In its first earnings report since acquiring FirstMerit Bank, Huntington Bancshares said its third-quarter profit fell 17 percent as a result of expenses related to the acquisition.
However, shares of the Columbus-based Huntington Bank’s stock were up more than 5 percent in mid-day trading, despite the loss.
The $3.4 billion stock and cash acquisition of formerly Akron-based FirstMerit was finalized on Aug. 16.
Huntington’s parent company said its net income for the third quarter was $127 million compared to $153 million a year ago. FirstMerit acquisition-related expenses totaled $159 million pretax, or $0.11 per common share, the bank said.
“We are very excited about the third-quarter acquisition of FirstMerit, which has strengthened the return profile of the company,” said Steve Steinour, chairman, president and CEO in a press release. “We delivered solid core fundamental performance for the quarter. Acquisition-related expenses continue to be in line with our expectations and guidance. Auto and mortgage lending were among the significant drivers of organic loan growth during the quarter, complemented by acquisition-related growth. We are entering a new era for Huntington, as we introduce our customer-centric strategies and operating model to new geographies and improve our operating efficiency due to increased scale.”
“Integration execution is proceeding on schedule as we move closer to operating as one expanded company with each passing day,” Steinour said. “We have completed workforce onboarding and initial training, and we are laser-focused on customer experience and retention. In addition, we remain confident we will complete the majority of system conversions during the first quarter of 2017, swiftly moving toward our target of realizing $255 million of annualized cost savings.”
Among highlights, the bank said the acquisition of FirstMerit added approximately $26.8 billion of total assets, $15.5 billion of total loans and leases, and $21.2 billion of total deposits.
Branch conversion of the FirstMerits is scheduled for the first quarter of next year, the bank said.
As part of the merger agreement, Akron became a regional headquarters for Huntington. The bank also agreed to set up a Huntington Foundation for Akron, with $2 million a year for 10 years to boost the local community.
Huntington also promised the employment number within the city of Akron, including branches, would equal 1,200 employees within two years — the same number of employees at the time of the deal. Akron would also gain a call center or operations center as part of the merger agreement.
In August, the bank opened the first phase of the new call center on one floor of the shorter of the two downtown Akron buildings. The call center will ultimately move to the operations center on Opportunity Parkway in Akron, officials said.
In Akron, it is unclear how many FirstMerit employees work for Huntington or have received notices that their jobs in the downtown Akron FirstMerit headquarters have been eliminated. An undisclosed number of employees at both companies received job offers and layoff notices in August. Bank officials at the time said because affected employees will be eligible to apply for new positions, it was difficult to say how many would be affected.
Huntington officials have said that no branch employees for either bank would lose their jobs. The downtown Akron former FirstMerit headquarters has mostly executive, administrative and back-office positions.
On Wednesday, bank officials said the bank was not prepared to “share combined workforce numbers until after the integration is complete.”
Spokesman Brent Wilder reiterated that the bank has committed “to meet 1,200 in Akron by the end of 2017 and exceed that total in 2018.”
The bank also previously announced that it was proposing to close 107 Huntington and FirstMerit branches in five states as part of the merger — including 20 in the Akron area— in the first quarter of 2017.
In order to gain federal approval, FirstMerit also sold 13 branches in Stark and Ashtabula counties to First Commonwealth Financial.