Branch Operations and Market Position - As of December 31, 2023, the company operates 999 full-service branches across multiple states, primarily in Ohio, Colorado, Illinois, Indiana, Kentucky, Michigan, Minnesota, Pennsylvania, West Virginia, and Wisconsin [18]. - The company is the 1 SBA lender in the nation by loan volume as of September 30, 2023 [25]. - The company holds a 40% market share in Columbus, OH, with deposits amounting to $41,638 million as of June 30, 2023 [36]. Organizational Structure and Segments - The organizational realignment in Q2 2023 consolidated several segments into two main segments: Consumer & Regional Banking and Commercial Banking [20]. - The Consumer & Regional Banking segment offers a wide array of financial products, including deposits, lending, and investment management, emphasizing a "Fair Play" banking philosophy [21]. - The Commercial Banking segment provides services to mid-market and large corporates, leveraging internal partnerships for wealth management, trust, and payments [28]. Technology and Innovation - The company continues to invest in technology and innovation to remain competitive against FinTechs and other financial service providers [38]. - The company aims to develop and launch new products and services through an active corporate development program focused on technology-driven partnerships [38]. Capital and Regulatory Compliance - Huntington's CET1 risk-based capital ratio as of December 31, 2023, is 10.25%, exceeding the minimum requirement of 4.50% [66]. - The total risk-based capital ratio for Huntington is 14.17%, significantly above the minimum requirement of 8.00% [66]. - Huntington is subject to a stress capital buffer (SCB) of 3.2% effective from October 1, 2023, through September 30, 2024 [63]. - The Bank's total risk-based capital ratio is 13.09%, also above the well-capitalized minimum of 10.00% [66]. - Huntington must maintain a minimum outstanding eligible long-term debt amount of no less than 6% of total risk-weighted assets if the proposed long-term debt requirements are adopted [57]. - The proposed Basel III endgame rules may require Huntington to calculate risk-based capital ratios under both the current U.S. standardized approach and an expanded risk-based approach [69]. - Huntington's capital planning is subject to the Federal Reserve's Comprehensive Capital Analysis and Review (CCAR) process, which evaluates capital adequacy under stress scenarios [71]. - As of December 31, 2023, Huntington's capital ratios are above the well-capitalized standards and meet applicable capital buffer requirements [67]. - The Federal Reserve may require Huntington to maintain capital ratios substantially in excess of mandated minimum levels based on economic conditions and the company's risk profile [61]. - Huntington is exempt from certain liquidity requirements due to its classification as a Category IV banking organization [56]. - Huntington's indicative SCB requirement for the 2023 Capital Plan is 3.2%, down from 3.3% [73]. - The Federal Reserve allows Huntington to make capital distributions without prior approval, provided it complies with capital rules [74]. - Huntington's ability to pay dividends is contingent on receiving dividends from its subsidiaries, which face various federal limitations [75]. Risk Management and Compliance - The FDIC requires the Bank to maintain enhanced recordkeeping for prompt payment of insured deposits in case of failure [97]. - The FDIC's DIF reserve ratio is at risk of not meeting the statutory minimum of 1.35% by September 30, 2028, without increasing deposit insurance assessment rates [98]. - The Bank submitted its most recent resolution plan to the FDIC on November 30, 2022, in compliance with new proposed rules [80]. - Huntington is required to serve as a source of financial strength to the Bank, potentially necessitating capital injections during financial distress [81]. - The Volcker Rule prohibits Huntington from engaging in short-term proprietary trading and imposes compliance obligations [79]. - The Anti-Money Laundering Act of 2020 may significantly alter due diligence and reporting requirements for the Bank [90]. - The CCPA allows California residents to access, delete, and opt out of sharing their personal information, with penalties for violations [94]. - The FDIC's special assessment for bank failures in H1 2023 will be based on estimated uninsured deposits, with a total accrued liability of approximately $214 million recognized in Q4 2023 [99]. - The CRA framework will be revised, affecting large banks' ratings, with new assessment areas and data collection requirements expected to take effect on April 1, 2024 [107]. Community Commitment and ESG Initiatives - Huntington committed $40 billion over five years to its Community Plan, with $13.6 billion allocated to affordable housing financing and consumer lending as of September 30, 2023 [117]. - The bank has reached $5.6 billion of its $10 billion commitment to expand small business lending programs through September 30, 2023 [117]. - Huntington's Lift Local Business® program has committed $100 million to support under-resourced entrepreneurs, with $89 million reached by October 31, 2023 [118]. - The bank's Climate Risk Director is responsible for assessing climate-related risks and emissions calculations, contributing to sustainability efforts [115]. - Huntington's ESG strategy includes a Chief ESG Officer overseeing compliance and goal setting, with a focus on environmental and social issues [114]. - The bank's commitment to diversity, equity, and inclusion initiatives has reached $10.2 billion as of September 30, 2023 [117]. - The total workforce at Huntington was 67% diverse, with middle, senior, and executive management levels being 48% diverse as of December 31, 2023 [131]. - In 2023, Huntington colleagues completed over 500,000 training hours as part of their development programs [127]. - Huntington offers a minimum hourly wage of $20, alongside competitive compensation and benefits to enhance employee retention [128]. - The company is committed to pay equity, conducting annual pay equity analyses to ensure fairness across gender and race [129]. Economic and Market Risks - Economic uncertainties, including inflation and rising interest rates, could adversely affect Huntington's business and financial condition [141]. - Changes in interest rates could significantly impact Huntington's net interest income and the value of its loans and securities [144]. - Prolonged inflation may negatively affect Huntington's profitability and stock price due to increased fixed costs and decreased consumer purchasing power [151]. - Competition in the financial services sector is expected to intensify, impacting Huntington's ability to attract and retain customers [152]. - A reduction in access to capital markets could hinder the ability to meet cash flow requirements and fund corporate expansion [156]. - Rising interest rates and disruptions in financial markets may negatively impact Huntington's ability to raise additional capital on acceptable terms [158]. - A downgrade in credit ratings could adversely affect access to liquidity and increase the cost of funds, impacting growth and profitability [159]. - Global economic instability and geopolitical matters could materially affect Huntington's results of operations and financial condition [161]. Operational and Cybersecurity Risks - Operational risks exist due to reliance on internal and third-party systems, which could disrupt business and impact liquidity [162]. - Cybersecurity risks have significantly increased, with potential for serious reputational harm and financial exposure due to cyber-attacks [165]. - Legislative and regulatory focus on cybersecurity and data privacy is increasing, with proposed regulations enhancing cyber risk management standards [171]. - The company faces significant operational risks, including fraud, unauthorized transactions, and system failures, which could lead to financial loss and litigation [174]. - Compliance with laws and regulations is costly and complex, potentially leading to fines and restrictions that adversely affect financial results [188]. - The company relies on third-party service providers for key business infrastructure, which poses risks that could impact service delivery and increase costs [181]. - Legislative and regulatory changes may materially affect the company by increasing costs and limiting business opportunities [191]. - The company is subject to heightened regulatory scrutiny regarding consumer practices, which could lead to increased costs and potential revenue loss [190]. Strategic Planning and Governance - The success of the company's strategic plan depends on the retention of key personnel; loss of executive officers could adversely affect business operations and stock value [202]. - Capital and liquidity regulations, including the CCAR assessment process, may require the company to maintain higher capital levels, impacting dividend payments and stock repurchases [203]. - Proposed changes to capital and liquidity requirements could increase operational costs and affect the company's financial results and ability to distribute capital [205]. - Cybersecurity is a critical component of the company's risk management strategy, with ongoing assessments and third-party reviews to ensure effectiveness [209]. - The company maintains a global cybersecurity threat operation to promptly detect and respond to incidents, minimizing disruptions to business [212]. - The company's headquarters is located in the Huntington Center, with a lease term expiring in 2030 and options for renewal [215].
HUNTINGTON BANCS(HBANL) - 2023 Q4 - Annual Report