Huntington National Bank 2015 Annual Report Download - page 60

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TDRs, ACL, and NCOs. In addition, we utilize delinquency rates, risk distribution and migration patterns, and product segmentation
in the analysis of our credit quality performance.
Credit quality performance in 2015 reflected continued overall positive results. Net charge-offs were substantially lower as a
result of several large recoveries. NPAs increased 18% to $399 million, compared to December 31, 2014. NCOs decreased 30%
compared to the prior year. The ACL to total loans ratio decreased by 7 basis points to 1.33%.
NPAs and NALs
NPAs consist of (1) NALs, which represent loans and leases no longer accruing interest, (2) OREO properties, and (3) other
NPAs. Any loan in our portfolio may be placed on nonaccrual status prior to the policies described below when collection of principal
or interest is in doubt. Also, when a borrower with discharged non-reaffirmed debt in a Chapter 7 bankruptcy is identified and the loan
is determined to be collateral dependent, the loan is placed on nonaccrual status.
C&I and CRE loans (except for purchased credit impaired loans) are placed on nonaccrual status at 90-days past due, or earlier
if repayment of principal and interest is in doubt. Of the $204 million of CRE and C&I-related NALs at December 31, 2015, $135
million, or 66%, represented loans that were less than 30-days past due, demonstrating our continued commitment to proactive credit
risk management. With the exception of residential mortgage loans guaranteed by government organizations which continue to accrue
interest, first lien loans secured by residential mortgage collateral are placed on nonaccrual status at 150-days past due. Junior-lien
home equity loans are placed on nonaccrual status at the earlier of 120-days past due or when the related first-lien loan has been
identified as nonaccrual. Automobile and other consumer loans are generally charged-off prior to the loan reaching 120-days past due.
When loans are placed on nonaccrual, accrued interest income is reversed with current year accruals charged to interest income
and prior year amounts generally charged-off as a credit loss. When, in our judgment, the borrower’s ability to make required interest
and principal payments has resumed and collectability is no longer in doubt, the loan or lease could be returned to accrual status.
The table reflects period-end NALs and NPAs detail for each of the last five years:
Table 11 - Nonaccrual Loans and Leases and Nonperforming Assets
(dollar amounts in thousands)
At December 31,
2015 2014 2013 2012 2011
Nonaccrual loans and leases:
Commercial and industrial $ 175,195 $ 71,974 $ 56,615 $ 90,705 $ 201,846
Commercial real estate 28,984 48,523 73,417 127,128 229,889
Automobile 6,564 4,623 6,303 7,823 —
Residential mortgages 94,560 96,564 119,532 122,452 68,658
Home equity 66,278 78,515 66,169 59,519 40,687
Other Consumer —4520 6—
Total nonaccrual loans and leases 371,581 300,244 322,056 407,633 541,080
Other real estate owned, net
Residential 24,194 29,291 23,447 21,378 20,330
Commercial 3,148 5,748 4,217 6,719 18,094
Total other real estate, net 27,342 35,039 27,664 28,097 38,424
Other nonperforming assets(1) — 2,440 2,440 10,045 10,772
Total nonperforming assets $ 398,923 $ 337,723 $ 352,160 $ 445,775 $ 590,276
Nonaccrual loans as a % of total loans and leases 0.74% 0.63% 0.75% 1.00% 1.39%
Nonperforming assets ratio(2) 0.79 0.71 0.82 1.09 1.51
Allowance for loan and lease losses as % of:
Nonaccrual loans and leases 161% 202% 201% 189% 178%
Nonperforming assets 150 179 184 173 163
Allowance for credit losses as % of:
Nonaccrual loans and leases 180% 222% 221% 199% 187%