Can Huntington Bancshares Defy Critics, Enrich Shareholders, and Make Banking Fair and Transparent?

While virtually every other major bank is trying to distance itself from the consumer, Huntington Bancshares is embracing personalized service. Will the contrarian strategy payoff?

Apr 1, 2014 at 11:45AM

Can good customer service and consumer-friendly policies be the foundation of a profitable bank? That's what Ohio-based Huntington Bancshares (NASDAQ:HBAN) is determined to find out.

The fact that Huntington Bancshares has chosen to differentiate itself by treating customers with decency and respect is a sad commentary on the state of banking. Read through the regulatory filings of any of the nation's largest banks and you'll find a stark contrast to this approach.

As my colleague Patrick Morris has pointed out, a recent presentation by Bank of America (NYSE:BAC) revealed that in-branch deposits cost almost 14 times more than those made over a smartphone. The implication? That the bank must figure out how to decrease the former and increase the latter.

To be sure, Bank of America is far from alone in this regard. PNC Financial has essentially shouted from the rooftops that free checking is a thing of the past and bank branches of the future will be fewer in number and smaller in scale. And the examples go on.

Much of the change is a natural consequence of technology. ATMs and mobile phones make banking less labor intensive from the lender's perspective and, legitimately, more efficient for customers. Why should someone drive to a branch to deposit a check when they can do so using a smartphone on their couch?

Added to this, a series of legal and regulatory changes have deprived banks of once-lucrative revenue sources. Most notably, debit card swipe fees are now capped and overdraft fees have been severely curtailed. The result is that customers are much less profitable to banks than they once were.

But while most of the nation's largest banks are responding to this new landscape by finding ways to minimize customer interactions, "optimizing" their branch networks, and eliminating perks like free checking, Huntington Bancshares is pursuing the antithesis.

Over the last two years, Huntington has aggressively opened new branches, introduced grace periods to give customers an opportunity to cure overdrafts, rolled out "asterisk-free" checking accounts with no minimum balance requirement and no monthly maintenance fee, and, most recently, removed overdraft protection transfer fees for both consumer and business checking accounts.

"At Huntington we made the decision that we did not want to charge customers for transferring their own money from one account to another," said Steve Steinour, president and CEO of Huntington Bancshares. "Customers want a fair approach to their banking so that they can save and invest their hard-earned dollars. We hear them and we continue to give them the services they want."

Although it's still too early to pronounce victory or defeat, there are promising signs. Consumer checking accounts are up 38% since the program began in 2010. Commercial relationships have increased by 28% over the same time period. And, according to the bank's own estimates, both its return on assets and net interest margin are consistently outperforming Huntington's peer group.

Can Huntington Bancshares parlay these wins into success for shareholders? That remains to be seen, as shares of the bank still trade for a considerable discount to their pre-crisis peak. But either way, I believe it's safe to say that it would be a welcome development for the banking industry if Huntington prevails.

Big banking's little $20.8 trillion secret
Do you hate your bank? If you're like most Americans, chances are good that you answered yes to that question. While that's not great news for consumers, it certainly creates opportunity for savvy investors. That's because there's a brand-new company that's revolutionizing banking, and is poised to kill the hated traditional brick-and-mortar banking model. And amazingly, despite its rapid growth, this company is still flying under the radar of Wall Street. To learn about about this company, click here to access our new special free report.

John Maxfield owns shares of Bank of America. The Motley Fool recommends Bank of America. The Motley Fool owns shares of Bank of America and Huntington Bancshares. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers