Quarterly report pursuant to Section 13 or 15(d)

FAIR VALUES OF ASSETS AND LIABILITIES

v3.24.2
FAIR VALUES OF ASSETS AND LIABILITIES
 6 Months Ended
Jun. 30, 2024
Fair Value Disclosures [Abstract]  
FAIR VALUES OF ASSETS AND LIABILITIES FAIR VALUES OF ASSETS AND LIABILITIES
See Note 19 - “Fair Value of Assets and Liabilities” to the Consolidated Financial Statements appearing in Huntington’s 2023 Annual Report on Form 10-K for a description of the valuation methodologies used for instruments measured at fair value, with the exception of the below described long-term debt elected to be accounted for at fair value in the three-month period ended June 30, 2024. 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, 2024 and 2023.
In the three-month period ended June 30, 2024, Huntington elected the fair value option for CLNs structured as long-term debt. CLNs are classified as Level 2 using quoted prices for similar liabilities in active markets, quoted prices of similar liabilities in markets that are not active, and inputs that are observable for the assets, either directly or indirectly, for substantially the full term of the financial instrument.
Assets and Liabilities measured at fair value on a recurring basis
Fair Value Measurements at Reporting Date Using Netting Adjustments (1) At June 30, 2024
(dollar amounts in millions) Level 1 Level 2 Level 3
Assets
Trading account securities:
U.S. Treasury securities $ 89  $ —  $ —  $ —  $ 89 
Municipal securities —  44  —  —  44 
Corporate debt —  21  —  —  21 
Total trading account securities
 89  65  —  —  154 
Available-for-sale securities:
U.S. Treasury securities 6,111  —  —  —  6,111 
Residential CMO —  2,992  —  —  2,992 
Residential MBS —  10,615  —  —  10,615 
Commercial MBS —  1,778  —  —  1,778 
Other agencies —  142  —  —  142 
Municipal securities —  37  3,341  —  3,378 
Private-label CMO —  92  20  —  112 
Asset-backed securities —  271  35  —  306 
Corporate debt —  2,010  —  —  2,010 
Other securities/sovereign debt —  10  —  —  10 
Total available-for-sale securities
 6,111  17,947  3,396  —  27,454 
Other securities 30  2  —  —  32 
Loans held for sale —  659  —  —  659 
Loans held for investment —  115  60  —  175 
MSRs —  —  543  —  543 
Other assets:
Derivative assets —  1,637  4  (1,215) 426 
Assets held in trust for deferred compensation plans 184  —  —  —  184 
Liabilities
Long-term debt —  480  —  —  480 
Derivative liabilities —  1,601  3  (884) 720 
Fair Value Measurements at Reporting Date Using
Netting Adjustments (1)
 At December 31, 2023
(dollar amounts in millions)
Level 1
Level 2
Level 3
Assets
Trading account securities:
U.S. Treasury securities $ 91  $ —  $ —  $ —  $ 91 
Other agencies —  2  —  —  2 
Municipal securities —  32  —  —  32 
Total trading account securities 91  34  —  —  125 
Available-for-sale securities:
U.S. Treasury securities 2,856  —  —  —  2,856 
Residential CMOs —  3,184  —  —  3,184 
Residential MBS —  11,382  —  —  11,382 
Commercial MBS —  1,827  —  —  1,827 
Other agencies —  155  —  —  155 
Municipal securities —  38  3,335  —  3,373 
Private-label CMO —  99  20  —  119 
Asset-backed securities —  281  75  —  356 
Corporate debt —  2,043  —  —  2,043 
Other securities/sovereign debt —  10  —  —  10 
Total available-for-sale securities 2,856  19,019  3,430  —  25,305 
Other securities 30  2  —  —  32 
Loans held for sale —  506  —  —  506 
Loans held for investment —  120  54  —  174 
MSRs —  —  515  —  515 
Other assets:
Derivative assets —  1,720  3  (1,330) 393 
Assets held in trust for deferred compensation plans 177  —  —  —  177 
Liabilities
Derivative liabilities —  1,416  5  (751) 670 
(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 following tables present a rollforward of the balance sheet amounts measured at fair value 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
Available-for-sale securities Loans held for investment
(dollar amounts in millions) MSRs
Derivative
instruments
Municipal
securities
 Private-
label CMO
Asset-backed
securities
Three months ended June 30, 2024
Opening balance $ 534  $ 4  $ 3,293  $ 20  $ 72  $ 58 
Transfers into Level 3 —  —  —  —  —  4 
Transfers out of Level 3 (1) —  (6) —  —  —  — 
Total gains/losses for the period:
Included in earnings:
Mortgage banking income 12  4  —  —  —  — 
Interest and fee income —  —  (1) —  —  (1)
Noninterest income —  (6) —  (1) —  — 
Provision for credit losses —  —  (2) —  —  — 
Included in OCI —  —  (33) —  —  — 
Purchases/originations 11  —  228  —  —  — 
Repayments —  —  —  —  —  (1)
Settlements (14) 5  (144) 1  (37) — 
Closing balance $ 543  $ 1  $ 3,341  $ 20  $ 35  $ 60 
Change in unrealized gains or losses for the period included in earnings for assets held at end of the reporting date $ 12  $ (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 —  —  (34) —  —  — 
Three months ended June 30, 2023
Opening balance $ 485  $ 3  $ 3,339  $ 20  $ 74  $ 15 
Transfers into Level 3 —  —  —  —  —  19 
Transfers out of Level 3 (1) —  (8) —  —  —  — 
Total gains/losses for the period:
Included in earnings:
Mortgage banking income 15  3  —  —  —  — 
Included in OCI —  —  (7) —  1  — 
Purchases/originations 18  —  378  —  —  — 
Repayments —  —  —  —  —  (1)
Settlements (13) —  (214) —  —  — 
Closing balance $ 505  $ (2) $ 3,496  $ 20  $ 75  $ 33 
Change in unrealized gains or losses for the period included in earnings for assets held at end of the reporting date $ 15  $ (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 —  —  (13) —  —  — 
(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.
Level 3 Fair Value Measurements
Available-for-sale securities
Loans held for investment
(dollar amounts in millions)
MSRs
Derivative
instruments
Municipal
securities
 Private- label CMO
Asset-backed
securities
Six months ended June 30, 2024
Opening balance $ 515  $ (2) $ 3,335  $ 20  $ 75  $ 54 
Transfers into Level 3 —  —  —  —  —  8 
Transfers out of Level 3 (1) —  (11) —  —  —  — 
Total gains/losses for the period:
Included in earnings:
Mortgage banking income 32  11  —  —  —  — 
Interest and fee income —  —  (1) (1) —  (1)
Noninterest income —  (8) —  —  —  — 
Provision for credit losses —  —  (2) —  —  — 
Included in OCI —  —  (14) —  —  — 
Purchases/originations 21  —  300  —  —  — 
Repayments —  —  —  —  —  (1)
Settlements (25) 11  (277) 1  (40) — 
Closing balance $ 543  $ 1  $ 3,341  $ 20  $ 35  $ 60 
Change in unrealized gains or losses for the period included in earnings for assets held at end of the reporting date $ 32  $ —  $ —  $ —  $ —  $ — 
Change in unrealized gains or losses for the period included in other comprehensive income for assets held at the end of the reporting period —  —  (16) —  —  — 
Six months ended June 30, 2023
Opening balance $ 494  $ (2) $ 3,248  $ 20  $ 74  $ 16 
Transfers into Level 3 —  —  —  —  —  19 
Transfers out of Level 3 (1) —  (10) —  —  —  — 
Total gains/losses for the period:
Included in earnings
Mortgage banking income 3  10  —  —  —  — 
Interest and fee income —  —  —  (1) —  — 
Included in OCI —  —  (4) —  1  — 
Purchases/originations 31  —  555  1  —  — 
Repayments —  —  —  —  —  (2)
Settlements (23) —  (303) —  —  — 
Closing balance $ 505  $ (2) $ 3,496  $ 20  $ 75  $ 33 
Change in unrealized gains or losses for the period included in earnings for assets held at end of the reporting date $ 3  $ 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 —  —  (10) —  —  — 
(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.
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:
Total
 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
At June 30, 2024
Assets
Loans held for sale $ 659  $ 645  $ 14  $ —  $ —  $ — 
Loans held for investment 175  186  (11) 2  3  (1)
Liabilities
Long-term debt 480  478  (2)
At December 31, 2023
Assets
Loans held for sale $ 506  $ 489  $ 17  $ —  $ —  $ — 
Loans held for investment 174  184  (10) 2  3  (1)
The following table presents the net gains (losses) from fair value changes:
Three Months Ended Six Months Ended
(dollar amounts in millions) June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023
Loans held for sale (1) $ 4  $ —  $ (3) $ — 
Loans held for investment (1)
 —  (3) (1) (3)
Long-term debt (2)
 (2) —  (2) — 
(1)The net gains (losses) from fair value changes are included in mortgage banking income on the Unaudited Consolidated Statements of Income.
(2)The net gains (losses) from fair value changes are included in other noninterest income on the Unaudited 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, for example, when there is evidence of impairment. 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 were as follows:
Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Total Losses
Three Months Ended Six Months Ended
(dollar amounts in millions) At June 30, 2024 At December 31, 2023 June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023
Collateral-dependent loans $ 97  $ 40  $ (16) $ (1) $ (41) $ (7)
Huntington records nonrecurring adjustments of collateral-dependent loans held for investment. 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 in the form of a charge-off.
Significant unobservable inputs for assets and liabilities measured at fair value
The following table presents quantitative information about the significant unobservable inputs for assets and liabilities measured at fair value.
Quantitative Information about Level 3 Fair Value Measurements (1)
At June 30, 2024
At December 31, 2023
(dollar amounts in millions) Valuation Technique Significant Unobservable Input Range Weighted Average Range Weighted Average
Measured at fair value on a recurring basis:
MSRs Discounted cash flow Constant prepayment rate 4  % - 40  % 8  % 4  % - 37  % 9  %
Spread over forward interest rate swap rates 4  % - 13  % 5  % 5  % - 13  % 5  %
Municipal securities and asset-backed securities Discounted cash flow Discount rate 5  % - 6  % 5  % 4  % - 6  % 5  %
Cumulative default —  % - 64  % 6  % —  % - 64  % 6  %
Loss given default 20  % 20  % 20  % 20  %
(1)     Certain disclosures related to quantitative level 3 fair value measurements do not include those deemed to be immaterial.
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.
Components of credit loss estimates including 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.
Fair values of financial instruments
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.
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 the Federal Reserve Bank, and federal funds sold. 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 servicing rights and relationship intangibles are not considered financial instruments and are not included in the following tables. Accordingly, this fair value information is not intended to, and does not, represent Huntington’s underlying value.
The following table provides the carrying amounts and estimated fair values of Huntington’s financial instruments.
(dollar amounts in millions) Amortized Cost Lower of Cost or Market
Fair Value or
Fair Value Option
 Total Carrying Amount Estimated Fair Value
At June 30, 2024
Financial Assets
Cash and short-term assets $ 12,783  $ —  $ —  $ 12,783  $ 12,783 
Trading account securities —  —  154  154  154 
Available-for-sale securities —  —  27,454  27,454  27,454 
Held-to-maturity securities 15,036  —  —  15,036  12,730 
Other securities 812  —  32  844  844 
Loans held for sale —  9  659  668  668 
Net loans and leases (1) 121,943  —  175  122,118  118,794 
Derivative assets —  —  426  426  426 
Assets held in trust for deferred compensation plans —  —  184  184  184 
Financial Liabilities
Deposits (2) 154,367  —  —  154,367  154,319 
Short-term borrowings 187  —  —  187  187 
Long-term debt 15,981  —  480  16,461  16,499 
Derivative liabilities —  —  720  720  720 
At December 31, 2023
Financial Assets
Cash and short-term assets $ 10,323  $ —  $ —  $ 10,323  $ 10,323 
Trading account securities —  —  125  125  125 
Available-for-sale securities —  —  25,305  25,305  25,305 
Held-to-maturity securities 15,750  —  —  15,750  13,718 
Other securities 693  —  32  725  725 
Loans held for sale —  10  506  516  516 
Net loans and leases (1) 119,553  —  174  119,727  116,781 
Derivative assets —  —  393  393  393 
Assets held in trust for deferred compensation plans —  —  177  177  177 
Financial Liabilities
Deposits (2) 151,230  —  —  151,230  151,183 
Short-term borrowings 620  —  —  620  620 
Long-term debt 12,394  —  —  12,394  12,276 
Derivative liabilities —  —  670  670  670 
(1)Includes collateral-dependent loans.
(2)Includes $1.4 billion in time deposits in excess of the FDIC insurance coverage limit at both June 30, 2024 and December 31, 2023.
The following table presents the level in the fair value hierarchy for the estimated fair values.
Estimated Fair Value Measurements at Reporting Date Using Netting Adjustments (1) 
Estimated Fair Value
(dollar amounts in millions) Level 1 Level 2 Level 3
At June 30, 2024
Financial Assets
Trading account securities $ 89  $ 65  $ —  $ —  $ 154 
Available-for-sale securities 6,111  17,947  3,396  —  27,454 
Held-to-maturity securities —  12,730  —  —  12,730 
Other securities (2) 30  2  —  —  32 
Loans held for sale —  659  9  —  668 
Net loans and leases —  115  118,679  —  118,794 
Derivative assets —  1,637  4  (1,215) 426 
Financial Liabilities
Deposits —  138,159  16,160  —  154,319 
Short-term borrowings —  187  —  —  187 
Long-term debt —  11,177  5,322  —  16,499 
Derivative liabilities —  1,601  3  (884) 720 
At December 31, 2023
Financial Assets
Trading account securities $ 91  $ 34  $ —  $ —  $ 125 
Available-for-sale securities 2,856  19,019  3,430  —  25,305 
Held-to-maturity securities —  13,718  —  —  13,718 
Other securities (2) 30  2  —  —  32 
Loans held for sale —  506  10  —  516 
Net loans and leases —  120  116,661  —  116,781 
Derivative assets —  1,720  3  (1,330) 393 
Financial Liabilities
Deposits —  135,627  15,556  —  151,183 
Short-term borrowings —  620  —  —  620 
Long-term debt —  8,929  3,347  —  12,276 
Derivative liabilities —  1,416  5  (751) 670 
(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.
(2)Excludes securities without readily determinable fair values.