Huntington National Bank 2009 Annual Report Download - page 16

determined b
y
allocatin
g
assets and specified off-balance sheet commitments into four wei
g
hted cate
g
ories
,
with hi
g
her wei
g
htin
g
assi
g
ned to cate
g
ories perceived as representin
gg
reater risk. The risk-based rati
o
represents capital divided b
y
total risk wei
g
hted assets. The levera
g
e ratio is core capital divided b
y
tota
l
assets adjusted as specified in the guidelines. The Bank is subject to substantially similar capital requirements
.
Generall
y
, under the applicable
g
uidelines, a financial institution’s capital is divided into two tiers.
Inst
i
tut
i
ons t
h
at must
i
ncorporate mar
k
et r
i
s
k
exposure
i
nto t
h
e
i
rr
i
s
k
-
b
ase
d
cap
i
ta
l
requ
i
rements ma
y
a
l
so
h
av
e
at
hi
r
d
t
i
er o
f
ca
pi
ta
li
nt
h
e
f
orm o
f
restr
i
cte
d
s
h
ort-term su
b
or
di
nate
dd
e
b
t. T
h
ese t
i
ers are
:
•“T
i
er 1”, or core cap
i
ta
l
,
i
nc
l
u
d
es tota
l
equ
i
t
y
p
l
us qua
lifyi
n
g
cap
i
ta
l
secur
i
t
i
es an
d
m
i
nor
i
t
yi
nterests,
exc
l
u
di
n
g
unrea
li
ze
dg
a
i
ns an
dl
osses accumu
l
ate
di
not
h
er compre
h
ens
i
ve
i
ncome, an
d
non-qua
lifyi
n
g
intan
g
ible and servicin
g
assets.
• “Tier 2”, or supplementar
y
capital, includes, amon
g
other thin
g
s, cumulative and limited-life preferre
d
s
tock, mandator
y
convertible securities, qualif
y
in
g
subordinated debt, and the allowance for credit
losses, up to 1.2
5
% of risk-wei
g
hted assets.
• “Tota
l
ca
pi
ta
l
”
i
sT
i
er 1
pl
us T
i
er 2 ca
pi
ta
l.
The Federal Reserve and the other federal bankin
g
re
g
ulators require that all intan
g
ible assets (net o
f
d
e
f
erre
d
tax), except or
igi
nate
d
or purc
h
ase
d
mort
g
a
g
e-serv
i
c
i
n
g
r
igh
ts, non-mort
g
a
g
e serv
i
c
i
n
g
assets, an
d
p
urc
h
ase
d
cre
di
t car
d
re
l
at
i
ons
hip
s,
b
e
d
e
d
ucte
df
rom T
i
er 1 ca
pi
ta
l
. However, t
h
e tota
l
amount o
f
t
h
ese
i
tems
included in ca
p
ital cannot exceed 100% of its Tier 1 ca
p
ital.
Under the risk-based
g
uidelines, financial institutions are required to maintain a risk-based ratio of 8%
,
with 4% bein
g
Tier 1 capital. The appropriate re
g
ulator
y
authorit
y
ma
y
set hi
g
her capital requirements whe
n
t
h
e
yb
e
li
eve an
i
nst
i
tut
i
on’s c
i
rcumstances warrant.
Un
d
er t
h
e
l
evera
g
e
g
u
id
e
li
nes,
fi
nanc
i
a
li
nst
i
tut
i
ons are requ
i
re
d
to ma
i
nta
i
na
l
evera
g
e rat
i
oo
f
at
l
eas
t
3%. T
h
em
i
n
i
mum rat
i
o
i
s app
li
ca
bl
eon
ly
to
fi
nanc
i
a
li
nst
i
tut
i
ons t
h
at meet certa
i
n spec
ifi
e
d
cr
i
ter
i
a,
includin
g
excellent asset qualit
y
,hi
g
h liquidit
y
, low interest rate risk exposure, and the hi
g
hest re
g
ulator
y
ratin
g
. Financial institutions not meetin
g
these criteria are required to maintain a minimum Tier 1 levera
ge
rat
i
oo
f
4%.
Spec
i
a
l
m
i
n
i
mum cap
i
ta
l
requ
i
rements app
ly
to equ
i
t
yi
nvestments
i
n non-
fi
nanc
i
a
l
compan
i
es. T
h
e
requirements consist of a series of deductions from Tier 1 capital that increase within a ran
g
e from 8% to 2
5%
of the ad
j
usted carr
y
in
g
value of the investment
.
Fa
il
ure to meet app
li
ca
bl
e cap
i
ta
lg
u
id
e
li
nes cou
ld
su
bj
ect t
h
e
fi
nanc
i
a
li
nst
i
tut
i
on to a var
i
et
y
o
f
enforcement remedies available to the federal re
g
ulator
y
authorities. These include limitations on the abilit
y
t
o
pa
ydi
v
id
en
d
s, t
h
e
i
ssuance
by
t
h
ere
g
u
l
ator
y
aut
h
or
i
t
y
o
f
a cap
i
ta
ldi
rect
i
ve to
i
ncrease cap
i
ta
l
,an
d
t
he
term
i
nat
i
on o
fd
epos
i
t
i
nsurance
by
t
h
e FDIC. In a
ddi
t
i
on, t
h
e
fi
nanc
i
a
li
nst
i
tut
i
on cou
ld b
esu
bj
ect to t
he
measures described below under “Prom
p
t Corrective Action” as a
pp
licable to “under-ca
p
italized” institutions
.
The risk-based capital standards of the Federal Reserve, the OCC, and the FDIC specif
y
that evaluation
s
b
y
the bankin
g
a
g
encies of a bank’s capital adequac
y
will include an assessment of the exposure to declines in
t
h
e econom
i
cva
l
ue o
f
t
h
e
b
an
k
’s cap
i
ta
ld
ue to c
h
an
g
es
i
n
i
nterest rates. T
h
ese
b
an
ki
n
g
a
g
enc
i
es
i
ssue
da
j
o
i
nt po
li
c
y
statement on
i
nterest rate r
i
s
kd
escr
ibi
n
g
pru
d
ent met
h
o
d
s
f
or mon
i
tor
i
n
g
suc
h
r
i
s
k
t
h
at re
ly
principall
y
on internal measures of exposure and active oversi
g
ht of risk mana
g
ement activities b
y
senio
r
managemen
t.
P
rom
p
t Corrective Action
T
h
eFe
d
era
l
De
p
os
i
t Insurance Cor
p
orat
i
on Im
p
rovement Act o
f
1991,
k
nown as FDICIA, re
q
u
i
res
f
e
d
era
l
b
an
ki
n
g
re
g
u
l
ator
y
aut
h
or
i
t
i
es to ta
k
e “prompt correct
i
ve act
i
on” w
i
t
h
respect to
d
epos
i
tor
yi
nst
i
tut
i
ons t
h
at
do
not meet minimum ca
p
ital re
q
uirements. For these
p
ur
p
oses, FDICIA establishes five ca
p
ital tiers: “well
-
cap
i
ta
li
ze
d
,” “a
d
equate
ly
-cap
i
ta
li
ze
d
,” “un
d
er-cap
i
ta
li
ze
d
,” “s
ig
n
ifi
cant
ly
un
d
er-cap
i
ta
li
ze
d
,” an
d
“cr
i
t
i
ca
lly
un
d
er-ca
pi
ta
li
ze
d
.
”
8