Annual report pursuant to Section 13 and 15(d)

VIEs

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VIEs
 12 Months Ended
Dec. 31, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
VIEs
Unconsolidated VIEs
The following tables provide a summary of the assets and liabilities included in Huntington’s Consolidated Financial Statements, as well as the maximum exposure to losses, associated with its interests related to unconsolidated VIEs for which Huntington holds an interest in, but is not the primary beneficiary of, the VIE at December 31, 2019, and 2018:
 
December 31, 2019
(dollar amounts in millions)
Total Assets
 
Total Liabilities
 
Maximum Exposure to Loss
Trust Preferred Securities
$
14

 
$
252

 
$
—

Affordable Housing Tax Credit Partnerships
727

 
332

 
727

Other Investments
179

 
63

 
179

Total
$
920

 
$
647

 
$
906

 
December 31, 2018
(dollar amounts in millions)
Total Assets
 
Total Liabilities
 
Maximum Exposure to Loss
Trust Preferred Securities
$
14

 
$
252

 
$
—

Affordable Housing Tax Credit Partnerships
708

 
357

 
708

Other Investments
126

 
53

 
126

Total
$
848

 
$
662

 
$
834


Trust-Preferred Securities
Huntington has certain wholly-owned trusts whose assets, liabilities, equity, income, and expenses are not included within Huntington’s Consolidated Financial Statements. These trusts have been formed for the sole purpose of issuing trust-preferred securities, from which the proceeds are then invested in Huntington junior subordinated debentures, which are reflected in Huntington’s Consolidated Balance Sheet as long-term debt. The trust securities are the obligations of the trusts, and as such, are not consolidated within Huntington’s Consolidated Financial Statements.
A list of trust-preferred securities outstanding at December 31, 2019 follows:
(dollar amounts in millions)
Rate
 
Principal amount of
subordinated note/
debenture issued to trust (1)
 
Investment in
unconsolidated
subsidiary
Huntington Capital I
2.61
%
(2)
$
70

 
$
6

Huntington Capital II
2.53

(3)
32

 
3

Sky Financial Capital Trust III
3.31

(4)
72

 
2

Sky Financial Capital Trust IV
3.31

(4)
74

 
2

Camco Financial Trust
3.24

(5)
4

 
1

Total
 
 
$
252

 
$
14

(1)
Represents the principal amount of debentures issued to each trust, including unamortized original issue discount.
(2)
Variable effective rate at December 31, 2019, based on three-month LIBOR + 0.70%.
(3)
Variable effective rate at December 31, 2019, based on three-month LIBOR + 0.625%.
(4)
Variable effective rate at December 31, 2019, based on three-month LIBOR + 1.40%.
(5)
Variable effective rate at December 31, 2019, based on three month LIBOR + 1.33%.
Each issue of the junior subordinated debentures has an interest rate equal to the corresponding trust securities distribution rate. Huntington has the right to defer payment of interest on the debentures at any time, or from time-to-time for a period not exceeding five years provided that no extension period may extend beyond the stated maturity of the related debentures. During any such extension period, distributions to the trust securities will also be deferred and Huntington’s ability to pay dividends on its common stock will be restricted. Periodic cash payments and payments upon liquidation or redemption with respect to trust securities are guaranteed by Huntington to the extent of funds held by the trusts. The guarantee ranks subordinate and junior in right of payment to all indebtedness of the Company to the same extent as the junior subordinated debt. The guarantee does not place a limitation on the amount of additional indebtedness that may be incurred by Huntington.
Affordable Housing Tax Credit Partnerships
Huntington makes certain equity investments in various limited partnerships that sponsor affordable housing projects utilizing the LIHTC pursuant to Section 42 of the Internal Revenue Code. The purpose of these investments is to achieve a satisfactory return on capital, to facilitate the sale of additional affordable housing product offerings, and to assist in achieving goals associated with the Community Reinvestment Act. The primary activities of the limited partnerships include the identification, development, and operation of multi-family housing that is leased to qualifying residential tenants. Generally, these types of investments are funded through a combination of debt and equity.
Huntington uses the proportional amortization method to account for a majority of its investments in these entities. These investments are included in other assets. Investments that do not meet the requirements of the proportional amortization method are accounted for using the equity method. Investment losses related to these investments are included in noninterest income in the Consolidated Statements of Income.
The following table presents the balances of Huntington’s affordable housing tax credit investments and related unfunded commitments at December 31, 2019 and 2018.
(dollar amounts in millions)
December 31,
2019
 
December 31,
2018
Affordable housing tax credit investments
$
1,242

 
$
1,147

Less: amortization
(515
)
 
(439
)
Net affordable housing tax credit investments
$
727

 
$
708

Unfunded commitments
$
332

 
$
357

The following table presents other information relating to Huntington’s affordable housing tax credit investments for the years ended December 31, 2019, 2018, and 2017:
  
Year Ended December 31,
(dollar amounts in millions)
2019
 
2018
 
2017
Tax credits and other tax benefits recognized
$
98

 
$
92

 
$
91

Proportional amortization expense included in provision for income taxes
84

 
79

 
70

There were no material sales of affordable housing tax credit investments in 2019, 2018 or 2017. Huntington recognized immaterial impairment losses for the years ended December 31, 2019, 2018 and 2017. The impairment losses recognized related to the fair value of the tax credit investments that were less than carrying value.
Other Investments
Other investments determined to be VIE’s include investments in Small Business Investment Companies, Historic Tax Credit Investments, certain equity method investments, renewable energy financings, automobile securitizations, and other miscellaneous investments.