Huntington National Bank 2015 Annual Report Download - page 194

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At December 31, 2015, 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, 2015, were as follows: $53 million in 2016, $49 million in 2017, $46 million in 2018, $42
million in 2019, $41 million in 2020, and $191 million thereafter. At December 31, 2015, total minimum lease payments have not
been reduced by minimum sublease rentals of $11 million due in the future under noncancelable subleases. At December 31, 2015, the
future minimum sublease rental payments that Huntington expects to receive were as follows: $4 million in 2016, $2 million in 2017,
$2 million in 2018, $1 million in 2019, $1 million in 2020, and $1 million thereafter. The rental expense for all operating leases was
$58 million, $57 million, and $55 million for 2015, 2014, and 2013, 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 banking regulators. 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.
Beginning in the 2015 first quarter, we became subject to the Basel III capital requirements including the standardized approach
for calculating risk-weighted assets in accordance with subpart D of the final capital rule. The Basel III capital requirements
emphasize CET1 capital, the most loss-absorbing form of capital, and implement strict eligibility criteria for regulatory capital
instruments. CET1 capital primarily includes common shareholders’ equity less certain deductions for goodwill and other intangibles
net of related taxes, and DTAs that arise from tax loss and credit carryforwards. Tier 1 capital is primarily comprised of CET1 capital,
perpetual preferred stock and certain qualifying capital instruments (TRUPS) that are subject to phase-out from tier 1 capital. Tier 2
capital primarily includes qualifying subordinated debt and qualifying ALLL. We are also subject to CCAR and must submit annual
capital plans to our banking regulators. We may pay dividends and repurchase stock up to the levels submitted in our capital plan to
which the FRB did not object.
As of December 31, 2015, Huntington and the Bank met all capital adequacy requirements and had regulatory capital ratios in
excess of the levels established for well-capitalized institutions. The period-end capital amounts and capital ratios of Huntington and
the Bank are as follows, including the CET1 ratio on a Basel III basis. The implementation of the Basel III capital requirements is
transitional and phases-in from January 1, 2015 through the end of 2018. Amounts presented prior to January 1, 2015 are calculated
using the Basel I capital requirements.
Well- December 31,
capitalized Minimum 2015 2014
Capital Capital Basel III Basel I
(dollar amounts in thousands) Ratios Ratios Ratio Amount Ratio Amount
Common equity tier 1 risk-based capital Consolidated N.A. 4.50% 9.79% $ 5,721,028 N.A. N.A.
Bank 6.50% 4.50 9.46 5,518,748 N.A. N.A.
Tier 1 risk-based capital Consolidated 6.00 6.00 10.53 6,154,000 11.50% $ 6,265,900
Bank 8.00 6.00 9.83 5,735,274 11.28 6,136,190
Total risk-based capital Consolidated 10.00 8.00 12.64 7,386,936 13.56 7,388,336
Bank 10.00 8.00 11.74 6,850,596 12.79 6,956,242
Tier 1 leverage capital Consolidated N.A. 4.00 8.79 6,154,000 9.74 6,265,900
Bank 5.00 4.00 8.21 5,735,274 9.56 6,136,190
Huntington has the ability to provide additional capital to the Bank to maintain the Bank’s risk-based capital ratios at levels at
which would be considered well-capitalized.
Huntington and its subsidiaries are also subject to various regulatory requirements that impose restrictions on cash, debt, and
dividends. The Bank is required to maintain cash reserves based on the level of certain of its deposits. This reserve requirement may