1 Word That Sums Up Huntington Bancshares' Opportunity

The opportunity associated with owning shares in Huntington Bancshares  (Nasdaq: HBAN  ) can be summed up in one word: growth.

The post-financial-crisis world has been one of feast or famine in the banking industry. While less adroitly managed lenders like SunTrust Banks  (NYSE: STI  ) , Bank of America  (NYSE: BAC  ) , and Citigroup  (NYSE: C  ) have retreated to lick their wounds and firm up their balance sheets, others have jumped on this once-in-a-generation opportunity to fill the void left behind. In the regional banking sector in particular, perhaps none is better positioned to exploit these dynamics than Huntington.

A leader for the brave new banking world
Huntington's principal advantage lies in the leadership of its chairman, president, and chief executive officer, Stephen Steinour. To say that Steinour has been down this road before would be a serious understatement. Between 1992 and 2008, he grew Citizens Financial, a unit of the Royal Bank of Scotland  (NYSE: RBS  ) , from a $5 billion regional lender into a leading commercial banking operation with 1,600 branches in 13 states and assets at the time of roughly $160 billion.

"Steve has been a terrific leader at Citizens," the chairman of RBS Americas said at Steinour's departure. "No one has worked harder or with more dedication to our company's great success during our many years of building Citizens into one of America's banking leaders."

Three steps to success
Under Steinour's leadership, Huntington has pursued a three-pronged approach to expansion. First, it's forming strategic partnerships with symbiotic operations scattered throughout the Midwest. In September 2010, it agreed to install branches in 103 of Giant Eagle's supermarket locations. And in May 2012, Huntington entered into a similar partnership to put branches in all of Meijer's 100 Michigan-based supermarkets. The 10-year contract with Meijer will nearly double the number of Huntington locations in Michigan and expose it to multiple new markets, including Lansing, Ann Arbor, and Flint, among others.

Second, Huntington is adroitly exploiting the misfortunes of weaker competitors by purchasing troubled lenders from the FDIC for significant discounts. In October 2009, it completed the FDIC-arranged purchase of Warren Bank, assuming $410 million in deposits and $66 million in other assets. Then in March 2012, it acquired Fidelity Bank from the FDIC, assuming its 15 branches, $800 million in assets, and $700 million in deposits. And more recently it was identified as an "interested buyer" for the 219-branch Citizens Republic Bancorp, which has yet to reimburse the government for its $345 million in TARP funds -- Akron, Ohio-based FirstMerit  (Nasdaq: FMER  ) ultimately completed the acquisition.

Finally, Huntington is working to deepen and expand its relationships with its current customers. Soon after taking over in 2009, Steinour introduced the Optimal Customer Relationship (OCR) initiative, a "cross-business segment strategy designed to increase overall customer profitability and retention by deepening product and service penetration to consumer and commercial customers. " Huntington has since added more than 240,000 households as customers and grown the proportion that use four or more of its products to 76%, a 3-percentage-point increase over the same time in 2011.

As investors think back on the shenanigans that took place during the financial bubble and ensuing crisis, this stands out as a reasonable, measured approach to growing the bank.

But does that make it a buy?
Huntington is a proven leader and has a solid plan for growth. But is that enough to make the stock a buy? To help figure out whether Huntington Bancshares is a buy today, I invite you to read our premium research report on the bank. Click here now for instant access.


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