Huntington National Bank 2009 Annual Report Download - page 23

Althou
g
h fluctuations in market interest rates are neither completel
y
predictable nor controllable, ou
r
Mar
k
et R
i
s
k
Comm
i
ttee (MRC) meets per
i
o
di
ca
lly
to mon
i
tor our
i
nterest rate sens
i
t
i
v
i
t
y
pos
i
t
i
on an
d
overse
e
our financial risk mana
g
ement b
y
establishin
g
policies and operatin
g
limits. For further discussion, see th
e
Market Risk — “Interest Rate Risk” section in Mana
g
ement’s Discussion and Anal
y
sis of Financial Conditio
n
an
d
Resu
l
ts o
f
Operat
i
ons. I
f
s
h
ort-term
i
nterest rates rema
i
natt
h
e
i
r
hi
stor
i
ca
lly l
ow
l
eve
l
s
f
or a pro
l
on
g
e
d
per
i
o
d
,an
d
assum
i
n
gl
on
g
er-term
i
nterest rates
f
a
ll f
urt
h
er, we cou
ld
exper
i
ence net
i
nterest mar
gi
n compres
-
sion as our interest-earnin
g
assets would continue to reprice downward while our interest-bearin
g
liabilit
y
rates, espec
i
a
lly
customer
d
epos
i
t rates, cou
ld
rema
i
n at current
l
eve
l
s.
(3) Li
q
ui
d
it
y
Ris
k
s
:
I
f
the Bank or hold
i
n
g
company were unable to borrow
f
unds throu
g
h access to cap
i
tal markets, w
e
ma
y
not be able to meet the cash
f
low re
q
u
i
rements o
f
our de
p
os
i
tors, cred
i
tors, and borrowers, or th
e
operatin
g
cash needed to fund corporate expansion and other corporate activities
.
Liquidit
y
is the abilit
y
to meet cash flow needs on a timel
y
basis at a reasonable cost. The liquidit
y
o
f
the Bank is used to make loans and leases and to repa
y
deposit liabilities as the
y
become due or are demande
d
by
customers. L
i
qu
idi
t
y
po
li
c
i
es an
dli
m
i
ts are esta
bli
s
h
e
dby
t
h
e
b
oar
d
o
fdi
rectors, w
i
t
h
operat
i
n
gli
m
i
ts se
t
by
MRC,
b
ase
d
upon t
h
e rat
i
oo
fl
oans to
d
epos
i
ts an
d
percenta
g
eo
f
assets
f
un
d
e
d
w
i
t
h
non-core or w
h
o
l
esa
le
fundin
g
. The Bank’s MRC re
g
ularl
y
monitors the overall liquidit
y
position of the Bank and the parent
compan
y
to ensure t
h
at var
i
ous a
l
ternat
i
ve strate
gi
es ex
i
st to cover unant
i
c
i
pate
d
events t
h
at cou
ld
a
ff
ec
t
li
qu
idi
t
y
. MRC a
l
so esta
bli
s
h
es po
li
c
i
es an
d
mon
i
tors
g
u
id
e
li
nes to
di
vers
ify
t
h
e Ban
k
’s w
h
o
l
esa
l
e
f
un
di
n
g
sources to avoid concentrations in an
y
one market source. Wholesale fundin
g
sources include Federal fund
s
purchased, securities sold under repurchase a
g
reements, non-core deposits, and medium- and lon
g
-term debt
,
w
hi
c
hi
nc
l
u
d
es a
d
omest
i
c
b
an
k
note pro
g
ram an
d
a Euronote pro
g
ram. T
h
e Ban
ki
sa
l
so a mem
b
er o
f
t
he
Fe
d
era
l
Home Loan Ban
k
o
f
C
i
nc
i
nnat
i
,O
hi
o (FHLB), w
hi
c
h
prov
id
es
f
un
di
n
g
t
h
rou
gh
a
d
vances to mem
b
er
s
that are collateralized with mort
g
a
g
e-related assets
.
We maintain a portfolio of securities that can be used as a secondar
y
source of liquidit
y
. There are othe
r
sources of liquidit
y
available to us should the
y
be needed. These sources include the sale or securitization of
l
oans, t
h
ea
bili
t
y
to acqu
i
re a
ddi
t
i
ona
l
nat
i
ona
l
mar
k
et, non-core
d
epos
i
ts,
i
ssuance o
f
a
ddi
t
i
ona
l
co
ll
atera
li
ze
d
b
orrow
i
n
g
s suc
h
as FHLB a
d
vances, t
h
e
i
ssuance o
fd
e
b
t secur
i
t
i
es, an
d
t
h
e
i
ssuance o
f
pre
f
erre
d
or commo
n
securities in
p
ublic or
p
rivate transactions. The Bank also can borrow from the Federal Reserve’s discount
w
i
n
d
ow.
Startin
g
in the middle of 2007, there has been si
g
nificant turmoil and volatilit
y
in worldwide financia
l
mar
k
ets w
hi
c
hi
s, at present, mo
d
erat
i
n
g
.T
h
ese con
di
t
i
ons
h
ave resu
l
te
di
na
di
srupt
i
on
i
nt
h
e
li
qu
idi
t
y
o
f
fi
nanc
i
a
l
mar
k
ets, an
d
cou
ld di
rect
ly i
mpact us to t
h
e extent we nee
d
to access cap
i
ta
l
mar
k
ets to ra
i
se
f
un
ds
to support our business and overall liquidit
y
position. This situation could affect the cost of such funds or our
a
bili
t
y
to ra
i
se suc
hf
un
d
s. I
f
we were una
bl
e to access an
y
o
f
t
h
ese
f
un
di
n
g
sources w
h
en nee
d
e
d
,wem
ight
b
e una
bl
e to meet customers’ nee
d
s, w
hi
c
h
cou
ld
a
d
verse
ly i
mpact our
fi
nanc
i
a
l
con
di
t
i
on, resu
l
ts o
f
operations, cash flows, and level of re
g
ulator
y
-qualif
y
in
g
capital. We ma
y
, from time to time, conside
r
opportunisticall
y
retirin
g
our outstandin
g
securities, includin
g
our subordinated debt, trust preferred securitie
s
an
d
pre
f
erre
d
s
h
ares
i
npr
i
vate
ly
ne
g
ot
i
ate
d
or open mar
k
et transact
i
ons
f
or cas
h
or common s
h
ares. T
hi
s cou
ld
a
d
verse
ly
a
ff
ect our
li
qu
idi
t
y
pos
i
t
i
on. For
f
urt
h
er
di
scuss
i
on, see t
h
e“L
i
qu
idi
t
y
R
i
s
k
” sect
i
on.
The OCC has im
p
osed dividend
p
a
y
ment and other restrictions on the Bank, which could im
p
act our
ab
i
l
i
t
y
to
p
a
y
d
i
v
i
dends to shareholders or re
p
urchase stock. Due to the losses that the Bank
i
ncurred
i
n
2009 and 2008, at December 31, 2009, the Bank could not declare and pay d
i
v
i
dends to the hold
i
n
g
com
-
p
any without re
g
ulatory approval
.
T
h
e OCC
i
st
h
epr
i
mar
y
re
g
u
l
ator
y
a
g
enc
y
t
h
at exam
i
nes t
h
e Ban
k
,
i
ts su
b
s
idi
ar
i
es, an
d
t
h
e
i
r respect
i
ve
activities. Under certain circumstances, includin
g
an
y
determination that the activities of the Bank or it
s
su
b
s
idi
ar
i
es const
i
tute an unsa
f
ean
d
unsoun
db
an
ki
n
g
pract
i
ce, t
h
e OCC
h
as t
h
e aut
h
or
i
t
yby
statute to restr
i
c
t
t
h
e Ban
k
’s a
bili
t
y
to trans
f
er assets, ma
k
es
h
are
h
o
ld
er
di
str
ib
ut
i
ons, an
d
re
d
eem pre
f
erre
d
secur
i
t
i
es
.
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