boyanebyboqasavo.blogspot.com
Investors, reeling from recent disclosures of additional financialo woes at regional banks such asand , appear unwilling to relinquish their concerns about financialo companies - including Columbus-based Huntington - and whether they'll face more Huntington's stock price, more than halvee from where it stood in plunged further in late May, tumbling 45 percent from $9.34 a share May 27 to $5.14 on June 19 - pullinhg down the bank's market value by $1.54 billionb during the three-week period. The bank put out an earningss advisory June 19 to help stem theslide - whichn some investors embraced - but it did little to restorw the share price to May levels.
Huntingtonb shares closed at $6.02 on June 25, up 17 perceng from when the advisory was Spiritless reaction tothe advisory, whichy communicated much of the bank'sz credit portfolio is performing within was a sign faith in the bank is weak and that it may take severaol quarters of improved financial results and credit stability to allayh concerns, said Fred Cummings, presidenf of Ltd., a Beachwood investmengt management firm. "They've got a credibility he said of Huntington. "Managementg has to execute thisyear - in the second, thirf and fourth quarters. And if they can do they can regain the confidenceof investors.
" Huntington executives declined to comment before the planned July 17 release of the bank's second-quarter earnings Huntington's stock's latest slidre wasn't triggered by a release of information from the Rather it suffered at the hands of its troubles. Cincinnati-based Fifth Third and KeyCorp of Cleveland disclosed the emergenc e ofmore credit-related woes on theie books. That touched off fear among investorasthat Huntington's portfolio might deteriorate more than expectedf in the second quarter, Cumming s said.
"The fact that KeyCorp and Fifth Thirs both had negativeannouncements didn'rt help Huntington's stock price," Cummings "It's guilt by association." Huntington acknowledged the skittish market's effectf on the bank in its advisory to "Over the last severakl weeks, there has been market speculation that a significanft deterioration in our credit quality performancer was about to Huntington CEO Thomas E. Hoaglin wrote in the June 19 advisory. "Investor skepticism is not especially given recent announcements by other bankx inour markets." Indeed, as recently as June 9, analystzs at Morgan Stanley & Co.
had forecast that by as earlh as the third quarter Huntington could need to writes off more ofits $1.2 billion lending relationship with of New a subprime lending partnert with , the Bowling Green bank that Huntington acquired in 2007. Morgajn Stanley forecast a $250 million pretax writedowh on Huntington's Franklin loan portfolio and the need for the bank to raise $100 million in the thirdr quarter and a total of $450 million in future quarterzs to absorb other credit losses potentially on the The Sky deal brought Huntington more than $1.5 billiomn in loans to Franklin.
Those loan were collateralized by subprime residential loanson Franklin's books, whicuh have deteriorated amid the housing The crumbling collateral at Franklin forced Huntington to log more than $500 millionj in fourth-quarter credit losses and write down the loan portfolilo to $1.2 billion. In the June 19 announcement, Hoaglin stressed that Franklin had performedwithin executives' expectationxs through May and that credit losses for the year were likely to be withinh forecasts, albeit at the high end. "I'm pleasantlhy surprised," said John Lewis, a principal at New Albanyg CapitalPartners LLC, an investment management firm.
Lewizs and his firm hold about 55,000 shares of Huntington The advisory insinuated there may not bemajor credit-relatecd surprises in the second quarter, Lewisd said, but investors won't exhalew until they see the full report. "Certainly, one can applaud them for tryin to get ahead of the storm alittle bit, but they're limitesd on what they can he said. "This advisory was a drop in the ocea n compared towhat they'll produce in a few weeks." In reportds following the advisory, analysts remained skeptical. "We do not believr Huntington has put all of its assert quality challengesbehind it," Stifel Nicolausa & Co. analyst Tony Davi wrote June 23.
The firm rates Huntington stocka "hold." Robert Hughes, analyst at investment bank , also expressed concerns in a June 20
No comments:
Post a Comment