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

Annual report pursuant to Section 13 and 15(d)

Variable Interest Entities

Variable Interest Entities

12 Months Ended

Dec. 31, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

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, 2022
(dollar amounts in millions)	Total Assets		Total Liabilities		Maximum Exposure to Loss

Affordable Housing Tax Credit Partnerships	$	2,036	$	1,260	$	2,036
Trust Preferred Securities	14		248		—
Other Investments	522		141		522
Total	$	2,572	$	1,649	$	2,558


	At December 31, 2021
(dollar amounts in millions)	Total Assets		Total Liabilities		Maximum Exposure to Loss
Affordable Housing Tax Credit Partnerships	$	1,652	$	949	$	1,652
Trust Preferred Securities	14		248		—

Other Investments	484		146		484
Total	$	2,150	$	1,343	$	2,136

Trust-Preferred Securities

Huntington has certain 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. Refer to Note 11 “Borrowings” for the outstanding amount of debentures issued to each trust and corresponding trust securities. The trust securities are the obligations of the trusts, and as such, are not consolidated within Huntington’s Consolidated Financial Statements.

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 are included in Other 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,
(dollar amounts in millions)	2022		2021
Affordable housing tax credit investments	$	2,891	$	2,376
Less: amortization	(855)		(724)
Net affordable housing tax credit investments	$	2,036	$	1,652
Unfunded commitments	$	1,260	$	949

The following table presents other information relating to Huntington’s affordable housing tax credit investments.


	Year Ended December 31,
(dollar amounts in millions)	2022		2021		2020
Tax credits and other tax benefits recognized	$	203	$	144	$	113
Proportional amortization expense included in provision for income taxes	170		126		97

There was no impairment recognized for the years ended December 31, 2022 and 2021, and 2020.

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, and other miscellaneous investments.