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

Quarterly report pursuant to Section 13 or 15(d)

LOANS / LEASES AND ALLOWANCE FOR CREDIT LOSSES

LOANS / LEASES AND ALLOWANCE FOR CREDIT LOSSES

3 Months Ended

Mar. 31, 2016

LOANS / LEASES AND ALLOWANCE FOR CREDIT LOSSES

Loans and leases for which Huntington has the intent and ability to hold for the foreseeable future, or until maturity or payoff, are classified in the Unaudited Condensed Consolidated Balance Sheets as loans and leases. Except for loans which are accounted for at fair value, loans are carried at the principal amount outstanding, net of unamortized premiums and discounts and deferred loan fees and costs, which resulted in a net premium of $272 million and $262 million at March 31, 2016 and December 31, 2015, respectively.

Loan and Lease Portfolio Composition

The following table provides a detailed listing of Huntington’s loan and lease portfolio at March 31, 2016 and December 31, 2015:



(dollar amounts in thousands)	March 31, 2016			December 31, 2015
Loans and leases:
Commercial and industrial	$	21,253,692		$	20,559,834
Commercial real estate	5,281,810			5,268,651
Automobile	9,919,921			9,480,678
Home equity	8,422,439			8,470,482
Residential mortgage	6,081,984			5,998,400
Other consumer	579,513			563,054
Loans and leases	51,539,359			50,341,099
Allowance for loan and lease losses	(613,719		)	(597,843		)
Net loans and leases	$	50,925,640		$	49,743,256

As shown in the table above, the primary loan and lease portfolios are: C&I, CRE, automobile, home equity, residential mortgage, and other consumer. For ACL purposes, these portfolios are further disaggregated into classes. The classes within each portfolio are as follows:



Portfolio	Class
Commercial and industrial	Owner occupied
	Purchased credit-impaired
	Other commercial and industrial

Commercial real estate	Retail properties
	Multi-family
	Office
	Industrial and warehouse
	Purchased credit-impaired
	Other commercial real estate

Automobile	NA (1)

Home equity	Secured by first-lien
	Secured by junior-lien

Residential mortgage	Residential mortgage
	Purchased credit-impaired

Other consumer	Other consumer
	Purchased credit-impaired


(1)	Not applicable. The automobile loan portfolio is not further segregated into classes.

Loan Purchases and Sales

The following table summarizes significant portfolio loan purchase and sale activity for the three-month periods ended March 31, 2016 and 2015. The table below excludes mortgage loans originated for sale.



(dollar amounts in thousands)	Commercial and Industrial		Commercial Real Estate		Automobile			Home Equity		Residential Mortgage		Other Consumer		Total
Portfolio loans and leases purchased or transferred from held for sale during the:
Three-month period ended March 31, 2016	$	664,887	$	—	$	—		$	—	$	2,144	$	—	$	667,031
Three-month period ended March 31, 2015	12,591		—		—			—		3,883		—		16,474
Portfolio loans and leases sold or transferred to loans held for sale during the:
Three-month period ended March 31, 2016	$	144,519	$	—	$	—		$	—	$	—	$	—	$	144,519
Three-month period ended March 31, 2015	85,700		—		1,061,859		(1)	—		—		—		1,147,559


(1)	Reflects the transfer of approximately $1.0 billion automobile loans to loans held-for-sale at March 31, 2015.

NALs and Past Due Loans

Loans are considered past due when the contractual amounts due with respect to principal and interest are not received within 30 days of the contractual due date.

Any loan in any portfolio may be placed on nonaccrual status prior to the policies described below when collection of principal or interest is in doubt. When a borrower with debt is discharged in a Chapter 7 bankruptcy and not reaffirmed by the borrower, the loan is determined to be collateral dependent and placed on nonaccrual status.

All classes within the C&I and CRE portfolios (except for purchased credit-impaired loans) are placed on nonaccrual status at 90-days past due. Residential mortgage loans are placed on nonaccrual status at 150-days past due, with the exception of residential mortgages guaranteed by government organizations. First-lien home equity loans are placed on nonaccrual status at 150-days past due. Junior-lien home equity loans are placed on nonaccrual status at the earlier of 120-days past due or when the related first-lien loan has been identified as nonaccrual. Automobile and other consumer loans are generally charged-off when the loan is 120-days past due.

For all classes within all loan portfolios, when a loan is placed on nonaccrual status, any accrued interest income is reversed with current year accruals charged to interest income, and prior year amounts are recognized as a credit loss.

For all classes within all loan portfolios, cash receipts received on NALs are applied entirely against principal until the loan or lease has been collected in full, after which time any additional cash receipts are recognized as interest income. However, for secured non-reaffirmed debt in a Chapter 7 bankruptcy, payments are applied to principal and interest when the borrower has demonstrated a capacity to continue payment of the debt and collection of the debt is reasonably assured. For unsecured non-reaffirmed debt in a Chapter 7 bankruptcy where the carrying value has been fully charged-off, payments are recorded as loan recoveries.

Regarding all classes within the C&I and CRE portfolios, the determination of a borrower’s ability to make the required principal and interest payments is based on an examination of the borrower’s current financial statements, industry, management capabilities, and other qualitative measures. For all classes within the consumer loan portfolio, the determination of a borrower’s ability to make the required principal and interest payments is based on multiple factors, including number of days past due and, in some instances, an evaluation of the borrower’s financial condition. When, in Management’s judgment, the borrower’s ability to make required principal and interest payments resumes and collectability is no longer in doubt, supported by sustained repayment history, the loan or lease is returned to accrual status. For these loans that have been returned to accrual status, cash receipts are applied according to the contractual terms of the loan.

The following table presents NALs by loan class at March 31, 2016 and December 31, 2015:



(dollar amounts in thousands)	March 31, 2016		December 31, 2015
Commercial and industrial:
Owner occupied	$	28,202	$	35,481
Other commercial and industrial	279,622		139,714
Total commercial and industrial	307,824		175,195
Commercial real estate:
Retail properties	4,087		7,217
Multi-family	4,501		5,819
Office	17,495		10,495
Industrial and warehouse	1,794		2,202
Other commercial real estate	2,924		3,251
Total commercial real estate	30,801		28,984
Automobile	7,598		6,564
Home equity:
Secured by first-lien	35,101		35,389
Secured by junior-lien	27,107		30,889
Total home equity	62,208		66,278
Residential mortgage	90,303		94,560
Other consumer	—		—
Total nonaccrual loans	$	498,734	$	371,581

The following table presents an aging analysis of loans and leases, including past due loans, by loan class at March 31, 2016 and December 31, 2015: (1)



	March 31, 2016
	Past Due										Total Loans and Leases		90 or more days past due and accruing
(dollar amounts in thousands)	30-59 Days		60-89 Days		90 or more days		Total		Current		Total Loans and Leases		90 or more days past due and accruing
Commercial and industrial:
Owner occupied	$	2,841	$	1,399	$	10,952	$	15,192	$	3,991,359	$	4,006,551	$	—
Purchased credit-impaired	6		69		4,459		4,534		10,066		14,600		4,459		(2)
Other commercial and industrial	39,246		31,255		41,679		112,180		17,120,361		17,232,541		3,573		(3)
Total commercial and industrial	42,093		32,723		57,090		131,906		21,121,786		21,253,692		8,032
Commercial real estate:
Retail properties	204		530		2,782		3,516		1,570,318		1,573,834		—
Multi-family	624		567		1,811		3,002		1,085,120		1,088,122		—
Office	—		182		3,003		3,185		859,000		862,185		—
Industrial and warehouse	120		—		994		1,114		400,263		401,377		—
Purchased credit-impaired	—		—		12,694		12,694		—		12,694		12,694		(2)
Other commercial real estate	249		278		2,433		2,960		1,340,638		1,343,598		—
Total commercial real estate	1,197		1,557		23,717		26,471		5,255,339		5,281,810		12,694
Automobile	54,220		10,205		5,291		69,716		9,850,205		9,919,921		5,064
Home equity:



Secured by first-lien	11,570		5,148		25,854		42,572		5,146,801		5,189,373		4,606
Secured by junior-lien	14,156		8,025		25,066		47,247		3,185,819		3,233,066		3,965
Total home equity	25,726		13,173		50,920		89,819		8,332,620		8,422,439		8,571
Residential mortgage:
Residential mortgage	85,460		31,460		116,358		233,278		5,847,214		6,080,492		69,583		(4)
Purchased credit-impaired	—		—		—		—		1,492		1,492		—
Total residential mortgage	85,460		31,460		116,358		233,278		5,848,706		6,081,984		69,583
Other consumer:
Other consumer	4,987		1,393		1,868		8,248		571,226		579,474		1,868
Purchased credit-impaired	—		—		—		—		39		39		—
Total other consumer	4,987		1,393		1,868		8,248		571,265		579,513		1,868
Total loans and leases	$	213,683	$	90,511	$	255,244	$	559,438	$	50,979,921	$	51,539,359	$	105,812



	December 31, 2015
	Past Due										Total Loans and Leases		90 or more days past due and accruing
(dollar amounts in thousands)	30-59 Days		60-89 Days		90 or more days		Total		Current
Commercial and industrial:
Owner occupied	$	11,947	$	3,613	$	13,793	$	29,353	$	3,983,447	$	4,012,800	$	—
Purchased credit-impaired	292		1,436		5,949		7,677		13,340		21,017		5,949		(2)
Other commercial and industrial	32,476		8,531		27,236		68,243		16,457,774		16,526,017		2,775		(3)
Total commercial and industrial	44,715		13,580		46,978		105,273		20,454,561		20,559,834		8,724
Commercial real estate:
Retail properties	1,823		195		3,637		5,655		1,501,054		1,506,709		—
Multi family	961		1,137		2,691		4,789		1,073,429		1,078,218		—
Office	5,022		256		3,016		8,294		886,331		894,625		—
Industrial and warehouse	93		—		373		466		503,701		504,167		—
Purchased credit-impaired	102		3,818		9,549		13,469		289		13,758		9,549		(2)
Other commercial real estate	1,231		315		2,400		3,946		1,267,228		1,271,174		—
Total commercial real estate	9,232		5,721		21,666		36,619		5,232,032		5,268,651		9,549
Automobile	69,553		14,965		7,346		91,864		9,388,814		9,480,678		7,162
Home equity
Secured by first-lien	18,349		7,576		26,304		52,229		5,139,256		5,191,485		4,499
Secured by junior-lien	18,128		9,329		29,996		57,453		3,221,544		3,278,997		4,545
Total home equity	36,477		16,905		56,300		109,682		8,360,800		8,470,482		9,044
Residential mortgage
Residential mortgage	102,670		34,298		119,354		256,322		5,740,624		5,996,946		69,917		(5)
Purchased credit-impaired	103		—		—		103		1,351		1,454		—
Total residential mortgage	102,773		34,298		119,354		256,425		5,741,975		5,998,400		69,917
Other consumer



Other consumer	6,469		1,852		1,395		9,716		553,286		563,002		1,394
Purchased credit-impaired	—		—		—		—		52		52		—
Total other consumer	6,469		1,852		1,395		9,716		553,338		563,054		1,394
Total loans and leases	$	269,219	$	87,321	$	253,039	$	609,579	$	49,731,520	$	50,341,099	$	105,790


(1)	NALs are included in this aging analysis based on the loan’s past due status.


(2)	Amounts represent accruing purchased impaired loans related to acquisitions. Under the applicable accounting guidance (ASC 310-30), the loans were recorded at fair value upon acquisition and remain in accruing status.


(3)	Amounts include Huntington Technology Finance administrative lease delinquencies.


(4)	Includes $58 million guaranteed by the U.S. government.


(5)	Includes $56 million guaranteed by the U.S. government.

Allowance for Credit Losses

Huntington maintains two reserves, both of which reflect Management’s judgment regarding the appropriate level necessary to absorb credit losses inherent in our loan and lease portfolio: the ALLL and the AULC. Combined, these reserves comprise the total ACL. The determination of the ACL requires significant estimates, including the timing and amounts of expected future cash flows on impaired loans and leases, consideration of current economic conditions, and historical loss experience pertaining to pools of homogeneous loans and leases, all of which may be susceptible to change.

The appropriateness of the ACL is based on Management’s current judgments about the credit quality of the loan portfolio. These judgments consider on-going evaluations of the loan and lease portfolio, including such factors as the differing economic risks associated with each loan category, the financial condition of specific borrowers, the level of delinquent loans, the value of any collateral and, where applicable, the existence of any guarantees or other documented support. Further, Management evaluates the impact of changes in interest rates and overall economic conditions on the ability of borrowers to meet their financial obligations when quantifying our exposure to credit losses and assessing the appropriateness of our ACL at each reporting date. In addition to general economic conditions and the other factors described above, additional factors also considered include: the impact of increasing or decreasing residential real estate values; the diversification of CRE loans; the development of new or expanded Commercial business segments such as healthcare, ABL, and energy, and the overall condition of the manufacturing industry. Management’s determinations regarding the appropriateness of the ACL are reviewed and approved by the Company’s board of directors.

The ALLL consists of two components: (1) the transaction reserve, which includes a loan level allocation, specific reserves related to loans considered to be impaired, and loans involved in troubled debt restructurings, and (2) the general reserve. The transaction reserve component includes both (1) an estimate of loss based on pools of commercial and consumer loans and leases with similar characteristics and (2) an estimate of loss based on an impairment review of each impaired C&I and CRE loan where obligor balance is greater than $1 million. For the C&I and CRE portfolios, the estimate of loss based on pools of loans and leases with similar characteristics is made by applying a PD factor and a LGD factor to each individual loan based on a regularly updated loan grade, using a standardized loan grading system. The PD factor and an LGD factor are determined for each loan grade using statistical models based on historical performance data. The PD factor considers on-going reviews of the financial performance of the specific borrower, including cash flow, debt-service coverage ratio, earnings power, debt level, and equity position, in conjunction with an assessment of the borrower’s industry and future prospects. The LGD factor considers analysis of the type of collateral and the relative LTV ratio. These reserve factors are developed and updated periodically based on credit migration models that track historical movements of loans between loan ratings over time and a combination of long-term average loss experience of our own portfolio and external industry data.

In the case of other homogeneous portfolios, such as automobile loans, home equity loans, and residential mortgage loans, the determination of the transaction reserve also incorporates PD and LGD factors. The estimate of loss is based on pools of loans and leases with similar characteristics. The PD factor considers current credit scores unless the account is delinquent, in which case a higher PD factor is used. The credit score provides a basis for understanding the borrower’s past and current payment performance, and this information is used to estimate expected losses over the emergence period. The performance of first-lien loans ahead of our junior-lien loans is available to use as part of our updated score process. The LGD factor considers analysis of the type of collateral and the relative LTV ratio. Credit scores, models, analyses, and other factors used to determine both the PD and LGD factors are updated frequently to capture the recent behavioral characteristics of the subject portfolios, as well as any changes in loss mitigation or credit origination strategies, and adjustments to the reserve factors are made as required.

The general reserve consists of our risk-profile reserve components, which includes items unique to our structure, policies, processes, and portfolio composition, as well as qualitative measurements and assessments of the loan portfolios including, but not limited to, management quality, concentrations, portfolio composition, industry comparisons, and internal review functions.

The estimate for the AULC is determined using the same procedures and methodologies as used for the ALLL. The loss factors used in the AULC are the same as the loss factors used in the ALLL while also considering a historical utilization of unused commitments. The AULC is reflected in accrued expenses and other liabilities in the Unaudited Condensed Consolidated Balance Sheet.

The ACL is increased through a provision for credit losses that is charged to earnings, based on Management’s quarterly evaluation of the factors previously mentioned, and is reduced by charge-offs, net of recoveries, and the ACL associated with securitized or sold loans.

The following table presents ALLL and AULC activity by portfolio segment for the three-month periods ended March 31, 2016 and 2015:



(dollar amounts in thousands)	Commercial and Industrial			Commercial Real Estate			Automobile			Home Equity			Residential Mortgage			Other Consumer			Total
Three-month period ended March 31, 2016:
ALLL balance, beginning of period	$	298,746		$	100,007		$	49,504		$	83,671		$	41,646		$	24,269		$	597,843
Loan charge-offs	(16,823		)	(12,126		)	(11,486		)	(7,710		)	(2,760		)	(8,787		)	(59,692		)
Recoveries of loans previously charged-off	10,309			29,602			4,716			4,029			1,113			1,371			51,140
Provision (reduction in allowance) for loan and lease losses	28,135			(15,409		)	5,298			(1,888		)	753			7,449			24,338
Write-downs of loans sold or transferred to loans held for sale	—			—			—			—			90			—			90
ALLL balance, end of period	$	320,367		$	102,074		$	48,032		$	78,102		$	40,842		$	24,302		$	613,719
AULC balance, beginning of period	$	55,886		$	7,562		$	—		$	2,068		$	18		$	6,547		$	72,081
Provision for (reduction in allowance) unfunded loan commitments and letters of credit	2,499			(75		)	—			42			2			776			3,244
AULC balance, end of period	$	58,385		$	7,487		$	—		$	2,110		$	20		$	7,323		$	75,325
ACL balance, end of period	$	378,752		$	109,561		$	48,032		$	80,212		$	40,862		$	31,625		$	689,044



(dollar amounts in thousands)	Commercial and Industrial			Commercial Real Estate			Automobile			Home Equity			Residential Mortgage			Other Consumer			Total
Three-month period ended March 31, 2015:
ALLL balance, beginning of period	$	286,995		$	102,839		$	33,466		$	96,413		$	47,211		$	38,272		$	605,196
Loan charge-offs	(24,612		)	(2,013		)	(8,103		)	(8,586		)	(4,863		)	(6,898		)	(55,075		)
Recoveries of loans previously charged-off	13,209			6,025			3,855			3,961			2,047			1,546			30,643
Provision for (reduction in allowance) loan and lease losses	8,981			(6,099		)	10,200			18,492			10,985			(15,904		)	26,655
Allowance for loans sold or transferred to loans held for sale	—			—			(2,293		)	—			—			—			(2,293		)
ALLL balance, end of period	$	284,573		$	100,752		$	37,125		$	110,280		$	55,380		$	17,016		$	605,126
AULC balance, beginning of period	$	48,988		$	6,041		$	—		$	1,924		$	8		$	3,845		$	60,806
Provision for (reduction in allowance) unfunded loan commitments and letters of credit	(6,673		)	(510		)	—			715			1			403			(6,064		)
AULC balance, end of period	$	42,315		$	5,531		$	—		$	2,639		$	9		$	4,248		$	54,742
ACL balance, end of period	$	326,888		$	106,283		$	37,125		$	112,919		$	55,389		$	21,264		$	659,868

Any loan in any portfolio may be charged-off prior to the policies described below if a loss confirming event has occurred. Loss confirming events include, but are not limited to, bankruptcy (unsecured), continued delinquency, foreclosure, or receipt of an asset valuation indicating a collateral deficiency and that asset is the sole source of repayment. Additionally, discharged, collateral dependent non-reaffirmed debt in Chapter 7 bankruptcy filings will result in a charge-off to estimated collateral value, less anticipated selling costs.

C&I and CRE loans are either fully or partially charged-off at 90-days past due. Automobile loans and other consumer loans are charged-off at 120-days past due. First-lien and junior-lien home equity loans are charged-off to the estimated fair value of the collateral, less anticipated selling costs, at 150-days past due and 120-days past due, respectively. Residential mortgages are charged-off to the estimated fair value of the collateral, less anticipated selling costs, at 150-days past due.

Credit Quality Indicators

To facilitate the monitoring of credit quality for C&I and CRE loans, and for purposes of determining an appropriate ACL level for these loans, Huntington utilizes the following categories of credit grades:

Pass - Higher quality loans that do not fit any of the other categories described below.

OLEM - The credit risk may be relatively minor yet represent a risk given certain specific circumstances. If the potential weaknesses are not monitored or mitigated, the loan may weaken or the collateral may be inadequate to protect Huntington’s position in the future. For these reasons, Huntington considers the loans to be potential problem loans.

Substandard - Inadequately protected loans by the borrower’s ability to repay, equity, and/or the collateral pledged to secure the loan. These loans have identified weaknesses that could hinder normal repayment or collection of the debt. It is likely Huntington will sustain some loss if any identified weaknesses are not mitigated.

Doubtful - Loans that have all of the weaknesses inherent in those loans classified as Substandard, with the added elements of the full collection of the loan is improbable and that the possibility of loss is high.

The categories above, which are derived from standard regulatory rating definitions, are assigned upon initial approval of the loan or lease and subsequently updated as appropriate.

Commercial loans categorized as OLEM, Substandard, or Doubtful are considered Criticized loans. Commercial loans categorized as Substandard or Doubtful are also considered Classified loans.

For all classes within all consumer loan portfolios, each loan is assigned a specific PD factor that is partially based on the borrower’s most recent credit bureau score, which we update quarterly. A credit bureau score is a credit score developed by Fair Isaac Corporation based on data provided by the credit bureaus. The credit bureau score is widely accepted as the standard measure of consumer credit risk used by lenders, regulators, rating agencies, and consumers. The higher the credit bureau score, the higher likelihood of repayment and therefore, an indicator of higher credit quality.

Huntington assesses the risk in the loan portfolio by utilizing numerous risk characteristics. The classifications described above, and also presented in the table below, represent one of those characteristics that are closely monitored in the overall credit risk management processes.

The following table presents each loan and lease class by credit quality indicator at March 31, 2016 and December 31, 2015:



	March 31, 2016
	Credit Risk Profile by UCS Classification
(dollar amounts in thousands)	Pass		OLEM		Substandard		Doubtful		Total
Commercial and industrial:
Owner occupied	$	3,747,191	$	85,644	$	173,241	$	475	$	4,006,551
Purchased credit-impaired	3,013		670		10,917		—		14,600
Other commercial and industrial	16,138,472		308,603		778,423		7,043		17,232,541
Total commercial and industrial	19,888,676		394,917		962,581		7,518		21,253,692
Commercial real estate:
Retail properties	1,555,093		8,240		10,501		—		1,573,834
Multi-family	1,042,495		28,005		17,218		404		1,088,122
Office	806,473		15,129		40,161		422		862,185
Industrial and warehouse	376,898		20,588		3,837		54		401,377
Purchased credit-impaired	7,115		447		5,132		—		12,694
Other commercial real estate	1,308,447		3,622		30,898		631		1,343,598
Total commercial real estate	5,096,521		76,031		107,747		1,511		5,281,810

	Credit Risk Profile by FICO Score (1)
	750+		650-749		<650		Other (2)		Total



Automobile	4,894,441		3,618,491		1,140,522		266,467		9,919,921
Home equity:
Secured by first-lien	3,346,422		1,463,054		264,024		115,873		5,189,373
Secured by junior-lien	1,812,484		1,018,134		309,979		92,469		3,233,066
Total home equity	5,158,906		2,481,188		574,003		208,342		8,422,439
Residential mortgage:
Residential mortgage	3,652,557		1,790,319		550,229		87,387		6,080,492
Purchased credit-impaired	278		737		477		—		1,492
Total residential mortgage	3,652,835		1,791,056		550,706		87,387		6,081,984
Other consumer:
Other consumer	216,875		263,341		54,790		44,468		579,474
Purchased credit-impaired	—		39		—		—		39
Total other consumer	$	216,875	$	263,380	$	54,790	$	44,468	$	579,513



	December 31, 2015
	Credit Risk Profile by UCS Classification
(dollar amounts in thousands)	Pass		OLEM		Substandard		Doubtful		Total
Commercial and industrial:
Owner occupied	$	3,731,113	$	114,490	$	165,301	$	1,896	$	4,012,800
Purchased credit-impaired	3,051		674		15,661		1,631		21,017
Other commercial and industrial	15,523,625		284,175		714,615		3,602		16,526,017
Total commercial and industrial	19,257,789		399,339		895,577		7,129		20,559,834
Commercial real estate:
Retail properties	1,473,014		10,865		22,830		—		1,506,709
Multi-family	1,029,138		28,862		19,898		320		1,078,218
Office	822,824		35,350		36,011		440		894,625
Industrial and warehouse	493,402		259		10,450		56		504,167
Purchased credit-impaired	7,194		397		6,167		—		13,758
Other commercial real estate	1,240,482		4,054		25,811		827		1,271,174
Total commercial real estate	5,066,054		79,787		121,167		1,643		5,268,651

	Credit Risk Profile by FICO Score (1)
	750+		650-749		<650		Other (2)		Total
Automobile	4,680,684		3,454,585		1,086,914		258,495		9,480,678
Home equity:
Secured by first-lien	3,369,657		1,441,574		258,328		121,926		5,191,485
Secured by junior-lien	1,841,084		1,024,851		323,998		89,064		3,278,997
Total home equity	5,210,741		2,466,425		582,326		210,990		8,470,482
Residential mortgage
Residential mortgage	3,563,683		1,813,002		567,688		52,573		5,996,946
Purchased credit-impaired	381		777		296		—		1,454
Total residential mortgage	3,564,064		1,813,779		567,984		52,573		5,998,400
Other consumer
Other consumer	233,969		269,694		49,650		9,689		563,002
Purchased credit-impaired	—		52		—		—		52
Total other consumer	$	233,969	$	269,746	$	49,650	$	9,689	$	563,054


(1)	Reflects most recent customer credit scores.


(2)	Reflects deferred fees and costs, loans in process, loans to legal entities, etc.

Impaired Loans

For all classes within the C&I and CRE portfolios, all loans with an obligor balance of $1 million or greater are considered for individual evaluation on a quarterly basis for impairment. Generally, consumer loans within any class are not individually evaluated on a regular basis for impairment. However, certain home equity and residential mortgage loans are measured for impairment based on the underlying collateral value. All TDRs, regardless of the outstanding balance amount, are also considered to be impaired. Loans acquired with evidence of deterioration of credit quality since origination for which it is probable at acquisition that all contractually required payments will not be collected are also considered to be impaired.

Once a loan has been identified for an assessment of impairment, the loan is considered impaired when, based on current information and events, it is probable that all amounts due according to the contractual terms of the loan agreement will not be collected. This determination requires significant judgment and use of estimates, and the eventual outcome may differ significantly from those estimates.

When a loan in any class has been determined to be impaired, the amount of the impairment is measured using the present value of expected future cash flows discounted at the loan’s effective interest rate or, as a practical expedient, the observable market price of the loan, or the fair value of the collateral, less anticipated selling costs, if the loan is collateral dependent. When the present value of expected future cash flows is used, the effective interest rate is the original contractual interest rate of the loan adjusted for any premium, discount, fees, or costs. A specific reserve is established as a component of the ALLL when a commercial loan has been determined to be impaired. Subsequent to the initial measurement of impairment, if there is a significant change to the impaired loan’s expected future cash flows, or if actual cash flows are significantly different from the cash flows previously estimated, Huntington recalculates the impairment and appropriately adjusts the specific reserve. Similarly, if Huntington measures impairment based on the observable market price of an impaired loan or the fair value of the collateral of an impaired collateral dependent loan, Huntington will adjust the specific reserve.

When a loan within any class is impaired, the accrual of interest income is discontinued unless the receipt of principal and interest is no longer in doubt. Interest income on TDRs is accrued when all principal and interest is expected to be collected under the post-modification terms. Cash receipts received on nonaccruing impaired loans within any class are generally applied entirely against principal until the loan has been collected in full (including already charged-off portion), after which time any additional cash receipts are recognized as interest income. Cash receipts received on accruing impaired loans within any class are applied in the same manner as accruing loans that are not considered impaired.

The following tables present the balance of the ALLL attributable to loans by portfolio segment individually and collectively evaluated for impairment and the related loan and lease balance at March 31, 2016 and December 31, 2015:



(dollar amounts in thousands)	Commercial and Industrial		Commercial Real Estate		Automobile		Home Equity		Residential Mortgage		Other Consumer		Total
ALL at March 31, 2016:
Portion of ALLL balance:
Attributable to purchased credit-impaired loans	$	799	$	—	$	—	$	—	$	—	$	—	$	799
Attributable to loans individually evaluated for impairment	24,557		7,180		1,853		13,894		16,335		340		64,159
Attributable to loans collectively evaluated for impairment	295,011		94,894		46,179		64,208		24,507		23,962		548,761
Total ALLL balance	$	320,367	$	102,074	$	48,032	$	78,102	$	40,842	$	24,302	$	613,719
Loan and Lease Ending Balances at March 31, 2016:
Portion of loan and lease ending balance:
Attributable to purchased credit-impaired loans	$	14,600	$	12,694	$	—	$	—	$	1,492	$	39	$	28,825
Individually evaluated for impairment	587,810		139,938		33,264		251,194		357,565		4,959		1,374,730
Collectively evaluated for impairment	20,651,282		5,129,178		9,886,657		8,171,245		5,722,927		574,515		50,135,804
Total loans and leases evaluated for impairment	$	21,253,692	$	5,281,810	$	9,919,921	$	8,422,439	$	6,081,984	$	579,513	$	51,539,359



(dollar amounts in thousands)	Commercial and Industrial		Commercial Real Estate		Automobile		Home Equity		Residential Mortgage		Other Consumer		Total
ALLL at December 31, 2015
Portion of ALLL balance:
Attributable to purchased credit-impaired loans	$	2,602	$	—	$	—	$	—	$	127	$	—	$	2,729
Attributable to loans individually evaluated for impairment	19,314		8,114		1,779		16,242		16,811		176		62,436
Attributable to loans collectively evaluated for impairment	276,830		91,893		47,725		67,429		24,708		24,093		532,678
Total ALLL balance:	$	298,746	$	100,007	$	49,504	$	83,671	$	41,646	$	24,269	$	597,843
Loan and Lease Ending Balances at December 31, 2015
Portion of loan and lease ending balances:
Attributable to purchased credit-impaired loans	$	21,017	$	13,758	$	—	$	—	$	1,454	$	52	$	36,281
Individually evaluated for impairment	481,033		144,977		31,304		248,839		366,995		4,640		1,277,788
Collectively evaluated for impairment	20,057,784		5,109,916		9,449,374		8,221,643		5,629,951		558,362		49,027,030
Total loans and leases evaluated for impairment	$	20,559,834	$	5,268,651	$	9,480,678	$	8,470,482	$	5,998,400	$	563,054	$	50,341,099

The following tables present by class the ending, unpaid principal balance, and the related ALLL, along with the average balance and interest income recognized only for loans and leases individually evaluated for impairment and purchased credit-impaired loans: (1), (2)



	March 31, 2016						Three months ended March 31, 2016
(dollar amounts in thousands)	Ending Balance		Unpaid Principal Balance (5)		Related Allowance		Average Balance		Interest Income Recognized
With no related allowance recorded:
Commercial and industrial:
Owner occupied	$	40,757	$	47,876	$	—	$	50,604	$	291
Purchased credit-impaired	—		—		—		—		—
Other commercial and industrial	240,790		243,042		—		210,540		942
Total commercial and industrial	281,547		290,918		—		261,144		1,233
Commercial real estate:
Retail properties	31,499		32,517		—		36,673		485
Multi-family	20,325		20,325		—		6,775		57
Office	16,360		30,330		—		10,671		141
Industrial and warehouse	—		—		—		1,143		19
Purchased credit-impaired	12,694		53,108		—		13,226		867
Other commercial real estate	6,479		6,645		—		3,319		47
Total commercial real estate	87,357		142,925		—		71,807		1,616
Residential mortgage:
Residential mortgage	—		—		—		—		—
Purchased credit-impaired	1,492		2,074		—		1,473		2
Total residential mortgage	1,492		2,074		—		1,473		2
Other consumer
Other consumer	—		—		—		—		—
Purchased credit-impaired	39		96		—		45		102
Total other consumer	$	39	$	96	$	—	$	45	$	102

With an allowance recorded:



Commercial and industrial: (3)
Owner occupied	$	66,342	$	74,899	$	4,086	$	57,815	$	584
Purchased credit-impaired	14,600		22,636		799		17,808		997
Other commercial and industrial	239,921		267,857		20,471		188,461		1,505
Total commercial and industrial	320,863		365,392		25,356		264,084		3,086
Commercial real estate: (4)
Retail properties	7,128		8,038		252		8,385		84
Multi-family	16,284		18,663		1,441		28,461		297
Office	11,798		14,949		1,496		11,727		52
Industrial and warehouse	3,108		3,642		259		6,411		20
Purchased credit-impaired	—		—		—		—		—
Other commercial real estate	26,957		30,472		3,732		24,873		305
Total commercial real estate	65,275		75,764		7,180		79,857		758
Automobile	33,264		33,962		1,853		32,284		578
Home equity:
Secured by first-lien	55,830		59,880		4,294		54,251		500
Secured by junior-lien	195,364		226,846		9,600		195,765		2,468
Total home equity	251,194		286,726		13,894		250,016		2,968
Residential mortgage (6):
Residential mortgage	357,565		399,284		16,335		362,280		3,036
Purchased credit-impaired	—		—		—		—		—
Total residential mortgage	357,565		399,284		16,335		362,280		3,036
Other consumer:
Other consumer	4,959		4,979		340		4,799		66
Purchased credit-impaired	—		—		—		—		—
Total other consumer	$	4,959	$	4,979	$	340	$	4,799	$	66



	December 31, 2015						Three months ended March 31, 2015
(dollar amounts in thousands)	Ending Balance		Unpaid Principal Balance (5)		Related Allowance		Average Balance		Interest Income Recognized
With no related allowance recorded:
Commercial and industrial:
Owner occupied	$	57,832	$	65,812	$	—	$	12,264	$	74
Purchased credit-impaired	—		—		—		—		—
Other commercial and industrial	197,969		213,739		—		41,552		338
Total commercial and industrial	255,801		279,551		—		53,816		412
Commercial real estate:
Retail properties	42,009		54,021		—		57,556		496
Multi-family	—		—		—		—		—
Office	9,030		12,919		—		1,680		31
Industrial and warehouse	1,720		1,741		—		526		7
Purchased credit-impaired	13,758		55,358		—		36,857		1,925
Other commercial real estate	1,743		1,775		—		4,354		46
Total commercial real estate	68,260		125,814		—		100,973		2,505
Other consumer	—		—		—		—		—
Purchased credit-impaired	52		101		—		—		—



Total other consumer	$	52	$	101	$	—	$	—	$	—

With an allowance recorded:
Commercial and industrial: (3)
Owner occupied	$	54,092	$	62,527	$	4,171	$	50,705	$	440
Purchased credit-impaired	21,017		30,676		2,602		22,303		1,164
Other commercial and industrial	171,140		181,000		15,143		148,098		1,036
Total commercial and industrial	246,249		274,203		21,916		221,106		2,640
Commercial real estate: (4)
Retail properties	9,096		11,121		1,190		40,572		363
Multi-family	34,349		37,208		1,593		15,625		170
Office	14,365		17,350		1,177		50,628		563
Industrial and warehouse	9,721		10,550		1,540		7,949		82
Purchased credit-impaired	—		—		—		—		—
Other commercial real estate	22,944		28,701		2,614		29,605		354
Total commercial real estate	90,475		104,930		8,114		144,379		1,532
Automobile	31,304		31,878		1,779		30,385		561
Home equity:
Secured by first-lien	52,672		57,224		4,359		146,545		1,584
Secured by junior-lien	196,167		227,733		11,883		170,386		1,985
Total home equity	248,839		284,957		16,242		316,931		3,569
Residential mortgage (6):
Residential mortgage	366,995		408,925		16,811		371,643		3,122
Purchased credit-impaired	1,454		2,189		127		2,040		3
Total residential mortgage	368,449		411,114		16,938		373,683		3,125
Other consumer:
Other consumer	4,640		4,649		176		4,566		62
Purchased credit-impaired	—		—		—		51		118
Total other consumer	$	4,640	$	4,649	$	176	$	4,617	$	180


(1)	These tables do not include loans fully charged-off.


(2)	All automobile, home equity, residential mortgage, and other consumer impaired loans included in these tables are considered impaired due to their status as a TDR.


(3)	At March 31, 2016, $92 million of the $321 million commercial and industrial loans with an allowance recorded were considered impaired due to their status as a TDR. At December 31, 2015, $91 million of the $246 million commercial and industrial loans with an allowance recorded were considered impaired due to their status as a TDR.


(4)	At March 31, 2016, $30 million of the $65 million commercial real estate loans with an allowance recorded were considered impaired due to their status as a TDR. At December 31, 2015, $35 million of the $90 million commercial real estate loans with an allowance recorded were considered impaired due to their status as a TDR.


(5)	The differences between the ending balance and unpaid principal balance amounts represent partial charge-offs.


(6)	At March 31, 2016, $29 million of the $358 million residential mortgages loans with an allowance recorded were guaranteed by the U.S. government. At December 31, 2015, $29 million of the $368 million residential mortgage loans with an allowance recorded were guaranteed by the U.S. government.

TDR Loans

TDRs are modified loans where a concession was provided to a borrower experiencing financial difficulties. Loan modifications are considered TDRs when the concessions provided are not available to the borrower through either normal channels or other sources. However, not all loan modifications are TDRs.

TDR Concession Types

The Company’s standards relating to loan modifications consider, among other factors, minimum verified income requirements, cash flow analyses, and collateral valuations. Each potential loan modification is reviewed individually and the terms of the loan are modified to meet a borrower’s specific circumstances at a point in time. All commercial TDRs are reviewed and approved by our SAD. The types of concessions provided to borrowers include:


•	Interest rate reduction: A reduction of the stated interest rate to a nonmarket rate for the remaining original life of the debt.


•	Amortization or maturity date change beyond what the collateral supports, including any of the following:


(1)	Lengthens the amortization period of the amortized principal beyond market terms. This concession reduces the minimum monthly payment and could increase the amount of the balloon payment at the end of the term of the loan. Principal is generally not forgiven.


(2)	Reduces the amount of loan principal to be amortized and increases the amount of the balloon payment at the end of the term of the loan. This concession also reduces the minimum monthly payment. Principal is generally not forgiven.


(3)	Extends the maturity date or dates of the debt beyond what the collateral supports. This concession generally applies to loans without a balloon payment at the end of the term of the loan.


•	Chapter 7 bankruptcy: A bankruptcy court’s discharge of a borrower’s debt is considered a concession when the borrower does not reaffirm the discharged debt.


•	Other: A concession that is not categorized as one of the concessions described above. These concessions include, but are not limited to: principal forgiveness, collateral concessions, covenant concessions, and reduction of accrued interest.

Principal forgiveness may result from any TDR modification of any concession type. However, the aggregate amount of principal forgiven as a result of loans modified as TDRs during the three-month periods ended March 31, 2016 and 2015, was not significant.

Following is a description of TDRs by the different loan types:

Commercial loan TDRs – Commercial accruing TDRs often result from loans receiving a concession with terms that are not considered a market transaction to Huntington. The TDR remains in accruing status as long as the customer is less than 90-days past due on payments per the restructured loan terms and no loss is expected.

Commercial nonaccrual TDRs result from either: (1) an accruing commercial TDR being placed on nonaccrual status, or (2) a workout where an existing commercial NAL is restructured and a concession is given. At times, these workouts restructure the NAL so that two or more new notes are created. The primary note is underwritten based upon our normal underwriting standards and is sized so projected cash flows are sufficient to repay contractual principal and interest. The terms on the secondary note(s) vary by situation, and may include notes that defer principal and interest payments until after the primary note is repaid. Creating two or more notes often allows the borrower to continue a project and allows Huntington to right-size a loan based upon the current expectations for a borrower’s or project’s performance.

Our strategy involving TDR borrowers includes working with these borrowers to allow them time to improve their financial position and remain our customer through refinancing their notes according to market terms and conditions in the future or to refinance elsewhere. A subsequent refinancing or modification of a loan may occur when either the loan matures according to the terms of the TDR-modified agreement or the borrower requests a change to the loan agreements. At that time, the loan is evaluated to determine if it is creditworthy. It is subjected to the normal underwriting standards and processes for other similar credit extensions, both new and existing. The refinanced note is evaluated to determine if it is considered a new loan or a continuation of the prior loan. A new loan is considered for removal of the TDR designation, whereas a continuation of the prior note requires a continuation of the TDR designation. In order for a TDR designation to be removed, the borrower must no longer be experiencing financial difficulties and the terms of the refinanced loan must not represent a concession.

Residential Mortgage loan TDRs – Residential mortgage TDRs represent loan modifications associated with traditional first-lien mortgage loans in which a concession has been provided to the borrower. The primary concessions given to residential mortgage borrowers are amortization or maturity date changes and interest rate reductions. Residential mortgages identified as TDRs involve borrowers unable to refinance their mortgages through the Company’s normal mortgage origination channels or through other independent sources. Some, but not all, of the loans may be delinquent.

Automobile, Home Equity, and Other Consumer loan TDRs – The Company may make similar interest rate, term, and principal concessions as with residential mortgage loan TDRs.

TDR Impact on Credit Quality

Huntington’s ALLL is largely determined by updated risk ratings assigned to commercial loans, updated borrower credit scores on consumer loans, and borrower delinquency history in both the commercial and consumer portfolios. These updated risk ratings and credit scores consider the default history of the borrower, including payment redefaults. As such, the provision for credit losses is impacted primarily by changes in borrower payment performance rather than the TDR classification. TDRs can be classified as either accrual or nonaccrual loans. Nonaccrual TDRs are included in NALs whereas accruing TDRs are excluded from NALs as it is probable that all contractual principal and interest due under the restructured terms will be collected.

Our TDRs may include multiple concessions and the disclosure classifications are presented based on the primary concession provided to the borrower. The majority of our concessions for the C&I and CRE portfolios are the extension of the maturity date.

TDR concessions may also result in the reduction of the ALLL within the C&I and CRE portfolios. This reduction is derived from payments and the resulting application of the reserve calculation within the ALLL. The transaction reserve for non-TDR C&I and CRE loans is calculated based upon several estimated probability factors, such as PD and LGD, both of which were previously discussed. Upon the occurrence of a TDR in our C&I and CRE portfolios, the reserve is measured based on discounted expected cash flows or collateral value, less anticipated selling costs, of the modified loan in accordance with ASC 310-10. The resulting TDR ALLL calculation often results in a lower ALLL amount because (1) the discounted expected cash flows or collateral value, less anticipated selling costs, indicate a lower estimated loss, (2) if the modification includes a rate increase, the discounting of the cash flows on the modified loan, using the pre-modification interest rate, exceeds the carrying value of the loan, or (3) payments may occur as part of the modification. The ALLL for C&I and CRE loans may increase as a result of the modification, as the discounted cash flow analysis may indicate additional reserves are required.

TDR concessions on consumer loans may increase the ALLL. The concessions made to these borrowers often include interest rate reductions, and therefore, the TDR ALLL calculation results in a greater ALLL compared with the non-TDR calculation as the reserve is measured based on the estimation of the discounted expected cash flows or collateral value, less anticipated selling costs, on the modified loan in accordance with ASC 310-10. The resulting TDR ALLL calculation often results in a higher ALLL amount because (1) the discounted expected cash flows or collateral value, less anticipated selling costs, indicate a higher estimated loss or, (2) due to the rate decrease, the discounting of the cash flows on the modified loan, using the pre-modification interest rate, indicates a reduction in the present value of expected cash flows or collateral value, less anticipated selling costs. In certain instances, the ALLL may decrease as a result of payments made in connection with the modification.

Commercial loan TDRs – In instances where the bank substantiates that it will collect its outstanding balance in full, the note is considered for return to accrual status upon the borrower showing a sustained period of repayment performance for a six-month period of time. This six-month period could extend before or after the restructure date. If a charge-off was taken as part of the restructuring, any interest or principal payments received on that note are applied to first reduce the bank’s outstanding book balance and then to recoveries of charged-off principal, unpaid interest, and/or fee expenses while the TDR is in nonaccrual status.

Residential Mortgage, Automobile, Home Equity, and Other Consumer loan TDRs – Modified loans identified as TDRs are aggregated into pools for analysis. Cash flows and weighted average interest rates are used to calculate impairment at the pooled-loan level. Once the loans are aggregated into the pool, they continue to be classified as TDRs until contractually repaid or charged-off.

Residential mortgage loans not guaranteed by a U.S. government agency such as the FHA, VA, and the USDA, including TDR loans, are reported as accrual or nonaccrual based upon delinquency status. Nonaccrual TDRs are those that are greater than 150-days contractually past due. Loans guaranteed by U.S. government organizations continue to accrue interest on guaranteed rates upon delinquency.

The following tables present by class and by the reason for the modification, the number of contracts, post-modification outstanding balance, and the financial effects of the modification for the three-month periods ended March 31, 2016 an 2015:



	New Troubled Debt Restructurings During The Three-Month Period Ended (1)
	March 31, 2016						March 31, 2015
(dollar amounts in thousands)	Number of Contracts	Post-modification Outstanding Ending Balance		Financial effects of modification (2)			Number of Contracts	Post-modification Outstanding Ending Balance		Financial effects of modification (2)
C&I—Owner occupied:
Interest rate reduction	1	$	17	$	(1	)	1	$	46	$	(1	)
Amortization or maturity date change	52	36,509		480			46	10,461		(174		)
Other	2	223		(17		)	3	613		(29		)
Total C&I—Owner occupied	55	36,749		462			50	11,120		(204		)
C&I—Other commercial and industrial:
Interest rate reduction	—	—		—			1	30		—
Amortization or maturity date change	132	86,149		92			117	80,376		814
Other	6	635		13			5	28,388		(430		)
Total C&I—Other commercial and industrial	138	86,784		105			123	108,794		384
CRE—Retail properties:
Interest rate reduction	—	—		—			1	1,657		(11		)
Amortization or maturity date change	4	523		(38		)	11	4,577		(199		)
Other	—	—		—			—	—		—
Total CRE—Retail properties	4	523		(38		)	12	6,234		(210		)
CRE—Multi family:
Interest rate reduction	—	—		—			—	—		—
Amortization or maturity date change	9	22,509		(105		)	19	5,045		(1		)
Other	—	—		—			—	—		—
Total CRE—Multi family	9	22,509		(105		)	19	5,045		(1		)
CRE—Office:
Interest rate reduction	—	—		—			—	—		—
Amortization or maturity date change	6	8,361		431			5	26,085		(31		)
Other	1	139		(19		)	—	—		—
Total CRE—Office	7	8,500		412			5	26,085		(31		)
CRE—Industrial and warehouse:
Interest rate reduction	—	—		—			—	—		—
Amortization or maturity date change	2	372		(879		)	1	226		—
Other	—	—		—			—	—		—
Total CRE—Industrial and Warehouse	2	372		(879		)	1	226		—
CRE—Other commercial real estate:
Interest rate reduction	—	—		—			—	—		—
Amortization or maturity date change	3	2,030		32			7	3,659		10
Other	1	124		35			1	152		—



Total CRE—Other commercial real estate	4	2,154		67			8	3,811		10
Automobile:
Interest rate reduction	4	42		2			13	19		1
Amortization or maturity date change	421	3,901		220			496	3,352		158
Chapter 7 bankruptcy	317	2,562		115			144	1,223		100
Other	—	—		—			—	—		—
Total Automobile	742	6,505		337			653	4,594		259
Residential mortgage:
Interest rate reduction	5	657		(32		)	5	476		(4		)
Amortization or maturity date change	92	10,759		(577		)	123	13,858		(121		)
Chapter 7 bankruptcy	17	1,505		70			34	4,176		(124		)
Other	—	—		—			6	708		—
Total Residential mortgage	114	12,921		(539		)	168	19,218		(249		)
First-lien home equity:
Interest rate reduction	12	971		33			10	1,419		26
Amortization or maturity date change	25	2,050		(28		)	49	3,611		(303		)
Chapter 7 bankruptcy	39	2,866		122			26	1,585		80
Other	—	—		—			—	—		—
Total First-lien home equity	76	5,887		127			85	6,615		(197		)
Junior-lien home equity:
Interest rate reduction	8	413		34			4	251		15
Amortization or maturity date change	204	9,840		(1,254		)	347	16,507		(2,936		)
Chapter 7 bankruptcy	60	731		611			51	775		887
Other	—	—		—			—	—		—
Total Junior-lien home equity	272	10,984		(609		)	402	17,533		(2,034		)
Other consumer:
Interest rate reduction	—	—		—			—	—		—
Amortization or maturity date change	4	555		24			4	95		4
Chapter 7 bankruptcy	7	66		7			2	6		1
Other	—	—		—			—	—		—
Total Other consumer	11	621		31			6	101		5
Total new troubled debt restructurings	1,434	$	194,509	$	(629	)	1,532	$	209,376	$	(2,268	)


(1)	TDRs may include multiple concessions and the disclosure classifications are based on the primary concession provided to the borrower.


(2)	Amount represents the financial impact via provision for loan and lease losses as a result of the modification.

Pledged Loans and Leases

At March 31, 2016, the Bank has access to the Federal Reserve’s discount window and advances from the FHLB – Cincinnati. As of March 31, 2016, these borrowings and advances are secured by $18.0 billion of loans and securities.

On March 31, 2015, Huntington completed its acquisition of Macquarie Equipment Finance, which we have re-branded Huntington Technology Finance. Huntington assumed debt associated with two securitizations. As of March 31, 2016, the debt is secured by $128 million of leases held by the trusts.