Huntington National Bank 2003 Annual Report Download - page 48

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MANAGEMENT’S DISCUSSION AND ANALYSIS
credit quality of new automobile loan and lease production continually increased, thus improving the overall credit quality
characteristics of the automobile loan and lease portfolio at the end of 2003 compared with prior periods.
A key corporate objective in 2003 has been to lower the total risk exposure to automobile loans and leases (see Significant Factor item 3).
Total automobile credit exposure represents the sum of automobile loans and leases reflected in total loans and leases, plus operating
lease assets, plus any securitized loans and leases. As shown in Table 6, the total automobile credit exposure at December 31, 2003, was
28% down from 33% at the end of the prior year.
Table 6—Loan and Lease Portfolio Composition
December 31,
2003 2002 2001 2000 1999
(in millions of dollars)
C&I (1) $ 5,314 25.2% $ 5,608 30.2% $ 6,442 34.9% $ 6,638 37.7% $ 6,343 35.2%
CRE 4,172 19.8 3,723 20.0 3,812 20.6 3,456 19.6 3,307 18.3
Total Commercial 9,486 45.0 9,331 50.2 10,254 55.5 10,094 57.3 9,650 53.5
Consumer
Automobile loans 2,992 14.2 3,042 16.4 2,853 15.4 2,480 14.1 3,489 19.3
Automobile leases 1,902 9.0 874 4.7 110 0.6 147 0.8 164 0.9
Home equity 3,792 18.0 3,198 17.2 3,580 19.4 2,166 12.3 1,710 9.5
Residential mortgage 2,531 12.0 1,746 9.4 1,129 6.1 1,058 6.0 1,521 8.4
Other loans 372 1.8 396 2.1 545 3.0 1,678 9.5 1,509 8.4
Total Consumer 11,589 55.0 9,256 49.8 8,217 44.5 7,529 42.7 8,393 46.5
Total Loans and Leases $21,075 100.0% $18,587 100.0% $18,471 100.0% $17,623 100.0% $18,043 100.0%
Total automobile loans and leases $ 4,894 $ 3,916 $ 2,963 $ 2,627 $ 3,653
Operating lease assets 1,260 2,201 3,006 2,946 2,574
Securitized loans 37 1,119 1,225 1,371 —
Total Automobile Exposure (2) $ 6,191 27.7% $ 7,236 33.0% $ 7,194 31.7% $ 6,944 31.6% $ 6,227 30.2%
Total Credit Exposure $22,372 100.0% $21,907 100.0% $22,702 100.0% $21,940 100.0% $20,617 100.0%
(1) There were no commercial loans outstanding that would be considered a concentration of lending to a particular industry or group of industries.
(2) Total loans and leases, operating lease assets, and securitized loans.
A
VERAGE
B
ALANCE
S
HEET
D
ISCUSSION
—L
OANS
,L
EASES
,
AND
O
THER
E
ARNING
A
SSETS
2003 versus 2002 Performance
Average loans and leases increased $2.6 billion, or 15%, and reflected growth in automobile loans and leases, residential mortgages,
home equity loans and lines, and CRE loans, partially offset by a decline in C&I loans (see Table 4).
Average automobile leases increased $1.0 billion with average automobile loans up $0.5 billion. The significant increase in automobile
leases reflected automobile lease accounting (see Significant Factors item 8). The $0.5 billion growth in average automobile loans
reflected a combination of factors. Contributing to growth were $2.8 billion of new originations, as well as the $0.5 billion average
impact of the July 1, 2003, adoption of FIN 46, which consolidated $1.0 billion of previously securitized automobile loans back on the
balance sheet (see Significant Factors item 4). These increases were partially offset by the $0.5 billion average impact from the sale of
three automobile loan portfolios, which totaled $2.1 billion (see Significant Factors item 3).
Also contributing to the growth in average loans and leases was a $0.6 billion, or 44%, growth in average residential mortgages,
reflecting the positive impact of lower interest rates on refinancing and new origination activity. Adjustable rate mortgages accounted
for 39% of the increase in average residential mortgage originations in 2003. Such factors were also reflected in the $0.4 billion, or 12%,
increase in average home equity loans and lines.
Average C&I loans declined $0.2 billion, or 3%, reflecting a combination of factors including the lack of significant middle-market
demand for loans due to the weak economy, company strategies to reduce exposure to large individual credits, and sales of NPAs (see
Significant Factors item 7). Partially offsetting these reductions was growth in small business commercial loans, an area of emphasis.
46 HUNTINGTON BANCSHARES INCORPORATED