Huntington National Bank 2012 Annual Report Download - page 49

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Total commercial loans were $22.4 billion at December 31, 2012, and represented 56% of our total loan and lease credit
exposure. Our commercial loan portfolio is diversified along product type, customer size, and geography within our footprint, and is
comprised of the following (see Commercial Credit discussion):
C&I loans – C&I loans and leases are made to commercial customers for use in normal business operations to finance working
capital needs, equipment purchases, or other projects. The majority of these borrowers are customers doing business within our
geographic regions. C&I loans and leases are generally underwritten individually and secured with the assets of the company and/or
the personal guarantee of the business owners. The financing of owner occupied facilities is considered a C&I loan even though there
is improved real estate as collateral. This treatment is a result of the credit decision process, which focuses on cash flow from
operations of the business to repay the debt. The operation, sale, rental, or refinancing of the real estate is not considered the primary
repayment source for these types of loans. As we expand our C&I portfolio, we have developed a “vertical” strategy to ensure that
new products or lending types are embedded within the structured, centralized Commercial Lending area with designated experienced
credit officers.
CRE loans – CRE loans consist of loans for income-producing real estate properties, real estate investment trusts, and real estate
developers. We mitigate our risk on these loans by requiring collateral values that exceed the loan amount and underwriting the loan
with projected cash flow in excess of the debt service requirement. These loans are made to finance properties such as apartment
buildings, office and industrial buildings, and retail shopping centers, and are repaid through cash flows related to the operation, sale,
or refinance of the property.
Construction CRE loans – Construction CRE loans are loans to individuals, companies, or developers used for the construction of
a commercial or residential property for which repayment will be generated by the sale or permanent financing of the property. Our
construction CRE portfolio primarily consists of retail, residential (land, single family, and condominiums), office, and warehouse
project types. Generally, these loans are for construction projects that have been presold or preleased, or have secured permanent
financing, as well as loans to real estate companies with significant equity invested in each project. These loans are underwritten and
managed by a specialized real estate lending group that actively monitors the construction phase and manages the loan disbursements
according to the predetermined construction schedule.
Total consumer loans were $18.4 billion at December 31, 2012, and represented 44% of our total loan and lease credit exposure.
The consumer portfolio was diversified primarily among automobile, home equity loans and lines-of-credit, and residential mortgages
(see Consumer Credit discussion).
Automobile – Automobile loans are primarily comprised of loans made through automotive dealerships and include exposure in
selected states outside of our primary banking markets. No state outside of our primary banking market represented more than 5% of
our total automobile portfolio at December 31, 2012. We have successfully implemented a loan securitization strategy to remain
within our established portfolio concentration limits.
Home equity – Home equity lending includes both home equity loans and lines-of-credit. This type of lending, which is secured
by a first-lien or junior-lien on the borrower’s residence, allows customers to borrow against the equity in their home. Products
include closed-end loans which are generally fixed-rate with principal and interest payments, and variable-rate, interest-only lines-of-
credit which do not require payment of principal during the 10-year revolving period of the line-of-credit. Applications are
underwritten centrally in conjunction with an automated underwriting system. The home equity consists of both first-lien and junior-
lien loans and lines-of-credit with underwriting criteria based on minimum credit scores, debt-to-income ratios, and LTV ratios.
Residential mortgages – Residential mortgages represent loans to consumers for the purchase or refinance of a residence. These
loans are generally financed over a 15-year to 30-year term, and in most cases, are extended to borrowers to finance their primary
residence. All applications are underwritten centrally and do not originate residential mortgages that allow negative amortization or
allow the borrower multiple payment options. Also, all residential mortgages are originated based on a completed full appraisal.
Other consumer loans/leases – Primarily consists of consumer loans not secured by real estate, including personal unsecured
loans.