Huntington National Bank 2009 Annual Report Download - page 64

RI
S
K MANA
G
EMENT AND
C
APITA
L
R
i
s
kid
ent
ifi
cat
i
on an
d
mon
i
tor
i
n
g
are
k
e
y
e
l
ements
i
n overa
ll
r
i
s
k
mana
g
ement. We
b
e
li
eve our pr
i
mar
y
risk exposures are credit, market, liquidit
y
, and operational risk. Cre
di
tr
i
s
ki
st
h
er
i
s
k
o
fl
oss
d
ue to a
d
verse
c
h
an
g
es
i
nt
h
e
b
orrower’s a
bili
t
y
to meet
i
ts
fi
nanc
i
a
l
o
blig
at
i
ons un
d
er a
g
ree
d
upon terms
.
Mar
k
et r
i
s
k
represents t
h
er
i
s
k
o
fl
oss
d
ue to c
h
an
g
es
i
nt
h
e mar
k
et va
l
ue o
f
assets an
dli
a
bili
t
i
es
d
ue to c
h
an
g
es
i
n
i
nterest
rates, exchan
g
e rates, and equit
y
prices. L
i
qu
idi
t
y
r
i
s
k
ar
i
ses
f
rom t
h
e poss
ibili
t
y
t
h
at
f
un
d
sma
y
not
be
ava
il
a
bl
e to sat
i
s
fy
current or
f
uture o
blig
at
i
ons resu
l
t
i
n
gf
rom externa
l
macro mar
k
et
i
ssues,
i
nvestor
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
institution market s
p
ecific issues.
O
perat
i
ona
l
r
i
s
k
ar
i
ses
f
rom t
h
e
i
n
h
erent
d
a
y
-to-
d
a
y
operat
i
ons o
f
t
h
e
compan
y
that could result in losses due to human error, inadequate or failed internal s
y
stems and controls, and
external e
v
ents
.
We
f
o
ll
ow a
f
orma
l
po
li
c
y
to
id
ent
ify
, measure, an
dd
ocument t
h
e
k
e
y
r
i
s
k
s
f
ac
i
n
g
t
h
e compan
y
.T
h
e
polic
y
outlines how those identified risks can be controlled or miti
g
ated and how we monitor the controls to
ensure t
h
at t
h
e
y
are e
ff
ect
i
ve. Our c
hi
e
f
r
i
s
k
o
ffi
cer
i
s respons
ibl
e
f
or ensur
i
n
g
t
h
at appropr
i
ate s
y
stems o
f
contro
l
s are
i
np
l
ace
f
or mana
gi
n
g
an
d
mon
i
tor
i
n
g
r
i
s
k
across t
h
e compan
y
. Potent
i
a
l
r
i
s
k
concerns are s
h
are
d
with the board of directors, as appropriate. Our internal audit department performs on
g
oin
g
independen
t
rev
i
ews o
f
t
h
er
i
s
k
mana
g
ement process an
d
ensures t
h
ea
d
equac
y
o
fd
ocumentat
i
on. T
h
e resu
l
ts o
f
t
h
es
e
rev
i
ews are reporte
d
re
g
u
l
ar
ly
to t
h
eau
di
t comm
i
ttee o
f
t
h
e
b
oar
d
o
fdi
rectors
.
Some of the more si
g
nificant processes used to mana
g
e and control credit, market, liquidit
y
,an
d
operat
i
ona
l
r
i
s
k
s are
d
escr
ib
e
di
nt
h
e
f
o
ll
ow
i
n
g
para
g
rap
h
s
.
C
red
i
tR
i
s
k
Credit risk is the risk of loss due to our counterparties not bein
g
able to meet their financial obli
g
ations
un
d
er a
g
ree
d
upon terms. We are su
bj
ect to cre
di
tr
i
s
ki
n our
l
en
di
n
g
, tra
di
n
g
,an
di
nvestment act
i
v
i
t
i
es. T
h
e
nature an
dd
e
g
ree o
f
cre
di
tr
i
s
ki
sa
f
unct
i
on o
f
t
h
et
y
pes o
f
transact
i
ons, t
h
e structure o
f
t
h
ose transact
i
ons
,
and the parties involved. The ma
j
orit
y
of our credit risk is associated with lendin
g
activities, as the acceptanc
e
an
d
mana
g
ement o
f
cre
di
tr
i
s
ki
s centra
l
to pro
fi
ta
bl
e
l
en
di
n
g
.Wea
l
so
h
ave cre
di
tr
i
s
k
assoc
i
ate
d
w
i
t
h
ou
r
i
nvestment an
dd
er
i
vat
i
ves act
i
v
i
t
i
es. Cre
di
tr
i
s
ki
s
i
nc
id
enta
l
to tra
di
n
g
act
i
v
i
t
i
es an
d
represents a s
ig
n
ifi
can
t
risk that is associated with our investment securities
p
ortfoli
o
(
see “Investment Securities Port
f
olio”
discussion
)
. Credit risk is miti
g
ated throu
g
h a combination of credit policies and processes, market risk
mana
g
ement act
i
v
i
t
i
es, an
d
port
f
o
li
o
di
vers
ifi
cat
i
on.
The maximum level of credit exposure to individual commercial borrowers is limited b
y
polic
yg
uideline
s
b
ase
d
on eac
hb
orrower or re
l
ate
dg
roup o
fb
orrowers. A
ll
aut
h
or
i
t
y
to
g
rant comm
i
tments
i
s
d
e
l
e
g
ate
d
t
h
rou
gh
t
h
e
i
n
d
epen
d
ent cre
di
ta
d
m
i
n
i
strat
i
on
f
unct
i
on an
di
s mon
i
tore
d
an
d
re
g
u
l
ar
ly
up
d
ate
d
. Concentrat
i
on
risk is mana
g
ed via limits on loan t
y
pe,
g
eo
g
raph
y
, industr
y
, and loan qualit
y
factors. We continue to focu
s
pre
d
om
i
nant
ly
on exten
di
n
g
cre
di
t to reta
il
an
d
commerc
i
a
l
customers w
i
t
h
ex
i
st
i
n
g
or expan
d
a
bl
ere
l
at
i
on
-
s
hi
ps w
i
t
hi
n our pr
i
mar
yb
an
ki
n
g
mar
k
ets. We cont
i
nue to a
dd
new
b
orrowers t
h
at meet our tar
g
ete
d
r
i
s
k
an
d
pro
fi
ta
bili
t
y
pro
fil
e.
T
h
ec
h
ec
k
san
db
a
l
ances
i
nt
h
e cre
di
t
p
rocess an
d
t
h
e
i
n
d
e
p
en
d
ence o
f
t
h
e cre
di
ta
d
m
i
n
i
strat
i
on an
d
r
i
s
k
mana
g
ement
f
unct
i
ons are
d
es
ig
ne
d
to appropr
i
ate
ly
assess t
h
e
l
eve
l
o
f
cre
di
tr
i
s
kb
e
i
n
g
accepte
d
,
f
ac
ili
tate t
he
earl
y
reco
g
nition of credit problems when the
y
do occur, and to provide for effective problem asse
t
mana
g
ement an
d
reso
l
ut
i
on
.
Cre
d
it Ex
p
osure Mix
As shown in the followin
g
table, at December 31, 2009, commercial loans totaled $20.6 billion, an
d
represented
5
6% of our total credit exposure. Our commercial loan portfolio is diversified alon
g
product t
y
pe
,
56