Huntington National Bank 2015 Annual Report Download - page 24

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FDICIA requires federal banking regulatory authorities to take Prompt Corrective Action with respect to depository
institutions that do not meet minimum capital requirements. For these purposes, FDICIA establishes five capital tiers: well-
capitalized, adequately-capitalized, under-capitalized, significantly under-capitalized, and critically under-capitalized.
Throughout 2015, our regulatory capital ratios and those of the Bank were in excess of the levels established for well-
capitalized institutions. An institution is deemed to be well-capitalized if it meets or exceeds the well-capitalized minimums listed
below, and is not subject to a regulatory order, agreement, or directive to meet and maintain a specific capital level for any capital
measure.
At December 31, 2015
(dollar amounts in billions)
Well-
capitalized minimums Actual
Excess
Capital (1)
Ratios:
Tier 1 leverage ratio Consolidated N/A 8.79% N/A
Bank 5.00% 8.21 $ 2.2
Common equity tier 1 risk-based capital ratio Consolidated N/A 9.79 N/A
Bank 6.50 9.46 1.7
Tier 1 risk-based capital ratio Consolidated 6.00 10.53 2.0
Bank 8.00 9.83 0.1
Total risk-based capital ratio Consolidated 10.00 12.64 1.5
Bank 10.00 11.74 1.0
(1) Amount greater than the well-capitalized minimum percentage.
FDICIA generally prohibits a depository institution from making any capital distribution, including payment of a cash
dividend or paying any management fee to its holding company, if the depository institution would become under-capitalized after
such payment. Under-capitalized institutions are also subject to growth limitations and are required by the appropriate federal
banking agency to submit a capital restoration plan. If any depository institution subsidiary of a holding company is required to
submit a capital restoration plan, the holding company would be required to provide a limited guarantee regarding compliance with
the plan as a condition of approval of such plan.
Depending upon the severity of the under capitalization, the under-capitalized institutions may be subject to a number of
requirements and restrictions, including orders to sell sufficient voting stock to become adequately-capitalized, requirements to
reduce total assets, cessation of receipt of deposits from correspondent banks, and restrictions on making any payment of principal
or interest on their subordinated debt. Critically under-capitalized institutions are subject to appointment of a receiver or
conservator within 90 days of becoming so classified.
Under FDICIA, a well-capitalized bank may accept brokered deposits without prior regulatory approval. A depository
institution that is not well-capitalized is generally prohibited from accepting brokered deposits and offering interest rates on
deposits higher than the prevailing rate in its market. Since the Bank is well-capitalized, the FDICIA brokered deposit rule did not
adversely affect its ability to accept brokered deposits. The Bank had $2.9 billion of such brokered deposits at December 31, 2015.
On September 3, 2014, the U.S. banking regulators approved a final rule to implement the U.S. version of the Basel
Committee's minimum liquidity coverage ratio (LCR) requirement for banking organizations with total consolidated assets of $250
billion or more, and a less stringent modified LCR requirement to depository institution holding companies below the threshold but
with total consolidated assets of $50 billion or more. The LCR requires covered banking organizations to maintain an amount of
unencumbered HQLA equal to projected stressed cash outflows over a 30 calendar-day stress scenario. We are covered by the
modified LCR requirement and therefore subject to the initial phase-in of the rule beginning in January 2016, with the requirement
fully phased-in January 2017. We will also be required to calculate the LCR monthly. The modified LCR is a minimum
requirement, and the Federal Reserve can impose additional liquidity requirements as a supervisory matter.
We are required to submit annual resolution plans
As a bank holding company with greater than $50 billion of assets, we are required annually to submit to the Federal Reserve
and the FDIC a resolution plan for the rapid and orderly resolution of the Company in the event of material financial distress or
failure. If both the Federal Reserve and the FDIC determine that our plan is not credible and the deficiencies are not cured in a
timely manner, the Federal Reserve and the FDIC may jointly impose on us more stringent capital, leverage or liquidity
requirements or restrictions on our growth, activities or operations.