Huntington National Bank 2007 Annual Report Download - page 41

Download and view the complete annual report

Please find page 41 of the 2007 Huntington National Bank annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 120

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120

Middle-market CRE loans and small business CRE loans totaled $9.2 billion at December 31, 2007. These loans were
predominantly to borrowers in our primary banking markets, and were diversified by the type of property, as reflected in the
following table:
Table 16 — Commercial Real Estate Loans by Property Type and Borrower Location
(in millions) Ohio Michigan Pennsylvania Indiana
West
Virginia Other
Total
Amount
At December 31, 2007
Retail properties $1,217 $ 224 $190 $144 $ 21 $14 $1,810 19.7%
Single family home builder 1,053 229 101 75 31 9 1,498 16.3
Office 788 186 121 48 47 8 1,198 13.1
Multi family 851 80 93 77 32 17 1,150 12.5
Industrial and warehouse 624 209 46 57 13 11 960 10.5
Unsecured lines to real estate companies 705 95 31 10 9 2 852 9.3
Raw land and other land uses 595 62 98 44 14 1 814 8.9
Health care 208 41 53 3 4 — 309 3.4
Hotel 147 60 21 6 2 — 236 2.6
Other 265 34 21 27 9 — 356 3.9
Total $6,453 $1,220 $775 $491 $182 $62 $9,183 100.0%
Consumer Credit
(This section should be read in conjunction with Significant Items 1 and 3.)
Consumer credit approvals are based on, among other factors, the financial strength of the borrower, type of exposure, and the
transaction structure. Consumer credit decisions are generally made in a centralized environment utilizing decision models. There
is also individual credit authority granted to certain individuals on a regional basis to preserve our local decision-making focus.
Each credit extension is assigned a specific probability-of-default and loss-given-default. The probability-of-default is generally a
function of the borrower’s most recent credit bureau score (FICO), which we update quarterly, while the loss-given-default is
related to the type of collateral and the loan-to-value ratio associated with the credit extension.
In consumer lending, credit risk is managed from a loan type and vintage performance analysis. All portfolio segments are
continuously monitored for changes in delinquency trends and other asset quality indicators. We make extensive use of portfolio
assessment models to continuously monitor the quality of the portfolio and identify under-performing segments. This information
is then incorporated into future origination strategies. The independent risk management group has a consumer process review
component to ensure the effectiveness and efficiency of the consumer credit processes.
Collection action is initiated on an “as needed” basis through a centrally managed collection and recovery function. The collection
group employs a series of collection methodologies designed to maintain a high level of effectiveness while maximizing efficiency.
In addition to the retained consumer loan portfolio, the collection group is responsible for collection activity on all sold and
securitized consumer loans and leases. (See the “Nonperforming Assets” section of “Credit Risk”, for further information regarding
when consumer loans are placed on nonaccrual status and when the balances are charged-off to the allowance for loan and lease
losses.)
Our consumer loan portfolio is diversified throughout our geographic footprint. However, the following two segments are
noteworthy:
Home Equity Portfolio
Our home equity portfolio (loans and lines) consists of both first and second position collateral with underwriting criteria based
on minimum FICO credit scores, debt-to-income ratios, and loan-to-value (LTV) ratios. We offer closed-end home equity loans
with a fixed interest rate and level monthly payments and a variable-rate, interest-only home equity line of credit. At December 31,
2007, we had $3.4 billion of home equity loans and $3.9 billion of home equity lines of credit. Combined, this represented 18% of
total loans and leases.
We believe we have granted credit conservatively within this portfolio. We do not originate home equity loans or lines that allow
negative amortization, or have LTV ratios at origination greater than 100%. Home equity loans are generally fixed rate with
periodic principal and interest payments. We originated $1.0 billion of home equity loans during 2007 with a weighted average
LTV ratio at origination of 68% and a weighted average FICO score at origination of 741. Home equity lines of credit generally
39
MANAGEMENT’S DISCUSSION AND ANALYSIS HUNTINGTON BANCSHARES INCORPORATED