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Considered near death just a year ago, Huntington Bancshares put up a surprise $40 million profit in the first quarter. Credit CEO Stephen Steinour, who has attacked credit problems, replenished capital, slashed expenses and, most notably, changed the culture at the chronic underachiever. Once an apparent takeover target, it's now on a short list of likely Midwest consolidators.
July 1
The credit crisis showed what can happen when banks grow faster than the economy.
Huntington Bancshares (HBAN) is mindful of that lesson even as its commercial lending outpaced the country's gross domestic product growth in the first quarter, says Stephen Steinour, the chairman and chief executive.
The Columbus, Ohio, company, which has $56 billion of assets, increased commercial lending at an annual rate of 16% to 17% as GDP increased at roughly 2.5%, Steinour said in discussing the company's
It reported profits of $153 million, up 21% from the previous quarter and year-earlier period.
"You have seen banks grow at this level stay controlled and stay disciplined," Steinour told reporters. "We are very prudent in our risk management. That is where I spent the bulk of my career."
The key drivers of Huntington's profits were lower provisions, higher mortgage banking revenue and gains from securitizing more automotive loans. Its margin benefited from increased commercial and industrial lending. Huntington's average C&I loans increased 4%, or about $600 million, from the prior quarter to $14.8 billion.
Total average loans and leases were flat at $39.1 billion because of auto loan runoff and securitizations. Comerica (CMA) and U.S. Bancorp (USB) reported higher commercial lending in the quarter, too.
Huntington is staying rational as it takes share from community banks and other players in an increasingly competitive market, Steinour says.
How?
Huntington is "choosing who we want to do business with," Steinour says. "We're not blindly cold-calling and getting business."
"We're targeting efforts at companies that we have information on and we know they have performed," he adds.
Credit got unusually tight during the crisis and even good companies had a few rough quarters that may have hurt their credit scores, he said at the time.
He credits Huntington's most recent loan growth to getting a head start on courting companies on the mend in Ohio, Michigan and elsewhere throughout its 660-branch, six-state territory.
"We got a running start on our growth regionally," he says.
Huntington's customer-friendly approach of going easy on fees and a broad recovery in the Midwest have helped, too, he says.
Huntington may pursue additional acquisitions in Michigan
Its primary focus in Michigan is organic growth, he says.
Huntington's shares rose nearly 1% to $6.40 Wednesday.
