Annual report pursuant to Section 13 and 15(d)

FAIR VALUES OF ASSETS AND LIABILITIES (Tables)

v3.10.0.1
FAIR VALUES OF ASSETS AND LIABILITIES (Tables)
12 Months Ended
Dec. 31, 2018
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 at December 31, 2018 and 2017 are summarized below:
 
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


 
Fair Value Measurements at Reporting Date Using
 
Netting Adjustments (1)
 
December 31, 2017
(dollar amounts in millions)
Level 1
 
Level 2
 
Level 3
 
 
Assets
 
 
 
 
 
 
 
 
 
Trading account securities:
 
 
 
 
 
 
 
 
 
Other securities
83

 
3

 

 

 
86

 
83

 
3

 

 

 
86

Available-for-sale securities:
 
 
 
 
 
 
 
 
 
U.S. Treasury securities
5

 

 

 

 
5

Residential CMOs

 
6,484

 

 

 
6,484

Residential MBS
 
 
1,367

 
 
 
 
 
1,367

Commercial MBS
 
 
2,487

 
 
 
 
 
2,487

Other agencies

 
70

 

 

 
70

Municipal securities

 
711

 
3,167

 

 
3,878

Asset-backed securities

 
443

 
24

 

 
467

Corporate debt

 
109

 

 

 
109

Other securities/Sovereign debt

 
2

 

 

 
2

 
5

 
11,673

 
3,191

 

 
14,869

Other securities
19

 

 

 

 
19

Loans held for sale

 
413

 

 

 
413

Loans held for investment

 
55

 
38

 

 
93

MSRs

 

 
11

 

 
11

Derivative assets

 
316

 
6

 
(190
)
 
132

Liabilities
 
 
 
 
 
 
 
 
 
Derivative liabilities

 
326

 
5

 
(245
)
 
86

(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.
Roll forward of derivatives measured on a recurring basis and classified as Level 3
The tables below present a rollforward of the balance sheet amounts for the years ended December 31, 2018, 2017, and 2016 for financial instruments measured on a recurring basis and classified as Level 3. The classification of an item as Level 3 is based on the significance of the unobservable inputs to the overall fair value measurement. However, Level 3 measurements may also include observable components of value that can be validated externally. Accordingly, the gains and losses in the table below include changes in fair value due in part to observable factors that are part of the valuation methodology.
 
Level 3 Fair Value Measurements
Year Ended December 31, 2018
 
 
 
 
 
Available-for-sale securities
 
 
(dollar amounts in millions)
MSRs
 
Derivative
instruments
 
Municipal
securities
 
Asset-
backed
securities
 
Loans held for investment
Opening balance
$
11

 
$
(1
)
 
$
3,167

 
$
24

 
$
38

Transfers out of Level 3 (1)

 
(35
)
 

 

 

Total gains/losses for the period:
 
 
 
 
 
 
 
 
 
Included in earnings
(1
)
 
35

 
(3
)
 
(2
)
 

Included in OCI

 

 
(52
)
 
11

 

Purchases/originations

 

 
658

 

 

Sales

 

 

 
(33
)
 

Repayments

 

 

 

 
(8
)
Settlements

 
3

 
(605
)
 

 

Closing balance
$
10

 
$
2

 
$
3,165

 
$

 
$
30

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

 
$

 
$

 
$

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

 
$

 
$
(52
)
 
$

 
$


 
Level 3 Fair Value Measurements
Year Ended December 31, 2017
 
 
 
 
 
Available-for-sale securities
 
 
(dollar amounts in millions)
MSRs
 
Derivative
instruments
 
Municipal
securities
 
Asset-
backed
securities
 
Loans held for investment
Opening balance
$
14

 
$
(2
)
 
$
2,798

 
$
76

 
$
48

Transfers out of Level 3 (1)

 
(15
)
 

 

 

Total gains/losses for the period:
 
 
 
 
 
 
 
 
 
Included in earnings
(3
)
 
16

 
(2
)
 
(5
)
 
1

Included in OCI

 

 
(8
)
 
14

 

Purchases/originations

 

 
787

 

 

Sales

 

 

 
(60
)
 

Repayments

 

 

 

 
(11
)
Settlements

 

 
(408
)
 
(1
)
 

Closing balance
$
11

 
$
(1
)
 
$
3,167

 
$
24

 
$
38

Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets held at end of the reporting date
$
(3
)
 
$

 
$

 
$
(4
)
 
$

 
Level 3 Fair Value Measurements
Year Ended December 31, 2016
 
 
 
 
 
Available-for-sale securities
 
 
(dollar amounts in millions)
MSRs
 
Derivative
instruments
 
Municipal
securities
 
Asset-
backed
securities
 
Loans held for investment
Opening balance
$
18

 
$
6

 
$
2,095

 
$
100

 
$
2

Transfers out of Level 3 (1)

 
(7
)
 

 

 

Total gains/losses for the period:
 
 
 
 
 
 
 
 
 
Included in earnings
(4
)
 
(1
)
 
7

 
(2
)
 
(2
)
Included in OCI

 

 
(28
)
 
6

 

Purchases/originations

 

 
1,399

 

 
56

Sales

 

 
(37
)
 
(25
)
 

Repayments

 

 

 

 
(8
)
Settlements

 

 
(638
)
 
(3
)
 

Closing balance
$
14

 
$
(2
)
 
$
2,798

 
$
76

 
$
48

Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets held at end of the reporting date
$
(4
)
 
$
(1
)
 
$
(33
)
 
$
4

 
$

(1)
Transfers out of Level 3 represent the settlement value of the derivative instruments (i.e. interest rate lock agreements) that are transferred to loans held for sale, which is classified as Level 2.
Roll forward of assets measured on a recurring basis and classified as Level 3
 
Level 3 Fair Value Measurements
Year Ended December 31, 2018
 
 
 
 
 
Available-for-sale securities
 
 
(dollar amounts in millions)
MSRs
 
Derivative
instruments
 
Municipal
securities
 
Asset-
backed
securities
 
Loans held for investment
Opening balance
$
11

 
$
(1
)
 
$
3,167

 
$
24

 
$
38

Transfers out of Level 3 (1)

 
(35
)
 

 

 

Total gains/losses for the period:
 
 
 
 
 
 
 
 
 
Included in earnings
(1
)
 
35

 
(3
)
 
(2
)
 

Included in OCI

 

 
(52
)
 
11

 

Purchases/originations

 

 
658

 

 

Sales

 

 

 
(33
)
 

Repayments

 

 

 

 
(8
)
Settlements

 
3

 
(605
)
 

 

Closing balance
$
10

 
$
2

 
$
3,165

 
$

 
$
30

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

 
$

 
$

 
$

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

 
$

 
$
(52
)
 
$

 
$


 
Level 3 Fair Value Measurements
Year Ended December 31, 2017
 
 
 
 
 
Available-for-sale securities
 
 
(dollar amounts in millions)
MSRs
 
Derivative
instruments
 
Municipal
securities
 
Asset-
backed
securities
 
Loans held for investment
Opening balance
$
14

 
$
(2
)
 
$
2,798

 
$
76

 
$
48

Transfers out of Level 3 (1)

 
(15
)
 

 

 

Total gains/losses for the period:
 
 
 
 
 
 
 
 
 
Included in earnings
(3
)
 
16

 
(2
)
 
(5
)
 
1

Included in OCI

 

 
(8
)
 
14

 

Purchases/originations

 

 
787

 

 

Sales

 

 

 
(60
)
 

Repayments

 

 

 

 
(11
)
Settlements

 

 
(408
)
 
(1
)
 

Closing balance
$
11

 
$
(1
)
 
$
3,167

 
$
24

 
$
38

Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets held at end of the reporting date
$
(3
)
 
$

 
$

 
$
(4
)
 
$

 
Level 3 Fair Value Measurements
Year Ended December 31, 2016
 
 
 
 
 
Available-for-sale securities
 
 
(dollar amounts in millions)
MSRs
 
Derivative
instruments
 
Municipal
securities
 
Asset-
backed
securities
 
Loans held for investment
Opening balance
$
18

 
$
6

 
$
2,095

 
$
100

 
$
2

Transfers out of Level 3 (1)

 
(7
)
 

 

 

Total gains/losses for the period:
 
 
 
 
 
 
 
 
 
Included in earnings
(4
)
 
(1
)
 
7

 
(2
)
 
(2
)
Included in OCI

 

 
(28
)
 
6

 

Purchases/originations

 

 
1,399

 

 
56

Sales

 

 
(37
)
 
(25
)
 

Repayments

 

 

 

 
(8
)
Settlements

 

 
(638
)
 
(3
)
 

Closing balance
$
14

 
$
(2
)
 
$
2,798

 
$
76

 
$
48

Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets held at end of the reporting date
$
(4
)
 
$
(1
)
 
$
(33
)
 
$
4

 
$

(1)
Transfers out of Level 3 represent the settlement value of the derivative instruments (i.e. interest rate lock agreements) that are transferred to loans held for sale, which is classified as Level 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 years ended December 31, 2018, 2017, and 2016:
 
Level 3 Fair Value Measurements
Year Ended December 31, 2018
 
 
 
 
 
Available-for-sale securities
(dollar amounts in millions)
MSRs
 
Derivative
instruments
 
Municipal
securities
 
Asset-
backed
securities
Classification of gains and losses in earnings:
 
 
 
 
 
 
 
Mortgage banking income
$
(1
)
 
$
35

 
$

 
$

Securities gains (losses)

 

 

 
(2
)
Interest and fee income

 

 
(3
)
 

Total
$
(1
)
 
$
35

 
$
(3
)
 
$
(2
)
 
Level 3 Fair Value Measurements
Year Ended December 31, 2017
 
 
 
 
 
Available-for-sale securities
 
 
(dollar amounts in millions)
MSRs
 
Derivative
instruments
 
Municipal
securities
 
Asset-
backed
securities
 
Loans held for investment
Classification of gains and losses in earnings:
 
 
 
 
 
 
 
 
 
Mortgage banking income
$
(3
)
 
$
16

 
$

 
$

 
$

Securities gains (losses)

 

 

 
(5
)
 

Interest and fee income

 

 
(2
)
 

 

Noninterest income

 

 

 

 
1

Total
$
(3
)
 
$
16

 
$
(2
)
 
$
(5
)
 
$
1

 
Level 3 Fair Value Measurements
Year Ended December 31, 2016
 
 
 
 
 
Available-for-sale securities
 
 
(dollar amounts in millions)
MSRs
 
Derivative
instruments
 
Municipal
securities
 
Asset-
backed
securities
 
Loans held for investment
Classification of gains and losses in earnings:
 
 
 
 
 
 
 
 
 
Mortgage banking income (loss)
$
(4
)
 
$
(1
)
 
$

 
$

 
$

Securities gains (losses)

 

 
1

 
(2
)
 

Noninterest income

 

 
6

 

 
(2
)
Total
$
(4
)
 
$
(1
)
 
$
7

 
$
(2
)
 
$
(2
)
Assets and liabilities under the fair value option
The following table presents the fair value and aggregate principal balance of certain assets and liabilities under the fair value option: 
 
December 31, 2018
 
Total Loans
 
Loans that are 90 or more days past due
(dollar amounts in millions)
Fair value
carrying
amount
 
Aggregate
unpaid
principal
 
Difference
 
Fair value
carrying
amount
 
Aggregate
unpaid
principal
 
Difference
Assets
 
 
 
 
 
 
 
 
 
 
 
Loans held for sale
$
613

 
$
594

 
$
19

 
$

 
$

 
$

Loans held for investment
79

 
87

 
(8
)
 
6

 
7

 
(1
)
 
December 31, 2017
 
Total Loans
 
Loans that are 90 or more days past due
(dollar amounts in millions)
Fair value
carrying
amount
 
Aggregate
unpaid
principal
 
Difference
 
Fair value
carrying
amount
 
Aggregate
unpaid
principal
 
Difference
Assets
 
 
 
 
 
 
 
 
 
 
 
Loans held for sale
$
413

 
$
400

 
$
13

 
$
1

 
$
1

 
$

Loans held for investment
93

 
102

 
$
(9
)
 
10

 
11

 
$
(1
)
The following tables present the net gains (losses) from fair value changes for the years ended December 31, 2018, 2017, and 2016: 
 
Net gains (losses) from fair value
changes Year Ended December 31,
(dollar amounts in millions)
2018
 
2017
 
2016
Assets
 
 
 
 
 
Loans held for sale
$
5

 
$
8

 
$
7

Loans held for investment

 

 


Assets measured at fair value on a nonrecurring basis
at fair value on a nonrecurring basis at December 31, 2018 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)
Year Ended
December 31, 2018
Impaired loans
33

 

 

 
33

 
(1
)
Other real estate owned
20

 

 

 
20

 
(7
)
Loans held for sale
145

 

 

 
145

 
(11
)
Quantitative information about significant unobservable level 3 fair value measurement inputs
The table below presents quantitative information about the significant unobservable inputs for assets and liabilities measured at fair value on a recurring and nonrecurring basis at December 31, 2018 and 2017:
 
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
 
 %
-
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

Other real estate owned
20

 
Appraisal value
 
NA
 
 
 
 
 
NA

Loans held for sale
121

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

 
Appraisal value
 
NA
 
 
 
 
 
N/A


 
Quantitative Information about Level 3 Fair Value Measurements at December 31, 2017
(dollar amounts in millions)
Fair Value
 
Valuation Technique
 
Significant Unobservable Input
 
Range
 
Weighted
 Average
Measured at fair value on a recurring basis:
 
 
 
 
 
 
 
 
MSRs
$
11

 
Discounted cash flow
 
Constant prepayment rate
 
8
 %
-
33
%
 
12
%
 
 
 
 
 
Spread over forward interest rate swap rates
 
8
 %
-
10
%
 
8
%
Derivative assets
6

 
Consensus Pricing
 
Net market price
 
(5
)%
-
20
%
 
2
%
 
 
 
 
 
Estimated Pull through %
 
3
 %
-
100
%
 
75
%
Derivative liabilities
5

 
Discounted cash flow
 
Estimated conversion factor
 
 
 
 
 
165
%
 
 
 
 
 
Estimated growth rate of Visa Class A shares
 
 
 
 
 
7
%
 
 
 
 
 
 Discount rate
 
 
 
 
 
3
%
 
 
 
 
 
Timing of the resolution of the litigation
 
12/31/2017
 
-
06/30/2020

Municipal securities
3,167

 
Discounted cash flow
 
Discount rate
 
 %
-
10
%
 
4
%
 
 
 
 
 
Cumulative default
 
 %
-
64
%
 
3
%
 
 
 
 
 
Loss given default
 
5
 %
-
90
%
 
24
%
Asset-backed securities
24

 
Discounted cash flow
 
Discount rate
 
7
 %
 
7
%
 
7
%
 
 
 
 
 
Cumulative prepayment rate
 
 %
 
72
%
 
7
%
 
 
 
 
 
Cumulative default
 
3
 %
 
53
%
 
7
%
 
 
 
 
 
Loss given default
 
90
 %
 
100
%
 
98
%
 
 
 
 
 
Cure given deferral
 
50
 %
 
50
%
 
50
%
Loans held for investment
38

 
Discounted cash flow
 
Discount rate
 
7
 %
-
18
%
 
8
%
 
 
 
 
 
Constant prepayment rate
 
2
 %
-
22
%
 
9
%
Fair value by balance sheet grouping
The following table provides the carrying amounts and estimated fair values of Huntington’s financial instruments at December 31, 2018 and December 31, 2017:
 
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

 
December 31, 2017
(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
1,567

 

 

 
$
1,567

 
$
1,567

Trading account securities

 

 
86

 
86

 
86

Available-for-sale securities

 

 
14,869

 
14,869

 
14,869

Held-to-maturity securities
9,091

 

 

 
9,091

 
8,971

Other securities
581

 

 
19

 
600

 
600

Loans held for sale

 
75

 
413

 
488

 
491

Net loans and leases (1)
69,333

 

 
93

 
69,426

 
69,146

Derivatives

 

 
132

 
132

 
132

Financial Liabilities
 
 
 
 
 
 
 
 
 
Deposits
77,041

 

 

 
77,041

 
77,010

Short-term borrowings
5,056

 

 

 
5,056

 
5,056

Long-term debt
9,206

 

 

 
9,206

 
9,402

Derivatives

 

 
86

 
86

 
86

(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 December 31, 2018 and December 31, 2017:
 
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

 
Estimated Fair Value Measurements at Reporting Date Using
 
December 31, 2017
(dollar amounts in millions)
Level 1
 
Level 2
 
Level 3
 
Financial Assets
 
 
 
 
 
 
 
Trading account securities
$
83

 
$
3

 
$

 
$
86

Available-for-sale securities
5

 
11,673

 
3,191

 
14,869

Held-to-maturity securities

 
8,971

 

 
8,971

Other securities (1)
19

 

 

 
19

Loans held for sale

 
413

 
78

 
491

Net loans and direct financing leases

 

 
69,146

 
69,146

Financial Liabilities

 

 

 
 
Deposits

 
73,975

 
3,035

 
77,010

Short-term borrowings

 

 
5,056

 
5,056

Long-term debt

 
8,944

 
458

 
9,402

(1)
Excludes securities without readily determinable fair values.