UPDATE 1-Huntington Bancshares has big loss, cuts dividend

NEW YORK Jan 22 (Reuters) - Huntington Bancshares Inc (HBAN.O), a large Ohio-based regional bank, posted a big fourth-quarter loss on Thursday, hurt by a charge tied to a troubled New Jersey lender, and slashed its dividend.

The net loss for Columbus-based Huntington was $417.3 million, or $1.20 per share, and compared with a net loss of $239.3 million, or 65 cents, a year earlier. For all of 2008, Huntington lost $113.8 million, or 44 cents per share.

Huntington cut its quarterly dividend 92 percent to 1 cent per share from 13.25 cents.

Results included a $454.3 million pre-tax charge, or 81 cents per share, to write off much of a commercial lending relationship with Franklin Credit Management Corp, a Jersey City, New Jersey, specialist in "scratch and dent" home loans, which go to problem borrowers. The bank said it ended the year with $520.2 million of net exposure to Franklin.

Huntington also recorded a $141.7 million pre-tax writedown, or 25 cents per share, for investment losses.

Analysts on average forecast profit excluding items of 20 cents per share, according to Reuters Estimates.

"The poor performance reflected the very difficult and challenging environment," said Stephen Steinour, a former Citizens Financial Group Inc chief who replaced Thomas Hoaglin as Huntington's chief executive last week. "My first priority was to take steps to address Franklin as an investor issue, which I believe we have now done.

Steinour called the dividend cut "painful" but said that in light of the 2008 loss and expectations that 2009 will be challenging, "it is the right decision for these times."

Like many of its Midwest rivals, Huntington has been hurt by the deteriorating economy, especially in the Midwest, which has been battered by the flailing auto industry.

The bank has received $1.4 billion from the U.S. Treasury Department's $700 billion Troubled Asset Relief Program.

Net charge-offs totaled $560.6 million, up from $377.9 million a year earlier. Both of those quarters' levels were boosted by the Franklin relationship, Huntington said. Third-quarter net charge-offs totaled $83.8 million.

Huntington shares closed Wednesday at $4.61 on the Nasdaq. The shares are down 58 percent in the last year, compared with a 64 percent decline in the KBW Bank Index .BKX. (Reporting by Jonathan Stempel; Editing by Steve Orlofsky)