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Huntington Leads Bank Stocks Higher

NEW YORK (TheStreet) -- Stocks of large-cap U.S. banks ended the week on a strong note, despite a negative reaction in the broad market as good news out of the Ukraine was outweighed by another set of disappointing housing numbers at home.

The broad indices all ended with moderate losses, although investors earlier cheered an agreement announced by the office of Ukraine President Viktor Yanukovych following negotiations with protest leaders, which includes various concessions to the protesters. These include early elections and the release from prison of former prime minister Yulia Tymoshenko.

The KBW Bank index (I:BKX) rose 0.4% to 67.87, with all but three of the 24 component stocks ending with gains.  Huntington Bancshares (HBAN) was the winner among large-cap banks, with shares up 1.8% to close at $9.11.

The National Association of Realtors on Friday said sales of existing single-family homes in the United States fell by 5.1% during January to a seasonally adjusted annual rate of 4.62 million, from December's sales pace of 4.87 million. The January figure fell short of consensus estimate of 4.69 million among economists polled by Thomson Reuters, and was also the lowest figure for existing home sales since July 2012.

As expected, the unusually severe winter weather had an effect on home sales, according to NAR chief economist Lawrence Yun. "Some housing activity will be delayed until spring. At the same time, we can't ignore the ongoing headwinds of tight credit, limited inventory, higher prices and higher mortgage interest rates. These issues will hinder home sales activity until the positive factors of job growth and new supply from higher housing starts begin to make an impac," Yun said in the NAR press release.

The median sales price for a single-family home during January was $188,900, declining from $197,700 in December, but rising from $171,100 in January 2013.

While there have been several reports pointing to slowdown in the recovery of the U.S. housing market, "the existing home market is looking healthier and healthier," according to Jonathan Smoke, chief economist at Metrostudy.

Smoke in an email wrote that January's sales pace is 15% higher than the NAR's 45-year average pace of 3.52 million, and added, "The abnormal level of investor activity is roughly 10 percent of the volume, so take away that and we still would be at least 5 percent above average in volume."

The trend is toward a "healthier mix" of conventional home sales to distressed sales, according to Smoke. "Resales gained 10 percent in share over the course of 2013, rising from 66 percent of total existing home transactions to 72 percent at the end of the year as both foreclosures and subsequent [sales of repossessed homes] declined. 2014 is seeing that trend continue as non-distressed regular resales now make up 74 percent of all existing home sales," he wrote.

Federal Reserve Transcripts

The Board of Governors of the Federal Reserve on Friday released transcripts of key meetings of the Federal Open Market Committee during 2008, which led to important policy decisions at the worst moment of the credit crisis.

Please see the following articles for detailed coverage of the meetings, which shed light on several controversial topics, including runs on banks, debate over the survival of Bear Stearns and banks' possible misreporting of LIBOR data:

Fed Says LIBOR 'Understated,' Describes Wachovia Deposit Run at Sept. 2008 Meeting

Fed Didn't Consider Bear Stearns Bailout Days Before Its Bailout

Fed Provided a 'Backstop For the Entire Market'

Huntington

Huntington Bancshares of Columbus, Ohio, has seen its stock decline 6% this year, following a stellar return of 54.5% during 2013.

The shares trade for 1.5 times their reported Dec. 31 tangible book value of $6.27 and for 11.7 times the consensus 2015 earnings estimate of 78 cents a share, among analysts polled by Thomson Reuters.  The consensus 2014 EPS estimate is 72 cents.

Please see TheStreet's earnings coverage for a discussion of the bank's fourth-quarter results, including an interview with with Huntington Bancshares CEO Stephen Steinour.

This table show's the performance of Huntington's stock against the KBW Bank Index and the S&P 500 ^GSPC since the end of 2011:

HBAN Chart

Fed Says LIBOR 'Understated,' Describes Wachovia Deposit Run at 2008 Meeting

JPMorgan's EPS Could Jump to $7.50, Analysts Say

Stock quotes in this article: HBAN, I:BKX 
Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.

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