There is hardly a more transformative story than the one that occurred at Huntington Bank during the past several years. In 2009, Stephen Steinour was brought in to right the struggling, Columbus, Ohio-based bank in the wake of the financial crisis. The bank lost $3.1 billion that year and had bad credit issues. It raised capital and went through extensive layoffs.
“It was a tough year for us,’’ Steinour said at Bank Director’s recent Bank Executive and Board Compensation conference. “We had to shift gears.”
One of the things the $56-bilion asset Huntington Bancshares did was rebrand Huntington Bank, capitalizing on the bad name banks got during the financial crisis. While other banks were criticized for making substantial sums in overdraft fees, Huntington rolled out a 24-hour grace period on overdraft. If a customer overdraws an account, that customer gets a notification and 24 hours to put the money in the account with no fees. It was an extremely difficult year in which to introduce the plan. The bank was losing money, and the new program cost $36 million that first year.
“It was a huge step by our board and boy are we glad we did it,” Steinour said.
On the tail of the program’s success in bringing in new business and cementing loyalty, Huntington introduced asterisk free checking on the recommendation of employees. The checking account has no minimum balance requirements or terms.
“Our colleagues loved it because they asked for it,’’ Steinour said. “It put them in an empowered position with our customers.”
Huntington Bank began marketing itself as a “fair play” bank that would “do the right thing.” A training and recruitment video for the bank portrays the bank as a contrast to Wall Street, featuring a guy smoking a roll of dollar bills as if it were a cigar.
“We want to give customers an advantage rather than taking advantage of them,’’ the video says.
The transformation of the bank seems to have worked. Branding was by no means the only way the bank has improved profitability, but it helped.
In Bank Director’s 2013 Bank Performance Scorecard, Huntington was the top performing bank above $50 billion in assets, beating out giants such as Wells Fargo & Co. and Capital One Financial Corp., on measurements such as profitability, asset quality and capital levels. Huntington’s core return on average equity was 11.95 percent in 2012 and its core return on average assets was 1.22 percent, compared to a median of 9.70 and .98, respectively, for banks above $50 billion in assets.
Nowadays, Steinour is also focused on recruiting employees, with a particular emphasis on attracting the millennial generation into banking. It’s a challenge heightened by a public perception of the industry as one that takes advantage of people and has benefited from government “bailouts.”
Steinour says young people expect advances in technology and they are outspoken about their career objectives. Getting them to stay more than a few years is a challenge, as they generally don’t plan to work for the same employer for their entire careers.
“You have to respond to that,’’ he said. “That’s the workforce we’re getting.”
In order to address the concerns of its millennial employees, Huntington has laid out explicit career pathways and expanded its internship program. In response to questions from prospective employees about diversity, the bank has started groups for particular ethnicities and persuasions, including a lesbian, gay and transgender group.
“The things I assumed from my era of banking are no longer valid,’’ Steinour said.
Some good business practices, however, are timeless.
“We are in a people business,’’ Steinour said. “It is critical to us to engender engagement and continue to build upon colleague satisfaction. Their enthusiasm every day translates into great customer service.”