficiency ratio and approximately 30 basis points of lift to our ROTCE. But our greater opportunity is in the revenue growth synergies that we will generate as we accelerate the rollout of the full Huntington franchise into these markets.

First, we will leverage Veritex' network to deliver the full suite of our consumer and small businesses as well as digital capabilities.

Second are the fee-based opportunities we can offer into Veritex's commercial and consumer customers including payments, wealth management and capital markets.

Third, we will leverage our combined scale and the benefit of Veritex's deep local relationships to accelerate the growth of our existing commercial verticals and local middle market banking. We're very confident in our ability to realize these synergies.

Additionally, we see substantial incremental opportunities to generate revenue synergy as we further invest into our Texas franchise. We will continue to build out our branch network in Dallas, Fort Worth and Houston and expand our commercial banking activities across the state, amongst other actions. As I've said, this partnership will be a springboard for our growth in this incredibly attractive market.

To summarize, we're executing on our organic growth strategies to drive industry-leading revenue growth. We're achieving outstanding profitability, which enables us to reinvest to compound our competitive advantage. We're poised to springboard our growth further through the partnership with Veritex. And all of this is driving a high level of tangible book value growth and increasing our return on tangible common equity.

With that, let me turn it over to Zach to discuss the quarter's financial results in detail. Zach?

Thank you, Steve, and good morning, everyone. Let's begin with the highlights of our third quarter results on Slide 9.

Huntington delivered another outstanding quarter, with earnings per common share of $0.41. On an adjusted basis, excluding the gain on sale of a portion of our corporate trust and custody business and FDIC deposit insurance fund assessment benefit and Veritex acquisition-related expenses, EPS was $0.40, an up 18% year-over-year. Average loan balances grew by $2.8 billion or 2% from the prior quarter, while average deposits increased by $1.4 billion or 1%, reported CET1 ended the quarter at 10.6%, with adjusted CET1 at 9.2%, up 30 basis points from last year and within our target operating range. credit performance remained strong, with net charge-offs at 22 basis points and allowance for credit losses ending the quarter at 1.86%.

On Slide 10, a loan growth accelerated to 9.2% year-over-year, led by strength in commercial lending and significant contributions from our new initiatives. During the quarter, new initiatives accounted for $1.2 billion, representing approximately 40% of total loan growth. Key drivers included our geographic expansion in Texas and North and South Carolina, as well as strong performance in our Funds Finance and Financial Institutions Group commercial verticals.

Of the remaining $1.6 billion in loan growth from the core, we delivered $700 million from corporate and specialty banking, from auto, $400 million from regional banking, $200 million from middle market and $200 million from asset finance. These gains were partially offset by a $600 million reduction in distribution finance inventories that was largely seasonal and a $100 million decrease in commercial real estate.

Turning to deposits on Slide 11. We -- average balances increased by $1.4 billion or 0.8% and our overall cost of deposits declined by 2 basis points during the quarter. Our relentless focus on growing households and deepening primary bank relationships within a disciplined framework has proven a powerful lever in driving sustained deposit gathering with disciplined pricing.

Our teams are performing exceptionally well. as we grow our funding base, and we expect to drive funding costs lower with additional Fed cuts.

On to Slide 12. During the quarter, we drove approximately $40 million or 2.7% on sequential growth in net interest income. This represents almost 12% growth on a year-over-year basis. Net interest margin was 3.13% for the third quarter, up 2 basis points from the prior quarter. Operating performance accelerated throughout the quarter on a number of fronts, including NIM, powering margin to outperform the expectation I shared at the mid-quarter conference due to both better-than-expected funding costs and better asset yields.

Turning to Slide 13. We continue to manage our hedging program to accomplish our objectives of protecting capital from a potential higher rate environment, while protecting NIM from a potential lower rate environment. Over the last year, we've reduced our asset sensitivity to a near neutral position.

Moving on to Slide 14. On an adjusted basis, noninterest income increased by 14% or $75 million compared to the prior year. Our fee businesses were strong across virtually every area, but with notable performance in our key strategic areas of focus: payments, wealth management and capital markets collectively grew 13% year-over-year. Momentum remains strong across these businesses and we expect them to continue driving fee growth going forward.

In addition, loan and deposit fees benefited powerfully from commercial loan commitments.

Moving to Slide 15. Payments delivered 10% year-over-year growth, propelled by a 20% increase in commercial payment revenues, reflecting deeper customer relationships and expanding contributions for merchant acquiring.

Moving to Wealth Management on Slide 16, well fees increased by 12% year-over-year, with assets under management up 11% and advisory households also rising at 9%. Over the past 12 months, we've gathered approximately $1.7 billion in net flows as our teams continue to execute against our advice and guidance focused strategy.

Moving to Slide 17. Capital Markets grew 21% year-over-year, supported by advisory, syndications and commercial banking-related activities. In our Advisory business, we continue to benefit from efforts to introduce this service to more of our middle market and large corporate customers. The advisory backlog continues to build, and we expect sustained momentum in commercial banking production to carry over to Capital Markets for another strong result this quarter.

Additionally, our leveraged finance and private equity platform is now fully built out and will start to more meaningfully contribute to our results going forward.

Turning to Slide 18. GAAP noninterest expense was $1.2 billion, modestly higher than the prior guidance due to revenue-related compensation from the robust revenue outperformance in the quarter. Our expense management remains focused on driving positive operating leverage, both this year and over our long-range financial plan.

As we have noted, we were executing disciplined cost efficiency programs that reduce baseline expenses and create the capacity to robustly grow investments in the business, even as we create overall positive operating leverage. On a trailing 12-month adjusted basis, we have generated 500 basis points of positive operating leverage.

Our outlook for full year 2025 operating leverage is now more than 2.5 percentage points of efficiency ratio improvement, significantly wider than the original budget of approximately 1% coming into this year.

Slide 19 recaps our capital position. We continue to increase our common equity Tier 1. Our capital management strategy remains focused on our top priority of funding high-return loan growth; and second, supporting our strong dividend yield. As we have noted, we intend to continue driving adjusted CET1, higher toward the midpoint of our 9% to 10% operating range, given our progress driving adjusted CET1 higher and our projections of continued strong capital generation, we expect to have capacity to add repurchases to the mix of distribution in the coming quarters.

Our intention is to approach any share repurchase activity in a systematic manner over time, while also remaining opportunistic to overweight activity in quarters when we believe the shares are significantly undervalued. Our baseline assumption as of now is for approximately $50 million of repurchases per quarter through 2026.

We will continue to optimize this amount based on the pace of loan growth and the objective of continuing a gradual upward trajectory of adjusted CET1 toward the midpoint of the range.

Turning to Slide 20. Our disciplined approach is generating powerful returns and driving shareholder value. Over the past year, we've grown adjusted ROTCE by more than 1 percentage point through robust PPNR expansion while simultaneously increasing our capital base. As noted, tangible book value is up 10% year-over-year, and we've returned over 45% of earnings through dividends.

Turning to Slide 21. Credit quality continues to perform very well, with net charge-offs of 22 basis points. Forward-looking credit metrics remained stable. The criticized asset ratio was 3.79% while the nonperforming asset ratio declined 3 basis points since last quarter and has been trending in a narrow range for several quarters.

On to Slide 22. While economic and policy uncertainty has persisted throughout the year, we continue to deliver terrific performance and are once again raising our expectations for revenue and earnings growth. The outlook I'll share on this slide reflects both standalone Huntington and the anticipated impacts of the Veritex close.

On a stand-alone basis, we're continuing to see strong loan growth and are expecting to hit the high end of our guidance range at approximately 8% for the full year. Inclusive of Veritex, we expect to see full year ADB growth of approximately 9% to 9.5%.

On deposits, we also see performance at the high end of our prior growth guidance at approximately 5.5%. Inclusive of Veritex, we expect to see deposits on a full year ADB basis, growing approximately 6.5% to 7%.

On a Huntington stand-alone basis, we are increasing our net interest income full year guidance by 2 percentage points, to 10% to 11% from the prior range of 8% to 9%, driven by better-than-expected loan growth and higher NIM. We are very pleased with our management of NIM in 2025 and the expansion we have driven. For the fourth quarter, we expect our standalone Huntington NIM, excluding the impact of Veritex to rise between 1 and 2 basis points from the Q3 level. And -- as we've noted in past updates, we anticipate stand-alone NIM to rise again in 2026 by at least 10 basis points, driven primarily by continued benefits from fixed asset repricing.

Given our neutral asset sensitivity, our modeling would indicate we could achieve this level of NIM expansion in Fed fund scenarios ranging from 0 to as many as 7 cuts. We expect NIM expansion and continued strong growth in loans to drive another powerful expansion of spread revenues next year. We expect this higher NIM into 2026 and and the continued strong growth in loans to drive another powerful expansion of spread revenues next year, speaking briefly about the impact on NIM from the combination with Veritex we expect Veritex will lift the Q4 reported NIM by an additional 2 to 3 basis points.

Of this 2 to 3 basis points lift from the acquisition, about 1 basis point is from PAA accretion and -- we expect a similar dynamic in 2026 in which Veritex adds 2 to 3 basis points on top of the NIM expansion we anticipate for next year. We have laid out a schedule of the expected PAA accretion for the fourth quarter and for 2026 in the appendix to the earnings slides. We expect that we will realize approximately 2/3 of the total PAA benefit from Veritex by the end of next year, with a much smaller amount trailing into 2027 and thereafter, continuing with guidance on revenue drivers.

On a stand-alone basis, we're increasing our full year fee income guidance to approximately 7% from our prior range of 4% to 6%. Momentum is building across the fee businesses, and we expect to carry that momentum into the fourth quarter and beyond.

On a stand-alone basis, we expect expense growth of 6.5%, driven by volume-related drivers and higher incentive compensation. Throughout the year, our outlook for positive operating leverage has continued to expand, from approximately 100 basis points at the beginning of the year to now over 250 basis points expected as of today. This is a powerful testament to the strength of our revenue generation and performance on programs to drive efficiency in baseline expenses while we continue to invest powerfully in the business.

For the fourth quarter, we expect approximately $20 million of core PPNR benefit from Veritex, which equates to about $0.01 of earnings per share. We also expect to incur the majority of acquisition-related onetime expenses in the fourth quarter with approximately $125 million to $150 million recognized at closing or shortly thereafter.

On credit, we anticipate charge-offs at or below the midpoint of the range on a full year basis. The tax rate for the full year is expected to be between 17% and 18%, benefiting from some discrete items.

Lastly, please note that we completed a preferred issuance in the third quarter, which will result in higher preferred dividends in the fourth quarter and subsequently, we included an updated quarterly dividend schedule in the appendix of the earnings deck.

Turning to Slide 23. In closing, our focus remains on driving long-term shareholder value. Our performance reflects disciplined execution, a powerful and scalable franchise and a durable business model. Risk management is deeply embedded in our culture, and our capital and liquidity positions remain top tier.

Organic growth continues to outpace peers, supporting attractive revenue and earnings growth and driving value creation. The Veritex acquisition provides a springboard for future growth.

With that, we'll conclude our prepared remarks and move to Q&A.

Thank you, Zack. We will now take questions. We ask that as a courtesy to your peers, each person ask only 1 question and 1 related follow-up question. If you have additional questions, please return to the queue. Thank you.

[Operator Instructions]. Our first question today is coming from Jon Arfstrom from RBC Capital Markets.

Nice job. First question is on the loan growth outlook. Can you talk a little bit more about the pipeline. Zach, you mentioned you felt like growth is still accelerating and I guess not just curious about the expansion-driven markets, but more about the core trends, what you're seeing and you feel like that's still accelerating?.

Jon, this is Zach. I'll take that. And the short answer is yes. We have a lot of momentum coming into the fourth quarter. The guidance we provided implies approximately 1.5% sequential growth. That's relative to the 2% sequential growth we just posted in the third quarter. So there's a lot of strength we see right now in the pipeline. It's just the momentum of the business generally.

In the core business -- in the core of the business, we're seeing regional banking, for example, continues to power very strong growth. Our broad commercial specialty business performing very well. we would always expect the fourth quarter to be a quite good equipment and asset finance production quarter just given the seasonality of that and in a number of other areas continue to perform well.

And then we also see continued strength in consumer auto is an area that has continued to grow sequentially throughout the year. And our broad other consumer lending activities continue pretty well. also. So confidence is high for the fourth quarter. As I look out into next year in '26, we're clearly not giving formal guidance at this moment, but our working assumption is somewhere in the mid- to high single digits for year-over-year loan growth in 2026 as well.

Okay. Perfect. I appreciate that. And then maybe Brendan or Steve, can you talk a little bit more about what you're seeing from a credit quality point of view. There's obviously a lot of fear and uncertainty out there. Your numbers look very clean, but anything you're watching more closely and curious how you feel about credit in general.

Jon, we've had just -- this is Steve. We've had a really exceptional year in terms of credit performance and our outlook would suggest that's going to continue. Everything we see at this point would suggest that's the case. We -- there have been some issues with different companies and impacting different lenders. We've fortunately not had any issues. I traced that back, we put an aggregate moderate to over risk appetites in place 15 years ago. You've seen our reporting on the consumer side, how tight it is. We're essentially that tight on the commercial side as well.

The policies, the front-end guidance, the active portfolio management the other controls, the disciplines, the diversification all have -- will help us at some point will be downturn, but will help us significantly. And again, you've seen that in the stress tests that have been done over the years as well. So we're optimistic about loan growth going forward, as Zach said a minute ago, and we're confident in our ability to manage the risks. We're not seeing anything at this point that one.

Your next question today is coming from Manan Gosalia from Morgan Stanley.

Just as a follow-up to the last question. Just given the recent headlines around alleged fraud, double pledging of collateral, can you talk about the safeguards that you implemented got against that?

Sure Manan, this is Brendan. I'll take that. As kind of tidying on to what Steve said -- the aggregate moderate to low risk appetite that we've -- that's been sort of the foundational for us for the last 15 years, where it also begins. The client selection, the distal client selection on the front end active and rigorous portfolio management as we oversee these loans through their financial performance as well as collateral monitoring help us to pull out any soft spots that we might see because of that active major, we work with our clients well in advance of any things like the events that have happened over the last month. So I feel really confident in our ability to actively manage our book.

Manan, we always had a relationship orientation. And so that, I think, helps us avoid situations like those that have recently been reported because we're not looking to just make a long we're looking for a relationship. And absent that, we tend to pass in fact, of a couple of ones that have been that have occurred recently, we passed all those.

Great. And can you talk a little bit more about the NDFI book? What's in there -- and how we should think about the risk around that book?

Sure, Manan. I'll take a trail take a swing at that. If you exclude out things like loans to beef and subscription lines into higher-rated insurance companies, our MDI portfolio exposure is approximately is right around 2% of total loans. So those as Steve was talking about, those loans are really characterized through a relationship approach with a lot of diversity baked in there, and then the active portfolio management that I talked about.

So all in all, as we look at that, we feel very good about how we're positioned against the NDF portfolio.

[Operator Instructions] Our next question is coming from Chris McGratty from KBW.

There we go. Sorry about that. Zach, when we think about operating leverage comments, the $250 million or so, I guess, medium term, how do you see this trending given the balance of synergies and investments to become larger?

It's a great question, Chris. Let me unpack that for you. So really, really pleased with how we managed operating leverage this year, rising from less than 1% in our budget to over 2.5% now as we continue to drive very significant investments into the business, the investments growing almost 20% year-on-year in the business. So just powerful testament to the way we're managing expenses. As we think about the expense model going forward, the approach we're taking is very sustainable.

We're continuing to drive fundamental reengineering into the cost base, taking out about 1% of baseline operating expenses every year. And then funneling that into offensive investment-related expense categories like technology development, marketing the addition of new people to build up these businesses. And so that baseline model continues to be really strong and and it's our approach for the next several years.

All things equal, when we do budgeting, we start with an assumption of at least 1% operating leverage in any given year. And potentially up to 2%. As I'm thinking about next year, we're still finalizing that budget, but that's a pretty reasonable range for you to expect for '26.

All right. Very helpful. And then maybe, Steve, on the strategic question, right? You've got a lot of momentum in your business. I think you've got a stock that people want to own. Can you just speak to the M&A conversations that might be happening as you kind of close the Veritex deal?

Chris, I was waiting for that one. Thank you for the question. We've done 3 combinations in 15 years. We've invested a lot in the last 3 years in the organic growth of the businesses, the Carolinas, the specialty businesses, Texas expansion, including the combination with Veritex and we have a lot on our plate that will drive organic growth.

That is -- that has been and continues to be our primary focus. We're extraordinarily pleased and confident of what we have before us and Veritex excited to be closing Monday. -- this past Monday through Wednesday, our Board was in Texas meeting with our new colleagues. Brand Standards has gotten us into a great position for an accelerated start with Malcolm Holland and team and I think we've got a lot to go after. So those are the priorities. We -- again, we've had 3 combinations in 15 years. At some point, there'll be something else. But our focus is driving the organic growth of the company. And we -- I'm going to preempt the potential another question. We were not involved in Comerica. We are focused on driving organic growth for the company.

The next question is coming from Matt O'Connor from Deutsche Bank.

This is Nate Stein on behalf of Matt O'Connor. You talked about NII increasing again next year, and you gave some specific commentary on the NIM and loan growth operating assumptions. But how do I think about your operating assumptions for NII on a stand-alone basis relative to up 10% to 11% this year.

Yes. Great question, Nate. Thank you. This is Zach. I'll take that. As I think about the spread revenue model 2025, is a great example of how we're driving it. Strong loan growth, 8% loan growth this year and 10 basis points of of NIM expansion is driving that, what we just posted 12% year-on-year growth in spread in the third quarter.

As I think about '26, I think the model is going to look similar. You just heard me say earlier to Jon Arfstrom's question that I'd expect mid- to high single digits in loan growth. And from my prepared remarks earlier, I noted my expectation of at least 10 basis points of spread revenue expansion and so that should drive a pretty strong outcome or of NIM expansion. And so that would drive a pretty strong overall spread revenue outcome for 2026 as well.

Okay. Sounds good. And then I won't ask about M&A, but I guess just on the organic growth, and you guys have demonstrated a lot of really good growth the past few years and then in 3Q as well. But the expansion markets are really ultra competitive. And can you just talk about how you're continuing to grow in those regions against both the national players and also the very long-standing local banks?

Sure, Nate, this is Steve. We compete against all these banks. All of our markets are competitive in the Carolinas and Texas, those are rapidly growing local economies. And Texas is the soon to be the seventh largest economy in the world. So you have a massive amount of economic activity there.

In the Carolinas, we made that move a couple of years ago. We were in early. We have great colleagues who we've attracted to the company, and they've done a phenomenal job. We're very, very pleased with the progress we've made in North of South Carolina and the build-out that's occurring. We opened a handful of branches this year. There'll be a couple of dozen next year. And the same the following year, that will allow us to bring the full franchise, all the businesses that we operate today into the Carolinas.

We've also brought some teams on a couple of adjacent states in Atlanta and a couple of parts of Florida that are off to a fabulous start as well. So the average tenure of our colleagues in terms of experience in the Carolinas is a couple of decades. So we -- these are seasoned colleagues, they've got great relationships. They're well established. They're doing an excellent job carrying our brands forward. and they've accelerated our profitability well beyond what we thought was possible.

And in the case of Texas, essentially the same thing, our Texas teams and middle market teams we've put in place in Dallas and Houston 1.5 years or so ago. turned profitable very, very quickly. They're growing nicely. We're #1 SBA lender in Texas. We've got some specialty in corporate businesses in Texas. And now we have Veritex and that will allow us to bring the full franchise into Texas. So these markets are competitive to be sure.

And the Carolinas, we're off to a great start, and that started several years ago. So we're established. And in Texas, we expect to rapidly establish ourselves because we've got great new colleagues joining us from Veritex. We're not doing a [indiscernible] we're already there at scale, as I mentioned, #5 share in Dallas. It's a great position of [ players. ] So we're very excited, as you can tell, about the opportunities for us -- but I'll also come back, the core franchise is performing very well. We expect to grow in the core on a continuing basis.

And I'm optimistic based on the great colleagues we have here and this -- the overall strategies of diversification and bringing our national capabilities through at a local level that we've had a winning set of strategies. So combined, very optimistic about organic growth well into '26, and potentially beyond assuming the economy holds up.

Our next question is coming from Stephen Alexopoulos from TD Cowen.

Wanted to start -- so Steve, you're one of the very few regional bank CEOs, which have been in the seat since GFC -- and even though you feel good about your credit book, you know as well as anybody, this is an industry where a few banks can take down the rest. I mean your stock is now down double digit over the past month. Steve, are you concerned that there are more credit quality issues out there lingering in the industry.

Steven, I suspect there are isolated issues that are in the industry. But I think on the whole, the industry has derisked since the GFC. And that's part of what you're seeing with the rapid rise in shadow banking system or NDF, whatever you would call it. I think the banks are in a much better position today, particularly those that are broadly diversified and most of us are, certainly, we are -- and again, we've managed with this aggregate moderate to low-risk appetite in place.

You've seen 15 years of consumer quarterly reporting, it's incredibly tight. And I think the industry is -- there'll be some episodic moments and some one-offs, but I think the industry is in a good shape. And I'm obviously aware of Jamie's position/comments this week, but I don't see it broadly affecting the industry -- and many of those who reported are suggesting the consumer is in relatively good shape. We certainly are not seeing forward indicators in terms of delinquency or other measures. Sorry for the long-winded answer. Go ahead, Steve.

I appreciate that answer. If I could pivot just for a follow-up, maybe for Zach. So the return on tangible equity is very impressive here, and I'm looking at the 16% to 17% medium-term goal you're calling out for 2027. Are you signaling that the return is going to decline in that range? I don't know if it's the Veritex deal. Can you just walk us through how you get from the current returns to that target?

Yes. Thanks for the question, Steven. I appreciate you calling that out. When we set those medium-term targets, we obviously wanted to signal what we thought was the most likely case, but also to be somewhat conservative and give ourselves a chance to beat it. And so really pleased that we were able to ROTCE up over a percentage point this year and already get above the high end of that medium term range, which, clearly, you can imagine would help us take a step back and see whether we would want to adjust that range going forward, and we could potentially do that.

For us, the focus is really that kind of dual approach to drive value here for our shareholders, drive tangible book value per share higher in a very powerful way, 10% growth this quarter in our Investor Day, I signaled to high single digit to low double-digit growth for the foreseeable future of that, but also couple it with a really strong return. And so we're certainly doing that now. And we'll give that targets and thoughts as we go into next year.

[Operator Instructions]. Our next question is coming from Ken Usdin from Autonomous Research.

This is Ben on from Ken's team. You guys talked about the deposit pricing outperformance. I guess, what's kind of driving that? And then how do you expect betas to look over the next 100 basis points or so of cuts?

Yes. Great question, Ben. I'll take that. This is Zach. So we feel just incredibly pleased with how our deposit teams are executing on both rate and volume, frankly, they handily exceeded our plans in the third quarter on both of those fronts. In just the execution is extraordinarily good.

And if I was to show you and zoom into the last 2 weeks of the quarter when the rate cut really occurred, we had a 40% beta in the last 2 weeks of the quarter. So that 40% is what we've guided before over the long term. It continues to be our expectation for what we'll see over the course of this overall down rate cycle, however, it ultimately manifests itself. I think your question was sort of how are we doing it? And what I would tell you is it's an incredibly sophisticated approach that our teams have of managing deposit activities. And it's all underpinned by the fact that we have primary bank relationships. And we say that a lot, but it really is foundational strategy.

We're winning the checking and operating accounts of our consumer and commercial customers. We're gathering other pools of liquidity, and we're managing the overall rate to be very efficient for us to gather marginal funding and it's all supported by extraordinarily sophisticated analytical and operational approaches that allow us to do that at a pretty granular level. So that's the playbook.

It's working very, very well and underlies our expectation of continue to drive solid volume into next year, we've talked a little bit about our loan growth outlook for next year, but I didn't comment on our deposit growth outlook, but that likewise is in a pretty solid position as well. We expect to match fund loan growth as we go into next year with core deposits.

Great. And just a clarification for next year. The 10 basis points of NIM expansion, is that on a full year basis, 26% over $25 million -- and then, I guess, is fixed rate repricing going to be the biggest driver there? Just any color on that.

Yes, that's the short answer to your first question and if you unpack the drivers of NIM expansion here, the biggest and most significant type of net driver is that fixed asset repricing. We've talked about this for a while. We've got 12 basis points of year-over-year benefit in success of pricing of 2024. We estimate this year 2025 to be around 10 basis points. Next year, we're estimating this 0.7 basis points of additional fixed asset repricing and even, frankly, further into 2027 benefits.

And it's really driven foundationally by the roll-off yields we're seeing in categories like auto and equipment leases is a lot lower than our new production yield, something like 70 to 75 basis points today in terms of that difference. And so that's really what drives that, and it's quite sustainable. We're also generally pretty asset neutral here in terms of our asset sensitivity position as we indicated in the prepared materials.

And so that really helps us to buffer the various scenarios in rate. And so we think that, that roughly 10 basis points or even more in most likely scenarios is durable under a very wide range of ultimate interest rate and outcomes here.

Your next question today is coming from Ebrahim Poonawala from Bank of America.

Zach, just following up on the deposit growth. I think the question I had was as we think about this deposit pricing competition and where you're able to grow these deposits both from a market standpoint and price standpoint, just speak to the competitive landscape.

And I think -- where I'm going with this is as we think about the balance sheet growth outlook from here incrementally, is that accretive to where the net interest margin is today or dilutive?

Yes. Terrific question. And I think the short answer is accretive. We're seeing very strong marginal returns. And I think the combination of what we're doing with asset yields both benefiting from fits server pricing was a little mechanical, but also actively modulating where we're producing to really optimize rate on the yield side and then couple that with driving down deposit costs, is a very intentional strategy to drive marginal returns higher. And so we're seeing that.

We get a lot of questions, but certainly a lot of interest on what's the vector right now in the competitive environment? And -- what I would tell you is we're not seeing anything very significant on the whole in terms of the change. It has been competitive, it remains competitive, and we have to be very, very smart in terms of how we operate. And to be honest, it's a battle of sort of 100 different levers all at the same time. It's incredibly sophisticated and granular and -- but the team is just executing exceptionally well to drive both lower volume and yield, but also drive down deposit costs and really make marginal funding as efficient as possible. So high confidence we're going to keep that off.

Understood. And one, just on loan growth. I'm sorry, if you Steve, you talked about the bonus depreciation seasonally equipment finance lending, it's a strong quarter for Huntington. I'm just wondering, has the tax bill related sort of stimulus flowing through where clients are now beginning to make those investments? And is that driving increased lending demand as we go into 2026?

Ebrahim, we are -- we typically have a very good fourth quarter for asset finance. The activity is firming up now and will be in line with our expectations. I don't think this will be a record year. Part of that is because of tariffs having some impact on the imported components and then some delays that occurred earlier in the year and just ordering that they can't get physical delivery now in the fourth quarter, but this is a good quarter, and I think it sets up next year to be a very good year.

We retain our question-and-answer session. I'd like to turn the floor back over to management for any further or closing comments.

Thank you for joining us today. In closing, our teams continue to deliver just exceptional results highlighted by our peer-leading growth, our robust profit growth and strong return on capital. And we've never been better positioned, and we're very confident in our ability to drive continued strong performance.

And finally, as usual, I'd like to thank our nearly 20,000 Huntington colleagues who every day look out for each other, for our customers and have driven this performance. But as you heard throughout the call today, we're really excited for our partnership with Veritex and to welcome Malcolm and our new Veritex colleagues this coming Monday. So thank you all for your interest in Huntington. Have a great day.

Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.