Annual report pursuant to Section 13 and 15(d)

OTHER REGULATORY MATTERS

v3.6.0.2
OTHER REGULATORY MATTERS
 12 Months Ended
Dec. 31, 2016
Banking and Thrift [Abstract]  
OTHER REGULATORY MATTERS
OTHER REGULATORY MATTERS
Huntington and its bank subsidiary, The Huntington National Bank (the Bank), are subject to various regulatory capital requirements administered by 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 2015, Huntington and the Bank 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 deferred tax assets 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 eventual phase-out from tier 1 capital in 2017. 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 2016 CCAR capital plan submission to which the FRB did not object.
As of December 31, 2016, 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.
 
 
Well-
 
 
 
December 31,
 
 
capitalized
 
Minimum
 
2016
 
2015
 
 
Capital
 
Capital
 
Basel III
(dollar amounts in thousands)
 
Ratios
 
Ratios
 
Ratio
 
Amount
 
Ratio
 
Amount
Common equity tier 1 risk-based capital
Consolidated
N.A.

 
4.50
%
 
9.56
%
 
$
7,485,816

 
9.79
%
 
$
5,721,028

 
Bank
6.50
%
 
4.50

 
10.42

 
8,153,091

 
9.46

 
5,518,748

Tier 1 risk-based capital
Consolidated
6.00

 
6.00

 
10.92

 
8,547,154

 
10.53

 
6,154,000

 
Bank
8.00

 
6.00

 
11.61

 
9,085,921

 
9.83

 
5,735,274

Total risk-based capital
Consolidated
10.00

 
8.00

 
13.05

 
10,215,627

 
12.64

 
7,386,936

 
Bank
10.00

 
8.00

 
13.83

 
10,817,597

 
11.74

 
6,850,596

Tier 1 leverage capital
Consolidated
N.A.

 
4.00

 
8.70

 
8,547,154

 
8.79

 
6,154,000

 
Bank
5.00

 
4.00

 
9.29

 
9,085,921

 
8.21

 
5,735,274


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 be met by holding cash in banking offices or on deposit at the Federal Reserve Bank. During 2016 and 2015, the average balances of these deposits were $0.3 billion and $0.5 billion, respectively.
Under current Federal Reserve regulations, the Bank is limited as to the amount and type of loans it may make to the parent company and nonbank subsidiaries. At December 31, 2016, the Bank could lend $1.1 billion to a single affiliate, subject to the qualifying collateral requirements defined in the regulations.
Dividends from the Bank are one of the major sources of funds for the Company. These funds aid the Company in the payment of dividends to shareholders, expenses, and other obligations. Payment of dividends and/or return of capital to the parent company is subject to various legal and regulatory limitations. During 2016, the Bank paid dividends and returned capital of $638.2 million to the holding company. Also, there are statutory and regulatory limitations on the ability of national banks to pay dividends or make other capital distributions.