Annual report pursuant to Section 13 and 15(d)

ALLOWANCE FOR CREDIT LOSSES

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ALLOWANCE FOR CREDIT LOSSES
 12 Months Ended
Dec. 31, 2021
Credit Loss [Abstract]  
Allowance for Credit Losses ALLOWANCE FOR CREDIT LOSSES
On January 1, 2020, Huntington adopted ASU 2016-13 Financial Instruments - Credit Losses (ASC Topic 326): Measurement of Credit Losses on Financial Instruments, which replaced the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (“CECL”) methodology.
Huntington adopted ASC Topic 326 using the modified retrospective method for all financial assets in scope of the standard. Results for reporting periods beginning after January 1, 2020 are presented under ASC Topic 326, while prior period amounts continue to be reported in accordance with previously applicable GAAP. Upon adoption, Huntington recorded an increase to the ACL of $393 million and a corresponding decrease to retained earnings of approximately $306 million, net of tax of $87 million. The overall increase to the ACL at adoption is comprised of a $180 million increase in the commercial ALLL, a $211 million increase in the consumer ALLL, and a $2 million increase to the AULC.
Allowance for Credit Losses - Roll-forward
The following table presents ACL activity by portfolio segment for the years ended December 31, 2021, 2020, and 2019:
(dollar amounts in millions) Commercial Consumer Total
Year ended December 31, 2021:
ALLL balance, beginning of period $ 1,236  $ 578  $ 1,814 
Loan and lease charge-offs (1) (243) (139) (382)
Recoveries of loans and leases previously charged-off 83  84  167 
Provision (benefit) for loan and lease losses 12  (13) (1)
Allowance on PCD loans and leases at acquisition 374  58  432 
ALLL balance, end of period
 $ 1,462  $ 568  $ 2,030 
AULC balance, beginning of period $ 34  $ 18  $ 52 
Provision for unfunded lending commitments 8  18  26 
Unfunded lending commitment losses (1) —  (1)
AULC balance, end of period $ 41  $ 36  $ 77 
ACL balance, end of period $ 1,503  $ 604  $ 2,107 
Year ended December 31, 2020:
ALLL balance, beginning of period $ 552  $ 231  $ 783 
Cumulative-effect of change in accounting principle for financial instruments - credit losses (2) 180  211  391 
Loan and lease charge-offs (374) (166) (540)
Recoveries of loans and leases previously charged-off 32  59  91 
Provision for loan and lease losses 846  243  1,089 
ALLL balance, end of period $ 1,236  $ 578  $ 1,814 
AULC balance, beginning of period $ 102  $ 2  $ 104 
Cumulative-effect of change in accounting principle for financial instruments - credit losses (4) (38) 40  2 
Provision (benefit) for unfunded lending commitments (17) (24) (41)
Unfunded lending commitment losses (13) —  (13)
AULC balance, end of period $ 34  $ 18  $ 52 
ACL balance, end of period $ 1,270  $ 596  $ 1,866 
 
Year ended December 31, 2019:
ALLL balance, beginning of period $ 542  $ 230  $ 772 
Loan and lease charge-offs (165) (197) (362)
Recoveries of loans and leases previously charged-off 40  57  97 
Provision for loan and lease losses 135  142  277 
Allowance for loans sold or transferred to loans held for sale —  (1) (1)
ALLL balance, end of period $ 552  $ 231  $ 783 
AULC balance, beginning of period $ 94  $ 2  $ 96 
Provision for unfunded lending commitments 10  —  10 
Unfunded lending commitment losses (2) —  (2)
AULC balance, end of period $ 102  $ 2  $ 104 
ACL balance, end of period $ 654  $ 233  $ 887 
(1)Net charge-offs and associated metrics for the year ended December 31, 2021 exclude $80 million of charge-offs recognized immediately upon completion of the TCF acquisition and related to required purchase accounting treatment.
(2)Relates to day one impact of the CECL adjustment as a result of the implementation of ASU 2016-13.
At December 31, 2021, the ACL was $2.1 billion, an increase of $241 million from the December 31, 2020 balance of $1.9 billion. The increase was primarily related to the TCF acquisition and associated allowance attributable to the acquired loans and leases and unfunded lending commitments, partially offset by improvement in the forecasted macroeconomic environment resulting from anticipated lower unemployment and higher GDP.
The economic scenarios used in the December 31, 2021 ACL determination contained significant judgmental assumptions. While we have incorporated estimates of economic uncertainty into our ACL, the ultimate impact the unprecedented levels of government fiscal and monetary actions will have on the economy, including inflation and our credit losses remains uncertain. Given the uncertainty associated with key economic scenario assumptions, the December 31, 2021 ACL included a general reserve that consists of various risk profile components, including profiles related to the commercial real estate portfolio, to capture economic uncertainty risk not addressed within the quantitative transaction reserve.