Regional bank Huntington Bancshares Inc. said Thursday it expects 2008 charge-offs at the top end of its 2008 guidance of 0.6% to 0.65%, but aimed to quell investor fears about further credit deterioration.
"The purpose of our announcement today is to reassure our shareholders that while credit quality remains under pressure given the continued economic weakness in our markets, our full year 2008 net charge-off outlook has remained fairly consistent," said Chief Executive Thomas Hoaglin. "Investor skepticism is not surprising, especially given recent announcements by other banks in our markets."
Huntington's share recently traded after-hours up 11% at $5.72. They closed Thursday at $5.14, down 6.9%.
The company also said it expects its second-quarter loan-loss provision to exceed 0.6% to 0.65% charge-offs by $55 million to $65 million, and announced it is moving $786 million in loans out of non-performing assets.
The market's mood has recently turned against regional banks amid news of increasing charge-offs, capital raising and dividend cuts.
Huntington cut its dividend and raised $569 million in equity in April to bolster capital levels amid "increased economic uncertainty." Huntington said that at the time it wasn't raising money because of any "known major credit challenges" and "this remains the case."
"We expect 2008 full-year home equity net charge-offs to be higher than historical levels, but to remain at a very manageable level," Hoaglin said. "We are fully aware that the economic environment remains difficult and could continue to get even more so. Nevertheless... we firmly believe the actions we have taken over the last several years will result in better relative credit quality performance throughout this cycle."