Huntington National Bank 2015 Annual Report Download - page 64
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56
During the 2015 third quarter, we reviewed our existing commercial and consumer credit models and completed a periodic
reassessment of certain ACL assumptions. Specifically, we updated our analysis of the loss emergence periods used for commercial
receivables collectively evaluated for impairment. Based on our observed portfolio experience, we extended our loss emergence
periods for the C&I portfolio and CRE portfolios. We also updated loss factors in our consumer home equity and residential mortgage
portfolios based on more recently observed portfolio experience. The net ACL impact of these enhancements was immaterial.
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, additional factors considered include: the
impact of increasing or decreasing residential real estate values, the diversification of CRE loans; the development of new or expanded
Commercial business verticals such as healthcare, ABL, and energy. 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 as of the balance sheet date.
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 years, all of the relevant benchmarks remain
strong.
The following table reflects activity in the ALLL and AULC for each of the last five years: