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Huntington Boosts Its Market Share
At the time, President, CEO and Chairman Thomas Hoaglin said the bank’s Michigan operation was lagging in performance largely due to lack of leadership, lots of management turnover and poor merger integration of First Michigan Bank (FMB) Corp., which Huntington acquired in 1997.
The bank’s new strategy included divesting of its Florida operations, consolidating 43 banking offices in Michigan, Ohio, Indiana and West Virginia, and focusing resources and capital from the Florida franchise sale on growing its core Midwest franchise.
As part of that strategy, the company appointed veteran Huntington banker James Dunlap as president of Huntington National Bank-Michigan, which serves the Grand Rapids, Kalamazoo, Traverse City, Muskegon, Holland, Niles and Sault Saint Marie markets.
Two months ago the banking analyst community invited Dunlap to New York to discuss Huntington’s progress over the past two years.
One of the things that Huntington was highly criticized for during the integration of FMB was that decisions were being made from the bank’s Columbus, Ohio, headquarters rather than at the local level, Dunlap recalled.
He said when he moved here to oversee Michigan operations, the company’s reputation, market standing and employee morale were in an obvious state of decline.
Customer service was bad — inconsistent and reactionary, he said.
“Our customers were angry and, frankly, a lot of them were gone. Our reputation was that we were probably incompetent, the way decisions were being made. We were certainly inconsistent.
“Our associates were ashamed, afraid and frozen when I got here. They couldn’t make a decision. We had to rebuild the bank, starting with the belief system, and redefine the culture around being a local bank with decision-making capacity.
“I came here because I was able to be in charge and do what needed to be done in West Michigan. We had significant resources at our disposal. Being a $30 billion regional bank holding company we had all the products and services, but I wanted Huntington to appear as small and as approachable as customers needed for us to be.”
Huntington’s rally cry became “the local bank with national resources” and that’s how it has tried to position itself in Michigan markets, he said.
Dunlap said he put an accountability system in place and increased the bank’s community outreach and involvement to give it “a face and a personality.”
Everybody wants to be a local bank today because it resonates with local markets, he said, but there’s something different in declaring it vs. defining it.
According to Dunlap, local banks do four things: They know their customers, they’re involved in the community, they make decisions at the point of contact and they’re flexible where necessary.
“We went on record to redefine what a local bank is and what it does,” Dunlap recalled. “I went further on record and asked people to hold us accountable for our behavior.
“Now our 1,300 associates are enthusiastic, energized and proud to work at Huntington. I think customers are appreciative, too.”
Today, the West Michigan franchise has the best credit quality, lowest delinquencies, lowest charge-offs and second highest growth in deposits of any franchise in the entire organization, he noted, adding that it’s the fastest growing and most profitable piece of the company right now.
Presently, it’s also the fastest growing bank in West Michigan in terms of market share gain, with a 1.25 percent increase in market share between June 2002 and June 2003.
Year-over-year deposits increased nearly $4 million.
According to the Federal Deposit Insurance Corp.’s annual market share data, Huntington has been steadily gaining market share in the MSA over the past two years. Huntington’s market share percentage was 9.77 as of June 30, 2000; 9.85 as of June 30, 2001; 10.29 as of June 30, 2002; and 11.54 as of June 30 this year.
“To grow that much, I think, is another endorsement of the marketplace’s recognition that perhaps there is a local bank that has local autonomy, that’s making local decisions and has the resources people are asking for.”
The June 2003 FDIC market share report ranked Fifth Third Bank as first, with 32.5 percent of market share in the MSA, and Bank One as third, with 8.9 percent market share.
There are a handful of other important indicators that Huntington is on the right track, Dunlap said.
In 1999, Huntington had a 50 percent turnover rate among employees. Now employee retention is up to 82 percent, and he believes that’s a direct reflection of the bank’s new culture.
“If you want to keep your best customers, you have to keep your best people.”
Every six months Huntington contracts with Roper Starch (Roper ASW), a market research organization, to conduct customer satisfaction surveys in all of its markets.
The most recent Roper survey revealed that 66 percent of Huntington’s Grand Rapids area customers were “very satisfied” with services, up from 40 percent of customers in 1999.
He said other major banks in the local market showed a 63 percent satisfaction rate.
“It’s the first time since we’ve been here that we’ve surpassed the other major banks,” he added. “We still have some room to improve to be the best in this market.”
Dunlap said the survey also revealed that one out of 10 customers had a problem with Huntington over the last 90 days, whereas one out of five said they had an issue with the bank during the same time period in 1999.
“This shows me that we’re doing the right things, that we’re doing them the right way and that we’re consistently keeping our promises. That’s how you build and keep market share.
“We know the marketplace is finding value in what we’re suggesting we’re capable of doing, but we have to ask for the business.”Dunlap said Huntington has 22 offices and “a great distribution system” in the Grand Rapids MSA that aren’t fully leveraged, so the bank has room to grow substantially without having to invest in new brick and mortar.