New York, April 07, 2009 -- Moody's Investors Service downgraded Huntington Bancshares Incorporated's
senior debt to Baa2 from A3. Huntington Bancshares Incorporated's
subordinate debt was downgraded to Baa3 from Baa1 and preferred to Ba2
from Baa2. Huntington National Bank's financial strength
rating was downgraded to C- from C+, long term deposits
to Baa1 from A2, and short-term deposits to Prime-2
from Prime-1. The Prime-2 rating of Huntington Bancshares
Incorporated was affirmed. The outlook is negative. This
concludes the review that began on January 22, 2009.
The downgrade and negative outlook reflects Moody's view that Huntington's
asset quality issues, and the resulting negative impact on capital
and profitability, has decreased the company's financial strength.
The capital concern is most significant from a tangible common equity
perspective (calculated in accordance with Moody's methodology).
Moody's views Huntington's asset quality issues to be centered
on its commercial real estate and commercial and industrial portfolios.
In regards to commercial real estate, the sharp decline in real
estate prices and anticipated deterioration in loan performance has led
Moody's to considerably increase its loss expectations for this asset
class. For commercial and industrial, Moody's observes
that the company operates in a region of the United States - the
Midwest and, predominantly, Ohio - that will likely
experience a more severe economic downturn than elsewhere in the country,
perhaps heralding a long period of higher loan losses tied to the deteriorating
Midwestern economy.
The rating action also reflects that risks that remain in Huntington's
exposure to residential mortgage loans related to Franklin Credit Management
Corporation despite the recent restructuring of this relationship.
Moody's notes that Huntington has a number of fundamental strengths,
including solid deposit market share in its core Ohio market and a prudent
liquidity position.
The last Huntington rating action was on January 22, 2008 when Moody's
placed Huntington's ratings under review for downgrade. Today's
rating action conclude that review. The rating review was consistent
with Moody's February 2009 announcement that it was recalibrating some
of the weights and relative importance attached to certain rating factors
within its current bank rating methodologies. Capital adequacy,
in particular, has taken on increasing importance in determining
the BFSR in the current environment. (Please see Moody's February
2009 special comment "Calibrating Bank Ratings in the Context of the Global
Financial Crisis.")
The principal methodologies used in rating Huntington were "Bank Financial
Strength Ratings: Global Methodology" and "Incorporation of Joint-Default
Analysis into Moody's Bank Ratings: A Refined Methodology",
which can be found at www.moodys.com in the Credit Policy
& Methodologies directory, in the Ratings Methodologies subdirectory.
Other methodologies and factors that may have been considered in the process
of rating Huntington can also be found in the Credit Policy & Methodologies
directory.
Downgrades:
..Issuer: Huntington Bancshares Capital Trust I
....Preferred Stock Preferred Stock,
Downgraded to Baa3 from Baa1
..Issuer: Huntington Bancshares Incorporated
....Multiple Seniority Medium-Term
Note Program, Downgraded to a range of Baa3 to Baa2 from a range
of Baa1 to A3
....Multiple Seniority Shelf, Downgraded
to a range of (P)Ba2 to (P)Baa2 from a range of (P)Baa2 to (P)A3
....Preferred Stock Preferred Stock,
Downgraded to Ba2 from Baa2
....Subordinate Regular Bond/Debenture,
Downgraded to Baa3 from Baa1
....Subordinate Shelf, Downgraded to
(P)Baa3 from (P)Baa1
....Senior Unsecured Medium-Term Note
Program, Downgraded to Baa2 from A3
..Issuer: Huntington Capital II
....Preferred Stock Preferred Stock,
Downgraded to Baa3 from Baa1
..Issuer: Huntington Capital III
....Preferred Stock Preferred Stock,
Downgraded to Baa3 from Baa1
....Preferred Stock Shelf, Downgraded
to (P)Baa3 from (P)Baa1
..Issuer: Huntington Capital IV
....Preferred Stock Shelf, Downgraded
to (P)Baa3 from (P)Baa1
..Issuer: Huntington Capital V
....Preferred Stock Shelf, Downgraded
to (P)Baa3 from (P)Baa1
..Issuer: Huntington Capital VI
....Preferred Stock Shelf, Downgraded
to (P)Baa3 from (P)Baa1
..Issuer: Huntington National Bank
....Bank Financial Strength Rating,
Downgraded to C- from C+
....Issuer Rating, Downgraded to Baa1
from A2
....OSO Rating, Downgraded to P-2
from P-1
....Deposit Rating, Downgraded to P-2
from P-1
....OSO Senior Unsecured OSO Rating,
Downgraded to Baa1 from A2
....Multiple Seniority Bank Note Program,
Downgraded to a range of Baa2 to P-2 from a range of A3 to P-1
....Subordinate Regular Bond/Debenture,
Downgraded to Baa2 from A3
....Senior Unsecured Bank Note Program,
Downgraded to a range of Baa1 to P-2 from a range of A2 to P-1
....Senior Unsecured Deposit Note/Takedown,
Downgraded to Baa1 from A2
....Senior Unsecured Regular Bond/Debenture,
Downgraded to Baa1 from A2
....Senior Unsecured Deposit Rating,
Downgraded to Baa1 from A2
..Issuer: Huntington Preferred Capital, Inc.
....Preferred Stock Preferred Stock,
Downgraded to Baa3 from Baa1
..Issuer: Sky Bank
....Subordinate Regular Bond/Debenture,
Downgraded to Baa2 from A3
..Issuer: Sky Financial Capital Trust I
....Preferred Stock Preferred Stock,
Downgraded to Baa3 from Baa1
..Issuer: Sky Financial Group, Inc.
....Subordinate Regular Bond/Debenture,
Downgraded to Baa3 from Baa1
Outlook Actions:
..Issuer: Huntington Bancshares Capital Trust I
....Outlook, Changed To Negative From
Rating Under Review
..Issuer: Huntington Bancshares Incorporated
....Outlook, Changed To Negative From
Rating Under Review
..Issuer: Huntington Capital II
....Outlook, Changed To Negative From
Rating Under Review
..Issuer: Huntington Capital III
....Outlook, Changed To Negative From
Rating Under Review
..Issuer: Huntington Capital IV
....Outlook, Changed To Negative From
Rating Under Review
..Issuer: Huntington Capital V
....Outlook, Changed To Negative From
Rating Under Review
..Issuer: Huntington Capital VI
....Outlook, Changed To Negative From
Rating Under Review
..Issuer: Huntington National Bank
....Outlook, Changed To Negative From
Rating Under Review
..Issuer: Huntington Preferred Capital, Inc.
....Outlook, Changed To Negative From
Rating Under Review
..Issuer: Sky Bank
....Outlook, Changed To Negative From
Rating Under Review
..Issuer: Sky Financial Capital Trust I
....Outlook, Changed To Negative From
Rating Under Review
..Issuer: Sky Financial Group, Inc.
....Outlook, Changed To Negative From
Rating Under Review
Headquartered in Columbus, OH, Huntington Bancshares Incorporated
had reported assets of $54.3 billion as of December 31,
2008.
New York
Robert Young
Managing Director
Financial Institutions Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
New York
Craig A. Emrick
VP - Senior Credit Officer
Financial Institutions Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Moody's downgrades Huntington senior to Baa2
