Huntington National Bank 2011 Annual Report Download - page 156

(2) Reflects deferred fees and costs, loans in process, loans to legal entities, etc.
(3) Includes $1,250,000 thousand of loans reflected as loans held for sale related to a planned automobile
securitization.
Impaired Loans
For all classes within the C&I and CRE portfolios, all loans with an outstanding balance of $1 million or
greater are evaluated on a quarterly basis for impairment. Generally, consumer loans within any class are not
individually evaluated on a regular basis for impairment.
Once a loan has been identified for an assessment of impairment, the loan is considered impaired when,
based on current information and events, it is probable that all amounts due according to the contractual terms of
the loan agreement will not be collected. This determination requires significant judgment and use of estimates,
and the eventual outcome may differ significantly from those estimates.
When a loan in any class has been determined to be impaired, the amount of the impairment is measured
using the present value of expected future cash flows discounted at the loan’s effective interest rate or, as a
practical expedient, the observable market price of the loan, or the fair value of the collateral if the loan is
collateral dependent. When the present value of expected future cash flows is used, the effective interest rate is
the original contractual interest rate of the loan adjusted for any premium or discount. When the contractual
interest rate is variable, the effective interest rate of the loan changes over time. A specific reserve is established
as a component of the ALLL when a loan has been determined to be impaired. Subsequent to the initial
measurement of impairment, if there is a significant change to the impaired loan’s expected future cash flows, or
if actual cash flows are significantly different from the cash flows previously estimated, Huntington recalculates
the impairment and appropriately adjusts the specific reserve. Similarly, if Huntington measures impairment
based on the observable market price of an impaired loan or the fair value of the collateral of an impaired
collateral dependent loan, Huntington will adjust the specific reserve.
When a loan within any class is impaired, the accrual of interest income is discontinued unless the receipt of
principal and interest is no longer in doubt. Interest income on TDRs is accrued when all principal and interest is
expected to be collected under the post-modification terms. Cash receipts received on nonaccruing impaired
loans within any class are generally applied entirely against principal until the loan has been collected in full,
after which time any additional cash receipts are recognized as interest income. Cash receipts received on
accruing impaired loans within any class are applied in the same manner as accruing loans that are not considered
impaired.
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