Huntington National Bank 2009 Annual Report Download - page 19

Sar
b
anes-Ox
l
e
y
Act o
f
200
2
The Sarbanes-Oxle
y
Act of 2002 imposed new or revised corporate
g
overnance, accountin
g
, and reportin
g
requirements on us and all other companies havin
g
securities re
g
istered with the SEC. In addition to
a
requ
i
rement t
h
at c
hi
e
f
execut
i
ve o
ffi
cers an
d
c
hi
e
ffi
nanc
i
a
l
o
ffi
cers cert
ify fi
nanc
i
a
l
statements
i
nwr
i
t
i
n
g
,t
he
statute imposed requirements affectin
g
, amon
g
other matters, the composition and activities of audit commit
-
tees,
di
sc
l
osures re
l
at
i
ng to corporate
i
ns
id
ers an
di
ns
id
er transact
i
ons, co
d
es o
f
et
hi
cs, an
d
t
h
ee
ff
ect
i
veness o
f
i
nterna
l
contro
l
s over
fi
nanc
i
a
l
report
i
n
g.
It
e
m1
A:
R
is
k
F
a
ctors
We,
lik
eot
h
er
fi
nanc
i
a
l
compan
i
es, are su
bj
ect to a num
b
er o
f
r
i
s
k
st
h
at ma
y
a
d
verse
ly
a
ff
ect ou
r
financial condition or results of operation, man
y
of which are outside of our direct control, thou
g
h efforts ar
e
made to mana
g
e those risks while optimizin
g
returns. Amon
g
the risks assumed are: (1
)
cre
di
tr
i
s
k,
w
hi
c
hi
s
the risk of loss due to loan and lease customers or other counterparties not bein
g
able to meet their financial
obli
g
ations under a
g
reed upon terms, (2
)
mar
k
et r
i
s
k
,w
hi
c
hi
st
h
er
i
s
k
o
fl
oss
d
ue to c
h
an
g
es
i
nt
h
e mar
k
e
t
value of assets and liabilities due to chan
g
es in market interest rates, forei
g
n exchan
g
e rates, equit
y
prices, an
d
credit s
p
reads, (3
)
li
qu
idi
t
y
r
i
s
k
,w
hi
c
hi
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
ble
to satisf
y
current or future commitments based on external macro market issues, investor and custome
r
percept
i
on o
ffi
nanc
i
a
l
stren
g
t
h
,an
d
events unre
l
ate
d
to t
h
e Compan
y
suc
h
as war, terror
i
sm, or
fi
nanc
i
a
l
i
nst
i
tut
i
on mar
k
et s
p
ec
ifi
c
i
ssues, an
d
(4
)
o
p
erat
i
ona
l
r
i
s
k
,w
hi
c
hi
st
h
er
i
s
k
o
fl
oss
d
ue to
h
uman error
,
inadequate or failed internal s
y
stems and controls, violations of, or noncompliance with, laws, rules
,
re
g
u
l
at
i
ons, prescr
ib
e
d
pract
i
ces, or et
hi
ca
l
stan
d
ar
d
s, an
d
externa
li
n
fl
uences suc
h
as mar
k
et con
di
t
i
ons
,
f
rau
d
u
l
ent act
i
v
i
t
i
es,
di
sasters, an
d
secur
i
t
y
r
i
s
k
s.
In a
ddi
t
i
on to t
h
eot
h
er
i
n
f
ormat
i
on
i
nc
l
u
d
e
d
or
i
ncorporate
dby
re
f
erence
i
nto t
hi
s report, rea
d
ers s
h
ou
ld
care
f
u
lly
cons
id
er t
h
at t
h
e
f
o
ll
ow
i
n
gi
mportant
f
actors, amon
g
ot
h
ers, cou
ld
mater
i
a
lly i
mpact our
b
us
i
ness,
future results of o
p
erations, and future cash flows.
(
1
)
Credit Risks
:
The allowance for loan losses may prove inadequate or be ne
g
atively affected by credit risk exposures
.
O
ur business depends on the creditworthiness of our customers. We periodicall
y
review the allowance for
loan and lease losses for adequac
y
considerin
g
economic conditions and trends, collateral values and credi
t
qua
li
t
yi
n
di
cators,
i
nc
l
u
di
n
g
past c
h
ar
g
e-o
ff
exper
i
ence an
dl
eve
l
so
f
past
d
ue
l
oans an
d
nonper
f
orm
i
n
g
assets.
T
h
ere
i
s no certa
i
nt
y
t
h
at t
h
ea
ll
owance
f
or
l
oan
l
osses w
ill b
ea
d
equate over t
i
me to cover cre
di
t
l
osses
i
nt
h
e
portfolio because of unanticipated adverse chan
g
es in the econom
y
, market conditions or events adversel
y
affectin
g
specific customers, industries or markets. If the credit qualit
y
of the customer base materiall
y
d
ecreases,
if
t
h
er
i
s
k
pro
fil
eo
f
a mar
k
et,
i
n
d
ustr
y
or
g
roup o
f
customers c
h
an
g
es mater
i
a
lly
,or
if
t
he
a
ll
owance
f
or
l
oan
l
osses
i
s not a
d
equate, our
b
us
i
ness,
fi
nanc
i
a
l
con
di
t
i
on,
li
qu
idi
t
y
, cap
i
ta
l
,an
d
resu
l
ts o
f
operations could be materiall
y
adversel
y
affected.
All of our loan
p
ortfolios,
p
articularl
y
our construction and commercial real estate
(
CRE
)
loans, ma
y
cont
i
nue to be a
ff
ected b
y
the susta
i
ned econom
i
c weakness o
f
our M
i
dwest markets and the
i
m
p
act o
f
h
ig
her unemployment rates. Th
i
s may have a s
ig
n
ifi
cantly adverse a
ff
ect on our bus
i
ness,
fi
nanc
i
al con
-
dition, li
q
uidit
y
,ca
p
ital, and results of o
p
eration
.
As described in the “Credit Risk” discussion, credit qualit
y
performance continued to be under pressur
e
durin
g
2009, with nonaccrual loans and leases (NALs) and nonperformin
g
assets (NPAs) both hi
g
her a
t
Decem
b
er 31, 2009, com
p
are
d
w
i
t
h
Decem
b
er 31, 2008, an
d
Decem
b
er 31, 2007. It s
h
ou
ld b
e note
d
t
h
at t
h
ere
w
as a 12%
d
ec
li
ne
i
nNPA’s
i
nt
h
e 2009
f
ourt
hq
uarter. T
h
ea
ll
owance
f
or cre
di
t
l
osses (ACL) o
f
$1,531.4 million at December 31, 2009, was 4.16% of
p
eriod-end loans and leases and 80% of
p
eriod-en
d
N
A
Ls
.
11