hban-20210331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021

Huntington Bancshares Incorporated

(Exact name of registrant as specified in its charter)


Maryland	1-34073	31-0724920
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification No.)

Registrant’s address: 41 South High Street, Columbus, Ohio 43287

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

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


Title of class	Trading Symbol(s)	Name of exchange on which registered
Depositary Shares (each representing a 1/40th interest in a share of 5.875% Series C Non-Cumulative, perpetual preferred stock)	HBANN	NASDAQ
Depositary Shares (each representing a 1/40th interest in a share of 6.250% Series D Non-Cumulative, perpetual preferred stock)	HBANO	NASDAQ
Depositary Shares (each representing a 1/40th interest in a share of 4.500% Series H Non-Cumulative, perpetual preferred stock)	HBANP	NASDAQ
Common Stock—Par Value $0.01 per Share	HBAN	NASDAQ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. x Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). x Yes ☐ No

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

Large Accelerated Filer

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ☐ Yes x No

There were 1,018,052,923 shares of the registrant’s common stock ($0.01 par value) outstanding on March 31, 2021.

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HUNTINGTON BANCSHARES INCORPORATED

INDEX


PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)			41
Condensed Consolidated Balance Sheets at March 31, 2021 and December 31, 2020			41
Condensed Consolidated Statements of Income for the three months ended March 31, 2021 and 2020			42
Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2021 and 2020			43
Condensed Consolidated Statements of Changes in Shareholders’ Equity for the three months ended March 31, 2021 and 2020			44
Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2021 and 2020			45
Notes to Unaudited Condensed Consolidated Financial Statements			47
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			5
Executive Overview			5
Discussion of Results of Operations			7
Risk Management and Capital:			15
Credit Risk			16
Market Risk			23
Liquidity Risk			27
Operational Risk			29
Compliance Risk			30
Capital			30
Business Segment Discussion			32
Additional Disclosures			36
Item 3. Quantitative and Qualitative Disclosures about Market Risk			81
Item 4. Controls and Procedures			81
PART II. OTHER INFORMATION
Item 1. Legal Proceedings			81
Item 1A. Risk Factors			81

Item 6. Exhibits			82
Signatures			83

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Glossary of Acronyms and Terms

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


ACL						Allowance for Credit Losses
AFS						Available-for-Sale

ALLL						Allowance for Loan and Lease Losses
AOCI						Accumulated Other Comprehensive Income
ASC						Accounting Standards Codification

AULC						Allowance for Unfunded Loan Commitments
Basel III						Refers to the final rule issued by the FRB and OCC and published in the Federal Register on October 11, 2013
CARES Act						Coronavirus Aid, Relief, and Economic Security Act, as amended
C&I						Commercial and Industrial
CCAR						Comprehensive Capital Analysis and Review
CDs						Certificates of Deposit
CECL						Current Expected Credit Loss
CET1						Common Equity Tier 1 on a Basel III basis
CFPB						Bureau of Consumer Financial Protection
CMO						Collateralized Mortgage Obligations
COVID-19						Coronavirus Disease 2019
CRE						Commercial Real Estate

EAD						Exposure at Default
EVE						Economic Value of Equity
FASB						Financial Accounting Standards Board
FDIC						Federal Deposit Insurance Corporation
FHLB						Federal Home Loan Bank of Cincinnati
FICO						Fair Isaac Corporation

FRB						Federal Reserve Board
FTE						Fully-Taxable Equivalent
FTP						Funds Transfer Pricing
FVO						Fair Value Option
GAAP						Generally Accepted Accounting Principles in the United States of America
HTM						Held-to-Maturity
IRS						Internal Revenue Service
Last-of-Layer						Last-of-layer is a fair value hedge of the interest rate risk of a portfolio of similar prepayable assets whereby the last dollar amount within the portfolio of assets is identified as the hedged item
LCR						Liquidity Coverage Ratio
LIBOR						London Interbank Offered Rate
LIHTC						Low Income Housing Tax Credit
MBS						Mortgage-Backed Securities
MD&A						Management’s Discussion and Analysis of Financial Condition and Results of Operations
MSR						Mortgage Servicing Right
NAICS						North American Industry Classification System
NALs						Nonaccrual Loans
NCO						Net Charge-off
NII						Noninterest Income
NIM						Net Interest Margin
NPAs						Nonperforming Assets

2021 1Q Form 10-Q 3

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

OLEM						Other Loans Especially Mentioned
OREO						Other Real Estate Owned
PCD						Purchased-Credit-Deteriorated
PPP						Paycheck Protection Program
PPPLF						Paycheck Protection Program Liquidity Facility
RBHPCG						Regional Banking and The Huntington Private Client Group
ROC						Risk Oversight Committee



SBA						Small Business Administration
SEC						Securities and Exchange Commission
TCF						TCF Financial Corporation
TDR						Troubled Debt Restructuring
U.S. Treasury						U.S. Department of the Treasury
UCS						Uniform Classification System
VIE						Variable Interest Entity
XBRL						eXtensible Business Reporting Language

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PART I. FINANCIAL INFORMATION

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

Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations

INTRODUCTION

We are a multi-state diversified regional bank holding company organized under Maryland law in 1966 and headquartered in Columbus, Ohio. Through the Bank, we have over 150 years of servicing the financial needs of our customers. Through our subsidiaries, we provide full-service commercial and consumer banking services, mortgage banking services, automobile financing, recreational vehicle and marine financing, equipment financing, investment management, trust services, brokerage services, insurance products and services, and other financial products and services. Our 814 full-service branches and private client group offices are located in Ohio, Illinois, Indiana, Kentucky, Michigan, Pennsylvania, and West Virginia. Select financial services and other activities are also conducted in various other states. International banking services are available through the headquarters office in Columbus, Ohio. Our foreign banking activities, in total or with any individual country, are not significant.

On December 13, 2020, we announced the signing of a definitive merger agreement (the “TCF/Huntington Merger Agreement”). Under the terms of the agreement, which was unanimously approved by the boards of directors of both companies, TCF Financial Corporation, the parent company of TCF National Bank will merge into Huntington in an all-stock transaction. TCF is a financial holding company headquartered in Detroit, Michigan with reported total assets of $47.8 billion based on their balance sheet at December 31, 2020.

Under the terms of the Merger Agreement, TCF shareholders will receive 3.0028 shares of Huntington common stock for each share of TCF common stock. Holders of TCF common stock will also receive cash in lieu of fractional shares. Each outstanding share of 5.70% Series C Non-Cumulative Perpetual Preferred Stock of TCF will be converted into the right to receive one share of a newly created series of preferred stock of Huntington.

This MD&A provides information we believe necessary for understanding our financial condition, changes in financial condition, results of operations, and cash flows. The MD&A included in our 2020 Form 10-K should be read in conjunction with this MD&A as this discussion provides only material updates to the 2020 Form 10-K. This MD&A should also be read in conjunction with the Unaudited Condensed Consolidated Financial Statements, Notes to Unaudited Condensed Consolidated Financial Statements, and other information contained in this report.

EXECUTIVE OVERVIEW

Summary of 2021 First Quarter Results Compared to 2020 First Quarter

For the quarter, we reported net income of $532 million, or $0.48 per common share, compared with $48 million, or $0.03 per common share, in the year-ago quarter.

Fully-taxable equivalent net interest income was $978 million, up $182 million, or 23%, from the year-ago quarter. This increase reflected the benefit from the $12.3 billion, or 12%, increase in average earning assets and a 34 basis point increase in the FTE net interest margin to 3.48%.

The provision for credit losses decreased $501 million year-over-year to $(60) million in the 2021 first quarter. Net charge-offs decreased $53 million to $64 million. Both Commercial NCOs of $49 million and Consumer NCOs of $15 million were down on both a year-over-year basis. Total NCOs represented an annualized 0.32% of average loans and leases in the current quarter, down from 0.62% in the year-ago quarter.

Noninterest income was $395 million, up $34 million, or 9%, from the year ago quarter. Mortgage banking income increased $42 million, or 72%. Partially offsetting these increases, service charges on deposit accounts decreased $18 million, or 21%.

2021 1Q Form 10-Q 5

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Noninterest expense for the 2021 first quarter increased $141 million, or 22%, from the year-ago quarter Personnel costs increased $73 million, or 18%. Outside data processing and other services increased $30 million, or 35%. Other noninterest expense increased $22 million, or 43%, primarily reflecting a $25 million donation to The Columbus Foundation.

Common Equity Tier 1 risk-based capital ratio was 10.33%, up from 9.47% a year ago. The regulatory Tier 1 risk-based capital ratio was 13.32% compared to 10.81% at March 31, 2020. The increase in regulatory capital ratios was driven by earnings, adjusted for the CECL transition, offset by the repurchase of $5 million of common stock over the last four quarters (all during 2020 fourth quarter) and cash dividends. The balance sheet growth impact on regulatory capital ratios was largely offset by a change in asset mix during 2020 related to the PPP loans and elevated deposits at the Federal Reserve, both of which are 0% risk weighted. The regulatory Tier 1 risk-based capital ratio also reflects the issuance of $500 million of Series F preferred stock, $500 million of Series G preferred stock and $500 million of Series H preferred stock in the 2020 second quarter, 2020 third quarter, and 2021 first quarter, respectively.

Business Overview

General

Our general business objectives are:

•Consistent organic revenue and balance sheet growth.

•Invest in our businesses, particularly technology and risk management.

•Deliver positive long-term operating leverage.

•Maintain aggregate moderate-to-low risk appetite.

•Disciplined capital management.

COVID-19

The COVID-19 pandemic continues to cause significant, unprecedented disruption that affects daily living and negatively impacts the economy. As further discussed in “Discussion of Results of Operations,” the current interest rate environment, borrower and counterparty credit quality and market volatility, among other factors, continue to impact our performance. Though we are unable to estimate the magnitude, we expect the pandemic and the resulting economic environment will continue to affect our future operating results.

Huntington was able to react quickly to the changes required by the pandemic because of the commitment and flexibility of its workforce coupled with well-prepared business continuity plans. While state and local governments have eased temporary business closures and we have opened our branches, we expect our colleagues who have been operating remotely to continue for a period of time. While the approved vaccines are being administered throughout our footprint, it remains unknown when, or if, there will be a return to historical norms of economic and social activity.

We continue to work with our customers to originate and renew business loans as well as originate loans made available through the Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”), a lending program established as part of the relief to American consumers and businesses in the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). Several subsequent congressional acts have reopened and extended the PPP loan program. During the 2021 first quarter, we have processed over 17,000 applications totaling approximately $1.8 billion under the reopened PPP.

Pending acquisition of TCF Financial Corporation

In late March 2021, Huntington and TCF shareholders approved the proposed merger of TCF with and into Huntington. The integration planning continues to proceed as expected. We expect that the transaction will be completed late in the second quarter of 2021, subject to regulatory approval and the satisfaction of other customary closing conditions set forth in the merger agreement.

Economy

Our first quarter results reflected a very strong beginning to what will be an important year for Huntington. The economic recovery continues to gain its footing, and we are seeing encouraging signs across our footprint and our individual businesses. Our lending pipelines are up across the board, and customer sentiment is improving —

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supporting our confidence in more robust loan demand later in the year. Additionally, we continue to see strong core deposit inflows and expect this elevated level of liquidity will remain for some time.

DISCUSSION OF RESULTS OF OPERATIONS

This section provides a review of financial performance from a consolidated perspective. It also includes a “Significant Items” section (See Non-GAAP Financial Measures) that summarizes key issues important for a complete understanding of performance trends. Key Unaudited Condensed Consolidated Balance Sheet and Unaudited Condensed Statement of Income trends are discussed. All earnings per share data are reported on a diluted basis. For additional insight on financial performance, please read this section in conjunction with the “Business Segment Discussion”.

2021 1Q Form 10-Q 7

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Table 1 - Selected Quarterly Income Statement Data

	Three Months Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
(amounts in millions, except per share data)	2021			2020			2020			2020			2020
Interest income	$	869		$	878		$	892		$	902		$	975
Interest expense	(103)			53			75			110			185
Net interest income	972			825			817			792			790
Provision for credit losses	(60)			103			177			327			441
Net interest income after provision for credit losses	1,032			722			640			465			349
Mortgage banking income	100			90			122			96			58
Service charges on deposit accounts	69			78			76			60			87
Card and payment processing income	65			65			66			59			58
Trust and investment management services	52			49			48			45			47
Capital markets fees	29			34			27			31			33
Insurance income	27			25			24			25			23
Bank owned life insurance income	16			14			17			17			16
Gain on sale of loans	3			13			13			8			8
Net (losses) gains on sales of securities	—			—			—			(1)			—
Other noninterest income	34			41			37			51			31
Total noninterest income	395			409			430			391			361
Personnel costs	468			426			453			418			395
Outside data processing and other services	115			111			98			90			85
Equipment	46			49			44			46			41
Net occupancy	42			39			40			39			40
Professional services	17			21			12			11			11
Amortization of intangibles	10			10			10			10			11
Marketing	14			15			9			5			9
Deposit and other insurance expense	8			8			6			9			9
Other noninterest expense	73			77			40			47			51
Total noninterest expense	793			756			712			675			652
Income before income taxes	634			375			358			181			58
Provision for income taxes	102			59			55			31			10
Net income	532			316			303			150			48
Dividends on preferred shares	31			35			28			19			18
Net income applicable to common shares	$	501		$	281		$	275		$	131		$	30

Average common shares—basic	1,018			1,017			1,017			1,016			1,018
Average common shares—diluted	1,041			1,036			1,031			1,029			1,035
Net income per common share—basic	$	0.49		$	0.28		$	0.27		$	0.13		$	0.03
Net income per common share—diluted	0.48			0.27			0.27			0.13			0.03
Return on average total assets	1.76		%	1.04		%	1.01		%	0.51		%	0.17		%
Return on average common shareholders’ equity	18.7			10.4			10.2			5.0			1.1
Return on average tangible common shareholders’ equity (1)	23.7			13.3			13.2			6.7			1.8
Net interest margin (2)	3.48			2.94			2.96			2.94			3.14
Efficiency ratio (3)	57.0			60.2			56.1			55.9			55.4
Effective tax rate	16.1			15.8			15.2			17.2			17.0

Revenue—FTE
Net interest income	$	972		$	825		$	817		$	792		$	790
FTE adjustment	6			5			5			5			6
Net interest income (2)	978			830			822			797			796
Noninterest income	395			409			430			391			361
Total revenue (2)	$	1,373		$	1,239		$	1,252		$	1,188		$	1,157

(1)Net income excluding expense for amortization of intangibles for the period divided by average tangible common shareholders’ equity. Average tangible common shareholders’ equity equals average total common shareholders’ equity less average intangible assets and goodwill. Expense for amortization of intangibles and average intangible assets are net of deferred tax liability, and calculated assuming a 21% tax rate.

(2)On an FTE basis assuming a 21% tax rate.

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

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Significant Items

Table 2 list certain items that we believe are significant to understanding corporate performance and trends (See Non-GAAP Financial Measures included in “Additional Disclosures” section). There was one Significant Item in the 2021 first quarter: $21 million of noninterest expense related to the pending acquisition of TCF. This resulted in a negative impact of $(0.02) per common share. There were no Significant Items in the other periods presented.


Table 2 - Significant Items Influencing Earnings Performance Comparison
	Three Months Ended
	March 31, 2021
(dollar amounts in millions, share amounts in thousands)	Amount		EPS (1)
Net income	$	532
Earnings per share, after-tax			$	0.48

Significant Items—favorable (unfavorable) impact:	Earnings		EPS (1)
Mergers and acquisitions, net expenses	$	(21)
Tax impact	4
Mergers and acquisitions, after tax	$	(17)	$	(0.02)

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

2021 1Q Form 10-Q 9

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Net Interest Income / Average Balance Sheet

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


Table 3 - Consolidated Average Balance Sheet and Net Interest Margin Analysis
	Average Balances
	Three Months Ended										Change
	March 31,		December 31,		September 30,		June 30,		March 31,		1Q21 vs. 1Q20
(dollar amounts in millions)	2021		2020		2020		2020		2020		Amount		Percent
Assets:
Interest-bearing deposits in Federal Reserve Bank	$	6,065	$	5,507	$	5,857	$	3,413	$	680	$	5,385	792	%
Interest-bearing deposits in banks	177		205		177		169		150		27		18
Securities:
Trading account securities	52		53		49		39		95		(43)		(45)
Available-for-sale securities:
Taxable	14,827		12,048		10,670		11,179		11,671		3,156		27
Tax-exempt	2,650		2,710		2,749		2,728		2,753		(103)		(4)
Total available-for-sale securities	17,477		14,758		13,419		13,907		14,424		3,053		21
Held-to-maturity securities—taxable	8,269		8,844		8,932		9,798		9,428		(1,159)		(12)



Other securities	412		420		430		474		445		(33)		(7)
Total securities	26,210		24,075		22,830		24,218		24,392		1,818		7
Loans held for sale	1,392		1,319		1,259		1,039		865		527		61
Loans and leases: (3)
Commercial:
Commercial and industrial	34,352		34,850		34,669		35,284		30,849		3,503		11
Commercial real estate:
Construction	1,053		1,085		1,175		1,201		1,165		(112)		(10)
Commercial	6,122		6,092		6,045		5,885		5,566		556		10
Commercial real estate	7,175		7,177		7,220		7,086		6,731		444		7
Total commercial	41,527		42,027		41,889		42,370		37,580		3,947		11
Consumer:
Automobile	12,665		12,857		12,889		12,681		12,924		(259)		(2)
Home equity	8,809		8,919		8,878		8,897		9,026		(217)		(2)
Residential mortgage	12,094		12,100		11,817		11,463		11,391		703		6
RV and marine	4,193		4,181		4,020		3,706		3,590		603		17
Other consumer	973		1,032		1,049		1,082		1,185		(212)		(18)
Total consumer	38,734		39,089		38,653		37,829		38,116		618		2
Total loans and leases	80,261		81,116		80,542		80,199		75,696		4,565		6
Allowance for loan and lease losses	(1,809)		(1,804)		(1,720)		(1,557)		(1,239)		(570)		(46)
Net loans and leases	78,452		79,312		78,822		78,642		74,457		3,995		5
Total earning assets	114,105		112,222		110,665		109,038		101,783		12,322		12
Cash and due from banks	1,080		1,113		1,173		1,299		914		166		18
Intangible assets	2,176		2,185		2,195		2,206		2,217		(41)		(2)
All other assets	7,443		7,279		7,216		7,205		6,472		971		15
Total assets	$	122,995	$	120,995	$	119,529	$	118,191	$	110,147	$	12,848	12	%
Liabilities and Shareholders’ Equity:
Interest-bearing deposits:
Demand deposits—interest-bearing	$	26,812	$	25,094	23,865		$	23,878	$	21,202	$	5,610	26	%
Money market deposits	26,247		26,144		26,200		25,728		24,697		1,550		6
Savings and other domestic deposits	12,277		11,468		11,157		10,609		9,632		2,645		27
Core certificates of deposit (4)	1,384		1,479		2,035		3,003		3,943		(2,559)		(65)
Other domestic time deposits of $250,000 or more	115		139		175		230		321		(206)		(64)
Brokered deposits and negotiable CDs	3,355		4,100		4,182		4,114		2,884		471		16

Total interest-bearing deposits	70,190		68,424		67,614		67,562		62,679		7,511		12
Short-term borrowings	208		239		162		826		3,383		(3,175)		(94)
Long-term debt	7,766		8,799		9,318		9,802		10,076		(2,310)		(23)
Total interest-bearing liabilities	78,164		77,462		77,094		78,190		76,138		2,026		3
Demand deposits—noninterest-bearing	29,095		28,140		27,435		25,660		20,054		9,041		45
All other liabilities	2,412		2,452		2,322		2,396		2,319		93		4
Shareholders’ equity	13,324		12,941		12,678		11,945		11,636		1,688		15
Total liabilities and shareholders’ equity	$	122,995	$	120,995	$	119,529	$	118,191	$	110,147	$	12,848	12	%

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

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

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Table 3 - Consolidated Average Balance Sheet and Net Interest Margin Analysis (Continued)

	Average Yield Rates (2)
	Three Months Ended
	March 31,		December 31,		September 30,		June 30,		March 31,
Fully-taxable equivalent basis (1)	2021		2020		2020		2020		2020
Assets:
Interest-bearing deposits in Federal Reserve Bank	0.10	%	0.10	%	0.10	%	0.10	%	1.08	%
Interest-bearing deposits in banks	0.08		0.12		0.13		0.33		1.52
Securities:
Trading account securities	3.64		3.65		3.18		1.99		3.21
Available-for-sale securities:
Taxable	1.32		1.53		1.89		2.30		2.62
Tax-exempt	2.52		2.59		2.71		2.75		3.30
Total available-for-sale securities	1.50		1.72		2.06		2.39		2.75
Held-to-maturity securities—taxable	2.02		2.11		2.28		2.39		2.50



Other securities	1.66		1.85		1.23		0.57		2.07
Total securities	1.67		1.87		2.13		2.35		2.64
Loans held for sale	2.64		2.96		2.82		3.22		3.39
Loans and leases: (3)
Commercial:
Commercial and industrial	3.99		3.64		3.67		3.62		4.12
Commercial real estate:
Construction	3.41		3.36		3.40		3.66		4.75
Commercial	2.64		2.62		2.63		2.94		4.00
Commercial real estate	2.75		2.73		2.75		3.06		4.13
Total commercial	3.78		3.48		3.52		3.53		4.12
Consumer:
Automobile	3.71		3.88		3.93		3.84		4.05
Home equity	3.71		3.76		3.79		3.73		4.75
Residential mortgage	3.13		3.27		3.41		3.51		3.70
RV and marine	4.30		4.53		4.60		4.71		4.91
Other consumer	11.17		11.12		11.23		11.10		12.39
Total consumer	3.78		3.93		4.00		4.00		4.45
Total loans and leases	3.78		3.70		3.75		3.75		4.29
Total earning assets	3.11		3.13		3.22		3.35		3.88
Liabilities:
Interest-bearing deposits:
Demand deposits—interest-bearing	0.04		0.04		0.05		0.07		0.43
Money market deposits	0.06		0.10		0.28		0.40		0.81
Savings and other domestic deposits	0.04		0.05		0.06		0.10		0.17
Core certificates of deposit (4)	0.51		0.56		1.03		1.55		1.91
Other domestic time deposits of $250,000 or more	0.22		0.51		0.92		1.25		1.56
Brokered deposits and negotiable CDs	0.18		0.19		0.19		0.18		1.22

Total interest-bearing deposits	0.06		0.08		0.18		0.28		0.68
Short-term borrowings	0.19		0.26		0.30		0.47		1.46
Long-term debt (5)	(5.88)		1.72		1.87		2.58		2.70
Total interest-bearing liabilities	(0.53)		0.27		0.39		0.57		0.98


Net interest rate spread	3.64		2.86		2.83		2.78		2.90
Impact of noninterest-bearing funds on margin	(0.16)		0.08		0.13		0.16		0.24
Net interest margin	3.48	%	2.94	%	2.96	%	2.94	%	3.14	%

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

(2) Average yield rates include the impact of applicable derivatives. Loan and lease and deposit average yield rates also include impact of applicable non-deferrable and amortized fees.

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

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

(5) Reflects the net mark-to-market impact of interest rate caps of $144 million or 741 bps and $5 million or 23 bps for 1Q 2021 and 4Q 2020, respectively.

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2021 First Quarter versus 2020 First Quarter

FTE net interest income for the 2021 first quarter increased $182 million, or 23%, from the 2020 first quarter. This increase reflected a $12.3 billion, or 12%, increase in average earning assets, and a 34 basis point increase in the FTE net interest margin to 3.48%. Net interest income in the 2021 first quarter included a $144 million net mark-to-market of interest rate caps, which favorably impacted the NIM by approximately 51 basis points (and long-term debt costs by approximately 741 basis points), and $45 million of deferred PPP loan fees recognized upon receipt of forgiveness payments from the SBA, which favorably impacted the NIM by approximately 16 basis points. The year-over-year decrease in earning asset yields and average liability costs also reflected the impact of lower interest rates and changes in balance sheet mix, including elevated deposits at the Federal Reserve Bank.

Average earning assets for the 2021 first quarter increased $12.3 billion, or 12%, from the year-ago quarter, primarily reflecting a $5.4 billion, or 792%, increase in interest-bearing deposits at the Federal Reserve Bank, a $4.6 billion, or 6%, increase in average total loans and leases, and a $1.8 billion, or 7%, increase in average securities. Average C&I loans increased $3.5 billion, or 11%, primarily reflecting the $5.8 billion of average PPP loans partially offset by lower C&I and dealer floorplan utilization rates. Average residential mortgage loans increased $0.7 billion, or 6%, reflecting continued robust portfolio mortgage production. Average RV and marine loans increased $0.6 billion, or 17%, reflecting strong consumer demand and continued strong production levels.

Average total interest-bearing liabilities for the 2021 first quarter increased $2.0 billion, or 3%, from the year-ago quarter. Average total deposits increased $16.6 billion, or 20%, while average total core deposits increased $16.3 billion, or 20%. The increase in average total core deposits was primarily driven by increased liquidity levels in reaction to the economic downturn, business and commercial growth related to the PPP loans, consumer growth largely related to government stimulus, increased consumer and business banking account production, and reduced attrition. Specifically within core deposits, average total demand deposits increased $14.7 billion, or 36%, average savings and other domestic deposits increased $2.6 billion, or 27%, and average money market deposits increased $1.6 billion, or 6%. Partially offsetting these increases, average core CDs decreased $2.6 billion, or 65%, reflecting the maturity of balances related to the 2018 consumer deposit growth initiatives. Average total debt decreased $5.5 billion, or 41%, reflecting the repayment of short-term borrowings, the maturity and issuance of $3.2 billion and $1.3 billion of long-term debt, respectively, over the past five quarters, and the purchase of $0.5 billion of long-term debt under the tender offer completed in November 2020, all due to the strong core deposit growth.

2021 First Quarter versus 2020 Fourth Quarter

Compared to the 2020 fourth quarter, FTE net interest income increased $148 million, or 18%, reflecting a $1.9 billion, or 2% increase in average earning assets and 54 basis points of NIM expansion. Both the net interest income increase and the NIM expansion primarily reflected the net impacts of the mark-to-market of interest rate caps and the deferred PPP loan fees recognized upon receipt of forgiveness payments from the SBA. The mark-to-market of interest rate caps was $144 million in the 2021 first quarter compared to $5 million in the 2020 fourth quarter. The accelerated recognition of deferred PPP loan fees were $45 million in the 2021 first quarter compared to $5 million in the 2020 fourth quarter.

Average earning assets increased $1.9 billion, or 2%, primarily reflecting a $2.1 billion, or 9%, increase in average securities, partially offset by a $0.9 billion, or 1%, decrease in average loans and leases. The increase in average securities reflected the purchase of securities to deploy excess liquidity. Average C&I loans decreased $0.5 billion, or 1%, primarily reflecting the $0.4 billion decrease in average PPP loans.

Average total interest-bearing liabilities increased $0.7 billion, or 1%, when compared to the 2020 fourth quarter. Average total deposits increased $2.7 billion, or 3%, and average total core deposits increased $3.5 billion, or 4%. The increase in average total core deposits was primarily driven by consumer growth largely related to government stimulus, increased liquidity levels among our commercial customers, seasonality in government banking, and improved consumer and business banking account retention. Specifically, within core deposits, average total demand deposits increased $2.7 billion, or 5%. Average total debt decreased $1.1 billion, or 12%, primarily reflecting the maturity of $1.1 billion of long-term debt, the purchase of $0.5 billion of long-term debt under the tender offer completed in November 2020, and the repayment of short-term borrowings, all due to the strong core deposit growth.

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Provision for Credit Losses

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

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

The provision for credit losses for the 2021 first quarter was $(60) million, a decrease of $501 million, or 114%, compared to the 2020 first quarter. The reduction in provision expense over the prior year was primarily attributed to the improvement in the forecasted macroeconomic environment resulting from anticipated lower unemployment and higher GDP.

Noninterest Income

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


Table 4 - Noninterest Income
	Three Months Ended				1Q21 vs. 1Q20			1Q21 vs. 4Q20
	March 31,		December 31,			March 31,		Change				Change
(dollar amounts in millions)	2021		2020			2020		Amount		Percent		Amount		Percent
Mortgage banking income	$	100	$	90		$	58	$	42	72	%	$	10	11	%
Service charges on deposit accounts	69		78			87		(18)		(21)		(9)		(12)
Card and payment processing income	65		65			58		7		12		—		—
Trust and investment management services	52		49			47		5		11		3		6
Capital markets fees	29		34			33		(4)		(12)		(5)		(15)
Insurance income	27		25			23		4		17		2		8
Bank owned life insurance income	16		14			16		—		—		2		14
Gain on sale of loans	3		13			8		(5)		(63)		(10)		(77)
Net (losses) gains on sales of securities	—		—			—		—		—		—		—
Other noninterest income	34		41			31		3		10		(7)		(17)
Total noninterest income	$	395	$	409		$	361	$	34	9	%	$	(14)	(3)	%

2021 First Quarter versus 2020 First Quarter

Total noninterest income for the 2021 first quarter increased $34 million, or 9%, from the year-ago quarter. Mortgage banking income increased $42 million, or 72%, primarily reflecting an 89% increase in salable mortgage originations and higher secondary marketing spreads offset by lower net mortgage servicing income. Card and payment processing income increased $7 million, or 12%, reflecting higher debit card usage. Trust and investment management services increased $5 million, or 11%, reflecting record net asset flows, and positive equity market performance over the prior twelve months. Partially offsetting these increases, service charges on deposit accounts decreased $18 million, or 21%, primarily reflecting reduced customer activity and elevated deposits. Gain on sale of loans decreased $5 million, or 63%, primarily reflecting the lower SBA loan sales resulting from the strategic decision to retain SBA loans on the balance sheet.

2021 First Quarter versus 2020 Fourth Quarter

Compared to the 2020 fourth quarter, total noninterest income decreased $14 million, or 3%. Gain on sale of loans decreased $10 million, or 77%, primarily reflecting lower SBA loan sales resulting from the strategic decision to retain SBA loans on the balance sheet. Service charges on deposit accounts decreased $9 million, or 12%, primarily reflecting reduced customer activity and elevated deposits. Other noninterest income decreased $7 million, or 17%, primarily reflecting a $6 million reduction in the Visa Class B derivative fair value adjustment. Capital markets fees decreased $5 million, or 15%, reflecting lower loan syndication fees and customer derivatives activity. Partially offsetting these decreases, mortgage banking income increased $10 million, or 11%, primarily reflecting a $10 million increase in net MSR risk management activities.

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Noninterest Expense

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


Table 5 - Noninterest Expense
	Three Months Ended				1Q21 vs. 1Q20			1Q21 vs. 4Q20
	March 31,		December 31,			March 31,		Change				Change
(dollar amounts in millions)	2021		2020			2020		Amount		Percent		Amount		Percent
Personnel costs	$	468	$	426		$	395	$	73	18	%	$	42	10	%
Outside data processing and other services	115		111			85		30		35		4		4
Equipment	46		49			41		5		12		(3)		(6)
Net occupancy	42		39			40		2		5		3		8
Professional services	17		21			11		6		55		(4)		(19)
Amortization of intangibles	10		10			11		(1)		(9)		—		—
Marketing	14		15			9		5		56		(1)		(7)
Deposit and other insurance expense	8		8			9		(1)		(11)		—		—
Other noninterest expense	73		77			51		22		43		(4)		(5)
Total noninterest expense	$	793	$	756		$	652	$	141	22	%	$	37	5	%
Number of employees (average full-time equivalent)	15,449		15,477			15,386		63		—	%	(28)		—	%

Impacts of Significant Items:


	Three Months Ended
	March 31,		December 31,		March 31,
(dollar amounts in millions)	2021		2020		2020

Outside data processing and other services	8		—		—
Net occupancy	3		—		—
Equipment	1		—		—
Professional services	8		—		—

Other noninterest expense	1		—		—
Total noninterest expense adjustments	$	21	$	—	$	—

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


	Three Months Ended						1Q21 vs. 1Q20				1Q21 vs. 4Q20
	March 31,		December 31,		March 31,		Change				Change
(dollar amounts in millions)	2021		2020		2020		Amount		Percent		Amount		Percent
Personnel costs	$	468	$	426	$	395	$	73	18	%	$	42	10	%
Outside data processing and other services	107		111		85		22		26		(4)		(4)
Net occupancy	39		39		40		(1)		(3)		—		—
Equipment	45		49		41		4		10		(4)		(8)
Deposit and other insurance expense	8		8		9		(1)		(11)		—		—
Professional services	9		21		11		(2)		(18)		(12)		(57)
Marketing	14		15		9		5		56		(1)		(7)
Amortization of intangibles	10		10		11		(1)		(9)		—		—
Other noninterest expense	72		77		51		21		41		(5)		(6)
Total adjusted noninterest expense (Non-GAAP)	$	772	$	756	$	652	$	120	18	%	$	16	2	%

2021 First Quarter versus 2020 First Quarter

Total noninterest expense for the 2021 first quarter increased $141 million or 22%, from the year-ago quarter. Personnel costs increased $73 million, or 18%, primarily reflecting increased incentives and commissions, a timing change implemented in the 2021 first quarter with respect to moving forward the annual grant of equity compensation from May to March, and higher benefits costs. Outside data processing and other services increased $30 million, or 35%, reflecting technology investments to support our strategic growth initiatives and $8 million of TCF acquisition-related expense. Other noninterest expense increased $22 million, or 43%, primarily reflecting a $25 million donation to The Columbus Foundation. Professional services expense increased $6 million, or 55%, reflecting $8 million of acquisition-related legal expense. Equipment expense increased $5 million, or 12%, primarily reflecting

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technology investments. Marketing expense increased $5 million, or 56%, reflecting a return to pre-pandemic levels and additional investment in strategic marketing initiatives including new Fair Play product launches.

2021 First Quarter versus 2020 Fourth Quarter

Total noninterest expense increased $37 million, or 5%, from the 2020 fourth quarter. Personnel costs increased $42 million, or 10%, primarily reflecting increased incentives and commissions, a timing change implemented in the 2021 first quarter with respect to moving forward the annual grant of equity compensation from May to March, and higher benefits costs.

Provision for Income Taxes

The provision for income taxes in the 2021 first quarter was $102 million, compared with provision for income taxes of $10 million in the 2020 first quarter and $59 million in the 2020 fourth quarter. All periods included the benefits from tax-exempt income, tax-advantaged investments, general business credits, investments in qualified affordable housing projects, and capital losses. The effective tax rates for the 2021 first quarter, 2020 first quarter, and 2020 fourth quarter were 16.1%, 17.0%, and 15.8%, respectively. The variance between the 2021 first quarter compared to the 2020 first quarter, and 2020 fourth quarter provision for income taxes and effective tax rates relates primarily to higher pre-tax income and the impact of stock-based compensation. The net federal deferred tax liability was $149 million and the net state deferred tax asset was $24 million at March 31, 2021.

We file income tax returns with the IRS and various state and city jurisdictions. Federal income tax audits have been completed for tax years through 2009. The 2010 and 2011 tax years remain under exam by the IRS. While the statute of limitations remains open for tax years 2012 through 2019, the IRS has advised that tax years 2012 through 2014 will not be audited and is currently examining the 2015 and 2016 federal income tax returns. Also, with few exceptions, the Company is no longer subject to state and local income tax examinations for tax years before 2016.

RISK MANAGEMENT AND CAPITAL

We use a multi-faceted approach to risk governance. It begins with the Board of Directors defining our risk appetite as aggregate moderate-to-low. Risk awareness, identification and assessment, reporting, and active management are key elements in overall risk management. Controls include, among others, effective segregation of duties, access, and authorization and reconciliation procedures, as well as staff education and a disciplined assessment process.

We believe that our primary risk exposures are credit, market, liquidity, operational and compliance. More information on risk can be found in the Risk Factors section included in Item 1A of our 2020 Form 10-K and subsequent filings with the SEC. The MD&A included in our 2020 Form 10-K should be read in conjunction with this MD&A as this discussion provides only material updates to the Form 10-K. This MD&A should also be read in conjunction with the Unaudited Condensed Consolidated Financial Statements, Notes to Unaudited Condensed Consolidated Financial Statements, and other information contained in this report. Our definition, philosophy, and approach to risk management have not materially changed from the discussion presented in the 2020 Form 10-K.

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Credit Risk

Credit risk is the risk of financial loss if a counterparty is not able to meet the agreed upon terms of the financial obligation. The majority of our credit risk is associated with lending activities, as the acceptance and management of credit risk is central to profitable lending. We also have credit risk associated with our investment securities portfolios (see Note 3 “Investment Securities and Other Securities” of the Notes to the Unaudited Condensed Consolidated Financial Statements). We engage with other financial counterparties for a variety of purposes including investing, asset and liability management, mortgage banking, and trading activities. A variety of derivative financial instruments, principally interest rate swaps, caps, floors, and collars, are used in asset and liability management activities to protect against the risk of adverse price or interest rate movements. We also use derivatives, principally loan sale commitments, in hedging our mortgage loan interest rate lock commitments and its mortgage loans held for sale. While there is credit risk associated with derivative activity, we believe this exposure is minimal.

We focus on the early identification, monitoring, and management of all aspects of our credit risk. In addition to the traditional credit risk mitigation strategies of credit policies and processes, market risk management activities, and portfolio diversification, we use quantitative measurement capabilities utilizing external data sources, enhanced modeling technology, and internal stress testing processes. Our ongoing expansion of portfolio management resources is central to our commitment to maintaining an aggregate moderate-to-low risk profile. In our efforts to identify risk mitigation techniques, we have focused on product design features, origination policies, and solutions for delinquent or stressed borrowers.

Over the course of 2020 and into 2021, we have assessed the impact of the COVID-19 pandemic on our loan portfolio, as we would with any natural disaster or significant economic decline. The longer term impact of our response is dependent upon a number of variables, including the prolonged impact of the COVID-19 pandemic and its impact on the economic recovery. Continued weakness in the labor market could lead to increased delinquencies and defaults in our consumer portfolio. Additionally, increased economic deterioration could lead to elevated default rates in our Commercial portfolio, especially for industries highly impacted by the COVID-19 pandemic.

The payment deferral program that Huntington initiated for its customers in March 2020 has largely ended, with less than 1% of the total deferrals remaining in place as of March 31, 2021. The remaining deferrals in the Consumer portfolio are in the Residential secured portfolio, consistent with the longer term payment deferral time frames available on those loans. For the few commercial borrowers requiring additional financial help, the expired deferrals were replaced with modified terms and conditions as we continue to work closely with our customers. The post deferral payment activity has been positive across both the Commercial and Consumer portfolios to date.

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Loan and Lease Credit Exposure Mix

Refer to the “Loan and Lease Credit Exposure Mix” section of our 2020 Form 10-K for a brief description of each portfolio segment.

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


Table 6 - Loan and Lease Portfolio Composition

(dollar amounts in millions)	March 31, 2021				December 31, 2020				September 30, 2020				June 30, 2020				March 31, 2020
Commercial:
Commercial and industrial	$	34,464	43	%	$	35,373	43	%	$	34,895	43	%	$	34,879	44	%	$	32,959	42	%
Commercial real estate:
Construction	1,083		1		1,035		1		1,154		1		1,200		1		1,180		2
Commercial	6,096		8		6,164		8		6,055		7		5,979		7		5,793		7
Commercial real estate	7,179		9		7,199		9		7,209		8		7,179		8		6,973		9
Total commercial	41,643		52		42,572		52		42,104		51		42,058		52		39,932		51
Consumer:
Automobile	12,591		16		12,778		16		12,925		17		12,678		16		12,907		17
Home equity	8,727		11		8,894		11		8,904		11		8,866		11		9,010		11
Residential mortgage	12,092		15		12,141		15		12,031		15		11,621		15		11,398		15
RV and marine	4,218		5		4,190		5		4,146		5		3,843		5		3,643		5
Other consumer	959		1		1,033		1		1,046		1		1,073		1		1,145		1
Total consumer	38,587		48		39,036		48		39,052		49		38,081		48		38,103		49
Total loans and leases	$	80,230	100	%	$	81,608	100	%	$	81,156	100	%	$	80,139	100	%	$	78,035	100	%

Our loan portfolio is a managed mix of consumer and commercial credits. At the corporate level, we manage the overall credit exposure and portfolio composition via a credit concentration policy. The policy designates specific loan types, collateral types, and loan structures to be formally tracked and assigned maximum exposure limits as a percentage of capital. C&I lending by NAICS categories, specific limits for CRE project types, loans secured by residential real estate, large dollar exposures, and designated high risk loan categories represent examples of specifically tracked components of our concentration management process. There are no identified concentrations that exceed the assigned exposure limit. Our concentration management policy is approved by the ROC of the Board of Directors and is used to ensure a high quality, well diversified portfolio that is consistent with our overall objective of maintaining an aggregate moderate-to-low risk profile. Changes to existing concentration limits, incorporating specific information relating to the potential impact on the overall portfolio composition and performance metrics, require the approval of the ROC prior to implementation.

Commercial Credit

Refer to the “Commercial Credit” section of our 2020 Form 10-K for our commercial credit underwriting and on-going credit management processes.

Consumer Credit

Refer to the “Consumer Credit” section of our 2020 Form 10-K for our consumer credit underwriting and on-going credit management processes.

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The table below provides our total loan and lease portfolio segregated by industry type. The changes in the industry composition from December 31, 2020 are consistent with the portfolio growth metrics.


Table 7 - Loan and Lease Portfolio by Industry Type

(dollar amounts in millions)	March 31, 2021				December 31, 2020				September 30, 2020				June 30, 2020				March 31, 2020
Commercial loans and leases:
Real estate and rental and leasing	$	6,854	9	%	$	6,962	9	%	$	7,056	9	%	$	7,117	9	%	$	6,991	9	%
Manufacturing	5,523		7		5,556		7		5,658		7		6,147		8		5,846		7
Retail trade (1)	4,694		6		5,111		6		4,922		6		5,053		6		5,886		8
Health care and social assistance	3,672		5		3,646		4		3,566		4		3,534		4		2,815		4
Finance and insurance	3,343		4		3,389		4		3,197		4		3,345		4		3,670		5
Accommodation and food services	3,281		4		3,100		4		3,012		4		2,877		4		2,081		3
Wholesale trade	2,545		3		2,652		3		2,529		3		2,352		3		2,555		3
Professional, scientific, and technical services	1,972		2		2,051		3		2,086		3		2,177		3		1,615		2
Other services	1,578		2		1,613		2		1,641		2		1,510		2		1,358		2
Construction	1,412		2		1,389		2		1,425		2		1,492		2		962		1
Transportation and warehousing	1,307		2		1,401		2		1,408		2		1,338		2		1,211		2
Admin./Support/Waste Mgmt. and Remediation Services	949		1		975		1		932		1		916		1		693		1
Information	793		1		829		1		817		1		759		1		728		1
Utilities	754		1		793		1		647		1		573		1		629		1
Arts, entertainment, and recreation	725		1		744		1		738		1		732		1		694		1
Educational services	686		1		735		1		752		—		559		—		465		—
Public administration	640		1		662		1		645		—		302		—		259		—
Mining, quarrying, and oil and gas extraction	511		—		601		—		674		1		930		1		1,162		1
Agriculture, forestry, fishing and hunting	139		—		157		—		158		—		140		—		141		—
Management of companies and enterprises	123		—		144		—		132		—		115		—		104		—
Unclassified/Other	142		—		62		—		109		—		90		—		67		—
Total commercial loans and leases by industry category	41,643		52		42,572		52		42,104		51		42,058		52		39,932		51
Automobile	12,591		16		12,778		16		12,925		17		12,678		16		12,907		17
Home Equity	8,727		11		8,894		11		8,904		11		8,866		11		9,010		11
Residential Mortgage	12,092		15		12,141		15		12,031		15		11,621		15		11,398		15
RV and marine	4,218		5		4,190		5		4,146		5		3,843		5		3,643		5
Other consumer loans	959		1		1,033		1		1,046		1		1,073		1		1,145		1
Total loans and leases	$	80,230	100	%	$	81,608	100	%	$	81,156	100	%	$	80,139	100	%	$	78,035	100	%

(1) Amounts include $2.0 billion, $2.4 billion, $2.2 billion, $2.8 billion and $4.0 billion of auto dealer services loans at March 31, 2021, December 31, 2020, September 30, 2020, June 30, 2020 and March 31, 2020, respectively.

Credit Quality

(This section should be read in conjunction with Note 4 “Loans / Leases” and Note 5 “Allowance for Credit Losses” of the Notes to Unaudited Condensed Consolidated Financial Statements.)

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

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Credit quality performance in the 2021 first quarter reflected total NCOs as a percent of average loans, annualized, of 0.32%, an decrease from 0.55% in the prior quarter. Total NCOs were $64 million, a decrease of $48 million from the prior quarter, driven by a $41 million decrease in Commercial NCOs, and a $7 million decrease in Consumer NCOs. NPAs decreased from the prior quarter by $19 million or 3% driven by reductions in the commercial portfolio.

NPAs, NALs, AND TDRs

(This section should be read in conjunction with Note 4 “Loans / Leases” and Note 5 “Allowance for Credit Losses” of the Notes to Unaudited Condensed Consolidated Financial Statements and “Credit Quality” section of our 2020 Form 10-K.)

NPAs and NALs

Commercial loans are placed on nonaccrual status at 90-days past due, or earlier if repayment of principal and interest is in doubt. Of the $351 million of commercial related NALs at March 31, 2021, $241 million, or 69%, represented loans that were less than 30-days past due, demonstrating our continued commitment to proactive credit risk management.

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


Table 8 - Nonaccrual Loans and Leases and Nonperforming Assets

(dollar amounts in millions)	March 31, 2021			December 31, 2020			September 30, 2020			June 30, 2020			March 31, 2020
Nonaccrual loans and leases (NALs):
Commercial and industrial	$	343		$	353		$	388		$	485		$	396
Commercial real estate	8			15			16			28			30
Automobile	3			4			5			8			6
Home equity	71			70			71			59			58
Residential mortgage	90			88			88			66			66
RV and marine	1			2			1			2			2
Other consumer	—			—			—			—			—
Total nonaccrual loans and leases	516			532			569			648			558
Other real estate, net:
Residential	2			4			4			5			8
Commercial	—			—			1			2			2
Total other real estate, net	2			4			5			7			10
Other NPAs (1)	26			27			28			58			18
Total nonperforming assets	$	544		$	563		$	602		$	713		$	586

Nonaccrual loans and leases as a % of total loans and leases	0.64		%	0.65		%	0.70		%	0.81		%	0.72		%
NPA ratio (2)	0.68			0.69			0.74			0.89			0.75

(1) Other nonperforming assets include certain impaired investment securities and/or nonaccrual loans held-for-sale.

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

2021 First Quarter versus 2020 Fourth Quarter.

Total NPAs decreased $19 million, or 3%, compared with December 31, 2020, driven by driven by reductions in C&I and CRE nonaccrual loans.

TDR Loans

(This section should be read in conjunction with Note 4 “Loans / Leases” of the Notes to Unaudited Condensed Consolidated Financial Statements and TDR Loans section of our 2020 Form 10-K.)

Over the past five quarters, the accruing component of the total TDR balance has been consistently over 75%, indicating there is no identified credit loss and the borrowers continue to make their monthly payments. As of March 31, 2021, over 81% of the $428 million of accruing TDRs secured by residential real estate (residential mortgage and home equity in Table 9) are current on their required payments, with over 55% of the accruing pool

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having had no delinquency in the past 12 months. There is limited migration from the accruing to nonaccruing components, and virtually all of the charge-offs come from the nonaccruing TDR balances.

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


Table 9 - Accruing and Nonaccruing Troubled Debt Restructured Loans (1)
(dollar amounts in millions)	March 31, 2021		December 31, 2020		September 30, 2020		June 30, 2020		March 31, 2020
TDRs—accruing:
Commercial and industrial	$	127	$	193	$	189	$	192	$	219
Commercial real estate	32		33		34		35		37
Automobile	51		50		53		52		42
Home equity	179		187		199		209		219
Residential mortgage	249		248		256		229		227
RV and marine	7		6		6		6		3
Other consumer	8		9		10		10		11
Total TDRs—accruing	653		726		747		733		758
TDRs—nonaccruing:
Commercial and industrial	101		95		146		169		119
Commercial real estate	3		3		3		3		4
Automobile	2		2		2		2		2
Home equity	30		30		29		26		25
Residential mortgage	51		51		48		43		42
RV and marine	1		1		1		1		2

Total TDRs—nonaccruing	188		182		229		244		194
Total TDRs	$	841	$	908	$	976	$	977	$	952

(1)Loan modifications under the CARES Act, as amended and interagency regulatory guidance are not considered TDRs.

Overall TDRs decreased in the quarter, primarily related to a decline in the C&I portfolio. Huntington continues to proactively work with our borrowing relationships that require assistance. The resulting loan structures enable our borrowers to meet their commitments and Huntington to retain earning assets. The accruing TDRs meet the well secured definition and have demonstrated a period of satisfactory payment performance.

ACL

(This section should be read in conjunction with Note 5 “Allowance for Credit Losses” of the Notes to Unaudited Condensed Consolidated Financial Statements.)

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

The models used within our loan and lease portfolio incorporate historical loss experience, as well as current and future economic conditions over a reasonable and supportable period beyond the balance sheet date. We make various judgments combined with historical loss experience to generate a loss rate that is applied to the outstanding loan or receivable balance to produce a reserve for expected credit losses.

We use a combination of statistically-based models that utilize assumptions about current and future economic conditions throughout the contractual life of the loan. The process of estimating expected credit losses is based on several key parameters: Probability of Default (PD), Exposure at Default (EAD), and Loss Given Default (LGD). Beyond the reasonable and supportable period (two to three years), the economic variables revert to a historical equilibrium at a pace dependent on the state of the economy reflected within the economic scenario.

These three parameters, PD, EAD, and LGD are utilized to estimate the cumulative credit losses over the remaining expected life of the loan. We also consider the likelihood a previously charged-off account will be recovered. This calculation is dependent on how long ago the account was charged-off and future economic conditions, which estimate the likelihood and magnitude of recovery. Our models are developed using internal historical loss experience covering the full economic cycle and consider the impact of account characteristics on expected losses.

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Future economic conditions consider multiple macroeconomic scenarios provided to us by an independent third party and are reviewed through the appropriate committee governance channels discussed below. These macroeconomic scenarios contain certain geography based variables that are influential to our modeling process, the most significant being unemployment rates and Gross Domestic Product (GDP). The probability weights assigned to each scenario are generally expected to be consistent from period to period. Any changes in probability weights must be supported by appropriate documentation and approval of senior management. Additionally, we consider whether to adjust the modeled estimates to address possible limitations within the models or factors not captured within the macroeconomic scenarios. Lifetime losses for most of our loans and receivables are evaluated collectively based on similar risk characteristics, risk ratings, origination credit bureau scores, delinquency status, and remaining months within loan agreements, among other factors.

The macroeconomic scenarios evaluated by Huntington during the 2021 first quarter continued to reflect the impact of the COVID-19 pandemic. The baseline scenario used for the quarter assumes that the worst of the economic disruption from the pandemic has passed, with the expectation that subsequent waves of the virus will not carry the same level of economic disruption experienced to date. The unemployment variable is incorporated within our models as both a rate of change variable and an absolute level variable. Historically, changes in unemployment have taken gradual paths resulting in more measured impacts each quarter.

The table below is intended to show how the forecasted path of these key macroeconomic variables has changed since the end of 2020:


Table 10 - Forecasted Key Macroeconomic Variables
Baseline scenario forecast	2020		2021				2022
	Q4		Q2		Q4		Q2		Q4


Unemployment rate (1)
4Q 2020	7.2	%	7.5	%	7.2	%	6.4	%	5.5	%
1Q 2021	N/A		6.3		5.7		5.0		4.5


Gross Domestic Product (1)
4Q 2020	3.0	%	3.8	%	5.8	%	4.4	%	3.9	%
1Q 2021	N/A		5.2		5.8		5.3		3.5


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

The uncertainty related to the COVID-19 pandemic prompted management to continue to assess the macroeconomic environment through the end of the quarter. Management considered multiple macroeconomic forecasts that reflected a range of possible outcomes in order to capture the severity of and the economic disruption associated with the pandemic. While we have incorporated our estimated impact of COVID-19 into our allowance for credit losses (“ACL”), the ultimate impact of COVID-19 is still uncertain, including how long economic activities will be impacted and what effect the unprecedented levels of government fiscal and monetary actions will have on the economy and our credit losses.

Given significant COVID-19 specific government relief programs and additional stimulus spending enacted into law during the first quarter, as well as certain limitations of our models in the current economic environment particularly the level of unemployment, management developed additional analytics to support adjustments to our modeled results. The Bank’s governance committees reviewed model results of each economic scenario for appropriate usage, concluding that the quantitative transactional reserve (collectively assessed) will continue to utilize the scenario weighting approach established in prior quarters. Given the impact of the unemployment variable utilized within the models and the uncertainty associated with key economic scenario assumptions, the March 31, 2021 ACL included a material general reserve component as well as additional industry specific risk profiles to capture economic uncertainty not addressed within the quantitative transaction reserve.

Our ACL methodology committee is responsible for developing the methodology, assumptions and estimates used in the calculation, as well as determining the appropriateness of the ACL. The ALLL represents the estimate of lifetime expected losses in the loan and lease portfolio at the reported date. The loss modeling process uses an EAD concept to calculate total expected losses on both funded balances and unfunded commitments, where appropriate.

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Losses related to the unfunded commitments are then recorded as AULC within other liabilities in the Unaudited Condensed Consolidated Balance Sheet. A liability for expected credit losses for off-balance sheet credit exposures is recognized if Huntington has a present contractual obligation to extend the credit and the obligation is not unconditionally cancelable.

The table below reflects the allocation of our ALLL among our various loan categories during each of the past five quarters:


Table 11 - Allocation of Allowance for Credit Losses (1)

(dollar amounts in millions)	March 31, 2021				December 31, 2020				September 30, 2020				June 30, 2020				March 31, 2020
ALLL
Commercial
Commercial and industrial	$	865	43	%	$	939	43	%	$	912	43	%	$	923	44	%	$	837	42	%
Commercial real estate	332		9		297		9		351		8		246		8		159		9
Total commercial	1,197		52		1,236		52		1,263		51		1,169		52		996		51
Consumer
Automobile	156		16		166		16		163		17		177		16		148		17
Home equity	90		11		124		11		103		11		105		11		120		11
Residential mortgage	73		15		79		15		69		15		44		15		53		15
RV and marine	114		5		129		5		116		5		125		5		97		5
Other consumer	73		1		80		1		82		1		82		1		90		1
Total consumer	506		48		578		48		533		49		533		48		508		49
Total ALLL	1,703		100	%	1,814		100	%	1,796		100	%	1,702		100	%	1,504		100	%
AULC	38				52				82				119				99
Total ACL	$	1,741			$	1,866			$	1,878			$	1,821			$	1,603
Total ALLL as a % of
Total loans and leases			2.12%				2.22%				2.21%				2.12%				1.93%
Nonaccrual loans and leases			330				341				316				263				270
NPAs			313				323				298				239				257
Total ACL as % of
Total loans and leases			2.17%				2.29%				2.31%				2.27%				2.06%
Nonaccrual loans and leases			338				351				330				281				287
NPAs			320				332				311				255				273

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

2021 First Quarter versus 2020 Fourth Quarter

At March 31, 2021, the ALLL was $1.7 billion, a decrease of $111 million compared to the December 31, 2020 balance of $1.8 billion. The ALLL to total loans and leases ratio decreased 10 basis points to 2.12%

The ACL to total loans ratio was 2.17% at March 31, 2021 compared to 2.29% at December 31, 2020. The decrease was primarily related to a reduction in credit reserves reflecting an improvement in the economic outlook.

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NCOs


Table 12 - Quarterly Net Charge-off Analysis
	Three Months Ended
	March 31,			December 31,			March 31,
(dollar amounts in millions)	2021			2020			2020
Net charge-offs (recoveries) by loan and lease type:
Commercial:
Commercial and industrial	$	52		$	58		$	84
Commercial real estate:
Construction	—			—			—
Commercial	(3)			32			(1)
Commercial real estate	(3)			32			(1)
Total commercial	49			90			83
Consumer:
Automobile	2			6			7
Home equity	—			1			5
Residential mortgage	—			1			1
RV and marine	3			2			2
Other consumer	10			12			19
Total consumer	15			22			34
Total net charge-offs	$	64		$	112		$	117




Net charge-offs (recoveries) - annualized percentages:
Commercial:
Commercial and industrial	0.60		%	0.67		%	1.09		%
Commercial real estate:
Construction	(0.04)			(0.04)			0.08
Commercial	(0.17)			2.14			(0.06)
Commercial real estate	(0.15)			1.81			(0.03)
Total commercial	0.47			0.86			0.89
Consumer:
Automobile	0.05			0.21			0.22
Home equity	0.02			0.01			0.19
Residential mortgage	0.01			0.05			0.02
RV and marine	0.29			0.21			0.27
Other consumer	3.99			4.35			6.45
Total consumer	0.16			0.22			0.35
Net charge-offs as a % of average loans	0.32		%	0.55		%	0.62		%

2021 First Quarter versus 2020 Fourth Quarter

NCOs were an annualized 0.32% of average loans and leases in the current quarter, decreasing from 0.55% in the 2020 fourth quarter, and below our average through-the-cycle target range of 0.35% - 0.55%. Annualized NCOs for the commercial portfolios were 0.47% in the current quarter compared to 0.86% in the 2020 fourth quarter. Consumer charge-offs were lower for the quarter, across the consumer portfolio, consistent with our expectations.

Market Risk

(This section should be read in conjunction with the “Market Risk” section of our 2020 Form 10-K for our on-going market risk management processes.)

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

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investments, and investments in securities backed by mortgage loans.

Huntington measures market risk exposure via financial simulation models, which provide management with insights on the potential impact to net interest income and other key metrics as a result of changes in market interest rates. Models are used to simulate cash flows and accrual characteristics of the balance sheet based on assumptions regarding the slope or shape of the yield curve, the direction and volatility of interest rates, and the changing composition and characteristics of the balance sheet resulting from strategic objectives and customer behavior. Assumptions and models provide insight on forecasted balance sheet growth and composition, and the pricing and maturity characteristics of current and future business.

In measuring the financial risks associated with interest rate sensitivity in Huntington’s balance sheet, Huntington compares a set of alternative interest rate scenarios to the results of a base case scenario derived using market forward rates. The market forward reflects the market consensus regarding the future level and slope of the yield curve across a range of tenor points. The standard set of interest rate scenarios includes two types: “shock” scenarios which are instantaneous parallel rate shifts, and “ramp” scenarios where the parallel shift is applied gradually over the first 12 months of the forecast on a pro rata basis. In both shock and ramp scenarios with falling rates, Huntington presumes that market rates cannot go below 0%. The forecasted scenarios are inclusive of realized income of interest rate risk hedging activities. Forward starting hedges are included to the extent that they have been transacted and that they start within the measurement horizon.


Table 14 - Net Interest Income at Risk

	Net Interest Income at Risk (%)
Basis point change scenario	-25		+100		+200
Board policy limits	-1.3	%	-2.0	%	-4.0	%
March 31, 2021	-0.6		3.0		6.6
December 31, 2020	-1.1		3.4		7.3

The NII at Risk results included in the table above reflect the analysis used monthly by management. It models gradual (“ramp” as defined above) +100 and +200 basis point parallel shifts in market interest rates, implied by the forward yield curve over the next twelve months as well as an instantaneous parallel shock of -25 basis points.

Our NII at Risk is within our Board of Directors’ policy limits for the -25, +100 and +200 basis point scenarios. The NII at Risk shows that our balance sheet is asset sensitive at both March 31, 2021, and December 31, 2020. The change in sensitivity is primarily driven by changes in market rate expectations, and the size and mix of the balance sheet.


Table 15 - Economic Value of Equity at Risk

	Economic Value of Equity at Risk (%)
Basis point change scenario	-25		+100		+200
Board policy limits	-1.5	%	-6.0	%	-12.0	%
March 31, 2021	—		-1.3		-4.4
December 31, 2020	-0.7		1.4		-0.1

The EVE results included in the table above reflect the analysis used monthly by management. It models immediate -25, +100 and +200 basis point parallel shifts (“shocks” as defined above) in market interest rates.

We are within our Board of Directors’ policy limits for the -25, +100 and +200 basis point scenarios. As of March 31st, EVE depicts a liability sensitive (long duration) balance sheet profile. The change in sensitivity from December 31st 2020’s asset sensitive (short duration) position was driven primarily by changes in the spot market rate curve impacting forecasted runoff expectations, and the size and shape of the balance sheet.

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Use of Derivatives to Manage Interest Rate Risk

An integral component of our interest rate risk management strategy is use of derivative instruments to minimize significant fluctuations in earnings caused by changes in market interest rates. Examples of derivative instruments that we may use as part of our interest rate risk management strategy include interest rate swaps, caps and floors, forward contracts, and forward starting interest rate swaps.

Table 16 shows all swap, floor and cap positions that are utilized for purposes of managing our exposures to the variability of interest rates. The interest rates variability may impact either the fair value of the assets and liabilities or impact the cash flows attributable to net interest margin. These positions are used to protect the fair value of asset and liabilities by converting the contractual interest rate on a specified amount of assets and liabilities (i.e., notional amounts) to another interest rate index. The positions are also used to hedge the variability in cash flows attributable to the contractually specified interest rate by converting the variable rate index into a fixed rate. The volume, maturity and mix of derivative positions change frequently as we adjust our broader interest rate risk management objectives and the balance sheet positions to be hedged. For further information, including the notional amount and fair values of these derivatives, refer to Note 12 “Derivative Financial Instruments” of the Notes to Unaudited Condensed Consolidated Financial Statements.

The following table presents additional information about the interest rate swaps, caps and floors used in Huntington’s asset and liability management activities at March 31, 2021 and December 31, 2020.


Table 16 - Weighted-Average Maturity, Receive Rate and LIBOR Reset Rate on Asset Liability Management Instruments
	March 31, 2021
			Average Maturity (years)			Weighted-Average Fixed Rate		Weighted-Average LIBOR Reset Rate
(dollar amounts in millions)	Notional Value			Fair Value
Asset conversion swaps
Receive Fixed - Pay 1 month LIBOR	$	6,525	1.78	$	219	1.81	%	0.11	%
Pay Fixed - Receive 1 month LIBOR (1)	2,957		2.48	38		0.22		0.11
Receive Fixed - Pay 1 month LIBOR - forward starting (2)	750		3.04	18		1.24		—
Pay Fixed - Receive 1 month LIBOR - forward starting (3)	233		9.35	9		1.12
Liability conversion swaps
Receive Fixed - Pay 1 month LIBOR	5,397		1.77	217		2.28		0.11


Basis Swaps
Pay SOFR- Receive Fed Fund (economic hedges) (4)	230		4.41	—		0.07		0.02
Pay Fed Fund - Receive SOFR (economic hedges) (4)	41		1.73	—		0.01		0.07
Total swap portfolio	$	16,133		$	501

	March 31, 2021
			Average Maturity (years)			Weighted-Average Strike		Weighted-Average LIBOR Reset Rate
(dollar amounts in millions)	Notional Value			Fair Value
Interest rate floors
Purchased Interest Rate Floors - 1 month LIBOR	$	6,175	0.15	$	28	1.76	%	0.11	%
Purchased Floor Spread - 1 month LIBOR	525		1.57	8		2.50 / 1.50		0.11
Purchased Floor Spread - 1 month LIBOR forward starting (5)	2,375		3.56	59		1.56 / 0.65		—
Purchased Floor Spread - 1 month LIBOR (economic hedges)	1,000		2.04	16		1.75 / 1.00		0.11
Interest rate caps
Purchased Cap - 1 month LIBOR (economic hedges)	5,000		6.66	244		0.98		0.11
Written Cap - 1 month LIBOR (economic hedges)	1,500		6.58	(25)		2.94		0.11
Written Cap - 1 month LIBOR forward starting (economic hedges) (2)	1,500		6.59	(24)		3.00		—
Total floors and caps portfolio	$	18,075		$	306

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	December 31, 2020
			Average Maturity (years)			Weighted-Average Fixed Rate		Weighted-Average LIBOR Reset Rate
(dollar amounts in millions)	Notional Value			Fair Value
Asset conversion swaps
Receive Fixed - Pay 1 month LIBOR	$	6,525	2.03	$	231	1.81	%	0.15	%
Pay Fixed - Receive 1 month LIBOR (1)	3,076		1.99	3		0.17		0.15
Receive Fixed - Pay 1 month LIBOR - forward starting (2)	750		3.29	23		1.24		—
Pay Fixed - Receive 1 month LIBOR - forward starting (6)	408		9.08	2		0.68		—
Liability conversion swaps
Receive Fixed - Pay 1 month LIBOR	5,397		2.02	262		2.28		0.15
Receive Fixed - Pay 3 month LIBOR	800		0.21	5		1.31		0.22
Basis Swaps
Pay SOFR- Receive Fed Fund (economic hedges) (4)	230		4.66	—		0.09		0.10
Pay Fed Fund - Receive SOFR (economic hedges) (4)	41		1.98	—		0.09		0.09
Total swap portfolio	$	17,227		$	526

	December 31, 2020
			Average Maturity (years)			Weighted-Average Floor Strike		Weighted-Average LIBOR Reset Rate
(dollar amounts in millions)	Notional Value			Fair Value
Interest rate floors
Purchased Interest Rate Floors - 1 month LIBOR	$	7,200	0.37	$	59	1.81	%	0.15	%
Purchased Floor Spread - 1 month LIBOR	400		1.74	7		2.50 / 1.50		0.15
Purchased Floor Spread - 1 month LIBOR forward starting (7)	2,500		3.72	76		1.65 / 0.70		—
Purchased Floor Spread - 1 month LIBOR (economic hedges)	1,000		2.29	18		1.75 / 1.00		0.16
Interest rate caps
Purchased Cap - 1 month LIBOR (economic hedges)	5,000		6.91	91		0.98		0.15
Total floors and caps portfolio	$	16,100		$	251

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

(2)Forward starting swaps and caps effective starting in April 2021.

(3)Forward starting swaps effective starting from April 2021 to May 2021.

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

(5)Forward starting floor spreads become effective starting from April 2021 to June 2021.

(6)Forward starting swaps become effective starting from January 2021 to May 2021.

(7)Forward starting floors become effective starting from March 2021 to June 2021.

During the fourth quarter of 2020, we purchased (long) $5.0 billion notional of interest rate caps with an average strike price of 98 basis points to reduce the impact on capital from rising rates and designated them as economic hedges of interest rate risk attributable to our long-term debt. Subsequently, in the first quarter of 2021, we entered into an incremental $3.0 billion notional of written (short) interest rates caps with an average strike price of 297 basis points and created a collar-like position for hedging our interest rate risk.

Net interest income in the current quarter included a $144 million mark-to-market of interest rate caps (including caps written in the first quarter of 2021). The mark-to-market is not included in the NII at Risk calculations above. As these positions are marked-to-market through net interest income each quarter, we expect impact in our reported net interest margin. However, the partial collar-like position that was created by selling the interest caps is expected to dampen those impacts.

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MSRs

(This section should be read in conjunction with Note 6 “Mortgage Loan Sales and Servicing Rights” of Notes to the Unaudited Condensed Consolidated Financial Statements.)

At March 31, 2021, we had a total of $274 million of capitalized MSRs representing the right to service $24 billion in mortgage loans.

MSR fair values are sensitive to movements in interest rates as expected future net servicing income depends on the projected outstanding principal balances of the underlying loans, which can be reduced by prepayments. Prepayments usually increase when mortgage interest rates decline and decrease when mortgage interest rates rise. We also employ hedging strategies to reduce the risk of MSR fair value changes or impairment. However, volatile changes in interest rates can diminish the effectiveness of these economic hedges. We report changes in the MSR value net of hedge-related trading activity in the mortgage banking income category of noninterest income.

MSR assets are included in servicing rights and other intangible assets in the Unaudited Condensed Consolidated Financial Statements.

Price Risk

Price risk represents the risk of loss arising from adverse movements in the prices of financial instruments that are carried at fair value and are subject to fair value accounting. We have price risk from trading securities, securities owned by our broker-dealer subsidiaries, foreign exchange positions, derivative instruments, and equity investments. We have established loss limits on the trading portfolio, on the amount of foreign exchange exposure that can be maintained, and on the amount of marketable equity securities that can be held.

Liquidity Risk

(This section should be read in conjunction with the “Liquidity Risk” section of our 2020 Form 10-K for our on-going liquidity risk management processes.)

Our primary source of liquidity is our core deposit base. Core deposits comprised approximately 97% of total deposits at March 31, 2021. We also have available unused wholesale sources of liquidity, including advances from the FHLB, issuance through dealers in the capital markets, and access to certificates of deposit issued through brokers. Liquidity is further provided by unencumbered, or unpledged, investment securities that totaled $13.4 billion as of March 31, 2021.

Bank Liquidity and Sources of Funding

Our primary sources of funding for the Bank are retail and commercial core deposits. At March 31, 2021, these core deposits funded 79% of total assets (124% of total loans). Other sources of liquidity include non-core deposits, FHLB advances, wholesale debt instruments, and securitizations. Demand deposit overdrafts that have been reclassified as loan balances were $16 million and $14 million at March 31, 2021 and December 31, 2020, respectively.

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


Table 17 - Deposit Composition

	March 31,				December 31,				September 30,				June 30,				March 31,
(dollar amounts in millions)	2021				2020				2020				2020				2020
By Type:
Demand deposits—noninterest-bearing	$	31,226	30	%	$	28,553	29	%	$	27,466	29	%	$	27,574	29	%	$	21,039	24	%
Demand deposits—interest-bearing	27,493		27		26,757		27		24,242		25		22,961		25		23,115		27
Money market deposits	26,268		26		26,248		27		26,230		28		25,312		27		25,068		29
Savings and other domestic deposits	13,115		13		11,722		12		11,268		12		11,034		12		9,845		11
Core certificates of deposit (1)	1,329		1		1,425		1		1,586		2		2,478		3		3,599		4
Total core deposits:	99,431		97		94,705		96		90,792		96		89,359		96		82,666		95
Other domestic deposits of $250,000 or more	105		—		131		—		156		—		209		—		276		—
Brokered deposits and negotiable CDs	2,648		3		4,112		4		4,206		4		4,123		4		3,888		5

Total deposits	$	102,184	100	%	$	98,948	100	%	$	95,154	100	%	$	93,691	100	%	$	86,830	100	%
Total core deposits:
Commercial	$	46,539	47	%	$	44,698	47	%	$	43,018	47	%	$	41,630	47	%	$	38,064	46	%
Consumer	52,892		53		50,007		53		47,774		53		47,729		53		44,602		54
Total core deposits	$	99,431	100	%	$	94,705	100	%	$	90,792	100	%	$	89,359	100	%	$	82,666	100	%

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

The Bank maintains borrowing capacity at the FHLB and the Federal Reserve Bank Discount Window. The Bank does not consider borrowing capacity from the Federal Reserve Bank Discount Window as a primary source of liquidity. Total loans and securities pledged to the Federal Reserve Bank Discount Window and the FHLB are $48.2 billion and $53.4 billion at March 31, 2021 and December 31, 2020, respectively.

At March 31, 2021, the market value of investment securities pledged to secure public and trust deposits, trading account liabilities, U.S. Treasury demand notes, and security repurchase agreements totaled $4.8 billion. There were no securities of a single issuer, which are not governmental or government-sponsored, that exceeded 10% of shareholders’ equity at March 31, 2021.

To the extent we are unable to obtain sufficient liquidity through core deposits, we may meet our liquidity needs through sources of wholesale funding, asset securitization or sale. Sources of wholesale funding include other domestic deposits of $250,000 or more, brokered deposits and negotiable CDs, short-term borrowings, and long-term debt. At March 31, 2021, total wholesale funding was $10.2 billion, a decrease from $12.8 billion at December 31, 2020. The decrease from year-end is due to a decrease in brokered deposits and negotiable CD and long-term debt.

At March 31, 2021, we believe the Bank has sufficient liquidity to meet its cash flow obligations for the foreseeable future.

Parent Company Liquidity

The parent company’s funding requirements consist primarily of dividends to shareholders, debt service, income taxes, operating expenses, funding of nonbank subsidiaries, repurchases of our stock, and acquisitions. The parent company obtains funding to meet obligations from dividends and interest received from the Bank, interest and dividends received from direct subsidiaries, net taxes collected from subsidiaries included in the federal consolidated tax return, fees for services provided to subsidiaries, and the issuance of debt securities.

During the 2021 first quarter, Huntington issued $500 million of Series H Preferred Stock. See Note 8 “Shareholders’ Equity” and Note 14 of our 2020 Form 10-K for further information.

At March 31, 2021 and December 31, 2020, the parent company had $4.1 billion and $4.4 billion, respectively, in cash and cash equivalents.

On April 21, 2021, the Board of Directors declared a quarterly common stock cash dividend of $0.15 per common share. The dividend is payable on July 1, 2021, to shareholders of record on June 17, 2021. Based on the

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current quarterly dividend of $0.15 per common share, cash demands required for common stock dividends are estimated to be approximately $153 million per quarter. On April 21, 2021, the Board of Directors also declared a quarterly Series B, Series C, Series D, Series E, Series F, Series G and Series H Preferred Stock dividend payable on July 15, 2021 to shareholders of record on July 1, 2021. Total cash demands required for Series B, Series C, Series D, Series E, Series F, Series G and Series H are expected to be approximately $37 million per quarter.

During the first three months of 2021, the Bank paid preferred and common dividends of $11 million and $0.3 billion, respectively. To meet any additional liquidity needs, the parent company may issue debt or equity securities from time to time.

Off-Balance Sheet Arrangements

In the normal course of business, we enter into various off-balance sheet arrangements. These arrangements include commitments to extend credit, interest rate swaps, floors and caps, financial guarantees contained in standby letters-of-credit issued by the Bank, and commitments by the Bank to sell mortgage loans.

Operational Risk

Operational risk is the risk of loss due to human error, third-party performance failures, inadequate or failed internal systems and controls, including the use of financial or other quantitative methodologies that may not adequately predict future results; violations of, or noncompliance with, laws, rules, regulations, prescribed practices, or ethical standards; and external influences such as market conditions, fraudulent activities, disasters, failed business contingency plans and security risks. We continuously strive to strengthen our system of internal controls to ensure compliance with significant contracts, agreements, laws, rules, and regulations, and to improve the oversight of our operational risk.

We actively monitor cyberattacks such as attempts related to online deception and loss of sensitive customer data. We evaluate internal systems, processes and controls to mitigate loss from cyber-attacks and, to date, have not experienced any material losses. Cybersecurity threats have increased, primarily through COVID-19 themed phishing campaigns. We are actively monitoring our email gateways for malicious phishing email campaigns. We have also increased our cybersecurity and fraud monitoring activities through the implementation of specific monitoring of remote connections by geography and volume of connections to detect anomalous remote logins, since a significant portion of our workforce is now working remotely.

Our objective for managing cyber security risk is to avoid or minimize the impacts of external threat events or other efforts to penetrate our systems. We work to achieve this objective by hardening networks and systems against attack, and by diligently managing visibility and monitoring controls within our data and communications environment to recognize events and respond before the attacker has the opportunity to plan and execute on its own goals. To this end we employ a set of defense in-depth strategies, which include efforts to make us less attractive as a target and less vulnerable to threats, while investing in threat analytic capabilities for rapid detection and response. Potential concerns related to cyber security may be escalated to our board-level Technology Committee, as appropriate. As a complement to the overall cyber security risk management, we use a number of internal training methods, both formally through mandatory courses and informally through written communications and other updates. Internal policies and procedures have been implemented to encourage the reporting of potential phishing attacks or other security risks. We also use third-party services to test the effectiveness of our cyber security risk management framework, and any such third parties are required to comply with our policies regarding information security and confidentiality.

To mitigate operational risks, we have an Operational Risk Committee, a Legal, Regulatory, and Compliance Committee, a Funds Movement Committee, and a Third Party Risk Management Committee. The responsibilities of these committees, among other duties, include establishing and maintaining management information systems to monitor material risks and to identify potential concerns, risks, or trends that may have a significant impact and ensuring that recommendations are developed to address the identified issues. In addition, we have a Model Risk Oversight Committee that is responsible for policies and procedures describing how model risk is evaluated and managed and the application of the governance process to implement these practices throughout the enterprise. These committees report any significant findings and remediation recommendations to the Risk Management Committee. Potential concerns may be escalated to our ROC and the Audit Committee, as appropriate. Significant findings or issues are escalated by the Third Party Risk Management Committee to the Technology Committee of the

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Board, as appropriate. A separate Board Committee on Conversions and Integration is in place to monitor the activities, risks and progress of the TCF merger.

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

Compliance Risk

Financial institutions are subject to many laws, rules, and regulations at both the federal and state levels. These broad-based laws, rules, and regulations include, but are not limited to, expectations relating to anti-money laundering, lending limits, client privacy, fair lending, prohibitions against unfair, deceptive or abusive acts or practices, protections for military members as they enter active duty, and community reinvestment. The volume and complexity of recent regulatory changes have increased our overall compliance risk. As such, we utilize various resources to help ensure expectations are met, including a team of compliance experts dedicated to ensuring our conformance with all applicable laws, rules, and regulations. Our colleagues receive training for several broad-based laws and regulations including, but not limited to, anti-money laundering and customer privacy. Additionally, colleagues engaged in lending activities receive training for laws and regulations related to flood disaster protection, equal credit opportunity, fair lending, and/or other courses related to the extension of credit. We set a high standard of expectation for adherence to compliance management and seek to continuously enhance our performance.

Capital

Both regulatory capital and shareholders’ equity are managed at the Bank and on a consolidated basis. We have an active program for managing capital and maintain a comprehensive process for assessing the Company’s overall capital adequacy. We believe our current levels of both regulatory capital and shareholders’ equity are adequate.

The following table presents certain regulatory capital data at both the consolidated and Bank levels for each of the periods presented:


Table 18 - Regulatory Capital Data (1)
		Basel III
(dollar amounts in millions)		March 31, 2021			December 31, 2020			March 31, 2020
Total risk-weighted assets	Consolidated	$	89,494		$	88,878		$	90,193
	Bank	89,140			88,601			90,016
CET I risk-based capital	Consolidated	9,240			8,887			8,538
	Bank	9,667			9,438			9,887
Tier 1 risk-based capital	Consolidated	11,920			11,083			9,746
	Bank	10,831			10,601			10,760
Tier 2 risk-based capital	Consolidated	1,729			1,774			1,746
	Bank	1,436			1,431			1,481
Total risk-based capital	Consolidated	13,649			12,856			11,492
	Bank	12,267			12,032			12,241
CET I risk-based capital ratio	Consolidated	10.32		%	10.00		%	9.47		%
	Bank	10.85			10.65			10.98
Tier 1 risk-based capital ratio	Consolidated	13.32			12.47			10.81
	Bank	12.15			11.97			11.95
Total risk-based capital ratio	Consolidated	15.25			14.46			12.74
	Bank	13.76			13.58			13.60
Tier 1 leverage ratio	Consolidated	9.85			9.32			9.01
	Bank	8.98			8.94			9.98

(1) Capital ratios reflect Huntington's election of a five-year transition to delay for two years the full impact of CECL on regulatory capital, followed by a three-year transition period.

At March 31, 2021, we maintained Basel III capital ratios in excess of the well-capitalized standards established by the FRB. The increase in capital ratios was driven by earnings, adjusted for the CECL transition, offset by the repurchase of $5 million of common stock over the last four quarters (all during 2020 fourth quarter) and cash

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dividends. The balance sheet growth impact on regulatory capital ratios was largely offset by a change in asset mix during 2020 related to PPP loans and elevated deposits at the Federal Reserve Bank (both of which are 0% risk weighted). The year-over-year change in regulatory Tier 1 risk-based capital and total risk-based capital ratios also reflect the issuance of $500 million of Series F preferred stock, $500 million of Series G preferred stock and $500 million of Series H preferred stock in the 2020 second quarter, 2020 third quarter and 2021 first quarter, respectively.

Shareholders’ Equity

We generate shareholders’ equity primarily through the retention of earnings, net of dividends and share repurchases. Other potential sources of shareholders’ equity include issuances of common and preferred stock. Our objective is to maintain capital at an amount commensurate with our risk profile and risk tolerance objectives, to meet both regulatory and market expectations, and to provide the flexibility needed for future growth and business opportunities.

Shareholders’ equity totaled $13.6 billion at March 31, 2021, an increase of $0.6 billion or 5% when compared with December 31, 2020.

On February 2, 2021, Huntington issued $500 million of preferred stock. Huntington issued 20,000,000 depositary shares, each representing a 1/40th ownership interest in a share of 4.50% Series H Non-Cumulative Perpetual Preferred Stock (Preferred H Stock), par value $0.01 per share, with a liquidation preference of $1,000 per share (equivalent to $25 per depositary share).

On June 25, 2020, we were notified by the FRB that that certain large BHCs, including Huntington, were required to update and resubmit their capital plans because changes in financial markets and the macroeconomic outlook that could have a material impact on the BHC’s risk profile and financial condition required the use of updated scenarios. On December 18, 2020, we were notified by the FRB that under both of the severely adverse and the alternative severely adverse economic stress scenarios in the supervisory stress tests, our modeled capital ratios would continue to exceed the minimum requirements under the FRB's capital adequacy rules. In addition, the FRB also announced that certain large BHCs, including Huntington, will be permitted to make both dividend and share repurchases during the first quarter of 2021, subject to limits based on the amount of dividends paid in the second quarter of 2020 and the Bank's average net income for the four preceding quarters and that the FRB was extending through March 31, 2021, the time period for the FRB to notify certain large BHCs, including Huntington, whether the FRB will recalculate a large BHC’s stress capital buffer.

On March 25, 2021, we were notified by the FRB that certain large BHCs, including Huntington, would continue to be permitted to make both dividend and share repurchases during the second quarter of 2021, subject to limits based on the amount of dividends paid in the second quarter of 2020 and the Bank's average net income for the four preceding quarters. Our second quarter dividend that was declared by the Board of Directors on April 22, 2021 complies with these limits. In addition, the FRB announced that it was extending, through June 30, 2021, the time period for the FRB to notify certain large BHCs including Huntington, whether the FRB will recalculate a large BHCs stress capital buffer.

While the FRB reserves the authority to revoke or amend the amount of the distributions, or to further extend the restrictions on second quarter capital distributions to future quarters, the FRB announced, on March 25, 2021, that for a bank, such as Huntington, that is not subject to the supervisory stress test in 2021 and on a two-year supervisory stress testing cycle, the restrictions on capital distributions will end after June 30, 2021 and the Bank’s SCB requirements based on the June 2020 stress test will remain in place.

Dividends

We consider disciplined capital management as a key objective, with dividends representing one component. Our strong capital ratios position us to take advantage of additional capital management opportunities.

Share Repurchases

From time to time the Board of Directors authorizes the Company to repurchase shares of our common stock. Although we announce when the Board of Directors authorizes share repurchases, we typically do not give any public notice before we repurchase our shares. Future stock repurchases may be private or open-market

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repurchases, including block transactions, accelerated or delayed block transactions, forward transactions, and similar transactions. Various factors determine the amount and timing of our share repurchases, including our capital requirements, the number of shares we expect to issue for employee benefit plans and acquisitions, market conditions (including the trading price of our stock), and regulatory and legal considerations.

BUSINESS SEGMENT DISCUSSION

Overview

Our business segments are based on our internally-aligned segment leadership structure, which is how we monitor results and assess performance. We have four major business segments: Consumer and Business Banking, Commercial Banking, Vehicle Finance, and Regional Banking and The Huntington Private Client Group (RBHPCG). The Treasury / Other function includes technology and operations, other unallocated assets, liabilities, revenue, and expense.

Business segment results are determined based upon our management practices, which assigns balance sheet and income statement items to each of the business segments. The process is designed around our organizational and management structure and, accordingly, the results derived are not necessarily comparable with similar information published by other financial institutions.

Revenue Sharing

Revenue is recorded in the business segment responsible for the related product or service. Fee sharing is recorded to allocate portions of such revenue to other business segments involved in selling to or providing service to customers. Results of operations for the business segments reflect these fee sharing allocations.

Expense Allocation

The management process that develops the business segment reporting utilizes various estimates and allocation methodologies to measure the performance of the business segments. Expenses are allocated to business segments using a two-phase approach. The first phase consists of measuring and assigning unit costs (activity-based costs) to activities related to product origination and servicing. These activity-based costs are then extended, based on volumes, with the resulting amount allocated to business segments that own the related products. The second phase consists of the allocation of overhead costs to all four business segments from Treasury / Other. We utilize a full-allocation methodology, where all Treasury / Other expenses, except reported Significant Items, if any, and a small amount of other residual unallocated expenses, are allocated to the four business segments.

Funds Transfer Pricing (FTP)

We use an active and centralized FTP methodology to attribute appropriate net interest income to the business segments. The intent of the FTP methodology is to transfer interest rate risk from the business segments by providing matched duration funding of assets and liabilities. The result is to centralize the financial impact, management, and reporting of interest rate risk in the Treasury / Other function where it can be centrally monitored and managed. The Treasury / Other function charges (credits) an internal cost of funds for assets held in (or pays for funding provided by) each business segment. The FTP rate is based on prevailing market interest rates for comparable duration assets (or liabilities).

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Net Income by Business Segment

Net income by business segment for the past three-month periods ending March 31, 2021 and March 31, 2020 is presented in the following table:


Table 19 - Net Income by Business Segment
	Three Months Ended March 31,
(dollar amounts in millions)	2021		2020
Consumer and Business Banking	$	111	$	60
Commercial Banking	118		(86)
Vehicle Finance	76		11
RBHPCG	25		24
Treasury / Other	202		39
Net income	$	532	$	48

Treasury / Other

The Treasury / Other function includes revenue and expense related to assets, liabilities, derivatives (including the mark-to-market of interest rate caps) , and equity not directly assigned or allocated to one of the four business segments. Assets include investment securities and bank owned life insurance.

Net interest income includes the impact of administering our investment securities portfolios, the net impact of derivatives used to hedge interest rate sensitivity as well as the financial impact associated with our FTP methodology, as described above. Noninterest income includes miscellaneous fee income not allocated to other business segments, such as bank owned life insurance income and securities and trading asset gains or losses. Noninterest expense includes certain corporate administrative, and other miscellaneous expenses not allocated to other business segments. The provision for income taxes for the business segments is calculated at a statutory 21% tax rate, although our overall effective tax rate is lower.


Consumer and Business Banking

Table 20 - Key Performance Indicators for Consumer and Business Banking
	Three Months Ended March 31,						Change
(dollar amounts in millions)	2021			2020			Amount			Percent
Net interest income	$	337		$	364		$	(27)		(7)	%
Provision for credit losses	(36)			82			(118)			(144)
Noninterest income	236			212			24			11
Noninterest expense	469			418			51			12
Provision for income taxes	29			16			13			81
Net income	$	111		$	60		$	51		85	%
Number of employees (average full-time equivalent)	7,808			7,769			39			1	%
Total average assets	$	30,718		$	24,677		$	6,041		24
Total average loans/leases	27,069			21,593			5,476			25
Total average deposits	62,333			51,296			11,037			22
Net interest margin	2.16		%	2.81		%	(0.65)		%	(23)
NCOs	$	14		$	32		$	(18)		(56)
NCOs as a % of average loans and leases	0.21		%	0.60		%	(0.39)		%	(65)

2021 First Three Months versus 2020 First Three Months

Consumer and Business Banking, including Home Lending, reported net income of $111 million in the first three-month period of 2021, an increase of $51 million, or 85%, compared to the year-ago period. Segment net interest income decreased $27 million, or 7%, due to decreased spread on deposits and decreased loan margin, partially offset by PPP revenues. The provision for credit losses decreased $118 million, or 144%, primarily due to changes in the forecasted economic outlook compared to the year-ago period. Noninterest income increased $24 million, or 11%, primarily due to increased mortgage banking income, and increased debit and ATM interchange from higher

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transaction volumes, partially offset by lower service charge income reflecting reduced customer overdrafts. Noninterest expense increased $51 million, or 12%, mostly due to increased personnel and incentives as a result of higher levels of production and origination volume.

Home Lending, an operating unit of Consumer and Business Banking, reflects the result of the origination, sale, and servicing of mortgage loans less referral fees and net interest income for mortgage banking products distributed by the retail branch network and other business segments. Home Lending reported net income of $24 million in the first three-month period of 2021, compared with net income of $11 million in the year-ago period. Noninterest income increased $32 million, driven primarily by an increase in salable mortgage originations and higher secondary marketing spreads. Noninterest expense increased $21 million due to higher personnel expense as a result of higher origination volumes.


Commercial Banking

Table 21 - Key Performance Indicators for Commercial Banking
	Three Months Ended March 31,						Change
(dollar amounts in millions)	2021			2020			Amount			Percent
Net interest income	$	199		$	232		$	(33)		(14)	%
Provision for credit losses	5			298			(293)			(98)
Noninterest income	88			86			2			2
Noninterest expense	133			129			4			3
Provision for income taxes	31			(23)			54			235
Net income (loss)	$	118		$	(86)		$	204		237	%
Number of employees (average full-time equivalent)	1,271			1,273			(2)			—	%
Total average assets	$	35,918		$	34,810		$	1,108		3
Total average loans/leases	26,694			27,238			(544)			(2)
Total average deposits	25,100			21,525			3,575			17
Net interest margin	2.78		%	3.15		%	(0.37)		%	(12)
NCOs	$	46		$	75		$	(29)		(39)
NCOs as a % of average loans and leases	0.68		%	1.11		%	(0.43)		%	(39)

2021 First Three Months versus 2020 First Three Months

Commercial Banking reported net income of $118 million in the first three-month period of 2021, compared to a net loss of $86 million in the year-ago period. The provision for credit losses decreased $293 million, or 98%, primarily due to changes in the forecasted economic outlook compared to the year-ago period. Segment net interest income decreased $33 million, or 14%, due to a 37 basis point decrease in net interest margin driven by a sharp decline in the benefit of deposits. Noninterest income increased $2 million, or 2%, largely driven by an increase in treasury management related revenue reflecting the impact of lower earnings credit rates on commercial deposits, partially offset by a decline in capital markets driven by decline in interest rate derivative income. Noninterest expense increased $4 million, or 3%, primarily due to personnel expense reflecting an increase in incentives, partially offset by a reduction in business development expense primarily reflecting reduced travel stemming from the COVID-19 pandemic.

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Vehicle Finance

Table 22 - Key Performance Indicators for Vehicle Finance
	Three Months Ended March 31,						Change
(dollar amounts in millions)	2021			2020			Amount			Percent
Net interest income	$	107		$	106		$	1		1	%
Provision for credit losses	(22)			60			(82)			(137)
Noninterest income	3			3			—			—
Noninterest expense	35			35			—			—
Provision for income taxes	21			3			18			600
Net income	$	76		$	11		$	65		591	%
Number of employees (average full-time equivalent)	254			263			(9)			(3)	%
Total average assets	$	19,468		$	20,215		$	(747)		(4)
Total average loans/leases	19,735			20,307			(572)			(3)
Total average deposits	768			366			402			110
Net interest margin	2.20		%	2.08		%	0.12		%	6
NCOs	$	5		$	10		$	(5)		(50)
NCOs as a % of average loans and leases	0.10		%	0.19		%	(0.09)		%	(47)

2021 First Three Months versus 2020 First Three Months

Vehicle Finance reported net income of $76 million in the first three-month period of 2021, an increase of $65 million, or 591%, compared to the year-ago period. The provision for credit losses decreased $82 million due to changes in the forecasted economic outlook as compared to the year ago period. Segment net interest income increased $1 million, or 1%, due to a 12 basis point increase in the net interest margin partially offset by a 3% decrease in average loan balances. The decrease in average loan balances of $0.6 billion is driven by average commercial balances as dealership inventory levels and the resulting floor plan line utilization remain low. Additionally, RV / Marine balances increased $0.6 billion year over year, reflecting strong production levels over the past year, partially offset by a decline of $0.3 billion of auto balances. Noninterest income and expense were both comparable to year ago levels.


Regional Banking and The Huntington Private Client Group

Table 23 - Key Performance Indicators for Regional Banking and The Huntington Private Client Group
	Three Months Ended March 31,						Change
(dollar amounts in millions)	2021			2020			Amount			Percent
Net interest income	$	34		$	43		$	(9)		(21)	%
Provision for credit losses	(7)			1			(8)			(800)
Noninterest income	53			50			3			6
Noninterest expense	62			62			—			—
Provision for income taxes	7			6			1			17
Net income	$	25		$	24		$	1		4	%
Number of employees (average full-time equivalent)	998			1,025			(27)			(3)	%
Total average assets	$	6,815		$	6,707		$	108		2
Total average loans/leases	6,568			6,415			153			2
Total average deposits	7,059			6,100			959			16
Net interest margin	1.92		%	2.69		%	(0.77)		%	(29)
NCOs	$	—		$	—		$	—		—
NCOs as a % of average loans and leases	—		%	—		%	—		%	—
Total assets under management (in billions)—eop	$	20.7		$	15.8		$	4.9		31
Total trust assets (in billions)—eop	136.0			123.7			12.3			10

eop - End of Period.

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2021 First Three Months versus 2020 First Three Months

RBHPCG reported net income of $25 million for the first three-month period of 2021, an increase of $1 million, or 4%, compared to the year-ago period. Segment net interest income decreased $9 million, or 21%, due to a 77 basis point decrease in net interest margin, reflecting both lower deposit and loan spreads. Average loans increased $0.2 billion, or 2%, primarily due to residential real estate mortgage loans, and average deposits increased $1.0 billion, or 16%, primarily related to PPP, stimulus, and higher customer liquidity levels. Noninterest income increased $3 million, or 6%, due to a 31% increase in assets under management reflecting record net asset flows and positive equity markets. In addition, the title insurance business reported record fee income. Noninterest expenses were flat to prior year reflecting lower discretionary expense and continued cost controls.

ADDITIONAL DISCLOSURES

Forward-Looking Statements

This report, including MD&A, contains certain forward-looking statements, including, but not limited to, certain plans, expectations, goals, projections, and statements, which are not historical facts and are subject to numerous assumptions, risks, and uncertainties. Statements that do not describe historical or current facts, including statements about beliefs and expectations, are forward-looking statements. Forward-looking statements may be identified by words such as expect, anticipate, believe, intend, estimate, plan, target, goal, or similar expressions, or future or conditional verbs such as will, may, might, should, would, could, or similar variations. The forward-looking statements are intended to be subject to the safe harbor provided by Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of 1995.

While there is no assurance that any list of risks and uncertainties or risk factors is complete, below are certain factors which could cause actual results to differ materially from those contained or implied in the forward-looking statements: changes in general economic, political, or industry conditions; the magnitude and duration of the COVID-19 pandemic and its impact on the global economy and financial market conditions and our business, results of operations, and financial condition; uncertainty in U.S. fiscal and monetary policy, including the interest rate policies of the Federal Reserve Board; volatility and disruptions in global capital and credit markets; movements in interest rates; reform of LIBOR; competitive pressures on product pricing and services; success, impact, and timing of our business strategies, including market acceptance of any new products or services including those implementing our “Fair Play” banking philosophy; the nature, extent, timing, and results of governmental actions, examinations, reviews, reforms, regulations, and interpretations, including those related to the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Basel III regulatory capital reforms, as well as those involving the OCC, Federal Reserve, FDIC, and CFPB; the occurrence of any event, change or other circumstances that could give rise to the right of one or both of the parties to terminate the merger agreement between Huntington and TCF; the outcome of any legal proceedings that may be instituted against Huntington or TCF; delays in completing the transaction; the failure to obtain necessary regulatory approvals (and the risk that such approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the transaction); the failure to satisfy any of the conditions to the transaction on a timely basis or at all; the possibility that the anticipated benefits of the transaction are not realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy and competitive factors in the areas where Huntington and TCF do business; the possibility that the transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events; diversion of management’s attention from ongoing business operations and opportunities; potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the transaction; the ability to complete the transaction and integration of Huntington and TCF successfully; the dilution caused by Huntington’s issuance of additional shares of its capital stock in connection with the transaction; and other factors that may affect the future results of Huntington and TCF.

All forward-looking statements speak only as of the date they are made and are based on information available at that time. Neither Huntington nor TCF assumes any obligation to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements were made or to reflect the occurrence of unanticipated events except as required by federal securities laws. As forward-looking statements involve significant risks and uncertainties, caution should be exercised against placing undue reliance on such statements.

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Non-GAAP Financial Measures

This document contains GAAP financial measures and non-GAAP financial measures where management believes it to be helpful in understanding our results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found herein.

Significant Items

From time-to-time, revenue, expenses, or taxes are impacted by items judged by Management to be outside of ordinary banking activities and/or by items that, while they may be associated with ordinary banking activities, are so unusually large that their outsized impact is believed by Management at that time to be infrequent or short-term in nature. We refer to such items as “Significant Items”. Most often, these Significant Items result from factors originating outside the Company; e.g., regulatory actions / assessments, windfall gains, one-time tax assessments / refunds, litigation actions, etc. In other cases, they may result from Management decisions associated with significant corporate actions outside of the ordinary course of business; e.g., merger / restructuring charges, recapitalization actions, goodwill impairment, etc.

Even though certain revenue and expense items are naturally subject to more volatility than others due to changes in market and economic environment conditions, as a general rule volatility alone does not define a Significant Item. For example, changes in the provision for credit losses, gains / losses from investment activities, asset valuation writedowns, etc., reflect ordinary banking activities and are, therefore, typically excluded from consideration as a Significant Item.

Management believes the disclosure of Significant Items, when appropriate, aids analysts/investors in better understanding corporate performance and trends so that they can ascertain which of such items, if any, they may wish to include/exclude from their analysis of the company’s performance - i.e., within the context of determining how that performance differed from their expectations, as well as how, if at all, to adjust their estimates of future performance accordingly. To this end, Management has adopted a practice of listing “Significant Items” in its external disclosure documents (e.g., earnings press releases, quarterly performance discussions, investor presentations, Forms 10-Q and 10-K).

Significant Items for any particular period are not intended to be a complete list of items that may materially impact current or future period performance.

Fully-Taxable Equivalent Basis

Interest income, yields, and ratios on a FTE basis are considered non-GAAP financial measures. Management believes net interest income on a FTE basis provides an insightful picture of the interest margin for comparison purposes. The FTE basis also allows management to assess the comparability of revenue arising from both taxable and tax-exempt sources. The FTE basis assumes a federal statutory tax rate of 21 percent. We encourage readers to consider the Unaudited Condensed Consolidated Financial Statements and other financial information contained in this Form 10-Q in their entirety, and not to rely on any single financial measure.

Non-Regulatory Capital Ratios

In addition to capital ratios defined by banking regulators, the Company considers various other measures when evaluating capital utilization and adequacy, including:

•Tangible common equity to tangible assets,

•Tangible equity to tangible assets, and

•Tangible common equity to risk-weighted assets using Basel III definitions.

These non-regulatory capital ratios are viewed by management as useful additional methods of reflecting the level of capital available to withstand unexpected market conditions. Additionally, presentation of these ratios allows readers to compare our capitalization to other financial services companies. These ratios differ from capital ratios defined by banking regulators principally in that the numerator excludes goodwill and other intangible assets, the nature and extent of which varies among different financial services companies. These ratios are not defined in GAAP or federal banking regulations. As a result, these non-regulatory capital ratios disclosed by the Company are considered non-GAAP financial measures.

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Because there are no standardized definitions for these non-regulatory capital ratios, the Company’s calculation methods may differ from those used by other financial services companies. Also, there may be limits in the usefulness of these measures to investors. As a result, we encourage readers to consider the Unaudited Condensed Consolidated Financial Statements and other financial information contained in this Form 10-Q in their entirety, and not to rely on any single financial measure.

Risk Factors

More information on risk can be found in Item 1A Risk Factors below and in the Risk Factors section included in Item 1A of our 2020 Form 10-K. Additional information regarding risk factors can also be found in the Risk Management and Capital discussion of this report.

Critical Accounting Policies and Use of Significant Estimates

Our Consolidated Financial Statements are prepared in accordance with GAAP. The preparation of financial statements in conformity with GAAP requires us to establish accounting policies and make estimates that affect amounts reported in our Consolidated Financial Statements. Note 1 of the Notes to Consolidated Financial Statements included in our December 31, 2020 Form 10-K, as supplemented by this report including this MD&A, describes the significant accounting policies we used in our Consolidated Financial Statements.

An accounting estimate requires assumptions and judgments about uncertain matters that could have a material effect on the Consolidated Financial Statements. Estimates are made under facts and circumstances at a point in time, and changes in those facts and circumstances could produce results substantially different from those estimates. Our most significant accounting policies and estimates and their related application are discussed in our December 31, 2020 Form 10-K.

Allowance for Credit Losses

Our ACL at March 31, 2021 represents our current estimate of the lifetime credit losses expected from our loan and lease portfolio and our unfunded loan commitments and letters of credit. Management estimates the allowance for credit losses by projecting probability of default, loss given default and exposure at default conditional on economic parameters, for the remaining contractual term. Internal factors that impact the quarterly allowance estimate include the level of outstanding balances, the portfolio performance and assigned risk ratings.

One of the most significant judgments influencing the allowance for credit losses estimate is the macro-economic forecasts. Key external economic parameters that directly impact our loss modeling framework include forecasted footprint unemployment rates and Gross Domestic Product. Changes in the economic forecasts could significantly affect the estimated credit losses, which could potentially lead to materially different allowance levels from one reporting period to the next.

Given the dynamic relationship between macro-economic variables within our modeling framework, it is difficult to estimate the impact of a change in any one individual variable on the allowance. As a result, management uses a probability-weighted approach that incorporates a baseline, an adverse and a more favorable economic scenario when formulating the quantitative estimate.

However, to illustrate a hypothetical sensitivity analysis, management calculated a quantitative allowance using a 100% weighting applied to an adverse scenario. This scenario includes assumptions around new infections and COVID-19 deaths being significantly above the baseline projections, leading to a much slower re-opening of the economy. Under this scenario, as an example, the unemployment rate remains elevated for a prolonged period and is estimated to remain at 8.0% and 6.5% at the end of 2022 and 2023, respectively. These numbers represent approximately 3.5% higher unemployment estimates than baseline scenario projections of 4.5% and 4.2%, respectively for the same time periods.

To demonstrate the sensitivity to key economic parameters, management calculated the difference between a 100% baseline weighting and a 100% adverse scenario weighting for modeled results. This would result in an incremental quantitative allowance impact of approximately $600 million.

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The resulting difference is not intended to represent an expected increase in allowance levels for a number of reasons including the following:

•Management uses a weighted approach applied to multiple economic scenarios for its allowance estimation process;

•The highly uncertain economic environment;

•The difficulty in predicting the inter-relationships between the economic parameters used in the various economic scenarios; and

•The sensitivity estimate does not account for any general reserve components and associated risk profile adjustments incorporated by management as part of its overall allowance framework.

We regularly review our ACL for appropriateness by performing on-going evaluations of the loan and lease portfolio. In doing so, we consider factors such as the differing economic risks associated with each loan category, the financial condition of specific borrowers, the level of delinquent loans, the value of any collateral and, where applicable, the existence of any guarantees or other documented support. We also evaluate the impact of changes in key economic parameters and overall economic conditions on the ability of borrowers to meet their financial obligations when quantifying our exposure to credit losses and assessing the appropriateness of our ACL at each reporting date. There is no certainty that our ACL will be appropriate over time to cover losses in our portfolio as economic and market conditions may ultimately differ from our reasonable and supportable forecast. Additionally, events adversely affecting specific customers, industries, or our markets such as the current COVID-19 pandemic, could severely impact our current expectations. If the credit quality of our customer base materially deteriorates or the risk profile of a market, industry, or group of customers changes materially, our net income and capital could be materially adversely affected which, in turn could have a material adverse effect on our financial condition and results of operations. The extent to which the current COVID-19 pandemic will continue to negatively impact our businesses, financial condition, liquidity and results will depend on future developments, which are highly uncertain and cannot be forecasted with precision at this time. For more information, see Note 4 “Loans and Leases” and Note 5 “Allowance for Credit Losses” of the Notes to Unaudited Condensed Consolidated Financial Statements.

Fair Value Measurement

Certain assets and liabilities are measured at fair value on a recurring basis, including securities, and derivative instruments. Assets and liabilities carried at fair value inherently include subjectivity and may require the use of significant assumptions, adjustments and judgment including, among others, discount rates, rates of return on assets, cash flows, default rates, loss rates, terminal values and liquidation values. A significant change in assumptions may result in a significant change in fair value, which in turn, may result in a higher degree of financial statement volatility and could result in significant impact on our results of operations, financial condition or disclosures of fair value information.

The fair value hierarchy requires use of observable inputs first and subsequently unobservable inputs when observable inputs are not available. Our fair value measurements involve various valuation techniques and models, which involve inputs that are observable (Level 1 or Level 2 in fair value hierarchy), when available. The level of judgment required to determine fair value is dependent on the methods or techniques used in the process. Assets and liabilities that are measured at fair value using quoted prices in active markets (Level 1) do not require significant judgment while the valuation of assets and liabilities when quoted market prices are not available (Levels 2 and 3) may require significant judgment to assess whether observable or unobservable inputs for those assets and liabilities provide reasonable determination of fair value. The fair values measured at each level of the fair value hierarchy, additional discussion regarding fair value measurements, and a brief description of how fair value is determined for categories that have unobservable inputs, can be found in Note 11 “Fair Values of Assets and Liabilities” of the Notes to Unaudited Condensed Consolidated Financial Statements.

Goodwill and Intangible Assets

The acquisition method of accounting requires that acquired assets and liabilities are recorded at their fair values as of the date of acquisition. This often involves estimates based on third party valuations or internal valuations based on discounted cash flow analyses or other valuation techniques, all of which are inherently subjective. Acquisitions typically result in goodwill, the amount by which the cost of net assets acquired in a business combination exceeds their fair value, which is subject to impairment testing at least annually. The

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amortization of identified intangible assets recognized in a business combination is based upon the estimated economic benefits to be received over their economic life, which is also subjective. Customer attrition rates that are based on historical experience are used to determine the estimated economic life of certain intangibles assets, including but not limited to, customer deposit intangibles.

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Item 1: Financial Statements

Huntington Bancshares Incorporated

Condensed Consolidated Balance Sheets

(Unaudited)


	March 31,		December 31,
(dollar amounts in millions)	2021		2020
Assets
Cash and due from banks	$	1,096	$	1,319
Interest-bearing deposits at Federal Reserve Bank	7,493		5,276
Interest-bearing deposits in banks	52		117
Trading account securities	51		62
Available-for-sale securities	19,375		16,485
Held-to-maturity securities	7,815		8,861


Other securities	411		418
Loans held for sale (includes $1,531 and $1,198 respectively, measured at fair value)(1)	1,537		1,275
Loans and leases (includes $118 and $94 respectively, measured at fair value)(1)	80,230		81,608
Allowance for loan and lease losses	(1,703)		(1,814)
Net loans and leases	78,527		79,794
Bank owned life insurance	2,581		2,577
Premises and equipment	747		757
Goodwill	1,990		1,990
Servicing rights and other intangible assets	480		428
Other assets	3,613		3,679
Total assets	$	125,768	$	123,038
Liabilities and shareholders’ equity
Liabilities
Deposits	$	102,184	$	98,948
Short-term borrowings	219		183
Long-term debt	7,210		8,352
Other liabilities	2,555		2,562
Total liabilities	112,168		110,045
Commitments and Contingent Liabilities (Note 14)
Shareholders’ equity
Preferred stock	2,676		2,191
Common stock	10		10
Capital surplus	8,806		8,781
Less treasury shares, at cost	(59)		(59)
Accumulated other comprehensive (loss) gain	(56)		192
Retained earnings	2,223		1,878
Total shareholders’ equity	13,600		12,993
Total liabilities and shareholders’ equity	$	125,768	$	123,038
Common shares authorized (par value of $0.01)	1,500,000,000		1,500,000,000

Common shares outstanding	1,018,052,923		1,017,196,776
Treasury shares outstanding	5,041,104		5,062,054
Preferred stock, authorized shares	6,617,808		6,617,808

Preferred shares outstanding	1,250,500		750,500

(1)Amounts represent loans for which Huntington has elected the fair value option. See Note 11 “Fair Values of Assets and Liabilities”.

See Notes to Unaudited Condensed Consolidated Financial Statements

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Huntington Bancshares Incorporated
Condensed Consolidated Statements of Income
(Unaudited)
	Three Months Ended March 31,
(dollar amounts in millions, except per share data, share count in thousands)	2021		2020
Interest and fee income:
Loans and leases	$	752	$	809
Available-for-sale securities
Taxable	49		76
Tax-exempt	13		18
Held-to-maturity securities—taxable	42		59
Other securities—taxable	2		2

Other	11		11
Total interest income	869		975
Interest expense:
Deposits	11		105
Short-term borrowings	—		12

Long-term debt	(114)		68
Total interest expense	(103)		185
Net interest income	972		790
Provision for credit losses	(60)		441
Net interest income after provision for credit losses	1,032		349
Mortgage banking income	100		58
Service charges on deposit accounts	69		87
Card and payment processing income	65		58
Trust and investment management services	52		47
Capital markets fees	29		33
Insurance income	27		23
Bank owned life insurance income	16		16
Gain on sale of loans	3		8


Other noninterest income	34		31
Total noninterest income	395		361
Personnel costs	468		395
Outside data processing and other services	115		85
Equipment	46		41
Net occupancy	42		40
Professional services	17		11
Amortization of intangibles	10		11
Marketing	14		9
Deposit and other insurance expense	8		9

Other noninterest expense	73		51
Total noninterest expense	793		652
Income before income taxes	634		58
Provision for income taxes	102		10
Net income	532		48
Dividends on preferred shares	31		18
Net income applicable to common shares	$	501	$	30
Average common shares—basic	1,017,512		1,017,643
Average common shares—diluted	1,041,003		1,034,576
Per common share:
Net income—basic	$	0.49	$	0.03
Net income—diluted	0.48		0.03



See Notes to Unaudited Condensed Consolidated Financial Statements

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Huntington Bancshares Incorporated

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)


	Three Months Ended March 31,
(dollar amounts in millions)	2021		2020
Net income	$	532	$	48



Unrealized net gains (losses) on available-for-sale securities arising during the period, net of reclassification for net realized gains and losses	(216)		173

Change in fair value related to cash flow hedges	(34)		308

Change in accumulated unrealized gains (losses) for pension and other post-retirement obligations	2		2
Other comprehensive income, net of tax	(248)		483
Comprehensive income	$	284	$	531

See Notes to Unaudited Condensed Consolidated Financial Statements

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Huntington Bancshares Incorporated

Condensed Consolidated Statements of Changes in Shareholders’ Equity

(Unaudited)


(dollar amounts in millions, share amounts in thousands)	Preferred Stock		Common Stock			Capital Surplus		Treasury Stock			Accumulated Other Comprehensive Gain (Loss)		Retained Earnings
	Amount		Shares	Amount				Shares	Amount						Total
Three Months Ended March 31, 2021
Balance, beginning of period	$	2,191	1,022,258	$	10	$	8,781	(5,062)	$	(59)	$	192	$	1,878	$	12,993

Net income													532		532
Other comprehensive income (loss), net of tax											(248)				(248)



Net proceeds from issuance of Series H Preferred Stock	485														485

Cash dividends declared:
Common ($0.15 per share)													(156)		(156)






Preferred													(31)		(31)
Recognition of the fair value of share-based compensation						28									28

Other share-based compensation activity			836	—		(3)							—		(3)

Other								21	—				—		—
Balance, end of period	$	2,676	1,023,094	$	10	$	8,806	(5,041)	$	(59)	$	(56)	$	2,223	$	13,600

Three Months Ended March 31, 2020
Balance, beginning of period	$	1,203	1,024,541	$	10	$	8,806	(4,537)	$	(56)	$	(256)	$	2,088	$	11,795
Cumulative-effect adjustment (ASU 2016-01)													(306)		(306)
Net income													48		48
Other comprehensive income (loss), net of tax											483				483




Repurchase of common stock			(7,088)	—		(88)									(88)
Cash dividends declared:
Common ($0.15 per share)													(155)		(155)






Preferred													(18)		(18)

Recognition of the fair value of share-based compensation						15									15

Other share-based compensation activity			1,299	—		(5)							—		(5)
Other								3	—						—
Balance, end of period	$	1,203	1,018,752	$	10	$	8,728	(4,534)	$	(56)	$	227	$	1,657	$	11,769

See Notes to Unaudited Condensed Consolidated Financial Statements

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Huntington Bancshares Incorporated

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Three Months Ended March 31,
(dollar amounts in millions)	2021		2020
Operating activities
Net income	$	532	$	48
Adjustments to reconcile net income to net cash (used in) provided by operating activities:

Provision for credit losses	(60)		441
Depreciation and amortization	71		119
Share-based compensation expense	28		15
Deferred income tax expense (benefit)	61		(37)


Net change in:
Trading account securities	11		63
Loans held for sale	(406)		(20)
Other assets	80		(1,023)
Other liabilities	(428)		892



Net cash (used in) provided by operating activities	(111)		498
Investing activities
Change in interest bearing deposits in banks	189		(26)

Proceeds from:
Maturities and calls of available-for-sale securities	1,758		669
Maturities and calls of held-to-maturity securities	1,043		398

Sales of available-for-sale securities	10		19

Purchases of available-for-sale securities	(4,857)		(2,476)



Net proceeds from sales of portfolio loans	158		191
Principal payments received under direct finance and sales-type leases	188		171
Net loan and lease activity, excluding sales and purchases	1,402		(2,926)

Purchases of premises and equipment	(22)		(11)

Purchases of loans and leases	(266)		(311)


Other, net	21		(20)
Net cash used in investing activities	(376)		(4,322)
Financing activities
Increase in deposits	3,236		4,483
Increase in short-term borrowings	53		458

Net proceeds from issuance of long-term debt	35		1,286
Maturity/redemption of long-term debt	(1,135)		(1,540)
Dividends paid on preferred stock	(35)		(18)
Dividends paid on common stock	(153)		(155)
Repurchases of common stock	—		(88)

Net proceeds from issuance of preferred stock	485		—

Payments related to tax-withholding for share based compensation awards	(5)		(6)
Other, net	—		1
Net cash provided by financing activities	2,481		4,421
Increase in cash and cash equivalents	1,994		597
Cash and cash equivalents at beginning of period	6,595		1,170
Cash and cash equivalents at end of period	$	8,589	$	1,767

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	Three Months Ended March 31,
(dollar amounts in millions)	2021		2020
Supplemental disclosures:
Interest paid	$	49	$	197
Income taxes paid	3		2

Non-cash activities
Loans transferred to held-for-sale from portfolio	84		313
Loans transferred to portfolio from held-for-sale	37		4


Transfer of securities from available-for-sale to held-to-maturity	—		1,520

See Notes to Unaudited Condensed Consolidated Financial Statements

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Huntington Bancshares Incorporated

Notes to Unaudited Condensed Consolidated Financial Statements

1. BASIS OF PRESENTATION

The accompanying Unaudited Condensed Consolidated Financial Statements of Huntington reflect all adjustments consisting of normal recurring accruals which are, in the opinion of Management, necessary for a fair statement of the consolidated financial position, the results of operations, and cash flows for the periods presented. These Unaudited Condensed Consolidated Financial Statements have been prepared according to the rules and regulations of the SEC and, therefore, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been omitted. The Notes to Consolidated Financial Statements appearing in Huntington’s 2020 Form 10-K, which include descriptions of significant accounting policies, as updated by the information contained in this report, should be read in conjunction with these interim financial statements.

For statement of cash flow purposes, cash and cash equivalents are defined as the sum of cash and due from banks and interest-bearing deposits at Federal Reserve Bank.

Certain prior period amounts have been reclassified to conform to current year’s presentation.

In conjunction with applicable accounting standards, all material subsequent events have been either recognized in the Unaudited Condensed Consolidated Financial Statements or disclosed in the Notes to Unaudited Condensed Consolidated Financial Statements. No subsequent events were disclosed for the current period.

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2. PENDING ACQUISITION OF TCF FINANCIAL CORPORATION

On December 13, 2020, Huntington announced the signing of a definitive merger agreement (the “ Merger Agreement”). Under the terms of the Merger Agreement, which was unanimously approved by the boards of directors of both companies, TCF Financial Corporation (“TCF”), the parent company of TCF National Bank, will merge into Huntington in an all-stock transaction valued at approximately $6.0 billion based on the closing stock price on the day preceding the announcement. TCF is a financial holding company headquartered in Detroit, Michigan with reported total assets of $47.8 billion based on their balance sheet at December 31, 2020.

On March 25, 2021, Huntington and TCF shareholders approved the merger. Huntington anticipates the transaction will be completed late in the second quarter of 2021, subject to regulatory approval and the satisfaction of other customary closing conditions set forth in the Merger Agreement.

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3. INVESTMENT SECURITIES AND OTHER SECURITIES

Debt securities purchased in which Huntington has the intent and ability to hold to their maturity are classified as held-to-maturity securities. All other debt and equity securities are classified as either available-for-sale or other securities.

The following tables provide amortized cost, fair value, and gross unrealized gains and losses by investment category at March 31, 2021 and December 31, 2020:


			Unrealized
(dollar amounts in millions)	Amortized Cost (1)		Gross Gains		Gross Losses		Fair Value
March 31, 2021
Available-for-sale securities:
U.S. Treasury	$	5	$	—	$	—	$	5
Federal agencies:
Residential CMO	$	3,081	$	100	$	(9)	$	3,172
Residential MBS	10,708		61		(124)		10,645
Commercial MBS	1,277		13		(63)		1,227
Other agencies	44		2		—		46
Total U.S. Treasury, federal agency and other agency securities	15,115		176		(196)		15,095
Municipal securities	3,050		91		(19)		3,122
Private-label CMO	50		—		—		50
Asset-backed securities	244		4		(1)		247
Corporate debt	888		—		(31)		857
Other securities/Sovereign debt	4		—		—		4
Total available-for-sale securities	$	19,351	$	271	$	(247)	$	19,375

Held-to-maturity securities:
Federal agencies:
Residential CMO	$	1,604	$	74	$	—	$	1,678
Residential MBS	3,259		69		(18)		3,310
Commercial MBS	2,719		114		—		2,833
Other agencies	230		8		—		238
Total federal agency and other agency securities	7,812		265		(18)		8,059
Municipal securities	3		—		—		3
Total held-to-maturity securities	$	7,815	$	265	$	(18)	$	8,062

Other securities, at cost:
Non-marketable equity securities:
Federal Home Loan Bank stock	$	52	$	—	$	—	$	52
Federal Reserve Bank stock	300		—		—		300
Other securities, at fair value
Mutual funds	42		—		—		42
Equity securities	16		1		—		17
Total other securities	$	410	$	1	$	—	$	411

(1)Amortized cost amounts excludes accrued interest receivable, which is recorded within other assets on the Consolidated Balance Sheets. At March 31, 2021, accrued interest receivable on available-for-sale securities and held-to-maturity securities totaled $40 million and $18 million, respectively.

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			Unrealized
(dollar amounts in millions)	Amortized Cost (1)		Gross Gains		Gross Losses		Fair Value
December 31, 2020
Available-for-sale securities:
U.S. Treasury	$	5	$	—	$	—	$	5
Federal agencies:
Residential CMO	$	3,550	$	121	$	(5)	$	3,666
Residential MBS	7,843		97		(5)		7,935
Commercial MBS	1,151		21		(9)		1,163
Other agencies	60		2		—		62
Total U.S. Treasury, federal agency and other agency securities	12,609		241		(19)		12,831
Municipal securities	2,928		91		(15)		3,004
Private-label CMO	9		—		—		9
Asset-backed securities	185		7		—		192
Corporate debt	440		5		—		445
Other securities/Sovereign debt	4		—		—		4
Total available-for-sale securities	$	16,175	$	344	$	(34)	$	16,485

Held-to-maturity securities:
Federal agencies:
Residential CMO	$	1,779	$	88	$	—	$	1,867
Residential MBS	3,715		103		—		3,818
Commercial MBS	3,118		191		—		3,309
Other agencies	246		12		—		258
Total federal agency and other agency securities	8,858		394		—		9,252
Municipal securities	3		—		—		3
Total held-to-maturity securities	$	8,861	$	394	$	—	$	9,255

Other securities, at cost:
Non-marketable equity securities:
Federal Home Loan Bank stock	$	60	$	—	$	—	$	60
Federal Reserve Bank stock	299		—		—		299
Other securities, at fair value
Mutual funds	50		—		—		50
Equity securities	8		1		—		9
Total other securities	$	417	$	1	$	—	$	418

(1)Amortized cost amounts excludes accrued interest receivable, which is recorded within other assets on the Consolidated Balance Sheets. At December 31, 2020, accrued interest receivable on available-for-sale securities and held-to-maturity securities totaled $32 million and $20 million, respectively.

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The following table provides the amortized cost and fair value of securities by contractual maturity at March 31, 2021 and December 31, 2020. Expected maturities may differ from contractual maturities as issuers may have the right to call or prepay obligations with or without incurring penalties.


	March 31, 2021				December 31, 2020
(dollar amounts in millions)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Available-for-sale securities:
Under 1 year	$	366	$	357	$	308	$	304
After 1 year through 5 years	1,228		1,237		1,145		1,154
After 5 years through 10 years	2,127		2,144		1,607		1,654
After 10 years	15,630		15,637		13,115		13,373
Total available-for-sale securities	$	19,351	$	19,375	$	16,175	$	16,485

Held-to-maturity securities:

After 1 year through 5 years	$	142	$	148	$	160	$	169
After 5 years through 10 years	121		126		131		138
After 10 years	7,552		7,788		8,570		8,948
Total held-to-maturity securities	$	7,815	$	8,062	$	8,861	$	9,255

The following tables provide detail on investment securities with unrealized losses aggregated by investment category and the length of time the individual securities have been in a continuous loss position at March 31, 2021 and December 31, 2020:


	Less than 12 Months				Over 12 Months				Total
(dollar amounts in millions)	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
March 31, 2021
Available-for-sale securities:
Federal agencies:
Residential CMO	$	413	$	(9)	$	—	$	—	$	413	$	(9)
Residential MBS	7,919		(124)		—		—		7,919		(124)
Commercial MBS	761		(63)		—		—		761		(63)

Total federal agency and other agency securities	9,093		(196)		—		—		9,093		(196)
Municipal securities	163		(7)		463		(12)		626		(19)

Asset-backed securities	65		(1)		—		—		65		(1)
Corporate debt	816		(31)		—		—		816		(31)

Total temporarily impaired available-for-sale securities	$	10,137	$	(235)	$	463	$	(12)	$	10,600	$	(247)

Held-to-maturity securities:
Federal agencies:

Residential MBS	$	1,235	(18)		—		—		1,235		(18)




Total temporarily impaired held-to-maturity securities	$	1,235	$	(18)	$	—	$	—	$	1,235	$	(18)

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	Less than 12 Months				Over 12 Months				Total
(dollar amounts in millions)	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
December 31, 2020
Available-for-sale securities:
Federal agencies:
Residential CMO	$	302	$	(5)	$	—	$	—	$	302	$	(5)
Residential MBS	1,633		(5)		—		—		1,633		(5)
Commercial MBS	321		(9)		—		—		321		(9)

Total federal agency and other agency securities	2,256		(19)		—		—		2,256		(19)
Municipal securities	110		(3)		490		(12)		600		(15)

Asset-backed securities	15		—		—		—		15		—
Corporate debt	51		—		—		—		51		—

Total temporarily impaired available-for-sale securities	$	2,432	$	(22)	$	490	$	(12)	$	2,922	$	(34)

At March 31, 2021 and December 31, 2020, the carrying value of investment securities pledged to secure public and trust deposits, trading account liabilities, U.S. Treasury demand notes, security repurchase agreements and to support borrowing capacity totaled $13.9 billion and $14.4 billion, respectively. There were no securities of a single issuer, which were not governmental or government-sponsored, that exceeded 10% of shareholders’ equity at either March 31, 2021 or December 31, 2020. At March 31, 2021, all HTM debt securities are considered AAA rated. In addition, there were no HTM debt securities considered past due at March 31, 2021.

AFS Securities Impairment/HTM Securities Allowance for Credit Losses

Based on an evaluation of available information including security type, counterparty credit quality, past events, current conditions, and reasonable and supportable forecasts that are relevant to collectability, Huntington has concluded that it expects to receive all contractual cash flows from each security held in its AFS and HTM debt securities portfolio. As such, no allowance or impairment is recorded with respect to securities as of March 31, 2021 and December 31, 2020.

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4. LOANS / LEASES

Loans and leases which Huntington has the intent and ability to hold for the foreseeable future, or until maturity or payoff, are classified in the Unaudited Condensed Consolidated Balance Sheets as loans and leases. The total balance of unamortized premiums, discounts, fees, and costs, recognized as part of loans and leases, was a net premium of $473 million and $491 million at March 31, 2021 and December 31, 2020, respectively.

Loan and Lease Portfolio Composition

The following table provides a detailed listing of Huntington’s loan and lease portfolio at March 31, 2021 and December 31, 2020.


(dollar amounts in millions)	March 31, 2021		December 31, 2020


















Loans and leases:
Commercial and industrial	$	34,464	$	35,373
Commercial real estate	7,179		7,199
Automobile	12,591		12,778
Home equity	8,727		8,894
Residential mortgage	12,092		12,141
RV and marine	4,218		4,190
Other consumer	959		1,033
Loans and leases	$	80,230	$	81,608
Allowance for loan and lease losses	(1,703)		(1,814)
Net loans and leases	$	78,527	$	79,794

Equipment Leases

Huntington leases equipment to customers, and substantially all such arrangements are classified as either sales-type or direct financing leases, which are included in C&I loans. These leases are reported at the aggregate of lease payments receivable and estimated residual values, net of unearned and deferred income, and any initial direct costs incurred to originate these leases.

Huntington assesses net investments in leases (including residual values) for impairment and recognizes any impairment losses in accordance with the impairment guidance for financial instruments. As such, net investments in leases may be reduced by an allowance for credit losses, with changes recognized as provision expense.

The following table presents net investments in lease financing receivables by category at March 31, 2021 and December 31, 2020.


(dollar amounts in millions)	March 31, 2021		December 31, 2020
Commercial and industrial:
Lease payments receivable	$	1,714	$	1,737
Estimated residual value of leased assets	622		664
Gross investment in commercial and industrial lease financing receivables	2,336		2,401
Deferred origination costs	21		21
Deferred fees	(190)		(200)
Total net investment in commercial and industrial lease financing receivables	$	2,167	$	2,222

The carrying value of residual values guaranteed was $77 million and $93 million as of March 31, 2021 and December 31, 2020, respectively. The future lease rental payments due from customers on sales-type and direct financing leases at March 31, 2021, totaled $1.7 billion and were due as follows: $0.6 billion in 2021, $0.4 billion in 2022, $0.3 billion in 2023, $0.2 billion in 2024, $0.1 billion in 2025, and $0.1 billion thereafter. Interest income recognized for these types of leases was $24 million and $27 million for the three-month periods ended March 31, 2021 and 2020, respectively.

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Nonaccrual and Past Due Loans

The following table presents NALs by loan class at March 31, 2021 and December 31, 2020 (1):


	March 31, 2021				December 31, 2020
(dollar amounts in millions)	Nonaccrual loans with no ACL		Total nonaccrual loans		Nonaccrual loans with no ACL		Total nonaccrual loans
Commercial and industrial	$	103	$	343	$	69	$	353
Commercial real estate	—		8		8		15
Automobile	—		3		—		4
Home equity	—		71		—		70
Residential mortgage	—		90		—		88
RV and marine	—		1		—		2

Total nonaccrual loans	$	103	$	516	$	77	$	532

(1) Generally excludes loans that were under payment deferral or granted other assistance, including amendments or waivers of financial covenants in response to the COVID-19 pandemic.

The following table presents an aging analysis of loans and leases, including past due loans and leases, by loan class at March 31, 2021 and December 31, 2020:


	March 31, 2021
	Past Due (1)										Loans Accounted for Under FVO		Total Loans and Leases		90 or more days past due and accruing
(dollar amounts in millions)	30-59 Days		60-89 Days		90 or more days		Total		Current
Commercial and industrial	$	37	$	20	$	96	$	153	$	34,311	$	—	$	34,464	$	8	(3)
Commercial real estate	1		1		2		4		7,175		—		7,179		—
Automobile	50		12		6		68		12,523		—		12,591		5
Home equity	23		11		58		92		8,634		1		8,727		10
Residential mortgage	78		26		194		298		11,677		117		12,092		128		(4)
RV and marine	11		3		2		16		4,202		—		4,218		1
Other consumer	6		2		2		10		949		—		959		2
Total loans and leases	$	206	$	75	$	360	$	641	$	79,471	$	118	$	80,230	$	154


	December 31, 2020
	Past Due (1)(2)										Loans Accounted for Under FVO		Total Loans and Leases		90 or more days past due and accruing
(dollar amounts in millions)	30-59 Days		60-89 Days		90 or more days		Total		Current
Commercial and industrial	$	60	$	38	$	95	$	193	$	35,180	$	—	$	35,373	$	10	(3)
Commercial real estate	—		1		11		12		7,187		—		7,199		—
Automobile	84		22		12		118		12,660		—		12,778		9
Home equity	35		15		61		111		8,782		1		8,894		14
Residential mortgage	114		38		194		346		11,702		93		12,141		132		(4)
RV and marine	17		3		3		23		4,167		—		4,190		3
Other consumer	9		4		3		16		1,017		—		1,033		3
Total loans and leases	$	319	$	121	$	379	$	819	$	80,695	$	94	$	81,608	$	171

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

(2)The principal balance of loans in payment deferral programs offered in response to the COVID-19 pandemic which are performing according to their modified terms are generally not considered delinquent.

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

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

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Credit Quality Indicators

See Note 5 “Loans / Leases and Allowance for Credit Losses” to the Consolidated Financial Statements of the Annual Report on Form 10-K for the year ended December 31, 2020 for a description of the credit quality indicators Huntington utilizes for monitoring credit quality and for determining an appropriate ACL level.

To facilitate the monitoring of credit quality for commercial loans, and for purposes of determining an appropriate ACL level for these loans, Huntington utilizes the following internally defined categories of credit grades:

•Pass - Higher quality loans that do not fit any of the other categories described below.

•OLEM - The credit risk may be relatively minor yet represents a risk given certain specific circumstances. If the potential weaknesses are not monitored or mitigated, the loan may weaken or the collateral may be inadequate to protect Huntington’s position in the future. For these reasons, Huntington considers the loans to be potential problem loans.

•Substandard - Inadequately protected loans resulting from the borrower’s ability to repay, equity, and/or the collateral pledged to secure the loan. These loans have identified weaknesses that could hinder normal repayment or collection of the debt. It is likely Huntington will sustain some loss if any identified weaknesses are not mitigated.

•Doubtful - Loans that have all of the weaknesses inherent in those loans classified as Substandard, with the added elements of the full collection of the loan is improbable and that the possibility of loss is high.

Loans are generally assigned a category of “Pass” rating upon initial approval and subsequently updated as appropriate based on the borrower’s financial performance.

Commercial loans categorized as OLEM, Substandard, or Doubtful are considered Criticized loans. Commercial loans categorized as Substandard or Doubtful are both considered Classified loans.

For all classes within the consumer loan portfolios, loans are assigned pool level PD factors based on the FICO range within which the borrower’s credit bureau score falls. A credit bureau score is a credit score developed by FICO based on data provided by the credit bureaus. The credit bureau score is widely accepted as the standard measure of consumer credit risk used by lenders, regulators, rating agencies, and consumers. The higher the credit bureau score, the higher likelihood of repayment and therefore, an indicator of higher credit quality.

Huntington assesses the risk in the loan portfolio by utilizing numerous risk characteristics. The classifications described above, and also presented in the table below, represent one of those characteristics that are closely monitored in the overall credit risk management processes.

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The following tables present each loan and lease class by vintage and credit quality indicator at March 31, 2021 and December 31, 2020 respectively:


	As of March 31, 2021
	Term Loans Amortized Cost Basis by Origination Year												Revolver Total at Amortized Cost Basis		Revolver Total Converted to Term Loans
(dollar amounts in millions)	2021		2020		2019		2018		2017		Prior						Total (3)
Commercial and industrial
Credit Quality Indicator (1):
Pass	$	4,040	$	10,291	$	4,087	$	2,369	$	1,215	$	1,605	$	8,656	$	2	$	32,265
OLEM	122		282		98		91		41		92		128		—		854
Substandard	54		216		110		176		184		212		386		—		1,338
Doubtful	1		4		—		1		—		—		1		—		7
Total Commercial and industrial	$	4,217	$	10,793	$	4,295	$	2,637	$	1,440	$	1,909	$	9,171	$	2	$	34,464

Commercial real estate
Credit Quality Indicator (1):
Pass	$	406	$	1,605	$	1,475	$	1,077	$	454	$	999	$	624	$	—	$	6,640
OLEM	2		88		31		62		68		35		1		—		287
Substandard	4		23		114		7		27		38		39		—		252

Total Commercial real estate	$	412	$	1,716	$	1,620	$	1,146	$	549	$	1,072	$	664	$	—	$	7,179

Automobile
Credit Quality Indicator (2):
750+	$	771	$	2,381	$	1,817	$	991	$	608	$	279	$	—	$	—	$	6,847
650-749	479		1,895		1,161		642		315		163		—		—		4,655
<650	44		336		271		216		132		90		—		—		1,089

Total Automobile	$	1,294	$	4,612	$	3,249	$	1,849	$	1,055	$	532	$	—	$	—	$	12,591

Home equity
Credit Quality Indicator (2):
750+	$	187	$	780	$	21	$	22	$	28	$	479	$	4,201	$	189	$	5,907
650-749	37		137		8		6		8		171		1,810		176		2,353
<650	1		1		1		1		2		74		286		100		466

Total Home equity	$	225	$	918	$	30	$	29	$	38	$	724	$	6,297	$	465	$	8,726

Residential mortgage
Credit Quality Indicator (2):
750+	$	963	$	3,204	$	1,143	$	727	$	883	$	1,723	$	1	$	—	$	8,644
650-749	254		836		355		255		249		621		—		—		2,570
<650	7		37		90		113		106		408		—		—		761

Total Residential mortgage	$	1,224	$	4,077	$	1,588	$	1,095	$	1,238	$	2,752	$	1	$	—	$	11,975

RV and marine
Credit Quality Indicator (2):
750+	$	267	$	1,050	$	491	$	547	$	311	$	375	$	—	$	—	$	3,041
650-749	46		351		193		182		126		176		—		—		1,074
<650	—		8		15		21		22		37		—		—		103

Total RV and marine	$	313	$	1,409	$	699	$	750	$	459	$	588	$	—	$	—	$	4,218

Other consumer
Credit Quality Indicator (2):
750+	$	22	$	59	$	52	$	21	$	6	$	16	$	319	$	2	$	497
650-749	9		30		46		15		4		4		264		28		400
<650	—		2		7		3		1		1		25		23		62

Total Other consumer	$	31	$	91	$	105	$	39	$	11	$	21	$	608	$	53	$	959

(1)Consistent with the credit quality disclosures, indicators for the Commercial portfolio are based on internally defined categories of credit grades which are generally refreshed at least semi-annually.

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

(3)The total amount of accrued interest recorded for these loans at March 31, 2021, presented in other assets within the Condensed Consolidated Balance Sheets, was $140 million and $119 million of commercial and consumer, respectively.

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	As of December 31, 2020
	Term Loans Amortized Cost Basis by Origination Year												Revolver Total at Amortized Cost Basis		Revolver Total Converted to Term Loans
(dollar amounts in millions)	2020		2019		2018		2017		2016		Prior						Total (3)
Commercial and industrial
Credit Quality Indicator (1):
Pass	$	13,757	$	4,525	$	2,758	$	1,347	$	974	$	916	$	8,894	$	2	$	33,173
OLEM	421		116		69		30		33		22		124		—		815
Substandard	196		144		188		224		46		159		423		—		1,380
Doubtful	2		—		1		—		—		1		1		—		5
Total Commercial and industrial	$	14,376	$	4,785	$	3,016	$	1,601	$	1,053	$	1,098	$	9,442	$	2	$	35,373

Commercial real estate
Credit Quality Indicator (1):
Pass	$	1,742	$	1,610	$	1,122	$	507	$	507	$	539	$	633	$	—	$	6,660
OLEM	94		78		63		37		28		14		4		—		318
Substandard	27		46		10		29		58		14		36		—		220
Doubtful	—		—		—		—		—		1		—		—		1
Total Commercial real estate	$	1,863	$	1,734	$	1,195	$	573	$	593	$	568	$	673	$	—	$	7,199

Automobile
Credit Quality Indicator (2):
750+	$	2,670	$	2,013	$	1,144	$	742	$	317	$	81	$	—	$	—	$	6,967
650-749	1,965		1,343		755		386		175		52		—		—		4,676
<650	312		301		244		157		84		37		—		—		1,135

Total Automobile	$	4,947	$	3,657	$	2,143	$	1,285	$	576	$	170	$	—	$	—	$	12,778

Home equity
Credit Quality Indicator (2):
750+	$	793	$	26	$	26	$	32	$	89	$	451	$	4,373	$	192	$	5,982
650-749	147		9		8		11		27		157		1,906		181		2,446
<650	1		1		1		1		6		70		286		99		465

Total Home equity	$	941	$	36	$	35	$	44	$	122	$	678	$	6,565	$	472	$	8,893

Residential mortgage
Credit Quality Indicator (2):
750+	$	3,269	$	1,370	$	891	$	1,064	$	762	$	1,243	$	1	$	—	$	8,600
650-749	991		435		307		278		171		495		—		—		2,677
<650	34		89		111		108		81		348		—		—		771

Total Residential mortgage	$	4,294	$	1,894	$	1,309	$	1,450	$	1,014	$	2,086	$	1	$	—	$	12,048

RV and marine
Credit Quality Indicator (2):
750+	$	1,136	$	525	$	589	$	337	$	153	$	254	$	—	$	—	$	2,994
650-749	348		215		201		136		64		129		—		—		1,093
<650	4		15		21		22		12		29		—		—		103

Total RV and marine	$	1,488	$	755	$	811	$	495	$	229	$	412	$	—	$	—	$	4,190

Other consumer
Credit Quality Indicator (2):
750+	$	69	$	58	$	26	$	8	$	4	$	14	$	340	$	2	$	521
650-749	36		56		17		5		2		3		294		30		443
<650	2		8		3		1		—		1		26		28		69

Total Other consumer	$	107	$	122	$	46	$	14	$	6	$	18	$	660	$	60	$	1,033

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

(3)The total amount of accrued interest recorded for these loans at December 31, 2020, presented in other assets within the Condensed Consolidated Balance Sheets, was $146 million and $123 million of commercial and consumer, respectively.

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TDR Loans

TDRs are modified loans where a concession was provided to a borrower experiencing financial difficulties. Loan modifications are considered TDRs when the concessions provided would not otherwise be considered. However, not all loan modifications are TDRs. See Note 5 “Loans / Leases and Allowance for Credit Losses” to the Consolidated Financial Statements of the Annual Report on Form 10-K for the year ended December 31, 2020 for an additional discussion of TDRs.

The following table presents, by class and modification type, the number of contracts, post-modification outstanding balance, and the financial effects of the modification for the three-month periods ended March 31, 2021 and 2020.


	New Troubled Debt Restructurings (1)
	Three Months Ended March 31, 2021
	Number of Contracts	Post-modification Outstanding Recorded Investment (2)
(dollar amounts in millions)		Interest rate reduction		Amortization or maturity date change		Chapter 7 bankruptcy		Other		Total
Commercial and industrial	12	$	—	$	5	$	—	$	—	$	5

Automobile	902	—		7		1		—		8
Home equity	62	—		1		2		—		3
Residential mortgage	86	—		13		1		—		14
RV and marine	49	—		1		—		—		1
Other consumer	97	—		—		—		1		1
Total new TDRs	1,208	$	—	$	27	$	4	$	1	$	32

	Three Months Ended March 31, 2020
	Number of Contracts	Post-modification Outstanding Recorded Investment (2)
(dollar amounts in millions)		Interest rate reduction		Amortization or maturity date change		Chapter 7 bankruptcy		Other		Total

Commercial and industrial	140	$	—	$	62	$	—	$	—	$	62
Commercial real estate	7	—		2		—		—		2
Automobile	798	—		6		2		—		8
Home equity	63	—		1		2		—		3
Residential mortgage	101	—		9		2		—		11
RV and marine	28	—		1		—		—		1
Other consumer	249	1		—		—		—		1
Total new TDRs	1,386	$	1	$	81	$	6	$	—	$	88

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

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

The financial effects of modification on the provision for loan and lease losses for the three-month periods ended March 31, 2021 and 2020, were less than $1 million and $9 million, respectively.

Pledged Loans

The Bank has access to the Federal Reserve’s discount window and advances from the FHLB. As of March 31, 2021 and December 31, 2020, these borrowings and advances are secured by $44.1 billion and $43.0 billion, respectively, of loans.

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5. ALLOWANCE FOR CREDIT LOSSES

Allowance for Loan and Lease Losses and Allowance for Credit Losses - Roll-forward

The following tables present ALLL and AULC activity by portfolio segment for the three-month periods ended March 31, 2021 and 2020.


(dollar amounts in millions)	Commercial		Consumer		Total
Three-month period ended March 31, 2021:
ALLL balance, beginning of period	$	1,236	$	578	$	1,814

Loan charge-offs	(61)		(34)		(95)
Recoveries of loans previously charged-off	12		19		31
Provision for loan and lease losses	10		(57)		(47)

ALLL balance, end of period	$	1,197	$	506	$	1,703
AULC balance, beginning of period	$	34	$	18	$	52

Provision (reduction in allowance) for unfunded loan commitments and letters of credit	(6)		(7)		(13)
Unfunded commitment losses	(1)		—		(1)
AULC balance, end of period	$	27	$	11	$	38
ACL balance, end of period	$	1,224	$	517	$	1,741


(dollar amounts in millions)	Commercial		Consumer		Total
Three-month period ended March 31, 2020:
ALLL balance, beginning of period	$	552	$	231	$	783
Cumulative-effect of change in accounting principle for financial instruments - credit losses (1)	180		211		391
Loan charge-offs	(88)		(48)		(136)
Recoveries of loans previously charged-off	5		14		19
Provision for loan and lease losses	347		100		447

ALLL balance, end of period	$	996	$	508	$	1,504
AULC balance, beginning of period	$	102	$	2	$	104
Cumulative-effect of change in accounting principle for financial instruments - credit losses (1)	(38)		40		2
Provision (reduction in allowance) for unfunded loan commitments and letters of credit	(5)		(1)		(6)
Unfunded commitment losses	(1)		—		(1)
AULC balance, end of period	$	58	$	41	$	99
ACL balance, end of period	$	1,054	$	549	$	1,603

(1)Relates to day one impact of the CECL adjustment as a result of the implementation of ASU 2016-13.

At March 31, 2021, the ACL was $1.7 billion, a decrease of $125 million from the December 31, 2020 balance of $1.9 billion. The decrease was primarily related to a reduction in credit reserves reflecting an improvement in the economic outlook. NCOs decreased $48 million, or 43%, in for the three-month period ended March 31, 2021. The decrease was driven by both commercial and consumer NCOs.

The suite of CECL models are generally dependent on the rate of change in unemployment rather than the absolute unemployment levels. Additionally, the economic scenarios used in the March 31, 2021 ACL determination contained significant judgmental assumptions around the ultimate number of COVID-19 cases and the economic impact of additional stimulus spending enacted into law during the first quarter. Given the impact of the unemployment variable utilized within the models and the uncertainty associated with key economic scenario assumptions, the March 31, 2021 ACL included a material general reserve component as well as additional industry specific risk profiles to capture economic uncertainty not addressed within the quantitative transaction reserve.

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6. MORTGAGE LOAN SALES AND SERVICING RIGHTS

Residential Mortgage Portfolio

The following table summarizes activity relating to residential mortgage loans sold with servicing retained for the three-month periods ended March 31, 2021 and 2020:


	Three Months Ended March 31,
(dollar amounts in millions)	2021		2020
Residential mortgage loans sold with servicing retained	$	2,256	$	1,428
Pretax gains resulting from above loan sales (1)	93		39

(1)Recorded in mortgage banking income

The following table summarizes the changes in MSRs recorded using the fair value method for the three-month periods ended March 31, 2021 and 2020 (1):


	Three Months Ended March 31,
(dollar amounts in millions)	2021		2020 (1)
Fair value, beginning of period	$	210	$	7
Fair value election for servicing assets previously measured using the amortized method	—		205
New servicing assets created	33		14
Change in fair value during the period due to:
Time decay (2)	(3)		(2)
Payoffs (3)	(17)		(6)
Changes in valuation inputs or assumptions (4)	51		(53)
Fair value, end of period	$	274	$	165
Weighted-average life (years)	7.0		6.4

(1)Prior to January 1, 2020, substantially all of Huntington’s MSR assets were recorded at amortized cost.

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

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

(4)Represents change in value resulting primarily from market-driven changes in interest rates.

MSRs do not trade in an active, open market with readily observable prices. Therefore, the fair value of MSRs is estimated using a discounted future cash flow model. Changes in the assumptions used may have a significant impact on the valuation of MSRs. MSR values are highly sensitive to movement in interest rates as expected future net servicing income depends on the projected outstanding principal balances of the underlying loans, which can be greatly impacted by the level of prepayments.

For MSRs under the fair value method, a summary of key assumptions and the sensitivity of the MSR value to changes in these assumptions at March 31, 2021, and December 31, 2020 follows:


	March 31, 2021							December 31, 2020 (1)
				Decline in fair value due to							Decline in fair value due to
(dollar amounts in millions)	Actual			10% adverse change		20% adverse change		Actual			10% adverse change		20% adverse change
Constant prepayment rate (annualized)	12.30	%		$	(15)	$	(28)	17.36	%		$	(12)	$	(23)
Spread over forward interest rate swap rates	509		bps	(6)		(12)		519		bps	(4)		(8)

(1)Prior to January 1, 2020, substantially all of Huntington’s MSR assets were recorded at amortized cost.

Total servicing, late fees and other ancillary fees included in mortgage banking income was $18 million and $17 million for the three-month periods ended March 31, 2021 and 2020, respectively.

The unpaid principal balance of residential mortgage loans serviced for third parties was $23.6 billion and $23.5 billion at March 31, 2021 and December 31, 2020, respectively.

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7. OTHER COMPREHENSIVE INCOME

The components of Huntington’s OCI for the three-month periods ended March 31, 2021 and 2020, were as follows:



	Three Months Ended March 31, 2021
	Tax (expense)
(dollar amounts in millions)	Pretax		Benefit		After-tax

Unrealized gains (losses) on available-for-sale securities arising during the period	$	(287)	$	64	$	(223)
Less: Reclassification adjustment for realized net losses (gains) included in net income	9		(2)		7
Net change in unrealized holding gains (losses) on available-for-sale securities	(278)		62		(216)



Net change in fair value on cash flow hedges	(44)		10		(34)
Net change in pension and other post-retirement obligations	3		(1)		2
Total other comprehensive income (loss)	$	(319)	$	71	$	(248)



	Three Months Ended March 31, 2020
	Tax (expense)
(dollar amounts in millions)	Pretax		Benefit		After-tax

Unrealized gains (losses) on available-for-sale securities arising during the period	$	217	$	(48)	$	169
Less: Reclassification adjustment for realized net losses (gains) included in net income	5		(1)		4
Net change in unrealized gains (losses) on available-for-sale securities	222		(49)		173



Net change in fair value on cash flow hedges	396		(88)		308
Net change in pension and other post-retirement obligations	2		—		2
Total other comprehensive income (loss)	$	620	$	(137)	$	483

Activity in accumulated OCI for the three-month periods ended March 31, 2021 and 2020, were as follows:



(dollar amounts in millions)	Unrealized gains (losses) on debt securities (1)		Change in fair value related to cash flow hedges		Unrealized gains (losses) for pension and other post- retirement obligations (2)		Total
Three Months Ended March 31, 2021
Balance, beginning of period	$	188	$	257	$	(253)	$	192

Other comprehensive income before reclassifications	(223)		(34)		—		(257)

Amounts reclassified from accumulated OCI to earnings	7		—		2		9
Period change	(216)		(34)		2		(248)
Balance, end of period	$	(28)	$	223	$	(251)	$	(56)

Three Months Ended March 31, 2020
Balance, beginning of period	$	(28)	$	23	$	(251)	$	(256)

Other comprehensive income before reclassifications	169		308		—		477
Amounts reclassified from accumulated OCI to earnings	4		—		2		6
Period change	173		308		2		483

Balance, end of period	$	145	$	331	$	(249)	$	227

(1)AOCI amounts at March 31, 2021, December 31, 2020 and March 31, 2020 include $60 million, $69 million and $87 million, respectively, net of unrealized losses on securities transferred from the available-for-sale securities portfolio to the held-to-maturity securities portfolio. The net unrealized losses will be recognized in earnings over the remaining life of the security using the effective interest method.

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8. SHAREHOLDERS’ EQUITY

Preferred Stock

The following is a summary of Huntington’s non-cumulative, non-voting, perpetual preferred stock outstanding as of March 31, 2021.



(dollar amounts in millions)
Series	Issuance Date	Total Shares Outstanding	Carrying Amount		Dividend Rate		Earliest Redemption Date

Series B	12/28/2011	35,500	$	23	3-mo. LIBOR + 270 bps		1/15/2017
Series D	3/21/2016	400,000	386		6.25	%	4/15/2021
Series D	5/5/2016	200,000	199		6.25	%	4/15/2021
Series C	8/16/2016	100,000	100		5.875	%	10/15/2021
Series E	2/27/2018	5,000	495		5.700	%	4/15/2023
Series F	5/27/2020	5,000	494		5.625	%	7/15/2030
Series G	8/3/2020	5,000	494		4.450	%	10/15/2027
Series H	2/2/2021	500,000	485		4.500	%	4/15/2026
Total		1,250,500	$	2,676

Series B, D, C and H of preferred stock have a liquidation value and redemption price per share of $1,000, plus any declared and unpaid dividends. Series E, F, and G stock have a liquidation value and redemption price per share of $100,000, plus any declared and unpaid dividends. All preferred stock has no stated maturity and redemption is solely at our option. Under current rules, any redemption of the preferred stock is subject to prior approval of the FRB.

The following table presents the dividends declared for each series of Preferred shares for the three-month periods ended March 31, 2021 and 2020:


	Three Months Ended March 31,
	2021				2020
(amounts in millions, except per share data)	Cash Dividend Declared Per Share				Cash Dividend Declared Per Share
Preferred Series			Amount ($)				Amount ($)
Series B	$	7.35	$	—	$	11.33	$	(1)
Series C	14.69		(2)		14.69		(1)
Series D	15.63		(9)		15.63		(9)
Series E	1,425.00		(7)		1,425.00		(7)
Series F	1,406.25		(7)		—		—
Series G	1,112.50		(6)		—		—

Total			$	(31)			$	(18)

9. EARNINGS PER SHARE

Basic earnings per share is the amount of earnings (adjusted for dividends declared on preferred stock) available to each share of common stock outstanding during the reporting period. Diluted earnings per share is the amount of earnings available to each share of common stock outstanding during the reporting period adjusted to include the effect of potentially dilutive common shares. Potentially dilutive common shares include incremental shares issued for stock options, restricted stock units and awards, and distributions from deferred compensation plans. Potentially dilutive common shares are excluded from the computation of diluted earnings per share in periods in which the effect would be antidilutive.

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The calculation of basic and diluted earnings per share for the three-month periods ended March 31, 2021 and 2020 was as follows:


	Three Months Ended March 31,
(dollar amounts in millions, except per share data, share count in thousands)	2021		2020
Basic earnings per common share:
Net income	$	532	$	48
Preferred stock dividends	(31)		(18)
Net income available to common shareholders	$	501	$	30
Average common shares issued and outstanding	1,017,512		1,017,643
Basic earnings per common share	$	0.49	$	0.03
Diluted earnings per common share:




Dilutive potential common shares:
Stock options and restricted stock units and awards	18,397		12,363
Shares held in deferred compensation plans	5,094		4,570


Dilutive potential common shares	23,491		16,933
Total diluted average common shares issued and outstanding	1,041,003		1,034,576
Diluted earnings per common share	$	0.48	$	0.03
Anti-dilutive awards (1)	1,666		8,045

(1)Reflects the total number of shares related to outstanding options that have been excluded from the computation of diluted earnings per share because the impact would have been anti-dilutive.

10. NONINTEREST INCOME

Huntington earns a variety of revenue including interest and fees from customers as well as revenues from non-customers. Certain sources of revenue are recognized within interest or fee income and are outside of the scope of ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). Other sources of revenue fall within the scope of ASC 606 and are generally recognized within noninterest income. These revenues are included within various sections of the Unaudited Condensed Consolidated Financial Statements. The following table shows Huntington’s total noninterest income segregated between contracts with customers within the scope of ASC 606 and those within the scope of other GAAP Topics.


(dollar amounts in millions)	Three Months Ended March 31,
Noninterest income	2021		2020
Noninterest income from contracts with customers	$	222	$	227
Noninterest income within the scope of other GAAP topics	173		134
Total noninterest income	$	395	$	361

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The following table illustrates the disaggregation by operating segment and major revenue stream and reconciles disaggregated revenue to segment revenue presented in Note 15 “Segment Reporting”.



	Three Months Ended March 31, 2021
(dollar amounts in millions)	Consumer & Business Banking		Commercial Banking		Vehicle Finance		RBHPCG		Treasury / Other		Huntington Consolidated
Major Revenue Streams
Service charges on deposit accounts	$	48	$	19	$	2	$	—	$	—	$	69
Card and payment processing income	58		4		—		—		—		62
Trust and investment management services	13		1		—		38		—		52
Insurance income	12		2		—		13		—		27
Other noninterest income	6		2		1		1		2		12
Net revenue from contracts with customers	$	137	$	28	$	3	$	52	$	2	$	222
Noninterest income within the scope of other GAAP topics	99		60		—		1		13		173
Total noninterest income	$	236	$	88	$	3	$	53	$	15	$	395

	Three Months Ended March 31, 2020
(dollar amounts in millions)	Consumer & Business Banking		Commercial Banking		Vehicle Finance		RBHPCG		Treasury / Other		Huntington Consolidated
Major Revenue Streams
Service charges on deposit accounts	$	68	$	17	$	1	$	1	$	—	$	87
Card and payment processing income	52		4		—		—		—		56
Trust and investment management services	10		1		—		36		—		47
Insurance income	8		2		—		12		1		23
Other noninterest income	8		3		1		1		1		14
Net revenue from contracts with customers	$	146	$	27	$	2	$	50	$	2	$	227
Noninterest income within the scope of other GAAP topics	66		59		1		—		8		134
Total noninterest income	$	212	$	86	$	3	$	50	$	10	$	361

Huntington generally provides services for customers in which it acts as principal. Payment terms and conditions vary amongst services and customers, and thus impact the timing and amount of revenue recognition. Some fees may be paid before any service is rendered and accordingly, such fees are deferred until the obligations pertaining to those fees are satisfied. Most Huntington contracts with customers are cancelable by either party without penalty or they are short-term in nature, with a contract duration of less than one year. Accordingly, most revenue deferred for the reporting period ended March 31, 2021 is expected to be earned within one year. Huntington does not have significant balances of contract assets or contract liabilities and any change in those balances during the reporting period ended March 31, 2021 was determined to be immaterial.

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11. FAIR VALUES OF ASSETS AND LIABILITIES

See Note 20 “Fair Value of Assets and Liabilities” to the Consolidated Financial Statements of the Annual Report on Form 10-K for the year ended December 31, 2020 for a description of the valuation methodologies used for instruments measured at fair value. Assets and liabilities measured at fair value rarely transfer between Level 1 and Level 2 measurements. There were no such transfers during the three-month periods ended March 31, 2021 and 2020.

Assets and Liabilities measured at fair value on a recurring basis

Assets and liabilities measured at fair value on a recurring basis at March 31, 2021 and December 31, 2020 are summarized below:


	Fair Value Measurements at Reporting Date Using						Netting Adjustments (1)		March 31, 2021
(dollar amounts in millions)	Level 1		Level 2		Level 3
Assets
Trading account securities:



Municipal securities	$	—	$	48	$	—	$	—	$	48
Corporate debt	—		3		—		—		3
	—		51		—		—		51
Available-for-sale securities:
U.S. Treasury securities	5		—		—		—		5
Residential CMOs	—		3,172		—		—		3,172
Residential MBS	—		10,645		—		—		10,645
Commercial MBS	—		1,227		—		—		1,227
Other agencies	—		46		—		—		46
Municipal securities	—		52		3,070		—		3,122
Private-label CMO	—		39		11		—		50
Asset-backed securities	—		200		47		—		247
Corporate debt	—		857		—		—		857
Other securities/sovereign debt	—		4		—		—		4
	5		16,242		3,128		—		19,375
Other securities	42		17		—		—		59
Loans held for sale	—		1,531		—		—		1,531
Loans held for investment	—		96		22		—		118
MSRs	—		—		274		—		274
Derivative assets	—		1,808		21		(816)		1,013
Liabilities


Derivative liabilities	—		863		11		(703)		171

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	Fair Value Measurements at Reporting Date Using						Netting Adjustments (1)		December 31, 2020
(dollar amounts in millions)	Level 1		Level 2		Level 3
Assets
Trading account securities:

Municipal securities	$	—	$	62	$	—	$	—	$	62


Available-for-sale securities:
U.S. Treasury securities	5		—		—		—		5
Residential CMOs	—		3,666		—		—		3,666
Residential MBS	—		7,935		—		—		7,935
Commercial MBS	—		1,163		—		—		1,163
Other agencies	—		62		—		—		62
Municipal securities	—		53		2,951		—		3,004
Private-label CMO	—		—		9		—		9
Asset-backed securities	—		182		10		—		192
Corporate debt	—		445		—		—		445
Other securities/sovereign debt	—		4		—		—		4
	5		13,510		2,970		—		16,485
Other securities	59		—		—		—		59
Loans held for sale	—		1,198		—		—		1,198
Loans held for investment	—		71		23		—		94
MSRs	—		—		210		—		210
Derivative assets	—		1,903		43		(889)		1,057
Liabilities


Derivative liabilities	—		1,031		2		(917)		116

(1)Amounts represent the impact of legally enforceable master netting agreements that allow the Company to settle positive and negative positions and cash collateral held or placed with the same counterparties.

The tables below present a rollforward of the balance sheet amounts for the three-month periods ended March 31, 2021 and 2020, for financial instruments measured on a recurring basis and classified as Level 3. The classification of an item as Level 3 is based on the significance of the unobservable inputs to the overall fair value measurement. However, Level 3 measurements may also include observable components of value that can be validated externally. Accordingly, the gains and losses in the table below include changes in fair value due in part to observable factors that are part of the valuation methodology.


	Level 3 Fair Value Measurements Three Months Ended March 31, 2021
					Available-for-sale securities						Loans held for investment
(dollar amounts in millions)	MSRs		Derivative instruments		Municipal securities		Private- label CMO		Asset-backed securities
Opening balance	$	210	$	41	$	2,951	$	9	$	10	$	23

Transfers out of Level 3 (1)	—		(39)		—		—		—		—
Total gains/losses for the period:
Included in earnings	51		8		—		—		—		—
Included in OCI	—		—		(4)		—		—		—
Purchases/originations	33		—		209		2		37		—

Repayments	—		—		—		—		—		(1)

Settlements	(20)		—		(86)		—		—		—
Closing balance	$	274	$	10	$	3,070	$	11	$	47	$	22
Change in unrealized gains or losses for the period included in earnings for assets held at end of the reporting date	$	51	$	(26)	$	—	$	—	$	—	$	—
Change in unrealized gains or losses for the period included in other comprehensive income for assets held at the end of the reporting period	—		—		(5)		—		—		—

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	Level 3 Fair Value Measurements Three Months Ended March 31, 2020
	MSRs		Derivative instruments		Available-for-sale securities							Loans held for investment
(dollar amounts in millions)					Municipal securities		Private- label CMO			Asset-backed securities
Opening balance	$	7	$	6	$	2,999	$	2		$	48	$	26
Fair value election for servicing assets previously measured using the amortized method	205		—		—		—			—		—
Transfers out of Level 3 (1)	—		(20)		—		—			—		—
Total gains/losses for the period:
Included in earnings	(47)		53		(1)		—			—		—
Included in OCI	—		—		(68)		—			—		—
Purchases/originations	—		—		73		—			27		—



Settlements	—		—		(66)		—			(6)		—
Closing balance	$	165	$	39	$	2,937	$	2		$	69	$	26
Change in unrealized gains or losses for the period included in earnings for assets held at end of the reporting date	$	(47)	$	34	$	—	$	—		$	—	$	—
Change in unrealized gains or losses for the period included in other comprehensive income for assets held at the end of the reporting period	$	—	$	—	(68)		$	—	0	$	—	$	—

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

The tables below summarize the classification of gains and losses due to changes in fair value, recorded in earnings for Level 3 assets and liabilities for the three-month periods ended March 31, 2021 and 2020:



	Level 3 Fair Value Measurements Three Months Ended March 31, 2021

(dollar amounts in millions)	MSRs		Derivative instruments
Classification of gains and losses in earnings:
Mortgage banking income	$	51	$	8




Total	$	51	$	8



	Level 3 Fair Value Measurements Three Months Ended March 31, 2020
					Available-for-sale securities
(dollar amounts in millions)	MSRs		Derivative instruments		Municipal securities
Classification of gains and losses in earnings:
Mortgage banking income	$	(47)	$	53	$	—

Interest and fee income	—		—		(1)


Total	$	(47)	$	53	$	(1)

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Assets and liabilities under the fair value option

The following tables present the fair value and aggregate principal balance of certain assets and liabilities under the fair value option:


	March 31, 2021
(dollar amounts in millions)	Total Loans						Loans that are 90 or more days past due
Assets	Fair value carrying amount		Aggregate unpaid principal		Difference		Fair value carrying amount		Aggregate unpaid principal		Difference
Loans held for sale	$	1,531	$	1,501	$	30	$	—	$	—	$	—
Loans held for investment	118		123		(5)		4		5		(1)


	December 31, 2020
(dollar amounts in millions)	Total Loans						Loans that are 90 or more days past due
Assets	Fair value carrying amount		Aggregate unpaid principal		Difference		Fair value carrying amount		Aggregate unpaid principal		Difference
Loans held for sale	$	1,198	$	1,134	$	64	$	2	$	2	$	—
Loans held for investment	94		99		(5)		7		8		(1)

The following table present the net gains (losses) from fair value changes for the three-month periods ended March 31, 2021 and 2020.


	Net gains (losses) from fair value changes
(dollar amounts in millions)	Three Months Ended March 31,
Assets	2021		2020
Loans held for sale (1)	$	(34)	$	19

(1)The net gains (losses) from fair value changes are included in Mortgage banking income on the Unaudited Condensed Consolidated Statements of Income.

Assets and Liabilities measured at fair value on a nonrecurring basis

Certain assets and liabilities may be required to be measured at fair value on a nonrecurring basis in periods subsequent to their initial recognition. These assets and liabilities are not measured at fair value on an ongoing basis; however, they are subject to fair value adjustments in certain circumstances, such as when there is evidence of impairment. The amounts presented represent the fair value on the various measurement dates throughout the period. The gains (losses) represent the amounts recorded during the period regardless of whether the asset is still held at period end.

The amounts measured at fair value on a nonrecurring basis at March 31, 2021 were as follows:

Fair Value Measurements Using

(dollar amounts in millions)

Fair Value

Quoted Prices

In Active

Markets for

Identical Assets

(Level 1)

Significant

Other

Observable

Inputs

(Level 2)

Significant

Other

Unobservable

Inputs

(Level 3)

Total
Gains/(Losses)
Three Months Ended
March 31, 2021

Collateral-dependent loans

—

(1)

Huntington records nonrecurring adjustments of collateral-dependent loans held for investment. Such amounts are generally based on the fair value of the underlying collateral supporting the loan. Appraisals are generally obtained to support the fair value of the collateral and incorporate measures such as recent sales prices for comparable properties and cost of construction. Periodically, in cases where the carrying value exceeds the fair value of the collateral less cost to sell, an impairment charge is recognized in the form of a charge-off.

68 Huntington Bancshares Incorporated

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Significant unobservable inputs for assets and liabilities measured at fair value on a recurring and nonrecurring basis

The table below presents quantitative information about the significant unobservable inputs for assets and liabilities measured at fair value on a recurring and nonrecurring basis at March 31, 2021 and December 31, 2020:


	Quantitative Information about Level 3 Fair Value Measurements at March 31, 2021 (1) (1)
(dollar amounts in millions)	Fair Value		Valuation Technique	Significant Unobservable Input	Range				Weighted Average
Measured at fair value on a recurring basis:
MSRs	$	274	Discounted cash flow	Constant prepayment rate	6	%	-	22%	12	%
				Spread over forward interest rate swap rates	3	%	-	11%	5	%
Derivative assets	21		Consensus Pricing	Net market price	(5)	%	-	12%	1	%
				Estimated Pull through %	6	%	-	100%	90	%




Municipal securities	3,070		Discounted cash flow	Discount rate	—	%	-	2%	1	%
Asset-backed securities	47			Cumulative default	—	%	-	39%	4	%
				Loss given default	5	%	-	80%	25	%







Measured at fair value on a nonrecurring basis:


Collateral-dependent loans	12		Appraisal value	N/A					N/A


	Quantitative Information about Level 3 Fair Value Measurements at December 31, 2020 (1)
(dollar amounts in millions)	Fair Value		Valuation Technique	Significant Unobservable Input	Range				Weighted Average
Measured at fair value on a recurring basis:
MSRs	$	210	Discounted cash flow	Constant prepayment rate	8	%	-	24%	17	%
				Spread over forward interest rate swap rates	4	%	-	11%	5	%
Derivative assets	43		Consensus Pricing	Net market price	(4)	%	-	11%	3	%
				Estimated Pull through %	1	%	-	100%	88	%




Municipal securities