Huntington National Bank 2013 Annual Report Download - page 58

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The following table reflects TDR activity for each of the past three years:
Table 16 - Troubled Debt Restructured Loan Activity
(dollar amounts in thousands) 2013 2012 2011
TDRs, beginning of period $ 875,625 $ 805,650 $ 666,880
N
ew TDRs
(
1
)
611,556 597,425 583,439
Payments (191,367) (191,035) (138,467)
Charge-offs (29,897) (81,115) (37,341)
Sales (11,164) (13,787) (54,715)
Refinanced to non-TDR --- --- (40,091)
Transfer to OREO (8,242) (21,709) (5,016)
Restructured TDRs - accruing
(
2
)
(211,131) (153,583) (154,945)
Restructured TDRs - nonaccruing
(
2
)
(26,772) (63,080) (47,659)
Other (53,767) (3,141) 33,565
TDRs, end of period $ 954,841 $ 875,625 $ 805,650
(1) 2013 includes a $46,031 thousand reduction of home equity TDRs incorrectly reflected as new TDRs in the 2013 first
quarter. 2013 and 2012 includes $78.4 million and $79.5 million, respectively, of Chapter 7 bankruptcy loans.
(2) Represents existing TDRs that were reunderwritten with new terms providing a concession. A corresponding amount is
included in the New TDRs amount above.
ACL
(This section should be read in conjunction with Note 3 of the Notes to Consolidated Financial Statements.)
Our total credit reserve is comprised of two components, both of which in our judgment are appropriate to absorb credit losses
inherent in our loan and lease portfolio: the ALLL and the AULC. Combined, these reserves comprise the total ACL. Our Credit
Administration group is responsible for developing the methodology assumptions and estimates used in the calculation, as well as
determining the appropriateness of the ACL. The ALLL represents the estimate of losses inherent in the loan portfolio at the reported
date. Additions to the ALLL result from recording provision expense for loan losses or increased risk levels resulting from loan risk-
rating downgrades, while reductions reflect charge-offs (net of recoveries), decreased risk levels resulting from loan risk-rating
upgrades, or the sale of loans. The AULC is determined by applying the transaction reserve process to the unfunded portion of the
loan exposures multiplied by an applicable funding expectation.
A provision for credit losses is recorded to adjust the ACL to the level we have determined to be appropriate to absorb credit
losses inherent in our loan and lease portfolio. The provision for credit losses in 2013 was $90.0 million, compared with
$147.4 million in 2012.
We regularly evaluate the appropriateness of the ACL by performing on-going evaluations of the loan and lease portfolio,
including such factors as the differing economic risks associated with each loan category, the financial condition of specific
borrowers, the level of delinquent loans, the value of any collateral and, where applicable, the existence of any guarantees or other
documented support. We evaluate the impact of changes in interest rates and overall economic conditions on the ability of borrowers
to meet their financial obligations when quantifying our exposure to credit losses and assessing the appropriateness of our ACL at
each reporting date. In addition to general economic conditions and the other factors described above, we also consider the impact of
collateral value trends and portfolio diversification.
In 2013, we implemented an enhanced commercial risk rating system and ACL calculation process. In addition, we enhanced
some of our qualitative assessments, specifically around the impact of the prevailing economic conditions. These enhancements had
an immaterial impact on the overall credit reserve and the overall decline in the ACL was primarily due to an improvement in
underlying credit quality across the portfolio. The portfolio level changes are more fully described below.
Our ACL evaluation process includes the on-going assessment of credit quality metrics, and a comparison of certain ACL
benchmarks to current performance. While the total ACL balance has declined in recent quarters, all of the relevant benchmarks
remain strong.