Huntington Bancshares Incorporated Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

LOANS / LEASES AND ALLOWANCE FOR CREDIT LOSSES

LOANS / LEASES AND ALLOWANCE FOR CREDIT LOSSES

9 Months Ended

Sep. 30, 2015

LOANS / LEASES AND ALLOWANCE FOR CREDIT LOSSES

Loans and leases for which Huntington has the intent and ability to hold for the foreseeable future, or until maturity or payoff, are classified in the Unaudited Condensed Consolidated Balance Sheets as loans and leases. Except for loans which are accounted for at fair value, loans are carried at the principal amount outstanding, net of unamortized premiums and discounts and deferred loan fees and costs, which resulted in a net premium of $246.6 million and $230.2 million at September 30, 2015 and December 31, 2014, respectively.

Loan and Lease Portfolio Compositioln

The following table provides a detailed listing of Huntington’s loan and lease portfolio at September 30, 2015 and December 31, 2014:



(dollar amounts in thousands)	September 30, 2015			December 31, 2014
Loans and leases:
Commercial and industrial	$	20,039,429		$	19,033,146
Commercial real estate	5,404,274			5,197,403
Automobile	9,160,241			8,689,902
Home equity	8,460,989			8,490,915
Residential mortgage	6,071,356			5,830,609
Other consumer	519,620			413,751
Loans and leases	49,655,909			47,655,726
Allowance for loan and lease losses	(591,938		)	(605,196		)
Net loans and leases	$	49,063,971		$	47,050,530

As shown in the table above, the primary loan and lease portfolios are: C&I, CRE, automobile, home equity, residential mortgage, and other consumer. For ACL purposes, these portfolios are further disaggregated into classes. The classes within each portfolio are as follows:



Portfolio	Class
Commercial and industrial	Owner occupied
	Purchased credit-impaired
	Other commercial and industrial

Commercial real estate	Retail properties
	Multi family
	Office
	Industrial and warehouse
	Purchased credit-impaired
	Other commercial real estate

Automobile	NA (1)

Home equity	Secured by first-lien
	Secured by junior-lien

Residential mortgage	Residential mortgage
	Purchased credit-impaired

Other consumer	Other consumer
	Purchased credit-impaired


(1)	Not applicable. The automobile loan portfolio is not further segregated into classes.

Huntington Technology Finance acquisition

On March 31, 2015, Huntington completed its acquisition of Macquarie Equipment Finance, which was re-branded Huntington Technology Finance. Lease receivables with a fair value of $838.6 million, including a lease residual value of approximately $200 million, were acquired by Huntington. These leases were recorded at fair value. The fair values for the leases were estimated using discounted cash flow analyses using interest rates currently being offered for leases with similar terms (Level 3), and reflected an estimate of credit and other risk associated with the leases.

Camco Financial acquisition

On March 1, 2014, Huntington completed its acquisition of Camco Financial. Loans with a fair value of $559.4 million were transferred to Huntington.

Fidelity Bank acquisition

On March 30, 2012, Huntington acquired the loans of Fidelity Bank located in Dearborn, Michigan from the FDIC. Under the agreement, loans with a fair value of $523.9 million were acquired by Huntington.

Purchased Credit-Impaired Loans

Purchased loans with evidence of deterioration in credit quality since origination for which it is probable at acquisition that we will be unable to collect all contractually required payments are considered to be credit impaired. Purchased credit-impaired loans are initially recorded at fair value, which is estimated by discounting the cash flows expected to be collected at the acquisition date. Because the estimate of expected cash flows reflects an estimate of future credit losses expected to be incurred over the life of the loans, an allowance for credit losses is not recorded at the acquisition date. The excess of cash flows expected at acquisition over the estimated fair value, referred to as the accretable yield, is recognized in interest income over the remaining life of the loan, or pool of loans, on a level-yield basis. The difference between the contractually required payments at acquisition and the cash flows expected to be collected at acquisition is referred to as the nonaccretable difference. A subsequent decrease in the estimate of cash flows expected to be received on purchased credit-impaired loans generally results in the recognition of an allowance for credit losses. Subsequent increases in cash flows result in reversal of any nonaccretable difference (or allowance for loan and lease losses to the extent any has been recorded) with a positive impact on interest income subsequently recognized. The measurement of cash flows involves assumptions and judgments for interest rates, prepayments, default rates, loss severity, and collateral values. All of these factors are inherently subjective and significant changes in the cash flow estimates over the life of the loan can result.

The following table presents a rollforward of the accretable yield for purchased credit impaired loans by acquisition for the three-month and nine-month periods ended September 30, 2015 and 2014:



	Three Months Ended September 30,						Nine Months Ended September 30,
(dollar amounts in thousands)	2015			2014			2015			2014
Fidelity Bank
Balance, beginning of period	$	19,312		$	24,596		$	19,388		$	27,995
Accretion	(2,818		)	(3,070		)	(8,682		)	(10,722		)
Reclassification (to) from nonaccretable difference	1,089			(6		)	6,877			4,247
Balance, end of period	$	17,583		$	21,520		$	17,583		$	21,520
Camco Financial
Balance, beginning of period	$	681		$	154		$	824		$	—
Impact of acquisition/purchase on March 1, 2014	—			—			—			143
Accretion	(106		)	(153		)	(1,357		)	(5,335		)
Reclassification (to) from nonaccretable difference	(393		)	816			715			6,009
Balance, end of period	$	182		$	817		$	182		$	817

The allowance for loan losses recorded on the purchased credit-impaired loan portfolio at September 30, 2015 and December 31, 2014 was $0.7 million and $4.1 million, respectively. The following table reflects the ending and unpaid balances of all contractually required payments and carrying amounts of the acquired loans by acquisition at September 30, 2015 and December 31, 2014:



	September 30, 2015				December 31, 2014
(dollar amounts in thousands)	Ending Balance		Unpaid Balance		Ending Balance		Unpaid Balance
Fidelity Bank
Commercial and industrial	$	19,484	$	28,812	$	22,405	$	33,622
Commercial real estate	24,619		67,413		36,663		87,250
Residential mortgage	1,513		2,292		1,912		3,096
Other consumer	50		107		51		123
Total	$	45,666	$	98,624	$	61,031	$	124,091
Camco Financial
Commercial and industrial	$	—	$	—	$	823	$	1,685
Commercial real estate	1,156		1,499		1,708		3,826
Residential mortgage	—		—		—		—
Other consumer	—		—		—		—
Total	$	1,156	$	1,499	$	2,531	$	5,511

Loan Purchases and Sales

The following table summarizes portfolio loan purchase and sale activity for the three-month and nine-month periods ended September 30, 2015 and 2014. The table below excludes mortgage loans originated for sale.



(dollar amounts in thousands)	Commercial and Industrial		Commercial Real Estate		Automobile			Home Equity				Residential Mortgage		Other Consumer		Total
Portfolio loans and leases purchased or transferred from held for sale during the:
Three-month period ended September 30, 2015	$	180,036	$	—	$	—		$	—			$	57,388	$	—	$	237,424
Nine-month period ended September 30, 2015	224,532		—		262,037		(2)	—				164,425		$	—	650,994
Three-month period ended September 30, 2014	64,668		—		—			—				2,224		$	—	66,892
Nine-month period ended September 30, 2014	$	270,272	$	—	$	—		$	—			$	16,547	$	—	$	286,819
Portfolio loans and leases sold or transferred to loans held for sale during the:
Three-month period ended September 30, 2015	$	98,117	$	—	$	—		$	96,786	(3	)	$	—	$	—	$	194,903
Nine-month period ended September 30, 2015	284,019		—		1,026,195		(1)	96,786				—		—		1,407,000
Three-month period ended September 30, 2014	179,065		—		—			—				—		—		179,065
Nine-month period ended September 30, 2014	$	283,796	$	7,434	$	—		$	—			$	—	$	7,592	$	298,822


(1)	Reflects the transfer of approximately $1.0 billion automobile loans to loans held-for-sale at March 31, 2015.


(2)	Includes loans Huntington no longer has the intent to sell and, therefore transferred back to the portfolio in the 2015 second quarter.


(3)	Reflects the transfer of approximately $96.8 million home equity TDRs from loans to loans held for sale at September 30, 2015.

NALs and Past Due Loans

Loans are considered past due when the contractual amounts due with respect to principal and interest are not received within 30 days of the contractual due date.

Any loan in any portfolio may be placed on nonaccrual status prior to the policies described below when collection of principal or interest is in doubt. When a borrower with debt is discharged in a Chapter 7 bankruptcy and not reaffirmed by the borrower, the loan is determined to be collateral dependent and placed on nonaccrual status.

All classes within the C&I and CRE portfolios (except for purchased credit-impaired loans) are placed on nonaccrual status at 90-days past due. Residential mortgage loans are placed on nonaccrual status at 150-days past due, with the exception of residential mortgages guaranteed by government organizations. First-lien home equity loans are placed on nonaccrual status at 150-days past due. Junior-lien home equity loans are placed on nonaccrual status at the earlier of 120-days past due or when the related first-lien loan has been identified as nonaccrual. Automobile and other consumer loans are generally charged-off when the loan is 120-days past due.

For all classes within all loan portfolios, when a loan is placed on nonaccrual status, any accrued interest income is reversed with current year accruals charged to interest income, and prior year amounts are recognized as a credit loss.

For all classes within all loan portfolios, cash receipts received on NALs are applied entirely against principal until the loan or lease has been collected in full, after which time any additional cash receipts are recognized as interest income. However, for secured non-reaffirmed debt in a Chapter 7 bankruptcy, payments are applied to principal and interest when the borrower has demonstrated a capacity to continue payment of the debt and collection of the debt is reasonably assured. For unsecured non-reaffirmed debt in a Chapter 7 bankruptcy where the carrying value has been fully charged-off, payments are recorded as loan recoveries.

Regarding all classes within the C&I and CRE portfolios, the determination of a borrower’s ability to make the required principal and interest payments is based on an examination of the borrower’s current financial statements, industry, management capabilities, and other qualitative measures. For all classes within the consumer loan portfolio, the determination of a borrower’s ability to make the required principal and interest payments is based on multiple factors, including number of days past due and, in some instances, an evaluation of the borrower’s financial condition. When, in Management’s judgment, the borrower’s ability to make required principal and interest payments resumes and collectability is no longer in doubt, supported by sustained repayment history, the loan or lease is returned to accrual status. For these loans that have been returned to accrual status, cash receipts are applied according to the contractual terms of the loan.

The following table presents NALs by loan class at September 30, 2015 and December 31, 2014:



(dollar amounts in thousands)	September 30, 2015		December 31, 2014
Commercial and industrial:
Owner occupied	$	42,231	$	41,285
Other commercial and industrial	115,671		30,689
Total commercial and industrial	157,902		71,974
Commercial real estate:
Retail properties	$	7,887	$	21,385
Multi family	9,183		9,743
Office	5,414		7,707
Industrial and warehouse	1,147		3,928
Other commercial real estate	3,885		5,760
Total commercial real estate	27,516		48,523
Automobile	5,551		4,623
Home equity:
Secured by first-lien	33,974		46,938
Secured by junior-lien	32,472		31,577
Total home equity	66,446		78,515
Residential mortgage	98,908		96,609
Other consumer	154		—
Total nonaccrual loans	$	356,477	$	300,244

The following table presents an aging analysis of loans and leases, including past due loans, by loan class at September 30, 2015 and December 31, 2014: (1)



	September 30, 2015
	Past Due										Total Loans and Leases		90 or more days past due and accruing
(dollar amounts in thousands)	30-59 Days		60-89 Days		90 or more days		Total		Current		Total Loans and Leases		90 or more days past due and accruing
Commercial and industrial:
Owner occupied	$	5,500	$	3,742	$	11,195	$	20,437	$	4,056,263	$	4,076,700	$	—
Purchased credit-impaired	802		1,622		3,412		5,836		13,648		19,484		3,412		(3)
Other commercial and industrial	54,302		21,742		17,901		93,945		15,849,300		15,943,245		3,159		(2)
Total commercial and industrial	60,604		27,106		32,508		120,218		19,919,211		20,039,429		6,571
Commercial real estate:
Retail properties	10,095		297		3,769		14,161		1,408,479		1,422,640		$	—
Multi family	1,078		3,620		2,605		7,303		1,210,792		1,218,095		—
Office	5,889		1,094		2,211		9,194		916,636		925,830		—
Industrial and warehouse	22		146		369		537		535,228		535,765		—
Purchased credit-impaired	364		1,052		12,178		13,594		12,181		25,775		12,178		(3)
Other commercial real estate	188		—		3,137		3,325		1,272,844		1,276,169		—
Total commercial real estate	17,636		6,209		24,269		48,114		5,356,160		5,404,274		12,178
Automobile	58,391		14,051		6,934		79,376		9,080,865		9,160,241		6,873
Home equity:
Secured by first-lien	13,269		7,241		26,321		46,831		5,110,070		5,156,901		4,207
Secured by junior-lien	21,693		10,523		32,952		65,168		3,238,920		3,304,088		6,557
Total home equity	34,962		17,764		59,273		111,999		8,348,990		8,460,989		10,764
Residential mortgage:
Residential mortgage	92,163		37,313		123,097		252,573		5,817,270		6,069,843		68,135		(4)
Purchased credit-impaired	—		—		—		—		1,513		1,513		—
Total residential mortgage	92,163		37,313		123,097		252,573		5,818,783		6,071,356		68,135
Other consumer:
Other consumer	6,411		1,547		1,241		9,199		510,371		519,570		1,087
Purchased credit-impaired	—		—		—		—		50		50		—
Total other consumer	6,411		1,547		1,241		9,199		510,421		519,620		1,087
Total loans and leases	$	270,167	$	103,990	$	247,322	$	621,479	$	49,034,430	$	49,655,909	$	105,608



	December 31, 2014
	Past Due										Total Loans and Leases		90 or more days past due and accruing
(dollar amounts in thousands)	30-59 Days		60-89 Days		90 or more days		Total		Current		Total Loans and Leases		90 or more days past due and accruing
Commercial and industrial:
Owner occupied	$	5,232	$	2,981	$	18,222	$	26,435	$	4,228,440	$	4,254,875	$	—
Purchased credit-impaired	846		—		4,937		5,783		17,445		23,228		4,937		(3)
Other commercial and industrial	15,330		1,536		9,101		25,967		14,729,076		14,755,043		—
Total commercial and industrial	21,408		4,517		32,260		58,185		18,974,961		19,033,146		4,937
Commercial real estate:
Retail properties	7,866		—		4,021		11,887		1,345,859		1,357,746		$	—
Multi family	1,517		312		3,337		5,166		1,085,250		1,090,416		—
Office	464		1,167		4,415		6,046		974,257		980,303		—
Industrial and warehouse	688		—		2,649		3,337		510,064		513,401		—
Purchased credit-impaired	89		289		18,793		19,171		19,200		38,371		18,793		(3)
Other commercial real estate	847		1,281		3,966		6,094		1,211,072		1,217,166		—
Total commercial real estate	11,471		3,049		37,181		51,701		5,145,702		5,197,403		18,793
Automobile	56,272		10,427		5,963		72,662		8,617,240		8,689,902		5,703
Home equity
Secured by first-lien	15,036		8,085		33,014		56,135		5,072,669		5,128,804		4,471
Secured by junior-lien	22,473		12,297		33,406		68,176		3,293,935		3,362,111		7,688
Total home equity	37,509		20,382		66,420		124,311		8,366,604		8,490,915		12,159
Residential mortgage
Residential mortgage	102,702		42,009		139,379		284,090		5,544,607		5,828,697		88,052		(5)
Purchased credit-impaired	—		—		—		—		1,912		1,912		—
Total residential mortgage	102,702		42,009		139,379		284,090		5,546,519		5,830,609		88,052
Other consumer
Other consumer	5,491		1,086		837		7,414		406,286		413,700		837
Purchased credit-impaired	—		—		—		—		51		51		—
Total other consumer	5,491		1,086		837		7,414		406,337		413,751		837
Total loans and leases	$	234,853	$	81,470	$	282,040	$	598,363	$	47,057,363	$	47,655,726	$	130,481


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


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


(3)	Amounts represent accruing purchased impaired loans related to acquisitions. Under the applicable accounting guidance (ASC 310-30), the loans were recorded at fair value upon acquisition and remain in accruing status.


(4)	Includes $50,643 thousand guaranteed by the U.S. government.


(5)	Includes $55,012 thousand guaranteed by the U.S. government.

Allowance for Credit Losses

Huntington maintains two reserves, both of which reflect Management’s judgment regarding the appropriate level necessary to absorb credit losses inherent in our loan and lease portfolio: the ALLL and the AULC. Combined, these reserves comprise the total ACL. The determination of the ACL requires significant estimates, including the timing and amounts of expected future cash flows on impaired loans and leases, consideration of current economic conditions, and historical loss experience pertaining to pools of homogeneous loans and leases, all of which may be susceptible to change.

The appropriateness of the ACL is based on Management’s current judgments about the credit quality of the loan portfolio. These judgments consider on-going evaluations of the loan and lease portfolio, including such factors as the differing economic risks associated with each loan category, the financial condition of specific borrowers, the level of delinquent loans, the value of any collateral and, where applicable, the existence of any guarantees or other documented support. Further, Management evaluates the impact of changes in interest rates and overall economic conditions on the ability of borrowers to meet their financial obligations when quantifying our exposure to credit losses and assessing the appropriateness of our ACL at each reporting date. In addition to general economic conditions and the other factors described above, additional factors also considered include: the impact of increasing or decreasing residential real estate values; the diversification of CRE loans; the development of new or expanded Commercial business segments such as healthcare, ABL, and energy, and the overall condition of the manufacturing industry. Management’s determinations regarding the appropriateness of the ACL are reviewed and approved by the Company’s board of directors.

The ALLL consists of two components: (1) the transaction reserve, which includes a loan level allocation, specific reserves related to loans considered to be impaired, and loans involved in troubled debt restructurings, and (2) the general reserve. The transaction reserve component includes both (1) an estimate of loss based on pools of commercial and consumer loans and leases with similar characteristics and (2) an estimate of loss based on an impairment review of each impaired C&I and CRE loan greater than $1.0 million. For the C&I and CRE portfolios, the estimate of loss based on pools of loans and leases with similar characteristics is made by applying a PD factor and a LGD factor to each individual loan based on a regularly updated loan grade, using a standardized loan grading system. The PD factor and an LGD factor are determined for each loan grade using statistical models based on historical performance data. The PD factor considers on-going reviews of the financial performance of the specific borrower, including cash flow, debt-service coverage ratio, earnings power, debt level, and equity position, in conjunction with an assessment of the borrower’s industry and future prospects. The LGD factor considers analysis of the type of collateral and the relative LTV ratio. These reserve factors are developed and updated periodically based on credit migration models that track historical movements of loans between loan ratings over time and a combination of long-term average loss experience of our own portfolio and external industry data.

In the case of other homogeneous portfolios, such as automobile loans, home equity loans, and residential mortgage loans, the determination of the transaction reserve also incorporates PD and LGD factors. The estimate of loss is based on pools of loans and leases with similar characteristics. The PD factor considers current credit scores unless the account is delinquent, in which case a higher PD factor is used. The credit score provides a basis for understanding the borrower’s past and current payment performance, and this information is used to estimate expected losses over the emergence period. The performance of first-lien loans ahead of our junior-lien loans is available to use as part of our updated score process. The LGD factor considers analysis of the type of collateral and the relative LTV ratio. Credit scores, models, analyses, and other factors used to determine both the PD and LGD factors are updated frequently to capture the recent behavioral characteristics of the subject portfolios, as well as any changes in loss mitigation or credit origination strategies, and adjustments to the reserve factors are made as required. Models utilized in the ALLL estimation process are subject to the Company’s model validation policies.

The general reserve consists of our risk-profile reserve components, which includes items unique to our structure, policies, processes, and portfolio composition, as well as qualitative measurements and assessments of the loan portfolios including, but not limited to, management quality, concentrations, portfolio composition, industry comparisons, and internal review functions.

The estimate for the AULC is determined using the same procedures and methodologies as used for the ALLL. The loss factors used in the AULC are the same as the loss factors used in the ALLL while also considering a historical utilization of unused commitments. The AULC is reflected in accrued expenses and other liabilities in the Unaudited Condensed Consolidated Balance Sheet.

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

During the 2015 first quarter, we reviewed our existing commercial and consumer credit models and enhanced certain processes and methods of ACL estimation. During this review, we analyzed the loss emergence periods used for consumer receivables collectively evaluated for impairment and, as a result, extended our loss emergence periods for products within these portfolios. As part of these enhancements to our credit reserve process, we evaluated the methods used to separately estimate economic risks inherent in our portfolios and decided to no longer utilize these separate estimation techniques. Economic risks are incorporated in our loss estimates elsewhere in our reserve calculation. The enhancements made to our credit reserve processes during the quarter allow for increased segmentation and analysis of the estimated incurred losses within our loan portfolios. The net ACL impact of these enhancements was immaterial.

During the 2015 third quarter, we reviewed our existing commercial and consumer credit models and completed a periodic reassessment of certain ACL assumptions. Specifically, we updated our analysis of the loss emergence periods used for commercial receivables collectively evaluated for impairment. Based on our observed portfolio experience, we extended our loss emergence periods for the C&I portfolio and CRE portfolios. We also updated loss factors in our consumer home equity and residential mortgage portfolios based on more recently observed portfolio experience. The net ACL impact of these enhancements was immaterial.

The following table presents ALLL and AULC activity by portfolio segment for the three-month and nine-month periods ended September 30, 2015 and 2014:



(dollar amounts in thousands)	Commercial and Industrial			Commercial Real Estate			Automobile			Home Equity			Residential Mortgage			Other Consumer			Total
Three-month period ended September 30, 2015:
ALLL balance, beginning of period	$	285,041		$	92,060		$	39,102		$	111,178		$	51,679		$	20,482		$	599,542
Loan charge-offs	(26,016		)	(3,976		)	(9,084		)	(10,164		)	(3,192		)	(8,443		)	(60,875		)
Recoveries of loans previously charged-off	16,158			17,797			4,176			4,295			1,182			1,104			44,712
Provision (reduction in allowance) for loan and lease losses	9,146			4,086			9,755			(13,406		)	(6,875		)	10,918			13,624
Write-downs of loans sold or transferred to loans held for sale	—			—			—			(5,065		)	—			—			(5,065		)
ALLL balance, end of period	$	284,329		$	109,967		$	43,949		$	86,838		$	42,794		$	24,061		$	591,938
AULC balance, beginning of period	$	41,849		$	5,778		$	—		$	2,522		$	17		$	5,205		$	55,371
Provision (reduction in allowance) for unfunded loan commitments and letters of credit	6,794			1,965			—			(619		)	—			712			8,852
AULC balance, end of period	$	48,643		$	7,743		$	—		$	1,903		$	17		$	5,917		$	64,223
ACL balance, end of period	$	332,972		$	117,710		$	43,949		$	88,741		$	42,811		$	29,978		$	656,161
Nine-month period ended September 30, 2015:
ALLL balance, beginning of period	$	286,995		$	102,839		$	33,466		$	96,413		$	47,211		$	38,272		$	605,196
Loan charge-offs	(62,841		)	(14,277		)	(24,878		)	(27,379		)	(11,665		)	(21,880		)	(162,920		)
Recoveries of loans previously charged-off	37,169			26,585			12,280			12,235			4,697			3,984			96,950
Provision (reduction in allowance) for loan and lease losses	23,006			(5,180		)	25,373			10,634			2,551			3,685			60,069
Write-downs of loans sold or transferred to loans held for sale	—			—			(2,292		)	(5,065		)	—			—			(7,357		)
ALLL balance, end of period	$	284,329		$	109,967		$	43,949		$	86,838		$	42,794		$	24,061		$	591,938
AULC balance, beginning of period	$	48,988		$	6,041		$	—		$	1,924		$	8		$	3,845		$	60,806
Provision for (reduction in allowance) unfunded loan commitments and letters of credit	(345		)	1,702			—			(21		)	9			2,072			3,417
AULC balance, end of period	$	48,643		$	7,743		$	—		$	1,903		$	17		$	5,917		$	64,223
ACL balance, end of period	$	332,972		$	117,710		$	43,949		$	88,741		$	42,811		$	29,978		$	656,161



(dollar amounts in thousands)	Commercial and Industrial			Commercial Real Estate			Automobile			Home Equity			Residential Mortgage			Other Consumer			Total
Three-month period ended September 30, 2014:
ALLL balance, beginning of period	$	278,512		$	137,346		$	27,158		$	105,943		$	47,191		$	38,951		$	635,101
Loan charge-offs	(20,723		)	(4,664		)	(7,292		)	(9,584		)	(6,477		)	(9,771		)	(58,511		)
Recoveries of loans previously charged-off	8,136			10,671			3,316			3,136			1,049			2,180			28,488
Provision for (reduction in allowance) loan and lease losses	25,476			(27,881		)	7,550			880			10,895			9,038			25,958
Allowance for loans sold or transferred to loans held for sale	—			—			—			—			—			—			—
ALLL balance, end of period	$	291,401		$	115,472		$	30,732		$	100,375		$	52,658		$	40,398		$	631,036
AULC balance, beginning of period	$	44,750		$	7,530		$	—		$	1,977		$	8		$	2,662		$	56,927
Provision for (reduction in allowance) unfunded loan commitments and letters of credit	(1,545		)	(552		)	—			(18		)	2			635			(1,478		)
AULC balance, end of period	$	43,205		$	6,978		$	—		$	1,959		$	10		$	3,297		$	55,449
ACL balance, end of period	$	334,606		$	122,450		$	30,732		$	102,334		$	52,668		$	43,695		$	686,485
Nine-month period ended September 30, 2014:
ALLL balance, beginning of period	$	265,801		$	162,557		$	31,053		$	111,131		$	39,577		$	37,751		$	647,870
Loan charge-offs	(60,305		)	(17,772		)	(21,969		)	(43,844		)	(21,525		)	(24,934		)	(190,349		)
Recoveries of loans previously charged-off	28,515			26,957			10,425			13,218			4,832			4,750			88,697
Provision for (reduction in allowance) loan and lease losses	57,390			(56,270		)	11,223			19,870			29,774			23,958			85,945
Allowance for loans sold or transferred to loans held for sale	—			—			—			—			—			(1,127		)	(1,127		)
ALLL balance, end of period	$	291,401		$	115,472		$	30,732		$	100,375		$	52,658		$	40,398		$	631,036
AULC balance, beginning of period	$	49,596		$	9,891		$	—		$	1,763		$	9		$	1,640		$	62,899
Provision for (reduction in allowance) unfunded loan commitments and letters of credit	(6,391		)	(2,913		)	—			196			1			1,657			(7,450		)
AULC balance, end of period	$	43,205		$	6,978		$	—		$	1,959		$	10		$	3,297		$	55,449
ACL balance, end of period	$	334,606		$	122,450		$	30,732		$	102,334		$	52,668		$	43,695		$	686,485

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

C&I and CRE loans are either charged-off or written down to net realizable value at 90-days past due. Automobile loans and other consumer loans are charged-off or written down to net realizable value at 120-days past due. First-lien and junior-lien home equity loans are charged-off to the estimated fair value of the collateral, less anticipated selling costs, at 150-days past due and 120-days past due, respectively. Residential mortgages are charged-off to the estimated fair value of the collateral, less anticipated selling costs, at 150-days past due.

Credit Quality Indicators

To facilitate the monitoring of credit quality for C&I and CRE loans, and for purposes of determining an appropriate ACL level for these loans, Huntington utilizes the following 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 represent a risk given certain specific circumstances. If the potential weaknesses are not monitored or mitigated, the loan may weaken or the collateral may be inadequate to protect Huntington’s position in the future. For these reasons, Huntington considers the loans to be potential problem loans.

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

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

The categories above, which are derived from standard regulatory rating definitions, are assigned upon initial approval of the loan or lease and subsequently updated as appropriate.

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

For all classes within all consumer loan portfolios, each loan is assigned a specific PD factor that is partially based on the borrower’s most recent credit bureau score, which we update quarterly. A credit bureau score is a credit score developed by Fair Isaac Corporation based on data provided by the credit bureaus. The credit bureau score is widely accepted as the standard measure of consumer credit risk used by lenders, regulators, rating agencies, and consumers. The higher the credit bureau score, the higher likelihood of repayment and therefore, an indicator of higher credit quality.

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

The following table presents each loan and lease class by credit quality indicator at September 30, 2015 and December 31, 2014:



	September 30, 2015
	Credit Risk Profile by UCS Classification
(dollar amounts in thousands)	Pass		OLEM		Substandard		Doubtful		Total
Commercial and industrial:
Owner occupied	$	3,763,002	$	96,338	$	213,755	$	3,605	$	4,076,700
Purchased credit-impaired	4,321		641		14,522		—		19,484
Other commercial and industrial	15,031,737		289,321		616,708		5,479		15,943,245
Total commercial and industrial	18,799,060		386,300		844,985		9,084		20,039,429
Commercial real estate:
Retail properties	1,372,078		10,659		39,903		—		1,422,640
Multi family	1,162,776		32,220		22,733		366		1,218,095
Office	861,564		27,713		35,267		1,286		925,830
Industrial and warehouse	527,047		268		8,374		76		535,765
Purchased credit-impaired	8,333		189		15,456		1,797		25,775
Other commercial real estate	1,240,034		7,114		28,460		561		1,276,169
Total commercial real estate	5,171,832		78,163		150,193		4,086		5,404,274



	Credit Risk Profile by FICO Score (1)
	750+		650-749		<650		Other (2)		Total
Automobile	4,465,597		3,388,521		1,053,464		252,659		9,160,241
Home equity:
Secured by first-lien	3,314,317		1,436,522		252,179		153,883		5,156,901
Secured by junior-lien	1,829,202		1,035,173		336,424		103,289		3,304,088
Total home equity	5,143,519		2,471,695		588,603		257,172		8,460,989
Residential mortgage:
Residential mortgage	3,563,718		1,859,268		602,172		44,685		6,069,843
Purchased credit-impaired	422		731		360		—		1,513
Total residential mortgage	3,564,140		1,859,999		602,532		44,685		6,071,356
Other consumer:
Other consumer	216,820		248,734		48,239		5,777		519,570
Purchased credit-impaired	—		50		—		—		50
Total other consumer	$	216,820	$	248,784	$	48,239	$	5,777	$	519,620



	December 31, 2014
	Credit Risk Profile by UCS Classification
(dollar amounts in thousands)	Pass		OLEM		Substandard		Doubtful		Total
Commercial and industrial:
Owner occupied	$	3,959,046	$	117,637	$	175,767	$	2,425	$	4,254,875
Purchased credit-impaired	3,915		741		14,901		3,671		23,228
Other commercial and industrial	13,925,334		386,666		440,036		3,007		14,755,043
Total commercial and industrial	17,888,295		505,044		630,704		9,103		19,033,146
Commercial real estate:
Retail properties	1,279,064		10,204		67,911		567		1,357,746
Multi family	1,044,521		12,608		32,322		965		1,090,416
Office	902,474		33,107		42,578		2,144		980,303
Industrial and warehouse	487,454		7,877		17,781		289		513,401
Purchased credit-impaired	6,914		803		25,460		5,194		38,371
Other commercial real estate	1,166,293		9,635		40,019		1,219		1,217,166
Total commercial real estate	4,886,720		74,234		226,071		10,378		5,197,403



	Credit Risk Profile by FICO Score (1)
	750+		650-749		<650		Other (2)		Total
Automobile	4,165,811		3,249,141		1,028,381		246,569		8,689,902
Home equity:
Secured by first-lien	3,255,088		1,426,191		283,152		164,373		5,128,804
Secured by junior-lien	1,832,663		1,095,332		348,825		85,291		3,362,111
Total home equity	5,087,751		2,521,523		631,977		249,664		8,490,915
Residential mortgage
Residential mortgage	3,285,310		1,785,137		666,562		91,688		5,828,697
Purchased credit-impaired	594		1,135		183		—		1,912
Total residential mortgage	3,285,904		1,786,272		666,745		91,688		5,830,609
Other consumer
Other consumer	195,128		187,781		30,582		209		413,700
Purchased credit-impaired	—		51		—		—		51
Total other consumer	$	195,128	$	187,832	$	30,582	$	209	$	413,751


(1)	Reflects currently updated customer credit scores.


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

Impaired Loans

For all classes within the C&I and CRE portfolios, all loans with an outstanding balance of $1.0 million or greater are considered for individual evaluation on a quarterly basis for impairment. Generally, consumer loans within any class are not individually evaluated on a regular basis for impairment. All TDRs, regardless of the outstanding balance amount, are also considered to be impaired. Loans acquired with evidence of deterioration of credit quality since origination for which it is probable at acquisition that all contractually required payments will not be collected are also considered to be impaired.

Once a loan has been identified for an assessment of impairment, the loan is considered impaired when, based on current information and events, it is probable that all amounts due according to the contractual terms of the loan agreement will not be collected. This determination requires significant judgment and use of estimates, and the eventual outcome may differ significantly from those estimates.

When a loan in any class has been determined to be impaired, the amount of the impairment is measured using the present value of expected future cash flows discounted at the loan’s effective interest rate or, as a practical expedient, the observable market price of the loan, or the fair value of the collateral, less anticipated selling costs, if the loan is collateral dependent. When the present value of expected future cash flows is used, the effective interest rate is the original contractual interest rate of the loan adjusted for any premium, discount, fees, or costs. A specific reserve is established as a component of the ALLL when a commercial loan has been determined to be impaired. Subsequent to the initial measurement of impairment, if there is a significant change to the impaired loan’s expected future cash flows, or if actual cash flows are significantly different from the cash flows previously estimated, Huntington recalculates the impairment and appropriately adjusts the specific reserve. Similarly, if Huntington measures impairment based on the observable market price of an impaired loan or the fair value of the collateral of an impaired collateral dependent loan, Huntington will adjust the specific reserve. The consumer portfolios are assessed on a pooled basis using a discounted cash flow basis.

When a loan within any class is impaired, the accrual of interest income is discontinued unless the receipt of principal and interest is no longer in doubt. Interest income on TDRs is accrued when all principal and interest is expected to be collected under the post-modification terms. Cash receipts received on nonaccruing impaired loans within any class are generally applied entirely against principal until the loan has been collected in full, after which time any additional cash receipts are recognized as interest income. Cash receipts received on accruing impaired loans within any class are applied in the same manner as accruing loans that are not considered impaired.

The following tables present the balance of the ALLL attributable to loans by portfolio segment individually and collectively evaluated for impairment and the related loan and lease balance at September 30, 2015 and December 31, 2014:



(dollar amounts in thousands)	Commercial and Industrial		Commercial Real Estate		Automobile		Home Equity		Residential Mortgage		Other Consumer		Total
ALLL at September 30, 2015:
Portion of ALLL balance:
Attributable to purchased credit-impaired loans	$	547	$	42	$	—	$	—	$	70	$	—	$	659
Attributable to loans individually evaluated for impairment	12,824		10,458		1,446		21,346		10,186		142		56,402
Attributable to loans collectively evaluated for impairment	270,958		99,467		42,503		65,492		32,538		23,919		534,877
Total ALLL balance	$	284,329	$	109,967	$	43,949	$	86,838	$	42,794	$	24,061	$	591,938
Loan and Lease Ending Balances at September 30, 2015:
Portion of loan and lease ending balance:
Attributable to purchased credit-impaired loans	$	19,484	$	25,775	$	—	$	—	$	1,513	$	50	$	46,822
Individually evaluated for impairment	454,648		134,397		29,938		240,886		383,718		4,720		1,248,307
Collectively evaluated for impairment	19,565,297		5,244,102		9,130,303		8,220,103		5,686,125		514,850		48,360,780
Total loans and leases evaluated for impairment	$	20,039,429	$	5,404,274	$	9,160,241	$	8,460,989	$	6,071,356	$	519,620	$	49,655,909



(dollar amounts in thousands)	Commercial and Industrial		Commercial Real Estate		Automobile		Home Equity		Residential Mortgage		Other Consumer		Total
ALLL at December 31, 2014
Portion of ALLL balance:
Attributable to purchased credit-impaired loans	$	3,846	$	—	$	—	$	—	$	8	$	245	$	4,099
Attributable to loans individually evaluated for impairment	11,049		18,887		1,531		26,027		16,535		214		74,243
Attributable to loans collectively evaluated for impairment	272,100		83,952		31,935		70,386		30,668		37,813		526,854
Total ALLL balance:	$	286,995	$	102,839	$	33,466	$	96,413	$	47,211	$	38,272	$	605,196
Loan and Lease Ending Balances at December 31, 2014
Portion of loan and lease ending balances:
Attributable to purchased credit-impaired loans	$	23,228	$	38,371	$	—	$	—	$	1,912	$	51	$	63,562
Individually evaluated for impairment	216,993		217,262		30,612		310,446		369,577		4,088		1,148,978
Collectively evaluated for impairment	18,792,925		4,941,770		8,659,290		8,180,469		5,459,120		409,612		46,443,186
Total loans and leases evaluated for impairment	$	19,033,146	$	5,197,403	$	8,689,902	$	8,490,915	$	5,830,609	$	413,751	$	47,655,726

The following tables present by class the ending, unpaid principal balance, and the related ALLL, along with the average balance and interest income recognized only for loans and leases individually evaluated for impairment and purchased credit-impaired loans: (1), (2)



	September 30, 2015						Three Months Ended September 30, 2015				Nine Months Ended September 30, 2015
(dollar amounts in thousands)	Ending Balance		Unpaid Principal Balance (5)		Related Allowance		Average Balance		Interest Income Recognized		Average Balance		Interest Income Recognized
With no related allowance recorded:
Commercial and industrial:
Owner occupied	$	45,595	$	55,449	$	—	$	42,137	$	149	$	25,142	$	296
Purchased credit-impaired	—		—		—		—		—		—		—
Other commercial and industrial	101,805		132,213		—		90,885		561		68,114		1,398
Total commercial and industrial	147,400		187,662		$	—	133,022		710		93,256		1,694
Commercial real estate:
Retail properties	42,412		64,421		—		45,483		526		51,315		1,485
Multi family	—		—		—		—		—		—		—
Office	9,112		12,993		—		8,815		34		7,336		151
Industrial and warehouse	2,018		2,039		—		673		10		400		17
Purchased credit-impaired	—		—		—		—		—		—		—
Other commercial real estate	2,250		2,282		—		1,956		20		2,716		81
Total commercial real estate	55,792		81,735		—		56,927		590		61,767		1,734
Other consumer
Other consumer	—		—		—		—		—		—		—
Purchased credit-impaired	50		107		—		50		3		51		11
Total other consumer	$	50	$	107	$	—	$	50	$	3	$	51	$	11

With an allowance recorded:
Commercial and industrial: (3)
Owner occupied	$	57,048	$	67,187	$	3,544	$	53,136	$	524	$	54,622	$	1,458
Purchased credit-impaired	19,484		28,812		547		19,803		1,216		21,053		4,176
Other commercial and industrial	250,200		264,320		9,280		225,478		1,680		185,312		4,054
Total commercial and industrial	326,732		360,319		13,371		298,417		3,420		260,987		9,688
Commercial real estate: (4)
Retail properties	20,938		25,945		3,175		32,387		332		39,074		1,112
Multi family	14,388		19,067		1,506		15,320		161		15,582		515
Office	12,508		16,324		1,122		20,639		201		37,272		1,214
Industrial and warehouse	6,266		6,751		1,014		6,296		84		6,949		246
Purchased credit-impaired	25,775		68,912		42		26,684		1,611		31,770		5,531
Other commercial real estate	24,505		30,567		3,641		25,368		306		27,974		994
Total commercial real estate	104,380		167,566		10,500		126,694		2,695		158,621		9,612
Automobile	29,938		30,470		1,446		29,371		554		29,878		1,659
Home equity:
Secured by first-lien	48,690		53,885		3,984		99,474		417		123,010		3,716
Secured by junior-lien	192,196		225,689		17,362		189,211		2,308		179,798		6,525
Total home equity	240,886		279,574		21,346		288,685		2,725		302,808		10,241
Residential mortgage (6):
Residential mortgage	383,718		426,569		10,186		374,250		3,209		372,946		9,309



Purchased credit-impaired	1,513		2,292		70		1,776		94		1,908		321
Total residential mortgage	385,231		428,861		10,256		376,026		3,303		374,854		9,630
Other consumer:
Other consumer	4,720		4,753		142		4,801		64		4,683		191
Purchased credit-impaired	—		—		—		—		—		—		—
Total other consumer	$	4,720	$	4,753	$	142	$	4,801	$	64	$	4,683	$	191



	December 31, 2014						Three Months Ended September 30, 2014				Nine Months Ended September 30, 2014
(dollar amounts in thousands)	Ending Balance		Unpaid Principal Balance (5)		Related Allowance		Average Balance		Interest Income Recognized		Average Balance		Interest Income Recognized
With no related allowance recorded:
Commercial and industrial:
Owner occupied	$	13,536	$	13,536	$	—	$	5,365	$	50	$	4,650	$	134
Purchased credit-impaired	—		—		—		—		—		—		—
Other commercial and industrial	24,309		26,858		—		5,137		70		6,768		256
Total commercial and industrial	37,845		40,394		$	—	10,502		120		11,418		390
Commercial real estate:
Retail properties	61,915		91,627		—		50,023		617		53,117		1,854
Multi family	—		—		—		—		—		—		—
Office	1,130		3,574		—		4,040		49		4,280		279
Industrial and warehouse	3,447		3,506		—		3,619		45		5,940		221
Purchased credit-impaired	38,371		91,075		—		—		—		—		—
Other commercial real estate	6,608		6,815		—		7,962		85		6,879		221
Total commercial real estate	111,471		196,597		—		65,644		796		70,216		2,575
Other consumer	—		—		—		—		—		—		—
Purchased credit-impaired	—		—		—		53		2		91		11
Total other consumer	$	—	$	—	$	—	$	53	$	2	$	91	$	11

With an allowance recorded:
Commercial and industrial: (3)
Owner occupied	$	44,869	$	53,639	$	4,220	$	39,001	$	383	$	39,653	$	1,172
Purchased credit-impaired	23,228		35,307		3,846		33,056		1,306		34,509		6,508
Other commercial and industrial	134,279		162,908		6,829		108,856		658		79,925		1,937
Total commercial and industrial	202,376		251,854		14,895		180,913		2,347		154,087		9,617
Commercial real estate: (4)
Retail properties	37,081		38,397		3,536		67,589		505		66,780		1,569
Multi family	17,277		23,725		2,339		17,551		172		16,472		488
Office	52,953		56,268		8,399		53,262		624		52,981		1,771
Industrial and warehouse	8,888		10,396		720		9,279		90		9,198		199
Purchased credit-impaired	—		—		—		49,979		1,813		64,688		9,034
Other commercial real estate	27,963		33,472		3,893		41,661		469		45,316		1,483
Total commercial real estate	144,162		162,258		18,887		239,321		3,673		255,435		14,544
Automobile	30,612		32,483		1,531		36,209		632		35,643		2,034
Home equity:
Secured by first-lien	145,566		157,978		8,296		131,301		1,391		121,861		4,001
Secured by junior-lien	164,880		208,118		17,731		144,919		1,678		124,254		4,539



Total home equity	310,446		366,096		26,027		276,220		3,069		246,115		8,540
Residential mortgage (6):
Residential mortgage	369,577		415,280		16,535		391,288		2,813		384,787		8,661
Purchased credit-impaired	1,912		3,096		8		2,369		101		2,373		504
Total residential mortgage	371,489		418,376		16,543		393,657		2,914		387,160		9,165
Other consumer:
Other consumer	4,088		4,209		214		3,502		53		2,473		146
Purchased credit-impaired	51		123		245		—		—		—		—
Total other consumer	$	4,139	$	4,332	$	459	$	3,502	$	53	$	2,473	$	146


(1)	These tables do not include loans fully charged-off or transferred to loans held for sale.


(2)	All automobile, home equity, residential mortgage, and other consumer impaired loans included in these tables are considered impaired due to their status as a TDR.


(3)	At September 30, 2015, $95,616 thousand of the $326,732 thousand commercial and industrial loans with an allowance recorded were considered impaired due to their status as a TDR. At December 31, 2014, $62,737 thousand of the $202,376 thousand commercial and industrial loans with an allowance recorded were considered impaired due to their status as a TDR.


(4)	At September 30, 2015, $45,578 thousand of the $104,380 thousand commercial real estate loans with an allowance recorded were considered impaired due to their status as a TDR. At December 31, 2014, $27,423 thousand of the $144,162 thousand commercial real estate loans with an allowance recorded were considered impaired due to their status as a TDR.


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


(6)	At September 30, 2015, $31,767 thousand of the $385,231 thousand residential mortgages loans with an allowance recorded were guaranteed by the U.S. government. At December 31, 2014, $24,470 thousand of the $371,489 thousand residential mortgage loans with an allowance recorded were guaranteed by the U.S. government.

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 are not available to the borrower through either normal channels or other sources. However, not all loan modifications are TDRs.

TDR Concession Types

The Company’s standards relating to loan modifications consider, among other factors, minimum verified income requirements, cash flow analyses, and collateral valuations. Each potential loan modification is reviewed individually and the terms of the loan are modified to meet a borrower’s specific circumstances at a point in time. All commercial TDRs are reviewed and approved by our SAD. The types of concessions provided to borrowers include:


•	Interest rate reduction: A reduction of the stated interest rate to a nonmarket rate for the remaining original life of the debt.


•	Amortization or maturity date change beyond what the collateral supports, including any of the following:


(1)	Lengthens the amortization period of the amortized principal beyond market terms. This concession reduces the minimum monthly payment and could increase the amount of the balloon payment at the end of the term of the loan. Principal is generally not forgiven.


(2)	Reduces the amount of loan principal to be amortized and increases the amount of the balloon payment at the end of the term of the loan. This concession also reduces the minimum monthly payment. Principal is generally not forgiven.


(3)	Extends the maturity date or dates of the debt beyond what the collateral supports. This concession generally applies to loans without a balloon payment at the end of the term of the loan.


•	Chapter 7 bankruptcy: A bankruptcy court’s discharge of a borrower’s debt is considered a concession when the borrower does not reaffirm the discharged debt.


•	Other: A concession that is not categorized as one of the concessions described above. These concessions include, but are not limited to: principal forgiveness, collateral concessions, covenant concessions, and reduction of accrued interest.

Principal forgiveness may result from any TDR modification of any concession type. However, the aggregate amount of principal forgiven as a result of loans modified as TDRs during the three-month and nine-month periods ended September 30, 2015 and 2014, was not significant.

Following is a description of TDRs by the different loan types:

Commercial loan TDRs – Commercial accruing TDRs often result from loans receiving a concession with terms that are not considered a market transaction to Huntington. The TDR remains in accruing status as long as the customer is less than 90-days past due on payments per the restructured loan terms and no loss is expected.

Commercial nonaccrual TDRs result from either: (1) an accruing commercial TDR being placed on nonaccrual status, or (2) a workout where an existing commercial NAL is restructured and a concession is given. At times, these workouts restructure the NAL so that two or more new notes are created. The primary note is underwritten based upon our normal underwriting standards and is sized so projected cash flows are sufficient to repay contractual principal and interest. The terms on the secondary note(s) vary by situation, and may include notes that defer principal and interest payments until after the primary note is repaid. Creating two or more notes often allows the borrower to continue a project and allows Huntington to right-size a loan based upon the current expectations for a borrower’s or project’s performance.

Our strategy involving TDR borrowers includes working with these borrowers to allow them to refinance elsewhere, as well as allow them time to improve their financial position and remain our customer through refinancing their notes according to market terms and conditions in the future. A subsequent refinancing or modification of a loan may occur when either the loan matures according to the terms of the TDR-modified agreement or the borrower requests a change to the loan agreements. At that time, the loan is evaluated to determine if it is creditworthy. It is subjected to the normal underwriting standards and processes for other similar credit extensions, both new and existing. The refinanced note is evaluated to determine if it is considered a new loan or a continuation of the prior loan. A new loan is considered for removal of the TDR designation, whereas a continuation of the prior note requires a continuation of the TDR designation. In order for a TDR designation to be removed, the borrower must no longer be experiencing financial difficulties and the terms of the refinanced loan must not represent a concession.

Residential Mortgage loan TDRs – Residential mortgage TDRs represent loan modifications associated with traditional first-lien mortgage loans in which a concession has been provided to the borrower. The primary concessions given to residential mortgage borrowers are amortization or maturity date changes and interest rate reductions. Residential mortgages identified as TDRs involve borrowers unable to refinance their mortgages through the Company’s normal mortgage origination channels or through other independent sources. Some, but not all, of the loans may be delinquent.

Automobile, Home Equity, and Other Consumer loan TDRs – The Company may make similar interest rate, term, and principal concessions as with residential mortgage loan TDRs.

TDR Impact on Credit Quality

Huntington’s ALLL is largely determined by updated risk ratings assigned to commercial loans, updated borrower credit scores on consumer loans, and borrower delinquency history in both the commercial and consumer portfolios. These updated risk ratings and credit scores consider the default history of the borrower, including payment redefaults. As such, the provision for credit losses is impacted primarily by changes in borrower payment performance rather than the TDR classification. TDRs can be classified as either accrual or nonaccrual loans. Nonaccrual TDRs are included in NALs whereas accruing TDRs are excluded from NALs as it is probable that all contractual principal and interest due under the restructured terms will be collected.

Our TDRs may include multiple concessions and the disclosure classifications are presented based on the primary concession provided to the borrower. The majority of our concessions for the C&I and CRE portfolios are the extension of the maturity date, but could also include an increase in the interest rate. In these instances, the primary concession is the maturity date extension.

TDR concessions may also result in the reduction of the ALLL within the C&I and CRE portfolios. This reduction is derived from payments and the resulting application of the reserve calculation within the ALLL. The transaction reserve for non-TDR C&I and CRE loans is calculated based upon several estimated probability factors, such as PD and LGD, both of which were previously discussed. Upon the occurrence of a TDR in our C&I and CRE portfolios, the reserve is measured based on discounted expected cash flows or collateral value, less anticipated selling costs, of the modified loan in accordance with ASC 310-10. The resulting TDR ALLL calculation often results in a lower ALLL amount because (1) the discounted expected cash flows or collateral value, less anticipated selling costs, indicate a lower estimated loss, (2) if the modification includes a rate increase, the discounting of the cash flows on the modified loan, using the pre-modification interest rate, exceeds the carrying value of the loan, or (3) payments may occur as part of the modification. The ALLL for C&I and CRE loans may increase as a result of the modification, as the discounted cash flow analysis may indicate additional reserves are required.

TDR concessions on consumer loans may increase the ALLL. The concessions made to these borrowers often include interest rate reductions, and therefore, the TDR ALLL calculation results in a greater ALLL compared with the non-TDR calculation as the reserve is measured based on the estimation of the discounted expected cash flows or collateral value, less anticipated selling costs, on the modified loan in accordance with ASC 310-10. The resulting TDR ALLL calculation often results in a higher ALLL amount because (1) the discounted expected cash flows or collateral value, less anticipated selling costs, indicate a higher estimated loss or, (2) due to the rate decrease, the discounting of the cash flows on the modified loan, using the pre-modification interest rate, indicates a reduction in the expected cash flows or collateral value, less anticipated selling costs. In certain instances, the ALLL may decrease as a result of payments made in connection with the modification.

Commercial loan TDRs – In instances where the bank substantiates that it will collect its outstanding balance in full, the note is considered for return to accrual status upon the borrower sustaining sufficient cash flows for a six-month period of time. This six-month period could extend before or after the restructure date. If a charge-off was taken as part of the restructuring, any interest or principal payments received on that note are applied to first reduce the bank’s outstanding book balance and then to recoveries of charged-off principal, unpaid interest, and/or fee expenses while the TDR is in nonaccrual status.

Residential Mortgage, Automobile, Home Equity, and Other Consumer loan TDRs – Modified loans identified as TDRs are aggregated into pools for analysis. Cash flows and weighted average interest rates are used to calculate impairment at the pooled-loan level. Once the loans are aggregated into the pool, they continue to be classified as TDRs until contractually repaid or charged-off.

Residential mortgage loans not guaranteed by a U.S. government agency such as the FHA, VA, and the USDA, including TDR loans, are reported as accrual or nonaccrual based upon delinquency status. Nonaccrual TDRs are those that are greater than 150-days contractually past due. Loans guaranteed by U.S. government organizations continue to accrue interest upon delinquency.

The following tables present by class and by the reason for the modification, the number of contracts, post-modification outstanding balance, and the financial effects of the modification for the three-month and nine-month periods ended September 30, 2015 and 2014:



	New Troubled Debt Restructurings During The Three-Month Period Ended (1)
	September 30, 2015						September 30, 2014
(dollar amounts in thousands)	Number of Contracts	Post-modification Outstanding Ending Balance		Financial effects of modification (2)			Number of Contracts	Post-modification Outstanding Ending Balance		Financial effects of modification (2)
C&I—Owner occupied:
Interest rate reduction	—	$	—	$	—		2	$	360	$	—
Amortization or maturity date change	60	29,433		303			27	11,562		132
Other	—	—		—			1	91		—
Total C&I—Owner occupied	60	29,433		303			30	12,013		132
C&I—Other commercial and industrial:
Interest rate reduction	2	89		(7		)	2	4,076		(14		)
Amortization or maturity date change	157	104,923		4,523			78	35,952		(202		)
Other	2	338		4			6	683		(6		)
Total C&I—Other commercial and industrial	161	105,350		4,520			86	40,711		(222		)
CRE—Retail properties:
Interest rate reduction	—	—		—			1	124		(1		)
Amortization or maturity date change	8	4,360		(125		)	7	1,997		(4		)
Other	—	—		—			—	—		—
Total CRE—Retail properties	8	4,360		(125		)	8	2,121		(5		)



CRE—Multi family:
Interest rate reduction	—	—	—		9	2,744	(75	)
Amortization or maturity date change	6	1,296	320		9	5,724	(3	)
Other	—	—	—		3	470	(4	)
Total CRE—Multi family	6	1,296	320		21	8,938	(82	)
CRE—Office:
Interest rate reduction	1	356	6		—	—	—
Amortization or maturity date change	7	26,259	178		6	2,575	(7	)
Other	—	—	—		1	10,564	328
Total CRE—Office	8	26,615	184		7	13,139	321
CRE—Industrial and warehouse:
Interest rate reduction	—	—	—		—	—	—
Amortization or maturity date change	4	2,692	(30	)	9	3,610	(45	)
Other	—	—	—		—	—	—
Total CRE—Industrial and Warehouse	4	2,692	(30	)	9	3,610	(45	)
CRE—Other commercial real estate:
Interest rate reduction	—	—	—		3	205	95
Amortization or maturity date change	5	934	40		3	1,762	(6	)
Other	—	—	—		—	—	—
Total CRE—Other commercial real estate	5	934	40		6	1,967	89
Automobile:
Interest rate reduction	5	6	—		7	199	2
Amortization or maturity date change	401	3,445	157		381	2,531	34
Chapter 7 bankruptcy	331	2,585	84		165	1,420	34
Other	—	—	—		—	—	—
Total Automobile	737	6,036	241		553	4,150	70
Residential mortgage:
Interest rate reduction	3	686	(4	)	7	633	10
Amortization or maturity date change	261	27,553	(147	)	64	7,723	(37	)
Chapter 7 bankruptcy	37	3,888	5		33	3,082	128
Other	3	254	—		1	106	—
Total Residential mortgage	304	32,381	(146	)	105	11,544	101
First-lien home equity:
Interest rate reduction	11	800	36		29	2,730	42
Amortization or maturity date change	57	4,863	(147	)	69	5,518	(316	)
Chapter 7 bankruptcy	40	2,288	99		24	1,988	104
Other	—	—	—		—	—	—
Total First-lien home equity	108	7,951	(12	)	122	10,236	(170	)
Junior-lien home equity:
Interest rate reduction	7	301	24		3	320	15



Amortization or maturity date change	364	13,979		(2,029		)	412	16,092		(2,140		)
Chapter 7 bankruptcy	61	552		1,035			49	750		710
Other	—	—		—			—	—		—
Total Junior-lien home equity	432	14,832		(970		)	464	17,162		(1,415		)
Other consumer:
Interest rate reduction	1	96		3			1	—		—
Amortization or maturity date change	1	2		—			14	642		33
Chapter 7 bankruptcy	2	13		—			2	5		—
Other	—	—		—			—	—		—
Total Other consumer	4	111		3			17	647		33
Total new troubled debt restructurings	1,837	$	231,991	$	4,328		1,428	$	126,238	$	(1,193	)


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


(2)	Amounts represent the financial impact via provision for loan and lease losses as a result of the modification.



	New Troubled Debt Restructurings During The Nine-Month Period Ended (1)
	September 30, 2015						September 30, 2014
(dollar amounts in thousands)	Number of Contracts	Post-modification Outstanding Ending Balance		Financial effects of modification (2)			Number of Contracts	Post-modification Outstanding Ending Balance		Financial effects of modification (2)
C&I—Owner occupied:
Interest rate reduction	3	$	235	$	(2	)	17	$	2,141	$	21
Amortization or maturity date change	161	76,400		(1,799		)	64	19,899		70
Other	3	613		(29		)	5	1,906		(35		)
Total C&I—Owner occupied	167	77,248		(1,830		)	86	23,946		56
C&I—Other commercial and industrial:
Interest rate reduction	7	524		3			21	49,557		(1,936		)
Amortization or maturity date change	427	341,148		(76,078		)	187	89,331		156
Other	8	28,850		(430		)	16	7,354		(75		)
Total C&I—Other commercial and industrial	442	370,522		(76,505		)	224	146,242		(1,855		)
CRE—Retail properties:
Interest rate reduction	1	1,657		(11		)	4	11,229		420
Amortization or maturity date change	20	15,333		(1,658		)	17	24,147		(185		)
Other	—	—		—			9	13,765		(35		)
Total CRE—Retail properties	21	16,990		(1,669		)	30	49,141		200
CRE—Multi family:
Interest rate reduction	1	90		—			20	3,484		(75		)
Amortization or maturity date change	36	11,532		291			20	6,104		(5		)
Other	8	216		(6		)	7	4,770		57
Total CRE—Multi family	45	11,838		285			47	14,358		(23		)
CRE—Office:
Interest rate reduction	1	356		7			2	120		(1		)



Amortization or maturity date change	19	57,332	250		16	11,791	(367	)
Other	1	30	(2	)	5	35,476	(3,153	)
Total CRE—Office	21	57,718	255		23	47,387	(3,521	)
CRE—Industrial and warehouse:
Interest rate reduction	—	—	—		2	4,046	—
Amortization or maturity date change	9	5,078	61		14	7,166	167
Other	—	—	—		1	977	—
Total CRE—Industrial and Warehouse	9	5,078	61		17	12,189	167
CRE—Other commercial real estate:
Interest rate reduction	—	—	—		8	5,224	146
Amortization or maturity date change	22	8,665	66		47	74,767	(2,781	)
Other	2	234	(22	)	2	926	(1	)
Total CRE—Other commercial real estate	24	8,899	44		57	80,917	(2,636	)
Automobile:
Interest rate reduction	30	48	2		55	627	10
Amortization or maturity date change	1,213	8,929	411		1,550	9,758	61
Chapter 7 bankruptcy	621	4,946	245		483	3,791	(7	)
Other	—	—	—		—	—	—
Total Automobile	1,864	13,923	658		2,088	14,176	64
Residential mortgage:
Interest rate reduction	12	1,423	(60	)	22	2,866	(14	)
Amortization or maturity date change	454	50,827	(342	)	281	39,025	518
Chapter 7 bankruptcy	106	10,948	(126	)	150	15,573	503
Other	9	962	—		4	405	5
Total Residential mortgage	581	64,160	(528	)	457	57,869	1,012
First-lien home equity:
Interest rate reduction	32	3,379	104		124	10,696	646
Amortization or maturity date change	171	14,906	(775	)	204	16,682	(647	)
Chapter 7 bankruptcy	88	5,143	233		67	4,410	204
Other	—	—	—		—	—	—
Total First-lien home equity	291	23,428	(438	)	395	31,788	203
Junior-lien home equity:
Interest rate reduction	15	650	45		171	6,142	185
Amortization or maturity date change	1,130	48,563	(7,580	)	1,045	41,177	(5,732	)
Chapter 7 bankruptcy	169	1,977	3,280		152	2,363	2,148
Other	—	—	—		—	—	—
Total Junior-lien home equity	1,314	51,190	(4,255	)	1,368	49,682	(3,399	)
Other consumer:
Interest rate reduction	1	96	3		1	—	—



Amortization or maturity date change	7	130		6			44	1,777		11
Chapter 7 bankruptcy	7	58		9			21	446		(51		)
Other	—	—		—			—	—		—
Total Other consumer	15	284		18			66	2,223		(40		)
Total new troubled debt restructurings	4,794	$	701,278	$	(83,904	)	4,858	$	529,918	$	(9,772	)


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


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

Any loan within any portfolio or class is considered to be in payment redefault at 90-days past due.

The following tables present TDRs that have defaulted within one year of modification during the three-month and nine-month periods ended September 30, 2015 and 2014:



	Troubled Debt Restructurings That Have Redefaulted (1) Within One Year of Modification During The Three Months Ended
	September 30, 2015			September 30, 2014
(dollar amounts in thousands)	Number of Contracts	Ending Balance		Number of Contracts	Ending Balance
C&I—Owner occupied:
Interest rate reduction	—	$	—	—	$	—
Amortization or maturity date change	2	328		2	388
Other	—	—		—	—
Total C&I—Owner occupied	2	328		2	388
C&I—Other commercial and industrial:
Interest rate reduction	—	—		—	—
Amortization or maturity date change	11	964		3	88
Other	—	—		—	—
Total C&I—Other commercial and industrial	11	964		3	88
CRE—Retail Properties:
Interest rate reduction	—	—		—	—
Amortization or maturity date change	—	—		—	—
Other	—	—		—	—
Total CRE—Retail properties	—	—		—	—
CRE—Multi family:
Interest rate reduction				—	—
Amortization or maturity date change	2	443		1	138
Other	1	140		—	—
Total CRE—Multi family	3	583		1	138
CRE—Office:
Interest rate reduction	—	—		—	—
Amortization or maturity date change	1	1,596		—	—
Other	—	—		—	—
Total CRE—Office	1	1,596		—	—
CRE—Industrial and Warehouse:
Interest rate reduction	—	—		1	1,339
Amortization or maturity date change	—	—		—	—
Other	—	—		—	—
Total CRE—Industrial and Warehouse	—	—		1	1,339



CRE—Other commercial real estate:
Interest rate reduction	—	—		—	—
Amortization or maturity date change	1	93		1	197
Other	—	—		—	—
Total CRE—Other commercial real estate	1	93		1	197
Automobile:
Interest rate reduction	—	—		—	—
Amortization or maturity date change	12	99		13	144
Chapter 7 bankruptcy	2	10		5	31
Other	—	—		—	—
Total Automobile	14	109		18	175
Residential mortgage:
Interest rate reduction	2	178		1	118
Amortization or maturity date change	19	1,624		20	2,300
Chapter 7 bankruptcy	3	310		10	1,007
Other	—	—		—	—
Total Residential mortgage	24	2,112		31	3,425
First-lien home equity:
Interest rate reduction	3	232		1	39
Amortization or maturity date change	—	—		6	998
Chapter 7 bankruptcy	3	265		6	243
Other	—	—		—	—
Total First-lien home equity	6	497		13	1,280
Junior-lien home equity:
Interest rate reduction	1	214		—	—
Amortization or maturity date change	7	220		8	578
Chapter 7 bankruptcy	2	—		15	24
Other	—	—		—	—
Total Junior-lien home equity	10	434		23	602
Other consumer:
Interest rate reduction	—	—		—	—
Amortization or maturity date change	—	—		—	—
Chapter 7 bankruptcy	—	—		—	—
Other	—	—		—	—
Total Other consumer	—	—		—	—
Total troubled debt restructurings with subsequent redefault	72	$	6,716	93	$	7,632


(1)	Subsequent redefault is defined as a payment redefault within 12 months of the restructuring date. Payment redefault is defined as 90-days past due for any loan within any portfolio or class. Any loan may be considered to be in payment redefault prior to the guidelines noted above when collection of principal or interest is in doubt.

Troubled Debt Restructurings That Have Redefaulted (1)

Within One Year of Modification During The Nine Months Ended

September 30, 2015

September 30, 2014

(dollar amounts in thousands)

Number of

Contracts

Ending

Balance

Number of

Contracts

Ending

Balance

C&I—Owner occupied:

Interest rate reduction

—



Amortization or maturity date change	5	900		4	788
Other	—	—		1	230
Total C&I—Owner occupied	5	900		5	1,018
C&I—Other commercial and industrial:
Interest rate reduction	1	27		—	—
Amortization or maturity date change	21	2,650		10	1,132
Other	—	—		—	—
Total C&I—Other commercial and industrial	22	2,677		10	1,132
CRE—Retail Properties:
Interest rate reduction	1	47		—	—
Amortization or maturity date change	1	6,482		—	—
Other	—	—		—	—
Total CRE—Retail properties	2	6,529		—	—
CRE—Multi family:
Interest rate reduction	—	$	—	—	—
Amortization or maturity date change	10	1,354		2	350
Other	1	140		—	—
Total CRE—Multi family	11	1,494		2	350
CRE—Office:
Interest rate reduction	—	—		—	—
Amortization or maturity date change	3	2,984		1	493
Other	—	—		—	—
Total CRE—Office	3	2,984		1	493
CRE—Industrial and Warehouse:
Interest rate reduction	—	—		1	1,339
Amortization or maturity date change	—	—		—	—
Other	—	—		—	—
Total CRE—Industrial and Warehouse	—	—		1	1,339
CRE—Other commercial real estate:
Interest rate reduction	—	—		—	—
Amortization or maturity date change	1	93		2	758
Other	—	—		—	—
Total CRE—Other commercial real estate	1	93		2	758
Automobile:
Interest rate reduction	1	4		—	—
Amortization or maturity date change	24	298		39	326
Chapter 7 bankruptcy	16	133		42	262
Other	—	—		—	—
Total Automobile	41	435		81	588
Residential mortgage:
Interest rate reduction	3	239		4	468
Amortization or maturity date change	45	4,225		64	7,354
Chapter 7 bankruptcy	7	699		33	2,952
Other	—	—		—	—
Total Residential mortgage	55	5,163		101	10,774
First-lien home equity:



Interest rate reduction	4	387		3	202
Amortization or maturity date change	4	258		14	1,928
Chapter 7 bankruptcy	26	2,191		14	843
Other	—	—		—	—
Total First-lien home equity	34	2,836		31	2,973
Junior-lien home equity:
Interest rate reduction	3	411		—	—
Amortization or maturity date change	27	1,018		22	1,276
Chapter 7 bankruptcy	14	401		37	620
Other	—	—		—	—
Total Junior-lien home equity	44	1,830		59	1,896
Other consumer:
Interest rate reduction	—	—		—	—
Amortization or maturity date change	—	—		—	—
Chapter 7 bankruptcy	—	—		—	—
Other	—	—		—	—
Total Other consumer	—	—		—	—
Total troubled debt restructurings with subsequent redefault	218	$	24,941	293	$	21,321


(1)	Subsequent redefault is defined as a payment redefault within 12 months of the restructuring date. Payment redefault is defined as 90-days past due for any loan in any portfolio or class. Any loan in any portfolio or class may be considered to be in payment redefault prior to the guidelines noted above when collection of principal or interest is in doubt.

Pledged Loans and Leases

At September 30, 2015, the Bank has access to the Federal Reserve’s discount window and advances from the FHLB – Cincinnati. As of September 30, 2015, these borrowings and advances are secured by $17.2 billion of loans and securities.

On March 31, 2015, Huntington completed its acquisition of Macquarie Equipment Finance, which we have re-branded Huntington Technology Finance. Huntington assumed debt associated with two securitizations. As of September 30, 2015, the debt is secured by $221.1 million of leases held by the trusts.