Huntington National Bank 2009 Annual Report Download - page 100

P
ri
ce
Ri
sk
Price risk represents the risk of loss arisin
g
from adverse movements in the prices of financial instrument
s
that are carried at fair value and are sub
j
ect to fair value accountin
g
. We have price risk from tradin
g
securities, securities owned b
y
our broker-dealer subsidiaries, forei
g
n exchan
g
e positions, equit
y
investments
,
investments in securities backed b
y
mort
g
a
g
e loans, and marketable equit
y
securities held b
y
our insurance
su
b
s
idi
ar
i
es. We
h
ave esta
bli
s
h
e
dl
oss
li
m
i
ts on t
h
e tra
di
n
g
port
f
o
li
o, on t
h
e amount o
ff
ore
ig
nexc
h
an
ge
exposure t
h
at can
b
ema
i
nta
i
ne
d
,an
d
on t
h
e amount o
f
mar
k
eta
bl
e equ
i
t
y
secur
i
t
i
es t
h
at can
b
e
h
e
ld by
t
h
e
insurance subsidiaries
.
EQ
UITY INVE
S
TMENT PORTFOLIO
S
In rev
i
ew
i
n
g
our equ
i
t
yi
nvestment port
f
o
li
o, we cons
id
er
g
enera
l
econom
i
can
d
mar
k
et con
di
t
i
ons
,
includin
g
industries in which private equit
y
merchant bankin
g
and communit
y
development investments are
ma
d
e, an
d
a
d
verse c
h
an
g
es a
ff
ect
i
n
g
t
h
eava
il
a
bili
t
y
o
f
cap
i
ta
l
.We
d
eterm
i
ne an
yi
mpa
i
rment
b
ase
d
on a
ll
o
f
t
h
e
i
n
f
ormat
i
on ava
il
a
bl
eatt
h
et
i
me o
f
t
h
e assessment. New
i
n
f
ormat
i
on or econom
i
c
d
eve
l
o
p
ments
i
nt
he
future could result in the reco
g
nition of additional impairment
.
Investment decisions that incor
p
orate credit risk re
q
uire the a
pp
roval of the inde
p
endent credit adminis
-
tration function. The de
g
ree of initial due dili
g
ence and subsequent review is a function of the t
y
pe, size, and
co
ll
atera
l
o
f
t
h
e
i
nvestment. Per
f
ormance
i
s mon
i
tore
d
on a re
g
u
l
ar
b
as
i
s, an
d
reporte
d
to t
h
e MRC.
From t
i
me to t
i
me, we
i
nvest
i
nvar
i
ous
i
nvestments w
i
t
h
equ
i
t
y
r
i
s
k
. Suc
hi
nvestments
i
nc
l
u
d
e
i
nvestmen
t
f
un
d
st
h
at
b
u
y
an
d
se
ll
pu
bli
c
ly
tra
d
e
d
secur
i
t
i
es,
i
nvestment
f
un
d
st
h
at
h
o
ld
secur
i
t
i
es o
f
pr
i
vate compan
i
es
,
di
rect equ
i
t
y
or venture cap
i
ta
li
nvestments
i
n compan
i
es (pu
bli
can
d
pr
i
vate), an
ddi
rect equ
i
t
y
or ventur
e
capital interests in private companies in connection with our mezzanine lendin
g
activities. These investment
s
are
i
nc
l
u
d
e
di
n “accrue
di
ncome an
d
ot
h
er assets” on our conso
lid
ate
db
a
l
ance s
h
eet. At Decem
b
er 31
,
2009
,
we had a total of
$
34.5 million of such investments
,
down from
$
44.7 million at December 31
,
2008. Ne
t
g
ains related to these equit
y
investments totaled
$
0.7 million in 2009, compared with net losses of
$
9.0 millio
n
in 2008. The 2008 losses reflected a
$
5.9 million venture capital loss, and
$
4.5 million of losses on public
equ
i
t
yf
un
d
st
h
at
b
ou
gh
tan
d
so
ld
pr
i
mar
ily
pu
bli
c
ly
tra
d
e
d
secur
i
t
i
es. T
h
ese
i
nvestments were pr
i
mar
ily in
f
un
d
st
h
at
f
ocuse
d
on t
h
e
fi
nanc
i
a
l
serv
i
ces sector t
h
at,
d
ur
i
n
g
2008, per
f
orme
d
worse t
h
an t
h
e
b
roa
d
equ
i
t
y
market. In 2009, we sold these public equit
y
fund investments.
L
iq
u
i
d
i
t
y
R
i
s
k
L
i
qu
idi
t
y
r
i
s
ki
st
h
er
i
s
k
o
fl
oss
d
ue to t
h
e poss
ibili
t
y
t
h
at
f
un
d
sma
y
not
b
eava
il
a
bl
e to sat
i
s
fy
current or
f
uture comm
i
tments resu
l
t
i
n
gf
rom externa
l
macro mar
k
et
i
ssues,
i
nvestor an
d
customer percept
i
on o
ffi
nanc
i
a
l
stren
g
th, and events unrelated to the compan
y
such as war, terrorism, or financial institution market specifi
c
i
ssues. We mana
g
e
li
qu
idi
t
y
r
i
s
k
at
b
ot
h
t
h
e Ban
k
an
d
at t
h
e parent compan
y
, Hunt
i
n
g
ton Bancs
h
ares
Incor
p
orate
d
(HBI).
T
h
e overa
ll
o
bj
ect
i
ve o
fli
qu
idi
t
y
r
i
s
k
mana
g
ement
i
s to ensure t
h
at we can o
b
ta
i
n cost-e
ff
ect
i
ve
f
un
di
n
g
to meet current and future obli
g
ations, as well as maintain sufficient levels of on-hand liquidit
y
, under both
normal “business as usual” and unanticipated, stressed circumstances. The Risk Mana
g
ement Committee wa
s
appo
i
nte
dby
t
h
e HBI Boar
d
R
i
s
k
Comm
i
ttee to oversee
li
qu
idi
t
y
r
i
s
k
mana
g
ement an
d
esta
bli
s
h
po
li
c
i
es an
d
li
m
i
ts,
b
ase
d
upon ana
ly
ses o
f
t
h
e rat
i
oo
fl
oans to
d
epos
i
ts,
li
qu
id
asset covera
g
e rat
i
os, t
h
e percenta
g
eo
f
assets funded with noncore or wholesale fundin
g
, net cash capital, liquid assets, and emer
g
enc
y
borrowin
g
capacit
y
. In addition, operatin
gg
uidelines are established to ensure that bank loans included in the Retail an
d
Bus
i
ness Ban
ki
n
g
, Commerc
i
a
l
Ban
ki
n
g
, Commerc
i
a
l
Rea
l
Estate, an
d
PFG
b
us
i
ness se
g
ments are
f
un
d
e
d
w
i
t
h
core
d
epos
i
ts. T
h
ese operat
i
n
gg
u
id
e
li
nes a
l
so ensure
di
vers
ifi
cat
i
on o
f
noncore
f
un
di
n
gby
t
y
pe, source, an
d
maturit
y
and provide sufficient liquidit
y
to cover 100% of wholesale funds maturin
g
within a six-mont
h
per
i
o
d
. A cont
i
n
g
enc
yf
un
di
n
g
p
l
an
i
s
i
np
l
ace, w
hi
c
hi
nc
l
u
d
es
f
orecaste
d
sources an
d
uses o
ff
un
d
sun
d
e
r
var
i
ous scenar
i
os
i
nor
d
er to prepare
f
or unexpecte
dli
qu
idi
t
y
s
h
orta
g
es,
i
nc
l
u
di
n
g
t
h
e
i
mp
li
cat
i
ons o
f
an
y
cre
di
t rat
i
n
g
c
h
an
g
es an
d
/or ot
h
er tr
igg
er events re
l
ate
d
to
fi
nanc
i
a
l
rat
i
os,
d
epos
i
t
fl
uctuat
i
ons,
d
e
b
t
i
ssuance
capacit
y
, stock performance, or ne
g
ative news related to us or the bankin
g
industr
y
. Liquidit
y
risk is reviewe
d
92