Chicago, SBA Lending to Factor Heavily in Huntington's Growth Story

Check deal completion off the to-do list for Steve Steinour at Huntington Bancshares.

Steinour, chairman and chief executive of what is now a $100 billion-asset company, can now focus his energies on integrating FirstMerit Bank in Akron, Ohio. The $3.4 billion purchase was the biggest ever for Steinour and his Columbus, Ohio, bank.

Steinour recently discussed the financial commitments that helped make the deal work, along with his plans for making the most of the $26 billion-asset bank that Huntington bought. FirstMerit, for instance, gives Huntington entry points into markets in Illinois and Wisconsin.

Here is an edited transcript of the conversation.

What are some of the opportunities for Huntington now that the deal has closed?

STEVE STEINOUR: We're quite sizable now in Ohio, but we think we have tremendous opportunities yet within our customer base. So there's a lot of focus on the core, if you will, of where Huntington historically has been in Ohio, Michigan, Indiana, northern Kentucky, West Virginia and western Pennsylvania.

We think we've got terrific growth opportunities in those six states, but the expansion into Chicago itself — just the Chicago MSA is bigger than some of the states we're in. FirstMerit has a really good business bank [and a] commercial bank group established in Chicago. There are very talented people. We're looking forward to doing more with that commercial group.

We'll do some niche things, too. You know we do a lot of SBA lending in our footprint. We'll open that up in Chicago.

How important was it to convey to Akron that Huntington remains the local bank?

We think of ourselves as a hometown Akron bank. FirstMerit has been here 172 years; it has the leading market share and it is involved in many, many things that go on throughout the community. We will be stepping into those shoes and we'll be … expanding those commitments. Akron and Summit County will be an important part of our growth expectations. When I started this conversation by saying we expect to continue to grow in Ohio, Akron will be part of that.

This deal seemed to get approval without any CRA-related hitches, which have tripped up others. It would be great to get your thoughts on that.

We have a reputation of being good to the community that, frankly, goes back to our founding. … There are deep community commitments that are just part of our DNA. In the context of CRA, that's again just part of who we are. The more vibrant and strong these communities are, the better we're going to do.

We do a lot of small-business lending, a lot of consumer lending and a lot of mortgage lending. It's just kind of bread and butter. We have a simple business model. I think that worked in our favor from a regulatory perspective. We will do even more SBA lending throughout Summit County and Akron as a consequence of the size there. It means more small-business lending, and more loans to individuals. That's all good for the community and it's good business.

We don't have to change our stripes in terms of who we are. We just have to deliver in a consistent fashion. I think that has weight in terms of the consideration process, but it's cloaked in mystery. I can't offer a specific insight. I can just suggest that managing risk well is vital and taking on community responsibility, which for us is part of our business plan, is very helpful. The two of those combined I think create a better set of circumstances for applications to be considered by the regulators.

Reflecting on the deal so far, what stands out as something that either exceeded expectations or challenged you?

There were a number of things that were very positive. We think of ourselves as being in a people business, but after you announce a deal, sometimes parties drift apart. In our case, [FirstMerit CEO] Paul Greig and the executive team were exceptionally good people to work with. They stayed focused and committed. They offered their advice and thoughts along the way and we adjusted our plans as a result.

We were confident of our execution when we announced [the deal]. I can tell you we're even more confident now because of the nature of the undertakings being shared, getting their advice along the way, and making sure we adjusted when we thought it was prudent.

I'm very bullish on what this will do for us. It's a real credit to [the FirstMerit] management team … and to our team. Kudos for listening. Kudos for asking. We believe, and we were talking about this today, that we're stronger together. We thought so at the announcement. I totally believe that today.

I'd like to hear more of your thoughts on SBA lending.

We think we can we can get bigger with SBA but also with a number of other products. I would point out that FirstMerit helps us a lot in Michigan. It fills in part of the state where we didn't have a lot of presence. This is like a hand-in-glove fit. The culture works. Their business model is very much aligned to ours. We get a lot of synergies on both revenue and expense.

You have also mentioned Flint, Mich. What has gone on there since Huntington committed $25 million to that community?

Flint, as we all know, had a national water emergency. When we looked at that issue and the timing of our announcement [with FirstMerit], we decided to make a series of investments. In anticipation of the closing, we just opened it up. We've touched a lot of small businesses in Flint as a result of the grants we've given and the SBA lending we're doing. It helps to establish us as a responsible community citizen.

What are your thoughts on the FirstMerit integration?

We're planning for it. We're very hands-on. This is a company that executes and we've got a lot of talent focused on this. The conversions will be done in the middle of next year. Much of the other activity, in terms of dispositions of excess real estate and things like that, will be done next year.

But the cultural side of this is typically multiyear. In this case, I will tell you that the way they approached their markets, the type of business they did is so very closely aligned to us. I think it is going to happen much faster and naturally.