Huntington Bank has plans to increase its presence in grocery stores while shuttering some free-standing branches, said the bank during its fourth-quarter 2011 earnings conference. Meanwhile, Huntington reports the significant impact of new caps to debit interchange fees.

It’s nothing new for banks to make an appearance in large retail outlets. The in-store banking branch alternative is typically less costly to operate compared to independent brick-and-mortar locations.

The cost-efficiency is one reason that Huntington Bank (NASDAQ: HBAN) plans to open up to 40 branches in Giant Eagle grocery stores.

For some consumers, visiting the bank is considered a chore. By having the bank at a frequent destination such as a supermarket, the move would expand convenience to consumers while also cutting down on costs.

Additionally, some Huntington branches that have weak activity and slight overlap with other Huntington offices will be closed, said Stephen Steinour, chairman and CEO of Huntington Bank.

The Columbus, Ohio-based bank expects to shut down 29 branches during the first quarter.

A Post-Durbin Environment

Despite solid earnings in the fourth quarter, Huntington Bank mentioned the negative impact on revenue growth from the new debit interchange swipe fee caps that went into effective in October of last year.

The new limits had been the scapegoat for banks that planned to charge fees for using debit cards – deemed a move to adapt to reduced revenue. These plans have since been scrapped.

In the fourth quarter, Huntington earned $17.4 million less from debit card transactions compared to the prior quarter.

Unlike the majority of big U.S. banks, Huntington did not mention plans to institute debit card fees. More remarkably, the bank continues to offer a free checking account that comes with no strings attached.

The consumer-friendly stance is accompanied by data that Huntington experienced strong deposit growth with a 10.3% growth in consumer checking accounts for the year.

However, Huntington received poor customer reviews and charges relatively high service fees, based on Huntington’s Bank Report Card on MyBankTracker.

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