Huntington National Bank 2015 Annual Report Download - page 21

13
larger participant rule for indirect automobile lending which brings larger non-bank indirect automobile lenders under CFPB
supervision.
Banking regulatory agencies have increasingly used their authority under Section 5 of the Federal Trade Commission Act to
take supervisory or enforcement action with respect to unfair or deceptive acts or practices (UDAP) by banks under standards
developed many years ago by the Federal Trade Commission in order to address practices that may not necessarily fall within the
scope of a specific banking or consumer finance law. The Dodd-Frank Act also gave to the CFPB similar authority to take action
in connection with unfair, deceptive, or abusive acts or practices (UDAAP) by entities subject to CFPB supervisory or enforcement
authority. Banks face considerable uncertainty as to the regulatory interpretation of “abusive” practices.
Financial services companies face increased regulation and exposure under the new Military Lending Act (MLA) final rules
issued by the Department of Defense that become effective for new loans entered into on and after October 3, 2016. The new rules
dramatically expand the scope of coverage of the MLA and compliance with the new rules will affect operations of more financial
services companies than under the previous rules.
On July 10, 2015, the Federal Communication Commission, interpreting the Telephone Consumer Protection Act, issued an
Omnibus Declaratory Ruling and Order that, among other things, restricted the use of automated telephone dialing machines. The
ruling effectively increases the cost of collecting debts as well as increases the litigation risk associated with the use of auto-
dialers.
Large bank holding companies and national banks are required to submit annual capital plans to the Federal Reserve and
OCC, respectively, and conduct stress tests.
The Federal Reserve’s Regulation Y requires large bank holding companies to submit capital plans to the Federal Reserve on
an annual basis and requires such bank holding companies to obtain approval from the Federal Reserve under certain
circumstances before making a capital distribution. This rule applies to us and all other bank holding companies with $50 billion or
more of total consolidated assets.
A large bank holding company’s capital plan must include an assessment of the expected uses and sources of capital over at
least the next nine quarters, a description of all planned capital actions over the planning horizon, a detailed description of the
entity’s process for assessing capital adequacy, the entity’s capital policy, and a discussion of any expected changes to the bank
holding company’s business plan that are likely to have a material impact on the firm’s capital adequacy or liquidity. The planning
horizon for the most recently completed capital planning and stress testing cycle encompasses the 2014 fourth quarter through the
2016 fourth quarter as was submitted in our capital plan in January 2015. Rules to implement the Basel III capital reforms in the
United States were finalized in July 2013 and are being phased-in by us beginning with 1Q 2015 results under the standardized
approach. Capital adequacy at large banking organizations, including us, is assessed against a minimum 4.5% CET1 ratio and a
4% tier 1 leverage ratio as determined by the Federal Reserve.
Capital plans for 2016 are required to be submitted to the Federal Reserve by April 5, 2016, and the Federal Reserve will
either object to the capital plan and/or planned capital actions, or provide a notice of non-objection, no later than June 30, 2016.
We intend to submit our capital plan to the Federal Reserve on or before April 5, 2016. There can be no assurance that the Federal
Reserve will respond favorably to our capital plan, capital actions or stress test 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.
In addition to the CCAR submission, section 165 of the Dodd-Frank Act requires that national banks, like The Huntington
National Bank, conduct annual stress tests for submission beginning in January 2015. The results of the stress tests will provide the
OCC with forward-looking information that will be used in bank supervision and will assist the agency in assessing a company’s
risk profile and capital adequacy. We submitted our stress test results to the OCC in January 2015. We intend to submit our 2016
capital plan to the OCC on or before April 5, 2016.
The regulatory capital rules indicate that common stockholders’ equity should be the dominant element within tier 1 capital
and that banking organizations should avoid overreliance on non-common equity elements. Under the Dodd-Frank Act, the ratio of
common equity tier 1 to risk-weighted assets became significant as a measurement of the predominance of common equity in tier 1
capital and an indication of the quality of capital in accordance with their requirements.
Conforming Covered Activities to implement the Volcker Rule.
On December 10, 2013, the Federal Reserve, the OCC, the FDIC, the CFTC and the SEC issued final rules to implement the
Volcker Rule contained in section 619 of the Dodd-Frank Act, and established July 21, 2015, as the end of the conformance period.
Section 619 generally prohibits an insured depository institution, any company that controls an insured depository institution (such