If you haven't heard, shares of Huntington Bancshares Inc. (NYSE:HBAN) rose nearly 10% Monday. That's really good considering most other
financial stocks are suffering. Why?
Friday CNBC Mad Money's Jim Cramer mentioned that the bank is the next Bank of America Corp. (NYSE:BAC) on his speculative financial stock list -- meaning a bank with high risk but high potential return similar to how BofA
stock seems to be recovering. Here's Cramer's
reasoning:
"Huntington Bancshares is showing strength after making a secondary offering many feared would merely dilute its shares. However, the secondary offering has been successful in raising capital for the bank, and HBAN already had $324 million to show for its $3.60 a share offering. In addition, the company is saving $100 million through cutbacks and is raising the dividend. Huntington is benefiting from insider buying as well." Other factors, according to a Wall Street Journal, report are
- Goldman, Sachs & Co. (NYSE:GS) upgraded its investment
rating on Huntington's shares to neutral from sell
- Oppenheimer analyst Terry McEvoy told Dow Jones Newswires, "Fundamentally, the successful increasing of their Tier 1 common
ratio and overall improvement in bank stock prices has helped
Huntington."
A little bit of publicity isn't hurting Huntington, but like several regional banks, the company has been on shaky groun. In April
the bank posted a $2.43 billion quarterly loss, and due to potential losses from commercial loans it had to take a $300 million credit-loss provision. Due to commercial loans, the capital in many regional banks could shrink down to worrisome levels,
causing hundreds of bank closures.
Recently MSNBC did an investigation of troubled asset ratios, which compares troubled loans against the bank's capital and loan loss reserves, for the 400 largest banks in the U.S.
As MSNBC
reports Huntington is one of the four regional banks hardest hit by losses:
"Four large banks account for more than $5 billion in losses. Huntington
National Bank of Columbus, Ohio, lost $2.46 billion. FIA Card Services
of Wilmington, Del., lost $1.47 billion. SunTrust Bank of Atlanta lost
$783 million. Sovereign Bank of Wyomissing, Pa., lost $764 million."However, its troubled asset ratio isn't bad. Huntington Bancshares ranked 39th with a troubled asset ratio of 47.1%. Usually asset ratios of 100% or more signify stress, according to the MSNBC report. For comparison, BankUnited FSB's troubled asset ratio prior to its close was 3749.8%, according to the same chart.
- Maria Woehr
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