Huntington National Bank 2014 Annual Report Download - page 53

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Appraisal values are obtained in conjunction with all originations and renewals, and on an as needed basis, in compliance with
regulatory requirements. Appraisals are obtained from approved vendors, and are reviewed by an internal appraisal review group
comprised of certified appraisers to ensure the quality of the valuation used in the underwriting process. We continue to perform on-
going portfolio level reviews within the CRE portfolio. These reviews generate action plans based on occupancy levels or sales
volume associated with the projects being reviewed. Property values are updated using appraisals on a regular basis to ensure
appropriate decisions regarding the on-going management of the portfolio reflect the changing market conditions. This highly
individualized process requires working closely with all of our borrowers, as well as an in-depth knowledge of CRE project lending
and the market environment.
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 region have the authority to make credit extension decisions to
preserve our focus on the local communities we operate in. Each credit extension is assigned a specific PD and LGD. The PD is
generally based on the borrower’s most recent credit bureau score (FICO), which we update quarterly, while the LGD is related to the
type of collateral and the LTV ratio associated with the credit extension.
In consumer lending, credit risk is managed from a segment (i.e., loan type, collateral position, geography, etc.) and vintage
performance analysis. All portfolio segments are continuously monitored for changes in delinquency trends and other asset quality
indicators. We make extensive use of portfolio assessment models to continuously monitor the quality of the portfolio, which may
result in changes to future origination strategies. The on-going analysis and review process results in a determination of an
appropriate ALLL amount for our consumer loan portfolio. The independent risk management group has a consumer process review
component to ensure the effectiveness and efficiency of the consumer credit processes.
Collection action is initiated as needed through a centrally managed collection and recovery function. The collection group
employs a series of collection methodologies designed to maintain a high level of effectiveness while maximizing efficiency. In
addition to the consumer loan portfolio, the collection group is responsible for collection activity on all sold and securitized consumer
loans and leases. Collection practices include a single contact point for the majority of the residential real estate secured portfolios.
AUTOMOBILE PORTFOLIO
Our strategy in the automobile portfolio continues to focus on high quality borrowers as measured by both FICO and internal
custom scores, combined with appropriate LTVs, terms, and profitability. Our strategy and operational capabilities allow us to
appropriately manage the origination quality across the entire portfolio, including our newer markets. Although increased origination
volume and entering new markets can be associated with increased risk levels, we believe our disciplined strategy and operational
processes significantly mitigate these risks.
We have continued to consistently execute our value proposition and take advantage of available market opportunities.
Importantly, we have maintained our high credit quality standards while expanding the portfolio.
RESIDENTIAL REAL ESTATE SECURED PORTFOLIOS
The properties securing our residential mortgage and home equity portfolios are primarily located within our geographic footprint.
Huntington continues to support our local markets with consistent underwriting across all residential secured products. The
residential-secured portfolio originations continue to be of high quality, with the majority of the negative credit impact coming from
loans originated in 2006 and earlier. Our portfolio management strategies associated with our Home Savers group allow us to focus
on effectively helping our customers with appropriate solutions for their specific circumstances.