It took longer than expected, but Huntington Bancshares (HBAN) finally cut costs deep enough to reach a key goal for this year — achieving positive operating leverage.

Cost-cutting will also remain a priority as Huntington vets potential deals, Stephen Steinour, the Columbus, Ohio, company’s chairman, president and chief executive, said. Expense control was an important component of Huntington’s recent agreement to buy Camco Financial (CAFI) in Cambridge, Ohio.

“We have been saying that if the right opportunity came along, and it was fair to our shareholders, we’d be interested,” Steinour said during an interview Thursday. “Camco fit those parameters nicely.”

During the third quarter, Huntington cut 200 mortgage-related jobs, closed 22 branches, scaled back the size of other facilities and began curtailing pensions. Noninterest expense fell 8% from a year earlier, to $423.3 million.

Net income rose 6% from a year earlier, to $178.5 million.

The results pleased investors who were concerned that the $57 billion-asset company would fall short of its publicly stated goal to improve operating leverage, says Scott Siefers, an analyst at Sandler O’Neill.

“That was an important shift in the story,” because Huntington had failed to achieve positive leverage at midyear, Siefers says. “It’s unquestionably a good thing.”

Huntington booked a $34 million pretax gain in the third quarter tied to pension curtailment. It also booked a $17 million charge from branch closures, facility realignment and reduced compensation.

During a Thursday conference call to discuss quarterly results, Siefers noted that management seemed to have stepped up the pace of cutting costs. “This is the first time in a while that you’ve had enough of a closure [number] to necessitate a special charge,” he said.

“We continue to prune our distribution network as any retailer would,” Steinour said during the call, noting that Huntington closed 29 branches last year.

Huntington has maintained a consistent branching strategy that involved opening offices in areas where it can get in cheap or where it lacks a strong presence, says Christopher Mutascio, an analyst at KBW. “Steinour runs a good ship, so if he’s opening one new branch, he’s closing two old ones,” Mutascio says.

Steinour has found other ways to cut costs. Huntington reduced marketing expenses by $5 million, or 27%, from a year earlier, by limiting promotional offers and through the “refinement” of other marketing efforts. It cut spending on lawyers and outside consultants by $5 million, or 29%, compared to a year earlier.

“The economic growth that we projected for the year, at least through the first half, was meaningfully lower than projections, so we adjusted our level of investment,” he said in an interview.

The company’s mortgage revenue tanked, as it has throughout the banking industry. Mortgage banking income fell 47% from a year earlier, to $23.6 million.

It is unclear when mortgage lending will return to a normal level, Steinour said. Though lawmakers reached a deal to re-open the government and avert a debt default, there is no way to know if the mortgage market will rebound in time for 2014’s buying season, he said.

“What was done [in Congress] last night was to kick the can down the road,” Steinour said. “I don’t know” when the mortgage purchase market will rebound.

Steinour said in the interview that he knows what he is looking for in acquisitions, noting that the planned purchase of the $600 million-asset Camco is a good template for future deals.

“It is the size we’re looking for, but we’re not limited to that,” he said, adding that he prefers banks with $500 million to $2.5 billion in assets. “There are a lot more banks in that asset range. . . . We are only going to do in-market deals at this time.”

Huntington also reviewed 75% of Camco’s loans, which will serve as a standard for future negotiations. “We have a very disciplined process that’s data-driven,” Steinour said. “We will only do a deal that has diligence conducted essentially at this level. We want to understand the risk before we do a deal.”

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