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HUNTINGTON BANCSHARES INC /MD/ - Quarter Report: 2021 September (Form 10-Q)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2021
hban-20210930_g1.jpg
Huntington Bancshares Incorporated
(Exact name of registrant as specified in its charter)
Maryland
1-34073
31-0724920
(State or other jurisdiction of
incorporation or organization)
(Commission
File Number)
(I.R.S. Employer
Identification No.)
Registrant’s address: 41 South High Street, Columbus, Ohio 43287
Registrant’s telephone number, including area code: (614) 480-2265
Securities registered pursuant to Section 12(b) of the Act
Title of class
Trading
Symbol(s)
Name of exchange on which registered
Depositary Shares (each representing a 1/40th interest in a share of 4.500% Series H Non-Cumulative, perpetual preferred stock)HBANPNASDAQ
Depositary Shares (each representing a 1/100th interest in a share of 5.70% Series I Non-Cumulative, perpetual preferred stock)HBANMNASDAQ
Common Stock—Par Value $0.01 per ShareHBANNASDAQ
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days.     x  Yes    ☐  No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     x  Yes    ☐  No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated FilerxAccelerated filer☐
Non-accelerated filer☐Smaller reporting company☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).     ☐  Yes    x  No
There were 1,446,461,249 shares of the registrant’s common stock ($0.01 par value) outstanding on September 30, 2021.

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HUNTINGTON BANCSHARES INCORPORATED
INDEX
 
2 Huntington Bancshares Incorporated
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Glossary of Acronyms and Terms

The following listing provides a comprehensive reference of common acronyms and terms used throughout the document: 
ACL  Allowance for Credit Losses
AFS  Available-for-Sale
ALLL  Allowance for Loan and Lease Losses
AOCIAccumulated Other Comprehensive Income
ASC  Accounting Standards Codification
AULC  Allowance for Unfunded Lending Commitments
Basel III  Refers to the final rule issued by the FRB and OCC and published in the Federal Register on October 11, 2013
CARES ActCoronavirus Aid, Relief, and Economic Security Act, as amended
C&I  Commercial and Industrial
CDs  Certificates of Deposit
CDICore Deposit Intangible
CECLCurrent Expected Credit Loss
CET1  Common Equity Tier 1 on a Basel III basis
CFPB  Bureau of Consumer Financial Protection
CMO  Collateralized Mortgage Obligations
COVID-19Coronavirus Disease 2019
CRE  Commercial Real Estate
EADExposure at Default
EVE  Economic Value of Equity
FASBFinancial Accounting Standards Board
FDIC  Federal Deposit Insurance Corporation
FHLB  Federal Home Loan Bank
FICO  Fair Isaac Corporation
FRB  Federal Reserve Bank
FTE  Fully-Taxable Equivalent
FTP  Funds Transfer Pricing
FVOFair Value Option
GAAP  Generally Accepted Accounting Principles in the United States of America
HTM  Held-to-Maturity
IRS  Internal Revenue Service
Last-of-LayerLast-of-layer is a fair value hedge of the interest rate risk of a portfolio of similar prepayable assets whereby the last dollar amount within the portfolio of assets is identified as the hedged item
LGDLoss Given Default
LIBOR  London Interbank Offered Rate
LIHTC  Low Income Housing Tax Credit
MBS  Mortgage-Backed Securities
MD&A  Management’s Discussion and Analysis of Financial Condition and Results of Operations
MSR  Mortgage Servicing Right
NAICS  North American Industry Classification System
NALs  Nonaccrual Loans
NCO  Net Charge-off
NII  Net Interest Income
NIM  Net Interest Margin
NPAs  Nonperforming Assets
OCC  Office of the Comptroller of the Currency
OCI  Other Comprehensive Income (Loss)
2021 3Q Form 10-Q 3

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OLEM  Other Loans Especially Mentioned
PCDPurchased Credit Deteriorated
PDProbability of Default
PPPPaycheck Protection Program
RBHPCG  Regional Banking and The Huntington Private Client Group
ROCRisk Oversight Committee
SBASmall Business Administration
SEC  Securities and Exchange Commission
TCFTCF Financial Corporation
TDR  Troubled Debt Restructuring
U.S. Treasury  U.S. Department of the Treasury
UPBUnpaid principal balance
VIE  Variable Interest Entity
XBRL  eXtensible Business Reporting Language

4 Huntington Bancshares Incorporated
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PART I. FINANCIAL INFORMATION
When we refer to “we”, “our”, “us”, “Huntington”, and “the Company” in this report, we mean Huntington Bancshares Incorporated and our consolidated subsidiaries, unless the context indicates that we refer only to the parent company, Huntington Bancshares Incorporated. When we refer to the “Bank” in this report, we mean our only bank subsidiary, The Huntington National Bank, and its subsidiaries.

Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations
INTRODUCTION
We are a multi-state diversified regional bank holding company organized under Maryland law in 1966 and headquartered in Columbus, Ohio. Through the Bank, we have over 150 years of servicing the financial needs of our customers. Through our subsidiaries, we provide full-service commercial and consumer banking services, mortgage banking services, automobile financing, recreational vehicle and marine financing, equipment financing, inventory finance, investment management, trust services, brokerage services, insurance products and services, and other financial products and services. Our 1,236 full-service branches and private client group offices are primarily located in Ohio, Colorado, Illinois, Indiana, Kentucky, Michigan, Minnesota, Pennsylvania, South Dakota, West Virginia and Wisconsin. Select financial services and other activities are also conducted in various other states. International banking services are available through the headquarters office in Columbus, Ohio. Our foreign banking activities, in total or with any individual country, are not significant.
This MD&A provides information we believe necessary for understanding our financial condition, changes in financial condition, results of operations, and cash flows. The MD&A included in our 2020 Annual Report on Form 10-K should be read in conjunction with this MD&A as this discussion provides only material updates to the 2020 Annual Report on Form 10-K. This MD&A should also be read in conjunction with the Unaudited Condensed Consolidated Financial Statements, Notes to Unaudited Condensed Consolidated Financial Statements, and other information contained in this report.
EXECUTIVE OVERVIEW
Acquisition of TCF Financial Corporation
On June 9, 2021, Huntington closed the acquisition of TCF Financial Corporation in an all-stock transaction valued at $7.2 billion. TCF was a financial holding company headquartered in Detroit, Michigan with operations across the Midwest. The acquisition added depth in existing markets and new markets for expansion and brings complimentary businesses together to drive synergies and growth. Historical periods prior to June 9, 2021 reflect results of legacy Huntington operations. Subsequent to closing, results reflect all post-acquisition activity. For further information, refer to Note 2 “Acquisition of TCF Financial Corporation” of the Notes to Unaudited Condensed Consolidated Financial Statements.
Summary of 2021 Third Quarter Results Compared to 2020 Third Quarter
For the quarter, we reported net income of $377 million, or $0.22 per common share, compared with $303 million, or $0.27 per common share, in the year-ago quarter. The reported net income benefited from a decline in provision for credit losses of $239 million and was impacted by TCF acquisition-related expenses totaling $234 million. After tax TCF acquisition-related expenses were $192 million or $(0.13) per common share.
Net interest income was $1.2 billion, up $343 million, or 42% from the year-ago quarter. FTE net interest income was $1.2 billion, up $345 million, or 42%, from the year-ago quarter. The increase in FTE net interest income reflected the benefit from the $48.7 billion, or 44%, increase in average earning assets, partially offset by a 6 basis point decrease in the FTE net interest margin to 2.90%. Average earning asset growth included a $29.4 billion, or 36%, increase in average loans and leases and a $13.1 billion, or 57% increase in average securities, both of which were impacted by the TCF acquisition in June 2021.
2021 3Q Form 10-Q 5

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The provision for credit losses decreased $239 million from the year-ago quarter to a benefit of $62 million in the 2021 third quarter. The decrease reflected the benefit from improvement in the macroeconomic scenarios. NCOs decreased $58 million from the year-ago-quarter to $55 million. Both commercial NCOs of $47 million and consumer NCOs of $8 million were down on a year-over-year basis. Total NCOs represented an annualized 0.20% of average loans and leases in the current quarter, down from 0.56% in the year-ago quarter.
Noninterest income was $535 million, up $105 million, or 24%, and noninterest expense increased $577 million, or 81%, from the year ago quarter. The increases in both noninterest income and noninterest expense were primarily impacted by the acquisition of TCF.
Common Equity Tier 1 risk-based capital ratio was 9.57%, down from 9.89% a year ago. The regulatory Tier 1 risk-based capital ratio was 11.35% compared to 12.37% at September 30, 2020. The decrease in regulatory capital ratios was driven by the repurchase of 33.4 million common shares over the last three quarters, cash dividends, partially offset by earnings, adjusted for the CECL transition. The balance sheet growth as a result of the TCF acquisition was largely offset by the common stock issued related to the acquisition, net of goodwill and intangibles, as well as elevated deposits at the Federal Reserve Bank (both of which are 0% risk weighted). The regulatory Tier 1 risk-based capital and total risk-based capital ratios also reflect the issuance of $500 million of Series H preferred stock in the 2021 first quarter, the issuance of $175 million of Series I preferred stock in the 2021 second quarter resulting from the conversion of TCF preferred stock, partially offset by the redemption of $600 million of Series D preferred stock in the 2021 third quarter. Additionally, the total risk-based capital ratio reflects the issuance of $558 million of subordinated notes in the 2021 third quarter.
On July 21, 2021, the Board approved the repurchase of up to $800 million of common shares within the next four quarters. Purchases of common stock under the authorization may include open market purchases, privately negotiated transactions, and accelerated share repurchase programs. During the 2021 third quarter, Huntington repurchased a total of $500 million of common stock, representing 33.4 million common shares, at a weighted average price of $14.96.
Business Overview
General
Our general business objectives are:
•Pursue consistent organic revenue and balance sheet growth.
•Invest in our businesses, particularly technology and risk management.
•Deliver positive long-term operating leverage.
•Maintain an aggregate moderate-to-low, through-the-cycle risk appetite.
•Execute disciplined capital management.
COVID-19
The COVID-19 pandemic has caused unprecedented disruption that has affected daily living and has negatively impacted the economy. As further discussed in “Discussion of Results of Operations,” the volatility in the markets and lingering economic uncertainty caused by the pandemic continue to impact our performance.
Huntington was able to react quickly to the changes required by the pandemic because of the commitment and flexibility of its workforce coupled with well-prepared business continuity plans. We continue to monitor the impact of the virus and evolving government guidelines.
Throughout the pandemic, we have worked with our customers to originate and renew business loans as well as originate loans made available through the SBA PPP, a lending program established as part of the relief to American consumers and businesses in the CARES Act. Several subsequent congressional acts have reopened and extended the PPP loan program. During the 2021 third quarter, we continued to work with our customers who received PPP loan forgiveness. Through September 2021, $8.5 billion of the PPP loans have been forgiven by the SBA of the original $11.4 billion of PPP loans originated by both Huntington and TCF prior to acquisition.
Uncertainty remains as to when there will be a return to historical norms of economic and social activity. Should current economic conditions deteriorate or if the pandemic worsens due to various factors, including through the spread of more easily communicable variants of COVID-19, such conditions could have an adverse effect on our business and results of operations and could adversely affect our financial condition.
6 Huntington Bancshares Incorporated
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Economy
We continued to see increasing momentum in our business strategies during the quarter, delivering loan growth (excluding PPP) and fee income, including areas like wealth, capital markets, and cards and payments. Additionally, we continue to make strategic investments to drive sustained organic growth by dynamically managing expenses.
DISCUSSION OF RESULTS OF OPERATIONS
This section provides a review of financial performance on a consolidated basis. Key Unaudited Condensed Consolidated Balance Sheet and Unaudited Condensed Statement of Income trends are discussed. All earnings per share data are reported on a diluted basis. For additional insight on financial performance, please read this section in conjunction with the “Business Segment Discussion”.
2021 3Q Form 10-Q 7

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Table 1 - Selected Quarterly Income Statement Data
 Three Months Ended
September 30,June 30,September 30,
(amounts in millions, except per share data)202120212020
Interest income$1,205 $935 $892 
Interest expense45 97 75 
Net interest income1,160 838 817 
Provision for credit losses(62)211 177 
Net interest income after provision for credit losses1,222 627 640 
Mortgage banking income81 67 122 
Service charges on deposit accounts 114 88 76 
Card and payment processing income96 80 66 
Trust and investment management services61 56 48 
Leasing revenue42 12 3 
Capital markets fees40 35 27 
Insurance income25 25 24 
Bank owned life insurance income15 16 17 
Gain on sale of loans2 3 13 
Net gains (losses) on sales of securities— 10 — 
Other noninterest income59 52 34 
Total noninterest income535 444 430 
Personnel costs643 592 453 
Outside data processing and other services304 162 98 
Equipment79 55 44 
Net occupancy95 72 40 
Lease financing equipment depreciation19 5 — 
Professional services26 48 12 
Amortization of intangibles13 11 10 
Marketing25 15 9 
Deposit and other insurance expense17 8 6 
Other noninterest expense68 104 40 
Total noninterest expense1,289 1,072 712 
Income (loss) before income taxes468 (1)358 
Provision for income taxes90 14 55 
Income (loss) after income taxes378 (15)303 
Income attributable to non-controlling interest1 — — 
Net income (loss) attributable to Huntington Bancshares Inc377 (15)303 
Dividends on preferred shares29 43 28 
Impact of preferred stock redemption15 — — 
Net income (loss) applicable to common shares$333 $(58)$275 
Average common shares—basic1,463 1,125 1,017 
Average common shares—diluted1,487 1,125 1,031 
Net income (loss) per common share—basic$0.23 $(0.05)$0.27 
Net income (loss) per common share—diluted0.22 (0.05)0.27 
Return on average total assets0.86 %(0.05)%1.01 %
Return on average common shareholders’ equity7.6 (1.9)10.2 
Return on average tangible common shareholders’ equity (1)11.5 (2.1)13.2 
Net interest margin (2)2.90 2.66 2.96 
Efficiency ratio (3)74.9 83.1 56.1 
Effective tax rate19.0 (2,353.3)15.2 
Revenue and Net Interest Income—FTE (Non-GAAP)
Net interest income$1,160 $838 $817 
FTE adjustment7 6 5 
Net interest income, FTE (non-GAAP) (2)1,167 844 822 
Noninterest income535 444 430 
Total revenue, FTE (non-GAAP) (2)$1,702 $1,288 $1,252 
(1)Net income (loss) excluding expense for amortization of intangibles for the period divided by average tangible common shareholders’ equity. Average tangible common shareholders’ equity equals average total common shareholders’ equity less average intangible assets and goodwill. Expense for amortization of intangibles and average intangible assets are net of deferred tax liability, and calculated assuming a 21% tax rate.
(2)On an FTE basis assuming a 21% tax rate.
(3)Noninterest expense less amortization of intangibles and goodwill impairment divided by the sum of FTE net interest income and noninterest income excluding securities gains (losses).
8 Huntington Bancshares Incorporated
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Table 2 - Selected Year to Date Income Statements
 Nine Months Ended September 30,Change
(amounts in millions, except per share data)20212020AmountPercent
Interest income$3,009 $2,769 $240 9 %
Interest expense39 370 (331)(89)
Net interest income2,970 2,399 571 24 
Provision for credit losses89 945 (856)(91)
Net interest income after provision for credit losses2,881 1,454 1,427 98 
Mortgage banking income248 277 (29)(10)
Service charges on deposit accounts 271 223 48 22 
Card and payment processing income241 183 58 32 
Trust and investment management services169 140 29 21 
Leasing revenue58 14 44 314 
Capital markets fees104 91 13 14 
Insurance income77 72 5 7 
Bank owned life insurance income47 49 (2)(4)
Gain on sale of loans8 30 (22)(73)
Net gains (losses) on sales of securities10 (1)11 1,100 
Other noninterest income141 104 37 36 
Total noninterest income1,374 1,182 192 16 
Personnel costs1,703 1,267 436 34 
Outside data processing and other services581 273 308 113 
Equipment180 132 48 36 
Net occupancy209 119 90 76 
Lease financing equipment depreciation24 1 23 2,300 
Professional services91 34 57 168 
Amortization of intangibles34 31 3 10 
Marketing54 23 31 135 
Deposit and other insurance expense33 24 9 38 
Other noninterest expense245 135 110 81 
Total noninterest expense3,154 2,039 1,115 55 
Income before income taxes1,101 597 504 84 
Provision for income taxes206 96 110 115 
Income after income taxes895 501 394 79 
Income attributable to non-controlling interest1 — 1 100 
Net income attributable to Huntington Bancshares Inc894 501 393 78 
Dividends on preferred shares103 65 38 58 
Impact of preferred stock redemption15 — 15 100 
Net income applicable to common shares$776 $436 $340 78 %
Average common shares—basic1,202 1,017 185 18 %
Average common shares—diluted1,225 1,032 193 19 
Net income per common share—basic$0.65 $0.43 $0.22 51 
Net income per common share—diluted0.63 0.42 0.21 50 
Revenue and Net Interest Income—FTE (Non-GAAP)
Net interest income$2,970 $2,399 $571 24 %
FTE adjustment19 16 3 19 
Net interest income, FTE (non-GAAP) (1)2,989 2,415 574 24 
Noninterest income1,374 1,182 192 16 
Total revenue, FTE (non-GAAP) (1)$4,363 $3,597 $766 21 %
(1)On an FTE basis assuming a 21% tax rate.


2021 3Q Form 10-Q 9

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Net Interest Income / Average Balance Sheet
The following tables detail the change in our average balance sheet and the net interest margin:
Table 3 - Consolidated Average Balance Sheet and Net Interest Margin Analysis
 Average Balances
Three Months EndedChangeChange
September 30,June 30,September 30,3Q21 vs. 3Q203Q21 vs. 2Q21
(dollar amounts in millions)202120212020AmountPercentAmountPercent
Assets:
Interest-bearing deposits at Federal Reserve Bank$11,536 $7,636 $5,857 $5,679 97 %$3,900 51 %
Interest-bearing deposits in banks466 319 177 289 163 147 46 
Securities:
Trading account securities49 48 49 — — 1 2 
Available-for-sale securities:
Taxable20,147 20,096 10,670 9,477 89 51 — 
Tax-exempt3,116 2,832 2,749 367 13 284 10 
Total available-for-sale securities23,263 22,928 13,419 9,844 73 335 1 
Held-to-maturity securities—taxable11,964 7,280 8,932 3,032 34 4,684 64 
Other securities677 479 430 247 57 198 41 
Total securities35,953 30,735 22,830 13,123 57 5,218 17 
Loans held for sale1,525 1,294 1,259 266 21 231 18 
Loans and leases: (1)
Commercial:
Commercial and industrial40,597 34,126 32,464 8,133 25 6,471 19 
Commercial real estate:
Construction1,803 1,310 1,175 628 53 493 38 
Commercial12,891 7,773 6,045 6,846 113 5,118 66 
Commercial real estate14,694 9,083 7,220 7,474 104 5,611 62 
Lease financing4,983 2,798 2,205 2,778 126 2,185 78 
Total commercial60,274 46,007 41,889 18,385 44 14,267 31 
Consumer:
Automobile13,209 12,793 12,889 320 2 416 3 
Residential mortgage18,886 13,768 11,817 7,069 60 5,118 37 
Home equity11,106 9,375 8,878 2,228 25 1,731 18 
RV and marine4,998 4,447 4,020 978 24 551 12 
Other consumer1,458 1,047 1,049 409 39 411 39 
Total consumer49,657 41,430 38,653 11,004 28 8,227 20 
Total loans and leases109,931 87,437 80,542 29,389 36 22,494 26 
Allowance for loan and lease losses(2,219)(1,828)(1,720)(499)(29)(391)(21)
Net loans and leases107,712 85,609 78,822 28,890 37 22,103 26 
Total earning assets159,411 127,421 110,665 48,746 44 31,990 25 
Cash and due from banks1,535 1,106 1,173 362 31 429 39 
Goodwill and other intangible assets5,578 3,055 2,195 3,383 154 2,523 83 
All other assets9,528 8,076 7,216 2,312 32 1,452 18 
Total assets$173,833 $137,830 $119,529 $54,304 45 %$36,003 26 %
Liabilities and Shareholders’ Equity:
Interest-bearing deposits:
Demand deposits—interest-bearing$35,690 $29,729 $23,865 $11,825 50 %$5,961 20 %
Money market deposits33,281 28,124 26,200 7,081 27 5,157 18 
Savings and other domestic deposits20,931 15,190 11,157 9,774 88 5,741 38 
Core certificates of deposit (2)3,319 1,832 2,035 1,284 63 1,487 81 
Other domestic deposits of $250,000 or more582 259 175 407 233 323 125 
Negotiable CDs, brokered and other deposits
3,905 2,986 4,182 (277)(7)919 31 
Total interest-bearing deposits97,708 78,120 67,614 30,094 45 19,588 25 
Short-term borrowings317 241 162 155 96 76 32 
Long-term debt7,587 6,887 9,318 (1,731)(19)700 10 
Total interest-bearing liabilities105,612 85,248 77,094 28,518 37 20,364 24 
Demand deposits—noninterest-bearing44,595 34,558 27,435 17,160 63 10,037 29 
All other liabilities3,823 2,608 2,322 1,501 65 1,215 47 
Total Huntington Bancshares Inc shareholders’ equity19,783 15,410 12,678 7,105 56 4,373 28 
Non-controlling interest20 6 — 20 100 14 233 
Total equity19,803 15,416 12,678 7,125 56 4,387 28 
Total liabilities and shareholders’ equity$173,833 $137,830 $119,529 $54,304 45 %$36,003 26 %
(1)For purposes of this analysis, NALs are reflected in the average balances of loans and leases.
(2)Includes consumer certificates of deposit of $250,000 or more.
10 Huntington Bancshares Incorporated
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Table 3 - Consolidated Average Balance Sheet and Net Interest Margin Analysis (Continued)
 Average Yield Rates (1)
 Three Months Ended
September 30,June 30,September 30,
Fully-taxable equivalent basis (2)202120212020
Assets:
Interest-bearing deposits at Federal Reserve Bank 0.17 %0.11 %0.10 %
Interest-bearing deposits in banks0.04 0.01 0.13 
Securities:
Trading account securities2.98 2.96 3.18 
Available-for-sale securities:
Taxable1.34 1.34 1.89 
Tax-exempt2.37 2.42 2.71 
Total available-for-sale securities1.48 1.47 2.06 
Held-to-maturity securities—taxable1.58 1.94 2.28 
Other securities1.43 1.72 1.23 
Total securities1.52 1.59 2.13 
Loans held for sale3.23 2.79 2.82 
Loans and leases: (3)
Commercial:
Commercial and industrial4.04 3.70 3.55 
Commercial real estate:
Construction3.68 3.57 3.40 
Commercial3.17 3.06 2.63 
Commercial real estate3.23 3.13 2.75 
Lease financing4.84 5.00 5.52 
Total commercial3.91 3.67 3.52 
Consumer:
Automobile3.62 3.62 3.93 
Residential mortgage2.95 3.04 3.41 
Home equity4.03 3.79 3.79 
RV and marine4.33 4.13 4.60 
Other consumer7.98 10.17 11.23 
Total consumer3.65 3.69 4.00 
Total loans and leases3.80 3.68 3.75 
Total earning assets3.02 2.96 3.22 
Liabilities:
Interest-bearing deposits:
Demand deposits—interest-bearing0.04 0.04 0.05 
Money market deposits0.08 0.06 0.28 
Savings and other domestic deposits0.03 0.04 0.06 
Core certificates of deposit (4)(0.23)0.19 1.03 
Other domestic deposits of $250,000 or more0.21 0.26 0.92 
Negotiable CDs, brokered and other deposits
0.15 0.16 0.19 
Total interest-bearing deposits0.05 0.06 0.18 
Short-term borrowings0.14 0.47 0.30 
Long-term debt (5)1.81 4.97 1.87 
Total interest-bearing liabilities0.17 0.45 0.39 
Net interest rate spread2.85 2.51 2.83 
Impact of noninterest-bearing funds on margin0.05 0.15 0.13 
Net interest margin2.90 %2.66 %2.96 %
(1)Average yield rates include the impact of applicable derivatives. Loan and lease and deposit average yield rates also include impact of applicable non-deferrable and amortized fees.
(2)    FTE yields are calculated assuming a 21% tax rate.
(3)    For purposes of this analysis, NALs are reflected in the average balances of loans.
(4)    Includes consumer certificates of deposit of $250,000 or more.
(5)    Reflects the mark-to-market impact of interest rate caps of a detriment of $55 million, or 318 bps, for 2Q 2021. There was no impact for 3Q 2021 or 2020.
2021 3Q Form 10-Q 11

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2021 Third Quarter versus 2020 Third Quarter
Net interest income for the 2021 third quarter increased $343 million, or 42%, from the 2020 third quarter. FTE net interest income, a non-GAAP financial measure, for the 2021 third quarter increased $345 million, or 42%, from the 2020 third quarter. The increase in FTE net interest income reflected a $48.7 billion, or 44%, increase in average earning assets, partially offset by a 6 basis point decrease in the FTE net interest margin to 2.90%. Net interest income in the 2021 third quarter was impacted by the TCF acquisition, including purchase accounting net accretion, which favorably impacted the NIM by approximately 9 basis points, and also included $30 million of deferred PPP loan fees recognized upon receipt of forgiveness payments from the SBA, which favorably impacted the NIM by approximately 8 basis points. The year-over-year decreases in earning asset yields and average liability costs also reflected the impact of lower interest rates and changes in balance sheet mix, including elevated average deposits at the FRB.
Average earning assets for the 2021 third quarter increased $48.7 billion, or 44%, from the year-ago quarter, primarily reflecting a $29.4 billion, or 36%, increase in average total loans and leases, a $13.1 billion, or 57%, increase in average securities and $5.7 billion, or 97%, increase in interest-bearing deposits at the FRB. The $29.4 billion, or 36%, increase in average total loans and leases was impacted by the TCF acquisition and robust portfolio mortgage production, partially offset by a decrease in average PPP loans. Average securities increased $13.1 billion, or 57%, primarily due to the TCF acquisition and the purchase of securities to deploy excess liquidity.
Average total interest-bearing liabilities for the 2021 third quarter increased $28.5 billion, or 37%, from the year-ago quarter. Average total deposits increased $47.3 billion, or 50%, while average total core deposits increased $47.1 billion, or 52%. Increases across categories reflect the impact of the TCF acquisition, the increase in average total deposits was additionally driven by elevated balances in core deposits largely related to residual government stimulus balances and improved retention. Specifically within core deposits, average total demand deposits increased $29.0 billion, or 57%, average savings and other domestic deposits increased $9.8 billion, or 88%, average money market deposits increased $7.1 billion, or 27%, and average core CDs increased $1.3 billion, or 63%. The increase in average core CDs due to the acquisition of TCF was partially offset by the maturity of balances related to the 2018 consumer deposit growth initiatives. Average total debt decreased $1.6 billion, or 17%, primarily reflecting the repayment and maturity of long-term debt over the past five quarters due to the strong core deposit growth, partially offset by $2.8 billion of debt assumed in the TCF acquisition.
2021 Third Quarter versus 2021 Second Quarter
Net interest income increased $322 million, or 38%, compared to the 2021 second quarter. FTE net interest income, a non-GAAP financial measure, increased $323 million, or 38%, compared to the 2021 second quarter, reflecting a $32.0 billion, or 25% increase in average earning assets and a 24 basis point increase in the FTE net interest margin. Net interest income for the 2021 third quarter included a full-quarter impact from the TCF acquisition, compared to the partial quarter impact to the 2021 second quarter. The NIM increase reflected the negative $55 million, or a 17 basis point, 2021 second quarter mark-to-market of interest rate caps and a $26 million, or a 6 basis point, third quarter 2021 increase in purchase accounting net accretion from the TCF acquisition, partially offset by larger average deposit balances at the FRB. The interest rate caps were exited in the 2021 second quarter. Accelerated recognition of deferred PPP loan fees were $30 million in both the 2021 third quarter and 2021 second quarter.
Average earning assets increased $32.0 billion, or 25%, primarily reflecting a $22.5 billion, or 26%, increase in average loans and leases and a $5.2 billion, or 17%, increase in average securities. Average balances across earning assets categories reflect the full-quarter impact from the TCF acquisition. The increase in average loan and lease growth was partially offset by the reduction of PPP loans due to forgiveness. Additionally, the increase in average securities reflected the purchase of securities to deploy excess liquidity.
Average total interest-bearing liabilities increased $20.4 billion, or 24%, when compared to the 2021 second quarter. Average total deposits increased $29.6 billion, or 26%, and average total core deposits increased $28.4 billion, or 26%. The increase in average total interest-bearing liabilities and deposits was primarily due to the full-quarter impact from the TCF acquisition. Specifically, within core deposits, average total demand deposits increased $16.0 billion, or 25%.
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Table 4 - Consolidated YTD Average Balance Sheets and Net Interest Margin Analysis
(dollar amounts in millions)
 YTD Average BalancesYTD Average Rates (1)
Nine Months Ended September 30,ChangeNine Months Ended September 30,
Fully-taxable equivalent basis (2)20212020AmountPercent20212020
Assets:
Interest-bearing deposits at Federal Reserve Bank $8,432 $3,326 $5,106 154 %0.13 %0.17 %
Interest-bearing deposits in banks322 166 156 94 0.04 0.62 
Securities:
Trading account securities50 61 (11)(18)3.21 2.94 
Available-for-sale securities:
Taxable18,376 11,171 7,205 64 1.33 2.28 
Tax-exempt2,868 2,743 125 5 2.43 2.92 
Total available-for-sale securities21,244 13,914 7,330 53 1.48 2.41 
Held-to-maturity securities—taxable9,185 9,384 (199)(2)1.81 2.39 
Other securities524 450 74 16 1.57 1.28 
Total securities31,003 23,809 7,194 30 1.58 2.38 
Loans held for sale1,404 1,055 349 33 2.90 3.11 
Loans and leases: (3)
Commercial:
Commercial and industrial35,657 31,328 4,329 14 3.90 3.67 
Commercial real estate:
Construction1,392 1,180 212 18 3.58 3.93 
Commercial8,953 5,833 3,120 53 3.02 3.17 
Commercial real estate10,345 7,013 3,332 48 3.09 3.29 
Lease financing3,336 2,276 1,060 47 4.96 5.44 
Total commercial49,338 40,617 8,721 21 3.80 3.71 
Consumer:
Automobile12,891 12,832 59 — 3.65 3.94 
Residential mortgage14,941 11,558 3,383 29 3.02 3.54 
Home equity9,771 8,933 838 9 3.86 4.09 
RV and marine4,549 3,773 776 21 4.26 4.73 
Other consumer1,161 1,105 56 5 9.52 11.60 
Total consumer43,313 38,201 5,112 13 3.70 4.15 
Total loans and leases92,651 78,818 13,833 18 3.75 3.92 
Allowance for loan and lease losses(1,953)(1,506)(447)(30)
Net loans and leases90,698 77,312 13,386 17 
Total earning assets133,812 107,174 26,638 25 3.03 %3.47 %
Cash and due from banks1,242 1,128 114 10 
Goodwill and other intangible assets3,615 2,206 1,409 64 
All other assets8,356 6,966 1,390 20 
Total assets$145,072 $115,968 $29,104 25 %
Liabilities and Shareholders’ Equity:
Interest-bearing deposits:
Demand deposits—interest-bearing$30,776 $22,985 $7,791 34 %0.04 %0.17 %
Money market deposits29,243 25,544 3,699 14 0.07 0.49 
Savings and other domestic deposits16,165 10,468 5,697 54 0.03 0.11 
Core certificates of deposit (4)2,186 2,990 (804)(27)0.05 1.59 
Other domestic deposits of $250,000 or more320 242 78 32 0.23 1.31 
Negotiable CDs, brokered and other deposits
3,417 3,728 (311)(8)0.16 0.45 
Total interest-bearing deposits82,107 65,957 16,150 24 0.05 0.37 
Short-term borrowings256 1,452 (1,196)(82)0.26 1.23 
Long-term debt (5)7,413 9,730 (2,317)(24)0.10 2.39 
Total interest-bearing liabilities89,776 77,139 12,637 16 0.06 0.64 
Demand deposits—noninterest-bearing36,139 24,394 11,745 48 — — 
All other liabilities2,952 2,347 605 26 
Total Huntington Bancshares Inc shareholders’ equity16,196 12,088 4,108 34 
Non-controlling interest9 — 9 100 
Total Equity16,205 12,088 4,117 34 
Total liabilities and shareholders’ equity$145,072 $115,968 $29,104 25 %
Net interest rate spread2.97 2.83 
Impact of noninterest-bearing funds on margin0.02 0.18 
Net interest margin2.99 %3.01 %
(1)Average yield rates include the impact of applicable derivatives. Loan and lease and deposit average yield rates also include impact of applicable non-deferrable and amortized fees.
(2)FTE yields are calculated assuming a 21% tax rate.
(3)For purposes of this analysis, NALs are reflected in the average balances of loans.
(4)Includes consumer certificates of deposit of $250,000 or more.
(5)Reflects the mark-to-market impact of interest rate caps, a benefit of $89 million, or 161 bps, for the first nine-month period of 2021. There was no impact for the first nine-month period of 2020.
2021 3Q Form 10-Q 13

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2021 First Nine Months versus 2020 First Nine Months
Net interest income for the first nine-month period of 2021 increased $571 million, or 24%. FTE net interest income, a non-GAAP financial measure, for the first nine-month period of 2021 increased $574 million, or 24%. The increase in FTE net interest income reflected the benefit of a $26.6 billion, or 25%, increase in average total earning assets, partially offset by a 2 basis point decrease in the FTE net interest margin. The increase in average total earning assets included a $13.8 billion, or 18%, increase in average loans and leases and a $7.2 billion, or 30%, increase in average securities. Average balances across earning assets categories reflect the late second-quarter 2021 TCF acquisition. The increase in average loans and leases additionally includes an increase in average PPP loans and average securities additionally reflected the purchase of securities to deploy excess liquidity. Average earning asset yields decreased 44 basis points due to lower interest rates on loans (down 17 basis points), a decline in securities yields and elevated deposits at the Federal Reserve Bank. Average funding costs decreased 58 basis points, primarily driven by lower cost of interest-bearing deposits (down 32 basis points) and the impact of the mark-to-market of interest rate caps (benefit of 9 basis points). The benefit from noninterest-bearing funding declined 16 basis points.
Provision for Credit Losses
(This section should be read in conjunction with the “Credit Risk” section.)
The provision for credit losses is the expense necessary to maintain the ALLL and the AULC at levels appropriate to absorb our estimate of credit losses expected over the life of the loan and lease portfolio and unfunded lending commitments.
The provision for credit losses for the 2021 third quarter was a benefit of $62 million, a decrease of $239 million, or 135%, compared to the 2020 third quarter. On a year-to-date basis, provision for credit losses for the first nine-month period of 2021 was $89 million, a decrease of $856 million, or 91%, compared to the year-ago period. The reduction in provision expense over the prior year quarter was primarily attributed to the improvement in the macroeconomic scenarios resulting primarily from lower forecasted unemployment. The reduction in provision expense over prior year-to-date was primarily attributed to the improvement in the macroeconomic scenarios, partially offset by the TCF acquisition initial provision for credit losses of $294 million ($234 million from non-PCD loans and leases and $60 million from acquired unfunded lending commitments).
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Noninterest Income
The following table reflects noninterest income for each of the periods presented: 
Table 5 - Noninterest Income
Three Months Ended3Q21 vs. 3Q203Q21 vs. 2Q21
September 30,June 30,September 30,ChangeChange
(dollar amounts in millions)202120212020AmountPercentAmountPercent
Mortgage banking income$81 $67 $122 $(41)(34)%$14 21 %
Service charges on deposit accounts 114 88 76 38 50 26 30 
Card and payment processing income96 80 66 30 45 16 20 
Trust and investment management services61 56 48 13 27 5 9 
Leasing revenue42 12 3 39 1,300 30 250 
Capital markets fees40 35 27 13 48 5 14 
Insurance income25 25 24 1 4 — — 
Bank owned life insurance income15 16 17 (2)(12)(1)(6)
Gain on sale of loans2 3 13 (11)(85)(1)(33)
Net gains (losses) on sales of securities— 10 — — — (10)(100)
Other noninterest income59 52 34 25 74 7 13 
Total noninterest income$535 $444 $430 $105 24 %$91 20 %
2021 Third Quarter versus 2020 Third Quarter
Total noninterest income for the 2021 third quarter increased $105 million, or 24%, from the year-ago quarter. Leasing revenue increased $39 million, primarily reflecting the addition of TCF’s portfolio of products. Service charges on deposit accounts increased $38 million, or 50%, due primarily to the addition of TCF customers prior to conversion to Huntington’s product and service set. Card and payment processing income increased $30 million, or 45%, reflecting higher interchange income that was primarily the result of the acquisition, but also higher customer transaction volumes. Other noninterest income increased $25 million, or 74%, primarily reflecting purchase accounting accretion from acquired unfunded loan commitments, a $6 million gain from branch divestiture, and increased amortization of upfront card-related contract renewal fees. Trust and investment management services increased $13 million, or 27%, reflecting continued strong net asset flows, positive equity market performance, and the TCF acquisition. Capital markets fees increased $13 million, or 48%, primarily reflecting higher loan syndication and interest rate derivatives. Partially offsetting these increases, mortgage banking income decreased $41 million, or 34%, primarily reflecting lower secondary marketing spreads.
2021 Third Quarter versus 2021 Second Quarter
Compared to the 2021 second quarter, total noninterest income increased $91 million, or 20%. Leasing revenue increased $30 million, primarily reflecting TCF’s leasing activities following the acquisition. Service charges on deposit accounts increased $26 million, or 30%, due primarily to the first full-quarter addition of TCF customers prior to the conversion to Huntington’s product and service set. Card and payment processing income increased $16 million, or 20%, primarily reflecting higher interchange income as a result of the TCF acquisition. Mortgage banking income increased $14 million, or 21%, primarily reflecting an increase in secondary marketing spreads and an increase in salable mortgage originations due to a full-quarter of volume added from the TCF acquisition. Other noninterest income increased $7 million, or 13%, primarily reflecting purchase accounting accretion from acquired unfunded loan commitments and a $6 million gain from branch divestitures. Partially offsetting these increases, gains on sales of securities decreased $10 million, reflecting securities portfolio optimization in the 2021 second quarter.
2021 3Q Form 10-Q 15

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Table 6 - Noninterest Income—2021 First Nine Months Ended vs. 2020 First Nine Months Ended
 Nine Months Ended September 30,Change
(dollar amounts in millions)20212020AmountPercent
Mortgage banking income$248 $277 $(29)(10)%
Service charges on deposit accounts 271 223 48 22 
Card and payment processing income241 183 58 32 
Trust and investment management services169 140 29 21 
Leasing revenue58 14 44 314 
Capital markets fees104 91 13 14 
Insurance income77 72 5 7 
Bank owned life insurance income47 49 (2)(4)
Gain on sale of loans8 30 (22)(73)
Net gains (losses) on sales of securities10 (1)11 1,100 
Other noninterest income141 104 37 36 
Total noninterest income$1,374 $1,182 $192 16 %
Noninterest income for the first nine-month period of 2021 increased $192 million, or 16%, from the year-ago period. The first nine-month period of 2021 noninterest income across categories was impacted by the June 2021 acquisition of TCF. Card and payment processing income increased $58 million, or 32%, primarily reflecting higher interchange income resulting from the TCF acquisition in addition to reduced customer activity as a result of the pandemic stay-at-home orders in the beginning of the prior year period. Service charges on deposit accounts increased $48 million, or 22%, primarily due to the impact of the addition of TCF customers prior to the conversion to Huntington’s product and service set, in addition to prior year period reflected pandemic-related fee waivers occurring through June. Leasing revenue increased $44 million primarily reflecting the addition of TCF’s portfolio of products. Other noninterest income increased $37 million, or 36%, primarily reflecting increased mezzanine investment income, increased amortization of upfront card-related contract renewal fees, purchase accounting accretion from acquired unfunded loan commitments and a $6 million gain from branch divestiture, partially offset by the prior year period gain on the annuitization of a retiree health plan. Trust and investment management services increased $29 million, or 21%, primarily reflecting higher sales production and overall market performance. Net gains (losses) on sales of securities increased $11 million, reflecting securities portfolio optimization. These increases were offset by a decrease in mortgage banking of $29 million, or 10%, primarily reflecting decreased spreads on salable originations, partially offset by an increase in volume added from the TCF acquisition, and a $22 million decrease in gain on sale of loans reflecting lower SBA loan sales resulting from the strategic decision to retain SBA loans on the balance sheet.
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Noninterest Expense
The following table reflects noninterest expense for each of the periods presented: 
Table 7 - Noninterest Expense
Three Months Ended3Q21 vs. 3Q203Q21 vs. 2Q21
September 30,June 30,September 30,ChangeChange
(dollar amounts in millions)202120212020AmountPercentAmountPercent
Personnel costs$643 $592 $453 $190 42 %$51 9 %
Outside data processing and other services304 162 98 206 210 142 88 
Equipment79 55 44 35 80 24 44 
Net occupancy95 72 40 55 138 23 32 
Lease financing equipment depreciation19 5 — 19 100 14 280 
Professional services26 48 12 14 117 (22)(46)
Amortization of intangibles13 11 10 3 30 2 18 
Marketing25 15 9 16 178 10 67 
Deposit and other insurance expense17 8 6 11 183 9 113 
Other noninterest expense68 104 40 28 70 (36)(35)
Total noninterest expense$1,289 $1,072 $712 $577 81 %$217 20 %
Number of employees (average full-time equivalent)20,908 17,018 15,680 5,228 33 %3,890 23 %
Impacts of TCF acquisition-related expenses:
Three Months Ended
September 30,June 30,September 30,
(dollar amounts in millions)202120212020
Personnel costs$36 $110 $— 
Outside data processing and other services140 33 — 
Net occupancy36 35 — 
Equipment5 3 — 
Professional services9 36 — 
Marketing3 — — 
Other noninterest expense5 52 — 
Total noninterest expense adjustments$234 $269 $— 
2021 Third Quarter versus 2020 Third Quarter
Total noninterest expense for the 2021 third quarter increased $577 million, or 81%, from the year-ago quarter, primarily reflecting the impact of the TCF acquisition and the TCF acquisition-related expenses. Outside data processing and other services increased $206 million, or 210%, reflecting TCF acquisition-related expenses and an increase in technology investments. Personnel costs increased $190 million, or 42%, primarily reflecting higher salaries and incentives related to a 33% increase in average full-time equivalent employees as a result of the TCF acquisition, as well as TCF acquisition-related expenses. Net occupancy expense increased $55 million, or 138%, and professional services expense increased $14 million, or 117%, both primarily due to TCF acquisition-related expense. Equipment expense increased $35 million, or 80%, and lease financing equipment depreciation increased $19 million, primarily as a result of the impact of the TCF acquisition. Other noninterest expense increased $28 million, or 70%, reflecting a prior year quarter benefit to legal expense, and an increase in expenses due to the impact of the TCF acquisition and TCF acquisition-related expenses. Marketing expense increased $16 million, or 178%, reflecting an increase in acquisition, deepening, and spend in new markets.
2021 3Q Form 10-Q 17

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2021 Third Quarter versus 2021 Second Quarter
Total noninterest expense increased $217 million, or 20%, from the 2021 second quarter. Noninterest expense in the 2021 third quarter across categories was impacted by a full-quarter impact from the TCF acquisition, compared to the late-quarter impact to the 2021 second quarter. TCF acquisition-related expenses totaled $234 million in 2021 third quarter, compared to $269 million in 2021 second quarter. Outside data processing and other services increased $142 million, or 88%, primarily due to an increase in TCF acquisition-related expenses. Personnel costs increased $51 million, or 9%, as the full quarter impact from the TCF acquisition was partially offset by a decrease in TCF acquisition-related expenses. Equipment expense increased $24 million, or 44%, net occupancy expenses increased $23 million, or 32%, and lease financing equipment depreciation increased $14 million, all primarily due to the impact from the TCF acquisition. Partially offsetting these increases, other noninterest expense decreased $36 million, or 35%, and professional services expense decreased $22 million, or 46%, both primarily due to a decrease in TCF acquisition-related expenses.

Table 8 - Noninterest Expense—2021 First Nine Months Ended vs. 2020 First Nine Months Ended
 Nine Months Ended September 30,Change
(dollar amounts in millions)20212020AmountPercent
Personnel costs$1,703 $1,267 $436 34 %
Outside data processing and other services581 273 308 113 
Equipment180 132 48 36 
Net occupancy209 119 90 76 
Lease financing equipment depreciation24 1 23 2,300 
Professional services91 34 57 168 
Amortization of intangibles34 31 3 10 
Marketing54 23 31 135 
Deposit and other insurance expense33 24 9 38 
Other noninterest expense245 135 110 81 
Total noninterest expense$3,154 $2,039 $1,115 55 %
Impacts of TCF acquisition-related expenses: 
 Nine Months Ended September 30,
(dollar amounts in millions)20212020
Personnel costs$146 $— 
Outside data processing and other services181 — 
Net occupancy74 — 
Equipment9 — 
Professional services53 — 
Marketing3 — 
Other noninterest expense58 — 
Total noninterest expense adjustments$524 $— 
Noninterest expense increased $1.1 billion, or 55%, from the year-ago period, primarily reflecting the impact of the TCF acquisition and the TCF acquisition-related expenses. Personnel costs increased $436 million, or 34%, primarily reflecting the impact of the TCF acquisition, as well as TCF acquisition-related expenses. Outside data processing and other services increased $308 million, or 113%, primarily reflecting TCF acquisition-related expense and an increase in technology investments. Other noninterest expense increased $110 million, or 81%, primarily as a result of TCF acquisition-related expense and an increase in foundation donations. Net occupancy expense increased $90 million, or 76%, and professional services expense increased $57 million, or 168%, both primarily reflecting TCF acquisition-related expense. Marketing expense increased $31 million, or 135%, primarily reflecting investment in new product launches and brand marketing in new markets and a return to pre-pandemic levels. Lease financing equipment depreciation increased $23 million, primarily due to the impact of the TCF acquisition.
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Provision for Income Taxes
The provision for income taxes in the 2021 third quarter was $90 million, compared with $55 million in the 2020 third quarter and $14 million in the 2021 second quarter. The provision for income taxes for the nine-month period ended September 30, 2021 and September 30, 2020 was $206 million and $96 million, respectively. All periods included the benefits from tax-exempt income, tax-advantaged investments, general business credits, investments in qualified affordable housing projects, and capital losses. The effective tax rates for the 2021 third quarter, 2020 third quarter, and 2021 second quarter were 19.0%, 15.2%, and (2,353.3)%, respectively. Excluding TCF acquisition-related expenses of $269 million, the related tax benefit of $51 million and discrete tax expenses of $16 million, the effective tax rate in the 2021 second quarter would have been 18.8%. The effective tax rates for the nine-month periods ended September 30, 2021 and September 30, 2020 were 18.7% and 16.0%, respectively. The variance between the 2021 third quarter compared to the 2020 third quarter, and the nine-month period ended September 30, 2021 compared to the nine-month period ended September 30, 2020 in the provision for income taxes and effective tax rates relates primarily to higher pre-tax income, discrete tax expenses and the impact of stock-based compensation. The net federal deferred tax liability was $151 million and the net state deferred tax asset was $20 million at September 30, 2021.
We file income tax returns with the IRS and various state, city, and foreign jurisdictions. Federal income tax audits have been completed for tax years through 2009. The 2010 and 2011 tax years remain under exam by the IRS. While the statute of limitations remains open for tax years 2012 through 2019, the IRS has advised that tax years 2012 through 2014 will not be audited and is currently examining the 2015 and 2016 federal income tax returns. Also, with few exceptions, we are no longer subject to state and local income tax examinations for tax years before 2016.
RISK MANAGEMENT AND CAPITAL
We use a multi-faceted approach to risk governance. It begins with the Board of Directors defining our risk appetite as aggregate moderate-to-low, through-the-cycle. Risk awareness, identification and assessment, reporting, and active management are key elements in overall risk management. Controls include, among others, effective segregation of duties, access management, and authorization and reconciliation procedures, as well as staff education and a disciplined assessment process.
We believe that our primary risk exposures are credit, market, liquidity, operational and compliance. More information on risk can be found in the Risk Factors section included in Item 1A of our 2020 Annual Report on Form 10-K and subsequent filings with the SEC. The MD&A included in our 2020 Annual Report on Form 10-K should be read in conjunction with this MD&A as this discussion provides only material updates to the 2020 Annual Report on Form 10-K. This MD&A should also be read in conjunction with the Unaudited Condensed Consolidated Financial Statements, Notes to Unaudited Condensed Consolidated Financial Statements, and other information contained in this report. Our definition, philosophy, and approach to risk management have not materially changed from the discussion presented in the 2020 Annual Report on Form 10-K.
Credit Risk
Credit risk is the risk of financial loss if a counterparty is not able to meet the agreed upon terms of the financial obligation. The majority of our credit risk is associated with lending activities, as the acceptance and management of credit risk is central to profitable lending. We also have credit risk associated with our investment securities portfolios (see Note 3 “Investment Securities and Other Securities” of the Notes to the Unaudited Condensed Consolidated Financial Statements). We engage with other financial counterparties for a variety of purposes including investing, asset and liability management, mortgage banking, and trading activities. A variety of derivative financial instruments, principally interest rate swaps, caps, floors, and collars, are used in asset and liability management activities to protect against the risk of adverse price or interest rate movements. We also use derivatives, principally loan sale commitments, in hedging our mortgage loan interest rate lock commitments and its mortgage loans held for sale. While there is credit risk associated with derivative activity, we believe this exposure is minimal.
2021 3Q Form 10-Q 19

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We focus on the early identification, monitoring, and management of all aspects of our credit risk. In addition to the traditional credit risk mitigation strategies of credit policies and processes, market risk management activities, and portfolio diversification, we use quantitative measurement capabilities utilizing external data sources, enhanced modeling technology, and internal stress testing processes. Our ongoing expansion of portfolio management resources is central to our commitment to maintaining an aggregate moderate-to-low, through-the-cycle risk appetite. In our efforts to identify risk mitigation techniques, we have focused on product design features, origination policies, and solutions for delinquent or stressed borrowers.
Loan and Lease Credit Exposure Mix
Refer to the “Loan and Lease Credit Exposure Mix” section of our 2020 Annual Report on Form 10-K for a brief description of each portfolio segment.
The table below provides the composition of our total loan and lease portfolio: 
Table 9 - Loan and Lease Portfolio Composition
(dollar amounts in millions)September 30,
2021		December 31,
2020
Commercial:
Commercial and industrial
$40,452 36 %$33,151 40 %
Commercial real estate:
Construction
1,812 2 1,035 1 
Commercial
12,882 12 6,164 8 
Commercial real estate
14,694 14 7,199 9 
Lease financing4,991 5 2,222 3 
Total commercial
60,137 55 42,572 52 
Consumer:
Automobile
13,305 12 12,778 16 
Residential mortgage18,922 17 12,141 15 
Home equity
10,919 10 8,894 11 
RV and marine
5,052 4 4,190 5 
Other consumer
2,232 2 1,033 1 
Total consumer
50,430 45 39,036 48 
Total loans and leases
$110,567 100 %$81,608 100 %
Our loan portfolio is a managed mix of consumer and commercial credits. We manage the overall credit exposure and portfolio composition via a credit concentration policy. The policy designates specific loan types, collateral types, and loan structures to be formally tracked and assigned maximum exposure limits as a percentage of capital. C&I lending by NAICS categories, specific limits for CRE project types, loans secured by residential real estate, large dollar exposures, and designated high risk loan categories represent examples of specifically tracked components of our concentration management process. There are no identified portfolio level concentrations that exceed the assigned exposure limit. Our concentration management policy is approved by the ROC and is used to ensure a high quality, well diversified portfolio that is consistent with our overall objective of maintaining an aggregate moderate-to-low, through-the-cycle risk appetite. Changes to existing concentration limits, incorporating specific information relating to the potential impact on the overall portfolio composition and performance metrics, require the approval of the ROC prior to implementation.
Commercial Credit
Refer to the “Commercial Credit” section of our 2020 Annual Report on Form 10-K for our commercial credit underwriting and on-going credit management processes.
Consumer Credit
Refer to the “Consumer Credit” section of our 2020 Annual Report on Form 10-K for our consumer credit underwriting and on-going credit management processes.
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The table below provides our total loan and lease portfolio by industry type. The changes in the industry composition from December 31, 2020 primarily relate to the TCF acquisition along with portfolio growth.
Table 10 - Loan and Lease Portfolio by Industry Type
(dollar amounts in millions)September 30,
2021		December 31,
2020
Commercial loans and leases:
Real estate and rental and leasing$13,791 12 %$6,962 9 %
Manufacturing7,153 6 5,556 7 
Retail trade (1)5,591 5 5,111 6 
Health care and social assistance4,874 4 3,646 4 
Finance and insurance4,357 4 3,389 4 
Accommodation and food services3,904 4 3,100 4 
Wholesale trade3,700 3 2,652 3 
Transportation and warehousing3,246 3 1,401 2 
Other services2,138 2 1,613 2 
Construction2,133 2 1,389 2 
Professional, scientific, and technical services1,985 2 2,051 3 
Arts, entertainment, and recreation1,595 1 744 1 
Admin./Support/Waste Mgmt. and Remediation Services1,347 1 975 1 
Information868 1 829 1 
Utilities797 1 793 1 
Educational services793 1 735 1 
Public administration761 1 662 1 
Mining, quarrying, and oil and gas extraction496 1 601 — 
Agriculture, forestry, fishing and hunting449 — 157 — 
Management of companies and enterprises129 — 144 — 
Unclassified/other30 — 62 — 
Total commercial loans and leases by industry category60,137 54 42,572 52 
Automobile13,305 12 12,778 16 
Residential mortgage18,922 17 12,141 15 
Home equity10,919 10 8,894 11 
RV and marine5,052 5 4,190 5 
Other consumer loans2,232 2 1,033 1 
Total loans and leases$110,567 100 %$81,608 100 %
(1)    Amounts include $1.1 billion and $2.4 billion of auto dealer services loans at September 30, 2021 and December 31, 2020, respectively.
Credit Quality
(This section should be read in conjunction with Note 4 “Loans / Leases” and Note 5 “Allowance for Credit Losses” of the Notes to Unaudited Condensed Consolidated Financial Statements.)
We believe the most meaningful way to assess overall credit quality performance is through an analysis of specific performance ratios. This approach forms the basis of the discussion in the sections immediately following: NPAs, NALs, TDRs, ACL, and NCOs. In addition, we utilize delinquency rates, risk distribution and migration patterns, product segmentation, and origination trends in the analysis of our credit quality performance.
Credit quality performance in the 2021 third quarter reflected total NCOs as a percent of average loans, annualized, of 0.20%, down from 0.28% in the prior quarter. Total NCOs were $55 million, a decrease of $7 million from the prior quarter, driven by a $12 million decrease in Commercial NCOs, partially offset by a $5 million increase in Consumer NCOs. NPAs decreased from the prior quarter by $121 million, or 12%, largely driven by decreases in the C&I and residential mortgage portfolios.
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NPAs, NALs, AND TDRs
(This section should be read in conjunction with Note 5 “Loans / Leases” and Note 6 “Allowance for Credit Losses” of the Notes to Unaudited Condensed Consolidated Financial Statements and “Credit Quality” section appearing in Huntington’s 2020 Annual Report on Form 10-K.)
NPAs and NALs
Commercial loans are placed on nonaccrual status at 90-days past due, or earlier if repayment of principal and interest is in doubt. Of the $657 million of commercial related NALs at September 30, 2021, $421 million, or 64%, represented loans that were less than 30-days past due, demonstrating our continued commitment to proactive credit risk management.
The following table reflects period-end NALs and NPAs detail.
Table 11 - Nonaccrual Loans and Leases and Nonperforming Assets
(dollar amounts in millions)September 30,
2021		December 31,
2020
Nonaccrual loans and leases (NALs):
Commercial and industrial
$494 $349 
Commercial real estate
103 15 
Lease financing60 4 
Automobile
3 4 
Residential mortgage
108 88 
Home equity
87 70 
RV and marine
6 2 
Other consumer
— — 
Total nonaccrual loans and leases
861 532 
Other real estate, net:
Residential
6 4 
Commercial
1 — 
Total other real estate, net7 4 
Other NPAs (1)25 27 
Total nonperforming assets
$893 $563 
Nonaccrual loans and leases as a % of total loans and leases
0.78 %0.65 %
NPA ratio (2)0.81 0.69 
(1)    Other nonperforming assets include certain impaired investment securities and/or nonaccrual loans held-for-sale.
(2)    Nonperforming assets divided by the sum of loans and leases, other real estate owned, and other NPAs.
2021 Third Quarter versus 2020 Fourth Quarter.
Total NPAs increased $330 million, or 59%, compared with December 31, 2020, largely driven by the TCF acquisition.
TDR Loans
(This section should be read in conjunction with Note 5 “Loans / Leases” of the Notes to Unaudited Condensed Consolidated Financial Statements and TDR Loans section appearing in Huntington’s 2020 Annual Report on Form 10-K.)
Over the past five quarters, the accruing component of the total TDR balance has been consistently over 75%, indicating there is no identified credit loss and the borrowers continue to make their monthly payments. As of September 30, 2021, over 80% of the $407 million of accruing TDRs secured by residential real estate (residential mortgage and home equity in Table 12) are current on their required payments, with over 59% of the accruing pool having had no delinquency in the past 12 months. There is limited migration from the accruing to nonaccruing components, and virtually all of the charge-offs come from the nonaccruing TDR balances.
TDRs identified by TCF prior to acquisition date are not included in our TDR disclosures as all such loans and leases were recorded at fair value as of the acquisition date. Subsequent modifications are evaluated for potential treatment as TDRs in accordance with Huntington’s accounting policies.
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The table below presents our accruing and nonaccruing TDRs.
Table 12 - Accruing and Nonaccruing Troubled Debt Restructured Loans (1)
(dollar amounts in millions)September 30,
2021		December 31,
2020
TDRs—accruing:
Commercial and industrial$113 $193 
Commercial real estate25 33 
Automobile45 50 
Residential mortgage244 248 
Home equity162 187 
RV and marine7 6 
Other consumer7 9 
Total TDRs—accruing603 726 
TDRs—nonaccruing:
Commercial and industrial78 95 
Commercial real estate1 3 
Automobile2 2 
Residential mortgage48 51 
Home equity25 30 
RV and marine1 1 
Total TDRs—nonaccruing155 182 
Total TDRs$758 $908 
(1)Loan modifications under the CARES Act, as amended and interagency regulatory guidance are not considered TDRs.
Overall TDRs decreased $150 million, compared with December 31, 2020, with declines in all portfolios with the exception of RV and marine. Huntington continues to proactively work with our borrowing relationships that require assistance. The resulting loan structures enable our borrowers to meet their commitments and Huntington to retain earning assets. The accruing TDRs meet the well secured definition and have demonstrated a period of satisfactory payment performance.
ACL
(This section should be read in conjunction with Note 5 “Allowance for Credit Losses” of the Notes to Unaudited Condensed Consolidated Financial Statements.)
Our ACL is comprised of two different components, both of which in our judgment are appropriate to absorb lifetime expected credit losses in our loan and lease portfolio: the ALLL and the AULC.
The models used within our loan and lease portfolio incorporate historical loss experience, as well as current and future economic conditions over a reasonable and supportable period beyond the balance sheet date. We make various judgments combined with historical loss experience to generate a loss rate that is applied to the outstanding loan or receivable balance to produce a reserve for expected credit losses.
We use a combination of statistically-based models that utilize assumptions about current and future economic conditions throughout the contractual life of the loan. The process of estimating expected credit losses is based on several key parameters: PD, EAD, and LGD. Beyond the reasonable and supportable period (two to three years), the economic variables revert to a historical equilibrium at a pace dependent on the state of the economy reflected within the economic scenario.
These three parameters, PD, EAD, and LGD are utilized to estimate the cumulative credit losses over the remaining expected life of the loan. We also consider the likelihood a previously charged-off account will be recovered. This calculation is dependent on how long ago the account was charged-off and future economic conditions, which estimate the likelihood and magnitude of recovery. Our models are developed using internal historical loss experience covering the full economic cycle and consider the impact of account characteristics on expected losses.
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Future economic conditions consider multiple macroeconomic scenarios provided to us by an independent third party and are reviewed through the appropriate committee governance channels discussed below. These macroeconomic scenarios contain certain geography based variables that are influential to our modeling process, the most significant being unemployment rates and Gross Domestic Product (GDP). The probability weights assigned to each scenario are generally expected to be consistent from period to period. Any changes in probability weights must be supported by appropriate documentation and approval of senior management. Additionally, we consider whether to adjust the modeled estimates to address possible limitations within the models or factors not captured within the macroeconomic scenarios. Lifetime losses for most of our loans and leases are evaluated collectively based on similar risk characteristics, risk ratings, origination credit bureau scores, delinquency status, and remaining months within loan agreements, among other factors.
The macroeconomic scenarios evaluated by Huntington during the 2021 third quarter continued to reflect the impact of the COVID-19 pandemic. The baseline scenario used for the quarter assumes that the worst of the economic disruption from the pandemic has passed, with the expectation that subsequent waves of the virus will not carry the same level of economic disruption experienced to date. The unemployment variable is incorporated within our models as both a rate of change variable and an absolute level variable. Historically, changes in unemployment have taken gradual paths resulting in more measured impacts each quarter.
The table below is intended to show how the forecasted path of these key macroeconomic variables has changed since the end of 2020:
Table 13 - Forecasted Key Macroeconomic Variables
Baseline scenario forecast202020212022
Q4Q2Q4Q2Q4
Unemployment rate (1)
4Q 20207.2 %7.5 %7.2 %6.4 %5.5 %
1Q 2021N/A6.3 5.7 5.0 4.5 
2Q 2021N/A5.9 4.5 3.7 3.5 
3Q 2021N/AN/A4.6 3.7 3.5 
Gross Domestic Product (1)
4Q 20203.0 %3.8 %5.8 %4.4 %3.9 %
1Q 2021N/A5.2 5.8 5.3 3.5 
2Q 2021N/A10.6 6.5 2.7 1.9 
3Q2021N/AN/A6.4 2.4 1.9 
(1) Values reflect the baseline scenario forecast inputs for each period presented, not updated for subsequent actual amounts.
Management continues to assess the uncertainty in the macroeconomic environment related to the COVID-19 pandemic. Management considered multiple macroeconomic forecasts that reflected a range of possible outcomes in order to capture the severity of and the economic disruption associated with the pandemic. While we have incorporated our estimated impact of COVID-19 into our ACL, the ultimate impact remains uncertain, including how long economic activities will be impacted and what effect the unprecedented levels of government fiscal and monetary actions will have on the economy and our credit losses.
Given significant COVID-19 specific government relief programs established during 2020 and additional stimulus spending enacted into law during 2021, management developed additional analytics to support adjustments to our modeled results. Our governance committees reviewed model results of each economic scenario for appropriate usage, concluding that the quantitative transactional reserve (collectively assessed) will continue to utilize the scenario weighting approach established in prior quarters. Given the uncertainty associated with key economic scenario assumptions, the September 30, 2021 ACL included a material general reserve component as well as additional industry specific risk profiles, including profiles related to the commercial real estate portfolio, to capture economic uncertainty not addressed within the quantitative transaction reserve.
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Our ACL methodology committee is responsible for developing the methodology, assumptions and estimates used in the calculation, as well as determining the appropriateness of the ACL. The ALLL represents the estimate of lifetime expected losses in the loan and lease portfolio at the reported date. The loss modeling process uses an EAD concept to calculate total expected losses on both funded balances and unfunded lending commitments, where appropriate. Losses related to the unfunded lending commitments are then recorded as AULC within other liabilities in the Unaudited Condensed Consolidated Balance Sheet. A liability for expected credit losses for off-balance sheet credit exposures is recognized if Huntington has a present contractual obligation to extend the credit and the obligation is not unconditionally cancelable.
The table below reflects the allocation of our ALLL among our various loan categories.
Table 14 - Allocation of Allowance for Credit Losses (1)
(dollar amounts in millions)September 30,
2021		December 31,
2020
ALLL
Commercial
Commercial and industrial$801 36 %$879 40 %
Commercial real estate678 14 297 9 
Lease financing70 5 60 3 
Total commercial1,549 55 1,236 52 
Consumer
Automobile122 12 166 16 
Residential mortgage127 17 79 15 
Home equity108 10 124 11 
RV and marine111 4 129 5 
Other consumer90 2 80 1 
Total consumer558 45 578 48 
Total ALLL2,107 100 %1,814 100 %
AULC98 52 
Total ACL$2,205 $1,866 
Total ALLL as a % of
Total loans and leases1.91%2.22%
Nonaccrual loans and leases245341
NPAs236323
Total ACL as % of
Total loans and leases1.99%2.29%
Nonaccrual loans and leases256351
NPAs247332
(1)Percentages represent the percentage of each loan and lease category to total loans and leases.
2021 Third Quarter versus 2020 Fourth Quarter
At September 30, 2021, the ALLL was $2.1 billion, an increase of $293 million compared to the December 31, 2020 balance of $1.8 billion, primarily reflecting the impact of the TCF acquisition. The ALLL to total loans and leases ratio decreased 31 basis points to 1.91%.
The ACL to total loans and leases ratio was 1.99% at September 30, 2021 compared to 2.29% at December 31, 2020. The decrease primarily reflects an improvement in the economic outlook.
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NCOs
Table 15 - Quarterly Net Charge-off Analysis
Three Months Ended
September 30,June 30,September 30,
(dollar amounts in millions)202120212020
Net charge-offs (recoveries) by loan and lease type:
Commercial:
Commercial and industrial
$28 $37 $70 
Commercial real estate:
Construction
(1)— (1)
Commercial
8 17 13 
Commercial real estate
7 17 12 
Lease financing12 5 7 
Total commercial
47 59 89 
Consumer:
Automobile
(4)(4)10 
Residential mortgage— — 1 
Home equity(3)(1)— 
RV and marine
— — 4 
Other consumer
15 8 9 
Total consumer
8 3 24 
Total net charge-offs$55 $62 $113 
Net charge-offs (recoveries) - annualized percentages:
Commercial:
Commercial and industrial
0.28 %0.43 %0.88 %
Commercial real estate:
Construction
(0.14)(0.04)(0.25)
Commercial
0.26 0.81 0.80 
Commercial real estate
0.21 0.69 0.63 
Lease financing0.87 0.93 1.10 
Total commercial
0.31 0.51 0.85 
Consumer:
Automobile
(0.10)(0.13)0.31 
Residential mortgage— — 0.03 
Home equity(0.08)(0.08)(0.02)
RV and marine
(0.01)0.02 0.38 
Other consumer
3.97 3.13 3.55 
Total consumer
0.07 0.02 0.24 
Net charge-offs as a % of average loans0.20 %0.28 %0.56 %
2021 Third Quarter versus 2021 Second Quarter
NCOs were an annualized 0.20% of average loans and leases in the current quarter, down from 0.28% in the 2021 second quarter, and below our average through-the-cycle target range of 0.35% - 0.55%. Annualized NCOs for the commercial portfolios were 0.31% in the current quarter compared to 0.51% in the 2021 second quarter. Consumer charge-offs were higher in the quarter, consistent with our expectations, but still well below the longer term run rate.

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The table below reflects NCO detail for the nine-month periods ended September 30, 2021 and 2020:
Table 16 - Year to Date Net Charge-off Analysis
(dollar amounts in millions)
Nine months ended September 30,
20212020
Net charge-offs (recoveries) by loan and lease type:
Commercial:
Commercial and industrial$93 $233 
Commercial real estate:
Construction(1)— 
Commercial22 11 
Commercial real estate21 11 
Lease financing41 8 
Total commercial
155 252 
Consumer:
Automobile(6)27 
Residential mortgage— 2 
Home equity(4)5 
RV and marine
3 10 
Other consumer33 41 
Total consumer
26 85 
Total net charge-offs$181 $337 
Nine months ended September 30,
20212020
Net charge-offs (recoveries) - annualized percentages:
Commercial:
Commercial and industrial0.35 %1.00 %
Commercial real estate:
Construction(0.08)(0.06)
Commercial0.32 0.25 
Commercial real estate0.27 0.20 
Lease financing1.64 0.43 
Total commercial0.42 0.83 
Consumer:
Automobile(0.06)0.28 
Residential mortgage— 0.02 
Home equity(0.05)0.09 
RV and marine
0.09 0.34 
Other consumer3.72 4.99 
Total consumer0.08 0.30 
Net charge-offs as a % of average loans0.26 %0.57 %

2021 First Nine Months versus 2020 First Nine Months
NCOs decreased $156 million in the first nine-month period of 2021 to $181 million. The decrease was evident across both the commercial and consumer portfolios. The commercial decrease was primarily a function of elevated losses associated within the oil and gas portfolio in 2020, while the consumer decrease was broad based due to positive portfolio performance throughout 2021.
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Market Risk
(This section should be read in conjunction with the “Market Risk” section appearing in Huntington’s 2020 Annual Report on Form 10-K for our on-going market risk management processes.)
Market risk refers to potential losses arising from changes in interest rates, foreign exchange rates, equity prices and commodity prices, including the correlation among these factors and their volatility. When the value of an instrument is tied to such external factors, the holder faces market risk. We are primarily exposed to interest rate risk as a result of offering a wide array of financial products to our customers and secondarily to price risk from trading securities, securities owned by our broker-dealer subsidiaries, foreign exchange positions, equity investments, and investments in securities backed by mortgage loans.
Huntington measures market risk exposure via financial simulation models, which provide management with insights on the potential impact to net interest income and other key metrics as a result of changes in market interest rates. Models are used to simulate cash flows and accrual characteristics of the balance sheet based on assumptions regarding the slope or shape of the yield curve, the direction and volatility of interest rates, and the changing composition and characteristics of the balance sheet resulting from strategic objectives and customer behavior. Assumptions and models provide insight on forecasted balance sheet growth and composition, and the pricing and maturity characteristics of current and future business.
In measuring the financial risks associated with interest rate sensitivity in Huntington’s balance sheet, Huntington compares a set of alternative interest rate scenarios to the results of a base case scenario derived using market forward rates. The market forward reflects the market consensus regarding the future level and slope of the yield curve across a range of tenor points. The standard set of interest rate scenarios includes two types: “shock” scenarios which are instantaneous parallel rate shifts, and “ramp” scenarios where the parallel shift is applied gradually over the first 12 months of the forecast on a pro rata basis. In both shock and ramp scenarios with falling rates, Huntington presumes that market rates will not go below 0%. The scenarios are inclusive of all executed interest rate risk hedging activities. Forward starting hedges are included to the extent that they have been transacted and that they start within the measurement horizon.
Table 17 - Net Interest Income at Risk
 Net Interest Income at Risk (%)
Basis point change scenario-25+100+200
Board policy limits-1.3 %-2.0 %-4.0 %
September 30, 2021-1.9 4.0 8.2 
December 31, 2020-1.1 3.4 7.3 
The NII at Risk results included in the table above reflect the analysis used monthly by management. It models gradual (“ramp” as defined above) +100 and +200 basis point parallel shifts in market interest rates, implied by the forward yield curve over the next twelve months as well as an instantaneous parallel shock of -25 basis points.
Huntington’s NII at Risk is within the Board of Directors’ policy limits for the +100 and +200 basis point scenarios. NII at Risk was operating outside the Board of Directors’ policy limit for the -25 basis point scenario at September 30, 2021. This breach was escalated to the Board of Directors’ ROC. On October 19, 2021, as part of our annual Corporate Risk Appetite review process, the ROC reviewed all established limits and determined an update to the limit was appropriate. The ROC approved an increase to the -25 basis point policy limit bringing this metric back into compliance.
The NII at Risk shows that the balance sheet is asset sensitive at both September 30, 2021, and December 31, 2020. The change in sensitivity is primarily driven by changes in market rate expectations, and the size and mix of the balance sheet.
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Table 18 - Economic Value of Equity at Risk
 Economic Value of Equity at Risk (%)
Basis point change scenario-25+100+200
Board policy limits-1.5 %-6.0 %-12.0 %
September 30, 2021-0.7 0.7 -1.7 
December 31, 2020-0.7 1.4 -0.1 
The EVE results included in the table above reflect the analysis used monthly by management. It models immediate -25, +100 and +200 basis point parallel shifts (“shocks” as defined above) in market interest rates.
Huntington is within the Board of Directors’ policy limits for the -25, +100 and +200 basis point scenarios. As of September 30, 2021, EVE depicts a liability sensitive (long duration) balance sheet profile. The change in sensitivity from December 31, 2020’s asset sensitive (short duration) position was driven primarily by changes in the spot market rate curve impacting forecasted runoff expectations, and the size and composition of the balance sheet as a result of the TCF acquisition.
Use of Derivatives to Manage Interest Rate Risk
An integral component of our interest rate risk management strategy is use of derivative instruments to minimize significant fluctuations in earnings caused by changes in market interest rates. Examples of derivative instruments that we may use as part of our interest rate risk management strategy include interest rate swaps, caps and floors, forward contracts, and forward starting interest rate swaps.
Table 19 shows all swap, and cap and floor positions that are utilized for purposes of managing our exposures to the variability of interest rates. The interest rates variability may impact either the fair value of the assets and liabilities or impact the cash flows attributable to net interest margin. These positions are used to protect the fair value of asset and liabilities by converting the contractual interest rate on a specified amount of assets and liabilities (i.e., notional amounts) to another interest rate index. The positions are also used to hedge the variability in cash flows attributable to the contractually specified interest rate by converting the variable rate index into a fixed rate. The volume, maturity and mix of derivative positions change frequently as we adjust our broader interest rate risk management objectives and the balance sheet positions to be hedged. For further information, including the notional amount and fair values of these derivatives, refer to Note 14 “Derivative Financial Instruments” of the Notes to Unaudited Condensed Consolidated Financial Statements.
The following table presents additional information about the interest rate swaps, and caps and floors used in Huntington’s asset and liability management activities at September 30, 2021 and December 31, 2020.
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Table 19 - Weighted-Average Maturity, Receive Rate and LIBOR Reset Rate on Asset Liability Management Instruments
September 30, 2021
 Average Maturity (years)
Weighted-Average
Fixed Rate
Weighted-Average
LIBOR Reset Rate
(dollar amounts in millions)Notional ValueFair Value
Asset conversion swaps
Receive Fixed - Pay 1 month LIBOR$7,275 1.41 $188 1.75 %0.08 %
Pay Fixed - Receive 1 month LIBOR (1)1,330 9.11 27 0.99 0.09 
Pay Fixed - Receive 1 month LIBOR - forward starting (2)6,042 3.89 15 0.84 — 
Liability conversion swaps
Receive Fixed - Pay 1 month LIBOR4,756 1.60 165 2.17 0.08 
Basis Swaps
Pay SOFR- Receive Fed Fund (economic hedges) (3)230 3.91 — 0.08 0.06 
Pay Fed Fund - Receive SOFR (economic hedges) (3)41 1.23 — 0.05 0.08 
Total swap portfolio$19,674 $395 
September 30, 2021
 Average Maturity (years)Weighted-Average Strike
Weighted-Average
LIBOR Reset Rate
(dollar amounts in millions)Notional ValueFair Value
Interest rate floors
Purchased Interest Rate Floors - 1 month LIBOR$375 0.31 $3 1.93 %0.09 %
Purchased Floor Spread - 1 month LIBOR275 1.38 3 1.00 / 1.750.09 
Total floors portfolio$650 $6 
December 31, 2020
 Average Maturity (years)
Weighted-Average
Fixed Rate
Weighted-Average
LIBOR Reset Rate
(dollar amounts in millions)Notional ValueFair Value
Asset conversion swaps
Receive Fixed - Pay 1 month LIBOR$6,525 2.03 $231 1.81 %0.15 %
Pay Fixed - Receive 1 month LIBOR (1)3,076 1.99 3 0.17 0.15 
Receive Fixed - Pay 1 month LIBOR - forward starting (4)750 3.29 23 1.24 — 
Pay Fixed - Receive 1 month LIBOR - forward starting (5)408 9.08 2 0.68 — 
Liability conversion swaps
Receive Fixed - Pay 1 month LIBOR5,397 2.02 262 2.28 0.15 
Receive Fixed - Pay 3 month LIBOR800 0.21 5 1.31 0.22 
Basis Swaps
Pay SOFR- Receive Fed Fund (economic hedges) (3)230 4.66 — 0.09 0.10 
Pay Fed Fund - Receive SOFR (economic hedges) (3)41 1.98 — 0.09 0.09 
Total swap portfolio$17,227 $526 
Interest rate floors
Purchased Interest Rate Floors - 1 month LIBOR$7,200 0.37 $59 1.81 %0.15 %
Purchased Floor Spread - 1 month LIBOR400 1.74 7  2.50 / 1.50 0.15 
Purchased Floor Spread - 1 month LIBOR forward starting (6)2,500 3.72 76  1.65 / 0.70— 
Purchased Floor Spread - 1 month LIBOR (economic hedges)1,000 2.2918  1.75 / 1.000.16 
Interest rate caps
Purchased Cap - 1 month LIBOR (economic hedges)5,000 6.9191 0.98 0.15 
Total floors and caps portfolio$16,100 $251 
(1)Amounts include interest rate swaps as fair value hedges of fixed-rate investment securities using the last-of-layer method.
(2)Forward starting swaps effective starting from October 2021 to October 2022.
(3)Swaps have variable pay and variable receive resets. Weighted Average Fixed Rate column represents pay rate reset.
(4)Forward starting swaps and caps effective starting in April 2021.
(5)Forward starting swaps become effective starting from January 2021 to May 2021.
(6)Forward starting floors become effective starting from March 2021 to June 2021.
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Net interest income in the nine-month period ended September 30, 2021 included a positive $89 million mark-to-market of interest rate caps. The mark-to-market is not included in the NII at Risk calculations above. The interest rate caps were terminated in the 2021 second quarter and were replaced with $4.0 billion of forward starting interest rate swaps that qualify for hedge accounting.
MSRs
(This section should be read in conjunction with Note 6 “Mortgage Loan Sales and Servicing Rights” of Notes to the Unaudited Condensed Consolidated Financial Statements.)
At September 30, 2021, we had a total of $338 million of capitalized MSRs representing the right to service $30.6 billion in mortgage loans.
MSR fair values are sensitive to movements in interest rates as expected future net servicing income depends on the projected outstanding principal balances of the underlying loans, which can be reduced by prepayments and declines in credit quality. Prepayments usually increase when mortgage interest rates decline and decrease when mortgage interest rates rise. We also employ hedging strategies to reduce the risk of MSR fair value changes or impairment. However, volatile changes in interest rates can diminish the effectiveness of these economic hedges. We report changes in the MSR value net of hedge-related trading activity in the mortgage banking income category of noninterest income.
MSR assets are included in servicing rights and other intangible assets in the Unaudited Condensed Consolidated Financial Statements.
Price Risk
Price risk represents the risk of loss arising from adverse movements in the prices of financial instruments that are carried at fair value and are subject to fair value accounting. We have price risk from trading securities, securities owned by our broker-dealer subsidiaries, foreign exchange positions, derivative instruments, and equity investments. We have established loss limits on the trading portfolio, on the amount of foreign exchange exposure that can be maintained, and on the amount of marketable equity securities that can be held.
Liquidity Risk
(This section should be read in conjunction with the “Liquidity Risk” section appearing in Huntington’s 2020 Annual Report on Form 10-K for our on-going liquidity risk management processes.)
Our primary source of liquidity is our core deposit base. Core deposits comprised approximately 97% of total deposits at September 30, 2021. We also have available unused wholesale sources of liquidity, including advances from the FHLB, issuance through dealers in the capital markets, and certificates of deposit issued through brokers. Liquidity is further provided by unencumbered, or unpledged, investment securities that totaled $14.8 billion as of September 30, 2021.
Bank Liquidity and Sources of Funding
Our primary sources of funding for the Bank are retail and commercial core deposits. At September 30, 2021, these core deposits funded 79% of total assets (124% of total loans). Other sources of liquidity include non-core deposits, FHLB advances, wholesale debt instruments, and securitizations. Demand deposit overdrafts that have been reclassified as loan balances were $29 million and $14 million at September 30, 2021 and December 31, 2020, respectively.
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The following table reflects deposit composition details.
Table 20 - Deposit Composition
September 30,December 31,
(dollar amounts in millions)20212020
By Type:
Demand deposits—noninterest-bearing$44,560 31 %$28,553 29 %
Demand deposits—interest-bearing36,423 26 26,757 27 
Money market deposits32,662 23 26,248 27 
Savings and other domestic deposits20,773 15 11,722 12 
Core certificates of deposit (1)3,080 2 1,425 1 
Total core deposits:137,498 97 94,705 96 
Other domestic deposits of $250,000 or more521 — 131 — 
Negotiable CDs, brokered and other deposits
3,879 3 4,112 4 
Total deposits$141,898 100 %$98,948 100 %
Total core deposits:
Commercial$61,210 45 %$44,698 47 %
Consumer76,288 55 50,007 53 
Total core deposits$137,498 100 %$94,705 100 %
(1)Includes consumer certificates of deposit of $250,000 or more.
The Bank maintains borrowing capacity at the FHLB and the Federal Reserve Bank Discount Window. The Bank does not consider borrowing capacity from the Federal Reserve Bank Discount Window as a primary source of liquidity. Total loans and securities pledged to the Federal Reserve Bank Discount Window and the FHLB are $56.2 billion and $53.4 billion at September 30, 2021 and December 31, 2020, respectively.
At September 30, 2021, the market value of investment securities pledged to secure public and trust deposits, trading account liabilities, U.S. Treasury demand notes, and security repurchase agreements totaled $6.4 billion. There were no securities of a single issuer, which are not governmental or government-sponsored, that exceeded 10% of shareholders’ equity at September 30, 2021.
To the extent we are unable to obtain sufficient liquidity through core deposits, we may meet our liquidity needs through sources of wholesale funding, asset securitization or sale. Sources of wholesale funding include other domestic deposits of $250,000 or more, negotiable CDs, brokered and other deposits, short-term borrowings, and long-term debt. At September 30, 2021, total wholesale funding was $12.6 billion, a decrease from $12.8 billion at December 31, 2020. The decrease from year-end is primarily due to a decrease in long-term debt.
At September 30, 2021, we believe the Bank has sufficient liquidity to meet its cash flow obligations for the foreseeable future.
Parent Company Liquidity
The parent company’s funding requirements consist primarily of dividends to shareholders, debt service, income taxes, operating expenses, funding of nonbank subsidiaries, repurchases of our stock, and acquisitions. The parent company obtains funding to meet obligations from dividends and interest received from the Bank, interest and dividends received from direct subsidiaries, net taxes collected from subsidiaries included in the federal consolidated tax return, fees for services provided to subsidiaries, and the issuance of debt securities.
During the 2021 first quarter, Huntington issued $500 million of Series H Preferred Stock. On June 9, 2021, each share of TCF’s Series C Non-Cumulative Perpetual Preferred Stock was converted into a share of a Series I Preferred Stock of Huntington having substantially the same terms as TCF’s preferred stock. See Note 10 “Shareholders’ Equity” and Note 14 appearing in Huntington’s 2020 Annual Report on Form 10-K for further information.
At September 30, 2021 and December 31, 2020, the parent company had $3.7 billion and $4.4 billion, respectively, in cash and cash equivalents.
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On October 20, 2021, the Board of Directors declared a quarterly common stock cash dividend of $0.155 per common share. The dividend is payable on January 3, 2022, to shareholders of record on December 17, 2021. Based on the current quarterly dividend of $0.155 per common share, cash demands required for common stock dividends are estimated to be approximately $224 million per quarter. Additionally, on October 20, 2021, the Board of Directors declared a quarterly Series B, Series E, Series F, Series G and Series H Preferred Stock dividend payable on January 18, 2022 to shareholders of record on January 1, 2022. On September 15, 2021, the Board of Directors declared a quarterly dividend for the Series I Preferred Stock payable on December 1, 2021 to shareholders of record on November 15, 2021. Total cash demands required for Series B, Series E, Series F, Series G, Series H and Series I are expected to be approximately $28 million per quarter.
During the first nine months of 2021, the Bank paid preferred and common dividends of $34 million and $875 million, respectively. To meet any additional liquidity needs, the parent company may issue debt or equity securities from time to time.
Off-Balance Sheet Arrangements
In the normal course of business, we enter into various off-balance sheet arrangements. These arrangements include commitments to extend credit, interest rate swaps, floors and caps, financial guarantees contained in standby letters-of-credit issued by the Bank, and commitments by the Bank to sell mortgage loans.
Operational Risk
Operational risk is the risk of loss due to human error, third-party performance failures, inadequate or failed internal systems and controls, including the use of financial or other quantitative methodologies that may not adequately predict future results; violations of, or noncompliance with, laws, rules, regulations, prescribed practices, or ethical standards; and external influences such as market conditions, fraudulent activities, disasters, failed business contingency plans and security risks. We continuously strive to strengthen our system of internal controls to ensure compliance with significant contracts, agreements, laws, rules, and regulations, and to improve the oversight of our operational risk.
We actively monitor cyberattacks such as attempts related to online deception and loss of sensitive customer data. We evaluate internal systems, processes and controls to mitigate loss from cyber-attacks and, to date, have not experienced any material losses. Cybersecurity threats have increased, primarily through phishing campaigns.  We are actively monitoring our email gateways for malicious phishing email campaigns.  We have also increased our cybersecurity and fraud monitoring activities through the implementation of specific monitoring of remote connections by geography and volume of connections to detect anomalous remote logins, since a significant portion of our workforce is now working remotely. 
Our objective for managing cyber security risk is to avoid or minimize the impacts of external threat events or other efforts to penetrate our systems. We work to achieve this objective by hardening networks and systems against attack, and by diligently managing visibility and monitoring controls within our data and communications environment to recognize events and respond before the attacker has the opportunity to plan and execute on its own goals. To this end we employ a set of defense in-depth strategies, which include efforts to make us less attractive as a target and less vulnerable to threats, while investing in threat analytic capabilities for rapid detection and response. Potential concerns related to cyber security may be escalated to our board-level Technology Committee, as appropriate. As a complement to the overall cyber security risk management, we use a number of internal training methods, both formally through mandatory courses and informally through written communications and other updates. Internal policies and procedures have been implemented to encourage the reporting of potential phishing attacks or other security risks. We also use third-party services to test the effectiveness of our cyber security risk management framework, and any such third parties are required to comply with our policies regarding information security and confidentiality.
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To mitigate operational risks, we have an Operational Risk Committee, a Legal, Regulatory, and Compliance Committee, a Funds Movement Committee, and a Third Party Risk Management Committee. The responsibilities of these committees, among other duties, include establishing and maintaining management information systems to monitor material risks and to identify potential concerns, risks, or trends that may have a significant impact and ensuring that recommendations are developed to address the identified issues. In addition, we have a Model Risk Oversight Committee that is responsible for policies and procedures describing how model risk is evaluated and managed and the application of the governance process to implement these practices throughout the enterprise. These committees report any significant findings and remediation recommendations to the Risk Management Committee. Potential concerns may be escalated to our ROC and the Audit Committee, as appropriate. Significant findings or issues are escalated by the Third Party Risk Management Committee to the Technology Committee of the Board, as appropriate.
The TCF integration is inherently large and complex. Our objective for managing execution risk is to minimize impact to daily operations. We have an established Integration Management Office led by senior management. Responsibilities include central management, reporting, and escalation of key integration deliverables. In addition, a separate Board Committee, the Integration Oversight Committee, is in place to assist in the oversight and to monitor the integration activities, risks and progress of the TCF acquisition.
The goal of this framework is to implement effective operational risk monitoring; minimize operational, fraud, and legal losses; minimize the impact of inadequately designed models and enhance our overall performance.
Compliance Risk
Financial institutions are subject to many laws, rules, and regulations at both the federal and state levels. These broad-based laws, rules, and regulations include, but are not limited to, expectations relating to anti-money laundering, lending limits, client privacy, fair lending, prohibitions against unfair, deceptive or abusive acts or practices, protections for military members as they enter active duty, and community reinvestment. The volume and complexity of recent regulatory changes have increased our overall compliance risk. As such, we utilize various resources to help ensure expectations are met, including a team of compliance experts dedicated to ensuring our conformance with all applicable laws, rules, and regulations. Our colleagues receive training for several broad-based laws and regulations including, but not limited to, anti-money laundering and customer privacy. Additionally, colleagues engaged in lending activities receive training for laws and regulations related to flood disaster protection, equal credit opportunity, fair lending, and/or other courses related to the extension of credit. We set a high standard of expectation for adherence to compliance management and seek to continuously enhance our performance.
Capital
Both regulatory capital and shareholders’ equity are managed at the Bank and on a consolidated basis. We have an active program for managing capital and maintain a comprehensive process for assessing the Company’s overall capital adequacy. We believe our current levels of both regulatory capital and shareholders’ equity are adequate.
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The following table presents certain regulatory capital data at both the consolidated and Bank levels for each of the periods presented:
Table 21 - Regulatory Capital Data (1)
  Basel III
(dollar amounts in millions) September 30, 2021December 31,
2020
Total risk-weighted assetsConsolidated$128,023 $88,878 
Bank127,537 88,601 
CET 1 risk-based capitalConsolidated12,250 8,887 
Bank13,284 9,438 
Tier 1 risk-based capitalConsolidated14,531 11,083 
Bank14,466 10,601 
Tier 2 risk-based capitalConsolidated2,842 1,774 
Bank1,996 1,431 
Total risk-based capitalConsolidated17,373 12,856 
Bank16,462 12,032 
CET 1 risk-based capital ratioConsolidated9.57 %10.00 %
Bank10.42 10.65 
Tier 1 risk-based capital ratioConsolidated11.35 12.47 
Bank11.34 11.97 
Total risk-based capital ratioConsolidated13.57 14.46 
Bank12.91 13.58 
Tier 1 leverage ratioConsolidated8.62 9.32 
Bank8.60 8.94 
(1)    Capital ratios reflect Huntington's election of a five-year transition of CECL on regulatory capital, followed by a three-year transition period. The CECL transition amount includes the impact of Huntington’s adoption of the new CECL accounting standards on January 1, 2020 and 25% for the cumulative change in the reported ACL since adopting CECL, excluding the allowance established at acquisition for purchased credit deteriorated loans.
At September 30, 2021, we maintained Basel III capital ratios in excess of the well-capitalized standards established by the FRB. The decrease in regulatory capital ratios was driven by the repurchase of 33.4 million common shares over the last three quarters, cash dividends, partially offset by earnings, adjusted for the CECL transition. The balance sheet growth as a result of the TCF acquisition was largely offset by the common stock issued related to the acquisition, net of goodwill and other intangibles, as well as elevated deposits at the Federal Reserve Bank (both of which are 0% risk weighted). The change in regulatory Tier 1 risk-based capital and total risk-based capital ratios for the first nine-month period of 2021 reflects the issuance of $500 million of Series H preferred stock in the 2021 first quarter, the issuance of $175 million of Series I preferred stock in the 2021 second quarter resulting from the conversion of TCF preferred stock, partially offset by the redemption of $600 million of Series D preferred stock in the 2021 third quarter, which represented all of the Series D preferred stock issued and outstanding. Additionally, the total risk-based capital ratio reflects the issuance of $558 million of subordinated notes in the 2021 third quarter.
Shareholders’ Equity
We generate shareholders’ equity primarily through the retention of earnings, net of dividends and share repurchases. Other potential sources of shareholders’ equity include issuances of common and preferred stock. Our objective is to maintain capital at an amount commensurate with our risk appetite and risk tolerance objectives, to meet both regulatory and market expectations, and to provide the flexibility needed for future growth and business opportunities.
Shareholders’ equity totaled $19.5 billion at September 30, 2021, an increase of $6.5 billion or 50% when compared with December 31, 2020.
On February 2, 2021, Huntington issued $500 million of preferred stock. Huntington issued 20,000,000 depositary shares, each representing a 1/40th ownership interest in a share of 4.50% Series H Non-Cumulative Perpetual Preferred Stock (Preferred H Stock), par value $0.01 per share, with a liquidation preference of $1,000 per share (equivalent to $25 per depositary share).
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On June 9, 2021, each share of TCF Financial Corporation 5.70% Series C Non-Cumulative Perpetual Preferred Stock, $0.01 par value per share, outstanding immediately prior to acquisition of TCF Financial Corporation was converted into the right to receive a share of the newly created Huntington 5.70% Series I Non-Cumulative Perpetual Preferred Stock, par value $0.01 per share.
On July 15, 2021, all 24,000,000 outstanding depositary shares, each representing a 1/40th interest in a share of Huntington’s 6.250% Series D Non-Cumulative Perpetual Preferred Stock, par value $0.01 per share, were redeemed.
Subsequent to quarter end, all 4,000,000 outstanding depositary shares, each representing a 1/40th interest in a share of Huntington’s 5.875% Series C Non-Cumulative Perpetual Preferred Stock, par value $0.01 per share, were redeemed.
On June 24, 2021, we were notified by the FRB that Huntington’s stress capital buffer (SCB) requirement would not be recalculated and that beginning on July 1, 2021, Huntington was authorized to make capital distributions that are consistent with the requirements in the FRB’s capital rule, inclusive of the final SCB requirement of 2.5% provided to Huntington on August 7, 2020. In addition, the FRB notified us that our preliminary SCB effective for the period October 1, 2021, until September 30, 2022 would remain at 2.5%, which is the minimum under the stress capital buffer framework.
Dividends
We consider disciplined capital management as a key objective, with dividends representing one component. Our strong capital position us to take advantage of additional capital management opportunities.
Share Repurchases
From time to time, the Board of Directors authorizes the Company to repurchase shares of our common stock. Although we announce when the Board of Directors authorizes share repurchases, we typically do not give any public notice before we repurchase our shares. Future stock repurchases may be private or open-market repurchases, including block transactions, accelerated or delayed block transactions, forward transactions, and similar transactions. Various factors determine the amount and timing of our share repurchases, including our capital requirements, the number of shares we expect to issue for employee benefit plans and acquisitions, market conditions (including the trading price of our stock), and regulatory and legal considerations.
On July 21, 2021, the Board authorized the repurchase of up to $800 million of common shares over the next four quarters. Purchases of common stock under the authorization may include open market purchases, privately negotiated transactions, and accelerated share repurchase programs. During the 2021 third quarter, Huntington repurchased a total of $500 million of common stock, representing 33.4 million common shares, at a weighted average price of $14.96.
BUSINESS SEGMENT DISCUSSION
Overview
Our business segments are based on our internally-aligned segment leadership structure, which is how we monitor results and assess performance. We have four major business segments: Consumer and Business Banking, Commercial Banking, Vehicle Finance, and Regional Banking and The Huntington Private Client Group (RBHPCG). The Treasury / Other function includes technology and operations, other unallocated assets, liabilities, revenue, and expense.
Business segment results are determined based upon our management practices, which assigns balance sheet and income statement items to each of the business segments. The process is designed around our organizational and management structure and, accordingly, the results derived are not necessarily comparable with similar information published by other financial institutions.
Revenue Sharing
Revenue is recorded in the business segment responsible for the related product or service. Fee sharing is recorded to allocate portions of such revenue to other business segments involved in selling to or providing service to customers. Results of operations for the business segments reflect these fee sharing allocations.
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Expense Allocation
The management process that develops the business segment reporting utilizes various estimates and allocation methodologies to measure the performance of the business segments. Expenses are allocated to business segments using a two-phase approach. The first phase consists of measuring and assigning unit costs (activity-based costs) to activities related to product origination and servicing. These activity-based costs are then extended, based on volumes, with the resulting amount allocated to business segments that own the related products. The second phase consists of the allocation of overhead costs to all four business segments from Treasury / Other. We utilize a full-allocation methodology, where all Treasury / Other expenses, except reported acquisition-related net expenses, if any, and a small amount of other residual unallocated expenses, are allocated to the four business segments.
Funds Transfer Pricing (FTP)
We use an active and centralized FTP methodology to attribute appropriate net interest income to the business segments. The intent of the FTP methodology is to transfer interest rate risk from the business segments by providing matched duration funding of assets and liabilities. The result is to centralize the financial impact, management, and reporting of interest rate risk in the Treasury / Other function where it can be centrally monitored and managed. The Treasury / Other function charges (credits) an internal cost of funds for assets held in (or pays for funding provided by) each business segment. The FTP rate is based on prevailing market interest rates for comparable duration assets (or liabilities).
Net Income (Loss) by Business Segment
Net income (loss) by business segment for the nine-month periods ending September 30, 2021 and September 30, 2020 is presented in the following table:
Table 22 - Net Income (Loss) by Business Segment
 Nine Months Ended September 30,
(dollar amounts in millions)20212020
Consumer and Business Banking$231 $249 
Commercial Banking446 (45)
Vehicle Finance243 81 
RBHPCG47 60 
Treasury / Other(73)156 
Net income$894 $501 
Treasury / Other
The Treasury / Other function includes revenue and expense related to assets, liabilities, derivatives (including the mark-to-market of interest rate caps), and equity not directly assigned or allocated to one of the four business segments. Assets include investment securities and bank owned life insurance.
Net interest income includes the impact of administering our investment securities portfolios, the net impact of derivatives used to hedge interest rate sensitivity as well as the financial impact associated with our FTP methodology, as described above. Noninterest income includes miscellaneous fee income not allocated to other business segments, such as bank owned life insurance income and securities and trading asset gains or losses. Noninterest expense includes certain TCF acquisition-related expenses in the current period, certain corporate administrative, and other miscellaneous expenses not allocated to other business segments. The provision for income taxes for the business segments is calculated at a statutory 21% tax rate, although our overall effective tax rate is lower.

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Consumer and Business Banking
Table 23 - Key Performance Indicators for Consumer and Business Banking
 Nine Months Ended September 30,Change
(dollar amounts in millions)20212020AmountPercent
Net interest income$1,187 $1,099 $88 8 %
Provision for credit losses57 200 (143)(72)
Noninterest income780 704 76 11 
Noninterest expense1,617 1,288 329 26 
Provision for income taxes62 66 (4)(6)
Net income$231 $249 $(18)(7)%
Number of employees (average full-time equivalent)8,905 7,914 991 13 %
Total average assets$35,470 $28,161 $7,309 26 
Total average loans/leases30,640 24,772 5,868 24 
Total average deposits76,806 55,884 20,922 37 
Net interest margin2.03 %2.59 %(0.56)%(22)
NCOs$68 $69 $(1)(1)
NCOs as a % of average loans and leases0.30 %0.37 %(0.07)%(19)
2021 First Nine Months versus 2020 First Nine Months

Consumer and Business Banking, including Home Lending, reported net income of $231 million in the first nine-month period of 2021, a decrease of $18 million, or 7%, compared to the year-ago period. Segment net interest income increased $88 million, or 8%, primarily due to the impact of the TCF acquisition and PPP revenue, partially offset by decreased spread on deposits and decreased loan margin. The provision for credit losses decreased $143 million, or 72%, primarily due to changes in the forecasted economic outlook compared to the year-ago period, partially offset by the TCF acquisition initial provision for credit losses. Noninterest income increased $76 million, or 11%, primarily due to higher interchange income and service charge income resulting from the TCF acquisition in addition to reduced customer activity and fee-waivers as a result of the pandemic in the beginning of the prior year period and a $6 million gain from branch divestitures, partially offset by decreased mortgage banking income. Noninterest expense increased $329 million, or 26%, primarily due to the impact of the TCF acquisition, in addition to increased allocated expense and personnel costs due to higher levels of production and origination volume.

Home Lending, an operating unit of Consumer and Business Banking, reflects the result of the origination, sale, and servicing of mortgage loans less referral fees and net interest income for mortgage banking products distributed by the retail branch network and other business segments. Home Lending reported net income of $19 million in the first nine-month period of 2021, compared with net income of $75 million in the year-ago period. Noninterest income decreased $63 million, driven primarily by decreased spreads on salable originations, partially offset by higher salable originations. Noninterest expense increased $41 million due to primarily due to higher personnel expense as a result of the TCF acquisition and higher origination volumes.

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Commercial Banking
Table 24 - Key Performance Indicators for Commercial Banking
 Nine Months Ended September 30,Change
(dollar amounts in millions)20212020AmountPercent
Net interest income$873 $693 $180 26 %
Provision for credit losses107 611 (504)(82)
Noninterest income353 261 92 35 
Noninterest expense553 400 153 38 
Provision (benefit) for income taxes119 (12)131 1,092 
Income attributable to non-controlling interest1 — 1 100 
Net income (loss)$446 $(45)$491 1,091 %
Number of employees (average full-time equivalent)1,652 1,280 372 29 %
Total average assets$40,941 $35,454 $5,487 15 
Total average loans/leases34,995 27,405 7,590 28 
Total average deposits28,475 23,076 5,399 23 
Net interest margin3.11 %3.09 %0.02 %1 
NCOs $116 $232 $(116)(50)
NCOs as a % of average loans and leases0.44 %1.13 %(0.69)%(61)
2021 First Nine Months versus 2020 First Nine Months
Commercial Banking reported net income of $446 million in the first nine-month period of 2021, compared to a net loss of $45 million in the year-ago period. Segment net interest income increased $180 million, or 26%, primarily due to an increase in average loans and leases reflecting the impact of the TCF acquisition, an increase in average PPP loans, and a 2 basis point increase in net interest margin driven by an increase in loan spread as the benefit from purchase accounting net accretion was partially offset by declines in yields. Partially offsetting these benefits was the impact of the continued decline in the benefit of deposits. The provision for credit losses decreased $504 million, or 82%, primarily due to changes in the forecasted economic outlook compared to the year-ago period, partially offset by the TCF acquisition initial provision for credit losses. Noninterest income increased $92 million, or 35%, reflecting the impact of the TCF acquisition, purchase accounting accretion from acquired unfunded loan commitments, and an increase in equipment finance revenue reflecting higher gains on terminations and sales. Noninterest expense increased $153 million, or 38%, primarily due to higher personnel expense and lease financing equipment depreciation as a result of the TCF acquisition. 

Vehicle Finance
Table 25 - Key Performance Indicators for Vehicle Finance
 Nine Months Ended September 30,Change
(dollar amounts in millions)20212020AmountPercent
Net interest income$340 $316 $24 8 %
Provision for credit losses(77)118 (195)(165)
Noninterest income9 7 2 29 
Noninterest expense119 103 16 16 
Provision for income taxes64 21 43 205 
Net income$243 $81 $162 200 %
Number of employees (average full-time equivalent)259 268 (9)(3)%
Total average assets$19,593 $19,766 $(173)(1)
Total average loans/leases19,836 19,926 (90)— 
Total average deposits1,046 618 428 69 
Net interest margin2.29 %2.11 %0.18 %9 
NCOs $(3)$37 $(40)(108)
NCOs as a % of average loans and leases(0.02)%0.24 %(0.26)%(108)
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2021 First Nine Months versus 2020 First Nine Months
Vehicle Finance reported net income of $243 million in the nine-month period of 2021, an increase of $162 million, compared to the year-ago period. Segment net interest income increased $24 million, or 8%, primarily due to an 18 basis point increase in the net interest margin. The provision for credit losses decreased $195 million to a benefit of $77 million, primarily due to strong credit performance and improvement in the economic outlook as compared to the year ago period. Noninterest income increased $2 million, or 29%, primarily due to increases in fee income from commercial relationships. Noninterest expense increased $16 million, or 16%, largely attributable to higher production related costs.

Regional Banking and The Huntington Private Client Group
Table 26 - Key Performance Indicators for Regional Banking and The Huntington Private Client Group
 Nine Months Ended September 30,Change
(dollar amounts in millions)20212020AmountPercent
Net interest income$113 $122 $(9)(7)%
Provision for credit losses2 16 (14)(88)
Noninterest income165 151 14 9 
Noninterest expense217 181 36 20 
Provision for income taxes12 16 (4)(25)
Net income$47 $60 $(13)(22)%
Number of employees (average full-time equivalent)1,051 1,024 27 3 %
Total average assets$7,278 $6,793 $485 7 
Total average loans/leases6,982 6,515 467 7 
Total average deposits7,742 6,424 1,318 21 
Net interest margin1.90 %2.44 %(0.54)%(22)
NCOs $— $— $— — 
NCOs as a % of average loans and leases— %— %— %— 
Total assets under management (in billions)—eop $23.9 $18.1 $5.8 32 
Total trust assets (in billions)—eop 133.6 121.7 11.9 10 
eop - End of Period.
2021 First Nine Months versus 2020 First Nine Months
RBHPCG reported net income of $47 million for the first nine-month period of 2021, a decrease of $13 million, or 22%, compared to the year-ago period. Segment net interest income decreased $9 million, or 7%, due to a 54 basis point decrease in net interest margin, largely driven by lower benefit in deposit spreads. Average loans and leases increased $0.5 billion, or 7%, primarily due to an increase in residential mortgage loans and the impact of the TCF acquisition. Average deposits increased $1.3 billion, or 21%, primarily related to higher customer liquidity levels, and impact of the acquired TCF deposit portfolio. The provision for credit losses decreased $14 million, primarily due to changes in the economic outlook compared to the year-ago period. Noninterest income increased $14 million, or 9%, reflecting higher sales production and overall market performance, and the impact of the TCF acquisition. The comparable period in 2020 included the sale of Retirement Plan Services recordkeeping and administrative services. Total assets under management increased 32% due to positive net asset flows, equity markets, and the impact of the TCF acquisition. Noninterest expense increased $36 million primarily due to an increase in personnel expense impacted by the TCF acquisition.
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ADDITIONAL DISCLOSURES
Forward-Looking Statements
This report, including MD&A, contains certain forward-looking statements, including, but not limited to, certain plans, expectations, goals, projections, and statements, which are not historical facts and are subject to numerous assumptions, risks, and uncertainties. Statements that do not describe historical or current facts, including statements about beliefs and expectations, are forward-looking statements. Forward-looking statements may be identified by words such as expect, anticipate, believe, intend, estimate, plan, target, goal, or similar expressions, or future or conditional verbs such as will, may, might, should, would, could, or similar variations. The forward-looking statements are intended to be subject to the safe harbor provided by Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of 1995.
While there is no assurance that any list of risks and uncertainties or risk factors is complete, below are certain factors which could cause actual results to differ materially from those contained or implied in the forward-looking statements: changes in general economic, political, or industry conditions; the magnitude and duration of the COVID-19 pandemic and its impact on the global economy and financial market conditions and our business, results of operations, and financial condition; uncertainty in U.S. fiscal and monetary policy, including the interest rate policies of the Federal Reserve Board; volatility and disruptions in global capital and credit markets; movements in interest rates; reform of LIBOR; competitive pressures on product pricing and services; success, impact, and timing of our business strategies, including market acceptance of any new products or services including those implementing our “Fair Play” banking philosophy; the nature, extent, timing, and results of governmental actions, examinations, reviews, reforms, regulations, and interpretations, including those related to the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Basel III regulatory capital reforms, as well as those involving the OCC, Federal Reserve, FDIC, and CFPB; the possibility that the anticipated benefits of the transaction with TCF are not realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy and competitive factors in the areas where Huntington does business; the possibility that the branch divestiture may be more expensive to complete than anticipated, including as a result of unexpected factors or events; diversion of management’s attention from ongoing business operations and opportunities; potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the branch divestiture; and other factors that may affect the future results of Huntington.
All forward-looking statements speak only as of the date they are made and are based on information available at that time. Huntington does not assume any obligation to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements were made or to reflect the occurrence of unanticipated events except as required by federal securities laws. As forward-looking statements involve significant risks and uncertainties, caution should be exercised against placing undue reliance on such statements.
Non-GAAP Financial Measures
This document contains GAAP financial measures and non-GAAP financial measures where management believes it to be helpful in understanding our results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found herein.
Fully-Taxable Equivalent Basis
Interest income, yields, and ratios on a FTE basis are considered non-GAAP financial measures. Management believes net interest income on a FTE basis provides an insightful picture of the interest margin for comparison purposes. The FTE basis also allows management to assess the comparability of revenue arising from both taxable and tax-exempt sources. The FTE basis assumes a federal statutory tax rate of 21 percent. We encourage readers to consider the Unaudited Condensed Consolidated Financial Statements and other financial information contained in this Form 10-Q in their entirety, and not to rely on any single financial measure.
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Non-Regulatory Capital Ratios
In addition to capital ratios defined by banking regulators, the Company considers various other measures when evaluating capital utilization and adequacy, including:
•Tangible common equity to tangible assets,
•Tangible equity to tangible assets, and
•Tangible common equity to risk-weighted assets using Basel III definitions.
These non-regulatory capital ratios are viewed by management as useful additional methods of reflecting the level of capital available to withstand unexpected market conditions. Additionally, presentation of these ratios allows readers to compare our capitalization to other financial services companies. These ratios differ from capital ratios defined by banking regulators principally in that the numerator excludes goodwill and other intangible assets, the nature and extent of which varies among different financial services companies. These ratios are not defined in GAAP or federal banking regulations. As a result, these non-regulatory capital ratios disclosed by the Company are considered non-GAAP financial measures.
Because there are no standardized definitions for these non-regulatory capital ratios, the Company’s calculation methods may differ from those used by other financial services companies. Also, there may be limits in the usefulness of these measures to investors. As a result, we encourage readers to consider the Unaudited Condensed Consolidated Financial Statements and other financial information contained in this Form 10-Q in their entirety, and not to rely on any single financial measure.
Risk Factors
More information on risk can be found in Item 1A Risk Factors below and in the Risk Factors section included in Item 1A of our 2020 Annual Report on Form 10-K. Additional information regarding risk factors can also be found in the Risk Management and Capital discussion of this report.
Critical Accounting Policies and Use of Significant Estimates
Our Consolidated Financial Statements are prepared in accordance with GAAP. The preparation of financial statements in conformity with GAAP requires us to establish accounting policies and make estimates that affect amounts reported in our Consolidated Financial Statements. Note 1 of the Notes to Consolidated Financial Statements included in our 2020 Annual Report on Form 10-K, as supplemented by this report including this MD&A, describes the significant accounting policies we used in our Consolidated Financial Statements.
An accounting estimate requires assumptions and judgments about uncertain matters that could have a material effect on the Consolidated Financial Statements. Estimates are made under facts and circumstances at a point in time, and changes in those facts and circumstances could produce results substantially different from those estimates. Our most significant accounting policies and estimates and their related application are discussed in our 2020 Annual Report on Form 10-K.
Allowance for Credit Losses
Our ACL at September 30, 2021 represents our current estimate of the lifetime credit losses expected from our loan and lease portfolio and our unfunded lending commitments. Management estimates the ACL by projecting probability of default, loss given default and exposure at default conditional on economic parameters, for the remaining contractual term. Internal factors that impact the quarterly allowance estimate include the level of outstanding balances, the portfolio performance and assigned risk ratings.
One of the most significant judgments influencing the ACL estimate is the macroeconomic forecasts. Key external economic parameters that directly impact our loss modeling framework include forecasted footprint unemployment rates and Gross Domestic Product. Changes in the economic forecasts could significantly affect the estimated credit losses, which could potentially lead to materially different allowance levels from one reporting period to the next.
Given the dynamic relationship between macroeconomic variables within our modeling framework, it is difficult to estimate the impact of a change in any one individual variable on the allowance. As a result, management uses a probability-weighted approach that incorporates a baseline, an adverse and a more favorable economic scenario when formulating the quantitative estimate.
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However, to illustrate a hypothetical sensitivity analysis, management calculated a quantitative allowance using a 100% weighting applied to an adverse scenario. This scenario includes assumptions around new infections and COVID-19 deaths rising again. Additionally, consumer confidence falls with the resulting drop in consumer spending sending the economy back into recession in fourth quarter 2021. Under this scenario, as an example, the unemployment rate increases once more and remains elevated for a prolonged period, the rate is estimated at 9.1% and 6.9% at the end of 2022 and 2023 respectively. These numbers represent 5.6% and 3.4% higher unemployment estimates than baseline scenario projections of 3.5% and 3.5%, respectively for the same time periods.
To demonstrate the sensitivity to key economic parameters used in the calculation of our ACL at September 30, 2021, management calculated the difference between our quantitative ACL and a 100% adverse scenario. Excluding consideration of qualitative adjustments, this sensitivity analysis would result in a hypothetical increase in our ACL of approximately $700 million at September 30, 2021.
The resulting difference is not intended to represent an expected increase in allowance levels for a number of reasons including the following:
•Management uses a weighted approach applied to multiple economic scenarios for its allowance estimation process;
•The highly uncertain economic environment;
•The difficulty in predicting the inter-relationships between the economic parameters used in the various economic scenarios; and
•The sensitivity estimate does not account for any general reserve components and associated risk profile adjustments incorporated by management as part of its overall allowance framework.
We regularly review our ACL for appropriateness by performing on-going evaluations of the loan and lease portfolio. In doing so, we consider factors such 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. We also evaluate the impact of changes in key economic parameters 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. There is no certainty that our ACL will be appropriate over time to cover losses in our portfolio as economic and market conditions may ultimately differ from our reasonable and supportable forecast. Additionally, events adversely affecting specific customers, industries, or our markets such as the current COVID-19 pandemic, could severely impact our current expectations. If the credit quality of our customer base materially deteriorates or the risk profile of a market, industry, or group of customers changes materially, our net income and capital could be materially adversely affected which, in turn could have a material adverse effect on our financial condition and results of operations. The extent to which the current COVID-19 pandemic will continue to negatively impact our businesses, financial condition, liquidity and results will depend on future developments, which are highly uncertain and cannot be forecasted with precision at this time. For more information, see Note 4 “Loans and Leases” and Note 5 “Allowance for Credit Losses” of the Notes to Unaudited Condensed Consolidated Financial Statements.
Acquisition Method of Accounting
The acquisition method of accounting requires that acquired assets and liabilities in a business combination are recorded at their fair values as of the date of acquisition. This method often involves estimates based on third party valuations or internal valuations based on discounted cash flow analyses or other valuation techniques, all of which are inherently subjective. Acquisition-related restructuring costs are expensed as incurred. The acquisition method of accounting does allow for a measurement period to make adjustments to acquisition accounting for up to one year after the acquisition date, for new information that existed at the acquisition date but may not have been known or available at that time. For further information, refer to Note 2 “Acquisition of TCF Financial Corporation” of the Notes to Unaudited Condensed Consolidated Financial Statements.
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Fair Value Measurement
Certain assets and liabilities are measured at fair value on a recurring basis, including securities, and derivative instruments. Assets and liabilities carried at fair value inherently include subjectivity and may require the use of significant assumptions, adjustments and judgment including, among others, discount rates, rates of return on assets, cash flows, default rates, loss rates, terminal values and liquidation values. A significant change in assumptions may result in a significant change in fair value, which in turn, may result in a higher degree of financial statement volatility and could result in significant impact on our results of operations, financial condition or disclosures of fair value information.
In addition to the above mentioned on-going fair value measurements, fair value is also used for recording business combinations and measuring other non-recurring financial assets and liabilities. At June 9, 2021, approximately $46 billion of our assets and $43 billion of our liabilities were recorded at fair value as a result of applying the acquisition method of accounting.
The fair value hierarchy requires use of observable inputs first and subsequently unobservable inputs when observable inputs are not available. Our fair value measurements involve various valuation techniques and models, which involve inputs that are observable (Level 1 or Level 2 in fair value hierarchy), when available. The level of judgment required to determine fair value is dependent on the methods or techniques used in the process. Assets and liabilities that are measured at fair value using quoted prices in active markets (Level 1) do not require significant judgment while the valuation of assets and liabilities when quoted market prices are not available (Levels 2 and 3) may require significant judgment to assess whether observable or unobservable inputs for those assets and liabilities provide reasonable determination of fair value. The fair values measured at each level of the fair value hierarchy, additional discussion regarding fair value measurements, and a brief description of how fair value is determined for categories that have unobservable inputs, can be found in Note 13 “Fair Values of Assets and Liabilities” of the Notes to Unaudited Condensed Consolidated Financial Statements.
Goodwill and Other Intangible Assets
Acquisitions typically result in goodwill, the amount by which the cost of net assets acquired in a business combination exceeds their fair value, which is subject to impairment testing at least annually. The amortization of identified intangible assets recognized in a business combination is based upon the estimated economic benefits to be received over their economic life, which is also subjective. Customer attrition rates that are based on historical experience are used to determine the estimated economic life of certain intangibles assets, including but not limited to, customer deposit intangibles.
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Item 1: Financial Statements
Huntington Bancshares Incorporated
Condensed Consolidated Balance Sheets
(Unaudited)
September 30,December 31,
(dollar amounts in millions)20212020
Assets
Cash and due from banks
$1,611 $1,319 
Interest-bearing deposits at Federal Reserve Bank
8,134 5,276 
Interest-bearing deposits in banks
443 117 
Trading account securities
77 62 
Available-for-sale securities
25,654 16,485 
Held-to-maturity securities
12,455 8,861 
Other securities
649 418 
Loans held for sale (includes $1,297 and $1,198 respectively, measured at fair value)(1)
1,335 1,275 
Loans and leases (includes $139 and $94 respectively, measured at fair value)(1)
110,567 81,608 
Allowance for loan and lease losses(2,107)(1,814)
Net loans and leases
108,460 79,794 
Bank owned life insurance
2,771 2,577 
Premises and equipment
1,126 757 
Goodwill
5,316 1,990 
Servicing rights and other intangible assets
614 428 
Other assets
5,233 3,679 
Total assets$173,878 $123,038 
Liabilities and shareholders’ equity
Liabilities
Deposits:
Demand deposits—noninterest-bearing$44,560 $28,553 
Interest-bearing97,338 70,395 
Total deposits141,898 98,948 
Short-term borrowings
435 183 
Long-term debt
7,779 8,352 
Other liabilities
4,267 2,562 
Total liabilities154,379 110,045 
Commitments and Contingent Liabilities (Note 16)
Shareholders’ equity
Preferred stock
2,267 2,191 
Common stock
15 10 
Capital surplus
15,350 8,781 
Less treasury shares, at cost
(79)(59)
Accumulated other comprehensive (loss) gain(125)192 
Retained earnings
2,051 1,878 
Total Huntington Bancshares Inc shareholders’ equity19,479 12,993 
Non-controlling interest20 — 
Total equity19,499 12,993 
Total liabilities and shareholders’ equity$173,878 $123,038 
Common shares authorized (par value of $0.01)
2,250,000,000 1,500,000,000 
Common shares outstanding1,446,461,249 1,017,196,776 
Treasury shares outstanding6,306,127 5,062,054 
Preferred stock, authorized shares6,617,808 6,617,808 
Preferred shares outstanding657,500 750,500 
(1)Amounts represent loans for which Huntington has elected the fair value option. See Note 13 “Fair Values of Assets and Liabilities”.
See Notes to Unaudited Condensed Consolidated Financial Statements
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Huntington Bancshares Incorporated
Condensed Consolidated Statements of Income
(Unaudited)
Three Months Ended
September 30,		Nine Months Ended
September 30,
(dollar amounts in millions, except per share data, share count in thousands)2021202020212020
Interest and fee income:
Loans and leases$1,056 $764 $2,614 $2,327 
Available-for-sale securities
Taxable68 50 184 191 
Tax-exempt15 15 41 47 
Held-to-maturity securities—taxable47 51 124 169 
Other securities—taxable2 1 6 4 
Other17 11 40 31 
Total interest income1,205 892 3,009 2,769 
Interest expense:
Deposits11 31 34 182 
Short-term borrowings— — — 13 
Long-term debt34 44 5 175 
Total interest expense45 75 39 370 
Net interest income1,160 817 2,970 2,399 
Provision for credit losses(62)177 89 945 
Net interest income after provision for credit losses1,222 640 2,881 1,454 
Mortgage banking income81 122 248 277 
Service charges on deposit accounts 114 76 271 223 
Card and payment processing income96 66 241 183 
Trust and investment management services61 48 169 140 
Leasing revenue42 3 58 14 
Capital markets fees40 27 104 91 
Insurance income25 24 77 72 
Bank owned life insurance income15 17 47 49 
Gain on sale of loans2 13 8 30 
Net gains (losses) on sales of securities— — 10 (1)
Other noninterest income59 34 141 104 
Total noninterest income535 430 1,374 1,182 
Personnel costs643 453 1,703 1,267 
Outside data processing and other services304 98 581 273 
Equipment79 44 180 132 
Net occupancy95 40 209 119 
Lease financing equipment depreciation19 — 24 1 
Professional services26 12 91 34 
Amortization of intangibles13 10 34 31 
Marketing25 9 54 23 
Deposit and other insurance expense17 6 33 24 
Other noninterest expense68 40 245 135 
Total noninterest expense1,289 712 3,154 2,039 
Income before income taxes468 358 1,101 597 
Provision for income taxes90 55 206 96 
Income after income taxes378 303 895 501 
Income attributable to non-controlling interest1 — 1 — 
Net income attributable to Huntington Bancshares Inc377 303 894 501 
Dividends on preferred shares29 28 103 65 
Impact of preferred stock redemption15 — 15 $— 
Net income applicable to common shares$333 $275 $776 $436 
Average common shares—basic1,462,736 1,017,253 1,201,763 1,017,052 
Average common shares—diluted1,487,335 1,031,460 1,225,428 1,031,573 
Per common share:
Net income—basic$0.23 $0.27 $0.65 $0.43 
Net income—diluted0.22 0.27 0.63 0.42 
See Notes to Unaudited Condensed Consolidated Financial Statements
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Huntington Bancshares Incorporated
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
 Three Months Ended
September 30,		Nine Months Ended
September 30,
(dollar amounts in millions)2021202020212020
Net income attributable to Huntington Bancshares Inc$377 $303 $894 $501 
Net unrealized gains (losses) on available-for-sale securities(82)5 (220)240 
Change in fair value related to cash flow hedges
(29)(40)(102)279 
Translation adjustments, net of hedges2 — (4)— 
Change in accumulated unrealized gains (losses) for pension and other post-retirement obligations
3 2 9 (6)
Other comprehensive income (loss), net of tax(106)(33)(317)513 
Comprehensive income $271 $270 $577 $1,014 
See Notes to Unaudited Condensed Consolidated Financial Statements
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Huntington Bancshares Incorporated
Condensed Consolidated Statements of Changes in Shareholders’ Equity
(Unaudited)
(dollar amounts in millions, share amounts in thousands)Preferred StockCommon StockCapital SurplusTreasury StockAccumulated Other Comprehensive Gain (Loss) Retained EarningsNon-controllingTotal
AmountSharesAmountSharesAmountTotalinterestEquity
Three Months Ended September 30, 2021
Balance, beginning of period$2,851 1,484,614 $15 $15,830 (8,056)$(105)$(19)$1,939 $20,511 $20 $20,531 
Net income377 377 1 378 
Other comprehensive income, net of tax(106)(106)(106)
Redemption of Preferred Series D Stock(585)(15)(600)(600)
Repurchases of common stock(33,409)— (500)(500)(500)
Cash dividends declared:
Common ($0.15 per share)
(221)(221)(221)
Preferred(29)(29)(29)
Recognition of the fair value of share-based compensation32 32 32 
Other share-based compensation activity1,562 — (12)— (12)(12)
Other1— 1,750 26 — 27 (1)26 
Balance, end of period$2,267 1,452,767 $15 $15,350 (6,306)$(79)$(125)$2,051 $19,479 $20 $19,499 
Three Months Ended September 30, 2020
Balance, beginning of period$1,697 1,022,309 $10 $8,743 (4,999)$(59)$290 $1,633 $12,314 $— $12,314 
Net income303 303 — 303 
Other comprehensive loss, net of tax(33)(33)(33)
Net proceeds from issuance of Preferred Stock494494 494 
Cash dividends declared:
Common ($0.15 per share)
(156)(156)(156)
Preferred(28)(28)(28)
Recognition of the fair value of share-based compensation21 21 21 
Other share-based compensation activity68 — 2 — 2 2 
Other(67)— — — 
Balance, end of period$2,191 1,022,377 $10 $8,766 (5,066)$(59)$257 $1,752 $12,917 $— $12,917 
See Notes to Unaudited Condensed Consolidated Financial Statements
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(dollar amounts in millions, share amounts in thousands)Preferred StockCommon StockCapital SurplusTreasury StockAccumulated Other Comprehensive Gain (Loss) Retained EarningsNon-controlling 
AmountSharesAmountSharesAmountTotalinterestTotal
Nine Months Ended September 30, 2021
Balance, beginning of period$2,191 1,022,258 $10 $8,781 (5,062)$(59)$192 $1,878 $12,993 $— $12,993 
Net income894 894 1 895 
Other comprehensive income (loss), net of tax(317)(317)(317)
TCF Financial Corp acquisition:
Issuance of common stock458,171 5 6,993 (37)6,961 6,961 
Issuance of Series I preferred stock175 10 185 185 
Non-controlling interest acquired22 22 
Net proceeds from issuance of preferred stock486 486 486 
Redemption of Preferred Series D Stock(585)(15)(600)(600)
Repurchases of common stock(33,409)— (500)(500)(500)
Cash dividends declared:
Common ($0.45 per share)
(601)(601)(601)
Preferred(103)(103)(103)
Recognition of the fair value of share-based compensation97 97 97 
Other share-based compensation activity5,747 — (31)— (31)(31)
Other— (1,244)17 — (2)15 (3)12 
Balance, end of period$2,267 1,452,767 $15 $15,350 (6,306)$(79)$(125)$2,051 $19,479 $20 $19,499 
Nine Months Ended September 30, 2020
Balance, beginning of period$1,203 1,024,541 $10 $8,806 (4,537)$(56)$(256)$2,088 $11,795 $— $11,795 
Cumulative-effect of change in accounting principle, net of tax(306)(306)(306)
Net income501 501 — 501 
Other comprehensive income, net of tax513 513 513 
Net proceeds from issuance of preferred stock988 988 988 
Repurchases of common stock(7,088)— (88)(88)(88)
Cash dividends declared:
Common ($0.45 per share)
(466)(466)(466)
Preferred(65)(65)(65)
Recognition of the fair value of share-based compensation60 60 60 
Other share-based compensation activity4,924 — (12)— (12)(12)
Other— (529)(3)— (3)(3)
Balance, end of period$2,191 1,022,377 $10 $8,766 (5,066)$(59)$257 $1,752 $12,917 $— $12,917 
See Notes to Unaudited Condensed Consolidated Financial Statements
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Huntington Bancshares Incorporated
Condensed Consolidated Statements of Cash Flows
(Unaudited)
 Nine Months Ended September 30,
(dollar amounts in millions)20212020
Operating activities
Net income$895 $501 
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses89 945 
Depreciation and amortization299 258 
Share-based compensation expense97 60 
Deferred income tax expense (benefit)40 (123)
Net change in:
Trading account securities(15)45 
Loans held for sale(115)(395)
Other assets(247)(919)
Other liabilities455 890 
Other, net67 (3)
Net cash provided by operating activities1,565 1,259 
Investing activities
Change in interest bearing deposits in banks611 (80)
Net cash received from business combination466 — 
Proceeds from:
Maturities and calls of available-for-sale securities5,408 3,657 
Maturities and calls of held-to-maturity securities3,073 2,028 
Sales of available-for-sale securities5,860 392 
Purchases of available-for-sale securities(14,995)(5,988)
Purchases of held-to-maturity securities(3,685)— 
Net proceeds from sales of portfolio loans and leases479 696 
Principal payments received under direct finance and sales-type leases899 518 
Net loan and lease activity, excluding sales and purchases4,121 (6,099)
Purchases of premises and equipment(157)(82)
Purchases of loans and leases(771)(1,248)
Net cash paid for branch disposition(618)— 
Other, net98 54 
Net cash provided by (used in) investing activities789 (6,152)
Financing activities
Increase in deposits5,136 12,807 
Decrease in short-term borrowings(1,062)(2,306)
Net proceeds from issuance of long-term debt646 1,348 
Maturity/redemption of long-term debt(2,649)(2,218)
Dividends paid on preferred stock(109)(55)
Dividends paid on common stock(531)(460)
Repurchases of common stock(500)(88)
Payment to repurchase preferred stock(600)— 
Net proceeds from issuance of preferred stock486 988 
Other, net(21)(18)
Net cash provided by financing activities796 9,998 
Increase in cash and cash equivalents3,150 5,105 
Cash and cash equivalents at beginning of period6,595 1,170 
Cash and cash equivalents at end of period$9,745 $6,275 
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 Nine Months Ended September 30,
(dollar amounts in millions)20212020
Supplemental disclosures:
Interest paid$135 $307 
Income taxes paid262 48 
Non-cash activities
Loans transferred to held-for-sale from portfolio385 839
Loans transferred to portfolio from held-for-sale83 37
Transfer of securities from available-for-sale to held-to-maturity 3,007 1,520 
Business Combination
Fair value of tangible assets acquired46,256 — 
Goodwill and other intangible assets3,483 — 
Liabilities assumed42,534 — 
Preferred stock issued in business combination185 — 
Common Stock issued in business combination6,998 — 
See Notes to Unaudited Condensed Consolidated Financial Statements


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Huntington Bancshares Incorporated
Notes to Unaudited Condensed Consolidated Financial Statements
1. BASIS OF PRESENTATION
The accompanying Unaudited Condensed Consolidated Financial Statements of Huntington reflect all adjustments consisting of normal recurring accruals which are, in the opinion of management, necessary for a fair statement of the consolidated financial position, the results of operations, and cash flows for the periods presented. These Unaudited Condensed Consolidated Financial Statements have been prepared according to the rules and regulations of the SEC and, therefore, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been omitted. The Notes to Consolidated Financial Statements appearing in Huntington’s 2020 Annual Report on Form 10-K, which include descriptions of significant accounting policies, as updated by the information contained in this report, should be read in conjunction with these interim financial statements.
For statement of cash flow purposes, cash and cash equivalents are defined as the sum of cash and due from banks and interest-bearing deposits at Federal Reserve Bank.
Certain prior period amounts have been reclassified to conform to current year’s presentation.
In conjunction with applicable accounting standards, all material subsequent events have been either recognized in the Unaudited Condensed Consolidated Financial Statements or disclosed in the Notes to Unaudited Condensed Consolidated Financial Statements.
2. ACQUISITION OF TCF FINANCIAL CORPORATION
On June 9, 2021, Huntington closed the acquisition of TCF Financial Corporation in an all-stock transaction valued at $7.2 billion. TCF was a financial holding company headquartered in Detroit, Michigan with operations across the Midwest. The acquisition added depth in existing markets and new markets for expansion and brings complimentary businesses together to drive synergies and growth.
Under the terms of the agreement, TCF shareholders received 3.0028 shares of Huntington common stock for each share of TCF common stock. Holders of TCF common stock also received cash in lieu of fractional shares. In addition, each outstanding share of 5.70% Series C Non-Cumulative Perpetual Preferred Stock of TCF was converted into one share of a newly created series of preferred stock of Huntington, Series I Preferred Stock.
The acquisition of TCF has been accounted for as a business combination. We recorded the estimate of fair value based on initial valuations available at June 9, 2021. We continue to review these valuations and certain of these estimated fair values are considered preliminary as of September 30, 2021, and subject to adjustment for up to one year after June 9, 2021. While we believe that the information available on June 9, 2021 provided a reasonable basis for estimating fair value, we expect that we may obtain additional information and evidence during the measurement period that would result in changes to the estimated fair value amounts. Valuations subject to change include, but are not limited to, loans and leases, certain deposits, deferred tax assets and liabilities and certain other assets and other liabilities.

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The following table provides a preliminary allocation of consideration paid for the fair value of assets acquired and liabilities and equity assumed from TCF as of June 9, 2021.
TCF
(dollar amounts in millions)UPBFair Value
Assets acquired:
Cash and due from banks$466 
Interest-bearing deposits at Federal Reserve Bank719 
Interest-bearing deposits in banks312 
Available-for-sale securities8,900 
Other securities358 
Loans held for sale363 
Loans and leases:
Commercial:
Commercial and industrial$12,726 12,441 
Commercial real estate8,125 7,869 
Lease financing2,929 2,912 
Total commercial23,780 23,222 
Consumer:
Automobile322 317 
Residential mortgage6,267 6,273 
Home equity2,644 2,607 
RV and marine581 570 
Other consumer179 167 
Total consumer9,993 9,934 
Total loans and leases$33,773 33,156 
Bank owned life insurance181 
Premises and equipment360 
Core deposit intangible92 
Other intangible assets6 
Servicing rights59 
Servicing rights and other intangible assets157 
Other assets1,441 
Total assets acquired46,413 
Liabilities and equity assumed:
Deposits38,663 
Short-term borrowings1,306 
Long-term debt1,516 
Other liabilities1,049 
Total liabilities42,534 
Non-controlling interest22 
Net assets acquired$3,857 
Consideration:
Fair value of common stock issued$6,998 
Fair value of preferred stock exchange185 
Total consideration$7,183 
Goodwill$3,326 
In connection with the acquisition, the Company recorded approximately $3.3 billion of goodwill. The goodwill was the result of expected synergies, operational efficiencies and other factors. Information regarding the allocation of goodwill recorded as a result of the acquisition to the Company’s reportable segments, as well as the carrying amounts and amortization of core deposit and other intangible assets, are provided in Note 7 “Goodwill and Other Intangible Assets” of the Notes to Unaudited Condensed Consolidated Financial Statements.
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The following is a description of the methods used to determine the fair values of significant assets and liabilities presented above.
Cash and due from banks and interest-bearing deposits in banks: The carrying amount of these assets is a reasonable estimate of fair value based on the short-term nature of these assets.
Securities: Fair values for securities are based on quoted market prices, where available. If quoted market prices are not available, fair value estimates are based on observable inputs including quoted market prices for similar instruments, quoted market prices that are not in an active market or other inputs that are observable in the market. In the absence of observable inputs, fair value is estimated based on pricing models and/or discounted cash flow methodologies.
Loans and leases: Fair values for loans and leases are based on a discounted cash flow methodology that considered factors including the type of loan and lease and related collateral, classification status, fixed or variable interest rate, term, amortization status and current discount rates. Loans and leases are grouped together according to similar characteristics when applying various valuation techniques. The discount rates used for loans and leases are based on current market rates for new originations of comparable loans and leases and include adjustments for liquidity. The discount rate does not include a factor for credit losses as that has been included as a reduction to the estimated cash flows.
CDI: This intangible asset represents the low cost of funding acquired core deposits provide relative to the Company’s marginal cost of funds. The fair value was estimated based on a discounted cash flow methodology that gave appropriate consideration to expected customer attrition rates, net maintenance cost of the deposit base, alternative cost of funds, and the interest costs associated with customer deposits. The CDI is being amortized over 10 years based upon the period over which estimated economic benefits are estimated to be received.
Deposits: The fair values used for the demand and savings deposits by definition equal the amount payable on demand at the acquisition date. The fair values for time deposits are estimated using a discounted cash flow calculation that applies interest rates currently being offered to the contractual interest rates on such time deposits.
Debt: The fair values of long-term debt instruments are estimated based on quoted market prices for the instrument if available, or for similar instruments if not available, or by using discounted cash flow analyses, based on current incremental borrowing rates for similar types of instruments.
Premises and equipment: The fair values of premises are based on a market approach, with Huntington obtaining third-party appraisals and broker opinions of value for land, office and branch space.
Servicing rights: Servicing rights are valued using an option-adjusted spread valuation model to project cash flows over multiple interest rate scenarios which are then discounted at risk-adjusted rates. The model considers portfolio characteristics, prepayment rates, delinquency rates, contractually specified servicing fees, late charges, other ancillary revenue, costs to service and other economic factors.
PCD loans and leases
Purchased loans and leases that reflect a more-than-insignificant deterioration of credit from origination are considered PCD. For PCD loans and leases, the initial estimate of expected credit losses is recognized in the ALLL on the date of acquisition using the same methodology as other loans and leases held-for-investment. The following table provides a summary of loans and leases purchased as part of the TCF acquisition with credit deterioration at acquisition:
(dollar amounts in millions)CommercialConsumerTotal
Par value (UPB)$7,931 $1,333 $9,264 
ALLL at acquisition(374)(58)(432)
Non-credit (discount)(219)(68)(287)
Fair value$7,338 $1,207 $8,545 
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Huntington's operating results for the quarter and year-to-date periods ended September 30, 2021 include the operating results of the acquired assets and assumed liabilities of TCF Financial Corporation subsequent to the acquisition on June 9, 2021. Due to the various conversions of TCF systems during the second quarter 2021, as well as other streamlining and integration of the operating activities into those of the Company, historical reporting for the former TCF operations is impracticable and thus disclosures of the revenue from the assets acquired and income before income taxes is impracticable for the period subsequent to acquisition.
The following table presents unaudited pro forma information as if the acquisition of TCF had occurred on January 1, 2020 under the “Unaudited Pro Forma” columns. The pro forma adjustments give effect to any change in interest income due to the accretion of the discount (premium) associated with the fair value adjustments to acquired loans and leases, any change in interest expense due to estimated premium amortization/discount accretion associated with the fair value adjustment to acquired interest-bearing deposits and long-term debt and the amortization of the CDI that would have resulted had the deposits been acquired as of January 1, 2020. Pro forma results include Huntington acquisition-related expenses which primarily included, but were not limited to, severance costs, professional services, data processing fees, marketing and advertising expenses totaling $234 million and $524 million for the three and nine-months ended September 30, 2021, respectively. Pro forma results also include adjustments for the elimination of TCF’s accretion of the discount (premium) associated with the fair value adjustments to acquired loans and leases, deposits and long-term debt, elimination of TCF's intangible amortization expense, and related income tax effects. The pro forma information does not necessarily reflect the results of operations that would have occurred had Huntington acquired TCF on January 1, 2020. Furthermore, cost savings and other business synergies related to the acquisition are not reflected in the pro forma amounts.
Unaudited Pro Forma for
Three months endedNine months ended
September 30,September 30,
(dollar amounts in millions)2021202020212020
Net interest income$1,160 $1,197 $3,625 $3,581 
Noninterest income535 554 1,604 1,586 
Net income attributable to Huntington Bancshares Inc377 364 1,268 433 
Branch divestiture: In September 2021, Huntington completed the divestiture of 14 branches acquired in the acquisition of TCF and certain related assets and deposit liabilities to Horizon Bank, to satisfy regulatory requirements in connection with the acquisition. Total deposits and loans that were divested to Horizon Bank for the transaction were $847 million and $209 million, respectively.

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3. INVESTMENT SECURITIES AND OTHER SECURITIES
Debt securities purchased in which Huntington has the intent and ability to hold to their maturity are classified as held-to-maturity securities. All other debt and equity securities are classified as either available-for-sale or other securities.
The following tables provide amortized cost, fair value, and gross unrealized gains and losses by investment category at September 30, 2021 and December 31, 2020:
Unrealized
(dollar amounts in millions)Amortized
Cost (1)		Gross
Gains		Gross
Losses		Fair Value
September 30, 2021
Available-for-sale securities:
U.S. Treasury$5 $— $— $5 
Federal agencies:
Residential CMO3,683 63 (12)3,734 
Residential MBS14,413 47 (123)14,337 
Commercial MBS1,522 11 (35)1,498 
Other agencies263 1 — 264 
Total U.S. Treasury, federal agency and other agency securities19,886 122 (170)19,838 
Municipal securities3,570 82 (18)3,634 
Private-label CMO120 — — 120 
Asset-backed securities284 3 (2)285 
Corporate debt1,789 5 (21)1,773 
Other securities/Sovereign debt4 — — 4 
Total available-for-sale securities$25,653 $212 $(211)$25,654 
Held-to-maturity securities:
Federal agencies:
Residential CMO$2,701 $56 $(4)$2,753 
Residential MBS7,079 62 (33)7,108 
Commercial MBS2,468 77 (1)2,544 
Other agencies205 7 — 212 
Total federal agency and other agency securities12,453 202 (38)12,617 
Municipal securities2 — — 2 
Total held-to-maturity securities$12,455 $202 $(38)$12,619 
Other securities, at cost:
Non-marketable equity securities:
Federal Home Loan Bank stock$52 $— $— $52 
Federal Reserve Bank stock511 — — 511 
Other securities, at fair value
Mutual funds62 — — 62 
Equity securities24 — — 24 
Total other securities$649 $— $— $649 
(1)Amortized cost amounts excludes accrued interest receivable, which is recorded within other assets on the Consolidated Balance Sheets. At September 30, 2021, accrued interest receivable on available-for-sale securities and held-to-maturity securities totaled $60 million and $26 million, respectively.
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Unrealized
(dollar amounts in millions)Amortized
Cost (1)		Gross
Gains		Gross
Losses		Fair Value
December 31, 2020
Available-for-sale securities:
U.S. Treasury$5 $— $— $5 
Federal agencies:
Residential CMO3,550 121 (5)3,666 
Residential MBS7,843 97 (5)7,935 
Commercial MBS1,151 21 (9)1,163 
Other agencies60 2 — 62 
Total U.S. Treasury, federal agency and other agency securities12,609 241 (19)12,831 
Municipal securities2,928 91 (15)3,004 
Private-label CMO9 — — 9 
Asset-backed securities185 7 — 192 
Corporate debt440 5 — 445 
Other securities/Sovereign debt4 — — 4 
Total available-for-sale securities$16,175 $344 $(34)$16,485 
Held-to-maturity securities:
Federal agencies:
Residential CMO$1,779 $88 $— $1,867 
Residential MBS3,715 103 — 3,818 
Commercial MBS3,118 191 — 3,309 
Other agencies246 12 — 258 
Total federal agency and other agency securities8,858 394 — 9,252 
Municipal securities3 — — 3 
Total held-to-maturity securities$8,861 $394 $— $9,255 
Other securities, at cost:
Non-marketable equity securities:
Federal Home Loan Bank stock$60 $— $— $60 
Federal Reserve Bank stock299 — — 299 
Other securities, at fair value
Mutual funds50 — — 50 
Equity securities8 1 — 9 
Total other securities$417 $1 $— $418 
(1)Amortized cost amounts excludes accrued interest receivable, which is recorded within other assets on the Consolidated Balance Sheets. At December 31, 2020, accrued interest receivable on available-for-sale securities and held-to-maturity securities totaled $32 million and $20 million, respectively.
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The following table provides the amortized cost and fair value of securities by contractual maturity at September 30, 2021 and December 31, 2020. Expected maturities may differ from contractual maturities as issuers may have the right to call or prepay obligations with or without incurring penalties.
September 30, 2021December 31, 2020
(dollar amounts in millions)
Amortized
Cost
Fair
Value
Amortized
Cost
Fair
Value
Available-for-sale securities:
Under 1 year$354 $351 $308 $304 
After 1 year through 5 years1,665 1,668 1,145 1,154 
After 5 years through 10 years2,935 2,962 1,607 1,654 
After 10 years20,699 20,673 13,115 13,373 
Total available-for-sale securities$25,653 $25,654 $16,175 $16,485 
Held-to-maturity securities:
After 1 year through 5 years$80 $83 $160 $169 
After 5 years through 10 years70 72 131 138 
After 10 years12,305 12,464 8,570 8,948 
Total held-to-maturity securities$12,455 $12,619 $8,861 $9,255 
The following tables provide detail on investment securities with unrealized losses aggregated by investment category and the length of time the individual securities have been in a continuous loss position at September 30, 2021 and December 31, 2020:
Less than 12 MonthsOver 12 MonthsTotal
(dollar amounts in millions)Fair
Value		Gross Unrealized
Losses		Fair
Value		Gross Unrealized
Losses		Fair
Value		Gross Unrealized
Losses
September 30, 2021
Available-for-sale securities:
Federal agencies:
Residential CMO1,064 (7)120 (5)1,184 (12)
Residential MBS10,212 (123)— — 10,212 (123)
Commercial MBS900 (31)25 (4)925 (35)
Other agencies119 — — — 119 — 
Total federal agency and other agency securities12,295 (161)145 (9)12,440 (170)
Municipal securities339 (8)377 (10)716 (18)
Private-label CMO58———58—
Asset-backed securities186 (1)7 (1)193 (2)
Corporate debt1,184 (20)28 (1)1,212 (21)
Total temporarily impaired available-for-sale securities$14,062 $(190)$557 $(21)$14,619 $(211)
Held-to-maturity securities:
Federal agencies:
Residential CMO$1,032 $(4)$— $— $1,032 $(4)
Residential MBS$4,398 $(33)$— $— $4,398 $(33)
Commercial MBS271 (1)— — 271 (1)
Total federal agency and other agency securities5,701 (38)— — 5,701 (38)
Total temporarily impaired held-to-maturity securities$5,701 $(38)$— $— $5,701 $(38)
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Less than 12 MonthsOver 12 MonthsTotal
(dollar amounts in millions)Fair
Value		Gross Unrealized
Losses		Fair
Value		Gross Unrealized
Losses		Fair
Value		Gross Unrealized
Losses
December 31, 2020
Available-for-sale securities:
Federal agencies:
Residential CMO$302 $(5)$— $— $302 $(5)
Residential MBS1,633 (5)— — 1,633 (5)
Commercial MBS321 (9)— — 321 (9)
Total federal agency and other agency securities2,256 (19)— — 2,256 (19)
Municipal securities110 (3)490 (12)600 (15)
Asset-backed securities15 — — — 15 — 
Corporate debt51 — — — 51 — 
Total temporarily impaired available-for-sale securities$2,432 $(22)$490 $(12)$2,922 $(34)
During the 2021 second quarter, Huntington transferred $3.0 billion of securities from the AFS portfolio to the HTM portfolio. At the time of the transfer, AOCI included $2 million of unrealized gains attributed to these securities. This gain will be amortized into interest income over the remaining life of the securities.
At September 30, 2021 and December 31, 2020, the carrying value of investment securities pledged to secure public and trust deposits, trading account liabilities, U.S. Treasury demand notes, security repurchase agreements and to support borrowing capacity totaled $23.2 billion and $14.4 billion, respectively. There were no securities of a single issuer, which were not governmental or government-sponsored, that exceeded 10% of shareholders’ equity at either September 30, 2021 or December 31, 2020. At September 30, 2021, all HTM debt securities are considered AAA rated. In addition, there were no HTM debt securities considered past due at September 30, 2021.
AFS Securities Impairment/HTM Securities Allowance for Credit Losses
Based on an evaluation of available information including security type, counterparty credit quality, past events, current conditions, and reasonable and supportable forecasts that are relevant to collectability, Huntington has concluded that it expects to receive all contractual cash flows from each security held in its AFS and HTM debt securities portfolio. As such, no allowance or impairment is recorded with respect to securities as of September 30, 2021 and December 31, 2020.
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4. LOANS AND LEASES
The following table provides a detailed listing of Huntington’s loan and lease portfolio at September 30, 2021 and December 31, 2020.
(dollar amounts in millions)September 30, 2021December 31, 2020
Commercial loan and lease portfolio:
Commercial and industrial$40,452 $33,151 
Commercial real estate14,694 7,199 
Lease financing4,991 2,222 
Total commercial loan and lease portfolio60,137 42,572 
Consumer loan portfolio:
Automobile13,305 12,778 
Residential mortgage18,922 12,141 
Home equity10,919 8,894 
RV and marine5,052 4,190 
Other consumer2,232 1,033 
Total consumer loan portfolio50,430 39,036 
Total loans and leases (1) (2)110,567 81,608 
Allowance for loan and lease losses(2,107)(1,814)
Net loans and leases$108,460 $79,794 
(1)Loans and leases are reported at principal amount outstanding including unamortized purchase premiums and discounts, unearned income, and net direct fees and costs associated with originating and acquiring loans and leases. The aggregate amount of these loan and lease adjustments was a net (discount) premium of $(85) million and $171 million at September 30, 2021 and December 31, 2020, respectively.
(2)The total amount of accrued interest recorded for these loans and leases at September 30, 2021, was $146 million and $143 million of commercial and consumer loan and lease portfolios, respectively, and at December 31, 2020, was $146 million and $123 million of commercial and consumer loan and lease portfolios, respectively. Accrued interest is presented in other assets within the Condensed Consolidated Balance Sheets.
Lease Financing
Huntington leases equipment to customers, and substantially all such arrangements are classified as either sales-type or direct financing leases, which are included in commercial loans and leases. These leases are reported at the aggregate of lease payments receivable and estimated residual values, net of unearned and deferred income, and any initial direct costs incurred to originate these leases.
Huntington assesses net investments in leases (including residual values) for impairment and recognizes any impairment losses in accordance with the impairment guidance for financial instruments. As such, net investments in leases may be reduced by an ACL, with changes recognized as provision expense.
The following table presents net investments in lease financing receivables by category at September 30, 2021 and December 31, 2020.
(dollar amounts in millions)September 30,
2021		December 31,
2020
Lease payments receivable$4,622 $1,737 
Estimated residual value of leased assets781 664 
Gross investment in lease financing receivables5,403 2,401 
Deferred origination costs24 21 
Deferred fees, unearned income and other(436)(200)
Total lease financing receivables$4,991 $2,222 
The carrying value of residual values guaranteed was $463 million and $93 million as of September 30, 2021 and December 31, 2020, respectively. The future lease rental payments due from customers on sales-type and direct financing leases at September 30, 2021, totaled $4.6 billion and were due as follows: $0.8 billion in 2021, $0.8 billion in 2022, $0.8 billion in 2023, $0.8 billion in 2024, $0.7 billion in 2025, and $0.7 billion thereafter. Interest income recognized for these types of leases was $73 million and $26 million for the three-month periods ended September 30, 2021 and 2020, respectively. For the nine-month periods ended September 30, 2021 and 2020, interest income recognized was $154 million and $81 million, respectively.
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Nonaccrual and Past Due Loans and Leases
The following table presents NALs by class at September 30, 2021 and December 31, 2020:
September 30, 2021December 31, 2020
(dollar amounts in millions)Nonaccrual loans and leases with no ACLTotal nonaccrual loans and leasesNonaccrual loans and leases with no ACLTotal nonaccrual loans and leases
Commercial and industrial$141 $494 $69 $349 
Commercial real estate27 103 8 15 
Lease financing2 60 — 4 
Automobile— 3 — 4 
Residential mortgage— 108 — 88 
Home equity— 87 — 70 
RV and marine— 6 — 2 
Other consumer— — — — 
Total nonaccrual loans and leases$170 $861 $77 $532 
The following table presents an aging analysis of loans and leases, by class at September 30, 2021 and December 31, 2020:
September 30, 2021
Past Due (1) Loans Accounted for Under FVOTotal Loans
and Leases		90 or
more days
past due
and accruing
(dollar amounts in millions)30-59
 Days		60-89
 Days		90 or 
more days		TotalCurrent
Commercial and industrial$86 $28 $80 $194 $40,258 $— $40,452 $6 
Commercial real estate9 5 18 32 14,662 — 14,694 — 
Lease financing87 20 19 126 4,865 — 4,991 12 (2)
Automobile61 13 7 81 13,224 — 13,305 5 
Residential mortgage106 44 212 362 18,422 138 18,922 138 (3)
Home equity42 14 65 121 10,797 1 10,919 10 
RV and marine12 2 3 17 5,035 — 5,052 2 
Other consumer11 3 2 16 2,216 — 2,232 2 
Total loans and leases$414 $129 $406 $949 $109,479 $139 $110,567 $175 
December 31, 2020
Past Due (1)(4) Loans Accounted for Under FVOTotal Loans
and Leases		90 or
more days
past due
and accruing
(dollar amounts in millions)30-59
 Days		60-89
 Days		90 or 
more days		TotalCurrent
Commercial and industrial$38 $33 $82 $153 $32,998 $— $33,151 $— 
Commercial real estate— 1 11 12 7,187 — 7,199 — 
Lease financing22 5 13 40 2,182 — 2,222 10 (2)
Automobile84 22 12 118 12,660 — 12,778 9 
Residential mortgage114 38 194 346 11,702 93 12,141 132 (3)
Home equity35 15 61 111 8,782 1 8,894 14 
RV and marine17 3 3 23 4,167 — 4,190 3 
Other consumer9 4 3 16 1,017 — 1,033 3 
Total loans and leases$319 $121 $379 $819 $80,695 $94 $81,608 $171 
(1)NALs are included in this aging analysis based on the loan’s past due status.
(2)Amounts include Huntington Technology Finance administrative lease delinquencies.
(3)Amounts include mortgage loans insured by U.S. government agencies.
(4)The principal balance of loans in payment deferral programs offered in response to the COVID-19 pandemic which are performing according to their modified terms are generally not considered delinquent.
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Credit Quality Indicators
See Note 5 “Loans/Leases” to the Consolidated Financial Statements appearing in Huntington’s 2020 Annual Report on Form 10-K for a description of the credit quality indicators Huntington utilizes for monitoring credit quality and for determining an appropriate ACL level.
To facilitate the monitoring of credit quality for commercial loans, and for purposes of determining an appropriate ACL level for these loans, Huntington utilizes the following internally defined 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 represents 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 resulting from 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.
Loans are generally assigned a category of “Pass” rating upon initial approval and subsequently updated as appropriate based on the borrower’s financial performance.
Commercial loans categorized as OLEM, Substandard, or Doubtful are considered Criticized loans. Commercial loans categorized as Substandard or Doubtful are both considered Classified loans.
For all classes within the consumer loan portfolios, loans are assigned pool level PD factors based on the FICO range within which the borrower’s credit bureau score falls. A credit bureau score is a credit score developed by FICO 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.
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The following tables present the amortized cost basis of loans and leases by vintage and credit quality indicator at September 30, 2021 and December 31, 2020 respectively:
As of September 30, 2021
Term Loans Amortized Cost Basis by Origination YearRevolver Total at Amortized Cost BasisRevolver Total Converted to Term Loans
(dollar amounts in millions)20212020201920182017PriorTotal
Commercial and industrial
Credit Quality Indicator (1):
Pass$10,821 $6,941 $4,246 $2,626 $1,222 $1,320 $10,698 $3 $37,877 
OLEM148 204 176 122 33 81 133 — 897 
Substandard182 171 266 244 146 193 469 — 1,671 
Doubtful1 — — 4 — 1 1 — 7 
Total Commercial and industrial$11,152 $7,316 $4,688 $2,996 $1,401 $1,595 $11,301 $3 $40,452 
Commercial real estate
Credit Quality Indicator (1):
Pass$2,561 $2,813 $2,939 $1,769 $929 $1,286 $613 $— $12,910 
OLEM57 172 77 78 82 46 1 — 513 
Substandard280 284 329 134 149 77 18 — 1,271 
Total Commercial real estate$2,898 $3,269 $3,345 $1,981 $1,160 $1,409 $632 $— $14,694 
Lease financing
Credit Quality Indicator (1):
Pass$1,383 $1,655 $915 $499 $282 $168 $— $— $4,902 
OLEM8 10 9 4 4 1 — — 36 
Substandard3 14 18 1 8 9 — — 53 
Total Lease financing$1,394 $1,679 $942 $504 $294 $178 $— $— $4,991 
Automobile
Credit Quality Indicator (2):
750+$2,250 $2,112 $1,563 $785 $441 $174 $— $— $7,325 
650-7491,879 1,442 867 458 212 96 — — 4,954 
<650283 252 200 149 87 55 — — 1,026 
Total Automobile$4,412 $3,806 $2,630 $1,392 $740 $325 $— $— $13,305 
Residential mortgage
Credit Quality Indicator (2):
750+$4,359 $4,253 $1,214 $678 $817 $2,132 $— $— $13,453 
650-7491,443 960 420 301 270 975 — — 4,369 
<65039 56 99 125 102 541 — — 962 
Total Residential mortgage$5,841 $5,269 $1,733 $1,104 $1,189 $3,648 $— $— $18,784 
Home equity
Credit Quality Indicator (2):
750+$570 $812 $101 $70 $61 $459 $4,796 $201 $7,070 
650-749138 156 98 62 38 232 2,320 172 3,216 
<6505 10 30 28 23 114 331 91 632 
Total Home equity$713 $978 $229 $160 $122 $805 $7,447 $464 $10,918 
RV and marine
Credit Quality Indicator (2):
750+$1,022 $982 $495 $518 $301 $364 $— $— $3,682 
650-749312 303 190 173 117 167 — — 1,262 
<6505 11 17 20 22 33 — — 108 
Total RV and marine$1,339 $1,296 $702 $711 $440 $564 $— $— $5,052 
Other consumer
Credit Quality Indicator (2):
750+$486 $217 $239 $83 $32 $73 $586 $2 $1,718 
650-74942 32 46 14 5 7 282 24 452 
<6503 2 7 3 1 2 26 18 62 
Total Other consumer$531 $251 $292 $100 $38 $82 $894 $44 $2,232 
(1)Consistent with the credit quality disclosures, indicators for the Commercial portfolio are based on internally defined categories of credit grades which are generally refreshed at least semi-annually.
(2)Consistent with the credit quality disclosures, indicators for the Consumer portfolio are based on updated customer credit scores refreshed at least quarterly.
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As of December 31, 2020
Term Loans Amortized Cost Basis by Origination YearRevolver Total at Amortized Cost BasisRevolver Total Converted to Term Loans
(dollar amounts in millions)20202019201820172016PriorTotal
Commercial and industrial
Credit Quality Indicator (1):
Pass$12,599 $4,161 $2,537 $1,192 $837 $815 $8,894 $2 $31,037 
OLEM415 112 65 24 32 22 124 — 794 
Substandard195 125 181 203 41 147 423 — 1,315 
Doubtful2 — 1 — — 1 1 — 5 
Total Commercial and industrial$13,211 $4,398 $2,784 $1,419 $910 $985 $9,442 $2 $33,151 
Commercial real estate
Credit Quality Indicator (1):
Pass$1,742 $1,610 $1,122 $507 $507 $539 $633 $— $6,660 
OLEM94 78 63 37 28 14 4 — 318 
Substandard27 46 10 29 58 14 36 — 220 
Doubtful— — — — — 1 — — 1 
Total Commercial real estate$1,863 $1,734 $1,195 $573 $593 $568 $673 $— $7,199 
Lease financing
Credit Quality Indicator (1):
Pass$1,158 $364 $221 $155 $137 $101 $— $— $2,136 
OLEM6 4 4 6 1 — — — 21 
Substandard1 19 7 21 5 12 — — 65 
Total Lease financing$1,165 $387 $232 $182 $143 $113 $— $— $2,222 
Automobile
Credit Quality Indicator (2):
750+$2,670 $2,013 $1,144 $742 $317 $81 $— $— $6,967 
650-7491,965 1,343 755 386 175 52 — — 4,676 
<650312 301 244 157 84 37 — — 1,135 
Total Automobile$4,947 $3,657 $2,143 $1,285 $576 $170 $— $— $12,778 
Residential mortgage
Credit Quality Indicator (2):
750+$3,269 $1,370 $891 $1,064 $762 $1,243 $1 $— $8,600 
650-749991 435 307 278 171 495 — — 2,677 
<65034 89 111 108 81 348 — — 771 
Total Residential mortgage$4,294 $1,894 $1,309 $1,450 $1,014 $2,086 $1 $— $12,048 
Home equity
Credit Quality Indicator (2):
750+$793 $26 $26 $32 $89 $451 $4,373 $192 $5,982 
650-749147 9 8 11 27 157 1,906 181 2,446 
<6501 1 1 1 6 70 286 99 465 
Total Home equity$941 $36 $35 $44 $122 $678 $6,565 $472 $8,893 
RV and marine
Credit Quality Indicator (2):
750+$1,136 $525 $589 $337 $153 $254 $— $— $2,994 
650-749348 215 201 136 64 129 — — 1,093 
<6504 15 21 22 12 29 — — 103 
Total RV and marine$1,488 $755 $811 $495 $229 $412 $— $— $4,190 
Other consumer
Credit Quality Indicator (2):
750+$69 $58 $26 $8 $4 $14 $340 $2 $521 
650-74936 56 17 5 2 3 294 30 443 
<6502 8 3 1 — 1 26 28 69 
Total Other consumer$107 $122 $46 $14 $6 $18 $660 $60 $1,033 
(1)Consistent with the credit quality disclosures, indicators for the Commercial portfolio are based on internally defined categories of credit grades which are generally refreshed at least semi-annually.
(2)Consistent with the credit quality disclosures, indicators for the Consumer portfolio are based on updated customer credit scores refreshed at least quarterly.

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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 would not otherwise be considered. However, not all loan modifications are TDRs. See Note 5 “Loans / Leases” to the Consolidated Financial Statements appearing in Huntington’s 2020 Annual Report on Form 10-K for an additional discussion of TDRs.
The following table presents, by class and modification type, the number of contracts, post-modification outstanding balance, and the financial effects of the modification for the three-month and nine-month periods ended September 30, 2021 and 2020.
New Troubled Debt Restructurings (1)
Three Months Ended September 30, 2021
Number of
Contracts		Post-modification Outstanding Recorded Investment (2)
(dollar amounts in millions)Interest rate reductionAmortization or maturity date changeChapter 7 bankruptcyOtherTotal
Commercial and industrial16 $— $3 $— $— $3 
Commercial real estate4 — — — — — 
Automobile498 — 3 1 — 4 
Residential mortgage74 — 7 2 — 9 
Home equity42 — 1 1 — 2 
RV and marine19 — — — — — 
Other consumer49 — — — — — 
Total new TDRs702 $— $14 $4 $— $18 
Three Months Ended September 30, 2020
Number of
Contracts		Post-modification Outstanding Recorded Investment (2)
(dollar amounts in millions)Interest rate reductionAmortization or maturity date changeChapter 7 bankruptcyOtherTotal
Commercial and industrial39 $— $28 $— $— $28 
Commercial real estate2 — — — — — 
Automobile726 — 5 2 — 7 
Residential mortgage242 — 40 2 — 42 
Home equity90 — 2 3 1 6 
RV and marine30 — 1 — — 1 
Other consumer122 1 — — — 1 
Total new TDRs1,251 $1 $76 $7 $1 $85 
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New Troubled Debt Restructurings (1)
Nine Months Ended September 30, 2021
Number of
Contracts		Post-modification Outstanding Recorded Investment (2)
(dollar amounts in millions)Interest rate reductionAmortization or maturity date changeChapter 7 bankruptcyOtherTotal
Commercial and industrial53 $15 $23 $— $— $38 
Commercial real estate4 — — — — — 
Automobile1,914 — 13 3 — 16 
Residential mortgage232 — 31 4 — 35 
Home equity155 — 3 5 — 8 
RV and marine finance103 1 1 1 — 3 
Other consumer214 — — — 1 1 
Total new TDRs2,675 $16 $71 $13 $1 $101 
Nine Months Ended September 30, 2020
Number of
Contracts		Post-modification Outstanding Recorded Investment (2)
(dollar amounts in millions)Interest rate reductionAmortization or maturity date changeChapter 7 bankruptcyOtherTotal
Commercial and industrial277 $— $116 $— $58 $174 
Commercial real estate11 — 3 — — 3 
Automobile2,582 — 26 5 — 31 
Residential mortgage448 — 62 5 — 67 
Home equity216 — 5 6 2 13 
RV and marine finance126 — 4 — — 4 
Other consumer513 3 — — — 3 
Total new TDRs4,173 $3 $216 $16 $60 $295 
(1)TDRs may include multiple concessions and the disclosure classifications are based on the primary concession provided to the borrower.
(2)Post-modification balances approximate pre-modification balances.
Pledged Loans
The Bank has access to the Federal Reserve’s discount window and advances from the FHLB. As of September 30, 2021 and December 31, 2020, these borrowings and advances are secured by $45.9 billion and $43.0 billion, respectively, of loans.
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5. ALLOWANCE FOR CREDIT LOSSES
Allowance for Credit Losses - Roll-forward
The following tables present ACL activity by portfolio segment for the three-month and nine-month periods ended September 30, 2021 and 2020.

(dollar amounts in millions)CommercialConsumerTotal
Three-month period ended September 30, 2021:
ALLL balance, beginning of period$1,618 $600 $2,218 
Loan and lease charge-offs(74)(32)(106)
Recoveries of loans and leases previously charged-off27 24 51 
Provision (benefit) for loan and lease losses(22)(34)(56)
ALLL balance, end of period$1,549 $558 $2,107 
AULC balance, beginning of period$76 $28 $104 
Provision for unfunded lending commitments2 (8)(6)
AULC balance, end of period$78 $20 $98 
ACL balance, end of period$1,627 $578 $2,205 
Nine-month period ended September 30, 2021:
ALLL balance, beginning of period$1,236 $578 $1,814 
Loan and lease charge-offs(213)(90)(303)
Recoveries of loans and leases previously charged-off58 64 122 
Provision for loan and lease losses (1)94 (52)42 
Allowance on loans and leases purchased with credit deterioration374 58 432 
ALLL balance, end of period$1,549 $558 $2,107 
AULC balance, beginning of period$34 $18 $52 
Provision for unfunded lending commitments (2)45 2 47 
Unfunded lending commitment losses(1)— (1)
AULC balance, end of period$78 $20 $98 
ACL balance, end of period$1,627 $578 $2,205 

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(dollar amounts in millions)CommercialConsumerTotal
Three-month period ended September 30, 2020:
ALLL balance, beginning of period$1,169 $533 $1,702 
Loan and lease charge-offs(101)(40)(141)
Recoveries of loans and leases previously charged-off12 16 28 
Provision for loan and lease losses183 24 207 
ALLL balance, end of period$1,263 $533 $1,796 
AULC balance, beginning of period$81 $38 $119 
Provision (reduction in allowance) for unfunded lending commitments(27)(3)(30)
Unfunded lending commitment losses(7)— (7)
AULC balance, end of period$47 $35 $82 
ACL balance, end of period$1,310 $568 $1,878 
Nine-month period ended September 30, 2020:
ALLL balance, beginning of period$552 $231 $783 
Cumulative-effect of change in accounting principle for financial instruments - credit losses (3)180 211 391 
Loan and lease charge-offs(272)(128)(400)
Recoveries of loans and leases previously charged-off20 43 63 
Provision for loan and lease losses783 176 959 
ALLL balance, end of period$1,263 $533 $1,796 
AULC balance, beginning of period$102 $2 $104 
Cumulative-effect of change in accounting principle for financial instruments - credit losses (3)(38)40 2 
Provision (reduction in allowance) for unfunded lending commitments(7)(7)(14)
Unfunded lending commitment losses(10)— (10)
AULC balance, end of period$47 $35 $82 
ACL balance, end of period$1,310 $568 $1,878 
(1)Includes $234 million of TCF acquisition initial provision for credit losses related to non-PCD loans and leases.
(2)Includes $60 million from acquired unfunded lending commitments.
(3)Relates to day one impact of the CECL adjustment as a result of the implementation of ASU 2016-13.
At September 30, 2021, the ACL was $2.2 billion, an increase of $339 million from the December 31, 2020 balance of $1.9 billion. The increase was primarily related to the addition of $432 million of allowance for loans purchased with credit deterioration and the TCF acquisition initial provision for credit losses of $294 million ($234 million from non-PCD loans and leases and $60 million from acquired unfunded lending commitments), partially offset by improvement in the forecasted macroeconomic environment resulting from anticipated lower unemployment and higher GDP.
The economic scenarios used in the September 30, 2021 ACL determination contained significant judgmental assumptions and the ultimate impact of COVID-19 remains uncertain, including how long economic activities will be impacted and what effect the unprecedented levels of government fiscal and monetary actions will have on the economy and our credit losses. Given the uncertainty associated with key economic scenario assumptions, the September 30, 2021 ACL included a material general reserve component as well as additional industry specific risk profiles, including profiles relating to the commercial real estate portfolio, to capture economic uncertainty not addressed within the quantitative transaction reserve.
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6. MORTGAGE LOAN SALES AND SERVICING RIGHTS
Residential Mortgage Portfolio
The following table summarizes activity relating to residential mortgage loans sold with servicing retained for the three-month and nine-month periods ended September 30, 2021 and 2020:
Three Months Ended
September 30,		Nine Months Ended
September 30,
(dollar amounts in millions)2021202020212020
Residential mortgage loans sold with servicing retained$2,298 $2,391 $7,302 $6,106 
Pretax gains resulting from above loan sales (1)80 98 274 196 
(1)Recorded in mortgage banking income.
The following table summarizes the changes in MSRs recorded using the fair value method for the three-month and nine-month periods ended September 30, 2021 and 2020:
Three Months Ended
September 30,		Nine Months Ended
September 30,
(dollar amounts in millions)20212020 20212020
Fair value, beginning of period$327 $172 $210 $7 
Fair value election for servicing assets previously measured using the amortized method (1)— — — 205 
Servicing assets obtained in acquisition— ``— 59 — 
New servicing assets created31 30 103 70 
Change in fair value during the period due to:
Time decay (2)(4)(2)(11)(6)
Payoffs (3)(17)(13)(50)(29)
Changes in valuation inputs or assumptions (4)1 4 27 (56)
Fair value, end of period$338 $191 $338 $191 
Weighted-average life (years)7.06.47.06.4
(1)Prior to January 1, 2020, substantially all of Huntington’s MSR assets were recorded at amortized cost.
(2)Represents decrease in value due to passage of time, including the impact from both regularly scheduled principal payments and partial loan paydowns.
(3)Represents decrease in value associated with loans that paid off during the period.
(4)Represents change in value resulting primarily from market-driven changes in interest rates.
MSRs do not trade in an active, open market with readily observable prices. Therefore, the fair value of MSRs is estimated using a discounted future cash flow model. Changes in the assumptions used may have a significant impact on the valuation of MSRs. MSR values are highly sensitive to movement in interest rates as expected future net servicing income depends on the projected outstanding principal balances of the underlying loans, which can be greatly impacted by the level of prepayments.
A summary of key assumptions and the sensitivity of the MSR value to changes in these assumptions at September 30, 2021, and December 31, 2020 follows:
September 30, 2021December 31, 2020
Decline in fair value due toDecline in fair value due to
(dollar amounts in millions)Actual10%
adverse
change		20%
adverse
change		Actual10%
adverse
change		20%
adverse
change
Constant prepayment rate (annualized)
12.21 %$(16)$(30)17.36 %$(12)$(23)
Spread over forward interest rate swap rates545 bps(7)(14)519 bps(4)(8)
Total servicing, late fees and other ancillary fees included in mortgage banking income was $22 million and $16 million for the three-month periods ended September 30, 2021 and 2020, respectively. For the nine-month periods ended September 30, 2021 and 2020, total servicing, late fees and other ancillary fees included in mortgage banking income was $57 million and $47 million, respectively.
The unpaid principal balance of residential mortgage loans serviced for third parties was $30.6 billion and $23.5 billion at September 30, 2021 and December 31, 2020, respectively.
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7. GOODWILL AND OTHER INTANGIBLE ASSETS
Business segments are based on segment leadership structure, which reflects how segment performance is monitored and assessed. We have four major business segments: Consumer and Business Banking, Commercial Banking, Vehicle Finance, and Regional Banking and The Huntington Private Client Group (RBHPCG). The Treasury / Other function includes technology and operations, other unallocated assets, liabilities, revenue, and expense.
A rollforward of goodwill by business segment for the first nine-month period of 2021 is presented in the table below.
(dollar amounts in millions)Consumer & Business BankingCommercial BankingVehicle FinanceRBHPCGTreasury / OtherHuntington
Consolidated
Balance, December 31, 2020$1,393 $427 $— $170 $— $1,990 
TCF acquisition2,006 1,260 — 60 — 3,326 
Balance, September 30, 2021$3,399 $1,687 $— $230 $— $5,316 
For additional information on the acquisition, refer to Note 2 “Acquisition of TCF Financial Corporation”.
At September 30, 2021 and December 31, 2020, Huntington’s other intangible assets consisted of the following:
(dollar amounts in millions)Gross
Carrying
Amount		Accumulated
Amortization		Net
Carrying
Value
September 30, 2021
Core deposit intangible$389 $(165)$224 
Customer relationship108 (77)31 
Total other intangible assets$497 $(242)$255 
December 31, 2020
Core deposit intangible$310 $(150)$160 
Customer relationship101 (70)31 
Total other intangible assets$411 $(220)$191 
The estimated amortization expense of other intangible assets for the remainder of 2021 and the next five years is as follows:
(dollar amounts in millions)
Amortization
Expense
2021$14 
202253 
202349 
202445 
202542 
202629 
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8. BORROWINGS
Borrowings with original maturities of one year or less are classified as short-term and were comprised of the following at September 30, 2021 and December 31, 2020, respectively: 
(dollar amounts in millions)September 30,
2021		December 31,
2020
Federal funds purchased and securities sold under agreements to repurchase$401 $71 
Other borrowings34 112 
Total short-term borrowings$435 $183 
Huntington’s long-term debt consisted of the following at September 30, 2021 and December 31, 2020, respectively:

(dollar amounts in millions)September 30,
2021		December 31,
2020
The Parent Company:
Senior Notes$2,802 $3,635 
Subordinated Notes1,037 507 
Total notes issued by the parent3,839 4,142 
The Bank:
Senior Notes2,451 3,533 
Subordinated Notes813 233 
Total notes issued by the bank3,264 3,766 
FHLB Advances216 3 
Other460 441 
Total long-term debt$7,779 $8,352 

As a result of the TCF acquisition, Huntington assumed long-term debt totaling $1.5 billion, of which a FHLB advance of $213 million and subordinated notes of $598 million remain outstanding at September 30, 2021. The assumed long-term FHLB advance has a maturity date in 2025 and carried interest rate of 1.03% at September 30, 2021. The assumed subordinated notes included $8 million of parent company obligations due in 2034 carrying variable interest rates based on three-month LIBOR plus 2.85% and $590 million of Bank obligations due in 2022 to 2030 carrying interest rates ranging from 0.64% to 3.75% outstanding at September 30, 2021.
During the 2021 third quarter, Huntington issued $558 million of fixed-to-fixed rate subordinated notes at par (the “2036 Notes”). The fixed-to-fixed rate subordinated notes, maturing on August 15, 2036, bear an initial fixed interest rate of 2.487% per annum, payable semi-annually in arrears on February 15 and August 15, commencing on February 15, 2022. Commencing August 15, 2031 (the “Reset Date”), the interest rate will reset to an annual interest rate equal to the five-year U.S. Treasury Rate as of the day falling two business days prior to the Reset Date, plus 1.170%.
Also during the 2021 third quarter, Huntington completed the exchange of the Parent Company’s 4.350% subordinated notes due 2023 and the Bank’s 6.250% subordinated notes due 2022, 4.60% subordinated notes due 2025, and the 4.270% subordinated notes due 2026 utilizing a portion of the 2036 Notes.

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9. OTHER COMPREHENSIVE INCOME
The components of Huntington’s OCI for the three-month and nine-month periods ended September 30, 2021 and 2020, were as follows:
Three Months Ended
September 30, 2021
Tax (expense)
(dollar amounts in millions)PretaxbenefitAfter-tax
Unrealized gains (losses) on available-for-sale securities arising during the period$(112)$26 $(86)
Less: Reclassification adjustment for realized net losses (gains) included in net income5 (1)4 
Net change in unrealized holding gains (losses) on available-for-sale securities(107)25 (82)
Net change in fair value on cash flow hedges(43)14 (29)
Foreign currency translation adjustment (1)(7)— (7)
Net unrealized gains (losses) on net investment hedges9 — 9 
Translation adjustments, net of hedges (1)2 — 2 
Net change in pension and other post-retirement obligations3 — 3 
Total other comprehensive income$(145)$39 $(106)
Three Months Ended
September 30, 2020
Tax (expense)
(dollar amounts in millions)PretaxbenefitAfter-tax
Unrealized gains (losses) on available-for-sale securities arising during the period$— $— $— 
Less: Reclassification adjustment for realized net losses (gains) included in net income6 (1)5 
Net change in unrealized gains (losses) on available-for-sale securities6 (1)5 
Net change in fair value on cash flow hedges(52)12 (40)
Net change in pension and other post-retirement obligations3 (1)2 
Total other comprehensive income$(43)$10 $(33)
Nine Months Ended
September 30, 2021
Tax (expense)
(dollar amounts in millions)PretaxbenefitAfter-tax
Unrealized gains (losses) on available-for-sale securities arising during the period$(311)$70 $(241)
Less: Reclassification adjustment for realized net losses (gains) included in net income27 (6)21 
Net change in unrealized holding gains (losses) on available-for-sale securities(284)64 (220)
Net change in fair value on cash flow hedges(135)33 (102)
Foreign currency translation adjustment (1)(13)— (13)
Net unrealized gains (losses) on net investment hedges9 — 9 
Translation adjustments, net of hedges (1)(4)— (4)
Net change in pension and other post-retirement obligations12 (3)9 
Total other comprehensive loss$(411)$94 $(317)
Nine Months Ended
September 30, 2020
Tax (expense)
(dollar amounts in millions)PretaxbenefitAfter-tax
Unrealized gains (losses) on available-for-sale securities arising during the period$274 $(61)$213 
Less: Reclassification adjustment for realized net losses (gains) included in net income35 (8)27 
Net change in unrealized holding gains (losses) on available-for-sale securities309 (69)240 
Net change in fair value on cash flow hedges358 (79)279 
Net change in pension and other post-retirement obligations (2)(8)2 (6)
Total other comprehensive income$659 $(146)$513 
(1)Foreign investments are deemed to be permanent in nature and, therefore, Huntington does not provide for taxes on foreign currency translation adjustments.
(2)Includes a settlement gain recognized in other noninterest income on the Unaudited Condensed Consolidated Statements of Income.
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Activity in accumulated OCI for the three-month and nine-month periods ended September 30, 2021 and 2020, were as follows:
(dollar amounts in millions)
Unrealized
 gains (losses) on
debt securities (1)
Change in fair value related to cash flow hedgesTranslation adjustments, net of hedges
Unrealized
 gains
(losses) for
pension and
other post-
retirement
obligations (2)
Total
Three Months Ended September 30, 2021
Balance, beginning of period$50 $184 $(6)$(247)$(19)
Other comprehensive income (loss) before reclassifications(86)(29)2 — (113)
Amounts reclassified from accumulated OCI to earnings4 — — 3 7 
Period change(82)(29)2 3 (106)
Balance, end of period$(32)$155 $(4)$(244)$(125)
Three Months Ended September 30, 2020
Balance, beginning of period$207 $342 $— $(259)$290 
Other comprehensive income before reclassifications— (40)— — (40)
Amounts reclassified from accumulated OCI to earnings5 — — 2 7 
Period change5 (40)— 2 (33)
Balance, end of period$212 $302 $— $(257)$257 
(dollar amounts in millions)
Unrealized
 gains (losses) on
debt securities (1)
Change in fair value related to cash flow hedgesTranslation adjustments, net of hedges
Unrealized 
gains
(losses) for
pension and
other post-
retirement
obligations (2)
Total
Nine Months Ended September 30, 2021
Balance, beginning of period$188 $257 $— $(253)$192 
Other comprehensive loss before reclassifications(241)(102)(4)— (347)
Amounts reclassified from accumulated OCI to earnings21 — — 9 30 
Period change(220)(102)(4)9 (317)
Balance, end of period$(32)$155 $(4)$(244)$(125)
Nine Months Ended September 30, 2020
Balance, beginning of period$(28)$23 $— $(251)$(256)
Other comprehensive income before reclassifications213 279 — — 492 
Amounts reclassified from accumulated OCI to earnings27 — — (6)21 
Period change240 279 — (6)513 
Balance, end of period$212 $302 $— $(257)$257 
(1)AOCI amounts at September 30, 2021 and September 30, 2020 include $41 million and $74 million, respectively, of net unrealized losses on securities transferred from the available-for-sale securities portfolio to the held-to-maturity securities portfolio. The net unrealized losses will be recognized in earnings over the remaining life of the security using the effective interest method.

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10. SHAREHOLDERS’ EQUITY

Preferred Stock
The following is a summary of Huntington’s non-cumulative, non-voting, perpetual preferred stock outstanding as of September 30, 2021.
(dollar amounts in millions)
SeriesIssuance DateTotal Shares Outstanding
Amount
Dividend RateEarliest Redemption Date
Series B12/28/201135,500 $23 3-mo. LIBOR + 270 bps1/15/2017
Series C8/16/2016100,000 100 5.875 %10/15/2021
Series E2/27/20185,000 495 5.700 4/15/2023
Series F5/27/20205,000 494 5.625 7/15/2030
Series G8/3/20205,000 494 4.450 10/15/2027
Series H2/2/2021500,000 486 4.500 4/15/2026
Series I6/9/20217,000 175 5.700 12/01/2022
Total657,500 $2,267 
Series B, C and H of preferred stock have a liquidation value and redemption price per share of $1,000, plus any declared and unpaid dividends. Series E, F, G, and I stock have a liquidation value and redemption price per share of $100,000, plus any declared and unpaid dividends. All preferred stock has no stated maturity and redemption is solely at Huntington’s option. Under current rules, any redemption of the preferred stock is subject to prior approval of the FRB.
On July 15, 2021, all 24,000,000 outstanding depositary shares, each representing a 1/40th interest in a share of Huntington’s 6.250% Series D Non-Cumulative Perpetual Preferred Stock, par value $0.01 per share, were redeemed. The depositary shares were redeemed at a price of $25.00 per depositary share (equivalent to $1,000 per share of Series D Preferred Stock) plus declared and unpaid dividends of $0.390625 per depositary share (equivalent to $15.625 per share of Series D Preferred Stock) for the period beginning on April 15, 2021 to, but not including, July 15, 2021. All dividends on the shares of Series D Preferred Stock ceased to accrue.
On October 15, 2021, all 4,000,000 outstanding depositary shares, each representing a 1/40th interest in a share of Huntington’s 5.875% Series C Non-Cumulative Perpetual Preferred Stock, par value $0.01 per share, were redeemed. The depositary shares were redeemed at a price of $25.00 per depositary share (equivalent of $1,000 per share of Series C Preferred Stock) plus declared unpaid dividends of $0.36725 per depositary share (equivalent to $14.69 per share of Series C Preferred Stock) for the period beginning on July 15, 2021 to, but not including, October 15, 2021. All dividends on the shares of Series C Preferred Stock will cease to accrue.
Preferred Series I Stock issued and outstanding
On June 9, 2021, each share of TCF Financial Corporation 5.70% Series C Non-Cumulative Perpetual Preferred Stock, $0.01 par value per share, outstanding immediately prior to the acquisition of TCF Financial Corporation was converted into the right to receive a share of the newly created Huntington 5.70% Series I Non-Cumulative Perpetual Preferred Stock, par value $0.01 per share.
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The following table presents the dividends declared for each series of Preferred shares for the three-month and nine-month periods ended September 30, 2021 and 2020:
Three Months Ended September 30,Nine months ended September 30,
(amounts in millions, except per share data)2021202020212020
Cash Dividend Declared Per ShareCash Dividend Declared Per ShareCash Dividend Declared Per ShareCash Dividend Declared Per Share
Preferred SeriesAmount ($)Amount ($)Amount ($)Amount ($)
Series B$7.07 $— $7.44 $— $21.63 $— $28.56 $(1)
Series C14.69 (1)14.69 (1)44.07 (4)44.07 (4)
Series D— — 15.63 (10)31.25 (18)46.88 (29)
Series E1,425.00 (7)1,425.00 (7)4,275.00 (21)4,275.00 (21)
Series F1,406.25 (7)2,062.50 (10)4,218.75 (21)2,062.50 (10)
Series G1,112.50 (6)— — 3,337.50 (18)— — 
Series H11.25 (6)— — 30.75 (16)— — 
Series I356.25 (2)— — 712.50 (5)— — 
Total$(29)$(28)$(103)$(65)
Change in Common Shares Authorized
During the second quarter of 2021, Huntington amended its charter to increase the number of authorized shares of common stock from 1.5 billion shares to 2.25 billion shares.
Share Repurchases
On July 21, 2021, the Board authorized the repurchase of up to $800 million of common shares over the next four quarters. Purchases of common stock under the authorization may include open market purchases, privately negotiated transactions, and accelerated share repurchase programs. During the 2021 third quarter, Huntington repurchased a total of $500 million common stock, representing 33.4 million common shares, at a weighted average price of $14.96.
Treasury shares
Treasury shares includes shares held for deferred compensation plans, at cost, of $79 million at September 30, 2021 and $59 million at December 31, 2020.
Non-controlling Interest in Subsidiaries
Through the acquisition of TCF, Huntington acquired a joint venture with The Toro Company ("Toro") called Red Iron Acceptance, LLC ("Red Iron"). Red Iron provides U.S. distributors and dealers and select Canadian distributors of the Toro and Exmark branded products with sources of financing. Huntington and Toro maintain a 55% and 45% ownership interest, respectively, in Red Iron. As Huntington has a controlling financial interest in Red Iron, its financial results are consolidated in Huntington's financial statements. Toro's interest is reported as a non-controlling interest within equity.
11. EARNINGS PER SHARE
Basic earnings per share is the amount of earnings (adjusted for dividends declared on preferred stock and impact of preferred stock redemption) available to each share of common stock outstanding during the reporting period. Diluted earnings per share is the amount of earnings available to each share of common stock outstanding during the reporting period adjusted to include the effect of potentially dilutive common shares. Potentially dilutive common shares include incremental shares issued for stock options, restricted stock units and awards, and distributions from deferred compensation plans. Potentially dilutive common shares are excluded from the computation of diluted earnings per share in periods in which the effect would be antidilutive.
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The calculation of basic and diluted earnings per share for the three-month and nine-month periods ended September 30, 2021 and 2020 was as follows:
Three Months Ended
September 30,		Nine Months Ended
September 30,
(dollar amounts in millions, except per share data, share count in thousands)2021202020212020
Basic earnings per common share:
Net income attributable to Huntington Bancshares Inc$377 $303 $894 $501 
Preferred stock dividends29 28 103 65 
Impact of preferred stock redemption15 — 15 — 
Net income available to common shareholders$333 $275 $776 $436 
Average common shares issued and outstanding1,462,736 1,017,253 1,201,763 1,017,052 
Basic earnings per common share$0.23 $0.27 $0.65 $0.43 
Diluted earnings per common share:
Dilutive potential common shares:
Stock options and restricted stock units and awards17,536 9,005 17,623 9,628 
Shares held in deferred compensation plans7,063 5,202 6,042 4,893 
Dilutive potential common shares24,599 14,207 23,665 14,521 
Total diluted average common shares issued and outstanding1,487,335 1,031,460 1,225,428 1,031,573 
Diluted earnings per common share$0.22 $0.27 $0.63 $0.42 
Anti-dilutive awards (1)4,609 13,954 4,410 12,420 
(1)Reflects the total number of shares related to outstanding options and awards that have been excluded from the computation of diluted earnings per share because the impact would have been anti-dilutive.
12. NONINTEREST INCOME
Huntington earns a variety of revenue including interest and fees from customers as well as revenues from non-customers. Certain sources of revenue are recognized within interest or fee income and are outside of the scope of ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). Other sources of revenue fall within the scope of ASC 606 and are generally recognized within noninterest income. These revenues are included within various sections of the Unaudited Condensed Consolidated Financial Statements. The following table shows Huntington’s total noninterest income segregated between contracts with customers within the scope of ASC 606 and those within the scope of other GAAP Topics.
(dollar amounts in millions)Three Months Ended September 30,Nine Months Ended September 30,
Noninterest income2021202020212020
Noninterest income from contracts with customers$315 $224 $794 $652 
Noninterest income within the scope of other GAAP topics220 206 580 530 
Total noninterest income$535 $430 $1,374 $1,182 
The following table illustrates the disaggregation by operating segment and major revenue stream and reconciles disaggregated revenue to segment revenue presented in Note 17 “Segment Reporting”.
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Three Months Ended September 30, 2021
(dollar amounts in millions)Consumer & Business BankingCommercial BankingVehicle FinanceRBHPCGTreasury / OtherHuntington Consolidated
Major Revenue Streams
Service charges on deposit accounts $89 $23 $1 $1 $— $114 
Card and payment processing income85 6 — — — 91 
Trust and investment management services17 — — 44 — 61 
Insurance income12 2 — 11 — 25 
Other noninterest income8 5 1 2 8 24 
Net revenue from contracts with customers$211 $36 $2 $58 $8 $315 
Noninterest income within the scope of
other GAAP topics
91 114 2 — 13 220 
Total noninterest income$302 $150 $4 $58 $21 $535 
Three Months Ended September 30, 2020
(dollar amounts in millions)Consumer & Business BankingCommercial BankingVehicle FinanceRBHPCGTreasury / OtherHuntington Consolidated
Major Revenue Streams
Service charges on deposit accounts $54 $19 $2 $1 $— $76 
Card and payment processing income59 4 — — — 63 
Trust and investment management services13 1 — 34 — 48 
Insurance income12 2 — 11 (1)24 
Other noninterest income6 6 1 3 (3)13 
Net revenue from contracts with customers$144 $32 $3 $49 $(4)$224 
Noninterest income within the scope of
other GAAP topics
130 58 (1)(2)21 206 
Total noninterest income$274 $90 $2 $47 $17 $430 
Nine Months Ended September 30, 2021
(dollar amounts in millions)Consumer & Business BankingCommercial BankingVehicle FinanceRBHPCGTreasury / OtherHuntington Consolidated
Major Revenue Streams
Service charges on deposit accounts $201 $64 $4 $2 $— $271 
Card and payment processing income211 14 — — — 225 
Trust and investment management services45 1 — 122 — 168 
Insurance income38 5 — 33 1 77 
Other noninterest income19 14 2 7 11 53 
Net revenue from contracts with customers$514 $98 $6 $164 $12 $794 
Noninterest income within the scope of
other GAAP topics
266 255 3 1 55 580 
Total noninterest income$780 $353 $9 $165 $67 $1,374 
Nine Months Ended September 30, 2020
(dollar amounts in millions)Consumer & Business BankingCommercial BankingVehicle FinanceRBHPCGTreasury / OtherHuntington Consolidated
Major Revenue Streams
Service charges on deposit accounts $161 $54 $4 $3 $— $222 
Card and payment processing income163 11 — — — 174 
Trust and investment management services33 3 — 104 — 140 
Insurance income32 5 — 34 1 72 
Other noninterest income18 14 2 11 (1)44 
Net revenue from contracts with customers$407 $87 $6 $152 $— $652 
Noninterest income within the scope of
other GAAP topics
297 174 1 (1)59 530 
Total noninterest income$704 $261 $7 $151 $59 $1,182 
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Huntington generally provides services for customers in which it acts as principal. Payment terms and conditions vary amongst services and customers, and thus impact the timing and amount of revenue recognition. Some fees may be paid before any service is rendered and accordingly, such fees are deferred until the obligations pertaining to those fees are satisfied. Most Huntington contracts with customers are cancelable by either party without penalty or they are short-term in nature, with a contract duration of less than one year. Accordingly, most revenue deferred for the reporting period ended September 30, 2021 is expected to be earned within one year. Huntington does not have significant balances of contract assets or contract liabilities and any change in those balances during the reporting period ended September 30, 2021 was determined to be immaterial.
13. FAIR VALUES OF ASSETS AND LIABILITIES
See Note 20 “Fair Value of Assets and Liabilities” to the Consolidated Financial Statements appearing in Huntington’s 2020 Annual Report on Form 10-K for a description of the valuation methodologies used for instruments measured at fair value. Assets and liabilities measured at fair value rarely transfer between Level 1 and Level 2 measurements. There were no such transfers during the three-month and nine-month periods ended September 30, 2021 and 2020.
Assets and Liabilities measured at fair value on a recurring basis
Assets and liabilities measured at fair value on a recurring basis at September 30, 2021 and December 31, 2020 are summarized in the following tables:
Fair Value Measurements at Reporting Date UsingNetting Adjustments (1)September 30, 2021
(dollar amounts in millions)Level 1Level 2Level 3
Assets
Trading account securities:
Municipal securities$— $77 $— $— $77 
— 77 — — 77 
Available-for-sale securities:
U.S. Treasury securities5 — — — 5 
Residential CMOs— 3,734 — — 3,734 
Residential MBS— 14,337 — — 14,337 
Commercial MBS— 1,498 — — 1,498 
Other agencies— 264 — — 264 
Municipal securities— 52 3,582 — 3,634 
Private-label CMO— 102 18 — 120 
Asset-backed securities— 250 35 — 285 
Corporate debt— 1,773 — — 1,773 
Other securities/sovereign debt— 4 — — 4 
5 22,014 3,635 — 25,654 
Other securities62 24 — — 86 
Loans held for sale— 1,297 — — 1,297 
Loans held for investment— 119 20 — 139 
MSRs— — 338 — 338 
Other assets:
Derivative assets— 1,567 19 (686)900 
Assets held in trust for deferred compensation plans151 — — — 151 
Liabilities
Other liabilities:
Derivative liabilities— 1,056 7 (813)250 
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Fair Value Measurements at Reporting Date Using
Netting Adjustments (1)
December 31, 2020
(dollar amounts in millions)
Level 1
Level 2
Level 3
Assets
Trading account securities:
Municipal securities$— $62 $— $— $62 
Available-for-sale securities:
U.S. Treasury securities5 — — — 5 
Residential CMOs— 3,666 — — 3,666 
Residential MBS— 7,935 — — 7,935 
Commercial MBS— 1,163 — — 1,163 
Other agencies— 62 — — 62 
Municipal securities— 53 2,951 — 3,004 
Private-label CMO— — 9 — 9 
Asset-backed securities— 182 10 — 192 
Corporate debt— 445 — — 445 
Other securities/sovereign debt— 4 — — 4 
5 13,510 2,970 — 16,485 
Other securities59 — — — 59 
Loans held for sale— 1,198 — — 1,198 
Loans held for investment— 71 23 — 94 
MSRs— — 210 — 210 
Other assets:
Derivative assets— 1,903 43 (889)1,057 
Assets held in trust for deferred compensation plans73 — — — 73 
Liabilities
Other liabilities:
Derivative liabilities— 1,031 2 (917)116 
(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 for the three-month and nine-month periods ended September 30, 2021 and 2020, 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.
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Level 3 Fair Value Measurements
Three Months Ended September 30, 2021
Available-for-sale securitiesLoans held for investment
(dollar amounts in millions)MSRs
Derivative
instruments
Municipal
securities
Private-
label CMO
Asset-backed
securities
Opening balance$327 $23 $3,609 $18 $46 $21 
Transfers out of Level 3 (1)— (39)— — — — 
Total gains/losses for the period:
Included in earnings1 28 (1)— — — 
Included in OCI— — (8)— — — 
Purchases/originations31 — 260 — — — 
Sales— — (17)— — — 
Repayments— — — — — (1)
Settlements(21)— (261)— (11)— 
Closing balance$338 $12 $3,582 $18 $35 $20 
Change in unrealized gains or losses for the period included in earnings for assets held at end of the reporting date$1 $(12)$— $— $— $— 
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)— — — 
Level 3 Fair Value Measurements
Three Months Ended September 30, 2020
MSRs
Derivative
instruments
Available-for-sale securitiesLoans held for investment
(dollar amounts in millions)
Municipal
securities
Private-
label
CMO
Asset-backed
securities
Opening balance$172 $40 $3,102 $5 $56 $25 
Transfers out of Level 3 (1)— (64)— — — — 
Total gains/losses for the period:
Included in earnings19 72 (1)— — — 
Included in OCI— — 60 — — — 
Purchases/originations— — 154 — — — 
Repayments— — — — — (1)
Settlements— — (226)— (7)— 
Closing balance$191 $48 $3,089 $5 $49 $24 
Change in unrealized gains or losses for the period included in earnings for assets held at end of the reporting date$18 $8 $— $— $— $— 
Change in unrealized gains or losses for the period included in other comprehensive income for assets held at the end of the reporting period— — 62 — — — 
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Level 3 Fair Value Measurements
Nine Months Ended September 30, 2021
Available-for-sale securities
Loans held for investment
(dollar amounts in millions)
MSRs
Derivative
instruments
Municipal
securities
Private- label CMO
Asset-backed
securities
Opening balance$210 $41 $2,951 $9 $10 $23 
Transfers out of Level 3 (1)— (109)— — — — 
Total gains/losses for the period:
Included in earnings27 73 (1)— — — 
Included in OCI— — (13)— — — 
Purchases/originations/acquisitions162 7 1,613 8 75 — 
Sales— — (369)— — — 
Repayments— — — — — (3)
Settlements(61)— (599)1 (50)— 
Closing balance$338 $12 $3,582 $18 $35 $20 
Change in unrealized gains or losses for the period included in earnings for assets held at end of the reporting date$27 $(33)$— $— $— $— 
Change in unrealized gains or losses for the period included in other comprehensive income for assets held at the end of the reporting period— — (14)— — — 
Level 3 Fair Value Measurements
Nine Months Ended September 30, 2020
Available-for-sale securities
Loans held for investment
(dollar amounts in millions)
MSRs
Derivative
instruments
Municipal
securities
Private-
label
CMO
Asset-
backed
securities
Opening balance$7 $6 $2,999 $2 $48 $26 
Fair value election for servicing assets previously measured using the amortized method205 — — — — — 
Transfers out of Level 3 (1)— (139)— — — — 
Total gains/losses for the period:
Included in earnings(21)181 (2)— — — 
Included in OCI— — 61 — — — 
Purchases/originations— — 491 3 28 — 
Repayments— — — — — (2)
Settlements— — (460)— (27)— 
Closing balance$191 $48 $3,089 $5 $49 $24 
Change in unrealized gains or losses for the period included in earnings for assets held at end of the reporting date$(22)$42 $— $— $— $— 
Change in unrealized gains or losses for the period included in other comprehensive income for assets held at the end of the reporting period— — 64 — — — — 
(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.
The following tables 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 nine-month periods ended September 30, 2021 and 2020:
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Level 3 Fair Value Measurements
Three Months Ended September 30, 2021
Available-for-sale securities
(dollar amounts in millions)MSRs
Derivative
instruments
Municipal
securities
Classification of gains and losses in earnings:
Mortgage banking income$1 $28 $— 
Interest and fee income— — (1)
Total$1 $28 $(1)
Level 3 Fair Value Measurements
Three Months Ended September 30, 2020
Available-for-sale securities
(dollar amounts in millions)MSRs
Derivative
instruments
Municipal
securities
Classification of gains and losses in earnings:
Mortgage banking income$19 $72 $— 
Interest and fee income— — (1)
Total$19 $72 $(1)
Level 3 Fair Value Measurements
Nine Months Ended September 30, 2021
(dollar amounts in millions)MSRs
Derivative
instruments
Municipal
securities
Classification of gains and losses in earnings:
Mortgage banking income$27 $73 $— 
Interest and fee income— — (1)
Total$27 $73 $(1)
Level 3 Fair Value Measurements
Nine Months Ended September 30, 2020
Available-for-sale securities
(dollar amounts in millions)MSRs
Derivative
instruments
Municipal
securities
Classification of gains and losses in earnings:
Mortgage banking income$(21)$181 $— 
Interest and fee income— — (2)
Total$(21)$181 $(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:
September 30, 2021
(dollar amounts in millions)Total LoansLoans 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$1,297 $1,260 $37 $— $— $— 
Loans held for investment139 143 (4)3 4 (1)
December 31, 2020
(dollar amounts in millions)Total LoansLoans 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$1,198 $1,134 $64 $2 $2 $— 
Loans held for investment94 99 (5)7 8 (1)
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The following table present the net gains (losses) from fair value changes for the three-month and nine-month periods ended September 30, 2021 and 2020.
Net gains (losses) from fair value changes
(dollar amounts in millions)Three Months Ended September 30,Nine Months Ended September 30,
Assets2021202020212020
Loans held for sale (1)$(4)$13 $(30)$35 
(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 September 30, 2021 were as follows:
Fair Value Measurements UsingTotal
Gains/(Losses)
 Nine Months Ended
September 30, 2021
(dollar amounts in millions)Fair ValueQuoted Prices
In Active
Markets for
Identical Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Other
Unobservable
Inputs
(Level 3)
Collateral-dependent loans$18 $— $— $18 $(2)
Loans held for sale— — — — 1 
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 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 September 30, 2021 and December 31, 2020:
Quantitative Information about Level 3 Fair Value Measurements at September 30, 2021 (1)
(dollar amounts in millions)Fair ValueValuation TechniqueSignificant Unobservable InputRange Weighted Average
Measured at fair value on a recurring basis:
MSRs$338 Discounted cash flowConstant prepayment rate8 %-21%12 %
Spread over forward interest rate swap rates3 %-11%5 %
Derivative assets19 Consensus PricingNet market price(4)%-10%1 %
Estimated pull through %6 %-100%90 %
Municipal securities3,582 Discounted cash flowDiscount rate— %-2%1 %
Asset-backed securities35 Cumulative default— %-64%5 %
Loss given default5 %-90%24 %
Measured at fair value on a nonrecurring basis:
Collateral-dependent loans18 Appraisal valueN/AN/A
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Quantitative Information about Level 3 Fair Value Measurements at December 31, 2020 (1)
(dollar amounts in millions)Fair ValueValuation TechniqueSignificant Unobservable InputRangeWeighted Average
Measured at fair value on a recurring basis:
MSRs$210 Discounted cash flowConstant prepayment rate8 %-24%17 %
Spread over forward interest rate swap rates4 %-11%5 %
Derivative assets43 Consensus PricingNet market price(4)%-11%3 %
Estimated pull through %1 %-100%88 %
Municipal securities2,951 Discounted cash flowDiscount rate— %1%1 %
Asset-backed securities10 Cumulative default— %39%4 %
Loss given default5 %80%25 %
Measured at fair value on a nonrecurring basis:
Collateral-dependent loans144 Appraisal valueN/ANA
(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.
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.
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Fair values of financial instruments
The following table provides the carrying amounts and estimated fair values of Huntington’s financial instruments at September 30, 2021 and December 31, 2020:
September 30, 2021
(dollar amounts in millions)Amortized CostLower of Cost or Market
Fair Value or
Fair Value Option
Total Carrying AmountEstimated Fair Value
Financial Assets
Cash and short-term assets$10,188 $— $— $10,188 $10,188 
Trading account securities— — 77 77 77 
Available-for-sale securities— — 25,654 25,654 25,654 
Held-to-maturity securities12,455 — — 12,455 12,619 
Other securities563 — 86 649 649 
Loans held for sale— 38 1,297 1,335 1,335 
Net loans and leases (1)108,321 — 139 108,460 108,385 
Derivative assets— — 900 900 900 
Assets held in trust for deferred compensation plans— — 151 151 151 
Financial Liabilities
Deposits141,898 — — 141,898 142,261 
Short-term borrowings435 — — 435 435 
Long-term debt7,779 — — 7,779 7,908 
Derivative liabilities— — 250 250 250 
December 31, 2020
(dollar amounts in millions)Amortized CostLower of Cost or Market
Fair Value or
Fair Value Option
Total Carrying AmountEstimated Fair Value
Financial Assets
Cash and short-term assets$6,712 $— $— $6,712 $6,712 
Trading account securities— — 62 62 62 
Available-for-sale securities— — 16,485 16,485 16,485 
Held-to-maturity securities8,861 — — 8,861 9,255 
Other securities359 — 59 418 418 
Loans held for sale— 77 1,198 1,275 1,275 
Net loans and leases (1)79,700 — 94 79,794 80,477 
Derivative assets— — 1,057 1,057 1,057 
Assets held in trust for deferred compensation plans— — 73 73 73 
Financial Liabilities
Deposits98,948 — — 98,948 99,021 
Short-term borrowings183 — — 183 183 
Long-term debt8,352 — — 8,352 8,568 
Derivative liabilities— — 116 116 116 
(1)Includes collateral-dependent loans.
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The following table presents the level in the fair value hierarchy for the estimated fair values at September 30, 2021 and December 31, 2020:
Estimated Fair Value Measurements at Reporting Date UsingNetting Adjustments (1) September 30, 2021
(dollar amounts in millions)Level 1Level 2Level 3
Financial Assets
Trading account securities$— $77 $— $77 
Available-for-sale securities5 22,014 3,635 25,654 
Held-to-maturity securities— 12,619 — 12,619 
Other securities (2)62 24 — 86 
Loans held for sale— 1,297 38 1,335 
Net loans and direct financing leases— 119 108,266 108,385 
Derivative assets— 1,567 19 $(686)900 
Financial Liabilities
Deposits— 137,142 5,119 142,261 
Short-term borrowings— 435 — 435 
Long-term debt— 7,147 761 7,908 
Derivative liabilities— 1,056 7 (813)250 
Estimated Fair Value Measurements at Reporting Date UsingNetting Adjustments (1)December 31, 2020
(dollar amounts in millions)Level 1Level 2Level 3
Financial Assets
Trading account securities$— $62 $— $62 
Available-for-sale securities5 13,510 2,970 16,485 
Held-to-maturity securities— 9,255 — 9,255 
Other securities (2)59 — — 59 
Loans held for sale— 1,198 77 1,275 
Net loans and direct financing leases— 71 80,406 80,477 
Derivative assets— 1,903 43 $(889)1,057 
Financial Liabilities
Deposits— 96,656 2,365 99,021 
Short-term borrowings— 183 — 183 
Long-term debt— 7,999 569 8,568 
Derivative liabilities— 1,031 2 (917)116 
(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.
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 FRB, 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.
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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, 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.
14. DERIVATIVE FINANCIAL INSTRUMENTS
Derivative financial instruments are recorded in the Unaudited Condensed Consolidated Balance Sheets as either an asset or a liability (in other assets or other liabilities, respectively) and measured at fair value.
Derivative financial instruments can be designated as accounting hedges under GAAP. Designating a derivative as an accounting hedge allows Huntington to recognize gains and losses on the hedging instruments in the income statement line item where the gains and losses on the hedged item are recognized. Gains and losses on derivatives that are not designated in an effective hedge relationship under GAAP immediately impact earnings within the period they occur.
The following table presents the fair values and notional values of all derivative instruments included in the Unaudited Condensed Consolidated Balance Sheets at September 30, 2021 and December 31, 2020. Amounts in the table below are presented gross without the impact of any net collateral arrangements.
September 30, 2021December 31, 2020
(dollar amounts in millions)Notional ValueAssetLiabilityNotional ValueAssetLiability
Derivatives designated as Hedging Instruments
Interest rate contracts$20,053 $413 $12 $27,056 $719 $51 
Foreign exchange contracts209 — — — — — 
Derivatives not designated as Hedging Instruments
Interest rate contracts54,089 772 665 44,495 1,074 828 
Foreign exchange contracts3,568 35 30 2,718 46 47 
Commodities contracts1,255 353 351 1,952 107 103 
Equity contracts705 13 5 517 — 4 
Total Contracts$79,879 $1,586 $1,063 $76,738 $1,946 $1,033 
The following table presents the amount of gain or loss recognized in income for derivatives not designated as hedging instruments under ASC Subtopic 815-10 in the Unaudited Condensed Consolidated Income Statement for the three-month and nine-month periods ended September 30, 2021 and 2020, respectively.
Location of Gain or (Loss) Recognized in Income
on Derivative
Amount of Gain or (Loss) Recognized in Income on Derivative
Three Months Ended
September 30,		Nine Months Ended
September 30,
(dollar amounts in millions)2021202020212020
Interest rate contracts:
CustomerCapital markets fees$13 $10 $37 $39 
Mortgage bankingMortgage banking income5 47 (24)109 
Interest rate floorsInterest and fee income on loans and leases(4)— (8)— 
Interest rate capsInterest expense on long-term debt— — 89 — 
Foreign exchange contractsCapital markets fees9 7 22 18 
Commodities contractsCapital markets fees(1)— (1)2 
Equity contractsOther noninterest expense(2)(1)(6)(3)
Total$20 $63 $109 $165 
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Derivatives used in asset and liability management activities
Huntington engages in balance sheet hedging activity, principally for asset and liability management purposes. Balance sheet hedging activity is generally arranged to receive hedge accounting treatment that can be classified as either fair value or cash flow hedges. Fair value hedges are executed to hedge changes in fair value of outstanding fixed-rate debt and investment securities caused by fluctuations in market interest rates. Cash flow hedges are executed to modify interest rate characteristics of designated commercial loans in order to reduce the impact of changes in future cash flows due to market interest rate changes.
The following table presents the gross notional values of derivatives used in Huntington’s asset and liability management activities at September 30, 2021 and December 31, 2020, identified by the underlying interest rate-sensitive instruments.
September 30, 2021
(dollar amounts in millions)Fair Value HedgesCash Flow HedgesEconomic HedgesTotal
Instruments associated with:
Investment securities$7,372 $— $— $7,372 
Loans— 7,925 271 8,196 
Long-term debt4,756 — — 4,756 
Total notional value at September 30, 2021$12,128 $7,925 $271 $20,324 
December 31, 2020
(dollar amounts in millions)Fair Value HedgesCash Flow HedgesEconomic HedgesTotal
Instruments associated with:
Investment securities$3,484 $— $— $3,484 
Loans— 17,375 1,271 18,646 
Long-term debt6,197 — 5,000 11,197 
Total notional value at December 31, 2020$9,681 $17,375 $6,271 $33,327 
These derivative financial instruments were entered into for the purpose of managing the interest rate risk of assets and liabilities. Net amounts receivable or payable on contracts hedging either interest earning assets or interest bearing liabilities were accrued as an adjustment to either interest income or interest expense. Adjustments to interest income were also recorded for the amounts related to the amortization of floors and forward-starting floors that were excluded from the hedge effectiveness, changes in the fair value of economic hedges, as well as the amounts related to terminated hedges reclassified from AOCI. The net amounts resulted in an increase to net interest income of $61 million and $82 million for the three-month periods ended September 30, 2021, and 2020, respectively. For the nine-month periods ended September 30, 2021, and 2020, the net amounts resulted in an increase to net interest income of $291 million and $151 million, respectively.
Fair Value Hedges
The changes in fair value of the fair value hedges are recorded through earnings and offset against changes in the fair value of the hedged item.
Huntington has designated $7.0 billion of interest rate swaps as fair value hedges of fixed-rate investment securities using the last-of-layer method. This approach allows the Company to designate as the hedged item a stated amount of the assets that are not expected to be affected by prepayments, defaults and other factors affecting the timing and amount of cash flows. The fair value basis adjustment on our hedged mortgage-backed securities is included in available-for-sale securities on our Unaudited Condensed Consolidated Statements of Financial Condition. Huntington has also designated $0.4 billion of interest rate swaps as fair value hedges of fixed-rate corporate bonds.
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The following table presents the change in fair value for derivatives designated as fair value hedges as well as the offsetting change in fair value on the hedged item for the three-month and nine-month periods ended September 30, 2021 and 2020.
Three Months Ended
September 30,		Nine Months Ended
September 30,
(dollar amounts in millions)2021202020212020
Interest rate contracts
Change in fair value of interest rate swaps hedging investment securities (1)$2 $— $39 $(1)
Change in fair value of hedged investment securities (1)— — (40)1 
Change in fair value of interest rate swaps hedging long-term debt (2)(22)(36)(95)159 
Change in fair value of hedged long term debt (2)22 35 96 (160)
(1)Recognized in Interest income—available-for-sale securities—taxable in the Unaudited Condensed Consolidated Statements of Income
(2)Recognized in Interest expense—long-term debt in the Unaudited Condensed Consolidated Statements of Income.
As of September 30, 2021, and December 31, 2020, the following amounts were recorded on the balance sheet related to cumulative basis adjustments for fair value hedges.
Amortized CostCumulative Amount of Fair Value Hedging Adjustment To Hedged Items
(dollar amounts in millions)September 30, 2021December 31, 2020September 30, 2021December 31, 2020
Assets
Investment securities (1)$17,630 $6,637 $2 $3 
Liabilities
Long-term debt4,882 6,383 135 232 
(1)Amounts include the amortized cost basis of closed portfolios used to designate hedging relationships in which the hedged item is the last layer expected to be remaining at the end of the hedging relationship. As of September 30, 2021, the amortized cost basis of the closed portfolios used in these hedging relationships was $17.2 billion, the cumulative basis adjustments associated with these hedging relationships was $1 million, and the amounts of the designated hedging instruments were $7.0 billion.
The cumulative amount of fair value hedging adjustments remaining for any hedged assets and liabilities for which hedge accounting has been discontinued was $(35) million and $(62) million at September 30, 2021 and December 31, 2020, respectively.
Cash Flow Hedges
At September 30, 2021, Huntington has $7.9 billion of interest rate floors, floor spreads and swaps. These are designated as cash flow hedges for variable rate commercial loans indexed to LIBOR. The change in the fair value of a derivative instrument designated as a cash flow hedge is initially recognized in OCI and is reclassified into income when the hedged item impacts earnings. The initial premium paid for the interest rate floor contracts represents the time value of the contracts and is not included in the measurement of hedge effectiveness. Any change in fair value related to time value is recognized in OCI. The initial premium paid is amortized on a straight line basis as a reduction to interest income over the contractual life of these contracts.
Gains and (losses) on interest rate floors, floor spreads, and swaps recognized in other comprehensive income were $(29) million and $(40) million for the three-month periods ended September 30, 2021 and 2020, respectively. For the nine-month periods ended September 30, 2021 and 2020, gains and losses on interest rate floors and swaps recognized in other comprehensive income were $(102) million and $279 million, respectively.
Net investment Hedges
Huntington has entered into forward foreign exchange contracts to hedge the value of the Company’s investments in non-U.S. dollar functional currency entities. The total notional amount of forward foreign exchange contracts at September 30, 2021 was $209 million.
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Derivatives used in mortgage banking activities
Mortgage loan origination hedging activity
Huntington’s mortgage origination hedging activity is related to economically hedging Huntington’s mortgage pricing commitments to customers and the secondary sale to third parties. The value of a newly originated mortgage is not firm until the interest rate is committed or locked. Forward commitments to sell economically hedge the possible loss on interest rate lock commitments due to interest rate change. The net asset position of these derivatives at September 30, 2021 and December 31, 2020 were $34 million and $26 million, respectively. At September 30, 2021 and December 31, 2020, Huntington had commitments to sell residential real estate loans of $2.7 billion and $2.9 billion, respectively. These contracts mature in less than one year.
MSR hedging activity
Huntington’s MSR economic hedging activity uses securities and derivatives to manage the value of the MSR asset and to mitigate the various types of risk inherent in the MSR asset, including risks related to duration, basis, convexity, volatility, and yield curve. The hedging instruments include forward commitments, TBA securities, Treasury futures contracts, interest rate swaps, and options on interest rate swaps.
The notional value of the derivative financial instruments, the corresponding net asset (liability) position recognized in other assets and/or other liabilities, and net trading gains (losses) related to MSR hedging activity is summarized in the following table:

(dollar amounts in millions)September 30,
2021		December 31,
2020
Notional value$1,153 $1,170 
Trading assets17 43 

Three Months Ended
September 30, 2021		Nine Months Ended
September 30, 2021
(dollar amounts in millions)2021202020212020
Trading gains$(4)$(1)$(28)$61 
MSR hedging trading assets and liabilities are included in other assets and other liabilities, respectively, in the Unaudited Condensed Balance Sheets. Trading gains (losses) are included in mortgage banking income in the Unaudited Condensed Consolidated Statement of Income.
Derivatives used in customer related activities
Various derivative financial instruments are offered to enable customers to meet their financing and investing objectives and for their risk management purposes. Derivative financial instruments used in trading activities consist of commodity, interest rate, and foreign exchange contracts. Huntington enters into offsetting third-party contracts with approved, reputable counterparties with substantially matching terms and currencies in order to economically hedge significant exposure related to derivatives used in trading activities.
The interest rate or price risk of customer derivatives is mitigated by entering into similar derivatives having offsetting terms with other counterparties. The credit risk to these customers is evaluated and included in the calculation of fair value. Foreign currency derivatives help the customer hedge risk and reduce exposure to fluctuations in exchange rates. Transactions are primarily in liquid currencies with Canadian dollars and Euros comprising a majority of all transactions. Commodity derivatives help the customer hedge risk and reduce exposure to fluctuations in the price of various commodities. Hedging of energy-related products and base metals comprise the majority of these transactions.
The net fair values of these derivative financial instruments, for which the gross amounts are included in other assets or other liabilities at both September 30, 2021 and December 31, 2020, were $53 million and $70 million, respectively. The total notional values of derivative financial instruments used by Huntington on behalf of customers, including offsetting derivatives, were $53 billion and $37 billion at September 30, 2021 and December 31, 2020, respectively. Huntington’s credit risk from customer derivatives was $787 million and $882 million at the same dates, respectively.
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Financial assets and liabilities that are offset in the Unaudited Condensed Consolidated Balance Sheets
Huntington records derivatives at fair value as further described in Note 13 “Fair Values of Assets and Liabilities”.
Derivative balances are presented on a net basis taking into consideration the effects of legally enforceable master netting agreements. Additionally, collateral exchanged with counterparties is also netted against the applicable derivative fair values. Huntington enters into derivative transactions with two primary groups: broker-dealers and banks, and Huntington’s customers. Different methods are utilized for managing counterparty credit exposure and credit risk for each of these groups.
Huntington enters into transactions with broker-dealers and banks for various risk management purposes. These types of transactions generally are high dollar volume. Huntington enters into collateral and master netting agreements with these counterparties, and routinely exchanges cash and high quality securities collateral. Huntington enters into transactions with customers to meet their financing, investing, payment and risk management needs. These types of transactions generally are low dollar volume. Huntington enters into master netting agreements with customer counterparties; however, collateral is generally not exchanged with customer counterparties.
In addition to the customer derivative credit exposure, aggregate credit risk associated with broker-dealer and bank derivative transactions, net of collateral that has been pledged by the counterparty, was $113 million and $175 million at September 30, 2021 and December 31, 2020, respectively. The credit risk associated with derivatives is calculated after considering master netting agreements.
At September 30, 2021, Huntington pledged $486 million of investment securities and cash collateral to counterparties, while other counterparties pledged $264 million of investment securities and cash collateral to Huntington to satisfy collateral netting agreements. In the event of credit downgrades, Huntington would not be required to provide additional collateral.
The following tables present the gross amounts of these assets and liabilities with any offsets to arrive at the net amounts recognized in the Unaudited Condensed Consolidated Balance Sheets at September 30, 2021 and December 31, 2020.

Offsetting of Financial Assets and Derivative Assets
Gross amounts
offset in the unaudited
condensed
consolidated
balance sheets
Net amounts of
assets
presented in
the unaudited condensed
consolidated
balance sheets
Gross amounts not offset in the
unaudited condensed consolidated
balance sheets
(dollar amounts in millions)
Gross amounts
of recognized
assets
Financial
instruments
Cash collateral
received
Net amount
September 30, 2021$1,586 $(686)$900 $(81)$(61)$758 
December 31, 20201,946 (889)1,057 (112)(142)803 
Offsetting of Financial Liabilities and Derivative Liabilities
Gross amounts
offset in the unaudited
condensed
consolidated
balance sheets
Net amounts of
liabilities
presented in
the unaudited condensed
consolidated
balance sheets
Gross amounts not offset in the
unaudited condensed consolidated
balance sheets
(dollar amounts in millions)
Gross amounts
of recognized
liabilities
Financial
instruments
Cash collateral
delivered
Net amount
September 30, 2021$1,063 $(813)$250 $— $(225)$25 
December 31, 20201,033 (917)116 (9)(105)2 
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15. VIEs
Unconsolidated VIEs
The following tables provide a summary of the assets and liabilities included in Huntington’s Unaudited Condensed Consolidated Financial Statements, as well as the maximum exposure to losses, associated with its interests related to unconsolidated VIEs for which Huntington holds an interest in, but is not the primary beneficiary, of the VIE at September 30, 2021, and December 31, 2020:
September 30, 2021
(dollar amounts in millions)
Total Assets
Total Liabilities
Maximum Exposure to Loss
Trust Preferred Securities
$14 $256 $— 
Affordable Housing Tax Credit Partnerships
1,436 774 1,436 
Other Investments
426 145 426 
Total
$1,876 $1,175 $1,862 
December 31, 2020
(dollar amounts in millions)Total AssetsTotal LiabilitiesMaximum Exposure to Loss
Trust Preferred Securities$14 $252 $— 
Affordable Housing Tax Credit Partnerships956 500 956 
Other Investments308 72 308 
Total$1,278 $824 $1,264 
Trust-Preferred Securities
Huntington has certain wholly-owned trusts whose assets, liabilities, equity, income, and expenses are not included within Huntington’s Unaudited Condensed Consolidated Financial Statements. These trusts have been formed for the sole purpose of issuing trust-preferred securities, from which the proceeds are then invested in Huntington junior subordinated debentures, which are reflected in Huntington’s Unaudited Condensed Consolidated Balance Sheet as long-term debt. The trust securities are the obligations of the trusts, and as such, are not consolidated within Huntington’s Unaudited Condensed Consolidated Financial Statements.
A list of trust preferred securities outstanding at September 30, 2021 follows:
(dollar amounts in millions)Rate
Principal amount of
subordinated note/
debenture issued to trust (1)
Investment in
unconsolidated
subsidiary
Huntington Capital I0.83 %(2)$70 $7 
Huntington Capital II0.76 (3)32 3 
Sky Financial Capital Trust III1.53 (4)72 2 
Sky Financial Capital Trust IV1.53 (4)74 2 
First Place Capital Trust I3.00 (5)4 — 
First Place Capital Trust II6.45 4 — 
Total$256 $14 
(1)Represents the principal amount of debentures issued to each trust, including unamortized original issue discount.
(2)Variable effective rate at September 30, 2021, based on three-month LIBOR +0.70%.
(3)Variable effective rate at September 30, 2021, based on three-month LIBOR +0.625%.
(4)Variable effective rate at September 30, 2021, based on three-month LIBOR +1.40%.
(5)Variable effective rate at September 30, 2021, based on three-month LIBOR +2.85%.
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Each issue of the junior subordinated debentures has an interest rate equal to the corresponding trust securities distribution rate. Huntington has the right to defer payment of interest on the debentures at any time, or from time-to-time for a period not exceeding five years provided that no extension period may extend beyond the stated maturity of the related debentures. During any such extension period, distributions to the trust securities will also be deferred and Huntington’s ability to pay dividends on its common stock will be restricted. Periodic cash payments and payments upon liquidation or redemption with respect to trust securities are guaranteed by Huntington to the extent of funds held by the trusts. The guarantee ranks subordinate and junior in right of payment to all indebtedness of the Company to the same extent as the junior subordinated debt. The guarantee does not place a limitation on the amount of additional indebtedness that may be incurred by Huntington.
Affordable Housing Tax Credit Partnerships
Huntington makes certain equity investments in various limited partnerships that sponsor affordable housing projects utilizing the LIHTC pursuant to Section 42 of the Internal Revenue Code. The purpose of these investments is to achieve a satisfactory return on capital, to facilitate the sale of additional affordable housing product offerings, and to assist in achieving goals associated with the Community Reinvestment Act. The primary activities of the limited partnerships include the identification, development, and operation of multi-family housing that is leased to qualifying residential tenants. Generally, these types of investments are funded through a combination of debt and equity.
Huntington uses the proportional amortization method to account for a majority of its investments in these entities. These investments are included in other assets. Investments that do not meet the requirements of the proportional amortization method are accounted for using the equity method. Investment losses related to these investments are included in noninterest income in the Unaudited Condensed Consolidated Statements of Income.
The following table presents the balances of Huntington’s affordable housing tax credit investments and related unfunded commitments at September 30, 2021 and December 31, 2020.
(dollar amounts in millions)September 30,
2021		December 31,
2020
Affordable housing tax credit investments$2,134 $1,568 
Less: amortization(698)(612)
Net affordable housing tax credit investments$1,436 $956 
Unfunded commitments$774 $500 
The following table presents other information relating to Huntington’s affordable housing tax credit investments for the three-month and nine-month periods ended September 30, 2021 and 2020.
Three Months Ended
September 30,		Nine Months Ended
September 30,
(dollar amounts in millions)2021202020212020
Tax credits and other tax benefits recognized$36 $29 $113 $88 
Proportional amortization expense included in provision for income taxes34 25 92 75 
There were no sales of affordable housing tax credit investments during the three-month and nine-month periods ended September 30, 2021 and 2020. There was no impairment recognized for the three-month and nine-month periods ended September 30, 2021 and 2020.
Other investments
Other investments determined to be VIE’s include investments in Small Business Investment Companies, Historic Tax Credit Investments, certain equity method investments, renewable energy financings, and other miscellaneous investments.
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16. COMMITMENTS AND CONTINGENT LIABILITIES
Commitments to extend credit
In the ordinary course of business, Huntington makes various commitments to extend credit that are not reflected in the Unaudited Condensed Consolidated Financial Statements. The contract amounts of these financial agreements at September 30, 2021 and December 31, 2020, were as follows:
(dollar amounts in millions)September 30,
2021		December 31,
2020
Contract amount representing credit risk
Commitments to extend credit:
Commercial
$28,226 $20,701 
Consumer
18,982 14,808 
Commercial real estate
2,576 1,313 
Standby letters of credit and guarantees on industrial revenue bonds904 581 
Commercial letters of credit
15 21 
Commitments to extend credit generally have fixed expiration dates, are variable-rate, and contain clauses that permit Huntington to terminate or otherwise renegotiate the contracts in the event of a significant deterioration in the customer’s credit quality. These arrangements normally require the payment of a fee by the customer, the pricing of which is based on prevailing market conditions, credit quality, probability of funding, and other relevant factors. Since many of these commitments are expected to expire without being drawn upon, the contract amounts are not necessarily indicative of future cash requirements. The interest rate risk arising from these financial instruments is insignificant as a result of their predominantly short-term, variable-rate nature. Collateral to secure any funding of these commitments predominately consists of residential and commercial real estate mortgage loans.
Standby letters-of-credit and guarantees on industrial revenue bonds are conditional commitments issued to guarantee the performance of a customer to a third-party. These guarantees are primarily issued to support public and private borrowing arrangements, including commercial paper, bond financing, and similar transactions. Most of these arrangements mature within two years. Since the conditions under which Huntington is required to fund these commitments may not materialize, the cash requirements are expected to be less than the total outstanding commitments. The carrying amount of deferred revenue associated with these guarantees was $6 million and $5 million at September 30, 2021 and December 31, 2020, respectively.
Commercial letters-of-credit represent short-term, self-liquidating instruments that facilitate customer trade transactions and generally have maturities of no longer than 90 days. The goods or cargo being traded normally secure these instruments.
Litigation and Regulatory Matters
In the ordinary course of business, Huntington is routinely a defendant in or party to pending and threatened legal and regulatory actions and proceedings.
In view of the inherent difficulty of predicting the outcome of such matters, particularly where the claimants seek very large or indeterminate damages or where the matters present novel legal theories or involve a large number of parties, Huntington generally cannot predict what the eventual outcome of the pending matters will be, what the timing of the ultimate resolution of these matters will be, or what the eventual loss, fines or penalties related to each matter may be.
Huntington establishes an accrued liability when those matters present loss contingencies that are both probable and estimable. In such cases, there may be an exposure to loss in excess of any amounts accrued. Huntington thereafter continues to monitor the matter for further developments that could affect the amount of the accrued liability that has been previously established.
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For certain matters, Huntington is able to estimate a range of possible loss. In cases in which Huntington possesses information to estimate a range of possible loss, that estimate is aggregated and disclosed below. There may be other matters for which a loss is probable or reasonably possible but such an estimate of the range of possible loss may not be possible. For those matters where an estimate of the range of possible loss is possible, management currently estimates the aggregate range of reasonably possible loss is $0 to $15 million at September 30, 2021 in excess of the accrued liability (if any) related to those matters. This estimated range of possible loss is based upon currently available information and is subject to significant judgment, a variety of assumptions, and known and unknown uncertainties. The matters underlying the estimated range will change from time to time, and actual results may vary significantly from the current estimate. The estimated range of possible loss does not represent Huntington’s maximum loss exposure.
Based on current knowledge, management does not believe that loss contingencies arising from pending matters will have a material adverse effect on the consolidated financial position of Huntington. Further, management believes that amounts accrued are adequate to address Huntington’s contingent liabilities. However, in light of the inherent uncertainties involved in these matters, some of which are beyond Huntington’s control, and the large or indeterminate damages sought in some of these matters, an adverse outcome in one or more of these matters could be material to Huntington’s results of operations for any particular reporting period.
17. SEGMENT REPORTING
Huntington’s business segments are based on our internally-aligned segment leadership structure, which is how management monitors results and assesses performance. The Company has four major business segments: Consumer and Business Banking, Commercial Banking, Vehicle Finance, and Regional Banking and The Huntington Private Client Group (RBHPCG). The Treasury / Other function includes technology and operations, other unallocated assets, liabilities, revenue, and expense. For a description of our business segments, see Note 26 - Segment Reporting to the Consolidated Financial Statements appearing in Huntington’s 2020 Annual Report on Form 10-K.
Listed in the following tables is certain operating basis financial information reconciled to Huntington’s September 30, 2021, December 31, 2020, and September 30, 2020, reported results by business segment.
Three Months Ended September 30,
Income Statements
Consumer & Business BankingCommercial BankingVehicle FinanceRBHPCGTreasury / OtherHuntington Consolidated
(dollar amounts in millions)
2021
Net interest income
$483 $416 $123 $42 $96 $1,160 
Provision for credit losses(7)(34)(25)4 — (62)
Noninterest income
302 150 4 58 21 535 
Noninterest expense
637 247 48 84 273 1,289 
Provision (benefit) for income taxes
33 73 22 3 (41)90 
Income attributable to non-controlling interest— 1 — — — 1 
Net income (loss) attributable to Huntington Bancshares Inc$122 $279 $82 $9 $(115)$377 
2020
Net interest income
$367 $221 $110 $39 $80 $817 
Provision for credit losses87 87 (12)15 — 177 
Noninterest income
274 90 2 47 17 430 
Noninterest expense
450 135 34 56 37 712 
Provision (benefit) for income taxes
22 19 19 3 (8)55 
Income attributable to non-controlling interest— — — — — — 
Net income attributable to Huntington Bancshares Inc$82 $70 $71 $12 $68 $303 
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Nine months ended September 30,
Income StatementsConsumer & Business BankingCommercial BankingVehicle FinanceRBHPCGTreasury / OtherHuntington Consolidated
(dollar amounts in millions)
2021
Net interest income$1,187 $873 $340 $113 $457 $2,970 
Provision for credit losses57 107 (77)2 — 89 
Noninterest income780 353 9 165 67 1,374 
Noninterest expense1,617 553 119 217 648 3,154 
Provision (benefit) for income taxes62 119 64 12 (51)206 
Income attributable to non-controlling interest— 1 — — — 1 
Net income (loss) attributable to Huntington Bancshares Inc
$231 $446 $243 $47 $(73)$894 
2020
Net interest income$1,099 $693 $316 $122 $169 $2,399 
Provision for credit losses200 611 118 16 — 945 
Noninterest income704 261 7 151 59 1,182 
Noninterest expense1,288 400 103 181 67 2,039 
Provision (benefit) for income taxes66 (12)21 16 5 96 
Income attributable to non-controlling interest— — — — — — 
Net income (loss) attributable to Huntington Bancshares Inc
$249 $(45)$81 $60 $156 $501 
Assets atDeposits at
(dollar amounts in millions)September 30,
2021		December 31,
2020		September 30,
2021		December 31,
2020
Consumer & Business Banking$41,656 $30,758 $94,439 $60,910 
Commercial Banking54,671 36,311 32,531 24,766 
Vehicle Finance20,122 19,789 1,437 722 
RBHPCG8,114 7,064 9,025 7,635 
Treasury / Other49,315 29,116 4,466 4,915 
Total
$173,878 $123,038 $141,898 $98,948 

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Item 3: Quantitative and Qualitative Disclosures about Market Risk
Quantitative and qualitative disclosures for the current period can be found in the Market Risk section of this report, which includes changes in market risk exposures from disclosures presented in Huntington’s 2020 Annual Report on Form 10-K.
Item 4: Controls and Procedures
Disclosure Controls and Procedures
Huntington maintains disclosure controls and procedures designed to ensure that the information required to be disclosed in the reports that it files or submits under the Securities Exchange Act of 1934, as amended (the Exchange Act), are recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Huntington’s management, with the participation of its Chief Executive Officer and the Chief Financial Officer, evaluated the effectiveness of Huntington’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of September 30, 2021. Based upon such evaluation, Huntington’s Chief Executive Officer and Chief Financial Officer have concluded that, as of September 30, 2021, Huntington’s disclosure controls and procedures were effective.
TCF was acquired on June 9, 2021. We have extended oversight and monitoring processes that support internal control over financial reporting to include the acquired operations. There have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended September 30, 2021, that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting.
PART II. OTHER INFORMATION
In accordance with the instructions to Part II, the other specified items in this part have been omitted because they are not applicable or the information has been previously reported.
Item 1: Legal Proceedings
Information required by this item is set forth in Note 16 “Commitments and Contingent Liabilities” of the Notes to Unaudited Condensed Consolidated Financial Statements under the caption “Litigation and Regulatory Matters” and is incorporated into this Item by reference.
Item 1A: Risk Factors
Information required by this item is set forth in Part 1 Item 2- Management’s Discussion and Analysis of Financial Condition and Results of Operations of this report and incorporated herein by reference.
2021 3Q Form 10-Q 97

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
(a) and (b)
Not Applicable
(c)
PeriodTotal Number of Shares Purchased (1)Average
Price Paid
Per Share		Maximum Number of Shares (or Approximate Dollar Value) that May Yet Be Purchased Under the Plans or Programs (2)
July 1, 2021 to July 31, 2021— $— $800,000,000 
August 1, 2021 to August 31, 202123,360,291 14.94 399,250,131 
September 1, 2021 to September 30, 202110,048,565 15.05 300,051,032 
Total33,408,856 $14.96 $300,051,032 
(1)The reported shares were repurchased pursuant to Huntington’s publicly-announced share repurchase authorization.
(2)The number shown represents, as of the end of each period, the approximate dollar value of Common Stock that may yet be purchased under publicly-announced share repurchase authorizations. The shares may be purchased, from time-to-time, depending on market conditions.
On July 21, 2021, the Board authorized the repurchase of up to $800 million of common shares over the next four quarters. During the 2021 third quarter, Huntington repurchased a total of 33.4 million shares at a weighted average share price of $14.96, with 23.5 million shares repurchased under the accelerated share repurchase program discussed below, and the remaining 9.9 million shares through open-market repurchases.

98 Huntington Bancshares Incorporated

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Item 6. Exhibits
Exhibit Index
This report incorporates by reference the documents listed below that we have previously filed with the SEC. The SEC allows us to incorporate by reference information in this document. The information incorporated by reference is considered to be a part of this document, except for any information that is superseded by information that is included directly in this document.
The SEC maintains an Internet web site that contains reports, proxy statements, and other information about issuers, like us, who file electronically with the SEC. The address of the site is http://www.sec.gov. The reports and other information filed by us with the SEC are also available free of charge at our internet web site. The address of the site is http://www.huntington.com. Except as specifically incorporated by reference into this Quarterly Report on Form 10-Q, information on those web sites is not part of this report. You also should be able to inspect reports, proxy statements, and other information about us at the offices of the Nasdaq National Market at 33 Whitehall Street, New York, New York 10004.
Exhibit
Number		Document DescriptionReport or Registration StatementSEC File or
Registration
Number		Exhibit
Reference
3.1
3.2
3.3
3.4
3.5
3.6
3.7
3.8
10.1
4.1(P)Instruments defining the Rights of Security Holders—reference is made to Articles Fifth, Eighth, and Tenth of Articles of Restatement of Charter, as amended and supplemented. Instruments defining the rights of holders of long-term debt will be furnished to the Securities and Exchange Commission upon request.
31.1
31.2
32.1
32.2
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101.SCH*Inline XBRL Taxonomy Extension Schema Document
101.CAL*Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*Inline XBRL Taxonomy Extension Presentation Linkbase Document
*Filed herewith
**Furnished herewith
***
2021 3Q Form 10-Q 99

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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
HUNTINGTON BANCSHARES INCORPORATED
(Registrant)
 
Date:November 5, 2021 /s/ Stephen D. Steinour
 Stephen D. Steinour
 Chairman, President, and Chief Executive Officer (Principal Executive Officer)
Date:November 5, 2021 /s/ Zachary Wasserman
 Zachary Wasserman
 
Chief Financial Officer
(Principal Financial Officer)

100 Huntington Bancshares Incorporated