July 29, 2022 - 10-Q: Quarterly report pursuant to Section 13 or 15(d) | Huntington Bancshares Incorporated (HBAN)

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 June 30, 2022


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

For the transition period from to

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 4.500% Series H Non-Cumulative, perpetual preferred stock)	HBANP	NASDAQ
Depositary Shares (each representing a 1/1000th interest in a share of 5.70% Series I Non-Cumulative, perpetual preferred stock)	HBANM	NASDAQ
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 1,442,194,344 shares of the registrant’s common stock ($0.01 par value) outstanding on June 30, 2022.

Table of Content

HUNTINGTON BANCSHARES INCORPORATED

INDEX


Glossary of Acronyms and Terms			3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)			41
Condensed Consolidated Balance Sheets at June 30, 2022 and December 31, 2021			41
Condensed Consolidated Statements of Income for the three and six months ended June 30, 2022 and 2021			42
Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2022 and 2021			43
Condensed Consolidated Statements of Changes in Shareholders’ Equity for the three and six months ended June 30, 2022 and 2021			44
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2022 and 2021			46
Notes to Unaudited Condensed Consolidated Financial Statements			48
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:			17
Credit Risk			17
Market Risk			24
Liquidity Risk			28
Operational Risk			29
Compliance Risk			30
Capital			30
Business Segment Discussion			32
Additional Disclosures			36
Item 3. Quantitative and Qualitative Disclosures about Market Risk			89
Item 4. Controls and Procedures			89
PART II. OTHER INFORMATION
Item 1. Legal Proceedings			89
Item 1A. Risk Factors			89
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			90
Item 6. Exhibits			91
Signatures			92

2 Huntington Bancshares Incorporated

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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 Lending Commitments
Basel III						Refers to the final rule issued by the FRB and OCC and published in the Federal Register on October 11, 2013
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
CDI						Core Deposit Intangible
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
FICO						Fair Isaac Corporation

FRB						Federal Reserve Bank or the 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


LGD						Loss Given Default
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						Net Interest Income
NIM						Net Interest Margin
NM						Not Meaningful
NPAs						Nonperforming Assets

OCC						Office of the Comptroller of the Currency

2022 2Q Form 10-Q 3

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OCI						Other Comprehensive Income

OLEM						Other Loans Especially Mentioned


PD						Probability of Default
PPP						Paycheck Protection Program

RBHPCG						Regional Banking and The Huntington Private Client Group
ROC						Risk Oversight Committee



SBA						Small Business Administration
SCB						Stress Capital Buffer
SEC						Securities and Exchange Commission
SOFR						Secured Overnight Financing Rate
TCF						TCF Financial Corporation
TDR						Troubled Debt Restructuring
U.S. Treasury						U.S. Department of the Treasury

UPB						Unpaid Principal Balance
VIE						Variable Interest Entity
XBRL						eXtensible Business Reporting Language

4 Huntington Bancshares Incorporated

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PART I. FINANCIAL INFORMATION

When we refer to “we”, “our”, “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, investment banking, capital markets, and advisory services, equipment financing, inventory finance, investment management, trust services, brokerage services, insurance products and services, and other financial products and services. At June 30, 2022, our 1,032 full-service branches and private client group offices are primarily located in Ohio, Colorado, Illinois, Indiana, Kentucky, Michigan, Minnesota, Pennsylvania, West Virginia and Wisconsin. Select financial services and other activities are also conducted in various other states. International banking services are available through the headquarters office in Columbus, Ohio. Our foreign banking activities, in total or with any individual country, are not significant.

This MD&A provides information we believe necessary for understanding our financial condition, changes in financial condition, results of operations, and cash flows. The MD&A included in our 2021 Annual Report on Form 10-K should be read in conjunction with this MD&A as this discussion provides only material updates to the 2021 Annual Report on Form 10-K. This MD&A should also be read in conjunction with the Unaudited Condensed Consolidated Financial Statements, Notes to Unaudited Condensed Consolidated Financial Statements, and other information contained in this report.

EXECUTIVE OVERVIEW

In June 2021, Huntington closed the acquisition of TCF Financial Corporation. Historical periods prior to June 9, 2021 reflect results of legacy Huntington operations. Subsequent to closing, results reflect all post-acquisition activity. See Note 3 “Acquisition of TCF Financial Corporation” of the Notes to Unaudited Condensed Consolidated Financial Statements appearing in Huntington’s 2021 Annual Report on Form 10-K for further information.

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

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

Summary of 2022 Second Quarter Results Compared to 2021 Second Quarter

For the quarter, we reported net income of $539 million, or $0.35 per diluted common share, compared with a net loss of $15 million, or $0.05 per diluted common share, in the year-ago quarter. The 2022 second quarter reported net income benefited from the full-quarter impact of the TCF acquisition and organic growth, while the year-ago quarter was negatively impacted by the TCF acquisition initial provision for credit losses of $294 million, or $239 million after tax ($0.21 per diluted common share) in addition to acquisition-related expenses totaling $269 million, or $218 million after-tax ($0.19 per diluted common share).

2022 2Q Form 10-Q 5

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Net interest income was $1.3 billion, up $423 million, or 50% from the year-ago quarter. FTE net interest income, a non-GAAP financial measure, increased $423 million, or 50%, from the year-ago quarter. The increase in FTE net interest income reflected the benefit from a $33.8 billion, or 27%, increase in average earning assets and a 49 basis point increase in the FTE NIM to 3.15%. Average earning assets growth included a $26.6 billion, or 30%, increase in average loans and leases and a $11.8 billion, or 38%, increase in average securities. The year-over-year increase in NIM was primarily due to improvements in yields on earning assets largely driven by the Federal Reserve's rate increases in addition to the 2021 second quarter unfavorable impact from the $55 million mark-to-market of interest rate caps.

The provision for credit losses decreased $144 million from the year-ago quarter to $67 million in the 2022 second quarter. The decrease in provision for credit losses was primarily due to the TCF acquisition initial provision for credit losses of $294 million recognized in the year-ago quarter, partially offset by loan and lease growth. The ACL decreased $154 million from the year-ago quarter to $2.2 billion in the 2022 second quarter to 1.87% of total loans and leases, compared to $2.3 billion, or 2.09% of total loans and leases. The decrease in ACL as a percentage of total loans and leases was driven by overall improved credit quality over the last year while recognizing the near-term recessionary risks. NCOs decreased $54 million from the year-ago-quarter to $8 million. Total NCOs represented an annualized 0.03% of average loans and leases in the current quarter, down from 0.28% in the year-ago quarter.

Noninterest income was $485 million, an increase of $41 million, or 9%, and noninterest expense decreased $54 million, or 5%, from the year-ago quarter. The increase to noninterest income was primarily due to the full-quarter benefit from the TCF acquisition, completed in June 2021. The decrease to noninterest expense was primarily due to a reduction in acquisition-related expenses of $245 million and execution of cost reduction initiatives, partially offset by the full-quarter impact from the TCF acquisition.

The tangible common equity to tangible assets ratio was 5.80% at June 30, 2022, down 108 basis points from December 31, 2021, primarily due to a decrease in tangible common equity related to higher interest rates causing a decrease in accumulated other comprehensive income and the impact from the acquisitions of Capstone Partners and Torana, partially offset by earnings. CET1 risk-based capital ratio was 9.05%, down from 9.33% from December 31, 2021. The regulatory Tier 1 risk-based capital ratio was 10.63% compared to 10.99% at December 31, 2021. The decrease in regulatory capital ratios was primarily driven by risk-weighted assets growth and goodwill recognized, partially offset by earnings.

During the first six months of 2022, Huntington repurchased no shares of common stock under the current repurchase authorization which began the third quarter of 2021 and expired June 30, 2022. As of June 30, 2022, the end of the current repurchase authorization, Huntington completed $650 million of the share repurchase authorization.

Business Overview

General

Our general business objectives are:

•Build on our vision to become the country’s leading people-first, digitally powered bank

•Drive sustainable long-term revenue growth and efficiency

•Deliver a Category of One customer experience through proactive and personalized guidance, differentiated products, and expertise

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

•Add scale and scope by acquiring and deepening relationships and launching of select partnerships

•Maintain positive operating leverage and execute disciplined capital management

•Execute effective risk management with an aggregate moderate-to-low, through-the-cycle risk appetite

COVID-19

The COVID-19 pandemic has caused unprecedented disruption that has affected daily living and has negatively impacted the economy. As further discussed in “Discussion of Results of Operations,” the volatility in the markets and economic uncertainty caused by the pandemic continue to have impact.

6 Huntington Bancshares Incorporated

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Huntington reacted quickly to the changes required by the pandemic as a result of the commitment and flexibility of our colleagues coupled with well-prepared business continuity plans. We continue to make progress welcoming more of our colleagues back to the office as part of our Coming Back Together plan. We offer Workplace Flex to help employees achieve work/life harmony in support of the business. We achieve this with flexible work arrangements, parental leave, and other health, wellness and financial benefits and services that assist employees and their families. We continue to monitor the impact of the virus and current government guidelines.

Economy

Growth in economic activity and demand for goods and services, alongside labor shortages, supply chain complications and geopolitical matters, have contributed to rising inflation. In response, the FRB has raised interest rates and began reducing the size of its balance sheet. Furthermore, the FRB signaled that it would continue to implement these policy actions in order to bring inflation down. The timing and impact of inflation and rising interest rates on our business and related financial results will depend on future developments, which are highly uncertain and difficult to predict. Our businesses and financial results may be impacted by a variety of other factors as well, such as an economic slowdown or recession.

We delivered positive results this quarter, driven by continued execution of strategic initiatives in addition to loan and lease and revenue growth. Further, we added capabilities through the acquisitions of Capstone Partners and Torana during the quarter. Additionally, we saw net interest income expansion, average deposit growth and demonstrated disciplined expense management. Credit continues to perform well in keeping with our aggregate moderate-to-low risk profile through-the-cycle. Through our disciplined and proactive approach, we believe Huntington is well positioned to manage through the uncertainty in the macroeconomic environment. We remain focused on delivering profitable growth.

DISCUSSION OF RESULTS OF OPERATIONS

This section provides a review of financial performance on a consolidated basis. 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”.

2022 2Q Form 10-Q 7

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Table 1 - Selected Quarterly Income Statement Data

	Three Months Ended
	June 30,			June 30,			Change
(amounts in millions, except per share data)	2022			2021			Amount		Percent
Interest income	$	1,331		$	935		$	396	42	%
Interest expense	70			97			(27)		(28)
Net interest income	1,261			838			423		50
Provision for credit losses	67			211			(144)		(68)
Net interest income after provision for credit losses	1,194			627			567		90
Service charges on deposit accounts	105			88			17		19
Card and payment processing income	96			80			16		20
Mortgage banking income	44			67			(23)		(34)
Trust and investment management services	63			56			7		13
Capital markets fees	54			35			19		54
Insurance income	27			25			2		8
Leasing revenue	27			12			15		NM
Bank owned life insurance income	11			16			(5)		(31)
Gain on sale of loans	12			3			9		NM
Net gains on sales of securities	—			10			(10)		(100)
Other noninterest income	46			52			(6)		(12)
Total noninterest income	485			444			41		9
Personnel costs	577			592			(15)		(3)
Outside data processing and other services	153			162			(9)		(6)
Net occupancy	58			72			(14)		(19)
Equipment	61			55			6		11
Professional services	19			48			(29)		(60)
Marketing	24			15			9		60
Deposit and other insurance expense	20			8			12		150
Amortization of intangibles	13			11			2		18
Lease financing equipment depreciation	11			5			6		120
Other noninterest expense	82			104			(22)		(21)
Total noninterest expense	1,018			1,072			(54)		(5)
Income (loss) before income taxes	661			(1)			662		NM
Provision for income taxes	120			14			106		NM
Income (loss) after income taxes	541			(15)			556		NM
Income attributable to non-controlling interest	2			—			2		NM
Net income (loss) attributable to Huntington Bancshares Inc	539			(15)			554		NM
Dividends on preferred shares	28			43			(15)		(35)

Net income (loss) applicable to common shares	$	511		$	(58)		$	569	NM

Average common shares—basic	1,441			1,125			316		28
Average common shares—diluted	1,463			1,125			338		30
Net income per common share—basic	$	0.35		$	(0.05)		$	0.40	NM
Net income per common share—diluted	0.35			(0.05)			0.40		NM
Return on average total assets	1.22		%	(0.05)		%
Return on average common shareholders’ equity	12.8			(1.9)
Return on average tangible common shareholders’ equity (1)	19.9			(2.1)
Net interest margin (2)	3.15			2.66
Efficiency ratio (3)	57.3			83.1
Effective tax rate	18.1			(2,353.3)

Revenue and Net Interest Income—FTE (non-GAAP)
Net interest income	$	1,261		$	838		$	423	50
FTE adjustment	6			6			—		—
Net interest income, FTE (non-GAAP) (2)	1,267			844			423		50
Noninterest income	485			444			41		9
Total revenue, FTE (non-GAAP) (2)	$	1,752		$	1,288		$	464	36

(1)Net income (loss) 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 (losses).

8 Huntington Bancshares Incorporated

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Table 2 - Selected Year to Date Income Statement Data

	Six Months Ended June 30,				Change
(amounts in millions, except per share data)	2022		2021		Amount		Percent
Interest income	$	2,526	$	1,804	$	722	40	%
Interest expense	119		(6)		125		NM
Net interest income	2,407		1,810		597		33
Provision for credit losses	92		151		(59)		(39)
Net interest income after provision for credit losses	2,315		1,659		656		40
Service charges on deposit accounts	202		157		45		29
Card and payment processing income	182		145		37		26
Mortgage banking income	93		167		(74)		(44)
Trust and investment management services	128		108		20		19
Capital markets fees	96		64		32		50
Insurance income	58		52		6		12
Leasing revenue	62		16		46		NM
Bank owned life insurance income	28		32		(4)		(13)
Gain on sale of loans	40		6		34		NM
Net gains on sales of securities	—		10		(10)		(100)
Other noninterest income	95		82		13		16
Total noninterest income	984		839		145		17
Personnel costs	1,157		1,060		97		9
Outside data processing and other services	318		277		41		15
Net occupancy	122		114		8		7
Equipment	142		101		41		41
Professional services	38		65		(27)		(42)
Marketing	45		29		16		55
Deposit and other insurance expense	38		16		22		138
Amortization of intangibles	27		21		6		29
Lease financing equipment depreciation	25		5		20		NM
Other noninterest expense	159		177		(18)		(10)
Total noninterest expense	2,071		1,865		206		11
Income before income taxes	1,228		633		595		94
Provision for income taxes	225		116		109		94
Income after income taxes	1,003		517		486		94
Income attributable to non-controlling interest	4		—		4		100
Net income attributable to Huntington Bancshares Inc	999		517		482		93
Dividends on preferred shares	56		74		(18)		(24)

Net income applicable to common shares	$	943	$	443	$	500	113	%

Average common shares—basic	1,440		1,071		369		34	%
Average common shares—diluted	1,464		1,094		370		34
Net income per common share—basic	$	0.65	$	0.41	$	0.24	59
Net income per common share—diluted	0.64		0.40		0.24		60


Revenue and Net Interest Income—FTE (Non-GAAP)
Net interest income	$	2,407	$	1,810	$	597	33	%
FTE adjustment	14		12		2		17
Net interest income, FTE (non-GAAP) (1)	2,421		1,822		599		33
Noninterest income	984		839		145		17
Total revenue, FTE (non-GAAP) (1)	$	3,405	$	2,661	$	744	28	%

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

2022 2Q Form 10-Q 9

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Average Balance Sheet / Net Interest Income

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


Table 3 - Consolidated Quarterly Average Balance Sheet and Net Interest Margin
	Three Months Ended
	June 30, 2022						June 30, 2021						Change in
	Average		Interest		Yield/		Average		Interest		Yield/		Average Balances
(dollar amounts in millions)	Balances		Income (FTE) (1)		Rate (2)		Balances		Income (FTE) (1)		Rate (2)		Amount		Percent
Assets:
Interest-bearing deposits at Federal Reserve Bank	$	3,532	$	7	0.80	%	$	7,636	$	2	0.11	%	$	(4,104)	(54)	%
Interest-bearing deposits in banks	161		1		1.32		319		—		0.01		(158)		(50)
Securities:
Trading account securities	30		1		3.99		48		1		2.96		(18)		(38)
Available-for-sale securities:
Taxable	21,672		123		2.25		20,096		67		1.34		1,576		8
Tax-exempt	2,859		19		2.71		2,832		17		2.42		27		1
Total available-for-sale securities	24,531		142		2.30		22,928		84		1.47		1,603		7
Held-to-maturity securities—taxable	17,234		90		2.10		7,280		35		1.94		9,954		137



Other securities	755		6		3.62		479		2		1.72		276		58
Total securities	42,550		239		2.24		30,735		122		1.59		11,815		38
Loans held for sale	1,033		10		4.08		1,294		9		2.79		(261)		(20)
Loans and leases: (3)
Commercial:
Commercial and industrial	42,689		415		3.84		34,126		319		3.70		8,563		25



Commercial real estate	15,276		131		3.41		9,083		72		3.13		6,193		68
Lease financing	4,919		61		4.98		2,798		36		5.00		2,121		76
Total commercial	62,884		607		3.83		46,007		427		3.67		16,877		37
Consumer:
Residential mortgage	20,527		158		3.09		13,768		104		3.04		6,759		49
Automobile	13,557		115		3.40		12,793		115		3.62		764		6
Home equity	10,373		115		4.44		9,375		89		3.79		998		11
RV and marine	5,317		55		4.12		4,447		46		4.13		870		20
Other consumer	1,291		30		9.08		1,004		27		10.61		287		29
Total consumer	51,065		473		3.70		41,387		381		3.69		9,678		23
Total loans and leases	113,949		1,080		3.77		87,394		808		3.68		26,555		30
Allowance for loan and lease losses	(2,053)						(1,828)						(225)		(12)
Net loans and leases	111,896						85,566						26,330		31
Total earning assets	161,225		1,337		3.33		127,378		941		2.96		33,847		27
Cash and due from banks	1,669						1,106						563		51
Goodwill and other intangible assets	5,613						3,055						2,558		84
All other assets	10,107						8,119						1,988		24
Total assets	$	176,561					$	137,830					$	38,731	28	%
Liabilities and Shareholders’ Equity:
Interest-bearing deposits:
Demand deposits—interest-bearing	$	41,712	$	11	0.10	%	$	29,729	$	4	0.04	%	$	11,983	40	%
Money market deposits	33,791		8		0.09		28,124		4		0.06		5,667		20
Savings and other domestic deposits	21,683		1		0.02		15,190		2		0.04		6,493		43
Core certificates of deposit (4)	2,228		—		0.07		1,832		1		0.19		396		22
Other domestic deposits of $250,000 or more	225		—		0.23		259		—		0.26		(34)		(13)
Negotiable CDs, brokered and other deposits	2,981		5		0.72		2,986		1		0.16		(5)		—

Total interest-bearing deposits	102,620		25		0.10		78,120		12		0.06		24,500		31
Short-term borrowings	2,103		7		1.40		241		—		0.47		1,862		NM
Long-term debt (5)	7,024		38		2.16		6,887		85		4.97		137		2
Total interest-bearing liabilities	111,747		70		0.25		85,248		97		0.45		26,499		31
Demand deposits—noninterest-bearing	42,388						34,558						7,830		23
All other liabilities	4,168						2,608						1,560		60
Total Huntington Bancshares Inc shareholders’ equity	18,228						15,410						2,818		18
Non-controlling interest	30						6						24		NM
Total equity	18,258						15,416						2,842		18
Total liabilities and shareholders’ equity	$	176,561					$	137,830					$	38,731	28	%
Net interest rate spread					3.08						2.51
Impact of noninterest-bearing funds on margin					0.07						0.15
Net interest margin/NII (FTE)			$	1,267	3.15	%			$	844	2.66	%

(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 and leases.

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

(5) Reflects the net mark-to-market impact of interest rate caps, a detriment of $55 million, or 318 bps, for the three-month period ended June 30, 2021. There was no impact for the three-month period ended June 30, 2022.

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2022 Second Quarter versus 2021 Second Quarter

Net interest income for the 2022 second quarter increased $423 million, or 50%, from the 2021 second quarter. FTE net interest income, a non-GAAP financial measure, for the 2022 second quarter increased $423 million, or 50%, from the 2021 second quarter. The increase in FTE net interest income reflects the benefit of a $33.8 billion, or 27%, increase in average total earning assets and a 49 basis point increase in the FTE NIM to 3.15%. The increase in average total earning assets included a $26.6 billion, or 30%, increase in average loans and leases and a $11.8 billion, or 38%, increase in average securities. Average balances across earning asset categories for the 2022 second quarter reflect the full-quarter impact of the TCF acquisition in addition to organic growth. The increase in average securities was additionally driven by the redeployment of excess liquidity into securities in the second half of 2021.

The NIM expansion was primarily due to improvements in yields on earning assets driven by the Federal Reserve’s rate increases in addition to the 2021 second quarter unfavorable impact from the $55 million mark-to-market of interest rate caps.

Net interest income for the 2022 second quarter included $16 million of net interest income from purchase accounting accretion and $5 million in accelerated PPP loan fees recognized upon forgiveness payments from the SBA, compared to $9 million and $30 million, respectively, in the 2021 second quarter.

2022 2Q Form 10-Q 11

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Table 4 - Consolidated YTD Average Balance Sheets and Net Interest Margin
	Six months ended
	June 30, 2022						June 30, 2021						Change in
	Average		Interest		Yield/		Average		Interest		Yield/		Average Balances
(dollar amounts in millions)	Balances		Income (FTE) (1)		Rate (2)		Balances		Income (FTE) (1)		Rate (2)		Amount		Percent
Assets:
Interest-bearing deposits at Federal Reserve Bank	$	5,354	$	10	0.38	%	$	6,855	$	4	0.11	%	$	(1,501)	(22)	%
Interest-bearing deposits in banks	168		1		0.71		248		—		0.03		(80)		(32)
Securities:
Trading account securities	38		1		3.63		50		1		3.32		(12)		(24)
Available-for-sale securities:
Taxable	22,931		213		1.85		17,476		116		1.33		5,455		31
Tax-exempt	2,873		41		2.86		2,742		34		2.46		131		5
Total available-for-sale securities	25,804		254		1.96		20,218		150		1.48		5,586		28
Held-to-maturity securities—taxable	15,902		156		1.97		7,772		77		1.98		8,130		105



Other securities	860		11		2.64		447		4		1.69		413		92
Total securities	42,604		422		1.98		28,487		232		1.63		14,117		50
Loans held for sale	1,137		20		3.58		1,343		18		2.71		(206)		(15)
Loans and leases: (3)
Commercial:
Commercial and industrial	42,047		807		3.82		33,145		634		3.80		8,902		27



Commercial real estate	15,170		245		3.22		8,134		121		2.96		7,036		87
Lease financing	4,915		122		4.95		2,500		64		5.08		2,415		97
Total commercial	62,132		1,174		3.76		43,779		819		3.72		18,353		42
Consumer:
Residential mortgage	20,019		304		3.04		12,936		199		3.08		7,083		55
Automobile	13,510		227		3.39		12,729		231		3.67		781		6
Home equity	10,394		217		4.21		9,093		169		3.75		1,301		14
RV and marine	5,210		107		4.14		4,320		90		4.21		890		21
Other consumer	1,288		58		9.02		988		54		10.89		300		30
Total consumer	50,421		913		3.64		40,066		743		3.73		10,355		26
Total loans and leases	112,553		2,087		3.71		83,845		1,562		3.73		28,708		34
Allowance for loan and lease losses	(2,050)						(1,818)						(232)		(13)
Net loans and leases	110,503						82,027						28,476		35
Total earning assets	161,816		2,540		3.17		120,778		1,816		3.03		41,038		34
Cash and due from banks	1,659						1,093						566		52
Goodwill and other intangible assets	5,598						2,618						2,980		114
All other assets	10,061						7,783						2,278		29
Total assets	$	177,084					$	130,454					$	46,630	36	%
Liabilities and Shareholders’ Equity:
Interest-bearing deposits:
Demand deposits—interest-bearing	$	41,176	$	14	0.07	%	$	28,279	$	6	0.04	%	$	12,897	46	%
Money market deposits	33,235		12		0.07		27,190		8		0.06		6,045		22
Savings and other domestic deposits	21,501		2		0.02		13,743		3		0.04		7,758		56
Core certificates of deposit (4)	2,393		1		0.10		1,487		3		0.36		906		61
Other domestic deposits of $250,000 or more	270		—		0.19		309		—		0.15		(39)		(13)
Negotiable CDs, brokered and other deposits	3,216		7		0.42		3,169		3		0.17		47		1

Total interest-bearing deposits	101,791		36		0.07		74,177		23		0.06		27,614		37
Short-term borrowings	3,408		14		0.83		224		—		0.34		3,184		NM
Long-term debt (5)	6,969		69		1.99		7,324		(29)		(0.78)		(355)		(5)
Total interest-bearing liabilities	112,168		119		0.21		81,725		(6)		(0.02)		30,443		37
Demand deposits—noninterest-bearing	42,177						31,841						10,336		32
All other liabilities	4,068						2,512						1,556		62
Total Huntington Bancshares Inc shareholders’ equity	18,644						14,373						4,271		30
Non-controlling interest	27						3						24		NM
Total equity	18,671						14,376						4,295		30
Total liabilities and shareholders’ equity	$	177,084					$	130,454					$	46,630	36	%
Net interest rate spread					2.96						3.05
Impact of noninterest-bearing funds on margin					0.06						(0.01)
Net interest margin/NII			$	2,421	3.02	%			$	1,822	3.04	%

(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 and leases.

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

(5) Reflects the net mark-to-market impact of interest rate caps, a benefit of $89 million, or 244 bps, for the first six-month period of 2021. There was no impact for the first six-month period of 2022.

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2022 First Six Months versus 2021 First Six Months

Net interest income for the first six-month period of 2022 increased $597 million, or 33%, from the year-ago period. FTE net interest income, a non-GAAP financial measure, for the first six-month period of 2022 increased $599 million, or 33%, from the year-ago period. The increase in FTE net interest income reflected the benefit of a $41.0 billion, or 34%, increase in average total earning assets, partially offset by a 2 basis point decrease in the FTE net interest margin to 3.02%. The increase in average total earning assets included a $28.7 billion, or 34%, increase in average loans and leases and a $14.1 billion, or 50%, increase in average securities. Average balances across earning assets categories reflect the late second-quarter 2021 TCF acquisition in addition to organic growth. The increase in average securities was additionally driven by the redeployment of excess liquidity into securities in the second half of 2021.

The NIM compression was driven by the benefit from the $89 million net mark-to-market impact of interest rate caps in the prior year and the impact of lower accelerated PPP loan fees recognized upon forgiveness payments from the SBA in 2022, partially offset by improvements in yields on securities and the benefit from an increase in net interest income from purchase accounting accretion in 2022.

Net interest income for the first six-month period of 2022 included $35 million of net interest income from purchase accounting accretion and $16 million in accelerated PPP loan fees recognized upon forgiveness payments from the SBA, compared to $9 million and $75 million, respectively, in the year-ago period.

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 credit allowance at levels appropriate to absorb our estimate of credit losses expected over the life of the loan and lease portfolio, securities portfolio and unfunded lending commitments.

The provision for credit losses for the 2022 second quarter was $67 million, a decrease of $144 million, compared to the 2021 second quarter. On a year-to-date basis, provision for credit losses for the first six-month period of 2022 was $92 million, a decrease of $59 million, or 39%, compared to the year-ago period. The decrease in provision expense over the prior year quarter and the prior year-to-date period was primarily attributed to the second quarter 2021 TCF acquisition initial provision for credit losses of $294 million ($234 million from loans and leases and $60 million from acquired unfunded lending commitments), partially offset by loan and lease growth. The components of the provision for credit losses were as follows:


Table 5 - Provision for Credit Losses
	Three Months Ended		Six Months Ended
	June 30,			June 30,		June 30,		June 30,
(dollar amounts in millions)	2022			2021		2022		2021
Provision for loan and lease losses	$	64		$	145	$	71	$	98
Provision for unfunded lending commitments	3			66		17		53
Provision for securities	—			—		4		—
Total provision for credit losses	$	67		$	211	$	92	$	151

The ACL decreased $154 million from the year-ago quarter to $2.2 billion, or 1.87%, of total loans and leases, compared to $2.3 billion, or 2.09% of total loans and leases. The decrease in ACL as a percentage of total loans and leases was driven by overall improved credit quality over the last year while recognizing the near-term recessionary risks.

2022 2Q Form 10-Q 13

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Noninterest Income

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


Table 6 - Noninterest Income
	Three Months Ended		2Q22 vs. 2Q21
	June 30,			June 30,		Change
(dollar amounts in millions)	2022			2021		Amount		Percent
Service charges on deposit accounts	$	105		$	88	$	17	19	%
Card and payment processing income	96			80		16		20
Mortgage banking income	44			67		(23)		(34)
Trust and investment management services	63			56		7		13
Capital markets fees	54			35		19		54
Insurance income	27			25		2		8
Leasing revenue	27			12		15		125
Bank owned life insurance income	11			16		(5)		(31)
Gain on sale of loans	12			3		9		NM
Net gains on sales of securities	—			10		(10)		(100)
Other noninterest income	46			52		(6)		(12)
Total noninterest income	$	485		$	444	$	41	9	%

2022 Second Quarter versus 2021 Second Quarter

Noninterest income for the 2022 second quarter was $485 million, an increase of $41 million, or 9%, from the year-ago quarter. The increase in noninterest income for the 2022 second quarter was driven by the full-quarter impact from the TCF acquisition, completed in June 2021. Capital markets fees increased $19 million, or 54%, primarily reflecting higher interest rate derivative fees, underwriting and advisory fees, foreign exchange fees and loan syndication. Gain on sale of loans increased $9 million, primarily due to resuming the sale of SBA loans in 2022. Trust and investment management services increased $7 million, or 13%, reflecting continued strong sales and the TCF acquisition. All other increases were primarily a result of the impact of the TCF acquisition. Partially offsetting these increases, mortgage banking income decreased $23 million, or 34%, primarily reflecting lower secondary marketing spreads and lower salable volume. Net gains on sales of securities decreased $10 million as the 2021 second quarter included sales reflecting securities optimization following the acquisition of TCF.


Table 7 - Noninterest Income—2022 First Six Months Ended vs. 2021 First Six Months Ended
	Six Months Ended June 30,				Change
(dollar amounts in millions)	2022		2021		Amount		Percent
Service charges on deposit accounts	$	202	$	157	$	45	29	%
Card and payment processing income	182		145		37		26
Mortgage banking income	93		167		(74)		(44)
Trust and investment management services	128		108		20		19
Capital markets fees	96		64		32		50
Insurance income	58		52		6		12
Leasing revenue	62		16		46		NM
Bank owned life insurance income	28		32		(4)		(13)
Gain on sale of loans	40		6		34		NM
Net gains on sales of securities	—		10		(10)		(100)
Other noninterest income	95		82		13		16
Total noninterest income	$	984	$	839	$	145	17	%

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Noninterest income for the first six-month period of 2022 increased $145 million, or 17%, from the year-ago period. The first six-month period of 2022 noninterest income across categories was driven by the full-period impact of the TCF acquisition, completed in June 2021. Gain on sale of loans increased $34 million, reflecting higher SBA loan sales resulting from the strategic decision to retain SBA loans on the balance sheet during 2021. Capital markets fees increased $32 million, or 50%, primarily reflecting higher interest rate derivative fees, foreign exchange fees, loan syndication fees and underwriting and advisory fees. Trust and investment management services increased $20 million, or 19%, primarily reflecting continued strong sales and the TCF acquisition. All other increases were primarily result of the impact of the TCF acquisition. These increases were partially offset by a decrease in mortgage banking of $74 million, or 44%, primarily reflecting lower secondary marketing spreads and lower salable volume, and a decrease in net gains on sales of securities of $10 million, as the prior year included sales reflecting securities optimization following the acquisition of TCF.

Noninterest Expense

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


Table 8 - Noninterest Expense
	Three Months Ended		2Q22 vs. 2Q21
	June 30,			June 30,		Change
(dollar amounts in millions)	2022			2021		Amount		Percent
Personnel costs	$	577		$	592	$	(15)	(3)	%
Outside data processing and other services	153			162		(9)		(6)
Net occupancy	58			72		(14)		(19)
Equipment	61			55		6		11
Professional services	19			48		(29)		(60)
Marketing	24			15		9		60
Deposit and other insurance expense	20			8		12		150
Amortization of intangibles	13			11		2		18
Lease financing equipment depreciation	11			5		6		120
Other noninterest expense	82			104		(22)		(21)
Total noninterest expense	$	1,018		$	1,072	$	(54)	(5)	%
Number of employees (average full-time equivalent)	19,866			17,018		2,848		17	%

Impacts of acquisition-related expenses:


	Three Months Ended
	June 30,		June 30,
(dollar amounts in millions)	2022		2021
Personnel costs	$	2	$	110
Outside data processing and other services	12		33
Net occupancy	6		35
Equipment	—		3
Professional services	1		36

Deposit and other insurance expense	1		—
Other noninterest expense	2		52
Total noninterest expense adjustments	$	24	$	269

2022 Second Quarter versus 2021 Second Quarter

Noninterest expense for the 2022 second quarter was $1.0 billion, a decrease of $54 million, or 5%, from the year-ago quarter, primarily reflecting a $245 million decrease in acquisition-related expenses and execution of cost reduction initiatives, partially offset by the full-quarter impact of the TCF acquisition, completed in June 2021.

Table of Content


Table 9 - Noninterest Expense—2022 First Six Months Ended vs. 2021 First Six Months Ended

	Six Months Ended June 30,				Change
(dollar amounts in millions)	2022		2021		Amount		Percent
Personnel costs	$	1,157	$	1,060	$	97	9	%
Outside data processing and other services	318		277		41		15
Net occupancy	122		114		8		7
Equipment	142		101		41		41
Professional services	38		65		(27)		(42)
Marketing	45		29		16		55
Deposit and other insurance expense	38		16		22		138
Amortization of intangibles	27		21		6		29
Lease financing equipment depreciation	25		5		20		NM
Other noninterest expense	159		177		(18)		(10)
Total noninterest expense	$	2,071	$	1,865	$	206	11	%

Impacts of TCF acquisition-related expenses:


	Six Months Ended June 30,
(dollar amounts in millions)	2022		2021
Personnel costs	$	7	$	110
Outside data processing and other services	37		41
Net occupancy	16		38
Equipment	2		4
Professional services	3		44

Deposit and other insurance expense	1
Other noninterest expense	4		53
Total noninterest expense adjustments	$	70	$	290

Noninterest expense increased $206 million, or 11%, from the year-ago period, primarily reflecting the full-period impact of the TCF acquisition, partially offset by a $220 million decrease in acquisition-related expenses and execution of cost reduction initiatives. Equipment expense increased $41 million, or 41%, primarily reflecting the impact of the TCF acquisition and timing of technology equipment purchases and amortization. Marketing expense increased $16 million, or 55%, primarily reflecting investment in new product launches and expanding brand marketing. All other increases were primarily a result of the impact of the TCF acquisition. Professional services expense decreased $27 million, or 42%, and other noninterest expense decreased $18 million, or 10%, both primarily reflecting decreases in acquisition-related expense, partially offset by the impact of the TCF acquisition.

Provision for Income Taxes

The provision for income taxes in the 2022 second quarter was $120 million, compared to $14 million in the 2021 second quarter. The provision for income taxes for the six-month periods ended June 30, 2022 and June 30, 2021 was $225 million and $116 million, respectively. All periods included the benefits from general business credits, capital losses, tax-exempt income, tax-exempt bank owned life insurance income, and investments in qualified affordable housing projects. The effective tax rates for the 2022 second quarter and 2021 second quarter were 18.1% and (2,353.3)%, respectively. Excluding TCF acquisition-related expense of $269 million, the related tax benefit of $51 million and discrete tax expenses of $16 million, the 2021 second quarter effective tax rate would have been 18.8%. The effective tax rates for the six-month periods ended June 30, 2022 and June 30, 2021 were 18.3% and 18.5%, respectively.

The net federal deferred tax asset was $401 million and the net state deferred tax asset was $49 million at June 30, 2022.

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We file income tax returns with the IRS and various state, city, and foreign jurisdictions. Federal income tax audits have been completed for tax years through 2009. The 2010 and 2011 tax years remain under exam by the IRS. While the statute of limitations remains open for tax years 2012 through 2020, 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, we are no longer subject to state and local income tax examinations for tax years before 2017.

RISK MANAGEMENT AND CAPITAL

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

We believe that our primary risk exposures are credit, market, liquidity, operational and compliance. More information on risk can be found in Item 1A Risk Factors below, the Risk Factors section included in Item 1A of our 2021 Annual Report on Form 10-K and subsequent filings with the SEC. The MD&A included in our 2021 Annual Report on Form 10-K should be read in conjunction with this MD&A as this discussion provides only material updates to the 2021 Annual Report on Form 10-K. This MD&A should also be read in conjunction with the Unaudited Condensed Consolidated Financial Statements, Notes to Unaudited Condensed Consolidated Financial 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 2021 Annual Report on Form 10-K.

Credit Risk

Credit risk is the risk of financial loss if a counterparty is not able to meet the agreed upon terms of the financial obligation. The majority of our credit risk is associated with lending activities, as the acceptance and management of credit risk is central to profitable lending. We also have credit risk associated with our investment securities portfolios (see Note 4 “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, and floors, are used in asset and liability management activities to protect against the risk of adverse price or interest rate movements. We also use derivatives, principally loan sale commitments, in hedging our mortgage loan interest rate lock commitments and mortgage loans held for sale. While there is credit risk associated with derivative activity, we believe this exposure is minimal.

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, through-the-cycle risk appetite. In our efforts to identify risk mitigation techniques, we have focused on product design features, origination policies, and solutions for delinquent or stressed borrowers.

2022 2Q Form 10-Q 17

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Loan and Lease Credit Exposure Mix

Refer to the “Loan and Lease Credit Exposure Mix” section of our 2021 Annual Report on Form 10-K for a brief description of each portfolio segment.

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


Table 10 - Loan and Lease Portfolio Composition

(dollar amounts in millions)	June 30, 2022				December 31, 2021
Commercial:
Commercial and industrial	$	43,440	38	%		$	41,688	37	%



Commercial real estate	15,695		13			14,961		14
Lease financing	5,043		4			5,000		4
Total commercial	64,178		55			61,649		55
Consumer:
Residential mortgage	21,220		18			19,256		17
Automobile	13,622		12			13,434		12
Home equity	10,426		9			10,550		9
RV and marine	5,453		5			5,058		5
Other consumer	1,322		1			1,320		2
Total consumer	52,043		45			49,618		45
Total loans and leases	$	116,221	100	%		$	111,267	100	%

Our loan portfolio is a managed mix of consumer and commercial credits. 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. Commercial 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 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, through-the-cycle risk appetite. 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 2021 Annual Report on Form 10-K for our commercial credit underwriting and on-going credit management processes.

Consumer Credit

Refer to the “Consumer Credit” section of our 2021 Annual Report on Form 10-K for our consumer credit underwriting and on-going credit management processes.

18 Huntington Bancshares Incorporated

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The table below provides our total loan and lease portfolio by industry type.


Table 11 - Loan and Lease Portfolio by Industry Type

(dollar amounts in millions)	June 30, 2022				December 31, 2021
Commercial loans and leases:
Real estate and rental and leasing	$	14,856	13	%	$	14,287	13	%
Retail trade (1)	7,879		7		6,709		6
Manufacturing	7,766		6		7,401		7
Finance and insurance	5,493		5		4,595		4
Health care and social assistance	4,470		4		4,733		4
Wholesale Trade	4,453		4		4,067		4
Accommodation and food services	3,423		3		3,778		3
Transportation and warehousing	3,133		3		3,096		3
Other services	1,986		2		2,119		2
Professional, scientific, and technical services	1,874		2		1,975		2
Construction	1,715		1		1,980		2
Arts, entertainment, and recreation	1,474		1		1,495		1
Admin./Support/Waste Mgmt. and Remediation Services	1,240		1		1,285		1
Utilities	988		1		932		1
Information	918		1		870		1
Public administration	688		1		713		1
Educational services	559		—		657		—
Agriculture, forestry, fishing and hunting	424		—		453		—
Mining, quarrying, and oil and gas extraction	276		—		358		—
Management of companies and enterprises	94		—		130		—
Unclassified/other	469		—		16		—
Total commercial loans and leases by industry category	64,178		55		61,649		55
Residential mortgage	21,220		18		19,256		17
Automobile	13,622		12		13,434		12
Home equity	10,426		9		10,550		9
RV and marine	5,453		5		5,058		5
Other consumer loans	1,322		1		1,320		2
Total loans and leases	$	116,221	100	%	$	111,267	100	%

(1) Amounts include $1.8 billion and $1.5 billion of auto dealer services loans at June 30, 2022 and December 31, 2021, respectively.

Credit Quality

(This section should be read in conjunction with Note 5 “Loans / Leases” and Note 6 “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, ACL, and NCOs. In addition, we utilize delinquency rates, risk distribution and migration patterns, product segmentation, and origination trends in the analysis of our credit quality performance.

Credit quality performance in the 2022 second quarter reflected NCOs of $8 million, or 0.03% of average total loans and leases, annualized, a decrease of $54 million, compared to $62 million, or 0.28%, in the year-ago quarter. The decrease was driven by a $70 million reduction in Commercial NCOs resulting in net recoveries of $11 million in 2022 second quarter, partially offset by a $16 million increase in Consumer NCOs. NPAs decreased from December 31, 2021 by $68 million, or 9%, largely driven by decreases in commercial and industrial and lease financing NALs.

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NPAs and NALs

(This section should be read in conjunction with Note 5 “Loans / Leases” and Note 6 “Allowance for Credit Losses” of the Notes to Unaudited Condensed Consolidated Financial Statements and “Credit Quality” section appearing in Huntington’s 2021 Annual Report on 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 $463 million of commercial related NALs at June 30, 2022, $300 million, or 65%, 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.


Table 12 - Nonaccrual Loans and Leases and Nonperforming Assets

(dollar amounts in millions)	June 30, 2022			December 31, 2021
Nonaccrual loans and leases (NALs):
Commercial and industrial	$	324		$	370
Commercial real estate	117			104
Lease financing	22			48
Residential mortgage	111			111
Automobile	4			3
Home equity	78			79
RV and marine	1			1

Total nonaccrual loans and leases	657			716
Other real estate, net:
Residential	11			8
Commercial	—			1
Total other real estate, net	11			9
Other NPAs (1)	14			25
Total nonperforming assets	$	682		$	750

Nonaccrual loans and leases as a % of total loans and leases	0.57		%	0.64		%
NPA ratio (2)	0.59			0.67

(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.

ACL

(This section should be read in conjunction with Note 6 “Allowance for Credit Losses” of the Notes to Unaudited Condensed Consolidated Financial Statements.)

Our ACL 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.

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

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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 described below. These macroeconomic scenarios contain certain variables that are influential to our modeling process, the most significant being unemployment rates and GDP. The probability weights assigned to each scenario are generally expected to be consistent from period to period and determined through our ACL process. Any changes in probability weights must be supported by appropriate documentation and approval of senior management. Additionally, we consider whether to adjust the modeled estimates to address possible limitations within the models or factors not captured within the macroeconomic scenarios. Lifetime losses for most of our loans and leases are evaluated collectively based on similar risk characteristics, risk ratings, origination credit bureau scores, delinquency status, and remaining months within loan agreements, among other factors.

The baseline scenario used for the 2022 second quarter assumes that the Russian invasion will not spread beyond Ukraine and the resulting disruptions to the oil, natural gas and other commodity markets will be limited and temporary. The overnight federal funds rate is forecast to average 2.1% in fourth quarter 2022 as the Federal Reserve looks to address the rising inflation. This rate is expected to peak at 2.75% prior to the expectation that the fed would start to cut rates in late 2024.

The table below is intended to show how the forecasted path of unemployment rate and GDP has changed since the end of 2021:


Table 13 - Forecasted Key Macroeconomic Variables
Baseline scenario forecast	2021		2022				2023
	Q4		Q2		Q4		Q2		Q4


Unemployment rate (1)
4Q 2021	4.5	%	3.7	%	3.5	%	3.5	%	3.5	%
1Q 2022	N/A		3.7		3.4		3.4		3.4
2Q 2022	N/A		3.5		3.3		3.4		3.5


Gross Domestic Product (1)
4Q 2021	6.6	%	3.6	%	2.5	%	2.9	%	2.8	%
1Q 2022	N/A		6.1		2.5		2.9		2.9
2Q 2022	N/A		3.6		2.7		2.3		2.6


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

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

Management develops additional analytics to support adjustments to our modeled results. Our governance committees reviewed model results of each economic scenario for appropriate usage, concluding that the quantitative transactional reserve will continue to utilize scenario weighting. Given the uncertainty associated with key economic scenario assumptions, the June 30, 2022 ACL included a general reserve that consists of various risk profile components, including profiles related to the potential economic impact of a near-term recession as the Federal Reserve raises interest rates attempting to lower inflation, and the commercial real estate portfolio, to capture 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 lending commitments, where appropriate. Losses related to the unfunded lending 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.

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The AULC is determined by applying the same quantitative reserve determination process to the unfunded portion of the loan exposures adjusted by an applicable funding expectation. (See Note 1 “Significant Accounting Policies” of the Notes to Unaudited Condensed Consolidated Financial Statements appearing in Huntington’s 2021 Annual Report on Form 10-K.)

Our ACL evaluation process includes the on-going assessment of credit quality metrics, and a comparison of certain ACL benchmarks to current performance. For more information, including the ALLL and AULC activity by portfolio segment, refer to Note 6 “Allowance for Credit Losses” of the Notes to the Unaudited Condensed Consolidated Financial Statements.

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


Table 14 - Allocation of Allowance for Credit Losses (1)

(dollar amounts in millions)	June 30, 2022				December 31, 2021
ALLL
Commercial
Commercial and industrial	$	804	38	%		$	832	37	%
Commercial real estate	498		13			586		14
Lease financing	40		4			44		4
Total commercial	1,342		55			1,462		55
Consumer
Residential mortgage	177		18			145		17
Automobile	146		12			108		12
Home equity	131		9			88		9
RV and marine	147		5			105		5
Other consumer	131		1			122		2
Total consumer	732		45			568		45
Total ALLL	2,074		100	%		2,030		100	%
AULC	94					77
Total ACL	$	2,168				$	2,107
Total ALLL as a % of
Total loans and leases			1.78%					1.82%
Nonaccrual loans and leases			316					284
NPAs			304					271
Total ACL as % of
Total loans and leases			1.87%					1.89%
Nonaccrual loans and leases			330					294
NPAs			318					281

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

At June 30, 2022, the ACL was $2.2 billion, or 1.87% of total loans and leases, compared to $2.1 billion, or 1.89%, at December 31, 2021. The decrease in ACL as a percentage of total loans and leases reflects overall improved credit quality while recognizing the near-term recessionary risks, while the increase in the total ACL was driven by loan and lease growth.

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NCOs

The table below reflects NCO detail for the three-month periods ended June 30, 2022 and 2021:


Table 15 - Quarterly Net Charge-off Analysis
	Three Months Ended
	June 30,			June 30,
(dollar amounts in millions)	2022			2021
Net charge-offs (recoveries) by loan and lease type:
Commercial:
Commercial and industrial	$	(4)		$	37
Commercial real estate	(4)			17
Lease financing	(3)			5
Total commercial	(11)			59
Consumer:
Residential mortgage	(1)			—
Automobile	—			(4)
Home equity	(2)			(1)
RV and marine	1			—
Other consumer	21			8
Total consumer	19			3
Total net charge-offs	$	8		$	62




Net charge-offs (recoveries) - annualized percentages:
Commercial:
Commercial and industrial	(0.04)		%	0.43		%



Commercial real estate	(0.11)			0.69
Lease financing	(0.24)			0.93
Total commercial	(0.07)			0.51
Consumer:
Residential mortgage	(0.02)			—
Automobile	—			(0.13)
Home equity	(0.08)			(0.08)
RV and marine	0.10			0.02
Other consumer	6.60			3.26
Total consumer	0.15			0.02
Net charge-offs as a % of average loans and leases	0.03		%	0.28		%

2022 Second Quarter versus 2021 Second Quarter

NCOs were an annualized 0.03% of average loans and leases in the current quarter, down from 0.28% in the 2021 second quarter. NCOs for the commercial portfolios showed improvement, with annualized net recoveries of 0.07% in the current quarter compared to annualized net charge-offs of 0.51% in the year-ago quarter. Consumer charge-offs were higher in the quarter, compared to the year-ago quarter.

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The table below reflects NCO detail for the six-month periods ended June 30, 2022 and 2021:


Table 16 - Year to Date Net Charge-off Analysis
(dollar amounts in millions)
	Six months ended June 30,
	2022			2021
Net charge-offs (recoveries) by loan and lease type:
Commercial:
Commercial and industrial	$	(27)		$	65



Commercial real estate	4			14
Lease financing	2			29
Total commercial	(21)			108
Consumer:
Residential mortgage	(1)			—
Automobile	—			(2)
Home equity	(3)			(1)
RV and marine	4			3
Other consumer	48			18
Total consumer	48			18
Total net charge-offs	$	27		$	126



Net charge-offs (recoveries) - annualized percentages:
Commercial:
Commercial and industrial	(0.13)		%	0.39		%



Commercial real estate	0.05			0.32
Lease financing	0.08			2.42
Total commercial	(0.07)			0.49
Consumer:
Residential mortgage	(0.01)			0.01
Automobile	—			(0.04)
Home equity	(0.05)			(0.03)
RV and marine	0.15			0.15
Other consumer	7.53			3.62
Total consumer	0.19			0.09
Net charge-offs as a % of average loans	0.05		%	0.30		%

2022 First Six Months versus 2021 First Six Months

NCOs decreased $99 million in the first six-month period of 2022 to $27 million. NCOs for the commercial portfolios showed improvement, with annualized net recoveries of 0.07% in the current period compared to annualized net charge-offs of 0.49% in the year-ago period. Consumer charge-offs were higher in the period, compared to the year-ago period.

Market Risk

(This section should be read in conjunction with the “Market Risk” section appearing in Huntington’s 2021 Annual Report on Form 10-K for our on-going market risk management processes.)

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

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We measure market risk exposure via financial simulation models, which provide management with insights on the potential impact to net interest income and other key metrics as a result of changes in market interest rates. Models are used to simulate cash flows and accrual characteristics of the balance sheet based on assumptions regarding the slope or shape of the yield curve, the direction and volatility of interest rates, and the changing composition and characteristics of the balance sheet resulting from strategic objectives and customer behavior. 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 our balance sheet, we compare a set of alternative interest rate scenarios to the results of a base case scenario derived using market forward rates. The market forward reflects the market consensus regarding the future level and slope of the yield curve across a range of tenor points. The standard set of interest rate scenarios includes two types: “shock” scenarios which are immediate parallel rate shifts, and “ramp” scenarios where the parallel shift is applied gradually over the first 12 months of the forecast on a pro rata basis. In both shock and ramp scenarios with falling rates, we presume that market rates will not go below 0%. The scenarios are inclusive of all executed interest rate risk hedging activities. Forward starting hedges are included to the extent that they have been transacted and that they start within the measurement horizon.

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


Table 17 - Net Interest Income at Risk

	Net Interest Income at Risk (%)
Basis point change scenario	-25	+100	+200

June 30, 2022	-2.1	3.0	6.0
December 31, 2021	-2.4	4.6	8.9

The NII at Risk results included in the table above reflect the analysis used monthly by management. It models gradual “ramp” +100 and +200 basis point parallel shift scenarios, implied by the forward yield curve over the next twelve months, as well as an immediate parallel “shock” scenario of -25 basis points.

The NII at Risk shows that the balance sheet is asset sensitive at both June 30, 2022, and December 31, 2021. The change in sensitivity is primarily driven by changes in market interest rate expectations, and the size and mix of the balance sheet.


Table 18 - Economic Value of Equity at Risk

	Economic Value of Equity at Risk (%)
Basis point change scenario	-25	+100	+200

June 30, 2022	0.9	-5.1	-11.6
December 31, 2021	-0.1	-1.5	-5.6

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 “shock” scenarios.

As of June 30, 2022, EVE at risk sensitivities have increased since December 31, 2021. The change in sensitivity from December 31, 2021 was driven primarily by changes in the spot market rate curve extending the duration of the securities portfolio and shortening the duration of liabilities.

We have LIBOR-based exposure in the form of variable rate loans, derivatives, Series B preferred stock, long term debt and other securities and financial arrangements. To address the discontinuance of LIBOR in its current form, we established a LIBOR transition team and project plan under the oversight of the CRO and CFO, providing periodic updates to the ROC. As of December 31, 2021, Huntington ceased issuance of new LIBOR loans. Contract remediation efforts coordinated by the LIBOR transition team are scheduled for completion by June 2023. Source systems have been updated to support alternative reference rates. At this time alternative reference rates are predominantly SOFR based. As such, we have developed a SOFR-enabled interest rate risk monitoring framework and a strategy for managing interest rate risk during the transition from LIBOR to SOFR. We continue to monitor market developments and legislative and regulatory updates.

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Use of Derivatives to Manage Interest Rate Risk

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

Table 19 shows all swap, collar and floor positions that are utilized for purposes of managing our exposures to the variability of interest rates. The interest rates variability may impact either the fair value of the assets and liabilities or impact the cash flows attributable to net interest margin. These positions are used to protect the fair value of asset and liabilities by converting the contractual interest rate on a specified amount of assets and liabilities (i.e., notional amounts) to another interest rate index. The positions are also used to hedge the variability in cash flows attributable to the contractually specified interest rate by converting the variable rate index into a fixed rate. The volume, maturity and mix of derivative positions change frequently as we adjust our broader interest rate risk management objectives and the balance sheet positions to be hedged. For further information, including the notional amount and fair values of these derivatives, refer to Note 14 “Derivative Financial Instruments” of the Notes to Unaudited Condensed Consolidated Financial Statements.

The following tables present additional information about the interest rate swaps and floors used in Huntington’s asset and liability management activities at June 30, 2022 and December 31, 2021.


Table 19 - Weighted-Average Maturity, Receive Rate and SOFR/LIBOR Reset Rate on Asset Liability Management Instruments
	June 30, 2022
			Average Maturity (years)			Weighted-Average Fixed Rate		Weighted-Average Reset Rate
(dollar amounts in millions)	Notional Value			Fair Value
Asset conversion swaps
Receive Fixed - Pay 1 month LIBOR	$	7,875	1.91	$	(282)	1.21	%	1.22	%
Receive Fixed - Pay SOFR (1)	4,500		3.49	(80)		2.31		0.91
Pay Fixed - Receive 1 month LIBOR (2)	3,615		5.37	339		0.88		1.58
Pay Fixed - Receive SOFR	326		7.42	29		1.44		0.79
Receive Fixed - Pay SOFR - forward starting	150		4.89	(2)		2.49		—
Pay Fixed - Receive 1 month LIBOR - forward starting (3)	4,500		3.68	288		0.98		—
Pay Fixed - Receive SOFR - forward starting (3)	1,403		5.23	41		1.87		—
Liability conversion swaps
Receive Fixed - Pay 1 month LIBOR	1,430		2.35	(26)		2.01		1.24
Receive Fixed - Pay SOFR (1)	3,550		4.14	(49)		2.27		0.56


Purchased swaption collars
Purchased Interest Rate Swaption Collars (4)	2,000		0.43	7		2.46 / 3.76		—
Basis Swaps
Pay SOFR- Receive Fed Fund (economic hedges) (5)	230		3.16	—		1.58		1.52
Pay Fed Fund - Receive SOFR (economic hedges) (5)	41		0.48	—		1.51		1.58
Total swap portfolio (6)	$	29,620		$	265

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	December 31, 2021
			Average Maturity (years)			Weighted-Average Fixed Rate		Weighted-Average Reset Rate
(dollar amounts in millions)	Notional Value			Fair Value
Asset conversion swaps
Receive Fixed - Pay 1 month LIBOR	$	10,775	1.88	$	58	1.38	%	0.11	%
Pay Fixed - Receive 1 month LIBOR (2)	1,625		8.83	34		1.08		0.10
Pay Fixed - Receive SOFR	67		7.98	—		1.32		—
Receive Fixed - Pay 1 month LIBOR - forward starting (3)	6,500		3.97	78		0.90		—
Pay Fixed - Receive SOFR - forward starting (7)	36		7.32	—		1.29		—

Liability conversion swaps
Receive Fixed - Pay 1 month LIBOR	1,928		2.16	54		2.13		0.10

Basis Swaps
Pay SOFR- Receive Fed Fund (economic hedges) (5)	230		3.66	—		0.08		0.06
Pay Fed Fund - Receive SOFR (economic hedges) (5)	41		0.98	—		0.05		0.08
Total swap portfolio	$	21,202		$	224

	December 31, 2021
			Average Maturity (years)			Weighted-Average Floor Strike		Weighted-Average Reset Rate
(dollar amounts in millions)	Notional Value			Fair Value
Interest rate floors
Purchased Interest Rate Floors - 1 month LIBOR	$	375	0.06	$	2	1.93	%	0.10	%





Total floors portfolio	$	375		$	2

(1)SOFR based swaps compound on a daily-basis.

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

(3)Forward starting swaps effective starting from April 2022 to February 2023.

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

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

(6)LIBOR swap instruments that remain outstanding in July 2023 will transition to a SOFR-based rate.

(7)Forward starting swaps effective starting from January 2022 to February 2023.

MSRs

(This section should be read in conjunction with Note 7 “Mortgage Loan Sales and Servicing Rights” of Notes to the Unaudited Condensed Consolidated Financial Statements.)

At June 30, 2022, we had a total of $463 million of capitalized MSRs representing the right to service $31.7 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 and declines in credit quality. 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.

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Liquidity Risk

(This section should be read in conjunction with the “Liquidity Risk” section appearing in Huntington’s 2021 Annual Report on 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 June 30, 2022. 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 $12.9 billion as of June 30, 2022.

Bank Liquidity and Sources of Funding

Our primary sources of funding for the Bank are consumer and commercial core deposits. At June 30, 2022, these core deposits funded 79% of total assets (122% 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 $27 million and $29 million at June 30, 2022 and December 31, 2021, respectively.

The following table reflects deposit composition detail.


Table 20 - Deposit Composition

	June 30,				December 31,
(dollar amounts in millions)	2022				2021
By Type:
Demand deposits—noninterest-bearing	$	42,131	29	%	$	43,236	30	%
Demand deposits—interest-bearing	41,433		28		39,837		28
Money market deposits	34,257		24		32,522		23
Savings and other domestic deposits	21,583		15		21,088		15
Core certificates of deposit (1)	2,103		1		2,740		2
Total core deposits:	141,507		97		139,423		98
Other domestic deposits of $250,000 or more	221		—		359		—
Negotiable CDs, brokered and other deposits	3,707		3		3,481		2

Total deposits	$	145,435	100	%	$	143,263	100	%
Total core deposits:
Commercial	$	63,629	45	%	$	61,521	44	%
Consumer	77,878		55		77,902		56
Total core deposits	$	141,507	100	%	$	139,423	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 $91.3 billion at June 30, 2022.

At June 30, 2022, the carrying value of investment securities pledged to secure public and trust deposits, trading account liabilities, U.S. Treasury demand notes, and security repurchase agreements, and to support borrowing capacity totaled $28.7 billion. There were no securities of a single issuer, which are not governmental or government-sponsored, that exceeded 10% of shareholders’ equity at June 30, 2022.

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, negotiable CDs, brokered and other deposits, short-term borrowings, and long-term debt. Our wholesale funding for both the Bank and parent company totaled $14.8 billion at June 30, 2022, compared to $11.3 billion at December 31, 2021. The increase from year-end is primarily due to issuances of short-term FHLB advances and senior debt, partially offset by repayment of maturing debt instruments.

At June 30, 2022, we believe the Bank has sufficient liquidity and capital resources to meet its cash flow obligations over the next 12 months and for the foreseeable future.

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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.

The parent company had $3.0 billion and $2.8 billion at June 30, 2022 and December 31, 2021 in cash and cash equivalents, respectively.

On July 20, 2022, our Board of Directors declared a quarterly common stock cash dividend of $0.155 per common share. The dividend is payable on October 3, 2022, to shareholders of record on September 19, 2022. Based on the current quarterly dividend of $0.155 per common share, cash demands required for common stock dividends are estimated to be approximately $224 million per quarter. Additionally, on July 20, 2022, our Board of Directors declared a quarterly Series B, Series E, Series F, Series G and Series H Preferred Stock dividend payable on October 17, 2022 to shareholders of record on October 1, 2022. On June 17, 2022, our Board of Directors declared a quarterly dividend for the Series I Preferred Stock payable on September 1, 2022 to shareholders of record on August 15, 2022. Total cash demands required for Series B, Series E, Series F, Series G, Series H and Series I are expected to be approximately $28 million per quarter.

During the first six months of 2022, the Bank paid preferred and common dividends to the parent company of $22 million and $458 million, respectively. To meet any additional liquidity needs, the parent company may issue debt or equity securities.

At June 30, 2022, we believe the Company has sufficient liquidity and capital resources to meet its cash flow obligations over the next 12 months and for the foreseeable future.

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, caps and floors, collars, 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 phishing campaigns. We are actively monitoring our email gateways for malicious phishing email campaigns. We have also increased our cybersecurity and fraud monitoring activities through the implementation of specific monitoring of remote connections by geography and volume of connections to detect anomalous remote logins, since a significant portion of our workforce has the option to work remotely.

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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 govern 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 our Audit Committee, as appropriate. Significant findings or issues are escalated by the Third Party Risk Management Committee to the Technology Committee of the Board, as appropriate.

The goal of this framework is to implement effective operational risk-monitoring; 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 hold ourselves to a high standard for adherence to compliance management and seek to continuously enhance our performance.

Capital

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

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


Table 21 - Regulatory Capital Data (1)

(dollar amounts in millions)		June 30, 2022			December 31, 2021
Total risk-weighted assets	Consolidated	$	137,841		$	131,266
	Bank	137,441			130,597
CET 1 risk-based capital	Consolidated	12,478			12,249
	Bank	13,813			13,261
Tier 1 risk-based capital	Consolidated	14,654			14,426
	Bank	15,005			14,445
Tier 2 risk-based capital	Consolidated	3,003			2,821
	Bank	2,210			1,982
Total risk-based capital	Consolidated	17,657			17,246
	Bank	17,215			16,427
CET 1 risk-based capital ratio	Consolidated	9.05		%	9.33		%
	Bank	10.05			10.15
Tier 1 risk-based capital ratio	Consolidated	10.63			10.99
	Bank	10.92			11.06
Total risk-based capital ratio	Consolidated	12.81			13.14
	Bank	12.53			12.58
Tier 1 leverage ratio	Consolidated	8.46			8.56
	Bank	8.68			8.60

(1) Huntington elected to temporarily delay certain effects of CECL on regulatory capital for two years, followed by a three-year transition period which began January 1, 2022 pursuant to a rule that allows bank holding companies and banks to delay for two years 100% of the day-one impact of adopting CECL and 25% of the cumulative change in the reported allowance for credit losses since adopting CECL. As of June 30, 2022, we have phased in 25% of the cumulative CECL deferral with the remaining impact to be recognized over the remainder of the three-year transition period.

At June 30, 2022, we maintained Basel III capital ratios in excess of the well-capitalized standards established by the FRB. The decrease in regulatory capital ratios was primarily driven by risk-weighted asset growth and goodwill recognized during the quarter, partially offset by earnings.

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 appetite and risk tolerance objectives, to meet both regulatory and market expectations, and to provide the flexibility needed for future growth and business opportunities.

Shareholders’ equity totaled $18.0 billion at June 30, 2022, a decrease of $1.3 billion or 7% when compared with December 31, 2021. The decrease was primarily driven by higher interest rates causing a decrease in accumulated other comprehensive income, partially offset by earnings, net of dividends.

Huntington is authorized to make capital distributions that are consistent with the requirements in the FRB’s capital rule, inclusive of the SCB requirement. As of June 30, 2022, Huntington’s SCB requirement was 2.5%, which is the minimum under the SCB framework. On April 5, 2022, Huntington submitted its 2022 Capital Plan to the Federal Reserve for supervisory review. By notice dated June 23, 2022, the Federal Reserve informed Huntington that its indicative SCB requirement associated with its 2022 Capital Plan is 3.3%. Huntington has submitted a request to the Federal Reserve for reconsideration of the indicative SCB requirement. Huntington anticipates that the Federal Reserve will disclose Huntington’s final SCB requirement by August 31, 2022, which will become effective October 1, 2022.

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Share Repurchases

From time to time our Board of Directors authorizes the Company to repurchase shares of our common stock. Although we announce when the Board of Directors authorizes share repurchases, we typically do not give any public notice before we repurchase our shares. Future stock repurchases may be private or open-market repurchases, including block transactions, accelerated or delayed block transactions, forward transactions, and similar transactions. Various factors determine the amount and timing of our share repurchases, including our capital requirements, the number of shares we expect to issue for employee benefit plans and acquisitions, market conditions (including the trading price of our stock), and regulatory and legal considerations.

During the first six months of 2022, Huntington repurchased no shares of common stock under the current repurchase authorization which began the third quarter of 2021 and ended June 30, 2022. As of June 30, 2022, the end of the current repurchase authorization, Huntington completed $650 million of the original $800 million share repurchase authorization.

BUSINESS SEGMENT DISCUSSION

Overview

Our business segments are based on our internally-aligned segment leadership structure, which is how we monitor results and assess performance. We have four major business segments: Commercial Banking, Consumer and Business Banking, 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 acquisition-related expenses, if any, and a small amount of other residual unallocated expenses, are allocated to the four business segments.

Funds Transfer Pricing (FTP)

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

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Net Income by Business Segment

Net income (loss) by business segment for the six-month periods ending June 30, 2022 and June 30, 2021 is presented in the following table:


Table 22 - Net Income by Business Segment
	Six Months Ended June 30,
(dollar amounts in millions)	2022		2021
Commercial Banking	$	560	$	167
Consumer and Business Banking	205		105
Vehicle Finance	62		161
RBHPCG	41		37
Treasury / Other	131		47
Net income	$	999	$	517


Commercial Banking

Table 23 - Key Performance Indicators for Commercial Banking
	Six Months Ended June 30,						Change
(dollar amounts in millions)	2022			2021			Amount			Percent
Net interest income	$	844		$	457		$	387		85	%
Provision for credit losses	(75)			143			(218)			NM
Noninterest income	292			203			89			44
Noninterest expense	496			306			190			62
Provision for income taxes	151			44			107			NM
Income attributable to non-controlling interest	4			—			4			100
Net income	$	560		$	167		$	393		235	%
Number of employees (average full-time equivalent)	2,056			1,424			632			44	%
Total average assets	$	58,018		$	34,370		$	23,648		69
Total average loans/leases	50,402			29,309			21,093			72
Total average deposits	34,260			26,242			8,018			31
Net interest margin	3.20		%	2.90		%	0.30		%	10
NCOs	$	(28)		$	84		$	(112)		(133)
NCOs as a % of average loans and leases	(0.11)		%	0.57		%	(0.68)		%	(119)

2022 First Six Months versus 2021 First Six Months

Commercial Banking reported net income of $560 million in the six-month period of 2022, compared to $167 million in the year-ago period. Segment net interest income increased $387 million, or 85%, primarily due to an increase in average earning assets reflecting the impact of the June 2021 acquisition of TCF and higher utilization rates, and a 30 basis point increase in net interest margin driven by an increase in spreads largely due to impact from the Federal Reserve's recent rate increases. The provision for credit losses decreased $218 million, primarily due to the initial provision for credit losses recognized in the second quarter 2021 related to the TCF acquisition. Noninterest income increased $89 million, or 44%, reflecting the impact of the TCF acquisition in addition to an increase in capital markets fees, primarily reflecting higher interest rate derivative fees, foreign exchange fees, loan syndication fees and underwriting and advisory fees. Noninterest expense increased $190 million, or 62%, primarily reflecting the impact of the TCF acquisition, driven by higher personnel expense due to increased number of colleagues, allocated overhead and operating lease expense.

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Consumer and Business Banking

Table 24 - Key Performance Indicators for Consumer and Business Banking
	Six Months Ended June 30,						Change
(dollar amounts in millions)	2022			2021			Amount			Percent
Net interest income	$	993		$	703		$	290		41	%
Provision for credit losses	74			63			11			17
Noninterest income	542			477			65			14
Noninterest expense	1,202			984			218			22
Provision for income taxes	54			28			26			93
Net income	$	205		$	105		$	100		95	%
Number of employees (average full-time equivalent)	9,530			8,160			1,370			17	%
Total average assets	$	38,499		$	31,834		$	6,665		21
Total average loans/leases	32,029			28,014			4,015			14
Total average deposits	94,866			67,702			27,164			40
Net interest margin	2.09		%	2.06		%	0.03		%	1
NCOs	$	54		$	41		$	13		32
NCOs as a % of average loans and leases	0.34		%	0.30		%	0.04		%	13

2022 First Six Months versus 2021 First Six Months

Consumer and Business Banking, including Home Lending, reported net income of $205 million in the six-month period of 2022, an increase of $100 million, or 95%, compared to the year-ago period. Segment net interest income increased $290 million, or 41%, primarily due to an increase in average earnings assets reflecting the impact of the June 2021 acquisition of TCF and a 3 basis point increase in net interest margin driven primarily from impact of the Federal Reserve's recent rate increases, partially offset by a decrease in accelerated PPP loan fees recognized upon forgiveness payments from the SBA. The provision for credit losses increased $11 million to $74 million, primarily due to an increase in loan growth. Noninterest income increased $65 million, or 14%, reflecting the impact of the TCF acquisition, primarily due to higher interchange income and service charges on deposit accounts along with gains from SBA sales in 2022, partially offset by decreased mortgage banking income primarily reflecting lower secondary marketing spreads and lower salable volume. Noninterest expense increased $218 million, or 22%, primarily reflecting the impact of the TCF acquisition largely driven by higher personnel expense reflecting an increase in the number of FTE employees and allocated overhead.

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 $80 million in the six-month period of 2022, compared with net income of $23 million in the year-ago period. Net interest income increased $94 million, primarily due to the impact of the TCF acquisition, reduction in prepayment activity and increased retention. The provision for credit losses decreased $32 million, primarily due to continued general improvement in economic conditions. Noninterest income decreased $52 million, driven primarily by lower secondary marketing spreads and lower salable volume.

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Vehicle Finance

Table 25 - Key Performance Indicators for Vehicle Finance
	Six Months Ended June 30,						Change
(dollar amounts in millions)	2022			2021			Amount			Percent
Net interest income	$	237		$	217		$	20		9	%
Provision (benefit) for credit losses	79			(53)			132			NM
Noninterest income	6			6			—			—
Noninterest expense	86			72			14			19
Provision for income taxes	16			43			(27)			(63)
Net income	$	62		$	161		$	(99)		(61)	%
Number of employees (average full-time equivalent)	270			258			12			5	%
Total average assets	$	21,148		$	19,383		$	1,765		9
Total average loans/leases	21,379			19,641			1,738			9
Total average deposits	1,273			903			370			41
Net interest margin	2.24		%	2.22		%	0.02		%	1
NCOs	$	2		$	1		$	1		100
NCOs as a % of average loans and leases	0.02		%	0.01		%	0.01		%	100

2022 First Six Months versus 2021 First Six Months

Vehicle Finance reported net income of $62 million in the six-month period of 2022, a decrease of $99 million, compared to the year-ago period. Segment net interest income increased $20 million, or 9%, primarily due to an increase in average earning assets and a 2 basis point increase in the net interest margin. The provision for credit losses increased $132 million, primarily due to reserve releases in 2021 as the economic environment was improving, in addition to the increasing risk during the second quarter 2022 of a near-term recession as the Federal Reserve raises rates attempting to lower inflation. Noninterest income was relatively unchanged from the year-ago period. Noninterest expense increased $14 million, or 19%, largely attributable to higher production related costs and geographic expansion.


Regional Banking and The Huntington Private Client Group

Table 26 - Key Performance Indicators for Regional Banking and The Huntington Private Client Group
	Six Months Ended June 30,						Change
(dollar amounts in millions)	2022			2021			Amount			Percent
Net interest income	$	104		$	70		$	34		49	%
Provision (benefit) for credit losses	14			(2)			16			NM
Noninterest income	124			107			17			16
Noninterest expense	162			132			30			23
Provision for income taxes	11			10			1			10
Net income	$	41		$	37		$	4		11	%
Number of employees (average full-time equivalent)	1,106			1,018			88			9	%
Total average assets	$	8,778		$	6,958		$	1,820		26
Total average loans/leases	8,484			6,705			1,779			27
Total average deposits	9,506			7,313			2,193			30
Net interest margin	2.13		%	1.89		%	0.24		%	13


Total assets under management (in billions)—eop	$	21.0		$	24.0		$	(3.0)		(13)
Total trust assets (in billions)—eop	129.3			146.7			(17.4)			(12)

eop - End of Period

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2022 First Six Months versus 2021 First Six Months

RBHPCG reported net income of $41 million for the first six-month period of 2022, an increase of $4 million, or 11%, compared to the year-ago period. Segment net interest income increased $34 million, or 49%, primarily due to an increase in average earnings assets and a 24 basis point increase in net interest margin, largely driven by higher benefit in deposit spreads. Average loans and leases increased $1.8 billion, or 27%, due to growth in both commercial and residential real estate mortgages, and the impact of the June 2021 acquisition of TCF. Average deposits increased $2.2 billion, or 30%, primarily related to higher customer liquidity levels, and impact of the acquired TCF deposit portfolio. The provision for credit losses increased $16 million, largely due to loan growth. Noninterest income increased $17 million, or 16%, reflecting higher sales production and the impact of the TCF acquisition. Total assets under management decreased 13% due to equity and bond markets, offset by positive net asset flows. Noninterest expense increased $30 million primarily due to an increase in personnel expense impacted by the TCF acquisition.

Treasury / Other

The Treasury / Other function includes revenue and expense related to assets, liabilities, derivatives (including the mark-to-market of interest rate caps in the first six-month period of 2021), 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, acquisition-related expenses, if any, and other miscellaneous expenses not allocated to other business segments. The provision for income taxes for the business segments is calculated at a statutory 21% tax rate, although our overall effective tax rate is lower.

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.

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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 related variants and mutations and their 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 possibility that the anticipated benefits of the transaction with TCF 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 does business; and other factors that may affect the future results of Huntington.

All forward-looking statements speak only as of the date they are made and are based on information available at that time. Huntington does not assume any obligation to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements were made or to reflect the occurrence of unanticipated events except as required by federal securities laws. As forward-looking statements involve significant risks and uncertainties, caution should be exercised against placing undue reliance on such statements.

Non-GAAP Financial Measures

This document contains GAAP financial measures and non-GAAP financial measures where management believes it to be helpful in understanding 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.

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.

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 2021 Annual Report on 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 2021 Annual Report on Form 10-K, as supplemented by this report including this MD&A .

Allowance for Credit Losses

Our ACL at June 30, 2022 represents our current estimate of the lifetime credit losses expected from our loan and lease portfolio and our unfunded lending commitments. Management estimates the ACL by projecting probability of default, loss given default and exposure at default conditional on economic parameters, for the remaining contractual term. Internal factors that impact the quarterly allowance estimate include the level of outstanding balances, the portfolio performance and assigned risk ratings.

One of the most significant judgments influencing the ACL estimate is the macroeconomic forecasts. Key external economic parameters that directly impact our loss modeling framework include forecasted 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 macroeconomic variables within our modeling framework, it is difficult to estimate the impact of a change in any one individual variable on the allowance. As a result, management uses a probability-weighted approach that incorporates a baseline, an adverse and a more favorable economic scenario when formulating the quantitative estimate.

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 the Russian invasion of Ukraine worsening and lasting longer than the baseline scenario. Import bans on Russian oil lead to additional price increases, contributing to higher inflation rates that are also exacerbated by the continuing supply chain disruption. Additionally, the Federal Reserve continues to raise rates through the first half of 2023 to fight inflation even as the economy heads into a recession in the third quarter 2022. Under this scenario, as an example, the unemployment rate increases from baseline levels and remains elevated for a prolonged period, the rate is estimated at 6.4% and 7.7% at the end of 2022 and 2023 respectively. These numbers result in unemployment rates that are approximately 3.1% and 4.2% higher than baseline scenario projections of 3.3% and 3.5%, respectively for the same time periods.

To demonstrate the sensitivity to key economic parameters used in the calculation of our ACL at June 30, 2022, management calculated the difference between our quantitative ACL and this 100% adverse scenario. Excluding consideration of qualitative adjustments, this sensitivity analysis would result in a hypothetical increase in our ACL of approximately $900 million at June 30, 2022. This hypothetical increase is reflective of the sensitivity of the rate of change in the unemployment variable on our models.

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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 geopolitical instability, risks of rising inflation including a near-term recession, or the emergence of a more contagious and severe COVID-19 variant, could severely impact our current expectations. If the credit quality of our customer base materially deteriorates or the risk profile of a market, industry, or group of customers changes materially, our net income and capital could be materially adversely affected which, in turn could have a material adverse effect on our financial condition and results of operations. The extent to which the geopolitical instability, risks of rising inflation, and the 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 5 “Loans and Leases” and Note 6 “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 13 “Fair Values of Assets and Liabilities” of the Notes to Unaudited Condensed Consolidated Financial Statements.

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Goodwill and Other Intangible Assets

The acquisition method of accounting requires that assets and liabilities acquired in a business combination are recorded at fair value as of the acquisition date. The valuation of assets and liabilities 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. This typically results in goodwill, the amount by which the cost of net assets acquired in a business combination exceeds their fair value, which is subject to impairment testing at least annually. The amortization of identified intangible assets recognized in a business combination is based upon the estimated economic benefits to be received over their economic life, which is also subjective. Customer attrition rates that are based on historical experience are used to determine the estimated economic life of certain intangibles assets, including but not limited to, customer deposit intangibles.

40 Huntington Bancshares Incorporated

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Item 1: Financial Statements

Huntington Bancshares Incorporated

Condensed Consolidated Balance Sheets

(Unaudited)


	June 30,		December 31,
(dollar amounts in millions)	2022		2021
Assets
Cash and due from banks	$	1,793	$	1,811
Interest-bearing deposits at Federal Reserve Bank	2,115		3,711
Interest-bearing deposits in banks	196		392
Trading account securities	34		46
Available-for-sale securities	24,377		28,460
Held-to-maturity securities	17,355		12,447


Other securities	763		648
Loans held for sale (includes $777 and $1,270 respectively, measured at fair value)(1)	969		1,676
Loans and leases (includes $179 and $171 respectively, measured at fair value)(1)	116,221		111,267
Allowance for loan and lease losses	(2,074)		(2,030)
Net loans and leases	114,147		109,237
Bank owned life insurance	2,766		2,765
Accrued income and other receivables	2,169		1,319
Premises and equipment	1,175		1,164
Goodwill	5,571		5,349
Servicing rights and other intangible assets	703		611
Other assets	4,649		4,428
Total assets	$	178,782	$	174,064
Liabilities and shareholders’ equity
Liabilities
Deposits:
Demand deposits—noninterest-bearing	$	42,131	$	43,236
Interest-bearing	103,304		100,027
Total deposits	145,435		143,263
Short-term borrowings	3,048		334
Long-term debt	7,866		7,108
Other liabilities	4,454		4,041
Total liabilities	160,803		154,746
Commitments and Contingent Liabilities (Note 16)
Shareholders’ equity
Preferred stock	2,167		2,167
Common stock	14		14
Capital surplus	15,261		15,222
Less treasury shares, at cost	(85)		(79)
Accumulated other comprehensive income (loss)	(2,098)		(229)
Retained earnings	2,691		2,202
Total Huntington Bancshares Inc shareholders’ equity	17,950		19,297
Non-controlling interest	29		21
Total equity	17,979		19,318
Total liabilities and shareholders’ equity	$	178,782	$	174,064
Common shares authorized (par value of $0.01)	2,250,000,000		2,250,000,000

Common shares outstanding	1,442,194,344		1,437,742,172
Treasury shares outstanding	6,691,381		6,298,288
Preferred stock, authorized shares	6,617,808		6,617,808

Preferred shares outstanding	557,500		557,500

(1)Amounts represent loans for which Huntington has elected the fair value option. See Note 13 “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 June 30,				Six months ended June 30,
(dollar amounts in millions, except per share data, share count in thousands)	2022		2021		2022		2021
Interest and fee income:
Loans and leases	$	1,078	$	806	$	2,082	$	1,558
Available-for-sale securities
Taxable	123		67		213		116
Tax-exempt	15		13		32		26
Held-to-maturity securities—taxable	90		35		156		77
Other securities—taxable	6		2		11		4

Other	19		12		32		23
Total interest income	1,331		935		2,526		1,804
Interest expense:
Deposits	25		12		36		23
Short-term borrowings	7		—		14		—

Long-term debt	38		85		69		(29)

Total interest expense	70		97		119		(6)
Net interest income	1,261		838		2,407		1,810
Provision for credit losses	67		211		92		151
Net interest income after provision for credit losses	1,194		627		2,315		1,659
Service charges on deposit accounts	105		88		202		157
Card and payment processing income	96		80		182		145
Mortgage banking income	44		67		93		167
Trust and investment management services	63		56		128		108
Capital markets fees	54		35		96		64
Insurance income	27		25		58		52
Leasing revenue	27		12		62		16
Bank owned life insurance income	11		16		28		32
Gain on sale of loans	12		3		40		6
Net gains on sales of securities	—		10		—		10

Other noninterest income	46		52		95		82
Total noninterest income	485		444		984		839
Personnel costs	577		592		1,157		1,060
Outside data processing and other services	153		162		318		277
Net occupancy	58		72		122		114
Equipment	61		55		142		101
Professional services	19		48		38		65
Marketing	24		15		45		29
Deposit and other insurance expense	20		8		38		16
Amortization of intangibles	13		11		27		21
Lease financing equipment depreciation	11		5		25		5

Other noninterest expense	82		104		159		177
Total noninterest expense	1,018		1,072		2,071		1,865
Income (loss) before income taxes	661		(1)		1,228		633
Provision for income taxes	120		14		225		116
Income after income taxes	541		(15)		1,003		517
Income attributable to non-controlling interest	2		—		4		—
Net income (loss) attributable to Huntington Bancshares Inc	539		(15)		999		517
Dividends on preferred shares	28		43		56		74

Net income (loss) applicable to common shares	$	511	$	(58)	$	943	$	443
Average common shares—basic	1,441,200		1,125,039		1,439,814		1,071,276
Average common shares—diluted	1,463,293		1,125,039		1,463,810		1,094,474
Per common share:
Net income—basic	$	0.35	$	(0.05)	$	0.65	$	0.41
Net income—diluted	0.35		(0.05)		0.64		0.40



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 June 30,				Six Months Ended June 30,
(dollar amounts in millions)	2022		2021		2022		2021
Net income (loss) attributable to Huntington Bancshares Inc	$	539	$	(15)	$	999	$	517
Other comprehensive (loss) income, net of tax:



Net unrealized (losses) gains on available-for-sale securities	(820)		78		(1,999)		(138)
Net impact of fair value hedges on available-for-sale securities	123		(5)		455		29
Change in fair value related to cash flow hedges	(86)		(34)		(326)		(102)


Translation adjustments, net of hedges	(2)		(6)		(2)		(6)
Change in accumulated unrealized gains for pension and other post-retirement obligations	1		4		3		6
Other comprehensive (loss) income, net of tax	(784)		37		(1,869)		(211)
Comprehensive (loss) income attributable to Huntington Bancshares	(245)		22		(870)		306
Comprehensive income attributed to non-controlling interest	2		—		4		—
Comprehensive (loss) income	$	(243)	$	22	$	(866)	$	306

See Notes to Unaudited Condensed Consolidated Financial Statements

2022 2Q Form 10-Q 43

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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 Income (Loss)		Retained Earnings				Non-controlling		Total
	Amount		Shares	Amount				Shares	Amount						Total		interest		Equity
Three Months Ended June 30, 2022
Balance, beginning of period	$	2,167	1,445,386	$	14	$	15,255	(6,211)	$	(78)	$	(1,314)	$	2,408	$	18,452	$	29	$	18,481
Net income													539		539		2		541
Other comprehensive (loss) income, net of tax											(784)				(784)				(784)







Cash dividends declared:
Common ($0.155 per share)													(228)		(228)				(228)
Preferred													(28)		(28)				(28)
Recognition of the fair value of share-based compensation						23									23				23

Other share-based compensation activity			3,499	—		(17)							—		(17)				(17)

Other						—		(480)	(7)				—		(7)		(2)		(9)
Balance, end of period	$	2,167	1,448,885	$	14	$	15,261	(6,691)	$	(85)	$	(2,098)	$	2,691	$	17,950	$	29	$	17,979

Three Months Ended June 30, 2021
Balance, beginning of period	$	2,676	1,023,094	$	10	$	8,806	(5,041)	$	(59)	$	(56)	$	2,223	$	13,600	$	—	$	13,600

Net loss													(15)		(15)		—		(15)
Other comprehensive income, net of tax											37				37				37
TCF Financial Corp acquisition:
Issuance of common stock			458,171	5		6,993			(37)						6,961				6,961
Issuance of Series I preferred stock	175					10									185				185
Non-controlling interest acquired															—		22		22





Cash dividends declared:
Common ($0.15 per share)													(224)		(224)				(224)
Preferred													(43)		(43)				(43)

Recognition of the fair value of share-based compensation						38									38				38

Other share-based compensation activity			3,349	—		(17)							—		(17)				(17)
Other						—		(3,015)	(9)				(2)		(11)		(2)		(13)
Balance, end of period	$	2,851	1,484,614	$	15	$	15,830	(8,056)	$	(105)	$	(19)	$	1,939	$	20,511	$	20	$	20,531

See Notes to Unaudited Condensed Consolidated Financial Statements

44 Huntington Bancshares Incorporated

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(dollar amounts in millions, share amounts in thousands)	Preferred Stock		Common Stock			Capital Surplus		Treasury Stock			Accumulated Other Comprehensive Gain (Loss)		Retained Earnings				Non-controlling
	Amount		Shares	Amount				Shares	Amount						Total		interest		Total
Six Months Ended June 30, 2022
Balance, beginning of period	$	2,167	1,444,040	$	14	$	15,222	(6,298)	$	(79)	$	(229)	$	2,202	$	19,297	$	21	$	19,318

Net income													999		999		4		1,003
Other comprehensive income (loss), net of tax											(1,869)				(1,869)				(1,869)








Cash dividends declared:
Common ($0.31 per share)													(454)		(454)				(454)
Preferred													(56)		(56)				(56)

Recognition of the fair value of share-based compensation						63									63				63
Other share-based compensation activity			4,845	—		(24)							—		(24)				(24)

Other						—		(393)	(6)		—		—		(6)		4		(2)
Balance, end of period	$	2,167	1,448,885	$	14	$	15,261	(6,691)	$	(85)	$	(2,098)	$	2,691	$	17,950	$	29	$	17,979

Six Months Ended June 30, 2021
Balance, beginning of period	$	2,191	1,022,258	$	10	$	8,781	(5,062)	$	(59)	$	192	$	1,878	$	12,993	$	—	$	12,993

Net income													517		517		—		517
Other comprehensive income, net of tax											(211)				(211)				(211)
TCF Financial Corp acquisition:
Issuance of common stock			458,171	5		6,993			(37)						6,961				6,961
Issuance of Series I preferred stock	175					10									185				185
Non-controlling interest acquired															—		22		22
Net proceeds from issuance of preferred stock	485														485				485


Cash dividends declared:
Common ($0.30 per share)													(380)		(380)				(380)
Preferred													(74)		(74)				(74)

Recognition of the fair value of share-based compensation						66									66				66
Other share-based compensation activity			4,185	—		(20)							—		(20)				(20)

Other						—		(2,994)	(9)				(2)		(11)		(2)		(13)
Balance, end of period	$	2,851	1,484,614	$	15	$	15,830	(8,056)	$	(105)	$	(19)	$	1,939	$	20,511	$	20	$	20,531

See Notes to Unaudited Condensed Consolidated Financial Statements

2022 2Q Form 10-Q 45

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Huntington Bancshares Incorporated

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Six Months Ended June 30,
(dollar amounts in millions)	2022		2021
Operating activities
Net income	$	1,003	$	517
Adjustments to reconcile net income to net cash provided by operating activities:

Provision for credit losses	92		151
Depreciation and amortization	207		274
Share-based compensation expense	63		66
Deferred income tax expense	108		34


Net change in:
Trading account securities	12		(31)
Loans held for sale	485		50

Other assets	(206)		(416)
Other liabilities	67		261


Other, net	(7)		82
Net cash provided by operating activities	1,824		988
Investing activities
Change in interest bearing deposits in banks	321		415
Net cash (paid) received from business combinations	(223)		466
Proceeds from:
Maturities and calls of available-for-sale securities	2,401		3,683
Maturities and calls of held-to-maturity securities	1,699		1,995
Maturities and calls of other securities	812		—
Sales of available-for-sale securities	—		5,838

Purchases of available-for-sale securities	(5,246)		(10,285)
Purchases of held-to-maturity securities	(2,409)		(1,547)
Purchases of other securities	(936)		—

Net proceeds from sales of portfolio loans and leases	704		334
Principal payments received under direct finance and sales-type leases	902		408
Net loan and lease activity, excluding sales and purchases	(5,858)		3,990

Purchases of premises and equipment	(123)		(99)

Purchases of loans and leases	(493)		(493)
Net accrued income and other receivables activity	(818)		(837)


Other, net	62		118
Net cash provided by (used in) investing activities	(9,205)		3,986
Financing activities
Increase in deposits	2,172		5,194
Increase (decrease) in short-term borrowings	3,209		(1,152)

Net proceeds from issuance of long-term debt	2,075		59
Maturity/redemption of long-term debt	(1,158)		(2,526)
Dividends paid on preferred stock	(56)		(66)
Dividends paid on common stock	(449)		(308)
Repurchases of common stock	—		—


Net proceeds from issuance of preferred stock	—		485


Other, net	(26)		—
Net cash provided by financing activities	5,767		1,686
Increase (decrease) in cash and cash equivalents	(1,614)		6,660
Cash and cash equivalents at beginning of period	5,522		6,595
Cash and cash equivalents at end of period	$	3,908	$	13,255

46 Huntington Bancshares Incorporated

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	Six Months Ended June 30,
(dollar amounts in millions)	2022		2021
Supplemental disclosures:
Interest paid	$	113	$	87
Income taxes (received) paid	(110)		200

Non-cash activities
Loans transferred to held-for-sale from portfolio	569		190
Loans transferred to portfolio from held-for-sale	31		60


Transfer of securities from available-for-sale to held-to-maturity	4,225		3,007


Business Combination (1)

(1) In the six months ended June 30, 2021, the TCF acquisition included fair value of tangible assets acquired of $46.3 billion, goodwill and other intangible assets of $3.5 billion, liabilities assumed $42.6 billion, preferred stock of $185 million, and common stock of $7.0 billion.

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 2021 Annual Report on Form 10-K, which include descriptions of significant accounting policies, as updated by the information contained in this report, should be read in conjunction with these interim financial statements.

For statement 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.

Effective in the 2022 first quarter, a new classification within the Unaudited Condensed Consolidated Balance Sheet of accrued income and other receivables was established comprised of activity that was previously classified as loans and leases (other consumer loans and leases) and other assets. All prior period amounts and all related metrics have been revised to conform to the current 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. There were no material subsequent events to disclose for the current period.

2. ACCOUNTING STANDARDS UPDATE

Accounting standards adopted in the current period


Standard	Summary of guidance	Effects on financial Statements
ASU 2021-08-Business Combinations (Topic 805) Issued October 2021	•The amendments in this update require that an acquirer apply topic 606 to the recognition and measurement of revenue contract assets and liabilities acquired in a business combination.	•Management adopted the guidance during the second quarter 2022. •The ASU has been applied to all business combinations occurring during the first six months of 2022 and will be applied prospectively to all business combinations occurring after adoption. •The adoption did not result in a material impact on Huntington’s Consolidated financial statements.
ASU 2022-01-Derivatives and Hedging (Topic 815): Fair Value Hedging - Portfolio Layer Method Issued March 2022	•The amendments in this update expand the current last-of-layer method to allow for multiple hedge layers in a single closed portfolio. To reflect the expansion, the last-of-layer method has been renamed the portfolio layer method. The standard also expands the scope of the portfolio layer method to nonprepayable financial assets.	•Management early adopted the guidance during the second quarter of 2022 using the modified retrospective basis. There was no impact to Huntington’s Consolidated financial statements as a result of the adoption. Amendments related to disclosures were applied prospectively from the initial adoption date. •The ASU also gives entities the option to reclassify debt securities classified in the held-to-maturity category at the date of adoption to the available-for-sale category if the entity applies the portfolio layer method hedging to one or more closed portfolios that include those debt securities, Huntington did not apply this option to any held-to-maturity securities.

48 Huntington Bancshares Incorporated

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Accounting standards yet to be adopted

Standard

Summary of guidance

Effects on financial statements

ASU 2022-02- Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures Issued March 2022

•The amendments in this update eliminate TDR accounting for entities that have adopted Update 2016-13, while enhancing disclosure requirements for certain loan modifications when a borrower is experiencing financial difficulty. The ASU also requires current period gross write-offs by year of origination for financing receivables and net investment in leases.

•Effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

•Adoption of the ASU will be applied prospectively, except for the portion of the standard related to the recognition and measurement of TDRs an entity may elect to use a modified retrospective transition method with a cumulative effect adjustment to retained earnings at the beginning of the period of adoption. An entity that elects to early adopt in an interim period should apply the guidance as of the beginning of the fiscal year that includes the interim period. An entity may also chose to early adopt the amendments about TDRs and related disclosure enhancements separately from amendments about vintage disclosures.

•Huntington is currently evaluating the impact of the ASU on its Consolidated financial statements, as well as which adoption method to apply.

3. BUSINESS COMBINATIONS

On June 15, 2022, Huntington acquired Capstone Partners, a leading middle market investment bank and advisory firm dedicated to servicing middle market companies throughout their full business lifecycle. The acquisition resulted in $192 million of goodwill, allocated to the Commercial segment, which approximates total consideration. Fair value estimates related to the acquired assets and liabilities are subject to adjustment during the one-year measurement period following the closing of the acquisition. The goodwill recognized is deductible for tax purposes.

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4. 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 June 30, 2022 and December 31, 2021:


			Unrealized
(dollar amounts in millions)	Amortized Cost (1)(2)		Gross Gains		Gross Losses		Fair Value
June 30, 2022
Available-for-sale securities:
U.S. Treasury	$	5	$	—	$	—	$	5
Federal agencies:
Residential CMO	3,217		—		(216)		3,001
Residential MBS	14,478		1		(1,532)		12,947
Commercial MBS	2,365		1		(384)		1,982
Other agencies	215		—		(6)		209
Total U.S. Treasury, federal agency and other agency securities	20,280		2		(2,138)		18,144
Municipal securities	3,604		1		(183)		3,422
Private-label CMO	158		—		(6)		152
Asset-backed securities	392		—		(31)		361
Corporate debt	2,539		99		(344)		2,294
Other securities/Sovereign debt	4		—		—		4
Total available-for-sale securities	$	26,977	$	102	$	(2,702)	$	24,377

Held-to-maturity securities:
Federal agencies:
Residential CMO	$	4,896	$	—	$	(383)	$	4,513
Residential MBS	10,509		2		(930)		9,581
Commercial MBS	1,792		1		(124)		1,669
Other agencies	156		—		(5)		151
Total federal agency and other agency securities	17,353		3		(1,442)		15,914
Municipal securities	2		—		—		2
Total held-to-maturity securities	$	17,355	$	3	$	(1,442)	$	15,916

Other securities, at cost:
Non-marketable equity securities:
Federal Home Loan Bank stock	$	187	$	—	$	—	$	187
Federal Reserve Bank stock	514		—		—		514
Equity securities	9		—		—		9
Other securities, at fair value:
Mutual funds	50		—		—		50
Equity securities	3		—		—		3
Total other securities	$	763	$	—	$	—	$	763

(1)Amortized cost amounts excludes accrued interest receivable, which is recorded within accrued income and other receivables on the Consolidated Balance Sheets. At June 30, 2022, accrued interest receivable on available-for-sale securities and held-to-maturity securities totaled $62 million and $38 million, respectively.

(2)Excluded from the amortized cost are portfolio level basis adjustments for securities designated in fair value hedges under the portfolio layer method. The basis adjustments totaled $608 million and represent a reduction to the amortized cost of the securities being hedged. The securities being hedged under the portfolio layer method are primarily Residential CMO and Residential MBS securities.

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			Unrealized
(dollar amounts in millions)	Amortized Cost (1)		Gross Gains		Gross Losses		Fair Value
December 31, 2021
Available-for-sale securities:
U.S. Treasury	$	5	$	—	$	—	$	5
Federal agencies:
Residential CMO	4,649		40		(40)		4,649
Residential MBS	15,533		135		(160)		15,508
Commercial MBS	1,896		7		(38)		1,865
Other agencies	248		1		(1)		248
Total U.S. Treasury, federal agency and other agency securities	22,331		183		(239)		22,275
Municipal securities	3,497		62		(33)		3,526
Private-label CMO	106		1		(1)		106
Asset-backed securities	385		1		(4)		382
Corporate debt	2,183		22		(38)		2,167
Other securities/Sovereign debt	4		—		—		4
Total available-for-sale securities	$	28,506	$	269	$	(315)	$	28,460

Held-to-maturity securities:
Federal agencies:
Residential CMO	$	2,602	$	35	$	(20)	$	2,617
Residential MBS	7,475		41		(59)		7,457
Commercial MBS	2,175		45		(5)		2,215
Other agencies	193		5		—		198
Total federal agency and other agency securities	12,445		126		(84)		12,487
Municipal securities	2		—		—		2
Total held-to-maturity securities	$	12,447	$	126	$	(84)	$	12,489

Other securities, at cost:
Non-marketable equity securities:
Federal Home Loan Bank stock	$	52	$	—	$	—	$	52
Federal Reserve Bank stock	512		—		—		512
Equity securities	12		—		—		12
Other securities, at fair value:
Mutual funds	65		—		—		65
Equity securities	6		1		—		7
Total other securities	$	647	$	1	$	—	$	648

(1)Amortized cost amounts excludes accrued interest receivable, which is recorded within accrued income and other receivables on the Consolidated Balance Sheets. At December 31, 2021, accrued interest receivable on available-for-sale securities and held-to-maturity securities totaled $62 million and $26 million, respectively.

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The following table provides the amortized cost and fair value of securities by contractual maturity at June 30, 2022 and December 31, 2021. Expected maturities may differ from contractual maturities as issuers may have the right to call or prepay obligations with or without incurring penalties.


	June 30, 2022				December 31, 2021
(dollar amounts in millions)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Available-for-sale securities:
Under 1 year	$	476	$	471	$	377	$	374
After 1 year through 5 years	2,347		2,203		1,888		1,880
After 5 years through 10 years	3,215		2,950		3,166		3,180
After 10 years	20,939		18,753		23,075		23,026
Total available-for-sale securities	$	26,977	$	24,377	$	28,506	$	28,460

Held-to-maturity securities:
Under 1 year	$	1	$	1	$	2	$	2
After 1 year through 5 years	85		83		162		164
After 5 years through 10 years	42		41		44		45
After 10 years	17,227		15,791		12,239		12,278
Total held-to-maturity securities	$	17,355	$	15,916	$	12,447	$	12,489

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 June 30, 2022 and December 31, 2021:


	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
June 30, 2022
Available-for-sale securities:
Federal agencies:
Residential CMO	$	2,671	$	(182)	$	170	$	(34)	$	2,841	$	(216)
Residential MBS	9,122		(977)		3,730		(555)		12,852		(1,532)
Commercial MBS	1,584		(270)		377		(114)		1,961		(384)
Other agencies	80		(6)		—		—		80		(6)
Total federal agency and other agency securities	13,457		(1,435)		4,277		(703)		17,734		(2,138)
Municipal securities	2,866		(161)		311		(22)		3,177		(183)
Private-label CMO	122		(6)		—		—		122		(6)
Asset-backed securities	319		(26)		42		(5)		361		(31)
Corporate debt	1,951		(274)		339		(70)		2,290		(344)

Total temporarily impaired available-for-sale securities	$	18,715	$	(1,902)	$	4,969	$	(800)	$	23,684	$	(2,702)

Held-to-maturity securities:
Federal agencies:
Residential CMO	$	4,501	$	(382)	$	8	$	(1)	$	4,509	$	(383)
Residential MBS	8,552		(826)		735		(104)		9,287		(930)
Commercial MBS	1,661		(124)		—		—		1,661		(124)
Other agencies	151		(5)		—		—		151		(5)
Total federal agency and other agency securities	14,865		(1,337)		743		(105)		15,608		(1,442)

Total temporarily impaired held-to-maturity securities	$	14,865	$	(1,337)	$	743	$	(105)	$	15,608	$	(1,442)

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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, 2021
Available-for-sale securities:
Federal agencies:
Residential CMO	$	2,925	$	(40)	$	—	$	—	$	2,925	$	(40)
Residential MBS	13,491		(160)		—		—		13,491		(160)
Commercial MBS	1,251		(38)		—		—		1,251		(38)
Other agencies	140		(1)		—		—		140		(1)
Total federal agency and other agency securities	17,807		(239)		—		—		17,807		(239)
Municipal securities	859		(22)		319		(11)		1,178		(33)
Private-label CMO	78		(1)		—		—		78		(1)
Asset-backed securities	237		(4)		—		—		237		(4)
Corporate debt	1,766		(38)		—		—		1,766		(38)

Total temporarily impaired available-for-sale securities	$	20,747	$	(304)	$	319	$	(11)	$	21,066	$	(315)

Held-to-maturity securities:
Federal agencies:
Residential CMO	$	1,453	$	(20)	$	—	$	—	$	1,453	$	(20)
Residential MBS	5,837		(59)		—		—		5,837		(59)
Commercial MBS	318		(5)		—		—		318		(5)

Total federal agency and other agency securities	7,608		(84)		—		—		7,608		(84)

Total temporarily impaired held-to-maturity securities	$	7,608	$	(84)	$	—	$	—	$	7,608	$	(84)

During the 2022 first quarter, Huntington transferred $4.2 billion of securities from the AFS portfolio to the HTM portfolio. At the time of the transfer, AOCI included $58 million of net unrealized losses (after-tax) attributed to these securities. This loss will be amortized into interest income over the remaining life of the securities.

At June 30, 2022 and December 31, 2021, 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 $28.7 billion and $21.7 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 June 30, 2022 or December 31, 2021. At June 30, 2022, all HTM debt securities are considered AAA rated. In addition, there were no HTM debt securities considered past due at June 30, 2022.

Based on an evaluation of available information including security type, counterparty credit quality, past events, current conditions, and reasonable and supportable forecasts that are relevant to collectability of cash flows, as of June 30, 2022, Huntington has concluded that except for one municipal bond classified as an AFS debt security for which a charge-off of $4 million was recognized during the 2022 first quarter, it expects to receive all contractual cash flows from each security held in its AFS and HTM debt securities portfolio. There was no allowance related to investment securities as of June 30, 2022 or December 31, 2021.

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5. LOANS AND LEASES

The following table provides a detailed listing of Huntington’s loan and lease portfolio at June 30, 2022 and December 31, 2021.


(dollar amounts in millions)	June 30, 2022		December 31, 2021


















Commercial loan and lease portfolio:
Commercial and industrial	$	43,440	$	41,688
Commercial real estate	15,695		14,961
Lease financing	5,043		5,000
Total commercial loan and lease portfolio	64,178		61,649
Consumer loan portfolio:
Residential mortgage	21,220		19,256
Automobile	13,622		13,434
Home equity	10,426		10,550
RV and marine	5,453		5,058
Other consumer	1,322		1,320
Total consumer loan portfolio	52,043		49,618
Total loans and leases (1) (2)	116,221		111,267
Allowance for loan and lease losses	(2,074)		(2,030)
Net loans and leases	$	114,147	$	109,237

(1)Loans and leases are reported at principal amount outstanding including unamortized purchase premiums and discounts, unearned income, and net direct fees and costs associated with originating and acquiring loans and leases. The aggregate amount of these loan and lease adjustments was a net discount of $48 million and $111 million at June 30, 2022 and December 31, 2021, respectively.

(2)The total amount of accrued interest recorded for these loans and leases at June 30, 2022, was $157 million and $153 million of commercial and consumer loan and lease portfolios, respectively, and at December 31, 2021, was $148 million and $150 million of commercial and consumer loan and lease portfolios, respectively. Accrued interest is presented in accrued income and other receivables within the Condensed Consolidated Balance Sheets.

Lease Financing

Huntington leases equipment to customers, and substantially all such arrangements are classified as either sales-type or direct financing leases, which are included in commercial loans and leases. 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 ACL, with changes recognized as provision expense.

The following table presents net investments in lease financing receivables by category at June 30, 2022 and December 31, 2021.


(dollar amounts in millions)	June 30, 2022		December 31, 2021

Lease payments receivable	$	4,674	$	4,620
Estimated residual value of leased assets	766		774
Gross investment in lease financing receivables	5,440		5,394
Deferred origination costs	39		36
Deferred fees, unearned income and other	(436)		(430)
Total lease financing receivables	$	5,043	$	5,000

The carrying value of residual values guaranteed was $435 million and $473 million as of June 30, 2022 and December 31, 2021, respectively. The future lease rental payments due from customers on sales-type and direct financing leases at June 30, 2022, totaled $4.7 billion and were due as follows: $878 million in 2022, $869 million in 2023, $865 million in 2024, $759 million in 2025, $672 million in 2026, and $631 million thereafter. Interest income recognized for these types of leases was $39 million and $56 million for the three-month periods ended June 30, 2022 and 2021, respectively. For the six-month periods ended June 30, 2022 and 2021, interest income recognized for these types of leases was $77 million and $81 million.

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Nonaccrual and Past Due Loans and Leases

The following table presents NALs by class at June 30, 2022 and December 31, 2021:


	June 30, 2022				December 31, 2021
(dollar amounts in millions)	Nonaccrual loans and leases with no ACL		Total nonaccrual loans and leases		Nonaccrual loans and leases with no ACL		Total nonaccrual loans and leases
Commercial and industrial	$	57	$	324	$	81	$	370
Commercial real estate	95		117		80		104
Lease financing	10		22		3		48
Residential mortgage	—		111		—		111
Automobile	—		4		—		3
Home equity	—		78		—		79
RV and marine	—		1		—		1

Total nonaccrual loans and leases	$	162	$	657	$	164	$	716

The following table presents an aging analysis of loans and leases, by class at June 30, 2022 and December 31, 2021:


	June 30, 2022
	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	$	63	$	97	$	106	$	266	$	43,174	$	—	$	43,440	$	11	(2)
Commercial real estate	45		10		12		67		15,628		—		15,695		—
Lease financing	45		18		14		77		4,966		—		5,043		10		(3)
Residential mortgage	237		58		230		525		20,517		178		21,220		168		(4)
Automobile	82		18		9		109		13,513		—		13,622		6
Home equity	46		18		64		128		10,297		1		10,426		13
RV and marine	14		4		2		20		5,433		—		5,453		2
Other consumer	13		2		2		17		1,305		—		1,322		2
Total loans and leases	$	545	$	225	$	439	$	1,209	$	114,833	$	179	$	116,221	$	212


	December 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	$	72	$	69	$	107	$	248	$	41,440	$	—	$	41,688	$	13	(2)
Commercial real estate	9		1		9		19		14,942		—		14,961		—
Lease financing	39		13		17		69		4,931		—		5,000		11		(3)
Residential mortgage	151		49		233		433		18,653		170		19,256		157		(4)
Automobile	79		18		8		105		13,329		—		13,434		6
Home equity	48		35		76		159		10,390		1		10,550		17
RV and marine	14		4		3		21		5,037		—		5,058		3
Other consumer	13		2		3		18		1,302		—		1,320		3
Total loans and leases	$	425	$	191	$	456	$	1,072	$	110,024	$	171	$	111,267	$	210

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

(2)Amounts include PPP (SBA guaranteed) and other SBA loans and leases.

(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” to the Consolidated Financial Statements appearing in Huntington’s 2021 Annual Report on Form 10-K 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 the amortized cost basis of loans and leases by vintage and credit quality indicator at June 30, 2022 and December 31, 2021 respectively:


	As of June 30, 2022
	Term Loans Amortized Cost Basis by Origination Year												Revolver Total at Amortized Cost Basis		Revolver Total Converted to Term Loans
(dollar amounts in millions)	2022		2021		2020		2019		2018		Prior						Total
Commercial and industrial
Credit Quality Indicator (1):
Pass	$	9,829	$	9,137	$	4,429	$	2,593	$	1,373	$	1,572	$	11,704	$	4	$	40,641
OLEM	76		204		78		71		85		48		192		—		754
Substandard	157		275		219		321		185		322		564		—		2,043
Doubtful	—		—		—		—		1		1		—		—		2
Total Commercial and industrial	$	10,062	$	9,616	$	4,726	$	2,985	$	1,644	$	1,943	$	12,460	$	4	$	43,440
Commercial real estate
Credit Quality Indicator (1):
Pass	$	2,526	$	3,700	$	2,121	$	2,193	$	1,289	$	1,416	$	1,208	$	—	$	14,453
OLEM	45		46		24		20		59		36		—		—		230
Substandard	182		161		213		198		107		133		17		—		1,011
Doubtful	—		—		—		—		1		—		—		—		1
Total Commercial real estate	$	2,753	$	3,907	$	2,358	$	2,411	$	1,456	$	1,585	$	1,225	$	—	$	15,695
Lease financing
Credit Quality Indicator (1):
Pass	$	934	$	1,590	$	1,225	$	637	$	288	$	230	$	—	$	—	$	4,904
OLEM	10		9		32		6		6		4		—		—		67
Substandard	4		5		18		25		6		14		—		—		72

Total Lease financing	$	948	$	1,604	$	1,275	$	668	$	300	$	248	$	—	$	—	$	5,043
Residential mortgage
Credit Quality Indicator (2):
750+	$	2,358	$	6,205	$	3,696	$	879	$	473	$	2,208	$	—	$	—	$	15,819
650-749	847		1,437		706		270		180		906		—		—		4,346
<650	12		56		56		94		111		548		—		—		877

Total Residential mortgage	$	3,217	$	7,698	$	4,458	$	1,243	$	764	$	3,662	$	—	$	—	$	21,042
Automobile
Credit Quality Indicator (2):
750+	$	1,673	$	2,621	$	1,571	$	1,057	$	456	$	236	$	—	$	—	$	7,614
650-749	1,199		1,988		909		519		254		113		—		—		4,982
<650	148		379		201		143		94		61		—		—		1,026

Total Automobile	$	3,020	$	4,988	$	2,681	$	1,719	$	804	$	410	$	—	$	—	$	13,622
Home equity
Credit Quality Indicator (2):
750+	$	301	$	602	$	651	$	27	$	25	$	350	$	4,868	$	272	$	7,096
650-749	91		102		78		10		8		138		2,102		272		2,801
<650	—		2		2		2		3		62		319		138		528

Total Home equity	$	392	$	706	$	731	$	39	$	36	$	550	$	7,289	$	682	$	10,425
RV and marine
Credit Quality Indicator (2):
750+	$	890	$	1,112	$	814	$	400	$	402	$	502	$	—	$	—	$	4,120
650-749	165		368		228		141		130		199		—		—		1,231
<650	1		14		13		15		16		43		—		—		102

Total RV and marine	$	1,056	$	1,494	$	1,055	$	556	$	548	$	744	$	—	$	—	$	5,453
Other consumer
Credit Quality Indicator (2):
750+	$	189	$	81	$	46	$	47	$	18	$	58	$	345	$	3	$	787
650-749	40		38		17		23		7		23		311		19		478
<650	1		3		2		4		2		3		28		14		57

Total Other consumer	$	230	$	122	$	65	$	74	$	27	$	84	$	684	$	36	$	1,322

(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.

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	As of December 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
Commercial and industrial
Credit Quality Indicator (1):
Pass	$	15,435	$	5,677	$	3,682	$	1,983	$	1,080	$	1,134	$	9,945	$	3	$	38,939
OLEM	183		178		87		83		38		73		166		—		808
Substandard	336		203		344		206		125		167		552		—		1,933
Doubtful	5		1		1		1		—		—		—		—		8
Total Commercial and industrial	$	15,959	$	6,059	$	4,114	$	2,273	$	1,243	$	1,374	$	10,663	$	3	$	41,688
Commercial real estate
Credit Quality Indicator (1):
Pass	$	4,144	$	2,367	$	2,593	$	1,456	$	761	$	1,124	$	798	$	—	$	13,243
OLEM	76		48		42		83		73		19		—		—		341
Substandard	224		362		448		115		151		46		30		—		1,376
Doubtful	—		—		—		1		—		—		—		—		1
Total Commercial real estate	$	4,444	$	2,777	$	3,083	$	1,655	$	985	$	1,189	$	828	$	—	$	14,961
Lease financing
Credit Quality Indicator (1):
Pass	$	1,851	$	1,441	$	809	$	417	$	226	$	131	$	—	$	—	$	4,875
OLEM	8		32		12		4		2		—		—		—		58
Substandard	6		23		19		2		9		8		—		—		67

Total Lease financing	$	1,865	$	1,496	$	840	$	423	$	237	$	139	$	—	$	—	$	5,000
Residential mortgage
Credit Quality Indicator (2):
750+	$	5,532	$	3,857	$	978	$	554	$	687	$	1,704	$	—	$	—	$	13,312
650-749	1,862		993		409		269		254		1,028		—		—		4,815
<650	48		56		104		120		99		532		—		—		959

Total Residential mortgage	$	7,442	$	4,906	$	1,491	$	943	$	1,040	$	3,264	$	—	$	—	$	19,086
Automobile
Credit Quality Indicator (2):
750+	$	2,993	$	1,927	$	1,381	$	666	$	345	$	129	$	—	$	—	$	7,441
650-749	2,393		1,237		736		380		168		55		—		—		4,969
<650	380		234		178		128		70		34		—		—		1,024

Total Automobile	$	5,766	$	3,398	$	2,295	$	1,174	$	583	$	218	$	—	$	—	$	13,434
Home equity
Credit Quality Indicator (2):
750+	$	645	$	701	$	32	$	31	$	34	$	387	$	4,772	$	272	$	6,874
650-749	129		94		15		13		13		161		2,324		324		3,073
<650	3		2		2		1		1		67		361		165		602

Total Home equity	$	777	$	797	$	49	$	45	$	48	$	615	$	7,457	$	761	$	10,549
RV and marine
Credit Quality Indicator (2):
750+	$	1,257	$	933	$	470	$	468	$	268	$	319	$	—	$	—	$	3,715
650-749	393		273		171		157		106		150		—		—		1,250
<650	6		11		13		18		18		27		—		—		93

Total RV and marine	$	1,656	$	1,217	$	654	$	643	$	392	$	496	$	—	$	—	$	5,058
Other consumer
Credit Quality Indicator (2):
750+	$	211	$	34	$	50	$	13	$	10	$	27	$	326	$	3	$	674
650-749	88		52		50		23		17		41		295		24		590
<650	2		2		5		2		—		1		27		17		56

Total Other consumer	$	301	$	88	$	105	$	38	$	27	$	69	$	648	$	44	$	1,320

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

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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” to the Consolidated Financial Statements appearing in Huntington’s 2021 Annual Report on Form 10-K 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 and six-month periods ended June 30, 2022 and 2021.


	New Troubled Debt Restructurings (1)
	Three Months Ended June 30, 2022
	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	88	$	19	$	12	$	—	$	1	$	32
Commercial real estate	4	37		—		—		—		37

Residential mortgage	238	—		32		3		—		35
Automobile	469	—		3		—		—		3
Home equity	70	—		3		2		—		5
RV and marine	35	—		—		—		—		—
Other consumer	23	—		—		—		—		—
Total new TDRs	927	$	56	$	50	$	5	$	1	$	112

	Three Months Ended June 30, 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	25	$	15	$	14	$	—	$	—	$	29


Residential mortgage	72	—		11		1		—		12
Automobile	514	—		3		1		—		4
Home equity	51	—		1		1		—		2
RV and marine	35	1		—		—		—		1
Other consumer	68	—		—		—		—		—
Total new TDRs	765	$	16	$	29	$	3	$	—	$	48

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	New Troubled Debt Restructurings (1)
	Six Months Ended June 30, 2022
	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	46	$	30	$	15	$	—	$	1	$	46
Commercial real estate	5	37		—		—		—		37

Residential mortgage	445	—		60		4		—		64
Automobile	1,094	—		7		1		—		8
Home equity	112	—		4		3		—		7
RV and marine finance	74	—		1		—		—		1
Other consumer	53	—		—		—		—		—
Total new TDRs	1,829	$	67	$	87	$	8	$	1	$	163

	Six Months Ended June 30, 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	37	$	15	$	19	$	—	$	—	$	34


Residential mortgage	158	—		24		2		—		26
Automobile	1,416	—		10		2		—		12
Home equity	113	—		2		3		—		5
RV and marine finance	84	1		1		—		—		2
Other consumer	165	—		—		—		1		1
Total new TDRs	1,973	$	16	$	56	$	7	$	1	$	80

(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.

Pledged Loans

The Bank has access to the Federal Reserve’s discount window and advances from the FHLB. As of June 30, 2022 and December 31, 2021, these borrowings and advances are secured by $70.0 billion and $61.1 billion, respectively, of loans.

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6. ALLOWANCE FOR CREDIT LOSSES

Allowance for Credit Losses - Roll-forward

The following tables present ACL activity by portfolio segment for the three-month and six-month periods ended June 30, 2022 and 2021.


(dollar amounts in millions)	Commercial		Consumer		Total
Three-month period ended June 30, 2022:
ALLL balance, beginning of period	$	1,514	$	504	$	2,018

Loan and lease charge-offs	(12)		(40)		(52)
Recoveries of loans and leases previously charged-off	24		20		44
Provision (benefit) for loan and lease losses	(184)		248		64


ALLL balance, end of period	$	1,342	$	732	$	2,074
AULC balance, beginning of period	$	57	$	34	$	91

Provision (benefit) for unfunded lending commitments	(4)		7		3


AULC balance, end of period	$	53	$	41	$	94
ACL balance, end of period	$	1,395	$	773	$	2,168
Six-month period ended June 30, 2022:
ALLL balance, beginning of period	$	1,462	$	568	$	2,030

Loan and lease charge-offs	(44)		(89)		(133)
Recoveries of loans and leases previously charged-off	65		41		106
Provision for loan and lease losses	(141)		212		71


ALLL balance, end of period	$	1,342	$	732	$	2,074
AULC balance, beginning of period	$	41	$	36	$	77

Provision for unfunded lending commitments	12		5		17


AULC balance, end of period	$	53	$	41	$	94
ACL balance, end of period	$	1,395	$	773	$	2,168

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(dollar amounts in millions)	Commercial		Consumer		Total
Three-month period ended June 30, 2021:
ALLL balance, beginning of period	$	1,197	$	506	$	1,703

Loan and lease charge-offs (1)	(78)		(24)		(102)
Recoveries of loans and leases previously charged-off	19		21		40
Provision for loan and lease losses (2)	106		39		145

Allowance on PCD loans and leases at acquisition	374		58		432
ALLL balance, end of period	$	1,618	$	600	$	2,218
AULC balance, beginning of period	$	27	$	11	$	38

Provision (benefit) for unfunded lending commitments (3)	49		17		66


AULC balance, end of period	$	76	$	28	$	104
ACL balance, end of period	$	1,694	$	628	$	2,322
Six-month period ended June 30, 2021:
ALLL balance, beginning of period	$	1,236	$	578	$	1,814

Loan and lease charge-offs (1)	(139)		(58)		(197)
Recoveries of loans and leases previously charged-off	31		40		71
Provision for loan and lease losses (2)	116		(18)		98

Allowance on PCD loans and leases at acquisition	374		58		432
ALLL balance, end of period	$	1,618	$	600	$	2,218
AULC balance, beginning of period	$	34	$	18	$	52

Provision (reduction in allowance) for unfunded lending commitments (3)	43		10		53

Unfunded lending commitment losses	(1)		—		(1)
AULC balance, end of period	$	76	$	28	$	104
ACL balance, end of period	$	1,694	$	628	$	2,322

(1)Loan and lease charge-offs for the three and six-month periods ended June 30, 2021 exclude $80 million of charge-offs recognized upon completion of the TCF acquisition related to required purchase accounting treatment. The initial ALLL recognized on PCD assets included these amounts and after charging these amounts off upon acquisition, the net impact was $432 million of additional ALLL for PCD loans.

(2)Includes $234 million of TCF acquisition initial provision for credit losses related to non-PCD loans and leases.

(3)Includes $60 million from acquired unfunded lending commitments.

At June 30, 2022, the ACL was $2.2 billion, an increase of $61 million from the December 31, 2021 balance of $2.1 billion.

The economic scenarios used in the June 30, 2022 ACL determination contained judgmental assumptions due to elevated levels of economic uncertainty associated with geopolitical instability, high inflation readings, and the expected path of interest rate increases by the Fed. Given the uncertainty associated with key economic scenario assumptions, the June 30, 2022 ACL included a general reserve that consists of various risk profile components, including the potential economic impact of a near-term recession as the Fed raises interest rates attempting to lower inflation, and the commercial real estate portfolio, to capture uncertainty not addressed within the quantitative transaction reserve.

7. 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 and six-month periods ended June 30, 2022 and 2021:


	Three Months Ended June 30,				Six Months Ended June 30,
(dollar amounts in millions)	2022		2021		2022		2021
Residential mortgage loans sold with servicing retained	$	1,313	$	2,748	$	3,247	$	5,004
Pretax gains resulting from above loan sales (1)	40		101		99		194

(1)Recorded in mortgage banking income.

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The following table summarizes the changes in MSRs recorded using the fair value method for the three-month and six-month periods ended June 30, 2022 and 2021:


	Three Months Ended June 30,					Six Months Ended June 30,
(dollar amounts in millions)	2022			2021		2022		2021
Fair value, beginning of period	$	416		$	274	$	351	$	210

Servicing assets obtained in acquisition	—		``	59		—		59
New servicing assets created	18			38		47		72
Change in fair value during the period due to:
Time decay (1)	(5)			(4)		(10)		(7)
Payoffs (2)	(10)			(16)		(20)		(33)
Changes in valuation inputs or assumptions (3)	44			(24)		95		26
Fair value, end of period	$	463		$	327	$	463	$	327
Weighted-average life (years)	8.1			6.9		8.1		6.9

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

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

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

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 sensitive to movement in interest rates as expected future net servicing income depends on the projected outstanding principal balances of the underlying loans, which are impacted by the level of prepayments.

A summary of key assumptions and the sensitivity of the MSR value to changes in these assumptions at June 30, 2022, and December 31, 2021 follows:


	June 30, 2022							December 31, 2021
				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)	7.29	%		$	(13)	$	(25)	12.28	%		$	(17)	$	(32)
Spread over forward interest rate swap rates	584		bps	(11)		(22)		466		bps	(7)		(13)

Total servicing, late and other ancillary fees included in mortgage banking income was $23 million and $17 million for the three-month periods ended June 30, 2022 and 2021, respectively. Total servicing, late fees and other ancillary fees included in mortgage banking income was $45 million and $35 million for the six-month periods ended June 30, 2022 and 2021, respectively. The unpaid principal balance of residential mortgage loans serviced for third parties was $32 billion and $31 billion at June 30, 2022 and December 31, 2021, respectively.

8. BORROWINGS

Borrowings with original maturities of one year or less are classified as short-term and were comprised of the following at June 30, 2022 and December 31, 2021, respectively:


(dollar amounts in millions)	June 30, 2022		December 31, 2021
Federal funds purchased and securities sold under agreements to repurchase	$	325	$	320
Federal Home Loan Bank advances	2,500		—

Other borrowings	223		14
Total short-term borrowings	$	3,048	$	334

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Huntington’s long-term debt consisted of the following at June 30, 2022 and December 31, 2021, respectively:


(dollar amounts in millions)	June 30, 2022		December 31, 2021
The Parent Company:
Senior Notes	$	2,389	$	2,083





Subordinated Notes	1,009		1,028







Total notes issued by the parent	3,398		3,111
The Bank:
Senior Notes	3,036		2,434











Subordinated Notes	671		811


Total notes issued by the bank	3,707		3,245
FHLB Advances	213		215

Other	548		537





Total long-term debt	$	7,866	$	7,108

In May 2022, the Bank issued $500 million of senior notes at 99.8% of face value. The senior notes mature on May 16, 2025 and have a fixed coupon rate of 4.01%.

In May 2022, the Bank issued $800 million of senior notes at 99.7% of face value. The senior notes mature on May 17, 2028 and have a fixed coupon rate of 4.55%.

In May 2022, the Bank issued $300 million of senior notes at 99.8% of face value. The senior notes mature on May 16, 2025 and have a floating rate equal to SOFR plus 119 basis points resetting quarterly.

In May 2022, Huntington issued $400 million of senior notes at 100% of face value. The senior notes mature on May 17, 2033 and have a fixed coupon rate of 5.02%.

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9. OTHER COMPREHENSIVE INCOME

The components of Huntington’s OCI for the three-month and six-month periods ended June 30, 2022 and 2021, were as follows:


(dollar amounts in millions)	Pretax		Tax (Expense) benefit		After-tax
Three Months Ended June 30, 2022

Unrealized losses on available-for-sale securities arising during the period	$	(1,147)	$	264	$	(883)
Reclassification adjustment for realized net losses included in net income	82		(19)		63
Total unrealized losses on available-for-sale securities	(1,065)		245		(820)

Net impact of fair value hedges on available-for-sale securities	161		(38)		123


Change in fair value related to cash flow hedges	(111)		25		(86)
Foreign currency translation adjustment (1)	(8)		—		(8)
Net unrealized gains (losses) on net investment hedges	6		—		6
Translation adjustments, net of hedges (1)	(2)		—		(2)
Change in accumulated unrealized gains for pension and other post retirement obligations	2		(1)		1
Other comprehensive loss	$	(1,015)	$	231	$	(784)
Three Months Ended June 30, 2021

Unrealized gains on available-for-sale securities arising during the period	$	88	$	(20)	$	68
Reclassification adjustment for realized net losses included in net income	13		(3)		10
Total unrealized losses on available-for-sale securities	101		(23)		78



Net impact of fair value hedges on available-for-sale securities	(6)		1		(5)
Change in fair value related to cash flow hedges	(42)		8		(34)


Translation adjustments, net of hedges (1)	(6)		—		(6)
Change in accumulated unrealized gains for pension and other post retirement obligations	3		1		4
Other comprehensive income	$	50	$	(13)	$	37

Six Months Ended June 30, 2022

Unrealized losses on available-for-sale securities arising during the period	$	(2,687)	$	618	$	(2,069)
Reclassification adjustment for realized net losses (gains) included in net income	91		(21)		70
Total unrealized gains (losses) on available-for-sale securities	(2,596)		597		(1,999)

Net impact of fair value hedges on available-for-sale securities	592		(137)		455


Change in fair value related to cash flow hedges	(421)		95		(326)
Foreign currency translation adjustment (1)	(6)		—		(6)
Net unrealized gains (losses) on net investment hedges	4		—		4
Translation adjustments, net of hedges (1)	(2)		—		(2)
Change in accumulated unrealized gains for pension and other post retirement obligations	5		(2)		3
Other comprehensive loss	$	(2,422)	$	553	$	(1,869)
Six Months Ended June 30, 2021

Unrealized losses on available-for-sale securities arising during the period	$	(199)	$	44	$	(155)
Reclassification adjustment for realized net losses (gains) included in net income	22		(5)		17
Total unrealized losses on available-for-sale securities	(177)		39		(138)

Net impact of fair value hedges on available-for-sale securities	38		(9)		29


Change in fair value related to cash flow hedges	(130)		28		(102)


Translation adjustments, net of hedges (1)	(6)		—		(6)
Change in accumulated unrealized gains for pension and other post retirement obligations	6		—		6
Other comprehensive loss	$	(269)	$	58	$	(211)

(1)Foreign investments are deemed to be permanent in nature and, therefore, Huntington does not provide for taxes on foreign currency translation adjustments.

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Activity in accumulated OCI for the three-month and six-month periods ended June 30, 2022 and 2021, were as follows:


(dollar amounts in millions)	Unrealized gains (losses) on available-for-sale securities (1)		Net impact of fair value hedges on available-for-sale securities				Change in fair value related to cash flow hedges				Translation adjustments, net of hedges				Unrealized gains (losses) for pension and other post- retirement obligations (2)		Total
Three Months Ended June 30, 2022
Balance, beginning of period	$	(1,332)	$	421			$	(177)			$	(3)			$	(223)	$	(1,314)

Other comprehensive income (loss) before reclassifications	(883)		123				(86)				(2)				—		(848)
Amounts reclassified from accumulated OCI to earnings	63		—				—				—				1		64
Period change	(820)		123				(86)				(2)				1		(784)
Balance, end of period	$	(2,152)	$	544			$	(263)			$	(5)			$	(222)	$	(2,098)

Three Months Ended June 30, 2021
Balance, beginning of period	$	(28)	$	36			$	187			$	—			$	(251)	$	(56)

Other comprehensive income (loss) before reclassifications	68		(5)				(34)				(6)				—		23
Amounts reclassified from accumulated OCI to earnings	10		—				—				—				4		14
Period change	78		(5)				(34)				(6)				4		37

Balance, end of period	$	50	$	31			$	153			$	(6)			$	(247)	$	(19)

Six Months Ended June 30, 2022
Balance, beginning of period	$	(153)	$	89			$	63			$	(3)			$	(225)	$	(229)
Other comprehensive loss before reclassifications	(2,069)		455				(326)				(2)				—		(1,942)
Amounts reclassified from accumulated OCI to earnings	70		—				—				—				3		73
Period change	(1,999)		455				(326)				(2)				3		(1,869)
Balance, end of period	$	(2,152)	$	544			$	(263)	$	—	$	(5)	$	—	$	(222)	$	(2,098)

Six Months Ended June 30, 2021
Balance, beginning of period	$	188	$	2			$	255			$	—			$	(253)	$	192
Other comprehensive income before reclassifications	(155)		29				(102)				(6)				—		(234)
Amounts reclassified from accumulated OCI to earnings	17		—				—				—				6		23
Period change	(138)		29				(102)				(6)				6		(211)
Balance, end of period	$	50	$	31	$	—	$	153	$	—	$	(6)	$	—	$	(247)	$	(19)

(1)AOCI amounts at June 30, 2022 and June 30, 2021 include $73 million and $48 million, respectively, of net unrealized losses (after-tax) 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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10. SHAREHOLDERS’ EQUITY

Preferred Stock

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



(dollar amounts in millions)				Carrying Amount
Series	Issuance Date	Shares Outstanding	Dividend Rate	Earliest Redemption Date (1)	June 30, 2022		December 31, 2021

Series B (2)	12/28/2011	35,500	3-mo. LIBOR + 270 bps	1/15/2017	$	23	$	23



Series E (3)	2/27/2018	5,000	5.70	4/15/2023	495		495
Series F (3)	5/27/2020	5,000	5.625	7/15/2030	494		494
Series G (3)	8/3/2020	5,000	4.45	10/15/2027	494		494
Series H (2)	2/2/2021	500,000	4.50	4/15/2026	486		486
Series I (4)	6/9/2021	7,000	5.70	12/01/2022	175		175
Total		557,500			$	2,167	$	2,167

(1) Denotes earliest option redemption date. Earlier redemption is solely at Huntington’s option, subject to prior approval of FRB.

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

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

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

The following table presents the dividends declared for each series of Preferred shares for the three-month and six-month periods ended June 30, 2022 and 2021:


	Three Months Ended June 30,								Six months ended June 30,
(amounts in millions, except per share data)	2022				2021				2022				2021
	Cash Dividend Declared Per Share				Cash Dividend Declared Per Share				Cash Dividend Declared Per Share				Cash Dividend Declared Per Share
Preferred Series			Amount ($)				Amount ($)				Amount ($)				Amount ($)
Series B	$	13.03	$	—	$	7.21	$	—	$	22.39	$	—	$	14.56	$	—
Series C	—		—		14.69		(1)		—		—		29.38		(3)
Series D	—		—		15.63		(9)		—		—		31.25		(18)
Series E	1,425.00		(7)		1,425.00		(7)		2,850.00		(14)		2,850.00		(14)
Series F	1,406.25		(7)		1,406.25		(7)		2,812.50		(14)		2,812.50		(14)
Series G	1,112.50		(6)		1,112.50		(6)		2,225.00		(12)		2,225.00		(12)
Series H	11.25		(6)		19.50		(10)		22.50		(12)		19.50		(10)
Series I	356.25		(2)		356.25		(3)		712.50		(4)		356.25		(3)
Total			$	(28)			$	(43)			$	(56)			$	(74)

Share Repurchases

On July 21, 2021, the Board authorized the repurchase of up to $800 million of common shares which began in the third quarter of 2021 and ended as of June 30, 2022. Purchases of common stock under the authorization may have included open market purchases, privately negotiated transactions, and accelerated share repurchase programs. During the first six months of 2022, Huntington repurchased no shares of common stock. As of June 30, 2022, Huntington completed $650 million of the share repurchase authorization.

Treasury shares

Treasury shares includes shares held for deferred compensation plans, at cost, of $85 million at June 30, 2022 and $79 million at December 31, 2021.

Non-controlling Interest in Subsidiaries

Through the acquisition of TCF, Huntington acquired a joint venture in which Huntington maintains a 55% ownership interest. As Huntington has a controlling financial interest, its financial results are consolidated in Huntington's financial statements and the other party’s 45% ownership interest is reported as a non-controlling interest within equity.

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11. 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.

The calculation of basic and diluted earnings per share for the three-month and six-month periods ended June 30, 2022 and 2021 was as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
(dollar amounts in millions, except per share data, share count in thousands)	2022		2021		2022		2021
Basic earnings per common share:
Net income attributable to Huntington Bancshares Inc	$	539	$	(15)	$	999	$	517
Preferred stock dividends	28		43		56		74

Net income available to common shareholders	$	511	$	(58)	$	943	$	443
Average common shares issued and outstanding	1,441,200		1,125,039		1,439,814		1,071,276
Basic earnings per common share	$	0.35	$	(0.05)	$	0.65	$	0.41
Diluted earnings per common share:




Dilutive potential common shares:
Stock options and restricted stock units and awards	15,545		—		17,587		17,667
Shares held in deferred compensation plans	6,548		—		6,409		5,531


Dilutive potential common shares	22,093		—		23,996		23,198
Total diluted average common shares issued and outstanding	1,463,293		1,125,039		1,463,810		1,094,474
Diluted earnings per common share	$	0.35	$	(0.05)	$	0.64	$	0.40
Anti-dilutive awards (1)	11,550		26,895		6,333		2,738

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

12. 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 June 30,				Six Months Ended June 30,
Noninterest income	2022		2021		2022		2021
Noninterest income from contracts with customers	$	322	$	257	$	630	$	479
Noninterest income within the scope of other GAAP topics	163		187		354		360
Total noninterest income	$	485	$	444	$	984	$	839

The following table illustrates the disaggregation by operating segment and major revenue stream and reconciles disaggregated revenue to segment revenue presented in Note 17 “Segment Reporting”.

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	Three Months Ended June 30, 2022
(dollar amounts in millions)	Commercial Banking		Consumer & Business Banking		Vehicle Finance		RBHPCG		Treasury / Other		Huntington Consolidated
Major Revenue Streams
Service charges on deposit accounts	$	22	$	81	$	1	$	1	$	—	$	105
Card and payment processing income	5		84		—		—		—		89
Trust and investment management services	2		17		—		44		—		63
Insurance income	2		14		—		12		(1)		27
Capital markets fees	7		2		1		1		—		11
Other noninterest income	21		6		—		—		—		27
Net revenue from contracts with customers	$	59	$	204	$	2	$	58	$	(1)	$	322
Noninterest income within the scope of other GAAP topics	92		66		1		—		4		163
Total noninterest income	$	151	$	270	$	3	$	58	$	3	$	485

			Three Months Ended June 30, 2021
(dollar amounts in millions)	Commercial Banking		Consumer & Business Banking		Vehicle Finance		RBHPCG		Treasury / Other		Huntington Consolidated
Major Revenue Streams
Service charges on deposit accounts	$	22	$	64	$	1	$	1	$	—	$	88
Card and payment processing income	4		68		—		—		—		72
Trust and investment management services	—		15		—		40		—		55
Insurance income	1		14		—		9		1		25
Capital markets fees	6		2		—		—		—		8
Other noninterest income	1		3		—		4		1		9
Net revenue from contracts with customers	$	34	$	166	$	1	$	54	$	2	$	257
Noninterest income within the scope of other GAAP topics	80		77		1		—		29		187
Total noninterest income	$	114	$	243	$	2	$	54	$	31	$	444

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	Six Months Ended June 30, 2022
(dollar amounts in millions)	Commercial Banking		Consumer & Business Banking		Vehicle Finance		RBHPCG		Treasury / Other		Huntington Consolidated
Major Revenue Streams
Service charges on deposit accounts	$	45	$	152	$	3	$	2	$	—	$	202
Card and payment processing income	11		158		—		—		—		169
Trust and investment management services	2		35		—		91		—		128
Insurance income	4		26		—		28		—		58
Capital markets fees	11		4		1		1		—		17
Other noninterest income	43		12		—		1		—		56
Net revenue from contracts with customers	$	116	$	387	$	4	$	123	$	—	$	630
Noninterest income within the scope of other GAAP topics	176		155		2		1		20		354
Total noninterest income	$	292	$	542	$	6	$	124	$	20	$	984

	Six Months Ended June 30, 2021
(dollar amounts in millions)	Commercial Banking		Consumer & Business Banking		Vehicle Finance		RBHPCG		Treasury / Other		Huntington Consolidated
Major Revenue Streams
Service charges on deposit accounts	$	41	$	112	$	3	$	1	$	—	$	157
Card and payment processing income	8		126		—		—		—		134
Trust and investment management services	1		28		—		78		—		107
Insurance income	3		26		—		22		1		52
Capital markets fees	7		3		1		—		—		11
Other noninterest income	2		8		—		5		3		18
Net revenue from contracts with customers	$	62	$	303	$	4	$	106	$	4	$	479
Noninterest income within the scope of other GAAP topics	141		174		2		1		42		360
Total noninterest income	$	203	$	477	$	6	$	107	$	46	$	839

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 June 30, 2022 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 June 30, 2022 was determined to be immaterial.

13. FAIR VALUES OF ASSETS AND LIABILITIES

See Note 19 “Fair Value of Assets and Liabilities” to the Consolidated Financial Statements appearing in Huntington’s 2021 Annual Report on Form 10-K 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 and six-month periods ended June 30, 2022 and 2021.

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Assets and Liabilities measured at fair value on a recurring basis


	Fair Value Measurements at Reporting Date Using						Netting Adjustments (1)		June 30, 2022
(dollar amounts in millions)	Level 1		Level 2		Level 3
Assets
Trading account securities:



Municipal securities	$	—	$	34	$	—	$	—	$	34


Available-for-sale securities:
U.S. Treasury securities	5		—		—		—		5
Residential CMOs	—		3,001		—		—		3,001
Residential MBS	—		12,947		—		—		12,947
Commercial MBS	—		1,982		—		—		1,982
Other agencies	—		209		—		—		209
Municipal securities	—		45		3,377		—		3,422
Private-label CMO	—		130		22		—		152
Asset-backed securities	—		317		44		—		361
Corporate debt	—		2,294		—		—		2,294
Other securities/sovereign debt	—		4		—		—		4
Total available-for-sale securities	5		20,929		3,443		—		24,377
Other securities	50		3		—		—		53
Loans held for sale	—		777		—		—		777
Loans held for investment	—		162		17		—		179
MSRs	—		—		463		—		463
Other assets:
Derivative assets	—		1,648		6		(1,222)		432
Assets held in trust for deferred compensation plans	122		—		—		—		122
Liabilities



Derivative liabilities	—		1,381		11		(756)		636

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

Municipal securities	$	—	$	46	$	—	$	—	$	46


Available-for-sale securities:
U.S. Treasury securities	5		—		—		—		5
Residential CMOs	—		4,649		—		—		4,649
Residential MBS	—		15,508		—		—		15,508
Commercial MBS	—		1,865		—		—		1,865
Other agencies	—		248		—		—		248
Municipal securities	—		49		3,477		—		3,526
Private-label CMO	—		86		20		—		106
Asset-backed securities	—		312		70		—		382
Corporate debt	—		2,167		—		—		2,167
Other securities/sovereign debt	—		4		—		—		4
Total available-for-sale securities	5		24,888		3,567		—		28,460
Other securities	65		7		—		—		72
Loans held for sale	—		1,270		—		—		1,270
Loans held for investment	—		152		19		—		171
MSRs	—		—		351		—		351
Other assets:
Derivative assets	—		1,055		10		(465)		600
Assets held in trust for deferred compensation plans	156		—		—		—		156
Liabilities
Derivative liabilities	—		737		6		(624)		119

(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 following tables present a rollforward of the balance sheet amounts measured at fair value on a recurring basis and classified as Level 3. The classification of an item as Level 3 is based on the significance of the unobservable inputs to the overall fair value measurement. However, Level 3 measurements may also include observable components of value that can be validated externally. Accordingly, the gains and losses in the table below include changes in fair value due in part to observable factors that are part of the valuation methodology.

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	Level 3 Fair Value Measurements
					Available-for-sale securities						Loans held for investment
(dollar amounts in millions)	MSRs		Derivative instruments		Municipal securities		Private- label CMO		Asset-backed securities
Three Months Ended June 30, 2022
Opening balance	$	416	$	(10)	$	3,282	$	19	$	62		$	18

Transfers out of Level 3 (1)	—		7		—		—		—			—
Total gains/losses for the period:
Included in earnings:
Mortgage banking income	44		(2)		—		—		—			—

Interest and fee income	—		—		—		(1)		—			—
Included in OCI	—		—		(88)		—		—			—
Purchases/originations	18		—		386		4		—			—

Repayments	—		—		—		—		—			(1)

Settlements	(15)		—		(203)		—		(18)			—
Closing balance	$	463	$	(5)	$	3,377	$	22	$	44		$	17
Change in unrealized gains or losses for the period included in earnings for assets held at end of the reporting date	$	44	$	7	$	—	$	—	$	—		$	—
Change in unrealized gains or losses for the period included in other comprehensive income for assets held at the end of the reporting period	—		—		(90)		—		—			—
Three Months Ended June 30, 2021
Opening balance	$	274	$	10	$	3,070	$	11	$	47		$	22

Transfers out of Level 3 (1)	—		(31)		—		—		—			—
Total gains/losses for the period:
Included in earnings:
Mortgage banking income	(24)		37		—		—		—			—

Included in OCI	—		—		(1)		—		—			—
Purchases/originations	97		7		1,144		6		38			—
Sales	—		—		(352)		—		—			—
Repayments	—		—		—		—		—			(1)

Settlements	(20)		—		(252)		1		(39)			—
Closing balance	$	327	$	23	$	3,609	$	18	$	46		$	21
Change in unrealized gains or losses for the period included in earnings for assets held at end of the reporting date	$	(24)	$	5	$	—	$	—	$	—		$	—
Change in unrealized gains or losses for the period included in other comprehensive income for assets held at the end of the reporting period	—		—		(1)		—		—			—

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	Level 3 Fair Value Measurements
					Available-for-sale securities						Loans held for investment
(dollar amounts in millions)	MSRs		Derivative instruments		Municipal securities		Private- label CMO		Asset-backed securities
Six Months Ended June 30, 2022
Opening balance	$	351	$	4	$	3,477	$	20	$	70	$	19

Transfers out of Level 3 (1)	—		—		—		—		—		—
Total gains/losses for the period:
Included in earnings
Mortgage banking income	95		(9)		—		—		—		—
Interest and fee income	—		—		(2)		(2)		—		—
Provision for credit losses	—		—		(4)		—		—		—
Included in OCI	—		—		(208)		—		(1)		—
Purchases/originations	48		—		558		4		—		—

Repayments	—		—		—		—		—		(2)

Settlements	(31)		—		(444)		—		(25)		—
Closing balance	$	463	$	(5)	$	3,377	$	22	$	44	$	17
Change in unrealized gains or losses for the period included in earnings for assets held at end of the reporting date	$	95	$	(9)	$	—	$	—	$	—	$	—
Change in unrealized gains or losses for the period included in other comprehensive income for assets held at the end of the reporting period	—		—		(205)		—		—		—
Six Months Ended June 30, 2021
Opening balance	$	210	$	41	$	2,951	$	9	$	10	$	23

Transfers out of Level 3 (1)	—		(70)		—		—		—		—
Total gains/losses for the period:
Included in earnings
Mortgage banking income	27		45		—		—		—		—
Included in OCI	—		—		(5)		—		—		—
Purchases/originations/acquisitions	130		7		1,353		8		75		—
Sales	—		—		(352)		—		—		—
Repayments	—		—		—		—		—		(2)

Settlements	(40)		—		(338)		1		(39)		—
Closing balance	$	327	$	23	$	3,609	$	18	$	46	$	21
Change in unrealized gains or losses for the period included in earnings for assets held at end of the reporting date	$	27	$	(21)	$	—	$	—	$	—	$	—
Change in unrealized gains or losses for the period included in other comprehensive income for assets held at the end of the reporting period	—		—		(4)		—		—		—

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

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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:


(dollar amounts in millions)	Total Loans						Loans that are 90 or more days past due
	Fair value carrying amount		Aggregate unpaid principal		Difference		Fair value carrying amount		Aggregate unpaid principal		Difference
June 30, 2022
Assets
Loans held for sale	$	777	$	778	$	(1)	$	—	$	—	$	—
Loans held for investment	179		184		(5)		5		5		—
December 31, 2021
Assets
Loans held for sale	$	1,270	$	1,237	$	33	$	—	$	—	$	—
Loans held for investment	171		177		(6)		4		4		—

The following table presents the net gains (losses) from fair value changes.



(dollar amounts in millions)	Three Months Ended June 30,				Six Months Ended June 30,
Assets	2022		2021		2022		2021
Loans held for sale (1)	$	10	$	11	$	(34)	$	(23)
Loans held for investment	—		—		1		—

(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 were as follows:


	Fair Value Measurements Using Significant Other Unobservable Inputs (Level 3)				Total Gains (Losses)
					Three Months Ended June 30,				Six Months Ended June 30,
(dollar amounts in millions)	June 30, 2022		December 31, 2021		2022		2021		2022		2021

Collateral-dependent loans	$	32	$	39	$	—	$	(1)	$	(1)	$	(2)

Loans held for sale	—		—		—		2		—		2

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.

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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:


	Quantitative Information about Level 3 Fair Value Measurements
			At June 30, 2022 (1)						At December 31, 2021 (1)
(dollar amounts in millions)	Valuation Technique	Significant Unobservable Input	Range				Weighted Average		Range					Weighted Average
Measured at fair value on a recurring basis:
MSRs	Discounted cash flow	Constant prepayment rate	5	%	-	25%	7	%	8	%	—%	23	%	12	%
		Spread over forward interest rate swap rates	5	%	-	13%	6	%	3	%	—%	11	%	5	%
Derivative assets	Consensus Pricing	Net market price	(15)	%	-	13%	(1)	%	(4)	%	—%	8	%	1	%
		Estimated pull through %	4	%	-	100%	91	%	6	%	—%	100	%	92	%




Municipal securities	Discounted cash flow	Discount rate	3	%	-	4%	4	%	—	%	—%	2	%	1	%
Asset-backed securities		Cumulative default	—	%	-	64%	6	%	—	%	—%	64	%	5	%
		Loss given default	5	%	-	80%	24	%	5	%	—%	80	%	23	%

(1) Certain disclosures related to quantitative level 3 fair value measurements do not include those deemed to be immaterial.

The following provides a general description of the impact of a change in an unobservable input on the fair value measurement and the interrelationship between unobservable inputs, where relevant/significant. Interrelationships may also exist between observable and unobservable inputs.

Credit loss estimates, such as probability of default, constant default, cumulative default, loss given default, cure given deferral, and loss severity, are driven by the ability of the borrowers to pay their loans and the value of the underlying collateral and are impacted by changes in macroeconomic conditions, typically increasing when economic conditions worsen and decreasing when conditions improve. An increase in the estimated prepayment rate typically results in a decrease in estimated credit losses and vice versa. Higher credit loss estimates generally result in lower fair values. Credit spreads generally increase when liquidity risks and market volatility increase and decrease when liquidity conditions and market volatility improve.

Discount rates and spread over forward interest rate swap rates typically increase when market interest rates increase and/or credit and liquidity risks increase and decrease when market interest rates decline and/or credit and liquidity conditions improve. Higher discount rates and credit spreads generally result in lower fair market values.

Net market price and pull through percentages generally increase when market interest rates increase and decline when market interest rates decline. Higher net market price and pull through percentages generally result in higher fair values.

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Fair values of financial instruments

The following table provides the carrying amounts and estimated fair values of Huntington’s financial instruments:


(dollar amounts in millions)	Amortized Cost		Lower of Cost or Market		Fair Value or Fair Value Option		Total Carrying Amount		Estimated Fair Value
June 30, 2022
Financial Assets
Cash and short-term assets	$	4,104	$	—	$	—	$	4,104	$	4,104
Trading account securities	—		—		34		34		34
Available-for-sale securities	—		—		24,377		24,377		24,377
Held-to-maturity securities	17,355		—		—		17,355		15,916
Other securities	710		—		53		763		763
Loans held for sale	—		192		777		969		973
Net loans and leases (1)	113,968		—		179		114,147		110,397
Derivative assets	—		—		432		432		432
Assets held in trust for deferred compensation plans	—		—		122		122		122
Financial Liabilities
Deposits	145,435		—		—		145,435		145,365
Short-term borrowings	3,048		—		—		3,048		3,048
Long-term debt	7,866		—		—		7,866		7,547
Derivative liabilities	—		—		636		636		636
December 31, 2021
Financial Assets
Cash and short-term assets	$	5,914	$	—	$	—	$	5,914	$	5,914
Trading account securities	—		—		46		46		46
Available-for-sale securities	—		—		28,460		28,460		28,460
Held-to-maturity securities	12,447		—		—		12,447		12,489
Other securities	576		—		72		648		648
Loans held for sale	—		406		1,270		1,676		1,621
Net loans and leases (1)	109,066		—		171		109,237		109,695
Derivative assets	—		—		600		600		600
Assets held in trust for deferred compensation plans	—		—		156		156		156
Financial Liabilities
Deposits	143,263		—		—		143,263		143,574
Short-term borrowings	334		—		—		334		334
Long-term debt	7,108		—		—		7,108		7,319
Derivative liabilities	—		—		119		119		119

(1)Includes collateral-dependent loans.

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The following table presents the level in the fair value hierarchy for the estimated fair values at June 30, 2022 and December 31, 2021:


	Estimated Fair Value Measurements at Reporting Date Using						Netting Adjustments (1)		Presented Balance
(dollar amounts in millions)	Level 1		Level 2		Level 3
June 30, 2022
Financial Assets
Trading account securities	$	—	$	34	$	—			$	34
Available-for-sale securities	5		20,929		3,443				24,377
Held-to-maturity securities	—		15,916		—				15,916
Other securities (2)	50		3		—				53
Loans held for sale	—		777		196				973
Net loans and leases	—		162		110,235				110,397
Derivative assets	—		1,648		6		$	(1,222)	432
Financial Liabilities
Deposits	—		141,762		3,603				145,365
Short-term borrowings	—		3,048		—				3,048
Long-term debt	—		6,757		790				7,547
Derivative liabilities	—		1,381		11		(756)		636
December 31, 2021
Financial Assets
Trading account securities	$	—	$	46	$	—			$	46
Available-for-sale securities	5		24,888		3,567				28,460
Held-to-maturity securities	—		12,489		—				12,489
Other securities (2)	65		7		—				72
Loans held for sale	—		1,270		351				1,621
Net loans and leases	—		152		109,543				109,695
Derivative assets	—		1,055		10		$	(465)	600
Financial Liabilities
Deposits	—		139,047		4,527				143,574
Short-term borrowings	—		334		—				334
Long-term debt	—		6,441		878				7,319
Derivative liabilities	—		737		6		(624)		119

(2)Excludes securities without readily determinable fair values.

The short-term nature of certain assets and liabilities result in their carrying value approximating fair value. These include trading account securities, customers’ acceptance liabilities, short-term borrowings, bank acceptances outstanding, FHLB advances, and cash and short-term assets, which include cash and due from banks, interest-bearing deposits in banks, interest-bearing deposits at FRB, federal funds sold, and securities purchased under resale agreements. Loan commitments and letters-of-credit generally have short-term, variable-rate features and contain clauses that limit Huntington’s exposure to changes in customer credit quality. Accordingly, their carrying values, which are immaterial at the respective balance sheet dates, are reasonable estimates of fair value.

Certain assets, the most significant being operating lease assets, bank owned life insurance, and premises and equipment, do not meet the definition of a financial instrument and are excluded from this disclosure. Similarly, mortgage servicing rights, deposit base, and other customer relationship intangibles are not considered financial instruments and are not included above. Accordingly, this fair value information is not intended to, and does not, represent Huntington’s underlying value. Many of the assets and liabilities subject to the disclosure requirements are not actively traded, requiring fair values to be estimated by management. These estimations necessarily involve the use of judgment about a wide variety of factors, including but not limited to, relevancy of market prices of comparable instruments, expected future cash flows, and appropriate discount rates.

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14. DERIVATIVE FINANCIAL INSTRUMENTS

Derivative financial instruments are recorded in the Unaudited Condensed Consolidated Balance Sheets as either an asset or a liability (in other assets or other liabilities, respectively) and measured at fair value.

Derivative financial instruments can be designated as accounting hedges under GAAP. Designating a derivative as an accounting hedge allows Huntington to recognize gains and losses on the hedging instruments in the income statement line item where the gains and losses on the hedged item are recognized. Gains and losses on derivatives that are not designated in an effective hedge relationship under GAAP immediately impact earnings within the period they occur.

The following table presents the fair values and notional values of all derivative instruments included in the Unaudited Condensed Consolidated Balance Sheets at June 30, 2022 and December 31, 2021. Amounts in the table below are presented gross without the impact of any net collateral arrangements.


	June 30, 2022						December 31, 2021
(dollar amounts in millions)	Notional Value		Asset		Liability		Notional Value		Asset		Liability
Derivatives designated as Hedging Instruments
Interest rate contracts	$	29,349	$	723	$	458	$	21,306	$	258	$	32
Foreign exchange contracts	209		—		4		210		1		—
Derivatives not designated as Hedging Instruments
Interest rate contracts	41,820		635		632		45,286		587		498
Foreign exchange contracts	4,260		55		45		3,524		29		31
Commodities contracts	980		241		240		1,077		178		177
Equity contracts	625		—		13		685		12		5
Total Contracts	$	77,243	$	1,654	$	1,392	$	72,088	$	1,065	$	743

The following table presents the amount of gain or loss recognized in income for derivatives not designated as hedging instruments under ASC Subtopic 815-10 in the Unaudited Condensed Consolidated Income Statement for the three-month and six-month periods ended June 30, 2022 and 2021, respectively.


	Location of Gain or (Loss) Recognized in Income on Derivative	Amount of Gain or (Loss) Recognized in Income on Derivative
		Three Months Ended June 30,				Six Months Ended June 30,
(dollar amounts in millions)		2022		2021		2022		2021
Interest rate contracts:
Customer	Capital markets fees	$	15	$	12	$	25	$	24
Mortgage banking	Mortgage banking income	(33)		(23)		(80)		(29)
Interest rate floors	Interest and fee income on loans and leases	—		(2)		—		(4)
Interest rate caps	Interest expense on long-term debt	—		(55)		—		89
Foreign exchange contracts	Capital markets fees	10		7		20		13
Commodities contracts	Capital markets fees	2		—		3		—

Equity contracts	Other noninterest expense	(4)		3		(3)		(4)
Total		$	(10)	$	(58)	$	(35)	$	89

Derivatives used in asset and liability management activities

Huntington engages in balance sheet hedging activity, principally for asset and liability management purposes. Balance sheet hedging activity is generally arranged to receive hedge accounting treatment that can be classified as either fair value or cash flow hedges. Fair value hedges are executed to hedge changes in fair value of outstanding fixed-rate debt and investment securities caused by fluctuations in market interest rates. Cash flow hedges are executed to modify interest rate characteristics of designated commercial loans in order to reduce the impact of changes in future cash flows due to market interest rate changes.

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The following table presents the gross notional values of derivatives used in Huntington’s asset and liability management activities at June 30, 2022 and December 31, 2021, identified by the underlying interest rate-sensitive instruments.


	June 30, 2022
(dollar amounts in millions)	Fair Value Hedges		Cash Flow Hedges		Economic Hedges		Total
Instruments associated with:
Investment securities	$	9,844	$	—	$	—	$	9,844
Loans	—		14,525		271		14,796


Long-term debt	4,980		—		—		4,980

Total notional value at June 30, 2022	$	14,824	$	14,525	$	271	$	29,620

	December 31, 2021
(dollar amounts in millions)	Fair Value Hedges		Cash Flow Hedges		Economic Hedges		Total
Instruments associated with:
Investment securities	$	8,228	$	—	$	—	$	8,228
Loans	—		11,150		271		11,421


Long-term debt	1,928		—		—		1,928
Total notional value at December 31, 2021	$	10,156	$	11,150	$	271	$	21,577

These derivative financial instruments were entered into for the purpose of managing the interest rate risk of assets and liabilities. Net amounts receivable or payable on contracts hedging either interest earning assets or interest bearing liabilities were accrued as an adjustment to either interest income or interest expense. Adjustments to interest income were also recorded for the amounts related to the amortization of floors and forward-starting floors that were excluded from the hedge effectiveness, changes in the fair value of economic hedges, as well as the amounts related to terminated hedges reclassified from AOCI. The net amounts resulted in an increase to net interest income of $48 million and $5 million for the three-month periods ended June 30, 2022, and 2021, respectively. For the six-month periods ended June 30, 2022, and 2021, the net amounts resulted in an increase to net interest income of $87 million and $230 million, respectively.

Fair Value Hedges

The changes in fair value of the fair value hedges are recorded through earnings and offset against changes in the fair value of the hedged item.

Huntington has designated $9.0 billion of interest rate swaps as fair value hedges of fixed-rate investment securities using the portfolio layer method. This approach allows the Company to designate as the hedged item a stated amount of the assets that are not expected to be affected by prepayments, defaults and other factors affecting the timing and amount of cash flows. The fair value portfolio level basis adjustment on our hedged mortgage-backed securities is not included in available-for-sale securities on our Unaudited Condensed Consolidated Statements of Financial Condition. Huntington has also designated $869 million of interest rate swaps as fair value hedges of fixed-rate corporate bonds.

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The following table presents the change in fair value for derivatives designated as fair value hedges as well as the offsetting change in fair value on the hedged item for the three-month and six-month periods ended June 30, 2022 and 2021.


	Three Months Ended June 30,				Six Months Ended June 30,
(dollar amounts in millions)	2022		2021		2022		2021
Interest rate contracts
Change in fair value of interest rate swaps hedging investment securities (1)	$	168	$	(6)	$	586	$	37
Change in fair value of hedged investment securities (1)	(160)		4		(590)		(40)


Change in fair value of interest rate swaps hedging long-term debt (2)	(38)		(23)		(136)		(73)
Change in fair value of hedged long term debt (2)	39		22		137		74

(1)Recognized in Interest income—available-for-sale securities—taxable in the Unaudited Condensed Consolidated Statements of Income.

(2)Recognized in Interest expense—long-term debt in the Unaudited Condensed Consolidated Statements of Income.

As of June 30, 2022, and December 31, 2021, the following amounts were recorded on the balance sheet related to cumulative basis adjustments for fair value hedges.


	Amortized Cost				Cumulative Amount of Fair Value Hedging Adjustment To Hedged Items
(dollar amounts in millions)	June 30, 2022		December 31, 2021		June 30, 2022		December 31, 2021
Assets
Investment securities (1)	$	18,089	$	17,150	$	(708)	$	(117)

Liabilities
Long-term debt (2)	4,486		1,981		(92)		45

(1)Amounts include the amortized cost basis of closed portfolios used to designate hedging relationships under the portfolio layer method. The hedged item is a layer of the closed portfolio which is expected to be remaining at the end of the hedging relationship. As of June 30, 2022, the amortized cost basis of the closed portfolios used in these hedging relationships was $17.3 billion, the cumulative basis adjustments associated with these hedging relationships was $608 million, and the amounts of the designated hedging instruments were $9.0 billion.

(2)Excluded from the above table are the cumulative amount of fair value hedge adjustments remaining for long-term debt for which hedge accounting has been discontinued in the amounts of $4 million at June 30, 2022 and $17 million at December 31, 2021.

Cash Flow Hedges

At June 30, 2022, Huntington has $14.5 billion of interest rate swaps and collars. These are designated as cash flow hedges for variable rate commercial loans. The change in the fair value of a derivative instrument designated as a cash flow hedge is initially recognized in OCI and is reclassified into income when the hedged item impacts earnings. The initial premium paid for the interest rate collar contracts represents the time value of the contracts and is not included in the measurement of hedge effectiveness. Any change in fair value related to time value is recognized in OCI. The initial premium paid is amortized on a straight line basis as a reduction to interest income over the contractual life of these contracts.

Gains and (losses) on interest rate floors, floor spreads, and swaps recognized in other comprehensive income (loss) after-tax were $(86) million and $(34) million for the three-month periods ended June 30, 2022 and 2021, respectively. For the six-month periods ended June 30, 2022 and 2021, gains and losses on interest rate floors and swaps recognized in other comprehensive income were $(326) million and $(102) million, respectively.

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Derivatives used in mortgage banking activities

Mortgage loan origination hedging activity

Huntington’s mortgage origination hedging activity is related to economically hedging Huntington’s mortgage pricing commitments to customers and the secondary sale to third parties. The value of a newly originated mortgage is not firm until the interest rate is committed or locked. Forward commitments to sell economically hedge the possible loss on interest rate lock commitments due to interest rate change. The net asset position of these derivatives at June 30, 2022 and December 31, 2021 were $5 million and $15 million, respectively. At June 30, 2022 and December 31, 2021, Huntington had commitments to sell residential real estate loans of $1.4 billion and $2.1 billion, respectively. These contracts mature in less than one year.

MSR hedging activity

Huntington’s MSR economic hedging activity uses securities and derivatives to manage the value of the MSR asset and to mitigate the various types of risk inherent in the MSR asset, including risks related to duration, basis, convexity, volatility, and yield curve. The hedging instruments include forward commitments, TBA securities, Treasury futures contracts, interest rate swaps, and options on interest rate swaps.

The notional value of the derivative financial instruments, the corresponding net asset (liability) position recognized in other assets and/or other liabilities, and net trading gains (losses) related to MSR hedging activity is summarized in the following table:



(dollar amounts in millions)	June 30, 2022		December 31, 2021
Notional value	$	975	$	1,330
Trading assets	2		19
Trading liabilities	(53)		—


	Three Months Ended June 30, 2022				Six Months Ended June 30, 2022
(dollar amounts in millions)	2022		2021		2022		2021
Trading gains	$	(33)	$	22	$	(80)	$	(24)

MSR hedging trading assets and liabilities are included in other assets and other liabilities, respectively, in the Unaudited Condensed Balance Sheets. Trading gains (losses) are included in mortgage banking income in the Unaudited Condensed Consolidated Statement of Income.

Derivatives used in customer related activities

Various derivative financial instruments are offered to enable customers to meet their financing and investing objectives and for their risk management purposes. Derivative financial instruments used in trading activities consist of commodity, interest rate, and foreign exchange contracts. Huntington enters into offsetting third-party contracts with approved, reputable counterparties with substantially matching terms and currencies in order to economically hedge significant exposure related to derivatives used in trading activities.

The interest rate or price risk of customer derivatives is mitigated by entering into similar derivatives having offsetting terms with other counterparties. The credit risk to these customers is evaluated and included in the calculation of fair value. Foreign currency derivatives help the customer hedge risk and reduce exposure to fluctuations in exchange rates. Transactions are primarily in liquid currencies with Canadian dollars and Euros comprising a majority of all transactions. Commodity derivatives help the customer hedge risk and reduce exposure to fluctuations in the price of various commodities. Hedging of energy-related products and base metals comprise the majority of these transactions.

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The net fair values of these derivative financial instruments, for which the gross amounts are included in other assets or other liabilities at both June 30, 2022 and December 31, 2021, were $72 million and $51 million, respectively. The total notional values of derivative financial instruments used by Huntington on behalf of customers, including offsetting derivatives, were $43.5 billion and $45.1 billion at June 30, 2022 and December 31, 2021, respectively. Huntington’s credit risk from customer derivatives was $136 million and $551 million at the same dates, respectively.

Financial assets and liabilities that are offset in the Unaudited Condensed Consolidated Balance Sheets

Huntington records derivatives at fair value as further described in Note 13 “Fair Values of Assets and Liabilities”.

Derivative balances are presented on a net basis taking into consideration the effects of legally enforceable master netting agreements. Additionally, collateral exchanged with counterparties is also netted against the applicable derivative fair values. Huntington enters into derivative transactions with two primary groups: broker-dealers and banks, and Huntington’s customers. Different methods are utilized for managing counterparty credit exposure and credit risk for each of these groups.

Huntington enters into transactions with broker-dealers and banks for various risk management purposes. These types of transactions generally are high dollar volume. Huntington enters into collateral and master netting agreements with these counterparties, and routinely exchanges cash and high quality securities collateral. Huntington enters into transactions with customers to meet their financing, investing, payment and risk management needs. These types of transactions generally are low dollar volume. Huntington enters into master netting agreements with customer counterparties; however, collateral is generally not exchanged with customer counterparties.

In addition to the customer derivative credit exposure, aggregate credit risk associated with broker-dealer and bank derivative transactions, net of collateral that has been pledged by the counterparty, was $293 million and $44 million at June 30, 2022 and December 31, 2021, respectively. The credit risk associated with derivatives is calculated after considering master netting agreements.

At June 30, 2022, Huntington pledged $285 million of investment securities and cash collateral to counterparties, while other counterparties pledged $782 million of investment securities and cash collateral to Huntington to satisfy collateral netting agreements. In the event of credit downgrades, Huntington would not be required to provide additional collateral.

The following tables present the gross amounts of these assets and liabilities with any offsets to arrive at the net amounts recognized in the Unaudited Condensed Consolidated Balance Sheets at June 30, 2022 and December 31, 2021.


Offsetting of Financial Assets and Derivative Assets
			Gross amounts offset in the unaudited condensed consolidated balance sheets		Net amounts of assets presented in the unaudited condensed consolidated balance sheets		Gross amounts not offset in the unaudited condensed consolidated balance sheets
(dollar amounts in millions)	Gross amounts of recognized assets						Financial instruments		Cash collateral received		Net amount
June 30, 2022	$	1,654	$	(1,222)	$	432	$	(7)	$	(157)	$	268
December 31, 2021	1,065		(465)		600		(65)		(31)		504


Offsetting of Financial Liabilities and Derivative Liabilities
			Gross amounts offset in the unaudited condensed consolidated balance sheets		Net amounts of liabilities presented in the unaudited condensed consolidated balance sheets		Gross amounts not offset in the unaudited condensed consolidated balance sheets
(dollar amounts in millions)	Gross amounts of recognized liabilities						Financial instruments		Cash collateral delivered		Net amount
June 30, 2022	$	1,392	$	(756)	$	636	$	(87)	$	(120)	$	429
December 31, 2021	743		(624)		119		(3)		(116)		—

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15. VIEs

Unconsolidated VIEs

The following tables provide a summary of the assets and liabilities included in Huntington’s Unaudited Condensed Consolidated Financial Statements, as well as the maximum exposure to losses, associated with its interests related to unconsolidated VIEs for which Huntington holds an interest in, but is not the primary beneficiary, of the VIE at June 30, 2022, and December 31, 2021:


	June 30, 2022
(dollar amounts in millions)	Total Assets		Total Liabilities		Maximum Exposure to Loss
Affordable Housing Tax Credit Partnerships	$	1,721	$	997	$	1,721
Trust Preferred Securities	8		179		—
Other Investments	528		152		528
Total	$	2,257	$	1,328	$	2,249


	December 31, 2021
(dollar amounts in millions)	Total Assets		Total Liabilities		Maximum Exposure to Loss
Affordable Housing Tax Credit Partnerships	$	1,652	$	949	$	1,652
Trust Preferred Securities	14		248		—
Other Investments	484		146		484
Total	$	2,150	$	1,343	$	2,136

Trust-Preferred Securities

Huntington has certain wholly-owned trusts whose assets, liabilities, equity, income, and expenses are not included within Huntington’s Unaudited Condensed Consolidated Financial Statements. These trusts have been formed for the sole purpose of issuing trust-preferred securities, from which the proceeds are then invested in Huntington junior subordinated debentures, which are reflected in Huntington’s Unaudited Condensed Consolidated Balance Sheet as long-term debt. The trust securities are the obligations of the trusts, and as such, are not consolidated within Huntington’s Unaudited Condensed Consolidated Financial Statements.

A list of trust preferred securities outstanding at June 30, 2022 follows:


(dollar amounts in millions)	Rate		Principal amount of subordinated note/ debenture issued to trust (1)		Investment in unconsolidated subsidiary

Huntington Capital II	2.91	(2)	$	32	$	3
Sky Financial Capital Trust III	3.69	(3)	72		2
Sky Financial Capital Trust IV	3.69	(3)	75		3





Total			$	179	$	8

(1)Represents the principal amount of debentures issued to each trust, including unamortized original issue discount.

(2)Variable effective rate at June 30, 2022, based on three-month LIBOR +0.625%.

(3)Variable effective rate at June 30, 2022, based on three-month LIBOR +1.40%.

Each issue of the junior subordinated debentures has an interest rate equal to the corresponding trust securities distribution rate. Huntington has the right to defer payment of interest on the debentures at any time, or from time-to-time for a period not exceeding five years provided that no extension period may extend beyond the stated maturity of the related debentures. During any such extension period, distributions to the trust securities will also be deferred and Huntington’s ability to pay dividends on its common stock will be restricted. Periodic cash payments and payments upon liquidation or redemption with respect to trust securities are guaranteed by Huntington to the extent of funds held by the trusts. The guarantee ranks subordinate and junior in right of payment to all indebtedness of the Company to the same extent as the junior subordinated debt. The guarantee does not place a limitation on the amount of additional indebtedness that may be incurred by Huntington.

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Affordable Housing Tax Credit Partnerships

Huntington makes certain equity investments in various limited partnerships that sponsor affordable housing projects utilizing the LIHTC pursuant to Section 42 of the Internal Revenue Code. The purpose of these investments is to achieve a satisfactory return on capital, to facilitate the sale of additional affordable housing product offerings, and to assist in achieving goals associated with the Community Reinvestment Act. The primary activities of the limited partnerships include the identification, development, and operation of multi-family housing that is leased to qualifying residential tenants. Generally, these types of investments are funded through a combination of debt and equity.

Huntington uses the proportional amortization method to account for a majority of its investments in these entities. These investments are included in other assets. Investments that do not meet the requirements of the proportional amortization method are accounted for using the equity method. Investment losses are included in Other noninterest income in the Unaudited Condensed Consolidated Statements of Income.

The following table presents the balances of Huntington’s affordable housing tax credit investments and related unfunded commitments at June 30, 2022 and December 31, 2021.


(dollar amounts in millions)	June 30, 2022		December 31, 2021
Affordable housing tax credit investments	$	2,517	$	2,376
Less: amortization	(796)		(724)
Net affordable housing tax credit investments	$	1,721	$	1,652
Unfunded commitments	$	997	$	949

The following table presents other information relating to Huntington’s affordable housing tax credit investments for the three-month and six-month periods ended June 30, 2022 and 2021.


	Three Months Ended June 30,				Six Months Ended June 30,
(dollar amounts in millions)	2022		2021		2022		2021
Tax credits and other tax benefits recognized	$	53	$	44	$	107	$	77

Proportional amortization expense included in provision for income taxes	44		30		86		58

There were no sales of affordable housing tax credit investments during the three-month and six-month periods ended June 30, 2022 and 2021. There was no impairment recognized for the three-month and six-month periods ended June 30, 2022 and 2021.

Other investments

Other investments determined to be VIE’s include investments in Small Business Investment Companies, Historic Tax Credit Investments, certain equity method investments, renewable energy financings, and other miscellaneous investments.

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16. COMMITMENTS AND CONTINGENT LIABILITIES

Commitments to extend credit

In the ordinary course of business, Huntington makes various commitments to extend credit that are not reflected in the Unaudited Condensed Consolidated Financial Statements. The contract amounts of these financial agreements at June 30, 2022 and December 31, 2021, were as follows:


(dollar amounts in millions)	June 30, 2022		December 31, 2021
Contract amount representing credit risk
Commitments to extend credit:
Commercial	$	29,398	$	27,933
Consumer	19,501		18,513
Commercial real estate	3,437		3,042
Standby letters of credit and guarantees on industrial revenue bonds	713		694
Commercial letters of credit	15		36

Commitments to extend credit generally have fixed expiration dates, are variable-rate, and contain clauses that permit Huntington to terminate or otherwise renegotiate the contracts in the event of a significant deterioration in the customer’s credit quality. These arrangements normally require the payment of a fee by the customer, the pricing of which is based on prevailing market conditions, credit quality, probability of funding, and other relevant factors. Since many of these commitments are expected to expire without being drawn upon, the contract amounts are not necessarily indicative of future cash requirements. The interest rate risk arising from these financial instruments is insignificant as a result of their predominantly short-term, variable-rate nature. Collateral to secure any funding of these commitments predominately consists of residential and commercial real estate mortgage loans.

Standby letters-of-credit and guarantees on industrial revenue bonds are conditional commitments issued to guarantee the performance of a customer to a third-party. These guarantees are primarily issued to support public and private borrowing arrangements, including commercial paper, bond financing, and similar transactions. Most of these arrangements mature within two years. Since the conditions under which Huntington is required to fund these commitments may not materialize, the cash requirements are expected to be less than the total outstanding commitments. The carrying amount of deferred revenue associated with these guarantees was $16 million and $7 million at June 30, 2022 and December 31, 2021, respectively.

Commercial letters-of-credit represent short-term, self-liquidating instruments that facilitate customer trade transactions and generally have maturities of no longer than 90 days. The goods or cargo being traded normally secure these instruments.

Litigation and Regulatory Matters

In the ordinary course of business, Huntington is routinely a defendant in or party to pending and threatened legal and regulatory actions and proceedings.

In view of the inherent difficulty of predicting the outcome of such matters, particularly where the claimants seek very large or indeterminate damages or where the matters present novel legal theories or involve a large number of parties, Huntington generally cannot predict what the eventual outcome of the pending matters will be, what the timing of the ultimate resolution of these matters will be, or what the eventual loss, fines or penalties related to each matter may be.

Huntington establishes an accrued liability when those matters present loss contingencies that are both probable and estimable. In such cases, there may be an exposure to loss in excess of any amounts accrued. Huntington thereafter continues to monitor the matter for further developments that could affect the amount of the accrued liability that has been previously established.

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For certain matters, Huntington is able to estimate a range of possible loss. In cases in which Huntington possesses information to estimate a range of possible loss, that estimate is aggregated and disclosed below. There may be other matters for which a loss is probable or reasonably possible but such an estimate of the range of possible loss may not be possible. For those matters where an estimate of the range of possible loss is possible, management currently estimates the aggregate range of reasonably possible loss is $0 to $15 million at June 30, 2022 in excess of the accrued liability (if any) related to those matters. This estimated range of possible loss is based upon currently available information and is subject to significant judgment, a variety of assumptions, and known and unknown uncertainties. The matters underlying the estimated range will change from time to time, and actual results may vary significantly from the current estimate. The estimated range of possible loss does not represent Huntington’s maximum loss exposure.

Based on current knowledge, management does not believe that loss contingencies arising from pending matters will have a material adverse effect on the consolidated financial position of Huntington. Further, management believes that amounts accrued are adequate to address Huntington’s contingent liabilities. However, in light of the inherent uncertainties involved in these matters, some of which are beyond Huntington’s control, and the large or indeterminate damages sought in some of these matters, an adverse outcome in one or more of these matters could be material to Huntington’s results of operations for any particular reporting period.

17. SEGMENT REPORTING

Huntington’s business segments are based on our internally-aligned segment leadership structure, which is how management monitors results and assesses performance. The Company has four major business segments: Commercial Banking, Consumer and Business 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. For a description of our business segments, see Note 25 - Segment Reporting to the Consolidated Financial Statements appearing in Huntington’s 2021 Annual Report on Form 10-K.

Listed in the following tables is certain operating basis financial information reconciled to Huntington’s June 30, 2022, December 31, 2021, and June 30, 2021, reported results by business segment.



	Three Months Ended June 30,
Income Statements	Commercial Banking		Consumer & Business Banking		Vehicle Finance		RBHPCG		Treasury / Other		Huntington Consolidated
(dollar amounts in millions)
2022
Net interest income	$	426	$	534	$	117	$	55	$	129	$	1,261
Provision (benefit) for credit losses	(206)		183		86		4		—		67
Noninterest income	151		270		3		58		3		485
Noninterest expense	248		590		41		81		58		1,018
Provision (benefit) for income taxes	113		7		(2)		6		(4)		120
Income attributable to non-controlling interest	2		—		—		—		—		2
Net income attributable to Huntington Bancshares Inc	$	420	$	24	$	(5)	$	22	$	78	$	539
2021
Net interest income	$	258	$	366	$	109	$	37	$	68	$	838
Provision (benefit) for credit losses	137		100		(31)		5		—		211
Noninterest income	114		243		2		54		31		444
Noninterest expense	173		513		37		72		277		1,072
Provision (benefit) for income taxes	13		—		21		3		(23)		14

Net income (loss) attributable to Huntington Bancshares Inc	$	49	$	(4)	$	84	$	11	$	(155)	$	(15)

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	Six Months Ended June 30,
Income Statements	Commercial Banking		Consumer & Business Banking		Vehicle Finance		RBHPCG		Treasury / Other		Huntington Consolidated
(dollar amounts in millions)
2022
Net interest income	$	844	$	993	$	237	$	104	$	229	$	2,407
Provision (benefit) for credit losses	(75)		74		79		14		—		92
Noninterest income	292		542		6		124		20		984
Noninterest expense	496		1,202		86		162		125		2,071
Provision (benefit) for income taxes	151		54		16		11		(7)		225
Income attributable to non-controlling interest	4		—		—		—		—		4
Net income attributable to Huntington Bancshares Inc	$	560	$	205	$	62	$	41	$	131	$	999
2021
Net interest income	$	457	$	703	$	217	$	70	$	363	$	1,810
Provision (benefit) for credit losses	143		63		(53)		(2)		—		151
Noninterest income	203		477		6		107		46		839
Noninterest expense	306		984		72		132		371		1,865
Provision (benefit) for income taxes	44		28		43		10		(9)		116

Net income attributable to Huntington Bancshares Inc	$	167	$	105	$	161	$	37	$	47	$	517


	Assets at				Deposits at
(dollar amounts in millions)	June 30, 2022		December 31, 2021		June 30, 2022		December 31, 2021
Commercial Banking	$	60,946	$	57,071	$	34,670	$	31,845
Consumer & Business Banking	39,425		39,929		95,693		95,352
Vehicle Finance	21,549		20,752		1,291		1,401
RBHPCG	9,469		8,325		9,226		10,162
Treasury / Other	47,393		47,987		4,555		4,503
Total	$	178,782	$	174,064	$	145,435	$	143,263

88 Huntington Bancshares Incorporated

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Item 3: Quantitative and Qualitative Disclosures about Market Risk

Quantitative and qualitative disclosures for the current period can be found in the Market Risk section of this report, which includes changes in market risk exposures from disclosures presented in Huntington’s 2021 Annual Report on Form 10-K.

Item 4: Controls and Procedures

Disclosure Controls and Procedures

Huntington maintains disclosure controls and procedures designed to ensure that the information required to be disclosed in the reports that it files or submits under the Securities Exchange Act of 1934, as amended (the Exchange Act), are recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Huntington’s management, with the participation of its Chief Executive Officer and the Chief Financial Officer, evaluated the effectiveness of Huntington’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of June 30, 2022. Based upon such evaluation, Huntington’s Chief Executive Officer and Chief Financial Officer have concluded that, as of June 30, 2022, Huntington’s disclosure controls and procedures were effective.

There have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended June 30, 2022, that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting.

PART II. OTHER INFORMATION

In accordance with the instructions to Part II, the other specified items in this part have been omitted because they are not applicable or the information has been previously reported.

Item 1: Legal Proceedings

Information required by this item is set forth in Note 16 “Commitments and Contingent Liabilities” of the Notes to Unaudited Condensed Consolidated Financial Statements under the caption “Litigation and Regulatory Matters” and is incorporated into this Item by reference.

Item 1A: Risk Factors

In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the risk factors discussed in Part I, “Item 1A. Risk Factors” in our 2021 Annual Report on Form 10-K, which could materially affect our business, financial condition, or results of operations. In the first quarter of 2022, we identified the following additional risk factor:

Liquidity Risks:

Instability in global economic conditions and geopolitical matters, as well as volatility in financial markets, could have a material adverse effect on the Company’s results of operations and financial condition. The macroeconomic environment in the United States is susceptible to global events and volatility in financial markets. For example, trade negotiations between the U.S. and other nations remain uncertain and could adversely impact economic and market conditions for the Company and its clients and counterparties. In addition, global demand for products may exceed supply during the economic recovery from the COVID-19 pandemic, and such shortages may cause inflation, adversely impact consumer and business confidence, and adversely affect the economy as well as the Company’s financial condition and results.

2022 2Q Form 10-Q 89

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) and (b)

Not Applicable

(c)


Period	Total Number of Shares Purchased (1)	Average Price Paid Per Share		Maximum Number of Shares (or Approximate Dollar Value) that May Yet Be Purchased Under the Plans or Programs (2)
April 1, 2022 to April 30, 2022	—	$	—	$	150,053,953
May 1, 2022 to May 31, 2022	—	—		150,053,953
June 1, 2022 to June 30, 2022	—	—		—
Total	—	$	—

(1)The reported shares were repurchased pursuant to Huntington’s publicly-announced share repurchase authorization.

(2)The number shown represents, as of the end of each period, the approximate dollar value of Common Stock that may yet be purchased under publicly-announced share repurchase authorizations. Authorization to repurchase common shares expired as of June 30, 2022.

90 Huntington Bancshares Incorporated

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Item 6. Exhibits

Exhibit Index

This report incorporates by reference the documents listed below that we have previously filed with the SEC. The SEC allows us to incorporate by reference information in this document. The information incorporated by reference is considered to be a part of this document, except for any information that is superseded by information that is included directly in this document.

The SEC maintains an Internet web site that contains reports, proxy statements, and other information about issuers, like us, who file electronically with the SEC. The address of the site is http://www.sec.gov. The reports and other information filed by us with the SEC are also available free of charge at our internet web site. The address of the site is http://www.huntington.com. Except as specifically incorporated by reference into this Quarterly Report on Form 10-Q, information on those web sites is not part of this report. You also should be able to inspect reports, proxy statements, and other information about us at the offices of the Nasdaq National Market at 33 Whitehall Street, New York, New York 10004.


Exhibit Number	Document Description	Report or Registration Statement	SEC File or Registration Number	Exhibit Reference
3.1	Articles Supplementary of Huntington Bancshares Incorporated, as of January 18, 2019.	Current Report on Form 8-K dated January 16, 2019.	001-34073	3.1
3.2	Articles of Restatement of Huntington Bancshares Incorporated, as of January 18, 2019.	Current Report on Form 8-K dated January 16, 2019.	001-34073	3.2
3.3	Articles Supplementary of Huntington Bancshares Incorporated, as of May 28, 2020.	Current Report on Form 8-K dated May 28, 2020.	001-34073	3.1
3.4	Articles Supplementary of Huntington Bancshares Incorporated, as of August 5, 2020.	Current Report on Form 8-K dated August 10, 2020.	001-34073	3.1
3.5	Bylaws of Huntington Bancshares Incorporated, as amended and restated on January 16, 2019.	Current Report on Form 8-K dated January 16, 2019.	001-34073	3.3
3.6	Articles Supplementary of Huntington Bancshares Incorporated, as of February 5, 2021	Current Report on Form 8-K dated February 5, 2021.	001-34073	3.1
3.7	Articles Supplementary of Huntington Bancshares Incorporated, as of June 8, 2021	Current Report on Form 8-K dated June 8, 2021	001-34073	3.1
3.8	Articles of Amendment of Huntington Bancshares Incorporated to Articles of Restatement of Huntington Bancshares Incorporated, as of June 8, 2021	Current Report on Form 8-K dated June 8, 2021	001-34073	3.2
4.1(P)	Instruments defining the Rights of Security Holders—reference is made to Articles Fifth, Eighth, and Tenth of Articles of Restatement of Charter, as amended and supplemented. Instruments defining the rights of holders of long-term debt will be furnished to the Securities and Exchange Commission upon request.
31.1	*Rule 13a-14(a) Certification – Chief Executive Officer.
31.2	*Rule 13a-14(a) Certification – Chief Financial Officer.
32.1	**Section 1350 Certification – Chief Executive Officer.
32.2	**Section 1350 Certification – Chief Financial Officer.
101.INS	***The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document
101.SCH	*Inline XBRL Taxonomy Extension Schema Document
101.CAL	*Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	*Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	*Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	*Inline XBRL Taxonomy Extension Presentation Linkbase Document



*			Filed herewith
**			Furnished herewith
***			The following material from Huntington’s Form 10-Q Report for the quarterly period ended June 30, 2022 formatted in Inline XBRL: (1) Unaudited Condensed Consolidated Balance Sheets, (2) Unaudited Condensed Consolidated Statements of Income, (3) Unaudited Condensed Consolidated Statements of Comprehensive Income (4) Unaudited Condensed Consolidated Statement of Changes in Shareholders’ Equity, (5) Unaudited Condensed Consolidated Statements of Cash Flows, and (6) the Notes to Unaudited Condensed Consolidated Financial Statements.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

HUNTINGTON BANCSHARES INCORPORATED

(Registrant)



Date:	July 29, 2022	/s/ Stephen D. Steinour
		Stephen D. Steinour
		Chairman, President, and Chief Executive Officer (Principal Executive Officer)

Date:	July 29, 2022	/s/ Zachary Wasserman
		Zachary Wasserman
		Chief Financial Officer (Principal Financial Officer)

92 Huntington Bancshares Incorporated

Form: 10-Q

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