NEW YORK, Feb 2 (Reuters) - Huntington Bancshares Inc's stock plummeted as much as 33 percent to below $2 per share on speculation the big Ohio-based lender might need to raise dilutive capital as credit losses soar.
Shares of Huntington were down 86 cents, or 29.9 percent, at $2.02 in late afternoon trading on the Nasdaq, after earlier falling to $1.93.
Neither the company nor the Nasdaq returned calls seeking comment. Huntington shares had fallen 62.4 percent in January, the second-worst performing stock on the 24-member KBW Bank Index.
Last month, the Columbus-based lender replaced its chief executive, slashed its quarterly dividend to a penny per share, and reported a $417.3 million fourth-quarter loss.
Much of the loss was a writedown of a commercial lending relationship with Franklin Credit Management Corp, a Jersey City, New Jersey specialist in loans to problem borrowers.
"Investors are concerned that capital will have to be raised, or that there could be more problems with the Franklin Credit relationship," said Terry McEvoy, an analyst at Oppenheimer & Co, who has a "perform" rating on Huntington.
"A vicious circle could take place if a company were required to issue common equity, which would take down existing shareholders even further," he added.
Analysts at Fox-Pitt Kelton, in a report late Friday, said Huntington has a ratio of tangible common equity to tangible assets of just 3.75 percent. That compares with a 6.36 percent average for similar-sized banks, and 6.04 percent for all banks it covers.
Huntington got a $1.4 billion infusion from the U.S. government's Troubled Asset Relief Program, leaving its capital level just below that of its average peer, Fox-Pitt analysts said.
But they said Huntington was one of nine lenders they cover that lowered or suspended their dividends this quarter in response to lowered tangible common equity ratios and the possibility of more capital erosion. "It remains unclear if actions are enough for these and others," it said.
Huntington ended the year with $54.3 billion of assets, and operates more than 600 banking offices in Ohio, Indiana, Kentucky, Michigan, Pennsylvania and West Virginia.

(Reporting by Jonathan Stempel; Editing by Tim Dobbyn) Keywords: HUNTINGTONBANCSHARES/SHARES (jon.stempel@thomsonreuters.com +1 646 223 6317; Reuters Messaging: jon.stempel.reuters.com@reuters.net)

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