Huntington National Bank 2011 Annual Report Download - page 33

regulatory capital known as Basel III. These guidelines, finalized in December 2010, followed earlier guidelines
by the Basel Committee and are designed to address many of the weaknesses identified in the banking sector as
contributing to the financial crisis of 2008 — 2010 by, among other things, increasing minimum capital
requirements, increasing the quality of capital, increasing the risk coverage of the capital framework, and
increasing standards for the supervisory review process and public disclosure.
In 2011, the Federal Reserve issued guidelines for evaluating proposals by certain bank holding companies,
including Huntington, to undertake capital actions in 2012, such as increasing dividend payments or repurchasing
or redeeming stock. This process is known as the Federal Reserve’s Capital Plan Review. Pursuant to those
Federal Reserve guidelines, Huntington submitted its proposed capital plan to the Federal Reserve in January
2012. The Federal Reserve is expected to undertake these capital plan reviews on a regular basis in the future.
There can be no assurance that the Federal Reserve will respond favorably to our capital plan as part of their
current Capital Plan Review, or future capital plan reviews, and the Federal Reserve or other regulatory capital
requirements may limit or otherwise restrict how we utilize our capital, including common stock dividends and
stock repurchases. Although not currently anticipated, our regulators may require us to raise additional capital in
the future. Issuing additional common stock may dilute existing stockholders.
The Federal Reserve has issued a proposed rule that, in addition to the broader Basel III capital reforms, will
implement the application of the Federal Reserve’s capital plan rule, including the requirement to maintain
capital above 5% Tier 1 Common risk-based capital ratio under both expected and stressed conditions.
2. If our regulators deem it appropriate, they can take regulatory actions that could result in a material
adverse impact on our ability to compete for new business, constrain our ability to fund our liquidity
needs or pay dividends, and increase the cost of our services.
We are subject to the supervision and regulation of various state and Federal regulators, including the OCC,
Federal Reserve, FDIC, SEC, Financial Industry Regulatory Authority, and various state regulatory agencies. As
such, we are subject to a wide variety of laws and regulations, many of which are discussed in the Regulatory
Matters section. As part of their supervisory process, which includes periodic examinations and continuous
monitoring, the regulators have the authority to impose restrictions or conditions on our activities and the manner
in which we manage the organization. Such actions could negatively impact us in a variety of ways, including
monetary fines, impacting our ability to pay dividends, precluding mergers or acquisitions, limiting our ability to
offer certain products or services, or imposing additional capital requirements.
3. Legislative and regulatory actions taken now or in the future that impacts the financial industry may
materially adversely affect us by increasing our costs, adding complexity in doing business, impeding
the efficiency of our internal business processes, negatively impacting the recoverability of certain of
our recorded assets, requiring us to increase our regulatory capital, limiting our ability to pursue
business opportunities, and otherwise result in a material adverse impact on our financial condition,
results of operation, liquidity, or stock price.
The U.S. Government has intervened on an unprecedented scale, responding to what has been commonly
referred to as the financial crisis. In addition to the previously enacted governmental assistance programs
designed to stabilize and stimulate the U.S. economy, recent market conditions have led to numerous programs
and proposals to reform the financial regulatory system and prevent future crises, including the Dodd-Frank Act.
The Dodd-Frank Act represents a comprehensive overhaul of the financial services industry within the
United States, establishes the new federal CFPB, and requires the bureau and other federal agencies to implement
many new and significant rules and regulations. At this time, it is difficult to predict the extent to which the
Dodd-Frank Act, or the resulting rules and regulations in their entirety, will impact our business. Compliance
with these new laws and regulations may result in additional costs, which could be significant, and may have a
material and adverse effect on our results of operations.
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