Humann, L. Phillip 1946–
L. Phillip Humann
President and chief executive officer, SunTrust Banks
Born: 1946, in Independence, Kansas.
Education: Auburn University, BS, 1967; MS, 1969.
Family: Married Jane (maiden name unknown).
Career: Trust Company of Georgia (later renamed SunTrust), 1969–?; Trust Company Bank, 1985–1989, chairman and chief executive officer; SunTrust Banks, 1989–, president and chief executive officer.
Address: SunTrust Banks, 303 Peachtree Street NE, Atlanta, Georgia 30308-3201; http://www.suntrust.com.
■ Although not a native of the South, being originally from Independence, Kansas, L. Phillip Humann was associated with the laid-back style of the southern banker—until it came time for bargaining or boardroom decisions. Those who saw him in action said that his slow southern style was deceiving. After receiving bachelor's and master's degrees in economics from Auburn University, Humann began his career in the commercial banking training program of the Trust Company of Georgia, the first incarnation of SunTrust Banks. By 1991 he was the second-ranking officer of SunTrust. He received the nod for the top job in 1998. At that time the Atlanta-based SunTrust employed 21,000 and was America's 19th-largest banking institution, based on its assets.
As Humann ascended through the ranks at SunTrust, several significant events marked his career. In the 1970s he helped pull the bank out of bad real estate loans. In the 1990s he used strong leadership skills to bring new revenues to the conservative bank. His failed hostile takeover bid for Wachovia in 2001 drew praise, but also pessimistic speculation. Yet Humann forged ahead by acquiring firms and reorganizing to enhance his company's hold on the South, despite rumors of SunTrust's own readiness to sell.
GROOMED FOR THE JOB
When Humann was appointed CEO of SunTrust in 1998, his predecessor, James B. Williams, announced that Humann had been groomed for the job of heading the bank. He noted that Humann had been second in command since 1991, working right alongside Williams. Both Williams and Humann told the press that the bank's conservative nature would not change with the new leadership. Wall Street analysts praised the decision to appoint Humann as CEO, although they expressed concern that SunTrust would not be able to compete in a market where acquisitions ruled. Even though Wall Street criticized the company for its lack of purchases, under Humann's direction SunTrust in fact completed 37 acquisitions during the 1990s. One notable failure occurred in 1998 when Humann tried to acquire Barnett Banks of Florida, but SunTrust's bid of $13 billion lost out to NationsBank at $14.6 billion.
The phrase "quiet transformation," coined by Humann after taking over as CEO, described his method of improving the performance and efficiency of SunTrust. However, his actions were not always quiet. Wall Street criticized SunTrust's integration of Richmond-based Crestar Financial after their 1998 merger. The Securities and Exchange Commission required that SunTrust revise its earnings as listed in the acquisition because it had set too much aside for bad loans. The request caused Humann public embarrassment, since he was the one who had to issue the restatement of the company's reserves, but the purchase of Crestar was nevertheless successful for SunTrust. The quiet transformation continued in 2000 as Humann cut 2,300 jobs at SunTrust and consolidated 27 banks with separate charters under one corporate umbrella. In 2001 he made his most aggressive move when he attempted to bring SunTrust into the Carolinas, the only hole in the company's southern holdings, by making a hostile takeover bid for the Wachovia Corporation.
THE BATTLE FOR THE CAROLINAS
Humann actually began negotiations for a merger with Wachovia in 2000. Hours before the boards of Wachovia and SunTrust planned to approve the agreement, the CEO of Wachovia called it off. As Humann later explained to American Banker, "Wachovia's CEO called me to terminate discussions based on some alleged unsolved differences in our approaches to the wealth management business. We didn't understand back then, and don't to this day" (May 15, 2001).
When SunTrust learned, several months after the merger talks collapsed, that First Union Corporation planned to acquire Wachovia, Humann launched what insiders called a hostile takeover bid. He seemed determined to win the North Carolina–based Wachovia to solidify SunTrust's southern stronghold, which in 2001 included Georgia, Virginia, Tennessee, and Florida. After he offered $14.7 billion for Wachovia in May 2001, institutional investors pushed him to offer more, which Humann refused to do. In the ensuing battle, both sides sued one another even before the shareholders voted on the bids.
Takeover specialists said that SunTrust needed to accomplish one of two things: "Demonstrate a much greater credibility with the investment community than First Union, or put such a commanding offer on the table it left Wachovia's board of directors no choice but to accept" (Atlanta Journal-Constitution, August 4, 2001). Although it seemed at first that SunTrust had accomplished al least one of those things with the strong stock price it offered, in the end Wachovia's shareholders voted 3-1 to take the First Union offer.
Not only had Humann's refusal to bid higher apparently hurt SunTrust's chance to increase its southern holdings, but the company was also cautioned by the SEC to suspend repurchasing its shares to bolster stock prices. Even though Humann did not agree with the SEC's ruling, he decided to stop the questionable practice. Humann told interviewers in 2002 that his hostile bid for Wachovia was not a new policy for SunTrust. He said that when polite negotiations failed, he had no other choice but to go the hostile route. In the end, despite the failure of the bid, SunTrust gained customers disgruntled with the changeover from Wachovia to First Union.
NEW METHODS IN A CONSERVATIVE WORLD
By 2002 Humann had brought SunTrust from being the nation's 19th-largest banking institution to being the ninth-largest, with $106.2 billion in assets. The purchase of Ohio-based Huntington Bancshares in 2002 brought Humann mixed reviews. Some analysts said that the move made sense because Huntington Bancshares had branches in Florida, allowing SunTrust to consolidate some of its own branches there. Insiders at SunTrust said that this type of merger would be the wave of the future for the company. However, other analysts argued that there were so few opportunities for mergers of this type that SunTrust could hardly grow except at the internal level.
Humann liked to say that SunTrust was in a strong position because of its low percentage of bad loans. However, in 2002 he could no longer make that claim after SunTrust lost $31.2 million in loans to Enron, a large energy company that went under in a public scandal. SunTrust wrote off the loans in an attempt to break any public connection to Enron.
The failed Wachovia bid made headlines, but it did not keep Humann from continuing to make changes at SunTrust. Critics said that these changes moved SunTrust from being essentially local bank under the leadership of Williams to being a large conglomerate with consolidated branches under one leadership. Humann maintained he was simply fine-tuning what had already been in place, and that this had to be done because of the company's growth. He told American Banker in 2002 that SunTrust still retained its community-bank status while becoming more centrally efficient.
Humann said the local banks provided what the customers wanted, which was contact with the top people in the bank. Betty Graseck, an analyst with Morgan Stanley, expressed concern regarding SunTrust's ability to maintain revenue momentum despite Humann's efforts at streamlining. Graseck said that the company needed to "focus aggressively to maintain share, especially as competition in its markets increases" (American Banker, September 16, 2002). Even though industry insiders criticized Humann's conservative tactics, Humann saw those tactics as positives for the company in an uncertain economy. He told a reporter in 2003 that SunTrust continued to build customers and strengthen ties with its existing clients, while still considering options for acquisitions.
MANAGEMENT STYLE AND STRATEGIES
Humann has been portrayed as relaxed on the surface, but those who worked with him knew that the surface was not the whole story. When Humann replaced Williams as CEO, industry insiders speculated as to what changes might occur at SunTrust. Williams assured them that if Humann had wanted to make changes, they would have been made even before he took over as the head of the company. Jon R. Burke, of Brown, Burke Capital Partners, summed up Humann for the Atlanta Journal-Constitution (February 11, 1998): "When he dies he'll bleed Trust Company blue." The analyst Harold Schroeder of Keefe, Bryette & Woods observed that Humann was not a flashy leader who pounded the table. Another analyst said that because Humann had spent his entire career at SunTrust, he had developed the slow-talking southern mannerisms of his predecessors, but that anyone dealing with him would be wrong to assume that his style implied slow thinking.
Some insiders characterized Humann as tough and autocratic. The Atlanta Journal-Constitution reported (August 4, 2001) that when he took over as CEO, he had classified all the executives at SunTrust into A, B, or C categories. Those in the C group were not expected to last very long at SunTrust. Others have remarked on his silence during meetings—with the warning that it meant he was absorbing everything going on around him. Rawson Haverty Sr., who served with Humann on the board of Atlanta's Haverty Furniture, told the Journal-Constitution : "He's always a heavyweight when he's in a meeting. You don't realize he's taking everything in, but he is. If everything is going along the way he likes, he doesn't say anything" (May 19, 2002).
Some who worked with Humann at SunTrust stated that the CEO's manner calmed other employees. John W. Spiegel, who served as SunTrust's chief financial officer, said that Humann handled crisis situations thoughtfully, without losing his temper or control of his emotions. Interviewers have noted that Humann remained calm and relaxed even in trying times such as during the battle for Wachovia, and that he also spoke openly and honestly even about negative press given SunTrust. Thomas Finucane, manager of the John Hancock Regional Bank Fund in Boston, referred to Humann as blunt and honest.
Humann avoided talking about himself, going so far with one reporter as to refuse to acknowledge information about his wife or even whether he had children. He also had a reputation for refusing to waste time, and as a result few at SunTrust under his leadership were ever late to meetings. If he told a joke, it was one that would inspire a grin rather than a guffaw because, as Spiegel pointed out, a huge joke would distract people from the business at hand. His serious and efficient manner was further reflected in his approach to controlling spending at SunTrust by freezing hiring and allowing attrition among the employees to do the rest. Even with interest rates hurting the banking industry in 2003, Humann remained optimistic about his company's future and denied continuing rumors of a takeover of SunTrust.
See also entry on SunTrust Banks Inc. in International Directory of Company Histories.
sources for further information
Boraks, David, "At SunTrust These Days It's 'Better' not 'Bigger': Carolina Demographics Still a Lure, CEO Says," American Banker, September 16, 2002, p. 1.
Chambers, Rob, "A New Leader for SunTrust, but No Switch in Direction," Atlanta Journal-Constitution, February 11, 1998.
Luke, Robert, "Battle for Wachovia: The Aftermath: Too Tough a Battle for SunTrust," Atlanta Journal-Constitution, August 4, 2001.
Mandaro, Laura, and Alissa Leibowitz, "Spurned Suitor SunTrust Returns—And This Time It's Hostile," American Banker, May 15, 2001, p. 1.
Paul, Peralte C., "The Georgia 100: Finance: SunTrust Banks: Conservative Choices Prove Prudent for Difficult Times," Atlanta Journal-Constitution, May 18, 2003.
Van Dusen, Christine, "A 'Calming' Banker: SunTrust's Humann on Even Keel," Atlanta Journal-Constitution, May 19, 2002.
—Patricia C. Behnke