No big changes to sales and incentive practices expected at Huntington, says bank's CEO
Huntington National Bank does not anticipate any material changes to its sales and incentive compensation practices, the bank's chairman and CEO, Steve Steinour, said during its earnings call on Wednesday.
Steinour noted that the bank had undertaken a detailed review of its practices, policies and procedures for "any signs of misalignment of incentives" but that to date it had not "uncovered any systemic, cultural or operational areas of concern."
"We focus our branches and officers on revenue, not product-specific or product required sales," he told an analyst on the call, adding that he therefore did not anticipate "any meaningful change on the incentive plans from where we are now."
He did, however, note that the bank is likely to refine some of its monitoring.
Huntington joins a string of other banks that have said during recent earnings calls that they are looking into their sales practices in the wake of the Wells Fargo fake-account-opening fiasco. Regions Bank, for example, said that it is "reviewing everything that it is doing."
As it reviews its sales practices, Huntington will likely look into ways to strengthen its wealth-related businesses, which posted a mixed third quarter.
The bank's trust services business was one of the stronger performers as it begins to recover from the sale of its proprietary mutual fund business nearly a year ago. Revenue from trust services generated $28.9 million in the third quarter, up 16% year-over-year and up 29% from the prior quarter.
Despite the boost, the bank's trust business still lags last's year revenue performance at the nine-month mark. At the end of the third quarter, trust operations generated $74.3 million, down 8% from $80.6 million in the same quarter a year ago.
The bank sold Huntington Asset Advisors and two related mutual fund services subsidiaries in the fourth quarter of 2015 and the trust business has until recently suffered from the sale.
Its two other wealth-related businesses delivered weak results. Third-quarter revenue from insurance services totaled $15.9 million, down 2% year-over-year and down 1% from the prior quarter. Revenue from its retail brokerage business also slipped, falling 2% to $14.7 million from $15.1 million in the same quarter a year ago.
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Even though the bank has great confidence in the processes it built, it nonetheless is "re-reviewing everything it's doing," says the bank's CEO.October 18
The bank has already taken action in instances of staff misbehavior, according to Chief Financial Officer Marianne Lake.October 14
Overall, Huntington Bancshares, the parent of Huntington Bank, earned $127 million, or 11 cents per common share, in the third quarter, compared with $153 million, or 18 cents per
common share, in the same quarter of 2015.
"The third quarter was a bit noisy, but underneath the noise we are pleased with the core financial performance," Mac McCullough, the bank's CFO, said during the call.