Huntington National Bank 2011 Annual Report Download - page 72

NALs were $541.1 million at December 31, 2011, compared with $777.9 million at December 31, 2010.
The decrease of $236.9 million, or 30%, primarily reflected:
• $144.9 million, or 42%, decrease in C&I NALs, primarily reflected both NCO activity and problem loan
resolutions, including payments and pay-offs. The decline was associated with loans throughout our
footprint, with no specific industry concentration.
• $133.8 million, or 37%, decrease in CRE NALs, primarily reflecting both NCO activity and problem loan
resolutions including payments and pay-offs. We continued to focus on early recognition of risk through
our on-going portfolio management processes.
Partially offset by:
• $23.6 million, or 53%, increase in residential mortgage NALs, primarily reflecting the continued weak
economic conditions and decline of residential real estate property values. The process related to
foreclosure and disposition of real estate assets has lengthened, resulting in loans remaining in a
delinquency status for a significantly longer period of time. Residential mortgage NALs have been
written down to net realizable value, less anticipated selling costs, which substantially limits any
significant risk of future loss. Additionally, a policy change resulted in the accelerated placement of loans
on NAL status totaling $8.0 million in 2011 (see Consumer Credit section).
• $18.2 million, or 81%, increase in home equity NALs, primarily reflecting the continued weak economic
conditions and decline of residential real estate property values. The home equity portfolio will continue
to be impacted by borrowers that are seeking to refinance but are in a negative equity position because of
a second-lien loan. Right-sizing and debt forgiveness associated with these situations are becoming more
frequent as borrowers realize the impact to their credit is minor, and that a default on a second-lien loan is
not likely to cause them to lose their home. Home equity NALs have been written down to net realizable
value, less anticipated selling costs, which substantially limits any significant future risk of loss.
Additionally, a policy change resulted in the accelerated placement of loans on NAL status totaling $6.7
million in 2011 (see Consumer Credit section).
Of the $431.7 million of CRE and C&I-related NALs at December 31, 2011, $128.0 million, or 30%,
represented loans that were less than 30 days past due, demonstrating our continued commitment to proactive
credit risk management.
NPAs, which include NALs, were $590.3 million at December 31, 2011, and represented 1.51% of related
assets. This compared with $844.8 million, or 2.21%, at December 31, 2010. The $254.5 million, or 30%,
decrease reflected:
• $236.9 million decrease to NALs, discussed above.
• $28.4 million decrease to OREO, primarily reflecting lower inflows combined with active sales activities.
As discussed previously, residential mortgages are placed on nonaccrual status at 150-days past due, with
the exception of residential mortgages guaranteed by government organizations which continue to accrue
interest. First-lien and second-lien home equity loans and lines-of-credit are placed on nonaccrual status at
150-days past due and 120-days past due, respectively.
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