FAIR VALUES OF ASSETS AND LIABILITIES

v3.19.1

FAIR VALUES OF ASSETS AND LIABILITIES	3 Months Ended
	Mar. 31, 2019
Fair Value Disclosures [Abstract]
FAIR VALUES OF ASSETS AND LIABILITIES	FAIR VALUES OF ASSETS AND LIABILITIES See Note 17 “Fair Value of Assets and Liabilities” to the Consolidated Financial Statements of the Annual Report on Form 10-K for the year ended December 31, 2018 for a description of the valuation methodologies used for instruments measured at fair value. Assets and liabilities measured at fair value rarely transfer between Level 1 and Level 2 measurements. There were no such transfers during the three-month periods ended March 31, 2019 and 2018. Assets and Liabilities measured at fair value on a recurring basis Assets and liabilities measured at fair value on a recurring basis at March 31, 2019 and December 31, 2018 are summarized below:   Fair Value Measurements at Reporting Date Using   Netting Adjustments (1)   March 31, 2019 (dollar amounts in millions) Level 1   Level 2   Level 3     Assets                   Trading account securities:                   Federal agencies: Other agencies $ —   $ 2   $ —   $ —   $ 2 Municipal securities —   86   —   —   86 Other securities 77   1   —   —   78   77   89   —   —   166 Available-for-sale securities:                   U.S. Treasury securities 5   —   —   —   5 Residential CMOs —   7,010   —   —   7,010 Residential MBS —   1,373   —   —   1,373 Commercial MBS —   1,553   —   —   1,553 Other agencies —   118   —   —   118 Municipal securities —   281   3,237   —   3,518 Asset-backed securities —   349   —   —   349 Corporate debt —   52   —   —   52 Other securities/sovereign debt —   4   —   —   4   5   10,740   3,237   —   13,982 Other securities 23   —   —   —   23 Loans held for sale —   523   —   —   523 Loans held for investment —   50   29   —   79 MSRs —   —   10   —   10 Derivative assets 1   513   8   (259 )   263 Liabilities                   Derivative liabilities 8   360   3   (284 )   87   Fair Value Measurements at Reporting Date Using   Netting Adjustments (1)   December 31, 2018 (dollar amounts in millions) Level 1   Level 2   Level 3     Assets                   Trading account securities:                   Municipal securities 1   27   —   —   28 Other securities $ 77   $ —   $ —   $ —   $ 77   78   27   —   —   105 Available-for-sale securities:                   U.S. Treasury securities 5   —   —   —   5 Residential CMOs —   6,999   —   —   6,999 Residential MBS —   1,255   —   —   1,255 Commercial MBS —   1,583   —   —   1,583 Other agencies —   126   —   —   126 Municipal securities —   275   3,165   —   3,440 Asset-backed securities —   315   —   —   315 Corporate debt —   53   —   —   53 Other securities/sovereign debt —   4   —   —   4   5   10,610   3,165   —   13,780 Other securities 22   —   —   —   22 Loans held for sale —   613   —   —   613 Loans held for investment —   49   30   —   79 MSRs —   —   10   —   10 Derivative assets 21   474   5   (291 )   209 Liabilities                   Derivative liabilities 11   390   3   (217 )   187 (1) Amounts represent the impact of legally enforceable master netting agreements that allow the Company to settle positive and negative positions and cash collateral held or placed with the same counterparties. The tables below present a rollforward of the balance sheet amounts for the three-month periods ended March 31, 2019 and 2018, for financial instruments measured on a recurring basis and classified as Level 3. The classification of an item as Level 3 is based on the significance of the unobservable inputs to the overall fair value measurement. However, Level 3 measurements may also include observable components of value that can be validated externally. Accordingly, the gains and losses in the table below include changes in fair value due in part to observable factors that are part of the valuation methodology.   Level 3 Fair Value Measurements Three Months Ended March 31, 2019           Available-for-sale securities   (dollar amounts in millions) MSRs   Derivative instruments   Municipal securities   Loans held for investment Opening balance $ 10   $ 2   $ 3,165   $ 30 Transfers out of Level 3 (1) —   (9 )   —   — Total gains/losses for the period:               Included in earnings —   12   1   — Included in OCI —   —   43   — Purchases/originations —   —   81   — Sales —   —   —   — Repayments —   —   —   (1 ) Settlements —   —   (53 )   — Closing balance $ 10   $ 5   $ 3,237   $ 29 Change in unrealized gains or losses for the period included in earnings for assets held at end of the reporting date $ —   $ 2   $ —   $ — Change in unrealized gains or losses for the period included in other comprehensive income for assets held at the end of the reporting period $ —   $ —   $ 43   $ —   Level 3 Fair Value Measurements Three Months Ended March 31, 2018           Available-for-sale securities     (dollar amounts in millions) MSRs   Derivative instruments   Municipal securities   Asset-backed securities   Loans held for investment Opening balance $ 11   $ (1 )   $ 3,167   $ 24   $ 38 Transfers out of Level 3 (1) —   (5 )   —   —   — Total gains/losses for the period:                   Included in earnings 1   6   (1 )   (2 )   — Included in OCI —   —   (28 )   11   — Purchases/originations —   —   193   —   — Sales —   —   —   (33 )   — Repayments —   —   —   —   (1 ) Settlements —   —   (101 )   —   — Closing balance $ 12   $ —   $ 3,230   $ —   $ 37 Change in unrealized gains or losses for the period included in earnings for assets held at end of the reporting date $ 1   $ —   $ —   $ —   $ — (1) Transfers out of Level 3 represent the settlement value of the derivative instruments (i.e. interest rate lock agreements) that is transferred to loans held for sale, which is classified as Level 2. The tables below summarize the classification of gains and losses due to changes in fair value, recorded in earnings for Level 3 assets and liabilities for the three-month periods ended March 31, 2019 and 2018:   Level 3 Fair Value Measurements Three Months Ended March 31, 2019           Available-for-sale securities   (dollar amounts in millions) MSRs   Derivative instruments   Municipal securities   Loans held for investment Classification of gains and losses in earnings:               Mortgage banking income $ —   $ 12   $ —   $ — Securities gains (losses) —   —   —   — Interest and fee income —   —   1   — Total $ —   $ 12   $ 1   $ —   Level 3 Fair Value Measurements Three Months Ended March 31, 2018           Available-for-sale securities     (dollar amounts in millions) MSRs   Derivative instruments   Municipal securities   Asset-backed securities   Loans held for investment Classification of gains and losses in earnings:                   Mortgage banking income $ 1   $ 6   $ —   $ —   $ — Securities gains (losses) —   —   —   (2 )   — Other expense —   —   (1 )   —   — Total $ 1   $ 6   $ (1 )   $ (2 )   $ — Assets and liabilities under the fair value option The following tables present the fair value and aggregate principal balance of certain assets and liabilities under the fair value option:   March 31, 2019 (dollar amounts in millions) Total Loans   Loans that are 90 or more days past due Assets Fair value carrying amount   Aggregate unpaid principal   Difference   Fair value carrying amount   Aggregate unpaid principal   Difference Loans held for sale $ 523   $ 506   $ 17   $ —   $ —   $ — Loans held for investment 79   86   (7 )   6   7   (1 )   December 31, 2018 (dollar amounts in millions) Total Loans   Loans that are 90 or more days past due Assets Fair value carrying amount   Aggregate unpaid principal   Difference   Fair value carrying amount   Aggregate unpaid principal   Difference Loans held for sale $ 613   $ 594   $ 19   $ —   $ —   $ — Loans held for investment 79   87   (8 )   6   7   (1 ) The following tables present the net gains (losses) from fair value changes for the three-month periods ended March 31, 2019 and 2018.     Net gains (losses) from fair value changes (dollar amounts in millions)   Three Months Ended March 31, Assets   2019   2018 Loans held for sale (1)   $ (2 )   $ (2 ) Loans held for investment   —   — (1) The net gains (losses) from fair value changes are included in Mortgage banking income on the Unaudited Condensed Consolidated Statements of Income. Assets and Liabilities measured at fair value on a nonrecurring basis Certain assets and liabilities may be required to be measured at fair value on a nonrecurring basis in periods subsequent to their initial recognition. These assets and liabilities are not measured at fair value on an ongoing basis; however, they are subject to fair value adjustments in certain circumstances, such as when there is evidence of impairment. The amounts presented represent the fair value on the various measurement dates throughout the period. The gains(losses) represent the amounts recorded during the period regardless of whether the asset is still held at period end. The amounts measured at fair value on a nonrecurring basis at March 31, 2019 were as follows:       Fair Value Measurements Using     (dollar amounts in millions) Fair Value   Quoted Prices In Active Markets for Identical Assets (Level 1)   Significant Other Observable Inputs (Level 2)   Significant Other Unobservable Inputs (Level 3)   Total Gains/(Losses) Three Months Ended March 31, 2019 Impaired loans 49   —   —   49   — Other real estate owned 6   —   —   6   (4 ) Huntington records nonrecurring adjustments of collateral-dependent loans measured for impairment when establishing the ALLL. Such amounts are generally based on the fair value of the underlying collateral supporting the loan. Appraisals are generally obtained to support the fair value of the collateral and incorporate measures such as recent sales prices for comparable properties and cost of construction. Periodically, in cases where the carrying value exceeds the fair value of the collateral less cost to sell, an impairment charge is recognized. Other real estate owned properties are included in other assets and valued based on appraisals and third-party price opinions. The appraisals supporting the fair value of the collateral to recognize loan impairment or unrealized loss on other real estate owned properties may not have been obtained as of March 31, 2019. Significant unobservable inputs for assets and liabilities measured at fair value on a recurring and nonrecurring basis The table below presents quantitative information about the significant unobservable inputs for assets and liabilities measured at fair value on a recurring and nonrecurring basis at March 31, 2019 and December 31, 2018:   Quantitative Information about Level 3 Fair Value Measurements at March 31, 2019 (dollar amounts in millions) Fair Value   Valuation Technique   Significant Unobservable Input   Range   Weighted Average Measured at fair value on a recurring basis: MSRs $ 10   Discounted cash flow   Constant prepayment rate   6% - 27 %   8 %           Spread over forward interest rate swap rates   5% - 11 %   9 % Derivative assets 8   Consensus Pricing   Net market price   (3)% - 11 %   3 %           Estimated Pull through %   2% - 100 %   88 % Derivative liabilities 3   Discounted cash flow   Estimated conversion factor           163 %           Estimated growth rate of Visa Class A shares           7 %            Discount rate           3 %           Timing of the resolution of the litigation           6/30/2020 Municipal securities 3,237   Discounted cash flow   Discount rate   3% - 3 %   3 %           Cumulative default   0 % - 39 %   3 %           Loss given default   5% - 90 %   24 % Loans held for investment 29   Discounted cash flow   Discount rate   7% - 8 %   8 %           Constant prepayment rate   8% - 12 %   9 % Measured at fair value on a nonrecurring basis: Impaired loans 49   Appraisal value   NA           NA Other real estate owned 6   Appraisal value   NA           NA   Quantitative Information about Level 3 Fair Value Measurements at December 31, 2018         (dollar amounts in millions) Fair Value   Valuation Technique   Significant Unobservable Input   Range   Weighted Average Measured at fair value on a recurring basis:         MSRs $ 10   Discounted cash flow   Constant prepayment rate   6  % - 54 %   8 %           Spread over forward interest rate swap rates   5  % - 11 %   8 % Derivative assets 5   Consensus Pricing   Net market price   (5 )% - 23 %   2 %           Estimated Pull through %   1  % - 100 %   92 % Derivative liabilities 3   Discounted cash flow   Estimated conversion factor           163 %           Estimated growth rate of Visa Class A shares           7 %            Discount rate           4 %           Timing of the resolution of the litigation           6/30/2020 Municipal securities 3,165   Discounted cash flow   Discount rate   4  % - 4 %   4 %           Cumulative default   0  % - 39 %   3 %           Loss given default   5  % - 90 %   25 % Loans held for investment 30   Discounted cash flow   Discount rate   7  % - 9 %   9 %           Constant prepayment rate   9  % - 9 %   9 % Measured at fair value on a nonrecurring basis:         Impaired loans 33   Appraisal value   NA           NA Other real estate owned 20   Appraisal value   NA           NA Loans held for sale 121   Discounted cash flow   Discount rate   5  %   6 %   5 %   24   Appraisal value   NA           N/A The following provides a general description of the impact of a change in an unobservable input on the fair value measurement and the interrelationship between unobservable inputs, where relevant/significant. Interrelationships may also exist between observable and unobservable inputs. Such relationships have not been included in the discussion below. Credit loss estimates, such as probability of default, constant default, cumulative default, loss given default, cure given deferral, and loss severity, are driven by the ability of the borrowers to pay their loans and the value of the underlying collateral and are impacted by changes in macroeconomic conditions, typically increasing when economic conditions worsen and decreasing when conditions improve. An increase in the estimated prepayment rate typically results in a decrease in estimated credit losses and vice versa. Higher credit loss estimates generally result in lower fair values. Credit spreads generally increase when liquidity risks and market volatility increase and decrease when liquidity conditions and market volatility improve. Discount rates and spread over forward interest rate swap rates typically increase when market interest rates increase and/or credit and liquidity risks increase, and decrease when market interest rates decline and/or credit and liquidity conditions improve. Higher discount rates and credit spreads generally result in lower fair market values. Net market price and pull through percentages generally increase when market interest rates increase and decline when market interest rates decline. Higher net market price and pull through percentages generally result in higher fair values. Fair values of financial instruments The following table provides the carrying amounts and estimated fair values of Huntington’s financial instruments at March 31, 2019 and December 31, 2018:   March 31, 2019 (dollar amounts in millions) Amortized Cost   Lower of Cost or Market   Fair Value or Fair Value Option   Total Carrying Amount   Estimated Fair Value Financial Assets                   Cash and short-term assets $ 1,483   $ —   $ —   $ 1,483   $ 1,483 Trading account securities —   —   166   166   166 Available-for-sale securities —   —   13,982   13,982   13,982 Held-to-maturity securities 8,747   —   —   8,747   8,591 Other securities 463   —   23   486   486 Loans held for sale —   170   523   693   696 Net loans and leases (1) 74,236   —   79   74,315   74,160 Derivatives —   —   263   263   263 Financial Liabilities                   Deposits 82,155   —   —   82,155   82,130 Short-term borrowings 2,862   —   —   2,862   2,862 Long-term debt 9,400   —   —   9,400   9,610 Derivatives —   —   87   87   87   December 31, 2018 (dollar amounts in millions) Amortized Cost   Lower of Cost or Market   Fair Value or Fair Value Option   Total Carrying Amount   Estimated Fair Value Financial Assets                   Cash and short-term assets $ 2,725   $ —   $ —   $ 2,725   $ 2,725 Trading account securities —   —   105   105   105 Available-for-sale securities —   —   13,780   13,780   13,780 Held-to-maturity securities 8,565   —   —   8,565   8,286 Other securities 543   —   22   565   565 Loans held for sale —   191   613   804   806 Net loans and leases (1) 74,049   —   79   74,128   73,668 Derivatives —   —   209   209   209 Financial Liabilities                   Deposits 84,774   —   —   84,774   84,731 Short-term borrowings 2,017   —   —   2,017   2,017 Long-term debt 8,625   —   —   8,625   8,718 Derivatives —   —   187   187   187 (1) Includes collateral-dependent loans measured for impairment. The following table presents the level in the fair value hierarchy for the estimated fair values at March 31, 2019 and December 31, 2018:   Estimated Fair Value Measurements at Reporting Date Using   March 31, 2019 (dollar amounts in millions) Level 1   Level 2   Level 3   Financial Assets               Trading account securities $ 77   $ 89   $ —   $ 166 Available-for-sale securities 5   10,740   3,237   13,982 Held-to-maturity securities —   8,591   —   8,591 Other securities (1) 23   —   —   23 Loans held for sale —   523   173   696 Net loans and direct financing leases —   50   74,110   74,160 Financial Liabilities               Deposits —   74,859   7,271   82,130 Short-term borrowings 2   —   2,860   2,862 Long-term debt —   9,016   594   9,610   Estimated Fair Value Measurements at Reporting Date Using   December 31, 2018 (dollar amounts in millions) Level 1   Level 2   Level 3   Financial Assets               Trading account securities $ 78   $ 27   $ —   $ 105 Available-for-sale securities 5   10,610   3,165   13,780 Held-to-maturity securities —   8,286   —   8,286 Other securities (1) 22   —   —   22 Loans held for sale —   613   193   806 Net loans and direct financing leases —   49   73,619   73,668 Financial Liabilities         Deposits —   76,922   7,809   84,731 Short-term borrowings 1   —   2,016   2,017 Long-term debt —   8,158   560   8,718 (1) Excludes securities without readily determinable fair values. The short-term nature of certain assets and liabilities result in their carrying value approximating fair value. These include trading account securities, customers’ acceptance liabilities, short-term borrowings, bank acceptances outstanding, FHLB advances, and cash and short-term assets, which include cash and due from banks, interest-bearing deposits in banks, interest-bearing deposits at Federal Reserve Bank, federal funds sold, and securities purchased under resale agreements. Loan commitments and letters-of-credit generally have short-term, variable-rate features and contain clauses that limit Huntington’s exposure to changes in customer credit quality. Accordingly, their carrying values, which are immaterial at the respective balance sheet dates, are reasonable estimates of fair value. Certain assets, the most significant being operating lease assets, bank owned life insurance, and premises and equipment, do not meet the definition of a financial instrument and are excluded from this disclosure. Similarly, mortgage and nonmortgage servicing rights, deposit base, and other customer relationship intangibles are not considered financial instruments and are not included above. Accordingly, this fair value information is not intended to, and does not, represent Huntington’s underlying value. Many of the assets and liabilities subject to the disclosure requirements are not actively traded, requiring fair values to be estimated by Management. These estimations necessarily involve the use of judgment about a wide variety of factors, including but not limited to, relevancy of market prices of comparable instruments, expected future cash flows, and appropriate discount rates.