Huntington National Bank 2006 Annual Report Download - page 37

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MANAGEMENT’S DISCUSSION AND ANALYSIS HUNTINGTON BANCSHARES INCORPORATED
Table 14 — Non-Performing Assets and Past Due Loans and Leases
At December 31,
(in thousands of dollars) 2006 2005 2004 2003 2002
Non-performing loans and leases(1):
Middle market commercial and industrial $ 35,657 $ 28,888 $ 24,179 $ 33,745 $ 79,691
Middle market commercial real estate 34,831 15,763 4,582 18,434 19,875
Small business commercial and industrial and commercial real estate 25,852 28,931 14,601 13,607 19,060
Residential mortgage 32,527 17,613 13,545 9,695 9,443
Home equity 15,266 10,720 7,055 — —
Total non-performing loans and leases 144,133 101,915 63,962 75,481 128,069
Other real estate, net:
Residential(2) 47,898 14,214 8,762 6,918 7,915
Commercial(3) 1,589 1,026 35,844 4,987 739
Total other real estate, net 49,487 15,240 44,606 11,905 8,654
Total non-performing assets $193,620 $117,155 $108,568 $ 87,386 $136,723
Non-performing loans and leases as a % of total loans and leases 0.55% 0.42% 0.27% 0.36% 0.69%
Non-performing assets as a % of total loans and leases and other real estate 0.74 0.48 0.46 0.41 0.74
Accruing loans and leases past due 90 days or more(2) $ 59,114 $ 56,138 $ 54,283 $ 55,913 $ 61,526
Accruing loans and leases past due 90 days or more as a percent of total loans
and leases 0.23% 0.23% 0.23% 0.27% 0.33%
Total allowances for credit losses (ACL) as % of:
Total loans and leases 1.19 1.25 1.29 1.59 1.81
Non-performing loans and leases 217 300 476 444 263
Non-performing assets 161 261 280 384 246
(1) Non-performing loans and leases include loans and leases on non-accrual status and restructured loans and leases. For all periods presented, there were no restructured loans and leases that
were not also on non-accrual status.
(2) Beginning in 2006, OREO includes balances of loans in foreclosure, which are fully guaranteed by the U.S. Government, that were reported in 90 day past due loans and leases in prior
periods.
(3) At December 31, 2004, other real estate owned included $35.7 million of properties that related to the workout of $5.9 million of mezzanine loans. These properties were subject to
$29.8 million of non-recourse debt to another financial institution. These properties were sold in 2005.
Table 15 — Non-Performing Asset Activity
Year Ended December 31,
(in thousands of dollars) 2006 2005 2004 2003 2002
Non-performing assets, beginning of year $117,155 $108,568 $ 87,386 $136,723 $227,493
New non-performing assets(1),(2) 222,043 171,150 137,359 222,043 260,229
Acquired non-performing assets 33,843 ————
Returns to accruing status (43,999) (7,547) (3,795) (16,632) (17,124)
Loan and lease losses (46,191) (38,819) (37,337) (109,905) (152,616)
Payments (59,469) (64,861) (43,319) (83,886) (136,774)
Sales(1) (29,762) (51,336) (31,726) (60,957) (44,485)
Non-performing assets, end of year $193,620 $117,155 $108,568 $ 87,386 $136,723
(1) In 2004, new non-performing assets included $35.7 million of properties that relate to the workout of $5.9 million of mezzanine loans. These properties were subject to $29.8 million of non-
recourse debt to another financial institution. These properties were sold in 2005.
(2) Beginning in 2006, OREO includes balances of loans in foreclosure, which are fully guaranteed by the U.S. Government, that were reported in 90 day past due loans and leases in prior
periods.
Allowances for Credit Losses
(This section should be read in conjunction with Significant Factors 1 and 3.)
We maintain two reserves, both of which are available to absorb probable credit losses: the allowance for loan and lease losses
(ALLL) and the allowance for unfunded loan commitments and letters of credit (AULC). When summed together, these reserves
constitute the total ACL. Our credit administration group is responsible for developing the methodology and determining the
adequacy of the ACL.
The ALLL represents the estimate of probable losses inherent in the loan portfolio at the balance sheet date. Additions to the
ALLL result from recording provision expense for loan losses or recoveries, while reductions reflect charge-offs, net of recoveries,
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