NEW YORK (
) -- Stephen Steinour, the CEO of
in an exclusive interview on Thursday the Columbus, Ohio lender is looking to focus on organic growth rather than acquisitions following its stock offering this week.
Stephen Steinour, CEO for Huntington Bancshares.
Huntington Bancshares on Tuesday priced a $920 million stock offering at $6.30 a share and on Wednesday offered $300 million in subordinated 10-year notes with a 7% coupon. Both offerings have been completed in order to repay the government's $1.4 billion in bailout funds and allow Huntington to exit the Troubled Assets Relief Program, or TARP.
Although the announcement of a dilutive capital raise caused the share price to decline 5% that day and then "break price" on Wednesday to close at $6.27, the shares were still up over 6% over the previous month.
Huntington's CEO Stephen Steinour called the TARP repayment "the last step in positioning Huntington for growth and improving long-term shareholder returns," adding that although "the economic environment remains fragile, and the period of recovery more prolonged, the possibility of a double dip recession appears unlikely."
In an interview with
following the stock offering Steinour was as upbeat as ever.
Were you surprised about the stock "breaking price" after the offering?
We were massively oversubscribed in an hour and a half. We had to shut the window, and not every bank
issuing shares has that experience. We had a lot of investor interest and we offered every investor some level of participation, but many were disappointed at the small allotment relative to the size of their order, so we expected that there would be some selling.
With the bank profitable for the past three quarters, very strongly capitalized and exiting TARP, are you looking to grow through M&A?
Acquisitions are not a top priority and we have no interest in going out of market. We're only interested in our footprint. Through the third quarter we've had organic growth of 5%, which is three times GDP. We don't believe we need to acquire in order to grow. The most significant focus for us is executing organic growth.
Where to you see the most intense competition coming from?
Well we have a very broad set of businesses. For some markets
the competition consists of community banks, in other markets such as West Virginia it is
in the consumer sector.
For small business, we've done a lot of lending with an SBA ranking of fifth-place nationally. This is an area where we see a lot of opportunity in our footprint. For middle market, it would be the other regionals and large banks.
What are your priorities moving forward?
Our loan growth has been somewhat unique and at the same time our credit quality has enormously improved. We're beginning to fire on all cylinders.
We are providing more value to the consumer, and we're bringing a philosophy of fairness. For example, we know a number of our customers incurred overdraft fees simply because they were unable to make a deposit that day.
Our "24 Hour Grace" gives them that extra day. There's no fee for this. Every customer gets it. So this gives customers an extra day of cash flow. For customers who make an honest mistake and can't make a deposit the same day, this is very, very important.
Do you think your competitors will fall in line with "24 Hour Grace?"
We hope not. They can't afford to. There's a halo from this, which we're seeing in blogs. At first the reaction was "what's in it for you?" and the answer is "there's nothing." We're giving this to every one of our consumers and we're in a position of strength where we can do it." So we're increasingly being seen as innovative or progressive in our thinking and are positioning ourselves to be the most customer-friendly bank in our markets, and we're not done.
The "fair banking philosophy" is clearly benefitting us and driving business. Banking will be redefined in this cycle and we have an opportunity to provide a unique definition of a bank that's customer friendly.
Do you seen any bright spots in the economy in Ohio and in your overall market?
Bright spots? Absolutely, and beyond Ohio, in Michigan, western Pennsylvania and West Virginia. Many of these markets are stable and improving. Auto manufacturing and parts supply is much better than a year ago. Across the board you can feel the stability and strengthening occurring. So we're bullish about next year. It won't be a normal year yet with too much unemployment, but we're heading the right direction. We're playing our part with innovative public/private partnerships with the state of Ohio.
Any thoughts about restoring the dividend?
We said as part of the offering itself that having more flexibility was a very important component and the regulators' guidance around dividends and buybacks drove our timing. We're in a position to consider dividend increases going forward and we're highly sensitive to our shareholders.
Written by Philip van Doorn in Jupiter, Fla.
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Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.