Huntington National Bank 2012 Annual Report Download - page 135

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Credit Quality Indicators
To facilitate the monitoring of credit quality for C&I and CRE loans, and for purposes of determining an appropriate ACL level
for these loans, Huntington utilizes the following categories of credit grades:
Pass = Higher quality loans that do not fit any of the other categories described below.
OLEM = The credit risk may be relatively minor yet represent a risk given certain specific circumstances. If the potential
weaknesses are not monitored or mitigated, the loan may weaken or the collateral may be inadequate to protect Huntington’s
position in the future. For these reasons, Huntington considers the loans to be potential problem loans.
Substandard = Inadequately protected loans by the borrower’s ability to repay, equity, and/or the collateral pledged to secure
the loan. These loans have identified weaknesses that could hinder normal repayment or collection of the debt. It is likely
Huntington will sustain some loss if any identified weaknesses are not mitigated.
Doubtful = Loans that have all of the weaknesses inherent in those loans classified as Substandard, with the added elements
of the full collection of the loan is improbable and that the possibility of loss is high.
The categories above, which are derived from standard regulatory rating definitions, are assigned upon initial approval of the loan
or lease and subsequently updated as appropriate.
Commercial loans categorized as OLEM, Substandard, or Doubtful are considered Criticized loans. Commercial loans
categorized as Substandard or Doubtful are also considered Classified loans.
For all classes within all consumer loan portfolios, each loan is assigned a specific PD factor that is partially based on the
borrower’s most recent credit bureau score (FICO), which we update quarterly. A FICO credit bureau score is a credit score
developed by Fair Isaac Corporation based on data provided by the credit bureaus. The FICO credit bureau score is widely accepted
as the standard measure of consumer credit risk used by lenders, regulators, rating agencies, and consumers. The higher the FICO
credit bureau score, the higher likelihood of repayment and therefore, an indicator of higher credit quality.
Huntington assesses the risk in the loan portfolio by utilizing numerous risk characteristics. The classifications described above,
and also presented in the table below, represent one of those characteristics that are closely monitored in the overall credit risk
management processes.
The following table presents each loan and lease class by credit quality indicator for the years ended December 31, 2012 and
2011:

December 31, 2012
Credit Risk Profile by UCS classification
(dollar amounts in thousands) Pass OLEM Substandard Doubtful Total
Commercial and industrial:
Owner occupied $ 3,970,597 $ 108,731 $ 205,822 $ 769 $ 4,285,919
Purchased impaired 1,663 6,555 46,254 --- 54,472
Other commercial and industrial 12,146,017 145,111 337,805 1,365 12,630,298
Total commercial and industrial $ 16,118,277 $ 260,397 $ 589,881 $ 2,134 $ 16,970,689
Commercial real estate:
Retail properties $ 1,184,987 $ 63,976 $ 181,896 $ --- $ 1,430,859
Multi family 902,616 24,098 57,548 138 984,400
Office 826,533 26,488 83,093 --- 936,114
Industrial and warehouse 540,484 15,132 41,286 --- 596,902
Purchased impaired 10,052 18,085 98,786 --- 126,923
Other commercial real estate 1,177,213 43,454 103,262 113 1,324,042
Total commercial real estate $ 4,641,885 $ 191,233 $ 565,871 $ 251 $ 5,399,240