Huntington National Bank 2012 Annual Report Download - page 75

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We do not believe that off-balance sheet arrangements will have a material impact on our liquidity or capital resources.
Table 32 - Contractual Obligations (1)
December 31, 2012
One Year 1 to 3 3 to 5 More than
(dollar amounts in millions) or Less Years Years 5 Years Total
Deposits without a stated maturity $ 37,543 $ ---$ ---$ --- $ 37,543
Certificates of deposit and other time deposits 6,230 1,914 418 149 8,711
FHLB advances 1,000 --- --- 9 1,009
Short-term borrowings 590 --- --- --- 590
Other long-term debt --- --- --- 152 152
Subordinated notes 50 130 110 907 1,197
Operating lease obligations 47 88 74 208 417
Purchase commitments 127 140 81 10 358
Pension minimum funding requirement (2) --- --- 30 101 (3) 131
(1) Amounts do not include associated interest payments.
(2) These amounts represent our estimated minimum pension contributions to our qualified plan required under ERISA and the
Pension Protection Act of 2006, as well as contributions necessary to avoid benefit restrictions and at-risk status. These amounts
represent estimates that are based on assumptions that are subject to change. See Note 18 to the Notes to Consolidated Financial
Statements for further information regarding the pension plan.
(3)
The minimum required contributions for years after 2017 are currently not reliably estimable.
Operational Risk
As with all companies, we are subject to operational risk. Operational risk is the risk of loss due to human error; inadequate or
failed internal systems and controls; violations of, or noncompliance with, laws, rules, regulations, prescribed practices, or ethical
standards; and external influences such as market conditions, fraudulent activities, disasters, and security risks. We continuously
strive to strengthen our system of internal controls to ensure compliance with laws, rules, and regulations, and to improve the
oversight of our operational risk. For example, we actively and continuously monitor cyber-attacks such as attempts related to eFraud
and loss of sensitive customer data. We constantly evaluate internal systems, processes and controls to mitigate loss from cyber-
attacks and, to date, have not experienced any material losses.
To mitigate operational risks, we have established a senior management Operational Risk Committee and a senior management
Legal, Regulatory, and Compliance Committee. The responsibilities of these committees, among other duties, include establishing
and maintaining management information systems to monitor material risks and to identify potential concerns, risks, or trends that
may have a significant impact and ensuring that recommendations are developed to address the identified issues. Both of these
committees report any significant findings and recommendations to the Risk Management Committee. Additionally, potential
concerns may be escalated to our ROC, as appropriate.
The goal of this framework is to implement effective operational risk techniques and strategies, minimize operational and fraud
losses, and enhance our overall performance.
Representation and Warranty Reserve
We primarily conduct our mortgage loan sale and securitization activity with FNMA and FHLMC. In connection with these and
other securitization transactions, we make certain representations and warranties that the loans meet certain criteria, such as collateral
type and underwriting standards. We may be required to repurchase individual loans and / or indemnify these organizations against
losses due to a loan not meeting the established criteria. We have a reserve for such losses, which is included in accrued expenses and
other liabilities. The reserves are estimated based on historical and expected repurchase activity, average loss rates, and current
economic trends. The level of mortgage loan repurchase losses depends upon economic factors, investor demand strategies and other
external conditions containing a level of uncertainty and risk that may change over the life of the underlying loans. We currently do
not have sufficient information to estimate the range of reasonably possible loss related to representation and warranty exposure.