Huntington National Bank 2011 Annual Report Download - page 66

Credit quality data regarding the ACL and NALs, segregated by core CRE loans and noncore CRE loans, is
presented in the following table:
Table 12 — Commercial Real Estate — Core vs. Noncore portfolios
December 31, 2011
Ending
Balance Prior NCOs ACL $ ACL % Credit Mark(1)
Nonaccrual
Loans
(dollar amounts in millions)
Total core ............................ $3,978 $ 25 $125 3.14% 3.75% $ 26
Noncore — SAD(2) .................. 735 253 182 24.76 44.03 195
Noncore — Other .................... 1,113 17 88 7.91 9.29 9
Total noncore ......................... 1,848 270 270 14.61 25.50 204
Total commercial real estate ............ $5,826 $295 $395 6.78% 11.27% $230
December 31, 2010
Ending
Balance Prior NCOs ACL $ ACL % Credit Mark(1)
Nonaccrual
Loans
Total core ............................ $4,042 $ 5 $160 3.96% 4.08% $ 16
Noncore — SAD(2) .................. 1,400 379 329 23.50 39.80 307
Noncore — Other .................... 1,209 5 105 8.68 9.06 41
Total noncore ......................... 2,609 384 434 16.63 27.33 348
Total commercial real estate ............ $6,651 $389 $594 8.93% 13.96% $364
(1) Calculated as (Prior NCOs + ACL $) / (Ending Balance + Prior NCOs)
(2) Noncore loans managed by SAD, the area responsible for managing loans and relationships designated as
Classified loans.
As shown in the above table, the ending balance of the CRE portfolio at December 31, 2011, declined $0.8
billion, or 12%, compared with December 31, 2010. Of this decline, 81% occurred in the noncore segment of the
portfolio administered by SAD, and was a result of payoffs and NCOs as we actively focused on the noncore
portfolio to reduce our overall CRE exposure. This reduction demonstrates our continued commitment to
achieving a materially lower risk profile in the CRE portfolio, consistent with our overall objective of
maintaining an aggregate moderate-to-low risk profile. We anticipate further noncore CRE declines, consistent
with our strategy to continue to reduce our overall CRE exposure. The reduction in the core segment is a result of
normal portfolio attrition combined with limited origination activity. We will continue to support our core
developer customers as appropriate, however, we do not believe that significant additional CRE activity is
appropriate given our current exposure in CRE lending and the current economic conditions.
Also as shown above, substantial reserves for the noncore portfolio have been established. At December 31,
2011, the ACL related to the noncore portfolio was 14.61%. The combination of the existing ACL and prior
NCOs represents the total credit actions taken on each segment of the portfolio. From this data, we calculate a
credit mark that provides a consistent measurement of the cumulative credit actions taken against a specific
portfolio segment. The 44.03% Credit Mark associated with the SAD-managed noncore portfolio is an indicator
of the aggressive portfolio management strategy employed for this portfolio.
Consumer Credit
Consumer credit approvals are based on, among other factors, the financial strength and payment history of
the borrower, type of exposure, and the transaction structure. Consumer credit decisions are generally made in a
centralized environment utilizing decision models. Importantly, certain individuals who understand each local
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