Huntington projects $16M fee reduction as it tries to keep overdraft edge

Huntington Bancshares Inc. says it plans to roll out additional changes to its deposit accounts as it monitors a wave of overdraft policy revamps across the industry and tries to keep its "leadership position."

Huntington launched its Fair Play product set more than a decade ago, which included a 24-hour period for customers to cover overdrafts. It has added features since then, including its introduction in 2020 of a $50 cushion within which overdrawn accounts do not generate overdraft fees.

Deposit account service charges at Huntington fell $13 million sequentially to $101 million in the 2021 fourth quarter, which the bank attributed to switching customers it acquired through its 2021 purchase of TCF Financial Corp. to Fair Play accounts.

Further changes to its accounts by the middle of the year are expected to drive an additional $16 million reduction in quarterly deposit service charges by the fourth quarter, executives said on an analyst call on financial results. Huntington did not specify the changes it is planning.

But, based on its experience with previous changes, Huntington expects to "earn back that run rate fee loss in approximately 18 to 24 months" because of offsetting factors like improved client retention, CFO Zachary Wasserman said. The bank also expects the policy changes to result in a reduction of $3 million to $5 million quarterly in charge-offs of uncollectible fees.

Fair Play has "added to our brand value, our customer, household growth, our relationship retention and expansion," Chairman, President and CEO Stephen Steinour said. "As we go forward, we'll still retain this leadership role. There are plans we have in place, going back now a number of months, to do some more looking out for our customers."

He added that Huntington has been watching the industry's pivot on overdraft closely, and "we would expect to react to that."

Including the impact of the deposit account changes, Huntington projected that its noninterest income would increase by a low-single digit percentage by the fourth quarter this year from a baseline of $515 million in the fourth quarter of 2021, driven by capital markets, payments and wealth management.