Huntington Raises Loan Loss Estimate.(Financial report)

COLUMBUS, OH -- Huntington Bancshares' second quarter earnings were clipped by a higher loan loss provision and poor mortgage hedging results.

The Ohio-based bank earned $80.5 million in the second quarter, down from $111.6 million in the second quarter of last year.

Among the second quarter charges were $5.1 million of impairment losses on securities backed by mortgage loans to borrowers with low credit scores. The company also reported a $4.8 million hit related to the hedging of mortgage servicing rights.

But the biggest item was a $24.8 million pre-tax addition in loss provision related to two eastern Michigan credit relationships and one commercial credit in Ohio.

Net charge-offs for 2007's second quarter were $34.5 million, or an annualized rate of 0.52% of average total loans and leases. Huntington said this is above its long-term target range of 0.35% to 0.45%.

Huntington said its mortgage banking income declined by 48%, or $6.5 million, driven by the MSR hedging loss. In the year earlier period, Huntington had posted a gain in its MSR hedging position.

Expenses related to the company's merger with Sky Financial Group, which closed in July, also weighed on the company's second quarter performance. Those merger costs trimmed net earnings by $7.6 million in the second quarter.