Steve Steinour has been involved in more than 30 mergers and acquisitions over the course of his career.
During each one, he’s tried to learn from it, to continuously improve. Steinour works to impart that same continuous improvement into the DNA of Huntington Bancshares Inc.
“No matter what we did last year, or previously, we want to improve upon it,” says Steinour, Huntington’s chairman, president and CEO. “And if our colleagues are striving to do that, that means better and better customer service, and better, faster, easier ways for the customer to work with us.”
Huntington’s acquisition of FirstMerit Corp. last year for $3.4 billion was the largest in the bank’s history. The due diligence period alone involved 500 people over the course of six weeks. But Huntington had been building toward the acquisition on a high level for years, Steinour says.
“We had been putting our IT infrastructure in shape for our company to be a lot larger. We had been building risk management capacities with that in mind, including our due diligence resources, databases, things of that nature,” he says. “We were investing in advance of this wonderful opportunity.”
It all started with a call to FirstMerit CEO Paul Greig, after Steinour noticed a number of executive retirements were scheduled to happen at the bank.
“It seemed to me that there might be a window to try and do something,” Steinour says.
He called Greig in May of 2015. The acquisition was announced in January 2016 and closed in August. The FirstMerit branches were converted to Huntington over President’s Day weekend.
Alignment and adjustment
With a merger or acquisition, the cultural alignment is important. You want to understand the culture and therefore the amount of change that the company has to go through in the context of an acquisition, Steinour says.
FirstMerit was a well-run, high performing company based on relationships, and Steinour knew Greig to be very thoughtful around risk and risk management.
“We felt that there were a lot of similarities between the two companies, from a distance,” he says.
Throughout the due diligence period, Steinour says the resounding theme he heard after Huntington employees had the chance to interact with the team at FirstMerit was “they are just like us” or “we’re just like them.”
“In this case, the cultures were very similar. That made the change management and expectations around that much more aligned, much easier for our new colleagues coming from FirstMerit,” he says.
Huntington got the benefit of a dedicated, motivated workforce that didn’t need massive retraining.
While some people changed roles, new systems were implemented, and the FirstMerit team had to be taught how Huntington manages risks and about the company overall, Steinour says people in banking are used to a fair amount of training.
More than training, the biggest challenge with an acquisition is winning the hearts and minds of employees, like the 3,500 people who now found themselves a part of Huntington.
“You’re trying to find ways to sensitively engage with them, and to point out what together we are capable of doing,” he says. “We use the phrase ‘stronger together.’ I really believe it.”
While FirstMerit had branches in new areas, such as Chicago and Wisconsin, 85 percent of its business was in Huntington’s market. But it did give Huntington more market share, which Steinour says is important in today’s economy and regulatory context. Adding FirstMerit also allowed Huntington to accelerate its investment in mobile and digital technologies.
FirstMerit gained additional products, services and tools, as well as broader support in a number of areas. At the same time, Huntington added a business line to finance boats and RVs and adopted and modified some of FirstMerit’s unique user experiences.
It helped enormously, Steinour says, that they wanted to keep the teams in the branches and the relationship managers virtually intact. Plus, some key FirstMerit employees moved into top management spots to bolster Huntington’s talent.
Collaboration all around
The day of the acquisition announcement, Steinour, Greig and their executive teams started a series of meetings in Akron; Cleveland; Flint, Michigan; and Chicago, among other locations, to get in front of the employee base. This gave both teams the opportunity to start communicating.
“It started a collaboration that continued throughout the period from announcement to close, and set the tone of the integration,” Steinour says. “There’s a lot of great people; they stayed in the game. They helped us and they continue to help us.”
Sometimes in a merger or acquisition, the outgoing executive team goes its own way and people are left to fend for themselves. That didn’t happen in this case. The executive collaboration was different than anything Steinour had experienced.
Greig was clear he wanted to stay involved because he views this as his legacy — he wanted it to go well for the FirstMerit customers and employees. Even after the conversion, Greig still calls Steinour as soon as he sees or hears something.
“We gave Paul and the FirstMerit team our budgets, our pro formas and our plans, and asked them for their input. I’ve never done that before. I’m not aware of others doing that,” Steinour says. “They got to see everything we were thinking, then help us further refine that — and to their credit they did a great job.”
Collaboration and the ability to create a collaborative process can provide better net results, if done properly, he says. It starts with respect, valuing the insights and opinions you receive. Then, after you solicit different viewpoints, you want to respond and make adjustments.
“Our plans were modified in some cases, adjusted, to incorporate the input. I think we got to better solutions,” Steinour says.
Customer service doesn’t stop
Another component to an acquisition of this size is planning.
“Our process list is 25,000-plus items that all have to come together. It’s very detailed and involves thousands of people,” Steinour says.
This can include simple things like whether bankers are communicating the right 800-number to customers.
“There’s always change for the customer. We recognize that. We tried to minimize the change,” he says.
For example, unlike many banks, Huntington decided to allow FirstMerit customers to use their old check stock until they run out. In order to make sure employees have the right account numbers, Huntington created a cross-reference table.
In the case of conversion weekend, Huntington had already changed out the signs, fronting them with laminate FirstMerit boards that could be peeled off. It also converted its network and equipment in advance, which Steinour says is a bigger deal than it sounds and hopefully led to better service for customers that weekend.
“There are a series of things that are on that punch list, down to very minute details, that all add up to what we hope will be an experience of change for our customers that minimizes the negatives and allows us to continue to do business with them,” he says.
Winning over customers during the integration and conversion was no different than any other time.
“We need to do that every day. I would tell you that this year, next year,” Steinour says. “Our customer service is not something we take for granted. It comes from our colleagues really feeling engaged and committed to giving great service.”
It’s also important to connect to the communities you’re working in.
For example, Huntington plans to combine two of its existing operating facilities in Columbus, in order to build the Huntington Gateway Center for up to 1,600 employees. The investment in the Northland neighborhood of Northeast Columbus will help anchor the neighborhood’s transition, along with a broader set of lending commitments.
Steinour felt with the purchase of FirstMerit, it was important to get to Akron, which held the bank’s headquarters, to talk to the community about Huntington’s plans.
While Huntington still has a lot of jobs in Columbus, he says it’s good to have a significant set of facilities elsewhere. If Columbus loses electricity or has major building damage from something such as a tornado, the bank can now shift work into Akron.
Huntington also has already started investing in the Akron area.
“We are going to continue to invest and we hope to grow,” he says. “This wasn’t about putting two companies together and then we go off and do the things we were doing before. We’ve got now a combined team. We are stronger together. We are in a better position to grow. And we will look to do that and to invest along the way.”
- Culture indicates the amount of change an acquisition requires.
- Win over your employees to deliver better customer service.
- Strong collaboration brings better net results.
The Steinour File:
Name: Steve Steinour
Title: Chairman, president and CEO
Company: Huntington Bancshares Inc.
Born: Gettysburg, Pennsylvania
Education: Degree in economics from Gettysburg College; Executive Program in Leadership from Stanford Graduate School of Business, Stanford University
What was your first job? I did newspaper delivery on a three-mile rural route of about 50 customers.
If you could go back to the beginning of your career, what advice would you give yourself? Focus on actively networking and continuing to dynamically learn.
What do you think is the most important quality of a good leader and why? Good listening skills to arrive at a better understanding of where the people you are working with are coming from and an openness to their views.
What do you like to do when you’re not working? Do you have any surprising hobbies? I ride my bike and support Pelotonia with training rides. I also fly fish with my son.