Huntington National Bank 2011 Annual Report Download - page 31

outside the Bank’s consolidated group, or any security holder outside the Bank’s consolidated group, without
regulatory approval. Since the first quarter of 2008, the Bank has requested and received OCC approval each
quarter to pay periodic dividends to shareholders outside the Bank’s consolidated group on the preferred and
common stock of its REIT and capital financing subsidiaries to the extent necessary to maintain their REIT
status. A wholly-owned nonbank subsidiary of the parent company owns a portion of the preferred shares of the
REIT and capital financing subsidiaries. Outside of the REIT and capital financing subsidiary dividends, we do
not anticipate that the Bank will declare dividends during 2012.
3. The failure of the European Union to stabilize the fiscal condition and creditworthiness of its weaker
member economies, such as Greece, Portugal, Spain, Ireland, and Italy, could have international
implications potentially impacting global financial institutions, the financial markets, and the
economic recovery underway in the United States.
Certain European Union member countries have fiscal obligations greater than their fiscal revenue, which
has caused investor concern over such country’s ability to continue to service their debt and foster economic
growth. Currently, the European debt crisis has caused credit spreads to widen in the fixed income debt markets,
and liquidity to be less abundant. A weaker European economy may transcend Europe, cause investors to lose
confidence in the safety and soundness of European financial institutions and the stability of European member
economies, and likewise negatively affect U.S.-based financial institutions, the stability of the global financial
markets, and the economic recovery underway in the United States.
Should the U.S. economic recovery be adversely impacted by these factors, loan and asset growth at U.S.
financial institutions could be negatively affected. A return of the volatile economic conditions experienced in
the U.S. during 2008-2009, including the adverse conditions in the fixed income debt markets, for an extended
period of time, particularly if left unmitigated by European Union monetary policy measures, may have a
material adverse indirect effect on us. (For further discussion, see the European Sovereign Debt and
Counterparty Exposure section within Credit Risk.)
Operational Risks:
1. The resolution of significant pending litigation, if unfavorable, could have a material adverse effect on
our results of operations for a particular period.
We face legal risks in our businesses, and the volume of claims and amount of damages and penalties
claimed in litigation and regulatory proceedings against financial institutions remain high. Substantial legal
liability against us could have material adverse financial effects or cause significant reputational harm to us,
which in turn could seriously harm our business prospects. It is possible that the ultimate resolution of these
matters, if unfavorable, may be material to the results of operations for a particular reporting period. (For further
discussion, see Note 22 of the Notes to Consolidated Financial Statements.)
2. We face significant operational risks which could lead to expensive litigation and loss of confidence by
our customers, regulators, and capital markets.
We are exposed to many types of operational risks, including reputational risk, legal and compliance risk,
cyber-attack risk, the risk of fraud or theft by employees or outsiders, unauthorized transactions by employees or
outsiders, or operational errors by employees, including clerical or record-keeping errors or those resulting from
faulty or disabled computer or telecommunications systems. These operational risks could lead to expensive
litigation and loss of confidence by our customers, regulators, and the capital markets.
Moreover, negative public opinion can result from our actual or alleged conduct in any number of activities,
including lending practices, corporate governance, and acquisitions and from actions taken by government
regulators and community organizations in response to those activities. Negative public opinion can adversely
affect our ability to attract and retain customers and can also expose us to litigation and regulatory action.
Relative to acquisitions, we cannot predict if, or when, we will be able to identify and attract acquisition
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