Huntington Bancshares Incorporated (NASDAQ:HBAN)
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5 Years : From Jan 2013 to Jan 2018
Huntington Bancshares (HBAN) drew intense interest in its share offering this week, Chief Executive Stephen Steinour said Thursday, as investors looked to get in on the bank's exit from government funds and step in front of a possible dividend raise.
Steinour told Dow Jones Newswires that the $920 million share offering this week was "massively oversubscribed" and that investors were clamoring to get in on the pricing. He said the offering was seven times oversubscribed. Some investors even called Huntington directly in an attempt to gain favor, Steinour said, skipping the traditional middleman, the underwriting banks.
The keen interest suggests "a lot of capital is on the sideline," Steinour said, adding a high volume of institutional investors were involved. "For us, it was very gratifying."
Huntington offered the more than 146 million shares, which it priced Tuesday at $6.30 each, to raise capital to pay back the $1.4 billion it owed the Treasury Department under the Troubled Asset Relief Program.
Steinour said the Ohio bank had reached the three qualifications it had set to pay the government back, including clarity on regulations, economic stability and profitability. He said exiting TARP didn't have anything to do with the bank's outlook for 2011, but does believe there is "an improving dynamic" in the economy.
"Things are improving but not leaps and bounds," Steinour said.
Steinour has been in Huntington's corner office for just under a year, presiding over a 72% improvement in share price and the bank's earlier-than-expected return to profitability in the first quarter. Earlier this week, both S&P Ratings Services and Fitch Ratings Service upgraded Huntington's credit ratings on the equity and debt offering and the plan to exit TARP.
Analysts viewed the exit as a positive, though most said the need to raise 65% of TARP funds in new equity seemed expensive. Many regional banks had been expected to raise only 50 cents for every dollar of TARP funds, and Huntington shares slid the day the offering was announced.
Steinour said part of the reason Huntington moved to exit TARP was raising the dividend. He said that "doesn't imply an immediate dividend decision" but the bank is "very sensitive" to shareholders. He added Huntington doesn't have a specific target for a dividend, but that it might take a series of hikes to get to a level the bank likes.
Bank of America-Merrill Lynch analysts relaunched coverage on Huntington Wednesday with a neutral rating, saying the shares were too high. Wall Street is largely divided on that point, with equal numbers of Huntington's analysts in neutral and buy recommendations. While the consensus for 2011 earnings is to double from 2010, Huntington's prospects are largely tied to the speed of the economy's gains, and the still sluggish loan environment.
-By David Benoit, Dow Jones Newswires; 212-416-2458; firstname.lastname@example.org