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Investing.com -- Moody’s Ratings has affirmed Huntington Bancshares Incorporated’s ratings but changed its outlook to negative following the bank’s announcement that it will acquire Cadence Bank.
The rating agency maintained Huntington’s long-term senior unsecured debt rating at Baa1 while changing the outlook on its banking subsidiary’s long-term deposits to negative from stable.
At the same time, Moody’s placed all of Cadence Bank’s ratings on review for upgrade, including its Baa2 long-term issuer rating and baa1 standalone Baseline Credit Assessment.
The all-stock transaction, announced Monday, is expected to close during the first quarter of 2026, subject to regulatory approvals. Cadence’s total assets, loans, and deposits each represent slightly more than one-quarter of Huntington’s as of September 30.
While Moody’s acknowledged Huntington’s strong track record of integrating acquisitions, the agency cited incremental operational and execution risks as reasons for the negative outlook. This marks Huntington’s second bank acquisition in recent months, with its earlier purchase of Veritex Holdings not yet fully integrated.
Despite these short-term concerns, Moody’s noted potential long-term benefits from the deal. Cadence’s franchise is centered in Texas and several Southern states with robust economies and strong demographic trends. The combination of Cadence’s and Veritex’s Texas operations will provide Huntington with a significant growth platform in a market where it already operates.
Following the transaction, Huntington will become subject to more stringent regulatory requirements as a Category III institution, which Moody’s believes will strengthen its credit profile over time. However, the acquisition will moderately increase Huntington’s commercial real estate concentration.
Management estimates the transaction will be "mildly dilutive" to regulatory capital, suggesting little change to Huntington’s common equity tier 1 ratio, which stood at 10.6% as of September 30.
Cadence’s ratings were placed on review for upgrade because they would align with Huntington’s upon completion of the transaction.
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