Huntington National Bank 2005 Annual Report Download - page 62

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MANAGEMENT’S DISCUSSION AND ANALYSIS HUNTINGTON BANCSHARES INCORPORATED
Net Charge-offs
(This section should be read in conjunction with Significant Factor 4.)
Total net charge-offs as a percent of average total loans and leases were 0.33% in 2005, down from 0.35% in 2004, and 0.81% in
2003. (See Table 19.)
Total net charge-offs for 2005 were $80.1 million, or an annualized 0.33% of average total loans and leases. While the dollar
amount of net charge-offs increased 2% from 2004, on a relative basis, net charge-offs declined slightly from the annualized
0.35% ratio a year ago.
Total commercial net charge-offs in 2005 were $29.6 million, or an annualized 0.28%, up from $15.5 million, or 0.16%, in 2004,
which included a $11.1 million one-time recovery on a previously charged-off loan.
Total consumer net charge-offs in the current year were $50.5 million, or an annualized 0.37% of related loans, down from
$63.1 million, or 0.51%, in 2004. Total automobile loan and lease net charge-offs in 2005 were $23.7 million, or an annualized
0.53% of related loans and leases, down from $39.4 million, or 0.88%, in 2004. This reduction reflected the impact of previous
loan sales. Home equity net charge-offs in the current year were $17.6 million, or an annualized 0.38% of related loans, up from
$15.1 million, or 0.36%, in 2004.
We have established the following long-term net charge-off ratio targets for certain portfolio segments, and for the total portfolio,
assuming a comparable portfolio mix, as well as a stable economic environment:
Table 18 — Long-term Net Charge-off Ratio Targets
Long-term Targets(1)
Middle market C&I 0.20% - 0.30%
Middle market CRE 0.15% - 0.25%
Small business C&I and CRE 0.50% - 0.60%
Automobile loans 0.75% - 0.85%
Automobile direct financing leases 0.50% - 0.60%
Home equity loans and lines 0.35% - 0.45%
Residential loans 0.10% +/–
Total portfolio 0.35% - 0.45%
(1) Assumes loan and lease portfolio mix comparable to December 31, 2005, and stable economic environment.
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