Huntington Bancshares suffers 4th-quarter loss

The bank recorded a $239 million loss but predicted profits for 2008.

COLUMBUS (AP) — Huntington Bancshares reported a fourth-quarter loss Thursday, stung by ties to a subprime lender.

The regional bank holding company said it lost $239 million, or 65 cents per share, for the quarter ended Dec. 31 compared with a profit of $87.7 million, or 37 cents per share, a year ago that included one-time charges of 10 cents per share. The results were consistent with the outlook Huntington released last week.

Analysts surveyed by Thomson Financial expected a loss of 43 cents a share.

Huntington reported total pretax charges of $565 million in the quarter, or $1 per share, much of it for its ties to Jersey City, N.J.-based Franklin Credit Management Corp., a subprime lender.

Huntington acquired the relationship with Franklin when it bought Sky Financial Group last year in a stock and cash deal worth $3.6 billion. Sky Financial had made loans to Franklin for 17 years that Franklin used to finance mortgages. Huntington has said it stopped making loans to Franklin.

The total provision for credit losses in the quarter was $512 million, including $405.8 million for Franklin, compared with $42 million in the third quarter. Huntington also increased the amount set aside for potential loan losses not related to Franklin to $106 million in the quarter, due primarily to the continued weakness in the commercial real estate markets in eastern Michigan and northern Ohio.

Other charges included merger costs from the Sky deal.

In an interview, Thomas Hoaglin, Huntington’s chairman, president and chief executive, said the losses from the ties with Franklin have been painful, but that the company believes it has established adequate reserves to address the problems. The value of the loans has been marked down about 30 percent.

The acquisition with Sky was announced in December 2006, before much of the trouble with subprime mortgages emerged. By the time the merger was completed last summer, it was too late to substantially reduce the risk, Hoaglin said.

Still, Hoaglin said the deal will benefit Huntington by giving Huntington a stronger presence in some markets and access to new markets and generating more revenues.

“We’re experiencing great pain at the moment, but ultimately it will prove to be a good thing,” he said.

He also said despite the problems with Franklin, the quarter’s results included good growth in commercial loans and in several key fee-generating areas.