When Steve Steinour left the top job at Citizens Financial Group Inc. about two years ago, he never imagined he would end up as chief of Huntington Bancshares Inc., an also-ran with big problems.
"I would never have wildly guessed that I would run Huntington — I had ambitions to do other things; it wasn't, per se, to run a bank," said Steinour, who spent 16 years at Citizens and struck the deal that put the bank's name on the national scene as sponsor of the Philadelphia Phillies' new baseball stadium. "I didn't anticipate, when I left Citizens, being in the role I am today."
Few anticipated where Huntington would be just more than a year after Steinour became chief executive of the Columbus, Ohio, lender: on the cusp of profitability thanks to his new team's overhaul of the $53 billion-asset regional banking company.
The 52-year-old executive — who started his career helping regulators liquidate failed banks in the early '80s — is winning praise from investors and analysts for helping rescue one of the Midwest's most troubled lenders. Huntington, with about 600 branches in Ohio and Pennsylvania, has contained a toxic subprime lending arm that pushed it deep into the red. It also plugged a hole in its balance sheet by raising a massive amount of capital last year.
Steinour is putting that cash to work by going on the offensive against his former employer and other banks in the cut-throat Midwestern banking market. The company recently extended branch hours and hired 200 people in Cleveland in an assault on Charter One, a Citizens subsidiary he used to run there. It also poached a commercial lending team in Michigan from Comerica Inc., which has the top deposit share in that state.
"He has remade that company — they are very competitive in most of their product segments," said Anthony Davis, an analyst who covers Midwestern banks for Stifel, Nicolaus & Co.
"The way he has reenergized the entire culture of the place, I don't think there is any question that they can grow deposit share and loan share."
'CALL ME STEVE'
Steinour has reputation for working brutal hours. In his rare time off, he says he goes jogging with his wife and clay pigeon shooting with his son. He has a daughter, too, and the family has traveled the world together. He lives within walking distance of the office, where he asks employees to call him "Steve." He chatted up branch managers at a recent function while posing for pictures with them. He describes himself as a hands-on boss who keeps close tabs on the performance of his people and the company's business lines.
"I have very high expectations of myself and the management team," he said.
Steinour is the first to acknowledge that Huntington has massive challenges to overcome. Chief among them, analysts said, is executing its ambitious growth plans in states with poor economic profiles like Ohio and Michigan. It also must overcome its status as somewhat of a laggard. Steinour is optimistic. He says Huntington has a good brand name and strong legacy of customer service to build on.
"I am one of the few CEOs that said 2009 will be our worst year — 2010 will be better," he said. "I remain committed to that outlook. We're getting stronger every day."
His growth strategy is straightforward enough. The aim is to generate higher revenue by cross-selling more products to retail customers. The company is also investing heavily in promising areas like small-business lending in order to take market share from the competition.
Steinour generated headlines in February when he said the company plans to double its small-business lending by loosening underwriting standards. Though that sounded rash, he explained the approach as "common sense" for a bank that wants to boost lending because even sound companies were unprofitable in the depth of the recession.
THE RIGHT RESUME
Analysts said that Steinour's experience makes him a good turnaround executive.
He worked in the Federal Deposit Insurance Corp.'s receivership department and at Bank of New England and Fleet Financial Group before joining Citizens in 1992. He was a favorite lieutenant there of former CEO Lawrence K. Fish, helping him build the company into a regional powerhouse by overseeing acquisitions and risk management, among other things.
Fish said he is not surprised where his protégé ended up. A lot of his former Citizens colleagues bought Huntington stock when Steinour took over, Fish said.
"Steve is the only person I've worked with who could schedule a meeting at 5:45 in the morning," Fish said.
"He is not a man to raise rare orchids or to bum around with the guys on Friday night. He's a worker."
Steinour has his work cut out for him at Huntington, which has a history of getting into trouble in pursuit of market dominance. Though it is one of the country's most innovative banks, it has never found a niche where it could outperform local rivals.
The 144-year-old lender's last two CEOs — Thomas Hoaglin and Frank Wobst — were effectively pushed out in the wake of abortive acquisitions.
Hoaglin, who served from 2001 to 2009, was making headway on restructuring the business when he made a disastrous deal that exposed the company to subprime lending.
Wobst, who ran the company from 1981 to 2001, incited the ire of shareholders after bad deals in Florida and Michigan.
It is far from certain that Steinour will succeed as he tries a Midwestern growth play of his own.
So far, investors are giving him the benefit of the doubt because he has delivered something Huntington has lacked for a while: credible leadership. It has a chance to reboot itself as the top player in the Midwest. The recession has disrupted its biggest rival, Fifth Third Bancorp in Cincinnati, and caused another one, Cleveland's National City Corp., to disappear when it was purchased by PNC Financial Services Group Inc. of Pittsburgh.
The market took Steinour seriously when he said in late January that Huntington — which has lost money for five straight quarters — would be profitable again this year now that it has a grip on its loan problems.
Its shares have risen 17% since then, outperforming the KBW Bank Index.
"He's a good turnaround banker: He knew what needed to be done, and he's done it," said Fred Cummings, the president of Elizabeth Park Capital Management Ltd. in Beachwood, Ohio.
"Huntington's core profitability is pretty solid, and that number should improve."
