Rick Parsons grew up in Avon Lake before 30-plus years in banking took him to an executive vice presidency of Bank of America. He now writes about the business, is an independent management advisor and conducts seminars including with the Ohio Bankers League -- the century-old association of financial institutions in the state. 

And, he uses his Ohio’s roots in another way too -- as a research base for projecting banking trends.

“'As Ohio goes’ in presidential elections is true for banking,too.”  The state is a microcosm of the nation with the same mix of mega-banks, midsize, regional banks, and local banks.

“When I see a merger of a FirstMerit and Huntington, in my view, it’s a really, really, big deal.”

Shrinking
He says trends in Ohio that are also seen nationally include “significant consolidation, across the board.”

The industry has gone from nearly 20,000 banks in the 1990s to less than 6,000. “Why this industry is shrinking is the same answer as why Huntington and FirstMerit merged.”

The economics of banking, with steadily increasing cost and flat income growth, is making bank stocks less attractive to investors. Huntington’s and FirsMerit’s stocks are valued lower now than at the turn of the millennium.

Merging is a way for banks to consolidate personnel -- where more than half of their controllable costs lie -- and cut costs by cutting jobs.

Competition reduced
A merger also reduces the number of competitors in the marketplace. That can affect customers, although it usually does not since there is still generally a lot of competition. 

There is also a factor in this merger of bringing together two banks that are historically “very well run.”

And, though they are regional, “these are big players;” Huntington is a top 25 bank nationally, and FirstMerit is top 50. If they merge, people around the country “take notice.”