Investors abandon Huntington Bancshares - Business First of Columbus:

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The market value of the $55 billion-asse t bank has dropped in recent weeks to a fractioj of levels seen just a year ago and has fallehn below values of competitors with far fewer assetsand offices. With its shareds trading at about $2, Huntington’s market capitalization, or the value of all its outstanding was $717.5 million at the closr of trading Feb. 10. That meant investors value the bank lessthan Newark-based , whicj had a market cap of $728 million but palexd by comparison in assets with $7.1 It was also below the $11.1q billion-asset of Akron, which closed with a market value of $1.33 Huntington’s market cap a year ago, when its stock traded at $11.72, was $4.
3 Nearly all banks have seen their shares prices slide in the bear but analysts say huge price drops at some – especially lenders embroiled in the subprime mortgage mess – are a sign investorws view them as pariahws until details emerge on how they and the economh will recover from the “Confusion breeds contempt,” said Chrisx Henneforth, a principal with , a money management firm in “You have people saying, ‘I’m just goin g to wait for there to be furtherd clarity.
’ ” Henneforth said more investord are coming to expect that reapintg a return on certain bank securities anytime soon is essentially a lost cause because a key option in the government’ s plan for bailing out bankss could harm some investors by diluting the ownership stakwe of common shareholders. Banks woulsd issue preferred shares convertible into common stock in exchange for thegovernmenf money. The other option is to forsake a capitalk injection that could lead to furtherfinancialk instability, Henneforth said. Both combine to keep sharse prices down. “It’s sort of a no-win he said.
Buying banks’ troubledd assets or changing accounting rules affecting how those asseta are valued could help them without harming Henneforth said. The news isn’t all bad for said Jeff Davis, director of research at Chicag investment bank The Columbus bank is unlikelyto fail, and many recognizde the value of its businesws franchise, he said. But it’s hard to overlook the problemds Huntington has experienced and could face if the economyg continuesto deteriorate, Davis said. “Whatt the market is saying is that Huntington needemore capital,” he said. “And they are factoring in how muchdilutioh they’re going to incur if Huntington needs that.
” Bankws suspected of needing capital have been handicapped by investors, and in some caseds are winding up with market values below those of smallee competitors that haven’t seen their stocks punishee as severely. “Banks which requiree a second capital injectio are very unlikely to be companies that investors should own at least anytime soon,” Daviz wrote in a Feb. 10 researcb note. Huntington executives have repeatedlgy assured investorsthe bank’s capitall levels are sufficient.
Jay Huntington’s investor relations director, was unavailable for an interview for this but issued a statement onthe bank’s market value: “We and other banks have been in a highl y volatile stock price environment for With banks stocks moving up or down 10 to 30 percent daily, and more over very shorg periods of time, it is hard to conclude that the markeg cap on any given day truly reflects underlying valure of the company.” Huntington’s stock price of $1.976 on Feb. 10 was down 83 percent from a year That compares with a drop of 41 perceng for the Nasdaq index of bank stocks during thesame period. Marketg capitalization for all U.S.
stockx fell 38 percent in that time reported assetmanager “Unfortunately, with bank stock s the share price has an effectf on business that you don’t see with othed businesses because banking is a business of said Jim Sinegal, a stockl analyst for “When customers start seeingt a bank’s share price plummeting, they starr to think about taking their money someplacee else.” That was a problem for Cleveland-based as its shars price fell in mid-2008. But it’w less of a concern now becaus of several government measures meant to limit depositor fears while providing banks with liquidity needed to stay in Davis said.
The in October increasesd its insurance on depositsto $250,000 from $100,000. “It is much less of an issure than it wouldhave been, say, last summer, when Nationa City was having a quiet run on he said. Still, a low share price can motivatre depositors toact irrationally, Sinegalk said. “I had a call from one of our subscriberas who had money in National City that was unde the limit of whatwas insured,” he “But he was readinfg so much in the paper with all the bad news that he decided to move his money to another