Huntington National Bank 2010 Annual Report Download - page 27

We also expend considerable effort to contain risk which emanates from execution of our business
strategies and work relentlessly to protect the Company’s reputation. Strategic and reputational risks do not
easily lend themselves to traditional methods of measurement. Rather, we closely monitor them through
processes such as new product / initiative reviews, frequent financial performance reviews, employee and
client surveys, monitoring market intelligence, periodic discussions between management and our board, and
other such efforts.
In addition to the other information included or incorporated by reference into this report, readers should
carefully consider that the following important factors, among others, could negatively impact our business,
future results of operations, and future cash flows materially.
Credit Risks:
1. Our ACL may prove inadequate or be negatively affected by credit risk exposures which could
materially adversely affect our net income and capital.
Our business depends on the creditworthiness of our customers. Our ACL of $1.3 billion at December 31,
2010, represents Management’s estimate of probable losses inherent in our loan and lease portfolio as well as
our unfunded loan commitments and letters of credit. We periodically review our ACL for adequacy. In doing
so, we consider economic conditions and trends, collateral values, and credit quality indicators, such as past
charge-off experience, levels of past due loans, and nonperforming assets. There is no certainty that our ACL
will be adequate over time to cover losses in the portfolio because of unanticipated adverse changes in the
economy, market conditions, or events adversely affecting specific customers, industries, or markets. If the
credit quality of our customer base materially decreases, if the risk profile of a market, industry, or group of
customers changes materially, or if the ACL is not adequate, our net income and capital could be materially
adversely affected which, in turn, could have a material negative adverse affect on our financial condition and
results of operations.
In addition, bank regulators periodically review our ACL and may require us to increase our provision for
loan and lease losses or loan charge-offs. Any increase in our ACL or loan charge-offs as required by these
regulatory authorities could have a material adverse affect on our financial condition and results of operations.
2. A sustained weakness or further weakening in economic conditions could materially adversely affect
our business.
Our performance could be negatively affected to the extent that further weaknesses in business and
economic conditions have direct or indirect material adverse impacts on us, our customers, and our
counterparties. These conditions could result in one or more of the following:
• A decrease in the demand for loans and other products and services offered by us;
• A decrease in customer savings generally and in the demand for savings and investment products
offered by us; and
• An increase in the number of customers and counterparties who become delinquent, file for protection
under bankruptcy laws, or default on their loans or other obligations to us.
An increase in the number of delinquencies, bankruptcies, or defaults could result in a higher level of
NPAs, NCOs, provision for credit losses, and valuation adjustments on loans held for sale. The markets we
serve are dependent on industrial and manufacturing businesses and thus are particularly vulnerable to adverse
changes in economic conditions affecting these sectors.
3. Further declines in home values or reduced levels of home sales in our markets could result in
higher delinquencies, greater charge-offs, and increased losses on the sale of foreclosed real estate in
future periods.
Like all financial institutions, we are subject to the effects of any economic downturn. There has been a
slowdown in the housing market across our geographic footprint, reflecting declining prices and excess
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