Moody's confirms Huntington Bancshares (Snr at A3); outlook negative
New York, February 22, 2008 -- Moody's Investors Service confirmed the ratings of Huntington Bancshares
Incorporated (Huntington), and its subsidiaries, including
its long-term senior debt rating at A3. Moody's also confirmed
the bank financial strength rating of its lead bank, Huntington
National Bank (HNB) at C+, as well as HNB's deposit rating
at A2 and its short-term ratings at P-1. The rating
outlook on all entities was changed to negative. These rating actions
conclude a review for possible downgrade that began on November 16,
2007.
Moody's said that the primary reasons for confirming Huntington's
ratings are (1) management's stated intention of evaluating additional
capital issuance alternatives and (2) the rating agency's view that,
with additional capital, Huntington will be able to weather elevated
loan loss provisions that Moody's expects over the near to intermediate
term. In addition, Moody's ratings reflect its view
that Huntington's franchise has improved since the Sky acquisition.
As a result of that transaction, the bank has strengthened its deposit
shares in Ohio and enhanced its commercial banking franchise in the U.S.
Midwest.
The negative outlook, however, is based on Moody's assumptions
for further weakness in certain of Huntington's asset classes.
They are: (1) the $9.2 billion commercial real estate
portfolio that contains residential construction and land development
loans and (2) the $7.3 billion home equity portfolio.
Compounding these risks is the fact that Huntington's footprint
is in a region of the United States that has come under intensified economic
strain.
Until the company issues additional capital, its capital position
is strained, the result of a large write-down for its exposure
to Franklin Credit Management Corporation (Franklin). Franklin
is a national consumer finance company that specializes in the acquisition
of scratch and dent loans -- that is, residential
mortgages that are currently delinquent or have had a history of delinquency
-- and in the origination of sub-prime residential
mortgages. Huntington has a net exposure to this collateral of
$1.1 billion that, despite Huntington's conservative
reserving to date, could produce further losses.
The rating agency added if Huntington failed to raise sufficient capital
in the near term, then a downgrade of its ratings is likely.
Below are the rating actions taken on Huntington by Moody's:
Issuer: Huntington Bancshares Capital Trust I
..Outlook Actions:
....Outlook, Changed To Negative From
Rating Under Review
..Confirmations:
....Preferred Stock Preferred Stock,
Confirmed at Baa1
Issuer: Huntington Bancshares Incorporated
..Outlook Actions:
....Outlook, Changed To Negative From
Rating Under Review
..Confirmations:
....Multiple Seniority Medium-Term
Note Program, Confirmed at Baa1
....Multiple Seniority Shelf, Confirmed
at (P)Baa2
....Subordinate Regular Bond/Debenture,
Confirmed at Baa1
....Subordinate Shelf, Confirmed at
(P)Baa1
....Senior Unsecured Medium-Term Note
Program, Confirmed at A3
Issuer: Huntington Capital II
..Outlook Actions:
....Outlook, Changed To Negative From
Rating Under Review
..Confirmations:
....Preferred Stock Preferred Stock,
Confirmed at Baa1
Issuer: Huntington Capital III
..Outlook Actions:
....Outlook, Changed To Negative From
Rating Under Review
..Confirmations:
....Preferred Stock Preferred Stock,
Confirmed at Baa1
....Preferred Stock Shelf, Confirmed
at (P)Baa1
Issuer: Huntington Capital IV
..Outlook Actions:
....Outlook, Changed To Negative From
Rating Under Review
..Confirmations:
....Preferred Stock Shelf, Confirmed
at (P)Baa1
Issuer: Huntington Capital V
..Outlook Actions:
....Outlook, Changed To Negative From
Rating Under Review
..Confirmations:
....Preferred Stock Shelf, Confirmed
at (P)Baa1
Issuer: Huntington Capital VI
..Outlook Actions:
....Outlook, Changed To Negative From
Rating Under Review
..Confirmations:
....Preferred Stock Shelf, Confirmed
at (P)Baa1
Issuer: Huntington National Bank
..Outlook Actions:
....Outlook, Changed To Negative From
Rating Under Review
..Confirmations:
.... Bank Financial Strength Rating,
Confirmed at C+
.... Issuer Rating, Confirmed at A2
.... OSO Rating, Confirmed at P-1
.... Deposit Rating, Confirmed at P-1
....OSO Senior Unsecured OSO Rating,
Confirmed at A2
....Multiple Seniority Bank Note Program,
Confirmed at A3
....Subordinate Regular Bond/Debenture,
Confirmed at A3
....Senior Unsecured Bank Note Program,
Confirmed at A2
....Senior Unsecured Deposit Note/Takedown,
Confirmed at A2
....Senior Unsecured Regular Bond/Debenture,
Confirmed at A2
....Senior Unsecured Deposit Rating,
Confirmed at A2
Issuer: Huntington Preferred Capital, Inc.
..Outlook Actions:
....Outlook, Changed To Negative From
Rating Under Review
..Confirmations:
....Preferred Stock Preferred Stock,
Confirmed at Baa1
Issuer: Sky Financial Capital Trust I
..Outlook Actions:
....Outlook, Changed To Negative From
Rating Under Review
..Confirmations:
....Preferred Stock Preferred Stock,
Confirmed at Baa1
Issuer: Sky Financial Group, Inc.
..Outlook Actions:
....Outlook, Changed To Negative From
Rating Under Review
..Confirmations:
....Subordinate Regular Bond/Debenture,
Confirmed at Baa1
Headquartered in Columbus, OH, Huntington Bancshares Incorporated
had reported assets of $55 billion as of December 31,2007.
New York
Robert Young
Managing Director
Financial Institutions Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Toronto
Peter Routledge
VP - Senior Credit Officer
Financial Institutions Group
Moody's Canada Inc.
(416) 214-1635
