Huntington National Bank 2009 Annual Report Download - page 132

see positive trends in earl
y
-sta
g
e delinquencies, indicatin
g
that even with the economic stress on ou
r
customers,
l
osses are expecte
d
to rema
i
n mana
g
ea
bl
e.
Home equit
y
NCOs in the 2009 fourth quarter were
$
35.8 million, or an annualized 1.89%. This was up
from
$
19.2 million, or an annualized 1.02%, in the
y
ear-a
g
o quarter. Althou
g
h NCOs were hi
g
her compare
d
with prior quarters, there continued to be a declinin
g
trend in the earl
y
-sta
g
e delinquenc
y
level in the hom
e
equit
y
line-of-credit portfolio, supportin
g
our lon
g
er-term positive view for home equit
y
portfolio performance
.
Th
e
high
er
l
osses resu
l
te
df
rom a s
ig
n
ifi
cant
i
ncrease
i
n
l
oss m
i
t
ig
at
i
on act
i
v
i
t
y
an
d
s
h
ort sa
l
es. We cont
i
nu
e
to
b
e
li
eve t
h
at our more proact
i
ve
l
oss m
i
t
ig
at
i
on strate
gi
es are
i
nt
h
e
b
est
i
nterest o
fb
ot
h
t
h
e compan
y
an
d
our customers. While there has been a clear increase in the losses over the course of 2009,
g
iven the marke
t
con
di
t
i
ons, per
f
ormance rema
i
ne
d
w
i
t
hi
n expectat
i
ons
.
Automobile loan and lease NCOs were $12.9 million
,
or an annualized 1.55%
,
down from $18.6 million
,
or an annualized 1.64%, in the
y
ear-a
g
o quarter. Performance of this portfolio on both an absolute and relativ
e
b
as
i
s cont
i
nue
d
to
b
e cons
i
stent w
i
t
h
our v
i
ews re
g
ar
di
n
g
t
h
eun
d
er
lyi
n
g
qua
li
t
y
o
f
t
h
e port
f
o
li
o. T
h
e
l
eve
l
o
f
d
e
li
nquenc
i
es
h
ave
i
mprove
d
compare
d
w
i
t
h
t
h
e
y
ear-a
g
o per
i
o
d
, support
i
n
g
our v
i
ew o
ffl
at-to-
i
mprove
d
performance
g
oin
g
forward.
NO
NA
CC
RUAL L
O
AN
S(
NAL
)
AND N
O
NPERF
O
RMIN
G
A
SS
ET
S(
NPA
)
Total NALs were $1,917.0 million at December 31, 2009, and re
p
resented 5.21% of total loans an
d
l
eases. This was u
p$
414.8 million, or 28%, from
$
1,502.1 million, or 3.66% com
p
ared with December 31
,
2
008. T
h
e
i
ncrease
f
rom t
h
e
y
ear-a
g
o quarter pr
i
mar
ily
re
fl
ecte
di
ncreases
i
n CRE an
d
non-Fran
kli
n-re
l
ate
d
C&I NALs. These increases reflected the sustained economic weakness in our markets, particularl
y
in ou
r
sin
g
le famil
y
home builder and retail properties portfolio se
g
ments.
NPAs, which include NALs, were
$
2,058.1 million at December 31, 2009, and re
p
resented 5.57% o
f
related assets. This was si
g
nificantl
y
hi
g
her than $1,636.6 million, or 3.97% of related assets at the end of the
y
ear-a
g
o period. The
$
421.4 million increase in NPAs from the end of the
y
ear-a
g
o period reflected th
e
$
414.8 million increase in NALs
.
T
h
e over 90-
d
a
yd
e
li
nquent,
b
ut st
ill
accru
i
n
g
, rat
i
oexc
l
u
di
n
gl
oans
g
uarantee
dby
t
h
e U.S. Government
,
was 0.40% at December 31, 2009, down
6
basis points from a
y
ear-a
g
o. On this same basis, the over 90-da
y
delinquenc
y
ratio for total consumer loans was 0.90% at December 31, 2009, up from 0.68% a
y
ear-a
g
o
.
A
LL
O
WAN
C
EF
O
R
C
REDIT L
OSS
E
S(
A
C
L
)
(This section should be in read in con
j
unction with Notes 1 and 8 in the Notes to the Consolidated Financia
l
Statements
)
.
In the 2009 fourth quarter we conducted a review of our ACL practices. Based on recent asset qualit
y
tren
d
s, coup
l
e
d
w
i
t
h
a
f
ra
gil
e econom
i
c out
l
oo
k
,t
h
e ACL was s
ig
n
ifi
cant
ly i
ncrease
d
,re
fl
ect
i
n
g
a 2009
f
ourt
h
q
uarter
p
rovision for credit losses of
$
894.0 million, which was more than double the level of the 2009 fourth
quarter char
g
e-offs. We experienced an increasin
g
trend in char
g
e-offs throu
g
hout 2009. The level of criticize
d
l
oans, an indicator of possible losses, continued to increase throu
g
h the fourth quarter, althou
g
h the increase
s
i
nt
h
e secon
dh
a
lf
o
f
2009 were at a s
l
ower rate com
p
are
d
w
i
t
h
t
h
e
fi
rst
h
a
lf
o
f
2009. W
hil
ewe
did
s
h
ow
a
decline in the level of NPAs at December 31, 2009, the inflow of
$
494.6 million remained substantiall
y
hi
g
he
r
than would be the case in a stable credit environment. Nevertheless
,
this was the lowest level of new NALs in
fi
ve quarters. Base
d
on t
h
ese asset qua
li
t
y
tren
d
s,
i
n con
j
unct
i
on w
i
t
h
a
f
ra
gil
e econom
y
part
i
cu
l
ar
ly i
nou
r
M
id
west mar
k
ets
,
t
h
e ACL was
i
ncrease
d
.
Muc
h
o
f
t
h
e
i
ncrease re
l
ate
d
to our CRE reta
il
port
f
o
li
ow
h
ere
high
er vacanc
y
rates,
l
ower rents, an
d
f
a
lli
n
g
propert
y
va
l
ues are o
f
s
ig
n
ifi
cant concern. Loss
i
nt
h
e event o
fd
e
f
au
l
t on man
y
c
l
asses o
f
CRE
propert
i
es
h
as
i
ncrease
d
su
b
stant
i
a
lly
t
h
rou
gh
out 2009 an
d
t
hi
s
i
s expecte
d
to cont
i
nue
i
nto 2010
.
124