Huntington Bancshares Inc. (Nasdaq: HBAN) plans to deploy $5 billion in Michigan as part of a new initiative to support small business and individuals going through times of tumult.
The $5 billion initiative in Michigan over five years is part of a broader seven-state, $20 billion lending and philanthropic Community Plan laid out Wednesday by the Columbus-based Huntington Bank, which operates throughout much of the Great Lakes and Midwest region.
The bank’s plan lays out three areas where it plans to make investments: access to capital for small business, particularly those owned by minorities, women and veterans; affordable housing and homeownership; and community lending and investment.
Sandra Pierce, who heads Huntington Bank’s private client group, regional banking and serves as the bank’s chairman in Michigan, said the dollars from the plan come from the bank’s own earnings and represent what Pierce said is the “largest commitment” in the bank’s history.
“If you take a look at access to capital, PPP helped. And it was important, but not enough,” Pierce said, referring to the federal Paycheck Protection Program that launched in April as a forgivable loan program for small businesses. “And so what we want to do with these dollars is additional investments beyond what we normally do.”
Pierce said that over the coming weeks, Huntington officials will have discussions with a variety of community groups around the state about how to best deploy the $5 billion in Michigan.
Hunington Bank, which has a branch on West Vernor Highway in Detroit’s Mexicantown neighborhood, plans to boost business lending in Michigan.
“You’re going to see — starting this month — specific initiatives that we’re going to be announcing under this plan,” Pierce said. “And you’ll see that it’s something we’ve never done before. It is not business as usual.”
Michigan Gov. Gretchen Whitmer, in a statement, praised the bank’s commitment to the state.
“This is great news for Michigan’s small-business owners who have faced unprecedented challenges as we have navigated the COVID-19 pandemic over the past six months,” Whitmer said. “These are Michiganders who have spent their lives building their businesses and who need our help now more than ever.”
With Wednesday’s announcement, Huntington becomes the latest bank operating in the region to announce enhanced lending for small, particularly minority-owned, businesses. TCF Bank in July announced a $1 billion fund, and Comerica has partnered with Detroit-based First Independence Bank for a minority lending initiative.
With more than $16.8 billion in deposits in the state as of last June, Huntington stood as the sixth largest bank in Michigan in 2019. The bank had about $118 billion in assets as of June 30 of this year.
As the coronavirus pandemic has dragged on, it’s largely prolonged the associated economic crisis. That’s resulted in banks, for the most part, tightening lending standards for businesses, according to the most recent Senior Loan Officer Opinion Survey conducted by the U.S. Federal Reserve Bank and last updated in early August.
“Regarding loans to businesses, respondents to the July survey indicated that, on balance, they tightened their standards and terms on commercial and industrial (C&I) loans to firms of all sizes,” the survey reads. Banks reported weaker demand for C&I loans from firms of all sizes.”
For her part, Pierce said she didn’t see lending at this point as particularly risky. Rather, current conditions call for banks to further deploy capital.
“I consider it that we’ve got to put the resources out there,” she said. “There are some businesses … that haven’t even opened yet. There are some businesses that have opened and can’t get their employees back yet.
“And so to me, it’s not increased risk. What it is, is everybody understanding that we all have to do this together and provide not just dollars, but go and actually support the businesses, with your business, with your personal dollars and spend money in these places.”