Huntington National Bank 2014 Annual Report Download - page 192

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During the pendency of the adversary proceedings commenced by the Cyberco and Teleservices trustees, the Bank moved to
substantively consolidate the two bankruptcy estates, principally on the ground that Teleservices was the alter ego and a mere
instrumentality of Cyberco at all times. On July 2, 2010, the Bankruptcy Court issued an Opinion and Order denying the Bank's
motion for substantive consolidation of the two bankruptcy estates. The Bank appealed that decision to the Bankruptcy Appellate
Panel (BAP) for the Sixth Circuit, which ruled that the order denying substantive consolidation would not be a final order until the
Bankruptcy Court issued its opinion on the Bank’s defenses in the Teleservices adversary proceeding, and dismissed the appeal. The
Bank appealed the BAP’s decision to the Sixth Circuit. When the Bankruptcy Court issued its March 17, 2011, opinion in the
Teleservices adversary proceeding, the Bank again appealed the order denying substantive consolidation to the BAP, which appeal
was held in abeyance pending decision by the Sixth Circuit on the appeal of the BAP’s 2010 order. On August 30, 2013, the Sixth
Circuit affirmed the BAP’s 2010 decision dismissing the original appeal. The Bank filed a status report with the BAP on the second
appeal and the trustees then moved to dismiss the second appeal on the ground that the Bankruptcy Court’s orders denying substantive
consolidation were still not final orders. The BAP granted the trustees’ motion in an Order dated December 23, 2013.
The Bank is a defendant in an action filed on January 17, 2012 against MERSCORP, Inc. and numerous other financial
institutions that participate in the mortgage electronic registration system (MERS). The putative class action was filed on behalf of all
88 counties in Ohio. The plaintiffs allege that the recording of mortgages and assignments thereof is mandatory under Ohio law and
seek a declaratory judgment that the defendants are required to record every mortgage and assignment on real property located in Ohio
and pay the attendant statutory recording fees. The complaint also seeks damages, attorney’s fees and costs. Huntington filed a motion
to dismiss the complaint, which has been fully briefed, but no ruling has been issued by the Geauga County, Ohio Court of Common
Pleas. Similar litigation has been initiated against MERSCORP, Inc. and other financial institutions in other jurisdictions throughout
the country, however, the Bank has not been named a defendant in those other cases.
The Bank is also a defendant in a putative class action filed on October 15, 2013. The plaintiffs filed the action in West Virginia
state court on behalf of themselves and other West Virginia mortgage loan borrowers who allege they were charged late fees in
violation of West Virginia law and the loan documents. Plaintiffs seek statutory civil penalties, compensatory damages and attorney’s
fees. The Bank removed the case to federal court, answered the complaint, and, on January 17, 2014, filed a motion for judgment on
the pleadings, asserting that West Virginia law is preempted by federal law and therefore does not apply to the Bank. Following
further briefing by the parties, the Court denied the Bank’s motion for judgment on the pleadings on September 26, 2014. On October
7, 2014, the Bank filed a motion to certify the District Court’s decision for interlocutory review by the Fourth Circuit Court of
Appeals. The plaintiffs have opposed the Bank’s motion. No ruling has yet been issued by the Court.
Commitments Under Operating Lease Obligations
At December 31, 2014, Huntington and its subsidiaries were obligated under noncancelable leases for land, buildings, and
equipment. Many of these leases contain renewal options and certain leases provide options to purchase the leased property during or
at the expiration of the lease period at specified prices. Some leases contain escalation clauses calling for rentals to be adjusted for
increased real estate taxes and other operating expenses or proportionately adjusted for increases in the consumer or other price
indices.
The future minimum rental payments required under operating leases that have initial or remaining noncancelable lease terms in
excess of one year as of December 31, 2014, were as follows: $50.9 million in 2015, $47.7 million in 2016, $44.4 million in 2017,
$41.2 million in 2018, $37.9 million in 2019, and $237.1 million thereafter. At December 31, 2014, total minimum lease payments
have not been reduced by minimum sublease rentals of $8.4 million due in the future under noncancelable subleases. At December
31, 2014, the future minimum sublease rental payments that Huntington expects to receive were as follows: $4.0 million in 2015, $2.0
million in 2016, $1.0 million in 2017, $0.6 million in 2018, $0.3 million in 2019, and $0.5 million thereafter. The rental expense for
all operating leases was $57.2 million, $55.3 million, and $54.7 million for 2014, 2013, and 2012, respectively. Huntington had no
material obligations under capital leases.
21. OTHER REGULATORY MATTERS
Huntington and its bank subsidiary, The Huntington National Bank (the Bank), are subject to various regulatory capital
requirements administered by federal and state banking agencies. These requirements involve qualitative judgments and quantitative
measures of assets, liabilities, capital amounts, and certain off-balance sheet items as calculated under regulatory accounting practices.
Failure to meet minimum capital requirements can initiate certain actions by regulators that, if undertaken, could have a material
adverse effect on Huntington’s and the Bank’s financial statements. Applicable capital adequacy guidelines require minimum ratios of
4.00% for Tier 1 risk-based Capital, 8.00% for total risk-based Capital, and 4.00% for Tier 1 leverage capital. To be considered well-
capitalized under the regulatory framework for prompt corrective action, the ratios must be at least 6.00%, 10.00%, and 5.00%,
respectively.