Huntington Bancshares Annual Report 2018

FY2018 Annual Report · Huntington Bancshares

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2018 ANNUAL REPORT

Huntington Bancshares Incorporated is a regional bank holding company headquartered in Columbus, Ohio, with
$109 billion of assets and a network of 954 branches and 1,774 ATMs across eight Midwestern states. Founded
in 1866, The Huntington National Bank and its affiliates provide consumer, small business, commercial, treasury
management, wealth management, brokerage, trust, and insurance services. Huntington also provides auto dealer,
equipment finance, national settlement, and capital market services that extend beyond its core states. Visit
huntington.com for more information.

CONSOLIDATED FINANCIAL HIGHLIGHTS

(In millions, except per share amounts)

2018

2017

Change
Amount

Change
Percent

NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PER COMMON SHARE AMOUNTS
Net income (loss) per common share – diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash dividend declared per common share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tangible book value per common share(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,393

1.20
0.50
7.34

1,186

$ 207

17%

1.00
0.35
6.97

$ 0.20
0.15
0.37

20%
43%
5%

PERFORMANCE RATIOS
Return on average total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Return on average tangible common shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net interest margin(2)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Efficiency ratio(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CAPITAL RATIOS
Tangible common equity/tangible asset ratio(1)(4)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CET 1 risk-based capital ratio(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tier 1 risk-based capital ratio(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total risk-based capital ratio(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1.33%
17.9
3.33
56.9

7.21%
9.65
11.06
12.98

1.17%
15.7
3.30
60.9

7.34%
10.01
11.34
13.39

CREDIT QUALITY MEASURES
Net charge-offs (NCOs) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
NCOs as a % of average loans and leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-accrual loans (NALs)(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
NAL ratio(1)(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-performing assets (NPAs)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
NPA ratio(1)(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Allowance for loan and lease losses (ALLL)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ALLL as a % of total loans and leases(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ALLL as a % of NALs(1)

145
0.20%
340
0.45%
387
0.52%
772
1.03%
228

(9)

$ (14)

159
0.23% (0.03)%
349
$
0.50% (0.05)%
$
389
0.55% (0.03)%
691
$
0.99%
198

81
0.04%
30

(2)

BALANCE SHEET – DECEMBER 31,
Total loans and leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 74,900
108,781
84,774
11,102

$ 70,117
104,185
77,041
10,814

$4,783
4,596
7,733
288

(9)%

(3)%

(1)%

12%

7%
4%
10%
3%

(1) At December 31.
(2) On a fully-taxable equivalent (FTE) basis assuming a 21% tax rate and a 35% tax rate for periods prior to January 1, 2018.
(3) Noninterest expense less amortization of intangibles and goodwill impairment divided by the sum of FTE net interest income and

(4)

(5)

noninterest income excluding securities gains (losses).
Tangible equity, tangible common equity, and tangible assets are non-GAAP financial measures. Additionally, any ratios utilizing these
financial measures are also non-GAAP. These financial measures have been included as they are considered to be critical metrics with
which to analyze and evaluate financial condition and capital strength. Other companies may calculate these financial measures
differently.
Tangible equity (total equity less goodwill and other intangible assets) divided by tangible assets (total assets less goodwill and other
intangible assets). Other intangible assets are net of deferred tax and calculated at a 21% tax rate.

(6) NALs divided by total loans and leases.
(7) NPAs divided by the sum of total loans and leases and other real estate owned.

DEAR FELLOW OWNERS AND FRIENDS:

I am pleased to report that 2018 was a year of strong financial performance and significant accomplishment, both
financially and strategically. Our performance was driven by the commitment of our approximately 16,000 colleagues and
the execution of our differentiated strategy. For years we have been focused on executing our strategic plan with a constant
focus on risk management in order to achieve consistent long-term financial performance. In 2018 we achieved all of our five
long-term financial goals established in the 2014 strategic plan. We also completed a new strategic plan which will drive our
success in the coming years and established new, improved long-term financial targets.

The one area that disappointed us in 2018 was our share performance, largely driven by the broad equity market sell-off

at the end of the year, which brought down all bank stocks, including Huntington. Total shareholder return (TSR), which is
the total share price performance assuming reinvestment of dividends, was -15.3% for 2018, modestly outperforming the
-17.7% TSR for the KBW Bank Index. While we are highly cognizant of short-term share performance, the Board,
management team, and a significant portion of our colleagues are all long-term shareholders (in fact, the seventh largest
shareholder of the Company when considered on a combined basis), so we appropriately manage the Company with a longer-
term view. Following a recovery in bank stocks in January 2019, Huntington’s TSR for the month of January 2019 was
11.1%, compared to 12.7% for the KBW Bank Index.

2018 Financial Performance—Record Revenue and Record Net Income

We reported record net income for the fourth consecutive year, earning $1.4 billion, a 17% increase over 2017. Earnings
per common share were $1.20, a 20% increase year over year. In addition, our profitability ratios were among the best in the
sector. Return on Assets (ROA) was 1.33%, Return on Common Equity (ROCE) was 13.4%, and Return on Tangible
Common Equity (ROTCE) was 17.9%. These results are the culmination of disciplined execution and the scale we have
achieved through organic growth and past acquisitions, including FirstMerit. We believe each of these return metrics
compares favorably with our regional bank peers and illustrates the earnings power of the Company we have built.

We reported record revenue of $4.5 billion in 2018, an increase of 4% over 2017. Net interest income increased 6% year

over year, reflecting 4% earning asset growth and net interest margin expansion of three basis points. Noninterest income
increased 1% year over year, as we continue to see positive momentum across our core business lines, partially offset by
unfavorable secondary market impacts in our mortgage and SBA businesses. Notably, capital markets fees increased 20%
year over year. The acquisition of municipal underwriter Hutchison, Shockey, Erley & Co. in the fourth quarter of 2018
positions our capital markets and government banking businesses for continued success in the future.

Strong expense management and the benefit of expense savings following the successful integration of FirstMerit in

2017 drove a 2% decrease in expenses. Also, as transactions continue to migrate outside the branches due to shifting
customer preferences, we adjusted the branch network at year end with the consolidation of 70 branches, or approximately
7% of the branch network (some of which were completed in early January 2019). In December, we entered into an
agreement to sell our Wisconsin branch banking operation, including 32 branch locations, to Associated Bank. Associated
has a significant presence throughout the state of Wisconsin which will allow for a smooth transition to ensure minimal
disruptions to our customers and colleagues. The sale was one outcome of the 2018 strategic planning process, as we
concluded that retail scale in Wisconsin would be too costly to achieve and our resources would be better deployed in other
initiatives. The deal is expected to close in the 2019 second quarter. We will maintain our national consumer and commercial
businesses, including our SBA business, in Wisconsin.

Our 2018 efficiency ratio, which represents the ratio of the cost to earn each dollar of revenue, was 57%, a decrease of

760 basis points from 2015 when we implemented the prior strategic plan. We continue to manage the Company with an
intense focus on revenue growth, coupled with disciplined expense management. As a result, we delivered annual positive
operating leverage in 2018 for the sixth consecutive year, consistent with our corporate financial goals.

Organic balance sheet growth was strong in 2018 as average loans and leases increased 6%. Our prime-focused

consumer lending products provided the larger portion of the year’s growth, as average consumer loans increased
$3.3 billion, or 10%, compared to the prior year. We saw particular strength in our home lending and vehicle finance
(automobile, recreational vehicle, and marine) businesses. Average commercial loans increased $1.1 billion, or 3%,
reflecting broad-based growth across our geographies and industries. Average core deposits grew by 5% as we successfully
deepened relationships with our existing customers and continued to focus on growing household checking accounts.

Our credit metrics are strong as we remain dedicated to maintaining our aggregate moderate-to-low risk profile and our

stringent underwriting standards. Net charge-offs for the year of 20 basis points remained below our through-the-cycle average
target range of 35 to 55 basis points. We booked loan loss provision in excess of net charge-offs in each of the 2018 quarters,
demonstrating our high-quality earnings and building our loan loss reserves for more challenging times in the future.

Our capital levels also remain strong. At year end, our Common Equity Tier 1 (CET1) ratio was 9.65%, within our
9-10% operating range. Our tangible common equity (TCE) ratio was 7.21% at year end. Delivering solid returns, strong risk

management, and solid capital levels allowed the Company to continue to execute on its well-established capital priorities:
(1) grow the core franchise, (2) support the cash dividend, and (3) all other uses, including share repurchases.

The full detail of our 2018 financial performance can be found in the Management’s Discussion and Analysis section

found later in the attached SEC Form 10-K. Please take the opportunity to read this as it provides additional insight and
commentary.

Capital Return to Shareholders

Our commitment to robust risk management and our strong profitability resulted in favorable results during the annual
Dodd-Frank Act Stress Test (DFAST) and Comprehensive Capital Analysis and Review (CCAR) processes with the Federal
Reserve. In fact, our cumulative losses within the supervisory severely adverse scenario were the third best among the
traditional commercial banks. We have now ranked fourth or better in each of the last four years that we have participated in
CCAR. In addition to giving some level of independent affirmation that our risk management practices are appropriate, the
outcome also establishes our ability to fund the dividend and share repurchases, collectively referred to as capital return.

In 2018 cash dividends paid to our owners increased for the eighth consecutive year. We also repurchased $939 million
of common shares, including $400 million repurchased under an Accelerated Share Repurchase (ASR) program in the 2018
third quarter. Combining the $541 million of cash dividends and the share repurchases, we returned capital of nearly
$1.5 billion, or 112% of 2018 net income to common shareholders, to our owners.

We were very pleased to be able to support this high level of capital return in 2018, but I would be remiss if I failed to

note that this level was abnormally high. During the 2018 first quarter, we converted $363 million of high-cost Series A
convertible preferred equity into common equity, and subsequently we issued $500 million of lower-cost Series E
fixed-to-floating rate non-cumulative perpetual preferred equity. Therefore, we increased our capital return by approximately
$363 million above what we would have normally done, all else being equal.

The Board has established a targeted long-term dividend payout ratio range of 40% to 45% (compared to 41% in 2018)

and a total payout ratio inclusive of share repurchases of 70% to 80% (compared to 112% in 2018). These levels represent
realistic expectations for us going forward, assuming a continued positive economic outlook. Our dividend yield at 2018 year
end was 4.5%. While the severe equity market sell-off of bank stocks in December played a key role in this level, the
dividend yield remains an attractive 4.1% as I write this letter in mid-February following the recent recovery in the market
for bank stocks, including Huntington.

New Strategic Plan

In the 2018 fourth quarter, we released high-level details of our new strategic plan to drive continued improvement in our

financial performance and enhance our industry-leading customer experience. The strategic plan initiatives build upon the
momentum from our two previous strategic plans. We have planned investments in digital, data, and technology enhancements
that will bolster our existing capabilities and infrastructure, with the goal of making banking intuitive, easier, and faster for our
customers. We are extending our customer experience advantage across our businesses to improve customer acquisition, reduce
customer attrition, and deepen customer relationships. We are strengthening our local advantage by leveraging our regional
presidents, local presence, and deep ties within our communities. Further, we are expanding into new industry verticals,
including a new Mid-Corporate Banking team, a technology, media, and telecom (TMT) vertical within Commercial Banking,
and a practice finance group (targeting veterinarians, dentists, and doctors) within Business Banking.

While the strategic plan involves important initiatives and investments to drive our businesses forward, the core of our

strategy remains the same. At its heart, our strategy is differentiated through our relentless focus on customer experience,
supported by a robust risk management culture and unique customer-centric mindset, which allows us to develop deep
relationships with our customers. We aim to leverage these strengths to gain market share and share of wallet across our
footprint and throughout our businesses. We believe our strategy will deliver more consistent financial performance through
economic cycles.

New Long-Term Financial Goals

As previously stated, during 2018 we achieved all five of our long-term financial goals for the first time on a reported

(GAAP) basis, two years ahead of the schedule originally contemplated in the 2014 strategic plan. As a result, we announced
revised, improved long-term financial goals as part of our new strategic plan. As I hope you have come to expect from
Huntington, we established goals, then achieved them, and are now raising the bar for better performance going
forward. Specifically, we reduced our long-term goal range for the efficiency ratio by 300 basis points from 56%-59% to
53%-56% and increased our goal range for ROTCE by 300 basis points from 15%-17% to 17%-20%. We seek to position the
Company to produce industry-leading financial performance and shareholder returns. While our 2018 efficiency ratio and
ROTCE already place us near the best in the peer group, we can do better, and we are committed to doing so.

The five long-term financial goals adopted by the Board of Directors as part of the 2018 strategic plan are:

(1) Annual revenue growth of 4%-6%;

(2) Annual revenue growth in excess of annual expense growth, also known as annual positive operating leverage;

(3) Return on tangible common equity, or ROTCE, of 17%-20%;

(4) Efficiency ratio of 53%-56%; and

(5) Net charge-offs of 0.35%-0.55%.

Purpose Drives Performance

The ability to make informed, effective decisions about money is key to both families’ and businesses’ stability. Our

colleagues’ efforts to better serve our customers and their financial needs, in turn, enable the strength and growth of our
communities. The underlying theme of our upcoming 2018 Environmental, Social, and Governance (ESG) Annual Report is
“Purpose Drives Performance.” This is a compelling message we have discussed extensively with our colleagues. At
Huntington, our promise is to look out for people. Huntington’s purpose, simply stated, is to make people’s lives better, help
businesses thrive, and strengthen the communities we serve.

Our values enable our purpose and are equally compelling: to work with a can-do attitude, a service heart, and forward
thinking. Purpose and corporate values have become a trendy topic in corporate America. Our purpose and our values are deeply
ingrained in our culture, our brand, and our value creation model. Our colleagues are focused on not just what they do, but as
importantly how they do it. There is an ethos of “doing the right thing,” and it guides how we serve our customers every day.

Our purpose and values also are reflected in the formalization of our ESG strategy two years ago, and our commitment
to advance the strategy ever since. In 2018 we published our second ESG Annual Report, and efforts are currently underway
on the third annual installment to be published in the second quarter. At Huntington we focused our ESG strategic approach
on the issues most important to our businesses and our key constituencies: our owners, our customers, our colleagues, and
our communities. We are a purpose-driven organization, focused on bettering the lives of people in our local markets.

Investing in Our Colleagues

Our colleagues are our most important asset and key to our brand and success. We continue to make important

investments in our colleagues’ well-being and professional development. We announced an increase to our minimum salary
commitment, for the third consecutive year, to $16 per hour, as of May 2019. We further enhanced our wellness and benefits
programs to better assist our colleagues when they need help the most. We have taken deliberate steps to ensure our health,
welfare, and retirement programs meet the needs of our diverse colleague base and are competitive. For 2019 we introduced
two new levels within our medical plan for colleagues with salaries less than $100,000, and we rolled back the cost of their
medical premiums. We also reduced deductibles for all participants.

We are focused on attracting, engaging, developing, and retaining talented colleagues. We are making a significant
investment in developing our leaders throughout the organization to equip and enable our colleagues to uphold our purpose,
align their work, and inspire their teams to do the same. We are elevating our Performance Management process to
Performance Engagement, with conversations that place equal emphasis on “what” and “how” we deliver, as well as more
frequent development conversations with colleagues. We are continuing to take a top-down approach to facilitating robust
leader development plans that are specific and actionable, designed to leverage strengths and focus on opportunities—both
for current and future roles. We are leveraging opportunities presented by several significant best-in-class technology
investments to take our management of talent to the next level, improving the quality, engagement, and retention of
colleagues across the organization.

Fairness and equitable treatment of our colleagues are paramount. We hire based on qualifications and evaluate,
recognize, reward, and promote colleagues based on performance. We continue to create a workplace that is welcoming,
inclusive, and respectful to all. Our world of diversity and inclusion extends beyond gender, race, ethnicity, age, and sexual
orientation to include different thoughts, skills, experiences, and backgrounds. Please see the 2017 ESG Annual Report and
the forthcoming 2018 ESG Annual Report for additional details on our ongoing commitment to our colleagues and our
human capital management.

Investing in the Digital Future

Our industry has experienced an immense amount of technological advancements in recent years. Numerous potential

disruptors are utilizing technology to make incursions into financial services. Huntington also is materially investing in
technology to better serve our customers. For example, in 2018 we introduced a new digital portal for our online banking and
our mobile banking app called “The Hub” to provide our customers with better insights and tools to help them better manage
their finances.

The Hub is a great example of our technology advancements, but it is not the only one. In 2018 we invested more in

technology development than we ever have, and we plan to invest even more in 2019. We are incorporating Artificial
Intelligence (AI) to provide insights to us as well as our customers. Further, we are integrating Robotic Process Automation
(RPA) to automate repetitive, mundane tasks that allow our colleagues to focus on our customers’ wants and needs. It is an
approach to technology we describe as “People First…Technology Enabled.” Our people, our colleagues, have made a
difference in the lives of our customers for more than 150 years. It is only natural to better train and equip them with
technology to better serve our customers.

Focused on What We Can Control

Last year represented the tenth year of the current U.S. economic expansion, making this the second longest expansion

since World War II. I remark on this not because we expect the current expansion to end over the near term. Quite the
contrary, in fact. Our customers point to continued economic expansion in 2019, and beyond. Nonetheless, our franchise is
built upon a foundation of strong risk management, which dictates that we are prepared for more challenging times should
they develop. We started these preparations in 2009 when we were still digging out of the global financial crisis. We adopted
an aggregate moderate-to-low risk appetite and built a robust risk management infrastructure based upon the three-
lines-of-defense architecture. Amongst the many areas of improved risk management, we implemented more than three
dozen lending concentration limits, as well as concentration limits within the deposit base. Today, we are a very well
diversified bank—roughly half consumer and half commercial on both sides of the balance sheet.

We are a much better and more disciplined bank than we were ten years ago. There has been a significant amount of
change in the banking sector over the past decade, not the least of which has been the increased regulatory burden. While the
pendulum of regulatory burden appears to be moderating now based on current proposals and commentary out of
Washington, DC, we are appropriately focused on what we can control and will react as necessary to developments on the
regulatory front. The disciplines that we have built to comply with new regulatory requirements have served us well, such as
stress testing our portfolios under the DFAST and CCAR processes, and we have no intention of unwinding these prudent
risk management structures.

This same philosophy of focusing on what we can control applies to how we are viewing the interest rate environment

headed into 2019. We, like the industry as a whole, benefited from the Federal Reserve’s gradual process of increasing
interest rates in 2018. The inherent asset sensitivity of our balance sheet (i.e., our assets benefited from higher interest rates
more than our liabilities faced headwinds) helped drive our revenue growth and the resulting strong earnings growth. As we
enter 2019, there is much less visibility into the trajectory of additional interest rate increases. Therefore, we have reverted to
our historical practice of assuming no change in interest rates when setting our 2019 budget. This allows us to set our
revenue expectations and our planned investments in our businesses appropriately for the year without outsized risk of
needing to make a mid-year adjustment. This conservative posture has served us well in the past, and we believe it is a
prudent approach to managing the business during the current period of elevated market volatility and uncertainty. If the
Federal Reserve proceeds with additional interest rate increases in 2019, we are positioned to capitalize on that revenue
upside and can accelerate strategic investments. On the other hand, even if the Federal Reserve maintains the current interest
rate posture, we are positioned for another good year of earnings.

Building for the Future

Equipped with a new strategic plan, momentum across our businesses, and a solid foundation on which to build, we

enter 2019 encouraged by the opportunities to drive our Company forward. We look to further extend our competitive
advantages, strengthening our distinguished customer experience. We have the scale, infrastructure, and talent to drive
continued profitable growth, while maintaining continued disciplined investment in our future. We have the strong risk
management infrastructure to guide us across economic cycles. And we have the indispensable support of our owners,
customers, and communities to inspire our efforts. I am fond of mentioning in these annual letters that our best days lie
ahead. I continue to strongly believe that to be the case. Thank you for your continued support of Huntington.

Stephen D. Steinour
Chairman, President, and Chief Executive Officer

COMMON STOCK AND DIVIDEND INFORMATION

2019 DIVIDEND PAYABLE DATES

2018 CASH DIVIDEND DECLARED DATA

QUARTER

PAYABLE DATE

QUARTER

RECORD DATE

PAYABLE DATE

1st
2nd
3rd
4th

*Subject to action by Board of Directors

COMMON STOCK PRICE

April 1, 2019
July 1, 2019*
October 1, 2019*
January 2, 2020*

1st
2nd
3rd
4th

March 19, 2018
June 18, 2018

April 2, 2018
July 2, 2018
September 17, 2018 October 1, 2018
January 2, 2019
December 18, 2018

PER COMMON
SHARE AMOUNT

$0.11
0.11
0.14
0.14

High
Low
Close

2018

16.60
11.12
11.92

2017

14.93
12.14
14.56

2016

13.64
7.83
13.22

2015

11.90
9.63
11.06

2014

10.74
8.66
10.52

2013

9.73
6.48
9.65

20-YEAR DIVIDEND HISTORY

CASH
DIVIDENDS
DECLARED (1)

$0.69
0.76
0.72
0.64
0.67
0.75
0.85
1.00
1.06
0.66

STOCK
DIVIDENDS/SPLITS

10% Stock Dividend
10% Stock Dividend
—
—
—
—
—
—
—
—

1999
2000
2001
2002
2003
2004
2005
2006
2007
2008

DISTRIBUTION
DATE OF STOCK
DIVIDEND/SPLIT

CASH
DIVIDENDS
DECLARED (1)

STOCK
DIVIDENDS/SPLITS

DISTRIBUTION
DATE OF STOCK
DIVIDEND/SPLIT

07/30/99
07/31/00
—
—
—
—
—
—
—
—

2009
2010
2011
2012
2013
2014
2015
2016
2017
2018

$0.04
0.04
0.10
0.16
0.19
0.21
0.25
0.29
0.35
0.50

—
—
—
—
—
—
—
—
—
—

(1) Restated for stock dividends and stock splits as applicable.

FORWARD-LOOKING STATEMENT DISCLOSURE

This report, including the letter to shareholders, contains certain forward-looking statements, including certain
plans, expectations, goals, projections, and statements, which 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. Actual results
could differ materially from those contained or implied by such statements for a variety of factors. Please refer to
Item 1A “Risk Factors” and the “Additional Disclosure” sections in Huntington’s Form 10-K for the year ending
December 31, 2018, for additional information. All forward-looking statements speak only as of the date they are
made and are based on information available at that time. We assume no 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.

[THIS PAGE INTENTIONALLY LEFT BLANK]

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________________________________________
FORM 10-K
_______________________________________________

(Mark One)

Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended December 31, 2018

Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number 1-34073
_______________________________________________

Huntington Bancshares Incorporated

(Exact name of registrant as specified in its charter)
_______________________________________________

Maryland
(State or other jurisdiction of
incorporation or organization)

41 S. High Street, Columbus, Ohio
(Address of principal executive offices)

31-0724920
(I.R.S. Employer
Identification No.)

43287
(Zip Code)

Registrant’s telephone number, including area code (614) 480-2265

Securities registered pursuant to Section 12(b) of the Act:

Title of class
5.875% Series C Non-Cumulative, perpetual preferred
stock
6.250% Series D Non-Cumulative, perpetual preferred
stock
Common Stock—Par Value $0.01 per Share

Name of exchange on which registered
NASDAQ

NASDAQ

Securities registered pursuant to Section 12(g) of the Act:
Title of class

Depositary Shares (each representing a 1/40th interest in a share of Floating Rate Series B Non-Cumulative Perpetual
Preferred Stock)

Depositary Shares (each representing a 1/100th interest in a share of 5.700% Series E Fixed-to-Floating Non-Cumulative
Perpetual Preferred Stock)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities

Exchange Act.

Yes

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the

Act.

Yes

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the

Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be
submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit such files).

Yes

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this

chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a
smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”,
“smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Non-accelerated filer

Accelerated filer

Smaller reporting company
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition

period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the
Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act)

Yes

The aggregate market value of voting and non-voting common equity held by non-affiliates of the registrant as of June 30,
2018, determined by using a per share closing price of $14.76, as quoted by NASDAQ on that date, was $16,029,310,082. As of
January 31, 2019, there were 1,046,813,306 shares of common stock with a par value of $0.01 outstanding.

Part III of this Form 10-K incorporates by reference certain information from the registrant’s definitive Proxy Statement for the
2019 Annual Shareholders’ Meeting.

Documents Incorporated By Reference

HUNTINGTON BANCSHARES INCORPORATED
INDEX

Part I.

Item 1.

Business

Item 1A. Risk Factors

Item 1B. Unresolved Staff Comments

Item 2.

Properties

Item 3.

Legal Proceedings

Item 4. Mine Safety Disclosures

Part II.

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity

Securities

Item 6.

Selected Financial Data

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Introduction

Executive Overview

Discussion of Results of Operations

Risk Management and Capital:

Credit Risk

Market Risk

Liquidity Risk

Operational Risk

Compliance Risk

Capital

Business Segment Discussion

Results for the Fourth Quarter

Additional Disclosures

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Item 8.

Financial Statements and Supplementary Data

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Item 9A. Controls and Procedures

Item 9B. Other Information

161

Part III.

Item 10. Directors, Executive Officers and Corporate Governance

Item 11. Executive Compensation

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Item 13. Certain Relationships and Related Transactions, and Director Independence

Item 14. Principal Accounting Fees and Services

Part IV.

Item 15. Exhibits and Financial Statement Schedules

Item 16. Form 10-K Summary

Signatures

161

162

163

The following listing provides a comprehensive reference of common acronyms and terms used throughout the document:

Glossary of Acronyms and Terms

ACL
AFS
ALCO
ALLL
AML
ANPR
AOCI
ASC
ASR
ATM
AULC
Bank Secrecy Act
BHC
BHC Act

C&I
CCAR

CCPA
CDs

CET1

CFPB
CISA

CMO
CRA

CRE

Allowance for Credit Losses
Available-for-Sale
Asset-Liability Management Committee
Allowance for Loan and Lease Losses

Anti-Money Laundering
Advance Notice of Proposed Rulemaking
Accumulated Other Comprehensive Income
Accounting Standards Codification
Accelerated Share Repurchase
Automated Teller Machine
Allowance for Unfunded Loan Commitments
Financial Recordkeeping and Reporting of Currency and Foreign Transactions Act of 1970
Bank Holding Company

Bank Holding Company Act of 1956
Commercial and Industrial
Comprehensive Capital Analysis and Review

California Consumer Privacy Act of 2018
Certificates of Deposit

Common equity tier 1 on a transitional Basel III basis

Consumer Financial Protection Bureau

Cybersecurity Information Sharing Act
Collateralized Mortgage Obligations

Community Reinvestment Act
Commercial Real Estate

DIF
Dodd-Frank Act

Deposit Insurance Fund
Dodd-Frank Wall Street Reform and Consumer Protection Act

Economic Growth Act
EPS

Economic Growth, Regulatory Relief and Consumer Protection Act
Earnings Per Share

EVE

FASB
FCRA

FDIA

FDIC

Economic Value of Equity

Financial Accounting Standards Board
Fair Credit Reporting Act

Federal Deposit Insurance Act

Federal Deposit Insurance Corporation

Federal Reserve

Board of Governors of the Federal Reserve System

FHA

FHC

FHLB

FICO

FinCEN

FINRA
FirstMerit
FRB

FTE
FTP

FVO

Federal Housing Administration

Financial Holding Company

Federal Home Loan Bank

Fair Isaac Corporation

Financial Crimes Enforcement Network

Financial Industry Regulatory Authority, Inc.
FirstMerit Corporation
Federal Reserve Bank

Fully-Taxable Equivalent
Funds Transfer Pricing

Fair Value Option

GAAP
GLBA
GSE
HMDA
HSE
HTM
IRS
LCR
LGD
LIBOR
LFI Rating System
LIHTC
LTD
LTV
MBS
MD&A

Generally Accepted Accounting Principles in the United States of America
Gramm-Leach-Bliley Act
Government Sponsored Enterprise
Home Mortgage Disclosure Act
Hutchinson, Shockey, Erley & Co.
Held-to-Maturity
Internal Revenue Service
Liquidity Coverage Ratio
Loss Given Default
London Interbank Offered Rate
Large Financial Institution Rating System
Low Income Housing Tax Credit
Long Term Debt
Loan to Value
Mortgage-Backed Securities
Management’s Discussion and Analysis of Financial Condition and Results of Operations

MSA
MSR

NAICS

NALs
NCO

NII
NIM

NOW

NPAs
NSF

OCC
OCI

OCR

OFAC
OIS

OLEM
OREO

OTTI

Metropolitan Statistical Area
Mortgage Servicing Right

North American Industry Classification System

Nonaccrual Loans
Net Charge-off

Noninterest Income
Net Interest Margin

Negotiable Order of Withdrawal

Nonperforming Assets
Non-Sufficient Funds

Office of the Comptroller of the Currency
Other Comprehensive Income (Loss)

Optimal Customer Relationship

Office of Foreign Assets Control
Overnight Indexed Swaps

Other Loans Especially Mentioned
Other Real Estate Owned

Other-Than-Temporary Impairment

Patriot Act

Plan

Problem Loans

Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism Act of 2001

Probability Of Default

Huntington Bancshares Retirement Plan

Includes nonaccrual loans and leases, accruing loans and leases past due 90 days or more, troubled debt
restructured loans, and criticized commercial loans

Proposed Capital and
Liquidity Tailoring Rule

Refers to the proposed rule, Proposed changes to applicability thresholds for regulatory and capital and
liquidity requirements, issued by the OCC, the Federal Reserve and the FDIC on October 31, 2018

Proposed EPS Tailoring
Rule

Refers to the proposed rule, Prudential Standards for Large Bank Holding Companies and Savings and
Loan Holding, issued by the Federal Reserve on October 31, 2018

Proposed Tailoring Rules
RBHPCG

Refers to the Proposed Capital and Liquidity Tailoring Rule and the Proposed EPS Tailoring Rule
Regional Banking and The Huntington Private Client Group

REIT
Riegle-Neal Act

Real Estate Investment Trust
The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994

ROC
RWA
SAD
SBA
SEC
SERP
SIFMA
SOFR
SRIP
TCJA
TDR
U.S. Basel III

U.S. Treasury
UCS
UPB

USDA
VA

VIE
XBRL

Risk Oversight Committee
Risk-Weighted Assets
Special Assets Division
Small Business Administration
Securities and Exchange Commission
Supplemental Executive Retirement Plan
Securities Industry and Financial Markets Association
Secured Overnight Financing Rate
Supplemental Retirement Income Plan
H.R. 1, Originally known as the Tax Cuts and Jobs Act
Troubled Debt Restructuring

Refers to the final rule issued by the Federal Reserve and OCC and published in the Federal Register
on October 11, 2013
U.S. Department of the Treasury
Uniform Classification System
Unpaid Principal Balance

U.S. Department of Agriculture
U.S. Department of Veteran Affairs

Variable Interest Entity
eXtensible Business Reporting Language

Huntington Bancshares Incorporated

PART I

When we refer to “Huntington,” “we,” “our,” “us,” and “the Company” in this report, we mean Huntington Bancshares
Incorporated and our consolidated subsidiaries, unless the context indicates that we refer only to the parent company, Huntington
Bancshares Incorporated. When we refer to the “Bank” in this report, we mean our only bank subsidiary, The Huntington National
Bank, and its subsidiaries.

Item 1: Business

We are a multi-state diversified regional bank holding company organized under Maryland law in 1966 and headquartered in
Columbus, Ohio. We have 15,693 average full-time equivalent employees. Through the Bank, we have over 150 years of serving
the financial needs of our customers. Through our subsidiaries, we provide full-service commercial, small business, consumer
banking services, mortgage banking services, automobile financing, recreational vehicle and marine financing, equipment leasing,
investment management, trust services, brokerage services, insurance programs, and other financial products and services. The
Bank, organized in 1866, is our only bank subsidiary. At December 31, 2018, the Bank had 10 private client group offices and 944
branches as follows:

• 451 branches in Ohio
• 300 branches in Michigan

• 49 branches in Pennsylvania

• 41 branches in Indiana

• 37 branches in Illinois

• 31 branches in Wisconsin
• 25 branches in West Virginia

• 10 branches in Kentucky

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.

Our business segments are based on our internally-aligned segment leadership structure, which is how we monitor results

and assess performance. For each of our four business segments, we expect the combination of our business model and
exceptional service to provide a competitive advantage that supports revenue and earnings growth. Our business model
emphasizes the delivery of a complete set of banking products and services offered by larger banks but distinguished by local
delivery and customer service.

A key strategic emphasis has been for our business segments to operate in cooperation to provide products and services to

our customers and to build stronger and more profitable relationships using our OCR sales and service process. The objectives of
OCR are to:

• Use a consultative sales approach to provide solutions that are specific to each customer.

• Leverage each business segment in terms of its products and expertise to benefit customers.

• Develop prospects who may want to have multiple products and services as part of their relationship with us.

Following is a description of our four business segments and the Treasury / Other function:

• Consumer and Business Banking: The Consumer and Business Banking segment 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, investments, consumer loans, credit cards, and small business
loans. Other financial services available to consumer and small business customers include mortgages, insurance, interest
rate risk protection, foreign exchange, and treasury management. Huntington serves customers through our network of
branches. In addition to our extensive branch network, customers can access Huntington through online banking, mobile
banking, telephone banking, and ATMs.

We have a “Fair Play” banking philosophy; providing differentiated products and services, built on a strong
foundation of customer advocacy. Our brand resonates with consumers and businesses; earning us new customers and
deeper relationships with current customers.

Business Banking is a dynamic part of our business and we are committed to being the bank of choice for businesses

in our markets. Business Banking is defined as serving companies with revenues up to $20 million. Huntington
continues to develop products and services that are designed specifically to meet the needs of small business and look for
ways to help companies find solutions to their financing needs.

Home Lending, an operating unit of Consumer and Business Banking, originates consumer loans and mortgages for

customers who are generally located in our primary banking markets. Consumer and mortgage lending products are
primarily distributed through the Consumer and Business Banking and Regional Banking and The Huntington Private

Client Group segments, as well as through commissioned loan originators. Home Lending earns interest on portfolio
loans and loans held-for-sale, earns fee income from the origination and servicing of mortgage loans, and recognizes gains
or losses from the sale of mortgage loans. Home Lending supports the origination of mortgage loans across all segments.

• Commercial Banking: Through a relationship banking model, this segment provides a wide array of products and

services to the middle market, corporate, real estate and government public sector customers located primarily within our
geographic footprint. The segment is divided into six business units: Middle Market, Specialty Banking, Asset Finance,
Capital Markets/Institutional Corporate Banking, Commercial Real Estate, and Treasury Management.

Middle Market primarily focuses on providing banking solutions to companies with annual revenues of $20 million

to $500 million. Through a relationship management approach, various products, capabilities, and solutions are
seamlessly delivered in a client centric way.

Specialty Banking offers tailored products and services to select industries that have a foothold in the Midwest.
Each team is comprised of industry experts with a dynamic understanding of the market and industry. Many of these
industries are experiencing tremendous change, which creates opportunities for Huntington to leverage our expertise and
help clients navigate, adapt, and succeed.

Asset Finance is a combination of our Huntington Equipment Finance, Huntington Public Capital®, Technology and

Healthcare Equipment Leasing, and Lender Finance divisions that focus on providing financing solutions against these
respective asset classes.

Capital Markets/Institutional Corporate Banking has three distinct product offerings: 1) corporate risk management
services, 2) institutional sales, trading, and underwriting, 3) institutional corporate banking. The Capital Markets Group
offers a full suite of risk management tools including commodities, foreign exchange, and interest rate hedging services.
The Institutional Sales, Trading, & Underwriting team provides access to capital and investment solutions for both
municipal and corporate institutions. Institutional Corporate Banking works with larger, often more complex companies
with revenues greater than $500 million. These entities, many of which are publicly traded, require a different and
customized approach to their banking needs.

The Commercial Real Estate team serves real estate developers, REITs, and other customers with lending needs that
are secured by commercial properties. Most of these customers are located within our footprint. Within Commercial Real
Estate, Huntington Community Development focuses on improving the quality of life for our communities and the
residents of low-to moderate-income neighborhoods by developing and delivering innovative products and services to
support affordable housing and neighborhood stabilization.

Treasury Management teams help businesses manage their working capital programs and reduce expenses. Our

liquidity solutions help customers save and invest wisely, while our payables and receivables capabilities help them
manage purchases and the receipt of payments for goods and services. All of this is provided while helping customers
take a sophisticated approach to managing their overhead, inventory, equipment, and labor.

• Vehicle Finance: Our products and services include providing financing to consumers for the purchase of automobiles,

light-duty trucks, recreational vehicles, and marine craft at franchised and other select dealerships, and providing
financing to franchised dealerships for the acquisition of new and used inventory. Products and services are delivered
through highly specialized relationship-focused bankers and product partners. Huntington creates well-defined
relationship plans which identify needs where solutions are developed and customer commitments are obtained.

The Vehicle Finance team services automobile dealerships, its owners, and consumers buying automobiles through

these franchised dealerships. Huntington has provided new and used automobile financing and dealer services throughout
the Midwest since the early 1950s. This consistency in the market and our focus on working with strong dealerships has
allowed us to expand into select markets outside of the Midwest and to actively deepen relationships while building a
strong reputation. Huntington also provides financing for the purchase by consumers of recreational vehicles and marine
craft on an indirect basis through a series of dealerships.

• Regional Banking and The Huntington Private Client Group: Regional Banking and The Huntington Private Client

Group is closely aligned with our regional banking markets. A fundamental point of differentiation is our commitment to
be actively engaged within our local markets - building connections with community and business leaders and offering a
uniquely personal experience delivered by colleagues working within those markets.

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 also 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 also provides corporate trust services and institutional and mutual fund
custody services.

• Treasury/Other: The Treasury / Other function includes technology and operations, other unallocated assets, liabilities,

revenue, and expense.

The financial results for each of these business segments are included in Note 23 of Notes to Consolidated Financial

Statements and are discussed in the Business Segment Discussion of our MD&A.

Competition

We compete with other banks and financial services companies such as savings and loans, credit unions, and finance and

trust companies, as well as mortgage banking companies, automobile and equipment financing companies (including captive
automobile finance companies), insurance companies, mutual funds, investment advisors, and brokerage firms, both within and
outside of our primary market areas. Financial Technology Companies, or FinTechs, are also providing nontraditional, but
increasingly strong, competition for our borrowers, depositors, and other customers.

We compete for loans primarily on the basis of a combination of value and service by building customer relationships as a

result of addressing our customers’ entire suite of banking needs, demonstrating expertise, and providing convenience to our
customers. We also consider the competitive pricing pressures in each of our markets.

We compete for deposits similarly on a basis of a combination of value and service and by providing convenience through a

banking network of branches and ATMs within our markets and our website at www.huntington.com. We also employ customer
friendly practices, such as our 24-Hour Grace® account feature, which gives customers an additional business day to cover
overdrafts to their consumer account without being charged overdraft fees.

The table below shows our competitive ranking and market share based on deposits of FDIC-insured institutions as of

June 30, 2018, in the top 10 metropolitan statistical areas (MSA) in which we compete:

MSA
Columbus, OH

Cleveland, OH

Detroit, MI
Akron, OH
Indianapolis, IN

Cincinnati, OH

Pittsburgh, PA
Toledo, OH

Grand Rapids, MI
Chicago, IL

Rank

Deposits
(in millions)

24,746
9,718

7,737

3,937
3,452

3,365
2,955

2,491

2,416
2,303

1
2

1
4

5
9

2
20

Market Share

37%
14

28
7

3
2

11
1

Source: FDIC.gov, based on June 30, 2018 survey.

Many of our nonfinancial institution competitors have fewer regulatory constraints, broader geographic service areas, greater

capital, and, in some cases, lower cost structures. In addition, competition for quality customers has intensified as a result of
changes in regulation, advances in technology and product delivery systems, consolidation among financial service providers, and
bank failures.

FinTechs continue to emerge in key areas of banking. In response, we are monitoring activity in marketplace lending along
with businesses engaged in money transfer, investment advice, and money management tools. Our strategy involves assessing the
marketplace and determining our near term plan, while developing a longer term approach to effectively service our existing
customers and attract new customers. This includes evaluating which products we develop in-house, as well as evaluating
partnership options, where applicable.

Regulatory Matters

Regulatory Environment

The banking industry is highly regulated. We are subject to supervision, regulation, and examination by various federal and

state regulators, including the Federal Reserve, OCC, SEC, CFPB, FDIC, FINRA, and various state regulatory agencies. The

statutory and regulatory framework that governs us is generally intended to protect depositors and customers, the DIF, the U.S.
banking and financial system, and financial markets as a whole.

Banking statutes, regulations, and policies are continually under review by Congress, state legislatures, and federal and state

regulatory agencies. In addition to laws and regulations, state and federal bank regulatory agencies may issue policy statements,
interpretive letters, and similar written guidance applicable to Huntington and its subsidiaries. Any change in the statutes,
regulations, or regulatory policies applicable to us, including changes in their interpretation or implementation, could have a
material effect on our business or organization.

Both the scope of the laws and regulations and the intensity of the supervision to which we are subject increased in response
to the financial crisis, as well as other factors, such as technological and market changes. Regulatory enforcement and fines have
also increased across the banking and financial services sector. Many of these changes have occurred as a result of the Dodd-Frank
Act and its implementing regulations, most of which are now in place. While the regulatory environment has entered a period of
rebalancing of the post financial crisis framework, we expect that our business will remain subject to extensive regulation and
supervision.

On May 24, 2018, the Economic Growth Act was signed into law. Among other regulatory changes, the Economic Growth

Act amends various sections of the Dodd-Frank Act, including section 165 of Dodd-Frank Act, which was revised to raise the asset
thresholds for determining the application of enhanced prudential standards for BHCs. Under the Economic Growth Act, BHCs
with consolidated assets below $100 billion were immediately exempted from all of the enhanced prudential standards, except risk
committee requirements, which will now apply to publicly-traded BHCs with $50 billion or more of consolidated assets. BHCs
with consolidated assets between $100 billion and $250 billion, including Huntington, will continue to be subject to the enhanced
prudential standards that applied to them before enactment of the Economic Growth Act for 18 months after the date of enactment,
unless the Federal Reserve acts earlier to exempt these BHCs from enhanced prudential standards or to continue to subject these
BHCs to some form of enhanced prudential standards. Following that 18-month period, BHCs with consolidated assets between
$100 billion and $250 billion will be exempt from all enhanced prudential standards that the Federal Reserve has not made
applicable to them, with the exception of risk committee requirements. As discussed immediately below, the Federal Reserve has
proposed a rule to implement the Economic Growth Act under which Huntington would remain subject to certain enhanced
prudential standards.

On October 31, 2018, the Federal Reserve issued the Proposed EPS Tailoring Rule pursuant to the Economic Growth Act to

adjust the thresholds at which certain enhanced prudential standards apply to U.S. BHCs with $100 billion or more in total
consolidated assets. Also on October 31, 2018, the Federal Reserve, OCC, and FDIC issued the Proposed Capital and Liquidity
Tailoring Rule to similarly adjust the thresholds at which certain other capital and liquidity standards apply to U.S. BHCs and
banks with $100 billion or more in total consolidated assets. Under the Proposed Tailoring Rules, these BHCs and banks,
including Huntington and the Bank, would be placed into one of four risk-based categories based on the banking organization’s
size, status as a global systemically important bank (or not), cross-jurisdictional activity, weighted short-term wholesale funding,
nonbank assets, and off-balance sheet exposure. The extent to which enhanced prudential standards and certain other capital and
liquidity standards would apply to these BHCs and banks would depend on the banking organization’s category. Under the
Proposed Tailoring Rules, which remain subject to finalization and may be revised, Huntington and the Bank would each qualify as
a Category IV banking organization subject to the least restrictive of the proposed requirements applicable to firms with $100
billion or more in total consolidated assets.

The ultimate benefits or consequences of the Economic Growth Act for Huntington, the Bank, Huntington’s other

subsidiaries, and Huntington’s activities will depend on the final form of the Proposed Tailoring Rules and additional rulemakings
to implement the Act that are expected to be issued by the U.S. banking agencies, which we cannot predict.

We are also subject to the disclosure and regulatory requirements of the Securities Act of 1933, as amended, and the

Securities Exchange Act of 1934, as amended, both as administered by the SEC, as well as the rules of Nasdaq that apply to
companies with securities listed on the Nasdaq Global Select Market.

The following discussion describes certain elements of the comprehensive regulatory framework applicable to us. This

discussion is not intended to describe all laws and regulations applicable to Huntington, the Bank, and Huntington’s other
subsidiaries.

Huntington as a Bank Holding Company

Huntington is registered as a BHC with the Federal Reserve under the BHC Act and qualifies for and has elected to become a

FHC under the GLBA. As a FHC, Huntington is permitted to engage in, and be affiliated with companies engaging in, a broader
range of activities than those permitted for a BHC. BHCs are generally restricted to engaging in the business of banking,
managing or controlling banks, and certain other activities determined by the Federal Reserve to be closely related to banking.
FHCs may also engage in activities that are considered to be financial in nature, as well as those incidental or complementary to
financial activities, including underwriting, dealing and making markets in securities, and making merchant banking investments in
non-financial companies. Huntington and the Bank must each remain “well-capitalized” and “well managed” in order for

Huntington to maintain its status as a FHC. In addition, the Bank must receive a CRA rating of at least “Satisfactory” at its most
recent examination for Huntington to engage in the full range of activities permissible for FHCs.

Huntington is subject to primary supervision, regulation and examination by the Federal Reserve, which serves as the

primary regulator of our consolidated organization. The primary regulators of our non-bank subsidiaries directly regulate the
activities of those subsidiaries, with the Federal Reserve exercising a supervisory role. Such non-bank subsidiaries include, for
example, broker-dealers registered with the SEC and investment advisers registered with the SEC with respect to their investment
advisory activities.

The Bank as a National Bank

The Bank is a national banking association chartered under the laws of the United States. As a national bank, the activities of

the Bank are limited to those specifically authorized under the National Bank Act and OCC regulations. The Bank is subject to
comprehensive primary supervision, regulation, and examination by the OCC. As a member of the DIF, the Bank is also subject to
regulation and examination by the FDIC.

Supervision, Examination and Enforcement

A principal objective of the U.S. bank regulatory regime is to protect depositors and customers, the DIF, the U.S. banking and

financial system, and financial markets as a whole by ensuring the financial safety and soundness of BHCs and banks, including
Huntington and the Bank. Bank regulators regularly examine the operations of BHCs and banks. In addition, BHCs and banks are
subject to periodic reporting and filing requirements.

The Federal Reserve, OCC, and FDIC have broad supervisory and enforcement authority with regard to BHCs and banks,

including the power to conduct examinations and investigations, impose nonpublic supervisory agreements, issue cease and desist
orders, impose fines and other civil and criminal penalties, terminate deposit insurance, and appoint a conservator or receiver. In
addition, Huntington, the Bank and other Huntington subsidiaries are subject to supervision, regulation, and examination by the
CFPB, which is the primary administrator of most federal consumer financial statutes and Huntington’s primary consumer
financial regulator. Supervision and examinations are confidential, and the outcomes of these actions may not be made public.

Bank regulators have various remedies available if they determine that the financial condition, capital resources, asset quality,

earnings prospects, management, liquidity, or other aspects of a banking organization’s operations are unsatisfactory. The
regulators may also take action if they determine that the banking organization or its management is violating or has violated any
law or regulation. The regulators have the power to, among other things, prohibit unsafe or unsound practices, require affirmative
actions to correct any violation or practice, issue administrative orders that can be judicially enforced, direct increases in capital,
direct the sale of subsidiaries or other assets, limit dividends and distributions, restrict growth, assess civil monetary penalties,
remove officers and directors, and terminate deposit insurance.

Engaging in unsafe or unsound practices or failing to comply with applicable laws, regulations, and supervisory agreements

could subject the Company, its subsidiaries, and their respective officers, directors, and institution-affiliated parties to the remedies
described above, and other sanctions. In addition, the FDIC may terminate a bank’s deposit insurance upon a finding that the
bank’s financial condition is unsafe or unsound or that the bank has engaged in unsafe or unsound practices or has violated an
applicable rule, regulation, order, or condition enacted or imposed by the bank’s regulatory agency.

In November 2018, the Federal Reserve adopted a new rating system, the LFI Rating System, to align its supervisory rating

system for large financial institutions, including Huntington, with its current supervisory programs for these firms. As compared to
the rating system it replaces, which will continue to be used for smaller BHCs, the LFI Rating System places a greater emphasis on
capital and liquidity, including related planning and risk management practices. Huntington will receive its first rating under the
LFI Rating System in 2020. These ratings will remain confidential.

Bank Acquisitions by Huntington

BHCs, such as Huntington, must obtain prior approval of the Federal Reserve in connection with any acquisition that results

in the BHC owning or controlling 5% or more of any class of voting securities of a bank or another BHC.

Acquisitions of Ownership of the Company

Acquisitions of Huntington’s voting stock above certain thresholds are subject to prior regulatory notice or approval under
federal banking laws, including the BHC Act and the Change in Bank Control Act of 1978. Under the Change in Bank Control
Act, a person or entity generally must provide prior notice to the Federal Reserve before acquiring the power to vote 10% or more
of our outstanding common stock. Investors should be aware of these requirements when acquiring shares in our stock.

Interstate Banking

Under the Riegle-Neal Act, a BHC may acquire banks in states other than its home state, subject to any state requirement that

the bank has been organized and operating for a minimum period of time, not to exceed five years, and the requirement that the

BHC not control, prior to or following the proposed acquisition, more than 10% of the total amount of deposits of insured
depository institutions nationwide or, unless the acquisition is the BHC’s initial entry into the state, more than 30% of such
deposits in the state (or such lesser or greater amount set by the state). The Riegle-Neal Act also authorizes banks to merge across
state lines, thereby creating interstate branches. A national bank, such as the Bank, with the approval of the OCC may open a
branch in any state if the law of that state would permit a state bank chartered in that state to establish the branch.

Regulatory Capital Requirements

Huntington and the Bank are subject to certain risk-based capital and leverage ratio requirements under the U.S. Basel III

capital rules adopted by the Federal Reserve, for Huntington, and by the OCC, for the Bank. These rules implement the Basel III
international regulatory capital standards in the United States, as well as certain provisions of the Dodd-Frank Act. These
quantitative calculations are minimums, and the Federal Reserve and OCC may determine that a banking organization, based on its
size, complexity, or risk profile, must maintain a higher level of capital in order to operate in a safe and sound manner.

Under the U.S. Basel III capital rules, Huntington’s and the Bank’s assets, exposures, and certain off-balance sheet items are
subject to risk weights used to determine the institutions’ risk-weighted assets. These risk-weighted assets are used to calculate the
following minimum capital ratios for Huntington and the Bank:

• CET1 Risk-Based Capital Ratio, equal to the ratio of CET1 capital to risk-weighted assets. CET1 capital primarily

includes common shareholders’ equity subject to certain regulatory adjustments and deductions, including with respect to
goodwill, intangible assets, certain deferred tax assets, and AOCI. Certain of these adjustments and deductions were
subject to phase-in periods that began on January 1, 2015, and was scheduled to end on January 1, 2018. Together with
the FDIC, the Federal Reserve and OCC have issued proposed rules that would simplify the capital treatment of certain
capital deductions and adjustments, and the final phase-in period for these capital deductions and adjustments has been
indefinitely delayed. In addition, in December 2018, the U.S. federal banking agencies finalized rules that would permit
BHCs and banks to phase-in, for regulatory capital purposes, the day-one impact of the new current expected credit loss
accounting rule on retained earnings over a period of three years. For further discussion of the new current expected
credit loss accounting rule, see Note 2 of the Notes to Consolidated Financial Statements.

• Tier 1 Risk-Based Capital Ratio, equal to the ratio of Tier 1 capital to risk-weighted assets. Tier 1 capital is primarily

comprised of CET1 capital, perpetual preferred stock, and certain qualifying capital instruments.

• Total Risk-Based Capital Ratio, equal to the ratio of total capital, including CET1 capital, Tier 1 capital, and Tier 2

capital, to risk-weighted assets. Tier 2 capital primarily includes qualifying subordinated debt and qualifying ALLL. Tier
2 capital also includes, among other things, certain trust preferred securities.

• Tier 1 Leverage Ratio, equal to the ratio of Tier 1 capital to quarterly average assets (net of goodwill, certain other

intangible assets, and certain other deductions).

The total minimum regulatory capital ratios and well-capitalized minimum ratios are reflected on the following page. The

Federal Reserve has not yet revised the well-capitalized standard for BHCs to reflect the higher capital requirements imposed
under the U.S. Basel III capital rules. For purposes of the Federal Reserve’s Regulation Y, including determining whether a BHC
meets the requirements to be an FHC, BHCs, such as Huntington, must maintain a Tier 1 Risk-Based Capital Ratio of 6.0% or
greater and a Total Risk-Based Capital Ratio of 10.0% or greater. If the Federal Reserve were to apply the same or a very similar
well-capitalized standard to BHCs as that applicable to the Bank, Huntington’s capital ratios as of December 31, 2018 would
exceed such revised well-capitalized standard. The Federal Reserve may require BHCs, including Huntington, to maintain capital
ratios substantially in excess of mandated minimum levels, depending upon general economic conditions and a BHC’s particular
condition, risk profile, and growth plans.

Failure to be well-capitalized or to meet minimum capital requirements could result in certain mandatory and possible
additional discretionary actions by regulators that, if undertaken, could have an adverse material effect on our operations or
financial condition. Failure to be well-capitalized or to meet minimum capital requirements could also result in restrictions on
Huntington’s or the Bank’s ability to pay dividends or otherwise distribute capital or to receive regulatory approval of applications.

In addition to meeting the minimum capital requirements, under the U.S. Basel III capital rules, Huntington and the Bank

must also maintain the required Capital Conservation Buffer to avoid becoming subject to restrictions on capital distributions and
certain discretionary bonus payments to management. The Capital Conservation Buffer is calculated as a ratio of CET1 capital to
risk-weighted assets, and it effectively increases the required minimum risk-based capital ratios. The Capital Conservation Buffer
requirement was phased in over a three-year period that began on January 1, 2016. The phase-in period ended on January 1, 2019,
and the Capital Conservation Buffer is now at its fully phased-in level of 2.5%. Throughout 2018, the required Capital
Conservation Buffer was 1.875%. The Tier 1 Leverage Ratio is not impacted by the Capital Conservation Buffer, and a banking
institution may be considered well-capitalized while remaining out of compliance with the Capital Conservation Buffer. In April
2018, the Federal Reserve issued a proposal that would, among other things, replace the Capital Conservation Buffer with stress

buffer requirements for certain large BHCs, including Huntington. Please refer to the Proposed Stress Buffer Requirements section
below for further details.

The table below summarizes the capital requirements that Huntington and the Bank must satisfy to avoid limitations on

capital distributions and certain discretionary bonus payments (i.e., the required minimum capital ratios plus the Capital
Conservation Buffer) during the remaining transition period for the Capital Conservation Buffer:

CET 1 risk-based capital ratio

Tier 1 risk-based capital ratio

Total risk-based capital ratio

Minimum Basel III Regulatory
Capital Ratio
Plus Capital Conservation Buffer

January 1, 2018

January 1, 2019

6.375%

7.875

9.875

7.00%

8.50

10.50

The following table presents the minimum regulatory capital ratios, minimum ratio plus capital conservation buffer, and well

capitalized minimums compared with Huntington’s and the Bank’s regulatory capital ratios as of December 31, 2018, calculated
using the regulatory capital methodology applicable during 2018.

(dollar amounts in billions)
Ratios:

CET 1 risk-based capital ratio

Tier 1 risk-based capital ratio

Total risk-based capital ratio

Tier 1 leverage ratio

Consolidated
Bank
Consolidated
Bank
Consolidated
Bank
Consolidated
Bank

Minimum
Regulatory
Capital Ratio

Minimum Ratio +
Capital
Conservation
Buffer (1)

Well-
Capitalized
Minimums (2)

At December 31,
2018

Actual

4.50%
4.50
6.00
6.00
8.00
8.00
4.00
4.00

6.375%
6.375
7.875
7.875
9.875
9.875
N/A
N/A

N/A
6.50%
6.00
8.00
10.00
10.00
N/A
5.00

9.65%
10.19
11.06
11.21
12.98
13.42
9.10
9.23

(1)

Reflects the capital conservation buffer of 1.875% applicable during 2018. Huntington and the Bank already meet the Capital Conservation Buffer at the
fully phased-in level of 2.5%.

(2) Reflects the well-capitalized standard applicable to Huntington under Federal Reserve Regulation Y and the well-capitalized standard applicable to the Bank.

Huntington has the ability to provide additional capital to the Bank to maintain the Bank’s risk-based capital ratios at levels

which would be considered well-capitalized.

As of December 31, 2018, Huntington’s and the Bank’s regulatory capital ratios were above the well-capitalized standards

and met the then-applicable Capital Conservation Buffer and the Capital Conservation Buffer on a fully phased-in basis. Based on
current estimates, we believe that Huntington and the Bank will continue to exceed all applicable well-capitalized regulatory
capital requirements and the Capital Conservation Buffer, on a fully phased-in basis.

Liquidity Requirements

BHCs with total consolidated assets of $250 billion or more are subject to a minimum LCR, and BHCs with at least $100

billion but less than $250 billion in total consolidated assets, including Huntington, are currently subject to a less stringent
modified version of the LCR. The LCR requires Huntington to meet certain liquidity measures by holding an adequate amount of
unencumbered high-quality liquid assets, such as Treasury securities and other sovereign debt, to cover its projected net cash
outflows over a 30 calendar-day stress scenario window. Because the LCR assigns less severe outflow assumptions to certain
types of customer deposits, banks’ demand for and the cost of these deposits may increase. Additionally, the LCR has increased
the demand for direct U.S. government and U.S. government-guaranteed debt that, while high quality, generally carry lower yields
than other securities BHCs hold in their investment portfolios. Under the Proposed Capital and Liquidity Tailoring Rule,
Huntington, as a Category IV banking organization, would be exempt from the LCR.

In addition, in May 2016, the federal bank regulatory agencies proposed a Net Stable Funding Ratio rule, which would
require large financial firms to meet certain net stable funding measures by funding themselves with adequate amounts of medium-
and long-term funding. As initially proposed, Huntington would be subject to a less stringent modified version of the Net Stable
Funding Ratio. Under the Proposed Capital and Liquidity Tailoring Rule, however, Huntington, as a Category IV banking
organization, would be exempt from the proposed Net Stable Funding Ratio.

We cannot predict whether the final form of the Proposed Capital and Liquidity Tailoring Rule will exempt Huntington from

the LCR and the proposed Net Stable Funding Ratio.

Enhanced Prudential Standards

Under the Dodd-Frank Act, as modified by the Economic Growth Act, BHCs with consolidated assets of more than $100
billion, such as Huntington, are currently subject to certain enhanced prudential standards. As a result, Huntington is subject to
more stringent standards, including liquidity and capital requirements, leverage limits, stress testing, resolution planning, and risk
management standards, than those applicable to smaller institutions. Certain larger banking organizations are subject to additional
enhanced prudential standards.

A rule to implement one other enhanced prudential standard—early remediation requirements—is still under consideration by

the Federal Reserve. In June 2018, the Federal Reserve adopted a final rule that established single counterparty credit limits. The
new single counterparty credit limits do not apply to BHCs like Huntington that do not have at least $250 billion of total
consolidated assets.

As discussed in the Regulatory Environment section above, following the 18-month period after the enactment of the
Economic Growth Act, BHCs with consolidated assets between $100 billion and $250 billion, such as Huntington, will be exempt
from all enhanced prudential standards that the Federal Reserve has not made applicable to them, with the exception of risk
committee requirements. Under the Proposed EPS Tailoring Rule, Huntington, as a Category IV banking organization, would be
subject to the least restrictive enhanced prudential standards applicable to firms with $100 billion or more in total consolidated
assets. As compared to enhanced prudential standards currently applicable to Huntington, under the Proposed EPS Tailoring Rule,
Huntington would no longer be subject to company-run stress testing requirements and would be subject to less frequent
supervisory stress tests, less frequent internal liquidity stress tests, and reduced liquidity risk management requirements. We
cannot predict whether the Proposed EPS Tailoring Rule will be adopted as proposed or whether any changes will be made to it
that would affect the enhanced prudential standards applicable to Huntington. In addition, future rulemakings to implement the
Economic Growth Act may further change the enhanced prudential standards applicable to Huntington.

Capital Planning

Huntington is required to submit a capital plan annually to the Federal Reserve for supervisory review in connection with its
annual CCAR process. Huntington is required to include within its capital plan an assessment of the expected uses and sources of
capital and a description of all planned capital actions over the nine-quarter planning horizon, a detailed description of the process
for assessing capital adequacy, its capital policy, and a discussion of any expected changes to its business plan that are likely to
have a material impact on its capital adequacy.

The Federal Reserve expects BHCs subject to CCAR, such as Huntington, to have sufficient capital to withstand a highly

adverse operating environment and to be able to continue operations, maintain ready access to funding, meet obligations to
creditors and counterparties, and serve as credit intermediaries. In addition, the Federal Reserve evaluates the planned capital
actions of these BHCs, including planned capital distributions such as dividend payments or stock repurchases. This involves a
quantitative assessment of capital based on supervisory-run stress tests that assess the ability to maintain capital levels above
certain minimum ratios, after taking all capital actions included in a BHC’s capital plan, under baseline and stressful conditions
throughout the nine-quarter planning horizon. As part of CCAR, the Federal Reserve evaluates whether BHCs have sufficient
capital to continue operations throughout times of economic and financial market stress and whether they have robust, forward-
looking capital planning processes that account for their unique risks. We generally may pay dividends and repurchase stock only
in accordance with a capital plan that has been reviewed by the Federal Reserve and as to which the Federal Reserve has not
objected. In addition, we are generally prohibited from making a capital distribution unless, after giving effect to the distribution,
we will meet all minimum regulatory capital ratios.

Under revised CCAR rules that became effective on March 6, 2017, the Federal Reserve is no longer allowed to object to the
capital plan of a large and non-complex BHC, such as Huntington, on a qualitative, as opposed to quantitative, basis. Instead, the
Federal Reserve may evaluate the strength of Huntington’s qualitative capital planning process through the regular supervisory
process and targeted horizontal reviews of particular aspects of capital planning. In April 2018, the Federal Reserve issued a
proposal to integrate its annual capital planning and stress testing requirements with certain ongoing regulatory capital
requirements, which would make changes to capital planning and stress testing processes for BHCs subject to the proposed rule,
including Huntington. Please refer to the Proposed Stress Buffer Requirements section below for further details. In addition, the
Federal Reserve has stated that, as part of a future rulemaking to implement the Economic Growth Act, it may further streamline
the CCAR rules and other capital planning requirements applicable to certain BHCs with consolidated assets between $100 billion
and $250 billion, including Huntington.

Huntington submitted its 2018 capital plan to the Federal Reserve in April 2018. The Federal Reserve did not object to
Huntington’s 2018 capital plan. On February 5, 2019, the Federal Reserve announced that certain less-complex U.S. BHCs with
less than $250 billion in total consolidated assets, including Huntington, would not be subject to supervisory stress testing,
company-run stress testing, or the CCAR process for the 2019 capital plan and stress test cycle. Those BHCs, including
Huntington, remain subject to the requirement to develop and maintain a capital plan, and the board of directors (or designated
subcommittee thereof) at those BHCs remain subject to the requirement to review and approve the BHC’s capital plan. If

Huntington chooses to submit a capital plan to the FRB in the 2019 capital plan cycle, it will be subject to a supervisory stress test
by the FRB. There can be no assurance that the Federal Reserve will respond favorably to Huntington’s future capital plans,
capital actions, or stress test results.

Stress Testing

Huntington is subject to annual supervisory stress tests. These supervisory stress tests are forward-looking quantitative

evaluations of the impact of stressful economic and financial market conditions on Huntington’s capital. Huntington also must
conduct semi-annual company-run stress tests, the results of which are filed with the Federal Reserve and publicly disclosed. The
objective of the annual company-run stress test is to ensure that covered institutions have robust, forward-looking capital planning
processes that account for their unique risks and to help ensure that covered institutions have sufficient capital to continue
operations throughout times of economic and financial stress. The results of these annual stress tests must be publicly disclosed.

As noted above, Huntington is not subject to supervisory stress testing or company-run stress testing for the 2019 stress test

cycle.

Under the Proposed EPS Tailoring Rule, Huntington, as a Category IV banking organization, would no longer be subject to
company-run stress testing requirements and would be subject to supervisory stress tests every two years, instead of annually. In
addition, on December 18, 2018, the OCC proposed a rule to implement the Economic Growth Act that would change the
minimum threshold at which company-run stress test requirements apply for national banks to $250 billion in total consolidated
assets. Under this proposed rule, the Bank would no longer be subject to company-run stress testing requirements. We cannot
predict whether the Proposed EPS Tailoring Rule or the OCC’s proposed rule will be adopted as proposed or whether any changes
will be made to either rule that would affect the stress testing requirements applicable to Huntington or the Bank.

Proposed Stress Buffer Requirements

On April 10, 2018, the Federal Reserve issued a proposal to integrate its annual capital planning and stress testing

requirements with certain ongoing regulatory capital requirements. The proposal, which would apply to certain BHCs, including
Huntington, would introduce a stress capital buffer and a stress leverage buffer, or stress buffer requirements, and related changes
to the capital planning and stress testing processes.

For risk-based capital requirements, the stress capital buffer would replace the existing Capital Conservation Buffer, which is
2.5% as of January 1, 2019. The stress capital buffer would equal the greater of (i) the maximum decline in our CET1 Risk-Based
Capital Ratio under the severely adverse scenario over the supervisory stress test measurement period, plus the sum of the ratios of
the dollar amount of our planned common stock dividends to our projected risk-weighted assets for each of the fourth through
seventh quarters of the supervisory stress test projection period, and (ii) 2.5%.

Like the stress capital buffer, the stress leverage buffer would be calculated based on the results of our most recent
supervisory stress tests. The stress leverage buffer would equal the maximum decline in our Tier 1 Leverage Ratio under the
severely adverse scenario, plus the sum of the ratios of the dollar amount of our planned common stock dividends to our projected
leverage ratio denominator for each of the fourth through seventh quarters of the supervisory stress test projection period. No floor
would be established for the stress leverage buffer, which would apply in addition to the current minimum Tier 1 Leverage Ratio of
4%.

The proposal would make related changes to capital planning and stress testing processes for BHCs subject to the stress

buffer requirements. In particular, the proposal would limit projected capital actions to planned common stock dividends in the
fourth through seventh quarters of the supervisory stress test projection period and would assume that BHCs maintain a constant
level of assets and risk-weighted assets throughout the supervisory stress test projection period.

In November 2018, the Federal Reserve’s Vice Chairman for Supervision stated that the Federal Reserve does not expect that

the proposed stress buffer requirements will go into effect before 2020, and that, while the Federal Reserve expects to finalize
certain elements of those requirements as proposed, other elements of the proposal will be re-proposed and again subject to public
comment.

Restrictions on Dividends

Huntington is a legal entity separate and distinct from its banking and non-banking subsidiaries. Since our consolidated net

income consists largely of net income of Huntington’s subsidiaries, our ability to pay dividends and repurchase shares depends
upon our receipt of dividends from these subsidiaries. Under federal law, there are various limitations on the extent to which the
Bank can declare and pay dividends to Huntington, including those related to regulatory capital requirements, general regulatory
oversight to prevent unsafe or unsound practices, and federal banking law requirements concerning the payment of dividends out
of net profits, surplus, and available earnings. Certain contractual restrictions also may limit the ability of the Bank to pay
dividends to Huntington. No assurances can be given that the Bank will, in any circumstances, pay dividends to Huntington.

Huntington’s ability to declare and pay dividends to our shareholders is similarly limited by federal banking law and Federal

Reserve regulations and policy. As discussed in the Capital Planning section above, a BHC may pay dividends and repurchase

stock only in accordance with a capital plan that has been reviewed by the Federal Reserve and as to which the Federal Reserve
has not objected.

Huntington and the Bank must maintain the applicable CET1 Capital Conservation Buffer to avoid becoming subject to
restrictions on capital distributions, including dividends. As of January 1, 2019, the fully phased in Capital Conservation Buffer is
2.5%. For more information on the Capital Conservation Buffer and the stress buffer requirements that the Federal Reserve has
proposed that would replace the Capital Conservation Buffer for BHCs, see the Regulatory Capital Requirements section and
Proposed Stress Buffer Requirements sections above, respectively.

Federal Reserve policy provides that a BHC should not pay dividends unless (1) the BHC’s net income over the last four

quarters (net of dividends paid) is sufficient to fully fund the dividends, (2) the prospective rate of earnings retention appears
consistent with the capital needs, asset quality, and overall financial condition of the BHC and its subsidiaries, and (3) the BHC
will continue to meet minimum required capital adequacy ratios. Accordingly, a BHC should not pay cash dividends that can only
be funded in ways that weaken the BHC’s financial health, such as by borrowing. The policy also provides that a BHC should
inform the Federal Reserve reasonably in advance of declaring or paying a dividend that exceeds earnings for the period for which
the dividend is being paid or that could result in a material adverse change to the BHC’s capital structure. BHCs also are required
to consult with the Federal Reserve before increasing dividends or redeeming or repurchasing capital instruments. Additionally,
the Federal Reserve could prohibit or limit the payment of dividends by a BHC if it determines that payment of the dividend would
constitute an unsafe or unsound practice.

Volcker Rule

Under the Volcker Rule, we are prohibited from (1) engaging in short-term proprietary trading for our own account and (2)

having certain ownership interests in and relationships with hedge funds or private equity funds (covered funds). The Volcker Rule
regulations contain exemptions for market-making, hedging, underwriting, trading in U.S. government and agency obligations, and
also permit certain ownership interests in certain types of covered funds to be retained. They also permit the offering and
sponsoring of covered funds under certain conditions. The Volcker Rule regulations impose significant compliance and reporting
obligations on banking entities, such as us. We have put in place the compliance programs required by the Volcker Rule and have
either divested or received extensions for any holdings in illiquid covered funds.

The five federal agencies implementing the Volcker Rule regulations have approved an interim final rule to permit banking

entities to retain interests in certain collateralized debt obligations backed primarily by trust preferred securities if certain
qualifications are met. In addition, the agencies released a non-exclusive list of issuers that meet the requirements of the interim
final rule. As of December 31, 2018, we had no investments in trust preferred securities.

In May 2018, the five federal agencies with rulemaking authority with respect to the Volcker Rule released a proposal to

revise the Volcker Rule. The proposal would tailor the Volcker Rule’s compliance requirements to the amount of a firm’s trading
activity, revise the definition of trading account, clarify certain key provisions in the Volcker Rule, and modify the information
companies are required to provide the federal agencies. If adopted, the proposed changes to the definition of trading account
would likely expand the scope of investing and trading activities subject to the Volcker Rule’s restrictions. We are currently
evaluating the potential impact that this proposed rule would have on our investing and trading activities.

Recovery and Resolution Planning

As a BHC with assets of $50 billion or more, Huntington is currently required to submit annually to the Federal Reserve and

the FDIC a resolution plan for the orderly resolution of Huntington and its significant legal entities under the U.S. Bankruptcy
Code or other applicable insolvency laws in a rapid and orderly fashion in the event of future material financial distress or failure.
If the Federal Reserve and the FDIC jointly determine that the resolution plan is not credible and the deficiencies are not cured in a
timely manner, they may jointly impose on us more stringent capital, leverage, or liquidity requirements, or restrictions on our
growth, activities, or operations. If we were to fail to address the deficiencies in our resolution plan when required, we could
eventually be required to divest certain assets or operations. Huntington submitted its resolution plan to the Federal Reserve and
the FDIC on December 21, 2017. The Federal Reserve and FDIC have extended the filing deadline for certain BHCs, including
Huntington, and as a result Huntington’s next resolution plan is not due to the Federal Reserve and FDIC until December 31, 2019.
In addition, the Bank is required to periodically file a separate resolution plan with the FDIC. The public versions of the resolution
plans previously submitted by Huntington and the Bank are available on the FDIC’s website and, in the case of Huntington’s
resolution plans, also on the Federal Reserve’s website.

The Economic Growth Act raised the threshold for BHC resolution plans to $250 billion in consolidated assets, but BHCs
with consolidated assets between $100 billion and $250 billion, including Huntington, continue to be subject to this requirement
for 18 months after the Economic Growth Act’s date of enactment, and the Federal Reserve and FDIC may require such BHCs to
remain subject to these requirements. The Federal Reserve and the FDIC have stated that they will propose a rule to amend the
applicability of resolution planning requirements for BHCs with between $100 billion and $250 billion in consolidated assets. We
cannot predict whether and to what extent Huntington will continue to be subject to the resolution plan requirements as a result of

any final rule resulting from this proposal.

The Economic Growth Act did not change the FDIC’s rules that require the Bank to periodically file a separate resolution

plan. The FDIC’s Chairman, however, has indicated that the FDIC intends to release an advanced notice of proposed rulemaking
with respect to the FDIC’s bank resolution plan requirements meant to better tailor bank resolution plans to a firm’s size,
complexity, and risk profile. Until the FDIC’s revisions to its bank resolution plan requirement are finalized, no bank resolution
plans will be required to be filed.

The Bank had previously been required to develop and maintain a recovery plan that is appropriate for its individual size, risk

profile, activities, and complexity, including the complexity of its organizational and legal entity structure under OCC guidelines
that establish enforceable standards for recovery planning for insured national banks. On December 27, 2018, the OCC finalized
an amendment to its guidelines that, among other things, raised the threshold at which banks become subject to the OCC’s
recovery planning guidelines to $250 billion in total consolidated assets. This increased threshold became effective on January 28,
2019, and as a result, the Bank is no longer subject to the OCC’s recovery planning guidelines.

Source of Strength

Huntington is required to serve as a source of financial and managerial strength to the Bank and, under appropriate
conditions, to commit resources to support the Bank. This support may be required by the Federal Reserve at times when we
might otherwise determine not to provide it or when doing so is not otherwise in the interests of Huntington or our shareholders or
creditors. The Federal Reserve may require a BHC to make capital injections into a troubled subsidiary bank and may charge the
BHC with engaging in unsafe and unsound practices if the BHC fails to commit resources to such a subsidiary bank or if it
undertakes actions that the Federal Reserve believes might jeopardize the BHC’s ability to commit resources to such subsidiary
bank.

Under these requirements, Huntington may in the future be required to provide financial assistance to the Bank should it

experience financial distress. Capital loans by Huntington to the Bank would be subordinate in right of payment to deposits and
certain other debts of the Bank. In the event of Huntington’s bankruptcy, any commitment by Huntington to a federal bank
regulatory agency to maintain the capital of the Bank would be assumed by the bankruptcy trustee and entitled to a priority of
payment.

FDIC as Receiver or Conservator of Huntington

Upon the insolvency of an insured depository institution, such as the Bank, the FDIC may be appointed as the conservator or
receiver of the institution. Under the Orderly Liquidation Authority, upon the insolvency of a BHC, such as Huntington, the FDIC
may be appointed as conservator or receiver of the BHC, if certain findings are made by the FDIC, the Federal Reserve, and the
Secretary of the Treasury, in consultation with the President. Acting as a conservator or receiver, the FDIC would have broad
powers to transfer any assets or liabilities of the institution without the approval of the institution’s creditors.

Depositor Preference

The FDIA provides that, in the event of the liquidation or other resolution of an insured depository institution, including the
Bank, the claims of depositors of the institution (including the claims of the FDIC as subrogee of insured depositors) and certain
claims for administrative expenses of the FDIC as a receiver would have priority over other general unsecured claims against the
institution. If the Bank were to fail, insured and uninsured depositors, along with the FDIC, would have priority in payment ahead
of unsecured, non-deposit creditors, including Huntington, with respect to any extensions of credit they have made to such insured
depository institution.

Transactions between a Bank and its Affiliates

Federal banking laws and regulations impose qualitative standards and quantitative limitations upon certain transactions
between a bank and its affiliates, including between a bank and its holding company and companies that the BHC may be deemed
to control for these purposes. Transactions covered by these provisions must be on arm’s-length terms and cannot exceed certain
amounts which are determined with reference to the bank’s regulatory capital. Moreover, if the transaction is a loan or other
extension of credit, it must be secured by collateral in an amount and quality expressly prescribed by statute, and if the affiliate is
unable to pledge sufficient collateral, the BHC may be required to provide it. The Dodd-Frank Act expanded the coverage and
scope of these regulations, including by applying them to the credit exposure arising under derivative transactions, repurchase and
reverse repurchase agreements, and securities borrowing and lending transactions. Federal banking laws also place similar
restrictions on loans and other extensions of credit by FDIC-insured banks, such as the Bank, and their subsidiaries to their
directors, executive officers, and principal shareholders.

Lending Standards and Guidance

The federal bank regulatory agencies have adopted uniform regulations prescribing standards for extensions of credit that are

secured by liens or interests in real estate or made for the purpose of financing permanent improvements to real estate. Under

these regulations, all insured depository institutions, such as the Bank, must adopt and maintain written policies establishing
appropriate limits and standards for extensions of credit that are secured by liens or interests in real estate or are made for the
purpose of financing permanent improvements to real estate. These policies must establish loan portfolio diversification standards,
prudent underwriting standards (including loan-to-value limits) that are clear and measurable, loan administration procedures, and
documentation, approval and reporting requirements. The real estate lending policies must reflect consideration of the federal
bank regulatory agencies’ Interagency Guidelines for Real Estate Lending Policies.

Heightened Governance and Risk Management Standards

The OCC has published guidelines to update expectations for the governance and risk management practices of certain large

financial institutions, including the Bank. The guidelines require covered institutions to establish and adhere to a written
governance framework in order to manage and control their risk-taking activities. In addition, the guidelines provide standards for
the institutions’ boards of directors to oversee the risk governance framework. As discussed in the Risk Management and Capital
section of the MDA, the Bank currently has a written governance framework and associated controls.

Anti-Money Laundering

The Bank Secrecy Act and the Patriot Act contain anti-money laundering and financial transparency provisions intended to
detect and prevent the use of the U.S. financial system for money laundering and terrorist financing activities. The Bank Secrecy
Act, as amended by the Patriot Act, requires depository institutions and their holding companies to undertake activities including
maintaining an AML program, verifying the identity of clients, monitoring for and reporting suspicious transactions, reporting on
cash transactions exceeding specified thresholds, and responding to requests for information by regulatory authorities and law
enforcement agencies. The Bank is subject to the Bank Secrecy Act and, therefore, is required to provide its employees with AML
training, designate an AML compliance officer, and undergo an annual, independent audit to assess the effectiveness of its AML
program. The Bank has implemented policies, procedures, and internal controls that are designed to comply with these AML
requirements. In May 2016, FinCEN, which is a unit of the Treasury Department that drafts regulations implementing the Patriot
Act and other AML legislation, issued final rules governing enhanced customer due diligence. The rules impose several new
obligations on covered financial institutions with respect to their “legal entity customers,” including corporations, limited liability
companies, and other similar entities. For each such customer that opens an account (including an existing customer opening a
new account), the covered financial institution must identify and verify the customer’s “beneficial owners,” who are specifically
defined in the rules. The rules contain an exemption for insurance premium financing transactions, but cash refunds issued in
connection with such transactions are not exempt, thus requiring verification of beneficial ownership before cash refunds may be
issued to borrowers. Bank regulators are focusing their examinations on AML compliance, and we will continue to monitor and
augment, where necessary, our AML compliance programs. The federal banking agencies are required, when reviewing bank and
BHC acquisition or merger applications, to take into account the effectiveness of the AML activities of the applicant.

OFAC Regulation

OFAC is responsible for administering economic sanctions that affect transactions with designated foreign countries,
nationals, and others, as defined by various Executive Orders and in various legislation. OFAC-administered sanctions take many
different forms. For example, sanctions may include: (1) restrictions on trade with or investment in a sanctioned country, including
prohibitions against direct or indirect imports from and exports to a sanctioned country and prohibitions on U.S. persons engaging
in financial transactions relating to, making investments in, or providing investment-related advice or assistance to, a sanctioned
country; and (2) a blocking of assets in which the government or “specially designated nationals” of the sanctioned country have
an interest, by prohibiting transfers of property subject to U.S. jurisdiction, including property in the possession or control of U.S.
persons. OFAC also publishes lists of persons, organizations, and countries suspected of aiding, harboring, or engaging in terrorist
acts, known as Specially Designated Nationals and Blocked Persons. Blocked assets, for example property and bank deposits,
cannot be paid out, withdrawn, set off, or transferred in any manner without a license from OFAC. Failure to comply with these
sanctions could have serious legal and reputational consequences.

Data Privacy

Federal and state law contains extensive consumer privacy protection provisions. The GLBA requires financial institutions to

periodically disclose their privacy policies and practices relating to sharing such information and enables retail customers to opt
out of our ability to share information with unaffiliated third parties under certain circumstances. Other federal and state laws and
regulations impact our ability to share certain information with affiliates and non-affiliates for marketing and/or non-marketing
purposes, or to contact customers with marketing offers. The GLBA also requires financial institutions to implement a
comprehensive information security program that includes administrative, technical, and physical safeguards to ensure the security
and confidentiality of customer records and information. These security and privacy policies and procedures for the protection of
personal and confidential information are in effect across all businesses and geographic locations as applicable. Federal law also
makes it a criminal offense, except in limited circumstances, to obtain or attempt to obtain customer information of a financial
nature by fraudulent or deceptive means.

Data privacy and data protection are areas of increasing state legislative focus. For example, in June of 2018, the Governor
of California signed into law the CCPA. The CCPA, which becomes effective on January 1, 2020, applies to for-profit businesses
that conduct business in California and meet certain revenue or data collection thresholds. The CCPA will give consumers the
right to request disclosure of information collected about them, and whether that information has been sold or shared with others,
the right to request deletion of personal information (subject to certain exceptions), the right to opt out of the sale of the
consumer’s personal information, and the right not to be discriminated against for exercising these rights. The CCPA contains
several exemptions, including an exemption applicable to information that is collected, processed, sold, or disclosed pursuant to
the GLBA. The California Attorney General has not yet proposed or adopted regulations implementing the CCPA, and the
California State Legislature has amended the Act since its passage. In California the CCPA may be interpreted or applied in a
manner inconsistent with our understanding or similar laws may be adopted by other states where we operate. We are continuing
to assess the impact of the CCPA on our business. The federal government may also pass data privacy or data protection
legislation.

Like other lenders, the Bank and other of our subsidiaries use credit bureau data in their underwriting activities. Use of such

data is regulated under the FCRA, and the FCRA also regulates reporting information to credit bureaus, prescreening individuals
for credit offers, sharing of information between affiliates, and using affiliate data for marketing purposes. Similar state laws may
impose additional requirements on us and our subsidiaries.

FDIC Insurance

The DIF provides insurance coverage for certain deposits, up to a standard maximum deposit insurance amount of $250,000
per depositor and is funded through assessments on insured depository institutions, based on the risk each institution poses to the
DIF. The Bank accepts customer deposits that are insured by the DIF and, therefore, must pay insurance premiums. The FDIC
may increase the Bank’s insurance premiums based on various factors, including the FDIC’s assessment of its risk profile. Until
September 30, 2018, banks with $10 billion or more in total assets, such as the Bank, were required to pay an assessment
surcharge. This requirement ended effective September 30, 2018, as a result of the FDIC’s reserve ratio exceeding 1.35%.

The FDIC issued a rule that requires large insured depository institutions, including the Bank, to enhance their deposit
account recordkeeping and related information technology system capabilities to facilitate prompt payment of insured deposits if
such an institution were to fail. We must comply with these new requirements by April 1, 2020.

Compensation

Our compensation practices are subject to oversight by the Federal Reserve and, with respect to some of our subsidiaries and

employees, by other financial regulatory bodies. The scope and content of compensation regulation in the financial industry are
continuing to develop, and we expect that these regulations and resulting market practices will continue to evolve over a number of
years.

The federal bank regulatory agencies have issued joint guidance on executive compensation designed to ensure that the
incentive compensation policies of banking organizations, such as Huntington and the Bank, do not encourage imprudent risk
taking and are consistent with the safety and soundness of the organization. In addition, the Dodd-Frank Act requires the federal
bank regulatory agencies and the SEC to issue regulations or guidelines requiring covered financial institutions, including
Huntington and the Bank, to prohibit incentive-based payment arrangements that encourage inappropriate risks by providing
compensation that is excessive or that could lead to material financial loss to the institution. A proposed rule was issued in 2016.
Also pursuant to the Dodd-Frank Act, in 2015, the SEC proposed rules that would direct stock exchanges to require listed
companies to implement clawback policies to recover incentive-based compensation from current or former executive officers in
the event of certain financial restatements and would also require companies to disclose their clawback policies and their actions
under those policies. Huntington continues to evaluate the proposed rules, both of which are subject to further rulemaking
procedures.

Cybersecurity

The CISA is intended to improve cybersecurity in the United States by enhanced sharing of information about security threats

among the U.S. government and private sector entities, including financial institutions. The CISA also authorizes companies to
monitor their own systems notwithstanding any other provision of law and allows companies to carry out defensive measures on
their own systems from cyber-attacks. The law includes liability protections for companies that share cyber threat information
with third parties so long as such sharing activity is conducted in accordance with CISA.

In October 2016, the federal bank regulatory agencies issued an ANPR regarding enhanced cyber risk management standards
which would apply to a wide range of large financial institutions and their third-party service providers, including us and the Bank.
The proposed standards would expand existing cybersecurity regulations and guidance to focus on cyber risk governance and
management, management of internal and external dependencies, and incident response, cyber resilience, and situational
awareness. In addition, the proposal contemplates more stringent standards for institutions with systems that are critical to the
financial sector.

Community Reinvestment Act

The CRA is intended to encourage banks to help meet the credit needs of their service areas, including low- and moderate-

income neighborhoods, consistent with safe and soundness practices. The relevant federal bank regulatory agency, the OCC in the
Bank’s case, examines each bank and assigns it a public CRA rating. A bank’s record of fair lending compliance is part of the
resulting CRA examination report.

The CRA requires the relevant federal bank regulatory agency to consider a bank’s CRA assessment when considering the
bank’s application to conduct certain mergers or acquisitions or to open or relocate a branch office. The Federal Reserve also must
consider the CRA record of each subsidiary bank of a BHC in connection with any acquisition or merger application filed by the
BHC. An unsatisfactory CRA record could substantially delay or result in the denial of an approval or application by Huntington
or the Bank. The Bank received a CRA rating of “Outstanding” in its most recent examination.

Leaders of the federal banking agencies recently have indicated their support for revising the CRA regulatory framework, and

on August 28, 2018, the OCC issued an ANPR to solicit ideas for building a new CRA framework. It is too early to tell whether
any changes will be made to applicable CRA requirements.

Transaction Account Reserves

Federal Reserve rules require depository institutions to maintain reserves against their transaction accounts, primarily
negotiable order of withdrawal (NOW) and regular checking accounts. For 2019, the first $16.3 million of covered balances are
exempt from the reserve requirement, aggregate balances between $16.3 million and $124.2 million are subject to a 3% reserve
requirement, and aggregate balances above $124.2 million are subject to a 10% reserve requirement. These reserve requirements
are subject to annual adjustment by the Federal Reserve. The Bank is in compliance with these requirements.

Debit Interchange Fees

We are subject to a statutory requirement that interchange fees for electronic debit transactions that are paid to or charged by

payment card issuers, including the Bank, be reasonable and proportional to the cost incurred by the issuer. Interchange fees for
electronic debit transactions are limited to 21 cents plus 0.05% of the transaction, plus an additional one cent per transaction fraud
adjustment. These fees impose requirements regarding routing and exclusivity of electronic debit transactions, and generally
require that debit cards be usable in at least two unaffiliated networks.

Consumer Protection Regulation and Supervision

We are subject to supervision and regulation by the CFPB with respect to federal consumer protection laws. We are also

subject to certain state consumer protection laws, and under the Dodd-Frank Act, state attorneys general and other state officials
are empowered to enforce certain federal consumer protection laws and regulations. State authorities have increased their focus on
and enforcement of consumer protection rules. These federal and state consumer protection laws apply to a broad range of our
activities and to various aspects of our business and include laws relating to interest rates, fair lending, disclosures of credit terms
and estimated transaction costs to consumer borrowers, debt collection practices, the use of and the provision of information to
consumer reporting agencies, and the prohibition of unfair, deceptive, or abusive acts or practices in connection with the offer, sale,
or provision of consumer financial products and services.

The CFPB has promulgated many mortgage-related final rules since it was established under the Dodd-Frank Act, including
rules related to the ability to repay and qualified mortgage standards, mortgage servicing standards, loan originator compensation
standards, high-cost mortgage requirements, HMDA requirements, and appraisal and escrow standards for higher priced
mortgages. The mortgage-related final rules issued by the CFPB have materially restructured the origination, servicing, and
securitization of residential mortgages in the United States. These rules have impacted, and will continue to impact, the business
practices of mortgage lenders, including the Company.

Available Information

We are subject to the informational requirements of the Exchange Act and, in accordance with the Exchange Act, we file
annual, quarterly, and current reports, proxy statements, and other information with the SEC. The SEC maintains an Internet web
site that contains reports, proxy statements, and other information about issuers, like us, who file electronically with the SEC. The
address of the site is http://www.sec.gov. The reports and other information, including any related amendments, filed by us with,
or furnished by us to, the SEC are also available free of charge at our Internet web site as soon as reasonably practicable after such
material is electronically filed with, or furnished to, the SEC. The address of the site is http://www.huntington.com. Except as
specifically incorporated by reference into this Annual Report on Form 10-K, information on those web sites is not part of this
report. You also should be able to inspect reports, proxy statements, and other information about us at the offices of the Nasdaq
National Market at 33 Whitehall Street, New York, New York 10004.

Item 1A: Risk Factors

We, like other financial companies, are subject to a number of risks that may adversely affect our financial condition or results

of operations, many of which are outside of our direct control. Among these risks are:

• Credit risk, which is the risk of loss due to loan and lease customers or other counterparties not being able to meet their

financial obligations under agreed upon terms;

• Market risk, which occurs when fluctuations in interest rates impact earnings and capital. Financial impacts are realized

through changes in the interest rates of balance sheet assets and liabilities (net interest margin) or directly through valuation
changes of capitalized MSR and/or trading assets (noninterest income);

• Liquidity risk, which is the risk to current or anticipated earnings or capital arising from an inability to meet obligations when
they come due. Liquidity risk includes the inability to access funding sources or manage fluctuations in funding levels.
Liquidity risk also results from the failure to recognize or address changes in market conditions that affect our ability to
liquidate assets quickly and with minimal loss in value;

• Operational and Legal risk, which is the risk of loss arising from inadequate or failed internal processes or systems, human
errors or misconduct, or adverse external events. Operational losses result from internal fraud, external fraud, inadequate or
inappropriate employment practices and workplace safety, failure to meet professional obligations involving customers,
products, and business practices, damage to physical assets, business disruption and systems failures, and failures in
execution, delivery, and process management. Legal risk includes, but is not limited to, exposure to orders, fines, penalties,
or punitive damages resulting from litigation, as well as regulatory actions;

• Compliance risk, which exposes us to money penalties, enforcement actions, or other sanctions as a result of non-

conformance with laws, rules, and regulations that apply to the financial services industry;

• Strategic risk, which is defined as risk to current or anticipated earnings, capital, or enterprise value arising from adverse
business decisions, improper implementation of business decisions or lack of responsiveness to industry / market changes;
and

• Reputation risk, which is the risk that negative publicity regarding an institution’s business practices, whether true or not,

will cause a decline in the customer base, costly litigation, or revenue reductions.

In addition to the other information included or incorporated by reference into this report, readers should carefully consider that

the following important factors, among others, could negatively impact our business, future results of operations, and future cash
flows materially.

Credit Risks:

Our ACL level may prove to not be adequate or be negatively affected by credit risk exposures which could adversely affect
our net income and capital.

Our business depends on the creditworthiness of our customers. Our ACL of $868 million at December 31, 2018, represented

Management’s estimate of probable losses inherent in our loan and lease portfolio (ALLL) as well as our unfunded loan commitments
and letters of credit (AULC). We regularly review our ACL for appropriateness. In doing so, we consider economic conditions and
trends, collateral values, and credit quality indicators, such as past charge-off experience, levels of past due loans, and NPAs. There is
no certainty that our ACL will be appropriate over time to cover losses in the portfolio because of unanticipated adverse changes in the
economy, market conditions, or events adversely affecting specific customers, industries, or markets. If the credit quality of our
customer base materially decreases, if the risk profile of a market, industry, or group of customers changes materially, or if the ACL is
not appropriate, our net income and capital could be materially adversely affected, which could have a material adverse effect on our
financial condition and results of operations.

In addition, regulatory review of risk ratings and loan and lease losses may impact the level of the ACL and could have a

material adverse effect on our financial condition and results of operations.

Furthermore, in June 2016, the FASB issued a new current expected credit loss rule, which will require banks to record, at the

time of origination, credit losses expected throughout the life of the asset portfolio on loans and held-to-maturity securities, as opposed
to the current practice of recording losses when it is probable that a loss event has occurred. We are required to adopt the current
expected credit loss rule in 2020 and expect to recognize a one-time cumulative effect adjustment to our ACL and retained earnings as
of January 1, 2020. The current expected credit loss model could materially affect how we determine our ACL and report our
financial condition and results of operations. For further discussion, see Note 2 of the Notes to Consolidated Financial Statements

Weakness in economic conditions could adversely affect our business.

Our performance could be negatively affected to the extent there is deterioration in business and economic conditions which

have direct or indirect material adverse impacts on us, our customers, and our counterparties. These conditions could result in one or
more of the following:

• A decrease in the demand for loans and other products and services offered by us;
• A decrease in customer savings generally and in the demand for savings and investment products offered by us; and
• An increase in the number of customers and counterparties who become delinquent, file for protection under bankruptcy

laws, or default on their loans or other obligations to us.

An increase in the number of delinquencies, bankruptcies, or defaults could result in a higher level of NPAs, NCOs, provision

for credit losses, and valuation adjustments on loans held for sale. The markets we serve are dependent on industrial and
manufacturing businesses and, thus, are particularly vulnerable to adverse changes in economic conditions affecting these sectors.

Market Risks:

Changes in interest rates could reduce our net interest income, reduce transactional income, and negatively impact the value of
our loans, securities, and other assets. This could have an adverse impact on our cash flows, financial condition, results of
operations, and capital.

Our results of operations depend substantially on net interest income, which is the difference between interest earned on interest

earning assets (such as investments and loans) and interest paid on interest bearing liabilities (such as deposits and borrowings).
Interest rates are highly sensitive to many factors, including governmental monetary policies and domestic and international economic
and political conditions. Conditions such as inflation, deflation, recession, unemployment, money supply, and other factors beyond
our control may also affect interest rates. In addition, after an extended period during which the Federal Reserve increased the size of
its balance sheet substantially above historical levels through the purchase of debt securities, the Federal Reserve has begun to reduce
the size of its balance sheet from these elevated levels, which might also affect interest rates. If our interest earning assets mature or
reprice faster than interest bearing liabilities in a declining interest rate environment, net interest income could be materially adversely
impacted. Likewise, if interest bearing liabilities mature or reprice more quickly than interest earning assets in a rising interest rate
environment, net interest income could be adversely impacted.

After a prolonged period of low and relatively stable interest rates, interest rates rose over the course of 2017 and 2018, although

interest rates continue to remain low by historical standards.

Changes in interest rates can affect the value of loans, securities, assets under management, and other assets, including mortgage

and nonmortgage servicing rights. An increase in interest rates that adversely affects the ability of borrowers to pay the principal or
interest on loans and leases may lead to an increase in NPAs and a reduction of income recognized, which could have a material
adverse effect on our results of operations and cash flows. When we place a loan on nonaccrual status, we reverse any accrued but
unpaid interest receivable, which decreases interest income. However, we continue to incur interest expense as a cost of funding
NALs without any corresponding interest income. In addition, transactional income, including trust income, brokerage income, and
gain on sales of loans can vary significantly from period-to-period based on a number of factors, including the interest rate
environment. A decline in interest rates along with a flattening yield curve limits our ability to reprice deposits given the current
historically low level of interest rates and could result in declining net interest margins if longer duration assets reprice faster than
deposits.

Rising interest rates reduce the value of our fixed-rate securities. Any unrealized loss from these portfolios impacts OCI,
shareholders’ equity, and the Tangible Common Equity ratio. Any realized loss from these portfolios impacts regulatory capital ratios.
In a rising interest rate environment, pension and other post-retirement obligations somewhat mitigate negative OCI impacts from
securities and financial instruments. For more information, refer to “Market Risk” of the MD&A.

Certain investment securities, notably mortgage-backed securities, are very sensitive to rising and falling rates. Generally, when

rates rise, prepayments of principal and interest will decrease and the duration of mortgage-backed securities will increase.
Conversely, when rates fall, prepayments of principal and interest will increase and the duration of mortgage-backed securities will
decrease. In either case, interest rates have a significant impact on the value of mortgage-backed securities.

MSR fair values are sensitive to movements in interest rates, as expected future net servicing income depends on the projected

outstanding principal balances of the underlying loans, which can be reduced by prepayments. Prepayments usually increase when
mortgage interest rates decline and decrease when mortgage interest rates rise.

In addition to volatility associated with interest rates, the Company also has exposure to equity markets related to the

investments within the benefit plans and other income from client based transactions.

Industry competition may have an adverse effect on our success.

Our profitability depends on our ability to compete successfully. We operate in a highly competitive environment, and we
expect competition to intensify. Certain of our competitors are larger and have more resources than we do, enabling them to be more
aggressive than us in competing for loans and deposits. In our market areas, we face competition from other banks and financial
service companies that offer similar services. Some of our non-bank competitors are not subject to the same extensive regulations we
are and, therefore, may have greater flexibility in competing for business. Technological advances have made it possible for our non-
bank competitors to offer products and services that traditionally were banking products and for financial institutions and other

companies to provide electronic and internet-based financial solutions, including mobile payments, online deposit accounts, electronic
payment processing, and marketplace lending, without having a physical presence where their customers are located. Legislative or
regulatory changes also could lead to increased competition in the financial services sector. For example, the Economic Growth Act
and, if adopted, the Proposed Tailoring Rules reduce the regulatory burden of certain large BHCs and raise the asset thresholds at
which more onerous requirements apply, which could cause certain large BHCs to become more competitive or to more aggressively
pursue expansion. Our ability to compete successfully depends on a number of factors, including customer convenience, quality of
service by investing in new products and services, electronic platforms, personal contacts, pricing, and range of products. If we are
unable to successfully compete for new customers and retain our current customers, our business, financial condition, or results of
operations may be adversely affected. In particular, if we experience an outflow of deposits as a result of our customers seeking
investments with higher yields or greater financial stability, or a desire to do business with our competitors, we may be forced to rely
more heavily on borrowings and other sources of funding to operate our business and meet withdrawal demands, thereby adversely
affecting our net interest margin. For more information, refer to “Competition” section of Item 1. Business.

Uncertainty about the future of LIBOR may adversely affect our business.

LIBOR and certain other interest rate “benchmarks” are the subject of recent national, international, and other regulatory
guidance and proposals for reform. These reforms may cause such benchmarks to perform differently than in the past or have other
consequences which cannot be predicted. On July 27, 2017, the United Kingdom’s Financial Conduct Authority, which regulates
LIBOR, publicly announced that it intends to stop persuading or compelling banks to submit information to the administrator of
LIBOR after 2021. The announcement indicates that the continuation of LIBOR on the current basis cannot be guaranteed after 2021.
While there is no consensus on what rate or rates may become accepted alternatives to LIBOR, a group of market participants
convened by the Federal Reserve, the Alternative Reference Rate Committee, has selected the Secured Overnight Finance Rate as its
recommended alternative to LIBOR. The Federal Reserve Bank of New York started to publish the Secured Overnight Financing Rate
in April 2018. The Secured Overnight Financing Rate is a broad measure of the cost of overnight borrowings collateralized by
Treasury securities that was selected by the Alternative Reference Rate Committee due to the depth and robustness of the U.S.
Treasury repurchase market. At this time, it is impossible to predict whether the Secured Overnight Financing Rate will become an
accepted alternative to LIBOR.

The market transition away from LIBOR to an alternative reference rate, such as the Secured Overnight Financing Rate, is

complex and could have a range of adverse effects on our business, financial condition and results of operations. In particular, any
such transition could:

• adversely affect the interest rates paid or received on, the revenue and expenses associated with or the value of Huntington’s
LIBOR-based assets and liabilities, which include certain variable rate loans, Huntington’s Series B preferred stock, certain
of Huntington’s junior subordinated debentures, certain of the Bank’s senior notes and certain other securities or financial
arrangements;

• adversely affect the interest rates paid or received on, the revenue and expenses associated with or the value of other

securities or financial arrangements, given LIBOR’s role in determining market interest rates globally;

• prompt inquiries or other actions from regulators in respect of Huntington’s preparation and readiness for the replacement of

LIBOR with an alternative reference rate; and

•

result in disputes, litigation or other actions with counterparties regarding the interpretation and enforceability of certain
fallback language in LIBOR-based contracts and securities.

The transition away from LIBOR to an alternative reference rate will require the transition to or development of appropriate
systems and analytics to effectively transition Huntington’s risk management and other processes from LIBOR-based products to
those based on the applicable alternative reference rate, such as the Secured Overnight Financing Rate. Huntington has developed a
LIBOR transition team and project plan that outlines timelines and priorities to prepare its processes, systems and people to support
this transition. Timelines and priorities include assessing the impact on our customers, as well as assessing system requirements for
operational processes. There can be no guarantee that these efforts will successfully mitigate the operational risks associated with the
transition away from LIBOR to an alternative reference rate.

The manner and impact of the transition from LIBOR to an alternative reference rate, as well as the effect of these developments

on our funding costs, loan and investment and trading securities portfolios, asset-liability management, and business, is uncertain.

Liquidity Risks:

Changes in either Huntington’s financial condition or in the general banking industry could result in a loss of depositor
confidence.

Liquidity is the ability to meet cash flow needs on a timely basis at a reasonable cost. The Bank uses its liquidity to extend
credit and to repay liabilities as they become due or as demanded by customers. The board of directors establishes liquidity policies,
including contingency funding plans, and limits, and management establishes operating guidelines for liquidity.

Our primary source of liquidity is our large supply of deposits from consumer and commercial customers. The continued
availability of this supply depends on customer willingness to maintain deposit balances with banks in general and us in particular.
The availability of deposits can also be impacted by regulatory changes (e.g., changes in FDIC insurance, the LCR, etc.), changes in
the financial condition of Huntington, other banks, or the banking industry in general, changes in the interest rates our competitors pay
on their deposits, and other events which can impact the perceived safety or economic benefits of bank deposits. Recently,
competition for deposits has increased and interest rates paid on deposits have generally risen. While we make significant efforts to
consider and plan for hypothetical disruptions in our deposit funding, market related, geopolitical, or other events could impact the
liquidity derived from deposits.

We are a holding company and depend on dividends by our subsidiaries for most of our funds.

Huntington is an entity separate and distinct from the Bank. The Bank conducts most of our operations, and Huntington

depends upon dividends from the Bank to service Huntington’s debt and to pay dividends to Huntington’s shareholders. The
availability of dividends from the Bank is limited by various statutes and regulations. It is possible, depending upon the financial
condition including liquidity and capital adequacy of the Bank and other factors, that the OCC could limit the payment of dividends or
other payments to Huntington by the Bank. In addition, the payment of dividends by our other subsidiaries is also subject to the laws
of the subsidiary’s state of incorporation, and regulatory capital and liquidity requirements applicable to such subsidiaries. In the
event that the Bank was unable to pay dividends to us, we in turn would likely have to reduce or stop paying dividends on our
Preferred and Common Stock. Our failure to pay dividends on our Preferred and Common Stock could have a material adverse effect
on the market price of our Preferred and Common Stock. Additional information regarding dividend restrictions is provided in Item 1.
Regulatory Matters.

If we lose access to capital markets, we may not be able to meet the cash flow requirements of our depositors, creditors, and
borrowers, or have the operating cash needed to fund corporate expansion and other corporate activities.

Wholesale funding sources include securitization, federal funds purchased, securities sold under repurchase agreements, non-

core deposits, and long-term debt. The Bank is also a member of the Federal Home Loan Bank of Cincinnati, which provides
members access to funding through advances collateralized with mortgage-related assets. We maintain a portfolio of highly-rated,
marketable securities that is available as a source of liquidity.

Capital markets disruptions can directly impact the liquidity of Huntington and the Bank. The inability to access capital markets

funding sources as needed could adversely impact our financial condition, results of operations, cash flows, and level of regulatory-
qualifying capital. We may, from time-to-time, consider using our existing liquidity position to opportunistically retire outstanding
securities in privately negotiated or open market transactions.

A reduction in our credit rating could adversely affect our access to capital and could increase our cost of funds.

The credit rating agencies regularly evaluate Huntington and the Bank, and credit ratings are based on a number of factors,
including our financial strength and ability to generate earnings, as well as factors not entirely within our control, including conditions
affecting the financial services industry, the economy, and changes in rating methodologies. There can be no assurance that we will
maintain our current credit ratings. A downgrade of the credit ratings of Huntington or the Bank could adversely affect our access to
liquidity and capital, and could significantly increase our cost of funds, trigger additional collateral or funding requirements, and
decrease the number of investors and counterparties willing to lend to us or purchase our securities. This could affect our growth,
profitability, and financial condition, including liquidity.

Operational and Legal Risks:

Our operational or security systems or infrastructure, or those of third parties, could fail or be breached, which could disrupt
our business and adversely impact our results of operations, liquidity, and financial condition, as well as cause legal or
reputational harm.

The potential for operational risk exposure exists throughout our business and, as a result of our interactions with, and reliance

on, third parties, is not limited to our own internal operational functions. Our operational and security systems and infrastructure,
including our computer systems, data management, and internal processes, as well as those of third parties, are integral to our
performance. We rely on our employees and third parties in our day-to-day and ongoing operations, who may, as a result of human

error, misconduct, malfeasance, or failure, or breach of our or of third-party systems or infrastructure, expose us to risk. For example,
our ability to conduct business may be adversely affected by any significant disruptions to us or to third parties with whom we interact
or upon whom we rely. In addition, our ability to implement backup systems and other safeguards with respect to third-party systems
is more limited than with respect to our own systems. Our financial, accounting, data processing, backup, or other operating or
security systems and infrastructure may fail to operate properly or become disabled or damaged as a result of a number of factors,
including events that are wholly or partially beyond our control, which could adversely affect our ability to process transactions or
provide services. Such events may include sudden increases in customer transaction volume; electrical, telecommunications, or other
major physical infrastructure outages; natural disasters such as earthquakes, tornadoes, hurricanes, and floods; disease pandemics;
cyber-attacks; and events arising from local or larger scale political or social matters, including wars and terrorist acts. In addition, we
may need to take our systems offline if they become infected with malware or a computer virus or as a result of another form of cyber-
attack. In the event that backup systems are utilized, they may not process data as quickly as our primary systems and some data
might not have been saved to backup systems, potentially resulting in a temporary or permanent loss of such data. We frequently
update our systems to support our operations and growth and to remain compliant with applicable laws, rules, and regulations. This
updating entails significant costs and creates risks associated with implementing new systems and integrating them with existing ones,
including business interruptions. Implementation and testing of controls related to our computer systems, security monitoring, and
retaining and training personnel required to operate our systems also entail significant costs. Operational risk exposures could
adversely impact our operations, liquidity, and financial condition, as well as cause reputational harm. In addition, we may not have
adequate insurance coverage to compensate for losses from a major interruption.

We face security risks, including denial of service attacks, hacking, social engineering attacks targeting our colleagues and
customers, malware intrusion or data corruption attempts, and identity theft that could result in the disclosure of confidential
information, adversely affect our business or reputation, and create significant legal and financial exposure.

Our computer systems and network infrastructure and those of third parties, on which we are highly dependent, are subject to

security risks and could be susceptible to cyber-attacks, such as denial of service attacks, hacking, terrorist activities, or identity theft.
Our business relies on the secure processing, transmission, storage, and retrieval of confidential, proprietary, and other information in
our computer and data management systems and networks, and in the computer and data management systems and networks of third
parties. In addition, to access our network, products, and services, our customers and other third parties may use personal mobile
devices or computing devices that are outside of our network environment and are subject to their own cybersecurity risks.

We, our customers, regulators, and other third parties, including other financial services institutions and companies engaged in

data processing, have been subject to, and are likely to continue to be the target of, cyber-attacks. These cyber-attacks include
computer viruses, malicious or destructive code, phishing attacks, denial of service or information, ransomware, improper access by
employees or vendors, attacks on personal email of employees, ransom demands to not expose security vulnerabilities in our systems
or the systems of third parties or other security breaches that could result in the unauthorized release, gathering, monitoring, misuse,
loss, or destruction of confidential, proprietary, and other information of ours, our employees, our customers, or of third parties,
damage our systems or otherwise materially disrupt our or our customers’ or other third parties’ network access or business operations.
As cyber threats continue to evolve, we may be required to expend significant additional resources to continue to modify or enhance
our protective measures or to investigate and remediate any information security vulnerabilities or incidents. Despite efforts to ensure
the integrity of our systems and implement controls, processes, policies, and other protective measures, we may not be able to
anticipate all security breaches, nor may we be able to implement guaranteed preventive measures against such security breaches.
Cyber threats are rapidly evolving, and we may not be able to anticipate or prevent all such attacks and could be held liable for any
security breach or loss.

Cybersecurity risks for banking organizations have significantly increased in recent years in part because of the proliferation of

new technologies, and the use of the internet and telecommunications technologies to conduct financial transactions. For example,
cybersecurity risks may increase in the future as we continue to increase our mobile-payment and other internet-based product
offerings and expand our internal usage of web-based products and applications. In addition, cybersecurity risks have significantly
increased in recent years in part due to the increased sophistication and activities of organized crime affiliates, terrorist organizations,
hostile foreign governments, disgruntled employees or vendors, activists, and other external parties, including those involved in
corporate espionage. Even the most advanced internal control environment may be vulnerable to compromise. Targeted social
engineering attacks and “spear phishing” attacks are becoming more sophisticated and are extremely difficult to prevent. In such an
attack, an attacker will attempt to fraudulently induce colleagues, customers, or other users of our systems to disclose sensitive
information in order to gain access to its data or that of its clients. Persistent attackers may succeed in penetrating defenses given
enough resources, time, and motive. The techniques used by cyber criminals change frequently, may not be recognized until launched,
and may not be recognized until well after a breach has occurred. The risk of a security breach caused by a cyber-attack at a vendor or
by unauthorized vendor access has also increased in recent years. Additionally, the existence of cyber-attacks or security breaches at
third-party vendors with access to our data may not be disclosed to us in a timely manner.

We also face indirect technology, cybersecurity, and operational risks relating to the customers, clients, and other third parties

with whom we do business or upon whom we rely to facilitate or enable our business activities, including, for example, financial
counterparties, regulators, and providers of critical infrastructure such as internet access and electrical power. As a result of increasing

consolidation, interdependence, and complexity of financial entities and technology systems, a technology failure, cyber-attack, or
other information or security breach that significantly degrades, deletes, or compromises the systems or data of one or more financial
entities could have a material impact on counterparties or other market participants, including us. This consolidation,
interconnectivity, and complexity increases the risk of operational failure, on both individual and industry-wide bases, as disparate
systems need to be integrated, often on an accelerated basis. Any third-party technology failure, cyber-attack, or other information or
security breach, termination, or constraint could, among other things, adversely affect our ability to effect transactions, service our
clients, manage our exposure to risk, or expand our business.

Cyber-attacks or other information or security breaches, whether directed at us or third parties, may result in a material loss or
have material consequences. Furthermore, the public perception that a cyber-attack on our systems has been successful, whether or
not this perception is correct, may damage our reputation with customers and third parties with whom we do business. Hacking of
personal information and identity theft risks, in particular, could cause serious reputational harm. A successful penetration or
circumvention of system security could cause us serious negative consequences, including our loss of customers and business
opportunities, costs associated with maintaining business relationships after an attack or breach; significant business disruption to our
operations and business, misappropriation, exposure, or destruction of our confidential information, intellectual property, funds, and/or
those of our customers; or damage to our or our customers’ and/or third parties’ computers or systems, and could result in a violation
of applicable privacy laws and other laws, litigation exposure, regulatory fines, penalties or intervention, loss of confidence in our
security measures, reputational damage, reimbursement or other compensatory costs, additional compliance costs, and could adversely
impact our results of operations, liquidity and financial condition. In addition, we may not have adequate insurance coverage to
compensate for losses from a cybersecurity event.

The resolution of significant pending litigation, if unfavorable, could have an adverse effect on our results of operations for a
particular period.

We face legal risks in our businesses, and the volume of claims and amount of damages and penalties claimed in litigation and

regulatory proceedings against financial institutions remain high. Substantial legal liability against us could have material adverse
financial effects or cause significant reputational harm to us, which in turn could seriously harm our business prospects. It is possible
that the ultimate resolution of these matters, if unfavorable, may be material to the results of operations for a particular reporting
period.

For more information on litigation risks, see Note 20 to the Consolidated Financial Statements.

We face significant operational risks which could lead to financial loss, expensive litigation, and loss of confidence by our
customers, regulators, and capital markets.

We are exposed to many types of operational risks, including the risk of fraud or theft by colleagues or outsiders, unauthorized

transactions by colleagues or outsiders, operational errors by colleagues, business disruption, and system failures. Huntington
executes against a significant number of controls, a large percent of which are manual and dependent on adequate execution by
colleagues and third-party service providers. There is inherent risk that unknown single points of failure through the execution chain
could give rise to material loss through inadvertent errors or malicious attack. These operational risks could lead to financial loss,
expensive litigation, and loss of confidence by our customers, regulators, and the capital markets.

Moreover, negative public opinion can result from our actual or alleged conduct in any number of activities, including clients,

products, and business practices; corporate governance; acquisitions; and from actions taken by government regulators and community
organizations in response to those activities. Negative public opinion can adversely affect our ability to attract and retain customers
and can also expose us to litigation and regulatory action.

Relative to acquisitions, we incur risks and challenges associated with the integration of employees, accounting systems, and

technology platforms from acquired businesses and institutions in a timely and efficient manner, and we cannot guarantee that we will
be successful in retaining existing customer relationships or achieving anticipated operating efficiencies expected from such
acquisitions. Acquisitions may be subject to the receipt of approvals from certain governmental authorities, including the Federal
Reserve, the OCC, and the United States Department of Justice, as well as the approval of our shareholders and the shareholders of
companies that we seek to acquire. These approvals for acquisitions may not be received, may take longer than expected, or may
impose conditions that are not presently anticipated or that could have an adverse effect on the combined company following the
acquisitions. Subject to requisite regulatory approvals, future business acquisitions may result in the issuance and payment of
additional shares of stock, which would dilute current shareholders’ ownership interests. Additionally, acquisitions may involve the
payment of a premium over book and market values. Therefore, dilution of our tangible book value and net income per common share
could occur in connection with any future transaction.

Failure to maintain effective internal controls over financial reporting could impair our ability to accurately and timely report
our financial results or prevent fraud, resulting in loss of investor confidence and adversely affecting our business and our
stock price.

Effective internal controls over financial reporting are necessary to provide reliable financial reports and prevent fraud. We are

subject to regulation that focuses on effective internal controls and procedures. Such controls and procedures are modified,

supplemented, and changed from time-to-time as necessitated by our growth and in reaction to external events and developments.
Any failure to maintain an effective internal control environment could impact our ability to report our financial results on an accurate
and timely basis, which could result in regulatory actions, loss of investor confidence, and an adverse impact on our business and our
stock price.

We rely on quantitative models to measure risks and to estimate certain financial values.

Quantitative models may be used to help manage certain aspects of our business and to assist with certain business decisions,

including estimating probable loan losses, measuring the fair value of financial instruments when reliable market prices are
unavailable, estimating the effects of changing interest rates and other market measures on our financial condition and results of
operations, managing risk, and for capital planning purposes (including during the CCAR capital planning and capital adequacy
process). Our measurement methodologies rely on many assumptions, historical analyses, and correlations. These assumptions may
not capture or fully incorporate conditions leading to losses, particularly in times of market distress, and the historical correlations on
which we rely may no longer be relevant. Additionally, as businesses and markets evolve, our measurements may not accurately
reflect this evolution. Even if the underlying assumptions and historical correlations used in our models are adequate, our models may
be deficient due to errors in computer code, inaccurate data, misuse of data, or the use of a model for a purpose outside the scope of
the model’s design.

All models have certain limitations. Reliance on models presents the risk that our business decisions based on information

incorporated from models will be adversely affected due to incorrect, missing, or misleading information. In addition, our models
may not capture or fully express the risks we face, may suggest that we have sufficient capitalization when we do not, or may lead us
to misjudge the business and economic environment in which we will operate. If our models fail to produce reliable results on an
ongoing basis, we may not make appropriate risk management, capital planning, or other business or financial decisions. Strategies
that we employ to manage and govern the risks associated with our use of models may not be effective or fully reliable. Also,
information that we provide to the public or regulators based on poorly designed models could be inaccurate or misleading.

Banking regulators continue to focus on the models used by banks and bank holding companies in their businesses. Some of our

decisions that the regulators evaluate, including distributions to our shareholders, could be affected adversely due to their perception
that the quality of the models used to generate the relevant information is insufficient.

We rely on third parties to provide key components of our business infrastructure.

We rely on third-party service providers to leverage subject matter expertise and industry best practice, provide enhanced
products and services, and reduce costs. Although there are benefits in entering into third-party relationships with vendors and others,
there are risks associated with such activities. When entering a third-party relationship, the risks associated with that activity are not
passed to the third-party but remain our responsibility. The Technology Committee of the board of directors provides oversight related
to the overall risk management process associated with third-party relationships. Management is accountable for the review and
evaluation of all new and existing third-party relationships. Management is responsible for ensuring that adequate controls are in
place to protect us and our customers from the risks associated with vendor relationships.

Increased risk could occur based on poor planning, oversight, control, and inferior performance or service on the part of the

third-party, and may result in legal costs or loss of business. While we have implemented a vendor management program to actively
manage the risks associated with the use of third-party service providers, any problems caused by third-party service providers could
adversely affect our ability to deliver products and services to our customers and to conduct our business. Replacing a third-party
service provider could also take a long period of time and result in increased expenses.

Changes in accounting policies, standards, and interpretations could affect how we report our financial condition and results
of operations.

The FASB, regulatory agencies, and other bodies that establish accounting standards periodically change the financial

accounting and reporting standards governing the preparation of our financial statements. Additionally, those bodies that establish and
interpret the accounting standards (such as the FASB, SEC, and banking regulators) may change prior interpretations or positions on
how these standards should be applied.

For further discussion, see Note 2 to the Consolidated Financial Statements.

Impairment of goodwill could require charges to earnings, which could result in a negative impact on our results of operations.

Our goodwill could become impaired in the future. If goodwill were to become impaired, it could limit the ability of the Bank

to pay dividends to Huntington, adversely impacting Huntington liquidity and ability to pay dividends or repay debt. The most
significant assumptions affecting our goodwill impairment evaluation are variables including the market price of our Common Stock,
projections of earnings, the discount rates used in the income approach to fair value, and the control premium above our current stock
price that an acquirer would pay to obtain control of us. We are required to test goodwill for impairment at least annually or when
impairment indicators are present. If an impairment determination is made in a future reporting period, our earnings and book value
of goodwill will be reduced by the amount of the impairment. If an impairment loss is recorded, it will have little or no impact on the

tangible book value of our Common Stock, or our regulatory capital levels, but such an impairment loss could significantly reduce the
Bank’s earnings and thereby restrict the Bank’s ability to make dividend payments to us without prior regulatory approval, because
Federal Reserve policy states the bank holding company dividends should be paid from current earnings. At December 31, 2018, the
book value of our goodwill was $2.0 billion, substantially all of which was recorded at the Bank. Any such write down of goodwill or
other acquisition related intangibles will reduce Huntington’s earnings, as well.

Negative publicity could damage our reputation and could significantly harm our business.

Our ability to attract and retain customers, clients, investors, and highly-skilled management and employees is affected by our

reputation. Public perception of the financial services industry in general was damaged as a result of the financial crisis that started in
2008. We face increased public and regulatory scrutiny resulting from the financial crisis and economic downturn. Significant harm
to our reputation can also arise from other sources, including employee misconduct, actual or perceived unethical behavior, conflicts
of interest, litigation, GSE or regulatory actions, failing to deliver minimum or required standards of service and quality, failing to
address customer and agency complaints, compliance failures, unauthorized release of confidential information due to cyber-attacks or
otherwise, and the activities of our clients, customers, and counterparties, including vendors. Actions by the financial service industry
generally or by institutions or individuals in the industry can adversely affect our reputation, indirectly by association. All of these
could adversely affect our growth, results of operation, and financial condition.

We depend on our executive officers and key personnel to continue the implementation of our long-term business strategy and
could be harmed by the loss of their services.

We believe that our continued growth and future success will depend in large part on the skills of our management team and our
ability to motivate and retain these individuals and other key personnel. The loss of service of one or more of our executive officers or
key personnel could reduce our ability to successfully implement our long-term business strategy, our business could suffer, and the
value of our stock could be materially adversely affected. Leadership changes will occur from time to time, and we cannot predict
whether significant resignations will occur or whether we will be able to recruit additional qualified personnel. We believe our
management team possesses valuable knowledge about the banking industry and that their knowledge and relationships would be very
difficult to replicate. Our success also depends on the experience of our branch managers and lending officers and on their
relationships with the customers and communities they serve. The loss of these key personnel could negatively impact our banking
operations. The loss of key personnel, or the inability to recruit and retain qualified personnel in the future, could have an adverse
effect on our business, financial condition, or operating results.

Compliance Risks:

We operate in a highly regulated industry, and the laws and regulations that govern our operations, corporate governance,
executive compensation and financial accounting, or reporting, including changes in them, or our failure to comply with them,
may adversely affect us.

The banking industry is highly regulated. We are subject to supervision, regulation, and examination by various federal and
state regulators, including the Federal Reserve, OCC, SEC, CFPB, FDIC, FINRA, and various state regulatory agencies. The statutory
and regulatory framework that governs us is generally intended to protect depositors and customers, the DIF, the U.S. banking and
financial system, and financial markets as a whole-not to protect shareholders. These laws and regulations, among other matters,
prescribe minimum capital requirements, impose limitations on our business activities (including foreclosure and collection practices),
limit the dividend or distributions that we can pay, restrict the ability of institutions to guarantee our debt, and impose certain specific
accounting requirements that may be more restrictive and may result in greater or earlier charges to earnings or reductions in our
capital than accounting principles generally accepted in the United States. Compliance with laws and regulations can be difficult and
costly, and changes to laws and regulations often impose additional compliance costs. Both the scope of the laws and regulations and
the intensity of the supervision to which we are subject have increased in recent years in response to the financial crisis, as well as
other factors such as technological and market changes. Such regulation and supervision may increase our costs and limit our ability
to pursue business opportunities. Further, our failure to comply with these laws and regulations, even if the failure was inadvertent or
reflects a difference in interpretation, could subject us to restrictions on our business activities, fines, and other penalties, any of which
could adversely affect our results of operations, capital base, and the price of our securities. Further, any new laws, rules, and
regulations could make compliance more difficult or expensive or otherwise adversely affect our business and financial condition.

Bank regulations regarding capital and liquidity, including the annual CCAR assessment process and the U.S. Basel III capital
and liquidity standards, could require higher levels of capital and liquidity. Among other things, these regulations could
impact our ability to pay common stock dividends, repurchase common stock, attract cost-effective sources of deposits, or
require the retention of higher amounts of low yielding securities.

The Federal Reserve administers CCAR, an annual forward-looking quantitative assessment of Huntington’s capital adequacy

and planned capital distributions and a review of the strength of Huntington’s practices to assess capital needs. We generally may pay
dividends and repurchase stock only in accordance with a capital plan that has been reviewed by the Federal Reserve and as to which
the Federal Reserve has not objected. The Federal Reserve also makes a quantitative assessment of capital based on supervisory-run
stress tests that assess the ability to maintain capital levels above each minimum regulatory capital ratio after making all capital
actions included in Huntington’s capital plan, under baseline and stressful conditions throughout a nine-quarter planning horizon.
There can be no assurance that the Federal Reserve or OCC will respond favorably to our capital plans, planned capital actions or
stress test results, and the Federal Reserve, OCC, or other regulatory capital requirements may limit or otherwise restrict how we
utilize our capital, including common stock dividends and stock repurchases.

We are also required to maintain minimum capital ratios and the Federal Reserve and OCC may determine that Huntington and/
or the Bank, based on size, complexity, or risk profile, must maintain capital ratios above these minimums in order to operate in a safe
and sound manner. In the event we are required to raise capital to maintain required minimum capital and leverage ratios or ratios
above the required applicable minimums, we may be forced to do so when market conditions are undesirable or on terms that are less
favorable to us than we would otherwise require. Furthermore, in order to prevent becoming subject to restrictions on our ability to
distribute capital or make certain discretionary bonus payments to management, we must maintain a Capital Conservation Buffer (of
1.875% in 2018 and 2.5% as of January 1, 2019), which is in addition to our required minimum capital ratios.

We are also currently subject to a modified LCR requirement that requires Huntington to maintain an adequate amount of
unencumbered high-quality liquid assets, such as Treasury securities and other sovereign debt, to cover projected net cash outflows
over a 30 calendar-day stress scenario window. Because the LCR assigns less severe outflow assumptions to certain types of customer
deposits, banks’ demand for and the cost of these deposits may increase. Additionally, the LCR has increased the demand for direct
U.S. government and U.S. government-guaranteed debt that, while high quality, generally carry lower yields than other securities
BHCs hold in their investment portfolios.

For more information regarding CCAR, stress testing, and capital and liquidity requirements, including several proposed rules

that would alter, reduce, or eliminate certain of these requirements as they apply to Huntington, refer to Item 1: Business - Regulatory
Matters.

If our regulators deem it appropriate, they can take regulatory actions that could result in a material adverse impact on our
financial results, ability to compete for new business, or preclude mergers or acquisitions. In addition, regulatory actions
could constrain our ability to fund our liquidity needs or pay dividends. Any of these actions could increase the cost of our
services.

We are subject to the supervision and regulation of various state and federal regulators, including the OCC, Federal Reserve,

FDIC, SEC, CFPB, FINRA, and various state regulatory agencies. As such, we are subject to a wide variety of laws and regulations,
many of which are discussed in Item 1. Regulatory Matters. As part of their supervisory process, which includes periodic
examinations and continuous monitoring, the regulators have the authority to impose restrictions or conditions on our activities and
the manner in which we manage the organization. Such actions could negatively impact us in a variety of ways, including charging
monetary fines, impacting our ability to pay dividends, precluding mergers or acquisitions, limiting our ability to offer certain products
or services, or imposing additional capital requirements.

Under the supervision of the CFPB, our Consumer and Business Banking products and services are subject to heightened
regulatory oversight and scrutiny with respect to compliance under consumer laws and regulations. We may face a greater number or
wider scope of investigations, enforcement actions, and litigation in the future related to consumer practices, thereby increasing costs
associated with responding to or defending such actions. Also, federal and state regulators have been increasingly focused on sales
practices of branch personnel, including taking regulatory action against other financial institutions. In addition, increased regulatory
inquiries and investigations, as well as any additional legislative or regulatory developments affecting our consumer businesses, and
any required changes to our business operations resulting from these developments, could result in significant loss of revenue, require
remuneration to our customers, trigger fines or penalties, limit the products or services we offer, require us to increase our prices and,
therefore, reduce demand for our products, impose additional compliance costs on us, increase the cost of collection, cause harm to
our reputation, or otherwise adversely affect our consumer businesses.

In addition, we are allowed to conduct certain activities that are financial in nature by virtue of Huntington’s status as an FHC,

as discussed in more detail in Item 1. Regulatory Matters. If Huntington or the Bank cease to meet the requirements necessary for
Huntington to continue to qualify as an FHC, the Federal Reserve may impose upon us corrective capital and managerial
requirements, and may place limitations on our ability to conduct all of the business activities that we conduct as a FHC. If the failure
to meet these standards persists, we could be required to divest our Bank, or cease all activities other than those activities that may be
conducted by a BHC but not an FHC.

Legislative and regulatory actions taken now or in the future that impact the financial industry may materially adversely
affect us by increasing our costs, adding complexity in doing business, impeding the efficiency of our internal business
processes, negatively impacting the recoverability of certain of our recorded assets, requiring us to increase our regulatory
capital, limiting our ability to pursue business opportunities, and otherwise resulting in a material adverse impact on our
financial condition, results of operation, liquidity, or stock price.

Both the scope of the laws and regulations and the intensity of the supervision to which we are subject increased in response to

the financial crisis as well as other factors such as technological and market changes. Regulatory enforcement and fines have also
increased across the banking and financial services sector. Compliance with these laws and regulations have resulted in and will
continue to result in additional costs, which could be significant, and may have a material and adverse effect on our results of
operations. In addition, if we do not appropriately comply with current or future legislation and regulations, especially those that
apply to our consumer operations, which has been an area of heightened focus, we may be subject to fines, penalties or judgments, or
material regulatory restrictions on our businesses, which could adversely affect operations and, in turn, financial results.

We may become subject to more stringent regulatory requirements and activity restrictions if the Federal Reserve and FDIC
determine that our resolution plan is not credible.

Huntington is required to submit annually to the Federal Reserve and the FDIC a resolution plan for its orderly resolution under

the U.S. Bankruptcy Code. If the Federal Reserve and the FDIC jointly determine that our resolution plan is not credible, we could
become subjected to more stringent capital, leverage or liquidity requirements or restrictions, or restrictions on our growth, activities,
or operations. If we were to fail to address deficiencies in our resolution plan when required, we could eventually be required to
divest certain assets or operations in ways that could negatively impact our operations and strategy.

For more information regarding resolution planning requirements, refer to Item 1: Business - Regulatory Matters.

Noncompliance with the Bank Secrecy Act and other anti-money laundering statutes and regulations could cause us material
financial loss.

There is also increased scrutiny of compliance with the rules enforced by the OFAC. If our policies, procedures, and systems

are deemed deficient or the policies, procedures, and systems of the financial institutions that we have already acquired or may acquire
in the future are deficient, we would be subject to liability, including fines and regulatory actions such as restrictions on our ability to
pay dividends and the necessity to obtain regulatory approvals to proceed with certain planned business activities, including
acquisition plans, which would negatively impact our business, financial condition, and results of operations. Failure to maintain and
implement adequate programs to combat money laundering and terrorist financing could also have serious reputational consequences
for us.

For more information regarding the Bank Secrecy Act, Patriot Act, anti-money laundering requirements and OFAC-administered

sanctions, refer to Item 1: Business - Regulatory Matters.

Cybersecurity and data privacy are areas of heightened legislative and regulatory focus.

As cybersecurity and data privacy risks for banking organizations and the broader financial system have significantly increased

in recent years, cybersecurity and data privacy issues have become the subject of increasing legislative and regulatory focus. The
federal bank regulatory agencies have proposed enhanced cyber risk management standards, which would apply to a wide range of
large financial institutions and their third-party service providers, including us and the Bank, and would focus on cyber risk
governance and management, management of internal and external dependencies, and incident response, cyber resilience, and
situational awareness. Several states have also proposed or adopted cybersecurity legislation and regulations, which require, among
other things, notification to affected individuals when there has been a security breach of their personal data. For more information
regarding cybersecurity, refer to Item 1: Business - Regulatory Matters.

We receive, maintain, and store non-public personal information of our customers and counterparties, including, but not limited

to, personally identifiable information and personal financial information. The sharing, use, disclosure, and protection of this
information are governed by federal and state law. Both personally identifiable information and personal financial information is
increasingly subject to legislation and regulation, the intent of which is to protect the privacy of personal information that is collected
and handled. For example, in June of 2018, the Governor of California signed into law the CCPA. The CCPA, which becomes
effective on January 1, 2020, applies to for-profit businesses that conduct business in California and meet certain revenue or data

collection thresholds. For more information regarding data privacy laws and regulations, refer to Item 1: Business - Regulatory
Matters.

We may become subject to new legislation or regulation concerning cybersecurity or the privacy of personally identifiable
information and personal financial information or of any other information we may store or maintain. We could be adversely affected
if new legislation or regulations are adopted or if existing legislation or regulations are modified such that we are required to alter our
systems or require changes to our business practices or privacy policies. If cybersecurity, data privacy, data protection, data transfer,
or data retention laws are implemented, interpreted, or applied in a manner inconsistent with our current practices, we may be subject
to fines, litigation, or regulatory enforcement actions or ordered to change our business practices, policies, or systems in a manner that
adversely impacts our operating results.

Item 1B: Unresolved Staff Comments

None.

Item 2: Properties

Our headquarters, as well as the Bank’s, is located in the Huntington Center, a thirty seven story office building located in
Columbus, Ohio. Of the building’s total office space available, we lease approximately 22%. The lease term expires in 2030, with six
five-year renewal options for up to 30 years but with no purchase option. The Bank has an indirect minority equity interest of 18.4%
in the building.

Our other major properties consist of the following:

Description

Indianapolis Main

Flint South (own building, lease portion of land, own portion of land)

Flint West (own building, lease land)

Holland Operations Center

Downtown Saginaw

Tower Building - Office

Cascade III (own building, lease land)

Operations Center

Cleveland - Public Square (lease a portion of building)

Easton - HNB Business Service Center

Capitol Square

Gateway Center

Huntington Center (lease a portion of building)

Northland Center

Huntington Plaza

Crosswoods - Mortgage Group

Court Street

Parma NORC

Toledo Corporate Building

Mahoning Federal Plaza Building

New Castle Building

Pittsburgh Main (lease a portion of building)

Charleston Main

Location

Own

Lease

Indianapolis, IN

Flint, MI

Holland, MI

Saginaw, MI

Akron, OH

Cleveland, OH

Columbus, OH

Elyria, OH

Parma, OH

Toledo, OH

Youngstown, OH

New Castle, PA

Pittsburgh, PA

Charleston, WV

The major properties occupied by the Company are used across all of the business segments and for corporate purposes.

Item 3: Legal Proceedings

Information required by this item is set forth in Note 20 of the Notes to Consolidated Financial Statements under the caption

“Litigation and Regulatory Matters” and is incorporated into this Item by reference.

Item 4: Mine Safety Disclosures

Not applicable.

PART II

Item 5: Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities

The common stock of Huntington Bancshares Incorporated is traded on the NASDAQ Stock Market under the symbol

“HBAN”. As of January 31, 2019, we had 28,724 shareholders of record.

Information regarding restrictions on dividends, as required by this Item, is set forth in Item 1: Business - Regulatory Matters

and in Note 21 of the Notes to Consolidated Financial Statements and incorporated into this Item by reference.

The following graph shows the changes, over the five-year period, in the value of $100 invested in (i) shares of Huntington’s

Common Stock; (ii) the Standard & Poor’s 500 Stock Index (the S&P 500 Index) and (iii) Keefe, Bruyette & Woods Bank Index, for
the period December 31, 2013, through December 31, 2018. The KBW Bank Index is a market capitalization-weighted bank stock
index published by Keefe, Bruyette & Woods. The index is composed of the largest banking companies and includes all money center
banks and regional banks, including Huntington. An investment of $100 on December 31, 2013, and the reinvestment of all
dividends, are assumed. The plotted points represent the cumulative total return on the last trading day of the fiscal year indicated.

HBAN
S&P 500
KBW Bank Index

2013
$100
$100
$100

2014
$111
$114
$109

2015
$120
$115
$110

2016
$147
$129
$141

2017
$166
$157
$167

2018
$141
$150
$138

For information regarding securities authorized for issuance under Huntington’s equity compensation plans, see Part III, Item

12.

The following table provides information regarding Huntington’s purchases of its Common Stock during the three-month period

ended December 31, 2018.

Period
October 1, 2018 to October 31, 2018
November 1, 2018 to November 30, 2018
December 1, 2018 to December 31, 2018
Total

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)

7,149,221
194,400
7,622,627
14,966,248

14.55
14.43
12.23
13.36

273,010,029
270,204,137
177,010,035
177,010,035

(1)
(2)

The reported shares were repurchased pursuant to Huntington’s publicly-announced share repurchase authorization.
The number shown represents, as of the end of each period, the approximate dollar value of Common Stock that may yet be purchased under publicly-announced
share repurchase authorizations. The shares may be purchased, from time-to-time, depending on market conditions.

On June 28, 2018, Huntington was notified by the Federal Reserve that it had no objection to Huntington’s proposed capital
actions included in Huntington’s capital plan submitted in the 2018 CCAR. These actions included a 27% increase in quarterly
dividend per common share to $0.14, starting in the third quarter of 2018, the repurchase of up to $1.068 billion of common stock over
the next four quarters (July 1, 2018 through June 30, 2019), and maintaining dividends on the outstanding classes of preferred stock
and trust preferred securities. Any capital actions, including those contemplated in the above announced actions, are subject to
consideration and evaluation by Huntington’s Board of Directors.

On July 17, 2018, the Board authorized the repurchase of up to $1.068 billion of common shares over the four quarters through
the 2019 second quarter. During the 2018 fourth quarter, Huntington repurchased a total of 15 million shares at a weighted average
share price of $13.36.

Item 6: Selected Financial Data

Table 1 - Selected Annual Income Statement Data (1)

(dollar amounts in millions, share amounts in thousands)

2018

2017

Year Ended December 31,
2016

2015

2014

Interest income

Interest expense
Net interest income
Provision for credit losses

Net interest income after provision for credit losses
Noninterest income
Noninterest expense
Income before income taxes
Provision for income taxes
Net income
Dividends on preferred shares
Net income applicable to common shares
Net income per common share—basic

Net income per common share—diluted

Cash dividends declared per common share
Balance sheet highlights
Total assets (period end)

Total long-term debt (period end)

Total shareholders’ equity (period end)

Average total assets

Average total long-term debt

Average total shareholders’ equity
Key ratios and statistics
Margin analysis—as a % of average earnings assets

Interest income (2)

Interest expense

Net interest margin (2)

Return on average total assets

Return on average common shareholders’ equity

Return on average tangible common shareholders’ equity (3), (7)

Efficiency ratio (4)

Dividend payout ratio

Average shareholders’ equity to average assets

Effective tax rate
Non-regulatory capital
Tangible common equity to tangible assets (period end) (5), (7)

Tangible equity to tangible assets (period end) (6), (7)
Tier 1 common risk-based capital ratio (period end) (7), (8)
Tier 1 leverage ratio (period end) (8)
Tier 1 risk-based capital ratio (period end) (8)

Total risk-based capital ratio (period end) (8)
Capital under current regulatory standards (Basel III)
CET 1 risk-based capital ratio

Tier 1 leverage ratio (period end)
Tier 1 risk-based capital ratio (period end)

Total risk-based capital ratio (period end)
Other data
Full-time equivalent employees (average)
Domestic banking offices (period end)

3,949

760
3,189
235
2,954
1,321
2,647
1,628
235
1,393
70
1,323

1.22

1.20

0.50

3,433

431
3,002
201
2,801
1,307
2,714
1,394
208
1,186
76
1,110

1.02

1.00

0.35

2,632

263
2,369
191
2,178
1,150
2,408
920
208
712
65
647

0.72

0.70

0.29

2,115

164
1,951
100
1,851
1,039
1,976
914
221
693
32
661

0.82

0.81

0.25

108,781

104,185

99,714

71,018

8,625

11,102

104,982

8,992

11,059

9,206

10,814

101,021

8,862

10,611

4.12%

0.79

3.33%

1.33%

13.4

17.9

56.9

41.0

10.53

14.5

7.21

8.34
N.A.
N.A.
N.A.

N.A.

3.77%

0.47

3.30%

1.17%

11.6

15.7

60.9

34.3

10.50

14.9

7.34

8.39
N.A.
N.A.
N.A.

N.A.

8,309

10,308

83,054

8,048

8,391

3.50%

0.34

3.16%

0.86%

8.6

10.7

66.8

40.3

10.10

22.6

7.16

8.26
N.A.
N.A.
N.A.

N.A.

7,042

6,595

68,560

5,585

6,536

3.41%

0.26

3.15%

1.01%

10.7

12.4

64.5

30.5

9.53

24.2

7.82

8.37
N.A.
N.A.
N.A.

N.A.

9.65%

10.01%

9.56%

9.79%

9.09
11.34

13.39

15,770
966

8.70
10.92

13.05

13,858
1,115

8.79
10.53

12.64

12,243
777

9.10
11.06

12.98

15,693
954

1,976

139
1,837
81
1,756
979
1,882
853
221
632
32
600

0.73

0.72

0.21

66,283

4,321

6,328

62,483

3,479

6,270

3.47%

0.24

3.23%

1.01%

10.2

11.8

65.1

28.8

10.03

25.9

8.17

8.76
10.23
9.74
11.50

13.56

N.A.

N.A.
N.A.

N.A.

11,873
729

(1)

Comparisons for presented periods are impacted by a number of factors. Refer to the “Significant Items” in the Discussion of Results of Operations for additional
discussion regarding these key factors.

(2) On an FTE basis assuming a 21% tax rate and a 35% tax rate for periods prior to January 1, 2018.
(3) Net income applicable to common shares excluding expense for amortization of intangibles for the period divided by average tangible shareholders’ equity.

Average tangible shareholders’ equity equals average total shareholders’ equity less average intangible assets and goodwill. Expense for amortization of
intangibles and average intangible assets are net of deferred tax.

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

(5)

(6)

(7)

(8)

GAAP)
Tangible common equity (total common equity less goodwill and other intangible assets) divided by tangible assets (total assets less goodwill and other
intangible assets). Other intangible assets are net of deferred tax.
Tangible equity (total equity less goodwill and other intangible assets) divided by tangible assets (total assets less goodwill and other intangible assets). Other
intangible assets are net of deferred tax.
Tier 1 common equity, tangible equity, tangible common equity, and tangible assets are non-GAAP financial measures. Additionally, any ratios utilizing these
financial measures are also non-GAAP. These financial measures have been included as they are considered to be critical metrics with which to analyze and
evaluate financial condition and capital strength. Other companies may calculate these financial measures differently.
In accordance with applicable regulatory reporting guidance, we are not required to retrospectively update historical filings for newly adopted accounting
principles. On January 1, 2015, we became subject to the Basel III capital requirements and the standardized approach for calculating risk-weighted assets in
accordance with subpart D of the final capital rule.

Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations

INTRODUCTION

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 should be read in conjunction with the Consolidated Financial
Statements, Notes to Consolidated Financial Statements, and other information contained in this report. The forward-looking
statements in this section and other parts of this report involve assumptions, risks, uncertainties, and other factors, including
statements regarding our plans, objectives, goals, strategies, and financial performance. Our actual results could differ materially from
the results anticipated in these forward-looking statements as a result of factors set forth under the caption “Forward-Looking
Statements” and those set forth in Item 1A.

EXECUTIVE OVERVIEW

2018 Financial Performance Review

In 2018, we reported net income of $1.4 billion, a 17% increase from the prior year. Earnings per common share on a diluted

basis for the year was $1.20, up 20% from the prior year.

Fully-taxable equivalent net interest income for 2018 increased $167 million, or 5%, from 2017. This reflected the impact of
4% average earning asset growth, a three basis point increase in the NIM to 3.33%, partially offset by 7% average interest-bearing
liability growth. Average earning asset growth included a $4.4 billion, or 6%, increase in average loans and leases, partially offset by
a $0.4 billion, or 2%, decrease in average securities. The NIM expansion reflected a 35 basis point positive impact from the mix and
yield on earning assets and a 10 basis point increase in the benefit from noninterest-bearing funding, partially offset by a 42 basis point
increase in funding costs.

The provision for credit losses was $235 million, up $34 million, or 17%. The increase in provision expense over the prior year

are primarily attributed to loan balance growth across the portfolio.

Noninterest income was $1.3 billion, up $14 million, or 1%, from the prior year. Card and payment processing income
increased $18 million, or 9%, due to higher check card interchange income and underlying customer growth. Trust and investment
management services increased $15 million, or 10%, primarily reflecting increased sales production and year over year market
growth. Capital markets fees increased $15 million, or 20%, reflecting increased sales of interest rate, foreign exchange and
commodity derivatives as well as fees as a result of the acquisition of Hutchinson, Shockey, Erley & Co. (HSE). Service charges on
deposit accounts increased $11 million, or 3%, due to an increase in both personal and corporate service charges. These increases
were partially offset by a $23 million, or 18% decrease in mortgage banking income, due to lower margin on loans sold, $17 million,
or 425%, increase in securities losses reflecting portfolio repositioning completed in the 2018 fourth quarter and a $5 million, or 3%,
decrease in other income primarily reflecting an unfavorable Visa Class B derivative fair value adjustment.

Noninterest expense was $2.6 billion, down $67 million, or 2%, from the prior year. Reported noninterest expense was

impacted by FirstMerit acquisition-related expenses totaling $154 million, offset by branch and facility consolidation-related expenses
and personnel costs. Net occupancy expense decreased $28 million, or 13%, primarily reflecting $52 million of prior year acquisition-
related expense, lower occupancy related expenses and reserves, partially offset by $28 million of branch and facility consolidation-
related expense. Outside data processing and other services decreased $19 million, or 6%, primarily reflecting $24 million of
acquisition-related expense in the year-ago period, partially offset by higher technology investment costs. Deposit and other insurance
expense decreased $15 million, or 19%, primarily due to the discontinuation of the FDIC surcharge in the 2018 fourth quarter. Other
noninterest expense decreased $14 million, or 6%, reflecting $9 million of acquisition-related expense in the year-ago period, as well
as declines in franchise and other taxes. Professional services decreased $9 million, or 13%, primarily reflecting $10 million of
acquisition-related expense in the year-ago period. Equipment decreased $7 million, or 4%, primarily due to $16 million in
acquisition-related costs in the year-ago period, partially offset by $7 million of branch and facility consolidation-related expense in
the 2018 fourth quarter. Marketing decreased $7 million, or 12%, driven by a decrease in promotional expense, partially offset by an
increase in advertising. Partially offsetting these decreases, personnel costs increased $35 million, or 2%, primarily reflecting higher
benefit costs and merit increases.

The tangible common equity to tangible assets ratio was 7.21%, down 13 basis points. The regulatory Common Equity Tier 1

(CET1) risk-based capital ratio was 9.65%, down 36 basis points. The regulatory Tier 1 risk-based capital ratio was 11.06%, down 28
basis points.

Consistent with the 2018 CCAR capital plan, the Company repurchased $939 million of common stock during 2018 at an
average cost of $15.23 per share. Included in the share repurchase activity, the Company completed a $400 million ASR which
effectively offset the impact of the $363 million Series A preferred equity conversion in the 2018 first quarter.

Business Overview

General

Our general business objectives are:

Invest in our businesses, particularly technology and risk management.

• Consistent organic revenue and balance sheet growth.
•
• Deliver positive operating leverage.
• Maintain aggregate moderate-to-low risk appetite.
• Disciplined capital management.

Economy

Our view of 2019 from a balance sheet growth perspective remains unchanged, generally consistent with our view of overall
economic activity. The underlying fundamentals of our local economies are positive, and businesses are generally performing well
and we are optimistic about 2019. Our loan pipelines remain steady, and credit metrics remain strong. We are executing on our new
strategic plan and continue to invest to drive organic growth. The plan entails low execution risk and builds on the success of the past
two strategic plans. At the same time, given recent market volatility, we are reverting to our historic practice of assuming no interest
rate hikes in our revenue expectation and are adjusting our expense expectation as a result. We are focused on what we can control to
drive long-term performance.

Legislative and Regulatory

A comprehensive discussion of legislative and regulatory matters affecting us can be found in the Regulatory Matters section

included in Item 1 of this Form 10-K.

Table 2 - Selected Annual Income Statements (1)
(dollar amounts in millions, share amounts in thousands)

Year Ended December 31,

Change from 2017

Change from 2016

2018

Amount

Percent

2017

Amount

Percent

2016

Interest income
Interest expense
Net interest income
Provision for credit losses
Net interest income after provision for credit
losses

Securities gains (losses)

Other income

Total noninterest income

Personnel costs

Outside data processing and other services

Net occupancy

Equipment

Deposit and other insurance expense

Professional services

Marketing

Amortization of intangibles

Other expense

Total noninterest expense

Income before income taxes

Provision for income taxes

Net income

Dividends on preferred shares

Net income applicable to common shares

Average common shares—basic

Average common shares—diluted
Per common share:
Net income—basic

Net income—diluted

Cash dividends declared
Revenue—FTE

Net interest income

FTE adjustment
Net interest income(2)
Noninterest income
Total revenue(2)

3,949
760
3,189
235

2,954

364
224
171
108
91
82
67
55

(21)

180

1,321

1,559

294

184

164

217

2,647

1,628

235

1,393

1,323

516
329
187
34

153

11
18
15
(23)
15
1
—
(1)

(17)

(5)

(19)

(28)

(7)

(15)

(9)

(7)

(3)

(14)

(67)

234

207

(6)

213

15 % $
76
6
17

3
9
10
(18)
20
1
—
(2)

(425)

(3)

(6)

(13)

(4)

(19)

(13)

(12)

(5)

(6)

(2)

(8)

3,433
431
3,002
201

2,801

353
206
156
131
76
81
67
56

(4)

185

1,307

1,524

313

212

171

231

2,714

1,394

208

1,186

19 % $

1,110

801
168
633
10

623

29
37
33
3
16
(3)
9
9

(4)

157

175

(36)

(3)

306

474

—

474

463

1,081,542

1,105,985

(3,144)

(30,201)

— %

(3)

1,084,686

1,136,186

180,248

217,396

1.22

1.20

0.50

3,189

30
3,219
1,321

4,540

0.20

0.15

187

(20)
167
14

181

20 % $

6 % $

(40)
5
1

4 % $

1.02

1.00

0.35

3,002

50
3,052
1,307

4,359

0.30

0.06

633

7
640
157

797

30% $
64
27
5

9
22
27
2
27
(4)
16
19

(100)

(34)

(5)

—

72% $

20%

42% $

27% $

16
27
14

22% $

2,632
263
2,369
191

2,178

324
169
123
128
60
84
58
47

—

157

1,150

1,349

305

153

165

105

184

2,408

920

208

712

647

904,438

918,790

0.72

0.70

0.29

2,369

43
2,412
1,150

3,562

Comparisons for presented periods are impacted by a number of factors. Refer to “Significant Items” in the Discussion of Results of Operations.

(1)
(2) On a fully-taxable equivalent (FTE) basis assuming a 21% tax rate and a 35% tax rate for periods prior to January 1, 2018.

DISCUSSION OF RESULTS OF OPERATIONS

This section provides a review of financial performance from a consolidated perspective. It also includes a “Significant Items”

section that summarizes key issues important for a complete understanding of performance trends. Key consolidated balance sheet and
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 Segment Discussion.”

Significant Items

Earnings comparisons among the three years ended December 31, 2018, 2017, and 2016 were impacted by a number of

Significant Items summarized below.

There were no Significant Items in 2018.

Significant Items included in 2017 and 2016 were:

1. Mergers and Acquisitions. Significant events relating to mergers and acquisitions, and the impacts of those events on

our reported results, were as follows:

• During 2017, $154 million of noninterest expense and $2 million of noninterest income was recorded related to the

acquisition of FirstMerit. This resulted in a negative impact of $0.09 per common share in 2017.

• During 2016, $282 million of noninterest expense and $1 million of noninterest income was recorded related to the

acquisition of FirstMerit. This resulted in a negative impact of $0.20 per common share in 2016.

2. Federal tax reform-related tax benefit. Significant events relating to federal tax reform-related tax benefits, and the

impacts of those events on our reported results, were as follows:

• During 2017, $123 million of federal tax reform-related tax benefit was recorded as provision for income taxes. This

resulted in a positive impact of $0.11 per common share in 2017.

3. Litigation Reserve. Significant events relating to our litigation reserve, and the impacts of those events on our reported

results, were as follows:

• During 2016, a $42 million reduction to litigation reserves was recorded as other noninterest expense. This resulted

in a positive impact of $0.03 per common share in 2016.

The following table reflects the earnings impact of the above-mentioned Significant Items for periods affected by this Results of

Operations discussion:

Table 3 - Significant Items Influencing Earnings Performance Comparison

(dollar amounts in millions, except per share data)

Net income

Earnings per share, after-tax

Significant items—favorable (unfavorable) impact:

Federal tax reform-related tax benefit

Tax impact

Federal tax reform-related tax benefit, after-tax

Mergers and acquisitions, net expenses

Tax impact

Mergers and acquisitions, after-tax

Litigation reserves

Tax impact

Litigation reserves, after-tax

2018

2017

2016

Amount

EPS (1)

Amount

EPS (1)

Amount

EPS (1)

1,393

1.20

Earnings

EPS

—

— $

—

1,186

1.00

Earnings

EPS

—

123

(152)

0.11

712

0.70

Earnings

EPS

—

— $

—

(282)

— $

(99) $

(0.09) $

(187) $

(0.20)

—

(15)

— $

0.03

(1)

Based upon the annual average outstanding diluted common shares.

Net Interest Income / Average Balance Sheet

Our primary source of revenue is net interest income, which is the difference between interest income from earning assets
(primarily loans, securities, and direct financing leases), and interest expense of funding sources (primarily interest-bearing deposits
and borrowings). Earning asset balances and related funding sources, as well as changes in the levels of interest rates, impact net
interest income. The difference between the average yield on earning assets and the average rate paid for interest-bearing liabilities is
the net interest spread. Noninterest-bearing sources of funds, such as demand deposits and shareholders’ equity, also support earning
assets. The impact of the noninterest-bearing sources of funds, often referred to as “free” funds, is captured in the net interest margin,
which is calculated as net interest income divided by average earning assets. Both the net interest margin and net interest spread are
presented on a fully-taxable equivalent basis, which means that tax-free interest income has been adjusted to a pretax equivalent
income, assuming a 21% tax rate and a 35% tax rate for periods prior to January 1, 2018.

The following table shows changes in fully-taxable equivalent interest income, interest expense, and net interest income due to

volume and rate variances for major categories of earning assets and interest-bearing liabilities:

Table 4 - Change in Net Interest Income Due to Changes in Average Volume and Interest Rates (1)

(dollar amounts in millions)

Fully-taxable equivalent basis (2)

Loans and leases

Investment securities

Other earning assets

Total interest income from earning assets

Deposits

Short-term borrowings

Long-term debt

Total interest expense of interest-bearing liabilities

2018

Increase (Decrease) From
Previous Year Due To

2017

Increase (Decrease) From
Previous Year Due To

Volume

Yield/
Rate

Total

Volume

189

274

463

Yield/
Rate

Total

234

(10)

184

(2)

312

195

312

496

211

329

167

423

157

(14)

566

242

115

127

657

163

(12)

808

168

640

Net interest income

167

— $

513

(1)

(2)

The change in interest rates due to both rate and volume has been allocated between the factors in proportion to the relationship of the absolute dollar amounts of
the change in each.
Calculated assuming a 21% tax rate and a 35% tax rate for periods prior to January 1, 2018.

Table 5 - Consolidated Average Balance Sheet and Net Interest Margin Analysis
(dollar amounts in millions)

Average Balances

Fully-taxable equivalent basis (1)
Assets
Interest-bearing deposits in Federal Reserve Bank (2)
Interest-bearing deposits in banks
Securities:

Trading account securities
Available-for-sale securities:

Taxable
Tax-exempt

Total available-for-sale securities
Held-to-maturity securities—taxable
Other securities

Total securities
Loans held for sale

Loans and leases: (3)

Commercial:

Commercial and industrial
Commercial real estate:
Construction
Commercial
Commercial real estate

Total commercial
Consumer:

Automobile loans and leases
Home equity
Residential mortgage
RV and marine finance
Other consumer

Total consumer
Total loans and leases
Allowance for loan and lease losses

Net loans and leases

Total earning assets
Cash and due from banks
Intangible assets
All other assets
Total assets
Liabilities and Shareholders’ Equity

Deposits:

Demand deposits—noninterest-bearing
Demand deposits—interest-bearing
Total demand deposits
Money market deposits
Savings and other domestic deposits
Core certificates of deposit

Total core deposits
Other domestic time deposits of $250,000 or more
Brokered time deposits and negotiable CDs
Deposits in foreign offices

Total deposits
Short-term borrowings
Long-term debt
Total interest-bearing liabilities
All other liabilities
Shareholders’ equity
Total liabilities and shareholders’ equity

Change from 2017

Change from 2016

2018

Amount

Percent

2017

Amount

Percent

2016

122
88

10,700
3,463
14,163
8,643
584
23,486
635

122
(11)

(6)

(1,203)
282
(921)
535
—
(392)
80

28,887

1,138

1,146
6,049
7,195
36,082

12,292
9,915
9,907
2,847
1,203
36,164
72,246
(747)
71,499
96,577
1,184
2,311
5,657
104,982

20,391
19,295
39,686
21,446
11,083
4,188
76,403
280
3,503
—
80,186
2,748
8,992
71,535
1,997
11,059
104,982

(52)
39
(13)
1,125

773
(79)
1,662
692
182
3,230
4,355
(80)
4,275
4,154
(269)
(55)
211
3,961

(1,308)
1,715
407
1,711
(614)
2,069
3,573
(165)
(172)
—
3,236
(175)
130
4,499
322
448
3,961

27,749

4,065

100 % $
(11)

— $
99

(6)

(10)
9
(6)
7
—
(2)
14

(4)
1
—
3

102

11,903
3,181
15,084
8,108
584
23,878
555

1,198
6,010
7,208
34,957

7
11,519
(1)
9,994
20
8,245
32
2,155
18
1,021
10
32,934
6
67,891
12
(667)
6
67,224
4
92,423
(19)
1,453
(2)
2,366
5,446
4
4 % $ 101,021

21,699
(6)% $
17,580
10
39,279
1
19,735
9
11,697
(5)
2,119
98
72,830
5
445
(37)
3,675
(5)
—
—
76,950
4
2,923
(6)
8,862
1
67,036
7
1,675
19
4
10,611
4 % $ 101,021

—
(1)

3,042
465
3,507
2,415
167
6,124
(499)

110
1,091
1,201
5,266

979
936
1,515
1,462
279
5,171
10,437
(53)
10,384
16,061
233
1,007
719
17,967

2,654
6,595
9,249
666
3,716
(181)
13,450
37
176
(204)
13,459
1,393
814
13,012
81
2,220
17,967

—% $
(1)

34
17
30
42
40
34
(47)

10
22
20
18

9
10
23
211
38
19
18
9
18
21
19
74
15
22% $

14% $
60
31
3
47
(8)
23
9
5
(100)
21
91
10
24
5
26
22% $

—
100

8,861
2,716
11,577
5,693
417
17,754
1,054

23,684

1,088
4,919
6,007
29,691

10,540
9,058
6,730
693
742
27,763
57,454
(614)
56,840
76,362
1,220
1,359
4,727
83,054

19,045
10,985
30,030
19,069
7,981
2,300
59,380
408
3,499
204
63,491
1,530
8,048
54,024
1,594
8,391
83,054

FTE yields are calculated assuming a 21% tax rate and a 35% tax rate for periods prior to January 1, 2018.

(1)
(2) Deposits in Federal Reserve Bank were treated as nonearning assets prior to 4Q 2018.
(3)

For purposes of this analysis, nonaccrual loans are reflected in the average balances of loans.

Table 5 - Consolidated Average Balance Sheet and Net Interest Margin Analysis (Continued)
(dollar amounts in millions)

Fully-taxable equivalent basis (1)
Assets
Interest-bearing deposits in Federal Reserve Bank (2)
Interest-bearing deposits in banks
Securities:
Trading account securities
Available-for-sale securities:

Taxable
Tax-exempt

Total available-for-sale securities
Held-to-maturity securities—taxable
Other securities
Total securities
Loans held for sale

Loans and leases: (3)

Commercial:

Commercial and industrial
Commercial real estate:
Construction
Commercial
Commercial real estate

Total commercial
Consumer:

Automobile loans and leases
Home equity
Residential mortgage
RV and marine finance
Other consumer

Total consumer
Total loans and leases
Total earning assets

Liabilities and Shareholders’ Equity

Deposits:

Demand deposits—noninterest-bearing
Demand deposits—interest-bearing
Total demand deposits
Money market deposits
Savings and other domestic deposits
Core certificates of deposit

Total core deposits
Other domestic time deposits of $250,000 or more
Brokered time deposits and negotiable CDs
Deposits in foreign offices

Total deposits
Short-term borrowings
Long-term debt

Total interest-bearing liabilities

Net interest income

Net interest rate spread
Impact of noninterest-bearing funds on margin

Net interest margin

Interest Income / Expense

Average Rate (4)

2018

2017

2016

2018

2017

2016

3
2

280
122
402
211
25
639
26

1,337

60
283
343
1,680

456
512
371
145
145
1,629
3,309
3,979

— $
2

—

283
118
401
193
20
614
21

1,142

52
240
292
1,434

412
463
301
118
118
1,412
2,846
3,483

— $
78
78
148
24
72
322
3
66
—
391
48
321
760
3,219

— $
38
38
66
24
13
141
2
37
—
180
25
226
431
3,052

—
—

—

210
91
301
138
12
451
35

879

40
176
216
1,095

351
381
244
39
79
1,094
2,189
2,675

—
11
11
46
15
13
85
2
15
—
102
5
156
263
2,412

2.33 %
1.97

— %
1.56 %

— %

0.44

0.80

2.61
3.53
2.84
2.44
4.34
2.72
4.15

4.63

5.26
4.67
4.77
4.66

0.18

2.38
3.71
2.66
2.38
3.42
2.57
3.75

4.12

4.36
4.00
4.06
4.11

3.71
5.16
3.74
5.09
12.04
4.50
4.58
4.12 %

3.58
4.63
3.65
5.46
11.53
4.28
4.19
3.77 %

0.42

2.36
3.35
2.60
2.43
2.95
2.54
3.27

3.71

3.72
3.57
3.60
3.69

3.32
4.21
3.63
5.67
10.62
3.94
3.81
3.50 %

— %

0.40
0.20
0.69
0.22
1.72
0.57
1.25
1.88
—
0.65
1.74
3.57
1.06

0.21
0.10
0.33
0.21
0.60
0.27
0.52
1.00
—
0.33
0.86
2.56
0.64

0.10
0.04
0.24
0.19
0.56
0.21
0.40
0.43
0.13
0.23
0.34
1.93
0.48

3.06
0.27
3.33%

3.13
0.17
3.30%

3.02
0.14
3.16%

FTE yields are calculated assuming a 21% tax rate and a 35% tax rate for periods prior to January 1, 2018.

(1)
(2) Deposits in Federal Reserve Bank were treated as nonearning assets prior to 4Q 2018 and associated interest income was not material.
(3)
(4) Yield/rates and amounts include the effects of hedge and risk management activities associated with the respective asset and liability categories.

For purposes of this analysis, nonaccrual loans are reflected in the average balances of loans.

2018 versus 2017

FTE net interest income for 2018 increased $167 million, or 5%, from 2017. This reflected the impact of 4% average earning

asset growth, a three basis point increase in the NIM to 3.33%, partially offset by 7% average interest-bearing liability growth.
Average earning asset growth included a $4.4 billion, or 6%, increase in average loans and leases and a $0.4 billion, or 2%, decrease in
average securities. The NIM expansion reflected a 35 basis point positive impact from the mix and yield on earning assets and a 10
basis point increase in the benefit from noninterest-bearing funding, partially offset by a 42 basis point increase in funding costs.

Average earning assets for 2018 increased $4.2 billion, or 4%, from the prior year, reflecting loan growth of $4.4 billion, or 6%,
partially offset by decline in average securities. Average C&I loans and leases increased $1.1 billion, or 4%, reflecting broad-based
growth. Residential mortgages increased $1.7 billion, or 20%, driven by increase in lending officers and expansion into the Chicago
market. Average RV and marine finance loans increased $0.7 billion, or 32%, reflecting the success of the expansion of the business
over the past two years while maintaining our commitment to super prime originations. Average automobile loans increased $0.8
billion, or 7%, driven by originations consistent with the current market dynamics and our commitment to high quality borrowers,
while optimizing yield and production in a rising rate environment over the past year. Average securities decreased $0.4 billion, or
2%.

Average total deposits for 2018 increased $3.2 billion, or 4%, from the prior year, while average total core deposits increased $3.6

billion, or 5%. Average core CDs increased $2.1 billion, or 98%, reflecting consumer growth initiatives primarily in the first three
quarters of 2018. Average money market deposits increased $1.7 billion, or 9%, reflecting growth in both commercial and consumer
deposits. Average total interest-bearing liabilities increased $4.5 billion, or 7%, from the prior year as deposits shifted from non-
interest bearing to interest bearing with the increase in rates.

2017 versus 2016

FTE net interest income for 2017 increased $640 million, or 27%, from 2016. This reflected the impact of 21% average earning
asset growth, a 14 basis point increase in the NIM to 3.30%, partially offset by 24% average interest-bearing liability growth. Average
earning asset growth included a $10.4 billion, or 18%, increase in average loans and leases and a $6.1 billion, or 34%, increase in
average securities. The NIM expansion reflected a 27 basis point positive impact from the mix and yield on earning assets and a three
basis point increase in the benefit from noninterest-bearing funding, partially offset by a 16 basis point increase in funding costs.

Average earning assets for 2017 increased $16.1 billion, or 21%, from the prior year, primarily reflecting the full year impact of

the FirstMerit acquisition. Average loans and leases increased $10.4 billion, or 18%, including a $4.1 billion, or 17%, increase in
average C&I loans and leases primarily driven by an increase in commercial middle market and specialty banking, a $1.5 billion, or
23%, increase in residential mortgage loans reflecting the benefit of the ongoing expansion of the home lending business, a $1.5
billion or 211%, increase in RV and marine finance loans reflecting the success of the expansion of the acquired business into 17 new
states over the past year and a $1.0 billion, or 9%, increase in automobile loans reflecting continued strength in new and used
automobile originations across our 23-state auto finance lending footprint. Average securities increased $6.1 billion, or 34%, which
included $2.9 billion of direct purchase municipal instruments in our commercial banking segment, up from $2.1 billion in the year-
ago period.

Average total deposits for 2017 increased $13.5 billion, or 21%, from the prior year, while average total core deposits increased
$13.5 billion, or 23%, including a $9.2 billion, or 31%, increase in average demand deposits and a $3.7 billion, or 47%, increase in
average savings and other domestic deposits. Average total interest-bearing liabilities increased $13.0 billion, or 24%, from the prior
year. These increases primarily reflect the full year impact of the FirstMerit acquisition. Average long-term borrowings increased $0.8
billion, or 10%, reflecting the issuance of $1.7 billion and maturity of $0.8 billion of senior debt during 2017.

Provision for Credit Losses

(This section should be read in conjunction with the Credit Risk section.)

The provision for credit losses is the expense necessary to maintain the ALLL and the AULC at levels appropriate to absorb our
estimate of credit losses inherent in the loan and lease portfolio and the portfolio of unfunded loan commitments and letters-of-credit.

The provision for credit losses in 2018 was $235 million, up $34 million, or 17%, from 2017. The increase in provision expense

over the prior year is primarily attributed to loan balance growth across the portfolio.

The provision for credit losses in 2017 was $201 million, up $10 million, or 5%, from 2016. The increase in provision expense

over the prior year was primarily the result of loan growth.

Noninterest Income

The following table reflects noninterest income for the past three years:

Table 6 - Noninterest Income

(dollar amounts in millions)

Change from 2017

Change from 2016

2018

Amount

Percent

2017

Amount

Percent

2016

Year Ended December 31,

Service charges on deposit accounts

Card and payment processing income

Trust and investment management services

Mortgage banking income

Capital markets fees

Insurance income

Bank owned life insurance income

Gain on sale of loans and leases

Securities gains (losses)

Other income

Total noninterest income

2018 versus 2017

364

224

171

108

(21)

180

3% $

(23)

(18)

—

(2)

(425)

(3)

—

(1)

(17)

(5)

353

206

156

131

(4)

185

(3)

(4)

9% $

(4)

(100)

324

169

123

128

—

157

1,150

1,321

1% $

1,307

157

14% $

Noninterest income for 2018 increased $14 million, or 1%, from the prior year. Card and payment processing income increased
$18 million, or 9%, due to higher check card interchange income and underlying customer growth. Trust and investment management
services increased $15 million, or 10%, primarily reflecting increased sales production and year over year market growth. Capital
markets fees increased $15 million, or 20%, reflecting increased sales of interest rate, foreign exchange and commodity derivatives as
well as fees as a result of the acquisition of HSE. Service charges on deposit accounts increased $11 million, or 3%, due to an increase
in both personal and corporate service charges. These increases were partially offset by a $23 million, or 18% decrease in mortgage
banking income, due to lower margin on loans sold, $17 million, or 425%, increase in securities losses reflecting portfolio
repositioning completed in the 2018 fourth quarter and a $5 million, or 3%, decrease in other income primarily reflecting an
unfavorable Visa Class B derivative fair value adjustment.

2017 versus 2016

Noninterest income for 2017 increased $157 million, or 14%, from the prior year, reflecting the full year impact of the

FirstMerit acquisition. Card and payment processing income increased $37 million, or 22%, due to higher credit and debit card related
income and underlying customer growth. Trust and investment management services increased $33 million, or 27%, and service
charges on deposit accounts increased $29 million, or 9%, reflecting market growth and ongoing customer acquisition. Other income
increased $28 million, or 18%, primarily reflecting increases in servicing income, mezzanine lending, loan syndication fees and
commitment fees. Capital markets fees increased $16 million, or 27%, reflecting our ongoing strategic focus on expanding the
business. Bank owned life insurance increased $9 million, or 16%. Gain on sale of loans increased $9 million, or 19%, as a result of
continued expansion of our SBA lending business during 2017 which more than offset gains in the prior year from our balance sheet
optimization strategy and the auto securitization completed in the 2016 fourth quarter. These increases were partially offset by a $4
million decline in securities gains and a $3 million decline in insurance income.

Noninterest Expense
(This section should be read in conjunction with Significant Items section.)

The following table reflects noninterest expense for the past three years:

Table 7 - Noninterest Expense

(dollar amounts in millions)

Change from 2017

Change from 2016

2018

Amount

Percent

2017

Amount

Percent

2016

Year Ended December 31,

Personnel costs

1,559

Outside data processing and other services

Net occupancy

Equipment

Deposit and other insurance expense

Professional services

Marketing

Amortization of intangibles

Other expense

Total noninterest expense

Number of employees (average full-time
equivalent)

Impact of Significant Items:

(dollar amounts in millions)

Personnel costs

Outside data processing and other services

Net occupancy

Equipment

Professional services

Marketing

Other expense

Total impact of significant items on
noninterest expense

294

184

164

217

2,647

15,693

2018

—

(19)

(28)

(7)

(15)

(9)

(7)

(3)

(14)

(67)

(77)

2 % $

1,524

175

13% $

1,349

(6)

(13)

(4)

(19)

(13)

(12)

(5)

(6)

313

212

171

231

(2)% $

2,714

(36)

(3)

306

(34)

(5)

13% $

305

153

165

105

184

2,408

— %

15,770

1,912

14%

13,858

Year Ended December 31,

2017

2016

154

239

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

Year Ended December 31,

Change from 2017

Change from 2016

2018

Amount

Percent

2017

Amount

Percent

2016

(dollar amounts in millions)

Personnel costs

Outside data processing and other services

Net occupancy

Equipment

Deposit and other insurance expense

Professional services

Marketing

Amortization of intangibles

Other expense

1,559

294

184

164

217

Total adjusted noninterest expense (Non-GAAP)

2,647

5% $

1,482

209

16% $

1,273

(19)

(10)

(5)

(2)

289

160

155

222

3% $

2,560

391

18% $

259

138

140

170

2,169

(15)

(6)

(3)

(5)

2018 versus 2017

Reported noninterest expense for 2018 decreased $67 million, or 2%, from the prior year, primarily reflecting the $154 million of
acquisition-related Significant Items in the year-ago period, offset by branch and facility consolidation-related expenses and personnel
costs. Net occupancy expense decreased $28 million, or 13%, primarily reflecting $52 million of prior year acquisition-related
expense, lower occupancy related expenses and reserves, partially offset by $28 million of branch and facility consolidation-related
expense. Outside data processing and other services decreased $19 million, or 6%, primarily reflecting $24 million of acquisition-
related expense in the year-ago period, partially offset by higher technology investment costs. Deposit and other insurance expense
decreased $15 million, or 19%, primarily due to the discontinuation of the FDIC surcharge in the 2018 fourth quarter. Other
noninterest expense decreased $14 million, or 6%, reflecting $9 million of acquisition-related expense in the year-ago period, as well
as declines in franchise and other taxes. Professional services decreased $9 million, or 13%, primarily reflecting $10 million of
acquisition-related expense in the year-ago period. Equipment decreased $7 million, or 4%, primarily due to $16 million in
acquisition-related costs in the year-ago period, partially offset by $7 million of branch and facility consolidation-related expense in
the 2018 fourth quarter. Marketing decreased $7 million, or 12%, driven by a decrease in promotional expense, partially offset by an
increase in advertising. Partially offsetting these decreases, personnel costs increased $35 million, or 2%, primarily reflecting higher
benefit costs and merit increases.

2017 versus 2016

Reported noninterest expense for 2017 increased $306 million, or 13%, from the prior year, reflecting the full year impact of the

First Merit acquisition. Personnel costs increased $175 million, or 13%, primarily reflecting the full year impact of the addition of
colleagues from FirstMerit. Net occupancy expense increased $59 million, or 39%, primarily reflecting $52 million of acquisition-
related expense. Other expense increased $47 million, or 26%, reflecting the full impact of FirstMerit. Amortization of intangibles
increased $26 million, or 87%, reflecting the full year impact of amortizing FirstMerit related intangibles. Deposit and other insurance
expense increased $24 million, or 44%, reflecting the increase in the assessment base. Partially offsetting these increases, professional
services decreased $36 million, or 34% reflecting a reduction in legal and consultation fees attributable to acquisition-related expense.

Provision for Income Taxes

(This section should be read in conjunction with Note 1 and Note 16 of the Notes to Consolidated Financial Statements.)

2018 versus 2017

The provision for income taxes was $235 million for 2018 compared with a provision for income taxes of $208 million in 2017.

Both years included the benefits from tax-exempt income, tax-advantaged investments, general business credits, investments in
qualified affordable housing projects, excess tax deductions for stock-based compensation, and capital losses. 2017 also included a
$123 million tax benefit related to the federal tax reform enacted on December 22, 2017, which is primarily attributed to the
revaluation of net deferred tax liabilities at the lower statutory federal income tax rate. We completed our provisional estimate related
to tax reform during the 2018 fourth quarter. As of December 31, 2018 and 2017 there was no valuation allowance on federal deferred
taxes. In 2018 and 2017 there was essentially no change recorded in the provision for state income taxes, net of federal, for the
portion of state deferred tax assets and state net operating loss carryforwards that are more likely than not to be realized. At
December 31, 2018, we had a net federal deferred tax liability of $105 million and a net state deferred tax asset of $41 million.

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. Certain proposed adjustments resulting from the IRS examination of our 2010 through 2011 tax
returns have been settled, subject to final approval by the Joint Committee on Taxation of the U.S. Congress. While the statute of
limitations remains open for tax years 2012 through 2017, the IRS has advised that tax years 2012 through 2014 will not be audited,
and began the examination of the 2015 federal income tax return in second quarter 2018. Various state and other jurisdictions remain
open to examination, including Ohio, Kentucky, Indiana, Michigan, Pennsylvania, West Virginia, Wisconsin, and Illinois.

2017 versus 2016

The provision for income taxes was $208 million for 2017 and 2016. Both years included the benefits from tax-exempt income,
tax-advantaged investments, general business credits, investments in qualified affordable housing projects, excess tax deductions for
stock-based compensation, and capital losses. 2017 also included a $123 million tax benefit related to the federal tax reform enacted
on December 22, 2017, which is primarily attributed to the revaluation of net deferred tax liabilities at the lower statutory federal
income tax rate. As of December 31, 2017 and 2016 there was no valuation allowance on federal deferred taxes. In 2017 and 2016,
there was essentially no change recorded in the provision for state income taxes, net of federal taxes, for the portion of state deferred
tax assets and state net operating loss carryforwards that are more likely than not to be realized.

RISK MANAGEMENT AND CAPITAL

Risk Governance

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. This does not preclude engagement in select higher risk activities. Rather, the definition is intended to represent an
aggregate view of where we want our overall risk to be managed.

Three board committees primarily oversee implementation of this desired risk appetite and monitoring of our risk profile:

• The Audit Committee oversees the integrity of the consolidated financial statements, including policies, procedures, and
practices regarding the preparation of financial statements, the financial reporting process, disclosures, and internal
control over financial reporting. The Audit Committee also provides assistance to the board in overseeing the internal
audit division and the independent registered public accounting firm’s qualifications and independence; compliance with
our Financial Code of Ethics for the chief executive officer and senior financial officers; and compliance with corporate
securities trading policies.

• The Risk Oversight Committee (ROC) assists the board of directors in overseeing management of material risks, the

approval and monitoring of the Company’s capital position and plan supporting our overall aggregate moderate-to-low
risk profile, the risk governance structure, compliance with applicable laws and regulations, and determining adherence
to the board’s stated risk appetite. The committee has oversight responsibility with respect to the full range of inherent
risks: market, credit, liquidity, legal, compliance/regulatory, operational, strategic, and reputational. The ROC provides
assistance to the Board in overseeing the credit review division. This committee also oversees our capital management
and planning process, ensures that the amount and quality of capital are adequate in relation to expected and unexpected
risks, and that our capital levels exceed “well-capitalized” requirements.

• The Technology Committee assists the board of directors in fulfilling its oversight responsibilities with respect to all
technology, cyber security, and third-party risk management strategies and plans. The committee is charged with
evaluating Huntington’s capability to properly perform all technology functions necessary for its business plan,
including projected growth, technology capacity, planning, operational execution, product development, and
management capacity. The committee provides oversight of technology investments and plans to drive efficiency as
well as to meet defined standards for risk, information security, and redundancy. The Committee oversees the allocation
of technology costs and ensures that they are understood by the board of directors. The Technology Committee
monitors and evaluates innovation and technology trends that may affect the Company’s strategic plans, including
monitoring of overall industry trends. The Technology Committee reviews and provides oversight of the Company’s
continuity and disaster recovery planning and preparedness.

The Audit and Risk Oversight Committees routinely hold executive sessions with our key officers engaged in accounting and

risk management. On a periodic basis, the two committees meet in joint session to cover matters relevant to both, such as the
construct and appropriateness of the ACL, which is reviewed quarterly. All directors have access to information provided to each
committee and all scheduled meetings are open to all directors.

Further, through its Compensation Committee, the board of directors seeks to ensure its system of rewards is risk-sensitive and

aligns the interests of management, creditors, and shareholders. We utilize a variety of compensation-related tools to induce
appropriate behavior, including common stock ownership thresholds for the chief executive officer and certain members of senior
management, a requirement to hold until retirement or exit from the Company, a portion of net shares received upon exercise of stock
options or release of restricted stock awards (50% for executive officers and 25% for other award recipients), equity deferrals,
recoupment provisions, and the right to terminate compensation plans at any time.

Management has implemented an Enterprise Risk Management and Risk Appetite Framework. Critically important is our self-

assessment process, in which each business segment produces an analysis of its risks and the strength of its risk controls. The segment
analyses are combined with assessments by our risk management organization of major risk sectors (e.g., market, credit, liquidity,
legal, compliance/regulatory, operational, strategic, and reputational) to produce an overall enterprise risk assessment. Outcomes of
the process include a determination of the quality of the overall control process, the direction of risk, and our position compared to the
defined risk appetite.

Management also utilizes a wide series of metrics (key risk indicators) to monitor risk positions throughout the Company. In

general, a range for each metric is established, which allows the Company, in aggregate, to operate within an aggregate moderate-to-
low risk profile. Deviations from the range will indicate if the risk being measured exceeds desired tolerance, which may then
necessitate corrective action.

We also have four executive level committees to manage risk: ALCO, Credit Policy and Strategy, Risk Management, and Capital

Management. Each committee focuses on specific categories of risk and is supported by a series of subcommittees that are tactical in
nature. We believe this structure helps ensure appropriate escalation of issues and overall communication of strategies.

Huntington utilizes three lines of defense with regard to risk management: (1) business segments, (2) corporate risk

management, and (3) internal audit and credit review. To induce greater ownership of risk within its business segments, segment risk
officers have been embedded in the business to identify and monitor risk, elevate and remediate issues, establish controls, perform
self-testing, and oversee the self-assessment process. Corporate Risk Management establishes policies, sets operating limits, reviews
new or modified products/processes, ensures consistency and quality assurance within the segments, and produces the enterprise risk
assessment. The Chief Risk Officer has significant input into the design and outcome of incentive compensation plans as they apply
to risk. Internal Audit and Credit Review provide additional assurance that risk-related functions are operating as intended.

A comprehensive discussion of risk management and capital matters affecting us can be found in the Risk Governance section

included in Item 1A and the Regulatory Matters section of Item 1 of this Form 10-K.

Some of the more significant processes used to manage and control credit, market, liquidity, operational, and compliance risks

are described in the following sections.

Credit Risk

Credit risk is the risk of financial loss if a counterparty is not able to meet the agreed upon terms of the financial obligation. The
majority of our credit risk is associated with lending activities, as the acceptance and management of credit risk is central to profitable
lending. We also have credit risk associated with our investment securities portfolios (see Note 4 of the Notes to 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. While there is credit risk associated with derivative activity, we believe this
exposure is minimal. (See Note 1 of the Notes to Consolidated Financial Statements.)

We continue to focus on the identification, monitoring, and management 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 portfolio management resources demonstrate our commitment to maintaining an aggregate moderate-to-low risk
profile. 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.

The maximum level of credit exposure to individual credit borrowers is limited by policy guidelines based on the perceived risk

of each borrower or related group of borrowers. All authority to grant commitments is delegated through the independent credit
administration function and is closely monitored and regularly updated. Concentration risk is managed through limits on loan type,
geography, industry, and loan quality factors. We focus predominantly on extending credit to retail and commercial customers with
existing or expandable relationships within our primary banking markets, although we will consider lending opportunities outside our
primary markets if we believe the associated risks are acceptable and aligned with strategic initiatives. Although we offer a broad set
of products, we continue to develop new lending products and opportunities. Each of these new products and opportunities goes
through a rigorous development and approval process prior to implementation to ensure our overall objective of maintaining an
aggregate moderate-to-low risk portfolio profile.

The checks and balances in the credit process and the separation of the credit administration and risk management functions are
designed to appropriately assess and sanction the level of credit risk being accepted, facilitate the early recognition of credit problems
when they occur, and provide for effective problem asset management and resolution. For example, we do not extend additional credit
to delinquent borrowers except in certain circumstances that substantially improve our overall repayment or collateral coverage
position.

Loan and Lease Credit Exposure Mix

At December 31, 2018, our loans and leases totaled $74.9 billion, representing a $4.8 billion, or 7%, increase compared to $70.1

billion at December 31, 2017.

Total commercial loans and leases were $37.4 billion at December 31, 2018, and represented 51% of our total loan and lease

credit exposure. Our commercial loan portfolio is diversified by product type, customer size, and geography within our footprint, and
is comprised of the following (see Commercial Credit discussion):

C&I – C&I loans and leases are made to commercial customers for use in normal business operations to finance working capital
needs, equipment purchases, or other projects. The majority of these borrowers are customers doing business within our
geographic regions. C&I loans and leases are generally underwritten individually and secured with the assets of the company
and/or the personal guarantee of the business owners. The financing of owner occupied facilities is considered a C&I loan even
though there is improved real estate as collateral. This treatment is a result of the credit decision process, which focuses on cash
flow from operations of the business to repay the debt. The operation, sale, rental, or refinancing of the real estate is not
considered the primary repayment source for these types of loans. As we have expanded our C&I portfolio, we have developed a
series of “vertical specialties” to ensure that new products or lending types are embedded within a structured, centralized
Commercial Lending area with designated, experienced credit officers. These specialties are comprised of either targeted
industries (for example, Healthcare, Food & Agribusiness, Energy, etc.) and/or lending disciplines (Equipment Finance, Asset
Based Lending, etc.), all of which requires a high degree of expertise and oversight to effectively mitigate and monitor risk. As
such, we have dedicated colleagues and teams focused on bringing value added expertise to these specialty clients.

CRE – CRE loans consist of loans to developers and REITs supporting income-producing or for-sale commercial real estate
properties. We mitigate our risk on these loans by requiring collateral values that exceed the loan amount and underwriting the
loan with projected cash flow in excess of the debt service requirement. These loans are made to finance properties such as
apartment buildings, office and industrial buildings, and retail shopping centers, and are repaid through cash flows related to the
operation, sale, or refinance of the property. For loans secured by real estate, appropriate appraisals are obtained at origination
and updated on an as needed basis in compliance with regulatory requirements.

Construction CRE – Construction CRE loans are loans to developers, companies, or individuals used for the construction of a
commercial or residential property for which repayment will be generated by the sale or permanent financing of the property.
Our construction CRE portfolio primarily consists of retail, multi-family, office, and warehouse project types. Generally, these
loans are for construction projects that have been pre-sold or pre-leased, or have secured permanent financing, as well as loans to
real estate companies with significant equity invested in each project. These loans are underwritten and managed by a
specialized real estate lending group that actively monitors the construction phase and manages the loan disbursements
according to the predetermined construction schedule.

Total consumer loans and leases were $37.5 billion at December 31, 2018, and represented 49% of our total loan and lease credit
exposure. The consumer portfolio is comprised primarily of automobile loans, home equity lines-of-credit, and residential mortgages
(see Consumer Credit discussion).

Automobile – Automobile loans are comprised primarily of loans made through automotive dealerships and include exposure in
selected states outside of our primary banking markets. The exposure outside of our core footprint states represents 21% of the
total exposure, with no individual state representing more than 5%. Applications are underwritten using an automated
underwriting system that applies consistent policies and processes across the portfolio.

Home equity – Home equity lending includes both home equity loans and lines-of-credit. This type of lending, which is secured
by a first-lien or junior-lien on the borrower’s residence, allows customers to borrow against the equity in their home or
refinance existing mortgage debt. Products include closed-end loans which are generally fixed-rate with principal and interest
payments, and variable-rate, interest-only lines-of-credit which do not require payment of principal during the 10-year revolving
period. The home equity line of credit converts to a 20-year amortizing structure at the end of the revolving period.
Applications are underwritten centrally in conjunction with an automated underwriting system. The home equity underwriting
criteria is based on minimum credit scores, debt-to-income ratios, and LTV ratios, with current collateral valuations. The
underwriting for the floating rate lines of credit also incorporates a stress analysis for a rising interest rate.

Residential mortgage – Residential mortgage loans represent loans to consumers for the purchase or refinance of a residence.
These loans are generally financed over a 15-year to 30-year term, and in most cases, are extended to borrowers to finance their
primary residence. Applications are underwritten centrally using consistent credit policies and processes. All residential
mortgage loan decisions utilize a full appraisal for collateral valuation. Huntington has not originated or acquired residential
mortgages that allow negative amortization or allow the borrower multiple payment options.

RV and marine finance – RV and marine finance loans are loans provided to consumers for the purpose of financing recreational
vehicles and boats. Loans are originated on an indirect basis through a series of dealerships across 34 states. The loans are
underwritten centrally using an application and decisioning system similar to automobile loans. The current portfolio includes
35% of the balances within our core footprint states.

Other consumer – Other consumer loans primarily consists of consumer loans not secured by real estate, including credit cards,
personal unsecured loans, and overdraft balances. We originate these products within our established set of credit policies and
guidelines.

The table below provides the composition of our total loan and lease portfolio:

Table 8 - Loan and Lease Portfolio Composition

(dollar amounts in millions)
Commercial:

Commercial and industrial
Commercial real estate:

Construction
Commercial

Commercial real estate

Total commercial
Consumer:

Automobile
Home equity
Residential mortgage
RV and marine finance
Other consumer

Total consumer

Total loans and leases

2018

2017

At December 31,
2016

2015

2014

$ 30,605

41% $ 28,107

40% $ 28,059

42% $ 20,560

41% $ 19,033

40%

1,185
5,657
6,842
37,447

2
8
10
51

1,217
6,008
7,225
35,332

2
9
11
51

1,446
5,855
7,301
35,360

2
9
11
53

1,031
4,237
5,268
25,828

2
8
10
51

875
4,322
5,197
24,230

12,429
9,722
10,728
3,254
1,320
37,453
$ 74,900

12,100
16
10,099
13
9,026
14
2,438
4
1,122
2
34,785
49
100% $ 70,117

10,969
17
10,106
14
7,725
13
1,846
3
956
2
31,602
49
100% $ 66,962

9,481
16
8,471
15
5,998
12
—
3
563
1
24,513
47
100% $ 50,341

8,690
19
8,491
17
5,831
12
—
—
414
1
23,426
49
100% $ 47,656

2
9
11
51

18
18
12
—
1
49
100%

Our loan portfolio is composed of a managed mix of consumer and commercial credits. At the corporate level, we manage the

overall credit exposure and portfolio composition via a credit concentration policy. The policy designates specific loan types,
collateral types, and loan structures to be formally tracked and assigned maximum exposure limits as a percentage of capital. C&I
lending by NAICS categories, specific limits for CRE project types, loans secured by residential real estate, shared national credit
exposure, and designated high risk loan definitions 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 risk profile. 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.

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

composition from December 31, 2017 are consistent with the portfolio growth metrics.

Table 9 - Loan and Lease Portfolio by Industry Type

(dollar amounts in millions)
Commercial loans and leases:

Real estate and rental and leasing

Retail trade (1)

Manufacturing

Finance and insurance

Wholesale trade

Health care and social assistance

Accommodation and food services

Professional, scientific, and technical services

Transportation and warehousing

Other services

Mining, quarrying, and oil and gas extraction

Construction

Admin./Support/Waste Mgmt. and Remediation Services

Arts, entertainment, and recreation

Educational services

Utilities

Information

Public administration

Unclassified/Other

Agriculture, forestry, fishing and hunting

Management of companies and enterprises

Total commercial loans and leases by industry category

Automobile

Home Equity

Residential mortgage

RV and marine finance

Other consumer loans

Total loans and leases

December 31,
2018

December 31,
2017

6,964

9% $

7,378

11%

5,337

5,140

3,377

2,830

2,533

1,709

1,344

1,320

1,290

1,286

924

737

599

473

454

441

253

174

37,447

12,429

9,722

10,728

3,254

1,320

—

51%

4,886

4,791

3,044

2,291

2,664

1,617

1,257

1,243

1,296

694

976

561

593

504

389

467

255

163

172

35,332

12,100

10,099

9,026

2,438

1,122

—

51%

$ 74,900

100% $ 70,117

100%

(1) Amounts include $3.6 billion and $3.2 billion of auto dealer services loans at December 31, 2018 and December 31, 2017, respectively.

Commercial Credit

The primary factors considered in commercial credit approvals are the financial strength of the borrower, assessment of the
borrower’s management capabilities, cash flows from operations, industry sector trends, type and sufficiency of collateral, type of
exposure, transaction structure, and the general economic outlook. While these are the primary factors considered, there are a number
of other factors that may be considered in the decision process. We utilize centralized preview and loan approval committees, led by
our credit officers. The risk rating (see next paragraph), size, and complexity of the credit determines the threshold for approval. For
loans not requiring loan committee approval, with the exception of small business loans, credit officers who understand each local
region and are experienced in the industries and loan structures of the requested credit exposure are involved in all loan decisions and
have the primary credit authority. For small business loans, we utilize a centralized loan approval process for standard products and
structures. In this centralized decision environment, certain individuals who understand each local region may make credit-extension
decisions to preserve our commitment to the communities in which we operate. In addition to disciplined and consistent judgmental
factors, a sophisticated credit scoring process is used as a primary evaluation tool in the determination of approving a loan within the
centralized loan approval process.

In commercial lending, on-going credit management is dependent on the type and nature of the loan. We monitor all significant
exposures on an on-going basis. All commercial credit extensions are assigned internal risk ratings reflecting the borrower’s PD and
LGD. This two-dimensional rating methodology provides granularity in the portfolio management process. The PD is rated and
applied at the borrower level. The LGD is rated and applied based on the specific type of credit extension and the quality and lien

position associated with the underlying collateral. The internal risk ratings are assessed at origination and updated at each periodic
monitoring event. There is also extensive macro portfolio management analysis on an on-going basis. We continually review and
adjust our risk-rating criteria based on actual experience, which provides us with the current risk level in the portfolio and is the basis
for determining an appropriate allowance for credit losses (ACL) amount for the commercial portfolio. A centralized portfolio
management team monitors and reports on the performance of the entire commercial portfolio, including small business loans, to
provide consistent oversight.

In addition to the initial credit analysis conducted during the approval process, our Credit Review group performs testing to

provide an independent review and assessment of the quality and risk of new loan originations. This group is part of our Risk
Management area and conducts portfolio reviews on a risk-based cycle to evaluate individual loans, validate risk ratings, and test the
consistency of credit processes.

Our standardized loan grading system considers many components that directly correlate to loan quality and likelihood of
repayment, one of which is guarantor support. On an annual basis, or more frequently if warranted, we consider, among other things,
the guarantor’s reputation and creditworthiness, along with various key financial metrics such as liquidity and net worth, assuming
such information is available. Our assessment of the guarantor’s credit strength, or lack thereof, is reflected in our risk ratings for such
loans, which is directly tied to, and an integral component of, our ACL methodology. When a loan goes to impaired status, viable
guarantor support is considered in the determination of a credit loss.

If our assessment of the guarantor’s credit strength yields an inherent capacity to perform, we will seek repayment from the

guarantor as part of the collection process and have done so successfully.

Substantially all loans categorized as Classified (see Note 3 of Notes to Consolidated Financial Statements) are managed by
SAD. SAD is a specialized group of credit professionals that handle the day-to-day management of workouts, commercial recoveries,
and problem loan sales. Its responsibilities include developing and implementing action plans, assessing risk ratings, and determining
the appropriateness of the allowance, the accrual status, and the ultimate collectability of the Classified loan portfolio.

C&I PORTFOLIO

We manage the risks inherent in the C&I portfolio through origination policies, a defined loan concentration policy with
established limits, on-going loan-level and portfolio-level reviews, recourse requirements, and continuous portfolio risk management
activities. Our origination policies for the C&I portfolio include loan product-type specific policies such as LTV and debt service
coverage ratios, as applicable.

The C&I portfolio continues to have solid origination activity while we maintain a focus on high quality originations. Problem

loans have trended downward over the last several years, reflecting a combination of proactive risk identification and effective
workout strategies implemented by the SAD. We continue to maintain a proactive approach to identifying borrowers that may be
facing financial difficulty in order to maximize the potential solutions. Subsequent to the origination of the loan, the Credit Review
group provides an independent review and assessment of the quality of the underwriting and risk of new loan originations.

CRE PORTFOLIO

We manage the risks inherent in this portfolio specific to CRE lending, focusing on the quality of the developer and the specifics

associated with each project. Generally, we: (1) limit our loans to 80% of the appraised value of the commercial real estate at
origination, (2) require net operating cash flows to be 125% of required interest and principal payments, and (3) if the commercial real
estate is non-owner occupied, require that at least 50% of the space of the project be pre-leased. We actively monitor both geographic
and project-type concentrations and performance metrics of all CRE loan types, with a focus on loans identified as higher risk based
on the risk rating methodology. Both macro-level and loan-level stress-test scenarios based on existing and forecast market conditions
are part of the on-going portfolio management process for the CRE portfolio.

Dedicated real estate professionals originate and manage the portfolio. The portfolio is diversified by project type and loan size,

and this diversification represents a significant portion of the credit risk management strategies employed for this portfolio.
Subsequent to the origination of the loan, the Credit Review group provides an independent review and assessment of the quality of
the underwriting and risk of new loan originations.

Appraisal values are obtained in conjunction with all originations and renewals, and on an as-needed basis, in compliance with
regulatory requirements and to ensure appropriate decisions regarding the on-going management of the portfolio reflect the changing
market conditions. Appraisals are obtained from approved vendors and are reviewed by an internal appraisal review group comprised
of certified appraisers to ensure the quality of the valuation used in the underwriting process. We continue to perform on-going
portfolio level reviews within the CRE portfolio. These reviews generate action plans based on occupancy levels or sales volume
associated with the projects being reviewed. This highly individualized process requires working closely with all of our borrowers, as
well as an in-depth knowledge of CRE project lending and the market environment.

Consumer Credit

Consumer credit approvals are based on, among other factors, the financial strength and payment history of the borrower, type
of exposure, and transaction structure. Consumer credit decisions are generally made in a centralized environment utilizing decision
models. Importantly, certain individuals who understand each local region have the authority to make credit extension decisions to
preserve our focus on the local communities in which we operate. Each credit extension is assigned a specific PD and LGD. The PD
is generally based on the borrower’s most recent credit bureau score (FICO), which we update quarterly, providing an ongoing view of
the borrowers PD. The LGD is related to the type of collateral associated with the credit extension, which typically does not change
over the course of the loan term. This allows Huntington to maintain a current view of the customer for credit risk management and
ACL purposes.

In consumer lending, credit risk is managed from a segment (i.e., loan type, collateral position, geography, etc.) and vintage

performance analysis. All portfolio segments are continuously monitored for changes in delinquency trends and other asset quality
indicators. We make extensive use of portfolio assessment models to continuously monitor the quality of the portfolio, which may
result in changes to future origination strategies. The ongoing analysis and review process results in a determination of an appropriate
ACL amount for our consumer loan portfolio. The independent risk management group has a consumer process review component to
ensure the effectiveness and efficiency of the consumer credit processes.

Collection actions by our customer assistance team are initiated as needed through a centrally managed collection and recovery

function. We employ a series of collection methodologies designed to maintain a high level of effectiveness, while maximizing
efficiency. In addition to the consumer loan portfolio, the customer assistance team is responsible for collection activity on all sold
and securitized consumer loans and leases. Collection practices include a single contact point for the majority of the residential real
estate secured portfolios.

AUTOMOBILE PORTFOLIO

Our strategy in the automobile portfolio continues to focus on high quality borrowers as measured by both FICO and internal

custom scores, combined with appropriate LTVs, terms, and profitability. Our strategy and operational capabilities allow us to
appropriately manage the origination quality across the entire portfolio, including our newer markets. Although increased origination
volume and entering new markets can be associated with increased risk levels, we believe our disciplined strategy and operational
processes significantly mitigate these risks.

We have continued to consistently execute our value proposition and take advantage of available market opportunities.

Importantly, we have maintained our high credit quality standards while expanding the portfolio.

RESIDENTIAL REAL ESTATE SECURED PORTFOLIOS

The properties securing our residential mortgage and home equity portfolios are primarily located within our geographic
footprint. Huntington continues to support our local markets with consistent underwriting across all residential secured products. The
residential-secured portfolio originations continue to be of high quality, with the majority of the negative credit impact coming from
loans originated prior to the financial crisis. Our portfolio management strategies associated with our Home Savers group allow us to
focus on effectively helping our customers with appropriate solutions for their specific circumstances.

Huntington underwrites all residential mortgage applications centrally, with a focus on higher quality borrowers. We do not

originate residential mortgages that allow negative amortization or allow the borrower multiple payment options. Residential
mortgages are originated based on a completed full appraisal during the credit underwriting process. We update values in compliance
with applicable regulations to facilitate our portfolio management, as well as our workout and loss mitigation functions.

We are subject to repurchase risk associated with residential mortgage loans sold in the secondary market. An appropriate level
of reserve for representations and warranties related to residential mortgage loans sold has been established to address this repurchase
risk inherent in the portfolio.

RV AND MARINE FINANCE PORTFOLIO

Our strategy in the RV and Marine portfolio focuses on high quality borrowers, combined with appropriate LTVs, terms, and

profitability. Although entering new markets can be associated with increased risk levels, we believe our disciplined strategy and
operational processes significantly mitigate these risks.

Credit Quality

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

We believe the most meaningful way to assess overall credit quality performance is through an analysis of specific performance
ratios. This approach forms the basis of the discussion in the sections immediately following: NPAs, NALs, TDRs, ACL, and NCOs.
In addition, we utilize delinquency rates, risk distribution and migration patterns, product segmentation, and origination trends in the
analysis of our credit quality performance.

Credit quality performance in 2018 reflected continued overall positive results with low net charge-offs. Total NCOs were $145

million or 0.20% of average total loans and leases, a decrease from $159 million or 0.23% in the prior year. There was a 1% decline
in NPAs from the prior year. The ALLL to total loans and leases ratio increased by 4 basis points to 1.03%.

NPAs and NALs

NPAs consist of (1) NALs, which represent loans and leases no longer accruing interest, (2) OREO properties, and (3) other
NPAs. Any loan in our portfolio may be placed on nonaccrual status prior to the policies described below when collection of principal
or interest is in doubt. Also, when a borrower with discharged non-reaffirmed debt in a Chapter 7 bankruptcy is identified and the loan
is determined to be collateral dependent, the loan is placed on nonaccrual status.

Commercial loans are placed on nonaccrual status at 90-days past due, or earlier if repayment of principal and interest is in
doubt. Of the $203 million of commercial related NALs at December 31, 2018, $139 million, or 68%, represented loans 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 finance and other consumer loans are generally fully charged-off at 120-days past due.

When loans are placed on nonaccrual, accrued interest income is reversed with current year accruals charged to interest income
and prior year amounts generally charged-off as a credit loss. When, in our judgment, the borrower’s ability to make required interest
and principal payments has resumed and collectability is no longer in doubt, the loan or lease could be returned to accrual status.

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

Table 10 - Nonaccrual Loans and Leases and Nonperforming Assets

December 31,

(dollar amounts in millions)

2018

2017

2016

2015

2014

Nonaccrual loans and leases (NALs):
Commercial and industrial
Commercial real estate
Automobile
Home equity
Residential mortgage
RV and marine finance
Other consumer

Total nonaccrual loans and leases
Other real estate, net:
Residential
Commercial

Total other real estate, net
Other NPAs (1)
Total nonperforming assets

188
15
5
62
69
1
—
340

19
4
23
24
387

161
29
6
68
84
1
—
349

24
9
33
7
389

234
20
6
72
91
—
—
423

31
20
51
7
481

175
29
7
66
95
—
—
372

24
3
27
—
399

72
48
5
79
96
—
—
300

29
6
35
3
338

Nonaccrual loans and leases as a % of total loans and leases

NPA ratio (2)

0.45%
0.52

0.50%
0.55

0.63%
0.72

0.74%
0.79

0.63%
0.71

(1) Other nonperforming assets at December 31, 2018 includes certain nonaccrual loans held-for-sale. Amounts prior to December 31, 2018 includes certain

impaired investment securities.

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

2018 versus 2017

Total NPAs decreased by $2 million, or 1%, compared with December 31, 2017. A $14 million, or 48%, decline in CRE and a

$15 million, or 18%, decline in residential mortgage portfolios, were largely offset by a $27 million, or 17%, increase in the C&I
portfolio. The C&I increase was centered in a small number of credits from diverse industries.

The following table reflects period-end accruing loans and leases 90 days or more past due for each of the last five years:

Table 11 - Accruing Past Due Loans and Leases

(dollar amounts in millions)
Accruing loans and leases past due 90 days or more:

Commercial and industrial (1)
Commercial real estate
Automobile
Home equity
Residential mortgage (excluding loans guaranteed by
the U.S. Government)
RV and marine finance
Other consumer

Total, excl. loans guaranteed by the U.S. Government
Add: loans guaranteed by U.S. Government

Total accruing loans and leases past due 90 days or more,
including loans guaranteed by the U.S. Government
Ratios:
Excluding loans guaranteed by the U.S. Government, as a
percent of total loans and leases
Guaranteed by U.S. Government, as a percent of total loans
and leases
Including loans guaranteed by the U.S. Government, as a
percent of total loans and leases

2018

2017

2016

2015

2014

December 31,

7
—
8
17

32
1
6
71
99

9
3
7
18

21
1
5
64
51

18
17
10
12

15
1
4
77
52

9
10
7
9

14
—
1
50
56

5
19
5
12

33
—
1
75
55

170

115

129

106

130

0.09%

0.12%

0.10%

0.16%

0.13

0.23

0.07

0.16

0.08

0.19

0.11

0.21

0.12

0.27

(1) Amounts include Huntington Technology Finance administrative lease delinquencies and accruing purchase impaired loans related to acquisitions.

TDR Loans

TDRs are modified loans where a concession was provided to a borrower experiencing financial difficulties. TDRs can be

classified as either accruing or nonaccruing loans. Nonaccruing TDRs are included in NALs whereas accruing TDRs are excluded
from NALs, as it is probable that all contractual principal and interest due under the restructured terms will be collected. TDRs
primarily reflect our loss mitigation efforts to proactively work with borrowers in financial difficulty or to comply with regulations
regarding the treatment of certain bankruptcy filing and discharge situations. Over the past five years, the accruing component of the
total TDR balance has been consistently over 80%, indicating there is no identified credit loss and the borrowers continue to make
their monthly payments. As of December 31, 2018, over 79% of the $470 million of accruing TDRs secured by residential real estate
(Residential mortgage and Home equity in Table 12) are current on their required payments, with over 63% of the accruing pool
having had no delinquency in the past 12 months. There is limited migration from the accruing to non-accruing components, and
virtually all of the charge-offs within this group of loans 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 years:

Table 12 - Accruing and Nonaccruing Troubled Debt Restructured Loans
(dollar amounts in millions)

2018

2017

December 31,
2016

2015

2014

TDRs—accruing:

Commercial and industrial
Commercial real estate
Automobile
Home equity
Residential mortgage
RV and marine finance
Other consumer

Total TDRs—accruing
TDRs—nonaccruing:

Commercial and industrial
Commercial real estate
Automobile
Home equity
Residential mortgage
RV and marine finance
Other consumer
Total TDRs—nonaccruing
Total TDRs

269
54
35
252
218
2
9
839

97
6
3
28
44
—
—
178
1,017

300
78
30
265
224
1
8
906

82
15
4
28
55
—
—
184
1,090

210
77
26
270
243
—
4
830

107
5
5
28
59
—
—
204
1,034

236
115
25
199
265
—
4
844

57
17
6
21
72
—
—
173
1,017

117
177
26
252
265
—
4
841

21
25
5
27
69
—
—
147
988

Our strategy is to structure TDRs in a manner that avoids new concessions subsequent to the initial TDR terms. However, there

are times when subsequent modifications are required, such as when a loan matures. Often loans are performing in accordance with
the TDR terms, and a new note is originated with similar modified terms. These loans are subjected to the normal underwriting
standards and processes for similar credit extensions, both new and existing. If the loan is not performing in accordance with the
existing TDR terms, typically an individualized approach to repayment is established. In accordance with GAAP, the refinanced note
is evaluated to determine if it is considered a new loan or a continuation of the prior loan. A new loan is considered for the removal of
the TDR designation. A continuation of the prior note requires the continuation of the TDR designation.

The types of concessions granted include interest rate reductions, amortization or maturity date changes beyond what the
collateral supports, and principal forgiveness based on the borrower’s specific needs at a point in time. Our policy does not limit the
number of times a loan may be modified. A loan may be modified multiple times if it is considered to be in the best interest of both
the borrower and us.

Commercial loans are not automatically considered to be accruing TDRs upon the granting of a concession. If the loan is in

accruing status and no loss is expected based on the modified terms, the modified TDR remains in accruing status. For loans that are
on nonaccrual status before the modification, reasonable assurance of repayment under modified terms and demonstrated repayment
performance for a minimum of six months is needed to return to accruing status. This six-month period could extend before or after
the restructure date.

Any granted change in terms or conditions that are not readily available in the market for that borrower, requires the designation
as a TDR. There are no provisions for the removal of the TDR designation based on payment activity for consumer loans. A loan may
be returned to accrual status when all contractually due interest and principal has been paid and the borrower demonstrates the
financial capacity to continue to pay as agreed, with the risk of loss diminished.

ACL

Our total credit reserve is comprised of two different components, both of which in our judgment are appropriate to absorb

credit losses inherent in our loan and lease portfolio: the ALLL and the AULC. Combined, these reserves comprise the total ACL.
Our ACL methodology committee is responsible for developing the methodology, assumptions and estimates used in the calculation,
as well as determining the appropriateness of the ACL. The ALLL represents the estimate of incurred losses in the loan portfolio at
the reported date. Additions to the ALLL result from recording provision expense for loan losses or increased risk levels resulting
from loan risk-rating downgrades or qualitative adjustments, while reductions reflect charge-offs (net of recoveries), decreased risk
levels resulting from loan risk-rating upgrades, or the sale of loans. 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. (See Note
1 of the Notes to Consolidated Financial Statements).

Our ACL evaluation process includes the on-going assessment of credit quality metrics, and a comparison of certain ACL

benchmarks to current performance. While the total ACL balance increased year over year, all of the relevant benchmarks remain
strong.

The following table reflects activity in the ALLL and AULC for each of the last five years:

Year Ended December 31,

2018

2017

2016

2015

2014

691

638

598

605

648

Table 13 - Summary of Allowance for Credit Losses
(dollar amounts in millions)

ALLL, beginning of year
Loan and lease charge-offs

Commercial:

Commercial and industrial
Commercial real estate:

Construction
Commercial

Commercial real estate

Total commercial
Consumer:

Automobile
Home equity
Residential mortgage
RV and marine finance
Other consumer

Total consumer

Total charge-offs
Recoveries of loan and lease charge-offs

Commercial:

Commercial and industrial
Commercial real estate:

Construction
Commercial

Total commercial real estate

Total commercial
Consumer:

Automobile
Home equity
Residential mortgage
RV and marine finance
Other consumer

Total consumer

Total recoveries
Net loan and lease charge-offs

Provision for loan and lease losses
Allowance for assets sold and securitized or transferred to
loans held for sale

ALLL, end of year
AULC, beginning of year

Provision for (Reduction in) unfunded loan commitments
and letters of credit losses
AULC recorded at acquisition

AULC, end of year
ACL, end of year

(68)

2
(6)
(4)
(72)

(64)
(20)
(11)
(13)
(72)
(180)
(252)

3
12
15
41

22
15
5
3
7
52
93
(159)
212

—
691
98

(11)
—
87
778

(77)

(2)
(14)
(16)
(93)

(50)
(26)
(11)
(3)
(44)
(134)
(227)

4
38
42
74

18
17
5
—
4
44
118
(109)
169

(20)
638
72

22
4
98
736

(80)

(2)
(16)
(18)
(98)

(36)
(36)
(16)
—
(32)
(120)
(218)

3
31
34
86

16
16
6
—
6
44
130
(88)
89

(8)
598
61

11
—
72
670

(77)

(6)
(19)
(25)
(102)

(30)
(54)
(26)
—
(35)
(145)
(247)

4
30
34
79

13
18
6
—
6
43
122
(125)
83

(1)
605
63

(2)
—
61
666

(68)

(1)
(10)
(11)
(79)

(58)
(21)
(11)
(14)
(85)
(189)
(268)

2
27
29
65

24
15
5
5
9
58
123
(145)
226

—
772
87

9
—
96
868

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

past five years:

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

2018

2017

December 31,

2016

2015

2014

ACL

Commercial

Commercial and industrial
Commercial real estate

Total commercial
Consumer

Automobile

Home equity
Residential mortgage
RV and marine finance
Other consumer

Total consumer

Total ALLL
AULC
Total ACL
Total ALLL as % of:

Total loans and leases

Nonaccrual loans and leases

NPAs

422
120
542

55
25
20
74
230
772
96
868

41 % $
10
51

13
14
4
2
49
100 %

1.03 %

228

200

377
105
482

60
21
15
60
209
691
87
778

40% $
11
51

14
13
3
2
49
100%

0.99%

198

178

356
95
451

65
33
5
36
187
638
98
736

42% $
11
53

15
12
3
1
47
100%

0.95%

151

133

299
100
399

84
42
—
23
199
598
72
670

41% $
10
51

17
12
—
1
49
100%

1.19%

161

150

287
103
390

96
47
—
39
215
605
61
666

40%
11
51

18
12
—
1
49
100%

1.27%

202

179

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

2018 versus 2017

At December 31, 2018, the ALLL was $772 million or 1.03% of total loans and leases, compared to $691 million or 0.99% at

December 31, 2017. The $81 million, or 12%, increase in the ALLL primarily relates to increased reserve levels associated with
portfolio loan growth across the portfolio. We believe the ratio is appropriate given the overall moderate-to-low risk profile of our
loan portfolio and its coverage levels reflect the quality of our portfolio and the current operating environment. We continue to focus
on early identification of loans with changes in credit metrics and have proactive action plans for these loans.

NCOs

A loan in any portfolio may be charged-off prior to the policies described below if a loss confirming event has occurred. 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 at the time of discharge.

Commercial loans are either charged-off or written down to net realizable value by 90-days past due with the exception of

administrative small ticket lease delinquencies. Automobile loans, RV and marine finance, and other consumer loans are generally
fully 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. The remaining balance is in
delinquent status until a modification can be completed, or the loan goes through the foreclosure process.

The following table reflects NCO detail for each of the last five years:

Table 15 - Net Loan and Lease Charge-offs
(dollar amounts in millions)

Net charge-offs by loan and lease type:

Commercial:

Commercial and industrial
Commercial real estate:

Construction
Commercial

Commercial real estate

Total commercial
Consumer:

Automobile
Home equity
Residential mortgage
RV and marine finance
Other consumer

Total consumer
Total net charge-offs

Net charge-offs - annualized percentages:

Commercial:

Commercial and industrial
Commercial real estate:

Construction
Commercial

Commercial real estate

Total commercial
Consumer:

Automobile
Home equity
Residential mortgage
RV and marine finance
Other consumer

Total consumer

Net charge-offs as a % of average loans

2018

Year Ended December 31,
2016

2015

2017

2014

(1)
(17)
(18)
14

34
6
6
9
76
131
145

(5)
(6)
(11)
31

42
5
6
10
65
128
159

(2)
(24)
(26)
19

32
9
6
2
41
90
109

(1)
(15)
(16)
12

20
20
10
—
26
76
88

2
(11)
(9)
23

17
37
20
—
28
102
125

0.11%

0.15%

0.19%

0.14%

0.18%

(0.13)
(0.26)
(0.24)
0.04

0.27
0.06
0.06
0.32
6.27
0.36
0.20%

(0.36)
(0.10)
(0.15)
0.09

0.36
0.05
0.08
0.48
6.36
0.39
0.23%

(0.19)
(0.49)
(0.44)
0.06

0.30
0.10
0.09
0.33
5.53
0.32
0.19%

(0.08)
(0.37)
(0.32)
0.05

0.23
0.23
0.17
—
5.44
0.32
0.18%

0.16
(0.25)
(0.19)
0.10

0.23
0.44
0.35
—
6.99
0.46
0.27%

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.

2018 versus 2017

NCOs decreased $14 million, or 9%, in 2018. Given the low level of commercial NCOs, we expect some continued volatility

on a period-to-period comparison basis.

Market Risk

Market risk refers to potential losses arising from changes in interest rates, foreign exchange rates, equity prices and commodity

prices, including the correlation among these factors and their volatility. When the value of an instrument is tied to such external
factors, the holder faces market risk. We are primarily exposed to interest rate risk as a result of offering a wide array of financial
products to our customers and secondarily to price risk from trading securities, securities owned by our broker-dealer subsidiaries,
foreign exchange positions, equity investments, and investments in securities backed by mortgage loans.

Interest Rate Risk

We actively manage interest rate risk, as changes in market interest rates may have a significant impact on reported earnings.

Changes in market interest rates may result in changes in the fair market value of our financial instruments, cash flows, and net
interest income. We seek to achieve consistent growth in net interest income and capital while managing volatility arising from shifts
in market interest rates. The ALCO oversees market risk management, as well as the establishment of risk measures, limits, and
policy guidelines for managing the amount of interest rate risk and its effect on net interest income and capital. According to these
policies, responsibility for measuring and the management of interest rate risk resides in the treasury group.

Interest rate risk on our balance sheet consists of reprice, option, and basis risks. Reprice risk results from differences in the

maturity, or repricing, of asset and liability portfolios. Option risk arises from embedded options present in the investment portfolio
and in many financial instruments such as loan prepayment options, deposit early withdrawal options, and interest rate options. These
options allow customers opportunities to benefit when market interest rates change, which typically results in higher costs or lower
revenue for us. Basis risk refers to the potential for changes in the underlying relationship between market rates or indices, which
subsequently result in a narrowing of profit spread on an earning asset or liability. Basis risk is also present in administered rate
liabilities, such as interest-bearing checking accounts, savings accounts, and money market accounts where historical pricing
relationships to market rates may change due to the level or directional change in market interest rates. The interest rate risk position
is measured and monitored using risk management tools, including earnings simulation modeling and EVE sensitivity analysis, which
capture both short-term and long-term interest rate risk exposures. Combining the results from these separate risk measurement
processes allows a reasonably comprehensive view of our short-term and long-term interest rate risks.

Interest rate risk measurement is calculated and reported to the ALCO monthly and ROC at least quarterly. The reported
information includes period-end results and identifies any policy limits exceeded, along with an assessment of the policy limit breach
and the action plan and timeline for resolution, mitigation, or assumption of the risk.

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).

NII at risk uses net interest income simulation analysis which involves forecasting net interest earnings under a variety of
scenarios including changes in the level of interest rates, the shape of the yield curve, and spreads between market interest rates. The
sensitivity of net interest income to changes in interest rates is measured using numerous interest rate scenarios including shocks,
gradual ramps, curve flattening, curve steepening as well as forecasts of likely interest rates scenarios. Modeling the sensitivity of net
interest earnings to changes in market interest rates is highly dependent on numerous assumptions incorporated into the modeling
process. To the extent that actual performance is different than what was assumed, actual net interest earnings sensitivity may be
different than projected. The assumptions used in the models are our best estimates based on studies conducted by the treasury group.
The treasury group uses a data warehouse to study interest rate risk at a transactional level and uses various ad-hoc reports to
continuously refine assumptions. Assumptions and methodologies regarding administered rate liabilities (e.g., savings accounts,
money market accounts and interest-bearing checking accounts), balance trends, and repricing relationships reflect our best estimate of
expected behavior and these assumptions are reviewed regularly.

We also have longer-term interest rate risk exposure, which may not be appropriately measured by earnings sensitivity analysis.

The ALCO uses EVE to study the impact of long-term cash flows on earnings and on capital. EVE involves discounting present
values of all cash flows of on and off-balance sheet items under different interest rate scenarios. The discounted present value of all
cash flows represents our EVE. The analysis requires modifying the expected cash flows in each interest rate scenario, which will
impact the discounted present value. The amount of base-case measurement and its sensitivity to shifts in the yield curve allow us to
measure longer-term repricing and option risk in the balance sheet.

Table 16 - Net Interest Income at Risk

Basis point change scenario
Board policy limits
December 31, 2018
December 31, 2017

Net Interest Income at Risk (%)

-100
-4.0%
-2.9%
-2.6%

+100
-2.0%
2.7%
2.5%

+200
-4.0%
5.8%
4.8%

The NII at Risk results included in the table above reflect the analysis used monthly by management. It models gradual -100,

+100 and +200 basis point parallel shifts in market interest rates, implied by the forward yield curve over the next twelve months. The

down 100 basis point scenario, included in Table 16, was added as rates have risen sufficiently, such that yields will not reach zero
percent, producing meaningful interest rate risk metrics. This replaces the down 25 basis point scenario reported in prior years.

Our NII at Risk is within our Board of Directors’ policy limits for the -100, +100 and +200 basis point scenarios. The NII at

Risk shows that our balance sheet is asset sensitive at both December 31, 2018 and December 31, 2017.

As of December 31, 2018, we had $4.9 billion of notional value in receive-fixed fair value swaps, which we use for asset and

liability management purposes.

Table 17 - Economic Value of Equity at Risk

Basis point change scenario
Board policy limits
December 31, 2018
December 31, 2017

Economic Value of Equity at Risk (%)

-100
-6.0%
-5.8%
-5.4%

+100
-6.0%
2.3%
1.9%

+200
-12.0%
3.1%
1.9%

The EVE results included in the table above reflect the analysis used monthly by management. It models immediate -100, +100

and +200 basis point parallel shifts in market interest rates. The down 100 basis point scenario, included in Table 17, was added as
rates have risen sufficiently, such that yields will not reach zero percent, producing meaningful interest rate risk metrics. This replaces
the down 25 basis point scenario reported in prior years.

We are within our Board of Directors’ policy limits for the -100, +100 and +200 basis point scenarios. The EVE depicts a

moderate asset sensitive balance sheet profile.

MSRs

(This section should be read in conjunction with Note 5 of Notes to the Consolidated Financial Statements.)

At December 31, 2018, we had a total of $221 million of capitalized MSRs representing the right to service $21 billion in
mortgage loans. Of this $221 million, $211 million was recorded using the amortization method and $10 million was recorded using
the fair value 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 usually increase when
mortgage interest rates decline and decrease when mortgage interest rates rise. MSRs recorded using the amortization method
generally relate to loans originated with historically low interest rates, which may result in a lower probability of prepayments or
impairment. We also employ hedging strategies to reduce the risk of MSR fair value changes or impairment. However, volatile
changes in interest rates can diminish the effectiveness of these economic hedges. We report changes in the MSR value net of hedge-
related trading activity in the mortgage banking income category of noninterest income. Decreases in fair value of the MSR, below
amortized costs, would be recognized as a decrease in mortgage banking income. Any increase in the fair value, to the extent of prior
impairment, would be recognized as an increase in mortgage banking income.

MSR assets are included in servicing rights and other intangible assets in the Consolidated Financial Statements.

Price Risk

Price risk represents the risk of loss arising from adverse movements in the prices of financial instruments that are carried at fair

value and are subject to fair value accounting. We have price risk from trading securities, securities owned by our broker-dealer
subsidiaries, foreign exchange positions 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

Liquidity risk is the possibility of us being unable to meet current and future financial obligations in a timely manner. Liquidity

is managed to ensure stable, reliable, and cost-effective sources of funds to satisfy demand for credit, deposit withdrawals and
investment opportunities. 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 rely on a large, stable core deposit base and a diversified
base of wholesale funding sources to manage liquidity risk. The ALCO is appointed by the ROC to oversee liquidity risk management
and the establishment of liquidity risk policies and limits. The treasury department is responsible for identifying, measuring, and
monitoring our liquidity profile. The position is evaluated daily, weekly, and monthly by analyzing the composition of all funding
sources, reviewing projected liquidity commitments by future months, and identifying sources and uses of funds. The overall
management of our liquidity position is also integrated into retail and commercial pricing policies to ensure a stable core deposit base.
Liquidity risk is reviewed and managed continuously for the Bank and the parent company, as well as its subsidiaries. In addition,
liquidity working groups meet regularly to identify and monitor liquidity positions, provide policy guidance, review funding
strategies, and oversee the adherence to, and maintenance of, the contingency funding plans.

Our primary source of liquidity is our core deposit base. Core deposits comprised approximately 96% of total deposits at
December 31, 2018. We also have available unused wholesale sources of liquidity, including advances from the FHLB of Cincinnati,
issuance through dealers in the capital markets, and access to certificates of deposit issued through brokers. Liquidity is further
provided by unencumbered, or unpledged, investment securities that totaled $17.5 billion as of December 31, 2018. The treasury
department also prepares a contingency funding plan that details the potential erosion of funds in the event of a systemic financial
market crisis or institutional-specific stress scenario. An example of an institution specific event would be a downgrade in our public
credit rating by a rating agency due to factors such as deterioration in asset quality, a large charge to earnings, a decline in profitability
or other financial measures, or a significant merger or acquisition. Examples of systemic events unrelated to us that could have an
effect on our access to liquidity would be terrorism or war, natural disasters, political events, 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 liquidity contingency plan therefore outlines the process for
addressing a liquidity crisis. The plan 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.

Investment securities portfolio

(This section should be read in conjunction with Note 4 of the Notes to Consolidated Financial Statements.)

Our investment securities portfolio is evaluated under established asset/liability management objectives. Changing market

conditions could affect the profitability of the portfolio, as well as the level of interest rate risk exposure.

The composition and maturity of the portfolio is presented on the following two tables:

Table 18 - Investment Securities and Other Securities Portfolio Summary
(dollar amounts in millions)
Available-for-sale securities, at fair value:

At December 31,

2018

2017

2016

U.S. Treasury, Federal agency, and other agency securities
Municipal securities
Other

Total available-for-sale securities

Held-to-maturity securities, at cost:

Federal agency and other agency securities
Municipal securities

Total held-to-maturity securities

Other securities:

Other securities, at cost:

Non-marketable equity securities (1)

Other securities, at fair value:

Mutual Funds
Marketable equity securities

Total other securities
Duration in years (2)

(1)
(2)

Consists of FHLB and FRB restricted stock holding carried at par.
The average duration assumes a market driven prepayment rate on securities subject to prepayment.

9,968
3,440
372
13,780

8,560
5
8,565

10,413
3,878
578
14,869

9,086
5
9,091

543

581

20
2
565
4.3

18
1
600
4.3

10,752
3,250
997
14,999

7,801
6
7,807

548

15
1
564
4.6

Table 19 - Investment Securities Portfolio Composition and Maturity
At December 31, 2018

1 year or less

After 1 year through
5 years

After 5 years
through 10 years

After 10 years

Total

Amount Yield (1) Amount Yield (1) Amount Yield (1) Amount Yield (1) Amount Yield (1)

2.59% $ —

—% $ —

—% $

2.59%

—

178

—

4.06

2.85

4.67

—

2.63

—

955

—

4.04

1.89

2.65

2.04

4.14

3.70

3.66

2.68

—

123

193

1,577

—

3.05

—

1.78

2.52

2.66

3.69

4.63

4.25

—

6,937

1,254

1,549

—

9,740

730

284

—

2.49

3.42

2.44

—

2.60

3.67

3.32

—

6,999

1,255

1,583

126

9,968

3,440

315

2.50

3.42

2.43

2.53

2.60

3.86

3.42

3.77

2.68

185

4.60% $ 1,039

4.05% $ 1,802

3.59% $ 10,754

2.69% $ 13,780

2.94%

(dollar amounts in millions)
Available-for-sale securities, at fair value:

U.S. Treasury
Federal agencies:

Residential CMO
Residential MBS
Commercial MBS

Other agencies

Total U.S. Treasury, Federal agencies and
other agencies

Municipal securities
Asset-backed securities
Corporate debt
Other securities/Sovereign debt
Total available-for-sale securities

Held-to-maturity securities, at cost:

Federal agencies:

Residential CMO
Residential MBS
Commercial MBS

Other agencies
Total Federal agencies and other agencies
Municipal securities

$ —

—% $ —

—% $

—

2.01

—

128

199

362

—

3.21% $ 2,089

2.55% $ 2,124

2.56%

—

2.66

2.49

2.62

—

1,851

4,107

140

8,187

3.04

2.52

2.53

2.64

2.63

1,851

4,235

350

8,560

3.04

2.52

2.49

2.64

2.63

Total held-to-maturity securities

$ —

—% $

2.01% $

362

2.62% $ 8,192

2.64% $ 8,565

2.64%

(1) Weighted average yields were calculated using amortized cost on a fully-taxable equivalent basis, assuming a 21% tax rate where applicable.

Bank Liquidity and Sources of Funding

Our primary sources of funding for the Bank are retail and commercial core deposits. At December 31, 2018, these core

deposits funded 74% of total assets (108% of total loans). Other sources of liquidity include non-core deposits, FHLB advances,
wholesale debt instruments, and securitizations. Demand deposit overdrafts have been reclassified as loan balances and were $23
million and $22 million at December 31, 2018 and December 31, 2017, respectively.

The following tables reflect contractual maturities of other domestic time deposits of $250,000 or more and brokered deposits

and negotiable CDs, as well as, other domestic time deposits of $100,000 or more and brokered deposits and negotiable CDs at
December 31, 2018.

Table 20 - Maturity Schedule of time deposits, brokered deposits, and negotiable CDs

(dollar amounts in millions)
Other domestic time deposits of $250,000 or more and
brokered deposits and negotiable CDs

Other domestic time deposits of $100,000 or more and
brokered deposits and negotiable CDs

3 Months
or Less

3 Months
to 6 Months

6 Months
to 12 Months

12 Months
or More

Total

At December 31, 2018

3,633

3,819

130

221

1,193

— $

3,853

619

5,852

The following table reflects deposit composition detail for each of the last three years:

Table 21 - Deposit Composition

(dollar amounts in millions)
By Type:

Demand deposits—noninterest-bearing
Demand deposits—interest-bearing
Money market deposits
Savings and other domestic deposits
Core certificates of deposit

Total core deposits:

Other domestic deposits of $250,000 or more
Brokered deposits and negotiable CDs

Total deposits
Total core deposits:

Commercial
Consumer
Total core deposits

2018 (1)

At December 31,

2017

2016

21,783
20,042
22,721
10,451
5,924
80,921
337
3,516
84,774

37,268
43,653
80,921

26% $
24
27
12
7
96
—
4

100% $

46% $
54
100% $

21,546
18,001
20,690
11,270
1,934
73,441
239
3,361
77,041

34,273
39,168
73,441

28% $
23
27
15
3
96
—
4

100% $

47% $
53
100% $

22,836
15,676
18,407
11,975
2,535
71,429
395
3,784
75,608

31,887
39,542
71,429

30%
21
24
16
3
94
1
5
100%

45%
55
100%

(1) December 31, 2018 includes $210 million of noninterest-bearing and $662 million of interesting bearing deposits classified as held-for-sale.

The Bank maintains borrowing capacity at the FHLB and the Federal Reserve Bank Discount Window. The Bank does not
consider borrowing capacity from the Federal Reserve Bank Discount Window as a primary source of liquidity. Total loans pledged to
the Federal Reserve Discount Window and the FHLB are $46.5 billion and $31.7 billion at December 31, 2018 and December 31,
2017, respectively.

To the extent we are unable to obtain sufficient liquidity through core deposits, we may meet our liquidity needs through sources
of wholesale funding, asset securitization or sale. Sources of wholesale funding include other domestic deposits of $250,000 or more,
brokered deposits and negotiable CDs, short-term borrowings, and long-term debt. At December 31, 2018, total wholesale funding
was $14.5 billion, a decrease from $17.9 billion at December 31, 2017. The decrease from prior year-end primarily relates to a
decrease in short-term borrowings.

Liquidity Coverage Ratio

At December 31, 2018, we believe the Bank had sufficient liquidity to be in compliance with the LCR requirements and to meet

its cash flow obligations for the foreseeable future.

Table 22 - Maturity Schedule of Commercial Loans

(dollar amounts in millions)

Commercial and industrial
Commercial real estate—construction
Commercial real estate—commercial

Total

Variable-interest rates
Fixed-interest rates

Total
Percent of total

At December 31, 2018

One Year
or Less

9,425
387
1,119
10,931
8,994
1,937
10,931

$
$

One to
Five Years
17,554
747
3,347
21,648
18,080
3,568
21,648

$
$

After
Five Years
3,626
51
1,191
4,868
3,066
1,802
4,868

$
$

Total
30,605
1,185
5,657
37,447
30,140
7,307
37,447

$
$

29%

58%

13%

100%

Percent
of total

82%
3
15
100%
80%
20
100%

At December 31, 2018, the carrying value of investment securities pledged to secure public and trust deposits, trading account
liabilities, U.S. Treasury demand notes, and security repurchase agreements totaled $4.5 billion. There were no securities of a single
issuer, which are not governmental or government-sponsored, that exceeded 10% of shareholders’ equity at December 31, 2018.

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 December 31, 2018 and December 31, 2017, the parent company had $2.4 billion and $1.6 billion, respectively, in cash and

cash equivalents.

On January 16, 2019, the Board of Directors declared a quarterly common stock cash dividend of $0.14 per common share. The

dividend is payable on April 1, 2019, to shareholders of record on March 18, 2019. Based on the current quarterly dividend of $0.14
per common share, cash demands required for common stock dividends are estimated to be approximately $147 million per quarter.
On January 16, 2019, the Board of Directors declared a quarterly Series B, Series C, Series D, and Series E Preferred Stock dividend
payable on April 15, 2019 to shareholders of record on April 1, 2019. Cash demands required for Series B Preferred Stock are
expected to be less than $1 million per quarter. Cash demands required for Series C, Series D and Series E are expected to be
approximately $2 million, $9 million and $7 million per quarter, respectively.

During 2018, the Bank paid preferred dividends of $45 million and common stock dividends of $1.7 billion to the holding

company. To meet any additional liquidity needs, the parent company may issue debt or equity securities from time to time.

Off-Balance Sheet Arrangements

In the normal course of business, we enter into various off-balance sheet arrangements. These arrangements include

commitments to extend credit, interest rate swaps, financial guarantees contained in standby letters-of-credit issued by the Bank, and
commitments by the Bank to sell mortgage loans.

COMMITMENTS TO EXTEND CREDIT

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. See
Note 20 for more information.

INTEREST RATE SWAPS

Balance sheet hedging activity is arranged to receive hedge accounting treatment and is classified as either fair value or cash
flow hedges. Fair value hedges are purchased to convert deposits and long-term debt from fixed-rate obligations to floating rate.
Cash flow hedges are also used to convert floating rate loans made to customers into fixed rate loans. See Note 18 for more
information.

STANDBY LETTERS-OF-CREDIT

Standby letters-of-credit are conditional commitments issued to guarantee the performance of a customer to a third-party. These

guarantees are primarily issued to support public and private borrowing arrangements, including commercial paper, bond financing,
and similar transactions. Most of these arrangements mature within two years and are expected to expire without being drawn upon.
Standby letters-of-credit are included in the determination of the amount of risk-based capital that the parent company and the Bank
are required to hold. Through our credit process, we monitor the credit risks of outstanding standby letters-of-credit. When it is
probable that a standby letter-of-credit will be drawn and not repaid in full, a loss is recognized in the provision for credit losses. See
Note 20 for more information.

COMMITMENTS TO SELL LOANS

Activity related to our mortgage origination activity supports the hedging of the mortgage pricing commitments to customers

and the secondary sale to third parties. In addition, we have commitments to sell residential real estate loans. These contracts mature
in less than one year. See Note 20 for more information.

We believe that off-balance sheet arrangements are properly considered in our liquidity risk management process.

Table 23 - Contractual Obligations (1)
(dollar amounts in millions)

Less than 1
Year

1 to 3
Years

3 to 5
Years

More than
5 Years

Total

At December 31, 2018

Deposits without a stated maturity

73,993

— $

Certificates of deposit and other time deposits

Short-term borrowings

Long-term debt

Operating lease obligations

Purchase commitments

(1) Amounts do not include associated interest payments.

Operational Risk

3,524

2,017

593

4,249

—

4,211

2,887

—

2,973

121

—

1,004

73,993

10,781

2,017

8,781

311

207

Operational risk is the risk of loss due to human error; 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, and security risks. We continuously strive to strengthen our system of internal controls to ensure compliance with
laws, rules, and regulations, and to improve the oversight of our operational risk. We actively monitor cyberattacks such as attempts
related to online deception and loss of sensitive customer data. We evaluate internal systems, processes and controls to mitigate loss
from cyber-attacks and, to date, have not experienced any material losses.

Our objective for managing cyber security risk is to avoid or minimize the impacts of external threat events or other efforts to

penetrate our systems. We work to achieve this objective by hardening networks and systems against attack, and by diligently
managing visibility and monitoring controls within our data and communications environment to recognize events and respond before
the attacker has the opportunity to plan and execute on its own goals. To this end we employ a set of defense in-depth strategies,
which include efforts to make us less attractive as a target and less vulnerable to threats, while investing in threat analytic capabilities
for rapid detection and response. Potential concerns related to cyber security may be escalated to our board-level Technology
Committee, as appropriate. As a complement to the overall cyber security risk management, we use a number of internal training
methods, both formally through mandatory courses and informally through written communications and other updates. Internal
policies and procedures have been implemented to encourage the reporting of potential phishing attacks or other security risks. We
also use third-party services to test the effectiveness of our cyber security risk management framework, and any such third parties are
required to comply with our policies regarding information security and confidentiality.

To mitigate operational risks, we have an Operational Risk Committee, a Legal, Regulatory, and Compliance Committee, and a

Third Party Risk Management Committee. The responsibilities of these committees, among other duties, include establishing and
maintaining management information systems to monitor material risks and to identify potential concerns, risks, or trends that may
have a significant impact and ensuring that recommendations are developed to address the identified issues. In addition, we have a
Model Risk Oversight Committee that is responsible for policies and procedures describing how model risk is evaluated and managed
and the application of the governance process to implement these practices throughout the enterprise. These committees report any
significant findings and recommendations to the Risk Management Committee. Potential concerns may be escalated to our ROC of
the Board, as appropriate. Significant findings or issues are escalated by the Third Party Risk Management Committee to the
Technology Committee of the Board, as appropriate.

The goal of this framework is to implement effective operational risk techniques and strategies; minimize operational, fraud, and

legal losses; minimize the impact of inadequately designed models and enhance our overall performance.

Compliance Risk

Financial institutions are subject to many laws, rules, and regulations at both the federal and state levels. These broad-based

laws, rules, and regulations include, but are not limited to, expectations relating to anti-money laundering, lending limits, client
privacy, fair lending, prohibitions against unfair, deceptive or abusive acts or practices, protections for military members as they enter
active duty, and community reinvestment. The volume and complexity of recent regulatory changes have increased our overall
compliance risk. As such, we utilize various resources to help ensure expectations are met, including a team of compliance experts
dedicated to ensuring our conformance with all applicable laws, rules, and regulations. Our colleagues receive training for several
broad-based laws and regulations including, but not limited to, anti-money laundering and customer privacy. Additionally, colleagues
engaged in lending activities receive training for laws and regulations related to flood disaster protection, equal credit opportunity, fair
lending, and/or other courses related to the extension of credit. We set a high standard of expectation for adherence to compliance
management and seek to continuously enhance our performance.

Capital

(This section should be read in conjunction with the Regulatory Matters section included in Part 1, Item 1 and Note 21 of the Notes to
Consolidated Financial Statements.)

Both regulatory capital and shareholders’ equity are managed at the Bank and on a consolidated basis. We have an active
program for managing capital and maintain a comprehensive process for assessing the Company’s overall capital adequacy. We
believe our current levels of both regulatory capital and shareholders’ equity are adequate.

Regulatory Capital

We are subject to the Basel III capital requirements including the standardized approach for calculating risk-weighted assets in

accordance with subpart D of the final capital rule. The following table presents risk-weighted assets and other financial data
necessary to calculate certain financial ratios, including CET1, which we use to measure capital adequacy.

Table 24 - Capital Under Current Regulatory Standards (Basel III)

(dollar amounts in millions)
CET 1 risk-based capital ratio:
Total shareholders’ equity
Regulatory capital adjustments:

Shareholders’ preferred equity and related surplus
Accumulated other comprehensive loss (income) offset
Goodwill and other intangibles, net of taxes
Deferred tax assets that arise from tax loss and credit carryforwards

CET 1 capital
Additional tier 1 capital

Shareholders’ preferred equity
Other
Tier 1 capital

LTD and other tier 2 qualifying instruments
Qualifying allowance for loan and lease losses

Total risk-based capital

Risk-weighted assets (RWA)
CET 1 risk-based capital ratio
Other regulatory capital data:

Tier 1 risk-based capital ratio
Total risk-based capital ratio
Tier 1 leverage ratio

At December 31,

2018

2017

11,102

10,814

(1,207)
609
(2,200)
(33)
8,271

1,207
—
9,478
776
868
11,122

85,687

(1,076)
528
(2,200)
(25)
8,041

1,076
(7)
9,110
869
778
10,757

80,340

9.65%

10.01%

11.06
12.98
9.10

11.34
13.39
9.09

Table 25 - Capital Adequacy—Non-Regulatory (Non-GAAP)
(dollar amounts in millions)

Consolidated capital calculations:

Common shareholders’ equity
Preferred shareholders’ equity

Total shareholders’ equity

Goodwill
Other intangible assets (1)

Total tangible equity

Preferred shareholders’ equity

Total tangible common equity

Total assets

Goodwill
Other intangible assets (1)

Total tangible assets

Tangible equity / tangible asset ratio

Tangible common equity / tangible asset ratio

Tangible common equity / RWA ratio

(1) Other intangible assets are net of deferred tax liability.

At December 31,

2018

2017

9,899
1,203
11,102
(1,989)
(222)
8,891
(1,203)
7,688

108,781
(1,989)
(222)
106,570

9,743
1,071
10,814
(1,993)
(273)
8,548
(1,071)
7,477

104,185
(1,993)
(273)
101,919

8.34%

7.21

8.97

8.39%

7.34

9.31

The following table presents certain regulatory capital data at both the consolidated and Bank levels for the past two years:

Table 26 - Regulatory Capital Data

(dollar amounts in millions)

Total risk-weighted assets

CET 1 risk-based capital

Tier 1 risk-based capital

Tier 2 risk-based capital

Total risk-based capital

CET 1 risk-based capital ratio

Tier 1 risk-based capital ratio

Total risk-based capital ratio

Tier 1 leverage ratio

Consolidated
Bank
Consolidated
Bank
Consolidated
Bank
Consolidated
Bank
Consolidated
Bank
Consolidated
Bank
Consolidated
Bank
Consolidated
Bank
Consolidated
Bank

At December 31,

Basel III

2018
85,687
85,717
8,271
8,732
9,478
9,611
1,644
1,893
11,122
11,504

9.65%

10.19
11.06
11.21
12.98
13.42
9.10
9.23

2017
80,340
80,383
8,041
8,856
9,110
9,727
1,647
1,790
10,757
11,517
10.01%
11.02
11.34
12.10
13.39
14.33
9.09
9.70

At December 31, 2018, we maintained Basel III capital ratios in excess of the well-capitalized standards established by the

Federal Reserve.

The Company repurchased $939 million of common stock during 2018 at an average cost of $15.23 per share. Included in the
share repurchase activity, the Company completed the $400 million ASR which effectively offset the impact of the $363 million Series
A preferred equity conversion in the 2018 first quarter.

Shareholders’ Equity

We generate shareholders’ equity primarily through the retention of earnings, net of dividends and share repurchases. Other

potential sources of shareholders’ equity include issuances of common and preferred stock. Our objective is to maintain capital at an
amount commensurate with our risk profile and risk tolerance objectives, to meet both regulatory and market expectations, and to
provide the flexibility needed for future growth and business opportunities.

Shareholders’ equity totaled $11.1 billion at December 31, 2018, an increase of $0.3 billion when compared with December 31,

2017.

On June 28, 2018, Huntington was notified by the Federal Reserve that it had no objection to Huntington’s proposed capital

actions included in Huntington’s capital plan submitted in the 2018 CCAR. These actions included a 27% increase in quarterly
dividend per common share to $0.14, starting in the third quarter of 2018, the repurchase of up to $1.068 billion of common stock over
the next four quarters (July 1, 2018 through June 30, 2019), and maintaining dividends on the outstanding classes of preferred stock
and trust preferred securities. Any capital actions, including those contemplated in the above announced actions, are subject to
consideration and evaluation by Huntington’s Board of Directors.

On July 17, 2018, the Board authorized the repurchase of up to $1.068 billion of common shares over the four quarters through

the 2019 second quarter. During 2018, Huntington repurchased a total of 61.6 million shares at a weighted average share price of
$15.23. Purchases of common shares under the authorization may include open market purchases, privately negotiated transactions,
and accelerated repurchase programs.

On July 27, 2018, Huntington entered into an accelerated share repurchase agreement for the repurchase of approximately $400

million of its outstanding common shares. The accelerated share repurchase program enabled Huntington to purchase 20.9 million
shares immediately. The accelerated share repurchase program ended in September 2018, resulting in an additional 4.4 million shares
being delivered to Huntington.

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.

Share Repurchases

From time to time the board of directors authorizes the Company to repurchase shares of our common stock. Although we
announce when the board of directors authorizes share repurchases, we typically do not give any public notice before we repurchase
our shares. Future stock repurchases may be private or open-market repurchases, including block transactions, accelerated or delayed
block transactions, forward transactions, and similar transactions. Various factors determine the amount and timing of our share
repurchases, including our capital requirements, the number of shares we expect to issue for employee benefit plans and acquisitions,
market conditions (including the trading price of our stock), and regulatory and legal considerations, including the Federal Reserve’s
response to our annual capital plan. There were 61.6 million common shares repurchased during 2018.

BUSINESS SEGMENT DISCUSSION

Overview

Our business segments are based on our internally-aligned segment leadership structure, which is how we monitor results and

assess performance. We have four major business segments: Consumer and Business Banking, Commercial Banking, Vehicle
Finance, and Regional Banking and The Huntington Private Client Group (RBHPCG). The Treasury / Other function includes
technology and operations, other unallocated assets, liabilities, revenue, and expense.

Business segment results are determined based upon our management practices, which assigns balance sheet and income
statement items to each of the business segments. The process is designed around our organizational and management structure and,
accordingly, the results derived are not necessarily comparable with similar information published by other financial institutions.

Revenue Sharing

Revenue is recorded in the business segment responsible for the related product or service. Fee sharing is recorded to allocate
portions of such revenue to other business segments involved in selling to, or providing service to customers. Results of operations
for the business segments reflect these fee sharing allocations.

Expense Allocation

The management process that develops the business segment reporting utilizes various estimates and allocation methodologies
to measure the performance of the business segments. Expenses are allocated to business segments using a two-phase approach. The
first phase consists of measuring and assigning unit costs (activity-based costs) to activities related to product origination and
servicing. These activity-based costs are then extended, based on volumes, with the resulting amount allocated to business segments
that own the related products. The second phase consists of the allocation of overhead costs to all four business segments from
Treasury / Other. We utilize a full-allocation methodology, where all Treasury / Other expenses, except reported Significant Items, and
certain other residual expenses, are allocated to the four business segments.

Funds Transfer Pricing (FTP)

We use an active and centralized 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 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 past three years is presented in the following table:

Table 27 - Net Income (Loss) by Business Segment

(dollar amounts in millions)
Consumer and Business Banking
Commercial Banking
Vehicle Finance
RBHPCG
Treasury / Other
Net income

Treasury / Other

Year Ended December 31,

2018

2017

2016

463
553
165
106
106
1,393

344
439
147
76
180
1,186

303
316
126
68
(101)
712

The Treasury / Other function includes revenue and expense related to assets, liabilities, and equity not directly assigned or
allocated to one of the four business segments. Assets include investment securities and bank owned life insurance. Net interest
income includes the impact of administering our investment securities portfolios, the net impact of derivatives used to hedge interest
rate sensitivity as well as the financial impact associated with our FTP methodology, as described above. Noninterest income includes
miscellaneous fee income not allocated to other business segments, such as bank owned life insurance income and securities and
trading asset gains or losses. Noninterest expense includes certain corporate administrative, and other miscellaneous expenses not
allocated to other business segments. The provision for income taxes for the business segments is calculated at a statutory 21% tax
rate and a 35% tax rate for periods prior to January 1, 2018, although our overall effective tax rate is lower. As a result, Treasury /
Other reflects a credit for income taxes representing the difference between the lower effective tax rate and the statutory tax rate used
at the time to allocate income taxes to the business segments.

Consumer and Business Banking

Table 28 - Key Performance Indicators for Consumer and Business Banking

(dollar amounts in millions unless otherwise noted)
Net interest income
Provision for credit losses
Noninterest income
Noninterest expense
Provision for income taxes
Net income
Number of employees (average full-time equivalent)

Total average assets
Total average loans/leases
Total average deposits
Net interest margin
NCOs
NCOs as a % of average loans and leases

2018 versus 2017

Year Ended December 31,

Change from 2017

2018

2017

Amount

Percent

2016

1,685
141
738
1,696
123
463

8,355
26,861
21,866
47,827

3.62%
108
0.50%

1,549
108
735
1,647
185
344

8,616
25,656
20,744
45,287

3.52%
104
0.50%

136
33
3
49
(62)
119

(261)
1,205
1,122
2,540
0.10%
4
—%

9 % $
31
—
3
(34)
35 % $

(3)%
5
5
6
3
4
—

1,224
68
649
1,339
163
303

7,466
21,317
17,861
36,652

3.42%
74
0.42%

Consumer and Business Banking, including Home Lending, reported net income of $463 million in 2018, an increase of $119

million, or 35%, compared with net income of $344 million in 2017. Segment net interest income increased $136 million, or 9%,
primarily due to an increase in total average loans and deposits. The provision for credit losses increased $33 million, or 31%, driven
by an increase in the allowance, primarily related to the other consumer portfolio. Noninterest expense increased $49 million, or 3%,
due to increased personnel costs and allocated expenses.

Home Lending, an operating unit of Consumer and Business Banking, reflects the result of the origination 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 a loss of $11 million in 2018, compared with net income of $12 million in the prior year. While
total revenues increased largely due to higher residential loan balances, this increase was offset by an increase in noninterest expenses
of $28 million, or 20%, as a result of higher origination volume and higher indirect expense allocations. Income from lower
origination spreads was offset by higher origination volume.

2017 versus 2016

Consumer and Business Banking reported net income of $344 million in 2017, compared with net income of $303 million in

2016. The $41 million increase included a $325 million, or 27%, increase in net interest income and an $86 million, or 13%, increase
noninterest income, partially offset by a $308 million, or 23%, increase in noninterest expense, a $40 million, or 59%, increase in
provision for credit losses, and a $22 million, or 13%, increase in provision for income taxes.

Home Lending reported net income of $12 million in 2017, a decrease of $12 million, compared to the year-ago period. While

total revenues increased $5 million, or 3%, this increase was offset by an increase in noninterest expenses of $18 million, or 15%.

Commercial Banking

Table 29 - Key Performance Indicators for Commercial Banking

Total average assets
Total average loans/leases
Total average deposits
Net interest margin
NCOs
NCOs as a % of average loans and leases

2018 versus 2017

Year Ended December 31,

Change from 2017

2018

2017

Amount

Percent

2016

938
38
313
513
147
553

1,266
33,178
26,301
22,216

3.26 %
(7)
(0.03)%

901
30
278
474
236
439

1,227
31,322
25,259
21,175

3.34%
1
—%

37
8
35
39
(89)
114

39
1,856
1,042
1,041
(0.08)%
(8)
(0.03)%

4% $
27
13
8
(38)
26% $

3%
6
4
5
(2)
(800)
(100)

717
79
245
397
170
316

1,075
26,894
21,278
17,349

3.11%
2
0.01%

Commercial Banking reported net income of $553 million in 2018, an increase of $114 million, or 26%, compared with net

income of $439 million in 2017. Segment net interest income increased $37 million, or 4%, primarily due to a 4% growth average
loans and leases and a 5% growth in average deposits. Net interest margin decreased eight basis points, primarily driven by a decline
in loan and lease spreads, partially offset by an improvement in deposit spreads. The provision for credit losses increased $8 million,
or 27%, primarily due to growth in the portfolio, partially offset by a reduction in NCOs. Noninterest income increased $35 million,
or 13%, largely driven by an increase in capital markets related revenues and loan commitment and other fees. Noninterest expense
increased $39 million, or 8%, primarily due to an increase in personnel expense and allocated overhead, partially offset by a decrease
in operating lease expense.

2017 versus 2016

Commercial Banking reported net income of $439 million in 2017, compared with net income of $316 million in 2016. The

$123 million increase included a $184 million, or 26%, increase in net interest income, a $33 million, or 13% increase in noninterest
income, partially offset by a $77 million, or 19%, increase in noninterest expense and a $66 million, or 39%, increase in provision for
income taxes.

Vehicle Finance

Table 30 - Key Performance Indicators for Vehicle Finance

Year Ended December 31,

Change from 2017

2018

2017

Amount

Percent

2016

403

424

(dollar amounts in millions unless otherwise noted)
Net interest income

Provision (reduction in allowance) for credit losses

Noninterest income

Noninterest expense

Provision for income taxes

Net income

Number of employees (average full-time equivalent)

Total average assets

Total average loans/leases

Total average deposits
Net interest margin

NCOs

NCOs as a % of average loans and leases

149

165

264

18,502

18,482

337

2.18%

149

147

253

16,966

16,936

334

2.51%

(21)

(8)

(4)

—

(35)

1,536

1,546

(0.33)%

(9)

0.23%

0.31%

(0.08)%

(5)% $

(13)

(29)

—

(44)

12 % $

4 %

(13)

(17)

(26)

344

118

126

211

14,369

14,089

288

2.40%

0.24%

2018 versus 2017

Vehicle Finance reported net income of $165 million in 2018, an increase of $18 million, or 12%, compared with net income of

$147 million in 2017. Results primarily reflect a lower provision for income taxes, as well as, a lower provision for credit losses
primarily resulting from a decrease in NCOs compared to the prior year. Segment net interest income decreased $21 million or 5%,
due to the 33 basis point reduction in the net interest margin, which reflects the continued run off of the higher yielding acquired
portfolio and, to a lesser degree, lower spreads on new loan production as a result of the rising rate environment during most of 2018.
These decreases were partially offset by a 9% increase in average loan balances. Noninterest income was down slightly primarily
reflecting lower servicing income due to the run off of securitized loans, while noninterest expense was unchanged.

2017 versus 2016

Vehicle Finance reported net income of $147 million in 2017, compared with net income of $126 million in 2016. The $21
million increase included an $80 million, or 23%, increase in net interest income, partially offset by a $31 million, or 26%, increase in
noninterest expense, a $16 million, or 34%, increase in the provision for credit losses and an $11 million, or 16%, increase in the
provision for income taxes.

Regional Banking and The Huntington Private Client Group

Table 31 - Key Performance Indicators for Regional Banking and The Huntington Private Client Group
Change from 2017

Year Ended December 31,

(dollar amounts in millions unless otherwise noted)
Net interest income
Provision (reduction in allowance) for credit losses
Noninterest income
Noninterest expense
Provision for income taxes
Net income
Number of employees (average full-time equivalent)
Total average assets
Total average loans/leases
Total average deposits
Net interest margin
NCOs
NCOs as a % of average loans and leases
Total assets under management (in billions)—eop
Total trust assets (in billions)—eop

eop—End of Period.

2018 versus 2017

2018

2017

Amount

Percent

2016

192
1
193
250
28
106
1,030
6,149
5,494
5,862
3.33%

— $
—%

15.3
105.1

172
—
188
243
41
76
1,023
5,543
4,857
6,028
2.92%
2
0.04%
18.3
110.1

20
1
5
7
(13)
30
7
606
637
(166)
0.41 %
(2)
(0.04)%
(3.0)
(5.0)

12% $
100
3
3
(32)
39% $
1%
11
13
(3)
14
(100)
(100)
(16)
(5)

153
(3)
177
229
36
68
977
4,615
4,120
5,342
2.90 %
(2)
(0.05)%
16.9
94.7

RBHPCG reported net income of $106 million in 2018, an increase of $30 million, or 39%, compared with a net income of $76

million in 2017. Net interest income increased $20 million, or 12%, due to an increase in average total loans combined with a 41 basis
point increase in net interest margin. The increase in average total loans was due to growth in commercial and portfolio mortgage
loans. Noninterest income increased $5 million, or 3%, primarily reflecting increased trust and investment management revenue as a
result of increased sales production and year over year market growth. Noninterest expense increased $7 million, or 3%, mainly as a
result of increased personnel expenses related to the hiring of new sales producers.

2017 versus 2016

RBHPCG reported net income of $76 million in 2017, compared with a net income of $68 million in 2016. The $8 million

increase included a $19 million, or 12%, increase in net interest income and an $11 million, or 6%, increase in noninterest income,
partially offset by a $14 million, or 6% increase in noninterest expense and a $5 million, or 14%, increase in provision for income
taxes.

RESULTS FOR THE FOURTH QUARTER

Earnings Discussion

In the 2018 fourth quarter, we reported net income of $334 million, a decrease of $98 million, or 23%, from the 2017 fourth

quarter. Diluted earnings per common share for the 2018 fourth quarter were $0.29, a decrease of $0.08 from the year-ago
quarter.

Table 32 - Significant Items Influencing Earnings Performance Comparison
(dollar amounts in millions, except per share data)

Three Months Ended:
December 31, 2018—Net income
Earnings per share, after-tax

December 31, 2017—Net income
Earnings per share, after-tax

Federal tax reform-related tax benefit
Tax impact

Federal tax reform-related tax benefit, after-tax

(1)

Based on average outstanding diluted common shares.

Net Interest Income / Average Balance Sheet

Amount

EPS (1)

Amount

334

432

—
123
123

EPS (1)

0.29

0.37

0.11

FTE net interest income for the 2018 fourth quarter increased $59 million, or 8%, from the 2017 fourth quarter. This
reflected the benefit from the $3.8 billion, or 4%, increase in average earning assets coupled with an 11 basis point increase in the
FTE net interest margin to 3.41%. Average earning asset yields increased 51 basis points year-over-year, driven by a 53 basis
point improvement in loan yields. Average interest-bearing liability costs increased 50 basis points, although interest-bearing
deposit costs only increased 47 basis points. The cost of short-term borrowings and long-term debt increased 134 basis points and
109 basis points, respectively. The benefit from noninterest-bearing funds increased 10 basis points versus the year-ago quarter.
Embedded within these yields and costs, FTE net interest income during the 2018 fourth quarter included $17 million, or
approximately seven basis points, of purchase accounting impact compared to $24 million, or approximately 10 basis points, in
the year-ago quarter. The 2018 fourth quarter included an approximately two basis point impact from higher commercial interest
recoveries. On a year-over-year basis, NIM was negatively impacted by two basis points as a result of the impact of federal tax
reform on the FTE adjustment.

Table 33 - Average Earning Assets - 2018 Fourth Quarter vs. 2017 Fourth Quarter

(dollar amounts in millions)
Loans/Leases

Commercial and industrial
Commercial real estate

Total commercial
Automobile
Home equity
Residential mortgage
RV and marine finance
Other consumer

Total consumer

Total loans/leases
Total securities
Loans held-for-sale and other earning assets
Total earning assets

Fourth Quarter

Change

2018

2017

Amount

Percent

29,557
6,944
36,501
12,423
9,817
10,574
3,216
1,291
37,321
73,822
22,656
1,274
97,752

27,445
7,196
34,641
11,963
10,027
8,809
2,405
1,095
34,299
68,940
24,309
688
93,937

2,112
(252)
1,860
460
(210)
1,765
811
196
3,022
4,882
(1,653)
586
3,815

8%
(4)
5
4
(2)
20
34
18
9
7
(7)
85
4%

Average earning assets for the 2018 fourth quarter increased $3.8 billion, or 4%, from the year-ago quarter, primarily
reflecting a $4.9 billion, or 7%, increase in average total loans and leases. Average C&I loans increased $2.1 billion, or 8%,
reflecting broad-based growth. Average residential mortgage loans increased $1.8 billion, or 20%, driven by an increase in

lending officers and expansion into the Chicago market. Average RV and marine finance loans increased $0.8 billion, or 34%,
reflecting the success of the geographic expansion over the past two years, while maintaining our commitment to super prime
originations. Average automobile loans increased $0.5 billion, or 4%, driven by origination volume consistent with current
market dynamics and our continued commitment to high quality borrowers while optimizing yield and production in the rising
rate environment over the past year. Average securities decreased $1.7 billion, or 7%, primarily due to runoff in the portfolio,
partially offset by continued growth in direct purchase municipal instruments in our commercial banking segment.

Table 34 - Average Interest-Bearing Liabilities - 2018 Fourth Quarter vs. 2017 Fourth Quarter

(dollar amounts in millions)
Deposits

Demand deposits: noninterest-bearing
Demand deposits: interest-bearing

Total demand deposits

Money market deposits
Savings and other domestic deposits
Core certificates of deposit

Total core deposits
Other domestic deposits of $250,000 or more
Brokered deposits and negotiable CDs

Total deposits
Short-term borrowings
Long-term debt
Total interest-bearing liabilities

Fourth Quarter

Change

2018

2017

Amount

Percent

20,384
19,860
40,244
22,595
10,534
5,705
79,078
346
3,507
82,931
1,006
8,871
72,424

21,745
18,175
39,920
20,731
11,348
1,947
73,946
400
3,391
77,737
2,837
9,232
68,061

(1,361)
1,685
324
1,864
(814)
3,758
5,132
(54)
116
5,194
(1,831)
(361)
4,363

(6)%
9
1
9
(7)
193
7
(14)
3
7
(65)
(4)
6 %

Average total deposits increased $5.2 billion, or 7%, while average total core deposits increased $5.1 billion, or 7%.

Average total interest-bearing liabilities for the 2018 fourth quarter increased $4.4 billion, or 6%, from the year ago quarter.
Average core CDs increased $3.8 billion, or 193%, reflecting consumer deposit growth initiatives primarily in the first three
quarters of 2018. Average money market deposits increased $1.9 billion, or 9%, primarily reflecting growth in commercial and
consumer balances. Savings and other domestic deposits decreased $0.8 billion, or 7%, primarily reflecting FirstMerit-related
balance attrition and continued consumer product mix shift. Average short-term borrowings decreased $1.8 billion, or 65%, as
continued growth in core deposits reduced reliance on wholesale funding.

Provision for Credit Losses

The provision for credit losses decreased to $60 million in the 2018 fourth quarter compared to $65 million in the 2017

fourth quarter.

Noninterest Income

Table 35 - Noninterest Income - 2018 Fourth Quarter vs. 2017 Fourth Quarter

(dollar amounts in millions)

Service charges on deposit accounts
Card and payment processing income
Trust and management investment services
Mortgage banking income
Capital markets fees
Insurance income
Bank owned life insurance income
Gain on sale of loans
Securities (losses) gains
Other income
Total noninterest income

Fourth Quarter

Change

2018

2017

Amount

Percent

94
58
42
23
29
21
16
16
(19)
49
329

91
53
41
33
23
21
18
17
(4)
47
340

3
5
1
(10)
6
—
(2)
(1)
(15)
2
(11)

3 %
9
2
(30)
26
—
(11)
(6)
(375)
4
(3)%

Noninterest income for the 2018 fourth quarter decreased $11 million, or 3%, from the year-ago quarter. Securities losses

were $19 million compared to $4 million in the year-ago quarter, reflecting the losses related to the $1.1 billion portfolio

repositioning completed in the 2018 fourth quarter. Mortgage banking income decreased $10 million, or 30%, primarily
reflecting lower spreads on origination volume. Capital markets fees increased $6 million, or 26%, primarily driven by $4 million
of fees from HSE, which was acquired October 1, 2018. Card and payment processing income increased $5 million, or 9%, due
to underlying customer growth and higher card usage.

Noninterest Expense

Table 36 - Noninterest Expense - 2018 Fourth Quarter vs. 2017 Fourth Quarter
Fourth Quarter

Change

(dollar amounts in millions)
Personnel costs
Outside data processing and other services
Net occupancy
Equipment
Deposit and other insurance expense
Professional services
Marketing
Amortization of intangibles
Other expense
Total noninterest expense
Number of employees (average full-time equivalent)

2018

2017

Amount

Percent

399
83
70
48
9
17
15
13
57
711

373
71
36
36
19
18
10
14
56
633

15,657

15,375

26
12
34
12
(10)
(1)
5
(1)
1
78

282

17
94
33
(53)
(6)
50
(7)
2
12%

Reported noninterest expense for the 2018 fourth quarter increased $78 million, or 12%, from the year-ago quarter. Net

occupancy costs increased $34 million, or 94%, primarily reflecting $28 million of branch and facility consolidation-related
expense in the 2018 fourth quarter. Personnel costs increased $26 million, or 7%, reflecting annual merit increases, higher benefit
costs, and $3 million of run-rate expense from HSE. Equipment increased $12 million, or 33%, primarily reflecting $7 million of
branch and facility consolidation-related expense in the 2018 fourth quarter. Outside data processing and other services expense
increased $12 million, or 17%, primarily driven by higher technology investment costs. Marketing increased $5 million, or 50%,
primarily reflecting timing of marketing campaigns. Deposit and other insurance expense decreased $10 million, or 53%, due to
the discontinuation of the FDIC surcharge in the 2018 fourth quarter.

Provision for Income Taxes

(This section should be read in conjunction with Note 1 and Note 16 of the Notes to Consolidated Financial Statements.)

The provision for income taxes in the 2018 fourth quarter was $57 million compared to a $20 million benefit in the 2017
fourth quarter. The effective tax rates for the 2018 fourth quarter and 2017 fourth quarter were 14.6% and (4.8%), respectively.
Included in the 2017 fourth quarter results is a $123 million tax benefit related to the TCJA enacted on December 22, 2017,
primarily attributed to the revaluation of net deferred tax liabilities at the lower statutory federal income tax rate. We completed
our provisional estimate related to tax reform during the 2018 fourth quarter. At December 31, 2018, we had a net federal
deferred tax liability of $105 million and a net state deferred tax asset of $41 million.

Credit Quality

NCOs

Net charge-offs increased $9 million to $50 million. The increase was primarily centered in the C&I portfolio, with no

segment or geographic concentration. Consumer charge-offs have remained consistent over the past year. NCOs represented an
annualized 0.27% of average loans and leases in the current quarter, up from 0.16% in the prior quarter and up from 0.24% in the
year-ago quarter.

NALs

Overall asset quality performance remained consistent with prior periods and our expectations. The consumer portfolio

metrics continue to reflect the results associated with our focus on high quality borrowers, with an expected modest seasonal
impact evident across the portfolios. The commercial portfolios have performed consistently, with some quarter-to-quarter
volatility as a result of the absolute low level of problem loans.

Nonaccrual loans and leases decreased $9 million, or 3%, from the year-ago quarter to $340 million, or 0.45% of total loans

and leases. The year-over-year decline was centered in the commercial real estate and residential mortgage portfolios, partially
offset by an increase in the commercial portfolio. OREO balances decreased $10 million, or 30%, from the year-ago quarter. The
decline in OREO assets reflected reductions in both commercial and residential properties. NPAs decreased to $387 million, or

0.52% of total loans and leases and OREO. On a linked quarter basis, NALs decreased $30 million, or 8%, while NPAs
decreased $16 million, or 4%.

ACL

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

The period-end ALLL as a percentage of total loans and leases increased to 1.03% compared to 0.99% a year ago, while the

ALLL as a percentage of period-end total NALs increased to 228% from 198% over the same period. The increase in the ALLL
is primarily the result of loan growth. We believe the level of the ALLL and ACL are appropriate given the low level of problem
loans and the current composition of the overall loan and lease portfolio.

Table 37 - Selected Quarterly Financial Information (1)

(dollar amounts in millions, share amounts in thousands)

December 31,

September 30,

June 30,

March 31,

2018

Three Months Ended

Interest income
Interest expense

Net interest income
Provision for credit losses
Net interest income after provision for credit losses
Total noninterest income
Total noninterest expense
Income before income taxes
Provision (benefit) for income taxes
Net income
Dividends on preferred shares
Net income applicable to common shares
Common shares outstanding
Average—basic
Average—diluted (2)
Ending
Book value per common share
Tangible book value per common share (3)

Per common share

Net income—basic
Net income—diluted
Return on average total assets
Return on average common shareholders’ equity
Return on average tangible common shareholders’ equity (4)
Efficiency ratio (5)
Effective tax rate
Margin analysis-as a % of average earning assets (6)

Interest income (6)
Interest expense
Net interest margin (6)

Revenue—FTE

Net interest income
FTE adjustment

Net interest income (6)
Noninterest income
Total revenue (6)

1,056
223
833
60
773
329
711
391
57
334
19
315

1,054,460
1,073,055
1,046,767
9.46
7.34

0.30
0.29
1.25%
12.9
17.3
58.7
14.6

4.34%
0.93
3.41%

833
8
841
329
1,170

1,007
205
802
53
749
342
651
440
62
378
18
360

1,084,536
1,103,740
1,061,529
9.17
7.06

0.33
0.33
1.42%
14.3
19.0
55.3
14.1

4.16%
0.84
3.32%

802
8
810
342
1,152

972
188
784
56
728
336
652
412
57
355
21
334

1,103,337
1,122,612
1,104,227
9.30
7.27

0.30
0.30
1.36%
13.2
17.6
56.6
13.8

4.07%
0.78
3.29%

784
7
791
336
1,127

914
144
770
66
704
314
633
385
59
326
12
314

1,083,836
1,124,778
1,101,796
9.17
7.12

0.29
0.28
1.27%
13.0
17.5
56.8
15.3

3.91%
0.61
3.30%

770
7
777
314
1,091

Table 38 - Selected Quarterly Capital Data (1)

Capital adequacy (Basel III)
Total risk-weighted assets
Tier 1 leverage ratio (period end)
CET 1 risk-based capital ratio
Tier 1 risk-based capital ratio (period end)
Total risk-based capital ratio (period end)
Tangible common equity / tangible asset ratio (7) (9)
Tangible equity / tangible asset ratio (8) (9)
Tangible common equity / risk-weighted assets ratio (9)

2018

December 31,
85,687
$

September 30,
83,580
$

June 30,

March 31,

82,951

81,365

9.10%
9.65
11.06
12.98
7.21
8.34
8.97

9.14%
9.89
11.33
13.36
7.25
8.41
8.97

9.65%
10.53
11.99
13.97
7.78
8.95
9.67

9.53%
10.45
11.94
13.92
7.70
8.88
9.65

(1)

Comparisons for presented periods are impacted by a number of factors. Refer to the Significant Items section for additional discussion regarding these
items.

(2) Weighted average diluted shares outstanding for the quarterly period ending March 31, 2018, includes the impact of the convertible preferred stock issued

in April of 2008.

(3) Other intangible assets are net of deferred tax liability.
(4) Net income applicable to common shares excluding expense for amortization of intangibles for the period divided by average tangible shareholders’ equity.

(5) Noninterest expense less amortization of intangibles and goodwill impairment divided by the sum of FTE net interest income and noninterest income

(6)
(7)

(8)

(9)

excluding securities gains (losses).
Presented on a FTE basis assuming a 21% tax rate.
Tangible common equity (total common equity less goodwill and other intangible assets) divided by tangible assets (total assets less goodwill and other
intangible assets). Other intangible assets are net of deferred tax.
Tangible equity (total equity less goodwill and other intangible assets) divided by tangible assets (total assets less goodwill and other intangible assets).
Other intangible assets are net of deferred tax.
Tangible equity, tangible common equity, and tangible assets are non-GAAP financial measures. Additionally, any ratios utilizing these financial measures
are also non-GAAP. These financial measures have been included as they are considered to be critical metrics with which to analyze and evaluate financial
condition and capital strength. Other companies may calculate these financial measures differently.

Table 39 - Selected Quarterly Financial Information (1)

(dollar amounts in millions, share amounts in thousands)

Interest income
Interest expense

Per common share

Net income—basic
Net income —diluted
Return on average total assets
Return on average common shareholders’ equity
Return on average tangible common shareholders’ equity (4)
Efficiency ratio (5)
Effective tax rate
Margin analysis-as a % of average earning assets (6)

Interest income (6)
Interest expense
Net interest margin (6)

Revenue—FTE

Net interest income
FTE adjustment

Net interest income (6)
Noninterest income

Total revenue (6)

Three Months Ended

December 31,
2017

September 30,
2017

June 30,
2017

March 31,
2017

894
124
770
65
705
340
633
412
(20)
432
19
413

1,077,397
1,130,117
1,072,027
9.09
6.97

0.38
0.37
1.67%
17.0
22.7
54.9
(4.8)

3.83%
0.53
3.30%

770
12
782
340

873
115
758
43
715
330
680
365
90
275
19
256

1,086,038
1,106,491
1,080,946
8.91
6.85

0.24
0.23
1.08%
10.5
14.1
60.5
24.7

3.78%
0.49
3.29%

758
13
771
330

846
101
745
25
720
325
694
351
79
272
19
253

1,088,934
1,108,527
1,090,016
8.79
6.74

0.23
0.23
1.09%
10.6
14.4
62.9
22.4

3.75%
0.44
3.31%

745
12
757
325

820
91
729
68
661
312
707
266
59
207
19
188

1,086,374
1,108,617
1,087,120
8.62
6.55

0.17
0.17
0.84%
8.2
11.3
65.7
22.2

3.70%
0.40
3.30%

729
13
742
312

1,122

1,101

1,082

1,054

Table 40 - Selected Quarterly Capital Data (1)

Capital adequacy (Basel III)
Total risk-weighted assets
Tier 1 leverage ratio
Tier 1 risk-based capital ratio
Total risk-based capital ratio
Tier 1 common risk-based capital ratio
Tangible common equity / tangible asset ratio (7)(9)
Tangible equity / tangible asset ratio (8)(9)
Tangible common equity / risk-weighted assets ratio (9)

2017

December 31,
80,340
$

September 30,
78,631
$

June 30,

March 31,

78,366

77,559

9.09%
10.01
11.34
13.39
7.34
8.39
9.31

8.96%
9.94
11.30
13.39
7.42
8.49
9.41

8.98%
9.88
11.24
13.33
7.41
8.49
9.37

8.76%
9.74
11.11
13.26
7.28
8.38
9.18

(1)

(2)

Comparisons for presented periods are impacted by a number of factors. Refer to the Significant Items section for additional discussion regarding these
items.
For all quarterly periods presented prior to December 31, 2017, the impact of the convertible preferred stock issued in April of 2008 was excluded from the
diluted share calculation because the result would have been higher than basic earnings per common share (anti-dilutive) for the periods.

(3) Other intangible assets are net of deferred tax.
(4) Net income applicable to common shares excluding expense for amortization of intangibles for the period divided by average tangible shareholders’ equity.

(5) Noninterest expense less amortization of intangibles and goodwill impairment divided by the sum of FTE net interest income and noninterest income

(6)
(7)

(8)

(9)

excluding securities gains (losses).
Presented on a FTE basis assuming a 35% tax rate.
Tangible common equity (total common equity less goodwill and other intangible assets) divided by tangible assets (total assets less goodwill and other
intangible assets). Other intangible assets are net of deferred tax.
Tangible equity (total equity less goodwill and other intangible assets) divided by tangible assets (total assets less goodwill and other intangible assets).
Other intangible assets are net of deferred tax.
Tangible equity, tangible common equity, and tangible assets are non-GAAP financial measures. Additionally, any ratios utilizing these financial measures
are also non-GAAP. These financial measures have been included as they are considered to be critical metrics with which to analyze and evaluate financial
condition and capital strength. Other companies may calculate these financial measures differently.

ADDITIONAL DISCLOSURES

Forward-Looking Statements

This report, including MD&A, contains certain forward-looking statements, including, but not limited to, certain plans,
expectations, goals, projections, and statements, which are not historical facts and are subject to numerous assumptions, risks, and
uncertainties. Statements that do not describe historical or current facts, including statements about beliefs and expectations, are
forward-looking statements. Forward-looking statements may be identified by words such as expect, anticipate, believe, intend,
estimate, plan, target, goal, or similar expressions, or future or conditional verbs such as will, may, might, should, would, could, or
similar variations. The forward-looking statements are intended to be subject to the safe harbor provided by Section 27A of the
Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of
1995.

While there is no assurance that any list of risks and uncertainties or risk factors is complete, below are certain factors which

could cause actual results to differ materially from those contained or implied in the forward-looking statements: changes in
general economic, political, or industry conditions; uncertainty in U.S. fiscal and monetary policy, including the interest rate
policies of the Federal Reserve Board; volatility and disruptions in global capital and credit markets; movements in interest rates;
competitive pressures on product pricing and services; success, impact, and timing of our business strategies, including market
acceptance of any new products or services 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; and other factors that may affect our future results.

All forward-looking statements speak only as of the date they are made and are based on information available at that

time. We do 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 results of operations or financial position. Where non-GAAP financial measures are used,
the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found
herein.

Significant Items

From time-to-time, revenue, expenses, or taxes are impacted by items judged by 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, 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.

Fully-Taxable Equivalent Basis

Interest income, yields, and ratios on a FTE basis are considered non-GAAP financial measures. Management believes net
interest income on a FTE basis provides an insightful picture of the interest margin for comparison purposes. The FTE basis also
allows management to assess the comparability of revenue arising from both taxable and tax-exempt sources. The FTE basis
assumes a federal statutory tax rate of 21 percent for the year ended 2018 and 35 percent for all prior periods. We encourage
readers to consider the consolidated financial statements and other financial information contained in this Form 10-K in their
entirety, and not to rely on any single financial measure.

Non-Regulatory Capital Ratios

In addition to capital ratios defined by banking regulators, the Company considers various other measures when evaluating

capital utilization and adequacy, including:

• Tangible common equity to tangible assets,
• Tangible equity to tangible assets, and
• Tangible common equity to risk-weighted assets using Basel III definitions.

These non-regulatory capital ratios are viewed by management as useful additional methods of reflecting the level of capital

available to withstand unexpected market conditions. Additionally, presentation of these ratios allows readers to compare the
Company’s capitalization to other financial services companies. These ratios differ from capital ratios defined by banking
regulators principally in that the numerator excludes goodwill and other intangible assets, the nature and extent of which varies
among different financial services companies. These ratios are not defined in GAAP or federal banking regulations. As a result,
these non-regulatory capital ratios disclosed by the Company are considered non-GAAP financial measures.

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 readers to consider the consolidated financial statements and other financial
information contained in this Form 10-K in their entirety, and not to rely on any single financial measure.

Risk Factors

More information on risk is discussed in the Risk Factors section included in Item 1A of this report. Additional information

regarding risk factors can also be found in the Risk Management and Capital discussion of this report, as well as the Regulatory
Matters section included in Item 1 of this report.

Critical Accounting Policies and Use of Significant Estimates

Our Consolidated Financial Statements are prepared in accordance with GAAP. The preparation of financial statements in

conformity with GAAP requires us to establish accounting policies and make estimates that affect amounts reported in our
Consolidated Financial Statements. Note 1 of the Notes to Consolidated Financial Statements, which is incorporated by reference
into this MD&A, describes the significant accounting policies we used in our Consolidated Financial Statements.

An accounting estimate requires assumptions and judgments about uncertain matters that could have a material effect on the

Consolidated Financial Statements. Estimates are made under facts and circumstances at a point in time, and changes in those
facts and circumstances could produce results substantially different from those estimates. Our most significant accounting
policies and estimates and their related application are discussed below.

Allowance for Credit Losses

Our ACL of $868 million at December 31, 2018, represents our estimate of probable credit losses inherent in our loan and

lease portfolio and our unfunded loan commitments and letters of credit. 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
risk 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 interest rates 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 the portfolio because of unanticipated adverse changes in the
economy, market conditions, or events adversely affecting specific customers, industries, or markets. If the credit quality of our
customer base materially deteriorates, the risk profile of a market, industry, or group of customers changes materially, or if the ACL
is not appropriate, 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. For more information, see Note 3 - Loans / Leases and Allowance for
Credit Losses.

Fair Value Measurement

Certain assets and liabilities are measured at fair value on a recurring basis and include trading securities, available-for-sale

securities, other securities, loans held for sale, loans held for investment, MSRs and derivative instruments. At December 31, 2018,
approximately $14.8 billion of our assets and $0.2 billion of our liabilities were recorded at fair value on a recurring basis. In
addition to assets and liabilities subject to recurring fair value measurement, we measure certain other assets such as impaired
loans, loans held for sale and other real estate owned at fair value on a non-recurring basis. Assets and liabilities carried at fair
value inherently include subjectivity and may require use of significant assumptions, adjustments and judgment. A significant
change in assumptions may result in a significant change in fair value, which in turn, may result in a higher degree of financial
statement volatility.

Significant adjustments and assumptions used in determining fair value include, but are not limited to, market liquidity and

credit quality, where appropriate. Valuations of products using models or other techniques are sensitive to assumptions used for the
significant inputs. The type and level of judgment required is largely dependent on the amount of observable market information
available. Where available, we use quoted market prices to determine fair value. If quoted market prices are not available, fair
value is determined based on inputs that are either directly observable or derived from market data using either internally
developed or independent third-party valuation models. These inputs include, but are not limited to, interest rate yield curves,
credit spreads, option volatilities, and option-adjusted spreads. Where neither quoted market prices nor observable market data are
available, fair value is determined using valuation models that feature one or more significant unobservable inputs based on
management’s expectation of what market participants would use in determining the fair value of the asset or liability. Inputs to
valuation models are considered unobservable if they are supported by little or no market activity. In periods of extreme volatility,
lessened liquidity or in illiquid markets, there may be more variability in market pricing or a lack of market data to use in the
valuation process.

A significant portion of our assets and liabilities that are reported at fair value are measured based on quoted market prices or

observable market / independent inputs and are classified within levels 1 and 2. Instruments valued using internally developed
valuation models and other valuation techniques that use significant unobservable inputs are classified within level 3 of the
valuation hierarchy. For more information, see Note 17 - Fair Value of Assets and Liabilities.

Income Taxes

The calculation of our provision for income taxes requires the use of estimates and judgments. We have two accruals for

income taxes: (1) our income tax payable represents the estimated net amount currently due to the federal, state, and local taxing
jurisdictions, net of any reserve for potential audit issues and any tax refunds; (2) our deferred federal and state income tax and
related valuation accounts, represents the estimated impact of temporary differences between how we recognize our assets and
liabilities under GAAP, and how such assets and liabilities are recognized under federal and state tax law. The net receivable

balance and deferred tax accounts are presented as components of other assets or other liabilities in accordance with the asset or
liability balance of the account.

In the ordinary course of business, we operate in various taxing jurisdictions and are subject to income and non-income

taxes. The effective tax rate is based in part on our interpretation of the relevant current tax laws. We believe the aggregate
liabilities related to taxes are appropriately reflected in the consolidated financial statements. We review the appropriate tax
treatment of all transactions taking into consideration statutory, judicial, and regulatory guidance in the context of our tax
positions. In addition, we rely on various tax opinions, recent tax audits, and historical experience.

From time-to-time, we engage in business transactions that may affect our tax liabilities. Where appropriate, we obtain
opinions of outside experts and assess the relative merits and risks of the appropriate tax treatment of business transactions taking
into account statutory, judicial, and regulatory guidance in the context of the tax position. However, changes to our estimates of
accrued taxes can occur due to changes in tax rates, implementation of new business strategies, resolution of issues with taxing
authorities regarding previously taken tax positions, and newly enacted statutory, judicial, and regulatory guidance. Such changes
could affect the amount of our accrued taxes and could be material to our financial position and / or results of operations. For more
information, see Note 16 - Income Taxes.

Goodwill and Intangible Assets

The acquisition method of accounting requires that acquired assets and liabilities are recorded at their fair values as of the
date of acquisition. This often involves estimates based on third party valuations or internal valuations based on discounted cash
flow analyses or other valuation techniques, all of which are inherently subjective. Acquisitions typically result in goodwill, the
amount by which the cost of net assets acquired in a business combination exceeds their fair value, which is subject to impairment
testing at least annually. The amortization of identified intangible assets recognized in a business combination is based upon the
estimated economic benefits to be received over their economic life, which is also subjective. Customer attrition rates that are
based on historical experience are used to determine the estimated economic life of certain intangibles assets, including but not
limited to, customer deposit intangibles. Refer to Note 6 of the Notes to Consolidated Financial Statements for further information
regarding these items.

Recent Accounting Pronouncements and Developments

Note 2 of the Notes to Consolidated Financial Statements discusses new accounting pronouncements adopted during 2018

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 Consolidated Financial Statements.

Item 7A: Quantitative and Qualitative Disclosures About Market Risk

Information required by this item is set forth under the heading of “Market Risk” in Item 7 (MD&A), which is incorporated by

reference into this item.

Item 8: Financial Statements and Supplementary Data

Information required by this item is set forth in the Reports of Independent Registered Public Accounting Firm, Consolidated

Financial Statements and Notes, and Selected Quarterly Income Statements, which is incorporated by reference into this item.

REPORT OF MANAGEMENT’S EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

The Management of Huntington Bancshares Incorporated (Huntington or the Company) is responsible for the financial information
and representations contained in the Consolidated Financial Statements and other sections of this report. The Consolidated Financial
Statements have been prepared in conformity with accounting principles generally accepted in the United States. In all material
respects, they reflect the substance of transactions that should be included based on informed judgments, estimates, and currently
available information. Management maintains a system of internal accounting controls, which includes the careful selection and
training of qualified personnel, appropriate segregation of responsibilities, communication of written policies and procedures, and a
broad program of internal audits. The costs of the controls are balanced against the expected benefits. During 2018, the audit
committee of the board of directors met regularly with Management, Huntington’s internal auditors, and the independent registered
public accounting firm, PricewaterhouseCoopers LLP, to review the scope of their audits and to discuss the evaluation of internal
accounting controls and financial reporting matters. The independent registered public accounting firm and the internal auditors have
free access to, and meet confidentially with, the audit committee to discuss appropriate matters. Also, Huntington maintains a
disclosure review committee. This committee’s purpose is to design and maintain disclosure controls and procedures to ensure that
material information relating to the financial and operating condition of Huntington is properly reported to its chief executive officer,
chief financial officer, chief auditor, and the audit committee of the board of directors in connection with the preparation and filing of
periodic reports and the certification of those reports by the chief executive officer and the chief financial officer.

REPORT OF MANAGEMENT’S ASSESSMENT OF INTERNAL CONTROL OVER FINANCIAL REPORTING

Management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined
in Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934, as amended. Huntington’s Management assessed the
effectiveness of the Company’s internal control over financial reporting as of December 31, 2018. In making this assessment,
Management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in
Internal Control—Integrated Framework (2013). Based on that assessment, Management concluded that, as of December 31, 2018,
the Company’s internal control over financial reporting is effective based on those criteria. The Company’s internal control over
financial reporting as of December 31, 2018 has been audited by PricewaterhouseCoopers LLP, an independent registered public
accounting firm, as stated in their report appearing on the next page.

Stephen D. Steinour – Chairman, President, and Chief Executive Officer

Howell D. McCullough III – Senior Executive Vice President and Chief Financial Officer

February 15, 2019

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of
Huntington Bancshares Incorporated

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Huntington Bancshares Incorporated and its subsidiaries (the
“Company”) as of December 31, 2018 and 2017, and the related consolidated statements of income, comprehensive income,
changes in shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2018, including the
related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company’s internal
control over financial reporting as of December 31, 2018, based on criteria established in Internal Control - Integrated Framework
(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position
of the Company as of December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the three years
in the period ended December 31, 2018 in conformity with accounting principles generally accepted in the United States of
America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting
as of December 31, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control
over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the
accompanying Report of Management’s Assessment of Internal Control over Financial Reporting. Our responsibility is to express
opinions on the Company’s consolidated financial statements and on the Company’s internal control over financial reporting based
on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States)
(PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and
the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement,
whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material
respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of
the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as
well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial
reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.
Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our
audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that
(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of
the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the
company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because
of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Columbus, Ohio
February 15, 2019

We have served as the Company’s auditor since 2015.

Huntington Bancshares Incorporated
Consolidated Balance Sheets

(dollar amounts in millions)
Assets
Cash and due from banks
Interest-bearing deposits at Federal Reserve Bank
Interest-bearing deposits in banks
Trading account securities
Available-for-sale securities
Held-to-maturity securities
Other securities
Loans held for sale (includes $613 and $413 respectively, measured at fair value)(1)
Loans and leases (includes $79 and $93 respectively, measured at fair value)(1)

Allowance for loan and lease losses

Net loans and leases
Bank owned life insurance
Premises and equipment
Goodwill
Servicing rights and other intangible assets
Other assets
Total assets
Liabilities and shareholders’ equity
Liabilities
Deposits in domestic offices

Demand deposits—noninterest-bearing (includes $210 classified as held-for-sale at
December 31, 2018)
Interest-bearing (includes $662 classified as held-for-sale at December 31, 2018)

Deposits
Short-term borrowings
Long-term debt
Other liabilities
Total liabilities
Commitments and contingencies (Note 20)
Shareholders’ equity
Preferred stock
Common stock
Capital surplus
Less treasury shares, at cost
Accumulated other comprehensive loss
Retained earnings
Total shareholders’ equity
Total liabilities and shareholders’ equity

Common shares authorized (par value of $0.01)
Common shares outstanding
Treasury shares outstanding
Preferred stock, authorized shares
Preferred shares outstanding

(1) Amounts represent loans for which Huntington has elected the fair value option. See Note 17.

See Notes to Consolidated Financial Statements

December 31,

2018

2017

1,108
1,564
53
105
13,780
8,565
565
804
74,900
(772)
74,128
2,507
790
1,989
535
2,288
108,781

21,783
62,991
84,774
2,017
8,625
2,263
97,679

1,203
11
9,181
(45)
(609)
1,361
11,102
108,781

1,212
308
47
86
14,869
9,091
600
488
70,117
(691)
69,426
2,466
864
1,993
584
2,151
104,185

21,546
55,495
77,041
5,056
9,206
2,068
93,371

1,071
11
9,707
(35)
(528)
588
10,814
104,185

1,500,000,000
1,046,767,252
3,817,385
6,617,808
740,500

1,500,000,000
1,072,026,681
3,268,265
6,617,808
1,098,006

Huntington Bancshares Incorporated
Consolidated Statements of Income

(dollar amounts in millions, share amounts in thousands)
Interest and fee income:
Loans and leases
Available-for-sale securities

Taxable
Tax-exempt

Held-to-maturity securities-taxable
Other securities-taxable
Other interest income
Total interest income
Interest expense

Deposits
Short-term borrowings
Long-term debt
Total interest expense
Net interest income

Provision for credit losses

Net interest income after provision for credit losses

Service charges on deposit accounts
Card and payment processing income
Trust and investment management services
Mortgage banking income
Capital markets fees
Insurance income
Bank owned life insurance income
Gain on sale of loans and leases
Net (losses) gains on sales of securities
Impairment losses recognized in earnings on available-for-sale securities (a)
Other income
Total noninterest income
Personnel costs
Outside data processing and other services
Net occupancy
Equipment
Deposit and other insurance expense
Professional services
Marketing
Amortization of intangibles
Other expense
Total noninterest expense
Income before income taxes

Provision for income taxes

Net income

Dividends on preferred shares
Net income applicable to common shares
Average common shares—basic

Average common shares—diluted
Per common share:
Net income—basic
Net income—diluted

(a) The following OTTI losses are included in securities losses for the periods presented:

Total OTTI losses

Noncredit-related portion of loss recognized in OCI

Net impairment credit losses recognized in earnings

See Notes to Consolidated Financial Statements

2018

Year Ended December 31,
2017

2016

3,305

2,838

279
97
211
25
32
3,949

391
48
321
760
3,189
235
2,954
364
224
171
108
91
82
67
55
(21)
—
180
1,321
1,559
294
184
164
63
60
53
53
217
2,647
1,628
235
1,393
70
1,323
1,081,542

1,105,985

1.22
1.20

283
77
193
20
22
3,433

180
25
226
431
3,002
201
2,801
353
206
156
131
76
81
67
56
—
(4)
185
1,307
1,524
313
212
171
78
69
60
56
231
2,714
1,394
208
1,186
76
1,110
1,084,686

1,136,186

1.02
1.00

2,178

211
59
138
12
34
2,632

102
5
156
263
2,369
191
2,178
324
169
123
128
60
84
58
47
2
(2)
157
1,150
1,349
305
153
165
54
105
63
30
184
2,408
920
208
712
65
647
904,438

918,790

0.72
0.70

— $
—
— $

(4) $
—
(4) $

(6)
4
(2)

Huntington Bancshares Incorporated
Consolidated Statements of Comprehensive Income

(dollar amounts in millions)
Net income
Other comprehensive income, net of tax:

Unrealized gains (losses) on available-for-sale and other securities:

Non-credit-related impairment recoveries on debt securities not expected to be sold
Unrealized net gains (losses) on available-for-sale and other securities arising during
the period, net of reclassification for net realized gains and losses

Total unrealized gains (losses) on available-for-sale securities
Unrealized gains on cash flow hedging derivatives, net of reclassifications to income
Change in accumulated unrealized gains (losses) for pension and other post-retirement
obligations

Other comprehensive loss, net of tax
Comprehensive income

See Notes to Consolidated Financial Statements

Year Ended December 31,

2018

2017

2016

1,393

1,186

712

—

(84)
(84)
—

(39)
(37)
3

4
(80)
1,313

—
(34)
1,152

(202)
(201)
1

25
(175)
537

Huntington Bancshares Incorporated
Consolidated Statements of Changes in Shareholders’ Equity

(dollar amounts in millions, share amounts in
thousands)

Year Ended December 31, 2018

Preferred Stock
Amount

Common Stock

Amount

Capital
Surplus

Treasury Stock

Amount

Accumulated
Other
Comprehensive
Loss

Retained
Earnings
(Deficit)

Total

Balance, beginning of year

1,071

1,075,295

$ 9,707

(3,268) $

(35) $

(528) $

588

10,814

Cumulative-effect adjustment (ASU 2016-01)

Net income

Other comprehensive income (loss)

Net proceeds from issuance of Preferred Series
E Stock

495

(61,644)

—

(939)

1,393

(1)

(80)

—

1,393

(80)

495

(939)

(541)

(3)

(6)

(37)

(24)

(10)

—

(3)

(6)

(37)

(24)

—

(41)

(7)

(363)

30,330

6,603

—

1,203

1,050,584

—

363

(31)

(549)

(10)

$ 9,181

(3,817) $

(45) $

(609) $ 1,361

11,102

Repurchases of common stock

Cash dividends declared:

Common ($0.50 per share)

Preferred Series B ($49.11 per share)

Preferred Series C ($58.76 per share)

Preferred Series D ($62.50 per share)

Preferred Series E ($4,892.50 per share)

Conversion of Preferred Series A Stock to
Common Stock

Recognition of the fair value of share-based
compensation

Other share-based compensation activity

Other

Balance, end of year

See Notes to Consolidated Financial Statements

Huntington Bancshares Incorporated
Consolidated Statements of Changes in Shareholders’ Equity

(dollar amounts in millions, share amounts in
thousands)

Year Ended December 31, 2017

Preferred Stock
Amount

Common Stock

Amount

Capital
Surplus

Treasury Stock

Amount

Accumulated
Other
Comprehensive
Loss

Retained
Earnings
(Deficit)

Total

Balance, beginning of year

1,071

1,088,641

$ 9,881

(2,953) $

(27) $

(401) $

(227) $ 10,308

Net income

Other comprehensive income (loss)

Repurchase of common stock

Cash dividends declared:

Common ($0.35 per share)

Preferred Series A ($85.00 per share)

Preferred Series B ($39.11 per share)

Preferred Series C ($58.76 per share)

Preferred Series D ($62.50 per share)

Recognition of the fair value of share-based
compensation

Other share-based compensation activity

TCJA, Reclassification from accumulated OCI
to retained earnings

Other

Balance, end of year

(19,430)

—

(260)

5,923

—

(10)

161

(315)

(8)

(34)

(93)

1,186

(34)

(260)

(379)

(31)

(1)

(6)

(38)

(19)

—

(4)

(379)

(31)

(1)

(6)

(38)

(9)

1,071

1,075,295

$ 9,707

(3,268) $

(35) $

(528) $

588

$ 10,814

See Notes to Consolidated Financial Statements

Huntington Bancshares Incorporated
Consolidated Statements of Changes in Shareholders’ Equity

(dollar amounts in millions, share amounts in
thousands)

Year Ended December 31, 2016

Preferred Stock
Amount

Common Stock

Amount

Capital
Surplus

Treasury Stock

Amount

Accumulated
Other
Comprehensive
Loss

Retained
Earnings
(Deficit)

Total

Balance, beginning of year

386

796,970

$ 7,039

(2,041) $

(18) $

(226) $

(594) $

6,595

Net income

Other comprehensive income (loss)

FirstMerit Acquisition:

Issuance of common stock

Issuance of Preferred Series C Stock

Net proceeds from issuance of Preferred Series
D Stock
Cash dividends declared:

Common ($0.29 per share)

Preferred Series A ($85.00 per share)

Preferred Series B ($34.03 per share)

Preferred Series C ($26.28 per share)

Preferred Series D ($51.04 per share)

Recognition of the fair value of share-based
compensation

Other share-based compensation activity

Other

285,425

2,764

100

585

5,924

322

—

(912)

(9)

712

(175)

(275)

(31)

(1)

(3)

(31)

(4)

712

(175)

2,767

104

585

(275)

(31)

(1)

(3)

(31)

(6)

$ 9,881

(2,953) $

(27) $

(401) $

(227) $ 10,308

Balance, end of year

1,071

1,088,641

See Notes to Consolidated Financial Statements

Huntington Bancshares Incorporated
Consolidated Statements of Cash Flows

(dollar amounts in millions)
Operating activities

Year Ended December 31,
2017

2016

2018

Net income
Adjustments to reconcile net income to net cash provided by (used in) operating activities:

1,393

1,186

Provision for credit losses
Depreciation and amortization

Share-based compensation expense
Deferred income tax expense
Net losses (gains) on sales of securities
Impairment losses recognized in earnings on available-for-sale securities
Net change in:

Trading account securities
Loans held for sale
Other assets
Other liabilities

Other, net

Net cash provided by (used in) operating activities
Investing activities

Change in interest bearing deposits in banks

Cash paid for acquisition of a business, net of cash received

Proceeds from:

Maturities and calls of available-for-sale securities

Maturities and calls of held-to-maturity securities

Sales of available-for-sale securities

Maturities, calls, and sales of other securities

Purchases of available-for-sale securities

Purchases of held-to-maturity securities

Purchases of other securities

Net proceeds from sales of portfolio loans

Net loan and lease activity, excluding sales and purchases

Purchases of premises and equipment

Purchases of loans and leases

Net cash paid for branch divestiture

Other, net

Net cash provided by (used in) investing activities
Financing activities

Increase (decrease) in deposits
Increase (decrease) in short-term borrowings
Net proceeds from issuance of long-term debt
Maturity/redemption of long-term debt

Dividends paid on preferred stock
Dividends paid on common stock
Repurchases of common stock

Net proceeds from issuance of preferred stock
Payments related to tax-withholding for share based compensation awards
Other, net

Net cash provided by (used for) financing activities
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

235
493

78
63
21
—

(11)
(301)
(235)
22
(32)

1,726

(15)

2,109

743

1,419

(2,485)

(338)

(7)

697

(5,333)

(110)

(542)

—

201
413

92
168
—
4

47
12
(420)
233
18

1,954

—

1,994

1,054

2,490

(48)

(5,429)

(1,356)

603

(3,680)

(194)

(405)

—

(3,663)

(4,866)

7,733
(3,025)
2,229
(2,798)

(70)
(514)
(939)

495
(27)
5

3,089
1,152
1,520

2,672

1,433
1,371
1,891
(948)

(76)
(349)
(260)

—
(26)
11

3,047
135
1,385

1,520

712

191
380

66
165
(2)
2

(96)
(123)
(96)
4
12

1,215

26
(133)

2,346

1,212

6,154
(233)
(10,905)
—

2,981
(3,951)
(120)
(411)
(480)
52
(3,445)

(292)
1,900
2,128
(1,275)
(54)
(245)
—

585
—
21

2,768
538
847

1,385

(dollar amounts in millions)
Supplemental disclosures:

Interest paid
Income taxes (refunded) paid

Non-cash activities:

Common stock issued to acquire FirstMerit
Preferred stock issued to acquire FirstMerit
Loans transferred to held-for-sale from portfolio
Loans transferred to portfolio from held-for-sale
Transfer of loans to OREO
Transfer of securities from held-to-maturity to available-for-sale
Transfer of securities from available-for-sale to held-to-maturity

Year Ended December 31,
2017

2018

2016

742
(52)

—
—
818
51
20
2,833
2,707

409
84

—
—
660
12
29
—
993

241
5

2,767
104
3,437
482
79
—
2,870

Huntington Bancshares Incorporated
Notes to Consolidated Financial Statements

1. SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations — Huntington Bancshares Incorporated (Huntington or the Company) is a multi-state diversified

regional bank holding company organized under Maryland law in 1966 and headquartered in Columbus, Ohio. Through its
subsidiaries, including its bank subsidiary, The Huntington National Bank (the Bank), Huntington is engaged in providing full-service
commercial, small business, consumer banking services, mortgage banking services, automobile financing, recreational vehicle and
marine financing, equipment leasing, investment management, trust services, brokerage services, customized insurance programs, and
other financial products and services. Huntington’s banking offices are located in Ohio, Illinois, Michigan, Pennsylvania, Indiana,
West Virginia, Wisconsin and Kentucky. 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.

Basis of Presentation — The Consolidated Financial Statements include the accounts of Huntington and its majority-owned

subsidiaries and are presented in accordance with GAAP. All intercompany transactions and balances have been eliminated in
consolidation. Entities in which Huntington holds a controlling financial interest are consolidated. For a voting interest entity, a
controlling financial interest is generally where Huntington holds, directly or indirectly, more than 50 percent of the outstanding
voting shares. For a variable interest entity (VIE), a controlling financial interest is where Huntington has the power to direct the
activities of an entity that most significantly impact the entity’s economic performance and has an obligation to absorb losses or the
right to receive benefits from the VIE. These losses or benefits, which could potentially be significant to the VIE, are consolidated.
For consolidated entities where Huntington holds less than a 100% interest, Huntington recognizes non-controlling interest (included
in shareholders’ equity) for the equity held by minority shareholders and non-controlling profit or loss (included in noninterest
expense) for the portion of the entity’s earnings attributable to minority interests. Investments in companies that are not consolidated
are accounted for using the equity method when Huntington has the ability to exert significant influence. Investments in
nonmarketable equity securities for which Huntington does not have the ability to exert significant influence are generally accounted
for using the cost method adjusted for change in observable prices. Investments in private investment partnerships that are accounted
for under the equity method or the cost method are included in other assets and Huntington’s earnings in equity investments are
included in other noninterest income. Investments accounted for under the cost and equity methods are periodically evaluated for
impairment.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that

significantly affect amounts reported in the Consolidated Financial Statements. Huntington utilizes processes that involve the use of
significant estimates and the judgments of management in determining the amount of its allowance for credit losses, income taxes, as
well as fair value measurements of investment securities, derivative instruments, goodwill, other intangible assets, pension assets and
liabilities, short-term borrowings, mortgage servicing rights, and loans held for sale. As with any estimate, actual results could differ
from those estimates.

For statements of cash flows purposes, cash and cash equivalents are defined as the sum of cash and due from banks and

interest-bearing deposits at Federal Reserve Bank.

Certain prior period amounts have been reclassified to conform to the current year’s presentation.

Resale and Repurchase Agreements — Securities purchased under agreements to resell and securities sold under agreements

to repurchase are treated as collateralized financing transactions and are recorded at the amounts at which the securities were acquired
or sold plus accrued interest. The fair value of collateral either received from or provided to a third-party is monitored and additional
collateral is obtained or requested to be returned to Huntington in accordance with the agreement.

Securities — Securities purchased with the intention of recognizing short-term profits or which are actively bought and sold are

classified as trading account securities and reported at fair value. The unrealized gains or losses on trading account securities are
recorded in other noninterest income, except for gains and losses on trading account securities used to economically hedge the fair
value of MSRs, which are included in mortgage banking income. Debt securities purchased in which Huntington has the positive
intent and ability to hold to their maturity are classified as held-to-maturity securities. Held-to-maturity securities are recorded at
amortized cost. All other debt and equity securities are classified as available-for-sale or other securities. Unrealized gains or losses
on available-for-sale are reported as a separate component of accumulated OCI in the Consolidated Statements of Changes in
Shareholders’ Equity. Credit-related declines in the value of debt securities that are considered OTTI are recorded in noninterest
income.

Huntington evaluates its investment securities portfolio on a quarterly basis for indicators of OTTI. Huntington assesses whether

OTTI has occurred when the fair value of a debt security is less than the amortized cost basis at the balance sheet date. Management
reviews the amount of unrealized loss, the length of time the security has been in an unrealized loss position, the credit rating history,
market trends of similar security classes, time remaining to maturity, and the source of both interest and principal payments to identify
securities which could potentially be impaired. For those debt securities that Huntington intends to sell or is more likely than not

required to sell, before the recovery of their amortized cost bases, the difference between fair value and amortized cost is considered to
be OTTI and is recognized in noninterest income. For those debt securities that Huntington does not intend to sell or is not more
likely than not required to sell, prior to expected recovery of amortized cost bases, the credit portion of the OTTI is recognized in
noninterest income while the noncredit portion is recognized in OCI. In determining the credit portion, Huntington uses a discounted
cash flow analysis, which includes evaluating the timing and amount of the expected cash flows. Non-credit-related OTTI results
from other factors, including increased liquidity spreads and higher interest rates. Presentation of OTTI is made in the Consolidated
Statements of Income on a gross basis with a reduction for the amount of OTTI recognized in OCI.

Securities transactions are recognized on the trade date (the date the order to buy or sell is executed). The carrying value plus
any related accumulated OCI balance of sold securities is used to compute realized gains and losses. Interest on securities, including
amortization of premiums and accretion of discounts using the effective interest method over the period to maturity, are included in
interest income.

Non-marketable equity securities include stock held for membership and regulatory purposes, such as FHLB stock and FRB

stock. These securities are accounted for at cost, evaluated for impairment, and are included in other securities. Other securities also
include mutual funds and other marketable equity securities. These securities are carried at fair value, with changes in fair value
recognized in other noninterest income.

Loans and Leases — Loans and direct financing leases for which Huntington has the intent and ability to hold for the

foreseeable future, or until maturity or payoff, are classified in the Consolidated Balance Sheets as loans and leases. Except for
purchase credit impaired loans and loans for which the fair value option has been elected, loans and leases are carried at the principal
amount outstanding, net of charge-offs, unamortized deferred loan origination fees and costs, premiums and discounts, and unearned
income. Direct financing leases are reported at the aggregate of lease payments receivable and estimated residual values, net of
unearned and deferred income, and any initial direct costs incurred to originate these leases. Interest income is accrued as earned
using the interest method. Huntington defers the fees it receives from the origination of loans and leases, as well as the direct costs of
those activities. Huntington also acquires loans at a premium and at a discount to their contractual values. Huntington amortizes loan
discounts, premiums, and net loan origination fees and costs over the contractual lives of the related loans using the effective interest
method.

Troubled debt restructurings are loans for which the original contractual terms have been modified to provide a concession to a

borrower experiencing financial difficulties. Loan modifications are considered TDRs when the concessions provided are not
available to the borrower through either normal channels or other sources. However, not all loan modifications are TDRs.
Modifications resulting in troubled debt restructurings may include changes to one or more terms of the loan, including but not limited
to, a change in interest rate, an extension of the repayment period, a reduction in payment amount, and partial forgiveness or
deferment of principal or accrued interest.

Impairment of the residual values of direct financing leases is evaluated quarterly, with those determined to be other than
temporary recognized by writing the leases down to fair value with a charge to other noninterest expense. Residual value impairment
arises when the expected fair value is less than the carrying amount, net of estimated amounts reimbursable by the lessee. Beginning
January 1, 2019, as a result of the implementation of ASC 842, lessors will assess net investments in leases (including residual values)
for impairment, and recognize any impairment losses in accordance with the impairment guidance for financial instruments. As such,
net investments in leases may be reduced by a recognized allowance for credit losses, with changes recognized as provision expense.

For leased equipment, the residual component of a direct financing lease represents the estimated fair value of the leased
equipment at the end of the lease term. Huntington uses industry data, historical experience, and independent appraisals to establish
these residual value estimates. Additional information regarding product life cycle, product upgrades, as well as insight into
competing products are obtained through relationships with industry contacts and are factored into residual value estimates where
applicable.

Loans Held for Sale — Loans in which Huntington does not have the intent and ability to hold for the foreseeable future are
classified as loans held for sale. Loans held for sale are carried at (a) the lower of cost or fair value less cost to sell, or (b) fair value
where the fair value option is elected. The fair value option is generally elected for mortgage loans held for sale to facilitate hedging
of the loans. The fair value of such loans is estimated based on the inputs that include prices of mortgage backed securities adjusted
for other variables such as, interest rates, expected credit defaults and market discount rates. The adjusted value reflects the price we
expect to receive from the sale of such loans.

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.

Any loan in any portfolio may be placed on nonaccrual status prior to the policies described below when collection of principal

or interest is in doubt. When a borrower with debt is discharged in a Chapter 7 bankruptcy and not reaffirmed by the borrower, the
loan is determined to be collateral dependent and placed on nonaccrual status, unless there is a co-borrower or the repayment is likely
to occur based on objective evidence.

All classes within the C&I and CRE portfolios are placed on nonaccrual status at 90-days past due. First-lien home equity loans

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 finance and other
consumer loans are placed on non-accrual, if not charged off, when the loan is 120-days past due. Residential mortgage loans are
placed on nonaccrual status at 150-days past due, with the exception of residential mortgages guaranteed by government agencies
which continue to accrue interest at the rate guaranteed by the government agency.

For all classes within all loan portfolios, when a loan is placed on nonaccrual status, any accrued interest income, to the extent it
is recognized in the current year, is reversed and charged to interest income, and prior year amounts in interest accrued are charged-off
as a credit loss.

For all classes within all loan portfolios, cash receipts on NALs are applied against principal until the loan or lease has been

collected in full, including the charged-off portion, after which time any additional cash receipts are recognized as interest income.
However, for secured non-reaffirmed debt in a Chapter 7 bankruptcy, payments are applied to principal and interest when the borrower
has demonstrated a capacity to continue payment of the debt and collection of the debt is reasonably assured. For unsecured non-
reaffirmed debt in a Chapter 7 bankruptcy where the carrying value has been fully charged-off, payments are recorded as loan
recoveries.

Within the C&I and CRE portfolios, the determination of a borrower’s ability to make the required principal and interest

payments is based on an examination of the borrower’s current financial statements, industry, management capabilities, and other
qualitative measures. For all classes within the consumer loan portfolio, the determination of a borrower’s ability to make the required
principal and interest payments is based on multiple factors, including number of days past due and, in some instances, an evaluation
of the borrower’s financial condition. When, in management’s judgment, the borrower’s ability to make required principal and
interest payments resumes and collectability is no longer in doubt, supported by sustained repayment history, the loan is returned to
accrual status. For these loans that have been returned to accrual status, cash receipts are applied according to the contractual terms of
the loan.

Allowance for Credit Losses — Huntington maintains two reserves, both of which reflect management’s judgment regarding
the appropriate level necessary to absorb credit losses inherent in our loan and lease portfolio: 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 loans and leases, consideration of current economic conditions, and historical loss
experience pertaining to pools of homogeneous loans and leases, all of which may be susceptible to change.

The appropriateness of the ACL is based on management’s current judgments about the credit quality of the loan portfolio.
These judgments consider on-going evaluations of the loan and lease portfolio, including such factors 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. Further, management evaluates the
impact of changes in interest rates 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.

The ALLL consists of two components: (1) the transaction reserve and (2) the general reserve. The transaction reserve

component includes both (1) an estimate of loss based on pools of commercial and consumer loans and leases with similar
characteristics and (2) an estimate of loss based on an impairment review of each impaired C&I and CRE loan where obligor balance
is greater than $1 million. For the C&I and CRE portfolios, the estimate of loss based on pools of loans and leases with similar
characteristics is made by applying PD and LGD factors to each individual loan based on a regularly updated loan grade, using a
standardized loan grading system. The PD and LGD factors are determined for each loan grade using statistical models based on
historical performance data. The PD factor considers on-going reviews of the financial performance of the specific borrower,
including cash flow, debt-service coverage ratio, earnings power, debt level, and equity position, in conjunction with an assessment of
the borrower’s industry and future prospects. The LGD factor considers analysis of the type of collateral and the relative LTV ratio.
These reserve factors are developed based on credit migration models that track historical movements of loans between loan ratings
over time and a combination of long-term average loss experience of our own portfolio and external industry data.

In the case of more homogeneous portfolios, such as automobile loans, home equity loans, and residential mortgage loans, the
determination of the transaction reserve also incorporates PD and LGD factors. The estimate of loss is based on pools of loans and
leases with similar characteristics. The PD factor considers current credit scores unless the account is delinquent, in which case a
higher PD factor is used driven by the associated delinquency status. The credit score provides a basis for understanding the
borrower’s past and current payment performance, and this information is used to estimate expected losses over the emergence period.
The performance of first-lien loans ahead of our junior-lien loans is available to use as part of our updated score process. The LGD
factor considers analysis of the type of collateral and the relative LTV ratio. Credit scores, models, analyses, and other factors used to
determine both the PD and LGD factors are updated frequently to capture the recent behavioral characteristics of the subject
portfolios, as well as any changes in loss mitigation or credit origination strategies, and adjustments to the reserve factors are made as
required.

The general reserve consists of various risk-profile reserve components. The risk-profile components consider items unique to

our structure, policies, processes, and portfolio composition, as well as qualitative measurements and assessments of the loan
portfolios including, but not limited to, concentrations, portfolio composition, industry comparisons, and internal review functions.

The estimate for the AULC is determined using the same procedures and methodologies as used for the ALLL. The loss factors

used in the AULC are the same as the loss factors used in the ALLL while also considering historical utilization of unused
commitments. The AULC is recorded in other liabilities in the Consolidated Balance Sheets.

Charge-off of Uncollectible Loans — Any loan in any portfolio may be charged-off prior to the policies described below if a

loss confirming event has occurred. Loss confirming events include, but are not limited to, bankruptcy (unsecured), continued
delinquency, foreclosure, or receipt of an asset valuation indicating a collateral deficiency and 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, unless the repayment is likely to occur based on objective evidence.

C&I and CRE loans are generally either charged-off or written down to net realizable value at 90-days past due. Automobile,

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 at 150-days past due.

Impaired Loans — For all classes within the C&I and CRE portfolios, loans with an obligor balance of $1 million or greater
are evaluated on a quarterly basis for impairment. Except for TDRs, consumer loans within any class are generally not individually
evaluated on a regular basis for impairment. All TDRs, regardless of the outstanding balance amount, are also considered to be
impaired. Loans acquired with evidence of deterioration in credit quality since origination for which it is probable at acquisition that
all contractually required payments will not be collected are also considered to be impaired.

Once a loan has been identified for an assessment of impairment, the loan is considered impaired when, based on current
information and events, it is probable that all amounts due according to the contractual terms of the loan agreement will not be
collected. This determination requires significant judgment and use of estimates, and the eventual outcome may differ significantly
from those estimates.

When a loan in any class has been determined to be impaired, the amount of the impairment is measured using the present value
of expected future cash flows discounted at the loan’s effective interest rate or, as a practical expedient, the observable market price of
the loan, or the fair value of the collateral, less anticipated selling costs, if the loan is collateral dependent. A specific reserve is
established as a component of the ALLL when a loan has been determined to be impaired. Subsequent to the initial measurement of
impairment, if there is a significant change to the impaired loan’s expected future cash flows, or if actual cash flows are significantly
different from the cash flows previously estimated, Huntington recalculates the impairment and appropriately adjusts the specific
reserve. Similarly, if Huntington measures impairment based on the observable market price of an impaired loan or the fair value of
the collateral of an impaired collateral dependent loan, Huntington will adjust the specific reserve as appropriate.

When a loan within any class is impaired, the accrual of interest income is discontinued unless the receipt of principal and
interest is no longer in doubt. Interest income on TDRs is accrued when all principal and interest is expected to be collected under the
post-modification terms. Cash receipts on nonaccruing impaired loans within any class are generally applied entirely against principal
until the loan has been collected in full (including any portion charged-off) or the loan is deemed current, after which time any
additional cash receipts are recognized as interest income. Cash receipts on accruing impaired loans within any class are applied in
the same manner as accruing loans that are not considered impaired.

Collateral — We pledge assets as collateral as required for various transactions including security repurchase agreements,
public deposits, loan notes, derivative financial instruments, short-term borrowings and long-term borrowings. Assets that have been
pledged as collateral, including those that can be sold or repledged by the secured party, continue to be reported on our Consolidated
Balance Sheets.

We also accept collateral, primarily as part of various transactions including derivative instruments and security resale
agreements. Collateral accepted by us, including collateral that we can sell or repledge, is excluded from our Consolidated Balance
Sheets.

The market value of collateral we have accepted or pledged is regularly monitored and additional collateral is obtained or

provided as necessary to ensure appropriate collateral coverage in these transactions.

Premises and Equipment — Premises and equipment are stated at cost, less accumulated depreciation and amortization.
Depreciation is computed principally by the straight-line method over the estimated useful lives of the related assets. Buildings and
building improvements are depreciated over an average of 30 to 40 years and 10 to 30 years, respectively. Land improvements and
furniture and fixtures are depreciated over an average of 5 to 20 years, while equipment is depreciated over a range of 3 to 10 years.
Leasehold improvements are amortized over the lesser of the asset’s useful life or the lease term, including any renewal periods for
which renewal is reasonably assured. Maintenance and repairs are charged to expense as incurred, while improvements that extend
the useful life of an asset are capitalized and depreciated over the remaining useful life. Amounts in premises and equipment may

include items classified as held-for-sale, which are carried at lower of cost or fair value, less costs to sell. Premises and equipment is
evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be
recoverable.

Mortgage Servicing Rights — Huntington recognizes the rights to service mortgage loans as an asset when servicing is

contractually separated from the underlying mortgage loans by sale or securitization of the loans with servicing rights retained or
when purchased. MSRs are included in servicing rights and other intangible assets in the Consolidated Balance Sheets.

For loan sales with servicing retained, a servicing asset is recorded on the day of the sale at fair value for the right to service the
loans sold. To determine the fair value of a MSR, Huntington uses an option adjusted spread cash flow analysis incorporating market
implied forward interest rates to estimate the future direction of mortgage and market interest rates. The forward rates utilized are
derived from the current yield curve for U.S. dollar interest rate swaps and are consistent with pricing of capital markets instruments.
The current and projected mortgage interest rate influences the prepayment rate and, therefore, the timing and magnitude of the cash
flows associated with the MSR. Servicing revenues on mortgage loans are included in mortgage banking income.

At the time of initial capitalization, MSRs may be grouped into servicing classes based on the availability of market inputs used

in determining fair value and the method used for managing the risks of the servicing assets. MSR assets are recorded using the fair
value method or the amortization method. The election of the fair value or amortization method is made at the time each servicing
class is established. All newly created MSRs since 2009 were recorded using the amortization method. Any change in the fair value
of MSRs carried under the fair value method, as well as amortization and impairment of MSRs under the amortization method, during
the period is recorded in mortgage banking income. Huntington economically hedges the value of certain MSRs using derivative
instruments and trading securities. Changes in fair value of these derivatives and trading securities are reported as a component of
mortgage banking income.

Goodwill and Other Intangible Assets — Under the acquisition method of accounting, the net assets of entities acquired by
Huntington are recorded at their estimated fair value at the date of acquisition. The excess cost of consideration paid over the fair
value of net assets acquired is recorded as goodwill. Other intangible assets with finite useful lives are amortized either on an
accelerated or straight-line basis over their estimated useful lives. Goodwill is evaluated for impairment on an annual basis at
October 1st of each year or whenever events or changes in circumstances indicate that the carrying value may not be recoverable.
Other intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of
the asset may not be recoverable.

Derivative Financial Instruments — A variety of derivative financial instruments, principally interest rate swaps, caps, floors,

and collars, are used in asset and liability management activities to protect against the risk of adverse price or interest rate movements.
These instruments provide flexibility in adjusting Huntington’s sensitivity to changes in interest rates without exposure to loss of
principal and higher funding requirements.

Huntington also uses derivatives, principally loan sale commitments, in hedging its mortgage loan interest rate lock

commitments and its mortgage loans held for sale. Mortgage loan sale commitments and the related interest rate lock commitments
are carried at fair value on the Consolidated Balance Sheets with changes in fair value reflected in mortgage banking income.
Huntington also uses certain derivative financial instruments to offset changes in value of its MSRs. These derivatives consist
primarily of forward interest rate agreements and forward mortgage contracts. The derivative instruments used are not designated as
qualifying hedges. Accordingly, such derivatives are recorded at fair value with changes in fair value reflected in mortgage banking
income.

Derivative financial instruments are recorded in the Consolidated Balance Sheets as either an asset or a liability (in other assets
or other liabilities, respectively) and measured at fair value. On the date a derivative contract is entered into, we designate it as either:
• a qualifying hedge of the fair value of a recognized asset or liability or of an unrecognized firm commitment (fair value

hedge);

• a qualifying hedge of the variability of cash flows to be received or paid related to a recognized asset liability or forecasted

transaction (cash flow hedge); or

• a trading instrument or a non-qualifying (economic) hedge.

Changes in the fair value of a derivative that has been designated and qualifies as a fair value hedge, along with the changes in

the fair value of the hedged asset or liability that is attributable to the hedged risk, are recorded in current period earnings. Changes in
the fair value of a derivative that has been designated and qualifies as a cash flow hedge are recorded in accumulated other
comprehensive income, net of income taxes, and reclassified into earnings in the period during which the hedged item affects
earnings. Changes in the fair value of derivatives held for trading purposes or which do not qualify for hedge accounting are reported
in current period earnings.

For those derivatives to which hedge accounting is applied, Huntington formally documents the hedging relationship and the

risk management objective and strategy for undertaking the hedge. This documentation identifies the hedging instrument, the hedged
item or transaction, the nature of the risk being hedged, and, unless the hedge meets all of the criteria to assume there is no
ineffectiveness, the method that will be used to assess the effectiveness of the hedging instrument and how ineffectiveness will be

100

measured. The methods utilized to assess retrospective hedge effectiveness, as well as the frequency of testing, vary based on the type
of item being hedged and the designated hedge period. For specifically designated fair value hedges of certain fixed-rate debt,
Huntington utilizes the short-cut method when certain criteria are met. For other fair value hedges of fixed-rate debt, Huntington
utilizes the regression method to evaluate hedge effectiveness on a quarterly basis.

Hedge accounting is discontinued prospectively when:
•

the derivative is no longer effective or expected to be effective in offsetting changes in the fair value or cash flows of a
hedged item (including firm commitments or forecasted transactions);
the derivative expires or is sold, terminated, or exercised;
the forecasted transaction is no longer probable of occurring;
the hedged firm commitment no longer meets the definition of a firm commitment; or
the designation of the derivative as a hedging instrument is removed.

•
•
•
•

When hedge accounting is discontinued and the derivative no longer qualifies as an effective fair value or cash flow hedge, the

derivative continues to be carried on the balance sheet at fair value.

In the case of a discontinued fair value hedge of a recognized asset or liability, as long as the hedged item continues to exist on
the balance sheet, the hedged item will no longer be adjusted for changes in fair value. The basis adjustment that had previously been
recorded to the hedged item during the period from the hedge designation date to the hedge discontinuation date is recognized as an
adjustment to the yield of the hedged item over the remaining life of the hedged item.

In the case of a discontinued cash flow hedge of a recognized asset or liability, as long as the hedged item continues to exist on
the balance sheet, the changes in fair value of the hedging derivative will no longer be recorded to other comprehensive income. The
balance applicable to the discontinued hedging relationship will be recognized in earnings over the remaining life of the hedged item
as an adjustment to yield. If the discontinued hedged item was a forecasted transaction that is not expected to occur, any amounts
recorded on the balance sheet related to the hedged item, including any amounts recorded in accumulated other comprehensive
income, are immediately reclassified to current period earnings.

In the case of either a fair value hedge or a cash flow hedge, if the previously hedged item is sold or extinguished, the basis

adjustment to the underlying asset or liability or any remaining unamortized AOCI balance will be recognized in the current period
earnings.

In all other situations in which hedge accounting is discontinued, the derivative will be carried at fair value on the consolidated

balance sheets, with changes in its fair value recognized in current period earnings unless re-designated as a qualifying hedge.

Like other financial instruments, derivatives contain an element of credit risk, which is the possibility that Huntington will incur

a loss because the counterparty fails to meet its contractual obligations. Notional values of interest rate swaps and other off-balance
sheet financial instruments significantly exceed the credit risk associated with these instruments and represent contractual balances on
which calculations of amounts to be exchanged are based. Credit exposure is limited to the sum of the aggregate fair value of
positions that have become favorable to Huntington, including any accrued interest receivable due from counterparties. Potential
credit losses are mitigated through careful evaluation of counterparty credit standing, selection of counterparties from a limited group
of high quality institutions, collateral agreements, and other contract provisions. Huntington considers the value of collateral held and
collateral provided in determining the net carrying value of derivatives.

Huntington offsets the fair value amounts recognized for derivative instruments and the fair value for the right to reclaim cash

collateral or the obligation to return cash collateral arising from derivative instrument(s) recognized at fair value executed with the
same counterparty under a master netting arrangement.

Fair Value Measurements — The Company records or discloses certain of its assets and liabilities at fair value. Fair value is
defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most
advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Fair
value measurements are classified within one of three levels in a valuation hierarchy based upon the observability of inputs to the
valuation of an asset or liability as of the measurement date. The three levels are defined as follows:

• Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active

markets.

• Level 2 – inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and
inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial
instrument.

• Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value measurement.

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to

the fair value measurement.

Bank Owned Life Insurance — Huntington’s bank owned life insurance policies are recorded at their cash surrender value.
Huntington recognizes tax-exempt income from the periodic increases in the cash surrender value of these policies and from death

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benefits. A portion of the cash surrender value is supported by holdings in separate accounts. Book value protection for the separate
accounts is provided by the insurance carriers and a highly rated major bank.

Transfers of Financial Assets and Securitizations — Transfers of financial assets in which we have surrendered control over

the transferred assets are accounted for as sales. In assessing whether control has been surrendered, we consider whether the
transferee would be a consolidated affiliate, the existence and extent of any continuing involvement in the transferred financial assets,
and the impact of all arrangements or agreements made contemporaneously with, or in contemplation of, the transfer, even if they
were not entered into at the time of transfer. Control is generally considered to have been surrendered when (i) the transferred assets
have been legally isolated from us or any of our consolidated affiliates, even in bankruptcy or other receivership, (ii) the transferee (or,
if the transferee is an entity whose sole purpose is to engage in securitization or asset-backed financing that is constrained from
pledging or exchanging the assets it receives, each third-party holder of its beneficial interests) has the right to pledge or exchange the
assets (or beneficial interests) it received without any constraints that provide more than a trivial benefit to us, and (iii) neither we nor
our consolidated affiliates and agents have (a) both the right and obligation under any agreement to repurchase or redeem the
transferred assets before their maturity, (b) the unilateral ability to cause the holder to return specific financial assets that also provides
us with a more-than-trivial benefit (other than through a cleanup call) or (c) an agreement that permits the transferee to require us to
repurchase the transferred assets at a price so favorable that it is probable that it will require us to repurchase them.

If the sale criteria are met, the transferred financial assets are removed from our balance sheet and a gain or loss on sale is
recognized. If the sale criteria are not met, the transfer is recorded as a secured borrowing in which the assets remain on our balance
sheet and the proceeds from the transaction are recognized as a liability. For the majority of financial asset transfers, it is clear
whether or not we have surrendered control. For other transfers, such as in the case of complex transactions or where we have
continuing involvement, we generally obtain a legal opinion as to whether the transfer results in a true sale by law.

Gains and losses on the loans and leases sold and servicing rights associated with loan and lease sales are determined when the
related loans or leases are sold to either a securitization trust or third-party. For loan or lease sales with servicing retained, a servicing
asset is recorded at fair value for the right to service the loans sold.

Pension and Other Postretirement Benefits — Huntington recognizes the funded status of the postretirement benefit plans on

the Consolidated Balance Sheets. Net postretirement benefit cost charged to current earnings related to these plans is predominantly
based on various actuarial assumptions regarding expected future experience.

Certain employees are participants in various defined contribution and other non-qualified supplemental retirement plans.

Contributions to defined contribution plans are charged to current earnings.

In addition, we maintain a 401(k) plan covering substantially all employees. Employer contributions to the plan are charged to

current earnings.

Noninterest Income — Huntington recognizes revenue when the performance obligations related to the transfer of goods or
services under the terms of a contract are satisfied. Some obligations are satisfied at a point in time while others are satisfied over a
period of time. Revenue is recognized as the amount of consideration to which Huntington expects to be entitled to in exchange for
transferring goods or services to a customer. When consideration includes a variable component, the amount of consideration
attributable to variability is included in the transaction price only to the extent it is probable that significant revenue recognized will
not be reversed when uncertainty associated with the variable consideration is subsequently resolved. Generally, the variability
relating to the consideration is explicitly stated in the contracts, but may also arise from Huntington’s customer business practice, for
example, waiving certain fees related to customer’s deposit accounts such as NSF fees. Huntington’s contracts generally do not
contain terms that require significant judgement to determine the variability impacting the transaction price.

Revenue is segregated based on the nature of product and services offered as part of contractual arrangements. Revenue from

contracts with customers is broadly segregated as follows:

•

Service charges on deposit accounts include fees and other charges Huntington receives to provide various services, including but
not limited to, maintaining an account with a customer, providing overdraft services, wire transfer, transferring funds, and
accepting and executing stop-payment orders. The consideration includes both fixed (e.g., account maintenance fee) and
transaction fees (e.g., wire-transfer fee). The fixed fee is recognized over a period of time while the transaction fee is recognized
when a specific service (e.g., execution of wire-transfer) is rendered to the customer. Huntington may, from time to time, waive
certain fees (e.g., NSF fee) for customers but generally does not reduce the transaction price to reflect variability for future
reversals due to the insignificance of the amounts. Waiver of fees reduces the revenue in the period the waiver is granted to the
customer.

• Card and payment processing income includes interchange fees earned on debit cards and credit cards. All other fees (e.g., annual
fees), and interest income are recognized in accordance with ASC 310. Huntington recognizes interchange fees for services
performed related to authorization and settlement of a cardholder’s transaction with a merchant. Revenue is recognized when a
cardholder’s transaction is approved and settled. The revenue may be constrained due to inherent uncertainty related to
cardholder’s right to return goods and services but as the uncertainty is resolved within a short period of time (generally within 30
days) interchange revenue is reduced by the amount of returns in the period the return is made by the customer.

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Certain volume or transaction based interchange expenses (net of rebates) paid to the payment network reduce the interchange
revenue and are presented net on the income statement. Similarly, rewards payable under a reward program to cardholders are
recognized as a reduction of the transaction price and are presented net against the interchange revenue.

•

Trust and investment management services includes fee income generated from personal, corporate and institutional customers.
Huntington also provides investment management services, cash management services and tax reporting to customers. Services
are rendered over a period of time, over which revenue is recognized. Huntington may also recognize revenue from referring a
customer to outside third-parties including mutual fund companies that pay distribution (12b-1) fees and other expenses. 12b-1
fees are received upon initially placing account holder’s funds with a mutual fund company as well as in the future periods as long
as the account holder (i.e., the fund investor), remains invested in the fund. The transaction price includes variable consideration
which is considered constrained as it is not probable that a significant revenue reversal in the amount of cumulative revenue
recognized will not occur. Accordingly, those fees are recognized as revenue when the uncertainty associated with the variable
consideration is subsequently resolved, that is, initial fees are recognized in the initial period while the future fees are recognized
in future periods.

Insurance income includes agency commissions that are recognized when Huntington sells insurance policies to customers.
Huntington is also entitled to renewal commissions and, in some cases, profit sharing which are recognized in subsequent periods.
The initial commission is recognized when the insurance policy is sold to a customer. Renewal commission is variable
consideration and is recognized in subsequent periods when the uncertainty around variable consideration is subsequently
resolved (i.e., when customer renews the policy). Profit sharing is also a variable consideration that is not recognized until the
variability surrounding realization of revenue is resolved (i.e., Huntington has reached a minimum volume of sales). Another
source of variability is the ability of the policy holder to cancel the policy anytime. In such cases, Huntington may be required,
under the terms of the contract, to return part of the commission received. A policy cancellation reserve is established for such
expected cancellations.

• Other noninterest income includes a variety of other revenue streams including capital markets revenue, miscellaneous consumer
fees and marketing allowance revenue. Revenue is recognized when, or as, a performance obligation is satisfied. Inherent
variability in the transaction price is not recognized until the uncertainty affecting the variability is resolved.

Control is transferred to a customer either at a point in time or over time. A performance obligation is deemed satisfied when the
control over goods or services is transferred to the customer. To determine when control is transferred at a point in time, Huntington
considers indicators, including but not limited to the right to payment for the asset, transfer of significant risk and rewards of
ownership of the asset and acceptance of the asset by the customer. When control is transferred over a period of time, for different
performance obligations, either the input or output method is used to determine the progress. The measure of progress used to assess
completion of the performance obligation varies between performance obligations and may be based on time throughout the period of
service or on the value of goods and services transferred to the customer. As each distinct service or activity is performed, Huntington
transfers control to the customer based on the services performed as the customer simultaneously receives the benefits of those
services. This timing of revenue recognition aligns with the resolution of any uncertainty related to variable consideration. Costs to
obtain a revenue producing contract are expensed when incurred as a practical expedient as the contractual period for majority of
contracts is one year or less.

Revenue is recorded in the business segment responsible for the related product or service. Fee sharing arrangements exist to

allocate portions of such revenue to other business segments involved in selling to, or providing service to, customers. Business
segment results are determined based upon management’s reporting system, which assigns balance sheet and income statement items
to each of the business segments. The process is designed around Huntington’s organizational and management structure and,
accordingly, the results derived are not necessarily comparable with similar information published by other financial institutions.

Income Taxes — Income taxes are accounted for under the asset and liability method. Accordingly, deferred tax assets and

liabilities are recognized for the future book and tax consequences attributable to temporary differences between the financial
statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are
determined using enacted tax rates expected to apply in the year in which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income at the time of enactment of
such change in tax rates.

Any interest or penalties due for payment of income taxes are included in the provision for income taxes. To the extent we do

not consider it more likely than not that a deferred tax asset will be recovered, a valuation allowance is recorded. All positive and
negative evidence is reviewed when determining how much of a valuation allowance is recognized on a quarterly basis. In
determining the requirements for a valuation allowance, sources of possible taxable income are evaluated including future reversals of
existing taxable temporary differences, future taxable income exclusive of reversing temporary differences and carryforwards, taxable
income in appropriate carryback years, and tax-planning strategies. Huntington applies a more likely than not recognition threshold
for all tax uncertainties.

Share-Based Compensation — Huntington uses the fair value based method of accounting for awards of HBAN stock granted

to employees under various share-based compensation plans. Share-based compensation costs are recognized prospectively for all

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new awards granted under these plans. Compensation expense relating to stock options is calculated using a methodology that is
based on the underlying assumptions of the Black-Scholes option pricing model and is charged to expense over the requisite service
period (e.g., vesting period). Compensation expense relating to restricted stock awards is based upon the fair value of the awards on
the date of grant and is charged to earnings over the requisite service period (e.g., vesting period) of the award.

Stock Repurchases — Acquisitions of Huntington stock are recorded at cost.

Segment Results — Accounting policies for the business segments are the same as those used in the preparation of the
Consolidated Financial Statements with respect to activities specifically attributable to each business segment. However, the
preparation of business segment results requires management to establish methodologies to allocate funding costs and benefits,
expenses, and other financial elements to each business segment, which are described in Note 23.

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2. ACCOUNTING STANDARDS UPDATE

Accounting standards adopted in current period

Standard
ASU 2014-09 -
Revenue from
Contracts with
Customers (Topic
606).
Issued May 2014

ASU 2016-01 -
Recognition and
Measurement of
Financial Assets and
Financial Liabilities.
Issued January 2016

Effects on financial statements
- Huntington adopted the new guidance on January 1, 2018 using

the modified retrospective approach.

- The update did not have a material impact on Huntington’s

Consolidated Financial Statements.

- See Note 13 for further detail impact on adoption.

Summary of guidance
- Topic 606 supersedes the revenue recognition

requirements in Topic 605, Revenue Recognition,
and most industry-specific guidance.

- Requires an entity to recognize revenue upon the

transfer 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 to the nature, amount, timing
and uncertainty of revenue and cash flows arising
from contracts with customers.

- Guidance sets forth a five step approach for revenue

recognition.

- Makes targeted improvements related to certain

- Huntington adopted the new guidance on January 1, 2018 using

the modified retrospective approach.

- Amendments were applied as a cumulative-effect adjustment to

the balance sheet as of January 1, 2018.

- Huntington reclassified $19 million of equity securities from

AFS Securities to Other Securities on the Consolidated Balance
Sheets and reclassified unrealized gains of $1 million from
AOCI to Retained Earnings. Prior periods have been adjusted
to present these securities as Other Securities to facilitate
comparison.

aspects of recognition, measurement, presentation
and disclosures for financial instruments 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.

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

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

- Clarifies guidance on the classification of certain

- Huntington adopted the new guidance on January 1, 2018.

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.

- The update did not have a material impact on Huntington’s

Consolidated Financial Statements.

- Requires that an employer report the service cost

- Huntington adopted the new guidance on January 1, 2018.

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 or disclosed separately from the service
cost component in the income statement.

- The update did not have a material impact on Huntington’s

Consolidated Financial Statements.

105

Effects on financial statements
- Huntington adopted the new guidance on January 1, 2018.

- The update did not have a material impact on Huntington’s

Consolidated Financial Statements.

- For cash flow and net investment hedges, the cumulative-effect
adjustment related to eliminating the separate measurement of
ineffectiveness should be recognized in AOCI with a
corresponding adjustment to retained earnings.

- Huntington adopted the new guidance on January 1, 2018.

Except as mentioned in the paragraph below, the update did not
have a material impact on Huntington’s Consolidated Financial
Statements.

- Huntington reclassified $2.8 billion securities eligible to be

hedged under the last-of-layer method from held-to-maturity to
available-for-sale and recognized $26 million of fair value loss
(net of tax) within OCI.

- Effective for fiscal years beginning after December 15, 2019 and
interim periods within those fiscal years with early adoption
permitted.

- Huntington early adopted the guidance effective 4Q 2018. The
amendment did not have a material impact on Huntington’s
Consolidated Financial Statements.

Standard
ASU 2017-09 - Stock
Compensation
Modification
Accounting.
Issued May 2017

Summary of guidance
- 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.

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.

- Modifies the disclosure requirements on fair value

measurements.

- Removes disclosures for transfers between Level 1
and Level 2, the policy for timing of transfers
between levels, and the valuation processes for
Level 3 fair value measurements.

- Clarifies that the information about uncertainty in

measurement in uncertainty disclosure should be as
of the reporting date.

- Adds disclosures related to (a) changes in

unrealized gains/losses in OCI for Level 3 fair
value measurements for assets held at the end of the
reporting period, and (b) the process of calculating
weighted average for significant unobservable
inputs used to develop Level 3 fair value
measurements.

ASU 2018-13 - Fair
Value Measurement
(Topic 820).
Issued August 2018

ASU 2018-14 -
Compensation -
Retirement Benefits -
Defined Benefit
Plans.
Issued August 2018

- Modifies the disclosure requirements for defined

- Effective retrospectively for fiscal years beginning after

December 15, 2020 and interim periods within those fiscal years
with early adoption permitted.

- Huntington early adopted the guidance effective 4Q 2018. The
amendment did not have a material impact on the Huntington’s
Consolidated Financial Statements.

benefit pension plans.

- Removes disclosures pertaining to (a) the amounts

of AOCI expected to be recognized as pension costs
over the next fiscal year, (b) the amount and timing
of plan assets expected to be returned to the
employer, and (c) the effect of one-percentage-point
change in the assumed health care trends on (i)
service and interest cost and (ii) postretirement
health care benefit obligation.

- Adds a new disclosure requiring an explanation of
the reasons for significant gains and losses related
to changes in the benefit obligation for the period.

106

Standard
ASU 2018-15 -
Customer’s
Accounting for
Implementation
Costs Incurred in a
Cloud Computing
Arrangement That Is
a Service Contract.
Issued August 2018

Summary of guidance
- Aligns the requirements for capitalizing

implementation costs incurred in a hosting
arrangement that is a service contract with the
requirements for capitalizing implementation costs
incurred to develop or obtain internal-use software
as well as with hosting arrangements that include an
internal-use software license.

- Requires the entity to expense the capitalized

implementation costs of a hosting arrangement over
the term of the hosting arrangement.

- Requires the entity to present the expense related to
implementation costs in the same statement of
income line and statement of cash flows line where
the fees for the service contract is recognized for
respective statements.

Effects on financial statements
- Effective for fiscal years beginning after December 15, 2019 and
interim periods within those fiscal years with early adoption
permitted.

- Huntington early adopted the guidance effective 3Q 2018. The

update did not have a material impact on Huntington’s
Consolidated Financial Statements as the guidance was
consistent with Huntington’s existing accounting treatment for
such arrangements.

107

Accounting standards yet to be adopted

Standard
ASU 2016-02 -
Leases.
Issued February 2016

Summary of guidance
- New lease accounting model for lessees and

lessors. 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 classified as an operating
lease or a finance lease. Impact to the income
statement is not expected to be material.

- 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.

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 including historical
experience, current conditions, and reasonable and
supportable forecasts that affect the collectibility of
the reported amount.

108

Effects on financial statements
- Effective for the fiscal period beginning after December 15,

2018, with early application permitted.

- Management adopted the guidance on January 1, 2019, and
elected certain practical expedients offered by the FASB,
including foregoing the restatement of comparative periods
upon adoption. Management also excluded short-term leases
from the recognition of right-of-use asset and lease liabilities.
Additionally, Huntington elected the transition relief allowed by
FASB in foregoing the reassessment of the following: whether
any existing contracts were or contained leases, the
classification of existing leases, and the determination of initial
direct costs for existing leases.

- Huntington expects to recognize right-of-use assets and lease

liabilities of approximately $225 million, representing
substantially all of its operating lease commitments. This
estimate is based, primarily, on the present value of unpaid
future minimum lease payments. Additionally, that amount is
impacted by assumptions around renewals and/or extensions,
and the interest rate used to discount those future lease
obligations.

- Existing sale and leaseback guidance, including the detailed
guidance applicable to sale-leasebacks of real estate, was
replaced with a new model applicable to all assets, which will
apply equally to both lessees and lessors. Under the new
standard, if the transaction meets sale criteria, the seller-lessee
will recognize the sale based on the new revenue recognition
standard when control transfers to the buyer-lessor,
derecognizing the asset sold and replacing it with a right-of-use
asset and lease liability for the leaseback. If the transaction is at
fair value, the seller-lessee shall recognize a gain or loss on sale
at that time.

- Costs related to exiting an operating lease before the end of its
contractual term have been historically accounted for pursuant
to ASC 420, with the recognition of a liability measured at the
present value of remaining lease payments reduced by any
expected sublease income upon the exit of that space. ASC 842
changed the accounting for such costs, with entities evaluating
the impairment of right-of-use assets using the guidance in ASC
360. Such an impairment analysis would occur once the entity
commits to a plan to abandon the space, and thus may accelerate
the timing of these costs.

- The new standard defines initial direct costs as those that would

not have been incurred if the lease had not been obtained.
Certain incremental costs previously eligible for capitalization,
such as internal overhead, will now be expensed.

- Effective for fiscal years beginning after December 15, 2019,
including interim periods within those fiscal years. Early
adoption is permitted for fiscal years beginning after December
15, 2018.

- Adoption will be 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 a working group comprised of teams from different
disciplines including credit, finance, and risk management to
evaluate the requirements of the new standard and the impact it
will have on our processes.

- Huntington is currently in the process of developing credit
models as well as accounting, reporting, and governance
processes to comply with the new credit reserve requirements.

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 material impact on

Huntington’s Consolidated Financial Statements.

ASU 2018-16 -
Derivatives and
Hedging - Inclusion
of SOFR as
Benchmark Interest
Rate for Hedge
Accounting
Purposes.
Issued October 2018

ASU 2018-20 -
Narrow-Scope
Improvements for
Lessors
Issued December 2018

- Permits use of the OIS rate based on SOFR as a

- For public business entities that already have adopted the

U.S. benchmark interest rate for hedge accounting
purposes under Topic 815 in addition to the U.S.
Treasury, the LIBOR swap rate, the OIS rate based
on the Fed Funds Effective Rate, and the SIFMA
Municipal Swap Rate.

- The amendments create a lessor practical expedient
applicable to sales and other similar taxes incurred
in connection with a lease, and simplify lessor
accounting for lessor costs paid by the lessee.

- Permits lessors, as an entity-wide accounting policy
election, to present sales and other similar taxes that
arise from a specific leasing transaction on a net
basis.

- Requires lessors to present lessor costs paid by the
lessee directly to a third party on a net basis –
regardless of whether the lessor knows, can
determine or can reliably estimate those costs.

- Requires lessors to present lessor costs paid by the

lessee to the lessor (e.g. through direct
reimbursement or as part of the fixed lease
payments) on a gross basis

amendments in ASU 2017-12, the amendments are effective for
fiscal years beginning after December 15, 2018, and interim
periods within those fiscal years.

- The amendments should be adopted on a prospective basis for
qualifying new or redesignated hedging relationships entered
into on or after the date of adoption.

- Huntington will evaluate its risk management and may

determine to hedge risk associated with OIS based on SOFR on
case-to-case basis.

- Effective date coincides with the effective date of ASU 2016-02
for Huntington (fiscal period beginning after December 15,
2018).

- Huntington elected to present sales and other similar taxes that

arise from specific leasing transactions on a net basis.

- Management will present property taxes on a gross basis where

such taxes are paid by Huntington and reimbursed by the lessee,
and has assessed the impact of that change to Huntington’s
consolidated financial statements.

- The amendment does not have a material impact on
Huntington’s Consolidated Financial Statements.

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3. LOANS / LEASES AND ALLOWANCE FOR CREDIT LOSSES

Loans and leases which Huntington has the intent and ability to hold for the foreseeable future, or until maturity or payoff, are

classified in the Consolidated Balance Sheets as loans and leases. The total balance that is recognized against loans and leases
pertaining to unamortized premiums, discounts, fees, and costs, was a net premium of $428 million and $334 million at December 31,
2018 and 2017, respectively.

Loan and Lease Portfolio Composition

The following table provides a detailed listing of Huntington’s loan and lease portfolio at December 31, 2018 and December 31,

2017.

(dollar amounts in millions)
Loans and leases:

Commercial and industrial

Commercial real estate

Automobile

Home equity

Residential mortgage

RV and marine finance

Other consumer

Loans and leases

Allowance for loan and lease losses

Net loans and leases

At December 31,

2018

2017

30,605

6,842

12,429

9,722

10,728

3,254

1,320

74,900

(772)

74,128

28,107

7,225

12,100

10,099

9,026

2,438

1,122

70,117

(691)

69,426

During the fourth quarter of 2018, Huntington announced the sale of its Wisconsin branch banking operations. As a result, $121

million of loans were transferred to loans held-for-sale on the Consolidated Balance Sheet. The sale is expected to close in the first
half of 2019.

Direct Financing Leases

Huntington’s loan and lease portfolio includes lease financing receivables consisting of direct financing leases on equipment,

which are included in C&I loans. Net investments in lease financing receivables by category at December 31, 2018 and 2017 were as
follows:

(dollar amounts in millions)
Commercial and industrial:

Lease payments receivable
Estimated residual value of leased assets

Gross investment in commercial lease financing receivables
Deferred origination costs
Deferred fees
Total net investment in commercial lease financing receivables

At December 31,

2018

2017

1,747
726
2,473
20
(250)
2,243

1,645
755
2,400
18
(225)
2,193

The future lease rental payments due from customers on direct financing leases at December 31, 2018, totaled $1.7 billion and

were due as follows: $0.6 billion in 2019, $0.4 billion in 2020, $0.3 billion in 2021, $0.2 billion in 2022, $0.1 billion in 2023, and $0.1
billion thereafter.

110

Nonaccrual and Past Due Loans

The following table presents NALs by loan class at December 31, 2018 and 2017:

(dollar amounts in millions)

Commercial and industrial
Commercial real estate
Automobile
Home equity
Residential mortgage
RV and marine finance
Other consumer

Total nonaccrual loans

December 31,

2018

2017

188
15
5
62
69
1
—
340

161
29
6
68
84
1
—
349

The amount of interest that would have been recorded under the original terms for total NAL loans was $22 million, $21 million,

and $24 million for 2018, 2017, and 2016, respectively. The total amount of interest recorded to interest income for these loans was
$12 million, $18 million, and $17 million in 2018, 2017, and 2016, respectively.

The following table presents an aging analysis of loans and leases, including past due loans and leases, by loan class at

December 31, 2018 and 2017 (1):

Past Due (1)

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

December 31, 2018

140

30,465

— $

30,605

7 (2)

(dollar amounts in millions)

Commercial and industrial

Commercial real estate

Automobile

Home equity

Residential mortgage

RV and marine finance

Other consumer

Total loans and leases

108

—

168

124

128

323

6,827

12,305

9,593

10,327

3,237

1,293

362

114

298

774

74,047

December 31, 2017

—

6,842

12,429

9,722

10,728

3,254

1,320

74,900

—

131 (3)

170

(dollar amounts in millions)

Commercial and industrial

Commercial real estate

Automobile

Home equity

Residential mortgage

RV and marine finance

Other consumer

Total loans and leases

Past Due (1)

30-59
Days

60-89
Days

90 or
more days

129

118

Total

Current

114

27,954

117

128

295

7,201

11,982

9,969

8,642

2,421

1,100

335

108

271

714

69,269

Purchased
Credit
Impaired

Loans
Accounted for
Under FVO

Total Loans
and Leases

90 or
more days
past due
and
accruing

—

— $

28,107

9 (2)

—

7,225

12,100

10,099

9,026

2,438

1,122

72 (3)

70,117

115

(1) NALs are included in this aging analysis based on the loan’s past due status.
(2) Amounts include Huntington Technology Finance administrative lease delinquencies.
(3) Amounts include mortgage loans insured by U.S. government agencies.

111

Allowance for Credit Losses

The following table presents ALLL and AULC activity by portfolio segment for the years ended December 31, 2018, 2017, and

2016:

(dollar amounts in millions)
Year ended December 31, 2018:

ALLL balance, beginning of period

Loan charge-offs
Recoveries of loans previously charged-off
Provision for loan and lease losses

ALLL balance, end of period
AULC balance, beginning of period

Provision (reduction in allowance) for unfunded loan commitments
and letters of credit
AULC balance, end of period
ACL balance, end of period

Year ended December 31, 2017:

ALLL balance, beginning of period

Loan charge-offs
Recoveries of loans previously charged-off
Provision for loan and lease losses

ALLL balance, end of period
AULC balance, beginning of period

Provision (reduction in allowance) for unfunded loan commitments
and letters of credit
AULC balance, end of period
ACL balance, end of period

Year ended December 31, 2016:

ALLL balance, beginning of period

Loan charge-offs
Recoveries of loans previously charged-off
Provision for loan and lease losses
Allowance for loans sold or transferred to loans held for sale

ALLL balance, end of period
AULC balance, beginning of period

Provision (reduction in allowance) for unfunded loan commitments
and letters of credit

AULC recorded at acquisition

AULC balance, end of period
ACL balance, end of period

Credit Quality Indicators

Commercial

Consumer

Total

$
$

482
(79)
65
74
542
84

10
94
636

451
(72)
41
62
482
87

(3)
84
566

399
(92)
73
85
(14)
451
64

19
4
87
538

$
$

209
(189)
58
152
230
3

(1)
2
232

187
(180)
52
150
209
11

(8)
3
212

199
(135)
45
84
(6)
187
8

3
—
11
198

$
$

691
(268)
123
226
772
87

9
96
868

638
(252)
93
212
691
98

(11)
87
778

598
(227)
118
169
(20)
638
72

22
4
98
736

To facilitate the monitoring of credit quality for commercial loans, and for purposes of determining an appropriate ACL level for

these loans, Huntington utilizes the following internally defined categories of credit grades:

• Pass - Higher quality loans that do not fit any of the other categories described below.

• OLEM - The credit risk may be relatively minor yet represents a risk given certain specific circumstances. If the potential

weaknesses are not monitored or mitigated, the loan may weaken or the collateral may be inadequate to protect Huntington’s
position in the future. For these reasons, Huntington considers the loans to be potential problem loans.

•

Substandard - Inadequately protected loans by the borrower’s ability to repay, equity, and/or the collateral pledged to secure
the loan. These loans have identified weaknesses that could hinder normal repayment or collection of the debt. It is likely
Huntington will sustain some loss if any identified weaknesses are not mitigated.

• Doubtful - Loans that have all of the weaknesses inherent in those loans classified as Substandard, with the added elements

of the full collection of the loan is improbable and that the possibility of loss is high.

112

Loans are generally assigned a category of “Pass” rating upon initial approval and subsequently updated as appropriate based

on the borrower’s financial performance.

Commercial loans categorized as OLEM, Substandard, or Doubtful are considered Criticized loans. Commercial loans

categorized as Substandard or Doubtful are both considered Classified loans.

For all classes within consumer loan portfolios, loans are assigned pool level PD factors based on the FICO range within which

the borrower’s most recent credit bureau score falls. A credit bureau score is a credit score developed by FICO based on data provided
by the credit bureaus. The credit bureau score is widely accepted as the standard measure of consumer credit risk used by lenders,
regulators, rating agencies, and consumers. The higher the credit bureau score, the higher likelihood of repayment and therefore, an
indicator of higher credit quality.

Huntington assesses the risk in the loan portfolio by utilizing numerous risk characteristics. The classifications described above,

and also presented in the table below, represent one of those characteristics that are closely monitored in the overall credit risk
management processes.

The following table presents each loan and lease class by credit quality indicator at December 31, 2018 and 2017:

(dollar amounts in millions)
Commercial and industrial
Commercial real estate

Automobile
Home equity
Residential mortgage
RV and marine finance
Other consumer

(dollar amounts in millions)
Commercial and industrial
Commercial real estate

Automobile
Home equity
Residential mortgage
RV and marine finance
Other consumer

(1)
(2)
(3)

Excludes loans accounted for under the fair value option.
Reflects updated customer credit scores.
Reflects deferred fees and costs, loans in process, etc.

December 31, 2018

Credit Risk Profile by UCS Classification

Pass

OLEM

Substandard

Doubtful

Total

28,807
6,586

518
181

1,269
74

Credit Risk Profile by FICO Score (1), (2)

750+

650-749

<650

Other (3)

6,254
6,098
7,159
2,074
501

4,520
2,975
2,801
990
633

1,373
591
612
105
129

11
1

282
56
78
85
57

30,605
6,842

Total

12,429
9,720
10,650
3,254
1,320

December 31, 2017

Credit Risk Profile by UCS Classification

Pass

OLEM

Substandard

Doubtful

Total

26,268
6,909

694
200

1,116
115

Credit Risk Profile by FICO Score (1), (2)

750+

650-749

<650

Other (3)

6,102
6,352
5,697
1,433
428

4,312
3,024
2,581
863
540

1,390
617
605
96
143

29
1

295
104
54
45
11

28,107
7,225

Total

12,099
10,097
8,937
2,437
1,122

113

Impaired Loans

The following tables present the balance of the ALLL attributable to loans by portfolio segment individually and collectively

evaluated for impairment and the related loan and lease balance for the years ended December 31, 2018 and 2017:

Commercial

Consumer

Total

33
509
542

516
36,931
37,447

10
220
230

591
36,783
37,374

Commercial

Consumer

32
450
482

41
607
34,684
35,332

9
200
209

— $
616
34,076
34,692

43
729
772

1,107
73,714
74,821

Total

41
650
691

41
1,223
68,760
70,024

(dollar amounts in millions)
ALLL at December 31, 2018

Portion of ALLL balance:

Attributable to loans individually evaluated for impairment
Attributable to loans collectively evaluated for impairment

Total ALLL balance

Loan and Lease Ending Balances at December 31, 2018 (1)

Portion of loan and lease ending balance:

Individually evaluated for impairment
Collectively evaluated for impairment
Total loans and leases evaluated for impairment

(1)

Excludes loans accounted for under the fair value option.

(dollar amounts in millions)
ALLL at December 31, 2017

Portion of ALLL balance:

Attributable to loans individually evaluated for impairment
Attributable to loans collectively evaluated for impairment

Total ALLL balance:

Loan and Lease Ending Balances at December 31, 2017 (1)

Portion of loan and lease ending balances:

Attributable to purchased credit-impaired loans
Individually evaluated for impairment
Collectively evaluated for impairment
Total loans and leases evaluated for impairment

(1)

Excludes loans accounted for under the fair value option.

114

The following tables present by class the ending, unpaid principal balance, and the related ALLL, along with the average
balance and interest income recognized only for impaired loans and leases for the years ended December 31, 2018 and 2017 (1):

(dollar amounts in millions)
With no related allowance recorded:
Commercial and industrial
Commercial real estate

With an allowance recorded:

Commercial and industrial
Commercial real estate
Automobile
Home equity
Residential mortgage
RV and marine finance
Other consumer

Total

Commercial and industrial (3)
Commercial real estate (4)
Automobile (2)
Home equity (5)
Residential mortgage (5)
RV and marine finance (2)
Other consumer (2)

December 31, 2018

Unpaid
Principal
Balance (6)

Ending
Balance

Year Ended

December 31, 2018

Related
Allowance (7)

Average
Balance

Interest
Income
Recognized

224
36

261
45

— $
—

256
47

221
35
38
314
287
2
9

445
71
38
314
287
2
9

240
39
42
356
323
3
9

501
84
42
356
323
3
9

31
2
2
10
4
—
3

272
45
37
326
297
2
8

528
92
37
326
297
2
8

22
8

11
2
2
14
11
—
—

33
10
2
14
11
—
—

115

(dollar amounts in millions)
With no related allowance recorded:
Commercial and industrial
Commercial real estate

With an allowance recorded:

Commercial and industrial
Commercial real estate
Automobile
Home equity
Residential mortgage
RV and marine finance
Other consumer

Total

Commercial and industrial (3)
Commercial real estate (4)
Automobile (2)
Home equity (5)
Residential mortgage (5)
RV and marine finance (2)
Other consumer (2)

December 31, 2017

Unpaid
Principal
Balance (6)

Ending
Balance

Year Ended

December 31, 2017

Related
Allowance (7)

Average
Balance

Interest
Income
Recognized

284
56

311
81

— $
—

206
64

257
51
36
334
308
2
8

541
107
36
334
308
2
8

280
51
40
385
338
3
8

591
132
40
385
338
3
8

29
3
2
14
4
—
2

292
52
33
329
325
1
5

498
116
33
329
325
1
5

12
8

16
2
2
15
12
—
—

28
10
2
15
12
—
—

These tables do not include loans fully charged-off.

(1)
(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 December 31, 2018 and December 31, 2017, C&I loans of $366 million and $382 million, respectively, were considered impaired due to their status as a

TDR.

(4) At December 31, 2018 and December 31, 2017, CRE loans of $60 million and $93 million, respectively, were considered impaired due to their status as a TDR.
Includes home equity and residential mortgages considered impaired due to collateral dependent designation associated with their non-accrual status as well as
(5)
home equity and mortgage loans considered impaired due to their status as a TDR.
The differences between the ending balance and unpaid principal balance amounts primarily represent partial charge-offs.
Impaired loans in the consumer portfolio are evaluated in pools and not at the loan level. Thus, these loans do not have an individually assigned allowance and as
such all are classified as with an allowance recorded in the tables above.

(6)
(7)

TDR Loans

The amount of interest that would have been recorded under the original terms for total accruing TDR loans was $51 million,
$49 million, and $49 million for 2018, 2017, and 2016, respectively. The total amount of actual interest recorded to interest income
for these loans was $48 million, $45 million, and $40 million for 2018, 2017, and 2016, respectively.

TDR Concession Types

The Company’s standards relating to loan modifications consider, among other factors, minimum verified income requirements,
cash flow analyses, and collateral valuations. Each potential loan modification is reviewed individually and the terms of the loan are
modified to meet a borrower’s specific circumstances at a point in time. All commercial TDRs are reviewed and approved by our
SAD.

Following is a description of TDRs by the different loan types:

Commercial loan TDRs – Our strategy involving commercial TDR borrowers includes working with these borrowers to allow

them to refinance elsewhere, as well as allow them time to improve their financial position and remain a Huntington customer through
refinancing their notes according to market terms and conditions in the future. A subsequent refinancing or modification of a loan may
occur when either the loan matures according to the terms of the TDR-modified agreement or the borrower requests a change to the
loan agreements. At that time, the loan is evaluated to determine if the borrower is creditworthy. It is subjected to the normal
underwriting standards and processes for other similar credit extensions, both new and existing. The refinanced note is evaluated to
determine if it is considered a new loan or a continuation of the prior loan. A new loan is considered for removal of the TDR
designation, whereas a continuation of the prior note requires a continuation of the TDR designation. In order for a TDR designation
to be removed, the borrower must no longer be experiencing financial difficulties and the terms of the refinanced loan must not
represent a concession.

116

Consumer loan TDRs – Residential mortgage TDRs represent loan modifications associated with traditional first-lien mortgage
loans in which a concession has been provided to the borrower. The primary concessions given to residential mortgage borrowers are
amortization or maturity date changes and interest rate reductions. Residential mortgages identified as TDRs involve borrowers
unable to refinance their mortgages through the Company’s normal mortgage origination channels or through other independent
sources. Some, but not all, of the loans may be delinquent. The Company may make similar interest rate, term, and principal
concessions for Automobile, Home Equity, RV and Marine Finance and Other Consumer loan TDRs.

TDR Impact on Credit Quality

Huntington’s ALLL is largely determined by risk ratings assigned to commercial loans, updated borrower credit scores on

consumer loans, and borrower delinquency history in both the commercial and consumer portfolios. These risk ratings and credit
scores consider the default history of the borrower, including payment redefaults. As such, the provision for credit losses is impacted
primarily by changes in borrower payment performance rather than the TDR classification. TDRs can be classified as either accrual or
nonaccrual loans. Nonaccrual TDRs are included in NALs whereas accruing TDRs are excluded from NALs as it is probable that all
contractual principal and interest due under the restructured terms will be collected.

The Company’s TDRs may include multiple concessions and the disclosure classifications are presented based on the primary

concession provided to the borrower. The majority of the concessions for the C&I and CRE portfolios are the extension of the
maturity date, but could also include an increase in the interest rate. In these instances, the primary concession is the maturity date
extension.

TDR concessions may also result in the reduction of the ALLL within the C&I and CRE portfolios. This reduction is derived
from payments and the resulting application of the reserve calculation within the ALLL. The transaction reserve for non-TDR C&I
and CRE loans is calculated based upon several estimated factors, such as PD and LGD. Upon the occurrence of a TDR in the C&I
and CRE portfolios, the reserve is measured based on discounted expected cash flows or collateral value, less anticipated selling costs,
of the modified loan in accordance with ASC 310-10. The resulting TDR ALLL calculation often results in a lower ALLL amount
because (1) the discounted expected cash flows or collateral value, less anticipated selling costs, indicate a lower estimated loss, (2) if
the modification includes a rate increase, the discounting of the cash flows on the modified loan, using the pre-modification interest
rate, exceeds the carrying value of the loan, or (3) payments may occur as part of the modification. Alternatively, the ALLL for C&I
and CRE loans may increase as a result of the modification, as the discounted cash flow analysis may indicate additional reserves are
required.

TDR concessions on consumer loans may increase the ALLL. The concessions made to these borrowers often include interest

rate reductions, and therefore, the TDR ALLL calculation results in a greater ALLL compared with the non-TDR calculation as the
reserve is measured based on the estimation of the discounted expected cash flows or collateral value, less anticipated selling costs, on
the modified loan in accordance with ASC 310-10. The resulting TDR ALLL calculation often results in a higher ALLL amount
because (1) the discounted expected cash flows or collateral value, less anticipated selling costs, indicate a higher estimated loss or,
(2) due to the rate decrease, the discounting of the cash flows on the modified loan, using the pre-modification interest rate, indicates a
reduction in the present value of expected cash flows or collateral value, less anticipated selling costs. However, in certain instances,
the ALLL may decrease as a result of payments made in connection with the modification.

117

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 years ended December 31, 2018 and 2017.

New Troubled Debt Restructurings (1)

Year Ended December 31, 2018

Post-modification Outstanding Recorded Investment (2)

Number of
Contracts

Interest rate
reduction

Amortization or
maturity date change

Chapter 7
bankruptcy

Other

Total

— $

352

— $

352

—

508

—

— $

539

Year Ended December 31, 2017

Post-modification Outstanding Recorded Investment (2)

Number of
Contracts

Interest rate
reduction

Amortization or
maturity date change

Chapter 7
bankruptcy

Other

Total

1,047

— $

—

600

122

—

601

122

725

102

2,867

602

345

117

1,633

6,391

111

2,741

922

453

131

1,340

6,745

(dollar amounts in millions)

Commercial and industrial

Commercial real estate

Automobile

Home equity

Residential mortgage

RV and marine finance

Other consumer

Total new TDRs

(dollar amounts in millions)

Commercial and industrial

Commercial real estate

Automobile

Home equity

Residential mortgage

RV and marine finance

Other consumer

Total new TDRs

817

853

(1)
(2)

TDRs may include multiple concessions. The disclosure classifications are based on the primary concession provided to the borrower.
Post-modification balances approximate pre-modification balances. The aggregate amount of charge-offs as a result of a restructuring are not significant.

The financial effects of modification represent the financial impact via provision (recovery) for loan and lease losses as a result

of the modification and were $(15) million and $(13) million at December 31, 2018 and December 31, 2017, respectively.

Pledged Loans and Leases

The Bank has access to the Federal Reserve’s discount window and advances from the FHLB of Cincinnati. As of

December 31, 2018 and 2017, these borrowings and advances are secured by $46.5 billion and $31.7 billion of loans and securities,
respectively.

118

4. INVESTMENT SECURITIES AND OTHER SECURITIES

Debt securities purchased in which Huntington has the positive intent and ability to hold to their maturity are classified as held-

to-maturity securities. All other debt and equity securities are classified as available-for-sale or other securities.

The following tables provide amortized cost, fair value, and gross unrealized gains and losses by investment category at

December 31, 2018 and 2017:

(dollar amounts in millions)
December 31, 2018
Available-for-sale securities:

U.S. Treasury
Federal agencies:

Residential CMO
Residential MBS
Commercial MBS

Other agencies

Total U.S. Treasury, federal agency and other agency securities

Municipal securities
Asset-backed securities
Corporate debt
Other securities/Sovereign debt
Total available-for-sale securities

Held-to-maturity securities:

Federal agencies:

Residential CMO
Residential MBS
Commercial MBS

Other agencies

Total federal agency and other agency securities

Municipal securities

Total held-to-maturity securities

Other securities, at cost:

Non-marketable equity securities:

Federal Home Loan Bank stock
Federal Reserve Bank stock

Other securities, at fair value

Mutual funds
Marketable equity securities

Total other securities

Unrealized

Amortized
Cost

Gross
Gains

Gross
Losses

Fair Value

— $

7,185
1,261
1,641
128
10,220
3,512
318
54
4
14,108

2,124
1,851
4,235
350
8,560
5
8,565

248
295

20
1
564

15
9
—
—
24
6
1
—
—
31

— $
2
—
—
2
—
2

— $
—

—
1
1

(201)
(15)
(58)
(2)
(276)
(78)
(4)
(1)
—
(359) $

(47) $
(42)
(186)
(6)
(281)
—
(281) $

— $
—

—
—
— $

6,999
1,255
1,583
126
9,968
3,440
315
53
4
13,780

2,077
1,811
4,049
344
8,281
5
8,286

248
295

20
2
565

119

(dollar amounts in millions)
December 31, 2017
Available-for-sale securities:

U.S. Treasury
Federal agencies:

Residential CMO
Residential MBS
Commercial MBS

Other agencies

Total U.S. Treasury, federal agency and other agency securities

Municipal securities
Asset-backed securities
Corporate debt
Other securities/Sovereign debt
Total available-for-sale securities

Held-to-maturity securities:

Federal agencies:

Residential CMO
Residential MBS
Commercial MBS

Other agencies

Total federal agency and other agency securities

Municipal securities

Total held-to-maturity securities

Other securities, at cost:

Non-marketable equity securities:

Federal Home Loan Bank stock
Federal Reserve Bank stock

Other securities, at fair value

Mutual funds
Marketable equity securities

Total other securities

Unrealized

Amortized
Cost

Gross
Gains

Gross
Losses

Fair Value

— $

6,661
1,371
2,539
69
10,645
3,892
482
106
2
15,127

3,714
1,049
3,791
532
9,086
5
9,091

287
294

18
1
600

1
1
—
1
3
21
1
3
—
28

1
2
—
1
4
—
4

— $
—

—
—
— $

(178)
(5)
(52)
—
(235)
(35)
(16)
—
—
(286) $

(58) $
(7)
(55)
(4)
(124)
—
(124) $

— $
—

—
—
— $

6,484
1,367
2,487
70
10,413
3,878
467
109
2
14,869

3,657
1,044
3,736
529
8,966
5
8,971

287
294

18
1
600

120

The following table provides the amortized cost and fair value of securities by contractual maturity at December 31, 2018. Expected

maturities may differ from contractual maturities as issuers may have the right to call or prepay obligations with or without incurring
penalties.

(dollar amounts in millions)
Available-for-sale securities:

Under 1 year
After 1 year through 5 years
After 5 years through 10 years
After 10 years

Total available-for-sale securities

Held-to-maturity securities:

Under 1 year
After 1 year through 5 years
After 5 years through 10 years
After 10 years

Total held-to-maturity securities

2018

Amortized
Cost

Fair
Value

186
1,057
1,838
11,027
14,108

— $
11
362
8,192
8,565

185
1,039
1,802
10,754
13,780

—
11
356
7,919
8,286

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 December 31, 2018 and 2017:

(dollar amounts in millions)
December 31, 2018
Available-for-sale securities:

Federal agencies:

Residential CMO
Residential MBS
Commercial MBS

Other agencies

Total federal agency and other agency securities

Municipal securities
Asset-backed securities
Corporate debt

Total temporarily impaired securities

Held-to-maturity securities:

Federal agencies:

Residential CMO
Residential MBS
Commercial MBS

Other agencies

Total federal agency and other agency securities

Municipal securities

Total temporarily impaired securities

Less than 12 Months

Over 12 Months

Total

Fair
Value

Gross
Unrealized
Losses

Fair
Value

Gross
Unrealized
Losses

Fair
Value

Gross
Unrealized
Losses

425
259
10
—

694
1,425
95
40
2,254

12
16
—
113

141
—
141

(3) $
(6)
—
—

(9)
(24)
(2)
—
(35) $

— $
—
—
(2)

(2)
—
(2) $

5,943
319
1,573
124

7,959
1,602
117
1
9,679

2,004
1,457
4,041
205

7,707
4
7,711

(198) $
(9)
(58)
(2)

(267)
(54)
(2)
(1)
(324) $

(47) $
(42)
(186)
(4)

(279)
—
(279) $

6,368
578
1,583
124

8,653
3,027
212
41
11,933

2,016
1,473
4,041
318

7,848
4
7,852

(201)
(15)
(58)
(2)

(276)
(78)
(4)
(1)
(359)

(47)
(42)
(186)
(6)

(281)
—
(281)

121

(dollar amounts in millions)
December 31, 2017
Available-for-sale securities:
Federal agencies:

Residential CMO
Residential MBS
Commercial MBS

Other agencies

Total federal agency and other agency securities

Municipal securities
Asset-backed securities

Total temporarily impaired securities

Held-to-maturity securities:

Federal agencies:

Residential CMO
Residential MBS
Commercial MBS

Other agencies

Total federal agency and other agency securities

Municipal securities

Total temporarily impaired securities

Less than 12 Months

Over 12 Months

Total

Fair
Value

Gross
Unrealized
Losses

Fair
Value

Gross
Unrealized
Losses

Fair
Value

Gross
Unrealized
Losses

1,660
1,078
960
39
3,737
1,681
127
5,545

2,369
974
3,456
249
7,048
—
7,048

(19) $
(5)
(15)
—
(39)
(21)
(1)
(61) $

(26) $
(7)
(49)
(2)
(84)
—
(84) $

4,520
11
1,527
—
6,058
497
173
6,728

1,019
—
253
139
1,411
5
1,416

(159) $
—
(37)
—
(196)
(14)
(15)
(225) $

(32) $
—
(6)
(2)
(40)
—
(40) $

6,180
1,089
2,487
39
9,795
2,178
300
12,273

3,388
974
3,709
388
8,459
5
8,464

(178)
(5)
(52)
—
(235)
(35)
(16)
(286)

(58)
(7)
(55)
(4)
(124)
—
(124)

Upon adoption of ASU 2017-12, Huntington transferred $2.8 billion of securities eligible to be hedged under the last-of-layer

method from the HTM portfolio to the AFS portfolio. At the time of the transfer, $26 million of unrealized losses were recognized in
OCI. Concurrently, Huntington transferred $2.7 billion of securities from the AFS portfolio to the HTM portfolio. At the time of the
transfer, AOCI included $56 million of unrealized losses attributed to these securities. This loss will be amortized into interest income
over the remaining life of the securities.

The following table is a summary of realized securities gains and losses for the years ended December 31, 2018, 2017, and

2016:

(dollar amounts in millions)

Gross gains on sales of securities
Gross (losses) on sales of securities

Net gain (loss) on sales of securities

OTTI recognized in earnings

Net securities (losses)

Security Impairment

Year Ended December 31,

2018

2017

2016

7
(28)
(21) $

—
(21) $

10
(10)
— $

(4)
(4) $

23
(21)
2

(2)
—

Huntington evaluates the securities portfolio for impairment on a quarterly basis. As of December 31, 2018, the Company has

evaluated available-for-sale and held-to-maturity securities with gross unrealized losses for impairment and concluded no OTTI is
required.

Other securities that are carried at cost are reviewed at least annually for impairment, with valuation adjustments recognized in

other noninterest income. As of December 31, 2018, the Company concluded no impairment is required.

122

5. MORTGAGE LOAN SALES AND SERVICING RIGHTS

Residential Mortgage Portfolio

The following table summarizes activity relating to residential mortgage loans sold with servicing retained for the years ended

December 31, 2018, 2017, and 2016:

(dollar amounts in millions)
Residential mortgage loans sold with servicing retained
Pretax gains resulting from above loan sales (1)

(1)

Recorded in mortgage banking income.

Year Ended December 31,

2018

2017

2016

3,846
87

3,985
99

3,632
97

The following table summarizes the changes in MSRs recorded using the amortization method for the years ended December 31,

2018 and 2017:

(dollar amounts in millions)
Carrying value, beginning of year
New servicing assets created
Impairment recovery (charge)
Amortization and other
Carrying value, end of year
Fair value, end of year
Weighted-average life (years)

2018

2017

$
$

191
44
6
(30)
211
212
6.7

172
44
1
(26)
191
191
7.1

MSRs do not trade in an active, open market with readily observable prices. Therefore, the fair value of MSRs is estimated
using a discounted future cash flow model. Changes in the assumptions used may have a significant impact on the valuation of MSRs.
MSR values are highly sensitive to movement in interest rates as expected future net servicing income depends on the projected
outstanding principal balances of the underlying loans, which can be greatly impacted by the level of prepayments.

For MSRs under the amortization method, a summary of key assumptions and the sensitivity of the MSR value to changes in

these assumptions at December 31, 2018, and 2017 follows:

(dollar amounts in millions)
Constant prepayment rate (annualized)
Spread over forward interest rate swap rates

December 31, 2018

December 31, 2017

Decline in fair value due to

Actual
9.40 % $
934 bps

10%
adverse
change

20%
adverse
change

(6) $
(7)

(12)
(13)

Actual
8.30 % $

1,049 bps

10%
adverse
change

20%
adverse
change

(5) $
(7)

(10)
(13)

Additionally, Huntington held MSRs recorded using the fair value method of $10 million and $11 million at December 31, 2018
and 2017, respectively. The change in fair value representing time decay, payoffs and changes in valuation inputs and assumptions for
the years ended December 31, 2018 and 2017 was $1 million and $3 million, respectively.

Total servicing, late and other ancillary fees included in mortgage banking income was $60 million, $56 million, and $50 million

for the years ended December 31, 2018, 2017, and 2016, respectively. The unpaid principal balance of residential mortgage loans
serviced for third parties was $21.0 billion, $19.8 billion, and $18.9 billion at December 31, 2018, 2017, and 2016, respectively.

123

6. GOODWILL AND OTHER INTANGIBLE ASSETS

Business segments are based on segment leadership structure, which reflects how segment performance is monitored and

assessed. We have four major business segments: Consumer and Business Banking, Commercial Banking, Vehicle Finance, and
Regional Banking and The Huntington Private Client Group (RBHPCG). The Treasury / Other function includes technology and
operations, other unallocated assets, liabilities, revenue, and expense.

A rollforward of goodwill by business segment for the years ended December 31, 2018 and 2017, is presented in the table

below:

(dollar amounts in millions)
Balance, January 1, 2017

Adjustments

Balance, December 31, 2017

Goodwill acquired during the period
Adjustments

Balance, December 31, 2018

Consumer &
Business
Banking

Commercial
Banking

Vehicle
Finance

RBHPCG

Treasury/
Other

1,398
—
1,398
—
(5)
1,393

453
(28)
425
1
—
426

— $
—
—
—
—
— $

142
28
170
—
—
170

Huntington
Consolidated
1,993
—
1,993
1
(5)
1,989

— $
—
—
—
—
— $

Huntington announced a change in its executive leadership team, which became effective at the end of 2017. As a result,
Commercial Real Estate is now included as an operating unit in the Commercial Banking segment. During the 2017 second quarter,
the previously reported Home Lending segment was included as an operating unit within the Consumer and Business Banking
segment, and the Insurance operating unit previously included in Commercial Banking was realigned to RBHPCG. As a result of
these changes, Huntington reclassified a net $28 million of goodwill from the Commercial Banking segment to the RBHPCG segment.

On October 1, 2018, Huntington completed its acquisition of HSE. As part of the transaction, Huntington recorded $1 million

of goodwill.

During the fourth quarter of 2018, Huntington reclassified $5 million of goodwill in the Consumer & Business Banking segment

related to the held for sale disposal group.

Goodwill is not amortized but is evaluated for impairment on an annual basis at October 1 of each year or whenever events or

changes in circumstances indicate the carrying value may not be recoverable. No impairment was recorded in 2018 or 2017.

At December 31, 2018 and 2017, Huntington’s other intangible assets consisted of the following:

(dollar amounts in millions)
December 31, 2018

Core deposit intangible
Customer relationship
Total other intangible assets
December 31, 2017

Core deposit intangible
Customer relationship
Total other intangible assets

Gross
Carrying
Amount

Accumulated
Amortization

Net
Carrying
Value

314
182
496

325
190
515

(93) $
(122)
(215) $

(61) $
(108)
(169) $

221
60
281

264
82
346

49
41
38
36
34

The estimated amortization expense of other intangible assets for the next five years is as follows:

(dollar amounts in millions)
2019
2020
2021
2022
2023

Amortization
Expense

124

7. PREMISES AND EQUIPMENT

Premises and equipment were comprised of the following at December 31, 2018 and 2017:

(dollar amounts in millions)
Land and land improvements
Buildings
Leasehold improvements
Equipment
Total premises and equipment
Less accumulated depreciation and amortization
Net premises and equipment

At December 31,

2018

2017

188
579
199
739
1,705
(915)
790

193
563
240
746
1,742
(878)
864

Depreciation and amortization charged to expense and rental income credited to net occupancy expense for the three years ended

December 31, 2018, 2017, and 2016 were:

(dollar amounts in millions)
Total depreciation and amortization of premises and equipment

Rental income credited to occupancy expense

8. SHORT-TERM BORROWINGS

2018

2017

2016

130

123

126

Borrowings with original maturities of one year or less are classified as short-term and were comprised of the following at

December 31, 2018 and 2017:

(dollar amounts in millions)
Federal funds purchased and securities sold under agreements to repurchase
Federal Home Loan Bank advances
Other borrowings
Total short-term borrowings

At December 31,

2018

2017

2,004
—
13
2,017

1,318
3,725
13
5,056

Other borrowings consist of borrowings from the U.S. Treasury and other notes payable.

125

9. LONG-TERM DEBT

Huntington’s long-term debt consisted of the following:

(dollar amounts in millions)
The Parent Company:
Senior Notes:

3.19% Huntington Bancshares Incorporated medium-term notes due 2021
2.33% Huntington Bancshares Incorporated senior notes due 2022
4.00% Huntington Bancshares Incorporated senior notes due 2025
2.64% Huntington Bancshares Incorporated senior notes due 2018

Subordinated Notes:

7.00% Huntington Bancshares Incorporated subordinated notes due 2020
3.55% Huntington Bancshares Incorporated subordinated notes due 2023
Sky Financial Capital Trust IV 4.20% junior subordinated debentures due 2036 (1)
Sky Financial Capital Trust III 4.20% junior subordinated debentures due 2036 (1)
Huntington Capital I Trust Preferred 3.50% junior subordinated debentures due 2027 (2)
Huntington Capital II Trust Preferred 3.42% junior subordinated debentures due 2028 (3)
Camco Financial Statutory Trust I 4.13% due 2037 (4)

Total notes issued by the parent
The Bank:
Senior Notes:

3.55% Huntington National Bank senior notes due 2023
3.25% Huntington National Bank senior notes due 2021
2.47% Huntington National Bank senior notes due 2020
2.55% Huntington National Bank senior notes due 2022
2.23% Huntington National Bank senior notes due 2019
2.43% Huntington National Bank senior notes due 2020
2.97% Huntington National Bank senior notes due 2020
3.31% Huntington National Bank senior notes due 2020 (5)
2.24% Huntington National Bank senior notes due 2018
2.10% Huntington National Bank senior notes due 2018
1.75% Huntington National Bank senior notes due 2018
5.04% Huntington National Bank medium-term notes due 2018

Subordinated Notes:

3.86% Huntington National Bank subordinated notes due 2026
5.45% Huntington National Bank subordinated notes due 2019
6.67% Huntington National Bank subordinated notes due 2018

Total notes issued by the bank
FHLB Advances:

3.12% weighted average rate, varying maturities greater than one year

Other:

Huntington Technology Finance nonrecourse debt, 4.19% effective interest rate, varying maturities
4.68% Huntington Preferred Capital II - Class F securities (6)
4.68% Huntington Preferred Capital II - Class G securities (6)

Total other
Total long-term debt

(1) Variable effective rate at December 31, 2018, based on three-month LIBOR +1.40%.
(2) Variable effective rate at December 31, 2018, based on three-month LIBOR +0.70%
(3) Variable effective rate at December 31, 2018, based on three-month LIBOR +0.625%.
(4) Variable effective rate at December 31, 2018, based on three-month LIBOR +1.33%.
(5) Variable effective rate at December 31, 2018, based on three-month LIBOR + 0.51%
(6) Variable effective rate at December 31, 2018, based on three-month LIBOR +1.88%.

126

At December 31,

2018

2017

969
946
507
—

969
953
—
399

312
245
74
72
69
31
4
3,128

—
—
694
685
497
498
492
300
844
748
496
35

238
77
129
5,733

263
75
—
338
9,206

305
239
74
72
69
31
4
3,216

756
750
692
672
498
493
491
300
—
—
—
—

229
76
—
4,957

322
74
50
446
8,625

Amounts above are net of unamortized discounts and adjustments related to hedging with derivative financial instruments. The
derivative instruments, principally interest rate swaps, are used to hedge interest rate risk of certain fixed-rate debt by converting the
debt to a variable rate. See Note 18 for more information regarding such financial instruments.

In May 2018, Huntington issued $500 million of senior notes at 99.686% of face value. The senior notes mature on May 15,

2025 and have a fixed coupon rate of 4.00%.

In May 2018, the Bank issued $750 million of senior notes at 99.774% of face value. The senior notes mature on May 14, 2021

and have a fixed coupon rate of 3.25%.

In August 2018, the Bank issued $750 million of senior notes at 99.780% of face value. The senior notes mature on October 6,

2023 and have a fixed coupon rate of 3.55%.

In March 2017, the Bank issued $700 million 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 to the maturity date at 100% of
principal plus accrued and unpaid interest. Also, in March 2017, the Bank issued $300 million of senior notes at 100% of face value.

In August 2017, the Bank issued $700 million 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%.

Long-term debt maturities for the next five years and thereafter are as follows:

(dollar amounts in millions)
The Parent Company:
Senior notes
Subordinated notes
The Bank:
Senior notes
Subordinated notes
FHLB Advances
Other
Total

2019

2020

2021

2022

2023

Thereafter

Total

— $
—

— $
300

1,000
—

— $
250

500
253

500
76
1
16
593

2,000
—
2
74
2,376

750
—
—
85
1,835

700
—
1
163
1,864

750
—
1
108
1,109

—
250
1
—
1,004

2,500
803

4,700
326
6
446
8,781

These maturities are based upon the par values of the long-term debt.

The terms of the long-term debt obligations contain various restrictive covenants including limitations on the acquisition of

additional debt in excess of specified levels, dividend payments, and the disposition of subsidiaries. As of December 31, 2018,
Huntington was in compliance with all such covenants.

10. OTHER COMPREHENSIVE INCOME

The components of Huntington’s OCI in the three years ended December 31, 2018, 2017, and 2016, were as follows:

(dollar amounts in millions)

Unrealized holding gains (losses) on available-for-sale debt securities
arising during the period

Less: Reclassification adjustment for net losses (gains) included in net income

Net change in unrealized holding gains (losses) on available-for-sale debt securities

Net change in pension and other post-retirement obligations

Total other comprehensive income (loss)

2018

Tax (expense)
Benefit

Pretax

After-tax

(151) $

(110)

(106) $

(9)

—

(116)

(84)

(80)

127

(dollar amounts in millions)

2017

Tax (expense)
Benefit

Pretax

After-tax

Noncredit-related impairment recoveries (losses) on debt securities not expected to be sold

(2) $

Unrealized holding gains (losses) on available-for-sale debt securities
arising during the period
Less: Reclassification adjustment for net losses (gains) included in net income

Net change in unrealized holding gains (losses) on available-for-sale debt securities

Net change in unrealized holding gains (losses) on available-for-sale equity securities

Unrealized gains (losses) on derivatives used in cash flow hedging relationships
arising during the period
Less: Reclassification adjustment for net (gains) losses included in net income

Net change in unrealized gains (losses) on derivatives used in cash flow hedging relationships

Net change in pension and other post-retirement obligations

Total other comprehensive income (loss)

(dollar amounts in millions)

Noncredit-related impairment recoveries (losses) on debt securities not expected to be sold

Unrealized holding gains (losses) on available-for-sale debt securities
arising during the period

Less: Reclassification adjustment for net gains (losses) included in net income

Net change in unrealized holding gains (losses) on available-for-sale debt securities

Unrealized gains and losses on derivatives used in cash flow hedging relationships
arising during the period

Net change in unrealized gains (losses) on derivatives used in cash flow hedging relationships

Net change in pension and post-retirement obligations

Total other comprehensive income (loss)

(87)

(57)

—

(52) $

(9)

(1)

—

(1)

—

2016

Tax (expense)
Benefit

Pretax

— $

After-tax

(203)

(107)

(309)

108

(1)

(13)

(56)

(37)

—

(34)

(133)

(69)

(201)

(269) $

(175)

Activity in accumulated OCI for the two years ended December 31, 2018 and 2017 were as follows:

(dollar amounts in millions)
December 31, 2016

Other comprehensive income before reclassifications
Amounts reclassified from accumulated OCI to earnings

Period change

TCJA, Reclassification from accumulated OCI to retained earnings

December 31, 2017
Cumulative-effect adjustments (ASU 2016-01)

Other comprehensive income before reclassifications
Amounts reclassified from accumulated OCI to earnings

Period change
December 31, 2018

Unrealized
gains (losses) on
debt
securities (1)

Unrealized
gains (losses) on
cash flow
hedging
derivatives

Unrealized
gains (losses) for
pension and other
post-retirement
obligations

Total

(193) $
(54)
17
(37)

(48)
(278)
(1)
(116)
32
(84)
(363) $

(3) $
2
1
3

—
—
—
—
—
—
— $

(205) $
(10)
10
—

(45)
(250)
—
—
4
4
(246) $

(401)
(62)
28
(34)

(93)
(528)
(1)
(116)
36
(80)
(609)

(1) AOCI amounts at December 31, 2018, 2017, and 2016 include $137 million, $95 million, and $82 million of net unrealized losses (before any deferred tax

benefits) on securities transferred from the available-for-sale securities portfolio to the held-to-maturity securities portfolio. The net unrealized losses will be
recognized in earnings over the remaining life of the security using the effective interest method.

128

The following table presents the reclassification adjustments out of accumulated OCI included in net income and the impacted

line items as listed on the Consolidated Statements of Income for the years ended December 31, 2018 and 2017:

Accumulated OCI components

(dollar amounts in millions)
Gains (losses) on debt securities:

Amortization of unrealized (losses)

Realized (loss) on sale of securities

OTTI recorded

Total before tax

Tax benefit

Net of tax

Gains (losses) on cash flow hedging relationships:

Interest rate contracts

Total before tax

Tax benefit

Net of tax

Amortization of defined benefit pension and post-
retirement items:

Actuarial losses

Net periodic benefit costs

Total before tax

Tax benefit

Net of tax

Amounts reclassified
from accumulated OCI

2018

2017

Reclassifications out of accumulated OCI

Location of net gain (loss)
reclassified from accumulated OCI into earnings

(13) $
(28)

—

(41)

(32) $

— $

—

— $

(8)
Interest income—held-to-maturity securities—taxable
(14) Noninterest income—net gains (losses) on sale of securities
(4) Noninterest income—Impairment losses recognized in

earnings on available-for-sale securities

(26)

(17)

(1)

—

(1)

Interest and fee income—loans and leases

(13) $

(18) Noninterest income / expense (1)

(9)

(7) $

2 Noninterest income / expense (1)

(16)

(10)

(1) The activity for 2018 and 2017 is recorded in Noninterest Income - other income and Noninterest Expense - personnel costs, respectively, on the Consolidated

Statements of Income.

11. SHAREHOLDERS’ EQUITY

The following is a summary of Huntington’s non-cumulative, non-voting, perpetual preferred stock outstanding as of

December 31, 2018.

(dollar amounts in millions, share amounts in thousands)

Series

Issuance Date

Total Shares Outstanding

Carrying Amount

Dividend Rate

Earliest Redemption Date

Series B

Series D

Series C

Series E

Total

12/28/2011

3/21/2016

5/5/2016

8/16/2016

2/27/2018

35,500

400,000

200,000

100,000

5,000

386

199

100

495

740,500

1,203

3-mo. LIBOR + 270 bps

6.25%

5.875%

5.70%

1/15/2017

7/15/2021

1/15/2022

4/15/2023

Series B, D, and C of preferred stock has a liquidation value and redemption price per share of $1,000, plus any declared and

unpaid dividends. Series E preferred stock has a liquidation value and redemption price per share of $100,000, plus any declared and
unpaid dividends. All preferred stock has no stated maturity and redemption is solely at the option of the Company. Under current
rules, any redemption of the preferred stock is subject to prior approval of the FRB.

Preferred A Stock conversion

On February 21, 2018, Huntington elected to effect the conversion of all of its outstanding 8.50% Series A Non-Cumulative
Perpetual Convertible Preferred Stock into common stock pursuant to the terms of the Series A Preferred Stock. On February 22,
2018, each share of Series A Preferred Stock was converted into 83.668 shares of Common Stock. Upon conversion, the Series A
Preferred Stock is no longer outstanding and all rights with respect to the Series A Preferred Stock were ceased and terminated, except
the right to receive the number of whole shares and any required cash-in-lieu of fractional shares of Common Stock. Following the
conversion, the Series A Preferred Stock shares were delisted from trading on NASDAQ.

129

Preferred E Stock issued and outstanding

On February 27, 2018, Huntington issued $500 million of preferred stock. Huntington issued 500,000 depositary shares, each

depositary shares representing a 1/100th ownership interest in a share of 5.70% Series E Fixed-to-Floating Non-Cumulative Perpetual
Preferred Stock (Preferred E Stock), par value $0.01 per share, with a liquidation preference of $100,000 per share (equivalent to
$1,000 per depositary share). Each holder of a depositary share will be entitled to all proportional rights and preferences of the
Preferred E Stock (including dividend, voting, redemption, and liquidation rights). Costs of $5 million related to the issuance of the
Preferred E Stock are reported as a direct deduction from the face amount of the stock.

Dividends on the Preferred E Stock will be non-cumulative and payable quarterly in arrears, when, and if, authorized by the

Company’s board of directors or a duly authorized committee of the board and declared by the Company, at an annual rate of 5.70%
per year on the liquidation preference of $100,000 per share, equivalent to $1,000 per depositary share. The dividend payment dates
are the fifteenth day of each January, April, July and October, which commenced on July 15, 2018.

The Preferred E Stock has no maturity date. Huntington may redeem the Preferred E Stock at its option, (i) in whole or in part,
from time to time, on any dividend payment date on or after April 15, 2023 or (ii) in whole but not in part, within 90 days following a
change in laws or regulations, in each case, at a redemption price equal to $100,000 per share (equivalent to $1,000 per depositary
share), plus any declared and unpaid dividends, without regard to any undeclared dividends on the Series E Preferred Stock prior to
the date fixed for redemption. If Huntington redeems the Preferred E Stock, the depositary will redeem a proportional number of
depositary shares. Neither the holders of Preferred E Stock nor holders of depositary shares will have the right to require the
redemption or repurchase of the Preferred E Stock or the depositary shares.

12. 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, distributions
from deferred compensation plans, and the conversion of the Company’s convertible preferred stock. Potentially dilutive common
shares are excluded from the computation of diluted earnings per share in periods in which the effect would be antidilutive.

On February 22, 2018, Huntington converted all its outstanding 8.50% Series A Non-Cumulative Perpetual Convertible
Preferred Stock to 30.3 million shares of common stock. Following the conversion, the additional shares were included in average
common shares issued and outstanding. The 2018 and 2017 total diluted average common shares issued and outstanding was
impacted by using the if-converted method. The calculation of basic and diluted earnings per share for each of the three years ended
December 31 was as follows:

(dollar amounts in millions, except per share data, share count in thousands)
Basic earnings per common share:
Net income
Preferred stock dividends

Net income available to common shareholders

Average common shares issued and outstanding
Basic earnings per common share
Diluted earnings per common share:
Net income available to common shareholders
Effect of assumed preferred stock conversion

Net income applicable to diluted earnings per share

Average common shares issued and outstanding
Dilutive potential common shares

Stock options and restricted stock units and awards
Shares held in deferred compensation plans
Dilutive impact of Preferred Stock
Other

Dilutive potential common shares

Total diluted average common shares issued and outstanding

Diluted earnings per common share

Year Ended December 31,

2018

2017

2016

1,393
(70)
1,323
1,081,542
1.22

1,323
—
1,323
1,081,542

16,529
3,511
4,403
—
24,443
1,105,985
1.20

1,186
(76)
1,110
1,084,686
1.02

1,110
31
1,141
1,084,686

17,883
3,160
30,330
127
51,500
1,136,186
1.00

712
(65)
647
904,438
0.72

647
—
647
904,438

11,728
2,486
—
138
14,352
918,790
0.70

There were approximately 2.3 million, 1.0 million, and 3.1 million options to purchase shares of common stock not included in

the computation of diluted earnings per share because the effect would be antidilutive at December 31, 2018, 2017, and 2016,
respectively.

130

13. NONINTEREST INCOME

Huntington earns a variety of revenue including interest and fees from customers as well as revenues from non-customers.
Certain sources of revenue are recognized within interest or fee income and are outside of the scope of ASC Topic 606, Revenue from
Contracts with Customers (“ASC 606”). Other sources of revenue fall within the scope of ASC 606 and are generally recognized
within noninterest income. These revenues are included within various sections of the Consolidated Financial Statements. The
following table shows Huntington’s total noninterest income segregated between contracts with customers within the scope of ASC
606 and those within the scope of other GAAP Topics.

(dollar amounts in millions)
Noninterest income

Noninterest income from contracts with customers
Noninterest income within the scope of other GAAP topics

Total noninterest income

Year Ended
December 31, 2018

881
440
1,321

The following table illustrates the disaggregation by operating segment and major revenue stream and reconciles disaggregated

revenue to segment revenue presented in Note 23:

(dollar amounts in millions)

Major Revenue Streams

Service charges on deposit accounts
Card and payment processing income
Trust and investment management services
Insurance income
Other income

Net revenue from contracts with customers

Noninterest income
within the scope of other GAAP topics
Total noninterest income

Year Ended December 31, 2018

Consumer &
Business Banking
290
$
198
28
34
38
588

150
738

Commercial
Banking

Vehicle
Finance

64
11
4
5
6
90

223
313

5
—
—
—
3
8

2
10

RBHPCG
4
$
—
139
41
8
192

1
193

Treasury /
Other

Huntington
Consolidated

— $
—
—
2
1
3

64
67

363
209
171
82
56
881

440
1,321

Huntington generally provides services for customers in which it acts as principal. Payment terms and conditions vary amongst

services and customers, and thus impact the timing and amount of revenue recognition. Some fees may be paid before any service is
rendered and accordingly, such fees are deferred until the obligations pertaining to those fees are satisfied. Most Huntington contracts
with customers are cancelable by either party without penalty or they are short-term in nature, with a contract duration of less than one
year. Accordingly, most revenue deferred for the reporting period ended December 31, 2018 is expected to be earned within one year.
Huntington does not have significant balances of contract assets or contract liabilities and any change in those balances during the
reporting period ended December 31, 2018 was determined to be immaterial.

14. SHARE-BASED COMPENSATION

Huntington sponsors nonqualified and incentive share based compensation plans. These plans provide for the granting of stock

options and other awards to officers, directors, and other employees. Compensation costs are included in personnel costs on the
Consolidated Statements of Income. Stock options and awards are granted at the closing market price on the date of the grant. Options
granted typically vest ratably over four years or when other conditions are met. Stock options, which represented a portion of the
grant values, have no intrinsic value until the stock price increases. Options granted on or after May 1, 2015 have a contractual term
of ten years. All options granted on or before April 30, 2015 have a contractual term of seven years.

2018 Long-Term Incentive Plan

In 2018, shareholders approved the Huntington Bancshares Incorporated 2018 Long-Term Incentive Plan (the 2018 Plan).
Shares remaining under the 2015 Long-Term Incentive Plan have been incorporated into the 2018 Plan. Accordingly, the total number
of shares authorized for awards under the 2018 Plan is 33 million shares. At December 31, 2018, 26 million shares from the Plan were
available for future grants.

Huntington issues shares to fulfill stock option exercises and restricted stock unit and award vesting from available authorized

common shares. At December 31, 2018, Huntington believes there are adequate authorized common shares to satisfy anticipated
stock option exercises and restricted stock unit and award vesting in 2019.

The following table presents total share-based compensation expense and related tax benefit for the three years ended

December 31, 2018, 2017, and 2016:

131

(dollar amounts in millions)
Share-based compensation expense
Tax benefit

2018

2017

2016

78
14

92
32

66
22

Huntington uses the Black-Scholes option pricing model to value options in determining the share-based compensation expense.
Forfeitures are estimated at the date of grant based on historical rates, and updated as necessary, and reduce the compensation expense
recognized. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the date of grant. The expected dividend
yield is based on the dividend rate and stock price at the date of the grant. Expected volatility is based on the estimated volatility of
Huntington’s stock over the expected term of the option.

The following table presents the weighted average assumptions used in the option-pricing model at the grant date for options

granted in the three years ended December 31, 2018, 2017, and 2016:

Assumptions

Risk-free interest rate
Expected dividend yield
Expected volatility of Huntington’s common stock
Expected option term (years)

Weighted-average grant date fair value per share

2018

2017

2016

2.88%
3.71
24.0
6.5
2.58

2.04%
3.31
29.5
6.5
2.81

1.63%
3.18
30.0
6.5
2.17

Huntington’s stock option activity and related information for the year ended December 31, 2018, was as follows:

(dollar amounts in millions, except per share and options amounts in thousands)
Outstanding at January 1, 2018
Granted
Exercised
Forfeited/expired
Outstanding at December 31, 2018
Expected to vest (1)
Exercisable at December 31, 2018

Options

Weighted-
Average
Exercise Price

Weighted-Average
Remaining
Contractual Life
(Years)

Aggregate
Intrinsic Value

13,918
2,538
(5,775)
(64)
10,617
4,503
5,981

$
$
$

8.21
14.81
6.57
13.31
10.64
13.36
8.52

5.4
8.6
3.0

$
$
$

22
2
21

(1)

The number of options expected to vest reflects an estimate of 133,000 shares expected to be forfeited.

The aggregate intrinsic value represents the amount by which the fair value of underlying stock exceeds the “in-the-money”
option exercise price. The total intrinsic value of options exercised for the years ended December 31, 2018, 2017, and 2016 were $52
million, $16 million and $11 million, respectively. For the years ended December 31, 2018, 2017, and 2016, cash received for the
exercises of stock options was $5 million, $11 million and $14 million, respectively. The tax benefit realized for the tax deductions
from option exercises totaled $10 million, $5 million and $3 million in 2018, 2017, and 2016, respectively.

Huntington also grants restricted stock awards, restricted stock units, performance share units, and other stock-based awards.

Restricted stock units and awards are issued at no cost to the recipient, and can be settled only in shares at the end of the vesting
period. Restricted stock awards provide the holder with full voting rights and cash dividends during the vesting period. Restricted
stock units do not provide the holder with voting rights or cash dividends during the vesting period, but do accrue a dividend
equivalent that is paid upon vesting, and are subject to certain service restrictions. Performance share units are payable contingent
upon Huntington achieving certain predefined performance objectives over the three-year measurement period. The fair value of these
awards reflects the closing market price of Huntington’s common stock on the grant date.

The following table summarizes the status of Huntington’s restricted stock awards, units, and performance share units as of

December 31, 2018, and activity for the year ended December 31, 2018:

Restricted Stock Awards

Restricted Stock Units

Performance Share Units

(amounts in thousands, except per share amounts)
Nonvested at January 1, 2018
Granted
Vested
Forfeited
Nonvested at December 31, 2018

Quantity

448
—
(227)
(20)
201

Weighted-
Average
Grant Date
Fair Value
Per Share

11.26
15.01
10.56
12.32
12.51

Weighted-
Average
Grant Date
Fair Value
Per Share

10.67
14.81
10.89
12.27
11.75

Quantity

3,018
691
(719)
(32)
2,958

Quantity

16,159
4,743
(4,948)
(474)
15,480

Weighted-
Average
Grant Date
Fair Value
Per Share

9.68
—
9.68
9.68
9.68

132

The weighted-average fair value at grant date of nonvested shares granted for the years ended December 31, 2018, 2017, and

2016 were $14.98, $11.13, and $9.59, respectively. The total fair value of awards vested during the years ended December 31, 2018,
2017, and 2016 was $62 million, $53 million, and $31 million, respectively. As of December 31, 2018, the total unrecognized
compensation cost related to nonvested shares was $96 million with a weighted-average expense recognition period of 2.3 years.

15. BENEFIT PLANS

Huntington sponsors a non-contributory defined benefit pension plan covering substantially all employees hired or rehired prior

to January 1, 2010. The plan, which was modified in 2013, no longer accrues service benefits to participants and provides benefits
based upon length of service and compensation levels. Huntington’s funding policy 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 were
no required minimum contributions during 2018.

The following table shows the weighted-average assumptions used to determine the benefit obligation at December 31, 2018 and

2017, and the net periodic benefit cost for the years then ended:

Weighted-average assumptions used to determine benefit obligations

Discount rate

Weighted-average assumptions used to determine net periodic benefit cost

Discount rate
Expected return on plan assets

Pension Benefits

2018

2017

4.41%

3.73%

3.73
5.75

4.38
6.50

The expected long-term rate of return on plan assets is an assumption reflecting the average rate of earnings expected on the
funds invested or to be invested to provide for the benefits included in the projected benefit obligation. The expected long-term rate of
return is established at the beginning of the plan year based upon historical returns and projected returns on the underlying mix of
invested assets.

The following table reconciles the beginning and ending balances of the benefit obligation of the Plan with the amounts

recognized in the consolidated balance sheets at December 31:

(dollar amounts in millions)
Projected benefit obligation at beginning of measurement year
Changes due to:
Service cost
Interest cost
Benefits paid
Settlements
Actuarial assumptions and gains (losses)

Total changes
Projected benefit obligation at end of measurement year

Pension Benefits

2018

2017

900

3
29
(26)
(18)
(67)
(79)
821

851

3
30
(27)
(31)
74
49
900

The following table reconciles the beginning and ending balances of the fair value of Plan assets at the December 31, 2018 and

2017 measurement dates:

(dollar amounts in millions)
Fair value of plan assets at beginning of measurement year
Changes due to:

Actual return on plan assets
Settlements
Benefits paid

Total changes
Fair value of plan assets at end of measurement year

Pension Benefits

2018

2017

903

(30)
(19)
(26)
(75)
828

841

118
(29)
(27)
62
903

As of December 31, 2018, the difference between the accumulated benefit obligation and the fair value of Huntington’s plan

assets was $7 million and is recorded in other liabilities.

133

The following table shows the components of net periodic benefit costs recognized in the three years ended December 31, 2018:

(dollar amounts in millions)
Service cost
Interest cost
Expected return on plan assets
Amortization of loss
Settlements
Benefit costs

Pension Benefits (1)

2018

2017

2016

3
29
(49)
9
7
(1) $

3
30
(55)
7
11
(4) $

5
30
(45)
7
(8)
(11)

(1) The pension costs for 2018 were recorded in noninterest income - other income. For 2017 and 2016 the costs were recorded in noninterest expense - personnel

costs, in the Consolidated Statements of Income.

Included in benefit costs above are $2 million, $2 million, and $2 million of plan expenses that were recognized in each of the

three years ended December 31, 2018, 2017, and 2016. It is Huntington’s policy to recognize settlement gains and losses as incurred.
Assuming no cash contributions are made to the Plan during 2019, Huntington expects net periodic pension benefit, excluding any
expense of settlements, to approximate $3 million for 2019.

At December 31, 2018 and 2017, The Huntington National Bank, as trustee, held all Plan assets. The Plan assets consisted of
investments in a variety of corporate and government fixed income investments, money market funds, and mutual funds as follows:

(dollar amounts in millions)
Cash equivalents:

Mutual funds-money market
U.S. Treasury bills

Fixed income:

Corporate obligations
U.S. Government obligations
U.S. Government agencies

Equities:

Mutual funds-equities
Common stock
Preferred stock
Exchange traded funds
Limited Partnerships

Fair value of plan assets

Fair Value

2018

2017

4
4

272
298
22

64
98
5
45
16
828

—% $
1

33
36
3

8
12
1
5
1

100% $

14
5

293
216
23

118
158
5
58
13
903

2%
1

32
24
3

13
17
1
6
1
100%

Investments of the Plan are accounted for at cost on the trade date and are reported at fair value. The valuation methodologies

used to measure the fair value of pension plan assets vary depending on the type of asset. At December 31, 2018, cash equivalent
money market funds and U.S. Treasury bills are valued at the closing price reported from an actively traded exchange and are
classified as Level 1. Mutual funds and exchange traded funds are valued at quoted market prices that represent the net asset value of
shares held by the Plan at year-end. The mutual funds held by the Plan are actively traded and are classified as Level 1. Fixed income
investments are valued using unadjusted quoted prices from active markets for similar assets are classified as Level 2. Common and
preferred stock are valued using the year-end closing price as determined by a national securities exchange and are classified as Level
1. The investment in the limited partnerships is reported at net asset value per share as determined by the general partners of each
limited partnership, based on their proportionate share of the partnership’s fair value as recorded in the partnership’s audited financial
statements.

The investment objective of the Plan is to maximize the return on Plan assets over a long-time period, while meeting the Plan

obligations. At December 31, 2018, Plan assets were invested 1% in cash equivalents, 27% in equity investments, and 72% in bonds,
with an average duration of 12.7 years on bond investments. The estimated life of benefit obligations was 12.4 years. Although it
may fluctuate with market conditions, Huntington has targeted a long-term allocation of Plan assets of 20% to 50% in equity
investments and 80% to 50% in bond investments. The allocation of Plan assets between equity investments and fixed income
investments will change from time to time.

134

At December 31, 2018, the following table shows when benefit payments were expected to be paid:

(dollar amounts in millions)
2019
2020
2021
2022
2023
2024 through 2028

Pension Benefits

49
49
48
48
48
238

Huntington also sponsors an unfunded defined benefit post-retirement plan as well as other nonqualified retirement plans, the

most significant being the SRIP and FirstMerit SERP. The SRIP and FirstMerit SERP plans provide certain former officers and
directors, with defined pension benefits in excess of limits imposed by federal tax law.

The following table presents the amounts recognized in the Consolidated Balance Sheets at December 31, 2018 and 2017, for all

defined benefit and nonqualified retirement plans:

(dollar amounts in millions)
Other liabilities

2018

2017

The following tables present the amounts recognized in OCI as of December 31, 2018, 2017, and 2016, and the changes in

accumulated OCI for the years ended December 31, 2018, 2017, and 2016:

(dollar amounts in millions)
Net actuarial loss
Prior service cost
Defined benefit pension plans

(dollar amounts in millions)
Net actuarial (loss) gain:

Amounts arising during the year
Amortization included in net periodic benefit costs

Prior service cost:

Amounts arising during the year
Amortization included in net periodic benefit costs

Total recognized in OCI

(dollar amounts in millions)
Net actuarial (loss) gain:

Amounts arising during the year
Amortization included in net periodic benefit costs

Prior service cost:

Amounts arising during the year
Amortization included in net periodic benefit costs

Total recognized in OCI

2018

2017

2016

(257) $
11
(246) $

(264) $
14
(250) $

(217)
12
(205)

Pretax

Tax (expense) Benefit

After-tax

2018

(5) $
13

—
(4)
4

2
(3)

—
1
— $

Pretax

Tax (expense) Benefit

After-tax (1)

2017

(16) $
18

—
(2)
— $

6
(7)

—
1

— $

(1)

TCJA reclassification from AOCI to retained earnings recorded during 2017 was $45 million.

(dollar amounts in millions)
Net actuarial (loss) gain:

Amounts arising during the year
Amortization included in net periodic benefit costs

Prior service cost:

Amounts arising during the year
Amortization included in net periodic benefit costs

Total recognized in OCI

Pretax

Tax (expense) Benefit

After-tax

2016

38
2

—
(2)
38

(13) $
(1)

—
1
(13) $

135

(3)
10

—
(3)
4

(10)
11

—
(1)
—

25
1

—
(1)
25

Huntington has a defined contribution plan that is available to eligible employees. Beginning January 1, 2018, Huntington

increased the company match such that Huntington matches participant contributions 150% of the first 2% of base pay and 100% of
the next 2%. Huntington’s expense related to the defined contribution plans for the years ended December 31, 2018, 2017, and 2016
was $46 million, $35 million, and $36 million, respectively. For 2018, the discretionary contribution was not made.

The following table shows the number of shares, market value, and dividends received on shares of Huntington stock held by the

defined contribution plan:

(dollar amounts in millions, share amounts in thousands)
Shares in Huntington common stock
Market value of Huntington common stock
Dividends received on shares of Huntington stock

16. INCOME TAXES

December 31,

2018

2017

11,635
139
6

13,566
198
4

The Company’s deferred federal and state income tax and related valuation accounts represents the estimated impact of

temporary differences between how we recognize our assets and liabilities under GAAP and how such assets and liabilities are
recognized under federal and state tax law. Deferred tax assets and liabilities are determined based on the difference between the
financial statement and tax bases of assets and liabilities as measured by the enacted tax rates which will be in effect when these
differences reverse. As a result of the reduction in the U.S. corporate income tax rate from 35% to 21% under the TCJA, the
Company revalued its ending net deferred tax liabilities at December 31, 2017. The Company recognized a $123 million tax
benefit in the Company’s Consolidated Statement of Income for the year ended December 31, 2017, as a result of the TCJA, of
which the benefit recognized is primarily attributable to the revaluation of net deferred tax liabilities. The Company completed its
provisional estimate related to tax reform during 2018, recognizing an additional immaterial benefit during the 2018 third quarter.

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various state, city, and foreign

jurisdictions. Federal income tax audits have been completed for tax years through 2009. Certain proposed adjustments resulting
from the IRS examination of our 2010 through 2011 tax returns have been settled, subject to final approval by the Joint Committee
on Taxation of the U.S. Congress. While the statute of limitations remains open for tax years 2012 through 2017, the IRS has
advised that tax years 2012 through 2014 will not be audited, and began the examination of the 2015 federal income tax return in
second quarter 2018. Various state and other jurisdictions remain open to examination, including Ohio, Kentucky, Indiana,
Michigan, Pennsylvania, West Virginia, Wisconsin, and Illinois.

The following table provides a reconciliation of the beginning and ending amounts of gross unrecognized tax benefits:

(dollar amounts in millions)
Unrecognized tax benefits at beginning of year

Gross increases for tax positions taken during prior years
Gross decreases for tax positions taken during prior years
Settlements with taxing authorities
Unrecognized tax benefits at end of year

2018

2017

50
—
(12)
(38)
— $

24
26
—
—
50

Any interest and penalties on income tax assessments or income tax refunds are recognized in the Consolidated Statements

of Income as a component of provision for income taxes. Total interest accrued was less than $1 million at December 31, 2018 and
2017. All of the gross unrecognized tax benefits would impact the Company’s effective tax rate if recognized.

136

The following is a summary of the provision (benefit) for income taxes:

(dollar amounts in millions)
Current tax provision (benefit)

Federal
State

Total current tax provision
Deferred tax provision (benefit)

Federal
State

Total deferred tax provision
Provision for income taxes

The following is a reconciliation for provision for income taxes:

(dollar amounts in millions)
Provision for income taxes computed at the statutory rate
Increases (decreases):

Tax-exempt income
Tax-exempt bank owned life insurance income
General business credits
Capital loss
Impact from TCJA
Affordable housing investment amortization, net of tax benefits
State income taxes, net
Stock based compensation
Other

Provision for income taxes

Year Ended December 31,

2018

2017

2016

152
20
172

71
(8)
63
235

41
(1)
40

151
17
168
208

Year Ended December 31,

2018

2017

2016

342

488

(23)
(14)
(80)
(60)
(3)
64
10
(14)
13
235

(31)
(23)
(71)
(67)
(123)
46
11
(13)
(9)
208

40
3
43

161
4
165
208

322

(27)
(20)
(64)
(46)
—
37
5
(4)
5
208

137

The significant components of deferred tax assets and liabilities at December 31, were as follows:

(dollar amounts in millions)
Deferred tax assets:

Allowances for credit losses
Fair value adjustments
Net operating and other loss carryforward
Accrued expense/prepaid
Pension and other employee benefits
Market discount
Partnership investments
Tax credit carryforward
Other assets
Total deferred tax assets
Deferred tax liabilities:

Lease financing
Loan origination costs
Operating assets
Mortgage servicing rights
Purchase accounting adjustments
Securities adjustments
Deferred dividend income
Pension and other employee benefits
Other liabilities
Total deferred tax liabilities
Net deferred tax (liability) asset before valuation allowance
Valuation allowance
Net deferred tax (liability) asset

At December 31,

2018

2017

184
173
95
16
14
6
5
—
6
499

262
148
69
45
25
6
—
—
2
557
(58)
(6)
(64) $

162
142
108
17
—
10
7
153
6
605

249
116
53
39
68
6
77
5
18
631
(26)
(6)
(32)

At December 31, 2018, Huntington’s net deferred tax asset related to loss and other carryforwards was $95 million. This was

comprised of federal net operating loss carryforwards of $51 million, which will begin expiring in 2030, $44 million of state net
operating loss carryforwards, which will begin expiring in 2019, and an alternative minimum tax credit carryforward of less than
$1 million, which will be fully utilized or refunded by 2022.

The state valuation allowance was $6 million at both December 31, 2018 and December 31, 2017, as the Company believes

that it is more likely than not, portions of the state deferred tax assets and state net operating loss carryforwards will not be
realized.

At December 31, 2018, retained earnings included approximately $12 million of base year reserves of acquired thrift
institutions, for which no deferred federal income tax liability has been recognized. Under current law, if these bad debt reserves
are used for purposes other than to absorb bad debt losses, they will be subject to federal income tax at the corporate tax rate
enacted at the time. The amount of unrecognized deferred tax liability relating to the cumulative bad debt deduction was
approximately $3 million at December 31, 2018.

138

17. FAIR VALUES OF ASSETS AND LIABILITIES

Following is a description of the valuation methodologies used for instruments measured at fair value, as well as the general

classification of such instruments pursuant to the valuation hierarchy.

Loans held for sale

Huntington has elected to apply the fair value option for mortgage loans originated with the intent to sell which are included

in loans held for sale. Mortgage loans held for sale are classified as Level 2 and are estimated using security prices for similar
product types.

Loans held for investment

Certain mortgage loans originated with the intent to sell for which the FVO was elected have been reclassified to mortgage

loans held for investment. These loans continue to be measured at fair value. The fair value is determined using fair value of
similar mortgage-backed securities adjusted for loan specific variables.

Huntington elected the fair value option for consumer loans with deteriorated credit quality acquired from FirstMerit. These
consumer loans are classified as Level 3. The key assumption used to determine the fair value of the consumer loans is discounted
cash flows.

Available-for-sale securities and trading account securities

Securities accounted for at fair value include both the available-for-sale and trading portfolios. Huntington determines the

fair value of securities utilizing quoted market prices obtained for identical or similar assets, third-party pricing services, third-
party valuation specialists and other observable inputs such as recent trade observations. AFS and trading securities are classified
as Level 1 using quoted market prices (unadjusted) in active markets for identical securities that Huntington has the ability to
access at the measurement date. Less than 1% of the positions in these portfolios are Level 1, and consist of U.S. Treasury
securities and money market mutual funds. When quoted market prices are not available, fair values are classified as Level 2 using
quoted prices for similar assets in active markets, quoted prices of identical or similar assets in markets that are not active, and
inputs that are observable for the asset, either directly or indirectly, for substantially the full term of the financial instrument. Level
2 represents 77% of the positions in these portfolios, which consists of U.S. Government and agency debt securities, agency
mortgage backed securities, private-label asset-backed securities, certain municipal securities and other securities. For Level 2
securities Huntington primarily uses prices obtained from third-party pricing services to determine the fair value of securities.
Huntington independently evaluates and corroborates the fair value received from pricing services through various methods and
techniques, including references to dealer or other market quotes, by reviewing valuations of comparable instruments, and by
comparing the prices realized on the sale of similar securities. If relevant market prices are limited or unavailable, valuations may
require significant management judgment or estimation to determine fair value, in which case the fair values are classified as Level
3 which represent 23% of the positions. The Level 3 positions consist of direct purchase municipal securities. A significant
change in the unobservable inputs for these securities may result in a significant change in the ending fair value measurement of
these securities.

The direct purchase municipal securities are classified as Level 3 and require significant estimates to determine fair value

which results in greater subjectivity. The fair value is determined by utilizing a discounted cash flow valuation technique
employed by a third-party valuation specialist. The third-party specialist uses assumptions related to yield, prepayment speed,
conditional default rates and loss severity based on certain factors such as, credit worthiness of the counterparty, prevailing market
rates, and analysis of similar securities. Huntington evaluates the fair values provided by the third-party specialist for
reasonableness.

MSRs

MSRs do not trade in an active, open market with readily observable prices. Accordingly, the fair value of these assets is
classified as Level 3. Huntington determines the fair value of MSRs using a discounted cash flow model based upon the month-
end interest rate curve and prepayment assumptions. The model utilizes assumptions to estimate future net servicing income cash
flows, including estimates of time decay, payoffs, and changes in valuation inputs and assumptions. Servicing brokers and other
sources of information (e.g. discussion with other mortgage servicers and industry surveys) are used to obtain information on
market practice and assumptions. On at least a quarterly basis, third-party marks are obtained from at least one servicing broker.
Huntington reviews the valuation assumptions against this market data for reasonableness and adjusts the assumptions if deemed
appropriate. Any recommended change in assumptions and/or inputs are presented for review to the Mortgage Price Risk
Subcommittee for final approval.

139

Derivative assets and liabilities

Derivatives classified as Level 2 consist of foreign exchange and commodity contracts, which are valued using exchange
traded swaps and futures market data. In addition, Level 2 includes interest rate contracts, which are valued using a discounted
cash flow method that incorporates current market interest rates. Level 2 also includes exchange traded options and forward
commitments to deliver mortgage-backed securities, which are valued using quoted prices.

Derivatives classified as Level 3 consist of interest rate lock agreements related to mortgage loan commitments and Visa®

shares swap. The determination of fair value includes assumptions related to the likelihood that a commitment will ultimately
result in a closed loan, which is a significant unobservable assumption. A significant increase or decrease in the external market
price would result in a significantly higher or lower fair value measurement.

Assets and Liabilities measured at fair value on a recurring basis

Assets and liabilities measured at fair value on a recurring basis at December 31, 2018 and 2017 are summarized below:

(dollar amounts in millions)
Assets
Trading account securities:

Municipal securities
Other securities

Available-for-sale securities:
U.S. Treasury securities
Residential CMOs
Residential MBS
Commercial MBS
Other agencies
Municipal securities
Asset-backed securities
Corporate debt
Other securities/Sovereign debt

Other securities
Loans held for sale
Loans held for investment
MSRs
Derivative assets
Liabilities
Derivative liabilities

Fair Value Measurements at Reporting Date Using

Level 1

Level 2

Level 3

Netting
Adjustments (1)

December 31,
2018

1
77
78

5
—
—
—
—
—
—
—
—
5

22
—
—
—
21

27
—
27

— $
—
—

—
6,999
1,255
1,583
126
275
315
53
4
10,610

—
—
—
—
—
3,165
—
—
—
3,165

—
—
—
—
—
—
—
—
—
—

— $
613
49
—
474

— $
—
30
10
5

— $
—
—
—
(291)

390

(217)

28
77
105

5
6,999
1,255
1,583
126
3,440
315
53
4
13,780

22
613
79
10
209

187

140

(dollar amounts in millions)
Assets
Trading account securities:

Other securities

Other securities
Loans held for sale
Loans held for investment
MSRs
Derivative assets
Liabilities
Derivative liabilities

Fair Value Measurements at Reporting Date Using

Level 1

Level 2

Level 3

Netting
Adjustments (1)

December 31,
2017

83
83

5
—

—
—
—
—
—
5
19
—
—
—
—

—

3
3

—
6,484
1,367
2,487
70
711
443
109
2
11,673
—
413
55
—
316

326

—
—

—
3,167
24
—
—
3,191
—
—
38
11
6

—
—

—
—
—
—
—
—
—
—
—
—
(190)

(245)

86
86

5
6,484
1,367
2,487
70
3,878
467
109
2
14,869
19
413
93
11
132

(1) Amounts represent the impact of legally enforceable master netting agreements that allow the Company to settle positive and negative positions and cash

collateral held or placed with the same counterparties.

The tables below present a rollforward of the balance sheet amounts for the years ended December 31, 2018, 2017, and 2016
for financial instruments measured on a recurring basis and classified as Level 3. The classification of an item as Level 3 is based
on the significance of the unobservable inputs to the overall fair value measurement. However, Level 3 measurements may also
include observable components of value that can be validated externally. Accordingly, the gains and losses in the table below
include changes in fair value due in part to observable factors that are part of the valuation methodology.

Level 3 Fair Value Measurements
Year Ended December 31, 2018

Available-for-sale securities

Municipal
securities

Asset-
backed
securities

3,167
—

24
—

Derivative
instruments
$

(1) $

(35)

Loans held
for
investment
38
$
—

35
—
—
—
—
3
2

(3)
(52)
658
—
—
(605)
3,165

(2)
11
—
(33)
—
—
— $

(1) $

— $

(52) $

— $

—
—
—
—
(8)
—
30

—

MSRs

11
—

(1)
—
—
—
—
—
10

(dollar amounts in millions)
Opening balance

Transfers out of Level 3 (1)
Total gains/losses for the period:

Included in earnings
Included in OCI

Purchases/originations
Sales
Repayments
Settlements
Closing balance
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 other
comprehensive income for assets held at the end of the reporting period

141

(dollar amounts in millions)
Opening balance

Transfers out of Level 3 (1)
Total gains/losses for the period:

Included in earnings
Included in OCI

Purchases/originations
Sales
Repayments
Settlements
Closing balance
Change in unrealized gains or losses for the period included in earnings
(or changes in net assets) for assets held at end of the reporting date

(dollar amounts in millions)
Opening balance
Transfers out of Level 3 (1)
Total gains/losses for the period:
Included in earnings
Included in OCI

Purchases/originations
Sales
Repayments
Settlements
Closing balance

Change in unrealized gains or losses for the period included in earnings
(or changes in net assets) for assets held at end of the reporting date

Level 3 Fair Value Measurements
Year Ended December 31, 2017

MSRs

14
—

(3)
—
—
—
—
—
11

Derivative
instruments
$

(2) $
(15)

16
—
—
—
—
—
(1) $

Available-for-sale securities

Municipal
securities

Asset-
backed
securities

2,798
—

(2)
(8)
787
—
—
(408)
3,167

76
—

(5)
14
—
(60)
—
(1)
24

(3) $

— $

(4) $

Loans held
for
investment
48
$
—

1
—
—
—
(11)
—
38

—

Level 3 Fair Value Measurements
Year Ended December 31, 2016

MSRs

18
—

(4)
—
—
—
—
—
14

Derivative
instruments
6
$
(7)

(1)
—
—
—
—
—
(2) $

Available-for-sale securities

Municipal
securities

Asset-
backed
securities

2,095
—

7
(28)
1,399
(37)
—
(638)
2,798

100
—

(2)
6
—
(25)
—
(3)
76

(4) $

(1) $

(33) $

Loans held
for
investment
2
$
—

(2)
—
56
—
(8)
—
48

—

(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.

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 years ended December 31, 2018, 2017, and 2016:

(dollar amounts in millions)
Classification of gains and losses in earnings:

Mortgage banking income
Securities gains (losses)
Interest and fee income

Total

Level 3 Fair Value Measurements
Year Ended December 31, 2018

Available-for-sale securities

MSRs

Derivative
instruments

Municipal
securities

Asset-
backed
securities

(1) $
—
—
(1) $

35
—
—
35

— $
—
(3)
(3) $

—
(2)
—
(2)

142

(dollar amounts in millions)
Classification of gains and losses in earnings:

Mortgage banking income
Securities gains (losses)
Interest and fee income
Noninterest income

Total

(dollar amounts in millions)
Classification of gains and losses in earnings:
Mortgage banking income (loss)
Securities gains (losses)
Noninterest income
Total

Assets and liabilities under the fair value option

Level 3 Fair Value Measurements
Year Ended December 31, 2017

Available-for-sale securities

MSRs

Derivative
instruments

Municipal
securities

Asset-
backed
securities

Loans held
for
investment

(3) $
—
—
—
(3) $

16
—
—
—
16

— $
—
(2)
—
(2) $

— $
(5)
—
—
(5) $

—
—
—
1
1

Level 3 Fair Value Measurements
Year Ended December 31, 2016

Available-for-sale securities

MSRs

Derivative
instruments

Municipal
securities

Asset-
backed
securities

Loans held
for
investment

(4) $
—
—
(4) $

(1) $
—
—
(1) $

— $
1
6
7

— $
(2)
—
(2) $

—
—
(2)
(2)

The following table presents the fair value and aggregate principal balance of certain assets and liabilities under the fair value

option:

(dollar amounts in millions)
Assets

Loans held for sale
Loans held for investment

(dollar amounts in millions)
Assets

Loans held for sale
Loans held for investment

December 31, 2018

Fair value
carrying
amount

Total Loans

Aggregate
unpaid
principal

Difference

Loans that are 90 or more days past due

Fair value
carrying
amount

Aggregate
unpaid
principal

Difference

613
79

594
87

19
(8)

— $
6

— $
7

—
(1)

December 31, 2017

Fair value
carrying
amount

Total Loans

Aggregate
unpaid
principal

Difference

Loans that are 90 or more days past due

Fair value
carrying
amount

Aggregate
unpaid
principal

Difference

413
93

400
102

$
$

13
(9)

1
10

1
11

$
$

—
(1)

The following tables present the net gains (losses) from fair value changes for the years ended December 31, 2018, 2017, and

2016:

(dollar amounts in millions)
Assets

Loans held for sale
Loans held for investment

Net gains (losses) from fair value
changes Year Ended December 31,
2017

2016

2018

5
—

8
—

7
—

143

Assets and Liabilities measured at fair value on a nonrecurring basis

Certain assets and liabilities may be required to be measured at fair value on a nonrecurring basis in periods subsequent to
their initial recognition. These assets and liabilities are not measured at fair value on an ongoing basis; however, they are subject to
fair value adjustments in certain circumstances, such as when there is evidence of impairment. The amounts presented represent
the fair value on the various measurement dates throughout the period. The gains(losses) represent the amounts recorded during
the period regardless of whether the asset is still held at period end.

The amounts measured at fair value on a nonrecurring basis at December 31, 2018 were as follows:

(dollar amounts in millions)
Impaired loans
Other real estate owned
Loans held for sale

Fair Value Measurements Using

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)
Year Ended
December 31, 2018

—
—

—

—
—

—

33
20

145

(1)
(7)

(11)

Fair Value

33
20

145

Huntington records nonrecurring adjustments of collateral-dependent loans measured for impairment when establishing the

ALLL. Such amounts are generally based on the fair value of the underlying collateral supporting the loan. Appraisals are
generally obtained to support the fair value of the collateral and incorporate measures such as recent sales prices for comparable
properties and cost of construction. Periodically, in cases where the carrying value exceeds the fair value of the collateral less cost
to sell, an impairment charge is recognized.

Other real estate owned properties are included in other assets and valued based on appraisals and third-party price opinions.

The appraisals supporting the fair value of the collateral to recognize loan impairment or unrealized loss on other real estate

owned properties may not have been obtained as of December 31, 2018.

Loans held for sale are measured at lower of cost or fair value less costs to sell. The fair value of loans held for sale is

determined based on discounted cash flows or based on the fair value of the underlying collateral supporting the loan.

144

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 December 31, 2018 and 2017:

Quantitative Information about Level 3 Fair Value Measurements at December 31, 2018

Weighted
Average

8%
8%
2%
92%
163%
7%
4%
6/30/2020
4%
3%
25%
9%
9%

NA
NA
5%
N/A

Weighted
Average

12%
8%
2%
75%
165%

7%
3%

(dollar amounts in millions)
Measured at fair value on a recurring basis:

Fair Value

Valuation Technique

MSRs

Discounted cash flow

Derivative assets

Derivative liabilities

Consensus Pricing

Discounted cash flow

Municipal securities

3,165

Discounted cash flow

Loans held for investment

Discounted cash flow

Measured at fair value on a nonrecurring basis:
Impaired loans
Other real estate owned
Loans held for sale

33
20
121
24

Appraisal value
Appraisal value
Discounted cash flow
Appraisal value

Significant Unobservable Input

Range

6 % -
54%
5 % -
11%
23%
(5)% -
1 % - 100%

Constant prepayment rate
Spread over forward interest rate swap rates
Net market price
Estimated Pull through %
Estimated conversion factor
Estimated growth rate of Visa Class A shares
Discount rate
Timing of the resolution of the litigation
Discount rate

4 % -
Cumulative default — % -
5 % -
Loss given default
7 % -
Discount rate
9 % -
Constant prepayment rate

4%
39%
90%
9%
9%

NA
NA
Discount rate
NA

5 %

(dollar amounts in millions)
Measured at fair value on a recurring basis:

Fair
Value

Valuation Technique

Significant Unobservable Input

Range

Quantitative Information about Level 3 Fair Value Measurements at December 31, 2017

MSRs

11 Discounted cash flow

Derivative assets

Consensus Pricing

Derivative liabilities

5 Discounted cash flow

Municipal securities

3,167 Discounted cash flow

Asset-backed securities

24 Discounted cash flow

Loans held for investment

38 Discounted cash flow

Constant prepayment rate
Spread over forward interest rate swap rates
Net market price
Estimated Pull through %
Estimated conversion factor

Estimated growth rate of Visa Class A shares
Discount rate

Timing of the resolution of the litigation

8 % -
8 % -
(5)% -
3 % -

33%
10%
20%
100%

Discount rate — % -
Cumulative default — % -
5 % -
Loss given default
7 %
Discount rate
Cumulative prepayment rate — %
3 %
Cumulative default
90 %
Loss given default
Cure given deferral
50 %
Discount rate
Constant prepayment rate

7 % -
2 % -

12/31/2017 - 06/30/2020
4%
3%
24%
7%
7%
7%
98%
50%
8%
9%

10%
64%
90%
7%
72%
53%
100%
50%
18%
22%

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.

145

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 the carrying amounts and estimated fair values of Huntington’s financial instruments at

December 31, 2018 and December 31, 2017:

(dollar amounts in millions)

Financial Assets

Cash and short-term assets

Trading account securities

Available-for-sale securities

Held-to-maturity securities

Other securities

Loans held for sale

Net loans and leases (1)

Derivatives

Financial Liabilities

Deposits

Short-term borrowings

Long-term debt

Derivatives

(dollar amounts in millions)

Financial Assets

Cash and short-term assets

Trading account securities

Available-for-sale securities

Held-to-maturity securities

Other securities

Loans held for sale

Net loans and leases (1)

Derivatives

Financial Liabilities

Deposits

Short-term borrowings

Long-term debt

Derivatives

Amortized Cost

Lower of Cost
or Market

Fair Value or
Fair Value Option

Total Carrying
Amount

Estimated Fair
Value

December 31, 2018

2,725

—

8,565

543

—

74,049

—

84,774

2,017

8,625

—

191

—

105

13,780

—

613

209

—

187

2,725

105

13,780

8,565

565

804

74,128

209

84,774

2,017

8,625

187

2,725

105

13,780

8,286

565

806

73,668

209

84,731

2,017

8,718

187

Amortized Cost

Lower of Cost
or Market

Fair Value or
Fair Value Option

Total Carrying
Amount

Estimated Fair
Value

December 31, 2017

1,567

—

9,091

581

—

69,333

—

77,041

5,056

9,206

—

— $

14,869

—

413

132

—

1,567

14,869

9,091

600

488

69,426

132

77,041

5,056

9,206

1,567

14,869

8,971

600

491

69,146

132

77,010

5,056

9,402

—

146

(1)

Includes collateral-dependent loans measured for impairment.

The following table presents the level in the fair value hierarchy for the estimated fair values at December 31, 2018 and

December 31, 2017:

(dollar amounts in millions)

Financial Assets

Trading account securities

Available-for-sale securities

Held-to-maturity securities

Other securities (1)

Loans held for sale

Net loans and direct financing leases

Financial Liabilities

Deposits

Short-term borrowings

Long-term debt

(dollar amounts in millions)

Financial Assets

Trading account securities

Available-for-sale securities

Held-to-maturity securities

Other securities (1)

Loans held for sale

Net loans and direct financing leases

Financial Liabilities

Deposits

Short-term borrowings

Long-term debt

Estimated Fair Value Measurements at Reporting Date Using

Level 1

Level 2

Level 3

December 31, 2018

— $

—

10,610

8,286

—

613

76,922

—

8,158

3,165

—

193

73,619

7,809

2,016

560

105

13,780

8,286

806

73,668

84,731

2,017

8,718

Estimated Fair Value Measurements at Reporting Date Using

Level 1

Level 2

Level 3

December 31, 2017

— $

—

11,673

8,971

—

413

—

73,975

—

8,944

3,191

—

69,146

3,035

5,056

458

14,869

8,971

491

69,146

77,010

5,056

9,402

(1) Excludes securities without readily determinable fair values.

The short-term nature of certain assets and liabilities result in their carrying value approximating fair value. These include

trading account securities, customers’ acceptance liabilities, short-term borrowings, bank acceptances outstanding, FHLB
advances, and cash and short-term assets, which include cash and due from banks, interest-bearing deposits in banks, interest-
bearing deposits at Federal Reserve Bank, federal funds sold, and securities purchased under resale agreements. Loan
commitments and letters-of-credit generally have short-term, variable-rate features and contain clauses that limit Huntington’s
exposure to changes in customer credit quality. Accordingly, their carrying values, which are immaterial at the respective balance
sheet dates, are reasonable estimates of fair value.

Certain assets, the most significant being operating lease assets, bank owned life insurance, and premises and equipment, do

not meet the definition of a financial instrument and are excluded from this disclosure. Similarly, mortgage and nonmortgage
servicing rights, deposit base, and other customer relationship intangibles are not considered financial instruments and are not
included above. Accordingly, this fair value information is not intended to, and does not, represent Huntington’s underlying value.
Many of the assets and liabilities subject to the disclosure requirements are not actively traded, requiring fair values to be estimated
by Management. These estimations necessarily involve the use of judgment about a wide variety of factors, including but not
limited to, relevancy of market prices of comparable instruments, expected future cash flows, and appropriate discount rates.

147

18. DERIVATIVE FINANCIAL INSTRUMENTS

Derivative financial instruments are recorded in the Consolidated Balance Sheets as either an asset or a liability (in other

assets or other liabilities, respectively) and measured at fair value.

Derivative financial instruments can be designated as accounting hedges under GAAP. Designating a derivative as an

accounting hedge allows Huntington to recognize gains and losses, less any ineffectiveness, in the income statement within the
same period that the hedged item affects earnings. Gains and losses on derivatives that are not designated to an effective hedge
relationship under GAAP immediately impact earnings within the period they occur.

The following table presents the fair values of all derivative instruments included in the Consolidated Balance Sheets at
December 31, 2018 and December 31, 2017. Amounts in the table below are presented gross without the impact of any net
collateral arrangements.

(dollar amounts in millions)
Derivatives designated as Hedging Instruments

Interest rate contracts

Derivatives not designated as Hedging Instruments

Interest rate contracts
Foreign exchange contracts
Commodities contracts
Equity contracts

Total Contracts

December 31, 2018

December 31, 2017

Asset

Liability

Asset

Liability

261
23
172
—
500

165
19
168
10
404

187
18
92
3
322

121

100
18
87
5
331

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 Condensed Consolidated Income Statement for the year ended December 31, 2018.

(dollar amounts in millions)

Interest rate contracts:

Customer

Mortgage Banking

Foreign exchange contracts

Commodities contracts

Equity contracts

Total

Location of Gain or (Loss)
Recognized in Income on
Derivative

Amount of Gain or (Loss) Recognized
in Income on Derivative

Year Ended December 31,

Capital markets fees

Mortgage banking income

Capital markets fees

Other noninterest expense

(19)

Derivatives used in Asset and Liability Management Activities

Huntington engages in balance sheet hedging activity, principally for asset liability management purposes, to convert fixed

rate assets or liabilities into floating rate or vice versa. Balance sheet hedging activity is arranged to receive hedge accounting
treatment and is classified as either fair value or cash flow hedges. Fair value hedges are executed to convert fixed-rate liabilities to
floating rate. Cash flow hedges are also used to convert floating rate assets into fixed rate assets.

148

The following table presents the gross notional values of derivatives used in Huntington’s asset and liability management

activities at December 31, 2018 and December 31, 2017, identified by the underlying interest rate-sensitive instruments:

(dollar amounts in millions)
Instruments associated with:

Investment securities
Long-term debt

Total notional value at December 31, 2018

December 31, 2018

Fair Value Hedges

Cash Flow Hedges

Total

—
4,865
4,865

12
—
12

12
4,865
4,877

(dollar amounts in millions)
Instruments associated with:

Long-term debt

Total notional value at December 31, 2017

December 31, 2017

Fair Value Hedges

Cash Flow Hedges

Total

8,375
8,375

—
— $

8,375
8,375

The following table presents additional information about the interest rate swaps used in Huntington’s asset and liability

management activities at December 31, 2018 and December 31, 2017:

(dollar amounts in millions)
Asset conversion swaps

Receive fixed—generic

Liability conversion swaps

Receive fixed—generic

Total swap portfolio at December 31, 2018

(dollar amounts in millions)
Liability conversion swaps
Receive fixed—generic

Total swap portfolio at December 31, 2017

December 31, 2018

Notional Value

Average
Maturity (years)

Weighted-Average Rate

Fair Value

Receive

Pay

1.2

—

2.20%

2.46%

4,865

4,877

2.6

2.24

2.24%

2.54

2.54%

December 31, 2017

Notional Value

Average
Maturity (years)

Weighted-Average Rate

Fair Value

Receive

Pay

8,375
8,375

2.5
2.5

(99)
(99)

1.56%

1.44%

These derivative financial instruments were entered into for the purpose of managing the interest rate risk of assets and
liabilities. Consequently, net amounts receivable or payable on contracts hedging either interest earning assets or interest bearing
liabilities were accrued as an adjustment to either interest income or interest expense. The net amounts resulted in an increase
(decrease) to net interest income of $(36) million, $23 million, and $72 million for the years ended December 31, 2018, 2017, and
2016, respectively.

During the second quarter of 2018, Huntington terminated $2.9 billion (notional value) of liability conversion swaps

subsequent to de-designating these swaps as fair value hedges. The adjusted basis of the hedged item at termination was recorded
as a loss of $149 million, which is being amortized over the remaining life of the long-term debt using the effective yield method.
Cash payments to counterparties resulting from termination of interest rate swaps are classified as operating activities in our
Consolidated Statement of Cash Flows.

Fair Value Hedges

The changes in fair value of the fair value hedges are recorded through earnings and offset against changes in the fair value of

the hedged item.

149

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:

(dollar amounts in millions)
Interest rate contracts

Year Ended December 31,

2018

2017

2016

Change in fair value of interest rate swaps hedging long-term debt (1)

Change in fair value of hedged long term debt (1)

112

(104)

(53)

(122)

112

(1)

Recognized in Interest expense— long-term debt in the Consolidated Statements of Income.

As of December 31, 2018, the following amounts were recorded on the balance sheet related to cumulative basis adjustments

for fair value hedges.

(dollar amounts in millions)

Long-term debt

Carrying Amount of the Hedged
Liabilities

Cumulative Amount of Fair Value
Hedging Adjustment To Hedged
Liabilities

December 31, 2018

4,845

(12)

The cumulative amount of fair value hedging adjustments remaining for any hedged assets and liabilities for which hedge

accounting has been discontinued is $(127) million at December 31, 2018.

Derivatives used in mortgage banking activities

Huntington’s mortgage origination hedging activity is related to the hedging of the mortgage pricing commitments to customers

and the secondary sale to third parties. The value of a newly originated mortgage is not firm until the interest rate is committed or
locked. Forward commitments to sell economically hedge the possible loss on interest rate lock commitments due to interest rate
change. The net asset (liability) position of these derivatives at December 31, 2018 and December 31, 2017 are $(4) million and $7
million, respectively. At December 31, 2018 and 2017, Huntington had commitments to sell securities collateralized by mortgage
loans of $0.8 billion and $0.7 billion, respectively. These contracts mature in less than one year.

Derivatives used in municipal bond underwriting

Interest rate futures contracts are used to offset interest rate exposure of the broker-dealer underwriting inventory. These

derivative financial instruments are recorded on the consolidated balance sheets as trading account securities and the related net gain
associated is recorded in capital market fees on the Consolidated Statement of Income. These derivatives are not designated as
hedging instruments. The total notional of these derivative financial instruments at December 31, 2018 was $11 million and had a
fair value of less than $1 million.

Derivatives used in customer related activities

Various derivative financial instruments are offered to enable customers to meet their financing and investing objectives and
for their risk management purposes. Derivative financial instruments used in trading activities consist of commodity, interest rate,
and foreign exchange contracts. Huntington enters into offsetting third-party contracts with approved, reputable counterparties with
substantially matching terms and currencies in order to economically hedge significant exposure related to derivatives used in
trading activities.

The interest rate or price risk of customer derivatives is mitigated by entering into similar derivatives having offsetting terms

with other counterparties. The credit risk to these customers is evaluated and included in the calculation of fair value. Foreign
currency derivatives help the customer hedge risk and reduce exposure to fluctuations in exchange rates. Transactions are primarily
in liquid currencies with Canadian dollars and Euros comprising a majority of all transactions. Commodity derivatives help the
customer hedge risk and reduce exposure to fluctuations in the price of various commodities. Hedging of energy-related products
and base metals comprise the majority of all transactions.

The net fair values of these derivative financial instruments, for which the gross amounts are included in other assets or other
liabilities at December 31, 2018 and December 31, 2017, were $92 million and $88 million, respectively. The total notional values
of derivative financial instruments used by Huntington on behalf of customers, including offsetting derivatives, were $26 billion and
$22 billion at December 31, 2018 and December 31, 2017, respectively. Huntington’s credit risk from customer derivatives was
$132 million and $119 million at the same dates, respectively.

150

Visa®-related Swaps

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 changes in the Visa®
litigation. In connection with the FirstMerit acquisition, Huntington acquired an additional Visa® related swap agreement. At
December 31, 2018, the combined fair value of the swap liabilities of $3 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 Consolidated Balance Sheets

Huntington records derivatives at fair value as further described in Note 17.

Derivative balances are presented on a net basis taking into consideration the effects of legally enforceable master netting
agreements. Additionally, collateral exchanged with counterparties is also netted against the applicable derivative fair values.
Huntington enters into derivative transactions with two primary groups: broker-dealers and banks, and Huntington’s customers.
Different methods are utilized for managing counterparty credit exposure and credit risk for each of these groups.

Huntington enters into transactions with broker-dealers and banks for various risk management purposes. These types of

transactions generally are high dollar volume. Huntington enters into collateral and master netting agreements with these
counterparties, and routinely exchanges cash and high quality securities collateral. Huntington enters into transactions with
customers to meet their financing, investing, payment and risk management needs. These types of transactions generally are low
dollar volume. Huntington enters into master netting agreements with customer counterparties, however collateral is generally not
exchanged with customer counterparties.

At December 31, 2018 and December 31, 2017, aggregate credit risk associated with derivatives, net of collateral that has
been pledged by the counterparty, was $37 million and $30 million, respectively. The credit risk associated with interest rate swaps
is calculated after considering master netting agreements with broker-dealers and banks.

At December 31, 2018, Huntington pledged $45 million of investment securities and cash collateral to counterparties, while

other counterparties pledged $144 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 Consolidated Balance Sheets at December 31, 2018 and December 31, 2017:

Gross amounts not offset in the
condensed consolidated balance
sheets

Financial
instruments

Cash collateral
received

(4) $
(11)

Net amount
152
103

(53) $
(18)

Gross amounts not offset in the
condensed consolidated balance
sheets

Cash collateral
delivered

Financial
instruments
$

— $
—

Net amount
175
65

(12) $
(21)

Offsetting of Derivative Assets

(dollar amounts in millions)

December 31, 2018
December 31, 2017

Gross amounts
of recognized
assets

Derivatives $
Derivatives

500
322

Offsetting of Derivative Liabilities

(dollar amounts in millions)

December 31, 2018
December 31, 2017

Gross amounts
of recognized
liabilities

Derivatives $
Derivatives

404
331

Gross amounts
offset in the
consolidated
balance sheets
$

(291) $
(190)

Net amounts of
assets
presented in
the
consolidated
balance sheets
209
132

Gross amounts
offset in the
consolidated
balance sheets
$

(217) $
(245)

Net amounts of
liabilities
presented in
the
consolidated
balance sheets
187
86

151

19. VIEs

Unconsolidated VIEs

The following tables provide a summary of the assets and liabilities included in Huntington’s 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, but is not the primary beneficiary, to the VIE at December 31, 2018, and 2017:

(dollar amounts in millions)
Trust Preferred Securities
Affordable Housing Tax Credit Partnerships
Other Investments
Total

Trust-Preferred Securities

Total Assets

14
708
126
848

Total Assets

14
636
125
775

December 31, 2018

Total Liabilities
252
357
53
662

December 31, 2017

Total Liabilities
252
335
53
640

Maximum
Exposure to Loss
—
708
126
834

Maximum
Exposure to Loss
—
636
125
761

Huntington has certain wholly-owned trusts whose assets, liabilities, equity, income, and expenses are not included within

Huntington’s 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 Consolidated Balance Sheet as long-term debt. The trust securities are the obligations of the trusts, and as such, are not
consolidated within Huntington’s Consolidated Financial Statements.

A list of trust-preferred securities outstanding at December 31, 2018 follows:

(dollar amounts in millions)
Huntington Capital I
Huntington Capital II
Sky Financial Capital Trust III
Sky Financial Capital Trust IV
Camco Financial Trust
Total

Rate

3.50% (2)
(3)
3.42
(4)
4.20
(4)
4.20
(5)
4.13

Principal amount of
subordinated note/
debenture issued to trust (1)
70
$
32
72
74
4
252

Investment in
unconsolidated
subsidiary

6
3
2
2
1
14

Represents the principal amount of debentures issued to each trust, including unamortized original issue discount.

(1)
(2) Variable effective rate at December 31, 2018, based on three-month LIBOR + 0.70%.
(3) Variable effective rate at December 31, 2018, based on three-month LIBOR + 0.625%.
(4) Variable effective rate at December 31, 2018, based on three-month LIBOR + 1.40%.
(5) Variable effective rate at December 31, 2018, 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.

152

Affordable Housing Tax Credit Partnerships

Huntington makes certain equity investments in various limited partnerships that sponsor affordable housing projects utilizing the

LIHTC pursuant to Section 42 of the Internal Revenue Code. The purpose of these investments is to achieve a satisfactory return on
capital, to facilitate the sale of additional affordable housing product offerings, and to assist in achieving goals associated with the
Community Reinvestment Act. The primary activities of the limited partnerships include the identification, development, and
operation of multi-family housing that is leased to qualifying residential tenants. Generally, these types of investments are funded
through a combination of debt and equity.

Huntington uses the proportional amortization method to account for a majority of its investments in these entities. These
investments are included in other assets. Investments that do not meet the requirements of the proportional amortization method are
accounted for using the equity method. Investment losses related to these investments are included in noninterest income in the
Consolidated Statements of Income.

The following table presents the balances of Huntington’s affordable housing tax credit investments and related unfunded

commitments at December 31, 2018 and 2017.

(dollar amounts in millions)
Affordable housing tax credit investments
Less: amortization
Net affordable housing tax credit investments
Unfunded commitments

December 31,
2018

December 31,
2017

$
$

1,147
(439)
708
357

$
$

996
(360)
636
335

The following table presents other information relating to Huntington’s affordable housing tax credit investments for the years

ended December 31, 2018, 2017, and 2016:

(dollar amounts in millions)
Tax credits and other tax benefits recognized
Proportional amortization method

Year Ended December 31,

2018

2017

2016

Tax credit amortization expense included in provision for income taxes

Equity method

Tax credit investment losses included in noninterest income

—

There were no material sales of affordable housing tax credit investments in 2018, 2017 or 2016. Huntington recognized
immaterial impairment losses for the years ended December 31, 2018, 2017 and 2016. The impairment losses recognized related to
the fair value of the tax credit investments that were less than carrying value.

Other Investments

Other investments determined to be VIE’s include investments in Small Business Investment Companies, Historic Tax Credit

Investments, certain equity method investments, automobile securitizations and other miscellaneous investments.

20. 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
Consolidated Financial Statements. The contract amounts of these financial agreements at December 31, 2018, and December 31,
2017 were as follows:

(dollar amounts in millions)
Contract amount representing credit risk
Commitments to extend credit:

Commercial
Consumer
Commercial real estate

Standby letters of credit
Commercial letters-of-credit

At December 31,

2018

2017

17,149
14,974
1,188
676
14

16,219
13,384
1,366
510
21

153

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.

Standby letters-of-credit are conditional commitments issued to guarantee the performance of a customer to a third-party. These

guarantees are primarily issued to support public and private borrowing arrangements, including commercial paper, bond financing,
and similar transactions. Most of these arrangements mature within two years. The carrying amount of deferred revenue associated
with these guarantees was $13 million and $10 million at December 31, 2018 and December 31, 2017, respectively.

Commercial letters-of-credit represent short-term, self-liquidating instruments that facilitate customer trade transactions and

generally have maturities of no longer than 90 days. The goods or cargo being traded normally secure these instruments.

Litigation and Regulatory Matters

In the ordinary course of business, Huntington is routinely a defendant in or party to pending and threatened legal and regulatory

actions and proceedings.

In view of the inherent difficulty of predicting the outcome of such matters, particularly where the claimants seek very large or

indeterminate damages or where the matters present novel legal theories or involve a large number of parties, Huntington generally
cannot predict what the eventual outcome of the pending matters will be, what the timing of the ultimate resolution of these matters
will be, or what the eventual loss, fines or penalties related to each matter may be.

Huntington establishes an accrued liability when those matters present loss contingencies that are both probable and estimable.

In such cases, there may be an exposure to loss in excess of any amounts accrued. Huntington thereafter continues to monitor the
matter for further developments that could affect the amount of the accrued liability that has been previously established.

For certain matters, Huntington is able to estimate a range of possible loss. In cases in which Huntington possesses information

to estimate a range of possible loss, that estimate is aggregated and disclosed below. There may be other matters for which a loss is
probable or reasonably possible but such an estimate of the range of possible loss may not be possible. For those matters where an
estimate of the range of possible loss is possible, management currently estimates the aggregate range of possible loss is $0 to $30
million at December 31, 2018 in excess of the accrued liability (if any) related to those matters. This estimated range of possible loss
is based upon currently available information and is subject to significant judgment and a variety of assumptions, and known and
unknown uncertainties. The matters underlying the estimated range will change from time to time, and actual results may vary
significantly from the current estimate. The estimated range of possible loss does not represent Huntington’s maximum loss exposure.

Based on current knowledge, management does not believe that loss contingencies arising from pending matters will have a

material adverse effect on the consolidated financial position of Huntington. Further, management believes that amounts accrued are
adequate to address Huntington’s contingent liabilities. However, in light of the inherent uncertainties involved in these matters, some
of which are beyond Huntington’s control, and the large or indeterminate damages sought in some of these matters, an adverse
outcome in one or more of these matters could be material to Huntington’s results of operations for any particular reporting period.

Commitments under Operating Lease Obligations

At December 31, 2018, Huntington and its subsidiaries were obligated under noncancelable leases for land, buildings, and
equipment. Many of these leases contain renewal options and certain leases provide options to purchase the leased property during or
at the expiration of the lease period at specified prices. Some leases contain escalation clauses calling for rentals to be adjusted for
increased real estate taxes and other operating expenses or proportionately adjusted for increases in the consumer or other price
indices.

The future minimum rental payments required under operating leases that have initial or remaining noncancelable lease terms in

excess of one year as of December 31, 2018, were as follows: $59 million in 2019, $55 million in 2020, $40 million in 2021, $35
million in 2022, $27 million in 2023, and $95 million thereafter. At December 31, 2018, total minimum lease payments have not been
reduced by minimum sublease rentals of $4 million due in the future under noncancelable subleases. At December 31, 2018, the
future minimum sublease rental payments that Huntington expects to receive were as follows: $2 million in 2019, $2 million in 2020,
and less than $1 million thereafter. The rental expense for all operating leases was $70 million, $76 million, and $65 million for 2018,
2017, and 2016, respectively. Huntington had no material obligations under capital leases.

154

21. OTHER REGULATORY MATTERS

Huntington and the Bank are subject to certain risk-based capital and leverage ratio requirements under the U.S. Basel III capital
rules adopted by the Federal Reserve, for Huntington, and by the OCC, for the Bank. These rules implement the Basel III international
regulatory capital standards in the United States, as well as certain provisions of the Dodd-Frank Act. These quantitative calculations
are minimums, and the Federal Reserve and OCC may determine that a banking organization, based on its size, complexity or risk
profile, must maintain a higher level of capital in order to operate in a safe and sound manner.

Under the U.S. Basel III capital rules, Huntington’s and the Bank’s assets, exposures and certain off-balance sheet items are

subject to risk weights used to determine the institutions’ risk-weighted assets. These risk-weighted assets are used to calculate the
following minimum capital ratios for Huntington and the Bank:

CET1 Risk-Based Capital Ratio, equal to the ratio of CET1 capital to risk-weighted assets. CET1 capital primarily includes
common shareholders’ equity subject to certain regulatory adjustments and deductions, including with respect to goodwill,
intangible assets, certain deferred tax assets, and AOCI. Certain of these adjustments and deductions were subject to phase-in
periods that began on January 1, 2015, and was scheduled to end on January 1, 2018. Together with the FDIC, the Federal
Reserve and OCC have issued proposed rules that would simplify the capital treatment of certain capital deductions and
adjustments, and the final phase-in period for these capital deductions and adjustments has been indefinitely delayed. In
addition, in December 2018, the U.S. federal banking agencies finalized rules that would permit BHCs and banks to phase-in,
for regulatory capital purposes, the day-one impact of the new current expected credit loss accounting rule on retained
earnings over a period of three years. For further discussion of the new current expected credit loss accounting rule, see Note
2 of the Notes to Consolidated Financial Statements.

Tier 1 Risk-Based Capital Ratio, equal to the ratio of Tier 1 capital to risk-weighted assets. Tier 1 capital is primarily
comprised of CET1 capital, perpetual preferred stock and certain qualifying capital instruments.

Total Risk-Based Capital Ratio, equal to the ratio of total capital, including CET1 capital, Tier 1 capital and Tier 2 capital, to
risk-weighted assets. Tier 2 capital primarily includes qualifying subordinated debt and qualifying ALLL. Tier 2 capital also
includes, among other things, certain trust preferred securities.

Tier 1 Leverage Ratio, equal to the ratio of Tier 1 capital to quarterly average assets (net of goodwill, certain other intangible
assets and certain other deductions).

The total minimum regulatory capital ratios and well-capitalized minimum ratios are reflected on the following page. The
Federal Reserve has not yet revised the well-capitalized standard for BHCs to reflect the higher capital requirements imposed under
the U.S. Basel III capital rules. For purposes of the Federal Reserve’s Regulation Y, including determining whether a BHC meets the
requirements to be an FHC, BHCs, such as Huntington, must maintain a Tier 1 Risk-Based Capital Ratio of 6.0% or greater and a
Total Risk-Based Capital Ratio of 10.0% or greater. If the Federal Reserve were to apply the same or a very similar well-capitalized
standard to BHCs as that applicable to the Bank, Huntington’s capital ratios as of December 31, 2018 would exceed such revised well-
capitalized standard. The Federal Reserve may require BHCs, including Huntington, to maintain capital ratios substantially in excess
of mandated minimum levels, depending upon general economic conditions and a BHC’s particular condition, risk profile and growth
plans.

Failure to be well-capitalized or to meet minimum capital requirements could result in certain mandatory and possible additional
discretionary actions by regulators that, if undertaken, could have an adverse material effect on our operations or financial condition.
Failure to be well-capitalized or to meet minimum capital requirements could also result in restrictions on Huntington’s or the Bank’s
ability to pay dividends or otherwise distribute capital or to receive regulatory approval of applications.

In addition to meeting the minimum capital requirements, under the U.S. Basel III capital rules Huntington and the Bank must
also maintain the required Capital Conservation Buffer to avoid becoming subject to restrictions on capital distributions and certain
discretionary bonus payments to management. The Capital Conservation Buffer is calculated as a ratio of CET1 capital to risk-
weighted assets, and it effectively increases the required minimum risk-based capital ratios. The Capital Conservation Buffer
requirement was phased in over a three-year period that began on January 1, 2016. The phase-in period ended on January 1, 2019, and
the Capital Conservation Buffer is now at its fully phased-in level of 2.5%. Throughout 2018, the required Capital Conservation
Buffer was 1.875%. The Tier 1 Leverage Ratio is not impacted by the Capital Conservation Buffer, and a banking institution may be
considered well-capitalized while remaining out of compliance with the Capital Conservation Buffer. In April 2018, the Federal
Reserve issued a proposal that would, among other things, replace the Capital Conservation Buffer with stress buffer requirements for
certain large BHCs, including Huntington. Please refer to the Proposed Stress Buffer Requirements section in the Item 1: Business for
further details.

155

As of December 31, 2018, Huntington’s and the Bank’s regulatory capital ratios were above the well-capitalized standards and
met the then-applicable Capital Conservation Buffer. Please refer to the table below for a summary of Huntington’s and the Bank’s
regulatory capital ratios as of December 31, 2018, calculated using the regulatory capital methodology applicable during 2018.

(dollar amounts in millions)

Minimum
Regulatory
Capital
Ratios

Minimum
Ratio+Capital
Conservation
Buffer

Well-
Capitalized
Minimums

Basel III
December 31,

2018

2017

Ratio

Amount

Ratio

Amount

CET 1 risk-based capital

Consolidated

Tier 1 risk-based capital

Consolidated

Bank

Total risk-based capital

Consolidated

Bank

Tier 1 leverage

Consolidated

Bank

4.50

6.00

8.00

4.00%

4.00

6.375%

6.375

7.875

9.875

N/A

6.50

6.00

8.00

10.00

N/A

9.65

10.19

11.06

11.21

12.98

13.42

9.10% $

5.00%

9.23

8,271

8,732

9,478

9,611

11,122

11,504

9,478

9,611

10.01

11.02

11.34

12.10

13.39

14.33

9.09% $

9.70

8,041

8,856

9,110

9,727

10,757

11,517

9,110

9,727

Huntington and its subsidiaries are also subject to various regulatory requirements that impose restrictions on cash, debt, and

dividends. The Bank is required to maintain cash reserves based on the level of certain of its deposits. This reserve requirement may
be met by holding cash in banking offices or on deposit at the FRB. During 2018 and 2017, the average balances of these deposits
were $0.4 billion and $0.4 billion, respectively.

Under current Federal Reserve regulations, the Bank is limited as to the amount and type of loans it may make to the parent

company and nonbank subsidiaries. At December 31, 2018, the Bank could lend $1.2 billion to a single affiliate, subject to the
qualifying collateral requirements defined in the regulations.

Dividends from the Bank are one of the major sources of funds for the Company. These funds aid the Company in the payment
of dividends to shareholders, expenses, and other obligations. Payment of dividends and/or return of capital to the parent company is
subject to various legal and regulatory limitations. During 2018, the Bank paid dividends of $1.7 billion to the holding company.
Also, there are statutory and regulatory limitations on the ability of national banks to pay dividends or make other capital distributions.

22. PARENT-ONLY FINANCIAL STATEMENTS

The parent-only financial statements, which include transactions with subsidiaries, are as follows:

Balance Sheets
(dollar amounts in millions)
Assets
Cash and due from banks
Due from The Huntington National Bank
Due from non-bank subsidiaries
Investment in The Huntington National Bank
Investment in non-bank subsidiaries
Accrued interest receivable and other assets
Total assets
Liabilities and shareholders’ equity
Long-term borrowings
Dividends payable, accrued expenses, and other liabilities
Total liabilities
Shareholders’ equity (1)
Total liabilities and shareholders’ equity

(1)

See Consolidated Statements of Changes in Shareholders’ Equity.

December 31,

2018

2017

2,352
739
40
11,493
142
239
15,005

3,216
687
3,903
11,102
15,005

1,618
798
58
11,696
111
252
14,533

3,128
591
3,719
10,814
14,533

156

Statements of Income
(dollar amounts in millions)
Income

Dividends from:

The Huntington National Bank
Non-bank subsidiaries

Interest from:

The Huntington National Bank
Non-bank subsidiaries

Other
Total income
Expense

Personnel costs
Interest on borrowings
Other
Total expense
Income before income taxes and equity in undistributed net income of subsidiaries
Provision (benefit) for income taxes
Income before equity in undistributed net income of subsidiaries
Increase (decrease) in undistributed net income (loss) of:

The Huntington National Bank
Non-bank subsidiaries

Net income
Other comprehensive income (loss) (1)
Comprehensive income

Year Ended December 31,

2018

2017

2016

1,722
—

27
2
(2)
1,749

2
124
118
244
1,505
(48)
1,553

(186)
26
1,393
(80)
1,313

298
14

20
2
4
338

19
91
115
225
113
(56)
169

1,015
2
1,186
(34)
1,152

188
11

14
3
—
216

12
59
123
194
22
(56)
78

629
5
712
(175)
537

(1)

See Consolidated Statements of Comprehensive Income for other comprehensive income (loss) detail.

157

Statements of Cash Flows
(dollar amounts in millions)
Operating activities
Net income

Year Ended December 31,

2018

2017

2016

1,393

1,186

712

Adjustments to reconcile net income to net cash provided by operating
activities:

Equity in undistributed net income of subsidiaries
Depreciation and amortization
Other, net

Net cash (used for) provided by operating activities
Investing activities

Repayments from subsidiaries
Advances to subsidiaries
Proceeds from sale of securities available-for-sale
Cash paid for acquisitions, net of cash received
Net cash (used for) provided by investing activities
Financing activities

Net proceeds from issuance of medium-term notes
Net proceeds from issuance of long-term borrowings
Payment of medium-term notes
Payment of long-term debt
Dividends paid on common stock
Repurchases of common stock
Net proceeds from issuance of preferred stock
Other, net

Net cash provided by (used for) financing activities
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Supplemental disclosure:

Interest paid

23. SEGMENT REPORTING

197
(2)
121
1,709

21
(13)
—
(15)
(7)

501
—
(400)
—
(584)
(939)
495
(41)
(968)
734
1,618
2,352

126

(997)
4
(37)
156

442
(29)
1
—
414

—
—
—
—
(425)
(260)
—
(20)
(705)
(135)
1,753
1,618

(634)
(1)
(24)
53

464
(1,758)
(2)
(133)
(1,429)

—
1,990
—
(65)
(299)
—
585
1
2,212
836
917
1,753

Huntington’s business segments are based on the internally-aligned segment leadership structure, which is how management

monitors results and assesses performance. The Company has four major business segments: Consumer and Business Banking,
Commercial Banking, Vehicle Finance, Regional Banking and The Huntington Private Client Group (RBHPCG). The Treasury /
Other function includes technology and operations, other unallocated assets, liabilities, revenue, and expense.

Business segment results are determined based upon Huntington’s management reporting system, which assigns balance sheet

and income statement items to each of the business segments. The process is designed around the organizational and management
structure and, accordingly, the results derived are not necessarily comparable with similar information published by other financial
institutions. Additionally, because of the interrelationships of the various segments, the information presented is not indicative of how
the segments would perform if they operated as independent entities.

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. Huntington utilizes a full-allocation methodology, where all Treasury / Other expenses, except
reported Significant Items, and a small amount of other residual unallocated expenses, are allocated to the four business segments.

The management accounting policies and processes utilized in compiling segment financial information are highly subjective
and, unlike financial accounting, are not based 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

158

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.

Huntington uses an active and centralized FTP methodology to attribute appropriate net interest income to the business

segments. The intent of the FTP methodology is to transfer interest rate risk from the business segments by providing matched
duration funding of assets and liabilities. The result is to centralize the financial impact, management, and reporting of interest rate
risk in the Treasury / Other function where it can be centrally monitored and managed. The Treasury / Other function charges (credits)
an internal cost of funds for assets held in (or pays for funding provided by) each business segment. The FTP rate is based on
prevailing market interest rates for comparable duration assets (or liabilities).

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. 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, corporate, real estate and government public sector customers located primarily within our geographic footprint.
The segment is divided into six business units: Middle Market, Specialty Banking, Asset Finance, Capital Markets/Institutional
Corporate Banking, Commercial Real Estate, and Treasury Management.

Vehicle Finance - Our products and services include providing financing to consumers for the purchase of automobiles, light-
duty trucks, recreational vehicles, and marine craft at franchised and other select dealerships, and providing financing to franchised
dealerships for the acquisition of new and used inventory. 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 also 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.

Listed below is certain financial information reconciled to Huntington’s December 31, 2018, December 31, 2017, and

December 31, 2016, reported results by business segment:

Income Statements
(dollar amounts in millions)
2018
Net interest income
Provision (benefit) for credit losses
Noninterest income
Noninterest expense
Provision (benefit) for income taxes
Net income (loss)
2017
Net interest income
Provision (benefit) for credit losses
Noninterest income
Noninterest expense
Provision (benefit) for income taxes
Net income (loss)
2016
Net interest income
Provision (benefit) for credit losses
Noninterest income
Noninterest expense
Provision (benefit) for income taxes
Net income (loss)

Consumer &
Business
Banking

Commercial
Banking

Vehicle
Finance

RBHPCG

Treasury /
Other

Huntington
Consolidated

1,685
141
738
1,696
123
463

1,549
108
735
1,647
185
344

1,224
68
649
1,339
163
303

159

938
38
313
513
147
553

901
30
278
474
236
439

717
79
245
397
170
316

403
55
10
149
44
165

424
63
14
149
79
147

344
47
15
118
68
126

192
1
193
250
28
106

172
—
188
243
41
76

153
(3)
177
229
36
68

(29) $
—
67
39
(107)
106

(44) $
—
92
201
(333)
180

(69) $
—
64
325
(229)
(101) $

3,189
235
1,321
2,647
235
1,393

3,002
201
1,307
2,714
208
1,186

2,369
191
1,150
2,408
208
712

(dollar amounts in millions)
Consumer & Business Banking
Commercial Banking
Vehicle Finance
RBHPCG
Treasury / Other
Total

Supplementary Data

Quarterly Results of Operations (unaudited)

Assets at
December 31,

Deposits at
December 31,

2018

2017

2018

2017

27,486
34,818
19,435
6,540
20,502
108,781

26,262
32,067
17,865
5,829
22,162
104,185

50,300
23,185
346
6,809
4,134
84,774

45,427
21,286
381
6,202
3,745
77,041

The following is a summary of the quarterly results of operations, for the years ended December 31, 2018 and 2017:

(dollar amounts in millions, except per share data)
Interest income
Interest expense
Net interest income
Provision for credit losses
Noninterest income
Noninterest expense
Income before income taxes
Provision for income taxes
Net income
Dividends on preferred shares
Net income applicable to common shares
Net income per common share — Basic

Net income per common share — Diluted

(dollar amounts in millions, except per share data)
Interest income
Interest expense
Net interest income
Provision for credit losses
Noninterest income
Noninterest expense
Income before income taxes
Provision (benefit) for income taxes
Net income
Dividends on preferred shares
Net income applicable to common shares
Net income per common share — Basic

Net income per common share — Diluted

Three Months Ended

December 31,

September 30,

2018

June 30,

2018

March 31,

2018

1,056
223
833
60
329
711
391
57
334
19
315

0.30
0.29

1,007
205
802
53
342
651
440
62
378
18
360

0.33
0.33

Three Months Ended

December 31,

September 30,

2017

June 30,

2017

894
124
770
65
340
633
412
(20)
432
19
413

0.38
0.37

873
115
758
43
330
680
365
90
275
19
256

0.24
0.23

972
188
784
56
336
652
412
57
355
21
334

0.30
0.30

846
101
745
25
325
694
351
79
272
19
253

0.23
0.23

914
144
770
66
314
633
385
59
326
12
314

0.29
0.28

March 31,

2017

820
91
729
68
312
707
266
59
207
19
188

0.17
0.17

160

Item 9: Changes In and Disagreements With Accountants on Accounting and Financial Disclosure

None.

Item 9A: Controls and Procedures

Disclosure Controls and Procedures

Huntington maintains disclosure controls and procedures designed to ensure that the information required to be disclosed in the

reports that it files or submits under the Securities Exchange Act of 1934, as amended (the Exchange Act), are recorded, processed,
summarized, and reported within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures
include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the
reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its
principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions
regarding required disclosure. Huntington’s Management, with the participation of its Chief Executive Officer and the Chief Financial
Officer, evaluated the effectiveness of Huntington’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and
15d-15(e) under the Exchange Act) as of December 31, 2018. Based upon such evaluation, Huntington’s Chief Executive Officer and
Chief Financial Officer have concluded that, as of December 31, 2018, Huntington’s disclosure controls and procedures were
effective.

Internal Control Over Financial Reporting

Information required by this item is set forth in the Report of Management’s Assessment of Internal Control over Financial

Reporting and the Report of Independent Registered Public Accounting Firm.

Changes in Internal Control Over Financial Reporting

There have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and

15d-15(f) under the Exchange Act) during the quarter ended December 31, 2018, that have materially affected, or are reasonably likely
to materially affect, internal control over financial reporting.

Item 9B: Other Information

Not applicable.

PART III

We refer in Part III of this report to relevant sections of our 2019 Proxy Statement for the 2019 annual meeting of shareholders,

which will be filed with the SEC pursuant to Regulation 14A within 120 days of the close of our 2018 fiscal year. Portions of our 2019
Proxy Statement, including the sections we refer to in this report, are incorporated by reference into this report.

Item 10: Directors, Executive Officers and Corporate Governance

Information required by this item is set forth under the captions Election of Directors, Corporate Governance, Our Executive

Officers, Board Meetings and Committee Information, Report of the Audit Committee, and Section 16(a) Beneficial Ownership
Reporting Compliance of our 2019 Proxy Statement, which is incorporated by reference into this item.

Item 11: Executive Compensation

Information required by this item is set forth under the captions Compensation of Executive Officers of our 2019 Proxy

Statement, which is incorporated by reference into this item.

161

Item 12: Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table sets forth information about Huntington common stock authorized for issuance under Huntington’s

existing equity compensation plans as of December 31, 2018.

Plan Category (1)
Equity compensation plans approved by security holders
Equity compensation plans not approved by security holders
Total

Number of
securities to be
issued upon
exercise of
outstanding
options, warrants,
and rights (2)
(a)

Weighted-average
exercise price of
outstanding
options, warrants,
and rights (3)
(b)

29,252,019
3,290
29,255,309

3.86
6.08
3.86

Number of
securities
remaining available
for future issuance
under equity
compensation
plans (excluding
securities reflected
in column (a)) (4)
(c)

26,185,301
—
26,185,301

(1) All equity compensation plan authorizations for shares of common stock provide for the number of shares to be adjusted for
stock splits, stock dividends, and other changes in capitalization. The Huntington Investment and Tax Savings Plan, a
broad-based plan qualified under Code Section 401(a) which includes Huntington common stock as one of a number of
investment options available to participants, is excluded from the table.

(2) The numbers in this column (a) reflect shares of common stock to be issued upon exercise of outstanding stock options and

the vesting of outstanding awards of RSUs, and PSUs and the release of DSUs. The shares of common stock to be issued
upon exercise or vesting under equity compensation plans not approved by shareholders include an inducement grant issued
outside of the Company’s stock plans, and awards granted under the following plans which are no longer active and for
which Huntington has not reserved the right to make subsequent grants or awards: employee and director stock plans of
Unizan Financial Corp., Camco Financial Corporation, and FirstMerit Corporation assumed in the acquisitions of these
companies.

(3) The weighted-average exercise prices in this column are based on outstanding options and do not take into account unvested

awards of RSUs, RSAs and PSUs and unreleased DSUs as these awards do not have an exercise price.

(4) The number of shares in this column (c) reflects the number of shares remaining available for future issuance under

Huntington’s 2018 Plan, excluding shares reflected in column (a). The number of shares in this column (c) does not include
shares of common stock to be issued under the following compensation plans: the Executive Deferred Compensation Plan,
which provides senior officers designated by the Compensation Committee the opportunity to defer up to 90% of base
salary, annual bonus compensation and certain equity awards, and up to 90% of long-term incentive awards; the
Supplemental Plan under which voluntary participant contributions made by payroll deduction are used to purchase shares;
the Deferred Compensation for Huntington Bancshares Incorporated Directors under which directors may defer their
director compensation and such amounts may be invested in shares of common stock; and the Deferred Compensation Plan
for directors (now inactive) under which directors of selected subsidiaries may defer their director compensation and such
amounts may be invested in shares of Huntington common stock. These plans do not contain a limit on the number of
shares that may be issued under them.

Additional information required by this item is set forth under the captions Ownership of Voting Stock of our 2019 Proxy

Statement, which is incorporated by reference into this item.

Item 13: Certain Relationships and Related Transactions, and Director Independence

Information required by this item is set forth under the captions Independence of Directors and Review, Approval or Ratification

of Transactions with Related Persons of our 2019 Proxy Statement, which are incorporated by reference into this item.

Item 14: Principal Accountant Fees and Services

Information required by this item is set forth under the caption Proposal to Ratify the Appointment of Independent Registered

Public Accounting Firm of our 2019 Proxy Statement which is incorporated by reference into this item.

162

PART IV

Item 15: Exhibits and Financial Statement Schedules

Financial Statements and Financial Statement Schedules

Our consolidated financial statements required in response to this Item are incorporated by reference from Item 8 of this Report.

Exhibits

Our exhibits listed on the Exhibit Index of this Form 10-K are filed with this Report or are incorporated herein by reference.

Item 16: 10-K Summary

Not applicable.

163

Exhibit Index

This report incorporates by reference the documents listed below that we have previously filed with the SEC. The SEC allows us to
incorporate by reference information in this document. The information incorporated by reference is considered to be a part of this
document, except for any information that is superseded by information that is included directly in this document.

The SEC maintains an Internet web site that contains reports, proxy statements, and other information about issuers, like us, who file
electronically with the SEC. The address of the site is http://www.sec.gov. The reports and other information filed by us with the SEC
are also available free of charge at our Internet web site. The address of the site is http://www.huntington.com. Except as specifically
incorporated by reference into this Annual Report on Form 10-K, information on those web sites is not part of this report. You also
should be able to inspect reports, proxy statements, and other information about us at the offices of the NASDAQ National Market at
33 Whitehall Street, New York, New York 10004.

Exhibit
Number

3.1

3.2

3.3

4.1

Document Description

Report or Registration Statement

Articles Supplementary of Huntington Bancshares Incorporated, as of
January 18, 2019.

Current Report on Form 8-K dated
January 16, 2019.

Articles of Restatement of Huntington Bancshares Incorporated, as of
January 18, 2019.

Current Report on Form 8-K dated
January 16, 2019.

Bylaws of Huntington Bancshares Incorporated, as amended and restated
on January 16, 2019.

Current Report on Form 8-K dated
January 16, 2019.

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.

SEC File or
Registration
Number

001-34073

Exhibit
Reference

3.1

3.2

3.3

10.1

* Form of Executive Agreement for certain executive officers.

Current Report on Form 8-K, dated
November 28, 2012.

001-34073

10.3

10.2

10.3

* Management Incentive Plan for Covered Officers as amended and
restated effective for plan years beginning on or after January 1, 2016.

Definitive Proxy Statement for the 2016
Annual Meeting of Shareholders.

* Huntington Supplemental Retirement Income Plan, amended and
restated, effective December 31, 2013.

Annual Report on Form 10-K for the
year ended December 31, 2013.

10.4(P)

* Deferred Compensation Plan and Trust for Directors

Post-Effective Amendment No. 2 to
Registration Statement on Form S-8
filed on January 28, 1991.

10.7

10.8

10.9

* Executive Deferred Compensation Plan, as amended and restated on
January 1, 2012.

Annual Report on Form 10-K for the
year ended December 31, 2012.

* The Huntington Supplemental Stock Purchase and Tax Savings Plan and
Trust, amended and restated, effective January 1, 2014.

Annual Report on Form 10-K for the
year ended December 31, 2013.

* Form of Employment Agreement between Stephen D. Steinour and
Huntington Bancshares Incorporated effective December 1, 2012.

Current Report on Form 8-K dated
November 28, 2012.

10.10

* Form of Executive Agreement between Stephen D. Steinour and
Huntington Bancshares Incorporated effective December 1, 2012.

Current Report on Form 8-K dated
November 28, 2012.

10.11

* Restricted Stock Unit Grant Notice with three year vesting.

10.12

* Restricted Stock Unit Grant Notice with six month vesting.

10.13

* Restricted Stock Unit Deferral Agreement.

10.14

* Director Deferred Stock Award Notice.

Current Report on Form 8-K dated
July 24, 2006.

10.15

* Huntington Bancshares Incorporated 2007 Stock and Long-Term
Incentive Plan.

Definitive Proxy Statement for the 2007
Annual Meeting of Stockholders.

10.16

* First Amendment to the 2007 Stock and Long-Term Incentive Plan.

10.17

* Second Amendment to the 2007 Stock and Long-Term Incentive Plan.

10.18

* 2009 Stock Option Grant Notice to Stephen D. Steinour.

Quarterly Report on Form 10-Q for the
quarter ended September 30, 2007.

Definitive Proxy Statement for the 2010
Annual Meeting of Shareholders.

Quarterly Report on Form 10-Q for the
quarter ended March 31, 2009.

10.19

10.20

* Form of Consolidated 2012 Stock Grant Agreement for Executive
Officers Pursuant to Huntington’s 2012 Long-Term Incentive Plan.

Quarterly Report on Form 10-Q for the
quarter ended June 30, 2012.

* Form of 2014 Restricted Stock Unit Grant Agreement for Executive
Officers.

Quarterly Report on Form 10-Q for the
quarter ended June 30, 2014.

10.21

* Form of 2014 Stock Option Grant Agreement for Executive Officers.

Quarterly Report on Form 10-Q for the
quarter ended June 30, 2014.

001-34073

33-10546

001-34073

000-02525

10.3

4(a)

10.8

10.1

10.2

99.1

99.2

99.3

99.4

000-02525

10.7

001-34073

10.1

10.2

10.1

10.2

164

* Deferred Compensation Plan and Trust for Directors

Annual Report on Form10-K for the year
ended December 31, 2017.

001-34073

10.32

001-34073

10.3

10.4

10.5

10.6

10.2

10.3

10.4

10.1

001-34073

10.33

001-34073

10.1

001-34073

10.2

10.3

10.4

10.1

* Form of 2014 Performance Stock Unit Grant Agreement for Executive
Officers.

Quarterly Report on Form 10-Q for the
quarter ended June 30, 2014.

* Form of 2014 Restricted Stock Unit Grant Agreement for Executive
Officers Version II.

Quarterly Report on Form 10-Q for the
quarter ended June 30, 2014.

* Form of 2014 Stock Option Grant Agreement for Executive Officers
Version II.

Quarterly Report on Form 10-Q for the
quarter ended June 30, 2014.

*Form of 2014 Performance Stock Unit Grant Agreement for Executive
Officers Version II.

Quarterly Report on Form 10-Q for the
quarter ended June 30, 2014.

*Huntington Bancshares Incorporated 2012 Long-Term Incentive Plan.

*Huntington Bancshares Incorporated 2015 Long-Term Incentive Plan.

10.28

*Form of 2015 Stock Option Grant Agreement.

10.29

*Form of 2015 Restricted Stock Unit Grant Agreement.

10.30

*Form of 2015 Performance Share Unit Grant Agreement.

*Huntington Bancshares Incorporated Restricted Stock Unit Grant
Agreement.

Definitive Proxy Statement for the 2012
Annual Meeting of Shareholders.

Definitive Proxy Statement for the 2015
Annual Meeting of Shareholders.

Quarterly Report on Form 10-Q for the
quarter ended June 30, 2015.

Quarterly Report on Form 10-Q for the
quarter ended March 31, 2015.

10.22

10.23

10.24

10.25

10.26

10.27

10.31

10.32

10.33

* Amended and Restated Deferred Compensation Plan and Trust for
Huntington Bancshares Incorporated Directors

Annual Report on Form 10-K for the
year ended December 31, 2017.

10.34

* First Amendment to the 2015 Long-Term Incentive Plan

10.35

*Huntington Bancshares Incorporated 2018 Long-Term Incentive Plan.

10.36

*Form of 2018 Stock Option Grant Agreement.

10.37

*Form of 2018 Restricted Stock Unit Agreement.

10.38

*Form of 2018 Performance Share Unit Grant Agreement.

Quarterly Report on Form 10-Q for the
quarter ended March 31, 2017.

Definitive Proxy Statement for 2018
Annual Meeting of Shareholders.

Quarterly Report on Form 10-Q for the
quarter ended June 30, 2018.

10.39

10.40

14.1(P)

*Executive Deferred Compensation Plan, as amended and restated on April
18, 2018.

Quarterly Report on Form 10-Q for the
quarter ended September 30, 2018.

*Huntington Supplemental 401(k) Plan (f/k/a Huntington Supplemental
Stock Purchase and Savings Plan and Trust), as amended and restated
effective January 1, 2019.

Code of Business Conduct and Ethics dated January 14, 2003 and revised
on January 24, 2018 and Financial Code of Ethics for Chief Executive
Officer and Senior Financial Officers, adopted January 18, 2003 and
revised on October 20, 2015, are available on our website at http://
www.huntington.com/About-Us/corporate-governance

21.1

Subsidiaries of the Registrant

23.1

24.1

31.1

31.2

32.1

32.2

101

Consent of PricewaterhouseCoopers LLP, Independent Registered Public
Accounting Firm.

Power of Attorney

Rule 13a-14(a) Certification – Chief Executive Officer.

Rule 13a-14(a) Certification – Chief Financial Officer.

Section 1350 Certification – Chief Executive Officer.

Section 1350 Certification – Chief Financial Officer.

The following material from Huntington’s Form 10-K Report for the year
ended December 31, 2018, formatted in XBRL: (1) Consolidated Balance
Sheets, (2) Consolidated Statements of Income, (3), Consolidated
Statements of Comprehensive Income, (4) Consolidated Statements of
Changes in Shareholders’ Equity, (5) Consolidated Statements of Cash
Flows, and (6) the Notes to the Consolidated Financial Statements.

* Denotes management contract or compensatory plan or arrangement.

165

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this

report to be signed on its behalf by the undersigned, thereunto duly authorized, on the 15th day of February, 2019.

Signatures

HUNTINGTON BANCSHARES INCORPORATED
(Registrant)

By:

/s/ Stephen D. Steinour
Stephen D. Steinour
Chairman, President, Chief Executive
Officer, and Director (Principal Executive Officer)

By:

/s/ Howell D. McCullough III
Howell D. McCullough III
Chief Financial Officer
(Principal Financial Officer)

/s/ Nancy E. Maloney
Nancy E. Maloney
Executive Vice President, Controller

(Principal Accounting Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons

on behalf of the Registrant and in the capacities indicated on the 15th day of February, 2019.

Lizabeth Ardisana *
Lizabeth Ardisana

Director

Ann B. Crane *

Ann B. Crane
Director

Robert S. Cubbin *
Robert S. Cubbin

Director

Steven G. Elliott *

Steven G. Elliott

Director

Gina D. France *

Gina D. France

Director

J. Michael Hochschwender *

J. Michael Hochschwender

Director

John C. Inglis *
John C. Inglis

Director

166

Peter J. Kight *
Peter J. Kight
Director

Richard W. Neu *
Richard W. Neu
Director

David L. Porteous *

David L. Porteous
Director

Kathleen H. Ransier *
Kathleen H. Ransier
Director

*/s/ Jana J. Litsey

Jana J. Litsey

Attorney-in-fact for each of the persons indicated

167

[THIS PAGE INTENTIONALLY LEFT BLANK]

Peter J. Kight(3)(7)
Private Investor
Joined Board: 2012

Richard W. Neu(1)(4)
Retired Chairman
MCG Capital Corporation
Joined Board: 2010

David L. Porteous(4)(5)(6)
Attorney
McCurdy, Wotila & Porteous, P.C.
Lead Director
Huntington Bancshares Incorporated
Joined Board: 2003

Kathleen H. Ransier(2)(3)
Retired Partner
Vorys, Sater, Seymour and Pease LLP
Joined Board: 2003

Stephen D. Steinour(4)
Chairman, President and Chief Executive Officer
Huntington Bancshares Incorporated
and The Huntington National Bank
Joined Board: 2009

BOARD OF DIRECTORS

Lizabeth Ardisana(6)(7)
Chief Executive Officer
ASG Renaissance, LLC
Joined Board: 2016

Ann B. (Tanny) Crane(1)(2)(4)(5)
President and Chief Executive Officer
Crane Group Company
Joined Board: 2010

Robert S. Cubbin(3)
Retired President and Chief Executive Officer
Meadowbrook Insurance Group
Joined Board: 2016

Steven G. Elliott(4)(6)
Retired Senior Vice Chairman
BNY Mellon
Joined Board: 2011

Gina D. France(1)
President and Chief Executive Officer
France Strategic Partners LLC
Joined Board: 2016

J. Michael Hochschwender(2)
President and Chief Executive Officer
The Smithers Group, Inc.
Joined Board: 2016

John C. (Chris) Inglis(5)(7)
Distinguished Visiting Professor of Cyber Studies
United States Naval Academy
Joined Board: 2016

COMMITTEES
(1) Audit
(2) Community Development
(3) Compensation
(4) Executive
(5) Nominating and Corporate Governance
(6) Risk Oversight
(7) Technology

CONTACT AND OTHER INFORMATION
SHAREHOLDER CONTACTS

Registered shareholders (holders of record with the company) requesting information about share balances, change of name
or address, lost certificates, or other shareholder account matters should contact Huntington’s registrar and transfer agent:

Computershare Investor Services
Attn: Shareholder Services
P.O. Box 50500
Louisville, KY 40233-5000
web.queries@computershare.com
(800) 725-0674

Beneficial shareholders (owners of shares held in a bank or brokerage account): When you purchase stock and it is held
for you by your broker, it is listed with the company in the broker’s name, and this is sometimes referred to as holding
shares in “street name.” Huntington does not know the identity of individual shareholders who hold their shares in this
manner; we simply know that a broker holds a certain number of shares which may be for any number of customers. If
you hold your stock in street name, you receive all dividend payments, annual reports, and proxy materials through
your broker. Therefore, questions about your account should be directed to your broker.

DIRECT STOCK PURCHASE AND DIVIDEND REINVESTMENT PLAN

Computershare Investment Plan (CIP) is a direct stock purchase and dividend reinvestment plan for registered holders
or for those who wish to become registered holders of common stock of Huntington. The CIP is offered and
administered by Computershare Trust Company, N.A. (Computershare), and not by Huntington. Both registered
shareholders and new investors are able to purchase Huntington common shares through the CIP. Computershare is the
registrar and transfer agent for Huntington common stock. Call (800) 725-0674 for information to enroll in the CIP.

DIRECT DEPOSIT OF DIVIDENDS

Automatic direct deposit of quarterly dividends is offered to our registered shareholders, at no charge, and provides secure
and timely access to their funds. For further information, please call the transfer agent, Computershare, at (800) 725-0674.

SHAREHOLDER INFORMATION

Common Stock:

The common stock of Huntington Bancshares Incorporated is traded on the Nasdaq Stock Market under the symbol
“HBAN.” The stock is listed as “HuntgBcshr” or “HuntBanc” in most newspapers. As of December 31, 2018,
Huntington had 28,818 shareholders of record.
Annual Meeting:

The 2019 Annual Meeting of Shareholders has been scheduled for 2:00 p.m. EDT, Thursday, April 18, 2019, at
Huntington’s Easton Business Service Center, 7 Easton Oval, Columbus, Ohio 43219.
Information Requests:

Copies of Huntington’s Annual Report; Forms 10-K, 10-Q, and 8-K; Financial Code of Ethics; and quarterly earnings
releases may be obtained, free of charge, by calling (888) 480-3164 or by visiting the Investor Relations section of
Huntington’s website, www.huntington.com.

ANALYST AND INVESTOR CONTACTS

Analysts and investors seeking information about Huntington should contact:

Investor Relations
Huntington Bancshares Incorporated
Huntington Center, HC0935
41 South High Street
Columbus, OH 43287
huntington.investor.relations@huntington.com
(800) 576-5007
Retail Shareholder Inquiries
(614) 480-5676
All Other Investor Inquiries

Huntington Bancshares Incorporated

Huntington Center | 41 South High Street, Columbus, Ohio 43287
800-480-2265 | huntington.com

The Huntington National Bank is Member FDIC. ⬢®, Huntington® and ⬢Huntington Welcome.® are federally
registered service marks of Huntington Bancshares Incorporated. ©2019 Huntington Bancshares Incorporated.