FAIR VALUES OF ASSETS AND LIABILITIES

v3.19.2

FAIR VALUES OF ASSETS AND LIABILITIES	6 Months Ended
	Jun. 30, 2019
Fair Value Disclosures [Abstract]
FAIR VALUES OF ASSETS AND LIABILITIES	FAIR VALUES OF ASSETS AND LIABILITIES See Note 17 “Fair Value of Assets and Liabilities” to the Consolidated Financial Statements of the Annual Report on Form 10-K for the year ended December 31, 2018 for a description of the valuation methodologies used for instruments measured at fair value. Assets and liabilities measured at fair value rarely transfer between Level 1 and Level 2 measurements. There were no such transfers during the three-month and six-month periods ended June 30, 2019 and 2018. Assets and Liabilities measured at fair value on a recurring basis Assets and liabilities measured at fair value on a recurring basis at June 30, 2019 and December 31, 2018 are summarized below:   Fair Value Measurements at Reporting Date Using   Netting Adjustments (1)   June 30, 2019 (dollar amounts in millions) Level 1   Level 2   Level 3     Assets                   Trading account securities:                   Federal agencies: Other agencies $ —   $ 3   $ —   $ —   $ 3 Municipal securities —   105   —   —   105 Other securities 68   —   —   —   68   68   108   —   —   176 Available-for-sale securities:                   U.S. Treasury securities 11   —   —   —   11 Residential CMOs —   6,458   —   —   6,458 Residential MBS —   1,880   —   —   1,880 Commercial MBS —   1,460   —   —   1,460 Other agencies —   115   —   —   115 Municipal securities —   58   3,202   —   3,260 Asset-backed securities —   455   —   —   455 Corporate debt —   51   —   —   51 Other securities/sovereign debt —   5   —   —   5   11   10,482   3,202   —   13,695 Other securities 14   —   —   —   14 Loans held for sale —   736   —   —   736 Loans held for investment —   50   28   —   78 MSRs —   —   9   —   9 Derivative assets 2   817   12   (398 )   433 Liabilities                   Derivative liabilities 12   474   3   (372 )   117   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 (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. The tables below present a rollforward of the balance sheet amounts for the three-month and six-month periods ended June 30, 2019 and 2018, 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 Three Months Ended June 30, 2019           Available-for-sale securities     (dollar amounts in millions) MSRs   Derivative instruments   Municipal securities   Loans held for investment Opening balance $ 10   $ 5   $ 3,237   $ 29 Transfers out of Level 3 (1) —   (15 )   —   — Total gains/losses for the period:               Included in earnings (1 )   19   (1 )   — Included in OCI —   —   3   — Purchases/originations —   —   28   — Sales —   —   —   — Repayments —   —   —   (1 ) Settlements —   —   (65 )   — Closing balance $ 9   $ 9   $ 3,202   $ 28 Change in unrealized gains or losses for the period included in earnings for assets held at end of the reporting date $ (1 )   $ 4   $ —   $ — Change in unrealized gains or losses for the period included in other comprehensive income for assets held at the end of the reporting period $ —   $ —   $ 3   $ —   Level 3 Fair Value Measurements Three Months Ended June 30, 2018           Available-for-sale securities     (dollar amounts in millions) MSRs   Derivative instruments   Municipal securities   Loans held for investment Opening balance $ 12   $ —   $ 3,230   $ 37 Transfers out of Level 3 (1) —   (9 )   —   — Total gains/losses for the period:               Included in earnings (1 )   10   (1 )   — Included in OCI —   —   (9 )   — Purchases/originations —   —   86   — Sales —   —   —   — Repayments —   —   —   (3 ) Settlements —   —   (128 )   — Closing balance $ 11   $ 1   $ 3,178   $ 34 Change in unrealized gains or losses for the period included in earnings for assets held at end of the reporting date $ (1 )   $ 2   $ —   $ —   Level 3 Fair Value Measurements Six Months Ended June 30, 2019           Available-for-sale securities     (dollar amounts in millions) MSRs   Derivative instruments   Municipal securities   Loans held for investment Opening balance $ 10   $ 2   $ 3,165   $ 30 Transfers out of Level 3 (1) —   (24 )   —   — Total gains/losses for the period:               Included in earnings (1 )   31   —   — Included in OCI —   —   46   — Purchases/originations —   —   108   — Sales —   —   —   — Repayments —   —   —   (2 ) Settlements —   —   (117 )   — Closing balance $ 9   $ 9   $ 3,202   $ 28 Change in unrealized gains or losses for the period included in earnings for assets held at end of the reporting date $ (1 )   $ 6   $ —   $ — Change in unrealized gains or losses for the period included in other comprehensive income for assets held at the end of the reporting period $ —   $ —   $ 46   $ —   Level 3 Fair Value Measurements Six Months Ended June 30, 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 into Level 3 —   —   —   —   — Transfers out of Level 3 (1) —   (14 )   —   —   — Total gains/losses for the period:                   Included in earnings —   16   (2 )   (2 )   — Included in OCI —   —   (37 )   11   — Purchases/originations —   —   279   —   — Sales —   —   —   (33 )   — Repayments —   —   —   —   (4 ) Issues —   —   —   —   — Settlements —   —   (229 )   —   — Closing balance $ 11   $ 1   $ 3,178   $ —   $ 34 Change in unrealized gains or losses for the period included in earnings for assets held at end of the reporting date $ —   $ 2   $ —   $ —   $ — (1) Transfers out of Level 3 represent the settlement value of the derivative instruments (i.e. interest rate lock agreements) that is transferred to loans held for sale, which is classified as Level 2. 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 three-month and six-month periods ended June 30, 2019 and 2018:   Level 3 Fair Value Measurements Three Months Ended June 30, 2019           Available-for-sale securities (dollar amounts in millions) MSRs   Derivative instruments   Municipal securities Classification of gains and losses in earnings:           Mortgage banking income $ (1 )   $ 19   $ — Interest and fee income —   —   (1 ) Total $ (1 )   $ 19   $ (1 )   Level 3 Fair Value Measurements Three Months Ended June 30, 2018           Available-for-sale securities (dollar amounts in millions) MSRs   Derivative instruments   Municipal securities Classification of gains and losses in earnings:           Mortgage banking income $ (1 )   $ 10   $ — Other expense —   —   (1 ) Total $ (1 )   $ 10   $ (1 )   Level 3 Fair Value Measurements Six Months Ended June 30, 2019           Available-for-sale securities (dollar amounts in millions) MSRs   Derivative instruments   Municipal securities Classification of gains and losses in earnings:           Mortgage banking income $ (1 )   $ 31   $ — Interest and fee income —   —   — Total $ (1 )   $ 31   $ —   Level 3 Fair Value Measurements Six Months Ended June 30, 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 $ —   $ 16   $ —   $ — Securities gains (losses) —   —   —   (2 ) Other expense —   —   (2 )   — Total $ —   $ 16   $ (2 )   $ (2 ) Assets and liabilities under the fair value option The following tables present the fair value and aggregate principal balance of certain assets and liabilities under the fair value option:   June 30, 2019 (dollar amounts in millions) Total Loans   Loans that are 90 or more days past due Assets Fair value carrying amount   Aggregate unpaid principal   Difference   Fair value carrying amount   Aggregate unpaid principal   Difference Loans held for sale $ 736   $ 711   $ 25   $ —   $ —   $ — Loans held for investment 78   86   (8 )   5   7   (2 )   December 31, 2018 (dollar amounts in millions) Total Loans   Loans that are 90 or more days past due Assets Fair value carrying amount   Aggregate unpaid principal   Difference   Fair value carrying amount   Aggregate unpaid principal   Difference Loans held for sale $ 613   $ 594   $ 19   $ —   $ —   $ — Loans held for investment 79   87   (8 )   6   7   (1 ) The following tables present the net gains (losses) from fair value changes for the three-month and six-month periods ended June 30, 2019 and 2018.     Net gains (losses) from fair value changes   Net gains (losses) from fair value changes (dollar amounts in millions)   Three Months Ended June 30,   Six Months Ended June 30, Assets   2019   2018   2019   2018 Loans held for sale (1)   $ 8   $ 5   $ 6   $ 3 Loans held for investment   —   —   —   — (1) The net gains (losses) from fair value changes are included in Mortgage banking income on the Unaudited Condensed Consolidated Statements of Income. Assets and Liabilities measured at fair value on a nonrecurring basis Certain assets and liabilities may be required to be measured at fair value on a nonrecurring basis in periods subsequent to their initial recognition. These assets and liabilities are not measured at fair value on an ongoing basis; however, they are subject to fair value adjustments in certain circumstances, such as when there is evidence of impairment. The amounts presented represent the fair value on the various measurement dates throughout the period. The gains (losses) represent the amounts recorded during the period regardless of whether the asset is still held at period end. The amounts measured at fair value on a nonrecurring basis at June 30, 2019 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) Six Months Ended June 30, 2019 MSRs $ 184   $ —   $ —   $ 184   $ (27 ) Impaired loans 14   —   —   14   — MSRs accounted for under the amortization method are subject to nonrecurring fair value measurement when the fair value is lower than the carrying amount. Huntington records nonrecurring adjustments of collateral-dependent loans measured for impairment when establishing the ALLL. Such amounts are generally based on the fair value of the underlying collateral supporting the loan. Appraisals are generally obtained to support the fair value of the collateral and incorporate measures such as recent sales prices for comparable properties and cost of construction. Periodically, in cases where the carrying value exceeds the fair value of the collateral less cost to sell, an impairment charge is recognized. Significant unobservable inputs for assets and liabilities measured at fair value on a recurring and nonrecurring basis 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 June 30, 2019 and December 31, 2018:   Quantitative Information about Level 3 Fair Value Measurements at June 30, 2019 (dollar amounts in millions) Fair Value   Valuation Technique   Significant Unobservable Input   Range   Weighted Average Measured at fair value on a recurring basis: MSRs $ 9   Discounted cash flow   Constant prepayment rate   0 % - 25 %   9 %           Spread over forward interest rate swap rates   5% - 11 %   9 % Derivative assets 12   Consensus Pricing   Net market price   (6)% - 9 %   4 %           Estimated Pull through %   4% - 100 %   89 % Derivative liabilities 3   Discounted cash flow   Estimated conversion factor           163 %           Estimated growth rate of Visa Class A shares           7 %            Discount rate           2 %           Timing of the resolution of the litigation           6/30/2020 Municipal securities 3,202   Discounted cash flow   Discount rate   3% - 3 %   3 %           Cumulative default   0 % - 64 %   4 %           Loss given default   5% - 80 %   25 % Loans held for investment 28   Discounted cash flow   Discount rate   6% - 7 %   6 %           Constant prepayment rate   8% - 12 %   8 % Measured at fair value on a nonrecurring basis: MSRs 184   Discounted cash flow   Constant prepayment rate   10 %   31 %   14 %           Spread over forward interest rate swap rates   5 %   11 %   9 % Impaired loans 14   Appraisal value   NA           NA   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   0  % - 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 Loans held for sale 121   Discounted cash flow   Discount rate   5  % - 6 %   5 %   24   Appraisal value   NA           NA The following provides a general description of the impact of a change in an unobservable input on the fair value measurement and the interrelationship between unobservable inputs, where relevant/significant. Interrelationships may also exist between observable and unobservable inputs. Credit loss estimates, such as probability of default, constant default, cumulative default, loss given default, cure given deferral, and loss severity, are driven by the ability of the borrowers to pay their loans and the value of the underlying collateral and are impacted by changes in macroeconomic conditions, typically increasing when economic conditions worsen and decreasing when conditions improve. An increase in the estimated prepayment rate typically results in a decrease in estimated credit losses and vice versa. Higher credit loss estimates generally result in lower fair values. Credit spreads generally increase when liquidity risks and market volatility increase and decrease when liquidity conditions and market volatility improve. Discount rates and spread over forward interest rate swap rates typically increase when market interest rates increase and/or credit and liquidity risks increase, and decrease when market interest rates decline and/or credit and liquidity conditions improve. Higher discount rates and credit spreads generally result in lower fair market values. Net market price and pull through percentages generally increase when market interest rates increase and decline when market interest rates decline. Higher net market price and pull through percentages generally result in higher fair values. Fair values of financial instruments The following table provides the carrying amounts and estimated fair values of Huntington’s financial instruments at June 30, 2019 and December 31, 2018:   June 30, 2019 (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 $ 1,747   $ —   $ —   $ 1,747   $ 1,747 Trading account securities —   —   176   176   176 Available-for-sale securities —   —   13,695   13,695   13,695 Held-to-maturity securities 8,704   —   —   8,704   8,748 Other securities 426   —   14   440   440 Loans held for sale —   42   736   778   781 Net loans and leases (1) 74,181   —   78   74,259   74,775 Derivatives —   —   433   433   433 Financial Liabilities                   Deposits 80,882   —   —   80,882   80,890 Short-term borrowings 4,161   —   —   4,161   4,161 Long-term debt 8,973   —   —   8,973   9,180 Derivatives —   —   117   117   117   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 (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 June 30, 2019 and December 31, 2018:   Estimated Fair Value Measurements at Reporting Date Using   June 30, 2019 (dollar amounts in millions) Level 1   Level 2   Level 3   Financial Assets               Trading account securities $ 68   $ 108   $ —   $ 176 Available-for-sale securities 11   10,482   3,202   13,695 Held-to-maturity securities —   8,748   —   8,748 Other securities (1) 14   —   —   14 Loans held for sale —   736   45   781 Net loans and direct financing leases —   78   74,697   74,775 Financial Liabilities               Deposits —   73,905   6,985   80,890 Short-term borrowings —   4,161   —   4,161 Long-term debt —   8,609   571   9,180   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 (1) Excludes securities without readily determinable fair values. The short-term nature of certain assets and liabilities result in their carrying value approximating fair value. These include trading account securities, customers’ acceptance liabilities, short-term borrowings, bank acceptances outstanding, FHLB advances, and cash and short-term assets, which include cash and due from banks, interest-bearing deposits in banks, interest-bearing deposits at Federal Reserve Bank, federal funds sold, and securities purchased under resale agreements. Loan commitments and letters-of-credit generally have short-term, variable-rate features and contain clauses that limit Huntington’s exposure to changes in customer credit quality. Accordingly, their carrying values, which are immaterial at the respective balance sheet dates, are reasonable estimates of fair value. Certain assets, the most significant being operating lease assets, bank owned life insurance, and premises and equipment, do not meet the definition of a financial instrument and are excluded from this disclosure. Similarly, mortgage and nonmortgage servicing rights, deposit base, and other customer relationship intangibles are not considered financial instruments and are not included above. Accordingly, this fair value information is not intended to, and does not, represent Huntington’s underlying value. Many of the assets and liabilities subject to the disclosure requirements are not actively traded, requiring fair values to be estimated by Management. These estimations necessarily involve the use of judgment about a wide variety of factors, including but not limited to, relevancy of market prices of comparable instruments, expected future cash flows, and appropriate discount rates.