H
U
N
T
I
N
G
T
O
N
B
A
N
C
S
H
A
R
E
S
I
N
C
O
R
P
O
R
A
T
E
D
2
0
1
9
A
N
N
U
A
L
R
E
P
O
R
T
Huntington Bancshares Incorporated
Huntington Center | 41 South High Street, Columbus, Ohio 43287
800-480-2265 | huntington.com
The Huntington National Bank, Member FDIC. ⬢®, Huntington® and ⬢ Huntington. Welcome.® are federally registered service marks of
Huntington Bancshares Incorporated. ©2020 Huntington Bancshares Incorporated.
2019 annual report
368224_HNB_2019_AnnualReportCover_R2.indd 4
368224_HNB_2019_AnnualReportCover_R2.indd 4
3/4/20 2:11 AM
3/4/20 2:11 AM
Huntington Bancshares Incorporated is a regional bank holding company headquartered in Columbus, Ohio, with $109
billion of assets and a network of 868 full-service branches, including 12 Private Client Group offices, and 1,448 ATMs
across seven 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 vehicle finance, 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)
2019
2018
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)
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)
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)
BALANCE SHEET - DECEMBER 31,
Total loans and leases
Total assets
Total deposits
Total shareholders’ equity
$
$
$
$
$
$
$
1,411
1.27
0.58
8.25
1.31%
16.9
3.26
56.6
7.88%
9.88
11.26
13.04
265
0.35%
468
0.62%
498
0.66%
783
1.04%
167
75,404
109,002
82,347
11,795
$
$
$
$
$
$
$
1,393
1.20
0.50
7.34
1.33%
17.9
3.33
56.9
7.21%
9.65
11.06
12.98
145
0.20%
340
0.45%
387
0.52%
772
1.03%
228
74,900
108,781
84,774
11,102
$
$
$
$
$
$
$
Change
Amount
Change
Percent
18
1 %
0.07
0.08
0.91
6 %
16 %
12 %
120
0.15%
128
0.17%
111
0.14%
11
0.01%
(61)
504
221
(2,427)
693
83 %
38 %
29 %
1 %
1 %
— %
(3)%
6 %
(1)
(2)
(3)
(4)
(5)
(6)
(7)
At December 31.
On a fully-taxable equivalent (FTE) basis assuming a 21% tax rate.
Noninterest expense less amortization of intangibles and goodwill impairment divided by the sum of FTE net interest income and 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.
NALs divided by total loans and leases.
NPAs divided by the sum of total loans and leases and other real estate owned.
368224_HNB_2019_AnnualReportCover_R2.indd 5
368224_HNB_2019_AnnualReportCover_R2.indd 5
3/4/20 2:11 AM
3/4/20 2:11 AM
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 transfer agent:
CONTACT AND OTHER INFORMATION
SHAREHOLDER CONTACTS
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. 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 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:
Information Requests:
The common stock of Huntington Bancshares Incorporated is traded on Nasdaq under the symbol “HBAN.”
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:
Huntington Investor Relations
Huntington Center, HC0935
41 South High Street
Columbus, OH 43287
huntington.investor.relations@huntington.com
Retail Shareholder Inquiries (800) 576-5007
All Other Investor Inquiries (614) 480-5676
DEAR FELLOW OWNERS AND FRIENDS:
2019 was a successful year for Huntington. We met our customers’ needs with our distinguished product set and
with consistently good customer service. I continue to be humbled by the commitment of our colleagues, who by living
our purpose, earn customer satisfaction recognition and awards on local, regional, and national levels. At Huntington,
we believe that purpose drives performance. Huntington’s purpose, simply stated, is to make people’s lives better, help
businesses thrive, and strengthen the communities we serve. We managed through a year of significant economic
uncertainty, market volatility, and falling interest rates, delivering sound financial performance in the face of these
headwinds while maintaining disciplined risk management.
I was pleased with our share performance in 2019. Total shareholder return (TSR), which is the total share price
performance assuming reinvestment of dividends, was a robust +31.7% for 2019, slightly outperforming the +31.5%
TSR for the S&P 500 Index. As I have noted before, although 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, one
of the ten largest shareholders of the Company when considered on a combined basis). We manage the Company to
create shareholder value over the long term through consistent, disciplined performance.
2019 Financial Performance—Record Revenue and Record Net Income
Earnings per Common Share
Net Income ($ in billions)
Efficiency Ratio
$1.27
$1.20
$1.00
$1.4
$1.4
$1.2
66.8%
64.5%
$0.81
$0.70
$0.7
$0.7
60.9%
56.9% 56.6%
2015
2016
2017
2018
2019
2015
2016
2017
2018
2019
2015
2016
2017
2018
2019
There is a historical ethos of humility and hard work in the Midwest — taking challenges head on as they present
themselves without dwelling on what could have been. That was our approach as 2019 quickly transitioned to a year
of substantial challenges. When writing this letter a year ago, we expected multiple interest rate increases from the
Federal Reserve, a welcomed outlook given our asset sensitive balance sheet positioning. This simply means our assets
would re-price more quickly than our liabilities, and thus we would see an improvement in our net interest income, the
source of more than two-thirds of our total revenue. As we know now, what occurred was quite different, as the slowing
global economic growth and significant market uncertainty caused the Federal Reserve to reduce interest rates three
times in 2019. The impact of this swing in interest rate outlook materially lowered revenue from what we originally
planned, all else equal.
To address this more challenging interest rate and revenue outlook, we implemented a hedging strategy, sold certain
loans, and took other structural actions to reduce the asset sensitivity of the balance sheet. For example, we modestly
reduced pricing on new super prime indirect auto loans in order to grow these fixed rate, short duration loans. We also
reduced the rate and terms of our deposits. Investments we made in our home lending business the past few years
resulted in record mortgage originations in the fourth quarter. We also managed our expenses more tightly, adjusting
certain investments and re-examining all discretionary spending. All told, this active management and execution across
the Company delivered bottom-line results roughly in line with our budget.
2019 Annual Report 1
2019 net income of $1.4 billion represented a record for Huntington, a 1% increase from the prior year. This is the
fifth consecutive year and the eighth time in the last nine years that we have achieved record net income. Earnings per
common share for the year were $1.27, up 6% from the prior year and the highest we have reported since the Global
Financial Crisis. Tangible book value per common share as of 2019 year-end was $8.25, a 12% year-over-year increase.
Our profitability ratios also were strong as return on average assets was 1.3%, return on average common equity was
13%, and return on average tangible common equity was 17%. We believe each of these return metrics again compare
favorably with our regional bank peers.
Fully taxable equivalent total revenue increased 3% to a record $4.7 billion. Fully taxable equivalent net interest
income increased 1% year-over-year, reflecting 3% earning asset growth partially offset by seven basis points of
compression in the net interest margin resulting from the declining interest rate environment. Noninterest income
increased 10% year-over-year, as we continue to see positive momentum across our core business lines, which we have
invested in significantly during the past several years. Mortgage banking income increased 55% as a result of these
investments and lower interest rates. Aided by our successful fourth quarter 2018 acquisition of municipal underwriter
Hutchison, Shockey, Erley & Co., capital markets fees increased 14% year-over-year. Importantly, noninterest income
contributed 31% of our total revenues in 2019, and we continue to focus on increasing the revenue contribution from
these noninterest income sources.
In challenging revenue environments such as 2019, disciplined expense management becomes even more
important. Total overhead expense increased 3% as we thoughtfully balanced continued investments in our business
with our annual goal of positive operating leverage, which means revenue growth exceeding expense growth. As a
result, in 2019 we delivered positive operating leverage on an adjusted basis1 for the seventh consecutive year. We
also continued to improve our efficiency ratio, which represents the ratio of the cost to earn each dollar of revenue,
decreasing to 56.6% compared to 56.9% in 2018. Our efficiency ratio remains one of the best among the regional banks.
Average Total Assets
($ in billions)
Average Total Loans and Leases
($ in billions)
Average Total Deposits
($ in billions)
$108
$105
$101
$75
$72
$68
$82
$80
$77
$83
$69
$57
$49
$63
$54
2015
2016
2017
2018
2019
2015
2016
2017
2018
2019
2015
2016
2017
2018
2019
Balance sheet growth was modest in 2019 as average total assets increased 3%, impacted by both the economic
environment and the sale of our Wisconsin branch-based operations in June 2019. Average loans and leases increased
4%, with like-sized increases in both our prime-focused consumer loans and our commercial loans. Somewhat uniquely
among regional banks, we are strategically and intentionally balanced between consumer and commercial. This provides
both strong risk management and the ability to maintain growth across a broader array of economic periods. Average
total deposits increased 3%, including a 4% increase in average core deposits. We continue to focus on growing consumer
and commercial checking relationships, the fundamental core of banking relationships.
Our credit metrics remain strong, reflective of our commitment to maintaining our aggregate moderate-to-low risk
profile and our stringent underwriting standards. Net charge-offs for the year were 35 basis points, the low end of our
average through-the-cycle target range of 35 to 55 basis points. The nonperforming asset ratio ended the year at 0.66%.
1
See 2019 fourth quarter earnings conference call slides for reconciliation
2 Huntington Bancshares Incorporated
These metrics were modestly higher than anticipated as we experienced weakness in our oil and gas portfolio. While
the oil and gas portfolio is small, less than 2% of total loans, the losses experienced in 2019 are unacceptable.
Nonetheless, our strategy and our commitment are and have been to outperform the industry on credit quality through
the cycle. The strong credit quality exhibited by the remaining 98%-plus of our loan portfolio supports this expectation.
Our capital levels also remain strong. Our Common Equity Tier 1 (CET1) risk-based ratio ended 2019 at 9.88%, up
from 9.65% a year earlier and consistent with our 9% to 10% operating guideline. Our tangible common equity (TCE)
ratio was 7.88% at year-end, up from 7.21% a year ago.
Subsequent to year-end, we implemented the new accounting standard for credit reserves called the Current
Expected Credit Loss, or CECL, methodology which estimates credit loss expectations over the entire life of the loan
instead of only when a loss has been incurred under the old methodology. Based on the portfolio composition as of
December 31, 2019, the adoption of CECL resulted in an increase to our total Allowance for Credit Losses (ACL) of
approximately $393 million, or 44%, from the 2019 year-end ACL level of $887 million. The increase in the ACL is largely
attributable to the consumer portfolio, given the longer asset duration associated with many of these products, and
the use of multiple economic scenarios when determining the Bank’s economic forecast. As a result of the increase in
the ACL, Huntington recognized a one-time downward adjustment of approximately $306 million to our retained
earnings. For regulatory capital purposes, this reduction to our regulatory capital ratios will be phased in over three
years; however, the full impact of the reduction will be reflected in our TCE ratio in the 2020 first quarter.
The full detail of our 2019 financial performance can be found in the Management’s Discussion and Analysis section
located later in the attached SEC Form 10-K. Please take the opportunity to read this, as it provides additional perspective
and commentary.
Capital Management and Capital Return to Shareholders
Tangible Book Value per
Common Share
Dividends per Common Share
Dividend Payout Ratio
$8.25
$7.34
$0.58
$0.50
45.0%
40.3%
41.0%
$6.91
$6.97
$6.43
$0.35
$0.29
$0.25
34.3%
30.5%
2015
2016
2017
2018
2019
2015
2016
2017
2018
2019
2015
2016
2017
2018
2019
As a result of recent regulatory reform, we were not required to formally participate in the annual Dodd-Frank Act
Stress Test and Comprehensive Capital Analysis and Review (CCAR) processes with the Federal Reserve during 2019, as
these were made an every-other-year requirement for regional banks with assets of $100 billion to $250 billion. The
Board maintained the same diligent oversight and approval process for our 2019 capital plan (which covers the period
of July 2019 through June 2020) as if we were participating in the regulatory process. We believe these processes make
us, and the banking industry, better, and our commitment to robust risk and capital management is as strong as ever.
We remain prudent with our allocation of capital to ensure we are earning adequate returns and taking appropriate
risk, consistent with our aggregate moderate-to-low risk profile.
We also remain committed to our well-established capital priorities: (1) grow the core franchise, (2) support the
cash dividend, and (3) all other uses, including share repurchases. Consistent with these priorities, we increased cash
dividends to our owners for the ninth consecutive year in 2019. The $611 million of total declared common dividends
represented a dividend payout ratio of 45%. We also repurchased $441 million of common stock. Combining the
2019 Annual Report 3
common dividends and the buybacks, we returned more than $1.0 billion of capital, or 79% of earnings, to our owners
in 2019. Our dividend yield was an attractive 4.0% at 2019 year end.
Over the long term, our Board of Directors has established a targeted dividend payout ratio range of 40% to 45%
and a total payout ratio inclusive of share repurchases of 70% to 80%. These levels represent realistic expectations for
us going forward, assuming a continued positive economic outlook.
Investment and Innovation
Strategic investment is critical to the future success of any company, and as we have stated many times, Huntington
is focused on creating long-term shareholder value. We are always looking at how we can best position ourselves for
the future and have made investments in our colleagues and in our businesses that will allow us to drive revenue growth,
deliver superior customer experiences, improve efficiency, and maintain our risk management disciplines, including
adhering to our aggregate moderate-to-low risk appetite.
Two years ago, we introduced “The Hub,” our digital platform designed to take our customer experience to an even
higher level. We received an important accolade which highlights these strategic investments with two high profile
recognitions from JD Power in 2019 for highest in customer satisfaction with Online Banking and Mobile Banking Apps.
Skeptics worry that a regional bank like Huntington cannot keep pace with the industry’s behemoths. I believe our
customers have spoken loudly through these recognitions.
Over the past several years, our technology investments, such as The Hub, have focused on digital capabilities
including products, features, and customer self-service tools and capabilities. We are also investing to protect our
customers and ourselves with robust risk management technology, including data management and cyber security.
Strategic Portfolio Mix
There is a perception by some in the market that regional banks have strategically abandoned consumer banking
to focus exclusively on commercial banking, thus leaving consumer banking to be the domain of the mega banks and
the credit card specialty banks. Huntington remains committed to the consumer. In fact, we are leaning in even deeper,
capitalizing on our customer-centric “Fair Play” philosophy, our Welcome brand, and our distinguished products.
Our strategy calls for our loan portfolio to hover around roughly half consumer and half business and commercial.
A relatively similar mix can be found in our deposits. This thoughtful diversification is a vital component of our credit
risk management and adherence to our aggregate moderate-to-low risk appetite. Over the second half of 2019, most
of our growth was driven by our super prime-focused indirect automobile lending and home lending businesses. In
fact, both of these businesses produced record originations during the 2019 fourth quarter. On the deposit side, we
remain focused on growing consumer checking accounts. Our 5% annual growth in average consumer noninterest
bearing deposits is among the best in the industry, as most banks have struggled to grow these core deposits.
2019 Average Loan Mix
2019 Average Deposit Mix
Commercial
50%
Consumer
50%
Commercial
46%
Consumer
54%
4 Huntington Bancshares Incorporated
Board and Management Additions
During 2019, we added three new directors to our Board as we proactively added depth to address an evolving
industry, highlighted by rapid technological change, and the unique risks, such as cybersecurity, that come along with
that change. A key component of our go-to-market strategy is the development of our omni-channel customer
experience, with a particular focus on digital and mobile channels. As a result of this strategic focus and a recognition
of the rapidly changing world of technology, both within and outside the banking industry, the Board added Allie Kline
and Alanna Cotton, two experts in leading consumer marketing, brands, and new products. The Board also added
banking and risk management expert Ken Phelan as part of our constant focus on disciplined risk management. With
these three key additions, coupled with our talented existing directors, I believe we have one of the strongest, most
engaged boards in corporate America.
The Executive Leadership Team also saw the addition of three new members. Last year, our long-time Chief Financial
Officer Mac McCullough and Chief Credit Officer Dan Neumeyer retired. Both gentlemen enjoyed great careers in
banking, and each left a lasting mark on their respective areas of expertise and oversight within Huntington. Following
Mr. Neumeyer’s retirement, we elevated Rich Pohle to Chief Credit Officer from his prior position as senior credit
approval officer. As part of that transition, we also aligned the credit function within the Company’s overall risk
management organization, under the leadership of Chief Risk Officer Helga Houston. Next, Huntington welcomed risk
management expert Nate Herman to the Bank as new Chief Auditor, while Harry Farver moved back into our Finance
segment leadership overseeing the technological transformation of our finance processes and infrastructure. Finally,
in November, Zach Wasserman joined as our new Chief Financial Officer, bringing a wide variety of experiences, along
with significant financial expertise in the payments and credit card businesses.
The biographies of each of our directors and our executive leadership are located in the 2020 annual proxy statement
as well as on the Investor Relations section of our website.
Advancing our Environmental, Social, and Governance (ESG) Strategy
The market’s interest in Environmental, Social, and Governance, or ESG, matters continues to grow rapidly. We
launched our formalized ESG efforts in late 2015, and solidified our ESG strategy in early 2017. Last year, we published
our third ESG Annual Report, and efforts are currently underway on the next annual installment to be published in the
2020 second quarter. The 2019 ESG Annual Report does a good job of laying out the progress we have achieved in our
ESG journey, our multi-year goals yet to be achieved, and many of the public acknowledgments of our hard work in
these areas. Recently, we were honored to be named one of “America’s Most Responsible Companies 2020” by
Newsweek. As we look ahead, we will look for opportunities to advance our ESG strategy and to better illustrate how
we have ingrained ESG disciplines into our corporate DNA.
If we viewed ESG as simply a business strategy, then I would be pleased with our progress; however, at Huntington,
it is more than that. The underlying behaviors—strong risk management, serving the needs of our stakeholders (our
owners, our customers, our colleagues, and our communities), and focusing on the long-term sustainability of our
businesses—have been forefront in the minds of Huntington’s Board, management, and colleagues for many years. We
never called it ESG; we called it doing the right thing. 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 are to work with a can-do attitude, a service heart, and forward thinking approach. Our purpose and our values
are deeply ingrained in our culture, our brand, and our value creation model. They provided the genesis a decade ago
for our Fair Play strategy, which we believe is still the most distinctive and compelling customer proposition in U.S.
banking. They also fuel the competitive advantage we enjoy today across our local communities, our deep local
knowledge and our superior customer experience.
2019 Annual Report 5
Investing in Our Colleagues
In last year’s letter, I detailed many of our efforts to make important investments in our colleagues’ well-being and
professional development. We maintained that focus in 2019, sustaining our efforts to engage, develop, retain, and
attract talent.
We continued to make investments to inform and educate our colleagues by leveraging technology platforms like
Pathways and others. We established continuing education programs, including Exact Track, which offers colleagues a
pre-imbursed college degree program. We invested in a Leadership Development Framework consisting of five new
programs with year-long development experiences for all levels of Huntington Leaders.
At Huntington, Welcome means Welcome to All. This phrase is ingrained in our culture and is reflected in our
approach to colleague engagement and customer service. We believe that employing a diverse and inclusive workforce
is critical to the very success of our Company. Our colleagues draw upon different life experiences which allow us to
cultivate the best ideas, as well as to innovate and continuously improve. We strive to identify and support diverse and
inclusive colleagues and candidates, as well as foster economic inclusion through diverse suppliers.
Please see the 2018 ESG Annual Report and the forthcoming 2019 ESG Annual Report for additional details on our
ongoing commitment to our colleagues and our human capital management.
Closing
While we take a moment here to celebrate the successes and acknowledge the challenges of 2019’s performance,
we also enter 2020 with eyes wide open to the continued global market volatility, challenging interest rate outlook, and
the uncertainty of an upcoming national election. The consumer economy remains strong, while a sense of uncertainty
and fatigue weighs on some of the nation’s businesses and corporations. Our tactical plans for 2020 are informed by
this challenging operating environment. Maintaining our disciplined execution and our long-term focus will be
paramount to delivering another successful year of performance in 2020, and beyond. I remain confident in Huntington’s
ability to deliver on our promise of top-quartile, through-the-cycle financial performance.
I would like to close with a few sincere expressions of my appreciation to the many people that make the continued
success of Huntington possible. To our more than 15,000 passionate and dedicated colleagues: thank you for what you
do every day for our customers, for each other, and for the communities we serve. To our directors: thank you for your
extraordinary commitment to Huntington. To our customers and other community stakeholders: thank you for trusting
us to help meet your financial needs and allowing us to help strengthen the communities we call home. And last but
certainly not least, to our shareholders: thank you for your continued confidence in and support of Huntington. We,
like many of you, are long-term owners of the Company, and our interests are appropriately aligned for long-term
performance.
I am proud to work with my fellow colleagues and our directors, who share a commitment to living our purpose.
Stephen D. Steinour
Chairman, President, and Chief Executive Officer
6 Huntington Bancshares Incorporated
BOARD OF DIRECTORS
FRONT ROW, L-R: Robert S. Cubbin, Ann B. (Tanny) Crane, Richard W. Neu, Gina D. France
BACK ROW, L-R: Alanna Y. Cotton, Stephen D. Steinour, Kenneth J. Phelan, Lizabeth Ardisana, Steven G. Elliott, Katherine M. A. (Allie) Kline,
John C. (Chris) Inglis, J. Michael Hochschwender, David L. Porteous, Kathleen H. Ransier (Not pictured: Peter J. Kight)
EXECUTIVE LEADERSHIP TEAM
FRONT ROW, L-R: Julie Tutkovics, Zachary Wasserman, Jana Litsey, Mark Thompson
BACK ROW, L-R: Stephen Steinour, Richard Pohle, Sandra Pierce, Andrew Harmening, Helga Houston, Paul Heller, Richard Remiker, Rajeev Syal,
Nathanael Herman
2019 Annual Report
7
1st
2nd
3rd
4th
*Subject to action by Board of Directors
COMMON STOCK PRICE
High
Low
Close
20-YEAR DIVIDEND HISTORY
COMMON STOCK AND DIVIDEND INFORMATION
2020 DIVIDEND PAYABLE DATES
2019 CASH DIVIDEND DECLARED DATA
QUARTER
PAYABLE DATE
QUARTER
RECORD DATE
PAYABLE DATE
April 1, 2020
July 1, 2020 *
October 1, 2020 *
January 4, 2021 *
1st
2nd
3rd
4th
March 18, 2019
June 17, 2019
April 1, 2019
July 1, 2019
September 17, 2019 October 1, 2019
January 2, 2020
December 18, 2019
PER COMMON
SHARE
AMOUNT
$0.14
0.14
0.15
0.15
2019
$15.63
11.72
15.08
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
CASH
DIVIDENDS
DECLARED (1)
$0.76
0.72
0.64
0.67
0.75
0.85
1.00
1.06
0.66
0.04
STOCK DIVIDENDS/SPLITS
10% Stock Dividend
—
—
—
—
—
—
—
—
—
DISTRIBUTION
DATE OF STOCK
DIVIDEND /SPLIT
CASH
DIVIDENDS
DECLARED (1)
STOCK DIVIDENDS/SPLITS
DISTRIBUTION
DATE OF STOCK
DIVIDEND /SPLIT
7/31/00
—
—
—
—
—
—
—
—
—
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
$0.04
0.10
0.16
0.19
0.21
0.25
0.29
0.35
0.50
0.58
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
(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 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. 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
Disclosures" sections in Huntington’s Form 10-K for the year ending December 31, 2019, 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.
8 Huntington Bancshares Incorporated
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________________________________________
FORM 10-K
_______________________________________________
Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 2019
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)
31-0724920
(I.R.S. Employer Identification No.)
41 South High Street
(Address of principal executive offices)
Columbus, Ohio
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
Common Stock—Par Value $0.01 per Share
Depositary Shares (each representing a 1/40th interest in a share of
5.875% Series C Non-Cumulative, perpetual preferred stock)
Depositary Shares (each representing a 1/40th interest in a share of
6.250% Series D Non-Cumulative, perpetual preferred stock)
Trading
Symbol(s)
HBAN
HBANN
HBANO
Name of exchange on which registered
NASDAQ
NASDAQ
NASDAQ
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the
Securities Exchange Act.
Yes
No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the
Act.
Yes
No
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
No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File
required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12
months (or for such shorter period that the registrant was required to submit such files).
Yes
No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-
accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large
accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2
of the Exchange Act.
Large Accelerated Filer
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)
No
Yes
The aggregate market value of voting and non-voting common equity held by non-affiliates of the registrant as of
June 30, 2019, determined by using a per share closing price of $13.82, as quoted by Nasdaq on that date, was
$14,582,832,960. As of January 31, 2020, there were 1,019,194,130 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 2020 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
MSR and Price 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
8
24
36
37
37
37
38
40
42
42
42
45
52
53
68
69
70
74
75
75
78
83
89
93
93
175
175
175
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
175
175
176
176
177
177
177
The following listing provides a comprehensive reference of common acronyms and terms used throughout the
Glossary of Acronyms and Terms
document:
ACL
AFS
ALCO
ALLL
AML
ANPR
AOCI
ASC
ATM
AULC
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
Automated Teller Machine
Allowance for Unfunded Loan Commitments
Bank Secrecy Act
Financial Recordkeeping and Reporting of Currency and Foreign Transactions Act of 1970
Basel III
BHC
BHC Act
C&I
CCAR
CCPA
CDs
CECL
CET1
CFPB
CISA
CMO
CRA
CRE
DIF
Refers to the final rule issued by the FRB and OCC and published in the Federal Register on October 11,
2013
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
Current Expected Credit Losses
Common equity tier 1 on a transitional Basel III basis
Bureau of Consumer Financial Protection
Cybersecurity Information Sharing Act
Collateralized Mortgage Obligations
Community Reinvestment Act
Commercial Real Estate
Deposit Insurance Fund
Dodd-Frank Act
Dodd-Frank Wall Street Reform and Consumer Protection Act
Economic Growth Act Economic Growth, Regulatory Relief and Consumer Protection Act
EPS
EVE
FASB
FCRA
FDIA
FDIC
Federal Reserve
FHC
FHLB
FICO
FinCEN
FINRA
FirstMerit
FRB
Earnings Per Share
Economic Value of Equity
Financial Accounting Standards Board
Fair Credit Reporting Act
Federal Deposit Insurance Act
Federal Deposit Insurance Corporation
Board of Governors of the Federal Reserve System
Financial Holding Company
Federal Home Loan Bank of Cincinnati
Fair Isaac Corporation
Financial Crimes Enforcement Network
Financial Industry Regulatory Authority, Inc.
FirstMerit Corporation
Federal Reserve Bank
2019 Form 10-K 5
FTE
FTP
FVO
GAAP
GLBA
GSE
HMDA
HSE
HTM
IRS
LCR
LGD
LIBOR
Fully-Taxable Equivalent
Funds Transfer Pricing
Fair Value Option
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
LFI Rating System
Large Financial Institution Rating System
LIHTC
LTV
MBS
MD&A
MSA
MSR
NAICS
NALs
NCO
NII
NIM
NOW
NPAs
NSF
OCC
OCI
OCR
OFAC
OIS
OLEM
OREO
OTTI
Patriot Act
PCD
PD
Plan
Low Income Housing Tax Credit
Loan-to-Value
Mortgage-Backed Securities
Management’s Discussion and Analysis of Financial Condition and Results of Operations
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
Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism Act of 2001
Purchased financial assets with credit deterioration
Probability of Default
Huntington Bancshares Retirement Plan
Problem Loans
Capital and Liquidity
Tailoring Rule
EPS Tailoring Rule
Tailoring Rules
Includes nonaccrual loans and leases, accruing loans and leases past due 90 days or more, troubled
debt restructured loans, and criticized commercial loans
Refers to the changes to applicability thresholds for regulatory and capital and liquidity requirements,
issued by the OCC, the Federal Reserve and the FDIC
Refers to Prudential Standards for Large Bank Holding Companies and Savings and Loan Holding, issued
by the Federal Reserve
Refers to the Capital and Liquidity Tailoring Rule and the EPS Tailoring Rule
6 Huntington Bancshares Incorporated
RBHPCG
REIT
Regional Banking and The Huntington Private Client Group
Real Estate Investment Trust
Riegle-Neal Act
The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994
ROC
RWA
SAD
SEC
SERP
SIFMA
SOFR
SRIP
TCJA
TDR
Risk Oversight Committee
Risk-Weighted Assets
Special Assets Division
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
U.S. Treasury
U.S. Department of the Treasury
UCS
VIE
XBRL
Uniform Classification System
Variable Interest Entity
eXtensible Business Reporting Language
2019 Form 10-K 7
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 15,664 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, 2019, the Bank had 12 private client group offices and 856 branches as follows:
• 424 branches in Ohio
• 277 branches in Michigan
• 45 branches in Pennsylvania
• 40 branches in Indiana
• 35 branches in Illinois
• 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 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.
8 Huntington Bancshares Incorporated
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 annual 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, large corporate, real estate and government public sector customers
located primarily within our geographic footprint. The segment is divided into six business units: Middle
Market/Asset Based Lending, Specialty Banking, Asset Finance, Capital Markets/Institutional Corporate
Banking, Commercial Real Estate, and Treasury Management.
Middle Market/Asset Based Lending primarily focuses on providing banking solutions to companies
with annual revenues of $20 to $500 million. Through a relationship management approach, various
products, capabilities, and solutions are seamlessly delivered in a client centric way. Huntington Business
Credit is an asset-based lender providing financing solutions to a broad range of industries that exhibit a
quick turning of working capital in a collateral controlled environment.
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®,
Huntington Technology Finance, 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, and 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 primarily with larger, often more complex companies with annual
revenues greater than $500 million. These entities, many of which are publicly traded, require an approach
customized 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
2019 Form 10-K 9
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, their 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 24 - “Segment Reporting” 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, equipment and automobile 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 the 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.
10
Huntington Bancshares Incorporated
The table below shows our competitive ranking and market share based on deposits of FDIC-insured
institutions as of June 30, 2019, in the top 10 MSAs 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)
1 $
2
6
1
4
5
9
1
2
19
22,828
10,743
8,305
4,186
3,579
3,403
3,320
2,765
2,259
2,465
Market Share
37%
15
6
28
7
2
2
22
11
1
Source: FDIC.gov, based on June 30, 2019 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 addition, larger established technology platform
companies continue to evaluate, and in some cases, create businesses focused on banking products. We are closely
monitoring activity in the marketplace to ensure that our products and services are technologically competitive.
Further, we continue to invest in and evolve our proactive internal innovation program to develop, incubate, and
launch new products and services driving ongoing differentiated value for our customers. Our overall strategy
involves an active corporate development program that seeks to identify partnership and possible investment
opportunities in technology-driven companies that can augment Huntington’s distribution and product capabilities.
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.
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 the 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 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, were subject to the enhanced prudential standards that applied to
them before enactment of the Economic Growth Act until December 31, 2019, when rules adopted by the Federal
Reserve that tailor the applicability of enhanced prudential standards and capital and liquidity requirements became
effective, as described in detail below.
2019 Form 10-K 11
In October 2019, the Federal Reserve adopted the EPS Tailoring Rule pursuant to the Economic Growth Act,
which adjusts the thresholds at which certain enhanced prudential standards apply to U.S. BHCs with $100 billion or
more in total consolidated assets. Also in October 2019, the Federal Reserve, OCC, and FDIC adopted the Capital and
Liquidity Tailoring Rule, which similarly adjusts 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 Tailoring Rules, these
BHCs and banks, including Huntington and the Bank, are 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 apply to these BHCs and banks
depends on the banking organization’s category. Under the Tailoring Rules, Huntington and the Bank each qualify as
a Category IV banking organization subject to the least restrictive of the requirements applicable to firms with $100
billion or more in total consolidated assets.
As a result of the Economic Growth Act and the Tailoring Rules, Huntington and the Bank are now subject to
less restrictive requirements with respect to certain enhanced prudential standards and capital and liquidity
requirements than in past years, but our business will remain subject to extensive regulation and supervision. The
U.S. banking agencies may issue additional rules to tailor the application of certain other regulatory requirements to
BHCs and banks, including Huntington and the Bank.
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 and investment advisers both registered with the SEC.
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.
12 Huntington Bancshares Incorporated
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
2019 Form 10-K 13
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 goodwill, intangible assets, certain deferred tax assets, and AOCI. In July 2019, the FDIC, the
Federal Reserve, and OCC issued final rules that simplify the capital treatment of mortgage servicing assets,
deferred tax assets arising from temporary differences that an institution could not realize through net
operating loss carrybacks, and investments in the capital of unconsolidated financial institutions, as well as
simplify the recognition and calculation of minority interests that are includable in regulatory capital, for
non-advanced approaches banking organizations, including Huntington and the Bank. Banking organizations
may adopt these changes beginning on January 1, 2020, and are required to adopt them for the quarter
beginning April 1, 2020. In addition, in December 2018, the U.S. federal banking agencies finalized rules that
permits BHCs and banks to phase-in, which Huntington and the Bank have elected, the day-one retained
earnings impact of the new CECL accounting rule over a period of three years for regulatory capital purposes.
For further discussion of the new CECL 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, 2019, 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 was at its
fully phased-in level of 2.5% throughout 2019. The Tier 1 Leverage Ratio is not impacted by the Capital Conservation
14 Huntington Bancshares Incorporated
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 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, 2019, calculated using the regulatory capital methodology applicable during 2019.
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,
2019
Actual
4.50%
4.50
6.00
6.00
8.00
8.00
4.00
4.00
7.00%
7.00
8.50
8.50
10.50
10.50
N/A
N/A
N/A
6.50%
6.00
8.00
10.00
10.00
N/A
5.00
9.88%
11.17
11.26
12.17
13.04
13.59
9.26
10.01
(1)
(2)
Reflects the fully phased-in capital conservation buffer of 2.5% applicable during 2019.
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, 2019, Huntington’s and the Bank’s regulatory capital ratios were above the well-capitalized
standards and met the Capital Conservation Buffer on a fully phased-in basis.
Liquidity Requirements
Under the Capital and Liquidity Tailoring Rule, Huntington, as a Category IV banking organization, is now exempt
from the LCR but will continue to be subject to internal liquidity stress tests and standards.
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 additional 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 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, under the EPS Tailoring Rule, Huntington, as a
Category IV banking organization, is 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 that were
applicable to Huntington, under the EPS Tailoring Rule, Huntington is no longer subject to company-run stress testing
requirements and is subject to less frequent supervisory stress tests, less frequent internal liquidity stress tests, and
reduced liquidity risk management requirements. Future rules to implement the Economic Growth Act may further
change the enhanced prudential standards applicable to Huntington.
2019 Form 10-K 15
Capital Planning and Stress Testing
Huntington is required to develop, maintain, and submit to the Federal Reserve a capital plan on an annual
basis for supervisory review in connection with its annual CCAR process. In 2019, Huntington, along with other BHCs
with total assets of less than $250 billion, was temporarily exempted from the submission requirement and
developed but did not submit a capital plan. 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 make capital distributions 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, including Huntington.
Effective December 31, 2019, the EPS Tailoring Rule subjects Huntington to supervisory stress tests every other
year as opposed to annually. These supervisory stress tests are forward-looking quantitative evaluations to the
impact of stressful economic and financial market conditions on Huntington’s capital. The EPS Tailoring Rule also
eliminated the requirement to conduct and file with the Federal Reserve company-run stress tests.
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 has replaced 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
16 Huntington Bancshares Incorporated
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.
The Federal Reserve’s Vice Chairman for Supervision stated that the Federal Reserve hopes to finalize the
proposed stress buffer requirements for the 2020 stress testing cycle, 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 make capital
distributions, including paying dividends and repurchasing 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. As also discussed above, Huntington was temporarily
exempted from the requirement to submit a capital plan in 2019 and instead was authorized by the Federal Reserve
to make capital distributions for the 2019 capital planning cycle up to the amount that would have allowed
Huntington to remain above all minimum capital requirements in the 2018 CCAR process, subject to certain
adjustments.
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.
2019 Form 10-K 17
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, 2019, we had no investments in trust
preferred securities.
As of October 2019, the five federal agencies with rulemaking authority with respect to the Volcker Rule
finalized amendments to the proprietary trading provisions of the Volcker Rule. These amendments 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. These amendments to the Volcker Rule are not material to our investing and trading
activities.
In early 2020, the five federal agencies proposed additional amendments to the Volcker Rule related to the
restrictions on ownership interests and relationships with covered funds. The ultimate benefits or consequences of
these amendments will depend on their final form, which we cannot predict.
Recovery and Resolution Planning
In past years, Huntington was 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.
In October 2019, the Federal Reserve and the FDIC adopted amendments to their resolution planning rule to adjust
the thresholds at which certain resolution planning requirements apply to BHCs with $100 billion or more in total
consolidated assets, including Huntington. As a result of these amendments, Huntington is no longer required to
submit a resolution plan to the Federal Reserve and the FDIC.
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 did not change the FDIC’s rules that require the Bank to periodically file a separate
resolution plan. In April 2019, the FDIC released an advanced notice of proposed rulemaking with respect to the
FDIC’s bank resolution plan requirements that requested comments on how 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.
18 Huntington Bancshares Incorporated
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,
2019 Form 10-K 19
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 set 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 MD&A, 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 customers,
verifying the identity of certain beneficial owners for legal entity customers, 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. 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. 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 became effective on January 1, 2020, applies
to for-profit businesses that conduct business in California and meet certain revenue or data collection thresholds.
20 Huntington Bancshares Incorporated
The CCPA gives 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 that many, but not
all, requirements of the CCPA are inapplicable to information that is collected, processed, sold, or disclosed pursuant
to the GLBA. The California State Legislature has amended the Act since its passage, which the Governor has signed
into law, and the California Attorney General has proposed regulations implementing the CCPA that have not yet
been adopted. 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. 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.
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. The FDIC has established an initial compliance date of April 1,
2020, and allows each large insured depository institution to file for an optional extension of the compliance date for
up to one year, to a date no later than April 1, 2021.
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 GLBA 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.
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
2019 Form 10-K 21
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 rules 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. The Federal Reserve
announced in May 2019 that it would revisit the ANPR in the future.
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 in December 2019, the OCC and FDIC issued a joint proposed rule that would amend the CRA
regulatory framework. It is too early to tell whether and to what extent 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 NOW and regular checking accounts. For 2020, the first $16.9 million of covered balances are exempt from
the reserve requirement, aggregate balances between $16.9 million and $127.5 million are subject to a 3% reserve
requirement, and aggregate balances above $127.5 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
22 Huntington Bancshares Incorporated
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.
2019 Form 10-K 23
Item 1A: Risk Factors
Huntington has formalized a holistic risk governance framework in alignment with the size, complexity, and
profile of the Company. 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. Our
framework is approved by the Risk Oversight Committee (ROC) of the Huntington’s Board of Directors (the Board).
Key components include establishing our risk appetite, line of defense and risk pillars, governance and committee
oversight and limit setting and escalation processes. Huntington classifies/aggregates risk into seven risk pillars.
Huntington recognizes that risks can be interrelated or embedded within each other, and therefore managing across
risk pillars is a key component of the Framework. The following defines the Company’s risk pillars.
• 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 risk, which is the risk of loss arising from inadequate or failed internal processes or systems,
including information security breaches or cyberattacks, 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;
• 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 $887 million at December 31,
2019, 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.
24 Huntington Bancshares Incorporated
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 CECL accounting rule, which requires banks to record, at the
time of origination, credit losses expected throughout the life of the asset 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 CECL accounting rule in 2020 and will recognize a one-time cumulative effect adjustment to
our ACL and retained earnings as of January 1, 2020. The CECL model could materially affect how we determine our
ACL and report our financial condition and results of operations. For further discussion, see Note 2 “Accounting
Standards Update” 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, decisions by the Federal Reserve to increase or reduce the size of its balance sheet may 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.
Changes in interest rates can affect the value of loans, securities, assets under management, and other assets,
including mortgage 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.
2019 Form 10-K 25
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 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 the 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 (ARRC), has selected SOFR as its recommended
alternative to LIBOR. The Federal Reserve Bank of New York started to publish SOFR in April 2018. SOFR 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
26 Huntington Bancshares Incorporated
is impossible to predict whether SOFR will become an accepted alternative to LIBOR. In January of 2020, Huntington
was added as an ARRC member.
The market transition away from LIBOR to an alternative reference rate, such as SOFR, 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 SOFR. 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.
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. 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
2019 Form 10-K 27
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: Business - 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 FHLB, 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 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, 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. 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; disease pandemics; cyber-attacks; and events
arising from local or larger scale political or social matters, including wars and terrorist attacks. Additional events
beyond our control that could impact our business directly or indirectly include natural disasters such as earthquakes
and weather events, including tornadoes, hurricanes and floods. Neither the occurrence nor the potential impact of
these events can be predicted, and the frequency and severity of weather events may be impacted by climate
changes. In addition, we may need to take our systems off-line 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. In addition, our ability to implement backup
28 Huntington Bancshares Incorporated
systems and other safeguards with respect to third-party systems is more limited than with respect to our own
systems. 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 sufficient preventive measures against such security breaches, which
may result in material losses or consequences for us.
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. Due
to increasing geopolitical tensions, nation state cyber attacks and ransomware are both increasing in sophistication
and prevalence. Targeted social engineering and email attacks (i.e. “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 speed at which new vulnerabilities are
discovered and exploited often before security patches are published continues to rise. 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
2019 Form 10-K 29
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.
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 regulations that would
enhance 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 and data privacy, 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 these types of information are governed by federal and state law. Both personally
identifiable information and personal financial information are increasingly subject to legislation and regulation, the
intent of which is to protect the privacy of personal information and personal financial information that is collected
and handled. For example, in June of 2018, the Governor of California signed into law the CCPA. The CCPA, which
became 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
30 Huntington Bancshares Incorporated
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.
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
2019 Form 10-K 31
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
are 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 - “Accounting Standards Update” 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
32 Huntington Bancshares Incorporated
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, 2019, 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.
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.
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.
2019 Form 10-K 33
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 21 - “Commitments and Contingent Liabilities” to the
Consolidated Financial Statements.
Noncompliance with the Bank Secrecy Act and other anti-money laundering statutes and regulations could cause
us material financial loss.
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 anti-money laundering 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.
FinCEN, a unit of the Treasury Department that administers the Bank Secrecy Act, is authorized to impose significant
civil money penalties for violations of those requirements and has recently engaged in coordinated enforcement
efforts with the federal bank regulatory agencies, as well as the United States Department of Justice, Drug
Enforcement Administration, and IRS.
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”.
Strategic Risk:
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.
34 Huntington Bancshares Incorporated
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
2.5% as of January 1, 2019), which is in addition to our required minimum capital ratios.
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: Business - “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
2019 Form 10-K 35
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.
Reputation Risk:
Damage to our reputation could significantly harm our business, including our competitive position and business
prospects.
Our ability to attract and retain customers, clients, investors, and employees is affected by our reputation.
Significant harm to our reputation can arise from various sources, including officer, director or employee misconduct,
actual or perceived unethical behavior, conflicts of interest, security breaches, litigation or regulatory outcomes,
compensation practices, failing to deliver minimum or required standards of service and quality, failing to address
customer and agency complaints, compliance failures, unauthorized release of personal, proprietary or confidential
information due to cyber-attacks or otherwise, perception of our environmental, social and governance practices and
disclosures, 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. In addition, adverse publicity or negative information posted on social media, whether or
not factually correct, may affect our business prospects. All of these could adversely affect our growth, results of
operation, and financial condition.
Item 1B: Unresolved Staff Comments
None.
36 Huntington Bancshares Incorporated
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% in the building.
Our other major properties consist of the following:
Description
Location
Primary Business Segment
Tower Building - Office
Akron, OH
Cascade III (own building, lease
land)
Akron, OH
Easton - HNB Business Service
Center
Columbus, OH
Capitol Square
Columbus, OH
Gateway Center
Columbus, OH
Huntington Center (lease a
portion of building)
Columbus, OH
Huntington Plaza
Columbus, OH
Crosswoods - Mortgage Group
Columbus, OH
Indianapolis Main
Indianapolis, IN
Downtown Saginaw
Saginaw, MI
Regional Leadership, Commercial Banking, Business
Banking, Private Client Banking, Trust, Bank
Operations, Retail Bank Branch
Compliance, Consumer & Private Bank Technology,
Corporate Sourcing, Bank Operations, Indirect
Lending, Information Security Services
Bank Operations, Vehicle Finance, Business Banking
Credit, Technology, Special Assets, Human
Resources
Bank Security, Internal Audit, Risk Administration,
Treasury Management, Retail Bank Branch
Bank Operations, Corporate Sourcing, Indirect
Loan, Insurance, Phone Bank
Bank Administration, Private Client Group,
Commercial Risk, Treasury, Finance, Accounting,
Legal, Marketing, Human Resources, Tax
Bank Operations, Compliance, HIC, Human
Resources, Insurance
Consumer Lending Operations, Title Insurance,
Mortgage Operations
Regional Leadership, Business Banking, Commercial
Banking, Vehicle Finance, HIC, Trust, Private Client
Regional Leadership, Private Banking, Retail Bank
Branch
Mahoning Federal Plaza Building
Youngstown, OH Business Banking Credit, Bank Operations,
Commercial Banking
Utilization of
Property for
HBI purposes
Own
Lease
60%
65%
80%
66%
74%
79%
79%
92%
62%
25%
69%
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 21 - “Commitments and Contingent Liabilities” 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.
2019 Form 10-K 37
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, 2020, we had 27,384 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 22 - “Other Regulatory Matters” 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, 2014, through December 31, 2019. 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, 2014, 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
2014
$100
100
100
2015
$108
101
100
2016
$132
113
129
2017
$149
138
153
2018
$127
132
126
2019
$167
174
172
38 Huntington Bancshares Incorporated
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, 2019.
Period
October 1, 2019 to October 31, 2019
November 1, 2019 to November 30, 2019
December 1, 2019 to December 31, 2019
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)
1,182,934
4,908,276
7,012,368
13,103,578
$
$
14.35
14.81
15.17
14.96
$
$
428,123,227
355,449,783
249,099,865
249,099,865
(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 27, 2019, Huntington announced proposed capital actions included in Huntington's 2019 capital plan.
These actions include a 7% increase in the quarterly dividend per common share to $0.15, starting in the third
quarter of 2019, the repurchase of up to $513 million of common stock over the next four quarters (July 1, 2019
through June 30, 2020), and maintaining dividends on the outstanding classes of preferred stock and trust preferred
securities. Any capital actions, including those contemplated above, are subject to approval by Huntington’s Board
of Directors.
On July 17, 2019, the Board of Directors authorized the repurchase of up to $513 million of common shares over
the four quarters through the 2020 second quarter. Purchases of common stock under the authorization may
include open market purchases, privately negotiated transactions, and accelerated repurchase programs. During the
2019 fourth quarter, Huntington repurchased a total of 13 million shares at a weighted average share price of $14.96.
2019 Form 10-K 39
Item 6: Selected Financial Data
Table 1 - Selected Annual Income Statement Data (1)
(amounts in millions, except per share data)
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)
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)
2019
2018
2017
2016
2015
Year Ended December 31,
$
4,201
$
3,949
$
3,433
$
2,632
$
988
3,213
287
2,926
1,454
2,721
1,659
248
1,411
74
1,337
1.29
1.27
0.58
$
$
760
3,189
235
2,954
1,321
2,647
1,628
235
1,393
70
1,323
1.22
1.20
0.50
$
$
431
3,002
201
2,801
1,307
2,714
1,394
208
1,186
76
1,110
1.02
1.00
0.35
$
$
263
2,369
191
2,178
1,150
2,408
920
208
712
65
647
0.72
0.70
0.29
$
$
$
$
$
109,002
$
108,781
$
104,185
$
99,714
$
9,849
11,795
107,971
9,332
11,560
8,625
11,102
104,982
8,992
11,059
9,206
10,814
101,021
8,862
10,611
4.25%
0.99
3.26%
1.31%
12.9
16.9
56.6
45.0
10.71
15.0
7.88
9.01
9.88
9.26
11.26
13.04
4.12%
0.79
3.33%
1.33%
13.4
17.9
56.9
41.0
10.53
14.5
7.21
8.34
9.65
9.10
11.06
12.98
3.77%
0.47
3.30%
1.17%
11.6
15.7
60.9
34.3
10.50
14.9
7.34
8.39
10.01
9.09
11.34
13.39
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
9.56
8.70
10.92
13.05
15,664
868
15,693
954
15,770
966
13,858
1,115
2,115
164
1,951
100
1,851
1,039
1,976
914
221
693
32
661
0.82
0.81
0.25
71,018
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
9.79
8.79
10.53
12.64
12,243
777
40 Huntington Bancshares Incorporated
(1)
(2)
(3)
(4)
(5)
(6)
(7)
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.
On an FTE basis assuming a 21% tax rate and a 35% tax rate for periods prior to January 1, 2018.
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.
Noninterest expense less amortization of intangibles divided by the sum of FTE net interest income and noninterest income excluding securities gains
(Non-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.
2019 Form 10-K 41
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
2019 Financial Performance Review
In 2019, we reported net income of $1.4 billion, a 1% increase from the prior year. Earnings per common share
on a diluted basis for the year were $1.27, up 6% from the prior year.
Fully-taxable equivalent net interest income for 2019 increased $20 million, or 1%, from 2018. This reflected
the impact of 3% average earning asset growth and a 4% growth of average interest-bearing liabilities. FTE net
interest margin decreased 7 basis points to 3.26%. Average earning asset growth reflects a $2.7 billion, or 4%,
increase in average loans and leases. The NIM compression reflected a 28 basis point increase in funding costs,
partially offset by a 13 basis point positive impact from earning asset yields and a 8 basis point increase in the
benefit from noninterest-bearing funding.
The provision for credit losses was $287 million, up $52 million, or 22%. The increase in provision expense over
the prior year was primarily attributed to higher commercial losses.
Noninterest income was $1.5 billion, up $133 million, or 10%, from the prior year. Mortgage banking income
increased $59 million or 55% driven by increased volume and higher salable spreads. Card and payment processing
income increased $22 million, or 10%, due to increased account activity. Capital markets fees increased $15 million,
or 14%, driven by increased underwriting activity primarily associated with the HSE acquisition. Other noninterest
income increased $20 million, or 12%, as a result of the gain on the sale of the Wisconsin retail branches and the
impact of the new lease accounting standard with regard to the presentation of income for personal property tax on
leased assets.
Noninterest expense was $2.7 billion, up $74 million, or 3%, from the prior year. Personnel costs increased $95
million, or 6%, primarily reflecting the shift toward colleagues supporting our core strategies, annual merit increases,
and $15 million of expense related to position reductions completed in the 2019 fourth quarter. Outside data
processing and other services increased $52 million, or 18%, primarily driven by higher technology investment costs.
Partially offsetting these increases, deposit and other insurance expense decreased $29 million, or 46%, primarily
due to the discontinuation of the FDIC surcharge in the 2018 fourth quarter. Net occupancy expense decreased $25
million, or 14%, primarily reflecting lower branch and facility consolidation-related expense as the 2018 fourth
quarter included $28 million of consolidation-related expense. Marketing decreased $16 million, or 30%, primarily
reflecting pacing of marketing campaigns and deposit promotions.
The tangible common equity to tangible assets ratio was 7.88%, up 67 basis points. The regulatory Common
Equity Tier 1 (CET1) risk-based capital ratio was 9.88%, up 23 basis points. The regulatory Tier 1 risk-based capital
ratio was 11.26%, up 20 basis points.
Consistent with the 2019 capital plan, the Company repurchased $441 million of common stock during 2019 at
an average cost of $14.00 per share.
42 Huntington Bancshares Incorporated
Business Overview
General
Our general business objectives are:
• Consistent organic revenue and balance sheet growth.
• Invest in our businesses, particularly technology and risk management.
• Deliver positive operating leverage.
• Maintain aggregate moderate-to-low risk appetite.
• Disciplined capital management.
Economy
Our local economies are growing, and our expectation for 2020 is for continued expansion. Building on the
strong customer sentiment, consumer lending should fuel balance sheet growth in the coming year. Our commercial
customers are performing well, and we are seeing success in our strategies, though volatility and uncertainty are
restraining overall commercial loan growth. The momentum across our businesses and focused execution,
augmented by the actions taken in 2019, set us up well entering 2020.
Legislative and Regulatory
A comprehensive discussion of legislative and regulatory matters affecting us can be found in Item 1: Business -
“Regulatory Matters” section of this Form 10-K.
2019 Form 10-K 43
Table 2 - Selected Annual Income Statements (1)
(amounts in millions, except per share data)
Year Ended December 31,
Change from 2018
Change from 2017
2019
Amount
Percent
2018
Amount
Percent
2017
Interest income
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
Other noninterest income
Total noninterest income
Personnel costs
Outside data processing and other services
Equipment
Net occupancy
Professional services
Amortization of intangibles
Marketing
Deposit and other insurance expense
Other noninterest expense
Total noninterest expense
Income before income taxes
Provision for income taxes
Net income
Dividends on preferred shares
$
4,201
$
988
3,213
287
2,926
372
246
178
167
123
88
66
55
(24)
183
1,454
1,654
346
163
159
54
49
37
34
225
2,721
1,659
248
1,411
74
Net income applicable to common shares
$
1,337
$
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)
(1)
(2)
1,039
1,056
$
$
1.29
1.27
0.58
$
3,213
$
26
3,239
1,454
4,693
$
$
252
228
24
52
(28)
8
22
7
59
15
6
(1)
—
(3)
20
133
95
52
(1)
(25)
(6)
(4)
(16)
(29)
8
74
31
13
18
4
14
(43)
(50)
0.07
0.07
0.08
24
(4)
20
133
153
6 % $
3,949
$
30
1
22
(1)
2
10
4
55
14
7
(1)
—
(14)
12
10
6
18
(1)
(14)
(10)
(8)
(30)
(46)
4
3
2
6
1
6
760
3,189
235
2,954
364
224
171
108
108
82
67
55
(21)
163
1,321
1,559
294
164
184
60
53
53
63
217
2,647
1,628
235
1,393
70
1 % $
1,323
$
(4)%
(5)
1,082
1,106
6 % $
6
16
$
1.22
1.20
0.50
1 % $
3,189
$
(13)
1
10
3 % $
30
3,219
1,321
4,540
$
516
329
187
34
153
11
18
15
(23)
18
1
—
(1)
(17)
(8)
14
35
(19)
(7)
(28)
(9)
(3)
(7)
(15)
(14)
(67)
234
27
207
(6)
213
(3)
(30)
0.20
0.20
0.15
187
(20)
167
14
181
15 % $
76
6
17
5
3
9
10
(18)
20
1
—
(2)
(425)
(5)
1
2
(6)
(4)
(13)
(13)
(5)
(12)
(19)
(6)
(2)
17
13
17
(8)
19 % $
— %
(3)
20 % $
20
43
6 % $
(40)
5
1
4 % $
3,433
431
3,002
201
2,801
353
206
156
131
90
81
67
56
(4)
171
1,307
1,524
313
171
212
69
56
60
78
231
2,714
1,394
208
1,186
76
1,110
1,085
1,136
1.02
1.00
0.35
3,002
50
3,052
1,307
4,359
Comparisons for presented periods are impacted by a number of factors. Refer to “Significant Items” in the Discussion of Results of Operations.
On a fully-taxable equivalent (FTE) basis assuming a 21% tax rate and a 35% tax rate for the period prior to January 1, 2018.
44 Huntington Bancshares Incorporated
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.”
For a discussion of our results of operations for 2018 versus 2017, see “Part II, Item 7: Management’s Discussion
and Analysis of Financial Condition and Results of Operations” Discussion of Results of Operations included in our
2018 Form 10-K, filed with the SEC on February 15, 2019.
Significant Items
Earnings comparisons among the three years ended December 31, 2019, 2018, and 2017 were impacted by a
number of Significant Items summarized below.
There were no Significant Items in 2019 or 2018.
Significant Items included in 2017 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.
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.
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
(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
2019
2018
2017
Amount
EPS (1)
Amount
EPS (1)
Amount
EPS (1)
1,411
$
1.27
Earnings
EPS
—
—
$
$
1,393
$
1.20
Earnings
EPS
—
—
$
$
— $
— $
— $
— $
—
—
$
—
—
$
1,186
$
1.00
Earnings
EPS
—
123
123
(152)
53
$
0.11
— $
— $
— $
— $
(99) $
(0.09)
$
$
$
$
$
(1)
Based upon the annual average outstanding diluted common shares.
2019 Form 10-K 45
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 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)
2019
Increase (Decrease) From
Previous Year Due To
2018
Increase (Decrease) From
Previous Year Due To
Fully-taxable equivalent basis (2)
Volume
Yield/
Rate
Total
Volume
Yield/
Rate
Total
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
$
127
$
108
$
235
$
189
$
274
$
(12)
20
135
17
(6)
12
23
10
(5)
113
177
12
16
205
(2)
15
248
194
6
28
228
(10)
5
184
16
(2)
3
17
35
3
312
195
25
92
312
Net interest income
$
112
$
(92) $
20
$
167
$
— $
463
25
8
496
211
23
95
329
167
(1)
(2)
The change in interest income or expense 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.
46 Huntington Bancshares Incorporated
Table 5 - Consolidated Average Balance Sheet and Net Interest Margin Analysis
(dollar amounts in millions)
Average Balances
Fully-taxable equivalent basis (1)
2019
Amount
Percent
2018
Amount
Percent
2017
Change from 2018
Change from 2017
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
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
Interest-bearing deposits:
Demand deposits—interest-bearing
Money market deposits
Savings and other domestic deposits
Core certificates of deposit (4)
Other domestic time deposits of $250,000 or more
Brokered time deposits and negotiable CDs
Total interest-bearing deposits
Short-term borrowings
Long-term debt
Total interest-bearing liabilities
Demand deposits—noninterest-bearing
All other liabilities
Shareholders’ equity
Total liabilities and shareholders’ equity
$
552
142
136
10,894
2,907
13,801
8,645
471
23,053
816
430
54
40
194
(556)
(362)
2
(113)
(433)
181
30,549
1,662
1,171
5,702
6,873
37,422
12,343
9,416
11,087
3,451
1,259
37,556
74,978
(786)
74,192
99,541
842
2,246
6,128
107,971
19,858
23,772
9,916
5,590
319
2,816
62,271
2,444
9,332
74,047
20,061
2,303
11,560
107,971
$
$
$
$
$
$
25
(347)
(322)
1,340
51
(499)
1,180
604
56
1,392
2,732
(39)
2,693
2,964
(342)
(65)
471
2,989
563
2,326
(1,167)
1,402
39
(687)
2,476
(304)
340
2,512
(330)
306
501
2,989
352% $
61
42
2
(16)
(3)
—
(19)
(2)
29
6
2
(6)
(4)
4
$
122
88
96
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
(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
1,715
1,711
(614)
2,069
(165)
(172)
4,544
(175)
130
4,499
(1,308)
322
448
3,961
12,292
—
9,915
(5)
9,907
12
2,847
21
1,203
5
36,164
4
72,246
4
(747)
(5)
71,499
4
96,577
3
1,184
(29)
2,311
(3)
8
5,657
3% $ 104,982
3% $
19,295
21,446
11
11,083
(11)
4,188
33
280
14
3,503
(20)
59,795
4
2,748
(11)
8,992
4
71,535
4
20,391
(2)
1,997
15
5
11,059
3% $ 104,982
$
$
$
(1)
(2)
(3)
(4)
FTE yields are calculated assuming a 21% tax rate and a 35% tax rate for periods prior to January 1, 2018.
Deposits in Federal Reserve Bank were treated as non-earning assets prior to 4Q 2018.
For purposes of this analysis, nonaccrual loans are reflected in the average balances of loans.
Includes consumer certificates of deposit of $250,000 or more.
100% $
(11)
(6)
(10)
9
(6)
7
—
(2)
14
4
(4)
1
—
3
7
(1)
20
32
18
10
6
(12)
6
4
(19)
(2)
4
4% $
10% $
9
(5)
98
(37)
(5)
8
(6)
1
7
(6)
19
4
4% $
—
99
102
11,903
3,181
15,084
8,108
584
23,878
555
27,749
1,198
6,010
7,208
34,957
11,519
9,994
8,245
2,155
1,021
32,934
67,891
(667)
67,224
92,423
1,453
2,366
5,446
101,021
17,580
19,735
11,697
2,119
445
3,675
55,251
2,923
8,862
67,036
21,699
1,675
10,611
101,021
2019 Form 10-K 47
Table 5 - Consolidated Average Balance Sheet and Net Interest Margin Analysis (Continued)
(dollar amounts in millions)
Fully-taxable equivalent basis (1)
2019
2018
2017
2019
2018
2017
Interest Income / Expense
Average Rate (5)
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
Other consumer
Total consumer
Total loans and leases
Total earning assets
Liabilities and Shareholders’ Equity
Interest-bearing deposits:
Demand deposits—interest-bearing
Money market deposits
Savings and other domestic deposits
Core certificates of deposit (4)
Other domestic time deposits of $250,000 or more
Brokered time deposits and negotiable CDs
Total interest-bearing 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
$
$
$
12
3
3
295
105
400
218
16
637
31
1,441
64
273
337
1,778
500
508
422
171
165
1,766
3,544
4,227
116
260
22
119
7
61
585
54
349
988
3,239
$
$
$
$
3
2
1
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
78
148
24
72
3
66
391
48
321
760
3,219
$
$
$
$
—
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
38
66
24
13
2
37
180
25
226
431
3,052
2.12%
2.01
2.33%
1.97
—%
1.56
2.17
2.71
3.61
2.90
2.52
3.47
2.76
3.76
4.72
5.51
4.79
4.91
4.75
4.05
5.40
3.81
4.95
13.11
4.70
4.73
4.25%
0.58%
1.09
0.22
2.13
1.82
2.18
0.94
2.23
3.74
1.34
2.91
0.35
3.26%
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
3.71
5.16
3.74
5.09
12.04
4.50
4.58
4.12%
0.40%
0.69
0.22
1.72
1.25
1.88
0.65
1.74
3.57
1.06
3.06
0.27
3.33%
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
3.58
4.63
3.65
5.46
11.53
4.28
4.19
3.77%
0.21%
0.33
0.21
0.60
0.52
1.00
0.33
0.86
2.56
0.64
3.13
0.17
3.30%
(1)
(2)
(3)
(4)
(5)
FTE yields are calculated assuming a 21% tax rate and a 35% tax rate for the period prior to January 1, 2018.
Deposits in Federal Reserve Bank were treated as non-earning assets prior to 4Q 2018 and the associated interest income was not material.
For purposes of this analysis, nonaccrual loans are reflected in the average balances of loans.
Includes consumer certificates of deposit of $250,000 or more.
Rates and amounts include the effects of hedge and risk management activities associated with the respective asset and liability categories.
48 Huntington Bancshares Incorporated
2019 versus 2018
Fully-taxable equivalent net interest income for 2019 increased $20 million, or 1%, from 2018. This reflected
the impact of 3% average earning asset growth and a 4% growth in average interest-bearing liabilities. FTE net
interest margin decreased 7 basis points to 3.26%. Average earning asset growth reflects a $2.7 billion, or 4%,
increase in average loans and leases. The NIM compression reflected a 28 basis point increase in funding costs,
partially offset by a 13 basis point positive impact from earning asset yields and a 8 basis point increase in the
benefit from noninterest-bearing funding.
Average earning assets for 2019 increased $3.0 billion, or 3%, from the prior year, reflecting loan growth of
$2.7 billion, or 4%. Average C&I loans and leases increased $1.7 billion, or 6%, reflecting broad-based growth.
Residential mortgages increased $1.2 billion, or 12%, reflecting robust mortgage production in the second half of
2019. Average RV and marine loans increased $0.6 billion, or 21%, primarily resulting from expansions of lending
activities in new markets in 2017 and 2018, while maintaining our commitment to super prime originations. Average
securities decreased $0.4 billion, or 2%.
Both average total interest-bearing deposits and average total interest-bearing liabilities for 2019 increased $2.5
billion, or 4%, from the prior year. Average core CDs increased $1.4 billion, or 33%, reflecting consumer deposit
growth initiatives primarily in the first three quarters of 2018, partially offset by maturity of balances towards the
end of 2019. Average money market deposits increased $2.3 billion, or 11%, reflecting growth driven by
promotional pricing. These increases were offset by a decrease in savings and other domestic deposits of $1.2 billion
or 11% reflecting a continued shift in consumer product mix.
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 2019 was $287 million, up $52 million, or 22%, from 2018. The increase in
provision expense over the prior year was primarily attributed to higher commercial losses.
Noninterest Income
The following table reflects noninterest income for the past three years:
Table 6 - Noninterest Income
(dollar amounts in millions)
Change from 2018
Change from 2017
2019
Amount
Percent
2018
Amount
Percent
2017
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
Net (losses) gains on sales of securities
Other noninterest income
Total noninterest income
$
372
246
178
167
123
88
66
55
(24)
183
$
1,454
$
8
22
7
59
15
6
(1)
—
(3)
20
133
2% $
10
4
55
14
7
(1)
—
(14)
12
$
364
224
171
108
108
82
67
55
(21)
163
10% $
1,321
$
11
18
15
(23)
18
1
—
(1)
(17)
(8)
14
3% $
9
10
(18)
20
1
—
(2)
(425)
(5)
353
206
156
131
90
81
67
56
(4)
171
1% $
1,307
2019 Form 10-K 49
2019 versus 2018
Noninterest income was $1.5 billion, up $133 million, or 10%, from the prior year. Mortgage banking income
increased $59 million or 55% driven by increased volume and higher salable spreads. Card and payment processing
income increased $22 million, or 10%, due to increased account activity. Capital markets fees increased $15 million,
or 14%, driven by increased underwriting activity primarily associated with the HSE acquisition. Other income
increased $20 million, or 12%, as a result of the gain on the sale of the Wisconsin retail branches and the impact of
the new lease accounting standard with regard to the presentation of income for personal property tax on leased
assets.
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 2018
Change from 2017
2019
Amount
Percent
2018
Amount
Percent
2017
Year Ended December 31,
Personnel costs
$
1,654
$
Outside data processing and other services
Equipment
Net occupancy
Professional services
Amortization of intangibles
Marketing
Deposit and other insurance expense
Other noninterest expense
Total noninterest expense
Number of employees (average full-time
equivalent)
Impact of Significant Items:
346
163
159
54
49
37
34
225
$
2,721
$
15,664
(dollar amounts in millions)
2019
Personnel costs
Outside data processing and other services
Equipment
Net occupancy
Professional services
Marketing
Other noninterest expense
Total impact of significant items on
noninterest expense
$
$
—
—
—
—
—
—
—
—
95
52
(1)
(25)
(6)
(4)
(16)
(29)
8
74
(29)
6 % $
1,559
$
18
(1)
(14)
(10)
(8)
(30)
(46)
4
294
164
184
60
53
53
63
217
3 % $
2,647
$
— %
15,693
Year Ended December 31,
2018
$
$
—
—
—
—
—
—
—
—
35
(19)
(7)
(28)
(9)
(3)
(7)
(15)
(14)
(67)
(77)
2 % $
1,524
(6)
(4)
(13)
(13)
(5)
(12)
(19)
(6)
(2)% $
313
171
212
69
56
60
78
231
2,714
— %
15,770
2017
$
42
24
16
52
10
1
9
$
154
50 Huntington Bancshares Incorporated
Adjusted Noninterest Expense (See Non-GAAP Financial Measures in the Additional Disclosures section):
Year Ended December 31,
Change from 2018
Change from 2017
(dollar amounts in millions)
2019
Amount
Percent
2018
Amount
Percent
2017
Personnel costs
$
1,654
$
Outside data processing and other services
Equipment
Net occupancy
Professional services
Amortization of intangibles
Marketing
Deposit and other insurance expense
Other noninterest expense
346
163
159
54
49
37
34
225
Total adjusted noninterest expense (Non-GAAP)
$
2,721
$
2019 versus 2018
95
52
(1)
(25)
(6)
(4)
(16)
(29)
8
74
6% $
1,559
$
18
(1)
(14)
(10)
(8)
(30)
(46)
4
294
164
184
60
53
53
63
217
3% $
2,647
$
77
5
9
24
1
(3)
(6)
(15)
(5)
87
5% $
1,482
2
6
15
2
(5)
(10)
(19)
(2)
3% $
289
155
160
59
56
59
78
222
2,560
Noninterest expense was $2.7 billion, up $74 million, or 3%, from the prior year. Personnel costs increased $95
million, or 6%, primarily reflecting the shift toward colleagues supporting our core strategies, annual merit increases,
and $15 million of expense related to position reductions completed in the 2019 fourth quarter. Outside data
processing and other services increased $52 million, or 18%, primarily driven by higher technology investment costs.
Offsetting these increases, deposit and other insurance expense decreased $29 million, or 46%, primarily due to the
discontinuation of the FDIC surcharge in the 2018 fourth quarter. Net occupancy expense decreased $25 million, or
14%, primarily reflecting lower branch and facility consolidation-related expense as the 2018 fourth quarter included
$28 million of consolidation-related expense. Marketing decreased $16 million, or 30%, primarily reflecting pacing of
marketing campaigns and deposit promotions.
Provision for Income Taxes
(This section should be read in conjunction with Note 1 - “Significant Accounting Policies” and Note 17 - “Income
Taxes” of the Notes to Consolidated Financial Statements.)
2019 versus 2018
The provision for income taxes was $248 million for 2019 compared with a provision for income taxes of $235
million in 2018. Both years included the benefits from tax-exempt income, tax-advantaged investments, general
business credits, investments in qualified affordable housing projects, stock-based compensation, and capital losses.
As of December 31, 2019 and 2018 there was no valuation allowance on federal deferred taxes. In 2019 and 2018
there was essentially no material 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. At December 31, 2019, we had a net federal deferred tax liability of $221 million and a net state deferred
tax asset of $38 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 2018, the IRS has advised that tax years 2012 through 2014 will not be audited, and is currently examining
the 2015 and 2016 federal income tax returns. Various state and other jurisdictions remain open to examination,
including Ohio, Kentucky, Indiana, Michigan, Pennsylvania, West Virginia, and Illinois.
2019 Form 10-K 51
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: credit, market,
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.
The Risk Oversight and Technology Committees routinely hold joint sessions to cover matters relevant to both
such as cybersecurity and IT risk and control projects and risk assessments.
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.
52 Huntington Bancshares Incorporated
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., credit, market, liquidity, operational, compliance, strategic, and reputation) 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
Factors section included in Item 1A: Risk Factors and the “Regulatory Matters” section of Item 1: Business 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 - "Investment Securities and Other Securities" 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. 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. Huntington also uses derivatives, principally
loan sale commitments, in hedging its mortgage loan interest rate lock commitments and its mortgage loans held for
sale. While there is credit risk associated with derivative activity, we believe this exposure is minimal. (See Note 1 -
"Significant Accounting Policies" of the Notes to Consolidated Financial Statements.)
We continue to focus on the identification, monitoring, and management of all aspects of our credit risk. In
addition to the traditional credit risk mitigation strategies of credit policies and processes, market risk management
activities, and portfolio diversification, we use quantitative measurement capabilities utilizing external data sources,
enhanced modeling technology, and internal stress testing processes. Our continued expansion of portfolio
management resources demonstrates 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.
2019 Form 10-K 53
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, 2019, our loans and leases totaled $75.4 billion, representing a $0.5 billion, or 1%, increase
compared to $74.9 billion at December 31, 2018.
Total commercial loans and leases were $37.3 billion at December 31, 2019, and represented 49% 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. We focus on borrowers 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.
54 Huntington Bancshares Incorporated
Total consumer loans and leases were $38.1 billion at December 31, 2019, and represented 51% of our total
loan and lease credit exposure. The consumer portfolio is comprised primarily of automobile loans, home equity
lines-of-credit, residential mortgages, and RV and marine finance (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 22% 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 rising interest rates.
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 – RV and marine 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 28% 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.
2019 Form 10-K 55
The table below provides the composition of our total loan and lease portfolio:
Table 8 - Loan and Lease Portfolio Composition
At December 31,
(dollar amounts in millions)
2019
2018
2017
2016
2015
Commercial:
Commercial and industrial
$ 30,664
41% $ 30,605
41% $ 28,107
40% $ 28,059
42% $ 20,560
41%
Commercial real estate:
Construction
Commercial
Commercial real estate
Total commercial
Consumer:
Automobile
Home equity
Residential mortgage
RV and marine
Other consumer
Total consumer
Total loans and leases
1,123
5,551
6,674
37,338
1
7
8
49
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
12,797
9,093
11,376
3,563
1,237
38,066
$ 75,404
17
12
15
5
2
51
12,429
9,722
10,728
3,254
1,320
37,453
100% $ 74,900
16
13
14
4
2
49
12,100
10,099
9,026
2,438
1,122
34,785
100% $ 70,117
17
14
13
3
2
49
10,969
10,106
7,725
1,846
956
31,602
100% $ 66,962
16
15
12
3
1
47
9,481
8,471
5,998
—
563
24,513
100% $ 50,341
2
8
10
51
19
17
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, large dollar exposures, 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 of Directors 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.
56 Huntington Bancshares Incorporated
The table below provides our total loan and lease portfolio segregated by industry type. The changes in the industry
composition from December 31, 2018 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
Manufacturing
Retail trade (1)
Finance and insurance
Health care and social assistance
Wholesale trade
Accommodation and food services
Professional, scientific, and technical services
Other services
Mining, quarrying, and oil and gas extraction
Transportation and warehousing
Construction
Admin./Support/Waste Mgmt. and Remediation Services
Arts, entertainment, and recreation
Information
Utilities
Educational services
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
Other consumer loans
Total loans and leases
December 31,
2019
December 31,
2018
$ 6,662
9% $ 6,964
9%
5,248
5,239
3,307
2,498
2,437
2,072
1,360
1,310
1,304
1,207
900
731
690
649
546
463
261
195
154
105
37,338
12,797
9,093
11,376
3,563
1,237
7
7
4
3
3
3
2
2
2
2
1
1
1
1
1
—
—
—
—
—
49%
17
12
15
5
2
5,140
5,337
3,377
2,533
2,830
1,709
1,344
1,290
1,286
1,320
924
737
599
441
454
473
253
174
174
88
37,447
12,429
9,722
10,728
3,254
1,320
7
7
5
3
4
2
2
2
2
2
1
1
1
1
1
1
—
—
—
—
51%
16
13
14
4
2
$ 75,404
100% $ 74,900
100%
(1) Amounts include $3.7 billion and $3.6 billion of auto dealer services loans at December 31, 2019 and December 31, 2018, 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.
2019 Form 10-K 57
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 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 “Loans / Leases and Allowance for Credit Losses” of
the 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. 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 120% of required interest and
principal payments, and (3) if the commercial real estate is non-owner occupied, require that pre-leasing generate
break even interest-only debt service. 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.
58 Huntington Bancshares Incorporated
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 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.
2019 Form 10-K 59
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 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 “Loans / Leases and Allowance for Credit Losses” 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 2019 was weaker than prior periods due to volatility in the commercial portfolio.
The consumer portfolio metrics continue to reflect our focus on high quality borrowers. Total NCOs were $265
million or 0.35% of average total loans and leases, an increase from $145 million or 0.20% in the prior year. There
was a 29% increase in NPAs from the prior year. The ALLL to total loans and leases ratio increased by 1 basis point
from the prior year to 1.04%.
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 $333 million of commercial related NALs at December 31, 2019, $236 million, or 71%,
represent 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 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.
60 Huntington Bancshares Incorporated
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)
2019
2018
2017
2016
2015
Nonaccrual loans and leases (NALs):
Commercial and industrial
Commercial real estate
Automobile
Home equity
Residential mortgage
RV and marine
Other consumer
Total nonaccrual loans and leases
Other real estate, net:
Residential
Commercial
Total other real estate, net
Other NPAs (1)
Total nonperforming assets
$
$
323
10
4
59
71
1
—
468
9
2
11
19
498
$
$
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
Nonaccrual loans and leases as a % of total loans and
leases
NPA ratio (2)
0.62%
0.66
0.45%
0.52
0.50%
0.55
0.63%
0.72
0.74%
0.79
(1)
(2)
Other nonperforming assets include certain impaired investment securities and/or nonaccrual loans held-for-sale.
Nonperforming assets divided by the sum of loans and leases, other real estate owned, and other NPAs.
2019 Form 10-K 61
2019 versus 2018
Total NPAs increased by $111 million, or 29%, compared with December 31, 2018. The increase was due to a
$135 million, or 72%, increase in the C&I portfolio, driven primarily by the oil and gas portfolio. OREO balances
decreased $12 million, or 52%, from the prior year.
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)
2019
2018
2017
2016
2015
Accruing loans and leases past due 90 days or more:
December 31,
Commercial and industrial (1)
Commercial real estate
Automobile
Home equity
Residential mortgage (excluding loans
guaranteed by the U.S. Government)
RV and marine
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
$
$
11
—
8
14
20
2
7
62
109
$
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
$
171
$
170
$
115
$
129
$
106
0.08%
0.09%
0.09%
0.12%
0.10%
0.14
0.23
0.13
0.23
0.07
0.16
0.08
0.19
0.11
0.21
(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, 2019, over 77% of the $449 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 62% 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.
62 Huntington Bancshares Incorporated
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)
2019
2018
December 31,
2017
2016
2015
TDRs—accruing:
Commercial and industrial
Commercial real estate
Automobile
Home equity
Residential mortgage
RV and marine
Other consumer
Total TDRs—accruing
TDRs—nonaccruing:
Commercial and industrial
Commercial real estate
Automobile
Home equity
Residential mortgage
RV and marine
Other consumer
Total TDRs—nonaccruing
Total TDRs
$
$
213
37
40
226
223
3
11
753
109
6
2
26
42
1
—
186
939
$
$
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
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 below market interest rates, longer amortization or extended
maturity date changes beyond what the collateral supports, as well as 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
2019 Form 10-K 63
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 - "Significant Accounting Policies" 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.
64 Huntington Bancshares Incorporated
The following table reflects activity in the ALLL and AULC for each of the last five years:
Year Ended December 31,
2019
2018
2017
2016
2015
$
772
$
691
$
638
$
598
$
605
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
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
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
Fair value of acquired AULC
Unfunded commitment losses
AULC, end of year
ACL, end of year
$
(160)
—
(5)
(5)
(165)
(57)
(21)
(9)
(15)
(95)
(197)
(362)
32
2
6
8
40
25
13
3
4
12
57
97
(265)
277
(1)
783
96
10
—
(2)
104
887
$
(68)
(1)
(10)
(11)
(79)
(58)
(21)
(11)
(14)
(85)
(189)
(268)
36
2
27
29
65
24
15
5
5
9
58
123
(145)
226
—
772
87
9
—
—
96
868
$
(68)
2
(6)
(4)
(72)
(64)
(20)
(11)
(13)
(72)
(180)
(252)
26
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)
32
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)
52
3
31
34
86
16
16
6
—
6
44
130
(88)
89
(8)
598
61
11
—
—
72
670
2019 Form 10-K 65
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)
2019
2018
December 31,
2017
2016
2015
ACL
Commercial
Commercial and industrial
$
Commercial real estate
Total commercial
Consumer
Automobile
Home equity
Residential mortgage
RV and marine
Other consumer
Total consumer
Total ALLL
AULC
Total ACL
Total ALLL as % of:
Total loans and leases
Nonaccrual loans and leases
NPAs
$
469
83
552
57
50
23
21
80
231
783
104
887
41 % $
8
49
17
12
15
5
2
51
100 %
$
1.04 %
167
157
422
120
542
56
55
25
20
74
230
772
96
868
41% $
10
51
16
13
14
4
2
49
100%
$
1.03%
228
200
377
105
482
53
60
21
15
60
209
691
87
778
40% $
11
51
17
14
13
3
2
49
100%
$
0.99%
198
178
356
95
451
48
65
33
5
36
187
638
98
736
42% $
11
53
16
15
12
3
1
47
100%
$
0.95%
151
133
299
100
399
50
84
42
—
23
199
598
72
670
41%
10
51
19
17
12
—
1
49
100%
1.19%
161
150
(1) Percentages represent the percentage of each loan and lease category to total loans and leases.
2019 versus 2018
At December 31, 2019, the ALLL was $783 million or 1.04% of total loans and leases, compared to $772 million
or 1.03% at December 31, 2018. We believe the ratio is appropriate given the aggregate 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, 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.
66 Huntington Bancshares Incorporated
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
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
Other consumer
Total consumer
Net charge-offs as a % of average loans
2019
Year Ended December 31,
2017
2016
2018
2015
$
128
$
32
$
42
$
45
$
(2)
(1)
(3)
125
32
8
6
11
83
140
265
$
(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
$
$
28
(1)
(15)
(16)
12
20
20
10
—
26
76
88
0.42%
0.11%
0.15%
0.19%
0.14%
(0.15)
(0.02)
(0.04)
0.33
0.26
0.08
0.06
0.31
6.62
0.37
0.35%
(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%
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.
2019 Form 10-K 67
2019 versus 2018
NCOs increased $120 million, or 83%, in 2019. The increase from the year-ago period was primarily centered in
the commercial portfolio.
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 interest rate and
mortgage price risk, as well as the establishment of risk measures, limits, and policy guidelines for managing the
amount of interest rate and mortgage price risk and its effect on net interest income and capital. Responsibility for
measuring and the management of interest rate risk resides with Corporate Treasury.
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.
68 Huntington Bancshares Incorporated
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 (1)
December 31, 2019
December 31, 2018
Net Interest Income at Risk (%)
-100
-2.0%
-0.3%
-2.9%
+100
-2.0%
1.0%
2.7%
+200
-4.0%
2.3%
5.8%
(1) The policy limit for the -100 basis point scenario changed from -4.0%, which was in effect at December 31, 2018, to -2.0% as of September 30, 2019.
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 decrease in sensitivity was driven by the purchase of interest rate floors as well as
additional interest rate swaps, changes to the actual and forecasted portfolio composition, and movements in
market rates.
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, 2019 and December 31, 2018.
Table 17 - Economic Value of Equity at Risk
Basis point change scenario
Board policy limits
December 31, 2019
December 31, 2018
Economic Value of Equity at Risk (%)
-100
-6.0%
-2.9%
-5.8%
+100
-6.0%
-3.1%
2.3%
+200
-12.0%
-9.1%
3.1%
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.
We are within our Risk Appetite Policy limits, established by the Risk Oversight Committee (ROC), for the -100,
+100 and +200 basis point scenarios. The EVE depicts an asset sensitive balance sheet profile in the -100 basis point
scenario and a liability sensitive profile due to additional convexity in the +100 and +200 basis point scenarios. The
decline in asset sensitivity was driven by slower security prepayments, deposit runoff assumption changes, and the
addition of interest rate swaps and floors mentioned above.
MSRs
(This section should be read in conjunction with Note 5 - “Mortgage Loan Sales and Servicing Rights” of Notes to
Consolidated Financial Statements.)
At December 31, 2019, we had a total of $212 million of capitalized MSRs representing the right to service $22
billion in mortgage loans. Of this $212 million, $205 million was recorded using the amortization method and $7
million was recorded using the fair value method. As of January 1, 2020, Huntington made an irrevocable election to
subsequently measure all classes of residential MSRs at fair value in order to eliminate any potential measurement
mismatch between our economic hedges and the MSRs. The impact of the irrevocable election was not material.
MSR fair values are sensitive to movements in interest rates as expected future net servicing income depends on the
projected outstanding principal balances of the underlying loans, which can be reduced by prepayments.
Prepayments usually increase when mortgage interest rates decline and decrease when mortgage interest rates rise.
We also employ hedging strategies to reduce the risk of MSR fair value changes or impairment. However, volatile
changes in interest rates can diminish the effectiveness of these economic hedges. We report changes in the MSR
value net of hedge-related trading activity in the mortgage banking income category of noninterest income.
2019 Form 10-K 69
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, derivative instruments, and equity investments.
We have established loss limits on the trading portfolio, on the amount of foreign exchange exposure that can be
maintained, and on the amount of marketable equity securities that can be held.
Liquidity Risk
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. Liquidity Risk is managed centrally by Corporate Treasury. 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 97% of total
deposits at December 31, 2019. We also have available unused wholesale sources of liquidity, including advances
from the FHLB, issuance through dealers in the capital markets, and access to certificates of deposit issued through
brokers. Liquidity is further provided by unencumbered, or unpledged, investment securities that totaled $19.5
billion as of December 31, 2019. 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 - “Investment Securities and Other Securities” of the Notes to
Consolidated Financial Statements.)
Our investment securities portfolio is evaluated under established ALCO objectives. Changing market
conditions could affect the profitability of the portfolio, as well as the level of interest rate risk exposure.
70 Huntington Bancshares Incorporated
The composition and contractual 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:
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.
Table 19 - Investment Securities Portfolio Composition and Maturity
At December 31,
2019
2018
2017
10,458
3,055
636
14,149
9,066
4
9,070
$
$
$
$
9,968
3,440
372
13,780
8,560
5
8,565
$
$
$
$
387
$
543
$
53
1
441
4.5
$
20
2
565
4.3
$
10,413
3,878
578
14,869
9,086
5
9,091
581
18
1
600
4.3
$
$
$
$
$
$
1 year or less
Amoun
Yield (1)
After 1 year
through 5 years
Yield (1)
Amoun
At December 31, 2019
After 5 years
through 10 years
Yield (1)
Amoun
After 10 years
Total
Amoun
Yield (1)
Amoun
Yield (1)
$
10
1.68% $ —
—% $ —
—% $ —
—% $
10
1.68%
—
—
—
1
11
167
—
48
2
1
—
—
—
2.04
1.72
3.79
—
2.66
3.52
3.01
—
—
—
51
51
1,067
—
31
37
3
—
—
—
2.57
2.58
3.56
—
3.39
3.65
2.60
127
2.62
—
—
—
—
113
2.52
240
1,305
—
49
12
—
2.58
3.50
—
3.65
3.96
—
4,958
4,222
976
—
10,156
516
2
451
—
—
2.59
2.94
2.45
—
2.72
3.77
1.24
3.13
—
—
5,085
4,222
976
165
10,458
3,055
2
579
51
4
2.59
2.94
2.45
2.53
2.72
3.58
1.24
3.15
3.72
2.68
$
229
3.45% $ 1,189
3.52% $ 1,606
3.37% $11,125
2.79% $14,149
2.93%
(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
Private-label CMO
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
$ —
—% $ —
—% $
—
—
—
—
—
—
—
—
—
—
—
—
2.15
2.15
—
—
—
17
17
—
17
30
—
114
156
300
—
3.16% $ 2,321
2.62% $ 2,351
2.63%
—
3.08
2.50
2.78
—
2,463
3,845
120
8,749
4
2.95
2.60
2.53
2.70
2.63
2,463
3,959
293
9,066
4
2.95
2.61
2.49
2.70
2.63
Total held-to-maturity securities
$ —
—% $
2.15% $
300
2.78% $ 8,753
2.70% $ 9,070
2.70%
(1) Weighted average yields were calculated using amortized cost on a fully-taxable equivalent basis, assuming a 21% tax rate where applicable.
2019 Form 10-K 71
Bank Liquidity and Sources of Funding
Our primary sources of funding for the Bank are retail and commercial core deposits. At December 31, 2019,
these core deposits funded 73% of total assets (105% 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 $25 million and $23 million at December 31, 2019 and December 31, 2018,
respectively.
The following table reflects contractual maturities of certain deposits at December 31, 2019.
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, 2019
2,903
3,426
$
$
326
816
$
$
192
455
$
$
47
183
$
$
3,468
4,880
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 (2)
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
2019
At December 31,
2018 (1)
2017
$
$
$
$
20,247
20,583
24,726
9,549
4,356
79,461
313
2,573
82,347
34,957
44,504
79,461
25% $
25
30
12
5
97
—
3
100% $
44% $
56
100% $
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%
(1)
(2)
December 31, 2018 includes $210 million of noninterest-bearing and $662 million of interesting bearing deposits classified as held-for-sale.
Includes consumer certificates of deposit of $250,000 or more.
The Bank maintains borrowing capacity at the FHLB and the Federal Reserve Bank Discount Window. The Bank
does not consider borrowing capacity from the Federal Reserve Bank Discount Window as a primary source of
liquidity. Total loans and securities pledged to the Federal Reserve Bank Discount Window and the FHLB are $39.6
billion and $46.5 billion at December 31, 2019 and December 31, 2018, 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, 2019, total wholesale funding was $15.3 billion, an increase from $14.5 billion at
December 31, 2018. The increase from the prior year-end primarily relates to an increase in short-term borrowings
and issuance of long-term debt, partially offset by a decrease in brokered deposits and negotiable CDs.
At December 31, 2019, we believe the Bank has sufficient liquidity to meet its cash flow obligations for the
foreseeable future.
72 Huntington Bancshares Incorporated
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, 2019
One Year
or Less
One to
Five Years
After
Five Years
$
$
$
$
8,086
414
947
9,447
7,740
1,707
9,447
$
$
$
$
18,728
628
3,328
22,684
18,176
4,508
22,684
$
$
$
$
3,850
81
1,276
5,207
3,159
2,048
5,207
$
$
$
$
Total
30,664
1,123
5,551
37,338
29,075
8,263
37,338
25%
61%
14%
100%
Percent
of total
82%
3
15
100%
78%
22
100%
At December 31, 2019, the market value of investment securities pledged to secure public and trust deposits,
trading account liabilities, U.S. Treasury demand notes, and security repurchase agreements totaled $3.8 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, 2019.
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, 2019 and December 31, 2018, the parent company had $3.1 billion and $2.4 billion,
respectively, in cash and cash equivalents.
On January 22, 2020, the Board of Directors declared a quarterly common stock cash dividend of $0.15 per
common share. The dividend is payable on April 1, 2020, to shareholders of record on March 18, 2020. Based on
the current quarterly dividend of $0.15 per common share, cash demands required for common stock dividends are
estimated to be approximately $153 million per quarter. On January 22, 2020, the Board of Directors declared a
quarterly Series B, Series C, Series D, and Series E Preferred Stock dividend payable on April 15, 2020 to shareholders
of record on April 1, 2020. 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 2019, the Bank paid preferred and common dividends of $45 million and $640 million, respectively.
During 2019, the Bank also repaid subordinate debt of $683 million 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 and floors, 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 21 -
“Commitments and Contingent Liabilities” of the Notes to Consolidated Financial Statements for more information.
2019 Form 10-K 73
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 19 - “Derivative Financial Instruments” of the Notes to Consolidated Financial Statements
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 21
- “Commitments and Contingent Liabilities” of the Notes to Consolidated Financial Statements 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 21 - “Commitments and Contingent Liabilities”
of the Notes to Consolidated Financial Statements 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, 2019
Deposits without a stated maturity
$
77,066
$
— $
— $
— $
77,066
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
4,671
2,606
2,407
48
111
566
—
4,407
81
117
44
—
—
—
2,025
1,005
61
14
86
8
5,281
2,606
9,844
276
250
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
74 Huntington Bancshares Incorporated
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, Funds Movement Committee, and a Third Party Risk Management Committee. The responsibilities of
these committees, among other duties, include establishing and maintaining management information systems to
monitor material risks and to identify potential concerns, risks, or trends that may have a significant impact and
ensuring that recommendations are developed to address the identified issues. In addition, we have a Model Risk
Oversight Committee that is responsible for policies and procedures describing how model risk is evaluated and
managed and the application of the governance process to implement these practices throughout the enterprise.
These committees report any significant findings and recommendations to the Risk Management Committee.
Potential concerns may be escalated to our ROC and the Audit Committee, as appropriate. Significant findings or
issues are escalated by the Third Party Risk Management Committee to the Technology Committee of the 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 I, Item 1: Business
and Note 22 - “Other Regulatory Matters” 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.
2019 Form 10-K 75
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 and related surplus
Tier 1 capital
Long-term debt 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
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.
76 Huntington Bancshares Incorporated
At December 31,
2019
2018
$
11,795
$
11,102
(1,207)
256
(2,153)
(44)
8,647
1,207
9,854
672
887
11,413
87,512
$
$
(1,207)
609
(2,200)
(33)
8,271
1,207
9,478
776
868
11,122
85,687
9.88%
9.65%
11.26
13.04
9.26
11.06
12.98
9.10
At December 31,
2019
2018
$
$
$
$
10,592
1,203
11,795
(1,990)
(183)
9,622
(1,203)
8,419
109,002
(1,990)
(183)
106,829
9.01%
7.88
9.62
9,899
1,203
11,102
(1,989)
(222)
8,891
(1,203)
7,688
108,781
(1,989)
(222)
106,570
8.34%
7.21
8.97
$
$
$
$
$
$
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
2019
2018
$
87,512
87,298
8,647
9,747
9,854
10,621
1,559
1,243
11,413
11,864
85,687
85,717
8,271
8,732
9,478
9,611
1,644
1,893
11,122
11,504
9.88%
9.65%
11.17
11.26
12.17
13.04
13.59
9.26
10.01
10.19
11.06
11.21
12.98
13.42
9.10
9.23
At December 31, 2019, we maintained Basel III capital ratios in excess of the well-capitalized standards
established by the FRB. All capital ratios were impacted by the repurchase of 31.4 million common shares during
2019.
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 $11.8 billion at December 31, 2019, an increase of $0.7 billion when compared
with December 31, 2018.
On June 27, 2019, Huntington announced proposed capital actions included in Huntington's 2019 capital plan.
These actions include a 7% increase in the quarterly dividend per common share to $0.15, starting in the third
quarter of 2019, the repurchase of up to $513 million of common stock over the next four quarters (July 1, 2019
through June 30, 2020), and maintaining dividends on the outstanding classes of preferred stock and trust preferred
securities. Any capital actions, including those contemplated above, are subject to approval by Huntington’s Board
of Directors.
On July 17, 2019, the Board of Directors authorized the repurchase of up to $513 million of common shares
over the four quarters through the 2020 second quarter. Purchases of common stock under the authorization may
include open market purchases, privately negotiated transactions, and accelerated repurchase programs. During the
2019 fourth quarter, Huntington repurchased a total of 13.1 million shares at a weighted average share price of
$14.96.
2019 Form 10-K 77
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. There were 31.4 million
shares of common stock repurchased during 2019.
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.
For a discussion of business segment trends for 2018 versus 2017, see “Part II, Item 7: Management’s
Discussion and Analysis of Financial Condition and Results of Operations” Business Segment Discussion included in
our 2018 Form 10-K, filed with the SEC on February 15, 2019.
Revenue Sharing
Revenue is recorded in the business segment responsible for the related product or service. Fee sharing is
recorded to allocate portions of such revenue to other business segments involved in selling to, or providing service
to, customers. Results of operations for the business segments reflect these fee sharing allocations.
Expense Allocation
The management process that develops the business segment reporting utilizes various estimates and
allocation methodologies to measure the performance of the business segments. Expenses are allocated to business
segments using a two-phase approach. The first phase consists of measuring and assigning unit costs (activity-based
costs) to activities related to product origination and servicing. These activity-based costs are then extended, based
on volumes, with the resulting amount allocated to business segments that own the related products. The second
phase consists of the allocation of overhead costs to all four business segments from Treasury / Other. We utilize a
full-allocation methodology, where all Treasury / Other expenses, except reported Significant Items, if any, and a
small amount of other residual unallocated expenses, are allocated to the four business segments.
78 Huntington Bancshares Incorporated
Funds Transfer Pricing (FTP)
We use an active and centralized FTP methodology to attribute appropriate net interest income to the business
segments. The intent of the FTP methodology is to transfer interest rate risk from the business segments by
providing matched duration funding of assets and liabilities. The result is to centralize the financial impact,
management, and reporting of interest rate risk in the Treasury / Other function where it can be centrally monitored
and managed. The Treasury / Other function charges (credits) an internal cost of funds for assets held in (or pays for
funding provided by) each business segment. The FTP rate is based on prevailing market interest rates for
comparable duration assets (or liabilities). During 2019, the Company updated and refined its FTP methodology
primarily related to the allocation of deposit funding costs. Prior period amounts presented below have been
restated to reflect the new methodology.
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 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,
2019
2018
2017
635
553
172
113
(62)
1,411
$
$
502
624
162
119
(14)
1,393
$
$
374
496
154
103
59
1,186
$
$
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.
2019 Form 10-K 79
Consumer and Business Banking
Table 28 - Key Performance Indicators for Consumer and Business Banking
Year Ended December 31,
Change from 2018
(dollar amounts in millions unless otherwise noted)
2019
2018
Amount
Percent
2017
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
2019 versus 2018
$
$
$
$
$
$
$
$
1,766
114
825
1,673
169
635
8,000
25,411
22,130
51,645
3.37%
128
0.58%
$
$
$
$
1,727
137
744
1,699
133
502
8,348
25,147
22,037
47,782
3.56%
108
0.49%
39
(23)
81
(26)
36
133
(348)
264
93
3,863
(0.19)%
20
0.09 %
2 % $
(17)
11
(2)
27
26 % $
(4)%
$
$
1
—
8
(5)
19
18
1,581
105
740
1,641
201
374
8,595
24,134
21,010
45,226
3.45%
105
0.50%
Consumer and Business Banking, including Home Lending, reported net income of $635 million in 2019, an
increase of $133 million, or 26%, compared with net income of $502 million in 2018. Segment net interest income
increased $39 million, or 2%, primarily due to an increase in average deposits. The provision for credit losses
decreased $23 million, or 17%. Noninterest income increased $81 million, or 11%, primarily due to increased
mortgage banking income due to higher salable volumes and spreads, card interchange income from higher
transaction volumes, and increased service charge income on deposit accounts. Noninterest expense decreased $26
million, or 2%, due to decreased personnel, occupancy, and equipment expense as a result of branch consolidations
and divestitures, as well as reduced FDIC insurance expense.
Home Lending, an operating unit of Consumer and Business Banking, reflects the result of the origination, sale,
and servicing of mortgage loans less referral fees and net interest income for mortgage banking products distributed
by the retail branch network and other business segments. Home Lending reported net income of $23 million in
2019, compared with a loss of $8 million in the prior year. Total revenues increased largely due to higher origination
volume, higher secondary marketing spreads, and net MSR risk management. Revenue increases were partially
offset by an increase in noninterest expense as a result of higher origination volumes and higher indirect expense
allocations.
80 Huntington Bancshares Incorporated
Commercial Banking
Table 29 - Key Performance Indicators for Commercial Banking
(dollar amounts in millions unless otherwise noted)
2019
2018
Amount
Percent
2017
Year Ended December 31,
Change from 2018
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
2019 versus 2018
$
$
$
$
$
$
$
$
1,037
132
359
564
147
553
1,317
33,843
27,151
21,072
3.49%
93
0.34%
1,013
42
321
502
166
624
1,256
31,209
26,137
22,197
3.53 %
(7)
(0.03)%
$
$
$
$
24
90
38
62
(19)
(71)
61
2,634
1,014
(1,125)
(0.04)%
100
0.37 %
2 % $
214
12
12
(11)
(11)% $
5 %
$
$
8
4
(5)
(1)
1,429
1,233
975
33
286
465
267
496
1,217
29,278
24,988
21,166
3.63%
—
—%
Commercial Banking reported net income of $553 million in 2019, a decrease of $71 million, or 11%, compared
with net income of $624 million in 2018. Segment net interest income increased $24 million, or 2%, primarily due to
the higher value of deposits as a source of funding. Net interest margin decreased 4 basis points, driven by a decline
in loan and lease spreads and a $1.1 billion decline in deposits. The provision for credit losses increased $90 million,
or 214%, primarily due to net charge-offs of $93 million in 2019 compared to a net recovery of $7 million in the prior
year. Noninterest income increased $38 million, or 12%, largely driven by an increase in capital markets related
revenues primarily due to increased underwriting activity driven by the acquisition of HSE in the fourth quarter of
2018 and customer interest rate derivatives as well as an increase in equipment finance related fee income.
Noninterest expense increased $62 million, or 12%, primarily due to an increase in personnel expense and allocated
overhead, which was driven by the acquisition of HSE, and other taxes related to the adoption of the new lease
accounting standard, partially offset by lower FDIC insurance expense.
Vehicle Finance
Table 30 - Key Performance Indicators for Vehicle Finance
(dollar amounts in millions unless otherwise noted)
2019
2018
Amount
Percent
2017
Year Ended December 31,
Change from 2018
Net interest income
$
397
$
392
$
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
$
$
$
44
12
148
45
172
265
19,393
19,466
333
2.04%
$
$
55
11
143
43
162
264
18,430
18,484
338
2.12%
$
$
5
(11)
1
5
2
10
1
963
982
(5)
(0.08)%
43
$
43
$
—
0.22%
0.23%
(0.01)%
— $
(4)
1% $
(20)
9
3
5
6% $
—%
427
63
14
141
83
154
253
$
16,903
16,938
5
5
(1)
(4)
335
2.52%
52
0.31%
2019 Form 10-K 81
2019 versus 2018
Vehicle Finance reported net income of $172 million in 2019, an increase of $10 million, or 6%, compared with
net income of $162 million in 2018. The increase was driven by a lower provision for credit losses primarily resulting
from continued strong credit quality of new loan originations. Segment net interest income increased $5 million or
1%, due to a $1.0 billion increase in average loan balances, offset in part by an 8 basis point reduction in the net
interest margin. The increase in average loans included a $0.6 billion increase in RV and Marine loans primarily
resulting from expansions of lending activities in new markets in 2017 and 2018 while maintaining our commitment
to super prime originations and a $0.3 billion increase in average floor plan and other commercial loans. The decline
in net interest margin is primarily a result of the continued run-off of the higher yielding acquired loan portfolios.
The increase in noninterest expense was due to higher costs associated with servicing a larger loan portfolio and
production levels.
Regional Banking and The Huntington Private Client Group
Table 31 - Key Performance Indicators for Regional Banking and The Huntington Private Client Group
Year Ended December 31,
Change from 2018
(dollar amounts in millions unless otherwise noted)
2019
2018
Amount
Percent
2017
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
$
$
$
$
$
$
$
$
$
$
198
(3)
198
256
30
113
1,057
6,438
6,132
5,983
3.18%
1
0.02%
17.5
121.8
$
$
$
203
1
193
244
32
119
1,026
5,802
5,487
5,926
3.32%
— $
—%
$
15.3
105.1
(5)
(4)
5
12
(2)
(6)
31
636
645
57
(0.14)%
1
0.02 %
2.2
16.7
(2)% $
(400)
3
5
(6)
(5)% $
3 %
$
$
$
11
12
1
(4)
100
100
14
16
209
—
189
239
56
103
1,019
5,198
4,861
6,097
3.32%
2
0.04%
18.3
110.1
eop—End of Period.
2019 versus 2018
RBHPCG reported net income of $113 million in 2019, a decrease of $6 million, or 5%, compared with a net
income of $119 million in 2018. Net interest income declined $5 million, or 2%, due to a 14 basis point decrease in
net interest margin partially offset by a $0.6 billion increase in average loans as a result of growth in commercial and
mortgage loans. Noninterest income increased $5 million, or 3%, primarily reflecting higher trust and investment
management revenue as a result of increased sales production and year over year market growth. Noninterest
expense increased $12 million, or 5%, mainly as a result of increased personnel expenses related to the hiring of new
sales colleagues.
82 Huntington Bancshares Incorporated
RESULTS FOR THE FOURTH QUARTER
Earnings Discussion
In the 2019 fourth quarter, we reported net income of $317 million, a decrease of $17 million, or 5%, from the
2018 fourth quarter. Diluted earnings per common share for the 2019 fourth quarter were $0.28, a decrease of
$0.01 from the year-ago quarter.
Net Interest Income / Average Balance Sheet
FTE net interest income for the 2019 fourth quarter decreased $55 million, or 7%, from the 2018 fourth
quarter. This reflected a 29 basis point decrease in the FTE net interest margin to 3.12%, partially offset by the
benefit from a $2.3 billion, or 2%, increase in average earning assets. The NIM compression primarily reflected a 29
basis point year-over-year decrease in average earning asset yields. The decrease in average earning asset yields was
primarily driven by the impact of lower interest rates in the quarter on loan yields. Embedded within these yields
and costs, FTE net interest income during the 2019 fourth quarter included $11 million, or approximately 4 basis
points, of purchase accounting impact compared to $17 million, or approximately 7 basis points, in the year-ago
quarter.
Table 32 - Average Earning Assets - 2019 Fourth Quarter vs. 2018 Fourth Quarter
(dollar amounts in millions)
Loans/Leases
Commercial and industrial
Commercial real estate
Total commercial
Automobile
Home equity
Residential mortgage
RV and marine
Other consumer
Total consumer
Total loans/leases
Total securities
Loans held-for-sale and other earning assets
Total earning assets
Fourth Quarter
Change
2019
2018
Amount
Percent
$
$
30,373
6,806
37,179
12,607
9,192
11,330
3,564
1,231
37,924
75,103
23,161
1,798
100,062
$
$
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
$
$
816
(138)
678
184
(625)
756
348
(60)
603
1,281
505
524
2,310
3%
(2)
2
1
(6)
7
11
(5)
2
2
2
41
2%
Average earning assets for the 2019 fourth quarter increased $2.3 billion, or 2%, from the year-ago quarter,
primarily reflecting a $1.3 billion, or 2%, increase in average total loans and leases. Average C&I loans increased $0.8
billion, or 3%, reflecting growth in specialty banking, asset finance, and corporate banking. Average residential
mortgage loans increased $0.8 billion, or 7%, reflecting robust mortgage production in the second half of 2019.
Average held-for-sale and other earning assets increased $0.5 billion, or 41%, primarily as a result of increased cash
from the timing of the securities portfolio repositioning and an increase in loans held-for-sale. Average total
securities increased $0.5 billion, or 2%, primarily reflecting the mark-to-market of the available-for-sale portfolio.
Partially offsetting these increases, average home equity loans and lines of credit decreased $0.6 billion, or 6%,
reflecting a shift in consumer preferences.
2019 Form 10-K 83
Table 33 - Average Interest-Bearing Liabilities - 2019 Fourth Quarter vs. 2018 Fourth Quarter
(dollar amounts in millions)
Interest-bearing deposits:
Demand deposits: interest-bearing
Money market deposits
Savings and other domestic deposits
Core certificates of deposit
Other domestic deposits of $250,000 or more
Brokered deposits and negotiable CDs
Total interest-bearing deposits
Short-term borrowings
Long-term debt
Total interest-bearing liabilities
Fourth Quarter
Change
2019
2018
Amount
Percent
20,140
24,560
9,552
4,795
313
2,589
61,949
1,965
9,886
73,800
$
19,860
22,595
10,534
5,705
346
3,507
62,547
1,006
8,871
72,424
$
$
280
1,965
(982)
(910)
(33)
(918)
(598)
959
1,015
1,376
1
9
(9)
(16)
(10)
(26)
(1)
95
11
2%
Average total interest-bearing liabilities for the 2019 fourth quarter increased $1.4 billion, or 2%, from the year-
ago quarter. Long-term debt increased $1.0 billion, or 11%, as a result of the issuance and maturity of $1.6 billion
and $0.6 billion, respectively, of long-term debt over the past three quarters. Average short-term borrowings
increased $1.0 billion, or 95%, as a result of the maturity of brokered CDs in the 2019 first quarter. Savings and other
domestic deposits decreased $1.0 billion, or 9%, primarily reflecting a continued shift in consumer product mix.
Average core CDs decreased $0.9 billion, or 16%, reflecting the maturity of the balances related to the 2018
consumer deposit growth initiatives. Average brokered deposits and negotiable CDs decreased $0.9 billion, or 26%,
reflecting the previously mentioned brokered CD maturities. Average money market deposits increased $2.0 billion,
or 9%, primarily reflecting growth driven by promotional pricing over the past seven quarters and a continued shift in
consumer product mix.
Provision for Credit Losses
The provision for credit losses increased to $79 million in the 2019 fourth quarter compared to $60 million from
the year-ago quarter.
Noninterest Income
Table 34 - Noninterest Income - 2019 Fourth Quarter vs. 2018 Fourth Quarter
(dollar amounts in millions)
2019
2018
Amount
Percent
Fourth Quarter
Change
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
Other noninterest income
Total noninterest income
$
$
95
64
47
58
31
24
17
16
(22)
42
372
$
$
94
58
42
23
34
21
16
16
(19)
44
329
$
$
1
6
5
35
(3)
3
1
—
(3)
(2)
43
1%
10
12
152
(9)
14
6
—
(16)
(5)
13%
Noninterest income for the 2019 fourth quarter increased $43 million, or 13%, from the year-ago quarter.
Mortgage banking income increased $35 million, or 152%, primarily reflecting higher volume and overall salable
spreads and a $12 million increase in income from net MSR risk management. Card and payment processing income
increased $6 million, or 10%, primarily reflecting increased account activity. Trust and investment management
services fees increased $5 million, or 12%, primarily driven by strong equity market performance.
84 Huntington Bancshares Incorporated
Noninterest Expense
Table 35 - Noninterest Expense - 2019 Fourth Quarter vs. 2018 Fourth Quarter
(dollar amounts in millions)
2019
2018
Amount
Percent
Fourth Quarter
Change
Personnel costs
Outside data processing and other services
Equipment
Net occupancy
Professional services
Amortization of intangibles
Marketing
Deposit and other insurance expense
Other noninterest expense
Total noninterest expense
Number of employees (average full-time equivalent)
$
$
$
$
426
89
42
41
14
12
9
10
58
701
15,495
$
$
399
83
48
70
17
13
15
9
57
711
15,657
27
6
(6)
(29)
(3)
(1)
(6)
1
1
(10)
(162)
7 %
7
(13)
(41)
(18)
(8)
(40)
11
2
(1)%
(1)%
Noninterest expense for the 2019 fourth quarter decreased $10 million, or 1%, from the year-ago quarter. Net
occupancy costs decreased $29 million, or 41%, primarily reflecting lower branch and facility consolidation-related
expense of $24 million. Marketing decreased $6 million, or 40%, primarily reflecting pacing of marketing campaigns.
Equipment decreased $6 million, or 13%, primarily reflecting lower branch and facility consolidation-related expense
of $5 million. Personnel costs increased $27 million, or 7%, primarily reflecting the $15 million of expense related to
the previously announced position reductions completed in the 2019 fourth quarter. Outside data processing and
other services expense increased $6 million, or 7%, primarily driven by higher technology investment costs and $3
million of expense related to a technology system decommission in the 2019 fourth quarter.
Provision for Income Taxes
(This section should be read in conjunction with Note 1 - “Significant Accounting Policies” and Note 17 - “Income
Taxes” of the Notes to Consolidated Financial Statements.)
The provision for income taxes was $55 million in the 2019 fourth quarter compared to $57 million in the 2018
fourth quarter. The effective tax rates for the 2019 fourth quarter and 2018 fourth quarter were 14.8% and 14.6%,
respectively. At December 31, 2019, we had a net federal deferred tax liability of $221 million and a net state
deferred tax asset of $38 million.
Credit Quality
NCOs
Net charge-offs increased $23 million to $73 million. The increase was driven by the oil and gas portfolio,
which made up approximately half of the total commercial NCOs. Consumer charge-offs have remained flat. NCOs
represented an annualized 0.39% of average loans and leases in the current quarter, up from 0.39% in the prior
quarter and up from 0.27% in the year-ago quarter.
NALs
Asset quality metrics remained in line with overall expectations. The consumer portfolio metrics remained
relatively stable, reflecting normal seasonal impacts. The commercial portfolio metrics reflected continued volatility
in the oil and gas portfolio, while the remainder of the commercial portfolio has performed well.
NALs increased $128 million, or 38%, from the year-ago quarter to $468 million, or 0.62% of total loans and
leases. The year-over-year increase was primarily in the C&I portfolio, particularly in the oil and gas portfolio. OREO
balances decreased $12 million, or 52%, from the year-ago quarter. NPAs increased to $498 million, or 0.66% of total
loans and leases and OREO. On a linked quarter basis, NALs increased $30 million, or 7%, while NPAs increased $16
million, or 3%.
2019 Form 10-K 85
ACL
(This section should be read in conjunction with Note 3 - “Loans / Leases and Allowance for Credit Losses” of the
Notes to Consolidated Financial Statements.)
The ALLL increased $11 million from the year-ago quarter, and as a percentage of total loans and leases
increased to 1.04% compared to 1.03% a year ago. The ALLL as a percentage of period-end total NALs decreased to
167% from 228% over the same period. The increase in the ALLL was primarily the result of loan growth and
portfolio management activity. 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 36 - Selected Quarterly Financial Information
(amounts in millions, except per share data)
December 31,
September 30,
June 30,
March 31,
2019
2019
2019
2019
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
Ending
Book value per common share
Tangible book value per common share (1)
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 (2)
Efficiency ratio (3)
Effective tax rate
Margin analysis-as a % of average earning assets (5)
Interest income (4)
Interest expense
Net interest margin (4)
Revenue—FTE
Net interest income
FTE adjustment
Net interest income (4)
Noninterest income
Total revenue (4)
86 Huntington Bancshares Incorporated
$
$
$
$
$
$
1,011
231
780
79
701
372
701
372
55
317
19
298
1,029
1,047
1,020
10.38
8.25
0.29
0.28
1.15%
11.1
14.3
58.4
14.8
4.03%
0.91
3.12%
780
6
786
372
1,158
$
$
$
$
$
$
1,052
253
799
82
717
389
667
439
67
372
18
354
1,035
1,051
1,033
10.37
8.25
0.34
0.34
1.37%
13.4
17.3
54.7
15.4
4.21%
1.01
3.20%
799
6
805
389
1,194
$
$
$
$
$
$
1,068
256
812
59
753
374
700
427
63
364
18
346
1,045
1,060
1,038
10.08
7.97
0.33
0.33
1.36%
13.5
17.7
57.6
14.6
4.35%
1.04
3.31%
812
7
819
374
1,193
$
$
$
$
$
$
1,070
248
822
67
755
319
653
421
63
358
19
339
1,047
1,066
1,046
9.78
7.67
0.32
0.32
1.35%
13.8
18.3
55.8
15.0
4.40%
1.01
3.39%
822
7
829
319
1,148
Table 37 - Selected Quarterly Capital Data
Capital adequacy (Basel III)
(dollar amounts in millions)
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 (5) (7)
Tangible equity / tangible asset ratio (6) (7)
Tangible common equity / risk-weighted assets ratio (7)
2019
December 31,
September 30,
June 30,
March 31,
$
87,512
$
86,719
$
86,332
$
85,966
9.26%
9.88
11.26
13.04
7.88
9.01
9.62
9.34%
10.02
11.41
13.29
8.00
9.13
9.83
9.24%
9.88
11.28
13.13
7.80
8.93
9.58
9.16%
9.84
11.25
13.11
7.57
8.71
9.34
(1)
(2)
(3)
(4)
(5)
(6)
(7)
Other intangible assets are net of deferred tax liability.
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 liability.
Noninterest expense less amortization of intangibles and goodwill impairment divided by the sum of FTE net interest income and noninterest income
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.
2019 Form 10-K 87
Table 38 - Selected Quarterly Financial Information
(amounts in millions, except per share data)
Three Months Ended
December 31,
September 30,
2018
2018
June 30,
2018
March 31,
2018
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 (1)
Ending
Book value per share
Tangible book value per share (2)
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 (3)
Efficiency ratio (4)
Effective tax rate
Margin analysis-as a % of average earning assets (6)
Interest income (5)
Interest expense
Net interest margin (5)
Revenue—FTE
Net interest income
FTE adjustment
Net interest income (5)
Noninterest income
Total revenue (5)
$
$
$
$
$
$
1,056
223
833
60
773
329
711
391
57
334
19
315
1,054
1,073
1,047
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
1,085
1,104
1,062
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
1,123
1,104
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
1,084
1,125
1,102
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
88 Huntington Bancshares Incorporated
Table 39 - Selected Quarterly Capital Data
Capital adequacy (Basel III)
(dollar amounts in millions)
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 (6)(8)
Tangible equity / tangible asset ratio (7)(8)
Tangible common equity / risk-weighted assets ratio (8)
2018
December 31,
September 30,
June 30,
March 31,
$
85,687
$
83,580
$
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%
9.53%
10.53
11.99
13.97
7.78
8.95
9.67
10.45
11.94
13.92
7.70
8.88
9.65
(1) Weighted average diluted shares outstanding for the quarterly period ending March 31, 2018, includes the dilutive impact of the convertible preferred
(2)
(3)
(4)
(5)
(6)
(7)
(8)
stock issued in April of 2008 until the date of conversion, February 22, 2018.
Other intangible assets are net of deferred tax.
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.
Noninterest expense less amortization of intangibles and goodwill impairment divided by the sum of FTE net interest income and noninterest income
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.
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; reform of LIBOR; competitive pressures on product pricing and services;
success, impact, and timing of our business strategies, including market acceptance of any new products or services
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.
2019 Form 10-K 89
Non-GAAP Financial Measures
This document contains GAAP financial measures and non-GAAP financial measures where management
believes it to be helpful in understanding our results of operations or financial position. Where non-GAAP financial
measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP
financial measure, can be found herein.
Significant Items
From time-to-time, revenue, expenses, or taxes are impacted by items judged by us to be outside of our
ordinary business 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 and 35 percent for periods
prior to January 1, 2018. 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 our capitalization to other financial services companies. These ratios differ from capital
ratios defined by banking regulators principally in that the numerator excludes goodwill and other intangible assets,
the nature and extent of which varies among different financial services companies. These ratios are not defined in
GAAP or federal banking regulations. As a result, these non-regulatory capital ratios disclosed by the Company are
considered non-GAAP financial measures.
90 Huntington Bancshares Incorporated
Because there are no standardized definitions for these non-regulatory capital ratios, the Company’s calculation
methods may differ from those used by other financial services companies. Also, there may be limits in the
usefulness of these measures to investors. As a result, we encourage readers to consider the 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: “Risk Factors” 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 : Business 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 - “Significant Accounting Policies” 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 $887 million at December 31, 2019, 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 and Leases and Allowance for Credit Losses” of the Notes to Consolidated Financial
Statements.
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, 2019, approximately $15.6 billion of our assets and $0.1 billion of our liabilities were
recorded at fair value on a 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 that are used as 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
2019 Form 10-K 91
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 18 - “Fair Value of
Assets and Liabilities” of the Notes to Consolidated Financial Statements.
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; and
(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. For more information, see Note 17 - “Income Taxes” of the Notes to Consolidated
Financial Statements.
Goodwill and Intangible Assets
The acquisition method of accounting requires that acquired assets and liabilities are recorded at their fair
values as of the date of acquisition. This often involves estimates based on third party valuations or internal
valuations based on discounted cash flow analyses or other valuation techniques, all of which are inherently
subjective. Acquisitions typically result in goodwill, the amount by which the cost of net assets acquired in a
business combination exceeds their fair value, which is subject to impairment testing at least annually. The
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. For more information, see Note 6 - “Goodwill and Other
Intangible Assets” of the Notes to Consolidated Financial Statements.
Recent Accounting Pronouncements and Developments
Note 2 - “Accounting Standards Update” of the Notes to Consolidated Financial Statements discusses new
accounting pronouncements adopted during 2019 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.
92 Huntington Bancshares Incorporated
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 to Consolidated Financial Statements, and Selected Quarterly Income
Statements, which is incorporated by reference into this item.
2019 Form 10-K 93
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 2019,
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, 2019. 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, 2019, 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, 2019 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
Zachary Wasserman – Senior Executive Vice President and Chief Financial Officer
February 14, 2020
94 Huntington Bancshares Incorporated
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, 2019 and 2018, and the related consolidated statements of
income, of comprehensive income, of changes in shareholders' equity and of cash flows for each of the three years in
the period ended December 31, 2019, 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, 2019, 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, 2019 and 2018, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 2019 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, 2019, 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
2019 Form 10-K 95
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.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated
financial statements that was communicated or required to be communicated to the audit committee and that (i)
relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our
especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter
in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by
communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the
accounts or disclosures to which it relates.
Valuation of Allowance for Credit Losses - General Reserve
As described in Notes 1 and 3 to the consolidated financial statements, management’s estimate of the allowance for
credit losses includes a general reserve component which consists of various risk-profile reserve components. The
risk-profile components consider items unique to the Company’s structure, policies, processes, and portfolio
composition. The general reserve also considers qualitative measurements and assessments of the Company’s loan
portfolios including, but not limited to, concentrations, portfolio composition, industry comparisons, and internal
review functions.
The principal considerations for our determination that performing procedures relating to the valuation of the
general reserve component of the allowance for credit losses is a critical audit matter are (i) the valuation involved
the application of significant judgment and estimation on the part of management, which in turn led to a high
degree of auditor judgment and subjectivity in performing procedures relating to the general reserve, (ii) significant
audit effort was necessary in evaluating management’s methodology, significant assumptions and calculations
relating to the general reserve component, (iii) significant audit judgment was necessary in evaluating audit evidence
obtained relating to the general reserve component, and (iv) the audit effort included the involvement of
professionals with specialized skill and knowledge to assist in performing procedures and evaluating the audit
evidence obtained from these procedures.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our
overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of
controls relating to valuation of the Company’s general reserve component of allowance for credit losses. These
procedures also included, among others, testing management’s process for determining the general reserve
component, including management’s process for deriving risk-profile reserve components, evaluating the
appropriateness of management’s methodology relating to the general reserve component and testing the
completeness and accuracy of data utilized by management. Professionals with specialized skill and knowledge were
used to assist in evaluating the appropriateness of management’s methodology, significant assumptions and
calculations relating to the general reserve component.
Columbus, Ohio
February 14, 2020
We have served as the Company’s auditor since 2015.
96 Huntington Bancshares Incorporated
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 $781 and $613 respectively, measured at fair value)(1)
Loans and leases (includes $81 and $79 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:
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)
Total Deposits
Short-term borrowings
Long-term debt
Other liabilities
Total liabilities
Commitments and contingencies (Note 21)
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 18.
See Notes to Consolidated Financial Statements
$
$
$
$
December 31,
2019
2018
1,045
125
102
99
14,149
9,070
441
877
75,404
(783)
74,621
2,542
763
1,990
475
2,703
109,002
$
$
20,247
$
62,100
82,347
2,606
9,849
2,405
97,207
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
10
8,806
(56)
(256)
2,088
11,795
109,002
1,500,000,000
1,020,003,482
4,537,605
6,617,808
740,500
$
1,203
11
9,181
(45)
(609)
1,361
11,102
108,781
1,500,000,000
1,046,767,252
3,817,385
6,617,808
740,500
2019 Form 10-K 97
Huntington Bancshares Incorporated
Consolidated Statements of Income
(dollar amounts in millions, except per share data, share amounts in thousands)
Interest and fee income:
Loans and leases
Available-for-sale securities
2019
Year Ended December 31,
2018
2017
$
3,541
$
3,305
$
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 noninterest income
Total noninterest income
Personnel costs
Outside data processing and other services
Equipment
Net occupancy
Professional services
Amortization of intangibles
Marketing
Deposit and other insurance expense
Other noninterest expense
Total noninterest expense
Income before income taxes
Provision for income taxes
Net income
Dividends on preferred shares
Net income available to common shareholders
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
98 Huntington Bancshares Incorporated
$
$
$
$
295
83
218
16
48
4,201
585
54
349
988
3,213
287
2,926
372
246
178
167
123
88
66
55
(24)
—
183
1,454
1,654
346
163
159
54
49
37
34
225
2,721
1,659
248
1,411
74
1,337
1,038,840
1,056,079
1.29
1.27
$
$
279
97
211
25
32
3,949
391
48
321
760
3,189
235
2,954
364
224
171
108
108
82
67
55
(21)
—
163
1,321
1,559
294
164
184
60
53
53
63
217
2,647
1,628
235
1,393
70
1,323
1,081,542
1,105,985
1.22
1.20
$
$
2,838
283
77
193
20
22
3,433
180
25
226
431
3,002
201
2,801
353
206
156
131
90
81
67
56
—
(4)
171
1,307
1,524
313
171
212
69
56
60
78
231
2,714
1,394
208
1,186
76
1,110
1,084,686
1,136,186
1.02
1.00
— $
—
— $
— $
—
— $
(4)
—
(4)
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 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 fair value related to cash flow hedges
Change in accumulated unrealized gains (losses) for pension and other post-retirement
obligations
Other comprehensive income (loss), net of tax
Comprehensive income
See Notes to Consolidated Financial Statements
Year Ended December 31,
2019
2018
2017
$
1,411
$
1,393
$
1,186
—
335
335
—
23
(5)
353
1,764
$
$
—
(84)
(84)
—
—
4
2
(39)
(37)
3
—
—
(80)
1,313
$
(34)
1,152
2019 Form 10-K 99
Huntington Bancshares Incorporated
Consolidated Statements of Changes in Shareholders’ Equity
(dollar amounts in millions, except per share data,
share amounts in thousands)
Year Ended December 31, 2019
Preferred
Stock
Amount
Common Stock
Shares
Amount
Capital
Surplus
Treasury Stock
Shares
Amount
Accumulated
Other
Comprehensive
Loss
Retained
Earnings
Total
Balance, beginning of year
$ 1,203
1,050,584
$
11
$ 9,181
(3,817) $
(45) $
(609) $ 1,361
$
11,102
Net income
Other comprehensive income (loss)
Repurchases of common stock
Cash dividends declared:
Common ($0.58 per share)
Preferred Series B ($51.22 per share)
Preferred Series C ($58.76 per share)
Preferred Series D ($62.50 per share)
Preferred Series E ($5,700.00 per share)
Recognition of the fair value of share-based
compensation
Other share-based compensation activity
Other
Balance, end of year
(31,494)
(1)
(440)
5,451
—
83
(18)
—
(720)
(11)
1,411
353
1,411
353
(441)
(611)
(611)
(2)
(6)
(37)
(29)
1
(2)
(6)
(37)
(29)
83
(18)
(10)
$ 1,203
1,024,541
$
10
$ 8,806
(4,537) $
(56) $
(256) $ 2,088
$
11,795
See Notes to Consolidated Financial Statements
100 Huntington Bancshares Incorporated
Huntington Bancshares Incorporated
Consolidated Statements of Changes in Shareholders’ Equity
(dollar amounts in millions, except per share data,
share amounts in thousands)
Year Ended December 31, 2018
Preferred
Stock
Amount
Common Stock
Shares
Amount
Capital
Surplus
Treasury Stock
Shares
Amount
Accumulated
Other
Comprehensive
Loss
Retained
Earnings
Total
Balance, beginning of year
$ 1,071
1,075,295
$
11
$ 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
Repurchase 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
495
(61,644)
—
(939)
(363)
30,330
6,603
—
$ 1,203
1,050,584
$
—
—
11
363
78
(31)
3
(549)
(10)
1
1,393
(1)
(80)
—
1,393
(80)
495
(939)
(541)
(541)
(3)
(6)
(37)
(24)
(10)
—
(3)
(6)
(37)
(24)
—
78
(41)
(7)
$ 9,181
(3,817) $
(45) $
(609) $ 1,361
$
11,102
2019 Form 10-K 101
Huntington Bancshares Incorporated
Consolidated Statements of Changes in Shareholders’ Equity
(dollar amounts in millions, except per share data,
share amounts in thousands)
Year Ended December 31, 2017
Preferred
Stock
Amount
Common Stock
Shares
Amount
Capital
Surplus
Treasury Stock
Shares
Amount
Accumulated
Other
Comprehensive
Loss
Retained
Earnings
(Deficit)
Total
Balance, beginning of year
$ 1,071
1,088,641
$
11
$ 9,881
(2,953) $
(27) $
(401) $
(227) $
10,308
(19,430)
—
(260)
1,186
(34)
1,186
(34)
(260)
(379)
(31)
(1)
(6)
(38)
92
(19)
—
(4)
(379)
(31)
(1)
(6)
(38)
(9)
93
—
5,923
—
92
(10)
4
(315)
(8)
(93)
$ 9,707
(3,268) $
(35) $
(528) $
588
$
10,814
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
161
$ 1,071
1,075,295
$
—
11
See Notes to Consolidated Financial Statements
102 Huntington Bancshares Incorporated
Huntington Bancshares Incorporated
Consolidated Statements of Cash Flows
(dollar amounts in millions)
Operating activities
Net income
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Year Ended December 31,
2019
2018
2017
$
1,411
$
1,393
$
1,186
Provision for credit losses
Depreciation and amortization
Share-based compensation expense
Deferred income tax expense
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
Purchases of available-for-sale securities
Purchases of held-to-maturity securities
Net proceeds from sales of portfolio loans
Principal payments received from finance leases
Net loan and lease activity, excluding sales and purchases
Purchases of premises and equipment
Purchases of loans and leases
Net cash paid for branch disposition
Other, net
Net cash provided by (used in) investing activities
Financing activities
(Decrease) increase 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
287
386
83
23
(32)
(214)
(593)
194
29
1,574
(112)
—
2,124
1,021
3,903
(6,036)
(1,519)
1,049
714
(2,149)
(107)
(445)
(548)
228
(1,877)
(1,702)
586
1,796
(743)
(74)
(597)
(441)
—
(26)
2
(1,199)
(1,502)
2,672
1,170
$
$
235
493
78
63
(11)
(301)
(235)
22
(11)
1,726
90
(15)
2,109
743
1,419
(2,485)
(338)
697
—
(5,333)
(110)
(542)
—
102
(3,663)
7,733
(3,025)
2,229
(2,798)
(70)
(514)
(939)
495
(27)
5
3,089
1,152
1,520
2,672
$
201
413
92
168
47
12
(420)
233
22
1,954
39
—
1,994
1,054
2,490
(5,429)
(1,356)
603
—
(3,680)
(194)
(405)
—
18
(4,866)
1,433
1,371
1,891
(948)
(76)
(349)
(260)
—
(26)
11
3,047
135
1,385
1,520
2019 Form 10-K 103
(dollar amounts in millions)
Supplemental disclosures:
Interest paid
Income taxes paid (refunded)
Non-cash activities:
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,
2019
2018
2017
$
989
111
963
19
19
—
—
$
742
$
(52)
818
51
20
2,833
2,707
409
84
660
12
29
—
993
104 Huntington Bancshares Incorporated
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, insurance programs, and other financial products and services. Huntington’s banking
offices are located in Ohio, Illinois, Michigan, Pennsylvania, Indiana, West Virginia, 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 are 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. 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
2019 Form 10-K 105
income. Debt securities purchased that 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 securities and other securities, respectively. Unrealized gains
or losses on available-for-sale securities 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 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, is 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 premiums and/or discounts 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 impairment arising if
the expected fair value is less than the carrying amount. Huntington assesses net investments in leases (including
residual values) for impairment and recognizes impairment losses in accordance with the impairment guidance for
financial instruments. As such, net investments in leases may be reduced by an allowance for credit losses, with
changes recognized as provision expense.
106 Huntington Bancshares Incorporated
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 costs to sell, or (b) fair value where the fair value option is elected. The fair value option is generally
elected for mortgage loans originated with the intent to sell 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 the debt is 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 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.
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 loans that are 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
2019 Form 10-K 107
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 loss 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 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
108 Huntington Bancshares Incorporated
generally not individually evaluated on a regular basis for impairment. All TDRs, regardless of the outstanding
balance amount, 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 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 are 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
2019 Form 10-K 109
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 and 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 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
110 Huntington Bancshares Incorporated
effectiveness of the hedging instrument. 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 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:
2019 Form 10-K 111
• 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 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
112 Huntington Bancshares Incorporated
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
practices, 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.
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.
2019 Form 10-K 113
• 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.
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 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 24 - “Segment Reporting”.
114 Huntington Bancshares Incorporated
2. ACCOUNTING STANDARDS UPDATE
Accounting standards adopted in current period
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.
- Accounting applied by a lessor is largely
unchanged from that applied under previous
guidance.
- Requires additional qualitative and quantitative
disclosures with the objective of enabling
users of the financial statements to assess the
amount, timing, and uncertainty of cash flows
arising from leases.
Effects on financial statements
- 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 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 recognized right-of-use assets of approximately $200
million and lease liabilities of approximately $250 million upon
adoption, representing substantially all of its operating lease
commitments, with the difference attributable to transition
adjustments required by ASC Topic 842 relating to previously
recognized amounts for deferred rent and lease exit costs
(recorded pursuant to ASC Topic 420). Right-of-use assets and
lease liabilities were based, primarily, on the present value of
unpaid future minimum lease payments. Additionally, the
amounts were impacted by assumptions around renewals and/
or extensions, and the interest rate used to discount those
future lease obligations. Impact to the income statement was
not material in the period of adoption.
- 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 ASU, if the
transaction meets sale criteria, the seller-lessee will recognize
the sale based on the new revenue recognition guidance (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 Topic 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
Topic 842 changes the accounting for such costs, with entities
evaluating the impairment of right-of-use assets using the
guidance in ASC Topic 360. Such an impairment analysis would
occur once the entity commits to a plan to abandon the space,
which may accelerate the timing of these costs.
- The guidance 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.
ASU 2017-04 -
Simplifying the Test
for Goodwill
Impairment.
Issued January 2017
- Simplifies the goodwill impairment test by
- Effective for annual and interim goodwill tests performed in
fiscal years beginning after December 15, 2019. Early adoption
is permitted.
- The guidance was adopted in the current period and did not
have an impact on Huntington's Consolidated Financial
Statements.
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.
2019 Form 10-K 115
Standard
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
ASU 2019-01 -
Leases (ASC Topic
842): Codification
Improvements
Issued: March 2019
Summary of guidance
- Permits use of the OIS rate based on SOFR as a
Effects on financial statements
- The guidance was adopted in the current period and did not
have a material impact on Huntington's Consolidated Financial
Statements.
- Huntington elected to present sales and other similar taxes that
arise from specific leasing transactions, when paid by the lessee
directly to a third party, 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.
- Huntington adopted the guidance concurrent with the adoption
of ASU 2016-02 on January 1, 2019. The ASU did not have a
material impact on Huntington's Consolidated Financial
Statements.
- The ASU relating to lessor accounting is effective for fiscal years
beginning after December 15, 2019, and interim periods within
those fiscal years.
- Huntington adopted the guidance effective January 1, 2019. The
ASU did not have a material impact on Huntington's
Consolidated Financial Statements.
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 ASU creates a lessor practical expedient
applicable to sales and other similar taxes
incurred in connection with a lease, and
simplifies 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
- Notes that lessors that are not manufacturers
or dealers will apply the fair value exception in
a manner similar to what they did prior to the
implementation of ASC Topic 842.
- Clarifies that lessors in the scope of ASC Topic
942 (Financial Services - Depository & Lending)
must classify principal payments received from
sales-type and direct financing leases in
investing activities in the statement of cash
flows.
- Eliminates certain interim transition disclosure
requirements related to the effect of an
accounting change on certain interim period
financial information.
116 Huntington Bancshares Incorporated
Accounting standards yet to be adopted
Standard
ASU 2016-13 -
Financial
Instruments - Credit
Losses.
Issued June 2016
Summary of guidance
- Eliminates the probable recognition threshold
Effects on financial statements
- Effective for fiscal years beginning after December 15, 2019,
for credit losses on financial assets measured at
amortized cost, replacing the current incurred
loss framework with an expected credit loss
model.
- Requires those financial assets subject to the
new guidance to be presented at the net
amount expected to be collected (i.e., net of
expected credit losses).
including interim periods within those fiscal years.
- 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 adopted the guidance on January 1, 2020 and
implemented changes to relevant systems, processes, and
controls where necessary.
- 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.
- Huntington has completed the process of developing credit
models with model implementation and validation completed
during the fourth quarter of 2019. In addition, management is
in the final stages of implementing the accounting, reporting,
and governance processes to comply with the new guidance.
- The guidance will require additional quantitative
and qualitative disclosures related to the credit
risk inherent in Huntington’s portfolio and how
management monitors the portfolio’s credit
quality.
- Based on the portfolio composition as of December 31, 2019,
the adoption of CECL resulted in an increase to our total ACL of
approximately $393 million. The estimated ACL of $1,280
million as of January 1, 2020 represents an increase of
approximately 44% from the 2019 year end ACL level of $887
million. The increase in the allowance is largely attributable to
the consumer portfolio, given the longer asset duration
associated with many of these products, and the use of multiple
economic scenarios when determining the Bank’s economic
forecast.
- The ASU eliminates the current accounting model for purchased-
credit-impaired loans, but requires an allowance to be
recognized for purchased-credit-deteriorated (PCD) assets
(those that have experienced more-than-insignificant
deterioration in credit quality since origination). Huntington did
not have any loans accounted for as PCD upon adoption.
- At adoption, Huntington did not record an allowance with
respect to HTM securities as the portfolio consists almost
entirely of agency-backed securities that inherently have
minimal nonpayment risk.
2019 Form 10-K 117
- Effective dates and transition requirements for amendments
related to CECL (ASC Topic 326) are the same as effective dates
and transition requirements for ASU 2016-13.
- Amendments related to Derivatives and Hedging (ASC Topic 815)
are effective as of the beginning of first annual period after the
issuance date of this Update (ASU 2019-04). Earlier adoption is
permitted, including adoption on any date on or after the
issuance of this Update.
- Amendment related to Recognition and Measurement of
Financial Instruments (ASC Topic 825) should be applied on a
modified-retrospective basis effective for fiscal years, including
interim period within those fiscal years, beginning after
December 15, 2019. Earlier adoption is permitted.
- Amendments in this Update are not expected to have a material
impact on Huntington's Consolidated Financial Statements.
- The effective date is the same as the effective date of ASU
2016-13.
- The ASU did not have a material impact on Huntington's
Consolidated Financial Statements.
- The Update is effective in fiscal years beginning after December
15, 2019, and interim periods within those fiscal years.
- The Update is not expected to have a material impact on
Huntington’s Consolidated Financial Statements.
ASU 2019-04 -
Codification
Improvements to
Topic 326, Financial
Instruments-Credit
Losses, Topic 815,
Derivatives and
Hedging, and Topic
825, Financial
Instruments
Issued: April 2019
ASU 2019-05 -
Financial
Instruments - Credit
Losses (Topic 326):
Targeted Transition
Relief
Issued: May 2019
ASU 2019-08 -
Compensation -
Codification
Improvements -
Share-based
Consideration
Payable to a
Customer
Issued: November
2019
- Clarifies various implementation issues related
to Recognition and Measurement of Financial
Instruments (ASC Topic 825), Current Expected
Credit Losses (ASC Topic 326) and Derivatives
and Hedging (ASC Topic 815).
- Provides additional implementation guidance
on CECL issues that include, among others, (a)
measurement of credit allowance on accrued
interest; (b) treatment of credit allowance upon
transfers between classifications or categories
for loans and debt securities; (c) inclusion of
recoveries in determining credit allowance
amounts; (d) using projections of rate change
for variable rate instruments; (e) vintage
disclosures for lines-of-credit; (f) contractual
extensions and renewals; (g) consideration of
prepayments in calculating effective interest
rate; and (h) consideration of costs to sell if the
entity intends to sell the collateral when
foreclosure is probable.
- Clarifies for Topic 815, among others, that (a)
only interest rate risk may be hedged in a
partial-term fair value hedge; (b) amortization
of fair value basis adjustment may begin before
the fair value hedge is discontinued; (c) hedged
AFS securities should be disclosed at amortized
cost for disclosures related to hedged assets;
and (d) contractually specified interest rate
should be considered when applying
hypothetical derivative method while assessing
hedge effectiveness.
- Clarifies among others, that (a) using
observable price under measurement
alternative provided by ASC Topic 321 is a non-
recurring fair value measurement and entities
should adhere to non-recurring fair value
disclosure requirements of Topic 820; and (b)
equity securities without readily determinable
fair value accounted for under measurement
alternative should be remeasured using
historical exchange rates.
- Provides entities that have certain instruments
within the scope of ASC Subtopic 326-20 with
an option to irrevocably elect fair value option,
applied on instrument-by-instrument basis.
The fair value option does not apply to held-to-
maturity debt securities.
- The ASU requires that an entity measure and
classify share-based payment awards granted
to a customer by applying the guidance in Topic
718.
- The amount of share-based payment awards
should be recorded as a reduction of the
transaction price and is required to be
measured on the basis of grant-date fair value
of the share-based payment awards in
accordance with Topic 718.
- The classification and subsequent
measurement of the award are subject to the
guidance in Topic 718 unless the share-based
payment award is subsequently modified and
the grantee is no longer a customer.
118 Huntington Bancshares Incorporated
ASU 2019-11 -
Financial
Instruments - Credit
Losses (Topic 326):
Codification
Improvements to
Topic 326
Issued: November
2019
ASU 2019-12 -
Income Taxes (Topic
740): Simplifying
the Accounting for
Income Taxes
Issued: December
2019
- The ASU clarifies or addresses stakeholders’
specific issues related to ASU 2016-13 as
described below:
- The effective dates for the Update is the same as the effective
dates of ASU 2016-13. The ASU was applied on a modified-
retrospective basis.
- The Update did not have a material impact on Huntington's
Consolidated Financial Statements.
- Clarifies that the allowance for purchased
financial assets with credit deterioration should
include expected recoveries. If a method other
than a discounted cash flow method is used to
calculate allowance, expected recoveries
should not result in an acceleration of the
noncredit discount.
- Provides transition relief by permitting entities
an accounting policy election to adjust the
effective interest rate on existing TDRs using
prepayment assumptions on the date of
adoption of Topic 326 rather than the
prepayment assumptions in effect immediately
before the restructuring.
- Extends the disclosure relief for accrued
interest receivable balances to additional
relevant disclosures involving amortized cost
basis.
- Clarifies that an entity should assess whether it
reasonably expects the borrower will be able to
continually replenish collateral securing the
financial asset to apply the practical expedient
related to collateral maintenance provision.
- This Update simplifies the accounting for
income taxes by removing exceptions to the:
- This Update is effective for fiscal years, and interim periods
within those fiscal years, beginning after December 15, 2020.
- Early adoption of the ASU is permitted, including adoption in
any interim period for which financial statements have not yet
been issued. An entity that elects to early adopt in an interim
period should reflect any adjustments as of the beginning of the
annual period that includes that interim period.
- The Update is not expected to have a material impact on
Huntington's Consolidated Financial Statements.
(a) Incremental approach for intraperiod tax
allocation when there is a loss from continuing
operations and income or a gain from other
items;
(b) Requirement to recognize a deferred tax
liability for equity method investments when a
foreign subsidiary becomes an equity method
investment;
(c) Ability not to recognize a deferred tax
liability for a foreign subsidiary when a foreign
equity method investment becomes a
subsidiary; and
(d) General methodology for calculating income
taxes in an interim period when a year-to-date
loss exceeds the anticipated loss for the year.
- This Update also simplifies various other
aspects of the accounting for income taxes.
2019 Form 10-K 119
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 of
unamortized premiums, discounts, fees, and costs, recognized as part of loans and leases, was a net premium of
$525 million and $428 million at December 31, 2019 and 2018, respectively.
Loan and Lease Portfolio Composition
The following table provides a detailed listing of Huntington’s loan and lease portfolio at December 31, 2019
and December 31, 2018.
(dollar amounts in millions)
Loans and leases:
Commercial and industrial
Commercial real estate
Automobile
Home equity
Residential mortgage
RV and marine
Other consumer
Loans and leases
Allowance for loan and lease losses
Net loans and leases
Equipment Leases
At December 31,
2019
2018
$
30,664
$
6,674
12,797
9,093
11,376
3,563
1,237
75,404
(783)
$
74,621
$
30,605
6,842
12,429
9,722
10,728
3,254
1,320
74,900
(772)
74,128
Huntington leases equipment to customers, and substantially all such arrangements are classified as either
sales-type or direct financing leases, which are included in C&I loans. These leases are reported at the aggregate of
lease payments receivable and estimated residual values, net of unearned and deferred income, and any initial direct
costs incurred to originate these leases. Renewal options for leases are at the option of the lessee, and are not
included in the measurement of lease receivables as they are not considered reasonably certain of exercise.
Purchase options are typically at fair value, and as such those options are not considered in the measurement of
lease receivables or in lease classification.
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. Upon expiration of a lease, residual assets
are remarketed, resulting in an extension of the lease by the lessee, a lease to a new customer, or purchase of the
residual asset by the lessee or another party. Huntington also purchases insurance guaranteeing the value of certain
residual assets.
120 Huntington Bancshares Incorporated
The following table presents net investments in lease financing receivables by category at December 31, 2019
and 2018:
(dollar amounts in millions)
Commercial and industrial:
Lease payments receivable
Estimated residual value of leased assets
Gross investment in commercial and industrial lease financing receivables
Deferred origination costs
Deferred fees
Total net investment in commercial and industrial lease financing receivables
At December 31,
2019
2018
$
$
1,841
728
2,569
19
(249)
2,339
$
$
1,747
726
2,473
20
(250)
2,243
The carrying value of residual values guaranteed was $95 million as of December 31, 2019. The future lease
rental payments due from customers on sales-type and direct financing leases at December 31, 2019, totaled $1.8
billion and were due as follows: $0.7 billion in 2020, $0.4 billion in 2021, $0.3 billion in 2022, $0.2 billion in 2023,
$0.1 billion in 2024, and $0.1 billion thereafter. Interest income recognized for these types of leases was $108
million and $100 million for the years ended December 31, 2019 and December 31, 2018, respectively.
Nonaccrual and Past Due Loans
The following table presents NALs by loan class at December 31, 2019 and 2018:
(dollar amounts in millions)
Commercial and industrial
Commercial real estate
Automobile
Home equity
Residential mortgage
RV and marine
Other consumer
Total nonaccrual loans
December 31,
2019
2018
$
$
323
10
4
59
71
1
—
468
$
$
188
15
5
62
69
1
—
340
The amount of interest that would have been recorded under the original terms for total NAL loans was $26
million, $22 million, and $21 million for 2019, 2018, and 2017, respectively. The total amount of interest recorded to
interest income for NAL loans was $9 million, $12 million, and $18 million in 2019, 2018, and 2017, respectively.
2019 Form 10-K 121
The following table presents an aging analysis of loans and leases, including past due loans and leases, by loan
class at December 31, 2019 and 2018 :
Past Due (1)
December 31, 2019
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
$
165
$
30,499
$
— $
30,664
$
11 (2)
(dollar amounts in millions)
Commercial and industrial
$
Commercial real estate
Automobile
Home equity
Residential mortgage
RV and marine
Other consumer
$
65
3
95
50
103
13
13
$
31
1
19
19
49
4
6
69
7
11
51
170
2
7
11
125
120
322
19
26
6,663
12,672
8,972
10,974
3,544
1,211
—
—
1
80
—
—
81
6,674
12,797
9,093
11,376
3,563
1,237
$
75,404
$
—
8
14
129 (3)
2
7
171
Total loans and leases
$
342
$
129
$
317
$
788
$
74,535
$
(dollar amounts in millions)
Commercial and industrial
$
Commercial real estate
Automobile
Home equity
Residential mortgage
RV and marine
Other consumer
Total loans and leases
Past Due (1)
December 31, 2018
30-59
Days
60-89
Days
90 or
more days
Total
Current
Loans
Accounted
for Under
FVO
Total Loans
and Leases
$
140
$
30,465
$
— $
$
72
10
95
51
108
12
14
$
17
—
19
21
47
3
7
51
5
10
56
168
2
6
15
124
128
323
17
27
6,827
12,305
9,593
10,327
3,237
1,293
90 or
more days
past due
and accruing
$
7 (2)
—
8
17
131 (3)
1
6
30,605
6,842
12,429
9,722
10,728
3,254
1,320
—
—
1
78
—
—
79
$
362
$
114
$
298
$
774
$
74,047
$
$
74,900
$
170
(1)
(2)
(3)
NALs are included in this aging analysis based on the loan’s past due status.
Amounts include Huntington Technology Finance administrative lease delinquencies.
Amounts include mortgage loans insured by U.S. government agencies.
122 Huntington Bancshares Incorporated
Allowance for Credit Losses
The following table presents ALLL and AULC activity by portfolio segment for the years ended December 31,
2019, 2018, and 2017:
(dollar amounts in millions)
Year ended December 31, 2019:
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
Unfunded commitment losses
AULC balance, end of period
ACL balance, end of period
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
Commercial
Consumer
Total
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
542
(165)
40
135
—
552
94
10
(2)
102
654
482
(79)
65
74
542
84
10
94
636
451
(72)
41
62
482
87
(3)
84
566
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
230
(197)
57
142
(1)
231
2
—
—
2
233
209
(189)
58
152
230
3
(1)
2
232
187
(180)
52
150
209
11
(8)
3
212
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
772
(362)
97
277
(1)
783
96
10
(2)
104
887
691
(268)
123
226
772
87
9
96
868
638
(252)
93
212
691
98
(11)
87
778
2019 Form 10-K 123
Credit Quality Indicators
To facilitate the monitoring of credit quality for commercial loans, and for purposes of determining an
appropriate ACL level for these loans, Huntington utilizes the following internally defined categories of credit grades:
• Pass - Higher quality loans that do not fit any of the other categories described below.
• OLEM - The credit risk may be relatively minor yet represents a risk given certain specific circumstances. If
the potential weaknesses are not monitored or mitigated, the loan may weaken or the collateral may be
inadequate to protect Huntington’s position in the future. For these reasons, Huntington considers the
loans to be potential problem loans.
•
Substandard - Inadequately protected loans resulting from the borrower’s ability to repay, equity, and/or
the collateral pledged to secure the loan. These loans have identified weaknesses that could hinder normal
repayment or collection of the debt. It is likely Huntington will sustain some loss if any identified
weaknesses are not mitigated.
• Doubtful - Loans that have all of the weaknesses inherent in those loans classified as Substandard, with the
added elements of the full collection of the loan is improbable and that the possibility of loss is high.
Loans are generally assigned a category of “Pass” rating upon initial approval and subsequently updated as
appropriate based on the borrower’s financial performance.
Commercial loans categorized as OLEM, Substandard, or Doubtful are considered Criticized loans. Commercial
loans categorized as Substandard or Doubtful are both considered Classified loans.
For all classes within the consumer loan portfolios, loans are assigned pool level PD factors based on the FICO
range within which the borrower’s 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 tables present each loan and lease class by credit quality indicator at December 31, 2019 and
2018:
(dollar amounts in millions)
Commercial and industrial
Commercial real estate
Automobile
Home equity
Residential mortgage
RV and marine
Other consumer
December 31, 2019
Credit Risk Profile by UCS Classification
Pass
OLEM
Substandard
Doubtful
Total
$
$
28,477
6,487
$
634
98
$
1,551
88
$
2
1
30,664
6,674
Credit Risk Profile by FICO Score (1), (2)
750+
650-749
<650
Other (3)
Total
6,759
5,763
7,976
2,391
546
4,661
2,772
2,742
1,053
571
1,377
557
578
119
120
—
—
—
—
—
12,797
9,092
11,296
3,563
1,237
124 Huntington Bancshares Incorporated
(dollar amounts in millions)
Commercial and industrial
Commercial real estate
Automobile
Home equity
Residential mortgage
RV and marine
Other consumer
December 31, 2018
Credit Risk Profile by UCS Classification
Pass
OLEM
Substandard
Doubtful
Total
$
$
28,807
6,586
$
518
181
$
1,269
74
$
11
1
30,605
6,842
Credit Risk Profile by FICO Score (1), (2)
750+
650-749
<650
Other (3)
Total
6,254
6,098
7,159
2,074
501
4,520
2,975
2,801
990
633
1,373
591
612
105
129
282
56
78
85
57
12,429
9,720
10,650
3,254
1,320
(1)
(2)
(3)
Excludes loans accounted for under the fair value option.
Reflects updated customer credit scores.
As of December 31, 2019, amounts previously reported in Other were identified and aligned with the appropriate loan balance classification. Amounts as
of December 31, 2018, reflects deferred fees and costs, loans in process, etc.
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, 2019
and 2018:
(dollar amounts in millions)
ALLL at December 31, 2019
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, 2019 (1)
Portion of loan and lease ending balances:
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, 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 balances:
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.
Commercial
Consumer
Total
$
$
$
$
$
$
$
$
61
491
552
600
36,738
37,338
$
$
$
$
8
223
231
574
37,411
37,985
Commercial
Consumer
33
509
542
516
36,931
37,447
$
$
$
$
10
220
230
591
36,783
37,374
$
$
$
$
$
$
$
$
69
714
783
1,174
74,149
75,323
Total
43
729
772
1,107
73,714
74,821
2019 Form 10-K 125
The following tables present by class the ending balance, unpaid principal balance, and the related ALLL, along
with the average balance and interest income recognized for impaired loans and leases for the years ended
December 31, 2019 and 2018 (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
Other consumer
Total
Commercial and industrial (4)
Commercial real estate (5)
Automobile (6)
Home equity (7)
Residential mortgage (7)
RV and marine (6)
Other consumer (6)
December 31, 2019
Unpaid
Principal
Balance (2)
Ending
Balance
Year Ended
December 31, 2019
Related
Allowance (3)
Average
Balance
Interest
Income
Recognized
$
$
181
25
$
215
26
— $
—
$
204
32
366
28
43
284
293
4
11
547
53
43
284
293
4
11
425
31
46
281
329
4
11
640
57
46
281
329
4
11
60
1
2
9
4
—
2
60
1
2
9
4
—
2
312
31
40
300
288
3
10
516
63
40
300
288
3
10
19
8
11
2
3
14
11
—
—
30
10
3
14
11
—
—
126 Huntington Bancshares Incorporated
(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
Other consumer
Total
Commercial and industrial (4)
Commercial real estate (5)
Automobile (6)
Home equity (7)
Residential mortgage (7)
RV and marine (6)
Other consumer (6)
December 31, 2018
Unpaid
Principal
Balance (2)
Ending
Balance
Year Ended
December 31, 2018
Related
Allowance (3)
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
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
—
—
(1)
(2)
(3)
(4)
(5)
(6)
(7)
These tables do not include loans fully charged-off.
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 are all classified as with an allowance in the tables above.
At December 31, 2019 and December 31, 2018, C&I loans of $322 million and $366 million, respectively, were considered impaired due to their status as a
TDR.
At December 31, 2019 and December 31, 2018, CRE loans of $43 million and $60 million, respectively, were considered impaired due to their status as a
TDR.
All automobile, RV and marine and other consumer impaired loans included in these tables are considered impaired due to their status as a TDR.
Includes home equity and residential mortgages considered impaired due to their non-accrual status and collateral dependent designation as well as
home equity and mortgage loans considered impaired due to their status as a TDR.
TDR Loans
The amount of interest that would have been recorded under the original terms for total accruing TDR loans
was $52 million, $51 million, and $49 million for 2019, 2018, and 2017, respectively. The total amount of actual
interest recorded to interest income for these loans was $49 million, $48 million, and $45 million for 2019, 2018, and
2017, 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
2019 Form 10-K 127
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.
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 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 interest rate concession. In these instances, the
primary concession is the maturity date extension.
128 Huntington Bancshares Incorporated
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, 2019 and 2018.
New Troubled Debt Restructurings (1)
Year Ended December 31, 2019
Post-modification Outstanding Recorded Investment (2)
Number of
Contracts
Interest rate
reduction
Amortization or
maturity date
change
Chapter 7
bankruptcy
Other
Total
482
$
— $
172
$
— $
29
2,971
306
330
139
972
5,229
$
—
—
—
—
—
8
8
13
19
9
35
1
—
$
249
$
—
7
8
2
2
—
19
$
7
—
—
—
—
—
—
7
$
179
13
26
17
37
3
8
$
283
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
725
102
2,867
602
345
117
1,633
6,391
$
—
—
—
—
—
8
8
82
15
25
34
—
—
$
508
$
—
8
11
3
1
—
23
—
—
—
—
—
—
82
23
36
37
1
8
$
— $
539
(dollar amounts in millions)
Commercial and industrial
Commercial real estate
Automobile
Home equity
Residential mortgage
RV and marine
Other consumer
Total new TDRs
(dollar amounts in millions)
Commercial and industrial
Commercial real estate
Automobile
Home equity
Residential mortgage
RV and marine
Other consumer
Total new TDRs
(1)
(2)
TDRs may include multiple concessions. The disclosure classification is 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 impact on the provision (recovery) for loan and lease losses.
Amounts for the years ended December 31, 2019 and December 31, 2018 were $(2) million and $(15) million,
respectively.
Pledged Loans and Leases
The Bank has access to the Federal Reserve’s discount window and advances from the FHLB. As of
December 31, 2019 and 2018, these borrowings and advances are secured by $39.6 billion and $46.5 billion,
respectively, of loans and securities.
2019 Form 10-K 129
4. INVESTMENT SECURITIES AND OTHER SECURITIES
The following tables provide amortized cost, fair value, and gross unrealized gains and losses by investment
category at December 31, 2019 and 2018:
(dollar amounts in millions)
December 31, 2019
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
Private-label CMO
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
$
10
$
— $
— $
10
5,055
4,180
979
165
10,389
3,044
2
575
49
4
14,063
2,351
2,463
3,959
293
9,066
4
9,070
90
297
53
1
441
$
$
$
$
$
$
$
$
$
$
48
45
1
1
95
34
—
6
2
—
137
33
50
34
2
119
—
119
$
$
$
— $
—
—
—
— $
(18)
(3)
(4)
(1)
(26)
(23)
—
(2)
—
—
(51) $
(3) $
—
—
—
(3)
—
(3) $
— $
—
—
—
— $
5,085
4,222
976
165
10,458
3,055
2
579
51
4
14,149
2,381
2,513
3,993
295
9,182
4
9,186
90
297
53
1
441
130 Huntington Bancshares Incorporated
(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
$
5
$
— $
— $
5
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
2019 Form 10-K 131
The following table provides the amortized cost and fair value of securities by contractual maturity at
December 31, 2019 and 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
2019
2018
Amortized
Cost
Fair
Value
Amortized
Cost
Fair
Value
$
$
$
$
231
1,196
1,594
11,042
14,063
$
$
— $
17
300
8,753
9,070
$
229
1,189
1,606
11,125
14,149
$
$
— $
17
305
8,864
9,186
$
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,
2019 and 2018:
(dollar amounts in millions)
December 31, 2019
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
$
$
$
$
1,206
1,169
472
86
2,933
273
116
1
3,323
218
317
81
58
674
4
678
$
$
$
$
(10) $
(3)
(2)
(1)
(16)
(4)
(1)
—
(21) $
(1) $
—
—
—
(1)
—
(1) $
519
9
272
—
800
1,204
37
—
2,041
112
—
—
—
112
—
112
$
$
$
$
(8) $
—
(2)
—
(10)
(19)
(1)
—
(30) $
(2) $
—
—
—
(2)
—
(2) $
1,725
1,178
744
86
3,733
1,477
153
1
5,364
330
317
81
58
786
4
790
$
$
$
$
(18)
(3)
(4)
(1)
(26)
(23)
(2)
—
(51)
(3)
—
—
—
(3)
—
(3)
132 Huntington Bancshares Incorporated
(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)
At December 31, 2019 and December 31, 2018, the market value of investment securities pledged to secure
public and trust deposits, trading account liabilities, U.S. Treasury demand notes, and security repurchase
agreements totaled $3.8 billion and $4.5 billion, respectively. There were no securities of a single issuer, which were
not governmental or government-sponsored, that exceeded 10% of shareholders’ equity at either December 31,
2019 or December 31, 2018.
The following table is a summary of realized securities gains and losses for the years ended December 31, 2019,
2018, and 2017:
(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,
2019
2018
2017
$
$
$
$
11
(35)
(24) $
—
(24) $
$
7
(28)
(21) $
—
(21) $
10
(10)
—
(4)
(4)
Huntington evaluates the securities portfolio for impairment on a quarterly basis. As of December 31, 2019
and December 31, 2018, the Company has evaluated available-for-sale and held-to-maturity securities which have
gross unrealized losses for impairment and concluded less than $1 million and no OTTI was required, respectively.
Other securities that are carried at cost are reviewed for impairment on a quarterly basis, with valuation
adjustments recognized in other noninterest income. As of December 31, 2019 and December 31, 2018, the
Company concluded no impairment was required.
2019 Form 10-K 133
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, 2019, 2018, and 2017:
(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,
2019
2018
2017
$
$
4,841
119
$
3,846
87
3,985
99
The following table summarizes the changes in MSRs recorded using the amortization method for the years
ended December 31, 2019 and 2018:
(dollar amounts in millions)
Carrying value, beginning of year
New servicing assets created
Impairment (charge) recovery
Amortization and other
Carrying value, end of year
Fair value, end of year
Weighted-average life (years)
2019
2018
$
$
$
$
$
$
211
52
(14)
(44)
205
206
6.4
191
44
6
(30)
211
212
6.7
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, 2019, and 2018 follows:
(dollar amounts in millions)
Constant prepayment rate (annualized)
Spread over forward interest rate swap rates
December 31, 2019
December 31, 2018
Decline in fair value due to
Decline in fair value due to
Actual
12.20 % $
855 bps
10%
adverse
change
20%
adverse
change
Actual
10%
adverse
change
20%
adverse
change
(8) $
(6)
(16)
(12)
9.40 % $
934 bps
(6) $
(7)
(12)
(13)
Additionally, Huntington held MSRs recorded using the fair value method of $7 million and $10 million at
December 31, 2019 and 2018, respectively. The change in fair value representing time decay, payoffs and changes in
valuation inputs and assumptions for the years ended December 31, 2019 and 2018 was $3 million and $1 million,
respectively.
Total servicing, late and other ancillary fees included in mortgage banking income was $63 million, $60 million,
and $56 million for the years ended December 31, 2019, 2018, and 2017, respectively. The unpaid principal balance
of residential mortgage loans serviced for third parties was $22.4 billion, $21.0 billion, and $19.8 billion at
December 31, 2019, 2018, and 2017, respectively.
134 Huntington Bancshares Incorporated
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, 2019 and 2018, is presented
in the table below:
(dollar amounts in millions)
Balance, January 1, 2018
Goodwill acquired during the period
Adjustments
Balance, December 31, 2018
Goodwill acquired during the period
Adjustments
Balance, December 31, 2019
Consumer &
Business
Banking
Commercial
Banking
Vehicle
Finance
RBHPCG
Treasury/
Other
$
$
1,398
—
(5)
1,393
—
—
1,393
$
$
425
1
—
426
—
1
427
$
$
— $
—
—
—
—
—
— $
170
—
—
170
—
—
170
$
$
Huntington
Consolidated
1,993
1
(5)
1,989
—
1
1,990
— $
—
—
—
—
—
— $
On October 1, 2018, Huntington completed its acquisition of HSE. As part of the transaction, Huntington
recorded $1 million of goodwill, which was subsequently adjusted during the measurement period.
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 2019 or 2018.
At December 31, 2019 and 2018, Huntington’s other intangible assets consisted of the following:
(dollar amounts in millions)
December 31, 2019
Core deposit intangible
Customer relationship
Total other intangible assets
December 31, 2018
Core deposit intangible
Customer relationship
Total other intangible assets
The estimated amortization expense of other intangible assets for the next five years is as follows:
(dollar amounts in millions)
2020
2021
2022
2023
2024
Amortization
Expense
$
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Value
$
$
$
$
310
115
425
314
182
496
$
$
$
$
(120) $
(73)
(193) $
(93) $
(122)
(215) $
190
42
232
221
60
281
41
38
36
34
32
2019 Form 10-K 135
7. OPERATING LEASES
At December 31, 2019, Huntington was obligated under noncancelable leases for branch and office space. These
leases are all classified as operating due to the amount of time such spaces are occupied relative to the underlying
assets useful lives. Many of these leases contain renewal options, most of which are not included in measurement
of the right-of-use asset as they are not considered reasonably certain of exercise (i.e., Huntington does not currently
have a significant economic incentive to exercise these options). 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. Occasionally, Huntington will sublease the land and buildings for
which it has obtained the right to use; substantially all of those sublease arrangements are classified as operating,
with sublease income recognized on a straight-line basis over the contractual term of the arrangement. Huntington
has elected not to include non-lease components in the measurement of right-of-use assets, and as such allocates
the costs attributable to such components, where those costs are not separately identifiable, via per-square-foot
costing analysis developed by the entity for owned and leased spaces. Huntington uses a portfolio approach to
develop discount rates as its lease portfolio is comprised of substantially all branch space and office space used in
the entity’s operations. That rate, an input used in the measurement of the entity’s right-of-use assets, leverages an
incremental borrowing rate of appropriate tenor and collateralization.
Net lease assets and liabilities at December 31, 2019 are as follows:
(dollar amounts in millions)
Assets
Operating lease assets
Liabilities
Lease liabilities
Net lease cost for the year ended December 31, 2019 are as follows:
(dollar amounts in millions)
Operating lease cost
Short-term lease cost
Sublease income
Net lease cost
Maturity of lease liabilities at December 31, 2019 are as follows:
(dollar amounts in millions)
2020
2021
2022
2023
2024
Thereafter
Total lease payments
Less: Interest
Total lease liabilities
Lease term and discount rate as of December 31, 2019 are as follows:
Weighted-average remaining lease term (years) for Operating leases
Weighted-average discount rate for Operating leases
136 Huntington Bancshares Incorporated
Classification
December 31, 2019
Other assets
Other liabilities
Classification
Net occupancy
Net occupancy
Net occupancy
$
$
$
$
$
$
$
210
233
Year Ended
December 31, 2019
Total
47
1
(3)
45
48
43
38
33
28
86
276
(43)
233
December 31, 2019
7.31
4.56%
Cash flow supplemental information at December 31, 2019 are as follows:
(dollar amounts in millions)
Cash paid for amounts included in the measurement of lease liabilities for Operating cash flows
Right-of-use assets obtained in exchange for lease obligations for Operating leases
Year Ended
December 31, 2019
$
(54)
40
8. PREMISES AND EQUIPMENT
Premises and equipment were comprised of the following at December 31, 2019 and 2018:
(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,
2019
2018
189
587
205
742
1,723
(960)
763
$
$
188
579
199
739
1,705
(915)
790
$
$
Depreciation and amortization charged to expense and rental income credited to net occupancy expense for
the three years ended December 31, 2019, 2018, and 2017 were:
(dollar amounts in millions)
Total depreciation and amortization of premises and equipment
Rental income credited to occupancy expense
2019
2018
2017
$
116
$
11
130
$
13
123
14
9. SHORT-TERM BORROWINGS
Borrowings with original maturities of one year or less are classified as short-term and were comprised of the
following at December 31, 2019 and 2018:
(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,
2019
2018
$
$
1,041
1,500
65
2,606
$
$
2,004
—
13
2,017
2019 Form 10-K 137
10. 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
2.67% Huntington Bancshares Incorporated senior notes due 2024
4.05% Huntington Bancshares Incorporated senior notes due 2025
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 3.31% junior subordinated debentures due 2036 (1)
Sky Financial Capital Trust III 3.31% junior subordinated debentures due 2036 (1)
Huntington Capital I Trust Preferred 2.61% junior subordinated debentures due 2027 (2)
Huntington Capital II Trust Preferred 2.53% junior subordinated debentures due 2028 (3)
Camco Financial Statutory Trust I 3.24% due 2037 (4)
Total notes issued by the parent
The Bank:
Senior Notes:
3.60% Huntington National Bank senior notes due 2023
3.33% 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
3.16% Huntington National Bank senior notes due 2022
2.43% Huntington National Bank senior notes due 2020
2.97% Huntington National Bank senior notes due 2020
2.42% Huntington National Bank senior notes due 2020 (5)
2.46% Huntington National Bank senior notes due 2021 (6)
2.23% Huntington National Bank senior notes due 2019
Subordinated Notes:
3.86% Huntington National Bank subordinated notes due 2026
5.45% Huntington National Bank subordinated notes due 2019
Total notes issued by the bank
FHLB Advances:
3.01% weighted average rate, varying maturities greater than one year
Other:
Huntington Technology Finance nonrecourse debt, 4.08% weighted average interest rate, varying maturities
3.79% Huntington Preferred Capital II - Class F securities (7)
3.79% Huntington Preferred Capital II - Class G securities (7)
3.91% Huntington Preferred Capital II - Class I securities (8)
Total other
Total long-term debt
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
Variable effective rate at December 31, 2019, based on three-month LIBOR +1.40%.
Variable effective rate at December 31, 2019, based on three-month LIBOR +0.70%
Variable effective rate at December 31, 2019, based on three-month LIBOR +0.625%.
Variable effective rate at December 31, 2019, based on three-month LIBOR +1.33%.
Variable effective rate at December 31, 2019, based on three-month LIBOR + 0.51%
Variable effective rate at December 31, 2019, based on three-month LIBOR +0.55%.
Variable effective rate at December 31, 2019, based on three-month LIBOR +1.88%.
Variable effective rate at December 31, 2019, based on three-month LIBOR +2.00%.
At December 31,
2019
2018
$
$
993
972
798
528
305
247
74
72
70
32
4
4,095
778
759
699
691
507
500
499
300
299
—
969
946
—
507
305
239
74
72
69
31
4
3,216
756
750
692
672
—
493
491
300
—
498
231
—
5,263
229
76
4,957
5
6
312
74
50
50
486
9,849
$
322
74
50
—
446
8,625
$
Amounts above are net of unamortized discounts and adjustments related to hedging with derivative financial
instruments. We use interest rate swaps to hedge interest rate risk of certain fixed-rate debt by converting the debt
138 Huntington Bancshares Incorporated
to a variable rate. See Note 19 - “Derivative Financial Instruments“ for more information regarding such financial
instruments.
The following table presents senior notes issued during 2019:
Date of Issuance
Issuer
Amount
% of face value
Interest Rate
Term
Maturity
January 2019
February 2019
Bank
Bank
$ 300 million
500 million
August 2019
Parent
800 million
100%
three-month LIBOR + 0.55% variable
February 5, 2021
99.909
99.781
3.125
2.625
fixed
fixed
April 1, 2022
August 6, 2024
Long-term debt maturities for the next five years and thereafter are as follows:
(dollar amounts in millions)
2020
2021
2022
2023
2024
Thereafter
Total
The Parent Company:
Senior notes
Subordinated notes
The Bank:
Senior notes
Subordinated notes
FHLB Advances
Other
Total
$
$
— $
300
$
1,000
—
$
1,000
—
— $
250
2,000
—
2
105
2,407
$
1,050
—
—
61
2,111
$
1,200
—
1
95
2,296
$
750
—
1
123
1,124
$
800
—
—
—
—
101
901
$
$
$
500
253
—
250
1
1
1,005
$
3,300
803
5,000
250
5
486
9,844
These maturities are based upon the par values of the long-term debt.
The terms of certain long-term debt obligations contain various restrictive covenants including limitations on
the acquisition of additional debt, dividend payments, and the disposition of subsidiaries. As of December 31, 2019,
Huntington was in compliance with all such covenants.
11. OTHER COMPREHENSIVE INCOME
The components of Huntington’s OCI in the three years ended December 31, 2019, 2018, and 2017, were as
follows:
(dollar amounts in millions)
2019
Tax (expense)
Benefit
Pretax
After-tax
Unrealized holding gains (losses) on available-for-sale securities arising during the period
$
403
$
(89) $
Less: Reclassification adjustment for realized net losses (gains) included in net income
Net change in unrealized holding gains (losses) on available-for-sale securities
Net change in fair value on cash flow hedges
Net change in pension and other post-retirement obligations
26
429
26
(7)
(5)
(94)
(3)
2
Total other comprehensive income (loss)
$
448
$
(95) $
(dollar amounts in millions)
2018
Tax (expense)
Benefit
Pretax
After-tax
Unrealized holding gains (losses) on available-for-sale securities arising during the period
$
(151) $
35
$
Less: Reclassification adjustment for realized net losses (gains) included in net income
Net change in unrealized holding gains (losses) on available-for-sale securities
Net change in pension and other post-retirement obligations
41
(110)
4
Total other comprehensive income (loss)
$
(106) $
(9)
26
—
26
$
314
21
335
23
(5)
353
(116)
32
(84)
4
(80)
2019 Form 10-K 139
(dollar amounts in millions)
2017
Tax (expense)
Benefit
Pretax
After-tax
Noncredit-related impairment recoveries (losses) on debt securities not expected to be sold
$
4
$
(2) $
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
Net change in unrealized holding gains (losses) on available-for-sale equity securities
Unrealized gains and losses on derivatives used in cash flow hedging relationships
arising during the period
Less: Reclassification adjustment for net losses (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 post-retirement obligations
Total other comprehensive income (loss)
(87)
26
(57)
1
3
1
4
—
$
(52) $
31
(9)
20
(1)
(1)
—
(1)
—
18
$
Activity in accumulated OCI for the two years ended December 31, 2019 and 2018 were as follows:
(dollar amounts in millions)
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
Other comprehensive income before reclassifications
Amounts reclassified from accumulated OCI to earnings
Period change
December 31, 2019
Unrealized
gains (losses) on
debt
securities (1)
Change in fair
value related
to cash flow
hedges
Unrealized
gains (losses) for
pension and other
post-retirement
obligations
Total
$
$
(278) $
(1)
(116)
32
(84)
(363)
314
21
335
(28) $
— $
(250) $
—
—
—
—
23
—
23
23
$
—
4
4
(246)
—
(5)
(5)
(251) $
2
(56)
17
(37)
—
2
1
3
—
(34)
(528)
(1)
(116)
36
(80)
(609)
337
16
353
(256)
(1)
AOCI amounts at December 31, 2019, 2018, and 2017 include $121 million, $137 million, and $95 million, respectively, net of unrealized losses on
securities transferred from the available-for-sale securities portfolio to the held-to-maturity securities portfolio. The net unrealized losses will be
recognized in earnings over the remaining life of the security using the effective interest method.
12. SHAREHOLDERS’ EQUITY
The following is a summary of Huntington’s non-cumulative, non-voting, perpetual preferred stock outstanding
as of December 31, 2019.
(dollar amounts in millions, share amounts in thousands)
Series
Series B
Series D
Series D
Series C
Series E
Total
Issuance Date
12/28/2011
3/21/2016
5/5/2016
8/16/2016
2/27/2018
Total Shares
Outstanding
Carrying Amount
Dividend Rate
Earliest Redemption
Date
35,500
$
400,000
200,000
100,000
5,000
23
386
199
100
495
740,500
$
1,203
3-mo. LIBOR + 270 bps
6.25%
6.25
5.875
5.70
1/15/2017
7/15/2021
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.
140 Huntington Bancshares Incorporated
13. EARNINGS PER SHARE
Basic earnings per common 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
common 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.
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:
(amounts in millions, except per share data, share count in thousands)
2019
2018
2017
Year Ended December 31,
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
Anti-dilutive awards (1)
$
$
$
$
$
$
1,411
(74)
1,337
1,038,840
1.29
1,337
—
1,337
1,038,840
12,994
4,245
—
—
17,239
1,056,079
1.27
5,253
$
$
$
$
$
$
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
2,307
$
$
$
$
$
$
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
1,009
(1) Reflects the total number of shares related to outstanding options that have been excluded from the computation of diluted earnings per share because
the impact would have been anti-dilutive.
14. 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, 2019
Year Ended
December 31, 2018
$
$
939
515
1,454
$
$
881
440
1,321
The following table illustrates the disaggregation by operating segment and major revenue stream and reconciles
2019 Form 10-K 141
disaggregated revenue to segment revenue presented in Note 24 - “Segment Reporting”:
(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 noninterest income
Net revenue from contracts with customers
Noninterest income
within the scope of other GAAP topics
Total noninterest income
(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 noninterest income
Net revenue from contracts with customers
Noninterest income
within the scope of other GAAP topics
Total noninterest income
Consumer &
Business Banking
Commercial
Banking
Vehicle
Finance
RBHPCG
Treasury /
Other
Huntington
Consolidated
Year Ended December 31, 2019
$
$
$
297
218
34
34
32
615
210
825
$
$
$
64
15
4
6
24
113
246
359
$
$
$
7
—
—
—
4
11
1
12
$
$
$
$
$
4
—
139
47
6
196
2
198
$
Year Ended December 31, 2018
$
$
$
290
198
28
34
38
588
156
744
$
$
$
64
11
4
5
6
90
231
321
$
$
$
5
—
—
—
3
8
3
11
$
$
$
$
$
4
—
139
41
8
192
1
193
$
— $
—
1
1
2
4
$
56
60
— $
—
—
2
1
3
$
49
52
372
233
178
88
68
939
515
363
209
171
82
56
881
440
$
1,454
$
1,321
Consumer &
Business Banking
Commercial
Banking
Vehicle
Finance
RBHPCG
Treasury /
Other
Huntington
Consolidated
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, 2019 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, 2019 was determined to be immaterial.
15. SHARE-BASED COMPENSATION
Huntington sponsors nonqualified and incentive share based compensation plans. These plans provide for the
granting of stock options, restricted stock awards, restricted stock units, performance share units and other awards
to officers, directors, and other employees. Compensation costs are included in personnel costs on the Consolidated
Statements of Income.
Huntington issues shares to fulfill stock option exercises and restricted stock unit and award vesting from
available authorized common shares. At December 31, 2019, Huntington believes there are adequate authorized
common shares to satisfy anticipated stock option exercises and restricted stock unit award vesting in 2020.
The following table presents total share-based compensation expense and related tax benefit for the three
years ended December 31, 2019, 2018, and 2017:
(dollar amounts in millions)
Share-based compensation expense
Tax benefit
2019
2018
2017
$
$
83
15
$
78
14
92
32
142 Huntington Bancshares Incorporated
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, 2019, 17 million shares from the Plan were available for future grants.
Stock Options
Stock options 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.
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, 2019, 2018, and 2017:
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
$
2019
2018
2017
2.41%
4.36
22.5
6.5
1.91
$
2.88%
3.71
24.0
6.5
2.58
$
2.04%
3.31
29.5
6.5
2.81
Huntington’s stock option activity and related information for the year ended December 31, 2019, was as follows:
(dollar amounts in millions, except per share and options amounts in
thousands)
Options
Weighted-
Average
Exercise Price
Weighted-
Average
Remaining
Contractual Life
(Years)
Aggregate
Intrinsic Value
Outstanding at January 1, 2019
Granted
Exercised
Forfeited/expired
Outstanding at December 31, 2019
Expected to vest (1)
Exercisable at December 31, 2019
10,617
3,211
(2,440)
(79)
11,309
5,955
5,195
$
$
$
$
10.64
13.77
7.28
14.08
12.23
13.77
10.42
6.7
8.6
4.5
$
$
$
32
8
24
(1)
The number of options expected to vest reflect an estimate of 159,000 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,
2019, 2018, and 2017 were $16 million, $52 million and $16 million, respectively. For the years ended December 31,
2019, 2018, and 2017, cash received for the exercises of stock options was $2 million, $5 million and $11 million,
respectively. The tax benefit realized for the tax deductions from option exercises totaled $3 million, $10 million and
$5 million in 2019, 2018, and 2017, respectively.
2019 Form 10-K 143
Other Restricted Stock Awards
Huntington also grants restricted stock awards, restricted stock units, performance share units, and other stock-
based awards. These awards are granted at the closing market price on the date of the grant. 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, 2019, and activity for the year ended December 31, 2019:
Restricted Stock Awards
Restricted Stock Units
Performance Share Units
(amounts in thousands, except per share amounts)
Quantity
Weighted-
Average
Grant Date
Fair Value
Per Share
Nonvested at January 1, 2019
Granted
Vested
Forfeited
Nonvested at December 31, 2019
$
201
—
(199)
(2)
— $
9.68
—
9.68
9.68
—
Weighted-
Average
Grant Date
Fair Value
Per Share
12.51
13.93
11.17
13.47
13.42
Quantity
15,480
5,581
(5,267)
(505)
15,289
$
$
Weighted-
Average
Grant Date
Fair Value
Per Share
11.75
13.77
10.07
14.30
13.49
Quantity
2,958
680
(854)
(15)
2,769
$
$
The weighted-average fair value at grant date of nonvested shares granted for the years ended December 31,
2019, 2018, and 2017 were $13.91, $14.98, and $11.13, respectively. The total fair value of awards vested during the
years ended December 31, 2019, 2018, and 2017 was $69 million, $62 million, and $53 million, respectively. As of
December 31, 2019, the total unrecognized compensation cost related to nonvested shares was $97 million with a
weighted-average expense recognition period of 2.4 years.
16. 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 2019.
The following table shows the weighted-average assumptions used to determine the benefit obligation at
December 31, 2019 and 2018, 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
2019
2018
3.40%
4.41%
4.41
5.25
3.73
5.75
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.
144 Huntington Bancshares Incorporated
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
2019
2018
$
$
821
$
2
32
(29)
(14)
111
102
923
$
The following table reconciles the beginning and ending balances of the fair value of Plan assets at the
December 31, 2019 and 2018 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
2019
2018
$
$
828
$
145
(13)
(29)
103
931
$
900
3
29
(26)
(18)
(67)
(79)
821
903
(30)
(19)
(26)
(75)
828
As of December 31, 2019, the difference between the accumulated benefit obligation and the fair value of
Huntington’s plan assets was $8 million and is recorded in other assets.
The following table shows the components of net periodic benefit costs recognized in the three years ended
December 31, 2019, 2018 and 2017:
(dollar amounts in millions)
Service cost
Interest cost
Expected return on plan assets
Amortization of loss
Settlements
Benefit costs
Pension Benefits (1)
2019
2018
2017
$
$
2
32
(44)
6
5
1
$
$
$
3
29
(49)
9
7
(1) $
3
30
(55)
7
11
(4)
(1) The pension costs for 2019 and 2018 were recorded in noninterest income - other income. For 2017 the costs were recorded in noninterest expense -
personnel costs, in the Consolidated Statements of Income.
Included in benefit costs above are $3 million, $2 million, and $2 million of plan expenses that were recognized
in each of the three years ended December 31, 2019, 2018, and 2017. It is Huntington’s policy to recognize
settlement gains and losses as incurred. Assuming no cash contributions are made to the Plan during 2020,
Huntington expects net periodic pension benefit, excluding any expense of settlements, to approximate $4 million
for 2020.
2019 Form 10-K 145
At December 31, 2019 and 2018, 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
Municipal obligations
U.S. Government agencies
Collective trust funds
Equities:
Mutual funds-equities
Common stock
Preferred stock
Exchange traded funds
Limited Partnerships
Fair value of plan assets
Fair Value
2019
2018
$
$
7
—
460
199
5
—
105
78
53
5
—
19
931
1% $
—
49
21
1
—
11
8
6
1
—
2
100% $
4
4
272
298
—
22
—
64
98
5
45
16
828
—%
1
33
36
—
3
—
8
12
1
5
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, 2019, 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, 2019, Plan assets were invested 1% in cash equivalents, 17% in
equity investments, and 82% in bonds, with an average duration of 15.9 years on bond investments. The estimated
life of benefit obligations was 13.0 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.
At December 31, 2019, the following table shows when benefit payments were expected to be paid:
(dollar amounts in millions)
2020
2021
2022
2023
2024
2025 through 2029
$
Pension Benefits
54
52
50
49
49
240
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.
146 Huntington Bancshares Incorporated
The following table presents the amounts recognized in the Consolidated Balance Sheets at December 31, 2019
and 2018, for all defined benefit and nonqualified retirement plans:
(dollar amounts in millions)
Other liabilities
2019
2018
$
67
$
63
The following tables present the amounts recognized in OCI as of December 31, 2019, 2018, and 2017, and the
changes in accumulated OCI for the years ended December 31, 2019, 2018, and 2017:
(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:
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:
Amortization included in net periodic benefit costs
Total recognized in OCI
2019
2018
2017
(261) $
10
(251) $
(257) $
11
(246) $
(264)
14
(250)
Pretax
Tax (expense) Benefit
After-tax
2019
(17) $
12
—
(2)
(7) $
$
5
(3)
—
—
2
$
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
— $
(12)
9
—
(2)
(5)
(3)
10
(3)
4
(10)
11
(1)
—
$
$
$
$
$
$
$
$
(1)
TCJA reclassification from AOCI to retained earnings recorded during 2017 was $45 million.
Huntington has a defined contribution plan that is available to eligible employees. Huntington’s expense
related to the defined contribution plans for the years ended December 31, 2019, 2018, and 2017 was $51 million,
$46 million, and $35 million, respectively.
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
December 31,
2019
2018
$
10,334
156
6
$
11,635
139
6
2019 Form 10-K 147
17. INCOME TAXES
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 2018, the IRS has advised that tax years 2012 through 2014 will not be
audited, and is currently examining the 2015 and 2016 federal income tax returns. Various state and other
jurisdictions remain open to examination, including Ohio, Kentucky, Indiana, Michigan, Pennsylvania, West Virginia,
and Illinois.
Huntington accounts for uncertainties in income taxes in accordance with ASC 740, Income Taxes. 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. The amounts of unrecognized tax benefits and accrued tax-
related interest and penalties were immaterial at December 31, 2019 and 2018. Further, the amount of net interest
and penalties related to unrecognized tax benefits was immaterial for all periods presented.
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
Year Ended December 31,
2019
2018
2017
$
$
209
16
225
24
(1)
23
248
$
$
152
20
172
71
(8)
63
235
$
$
Year Ended December 31,
2019
2018
2017
$
348
$
342
$
(88)
(62)
(21)
(14)
(5)
70
11
—
9
248
$
(80)
(60)
(23)
(14)
(14)
64
10
(3)
13
235
$
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):
General business credits
Capital loss
Tax-exempt income
Tax-exempt bank owned life insurance income
Stock based compensation
Affordable housing investment amortization, net of tax benefits
State income taxes, net
Impact from TCJA
Other
Provision for income taxes
$
148 Huntington Bancshares Incorporated
41
(1)
40
151
17
168
208
488
(71)
(67)
(31)
(23)
(13)
46
11
(123)
(9)
208
The significant components of deferred tax assets and liabilities at December 31, 2019 and 2018 were as
follows:
(dollar amounts in millions)
Deferred tax assets:
Allowances for credit losses
Net operating and other loss carryforward
Fair value adjustments
Lease liability
Purchase accounting and other intangibles
Pension and other employee benefits
Accrued expense/prepaid
Partnership investments
Market discount
Other assets
Total deferred tax assets
Deferred tax liabilities:
Lease financing
Loan origination costs
Operating assets
Right-of-use asset
Mortgage servicing rights
Securities adjustments
Purchase accounting and other intangibles
Other liabilities
Total deferred tax liabilities
Net deferred tax (liability) asset before valuation allowance
Valuation allowance
Net deferred tax (liability) asset
At December 31,
2019
2018
$
$
$
184
99
77
47
33
12
3
3
2
3
463
359
119
74
41
36
11
—
—
640
(177)
(6)
(183) $
184
95
173
—
—
14
16
5
6
6
499
262
148
69
—
45
6
25
2
557
(58)
(6)
(64)
At December 31, 2019, Huntington’s net deferred tax asset related to loss and other carryforwards was $99
million. This was comprised of federal net operating loss carryforwards of $44 million, which will begin expiring in
2029, $40 million of state net operating loss carryforwards, which will begin expiring in 2020, an alternative
minimum tax credit carryforward of less than $1 million, which will be fully utilized or refunded by 2022, and a
capital loss carryforward of $15 million, which expires in 2022.
The state valuation allowance was $6 million at both December 31, 2019 and December 31, 2018, 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, 2019, 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, 2019.
2019 Form 10-K 149
18. 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 classified as Level 1 use quoted market prices (unadjusted) in active markets for identical
securities 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 78% 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 22% of the positions. The Level 3
positions predominantly 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.
150 Huntington Bancshares Incorporated
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.
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 the Visa® share swap. The determination of fair value of the interest rate locks 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.
2019 Form 10-K 151
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, 2019 and 2018 are summarized
below:
(dollar amounts in millions)
Assets
Trading account securities:
Federal agencies: Other agencies
Municipal securities
Other securities
Available-for-sale securities:
U.S. Treasury securities
Residential CMOs
Residential MBS
Commercial MBS
Other agencies
Municipal securities
Private-label CMO
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,
2019
$
— $
—
30
30
$
4
63
2
69
— $
—
—
—
— $
—
—
—
10
—
—
—
—
—
—
—
—
—
10
54
—
—
—
—
—
—
5,085
4,222
976
165
56
—
531
51
4
11,090
—
781
55
—
848
519
—
—
—
—
—
2,999
2
48
—
—
3,049
—
—
26
7
8
2
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(404)
(417)
4
63
32
99
10
5,085
4,222
976
165
3,055
2
579
51
4
14,149
54
781
81
7
452
104
152 Huntington Bancshares Incorporated
(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
11
$
$
27
—
27
— $
—
—
— $
—
—
—
6,999
1,255
1,583
126
275
315
53
4
10,610
—
613
49
—
474
390
—
—
—
—
—
3,165
—
—
—
3,165
—
—
30
10
5
3
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(291)
(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
(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, 2019,
2018, and 2017 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, 2019
Available-for-sale securities
(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
MSRs
$
Derivative
instruments
Municipal
securities
$
10
—
$
2
(62)
3,165
—
Private-
label
CMO
Asset-
backed
securities
Loans held
for
investment
$
— $
—
(3)
—
—
—
—
—
7
$
(3) $
66
—
—
—
—
—
6
3
$
$
(1)
77
254
—
—
(496)
2,999
2
$
2
$
—
—
55
—
—
(7)
48
$
— $
— $
— $
— $
— $
74
$
— $
— $
$
$
$
30
—
1
—
—
—
(5)
—
26
—
—
2019 Form 10-K 153
(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
Change in unrealized gains or losses for the period included in other
comprehensive income for assets held at the end of the reporting period
(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, 2018
Available-for-sale securities
Derivative
instruments
Municipal
securities
Asset-
backed
securities
Loans held
for
investment
11
—
(1)
—
—
—
—
—
10
$
$
(1) $
(35)
$
3,167
—
35
—
—
—
—
3
2
$
(3)
(52)
658
—
—
(605)
3,165
$
$
24
—
(2)
11
—
(33)
—
—
— $
(1) $
— $
— $
— $
— $
— $
(52) $
— $
38
—
—
—
—
—
(8)
—
30
—
—
Level 3 Fair Value Measurements
Year Ended December 31, 2017
Available-for-sale securities
Derivative
instruments
Municipal
securities
Asset-
backed
securities
Loans held
for
investment
14
—
(3)
—
—
—
—
—
11
$
$
(2) $
(15)
$
2,798
—
$
76
—
16
—
—
—
—
—
(1) $
(2)
(8)
787
—
—
(408)
3,167
$
(5)
14
—
(60)
—
(1)
24
$
48
—
1
—
—
—
(11)
—
38
(3) $
— $
— $
(4) $
—
MSRs
$
$
$
$
MSRs
$
$
$
(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.
154 Huntington Bancshares Incorporated
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, 2019, 2018, and 2017:
(dollar amounts in millions)
Classification of gains and losses in earnings:
Mortgage banking income
Interest and fee income
Total
(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, 2019
Available-for-sale
securities
MSRs
Derivative
instruments
Municipal
securities
Loans held
for
investment
(3) $
—
(3) $
66
—
66
$
$
— $
(1)
(1) $
—
1
1
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)
Level 3 Fair Value Measurements
Year Ended December 31, 2017
Available-for-sale securities
$
$
$
$
(dollar amounts in millions)
Classification of gains and losses in earnings:
Mortgage banking income (loss)
Securities gains (losses)
Interest and fee income
Noninterest income
Total
MSRs
Derivative
instruments
Municipal
securities
Asset-
backed
securities
Loans held
for
investment
$
$
(3) $
—
—
—
(3) $
16
—
—
—
16
$
$
— $
—
(2)
—
(2) $
— $
(5)
—
—
(5) $
—
—
—
1
1
Assets and liabilities under the fair value option
The following tables 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, 2019
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
$
781
81
$
755
87
$
26
(6)
$
2
3
$
2
4
—
(1)
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)
2019 Form 10-K 155
$
$
The following tables present the net gains (losses) from fair value changes for the years ended December 31,
2019, 2018, and 2017:
(dollar amounts in millions)
Assets
Loans held for sale
Loans held for investment
Net gains (losses) from fair value
changes Year Ended December 31,
2019
2018
2017
$
$
7
1
$
5
—
8
—
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, 2019 were as follows:
(dollar amounts in millions)
Fair Value
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, 2019
MSRs
Impaired loans
$
$
206
26
— $
—
— $
—
$
206
26
(14)
(1)
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. In cases where the carrying value exceeds the
fair value of the collateral less cost to sell, an impairment charge is recognized.
156 Huntington Bancshares Incorporated
Significant unobservable inputs for assets and liabilities measured at fair value on a recurring and nonrecurring
basis
The table below presents quantitative information about the significant unobservable inputs for assets and
liabilities measured at fair value on a recurring and nonrecurring basis at December 31, 2019 and 2018:
Quantitative Information about Level 3 Fair Value Measurements at December 31, 2019
(dollar amounts in millions)
Fair Value
Valuation Technique
Significant Unobservable Input
Range
Measured at fair value on a recurring basis:
MSRs
$
Derivative assets
Derivative liabilities
7
8
2
Discounted cash flow
Consensus Pricing
Discounted cash flow
Municipal securities
Asset-backed securities
2,999
48
Discounted cash flow
Loans held for investment
26
Discounted cash flow
Measured at fair value on a nonrecurring basis:
MSRs
206
Discounted cash flow
Impaired loans
26
Appraisal value
26%
Constant prepayment rate — % -
11%
5 % -
(2)% -
11%
2 % - 100%
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
2 % -
Cumulative default — % -
5 % -
Loss given default
5 % -
Discount rate
9 % -
Constant prepayment rate
Constant prepayment rate
Spread over forward interest rate swap rates
NA
10 %
5 %
3%
39%
80%
6%
12%
31%
11%
(dollar amounts in millions)
Fair Value
Valuation Technique
Significant Unobservable Input
Range
Quantitative Information about Level 3 Fair Value Measurements at December 31, 2018
Measured at fair value on a recurring basis:
MSRs
$
10
Discounted cash flow
Derivative assets
Derivative liabilities
5
3
Consensus Pricing
Discounted cash flow
Municipal securities
3,165
Discounted cash flow
Loans held for investment
30 Discounted cash flow
Measured at fair value on a nonrecurring basis:
Impaired loans
Loans held for sale
33
121
24
Appraisal value
Discounted cash flow
Appraisal value
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
6 % -
54%
5 % -
11%
23%
(5)% -
1 % - 100%
Discount rate
4 % -
Cumulative default — % -
5 % -
Loss given default
7 % -
Discount rate
9 % -
Constant prepayment rate
4%
39%
90%
9%
9%
NA
Discount rate
NA
5 %
6%
Weighted
Average
8%
8%
2%
91%
162%
7%
2%
6/30/2020
2%
4%
24%
5%
9%
12%
9%
NA
Weighted
Average
8%
8%
2%
92%
163%
7%
4%
6/30/2020
4%
3%
25%
9%
9%
NA
5%
NA
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.
2019 Form 10-K 157
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, 2019 and December 31, 2018:
(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, 2019
$
$
1,272
—
—
9,070
387
—
74,540
—
82,347
2,606
9,849
—
— $
—
—
—
—
96
—
—
—
—
—
—
— $
99
14,149
—
54
781
81
452
—
—
—
104
$
1,272
99
14,149
9,070
441
877
74,621
452
82,347
2,606
9,849
104
1,272
99
14,149
9,186
441
879
75,177
452
82,344
2,606
10,075
104
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
—
22
613
79
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
(1)
Includes collateral-dependent loans measured for impairment.
158 Huntington Bancshares Incorporated
The following table presents the level in the fair value hierarchy for the estimated fair values at December 31,
2019 and December 31, 2018:
(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, 2019
$
$
30
10
—
54
—
—
—
—
—
69
11,090
9,186
—
781
55
76,790
—
9,439
$
— $
3,049
—
—
98
75,122
5,554
2,606
636
99
14,149
9,186
54
879
75,177
82,344
2,606
10,075
Estimated Fair Value Measurements at Reporting Date Using
Level 1
Level 2
Level 3
December 31, 2018
$
78
5
—
22
—
—
—
1
—
$
27
$
— $
10,610
8,286
—
613
49
76,922
—
8,158
3,165
—
—
193
73,619
7,809
2,016
560
105
13,780
8,286
22
806
73,668
84,731
2,017
8,718
(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 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.
2019 Form 10-K 159
19. 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 on the hedging instruments in the income
statement line item where the gains and losses on the hedged item are recognized. Gains and losses on derivatives
that are not designated in an effective hedge relationship under GAAP immediately impact earnings within the period
they occur.
The following table presents the fair values of all derivative instruments included in the Consolidated Balance
Sheets at December 31, 2019 and December 31, 2018. Amounts in the table below are presented gross without the
impact of any net collateral arrangements.
(dollar amounts in millions)
Asset
Liability
Asset
Liability
December 31, 2019
December 31, 2018
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
$
$
256
$
36
$
44
$
420
19
155
6
856
$
314
18
152
1
521
$
261
23
172
—
500
$
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 Consolidated Income Statement for the years ended
December 31, 2019 and 2018.
(dollar amounts in millions)
Interest rate contracts:
Customer
Mortgage Banking
Interest rate floors
Foreign exchange contracts
Commodities contracts
Equity contracts
Total
Location of Gain or (Loss)
Recognized in Income on
Derivative
Year Ended December 31,
2019
2018
Capital markets fees
Mortgage banking income
Other noninterest income
Capital markets fees
Capital markets fees
Other noninterest expense
$
$
$
49
37
4
28
(2)
(4)
112
$
42
165
19
168
10
404
41
(19)
—
27
6
4
59
Derivatives used in asset and liability management activities
Huntington engages in balance sheet hedging activity, principally for asset and liability management purposes.
Balance sheet hedging activity is generally arranged to receive hedge accounting treatment that can be classified as
either fair value or cash flow hedges. Fair value hedges are executed to hedge changes in fair value of outstanding
fixed-rate debt caused by fluctuations in market interest rates. Cash flow hedges are executed to modify interest rate
characteristics of designated commercial loans in order to reduce the impact of changes in future cash flows due to
market interest rate changes.
160 Huntington Bancshares Incorporated
The following table presents the gross notional values of derivatives used in Huntington’s asset and liability
management activities at December 31, 2019 and December 31, 2018, identified by the underlying interest rate-
sensitive instruments:
(dollar amounts in millions)
Instruments associated with:
Loans
Investment securities
Long-term debt
Total notional value at December 31, 2019
(dollar amounts in millions)
Instruments associated with:
Investment securities
Long-term debt
Total notional value at December 31, 2018
December 31, 2019
Fair Value Hedges
Cash Flow Hedges
Total
$
$
— $
—
7,540
7,540
$
18,375
12
—
18,387
December 31, 2018
Fair Value Hedges
Cash Flow Hedges
$
$
— $
4,865
4,865
$
12
—
12
$
$
$
$
18,375
12
7,540
25,927
Total
12
4,865
4,877
The following table presents additional information about the interest rate swaps and floors used in Huntington’s
asset and liability management activities at December 31, 2019 and December 31, 2018:
(dollar amounts in millions)
Asset conversion swaps
Receive fixed—generic
Liability conversion swaps
Receive fixed—generic
Total swap portfolio at December 31, 2019
(dollar amounts in millions)
Interest rate floors
Designated interest rate floors
Total floors portfolio at December 31, 2019
(dollar amounts in millions)
Asset conversion swaps
Receive fixed—generic
Liability conversion swaps
Receive fixed—generic
Total swap portfolio at December 31, 2018
December 31, 2019
Notional Value
Average
Maturity (years)
Weighted-Average Rate
Fair Value
Receive
Pay
$
$
$
$
8,637
3.3
$
23
1.66%
1.06%
7,540
16,177
2.3
2.9
$
151
174
2.20
1.91%
1.79
1.40%
December 31, 2019
Notional Value
Average Maturity (years)
Fair Value
9,750
9,750
1.6
1.6
$
$
46
46
December 31, 2018
Notional Value
Average
Maturity (years)
Weighted-Average Rate
Fair Value
Receive
Pay
$
$
12
4,865
4,877
1.2
$
2.6
2.6
$
—
2
2
2.20%
2.46%
2.24%
2.24%
2.54%
2.54%
These derivative financial instruments were entered into for the purpose of managing the interest rate risk of
assets and liabilities. Net amounts receivable or payable on contracts hedging either interest earning assets or interest
bearing liabilities were accrued as an adjustment to either interest income or interest expense. The net amounts
resulted in an increase (decrease) to net interest income of $(53) million, $(36) million, and $23 million for the years
ended December 31, 2019, 2018, and 2017, respectively.
2019 Form 10-K 161
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.
The following table presents the change in fair value for derivatives designated as fair value hedges as well as the
offsetting change in fair value on the hedged item for the years ended December 31, 2019 and 2018:
(dollar amounts in millions)
Interest rate contracts
Year Ended December 31,
2019
2018
2017
Change in fair value of interest rate swaps hedging long-term debt (1)
$
Change in fair value of hedged long term debt (1)
127
$
(125)
112
$
(104)
(53)
54
(1)
Recognized in Interest expense - long-term debt in the Consolidated Statements of Income.
As of December 31, 2019, 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, 2019
December 31, 2018
December 31, 2019
December 31, 2018
$
7,578
$
4,845
$
114
$
(12)
The cumulative amount of fair value hedging adjustments remaining for any hedged assets and liabilities for
which hedge accounting has been discontinued is $(93) million at December 31, 2019 and $(127) million at
December 31, 2018.
Cash Flow Hedges
During 2019, Huntington entered into $18.4 billion of interest rate floors and swaps. These are designated as
cash flow hedges for variable rate commercial loans indexed to LIBOR. The initial premium paid for the interest rate
floor contracts represents the time value of the contracts and is not included in the measurement of hedge
effectiveness. Any change in fair value related to time value is recognized in OCI. The initial premium paid is amortized
on a straight line basis as a reduction to interest income over the contractual life of these contracts.
Derivatives used in mortgage banking activities
Mortgage loan origination hedging activity
Huntington’s mortgage origination hedging activity is related to economically hedging of Huntington’s mortgage
pricing commitments to customers and the secondary sale to third parties. The value of a newly originated mortgage
is not firm until the interest rate is committed or locked. Forward commitments to sell economically hedge the
possible loss on interest rate lock commitments due to interest rate change. The net asset (liability) position of these
derivatives at December 31, 2019 and December 31, 2018 are $6 million and $(4) million, respectively. At
December 31, 2019 and 2018, Huntington had commitments to sell residential real estate loans of $1.4 billion and $0.8
billion, respectively. These contracts mature in less than one year.
162 Huntington Bancshares Incorporated
MSR hedging activity
Huntington’s MSR economic hedging activity uses securities and derivatives to manage the value of the MSR asset
and to mitigate the various types of risk inherent in the MSR asset, including risks related to duration, basis, convexity,
volatility, and yield curve. The hedging instruments include forward commitments, interest rate swaps, and options on
interest rate swaps.
The notional value of the derivative financial instruments, corresponding trading assets and liabilities, and net
trading gains (losses) related to MSR hedging activity is summarized in the following table:
MSR hedging activity
(dollar amounts in millions)
Notional value
Trading assets
(dollar amounts in millions)
Trading gains (losses)
December 31, 2019
December 31, 2018
$
$
778
19
—
—
Year December 31,
2019
2018
$
30
(8)
MSR hedging trading assets and liabilities are included in other assets and other liabilities, respectively, in the
Consolidated Balance Sheets. Trading gains (losses) are included in mortgage banking income in the Consolidated
Statement of Income.
Derivatives used in customer related activities
Various derivative financial instruments are offered to enable customers to meet their financing and investing
objectives and for their risk management purposes. Derivative financial instruments used in trading activities consist
of commodity, interest rate, and foreign exchange contracts. Huntington enters into offsetting third-party contracts
with approved, reputable counterparties with substantially matching terms and currencies in order to economically
hedge significant exposure related to derivatives used in trading activities.
The interest rate or price risk of customer derivatives is mitigated by entering into similar derivatives having
offsetting terms with other counterparties. The credit risk to these customers is evaluated and included in the
calculation of fair value. Foreign currency derivatives help the customer hedge risk and reduce exposure to
fluctuations in exchange rates. Transactions are primarily in liquid currencies with Canadian dollars and Euros
comprising a majority of all transactions. Commodity derivatives help the customer hedge risk and reduce exposure to
fluctuations in the price of various commodities. Hedging of energy-related products and base metals comprise the
majority of these transactions.
The net fair values of these derivative financial instruments, for which the gross amounts are included in other
assets or other liabilities at December 31, 2019 and December 31, 2018, were $87 million and $92 million,
respectively. The total notional values of derivative financial instruments used by Huntington on behalf of customers,
including offsetting derivatives, were $30 billion and $26 billion at December 31, 2019 and December 31, 2018,
respectively. Huntington’s credit risk from customer derivatives was $407 million and $132 million at the same dates,
respectively.
Visa®-related Swaps
In connection with the sale of Huntington’s Class B Visa® shares, Huntington entered into swap agreements with
the purchaser of the shares. The swap agreements adjust for dilution in the conversion ratio of Class B shares resulting
from changes in the Visa® litigation. At December 31, 2019, the fair value of the swap liabilities of $1 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.
2019 Form 10-K 163
Financial assets and liabilities that are offset in the Consolidated Balance Sheets
Huntington records derivatives at fair value as further described in Note 18 - “Fair Values of Assets and
Liabilities”.
Derivative balances are presented on a net basis taking into consideration the effects of legally enforceable
master netting agreements. Additionally, collateral exchanged with counterparties is also netted against the applicable
derivative fair values. Huntington enters into derivative transactions with two primary groups: broker-dealers and
banks, and Huntington’s customers. Different methods are utilized for managing counterparty credit exposure and
credit risk for each of these groups.
Huntington enters into transactions with broker-dealers and banks for various risk management purposes. These
types of transactions generally are high dollar volume. Huntington enters into collateral and master netting
agreements with these counterparties, and routinely exchanges cash and high quality securities collateral. Huntington
enters into transactions with customers to meet their financing, investing, payment and risk management needs.
These types of transactions generally are low dollar volume. Huntington enters into master netting agreements with
customer counterparties, however collateral is generally not exchanged with customer counterparties.
In addition to the customer derivative credit exposure, aggregate credit risk associated with broker-dealer and
bank derivative transactions, net of collateral that has been pledged by the counterparty, was $22 million and $37
million at December 31, 2019 and December 31, 2018, respectively. The credit risk associated with derivatives is
calculated after considering master netting agreements.
At December 31, 2019, Huntington pledged $171 million of investment securities and cash collateral to
counterparties, while other counterparties pledged $178 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, 2019 and December 31, 2018:
Offsetting of Financial Assets and Derivative Assets
(dollar amounts in millions)
December 31, 2019
December 31, 2018
Gross amounts
of recognized
assets
Gross amounts
offset in the
consolidated
balance sheets
Net amounts of
assets
presented in
the
consolidated
balance sheets
Gross amounts not offset in the
consolidated balance sheets
Financial
instruments
Cash collateral
received
Net amount
Derivatives $
Derivatives
$
856
500
(404) $
(291)
$
452
209
(65) $
(4)
(29) $
(53)
358
152
Offsetting of Financial Liabilities and Derivative Liabilities
(dollar amounts in millions)
December 31, 2019
December 31, 2018
Gross amounts
of recognized
liabilities
Gross amounts
offset in the
consolidated
balance sheets
Net amounts of
liabilities
presented in
the
consolidated
balance sheets
Gross amounts not offset in the
consolidated balance sheets
Financial
instruments
Cash collateral
delivered
Net amount
Derivatives $
Derivatives
$
521
404
(417) $
(217)
$
104
187
— $
—
(75) $
(12)
29
175
164 Huntington Bancshares Incorporated
20. 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 in, but is not the primary beneficiary of, the VIE at
December 31, 2019, and 2018:
(dollar amounts in millions)
Trust Preferred Securities
Affordable Housing Tax Credit Partnerships
Other Investments
Total
(dollar amounts in millions)
Trust Preferred Securities
Affordable Housing Tax Credit Partnerships
Other Investments
Total
Trust-Preferred Securities
December 31, 2019
Total Assets
Total Liabilities
14
727
179
920
$
$
252
332
63
647
Maximum
Exposure to Loss
—
$
727
179
906
$
December 31, 2018
Total Assets
Total Liabilities
Maximum
Exposure to Loss
14
708
126
848
$
$
252
357
53
662
$
$
—
708
126
834
$
$
$
$
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, 2019 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
Principal amount of
subordinated note/
debenture issued to trust (1)
Investment in
unconsolidated
subsidiary
2.61% (2)
(3)
2.53
(4)
3.31
(4)
3.31
(5)
3.24
$
$
70
32
72
74
4
252
$
$
6
3
2
2
1
14
(1)
(2)
(3)
(4)
(5)
Represents the principal amount of debentures issued to each trust, including unamortized original issue discount.
Variable effective rate at December 31, 2019, based on three-month LIBOR + 0.70%.
Variable effective rate at December 31, 2019, based on three-month LIBOR + 0.625%.
Variable effective rate at December 31, 2019, based on three-month LIBOR + 1.40%.
Variable effective rate at December 31, 2019, 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.
2019 Form 10-K 165
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, 2019 and 2018.
(dollar amounts in millions)
Affordable housing tax credit investments
Less: amortization
Net affordable housing tax credit investments
Unfunded commitments
December 31,
2019
December 31,
2018
$
$
$
1,242
(515)
727
332
$
$
$
1,147
(439)
708
357
The following table presents other information relating to Huntington’s affordable housing tax credit
investments for the years ended December 31, 2019, 2018, and 2017:
(dollar amounts in millions)
Year Ended December 31,
2019
2018
2017
Tax credits and other tax benefits recognized
Proportional amortization expense included in provision for income taxes
$
$
98
84
$
92
79
91
70
There were no material sales of affordable housing tax credit investments in 2019, 2018 or 2017. Huntington
recognized immaterial impairment losses for the years ended December 31, 2019, 2018 and 2017. 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, renewable energy financings, automobile
securitizations, and other miscellaneous investments.
21. 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, 2019, and December 31, 2018 were as follows:
166 Huntington Bancshares Incorporated
(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,
2019
2018
$
$
18,326
14,831
1,364
587
8
17,149
14,974
1,188
676
14
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.
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 $8 million and $13 million at
December 31, 2019 and December 31, 2018, 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 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 $20 million at December 31, 2019 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
2019 Form 10-K 167
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.
22. 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. In July 2019, the
FDIC, the Federal Reserve and OCC issued final rules that simplify the capital treatment of mortgage servicing
assets, deferred tax assets arising from temporary differences that an institution could not realize through
net operating loss carrybacks, and investments in the capital of unconsolidated financial institutions, as well
as simplify the recognition and calculation of minority interests that are includable in regulatory capital, for
non-advanced approaches banking organizations, including Huntington and the Bank. Banking organizations
may adopt these changes beginning on January 1, 2020, and are required to adopt them for the quarter
beginning April 1, 2020.
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 CECL 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, 2019 would exceed such a 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
168 Huntington Bancshares Incorporated
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 was at its
fully phased-in level of 2.5% throughout 2019.
As of December 31, 2019, 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, 2019, calculated using the regulatory capital
methodology applicable during 2019.
(dollar amounts in millions)
Minimum
Regulatory
Capital
Ratios
Minimum
Ratio+Capital
Conservation
Buffer
Well-
Capitalized
Minimums
Basel III
December 31,
2019
2018
Ratio
Amount
Ratio
Amount
CET 1 risk-based capital
Consolidated
4.50%
7.00%
Bank
Tier 1 risk-based capital
Consolidated
Bank
Total risk-based capital
Consolidated
Bank
Tier 1 leverage
Consolidated
Bank
4.50
6.00
6.00
8.00
8.00
4.00
4.00
7.00
8.50
8.50
10.50
10.50
N/A
N/A
N/A
6.50%
6.00
8.00
10.00
10.00
N/A
5.00
9.88% $
11.17
11.26
12.17
13.04
13.59
9.26
10.01
8,647
9,747
9,854
10,621
11,413
11,864
9,854
10,621
9.65% $
10.19
11.06
11.21
12.98
13.42
9.10
9.23
8,271
8,732
9,478
9,611
11,122
11,504
9,478
9,611
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
2019 and 2018, the average balances of these deposits were $0.6 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, 2019, 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 2019, the Bank paid
dividends of $0.7 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.
2019 Form 10-K 169
23. 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.
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
$
$
$
December 31,
2019
2018
$
$
$
$
3,119
47
34
12,833
165
349
16,547
4,095
657
4,752
11,795
16,547
$
$
$
$
Year Ended December 31,
2019
2018
2017
$
$
1,722
—
685
3
8
2
2
700
6
143
145
294
406
(63)
469
908
34
1,411
353
1,764
$
$
27
2
(2)
1,749
2
124
118
244
1,505
(48)
1,553
(186)
26
1,393
(80)
1,313
$
$
2,352
739
40
11,493
142
239
15,005
3,216
687
3,903
11,102
15,005
298
14
20
2
4
338
19
91
115
225
113
(56)
169
1,015
2
1,186
(34)
1,152
(1)
See Consolidated Statements of Comprehensive Income for other comprehensive income (loss) detail.
170 Huntington Bancshares Incorporated
Statements of Cash Flows
(dollar amounts in millions)
Operating activities
Net income
Year Ended December 31,
2019
2018
2017
$
1,411
$
1,393
$
1,186
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
(Purchases)/Proceeds from sale of securities
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
Payment of medium-term notes
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
24. SEGMENT REPORTING
(942)
(2)
(19)
448
701
(11)
(38)
—
652
797
—
(671)
(441)
—
(18)
(333)
767
2,352
3,119
135
$
$
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
90
$
$
Huntington’s business segments are based on our internally-aligned segment leadership structure, which is how
management monitors results and assesses performance. The Company has four major business segments:
Consumer and Business Banking, Commercial Banking, Vehicle Finance, Regional Banking and The Huntington Private
Client Group (RBHPCG). The Treasury / Other function includes technology and operations, other unallocated assets,
liabilities, revenue, and expense.
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.
Revenue is recorded in the business segment responsible for the related product or service. Fee sharing is
recorded to allocate portions of such revenue to other business segments involved in selling to, or providing service
to customers. Results of operations for the business segments reflect these fee sharing allocations.
The management 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
2019 Form 10-K 171
utilizes a full-allocation methodology, where all Treasury / Other expenses, except reported Significant Items, if any,
and a small amount of other residual unallocated expenses, are allocated to the four business segments.
The management 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 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). During 2019, the Company updated and refined its FTP methodology
primarily related to the allocation of deposit funding costs. Prior period amounts presented below have been
restated to reflect the new methodology.
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
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, large corporate, real estate and government public sector customers located
primarily within our geographic footprint. The segment is divided into six business units: Middle Market/Asset Based
Lending, 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.
172 Huntington Bancshares Incorporated
Listed in the table below is certain operating basis financial information reconciled to Huntington’s
December 31, 2019, December 31, 2018, and December 31, 2017, reported results by business segment:
Income Statements
(dollar amounts in millions)
2019
Net interest income
Provision (benefit) for credit losses
Noninterest income
Noninterest expense
Provision (benefit) for income taxes
Net income (loss)
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)
(dollar amounts in millions)
Consumer & Business Banking
Commercial Banking
Vehicle Finance
RBHPCG
Treasury / Other
Total
Consumer &
Business
Banking
Commercial
Banking
Vehicle
Finance
RBHPCG
Treasury /
Other
Huntington
Consolidated
$
$
$
$
$
$
1,766
114
825
1,673
169
635
1,727
137
744
1,699
133
502
1,581
105
740
1,641
201
374
$
$
$
$
$
$
$
$
1,037
132
359
564
147
553
1,013
42
321
502
166
624
975
33
286
465
267
496
$
$
$
$
$
$
397
44
12
148
45
172
392
55
11
143
43
162
427
63
14
141
83
154
$
$
$
$
$
$
198
(3)
198
256
30
113
203
1
193
244
32
119
209
—
189
239
56
103
$
$
$
$
$
$
(185) $
—
60
80
(143)
(62) $
(146) $
—
52
59
(139)
(14) $
(190) $
—
78
228
(399)
59
$
Assets at
December 31,
Deposits at
December 31,
2019
2018
2019
2018
25,073
34,337
20,155
6,665
22,772
109,002
$
$
27,486
34,818
19,435
6,540
20,502
108,781
$
$
51,675
20,762
376
6,370
3,164
82,347
$
$
3,213
287
1,454
2,721
248
1,411
3,189
235
1,321
2,647
235
1,393
3,002
201
1,307
2,714
208
1,186
50,300
23,185
346
6,809
4,134
84,774
2019 Form 10-K 173
Supplementary Data
Quarterly Results of Operations (unaudited)
The following is a summary of the quarterly results of operations, for the years ended December 31, 2019 and
2018:
(dollar amounts in millions, except per share data)
2019
2019
December 31,
September 30,
June 30,
2019
March 31,
2019
Three Months Ended
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
$
$
$
$
$
$
$
$
$
1,011
231
780
79
372
701
372
55
317
19
298
0.29
0.28
$
$
$
1,052
253
799
82
389
667
439
67
372
18
354
0.34
0.34
1,068
256
812
59
374
700
427
63
364
18
346
0.33
0.33
Three Months Ended
December 31,
September 30,
2018
2018
June 30,
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
972
188
784
56
336
652
412
57
355
21
334
0.30
0.30
$
$
$
$
$
$
1,070
248
822
67
319
653
421
63
358
19
339
0.32
0.32
March 31,
2018
914
144
770
66
314
633
385
59
326
12
314
0.29
0.28
174 Huntington Bancshares Incorporated
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 SEC’s
rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed by an issuer in the reports that it files or submits under the
Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive and
principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions
regarding required disclosure. Huntington’s Management, with the participation of its Chief Executive Officer and
the Chief Financial Officer, evaluated the effectiveness of Huntington’s disclosure controls and procedures (as such
term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2019. Based upon
such evaluation, Huntington’s Chief Executive Officer and Chief Financial Officer have concluded that, as of
December 31, 2019, 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, 2019, 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 2020 Proxy Statement for the 2020 annual meeting
of shareholders, which will be filed with the SEC pursuant to Regulation 14A within 120 days of the close of our 2019
fiscal year. Portions of our 2020 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 2020 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
2020 Proxy Statement, which is incorporated by reference into this item.
2019 Form 10-K 175
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, 2019.
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)
Number of
securities
remaining available
for future issuance
under equity
compensation
plans (excluding
securities reflected
in column (a)) (4)
(c)
29,366,419 $
943
29,367,362 $
4.71
13.14
4.71
17,271,559
—
17,271,559
(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 Internal Revenue 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
2020 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 2020 Proxy Statement, which are incorporated
by reference into this item.
176 Huntington Bancshares Incorporated
Item 14: Principal Accounting 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 2020 Proxy Statement which is incorporated by reference into
this item.
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.
2019 Form 10-K 177
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.
4.2
Description of Securities
SEC File or
Registration
Number
001-34073
001-34073
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.
Current Report on Form 8-K dated
July 24, 2006.
Current Report on Form 8-K dated
July 24, 2006.
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.
001-34073
001-34073
33-10546
001-34073
001-34073
001-34073
001-34073
000-02525
000-02525
000-02525
000-02525
000-02525
A
10.3
4(a)
10.8
10.8
10.1
10.2
99.1
99.2
99.3
99.4
G
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.
Quarterly Report on Form 10-Q for the
quarter ended September 30, 2007.
Definitive Proxy Statement for the 2010
Annual Meeting of Shareholders.
000-02525
10.7
001-34073
A
10.18
* 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.
001-34073
10.2
178 Huntington Bancshares Incorporated
*Huntington Bancshares Incorporated Restricted Stock Unit Grant
Agreement.
Quarterly Report on Form 10-Q for the
quarter ended March 31, 2015.
* Deferred Compensation Plan and Trust for Directors
Annual Report on Form10-K for the year
ended December 31, 2017.
001-34073
10.32
10.19
* Form of 2014 Restricted Stock Unit Grant Agreement for Executive
Officers.
Quarterly Report on Form 10-Q for the
quarter ended June 30, 2014.
10.20
* Form of 2014 Stock Option Grant Agreement for Executive Officers.
Quarterly Report on Form 10-Q for the
quarter ended June 30, 2014.
* 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.
10.27
*Form of 2015 Stock Option Grant Agreement.
10.28
*Form of 2015 Restricted Stock Unit Grant Agreement.
10.29
*Form of 2015 Performance Share 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 June 30, 2015.
Quarterly Report on Form 10-Q for the
quarter ended June 30, 2015.
10.21
10.22
10.23
10.24
10.25
10.26
10.30
10.31
10.32
* 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.
10.33
* First Amendment to the 2015 Long-Term Incentive Plan
10.34
*Huntington Bancshares Incorporated 2018 Long-Term Incentive Plan.
10.35
*Form of 2018 Stock Option Grant Agreement.
10.36
*Form of 2018 Restricted Stock Unit Agreement.
10.37
*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.
Quarterly Report on Form 10-Q for the
quarter ended June 30, 2018.
Quarterly Report on Form 10-Q for the
quarter ended June 30, 2018.
10.38
10.39
10.40
10.41
10.42
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.
Annual Report on Form 10-K for the
year ended December 31, 2018.
Transition Agreement dated May 13, 2019, by and between The
Huntington National Bank and Howell D. McCullough
Current Report on Form 8-K, dated May
13, 2019.
*Second Amendment to Huntington Supplemental 401(k) Plan dated
October 22, 2019.
*First Amendment to The Huntington National Bank Supplemental
Retirement Income Plan dated October 23, 2019.
Quarterly Report on Form 10-Q for the
quarter ended September 30, 2019.
Quarterly Report on Form 10-Q for the
quarter ended September 30, 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
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.
001-34073
001-34073
001-34073
001-34073
001-34073
001-34073
001-34073
001-34073
001-34073
001-34073
001-34073
001-34073
10.1
10.2
10.3
10.4
10.5
10.6
A
A
10.2
10.3
10.4
10.1
001-34073
10.33
001-34073
10.1
001-34073
001-34073
001-34073
001-34073
001-34073
A
10.2
10.3
10.4
10.1
001-34073
10.40
001-34073
001-34073
001-34073
10.1
10.1
10.2
2019 Form 10-K 179
101
The following material from Huntington’s Form 10-K Report for the year
ended December 31, 2019, formatted in Inline 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.
104
Cover Page Interactive Data File - the cover page XBRL tags are embedded
within the Inline XBRL document.
* Denotes management contract or compensatory plan or arrangement.
180 Huntington Bancshares Incorporated
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 14th day of
February, 2020.
Signatures
HUNTINGTON BANCSHARES INCORPORATED
(Registrant)
By:
/s/ Stephen D. Steinour
Stephen D. Steinour
Chairman, President, Chief Executive
Officer, and Director (Principal Executive Officer)
By:
By:
/s/ Zachary Wasserman
Zachary Wasserman
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 14th day of February, 2020.
Lizabeth Ardisana *
Lizabeth Ardisana
Director
Alanna Y. Cotton *
Alanna Y. Cotton
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
2019 Form 10-K 181
J. Michael Hochschwender *
J. Michael Hochschwender
Director
John C. Inglis *
John C. Inglis
Director
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/ Katherine M. A. Kline *
Katherine M. A. Kline
Director
/s/ Kenneth J. Phelan *
Kenneth J. Phelan
Director
*/s/ Jana J. Litsey
Jana J. Litsey
Attorney-in-fact for each of the persons indicated
182 Huntington Bancshares Incorporated
This page intentionally left blank.
This page intentionally left blank.
Huntington Bancshares Incorporated is a regional bank holding company headquartered in Columbus, Ohio, with $109
billion of assets and a network of 868 full-service branches, including 12 Private Client Group offices, and 1,448 ATMs
across seven 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 vehicle finance, 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)
2019
2018
Change
Amount
Change
Percent
NET INCOME
1,411
1,393
18
1 %
Tangible common equity/tangible asset ratio (1) (4) (5)
7.88%
7.21%
PER COMMON SHARE AMOUNTS
Net income (loss) per common share - diluted
Cash dividend declared per common share
Tangible book value per common share (1)
PERFORMANCE RATIOS
Return on average total assets
Return on average tangible common shareholders’ equity
Net interest margin (2)
Efficiency ratio (3)
CAPITAL RATIOS
CET 1 risk-based capital ratio (1)
Tier 1 risk-based capital ratio (1)
Total risk-based capital ratio (1)
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)
BALANCE SHEET - DECEMBER 31,
Total loans and leases
Total assets
Total deposits
Total shareholders’ equity
$
$
$
$
$
$
$
$
$
$
$
$
1.27
0.58
8.25
1.31%
16.9
3.26
56.6
9.88
11.26
13.04
265
0.35%
468
0.62%
498
0.66%
783
1.04%
167
$
$
$
$
$
$
1.20
0.50
7.34
1.33%
17.9
3.33
56.9
9.65
11.06
12.98
145
0.20%
340
0.45%
387
0.52%
772
1.03%
228
$
75,404
$
74,900
$
109,002
82,347
11,795
108,781
84,774
11,102
0.07
0.08
0.91
6 %
16 %
12 %
120
0.15%
128
0.17%
111
0.14%
11
0.01%
(61)
504
221
(2,427)
693
83 %
38 %
29 %
1 %
1 %
— %
(3)%
6 %
(1)
(2)
(3)
(4)
(5)
(6)
(7)
At December 31.
On a fully-taxable equivalent (FTE) basis assuming a 21% tax rate.
securities gains (losses).
Noninterest expense less amortization of intangibles and goodwill impairment divided by the sum of FTE net interest income and noninterest income excluding
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.
NALs divided by total loans and leases.
NPAs divided by the sum of total loans and leases and other real estate owned.
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 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. 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 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 Nasdaq under the symbol “HBAN.”
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:
Huntington Investor Relations
Huntington Center, HC0935
41 South High Street
Columbus, OH 43287
huntington.investor.relations@huntington.com
Retail Shareholder Inquiries (800) 576-5007
All Other Investor Inquiries (614) 480-5676
368224_HNB_2019_AnnualReportCover_R2.indd 7
368224_HNB_2019_AnnualReportCover_R2.indd 7
3/4/20 2:11 AM
3/4/20 2:11 AM
H
U
N
T
I
N
G
T
O
N
B
A
N
C
S
H
A
R
E
S
I
N
C
O
R
P
O
R
A
T
E
D
2
0
1
9
A
N
N
U
A
L
R
E
P
O
R
T
Huntington Bancshares Incorporated
Huntington Center | 41 South High Street, Columbus, Ohio 43287
800-480-2265 | huntington.com
The Huntington National Bank, Member FDIC. ⬢®, Huntington® and ⬢ Huntington. Welcome.® are federally registered service marks of
Huntington Bancshares Incorporated. ©2020 Huntington Bancshares Incorporated.
368224_HNB_2019_AnnualReportCover_R2.indd 2
368224_HNB_2019_AnnualReportCover_R2.indd 2
3/4/20 2:11 AM
3/4/20 2:11 AM