Huntington National Bank 2011 Annual Report Download - page 154

C&I and CRE loans are either charged-off or written down to net realizable value at 90-days past due.
Automobile loans and other consumer loans are charged-off at 120-days past due. First-lien and second-lien
home equity loans are charged-off to the estimated fair value of the collateral, less anticipated selling costs, at
150-days past due and 120-days past due, respectively. Residential mortgages are charged-off to the estimated
fair value of the collateral at 150-days past due.
Credit Quality Indicators
To facilitate the monitoring of credit quality for C&I and CRE loans, and for purposes of determining an
appropriate ACL level for these loans, Huntington utilizes the following categories of credit grades:
Pass = Higher quality loans that do not fit any of the other categories described below.
OLEM = Potentially weak loans. The credit risk may be relatively minor yet represent a risk given certain
specific circumstances. If the potential weaknesses are not monitored or mitigated, the loan may weaken or
inadequately protect Huntington’s position in the future.
Substandard = Inadequately protected loans by the borrower’s ability to repay, equity, and/or the collateral
pledged to secure the loan. These loans have identified weaknesses that could hinder normal repayment or
collection of the debt. It is likely Huntington will sustain some loss if any identified weaknesses are not
mitigated.
Doubtful = Loans that have all of the weaknesses inherent in those loans classified as Substandard, with the
added elements of the full collection of the loan is improbable and that the possibility of loss is high.
The categories above, which are derived from standard regulatory rating definitions, are assigned upon
initial approval of the loan or lease and subsequently updated as appropriate.
Commercial loans categorized as OLEM, Substandard, or Doubtful are considered Criticized loans.
Commercial loans categorized as Substandard or Doubtful are also considered Classified loans.
For all classes within all consumer loan portfolios, each loan is assigned a specific PD factor that is
generally based on the borrower’s most recent credit bureau score (FICO), which we update quarterly. A FICO
credit bureau score is a credit score developed by Fair Isaac Corporation based on data provided by the credit
bureaus. The FICO credit bureau score is widely accepted as the standard measure of consumer credit risk used
by lenders, regulators, rating agencies, and consumers. The higher the FICO credit bureau score, the higher
likelihood of repayment and therefore, an indicator of lower credit risk.
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