PART I. FINANCIAL INFORMATION

When we refer to ~~“we”, “our”,~~“we,” “our,” “us,” “Huntington,” and ~~“us”, and "the Company"~~“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 are committed to making people’s lives better, helping businesses thrive, and strengthening the communities we serve and have over 150 years of servicing the financial needs of our customers. Through our subsidiaries, we provide full-service commercial and consumer deposit, lending, and other banking ~~services,~~services. This includes, but is not limited to, payments, mortgage banking, ~~services,~~ automobile, ~~financing,~~ recreational vehicle and marine financing, investment banking, capital markets, advisory, equipment ~~leasing,~~financing, distribution finance, investment management, trust, ~~services,~~ brokerage, ~~services,~~ insurance, ~~programs,~~ and other financial products and services. ~~Our 958~~At March 31, 2023, our 1,001 full-service branches and private client group offices are primarily located in Ohio, Colorado, Illinois, Indiana, Kentucky, Michigan, Minnesota, Pennsylvania, West Virginia, and Wisconsin. 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.~~

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 ~~2016~~2022 Annual Report on Form 10-K should be read in conjunction with this MD&A as this discussion provides only material updates to the ~~2016~~2022 Annual Report on 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 ~~Statement~~s,Statements, and other information contained in this report.

EXECUTIVE OVERVIEW

Acquisitions and Divestitures

In May 2022, Huntington completed the acquisition of Torana, now known as Huntington Choice Pay, a digital payments business focused on business to consumer payments. This acquisition along with the formation of our enterprise-wide payments group reflects one of our strategic priorities to accelerate our payments capabilities and expand the services provided to our customers.

In June 2022, Huntington completed the acquisition of Capstone Partners, a top tier middle market investment bank and advisory firm. The transaction brings a national scale to serve middle market business owners throughout the corporate lifecycle, building on Huntington’s regional banking foundation. Capstone Partners related revenue, including mergers and acquisitions, capital raising and other advisory-related fees, is recognized within capital markets fees in the Consolidated Statements of Income.

In March 2023, we closed the sale of our RPS business and entered into an ongoing partnership with the purchaser. The sale of our RPS business resulted in a $57 million gain including associated goodwill allocation, recorded within other noninterest income.

Summary of ~~2017 Third~~2023 First Quarter Results Compared to ~~2016 Third~~2022 First Quarter

For the quarter, we reported net income of ~~$275~~$602 million, or ~~$0.23~~$0.39 per diluted common share, compared with ~~$127~~$460 million, or ~~$0.11~~$0.29 per diluted common share, in the year-ago ~~quarter (see~~ quarter.

2023 1Q Form 10-Q 5

Table ~~1). Reported net~~of Content

Net interest income was ~~impacted by FirstMerit acquisition-related net expenses totaling~~ ~~$31~~$1.4 billion, up $263 million, ~~pre-tax,~~ or ~~$0.02 per common share.~~

~~Fully-taxable equivalent~~23% from the year-ago quarter. FTE net interest income, ~~was $771 million, up $135~~a non-GAAP financial measure, increased $264 million, or ~~21%.~~23%, from the year-ago quarter. The ~~results reflected~~increase in FTE net interest income primarily reflects a 52 basis point increase in the ~~benefit from~~FTE NIM to 3.40% and a ~~$13.2~~$6.7 billion, or ~~17%~~4%, increase in average earning ~~assets~~assets. The year-over-year increase in NIM was driven by the higher rate environment driving an increase in loan and ~~an 11 basis point improvement in the net interest margin to 3.29%.~~lease and investment security yields, partially offset by higher cost of funds. Average earning asset growth included a ~~$7.6~~$9.3 billion, or ~~12%~~8%, increase in average loans and leases, and a $5.6 billion, or 31%, increase in average securities. The net interest margin expansion reflected a 26 basis point increase in earning asset yields, including an approximate 12 basis point impact of purchase accounting, and a 4 basis point increase in the benefit from noninterest-bearing funds, partially offset by ~~a 19 basis point increase~~decreases of $1.1 billion, or 15%, in ~~funding costs.~~interest-bearing deposits at the Federal Reserve Bank, $793 million, or 64%, in loans held for sale, and $768 million, or 2%, in average securities.

The provision for credit losses ~~decreased $20~~increased $60 million ~~year-over-year~~from the year-ago quarter to ~~$44~~$85 million in the ~~2017 third~~2023 first quarter. ~~NCOs increased $3 million to $43 million. NCOs represented an annualized 0.25% of average loans and leases, which remains below our long-term expectation of 35 to 55 basis points.~~

~~Non-interest income was $330 million, up $28 million, or 9%.~~ The increase ~~was primarily a result of~~in provision expense compared to the ~~FirstMerit acquisition. In addition, card and payment processing income increased due to higher credit and debit card related income and underlying customer growth.~~ ~~Capital markets fees increased reflecting our continued strategic focus on expanding the business.~~

Non-interest expense was $680 million, down $32 million, or 4%, primarily reflecting the impact of the FirstMerit acquisition. Personnel costs decreased primarily related to acquisition-related personnel expense partially offsetyear-ago quarter is driven by an increase in ~~average full-time equivalent employees.~~ ~~Further, professional services, outside data processing~~realized net credit losses, along with allowance builds in the current quarter associated with loan growth and economic uncertainty. The ACL increased $190 million from the year-ago quarter to $2.3 billion in the 2023 first quarter, or 1.90% of total loans and leases, compared to $2.1 billion, or 1.87% of total loans and leases. The increase in the total ACL was primarily driven by loan and lease growth and the increase in ACL coverage ratio reflecting the increased near-term recessionary risks in 2023.

Noninterest income was $512 million, an increase of $13 million, or 3%, and noninterest expense increased $33 million, or 3%, from the year-ago quarter. The increase in noninterest income was primarily due to the sale of our RPS business which resulted in a $57 million gain including associated goodwill allocation, recorded within other ~~services decreased primarily reflecting a net decrease~~noninterest income, and an increase in ~~acquisition-related Significant Items,~~capital market fees, partially offset by ~~higher card~~decreases in gain on sale of loans, mortgage banking income, and ~~data processing~~service charges on deposit accounts. The increase in noninterest expense ~~from increased usage. Partially offsetting these decreases, other~~was primarily due to $36 million of voluntary retirement program expense ~~increased~~and $6 million of organizational realignment expense, and additional increase in personnel costs, partially offset by reductions in acquisition-related expenses and equipment expense.

Total assets at March 31, 2023 were $189.1 billion, an increase of $6.2 billion, or 3%, compared to December 31, 2022. The increase in total assets was primarily ~~reflecting~~driven by increases in interest-bearing deposits at Federal Reserve Bank of $3.9 billion, or 79%, and loans and leases of $1.7 billion, or 1%, driven by an increase in ~~donations~~commercial loans and ~~sponsorships and equipment lease residual impairments.~~leases. Total liabilities at March 31, 2023 were $170.3 billion, an increase of $5.1 billion, or 3%, compared to December 31, 2022. The increase in total liabilities was primarily driven by an increase in total debt of $8.3 billion, or 70%, partially offset by a decrease in total deposits of $2.6 billion, or 2%, largely due to lower commercial core deposits.

The tangible common ~~equity~~equity to tangible assets ratio was ~~7.42%,~~5.77% at March 31, 2023, up 2822 basis points from ~~a year-ago. The~~December 31, 2022,primarily due to an increase in tangible common equity related to current period earnings and improved AOCI. CET1 risk-based capital ratio was ~~9.94% at September 30, 2017, compared to 9.09% a year ago.~~9.55%, up from 9.36% from December 31, 2022. The increase in regulatory ~~Tier 1 risk-based capital ratio was 11.30% compared to 10.40% at September 30, 2016.~~ ~~All~~ capital ratios ~~were impacted~~was primarily driven by current period earnings, partially offset by dividends and the CECL transitional amount.

In January 2023, the Board authorized the repurchase of ~~$123 million~~up to $1.0 billion of common shares within the eight quarter period ending December 31, 2024. Purchases of common stock under the authorization may include open market purchases, privately negotiated transactions, and accelerated share repurchase programs. Huntington repurchased no shares of common stock under the current repurchase authorization in the three months ended March 31, 2023. As part of our 2023 capital plan to grow capital and current expectation that organic capital will be used for funding loan and lease growth, we do not expect to utilize the share repurchase program during 2023. However, we may at ~~an average cost~~our discretion resume share repurchases at any time while considering factors including, but not limited to, capital requirements and market conditions.

6 Huntington Bancshares Incorporated

Table of ~~$12.75 per share during the 2017 third quarter.~~ ~~The total risk-based capital ratio was impacted by the repurchase of trust preferred securities during the 2016 fourth quarter.~~Content

~~Business Overview~~

General

Our general business objectives ~~are:~~are to:

1.~~Grow net interest income~~•Build on our vision to be the country’s leading people-first, digitally powered bank

•Drive sustainable long-term revenue growth and ~~fee income.~~efficiency

2.•Deliver a Category of One customer experience through our distinguished brand and culture

•Extend our digital leadership with focus on ease of use, access to information, and self-service across products and services

•Leverage expertise and capabilities to acquire and deepen relationships and launching of select partnerships

•Maintain positive operating ~~leverage.~~leverage and execute disciplined capital management

3.~~Increase primary customer relationships across all~~•Stability and resilience through risk management, maintaining an aggregate moderate-to-low, through-the-cycle risk appetite

Economy

Growth in economic activity and demand for goods and services, alongside labor shortages, supply chain complications and geopolitical matters, have contributed to rising inflation. In response, the Federal Reserve has raised interest rates and had begun reducing the size of its balance sheet. On March 10 and March 12, 2023, Silicon Valley Bank and Signature Bank, respectively, were closed by regulators with the FDIC appointed as receiver. The closures of those banks and adverse developments affecting other banks in March 2023 resulted in heightened levels of market activity and volatility. The impact of market volatility from the adverse developments in the banking industry along with continued high inflation and rising interest rates on our business ~~segments.~~and related financial results will depend on future developments, which are highly uncertain and difficult to predict. Our businesses and financial results may be impacted by a variety of other factors as well, such as an economic slowdown or recession. Our economic forecast assumes a mild recession in 2023 with growth returning in 2024. We expect inflation to moderate through 2023 as the Federal Reserve actions take effect, but that will result in lower GDP growth and higher unemployment until the economy begins to rebound into 2024.

4.~~Continue~~Our results this quarter reflect continued discipline expense management, continued investments to ~~strengthen risk management.~~

5.~~Maintain~~drive sustainable revenue growth, and solid capital ~~and liquidity positions consistent~~levels, despite the market disruption. Credit continues to perform well in keeping with our aggregate moderate-to-low, through-the-cycle risk appetite. With our disciplined and proactive approach, we believe Huntington is well positioned to manage through the uncertain economic outlook on the horizon. We remain focused on delivering profitable growth and driving value for our shareholders.

~~Economy~~Other Recent Developments

WeIn the aftermath of the recent bank failures, we expect ~~consumer and business optimism~~that the banking agencies will propose certain actions, including reforms that will require higher capital, including increased requirements to remain high across our footprint. Labor markets and consumer spending are strong with some inflationary pressures. Throughout 2017, consumer loan growth has remained steady. To date manufacturing has benefitedissue long-term debt, as well as special assessments to repay losses to the ~~Midwest. Our pipelines support commercial loan growth, although~~FDIC’s Deposit Insurance Fund. It is not yet possible to quantify the ~~commercial lending environment is competitive on both structures and rates.~~impact of these potential actions.

DISCUSSION OF RESULTS OF OPERATIONS

This section provides a review of financial performance ~~from~~on a consolidated ~~perspective. It also includes a “Significant Items” section that summarizes key issues important for a complete understanding of performance trends.~~basis. Key ~~Unaudited Condensed Consolidated Balance Sheet~~unaudited consolidated balance sheet and ~~Unaudited Condensed Statement of Income~~unaudited income statement 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~~“Business Segment ~~Discussion.~~Discussion.”

2023 1Q Form 10-Q 7

Table 1 - Selected Quarterly Income Statement Data (1)
(dollar amounts in thousands, except per share amounts)
Three Months Ended
September 30, June 30, March 31, December 31, September 30,
2017 2017 2017 2016 2016
Interest income $ 872,987
$ 846,424
$ 820,360
$ 814,858
$ 694,346
Interest expense 114,554
101,912
90,385
79,877
68,956
Net interest income 758,433
744,512
729,975
734,981
625,390
Provision for credit losses 43,590
24,978
67,638
74,906
63,805
Net interest income after provision for credit losses 714,843
719,534
662,337
660,075
561,585
Service charges on deposit accounts 90,681
87,582
83,420
91,577
86,847
Cards and payment processing income 53,647
52,485
47,169
49,113
44,320
Mortgage banking income 33,615
32,268
31,692
37,520
40,603
Trust and investment management services 33,531
32,232
33,869
34,016
28,923
Insurance income 13,992
15,843
15,264
16,486
15,865
Brokerage income 14,458
16,294
15,758
17,014
14,719
Capital markets fees 21,719
16,836
14,200
18,730
14,750
Bank owned life insurance income 16,453
15,322
17,542
17,067
14,452
Gain on sale of loans 13,877
12,002
12,822
24,987
7,506
Net securities gains (losses) (33 ) 135
(8 ) (1,771 ) 1,031
Other noninterest income 38,157
44,219
40,735
29,598
33,399
Total noninterest income 330,097
325,218
312,463
334,337
302,415
Personnel costs 377,088
391,997
382,000
359,755
405,024
Outside data processing and other services 79,586
75,169
87,202
88,695
91,133
Equipment 45,458
42,924
46,700
59,666
40,792
Net occupancy 55,124
52,613
67,700
49,450
41,460
Professional services 15,227
18,190
18,295
23,165
47,075
Marketing 16,970
18,843
13,923
21,478
14,438
Deposit and other insurance expense 18,514
20,418
20,099
15,772
14,940
Amortization of intangibles 14,017
14,242
14,355
14,099
9,046
Other noninterest expense 58,444
59,968
57,148
49,417
48,339
Total noninterest expense 680,428
694,364
707,422
681,497
712,247
Income before income taxes 364,512
350,388
267,378
312,915
151,753
Provision for income taxes 89,944
78,647
59,284
73,952
24,749
Net income 274,568
271,741
208,094
238,963
127,004
Dividends on preferred shares 18,903
18,889
18,878
18,865
18,537
Net income applicable to common shares $ 255,665
$ 252,852
$ 189,216
$ 220,098
$ 108,467

Average common shares—basic 1,086,038
1,088,934
1,086,374
1,085,253
938,578
Average common shares—diluted 1,106,491
1,108,527
1,108,617
1,104,358
952,081
Net income per common share—basic $ 0.24
$ 0.23
$ 0.17
$ 0.20
$ 0.12
Net income per common share—diluted 0.23
0.23
0.17
0.20
0.11
Cash dividends declared per common share 0.08
0.08
0.08
0.08
0.07
Return on average total assets 1.08 % 1.09 % 0.84 % 0.95 % 0.58 %
Return on average common shareholders’ equity 10.5
10.6
8.2
9.4
5.4
Return on average tangible common shareholders’ equity (2) 14.1
14.4
11.3
12.9
7.0
Net interest margin (3) 3.29
3.31
3.30
3.25
3.18
Efficiency ratio (4) 60.5
62.9
65.7
61.6
75.0
Effective tax rate 24.7
22.4
22.2
23.6
16.3

Revenue—FTE
Net interest income $ 758,433
$ 744,512
$ 729,975
$ 734,981
$ 625,390
FTE adjustment 12,209
12,069
12,058
12,560
10,598
Net interest income (3) 770,642
756,581
742,033
747,541
635,988
Noninterest income 330,097
325,218
312,463
334,337
302,415
Total revenue (3) $ 1,100,739
$ 1,081,799
$ 1,054,496
$ 1,081,878
$ 938,403

Table of Content


Table 1 - Selected Quarterly Income Statement Data										Table 1 - Selected Quarterly Income Statement Data

											Three Months Ended
											March 31,			March 31,			Change
Table 2 - Selected Year to Date Income Statements (1)

	Nine Months Ended September 30,				Change
(dollar amounts in thousands, except per share amounts)	2017		2016		Amount			Percent
(amounts in millions, except per share data)										(amounts in millions, except per share data)	2023			2022			Amount		Percent
Interest income	$	2,539,771	$	1,817,255	$	722,516		40	%	Interest income	$	2,028		$	1,195		$	833	70	%
Interest expense	306,851		182,918		123,933			68		Interest expense	619			49			570		NM
Net interest income	2,232,920		1,634,337		598,583			37		Net interest income	1,409			1,146			263		23
Provision for credit losses	136,206		115,896		20,310			18		Provision for credit losses	85			25			60		NM
Net interest income after provision for credit losses	2,096,714		1,518,441		578,273			38		Net interest income after provision for credit losses	1,324			1,121			203		18
Service charges on deposit accounts	261,683		232,722		28,961			12		Service charges on deposit accounts	83			97			(14)		(14)
Cards and payment processing income	153,301		119,951		33,350			28
Card and payment processing income										Card and payment processing income	93			86			7		8
Capital markets fees										Capital markets fees	59			42			17		40
Trust and investment management services										Trust and investment management services	62			65			(3)		(5)
Mortgage banking income	97,575		90,737		6,838			8		Mortgage banking income	26			49			(23)		(47)
Trust and investment management services	99,633		74,258		25,375			34
Leasing revenue										Leasing revenue	26			35			(9)		(26)
Insurance income	45,099		48,037		(2,938		)	(6	)	Insurance income	34			31			3		10
Brokerage income	46,510		44,819		1,691			4
Capital markets fees	52,755		40,797		11,958			29
Gain on sale of loans										Gain on sale of loans	3			28			(25)		(89)
Bank owned life insurance income	49,317		40,500		8,817			22		Bank owned life insurance income	16			17			(1)		(6)
Gain on sale of loans	38,701		22,166		16,535			75
Net securities gains (losses)	94		1,687		(1,593		)	(94	)
Net gains on sales of securities										Net gains on sales of securities	1			—			1		NM
Other noninterest income	123,110		99,720		23,390			23		Other noninterest income	109			49			60		122
Total noninterest income	967,778		815,394		152,384			19		Total noninterest income	512			499			13		3
Personnel costs	1,151,085		989,369		161,716			16		Personnel costs	649			580			69		12
Outside data processing and other services	241,957		216,047		25,910			12		Outside data processing and other services	151			165			(14)		(8)
Equipment	135,082		105,173		29,909			28		Equipment	64			81			(17)		(21)
Net occupancy	175,437		103,640		71,797			69		Net occupancy	60			64			(4)		(6)
Marketing										Marketing	25			21			4		19
Professional services	51,712		82,101		(30,389		)	(37	)	Professional services	16			19			(3)		(16)
Marketing	49,736		41,479		8,257			20
Deposit and other insurance expense	59,031		38,335		20,696			54		Deposit and other insurance expense	20			18			2		11
Amortization of intangibles	42,614		16,357		26,257			161		Amortization of intangibles	13			14			(1)		(7)
Lease financing equipment depreciation										Lease financing equipment depreciation	8			14			(6)		(43)
Other noninterest expense	175,560		134,487		41,073			31		Other noninterest expense	80			77			3		4
Total noninterest expense	2,082,214		1,726,988		355,226			21		Total noninterest expense	1,086			1,053			33		3
Income before income taxes	982,278		606,847		375,431			62		Income before income taxes	750			567			183		32
Provision for income taxes	227,875		133,989		93,886			70		Provision for income taxes	144			105			39		37
Net income	754,403		472,858		281,545			60
Dividends declared on preferred shares	56,670		46,409		10,261			22
Income after income taxes										Income after income taxes	606			462			144		31
Income attributable to non-controlling interest										Income attributable to non-controlling interest	4			2			2		100
Net income attributable to Huntington										Net income attributable to Huntington	602			460			142		31
Dividends on preferred shares										Dividends on preferred shares	29			28			1		4

Net income applicable to common shares	$	697,733	$	426,449	$	271,284		64	%	Net income applicable to common shares	$	573		$	432		$	141	33	%

Average common shares—basic	1,087,115		844,167		242,948			29	%	Average common shares—basic	1,443			1,438			5		—	%
Average common shares—diluted	1,107,878		856,934		250,944			29		Average common shares—diluted	1,469			1,464			5		—
Net income per common share—basic	$	0.64	$	0.51	$	0.13		25		Net income per common share—basic	$	0.40		$	0.30		$	0.10	33
Net income per common share—diluted	0.63		0.50		0.13			26		Net income per common share—diluted	0.39			0.29			0.10		34
Cash dividends declared per common share	0.24		0.21		0.03			14
Return on average total assets										Return on average total assets	1.32		%	1.05		%
Return on average common shareholders’ equity										Return on average common shareholders’ equity	14.6			10.4
Return on average tangible common shareholders’ equity (1)										Return on average tangible common shareholders’ equity (1)	23.1			15.8
Net interest margin (2)										Net interest margin (2)	3.40			2.88
Efficiency ratio (3)										Efficiency ratio (3)	55.6			62.9

Revenue—FTE

Revenue and Net Interest Income—FTE (non-GAAP)										Revenue and Net Interest Income—FTE (non-GAAP)
Net interest income	$	2,232,920	$	1,634,337	$	598,583		37	%	Net interest income	$	1,409		$	1,146		$	263	23	%
FTE adjustment	36,336		29,848		6,488			22
Net interest income (3)	2,269,256		1,664,185		605,071			36
FTE adjustment (2)										FTE adjustment (2)	9			8			1		13
Net interest income, FTE (non-GAAP) (2)										Net interest income, FTE (non-GAAP) (2)	1,418			1,154			264		23
Noninterest income	967,778		815,394		152,384			19		Noninterest income	512			499			13		3
Total revenue (3)	$	3,237,034	$	2,479,579	$	757,455		31	%
Total revenue, FTE (non-GAAP) (2)										Total revenue, FTE (non-GAAP) (2)	$	1,930		$	1,653		$	277	17	%


~~(1)~~	~~Comparisons for presented periods are impacted by a number of factors. Refer to the “Significant Items” for additional discussion regarding these key factors.~~

~~(2)~~

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 35% tax rate.


~~(3)~~	~~On a fully-taxable equivalent (FTE) basis assuming a 35% tax rate.~~


~~(4)~~	~~Noninterest expense less amortization of intangibles and goodwill impairment divided by the sum of FTE net interest income and noninterest income excluding securities gains.~~

(1)Net income applicable to common shares 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.

~~Significant Items~~

~~Earnings comparisons are impacted~~(3)Noninterest expense less amortization of intangibles divided by the ~~Significant Items summarized below:~~

~~Mergers~~sum of FTE net interest income and ~~Acquisitions. Significant events relating to mergers and acquisitions, and the impacts of those events on our reported results, are as follows:~~

~~During the 2017 third quarter, $31 million of~~ noninterest ~~expense was recorded related to the acquisition of FirstMerit. This resulted in a negative impact of $0.02 per common share.~~

~~During the 2017 second quarter, $50 million of noninterest expense was recorded related to the acquisition of FirstMerit. This resulted in a negative impact of $0.03 per common share.~~

income excluding securities gains.

~~During the 2016 third quarter, $159 million~~

8 Huntington Bancshares Incorporated

Table of ~~noninterest expense was recorded related to the then pending acquisition of FirstMerit. This resulted in a negative impact of $0.11 per common share.~~Content

~~The following table reflects the earnings impact of the above-mentioned Significant Items for periods affected:~~

Table 3 - Significant Items Influencing Earnings Performance Comparison
(dollar amounts in thousands, except per share amounts)
Three Months Ended
September 30, 2017 June 30, 2017 September 30, 2016
Amount EPS (1) Amount EPS (1) Amount EPS (1)
Net income $ 274,568
$ 271,741
$ 127,004

Earnings per share, after-tax $ 0.23
$ 0.23
$ 0.11

Significant Items—favorable (unfavorable) impact: Earnings EPS (1) Earnings EPS (1) Earnings EPS (1)
Mergers and acquisitions, net expenses $ (30,733 ) $ (50,243 ) $ (158,749 )
Tax impact 10,757
17,585
52,033

Mergers and acquisitions, after-tax $ (19,976 )
$ (0.02 )
$ (32,658 )
$ (0.03 ) $ (106,716 ) $ (0.11 )


~~(1)~~	~~Based upon the quarterly average outstanding diluted common shares.~~

Nine Months Ended
September 30, 2017 September 30, 2016
Amount EPS (1) Amount EPS (1)
Net income $ 754,403
$ 472,858

Earnings per share, after-tax $ 0.63
$ 0.50

Significant Items—favorable (unfavorable) impact: Earnings EPS (1) Earnings EPS (1)
Mergers and acquisitions, net expenses $ (152,121 ) $ (185,944 )
Tax impact 53,243
61,252

Mergers and acquisitions, after-tax $ (98,878 ) $ (0.09 ) $ (124,692 ) $ (0.14 )


~~(1)~~	~~Based upon the year to date average outstanding diluted common shares.~~

Average Balance Sheet / Net Interest Income ~~/ Average Balance Sheet~~

The following tables detail the change in our average balance sheet and the net interest ~~margin:~~margin.


Table 2 - Consolidated Quarterly Average Balance Sheet and Net Interest Margin
	Three Months Ended
	March 31, 2023						March 31, 2022						Change in
	Average		Interest		Yield/		Average		Interest		Yield/		Average Balances
(dollar amounts in millions)	Balances		Income (FTE) (1)		Rate (2)		Balances		Income (FTE) (1)		Rate (2)		Amount		Percent
Assets:
Interest-bearing deposits at Federal Reserve Bank	$	6,101	$	71	4.65	%	$	7,195	$	3	0.17	%	$	(1,094)	(15)	%
Interest-bearing deposits in banks	249		5		8.50		174		—		0.15		75		43
Securities:
Trading account securities	21		—		5.37		46		—		3.39		(25)		(54)
Available-for-sale securities:
Taxable	21,368		232		4.34		24,205		90		1.49		(2,837)		(12)
Tax-exempt	2,640		29		4.40		2,886		22		3.00		(246)		(9)
Total available-for-sale securities	24,008		261		4.35		27,091		112		1.65		(3,083)		(11)
Held-to-maturity securities—taxable	16,977		102		2.41		14,556		66		1.81		2,421		17



Other securities	886		10		4.35		967		5		1.88		(81)		(8)
Total securities	41,892		373		3.56		42,660		183		1.72		(768)		(2)
Loans held for sale	450		7		5.85		1,243		10		3.15		(793)		(64)
Loans and leases: (3)
Commercial:
Commercial and industrial	46,110		643		5.58		41,397		392		3.79		4,713		11



Commercial real estate	16,600		276		6.65		15,063		114		3.01		1,537		10
Lease financing	5,209		68		5.25		4,912		61		4.93		297		6
Total commercial	67,919		987		5.82		61,372		567		3.69		6,547		11
Consumer:
Residential mortgage	22,327		190		3.41		19,505		146		2.99		2,822		14
Automobile	13,245		129		3.94		13,463		112		3.38		(218)		(2)
Home equity	10,258		181		7.14		10,414		102		3.99		(156)		(1)
RV and marine	5,366		58		4.42		5,103		52		4.15		263		5
Other consumer	1,305		36		11.18		1,285		28		8.96		20		2
Total consumer	52,501		594		4.57		49,770		440		3.57		2,731		5
Total loans and leases	120,420		1,581		5.27		111,142		1,007		3.64		9,278		8
Total earning assets	169,112		2,037		4.89		162,414		1,203		3.00		6,698		4
Cash and due from banks	1,598						1,648						(50)		(3)
Goodwill and other intangible assets	5,759						5,584						175		3
All other assets	10,568						10,013						555		6
Allowance for loan and lease losses	(2,143)						(2,047)						(96)		(5)
Total assets	$	184,894					$	177,612					$	7,282	4	%
Liabilities and shareholders’ equity:
Interest-bearing deposits:
Demand deposits—interest-bearing	$	40,654	$	132	1.32	%	$	40,634	$	3	0.03	%	$	20	—	%
Money market deposits	37,301		172		1.87		32,672		4		0.05		4,629		14
Savings and other domestic deposits	19,877		3		0.07		21,316		1		0.02		(1,439)		(7)
Core certificates of deposit (4)	5,747		43		3.01		2,560		1		0.14		3,187		124
Other domestic deposits of $250,000 or more	252		2		2.45		316		—		0.08		(64)		(20)
Negotiable CDs, brokered and other deposits	4,815		54		4.56		3,453		2		0.17		1,362		39

Total interest-bearing deposits	108,646		406		1.52		100,951		11		0.04		7,695		8
Short-term borrowings	4,371		60		5.56		4,728		7		0.57		(357)		(8)
Long-term debt	11,047		153		5.52		6,914		31		1.83		4,133		60
Total interest-bearing liabilities	124,064		619		2.02		112,593		49		0.18		11,471		10
Demand deposits—noninterest-bearing	37,498						41,966						(4,468)		(11)
All other liabilities	5,056						3,964						1,092		28
Total liabilities	166,618						158,523						8,095		5
Total Huntington shareholders’ equity	18,231						19,064						(833)		(4)
Non-controlling interest	45						25						20		80
Total equity	18,276						19,089						(813)		(4)
Total liabilities and equity	$	184,894					$	177,612					$	7,282	4	%
Net interest rate spread					2.87						2.82
Impact of noninterest-bearing funds on margin					0.53						0.06
Net interest margin/NII (FTE)			$	1,418	3.40	%			$	1,154	2.88	%

(1)FTE yields are calculated assuming a 21% tax rate.

(2)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 and leases.

(4)Includes consumer certificates of deposit of $250,000 or more.

2023 1Q Form 10-Q 9

Table 4 - Consolidated Average Balance Sheet and Net Interest Margin Analysis

Average Balances
(dollar amounts in millions) Three Months Ended Change
September 30, June 30, March 31, December 31, September 30, 3Q17 vs. 3Q16
2017 2017 2017 2016 2016 Amount Percent
Assets:
Interest-bearing deposits in banks $ 102
$ 102
$ 100
$ 110
$ 95
$ 7
8 %
Loans held for sale 678
525
415
2,507
695
(17 ) (2 )
Securities:
Available-for-sale and other securities:
Taxable 12,275
13,135
12,801
13,734
9,785
2,490
25
Tax-exempt 3,161
3,104
3,049
3,136
2,854
307
11
Total available-for-sale and other securities 15,436
16,239
15,850
16,870
12,639
2,797
22
Trading account securities 92
91
137
139
49
43
88
Held-to-maturity securities—taxable 8,264
7,427
7,656
5,432
5,487
2,777
51
Total securities 23,793
23,756
23,643
22,441
18,175
5,618
31
Loans and leases: (1)
Commercial:
Commercial and industrial 27,643
27,992
27,922
27,727
24,957
2,686
11
Commercial real estate:
Construction 1,152
1,130
1,314
1,413
1,132
20
2
Commercial 6,064
5,940
6,039
5,805
5,227
837
16
Commercial real estate 7,216
7,070
7,353
7,218
6,359
857
13
Total commercial 34,859
35,062
35,276
34,945
31,316
3,543
11
Consumer:
Automobile 11,713
11,324
11,063
10,866
11,402
311
3
Home equity 9,960
9,958
10,072
10,101
9,260
700
8
Residential mortgage 8,402
7,979
7,777
7,690
7,012
1,390
20
RV and marine finance 2,296
2,039
1,874
1,844
915
1,381
151
Other consumer 1,046
983
919
959
817
229
28
Total consumer 33,417
32,283
31,705
31,460
29,406
4,011
14
Total loans and leases 68,276
67,345
66,981
66,405
60,722
7,554
12
Allowance for loan and lease losses (672 ) (672 ) (636 ) (614 ) (623 ) (49 ) 8
Net loans and leases 67,604
66,673
66,345
65,791
60,099
7,505
12
Total earning assets 92,849
91,728
91,139
91,463
79,687
13,162
17
Cash and due from banks 1,299
1,287
2,011
1,538
1,325
(26 ) (2 )
Intangible assets 2,359
2,373
2,387
2,421
1,547
812
52
All other assets 5,455
5,405
5,442
5,559
4,962
493
10
Total assets $ 101,290
$ 100,121
$ 100,343
$ 100,367
$ 86,898
$ 14,392
17 %
Liabilities and Shareholders’ Equity:
Deposits:
Demand deposits—noninterest-bearing $ 21,723
$ 21,599
$ 21,730
$ 23,250
$ 20,033
$ 1,690
8 %
Demand deposits—interest-bearing 17,878
17,445
16,805
15,294
12,362
5,516
45
Total demand deposits 39,601
39,044
38,535
38,544
32,395
7,206
22
Money market deposits 20,314
19,212
18,653
18,618
18,453
1,861
10
Savings and other domestic deposits 11,590
11,889
11,970
12,272
8,889
2,701
30
Core certificates of deposit 2,044
2,146
2,342
2,636
2,285
(241 ) (11 )
Total core deposits 73,549
72,291
71,500
72,070
62,022
11,527
19
Other domestic time deposits of $250,000 or more 432
479
470
391
382
50
13
Brokered deposits and negotiable CDs 3,563
3,783
3,969
4,273
3,904
(341 ) (9 )
Deposits in foreign offices —
—
—
152
194
(194 ) —
Total deposits 77,544
76,553
75,939
76,886
66,502
11,042
17
Short-term borrowings 2,391
2,687
3,792
2,628
1,306
1,085
83
Long-term debt 8,949
8,730
8,529
8,594
8,488
461
5
Total interest-bearing liabilities 67,161
66,371
66,530
64,858
56,263
10,898
19
All other liabilities 1,661
1,557
1,661
1,833
1,608
53
3
Shareholders’ equity 10,745
10,594
10,422
10,426
8,994
1,751
19
Total liabilities and shareholders’ equity $ 101,290
$ 100,121
$ 100,343
$ 100,367
$ 86,898
$ 14,392
17 %

Table of Content

Table 4 - Consolidated Average Balance Sheet and Net Interest Margin Analysis (Continued)

Average Yield Rates (2)
Three Months Ended
September 30, June 30, March 31, December 31, September 30,
Fully-taxable equivalent basis (3) 2017 2017 2017 2016 2016
Assets:
Interest-bearing deposits in banks 1.77 % 1.53 % 1.09 % 0.64 % 0.64 %
Loans held for sale 3.83
3.73
3.82
2.95
3.53
Securities:
Available-for-sale and other securities:
Taxable 2.42
2.38
2.38
2.43
2.35
Tax-exempt 3.62
3.71
3.77
3.60
3.01
Total available-for-sale and other securities 2.67
2.64
2.65
2.65
2.50
Trading account securities 0.16
0.25
0.11
0.18
0.58
Held-to-maturity securities—taxable 2.36
2.38
2.36
2.43
2.41
Total securities 2.55
2.55
2.54
2.58
2.47
Loans and leases: (1)
Commercial:
Commercial and industrial 4.05
4.04
3.98
3.83
3.68
Commercial real estate:
Construction 4.55
4.26
3.95
3.65
3.76
Commercial 4.08
3.97
3.69
3.54
3.54
Commercial real estate 4.16
4.02
3.74
3.56
3.58
Total commercial 4.07
4.04
3.93
3.78
3.66
Consumer:
Automobile 3.60
3.55
3.55
3.57
3.37
Home equity 4.72
4.61
4.45
4.24
4.21
Residential mortgage 3.65
3.66
3.63
3.58
3.61
RV and marine finance 5.43
5.57
5.63
5.64
5.70
Other consumer 11.59
11.47
12.05
10.91
10.93
Total consumer 4.32
4.27
4.23
4.13
3.97
Total loans and leases 4.20
4.15
4.07
3.95
3.81
Total earning assets 3.78
3.75
3.70
3.60
3.52
Liabilities:
Deposits:
Demand deposits—noninterest-bearing —
—
—
—
—
Demand deposits—interest-bearing 0.23
0.20
0.15
0.11
0.11
Total demand deposits 0.10
0.09
0.07
0.04
0.04
Money market deposits 0.36
0.31
0.26
0.24
0.24
Savings and other domestic deposits 0.20
0.21
0.22
0.25
0.21
Core certificates of deposit 0.73
0.56
0.39
0.29
0.43
Total core deposits 0.30
0.26
0.22
0.20
0.20
Other domestic time deposits of $250,000 or more 0.61
0.49
0.45
0.39
0.40
Brokered deposits and negotiable CDs 1.16
0.95
0.72
0.48
0.44
Deposits in foreign offices —
—
—
0.13
0.13
Total deposits 0.35
0.31
0.26
0.23
0.22
Short-term borrowings 0.95
0.78
0.63
0.36
0.29
Long-term debt 2.65
2.49
2.33
2.19
1.97
Total interest-bearing liabilities 0.68
0.61
0.54
0.48
0.49
Net interest rate spread 3.10
3.14
3.16
3.12
3.03
Impact of noninterest-bearing funds on margin 0.19
0.17
0.14
0.13
0.15
Net interest margin 3.29 % 3.31 % 3.30 % 3.25 % 3.18 %
Net Interest Income


~~(1)~~	~~For purposes of this analysis, NALs are reflected in the average balances of loans.~~


~~(2)~~	~~Loan and lease and deposit average rates include impact of applicable derivatives, non-deferrable fees, and amortized fees.~~


~~(3)~~	~~FTE yields are calculated assuming a 35% tax rate.~~

~~2017 Third Quarter versus 2016 Third Quarter~~

~~Fully-taxable equivalent (FTE) net~~Net interest income for the ~~2017 third~~2023 first quarter increased ~~$135~~$263 million, or ~~21%~~23%, from the ~~2016 third~~2022 first quarter. ~~This reflected~~FTE net interest income, a non-GAAP financial measure, for the ~~benefit~~2023 first quarter increased $264 million, or 23%, from the ~~$13.2~~2022 first quarter. The increase in FTE net interest income primarily reflects a 52 basis point increase in the FTE NIM to 3.40% and a $6.7 billion, or ~~17%~~4%, increase in average total earning ~~assets coupled with~~assets. The NIM expansion was driven by the higher rate environment driving an ~~11 basis point improvement~~increase in loan and lease and investment security yields, partially offset by higher cost of funds.

Net interest income for the 2023 first quarter included $10 million of net interest income from purchase accounting accretion and accelerated PPP loan fees recognized upon forgiveness payments from the SBA, compared to $30 million in the ~~FTE net interest margin (NIM) to 3.29%.~~ 2022 first quarter.

Average ~~earning asset growth included a $7.6~~Balance Sheet

Average assets for the 2023 first quarter increased $7.3 billion, or ~~12%~~4%, to $184.9 billion from the 2022 first quarter, primarily due to an increase in average loans and leases ~~and a $5.6~~of $9.3 billion, or ~~31%~~8%, partially offset by decreases in average interest-bearing deposits at the Federal Reserve Bank of $1.1 billion, or 15%, loans held for sale of $793 million, or 64%, and total securities of $768 million, or 2%. The increase in average ~~securities.The NIM expansion reflected a 26 basis point increase related~~loans and leases was driven by organic growth in average commercial loans and leases of $6.5 billion, or 11%, and average consumer loans of $2.7 billion, or 5%.

Average liabilities increased $8.1 billion, or 5%, from the 2022 first quarter, primarily due to ~~the mix~~increases in average borrowings and ~~yield~~deposits. Average borrowings increased $3.8 billion, or 32%, driven by new debt issuances and higher FHLB borrowings reflecting actions taken as part of ~~earning assets and a 4 basis point~~normal management of funding needs. Total average deposits increased $3.2 billion, or 2%, primarily due to an increase in ~~the benefit from noninterest-bearing funds,~~average interest-bearing deposits of $7.7 billion, largely due to increases in average money market and certificate of deposits, partially offset by a ~~19 basis point increase~~decrease in ~~funding costs. FTE net interest income during the 2017 third quarter included $27~~noninterest-bearing deposits of $4.5 billion.

Average shareholders’ equity decreased $833 million, or ~~approximately 12 basis points, of purchase accounting impact.~~

~~Average earning assets for the 2017 third quarter increased $13.2 billion, or 17%~~4%, from the ~~year-ago~~2022 first quarter primarily reflecting the impact of the FirstMerit acquisition. Average securities increased $5.6 billion, or 31%, which included a $0.3 billion increase in direct purchase municipal instruments in our commercial banking segment. Average residential mortgage loans increased $1.4 billion, or 20%, as we continuedue to see the benefits associated with the expansion of our home lending business. Average RV and marine finance loans increased $1.4 billion, or 151%, reflecting the expansion of the acquired business into 17 new states over the past year.

Average total deposits for the 2017 third quarter increased $11.0 billion, or 17%, from the year-ago quarter, while average total core deposits increased $11.5 billion, or 19%. Average total interest-bearing liabilities increased $10.9 billion, or 19%, from the year-ago quarter. These increases primarily reflect the impact of the FirstMerit acquisition. Average demand deposits increased $7.2 billion, or 22%, comprised of a $5.1 billion, or 24%,an increase in average ~~commercial demand deposits and a $2.1 billion, or 20%, increase~~accumulated other comprehensive loss driven by changes in average consumer demand deposits. Average long-term borrowings increased $0.5 billion, or 5%, reflecting the issuance of $2.7 billion and maturity of $1.6 billion of senior debt over the past five quarters.

~~2017 Third Quarter versus 2017 Second Quarter~~

~~Compared to the 2017 second quarter, FTE net~~ interest ~~income increased $14 million, or 2%.~~ ~~Average earning assets increased $1.1 billion, or 1%, sequentially, while the NIM decreased 2 basis points.The decrease in the NIM reflected a 7 basis point increase in the cost of interest-bearing liabilities,~~rates, partially offset by ~~a 3 basis point increase in earning asset yields and a 2 basis point increase in the benefit from noninterest-bearing funds.~~ ~~The purchase accounting impact on the net interest margin was approximately 12 basis points in the 2017 third quarter compared to approximately 15 basis points in the prior quarter.~~earnings.

Compared to the 2017 second quarter, average earning assets increased $1.1 billion, or 1%. Average loans and leases increased $0.9 billion, or 1%, primarily reflecting growth in residential mortgage, automobile, and RV and marine loans partially offset by a decline in average commercial and industrial loans. Average commercial and industrial loans were negatively impacted by the seasonal decline in automobile floorplan lending, a reduction in mortgage warehouse lending, and continued runoff in corporate banking, partially offset by growth in asset finance.

Compared to the 2017 second quarter, average total core deposits increased $1.3 billion, or 2%, primarily reflecting a $1.1 billion, or 6%, increase in money market deposits and a $0.6 billion, or 1%, increase in average demand deposits.

Table 5 - Consolidated YTD Average Balance Sheets and Net Interest Margin Analysis

(dollar amounts in millions) YTD Average Balances YTD Average Rates (2)
Nine Months Ended September 30, Change Nine Months Ended September 30,
Fully-taxable equivalent basis (1) 2017 2016 Amount Percent 2017 2016
Assets:
Interest-bearing deposits in banks $ 102
$ 97
$ 5
5 % 1.46 % 0.37 %
Loans held for sale 540
567
(27 ) (5 ) 3.79
3.76
Securities:

Available-for-sale and other securities:

Taxable 12,735
7,781
4,954
64
2.40
2.37
Tax-exempt 3,105
2,576
529
21
3.70
3.25
Total available-for-sale and other securities 15,840
10,357
5,483
53
2.65
2.59
Trading account securities 107
43
64
149
0.17
0.68
Held-to-maturity securities—taxable 7,785
5,781
2,004
35
2.37
2.43
Total securities 23,732
16,181
7,551
47
2.55
2.53
Loans and leases: (3)

Commercial:

Commercial and industrial 27,852
22,326
5,526
25
4.03
3.57
Commercial real estate:

Construction 1,198
979
219
22
4.24
3.66
Commercial 6,014
4,621
1,393
30
3.92
3.50
Commercial real estate 7,212
5,600
1,612
29
3.97
3.52
Total commercial 35,064
27,926
7,138
26
4.01
3.56
Consumer:

Automobile 11,369
10,430
939
9
3.57
3.24
Home equity 9,983
8,708
1,275
15
4.60
4.19
Residential mortgage 8,055
6,406
1,649
26
3.65
3.65
RV and marine finance 2,071
307
1,764
575
5.54
5.70
Other consumer 997
670
327
49
11.53
10.46
Total consumer 32,475
26,521
5,954
22
4.27
3.86
Total loans and leases 67,539
54,447
13,092
24
4.14
3.71
Allowance for loan and lease losses (660 ) (614 ) (46 ) 7

Net loans and leases 66,879
53,833
13,046
24

Total earning assets 91,913
71,292
20,621
29
3.75 % 3.46 %
Cash and due from banks 1,530
1,114
416
37

Intangible assets 2,373
1,003
1,370
137

All other assets 5,433
4,446
987
22

Total assets $ 100,589
$ 77,241
$ 23,348
30 %
Liabilities and Shareholders’ Equity:
Deposits:
Demand deposits—noninterest-bearing $ 21,684
$ 17,634
$ 4,050
23 % — % — %
Demand deposits—interest-bearing 17,380
9,538
7,842
82
0.20
0.10
Total demand deposits 39,064
27,172
11,892
44
0.09
0.03
Money market deposits 19,399
19,220
179
1
0.31
0.24
Savings and other domestic deposits 11,815
6,541
5,274
81
0.21
0.16
Core certificates of deposit 2,176
2,186
(10 ) —
0.55
0.67
Total core deposits 72,454
55,119
17,335
31
0.26
0.21
Other domestic time deposits of $250,000 or more 460
413
47
11
0.51
0.40
Brokered deposits and negotiable CDs 3,770
3,239
531
16
0.93
0.41
Deposits in foreign offices —
222
(222 ) —
—
0.13
Total deposits 76,684
58,993
17,691
30
0.31
0.23
Short-term borrowings 2,952
1,161
1,791
154
0.76
0.32
Long-term debt 8,738
7,866
872
11
2.49
1.84
Total interest-bearing liabilities 66,690
50,386
16,304
32
0.61
0.48
All other liabilities 1,627
1,513
114
8

Shareholders’ equity 10,588
7,708
2,880
37

Total liabilities and shareholders’ equity $ 100,589
$ 77,241
$ 23,348
30 %
Net interest rate spread 3.13
2.98
Impact of noninterest-bearing funds on margin 0.17
0.14
Net interest margin 3.30 % 3.12 %


~~(1)~~	~~FTE yields are calculated assuming a 35% tax rate.~~


~~(2)~~	~~Loan, lease, and deposit average rates include the impact of applicable derivatives, non-deferrable fees, and amortized deferred fees.~~


~~(3)~~	~~For purposes of this analysis, nonaccrual loans are reflected in the average balances of loans.~~

~~2017 First Nine Months versus 2016 First Nine Months~~

FTE net interest income for the first nine-month period of 2017 increased $605 million, or 36%. This reflected the benefit of a $20.6 billion, or 29%, increase in average total earning assets coupled with a FTE net interest margin, which increased to 3.30% from 3.12%. Average securities increased $7.6 billion, or 47%, primarily reflecting the acquisition of FirstMerit and an increase in direct purchase municipal instruments in our commercial banking segment. Average loans and leases increased $13.1 billion, or 24%, primarily reflecting an increase in C&I lending, residential mortgage loans and RV and marine finance resulting from the acquisition of FirstMerit.

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~~ACL at levels appropriate to absorb our estimate of credit losses inexpected over the life of the loan and lease portfolio, securities portfolio, and ~~the portfolio of~~ unfunded ~~loan commitments and letters-of-credit.~~lending commitments.

The provision for credit losses for the ~~2017 third~~2023 first quarter was ~~$44~~$85 million, ~~which decreased $20~~an increase of $60 million, ~~or 32%,~~ compared to the ~~third~~2022 first quarter. The increase in provision expense compared to the year-ago quarter ~~2016. NCOs increased $3 million to $43 million compared with the same period in the prior year reflecting~~was driven by an increase in ~~consumer~~realized net ~~charge-offs, partially offset by a decrease~~credit losses, along with allowance builds in ~~commercial net charge-offs. Net charge-offs represented an annualized 0.25%~~the current quarter associated with loan and lease growth and economic uncertainty.

The components of ~~average loans and leases, which remains below our long-term expectation of 35 to 55 basis points.~~

~~On a year-to-date basis,~~the provision for credit losses ~~for the first nine-month period~~were as follows:


Table 3 - Provision for Credit Losses
	Three Months Ended
	March 31,		March 31,
(dollar amounts in millions)	2023		2022
Provision for loan and lease losses	$	78	$	7
Provision for unfunded lending commitments	7		14
Provision for securities	—		4
Total provision for credit losses	$	85	$	25

10 Huntington Bancshares Incorporated

Table of ~~2017 was $136 million, an increase of $20 million, or 18%, compared to the year-ago period, reflecting increased net charge-offs due to portfolio loan growth.~~Content

Noninterest Income

The following table reflects noninterest income for each of the periods presented:

Table 6 - Noninterest Income
Three Months Ended 3Q17 vs. 3Q16 3Q17 vs. 2Q17
September 30, June 30, September 30, Change Change
(dollar amounts in thousands) 2017 2017 2016 Amount Percent Amount Percent
Service charges on deposit accounts $ 90,681
$ 87,582
$ 86,847
$ 3,834
4 % $ 3,099
4 %
Cards and payment processing income 53,647
52,485
44,320
9,327
21
1,162
2
Mortgage banking income 33,615
32,268
40,603
(6,988 ) (17 ) 1,347
4
Trust and investment management services 33,531
32,232
28,923
4,608
16
1,299
4
Insurance income 13,992
15,843
15,865
(1,873 ) (12 ) (1,851 ) (12 )
Brokerage income 14,458
16,294
14,719
(261 ) (2 ) (1,836 ) (11 )
Capital markets fees 21,719
16,836
14,750
6,969
47
4,883
29
Bank owned life insurance income 16,453
15,322
14,452
2,001
14
1,131
7
Gain on sale of loans 13,877
12,002
7,506
6,371
85
1,875
16
Net securities gains (losses) (33 ) 135
1,031
(1,064 ) (103 ) (168 ) (124 )
Other noninterest income 38,157
44,219
33,399
4,758
14
(6,062 ) (14 )
Total noninterest income $ 330,097
$ 325,218
$ 302,415
$ 27,682
9 % $ 4,879
2 %

~~2017 Third Quarter versus 2016 Third Quarter~~


Table 4 - Noninterest Income
	Three Months Ended		1Q23 vs. 1Q22
	March 31,			March 31,		Change
(dollar amounts in millions)	2023			2022		Amount		Percent
Service charges on deposit accounts	$	83		$	97	$	(14)	(14)	%
Card and payment processing income	93			86		7		8
Capital markets fees	59			42		17		40
Trust and investment management services	62			65		(3)		(5)
Mortgage banking income	26			49		(23)		(47)
Leasing revenue	26			35		(9)		(26)
Insurance income	34			31		3		10
Gain on sale of loans	3			28		(25)		(89)
Bank owned life insurance income	16			17		(1)		(6)
Net gains on sales of securities	1			—		1		100
Other noninterest income	109			49		60		122
Total noninterest income	$	512		$	499	$	13	3	%

Noninterest income for the ~~2017 third~~2023 first quarter ~~increased $28~~was $512 million, an increase of $13 million, or 9%3%, from the year-ago ~~quarter,~~quarter. Other noninterest income increased $60 million primarily reflecting a $57 million gain on the ~~impact~~sale of ~~the FirstMerit acquisition. Card and payment processing income increased $9 million, or 21%, due to higher credit and debit card related income and underlying customer growth.~~our RPS business, including associated goodwill allocation. Capital markets fees increased $7$17 million, or 40%, primarily reflecting Capstone Partners related advisory fees. Partially offsetting these increases, gain on sale of loans decreased $25 million, or 89%, resulting from the strategic decision to retain the guaranteed portion of SBA loans at origination. Mortgage banking income decreased $23 million, or 47%, primarily reflecting ~~our ongoing strategic focus~~lower salable volume and spreads. Service charges on ~~expanding the business. Gain on sale of loans increased $6 million, or 85%, as a result of continued expansion of our SBA lending business. Other income increased $5~~deposit accounts decreased $14 million, or 14%, primarily reflecting ~~a $5 million benefit~~impact from ~~derivative ineffectiveness~~deposit pricing and ~~a $3 million increase in servicing income. These increases were partially offset by a $7 million decline in mortgage banking income due to lower spreads on origination volume.~~program changes.

~~2017 Third Quarter versus 2017 Second Quarter~~

Compared to the 2017 second quarter, total noninterest income increased $5 million, or 2%. Capital markets fees increased $5 million, or 29%, as a result of the previously-mentioned expansion of the business. Conversely, other income decreased $6 million, or 14%, primarily reflecting a decrease in loan syndication fees.

Table 7 - Noninterest Income—2017 First Nine Months vs. 2016 First Nine Months

Nine Months Ended September 30, Change
(dollar amounts in thousands) 2017 2016 Amount Percent
Service charges on deposit accounts $ 261,683
$ 232,722
$ 28,961
12 %
Cards and payment processing income 153,301
119,951
33,350
28
Mortgage banking income 97,575
90,737
6,838
8
Trust and investment management services 99,633
74,258
25,375
34
Insurance income 45,099
48,037
(2,938 ) (6 )
Brokerage income 46,510
44,819
1,691
4
Capital markets fees 52,755
40,797
11,958
29
Bank owned life insurance income 49,317
40,500
8,817
22
Gain on sale of loans 38,701
22,166
16,535
75
Net securities gains (losses) 94
1,687
(1,593 ) (94 )
Other noninterest income 123,110
99,720
23,390
23
Total noninterest income $ 967,778
$ 815,394
$ 152,384
19 %

Noninterest income for the first nine-month period of 2017 increased $152 million, or 19%, from the year-ago period, primarily reflecting the impact of the FirstMerit acquisition. Service charges on deposit accounts increased $29 million, or 12%, reflecting the benefit of the FirstMerit acquisition and continued new customer acquisition. Cards and payment processing income increased $33 million, or 28%, due to an increase in credit and debit card transactions and underlying customer growth. Trust and investment management services increased $25 million, or 34%, primarily reflecting an increase in assets under management as a result of the FirstMerit acquisition.

Noninterest Expense

~~(This section should be read in conjunction with Significant Items 1.)~~

The following table reflects noninterest expense for each of the periods presented:


Table 5 - Noninterest Expense
	Three Months Ended		1Q23 vs. 1Q22
	March 31,			March 31,		Change
(dollar amounts in millions)	2023			2022		Amount		Percent
Personnel costs	$	649		$	580	$	69	12	%
Outside data processing and other services	151			165		(14)		(8)
Equipment	64			81		(17)		(21)
Net occupancy	60			64		(4)		(6)
Marketing	25			21		4		19
Professional services	16			19		(3)		(16)
Deposit and other insurance expense	20			18		2		11
Amortization of intangibles	13			14		(1)		(7)
Lease financing equipment depreciation	8			14		(6)		(43)
Other noninterest expense	80			77		3		4
Total noninterest expense	$	1,086		$	1,053	$	33	3	%
Number of employees (average full-time equivalent)	20,198			19,722		476		2	%

2023 1Q Form 10-Q 11

Table of Content

Table 8 - Noninterest Expense
Three Months Ended 3Q17 vs. 3Q16 3Q17 vs. 2Q17
September 30, June 30, September 30, Change Change
(dollar amounts in thousands) 2017 2017 2016 Amount Percent Amount Percent
Personnel costs $ 377,088
$ 391,997
$ 405,024
$ (27,936 ) (7 )% $ (14,909 ) (4 )%
Outside data processing and other services 79,586
75,169
91,133
(11,547 ) (13 ) 4,417
6
Equipment 45,458
42,924
40,792
4,666
11
2,534
6
Net occupancy 55,124
52,613
41,460
13,664
33
2,511
5
Professional services 15,227
18,190
47,075
(31,848 ) (68 ) (2,963 ) (16 )
Marketing 16,970
18,843
14,438
2,532
18
(1,873 ) (10 )
Deposit and other insurance expense 18,514
20,418
14,940
3,574
24
(1,904 ) (9 )
Amortization of intangibles 14,017
14,242
9,046
4,971
55
(225 ) (2 )
Other noninterest expense 58,444
59,968
48,339
10,105
21
(1,524 ) (3 )
Total noninterest expense $ 680,428
$ 694,364
$ 712,247
$ (31,819 ) (4 )% $ (13,936 ) (2 )%
Number of employees (average full-time equivalent) 15,508
15,877
14,511
997
7 % (369 ) (2 )%

~~Impacts of Significant Items:~~

Three Months Ended
September 30, June 30, September 30,
(dollar amounts in thousands) 2017 2017 2016
Personnel costs $ 4,362
$ 17,934
$ 76,199
Outside data processing and other services 3,304
6,246
27,639
Equipment 6,505
3,994
4,739
Net occupancy 14,255
14,415
7,116
Professional services 2,038
3,804
33,679
Marketing 17
112
926
Other noninterest expense 252
3,738
8,451
Total noninterest expense adjustments $ 30,733
$ 50,243
$ 158,749

~~Adjusted~~ Noninterest ~~Expense (See Non-GAAP Financial Measures in the Additional Disclosures section):~~

Three Months Ended 3Q17 vs. 3Q16 3Q17 vs. 2Q17
September 30, June 30, September 30, Change Change
(dollar amounts in thousands) 2017 2017 2016 Amount Percent Amount Percent
Personnel costs $ 372,726
$ 374,063
$ 328,825
$ 43,901
13 % $ (1,337 ) — %
Outside data processing and other services 76,282
68,923
63,494
12,788
20
7,359
11
Equipment 38,953
38,930
36,053
2,900
8
23
—
Net occupancy 40,869
38,198
34,344
6,525
19
2,671
7
Professional services 13,189
14,386
13,396
(207 ) (2 ) (1,197 ) (8 )
Marketing 16,953
18,731
13,512
3,441
25
(1,778 ) (9 )
Deposit and other insurance expense 18,514
20,418
14,940
3,574
24
(1,904 ) (9 )
Amortization of intangibles 14,017
14,242
9,046
4,971
55
(225 ) (2 )
Other noninterest expense 58,192
56,230
39,888
18,304
46
1,962
3
Total adjusted noninterest expense (Non-GAAP) $ 649,695
$ 644,121
$ 553,498
$ 96,197
17 % $ 5,574
1 %

~~2017 Third Quarter~~ ~~versus 2016 Third Quarter~~

~~Reported noninterest~~ expense for the ~~2017 third~~2023 first quarter ~~decreased $32~~was $1.1 billion, an increase of $33 million, or 4%3%, from the year-ago quarter. There were no acquisition-related expenses for the 2023 first quarter, ~~primarily reflecting~~compared to $46 million in the ~~year-over-year decrease in FirstMerit acquisition-related Significant Items.~~year-ago quarter. Personnel costs ~~decreased $28~~increased $69 million, or 7%12%, primarily reflecting ~~a $72~~$36 million ~~net decrease~~of voluntary retirement program expense and $6 million of organizational realignment expense, in ~~acquisition-related personnel~~addition to higher expense ~~partially offset by a 7%~~due to the impact of the Capstone Partners acquisition. Partially offsetting this increase, ~~in average full-time equivalent employees. Professional services~~equipment expense decreased ~~$32~~$17 million, or ~~68%~~21%, primarily reflecting ~~the net decrease in Significant Items.~~timing of technology equipment purchases and amortization. Outside data processing and other services decreased ~~$12~~$14 million, or ~~13%~~8%, primarily reflecting ~~the $24 million net~~a decrease in ~~Significant Items~~acquisition-related expenses of $25 million, partially offset by higher card and data processing expense from increased usage. Partially offsetting these decreases, other expense increased $10 million, or 21%, primarily reflecting a $5 million increase in donations and sponsorships and a $3 million impairment of certain equipment lease residuals. The 2017 third quarter noninterest expense also included approximately $12 million of nonrecurring net expense, not included in Significant Items, from personnel, operational, and efficiency improvement efforts, including the previously announced consolidation of 38 full-service branches, 7 drive-through only locations, and 3 corporate offices.technology investments.

~~2017 Third Quarter~~ ~~versus 2017 Second Quarter~~

Reported noninterest expense decreased $14 million, or 2%, from the 2017 second quarter, including a $20 million net decrease in Significant Items. Personnel costs decreased $15 million, or 4%, reflecting a $14 million net decrease in acquisition-related expenses.

Table 9 - Noninterest Expense—2017 First Nine Months vs. 2016 First Nine Months

Nine Months Ended September 30, Change
(dollar amounts in thousands) 2017 2016 Amount Percent
Personnel costs $ 1,151,085
$ 989,369
$ 161,716
16 %
Outside data processing and other services 241,957
216,047
25,910
12
Equipment 135,082
105,173
29,909
28
Net occupancy 175,437
103,640
71,797
69
Professional services 51,712
82,101
(30,389 ) (37 )
Marketing 49,736
41,479
8,257
20
Deposit and other insurance expense 59,031
38,335
20,696
54
Amortization of intangibles 42,614
16,357
26,257
161
Other noninterest expense 175,560
134,487
41,073
31
Total noninterest expense $ 2,082,214
$ 1,726,988
$ 355,226
21 %

~~Impacts of Significant Items:~~

Nine Months Ended September 30,
(dollar amounts in thousands) 2017 2016
Personnel costs $ 41,851
$ 81,405
Outside data processing and other services 24,025
31,047
Equipment 16,262
4,743
Net occupancy 52,012
7,626
Professional services 10,060
48,676
Marketing 945
1,180
Other noninterest expense 9,116
11,267
Total noninterest expense adjustments $ 154,271
$ 185,944

~~Adjusted Noninterest Expense (See Non-GAAP Financial Measures in Additional Disclosures section):~~

Nine Months Ended September 30, Change
(dollar amounts in thousands) 2017 2016 Amount Percent
Personnel costs $ 1,109,234
$ 907,964
$ 201,270
22 %
Outside data processing and other services 217,932
185,000
32,932
18
Equipment 118,820
100,430
18,390
18
Net occupancy 123,425
96,014
27,411
29
Professional services 41,652
33,425
8,227
25
Marketing 48,791
40,299
8,492
21
Deposit and other insurance expense 59,031
38,335
20,696
54
Amortization of intangibles 42,614
16,357
26,257
161
Other noninterest expense 166,444
123,220
43,224
35
Total adjusted noninterest expense (Non-GAAP) $ 1,927,943
$ 1,541,044
$ 386,899
25 %

Reported noninterest expense increased $355 million, or 21%, from the year-ago period, primarily reflecting the impact of the FirstMerit acquisition, including Significant Items. Personnel costs increased $162 million, or 16%, primarily reflecting a 21% increase in the number of average full-time equivalent employees largely related to the additional colleagues during the integration and conversion of FirstMerit as well as the in-store branch expansion. Net occupancy expense increased $72 million, or 69%, largely due to an increase of $44 million of acquisition-related expense. Outside data processing and other services increased $26 million, or 12%, primarily reflecting higher card and data processing expense from increased usage partially offset by a decline in acquisition-related expenses. Deposit and other insurance expense increased $21 million, or 54%, reflecting the larger assessment based and the FDIC Large Institution Surcharge implemented during the 2016 third quarter. Other noninterest expense increased $41 million, or 31%, reflecting the impact of the acquisition as well as a $5 million

increase in donations and sponsorships and a $3 million impairment on certain equipment lease residuals. These increases were partially offset by a decrease of $30 million, or 37%, in professional services reflecting a $39 million decrease in acquisition-related expenses.

Provision for Income Taxes

The provision for income taxes in the ~~2017 third~~2023 first quarter was ~~$90 million. This~~$144 million, compared ~~with a provision for income taxes of $25~~to $105 million in the ~~2016 third quarter and $79 million in the 2017 second~~2022 first quarter. ~~The provision for income taxes for the nine month periods ended September 30, 2017 and September 30, 2016 was $228 million and $134 million, respectively. All~~Both periods included the benefits from ~~tax-exempt income, tax-advantaged investments,~~ general business credits, capital losses, tax-exempt income, tax-exempt bank owned life insurance income, and investments in qualified affordable housing ~~projects, excess tax deductions for stock-based compensation, and capital losses.~~projects. The effective tax rates for the ~~2017 third quarter, 2016 third~~2023 first quarter and ~~2017 second~~2022 first quarter were ~~24.7%, 16.3%,~~19.2% and ~~22.4%, respectively. The effective tax rates for the nine-month periods ended September 30, 2017 and September 30, 2016 were 23.2% and 22.1%~~18.5%, respectively. The variance between the ~~2017 third~~2023 first quarter compared to the ~~2016 third~~2022 first quarter ~~and 2017 second quarter and for the nine-month period ended September 30, 2017 compared to the nine-month period ended September 30, 2016 in the~~ provision for income taxes and effective tax rates relates primarily to ~~the Significant Items.~~ higher pretax income and non-deductible items.

The net federal deferred tax asset was ~~$29~~$294 million, and the net state deferred tax asset was ~~$35~~$82 million at ~~September 30, 2017.~~March 31, 2023.

We file income tax returns with the IRS and various state, city, and foreign jurisdictions. Federal income tax audits have been completed for tax years through ~~2009. The IRS~~2016. Also, with few exceptions, the Company is ~~currently examining our 2010~~no longer subject to state and ~~2011 consolidated federal~~local income tax ~~returns. While the statute of limitations remains open~~examinations for tax years 2012-2016, the IRS has advised that tax years 2012-2014 will not be audited, and plans to begin the examination of the 2015 federal income tax return during the 2017 fourth quarter. Various state and other jurisdictions remain open to examination, including Ohio, Kentucky, Indiana, Michigan, Pennsylvania, West Virginia, Wisconsin, and Illinois.before 2018.

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 management, and authorization and reconciliation procedures, as well as staff education and a disciplined assessment process. 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, through-the-cycle.

We ~~believe that our primary~~classify/aggregate risk ~~exposures are~~into seven risk pillars; credit, market, liquidity, operational, compliance, strategic, and ~~compliance oriented.~~reputation. More information on risk can be found inItem 1A Risk Factors below, the Risk Factors section included in Item 1A of our ~~2016~~2022 Annual Report on Form 10-K and subsequent filings with the SEC. The MD&A included in our ~~2016~~2022 Annual Report on Form 10-K should be read in conjunction with this MD&A, as this discussion provides only material updates to the 2022 Annual Report on Form 10-K. This MD&A should also be read in conjunction with the ~~financial statements, notes~~Unaudited Consolidated Financial Statements, Notes to Unaudited 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 ~~2016~~2022 Annual Report on Form 10-K.

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 ~~AFS and HTM~~investment securities portfolios (see Note 43 “Investment Securities and ~~Note 5~~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, swaptions, swaption collars, and floors 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 mortgage loans held for sale. While there is credit risk associated with derivative activity, we believe this exposure is minimal.

12 Huntington Bancshares Incorporated

Table of Content

We ~~continue to~~ focus on the early identification, monitoring, and ~~managing~~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 ~~demonstrate~~is central to our commitment to maintaining an aggregate moderate-to-low, through-the-cycle risk ~~profile.~~appetite. In our efforts ~~to continue~~ to identify risk mitigation techniques, we have focused on product design features, origination policies, and solutions for delinquent or stressed borrowers.

Loan and Lease Credit Exposure Mix

Refer to the “Loan and Lease Credit Exposure Mix” section of our ~~2016~~2022 Annual Report on 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																					Table 6 - Loan and Lease Portfolio Composition

(dollar amounts in millions)																					(dollar amounts in millions)	At March 31, 2023				At December 31, 2022
Commercial:																					Commercial:
Commercial and industrial																					Commercial and industrial	$	47,049	40	%	$	45,127	38	%

Table 10 - Loan and Lease Portfolio Composition

(dollar amounts in millions)	September 30, 2017				June 30, 2017				March 31, 2017				December 31, 2016				September 30, 2016
Ending Balances by Type:
Commercial:
Commercial and industrial	$	27,469	40	%	$	27,969	41	%	$	28,176	42	%	$	28,059	42	%	$	27,668	42	%
Commercial real estate:
Construction	1,182		2		1,145		2		1,107		2		1,446		2		1,414		2
Commercial	6,024		9		6,000		9		5,986		9		5,855		9		5,842		9
Commercial real estate	7,206		11		7,145		11		7,093		11		7,301		11		7,256		11		Commercial real estate	16,377		13		16,634		14
Lease financing																					Lease financing	5,244		4		5,252		4
Total commercial	34,675		51		35,114		52		35,269		53		35,360		53		34,924		53		Total commercial	68,670		57		67,013		56
Consumer:																					Consumer:
Residential mortgage																					Residential mortgage	22,472		19		22,226		19
Automobile	11,876		17		11,555		17		11,155		17		10,969		16		10,791		16		Automobile	13,187		11		13,154		11
Home equity	9,985		15		9,966		15		9,974		15		10,106		15		10,120		15		Home equity	10,166		8		10,375		9
Residential mortgage	8,616		13		8,237		12		7,829		12		7,725		12		7,665		12
RV and marine finance	2,371		3		2,178		3		1,935		2		1,846		3		1,840		3
RV and marine																					RV and marine	5,404		4		5,376		4
Other consumer	1,064		1		1,009		1		936		1		956		1		964		1		Other consumer	1,280		1		1,379		1
Total consumer	33,912		49		32,945		48		31,829		47		31,602		47		31,380		47		Total consumer	52,509		43		52,510		44
Total loans and leases	$	68,587	100	%	$	68,059	100	%	$	67,098	100	%	$	66,962	100	%	$	66,304	100	%	Total loans and leases	$	121,179	100	%	$	119,523	100	%

Our loan and lease portfolio is ~~composed of~~ a managed mix of consumer and commercial credits. ~~At the corporate level, we~~We manage the overall credit exposure and portfolio composition ~~in part~~ 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~~Commercial lending by NAICS categories, specific limits for CRE project types, loans secured by residential real estate, ~~shared national credit exposure,~~large dollar exposures, and designated high risk loan ~~definitions~~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~~ and is ~~one of the strategies~~ used to ensure a high quality, well diversified portfolio that is consistent with our overall objective of maintaining an aggregate moderate-to-low, through-the-cycle risk ~~profile.~~appetite. Changes to existing concentration limits, ~~require the approval of the ROC prior to implementation,~~ incorporating specific information relating to the potential impact on the overall portfolio composition and performance ~~metrics.~~metrics, require the approval of the ROC prior to implementation.

Commercial Credit

Refer to the ~~“Commercial Credit”~~“Commercial Credit” section of our ~~2016~~2022 Annual Report on Form 10-K for our commercial credit underwriting and on-going credit management processes.

Consumer Credit

Refer to the ~~“Consumer Credit”~~“Consumer Credit” section of our ~~2016~~2022 Annual Report on Form 10-K for our consumer credit underwriting and on-going credit management processes.

2023 1Q Form 10-Q 13

Table of Content

The table below provides our total loan and lease portfolio ~~segregated~~ by industry ~~type. The changes in the industry composition from~~type:


Table 7 - Loan and Lease Portfolio by Industry Type

(dollar amounts in millions)	At March 31, 2023				At December 31, 2022
Commercial loans and leases:
Real estate and rental and leasing	$	16,407	14	%	$	16,310	14	%
Retail trade (1)	11,164		9		9,894		8
Manufacturing	8,019		7		7,809		7
Finance and insurance	5,033		4		5,005		4
Health care and social assistance	4,361		4		4,293		4
Wholesale Trade	3,734		3		3,922		3
Transportation and warehousing	3,279		3		3,246		3
Accommodation and food services	3,261		3		3,335		3
Professional, scientific, and technical services	2,054		2		1,899		2
Other Services	1,919		2		2,097		2
Construction	1,735		1		1,757		1
Utilities	1,604		1		1,298		1
Admin./Support/Waste Mgmt. and Remediation Services	1,421		1		1,370		1
Arts, entertainment, and recreation	1,304		1		1,424		1
Information	1,300		1		1,167		1
Public administration	656		1		667		1
Educational services	471		—		513		—
Agriculture, forestry, fishing, and hunting	413		—		455		—
Mining, quarrying, and oil and gas extraction	201		—		196		—
Management of companies and enterprises	117		—		127		—
Unclassified/other	217		—		229		—
Total commercial loans and leases by industry category	68,670		57		67,013		56
Residential mortgage	22,472		19		22,226		19
Automobile	13,187		11		13,154		11
Home equity	10,166		8		10,375		9
RV and marine	5,404		4		5,376		4
Other consumer loans	1,280		1		1,379		1
Total loans and leases	$	121,179	100	%	$	119,523	100	%

(1) Amounts include $2.4 billion and $2.3 billion of auto dealer services loans at March 31, 2023 and December 31, ~~2016 are consistent with the portfolio growth.~~2022, respectively.

Credit Quality

Table 11 - Loan and Lease Portfolio by Industry Type
(dollar amounts in millions)
September 30,
2017 June 30,
2017 March 31,
2017 December 31,
2016 September 30,
2016
Commercial loans and leases:
Real estate and rental and leasing $ 7,461
11 % $ 7,588
12 % $ 7,482
12 % $ 7,545
11 % $ 7,513
12 %
Manufacturing 4,874
7
4,916
7
5,048
8
4,937
7
4,931
7
Retail trade (1) 4,643
7
4,805
7
4,902
7
4,758
7
4,588
7
Finance and insurance 2,900
4
3,051
4
2,844
4
2,010
3
2,289
3
Health care and social assistance 2,727
4
2,699
4
2,727
4
2,729
4
2,638
4
Wholesale trade 2,070
3
2,058
3
2,181
3
2,071
3
2,009
3
Accommodation and food services 1,653
2
1,660
2
1,652
2
1,678
3
1,612
2
Other services 1,265
2
1,261
2
1,278
2
1,223
2
1,205
2
Transportation and warehousing 1,255
2
1,284
2
1,382
2
1,366
2
1,357
2
Professional, scientific, and technical services 1,230
2
1,232
2
1,240
2
1,264
2
1,228
2
Construction 913
1
928
1
924
1
875
1
889
1
Mining, quarrying, and oil and gas extraction 619
1
501
1
511
1
668
1
704
1
Arts, entertainment, and recreation 530
1
469
1
506
1
556
1
437
1
Educational services 509
1
570
1
544
1
501
1
495
1
Admin./Support/Waste Mgmt. and Remediation Services 484
1
444
1
427
1
429
1
409
1
Information 468
1
458
1
454
1
473
1
475
1
Utilities 431
1
433
1
463
1
470
1
480
1
Public administration 262
—
274
—
266
—
272
—
273
—
Agriculture, forestry, fishing and hunting 176
—
203
—
170
—
151
—
161
—
Unclassified/Other 122
—
183
—
167
—
1,288
2
1,136
2
Management of companies and enterprises 86
—
97
—
101
—
96
—
95
—
Total commercial loans and leases by industry category 34,675
51
35,114
52
35,269
53
35,360
53
34,924
53
Automobile 11,876
17
11,555
17
11,155
17
10,969
16
10,791
16
Home Equity 9,985
15
9,966
15
9,974
15
10,106
15
10,120
15
Residential mortgage 8,616
13
8,237
12
7,829
12
7,725
12
7,665
12
RV and marine finance 2,371
3
2,178
3
1,935
2
1,846
3
1,840
3
Other consumer loans 1,064
1
1,009
1
936
1
956
1
964
1
Total loans and leases $ 68,587
100 % $ 68,059
100 % $ 67,098
100 % $ 66,962
100 % $ 66,304
100 %


~~(1)~~	Amounts include $3.0 billion, $3.2 billion, $3.3 billion, $3.2 billion and $3.0 billion of auto dealer services loans at September 30, 2017, June 30, 2017, March 31, 2017, December 31, 2016 and September 30, 2016, respectively.

~~Credit~~ ~~Quality~~

(This section should be read in conjunction with Note 34 “Loans and Leases” and Note 5 “Allowance 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 ~~credit quality~~specific performance ratios. This approach forms the basis ~~of most~~ of the discussion in the sections immediately following: NPAs, ~~and~~ NALs, ~~TDRs,~~ ACL, and NCOs. In addition, we utilize delinquency rates, risk distribution and migration patterns, ~~and~~ product segmentation, and origination trends in the analysis of our credit quality performance.

Credit quality performance in the ~~2017 third~~2023 first quarter reflected ~~continued overall positive results with stable levels~~NCOs of ~~delinquencies and a 7% decline in NPAs from the prior quarter. Total NCOs were $43~~$57 million, or ~~0.25% annualized,~~0.19% of average total loans and ~~leases. Net charge-offs increased~~leases, annualized, an increase of $38 million, compared to $19 million, or 0.07%, in the year-ago quarter. The increase was driven by $7a $39 million ~~from~~increase in Commercial NCOs to $29 million in the 2023 first quarter, reflecting realized net credit losses in the current period, compared to net credit recoveries in the prior ~~quarter, due to an increase~~year period. NPAs decreased from December 31, 2022 by $16 million, or 3%, largely driven by a decrease in ~~the net charge-offs~~commercial and industrial NALs.

14 Huntington Bancshares Incorporated

Table of ~~the consumer portfolios. The ACL to total loans and leases ratio declined by 1 basis point to 1.10%.~~Content

~~NPAs, NALs, AND TDRs~~

~~(This section should be read in conjunction with Note 3 of the Notes to Unaudited Condensed Consolidated Financial Statements and "Credit Quality" section of our 2016 Form 10-K.)~~

NPAs and NALs

(This section should be read in conjunction with Note 4 “Loans and Leases” and Note 5 “Allowance for Credit Losses” of the Notes to Consolidated Financial Statements and “Credit Quality” section appearing in Huntington’s 2022 Annual Report on Form 10-K.)

NPAs and NALs

Commercial loans and leases are placed on nonaccrual status at 90-days past due, or earlier if repayment of principal and interest is in doubt. Of the ~~$187~~$373 million of ~~CRE and C&I-related~~commercial related NALs at ~~September 30, 2017, $106~~March 31, 2023, $218 million, or ~~57%~~58%, ~~represented~~represent loans and leases that were less than 30-days past due, demonstrating our continued commitment to proactive credit risk management. With the exception of residential mortgage loans guaranteed by government organizations which continue to accrue interest, first-lien loans secured by residential mortgage collateral are placed on nonaccrual status at 150-days past due. Junior-lien home equity loans are placed on nonaccrual status at the earlier of 120-days past due or when the related first-lien loan has been identified as nonaccrual. Automobile, RV and marine and other consumer loans are generally charged-off at 120-days past due. ~~TDR recognition at an earlier past due status than summarized above also may result in NAL designation.~~

The following table reflects period-end NALs and NPAs ~~detail for each of the last five quarters:~~ detail:


Table 8 - Nonaccrual Loans and Leases and Nonperforming Assets																Table 8 - Nonaccrual Loans and Leases and Nonperforming Assets

Table 12 - Nonaccrual Loans and Leases and Nonperforming Assets
(dollar amounts in thousands)
	September 30, 2017			June 30, 2017			March 31, 2017			December 31, 2016			September 30, 2016
(dollar amounts in millions)																(dollar amounts in millions)	At March 31, 2023			At December 31, 2022
Nonaccrual loans and leases (NALs):																Nonaccrual loans and leases (NALs):
Commercial and industrial	$	169,751		$	195,279		$	232,171		$	234,184		$	220,862		Commercial and industrial	$	273		$	288
Commercial real estate	17,397			16,763			13,889			20,508			21,300			Commercial real estate	86			92
Lease financing																Lease financing	14			18
Residential mortgage																Residential mortgage	81			90
Automobile	4,076			3,825			4,881			5,766			4,777			Automobile	4			4
Home equity	71,353			67,940			69,575			71,798			69,044			Home equity	74			76
Residential mortgage	75,251			80,306			80,686			90,502			88,155
RV and marine finance	309			341			106			245			96
Other consumer	108			2			2			—			—
RV and marine																RV and marine	1			1

Total nonaccrual loans and leases	338,245			364,456			401,310			423,003			404,234			Total nonaccrual loans and leases	533			569
Other real estate:
Other real estate, net:																Other real estate, net:
Residential	26,449			26,890			31,786			30,932			34,421			Residential	20			11
Commercial	15,592			16,926			18,101			19,998			36,915
Total other real estate	42,041			43,816			49,887			50,930			71,336

Total other real estate, net																Total other real estate, net	20			11
Other NPAs (1)	6,677			6,906			6,910			6,968			—			Other NPAs (1)	25			14
Total nonperforming assets	$	386,963		$	415,178		$	458,107		$	480,901		$	475,570		Total nonperforming assets	$	578		$	594

Nonaccrual loans and leases as a % of total loans and leases	0.49		%	0.54		%	0.60		%	0.63		%	0.61		%	Nonaccrual loans and leases as a % of total loans and leases	0.44		%	0.48		%
NPA ratio (2)	0.56			0.61			0.68			0.72			0.72			NPA ratio (2)	0.48			0.50
(NPA&90+days past due)/(Loans&OREO)	0.74			0.81			0.87			0.91			0.92

(1)Other nonperforming assets ~~includes~~include certain impaired investment ~~securities.~~


~~(2)~~	~~Nonperforming assets divided by the sum of loans and leases, other real estate owned, and other NPAs.~~

securities and/or nonaccrual loans held-for-sale.

~~2017 Third Quarter versus 2016 Fourth Quarter.~~(2) Nonperforming assets divided by the sum of loans and leases, other real estate owned, and other NPAs.

Total NPAs decreased by $94 million, or 20%, compared with December 31, 2016 primarily as a result of decreases in the C&I and residential portfolios NALs and a 17% decrease in OREO. The C&I decline was a result of significant payoffs and return to accrual of large relationships that were identified as NAL in the fourth quarter of 2016. The residential mortgage decline was in part due to the efforts by our Home Savers Group actively working with our customers.ACL

~~TDR Loans~~

(This section should be read in conjunction with Note 35 “Allowance for Credit Losses” of the Notes to Unaudited ~~Condensed Consolidated Financial Statements and TDR Loans section of our 2016 Form 10-K.)~~

Over the past five quarters, the accruing component of the total TDR balance has been between 80% and 84%, as borrowers continue to make their monthly payments in accordance with the modified terms. From a payment standpoint, over 80% of the $500 million of accruing TDRs secured by residential real estate (Residential Mortgage and Home Equity in Table 13) are current on their required payments. In addition, over 60% of the accruing pool have had no delinquency at all in the past 12 months. There is limited migration from the accruing to non-accruing components, and virtually all of the charge-offs come from the non-accruing TDR balances.

~~The table below presents our accruing and nonaccruing TDRs at period-end for each of the past five quarters:~~

Table 13 - Accruing and Nonaccruing Troubled Debt Restructured Loans
(dollar amounts in thousands)
September 30,
2017 June 30,
2017 March 31,
2017 December 31,
2016 September 30,
2016
Troubled debt restructured loans—accruing:
Commercial and industrial $ 268,373
$ 270,372
$ 222,303
$ 210,119
$ 232,740
Commercial real estate 80,272
74,429
81,202
76,844
80,553
Automobile 28,973
28,140
27,968
26,382
27,843
Home equity 264,410
268,731
271,258
269,709
275,601
Residential mortgage 235,191
238,087
239,175
242,901
251,529
RV and marine finance 1,211
950
581
—
—
Other consumer 6,353
4,017
4,128
3,780
4,102
Total troubled debt restructured loans—accruing 884,783
884,726
846,615
829,735
872,368
Troubled debt restructured loans—nonaccruing:
Commercial and industrial 96,248
89,757
88,759
107,087
70,179
Commercial real estate 3,797
3,823
4,357
4,507
5,672
Automobile 4,076
4,291
4,763
4,579
4,437
Home equity 30,753
28,667
29,090
28,128
28,009
Residential mortgage 50,428
55,590
59,773
59,157
62,027
RV and marine finance 309
381
106
—
—
Other consumer 103
109
117
118
142
Total troubled debt restructured loans—nonaccruing 185,714
182,618
186,965
203,576
170,466
Total troubled debt restructured loans $ 1,070,497
$ 1,067,344
$ 1,033,580
$ 1,033,311
$ 1,042,834

~~Accruing TDRs increased by $55 million compared with December 31, 2016, primarily as a result of the addition of C&I loans that meet the well secured definition~~ ~~and have demonstrated a period of satisfactory payment performance.~~

~~ACL~~

~~(This section should be read in conjunction with Note 3 of the Notes to Unaudited Condensed~~ Consolidated Financial Statements.)

Our ~~total credit reserve~~ACL is comprised of two different components, both of which in our judgment are appropriate to absorb lifetime expected credit losses ~~inherent~~ in our loan and lease portfolio: the ALLL and the AULC. ~~Combined, these reserves comprise~~

We use statistically-based models that employ assumptions about current and future economic conditions throughout the ~~total ACL.~~ contractual life of the loan. The process of estimating expected credit losses is based on three key parameters: PD, EAD, and 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.

2023 1Q Form 10-Q 15

Table of Content

Future economic conditions consider multiple macroeconomic scenarios provided to us by an independent third party and are reviewed through the appropriate committee governance channels described below. These macroeconomic scenarios contain certain variables that are influential to our modeling process, the most significant being unemployment rates and GDP. The probability weights assigned to each scenario are generally expected to be consistent from period to period and determined through our ACL process. 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 leases 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 baseline scenario used for the 2023 first quarter assumes a weaker pace of job growth will cause the unemployment rate to gradually increase to 4.0% by the end of 2024. The overnight federal funds rate is forecasted to increase to a peak rate of approximately 4.8% in the second quarter of 2023 as the Federal Reserve continues to address the elevated inflation levels. The expectation is that the Federal Reserve would then start to cut rates early in 2024, although monetary policy remains restrictive until the end of 2025. The federal funds rate returns to its neutral rate in early 2026. Inflation is forecasted to drop from an average of 8.0% in 2022, to 3.9% in 2023 and to 2.4% in 2024 as a result of the Federal Reserve’s actions, and as inflation pressures stemming from U.S supply chain stress, U.S labor market conditions, the housing market and global energy prices soften. The GDP forecast is relatively unchanged from the prior quarter, forecasted to be 2.6% by the end of 2024.

Management uses a probability-weighted approach that incorporates a baseline, an adverse and a more favorable economic scenario when formulating that quantitative estimate for the allowance The table below is intended to show how the forecasted path of unemployment and GDP in the baseline scenario has changed since the end of 2022:


Table 9 - Forecasted Key Macroeconomic Variables
Baseline scenario forecast	2022		2023				2024
	Q4		Q2		Q4		Q2		Q4


Unemployment rate (1)
4Q 2022	3.7	%	3.9	%	4.1	%	4.1	%	3.9	%
1Q 2023	N/A		3.4		3.7		3.9		4.0



Gross Domestic Product (1)
4Q 2022	(0.1)	%	0.4	%	2.0	%	2.3	%	2.7	%
1Q 2023	N/A		1.0		2.1		2.4		2.6



(1) Values reflect the baseline scenario forecast inputs for each period presented, not updated for subsequent actual amounts.

Management continues to assess the uncertainty in the macroeconomic environment, including geopolitical instability and current inflation levels, considering multiple macroeconomic forecasts that reflected a range of possible outcomes. While we have incorporated estimates of economic uncertainty into our ACL, the ultimate impact of the current inflation levels and attempts to lower inflation through Federal Reserve rate actions will have on the economy remains unknown.

Management develops additional analytics to support adjustments to our modeled results. Our governance committees reviewed model results of each economic scenario for appropriate usage, concluding that the quantitative transactional reserve will continue to utilize scenario weighting. Given the uncertainty associated with key economic scenario assumptions, the March 31, 2023 ACL included a general reserve that consists of various risk profile components, including profiles to capture uncertainty not addressed within the quantitative transaction reserve.

16 Huntington Bancshares Incorporated

Table of Content

Our ACL ~~Methodology Committee~~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 ~~inherent~~ in the loan and lease portfolio at the reported date. ~~Additions~~The loss modeling process uses an EAD concept to calculate total expected losses on both funded balances and unfunded lending commitments, where appropriate. Losses related to the ~~ALLL result from recording provision expense~~unfunded lending commitments are then recorded as AULC within other liabilities in the Unaudited 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 ~~recognition of loan losses due to new loan originations or funding under existing lines,~~credit and increased risk levels resulting from loan risk-rating downgrades or increasing delinquency migrations. Reductions reflect charge-offs (net of recoveries), and decreased risk levels resulting from loan risk-rating upgrades, decreasing delinquencies, or the ~~sale / paydown of loans.~~ obligation is not unconditionally cancelable.

The AULC is determined by applying the same quantitative reserve determination process to the unfunded portion of the loan exposures adjusted by an applicable funding expectation.

~~Loans originated for investment are stated at their principal amount outstanding adjusted for partial charge-offs, and net~~

~~deferred loan fees and costs. Acquired loans are those purchased in the FirstMerit acquisition. These loans were recorded at estimated fair value at the acquisition date with no carryover~~(See Note 1 “Significant Accounting Policies” of the ~~related ALLL. The difference between acquired contractual balance and estimated fair value at acquisition date was recorded as a purchase premium or discount.~~Notes to Consolidated Financial Statements appearing in Huntington’s 2022 Annual Report on Form 10-K.)

Our ACL evaluation ~~process~~process includes the on-going assessment of credit quality metrics, and a comparison of certain ACL benchmarks to current performance. For further information, including the ALLL and AULC activity by portfolio segment, refer to Note 5 “Allowance for Credit Losses” of the Notes to the Unaudited Consolidated Financial Statements.

The table below reflects the allocation of our ~~ACL~~ALLL among our various loan and lease categories ~~during~~and the reported ACL:


Table 10 - Allocation of Allowance for Credit Losses

(dollar amounts in millions)	At March 31, 2023						At December 31, 2022
	Allocation of Allowance		% of Total ALLL		% of Total Loans and Leases (1)		Allocation of Allowance		% of Total ALLL		% of Total Loans and Leases (1)
Commercial
Commercial and industrial	$	915	43	%	40	%	$	890	42	%	38	%
Commercial real estate	492		23		13		482		23		14
Lease financing	50		2		4		52		2		4
Total commercial	1,457		68		57		1,424		67		56
Consumer
Residential mortgage	176		8		19		187		8		19
Automobile	151		7		11		141		7		11
Home equity	118		6		8		105		5		9
RV and marine	144		7		4		143		7		4
Other consumer	96		4		1		121		6		1
Total consumer	685		32		43		697		33		44
Total ALLL	2,142		100	%	100	%	2,121		100	%	100	%
AULC	157						150
Total ACL	$	2,299					$	2,271
Total ALLL as a % of
Total loans and leases	1.77%						1.77%
Nonaccrual loans and leases	402						373
NPAs	371						357
Total ACL as % of
Total loans and leases	1.90%						1.90%
Nonaccrual loans and leases	431						400
NPAs	398						382

(1)Percentages represent the percentage of each ~~of the past five quarters:~~

Table 14 - Allocation of Allowance for Credit Losses (1)
(dollar amounts in thousands)

September 30,
2017 June 30,
2017 March 31,
2017 December 31,
2016 September 30,
2016
Allowance for Credit Losses
Commercial
Commercial and industrial $ 373,821
40 % $ 367,956
41 % $ 380,504
42 % $ 355,424
42 % $ 333,101
42 %
Commercial real estate 100,301
11
106,620
11
99,804
11
95,667
11
98,694
11
Total commercial 474,122
51
474,576
52
480,308
53
451,091
53
431,795
53
Consumer
Automobile 50,382
17
48,322
17
46,402
17
47,970
16
42,584
16
Home equity 57,897
15
62,941
15
64,900
15
65,474
15
69,866
15
Residential mortgage 29,236
13
33,304
12
35,559
12
33,398
12
36,510
12
RV and marine finance 13,018
3
7,665
3
4,022
2
5,311
3
4,289
3
Other consumer 50,831
1
41,188
1
41,389
1
35,169
1
31,854
1
Total consumer 201,364
49
193,420
48
192,272
47
187,322
47
185,103
47
Total allowance for loan and lease losses 675,486
100 % 667,996
100 % 672,580
100 % 638,413
100 % 616,898
100 %
Allowance for unfunded loan commitments 78,566
85,359
91,838
97,879
88,433

Total allowance for credit losses $ 754,052
$ 753,355
$ 764,418
$ 736,292
$ 705,331

Total allowance for loan and leases losses as % of:
Total loans and leases 0.98 % 0.98 % 1.00 % 0.95 % 0.93 %
Nonaccrual loans and leases 200
183
168
151
153
Nonperforming assets 175
161
147
133
130
Total allowance for credit losses as % of:
Total loans and leases 1.10 % 1.11 % 1.14 % 1.10 % 1.06 %
Nonaccrual loans and leases 223
207
190
174
174
Nonperforming assets 195
181
167
153
148


~~(1)~~	~~Percentages represent the percentage of each loan and lease category to total loans and leases.~~

~~2017 Third Quarter versus 2016 Fourth Quarter~~loan and lease category to total loans and leases.

At ~~September 30, 2017, the ALLL was $675 million, compared to $638 million at~~both March 31, 2023 and December 31, ~~2016.~~2022, the ACL was $2.3 billion, or 1.90% of total loans and leases. The ~~$37 million, or 6%,~~marginal absolute increase in the ~~ALLL relates to an increase in Criticized/Classified assets in the C&I portfolio as well as growth in reserve levels~~total ACL was driven by loan and lease growth.

2023 1Q Form 10-Q 17

Table of Content

NCOs

The table below reflects NCO detail for the ~~Other Consumer portfolio related to growth~~three-month periods ended March 31, 2023 and ~~seasoning of the portfolio.~~2022:

The ACL to total loans ratio was 1.10% at September 30, 2017 and December 31, 2016. Management believes the ratio is appropriate given the overall moderate-to-low risk profile of our loan portfolio. We continue to focus on early identification of loans with changes in credit metrics and proactive action plans for these loans. We believe that our ACL is appropriate and its coverage level is reflective of the quality of our portfolio and the current operating environment.


Table 11 - Quarterly Net Charge-off Analysis
	Three Months Ended
	March 31,			March 31,
(dollar amounts in millions)	2023			2022
Net charge-offs (recoveries) by loan and lease type:
Commercial:
Commercial and industrial	$	16		$	(23)
Commercial real estate	18			8
Lease financing	(5)			5
Total commercial	29			(10)
Consumer:
Residential mortgage	—			—
Automobile	5			—
Home equity	(1)			(1)
RV and marine	2			3
Other consumer	22			27
Total consumer	28			29
Total net charge-offs	$	57		$	19




Net charge-offs (recoveries) - annualized percentages:
Commercial:
Commercial and industrial	0.14		%	(0.22)		%



Commercial real estate	0.42			0.22
Lease financing	(0.37)			0.40
Total commercial	0.17			(0.06)
Consumer:
Residential mortgage	0.01			—
Automobile	0.14			0.01
Home equity	(0.02)			(0.03)
RV and marine	0.18			0.20
Other consumer	6.37			8.46
Total consumer	0.21			0.23
Net charge-offs as a % of average loans and leases	0.19		%	0.07		%

~~NCOs~~

~~A l~~oan in any portfolio may be charged-off if a loss confirming event has occurred or in accordance with the policies described below, whichever is earlier. Loss confirming events include, but are not limited to, bankruptcy (unsecured), continued delinquency, foreclosure, or receipt of an asset valuation indicating a collateral deficiency where that asset is the sole source of repayment. Additionally, discharged, collateral dependent non-reaffirmed debt in Chapter 7 bankruptcy filings will result in a charge-off to estimated collateral value, less anticipated selling costs.

C&I and CRE loans are either charged-off or written down to net realizable value at 90-days past due with the exception of Huntington Technology Finance administrative lease delinquencies. Automobile loans, RV and marine finance and other consumer loans are generally charged-off at 120-days past due. First-lien and junior-lien home equity loans are charged-off to the estimated fair value of the collateral, less anticipated selling costs, at 150-days past due and 120-days past due, respectively. Residential mortgages are charged-off to the estimated fair value of the collateral, less anticipated selling costs, at 150-days past due.

Table 15 - Quarterly Net Charge-off Analysis
Three Months Ended
September 30, June 30, September 30,
(dollar amounts in thousands) 2017 2017 2016
Net charge-offs (recoveries) by loan and lease type:
Commercial:
Commercial and industrial $ 13,317
$ 12,870
$ 19,225
Commercial real estate:
Construction (870 ) 83
(271 )
Commercial (3,184 ) (3,638 ) (2,427 )
Commercial real estate (4,054 ) (3,555 ) (2,698 )
Total commercial 9,263
9,315
16,527
Consumer:
Automobile 9,619
8,318
7,769
Home equity 1,532
1,218
2,624
Residential mortgage 2,057
1,052
1,728
RV and marine finance 3,390
1,875
106
Other consumer 17,031
14,262
11,311
Total consumer 33,629
26,725
23,538
Total net charge-offs $ 42,892
$ 36,040
$ 40,065

Three Months Ended
September 30, June 30, September 30,
2017 2017 2016
Net charge-offs (recoveries)—annualized percentages:
Commercial:
Commercial and industrial 0.19 % 0.18 % 0.31 %
Commercial real estate:
Construction (0.30 ) 0.03
(0.10 )
Commercial (0.21 ) (0.24 ) (0.19 )
Commercial real estate (0.22 ) (0.20 ) (0.17 )
Total commercial 0.11
0.11
0.21
Consumer:
Automobile 0.33
0.29
0.27
Home equity 0.06
0.05
0.11
Residential mortgage 0.10
0.05
0.10
RV and marine finance 0.59
0.37
0.05
Other consumer 6.51
5.81
5.54
Total consumer 0.40
0.33
0.32
Net charge-offs as a % of average loans 0.25 % 0.21 % 0.26 %

In assessing NCO trends, it is helpful to understand the process of how commercial loans are treated as they deteriorate over time. The ALLL is established consistent with the level of risk associated with the commercial portfolio's original underwriting. As a part of our normal portfolio management process for commercial loans, loans within the portfolio are periodically reviewed and the ALLL is increased or decreased based on the updated risk ratings. For TDRs and individually assessed impaired loans, a specific reserve is established based on the discounted projected cash flows or collateral value of the specific loan. Charge-offs, if necessary, are generally recognized in a period after the specific ALLL is established. Consumer loans are treated in much the same manner as commercial loans, with increasing reserve factors applied based on the risk characteristics of the loan, although specific reserves are not identified for consumer loans, except for TDRs. In summary, if loan quality deteriorates, the typical credit sequence would be periods of reserve building, followed by periods of higher NCOs as the previously established ALLL is utilized. Additionally, an increase in the ALLL either precedes or is in conjunction with increases in NALs. When a loan is classified as NAL, it is evaluated for specific ALLL or charge-off. As a result, an increase in NALs does not necessarily result in an increase in the ALLL or an expectation of higher future NCOs.

~~2017 Third Quarter versus 2017 Second Quarter~~

NCOs were an annualized ~~0.25%~~0.19% of average loans and leases in the current quarter, ~~an increase~~up from ~~0.21%~~0.07% in the ~~2017 second quarter, still below our long-term expectation of 0.35% - 0.55%. Commercial - C&I charge-offs were slightly higher~~2022 first quarter. NCOs for the commercial portfolios were higher, with annualized net charge-offs of 0.17% in the current quarter, ~~but well within our expected performance range.~~ compared to net recoveries of 0.06% in the year-ago quarter, reflecting the continued normalization of net charge-offs. Consumer charge-offs were ~~higher for~~modestly lower in the quarter, ~~primarily driven by seasonality trends across~~compared to the ~~consumer portfolio, consistent with our expectations.~~ ~~Given the low level~~year-ago quarter.

18 Huntington Bancshares Incorporated

Table of ~~C&I and CRE NCO’s, we have experienced and continue to expect some volatility on a quarter-to-quarter comparison basis.~~

~~The table below reflects NCO detail for the nine-month periods ended September 30, 2017 and 2016:~~

Content

Table 16 - Year to Date Net Charge-off Analysis
Nine Months Ended September 30,
(dollar amounts in thousands) 2017 2016
Net charge-offs by loan and lease type:
Commercial:
Commercial and industrial $ 34,283
$ 29,441
Commercial real estate:
Construction (3,924 ) (752 )
Commercial (5,927 ) (20,095 )
Commercial real estate (9,851 ) (20,847 )
Total commercial 24,432
8,594
Consumer:
Automobile 30,344
18,859
Home equity 4,412
7,383
Residential mortgage 5,704
4,151
RV and marine finance 7,628
106
Other consumer 45,850
26,279
Total consumer 93,938
56,778
Total net charge-offs $ 118,370
$ 65,372

Nine Months Ended September 30,
2017 2016
Net charge-offs - annualized percentages:
Commercial:
Commercial and industrial 0.16 % 0.18 %
Commercial real estate:
Construction (0.44 ) (0.10 )
Commercial (0.13 ) (0.58 )
Commercial real estate (0.18 ) (0.50 )
Total commercial 0.09
0.04
Consumer:
Automobile 0.36
0.24
Home equity 0.06
0.11
Residential mortgage 0.09
0.09
RV and marine finance 0.49
0.05
Other consumer 6.13
5.23
Total consumer 0.39
0.29
Net charge-offs as a % of average loans 0.23 % 0.16 %

~~2017 First Nine Months versus 2016 First Nine Months~~

NCOs were $118 million, a $53 million increase from the same period in the prior year. The increase primarily relates to portfolio growth as a result of the FirstMerit acquisition as well as one large commercial recovery in the prior year period. Given the low level of C&I and CRE NCO’s, there will continue to be some volatility on a period-to-period comparison basis.

Market Risk

(This section should be read in conjunction with the “Market Risk” section ~~of our 2016~~appearing in Huntington’s 2022 Annual Report on 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 ~~subsidiary,~~subsidiaries, foreign exchange positions, equity investments, and investments in securities backed by mortgage loans.

~~Interest Rate~~We measure 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. Our models incorporate market-based assumptions that include the impact of changing interest rates on prepayment rates of assets and runoff rates of deposits. The models also include our projections of the future volume and pricing of various business lines.

In measuring the financial risks associated with interest rate sensitivity in our balance sheet, we compare 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 immediate 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, we presume that market rates will not go below 0%. The scenarios are inclusive of all executed 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.

We use two approaches to model interest rate risk: Net interest income at risk (NII at risk) and economic value of equity at risk modeling sensitivity analysis (EVE at Risk).


Table 12 - Net Interest Income at Risk

	Net Interest Income at Risk (%)
Basis point change scenario	-200	-100	+100	+200

At March 31, 2023	-6.1	-2.9	2.8	5.5
At December 31, 2022	-4.1	-2.0	2.0	4.0

NII at Risk

Table 17 - Net Interest Income at Risk

Net Interest Income at Risk (%)
Basis point change scenario -25
+100
+200
Board policy limits N/A
-2.0 % -4.0 %
September 30, 2017 -0.5 % 2.5 % 5.0 %
December 31, 2016 -1.0 % 2.7 % 5.6 %

is used by management to measure the risk and impact to earnings over the next 12 months, using a variety of interest rate scenarios. The NII at Risk results included in the table above reflect the analysis used monthly by management. It models gradual ~~-25,~~“ramp” -200, -100, +100 and +200 basis point parallel ~~shifts in market interest rates,~~shift scenarios, implied by the forward yield curve over the next twelve months. Due to the current low level of short-term interest rates, the analysis reflects a declining interest rate scenario of 25 basis points, the point at which many assets and liabilities reach zero percent.

~~Our NII at Risk is within our board of director's policy limits for the +100 and +200 basis point scenarios. There is no policy limit for the -25 basis point scenario.~~ The NII at Risk shows that the balance sheet is asset sensitive at both ~~September 30, 2017,~~March 31, 2023, and December 31, ~~2016.~~2022. The change in sensitivity is primarily driven by changes in the funding mix and hedging activity, including entering into pay-fixed swaps and terminating receive-fixed swaps.

2023 1Q Form 10-Q 19

Table of Content

Table 18 - Economic Value of Equity at Risk

Economic Value of Equity at Risk (%)
Basis point change scenario -25
+100
+200
Board policy limits N/A
-5.0 % -12.0 %
September 30, 2017 -1.2 % 3.4 % 4.9 %
December 31, 2016 -0.6 % 0.9 % 0.2 %


Table 13 - Economic Value of Equity at Risk

	Economic Value of Equity at Risk (%)
Basis point change scenario	-200	-100	+100	+200

At March 31, 2023	-0.9	0.9	-3.2	-8.4
At December 31, 2022	9.0	5.9	-8.0	-17.3

EVE at Risk provides a sensitivity analysis on shareholder’s equity for longer-term interest rate risk in the banking book. The EVE results included in the table above reflect the analysis used monthly by management. It models immediate ~~-25,~~-200, -100, +100 and +200 basis point parallel ~~shifts~~“shock” scenarios.

The change in sensitivity from December 31, 2022 was driven primarily by deposit runoff rate changes, changes in the yield curve and hedging throughout the period.

As of March 31, 2023, Huntington had outstanding LIBOR-based instruments that mature after June 30, 2023, including, loan and lease exposures totaling approximately $16 billion, notional derivative exposure totaling approximately $32 billion, securities of approximately $1 billion, and long-term debt of $347 million. To address the discontinuance of LIBOR in its current form, we established a LIBOR transition team and project plan under the oversight of the CRO and CFO, providing periodic updates to the ROC. Contract remediation efforts coordinated by the LIBOR transition team are scheduled for completion by June 2023. Source systems have been updated to support alternative reference rates. At this time alternative reference rates are predominantly SOFR based. As such, we have developed a SOFR-enabled interest rate risk monitoring framework and a strategy for managing interest rate risk during the transition from LIBOR to SOFR. We continue to monitor market developments and legislative and regulatory updates.

Use of Derivatives to Manage Interest Rate Risk

An integral component of our interest rate risk management strategy is the use of derivative instruments to minimize significant fluctuations in earnings caused by changes in market interest rates. ~~Due to the current low level~~Examples of ~~short-term interest rates, the analysis reflects a declining interest rate scenario~~derivative instruments that we may use as part of ~~25 basis points, the point at which deposit costs reach zero percent.~~

~~We are within~~ our ~~board of director's policy limits for the +100 and +200 basis point scenarios. There is no policy limit for the -25 basis point scenario. The EVE depicts a moderate level of long-term~~ interest rate risk ~~which indicates~~management strategy include interest rate swaps, caps and floors, collars, forward contracts, and forward starting interest rate swaps.

Table 14 shows all swap, swaption, swaption collar and floor 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 ~~is positioned favorably for rising~~positions to be hedged. For further information, including the notional amount and fair values of these derivatives, refer to Note 13 “Derivative Financial Instruments” of the Notes to Unaudited Consolidated Financial Statements.

The following tables present additional information about the interest ~~rates. The EVE increase~~rate swaps, swaptions, swaption collars, and floors used in Huntington’s asset and liability management activities at ~~September 30, 2017 from~~March 31, 2023 and December 31, ~~2016 is primarily~~2022.

20 Huntington Bancshares Incorporated

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Table 14 - Weighted-Average Maturity, Receive Rate and SOFR/LIBOR Reset Rate on Asset Liability Management Instruments

			Average Maturity (years)			Weighted-Average Fixed Rate		Weighted-Average Reset Rate
(dollar amounts in millions)	Notional Value			Fair Value
At March 31, 2023
Asset conversion swaps
Securities (1):
Pay Fixed - Receive 1 month LIBOR	$	8,115	3.68	$	710	0.93	%	4.81	%
Pay Fixed - Receive SOFR	2,866		4.45	90		2.54		2.17
Pay Fixed - Receive SOFR - forward starting (2)	980		9.17	3		2.85		—
Loans:
Receive Fixed - Pay SOFR - forward starting (3)	2,000		4.68	(18)		2.83		—
Receive Fixed - Pay 1 month LIBOR	3,275		0.66	(65)		1.62		4.74
Receive Fixed - Pay SOFR	9,750		3.65	(233)		2.74		4.28


Liability conversion swaps
Receive Fixed - Pay 1 month LIBOR	1,430		1.60	(47)		2.01		4.71
Receive Fixed - Pay SOFR	6,299		4.66	(111)		3.16		3.41


Purchased swaption collars
Purchased Interest Rate Swaption Collars (4)	2,800		0.11	27		3.18 / 4.27		—
Purchased floors
Purchased Floor Spread - SOFR (4)	1,550		2.95	19		2.90 / 3.90		—
Purchased Floor Spread - SOFR forward starting (4)	3,450		3.08	46		2.99 / 3.99		—
Basis swaps

Pay SOFR- Receive Fed Fund (economic hedges) (5)	174		3.33	—		4.83		4.83
Pay Fed Fund - Receive SOFR (economic hedges) (5)	1		12.56	—		4.87		4.83
Purchased swaptions
Pay Fixed - Receive SOFR Swaptions (economic hedges)	1,500		1.00	3		5.05		—
Total swap portfolio (6)	$	44,190		$	424





At December 31, 2022
Asset conversion swaps
Securities (1):
Pay Fixed - Receive 1 month LIBOR	$	8,024	3.89	$	834	0.93	%	4.37	%
Pay Fixed - Receive SOFR	366		7.02	49		1.46		3.82
Pay Fixed - Receive 1 month LIBOR - forward starting (7)	91		7.31	12		1.62		—
Pay Fixed - Receive SOFR - forward starting (8)	1,926		6.17	85		2.17		—
Loans:
Receive Fixed - Pay SOFR - forward starting (9)	2,950		4.91	(109)		2.64		—
Receive Fixed - Pay 1 month LIBOR	7,875		1.41	(390)		1.21		4.20
Receive Fixed - Pay SOFR	8,700		3.55	(351)		2.57		3.90
Liability conversion swaps
Receive Fixed - Pay 1 month LIBOR	1,430		1.85	(60)		2.01		4.25
Receive Fixed - Pay SOFR	6,299		4.91	(201)		3.16		3.36
Purchased swaption collars
Purchased Interest Rate Swaption Collars (4)	4,800		0.27	(6)		2.87 / 4.05		—
Basis swaps
Pay SOFR- Receive Fed Fund (economic hedges) (5)	174		3.58	—		4.33		4.31
Pay Fed Fund - Receive SOFR (economic hedges) (5)	1		12.81	—		4.35		4.33
Total swap portfolio (6)	$	42,636		$	(137)

(1)Amounts include interest rate swaps as fair value hedges of fixed-rate investment securities using the ~~result~~portfolio layer method.

(2)Forward starting swaps effective starting from April 2023 to October 2027.

(3)Forward starting swaps effective starting from April 2023 to January 2025.

(4)The weighted average fixed rates for floor spread and swaption collars are the weighted average strike rates for the upper and lower bounds of the instruments.

(5)Swaps have variable pay and variable receive resets. Weighted Average Fixed Rate column represents pay rate reset.

(6)LIBOR swap instruments that have maturities beyond July 2023 will transition to a SOFR-based rate.

(7)Forward starting swaps effective starting from January 2023 to February 2023.

(8)Forward starting swaps effective starting from January 2023 to October 2027.

(9)Forward starting swaps effective starting from January 2023 to July 2024.

2023 1Q Form 10-Q 21

Table of Content

During the first quarter of 2023, we entered into $1.5 billion of interest rate swaptions with an average strike price of 5.05% to reduce the impact on capital from rising rates. These swaptions are economic hedges of interest rate risk attributable to our investment securities with the change in ~~the average life assumptions for certain loans, deposits and securities.~~value of these instruments recorded in other noninterest income.

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.~~Statements.)

At ~~September 30, 2017,~~March 31, 2023, we had a total of ~~$195~~$485 million of capitalized MSRs representing the right to service ~~$19.6~~$32.5 billion in mortgage loans. ~~Of this $195 million, $12 million was recorded using the fair value method and $183 million was recorded using the amortization method.~~

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 and declines in credit quality. Prepayments usually increase when mortgage interest rates decline and decrease when mortgage interest rates rise. We ~~have employed~~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. ~~Changes in the recorded value of the MSR between reporting dates are recognized as an increase or a decrease in mortgage banking income.~~

~~MSRs recorded using the amortization method generally relate to loans originated with historically low interest rates, resulting in a lower probability of prepayments and, ultimately, impairment.~~ 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 ~~subsidiary,~~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 2016~~appearing in Huntington’s 2022 Annual Report on Form 10-K for our on-going liquidity risk management processes.)

~~Our primary source~~Liquidity risk is the possibility of us being unable to meet current and future financial obligations in a timely manner. The goal of liquidity management is ~~our~~to ensure adequate, stable, reliable, and cost-effective sources of funds to satisfy changes in loan and lease demand, unexpected levels of deposit withdrawals, investment opportunities, and other contractual obligations. We consider core earnings, strong capital ratios, and credit quality essential for maintaining high credit ratings, which allows us cost-effective access to market-based liquidity. We mitigate liquidity risk by maintaining liquid assets in the form of cash and cash equivalents and securities. In addition, we maintain a large, stable core deposit ~~base. Core deposits comprised approximately 95%~~base and a diversified base of ~~total deposits at September 30, 2017. We also have~~readily available ~~unused~~ wholesale funding sources, ~~of liquidity,~~ including advances from the FHLB ~~of Cincinnati,~~through pledged borrowing capacity, issuance through dealers in the capital markets, and access to certificates of deposit issued through brokers. Liquidity risk is ~~further provided~~reviewed and managed continuously for the Bank and the parent company, as well as its subsidiaries. At March 31, 2023, management believes current sources of liquidity are sufficient to meet Huntington’s on and off-balance sheet obligations.

22 Huntington Bancshares Incorporated

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We maintain a contingency funding plan that provides for liquidity stress testing, which assesses the potential erosion of funds in the event of an institution-specific event or systemic financial market crisis. Examples of institution specific events could include a downgrade in our public credit rating by ~~unencumbered,~~a rating agency, a large charge to earnings, declines in profitability or ~~unpledged, investment securities~~other financial measures, declines in liquidity sources including reductions in deposit balances or access to contingent funding sources, or a significant merger or acquisition. Examples of systemic events unrelated to us that ~~totaled $13.9~~could have an effect on our access to liquidity would be terrorism or war, natural disasters, political events, seizure of a major financial institution, or the default or bankruptcy of a major, corporation, mutual fund, or hedge fund. Similarly, market speculation or rumors about us, or the banking industry in general, may adversely affect the cost and availability of normal funding sources. The contingency funding plan outlines the process for addressing a liquidity crisis and provides for an evaluation of funding sources under various market conditions. It also assigns specific roles and responsibilities and communication protocols for effectively managing liquidity through a problem period.

Our largest source of liquidity on a consolidated basis is core deposits, which provide stable and lower-cost funding. Core deposits were $140.4 billion at March 31, 2023 which comprised 97% of total deposits, compared to $142.1 billion, and 96% of total deposits, at December 31, 2022. The decrease in core deposits, compared to December 31, 2022, was primarily driven by a decrease in commercial core deposits driven by seasonality and shifts to off-balance sheet liquidity solutions we provide for our customers, partially offset by an increase in consumer core deposits. Our core deposits come from a base of primary bank customer relationships and we continue to focus on acquiring and deepening those relationships resulting in our granular and diversified deposit base.

The following table reflects deposit composition detail.


Table 15 - Deposit Composition

(dollar amounts in millions)	At March 31, 2023				At December 31, 2022
Total deposits by type:
Demand deposits—noninterest-bearing	$	36,789	25	%	$	38,242	26	%
Demand deposits—interest-bearing	39,827		28		43,136		29
Money market deposits	37,276		26		36,082		24
Savings and other domestic deposits	19,546		13		20,357		14
Core certificates of deposit (1)	6,981		5		4,324		3
Total core deposits:	140,419		97		142,141		96
Other domestic deposits of $250,000 or more	282		—		220		—
Negotiable CDs, brokered and other deposits	4,577		3		5,553		4

Total deposits	$	145,278	100	%	$	147,914	100	%









Total core deposits:
Commercial	$	61,132	44	%	$	64,107	45	%
Consumer	79,287		56		78,034		55
Total core deposits	$	140,419	100	%	$	142,141	100	%

Total deposits (insured/uninsured):
Insured deposits	$	100,186	69	%	$	100,631	68	%


Uninsured deposits (2)	45,092		31		47,283		32

Total deposits	$	145,278	100	%	$	147,914	100	%

(1)Includes consumer certificates of deposit of $250,000 or more.

(2)Represents consolidated Huntington uninsured deposits, determined by adjusting the amounts reported in the Bank Call Report (FFIEC 031) by inter-company deposits, which are not customer facing and are therefore eliminated through consolidation. Bank Call Report uninsured deposit balances are reported gross at $52.8 billion, which includes $7.7 billion of inter-company deposits as of ~~September 30, 2017.~~March 31, 2023, and $84.6 billion, which includes $37.3 billion of inter-company deposits as of December 31, 2022. Additionally, of the total uninsured deposits, $6.4 billion and $5.8 billion are secured by collateral, at March 31, 2023 and December 31, 2022, respectively.

Cash and cash equivalents were $10.4 billion and $6.7 billion at March 31, 2023 and December 31, 2022, respectively. The $3.7 billion increase in cash and cash equivalents is primarily due to an increase in interest-bearing deposits at the Federal Reserve Bank to support short-term liquidity.

2023 1Q Form 10-Q 23

Table of Content

Total securities were $42.4 billion at March 31, 2023, compared to $41.3 billion at December 31, 2022. The $1.0 billion increase in securities compared to December 31, 2022, was primarily due to unrealized gain on available for sale securities and an increase in FHLB stock during the period. At March 31, 2023, the duration of the securities portfolio was 4.7 years, or 3.7 years net of hedging. Securities are pledged to secure borrowing capacity with the FHLB and the Federal Reserve, discussed further in the Bank Liquidity and Sources of Funding section below. At March 31, 2023, securities with market value of $8.7 billion were unpledged.

Sources of wholesale funding include other domestic deposits of $250,000 or more, negotiable CDs, brokered and other deposits, short-term borrowings, and long-term debt. Our wholesale funding totaled $24.8 billion at March 31, 2023, compared to $17.5 billion at December 31, 2022. The increase from year-end is primarily due to an increase in FHLB borrowings.

Bank Liquidity and Sources of Funding

Our primary sources of funding for the Bank are ~~retail~~consumer and commercial core deposits. At ~~September 30, 2017,~~March 31, 2023, these core deposits funded ~~73%~~74% of total assets ~~(109%~~(116% of total ~~loans)~~loans and leases). ~~Other~~To the extent we are unable to obtain sufficient liquidity through core deposits and cash and cash equivalents, we may meet our liquidity needs through sources of ~~liquidity include non-core deposits, FHLB advances,~~ wholesale ~~debt instruments,~~funding and ~~securitizations. Demand deposit overdrafts that have been reclassified as loan balances were $24 million and $23 million at September 30, 2017 and December 31, 2016, respectively.~~

~~The following table reflects deposit composition detail for each of the last five quarters:~~

Table 19 - Deposit Composition
(dollar amounts in millions)
September 30, June 30, March 31, December 31, September 30,
2017 2017 2017 2016 2016
By Type:
Demand deposits—noninterest-bearing $ 22,225
28 % $ 21,420
28 % $ 21,489
28 % $ 22,836
30 % $ 23,426
30 %
Demand deposits—interest-bearing 18,343
23
17,113
23
18,618
24
15,676
21
15,730
20
Money market deposits 20,553
26
19,423
26
18,664
24
18,407
24
18,604
24
Savings and other domestic deposits 11,441
15
11,758
15
12,043
16
11,975
16
12,418
16
Core certificates of deposit 2,009
3
2,088
3
2,188
3
2,535
3
2,724
4
Total core deposits: 74,571
95
71,802
95
73,002
95
71,429
94
72,902
94
Other domestic deposits of $250,000 or more 418
1
441
1
524
1
394
1
391
1
Brokered deposits and negotiable CDs 3,456
4
3,690
4
3,897
4
3,785
5
3,972
5
Deposits in foreign offices —
—
—
—
—
—
—
—
140
—
Total deposits $ 78,445
100 % $ 75,933
100 % $ 77,423
100 % $ 75,608
100 % $ 77,405
100 %
Total core deposits:
Commercial $ 35,516
48 % $ 32,201
45 % $ 32,963
45 % $ 31,887
45 % $ 32,936
45 %
Consumer 39,055
52
39,601
55
40,039
55
39,542
55
39,966
55
Total core deposits $ 74,571
100 % $ 71,802
100 % $ 73,002
100 % $ 71,429
100 % $ 72,902
100 %

asset securitization or sale.

The Bank maintains borrowing capacity at the FHLB and the Federal Reserve ~~Bank Discount Window.~~secured by pledged loans and securities. The Bank does not consider borrowing capacity at the Federal Reserve a primary source of funding, however, could be used as a potential source of liquidity in a stressed environment or during a market disruption. At March 31, 2023, the Bank’s available contingent borrowing capacity at the FHLB and Federal Reserve totaled $51.1 billion, compared to $53.5 billion at December 31, 2022. We continue to optimize borrowing capacity and early in the second quarter the Bank pledged incremental assets which, after receiving approval from the Federal Reserve, resulted in an increase in overall borrowing capacity of approximately $24 billion. The amount of available contingent borrowing capacity may fluctuate based on the level of borrowings outstanding and level of assets pledged.

At March 31, 2023, we believe the Bank Discount Window as a primary source of liquidity. Total loans pledged to the Federal Reserve Discount Window and the FHLB are $32.0 billion and $19.7 billion at September 30, 2017 and December 31, 2016, respectively.

~~To the extent we are unable to obtain~~has 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, deposits in foreign offices, short-term borrowings, and long-term debt. At September 30, 2017, total wholesale funding was $14.9 billion, a decrease from $16.2 billion at December 31, 2016. The decrease from year-end primarily relates to a decrease in short-term borrowings.

~~Liquidity Coverage Ratio~~

On September 3, 2014, the U.S. banking regulators adopted a final LCR for internationally active banking organizations, generally those with $250 billion or more in total assets, and a Modified LCR rule for banking organizations, similar to Huntington, with $50 billion or more in total assets that are not internationally active banking organizations. The LCR is designed to promote the short-term resilience of the liquidity risk profile of banks to which it applies. The Modified LCR requires Huntington to maintain HQLAcapital resources to meet its ~~net~~ cash ~~outflows~~flow obligations over ~~a prospective 30 calendar-day period, which takes into account~~ the ~~potential impact of idiosyncratic~~next 12 months and ~~market-wide shocks. The Modified LCR transition period began on January 1, 2016, with Huntington required to maintain HQLA equal to 90 percent of~~for the ~~stated requirement. The ratio increased to 100 percent on January 1, 2017. At September 30, 2017, Huntington was in compliance with the Modified LCR requirement.~~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.

~~At September 30, 2017, the~~The parent company had ~~$1.9~~$3.0 billion and $3.5 billion at March 31, 2023 and December 31, 2022 in cash and cash equivalents, ~~slightly up fromDecember 31, 2016.~~respectively.

On ~~October 18, 2017, the board~~April 19, 2023, our Board of ~~directors~~Directors declared a quarterly common stock cash dividend of ~~$0.11~~$0.155 per common share. The dividend is payable on ~~January 2, 2018,~~July 3, 2023, to shareholders of record on ~~December 18, 2017.~~June 19, 2023. Based on the current quarterly dividend of ~~$0.11~~$0.155 per common share, cash demands required for common stock dividends are estimated to be approximately ~~$119~~$224 million per quarter. ~~On October 18, 2017, the board~~Additionally, on April 19, 2023, our Board of ~~directors~~Directors declared a quarterly Series ~~A, Series~~ B, Series C,E, Series F, Series G, Series H, and Series DJ Preferred Stock dividend payable on ~~January 15, 2018~~July 17, 2023 to shareholders of record on ~~January~~July 1, ~~2018. Based~~2023. On March 29, 2023, our Board of Directors declared a quarterly dividend for the Series I Preferred Stock payable on ~~the current dividend,~~June 1, 2023 to shareholders of record on May 15, 2023. Total cash demands required for ~~Series A, Series B, Series C, and Series D Preferred Stock~~preferred stock dividends are ~~estimated~~expected to be approximately ~~$8 million, $0.3 million, $1.5 million, and $9~~$40 million per ~~quarter, respectively.~~quarter.

During the first ~~nine~~three months of ~~2017, the Bank returned capital totaling $426 million. Additionally,~~2023, the Bank paid a preferred ~~dividend~~and common dividends to the parent company of ~~$34~~$11 million and ~~common stock dividend of $100~~$189 million, ~~to the holding company during the first nine months of 2017.~~respectively. To meet any additional liquidity needs, the parent company may issue debt or equity ~~securities from time~~securities.

At March 31, 2023, we believe the Company has sufficient liquidity and capital resources to ~~time.~~meet its cash flow obligations over the next 12 months and for the foreseeable future.

24 Huntington Bancshares Incorporated

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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, ~~(See Note 14),~~interest rate swaps, caps and floors, swaption collars, financial guarantees contained in standby letters-of-credit issued by the Bank, ~~(See Note 14),~~ and commitments by the Bank to sell mortgage ~~loans (See Note 14).~~loans.

Operational Risk

Operational risk is the risk of loss due to human ~~error;~~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 ~~and continuously~~ monitor ~~cyber-attacks~~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~~cyberattacks and, to date, have not experienced any material losses.

Cybersecurity threats have increased, primarily through 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 has the option to work 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~~govern operational risks, we have ~~a senior management~~an Operational Risk Committee, ~~and~~ a ~~senior management~~ 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 ~~senior management~~ 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 our Audit Committee, as appropriate. Significant findings or issues are escalated by the Third Party Risk Management Committee to the Technology Committee of the Board of Directors, as appropriate.

The FirstMerit integration was inherently large and complex. Our objective for managing execution risk was to minimize impacts to daily operations. We established an Integration Management Office led by senior management. Responsibilities included central management, reporting, and escalation of key integration deliverables. In addition, a board level Integration Governance Committee was established to assist in the oversight of the integration of people, systems, and processes of FirstMerit with Huntington. While the systems' conversion is now largely completed, continued oversight occurred until all converted systems were fully decommissioned.

The goal of this framework is to implement effective operational ~~risk techniques and strategies,~~risk-monitoring; minimize operational, fraud, and legal losses; minimize the impact of inadequately designed models and enhance our overall ~~performance.~~performance.

2023 1Q Form 10-Q 25

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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. ~~Additionally, the~~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~~hold ourselves to a high standard ~~of expectation~~ for adherence to compliance management and seek to continuously enhance our performance.

Capital

We consider disciplined capital management as a key objective. 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~~our 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 16 - Regulatory Capital Data (1)

(dollar amounts in millions)		At March 31, 2023			At December 31, 2022
Total risk-weighted assets	Consolidated	$	142,331		$	141,940
	Bank	141,991			141,571
CET1 risk-based capital	Consolidated	13,588			13,290
	Bank	14,540			14,133
Tier 1 risk-based capital	Consolidated	16,082			15,467
	Bank	15,756			15,334
Tier 2 risk-based capital	Consolidated	3,174			3,106
	Bank	2,378			2,313
Total risk-based capital	Consolidated	19,256			18,573
	Bank	18,134			17,647
CET1 risk-based capital ratio	Consolidated	9.55		%	9.36		%
	Bank	10.24			9.98
Tier 1 risk-based capital ratio	Consolidated	11.30			10.90
	Bank	11.10			10.83
Total risk-based capital ratio	Consolidated	13.53			13.09
	Bank	12.77			12.47
Tier 1 leverage ratio	Consolidated	8.79			8.60
	Bank	8.63			8.54

Table 20 - Regulatory Capital Data
Basel III
(dollar amounts in millions) September 30,
2017 June 30,
2017 December 31,
2016
Total risk-weighted assets Consolidated $ 78,631
$ 78,366
$ 78,263
Bank 78,848
78,489
78,242
Common equity tier I risk-based capital Consolidated 7,817
7,740
7,486
Bank 8,491
8,367
8,153
Tier 1 risk-based capital Consolidated 8,886
8,809
8,547
Bank 9,362
9,238
9,086
Tier 2 risk-based capital Consolidated 1,638
1,640
1,668
Bank 1,706
1,706
1,732
Total risk-based capital Consolidated 10,524
10,449
10,215
Bank 11,068
10,944
10,818
Tier 1 leverage ratio Consolidated 8.96 % 8.98 % 8.70 %
Bank 9.44
9.43
9.29
Common equity tier I risk-based capital ratio Consolidated 9.94
9.88
9.56
Bank 10.77
10.66
10.42
Tier 1 risk-based capital ratio Consolidated 11.30
11.24
10.92
Bank 11.87
11.77
11.61
Total risk-based capital ratio Consolidated 13.39
13.33
13.05
Bank 14.04
13.94
13.83

(1) Huntington elected to temporarily delay certain effects of CECL on regulatory capital for two years, followed by a three-year transition period which began January 1, 2022 pursuant to a rule that allows bank holding companies and banks to delay for two years 100% of the day-one impact of adopting CECL and 25% of the cumulative change in the reported allowance for credit losses since adopting CECL. As of March 31, 2023 and December 31, 2022, we have phased in 50% and 25%, respectively, of the cumulative CECL deferral with the remaining impact to be recognized over the remainder of the three-year transition period.

At ~~September 30, 2017,~~March 31, 2023, at both the consolidated and Bank level, we maintained Basel III ~~transitional~~ capital ratios in excess of the well-capitalized standards established by the ~~FRB.~~

~~Common Equity Tier 1 (CET1)~~Federal Reserve. The increase in the consolidated CET1 risk-based capital ratio, ~~was 9.94% at September 30, 2017, up from 9.56% at December 31, 2016. The regulatory Tier 1 risk-based capital ratio was 11.30%~~ compared to ~~10.92% at December 31, 2016. All capital ratios were impacted~~the prior year end, was primarily driven by current period earnings, partially offset by dividends and the ~~repurchase~~CECL transitional amount.

26 Huntington Bancshares Incorporated

Table of ~~$123 million of common stock at an average cost of $12.75 per share during the 2017 third quarter.~~Content

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~~appetite 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 ~~$10.7~~$18.8 billion at ~~September 30, 2017,~~March 31, 2023, an increase of ~~$0.4~~$1.0 billion or 6% when compared with December 31, ~~2016.~~2022. The increase was primarily driven by earnings, net of dividends, improved AOCI, and the issuance of perpetual preferred stock.

~~On June 28, 2017,~~ Huntington ~~was notified by~~is authorized to make capital distributions that are consistent with the requirements in the Federal ~~Reserve that it had no objection~~Reserve’s capital rule, inclusive of the SCB requirement. Huntington’s SCB requirement associated with its 2022 Capital Plan is 3.3%, effective for the period of October 1, 2022 through September 30, 2023.

Share Repurchases

From time to ~~Huntington's proposed capital actions included in Huntington's capital plan submitted in~~time our Board of Directors authorizes the ~~2017 Comprehensive Capital Analysis and Review (CCAR). These actions included a 38% increase in the quarterly dividend per~~Company to repurchase shares of our common share to $0.11, starting in the fourth quarter of 2017, the repurchase of up to $308 million of common stock over the next four quarters (July 1, 2017 through June 30, 2018), subject to authorization bystock. 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 repurchases, including block transactions, accelerated or delayed block transactions, forward transactions, and ~~maintaining dividends on~~similar transactions. Various factors determine the ~~outstanding classes~~amount and timing of ~~preferred stock~~our share repurchases, including our capital requirements, the number of shares we expect to issue for employee benefit plans and ~~trust preferred securities.~~acquisitions, market conditions (including the trading price of our stock), and regulatory and legal considerations.

On ~~July 19, 2017, the~~January 18, 2023, our Board authorized the repurchase of up to ~~$308 million~~$1.0 billion of common shares ~~over~~within the ~~four quarters through~~eight quarter period ending December 31, 2024, subject to the ~~2018 second quarter. During the 2017 third quarter, Huntington purchased $123 million of common stock at an~~

~~average cost of $12.75 per share.~~Federal Reserve’s capital regulations. Purchases of common stock under the authorization may include open market purchases, privately negotiated transactions, and accelerated share repurchase programs.

~~Dividends~~

We consider disciplined capital management as a key objective, with dividends representing one component. Our strong capital ratios and expectations for continued earnings growth positions us to continue to actively explore additional capital management opportunities.

~~Fair Value~~

At During the ~~end~~2023 first quarter, Huntington repurchased no shares of ~~each quarter, we assess~~common stock under the ~~valuation hierarchy for each asset or liability measured.~~current repurchase authorization. As ~~necessary, assets or liabilities may be transferred within hierarchy levels due to changes in availability of observable market inputs at the measurement date. The fair values measured at each level~~part of the ~~fair value hierarchy, additional discussion regarding fair value measurements,~~2023 capital plan and ~~a brief description of how fair value is determined~~our current expectation that organic capital will be used for ~~categories that have unobservable inputs, can be found in Note 11 of~~funding loan and lease growth, we do not expect to utilize the ~~Notes~~share repurchase program during 2023. However, we may at our discretion resume share repurchases at any time while considering factors including, but not limited to, ~~Unaudited Condensed Consolidated Financial Statements.~~capital requirements and market conditions.

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: Commercial Banking, Consumer and Business Banking, ~~Commercial Banking, Commercial Real Estate and~~ Vehicle Finance, ~~(CREVF),~~ and Regional Banking and The Huntington Private Client Group (RBHPCG). AThe Treasury / Other function includes technology and operations, other unallocated assets, liabilities, revenue, and expense.

To align with our strategic priorities, in the second quarter of 2023 we executed on our organizational realignment to consolidate three of our current major business segments, consisting of Consumer and Business Banking, Vehicle Finance, and RBHPCG, into one new major business segment called Consumer & Regional Banking. This will result in two major business segments, Consumer & Regional Banking and Commercial Banking, to be presented beginning with the second quarter of 2023 reporting.

Business segment results are determined based upon our management ~~accounting~~ 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.

We announced a change within our executive leadership team, which became effective during the 2017 second quarter. As a result, the previously reported Home Lending segment is now included as an operating unit within the Consumer and Business Banking segment. Additionally, the Insurance operating unit previously included in Commercial Banking was realigned to RBHPCG during second quarter. Prior period results have been reclassified to conform to the current period presentation.

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.

2023 1Q Form 10-Q 27

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Expense Allocation

The management ~~accounting~~ 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,~~acquisition-related expenses, 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~~modeled 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).

Net Income by Business Segment

Net income by business segment for the ~~nine-month~~three-month periods ending ~~September 30, 2017~~March 31, 2023 and ~~September 30, 2016~~March 31, 2022 is presented in the following table:


Table 17 - Net Income by Business Segment
	Three Months Ended March 31,
(dollar amounts in millions)	2023		2022
Commercial Banking	$	318	$	140
Consumer and Business Banking	430		181
Vehicle Finance	44		67
RBHPCG	83		19
Treasury / Other	(273)		53
Net income attributable to Huntington	$	602	$	460


Commercial Banking

Table 18 - Key Performance Indicators for Commercial Banking
	Three Months Ended March 31,						Change
(dollar amounts in millions)	2023			2022			Amount			Percent
Net interest income	$	570		$	418		$	152		36	%
Provision for credit losses	40			131			(91)			(69)
Noninterest income	157			141			16			11
Noninterest expense	280			248			32			13
Provision for income taxes	85			38			47			124
Income attributable to non-controlling interest	4			2			2			100
Net income attributable to Huntington	$	318		$	140		$	178		127	%
Number of employees (average FTE)	2,254			2,026			228			11	%
Total average assets	$	64,424		$	56,989		$	7,435		13
Total average loans/leases	56,146			49,515			6,631			13
Total average deposits	36,897			33,355			3,542			11
Net interest margin	3.94		%	3.24		%	0.70		%	22
NCOs	$	21		$	(11)		$	32		NM
NCOs as a % of average loans and leases	0.15		%	(0.09)		%	0.24		%	NM

28 Huntington Bancshares Incorporated

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Table 21 - Net Income (Loss) by Business Segment
Nine Months Ended September 30,
(dollar amounts in thousands) 2017 2016
Consumer and Business Banking $ 314,366
$ 234,356
Commercial Banking 239,685
133,470
CREVF 162,676
129,802
RBHPCG 66,962
46,529
Treasury / Other (29,286 ) (71,299 )
Net income $ 754,403
$ 472,858
Commercial Banking reported net income of $318 million in the three-month period of 2023, compared to $140 million in the year-ago period. Segment net interest income increased $152 million, or 36%, primarily due to a 70 basis point increase in NIM, driven by the higher rate environment resulting in an increase in spreads and an increase in average loans and leases, partially offset by an increase in average deposits. The provision for credit losses decreased $91 million, primarily due to a large reserve build that was recorded in the prior year based on the increased geopolitical uncertainty at that time, partially offset by current quarter loan and lease growth. Noninterest income increased $16 million, or 11%, primarily due to an increase in capital markets fees, primarily due to higher advisory fees supported by the impact of the Capstone Partners acquisition, partially offset by lower leasing revenue. Noninterest expense increased $32 million, or 13%, primarily due to an increase in personnel costs reflecting the impact of the Capstone Partners acquisition and an increase in average FTE employees.


Consumer and Business Banking

Table 19 - Key Performance Indicators for Consumer and Business Banking
	Three Months Ended March 31,						Change
(dollar amounts in millions)	2023			2022			Amount			Percent
Net interest income	$	977		$	459		$	518		113	%
Provision (benefit) for credit losses	26			(109)			135			124
Noninterest income	223			272			(49)			(18)
Noninterest expense	630			612			18			3
Provision for income taxes	114			47			67			143
Net income attributable to Huntington	$	430		$	181		$	249		138	%
Number of employees (average FTE)	10,494			9,600			894			9	%
Total average assets	$	38,077		$	38,730		$	(653)		(2)
Total average loans/leases	32,235			32,134			101			—
Total average deposits	93,210			94,464			(1,254)			(1)
Net interest margin	4.22		%	1.95		%	2.27		%	116
NCOs	$	27		$	29		$	(2)		(7)
NCOs as a % of average loans and leases	0.34		%	0.36		%	(0.02)		%	(6)

Consumer and Business Banking reported net income of $430 million in the three-month period of 2023, an increase of $249 million, or 138%, compared to the year-ago period. Segment net interest income increased $518 million, or 113%, primarily due to a 227 basis point increase in NIM driven by the higher rate environment. The provision for credit losses increased $135 million, or 124%, primarily due to reserve releases in the three-month period of 2022 due to generally improving macro-economic environment at that time. Noninterest income decreased $49 million, or 18%, primarily due to a decrease in gain on sale of loans resulting from the strategic decision to retain the guaranteed portion of SBA loans at origination, lower mortgage banking income reflecting lower salable volume and spreads, and decreased service charges primarily reflecting impact from program changes. Noninterest expense increased $18 million, or 3%, primarily due to an increase in average FTE employees.

2023 1Q Form 10-Q 29

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Vehicle Finance

Table 20 - Key Performance Indicators for Vehicle Finance
	Three Months Ended March 31,						Change
(dollar amounts in millions)	2023			2022			Amount			Percent
Net interest income	$	114		$	120		$	(6)		(5)	%
Provision (benefit) for credit losses	20			(7)			27			NM
Noninterest income	3			3			—			—
Noninterest expense	41			45			(4)			(9)
Provision for income taxes	12			18			(6)			(33)
Net income attributable to Huntington	$	44		$	67		$	(23)		(34)	%
Number of employees (average FTE)	271			270			1			—	%
Total average assets	$	21,677		$	20,932		$	745		4
Total average loans/leases	21,969			21,155			814			4
Total average deposits	1,101			1,289			(188)			(15)
Net interest margin	2.11		%	2.29		%	(0.18)		%	(8)
NCOs	$	7		$	2		$	5		NM
NCOs as a % of average loans and leases	0.13		%	0.04		%	0.09		%	NM

Vehicle Finance reported net income of $44 million in the three-month period of 2023, a decrease of $23 million, or 34%, compared to the year-ago period. Segment net interest income decreased $6 million, or 5%, primarily due to an 18 basis point decrease in the NIM, partially offset by an increase in average earning assets. The provision for credit losses increased $27 million, as prior year continued to reflect reserve releases driven by the generally improving macroeconomic environment at that time.


Regional Banking and The Huntington Private Client Group

Table 21 - Key Performance Indicators for Regional Banking and The Huntington Private Client Group
	Three Months Ended March 31,						Change
(dollar amounts in millions)	2023			2022			Amount			Percent
Net interest income	$	68		$	49		$	19		39	%
Provision (benefit) for credit losses	(1)			10			(11)			(110)
Noninterest income	117			66			51			77
Noninterest expense	81			81			—			—
Provision for income taxes	22			5			17			NM
Net income attributable to Huntington	$	83		$	19		$	64		NM
Number of employees (average FTE)	1,115			1,113			2			—	%
Total average assets	$	10,063		$	8,482		$	1,581		19
Total average loans/leases	9,778			8,178			1,600			20
Total average deposits	9,231			9,520			(289)			(3)
Net interest margin	2.81		%	2.03		%	0.78		%	38
NCOs	$	1		$	—		$	1		NM
NCOs as a % of average loans and leases	0.04		%	—		%	0.04		%	NM
Total assets under management (in billions)—eop	$	22.9		$	24.2		$	(1.3)		(6)
Total trust assets (in billions)—eop	150.3			134.6			15.7			12

eop - End of Period

30 Huntington Bancshares Incorporated

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RBHPCG reported net income of $83 million for the first three-month period of 2023, an increase of $64 million, compared to the year-ago period. Segment net interest income increased $19 million, or 39%, primarily due to an increase in average earnings assets and a 78 basis point increase in NIM, largely driven by the higher rate environment. Average loans and leases increased $1.6 billion, or 20%, due to growth in residential mortgages. Average deposits decreased $289 million, or 3%, primarily related to declines in core deposits. The provision for credit losses decreased $11 million, primarily due to a reserve build in the first quarter of 2022 based on increased geopolitical uncertainty at that time. Noninterest income increased $51 million, or 77%, primarily due to the sale of our RPS business which resulted in a $57 million gain including associated goodwill allocation.

Treasury / Other

The Treasury / Other function includes revenue and expense related to assets, liabilities, derivatives, and equity not directly assigned or allocated to one of the four business segments. ~~Other assets~~Assets include investment securities and bank owned life insurance. ~~The financial impact associated with our FTP methodology, as described above, is also included.~~

Net interest income includes the impact of administering our investment securities portfolios, ~~and~~ the net impact of derivatives used to hedge interest rate ~~sensitivity.~~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 ~~FirstMerit~~certain corporate administrative, acquisition-related expenses, ~~in 2017 first nine-month period, certain corporate administrative,~~if any, and other miscellaneous expenses not allocated to other business segments. The provision for income taxes for the business segments is calculated at a statutory ~~35%~~21% tax rate, ~~though~~although our overall effective tax rate is lower. ~~As a result,~~

Treasury / Other ~~reflects~~reported a ~~credit for income taxes representing the difference between the lower actual effective tax rate and the statutory tax rate used to allocate income taxes to the business segments.~~

Consumer and Business Banking

Table 22 - Key Performance Indicators for Consumer and Business Banking
Nine Months Ended September 30, Change
(dollar amounts in thousands unless otherwise noted) 2017 2016 Amount Percent
Net interest income $ 1,255,617
$ 911,706
$ 343,911
38 %
Provision for credit losses 74,270
43,474
30,796
71
Noninterest income 544,445
459,732
84,713
18
Noninterest expense 1,242,152
967,417
274,735
28
Provision for income taxes 169,274
126,191
43,083
34
Net income $ 314,366
$ 234,356
$ 80,010
34 %
Number of employees (average full-time equivalent) 8,696
6,997
1,699
24 %
Total average assets (in millions) $ 25,461
$ 19,921
$ 5,540
28
Total average loans/leases (in millions) 20,577
16,967
3,610
21
Total average deposits (in millions) 45,478
33,759
11,719
35
Net interest margin 3.79 % 3.69 % 0.10 % 3
NCOs $ 75,064
$ 49,873
$ 25,191
51
NCOs as a % of average loans and leases 0.48 % 0.39 % 0.09 % 23

~~2017 First Nine Months versus 2016 First Nine Months~~

~~Consumer and Business Banking, including Home Lending, reported~~ net ~~income~~loss of ~~$314~~$273 million in the ~~first nine-month~~three-month period of ~~2017, an increase~~2023, a decrease of ~~$80~~$326 million, ~~or 34%,~~ compared to the year-ago ~~period. Results were predominantly impacted~~period, driven by ~~the FirstMerit acquisition.~~a decrease in net interest income, partially offset by a decrease in provision for income tax. Segment net interest income ~~increased $344~~decreased $420 million, ~~or 38%,~~ primarily due to an increase in total average loans and deposits. The provision for credit losses increased $31 million, or 71%, driven by increased NCOs as well as an increase in the allowance. Noninterest income increased $85 million, or 18%, due to an increase in card and payment processing income and service chargesFTP credits on deposit accounts, which were driven by higher debit card-related transaction volumes and an increase in the number of households. In addition, SBA loan sales gains contributed to improved noninterest income. Noninterest expense increased $275 million, or 28%, due to an increase in personnel and occupancy expense relateddeposits allocated to the ~~addition of FirstMerit branches and colleagues. Higher processing costs related to transaction volumes, along with allocated expenses, also contributed to the increase in noninterest expense.~~

Home Lending, an operating unit of Consumer and Business Banking, reflects the result of the origination 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 $6 million in the first nine-month period of 2017, a decrease of $11 million, or 64%, compared to the year-ago period. While total revenues increased $9 million, or 8%, largely due to higher residential loan balances, this increase was offset by an increase in noninterest expenses of $22 million, or 27%, as a result of higher personnel costs related to the FirstMerit acquisition and higher origination volume. Income from lower origination spreads offset higher origination volume.

Commercial Banking

Table 23 - Key Performance Indicators for Commercial Banking
Nine Months Ended September 30, Change
(dollar amounts in thousands unless otherwise noted) 2017 2016 Amount Percent
Net interest income $ 514,900
$ 355,263
$ 159,637
45 %
Provision for credit losses 21,378
53,212
(31,834 ) (60 )
Noninterest income 176,609
150,228
26,381
18
Noninterest expense 301,385
246,941
54,444
22
Provision for income taxes 129,061
71,868
57,193
80
Net income $ 239,685
$ 133,470
$ 106,215
80 %
Number of employees (average full-time equivalent) 1,078
894
184
21 %
Total average assets (in millions) $ 24,026
$ 19,012
$ 5,014
26
Total average loans/leases (in millions) 19,051
14,951
4,100
27
Total average deposits (in millions) 19,206
14,976
4,230
28
Net interest margin 3.33 % 2.95 % 0.38 % 13
NCOs $ 13,420
$ 19,951
$ (6,531 ) (33 )
NCOs as a % of average loans and leases 0.09 % 0.18 % (0.09 )% (50 )

~~2017 First Nine Months versus 2016 First Nine Months~~

Commercial Banking reported net income of $240 million in the first nine-month period of 2017, an increase of $106 million, or 80%, compared to the year-ago period. Results were predominantly impacted by the FirstMerit acquisition. Segment net interest income increased $160 million, or 45%, primarily due to an increase in both average loans and deposits combined with a 38 basis point increase in net interest margin. The provision for credit losses decreased $32 million, or 60%, driven by an improvement in energy related credits and a reduction in NCOs. Noninterest income increased $26 million, or 18%, largely driven by an increase in loan commitment and other fees, capital markets related revenues, and deposit service charges and other treasury management related income partially offset by a reduction in operating lease income. Noninterest expense increased $54 million, or 22%, primarily due to an increase in personnel expense, allocated expenses, and amortization of intangibles, partially offset by a decrease in operating lease expense.

Commercial Real Estate and Vehicle Finance

Table 24 - Commercial Real Estate and Vehicle Finance
Nine Months Ended September 30, Change
(dollar amounts in thousands unless otherwise noted) 2017 2016 Amount Percent
Net interest income $ 419,556
$ 317,704
$ 101,852
32 %
Provision for credit losses 40,047
18,706
21,341
114
Noninterest income 34,750
25,951
8,799
34
Noninterest expense 163,989
125,254
38,735
31
Provision for income taxes 87,594
69,893
17,701
25
Net income $ 162,676
$ 129,802
$ 32,874
25 %
Number of employees (average full-time equivalent) 406
330
76
23 %
Total average assets (in millions) $ 24,121
$ 19,520
$ 4,601
24
Total average loans/leases (in millions) 23,025
18,433
4,592
25
Total average deposits (in millions) 1,878
1,669
209
13
Net interest margin 2.42 % 2.25 % 0.17 % 8
NCOs (Recoveries) $ 28,007
$ (2,146 ) $ 30,153
(1,405 )
NCOs as a % of average loans and leases 0.16 % (0.02 )% 0.18 % (900 )

~~2017 First Nine Months versus 2016 First Nine Months~~

CREVF reported net income of $163 million in the first nine-month period of 2017, an increase of $33 million, or 25%, compared to the year-ago period. Results were positively impacted by the FirstMerit acquisition, offset in part by a higher provision for credit losses reflecting significant commercial real estate recoveries benefiting the year ago period. Segment net interest income increased $102 million or 32%, due to both higher loan balances and a 17 basis point increase in the net interest margin primarily reflecting the purchase accounting impact of the acquired loan portfolios. Noninterest income increased $9 million, or 34%, primarily due to an increase in gains on various equity investments associated with mezzanine lending related activities ~~and an increase in net servicing income on securitized automobile loans. Noninterest expense increased $39 million, or 31%, primarily due to an increase in personnel costs and other allocated costs attributed to higher production and portfolio balance levels.~~

Regional Banking and The Huntington Private Client Group

Table 25 - Key Performance Indicators for Regional Banking and The Huntington Private Client Group
Nine Months Ended September 30, Change
(dollar amounts in thousands unless otherwise noted) 2017 2016 Amount Percent
Net interest income $ 145,089
$ 112,473
$ 32,616
29 %
Provision for credit losses 510
490
20
4
Noninterest income 140,610
126,245
14,365
11
Noninterest expense 182,171
166,645
15,526
9
Provision for income taxes 36,056
25,054
11,002
44
Net income $ 66,962
$ 46,529
$ 20,433
44 %
Number of employees (average full-time equivalent) 1,027
953
74
8 %
Total average assets (in millions) $ 5,473
$ 4,424
$ 1,049
24
Total average loans/leases (in millions) 4,779
3,997
782
20
Total average deposits (in millions) 5,893
5,002
891
18
Net interest margin 3.38 % 3.01 % 0.37 % 12
NCOs (Recoveries) $ 1,879
$ (2,392 ) $ 4,271
(179 )
NCOs as a % of average loans and leases 0.05 % (0.08 )% 0.13 % (163 )
Total assets under management (in billions)—eop $ 18.0
$ 17.3
$ 0.7
4
Total trust assets (in billions)—eop 106.3
98.8
7.5
8

~~eop - End of Period.~~

~~2017 First Nine Months versus 2016 First Nine Months~~

RBHPCG reported net income of $67 million in the first nine-month period of 2017, an increase of $20 million, or 44%, compared to the year-ago period. Results were predominantly impacted by the FirstMerit acquisition. Net interest income increased $33 million, or 29%, due to an increase in average total deposits and loans combined with a 37 basis point increase in net interest margin. The increase in average total loans was due to growth in commercial and portfolio mortgage loans, while the increase in average total deposits was due to growth in interest checking balances. The provision for credit losses was essentially unchanged. Noninterest income increased $14 million, or 11%, primarily reflecting increased trust and investment management revenue as a result of an increase in trust assets and assets under management, largely from the FirstMerit acquisition. Noninterest expense increased $16 million, or 9%, as a result of increased personnel expenses and amortization of intangibles resulting from the FirstMerit acquisition.

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.

2023 1Q Form 10-Q 31

Table of Content

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; deterioration in business and economic conditions, including persistent inflation, supply chain issues or labor shortages, instability in global economic conditions and geopolitical matters, as well as volatility in financial markets; the impact of pandemics, including the COVID-19 pandemic and related variants and mutations, and their impact on the global economy and financial market conditions and our business, results of operations, and financial condition; the impacts related to or resulting from recent bank failures and other volatility, including potential increased regulatory requirements and costs and potential impacts to macroeconomic conditions, which could affect the ability of depository institutions, including us, to attract and retain depositors and to borrow or raise capital; unexpected outflows of uninsured deposits which may require us to sell investment securities at a loss; rising interest rates which could negatively impact the value of our portfolio of investment securities; the loss of value of our investment portfolio which could negatively impact market perceptions of us and could lead to deposit withdrawals; the effects of social media on market perceptions of us and banks generally; cybersecurity risks; uncertainty in U.S. fiscal and monetary policy, including the interest rate policies of the Federal ~~Reserve Board;~~Reserve; volatility and disruptions in global capital and credit markets; movements in interest rates; transition away from 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 possibility that the anticipated benefits of the merger with FirstMerit Corporation are not realized completely or when expected, including as a result of the impact of, or problems arising from, the strength of the economy and competitive factors in the areas where we do business; and other factors that may affect ~~our~~the future ~~results. Additional factors that could cause~~ results to differ materially from those described above can be found in our Annual Report on Form 10-K for the year ended December 31, 2016, and Quarterly Reports on Form 10-Q for the quarters ended March 31, 2017 and June 30, 2017, which are on file with the Securities and Exchange Commission (the “SEC”) and available in the “Investor Relations” section of ~~our website,~~ ~~http://www.huntington.com, under the heading “Publications and Filings” and in other documents we file with the SEC.~~Huntington.

All forward-looking statements speak only as of the date they are made and are based on information available at that time. ~~We do~~Huntington does not assume 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.

Non-GAAP Financial Measures

This document contains GAAP financial measures and non-GAAP financial measures where management believes it to be helpful in understanding ~~Huntington’s~~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 where applicable.~~

~~Significant Items~~

From time-to-time, revenue, expenses, or taxes are impacted by items judged by us 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 us 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, changes in accounting principles, one-time tax assessments / refunds, litigation actions, etc. In

other cases, they may result from our 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.

We believe the disclosure of Significant Items provides a better understanding of our performance and trends to ascertain which of such items, if any, to include or exclude from an analysis of our performance; i.e., within the context of determining how that performance differed from expectations, as well as how, if at all, to adjust estimates of future performance accordingly. To this end, we adopted a practice of listing Significant Items in our external disclosure documents; e.g., earnings press releases, 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.~~herein.

Fully-Taxable Equivalent Basis

Interest income, yields, and ratios on aan FTE basis are considered non-GAAP financial measures. Management believes net interest income on aan 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 3521 percent. We encourage readers to consider the ~~consolidated financial statements~~Unaudited 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 ad~~dition~~addition to capital ratios defined by banking regulators, the Company considers various other measures when evaluating capital ~~utilization~~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.

32 Huntington Bancshares Incorporated

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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 ~~the Company’s~~our capitalization to other financial services companies. These ratios differ from capital ratios defined by banking regulators principally in that the numerator excludes ~~preferred securities,~~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.

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, ~~the Company encourages~~we encourage readers to consider the ~~consolidated financial statements~~Unaudited 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~~

Information on risk is discussed in the Risk Factors section included in Item 1A of our 2016 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 ~~financial statements~~Consolidated Financial Statements are prepared in accordance with GAAP. The preparation of financial statements in conformity with GAAP requires us to establish ~~critical~~ accounting policies and make ~~accounting~~ estimates ~~assumptions, and judgments~~ that affect amounts ~~recorded and~~ reported in our ~~financial statements.~~Consolidated Financial Statements. Note 1 of the Notes to Consolidated Financial Statements included in our ~~December 31, 2016~~2022 Annual Report on Form 10-K, as supplemented by this report ~~lists~~including this MD&A, describes the significant accounting policies we ~~use~~used in ~~the development and presentation of~~ our financial statements. This MD&A, the significant accounting policies, and other financial statement disclosures identify and address key variables and other qualitative and quantitative factors necessary for an understanding and evaluation of our company, financial position, results of operations, and cash flows.Consolidated Financial Statements.

An accounting estimate requires assumptions and judgments about uncertain matters that could have a material effect on the ~~financial statements if a different amount within a range of estimates were used or if estimates changed from period to period.~~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 critical accounting policies include the allowance for credit losses, fair value measurement, and goodwill. The policies, assumptions, and judgments related to fair value measurement and goodwill are described in the Critical Accounting Policies and Use of Significant Estimates section within the MD&A of Huntington’s 2022 Annual Report on Form 10-K. The following details the policies, assumption, and judgments related to the allowance for credit losses.

Allowance for Credit Losses

Our ACL at March 31, 2023 represents our current estimate of the lifetime credit losses expected from our loan and lease portfolio and our unfunded lending commitments. Management estimates the ACL 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 ACL estimate is the macroeconomic forecasts. Key external economic parameters that directly impact our loss modeling framework include forecasted 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 macroeconomic 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.

2023 1Q Form 10-Q 33

Table of Content

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 inflation remaining elevated due to persistent shortages and concerns about a wage price spiral. Increased geopolitical tensions between China and Taiwan impact the supply chain for semiconductors. The threat of a wider conflict causes consumer confidence to fall. Additionally, the Russian invasion lasts longer than in the baseline scenario further impacting the supply chain. The combination of elevated inflation, increasing supply chain shortages, political tensions and the federal funds rate remaining elevated cause the stock market to fall. The economy falls into a recession in the second quarter of 2023. Under this scenario, as an example, the unemployment rate increases from baseline levels and remains elevated for a prolonged period, the rate is estimated at 7.1% and 7.3% at the end of 2023 and 2024, respectively. This forecast reflects unemployment rates that are approximately 3.4% and 3.3% higher than baseline scenario projections of 3.7% and 4.0%, respectively, for the same time periods.

To demonstrate the sensitivity to key economic parameters used in the calculation of our ACL at March 31, 2023, management calculated the difference between our quantitative ACL and this 100% adverse scenario. Excluding consideration of qualitative adjustments, this sensitivity analysis would result in a hypothetical increase in our ACL of approximately $1.1 billion at March 31, 2023. This hypothetical increase is reflective of the sensitivity of the rate of change in the unemployment variable on our models.

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 ~~when those estimates were made.~~

~~Our most significant accounting estimates relate~~our reasonable and supportable forecast. Additionally, events adversely affecting specific customers, industries, or our markets such as geopolitical instability, risks of inflation including a near-term recession, or the emergence of a more contagious and severe COVID-19 variant, 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 geopolitical instability, risks of inflation, and the COVID-19 pandemic will continue to negatively impact our ~~ACL, valuation of~~businesses, financial ~~instruments, contingent liabilities, income taxes,~~condition, liquidity, and ~~deferred tax assets. These significant accounting estimates~~results will depend on future developments, which are highly uncertain and ~~their related application are discussed in our December 31, 2016 Form 10-K.~~

~~Recent Accounting Pronouncements~~cannot be forecasted with precision at this time. For more information, see Note 4 “Loans and ~~Developments~~

Leases” and Note 25 “Allowance for Credit Losses” of the Notes to Unaudited Condensed Consolidated Financial Statements discusses new accounting pronouncements adopted during 2017 and the expected impact of accounting pronouncements recently issued but not yet required to be adopted. To the extent the adoption of new accounting standards materially affect financial condition, results of operations, or liquidity, the impacts are discussed in the applicable section of this MD&A and the Notes to Unaudited Condensed Consolidated Financial Statements.

34 Huntington Bancshares Incorporated

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Item 1: Financial Statements

Huntington Bancshares Incorporated

~~Condensed~~ Consolidated Balance Sheets

(Unaudited)


	At March 31,		At December 31,
(dollar amounts in millions)	2023		2022
Assets
Cash and due from banks	$	1,568	$	1,796
Interest-bearing deposits at Federal Reserve Bank	8,801		4,908
Interest-bearing deposits in banks	203		214
Trading account securities	18		19
Available-for-sale securities	24,086		23,423
Held-to-maturity securities	16,977		17,052


Other securities	1,299		854
Loans held for sale (includes $446 and $520 respectively, measured at fair value)(1)	457		529
Loans and leases (includes $187 and $185 respectively, measured at fair value)(1)	121,179		119,523
Allowance for loan and lease losses	(2,142)		(2,121)
Net loans and leases	119,037		117,402
Bank owned life insurance	2,753		2,753
Accrued income and other receivables	1,521		1,573
Premises and equipment	1,136		1,156
Goodwill	5,561		5,571
Servicing rights and other intangible assets	685		712
Other assets	4,968		4,944
Total assets	$	189,070	$	182,906
Liabilities and shareholders’ equity
Liabilities
Deposits:
Demand deposits—noninterest-bearing	$	36,789	$	38,242
Interest-bearing	108,489		109,672
Total deposits	145,278		147,914
Short-term borrowings	6,898		2,027
Long-term debt	13,072		9,686
Other liabilities	5,011		5,510
Total liabilities	170,259		165,137
Commitments and Contingent Liabilities (Note 15)
Shareholders’ Equity
Preferred stock	2,484		2,167
Common stock	15		14
Capital surplus	15,332		15,309
Less treasury shares, at cost	(82)		(80)
Accumulated other comprehensive income (loss)	(2,755)		(3,098)
Retained earnings	3,764		3,419
Total Huntington shareholders’ equity	18,758		17,731
Non-controlling interest	53		38
Total equity	18,811		17,769
Total liabilities and equity	$	189,070	$	182,906
Common shares authorized (par value of $0.01)	2,250,000,000		2,250,000,000

Common shares outstanding	1,443,614,966		1,443,068,036
Treasury shares outstanding	6,465,176		6,322,052
Preferred stock, authorized shares	6,617,808		6,617,808

Preferred shares outstanding	882,500		557,500

(dollar amounts in thousands, except number of shares) September 30, December 31,
2017 2016
Assets
Cash and due from banks $ 1,193,738
$ 1,384,770
Interest-bearing deposits in banks 50,090
58,267
Trading account securities 88,488
133,295
Loans held for sale (includes $584,829 and $438,224 respectively, measured at fair value)(1) 651,734
512,951
Available-for-sale and other securities 15,453,061
15,562,837
Held-to-maturity securities 8,688,399
7,806,939
Loans and leases (includes $99,191 and $82,319 respectively, measured at fair value)(1) 68,587,296
66,961,996
Allowance for loan and lease losses (675,486 ) (638,413 )
Net loans and leases 67,911,810
66,323,583
Bank owned life insurance 2,459,807
2,432,086
Premises and equipment 853,290
815,508
Goodwill 1,992,849
1,992,849
Other intangible assets 359,844
402,458
Servicing rights 229,746
225,578
Accrued income and other assets 2,055,270
2,062,976
Total assets $ 101,988,126
$ 99,714,097
Liabilities and shareholders’ equity
Liabilities
Deposits $ 78,445,113
$ 75,607,717
Short-term borrowings 1,829,549
3,692,654
Long-term debt 9,200,707
8,309,159
Accrued expenses and other liabilities 1,813,908
1,796,421
Total liabilities 91,289,277
89,405,951
Commitments and contingencies (Note 14)
Shareholders’ equity
Preferred stock 1,071,286
1,071,227
Common stock 10,844
10,886
Capital surplus 9,820,600
9,881,277
Less treasury shares, at cost (35,133 ) (27,384 )
Accumulated other comprehensive loss (369,963 ) (401,016 )
Retained earnings (deficit) 201,215
(226,844 )
Total shareholders’ equity 10,698,849
10,308,146
Total liabilities and shareholders’ equity $ 101,988,126
$ 99,714,097
Common shares authorized (par value of $0.01) 1,500,000,000
1,500,000,000
Common shares issued 1,084,366,589
1,088,641,251
Common shares outstanding 1,080,946,315
1,085,688,538
Treasury shares outstanding 3,420,274
2,952,713
Preferred stock, authorized shares 6,617,808
6,617,808
Preferred shares issued 2,702,571
2,702,571
Preferred shares outstanding 1,098,006
1,098,006
(1)Amounts represent loans for which Huntington has elected the fair value option. See Note 12 “Fair Values of Assets and Liabilities”.


~~(1)~~	~~Amounts represent loans for which Huntington has elected the fair value option. See Note 11.~~

See Notes to Unaudited ~~Condensed~~ Consolidated Financial Statements

2023 1Q Form 10-Q 35

Huntington Bancshares Incorporated
Condensed Consolidated Statements of Income
(Unaudited)
(dollar amounts in thousands, except per share amounts) Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
Interest and fee income:
Loans and leases $ 724,284
$ 583,653
$ 2,100,056
$ 1,516,849
Available-for-sale and other securities
Taxable 74,409
57,572
228,986
138,178
Tax-exempt 18,579
13,687
55,961
40,499
Held-to-maturity securities—taxable 48,743
33,098
138,214
105,307
Other 6,972
6,336
16,554
16,422
Total interest income 872,987
694,346
2,539,771
1,817,255
Interest expense:
Deposits 49,611
26,233
126,688
71,575
Short-term borrowings 5,713
959
16,782
2,770
Federal Home Loan Bank advances 65
66
197
207
Subordinated notes and other long-term debt 59,165
41,698
163,184
108,366
Total interest expense 114,554
68,956
306,851
182,918
Net interest income 758,433
625,390
2,232,920
1,634,337
Provision for credit losses 43,590
63,805
136,206
115,896
Net interest income after provision for credit losses 714,843
561,585
2,096,714
1,518,441
Service charges on deposit accounts 90,681
86,847
261,683
232,722
Cards and payment processing income 53,647
44,320
153,301
119,951
Mortgage banking income 33,615
40,603
97,575
90,737
Trust and investment management services 33,531
28,923
99,633
74,258
Insurance income 13,992
15,865
45,099
48,037
Brokerage income 14,458
14,719
46,510
44,819
Capital markets fees 21,719
14,750
52,755
40,797
Bank owned life insurance income 16,453
14,452
49,317
40,500
Gain on sale of loans 13,877
7,506
38,701
22,166
Net gains on sales of securities 71
1,031
3,781
1,763
Impairment losses on available-for-sale securities (104 ) —
(3,687 ) (76 )
Other noninterest income 38,157
33,399
123,110
99,720
Total noninterest income 330,097
302,415
967,778
815,394
Personnel costs 377,088
405,024
1,151,085
989,369
Outside data processing and other services 79,586
91,133
241,957
216,047
Equipment 45,458
40,792
135,082
105,173
Net occupancy 55,124
41,460
175,437
103,640
Professional services 15,227
47,075
51,712
82,101
Marketing 16,970
14,438
49,736
41,479
Deposit and other insurance expense 18,514
14,940
59,031
38,335
Amortization of intangibles 14,017
9,046
42,614
16,357
Other noninterest expense 58,444
48,339
175,560
134,487
Total noninterest expense 680,428
712,247
2,082,214
1,726,988
Income before income taxes 364,512
151,753
982,278
606,847
Provision for income taxes 89,944
24,749
227,875
133,989
Net income 274,568
127,004
754,403
472,858
Dividends on preferred shares 18,903
18,537
56,670
46,409
Net income applicable to common shares $ 255,665
$ 108,467
$ 697,733
$ 426,449

Table of Content


Huntington Bancshares Incorporated
Consolidated Statements of Income
(Unaudited)
	Three Months Ended March 31,
(dollar amounts in millions, except per share data, share count in thousands)		2023		2022
Interest and fee income:
Loans and leases		$	1,579	$	1,004
Available-for-sale securities
Taxable		232		90
Tax-exempt		23		17
Held-to-maturity securities—taxable		102		66
Other securities—taxable		10		5

Other		82		13
Total interest income		2,028		1,195
Interest expense:
Deposits		406		11
Short-term borrowings		60		7

Long-term debt		153		31

Total interest expense		619		49
Net interest income		1,409		1,146
Provision for credit losses		85		25
Net interest income after provision for credit losses		1,324		1,121
Service charges on deposit accounts		83		97
Card and payment processing income		93		86
Capital markets fees		59		42
Trust and investment management services		62		65
Mortgage banking income		26		49
Leasing revenue		26		35
Insurance income		34		31
Gain on sale of loans		3		28
Bank owned life insurance income		16		17
Net gains on sales of securities		1		—

Other noninterest income		109		49
Total noninterest income		512		499
Personnel costs		649		580
Outside data processing and other services		151		165
Equipment		64		81
Net occupancy		60		64
Marketing		25		21
Professional services		16		19
Deposit and other insurance expense		20		18
Amortization of intangibles		13		14
Lease financing equipment depreciation		8		14

Other noninterest expense		80		77
Total noninterest expense		1,086		1,053
Income before income taxes		750		567
Provision for income taxes		144		105
Income after income taxes		606		462
Income attributable to non-controlling interest		4		2
Net income attributable to Huntington		602		460
Dividends on preferred shares		29		28

Net income applicable to common shares		$	573	$	432
Average common shares—basic		1,443,268		1,438,427
Average common shares—diluted		1,469,279		1,464,327
Per common share:
Net income—basic		$	0.40	$	0.30
Net income—diluted		0.39		0.29



See Notes to Unaudited Consolidated Financial Statements

36 Huntington Bancshares Incorporated

Three Months Ended
September 30, Nine Months Ended
September 30,
(dollar amounts in thousands, except per share amounts) 2017 2016 2017 2016

Average common shares—basic 1,086,038
938,578
1,087,115
844,167
Average common shares—diluted 1,106,491
952,081
1,107,878
856,934
Per common share:
Net income—basic $ 0.24
$ 0.12
$ 0.64
$ 0.51
Net income—diluted 0.23
0.11
0.63
0.50
Cash dividends declared 0.08
0.07
0.24
0.21
OTTI losses for the periods presented:
Total OTTI losses $ (104 ) $ —
$ (3,693 ) $ (3,809 )
Noncredit-related portion of loss recognized in OCI —
—
6
3,733
Impairment losses recognized in earnings on available-for-sale securities $ (104 ) $ —
$ (3,687 ) $ (76 )

See Notes to Unaudited Condensed Consolidated Financial Statements

Table of Content

Huntington Bancshares Incorporated

~~Condensed~~ Consolidated Statements of Comprehensive Income

(Unaudited)

Three Months Ended
September 30, Nine Months Ended
September 30,
(dollar amounts in thousands) 2017 2016 2017 2016
Net income $ 274,568
$ 127,004
$ 754,403
$ 472,858
Other comprehensive income, net of tax:
Unrealized gains (losses) on available-for-sale and other securities:
Non-credit-related impairment recoveries (losses) on debt securities not expected to be sold 265
1,294
2,391
(388 )
Unrealized net gains (losses) on available-for-sale and other securities arising during the period, net of reclassification for net realized gains and losses (21,968 ) (35,036 ) 25,081
47,118
Total unrealized gains (losses) on available-for-sale and other securities (21,703 ) (33,742 ) 27,472
46,730
Unrealized gains (losses) on cash flow hedging derivatives, net of reclassifications to income 1,318
(5,232 ) 1,563
4,731
Change in accumulated unrealized losses for pension and other post-retirement obligations 779
841
2,018
2,522
Other comprehensive income (loss), net of tax (19,606 ) (38,133 ) 31,053
53,983
Comprehensive income $ 254,962
$ 88,871
$ 785,456
$ 526,841


	Three Months Ended March 31,
(dollar amounts in millions)	2023		2022
Net income attributable to Huntington	$	602	$	460
Other comprehensive income (loss), net of tax:



Net unrealized gains (losses) on available-for-sale securities	294		(1,179)
Net impact of fair value hedges on available-for-sale securities	(140)		332
Net change related to cash flow hedges on loans	189		(240)



Change in accumulated unrealized gains for pension and other post-retirement obligations	—		2
Other comprehensive income (loss), net of tax	343		(1,085)
Comprehensive income (loss) attributable to Huntington	945		(625)
Comprehensive income attributed to non-controlling interest	4		2
Comprehensive income (loss)	$	949	$	(623)

See Notes to Unaudited ~~Condensed~~ Consolidated Financial Statements

2023 1Q Form 10-Q 37

Table of Content

Huntington Bancshares Incorporated

~~Condensed~~ Consolidated Statements of Changes in Shareholders’ Equity

(Unaudited)

Accumulated Other Comprehensive Gain (Loss) Retained Earnings (Deficit)
(dollar amounts in thousands, except per share amounts) Preferred Stock Common Stock Capital Surplus Treasury Stock
Amount Shares Amount Shares Amount Total
Nine Months Ended September 30, 2016
Balance, beginning of period $ 386,291
796,970
$ 7,970
$ 7,038,502
(2,041 ) $ (17,932 ) $ (226,158 ) $ (594,067 ) $ 6,594,606
Net income 472,858
472,858
Other comprehensive income (loss) 53,983
53,983
FirstMerit Acquisition:
Issuance of common stock 285,425
2,854
2,764,044
2,766,898
Issuance of Series C preferred stock 100,000
4,320
104,320
Net proceeds from issuance of Series D preferred stock 584,936
584,936
Cash dividends declared:
Common ($0.21 per share) (187,710 ) (187,710 )
Preferred Series A ($63.75 per share) (23,110 ) (23,110 )
Preferred Series B ($25.08 per share) (890 ) (890 )
Preferred Series C ($11.59 per share) (1,159 ) (1,159 )
Preferred Series D ($35.42 per share) (21,250 ) (21,250 )
Recognition of the fair value of share-based compensation 48,568
48,568
Other share-based compensation activity 5,014
50
4,389
(3,823 ) 616
Shares sold to HIP 322
3
3,207
3,210
Other

119
(908 ) (9,001 ) (229 ) (9,111 )
Balance, end of period $ 1,071,227
1,087,731
$ 10,877
$ 9,863,149
(2,949 ) $ (26,933 ) $ (172,175 ) $ (359,380 ) $ 10,386,765

Nine Months Ended September 30, 2017
Balance, beginning of period $ 1,071,227
1,088,641
$ 10,886
$ 9,881,277
(2,953 ) $ (27,384 ) $ (401,016 ) $ (226,844 ) $ 10,308,146
Net income 754,403
754,403
Other comprehensive income (loss) 31,053
31,053
Repurchases of common stock (9,645 ) (96 ) (123,108 ) (123,204 )
Cash dividends declared:
Common ($0.24 per share) (260,919 ) (260,919 )
Preferred Series A ($63.75 per share) (23,110 ) (23,110 )
Preferred Series B ($28.96 per share) (1,028 ) (1,028 )
Preferred Series C ($44.07 per share) (4,407 ) (4,407 )
Preferred Series D ($46.88 per share) (28,125 ) (28,125 )
Recognition of the fair value of share-based compensation 72,747
72,747
Other share-based compensation activity 5,361
53
(11,928 ) (8,499 ) (20,374 )
Other 59
10
1
1,612
(468 ) (7,749 ) (256 ) (6,333 )
Balance, end of period $ 1,071,286
1,084,367
$ 10,844
$ 9,820,600
(3,421 ) $ (35,133 ) $ (369,963 ) $ 201,215
$ 10,698,849


(dollar amounts in millions, share amounts in thousands)	Preferred Stock		Common Stock			Capital Surplus		Treasury Stock			AOCI		Retained Earnings		Huntington Shareholders’ Equity		Non-controlling		Total
	Amount		Shares	Amount				Shares	Amount								Interest		Equity
Three Months Ended March 31, 2023
Balance, beginning of period	$	2,167	1,449,390	$	14	$	15,309	(6,322)	$	(80)	$	(3,098)	$	3,419	$	17,731	$	38	$	17,769
Net income													602		602		4		606
Other comprehensive income (loss), net of tax											343				343				343



Net proceeds from issuance of Series J preferred stock	317														317				317



Cash dividends declared:
Common ($0.155 per share)													(228)		(228)				(228)
Preferred													(29)		(29)				(29)
Recognition of the fair value of share-based compensation						25									25				25

Other share-based compensation activity			690	1		(2)							—		(1)				(1)

Other						—		(143)	(2)				—		(2)		11		9
Balance, end of period	$	2,484	1,450,080	$	15	$	15,332	(6,465)	$	(82)	$	(2,755)	$	3,764	$	18,758	$	53	$	18,811

Three Months Ended March 31, 2022
Balance, beginning of period	$	2,167	1,444,040	$	14	$	15,222	(6,298)	$	(79)	$	(229)	$	2,202	$	19,297	$	21	$	19,318

Net income													460		460		2		462
Other comprehensive (loss) income, net of tax											(1,085)				(1,085)				(1,085)










Cash dividends declared:
Common ($0.155 per share)													(226)		(226)				(226)
Preferred													(28)		(28)				(28)

Recognition of the fair value of share-based compensation						40									40				40

Other share-based compensation activity			1,346	—		(7)							—		(7)				(7)
Other						—		87	1				—		1		6		7
Balance, end of period	$	2,167	1,445,386	$	14	$	15,255	(6,211)	$	(78)	$	(1,314)	$	2,408	$	18,452	$	29	$	18,481

See Notes to Unaudited ~~Condensed~~ Consolidated Financial Statements

38 Huntington Bancshares Incorporated

Table of Content

Huntington Bancshares Incorporated

~~Condensed~~ Consolidated Statements of Cash Flows

(Unaudited)


	Three Months Ended March 31,
(dollar amounts in millions)	2023		2022
Operating activities
Net income	$	606	$	462
Adjustments to reconcile net income to net cash provided by operating activities:

Provision for credit losses	85		25
Depreciation and amortization	142		112
Share-based compensation expense	25		40
Deferred income tax expense	55		52


Net change in:
Trading account securities	1		(28)
Loans held for sale	44		461

Other assets	(348)		(171)
Other liabilities	(456)		(102)


Other, net	(24)		(2)
Net cash provided by operating activities	130		849
Investing activities
Change in interest bearing deposits in banks	(6)		388

Proceeds from:
Maturities and calls of available-for-sale securities	432		1,376
Maturities and calls of held-to-maturity securities	320		928
Maturities and calls of other securities	—		383
Sales of available-for-sale securities	435		—

Purchases of available-for-sale securities	(1,168)		(3,866)
Purchases of held-to-maturity securities	(254)		(1,460)
Purchases of other securities	(586)		(796)

Net proceeds from sales of portfolio loans and leases	89		447
Principal payments received under direct finance and sales-type leases	487		222
Net loan and lease activity, excluding sales and purchases	(2,272)		(1,691)

Purchases of premises and equipment	(25)		(73)

Purchases of loans and leases	(12)		(396)
Net accrued income and other receivables activity	92		(867)


Other, net	169		50
Net cash (used in) provided by investing activities	(2,299)		(5,355)
Financing activities
(Decrease) increase in deposits	(2,636)		3,702
Increase in short-term borrowings	5,128		557

Net proceeds from issuance of long-term debt	3,541		39
Maturity/redemption of long-term debt	(268)		(533)
Dividends paid on preferred stock	(29)		(28)
Dividends paid on common stock	(225)		(225)



Net proceeds from issuance of preferred stock	317		—


Other, net	6		(4)
Net cash provided by financing activities	5,834		3,508
Increase (decrease) in cash and cash equivalents	3,665		(998)
Cash and cash equivalents at beginning of period	6,704		5,522
Cash and cash equivalents at end of period	$	10,369	$	4,524

2023 1Q Form 10-Q 39

Table of Content

Nine Months Ended
September 30,
(dollar amounts in thousands) 2017 2016
Operating activities
Net income $ 754,403
$ 472,858
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses 136,206
115,896
Depreciation and amortization 307,063
299,444
Share-based compensation expense 72,747
48,568
Deferred income tax expense (benefit) 36,244
(18,094 )
Net gains on sales of securities (3,781 ) (1,763 )
Impairment losses recognized in earnings on available-for-sale securities 3,687
76
Net change in:
Trading account securities 44,807
926
Loans held for sale (164,405 ) (194,735 )
Accrued income and other assets (136,485 ) (169,453 )
Accrued expense and other liabilities 42,162
144,496
Other, net 13,647
(12,413 )
Net cash provided by (used for) operating activities 1,106,295
685,806
Investing activities
Change in interest bearing deposits in banks 20,688
33,221
Cash paid for acquisition of a business, net of cash received —
(133,218 )
Proceeds from:
Maturities and calls of available-for-sale and other securities 1,081,091
1,266,031
Maturities of held-to-maturity securities 792,996
850,170
Sales of available-for-sale and other securities 1,255,152
3,893,482
Purchases of available-for-sale and other securities (3,208,608 ) (5,434,332 )
Purchases of held-to-maturity securities (689,670 ) —
Net proceeds from sales of portfolio loans 427,142
352,277
Net loan and lease activity, excluding sales and purchases (2,159,966 ) (3,286,238 )
Purchases of premises and equipment (144,637 ) (63,688 )
Proceeds from sales of other real estate 25,156
21,765
Purchases of loans and leases (112,859 ) (359,208 )
Other, net 11,556
(249 )
Net cash provided by (used for) investing activities (2,701,959 ) (2,859,987 )
Financing activities
Increase (decrease) in deposits 2,837,396
853,806
Increase (decrease) in short-term borrowings (1,865,157 ) 363,518
Net proceeds from issuance of long-term debt 1,773,096
2,081,643
Maturity/redemption of long-term debt (882,977 ) (684,746 )
Dividends paid on preferred stock (56,632 ) (46,409 )
Dividends paid on common stock (261,593 ) (168,656 )
Repurchases of common stock (123,204 ) —
Proceeds from stock options exercised 9,316
6,084
Net proceeds from issuance of preferred stock —
584,936
Payments related to tax-withholding for share based compensation awards (25,613 ) —
Other, net —
(1,212 )
Net cash provided by (used for) financing activities 1,404,632
2,988,964
Increase (decrease) in cash and cash equivalents (191,032 ) 814,783
Cash and cash equivalents at beginning of period 1,384,770
847,156
Cash and cash equivalents at end of period $ 1,193,738
$ 1,661,939


						Three Months Ended March 31,
(dollar amounts in millions)					(dollar amounts in millions)	2023		2022
Supplemental disclosures:					Supplemental disclosures:
Interest paid					Interest paid	$	562	$	61
Income taxes (received) paid					Income taxes (received) paid	(59)		(18)

Non-cash activities					Non-cash activities
Loans transferred to held-for-sale from portfolio					Loans transferred to held-for-sale from portfolio	80		356
Loans transferred to portfolio from held-for-sale					Loans transferred to portfolio from held-for-sale	6		19

Transfer of securities from available-for-sale to held-to-maturity					Transfer of securities from available-for-sale to held-to-maturity	—		4,225

	Nine Months Ended September 30,
(dollar amounts in thousands)	2017		2016
Supplemental disclosures:
Interest paid	$	307,493	$	159,357
Income taxes paid	71,165		3,869
Non-cash activities
Loans transferred to held-for-sale from portfolio	446,152		3,204,732
Loans transferred to portfolio from held-for-sale	4,751		92,585
Transfer of loans to OREO	23,691		18,678
Transfer of securities to held-to-maturity from available-for-sale	992,760		—

See Notes to Unaudited ~~Condensed~~ Consolidated Financial Statements

40 Huntington Bancshares Incorporated

Table of Content

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,~~management, necessary for a fair statement of the consolidated financial position, the results of operations, and cash flows for the periods presented. ~~The year-end condensed consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by GAAP.~~ 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 ~~2016~~2022 Annual Report on 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~~Effective January 1, 2023, Huntington adopted ASU 2022-02 Financial Instruments - Credit Losses (Topic 326) Troubled Debt Restructurings (TDR) and Vintage Disclosures, which removed the existing measurement and disclosure requirements for TDR loans and added additional disclosure requirements related to modifications provided to borrowers experiencing financial difficulty. Prior to adoption a change in contractual terms of ~~cash flow purposes, cash~~a loan where a borrower was experiencing financial difficulty and ~~cash equivalents are~~received a concession not available through other sources the loans was required to be disclosed as a TDR, whereas now a borrower that is experiencing financial difficulty and receives a modification in the form of principal forgiveness, interest rate reduction, an other-than-insignificant payment delay or a term extension in the current period needs to be disclosed. Huntington may modify loans to borrowers experiencing financial difficulty as a way of managing risk and mitigating credit loss from the borrower. Huntington may make various types of modifications and may in certain circumstances use a combination of modification types in order to mitigate future loss. The amount of defined asmodifications given to borrowers experiencing financial difficulty is disclosed in the ~~sum of “Cash and due from banks” which includes amounts on deposit~~Notes to the Consolidated Financial Statements, along with the ~~Federal Reserve and “Federal funds sold and securities purchased under resale agreements.”~~financial impact of those modifications.

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.

~~Certain amounts reported in prior periods have been reclassified~~ There were no material subsequent events to ~~conform to~~disclose for the current ~~period presentation.~~period.

2. ACCOUNTING STANDARDS UPDATE

~~Standard~~Accounting standards adopted in the current period


Standard	Summary of guidance	Effects on financial ~~statements~~Statements
ASU ~~2014-09~~2022-02- Financial Instruments - ~~Revenue from Contracts with Customers~~Credit Losses (Topic ~~606)~~326): Troubled Debt Restructurings and Vintage Disclosures Issued ~~May 2014~~March 2022	•The amendments in this update eliminate TDR accounting while enhancing disclosure requirements for certain loan modifications when a borrower is experiencing financial difficulty. The ASU also requires disclosure of current period gross charge-offs by year of origination for financing receivables and net investments in leases.	~~- Topic 606 supersedes~~•Management adopted the ~~revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance.~~guidance during the first quarter 2023. ~~- Requires an entity to recognize revenue upon~~•The ASU has been applied prospectively, except the ~~transfer~~portion of ~~promised goods or services to customers in an amount that reflects~~ the ~~consideration to which the entity expects to be entitled in exchange for those goods or services.~~ ~~- Also requires additional qualitative and quantitative disclosures relating~~standard related to the ~~nature, amount, timing~~recognition and ~~uncertainty~~measurement of ~~revenue and cash flows arising from contracts with customers~~ ~~- Guidance sets forth~~TDRs where we elected to use a ~~five step approach for revenue recognition.~~	- Effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Management intends to adopt the new guidance on January 1, 2018 using the modified retrospective ~~approach.~~transition method. ~~- Management's analysis includes:~~ ~~(a) Identification of all revenue streams included~~•The adoption did not result in ~~the financial statements;~~ ~~(b) Determination of scope exclusions to identify ‘in-scope’ revenue streams;~~ ~~(c) Determination of size, timing, and amount of revenue recognition for in-scope items;~~ ~~(d) Identification of contracts for further analysis; and~~ ~~(e) Completion of review of certain contracts to evaluate the potential impact of the new guidance.~~ ~~- Key revenue streams identified include service charges, credit card and payment processing fees, trust services fees, insurance income, brokerage services, and mortgage banking income.~~ ~~- The new guidance is not expected to have~~ a ~~significant~~material impact on Huntington’s Unaudited Consolidated Financial Statements.



~~Standard~~Accounting standards yet to be adopted

Standard

Summary of guidance

Effects on financial statements

ASU ~~2016-01~~2023-02 Investments - ~~Recognition~~Equity Method and ~~Measurement~~Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method Issued: March 2023

•Permits the election of ~~Financial Assets~~the proportional amortization method for any tax equity investment that meets specific criteria.

•Requires that the election be made on a tax-credit-program-by-tax-credit-program basis.

•Receipt of tax credits must be accounted for using the flow through method.

•Required that a liability be recorded for delayed equity contributions.

•Expands disclosure requirements for the nature of investments and ~~Financial Liabilities.~~

~~Issued January 2016~~

financial statement effect.

~~- Improvements to GAAP disclosures including requiring an entity to:~~

~~(a) Measure its equity investments with changes in the fair value recognized in the income statement.~~

(b) Present separately in OCI the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments (i.e., FVO liability).

~~(c) Use the exit price notion when measuring the fair value of financial instruments for disclosure purposes.~~

~~(d) Assess deferred tax assets related to a net unrealized loss on AFS securities in combination with the entity’s other deferred tax assets.~~

~~- Effective for the fiscal period beginning after December 15, 2017, including interim periods within those fiscal years.~~

~~- Amendments are applied as a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption.~~

~~- The amendment is not expected to have a significant impact on Huntington's Unaudited Consolidated Financial Statements.~~

~~ASU 2016-02 - Leases.~~

~~Issued February 2016~~

- New lease accounting model for lessors and lessees. For lessees, virtually all leases will be required to be recognized on the balance sheet by recording a right-of-use asset and lease liability. Subsequent accounting for leases varies depending on whether the lease is an operating lease or a finance lease.

~~- Accounting applied by a lessor is largely unchanged from that applied under the existing guidance.~~

- Requires additional qualitative and quantitative disclosures with the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases.

~~- Effective for the fiscal period beginning after December 15, 2018, with early application permitted.~~

- Management intends to adopt the guidance on January 1, 2019, and has formed a working group comprised of associates from different disciplines, including Procurement, Real Estate, and Credit Administration, to evaluate the impact of the standard where Huntington is a lessee or lessor, as well as any impact to borrower’s financial statements.

- Management is currently assessing the impact of the new guidance on Huntington's Unaudited Consolidated Financial Statements, including working with associates engaged in the procurement of goods and services used in the entity’s operations, and reviewing contractual arrangements for embedded leases in an effort to identify Huntington’s full lease population.

~~- Huntington will recognize right-of-use assets and lease liabilities for virtually all of its operating lease commitments.~~

~~ASU 2016-13 - Financial Instruments - Credit Losses.~~

~~Issued June 2016~~

~~- Eliminates the probable recognition threshold for credit losses on financial assets measured at amortized cost.~~

~~- Requires those financial assets to be presented at the net amount expected to be collected (i.e., net of expected credit losses).~~

- Measurement of expected credit losses should be based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectibility of the reported amount.

- •Effective for fiscal years beginning after December 15, ~~2019,~~2023, including interim periods within those fiscal years.

•Early adoption is permitted ~~for fiscal years beginning after December 15, 2018.~~

~~- Applied through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period~~ in ~~which the guidance is effective.~~

- Management intends to adopt the guidance on January 1, 2020 and has formed a working group comprised of teams from different disciplines including credit and finance to evaluate the requirements of the new standard and the impact it will have on our processes.

- The early stages of this evaluation include a review of existing credit models to identify areas where existing credit models used to comply with other regulatory requirements may be leveraged and areas where new impairment models may be required.

~~ASU 2016-15 - Classification of Certain Cash Receipts and Cash Payments.~~

~~Issued August 2016~~

~~- Clarifies guidance on the classification of certain cash receipts and payments in the statement of cash flows.~~

- Provides consistent principles for evaluating the classification of cash payments and receipts in the statement of cash flows to reduce diversity in practice with respect to several types of cash flows.

- Effective using a retrospective transition approach for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in anany interim period.

- •If ~~an entity early adopts the amendments~~adopted in an interim period, ~~any adjustments should~~it shall be ~~reflected~~adopted as ofif adopted at the beginning of the fiscal ~~year that includes that interim period.~~year.

•The amendments can be applied in retrospective or modified retrospective basis, with a cumulative effect adjustment reflected in retained earnings.

~~- This Update~~•Huntington is ~~not expected to have a significant~~currently evaluating the impact of the standard on ~~Huntington's~~its Unaudited Consolidated Financial Statements.

~~Standard~~

~~Summary of guidance~~

~~Effects on financial statements~~

~~ASU 2017-04 - Simplifying the Test for Goodwill Impairment.~~

~~Issued January 2017~~

- Simplifies the goodwill impairment test by eliminating Step 2 of the goodwill impairment process, which requires an entity to determine the implied fair value of its goodwill by assigning fair value to all its assets and liabilities.

~~- Entities will instead recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value.~~

~~- Entities will still have the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary.~~

~~- Effective for annual and interim goodwill tests performed in fiscal years beginning after December 15, 2019. Early adoption is permitted.~~

~~- The amendment is not expected to have a significant impact on Huntington's Unaudited Consolidated Financial Statements.~~

~~ASU 2017-07 - Improving the Presentation of Net Periodic Pension Cost and Periodic Postretirement Benefit Cost.~~

~~Issued March 2017~~

- Requires that an employer report the service cost component of the pension cost and postretirement benefit cost in the same line items as other compensation costs arising from services rendered by the pertinent employees during the period.

~~- Other components of the net benefit cost should be presented in the income statement separately from the service cost component.~~

- Effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted as of the beginning of an annual period for which financial statements have not been issued or made available for issuance.

~~- This Update is not expected to have a significant impact on Huntington's Unaudited Consolidated Financial Statements.~~

~~ASU 2017-09 - Stock Compensation Modification Accounting.~~

~~Issued May 2017~~

~~- Reduces the current diversity in practice and provides explicit guidance pertaining to the provisions of modification accounting.~~

- Clarifies that an entity should account for effects of modification unless the fair value, vesting conditions and the classification of the modified award are the same as the original awards immediately before the original award is modified.

~~- Effective prospectively for annual periods and interim periods within those annual periods, beginning after December 15, 2017. Earlier application is permitted.~~

~~- The Update is not expected to have a significant impact on Huntington's Unaudited Consolidated Financial Statements.~~

~~ASU 2017-12 - Derivatives and Hedging - Targeted Improvements to Accounting for Hedging Activities.~~

~~Issued August 2017~~

~~- Aligns the entity’s risk management activities and financial reporting for hedging relationships.~~

~~- Requires an entity to present the earnings effect of the hedging instrument in the same income statement line item in which the earnings effect of the hedged item is reported.~~

~~- Refines measurement techniques for hedges of benchmark interest rate risk.~~

~~- Eliminates the separate measurement and reporting of hedge ineffectiveness.~~

~~- Allows stated amount of assets in a closed portfolio to be fair value hedged by excluding proportion of hedged item related to prepayments, defaults and other events.~~

~~- Eases hedge effectiveness testing including an option to perform qualitative testing.~~

- Effective for annual periods and interim periods within those annual periods, beginning after December 15, 2018. For cash flow and net investment hedges, cumulative-effect adjustment related to eliminating the separate measurement of ineffectiveness should be recognized in AOCI with a corresponding adjustment to retained earnings. Earlier application is permitted.

~~- Huntington is considering adopting the new guidance on January 1, 2018. The Update is not expected to have a significant impact on Huntington's Unaudited Consolidated Financial Statements.~~

2023 1Q Form 10-Q 41

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3. ~~LOANS / LEASES~~INVESTMENT SECURITIES AND ~~ALLOWANCE FOR CREDIT LOSSES~~OTHER SECURITIES

~~Loans and leases~~Debt securities purchased in which Huntington has the intent and ability to hold ~~for the foreseeable future, or until~~to their maturity ~~or payoff,~~ are classified ~~in the Unaudited Condensed Consolidated Balance Sheets~~ as ~~loans~~held-to-maturity securities. All other debt and ~~leases. Except for loans which~~equity securities are ~~accounted for at~~classified as either available-for-sale or other securities.

The following tables provide amortized cost, fair value, ~~loans are carried~~and gross unrealized gains and losses by investment category at the principal amount outstanding, net of unamortized premiums and discounts and deferred loan fees and costs and purchase accounting adjustments, which resulted in a net premium of $295 million and $120 million at September 30, 2017March 31, 2023 and December 31, ~~2016,~~2022:


			Unrealized
(dollar amounts in millions)	Amortized Cost (1)(2)		Gross Gains		Gross Losses		Fair Value
At March 31, 2023
Available-for-sale securities:
U.S. Treasury	$	5	$	—	$	—	$	5
Federal agencies:
Residential CMO	3,818		1		(369)		3,450
Residential MBS	14,193		10		(1,870)		12,333
Commercial MBS	2,555		—		(588)		1,967
Other agencies	184		—		(8)		176
Total U.S. Treasury, federal agency, and other agency securities	20,755		11		(2,835)		17,931
Municipal securities	3,614		1		(234)		3,381
Private-label CMO	143		—		(13)		130
Asset-backed securities	413		—		(38)		375
Corporate debt	2,481		109		(325)		2,265
Other securities/Sovereign debt	4		—		—		4
Total available-for-sale securities	$	27,410	$	121	$	(3,445)	$	24,086

Held-to-maturity securities:
Federal agencies:
Residential CMO	$	5,133	$	7	$	(634)	$	4,506
Residential MBS	10,090		1		(1,199)		8,892
Commercial MBS	1,630		—		(207)		1,423
Other agencies	122		—		(6)		116
Total federal agency and other agency securities	16,975		8		(2,046)		14,937
Municipal securities	2		—		—		2
Total held-to-maturity securities	$	16,977	$	8	$	(2,046)	$	14,939

Other securities, at cost:
Non-marketable equity securities:
Federal Home Loan Bank stock	$	748	$	—	$	—	$	748
Federal Reserve Bank stock	509		��		—		509
Equity securities	9		—		—		9
Other securities, at fair value:
Mutual funds	32		—		—		32
Equity securities	1		—		—		1
Total other securities	$	1,299	$	—	$	—	$	1,299

(1)Amortized cost amounts exclude accrued interest receivable, which is recorded within accrued income and other receivables on the Consolidated Balance Sheets. At March 31, 2023, accrued interest receivable on available-for-sale securities and held-to-maturity securities totaled $73 million and $39 million, respectively.

(2)Excluded from the amortized cost are portfolio level basis adjustments for securities designated in fair value hedges under the portfolio layer method. The basis adjustments totaled $689 million and represent a reduction to the amortized cost of the securities being hedged. The securities being hedged under the portfolio layer method are primarily Residential CMO and Residential MBS securities.

~~Loan~~

42 Huntington Bancshares Incorporated

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			Unrealized
(dollar amounts in millions)	Amortized Cost (1)(2)		Gross Gains		Gross Losses		Fair Value
At December 31, 2022
Available-for-sale securities:
U.S. Treasury	$	103	$	—	$	—	$	103
Federal agencies:
Residential CMO	3,336		—		(422)		2,914
Residential MBS	14,349		4		(2,090)		12,263
Commercial MBS	2,565		—		(612)		1,953
Other agencies	190		1		(9)		182
Total U.S. Treasury, federal agency, and other agency securities	20,543		5		(3,133)		17,415
Municipal securities	3,527		1		(238)		3,290
Private-label CMO	146		—		(18)		128
Asset-backed securities	416		—		(44)		372
Corporate debt	2,467		132		(385)		2,214
Other securities/Sovereign debt	4		—		—		4
Total available-for-sale securities	$	27,103	$	138	$	(3,818)	$	23,423

Held-to-maturity securities:
Federal agencies:
Residential CMO	$	4,970	$	4	$	(714)	$	4,260
Residential MBS	10,295		—		(1,375)		8,920
Commercial MBS	1,652		—		(204)		1,448
Other agencies	133		—		(9)		124
Total federal agency and other agency securities	17,050		4		(2,302)		14,752
Municipal securities	2		—		—		2
Total held-to-maturity securities	$	17,052	$	4	$	(2,302)	$	14,754

Other securities, at cost:
Non-marketable equity securities:
Federal Home Loan Bank stock	$	312	$	—	$	—	$	312
Federal Reserve Bank stock	500		—		—		500
Equity securities	10		—		—		10
Other securities, at fair value:
Mutual funds	31		—		—		31
Equity securities	1		—		—		1
Total other securities	$	854	$	—	$	—	$	854

(1)Amortized cost amounts exclude accrued interest receivable, which is recorded within accrued income and ~~Lease Portfolio Composition~~other receivables on the Consolidated Balance Sheets. At December 31, 2022, accrued interest receivable on available-for-sale securities and held-to-maturity securities totaled $64 million and $39 million, respectively.

(2)Excluded from the amortized cost are portfolio level basis adjustments for securities designated in fair value hedges under the portfolio layer method. The basis adjustments totaled $849 million and represent a reduction to the amortized cost of the securities being hedged. The securities being hedged under the portfolio layer method are primarily Residential CMO and Residential MBS securities.

2023 1Q Form 10-Q 43

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The following table provides the amortized cost and fair value of securities by contractual maturity at March 31, 2023 and December 31, 2022. Expected maturities may differ from contractual maturities as issuers may have the right to call or prepay obligations with or without incurring penalties.


	At March 31, 2023				At December 31, 2022
(dollar amounts in millions)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Available-for-sale securities:
Under 1 year	$	502	$	494	$	518	$	511
After 1 year through 5 years	2,387		2,232		2,182		2,033
After 5 years through 10 years	2,913		2,666		3,106		2,814
After 10 years	21,608		18,694		21,297		18,065
Total available-for-sale securities	$	27,410	$	24,086	$	27,103	$	23,423

Held-to-maturity securities:
Under 1 year	$	2	$	2	$	—	$	—
After 1 year through 5 years	62		60		72		68
After 5 years through 10 years	67		63		71		66
After 10 years	16,846		14,814		16,909		14,620
Total held-to-maturity securities	$	16,977	$	14,939	$	17,052	$	14,754

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, 2023 and December 31, 2022:


	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
At March 31, 2023
Available-for-sale securities:
Federal agencies:
Residential CMO	$	1,241	$	(71)	$	1,808	$	(298)	$	3,049	$	(369)
Residential MBS	555		(31)		11,285		(1,839)		11,840		(1,870)
Commercial MBS	526		(77)		1,441		(511)		1,967		(588)
Other agencies	22		—		71		(8)		93		(8)
Total federal agency and other agency securities	2,344		(179)		14,605		(2,656)		16,949		(2,835)
Municipal securities	1,019		(60)		2,212		(174)		3,231		(234)
Private-label CMO	37		(3)		72		(10)		109		(13)
Asset-backed securities	36		(2)		340		(36)		376		(38)
Corporate debt	75		(4)		2,190		(321)		2,265		(325)

Total temporarily impaired available-for-sale securities	$	3,511	$	(248)	$	19,419	$	(3,197)	$	22,930	$	(3,445)

Held-to-maturity securities:
Federal agencies:
Residential CMO	$	254	$	(5)	$	3,830	$	(629)	$	4,084	$	(634)
Residential MBS	1,456		(72)		7,341		(1,127)		8,797		(1,199)
Commercial MBS	52		(2)		1,371		(205)		1,423		(207)
Other agencies	—		—		116		(6)		116		(6)
Total federal agency and other agency securities	1,762		(79)		12,658		(1,967)		14,420		(2,046)

Total temporarily impaired held-to-maturity securities	$	1,762	$	(79)	$	12,658	$	(1,967)	$	14,420	$	(2,046)

44 Huntington Bancshares Incorporated

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	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
At December 31, 2022
Available-for-sale securities:
Federal agencies:
Residential CMO	$	2,096	$	(224)	$	818	$	(198)	$	2,914	$	(422)
Residential MBS	2,455		(286)		9,490		(1,804)		11,945		(2,090)
Commercial MBS	1,090		(249)		863		(363)		1,953		(612)
Other agencies	40		(1)		56		(8)		96		(9)
Total federal agency and other agency securities	5,681		(760)		11,227		(2,373)		16,908		(3,133)
Municipal securities	2,298		(174)		807		(64)		3,105		(238)
Private-label CMO	64		(13)		43		(5)		107		(18)
Asset-backed securities	174		(10)		199		(34)		373		(44)
Corporate debt	727		(105)		1,487		(280)		2,214		(385)

Total temporarily impaired available-for-sale securities	$	8,944	$	(1,062)	$	13,763	$	(2,756)	$	22,707	$	(3,818)

Held-to-maturity securities:
Federal agencies:
Residential CMO	$	1,702	$	(238)	$	2,283	$	(476)	$	3,985	$	(714)
Residential MBS	4,151		(462)		4,711		(913)		8,862		(1,375)
Commercial MBS	1,201		(154)		247		(50)		1,448		(204)
Other agencies	124		(9)		—		—		124		(9)
Total federal agency and other agency securities	7,178		(863)		7,241		(1,439)		14,419		(2,302)

Total temporarily impaired held-to-maturity securities	$	7,178	$	(863)	$	7,241	$	(1,439)	$	14,419	$	(2,302)

At March 31, 2023 and December 31, 2022, the carrying value of investment securities pledged: (i) to secure certain uninsured deposits, trading account liabilities, U.S. Treasury demand notes, and security repurchase agreements, and (ii) to support borrowing capacity, totaled $32.2 billion and $26.9 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, 2023 or December 31, 2022. At March 31, 2023, all HTM debt securities are considered investment grade. In addition, there were no HTM debt securities considered past due at March 31, 2023.

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 of cash flows, as of March 31, 2023, Huntington has concluded that except for one municipal bond classified as an AFS debt security for which a charge-off of $4 million was recognized during the 2022 first quarter, it expects to receive all contractual cash flows from each security held in its AFS and HTM debt securities portfolio. There was no allowance related to investment securities as of March 31, 2023 or December 31, 2022.

2023 1Q Form 10-Q 45

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4. LOANS AND LEASES

The following table provides a detailed listing of Huntington’s loan and lease portfolio at ~~September 30, 2017~~March 31, 2023 and December 31, ~~2016.~~2022.


(dollar amounts in millions)	At March 31, 2023		At December 31, 2022


















Commercial loan and lease portfolio:
Commercial and industrial	$	47,049	$	45,127
Commercial real estate	16,377		16,634
Lease financing	5,244		5,252
Total commercial loan and lease portfolio	68,670		67,013
Consumer loan portfolio:
Residential mortgage	22,472		22,226
Automobile	13,187		13,154
Home equity	10,166		10,375
RV and marine	5,404		5,376
Other consumer	1,280		1,379
Total consumer loan portfolio	52,509		52,510
Total loans and leases (1)(2)	121,179		119,523
Allowance for loan and lease losses	(2,142)		(2,121)
Net loans and leases	$	119,037	$	117,402

(dollar amounts in thousands) September 30,
2017 December 31,
2016
Loans and leases:
Commercial and industrial $ 27,469,344
$ 28,058,712
Commercial real estate 7,206,096
7,300,901
Automobile 11,876,033
10,968,782
Home equity 9,984,728
10,105,774
Residential mortgage 8,616,059
7,724,961
RV and marine finance 2,371,065
1,846,447
Other consumer 1,063,971
956,419
Loans and leases 68,587,296
66,961,996
Allowance for loan and lease losses (675,486 ) (638,413 )
Net loans and leases $ 67,911,810
$ 66,323,583
(1)Loans and leases are reported at principal amount outstanding including unamortized purchase premiums and discounts, unearned income, and net direct fees and costs associated with originating and acquiring loans and leases. The aggregate amount of these loan and lease adjustments was a net (discount) premium of $(12) million and $3 million at March 31, 2023 and December 31, 2022, respectively.

(2)The total amount of accrued interest recorded for these loans and leases at March 31, 2023, was $305 million and $187 million of commercial and consumer loan and lease portfolios, respectively, and at December 31, 2022, was $274 million and $186 million of commercial and consumer loan and lease portfolios, respectively. Accrued interest is presented in accrued income and other receivables within the Consolidated Balance Sheets.

~~FirstMerit Purchased Credit-Impaired Loans~~Lease Financing

The following table presents ~~a rollforward~~net investments in lease financing receivables by category at March 31, 2023 and December 31, 2022.


(dollar amounts in millions)	At March 31, 2023		At December 31, 2022

Lease payments receivable	$	4,928	$	4,916
Estimated residual value of leased assets	784		788
Gross investment in lease financing receivables	5,712		5,704
Deferred origination costs	49		46
Deferred fees, unearned income and other	(517)		(498)
Total lease financing receivables	$	5,244	$	5,252

The carrying value of ~~the accretable yield~~residual values guaranteed was $474 million and $466 million as of March 31, 2023 and December 31, 2022, respectively. The future lease rental payments due from customers on sales-type and direct financing leases at March 31, 2023, totaled $4.9 billion and were due as follows: $796 million in 2023, $979 million in 2024, $883 million in 2025, $842 million in 2026, $750 million in 2027, and $678 million thereafter. Interest income recognized for ~~purchased credit impaired loans~~these types of leases was $68 million and $38 million for the three-month periods ended March 31, 2023 and ~~nine-month period ended September 30, 2017.~~

Three Months Ended
September 30, Nine Months Ended
September 30,
(dollar amounts in thousands) 2017 2017
Balance, beginning of period $ 36,509
$ 36,669
Accretion (4,343 ) (13,833 )
Reclassification (to) from nonaccretable difference 3,044
12,374
Balance, end of period $ 35,210
$ 35,210

~~The following table reflects the ending and unpaid balances of the purchase credit impaired loans at September 30, 2017 and December 31, 2016.~~2022, respectively.

46 Huntington Bancshares Incorporated

September 30, 2017 December 31, 2016
(dollar amounts in thousands) Ending
Balance Unpaid Principal
Balance Ending
Balance Unpaid Principal
Balance
Commercial and industrial $ 48,606
$ 72,117
$ 68,338
$ 100,031
Commercial real estate 16,383
29,689
34,042
56,320
Total $ 64,989
$ 101,806
$ 102,380
$ 156,351

Table of Content

~~There was no allowance for loan losses recorded on the purchased credit-impaired loan portfolio at September 30, 2017 and December 31, 2016.~~

Nonaccrual and Past Due Loans

~~Loans are considered past due when the contractual amounts due with respect to principal~~ and interest are not received within 30 days of the contractual due date. See Note 1 “Significant Accounting Policies” to the consolidated financial statements of the Annual Report on Form 10-K for the year ended December 31, 2016 for a description of the accounting policies related to the NALs.

Leases

The following table presents ~~nonaccrual loans (NALs)~~NALs by ~~loan~~ class at ~~September 30, 2017~~March 31, 2023 and December 31, ~~2016.~~2022:


						At March 31, 2023				At December 31, 2022
(dollar amounts in thousands)	September 30, 2017		December 31, 2016
(dollar amounts in millions)					(dollar amounts in millions)	Nonaccrual loans and leases with no ACL		Total nonaccrual loans and leases		Nonaccrual loans and leases with no ACL		Total nonaccrual loans and leases
Commercial and industrial	$	169,751	$	234,184	Commercial and industrial	$	37	$	273	$	49	$	288
Commercial real estate	17,397		20,508		Commercial real estate	37		86		63		92
Lease financing					Lease financing	—		14		—		18
Residential mortgage					Residential mortgage	—		81		—		90
Automobile	4,076		5,766		Automobile	—		4		—		4
Home equity	71,353		71,798		Home equity	—		74		—		76
Residential mortgage	75,251		90,502
RV and marine finance	309		245
Other consumer	108		—
Total nonaccrual loans	$	338,245	$	423,003
RV and marine					RV and marine	—		1		—		1

Total nonaccrual loans and leases					Total nonaccrual loans and leases	$	74	$	533	$	112	$	569

The following ~~table presents~~tables present an aging analysis of loans and leases, ~~including past due loans,~~ by ~~loan~~ class at ~~September 30, 2017~~March 31, 2023 and December 31, ~~2016. (1)~~2022:


	At March 31, 2023
	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	$	23	$	90	$	150	$	46,899	$	—	$	47,049	$	12	(2)
Commercial real estate	31		42		9		82		16,295		—		16,377		—
Lease financing	34		35		12		81		5,163		—		5,244		10		(3)
Residential mortgage	196		61		181		438		21,848		186		22,472		134		(4)
Automobile	78		16		9		103		13,084		—		13,187		7
Home equity	49		27		68		144		10,021		1		10,166		18
RV and marine	13		3		2		18		5,386		—		5,404		2
Other consumer	8		3		2		13		1,267		—		1,280		2
Total loans and leases	$	446	$	210	$	373	$	1,029	$	119,963	$	187	$	121,179	$	185


																								At December 31, 2022
	September 30, 2017																							Past Due (1)																						Loans Accounted for Under FVO			Total Loans and Leases		90 or more days past due and accruing
	Past Due												Loans Accounted for Under the Fair Value Option			Total Loans and Leases			90 or more days past due and accruing
(dollar amounts in thousands)	30-59 Days		60-89 Days		90 or more days		Total		Current		Purchased Credit Impaired
(dollar amounts in millions)																						(dollar amounts in millions)		30-59 Days				60-89 Days				90 or more days				Total				Current								Loans Accounted for Under FVO			Total Loans and Leases			90 or more days past due and accruing
Commercial and industrial	$	36,505	$	10,654	$	77,835	$	124,994	$	27,295,744	$	48,606			$			—					$	27,469,344		$	14,083	(2)	Commercial and industrial	$	53			$	19			$	108			$	180	$	44,947										(2)
Commercial real estate	35,444		2,586		20,010		58,040		7,131,673		16,383		—			7,206,096			9,550			Commercial real estate		2				1				9				12				16,622						—			16,634		—
Lease financing																						Lease financing		36				18				10				64				5,188						—			5,252		9		(3)
Residential mortgage																						Residential mortgage		246				69				199				514				21,528						184			22,226		146		(4)
Automobile	79,457		17,167		10,449		107,073		11,767,782		—		1,178			11,876,033			10,239			Automobile		88				20				11				119				13,035						—			13,154		9
Home equity	41,748		19,601		63,747		125,096		9,857,359		—		2,273			9,984,728			16,150			Home equity		56				30				66				152				10,222						1			10,375		15
Residential mortgage	111,722		45,041		104,167		260,930		8,260,742		—		94,387			8,616,059			62,832		(3)
RV and marine finance	10,303		2,184		2,134		14,621		2,355,309		—		1,135			2,371,065			2,063
RV and marine																						RV and marine		15				5				3				23				5,353						—			5,376		3
Other consumer	10,180		4,394		3,752		18,326		1,045,427		—		218			1,063,971			3,752			Other consumer		13				3				3				19				1,360						—			1,379		2
Total loans and leases	$	325,359	$	101,627	$	282,094	$	709,080	$	67,714,036	$	64,989	$	99,191		$	68,587,296		$	118,669		Total loans and leases		$	509			$	165			$	409			$	1,083			$	118,255					$	185		$	119,523	$	207

(1)NALs are included in this aging analysis based on the loan’s past due status.

December 31, 2016
Past Due Loans Accounted for Under the Fair Value Option Total Loans
and Leases 90 or
more days
past due
and accruing
(dollar amounts in thousands) 30-59
Days 60-89
Days 90 or
more days Total Current Purchased
Credit Impaired
Commercial and industrial 42,052
20,136
74,174
136,362
27,854,012
68,338
—
28,058,712
18,148
(2)
Commercial real estate 21,187
3,202
29,659
54,048
7,212,811
34,042
—
7,300,901
17,215

Automobile 76,283
17,188
10,442
103,913
10,862,715
—
2,154
10,968,782
10,182

Home equity 38,899
23,903
53,002
115,804
9,986,697
—
3,273
10,105,774
11,508

Residential mortgage 122,469
37,460
116,682
276,611
7,373,414
—
74,936
7,724,961
66,952
(3)
RV and marine finance 10,009
2,230
1,566
13,805
1,831,123
—
1,519
1,846,447
1,462

Other consumer 9,442
4,324
3,894
17,660
938,322
—
437
956,419
3,895

Total loans and leases $ 320,341
$ 108,443
$ 289,419
$ 718,203
$ 66,059,094
$ 102,380
$ 82,319
$ 66,961,996
$ 129,362


~~(1)~~	~~NALs are included in this aging analysis based on their past due status.~~


~~(2)~~	~~Amounts include Huntington Technology Finance administrative lease delinquencies.~~


~~(3)~~	~~Amounts include loans guaranteed by government organizations.~~

~~Allowance for Credit Losses~~

Huntington maintains two reserves, both of which reflect Management’s judgment regarding the appropriate level necessary to absorb probable and estimable credit losses inherent in our loan and lease portfolio as of the balance sheet date: the ALLL and the AULC. Combined, these reserves comprise the total ACL. The determination of the ACL requires significant estimates, including the timing and amounts of expected future cash flows on impaired(2)Amounts include SBA loans and ~~leases, consideration~~leases.

(3)Amounts include Huntington Technology Finance administrative lease delinquencies.

(4)Amounts include mortgage loans insured by U.S. government agencies.

2023 1Q Form 10-Q 47

Table of ~~current economic conditions, and historical loss experience pertaining to pools of homogeneous loans and leases, all of which may be susceptible to change.~~ Content

Credit Quality Indicators

See Note ~~1 “Significant Accounting Policies”~~5 “Loans and Leases” to the ~~consolidated financial statements of the~~Consolidated Financial Statements appearing in Huntington’s 2022 Annual Report on Form 10-K ~~for the year ended December 31, 2016 for a description of the accounting policies related to the ACL.~~

The ACL is increased through a provision for credit losses that is charged to earnings, based on Management’s quarterly evaluation and is reduced by charge-offs, net of recoveries, and the ACL associated with loans sold or transferred to held-for-sale.

~~The following table presents ALLL and AULC activity by portfolio segment for the three-month and nine-month periods ended September 30, 2017 and 2016.~~

(dollar amounts in thousands) Commercial Consumer Total
Three-month period ended September 30, 2017:
ALLL balance, beginning of period $ 474,576
$ 193,420
$ 667,996
Loan charge-offs (19,278 ) (45,494 ) (64,772 )
Recoveries of loans previously charged-off 10,015
11,865
21,880
Provision for (reduction in allowance) loan and lease losses 8,810
41,573
50,383
Allowance for loans sold or transferred to loans held for sale (1 ) —
(1 )
ALLL balance, end of period $ 474,122
$ 201,364
$ 675,486
AULC balance, beginning of period $ 82,827
$ 2,532
$ 85,359
Provision for (reduction in allowance) unfunded loan commitments and letters of credit (6,528 ) (265 ) (6,793 )
AULC balance, end of period $ 76,299
$ 2,267
$ 78,566
ACL balance, end of period $ 550,421
$ 203,631
$ 754,052
Nine-month period ended September 30, 2017:
ALLL balance, beginning of period $ 451,091
$ 187,322
$ 638,413
Loan charge-offs (58,051 ) (133,884 ) (191,935 )
Recoveries of loans previously charged-off 33,619
39,946
73,565
Provision for (reduction in allowance) loan and lease losses 47,539
107,980
155,519
Allowance for loans sold or transferred to loans held for sale (76 ) —
(76 )
ALLL balance, end of period $ 474,122
$ 201,364
$ 675,486
AULC balance, beginning of period $ 86,543
$ 11,336
$ 97,879
Provision for (reduction in allowance) unfunded loan commitments and letters of credit (10,244 ) (9,069 ) (19,313 )
AULC balance, end of period $ 76,299
$ 2,267
$ 78,566
ACL balance, end of period $ 550,421
$ 203,631
$ 754,052

(dollar amounts in thousands) Commercial Consumer Total
Three-month period ended September 30, 2016:
ALLL balance, beginning of period $ 424,507
$ 198,557
$ 623,064
Loan charge-offs (24,839 ) (34,429 ) (59,268 )
Recoveries of loans previously charged-off 8,312
10,891
19,203
Provision for (reduction in allowance) loan and lease losses 36,689
16,834
53,523
Allowance for loans sold or transferred to loans held for sale (12,874 ) (6,750 ) (19,624 )
ALLL balance, end of period $ 431,795
$ 185,103
$ 616,898
AULC balance, beginning of period $ 63,717
$ 10,031
$ 73,748
Provision for (reduction in allowance) unfunded loan commitments and letters of credit 9,739
543
10,282
AULC recorded at acquisition 4,403
—
4,403
AULC balance, end of period $ 77,859
$ 10,574
$ 88,433
ACL balance, end of period $ 509,654
$ 195,677
$ 705,331
Nine-month period ended September 30, 2016:
ALLL balance, beginning of period $ 398,753
$ 199,090
$ 597,843
Loan charge-offs (70,721 ) (91,784 ) (162,505 )
Recoveries of loans previously charged-off 62,127
35,006
97,133
Provision for (reduction in allowance) loan and lease losses 54,510
49,437
103,947
Allowance for loans sold or transferred to loans held for sale (12,874 ) (6,646 ) (19,520 )
ALLL balance, end of period $ 431,795
$ 185,103
$ 616,898
AULC balance, beginning of period $ 63,448
$ 8,633
$ 72,081
Provision for (reduction in allowance) unfunded loan commitments and letters of credit 10,008
1,941
11,949
AULC recorded at acquisition 4,403
—
4,403
AULC balance, end of period $ 77,859
$ 10,574
$ 88,433
ACL balance, end of period $ 509,654
$ 195,677
$ 705,331

~~Credit Quality Indicators~~

~~See Note 4 “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, 2016~~ for a description of the credit quality indicators Huntington utilizes for monitoring credit quality and for determining an appropriate ACL level.

For all classes within the consumer loan portfolios, borrower credit bureau scores are monitored as an indicator of credit quality. 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 ~~following~~classifications described above, and also presented in the table ~~presents each loan and lease class by~~below, represent one of those characteristics that are closely monitored in the overall credit ~~quality indicator at September 30, 2017 and December 31, 2016.~~risk management processes.

48 Huntington Bancshares Incorporated

Table of Content

September 30, 2017
Credit Risk Profile by UCS Classification
(dollar amounts in thousands) Pass OLEM Substandard Doubtful Total
Commercial
Commercial and industrial $ 25,447,805
$ 803,540
$ 1,189,789
$ 28,210
$ 27,469,344
Commercial real estate 6,934,670
144,122
126,352
952
7,206,096

Credit Risk Profile by FICO Score (1), (2)
750+ 650-749 <650 Other (3) Total
Consumer
Automobile $ 5,939,409
$ 4,278,062
$ 1,371,574
$ 285,810
$ 11,874,855
Home equity 6,359,778
2,985,933
621,817
14,927
9,982,455
Residential mortgage 5,311,993
2,479,820
599,055
130,804
8,521,672
RV and marine finance 1,385,176
853,545
91,302
39,907
2,369,930
Other consumer 404,047
510,804
136,346
12,556
1,063,753

December 31, 2016
Credit Risk Profile by UCS Classification
(dollar amounts in thousands) Pass OLEM Substandard Doubtful Total
Commercial
Commercial and industrial $ 26,211,885
$ 810,287
$ 1,028,819
$ 7,721
$ 28,058,712
Commercial real estate 7,042,304
96,975
159,098
2,524
7,300,901

Credit Risk Profile by FICO Score (1), (2)
750+ 650-749 <650 Other (3) Total
Consumer
Automobile $ 5,369,085
$ 4,043,611
$ 1,298,460
$ 255,472
$ 10,966,628
Home equity 6,280,328
2,891,330
637,560
293,283
10,102,501
Residential mortgage 4,662,777
2,285,121
615,067
87,060
7,650,025
RV and marine finance 1,064,143
644,039
72,995
63,751
1,844,928
Other consumer 346,867
455,959
133,243
19,913
955,982


~~(1)~~	~~Excludes loans accounted for under the fair value option.~~


~~(2)~~	~~Reflects most recent customer credit scores.~~


~~(3)~~	~~Reflects deferred fees and costs, loans in process, loans to legal entities, etc.~~

~~Impaired Loans~~

See Note 1 “Significant Accounting Policies” to the consolidated financial statements of the Annual Report on Form 10-K for the year ended December 31, 2016 for a description of accounting policies related to impaired loans.

The following tables present the ~~balance~~amortized cost basis of ~~the ALLL attributable to~~ loans and leases by ~~portfolio segment individually~~vintage and ~~collectively evaluated for impairment and the related loan and lease balance~~credit quality indicator at ~~September 30, 2017~~March 31, 2023 and December 31, ~~2016.~~2022 respectively:


	At March 31, 2023
	Term Loans Amortized Cost Basis by Origination Year												Revolver Total at Amortized Cost Basis		Revolver Total Converted to Term Loans
(dollar amounts in millions)	2023		2022		2021		2020		2019		Prior						Total
Commercial and industrial
Credit Quality Indicator (1):
Pass	$	5,651	$	13,501	$	5,680	$	2,891	$	1,760	$	1,956	$	13,043	$	4	$	44,486
OLEM	33		207		123		52		19		92		170		—		696
Substandard	58		341		158		199		179		356		575		—		1,866
Doubtful	—		—		—		—		—		1		—		—		1
Total Commercial and industrial	$	5,742	$	14,049	$	5,961	$	3,142	$	1,958	$	2,405	$	13,788	$	4	$	47,049
Commercial real estate
Credit Quality Indicator (1):
Pass	$	620	$	5,544	$	2,995	$	1,438	$	1,508	$	1,750	$	1,509	$	—	$	15,364
OLEM	5		147		46		8		34		42		—		—		282
Substandard	65		147		107		39		158		213		2		—		731

Total Commercial real estate	$	690	$	5,838	$	3,148	$	1,485	$	1,700	$	2,005	$	1,511	$	—	$	16,377
Lease financing
Credit Quality Indicator (1):
Pass	$	471	$	1,777	$	1,176	$	817	$	409	$	261	$	—	$	—	$	4,911
OLEM	31		28		9		24		15		6		—		—		113
Substandard	8		71		44		60		21		15		—		—		219
Doubtful	—		—		1		—		—		—		—		—		1
Total Lease financing	$	510	$	1,876	$	1,230	$	901	$	445	$	282	$	—	$	—	$	5,244
Residential mortgage
Credit Quality Indicator (2):
750+	$	331	$	3,774	$	6,244	$	3,493	$	816	$	2,452	$	—	$	—	$	17,110
650-749	137		1,323		1,142		613		216		878		—		—		4,309
<650	2		60		73		67		93		572		—		—		867

Total Residential mortgage	$	470	$	5,157	$	7,459	$	4,173	$	1,125	$	3,902	$	—	$	—	$	22,286
Automobile
Credit Quality Indicator (2):
750+	$	911	$	2,471	$	2,021	$	1,097	$	655	$	276	$	—	$	—	$	7,431
650-749	422		1,850		1,333		591		308		159		—		—		4,663
<650	36		351		349		169		105		83		—		—		1,093

Total Automobile	$	1,369	$	4,672	$	3,703	$	1,857	$	1,068	$	518	$	—	$	—	$	13,187
Home equity
Credit Quality Indicator (2):
750+	$	96	$	463	$	557	$	592	$	21	$	298	$	4,562	$	240	$	6,829
650-749	44		122		83		65		9		121		2,097		245		2,786
<650	—		3		3		4		2		51		354		133		550

Total Home equity	$	140	$	588	$	643	$	661	$	32	$	470	$	7,013	$	618	$	10,165
RV and marine
Credit Quality Indicator (2):
750+	$	250	$	1,080	$	981	$	685	$	339	$	733	$	—	$	—	$	4,068
650-749	33		305		303		193		116		270		—		—		1,220
<650	—		9		20		18		16		53		—		—		116

Total RV and marine	$	283	$	1,394	$	1,304	$	896	$	471	$	1,056	$	—	$	—	$	5,404
Other consumer
Credit Quality Indicator (2):
750+	$	66	$	111	$	55	$	29	$	28	$	60	$	363	$	3	$	715
650-749	21		63		26		10		12		16		339		15		502
<650	—		5		4		2		3		2		34		13		63

Total Other consumer	$	87	$	179	$	85	$	41	$	43	$	78	$	736	$	31	$	1,280

(1)Consistent with the credit quality disclosures, indicators for the Commercial portfolio are based on internally defined categories of credit grades.

(2)Consistent with the credit quality disclosures, indicators for the Consumer portfolio are based on updated customer credit scores refreshed at least quarterly.

2023 1Q Form 10-Q 49

Table of Content

(dollar amounts in thousands) Commercial Consumer Total
ALLL at September 30, 2017:
Portion of ALLL balance:
Purchased credit-impaired loans $ —
$ —
$ —
Attributable to loans individually evaluated for impairment 22,838
13,874
36,712
Attributable to loans collectively evaluated for impairment 451,284
187,490
638,774
Total ALLL balance $ 474,122
$ 201,364
$ 675,486
Loan and Lease Ending Balances at September 30, 2017: (1)
Portion of loan and lease ending balance:
Purchased credit-impaired loans $ 64,989
$ —
$ 64,989
Individually evaluated for impairment 566,340
621,808
1,188,148
Collectively evaluated for impairment 34,044,110
33,190,856
67,234,966
Total loans and leases evaluated for impairment $ 34,675,439
$ 33,812,664
$ 68,488,103


	At December 31, 2022
	Term Loans Amortized Cost Basis by Origination Year												Revolver Total at Amortized Cost Basis		Revolver Total Converted to Term Loans
(dollar amounts in millions)	2022		2021		2020		2019		2018		Prior						Total
Commercial and industrial
Credit Quality Indicator (1):
Pass	$	16,480	$	6,597	$	3,279	$	2,040	$	1,068	$	1,163	$	12,077	$	3	$	42,707
OLEM	108		139		72		21		49		26		112		—		527
Substandard	364		181		189		212		141		255		550		—		1,892
Doubtful	—		—		—		—		—		1		—		—		1
Total Commercial and industrial	$	16,952	$	6,917	$	3,540	$	2,273	$	1,258	$	1,445	$	12,739	$	3	$	45,127
Commercial real estate
Credit Quality Indicator (1):
Pass	$	5,634	$	3,260	$	1,616	$	1,728	$	917	$	1,044	$	1,502	$	—	$	15,701
OLEM	61		53		1		43		6		9		—		—		173
Substandard	235		118		105		75		85		140		2		—		760

Total Commercial real estate	$	5,930	$	3,431	$	1,722	$	1,846	$	1,008	$	1,193	$	1,504	$	—	$	16,634
Lease financing
Credit Quality Indicator (1):
Pass	$	1,930	$	1,291	$	952	$	447	$	186	$	143	$	—	$	—	$	4,949
OLEM	32		9		15		18		6		3		—		—		83
Substandard	65		37		74		24		9		11		—		—		220

Total Lease financing	$	2,027	$	1,337	$	1,041	$	489	$	201	$	157	$	—	$	—	$	5,252
Residential mortgage
Credit Quality Indicator (2):
750+	$	3,666	$	6,274	$	3,566	$	846	$	469	$	2,070	$	—	$	—	$	16,891
650-749	1,394		1,172		617		211		137		777		—		—		4,308
<650	49		68		61		95		90		480		—		—		843

Total Residential mortgage	$	5,109	$	7,514	$	4,244	$	1,152	$	696	$	3,327	$	—	$	—	$	22,042
Automobile
Credit Quality Indicator (2):
750+	$	2,770	$	2,212	$	1,243	$	777	$	289	$	98	$	—	$	—	$	7,389
650-749	1,944		1,508		683		367		162		52		—		—		4,716
<650	307		352		173		115		67		35		—		—		1,049

Total Automobile	$	5,021	$	4,072	$	2,099	$	1,259	$	518	$	185	$	—	$	—	$	13,154
Home equity
Credit Quality Indicator (2):
750+	$	463	$	573	$	611	$	23	$	20	$	301	$	4,787	$	252	$	7,030
650-749	131		88		68		9		8		122		2,129		261		2,816
<650	3		3		3		2		2		51		335		129		528

Total Home equity	$	597	$	664	$	682	$	34	$	30	$	474	$	7,251	$	642	$	10,374
RV and marine
Credit Quality Indicator (2):
750+	$	1,148	$	1,031	$	731	$	361	$	354	$	438	$	—	$	—	$	4,063
650-749	290		315		200		118		113		169		—		—		1,205
<650	5		18		15		17		17		36		—		—		108

Total RV and marine	$	1,443	$	1,364	$	946	$	496	$	484	$	643	$	—	$	—	$	5,376
Other consumer
Credit Quality Indicator (2):
750+	$	207	$	64	$	35	$	34	$	13	$	52	$	393	$	3	$	801
650-749	71		30		12		15		4		14		355		16		517
<650	3		3		2		3		1		2		33		14		61

Total Other consumer	$	281	$	97	$	49	$	52	$	18	$	68	$	781	$	33	$	1,379

(1)Consistent with the credit quality disclosures, indicators for the Commercial portfolio are based on internally defined categories of credit grades.

(2)Consistent with the credit quality disclosures, indicators for the Consumer portfolio are based on updated customer credit scores refreshed at least quarterly.

50 Huntington Bancshares Incorporated

(dollar amounts in thousands) Commercial Consumer Total
ALLL at December 31, 2016
Portion of ALLL balance:
Purchased credit-impaired loans $ —
$ —
$ —
Attributable to loans individually evaluated for impairment $ 10,525
$ 11,021
$ 21,546
Attributable to loans collectively evaluated for impairment 440,566
176,301
616,867
Total ALLL balance: $ 451,091
$ 187,322
$ 638,413
Loan and Lease Ending Balances at December 31, 2016 (1)
Portion of loan and lease ending balances:
Purchased credit-impaired loans $ 102,380
$ —
$ 102,380
Individually evaluated for impairment 415,624
457,890
873,514
Collectively evaluated for impairment 34,841,609
31,062,174
65,903,783
Total loans and leases evaluated for impairment $ 35,359,613
$ 31,520,064
$ 66,879,677

Table of Content


~~(1)~~	~~Excludes loans accounted for under the fair value option.~~

The following tables present the gross charge-offs of loans and leases by ~~class~~vintage.


	Term Loans Gross Charge-offs by Origination Year												Revolver Gross Charge-offs		Revolver Converted to Term Loans Gross Charge-offs
(dollar amounts in millions)	2023		2022		2021		2020		2019		Prior						Total
Three Months Ended March 31, 2023
Commercial and industrial	$	1	$	14	$	3	$	6	$	4	$	—	$	4	$	—	$	32
Commercial real estate	—		—		19		—		—		—		—		—		19
Lease Financing	—		—		—		—		—		1		—		—		1
Residential mortgage	—		—		1		—		—		1		—		—		2
Automobile	—		3		4		2		1		2		—		—		12
Home equity	—		—		—		—		—		—		1		1		2
RV and marine	—		—		1		1		1		1		—		—		4
Other consumer	1		8		5		1		1		4		—		7		27
Total	$	2	$	25	$	33	$	10	$	7	$	9	$	5	$	8	$	99

Modifications to Debtors Experiencing Financial Difficulty

Effective January 1, 2023, Huntington adopted ASU 2022-02- Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. For additional information on the ~~ending, unpaid~~adoption, refer to both Note 1 “Basis of Presentation” and Note 2 “Accounting Standards Update.”

Huntington will modify the contractual terms of loans to a borrower experiencing financial difficulties as a way to mitigate loss, proactively work with borrowers in financial difficulty, or to comply with regulations regarding the treatment of certain bankruptcy filing and discharge situations.

A debtor is considered to be experiencing financial difficulty when there is significant doubt about the debtor’s ability to make required payments on the debt or to get equivalent financing from another creditor at a market rate for similar debt. A loan placed on nonaccrual because the borrower is experiencing financial difficulty may be returned to accrual status when all contractually due interest and principal ~~balance,~~has been paid and the ~~related ALLL,~~borrower demonstrates the financial capacity to continue to pay as agreed, with the risk of loss diminished.

Reported Modification Types

Modifications in the form of principal forgiveness, an interest rate reduction, an other than insignificant payment delay or a term extension that have occurred in the current reporting period to a borrower experiencing financial difficulty are disclosed along with the ~~average balance~~financial impact of the modifications.

Huntington will generally try other forms of relief before principal forgiveness but would define any contractual reduction in the amount of principal due without receiving payment or assets as forgiveness. For the purpose of the disclosure Huntington considers any contractual change in interest rate that results in the borrower receiving a below market rate to be an interest rate reduction. Many factors can go into what is considered an other than insignificant payment delay such as the significance of the restructured payment amount relative to the normal loan payment or the relative significance of the delay to the original loan terms. Generally, Huntington would consider any delay in payment of greater than 90 days in the last 12 months to be significant. For the purpose of the disclosure modification of contingent payment features or covenants that would have accelerated payment are not considered term extensions.

2023 1Q Form 10-Q 51

Table of Content

Following is a description of what is considered a borrower experiencing financial difficulty by the different loan types:

Commercial loan modifications – Our strategy involving commercial borrowers generally includes working with these borrowers to allow them time to improve their financial position and remain a Huntington customer through restructuring their notes or to restructure elsewhere if necessary. Borrowers that are rated substandard or worse in accordance with the regulatory definition, or that cannot otherwise restructure at market terms and conditions, are considered to be experiencing financial difficulty. A subsequent restructuring or modification of a loan may occur when either the loan matures according to the terms of the modified agreement, or the borrower requests a change to the loan agreements. It is subjected to the normal underwriting standards and processes for other similar credit extensions, both new and existing. The restructured note is evaluated to determine if it is considered a new loan or a continuation of the prior loan.

Consumer loan modifications – Consumer loans in which a borrower requires a modification as a result of negative changes to their financial condition or to avoid default, generally indicate the borrower is experiencing financial difficulty. The primary modifications made to consumer loans are amortization, maturity date and interest ~~income recognized only~~rate changes. Consumer borrowers identified as experiencing financial difficulty are unable to refinance their loans through the Company’s normal origination channels or through other independent sources. Most, but not all, of the loans may be delinquent. The Company’s primary loan categories that receive modifications are residential mortgage, automobile, home equity, RV and marine, and other consumer loans.

Impact on Credit Quality of Borrowers Experiencing Financial Difficulty

Huntington’s ALLL is influenced by loan level characteristics that inform the assessed propensity to default. As such, the provision for ~~impaired~~credit losses is impacted primarily by changes in such loan level characteristics, such as payment performance. Commercial borrowers experiencing financial difficulty are risk rated to reflect the increase in default characteristics so that that the ALLL reflects the future risk of loss. Borrowers experiencing financial difficulty can be classified as either accrual or nonaccrual loans.

The following table summarizes the amortized cost basis of loans modified during the reporting period to borrowers experiencing financial difficulty, disaggregated by class of financing receivable and ~~leases and purchased credit-impaired loans:~~ type of modification.


	Amortized Cost
(dollar amounts in millions)	Interest rate reduction		Term extension		Combo - interest rate reduction and term extension		Total		% of total loan class (1)
Three months ended March 31, 2023
Commercial and industrial	$	35	$	124	$	3	$	162	0.34	%
Commercial real estate	—		48		—		48		0.29
Residential mortgage	—		23		1		24		0.11
Automobile	—		3		—		3		0.02
Home equity	—		—		3		3		0.03
RV and marine	—		1		—		1		0.02

Total loans made to borrowers experiencing financial difficulty in which modifications were made	$	35	$	199	$	7	$	241

(1)~~, (2)~~Represents the amortized cost of loans modified during the reporting period as a percentage of the period-end loan balance by class.

52 Huntington Bancshares Incorporated

Table of Content

September 30, 2017 Three Months Ended
September 30, 2017 Nine Months Ended
September 30, 2017
(dollar amounts in thousands)
Ending
Balance

Unpaid
Principal
Balance (6)

Related
Allowance

Average
Balance

Interest
Income
Recognized

Average
Balance

Interest
Income
Recognized
With no related allowance recorded:
Commercial and industrial $ 299,349
$ 324,474
$ —
$ 294,513
$ 4,969
$ 227,611
$ 7,467
Commercial real estate 65,382
92,215
—
71,277
1,825
80,388
5,762
Automobile —
—
—
—
—
—
—
Home equity —
—
—
—
—
—
—
Residential mortgage —
—
—
—
—
—
—
RV and marine finance —
—
—
—
—
—
—
Other consumer —
—
—
—
—
—
—

With an allowance recorded:
Commercial and industrial 213,520
245,328
19,958
222,745
1,950
334,297
12,712
Commercial real estate 53,078
60,366
2,880
40,672
468
54,352
1,388
Automobile 33,049
33,049
1,683
32,740
496
32,293
1,576
Home equity 335,763
367,870
14,486
330,784
3,713
326,932
11,639
Residential mortgage 310,440
341,724
8,060
319,745
2,837
329,193
8,851
RV and marine finance 1,520
1,520
88
1,425
23
884
58
Other consumer 6,456
6,456
1,288
6,944
47
7,117
184

Total
Commercial and industrial (3) 512,869
569,802
19,958
517,258
6,919
561,908
20,179
Commercial real estate (4) 118,460
152,581
2,880
111,949
2,293
134,740
7,150
Automobile (2) 33,049
33,049
1,683
32,740
496
32,293
1,576
Home equity (5) 335,763
367,870
14,486
330,784
3,713
326,932
11,639
Residential mortgage (5) 310,440
341,724
8,060
319,745
2,837
329,193
8,851
RV and marine finance (2) 1,520
1,520
88
1,425
23
884
58
Other consumer (2) 6,456
6,456
1,288
6,944
47
7,117
184
The following table describes the financial effect of the modification made to borrowers experiencing financial difficulty.


	Interest Rate Reduction				Term Extension
	Weighted-average contractual interest rate				Weighted-average years added to the life
	From		To
Three months ended March 31, 2023
Commercial and industrial	7.60	%	6.80	%	0.9
Commercial real estate					0.6
Residential mortgage	5.36		4.14		6.3
Automobile					2.1
Home equity	8.13		5.59		16.6
RV and marine					3.1

The performance of loans made to borrowers experiencing financial difficulty in which modifications were made is closely monitored to understand the effectiveness of modification efforts. Loans are considered to be in payment default at 90 or more days past due. The following table depicts the performance of loans that have been modified during the reporting period.

December 31, 2016 Three Months Ended
September 30, 2016 Nine Months Ended
September 30, 2016
(dollar amounts in thousands)
Ending
Balance

Unpaid
Principal
Balance (6)

Related
Allowance

Average
Balance

Interest
Income
Recognized

Average
Balance

Interest
Income
Recognized
With no related allowance recorded:
Commercial and industrial $ 299,606

$ 358,712

$ —

$ 305,956

$ 2,235

$ 290,163

$ 4,858
Commercial real estate 88,817

126,152

—

80,000

907

58,666

2,257
Automobile —
—
—
—
—
—
—
Home equity —

—

—

—

—

—

—
Residential mortgage —

—

—

—

—

—

—
RV and marine finance —
—
—
—
—
—
—
Other consumer —

—

—

—

—

—

—

With an allowance recorded:
Commercial and industrial 406,243
448,121
22,259
281,934
1,631
274,262
5,460
Commercial real estate 97,238
107,512
3,434
49,140
521
49,587
1,895
Automobile 30,961
31,298
1,850
31,540
541
31,912
1,643
Home equity 319,404
352,722
15,032
284,512
3,453
267,264
9,382
Residential mortgage 327,753
363,099
12,849
344,237
2,978
353,259
9,041
RV and marine finance —
—
—
—
—
—
—
Other consumer 3,897
3,897
260
4,454
58
4,627
178

Total
Commercial and industrial (3) 705,849
806,833
22,259
587,890
3,866
564,425
10,318
Commercial real estate (4) 186,055
233,664
3,434
129,140
1,428
108,253
4,152
Automobile (2) 30,961
31,298
1,850
31,540
541
31,912
1,643
Home equity (5) 319,404
352,722
15,032
284,512
3,453
267,264
9,382
Residential mortgage (5) 327,753
363,099
12,849
344,237
2,978
353,259
9,041
RV and marine finance (2) —
—
—
—
—
—
—
Other consumer (2) 3,897
3,897
260
4,454
58
4,627
178


~~(1)~~	~~These tables do not include loans fully charged-off.~~


~~(2)~~	~~All automobile, RV and marine finance and other consumer impaired loans included in these tables are considered impaired due to their status as a TDR.~~


~~(3)~~	~~At September 30, 2017 and December 31, 2016, commercial and industrial loans of $365 million and $317 million, respectively, were considered impaired due to their status as a TDR.~~


~~(4)~~	~~At September 30, 2017 and December 31, 2016, commercial real estate loans of $84 million and $81 million, respectively, were considered impaired due to their status as a TDR.~~


~~(5)~~	Includes home equity and residential mortgages considered to be collateral dependent due to their non-accrual status as well as home equity and mortgage loans considered impaired due to their status as a TDR.


~~(6)~~	~~The differences between the ending balance and unpaid principal balance amounts represent partial charge-offs.~~


	At March 31, 2023
	Past Due
(dollar amounts in millions)	30-59 Days		60-89 Days		90 or more days		Total		Current		Total
Commercial and industrial	$	—	$	—	$	—	$	—	$	162	$	162
Commercial real estate	—		—		—		—		48		48
Residential mortgage	4		4		—		8		16		24
Automobile	—		—		—		—		3		3
Home equity	—		—		—		—		3		3
RV and marine	—		—		—		—		1		1

Total loans made to borrowers experiencing financial difficulty in which modifications were made in the three months ended March 31, 2023	$	4	$	4	$	—	$	8	$	233	$	241

TDR Loans

The following provides additional disclosures previously required by ASC Subtopic 310-40, Receivables—Troubled Debt Restructurings by Creditors, related to the three months ended March 31, 2022.

TDRs are modified loans where a concession was provided to a borrower experiencing financial difficulties. Loan modifications are considered TDRs when the concessions provided ~~are~~would not ~~available to the borrower through either normal channels or other sources.~~otherwise be considered. However, not all loan modifications are TDRs. ~~Acquired, non-purchased credit impaired loans are only considered for TDR reporting for modifications made subsequent to acquisition.~~ See Note 41 “Significant Accounting Policies” and Note 5 “Loans ~~/ Leases~~ and ~~Allowance for Credit Losses”~~Leases” to the ~~consolidated financial statements of the~~Consolidated Financial Statements appearing in Huntington’s 2022 Annual Report on Form 10-K for ~~the year ended December 31, 2016 for an~~ additional discussion of TDRs.

2023 1Q Form 10-Q 53

Table of Content

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 period ended March 31, 2022.


	New Troubled Debt Restructurings (1)













	Three Months Ended March 31, 2022
	Number of Contracts	Post-modification Outstanding Recorded Investment (2)
(dollar amounts in millions)		Interest rate concession		Amortization or maturity date change		Chapter 7 bankruptcy		Total

Commercial and industrial	53	$	11	$	3	$	—	$	14
Commercial real estate	1	—		—		—		—

Residential mortgage	207	—		28		1		29
Automobile	625	—		4		1		5
Home equity	42	—		1		1		2
RV and marine	39	—		1		—		1
Other consumer	30	—		—		—		—
Total new TDRs	997	$	11	$	37	$	3	$	51

(1)TDRs may include multiple concessions and ~~nine-month periods ended September 30, 2017 and 2016.~~the disclosure classifications are based on the primary concession provided to the borrower.

New Troubled Debt Restructurings During The Three-Month Period Ended (1)
September 30, 2017 September 30, 2016
(dollar amounts in thousands)
Number of
Contracts

Post-modification
Outstanding
Ending Balance

Financial effects
of modification (2)

Number of
Contracts

Post-modification
Outstanding
Ending Balance

Financial effects
of modification (2)
Commercial and industrial:
Interest rate reduction 6
$ 817
$ —
2
$ 122
$ 6
Amortization or maturity date change 271
138,381
(837 ) 246
89,100
(1,450 )
Other —
—
—
6
711
(2 )
Total Commercial and industrial 277
139,198
(837 ) 254
89,933
(1,446 )
Commercial real estate:
Interest rate reduction —
—
—
—
—
—
Amortization or maturity date change 28
17,811
133
30
11,183
(546 )
Other —
—
—
—
—
—
Total commercial real estate: 28
17,811
133
30
11,183
(546 )
Automobile:
Interest rate reduction 5
72
3
4
26
3
Amortization or maturity date change 487
3,943
124
452
4,438
559
Chapter 7 bankruptcy 305
2,562
69
236
1,840
157
Other —
—
—
—
—
—
Total Automobile 797
6,577
196
692
6,304
719
Home equity:
Interest rate reduction 8
376
11
14
352
10
Amortization or maturity date change 160
11,676
(1,131 ) 110
6,740
(574 )
Chapter 7 bankruptcy 79
2,728
647
70
2,395
1,327
Other —
—
—
—
—
—
Total Home equity 247
14,780
(473 ) 194
9,487
763
Residential mortgage:
Interest rate reduction —
—
—
2
134
(2 )
Amortization or maturity date change 102
11,282
(272 ) 77
7,988
(220 )
Chapter 7 bankruptcy 20
1,656
(2 ) 17
1,105
(63 )
Other 1
64
2
3
260
—
Total Residential mortgage 123
13,002
(272 ) 99
9,487
(285 )
RV and marine finance:
Interest rate reduction —
—
—
—
—
—
Amortization or maturity date change 10
84
3
—
—
—
Chapter 7 bankruptcy 22
492
15
—
—
—
Other —
—
—
—
—
—
Total RV and marine finance 32
576
18
—
—
—
Other consumer:
Interest rate reduction 18
52
—
—
—
—
Amortization or maturity date change 677
3,106
1
1
16
—
Chapter 7 bankruptcy 4
24
1
1
6
—
Other —
—
—
—
—
—
Total Other consumer 699
3,182
2
2
22
—
Total new troubled debt restructurings 2,203
$ 195,126
$ (1,233 ) 1,271
$ 126,416
$ (795 )

New Troubled Debt Restructurings During The Nine-Month Period Ended (1)
September 30, 2017 September 30, 2016
(dollar amounts in thousands)
Number of
Contracts

Post-modification
Outstanding
Ending Balance

Financial effects
of modification (2)

Number of
Contracts

Post-modification
Outstanding
Ending Balance

Financial effects
of modification (2)
Commercial and industrial:
Interest rate reduction 8
$ 854
$ 6
4
$ 161
$ 5
Amortization or maturity date change 735
418,924
(8,695 ) 629
345,691
(4,368 )
Other 4
380
(27 ) 16
1,801
(4 )
Total Commercial and industrial 747
420,158
(8,716 ) 649
347,653
(4,367 )
Commercial real estate:
Interest rate reduction —
—
—
1
84
—
Amortization or maturity date change 71
74,101
(682 ) 90
60,995
(1,828 )
Other —
—
—
4
315
16
Total commercial real estate: 71
74,101
(682 ) 95
61,394
(1,812 )
Automobile:
Interest rate reduction 24
308
9
11
132
10
Amortization or maturity date change 1,298
11,097
302
1,159
11,002
981
Chapter 7 bankruptcy 743
5,878
116
797
6,384
386
Other —
—
—
—
—
—
Total Automobile 2,065
17,283
427
1,967
17,518
1,377
Home equity:
Interest rate reduction 25
1,444
24
43
2,363
103
Amortization or maturity date change 401
25,544
(2,559 ) 466
25,031
(2,592 )
Chapter 7 bankruptcy 243
8,764
2,049
215
8,106
2,327
Other 70
4,241
(326 ) —
—
—
Total Home equity 739
39,993
(812 ) 724
35,500
(162 )
Residential mortgage:
Interest rate reduction 2
110
(9 ) 12
1,195
(17 )
Amortization or maturity date change 282
30,649
(761 ) 277
29,388
(1,217 )
Chapter 7 bankruptcy 69
6,328
(139 ) 40
3,788
(42 )
Other 22
2,448
19
4
424
—
Total Residential mortgage 375
39,535
(890 ) 333
34,795
(1,276 )
RV and marine finance:
Interest rate reduction —
—
—
—
—
—
Amortization or maturity date change 34
710
19
—
—
—
Chapter 7 bankruptcy 71
1,246
25
—
—
—
Other —
—
—
—
—
—
Total RV and marine finance 105
1,956
44
—
—
—
Other consumer:
Interest rate reduction 19
130
2
—
—
—
Amortization or maturity date change 681
3,394
8
6
575
24
Chapter 7 bankruptcy 7
36
1
8
72
7
Other —
—
—
—
—
—
Total Other consumer 707
3,560
11
14
647
31
Total new troubled debt restructurings 4,809
$ 596,586
$ (10,618 ) 3,782
$ 497,507
$ (6,209 )


~~(1)~~	~~TDRs may include multiple concessions and the disclosure classifications are based on the primary concession provided to the borrower.~~


~~(2)~~	~~Amount represents the financial impact via provision for loan and lease losses as a result of the modification.~~

(2)Post-modification balances approximate pre-modification balances.

Pledged Loans ~~and Leases~~

~~At September 30, 2017, the~~The Bank has access to the Federal Reserve’s discount window and advances from the ~~FHLB – Cincinnati.~~FHLB. As of ~~September 30, 2017,~~March 31, 2023 and December 31, 2022, these borrowings and advances are secured by ~~$32.0~~$71.1 billion and $70.9 billion, respectively, of ~~loans and securities.~~loans.

5. ALLOWANCE FOR CREDIT LOSSES

~~4. AVAILABLE-FOR-SALE AND OTHER SECURITIES~~

~~Listed below are the contractual maturities of available-for-sale and other securities at September 30, 2017 and December 31, 2016.~~

September 30, 2017 December 31, 2016
(dollar amounts in thousands)
Amortized
Cost
Fair Value
Amortized
Cost
Fair Value
U.S. Treasury and Federal agency securities:
U.S. Treasury:
1 year or less $ 11,256
$ 11,260
$ 4,978
$ 4,988
After 1 year through 5 years —
—
502
509
After 5 years through 10 years —
—
—
—
After 10 years —
—
—
—
Total U.S. Treasury 11,256
11,260
5,480
5,497
Federal agencies: mortgage-backed securities:
1 year or less —
—
—
—
After 1 year through 5 years 32,749
32,515
46,591
46,762
After 5 years through 10 years 257,032
255,488
173,941
176,404
After 10 years 10,496,277
10,351,747
10,630,929
10,450,176
Total Federal agencies: mortgage-backed securities 10,786,058
10,639,750
10,851,461
10,673,342
Other agencies:
1 year or less 4,201
4,223
4,302
4,367
After 1 year through 5 years 8,892
9,034
5,092
5,247
After 5 years through 10 years 82,692
83,194
63,618
63,928
After 10 years —
—
—
—
Total other agencies 95,785
96,451
73,012
73,542
Total U.S. Treasury and Federal agency securities 10,893,099
10,747,461
10,929,953
10,752,381
Municipal securities:
1 year or less 163,747
160,032
169,636
166,887
After 1 year through 5 years 905,872
905,075
933,893
933,903
After 5 years through 10 years 1,656,860
1,655,384
1,463,459
1,464,583
After 10 years 703,350
705,618
693,440
684,684
Total municipal securities 3,429,829
3,426,109
3,260,428
3,250,057
Asset-backed securities:
1 year or less —
—
—
—
After 1 year through 5 years 80,003
80,330
80,700
80,560
After 5 years through 10 years 162,079
163,439
223,352
224,565
After 10 years 326,724
311,422
520,072
488,356
Total asset-backed securities 568,806
555,191
824,124
793,481
Corporate debt:
1 year or less 3,143
3,157
43,223
43,603
After 1 year through 5 years 66,878
68,450
78,430
80,196
After 5 years through 10 years 38,471
39,902
32,523
32,865
After 10 years 13,211
14,120
40,361
42,019
Total corporate debt 121,703
125,629
194,537
198,683
Other:
1 year or less 3,150
3,144
1,650
1,650
After 1 year through 5 years 800
791
2,302
2,283
After 5 years through 10 years —
—
—
—
After 10 years —
—
10
10
Nonmarketable equity securities 583,019
583,019
547,704
547,704
Mutual funds 10,416
10,416
15,286
15,286
Marketable equity securities 861
1,301
861
1,302
Total other 598,246
598,671
567,813
568,235
Total available-for-sale and other securities $ 15,611,683
$ 15,453,061
$ 15,776,855
$ 15,562,837

Other securities at September 30, 2017 and December 31, 2016 include non-marketable equity securities of $287 million and $249 million of stock issued by the FHLB and $296 million and $299 million of Federal Reserve Bank stock, respectively. Non-marketable equity securities are recorded at amortized cost.Allowance for Credit Losses - Roll-forward

The following tables ~~provide amortized cost, fair value,~~present ACL activity by portfolio segment for the three-month periods ended March 31, 2023 and ~~gross unrealized gains and losses recognized in OCI by investment category~~2022.


(dollar amounts in millions)	Commercial		Consumer		Total
Three-month period ended March 31, 2023:
ALLL balance, beginning of period	$	1,424	$	697	$	2,121

Loan and lease charge-offs	(52)		(47)		(99)
Recoveries of loans and leases previously charged-off	23		19		42
Provision for loan and lease losses	62		16		78


ALLL balance, end of period	$	1,457	$	685	$	2,142
AULC balance, beginning of period	$	71	$	79	$	150

Provision for unfunded lending commitments	4		3		7


AULC balance, end of period	$	75	$	82	$	157
ACL balance, end of period	$	1,532	$	767	$	2,299

54 Huntington Bancshares Incorporated

Table of Content



(dollar amounts in millions)	Commercial		Consumer		Total
Three-month period ended March 31, 2022:
ALLL balance, beginning of period	$	1,462	$	568	$	2,030

Loan and lease charge-offs	(31)		(50)		(81)
Recoveries of loans and leases previously charged-off	40		22		62
Provision (benefit) for loan and lease losses	43		(36)		7


ALLL balance, end of period	$	1,514	$	504	$	2,018
AULC balance, beginning of period	$	41	$	36	$	77

Provision (benefit) for unfunded lending commitments	16		(2)		14


AULC balance, end of period	$	57	$	34	$	91
ACL balance, end of period	$	1,571	$	538	$	2,109

At March 31, 2023, the ACL was $2.3 billion, an increase of $28 million compared to December 31, 2022.

The commercial ACL was $1.5 billion at ~~September 30, 2017~~both March 31, 2023 and December 31, ~~2016:~~

Unrealized
(dollar amounts in thousands)
Amortized
Cost

Gross
Gains

Gross
Losses
Fair Value
September 30, 2017
U.S. Treasury $ 11,256
$ 4
$ —
$ 11,260
Federal agencies:
Mortgage-backed securities 10,786,058
5,851
(152,159 ) 10,639,750
Other agencies 95,785
722
(56 ) 96,451
Total U.S. Treasury, Federal agency securities 10,893,099
6,577
(152,215 ) 10,747,461
Municipal securities 3,429,829
31,043
(34,763 ) 3,426,109
Asset-backed securities 568,806
2,409
(16,024 ) 555,191
Corporate debt 121,703
3,927
(1 ) 125,629
Other securities 598,246
439
(14 ) 598,671
Total available-for-sale and other securities $ 15,611,683
$ 44,395
$ (203,017 ) $ 15,453,061

Unrealized
(dollar amounts in thousands)
Amortized
Cost

Gross
Gains

Gross
Losses
Fair Value
December 31, 2016
U.S. Treasury $ 5,480
$ 17
$ —
$ 5,497
Federal agencies:
Mortgage-backed securities 10,851,461
12,548
(190,667 ) 10,673,342
Other agencies 73,012
536
(6 ) 73,542
Total U.S. Treasury, Federal agency securities 10,929,953
13,101
(190,673 ) 10,752,381
Municipal securities 3,260,428
28,431
(38,802 ) 3,250,057
Asset-backed securities 824,124
1,492
(32,135 ) 793,481
Corporate debt 194,537
4,161
(15 ) 198,683
Other securities 567,813
441
(19 ) 568,235
Total available-for-sale and other securities $ 15,776,855
$ 47,626
$ (261,644 ) $ 15,562,837

2022. The increase of $37 million since year end was primarily attributable to C&I loan growth.

The ~~following tables provide detail on investment securities with unrealized gross losses aggregated by investment category and~~consumer ACL was $767 million, a marginal decrease of $9 million from the ~~length of time the individual securities have been in a continuous loss position as of September 30, 2017 and~~ December 31, ~~2016.~~

Less than 12 Months Over 12 Months Total
(dollar amounts in thousands) Fair Value
Unrealized
Losses
Fair Value
Unrealized
Losses
Fair Value
Unrealized
Losses
September 30, 2017
Federal agencies:
Mortgage-backed securities $ 8,283,266
$ (125,950 ) $ 1,003,097
$ (26,209 ) $ 9,286,363
$ (152,159 )
Other agencies 11,607
(56 ) —
—
11,607
(56 )
Total Federal agency securities 8,294,873
(126,006 ) 1,003,097
(26,209 ) 9,297,970
(152,215 )
Municipal securities 1,293,344
(23,995 ) 277,157
(10,768 ) 1,570,501
(34,763 )
Asset-backed securities 199,109
(1,471 ) 122,568
(14,553 ) 321,677
(16,024 )
Corporate debt 200
(1 ) —
—
200
(1 )
Other securities 791
(8 ) 1,494
(6 ) 2,285
(14 )
Total temporarily impaired securities $ 9,788,317
$ (151,481 ) $ 1,404,316
$ (51,536 ) $ 11,192,633
$ (203,017 )

Less than 12 Months Over 12 Months Total
(dollar amounts in thousands) Fair Value
Unrealized
Losses
Fair Value
Unrealized
Losses
Fair Value
Unrealized
Losses
December 31, 2016
Federal agencies:
Mortgage-backed securities $ 8,908,470
$ (189,318 ) $ 41,706
$ (1,349 ) $ 8,950,176
$ (190,667 )
Other agencies 924
(6 ) —
—
924
(6 )
Total Federal agency securities 8,909,394
(189,324 ) 41,706
(1,349 ) 8,951,100
(190,673 )
Municipal securities 1,412,152
(29,175 ) 272,292
(9,627 ) 1,684,444
(38,802 )
Asset-backed securities 361,185
(3,043 ) 178,924
(29,092 ) 540,109
(32,135 )
Corporate debt 3,567
(15 ) 200
—
3,767
(15 )
Other securities 790
(11 ) 1,492
(8 ) 2,282
(19 )
Total temporarily impaired securities $ 10,687,088
$ (221,568 ) $ 494,614
$ (40,076 ) $ 11,181,702
$ (261,644 )

~~At September 30, 2017 and December 31, 2016, the carrying value~~2022 balance of ~~investment securities pledged~~$776 million, primarily attributable to secure public and trust deposits, trading account liabilities, U.S. Treasury demand notes, and security repurchase agreements totaled $6.2 billion and $5.0 billion, respectively. There were no securities of a ~~single issuer, which are not governmental or government-sponsored, that exceeded 10% of shareholders’ equity~~reduction in other consumer balances at ~~either September 30, 2017 or December 31, 2016.~~

~~The following table is a summary of realized securities gains and losses for the three-month and nine-month periods ended September 30, 2017 and 2016, respectively.~~

Three Months Ended
September 30, Nine Months Ended
September 30,
(dollar amounts in thousands) 2017 2016 2017 2016
Gross gains on sales of securities $ 4,201
$ 3,770
$ 8,311
$ 7,161
Gross (losses) on sales of securities (4,130 ) (2,739 ) (4,530 ) (5,398 )
Net gain on sales of securities $ 71
$ 1,031
$ 3,781
$ 1,763
OTTI recognized in earnings (104 ) —
(3,687 ) (76 )
Net securities gains (losses) $ (33 ) $ 1,031
$ 94
$ 1,687

~~Security Impairment~~

Huntington evaluates the available-for-sale securities portfolio on a quarterly basis for impairment and conducts a comprehensive security-level assessment on all available-for-sale securities. Impairment exists when the present value of the expected cash flows are not sufficient to recover the entire amortized cost basis at the balance sheet date. Under these circumstances, any credit impairment would be recognized in earnings. At the end of first quarter.

The baseline economic scenario used in the March 31, 2023 ACL determination included the federal funds rate projected to peak at approximately 4.8% in the second quarter of ~~2017, Huntington changed its intent from able and willing~~2023 as the Federal Reserve continues to hold to sell sometime in the near future prior to final maturity for the two Reg Diversified CDO securities. Related to this change in intent, Huntington estimated the fair value of these bonds by obtaining bids.address elevated inflation levels. As a result, inflation is forecast to drop from an estimated 8.0% in 2022 to 2.4% by 2024. However, unemployment is expected to gradually increase to a projected level of this analysis, Huntington recognized $3.6 million of OTTI on these two securities. In addition, Huntington recognized an additional $0.1 million of OTTI in the 2017 third quarter relating an investment in the Municipal Securities portfolio. For all other securities, Huntington does not intend to sell, nor does it believe it will be required to sell these securities until the amortized cost is recovered, which may be at maturity.4.0% by Q4 2024.

The ~~highest risk investments in the portfolio are the trust-preferred CDO securities which are in the asset-backed securities portfolio. This portfolio is in runoff,~~economic scenarios used included elevated levels of economic uncertainty associated with geopolitical instability, high inflation readings, and the ~~Company has not purchased these types~~expected path of ~~securities since 2005. The fair values of~~interest rate increases by the ~~CDO assets have been impacted by various market conditions. The unrealized losses are primarily~~Federal Reserve. Given the ~~result of wider liquidity spreads on asset-backed securities and~~uncertainty associated with key economic scenario assumptions, the ~~longer expected average lives of the trust-preferred CDO securities, due to changes in the expectations of when the underlying securities will be repaid.~~

~~Collateralized Debt Obligations~~ ~~are backed by~~March 31, 2023 ACL included a ~~pool of debt securities issued by financial institutions. The collateral generally~~general reserve that consists of ~~trust-preferred securities and subordinated debt securities issued by banks, bank holding companies, and insurance companies. Many collateral issuers have~~various risk profile components to capture uncertainty not addressed within the option of deferring interest payments on their debt for up to five years. A full cash flow analysis is used to estimate fair values and assess impairment for each security within this portfolio. A third-party pricing specialist with direct industry experience in pooled-trust-preferred security evaluations is engaged to provide assistance estimating the fair value and expected cash flows on this portfolio. The full cash flow analysis is completed by evaluating the relevant credit and structural aspects of each pooled-trust-preferred security in the portfolio, including collateral performance projections for each piece of collateral in the security and terms of the security’s structure. The credit review includes an analysis of profitability, credit quality, operating efficiency, leverage, and liquidity using available financial and regulatory information for each underlying collateral issuer. The analysis also includes a review of historical industry default data, current / near-term operating conditions, and the impact of macroeconomic and regulatory changes. Using the results of the analysis, the Company estimates appropriate default and recovery probabilities for each piece of collateral, then estimates the expected cash flows for each security. The fair value of each security is obtained by discounting the expected cash flows at a market discount rate. The market discount rate is determined by reference to yields observed in the market for similarly rated collateralized debt obligations, specifically high-yield collateralized loan obligations. The relatively high market discount rate is reflective of the uncertainty of the cash flows and illiquid nature of these securities. The large differential between the fair value and amortized cost of some of the securities reflects the high market discount rate and the expectation that the majority of the cash flows will not be received until near the final maturity of the security (the final maturities range from 2032 to 2035).quantitative transaction reserve.

The following table summarizes the relevant characteristics of the Company's CDO securities portfolio, which are included in asset-backed securities, at September 30, 2017. Each security is part of a pool of issuers and supports a more senior tranche of securities except for the MM Comm III securities, which are the most senior class.

~~Collateralized Debt Obligation Securities~~

(dollar amounts in thousands)
Lowest
Credit
Rating
(2)

# of Issuers
Currently
Performing/
Remaining (3)

Actual
Deferrals
and
Defaults
as a % of
Original
Collateral

Expected
Defaults
as a % of
Remaining
Performing
Collateral

Excess
Subordination
(4)
Deal Name Par Value
Amortized
Cost

Fair
Value

Unrealized
Loss (1)

MM Comm III 4,509
4,308
3,641
(667 ) BB+ 5/8 5 7 34
Reg Diversified 25,500
100
510
410
D
— — —
Tropic III 31,000
30,989
19,976
(11,013 ) BB 27/36 16 6 41
Total at September 30, 2017 $ 61,009
$ 35,397
$ 24,127
$ (11,270 )
Total at December 31, 2016 $ 137,197
$ 101,210
$ 76,003
$ (25,207 )


~~(1)~~	~~The majority of securities have been in a continuous loss position for 12 months or longer.~~


~~(2)~~	~~For purposes of comparability, the lowest credit rating expressed is equivalent to Fitch ratings even where the lowest rating is based on another nationally recognized credit rating agency.~~


~~(3)~~	~~Includes both banks and/or insurance companies.~~

~~(4)~~

Excess subordination percentage represents the additional defaults in excess of both current and projected defaults that the CDO can absorb before the bond experiences credit impairment. Excess subordinated percentage is calculated by (a) determining what percentage of defaults a deal can experience before the bond has credit impairment, and (b) subtracting from this default breakage percentage both total current and expected future default percentages.

For the three-month and nine-month periods ended September 30, 2017 and 2016, the following table summarizes by security type the total OTTI losses recognized in the Unaudited Condensed Consolidated Statements of Income for securities evaluated for impairment as described above.

Three Months Ended
September 30, Nine Months Ended
September 30,
(dollar amounts in thousands) 2017 2016 2017 2016
Available-for-sale and other securities:
Collateralized Debt Obligations $ —
$ —
$ 3,559
$ —
Municipal Securities 104
—
128
76
Total available-for-sale and other securities $ 104
$ —
$ 3,687
$ 76

~~The following table presents the OTTI recognized in earnings on debt securities held by Huntington for the three-month and nine-month periods ended September 30, 2017 and 2016, respectively.~~

Three Months Ended
September 30, Nine Months Ended
September 30,
(dollar amounts in thousands) 2017 2016 2017 2016
Balance, beginning of period $ 10,821
$ 9,831
$ 11,796
$ 18,368
Reductions from sales (5,373 ) (76 ) (9,931 ) (8,689 )
Additional credit losses 104
—
3,687
76
Balance, end of period $ 5,552
$ 9,755
$ 5,552
$ 9,755

~~5. HELD-TO-MATURITY SECURITIES~~

Held-to-maturity securities are debt securities that Huntington has the intent and ability to hold until maturity. The debt securities are carried at amortized cost and adjusted for amortization of premiums and accretion of discounts using the interest method.

During the second quarter of 2017, Huntington transferred $1.0 billion of mortgage-backed and other agency securities from the available-for-sale securities portfolio to the held-to-maturity securities portfolio. The securities were reclassified at fair value at the date of transfer. At the time of the transfer, $13.5 million of unrealized net losses were recognized in OCI. The amounts in OCI will be recognized in earnings over the remaining life of the securities as an offset to the adjustment of yield in a manner consistent with the amortization of the premium on the same transferred securities, resulting in an immaterial impact on net income.

~~Listed below are the contractual maturities of held-to-maturity securities at September 30, 2017 and December 31, 2016.~~

September 30, 2017 December 31, 2016
(dollar amounts in thousands)
Amortized
Cost

Fair
Value

Amortized
Cost

Fair
Value
Federal agencies mortgage-backed securities:
1 year or less $ —
$ —
$ —
$ —
After 1 year through 5 years —
—
—
—
After 5 years through 10 years 68,668
68,478
41,261
40,791
After 10 years 8,067,957
8,035,777
7,157,083
7,139,943
Total Federal agencies mortgage-backed securities 8,136,625
8,104,255
7,198,344
7,180,734
Other agencies:
1 year or less —
—
—
—
After 1 year through 5 years —
—
—
—
After 5 years through 10 years 375,580
376,393
398,341
399,452
After 10 years 170,628
169,741
204,083
201,180
Total other agencies 546,208
546,134
602,424
600,632
Total Federal agencies 8,682,833
8,650,389
7,800,768
7,781,366
Municipal securities:
1 year or less —
—
—
—
After 1 year through 5 years —
—
—
—
After 5 years through 10 years —
—
—
—
After 10 years 5,566
5,416
6,171
5,902
Total municipal securities 5,566
5,416
6,171
5,902
Total held-to-maturity securities $ 8,688,399
$ 8,655,805
$ 7,806,939
$ 7,787,268

~~The following table provides amortized cost, gross unrealized gains and losses, and fair value by investment category at September 30, 2017 and December 31, 2016.~~

Unrealized
(dollar amounts in thousands)
Amortized
Cost

Gross
Gains

Gross
Losses
Fair Value
September 30, 2017
Federal agencies:
Mortgage-backed securities $ 8,136,625
$ 14,868
$ (47,238 ) $ 8,104,255
Other agencies 546,208
1,697
(1,771 ) 546,134
Total Federal agencies 8,682,833
16,565
(49,009 ) 8,650,389
Municipal securities 5,566
—
(150 ) 5,416
Total held-to-maturity securities $ 8,688,399
$ 16,565
$ (49,159 ) $ 8,655,805

Unrealized
(dollar amounts in thousands)
Amortized
Cost

Gross
Gains

Gross
Losses
Fair Value
December 31, 2016
Federal agencies:
Mortgage-backed securities $ 7,198,344
$ 20,883
$ (38,493 ) $ 7,180,734
Other agencies 602,424
1,690
(3,482 ) 600,632
Total Federal agencies 7,800,768
22,573
(41,975 ) 7,781,366
Municipal securities 6,171
—
(269 ) 5,902
Total held-to-maturity securities $ 7,806,939
$ 22,573
$ (42,244 ) $ 7,787,268

The following tables provide detail on held-to-maturity securities with unrealized gross losses aggregated by investment category and the length of time the individual securities have been in a continuous loss position, at September 30, 2017 and December 31, 2016.

Less than 12 Months Over 12 Months Total
(dollar amounts in thousands) Fair
Value Unrealized
Losses Fair
Value Unrealized
Losses Fair
Value Unrealized
Losses
September 30, 2017
Federal agencies:
Mortgage-backed securities $ 5,729,896
$ (38,204 ) $ 301,637
$ (9,034 ) $ 6,031,533
$ (47,238 )
Other agencies 248,109
(1,771 ) —
—
248,109
(1,771 )
Total Federal agencies 5,978,005
(39,975 ) 301,637
(9,034 ) 6,279,642
(49,009 )
Municipal securities —
—
5,416
(150 ) 5,416
(150 )
Total temporarily impaired securities $ 5,978,005
$ (39,975 ) $ 307,053
$ (9,184 ) $ 6,285,058
$ (49,159 )

Less than 12 Months Over 12 Months Total
(dollar amounts in thousands)
Fair
Value

Unrealized
Losses

Fair
Value

Unrealized
Losses

Fair
Value

Unrealized
Losses
December 31, 2016
Federal agencies:
Mortgage-backed securities $ 2,855,360
$ (31,470 ) $ 186,226
$ (7,023 ) $ 3,041,586
$ (38,493 )
Other agencies 413,207
(3,482 ) —
—
413,207
(3,482 )
Total Federal agencies 3,268,567
(34,952 ) 186,226
(7,023 ) 3,454,793
(41,975 )
Municipal securities 5,902
(269 ) —
—
5,902
(269 )
Total temporarily impaired securities $ 3,274,469
$ (35,221 ) $ 186,226
$ (7,023 ) $ 3,460,695
$ (42,244 )

~~Security Impairment~~

Huntington evaluates the held-to-maturity securities portfolio on a quarterly basis for impairment. Impairment exists when the present value of the expected cash flows is not sufficient to recover the entire amortized cost basis at the balance sheet date. Under these circumstances, any impairment would be recognized in earnings. As of September 30, 2017, Management has evaluated held-to-maturity securities with unrealized losses for impairment and concluded no OTTI is required.

6. MORTGAGE LOAN SALES AND ~~SECURITIZATIONS~~SERVICING RIGHTS

Residential Mortgage ~~Loans~~Portfolio

The following table summarizes activity relating to residential mortgage loans sold with servicing retained for the three-month ~~and nine-month~~ periods ended ~~September 30, 2017~~March 31, 2023 and ~~2016.~~2022:


	Three Months Ended March 31,
(dollar amounts in millions)	2023		2022
Residential mortgage loans sold with servicing retained	$	862	$	1,934
Pretax gains resulting from above loan sales (1)	7		59

Three Months Ended
September 30, Nine Months Ended
September 30,
(dollar amounts in thousands) 2017 2016 2017 2016
Residential mortgage loans sold with servicing retained $ 1,178,955
$ 1,204,547
$ 2,824,707
$ 2,552,602
Pretax gains resulting from above loan sales (1) 26,880
32,073
66,014
64,804


~~(1)~~	(1)Recorded ~~in mortgage banking income.~~

A mortgage servicing right (MSR) is established only when the servicing is contractually separated from the underlying mortgage loans by sale or securitization of the loans with servicing rights retained. At initial recognition, the MSR asset is established at its fair value using assumptions consistent with assumptions used to estimate the fair value of existing MSRs. Subsequent to the initial recognition, MSRs may be measured using either the fair value method or the amortization method. The election of the fair value method or amortization method is made at the time each servicing class is established. Subsequently, servicing rights are accounted for based on the methodology chosen for each respective servicing class. Any

increase or decrease in the fair value of MSRs carried under the fair value method, as well as amortization or impairment of MSRs recorded using the amortization method, during the period is recorded as an increase or decrease in mortgage banking ~~income, which is reflected in noninterest income in the Unaudited Condensed Consolidated Statements~~income.

2023 1Q Form 10-Q 55

Table of ~~Income.~~Content

The following ~~tables summarize~~table summarizes the changes in MSRs recorded using ~~either~~ the fair value method ~~or the amortization method~~ for the three-month ~~and nine-month~~ periods ended ~~September 30, 2017~~March 31, 2023 and ~~2016.~~2022:


	Three Months Ended March 31,
(dollar amounts in millions)	2023		2022
Fair value, beginning of period	$	494	$	351


New servicing assets created	13		29
Change in fair value during the period due to:
Time decay (1)	(6)		(5)
Payoffs (2)	(4)		(10)
Changes in valuation inputs or assumptions (3)	(12)		51
Fair value, end of period	$	485	$	416

Fair Value Method: Three Months Ended
September 30, Nine Months Ended
September 30,
(dollar amounts in thousands) 2017 2016 2017 2016
Fair value, beginning of period $ 12,528
$ 13,105
$ 13,747
$ 17,585
Change in fair value during the period due to:
Time decay (1) (202 ) (217 ) (649 ) (734 )
Payoffs (2) (295 ) (423 ) (876 ) (1,392 )
Changes in valuation inputs or assumptions (3) (278 ) (37 ) (469 ) (3,031 )
Fair value, end of period: $ 11,753
$ 12,428
$ 11,753
$ 12,428
Weighted-average life (years) 5.5
5.1
5.5
5.1
(1)Represents decrease in value due to passage of time, including the impact from both regularly scheduled principal payments and partial loan paydowns.


~~(1)~~	~~Represents decrease in value due to passage of time, including the impact from both regularly scheduled loan principal payments and partial loan paydowns.~~


~~(2)~~	~~Represents decrease in value associated with loans that paid off during the period.~~


~~(3)~~	~~Represents change in value resulting primarily from market-driven changes in interest rates and prepayment speeds.~~

(2)Represents decrease in value associated with loans that paid off during the period.

Amortization Method: Three Months Ended
September 30, Nine Months Ended
September 30,
(dollar amounts in thousands) 2017 2016 2017 2016
Carrying value, beginning of period $ 176,491
$ 121,292
$ 172,466
$ 143,133
New servicing assets created 12,841
12,434
30,694
25,820
Servicing assets acquired —
15,317
—
15,317
Impairment (charge) / recovery 688
2,543
(318 ) (21,093 )
Amortization and other (6,995 ) (7,194 ) (19,817 ) (18,785 )
Carrying value, end of period $ 183,025
$ 144,392
$ 183,025
$ 144,392
Fair value, end of period $ 183,583
$ 144,623
$ 183,583
$ 144,623
Weighted-average life (years) 7.0
6.1
7.0
6.1

(3)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~~readily observable prices. ~~While sales of MSRs occur, the precise terms and conditions are typically not readily available.~~ Therefore, the fair value of MSRs is estimated using a discounted future cash flow model. The model considers portfolio characteristics, contractually-specified servicing fees and assumptions related to prepayments, delinquency rates, late charges, other ancillary revenues, costs to service, and other economic factors. Changes in the assumptions used may have a significant impact on the valuation of MSRs.

MSR values are sensitive to ~~movements~~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~~are impacted by the level of prepayments. ~~Huntington hedges the value of the MSRs against changes in value attributable to changes in interest rates using a combination of derivative instruments and trading securities.~~

~~For MSRs under the fair value method, a~~A summary of key assumptions and the sensitivity of the MSR value ~~at September 30, 2017 and December 31, 2016,~~ to changes in these assumptions ~~is shown in the table below.~~

September 30, 2017 December 31, 2016
Decline in fair value due to Decline in fair value due to
(dollar amounts in thousands) Actual
10%
adverse
change

20%
adverse
change
Actual
10%
adverse
change

20%
adverse
change
Constant prepayment rate (annualized)
12.10 % $ (472 ) $ (910 ) 10.90 % $ (501 ) $ (970 )
Spread over forward interest rate swap rates 813 bps (436 ) (823 ) 536 bps (454 ) (879 )

~~For MSRs under the amortization method, a summary of key assumptions and the sensitivity of the MSR value~~ at ~~September 30, 2017~~March 31, 2023, and December 31, ~~2016, to changes in these assumptions is shown in the table below.~~2022 follows:


																		At March 31, 2023							At December 31, 2022
	September 30, 2017								December 31, 2016												Decline in fair value due to							Decline in fair value due to
			Decline in fair value due to								Decline in fair value due to
(dollar amounts in thousands)	Actual		10% adverse change			20% adverse change			Actual		10% adverse change			20% adverse change
(dollar amounts in millions)																	(dollar amounts in millions)	Actual			10% adverse change		20% adverse change		Actual			10% adverse change		20% adverse change
Constant prepayment rate (annualized)	8.40	%	$	(5,172	)	$	(10,038	)	7.80	%	$	(4,510	)	$	(8,763	)	Constant prepayment rate (annualized)	7.76	%		$	(13)	$	(26)	7.05	%		$	(13)	$	(25)
Spread over forward interest rate swap rates	1,041	bps	(6,866		)	(12,934		)	1,173	bps	(5,259		)	(10,195		)	Spread over forward interest rate swap rates	575		bps	(11)		(22)		578		bps	(12)		(22)

Total servicing, late and other ancillary fees included in mortgage banking income ~~amounted to $14~~was $24 million and ~~$13~~$22 million for the three-month periods ended ~~September 30, 2017~~March 31, 2023 and ~~2016. For the nine-month periods ended September 30, 2017 and 2016, total net servicing fees included in mortgage banking income were $42 million and $36 million.~~2022, respectively. The unpaid principal balance of residential mortgage loans serviced for third parties was ~~$19.3~~$32.5 billion and ~~$18.9~~$32.4 billion at ~~September 30, 2017~~March 31, 2023 and December 31, ~~2016,~~2022, respectively.

~~Automobile Loans~~

~~Huntington has retained servicing responsibilities on sold automobile loans~~7. BORROWINGS

Borrowings with original maturities of one year or less are classified as short-term and receives annual servicing fees and other ancillary fees on the outstanding loan balances. Automobile loan servicing rights are accounted for using the amortization method. A servicing asset is established at fair value at the timewere comprised of the sale. The servicing asset is then amortized against servicing income. Impairment, if any, is recognized when carrying value exceeds the fair value as determined by calculating the present value of expected net future cash flows. The primary risk characteristic for measuring servicing assets is payoff rates of the underlying loan pools. Valuation calculations rely on the predicted payoff assumption and, if actual payoff is quicker than expected, then future value would be impaired

~~Changes in the carrying value of automobile loan servicing rights for the three-month and nine-month periods ended September 30, 2017 and 2016, and the fair value~~following at ~~the end of each period were as shown in the table below.~~

Three Months Ended
September 30, Nine Months Ended
September 30,
(dollar amounts in thousands) 2017 2016 2017 2016
Carrying value, beginning of period $ 12,524
$ 5,458
$ 18,285
$ 8,771
Amortization and other (2,338 ) (1,087 ) (8,099 ) (4,400 )
Carrying value, end of period $ 10,186
$ 4,371
$ 10,186
$ 4,371
Fair value, end of period $ 10,398
$ 4,366
$ 10,398
$ 4,366
Weighted-average contractual life (years) 3.7
3.2
3.7
3.2

~~A summary of key assumptions and the sensitivity of the automobile loan servicing rights value to changes in these assumptions at September 30, 2017~~March 31, 2023 and December 31, ~~2016 is shown in~~2022, respectively:


(dollar amounts in millions)	At March 31, 2023		At December 31, 2022
Federal funds purchased and securities sold under agreements to repurchase	$	403	$	253
FHLB advances	6,450		1,700

Other borrowings	45		74
Total short-term borrowings	$	6,898	$	2,027

56 Huntington Bancshares Incorporated

Table of Content

Huntington’s long-term debt consisted of the ~~table below.~~following at March 31, 2023 and December 31, 2022, respectively:


(dollar amounts in millions)	At March 31, 2023		At December 31, 2022
The Parent Company:
Senior Notes	$	3,057	$	3,005





Subordinated Notes	768		975







Total notes issued by the parent	3,825		3,980
The Bank:
Senior Notes	4,309		4,272











Subordinated Notes	659		651


Total notes issued by the bank	4,968		4,923
FHLB Advances	3,709		211

Other	570		572





Total long-term debt	$	13,072	$	9,686

8. OTHER COMPREHENSIVE INCOME

September 30, 2017 December 31, 2016
Decline in fair value due to Decline in fair value due to
(dollar amounts in thousands) Actual 10%
adverse
change 20%
adverse
change Actual 10%
adverse
change 20%
adverse
change
Constant prepayment rate (annualized)
23.66 % $ (586 ) $ (1,112 ) 19.98 % $ (1,047 ) $ (2,026 )
Spread over forward interest rate swap rates 500 bps (14 ) (27 ) 500 bps (26 ) (53 )

~~Servicing income amounted to $4 million and $2 million~~The components of Huntington’s OCI for the three-month periods ~~ending September 30, 2017,~~ended March 31, 2023 and ~~2016. For the nine-month periods ended September 30, 2017~~2022, were as follows:


(dollar amounts in millions)	Pretax		Tax (expense) benefit		After-tax
Three Months Ended March 31, 2023

Unrealized gains (losses) on available-for-sale securities arising during the period	$	379	$	(87)	$	292
Reclassification adjustment for realized net losses included in net income	3		(1)		2
Total unrealized gains (losses) on available-for-sale securities	382		(88)		294

Net impact of fair value hedges on available-for-sale securities	(182)		42		(140)
Unrealized gains (losses) on cash flow hedges during the period	231		(53)		178
Reclassification adjustment for cash flow hedges included in net income	12		(1)		11
Net change related to cash flow hedges on loans	243		(54)		189




Other comprehensive income (loss)	$	443	$	(100)	$	343
Three Months Ended March 31, 2022

Unrealized gains (losses) on available-for-sale securities arising during the period	$	(1,540)	$	354	$	(1,186)
Reclassification adjustment for realized net losses included in net income	9		(2)		7
Total unrealized gains (losses) on available-for-sale securities	(1,531)		352		(1,179)



Net impact of fair value hedges on available-for-sale securities	431		(99)		332
Net change related to cash flow hedges on loans	(310)		70		(240)
Foreign currency translation adjustment (1)	2		—		2
Net unrealized gains (losses) on net investment hedges	(2)		—		(2)
Translation adjustments, net of hedges (1)	—		—		—
Change in accumulated unrealized gains for pension and other post-retirement obligations	3		(1)		2
Other comprehensive income (loss)	$	(1,407)	$	322	$	(1,085)

(1)Foreign investments are deemed to be permanent in nature and, ~~2016, total servicing income was $14 million and $6 million, respectively. The unpaid principal balance~~therefore, Huntington does not provide for taxes on foreign currency translation adjustments.

2023 1Q Form 10-Q 57

Table of ~~automobile loans serviced for third parties was $1.2 billion and $1.7 billion at September 30, 2017 and December 31, 2016, respectively.~~

~~Small Business Administration (SBA) Portfolio~~

~~The following table summarizes activity relating to SBA loans sold with servicing retained for the three-month and nine-month periods ended September 30, 2017 and 2016.~~

Content

Three Months Ended
September 30, Nine Months Ended
September 30,
(dollar amounts in thousands) 2017 2016 2017 2016
SBA loans sold with servicing retained $ 107,259
$ 62,803
$ 272,635
$ 167,321
Pretax gains resulting from above loan sales (1) 8,508
4,679
21,435
12,862


~~(1)~~	~~Recorded in gain on sale of loans.~~

Huntington has retained servicing responsibilities on sold SBA loans and receives annual servicing fees on the outstanding loan balances. SBA loan servicing rights are accounted for using the amortization method. A servicing asset is established at fair value at the time of the sale using a discounted future cash flow model. The servicing asset is then amortized against servicing income. Impairment, if any, is recognized when carrying value exceeds the fair value as determined by calculating the present value of expected net future cash flows.

~~The following tables summarize the changes~~Activity in ~~the carrying value of the servicing asset for the three-month and nine-month periods ended September 30, 2017 and 2016. The fair value at~~ ~~the end of each period is shown in the table below.~~

Three Months Ended
September 30, Nine Months Ended
September 30,
(dollar amounts in thousands) 2017 2016 2017 2016
Carrying value, beginning of period $ 23,113
$ 19,612
$ 21,080
$ 19,747
New servicing assets created 3,591
1,879
9,187
5,259
Amortization and other (1,923 ) (1,745 ) (5,486 ) (5,260 )
Carrying value, end of period $ 24,781
$ 19,746
$ 24,781
$ 19,746
Fair value, end of period $ 28,822
$ 24,065
$ 28,822
$ 24,065
Weighted-average life (years) 3.3
3.3
3.3
3.3

~~A summary of key assumptions and the sensitivity of the SBA loan servicing rights value to changes in these assumptions at September 30, 2017 and December 31, 2016 is shown in the table below.~~

September 30, 2017 December 31, 2016
Decline in fair value due to Decline in fair value due to
(dollar amounts in thousands) Actual
10%
adverse
change

20%
adverse
change
Actual
10%
adverse
change

20%
adverse
change
Constant prepayment rate (annualized)
7.50 % $ (385 ) $ (764 ) 7.40 % $ (324 ) $ (644 )
Discount rate 15.00
(774 ) (1,516 ) 15.00
(1,270 ) (1,870 )

~~Servicing income amounted to $3 million and $2 million~~accumulated OCI for the three-month periods ~~ending September 30, 2017,~~ended March 31, 2023 and ~~2016, respectively. For the nine-month periods ended September 30, 2017~~2022, were as follows:


(dollar amounts in millions)	Unrealized gains (losses) on available-for-sale securities (1)		Net impact of fair value hedges on available-for-sale securities		Net change related to cash flow hedges on loans		Translation adjustments, net of hedges		Unrealized gains (losses) for pension and other post- retirement obligations		Total
Three Months Ended March 31, 2023
Balance, beginning of period	$	(3,002)	$	754	$	(632)	$	(8)	$	(210)	$	(3,098)

Other comprehensive income (loss) before reclassifications	292		(140)		178		—		—		330
Amounts reclassified from accumulated OCI to earnings	2		—		11		—		—		13
Period change	294		(140)		189		—		—		343
Balance, end of period	$	(2,708)	$	614	$	(443)	$	(8)	$	(210)	$	(2,755)

Three Months Ended March 31, 2022
Balance, beginning of period	$	(153)	$	89	$	63	$	(3)	$	(225)	$	(229)

Other comprehensive income (loss) before reclassifications	(1,186)		332		(240)		—		—		(1,094)
Amounts reclassified from accumulated OCI to earnings	7		—		—		—		2		9
Period change	(1,179)		332		(240)		—		2		(1,085)

Balance, end of period	$	(1,332)	$	421	$	(177)	$	(3)	$	(223)	$	(1,314)

(1)AOCI amounts at March 31, 2023 and ~~2016, total servicing income was $8~~March 31, 2022 include $64 million and $7$78 million, ~~respectively. The unpaid principal balance~~respectively, of ~~SBA loans serviced for third parties was $1.3 billion and $1.1 billion at September 30, 2017 and December 31, 2016, respectively.~~

7. ~~LONG-TERM DEBT~~

~~In March 2017,~~net unrealized losses (after-tax) on securities transferred from the ~~Bank issued $0.7 billion of senior notes at 99.994% of face value. The senior notes mature on March 10, 2020 and have a fixed coupon rate of 2.375%. The senior notes may be redeemed one month prior~~available-for-sale securities portfolio to the ~~maturity date at 100%~~held-to-maturity securities portfolio. The net unrealized losses will be recognized in earnings over the remaining life of ~~principal plus accrued and unpaid interest. Also, in March 2017,~~ the ~~Bank issued $0.3 billion of senior notes at 100% of face value. The senior notes mature on March 10, 2020 and have a variable coupon rate of three month LIBOR + 51 basis points.~~security using the effective interest method.

In August 2017, the Bank issued $0.7 billion of senior notes at 99.762% of face value. The senior notes mature on August 7, 2022 and have a fixed coupon rate of 2.50%. The senior notes may be redeemed one month prior to the maturity date at 100% of principal plus accrued and unpaid interest.

9. SHAREHOLDERS' EQUITY

8. ~~OTHER COMPREHENSIVE INCOME~~

~~The components of other comprehensive income for the three-month and nine-month periods ended September 30, 2017 and 2016, were as shown in the following table.~~

Three Months Ended
September 30, 2017
Tax (Expense)
(dollar amounts in thousands) Pretax Benefit After-tax
Noncredit-related impairment recoveries (losses) on debt securities not expected to be sold $ 410
$ (145 ) $ 265
Unrealized holding gains (losses) on available-for-sale debt securities arising during the period (42,429 ) 14,828
(27,601 )
Less: Reclassification adjustment for net losses (gains) included in net income 8,715
(3,082 ) 5,633
Net change in unrealized holding gains (losses) on available-for-sale debt securities (33,304 ) 11,601
(21,703 )
Unrealized gains (losses) on derivatives used in cash flow hedging relationships arising during the period 1,885
(660 ) 1,225
Less: Reclassification adjustment for net (gains) losses included in net income 144
(51 ) 93
Net change in unrealized gains (losses) on derivatives used in cash flow hedging relationships 2,029
(711 ) 1,318
Net change in pension and other post-retirement obligations 1,198
(419 ) 779
Total other comprehensive income (loss) $ (30,077 ) $ 10,471
$ (19,606 )

Three Months Ended
September 30, 2016
Tax (Expense)
(dollar amounts in thousands) Pretax Benefit After-tax
Noncredit-related impairment recoveries (losses) on debt securities not expected to be sold $ 2,002
$ (708 ) $ 1,294
Unrealized holding gains (losses) on available-for-sale debt securities arising during the period (54,109 ) 18,604
(35,505 )
Less: Reclassification adjustment for net losses (gains) included in net income 726
(257 ) 469
Net change in unrealized holding gains (losses) on available-for-sale debt securities (51,381 ) 17,639
(33,742 )
Unrealized gains (losses) on derivatives used in cash flow hedging relationships arising during the period (8,171 ) 2,860
(5,311 )
Less: Reclassification adjustment for net (gains) losses included in net income 123
(44 ) 79
Net change in unrealized gains (losses) on derivatives used in cash flow hedging relationships (8,048 ) 2,816
(5,232 )
Net change in pension and other post-retirement obligations 1,293
(452 ) 841
Total other comprehensive income (loss) $ (58,136 ) $ 20,003
$ (38,133 )

Nine Months Ended
September 30, 2017
Tax (expense)
(dollar amounts in thousands) Pretax Benefit After-tax
Noncredit-related impairment recoveries (losses) on debt securities not expected to be sold $ 3,698
$ (1,307 ) $ 2,391
Unrealized holding gains (losses) on available-for-sale debt securities arising during the period 19,853
(6,779 ) 13,074
Less: Reclassification adjustment for net losses (gains) included in net income 18,577
(6,570 ) 12,007
Net change in unrealized holding gains (losses) on available-for-sale debt securities 42,128
(14,656 ) 27,472
Unrealized gains (losses) on derivatives used in cash flow hedging relationships arising during the period 1,274
(446 ) 828
Less: Reclassification adjustment for net (gains) losses included in net income 1,131
(396 ) 735
Net change in unrealized gains (losses) on derivatives used in cash flow hedging relationships 2,405
(842 ) 1,563
Net change in pension and other post-retirement obligations 3,104
(1,086 ) 2,018
Total other comprehensive income (loss) $ 47,637
$ (16,584 ) $ 31,053

Nine Months Ended
September 30, 2016
Tax (expense)
(dollar amounts in thousands) Pretax Benefit After-tax
Noncredit-related impairment recoveries (losses) on debt securities not expected to be sold $ (600 ) $ 212
$ (388 )
Unrealized holding gains (losses) on available-for-sale debt securities arising during the period 76,637
(28,315 ) 48,322
Less: Reclassification adjustment for net losses (gains) included in net income (2,032 ) 718
(1,314 )
Net change in unrealized holding gains (losses) on available-for-sale debt securities 74,005
(27,385 ) 46,620
Net change in unrealized holding gains (losses) on available-for-sale equity securities 170
(60 ) 110
Unrealized gains (losses) on derivatives used in cash flow hedging relationships arising during the period 8,047
(2,816 ) 5,231
Less: Reclassification adjustment for net (gains) losses included in net income (769 ) 269
(500 )
Net change in unrealized gains (losses) on derivatives used in cash flow hedging relationships 7,278
(2,547 ) 4,731
Net change in pension and other post-retirement obligations 3,879
(1,357 ) 2,522
Total other comprehensive income (loss) $ 85,332
$ (31,349 ) $ 53,983

Preferred Stock

The following ~~table presents activity in accumulated other comprehensive income (loss), net~~is a summary of ~~tax, for~~Huntington’s non-cumulative, non-voting, perpetual preferred stock outstanding.



(dollar amounts in millions)				Carrying Amount
Series	Issuance Date	Shares Outstanding	Dividend Rate	Earliest Redemption Date (1)	At March 31, 2023		At December 31, 2022
Series B (2)	12/28/2011	35,500	3-mo. LIBOR + 270 bps	1/15/2017	$	23	$	23



Series E (3)	2/27/2018	5,000	5.70	4/15/2023	495		495
Series F (3)	5/27/2020	5,000	5.625	7/15/2030	494		494
Series G (3)	8/3/2020	5,000	4.45	10/15/2027	494		494
Series H (2)	2/2/2021	500,000	4.50	4/15/2026	486		486
Series I (4)	6/9/2021	7,000	5.70	12/01/2022	175		175
Series J (2)	3/6/2023	325,000	6.875	4/15/2028	317		—
Total		882,500			$	2,484	$	2,167

(1) Redeemable at Huntington’s option on the ~~nine-month periods ended September 30, 2017~~date stated or on a quarterly basis thereafter. Earlier redemption is solely at Huntington’s option, subject to any required prior approval of Federal Reserve.

(2) Series B, H, and ~~2016.~~J preferred stock have a liquidation value and redemption price per share of $1,000, plus any declared and unpaid dividends.

(3) Series E, F, and G preferred stock have a liquidation value and redemption price per share of $100,000, plus any declared and unpaid dividends.

(4) Series I preferred stock has a liquidation value and redemption price per share of $25,000, plus any declared and unpaid dividends.

58 Huntington Bancshares Incorporated

(dollar amounts in thousands)
Unrealized gains
and (losses) on
debt securities
(1)

Unrealized
gains and
(losses) on
equity
securities

Unrealized
gains and
(losses) on
cash flow
hedging
derivatives

Unrealized gains
(losses) for
pension and
other post-
retirement
obligations
Total
December 31, 2015 $ 8,361
$ 176
$ (3,948 ) $ (230,747 ) $ (226,158 )
Other comprehensive income before reclassifications 47,934
110
5,231
—
53,275
Amounts reclassified from accumulated OCI to earnings (1,314 ) —
(500 ) 2,522
708
Period change 46,620
110
4,731
2,522
53,983
September 30, 2016 $ 54,981
$ 286
$ 783
$ (228,225 ) $ (172,175 )

December 31, 2016 $ (192,764 ) $ 287
$ (2,634 ) $ (205,905 ) $ (401,016 )
Other comprehensive income before reclassifications 15,465
—
828
—
16,293
Amounts reclassified from accumulated OCI to earnings 12,007
—
735
2,018
14,760
Period change 27,472
—
1,563
2,018
31,053
September 30, 2017 $ (165,292 ) $ 287
$ (1,071 ) $ (203,887 ) $ (369,963 )

Table of Content


~~(1)~~	Amounts at September 30, 2017 and December 31, 2016 include $97 million and $82 million, respectively, of net unrealized gains on securities transferred from the available-for-sale securities portfolio to the held-to-maturity securities portfolio. The net unrealized gains will be recognized in earnings over the remaining life of the security using the effective interest method.

The following table presents the ~~reclassification adjustments out~~dividends declared for each series of ~~accumulated OCI included in net income and the impacted line items as listed on the Unaudited Condensed Consolidated Statements of Income~~Preferred shares for the three-month ~~and nine-month~~ periods ended ~~September 30, 2017~~March 31, 2023 and ~~2016.~~2022:


	Three Months Ended March 31,
(amounts in millions, except per share data)	2023				2022
	Cash Dividend Declared Per Share				Cash Dividend Declared Per Share
Preferred Series			Amount ($)				Amount ($)
Series B	$	18.82	$	(1)	$	9.36	$	—


Series E	1,425.00		(7)		1,425.00		(7)
Series F	1,406.25		(7)		1,406.25		(7)
Series G	1,112.50		(6)		1,112.50		(6)
Series H	11.25		(6)		11.25		(6)
Series I	356.25		(2)		356.25		(2)
Series J (1)	—		—		—		—
Total			$	(29)			$	(28)

(1) First dividend declaration for Series J begins in second quarter 2023.

Reclassifications out of accumulated OCI
Accumulated OCI components Amounts reclassified from accumulated OCI Location of net gain (loss) reclassified from accumulated OCI into earnings
Three Months Ended
(dollar amounts in thousands) September 30, 2017 September 30, 2016
Gains (losses) on debt securities:
Amortization of unrealized gains (losses) $ (1,498 ) $ (726 ) Interest income - held-to-maturity securities - taxable
Realized gain (loss) on sale of securities (7,113 ) —
Noninterest income - net gains (losses) on sale of securities
OTTI recorded (104 ) —
Noninterest income - net gains (losses) on sale of securities
(8,715 ) (726 ) Total before tax
3,082
257
Tax (expense) benefit
$ (5,633 ) $ (469 ) Net of tax
Gains (losses) on cash flow hedging relationships:
Interest rate contracts $ (144 ) $ (123 ) Interest income - loans and leases
Interest rate contracts —
—
Noninterest income - other income
(144 ) (123 ) Total before tax
51
44
Tax (expense) benefit
$ (93 ) $ (79 ) Net of tax
Amortization of defined benefit pension and post-retirement items:
Actuarial gains (losses) $ (1,690 ) $ (1,785 ) Noninterest expense - personnel costs
Prior service credit 492
492
Noninterest expense - personnel costs
(1,198 ) (1,293 ) Total before tax
419
452
Tax (expense) benefit
$ (779 ) $ (841 ) Net of tax

Reclassifications out of accumulated OCI
Accumulated OCI components Amounts reclassified from accumulated OCI Location of net gain (loss) reclassified from accumulated OCI into earnings
Nine Months Ended
(dollar amounts in thousands) September 30, 2017 September 30, 2016
Gains (losses) on debt securities:
Amortization of unrealized gains (losses) $ (7,388 ) $ 478
Interest income - held-to-maturity securities - taxable
Realized gain (loss) on sale of securities (7,502 ) 1,630
Noninterest income - net gains (losses) on sale of securities
OTTI recorded (3,687 ) (76 ) Noninterest income - net gains (losses) on sale of securities
(18,577 ) 2,032
Total before tax
6,570
(718 ) Tax (expense) benefit
$ (12,007 ) $ 1,314
Net of tax
Gains (losses) on cash flow hedging relationships:
Interest rate contracts $ (1,131 ) $ 770
Interest income - loans and leases
Interest rate contracts —
(1 ) Noninterest income - other income
(1,131 ) 769
Total before tax
396
(269 ) Tax (expense) benefit
$ (735 ) $ 500
Net of tax
Amortization of defined benefit pension and post-retirement items:
Actuarial gains (losses) $ (4,580 ) $ (5,355 ) Noninterest expense - personnel costs
Prior service credit 1,476
1,476
Noninterest expense - personnel costs
(3,104 ) (3,879 ) Total before tax
1,086
1,357
Tax (expense) benefit
$ (2,018 ) $ (2,522 ) Net of tax

9.10. 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, and the conversion of the Company’s convertible preferred stock.~~plans. Potentially dilutive common shares are excluded from the computation of diluted earnings per share ~~during~~in periods in which the effect would be antidilutive. For diluted earnings per share, net income available to common shares can be affected by the conversion of the Company’s convertible preferred stock. Where the effect of this conversion would be dilutive, net income available to common shareholders is adjusted by the associated preferred dividends and deemed dividend.

The calculation of basic and diluted earnings per share for the ~~three and nine-month periods ended September 30, 2017 and 2016, was as shown in the table.~~

Three Months Ended
September 30, Nine Months Ended
September 30,
(dollar amounts in thousands, except per share amounts) 2017 2016 2017 2016
Basic earnings per common share:
Net income $ 274,568
$ 127,004
$ 754,403
$ 472,858
Preferred stock dividends (18,903 ) (18,537 ) (56,670 ) (46,409 )
Net income available to common shareholders $ 255,665
$ 108,467
$ 697,733
$ 426,449
Average common shares issued and outstanding 1,086,038
938,578
1,087,115
844,167
Basic earnings per common share $ 0.24
$ 0.12
$ 0.64
$ 0.51
Diluted earnings per common share:
Net income available to common shareholders $ 255,665
$ 108,467
$ 697,733
$ 426,449
Effect of assumed preferred stock conversion —
—
—
—
Net income applicable to diluted earnings per share $ 255,665
$ 108,467
$ 697,733
$ 426,449
Average common shares issued and outstanding 1,086,038
938,578
1,087,115
844,167
Dilutive potential common shares:
Stock options and restricted stock units and awards 17,079
10,714
17,515
10,295
Shares held in deferred compensation plans 3,228
2,654
3,096
2,337
Other 146
135
152
135
Dilutive potential common shares 20,453
13,503
20,763
12,767
Total diluted average common shares issued and outstanding 1,106,491
952,081
1,107,878
856,934
Diluted earnings per common share $ 0.23
$ 0.11
$ 0.63
$ 0.50

~~For the~~ three-month periods ended ~~September 30, 2017~~March 31, 2023 and ~~2016, approximately 1.5 million and 3.5 million, respectively,~~2022 was as follows:


	Three Months Ended March 31,
(dollar amounts in millions, except per share data, share count in thousands)	2023		2022
Basic earnings per common share:
Net income attributable to Huntington	$	602	$	460
Preferred stock dividends	29		28

Net income available to common shareholders	$	573	$	432
Average common shares issued and outstanding	1,443,268		1,438,427
Basic earnings per common share	$	0.40	$	0.30
Diluted earnings per common share:




Dilutive potential common shares:
Stock options and restricted stock units and awards	19,613		19,629
Shares held in deferred compensation plans	6,398		6,271


Dilutive potential common shares	26,011		25,900
Total diluted average common shares issued and outstanding	1,469,279		1,464,327
Diluted earnings per common share	$	0.39	$	0.29
Anti-dilutive awards (1)	9,344		2,148

(1)Reflects the total number of shares related to outstanding options ~~to purchase shares of common stock were not included in~~that have been excluded from the computation of diluted earnings per share because the ~~effect~~impact would ~~be antidilutive. For the nine-month periods ended September 30, 2017 and 2016, approximately 0.9 million and 3.3 million, respectively, were not included.~~have been anti-dilutive.

2023 1Q Form 10-Q 59

~~10.~~ ~~BENEFIT PLANS~~

Table of Content

11. NONINTEREST INCOME

Huntington ~~sponsors~~earns a ~~non-contributory defined benefit pension plan covering substantially all employees hired~~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 ~~rehired prior to January 1, 2010. The plan, which was modified in 2013~~fee income and no longer accrues service benefits to participants, provides benefits based upon length of service and compensation levels. The funding policy of Huntington is to contribute an annual amount that is at least equal to the minimum funding requirements but not more than the amount deductible under the Internal Revenue Code. There is no required minimum contribution for 2017.

In addition, Huntington has a defined benefit post-retirement plan that provides certain healthcare and life insurance benefits to retired employees who have attained the age of 55 and have at least 10 years of vesting service under this plan.

~~As part~~are outside of the ~~FirstMerit acquisition, Huntington agreed to assume~~scope of ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). Other sources of revenue fall within the scope of ASC 606 and ~~honor all FirstMerit benefit plans. The FirstMerit Pension Plan was frozen for nonvested employees and closed to new entrants after December 31, 2006. Effective December 31, 2012,~~are generally recognized within noninterest income. These revenues are included within various sections of the ~~FirstMerit Pension Plan was frozen for vested employees. Additionally, FirstMerit had a post-retirement benefit plan which provided medical and life insurance for retired employees.~~

~~For additional information on benefit plans, see the Benefit Plan footnote in our 2016 Form 10-K.~~

Unaudited Consolidated Financial Statements. The following table shows Huntington’s total noninterest income segregated between contracts with customers within the ~~components~~scope of ~~net periodic (benefit) cost for all plans.~~ASC 606 and those within the scope of other GAAP Topics.


(dollar amounts in millions)	Three Months Ended March 31,
Noninterest income	2023		2022
Noninterest income from contracts with customers	$	377	$	308
Noninterest income within the scope of other GAAP topics	135		191
Total noninterest income	$	512	$	499

The following table illustrates the disaggregation by operating segment and major revenue stream and reconciles disaggregated revenue to segment revenue presented in Note 16 “Segment Reporting”.



	Three Months Ended March 31, 2023
(dollar amounts in millions)	Commercial Banking		Consumer & Business Banking		Vehicle Finance		RBHPCG		Treasury / Other		Huntington Consolidated
Major Revenue Streams
Service charges on deposit accounts	$	19	$	61	$	2	$	1	$	—	$	83
Card and payment processing income	6		80		—		—		—		86
Trust and investment management services	—		17		—		45		—		62
Insurance income	2		19		—		13		—		34
Capital markets fees	26		2		1		—		—		29
Other noninterest income	20		7		—		56		—		83
Net revenue from contracts with customers	$	73	$	186	$	3	$	115	$	—	$	377
Noninterest income within the scope of other GAAP topics	84		37		—		2		12		135
Total noninterest income	$	157	$	223	$	3	$	117	$	12	$	512

			Three Months Ended March 31, 2022
(dollar amounts in millions)	Commercial Banking		Consumer & Business Banking		Vehicle Finance		RBHPCG		Treasury / Other		Huntington Consolidated
Major Revenue Streams
Service charges on deposit accounts	$	23	$	71	$	2	$	1	$	—	$	97
Card and payment processing income	6		74		—		—		—		80
Trust and investment management services	—		18		—		47		—		65
Insurance income	2		12		—		16		1		31
Capital markets fees	4		2		—		—		—		6
Other noninterest income	21		6		—		1		1		29
Net revenue from contracts with customers	$	56	$	183	$	2	$	65	$	2	$	308
Noninterest income within the scope of other GAAP topics	85		89		1		1		15		191
Total noninterest income	$	141	$	272	$	3	$	66	$	17	$	499

60 Huntington Bancshares Incorporated

Pension Benefits Post-Retirement Benefits
Three Months Ended September 30, Three Months Ended September 30,
(dollar amounts in thousands) 2017 2016 2017 2016
Service cost $ 640
$ 1,425
$ 22
$ 16
Interest cost 7,478
7,978
98
79
Expected return on plan assets (13,803 ) (12,086 ) —
—
Amortization of prior service cost —
—
(492 ) (492 )
Amortization of (gain) loss 1,747
1,865
(55 ) (72 )
Settlements 5,049
3,400
—
—
Net periodic (benefit) cost $ 1,111
$ 2,582
$ (427 ) $ (469 )

Table of Content

Pension Benefits Post-Retirement Benefits
Nine Months Ended September 30, Nine Months Ended September 30,
(dollar amounts in thousands) 2017 2016 2017 2016
Service cost $ 1,920
$ 3,475
$ 65
$ 16
Interest cost 22,433
21,474
296
188
Expected return on plan assets (41,409 ) (32,533 ) —
—
Amortization of prior service cost —
—
(1,476 ) (1,476 )
Amortization of (gain) loss 5,241
5,594
(164 ) (216 )
Settlements 10,049
10,200
—
—
Net periodic (benefit) cost $ (1,766 ) $ 8,210
$ (1,279 ) $ (1,488 )

Huntington ~~has~~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 ~~defined contribution plan that~~contract duration of less than one year. Accordingly, most revenue deferred for the reporting period ended March 31, 2023 is ~~available~~expected to ~~eligible employees.~~be earned within one year. Huntington ~~matches participant contributions, up to the first 4%~~does not have significant balances of ~~base pay that is contributed to the defined contribution plan. For 2016, a discretionary profit-sharing contribution equal to 1% of eligible participants’ 2016 base pay was awarded~~contract assets or contract liabilities and any change in those balances during the ~~2017 first quarter. Huntington's expense related~~reporting period ended March 31, 2023 was determined to the defined contribution plans during the third quarter 2017 and 2016 was $5 million and $9 million, respectively. For the nine-month periods ended September 30, 2017 and 2016, expense related to the defined contribution plans was $26 million and $26 million, respectively.be immaterial.

~~11.~~ 12. FAIR VALUES OF ASSETS AND LIABILITIES

See Note 1819 “Fair Value of Assets and Liabilities” to the ~~consolidated financial statements of the~~Consolidated Financial Statements appearing in Huntington’s 2022 Annual Report on Form 10-K for ~~the year ended December 31, 2016 for~~ a description of ~~additional~~the valuation methodologies used for ~~assets and liabilities~~instruments measured at fair ~~value on a recurring and non-recurring basis.~~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 ~~and nine-month~~ periods ended ~~September 30, 2017~~March 31, 2023 and ~~2016.~~

2022.

Assets and Liabilities measured at fair value on a recurring basis

~~Assets~~


	Fair Value Measurements at Reporting Date Using						Netting Adjustments (1)		At March 31, 2023
(dollar amounts in millions)	Level 1		Level 2		Level 3
Assets
Trading account securities:



Municipal securities	$	—	$	18	$	—	$	—	$	18


Available-for-sale securities:
U.S. Treasury securities	5		—		—		—		5
Residential CMO	—		3,450		—		—		3,450
Residential MBS	—		12,333		—		—		12,333
Commercial MBS	—		1,967		—		—		1,967
Other agencies	—		176		—		—		176
Municipal securities	—		42		3,339		—		3,381
Private-label CMO	—		110		20		—		130
Asset-backed securities	—		301		74		—		375
Corporate debt	—		2,265		—		—		2,265
Other securities/sovereign debt	—		4		—		—		4
Total available-for-sale securities	5		20,648		3,433		—		24,086
Other securities	32		1		—		—		33
Loans held for sale	—		446		—		—		446
Loans held for investment	—		172		15		—		187
MSRs	—		—		485		—		485
Other assets:
Derivative assets	—		1,984		6		(1,564)		426
Assets held in trust for deferred compensation plans	164		—		—		—		164
Liabilities



Derivative liabilities	—		1,595		3		(861)		737

2023 1Q Form 10-Q 61

Table of Content


	Fair Value Measurements at Reporting Date Using						Netting Adjustments (1)		At December 31, 2022
(dollar amounts in millions)	Level 1		Level 2		Level 3
Assets
Trading account securities:

Municipal securities	$	—	$	19	$	—	$	—	$	19


Available-for-sale securities:
U.S. Treasury securities	103		—		—		—		103
Residential CMOs	—		2,914		—		—		2,914
Residential MBS	—		12,263		—		—		12,263
Commercial MBS	—		1,953		—		—		1,953
Other agencies	—		182		—		—		182
Municipal securities	—		42		3,248		—		3,290
Private-label CMO	—		108		20		—		128
Asset-backed securities	—		298		74		—		372
Corporate debt	—		2,214		—		—		2,214
Other securities/sovereign debt	—		4		—		—		4
Total available-for-sale securities	103		19,978		3,342		—		23,423
Other securities	31		1		—		—		32
Loans held for sale	—		520		—		—		520
Loans held for investment	—		169		16		—		185
MSRs	—		—		494		—		494
Other assets:
Derivative assets	—		2,161		3		(1,808)		356
Assets held in trust for deferred compensation plans	155		—		—		—		155
Liabilities
Derivative liabilities	—		2,332		5		(1,345)		992

(1)Amounts represent the impact of legally enforceable master netting agreements that allow the Company to settle positive and ~~liabilities measured at fair value on a recurring basis at September 30, 2017~~negative positions and ~~December 31, 2016 are summarized in~~cash collateral held or placed with the ~~table below.~~

Fair Value Measurements at Reporting Date Using Netting Adjustments (1) September 30, 2017
(dollar amounts in thousands) Level 1 Level 2 Level 3
Assets
Loans held for sale $ —
$ 584,829
$ —
$ —
$ 584,829
Loans held for investment —
58,708
40,483
—
99,191
Trading account securities:
U.S. Treasury securities 25
—
—
—
25
Municipal securities —
1,481
—
—
1,481
Other securities 86,982
—
—
—
86,982
87,007
1,481
—
—
88,488
Available-for-sale and other securities:
U.S. Treasury securities 11,260
—
—
—
11,260
Federal agencies: Mortgage-backed —
10,639,750
—
—
10,639,750
Federal agencies: Other agencies —
96,451
—
—
96,451
Municipal securities —
468,082
2,958,027
—
3,426,109
Asset-backed securities —
531,064
24,127
—
555,191
Corporate debt —
125,629
—
—
125,629
Other securities 11,717
3,935
—
—
15,652
22,977
11,864,911
2,982,154
—
14,870,042
MSRs —
—
11,753
—
11,753
Derivative assets —
312,401
8,425
(154,562 ) 166,264
Liabilities
Derivative liabilities —
288,191
5,459
(234,526 ) 59,124
Short-term borrowings 4
—
—
—
4

Fair Value Measurements at Reporting Date Using Netting Adjustments (1) December 31, 2016
(dollar amounts in thousands) Level 1 Level 2 Level 3
Assets
Loans held for sale $ —
$ 438,224
$ —
$ —
$ 438,224
Loans held for investment —
34,439
47,880
—
82,319
Trading account securities:
Municipal securities —
1,148
—
—
1,148
Other securities 132,147
—
—
—
132,147
132,147
1,148
—
—
133,295
Available-for-sale and other securities:
U.S. Treasury securities 5,497
—
—
—
5,497
Federal agencies: Mortgage-backed —
10,673,342
—
—
10,673,342
Federal agencies: Other agencies —
73,542
—
—
73,542
Municipal securities —
452,013
2,798,044
—
3,250,057
Asset-backed securities —
717,478
76,003
—
793,481
Corporate debt —
198,683
—
—
198,683
Other securities 16,588
3,943
—
—
20,531
22,085
12,119,001
2,874,047
—
15,015,133
MSRs —
—
13,747
—
13,747
Derivative assets —
414,412
5,747
(181,940 ) 238,219
Liabilities
Derivative liabilities —
362,777
7,870
(272,361 ) 98,286
Short-term borrowings 474
—
—
—
474


~~(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.

same counterparties.

The following tables ~~below~~ present a rollforward of the balance sheet amounts ~~for the three-month and nine-month periods ended September 30, 2017 and 2016, for financial instruments~~ measured at fair value 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.

62 Huntington Bancshares Incorporated

Table of Content


																	Level 3 Fair Value Measurements
	Level 3 Fair Value Measurements Three Months Ended September 30, 2017																				Available-for-sale securities						Loans held for investment
(dollar amounts in millions)																(dollar amounts in millions)	MSRs		Derivative instruments		Municipal securities		Private- label CMO		Asset-backed securities
Three Months Ended March 31, 2023																Three Months Ended March 31, 2023
Opening balance																Opening balance	$	494	$	(2)	$	3,248	$	20	$	74		$	16
							Available-for-sale securities
(dollar amounts in thousands)	MSRs			Derivative instruments			Municipal securities			Asset-backed securities			Loans held for investment
Opening balance	$	12,528		$	3,178		$	2,872,007		$	42,575		$	43,855
Transfers out of Level 3 (1)	—			(1,376		)	—			—			—			Transfers out of Level 3 (1)	—		(2)		—		—		—			—
Total gains/losses for the period:																Total gains/losses for the period:
Included in earnings	(775		)	1,164			(637		)	(1,569		)	187
Included in earnings:																Included in earnings:
Mortgage banking income																Mortgage banking income	(12)		7		—		—		—			—

Interest and fee income																Interest and fee income	—		—		—		(1)		—			—
Included in OCI	—			—			(33,781		)	5,166			—			Included in OCI	—		—		3		—		—			—
Purchases/originations	—			—			166,514			—			—			Purchases/originations	13		—		177		—		—			—
Sales	—			—			(90		)	(21,625		)	—

Repayments	—			—			—			—			(3,559		)	Repayments	—		—		—		—		—			(1)

Settlements	—			—			(45,986		)	(420		)	—			Settlements	(10)		��		(89)		1		—			—
Closing balance	$	11,753		$	2,966		$	2,958,027		$	24,127		$	40,483		Closing balance	$	485	$	3	$	3,339	$	20	$	74		$	15
Change in unrealized gains or losses for the period included in earnings for assets held at end of the reporting date	$	(775	)	$	1,164		$	(104	)	$	—		$	—		Change in unrealized gains or losses for the period included in earnings for assets held at end of the reporting date	$	(12)	$	5	$	—	$	—	$	—		$	—
Change in unrealized gains or losses for the period included in other comprehensive income for assets held at the end of the reporting period																Change in unrealized gains or losses for the period included in other comprehensive income for assets held at the end of the reporting period	—		—		3		—		—			—
Three Months Ended March 31, 2022																Three Months Ended March 31, 2022
Opening balance																Opening balance	$	351	$	4	$	3,477	$	20	$	70		$	19

Transfers out of Level 3 (1)																Transfers out of Level 3 (1)	—		(7)		—		—		—			—
Total gains/losses for the period:																Total gains/losses for the period:
Included in earnings:																Included in earnings:
Mortgage banking income																Mortgage banking income	51		(7)		—		—		—			—
Interest and fee income																Interest and fee income	—		—		(2)		(1)		—			—
Provision for credit losses																Provision for credit losses	—		—		(4)		—		—			—
Included in OCI																Included in OCI	—		—		(120)		—		(1)			—
Purchases/originations																Purchases/originations	29		—		172		—		—			—

Repayments																Repayments	—		—		—		—		—			(1)

Settlements																Settlements	(15)		—		(241)		—		(7)			—
Closing balance																Closing balance	$	416	$	(10)	$	3,282	$	19	$	62		$	18
Change in unrealized gains or losses for the period included in earnings for assets held at end of the reporting date																Change in unrealized gains or losses for the period included in earnings for assets held at end of the reporting date	$	51	$	(16)	$	—	$	—	$	—		$	—
Change in unrealized gains or losses for the period included in other comprehensive income for assets held at the end of the reporting period																Change in unrealized gains or losses for the period included in other comprehensive income for assets held at the end of the reporting period	—		—		(118)		—		(1)			—
(1)Transfers out of Level 3 represent the settlement value of the derivative instruments (i.e., interest rate lock agreements) that are transferred to loans held for sale, which is classified as Level 2.																(1)Transfers out of Level 3 represent the settlement value of the derivative instruments (i.e., interest rate lock agreements) that are transferred to loans held for sale, which is classified as Level 2.

Level 3 Fair Value Measurements
Three Months Ended September 30, 2016
Available-for-sale securities
(dollar amounts in thousands) MSRs
Derivative
instruments

Municipal
securities

Asset-backed
securities
Loans held for investment
Opening balance $ 13,105
$ 12,751
$ 2,237,975
$ 71,379
$ 925
Transfers out of Level 3 (1) —
(1,692 ) —
—
—
Total gains/losses for the period:
Included in earnings (677 ) (2,459 ) 4,166
—
(249 )
Included in OCI —
—
(28,272 ) 2,875
—
Purchases/originations —
—
953,639
10
56,469
Sales —
—

—
—
Repayments —
—
—
—
(3,860 )
Settlements —
—
(262,235 ) (445 ) —
Closing balance $ 12,428
$ 8,600
$ 2,905,273
$ 73,819
$ 53,285
Change in unrealized gains or losses for the period included in earnings for assets held at end of the reporting date $ (677 ) $ (2,459 ) $ —
$ —
$ —

~~(1)~~

Transfers out of Level 3 represent the settlement value of the derivative instruments (i.e. interest rate lock agreements) that were transferred to loans held for sale, which are classified as Level 2.

Level 3 Fair Value Measurements
Nine Months Ended September 30, 2017
Available-for-sale securities
(dollar amounts in thousands) MSRs
Derivative
instruments

Municipal
securities

Asset-backed
securities
Loans held for investment
Opening balance $ 13,747
$ (2,123 ) $ 2,798,044
$ 76,003
$ 47,880
Transfers out of Level 3 (1) —
(3,833 ) —
—
—
Total gains/losses for the period:
Included in earnings (1,994 ) 8,922
(3,612 ) (5,097 ) 1,617
Included in OCI —
—
(887 ) 13,936
—
Purchases/originations —
—
414,123
—
—
Sales —
—
(90 ) (59,353 ) —
Repayments —
—
—
—
(9,014 )
Settlements —
—
(249,551 ) (1,362 ) —
Closing balance $ 11,753
$ 2,966
$ 2,958,027
$ 24,127
$ 40,483
Change in unrealized gains or losses for the period included in earnings for assets held at end of the reporting date $ (1,994 ) $ 8,922
$ (128 ) $ (3,559 ) $ —

Level 3 Fair Value Measurements
Nine Months Ended September 30, 2016
Available-for-sale securities
(dollar amounts in thousands) MSRs
Derivative
instruments

Municipal
securities

Asset-
backed
securities
Loans held for investment
Opening balance $ 17,585
$ 6,056
$ 2,095,551
$ 100,337
$ 1,748
Transfers out of Level 3 (1) —
(5,115 ) —
—
—
Total gains/losses for the period:
Included in earnings (5,157 ) 7,659
4,166
2
(249 )
Included in OCI —
—
(8,946 ) 3,549
—
Purchases/originations —
—
1,237,546
10
56,469
Sales —
—
(36,657 ) (27,794 ) —
Repayments —
—
—
—
(4,683 )
Settlements —
—
(386,387 ) (2,285 ) —
Closing balance $ 12,428
$ 8,600
$ 2,905,273
$ 73,819
$ 53,285
Change in unrealized gains or losses for the period included in earnings for assets held at end of the reporting date $ (5,157 ) $ 7,759
$ —
$ 2
$ —

~~(1)~~

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 and nine-month periods ended September 30, 2017 and 2016.

2023 1Q Form 10-Q 63

Level 3 Fair Value Measurements
Three Months Ended September 30, 2017
Available-for-sale securities
(dollar amounts in thousands) MSRs
Derivative
instruments

Municipal
securities

Asset-backed
securities
Loans held for investment
Classification of gains and losses in earnings:
Mortgage banking income $ (775 ) $ 1,164
$ —
$ —
$ —
Securities gains (losses) —
—
(104 ) (1,569 ) —
Interest and fee income —
—
(533 ) —
—
Noninterest income —
—
—
—
187
Total $ (775 ) $ 1,164
$ (637 ) $ (1,569 ) $ 187

Table of Content

Level 3 Fair Value Measurements
Three Months Ended September 30, 2016
Available-for-sale securities
(dollar amounts in thousands) MSRs
Derivative
instruments

Municipal
securities

Asset-backed
securities
Loans held for investment
Classification of gains and losses in earnings:
Mortgage banking income $ (677 ) $ (2,459 ) $ —
$ —
$ —
Securities gains (losses) —
—
—
—
—
Interest and fee income —
—
—
—
—
Noninterest income —
—
4,166
—
(249 )
Total $ (677 ) $ (2,459 ) $ 4,166
$ —
$ (249 )

Level 3 Fair Value Measurements
Nine Months Ended September 30, 2017
Available-for-sale securities
(dollar amounts in thousands) MSRs
Derivative
instruments

Municipal
securities

Asset-backed
securities
Loans held for investment
Classification of gains and losses in earnings:
Mortgage banking income $ (1,994 ) $ 8,922
$ —
$ —
$ —
Securities gains (losses) —
—
(128 ) (5,100 ) —
Interest and fee income —
—
(3,484 ) 3
—
Noninterest income —
—
—
—
1,617
Total $ (1,994 ) $ 8,922
$ (3,612 ) $ (5,097 ) $ 1,617

Level 3 Fair Value Measurements
Nine Months Ended September 30, 2016
Available-for-sale securities
(dollar amounts in thousands) MSRs
Derivative
instruments

Municipal
securities

Asset-backed
securities
Loans held for investment
Classification of gains and losses in earnings:
Mortgage banking income $ (5,157 ) $ 7,659
$ —
$ —
$ —
Securities gains (losses) —
—
—
—
—
Interest and fee income —
—
—
—
—
Noninterest income —
—
4,166
2
(249 )
Total $ (5,157 ) $ 7,659
$ 4,166
$ 2
$ (249 )

Assets and liabilities under the fair value option

The following table presents the fair value and aggregate principal balance of certain assets and liabilities under the fair value ~~option.~~option:

September 30, 2017
Total Loans Loans that are 90 or more days past due
(dollar amounts in thousands)
Fair value
carrying
amount

Aggregate
unpaid
principal
Difference
Fair value
carrying
amount

Aggregate
unpaid
principal
Difference
Assets
Loans held for sale $ 584,829
$ 564,106
$ 20,723
$ 602
$ 608
$ (6 )
Loans held for investment 99,191
107,997
(8,806 ) 10,086
11,781
(1,695 )


																Total Loans						Loans that are 90 or more days past due
(dollar amounts in millions)															(dollar amounts in millions)	Fair value carrying amount		Aggregate unpaid principal		Difference		Fair value carrying amount		Aggregate unpaid principal		Difference
At March 31, 2023															At March 31, 2023
	December 31, 2016
	Total Loans							Loans that are 90 or more days past due
(dollar amounts in thousands)	Fair value carrying amount		Aggregate unpaid principal		Difference			Fair value carrying amount		Aggregate unpaid principal		Difference
Assets
Loans held for sale	$	438,224	$	433,760	$	4,464		$	—	$	—	$	—		Loans held for sale	$	446	$	439	$	7	$	—	$	—	$	—
Loans held for investment	82,319		91,998		(9,679		)	8,408		11,082		(2,674		)	Loans held for investment	187		192		(5)		3		3		—
At December 31, 2022															At December 31, 2022

Loans held for sale															Loans held for sale	$	520	$	513	$	7	$	—	$	—	$	—
Loans held for investment															Loans held for investment	185		190		(5)		11		11		—

The following ~~tables present~~table presents the net gains (losses) from fair value changes.



	Three Months Ended March 31,
(dollar amounts in millions)	2023		2022
Loans held for sale (1)	$	—	$	(44)
Loans held for investment	—		1

(1)The net gains (losses) from fair value changes ~~for~~are included in Mortgage banking income on the ~~three-month and nine-month periods ended September 30, 2017 and 2016.~~

Net gains (losses) from fair value changes Net gains (losses) from fair value changes
Three Months Ended
September 30, Nine Months Ended
September 30,
(dollar amounts in thousands) 2017 2016 2017 2016
Assets
Loans held for sale $ (1,897 ) $ (4,439 ) $ 11,719
$ 9,080
Loans held for investment 187
—
1,617
—

Unaudited 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. ~~For~~The amounts presented represent the ~~nine months ended September 30, 2017, assets~~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 were as ~~shown in the table below.~~follows:


	Fair Value Measurements Using Significant Other Unobservable Inputs (Level 3)				Total Losses
					Three Months Ended March 31,
(dollar amounts in millions)	At March 31, 2023		At December 31, 2022		2023		2022

Collateral-dependent loans	$	30	$	16	$	(6)	$	(1)

Fair Value Measurements Using
(dollar amounts in thousands) 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)
Nine Months Ended
September 30, 2017
MSRs $ 182,043
$ —
$ —
$ 182,043
$ (318 )
Impaired loans 68,159
—
—
68,159
(3,976 )
Other real estate owned 42,041
—
—
42,041
(1,759 )

~~MSRs accounted for under the amortization method are subject to nonrecurring fair value measurement when the fair value is lower than the carrying amount.~~

~~Periodically,~~ Huntington records nonrecurring adjustments of collateral-dependent loans ~~measured~~held for ~~impairment when establishing the ACL.~~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. InPeriodically, in cases where the carrying value exceeds the fair value of the collateral less cost to sell, an impairment charge is ~~recognized.~~recognized in the form of a charge-off.

~~Other real estate-owned properties are included in accrued income and other assets and valued based on appraisals and third-party price opinions, less estimated selling costs.~~

64 Huntington Bancshares Incorporated

Table of Content

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 September 30, 2017 and December 31, 2016:~~basis:


	Quantitative Information about Level 3 Fair Value Measurements
			At March 31, 2023 (1)						At December 31, 2022 (1)
(dollar amounts in millions)	Valuation Technique	Significant Unobservable Input	Range				Weighted Average		Range				Weighted Average
Measured at fair value on a recurring basis:
MSRs	Discounted cash flow	Constant prepayment rate	5	%	-	27%	8	%	5	%	-	40%	7	%
		Spread over forward interest rate swap rates	5	%	-	13%	6	%	5	%	-	13%	6	%






Municipal securities and asset-backed securities	Discounted cash flow	Discount rate	4	%	-	5%	5	%	5	%	-	5%	5	%
		Cumulative default	—	%	-	64%	8	%	—	%	-	64%	7	%
		Loss given default	20	%	-	20%	20	%	20	%	-	20%	20	%

Quantitative Information about Level 3 Fair Value Measurements at September 30, 2017
(dollar amounts in thousands) Fair Value Valuation Technique Significant Unobservable Input Range (Weighted Average)
Measured at fair value on a recurring basis:
MSRs $ 11,753
Discounted cash flow Constant prepayment rate 9.0% - 31.0% (12%)
Spread over forward interest rate
swap rates 8.0% - 10.0% (8.1%)
Derivative assets 8,425
Consensus Pricing Net market price -4.0% - 21.4% (1.8%)
Derivative liabilities 5,459
Estimated Pull through % 11.0% - 99.0% (79.0%)
Municipal securities 2,958,027
Discounted cash flow Discount rate 0.0% - 10.3% (4.0%)
Cumulative default 0.0% - 42.0% (4.9%)
Loss given default 5.0% - 80.0% (23.7%)
Asset-backed securities 24,127
Discounted cash flow Discount rate 1.3% - 6.8% (6.5%)
Cumulative prepayment rate 0.0% - 72% (7.3%)
Cumulative default 2.9% - 100% (8.6%)
Loss given default 90% - 100% (97.8%)
Loans held for investment 40,483
Discounted cash flow Discount rate 7.0% - 17.7% (8.2%)
Measured at fair value on a nonrecurring basis:
MSRs 182,043
Discounted cash flow Constant prepayment rate 6.0% - 21.0% (8%)
Spread over forward interest rate
swap rates 1.8% - 20.0% (10.4%)
Impaired loans 68,159
Appraisal value NA NA
Other real estate owned 42,041
Appraisal value NA NA

Quantitative Information about Level 3 Fair Value Measurements at December 31, 2016
(dollar amounts in thousands) Fair Value Valuation Technique Significant Unobservable Input Range (Weighted Average)
Measured at fair value on a recurring basis:
MSRs $ 13,747
Discounted cash flow Constant prepayment rate 5.63% - 34.4% (10.9%)
Spread over forward interest rate
swap rates 3.0% - 9.2% (5.4%)
Derivative assets 5,747
Consensus Pricing Net market price -7.1% - 25.4% (1.1%)
Derivative liabilities 7,870
Estimated Pull through % 8.1% - 99.8% (76.9%)
Municipal securities 2,798,044
Discounted cash flow Discount rate 0.0% - 10.0% (3.6%)
Cumulative default 0.3% - 37.8% (4.0%)
Loss given default 5.0% - 80.0% (24.1%)
Asset-backed securities 76,003
Discounted cash flow Discount rate 5.0% - 12.0% (6.3%)
Cumulative prepayment rate 0.0% - 73% (6.5%)
Cumulative default 1.1% - 100% (11.2%)
Loss given default 85% - 100% (96.3%)
Cure given deferral 0.0% - 75.0% (36.2%)
Loans held for investment 47,880
Discounted cash flow Discount rate 5.4% - 16.2% (5.6%)
Measured at fair value on a nonrecurring basis:
MSRs 171,309
Discounted cash flow Constant prepayment rate 5.57% - 30.4% (7.8%)
Spread over forward interest rate
swap rates 4.2% - 20.0% (11.7%)
Impaired loans 53,818
Appraisal value NA NA
Other real estate owned 50,930
Appraisal value NA 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. ~~Such relationships have not been included in the discussion below.~~

A significant change in the unobservable inputs may result in a significant change in the ending fair value measurement of Level 3 instruments. In general, prepayment rates increase when market interest rates decline and decrease when market interest rates rise and higher prepayment rates generally result in lower fair values for MSR assets and Asset-backed securities.

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.

Fair values of financial instruments

~~The following table provides~~Many of the ~~carrying amounts~~assets and ~~estimated~~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 ~~Huntington’s financial~~judgment about a wide variety of factors, including but not limited to, relevancy of market prices of comparable instruments, ~~that are carried either at fair value or cost at September 30, 2017~~expected future cash flows, and ~~December 31, 2016:~~

September 30, 2017 December 31, 2016
(dollar amounts in thousands)
Carrying
Amount
Fair Value
Carrying
Amount
Fair Value
Financial Assets
Cash and short-term assets $ 1,243,828
$ 1,243,828
$ 1,443,037
$ 1,443,037
Trading account securities 88,488
88,488
133,295
133,295
Loans held for sale 651,734
657,270
512,951
515,640
Available-for-sale and other securities 15,453,061
15,453,061
15,562,837
15,562,837
Held-to-maturity securities 8,688,399
8,655,805
7,806,939
7,787,268
Net loans and direct financing leases 67,911,810
67,698,855
66,323,583
66,294,639
Derivatives 166,264
166,264
238,219
238,219
Financial Liabilities
Deposits 78,445,113
78,422,971
75,607,717
76,161,091
Short-term borrowings 1,829,549
1,829,549
3,692,654
3,692,654
Long-term debt 9,200,707
9,402,926
8,309,159
8,387,444
Derivatives 59,124
59,124
98,286
98,286

The following table presents the level in the fair value hierarchy for the estimated fair values of only Huntington’s financial instruments that are not already on the Unaudited Condensed Consolidated Balance Sheets at fair value at September 30, 2017 and December 31, 2016:

Estimated Fair Value Measurements at Reporting Date Using September 30, 2017
(dollar amounts in thousands) Level 1 Level 2 Level 3
Financial Assets
Held-to-maturity securities $ —
$ 8,655,805
$ —
$ 8,655,805
Net loans and direct financing leases —
—
67,698,855
67,698,855
Financial Liabilities
Deposits —
75,230,127
3,192,844
78,422,971
Short-term borrowings 4
—
1,829,545
1,829,549
Long-term debt —
8,992,820
410,106
9,402,926

Estimated Fair Value Measurements at Reporting Date Using December 31, 2016
(dollar amounts in thousands) Level 1 Level 2 Level 3
Financial Assets
Held-to-maturity securities $ —
$ 7,787,268
$ —
$ 7,787,268
Net loans and direct financing leases —
—
66,294,639
66,294,639
Financial Liabilities

Deposits —
72,319,328
3,841,763
76,161,091
Short-term borrowings 474
—
3,692,180
3,692,654
Long-term debt —
7,980,176
407,268
8,387,444

appropriate discount rates.

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, and federal funds ~~sold and securities purchased under resale agreements.~~sold. 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 ~~and nonmortgage~~ servicing rights ~~deposit base,~~ and ~~other customer~~ relationship intangibles are not considered financial instruments and are not included ~~above.~~in following tables. Accordingly, this fair value information is not intended to, and does not, represent Huntington’s underlying value. ~~Many~~

2023 1Q Form 10-Q 65

Table 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.Content

The following ~~methods~~table provides the carrying amounts and ~~assumptions were used by~~estimated fair values of Huntington’s financial instruments:


(dollar amounts in millions)	Amortized Cost		Lower of Cost or Market		Fair Value or Fair Value Option		Total Carrying Amount		Estimated Fair Value
At March 31, 2023
Financial Assets
Cash and short-term assets	$	10,572	$	—	$	—	$	10,572	$	10,572
Trading account securities	—		—		18		18		18
Available-for-sale securities	—		—		24,086		24,086		24,086
Held-to-maturity securities	16,977		—		—		16,977		14,939
Other securities	1,266		—		33		1,299		1,299
Loans held for sale	—		11		446		457		457
Net loans and leases (1)	118,850		—		187		119,037		115,020
Derivative assets	—		—		426		426		426
Assets held in trust for deferred compensation plans	—		—		164		164		164
Financial Liabilities
Deposits	145,278		—		—		145,278		145,179
Short-term borrowings	6,898		—		—		6,898		6,898
Long-term debt	13,072		—		—		13,072		12,591
Derivative liabilities	—		—		737		737		737
At December 31, 2022
Financial Assets
Cash and short-term assets	$	6,918	$	—	$	—	$	6,918	$	6,918
Trading account securities	—		—		19		19		19
Available-for-sale securities	—		—		23,423		23,423		23,423
Held-to-maturity securities	17,052		—		—		17,052		14,754
Other securities	822		—		32		854		854
Loans held for sale	—		9		520		529		529
Net loans and leases (1)	117,217		—		185		117,402		112,591
Derivative assets	—		—		356		356		356
Assets held in trust for deferred compensation plans	—		—		155		155		155
Financial Liabilities
Deposits	147,914		—		—		147,914		147,796
Short-term borrowings	2,027		—		—		2,027		2,027
Long-term debt	9,686		—		—		9,686		9,564
Derivative liabilities	—		—		992		992		992

(1)Includes collateral-dependent loans.

66 Huntington ~~to estimate~~Bancshares Incorporated

Table of Content

The following table presents the level in the fair value ofhierarchy for the ~~remaining classes of financial instruments:~~

~~Held-to-maturity securities~~

Fair values are determined by using models that are based on security-specific details, as well as relevant industry and economic factors. The most significant of these inputs are quoted market prices, and interest rate spreads on relevant benchmark securities.

~~Loans and Direct Financing Leases~~

~~Variable-rate loans that reprice frequently are based on carrying amounts, as adjusted for~~ estimated ~~credit losses. The~~ fair values ~~for other loans~~at March 31, 2023 and ~~leases are estimated using discounted~~December 31, 2022:


	Estimated Fair Value Measurements at Reporting Date Using						Netting Adjustments (1)		Presented Balance
(dollar amounts in millions)	Level 1		Level 2		Level 3
At March 31, 2023
Financial Assets
Trading account securities	$	—	$	18	$	—			$	18
Available-for-sale securities	5		20,648		3,433				24,086
Held-to-maturity securities	—		14,939		—				14,939
Other securities (2)	32		1		—				33
Loans held for sale	—		446		11				457
Net loans and leases	—		172		114,848				115,020
Derivative assets	—		1,984		6		$	(1,564)	426
Financial Liabilities
Deposits	—		136,712		8,467				145,179
Short-term borrowings	—		6,898		—				6,898
Long-term debt	—		8,205		4,386				12,591
Derivative liabilities	—		1,595		3		(861)		737
At December 31, 2022
Financial Assets
Trading account securities	$	—	$	19	$	—			$	19
Available-for-sale securities	103		19,978		3,342				23,423
Held-to-maturity securities	—		14,754		—				14,754
Other securities (2)	31		1		—				32
Loans held for sale	—		520		9				529
Net loans and leases	—		169		112,422				112,591
Derivative assets	—		2,161		3		$	(1,808)	356
Financial Liabilities
Deposits	—		142,081		5,715				147,796
Short-term borrowings	—		2,027		—				2,027
Long-term debt	—		8,680		884				9,564
Derivative liabilities	—		2,332		5		(1,345)		992

(1)Amounts represent the impact of legally enforceable master netting agreements that allow the Company to settle positive and negative positions and cash flow analyses and employ interest rates currently being offered for loans and leases with similar terms. The rates take into account the position of the yield curve, as well as an adjustment for prepayment risk, operating costs, and profit. This value is also reduced by an estimate of expected losses and the credit risk associated in the loan and lease portfolio. The valuation of the loan portfolio reflected discounts that Huntington believed are consistent with transactions occurring in the marketplace.

~~Deposits~~

Demand deposits, savings accounts, and money market deposits are, by definition, equal to the amount payable on demand. The fair values of fixed-rate time deposits are estimated by discounting cash flows using interest rates currently being offered on certificates with similar maturities.

~~Debt~~

~~Long-term debt is based upon quoted market prices, which are inclusive of Huntington’s credit risk. In the absence of quoted market prices, discounted cash flows using market rates for similar debt~~collateral held or placed with the same ~~maturities are used in the determination of~~counterparties.

(2)Excludes securities without readily determinable fair ~~value.~~values.

~~12.~~13. DERIVATIVE FINANCIAL INSTRUMENTS

Derivative financial instruments are recorded in the Unaudited ~~Condensed~~ Consolidated Balance Sheets as either an asset or a liability (in ~~accrued income and~~ other assets or ~~accrued expenses and~~ 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.

2023 1Q Form 10-Q 67

Table of Content

The following table presents the fair values and notional values of all derivative instruments included in the Unaudited ~~Condensed~~ Consolidated Balance Sheets at ~~September 30, 2017~~March 31, 2023 and December 31, ~~2016.~~2022. Amounts in the table below are presented gross without the impact of any net collateral arrangements.


										At March 31, 2023									At December 31, 2022
	September 30, 2017				December 31, 2016
(dollar amounts in thousands)	Asset		Liability		Asset		Liability
(dollar amounts in millions)									(dollar amounts in millions)	Notional Value			Asset			Liability			Notional Value			Asset			Liability
Derivatives designated as Hedging Instruments									Derivatives designated as Hedging Instruments
Interest rate contracts	$	32,837	$	93,224	$	46,440	$	99,996	Interest rate contracts	$	42,515		$	1,037		$	616		$	42,461		$	1,008		$	1,145
Foreign exchange contracts									Foreign exchange contracts	204			4			—			202			2			—
Derivatives not designated as Hedging Instruments									Derivatives not designated as Hedging Instruments
Interest rate contracts ~~(1)~~	198,471		112,534		232,653		140,475		40,809			773			790			37,562			968			1,008
Foreign exchange contracts	22,354		21,020		23,265		19,576		Foreign exchange contracts	5,621			65			68			4,889			68			68
Commodities contracts	66,133		61,695		108,026		104,328		Commodities contracts	852			111			108			762			114			113
Equity contracts	1,031		5,177		9,775		6,272		Equity contracts	678			—			16			636			4			3
Total Contracts	$	320,826	$	293,650	$	420,159	$	370,647	Total Contracts	$	90,679		$	1,990		$	1,598		$	86,512		$	2,164		$	2,337

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 Consolidated Income Statement for the three-month periods ended March 31, 2023 and 2022, respectively.


~~(1)~~	~~Includes derivative assets and liabilities used in mortgage banking activities.~~


	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)		2023		2022
Interest rate contracts:
Customer	Capital markets fees	$	7	$	10
Mortgage banking	Mortgage banking income	9		(47)

Interest rate swaptions	Other noninterest income	(1)		—
Foreign exchange contracts	Capital markets fees	12		10
Commodities contracts	Capital markets fees	2		1

Equity contracts	Other noninterest expense	(1)		1
Total		$	28	$	(25)

Derivatives used in asset and liability management activities

Huntington engages in balance sheet hedging activity, principally for asset and liability management ~~purposes, to convert fixed rate assets or liabilities into floating rate, or vice versa.~~purposes. Balance sheet hedging activity is generally arranged to receive hedge accounting treatment ~~and is~~that can be classified as either fair value or cash flow hedges. Fair value hedges are ~~purchased~~executed to ~~convert subordinated~~hedge changes in fair value of outstanding fixed-rate debt and ~~other long-term debt from fixed-rate obligations to floating rate.~~investment securities caused by fluctuations in market interest rates. Cash flow hedges are ~~also used~~executed to ~~convert floating~~modify interest rate characteristics of designated commercial loans ~~into fixed~~in order to reduce the impact of changes in future cash flows due to market interest rate ~~loans.~~changes.

68 Huntington Bancshares Incorporated

Table of Content

The following table presents the gross notional values of derivatives used in Huntington’s asset and liability management activities at ~~September 30, 2017~~March 31, 2023 and December 31, ~~2016,~~2022, identified by the underlying interest rate-sensitive instruments.

September 30, 2017
(dollar amounts in thousands) Fair Value Hedges Cash Flow Hedges Total
Instruments associated with:
Loans $ —
$ 1,325,000
$ 1,325,000
Subordinated notes 950,000
—
950,000
Long-term debt 7,425,000
—
7,425,000
Total notional value at September 30, 2017 $ 8,375,000
$ 1,325,000
$ 9,700,000

December 31, 2016
(dollar amounts in thousands) Fair Value Hedges Cash Flow Hedges Total
Instruments associated with:
Loans $ —
$ 3,325,000
$ 3,325,000
Subordinated notes 950,000
—
950,000
Long-term debt 6,525,000
—
6,525,000
Total notional value at December 31, 2016 $ 7,475,000
$ 3,325,000
$ 10,800,000

~~The following table presents additional information about the interest rate swaps used in Huntington’s asset and liability management activities at September 30, 2017 and December 31, 2016.~~

September 30, 2017
Weighted-Average Rate
(dollar amounts in thousands) Notional Value Average Maturity (years) Fair Value Receive Pay
Asset conversion swaps
Receive fixed—generic $ 1,325,000
0.1 $ (1,239 ) 0.72 % 1.23 %
Liability conversion swaps
Receive fixed—generic 8,375,000
2.8 (59,148 ) 1.56
1.29
Total swap portfolio at September 30, 2017 $ 9,700,000
2.3 $ (60,387 )

December 31, 2016
Weighted-Average Rate
(dollar amounts in thousands) Notional Value Average Maturity (years) Fair Value Receive Pay
Asset conversion swaps
Receive fixed—generic $ 3,325,000
0.6 $ (2,060 ) 1.04 % 0.91 %
Liability conversion swaps
Receive fixed—generic 7,475,000
3.1 (51,496 ) 1.49
0.88
Total swap portfolio at December 31, 2016 $ 10,800,000
2.3 $ (53,556 )



(dollar amounts in millions)	Fair Value Hedges		Cash Flow Hedges		Economic Hedges		Total
At March 31, 2023
Instruments associated with:
Investment securities	$	11,961	$	—	$	1,500	$	13,461
Loans	—		22,825		175		23,000


Long-term debt	7,729		—		—		7,729

Total notional value	$	19,690	$	22,825	$	1,675	$	44,190



At December 31, 2022
Instruments associated with:
Investment securities	$	10,407	$	—	$	—	$	10,407
Loans	—		24,325		175		24,500


Long-term debt	7,729		—		—		7,729
Total notional value	$	18,136	$	24,325	$	175	$	42,636

These derivative financial instruments ~~are~~were entered into ~~to manage~~for the purpose of managing the interest rate risk of assets and liabilities. ~~Consequently, net~~Net amounts receivable or payable on contracts hedging either ~~interest-earning~~interest earning assets or ~~interest-bearing~~interest bearing liabilities ~~are~~were accrued as an adjustment to either interest income or interest expense. Adjustments to interest income were also recorded for the amounts related to the amortization of premiums for collars, 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~~a decrease to net interest income of $3$52 million and ~~$18~~an increase of $39 million for the three-month periods ended ~~September 30, 2017,~~March 31, 2023, and ~~2016,~~2022, respectively. ~~For the nine-month periods ended September 30, 2017, and 2016, the net amounts resulted in an increase to net interest income of $20 million and $58 million, respectively.~~

Fair Value Hedges

The changes in fair value of the fair value hedges are ~~to the extent that the hedging relationship is effective,~~ recorded through earnings and offset against changes in the fair value of the hedged item.

Huntington has designated $11.1 billion of interest rate swaps as fair value hedges of fixed-rate investment securities using the portfolio 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 portfolio level basis adjustment on our hedged mortgage-backed securities portfolio has not been attributed to the individual available-for-sale securities in our Unaudited Consolidated Statements of Financial Condition. Huntington has also designated $869 million of interest rate swaps as fair value hedges of fixed-rate corporate bonds.

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 ~~and nine-month~~ periods ended ~~September 30, 2017~~March 31, 2023 and ~~2016.~~2022.


	Three Months Ended March 31,
(dollar amounts in millions)	2023		2022
Interest rate contracts
Change in fair value of interest rate swaps hedging investment securities (1)	$	(182)	$	418
Change in fair value of hedged investment securities (1)	181		(430)


Change in fair value of interest rate swaps hedging long-term debt (2)	116		(98)
Change in fair value of hedged long term debt (2)	(116)		98

(1)Recognized in Interest income—available-for-sale securities—taxable in the Unaudited Consolidated Statements of Income.

(2)Recognized in Interest expense—long-term debt in the Unaudited Consolidated Statements of Income.

2023 1Q Form 10-Q 69

Table of Content

Three Months Ended
September 30, Nine Months Ended
September 30,
(dollar amounts in thousands) 2017 2016 2017 2016
Interest rate contracts
Change in fair value of interest rate swaps hedging deposits (1) $ —
$ —
$ —
$ (82 )
Change in fair value of hedged deposits (1) —
—
—
72
Change in fair value of interest rate swaps hedging subordinated notes (2) (2,234 ) (9,688 ) (4,665 ) (2,880 )
Change in fair value of hedged subordinated notes (2) 3,615
10,400
6,782
3,591
Change in fair value of interest rate swaps hedging other long-term debt (2) (6,431 ) (45,870 ) (880 ) 37,179
Change in fair value of hedged other long-term debt (2) 7,152
42,647
(1,226 ) (38,187 )
As of March 31, 2023 and December 31, 2022, 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)	At March 31, 2023		At December 31, 2022		At March 31, 2023		At December 31, 2022
Assets
Investment securities (1)	$	19,619	$	18,029	$	(798)	$	(979)

Liabilities
Long-term debt (2)	7,293		7,175		(140)		(256)


~~(1)~~	Effective portion of the hedging relationship is recognized in Interest expense—deposits in the Unaudited Condensed Consolidated Statements of Income. Any resulting ineffective portion of the hedging relationship is recognized in noninterest income in the Unaudited Condensed Consolidated Statements of Income.


~~(2)~~	Effective portion of the hedging relationship is recognized in Interest expense—subordinated notes and other long-term debt in the Unaudited Condensed Consolidated Statements of Income. Any resulting ineffective portion of the hedging relationship is recognized in noninterest income in the Unaudited Condensed Consolidated Statements of Income.

(1)Amounts include the amortized cost basis of closed portfolios used to designate hedging relationships under the portfolio layer method. The hedged item is a layer of the closed portfolio which is expected to be remaining at the end of the hedging relationship. As of March 31, 2023, the amortized cost basis of the closed portfolios used in these hedging relationships was $18.8 billion, the cumulative basis adjustments associated with these hedging relationships was $689 million, and the amounts of the designated hedging instruments were $11.1 billion.

(2)Excluded from the above table are the cumulative amount of fair value hedge adjustments remaining for long-term debt for which hedge accounting has been discontinued in the amounts of $(70) million at March 31, 2023 and $(70) million at December 31, 2022.

Cash Flow Hedges

To the extent derivatives designated as cash flow hedges are effective in offsetting the variability of the hedged cash flows, changes in the derivatives’ fair value will not be included in current earnings but are reported as a component of OCI in the Unaudited Condensed Consolidated Statements of Changes in Shareholders’ Equity. These changes in fair value will be included in earnings of future periods when earnings are also affected by the changes in the hedged cash flows. To the extent these derivatives are not effective, changes in their fair values are immediately included in noninterest income.

The following table presents the gains and (losses) recognized in OCI and the location in the Unaudited Condensed Consolidated Statements of Income of gains and (losses) reclassified from OCI into earnings for derivatives designated as effective cash flow hedges for the three-month and nine-month periods ended September 30, 2017 and 2016.

Derivatives in cash flow hedging relationships
Amount of gain or (loss) recognized in OCI on derivatives
(effective portion)
(after-tax)

Location of gain or (loss) reclassified from
accumulated OCI into earnings (effective portion)

Amount of (gain) or loss
reclassified from
accumulated OCI into earnings
(effective portion)
Three Months Ended September 30, Three Months Ended September 30,
(dollar amounts in thousands) 2017 2016 2017 2016
Interest rate contracts
Loans $ 1,225
$ (5,311 ) Interest and fee income - loans and leases $ 144
$ 123
Investment Securities —
—
Noninterest income - other income —
—
Total $ 1,225
$ (5,311 ) $ 144
$ 123

Derivatives in cash flow hedging relationships
Amount of gain or (loss) recognized in OCI on derivatives
(effective portion)
(after-tax)

Location of gain or (loss) reclassified from
accumulated OCI into earnings (effective portion)

Amount of (gain) or loss
reclassified from
accumulated OCI into earnings
(effective portion)
Nine Months Ended September 30, Nine Months Ended September 30,
(dollar amounts in thousands) 2017 2016 2017 2016
Interest rate contracts
Loans $ 828
$ 5,231
Interest and fee income - loans and leases $ 1,131
$ (770 )
Investment Securities —
—
Noninterest income - other income —
1

$ 828
$ 5,231
$ 1,131
$ (769 )

~~Gains and losses on swaps related to loans and investment securities are recorded in interest income and interest expense, respectively. During the next twelve months,~~At March 31, 2023, Huntington ~~expects to reclassify to earnings approximately $(1) million after-tax of unrealized gains (losses) on cash flow hedging derivatives currently in OCI.~~

~~The following table presents the gains and (losses) recognized in noninterest income for the ineffective portion~~has $22.8 billion of interest rate ~~contracts for derivatives~~swaps, swaption collars, and floors. These are designated as cash flow hedges for variable rate commercial loans. The change in the ~~three~~fair value of a derivative instrument designated as a cash flow hedge is initially recognized in OCI and ~~nine-month periods ended September 30, 2017~~is reclassified into income when the hedged item impacts earnings. The initial premium paid for the interest rate collar and ~~2016.~~

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.

Derivatives in cash flow hedging relationships Three Months Ended
September 30, Nine Months Ended
September 30,
(dollar amounts in thousands) 2017 2016 2017 2016
Interest rate contracts
Loans $ 359
$ (371 ) $ 225
$ 6

At March 31, 2023, the net losses recognized in AOCI that are expected to be reclassified into earnings within the next 12 months were $181 million.

Derivatives used in mortgage banking activities

Mortgage loan origination hedging activity

~~Huntington’s~~Huntington’s mortgage origination hedging activity is related to ~~the~~economically hedging ~~of the~~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. ~~The~~Forward commitments to sell economically hedge the possible loss on interest rate lock commitments ~~are derivative positions offset by forward~~due to interest rate change. The position of these derivatives at March 31, 2023 and December 31, 2022 were a net asset of $4 million and a net liability of $3 million, respectively. At March 31, 2023 and December 31, 2022, Huntington had commitments to sell ~~loans.~~

~~Huntington uses two types~~residential real estate loans of ~~mortgage-backed securities~~$1.1 billion and $766 million, respectively. These contracts mature in its forward commitments to sell loans. The first type of forward commitment is a “To Be Announced” (or TBA), the second is a “Specified Pool” mortgage-backed security. Huntington uses these derivatives to hedge the value of mortgage-backed securities until they are sold.

~~The following table summarizes the derivative assets and liabilities used in mortgage banking activities:~~

Derivatives used in mortgage banking activities September 30, 2017 December 31, 2016
(dollar amounts in thousands) Asset Liability Asset Liability
Interest rate lock agreements $ 8,425
$ 282
$ 5,747
$ 1,598
Forward trades and options 1,562
1,782
13,319
1,173
Total derivatives used in mortgage banking activities $ 9,987
$ 2,064
$ 19,066
$ 2,771
less than one year.

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 total notional value~~

70 Huntington Bancshares Incorporated

Table of ~~these derivative financial instruments at September 30, 2017 and December 31, 2016, was $188 million and $300 million, respectively. The total notional amount at September 30, 2017 corresponds to~~Content

MSR hedging trading assets ~~with a fair value of $1 million~~ and ~~trading~~ liabilities ~~with a fair value of $2 million. Net trading~~are included in other assets and other liabilities, respectively, in the Unaudited Balance Sheets. Trading gains ~~and~~ (losses) related to MSR hedging for the three-month periods ended September 30, 2017 and 2016, were less than $1 million and $(1) million and $1 million and $17 million for the nine-month periods ended September 30, 2017 and 2016, respectively. These amounts are included in mortgage banking income in the Unaudited ~~Condensed~~ Consolidated ~~Statements~~Statement of Income. The notional value of the derivative financial instruments, the corresponding trading assets and liabilities positions, and net trading gains (losses) related to MSR hedging activity is summarized in the following tables:



(dollar amounts in millions)	At March 31, 2023		At December 31, 2022
Notional value	$	1,135	$	1,120
Trading assets	5		4
Trading liabilities	(64)		(78)


	Three Months Ended March 31, 2023
(dollar amounts in millions)	2023		2022
Trading gains (losses)	$	9	$	(47)

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 ~~may enter~~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 ~~all~~these transactions.

The net fair values of these derivative financial instruments, for which the gross amounts are included in ~~accrued income and~~ other assets or ~~accrued expenses and~~ other liabilities at both ~~September 30, 2017~~March 31, 2023 and December 31, ~~2016,~~2022, were ~~$84~~$61 million and ~~$80~~$59 million, respectively. The total notional values of derivative financial instruments used by Huntington on behalf of customers, including offsetting derivatives, were ~~$21.4~~$42.7 billion and ~~$20.6~~$40.7 billion at ~~both September 30, 2017~~March 31, 2023 and December 31, ~~2016,~~2022, respectively. Huntington’s credit risk from ~~interest rate swaps used for trading purposes~~customer derivatives was ~~$156~~$139 million and ~~$196~~$118 million at the same dates, respectively.

~~Share Swap Economic Hedge~~

Huntington acquires and holds shares of Huntington common stock in a Rabbi Trust for the Executive Deferred Compensation Plan. Huntington common stock held in the Rabbi Trust is recorded at cost and the corresponding deferred compensation liability is recorded at fair value using Huntington's share price as a significant input.

During the second quarter of 2017, Huntington entered into an economic hedge with a notional value of $8 million to hedge deferred compensation expense related to the Executive Deferred Compensation Plan. During the third quarter 2017, the previous economic hedge entered into during the second quarter of 2016 of $20 million expired. Also during the third quarter of 2017, Huntington entered into an economic hedge with notional value of $31 million for a total of $39 million at September 30, 2017 to hedge deferred compensation expense related to the Executive Deferred Compensation Plan. The economic hedges are recorded at fair value in other assets or liabilities. Changes in the fair value are recorded directly through other noninterest expense in the Unaudited Condensed Consolidated Statements of Income. At September 30, 2017, the fair value of the share swaps was $1 million.

~~Visa~~^®~~-related Swap~~

~~In connection with the sale of Huntington’s Class B Visa~~^® ~~shares, Huntington entered into a swap agreement with the purchaser of the shares. The swap agreement adjusts for dilution in the conversion ratio of Class B shares resulting from the Visa~~^® ~~litigation. In connection with the FirstMerit acquisition, Huntington acquired an additional Visa~~^®related swap agreement. At September 30, 2017, the combined fair value of the swap liabilities of $5 million is an estimate of the exposure liability based upon Huntington’s assessment of the potential Visa^® ~~litigation losses and timing of the litigation settlement.~~

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.~~12 “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~~high dollar volume. Huntington enters into ~~bilateral~~ collateral and master netting agreements with these counterparties, and routinely exchanges cash and high quality securities collateral. Huntington enters into transactions with customers to meet their financing, investing, payment and risk management needs. These types of transactions generally are ~~low-dollar~~low dollar volume. Huntington enters into master netting agreements with customer counterparties; however, collateral is generally not ~~exchanged.~~exchanged with customer counterparties.

~~At September 30, 2017 and December 31, 2016,~~

2023 1Q Form 10-Q 71

Table of Content

In addition to the customer derivative credit exposure, aggregate credit risk associated with ~~these~~broker-dealer and bank derivative transactions was net credit risk of $272 million and $227 million at March 31, 2023 and December 31, 2022, respectively. The net credit risk associated with derivatives ~~net of~~is calculated after considering master netting agreements and is reduced by collateral that has been pledged by the counterparty, was $30 million and $26 million, respectively. The credit risk associated with interest rate swaps is calculated after considering master netting agreements with broker-dealers and banks.

counterparty.

At ~~September 30, 2017,~~March 31, 2023, Huntington pledged ~~$144~~$237 million of investment securities and cash collateral to counterparties, while other counterparties pledged ~~$78~~$951 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 ~~September 30, 2017~~March 31, 2023 and December 31, ~~2016.~~2022.


Offsetting of Financial Assets and Derivative Assets
			Gross amounts offset in the unaudited consolidated balance sheets		Net amounts of assets presented in the unaudited consolidated balance sheets		Gross amounts not offset in the unaudited consolidated balance sheets
(dollar amounts in millions)	Gross amounts of recognized assets						Financial instruments		Cash collateral received		Net amount
At March 31, 2023	$	1,990	$	(1,564)	$	426	$	(66)	$	(20)	$	340
At December 31, 2022	2,164		(1,808)		356		(7)		(56)		293


Offsetting of Financial Liabilities and Derivative Liabilities
			Gross amounts offset in the unaudited consolidated balance sheets		Net amounts of liabilities presented in the unaudited consolidated balance sheets		Gross amounts not offset in the unaudited consolidated balance sheets
(dollar amounts in millions)	Gross amounts of recognized liabilities						Financial instruments		Cash collateral delivered		Net amount
At March 31, 2023	$	1,598	$	(861)	$	737	$	—	$	(92)	$	645
At December 31, 2022	2,337		(1,345)		992		(79)		(118)		795

Offsetting of Financial Liabilities and Derivative Assets
Gross amounts
offset in the
condensed
consolidated
balance sheets Net amounts of
assets
presented in
the condensed
consolidated
balance sheets
Gross amounts not offset in
the condensed consolidated
balance sheets

(dollar amounts in thousands)
Gross amounts
of recognized
assets

Financial
instruments

Cash collateral
received
Net amount
September 30, 2017 Derivatives $ 320,826
$ (154,562 ) $ 166,264
$ (23,350 ) $ (16,895 ) $ 126,019
December 31, 2016 Derivatives 420,159
(181,940 ) 238,219
(34,328 ) (5,428 ) 198,463

Offsetting of Financial Liabilities and Derivative Liabilities

Gross amounts
offset in the
condensed
consolidated
balance sheets

Net amounts of
liabilities
presented in
the condensed
consolidated
balance sheets

Gross amounts not offset in
the condensed consolidated
balance sheets

(dollar amounts in thousands)
Gross amounts
of recognized
liabilities

Financial
instruments

Cash collateral
delivered
Net amount
September 30, 2017 Derivatives $ 293,650
$ (234,526 ) $ 59,124
$ —
$ (26,766 ) $ 32,358
December 31, 2016 Derivatives 370,647
(272,361 ) 98,286
(7,550 ) (23,943 ) 66,793

~~13. VIEs~~

~~Consolidated VIEs~~

Consolidated VIEs at September 30, 2017, consisted of certain loan and lease securitization trusts. Huntington has determined that the trusts are VIEs. Huntington has concluded that it is the primary beneficiary of these trusts because it has the power to direct the activities of the entity that most significantly affect the entity’s economic performance and it has either the obligation to absorb losses of the entity that could potentially be significant to the VIE or the right to receive benefits from the entity that could potentially be significant to the VIE.

~~The following tables present the carrying amount and classification of the consolidated trusts’ assets and liabilities that were included in the Unaudited Condensed Consolidated Balance Sheets at September 30, 2017 and December 31, 2016.~~

September 30, 2017
Huntington Technology Funding Trust Other Consolidated VIEs Total
(dollar amounts in thousands) Series 2014A
Assets:
Cash $ 1,569
$ —
$ 1,569
Net loans and leases 33,148
—
33,148
Accrued income and other assets —
269
269
Total assets $ 34,717
$ 269
$ 34,986
Liabilities:
Other long-term debt $ 28,120
$ —
$ 28,120
Accrued interest and other liabilities —
269
269
Total liabilities 28,120
269
28,389
Equity:
Beneficial Interest owned by third party 6,597
—
6,597
Total liabilities and equity $ 34,717
$ 269
$ 34,986

December 31, 2016
Huntington Technology
Funding Trust Other Consolidated VIEs Total
(dollar amounts in thousands) Series 2014A
Assets:
Cash $ 1,564
$ —
$ 1,564
Net loans and leases 69,825
—
69,825
Accrued income and other assets —
281
281
Total assets $ 71,389
$ 281
$ 71,670
Liabilities:
Other long-term debt $ 57,494
$ —
$ 57,494
Accrued interest and other liabilities —
281
281
Total liabilities 57,494
281
57,775
Equity:
Beneficial Interest owned by third party 13,895
—
13,895
Total liabilities and equity $ 71,389
$ 281
$ 71,670

The loans and leases were designated to repay the securitized notes. Huntington services the loans and leases and uses the proceeds from principal and interest payments to pay the securitized notes during the amortization period. Huntington has not provided financial or other support that was not previously contractually required.14. Variable Interest Entities

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, toof the VIE at ~~September 30, 2017,~~March 31, 2023, and December 31, ~~2016.~~2022:


	At March 31, 2023
(dollar amounts in millions)	Total Assets		Total Liabilities		Maximum Exposure to Loss
Affordable Housing Tax Credit Partnerships	$	2,141	$	1,326	$	2,141
Trust Preferred Securities	14		248		—
Other Investments	557		144		557
Total	$	2,712	$	1,718	$	2,698


	At December 31, 2022
(dollar amounts in millions)	Total Assets		Total Liabilities		Maximum Exposure to Loss
Affordable Housing Tax Credit Partnerships	$	2,036	$	1,260	$	2,036
Trust Preferred Securities	14		248		—
Other Investments	522		141		522
Total	$	2,572	$	1,649	$	2,558

72 Huntington Bancshares Incorporated

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September 30, 2017
(dollar amounts in thousands) Total Assets
Total Liabilities
Maximum Exposure to Loss
2016-1 Automobile Trust $ 8,674
$ —
$ 8,674
2015-1 Automobile Trust 1,506

—

1,506
Trust Preferred Securities 13,919

252,577

—
Low Income Housing Tax Credit Partnerships 638,171

348,733

638,171
Other Investments 108,556

48,339

108,556
Total $ 770,826

$ 649,649

$ 756,907

December 31, 2016
(dollar amounts in thousands) Total Assets Total Liabilities Maximum Exposure to Loss
2016-1 Automobile Trust $ 14,770
$ —
$ 14,770
2015-1 Automobile Trust 2,227
—
2,227
Trust Preferred Securities 13,919
252,552
—
Low Income Housing Tax Credit Partnerships 576,880
292,721
576,880
Other Investments 79,195
42,316
79,195
Total $ 686,991

$ 587,589

$ 673,072

~~The following table provides a summary of automobile transfers to trusts in separate securitization transactions.~~

(dollar amounts in millions) Year Amount Transferred
2016-1 Automobile Trust 2016 $ 1,500
2015-1 Automobile Trust 2015 750

The securitizations and the resulting sale of all underlying securities qualified for sale accounting. Huntington has concluded that it is not the primary beneficiary of these trusts because it has neither the obligation to absorb losses of the entities that could potentially be significant to the VIEs nor the right to receive benefits from the entities that could potentially be significant to the VIEs. Huntington is not required and does not currently intend to provide any additional financial support to the trusts. Investors and creditors only have recourse to the assets held by the trusts. The interest Huntington holds in the VIEs relates to servicing rights which are included in servicing rights of Huntington’s Unaudited Consolidated Balance Sheets. The maximum exposure to loss is equal to the carrying value of the servicing asset. See Note 6 for more information.

~~Trust Preferred Securities~~

Huntington has certain wholly-owned trusts whose assets, liabilities, equity, income, and expenses are not included in 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 Sheets as subordinated notes. The trust securities are the obligations of the trusts, and as such, are not consolidated in Huntington’s Unaudited Condensed Consolidated Financial Statements. A list of trust preferred securities outstanding at September 30, 2017 follows.

(dollar amounts in thousands) Rate
Principal amount of
subordinated note/
debenture issued to trust (1)

Investment in
unconsolidated
subsidiary
Huntington Capital I 2.01 % (2) $ 69,730
$ 6,186
Huntington Capital II 1.95
(3) 32,093
3,093
Sky Financial Capital Trust III 2.74
(4) 72,165
2,165
Sky Financial Capital Trust IV 2.70
(4) 74,320
2,320
Camco Financial Trust 3.76
(5) 4,269
155
Total $ 252,577
$ 13,919


~~(1)~~	~~Represents the principal amount of debentures issued to each trust, including unamortized original issue discount.~~


~~(2)~~	~~Variable effective rate at September 30, 2017, based on three-month LIBOR +0.70%.~~


~~(3)~~	~~Variable effective rate at September 30, 2017, based on three-month LIBOR +0.625%.~~


~~(4)~~	~~Variable effective rate at September 30, 2017, based on three-month LIBOR +1.40%.~~


~~(5)~~	~~Variable effective rate at September 30, 2017, 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.

~~Low Income~~Affordable Housing Tax Credit Partnerships

Huntington makes certain equity investments in various limited partnerships that sponsor affordable housing projects utilizing the ~~Low Income Housing Tax Credit (LIHTC)~~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 ~~all qualified~~a majority of its investments in these entities. These investments are included in ~~accrued income and~~ other assets. Investments that do not meet the requirements of the proportional

amortization method are ~~recognized~~accounted for using the equity method. Investment ~~gains/~~losses ~~related to these investments~~ are included in Other noninterest income in the Unaudited ~~Condensed~~ Consolidated Statements of Income.

The following table presents the balances of Huntington’s affordable housing tax credit investments and related unfunded commitments at ~~September 30, 2017~~March 31, 2023 and December 31, ~~2016.~~2022.


(dollar amounts in thousands)	September 30, 2017			December 31, 2016
(dollar amounts in millions)							(dollar amounts in millions)	At March 31, 2023		At December 31, 2022
Affordable housing tax credit investments	$	980,984		$	877,237		Affordable housing tax credit investments	$	3,050	$	2,891
Less: amortization	(342,813		)	(300,357		)	Less: amortization	(909)		(855)
Net affordable housing tax credit investments	$	638,171		$	576,880		Net affordable housing tax credit investments	$	2,141	$	2,036
Unfunded commitments	$	348,733		$	292,721		Unfunded commitments	$	1,326	$	1,260

The following table presents other information ~~related~~relating to Huntington’s affordable housing tax credit investments for the three-month ~~and nine-month~~ periods ended ~~September 30, 2017~~March 31, 2023 and ~~2016.~~2022.


	Three Months Ended March 31,
(dollar amounts in millions)	2023		2022
Tax credits and other tax benefits recognized	$	66	$	53

Proportional amortization expense included in provision for income taxes	54		41

Three Months Ended
September 30, Nine Months Ended
September 30,
(dollar amounts in thousands) 2017 2016 2017 2016
Tax credits and other tax benefits recognized $ 22,471
$ 21,200
$ 68,426
$ 57,634
Proportional amortization method
Tax credit amortization expense included in provision for income taxes 17,292
13,608
51,474
38,513
Equity method
Tax credit investment (gains) losses included in noninterest income —
132
—
396

~~Huntington recognized immaterial impairment losses on~~There were no sales of affordable housing tax credit investments during the three-month ~~and nine-month~~ periods ended ~~September 30, 2017~~March 31, 2023 and ~~2016. The~~2022. There was no impairment ~~losses~~ recognized ~~related~~for the three-month periods ended March 31, 2023 and 2022.

Trust-Preferred Securities

Huntington has certain wholly-owned trusts whose assets, liabilities, equity, income, and expenses are not included within Huntington’s Unaudited 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 Consolidated Balance Sheet as long-term debt. See Note 11 “Borrowings” to the ~~fair value~~Consolidated Financial Statements appearing in Huntington’s 2022 Annual Report on Form 10-K for the outstanding amount of debentures issued to each trust and corresponding trust securities as of December 31, 2022. The trust securities are the obligations of the ~~tax credit investments that were less than carrying value.~~trusts, and as such, are not consolidated within Huntington’s Unaudited Consolidated Financial Statements.

Other ~~Investments~~investments

Other investments determined to be ~~VIEs~~VIE’s include investments in ~~New Market Tax Credit Investments,~~Small Business Investment Companies, Historic Tax Credit Investments, ~~Small Business Investment Companies, Rural Business Investment Companies,~~ certain equity method investments, renewable energy financings, and other miscellaneous investments.

2023 1Q Form 10-Q 73

~~14.~~

Table of Content

15. 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 ~~September 30, 2017~~March 31, 2023 and December 31, ~~2016,~~2022, were as ~~listed in the following table.~~follows:

(dollar amounts in thousands) September 30,
2017
December 31,
2016
Contract amount representing credit risk:
Commitments to extend credit
Commercial $ 16,056,609

$ 15,190,056
Consumer 12,977,175

12,235,943
Commercial real estate 1,373,127

1,697,671
Standby letters-of-credit 547,689

637,182
Commercial letters-of-credit 16,815

4,610


(dollar amounts in millions)	At March 31, 2023		At December 31, 2022
Contract amount representing credit risk
Commitments to extend credit:
Commercial	$	32,634	$	32,500
Consumer	19,482		19,064
Commercial real estate	3,199		3,393
Standby letters of credit and guarantees on industrial revenue bonds	696		714
Commercial letters of credit	51		15

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. Collateral to secure any funding of these commitments predominately consists of residential and commercial real estate mortgage loans.

Standby letters-of-credit and guarantees on industrial revenue bonds are conditional commitments issued to guarantee the performance of a customer to a ~~third party.~~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. Since the conditions under which Huntington is required to fund these commitments may not materialize, the cash requirements are expected to be less than the total outstanding commitments. The carrying amount of deferred revenue associated with these guarantees was $5$29 million and $8$27 million at ~~September 30, 2017~~March 31, 2023 and December 31, ~~2016,~~2022, 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 ~~secures~~secure these instruments.

~~Commitments~~Litigation and Regulatory Matters

In the ordinary course of business, Huntington is routinely a defendant in or party to ~~sell loans~~pending and threatened legal and regulatory actions and proceedings.

~~Activity~~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 our mortgage origination activity supports the hedging of the mortgage pricing commitments to customers and the secondary sale to third parties. At September 30, 2017 and December 31, 2016, Huntington had commitments to sell residential real estate loans of $1.0 billion and $0.8 billion, respectively. These contracts mature in less than one year.each matter may be.

~~Litigation~~

The nature of Huntington’s business ordinarily results in a certain amount of pending as well as threatened claims, litigation, investigations, regulatory and legal and administrative cases, matters and proceedings, all of which are considered incidental to the normal conduct of business. When the Company determines it has meritorious defenses to the claims asserted, it vigorously defends itself. The Company considers settlement of cases when, in Management’s judgment, it is in the best interests of both the Company and its shareholders to do so.

On at least a quarterly basis, Huntington assesses its liabilities and contingencies in connection with threatened and outstanding legal cases, matters and proceedings, utilizing the latest information available. For cases, matters and proceedings where it is both probable the Company will incur a loss and the amount can be reasonably estimated, Huntington establishes an ~~accrual~~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 ~~the loss. Once established, the accrual is adjusted as appropriate to reflect any relevant developments. For cases, matters or proceedings where a loss is not probable or~~further developments that could affect the amount of the ~~loss cannot be estimated, no accrual is~~accrued liability that has been previously established.

74 Huntington Bancshares Incorporated

Table of Content

For certain matters, Huntington is able to estimate a range of possible loss. In ~~certain~~ 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 ~~and proceedings, exposure to loss exists in excess of the accrual to the extent such~~for which a loss is probable or reasonably possible but ~~not probable. Management believes~~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 ~~losses,~~loss is $0 to $15 million at March 31, 2023 in excess of ~~amounts~~the accrued ~~for current legal proceedings is up~~liability (if any) related to ~~$65 million at September 30, 2017. For certain other cases, and matters, Management cannot reasonably estimate the~~those matters. This estimated range of possible loss ~~at this time. Any estimate involves~~is based upon currently available information and is subject to significant judgment, ~~given~~a variety of assumptions, and known and unknown uncertainties. The matters underlying the varying stages of the proceedings (including the fact that many of them are currently in preliminary stages), the existence of multiple defendants in several of the current proceedings whose share of liability has yet to be determined, the numerous unresolved issues in many of the proceedings, and the inherent uncertainty of the various potential outcomes of such proceedings. Accordingly, Management’s estimateestimated range will change from ~~time-to-time,~~time to time, and actual ~~losses~~results may ~~be more or less than~~vary significantly from the current estimate. The estimated range of possible loss does not represent Huntington’s maximum loss exposure.

~~While the final outcome of legal cases, matters, and proceedings is inherently uncertain, based~~Based on ~~information currently available, advice of counsel, and available insurance coverage, Management believes~~current knowledge, management does not believe that ~~the amount it has already accrued is adequate and any incremental liability~~loss contingencies arising from ~~the Company’s legal cases,~~pending matters ~~or proceedings~~ will ~~not~~ have a material ~~negative~~ adverse effect on the ~~Company’s~~ consolidated financial position ~~as a whole.~~of Huntington. Further, management believes that amounts accrued are adequate to address Huntington’s contingent liabilities. However, in light of the ~~event~~inherent uncertainties involved in these matters, some of ~~unexpected future developments, it is possible that~~which are beyond Huntington’s control, and the ~~ultimate resolution~~large or indeterminate damages sought in some of these ~~cases,~~ matters, ~~and proceedings, if unfavorable, may~~an adverse outcome in one or more of these matters could be material to ~~the Company’s consolidated financial position in a~~Huntington’s results of operations for any particular reporting period.

~~Meoli v. The Huntington National Bank (Cyberco Litigation).~~ The Bank has been named a defendant in a lawsuit arising from the Bank’s commercial lending, depository, and equipment leasing relationships with Cyberco Holdings, Inc. (Cyberco), Cyberco allegedly defrauded equipment lessors and financial institutions, including Huntington, in financing the purchase of computer equipment from Teleservices Group, Inc. (Teleservices), which itself later proved to be a shell corporation. Bankruptcy proceedings for both Cyberco and Teleservices ensued.

In an adversary proceeding brought by the bankruptcy trustee for Teleservices in the U.S. District Court for the Western District of Michigan, judgment was rendered against Huntington in the amount of $72 million plus costs and pre- and post-judgment interest. Huntington appealed the judgment to the U.S. Sixth Circuit Court of Appeals, which reversed the judgment in part and remanded the case for further proceedings. The case is currently before the bankruptcy court again. The parties have completed briefing on liability and the appropriate calculation of damages, and await the scheduling of a hearing on the issue.

~~Powell v. Huntington National Bank.~~ Huntington is a defendant in a class action filed on October 15, 2013 alleging Huntington charged late fees on mortgage loans in a method that violated West Virginia law and the loan documents. Plaintiffs seek statutory civil penalties, compensatory damages and attorney’s fees. Huntington filed a motion for summary judgment on

the plaintiffs’ claims, which was granted by the U.S. District Court on December 28, 2016. Plaintiffs have appealed to the U.S. Fourth Circuit Court of Appeals. Oral arguments were held on October 24, 2017.

~~FirstMerit Overdraft Litigation.~~ Commencing in December 2010, two separate lawsuits were filed in the Summit County Court of Common Pleas and the Lake County Court of Common Pleas against FirstMerit. The complaints were brought as class actions on behalf of Ohio residents who maintained a checking account at FirstMerit and who incurred one or more overdraft fees as a result of the alleged re-sequencing of debit transactions. The parties have reached a global settlement for approximately $9 million cash to a common fund plus an additional $7 million in debt forgiveness. Attorneys' fees will be paid from the fund, with any remaining funds going to charity. FirstMerit’s insurer has reimbursed Huntington 49% of the approximately $9 million, which totals approximately $4.4 million. The court preliminarily approved the settlement on December 5, 2016 and the cash portion of the settlement was funded on December 12, 2016. The settlement received final approval on June 2, 2017 and there has been no appeal, so the settlement is final. Huntington is in the process of issuing settlement checks, forgiving the agreed-upon debt, and taking other actions as agreed upon in the settlement agreement. Because the settlement is in the process of being concluded, we anticipate no further reporting on this matter.

~~15.~~16. SEGMENT REPORTING

~~Our~~Huntington’s business segments are based on our internally-aligned segment leadership structure, which is how ~~we monitor~~management monitors results and ~~assess~~assesses performance. ~~We have~~The Company has four major business segments: Commercial Banking, Consumer and Business Banking, ~~Commercial Banking, Commercial Real Estate and~~ Vehicle Finance, ~~(CREVF),~~and Regional Banking and The Huntington Private Client Group (RBHPCG). The Treasury / Other function includes ~~our~~ technology and operations, other unallocated assets, liabilities, revenue, and expense.

~~Business segment results are determined based upon~~ For a description of our management reporting system, 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. 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.

~~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.~~

The management accounting 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 (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, and a small amount of other residual unallocated expenses, are allocatedsee Note 25 - Segment Reporting to the ~~four business segments.~~

~~The management accounting policies and processes utilized~~Consolidated Financial Statements appearing in ~~compiling segment financial information are highly subjective and, unlike financial accounting, are not based~~Huntington’s 2022 Annual Report on authoritative guidance similar to GAAP. As a result, reported segment results are not necessarily comparable with similar information reported by other financial institutions. Furthermore, changes in management structure or allocation methodologies and procedures result in changes in reported segment
~~financial data. Accordingly, certain amounts have been reclassified to conform to the current period presentation.~~

We use an active and centralized Funds Transfer Pricing (FTP) methodology to attribute appropriate 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 centralizes 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).

We announced a change in our executive leadership team, which became effective during the second quarter of 2017. As a result, the previously-reported Home Lending segment is now included as an operating unit in the Consumer and Business Banking segment. Additionally, the Insurance operating unit previously included in Commercial Banking was realigned to RBHPCG during second quarter. Prior period results have been reclassified to conform to the current period presentation.

~~Consumer and Business Banking~~ - The Consumer and Business Banking segment, including Home Lending, provides a wide array of financial products and services to consumer and small business customers including but not limited to checking accounts, savings accounts, money market accounts, certificates of deposit, mortgage loans, consumer loans, credit cards, and small business loans and investment products. Other financial services available to consumer and small business customers include insurance, interest rate risk protection, foreign exchange, and treasury management. Business Banking is defined as serving companies with revenues up to $20 million and consists of approximately 254,000 businesses. Home Lending supports origination and servicing of consumer loans and mortgages for customers who are generally located in our primary banking markets across all segments.

~~Commercial Banking~~ - Through a relationship banking model, this segment provides a wide array of products and services to the middle market, large corporate, and government public sector customers located primarily within our geographic footprint. The segment is divided into six business units: Middle Market, Large Corporate, Specialty Banking, Asset Finance, Capital Markets and Treasury Management.

~~Commercial Real Estate and Vehicle Finance~~ - This segment provides lending and other banking products and services to customers outside of our traditional retail and commercial banking segments. Our products and services include providing financing for the purchase of automobiles, light-duty trucks, recreational vehicles and marine craft at franchised dealerships, financing the acquisition of new and used vehicle inventory of franchised automotive dealerships, and financing for land, buildings, and other commercial real estate owned or constructed by real estate developers, automobile dealerships, or other customers with real estate project financing needs. Products and services are delivered through highly specialized relationship-focused bankers and product partners.

~~Regional Banking and The Huntington Private Client Group~~ - The core business of The Huntington Private Client Group is The Huntington Private Bank, which consists of Private Banking, Wealth & Investment Management, and Retirement Plan Services. The Huntington Private Bank provides high net-worth customers with deposit, lending (including specialized lending options), and banking services. The Huntington Private Bank delivers wealth management and legacy planning through investment and portfolio management, fiduciary administration, and trust services. This group also provides retirement plan services to corporate businesses. The Huntington Private Client Group provides corporate trust services and institutional and mutual fund custody services and insurance services.Form 10-K.

Listed in the ~~table below~~following tables is certain operating basis financial information reconciled to Huntington’s ~~September 30, 2017,~~March 31, 2023, December 31, ~~2016,~~2022, and ~~September 30, 2016,~~March 31, 2022, reported results by business segment.



	Three Months Ended March 31,
Income Statements	Commercial Banking		Consumer & Business Banking		Vehicle Finance		RBHPCG		Treasury / Other		Huntington Consolidated
(dollar amounts in millions)
2023
Net interest income	$	570	$	977	$	114	$	68	$	(320)	$	1,409
Provision (benefit) for credit losses	40		26		20		(1)		—		85
Noninterest income	157		223		3		117		12		512
Noninterest expense	280		630		41		81		54		1,086
Provision (benefit) for income taxes	85		114		12		22		(89)		144
Income attributable to non-controlling interest	4		—		—		—		—		4
Net income (loss) attributable to Huntington	$	318	$	430	$	44	$	83	$	(273)	$	602
2022
Net interest income	$	418	$	459	$	120	$	49	$	100	$	1,146
Provision (benefit) for credit losses	131		(109)		(7)		10		—		25
Noninterest income	141		272		3		66		17		499
Noninterest expense	248		612		45		81		67		1,053
Provision (benefit) for income taxes	38		47		18		5		(3)		105
Income attributable to non-controlling interest	2		—		—		—		—		2
Net income attributable to Huntington	$	140	$	181	$	67	$	19	$	53	$	460

2023 1Q Form 10-Q 75

Table of Content

Three Months Ended September 30,
Income Statements Consumer & Business Banking Commercial Banking CREVF RBHPCG Treasury / Other Huntington Consolidated
(dollar amounts in thousands)
2017
Net interest income $ 426,752
$ 171,448
$ 139,870
$ 49,596
$ (29,233 ) $ 758,433
Provision for (reduction in allowance) credit losses 24,089
9,580
9,705
216
—
43,590
Noninterest income 189,378
59,121
10,969
46,215
24,414
330,097
Noninterest expense 415,874
100,003
55,354
58,237
50,960
680,428
Income taxes 61,658
42,345
30,022
13,076
(57,157 ) 89,944
Net income $ 114,509
$ 78,641
$ 55,758
$ 24,282
$ 1,378
$ 274,568
2016
Net interest income $ 349,283
$ 143,023
$ 126,489
$ 41,971
$ (35,376 ) $ 625,390
Provision for (reduction in allowance) credit losses 12,724
23,788
25,615
1,663
15
63,805
Noninterest income 177,234
54,744
8,001
45,339
17,097
302,415
Noninterest expense 349,470
87,892
44,331
57,473
173,081
712,247
Income taxes 57,513
30,130
22,590
9,861
(95,345 ) 24,749
Net income $ 106,810
$ 55,957
$ 41,954
$ 18,313
$ (96,030 ) $ 127,004


	Assets at				Deposits at
(dollar amounts in millions)	March 31, 2023		December 31, 2022		March 31, 2023		December 31, 2022
Commercial Banking	$	65,183	$	63,812	$	35,243	$	37,509
Consumer & Business Banking	38,275		38,561		94,729		93,676
Vehicle Finance	21,767		21,461		1,018		1,136
RBHPCG	10,134		10,045		9,009		9,550
Treasury / Other	53,711		49,027		5,279		6,043
Total	$	189,070	$	182,906	$	145,278	$	147,914

76 Huntington Bancshares Incorporated

Nine Months Ended September 30,
Income Statements Consumer & Business Banking Commercial Banking CREVF RBHPCG Treasury / Other Huntington Consolidated
(dollar amounts in thousands)
2017
Net interest income $ 1,255,617
$ 514,900
$ 419,556
$ 145,089
$ (102,242 ) $ 2,232,920
Provision for credit losses 74,270
21,378
40,047
510
1
136,206
Noninterest income 544,445
176,609
34,750
140,610
71,364
967,778
Noninterest expense 1,242,152
301,385
163,989
182,171
192,517
2,082,214
Income taxes 169,274
129,061
87,594
36,056
(194,110 ) 227,875
Net income $ 314,366
$ 239,685
$ 162,676
$ 66,962
$ (29,286 ) $ 754,403
2016
Net interest income $ 911,706
$ 355,263
$ 317,704
$ 112,473
$ (62,809 ) $ 1,634,337
Provision for credit losses 43,474
53,212
18,706
490
14
115,896
Noninterest income 459,732
150,228
25,951
126,245
53,238
815,394
Noninterest expense 967,417
246,941
125,254
166,645
220,731
1,726,988
Income taxes 126,191
71,868
69,893
25,054
(159,017 ) 133,989
Net income $ 234,356
$ 133,470
$ 129,802
$ 46,529
$ (71,299 ) $ 472,858

Table of Content

Assets at Deposits at
(dollar amounts in thousands) September 30,
2017 December 31,
2016 September 30,
2017 December 31,
2016
Consumer & Business Banking $ 25,989,043
$ 25,332,635
$ 45,694,477
$ 45,355,745
Commercial Banking 24,199,091
24,121,689
20,795,143
18,053,208
CREVF 24,723,324
23,576,832
2,052,274
1,893,072
RBHPCG 5,695,880
5,327,622
5,944,240
6,214,250
Treasury / Other 21,380,788
21,355,319
3,958,979
4,091,442
Total $ 101,988,126
$ 99,714,097
$ 78,445,113
$ 75,607,717

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 ~~2016~~2022 Annual Report on 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)~~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,~~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 ~~the end of the period covered by this report.~~March 31, 2023. Based upon such evaluation, Huntington’s Chief Executive Officer and Chief Financial Officer have concluded that, as of ~~the end of such period,~~March 31, 2023, Huntington’s disclosure controls and procedures were effective.

There have not been any changes in ~~Huntington’s~~our internal ~~controls~~control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the ~~fiscal~~ quarter ~~to which this report relates~~ended March 31, 2023, that have materially affected, or are reasonably likely to materially affect, ~~Huntington’s~~ 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 15 “Commitments and Contingent Liabilities” of the Notes to Unaudited ~~Condensed~~ Consolidated Financial Statements ~~included in~~ under the caption “Litigation and Regulatory Matters” and is incorporated into this Item ~~1 of this report and incorporated herein~~ by reference.

Item 1A: Risk Factors

~~Information required by this item is~~In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the risk factors discussed in Part ~~1 Item 2- Management’s Discussion and Analysis~~I, “Item 1A. Risk Factors” in our 2022 Annual Report on Form 10-K, which could materially affect our business, financial condition, or results of ~~Financial Condition and Results of Operations of this report and incorporated herein by reference.~~operations.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) and (b)

Not Applicable

(c)

~~(c)~~Period

Total Number of Shares Purchased

Average
Price Paid
Per Share

Maximum Number of Shares (or Approximate Dollar Value) that May Yet Be Purchased Under the Plans or Programs (1)

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)
July 1, 2017 to July 31, 2017 1,122,116
$ 13.20
$ 293,164,850
August 1, 2017 to August 31, 2017 6,046,079
12.81
215,621,231
September 1, 2017 to September 30, 2017 2,476,746
12.43
184,795,094
Total 9,644,941
$ 12.75
$ 184,795,094

January 1, 2023 to January 31, 2023			—						$	—					$	1,000,000,000
~~(1)~~February 1, 2023 to February 28, 2023			~~The reported shares were repurchased pursuant to Huntington’s publicly-announced stock repurchase authorizations.~~—

		—		1,000,000,000
~~(2)~~March 1, 2023 to March 31, 2023	The number shown represents, as of the end of each period, the maximum number of shares (or approximate dollar value) of Common Stock that may yet be purchased under publicly-announced stock repurchase authorizations. The shares may be purchased, from time-to-time, depending on market conditions.—		—		1,000,000,000
Total	—		$	—

~~On June 28, 2017, Huntington was notified by~~(1)The number shown represents, as of the ~~Federal Reserve~~end of each period, the approximate dollar value of Common Stock that it had no objection to Huntington's proposed capital actions included in Huntington's capital plan submitted in the 2017 Comprehensive Capital Analysis and Review (CCAR). These actions included a 38% increase in the quarterly dividend per commonmay yet be purchased under publicly-announced share ~~to $0.11, starting in the fourth quarter~~repurchase authorizations. The shares may be purchased, from time-to-time, depending on market conditions.

2023 1Q Form 10-Q 77

Table of 2017, the repurchase of up to $308 million of common stock over the next four quarters (July 1, 2017 through June 30, 2018), subject to authorization by the Board of Directors, and maintaining dividends on the outstanding classes of preferred stock and trust preferred securities.Content

On July 19, 2017, the Board authorized the repurchase of up to $308 million of common shares over the four quarters through the second quarter of 2018. Purchases of common stock under the authorization may include open market purchases, privately-negotiated transactions, and accelerated repurchase programs.

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.

~~This information may be read and copied at the Public Reference Room of the SEC at 100 F Street, N.E., Washington, D.C. 20549.~~ The SEC ~~also~~ maintains an Internet ~~website~~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~~. www.sec.gov. The reports and other information filed by us with the SEC are also available free of charge at our ~~Internet~~internet web site. The address of the site is http://~~www.huntington.com~~. www.huntington.com. Except as specifically incorporated by reference into this Quarterly Report on Form 10-Q, information on those ~~websites~~web sites is not part of this report. ~~Reports,~~You also should be able to inspect reports, proxy statements, and other information about us ~~can also be inspected~~ at the offices of the ~~NASDAQ~~Nasdaq National Market at 33 Whitehall Street, New York, New ~~York.~~York 10004.

Exhibit
Number
Document Description Report or Registration Statement
SEC File or
Registration
Number

Exhibit
Reference

3.1 (P) Articles of Restatement of Charter. Annual Report on Form 10-K for the year ended December 31, 1993 000-02525 3
(i)

3.2
Articles of Amendment to Articles of Restatement of Charter.

Current Report on Form 8-K dated May 31, 2007

000-02525

3.1



3.3
Articles of Amendment to Articles of Restatement of Charter.

Current Report on Form 8-K dated May 7, 2008

000-02525

3.1



3.4
Articles of Amendment to Articles of Restatement of Charter.

Current Report on Form 8-K dated April 27, 2010

001-34073

3.1



3.5
Articles Supplementary of Huntington Bancshares Incorporated, as of April 22, 2008.

Current Report on Form 8-K dated April 22, 2008

000-02525

3.1



3.6
Articles Supplementary of Huntington Bancshares Incorporated, as of April 22. 2008.

Current Report on Form 8-K dated April 22, 2008

000-02525

3.2



3.7
Articles Supplementary of Huntington Bancshares Incorporated, as of November 12, 2008.

Current Report on Form 8-K dated November 12, 2008

001-34073

3.1



3.8
Articles Supplementary of Huntington Bancshares Incorporated, as of December 31, 2006.

Annual Report on Form 10-K for the year ended December 31, 2006

000-02525

3.4

3.9
Articles Supplementary of Huntington Bancshares Incorporated, as of December 28, 2011.

Current Report on Form 8-K dated December 28, 2011

001-34073

3.1

3.10
Articles Supplementary of Huntington Bancshares Incorporated, as of March 18, 2016.

Current Report on Form 8-K dated March 21, 2016

001-34073

3.1

3.11
Articles Supplementary of Huntington Bancshares Incorporated, as of May 3, 2016.

Current Report on Form 8-K dated May 5, 2016

001-34073

3.2

3.12
Articles Supplementary of Huntington Bancshares Incorporated, effective as of August 15, 2016.

Registration Statement on Form 8-A dated August 15, 2016

001-34073

3.12

3.13
Bylaws of Huntington Bancshares Incorporated, as amended and restated, as of July 19, 2017.

Current Report on Form 8-K dated July 21, 2017

001-34073

3.1

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
*Rule 13a-14(a) Certification – Chief Executive Officer.

31.2
*Rule 13a-14(a) Certification – Chief Financial Officer.

32.1
**Section 1350 Certification – Chief Executive Officer.


Exhibit Number	Document Description	Report or Registration Statement	SEC File or Registration Number	Exhibit Reference
3.1	Articles Supplementary of Huntington Bancshares Incorporated, as of January 18, 2019.	Current Report on Form 8-K dated January 16, 2019.	001-34073	3.1
3.2	Articles of Restatement of Huntington Bancshares Incorporated, as of January 18, 2019.	Current Report on Form 8-K dated January 16, 2019.	001-34073	3.2
3.3	Articles Supplementary of Huntington Bancshares Incorporated, as of May 28, 2020.	Current Report on Form 8-K dated May 28, 2020.	001-34073	3.1
3.4	Articles Supplementary of Huntington Bancshares Incorporated, as of August 5, 2020.	Current Report on Form 8-K dated August 10, 2020.	001-34073	3.1
3.5	Bylaws of Huntington Bancshares Incorporated, as amended and restated on January 16, 2019.	Current Report on Form 8-K dated January 16, 2019.	001-34073	3.3
3.6	Articles Supplementary of Huntington Bancshares Incorporated, as of February 5, 2021	Current Report on Form 8-K dated February 5, 2021.	001-34073	3.1
3.7	Articles Supplementary of Huntington Bancshares Incorporated, as of June 8, 2021	Current Report on Form 8-K dated June 8, 2021	001-34073	3.1
3.8	Articles of Amendment of Huntington Bancshares Incorporated to Articles of Restatement of Huntington Bancshares Incorporated, as of June 8, 2021	Current Report on Form 8-K dated June 8, 2021	001-34073	3.2
3.9	Articles Supplementary of Huntington Bancshares Incorporated, as of March 3, 2023.	Current Report on Form 8-K dated March 2, 2023	001-34073	3.1
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	*Rule 13a-14(a) Certification – Chief Executive Officer.
31.2	*Rule 13a-14(a) Certification – Chief Financial Officer.
32.1	**Section 1350 Certification – Chief Executive Officer.
32.2	**Section 1350 Certification – Chief Financial Officer.
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
104	*Cover Page Interactive Data File (formatted as Inline XBRL and contained within Exhibit 101 attachments)

~~32.2~~

**~~Section 1350 Certification – Chief Financial Officer~~.

~~101~~*

Filed herewith

Furnished herewith

***

The following material from Huntington’s Form 10-Q Report for the quarterly period ended ~~September 30, 2017,~~March 31, 2023 formatted in Inline XBRL: (1) Unaudited ~~Condensed Consolidated~~ Consolida ted Balance Sheets, (2) Unaudited ~~Condensed~~ Consolidated Statements of Income, (3) Unaudited ~~Condensed~~ Consolidated Statements of Comprehensive Income (4) Unaudited ~~Condensed~~ Consolidated Statement of Changes in Shareholders’ Equity, (5) ~~Unaudited Condensed~~Unaudite d Consolidated Statements of Cash Flows, and (6) the Notes to Unaudited ~~Condensed~~ Consolidated Financial ~~Statements.~~

Statements.

78 Huntington Bancshares Incorporated



*	~~Filed herewith~~
**	~~Furnished herewith~~

Table of Content

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the ~~Registrant~~registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

~~Huntington Bancshares Incorporated~~HUNTINGTON BANCSHARES INCORPORATED

(Registrant)



Date:		April 28, 2023
~~Date:~~	~~October 30, 2017~~	/s/ Stephen D. Steinour
			Stephen D. Steinour
			Chairman, President, and Chief Executive Officer ~~and President~~(Principal Executive Officer)

Date:		~~October 30, 2017~~April 28, 2023	/s/ ~~Howell D. McCullough III~~Zachary Wasserman
			~~Howell D. McCullough III~~Zachary Wasserman
			Chief Financial Officer (Principal Financial Officer)

~~103~~

2023 1Q Form 10-Q 79



Maryland	1-34073	31-0724920
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification No.)


Title of class	Trading Symbol(s)	Name of exchange on which registered


Depositary Shares (each representing a 1/40th interest in a share of 4.500% Series H Non-Cumulative, perpetual preferred stock)	HBANP	NASDAQ
Depositary Shares (each representing a 1/1000th interest in a share of 5.70% Series I Non-Cumulative, perpetual preferred stock)	HBANM	NASDAQ
Depositary Shares (each representing a 1/40th interest in a share of 6.875% Series J Non-Cumulative, perpetual preferred stock)	HBANL	NASDAQ
Common Stock—Par Value $0.01 per Share	HBAN	NASDAQ



Glossary of Acronyms and Terms		3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)		3935
~~Condensed~~ Consolidated Balance Sheets at ~~September 30, 2017~~March 31, 2023 and December 31, ~~2016~~2022		4035
~~Condensed~~ Consolidated Statements of Income for the three months ended March 31, 2023 and ~~nine months ended September 30, 2017 and 2016~~2022		4136
~~Condensed~~ Consolidated Statements of Comprehensive Income for the three months ended March 31, 2023 and ~~nine months ended September 30, 2017 and 2016~~2022		4337
~~Condensed~~ Consolidated Statements of Changes in Shareholders’ Equity for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2023 and ~~2016~~2022		4438
~~Condensed~~ Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2023 and ~~2016~~2022		4539
Notes to Unaudited ~~Condensed~~ Consolidated Financial Statements		4741
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		65
Executive Overview		65
Discussion of Results of Operations		7
Risk Management and Capital:		1912
Credit Risk		1912
Market Risk		2719
Liquidity Risk		2922
Operational Risk		3025
Compliance Risk		3126
Capital		3126
~~Fair Value~~		33
Business Segment Discussion	3327
Additional Disclosures		3731
Item 3. Quantitative and Qualitative Disclosures about Market Risk		9877
Item 4. Controls and Procedures		9977
PART II. OTHER INFORMATION
Item 1. Legal Proceedings		~~100~~77
Item 1A. Risk Factors		~~100~~77
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		~~100~~77
Item 6. Exhibits		~~100~~78
Signatures		~~103~~79


ACL			Allowance for Credit Losses
AFS			Available-for-Sale

ALLL			Allowance for Loan and Lease Losses

AOCI			Accumulated Other Comprehensive Income (Loss)
ASC			Accounting Standards Codification


~~ABS~~ASU			~~Asset-Backed Securities~~Accounting Standards Update
AULC
~~ACL~~		~~Allowance for Credit Losses~~

~~AFS~~	~~Available-for-Sale~~

~~ALCO~~	~~Asset-Liability Management Committee~~

~~ALLL~~	~~Allowance for Loan and Lease Losses~~

~~ANPR~~	~~Advance Notice of Proposed Rulemaking~~

~~ASC~~	~~Accounting Standards Codification~~

~~ATM~~	~~Automated Teller Machine~~

~~AULC~~	Allowance for Unfunded ~~Loan~~Lending Commitments

Basel III			Refers to the final rule issued by the FRB and OCC and published in the Federal Register on October 11, 2013

~~BHC~~			~~Bank Holding Companies~~
Capstone Partners			Capstone Enterprises LLC
~~BHC Act~~			~~Bank Holding Company Act of 1956~~
C&I
~~C&I~~		Commercial and Industrial

~~CCAR~~			~~Comprehensive Capital Analysis and Review~~

~~CDO~~CDs			~~Collateralized Debt Obligations~~Certificates of Deposit

~~CDs~~CECL			~~Certificate of Deposit~~Current Expected Credit Losses
CET1
~~CET1~~		Common ~~equity tier~~Equity Tier 1 on a ~~transitional~~ Basel III basis
CFPB
~~CFPB~~		Bureau of Consumer Financial Protection ~~Bureau~~

~~CISA~~CMO			~~Cybersecurity Information Sharing Act~~

~~CMO~~	Collateralized Mortgage Obligations
COVID-19			Coronavirus Disease 2019
~~CRA~~			~~Community Reinvestment Act~~

~~CRE~~
CRE			Commercial Real Estate

~~CREVF~~			~~Commercial Real Estate and Vehicle Finance~~

~~DIF~~	~~Deposit Insurance Fund~~

Dodd-Frank Act		Dodd-Frank Wall Street Reform and Consumer Protection Act
EAD			Exposure at Default
~~EFT~~			~~Electronic Fund Transfer~~

~~EPS~~	~~Earnings Per Share~~

~~EVE~~	~~Economic Value of Equity~~

~~FASB~~	~~Financial Accounting Standards Board~~

~~FDIC~~	~~Federal Deposit Insurance Corporation~~

~~FDICIA~~	~~Federal Deposit Insurance Corporation Improvement Act of 1991~~

~~FHA~~	~~Federal Housing Administration~~

~~FHC~~	~~Financial Holding Company~~

~~FHLB~~	~~Federal Home Loan Bank~~

~~FICO~~	~~Fair Isaac Corporation~~



~~FirstMerit~~		~~FirstMerit Corporation~~
ESG		Environmental, Social, and Governance
~~FRB~~EVE		Economic Value of Equity



FDIC		Federal Deposit Insurance Corporation
Federal Reserve		Board of Governors of the Federal Reserve ~~Bank~~System

~~FTE~~FHLB		~~Fully-Taxable Equivalent~~Federal Home Loan Bank
FICO		Fair Isaac Corporation
~~FTP~~




FTE		Fully-Taxable Equivalent or Full-Time Equivalent
FTP		Funds Transfer Pricing
FVO		Fair Value Option
GAAP		Generally Accepted Accounting Principles in the United States of America
GDP		Gross Domestic Product
~~HIP~~		~~Huntington Investment and Tax Savings Plan~~

~~HQLA~~		~~High Quality Liquid Asset~~

HTM		Held-to-Maturity

IRS		Internal Revenue Service

~~LCR~~		~~Liquidity Coverage Ratio~~

LGD		~~Loss-Given-Default~~Loss Given Default
LIBOR
~~LIBOR~~	London Interbank Offered Rate
LIHTC
~~LIHTC~~	Low Income Housing Tax Credit

~~LTV~~MBS		~~Loan to Value~~Mortgage-Backed Securities
MD&A
~~MBS~~	~~Mortgage-Backed Securities~~

~~MD&A~~	Management’s Discussion and Analysis of Financial Condition and Results of Operations

~~MSA~~MSR		~~Metropolitan Statistical Area~~Mortgage Servicing Right
NAICS
~~MSR~~	~~Mortgage Servicing Rights~~

~~NAICS~~	North American Industry Classification System
NALs		Nonaccrual Loans
~~NALs~~NCO		~~Nonaccrual Loans~~Net Charge-off
NII
~~NCO~~	~~Net Charge-off~~

~~NII~~	Net Interest Income
NIM
~~NIM~~	Net Interest Margin
NM		Not Meaningful
NPAs		Nonperforming Assets


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


OCC		Office of the Comptroller of the Currency
OCI
~~OCI~~	Other Comprehensive Income (Loss)

~~OCR~~		~~Optimal Customer Relationship~~
OLEM
~~OLEM~~	Other Loans Especially Mentioned

~~OREO~~		~~Other Real Estate Owned~~

~~OTTI~~		~~Other-Than-Temporary Impairment~~

PD		~~Probability-Of-Default~~Probability of Default

~~Plan~~PPP		~~Huntington Bancshares Retirement Plan~~Paycheck Protection Program

~~RBHPCG~~



RBHPCG		Regional Banking and The Huntington Private Client Group

~~REIT~~	~~Real Estate Investment Trust~~

~~ROC~~	~~Risk Oversight Committee~~

~~RWA~~	~~Risk-Weighted Assets~~

~~SAD~~	~~Special Assets Division~~

~~SBA~~	~~Small Business Administration~~

~~SEC~~	~~Securities and Exchange Commission~~



ROC		Risk Oversight Committee
~~SERP~~		~~Supplemental Executive Retirement Plan~~

~~SRIP~~		~~Supplemental Retirement Income Plan~~
RPS		Retirement Plan Services
~~TCE~~SBA		~~Tangible Common Equity~~Small Business Administration
SCB		Stress Capital Buffer
~~TDR~~SEC		Securities and Exchange Commission
SOFR		Secured Overnight Financing Rate

TDR		Troubled Debt ~~Restructured Loan~~Restructuring
Torana		Digital Payments Torana, Inc.
U.S. Treasury		U.S. Department of the Treasury

~~UCS~~		~~Uniform Classification System~~
VIE
~~UPB~~	~~Unpaid Principal Balance~~

~~USDA~~	~~U.S. Department of Agriculture~~

~~VIE~~	Variable Interest Entity
XBRL
~~XBRL~~	eXtensible Business Reporting Language



	Nine Months Ended
	September 30, 2017						September 30, 2016
	Amount			EPS (1)			Amount			EPS (1)
Net income	$	754,403					$	472,858
Earnings per share, after-tax				$	0.63					$	0.50

Significant Items—favorable (unfavorable) impact:	Earnings			EPS (1)			Earnings			EPS (1)
Mergers and acquisitions, net expenses	$	(152,121	)				$	(185,944	)
Tax impact	53,243						61,252
Mergers and acquisitions, after-tax	$	(98,878	)	$	(0.09	)	$	(124,692	)	$	(0.14	)



Table 4 - Consolidated Average Balance Sheet and Net Interest Margin Analysis (Continued)

	Average Yield Rates (2)
	Three Months Ended
	September 30,		June 30,		March 31,		December 31,		September 30,
Fully-taxable equivalent basis (3)	2017		2017		2017		2016		2016
Assets:
Interest-bearing deposits in banks	1.77	%	1.53	%	1.09	%	0.64	%	0.64	%
Loans held for sale	3.83		3.73		3.82		2.95		3.53
Securities:
Available-for-sale and other securities:
Taxable	2.42		2.38		2.38		2.43		2.35
Tax-exempt	3.62		3.71		3.77		3.60		3.01
Total available-for-sale and other securities	2.67		2.64		2.65		2.65		2.50
Trading account securities	0.16		0.25		0.11		0.18		0.58
Held-to-maturity securities—taxable	2.36		2.38		2.36		2.43		2.41
Total securities	2.55		2.55		2.54		2.58		2.47
Loans and leases: (1)
Commercial:
Commercial and industrial	4.05		4.04		3.98		3.83		3.68
Commercial real estate:
Construction	4.55		4.26		3.95		3.65		3.76
Commercial	4.08		3.97		3.69		3.54		3.54
Commercial real estate	4.16		4.02		3.74		3.56		3.58
Total commercial	4.07		4.04		3.93		3.78		3.66
Consumer:
Automobile	3.60		3.55		3.55		3.57		3.37
Home equity	4.72		4.61		4.45		4.24		4.21
Residential mortgage	3.65		3.66		3.63		3.58		3.61
RV and marine finance	5.43		5.57		5.63		5.64		5.70
Other consumer	11.59		11.47		12.05		10.91		10.93
Total consumer	4.32		4.27		4.23		4.13		3.97
Total loans and leases	4.20		4.15		4.07		3.95		3.81
Total earning assets	3.78		3.75		3.70		3.60		3.52
Liabilities:
Deposits:
Demand deposits—noninterest-bearing	—		—		—		—		—
Demand deposits—interest-bearing	0.23		0.20		0.15		0.11		0.11
Total demand deposits	0.10		0.09		0.07		0.04		0.04
Money market deposits	0.36		0.31		0.26		0.24		0.24
Savings and other domestic deposits	0.20		0.21		0.22		0.25		0.21
Core certificates of deposit	0.73		0.56		0.39		0.29		0.43
Total core deposits	0.30		0.26		0.22		0.20		0.20
Other domestic time deposits of $250,000 or more	0.61		0.49		0.45		0.39		0.40
Brokered deposits and negotiable CDs	1.16		0.95		0.72		0.48		0.44
Deposits in foreign offices	—		—		—		0.13		0.13
Total deposits	0.35		0.31		0.26		0.23		0.22
Short-term borrowings	0.95		0.78		0.63		0.36		0.29
Long-term debt	2.65		2.49		2.33		2.19		1.97
Total interest-bearing liabilities	0.68		0.61		0.54		0.48		0.49
Net interest rate spread	3.10		3.14		3.16		3.12		3.03
Impact of noninterest-bearing funds on margin	0.19		0.17		0.14		0.13		0.15
Net interest margin	3.29	%	3.31	%	3.30	%	3.25	%	3.18	%




Table 5 - Consolidated YTD Average Balance Sheets and Net Interest Margin Analysis

(dollar amounts in millions)	YTD Average Balances											YTD Average Rates (2)
	Nine Months Ended September 30,						Change					Nine Months Ended September 30,
Fully-taxable equivalent basis (1)	2017			2016			Amount			Percent		2017		2016
Assets:
Interest-bearing deposits in banks	$	102		$	97		$	5		5	%	1.46	%	0.37	%
Loans held for sale	540			567			(27		)	(5	)	3.79		3.76
Securities:
Available-for-sale and other securities:
Taxable	12,735			7,781			4,954			64		2.40		2.37
Tax-exempt	3,105			2,576			529			21		3.70		3.25
Total available-for-sale and other securities	15,840			10,357			5,483			53		2.65		2.59
Trading account securities	107			43			64			149		0.17		0.68
Held-to-maturity securities—taxable	7,785			5,781			2,004			35		2.37		2.43
Total securities	23,732			16,181			7,551			47		2.55		2.53
Loans and leases: (3)
Commercial:
Commercial and industrial	27,852			22,326			5,526			25		4.03		3.57
Commercial real estate:
Construction	1,198			979			219			22		4.24		3.66
Commercial	6,014			4,621			1,393			30		3.92		3.50
Commercial real estate	7,212			5,600			1,612			29		3.97		3.52
Total commercial	35,064			27,926			7,138			26		4.01		3.56
Consumer:
Automobile	11,369			10,430			939			9		3.57		3.24
Home equity	9,983			8,708			1,275			15		4.60		4.19
Residential mortgage	8,055			6,406			1,649			26		3.65		3.65
RV and marine finance	2,071			307			1,764			575		5.54		5.70
Other consumer	997			670			327			49		11.53		10.46
Total consumer	32,475			26,521			5,954			22		4.27		3.86
Total loans and leases	67,539			54,447			13,092			24		4.14		3.71
Allowance for loan and lease losses	(660		)	(614		)	(46		)	7
Net loans and leases	66,879			53,833			13,046			24
Total earning assets	91,913			71,292			20,621			29		3.75	%	3.46	%
Cash and due from banks	1,530			1,114			416			37
Intangible assets	2,373			1,003			1,370			137
All other assets	5,433			4,446			987			22
Total assets	$	100,589		$	77,241		$	23,348		30	%
Liabilities and Shareholders’ Equity:
Deposits:
Demand deposits—noninterest-bearing	$	21,684		$	17,634		$	4,050		23	%	—	%	—	%
Demand deposits—interest-bearing	17,380			9,538			7,842			82		0.20		0.10
Total demand deposits	39,064			27,172			11,892			44		0.09		0.03
Money market deposits	19,399			19,220			179			1		0.31		0.24
Savings and other domestic deposits	11,815			6,541			5,274			81		0.21		0.16
Core certificates of deposit	2,176			2,186			(10		)	—		0.55		0.67
Total core deposits	72,454			55,119			17,335			31		0.26		0.21
Other domestic time deposits of $250,000 or more	460			413			47			11		0.51		0.40
Brokered deposits and negotiable CDs	3,770			3,239			531			16		0.93		0.41
Deposits in foreign offices	—			222			(222		)	—		—		0.13
Total deposits	76,684			58,993			17,691			30		0.31		0.23
Short-term borrowings	2,952			1,161			1,791			154		0.76		0.32
Long-term debt	8,738			7,866			872			11		2.49		1.84
Total interest-bearing liabilities	66,690			50,386			16,304			32		0.61		0.48
All other liabilities	1,627			1,513			114			8
Shareholders’ equity	10,588			7,708			2,880			37
Total liabilities and shareholders’ equity	$	100,589		$	77,241		$	23,348		30	%
Net interest rate spread												3.13		2.98
Impact of noninterest-bearing funds on margin												0.17		0.14
Net interest margin												3.30	%	3.12	%



Table 6 - Noninterest Income
	Three Months Ended							3Q17 vs. 3Q16					3Q17 vs. 2Q17
	September 30,			June 30,		September 30,		Change					Change
(dollar amounts in thousands)	2017			2017		2016		Amount			Percent		Amount			Percent
Service charges on deposit accounts	$	90,681		$	87,582	$	86,847	$	3,834		4	%	$	3,099		4	%
Cards and payment processing income	53,647			52,485		44,320		9,327			21		1,162			2
Mortgage banking income	33,615			32,268		40,603		(6,988		)	(17	)	1,347			4
Trust and investment management services	33,531			32,232		28,923		4,608			16		1,299			4
Insurance income	13,992			15,843		15,865		(1,873		)	(12	)	(1,851		)	(12	)
Brokerage income	14,458			16,294		14,719		(261		)	(2	)	(1,836		)	(11	)
Capital markets fees	21,719			16,836		14,750		6,969			47		4,883			29
Bank owned life insurance income	16,453			15,322		14,452		2,001			14		1,131			7
Gain on sale of loans	13,877			12,002		7,506		6,371			85		1,875			16
Net securities gains (losses)	(33		)	135		1,031		(1,064		)	(103	)	(168		)	(124	)
Other noninterest income	38,157			44,219		33,399		4,758			14		(6,062		)	(14	)
Total noninterest income	$	330,097		$	325,218	$	302,415	$	27,682		9	%	$	4,879		2	%



Table 8 - Noninterest Expense
	Three Months Ended						3Q17 vs. 3Q16					3Q17 vs. 2Q17
	September 30,		June 30,		September 30,		Change					Change
(dollar amounts in thousands)	2017		2017		2016		Amount			Percent		Amount			Percent
Personnel costs	$	377,088	$	391,997	$	405,024	$	(27,936	)	(7	)%	$	(14,909	)	(4	)%
Outside data processing and other services	79,586		75,169		91,133		(11,547		)	(13	)	4,417			6
Equipment	45,458		42,924		40,792		4,666			11		2,534			6
Net occupancy	55,124		52,613		41,460		13,664			33		2,511			5
Professional services	15,227		18,190		47,075		(31,848		)	(68	)	(2,963		)	(16	)
Marketing	16,970		18,843		14,438		2,532			18		(1,873		)	(10	)
Deposit and other insurance expense	18,514		20,418		14,940		3,574			24		(1,904		)	(9	)
Amortization of intangibles	14,017		14,242		9,046		4,971			55		(225		)	(2	)
Other noninterest expense	58,444		59,968		48,339		10,105			21		(1,524		)	(3	)
Total noninterest expense	$	680,428	$	694,364	$	712,247	$	(31,819	)	(4	)%	$	(13,936	)	(2	)%
Number of employees (average full-time equivalent)	15,508		15,877		14,511		997			7	%	(369		)	(2	)%



Table 17 - Net Interest Income at Risk

	Net Interest Income at Risk (%)
Basis point change scenario	-25		+100		+200
Board policy limits	N/A		-2.0	%	-4.0	%
September 30, 2017	-0.5	%	2.5	%	5.0	%
December 31, 2016	-1.0	%	2.7	%	5.6	%



Table 19 - Deposit Composition
(dollar amounts in millions)
	September 30,				June 30,				March 31,				December 31,				September 30,
	2017				2017				2017				2016				2016
By Type:
Demand deposits—noninterest-bearing	$	22,225	28	%	$	21,420	28	%	$	21,489	28	%	$	22,836	30	%	$	23,426	30	%
Demand deposits—interest-bearing	18,343		23		17,113		23		18,618		24		15,676		21		15,730		20
Money market deposits	20,553		26		19,423		26		18,664		24		18,407		24		18,604		24
Savings and other domestic deposits	11,441		15		11,758		15		12,043		16		11,975		16		12,418		16
Core certificates of deposit	2,009		3		2,088		3		2,188		3		2,535		3		2,724		4
Total core deposits:	74,571		95		71,802		95		73,002		95		71,429		94		72,902		94
Other domestic deposits of $250,000 or more	418		1		441		1		524		1		394		1		391		1
Brokered deposits and negotiable CDs	3,456		4		3,690		4		3,897		4		3,785		5		3,972		5
Deposits in foreign offices	—		—		—		—		—		—		—		—		140		—
Total deposits	$	78,445	100	%	$	75,933	100	%	$	77,423	100	%	$	75,608	100	%	$	77,405	100	%
Total core deposits:
Commercial	$	35,516	48	%	$	32,201	45	%	$	32,963	45	%	$	31,887	45	%	$	32,936	45	%
Consumer	39,055		52		39,601		55		40,039		55		39,542		55		39,966		55
Total core deposits	$	74,571	100	%	$	71,802	100	%	$	73,002	100	%	$	71,429	100	%	$	72,902	100	%



Table 20 - Regulatory Capital Data
		Basel III
(dollar amounts in millions)		September 30, 2017			June 30, 2017			December 31, 2016
Total risk-weighted assets	Consolidated	$	78,631		$	78,366		$	78,263
	Bank	78,848			78,489			78,242
Common equity tier I risk-based capital	Consolidated	7,817			7,740			7,486
	Bank	8,491			8,367			8,153
Tier 1 risk-based capital	Consolidated	8,886			8,809			8,547
	Bank	9,362			9,238			9,086
Tier 2 risk-based capital	Consolidated	1,638			1,640			1,668
	Bank	1,706			1,706			1,732
Total risk-based capital	Consolidated	10,524			10,449			10,215
	Bank	11,068			10,944			10,818
Tier 1 leverage ratio	Consolidated	8.96		%	8.98		%	8.70		%
	Bank	9.44			9.43			9.29
Common equity tier I risk-based capital ratio	Consolidated	9.94			9.88			9.56
	Bank	10.77			10.66			10.42
Tier 1 risk-based capital ratio	Consolidated	11.30			11.24			10.92
	Bank	11.87			11.77			11.61
Total risk-based capital ratio	Consolidated	13.39			13.33			13.05
	Bank	14.04			13.94			13.83



Consumer and Business Banking

Table 22 - Key Performance Indicators for Consumer and Business Banking
	Nine Months Ended September 30,						Change
(dollar amounts in thousands unless otherwise noted)	2017			2016			Amount			Percent
Net interest income	$	1,255,617		$	911,706		$	343,911		38	%
Provision for credit losses	74,270			43,474			30,796			71
Noninterest income	544,445			459,732			84,713			18
Noninterest expense	1,242,152			967,417			274,735			28
Provision for income taxes	169,274			126,191			43,083			34
Net income	$	314,366		$	234,356		$	80,010		34	%
Number of employees (average full-time equivalent)	8,696			6,997			1,699			24	%
Total average assets (in millions)	$	25,461		$	19,921		$	5,540		28
Total average loans/leases (in millions)	20,577			16,967			3,610			21
Total average deposits (in millions)	45,478			33,759			11,719			35
Net interest margin	3.79		%	3.69		%	0.10		%	3
NCOs	$	75,064		$	49,873		$	25,191		51
NCOs as a % of average loans and leases	0.48		%	0.39		%	0.09		%	23



Commercial Banking

Table 23 - Key Performance Indicators for Commercial Banking
	Nine Months Ended September 30,						Change
(dollar amounts in thousands unless otherwise noted)	2017			2016			Amount			Percent
Net interest income	$	514,900		$	355,263		$	159,637		45	%
Provision for credit losses	21,378			53,212			(31,834		)	(60	)
Noninterest income	176,609			150,228			26,381			18
Noninterest expense	301,385			246,941			54,444			22
Provision for income taxes	129,061			71,868			57,193			80
Net income	$	239,685		$	133,470		$	106,215		80	%
Number of employees (average full-time equivalent)	1,078			894			184			21	%
Total average assets (in millions)	$	24,026		$	19,012		$	5,014		26
Total average loans/leases (in millions)	19,051			14,951			4,100			27
Total average deposits (in millions)	19,206			14,976			4,230			28
Net interest margin	3.33		%	2.95		%	0.38		%	13
NCOs	$	13,420		$	19,951		$	(6,531	)	(33	)
NCOs as a % of average loans and leases	0.09		%	0.18		%	(0.09		)%	(50	)



Commercial Real Estate and Vehicle Finance

Table 24 - Commercial Real Estate and Vehicle Finance
	Nine Months Ended September 30,						Change
(dollar amounts in thousands unless otherwise noted)	2017			2016			Amount			Percent
Net interest income	$	419,556		$	317,704		$	101,852		32	%
Provision for credit losses	40,047			18,706			21,341			114
Noninterest income	34,750			25,951			8,799			34
Noninterest expense	163,989			125,254			38,735			31
Provision for income taxes	87,594			69,893			17,701			25
Net income	$	162,676		$	129,802		$	32,874		25	%
Number of employees (average full-time equivalent)	406			330			76			23	%
Total average assets (in millions)	$	24,121		$	19,520		$	4,601		24
Total average loans/leases (in millions)	23,025			18,433			4,592			25
Total average deposits (in millions)	1,878			1,669			209			13
Net interest margin	2.42		%	2.25		%	0.17		%	8
NCOs (Recoveries)	$	28,007		$	(2,146	)	$	30,153		(1,405	)
NCOs as a % of average loans and leases	0.16		%	(0.02		)%	0.18		%	(900	)



Regional Banking and The Huntington Private Client Group

Table 25 - Key Performance Indicators for Regional Banking and The Huntington Private Client Group
	Nine Months Ended September 30,						Change
(dollar amounts in thousands unless otherwise noted)	2017			2016			Amount			Percent
Net interest income	$	145,089		$	112,473		$	32,616		29	%
Provision for credit losses	510			490			20			4
Noninterest income	140,610			126,245			14,365			11
Noninterest expense	182,171			166,645			15,526			9
Provision for income taxes	36,056			25,054			11,002			44
Net income	$	66,962		$	46,529		$	20,433		44	%
Number of employees (average full-time equivalent)	1,027			953			74			8	%
Total average assets (in millions)	$	5,473		$	4,424		$	1,049		24
Total average loans/leases (in millions)	4,779			3,997			782			20
Total average deposits (in millions)	5,893			5,002			891			18
Net interest margin	3.38		%	3.01		%	0.37		%	12
NCOs (Recoveries)	$	1,879		$	(2,392	)	$	4,271		(179	)
NCOs as a % of average loans and leases	0.05		%	(0.08		)%	0.13		%	(163	)
Total assets under management (in billions)—eop	$	18.0		$	17.3		$	0.7		4
Total trust assets (in billions)—eop	106.3			98.8			7.5			8



Huntington Bancshares Incorporated
Condensed Consolidated Statements of Income
(Unaudited)
(dollar amounts in thousands, except per share amounts)	Three Months Ended September 30,					Nine Months Ended September 30,
	2017			2016		2017			2016
Interest and fee income:
Loans and leases	$	724,284		$	583,653	$	2,100,056		$	1,516,849
Available-for-sale and other securities
Taxable	74,409			57,572		228,986			138,178
Tax-exempt	18,579			13,687		55,961			40,499
Held-to-maturity securities—taxable	48,743			33,098		138,214			105,307
Other	6,972			6,336		16,554			16,422
Total interest income	872,987			694,346		2,539,771			1,817,255
Interest expense:
Deposits	49,611			26,233		126,688			71,575
Short-term borrowings	5,713			959		16,782			2,770
Federal Home Loan Bank advances	65			66		197			207
Subordinated notes and other long-term debt	59,165			41,698		163,184			108,366
Total interest expense	114,554			68,956		306,851			182,918
Net interest income	758,433			625,390		2,232,920			1,634,337
Provision for credit losses	43,590			63,805		136,206			115,896
Net interest income after provision for credit losses	714,843			561,585		2,096,714			1,518,441
Service charges on deposit accounts	90,681			86,847		261,683			232,722
Cards and payment processing income	53,647			44,320		153,301			119,951
Mortgage banking income	33,615			40,603		97,575			90,737
Trust and investment management services	33,531			28,923		99,633			74,258
Insurance income	13,992			15,865		45,099			48,037
Brokerage income	14,458			14,719		46,510			44,819
Capital markets fees	21,719			14,750		52,755			40,797
Bank owned life insurance income	16,453			14,452		49,317			40,500
Gain on sale of loans	13,877			7,506		38,701			22,166
Net gains on sales of securities	71			1,031		3,781			1,763
Impairment losses on available-for-sale securities	(104		)	—		(3,687		)	(76		)
Other noninterest income	38,157			33,399		123,110			99,720
Total noninterest income	330,097			302,415		967,778			815,394
Personnel costs	377,088			405,024		1,151,085			989,369
Outside data processing and other services	79,586			91,133		241,957			216,047
Equipment	45,458			40,792		135,082			105,173
Net occupancy	55,124			41,460		175,437			103,640
Professional services	15,227			47,075		51,712			82,101
Marketing	16,970			14,438		49,736			41,479
Deposit and other insurance expense	18,514			14,940		59,031			38,335
Amortization of intangibles	14,017			9,046		42,614			16,357
Other noninterest expense	58,444			48,339		175,560			134,487
Total noninterest expense	680,428			712,247		2,082,214			1,726,988
Income before income taxes	364,512			151,753		982,278			606,847
Provision for income taxes	89,944			24,749		227,875			133,989
Net income	274,568			127,004		754,403			472,858
Dividends on preferred shares	18,903			18,537		56,670			46,409
Net income applicable to common shares	$	255,665		$	108,467	$	697,733		$	426,449



																Accumulated Other Comprehensive Gain (Loss)			Retained Earnings (Deficit)
(dollar amounts in thousands, except per share amounts)	Preferred Stock		Common Stock					Capital Surplus			Treasury Stock
	Amount		Shares		Amount						Shares		Amount									Total
Nine Months Ended September 30, 2016
Balance, beginning of period	$	386,291	796,970		$	7,970		$	7,038,502		(2,041	)	$	(17,932	)	$	(226,158	)	$	(594,067	)	$	6,594,606
Net income																			472,858			472,858
Other comprehensive income (loss)																53,983						53,983
FirstMerit Acquisition:
Issuance of common stock			285,425		2,854			2,764,044														2,766,898
Issuance of Series C preferred stock	100,000							4,320														104,320
Net proceeds from issuance of Series D preferred stock	584,936																					584,936
Cash dividends declared:
Common ($0.21 per share)																			(187,710		)	(187,710		)
Preferred Series A ($63.75 per share)																			(23,110		)	(23,110		)
Preferred Series B ($25.08 per share)																			(890		)	(890		)
Preferred Series C ($11.59 per share)																			(1,159		)	(1,159		)
Preferred Series D ($35.42 per share)																			(21,250		)	(21,250		)
Recognition of the fair value of share-based compensation								48,568														48,568
Other share-based compensation activity			5,014		50			4,389											(3,823		)	616
Shares sold to HIP			322		3			3,207														3,210
Other								119			(908	)	(9,001		)				(229		)	(9,111		)
Balance, end of period	$	1,071,227	1,087,731		$	10,877		$	9,863,149		(2,949	)	$	(26,933	)	$	(172,175	)	$	(359,380	)	$	10,386,765

Nine Months Ended September 30, 2017
Balance, beginning of period	$	1,071,227	1,088,641		$	10,886		$	9,881,277		(2,953	)	$	(27,384	)	$	(401,016	)	$	(226,844	)	$	10,308,146
Net income																			754,403			754,403
Other comprehensive income (loss)																31,053						31,053
Repurchases of common stock			(9,645	)	(96		)	(123,108		)												(123,204		)
Cash dividends declared:
Common ($0.24 per share)																			(260,919		)	(260,919		)
Preferred Series A ($63.75 per share)																			(23,110		)	(23,110		)
Preferred Series B ($28.96 per share)																			(1,028		)	(1,028		)
Preferred Series C ($44.07 per share)																			(4,407		)	(4,407		)
Preferred Series D ($46.88 per share)																			(28,125		)	(28,125		)
Recognition of the fair value of share-based compensation								72,747														72,747
Other share-based compensation activity			5,361		53			(11,928		)									(8,499		)	(20,374		)
Other	59		10		1			1,612			(468	)	(7,749		)				(256		)	(6,333		)
Balance, end of period	$	1,071,286	1,084,367		$	10,844		$	9,820,600		(3,421	)	$	(35,133	)	$	(369,963	)	$	201,215		$	10,698,849



	September 30, 2017
	Credit Risk Profile by UCS Classification
(dollar amounts in thousands)	Pass		OLEM		Substandard		Doubtful		Total
Commercial
Commercial and industrial	$	25,447,805	$	803,540	$	1,189,789	$	28,210	$	27,469,344
Commercial real estate	6,934,670		144,122		126,352		952		7,206,096

	Credit Risk Profile by FICO Score (1), (2)
	750+		650-749		<650		Other (3)		Total
Consumer
Automobile	$	5,939,409	$	4,278,062	$	1,371,574	$	285,810	$	11,874,855
Home equity	6,359,778		2,985,933		621,817		14,927		9,982,455
Residential mortgage	5,311,993		2,479,820		599,055		130,804		8,521,672
RV and marine finance	1,385,176		853,545		91,302		39,907		2,369,930
Other consumer	404,047		510,804		136,346		12,556		1,063,753



	September 30, 2017						Three Months Ended September 30, 2017				Nine Months Ended September 30, 2017
(dollar amounts in thousands)	Ending Balance		Unpaid Principal Balance (6)		Related Allowance		Average Balance		Interest Income Recognized		Average Balance		Interest Income Recognized
With no related allowance recorded:
Commercial and industrial	$	299,349	$	324,474	$	—	$	294,513	$	4,969	$	227,611	$	7,467
Commercial real estate	65,382		92,215		—		71,277		1,825		80,388		5,762
Automobile	—		—		—		—		—		—		—
Home equity	—		—		—		—		—		—		—
Residential mortgage	—		—		—		—		—		—		—
RV and marine finance	—		—		—		—		—		—		—
Other consumer	—		—		—		—		—		—		—

With an allowance recorded:
Commercial and industrial	213,520		245,328		19,958		222,745		1,950		334,297		12,712
Commercial real estate	53,078		60,366		2,880		40,672		468		54,352		1,388
Automobile	33,049		33,049		1,683		32,740		496		32,293		1,576
Home equity	335,763		367,870		14,486		330,784		3,713		326,932		11,639
Residential mortgage	310,440		341,724		8,060		319,745		2,837		329,193		8,851
RV and marine finance	1,520		1,520		88		1,425		23		884		58
Other consumer	6,456		6,456		1,288		6,944		47		7,117		184

Total
Commercial and industrial (3)	512,869		569,802		19,958		517,258		6,919		561,908		20,179
Commercial real estate (4)	118,460		152,581		2,880		111,949		2,293		134,740		7,150
Automobile (2)	33,049		33,049		1,683		32,740		496		32,293		1,576
Home equity (5)	335,763		367,870		14,486		330,784		3,713		326,932		11,639
Residential mortgage (5)	310,440		341,724		8,060		319,745		2,837		329,193		8,851
RV and marine finance (2)	1,520		1,520		88		1,425		23		884		58
Other consumer (2)	6,456		6,456		1,288		6,944		47		7,117		184



	December 31, 2016						Three Months Ended September 30, 2016				Nine Months Ended September 30, 2016
(dollar amounts in thousands)	Ending Balance		Unpaid Principal Balance (6)		Related Allowance		Average Balance		Interest Income Recognized		Average Balance		Interest Income Recognized
With no related allowance recorded:
Commercial and industrial	$	299,606	$	358,712	$	—	$	305,956	$	2,235	$	290,163	$	4,858
Commercial real estate	88,817		126,152		—		80,000		907		58,666		2,257
Automobile	—		—		—		—		—		—		—
Home equity	—		—		—		—		—		—		—
Residential mortgage	—		—		—		—		—		—		—
RV and marine finance	—		—		—		—		—		—		—
Other consumer	—		—		—		—		—		—		—

With an allowance recorded:
Commercial and industrial	406,243		448,121		22,259		281,934		1,631		274,262		5,460
Commercial real estate	97,238		107,512		3,434		49,140		521		49,587		1,895
Automobile	30,961		31,298		1,850		31,540		541		31,912		1,643
Home equity	319,404		352,722		15,032		284,512		3,453		267,264		9,382
Residential mortgage	327,753		363,099		12,849		344,237		2,978		353,259		9,041
RV and marine finance	—		—		—		—		—		—		—
Other consumer	3,897		3,897		260		4,454		58		4,627		178

Total
Commercial and industrial (3)	705,849		806,833		22,259		587,890		3,866		564,425		10,318
Commercial real estate (4)	186,055		233,664		3,434		129,140		1,428		108,253		4,152
Automobile (2)	30,961		31,298		1,850		31,540		541		31,912		1,643
Home equity (5)	319,404		352,722		15,032		284,512		3,453		267,264		9,382
Residential mortgage (5)	327,753		363,099		12,849		344,237		2,978		353,259		9,041
RV and marine finance (2)	—		—		—		—		—		—		—
Other consumer (2)	3,897		3,897		260		4,454		58		4,627		178



(dollar amounts in thousands)										Lowest Credit Rating (2)	# of Issuers Currently Performing/ Remaining (3)	Actual Deferrals and Defaults as a % of Original Collateral	Expected Defaults as a % of Remaining Performing Collateral	Excess Subordination (4)
Deal Name	Par Value		Amortized Cost		Fair Value		Unrealized Loss (1)			Lowest Credit Rating (2)	# of Issuers Currently Performing/ Remaining (3)	Actual Deferrals and Defaults as a % of Original Collateral	Expected Defaults as a % of Remaining Performing Collateral	Excess Subordination (4)
MM Comm III	4,509		4,308		3,641		(667		)	BB+	5/8	5	7	34
Reg Diversified	25,500		100		510		410			D		—	—	—
Tropic III	31,000		30,989		19,976		(11,013		)	BB	27/36	16	6	41
Total at September 30, 2017	$	61,009	$	35,397	$	24,127	$	(11,270	)
Total at December 31, 2016	$	137,197	$	101,210	$	76,003	$	(25,207	)



Fair Value Method:	Three Months Ended September 30,						Nine Months Ended September 30,
(dollar amounts in thousands)	2017			2016			2017			2016
Fair value, beginning of period	$	12,528		$	13,105		$	13,747		$	17,585
Change in fair value during the period due to:
Time decay (1)	(202		)	(217		)	(649		)	(734		)
Payoffs (2)	(295		)	(423		)	(876		)	(1,392		)
Changes in valuation inputs or assumptions (3)	(278		)	(37		)	(469		)	(3,031		)
Fair value, end of period:	$	11,753		$	12,428		$	11,753		$	12,428
Weighted-average life (years)	5.5			5.1			5.5			5.1



Amortization Method:	Three Months Ended September 30,						Nine Months Ended September 30,
(dollar amounts in thousands)	2017			2016			2017			2016
Carrying value, beginning of period	$	176,491		$	121,292		$	172,466		$	143,133
New servicing assets created	12,841			12,434			30,694			25,820
Servicing assets acquired	—			15,317			—			15,317
Impairment (charge) / recovery	688			2,543			(318		)	(21,093		)
Amortization and other	(6,995		)	(7,194		)	(19,817		)	(18,785		)
Carrying value, end of period	$	183,025		$	144,392		$	183,025		$	144,392
Fair value, end of period	$	183,583		$	144,623		$	183,583		$	144,623
Weighted-average life (years)	7.0			6.1			7.0			6.1



	Three Months Ended September 30, 2017
				Tax (Expense)
(dollar amounts in thousands)	Pretax			Benefit			After-tax
Noncredit-related impairment recoveries (losses) on debt securities not expected to be sold	$	410		$	(145	)	$	265
Unrealized holding gains (losses) on available-for-sale debt securities arising during the period	(42,429		)	14,828			(27,601		)
Less: Reclassification adjustment for net losses (gains) included in net income	8,715			(3,082		)	5,633
Net change in unrealized holding gains (losses) on available-for-sale debt securities	(33,304		)	11,601			(21,703		)
Unrealized gains (losses) on derivatives used in cash flow hedging relationships arising during the period	1,885			(660		)	1,225
Less: Reclassification adjustment for net (gains) losses included in net income	144			(51		)	93
Net change in unrealized gains (losses) on derivatives used in cash flow hedging relationships	2,029			(711		)	1,318
Net change in pension and other post-retirement obligations	1,198			(419		)	779
Total other comprehensive income (loss)	$	(30,077	)	$	10,471		$	(19,606	)



(dollar amounts in thousands)	Unrealized gains and (losses) on debt securities (1)			Unrealized gains and (losses) on equity securities		Unrealized gains and (losses) on cash flow hedging derivatives			Unrealized gains (losses) for pension and other post- retirement obligations			Total
December 31, 2015	$	8,361		$	176	$	(3,948	)	$	(230,747	)	$	(226,158	)
Other comprehensive income before reclassifications	47,934			110		5,231			—			53,275
Amounts reclassified from accumulated OCI to earnings	(1,314		)	—		(500		)	2,522			708
Period change	46,620			110		4,731			2,522			53,983
September 30, 2016	$	54,981		$	286	$	783		$	(228,225	)	$	(172,175	)

December 31, 2016	$	(192,764	)	$	287	$	(2,634	)	$	(205,905	)	$	(401,016	)
Other comprehensive income before reclassifications	15,465			—		828			—			16,293
Amounts reclassified from accumulated OCI to earnings	12,007			—		735			2,018			14,760
Period change	27,472			—		1,563			2,018			31,053
September 30, 2017	$	(165,292	)	$	287	$	(1,071	)	$	(203,887	)	$	(369,963	)



	Reclassifications out of accumulated OCI
Accumulated OCI components	Amounts reclassified from accumulated OCI						Location of net gain (loss) reclassified from accumulated OCI into earnings
	Three Months Ended
(dollar amounts in thousands)	September 30, 2017			September 30, 2016
Gains (losses) on debt securities:
Amortization of unrealized gains (losses)	$	(1,498	)	$	(726	)	Interest income - held-to-maturity securities - taxable
Realized gain (loss) on sale of securities	(7,113		)	—			Noninterest income - net gains (losses) on sale of securities
OTTI recorded	(104		)	—			Noninterest income - net gains (losses) on sale of securities
	(8,715		)	(726		)	Total before tax
	3,082			257			Tax (expense) benefit
	$	(5,633	)	$	(469	)	Net of tax
Gains (losses) on cash flow hedging relationships:
Interest rate contracts	$	(144	)	$	(123	)	Interest income - loans and leases
Interest rate contracts	—			—			Noninterest income - other income
	(144		)	(123		)	Total before tax
	51			44			Tax (expense) benefit
	$	(93	)	$	(79	)	Net of tax
Amortization of defined benefit pension and post-retirement items:
Actuarial gains (losses)	$	(1,690	)	$	(1,785	)	Noninterest expense - personnel costs
Prior service credit	492			492			Noninterest expense - personnel costs
	(1,198		)	(1,293		)	Total before tax
	419			452			Tax (expense) benefit
	$	(779	)	$	(841	)	Net of tax



	Pension Benefits						Post-Retirement Benefits
	Three Months Ended September 30,						Three Months Ended September 30,
(dollar amounts in thousands)	2017			2016			2017			2016
Service cost	$	640		$	1,425		$	22		$	16
Interest cost	7,478			7,978			98			79
Expected return on plan assets	(13,803		)	(12,086		)	—			—
Amortization of prior service cost	—			—			(492		)	(492		)
Amortization of (gain) loss	1,747			1,865			(55		)	(72		)
Settlements	5,049			3,400			—			—
Net periodic (benefit) cost	$	1,111		$	2,582		$	(427	)	$	(469	)



			Fair Value Measurements Using
(dollar amounts in thousands)	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) Nine Months Ended September 30, 2017
MSRs	$	182,043	$	—	$	—	$	182,043	$	(318	)
Impaired loans	68,159		—		—		68,159		(3,976		)
Other real estate owned	42,041		—		—		42,041		(1,759		)



	September 30, 2017
							Weighted-Average Rate
(dollar amounts in thousands)	Notional Value		Average Maturity (years)	Fair Value			Receive		Pay
Asset conversion swaps
Receive fixed—generic	$	1,325,000	0.1	$	(1,239	)	0.72	%	1.23	%
Liability conversion swaps
Receive fixed—generic	8,375,000		2.8	(59,148		)	1.56		1.29
Total swap portfolio at September 30, 2017	$	9,700,000	2.3	$	(60,387	)

	December 31, 2016
							Weighted-Average Rate
(dollar amounts in thousands)	Notional Value		Average Maturity (years)	Fair Value			Receive		Pay
Asset conversion swaps
Receive fixed—generic	$	3,325,000	0.6	$	(2,060	)	1.04	%	0.91	%
Liability conversion swaps
Receive fixed—generic	7,475,000		3.1	(51,496		)	1.49		0.88
Total swap portfolio at December 31, 2016	$	10,800,000	2.3	$	(53,556	)