Quarterly report pursuant to Section 13 or 15(d)

VIEs

v3.10.0.1
VIEs
 9 Months Ended
Sep. 30, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
VIEs
VIEs
Unconsolidated VIEs
The following tables provide a summary of the assets and liabilities included in Huntington’s Unaudited Condensed 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, but is not the primary beneficiary, to the VIE at September 30, 2018, and December 31, 2017:

September 30, 2018
(dollar amounts in millions)
Total Assets

Total Liabilities

Maximum Exposure to Loss
2016-1 Automobile Trust
$
3

 
$
1

 
$
3

2015-1 Automobile Trust
—


—


—

Trust Preferred Securities
14


252


—

Affordable Housing Tax Credit Partnerships
683


345


683

Other Investments
125


54


125

Total
$
825


$
652


$
811

 
December 31, 2017
(dollar amounts in millions)
Total Assets
 
Total Liabilities
 
Maximum Exposure to Loss
2016-1 Automobile Trust
$
7

 
$
—

 
$
7

2015-1 Automobile Trust
1

 
—

 
1

Trust Preferred Securities
14

 
252

 
—

Affordable Housing Tax Credit Partnerships
636

 
335

 
636

Other Investments
117

 
53

 
117

Total
$
775


$
640


$
761


Automobile Securitizations
Huntington transferred two automobile loans to trusts in two separate securitizations and the resulting sale of all underlying securities qualified for sale accounting. Huntington has concluded that it is not the primary beneficiary of these trusts because it has neither the obligation to absorb losses of the entities that could potentially be significant to the VIEs nor the right to receive benefits from the entities that could potentially be significant to the VIEs. Huntington is not required and does not currently intend to provide any additional financial support to the trusts. Investors and creditors only have recourse to the assets held by the trusts. The interest Huntington holds in the VIEs relates to servicing rights which are included within accrued income and other assets of Huntington’s Unaudited Consolidated Balance Sheets. The maximum exposure to loss is equal to the carrying value of the servicing asset.
Trust-Preferred Securities
Huntington has certain wholly-owned trusts whose assets, liabilities, equity, income, and expenses are not included within Huntington’s Unaudited Condensed 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 Unaudited Condensed 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 Unaudited Condensed Consolidated Financial Statements.
A list of trust preferred securities outstanding at September 30, 2018 follows:
(dollar amounts in millions)
Rate
 
Principal amount of
subordinated note/
debenture issued to trust (1)
 
Investment in
unconsolidated
subsidiary
Huntington Capital I
3.10
%
(2)
$
70

 
$
6

Huntington Capital II
3.02

(3)
32

 
3

Sky Financial Capital Trust III
3.80

(4)
72

 
2

Sky Financial Capital Trust IV
3.80

(4)
74

 
2

Camco Financial Trust
3.73

(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 September 30, 2018, based on three-month LIBOR +0.70%.
(3)
Variable effective rate at September 30, 2018, based on three-month LIBOR +0.625%.
(4)
Variable effective rate at September 30, 2018, based on three-month LIBOR +1.40%.
(5)
Variable effective rate at September 30, 2018, 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 Low Income Housing Tax Credit (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 accrued income and 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 Unaudited Condensed Consolidated Statements of Income.
The following table presents the balances of Huntington’s affordable housing tax credit investments and related unfunded commitments at September 30, 2018 and December 31, 2017.
(dollar amounts in millions)
September 30,
2018
 
December 31,
2017
Affordable housing tax credit investments
$
1,102

 
$
996

Less: amortization
(419
)
 
(360
)
Net affordable housing tax credit investments
$
683

 
$
636

Unfunded commitments
$
345

 
$
335


The following table presents other information relating to Huntington’s affordable housing tax credit investments for the three-month and nine-month periods ended September 30, 2018 and 2017.
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
(dollar amounts in millions)
 
2018
 
2017
 
2018
 
2017
Tax credits and other tax benefits recognized
 
$
24

 
$
22

 
$
70

 
$
68

Proportional amortization method
 
 
 
 
 
 
 
 
Tax credit amortization expense included in provision for income taxes
19

 
17

 
59

 
51


There were no impairment losses recognized during the three-month period ended September 30, 2018. Huntington recognized immaterial impairment losses for the three-month and nine-month periods ended September 30, 2017, and for the nine-month period ended September 30, 2018. 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 and other miscellaneous investments.