Huntington National Bank 2011 Annual Report Download - page 23

Throughout 2011, our regulatory capital ratios and those of the Bank were in excess of the levels established
for well-capitalized institutions. An institution is deemed to be well-capitalized if it has a total risk-based capital
ratio of 10% or greater, a Tier 1 risk-based capital ratio of 6% or greater, and a Tier 1 leverage ratio of 5% or
greater and is not subject to a regulatory order, agreement, or directive to meet and maintain a specific capital
level for any capital measure.
Well-
capitalized
minimums
At December 31,
2011
Actual
Excess
Capital(1)
(dollar amounts in billions)
Ratios:
Tier 1 leverage ratio ........................... Consolidated 5.00% 10.28% $2.9
Bank 5.00 7.89 1.6
Tier 1 risk-based capital ratio ................... Consolidated 6.00 12.11 2.8
Bank 6.00 9.30 1.5
Total risk-based capital ratio .................... Consolidated 10.00 14.77 2.2
Bank 10.00 12.60 1.2
(1) Amount greater than the well-capitalized minimum percentage.
FDICIA generally prohibits a depository institution from making any capital distribution, including payment
of a cash dividend or paying any management fee to its holding company, if the depository institution would
become under-capitalized after such payment. Under-capitalized institutions are also subject to growth
limitations and are required by the appropriate federal banking agency to submit a capital restoration plan. If any
depository institution subsidiary of a holding company is required to submit a capital restoration plan, the
holding company would be required to provide a limited guarantee regarding compliance with the plan as a
condition of approval of such plan.
Depending upon the severity of the under capitalization, the under-capitalized institutions may be subject to a
number of requirements and restrictions, including orders to sell sufficient voting stock to become adequately-
capitalized, requirements to reduce total assets, cessation of receipt of deposits from correspondent banks, and
restrictions on making any payment of principal or interest on their subordinated debt. Critically under-capitalized
institutions are subject to appointment of a receiver or conservator within 90 days of becoming so classified.
Under FDICIA, a depository institution that is not well-capitalized is generally prohibited from accepting
brokered deposits and offering interest rates on deposits higher than the prevailing rate in its market. Since the
Bank is well-capitalized, the FDICIA brokered deposit rule did not adversely affect its ability to accept brokered
deposits. The Bank had $1.3 billion of such brokered deposits at December 31, 2011.
Under the Dodd-Frank Act, important changes will be implemented beginning January 1, 2013, concerning
the capital requirements for financial institutions.
As a bank holding company, we must act as a source of financial and managerial strength to the Bank and
the Bank is subject to affiliate transaction restrictions.
Under the Dodd-Frank Act, a bank holding company must act as a source of financial and managerial
strength to each of its subsidiary banks and must commit resources to support each such subsidiary bank. The
Federal Reserve may require a bank holding company to make capital injections into a troubled subsidiary bank.
It may charge the bank holding company with engaging in unsafe and unsound practices if the bank holding
company fails to commit resources to such a subsidiary bank or if it undertakes actions that the Federal Reserve
believes might jeopardize the bank holding company’s ability to commit resources to such subsidiary bank.
Any loans by a holding company to a subsidiary bank are subordinate in right of payment to deposits and to
certain other indebtedness of such subsidiary bank. In the event of a bank holding company’s bankruptcy, an
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