Huntington Bancshares is reorganizing several major business lines under a new plan aimed at both cutting costs and increasing revenue, particularly by seizing opportunities in the wealth management business.
Columbus, Ohio-based Huntington detailed the initiative Wednesday at an investor conference. Under the reorganization, the $182.9 billion-asset bank plans to consolidate three existing units — consumer and business banking, vehicle finance and a third segment that includes wealth management, private banking and insurance — into a single unit.
That larger unit will be known as Consumer & Regional Banking. It will continue to operate separately from the bank’s existing Commercial Banking unit.
Huntington CEO Steve Steinour said that the reorganization should enable the bank to better align its advisory services for mass affluent customers with those that it offers to affluent clients.
“By aligning these business units within one segment, we’re bringing all of our wealth management activities under a central team,” Steinour said at the investor conference.
The reorganization is also expected to improve efficiency by enabling the bank to consolidate support functions. But Steinour said the primary purpose is to increase revenue, and he zeroed in on the wealth management business as offering a notable opportunity.
“We see this as a big growth area for us going forward. We are underpenetrated,” he said. “And while we’ve made some progress, it’s not coming fast enough from my perspective. So this alignment, I think, helps us significantly in that regard.”
The parent company of Huntington Bank is also taking other steps to trim costs. The company’s first-ever voluntary retirement program, which it previewed in January during its fourth-quarter earnings call, was rolled out late last month. The voluntary retirement plan is aimed at individuals in middle-level and senior-level roles.
Huntington executives said Wednesday that they don’t have a projection for the total savings the program will yield.
Other banks — including Goldman Sachs, Capital One Financial and New York Community Bancorp — have announced layoffs in recent months. Across the industry, companies are looking to cut expenses amid expectations that loan demand will continue to slide this year.
“The road ahead may be rough as we enter the next recession,” executives at the digital banking platform Q2 wrote in a report last month on the state of commercial banking.
Huntington executives did not mention the possibility of job cuts Wednesday, but they did discuss shuttering branches as another way to control costs. The bank closed 30 branches, or about 3% of its total, this quarter.
“So in our retail branch distribution network, we’ve got about 1,000 points of presence. They’re still very relevant,” Chief Financial Officer Zachary Wasserman said at the investor conference. “But over time, there’s an opportunity to pluck the least productive nodes out of that network and generate net economics. And so that’s what we’re doing.”
Huntington executives said they are reinvesting a portion of the savings from the bank’s various cost-cutting efforts back into the business.
They pointed to investments in digital capabilities, spending on customer acquisition and brand building and the addition of employees in key revenue-producing positions. They also noted that Huntington plans to add branches in certain markets where it has opportunities to grow.
For example, Huntington expects to open more than 20 locations in Denver — a new market that the bank added through its acquisition of TCF Financial — over the next several years.
Huntington’s noninterest expenses totaled $4.2 billion last year, which was down 4% from 2021.