Huntington Bancshares Inc. is the latest banking company to launch an online deposit-gathering effort.
On Monday the $36 billion-asset Columbus, Ohio, company officially launched an online high-yield account that pays an annual interest rate of 5.3%. The account is available exclusively through a new dedicated Web site, directhuntington.com. Customers need a minimum balance of $1,000, and the funds can be accessed with an automated teller machine card, the company said.
Huntington said it conducted a soft launch of the account Jan. 29 and has already gathered about $8 million of deposits through it.
Tim Scholten, director of online services, described the effort as "a great way to expand our reach geographically." An online deposit-gathering capability is especially important because of Huntington's location in the slower-growth Midwest, he said.
(The company is poised to become larger in the region when it closes its $3.6 billion deal to buy Sky Financial Group Inc. of Bowling Green, Ohio, in July.)
"Over the years having a top-performing online bank has really helped us retain customers who have moved away," he said. Catching new online customers around the country with a competitive rate will also be a plus.
Several companies, including Citigroup Inc. and Washington Mutual Inc., have launched similar online accounts over the last 12 months.
Like many other companies in the banking sector, Huntington has struggled with deposit competition in recent quarters. For the fourth quarter, it reported that core deposits were flat from the third quarter, at $19.6 billion. The loan portfolio also was flat, at $26.2 billion, mainly because Huntington sold a portion of its mortgage portfolio.
The net interest margin grew 6 basis points, to 3.28%, as a result of a balance-sheet restructuring.
Terry McEvoy, an analyst at Oppenheimer & Co., said in an interview that he views Huntington's announcement of the new account as a "neutral" for the company — in line with his rating on the shares — though he will look for signs of deposit growth.
"Right now it's an attractive alternative to bring in funds," he said.
