After months of declining profits and three quarters of disappointing earnings, Huntington Bancshares has called on an outsider, Thomas E. Hoaglin, to turn the company around.
Mr. Hoaglin, 51, was named Thursday to succeed Frank Wobst as chief executive officer of the Columbus, Ohio, banking company. He will assume the job in mid-February. Mr. Wobst, 67, will remain as chairman.
Though many had anticipated the retirement of Mr. Wobst - he has been chief executive for 20 years - the naming of Mr. Hoaglin as his successor came as a surprise. Most outside observers assumed that Peter Geier, Huntington's president and newly appointed vice chairman, had a lock on the CEO position.
Instead, Mr. Geier will aid in the transition through February and then leave the bank to pursue other interests.
In an interview, Mr. Wobst said that the poor performance last year made the board reconsider his successor. "We have had a rough time for a couple of quarters and the board felt for my succession they should go outside," Mr. Wobst said.
The change in management and the recent hiring of a new chief financial officer, Michael McMennanmin - who once worked under Mr. Hoaglin at Bank One Corp. - may end speculation about acquisition talks at Huntington.
"It was our sense before today, that if Huntington did not improve its performance, Mr. Wobst would sell the company by the end of the year," said Fred A. Cummings, an analyst at McDonald & Co. "I think this is a sure sign that Huntington is not for sale."
The first signs of deteriorating performance at Huntington came in the second quarter last year, when the company's profits began to drop. In the third quarter, blaming the slow growth in the sale of brokerage products and higher interest rates, $29 billion-asset Huntington reported earnings of 20 cents per share, well below analyst expectations of 41 cents. The company, attempting to shore itself up, sold a number of loans and readjusted its earnings outlook.
Fourth-quarter profits, which were also announced Thursday, showed some signs of hope. Earnings per share of 31 cents fell just a penny short of analysts' adjusted expectations (original expectations were 43 cents), but they were still 29% lower than profits reported for the fourth quarter of 1999.
Mr. Hoaglin comes to Huntington after a six-month stint as vice chairman of Birmingham, Ala.-based AmSouth Bancorp last year and nearly three decades of various management and executive positions at Bank One Corp., which was based in Columbus before its 1998 merger with First Chicago Corp.
The chairman and his successor got to know each early in Mr. Hoaglin's career. Mr. Wobst said he selected this longtime competitor because Mr. Hoaglin is familiar with Huntington's market and has an excellent reputation in the banking industry.
"I think he is coming at the right time," Mr. Wobst said. "I am looking forward to working with him and I hope he leads us to greener pastures."
Mr. Hogan said he is excited about the challenge, though he finds it "a little strange" to be working for a former competitor. He said in an interview that he has no immediate plans on how to turn around the ailing Huntington.
He said that when he starts in February, he wants to "immerse" himself in every aspect of the company for several weeks and then decide where Huntington needs to direct its resources.
"Performance had not been up to expectations and a lot of improvement needs to be done; and it's great for a newcomer like me to be here to guide that improvement," he said.