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Fitch Affirms Huntington Bancshares, Inc.'s L-T IDR at 'BBB'; Outlook Negative.

NEW YORK -- Fitch Ratings affirms Huntington Bancshares, Inc. (HBAN) and Huntington National Bank's ratings, including the Long-term Issuer Default Rating (IDR) at 'BBB' and 'BBB+', respectively. The Rating Outlook remains Negative.

Improving HBAN's relatively low tangible common equity position had been an area of focus for management in 2009 and efforts to boost tangible common equity have been successful. Largely through the issuance of new common stock, the company has raised its tangible common equity to assets ratio approximately 200 bps since year end 2008 (YE08) with the bulk of the capital raising being completed in second quarter-2009 (2Q'09). HBAN also recently announced an additional $150 million equity issuance, which will complete the company's previously announced capital raising efforts.

Fitch's April 2009 rating action (ratings downgraded to current levels) reflected the view that HBAN's earnings will be pressured for the remainder of 2009 as nonperforming loans and credit costs pressure the bottom line. This view remains unchanged. Additionally, Fitch was concerned with HBAN's low levels of tangible common equity and the relatively high level of preferred in the capital structure which could hinder holding company financial flexibility. Reflecting this, the notching between the bank and the holding company as well as holding company and certain preferred issues was widened to further indicate the heightened level of pressure for the company to address capital issues and enhance holding company financial flexibility.

While the company's efforts to date have been successful and remove some near-term ratings pressure, the continued difficult operating environment indicates that operating losses over the near term are likely to continue. Additionally, Fitch expects that asset quality metrics will likely weaken further, especially in the commercial real estate portfolio maintaining the negative pressure and Negative Outlook on the company's ratings. That said, the increased capital and liquidity at the holding company has improved financial flexibility. Fitch believes the holding company has sufficient cash (currently approximately $1.2 billion) to support relatively nominal near-term obligations. However, Fitch expects the holding company will need to downstream capital to the bank over the coming quarters to offset operating losses. Fitch will maintain the notching between the bank and holding company until greater clarity is apparent that holding company resources are sufficient to meet bank capital needs, while still providing the holding company with adequate flexibility to meet its own needs, including preferred dividends.

Fitch has affirmed the following ratings:

Huntington Bancshares, Inc.

--Long-term Issuer Default Rating (IDR) at 'BBB';

--Short-term IDR at 'F2';

--Individual at 'C';

--Preferred stock at 'BB';

--Support at '5';

--Support Floor at 'NF'.

Huntington National Bank

--Short-term debt FDIC guaranteed under TLGP at 'F1+';

--long-term debt FDIC guaranteed under TLGP at 'AAA';

--Long-term deposits at 'A-';

--Long-term IDR at 'BBB+';

--Senior unsecured at 'BBB+';

--Subordinated debt at 'BBB';

--Short-term IDR at 'F2';

--Short-term deposits at 'F1';

--Individual at 'C';

--Support at '5';

--Support Floor at 'NF'.

Huntington Capital I-III

--Preferred stock at 'BB+'.

Sky Bank

--Subordinated debt at 'BBB'.

Sky Financial Capital Trust I-IV

--Preferred stock at 'BB+'.

The Rating Outlook for Huntington Bancshares, Inc. and Huntington National Bank is Negative.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, 'www.fitchratings.com'. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
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Publication:Business Wire
Geographic Code:1U2NY
Date:Sep 14, 2009
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