Huntington National Bank 2014 Annual Report Download - page 116

110
Nonaccrual and Past Due Loans — Loans are considered past due when the contractual amounts due with respect to principal and
interest are not received within 30 days of the contractual due date.
Any loan in any portfolio may be placed on nonaccrual status prior to the policies described below when collection of principal or
interest is in doubt. When a borrower with debt is discharged in a Chapter 7 bankruptcy and not reaffirmed by the borrower, the loan is
determined to be collateral dependent and placed on nonaccrual status, unless there is a co-borrower.
All classes within the C&I and CRE portfolios (except for purchased credit-impaired loans) are placed on nonaccrual status at 90-
days past due. First-lien home equity loans are placed on nonaccrual status at 150-days past due. Junior-lien home equity loans are
placed on nonaccrual status at the earlier of 120-days past due or when the related first-lien loan has been identified as nonaccrual.
Automobile and other consumer loans are generally charged-off when the loan is 120-days past due. Residential mortgage loans are
placed on nonaccrual status at 150-days past due, with the exception of residential mortgages guaranteed by government agencies
which continue to accrue interest at the rate guaranteed by the government agency. We are reimbursed from the government agency
for reasonable expenses incurred in servicing loans. The FHA reimburses us for 66% of expenses, and the VA reimburses us at a
maximum percentage of guarantee which is established for each individual loan. We have not experienced either material losses in
excess of guarantee caps or significant delays or rejected claims from the related government entity.
For all classes within all loan portfolios, when a loan is placed on nonaccrual status, any accrued interest income is reversed with
current year accruals charged to interest income, and prior year amounts charged-off as a credit loss.
For all classes within all loan portfolios, cash receipts received on NALs are applied against principal until the loan or lease has
been collected in full, after which time any additional cash receipts are recognized as interest income. However, for secured non-
reaffirmed debt in a Chapter 7 bankruptcy, payments are applied to principal and interest when the borrower has demonstrated a
capacity to continue payment of the debt and collection of the debt is reasonably assured. For unsecured non-reaffirmed debt in a
Chapter 7 bankruptcy where the carrying value has been fully charged-off, payments are recorded as loan recoveries.
Regarding all classes within the C&I and CRE portfolios, the determination of a borrower's ability to make the required principal
and interest payments is based on an examination of the borrower's current financial statements, industry, management capabilities,
and other qualitative measures. For all classes within the consumer loan portfolio, the determination of a borrower's ability to make the
required principal and interest payments is based on multiple factors, including number of days past due and, in some instances, an
evaluation of the borrower's financial condition. When, in Management's judgment, the borrower's ability to make required principal
and interest payments resumes and collectability is no longer in doubt, the loan is returned to accrual status. For these loans that have
been returned to accrual status, cash receipts are applied according to the contractual terms of the loan.
Charge-off of Uncollectible Loans — Any loan in any portfolio may be charged-off prior to the policies described below if a loss
confirming event has occurred. Loss confirming events include, but are not limited to, bankruptcy (unsecured), continued
delinquency, foreclosure, or receipt of an asset valuation indicating a collateral deficiency and that asset is the sole source of
repayment. Additionally, discharged, collateral dependent non-reaffirmed debt in Chapter 7 bankruptcy filings will result in a charge-
off to estimated collateral value, less anticipated selling costs.
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 junior-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.
Impaired Loans — For all classes within the C&I and CRE portfolios, all loans with an outstanding balance of $1.0 million or greater
are evaluated on a quarterly basis for impairment. Generally, consumer loans within any class are not individually evaluated on a
regular basis for impairment. All TDRs, regardless of the outstanding balance amount, are also considered to be impaired. Loans
acquired with evidence of deterioration in credit quality since origination for which it is probable at acquisition that all contractually
required payments will not be collected are also considered to be impaired.
Once a loan has been identified for an assessment of impairment, the loan is considered impaired when, based on current
information and events, it is probable that all amounts due according to the contractual terms of the loan agreement will not be
collected. This determination requires significant judgment and use of estimates, and the eventual outcome may differ significantly
from those estimates.