Shares of Huntington Bancshares plunged Thursday after the U.S. Midwest regional bank projected a fourth-quarter loss of $239 million, blaming a troubling brew of mortgage losses, write-downs and a long list of other charges.
Charges and write-downs are expected to reduce earnings by $1.00 a share to a loss of 65 cents. They include $275 million, or 75 cents, for losses stemming from its relationship with Franklin Credit Management, a New Jersey mortgage firm specializing in riskier home loans.
But the quarter was also marred by losses on loans held for sale, equity investments and hedges against mortgage servicing rights. It also suffered impairment on investment securities and took a loss from its share of a Visa antitrust settlement.
In addition, the credit and interest rate environment hurt Huntington, as reflected in the need to boost loss reserves and a shrinking profit margin. Results also suffered from "continued weakness in commercial real estate markets."
Analysts on average had expected Huntington to lose 38 cents a share in the quarter, according to Reuters Estimates.
"These results were well below our expectations," Chief Executive Thomas Hoaglin said in a statement.
The bank's shares were down 74 cents, or 6 percent, to $12.48 in morning trade, after falling as much as 12 percent shortly after the opening bell.
Huntington , based in Columbus, Ohio, expects to report $1.7 billion of nonperforming assets, including $1.2 billion for Franklin. Net interest margin narrowed by 26 percentage points to 3.26 percent from the third quarter.
On a positive note, the bank said commercial lending rose 6 percent from the third-quarter and that some fee-producing businesses grew.