Huntington National Bank 2012 Annual Report Download - page 28

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Compliance Risks:
1. Bank regulators and other regulations, including proposed Basel III capital standards and capital plan reviews, may
require higher capital levels, impacting our ability to pay common stock dividends or repurchase our common stock.
In June 2012, the FRB, OCC, and FDIC (collectively, the Agencies) issued three Notices of Proposed Rulemaking (NPRs) that
would revise and replace the Agencies’ current capital rules to align with the BASEL III capital standards and meet certain
requirements of the Dodd-Frank Act. Certain requirements of the proposed NPRs would establish more restrictive capital definitions,
higher risk-weightings for certain asset classes, capital buffers, and higher minimum capital ratios. The proposed NPRs were in a
comment period through October 22, 2012, and are subject to further modification by the Agencies, as the release of the final rules has
been deferred indefinitely. See the Capital section within Management’s Discussion and Analysis of Financial Condition and Results
of Operations.
The Federal Reserve has issued guidelines for evaluating proposals by certain bank holding companies, including Huntington, to
undertake capital actions, 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 initial proposed
capital plan to the Federal Reserve in January 2012. On March 14, 2012, we were notified by the Federal Reserve that it had not
objected to our proposed capital actions included in our capital plan. These actions included the potential repurchase of up to $182
million of common stock and a continuation of our current common dividend through the first quarter of 2013. On January 7, 2013,
Huntington submitted its 2013 Capital Plan to the Federal Reserve including proposed capital actions through the first quarter of 2014.
The Federal Reserve and OCC are expected to undertake these capital plan reviews on a regular basis in the future. There can be
no assurance that the Federal Reserve or OCC will respond favorably to our capital plan as part of their future capital plan reviews,
and the Federal Reserve, OCC, 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 plans rule, including the requirement to maintain capital above 5% for the 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, CFPB, 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 will result in additional costs, which could be
significant, and may have a material and adverse effect on our results of operations.