Huntington Bancshares Inc. Business Information, Profile, and History

History of Huntington Bancshares Inc.

Huntington Bancshares Inc. is one of the 40 largest multibank holding companies in the United States. With about $16.5 billion in assets in 1994, Huntington operated 350 offices in eight states, mostly in Ohio and other midwestern states. It also provided various financial services through several subsidiaries. Huntington's rich history spans more than 125 years.

P. W. Huntington formed the Huntington National Bank in 1866. He had to do something big. After all, P. W. was one of the most recent additions to a long line of Huntington's that had helped shape the United States of America. In 1633 Simon and Margaret Huntington left Norwich, England, with their daughter and four sons to settle in the tiny town of Roxbury, Massachusetts. Simon died of smallpox during the voyage, but the family prospered, married, and multiplied. Benjamin Huntington, P. W.'s great grandfather and the descendent of one of Margaret's sons, helped to start the Revolutionary War by calling the first revolutionary meeting in Norwich, Connecticut, in 1774. Another Huntington, Samuel, was president of the Continental Congress from 1779 to 1781, signed the Declaration of Independence, and helped construct the Constitution; some historians have even referred to Samuel as the nation's true first president. The Huntington after which P. W. was named, Pelatiah Webster, was a well-known political economist, author, and teacher during the late 1700s.

P. W. himself was born 1836, went to work at the age of 14 on a whaling vessel that sailed to Russia, and began a job as a messenger in a Columbus, Ohio, bank when he was 17. After working for 13 years in the rapidly growing Columbus banking industry, P. W. started his own banking enterprise, P. W. Huntington & Company. The bank grew quickly. P. W. built a five-story building in 1878, Columbus' first "skyscraper," and began to get his sons involved with the bank's operations. Four of P. W.'s five sons became partners during the 1890s and early 1900s, eventually assuming executive management positions. The bank was incorporated in 1905 as the Huntington National Bank of Columbus.

Huntington moved to a new, larger building in 1916 to house its burgeoning operations. P. W. died in 1918 shortly after turning the bank over to his sons. By the time of his death, however, he had built the bank into a leading financial institution in Columbus. Francis, or "F. R.," became president and provided active leadership for fourteen years. One of F.R.'s most important contributions during his short term as president was the initiation of an acquisition program; in 1923, Huntington purchased State Savings Bank and Trust Co. and the Hayden Clinton National Bank, thus swelling its capital base considerably.

As a result of its acquisitions, Huntington became active in the trust business. In fact, by 1930 the bank's trust assets totaled more than all its other banking assets combined. F. R. died in 1928 at the age of 52, but not before constructing a large addition onto the bank's existing building. The grand complex received world-wide attention when it was unveiled in 1926. Shortly thereafter, F. R.'s brother, Theodore, or "T. S.," assumed the presidency. One year later, the Great Depression began.

Fortunately for the bank's investors, T. S. maintained the strict, low-risk banking strategy during 1928 and 1929 that had been initiated by his father and followed by F. R.. P. W. believed in high liquidity, large cash reserves, and cautious investments. P. W. had once turned away a giant $500,000 deposit from a railroad, saying to one of his sons, "We should not owe that much money to anyone." P. W. was also known for collecting sticks on his walk to work in the morning--He burned them in the company's fireplaces to save money on heating fuel. Like his father, F. R. carefully avoided the urge to invest in the plethora of speculative opportunities that arose during the "Roaring Twenties."

As a result of its discipline, Huntington survived the Depression while many of its industry peers shrank into oblivion. T. S. guided the company for only four years before stepping aside for health reasons. He handed the company off in 1933 to the youngest Huntington brother, B. Gwynne, or B. G. Known for his almost limitless energy, B. G. successfully guided the bank through the perilous Depression and World War II years before ceding his duties as president and becoming chairman of the board in 1949. B. G. served as chairman during Huntington's rapid postwar expansion. His death in 1958 marked the end of 92 years of guidance for Huntington National by the men of the P. W. Huntington family. Exemplifying their leadership during that period was the motto carved into the stone in the bank's main lobby, "In Prosperity Be Prudent; In Adversity Be Patient."

B. G. Huntington was succeeded as president by John E. Stevenson. Stevenson, who had worked in the Columbus banking industry since 1907 and had come to Huntington by way of the 1923 mergers, was a strong and decisive leader. One of his most notable achievements as chief executive of Huntington was extending the bank's reach through the addition of branches. During the early 1960s, Huntington built several branches and acquired a number of banks that it turned into Huntington branches. Stevenson also oversaw Huntington's entry into new services, namely installment and mortgage loans and retail lending. Noted for his emphasis on loyalty, Stevenson is recorded in company annals as having told a colleague, "Run the place as though you owned it, but never fool yourself into thinking that you do." Clair E. Fultz assumed Stevenson's duties as president in 1963.

Although the Huntington National Bank benefited from an astute, dedicated management team during its 1950s and 1960s growth years, much of its success was attributable to the healthy expansion of the local economy. Indeed, Columbus' population soared from 70,000 in 1940 to a whopping 376,000 by 1950 and to 471,000 by 1960, making it the second largest city in Ohio. The boom in housing, industry, and retail sectors created huge opportunities for Huntington to increase its lending activities and attract a steady supply of deposits. Huntington flourished. Between 1958 and 1966, in fact, its assets doubled. By the mid-1960s, the bank was separated into eight major division, was operating 15 offices in the Columbus area, was lending money for all types of consumer and business needs, and had implemented computer systems to reduce its escalating load of paperwork.

1966 marked Huntington's 100th anniversary. It also signaled the start of a new era of expansion for the bank that occurred during the late 1960s and 1970s. By 1965, Huntington's trust division had grown so large that a separate building, connected to the main bank by an underground tunnel, was created to separately house that operation. In 1966, Huntington created an international banking division that would eventually provide important financial services for foreign banks and companies. Among other accomplishments, in 1972 Huntington National became the first bank in the United States to open a 24-hour, fully automated banking office. Called the "Handy Bank," the concept was soon copied around the world.

Importantly, Huntington National formed Huntington Bancshares Inc. in 1966 as a means of extending its reach into other parts of Ohio that were previously off limits under federal banking laws. Huntington Bancshares became the parent of Huntington National Bank and subsequently conducted a string of acquisitions during the late 1960s and 1970s. Under the direction of a new president, Arthur D. Herrmann, who took office in 1975, Bancshares created new financial services divisions to place under its corporate umbrella. In 1976, for instance, the Huntington Mortgage Company was founded--by 1979 it was the largest construction lender in central Ohio. The Huntington Leasing Company was started in 1977, and doubled its assets by 1979. By 1979, in fact, Huntington Bancshares Inc. had assets of nearly $2.5 billion (up from just $400 million in 1966) and was operating 97 offices through 15 affiliated banks.

State deregulation of the banking industry in 1979 provided new opportunities for Huntington to enlarge its already ballooning organization. Under the direction of Frank A. Wobst, who became president of Huntington in 1981, Huntington National opened new branches in Kayton, Akron, and Cincinnati. Those gains were augmented by several new acquisitions by Bancshares, including two pivotal purchases in 1982: Reeves Banking and Trust Company of Dover and, more importantly, Union Commerce Corporation of Cleveland. As a result of expansion and acquisition, Huntington Bancshares became Ohio's fourth largest bank holding company in 1982, with $5 billion in assets, 176 branch offices, and operations in 94 Ohio cities.

Huntington was again aided by deregulatory efforts in 1985, but this time at the federal level. Congress approved interstate banking regulations in that year that allowed Huntington Bancshares and other multibank holding companies to become active in other states. Huntington's management determined that its national expansion objectives could best be achieved by establishing separate holding companies in different states. It formed Huntington Bancshares Indiana, Inc., for example, and set up similar holding companies in Kentucky and Michigan. Huntington completed four major acquisitions of banks in those three states, and also extended operations of some of its subsidiaries into Florida, Delaware, New Jersey, Pennsylvania, and several other states. All the while, Huntington continued to strengthen its presence in its core Ohio markets.

Although Huntington's rampant growth during the 1970s and 1980s may appear to reflect a divergence from the cautious growth strategies employed by the Huntington family, it was really more symbolic of industry trends dominant during that period. Indeed, as smaller U.S. banks found themselves under increasing pressure to compete against nonbank financial institutions that were encroaching on their traditional turf, the number of banking entities in the United States plunged from about 13,000 in 1983 to less than 10,000 by 1990. Meanwhile, the number of multibank holding companies, like Huntington Bancshares, grew from about 300 to around 1,000. Huntington did increase its exposure to risk, but it pursued a generally safe strategy during the 1980s.

Huntington's shakiest move was its $2 billion 1982 Union Commerce acquisition. Although it doubled Huntington's size, the purchase left the company loaded with debt that took six years to pare. Wobst and his colleagues learned from the troubled 1982 acquisition, and pursued a less aggressive growth plan throughout the remainder of the 1980s. Nevertheless, a steady stream of purchases combined with the Huntington's expansion into a range of new financial services generated strong asset, revenue, and profit growth for the holding company during most of the decade. By 1989, Huntington boasted $10.9 billion in assets and 248 offices in 11 states. Furthermore, the bank was gearing up for faster growth in the 1990s.

Although industry trends favored Huntington's rapid rise during the latter half of the 1900s, the primary source of its success was sound management. After all, many of Huntington's competitors had suffered irreversible defeats during the late 1970s and early 1980s, and many others had engaged in risky investment strategies that were about to damage them severely in the early 1990s. In contrast, Huntington remained comparatively healthy. It refused to be drawn into imprudent growth tactics to compete with its faster growing peers, such as industry leader Banc One. "In the 1960s and 1970s they (Banc One) made a lot more money than we did...," Wobst acknowledged in the September 13, 1993 issue of Forbes. "If we had tried to grow as fast as they did, we wouldn't be around anymore."

The chief executives that had provided Huntington's sound management during the 1980s represented an eclectic mix of skills and backgrounds. Wobst was born in Germany, studied law, and immigrated to the United States in 1934 when he was 24. Unable to speak English, Wobst learned the language and worked his way up to the presidency of the company after being in the United States for only 23 years. Wobst became chairman and chief executive in 1984, ceding his presidential duties to 40-year-old Zuheir Sofia. Sofia, a native of Lebanon, came to the United States as a teenager and joined Huntington's start-up international division in 1971. By 1984 he was practically running the company.

During the early 1990s Wobst and Sofia sustained, and even accelerated, the expansion rate they had achieved in the 1980s. They also succeeded in strengthening the holding company's balance sheet and improving its productivity and profitability. Huntington celebrated its 125th anniversary by offering a range of new financial and banking services. It began sponsoring low-income community development loan programs, for example, and started offering cut-rate, at-home banking for low- and moderate-income customers. Huntington also hopped into the surging mutual fund and insurance markets, offering its own proprietary products. Importantly, the bank continued to expand through cautious acquisitions.

Perhaps Huntington's greatest accomplishment during the late 1980s and early 1990s was its development and implementation of cutting-edge information systems that were slashing its labor costs and improving service. It poured millions of dollars into, for example, a system that allowed customers to pay bills through a touch-tone telephone. It also created a service that let customers talk to staff to make investments, loan inquiries, or account transactions by phone, 24 hours per day. It worked to developed a telephone with a screen that would let its customers pay bills, book airline tickets, and access other Huntington services. In 1994, Huntington opened a $4 million operations center in West Virginia, where it planned to consolidate its account management operations. "We have used technology very smartly," Sofia said in an August 1993 issue of Columbus Dispatch, "and all of the sudden it is beginning to pay off for us."

Other aspects of Huntington's operations were also paying off in the early 1990s. In 1992, Huntington Bancshares' earnings surpassed $50 million before rocketing almost 50 percent in 1993 to $103 million. Furthermore, the holding company's total base of assets ballooned to $16 billion. By early 1994, its assets had risen to a staggering $18 billion, a rise of more than 60 percent since 1989. Huntington had become the 40th largest bank in the United States (by assets) by 1994, and was operating more than 450 banking and financial services offices in 17 states. Befitting the legacy of fiscal propriety initiated by P. W. Huntington in the 1860s, the company's financial health was among the best in the industry going into the mid-1990s. In addition, its stock price surged more than 25 percent during 1993, reflecting Huntington's potential for future expansion.

Principal Subsidiaries: The Huntington National Bank.