Huntington National Bank 2011 Annual Report Download - page 63

The table below provides our total loan and lease portfolio segregated by the type of collateral securing the
loan or lease:
Table 11 — Total Loan and Lease Portfolio by Collateral Type
At December 31,
2011 2010 2009 2008 2007
(dollar amounts in millions)
Secured loans:
Real estate —
commercial .......... $ 9,557 25% $10,389 27% $11,286 31% $13,121 32% $13,149 33%
Real estate —
consumer ........... 13,444 35 12,214 32 12,176 33 12,318 30 12,737 32
Vehicles .............. 6,021 16 7,134 19 4,600 13 6,063 15 5,722 14
Receivables/Inventory . . . 4,450 12 3,763 10 3,582 10 3,915 10 3,391 8
Machinery/Equipment . . . 1,994 5 1,766 5 1,772 5 1,916 5 1,715 4
Securities/Deposits ...... 800 2 734 2 1,145 3 862 2 788 2
Other ................. 1,018 1 990 2 1,124 2 1,231 2 1,130 3
Total secured loans and
leases ................ 37,284 96 36,990 97 35,685 97 39,426 96 38,632 96
Unsecured loans and
leases ................ 1,640 4 1,117 3 1,106 3 1,666 4 1,423 4
Total loans and leases ..... $38,924 100% $38,107 100% $36,791 100% $41,092 100% $40,055 100%
Commercial Credit
The primary factors considered in commercial credit approvals are the financial strength of the borrower,
assessment of the borrower’s management capabilities, cash flows from operations, industry sector trends, type
and sufficiency of collateral, type of exposure, transaction structure, and the general economic outlook. While
these are the primary factors considered, there are a number of other factors that may be considered in the
decision process. For all loans exceeding $5.0 million, we utilize a centralized senior loan committee, led by our
chief credit officer. For loans less than $5.0 million, with the exception of small business loans, credit officers
who understand each local region and are experienced in the industries and loan structures of the requested credit
exposure are involved in all loan decisions and have the primary credit authority. For small business loans, we
utilize a centralized loan approval process for standard products and structures. In this centralized decision
environment, certain individuals who understand each local region may make credit-extension decisions to
preserve our commitment to the communities we operate in. In addition to disciplined and consistent judgmental
factors, a sophisticated credit scoring process is used as a primary evaluation tool in the determination of
approving a loan within the centralized loan approval process.
In commercial lending, on-going credit management is dependent on the type and nature of the loan. We
monitor all significant exposures on an on-going basis. All commercial credit extensions are assigned internal
risk ratings reflecting the borrower’s PD and LGD (severity of loss). This two-dimensional rating methodology
provides granularity in the portfolio management process. The PD is rated and applied at the borrower level. The
LGD is rated and applied based on the type of credit extension and the quality and lien position associated with
the underlying collateral. The internal risk ratings are assessed at origination and updated at each periodic
monitoring event. There is also extensive macro portfolio management analysis on an on-going basis. We
continually review and adjust our risk-rating criteria based on actual experience, which provides us with the
current risk level in the portfolio and is the basis for determining an appropriate allowance amount for the
commercial portfolio. To provide consistent oversight, a centralized portfolio management team monitors and
reports on the performance of the entire commercial portfolio, including small business loans.
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