Huntington chief throws cold water on talk of deal for Comerica

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Huntington Bancshares chief Stephen Steinour on Thursday downplayed speculation that his Columbus, Ohio, company could make a run at buying Comerica.

When Dallas-based Comerica changed CEOs earlier this week, it rekindled questions about whether the company might be for sale — and, if so, who would want to buy it. U.S. Bancorp, PNC Financial Services Group and Huntington were named as potential suitors in a recent Morningstar note.

The thinking is that Comerica would add more commercial banking to the $108 billion-asset Huntington's foothold in the Midwest, especially Michigan, where Comerica was once based. With 276 branches and $17 billion of deposits, Michigan is the second-largest market in Huntington’s eight-state Midwestern footprint.

Steinour, though, characterized the reports as conjectural.

"It's another guy's speculation," he said in an interview after Huntington issued first-quarter results. "Because of Comerica's meaningful presence in Michigan, we get added to the list. We're kind of lumped in because of our geographical proximity."

Huntington completed its last major bank acquisition — of FirstMerit in Toledo, Ohio — in August 2016. While Steinour ruled nothing out, he seemed far more comfortable with the idea of achieving continued growth at the bank that is in place now than tossing his hat back into the merger-and-acquisition ring. He described Huntington's current strategy as "driving the core."

Meanwhile, Steinour was upbeat about the U.S. economy's resilience in the face of predictions that a recession could be approaching.

“What we are hearing from our customers remains positive,” Steinour said Thursday in an interview. “We’re not seeing any early-on signs” of a slowdown.

That strength was reflected in Huntington’s commercial-and-industrial loan portfolio, which grew 8% from a year earlier. “The first quarter tends to be the slowest for commercial loan activity, but our pipeline held steady,” Steinour said.

Huntington reported 6% year-over-year growth in its overall loan portfolio, which totaled $75.1 billion on March 31. In addition to the strong commercial results, “consumer confidence is at the highest levels we’ve seen since 2000,” Steinour said.

Motivated by concerns the long-running economic recovery was on its last legs, Huntington recently shifted to a “super-prime” origination strategy in indirect auto and other consumer loan categories. And while the company has no intention of loosening its underwriting standards, Steinour acknowledged the economy has proved more resilient than expected.

“We’ve had the view that [a slowdown] is imminent for the last couple of years, and we’ve been wrong,” he said.

Huntington’s net income totaled $358 million for the three months that ended March 31, up 10% from the same period in 2018. Revenues of $1.15 billion were up 5%. At $82.7 billion, deposits were up 8%, helping the company meet its goal of funding loan growth with core deposits.

If there was a soft spot to Huntington’s results it was in asset quality. After four consecutive quarters of declines, nonaccrual loans ticked up during the quarter, as did charge-offs. Given the company’s low baseline, credit quality metrics remain well within its guidance, though.

“It’s important to look longer-term,” Chief Credit Officer Daniel Neumeyer said on a conference call with analysts. “Anything can happen in a quarter, and this quarter we saw a little more activity.”

Problems with a handful of commercial credits drove a $71 million increase in nonaccrual credits, which totaled $417 million on March 31. At the same time, there was no concentration in either industry or geography, Chief Financial Officer Howell D. “Mac” McCullough said on the conference call.

Even with the uptick, both Neumeyer and Steinour described Huntington’s overall asset quality as “rock solid.”

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