Huntington National Bank 2007 Annual Report Download - page 43

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assess overall credit quality performance for 2007 is through an analysis of credit quality performance ratios. This approach forms
the basis of most of the discussion in the three sections immediately following: Nonaccruing Loans and Nonperforming Assets,
Allowance for Credit Losses, and Net Charge-offs.
Nonaccruing Loans (NAL/NALs) and Nonperforming Assets (NPA/NPAs)
(This section should be read in conjunction with Significant Items 1, 2, and 3.)
NPAs consist of (1) NALs, which represent loans and leases that are no longer accruing interest and/or have been renegotiated to
below market rates based upon financial difficulties of the borrower, (2) troubled-debt restructured loans, (3) NALs held-for-sale,
(4) real estate acquired through foreclosure, and (5) other NPAs. Middle-market C&I, CRE, and small business loans are generally
placed on nonaccrual status when collection of principal or interest is in doubt or when the loan is 90-days past due. When
interest accruals are suspended, accrued interest income is reversed with current year accruals charged to earnings and prior-year
amounts generally charged-off as a credit loss.
Consumer loans and leases, excluding residential mortgages and home equity lines and loans, are not placed on nonaccrual status
but are charged-off in accordance with regulatory statutes, which is generally no more than 120-days past due. Residential
mortgages and home equity loans and lines are placed on nonaccrual status within 180-days past due as to principal and 210-days
past due as to interest, regardless of collateral. A charge-off on a residential mortgage loan is recorded when the loan has been
foreclosed and the loan balance exceeds the fair value of the real estate. The fair value of the collateral, less the cost to sell, is then
recorded as other real estate owned (OREO).
When we believe the borrower’s ability and intent to make periodic interest and principal payments has resumed, and collectibility
is no longer in doubt, the loan is returned to accrual status.
Table 17 reflects period-end NALs, NPAs, and past due loans and leases detail for each of the last five years.
Table 17 — Nonaccrual Loans, Nonperforming Assets and Past Due Loans and Leases
(in thousands of dollars) 2007 2006 2005 2004 2003
At December 31,
Nonaccrual loans and leases:
Middle market commercial and industrial $ 51,875 $ 35,657 $ 28,888 $ 24,179 $33,745
Middle market commercial real estate 132,157 34,831 15,763 4,582 18,434
Small business commercial and industrial and commercial real estate 52,114 25,852 28,931 14,601 13,607
Residential mortgage 59,557 32,527 17,613 13,545 9,695
Home equity 24,068 15,266 10,720 7,055 —
Total nonaccrual loans and leases 319,771 144,133 101,915 63,962 75,481
Restructured loans, accruing 1,187,368 ————
Other real estate, net:
Residential
(1)
72,467 47,898 14,214 8,762 6,918
Commercial 2,804 1,589 1,026 35,844 4,987
Total other real estate, net 75,271 49,487 15,240 44,606 11,905
Impaired loans held-for-sale
(2)
73,481 ————
Other nonperforming assets
(3)
4,379 ————
Total nonperforming assets $1,660,270 $193,620 $117,155 $108,568 $87,386
Nonaccrual loans and leases as a % of total loans and leases 0.80% 0.55% 0.42% 0.27% 0.36%
NPA ratio
(4)
4.13 0.74 0.48 0.46 0.41
Accruing loans and leases past due 90 days or more $ 140,977 $ 59,114 $ 56,138 $ 54,283 $55,913
Accruing loans and leases past due 90 days or more as a percent of total loans and
leases 0.35% 0.23% 0.23% 0.23% 0.27%
Total allowances for credit losses (ACL) as % of:
Total loans and leases 1.61 1.19 1.25 1.29 1.59
Nonaccrual loans and leases 202 217 300 476 444
(1) Beginning in 2006, OREO includes balances of loans in foreclosure that are serviced for others and, which are fully guaranteed by the U.S. Government, that were reported in 90 day past due
loans and leases in prior periods.
(2) Represent impaired commercial loans acquired in the Sky Financial acquisition that are intended to be sold. Held for sale loans are carried at the lower of cost or market value.
(3) Other nonperforming assets represent certain investment securities backed by mortgage loans to borrowers with lower FICO scores.
(4) Nonperforming assets divided by the sum of loans and leases, impaired loans held-for-sale, net other real estate, and other NPAs.
41
MANAGEMENT’S DISCUSSION AND ANALYSIS HUNTINGTON BANCSHARES INCORPORATED