Huntington Hit on Loan Losses - TheStreet

Huntington Hit on Loan Losses

Shares drop 3%.
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Huntington Bancshares

(HBAN) - Get Report

tumbled 3% after the bank warned that second-quarter earnings would be hit by a soft real estate market in the Midwest.

The Columbus, Ohio-based company said that it expects to make 34 cents a share for the quarter. Analysts were predicting a profit of 45 cents a share, according to Thomson Financial.

Huntington said a $60 million pretax charge -- mostly for a bigger provision for loan losses -- will shave 11 cents a share off earnings in the second quarter. Most of the provision is related to three large credits, "including two east Michigan real estate credits and one Northeast Ohio commercial loan," it said.

"These results were below our expectations and resulted primarily from difficult and deteriorating residential real estate markets," said Thomas Hoaglin, Huntington's chairman and CEO, in a press release. "The spring and early-summer selling season is important for homebuilders and while we had expected softness, in the case of East Michigan, it turned out to be far worse than planned. We believe that it is important to address this situation aggressively."

Hoaglin added that the company's loan-loss reserve ratio will rise to 1.15% for the second quarter, up from 1.08% in the first three months of the year.

Shares of Huntington fell 64 cents to $22.