Quarterly report pursuant to Section 13 or 15(d)

FAIR VALUES OF ASSETS AND LIABILITIES (Tables)

v3.19.2
FAIR VALUES OF ASSETS AND LIABILITIES (Tables)
6 Months Ended
Jun. 30, 2019
Fair Value Disclosures [Abstract]  
Assets and liabilities measured at fair value on a recurring basis
Assets and Liabilities measured at fair value on a recurring basis
Assets and liabilities measured at fair value on a recurring basis at June 30, 2019 and December 31, 2018 are summarized below:
 
Fair Value Measurements at Reporting Date Using
 
Netting Adjustments (1)
 
June 30, 2019
(dollar amounts in millions)
Level 1
 
Level 2
 
Level 3
 
 
Assets
 
 
 
 
 
 
 
 
 
Trading account securities:
 
 
 
 
 
 
 
 
 
Federal agencies: Other agencies
$

 
$
3

 
$

 
$

 
$
3

Municipal securities

 
105

 

 

 
105

Other securities
68

 

 

 

 
68

 
68

 
108

 

 

 
176

Available-for-sale securities:
 
 
 
 
 
 
 
 
 
U.S. Treasury securities
11

 

 

 

 
11

Residential CMOs

 
6,458

 

 

 
6,458

Residential MBS

 
1,880

 

 

 
1,880

Commercial MBS

 
1,460

 

 

 
1,460

Other agencies

 
115

 

 

 
115

Municipal securities

 
58

 
3,202

 

 
3,260

Asset-backed securities

 
455

 

 

 
455

Corporate debt

 
51

 

 

 
51

Other securities/sovereign debt

 
5

 

 

 
5

 
11

 
10,482

 
3,202

 

 
13,695

Other securities
14

 

 

 

 
14

Loans held for sale

 
736

 

 

 
736

Loans held for investment

 
50

 
28

 

 
78

MSRs

 

 
9

 

 
9

Derivative assets
2

 
817

 
12

 
(398
)
 
433

Liabilities
 
 
 
 
 
 
 
 
 
Derivative liabilities
12

 
474

 
3

 
(372
)
 
117

 
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.
Rollforward of financial instruments measured on a recurring basis and classified as Level 3
 
Level 3 Fair Value Measurements
Three Months Ended June 30, 2019
 
 
 
 
 
Available-for-sale securities
 
 
(dollar amounts in millions)
MSRs
 
Derivative
instruments
 
Municipal
securities
 
Loans held for investment
Opening balance
$
10

 
$
5

 
$
3,237

 
$
29

Transfers out of Level 3 (1)

 
(15
)
 

 

Total gains/losses for the period:
 
 
 
 
 
 
 
Included in earnings
(1
)
 
19

 
(1
)
 

Included in OCI

 

 
3

 

Purchases/originations

 

 
28

 

Sales

 

 

 

Repayments

 

 

 
(1
)
Settlements

 

 
(65
)
 

Closing balance
$
9

 
$
9

 
$
3,202

 
$
28

Change in unrealized gains or losses for the period included in earnings for assets held at end of the reporting date
$
(1
)
 
$
4

 
$

 
$

Change in unrealized gains or losses for the period included in other comprehensive income for assets held at the end of the reporting period
$

 
$

 
$
3

 
$

 
Level 3 Fair Value Measurements
Three Months Ended June 30, 2018
 
 
 
 
 
Available-for-sale securities
 
 
(dollar amounts in millions)
MSRs
 
Derivative
instruments
 
Municipal
securities
 
Loans held for investment
Opening balance
$
12

 
$

 
$
3,230

 
$
37

Transfers out of Level 3 (1)

 
(9
)
 

 

Total gains/losses for the period:
 
 
 
 
 
 
 
Included in earnings
(1
)
 
10

 
(1
)
 

Included in OCI

 

 
(9
)
 

Purchases/originations

 

 
86

 

Sales

 

 

 

Repayments

 

 

 
(3
)
Settlements

 

 
(128
)
 

Closing balance
$
11

 
$
1

 
$
3,178

 
$
34

Change in unrealized gains or losses for the period included in earnings for assets held at end of the reporting date
$
(1
)
 
$
2

 
$

 
$


Classification of gains and losses due to changes in fair value, recorded in earnings for Level 3 assets and liabilities
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 and six-month periods ended June 30, 2019 and 2018:
 
Level 3 Fair Value Measurements
Three Months Ended June 30, 2019
 
 
 
 
 
Available-for-sale securities
(dollar amounts in millions)
MSRs
 
Derivative
instruments
 
Municipal
securities
Classification of gains and losses in earnings:
 
 
 
 
 
Mortgage banking income
$
(1
)
 
$
19

 
$

Interest and fee income

 

 
(1
)
Total
$
(1
)
 
$
19

 
$
(1
)
 
Level 3 Fair Value Measurements
Three Months Ended June 30, 2018
 
 
 
 
 
Available-for-sale securities
(dollar amounts in millions)
MSRs
 
Derivative
instruments
 
Municipal
securities
Classification of gains and losses in earnings:
 
 
 
 
 
Mortgage banking income
$
(1
)
 
$
10

 
$

Other expense

 

 
(1
)
Total
$
(1
)
 
$
10

 
$
(1
)

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:
 
June 30, 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
$
736

 
$
711

 
$
25

 
$

 
$

 
$

Loans held for investment
78

 
86

 
(8
)
 
5

 
7

 
(2
)
 
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 and six-month periods ended June 30, 2019 and 2018.
 
 
Net gains (losses) from fair value changes
 
Net gains (losses) from fair value changes
(dollar amounts in millions)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
Assets
 
2019
 
2018
 
2019
 
2018
Loans held for sale (1)
 
$
8

 
$
5

 
$
6

 
$
3

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 measured at fair value on a nonrecurring basis
The amounts measured at fair value on a nonrecurring basis at June 30, 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)
Six Months Ended
June 30, 2019
MSRs
$
184

 
$

 
$

 
$
184

 
$
(27
)
Impaired loans
14

 

 

 
14

 


Quantitative information about significant unobservable level 3 fair value measurement inputs
 
Quantitative Information about Level 3 Fair Value Measurements at June 30, 2019
(dollar amounts in millions)
Fair Value
 
Valuation Technique
 
Significant Unobservable Input
 
Range
 
Weighted Average
Measured at fair value on a recurring basis:
MSRs
$
9

 
Discounted cash flow
 
Constant prepayment rate
 
0
%
-
25
%
 
9
%
 
 
 
 
 
Spread over forward interest rate swap rates
 
5%
-
11
%
 
9
%
Derivative assets
12

 
Consensus Pricing
 
Net market price
 
(6)%
-
9
%
 
4
%
 
 
 
 
 
Estimated Pull through %
 
4%
-
100
%
 
89
%
Derivative liabilities
3

 
Discounted cash flow
 
Estimated conversion factor
 
 
 
 
 
163
%
 
 
 
 
 
Estimated growth rate of Visa Class A shares
 
 
 
 
 
7
%
 
 
 
 
 
 Discount rate
 
 
 
 
 
2
%
 
 
 
 
 
Timing of the resolution of the litigation
 
 
 
 
 
6/30/2020

Municipal securities
3,202

 
Discounted cash flow
 
Discount rate
 
3%
-
3
%
 
3
%
 
 
 
 
 
Cumulative default
 
0
%
-
64
%
 
4
%
 
 
 
 
 
Loss given default
 
5%
-
80
%
 
25
%
Loans held for investment
28

 
Discounted cash flow
 
Discount rate
 
6%
-
7
%
 
6
%
 
 
 
 
 
Constant prepayment rate
 
8%
-
12
%
 
8
%
Measured at fair value on a nonrecurring basis:
MSRs
184

 
Discounted cash flow
 
Constant prepayment rate
 
10
%
 
31
%
 
14
%
 
 
 
 
 
Spread over forward interest rate swap rates
 
5
%
 
11
%
 
9
%
Impaired loans
14

 
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

Loans held for sale
121

 
Discounted cash flow
 
Discount rate
 
5
 %
-
6
%
 
5
%
 
24

 
Appraisal value
 
NA
 
 
 
 
 
NA


Carrying amounts and estimated fair values of financial instruments
The following table provides the carrying amounts and estimated fair values of Huntington’s financial instruments at June 30, 2019 and December 31, 2018:
 
June 30, 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
$
1,747

 
$

 
$

 
$
1,747

 
$
1,747

Trading account securities

 

 
176

 
176

 
176

Available-for-sale securities

 

 
13,695

 
13,695

 
13,695

Held-to-maturity securities
8,704

 

 

 
8,704

 
8,748

Other securities
426

 

 
14

 
440

 
440

Loans held for sale

 
42

 
736

 
778

 
781

Net loans and leases (1)
74,181

 

 
78

 
74,259

 
74,775

Derivatives

 

 
433

 
433

 
433

Financial Liabilities
 
 
 
 
 
 
 
 
 
Deposits
80,882

 

 

 
80,882

 
80,890

Short-term borrowings
4,161

 

 

 
4,161

 
4,161

Long-term debt
8,973

 

 

 
8,973

 
9,180

Derivatives

 

 
117

 
117

 
117

 
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 June 30, 2019 and December 31, 2018:
 
Estimated Fair Value Measurements at Reporting Date Using
 
June 30, 2019
(dollar amounts in millions)
Level 1
 
Level 2
 
Level 3
 
Financial Assets
 
 
 
 
 
 
 
Trading account securities
$
68

 
$
108

 
$

 
$
176

Available-for-sale securities
11

 
10,482

 
3,202

 
13,695

Held-to-maturity securities

 
8,748

 

 
8,748

Other securities (1)
14

 

 

 
14

Loans held for sale

 
736

 
45

 
781

Net loans and direct financing leases

 
78

 
74,697

 
74,775

Financial Liabilities
 
 
 
 
 
 
 
Deposits

 
73,905

 
6,985

 
80,890

Short-term borrowings

 
4,161

 

 
4,161

Long-term debt

 
8,609

 
571

 
9,180

 
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