Magazine article American Banker

Huntington SEC Update Reiterates '07 Guidance

Magazine article American Banker

Huntington SEC Update Reiterates '07 Guidance

Article excerpt

Huntington Bancshares Inc. affirmed its 2007 earnings guidance Friday in a business update that showed a degree of comfort with credit trends.

Analysts said the update, Huntington's 8-K filing with the Securities and Exchange Commission, makes sense in light of the Columbus, Ohio, company's shaky second-quarter credit performance and Wall Street's concerns about the credit markets in general.

The 216-page filing appeared to attempt to reassure investors that Huntington's $5.5 billion mortgage portfolio is sound, and noted that it includes no subprime, option adjustable-rate mortgages, or negative amortization loans.

It said that at midyear $640 million, or 13% of the portfolio, consisted of alternative-A mortgages. Huntington also reported second-quarter declines in delinquencies its prime first-mortgage portfolio and in its alt-A portfolio. Delinquencies were flat in its interest-only mortgages.

Huntington, which has assets of $54 billion, said in the filing that it "implemented more conservative underwriting" for alt-A loans in late 2005.

In the first half of this year such originations made up 6% of its mortgage originations. Alt-A originations were 16% of its total in all of 2006, versus 20% in 2005.

The $17.6 billion-asset Sky Financial Group, which Huntington acquired on July 1 for $3.6 billion, had a "minimal" amount of alt-A loans, Huntington said. It did not specify how many.

Huntington said that despite taking a $60 million pretax provision expense related to loans to two home builders in eastern Michigan and a commercial loan in northern Ohio, it believes construction lending is a "good business." But it is "aggressively reviewing the higher level of monitored credit balances" among its single-family builder clients, it said.

In its $13.1 billion commercial loan portfolio, delinquencies rose 2 basis points from the first quarter and 6 basis points from a year earlier, to 0. …

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