Huntington Bancshares Incorporated Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

OPERATING LEASES

OPERATING LEASES

6 Months Ended

Jun. 30, 2019

At June 30, 2019, Huntington was obligated under noncancelable leases for branch and office space. These leases are all classified as operating due to the amount of time such spaces are occupied relative to the underlying assets useful lives. Many of these leases contain renewal options, most of which are not included in measurement of the right-of-use asset as they are not considered reasonably certain of exercise (i.e., Huntington does not currently have a significant economic incentive to exercise these options). Some leases contain escalation clauses calling for rentals to be adjusted for increased real estate taxes and other operating expenses or proportionately adjusted for increases in the consumer or other price indices. Occasionally, Huntington

will sublease the land and buildings for which it has obtained the right to use; substantially all of those sublease arrangements are classified as operating, with sublease income recognized on a straight-line basis over the contractual term of the arrangement. Huntington has elected not to include non-lease components in the measurement of right-of-use assets, and as such allocates the costs attributable to such components, where those costs are not separately identifiable, via per-square-foot costing analysis developed by the entity for owned and leased spaces. Huntington uses a portfolio approach to develop discount rates as its lease portfolio is comprised of substantially all branch space and office space used in the entity’s operations. That rate, an input used in the measurement of the entity’s right-of-use assets, leverages an incremental borrowing rate of appropriate tenor and collateralization.

Net lease assets and liabilities at June 30, 2019 are as follows:



(dollar amounts in millions)	Classification	June 30, 2019
Assets
Operating lease assets	Other assets	$	202
Liabilities
Lease liabilities	Other liabilities	$	228

Net lease cost for the three-month and six-month periods ended June 30, 2019 is as follows:



(dollar amounts in millions)	Classification	Three Months Ended June 30, 2019			Six Months Ended June 30, 2019
Operating lease cost	Net occupancy	$	13		$	25
Sublease income	Net occupancy	(1		)	(2		)
Net lease cost		$	12		$	23

Maturity of lease liabilities at June 30, 2019 are as follows:



(dollar amounts in millions)	Total
Remainder of 2019	$	22
2020	50
2021	37
2022	32
2023	27
Thereafter	103
Total lease payments	$	271
Less: Interest	(43		)
Total lease liabilities	$	228

Lease term and discount rate as of June 30, 2019 are as follows:



	June 30, 2019
Weighted-average remaining lease term (years)
Operating leases	7.53

Weighted-average discount rate
Operating leases	4.70	%

Cash flow supplemental information at June 30, 2019 are as follows:



(dollar amounts in millions)	Six Months Ended June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	(27	)

Right-of-use assets obtained in exchange for lease obligations
Operating leases	12