Huntington Bancshares Incorporated Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

OPERATING LEASES Leases (Notes)

OPERATING LEASES Leases (Notes)

12 Months Ended

Dec. 31, 2019

OPERATING LEASES

At December 31, 2019, Huntington was obligated under noncancelable leases for branch and office space. These leases are all classified as operating due to the amount of time such spaces are occupied relative to the underlying assets useful lives. Many of these leases contain renewal options, most of which are not included in measurement of the right-of-use asset as they are not considered reasonably certain of exercise (i.e., Huntington does not currently have a significant economic incentive to exercise these options). Some leases contain escalation clauses calling for rentals to be adjusted for increased real estate taxes and other operating expenses or proportionately adjusted for increases in the consumer or other price indices. Occasionally, Huntington will sublease the land and buildings for which it has obtained the right to use; substantially all of those sublease arrangements are classified as operating, with sublease income recognized on a straight-line basis over the contractual term of the arrangement. Huntington has elected not to include non-lease components in the measurement of right-of-use assets, and as such allocates the costs attributable to such components, where those costs are not separately identifiable, via per-square-foot costing analysis developed by the entity for owned and leased spaces. Huntington uses a portfolio approach to develop discount rates as its lease portfolio is comprised of substantially all branch space and office space used in the entity’s operations. That rate, an input used in the measurement of the entity’s right-of-use assets, leverages an incremental borrowing rate of appropriate tenor and collateralization.

Net lease assets and liabilities at December 31, 2019 are as follows:



(dollar amounts in millions)	Classification	December 31, 2019
Assets
Operating lease assets	Other assets	$	210
Liabilities
Lease liabilities	Other liabilities	$	233

Net lease cost for the year ended December 31, 2019 are as follows:



(dollar amounts in millions)	Classification	Year Ended December 31, 2019
Operating lease cost	Net occupancy	$	47
Short-term lease cost	Net occupancy	1
Sublease income	Net occupancy	(3		)
Net lease cost		$	45

Maturity of lease liabilities at December 31, 2019 are as follows:



(dollar amounts in millions)	Total
2020	$	48
2021	43
2022	38
2023	33
2024	28
Thereafter	86
Total lease payments	$	276
Less: Interest	(43		)
Total lease liabilities	$	233

Lease term and discount rate as of December 31, 2019 are as follows:



	December 31, 2019
Weighted-average remaining lease term (years) for Operating leases	7.31
Weighted-average discount rate for Operating leases	4.56	%

Cash flow supplemental information at December 31, 2019 are as follows:



(dollar amounts in millions)	Year Ended December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities for Operating cash flows	$	(54	)
Right-of-use assets obtained in exchange for lease obligations for Operating leases	40