BY JEFF McKINNEY
The Cincinnati Enquirer
Huntington Bancshares Inc. said Wednesday it will eliminate 1,000 jobs within the next six to nine months to slash costs and help increase the banking company's earnings.
The Columbus-based bank said it will cut its work force by 10 percent, close nearly 40 branches and outsource so-called back-office
functions to help offset rising costs the bank incurred by making several acquisitions the past year.
Huntington, which operates Greater Cincinnati's fifth-largest bank, said the initiatives will add about $125 million in annual pre-tax profits. The bank said it will take a pre-tax restructuring charge of $90 million next quarter to cover downsizing-related costs.
"The Huntington is doing well, but we need to do better," said Frank Wobst, Huntington's chairman and chief executive.
News of the restructuring came the same day Huntington reported third-quarter net income of $88.7 million, or 42 cents a share, compared with $44.2 million, or 41 cents a share a year ago.
But the bank's third-quarter efficiency ratio rose to about 56.5 percent, up from 55.1 percent a year ago. The efficiency ratio reflects the amount of a bank's revenues that are paid out as expenses. Analysts said rising costs from acquisitions was not offset by revenue gains.
In Greater Cincinnati, the restructuring will have limited impact.
Myr Grayson, regional president of Huntington in Cincinnati, said the restructuring means the bank will close two of its 28 Greater Cincinnati branches. Branches in Walnut Hills and Southgate in Campbell County will close early next year.
He said about 25 people would be affected locally, but he expects that most would be able to transfer to other branches. Huntington employs about 650 people in Cincinnati and Northern Kentucky. Huntington's restructuring underscores the reality that banks are under pressure to perform for investors or consider other options to boost profitability.
Fred Cummings of McDonald & Co. in Cleveland said Huntington's $1.2 billion acquisition of First Michigan Bank Corp., Huntington's biggest deal ever, did not work out as the bank expected. He said that deal was projected to add to Huntington's profits but diluted them because of the loss of some of First Michigan's commercial loan business.
He also said Huntington's goal is to reduce its efficiency ratio to 51 percent, historically where it has performed.
