Huntington Wasting No Time Wringing Profit from FirstMerit Deal

Huntington Bancshares in Columbus, Ohio, is wasting no time capitalizing on its purchase of FirstMerit in Akron, Ohio.

The $100 billion-asset company has already sold $3.3 billion of securities from FirstMerit's portfolio, Mac McCullough, Huntington's chief financial officer, told an audience at a conference in New York hosted by Barclays. Huntington subsequently reinvested about two-thirds of the proceeds in higher-yielding instruments.

Huntington completed its $3.3 billion acquisition of FirstMerit in mid-August.

The securities shift could boost Huntington's earning per share by a penny, Brian Klock, an analyst with Keefe, Bruyette & Woods, wrote in a research note Tuesday.

McCullough said he was "quite confident" that Huntington would achieve the $255 million in cost reductions that it outlined when it announced the deal in January. As part of the cost-cutting effort, Huntington plans to consolidate 101 branches when it converts FirstMerit's branches in February.

Technology conversion should be "substantially complete" by the middle of the first quarter, McCullough said. Huntington has opted to discard all of FirstMerit's technology applications.

"We've made significant applications in technology and our applications will scale to absorb the FirstMerit volumes," McCullough said.

Huntington also expects to generate an additional $100 million of fee income from expanded mortgage and Small Business Administration lending, as well as increased cross-selling efforts, McCullough said.

While he did not rule out additional acquisitions, McCullough said Huntington was unlikely to pursue any deals in 2017. Next year "is reserved for FirstMerit and getting integration right," he said.