Huntington National Bank 2009 Annual Report Download - page 80

Cre
d
it
Q
ua
l
ity
We
b
e
li
eve t
h
e most mean
i
n
gf
u
l
wa
y
to assess overa
ll
cre
di
t qua
li
t
y
per
f
ormance
f
or 2009
i
st
h
rou
gh
a
n
anal
y
sis of credit qualit
y
performance ratios. This approach forms the basis of most of the discussion in the
three sections immediatel
y
followin
g
: NALs and NPAs, ACL, and NCOs.
Cre
di
t qua
li
t
y
per
f
ormance
i
n 2009 was ne
g
at
i
ve
ly i
mpacte
dby
t
h
e susta
i
ne
d
econom
i
c wea
k
ness
i
nou
r
Midwest markets, althou
g
h there were si
g
ns of stabilization late in the
y
ear. In addition, we initiated certain
act
i
ons
i
n 2009 w
i
t
h
re
g
ar
d
to
l
oss reco
g
n
i
t
i
on on our res
id
ent
i
a
l
mort
g
a
g
e port
f
o
li
ot
h
at we
b
e
li
eve w
ill
i
ncrease t
h
e
fl
ex
ibili
t
yi
n wor
ki
n
g
t
h
e
l
oans towar
d
a more t
i
me
ly
reso
l
ut
i
on. We ant
i
c
i
pate a c
h
a
ll
en
gi
n
gf
u
ll-
y
ear in 2010 with re
g
ards to credit qualit
y
, but believe that 2009 was the peak in terms of NPA levels, as wel
l
as for credit losses and the related increase in the A
C
L
.
N
ONACCRUAL LOANS
(
NALs
)
AND NONPERFORMING ASSETS
(
NPAs
)
(T
h
is section s
h
ou
ld b
erea
d
in con
j
unction wit
h
Signi
f
icant Items 2 an
d
3an
d
t
h
e“Fran
kl
in Loans
R
estructuring Transaction”
d
iscussion
l
ocate
d
wit
h
t
h
e “Critica
l
Accounting Po
l
icies an
d
Use o
f
Signi
f
ican
t
E
stimates” section.
)
NPAs consist of (a) NALs, which represent loans and leases that are no lon
g
er accruin
g
interest
,
(b) impaired held-for-sale loans, (c) OREO, and (d) other NPAs. A C&I or CRE loan is
g
enerall
y
placed o
n
nonaccrua
l
status w
h
en co
ll
ect
i
on o
f
pr
i
nc
i
pa
l
or
i
nterest
i
s
i
n
d
ou
b
torw
h
en t
h
e
l
oan
i
s 90-
d
a
y
s past
d
ue
.
Res
id
ent
i
a
l
mort
g
a
g
e
l
oans are p
l
ace
d
on nonaccrua
l
status at 180
d
a
y
s, an
d
ac
h
ar
g
e-o
ff i
s recor
d
e
d
w
h
en t
he
loan has been foreclosed and the loan balance exceeds the fair value of the collateral. A home equit
y
loan is
p
l
ace
d
on nonaccrua
l
status at 120
d
a
y
s, an
d
ac
h
ar
g
e-o
ff i
s recor
d
e
d
w
h
en
i
t
i
s
d
eterm
i
ne
d
t
h
at t
h
ere
i
s not
su
ffi
c
i
ent equ
i
t
yi
nt
h
e
l
oan to cover our pos
i
t
i
on. W
h
en
i
nterest accrua
l
s are suspen
d
e
d
, accrue
di
nteres
t
income is reversed with current
y
ear accruals char
g
ed to earnin
g
s and prior-
y
ear amounts
g
enerall
y
char
g
ed
-
off as a credit loss
.
Accruin
g
restructured loans (ARLs) consists of accruin
g
loans that have been reunderwritten, modified, o
r
restructure
d
w
h
en
b
orrowers are exper
i
enc
i
n
g
pa
y
ment
diffi
cu
l
t
i
es. Genera
lly
,pr
i
or to restructur
i
n
g
,t
h
es
e
l
oans
h
ave not reac
h
e
d
a status to
b
e cons
id
ere
d
as NALs. T
h
ese
l
oan restructur
i
n
g
s are one component o
f
t
he
loss miti
g
ation process, and are made to increase the likelihood of the borrower’s abilit
y
to repa
y
the loan
.
Mo
difi
cat
i
ons to t
h
ese
l
oans
i
nc
l
u
d
e,
b
ut are not
li
m
i
te
d
to, c
h
anges to any o
f
t
h
e
f
o
ll
ow
i
ng:
i
nterest rate
,
matur
i
t
y
,pr
i
nc
i
pa
l
,pa
y
ment amount, or a com
bi
nat
i
on o
f
eac
h.
Ta
bl
e27re
fl
ects per
i
o
d
-en
d
NALs an
d
NPAs
d
eta
il f
or eac
h
o
f
t
h
e
l
ast
fi
ve
y
ears, an
d
Ta
bl
e28re
fl
ect
s
per
i
o
d
-en
d
ARLs an
d
past
d
ue
l
oans an
dl
eases
d
eta
il f
or eac
h
o
f
t
h
e
l
ast
fi
ve
y
ears. Ta
bl
e29
d
eta
il
st
he
Franklin-related im
p
acts to NALs and NPAs for 2009 and 2008. Prior to 2008, there were no Franklin-relate
d
NA
Ls or
N
P
A
s
.
72