With its expenses continuing to run above its long-term expectations, Huntington Bancshares Inc. said Thursday that is planning to close 29 free-standing branches across its six-state network during the first quarter.
Stephen Steinour, the chairman and chief executive of the Columbus, Ohio, company said in a conference call with analysts that the branches are all near Huntington offices and do not generate enough activity to justify keeping them open. The branches slated for closure represent less than 5% of Huntington's total branch network.
He added, though, that the $55 billion-asset Huntington intends to open as many 40 branches this year inside Giant Eagle grocery stores. In-store branches are typically much smaller and cost less to operate than stand-alone branches.
"It's prudent management," Steinour said on the call discussing Huntington's fourth-quarter earnings. "As any good retailer does, we adjust our distribution."
Overall, Huntington reported solid earnings in the earnings in the fourth quarter thanks to significantly improved credit quality and strong deposit growth. The company earned $126.9 million, up 3% from the same period in 2010, but down 12% from the prior quarter.
But like most banks these days, Huntington is struggling to grow revenues as loan demand remains relatively weak and new caps on interchange fees have sharply reduced income from debit cards. In the fourth quarter, Huntington said that revenues from debit transactions declined $17.3 million from the prior quarter.
The company's noninterest expense did decline slightly during the quarter, but Steinour said in a news release that "expenses continued to run at levels above our long-term expectations relative to revenue."
Steinour has set a goal of lowering Huntington's efficiency from 64% at Dec. 31 to the "mid 50% range" long-term.
In late trading Thursday, Huntington's shares were down 4% from Wednesday's close, to $5.79.