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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2021
HBAN-20210331_G1.JPG
Huntington Bancshares Incorporated
(Exact name of registrant as specified in its charter)
Maryland
1-34073
31-0724920
(State or other jurisdiction of
incorporation or organization)
(Commission
File Number)
(I.R.S. Employer
Identification No.)
Registrant’s address: 41 South High Street, Columbus, Ohio 43287
Registrant’s telephone number, including area code: (614) 480-2265
Securities registered pursuant to Section 12(b) of the Act
Title of class
Trading
Symbol(s)
Name of exchange on which registered
Depositary Shares (each representing a 1/40th interest in a share of 5.875% Series C Non-Cumulative, perpetual preferred stock) HBANN NASDAQ
Depositary Shares (each representing a 1/40th interest in a share of 6.250% Series D Non-Cumulative, perpetual preferred stock) HBANO NASDAQ
Depositary Shares (each representing a 1/40th interest in a share of 4.500% Series H Non-Cumulative, perpetual preferred stock) HBANP NASDAQ
Common Stock—Par Value $0.01 per Share HBAN NASDAQ
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days.     x  Yes      No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     x  Yes      No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer x Accelerated filer
Non-accelerated filer Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).     ☐  Yes    x  No
There were 1,018,052,923 shares of the registrant’s common stock ($0.01 par value) outstanding on March 31, 2021.


Table of Contents
HUNTINGTON BANCSHARES INCORPORATED
INDEX
 
41
Condensed Consolidated Balance Sheets at March 31, 2021 and December 31, 2020
41
42
43
44
45
47
5
5
7
15
16
23
27
29
30
30
32
36
81
81
81
81
82
83
2 Huntington Bancshares Incorporated

Table of Contents
Glossary of Acronyms and Terms

The following listing provides a comprehensive reference of common acronyms and terms used throughout the document:
 
ACL    Allowance for Credit Losses
AFS    Available-for-Sale
ALLL    Allowance for Loan and Lease Losses
AOCI Accumulated Other Comprehensive Income
ASC    Accounting Standards Codification
AULC    Allowance for Unfunded Loan Commitments
Basel III    Refers to the final rule issued by the FRB and OCC and published in the Federal Register on October 11, 2013
CARES Act Coronavirus Aid, Relief, and Economic Security Act, as amended
C&I    Commercial and Industrial
CCAR    Comprehensive Capital Analysis and Review
CDs    Certificates of Deposit
CECL Current Expected Credit Loss
CET1    Common Equity Tier 1 on a Basel III basis
CFPB    Bureau of Consumer Financial Protection
CMO    Collateralized Mortgage Obligations
COVID-19 Coronavirus Disease 2019
CRE    Commercial Real Estate
EAD Exposure at Default
EVE    Economic Value of Equity
FASB Financial Accounting Standards Board
FDIC    Federal Deposit Insurance Corporation
FHLB    Federal Home Loan Bank of Cincinnati
FICO    Fair Isaac Corporation
FRB    Federal Reserve Board
FTE    Fully-Taxable Equivalent
FTP    Funds Transfer Pricing
FVO Fair Value Option
GAAP    Generally Accepted Accounting Principles in the United States of America
HTM    Held-to-Maturity
IRS    Internal Revenue Service
Last-of-Layer Last-of-layer is a fair value hedge of the interest rate risk of a portfolio of similar prepayable assets whereby the last dollar amount within the portfolio of assets is identified as the hedged item
LCR    Liquidity Coverage Ratio
LIBOR    London Interbank Offered Rate
LIHTC    Low Income Housing Tax Credit
MBS    Mortgage-Backed Securities
MD&A    Management’s Discussion and Analysis of Financial Condition and Results of Operations
MSR    Mortgage Servicing Right
NAICS    North American Industry Classification System
NALs    Nonaccrual Loans
NCO    Net Charge-off
NII    Noninterest Income
NIM    Net Interest Margin
NPAs    Nonperforming Assets
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OCC    Office of the Comptroller of the Currency
OCI    Other Comprehensive Income (Loss)
OLEM    Other Loans Especially Mentioned
OREO    Other Real Estate Owned
PCD Purchased-Credit-Deteriorated
PPP Paycheck Protection Program
PPPLF Paycheck Protection Program Liquidity Facility
RBHPCG    Regional Banking and The Huntington Private Client Group
ROC Risk Oversight Committee
SBA Small Business Administration
SEC    Securities and Exchange Commission
TCF TCF Financial Corporation
TDR    Troubled Debt Restructuring
U.S. Treasury    U.S. Department of the Treasury
UCS    Uniform Classification System
VIE    Variable Interest Entity
XBRL    eXtensible Business Reporting Language

4 Huntington Bancshares Incorporated

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PART I. FINANCIAL INFORMATION
When we refer to “we”, “our”, and “us”, “Huntington”, and “the Company” in this report, we mean Huntington Bancshares Incorporated and our consolidated subsidiaries, unless the context indicates that we refer only to the parent company, Huntington Bancshares Incorporated. When we refer to the “Bank” in this report, we mean our only bank subsidiary, The Huntington National Bank, and its subsidiaries.
Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations
INTRODUCTION
We are a multi-state diversified regional bank holding company organized under Maryland law in 1966 and headquartered in Columbus, Ohio. Through the Bank, we have over 150 years of servicing the financial needs of our customers. Through our subsidiaries, we provide full-service commercial and consumer banking services, mortgage banking services, automobile financing, recreational vehicle and marine financing, equipment financing, investment management, trust services, brokerage services, insurance products and services, and other financial products and services. Our 814 full-service branches and private client group offices are located in Ohio, Illinois, Indiana, Kentucky, Michigan, Pennsylvania, and West Virginia. Select financial services and other activities are also conducted in various other states. International banking services are available through the headquarters office in Columbus, Ohio. Our foreign banking activities, in total or with any individual country, are not significant.
On December 13, 2020, we announced the signing of a definitive merger agreement (the “TCF/Huntington Merger Agreement”). Under the terms of the agreement, which was unanimously approved by the boards of directors of both companies, TCF Financial Corporation, the parent company of TCF National Bank will merge into Huntington in an all-stock transaction. TCF is a financial holding company headquartered in Detroit, Michigan with reported total assets of $47.8 billion based on their balance sheet at December 31, 2020.
Under the terms of the Merger Agreement, TCF shareholders will receive 3.0028 shares of Huntington common stock for each share of TCF common stock. Holders of TCF common stock will also receive cash in lieu of fractional shares. Each outstanding share of 5.70% Series C Non-Cumulative Perpetual Preferred Stock of TCF will be converted into the right to receive one share of a newly created series of preferred stock of Huntington.
This MD&A provides information we believe necessary for understanding our financial condition, changes in financial condition, results of operations, and cash flows. The MD&A included in our 2020 Form 10-K should be read in conjunction with this MD&A as this discussion provides only material updates to the 2020 Form 10-K. This MD&A should also be read in conjunction with the Unaudited Condensed Consolidated Financial Statements, Notes to Unaudited Condensed Consolidated Financial Statements, and other information contained in this report.
EXECUTIVE OVERVIEW
Summary of 2021 First Quarter Results Compared to 2020 First Quarter
For the quarter, we reported net income of $532 million, or $0.48 per common share, compared with $48 million, or $0.03 per common share, in the year-ago quarter.
Fully-taxable equivalent net interest income was $978 million, up $182 million, or 23%, from the year-ago quarter. This increase reflected the benefit from the $12.3 billion, or 12%, increase in average earning assets and a 34 basis point increase in the FTE net interest margin to 3.48%.
The provision for credit losses decreased $501 million year-over-year to $(60) million in the 2021 first quarter. Net charge-offs decreased $53 million to $64 million. Both Commercial NCOs of $49 million and Consumer NCOs of $15 million were down on both a year-over-year basis. Total NCOs represented an annualized 0.32% of average loans and leases in the current quarter, down from 0.62% in the year-ago quarter.
Noninterest income was $395 million, up $34 million, or 9%, from the year ago quarter. Mortgage banking income increased $42 million, or 72%. Partially offsetting these increases, service charges on deposit accounts decreased $18 million, or 21%.
2021 1Q Form 10-Q 5


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Noninterest expense for the 2021 first quarter increased $141 million, or 22%, from the year-ago quarter Personnel costs increased $73 million, or 18%. Outside data processing and other services increased $30 million, or 35%. Other noninterest expense increased $22 million, or 43%, primarily reflecting a $25 million donation to The Columbus Foundation.
Common Equity Tier 1 risk-based capital ratio was 10.33%, up from 9.47% a year ago. The regulatory Tier 1 risk-based capital ratio was 13.32% compared to 10.81% at March 31, 2020. The increase in regulatory capital ratios was driven by earnings, adjusted for the CECL transition, offset by the repurchase of $5 million of common stock over the last four quarters (all during 2020 fourth quarter) and cash dividends. The balance sheet growth impact on regulatory capital ratios was largely offset by a change in asset mix during 2020 related to the PPP loans and elevated deposits at the Federal Reserve, both of which are 0% risk weighted. The regulatory Tier 1 risk-based capital ratio also reflects the issuance of $500 million of Series F preferred stock, $500 million of Series G preferred stock and $500 million of Series H preferred stock in the 2020 second quarter, 2020 third quarter, and 2021 first quarter, respectively.
Business Overview
General
Our general business objectives are:
Consistent organic revenue and balance sheet growth.
Invest in our businesses, particularly technology and risk management.
Deliver positive long-term operating leverage.
Maintain aggregate moderate-to-low risk appetite.
Disciplined capital management.
COVID-19
The COVID-19 pandemic continues to cause significant, unprecedented disruption that affects daily living and negatively impacts the economy. As further discussed in “Discussion of Results of Operations,” the current interest rate environment, borrower and counterparty credit quality and market volatility, among other factors, continue to impact our performance. Though we are unable to estimate the magnitude, we expect the pandemic and the resulting economic environment will continue to affect our future operating results.
Huntington was able to react quickly to the changes required by the pandemic because of the commitment and flexibility of its workforce coupled with well-prepared business continuity plans. While state and local governments have eased temporary business closures and we have opened our branches, we expect our colleagues who have been operating remotely to continue for a period of time. While the approved vaccines are being administered throughout our footprint, it remains unknown when, or if, there will be a return to historical norms of economic and social activity.
We continue to work with our customers to originate and renew business loans as well as originate loans made available through the Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”), a lending program established as part of the relief to American consumers and businesses in the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). Several subsequent congressional acts have reopened and extended the PPP loan program. During the 2021 first quarter, we have processed over 17,000 applications totaling approximately $1.8 billion under the reopened PPP.
Pending acquisition of TCF Financial Corporation
In late March 2021, Huntington and TCF shareholders approved the proposed merger of TCF with and into Huntington. The integration planning continues to proceed as expected. We expect that the transaction will be completed late in the second quarter of 2021, subject to regulatory approval and the satisfaction of other customary closing conditions set forth in the merger agreement.
Economy
Our first quarter results reflected a very strong beginning to what will be an important year for Huntington. The economic recovery continues to gain its footing, and we are seeing encouraging signs across our footprint and our individual businesses. Our lending pipelines are up across the board, and customer sentiment is improving —
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supporting our confidence in more robust loan demand later in the year. Additionally, we continue to see strong core deposit inflows and expect this elevated level of liquidity will remain for some time.
DISCUSSION OF RESULTS OF OPERATIONS
This section provides a review of financial performance from a consolidated perspective. It also includes a “Significant Items” section (See Non-GAAP Financial Measures) that summarizes key issues important for a complete understanding of performance trends. Key Unaudited Condensed Consolidated Balance Sheet and Unaudited Condensed Statement of Income trends are discussed. All earnings per share data are reported on a diluted basis. For additional insight on financial performance, please read this section in conjunction with the “Business Segment Discussion”.
2021 1Q Form 10-Q 7


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Table 1 - Selected Quarterly Income Statement Data
  Three Months Ended
March 31, December 31, September 30, June 30, March 31,
(amounts in millions, except per share data) 2021 2020 2020 2020 2020
Interest income $ 869  $ 878  $ 892  $ 902  $ 975 
Interest expense (103) 53  75  110  185 
Net interest income 972  825  817  792  790 
Provision for credit losses (60) 103  177  327  441 
Net interest income after provision for credit losses 1,032  722  640  465  349 
Mortgage banking income 100  90  122  96  58 
Service charges on deposit accounts 69  78  76  60  87 
Card and payment processing income 65  65  66  59  58 
Trust and investment management services 52  49  48  45  47 
Capital markets fees 29  34  27  31  33 
Insurance income 27  25  24  25  23 
Bank owned life insurance income 16  14  17  17  16 
Gain on sale of loans 13  13 
Net (losses) gains on sales of securities —  —  —  (1) — 
Other noninterest income 34  41  37  51  31 
Total noninterest income 395  409  430  391  361 
Personnel costs 468  426  453  418  395 
Outside data processing and other services 115  111  98  90  85 
Equipment 46  49  44  46  41 
Net occupancy 42  39  40  39  40 
Professional services 17  21  12  11  11 
Amortization of intangibles 10  10  10  10  11 
Marketing 14  15 
Deposit and other insurance expense
Other noninterest expense 73  77  40  47  51 
Total noninterest expense 793  756  712  675  652 
Income before income taxes 634  375  358  181  58 
Provision for income taxes 102  59  55  31  10 
Net income 532  316  303  150  48 
Dividends on preferred shares 31  35  28  19  18 
Net income applicable to common shares $ 501  $ 281  $ 275  $ 131  $ 30 
Average common shares—basic 1,018  1,017  1,017  1,016  1,018 
Average common shares—diluted 1,041  1,036  1,031  1,029  1,035 
Net income per common share—basic $ 0.49  $ 0.28  $ 0.27  $ 0.13  $ 0.03 
Net income per common share—diluted 0.48  0.27  0.27  0.13  0.03 
Return on average total assets 1.76  % 1.04  % 1.01  % 0.51  % 0.17  %
Return on average common shareholders’ equity 18.7  10.4  10.2  5.0  1.1 
Return on average tangible common shareholders’ equity (1) 23.7  13.3  13.2  6.7  1.8 
Net interest margin (2) 3.48  2.94  2.96  2.94  3.14 
Efficiency ratio (3) 57.0  60.2  56.1  55.9  55.4 
Effective tax rate 16.1  15.8  15.2  17.2  17.0 
Revenue—FTE
Net interest income $ 972  $ 825  $ 817  $ 792  $ 790 
FTE adjustment
Net interest income (2) 978  830  822  797  796 
Noninterest income 395  409  430  391  361 
Total revenue (2) $ 1,373  $ 1,239  $ 1,252  $ 1,188  $ 1,157 
(1)Net income excluding expense for amortization of intangibles for the period divided by average tangible common shareholders’ equity. Average tangible common shareholders’ equity equals average total common shareholders’ equity less average intangible assets and goodwill. Expense for amortization of intangibles and average intangible assets are net of deferred tax liability, and calculated assuming a 21% tax rate.
(2)On an FTE basis assuming a 21% tax rate.
(3)Noninterest expense less amortization of intangibles and goodwill impairment divided by the sum of FTE net interest income and noninterest income excluding securities gains.
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Significant Items
Table 2 list certain items that we believe are significant to understanding corporate performance and trends (See Non-GAAP Financial Measures included in “Additional Disclosures” section). There was one Significant Item in the 2021 first quarter: $21 million of noninterest expense related to the pending acquisition of TCF. This resulted in a negative impact of $(0.02) per common share. There were no Significant Items in the other periods presented.
Table 2 - Significant Items Influencing Earnings Performance Comparison
  Three Months Ended
March 31, 2021
(dollar amounts in millions, share amounts in thousands) Amount EPS (1)
Net income $ 532 
Earnings per share, after-tax $ 0.48 
Significant Items—favorable (unfavorable) impact: Earnings EPS (1)
Mergers and acquisitions, net expenses $ (21)
Tax impact
Mergers and acquisitions, after tax $ (17) $ (0.02)
(1)Based upon the quarterly average outstanding diluted common shares.

2021 1Q Form 10-Q 9


Net Interest Income / Average Balance Sheet
The following tables detail the change in our average balance sheet and the net interest margin:
Table 3 - Consolidated Average Balance Sheet and Net Interest Margin Analysis
  Average Balances
Three Months Ended Change
March 31, December 31, September 30, June 30, March 31, 1Q21 vs. 1Q20
(dollar amounts in millions) 2021 2020 2020 2020 2020 Amount Percent
Assets:
Interest-bearing deposits in Federal Reserve Bank $ 6,065  $ 5,507  $ 5,857  $ 3,413  $ 680  $ 5,385  792  %
Interest-bearing deposits in banks 177  205  177  169  150  27  18 
Securities:
Trading account securities 52  53  49  39  95  (43) (45)
Available-for-sale securities:
Taxable 14,827  12,048  10,670  11,179  11,671  3,156  27 
Tax-exempt 2,650  2,710  2,749  2,728  2,753  (103) (4)
Total available-for-sale securities 17,477  14,758  13,419  13,907  14,424  3,053  21 
Held-to-maturity securities—taxable 8,269  8,844  8,932  9,798  9,428  (1,159) (12)
Other securities 412  420  430  474  445  (33) (7)
Total securities 26,210  24,075  22,830  24,218  24,392  1,818 
Loans held for sale 1,392  1,319  1,259  1,039  865  527  61 
Loans and leases: (3)
Commercial:
Commercial and industrial 34,352  34,850  34,669  35,284  30,849  3,503  11 
Commercial real estate:
Construction 1,053  1,085  1,175  1,201  1,165  (112) (10)
Commercial 6,122  6,092  6,045  5,885  5,566  556  10 
Commercial real estate 7,175  7,177  7,220  7,086  6,731  444 
Total commercial 41,527  42,027  41,889  42,370  37,580  3,947  11 
Consumer:
Automobile 12,665  12,857  12,889  12,681  12,924  (259) (2)
Home equity 8,809  8,919  8,878  8,897  9,026  (217) (2)
Residential mortgage 12,094  12,100  11,817  11,463  11,391  703 
RV and marine 4,193  4,181  4,020  3,706  3,590  603  17 
Other consumer 973  1,032  1,049  1,082  1,185  (212) (18)
Total consumer 38,734  39,089  38,653  37,829  38,116  618 
Total loans and leases 80,261  81,116  80,542  80,199  75,696  4,565 
Allowance for loan and lease losses (1,809) (1,804) (1,720) (1,557) (1,239) (570) (46)
Net loans and leases 78,452  79,312  78,822  78,642  74,457  3,995 
Total earning assets 114,105  112,222  110,665  109,038  101,783  12,322  12 
Cash and due from banks 1,080  1,113  1,173  1,299  914  166  18 
Intangible assets 2,176  2,185  2,195  2,206  2,217  (41) (2)
All other assets 7,443  7,279  7,216  7,205  6,472  971  15 
Total assets $ 122,995  $ 120,995  $ 119,529  $ 118,191  $ 110,147  $ 12,848  12  %
Liabilities and Shareholders’ Equity:
Interest-bearing deposits:
Demand deposits—interest-bearing $ 26,812  $ 25,094  23,865  $ 23,878  $ 21,202  $ 5,610  26  %
Money market deposits 26,247  26,144  26,200  25,728  24,697  1,550 
Savings and other domestic deposits 12,277  11,468  11,157  10,609  9,632  2,645  27 
Core certificates of deposit (4) 1,384  1,479  2,035  3,003  3,943  (2,559) (65)
Other domestic time deposits of $250,000 or more 115  139  175  230  321  (206) (64)
Brokered deposits and negotiable CDs 3,355  4,100  4,182  4,114  2,884  471  16 
Total interest-bearing deposits 70,190  68,424  67,614  67,562  62,679  7,511  12 
Short-term borrowings 208  239  162  826  3,383  (3,175) (94)
Long-term debt 7,766  8,799  9,318  9,802  10,076  (2,310) (23)
Total interest-bearing liabilities 78,164  77,462  77,094  78,190  76,138  2,026 
Demand deposits—noninterest-bearing 29,095  28,140  27,435  25,660  20,054  9,041  45 
All other liabilities 2,412  2,452  2,322  2,396  2,319  93 
Shareholders’ equity 13,324  12,941  12,678  11,945  11,636  1,688  15 
Total liabilities and shareholders’ equity $ 122,995  $ 120,995  $ 119,529  $ 118,191  $ 110,147  $ 12,848  12  %
(3)For purposes of this analysis, NALs are reflected in the average balances of loans.
(4)Includes consumer certificates of deposit of $250,000 or more.
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Table 3 - Consolidated Average Balance Sheet and Net Interest Margin Analysis (Continued)
  Average Yield Rates (2)
  Three Months Ended
March 31, December 31, September 30, June 30, March 31,
Fully-taxable equivalent basis (1) 2021 2020 2020 2020 2020
Assets:
Interest-bearing deposits in Federal Reserve Bank 0.10  % 0.10  % 0.10  % 0.10  % 1.08  %
Interest-bearing deposits in banks 0.08  0.12  0.13  0.33  1.52 
Securities:
Trading account securities 3.64  3.65  3.18  1.99  3.21 
Available-for-sale securities:
Taxable 1.32  1.53  1.89  2.30  2.62 
Tax-exempt 2.52  2.59  2.71  2.75  3.30 
Total available-for-sale securities 1.50  1.72  2.06  2.39  2.75 
Held-to-maturity securities—taxable 2.02  2.11  2.28  2.39  2.50 
Other securities 1.66  1.85  1.23  0.57  2.07 
Total securities 1.67  1.87  2.13  2.35  2.64 
Loans held for sale 2.64  2.96  2.82  3.22  3.39 
Loans and leases: (3)
Commercial:
Commercial and industrial 3.99  3.64  3.67  3.62  4.12 
Commercial real estate:
Construction 3.41  3.36  3.40  3.66  4.75 
Commercial 2.64  2.62  2.63  2.94  4.00 
Commercial real estate 2.75  2.73  2.75  3.06  4.13 
Total commercial 3.78  3.48  3.52  3.53  4.12 
Consumer:
Automobile 3.71  3.88  3.93  3.84  4.05 
Home equity 3.71  3.76  3.79  3.73  4.75 
Residential mortgage 3.13  3.27  3.41  3.51  3.70 
RV and marine 4.30  4.53  4.60  4.71  4.91 
Other consumer 11.17  11.12  11.23  11.10  12.39 
Total consumer 3.78  3.93  4.00  4.00  4.45 
Total loans and leases 3.78  3.70  3.75  3.75  4.29 
Total earning assets 3.11  3.13  3.22  3.35  3.88 
Liabilities:
Interest-bearing deposits:
Demand deposits—interest-bearing 0.04  0.04  0.05  0.07  0.43 
Money market deposits 0.06  0.10  0.28  0.40  0.81 
Savings and other domestic deposits 0.04  0.05  0.06  0.10  0.17 
Core certificates of deposit (4) 0.51  0.56  1.03  1.55  1.91 
Other domestic time deposits of $250,000 or more 0.22  0.51  0.92  1.25  1.56 
Brokered deposits and negotiable CDs 0.18  0.19  0.19  0.18  1.22 
Total interest-bearing deposits 0.06  0.08  0.18  0.28  0.68 
Short-term borrowings 0.19  0.26  0.30  0.47  1.46 
Long-term debt (5) (5.88) 1.72  1.87  2.58  2.70 
Total interest-bearing liabilities (0.53) 0.27  0.39  0.57  0.98 
Net interest rate spread 3.64  2.86  2.83  2.78  2.90 
Impact of noninterest-bearing funds on margin (0.16) 0.08  0.13  0.16  0.24 
Net interest margin 3.48  % 2.94  % 2.96  % 2.94  % 3.14  %
(1)FTE yields are calculated assuming a 21% tax rate.
(2)    Average yield rates include the impact of applicable derivatives. Loan and lease and deposit average yield rates also include impact of applicable non-deferrable and amortized fees.
(3)    For purposes of this analysis, NALs are reflected in the average balances of loans.
(4)    Includes consumer certificates of deposit of $250,000 or more.
(5)    Reflects the net mark-to-market impact of interest rate caps of $144 million or 741 bps and $5 million or 23 bps for 1Q 2021 and 4Q 2020, respectively.
2021 1Q Form 10-Q 11


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2021 First Quarter versus 2020 First Quarter
FTE net interest income for the 2021 first quarter increased $182 million, or 23%, from the 2020 first quarter. This increase reflected a $12.3 billion, or 12%, increase in average earning assets, and a 34 basis point increase in the FTE net interest margin to 3.48%. Net interest income in the 2021 first quarter included a $144 million net mark-to-market of interest rate caps, which favorably impacted the NIM by approximately 51 basis points (and long-term debt costs by approximately 741 basis points), and $45 million of deferred PPP loan fees recognized upon receipt of forgiveness payments from the SBA, which favorably impacted the NIM by approximately 16 basis points. The year-over-year decrease in earning asset yields and average liability costs also reflected the impact of lower interest rates and changes in balance sheet mix, including elevated deposits at the Federal Reserve Bank.
Average earning assets for the 2021 first quarter increased $12.3 billion, or 12%, from the year-ago quarter, primarily reflecting a $5.4 billion, or 792%, increase in interest-bearing deposits at the Federal Reserve Bank, a $4.6 billion, or 6%, increase in average total loans and leases, and a $1.8 billion, or 7%, increase in average securities. Average C&I loans increased $3.5 billion, or 11%, primarily reflecting the $5.8 billion of average PPP loans partially offset by lower C&I and dealer floorplan utilization rates. Average residential mortgage loans increased $0.7 billion, or 6%, reflecting continued robust portfolio mortgage production. Average RV and marine loans increased $0.6 billion, or 17%, reflecting strong consumer demand and continued strong production levels.
Average total interest-bearing liabilities for the 2021 first quarter increased $2.0 billion, or 3%, from the year-ago quarter. Average total deposits increased $16.6 billion, or 20%, while average total core deposits increased $16.3 billion, or 20%. The increase in average total core deposits was primarily driven by increased liquidity levels in reaction to the economic downturn, business and commercial growth related to the PPP loans, consumer growth largely related to government stimulus, increased consumer and business banking account production, and reduced attrition. Specifically within core deposits, average total demand deposits increased $14.7 billion, or 36%, average savings and other domestic deposits increased $2.6 billion, or 27%, and average money market deposits increased $1.6 billion, or 6%. Partially offsetting these increases, average core CDs decreased $2.6 billion, or 65%, reflecting the maturity of balances related to the 2018 consumer deposit growth initiatives. Average total debt decreased $5.5 billion, or 41%, reflecting the repayment of short-term borrowings, the maturity and issuance of $3.2 billion and $1.3 billion of long-term debt, respectively, over the past five quarters, and the purchase of $0.5 billion of long-term debt under the tender offer completed in November 2020, all due to the strong core deposit growth.
2021 First Quarter versus 2020 Fourth Quarter
Compared to the 2020 fourth quarter, FTE net interest income increased $148 million, or 18%, reflecting a $1.9 billion, or 2% increase in average earning assets and 54 basis points of NIM expansion. Both the net interest income increase and the NIM expansion primarily reflected the net impacts of the mark-to-market of interest rate caps and the deferred PPP loan fees recognized upon receipt of forgiveness payments from the SBA. The mark-to-market of interest rate caps was $144 million in the 2021 first quarter compared to $5 million in the 2020 fourth quarter. The accelerated recognition of deferred PPP loan fees were $45 million in the 2021 first quarter compared to $5 million in the 2020 fourth quarter.
Average earning assets increased $1.9 billion, or 2%, primarily reflecting a $2.1 billion, or 9%, increase in average securities, partially offset by a $0.9 billion, or 1%, decrease in average loans and leases. The increase in average securities reflected the purchase of securities to deploy excess liquidity. Average C&I loans decreased $0.5 billion, or 1%, primarily reflecting the $0.4 billion decrease in average PPP loans.
Average total interest-bearing liabilities increased $0.7 billion, or 1%, when compared to the 2020 fourth quarter. Average total deposits increased $2.7 billion, or 3%, and average total core deposits increased $3.5 billion, or 4%. The increase in average total core deposits was primarily driven by consumer growth largely related to government stimulus, increased liquidity levels among our commercial customers, seasonality in government banking, and improved consumer and business banking account retention. Specifically, within core deposits, average total demand deposits increased $2.7 billion, or 5%. Average total debt decreased $1.1 billion, or 12%, primarily reflecting the maturity of $1.1 billion of long-term debt, the purchase of $0.5 billion of long-term debt under the tender offer completed in November 2020, and the repayment of short-term borrowings, all due to the strong core deposit growth.
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Provision for Credit Losses
(This section should be read in conjunction with the “Credit Risk” section.)
The provision for credit losses is the expense necessary to maintain the ALLL and the AULC at levels appropriate to absorb our estimate of credit losses expected over the life of the loan and lease portfolio and the portfolio of unfunded loan commitments and letters of credit.
The provision for credit losses for the 2021 first quarter was $(60) million, a decrease of $501 million, or 114%, compared to the 2020 first quarter. The reduction in provision expense over the prior year was primarily attributed to the improvement in the forecasted macroeconomic environment resulting from anticipated lower unemployment and higher GDP.
Noninterest Income
The following table reflects noninterest income for each of the periods presented: 
Table 4 - Noninterest Income
Three Months Ended 1Q21 vs. 1Q20 1Q21 vs. 4Q20
March 31, December 31, March 31, Change Change
(dollar amounts in millions) 2021 2020 2020 Amount Percent Amount Percent
Mortgage banking income $ 100  $ 90  $ 58  $ 42  72  % $ 10  11  %
Service charges on deposit accounts 69  78  87  (18) (21) (9) (12)
Card and payment processing income 65  65  58  12  —  — 
Trust and investment management services 52  49  47  11 
Capital markets fees 29  34  33  (4) (12) (5) (15)
Insurance income 27  25  23  17 
Bank owned life insurance income 16  14  16  —  —  14 
Gain on sale of loans 13  (5) (63) (10) (77)
Net (losses) gains on sales of securities —  —  —  —  —  —  — 
Other noninterest income 34  41  31  10  (7) (17)
Total noninterest income $ 395  $ 409  $ 361  $ 34  % $ (14) (3) %
2021 First Quarter versus 2020 First Quarter
Total noninterest income for the 2021 first quarter increased $34 million, or 9%, from the year-ago quarter. Mortgage banking income increased $42 million, or 72%, primarily reflecting an 89% increase in salable mortgage originations and higher secondary marketing spreads offset by lower net mortgage servicing income. Card and payment processing income increased $7 million, or 12%, reflecting higher debit card usage. Trust and investment management services increased $5 million, or 11%, reflecting record net asset flows, and positive equity market performance over the prior twelve months. Partially offsetting these increases, service charges on deposit accounts decreased $18 million, or 21%, primarily reflecting reduced customer activity and elevated deposits. Gain on sale of loans decreased $5 million, or 63%, primarily reflecting the lower SBA loan sales resulting from the strategic decision to retain SBA loans on the balance sheet.
2021 First Quarter versus 2020 Fourth Quarter
Compared to the 2020 fourth quarter, total noninterest income decreased $14 million, or 3%. Gain on sale of loans decreased $10 million, or 77%, primarily reflecting lower SBA loan sales resulting from the strategic decision to retain SBA loans on the balance sheet. Service charges on deposit accounts decreased $9 million, or 12%, primarily reflecting reduced customer activity and elevated deposits. Other noninterest income decreased $7 million, or 17%, primarily reflecting a $6 million reduction in the Visa Class B derivative fair value adjustment. Capital markets fees decreased $5 million, or 15%, reflecting lower loan syndication fees and customer derivatives activity. Partially offsetting these decreases, mortgage banking income increased $10 million, or 11%, primarily reflecting a $10 million increase in net MSR risk management activities.
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Noninterest Expense
The following table reflects noninterest expense for each of the periods presented: 
Table 5 - Noninterest Expense
Three Months Ended 1Q21 vs. 1Q20 1Q21 vs. 4Q20
March 31, December 31, March 31, Change Change
(dollar amounts in millions) 2021 2020 2020 Amount Percent Amount Percent
Personnel costs $ 468  $ 426  $ 395  $ 73  18  % $ 42  10  %
Outside data processing and other services 115  111  85  30  35 
Equipment 46  49  41  12  (3) (6)
Net occupancy 42  39  40 
Professional services 17  21  11  55  (4) (19)
Amortization of intangibles 10  10  11  (1) (9) —  — 
Marketing 14  15  56  (1) (7)
Deposit and other insurance expense (1) (11) —  — 
Other noninterest expense 73  77  51  22  43  (4) (5)
Total noninterest expense $ 793  $ 756  $ 652  $ 141  22  % $ 37  %
Number of employees (average full-time equivalent) 15,449  15,477  15,386  63  —  % (28) —  %
Impacts of Significant Items:
Three Months Ended
March 31, December 31, March 31,
(dollar amounts in millions) 2021 2020 2020
Outside data processing and other services —  — 
Net occupancy —  — 
Equipment —  — 
Professional services —  — 
Other noninterest expense —  — 
Total noninterest expense adjustments $ 21  $ —  $ — 
Adjusted Noninterest Expense (See Non-GAAP Financial Measures in the Additional Disclosures section):
Three Months Ended 1Q21 vs. 1Q20 1Q21 vs. 4Q20
March 31, December 31, March 31, Change Change
(dollar amounts in millions) 2021 2020 2020 Amount Percent Amount Percent
Personnel costs $ 468  $ 426  $ 395  $ 73  18  % $ 42  10  %
Outside data processing and other services 107  111  85  22  26  (4) (4)
Net occupancy 39  39  40  (1) (3) —  — 
Equipment 45  49  41  10  (4) (8)
Deposit and other insurance expense (1) (11) —  — 
Professional services 21  11  (2) (18) (12) (57)
Marketing 14  15  56  (1) (7)
Amortization of intangibles 10  10  11  (1) (9) —  — 
Other noninterest expense 72  77  51  21  41  (5) (6)
Total adjusted noninterest expense (Non-GAAP) $ 772  $ 756  $ 652  $ 120  18  % $ 16  %
2021 First Quarter versus 2020 First Quarter
Total noninterest expense for the 2021 first quarter increased $141 million or 22%, from the year-ago quarter. Personnel costs increased $73 million, or 18%, primarily reflecting increased incentives and commissions, a timing change implemented in the 2021 first quarter with respect to moving forward the annual grant of equity compensation from May to March, and higher benefits costs. Outside data processing and other services increased $30 million, or 35%, reflecting technology investments to support our strategic growth initiatives and $8 million of TCF acquisition-related expense. Other noninterest expense increased $22 million, or 43%, primarily reflecting a $25 million donation to The Columbus Foundation. Professional services expense increased $6 million, or 55%, reflecting $8 million of acquisition-related legal expense. Equipment expense increased $5 million, or 12%, primarily reflecting
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technology investments. Marketing expense increased $5 million, or 56%, reflecting a return to pre-pandemic levels and additional investment in strategic marketing initiatives including new Fair Play product launches.
2021 First Quarter versus 2020 Fourth Quarter
Total noninterest expense increased $37 million, or 5%, from the 2020 fourth quarter. Personnel costs increased $42 million, or 10%, primarily reflecting increased incentives and commissions, a timing change implemented in the 2021 first quarter with respect to moving forward the annual grant of equity compensation from May to March, and higher benefits costs.
Provision for Income Taxes
The provision for income taxes in the 2021 first quarter was $102 million, compared with provision for income taxes of $10 million in the 2020 first quarter and $59 million in the 2020 fourth quarter. All periods included the benefits from tax-exempt income, tax-advantaged investments, general business credits, investments in qualified affordable housing projects, and capital losses. The effective tax rates for the 2021 first quarter, 2020 first quarter, and 2020 fourth quarter were 16.1%, 17.0%, and 15.8%, respectively. The variance between the 2021 first quarter compared to the 2020 first quarter, and 2020 fourth quarter provision for income taxes and effective tax rates relates primarily to higher pre-tax income and the impact of stock-based compensation. The net federal deferred tax liability was $149 million and the net state deferred tax asset was $24 million at March 31, 2021.
We file income tax returns with the IRS and various state and city jurisdictions. Federal income tax audits have been completed for tax years through 2009. The 2010 and 2011 tax years remain under exam by the IRS. While the statute of limitations remains open for tax years 2012 through 2019, the IRS has advised that tax years 2012 through 2014 will not be audited and is currently examining the 2015 and 2016 federal income tax returns. Also, with few exceptions, the Company is no longer subject to state and local income tax examinations for tax years before 2016.
RISK MANAGEMENT AND CAPITAL
We use a multi-faceted approach to risk governance. It begins with the Board of Directors defining our risk appetite as aggregate moderate-to-low. Risk awareness, identification and assessment, reporting, and active management are key elements in overall risk management. Controls include, among others, effective segregation of duties, access, and authorization and reconciliation procedures, as well as staff education and a disciplined assessment process.
We believe that our primary risk exposures are credit, market, liquidity, operational and compliance. More information on risk can be found in the Risk Factors section included in Item 1A of our 2020 Form 10-K and subsequent filings with the SEC. The MD&A included in our 2020 Form 10-K should be read in conjunction with this MD&A as this discussion provides only material updates to the Form 10-K. This MD&A should also be read in conjunction with the Unaudited Condensed Consolidated Financial Statements, Notes to Unaudited Condensed Consolidated Financial Statements, and other information contained in this report. Our definition, philosophy, and approach to risk management have not materially changed from the discussion presented in the 2020 Form 10-K.
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Credit Risk
Credit risk is the risk of financial loss if a counterparty is not able to meet the agreed upon terms of the financial obligation. The majority of our credit risk is associated with lending activities, as the acceptance and management of credit risk is central to profitable lending. We also have credit risk associated with our investment securities portfolios (see Note 3 “Investment Securities and Other Securities” of the Notes to the Unaudited Condensed Consolidated Financial Statements). We engage with other financial counterparties for a variety of purposes including investing, asset and liability management, mortgage banking, and trading activities. A variety of derivative financial instruments, principally interest rate swaps, caps, floors, and collars, are used in asset and liability management activities to protect against the risk of adverse price or interest rate movements. We also use derivatives, principally loan sale commitments, in hedging our mortgage loan interest rate lock commitments and its mortgage loans held for sale. While there is credit risk associated with derivative activity, we believe this exposure is minimal.
We focus on the early identification, monitoring, and management of all aspects of our credit risk. In addition to the traditional credit risk mitigation strategies of credit policies and processes, market risk management activities, and portfolio diversification, we use quantitative measurement capabilities utilizing external data sources, enhanced modeling technology, and internal stress testing processes. Our ongoing expansion of portfolio management resources is central to our commitment to maintaining an aggregate moderate-to-low risk profile. In our efforts to identify risk mitigation techniques, we have focused on product design features, origination policies, and solutions for delinquent or stressed borrowers.
Over the course of 2020 and into 2021, we have assessed the impact of the COVID-19 pandemic on our loan portfolio, as we would with any natural disaster or significant economic decline. The longer term impact of our response is dependent upon a number of variables, including the prolonged impact of the COVID-19 pandemic and its impact on the economic recovery. Continued weakness in the labor market could lead to increased delinquencies and defaults in our consumer portfolio. Additionally, increased economic deterioration could lead to elevated default rates in our Commercial portfolio, especially for industries highly impacted by the COVID-19 pandemic.
The payment deferral program that Huntington initiated for its customers in March 2020 has largely ended, with less than 1% of the total deferrals remaining in place as of March 31, 2021. The remaining deferrals in the Consumer portfolio are in the Residential secured portfolio, consistent with the longer term payment deferral time frames available on those loans. For the few commercial borrowers requiring additional financial help, the expired deferrals were replaced with modified terms and conditions as we continue to work closely with our customers. The post deferral payment activity has been positive across both the Commercial and Consumer portfolios to date.
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Loan and Lease Credit Exposure Mix
Refer to the “Loan and Lease Credit Exposure Mix” section of our 2020 Form 10-K for a brief description of each portfolio segment.
The table below provides the composition of our total loan and lease portfolio: 
Table 6 - Loan and Lease Portfolio Composition
(dollar amounts in millions) March 31,
2021
December 31,
2020
September 30,
2020
June 30,
2020
March 31,
2020
Commercial:
Commercial and industrial
$ 34,464  43  % $ 35,373  43  % $ 34,895  43  % $ 34,879  44  % $ 32,959  42  %
Commercial real estate:
Construction
1,083  1,035  1,154  1,200  1,180 
Commercial
6,096  6,164  6,055  5,979  5,793 
Commercial real estate
7,179  7,199  7,209  7,179  6,973 
Total commercial
41,643  52  42,572  52  42,104  51  42,058  52  39,932  51 
Consumer:
Automobile
12,591  16  12,778  16  12,925  17  12,678  16  12,907  17 
Home equity
8,727  11  8,894  11  8,904  11  8,866  11  9,010  11 
Residential mortgage
12,092  15  12,141  15  12,031  15  11,621  15  11,398  15 
RV and marine
4,218  4,190  4,146  3,843  3,643 
Other consumer
959  1,033  1,046  1,073  1,145 
Total consumer
38,587  48  39,036  48  39,052  49  38,081  48  38,103  49 
Total loans and leases
$ 80,230  100  % $ 81,608  100  % $ 81,156  100  % $ 80,139  100  % $ 78,035  100  %
Our loan portfolio is a managed mix of consumer and commercial credits. At the corporate level, we manage the overall credit exposure and portfolio composition via a credit concentration policy. The policy designates specific loan types, collateral types, and loan structures to be formally tracked and assigned maximum exposure limits as a percentage of capital. C&I lending by NAICS categories, specific limits for CRE project types, loans secured by residential real estate, large dollar exposures, and designated high risk loan categories represent examples of specifically tracked components of our concentration management process. There are no identified concentrations that exceed the assigned exposure limit. Our concentration management policy is approved by the ROC of the Board of Directors and is used to ensure a high quality, well diversified portfolio that is consistent with our overall objective of maintaining an aggregate moderate-to-low risk profile. Changes to existing concentration limits, incorporating specific information relating to the potential impact on the overall portfolio composition and performance metrics, require the approval of the ROC prior to implementation.
Commercial Credit
Refer to the “Commercial Credit” section of our 2020 Form 10-K for our commercial credit underwriting and on-going credit management processes.
Consumer Credit
Refer to the “Consumer Credit” section of our 2020 Form 10-K for our consumer credit underwriting and on-going credit management processes.
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The table below provides our total loan and lease portfolio segregated by industry type. The changes in the industry composition from December 31, 2020 are consistent with the portfolio growth metrics.
Table 7 - Loan and Lease Portfolio by Industry Type
(dollar amounts in millions) March 31,
2021
December 31,
2020
September 30,
2020
June 30,
2020
March 31,
2020
Commercial loans and leases:
Real estate and rental and leasing $ 6,854  % $ 6,962  % $ 7,056  % $ 7,117  % $ 6,991  %
Manufacturing 5,523  5,556  5,658  6,147  5,846 
Retail trade (1) 4,694  5,111  4,922  5,053  5,886 
Health care and social assistance 3,672  3,646  3,566  3,534  2,815 
Finance and insurance 3,343  3,389  3,197  3,345  3,670 
Accommodation and food services 3,281  3,100  3,012  2,877  2,081 
Wholesale trade 2,545  2,652  2,529  2,352  2,555 
Professional, scientific, and technical services 1,972  2,051  2,086  2,177  1,615 
Other services 1,578  1,613  1,641  1,510  1,358 
Construction 1,412  1,389  1,425  1,492  962 
Transportation and warehousing 1,307  1,401  1,408  1,338  1,211 
Admin./Support/Waste Mgmt. and Remediation Services 949  975  932  916  693 
Information 793  829  817  759  728 
Utilities 754  793  647  573  629 
Arts, entertainment, and recreation 725  744  738  732  694 
Educational services 686  735  752  —  559  —  465  — 
Public administration 640  662  645  —  302  —  259  — 
Mining, quarrying, and oil and gas extraction 511  —  601  —  674  930  1,162 
Agriculture, forestry, fishing and hunting 139  —  157  —  158  —  140  —  141  — 
Management of companies and enterprises 123  —  144  —  132  —  115  —  104  — 
Unclassified/Other 142  —  62  —  109  —  90  —  67  — 
Total commercial loans and leases by industry category 41,643  52  42,572  52  42,104  51  42,058  52  39,932  51 
Automobile 12,591  16  12,778  16  12,925  17  12,678  16  12,907  17 
Home Equity 8,727  11  8,894  11  8,904  11  8,866  11  9,010  11 
Residential Mortgage 12,092  15  12,141  15  12,031  15  11,621  15  11,398  15 
RV and marine 4,218  4,190  4,146  3,843  3,643 
Other consumer loans 959  1,033  1,046  1,073  1,145 
Total loans and leases $ 80,230  100  % $ 81,608  100  % $ 81,156  100  % $ 80,139  100  % $ 78,035  100  %
(1)    Amounts include $2.0 billion, $2.4 billion, $2.2 billion, $2.8 billion and $4.0 billion of auto dealer services loans at March 31, 2021, December 31, 2020, September 30, 2020, June 30, 2020 and March 31, 2020, respectively.
Credit Quality
(This section should be read in conjunction with Note 4 “Loans / Leases” and Note 5Allowance for Credit Losses” of the Notes to Unaudited Condensed Consolidated Financial Statements.)
We believe the most meaningful way to assess overall credit quality performance is through an analysis of specific performance ratios. This approach forms the basis of the discussion in the sections immediately following: NPAs, NALs, TDRs, ACL, and NCOs. In addition, we utilize delinquency rates, risk distribution and migration patterns, product segmentation, and origination trends in the analysis of our credit quality performance.
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Credit quality performance in the 2021 first quarter reflected total NCOs as a percent of average loans, annualized, of 0.32%, an decrease from 0.55% in the prior quarter. Total NCOs were $64 million, a decrease of $48 million from the prior quarter, driven by a $41 million decrease in Commercial NCOs, and a $7 million decrease in Consumer NCOs. NPAs decreased from the prior quarter by $19 million or 3% driven by reductions in the commercial portfolio.
NPAs, NALs, AND TDRs
(This section should be read in conjunction with Note 4 “Loans / Leases” and Note 5Allowance for Credit Losses” of the Notes to Unaudited Condensed Consolidated Financial Statements and “Credit Quality” section of our 2020 Form 10-K.)
NPAs and NALs
Commercial loans are placed on nonaccrual status at 90-days past due, or earlier if repayment of principal and interest is in doubt. Of the $351 million of commercial related NALs at March 31, 2021, $241 million, or 69%, represented loans that were less than 30-days past due, demonstrating our continued commitment to proactive credit risk management.
The following table reflects period-end NALs and NPAs detail for each of the last five quarters:
Table 8 - Nonaccrual Loans and Leases and Nonperforming Assets
(dollar amounts in millions) March 31,
2021
December 31,
2020
September 30,
2020
June 30,
2020
March 31,
2020
Nonaccrual loans and leases (NALs):
Commercial and industrial
$ 343  $ 353  $ 388  $ 485  $ 396 
Commercial real estate
15  16  28  30 
Automobile
Home equity
71  70  71  59  58 
Residential mortgage
90  88  88  66  66 
RV and marine
Other consumer
—  —  —  —  — 
Total nonaccrual loans and leases
516  532  569  648  558 
Other real estate, net:
Residential
Commercial
—  — 
Total other real estate, net
10 
Other NPAs (1) 26  27  28  58  18 
Total nonperforming assets
$ 544  $ 563  $ 602  $ 713  $ 586 
Nonaccrual loans and leases as a % of total loans and leases
0.64  % 0.65  % 0.70  % 0.81  % 0.72  %
NPA ratio (2) 0.68  0.69  0.74  0.89  0.75 
(1)    Other nonperforming assets include certain impaired investment securities and/or nonaccrual loans held-for-sale.
(2)    Nonperforming assets divided by the sum of loans and leases, other real estate owned, and other NPAs.
2021 First Quarter versus 2020 Fourth Quarter.
Total NPAs decreased $19 million, or 3%, compared with December 31, 2020, driven by driven by reductions in C&I and CRE nonaccrual loans.
TDR Loans
(This section should be read in conjunction with Note 4 “Loans / Leases” of the Notes to Unaudited Condensed Consolidated Financial Statements and TDR Loans section of our 2020 Form 10-K.)
Over the past five quarters, the accruing component of the total TDR balance has been consistently over 75%, indicating there is no identified credit loss and the borrowers continue to make their monthly payments. As of March 31, 2021, over 81% of the $428 million of accruing TDRs secured by residential real estate (residential mortgage and home equity in Table 9) are current on their required payments, with over 55% of the accruing pool
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having had no delinquency in the past 12 months. There is limited migration from the accruing to nonaccruing components, and virtually all of the charge-offs come from the nonaccruing TDR balances.
The table below presents our accruing and nonaccruing TDRs at period-end for each of the past five quarters:
Table 9 - Accruing and Nonaccruing Troubled Debt Restructured Loans (1)
(dollar amounts in millions) March 31,
2021
December 31,
2020
September 30,
2020
June 30,
2020
March 31,
2020
TDRs—accruing:
Commercial and industrial $ 127  $ 193  $ 189  $ 192  $ 219 
Commercial real estate 32  33  34  35  37 
Automobile 51  50  53  52  42 
Home equity 179  187  199  209  219 
Residential mortgage 249  248  256  229  227 
RV and marine
Other consumer 10  10  11 
Total TDRs—accruing 653  726  747  733  758 
TDRs—nonaccruing:
Commercial and industrial 101  95  146  169  119 
Commercial real estate
Automobile
Home equity 30  30  29  26  25 
Residential mortgage 51  51  48  43  42 
RV and marine
Total TDRs—nonaccruing 188  182  229  244  194 
Total TDRs $ 841  $ 908  $ 976  $ 977  $ 952 

(1)Loan modifications under the CARES Act, as amended and interagency regulatory guidance are not considered TDRs.
Overall TDRs decreased in the quarter, primarily related to a decline in the C&I portfolio. Huntington continues to proactively work with our borrowing relationships that require assistance. The resulting loan structures enable our borrowers to meet their commitments and Huntington to retain earning assets. The accruing TDRs meet the well secured definition and have demonstrated a period of satisfactory payment performance.
ACL
(This section should be read in conjunction with Note 5 “Allowance for Credit Losses” of the Notes to Unaudited Condensed Consolidated Financial Statements.)
Our total credit reserve is comprised of two different components, both of which in our judgment are appropriate to absorb lifetime expected credit losses in our loan and lease portfolio: the ALLL and the AULC. Combined, these reserves comprise the total ACL.
The models used within our loan and lease portfolio incorporate historical loss experience, as well as current and future economic conditions over a reasonable and supportable period beyond the balance sheet date. We make various judgments combined with historical loss experience to generate a loss rate that is applied to the outstanding loan or receivable balance to produce a reserve for expected credit losses.
We use a combination of statistically-based models that utilize assumptions about current and future economic conditions throughout the contractual life of the loan. The process of estimating expected credit losses is based on several key parameters: Probability of Default (PD), Exposure at Default (EAD), and Loss Given Default (LGD). Beyond the reasonable and supportable period (two to three years), the economic variables revert to a historical equilibrium at a pace dependent on the state of the economy reflected within the economic scenario.
These three parameters, PD, EAD, and LGD are utilized to estimate the cumulative credit losses over the remaining expected life of the loan. We also consider the likelihood a previously charged-off account will be recovered. This calculation is dependent on how long ago the account was charged-off and future economic conditions, which estimate the likelihood and magnitude of recovery. Our models are developed using internal historical loss experience covering the full economic cycle and consider the impact of account characteristics on expected losses.
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Future economic conditions consider multiple macroeconomic scenarios provided to us by an independent third party and are reviewed through the appropriate committee governance channels discussed below. These macroeconomic scenarios contain certain geography based variables that are influential to our modeling process, the most significant being unemployment rates and Gross Domestic Product (GDP). The probability weights assigned to each scenario are generally expected to be consistent from period to period. Any changes in probability weights must be supported by appropriate documentation and approval of senior management. Additionally, we consider whether to adjust the modeled estimates to address possible limitations within the models or factors not captured within the macroeconomic scenarios. Lifetime losses for most of our loans and receivables are evaluated collectively based on similar risk characteristics, risk ratings, origination credit bureau scores, delinquency status, and remaining months within loan agreements, among other factors.
The macroeconomic scenarios evaluated by Huntington during the 2021 first quarter continued to reflect the impact of the COVID-19 pandemic. The baseline scenario used for the quarter assumes that the worst of the economic disruption from the pandemic has passed, with the expectation that subsequent waves of the virus will not carry the same level of economic disruption experienced to date. The unemployment variable is incorporated within our models as both a rate of change variable and an absolute level variable. Historically, changes in unemployment have taken gradual paths resulting in more measured impacts each quarter.
The table below is intended to show how the forecasted path of these key macroeconomic variables has changed since the end of 2020:
Table 10 - Forecasted Key Macroeconomic Variables
Baseline scenario forecast 2020 2021 2022
Q4 Q2 Q4 Q2 Q4
Unemployment rate (1)
4Q 2020 7.2  % 7.5  % 7.2  % 6.4  % 5.5  %
1Q 2021 N/A 6.3  5.7  5.0  4.5 
Gross Domestic Product (1)
4Q 2020 3.0  % 3.8  % 5.8  % 4.4  % 3.9  %
1Q 2021 N/A 5.2  5.8  5.3  3.5 
(1) Values reflect the baseline scenario forecast inputs for each period presented, not updated for subsequent actual amounts.
The uncertainty related to the COVID-19 pandemic prompted management to continue to assess the macroeconomic environment through the end of the quarter. Management considered multiple macroeconomic forecasts that reflected a range of possible outcomes in order to capture the severity of and the economic disruption associated with the pandemic. While we have incorporated our estimated impact of COVID-19 into our allowance for credit losses (“ACL”), the ultimate impact of COVID-19 is still uncertain, including how long economic activities will be impacted and what effect the unprecedented levels of government fiscal and monetary actions will have on the economy and our credit losses.
Given significant COVID-19 specific government relief programs and additional stimulus spending enacted into law during the first quarter, as well as certain limitations of our models in the current economic environment particularly the level of unemployment, management developed additional analytics to support adjustments to our modeled results. The Bank’s governance committees reviewed model results of each economic scenario for appropriate usage, concluding that the quantitative transactional reserve (collectively assessed) will continue to utilize the scenario weighting approach established in prior quarters. Given the impact of the unemployment variable utilized within the models and the uncertainty associated with key economic scenario assumptions, the March 31, 2021 ACL included a material general reserve component as well as additional industry specific risk profiles to capture economic uncertainty not addressed within the quantitative transaction reserve.
Our ACL methodology committee is responsible for developing the methodology, assumptions and estimates used in the calculation, as well as determining the appropriateness of the ACL. The ALLL represents the estimate of lifetime expected losses in the loan and lease portfolio at the reported date. The loss modeling process uses an EAD concept to calculate total expected losses on both funded balances and unfunded commitments, where appropriate.
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Losses related to the unfunded commitments are then recorded as AULC within other liabilities in the Unaudited Condensed Consolidated Balance Sheet. A liability for expected credit losses for off-balance sheet credit exposures is recognized if Huntington has a present contractual obligation to extend the credit and the obligation is not unconditionally cancelable.
The table below reflects the allocation of our ALLL among our various loan categories during each of the past five quarters: 
Table 11 - Allocation of Allowance for Credit Losses (1)
(dollar amounts in millions) March 31,
2021
December 31,
2020
September 30,
2020
June 30,
2020
March 31,
2020
ALLL
Commercial
Commercial and industrial $ 865  43  % $ 939  43  % $ 912  43  % $ 923  44  % $ 837  42  %
Commercial real estate 332  297  351  246  159 
Total commercial 1,197  52  1,236  52  1,263  51  1,169  52  996  51 
Consumer
Automobile 156  16  166  16  163  17  177  16  148  17 
Home equity 90  11  124  11  103  11  105  11  120  11 
Residential mortgage 73  15  79  15  69  15  44  15  53  15 
RV and marine 114  129  116  125  97 
Other consumer 73  80  82  82  90 
Total consumer 506  48  578  48  533  49  533  48  508  49 
Total ALLL 1,703  100  % 1,814  100  % 1,796  100  % 1,702  100  % 1,504  100  %
AULC 38  52  82  119  99 
Total ACL $ 1,741  $ 1,866  $ 1,878  $ 1,821  $ 1,603 
Total ALLL as a % of
Total loans and leases 2.12% 2.22% 2.21% 2.12% 1.93%
Nonaccrual loans and leases 330 341 316 263 270
NPAs 313 323 298 239 257
Total ACL as % of
Total loans and leases 2.17% 2.29% 2.31% 2.27% 2.06%
Nonaccrual loans and leases 338 351 330 281 287
NPAs 320 332 311 255 273
(1)Percentages represent the percentage of each loan and lease category to total loans and leases.
2021 First Quarter versus 2020 Fourth Quarter
At March 31, 2021, the ALLL was $1.7 billion, a decrease of $111 million compared to the December 31, 2020 balance of $1.8 billion. The ALLL to total loans and leases ratio decreased 10 basis points to 2.12%
The ACL to total loans ratio was 2.17% at March 31, 2021 compared to 2.29% at December 31, 2020. The decrease was primarily related to a reduction in credit reserves reflecting an improvement in the economic outlook.
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NCOs
Table 12 - Quarterly Net Charge-off Analysis
Three Months Ended
March 31, December 31, March 31,
(dollar amounts in millions) 2021 2020 2020
Net charge-offs (recoveries) by loan and lease type:
Commercial:
Commercial and industrial
$ 52  $ 58  $ 84 
Commercial real estate:
Construction
—  —  — 
Commercial
(3) 32  (1)
Commercial real estate
(3) 32  (1)
Total commercial
49  90  83 
Consumer:
Automobile
Home equity
— 
Residential mortgage
— 
RV and marine
Other consumer
10  12  19 
Total consumer
15  22  34 
Total net charge-offs
$ 64  $ 112  $ 117 
Net charge-offs (recoveries) - annualized percentages:
Commercial:
Commercial and industrial
0.60  % 0.67  % 1.09  %
Commercial real estate:
Construction
(0.04) (0.04) 0.08 
Commercial
(0.17) 2.14  (0.06)
Commercial real estate
(0.15) 1.81  (0.03)
Total commercial
0.47  0.86  0.89 
Consumer:
Automobile
0.05  0.21  0.22 
Home equity
0.02  0.01  0.19 
Residential mortgage
0.01  0.05  0.02 
RV and marine
0.29  0.21  0.27 
Other consumer
3.99  4.35  6.45 
Total consumer
0.16  0.22  0.35 
Net charge-offs as a % of average loans
0.32  % 0.55  % 0.62  %

2021 First Quarter versus 2020 Fourth Quarter
NCOs were an annualized 0.32% of average loans and leases in the current quarter, decreasing from 0.55% in the 2020 fourth quarter, and below our average through-the-cycle target range of 0.35% - 0.55%. Annualized NCOs for the commercial portfolios were 0.47% in the current quarter compared to 0.86% in the 2020 fourth quarter. Consumer charge-offs were lower for the quarter, across the consumer portfolio, consistent with our expectations.
Market Risk
(This section should be read in conjunction with the “Market Risk” section of our 2020 Form 10-K for our on-going market risk management processes.)
Market risk refers to potential losses arising from changes in interest rates, foreign exchange rates, equity prices and commodity prices, including the correlation among these factors and their volatility. When the value of an instrument is tied to such external factors, the holder faces market risk. We are primarily exposed to interest rate risk as a result of offering a wide array of financial products to our customers and secondarily to price risk from trading securities, securities owned by our broker-dealer subsidiaries, foreign exchange positions, equity
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investments, and investments in securities backed by mortgage loans.
Huntington measures market risk exposure via financial simulation models, which provide management with insights on the potential impact to net interest income and other key metrics as a result of changes in market interest rates. Models are used to simulate cash flows and accrual characteristics of the balance sheet based on assumptions regarding the slope or shape of the yield curve, the direction and volatility of interest rates, and the changing composition and characteristics of the balance sheet resulting from strategic objectives and customer behavior. Assumptions and models provide insight on forecasted balance sheet growth and composition, and the pricing and maturity characteristics of current and future business.
In measuring the financial risks associated with interest rate sensitivity in Huntington’s balance sheet, Huntington compares a set of alternative interest rate scenarios to the results of a base case scenario derived using market forward rates. The market forward reflects the market consensus regarding the future level and slope of the yield curve across a range of tenor points. The standard set of interest rate scenarios includes two types: “shock” scenarios which are instantaneous parallel rate shifts, and “ramp” scenarios where the parallel shift is applied gradually over the first 12 months of the forecast on a pro rata basis. In both shock and ramp scenarios with falling rates, Huntington presumes that market rates cannot go below 0%. The forecasted scenarios are inclusive of realized income of interest rate risk hedging activities. Forward starting hedges are included to the extent that they have been transacted and that they start within the measurement horizon.
Table 14 - Net Interest Income at Risk
  Net Interest Income at Risk (%)
Basis point change scenario -25 +100 +200
Board policy limits -1.3  % -2.0  % -4.0  %
March 31, 2021 -0.6  3.0  6.6 
December 31, 2020 -1.1  3.4  7.3 
The NII at Risk results included in the table above reflect the analysis used monthly by management. It models gradual (“ramp” as defined above) +100 and +200 basis point parallel shifts in market interest rates, implied by the forward yield curve over the next twelve months as well as an instantaneous parallel shock of -25 basis points.
Our NII at Risk is within our Board of Directors’ policy limits for the -25, +100 and +200 basis point scenarios. The NII at Risk shows that our balance sheet is asset sensitive at both March 31, 2021, and December 31, 2020. The change in sensitivity is primarily driven by changes in market rate expectations, and the size and mix of the balance sheet.
Table 15 - Economic Value of Equity at Risk
  Economic Value of Equity at Risk (%)
Basis point change scenario -25 +100 +200
Board policy limits -1.5  % -6.0  % -12.0  %
March 31, 2021 —  -1.3  -4.4 
December 31, 2020 -0.7  1.4  -0.1 
The EVE results included in the table above reflect the analysis used monthly by management. It models immediate -25, +100 and +200 basis point parallel shifts (“shocks” as defined above) in market interest rates.
We are within our Board of Directors’ policy limits for the -25, +100 and +200 basis point scenarios. As of March 31st, EVE depicts a liability sensitive (long duration) balance sheet profile. The change in sensitivity from December 31st 2020’s asset sensitive (short duration) position was driven primarily by changes in the spot market rate curve impacting forecasted runoff expectations, and the size and shape of the balance sheet.
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Use of Derivatives to Manage Interest Rate Risk
An integral component of our interest rate risk management strategy is use of derivative instruments to minimize significant fluctuations in earnings caused by changes in market interest rates. Examples of derivative instruments that we may use as part of our interest rate risk management strategy include interest rate swaps, caps and floors, forward contracts, and forward starting interest rate swaps.
Table 16 shows all swap, floor and cap positions that are utilized for purposes of managing our exposures to the variability of interest rates. The interest rates variability may impact either the fair value of the assets and liabilities or impact the cash flows attributable to net interest margin. These positions are used to protect the fair value of asset and liabilities by converting the contractual interest rate on a specified amount of assets and liabilities (i.e., notional amounts) to another interest rate index. The positions are also used to hedge the variability in cash flows attributable to the contractually specified interest rate by converting the variable rate index into a fixed rate. The volume, maturity and mix of derivative positions change frequently as we adjust our broader interest rate risk management objectives and the balance sheet positions to be hedged. For further information, including the notional amount and fair values of these derivatives, refer to Note 12 “Derivative Financial Instruments” of the Notes to Unaudited Condensed Consolidated Financial Statements.
The following table presents additional information about the interest rate swaps, caps and floors used in Huntington’s asset and liability management activities at March 31, 2021 and December 31, 2020.
Table 16 - Weighted-Average Maturity, Receive Rate and LIBOR Reset Rate on Asset Liability Management Instruments
March 31, 2021
 Average Maturity (years)
Weighted-Average
Fixed Rate
Weighted-Average
LIBOR Reset Rate
(dollar amounts in millions) Notional Value Fair Value
Asset conversion swaps
Receive Fixed - Pay 1 month LIBOR $ 6,525  1.78  $ 219  1.81  % 0.11  %
Pay Fixed - Receive 1 month LIBOR (1) 2,957  2.48  38  0.22  0.11 
Receive Fixed - Pay 1 month LIBOR - forward starting (2) 750  3.04  18  1.24  — 
Pay Fixed - Receive 1 month LIBOR - forward starting (3) 233  9.35  1.12 
Liability conversion swaps
Receive Fixed - Pay 1 month LIBOR 5,397  1.77  217  2.28  0.11 
Basis Swaps
Pay SOFR- Receive Fed Fund (economic hedges) (4) 230  4.41  —  0.07  0.02 
Pay Fed Fund - Receive SOFR (economic hedges) (4) 41  1.73  —  0.01  0.07 
Total swap portfolio $ 16,133  $ 501 
March 31, 2021
 Average Maturity (years) Weighted-Average Strike
Weighted-Average
LIBOR Reset Rate
(dollar amounts in millions) Notional Value Fair Value
Interest rate floors
Purchased Interest Rate Floors - 1 month LIBOR $ 6,175  0.15  $ 28  1.76  % 0.11  %
Purchased Floor Spread - 1 month LIBOR 525  1.57  2.50 / 1.50 0.11 
Purchased Floor Spread - 1 month LIBOR forward starting (5) 2,375  3.56  59  1.56 / 0.65 — 
Purchased Floor Spread - 1 month LIBOR (economic hedges) 1,000  2.04  16  1.75 / 1.00 0.11 
Interest rate caps
Purchased Cap - 1 month LIBOR (economic hedges) 5,000  6.66  244  0.98  0.11 
Written Cap - 1 month LIBOR (economic hedges) 1,500  6.58  (25) 2.94  0.11 
Written Cap - 1 month LIBOR forward starting (economic hedges) (2) 1,500  6.59  (24) 3.00  — 
Total floors and caps portfolio $ 18,075  $ 306 
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December 31, 2020
 Average Maturity (years)
Weighted-Average
Fixed Rate
Weighted-Average
LIBOR Reset Rate
(dollar amounts in millions) Notional Value Fair Value
Asset conversion swaps
Receive Fixed - Pay 1 month LIBOR $ 6,525  2.03  $ 231  1.81  % 0.15  %
Pay Fixed - Receive 1 month LIBOR (1) 3,076  1.99  0.17  0.15 
Receive Fixed - Pay 1 month LIBOR - forward starting (2) 750  3.29  23  1.24  — 
Pay Fixed - Receive 1 month LIBOR - forward starting (6) 408  9.08  0.68  — 
Liability conversion swaps
Receive Fixed - Pay 1 month LIBOR 5,397  2.02  262  2.28  0.15 
Receive Fixed - Pay 3 month LIBOR 800  0.21  1.31  0.22 
Basis Swaps
Pay SOFR- Receive Fed Fund (economic hedges) (4) 230  4.66  —  0.09  0.10 
Pay Fed Fund - Receive SOFR (economic hedges) (4) 41  1.98  —  0.09  0.09 
Total swap portfolio $ 17,227  $ 526 
December 31, 2020
 Average Maturity (years)
Weighted-Average
Floor Strike
Weighted-Average
LIBOR Reset Rate
(dollar amounts in millions) Notional Value Fair Value
Interest rate floors
Purchased Interest Rate Floors - 1 month LIBOR $ 7,200  0.37  $ 59  1.81  % 0.15  %
Purchased Floor Spread - 1 month LIBOR 400  1.74   2.50 / 1.50 0.15 
Purchased Floor Spread - 1 month LIBOR forward starting (7) 2,500  3.72  76   1.65 / 0.70 — 
Purchased Floor Spread - 1 month LIBOR (economic hedges) 1,000  2.29 18   1.75 / 1.00 0.16 
Interest rate caps
Purchased Cap - 1 month LIBOR (economic hedges) 5,000  6.91 91  0.98  0.15 
Total floors and caps portfolio $ 16,100  $ 251 
(1)Amounts include interest rate swaps as fair value hedges of fixed-rate investment securities using the last-of-layer method.
(2)Forward starting swaps and caps effective starting in April 2021.
(3)Forward starting swaps effective starting from April 2021 to May 2021.
(4)Swaps have variable pay and variable receive resets. Weighted Average Fixed Rate column represents pay rate reset.
(5)Forward starting floor spreads become effective starting from April 2021 to June 2021.
(6)Forward starting swaps become effective starting from January 2021 to May 2021.
(7)Forward starting floors become effective starting from March 2021 to June 2021.
During the fourth quarter of 2020, we purchased (long) $5.0 billion notional of interest rate caps with an average strike price of 98 basis points to reduce the impact on capital from rising rates and designated them as economic hedges of interest rate risk attributable to our long-term debt. Subsequently, in the first quarter of 2021, we entered into an incremental $3.0 billion notional of written (short) interest rates caps with an average strike price of 297 basis points and created a collar-like position for hedging our interest rate risk.
Net interest income in the current quarter included a $144 million mark-to-market of interest rate caps (including caps written in the first quarter of 2021). The mark-to-market is not included in the NII at Risk calculations above. As these positions are marked-to-market through net interest income each quarter, we expect impact in our reported net interest margin. However, the partial collar-like position that was created by selling the interest caps is expected to dampen those impacts.
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MSRs
(This section should be read in conjunction with Note 6 “Mortgage Loan Sales and Servicing Rights” of Notes to the Unaudited Condensed Consolidated Financial Statements.)
At March 31, 2021, we had a total of $274 million of capitalized MSRs representing the right to service $24 billion in mortgage loans.
MSR fair values are sensitive to movements in interest rates as expected future net servicing income depends on the projected outstanding principal balances of the underlying loans, which can be reduced by prepayments. Prepayments usually increase when mortgage interest rates decline and decrease when mortgage interest rates rise. We also employ hedging strategies to reduce the risk of MSR fair value changes or impairment. However, volatile changes in interest rates can diminish the effectiveness of these economic hedges. We report changes in the MSR value net of hedge-related trading activity in the mortgage banking income category of noninterest income.
MSR assets are included in servicing rights and other intangible assets in the Unaudited Condensed Consolidated Financial Statements.
Price Risk
Price risk represents the risk of loss arising from adverse movements in the prices of financial instruments that are carried at fair value and are subject to fair value accounting. We have price risk from trading securities, securities owned by our broker-dealer subsidiaries, foreign exchange positions, derivative instruments, and equity investments. We have established loss limits on the trading portfolio, on the amount of foreign exchange exposure that can be maintained, and on the amount of marketable equity securities that can be held.
Liquidity Risk
(This section should be read in conjunction with the “Liquidity Risk” section of our 2020 Form 10-K for our on-going liquidity risk management processes.)
Our primary source of liquidity is our core deposit base. Core deposits comprised approximately 97% of total deposits at March 31, 2021. We also have available unused wholesale sources of liquidity, including advances from the FHLB, issuance through dealers in the capital markets, and access to certificates of deposit issued through brokers. Liquidity is further provided by unencumbered, or unpledged, investment securities that totaled $13.4 billion as of March 31, 2021.
Bank Liquidity and Sources of Funding
Our primary sources of funding for the Bank are retail and commercial core deposits. At March 31, 2021, these core deposits funded 79% of total assets (124% of total loans). Other sources of liquidity include non-core deposits, FHLB advances, wholesale debt instruments, and securitizations. Demand deposit overdrafts that have been reclassified as loan balances were $16 million and $14 million at March 31, 2021 and December 31, 2020, respectively.
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The following table reflects deposit composition detail for each of the last five quarters:
Table 17 - Deposit Composition
March 31, December 31, September 30, June 30, March 31,
(dollar amounts in millions) 2021 2020 2020 2020 2020
By Type:
Demand deposits—noninterest-bearing $ 31,226  30  % $ 28,553  29  % $ 27,466  29  % $ 27,574  29  % $ 21,039  24  %
Demand deposits—interest-bearing 27,493  27  26,757  27  24,242  25  22,961  25  23,115  27 
Money market deposits 26,268  26  26,248  27  26,230  28  25,312  27  25,068  29 
Savings and other domestic deposits 13,115  13  11,722  12  11,268  12  11,034  12  9,845  11 
Core certificates of deposit (1) 1,329  1,425  1,586  2,478  3,599 
Total core deposits: 99,431  97  94,705  96  90,792  96  89,359  96  82,666  95 
Other domestic deposits of $250,000 or more 105  —  131  —  156  —  209  —  276  — 
Brokered deposits and negotiable CDs 2,648  4,112  4,206  4,123  3,888 
Total deposits $ 102,184  100  % $ 98,948  100  % $ 95,154  100  % $ 93,691  100  % $ 86,830  100  %
Total core deposits:
Commercial $ 46,539  47  % $ 44,698  47  % $ 43,018  47  % $ 41,630  47  % $ 38,064  46  %
Consumer 52,892  53  50,007  53  47,774  53  47,729  53  44,602  54 
Total core deposits $ 99,431  100  % $ 94,705  100  % $ 90,792  100  % $ 89,359  100  % $ 82,666  100  %
(1)    Includes consumer certificates of deposit of $250,000 or more.
The Bank maintains borrowing capacity at the FHLB and the Federal Reserve Bank Discount Window. The Bank does not consider borrowing capacity from the Federal Reserve Bank Discount Window as a primary source of liquidity. Total loans and securities pledged to the Federal Reserve Bank Discount Window and the FHLB are $48.2 billion and $53.4 billion at March 31, 2021 and December 31, 2020, respectively.
At March 31, 2021, the market value of investment securities pledged to secure public and trust deposits, trading account liabilities, U.S. Treasury demand notes, and security repurchase agreements totaled $4.8 billion. There were no securities of a single issuer, which are not governmental or government-sponsored, that exceeded 10% of shareholders’ equity at March 31, 2021.
To the extent we are unable to obtain sufficient liquidity through core deposits, we may meet our liquidity needs through sources of wholesale funding, asset securitization or sale. Sources of wholesale funding include other domestic deposits of $250,000 or more, brokered deposits and negotiable CDs, short-term borrowings, and long-term debt. At March 31, 2021, total wholesale funding was $10.2 billion, a decrease from $12.8 billion at December 31, 2020. The decrease from year-end is due to a decrease in brokered deposits and negotiable CD and long-term debt.
At March 31, 2021, we believe the Bank has sufficient liquidity to meet its cash flow obligations for the foreseeable future.
Parent Company Liquidity
The parent company’s funding requirements consist primarily of dividends to shareholders, debt service, income taxes, operating expenses, funding of nonbank subsidiaries, repurchases of our stock, and acquisitions. The parent company obtains funding to meet obligations from dividends and interest received from the Bank, interest and dividends received from direct subsidiaries, net taxes collected from subsidiaries included in the federal consolidated tax return, fees for services provided to subsidiaries, and the issuance of debt securities.
During the 2021 first quarter, Huntington issued $500 million of Series H Preferred Stock. See Note 8 “Shareholders’ Equity” and Note 14 of our 2020 Form 10-K for further information.
At March 31, 2021 and December 31, 2020, the parent company had $4.1 billion and $4.4 billion, respectively, in cash and cash equivalents.
On April 21, 2021, the Board of Directors declared a quarterly common stock cash dividend of $0.15 per common share. The dividend is payable on July 1, 2021, to shareholders of record on June 17, 2021. Based on the
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current quarterly dividend of $0.15 per common share, cash demands required for common stock dividends are estimated to be approximately $153 million per quarter. On April 21, 2021, the Board of Directors also declared a quarterly Series B, Series C, Series D, Series E, Series F, Series G and Series H Preferred Stock dividend payable on July 15, 2021 to shareholders of record on July 1, 2021. Total cash demands required for Series B, Series C, Series D, Series E, Series F, Series G and Series H are expected to be approximately $37 million per quarter.
During the first three months of 2021, the Bank paid preferred and common dividends of $11 million and $0.3 billion, respectively. To meet any additional liquidity needs, the parent company may issue debt or equity securities from time to time.
Off-Balance Sheet Arrangements
In the normal course of business, we enter into various off-balance sheet arrangements. These arrangements include commitments to extend credit, interest rate swaps, floors and caps, financial guarantees contained in standby letters-of-credit issued by the Bank, and commitments by the Bank to sell mortgage loans.
Operational Risk
Operational risk is the risk of loss due to human error, third-party performance failures, inadequate or failed internal systems and controls, including the use of financial or other quantitative methodologies that may not adequately predict future results; violations of, or noncompliance with, laws, rules, regulations, prescribed practices, or ethical standards; and external influences such as market conditions, fraudulent activities, disasters, failed business contingency plans and security risks. We continuously strive to strengthen our system of internal controls to ensure compliance with significant contracts, agreements, laws, rules, and regulations, and to improve the oversight of our operational risk.
We actively monitor cyberattacks such as attempts related to online deception and loss of sensitive customer data. We evaluate internal systems, processes and controls to mitigate loss from cyber-attacks and, to date, have not experienced any material losses. Cybersecurity threats have increased, primarily through COVID-19 themed phishing campaigns.  We are actively monitoring our email gateways for malicious phishing email campaigns.  We have also increased our cybersecurity and fraud monitoring activities through the implementation of specific monitoring of remote connections by geography and volume of connections to detect anomalous remote logins, since a significant portion of our workforce is now working remotely. 
Our objective for managing cyber security risk is to avoid or minimize the impacts of external threat events or other efforts to penetrate our systems. We work to achieve this objective by hardening networks and systems against attack, and by diligently managing visibility and monitoring controls within our data and communications environment to recognize events and respond before the attacker has the opportunity to plan and execute on its own goals. To this end we employ a set of defense in-depth strategies, which include efforts to make us less attractive as a target and less vulnerable to threats, while investing in threat analytic capabilities for rapid detection and response. Potential concerns related to cyber security may be escalated to our board-level Technology Committee, as appropriate. As a complement to the overall cyber security risk management, we use a number of internal training methods, both formally through mandatory courses and informally through written communications and other updates. Internal policies and procedures have been implemented to encourage the reporting of potential phishing attacks or other security risks. We also use third-party services to test the effectiveness of our cyber security risk management framework, and any such third parties are required to comply with our policies regarding information security and confidentiality.
To mitigate operational risks, we have an Operational Risk Committee, a Legal, Regulatory, and Compliance Committee, a Funds Movement Committee, and a Third Party Risk Management Committee. The responsibilities of these committees, among other duties, include establishing and maintaining management information systems to monitor material risks and to identify potential concerns, risks, or trends that may have a significant impact and ensuring that recommendations are developed to address the identified issues. In addition, we have a Model Risk Oversight Committee that is responsible for policies and procedures describing how model risk is evaluated and managed and the application of the governance process to implement these practices throughout the enterprise. These committees report any significant findings and remediation recommendations to the Risk Management Committee. Potential concerns may be escalated to our ROC and the Audit Committee, as appropriate. Significant findings or issues are escalated by the Third Party Risk Management Committee to the Technology Committee of the
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Board, as appropriate. A separate Board Committee on Conversions and Integration is in place to monitor the activities, risks and progress of the TCF merger.
The goal of this framework is to implement effective operational risk monitoring techniques and strategies; minimize operational, fraud, and legal losses; minimize the impact of inadequately designed models and enhance our overall performance.
Compliance Risk
Financial institutions are subject to many laws, rules, and regulations at both the federal and state levels. These broad-based laws, rules, and regulations include, but are not limited to, expectations relating to anti-money laundering, lending limits, client privacy, fair lending, prohibitions against unfair, deceptive or abusive acts or practices, protections for military members as they enter active duty, and community reinvestment. The volume and complexity of recent regulatory changes have increased our overall compliance risk. As such, we utilize various resources to help ensure expectations are met, including a team of compliance experts dedicated to ensuring our conformance with all applicable laws, rules, and regulations. Our colleagues receive training for several broad-based laws and regulations including, but not limited to, anti-money laundering and customer privacy. Additionally, colleagues engaged in lending activities receive training for laws and regulations related to flood disaster protection, equal credit opportunity, fair lending, and/or other courses related to the extension of credit. We set a high standard of expectation for adherence to compliance management and seek to continuously enhance our performance.
Capital
Both regulatory capital and shareholders’ equity are managed at the Bank and on a consolidated basis. We have an active program for managing capital and maintain a comprehensive process for assessing the Company’s overall capital adequacy. We believe our current levels of both regulatory capital and shareholders’ equity are adequate.
The following table presents certain regulatory capital data at both the consolidated and Bank levels for each of the periods presented:
Table 18 - Regulatory Capital Data (1)
    Basel III
(dollar amounts in millions)   March 31, 2021 December 31, 2020 March 31, 2020
Total risk-weighted assets Consolidated $ 89,494  $ 88,878  $ 90,193 
Bank 89,140  88,601  90,016 
CET I risk-based capital Consolidated 9,240  8,887  8,538 
Bank 9,667  9,438  9,887 
Tier 1 risk-based capital Consolidated 11,920  11,083  9,746 
Bank 10,831  10,601  10,760 
Tier 2 risk-based capital Consolidated 1,729  1,774  1,746 
Bank 1,436  1,431  1,481 
Total risk-based capital Consolidated 13,649  12,856  11,492 
Bank 12,267  12,032  12,241 
CET I risk-based capital ratio Consolidated 10.32  % 10.00  % 9.47  %
Bank 10.85  10.65  10.98 
Tier 1 risk-based capital ratio Consolidated 13.32  12.47  10.81 
Bank 12.15  11.97  11.95 
Total risk-based capital ratio Consolidated 15.25  14.46  12.74 
Bank 13.76  13.58  13.60 
Tier 1 leverage ratio Consolidated 9.85  9.32  9.01 
Bank 8.98  8.94  9.98 
(1)    Capital ratios reflect Huntington's election of a five-year transition to delay for two years the full impact of CECL on regulatory capital, followed by a three-year transition period.
At March 31, 2021, we maintained Basel III capital ratios in excess of the well-capitalized standards established by the FRB. The increase in capital ratios was driven by earnings, adjusted for the CECL transition, offset by the repurchase of $5 million of common stock over the last four quarters (all during 2020 fourth quarter) and cash
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dividends. The balance sheet growth impact on regulatory capital ratios was largely offset by a change in asset mix during 2020 related to PPP loans and elevated deposits at the Federal Reserve Bank (both of which are 0% risk weighted). The year-over-year change in regulatory Tier 1 risk-based capital and total risk-based capital ratios also reflect the issuance of $500 million of Series F preferred stock, $500 million of Series G preferred stock and $500 million of Series H preferred stock in the 2020 second quarter, 2020 third quarter and 2021 first quarter, respectively.
Shareholders’ Equity
We generate shareholders’ equity primarily through the retention of earnings, net of dividends and share repurchases. Other potential sources of shareholders’ equity include issuances of common and preferred stock. Our objective is to maintain capital at an amount commensurate with our risk profile and risk tolerance objectives, to meet both regulatory and market expectations, and to provide the flexibility needed for future growth and business opportunities.
Shareholders’ equity totaled $13.6 billion at March 31, 2021, an increase of $0.6 billion or 5% when compared with December 31, 2020.
On February 2, 2021, Huntington issued $500 million of preferred stock. Huntington issued 20,000,000 depositary shares, each representing a 1/40th ownership interest in a share of 4.50% Series H Non-Cumulative Perpetual Preferred Stock (Preferred H Stock), par value $0.01 per share, with a liquidation preference of $1,000 per share (equivalent to $25 per depositary share).
On June 25, 2020, we were notified by the FRB that that certain large BHCs, including Huntington, were required to update and resubmit their capital plans because changes in financial markets and the macroeconomic outlook that could have a material impact on the BHC’s risk profile and financial condition required the use of updated scenarios. On December 18, 2020, we were notified by the FRB that under both of the severely adverse and the alternative severely adverse economic stress scenarios in the supervisory stress tests, our modeled capital ratios would continue to exceed the minimum requirements under the FRB's capital adequacy rules. In addition, the FRB also announced that certain large BHCs, including Huntington, will be permitted to make both dividend and share repurchases during the first quarter of 2021, subject to limits based on the amount of dividends paid in the second quarter of 2020 and the Bank's average net income for the four preceding quarters and that the FRB was extending through March 31, 2021, the time period for the FRB to notify certain large BHCs, including Huntington, whether the FRB will recalculate a large BHC’s stress capital buffer.
On March 25, 2021, we were notified by the FRB that certain large BHCs, including Huntington, would continue to be permitted to make both dividend and share repurchases during the second quarter of 2021, subject to limits based on the amount of dividends paid in the second quarter of 2020 and the Bank's average net income for the four preceding quarters. Our second quarter dividend that was declared by the Board of Directors on April 22, 2021 complies with these limits. In addition, the FRB announced that it was extending, through June 30, 2021, the time period for the FRB to notify certain large BHCs including Huntington, whether the FRB will recalculate a large BHCs stress capital buffer.
While the FRB reserves the authority to revoke or amend the amount of the distributions, or to further extend the restrictions on second quarter capital distributions to future quarters, the FRB announced, on March 25, 2021, that for a bank, such as Huntington, that is not subject to the supervisory stress test in 2021 and on a two-year supervisory stress testing cycle, the restrictions on capital distributions will end after June 30, 2021 and the Bank’s SCB requirements based on the June 2020 stress test will remain in place.
Dividends
We consider disciplined capital management as a key objective, with dividends representing one component. Our strong capital ratios position us to take advantage of additional capital management opportunities.
Share Repurchases
From time to time the Board of Directors authorizes the Company to repurchase shares of our common stock. Although we announce when the Board of Directors authorizes share repurchases, we typically do not give any public notice before we repurchase our shares. Future stock repurchases may be private or open-market
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repurchases, including block transactions, accelerated or delayed block transactions, forward transactions, and similar transactions. Various factors determine the amount and timing of our share repurchases, including our capital requirements, the number of shares we expect to issue for employee benefit plans and acquisitions, market conditions (including the trading price of our stock), and regulatory and legal considerations.

BUSINESS SEGMENT DISCUSSION
Overview
Our business segments are based on our internally-aligned segment leadership structure, which is how we monitor results and assess performance. We have four major business segments: Consumer and Business Banking, Commercial Banking, Vehicle Finance, and Regional Banking and The Huntington Private Client Group (RBHPCG). The Treasury / Other function includes technology and operations, other unallocated assets, liabilities, revenue, and expense.
Business segment results are determined based upon our management practices, which assigns balance sheet and income statement items to each of the business segments. The process is designed around our organizational and management structure and, accordingly, the results derived are not necessarily comparable with similar information published by other financial institutions.
Revenue Sharing
Revenue is recorded in the business segment responsible for the related product or service. Fee sharing is recorded to allocate portions of such revenue to other business segments involved in selling to or providing service to customers. Results of operations for the business segments reflect these fee sharing allocations.
Expense Allocation
The management process that develops the business segment reporting utilizes various estimates and allocation methodologies to measure the performance of the business segments. Expenses are allocated to business segments using a two-phase approach. The first phase consists of measuring and assigning unit costs (activity-based costs) to activities related to product origination and servicing. These activity-based costs are then extended, based on volumes, with the resulting amount allocated to business segments that own the related products. The second phase consists of the allocation of overhead costs to all four business segments from Treasury / Other. We utilize a full-allocation methodology, where all Treasury / Other expenses, except reported Significant Items, if any, and a small amount of other residual unallocated expenses, are allocated to the four business segments.
Funds Transfer Pricing (FTP)
We use an active and centralized FTP methodology to attribute appropriate net interest income to the business segments. The intent of the FTP methodology is to transfer interest rate risk from the business segments by providing matched duration funding of assets and liabilities. The result is to centralize the financial impact, management, and reporting of interest rate risk in the Treasury / Other function where it can be centrally monitored and managed. The Treasury / Other function charges (credits) an internal cost of funds for assets held in (or pays for funding provided by) each business segment. The FTP rate is based on prevailing market interest rates for comparable duration assets (or liabilities).
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Net Income by Business Segment
Net income by business segment for the past three-month periods ending March 31, 2021 and March 31, 2020 is presented in the following table:
Table 19 - Net Income by Business Segment
  Three Months Ended March 31,
(dollar amounts in millions) 2021 2020
Consumer and Business Banking $ 111  $ 60 
Commercial Banking 118  (86)
Vehicle Finance 76  11 
RBHPCG 25  24 
Treasury / Other 202  39 
Net income $ 532  $ 48 
Treasury / Other
The Treasury / Other function includes revenue and expense related to assets, liabilities, derivatives (including the mark-to-market of interest rate caps) , and equity not directly assigned or allocated to one of the four business segments. Assets include investment securities and bank owned life insurance.
Net interest income includes the impact of administering our investment securities portfolios, the net impact of derivatives used to hedge interest rate sensitivity as well as the financial impact associated with our FTP methodology, as described above. Noninterest income includes miscellaneous fee income not allocated to other business segments, such as bank owned life insurance income and securities and trading asset gains or losses. Noninterest expense includes certain corporate administrative, and other miscellaneous expenses not allocated to other business segments. The provision for income taxes for the business segments is calculated at a statutory 21% tax rate, although our overall effective tax rate is lower.
Consumer and Business Banking
Table 20 - Key Performance Indicators for Consumer and Business Banking
  Three Months Ended March 31, Change
(dollar amounts in millions) 2021 2020 Amount Percent
Net interest income $ 337  $ 364  $ (27) (7) %
Provision for credit losses (36) 82  (118) (144)
Noninterest income 236  212  24  11 
Noninterest expense 469  418  51  12 
Provision for income taxes 29  16  13  81 
Net income $ 111  $ 60  $ 51  85  %
Number of employees (average full-time equivalent) 7,808  7,769  39  %
Total average assets $ 30,718  $ 24,677  $ 6,041  24 
Total average loans/leases 27,069  21,593  5,476  25 
Total average deposits 62,333  51,296  11,037  22 
Net interest margin 2.16  % 2.81  % (0.65) % (23)
NCOs $ 14  $ 32  $ (18) (56)
NCOs as a % of average loans and leases 0.21  % 0.60  % (0.39) % (65)
2021 First Three Months versus 2020 First Three Months
Consumer and Business Banking, including Home Lending, reported net income of $111 million in the first three-month period of 2021, an increase of $51 million, or 85%, compared to the year-ago period. Segment net interest income decreased $27 million, or 7%, due to decreased spread on deposits and decreased loan margin, partially offset by PPP revenues. The provision for credit losses decreased $118 million, or 144%, primarily due to changes in the forecasted economic outlook compared to the year-ago period. Noninterest income increased $24 million, or 11%, primarily due to increased mortgage banking income, and increased debit and ATM interchange from higher
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transaction volumes, partially offset by lower service charge income reflecting reduced customer overdrafts. Noninterest expense increased $51 million, or 12%, mostly due to increased personnel and incentives as a result of higher levels of production and origination volume.
Home Lending, an operating unit of Consumer and Business Banking, reflects the result of the origination, sale, and servicing of mortgage loans less referral fees and net interest income for mortgage banking products distributed by the retail branch network and other business segments. Home Lending reported net income of $24 million in the first three-month period of 2021, compared with net income of $11 million in the year-ago period. Noninterest income increased $32 million, driven primarily by an increase in salable mortgage originations and higher secondary marketing spreads. Noninterest expense increased $21 million due to higher personnel expense as a result of higher origination volumes.
Commercial Banking
Table 21 - Key Performance Indicators for Commercial Banking
  Three Months Ended March 31, Change
(dollar amounts in millions) 2021 2020 Amount Percent
Net interest income $ 199  $ 232  $ (33) (14) %
Provision for credit losses 298  (293) (98)
Noninterest income 88  86 
Noninterest expense 133  129 
Provision for income taxes 31  (23) 54  235 
Net income (loss) $ 118  $ (86) $ 204  237  %
Number of employees (average full-time equivalent) 1,271  1,273  (2) —  %
Total average assets $ 35,918  $ 34,810  $ 1,108 
Total average loans/leases 26,694  27,238  (544) (2)
Total average deposits 25,100  21,525  3,575  17 
Net interest margin 2.78  % 3.15  % (0.37) % (12)
NCOs $ 46  $ 75  $ (29) (39)
NCOs as a % of average loans and leases 0.68  % 1.11  % (0.43) % (39)
2021 First Three Months versus 2020 First Three Months
Commercial Banking reported net income of $118 million in the first three-month period of 2021, compared to a net loss of $86 million in the year-ago period. The provision for credit losses decreased $293 million, or 98%, primarily due to changes in the forecasted economic outlook compared to the year-ago period. Segment net interest income decreased $33 million, or 14%, due to a 37 basis point decrease in net interest margin driven by a sharp decline in the benefit of deposits. Noninterest income increased $2 million, or 2%, largely driven by an increase in treasury management related revenue reflecting the impact of lower earnings credit rates on commercial deposits, partially offset by a decline in capital markets driven by decline in interest rate derivative income. Noninterest expense increased $4 million, or 3%, primarily due to personnel expense reflecting an increase in incentives, partially offset by a reduction in business development expense primarily reflecting reduced travel stemming from the COVID-19 pandemic. 
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Vehicle Finance
Table 22 - Key Performance Indicators for Vehicle Finance
  Three Months Ended March 31, Change
(dollar amounts in millions) 2021 2020 Amount Percent
Net interest income $ 107  $ 106  $ %
Provision for credit losses (22) 60  (82) (137)
Noninterest income —  — 
Noninterest expense 35  35  —  — 
Provision for income taxes 21  18  600 
Net income $ 76  $ 11  $ 65  591  %
Number of employees (average full-time equivalent) 254  263  (9) (3) %
Total average assets $ 19,468  $ 20,215  $ (747) (4)
Total average loans/leases 19,735  20,307  (572) (3)
Total average deposits 768  366  402  110 
Net interest margin 2.20  % 2.08  % 0.12  %
NCOs $ $ 10  $ (5) (50)
NCOs as a % of average loans and leases 0.10  % 0.19  % (0.09) % (47)
2021 First Three Months versus 2020 First Three Months
Vehicle Finance reported net income of $76 million in the first three-month period of 2021, an increase of $65 million, or 591%, compared to the year-ago period. The provision for credit losses decreased $82 million due to changes in the forecasted economic outlook as compared to the year ago period. Segment net interest income increased $1 million, or 1%, due to a 12 basis point increase in the net interest margin partially offset by a 3% decrease in average loan balances. The decrease in average loan balances of $0.6 billion is driven by average commercial balances as dealership inventory levels and the resulting floor plan line utilization remain low. Additionally, RV / Marine balances increased $0.6 billion year over year, reflecting strong production levels over the past year, partially offset by a decline of $0.3 billion of auto balances. Noninterest income and expense were both comparable to year ago levels.
Regional Banking and The Huntington Private Client Group
Table 23 - Key Performance Indicators for Regional Banking and The Huntington Private Client Group
  Three Months Ended March 31, Change
(dollar amounts in millions) 2021 2020 Amount Percent
Net interest income $ 34  $ 43  $ (9) (21) %
Provision for credit losses (7) (8) (800)
Noninterest income 53  50 
Noninterest expense 62  62  —  — 
Provision for income taxes 17 
Net income $ 25  $ 24  $ %
Number of employees (average full-time equivalent) 998  1,025  (27) (3) %
Total average assets $ 6,815  $ 6,707  $ 108 
Total average loans/leases 6,568  6,415  153 
Total average deposits 7,059  6,100  959  16 
Net interest margin 1.92  % 2.69  % (0.77) % (29)
NCOs $ —  $ —  $ —  — 
NCOs as a % of average loans and leases —  % —  % —  % — 
Total assets under management (in billions)—eop $ 20.7  $ 15.8  $ 4.9  31 
Total trust assets (in billions)—eop 136.0  123.7  12.3  10 
eop - End of Period.
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2021 First Three Months versus 2020 First Three Months
RBHPCG reported net income of $25 million for the first three-month period of 2021, an increase of $1 million, or 4%, compared to the year-ago period. Segment net interest income decreased $9 million, or 21%, due to a 77 basis point decrease in net interest margin, reflecting both lower deposit and loan spreads. Average loans increased $0.2 billion, or 2%, primarily due to residential real estate mortgage loans, and average deposits increased $1.0 billion, or 16%, primarily related to PPP, stimulus, and higher customer liquidity levels. Noninterest income increased $3 million, or 6%, due to a 31% increase in assets under management reflecting record net asset flows and positive equity markets. In addition, the title insurance business reported record fee income. Noninterest expenses were flat to prior year reflecting lower discretionary expense and continued cost controls.
ADDITIONAL DISCLOSURES
Forward-Looking Statements
This report, including MD&A, contains certain forward-looking statements, including, but not limited to, certain plans, expectations, goals, projections, and statements, which are not historical facts and are subject to numerous assumptions, risks, and uncertainties. Statements that do not describe historical or current facts, including statements about beliefs and expectations, are forward-looking statements. Forward-looking statements may be identified by words such as expect, anticipate, believe, intend, estimate, plan, target, goal, or similar expressions, or future or conditional verbs such as will, may, might, should, would, could, or similar variations. The forward-looking statements are intended to be subject to the safe harbor provided by Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of 1995.
While there is no assurance that any list of risks and uncertainties or risk factors is complete, below are certain factors which could cause actual results to differ materially from those contained or implied in the forward-looking statements: changes in general economic, political, or industry conditions; the magnitude and duration of the COVID-19 pandemic and its impact on the global economy and financial market conditions and our business, results of operations, and financial condition; uncertainty in U.S. fiscal and monetary policy, including the interest rate policies of the Federal Reserve Board; volatility and disruptions in global capital and credit markets; movements in interest rates; reform of LIBOR; competitive pressures on product pricing and services; success, impact, and timing of our business strategies, including market acceptance of any new products or services including those implementing our “Fair Play” banking philosophy; the nature, extent, timing, and results of governmental actions, examinations, reviews, reforms, regulations, and interpretations, including those related to the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Basel III regulatory capital reforms, as well as those involving the OCC, Federal Reserve, FDIC, and CFPB; the occurrence of any event, change or other circumstances that could give rise to the right of one or both of the parties to terminate the merger agreement between Huntington and TCF; the outcome of any legal proceedings that may be instituted against Huntington or TCF; delays in completing the transaction; the failure to obtain necessary regulatory approvals (and the risk that such approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the transaction); the failure to satisfy any of the conditions to the transaction on a timely basis or at all; the possibility that the anticipated benefits of the transaction are not realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy and competitive factors in the areas where Huntington and TCF do business; the possibility that the transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events; diversion of management’s attention from ongoing business operations and opportunities; potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the transaction; the ability to complete the transaction and integration of Huntington and TCF successfully; the dilution caused by Huntington’s issuance of additional shares of its capital stock in connection with the transaction; and other factors that may affect the future results of Huntington and TCF.
All forward-looking statements speak only as of the date they are made and are based on information available at that time. Neither Huntington nor TCF assumes any obligation to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements were made or to reflect the occurrence of unanticipated events except as required by federal securities laws. As forward-looking statements involve significant risks and uncertainties, caution should be exercised against placing undue reliance on such statements.
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Non-GAAP Financial Measures
This document contains GAAP financial measures and non-GAAP financial measures where management believes it to be helpful in understanding our results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found herein.
Significant Items
From time-to-time, revenue, expenses, or taxes are impacted by items judged by Management to be outside of ordinary banking activities and/or by items that, while they may be associated with ordinary banking activities, are so unusually large that their outsized impact is believed by Management at that time to be infrequent or short-term in nature. We refer to such items as “Significant Items”. Most often, these Significant Items result from factors originating outside the Company; e.g., regulatory actions / assessments, windfall gains, one-time tax assessments / refunds, litigation actions, etc. In other cases, they may result from Management decisions associated with significant corporate actions outside of the ordinary course of business; e.g., merger / restructuring charges, recapitalization actions, goodwill impairment, etc.
Even though certain revenue and expense items are naturally subject to more volatility than others due to changes in market and economic environment conditions, as a general rule volatility alone does not define a Significant Item. For example, changes in the provision for credit losses, gains / losses from investment activities, asset valuation writedowns, etc., reflect ordinary banking activities and are, therefore, typically excluded from consideration as a Significant Item.
Management believes the disclosure of Significant Items, when appropriate, aids analysts/investors in better understanding corporate performance and trends so that they can ascertain which of such items, if any, they may wish to include/exclude from their analysis of the company’s performance - i.e., within the context of determining how that performance differed from their expectations, as well as how, if at all, to adjust their estimates of future performance accordingly. To this end, Management has adopted a practice of listing “Significant Items” in its external disclosure documents (e.g., earnings press releases, quarterly performance discussions, investor presentations, Forms 10-Q and 10-K).
Significant Items for any particular period are not intended to be a complete list of items that may materially impact current or future period performance.
Fully-Taxable Equivalent Basis
Interest income, yields, and ratios on a FTE basis are considered non-GAAP financial measures. Management believes net interest income on a FTE basis provides an insightful picture of the interest margin for comparison purposes. The FTE basis also allows management to assess the comparability of revenue arising from both taxable and tax-exempt sources. The FTE basis assumes a federal statutory tax rate of 21 percent. We encourage readers to consider the Unaudited Condensed Consolidated Financial Statements and other financial information contained in this Form 10-Q in their entirety, and not to rely on any single financial measure.
Non-Regulatory Capital Ratios
In addition to capital ratios defined by banking regulators, the Company considers various other measures when evaluating capital utilization and adequacy, including:
Tangible common equity to tangible assets,
Tangible equity to tangible assets, and
Tangible common equity to risk-weighted assets using Basel III definitions.
These non-regulatory capital ratios are viewed by management as useful additional methods of reflecting the level of capital available to withstand unexpected market conditions. Additionally, presentation of these ratios allows readers to compare our capitalization to other financial services companies. These ratios differ from capital ratios defined by banking regulators principally in that the numerator excludes goodwill and other intangible assets, the nature and extent of which varies among different financial services companies. These ratios are not defined in GAAP or federal banking regulations. As a result, these non-regulatory capital ratios disclosed by the Company are considered non-GAAP financial measures.
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Because there are no standardized definitions for these non-regulatory capital ratios, the Company’s calculation methods may differ from those used by other financial services companies. Also, there may be limits in the usefulness of these measures to investors. As a result, we encourage readers to consider the Unaudited Condensed Consolidated Financial Statements and other financial information contained in this Form 10-Q in their entirety, and not to rely on any single financial measure.
Risk Factors
More information on risk can be found in Item 1A Risk Factors below and in the Risk Factors section included in Item 1A of our 2020 Form 10-K. Additional information regarding risk factors can also be found in the Risk Management and Capital discussion of this report.
Critical Accounting Policies and Use of Significant Estimates
Our Consolidated Financial Statements are prepared in accordance with GAAP. The preparation of financial statements in conformity with GAAP requires us to establish accounting policies and make estimates that affect amounts reported in our Consolidated Financial Statements. Note 1 of the Notes to Consolidated Financial Statements included in our December 31, 2020 Form 10-K, as supplemented by this report including this MD&A, describes the significant accounting policies we used in our Consolidated Financial Statements.
An accounting estimate requires assumptions and judgments about uncertain matters that could have a material effect on the Consolidated Financial Statements. Estimates are made under facts and circumstances at a point in time, and changes in those facts and circumstances could produce results substantially different from those estimates. Our most significant accounting policies and estimates and their related application are discussed in our December 31, 2020 Form 10-K.
Allowance for Credit Losses
Our ACL at March 31, 2021 represents our current estimate of the lifetime credit losses expected from our loan and lease portfolio and our unfunded loan commitments and letters of credit. Management estimates the allowance for credit losses by projecting probability of default, loss given default and exposure at default conditional on economic parameters, for the remaining contractual term. Internal factors that impact the quarterly allowance estimate include the level of outstanding balances, the portfolio performance and assigned risk ratings.
One of the most significant judgments influencing the allowance for credit losses estimate is the macro-economic forecasts. Key external economic parameters that directly impact our loss modeling framework include forecasted footprint unemployment rates and Gross Domestic Product. Changes in the economic forecasts could significantly affect the estimated credit losses, which could potentially lead to materially different allowance levels from one reporting period to the next.
Given the dynamic relationship between macro-economic variables within our modeling framework, it is difficult to estimate the impact of a change in any one individual variable on the allowance. As a result, management uses a probability-weighted approach that incorporates a baseline, an adverse and a more favorable economic scenario when formulating the quantitative estimate.
However, to illustrate a hypothetical sensitivity analysis, management calculated a quantitative allowance using a 100% weighting applied to an adverse scenario. This scenario includes assumptions around new infections and COVID-19 deaths being significantly above the baseline projections, leading to a much slower re-opening of the economy. Under this scenario, as an example, the unemployment rate remains elevated for a prolonged period and is estimated to remain at 8.0% and 6.5% at the end of 2022 and 2023, respectively. These numbers represent approximately 3.5% higher unemployment estimates than baseline scenario projections of 4.5% and 4.2%, respectively for the same time periods.
To demonstrate the sensitivity to key economic parameters, management calculated the difference between a 100% baseline weighting and a 100% adverse scenario weighting for modeled results. This would result in an incremental quantitative allowance impact of approximately $600 million.
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The resulting difference is not intended to represent an expected increase in allowance levels for a number of reasons including the following:
Management uses a weighted approach applied to multiple economic scenarios for its allowance estimation process;
The highly uncertain economic environment;
The difficulty in predicting the inter-relationships between the economic parameters used in the various economic scenarios; and
The sensitivity estimate does not account for any general reserve components and associated risk profile adjustments incorporated by management as part of its overall allowance framework.
We regularly review our ACL for appropriateness by performing on-going evaluations of the loan and lease portfolio. In doing so, we consider factors such as the differing economic risks associated with each loan category, the financial condition of specific borrowers, the level of delinquent loans, the value of any collateral and, where applicable, the existence of any guarantees or other documented support. We also evaluate the impact of changes in key economic parameters and overall economic conditions on the ability of borrowers to meet their financial obligations when quantifying our exposure to credit losses and assessing the appropriateness of our ACL at each reporting date. There is no certainty that our ACL will be appropriate over time to cover losses in our portfolio as economic and market conditions may ultimately differ from our reasonable and supportable forecast. Additionally, events adversely affecting specific customers, industries, or our markets such as the current COVID-19 pandemic, could severely impact our current expectations. If the credit quality of our customer base materially deteriorates or the risk profile of a market, industry, or group of customers changes materially, our net income and capital could be materially adversely affected which, in turn could have a material adverse effect on our financial condition and results of operations. The extent to which the current COVID-19 pandemic will continue to negatively impact our businesses, financial condition, liquidity and results will depend on future developments, which are highly uncertain and cannot be forecasted with precision at this time. For more information, see Note 4 “Loans and Leases” and Note 5 “Allowance for Credit Losses” of the Notes to Unaudited Condensed Consolidated Financial Statements.
Fair Value Measurement
Certain assets and liabilities are measured at fair value on a recurring basis, including securities, and derivative instruments. Assets and liabilities carried at fair value inherently include subjectivity and may require the use of significant assumptions, adjustments and judgment including, among others, discount rates, rates of return on assets, cash flows, default rates, loss rates, terminal values and liquidation values. A significant change in assumptions may result in a significant change in fair value, which in turn, may result in a higher degree of financial statement volatility and could result in significant impact on our results of operations, financial condition or disclosures of fair value information.
The fair value hierarchy requires use of observable inputs first and subsequently unobservable inputs when observable inputs are not available. Our fair value measurements involve various valuation techniques and models, which involve inputs that are observable (Level 1 or Level 2 in fair value hierarchy), when available. The level of judgment required to determine fair value is dependent on the methods or techniques used in the process. Assets and liabilities that are measured at fair value using quoted prices in active markets (Level 1) do not require significant judgment while the valuation of assets and liabilities when quoted market prices are not available (Levels 2 and 3) may require significant judgment to assess whether observable or unobservable inputs for those assets and liabilities provide reasonable determination of fair value. The fair values measured at each level of the fair value hierarchy, additional discussion regarding fair value measurements, and a brief description of how fair value is determined for categories that have unobservable inputs, can be found in Note 11 “Fair Values of Assets and Liabilities” of the Notes to Unaudited Condensed Consolidated Financial Statements.
Goodwill and Intangible Assets
The acquisition method of accounting requires that acquired assets and liabilities are recorded at their fair values as of the date of acquisition. This often involves estimates based on third party valuations or internal valuations based on discounted cash flow analyses or other valuation techniques, all of which are inherently subjective. Acquisitions typically result in goodwill, the amount by which the cost of net assets acquired in a business combination exceeds their fair value, which is subject to impairment testing at least annually. The
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amortization of identified intangible assets recognized in a business combination is based upon the estimated economic benefits to be received over their economic life, which is also subjective. Customer attrition rates that are based on historical experience are used to determine the estimated economic life of certain intangibles assets, including but not limited to, customer deposit intangibles.

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Item 1: Financial Statements
Huntington Bancshares Incorporated
Condensed Consolidated Balance Sheets
(Unaudited)
March 31, December 31,
(dollar amounts in millions) 2021 2020
Assets
Cash and due from banks
$ 1,096  $ 1,319 
Interest-bearing deposits at Federal Reserve Bank
7,493  5,276 
Interest-bearing deposits in banks
52  117 
Trading account securities
51  62 
Available-for-sale securities
19,375  16,485 
Held-to-maturity securities
7,815  8,861 
Other securities
411  418 
Loans held for sale (includes $1,531 and $1,198 respectively, measured at fair value)(1)
1,537  1,275 
Loans and leases (includes $118 and $94 respectively, measured at fair value)(1)
80,230  81,608 
Allowance for loan and lease losses (1,703) (1,814)
Net loans and leases
78,527  79,794 
Bank owned life insurance
2,581  2,577 
Premises and equipment
747  757 
Goodwill
1,990  1,990 
Servicing rights and other intangible assets
480  428 
Other assets
3,613  3,679 
Total assets $ 125,768  $ 123,038 
Liabilities and shareholders’ equity
Liabilities
Deposits
$ 102,184  $ 98,948 
Short-term borrowings
219  183 
Long-term debt
7,210  8,352 
Other liabilities
2,555  2,562 
Total liabilities 112,168  110,045 
Commitments and Contingent Liabilities (Note 14)
Shareholders’ equity
Preferred stock
2,676  2,191 
Common stock
10  10 
Capital surplus
8,806  8,781 
Less treasury shares, at cost
(59) (59)
Accumulated other comprehensive (loss) gain (56) 192 
Retained earnings
2,223  1,878 
Total shareholders’ equity 13,600  12,993 
Total liabilities and shareholders’ equity $ 125,768  $ 123,038 
Common shares authorized (par value of $0.01)
1,500,000,000  1,500,000,000 
Common shares outstanding 1,018,052,923  1,017,196,776 
Treasury shares outstanding 5,041,104  5,062,054 
Preferred stock, authorized shares 6,617,808  6,617,808 
Preferred shares outstanding 1,250,500  750,500 

(1)Amounts represent loans for which Huntington has elected the fair value option. See Note 11 “Fair Values of Assets and Liabilities”.
See Notes to Unaudited Condensed Consolidated Financial Statements
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Huntington Bancshares Incorporated
Condensed Consolidated Statements of Income
(Unaudited)
Three Months Ended
March 31,
(dollar amounts in millions, except per share data, share count in thousands) 2021 2020
Interest and fee income:
Loans and leases $ 752  $ 809 
Available-for-sale securities
Taxable 49  76 
Tax-exempt 13  18 
Held-to-maturity securities—taxable 42  59 
Other securities—taxable
Other 11  11 
Total interest income 869  975 
Interest expense:
Deposits 11  105 
Short-term borrowings —  12 
Long-term debt (114) 68 
Total interest expense (103) 185 
Net interest income 972  790 
Provision for credit losses (60) 441 
Net interest income after provision for credit losses 1,032  349 
Mortgage banking income 100  58 
Service charges on deposit accounts 69  87 
Card and payment processing income 65  58 
Trust and investment management services 52  47 
Capital markets fees 29  33 
Insurance income 27  23 
Bank owned life insurance income 16  16 
Gain on sale of loans
Other noninterest income 34  31 
Total noninterest income 395  361 
Personnel costs 468  395 
Outside data processing and other services 115  85 
Equipment 46  41 
Net occupancy 42  40 
Professional services 17  11 
Amortization of intangibles 10  11 
Marketing 14 
Deposit and other insurance expense
Other noninterest expense 73  51 
Total noninterest expense 793  652 
Income before income taxes 634  58 
Provision for income taxes 102  10 
Net income 532  48 
Dividends on preferred shares 31  18 
Net income applicable to common shares $ 501  $ 30 
Average common shares—basic 1,017,512  1,017,643 
Average common shares—diluted 1,041,003  1,034,576 
Per common share:
Net income—basic $ 0.49  $ 0.03 
Net income—diluted 0.48  0.03 
See Notes to Unaudited Condensed Consolidated Financial Statements
42 Huntington Bancshares Incorporated


Huntington Bancshares Incorporated
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
  Three Months Ended
March 31,
(dollar amounts in millions) 2021 2020
Net income $ 532  $ 48 
Unrealized net gains (losses) on available-for-sale securities arising during the period, net of reclassification for net realized gains and losses
(216) 173 
Change in fair value related to cash flow hedges
(34) 308 
Change in accumulated unrealized gains (losses) for pension and other post-retirement obligations
Other comprehensive income, net of tax (248) 483 
Comprehensive income $ 284  $ 531 
See Notes to Unaudited Condensed Consolidated Financial Statements

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Huntington Bancshares Incorporated
Condensed Consolidated Statements of Changes in Shareholders’ Equity
(Unaudited)
(dollar amounts in millions, share amounts in thousands) Preferred Stock Common Stock Capital Surplus Treasury Stock Accumulated Other Comprehensive Gain (Loss) Retained Earnings  
Amount Shares Amount Shares Amount Total
Three Months Ended March 31, 2021
Balance, beginning of period $ 2,191  1,022,258  $ 10  $ 8,781  (5,062) $ (59) $ 192  $ 1,878  $ 12,993 
Net income 532  532 
Other comprehensive income (loss), net of tax (248) (248)
Net proceeds from issuance of Series H Preferred Stock 485  485 
Cash dividends declared:
Common ($0.15 per share)
(156) (156)
Preferred (31) (31)
Recognition of the fair value of share-based compensation 28  28 
Other share-based compensation activity 836  —  (3) —  (3)
Other 21  —  —  — 
Balance, end of period $ 2,676  1,023,094  $ 10  $ 8,806  (5,041) $ (59) $ (56) $ 2,223  $ 13,600 
Three Months Ended March 31, 2020
Balance, beginning of period $ 1,203  1,024,541  $ 10  $ 8,806  (4,537) $ (56) $ (256) $ 2,088  $ 11,795 
Cumulative-effect adjustment (ASU 2016-01) (306) (306)
Net income 48  48 
Other comprehensive income (loss), net of tax 483  483 
Repurchase of common stock (7,088) —  (88) (88)
Cash dividends declared:
Common ($0.15 per share)
(155) (155)
Preferred (18) (18)
Recognition of the fair value of share-based compensation 15  15 
Other share-based compensation activity 1,299  —  (5) —  (5)
Other —  — 
Balance, end of period $ 1,203  1,018,752  $ 10  $ 8,728  (4,534) $ (56) $ 227  $ 1,657  $ 11,769 
See Notes to Unaudited Condensed Consolidated Financial Statements
44 Huntington Bancshares Incorporated


Table of Contents
Huntington Bancshares Incorporated
Condensed Consolidated Statements of Cash Flows
(Unaudited)
  Three Months Ended March 31,
(dollar amounts in millions) 2021 2020
Operating activities
Net income $ 532  $ 48 
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Provision for credit losses (60) 441 
Depreciation and amortization 71  119 
Share-based compensation expense 28  15 
Deferred income tax expense (benefit) 61  (37)
Net change in:
Trading account securities 11  63 
Loans held for sale (406) (20)
Other assets 80  (1,023)
Other liabilities (428) 892 
Net cash (used in) provided by operating activities (111) 498 
Investing activities
Change in interest bearing deposits in banks 189  (26)
Proceeds from:
Maturities and calls of available-for-sale securities 1,758  669 
Maturities and calls of held-to-maturity securities 1,043  398 
Sales of available-for-sale securities 10  19 
Purchases of available-for-sale securities (4,857) (2,476)
Net proceeds from sales of portfolio loans 158  191 
Principal payments received under direct finance and sales-type leases 188  171 
Net loan and lease activity, excluding sales and purchases 1,402  (2,926)
Purchases of premises and equipment (22) (11)
Purchases of loans and leases (266) (311)
Other, net 21  (20)
Net cash used in investing activities (376) (4,322)
Financing activities
Increase in deposits 3,236  4,483 
Increase in short-term borrowings 53  458 
Net proceeds from issuance of long-term debt 35  1,286 
Maturity/redemption of long-term debt (1,135) (1,540)
Dividends paid on preferred stock (35) (18)
Dividends paid on common stock (153) (155)
Repurchases of common stock —  (88)
Net proceeds from issuance of preferred stock 485  — 
Payments related to tax-withholding for share based compensation awards (5) (6)
Other, net — 
Net cash provided by financing activities 2,481  4,421 
Increase in cash and cash equivalents 1,994  597 
Cash and cash equivalents at beginning of period 6,595  1,170 
Cash and cash equivalents at end of period $ 8,589  $ 1,767 
2021 1Q Form 10-Q 45


  Three Months Ended March 31,
(dollar amounts in millions) 2021 2020
Supplemental disclosures:
Interest paid $ 49  $ 197 
Income taxes paid
Non-cash activities
Loans transferred to held-for-sale from portfolio 84  313 
Loans transferred to portfolio from held-for-sale 37 
Transfer of securities from available-for-sale to held-to-maturity —  1,520 
See Notes to Unaudited Condensed Consolidated Financial Statements


46 Huntington Bancshares Incorporated


Table of Contents
Huntington Bancshares Incorporated
Notes to Unaudited Condensed Consolidated Financial Statements
1. BASIS OF PRESENTATION
The accompanying Unaudited Condensed Consolidated Financial Statements of Huntington reflect all adjustments consisting of normal recurring accruals which are, in the opinion of Management, necessary for a fair statement of the consolidated financial position, the results of operations, and cash flows for the periods presented. These Unaudited Condensed Consolidated Financial Statements have been prepared according to the rules and regulations of the SEC and, therefore, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been omitted. The Notes to Consolidated Financial Statements appearing in Huntington’s 2020 Form 10-K, which include descriptions of significant accounting policies, as updated by the information contained in this report, should be read in conjunction with these interim financial statements.
For statement of cash flow purposes, cash and cash equivalents are defined as the sum of cash and due from banks and interest-bearing deposits at Federal Reserve Bank.
Certain prior period amounts have been reclassified to conform to current year’s presentation.
In conjunction with applicable accounting standards, all material subsequent events have been either recognized in the Unaudited Condensed Consolidated Financial Statements or disclosed in the Notes to Unaudited Condensed Consolidated Financial Statements. No subsequent events were disclosed for the current period.
2021 1Q Form 10-Q 47


2. PENDING ACQUISITION OF TCF FINANCIAL CORPORATION
On December 13, 2020, Huntington announced the signing of a definitive merger agreement (the “ Merger Agreement”). Under the terms of the Merger Agreement, which was unanimously approved by the boards of directors of both companies, TCF Financial Corporation (“TCF”), the parent company of TCF National Bank, will merge into Huntington in an all-stock transaction valued at approximately $6.0 billion based on the closing stock price on the day preceding the announcement. TCF is a financial holding company headquartered in Detroit, Michigan with reported total assets of $47.8 billion based on their balance sheet at December 31, 2020.
Under the terms of the Merger Agreement, TCF shareholders will receive 3.0028 shares of Huntington common stock for each share of TCF common stock. Holders of TCF common stock will also receive cash in lieu of fractional shares. Each outstanding share of 5.70% Series C Non-Cumulative Perpetual Preferred Stock of TCF will be converted into the right to receive one share of a newly created series of preferred stock of Huntington.
On March 25, 2021, Huntington and TCF shareholders approved the merger. Huntington anticipates the transaction will be completed late in the second quarter of 2021, subject to regulatory approval and the satisfaction of other customary closing conditions set forth in the Merger Agreement.
48 Huntington Bancshares Incorporated


3. INVESTMENT SECURITIES AND OTHER SECURITIES
Debt securities purchased in which Huntington has the intent and ability to hold to their maturity are classified as held-to-maturity securities.  All other debt and equity securities are classified as either available-for-sale or other securities.
The following tables provide amortized cost, fair value, and gross unrealized gains and losses by investment category at March 31, 2021 and December 31, 2020:
Unrealized
(dollar amounts in millions) Amortized
Cost (1)
Gross
Gains
Gross
Losses
Fair Value
March 31, 2021
Available-for-sale securities:
U.S. Treasury $ $ —  $ —  $
Federal agencies:
Residential CMO $ 3,081  $ 100  $ (9) $ 3,172 
Residential MBS 10,708  61  (124) 10,645 
Commercial MBS 1,277  13  (63) 1,227 
Other agencies 44  —  46 
Total U.S. Treasury, federal agency and other agency securities 15,115  176  (196) 15,095 
Municipal securities 3,050  91  (19) 3,122 
Private-label CMO 50  —  —  50 
Asset-backed securities 244  (1) 247 
Corporate debt 888  —  (31) 857 
Other securities/Sovereign debt —  — 
Total available-for-sale securities $ 19,351  $ 271  $ (247) $ 19,375 
Held-to-maturity securities:
Federal agencies:
Residential CMO $ 1,604  $ 74  $ —  $ 1,678 
Residential MBS 3,259  69  (18) 3,310 
Commercial MBS 2,719  114  —  2,833 
Other agencies 230  —  238 
Total federal agency and other agency securities 7,812  265  (18) 8,059 
Municipal securities —  — 
Total held-to-maturity securities $ 7,815  $ 265  $ (18) $ 8,062 
Other securities, at cost:
Non-marketable equity securities:
Federal Home Loan Bank stock $ 52  $ —  $ —  $ 52 
Federal Reserve Bank stock 300  —  —  300 
Other securities, at fair value
Mutual funds 42  —  —  42 
Equity securities 16  —  17 
Total other securities $ 410  $ $ —  $ 411 
(1)Amortized cost amounts excludes accrued interest receivable, which is recorded within other assets on the Consolidated Balance Sheets. At March 31, 2021, accrued interest receivable on available-for-sale securities and held-to-maturity securities totaled $40 million and $18 million, respectively.
2021 1Q Form 10-Q 49


Unrealized
(dollar amounts in millions) Amortized
Cost (1)
Gross
Gains
Gross
Losses
Fair Value
December 31, 2020
Available-for-sale securities:
U.S. Treasury $ $ —  $ —  $
Federal agencies:
Residential CMO $ 3,550  $ 121  $ (5) $ 3,666 
Residential MBS 7,843  97  (5) 7,935 
Commercial MBS 1,151  21  (9) 1,163 
Other agencies 60  —  62 
Total U.S. Treasury, federal agency and other agency securities 12,609  241  (19) 12,831 
Municipal securities 2,928  91  (15) 3,004 
Private-label CMO —  — 
Asset-backed securities 185  —  192 
Corporate debt 440  —  445 
Other securities/Sovereign debt —  — 
Total available-for-sale securities $ 16,175  $ 344  $ (34) $ 16,485 
Held-to-maturity securities:
Federal agencies:
Residential CMO $ 1,779  $ 88  $ —  $ 1,867 
Residential MBS 3,715  103  —  3,818 
Commercial MBS 3,118  191  —  3,309 
Other agencies 246  12  —  258 
Total federal agency and other agency securities 8,858  394  —  9,252 
Municipal securities —  — 
Total held-to-maturity securities $ 8,861  $ 394  $ —  $ 9,255 
Other securities, at cost:
Non-marketable equity securities:
Federal Home Loan Bank stock $ 60  $ —  $ —  $ 60 
Federal Reserve Bank stock 299  —  —  299 
Other securities, at fair value
Mutual funds 50  —  —  50 
Equity securities — 
Total other securities $ 417  $ $ —  $ 418 
(1)Amortized cost amounts excludes accrued interest receivable, which is recorded within other assets on the Consolidated Balance Sheets. At December 31, 2020, accrued interest receivable on available-for-sale securities and held-to-maturity securities totaled $32 million and $20 million, respectively.
50 Huntington Bancshares Incorporated


The following table provides the amortized cost and fair value of securities by contractual maturity at March 31, 2021 and December 31, 2020. Expected maturities may differ from contractual maturities as issuers may have the right to call or prepay obligations with or without incurring penalties.
March 31, 2021 December 31, 2020
(dollar amounts in millions)
Amortized
Cost
Fair
Value
Amortized
Cost
Fair
Value
Available-for-sale securities:
Under 1 year $ 366  $ 357  $ 308  $ 304 
After 1 year through 5 years 1,228  1,237  1,145  1,154 
After 5 years through 10 years 2,127  2,144  1,607  1,654 
After 10 years 15,630  15,637  13,115  13,373 
Total available-for-sale securities $ 19,351  $ 19,375  $ 16,175  $ 16,485 
Held-to-maturity securities:
After 1 year through 5 years $ 142  $ 148  $ 160  $ 169 
After 5 years through 10 years 121  126  131  138 
After 10 years 7,552  7,788  8,570  8,948 
Total held-to-maturity securities $ 7,815  $ 8,062  $ 8,861  $ 9,255 
The following tables provide detail on investment securities with unrealized losses aggregated by investment category and the length of time the individual securities have been in a continuous loss position at March 31, 2021 and December 31, 2020:
Less than 12 Months Over 12 Months Total
(dollar amounts in millions) Fair
Value
Gross Unrealized
Losses
Fair
Value
Gross Unrealized
Losses
Fair
Value
Gross Unrealized
Losses
March 31, 2021
Available-for-sale securities:
Federal agencies:
Residential CMO $ 413  $ (9) $ —  $ —  $ 413  $ (9)
Residential MBS 7,919  (124) —  —  7,919  (124)
Commercial MBS 761  (63) —  —  761  (63)
Total federal agency and other agency securities 9,093  (196) —  —  9,093  (196)
Municipal securities 163  (7) 463  (12) 626  (19)
Asset-backed securities 65  (1) —  —  65  (1)
Corporate debt 816  (31) —  —  816  (31)
Total temporarily impaired available-for-sale securities $ 10,137  $ (235) $ 463  $ (12) $ 10,600  $ (247)
Held-to-maturity securities:
Federal agencies:
Residential MBS $ 1,235  (18) —  —  1,235  (18)
Total temporarily impaired held-to-maturity securities $ 1,235  $ (18) $ —  $ —  $ 1,235  $ (18)
2021 1Q Form 10-Q 51


Less than 12 Months Over 12 Months Total
(dollar amounts in millions) Fair
Value
Gross Unrealized
Losses
Fair
Value
Gross Unrealized
Losses
Fair
Value
Gross Unrealized
Losses
December 31, 2020
Available-for-sale securities:
Federal agencies:
Residential CMO $ 302  $ (5) $ —  $ —  $ 302  $ (5)
Residential MBS 1,633  (5) —  —  1,633  (5)
Commercial MBS 321  (9) —  —  321  (9)
Total federal agency and other agency securities 2,256  (19) —  —  2,256  (19)
Municipal securities 110  (3) 490  (12) 600  (15)
Asset-backed securities 15  —  —  —  15  — 
Corporate debt 51  —  —  —  51  — 
Total temporarily impaired available-for-sale securities
$ 2,432  $ (22) $ 490  $ (12) $ 2,922  $ (34)
At March 31, 2021 and December 31, 2020, the carrying value of investment securities pledged to secure public and trust deposits, trading account liabilities, U.S. Treasury demand notes, security repurchase agreements and to support borrowing capacity totaled $13.9 billion and $14.4 billion, respectively. There were no securities of a single issuer, which were not governmental or government-sponsored, that exceeded 10% of shareholders’ equity at either March 31, 2021 or December 31, 2020. At March 31, 2021, all HTM debt securities are considered AAA rated. In addition, there were no HTM debt securities considered past due at March 31, 2021.
AFS Securities Impairment/HTM Securities Allowance for Credit Losses
Based on an evaluation of available information including security type, counterparty credit quality, past events, current conditions, and reasonable and supportable forecasts that are relevant to collectability, Huntington has concluded that it expects to receive all contractual cash flows from each security held in its AFS and HTM debt securities portfolio. As such, no allowance or impairment is recorded with respect to securities as of March 31, 2021 and December 31, 2020.
52 Huntington Bancshares Incorporated


4. LOANS / LEASES
Loans and leases which Huntington has the intent and ability to hold for the foreseeable future, or until maturity or payoff, are classified in the Unaudited Condensed Consolidated Balance Sheets as loans and leases. The total balance of unamortized premiums, discounts, fees, and costs, recognized as part of loans and leases, was a net premium of $473 million and $491 million at March 31, 2021 and December 31, 2020, respectively.
Loan and Lease Portfolio Composition
The following table provides a detailed listing of Huntington’s loan and lease portfolio at March 31, 2021 and December 31, 2020.
(dollar amounts in millions) March 31, 2021 December 31, 2020
Loans and leases:
Commercial and industrial
$ 34,464  $ 35,373 
Commercial real estate
7,179  7,199 
Automobile
12,591  12,778 
Home equity
8,727  8,894 
Residential mortgage
12,092  12,141 
RV and marine
4,218  4,190 
Other consumer
959  1,033 
Loans and leases $ 80,230  $ 81,608 
Allowance for loan and lease losses (1,703) (1,814)
Net loans and leases $ 78,527  $ 79,794 
Equipment Leases
Huntington leases equipment to customers, and substantially all such arrangements are classified as either sales-type or direct financing leases, which are included in C&I loans. These leases are reported at the aggregate of lease payments receivable and estimated residual values, net of unearned and deferred income, and any initial direct costs incurred to originate these leases.
Huntington assesses net investments in leases (including residual values) for impairment and recognizes any impairment losses in accordance with the impairment guidance for financial instruments. As such, net investments in leases may be reduced by an allowance for credit losses, with changes recognized as provision expense.
The following table presents net investments in lease financing receivables by category at March 31, 2021 and December 31, 2020.
(dollar amounts in millions) March 31,
2021
December 31,
2020
Commercial and industrial:
Lease payments receivable $ 1,714  $ 1,737 
Estimated residual value of leased assets 622  664 
Gross investment in commercial and industrial lease financing receivables 2,336  2,401 
Deferred origination costs 21  21 
Deferred fees (190) (200)
Total net investment in commercial and industrial lease financing receivables $ 2,167  $ 2,222 
The carrying value of residual values guaranteed was $77 million and $93 million as of March 31, 2021 and December 31, 2020, respectively. The future lease rental payments due from customers on sales-type and direct financing leases at March 31, 2021, totaled $1.7 billion and were due as follows: $0.6 billion in 2021, $0.4 billion in 2022, $0.3 billion in 2023, $0.2 billion in 2024, $0.1 billion in 2025, and $0.1 billion thereafter. Interest income recognized for these types of leases was $24 million and $27 million for the three-month periods ended March 31, 2021 and 2020, respectively.
2021 1Q Form 10-Q 53


Nonaccrual and Past Due Loans
The following table presents NALs by loan class at March 31, 2021 and December 31, 2020 (1):
March 31, 2021 December 31, 2020
(dollar amounts in millions) Nonaccrual loans with no ACL Total nonaccrual loans Nonaccrual loans with no ACL Total nonaccrual loans
Commercial and industrial $ 103  $ 343  $ 69  $ 353 
Commercial real estate —  15 
Automobile —  — 
Home equity —  71  —  70 
Residential mortgage —  90  —  88 
RV and marine —  — 
Total nonaccrual loans $ 103  $ 516  $ 77  $ 532 
(1)    Generally excludes loans that were under payment deferral or granted other assistance, including amendments or waivers of financial covenants in response to the COVID-19 pandemic.
The following table presents an aging analysis of loans and leases, including past due loans and leases, by loan class at March 31, 2021 and December 31, 2020:
March 31, 2021
Past Due (1)  Loans Accounted for Under FVO Total Loans
and Leases
90 or
more days
past due
and accruing
(dollar amounts in millions) 30-59
Days
60-89
 Days
90 or 
more days
Total Current
Commercial and industrial $ 37  $ 20  $ 96  $ 153  $ 34,311  $ —  $ 34,464  $
(3)
Commercial real estate 7,175  —  7,179  — 
Automobile 50  12  68  12,523  —  12,591 
Home equity 23  11  58  92  8,634  8,727  10 
Residential mortgage 78  26  194  298  11,677  117  12,092  128  (4)
RV and marine 11  16  4,202  —  4,218 
Other consumer 10  949  —  959 
Total loans and leases $ 206  $ 75  $ 360  $ 641  $ 79,471  $ 118  $ 80,230  $ 154 
December 31, 2020
Past Due (1)(2)  Loans Accounted for Under FVO Total Loans
and Leases
90 or
more days
past due
and accruing
(dollar amounts in millions) 30-59
Days
60-89
 Days
90 or 
more days
Total Current
Commercial and industrial $ 60  $ 38  $ 95  $ 193  $ 35,180  $ —  $ 35,373  $ 10 
(3)
Commercial real estate —  11  12  7,187  —  7,199  — 
Automobile 84  22  12  118  12,660  —  12,778 
Home equity 35  15  61  111  8,782  8,894  14 
Residential mortgage 114  38  194  346  11,702  93  12,141  132  (4)
RV and marine 17  23  4,167  —  4,190 
Other consumer 16  1,017  —  1,033 
Total loans and leases $ 319  $ 121  $ 379  $ 819  $ 80,695  $ 94  $ 81,608  $ 171 
(1)NALs are included in this aging analysis based on the loan’s past due status.
(2)The principal balance of loans in payment deferral programs offered in response to the COVID-19 pandemic which are performing according to their modified terms are generally not considered delinquent.
(3)Amounts include Huntington Technology Finance administrative lease delinquencies.
(4)Amounts include mortgage loans insured by U.S. government agencies.
54 Huntington Bancshares Incorporated


Credit Quality Indicators
See Note 5 “Loans / Leases and Allowance for Credit Losses” to the Consolidated Financial Statements of the Annual Report on Form 10-K for the year ended December 31, 2020 for a description of the credit quality indicators Huntington utilizes for monitoring credit quality and for determining an appropriate ACL level.
To facilitate the monitoring of credit quality for commercial loans, and for purposes of determining an appropriate ACL level for these loans, Huntington utilizes the following internally defined categories of credit grades:
Pass - Higher quality loans that do not fit any of the other categories described below.
OLEM - The credit risk may be relatively minor yet represents a risk given certain specific circumstances. If the potential weaknesses are not monitored or mitigated, the loan may weaken or the collateral may be inadequate to protect Huntington’s position in the future. For these reasons, Huntington considers the loans to be potential problem loans.
Substandard - Inadequately protected loans resulting from the borrower’s ability to repay, equity, and/or the collateral pledged to secure the loan. These loans have identified weaknesses that could hinder normal repayment or collection of the debt. It is likely Huntington will sustain some loss if any identified weaknesses are not mitigated.
Doubtful - Loans that have all of the weaknesses inherent in those loans classified as Substandard, with the added elements of the full collection of the loan is improbable and that the possibility of loss is high.
Loans are generally assigned a category of “Pass” rating upon initial approval and subsequently updated as appropriate based on the borrower’s financial performance.
Commercial loans categorized as OLEM, Substandard, or Doubtful are considered Criticized loans. Commercial loans categorized as Substandard or Doubtful are both considered Classified loans.
For all classes within the consumer loan portfolios, loans are assigned pool level PD factors based on the FICO range within which the borrower’s credit bureau score falls. A credit bureau score is a credit score developed by FICO based on data provided by the credit bureaus. The credit bureau score is widely accepted as the standard measure of consumer credit risk used by lenders, regulators, rating agencies, and consumers. The higher the credit bureau score, the higher likelihood of repayment and therefore, an indicator of higher credit quality.
Huntington assesses the risk in the loan portfolio by utilizing numerous risk characteristics. The classifications described above, and also presented in the table below, represent one of those characteristics that are closely monitored in the overall credit risk management processes.
2021 1Q Form 10-Q 55


The following tables present each loan and lease class by vintage and credit quality indicator at March 31, 2021 and December 31, 2020 respectively:
As of March 31, 2021
Term Loans Amortized Cost Basis by Origination Year Revolver Total at Amortized Cost Basis Revolver Total Converted to Term Loans
(dollar amounts in millions) 2021 2020 2019 2018 2017 Prior Total (3)
Commercial and industrial
Credit Quality Indicator (1):
Pass $ 4,040  $ 10,291  $ 4,087  $ 2,369  $ 1,215  $ 1,605  $ 8,656  $ $ 32,265 
OLEM 122  282  98  91  41  92  128  —  854 
Substandard 54  216  110  176  184  212  386  —  1,338 
Doubtful —  —  —  — 
Total Commercial and industrial $ 4,217  $ 10,793  $ 4,295  $ 2,637  $ 1,440  $ 1,909  $ 9,171  $ $ 34,464 
Commercial real estate
Credit Quality Indicator (1):
Pass $ 406  $ 1,605  $ 1,475  $ 1,077  $ 454  $ 999  $ 624  $ —  $ 6,640 
OLEM 88  31  62  68  35  —  287 
Substandard 23  114  27  38  39  —  252 
Total Commercial real estate $ 412  $ 1,716  $ 1,620  $ 1,146  $ 549  $ 1,072  $ 664  $ —  $ 7,179 
Automobile
Credit Quality Indicator (2):
750+ $ 771  $ 2,381  $ 1,817  $ 991  $ 608  $ 279  $ —  $ —  $ 6,847 
650-749 479  1,895  1,161  642  315  163  —  —  4,655 
<650 44  336  271  216  132  90  —  —  1,089 
Total Automobile $ 1,294  $ 4,612  $ 3,249  $ 1,849  $ 1,055  $ 532  $ —  $ —  $ 12,591 
Home equity
Credit Quality Indicator (2):
750+ $ 187  $ 780  $ 21  $ 22  $ 28  $ 479  $ 4,201  $ 189  $ 5,907 
650-749 37  137  171  1,810  176  2,353 
<650 74  286  100  466 
Total Home equity $ 225  $ 918  $ 30  $ 29  $ 38  $ 724  $ 6,297  $ 465  $ 8,726 
Residential mortgage
Credit Quality Indicator (2):
750+ $ 963  $ 3,204  $ 1,143  $ 727  $ 883  $ 1,723  $ $ —  $ 8,644 
650-749 254  836  355  255  249  621  —  —  2,570 
<650 37  90  113  106  408  —  —  761 
Total Residential mortgage $ 1,224  $ 4,077  $ 1,588  $ 1,095  $ 1,238  $ 2,752  $ $ —  $ 11,975 
RV and marine
Credit Quality Indicator (2):
750+ $ 267  $ 1,050  $ 491  $ 547  $ 311  $ 375  $ —  $ —  $ 3,041 
650-749 46  351  193  182  126  176  —  —  1,074 
<650 —  15  21  22  37  —  —  103 
Total RV and marine $ 313  $ 1,409  $ 699  $ 750  $ 459  $ 588  $ —  $ —  $ 4,218 
Other consumer
Credit Quality Indicator (2):
750+ $ 22  $ 59  $ 52  $ 21  $ $ 16  $ 319  $ $ 497 
650-749 30  46  15  264  28  400 
<650 —  25  23  62 
Total Other consumer $ 31  $ 91  $ 105  $ 39  $ 11  $ 21  $ 608  $ 53  $ 959 
(1)Consistent with the credit quality disclosures, indicators for the Commercial portfolio are based on internally defined categories of credit grades which are generally refreshed at least semi-annually.
(2)Consistent with the credit quality disclosures, indicators for the Consumer portfolio are based on updated customer credit scores refreshed at least quarterly.
(3)The total amount of accrued interest recorded for these loans at March 31, 2021, presented in other assets within the Condensed Consolidated Balance Sheets, was $140 million and $119 million of commercial and consumer, respectively.

56 Huntington Bancshares Incorporated


As of December 31, 2020
Term Loans Amortized Cost Basis by Origination Year Revolver Total at Amortized Cost Basis Revolver Total Converted to Term Loans
(dollar amounts in millions) 2020 2019 2018 2017 2016 Prior Total (3)
Commercial and industrial
Credit Quality Indicator (1):
Pass $ 13,757  $ 4,525  $ 2,758  $ 1,347  $ 974  $ 916  $ 8,894  $ $ 33,173 
OLEM 421  116  69  30  33  22  124  —  815 
Substandard 196  144  188  224  46  159  423  —  1,380 
Doubtful —  —  —  — 
Total Commercial and industrial $ 14,376  $ 4,785  $ 3,016  $ 1,601  $ 1,053  $ 1,098  $ 9,442  $ $ 35,373 
Commercial real estate
Credit Quality Indicator (1):
Pass $ 1,742  $ 1,610  $ 1,122  $ 507  $ 507  $ 539  $ 633  $ —  $ 6,660 
OLEM 94  78  63  37  28  14  —  318 
Substandard 27  46  10  29  58  14  36  —  220 
Doubtful —  —  —  —  —  —  — 
Total Commercial real estate $ 1,863  $ 1,734  $ 1,195  $ 573  $ 593  $ 568  $ 673  $ —  $ 7,199 
Automobile
Credit Quality Indicator (2):
750+ $ 2,670  $ 2,013  $ 1,144  $ 742  $ 317  $ 81  $ —  $ —  $ 6,967 
650-749 1,965  1,343  755  386  175  52  —  —  4,676 
<650 312  301  244  157  84  37  —  —  1,135 
Total Automobile $ 4,947  $ 3,657  $ 2,143  $ 1,285  $ 576  $ 170  $ —  $ —  $ 12,778 
Home equity
Credit Quality Indicator (2):
750+ $ 793  $ 26  $ 26  $ 32  $ 89  $ 451  $ 4,373  $ 192  $ 5,982 
650-749 147  11  27  157  1,906  181  2,446 
<650 70  286  99  465 
Total Home equity $ 941  $ 36  $ 35  $ 44  $ 122  $ 678  $ 6,565  $ 472  $ 8,893 
Residential mortgage
Credit Quality Indicator (2):
750+ $ 3,269  $ 1,370  $ 891  $ 1,064  $ 762  $ 1,243  $ $ —  $ 8,600 
650-749 991  435  307  278  171  495  —  —  2,677 
<650 34  89  111  108  81  348  —  —  771 
Total Residential mortgage $ 4,294  $ 1,894  $ 1,309  $ 1,450  $ 1,014  $ 2,086  $ $ —  $ 12,048 
RV and marine
Credit Quality Indicator (2):
750+ $ 1,136  $ 525  $ 589  $ 337  $ 153  $ 254  $ —  $ —  $ 2,994 
650-749 348  215  201  136  64  129  —  —  1,093 
<650 15  21  22  12  29  —  —  103 
Total RV and marine $ 1,488  $ 755  $ 811  $ 495  $ 229  $ 412  $ —  $ —  $ 4,190 
Other consumer
Credit Quality Indicator (2):
750+ $ 69  $ 58  $ 26  $ $ $ 14  $ 340  $ $ 521 
650-749 36  56  17  294  30  443 
<650 —  26  28  69 
Total Other consumer $ 107  $ 122  $ 46  $ 14  $ $ 18  $ 660  $ 60  $ 1,033 
(1)Consistent with the credit quality disclosures, indicators for the Commercial portfolio are based on internally defined categories of credit grades which are generally refreshed at least semi-annually.
(2)Consistent with the credit quality disclosures, indicators for the Consumer portfolio are based on updated customer credit scores refreshed at least quarterly.
(3)The total amount of accrued interest recorded for these loans at December 31, 2020, presented in other assets within the Condensed Consolidated Balance Sheets, was $146 million and $123 million of commercial and consumer, respectively.

2021 1Q Form 10-Q 57


TDR Loans
TDRs are modified loans where a concession was provided to a borrower experiencing financial difficulties. Loan modifications are considered TDRs when the concessions provided would not otherwise be considered. However, not all loan modifications are TDRs. See Note 5 “Loans / Leases and Allowance for Credit Losses” to the Consolidated Financial Statements of the Annual Report on Form 10-K for the year ended December 31, 2020 for an additional discussion of TDRs.
The following table presents, by class and modification type, the number of contracts, post-modification outstanding balance, and the financial effects of the modification for the three-month periods ended March 31, 2021 and 2020.
New Troubled Debt Restructurings (1)
Three Months Ended March 31, 2021
Number of
Contracts
Post-modification Outstanding Recorded Investment (2)
(dollar amounts in millions) Interest rate reduction Amortization or maturity date change Chapter 7 bankruptcy Other Total
Commercial and industrial 12  $ —  $ $ —  $ —  $
Automobile 902  —  — 
Home equity 62  —  — 
Residential mortgage 86  —  13  —  14 
RV and marine 49  —  —  — 
Other consumer 97  —  —  — 
Total new TDRs 1,208  $ —  $ 27  $ $ $ 32 
Three Months Ended March 31, 2020
Number of
Contracts
Post-modification Outstanding Recorded Investment (2)
(dollar amounts in millions) Interest rate reduction Amortization or maturity date change Chapter 7 bankruptcy Other Total
Commercial and industrial 140  $ —  $ 62  $ —  $ —  $ 62 
Commercial real estate —  —  — 
Automobile 798  —  — 
Home equity 63  —  — 
Residential mortgage 101  —  —  11 
RV and marine 28  —  —  — 
Other consumer 249  —  —  — 
Total new TDRs 1,386  $ $ 81  $ $ —  $ 88 
(1)TDRs may include multiple concessions and the disclosure classifications are based on the primary concession provided to the borrower.
(2)Post-modification balances approximate pre-modification balances.
The financial effects of modification on the provision for loan and lease losses for the three-month periods ended March 31, 2021 and 2020, were less than $1 million and $9 million, respectively.
Pledged Loans
The Bank has access to the Federal Reserve’s discount window and advances from the FHLB. As of March 31, 2021 and December 31, 2020, these borrowings and advances are secured by $44.1 billion and $43.0 billion, respectively, of loans.
58 Huntington Bancshares Incorporated


5. ALLOWANCE FOR CREDIT LOSSES
Allowance for Loan and Lease Losses and Allowance for Credit Losses - Roll-forward
The following tables present ALLL and AULC activity by portfolio segment for the three-month periods ended March 31, 2021 and 2020.
(dollar amounts in millions) Commercial Consumer Total
Three-month period ended March 31, 2021:
ALLL balance, beginning of period $ 1,236  $ 578  $ 1,814 
Loan charge-offs (61) (34) (95)
Recoveries of loans previously charged-off 12  19  31 
Provision for loan and lease losses 10  (57) (47)
ALLL balance, end of period $ 1,197  $ 506  $ 1,703 
AULC balance, beginning of period $ 34  $ 18  $ 52 
Provision (reduction in allowance) for unfunded loan commitments and letters of credit (6) (7) (13)
Unfunded commitment losses (1) —  (1)
AULC balance, end of period $ 27  $ 11  $ 38 
ACL balance, end of period $ 1,224  $ 517  $ 1,741 
(dollar amounts in millions) Commercial Consumer Total
Three-month period ended March 31, 2020:
ALLL balance, beginning of period $ 552  $ 231  $ 783 
Cumulative-effect of change in accounting principle for financial instruments - credit losses (1) 180 211 391
Loan charge-offs (88) (48) (136)
Recoveries of loans previously charged-off 14  19 
Provision for loan and lease losses 347  100  447 
ALLL balance, end of period $ 996  $ 508  $ 1,504 
AULC balance, beginning of period $ 102  $ $ 104 
Cumulative-effect of change in accounting principle for financial instruments - credit losses (1) (38) 40 
Provision (reduction in allowance) for unfunded loan commitments and letters of credit (5) (1) (6)
Unfunded commitment losses (1) —  (1)
AULC balance, end of period $ 58  $ 41  $ 99 
ACL balance, end of period $ 1,054  $ 549  $ 1,603 
(1)Relates to day one impact of the CECL adjustment as a result of the implementation of ASU 2016-13.
At March 31, 2021, the ACL was $1.7 billion, a decrease of $125 million from the December 31, 2020 balance of $1.9 billion. The decrease was primarily related to a reduction in credit reserves reflecting an improvement in the economic outlook. NCOs decreased $48 million, or 43%, in for the three-month period ended March 31, 2021. The decrease was driven by both commercial and consumer NCOs.
The suite of CECL models are generally dependent on the rate of change in unemployment rather than the absolute unemployment levels. Additionally, the economic scenarios used in the March 31, 2021 ACL determination contained significant judgmental assumptions around the ultimate number of COVID-19 cases and the economic impact of additional stimulus spending enacted into law during the first quarter. Given the impact of the unemployment variable utilized within the models and the uncertainty associated with key economic scenario assumptions, the March 31, 2021 ACL included a material general reserve component as well as additional industry specific risk profiles to capture economic uncertainty not addressed within the quantitative transaction reserve.
2021 1Q Form 10-Q 59


6. MORTGAGE LOAN SALES AND SERVICING RIGHTS
Residential Mortgage Portfolio
The following table summarizes activity relating to residential mortgage loans sold with servicing retained for the three-month periods ended March 31, 2021 and 2020:
Three Months Ended
March 31,
(dollar amounts in millions) 2021 2020
Residential mortgage loans sold with servicing retained $ 2,256  $ 1,428 
Pretax gains resulting from above loan sales (1) 93  39 
(1)Recorded in mortgage banking income
The following table summarizes the changes in MSRs recorded using the fair value method for the three-month periods ended March 31, 2021 and 2020 (1):
Three Months Ended
March 31,
(dollar amounts in millions) 2021 2020 (1)
Fair value, beginning of period $ 210  $
Fair value election for servicing assets previously measured using the amortized method —  205 
New servicing assets created 33  14 
Change in fair value during the period due to:
Time decay (2) (3) (2)
Payoffs (3) (17) (6)
Changes in valuation inputs or assumptions (4) 51  (53)
Fair value, end of period $ 274  $ 165 
Weighted-average life (years) 7.0 6.4
(1)Prior to January 1, 2020, substantially all of Huntington’s MSR assets were recorded at amortized cost.
(2)Represents decrease in value due to passage of time, including the impact from both regularly scheduled principal payments and partial loan paydowns.
(3)Represents decrease in value associated with loans that paid off during the period.
(4)Represents change in value resulting primarily from market-driven changes in interest rates.
MSRs do not trade in an active, open market with readily observable prices. Therefore, the fair value of MSRs is estimated using a discounted future cash flow model. Changes in the assumptions used may have a significant impact on the valuation of MSRs. MSR values are highly sensitive to movement in interest rates as expected future net servicing income depends on the projected outstanding principal balances of the underlying loans, which can be greatly impacted by the level of prepayments.
For MSRs under the fair value method, a summary of key assumptions and the sensitivity of the MSR value to changes in these assumptions at March 31, 2021, and December 31, 2020 follows:
March 31, 2021 December 31, 2020 (1)
Decline in fair value due to Decline in fair value due to
(dollar amounts in millions) Actual 10%
adverse
change
20%
adverse
change
Actual 10%
adverse
change
20%
adverse
change
Constant prepayment rate (annualized)
12.30  % $ (15) $ (28) 17.36  % $ (12) $ (23)
Spread over forward interest rate swap rates 509  bps (6) (12) 519  bps (4) (8)
(1)Prior to January 1, 2020, substantially all of Huntington’s MSR assets were recorded at amortized cost.
Total servicing, late fees and other ancillary fees included in mortgage banking income was $18 million and $17 million for the three-month periods ended March 31, 2021 and 2020, respectively.
The unpaid principal balance of residential mortgage loans serviced for third parties was $23.6 billion and $23.5 billion at March 31, 2021 and December 31, 2020, respectively.
60 Huntington Bancshares Incorporated


7. OTHER COMPREHENSIVE INCOME
The components of Huntington’s OCI for the three-month periods ended March 31, 2021 and 2020, were as follows:
Three Months Ended
March 31, 2021
Tax (expense)
(dollar amounts in millions) Pretax Benefit After-tax
Unrealized gains (losses) on available-for-sale securities arising during the period $ (287) $ 64  $ (223)
Less: Reclassification adjustment for realized net losses (gains) included in net income (2)
Net change in unrealized holding gains (losses) on available-for-sale securities (278) 62  (216)
Net change in fair value on cash flow hedges (44) 10  (34)
Net change in pension and other post-retirement obligations (1)
Total other comprehensive income (loss) $ (319) $ 71  $ (248)
Three Months Ended
March 31, 2020
Tax (expense)
(dollar amounts in millions) Pretax Benefit After-tax
Unrealized gains (losses) on available-for-sale securities arising during the period $ 217  $ (48) $ 169 
Less: Reclassification adjustment for realized net losses (gains) included in net income (1)
Net change in unrealized gains (losses) on available-for-sale securities 222  (49) 173 
Net change in fair value on cash flow hedges 396  (88) 308 
Net change in pension and other post-retirement obligations — 
Total other comprehensive income (loss) $ 620  $ (137) $ 483 
Activity in accumulated OCI for the three-month periods ended March 31, 2021 and 2020, were as follows:
(dollar amounts in millions)
Unrealized gains (losses) on
debt securities (1)
Change in fair value related to cash flow hedges
Unrealized gains
(losses) for
pension and
other post-
retirement
obligations (2)
Total
Three Months Ended March 31, 2021
Balance, beginning of period $ 188  $ 257  $ (253) $ 192 
Other comprehensive income before reclassifications (223) (34) —  (257)
Amounts reclassified from accumulated OCI to earnings — 
Period change (216) (34) (248)
Balance, end of period $ (28) $ 223  $ (251) $ (56)
Three Months Ended March 31, 2020
Balance, beginning of period $ (28) $ 23  $ (251) $ (256)
Other comprehensive income before reclassifications 169  308  —  477 
Amounts reclassified from accumulated OCI to earnings — 
Period change 173  308  483 
Balance, end of period $ 145  $ 331  $ (249) $ 227 
(1)AOCI amounts at March 31, 2021, December 31, 2020 and March 31, 2020 include $60 million, $69 million and $87 million, respectively, net of unrealized losses on securities transferred from the available-for-sale securities portfolio to the held-to-maturity securities portfolio. The net unrealized losses will be recognized in earnings over the remaining life of the security using the effective interest method.

2021 1Q Form 10-Q 61


8. SHAREHOLDERS’ EQUITY
Preferred Stock
The following is a summary of Huntington’s non-cumulative, non-voting, perpetual preferred stock outstanding as of March 31, 2021.
(dollar amounts in millions)
Series Issuance Date Total Shares Outstanding Carrying Amount Dividend Rate Earliest Redemption Date
Series B 12/28/2011 35,500  $ 23  3-mo. LIBOR + 270 bps 1/15/2017
Series D 3/21/2016 400,000  386  6.25  % 4/15/2021
Series D 5/5/2016 200,000  199  6.25  % 4/15/2021
Series C 8/16/2016 100,000  100  5.875  % 10/15/2021
Series E 2/27/2018 5,000  495  5.700  % 4/15/2023
Series F 5/27/2020 5,000  494  5.625  % 7/15/2030
Series G 8/3/2020 5,000  494  4.450  % 10/15/2027
Series H 2/2/2021 500,000  485  4.500  % 4/15/2026
Total 1,250,500  $ 2,676 
Series B, D, C and H of preferred stock have a liquidation value and redemption price per share of $1,000, plus any declared and unpaid dividends. Series E, F, and G stock have a liquidation value and redemption price per share of $100,000, plus any declared and unpaid dividends. All preferred stock has no stated maturity and redemption is solely at our option. Under current rules, any redemption of the preferred stock is subject to prior approval of the FRB.
The following table presents the dividends declared for each series of Preferred shares for the three-month periods ended March 31, 2021 and 2020:
Three Months Ended March 31,
2021 2020
(amounts in millions, except per share data) Cash Dividend Declared Per Share Cash Dividend Declared Per Share
Preferred Series Amount ($) Amount ($)
Series B $ 7.35  $ —  $ 11.33  $ (1)
Series C 14.69  (2) 14.69  (1)
Series D 15.63  (9) 15.63  (9)
Series E 1,425.00  (7) 1,425.00  (7)
Series F 1,406.25  (7) —  — 
Series G 1,112.50  (6) —  — 
Total $ (31) $ (18)
9. EARNINGS PER SHARE
Basic earnings per share is the amount of earnings (adjusted for dividends declared on preferred stock) available to each share of common stock outstanding during the reporting period. Diluted earnings per share is the amount of earnings available to each share of common stock outstanding during the reporting period adjusted to include the effect of potentially dilutive common shares. Potentially dilutive common shares include incremental shares issued for stock options, restricted stock units and awards, and distributions from deferred compensation plans. Potentially dilutive common shares are excluded from the computation of diluted earnings per share in periods in which the effect would be antidilutive.
62 Huntington Bancshares Incorporated


The calculation of basic and diluted earnings per share for the three-month periods ended March 31, 2021 and 2020 was as follows:
Three Months Ended
March 31,
(dollar amounts in millions, except per share data, share count in thousands) 2021 2020
Basic earnings per common share:
Net income $ 532  $ 48 
Preferred stock dividends (31) (18)
Net income available to common shareholders $ 501  $ 30 
Average common shares issued and outstanding 1,017,512  1,017,643 
Basic earnings per common share $ 0.49  $ 0.03 
Diluted earnings per common share:
Dilutive potential common shares:
Stock options and restricted stock units and awards 18,397  12,363 
Shares held in deferred compensation plans 5,094  4,570 
Dilutive potential common shares 23,491  16,933 
Total diluted average common shares issued and outstanding 1,041,003  1,034,576 
Diluted earnings per common share $ 0.48  $ 0.03 
Anti-dilutive awards (1) 1,666  8,045 
(1)Reflects the total number of shares related to outstanding options that have been excluded from the computation of diluted earnings per share because the impact would have been anti-dilutive.
10. NONINTEREST INCOME
Huntington earns a variety of revenue including interest and fees from customers as well as revenues from non-customers. Certain sources of revenue are recognized within interest or fee income and are outside of the scope of ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). Other sources of revenue fall within the scope of ASC 606 and are generally recognized within noninterest income. These revenues are included within various sections of the Unaudited Condensed Consolidated Financial Statements. The following table shows Huntington’s total noninterest income segregated between contracts with customers within the scope of ASC 606 and those within the scope of other GAAP Topics.
(dollar amounts in millions) Three Months Ended March 31,
Noninterest income 2021 2020
Noninterest income from contracts with customers $ 222  $ 227 
Noninterest income within the scope of other GAAP topics 173  134 
Total noninterest income $ 395  $ 361 
2021 1Q Form 10-Q 63


The following table illustrates the disaggregation by operating segment and major revenue stream and reconciles disaggregated revenue to segment revenue presented in Note 15 “Segment Reporting”.
Three Months Ended March 31, 2021
(dollar amounts in millions) Consumer & Business Banking Commercial Banking Vehicle Finance RBHPCG Treasury / Other Huntington Consolidated
Major Revenue Streams
Service charges on deposit accounts $ 48  $ 19  $ $ —  $ —  $ 69 
Card and payment processing income 58  —  —  —  62 
Trust and investment management services 13  —  38  —  52 
Insurance income 12  —  13  —  27 
Other noninterest income 12 
Net revenue from contracts with customers $ 137  $ 28  $ $ 52  $ $ 222 
Noninterest income within the scope of
other GAAP topics
99  60  —  13  173 
Total noninterest income $ 236  $ 88  $ $ 53  $ 15  $ 395 
Three Months Ended March 31, 2020
(dollar amounts in millions) Consumer & Business Banking Commercial Banking Vehicle Finance RBHPCG Treasury / Other Huntington Consolidated
Major Revenue Streams
Service charges on deposit accounts $ 68  $ 17  $ $ $ —  $ 87 
Card and payment processing income 52  —  —  —  56 
Trust and investment management services 10  —  36  —  47 
Insurance income —  12  23 
Other noninterest income 14 
Net revenue from contracts with customers $ 146  $ 27  $ $ 50  $ $ 227 
Noninterest income within the scope of
other GAAP topics
66  59  —  134 
Total noninterest income $ 212  $ 86  $ $ 50  $ 10  $ 361 
Huntington generally provides services for customers in which it acts as principal. Payment terms and conditions vary amongst services and customers, and thus impact the timing and amount of revenue recognition. Some fees may be paid before any service is rendered and accordingly, such fees are deferred until the obligations pertaining to those fees are satisfied. Most Huntington contracts with customers are cancelable by either party without penalty or they are short-term in nature, with a contract duration of less than one year. Accordingly, most revenue deferred for the reporting period ended March 31, 2021 is expected to be earned within one year. Huntington does not have significant balances of contract assets or contract liabilities and any change in those balances during the reporting period ended March 31, 2021 was determined to be immaterial.
64 Huntington Bancshares Incorporated


11. FAIR VALUES OF ASSETS AND LIABILITIES
See Note 20 “Fair Value of Assets and Liabilities” to the Consolidated Financial Statements of the Annual Report on Form 10-K for the year ended December 31, 2020 for a description of the valuation methodologies used for instruments measured at fair value. Assets and liabilities measured at fair value rarely transfer between Level 1 and Level 2 measurements. There were no such transfers during the three-month periods ended March 31, 2021 and 2020.
Assets and Liabilities measured at fair value on a recurring basis
Assets and liabilities measured at fair value on a recurring basis at March 31, 2021 and December 31, 2020 are summarized below:
Fair Value Measurements at Reporting Date Using Netting Adjustments (1) March 31, 2021
(dollar amounts in millions) Level 1 Level 2 Level 3
Assets
Trading account securities:
Municipal securities $ —  $ 48  $ —  $ —  $ 48 
Corporate debt —  —  — 
—  51  —  —  51 
Available-for-sale securities:
U.S. Treasury securities —  —  — 
Residential CMOs —  3,172  —  —  3,172 
Residential MBS —  10,645  —  —  10,645 
Commercial MBS —  1,227  —  —  1,227 
Other agencies —  46  —  —  46 
Municipal securities —  52  3,070  —  3,122 
Private-label CMO —  39  11  —  50 
Asset-backed securities —  200  47  —  247 
Corporate debt —  857  —  —  857 
Other securities/sovereign debt —  —  — 
16,242  3,128  —  19,375 
Other securities 42  17  —  —  59 
Loans held for sale —  1,531  —  —  1,531 
Loans held for investment —  96  22  —  118 
MSRs —  —  274  —  274 
Derivative assets —  1,808  21  (816) 1,013 
Liabilities
Derivative liabilities —  863  11  (703) 171 
2021 1Q Form 10-Q 65


Fair Value Measurements at Reporting Date Using
Netting Adjustments (1)
December 31, 2020
(dollar amounts in millions)
Level 1
Level 2
Level 3
Assets
Trading account securities:
Municipal securities $ —  $ 62  $ —  $ —  $ 62 
Available-for-sale securities:
U.S. Treasury securities —  —  — 
Residential CMOs —  3,666  —  —  3,666 
Residential MBS —  7,935  —  —  7,935 
Commercial MBS —  1,163  —  —  1,163 
Other agencies —  62  —  —  62 
Municipal securities —  53  2,951  —  3,004 
Private-label CMO —  —  — 
Asset-backed securities —  182  10  —  192 
Corporate debt —  445  —  —  445 
Other securities/sovereign debt —  —  — 
13,510  2,970  —  16,485 
Other securities 59  —  —  —  59 
Loans held for sale —  1,198  —  —  1,198 
Loans held for investment —  71  23  —  94 
MSRs —  —  210  —  210 
Derivative assets —  1,903  43  (889) 1,057 
Liabilities
Derivative liabilities —  1,031  (917) 116 
(1)Amounts represent the impact of legally enforceable master netting agreements that allow the Company to settle positive and negative positions and cash collateral held or placed with the same counterparties.
The tables below present a rollforward of the balance sheet amounts for the three-month periods ended March 31, 2021 and 2020, for financial instruments measured on a recurring basis and classified as Level 3. The classification of an item as Level 3 is based on the significance of the unobservable inputs to the overall fair value measurement. However, Level 3 measurements may also include observable components of value that can be validated externally. Accordingly, the gains and losses in the table below include changes in fair value due in part to observable factors that are part of the valuation methodology.
Level 3 Fair Value Measurements
Three Months Ended March 31, 2021
Available-for-sale securities Loans held for investment
(dollar amounts in millions) MSRs
Derivative
instruments
Municipal
securities
Private-
label CMO
Asset-backed
securities
Opening balance $ 210  $ 41  $ 2,951  $ $ 10  $ 23 
Transfers out of Level 3 (1) —  (39) —  —  —  — 
Total gains/losses for the period:
Included in earnings 51  —  —  —  — 
Included in OCI —  —  (4) —  —  — 
Purchases/originations 33  —  209  37  — 
Repayments —  —  —  —  —  (1)
Settlements (20) —  (86) —  —  — 
Closing balance $ 274  $ 10  $ 3,070  $ 11  $ 47  $ 22 
Change in unrealized gains or losses for the period included in earnings for assets held at end of the reporting date $ 51  $ (26) $ —  $ —  $ —  $ — 
Change in unrealized gains or losses for the period included in other comprehensive income for assets held at the end of the reporting period —  —  (5) —  —  — 
66 Huntington Bancshares Incorporated


Level 3 Fair Value Measurements
Three Months Ended March 31, 2020
MSRs
Derivative
instruments
Available-for-sale securities Loans held for investment
(dollar amounts in millions)
Municipal
securities
Private-
label
CMO
Asset-backed
securities
Opening balance $ $ $ 2,999  $ $ 48  $ 26 
Fair value election for servicing assets previously measured using the amortized method 205  —  —  —  —  — 
Transfers out of Level 3 (1) —  (20) —  —  —  — 
Total gains/losses for the period:
Included in earnings (47) 53  (1) —  —  — 
Included in OCI —  —  (68) —  —  — 
Purchases/originations —  —  73  —  27  — 
Settlements —  —  (66) —  (6) — 
Closing balance $ 165  $ 39  $ 2,937  $ $ 69  $ 26 
Change in unrealized gains or losses for the period included in earnings for assets held at end of the reporting date $ (47) $ 34  $ —  $ —  $ —  $ — 
Change in unrealized gains or losses for the period included in other comprehensive income for assets held at the end of the reporting period $ —  $ —  (68) $ —  0 $ —  $ — 
(1)Transfers out of Level 3 represent the settlement value of the derivative instruments (i.e. interest rate lock agreements) that is transferred to loans held for sale, which is classified as Level 2.
The tables below summarize the classification of gains and losses due to changes in fair value, recorded in earnings for Level 3 assets and liabilities for the three-month periods ended March 31, 2021 and 2020:
Level 3 Fair Value Measurements
Three Months Ended March 31, 2021
(dollar amounts in millions) MSRs
Derivative
instruments
Classification of gains and losses in earnings:
Mortgage banking income $ 51  $
Total $ 51  $
Level 3 Fair Value Measurements
Three Months Ended March 31, 2020
Available-for-sale securities
(dollar amounts in millions) MSRs
Derivative
instruments
Municipal
securities
Classification of gains and losses in earnings:
Mortgage banking income $ (47) $ 53  $ — 
Interest and fee income —  —  (1)
Total $ (47) $ 53  $ (1)
2021 1Q Form 10-Q 67


Assets and liabilities under the fair value option
The following tables present the fair value and aggregate principal balance of certain assets and liabilities under the fair value option:
March 31, 2021
(dollar amounts in millions) Total Loans Loans that are 90 or more days past due
Assets
Fair value
carrying
amount
Aggregate
unpaid
principal
Difference
Fair value
carrying
amount
Aggregate
unpaid
principal
Difference
Loans held for sale $ 1,531  $ 1,501  $ 30  $ —  $ —  $ — 
Loans held for investment 118  123  (5) (1)
December 31, 2020
(dollar amounts in millions) Total Loans Loans that are 90 or more days past due
Assets
Fair value
carrying
amount
Aggregate
unpaid
principal
Difference
Fair value
carrying
amount
Aggregate
unpaid
principal
Difference
Loans held for sale $ 1,198  $ 1,134  $ 64  $ $ $ — 
Loans held for investment 94  99  (5) (1)
The following table present the net gains (losses) from fair value changes for the three-month periods ended March 31, 2021 and 2020.
Net gains (losses) from fair value changes
(dollar amounts in millions) Three Months Ended March 31,
Assets 2021 2020
Loans held for sale (1) $ (34) $ 19 
(1)The net gains (losses) from fair value changes are included in Mortgage banking income on the Unaudited Condensed Consolidated Statements of Income.
Assets and Liabilities measured at fair value on a nonrecurring basis
Certain assets and liabilities may be required to be measured at fair value on a nonrecurring basis in periods subsequent to their initial recognition. These assets and liabilities are not measured at fair value on an ongoing basis; however, they are subject to fair value adjustments in certain circumstances, such as when there is evidence of impairment. The amounts presented represent the fair value on the various measurement dates throughout the period. The gains (losses) represent the amounts recorded during the period regardless of whether the asset is still held at period end.
The amounts measured at fair value on a nonrecurring basis at March 31, 2021 were as follows:
Fair Value Measurements Using
(dollar amounts in millions) Fair Value
Quoted Prices
In Active
Markets for
Identical Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Other
Unobservable
Inputs
(Level 3)
Total
Gains/(Losses)
Three Months Ended
March 31, 2021
Collateral-dependent loans 12  —  —  12  (1)
Huntington records nonrecurring adjustments of collateral-dependent loans held for investment. Such amounts are generally based on the fair value of the underlying collateral supporting the loan. Appraisals are generally obtained to support the fair value of the collateral and incorporate measures such as recent sales prices for comparable properties and cost of construction. Periodically, in cases where the carrying value exceeds the fair value of the collateral less cost to sell, an impairment charge is recognized in the form of a charge-off.

68 Huntington Bancshares Incorporated


Significant unobservable inputs for assets and liabilities measured at fair value on a recurring and nonrecurring basis
The table below presents quantitative information about the significant unobservable inputs for assets and liabilities measured at fair value on a recurring and nonrecurring basis at March 31, 2021 and December 31, 2020:
Quantitative Information about Level 3 Fair Value Measurements at March 31, 2021 (1) (1)
(dollar amounts in millions) Fair Value Valuation Technique Significant Unobservable Input Range Weighted Average
Measured at fair value on a recurring basis:
MSRs $ 274  Discounted cash flow Constant prepayment rate % - 22% 12  %
Spread over forward interest rate swap rates % - 11% %
Derivative assets 21  Consensus Pricing Net market price (5) % - 12% %
Estimated Pull through % % - 100% 90  %
Municipal securities 3,070  Discounted cash flow Discount rate —  % - 2% %
Asset-backed securities 47  Cumulative default —  % - 39% %
Loss given default % - 80% 25  %
Measured at fair value on a nonrecurring basis:
Collateral-dependent loans 12  Appraisal value N/A N/A
Quantitative Information about Level 3 Fair Value Measurements at December 31, 2020 (1)
(dollar amounts in millions) Fair Value Valuation Technique Significant Unobservable Input Range Weighted Average
Measured at fair value on a recurring basis:
MSRs $ 210  Discounted cash flow Constant prepayment rate % - 24% 17  %
Spread over forward interest rate swap rates % - 11% %
Derivative assets 43  Consensus Pricing Net market price (4) % - 11% %
Estimated Pull through % % - 100% 88  %
Municipal securities 2,951  Discounted cash flow Discount rate —  % 1% %
Asset-backed securities 10  Cumulative default —  % 39% %
Loss given default % 80% 25  %
Measured at fair value on a nonrecurring basis:
Collateral-dependent loans 144  Appraisal value N/A NA
(1)     Certain disclosures related to quantitative level 3 fair value measurements do not include those deemed to be immaterial.
The following provides a general description of the impact of a change in an unobservable input on the fair value measurement and the interrelationship between unobservable inputs, where relevant/significant. Interrelationships may also exist between observable and unobservable inputs.
Credit loss estimates, such as probability of default, constant default, cumulative default, loss given default, cure given deferral, and loss severity, are driven by the ability of the borrowers to pay their loans and the value of the underlying collateral and are impacted by changes in macroeconomic conditions, typically increasing when economic conditions worsen and decreasing when conditions improve. An increase in the estimated prepayment rate typically results in a decrease in estimated credit losses and vice versa. Higher credit loss estimates generally result in lower fair values. Credit spreads generally increase when liquidity risks and market volatility increase and decrease when liquidity conditions and market volatility improve.
Discount rates and spread over forward interest rate swap rates typically increase when market interest rates increase and/or credit and liquidity risks increase and decrease when market interest rates decline and/or credit and liquidity conditions improve. Higher discount rates and credit spreads generally result in lower fair market values.
Net market price and pull through percentages generally increase when market interest rates increase and decline when market interest rates decline. Higher net market price and pull through percentages generally result in higher fair values.
2021 1Q Form 10-Q 69


Fair values of financial instruments
The following table provides the carrying amounts and estimated fair values of Huntington’s financial instruments at March 31, 2021 and December 31, 2020:
March 31, 2021
(dollar amounts in millions) Amortized Cost Lower of Cost or Market
Fair Value or
Fair Value Option
Total Carrying Amount Estimated Fair Value
Financial Assets
Cash and short-term assets $ 8,641  $ —  $ —  $ 8,641  $ 8,641 
Trading account securities —  —  51  51  51 
Available-for-sale securities —  —  19,375  19,375  19,375 
Held-to-maturity securities 7,815  —  —  7,815  8,062 
Other securities 352  —  59  411  411 
Loans held for sale —  1,531  1,537  1,537 
Net loans and leases (1) 78,409  —  118  78,527  78,603 
Derivative assets —  —  1,013  1,013  1,013 
Financial Liabilities
Deposits 102,184  —  —  102,184  102,231 
Short-term borrowings 219  —  —  219  219 
Long-term debt 7,210  —  —  7,210  7,305 
Derivative liabilities —  —  171  171  171 
December 31, 2020
(dollar amounts in millions) Amortized Cost Lower of Cost or Market
Fair Value or
Fair Value Option
Total Carrying Amount Estimated Fair Value
Financial Assets
Cash and short-term assets $ 6,712  $ —  $ —  $ 6,712  $ 6,712 
Trading account securities —  —  62  62  62 
Available-for-sale securities —  —  16,485  16,485  16,485 
Held-to-maturity securities 8,861  —  —  8,861  9,255 
Other securities 359  —  59  418  418 
Loans held for sale —  77  1,198  1,275  1,275 
Net loans and leases (1) 79,700  —  94  79,794  80,477 
Derivative assets —  —  1,057  1,057  1,057 
Financial Liabilities
Deposits 98,948  —  —  98,948  99,021 
Short-term borrowings 183  —  —  183  183 
Long-term debt 8,352  —  —  8,352  8,568 
Derivative liabilities —  —  116  116  116 
(1)Includes collateral-dependent loans.
70 Huntington Bancshares Incorporated


The following table presents the level in the fair value hierarchy for the estimated fair values at March 31, 2021 and December 31, 2020:
Estimated Fair Value Measurements at Reporting Date Using Netting Adjustments (1)  March 31, 2021
(dollar amounts in millions) Level 1 Level 2 Level 3
Financial Assets
Trading account securities $ —  $ 51  $ —  $ 51 
Available-for-sale securities 16,242  3,128  19,375 
Held-to-maturity securities —  8,062  —  8,062 
Other securities (2) 42  17  —  59 
Loans held for sale —  1,531  1,537 
Net loans and direct financing leases —  96  78,507  78,603 
Derivative assets —  1,808  21  $ (816) 1,013 
Financial Liabilities
Deposits —  99,998  2,233  102,231 
Short-term borrowings —  219  —  219 
Long-term debt —  6,736  569  7,305 
Derivative liabilities —  863  11  (703) 171 
Estimated Fair Value Measurements at Reporting Date Using Netting Adjustments (1) December 31, 2020
(dollar amounts in millions) Level 1 Level 2 Level 3
Financial Assets
Trading account securities $ —  $ 62  $ —  $ 62 
Available-for-sale securities 13,510  2,970  16,485 
Held-to-maturity securities —  9,255  —  9,255 
Other securities (2) 59  —  —  59 
Loans held for sale —  1,198  77  1,275 
Net loans and direct financing leases —  71  80,406  80,477 
Derivative assets —  1,903  43  $ (889) 1,057 
Financial Liabilities
Deposits —  96,656  2,365  99,021 
Short-term borrowings —  183  —  183 
Long-term debt —  7,999  569  8,568 
Derivative liabilities —  1,031  (917) 116 
(1)Amounts represent the impact of legally enforceable master netting agreements that allow the Company to settle positive and negative positions and cash collateral held or placed with the same counterparties.
(2)Excludes securities without readily determinable fair values.
The short-term nature of certain assets and liabilities result in their carrying value approximating fair value. These include trading account securities, customers’ acceptance liabilities, short-term borrowings, bank acceptances outstanding, FHLB advances, and cash and short-term assets, which include cash and due from banks, interest-bearing deposits in banks, interest-bearing deposits at Federal Reserve Bank, federal funds sold, and securities purchased under resale agreements. Loan commitments and letters-of-credit generally have short-term, variable-rate features and contain clauses that limit Huntington’s exposure to changes in customer credit quality. Accordingly, their carrying values, which are immaterial at the respective balance sheet dates, are reasonable estimates of fair value.
Certain assets, the most significant being operating lease assets, bank owned life insurance, and premises and equipment, do not meet the definition of a financial instrument and are excluded from this disclosure. Similarly, mortgage servicing rights, deposit base, and other customer relationship intangibles are not considered financial instruments and are not included above. Accordingly, this fair value information is not intended to, and does not,
2021 1Q Form 10-Q 71


represent Huntington’s underlying value. Many of the assets and liabilities subject to the disclosure requirements are not actively traded, requiring fair values to be estimated by Management. These estimations necessarily involve the use of judgment about a wide variety of factors, including but not limited to, relevancy of market prices of comparable instruments, expected future cash flows, and appropriate discount rates.
12. DERIVATIVE FINANCIAL INSTRUMENTS
Derivative financial instruments are recorded in the Unaudited Condensed Consolidated Balance Sheets as either an asset or a liability (in other assets or other liabilities, respectively) and measured at fair value.
Derivative financial instruments can be designated as accounting hedges under GAAP. Designating a derivative as an accounting hedge allows Huntington to recognize gains and losses on the hedging instruments in the income statement line item where the gains and losses on the hedged item are recognized. Gains and losses on derivatives that are not designated in an effective hedge relationship under GAAP immediately impact earnings within the period they occur.
The following table presents the fair values and notional values of all derivative instruments included in the Unaudited Condensed Consolidated Balance Sheets at March 31, 2021 and December 31, 2020. Amounts in the table below are presented gross without the impact of any net collateral arrangements.
March 31, 2021 December 31, 2020
(dollar amounts in millions) Notional Value Asset Liability Notional Value Asset Liability
Derivatives designated as Hedging Instruments
Interest rate contracts $ 24,937  $ 638  $ 42  $ 27,056  $ 719  $ 51 
Derivatives not designated as Hedging Instruments
Interest rate contracts 55,792  1,034  686  44,495  1,074  828 
Foreign exchange contracts 2,737  44  42  2,718  46  47 
Commodities contracts 1,660  101  98  1,952  107  103 
Equity contracts 502  12  517  — 
Total Contracts $ 85,628  $ 1,829  $ 874  $ 76,738  $ 1,946  $ 1,033 
The following table presents the amount of gain or loss recognized in income for derivatives not designated as hedging instruments under ASC Subtopic 815-10 in the Unaudited Condensed Consolidated Income Statement for the three-month periods ended March 31, 2021 and 2020, respectively.
Location of Gain or (Loss) Recognized in Income
on Derivative
Amount of Gain or (Loss) Recognized in Income on Derivative
Three Months Ended
March 31,
(dollar amounts in millions) 2021 2020
Interest rate contracts:
Customer Capital markets fees $ 12  $ 18 
Mortgage Banking Mortgage banking income (6) 96 
Interest rate floors Interest and fee income on loans and leases (2) — 
Interest rate caps Interest expense on long-term debt 144  — 
Foreign exchange contracts Capital markets fees
Commodities contracts Capital markets fees — 
Equity contracts Other noninterest expense (7) (2)
Total $ 147  $ 120 
Derivatives used in asset and liability management activities
Huntington engages in balance sheet hedging activity, principally for asset and liability management purposes. Balance sheet hedging activity is generally arranged to receive hedge accounting treatment that can be classified as either fair value or cash flow hedges. Fair value hedges are executed to hedge changes in fair value of outstanding fixed-rate debt and investment securities caused by fluctuations in market interest rates. Cash flow hedges are
72 Huntington Bancshares Incorporated


executed to modify interest rate characteristics of designated commercial loans in order to reduce the impact of changes in future cash flows due to market interest rate changes.
The following table presents the gross notional values of derivatives used in Huntington’s asset and liability management activities at March 31, 2021 and December 31, 2020, identified by the underlying interest rate-sensitive instruments.
March 31, 2021
(dollar amounts in millions) Fair Value Hedges Cash Flow Hedges Economic Hedges Total
Instruments associated with:
Investment securities $ 3,190  $ —  $ —  $ 3,190 
Loans —  16,350  1,271  17,621 
Long-term debt 5,397  —  8,000  13,397 
Total notional value at March 31, 2021 $ 8,587  $ 16,350  $ 9,271  $ 34,208 
December 31, 2020
(dollar amounts in millions) Fair Value Hedges Cash Flow Hedges Economic Hedges Total
Instruments associated with:
Investment securities $ 3,484  $ —  $ —  $ 3,484 
Loans —  17,375  1,271  18,646 
Long-term debt 6,197  —  5,000  11,197 
Total notional value at December 31, 2020 $ 9,681  $ 17,375  $ 6,271  $ 33,327 
These derivative financial instruments were entered into for the purpose of managing the interest rate risk of assets and liabilities. Net amounts receivable or payable on contracts hedging either interest earning assets or interest bearing liabilities were accrued as an adjustment to either interest income or interest expense. Also, recorded as an adjustment to interest income were the amounts related to the amortization of floors and forward-starting floors that were excluded from the hedge effectiveness, changes in the fair value of economic hedges, as well as the amounts related to terminated hedges reclassified from AOCI. The net amounts resulted in an increase (decrease) to net interest income of $225 million and $16 million for the three-month periods ended March 31, 2021, and 2020, respectively.
Fair Value Hedges
The changes in fair value of the fair value hedges are recorded through earnings and offset against changes in the fair value of the hedged item.
Huntington has designated $2.8 billion of interest rate swaps as fair value hedges of fixed-rate investment securities using the last-of-layer method. This approach allows the Company to designate as the hedged item a stated amount of the assets that are not expected to be affected by prepayments, defaults and other factors affecting the timing and amount of cash flows. The fair value basis adjustment on our hedged mortgage-backed securities is included in available-for-sale securities on our Unaudited Condensed Consolidated Statements of Financial Condition.
2021 1Q Form 10-Q 73


The following table presents the change in fair value for derivatives designated as fair value hedges as well as the offsetting change in fair value on the hedged item for the three-month periods ended March 31, 2021 and 2020.
Three Months Ended
March 31,
(dollar amounts in millions) 2021 2020
Interest rate contracts
Change in fair value of interest rate swaps hedging investment securities (1) $ 43  $ — 
Change in fair value of hedged investment securities (1) (44) — 
Change in fair value of interest rate swaps hedging long-term debt (2) (50) 200 
Change in fair value of hedged long term debt (2) 52  (190)
(1)Recognized in Interest income—available-for-sale securities—taxable in the Unaudited Condensed Consolidated Statements of Income
(2)Recognized in Interest expense—long-term debt in the Unaudited Condensed Consolidated Statements of Income.
As of March 31, 2021, and December 31, 2020, the following amounts were recorded on the balance sheet related to cumulative basis adjustments for fair value hedges.
Amortized Cost Cumulative Amount of Fair Value Hedging Adjustment To Hedged Items
(dollar amounts in millions) March 31, 2021 December 31, 2020 March 31, 2021 December 31, 2020
Assets
Investment securities (1) $ 5,713  $ 6,637  $ $
Liabilities
Long-term debt 5,538  6,383  180  232 
(1)Amounts include the amortized cost basis of closed portfolios used to designate hedging relationships in which the hedged item is the last layer expected to be remaining at the end of the hedging relationship. As of March 31, 2021, the amortized cost basis of the closed portfolios used in these hedging relationships was $5.3 billion, the cumulative basis adjustments associated with these hedging relationships was $1 million, and the amounts of the designated hedged items were $2.8 billion.
The cumulative amount of fair value hedging adjustments remaining for any hedged assets and liabilities for which hedge accounting has been discontinued was $(50) million and $(62) million at March 31, 2021 and December 31, 2020, respectively.
Cash Flow Hedges
At March 31, 2021, Huntington has $16.4 billion of interest rate floors, floor spreads and swaps. These are designated as cash flow hedges for variable rate commercial loans indexed to LIBOR. The change in the fair value of a derivative instrument designated as a cash flow hedge is initially recognized in OCI and is reclassified into income when the hedged item impacts earnings. The initial premium paid for the interest rate floor contracts represents the time value of the contracts and is not included in the measurement of hedge effectiveness. Any change in fair value related to time value is recognized in OCI. The initial premium paid is amortized on a straight line basis as a reduction to interest income over the contractual life of these contracts.
Gains and (losses) on interest rate floors, floor spreads, and swaps recognized in other comprehensive income were $(34) million and $308 million for the three-months periods ended March 31, 2021 and 2020, respectively.
Derivatives used in mortgage banking activities
Mortgage loan origination hedging activity
Huntington’s mortgage origination hedging activity is related to economically hedging Huntington’s mortgage pricing commitments to customers and the secondary sale to third parties. The value of a newly originated mortgage is not firm until the interest rate is committed or locked. Forward commitments to sell economically hedge the possible loss on interest rate lock commitments due to interest rate change. The net asset position of these derivatives at March 31, 2021 and December 31, 2020 are $65 million and $26 million, respectively. At March 31, 2021 and December 31, 2020, Huntington had commitments to sell residential real estate loans of $2.9 billion and $2.9 billion, respectively. These contracts mature in less than one year.
74 Huntington Bancshares Incorporated


MSR hedging activity
Huntington’s MSR economic hedging activity uses securities and derivatives to manage the value of the MSR asset and to mitigate the various types of risk inherent in the MSR asset, including risks related to duration, basis, convexity, volatility, and yield curve. The hedging instruments include forward commitments, TBA securities, Treasury futures contracts, interest rate swaps, and options on interest rate swaps.
The notional value of the derivative financial instruments, the corresponding net asset (liability) position recognized in other assets and/or other liabilities, and net trading gains (losses) related to MSR hedging activity is summarized in the following table:
(dollar amounts in millions) March 31,
2021
December 31,
2020
Notional value $ 875  $ 1,170 
Trading assets 43 
Three Months Ended
March 31, 2021
(dollar amounts in millions) 2021 2020
Trading gains $ (46) $ 57 
MSR hedging trading assets and liabilities are included in other assets and other liabilities, respectively, in the Unaudited Condensed Balance Sheets. Trading gains (losses) are included in mortgage banking income in the Unaudited Condensed Consolidated Statement of Income.
Derivatives used in customer related activities
Various derivative financial instruments are offered to enable customers to meet their financing and investing objectives and for their risk management purposes. Derivative financial instruments used in trading activities consist of commodity, interest rate, and foreign exchange contracts. Huntington enters into offsetting third-party contracts with approved, reputable counterparties with substantially matching terms and currencies in order to economically hedge significant exposure related to derivatives used in trading activities.
The interest rate or price risk of customer derivatives is mitigated by entering into similar derivatives having offsetting terms with other counterparties. The credit risk to these customers is evaluated and included in the calculation of fair value. Foreign currency derivatives help the customer hedge risk and reduce exposure to fluctuations in exchange rates. Transactions are primarily in liquid currencies with Canadian dollars and Euros comprising a majority of all transactions. Commodity derivatives help the customer hedge risk and reduce exposure to fluctuations in the price of various commodities. Hedging of energy-related products and base metals comprise the majority of these transactions.
The net fair values of these derivative financial instruments, for which the gross amounts are included in other assets or other liabilities at both March 31, 2021 and December 31, 2020, were $73 million and $70 million, respectively. The total notional values of derivative financial instruments used by Huntington on behalf of customers, including offsetting derivatives, were $46 billion and $37 billion at March 31, 2021 and December 31, 2020, respectively. Huntington’s credit risk from customer derivatives was $593 million and $882 million at the same dates, respectively.
Financial assets and liabilities that are offset in the Unaudited Condensed Consolidated Balance Sheets
Huntington records derivatives at fair value as further described in Note 11 “Fair Values of Assets and Liabilities”.
Derivative balances are presented on a net basis taking into consideration the effects of legally enforceable master netting agreements. Additionally, collateral exchanged with counterparties is also netted against the applicable derivative fair values. Huntington enters into derivative transactions with two primary groups: broker-dealers and banks, and Huntington’s customers. Different methods are utilized for managing counterparty credit exposure and credit risk for each of these groups.
Huntington enters into transactions with broker-dealers and banks for various risk management purposes. These types of transactions generally are high dollar volume. Huntington enters into collateral and master netting agreements with these counterparties, and routinely exchanges cash and high quality securities collateral.
2021 1Q Form 10-Q 75


Huntington enters into transactions with customers to meet their financing, investing, payment and risk management needs. These types of transactions generally are low dollar volume. Huntington enters into master netting agreements with customer counterparties; however, collateral is generally not exchanged with customer counterparties.
In addition to the customer derivative credit exposure, aggregate credit risk associated with broker-dealer and bank derivative transactions, net of collateral that has been pledged by the counterparty, was $420 million and $175 million at March 31, 2021 and December 31, 2020, respectively. The credit risk associated with derivatives is calculated after considering master netting agreements.
At March 31, 2021, Huntington pledged $69 million of investment securities and cash collateral to counterparties, while other counterparties pledged $434 million of investment securities and cash collateral to Huntington to satisfy collateral netting agreements. In the event of credit downgrades, Huntington would not be required to provide additional collateral.
The following tables present the gross amounts of these assets and liabilities with any offsets to arrive at the net amounts recognized in the Unaudited Condensed Consolidated Balance Sheets at March 31, 2021 and December 31, 2020.
Offsetting of Financial Assets and Derivative Assets
Gross amounts
offset in the unaudited
condensed
consolidated
balance sheets
Net amounts of
assets
presented in
the unaudited condensed
consolidated
balance sheets
Gross amounts not offset in the
unaudited condensed consolidated
balance sheets
(dollar amounts in millions)
Gross amounts
of recognized
assets
Financial
instruments
Cash collateral
received
Net amount
March 31, 2021 $ 1,829  $ (816) $ 1,013  $ (82) $ (190) $ 741 
December 31, 2020 1,946  (889) 1,057  (112) (142) 803 
Offsetting of Financial Liabilities and Derivative Liabilities
Gross amounts
offset in the unaudited
condensed
consolidated
balance sheets
Net amounts of
liabilities
presented in
the unaudited condensed
consolidated
balance sheets
Gross amounts not offset in the
unaudited condensed consolidated
balance sheets
(dollar amounts in millions)
Gross amounts
of recognized
liabilities
Financial
instruments
Cash collateral
delivered
Net amount
March 31, 2021 $ 874  $ (703) $ 171  $ (17) $ (173) $ (19)
December 31, 2020 1,033  (917) 116  (9) (105)
13. VIEs
Unconsolidated VIEs
The following tables provide a summary of the assets and liabilities included in Huntington’s Unaudited Condensed Consolidated Financial Statements, as well as the maximum exposure to losses, associated with its interests related to unconsolidated VIEs for which Huntington holds an interest in, but is not the primary beneficiary, of the VIE at March 31, 2021, and December 31, 2020:
March 31, 2021
(dollar amounts in millions)
Total Assets
Total Liabilities
Maximum Exposure to Loss
Trust Preferred Securities
$ 14  $ 253  $ — 
Affordable Housing Tax Credit Partnerships
945  445  945 
Other Investments
329  72  329 
Total
$ 1,288  $ 770  $ 1,274 
76 Huntington Bancshares Incorporated


December 31, 2020
(dollar amounts in millions) Total Assets Total Liabilities Maximum Exposure to Loss
Trust Preferred Securities $ 14  $ 252  $ — 
Affordable Housing Tax Credit Partnerships 956  500  956 
Other Investments 308  72  308 
Total $ 1,278  $ 824  $ 1,264 
Trust-Preferred Securities
Huntington has certain wholly-owned trusts whose assets, liabilities, equity, income, and expenses are not included within Huntington’s Unaudited Condensed Consolidated Financial Statements. These trusts have been formed for the sole purpose of issuing trust-preferred securities, from which the proceeds are then invested in Huntington junior subordinated debentures, which are reflected in Huntington’s Unaudited Condensed Consolidated Balance Sheet as long-term debt. The trust securities are the obligations of the trusts, and as such, are not consolidated within Huntington’s Unaudited Condensed Consolidated Financial Statements.
A list of trust preferred securities outstanding at March 31, 2021 follows:
(dollar amounts in millions) Rate
Principal amount of
subordinated note/
debenture issued to trust (1)
Investment in
unconsolidated
subsidiary
Huntington Capital I 0.81  % (2) $ 70  $
Huntington Capital II 0.74  (3) 32 
Sky Financial Capital Trust III 1.51  (4) 72 
Sky Financial Capital Trust IV 1.51  (4) 74 
Camco Financial Trust 1.44  (5)
Total $ 253  $ 14 
(1)Represents the principal amount of debentures issued to each trust, including unamortized original issue discount.
(2)Variable effective rate at March 31, 2021, based on three-month LIBOR +0.70%.
(3)Variable effective rate at March 31, 2021, based on three-month LIBOR +0.625%.
(4)Variable effective rate at March 31, 2021, based on three-month LIBOR +1.40%.
(5)Variable effective rate at March 31, 2021, based on three-month LIBOR +1.33%.
Each issue of the junior subordinated debentures has an interest rate equal to the corresponding trust securities distribution rate. Huntington has the right to defer payment of interest on the debentures at any time, or from time-to-time for a period not exceeding five years provided that no extension period may extend beyond the stated maturity of the related debentures. During any such extension period, distributions to the trust securities will also be deferred and Huntington’s ability to pay dividends on its common stock will be restricted. Periodic cash payments and payments upon liquidation or redemption with respect to trust securities are guaranteed by Huntington to the extent of funds held by the trusts. The guarantee ranks subordinate and junior in right of payment to all indebtedness of the Company to the same extent as the junior subordinated debt. The guarantee does not place a limitation on the amount of additional indebtedness that may be incurred by Huntington.
Affordable Housing Tax Credit Partnerships
Huntington makes certain equity investments in various limited partnerships that sponsor affordable housing projects utilizing the LIHTC pursuant to Section 42 of the Internal Revenue Code. The purpose of these investments is to achieve a satisfactory return on capital, to facilitate the sale of additional affordable housing product offerings, and to assist in achieving goals associated with the Community Reinvestment Act. The primary activities of the limited partnerships include the identification, development, and operation of multi-family housing that is leased to qualifying residential tenants. Generally, these types of investments are funded through a combination of debt and equity.
Huntington uses the proportional amortization method to account for a majority of its investments in these entities. These investments are included in other assets. Investments that do not meet the requirements of the proportional amortization method are accounted for using the equity method. Investment losses related to these investments are included in noninterest income in the Unaudited Condensed Consolidated Statements of Income.
2021 1Q Form 10-Q 77


The following table presents the balances of Huntington’s affordable housing tax credit investments and related unfunded commitments at March 31, 2021 and December 31, 2020.
(dollar amounts in millions) March 31,
2021
December 31,
2020
Affordable housing tax credit investments $ 1,582  $ 1,568 
Less: amortization (637) (612)
Net affordable housing tax credit investments $ 945  $ 956 
Unfunded commitments $ 445  $ 500 
The following table presents other information relating to Huntington’s affordable housing tax credit investments for the three-month periods ended March 31, 2021 and 2020.
Three Months Ended
March 31,
(dollar amounts in millions) 2021 2020
Tax credits and other tax benefits recognized $ 33  $ 29 
Proportional amortization expense included in provision for income taxes 28  25 
There were no sales of affordable housing tax credit investments during the three-month periods ended March 31, 2021 and 2020. There was no impairment recognized for the three-month periods ended March 31, 2021 and 2020.
Other investments
Other investments determined to be VIE’s include investments in Small Business Investment Companies, Historic Tax Credit Investments, certain equity method investments, renewable energy financings, and other miscellaneous investments.
14. COMMITMENTS AND CONTINGENT LIABILITIES
Commitments to extend credit
In the ordinary course of business, Huntington makes various commitments to extend credit that are not reflected in the Unaudited Condensed Consolidated Financial Statements. The contract amounts of these financial agreements at March 31, 2021 and December 31, 2020, were as follows:
(dollar amounts in millions) March 31,
2021
December 31,
2020
Contract amount representing credit risk
Commitments to extend credit:
Commercial
$ 21,580  $ 20,701 
Consumer
14,966  14,808 
Commercial real estate
1,315  1,313 
Standby letters of credit
632  581 
Commercial letters of credit
12  21 
Commitments to extend credit generally have fixed expiration dates, are variable-rate, and contain clauses that permit Huntington to terminate or otherwise renegotiate the contracts in the event of a significant deterioration in the customer’s credit quality. These arrangements normally require the payment of a fee by the customer, the pricing of which is based on prevailing market conditions, credit quality, probability of funding, and other relevant factors. Since many of these commitments are expected to expire without being drawn upon, the contract amounts are not necessarily indicative of future cash requirements. The interest rate risk arising from these financial instruments is insignificant as a result of their predominantly short-term, variable-rate nature.
78 Huntington Bancshares Incorporated


Standby letters-of-credit are conditional commitments issued to guarantee the performance of a customer to a third-party. These guarantees are primarily issued to support public and private borrowing arrangements, including commercial paper, bond financing, and similar transactions. Most of these arrangements mature within two years. The carrying amount of deferred revenue associated with these guarantees was $6 million and $5 million at March 31, 2021 and December 31, 2020, respectively.
Commercial letters-of-credit represent short-term, self-liquidating instruments that facilitate customer trade transactions and generally have maturities of no longer than 90 days. The goods or cargo being traded normally secure these instruments.
Litigation and Regulatory Matters
In the ordinary course of business, Huntington is routinely a defendant in or party to pending and threatened legal and regulatory actions and proceedings.
In view of the inherent difficulty of predicting the outcome of such matters, particularly where the claimants seek very large or indeterminate damages or where the matters present novel legal theories or involve a large number of parties, Huntington generally cannot predict what the eventual outcome of the pending matters will be, what the timing of the ultimate resolution of these matters will be, or what the eventual loss, fines or penalties related to each matter may be.
Huntington establishes an accrued liability when those matters present loss contingencies that are both probable and estimable. In such cases, there may be an exposure to loss in excess of any amounts accrued. Huntington thereafter continues to monitor the matter for further developments that could affect the amount of the accrued liability that has been previously established.
For certain matters, Huntington is able to estimate a range of possible loss. In cases in which Huntington possesses information to estimate a range of possible loss, that estimate is aggregated and disclosed below. There may be other matters for which a loss is probable or reasonably possible but such an estimate of the range of possible loss may not be possible. For those matters where an estimate of the range of possible loss is possible, management currently estimates the aggregate range of reasonably possible loss is $0 to $10 million at March 31, 2021 in excess of the accrued liability (if any) related to those matters. This estimated range of possible loss is based upon currently available information and is subject to significant judgment, a variety of assumptions, and known and unknown uncertainties. The matters underlying the estimated range will change from time to time, and actual results may vary significantly from the current estimate. The estimated range of possible loss does not represent Huntington’s maximum loss exposure.
Based on current knowledge, management does not believe that loss contingencies arising from pending matters will have a material adverse effect on the consolidated financial position of Huntington. Further, management believes that amounts accrued are adequate to address Huntington’s contingent liabilities. However, in light of the inherent uncertainties involved in these matters, some of which are beyond Huntington’s control, and the large or indeterminate damages sought in some of these matters, an adverse outcome in one or more of these matters could be material to Huntington’s results of operations for any particular reporting period.
15. SEGMENT REPORTING
Huntington’s business segments are based on our internally-aligned segment leadership structure, which is how management monitors results and assesses performance. The Company has four major business segments: Consumer and Business Banking, Commercial Banking, Vehicle Finance, Regional Banking and The Huntington Private Client Group (RBHPCG). The Treasury / Other function includes technology and operations, other unallocated assets, liabilities, revenue, and expense. For a description of our business segments, see Note 26 - Segment Reporting to the Consolidated Financial Statements of the Corporation’s 2020 Annual Report on Form 10-K.
2021 1Q Form 10-Q 79


Business segment results are determined based upon Huntington’s management reporting system, which assigns balance sheet and income statement items to each of the business segments. The process is designed around the organizational and management structure and, accordingly, the results derived are not necessarily comparable with similar information published by other financial institutions. Additionally, because of the interrelationships of the various segments, the information presented is not indicative of how the segments would perform if they operated as independent entities.
Huntington uses an active and centralized FTP methodology to attribute appropriate net interest income to the business segments. The intent of the FTP methodology is to transfer interest rate risk from the business segments by providing matched duration funding of assets and liabilities. The result is to centralize the financial impact, management, and reporting of interest rate risk in the Treasury / Other function where it can be centrally monitored and managed. The Treasury / Other function charges (credits) an internal cost of funds for assets held in (or pays for funding provided by) each business segment. The FTP rate is based on prevailing market interest rates for comparable duration assets (or liabilities).
Listed in the table below is certain operating basis financial information reconciled to Huntington’s March 31, 2021, December 31, 2020, and March 31, 2020, reported results by business segment.
Three Months Ended March 31,
Income Statements
Consumer & Business Banking Commercial Banking Vehicle Finance RBHPCG Treasury / Other Huntington Consolidated
(dollar amounts in millions)
2021
Net interest income
$ 337  $ 199  $ 107  $ 34  $ 295  $ 972 
Provision (benefit) for credit losses
(36) (22) (7) —  (60)
Noninterest income
236  88  53  15  395 
Noninterest expense
469  133  35  62  94  793 
Provision (benefit) for income taxes
29  31  21  14  102 
Net income (loss)
$ 111  $ 118  $ 76  $ 25  $ 202  $ 532 
2020
Net interest income
$ 364  $ 232  $ 106  $ 43  $ 45  $ 790 
Provision (benefit) for credit losses
82  298  60  —  441 
Noninterest income
212  86  50  10  361 
Noninterest expense
418  129  35  62  652 
Provision (benefit) for income taxes
16  (23) 10 
Net income (loss)
$ 60  $ (86) $ 11  $ 24  $ 39  $ 48 
Assets at Deposits at
(dollar amounts in millions) March 31,
2021
December 31,
2020
March 31,
2021
December 31,
2020
Consumer & Business Banking $ 30,627  $ 30,758  $ 65,437  $ 60,910 
Commercial Banking 36,797  36,311  25,420  24,766 
Vehicle Finance 19,208  19,789  849  722 
RBHPCG 6,837  7,064  7,163  7,635 
Treasury / Other 32,299  29,116  3,315  4,915 
Total
$ 125,768  $ 123,038  $ 102,184  $ 98,948 

80 Huntington Bancshares Incorporated


Item 3: Quantitative and Qualitative Disclosures about Market Risk
Quantitative and qualitative disclosures for the current period can be found in the Market Risk section of this report, which includes changes in market risk exposures from disclosures presented in Huntington’s 2020 Form 10-K.
Item 4: Controls and Procedures
Disclosure Controls and Procedures
Huntington maintains disclosure controls and procedures designed to ensure that the information required to be disclosed in the reports that it files or submits under the Securities Exchange Act of 1934, as amended (the Exchange Act), are recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Huntington’s Management, with the participation of its Chief Executive Officer and the Chief Financial Officer, evaluated the effectiveness of Huntington’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of March 31, 2021. Based upon such evaluation, Huntington’s Chief Executive Officer and Chief Financial Officer have concluded that, as of March 31, 2021, Huntington’s disclosure controls and procedures were effective.
There have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended March 31, 2021, that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting.
PART II. OTHER INFORMATION
In accordance with the instructions to Part II, the other specified items in this part have been omitted because they are not applicable or the information has been previously reported.
Item 1: Legal Proceedings
Information required by this item is set forth in Note 14 “Commitments and Contingent Liabilities” of the Notes to Unaudited Condensed Consolidated Financial Statements under the caption “Litigation and Regulatory Matters” and is incorporated into this Item by reference.
Item 1A: Risk Factors
Information required by this item is set forth in Part 1 Item 2- Management’s Discussion and Analysis of Financial Condition and Results of Operations of this report and incorporated herein by reference.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
(a) and (b)
Not Applicable
(c)
Period Total Number of Shares Purchased (1) Average
Price Paid
Per Share
Maximum Number of Shares (or Approximate Dollar Value) that May Yet Be Purchased Under the Plans or Programs (2)
January 1, 2021 to January 31, 2021 —  —  — 
February 1, 2020 to February 28, 2021 —  —  — 
March 1, 2021 to March 31, 2021 —  —  — 
Total —  $ —  $ — 
 
(1)The reported shares were repurchased pursuant to Huntington’s publicly-announced share repurchase authorization.
(2)The number shown represents, as of the end of each period, the approximate dollar value of Common Stock that may yet be purchased under publicly-announced share repurchase authorizations. The shares may be purchased, from time-to-time, depending on market conditions.
2021 1Q Form 10-Q 81


Table of Contents


Item 6. Exhibits
Exhibit Index
This report incorporates by reference the documents listed below that we have previously filed with the SEC. The SEC allows us to incorporate by reference information in this document. The information incorporated by reference is considered to be a part of this document, except for any information that is superseded by information that is included directly in this document.
The SEC maintains an Internet web site that contains reports, proxy statements, and other information about issuers, like us, who file electronically with the SEC. The address of the site is http://www.sec.gov. The reports and other information filed by us with the SEC are also available free of charge at our internet web site. The address of the site is http://www.huntington.com. Except as specifically incorporated by reference into this Quarterly Report on Form 10-Q, information on those web sites is not part of this report. You also should be able to inspect reports, proxy statements, and other information about us at the offices of the Nasdaq National Market at 33 Whitehall Street, New York, New York 10004.
Exhibit
Number
Document Description Report or Registration Statement SEC File or
Registration
Number
Exhibit
Reference
3.1
3.1
3.2
3.2
3.3
3.1
3.4
3.1
3.5
3.3
3.6
3.1
10.1
4.1(P) Instruments defining the Rights of Security Holders—reference is made to Articles Fifth, Eighth, and Tenth of Articles of Restatement of Charter, as amended and supplemented. Instruments defining the rights of holders of long-term debt will be furnished to the Securities and Exchange Commission upon request.
31.1
31.2
32.1
32.2
101.INS ***The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document
101.SCH *Inline XBRL Taxonomy Extension Schema Document
101.CAL *Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF *Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB *Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE *Inline XBRL Taxonomy Extension Presentation Linkbase Document
 
* Filed herewith
** Furnished herewith
***
82 Huntington Bancshares Incorporated


Table of Contents
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
HUNTINGTON BANCSHARES INCORPORATED
(Registrant)
 
Date: April 30, 2021   /s/ Stephen D. Steinour
  Stephen D. Steinour
  Chairman, President, and Chief Executive Officer (Principal Executive Officer)
Date: April 30, 2021   /s/ Zachary Wasserman
  Zachary Wasserman
 
Chief Financial Officer
(Principal Financial Officer)

2021 1Q Form 10-Q 83


Exhibit 31.1
CERTIFICATION
I, Stephen D. Steinour, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Huntington Bancshares Incorporated;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:
a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and
b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 
Date: April 30, 2021
/s/ Stephen D. Steinour
Stephen D. Steinour
Chief Executive Officer


Exhibit 31.2
CERTIFICATION
I, Zachary Wasserman, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Huntington Bancshares Incorporated;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:
a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and
b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: April 30, 2021
/s/ Zachary Wasserman
Zachary Wasserman
Chief Financial Officer


Exhibit 32.1
SECTION 1350 CERTIFICATION
In connection with the Quarterly Report of Huntington Bancshares Incorporated (the “Company”) on Form 10-Q for the three months ended March 31, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Stephen D. Steinour, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
(1)The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
/s/ Stephen D. Steinour
Stephen D. Steinour
Chief Executive Officer
April 30, 2021



Exhibit 32.2
SECTION 1350 CERTIFICATION
In connection with the Quarterly Report of Huntington Bancshares Incorporated (the “Company”) on Form 10-Q for the three months ended March 31, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Zachary Wasserman, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
(1)The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
/s/
Zachary Wasserman
Zachary Wasserman
Chief Financial Officer
April 30, 2021