Huntington National Bank 2007 Annual Report Download - page 92

Download and view the complete annual report

Please find page 92 of the 2007 Huntington National Bank annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 120

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120

SINGLE FAMILY HOMEBUILDERS
At December 31, 2007, Huntington had $1.5 billion of loans to single family homebuilders, including loans made to both middle
market and small business homebuilders. Such loans represented 4% of total loans and leases. Of this portfolio, 66% were to
finance projects currently under construction, 26% to finance land under development, and 8% to finance land held for
development.
There has been a slowdown in the housing market across Huntington’s geographic footprint, reflecting declining prices and excess
inventories of houses to be sold, particularly in the eastern Michigan and northern Ohio markets. As a result, homebuilders have
shown signs of financial deterioration. Huntington has taken the following steps to mitigate the risk arising from this exposure:
(1) all loans have been reviewed three times during the last 12 months and are continuously monitored, (2) credit valuation
adjustments have been made across the entire portfolio based on the current condition of each relationship, and (3) reserves have
been increased based on proactive risk identification and thorough borrower analysis.
HOME EQUITY AND RESIDENTIAL MORTGAGE LOANS
There is a potential for loan products to contain contractual terms that give rise to a concentration of credit risk that may increase
a lending institution’s exposure to risk of nonpayment or realization. Examples of these contractual terms include loans that permit
negative amortization, a loan-to-value of greater than 100%, and option adjustable-rate mortgages. Huntington does not offer
mortgage loan products that contain these terms. Home equity loans totaled $7.3 billion and $4.9 billion at December 31, 2007
and 2006, respectively, or 18% and 19% of total loans at the end of each respective period. From a credit risk perspective, 84% of
the home equity loans had a loan to value ratio of less than 90% at December 31, 2007. The charge-off policy for home equity
loans is described in Note 1. Other than the credit risk concentration described above, there was no other economic, industry, or
geographic concentration of credit risk in the loan and lease portfolio at December 31, 2007.
RELATED PARTY TRANSACTIONS
Huntington has made loans to its officers, directors, and their associates. These loans were made in the ordinary course of business
under normal credit terms, including interest rate and collateralization, and do not represent more than the normal risk of
collection. These loans to related parties for the year ended December 31 are summarized as follows:
(in thousands) 2007 2006
Balance, beginning of year $ 56,506 $ 76,488
Loans made 125,229 105,337
Repayments (98,366) (91,639)
Changes due to status of executive officers and directors 13,024 (33,680)
Balance, end of year $ 96,393 $ 56,506
NONACCRUAL LOANS,NON-PERFORMING ASSETS AND PAST DUE LOANS AND LEASES
At December 31, 2007 and 2006, loans in non-accrual status, loans past due 90 days or more and still accruing interest, and
restructured loans were as follows:
(in thousands) 2007 2006
At December 31,
Commercial and industrial $ 87,679 $ 58,393
Commercial real estate 148,467 37,947
Residential mortgage 59,557 32,527
Home equity 24,068 15,266
Total nonaccrual loans and leases 319,771 144,133
Restructured loans 1,187,368 —
Other real estate, net 75,271 49,487
Impaired loans held for sale
(1)
73,481 —
Other nonperforming assets
(2)
4,379 —
Total nonperforming assets $1,660,270 $193,620
Accruing loans past due 90 days or more $ 140,977 $ 59,114
(1) Represent loans obtained from the Sky acquisition that are intended to be sold. Held for sale loans are carried at the lower of cost or fair value.
(2) Other NPAs represent certain investment securities backed by mortgage loans to borrowers with lower FICO scores.
The amount of interest that would have been recorded under the original terms for total loans classified as non-accrual or
renegotiated was $51.3 million for 2007, $14.2 million for 2006, and $7.7 million for 2005. Amounts actually collected and
90
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS HUNTINGTON BANCSHARES INCORPORATED