VERITAS COLLEGE OF IROSIN
SAN JULIAN, IROSIN, SORSOGON
BACHELOR OF SCIENCE IN BUSINESS ADMINISTRATION
MAJOR IN FINANCIAL MANAGEMENT
A CASE STUDY
THE FINANCIAL INSTABILTY AND AMID CRISIS OF HUNTINGTON BANCSHARES
PROPONENTS:
SIMON L. AVILA
SUBMITTED TO:
ALEXANDRA LOUSIE ROMEO
2023
I. Introduction
I.1 Background of the study
. . The bank became a subsidiary for thousands of generations and became part of the society. It
is defined as a financial institution that is licensed to accept checking and savings deposits and
make loans. Also, they lend short-term cash to others for long-term debt such as house
mortgages, car loans, business loans, etc. This process creates market liquidity that creates
money and keeps the supply chain going.
This institution plays a vital role in economy, to provide better services such as capital
management, foreign exchange, safe deposit boxes and transaction, and essential services both to
consumers and businesses Because of it, the governments around the world have laws in place to
try to prevent them from engaging in excessively risky behavior that may affect financial
stability of another firm that may connects through.
Just like any other business, the banks’ goal is to earn profits for its stakeholders to run and
continue their services and transactions. In order to achieve this, banks charge higher interest
rates on loans and other debt they issue to borrowers than accountholders.
Thus, bank must assure that their operations must neat and cannot cause some commotion that
can impact their industry.
1.2 Statement of the problem
This study aims to identify some problem that occurred the Huntington Bancshares. It is need
to know for generating possible solution and recommendation that may given at the end this
study
The fall of some biggest bank such as Silicon Valley Bank due to the aggressive
increasing of interest rate to fight inflation. In addition, acquiring bonds which has
higher interest rate than the low interest rate that they pay forced the bank to sell a
chunk of its bonds at a steep loss, and the pace of withdrawals accelerated as word
spread effectively rendered to insolvency
Creates low interest rate as well as the capital rate
Slow progress and volatility of stock
1.3 PURPOSE OF THE STUDY
this study aim is to gather some information to proof and recognized some of the reasons and
solution to the problem face by the choice bank topic such as the Huntington Bancshares:
Recognized the possible outcomes they use in solution to the problem
Create some realization how bank work and their circumstances that they face
To gather information and additional method that may serve as guide in banking.
industries.
II. Company Information
2.1 Background
Huntington Bancshares Incorporated is a bank holding company headquartered in
Columbus, Ohio, United States and the current CEO was MR. Stephen D. Stienour.
P. W. Huntington formed P. W. Huntington & Company in 1866, operating on the
northwest corner of High and Broad Streets; the site now houses the regional headquarters for
rival U.S. Bancorp. Huntington built its first five-story building in 1878, on the intersection's
southwest corner. Four out of five sons of P. W. would become partners during the 1890s and
early 1900s. The bank was incorporated in 1905 as The Huntington National Bank of Columbus.
Huntington died in 1918 shortly after turning the bank over to his sons.
Francis Huntington became president and provided active leadership for 14 years. In 1915,
the bank received limited trust powers. In 1922, the bank received full trust powers from the
Federal Reserve System. In 1923, Huntington purchased Columbus-based the State Savings
Bank & Trust Company and the Hayden-Clinton National Bank of Columbus, swelling its capital
base.
In 1958, Huntington acquired the Columbus-based The Market Exchange Bank Company.
In 1962, Huntington acquired both First National Bank of Grove City and The People's Bank of
Canal Winchester. In 1963, Huntington acquired both The Columbus Savings Bank and the
Columbus-based The Northern Savings Bank. In 1966, Huntington Bancshares Incorporated
(HBI) was established as a bank holding company.
In 1967, Huntington Bancshares acquired the Washington Court House-based The
Washington Savings Bank. In 1969, it acquired the Ashland-based Farmers Bank. In 1970, it also
acquired the Bowling Green-based The Bank of Wood County Company, the Toledo-based The
Lucas County State Bank, and Lagonda National Bank of Springfield. In 1971, Huntington
Bancshares acquired First National Bank & Trust Company of Lima, The Woodville State Bank,
and the Kent-based The Portage National Bank. In 1972, it acquired The First National Bank of
Wadsworth and The First National Bank of Kenton, also establishing the first 24-hour, fully
automated banking office.
In 1973, Alger Savings Bank merged into an affiliate in Kenton, Ohio. In 1976, The
Huntington Mortgage Company formed as a subsidiary of Huntington Bancshares with The
Pickerington Bank being merged into the bank. In 1977, Huntington Bancshares acquired The
Bellefontaine National Bank, The Central National Bank of London, and Columbus-based The
Franklin National Bank. In 1979, a loan production office opened in Dayton, Ohio.
In 1975, the company changed its logo to its current "honeycomb" logo.
In 1980, Farmers & Merchants Bank, Milford Center and The First National Bank of Burton
were merged with Huntington Bancshares.
In 1981, the bank acquired Alexandria Bank Company and renamed it The Huntington State
Bank, with a loan production office opening in Cincinnati.
In 1982, the bank merged with the Reeves Banking and Trust Company. Huntington
acquired the tiny Savings Bank of Chillicothe, Ohio in the early 1980s, which gained some fame
in 2011 when 100-year-old June Gregg revealed to Huntington officials that her father had
opened a savings account for her as a baby with Savings Bank in 1913 and that she had
subsequently kept the account open. Huntington officials later confirmed it and gave her account
a temporary increase in her interest rate to 5% as a centenarian present for her 98-year loyalty to
Huntington and the Chillicothe branch's predecessor, Savings Bank.
In 1983, the bank acquired Cleveland-based Union Commerce Bank.
In 1997, the bank acquired First Michigan Bank Corporation of Holland, Michigan.
In 2002, the company sold its branches in Florida to SunTrust Banks for $705 million.
In March 2006, the company acquired Unizan Financial.
In July 2007, the company acquired Sky Financial Group Inc. based in Bowling Green,
Ohio, which increased its presence in Indiana and Ohio and expanded it into Western
Pennsylvania for the first time. As of 2021, Huntington is the sixth-largest bank in the Pittsburgh
market by deposits.
In November 2008, the United States Department of the Treasury invested $1.4 billion in
the company as part of the Troubled Asset Relief Program and in December 2010, the company
repaid the Treasury. The U.S. government made a profit of over $144 million from its investment
in the company.
In 2009, Huntington bid against rival Fifth Third Bank to acquire National City Corp.
branches in the Pittsburgh region from PNC Financial Services. The United States Department of
Justice ordered PNC to sell the branches to comply with United States antitrust law concerns
after the National City acquisition by PNC.[33] Ultimately, PNC sold the overlapping branches
to First Niagara Bank.
On October 3, 2009, the Federal Deposit Insurance Corporation named Huntington as
receiver of a $400 million deposit portfolio from the bank failure of Warren Bank in Warren,
Michigan.
On December 18, 2009, Huntington signed a 45-day lease with the FDIC to run a bridge
bank for the failed Citizens State Bank in New Baltimore, Michigan.
In June 2011, three wordmarks and 2 icons were placed on the top of the 200 Public Square
building in Cleveland, Ohio. The Building was formerly named the BP Building and was
headquarters to SOHIO from 1985 to 2011, when the logo was put on the building.
In March 2012, the bank acquired Dearborn-based Fidelity Bank.
In 2012, Huntington was in merger discussions with Flint, Michigan-based Citizens
Republic Bancorp. Discussions stalled and FirstMerit purchased Citizens Republic in September
2012. FirstMerit was itself to be acquired by Huntington in 2016.
In the first quarter of 2013, Huntington changed its ATMs to new ones that allow customers
to make deposits by inserting cash and checks directly into the ATM. The bank started in 2014
offering ATM deposits from mobile phones and through online transfers until 11:59 p.m. and
post them that day.
In March 2014, the company acquired Ohio-based Camco Financial, holding company for
Advantage Bank, for $97 million in stock.[49][50][51][52
In September 2014, the company acquired 24 offices of Bank of America in Central
Michigan, including the Port Huron, Flint, and Saginaw markets. This raised the number of
Huntington branches in Michigan to 173, including over 40 locations housed in Meijer store
In March 2015, the company acquired Michigan-based Macquarie Equipment Finance, Inc.
from Sydney, Australia-based Macquarie Group for $458 million.
In January 2016, Huntington announced it would purchase Akron-based FirstMerit
Corporation for $3.4 billion, making the FirstMerit Tower in Akron, Ohio, have the Huntington
word mark on it, and making it one of the largest banks in Ohio.[Due to Sherman Antitrust Act
concerns by the United States Department of Justice, it sold 11 branches in Canton and two in
Ashtabula to First Commonwealth Bank.[60] Additionally, 107 branches located within 2.5
miles of other Huntington / FirstMerit branches were closed.
In June 2022, Huntington completed its acquisition of Capstone Partners, an investment
bank and advisory firm based in Boston.
2.2 Products/Services
The company operates through the following segments: Personal, Private Banking,
Business, and Commercial.
Personal
The personal segment involves banking services, loans, investments, insurance, and
securities.
Private Banking
The Private Banking segment is comprised of banking services, lending, investments,
financial & retirement planning, trusts & estates, retirement plan services, and insurance
services.
Business
The Business segment consists of business checking accounts, savings & liquidities, credit
cards, loans, treasury management, and insurance.
Commercial
The Commercial segment involves Treasury Management, Credit, Loans & Leasing, Capital
Markets Insurance, and Investments.
III. Findings and Discussion
3.1 Findings
Risk Management and Capital – the study finds out that the credit, market, liquidity,
compliance, strategic and reputation on Huntington Bancshares have some issue that can be
affected their operation.
Credit risk- Huntington has a financial loss that counterparty is not able to meet the agreed upon
terms to their financial obligation. The majority of the credit is associated with lending activities,
as the acceptance and management of credit to profitable lending.
Market risk- it refers to the potential losses arising from the changes in interest rate, foreign
exchange rates, equity prices and commodity prices, including the correlation among their
factors and their volatility.
Liquidity risk- Huntington has a possibility of being unable to meet current and future financial
obligations in a timely manner. It compromises in unexpected level of deposit withdrawal
investment opportunities, and other contractual obligation.
Operational risk- this is due to human error, third-party performance failures, inadequate or
failed internal systems and controls, including the use of financial or other quantitative
methodologies that may not adequately predict future result. Huntington has some neglect in
manage and supervise it.
Compliance risk- financial institution are subject to many laws, rule and regulations at both the
federal and state level. These broad-base laws, rule, and regulation include, but are not limited to,
expectations relating to fair lending, and community reinvestment. The Huntington have
compliance that must need to take action.
Strategic risk- the institution must strategy to cop up some changes to create benefits to the
institution but, Huntington has some factor must to reconsider due to the fact that they affected
some changes in the economy.
Reputation risk-Huntington have some issue that must resolve in consideration to the image to
the society that can affect the company.
3.2 Discussion
Risk management and Capital- to this implication, the following problem were creating
some solution that may help the to the studied bank to make an action and way to improve their
institution.
Credit risk- the Huntington must engage with other financial counterparties for a variety of
purposes including investing, asset and liabilities management mortgage banking and trading
activities in a way that can dissolve the risk in asset and interest rate movement.
Market risk- to counterpart it, the Huntington must measure their market risk via financial
models which, provides insight on the potential impact to the interest income and other key
metrics as a result of market interest rate.
Liquidity risk- the Huntington must mitigate liquidity risk by maintaining liquid asset in the form
of cash and cash equivalents and securities in addition, it must to be maintain a large, stable core
deposit base and diversified base readily available funding source to be sufficient to meet they’re
on and off-balance sheet obligation.
Operational risk- the bank must perform some inspections and organize to prevention for better
securities to any can became threat to their institution.
Compliance risk- as such, it must utilize various resources to help ensure expectation are met,
including to create a team that may expert to ensure that may resolve with applicable law, rule,
and regulations.
Strategic risk-the Huntington must provide better plan to that utilize the changes that mat
occurred to their bank industry.
Reputation risk- they must show their true effort to manage their banking system for better image
to their costumers as well as to their potential shareholders.
IV. Recommendations and Improvement
To this study it may comply some effort to supervise their management as well as monitoring
of their shared accounts and stock for better operation of it. Also Huntington must have some
save funds in case some problem were occurred to easily prevent some issues that can lead to
their downfall.
V. References
https://www.fool.com/investing/general/2014/07/24/huntington-bancshares-problem-
with-too-much-profit.aspx#:~:text=The%20largest%20increases%20in%20noninterest
%20expenses%20over%20the,in%20data%20processing%20with%20the%20increased
%20deposit%20volume.
https://www.dispatch.com/story/business/finance/2023/04/20/huntington-ceo-steinour-
on-banking-crisis-i-think-the-storm-has-passed/70131152007/
https://www.huntington.com/-/media/pdf/corporate-governance/Corporate-
Governance-Guidelines-Jan-2022.pdf?rev=ceb7de2c592f43d985763a534ece72ac
https://www.thestreet.com/files/r/ratings/equities/HBAN_weiss.pdf
https://en.wikipedia.org/wiki/Huntington_Bancshares
https://www.fitchratings.com/research/banks/fitch-affirms-huntington-at-a-outlook-
stable-14-10-2022#:~:text=Capital%20Lower%3B%20Expected%20to%20Build%20Back
%20Following%20Acquisition%3A,the%20lower%20quartile%20of%20its%20stated
%20operating%20range.
https://www.fdic.gov/resources/resolutions/resolution-authority/resplans/plans/
huntington-165-1712.pdf
https://economictimes.indiatimes.com/definition/bank
https://www.reuters.com/article/huntingtonbancshares-idUKN2249077220090122
http://www.marketscreener.com/quote/stock /HUNTINGTON-BANCSHARES-INC-
40328830/new/HUNTINGTON-BANCSHARES-INC-MD-Management-s- Discussion-And-
Analysis-of-Financial-Condition-and-Re43682837/
https://www.fdic.gov/resources/resulutionauthority/replans/plans/huntington-1412.pdf
VI. Appendix
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