Huntington Bancshares 10Q 2023 Q2 Quarterly report

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 June 30, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

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)	HBANP	NASDAQ
Depositary Shares (each representing a 1/1000th interest in a share of 5.70% Series I Non-Cumulative, perpetual preferred stock)	HBANM	NASDAQ
Depositary Shares (each representing a 1/40th interest in a share of 6.875% Series J Non-Cumulative, perpetual preferred stock)	HBANL	NASDAQ
Common Stock—Par Value $0.01 per Share	HBAN	NASDAQ

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 Filer

Accelerated 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 1,447,882,434 shares of the registrant’s common stock ($0.01 par value) outstanding on June 30, 2023.

HUNTINGTON BANCSHARES INCORPORATED

INDEX


Glossary of Acronyms and Terms			5
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)			41
Consolidated Balance Sheets at June 30 , 2023 and December 31, 2022			41
Consolidated Statements of Income for the three and six months ended June 30 , 2023 and 2022			42
Consolidated Statements of Comprehensive Income for the three and six months ended June 30 , 2023 and 2022			43
Consolidated Statements of Changes in Shareholders’ Equity for the three and six months ended June 30 , 2023 and 2022			44
Consolidated Statements of Cash Flows for the six months ended June 30 , 2023 and 2022			46
Notes to Unaudited Consolidated Financial Statements			48
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			7
Executive Overview			7
Discussion of Results of Operations			9
Risk Management and Capital:			18
Credit Risk			18
Market Risk			25
Liquidity Risk			28
Operational Risk			31
Compliance Risk			32
Capital			32
Business Segment Discussion			33
Additional Disclosures			38
Item 3. Quantitative and Qualitative Disclosures about Market Risk			89
Item 4. Controls and Procedures			89
PART II. OTHER INFORMATION
Item 1. Legal Proceedings			89
Item 1A. Risk Factors			89
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			89
Item 5. Other Information			90
Item 6. Exhibits			91
Signatures			92

4 Huntington Bancshares Incorporated

Table of Contents

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

AOCI						Accumulated Other Comprehensive Income (Loss)
ASC						Accounting Standards Codification


ASU						Accounting Standards Update
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


Capstone Partners						Capstone Enterprises LLC

C&I						Commercial and Industrial



CDs						Certificates of Deposit

CECL						Current Expected Credit Losses
CET1						Common Equity Tier 1 on a Basel III basis
CFPB						Bureau of Consumer Financial Protection

CFO						Chief Financial Officer
CRO						Chief Risk Officer
CMO						Collateralized Mortgage Obligations
COVID-19						Coronavirus Disease 2019



CRE						Commercial Real Estate


Dodd-Frank Act						Dodd-Frank Wall Street Reform and Consumer Protection Act
EAD						Exposure at Default



ESG						Environmental, Social, and Governance
EOP						End of Period
EVE						Economic Value of Equity



FDIC						Federal Deposit Insurance Corporation
Federal Reserve						Board of Governors of the Federal Reserve System

FHLB						Federal Home Loan Bank
FICO						Fair Isaac Corporation





FTE						Fully-Taxable Equivalent
FTP						Funds Transfer Pricing
FVO						Fair Value Option
GAAP						Generally Accepted Accounting Principles in the United States of America
GDP						Gross Domestic Product




HTM						Held-to-Maturity

IRS						Internal Revenue Service



LGD						Loss 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

2023 2Q Form 10-Q 5

Table of Contents


NIM						Net Interest Margin
NM						Not Meaningful
NPAs						Nonperforming Assets

OCC						Office of the Comptroller of the Currency
OCI						Other Comprehensive Income (Loss)


OLEM						Other Loans Especially Mentioned





PD						Probability of Default

PPP						Paycheck Protection Program





RBHPCG						Regional Banking and The Huntington Private Client Group


REIT						Real estate investment trust
ROC						Risk Oversight Committee



RPS						Retirement Plan Services
RV						Recreational vehicle
SBA						Small Business Administration
SCB						Stress Capital Buffer
SEC						Securities and Exchange Commission
SOFR						Secured Overnight Financing Rate

TDR						Troubled Debt Restructuring
Torana						Digital Payments Torana, Inc.
U.S. Treasury						U.S. Department of the Treasury


VIE						Variable Interest Entity
XBRL						eXtensible Business Reporting Language

6 Huntington Bancshares Incorporated

Table of Contents

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 are committed to making people’s lives better, helping businesses thrive, and strengthening the communities we serve and have over 150 years of servicing the financial needs of our customers. Through our subsidiaries, we provide full-service commercial and consumer deposit, lending, and other banking services. This includes, but is not limited to, payments, mortgage banking, automobile, recreational vehicle and marine financing, investment banking, capital markets, advisory, equipment financing, distribution finance, investment management, trust, brokerage, insurance, and other financial products and services. At June 30, 2023, our 1,001 full-service branches and private client group offices are primarily located in Ohio, Colorado, Illinois, Indiana, Kentucky, Michigan, Minnesota, Pennsylvania, West Virginia, and Wisconsin. Select financial services and other activities are also conducted in various other states.

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 2022 Annual Report on Form 10-K should be read in conjunction with this MD&A as this discussion provides only material updates to the 2022 Annual Report on Form 10-K. This MD&A should also be read in conjunction with the Unaudited Consolidated Financial Statements, Notes to Unaudited Consolidated Financial Statements, and other information contained in this report.

EXECUTIVE OVERVIEW

Acquisitions and Divestitures

In May 2022, Huntington completed the acquisition of Torana, now known as Huntington Choice Pay, a digital payments business focused on business to consumer payments. This acquisition along with the formation of our enterprise-wide payments group reflects one of our strategic priorities to accelerate our payments capabilities and expand the services provided to our customers.

In June 2022, Huntington completed the acquisition of Capstone Partners, a top tier middle market investment bank and advisory firm. The transaction brings a national scale to serve middle market business owners throughout the corporate lifecycle, building on Huntington’s regional banking foundation. Capstone Partners related revenue, including mergers and acquisitions, capital raising and other advisory-related fees, is recognized within capital markets fees in the Consolidated Statements of Income.

In March 2023, we closed the sale of our RPS business and entered into an ongoing partnership with the purchaser. The sale of our RPS business resulted in a $57 million gain including associated goodwill allocation, recorded within other noninterest income.

Summary of 2023 Second Quarter Results Compared to 2022 Second Quarter

For the quarter, we reported net income of $559 million, or $0.35 per diluted common share, compared with $539 million, or $0.35 per diluted common share, in the year-ago quarter.

Net interest income was $1.3 billion, up $85 million, or 7% from the year-ago quarter. FTE net interest income, a non-GAAP financial measure, increased $90 million, or 7%, from the year-ago quarter. The increase in FTE net interest income primarily reflects $13.7 billion, or 8%, increase in average earning assets, partially offset by a 4 basis point decrease in the FTE NIM to 3.11% and an increase in average interest-bearing liabilities.

2023 2Q Form 10-Q 7

Table of Contents

The provision for credit losses increased $25 million from the year-ago quarter to $92 million in the 2023 second quarter. The increase in provision expense compared to the year-ago quarter was driven by allowance builds that reflect modest deterioration in the current macro-economic environment. The ACL increased $174 million from the year-ago quarter to $2.3 billion in the 2023 second quarter, or 1.93% of total loans and leases, compared to $2.2 billion, or 1.87% of total loans and leases. The increase in the total ACL was driven by a combination of loan and lease growth and modest deterioration in the current macro-economic forecast.

Noninterest income was $495 million, an increase of $10 million, or 2%, and noninterest expense increased $32 million, or 3%, from the year-ago quarter. The increase in noninterest income was primarily due to an $18 million increase from favorable mark-to-market on pay-fixed swaptions, included within other noninterest income, and additional increases in card and payments processing, bank owned life insurance, and trust and investment management services, partially offset by decreases in service charges on deposit accounts and mortgage banking income. The increase in noninterest expense was primarily due to increases in personnel costs, marketing expense, and outside data processing and other services, partially offset by reductions in acquisition-related expenses.

Total assets at June 30, 2023 were $188.5 billion, an increase of $5.6 billion, or 3%, compared to December 31, 2022. The increase in total assets was primarily driven by increases in interest-bearing deposits at Federal Reserve Bank of $4.5 billion, or 92%, and loans and leases of $1.7 billion, or 1%. Total liabilities at June 30, 2023 were $169.7 billion, an increase of $4.5 billion, or 3%, compared to December 31, 2022. The increase in total liabilities was primarily driven by an increase in long-term debt of $5.0 billion, or 52%.

The tangible common equity to tangible assets ratio was 5.80% at June 30, 2023, up 25 basis points from December 31, 2022, primarily due to an increase in tangible common equity related to current period earnings. CET1 risk-based capital ratio was 9.82%, up from 9.36% from December 31, 2022. The increase in regulatory capital ratios was primarily driven by current period earnings, partially offset by dividends and the CECL transitional amount.

General

Our general business objectives are to:

•Build on our vision to be the country’s leading people-first, digitally powered bank

•Drive sustainable long-term revenue growth and efficiency

•Deliver a Category of One customer experience through our distinguished brand and culture

•Extend our digital leadership with focus on ease of use, access to information, and self-service across products and services

•Leverage expertise and capabilities to acquire and deepen relationships and launching of select partnerships

•Maintain positive operating leverage and execute disciplined capital management

•Stability and resilience through risk management, maintaining an aggregate moderate-to-low, through-the-cycle risk appetite

Economy

During the second quarter of 2023, inflation has continued to trend lower while remaining at elevated levels above the Federal Reserve’s target. The Federal Reserve raised interest rates one time in May and paused in June to further evaluate the impact of their tightening and the overall health of the economy. Market volatility has subsided, and deposits have generally stabilized across the banking sector. Over the same period, loan growth across the banking sector has decreased given economic uncertainty. Further, as a result of the recent bank failures, ongoing regulatory reforms are expected, including increased capital and long-term debt requirements, as well as a special assessment to repay losses to the FDIC’s Deposit Insurance Fund.

Our economic forecast assumes a slowdown over the next 12 months with a return to modest growth in 2024. We expect inflation to moderate through 2024 as the Federal Reserve actions continue to have an effect, and will likely result in lower GDP growth and higher unemployment.

8 Huntington Bancshares Incorporated

Table of Contents

Our quarterly results reflect continued execution of our strategy and the strength of our balance sheet, delivered through sustained deposit growth and increased capital levels driven by earnings and capital optimization. Credit continues to perform well in keeping with our aggregate moderate-to-low, through-the-cycle risk appetite. With our disciplined and proactive approach, including balance sheet and other efficiency efforts to increase capital, we believe Huntington is well positioned to manage through the uncertain economic outlook on the horizon. We remain focused on delivering profitable growth and driving value for our shareholders.

Other Recent Developments

Following the recent failure of two financial institutions and resulting losses to the FDIC’s Deposit Insurance Fund, the FDIC approved a notice of proposed rulemaking in May 2023 that would implement a special assessment to recover the cost associated with protecting uninsured depositors as part of those financial institution failures. Under the proposed rule, the assessment base for the special assessment would be equal to an insured depository institution’s estimated uninsured deposits reported as of December 31, 2022, adjusted to exclude the first $5 billion of uninsured deposits. The $5 billion exclusion would be applied once to the aggregate amount of uninsured deposits.

The FDIC is proposing a special assessment at an annual rate of approximately 12.5 basis points to be assessed over eight quarters. The special assessment rate is subject to change prior to any final rule depending on any adjustments to the loss estimate, mergers or failures, or amendments to reported estimates of uninsured deposits. As proposed and based on The Huntington National Bank reported uninsured deposits as of December 31, 2022, the estimated impact of the special assessment is approximately $115 million. On July 24, 2023, the FDIC issued a Financial Institution Letter which clarified that inter-company subsidiary deposits should be included in reported uninsured deposits. If Huntington were to include these inter-company bank subsidiary deposits at December 31, 2022, the estimated impact of the special assessment would equal approximately $199 million. Huntington continues to assess these developments.

Any change to the terms of the final rule impacting the determination of uninsured deposits, exclusionary criteria, annual rate, or term of annual rate application would have a direct impact on the estimate of Huntington’s special assessment.

We continue to assess the impact of the special assessment to our future operating results and expect to record the impact when the final rule is enacted.

On July 27, 2023, the Federal Banking Agencies released a notice of proposed rulemaking to revise the Basel III Capital Rules applicable to the Company and the Bank. We are in the process of evaluating this proposed rulemaking and assessing its potential impact on Huntington.

DISCUSSION OF RESULTS OF OPERATIONS

This section provides a review of financial performance on a consolidated basis. Key unaudited consolidated balance sheet and unaudited income statement 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.”

2023 2Q Form 10-Q 9

Table of Contents


Table 1 - Selected Quarterly Income Statement Data

	Three months ended June 30,			Change
(amounts in millions, except per share data)	2023				2022			Amount		Percent
Interest income	$	2,225			$	1,331		$	894	67	%
Interest expense	879				70			809		NM
Net interest income	1,346				1,261			85		7
Provision for credit losses	92				67			25		37
Net interest income after provision for credit losses	1,254				1,194			60		5
Service charges on deposit accounts	87				105			(18)		(17)
Card and payment processing income	102				96			6		6
Capital markets fees	57				54			3		6
Trust and investment management services	68				63			5		8
Mortgage banking income	33				44			(11)		(25)
Leasing revenue	25				27			(2)		(7)
Insurance income	30				27			3		11
Gain on sale of loans	8				12			(4)		(33)
Bank owned life insurance income	16				11			5		45
Net (losses) gains on sales of securities	(5)				—			(5)		NM
Other noninterest income	74				46			28		61
Total noninterest income	495				485			10		2
Personnel costs	613				577			36		6
Outside data processing and other services	148				153			(5)		(3)
Equipment	64				61			3		5
Net occupancy	54				58			(4)		(7)
Marketing	32				24			8		33
Professional services	21				19			2		11
Deposit and other insurance expense	23				20			3		15
Amortization of intangibles	13				13			—		—
Lease financing equipment depreciation	8				11			(3)		(27)
Other noninterest expense	74				82			(8)		(10)
Total noninterest expense	1,050				1,018			32		3
Income before income taxes	699				661			38		6
Provision for income taxes	134				120			14		12
Income after income taxes	565				541			24		4
Income attributable to non-controlling interest	6				2			4		NM
Net income attributable to Huntington	559				539			20		4
Dividends on preferred shares	40				28			12		43

Net income applicable to common shares	$	519			$	511		$	8	2	%

Average common shares—basic	1,446				1,441			5		—	%
Average common shares—diluted	1,466				1,463			3		—
Net income per common share—basic	$	0.36			$	0.35		$	0.01	3
Net income per common share—diluted	0.35				0.35			—		—
Return on average total assets	1.18		%		1.22		%
Return on average common shareholders’ equity	12.7				12.8
Return on average tangible common shareholders’ equity (1)	19.9				19.9
Net interest margin (2)	3.11				3.15
Efficiency ratio (3)	55.9				57.3


Revenue and Net Interest Income—FTE (non-GAAP)
Net interest income	$	1,346			$	1,261		$	85	7	%
FTE adjustment (2)	11				6			5		83
Net interest income, FTE (non-GAAP) (2)	1,357				1,267			90		7
Noninterest income	495				485			10		2
Total revenue, FTE (non-GAAP) (2)	$	1,852			$	1,752		$	100	6	%

(1)Net income applicable to common shares 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 divided by the sum of FTE net interest income and noninterest income excluding securities gains.

10 Huntington Bancshares Incorporated

Table of Contents



Table 2 - Selected Year to Date Income Statement Data

	Six months ended June 30,				Change
(amounts in millions, except per share data)	2023		2022		Amount		Percent
Interest income	$	4,253	$	2,526	$	1,727	68	%
Interest expense	1,498		119		1,379		NM
Net interest income	2,755		2,407		348		14
Provision for credit losses	177		92		85		92
Net interest income after provision for credit losses	2,578		2,315		263		11
Service charges on deposit accounts	170		202		(32)		(16)
Card and payment processing income	195		182		13		7
Capital markets fees	116		96		20		21
Trust and investment management services	130		128		2		2
Mortgage banking income	59		93		(34)		(37)
Leasing revenue	51		62		(11)		(18)
Insurance income	64		58		6		10
Gain on sale of loans	11		40		(29)		(73)
Bank owned life insurance income	32		28		4		14
Net (losses) gains on sales of securities	(4)		—		(4)		NM
Other noninterest income	183		95		88		93
Total noninterest income	1,007		984		23		2
Personnel costs	1,262		1,157		105		9
Outside data processing and other services	299		318		(19)		(6)
Equipment	128		142		(14)		(10)
Net occupancy	114		122		(8)		(7)
Marketing	57		45		12		27
Professional services	37		38		(1)		(3)
Deposit and other insurance expense	43		38		5		13
Amortization of intangibles	26		27		(1)		(4)
Lease financing equipment depreciation	16		25		(9)		(36)
Other noninterest expense	154		159		(5)		(3)
Total noninterest expense	2,136		2,071		65		3
Income before income taxes	1,449		1,228		221		18
Provision for income taxes	278		225		53		24
Income after income taxes	1,171		1,003		168		17
Income attributable to non-controlling interest	10		4		6		150
Net income attributable to Huntington	1,161		999		162		16
Dividends on preferred shares	69		56		13		23

Net income applicable to common shares	$	1,092	$	943	$	149	16	%

Average common shares—basic	1,445		1,440		5		—	%
Average common shares—diluted	1,468		1,464		4		—
Net income per common share—basic	$	0.76	$	0.65	$	0.11	17
Net income per common share—diluted	0.74		0.64		0.10		16


Revenue and Net Interest Income—FTE (Non-GAAP)
Net interest income	$	2,755	$	2,407	$	348	14	%
FTE adjustment	20		14		6		43
Net interest income, FTE (non-GAAP) (1)	2,775		2,421		354		15
Noninterest income	1,007		984		23		2
Total revenue, FTE (non-GAAP) (1)	$	3,782	$	3,405	$	377	11	%

(1)On an FTE basis assuming a 21% tax rate.

2023 2Q Form 10-Q 11

Table of Contents

Average Balance Sheet / Net Interest Income

The following tables detail the change in our average balance sheet and the net interest margin.


Table 3 - Consolidated Quarterly Average Balance Sheet and Net Interest Margin (1)

	Three months ended June 30, 2023						Three months ended June 30, 2022						Change in
	Average		Interest		Yield/		Average		Interest		Yield/		Average Balances
(dollar amounts in millions)	Balances		Income (FTE) (2)		Rate (3)		Balances		Income (FTE) (2)		Rate (3)		Amount		Percent
Assets:
Interest-bearing deposits at Federal Reserve Bank	$	11,052	$	141	5.12	%	$	3,532	$	7	0.80	%	$	7,520	NM
Interest-bearing deposits in banks	229		5		7.79		161		1		1.32		68		42
Securities:
Trading account securities	34		1		4.92		30		1		3.99		4		13
Available-for-sale securities:
Taxable	20,920		252		4.82		21,672		123		2.25		(752)		(3)
Tax-exempt	2,745		33		4.87		2,859		19		2.71		(114)		(4)
Total available-for-sale securities	23,665		285		4.83		24,531		142		2.30		(866)		(4)
Held-to-maturity securities—taxable	16,762		102		2.42		17,234		90		2.10		(472)		(3)



Other securities	1,263		11		3.47		755		6		3.62		508		67
Total securities	41,724		399		3.82		42,550		239		2.24		(826)		(2)
Loans held for sale	559		8		6.05		1,033		10		4.08		(474)		(46)
Loans and leases: (4)
Commercial:
Commercial and industrial	50,194		746		5.87		44,763		427		3.78		5,431		12



Commercial real estate	13,342		243		7.22		13,202		119		3.56		140		1
Lease financing	5,155		71		5.45		4,919		61		4.98		236		5
Total commercial	68,691		1,060		6.10		62,884		607		3.83		5,807		9
Consumer:
Residential mortgage	22,765		200		3.51		20,527		158		3.09		2,238		11
Automobile	12,927		134		4.17		13,557		115		3.40		(630)		(5)
Home equity	10,154		187		7.42		10,373		115		4.44		(219)		(2)
RV and marine	5,478		63		4.59		5,317		55		4.12		161		3
Other consumer	1,330		39		11.59		1,291		30		9.08		39		3
Total consumer	52,654		623		4.74		51,065		473		3.70		1,589		3
Total loans and leases	121,345		1,683		5.51		113,949		1,080		3.77		7,396		6
Total earning assets	174,909		2,236		5.13		161,225		1,337		3.33		13,684		8
Cash and due from banks	1,639						1,669						(30)		(2)
Goodwill and other intangible assets	5,734						5,613						121		2
All other assets	10,638						10,107						531		5
Allowance for loan and lease losses	(2,174)						(2,053)						(121)		(6)
Total assets	$	190,746					$	176,561					$	14,185	8	%
Liabilities and shareholders’ equity:
Interest-bearing deposits:
Demand deposits—interest-bearing	$	39,772	$	167	1.68	%	$	41,712	$	11	0.10	%	$	(1,940)	(5)	%
Money market deposits	38,753		255		2.64		33,791		8		0.09		4,962		15
Savings and other domestic deposits	18,826		6		0.11		21,683		1		0.02		(2,857)		(13)
Core certificates of deposit (5)	8,820		83		3.78		2,228		—		0.07		6,592		NM
Other domestic deposits of $250,000 or more	320		2		3.27		225		—		0.23		95		42
Negotiable CDs, brokered and other deposits	4,502		57		5.07		2,981		5		0.72		1,521		51

Total interest-bearing deposits	110,993		570		2.06		102,620		25		0.10		8,373		8
Short-term borrowings	5,242		74		5.70		2,103		7		1.40		3,139		149
Long-term debt	16,252		235		5.79		7,024		38		2.16		9,228		131
Total interest-bearing liabilities	132,487		879		2.66		111,747		70		0.25		20,740		19
Demand deposits—noninterest-bearing	34,566						42,388						(7,822)		(18)
All other liabilities	4,796						4,168						628		15
Total liabilities	171,849						158,303						13,546		9
Total Huntington shareholders’ equity	18,844						18,228						616		3
Non-controlling interest	53						30						23		77
Total equity	18,897						18,258						639		3
Total liabilities and equity	$	190,746					$	176,561					$	14,185	8	%
Net interest rate spread					2.47						3.08
Impact of noninterest-bearing funds on margin					0.64						0.07
Net interest margin/NII (FTE)			$	1,357	3.11	%			$	1,267	3.15	%

(1)During the 2023 second quarter, the process for assessing and monitoring the risk and performance of non-real estate secured commercial loans was revised, primarily loans to REITs. These loans were reclassified from CRE to the C&I loan category to align reporting with this process revision. All prior period results have been adjusted to conform to the current presentation.

(2)FTE yields are calculated assuming a 21% tax rate.

(3)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.

(4)For purposes of this analysis, NALs are reflected in the average balances of loans and leases.

(5)Includes consumer certificates of deposit of $250,000 or more.

12 Huntington Bancshares Incorporated

Table of Contents

Quarterly Net Interest Income

Net interest income for the 2023 second quarter increased $85 million, or 7%, from the 2022 second quarter. FTE net interest income, a non-GAAP financial measure, for the 2023 second quarter increased $90 million, or 7%, from the 2022 second quarter. The increase in FTE net interest income primarily reflects $13.7 billion, or 8%, increase in average earning assets, partially offset by a 4 basis point decrease in the FTE NIM to 3.11% and an increase in average interest-bearing liabilities. The NIM compression was driven by higher cost of funds and the impact from higher cash balances, partially offset by the higher rate environment driving an increase in loan and lease and investment security yields.

Average Balance Sheet

Average assets for the 2023 second quarter increased $14.2 billion, or 8%, to $190.7 billion from the 2022 second quarter, primarily due to an increase in average interest-bearing deposits at the Federal Reserve Bank of $7.5 billion, and average loans and leases of $7.4 billion, or 6%, partially offset by a decrease in average total securities of $826 million, or 2%. The increase in average loans and leases was driven by growth in average commercial loans and leases of $5.8 billion, or 9%, and average consumer loans of $1.6 billion, or 3%.

Average liabilities for the 2023 second quarter increased $13.5 billion, or 9%, from the 2022 second quarter, primarily due to increases in average borrowings and deposits. Average borrowings increased $12.4 billion, or 135%, driven by long and short-term FHLB borrowings and new debt issuances reflecting actions taken as part of normal management of funding needs. Average deposits increased $551 million, primarily due to an increase in average interest-bearing deposits of $8.4 billion, or 8%, largely due to increases in average certificate of deposits and money market deposits, partially offset by a decrease in noninterest-bearing deposits of $7.8 billion, or 18%.

Average shareholders’ equity for the 2023 second quarter increased $616 million, or 3%, from the 2022 second quarter primarily due to earnings, partially offset by an increase in average accumulated other comprehensive loss driven by changes in interest rates.

2023 2Q Form 10-Q 13

Table of Contents


Table 4 - Consolidated YTD Average Balance Sheets and Net Interest Margin (1)
	Six months ended
	June 30, 2023						June 30, 2022						Change in
	Average		Interest		Yield/		Average		Interest		Yield/		Average Balances
(dollar amounts in millions)	Balances		Income (FTE) (2)		Rate (2)		Balances		Income (FTE) (2)		Rate (3)		Amount		Percent
Assets:
Interest-bearing deposits at Federal Reserve Bank	$	8,590	$	212	4.95	%	$	5,354	$	10	0.38	%	$	3,236	60	%
Interest-bearing deposits in banks	239		10		8.16		168		1		0.71		71		42
Securities:
Trading account securities	27		1		5.09		38		1		3.63		(11)		(29)
Available-for-sale securities:
Taxable	21,143		484		4.58		22,931		213		1.85		(1,788)		(8)
Tax-exempt	2,693		62		4.64		2,873		41		2.86		(180)		(6)
Total available-for-sale securities	23,836		546		4.59		25,804		254		1.96		(1,968)		(8)
Held-to-maturity securities—taxable	16,869		204		2.42		15,902		156		1.97		967		6



Other securities	1,075		21		3.83		860		11		2.64		215		25
Total securities	41,807		772		3.69		42,604		422		1.98		(797)		(2)
Loans held for sale	505		15		5.96		1,137		20		3.58		(632)		(56)
Loans and leases: (4)
Commercial:
Commercial and industrial	49,615		1,432		5.74		43,937		828		3.75		5,678		13



Commercial real estate	13,511		476		7.01		13,280		224		3.35		231		2
Lease financing	5,181		139		5.35		4,915		122		4.95		266		5
Total commercial	68,307		2,047		5.96		62,132		1,174		3.76		6,175		10
Consumer:
Residential mortgage	22,547		390		3.46		20,019		304		3.04		2,528		13
Automobile	13,085		263		4.05		13,510		227		3.39		(425)		(3)
Home equity	10,206		368		7.28		10,394		217		4.21		(188)		(2)
RV and marine	5,422		121		4.51		5,210		107		4.14		212		4
Other consumer	1,318		75		11.39		1,288		58		9.02		30		2
Total consumer	52,578		1,217		4.66		50,421		913		3.64		2,157		4
Total loans and leases	120,885		3,264		5.39		112,553		2,087		3.71		8,332		7

Total earning assets	172,026		4,273		5.01		161,816		2,540		3.17		10,210		6
Cash and due from banks	1,619						1,659						(40)		(2)
Goodwill and other intangible assets	5,747						5,598						149		3
All other assets	10,602						10,061						541		5
Allowance for loan and lease losses	(2,158)						(2,050)						(108)		(5)
Total assets	$	187,836					$	177,084					$	10,752	6	%
Liabilities and Shareholders’ Equity:
Interest-bearing deposits:
Demand deposits—interest-bearing	$	40,211	$	299	1.50	%	$	41,176	$	14	0.07	%	$	(965)	(2)	%
Money market deposits	38,031		427		2.27		33,235		12		0.07		4,796		14
Savings and other domestic deposits	19,348		9		0.09		21,501		2		0.02		(2,153)		(10)
Core certificates of deposit (5)	7,292		126		3.48		2,393		1		0.10		4,899		NM
Other domestic deposits of $250,000 or more	286		4		2.91		270		—		0.19		16		6
Negotiable CDs, brokered and other deposits	4,659		111		4.81		3,216		7		0.42		1,443		45

Total interest-bearing deposits	109,827		976		1.79		101,791		36		0.07		8,036		8
Short-term borrowings	4,809		134		5.64		3,408		14		0.83		1,401		41
Long-term debt	13,664		388		5.67		6,969		69		1.99		6,695		96
Total interest-bearing liabilities	128,300		1,498		2.35		112,168		119		0.21		16,132		14
Demand deposits—noninterest-bearing	36,023						42,177						(6,154)		(15)
All other liabilities	4,925						4,068						857		21
Total liabilities	169,248						158,413						10,835		7
Total Huntington shareholders’ equity	18,539						18,644						(105)		(1)
Non-controlling interest	49						27						22		81
Total equity	18,588						18,671						(83)		—
Total liabilities and shareholders’ equity	$	187,836					$	177,084					$	10,752	6	%
Net interest rate spread					2.66						2.96
Impact of noninterest-bearing funds on margin					0.59						0.06
Net interest margin/NII			$	2,775	3.25	%			$	2,421	3.02	%

(2)FTE yields are calculated assuming a 21% tax rate.

(3)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.

(4)For purposes of this analysis, NALs are reflected in the average balances of loans and leases.

(5)Includes consumer certificates of deposit of $250,000 or more.

14 Huntington Bancshares Incorporated

Table of Contents

Year to Date Net Interest Income

Net interest income for the first six-month period of 2023 increased $348 million, or 14%, from the year-ago period. FTE net interest income, a non-GAAP financial measure, for the first six-month period of 2023 increased $354 million, or 15%, from the year-ago period. The increase in FTE net interest income reflected the benefit of a 23 basis point increase in the FTE NIM to 3.25% and a $10.2 billion, or 6%, increase in average total earning assets, partially offset by a $16.1 billion, or 14%, increase in interest-bearing liabilities and lower accelerated PPP loan fees recognized upon forgiveness payments from the SBA and purchase accounting accretion.

The NIM expansion was driven by the higher rate environment driving an increase in loans and lease and investment security yields, partially offset by higher cost of funds and higher cash balances.

Net interest income for the first six-month period of 2023 included $18 million of net interest income from purchase accounting accretion, compared to $35 million and $16 million from purchase accounting accretion and accelerated PPP loan fees recognized upon forgiveness payments from the SBA, respectively, in the year-ago period.

Average Balance Sheet

Average assets for the first six-month period of 2023 increased $10.8 billion, or 6%, to $187.8 billion from the year-ago period, primarily due to increases in average loans and leases of $8.3 billion, or 7%, and interest-bearing deposits at the Federal Reserve Bank of $3.2 billion, or 60%, partially offset by a decrease in total securities of $797 million, or 2%. The increase in average loans and leases was driven by growth in average commercial loans and leases of $6.2 billion, or 10%, and average consumer loans of $2.2 billion, or 4%.

Average liabilities for the first six-month period of 2023 increased $10.8 billion, or 7%, from the year-ago period, primarily due to increases in average borrowings and deposits. Average borrowings increased $8.1 billion, or 78%, driven by higher long and short-term FHLB borrowings and new debt issuances reflecting actions taken as part of normal management of funding needs. Total average deposits increased $1.9 billion, or 1%, primarily due to an increase in average interest-bearing deposits of $8.0 billion, or 8%, largely due to increases in average certificates of deposits and money market deposits, partially offset by a decrease in noninterest-bearing deposits of $6.2 billion, or 15%.

Average shareholders’ equity for the first six-month of 2023 decreased $105 million, or 1%, from the year-ago period primarily due to an increase in average accumulated other comprehensive loss driven by changes in interest rates, partially offset by earnings.

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 ACL at levels appropriate to absorb our estimate of credit losses expected over the life of the loan and lease portfolio, securities portfolio, and unfunded lending commitments.

The provision for credit losses for the 2023 second quarter was $92 million, an increase of $25 million, compared to the 2022 second quarter. On a year-to-date basis, provision for credit losses for the first six-month period of 2023 was $177 million, an increase of $85 million, or 92%, compared to year-ago period. The increase in provision expense over the prior year quarter was driven by allowance builds that reflect modest deterioration in the current macro-economic forecast. The increase over the prior year-to-date period was driven by allowance builds associated with a combination of loan and lease growth and modest deterioration in the current macro-economic forecast.

2023 2Q Form 10-Q 15

Table of Contents

The components of the provision for credit losses were as follows:


Table 5 - Provision for Credit Losses
	Three months ended		Six months ended
	June 30,			June 30,		June 30,		June 30,
(dollar amounts in millions)	2023			2022		2023		2022
Provision for loan and lease losses	$	84		$	64	$	162	$	71
Provision for unfunded lending commitments	8			3		15		17
Provision for securities	—			—		—		4
Total provision for credit losses	$	92		$	67	$	177	$	92

Noninterest Income

The following table reflects noninterest income for each of the periods presented:


Table 6 - Noninterest Income
	Three months ended		Six months ended
	June 30,			June 30,		Change		June 30,		June 30,		Change
(dollar amounts in millions)	2023			2022		Percent		2023		2022		Percent
Service charges on deposit accounts	$	87		$	105	(17)	%	$	170	$	202	(16)	%
Card and payment processing income	102			96		6		195		182		7
Capital markets fees	57			54		6		116		96		21
Trust and investment management services	68			63		8		130		128		2
Mortgage banking income	33			44		(25)		59		93		(37)
Leasing revenue	25			27		(7)		51		62		(18)
Insurance income	30			27		11		64		58		10
Gain on sale of loans	8			12		(33)		11		40		(73)
Bank owned life insurance income	16			11		45		32		28		14
Net (losses) gains on sales of securities	(5)			—		(100)		(4)		—		(100)
Other noninterest income	74			46		61		183		95		93
Total noninterest income	$	495		$	485	2	%	$	1,007	$	984	2	%

Noninterest income for the 2023 second quarter was $495 million, an increase of $10 million, or 2%, from the year-ago quarter. Other noninterest income increased $28 million, or 61%, primarily due to an $18 million increase from favorable mark-to-market on pay-fixed swaptions. Additional increases included card and payment processing income of $6 million, or 6%, bank owned life insurance income of $5 million, or 45%, and trust and investment management fees of $5 million, or 8%. Partially offsetting these increases, service charges on deposit accounts decreased $18 million, or 17%, primarily reflecting the impact from program changes, and mortgage banking income decreased $11 million, or 25%, primarily reflecting lower net MSR risk management.

Noninterest income for the first six-month period of 2023 increased $23 million, or 2%, from the year-ago period. Other noninterest income increased $88 million, or 93%, primarily due to a $57 million gain on the sale of our RPS business, including associated goodwill allocation, and a $17 million increase from favorable mark-to-market on pay-fixed swaptions. Additional increases included capital markets fees of $20 million, or 21%, primarily reflecting Capstone Partners related advisory fees, partially offset by a decrease in interest rate derivative fees, and card and payments processing income of $13 million, or 7%, largely due to an increase in debit card usage. Partially offsetting these increases, mortgage banking decreased $34 million, or 37%, primarily reflecting lower salable volume and net MSR risk management. Service charges on deposits accounts decreased $32 million, or 16%, primarily reflecting impact from program changes. Gain on sale of loans decreased $29 million, or 73%, primarily resulting from the strategic decision to retain the guaranteed portion of SBA loans at origination. Leasing revenue decreased $11 million, or 18%, primarily driven by a decrease in operating lease income.

16 Huntington Bancshares Incorporated

Table of Contents

Noninterest Expense

The following table reflects noninterest expense for each of the periods presented:


Table 7 - Noninterest Expense
	Three months ended		Six months ended
	June 30,			June 30,		Change		June 30,	June 30,		Change
(dollar amounts in millions)	2023			2022		Percent			2023		2022		Percent
Personnel costs	$	613		$	577	6	%		$	1,262	$	1,157	9	%
Outside data processing and other services	148			153		(3)			299		318		(6)
Equipment	64			61		5			128		142		(10)
Net occupancy	54			58		(7)			114		122		(7)
Marketing	32			24		33			57		45		27
Professional services	21			19		11			37		38		(3)
Deposit and other insurance expense	23			20		15			43		38		13
Amortization of intangibles	13			13		—			26		27		(4)
Lease financing equipment depreciation	8			11		(27)			16		25		(36)
Other noninterest expense	74			82		(10)			154		159		(3)
Total noninterest expense	$	1,050		$	1,018	3	%		$	2,136	$	2,071	3	%
Number of employees (average full-time equivalent)	20,200			19,866		2	%		20,198		19,821		2	%

Noninterest expense for the 2023 second quarter was $1.1 billion, an increase of $32 million, or 3%, from the year-ago quarter. There were no acquisition-related expenses for the 2023 second quarter, compared to $24 million in the year-ago quarter. Personnel costs increased $36 million, or 6%, primarily reflecting higher expense due to the impact of the Capstone Partners acquisition and merit increases. Marketing expense increased $8 million, or 33%, primarily reflecting actions taken to deepen and acquire new customer relationships. Partially offsetting these increases, outside data processing and other services decreased $5 million, or 3%, primarily reflecting a decrease in acquisition-related expenses of $12 million, partially offset by higher technology investments.

Noninterest expense for the first six-month period of 2023 increased $65 million, or 3%, from the year-ago period. There were no acquisition-related expenses for the first six-month period of 2023, compared to $70 million in the year-ago period. Personnel costs increased $105 million, or 9%, primarily due to $36 million of voluntary retirement program expense and $6 million of organizational realignment expense, the impact of Capstone Partners acquisition and merit increases, partially offset by a $7 million decrease in acquisition-related expenses. Marketing expense increased $12 million, or 27%, primarily reflecting actions taken to deepen and acquire new customer relationships. Partially offsetting these increases, outside data processing decreased $19 million, or 6%, primarily due to a decrease of $37 million in acquisition-related expenses, partially offset by higher technology investments. Equipment expense decreased $14 million, or 10%, primarily reflecting the timing of technology equipment purchases and amortization.

Provision for Income Taxes

The provision for income taxes in the 2023 second quarter was $134 million, compared to $120 million in the 2022 second quarter. The provision for income taxes for the six-month periods ended June 30, 2023 and June 30, 2022 was $278 million and $225 million, respectively. All periods included the benefits from general business credits, capital losses, tax-exempt income, tax-exempt bank owned life insurance income, and investments in qualified affordable housing projects. The effective tax rates for the 2023 second quarter and 2022 second quarter were 19.3% and 18.1%, respectively. The effective tax rates for the six-month periods ended June 30, 2023 and June 30, 2022 were 19.2% and 18.3%, respectively. The variance between the 2023 second quarter compared to the 2022 second quarter, and the six month period ended June 30, 2023 compared to the six month period ended June 30, 2022 provision for income taxes and effective tax rates relates primarily to a reduction in capital losses, partially offset by an increase in tax credits and the impact of stock-based compensation.

The net federal deferred tax asset was $383 million, and the net state deferred tax asset was $87 million at June 30, 2023.

2023 2Q Form 10-Q 17

Table of Contents

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 2016. Also, with few exceptions, the Company is no longer subject to state and local income tax examinations for tax years before 2018.

RISK MANAGEMENT AND CAPITAL

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 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.

We classify/aggregate risk into seven risk pillars; credit, market, liquidity, operational, compliance, strategic, and reputation. More information on risk can be found in Item 1A Risk Factors below, the Risk Factors section included in Item 1A of our 2022 Annual Report on Form 10-K and subsequent filings with the SEC. The MD&A included in our 2022 Annual Report on Form 10-K should be read in conjunction with this MD&A, as this discussion provides only material updates to the 2022 Annual Report on Form 10-K. This MD&A should also be read in conjunction with the Unaudited Consolidated Financial Statements, Notes to Unaudited 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 2022 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 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, swaptions, swaption collars, and floors 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 mortgage loans held for sale. While there is credit risk associated with derivative activity, we believe this exposure is minimal.

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 disciplined portfolio management processes are 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 2022 Annual Report on Form 10-K for a brief description of each portfolio segment. During the 2023 second quarter, Huntington revised its process for assessing and monitoring the risk and performance of non-real estate secured commercial loans, primarily loans to REITs. These loans were reclassified from CRE to the C&I loan category to align reporting with this process revision. All prior period results have been adjusted to conform to the current presentation.

18 Huntington Bancshares Incorporated

Table of Contents

The table below provides the composition of our total loan and lease portfolio:


Table 8 - Loan and Lease Portfolio Composition

(dollar amounts in millions)	At June 30, 2023				At December 31, 2022
Commercial:
Commercial and industrial	$	49,834	41	%	$	48,121	41	%



Commercial real estate	13,166		11		13,640		11
Lease financing	5,143		4		5,252		4
Total commercial	68,143		56		67,013		56
Consumer:
Residential mortgage	23,138		19		22,226		19
Automobile	12,819		11		13,154		11
Home equity	10,135		8		10,375		9
RV and marine	5,640		5		5,376		4
Other consumer	1,350		1		1,379		1
Total consumer	53,082		44		52,510		44
Total loans and leases	$	121,225	100	%	$	119,523	100	%

Our loan and lease 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. Commercial 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 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 2022 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 2022 Annual Report on Form 10-K for our consumer credit underwriting and on-going credit management processes.

2023 2Q Form 10-Q 19

Table of Contents

The table below provides our total loan and lease portfolio by industry type:


Table 9 - Loan and Lease Portfolio by Industry Type

(dollar amounts in millions)	At June 30, 2023				At December 31, 2022
Commercial loans and leases:
Real estate and rental and leasing (1)	$	16,372	14	%	$	16,310	14	%
Retail trade (2)	10,843		9		9,894		8
Manufacturing	7,754		6		7,809		7
Finance and insurance (1)	5,079		4		5,005		4
Health care and social assistance (1)	4,321		4		4,293		4
Wholesale Trade	3,777		3		3,922		3
Accommodation and food services	3,197		3		3,335		3
Transportation and warehousing	3,196		3		3,246		3
Professional, scientific, and technical services	2,102		2		1,899		2
Other Services	1,910		2		2,097		2
Utilities	1,809		1		1,298		1
Construction	1,707		1		1,757		1
Admin./Support/Waste Mgmt. and Remediation Services	1,431		1		1,370		1
Arts, entertainment, and recreation	1,302		1		1,424		1
Information	1,253		1		1,167		1
Public administration	667		1		667		1
Educational services	473		—		513		—
Agriculture, forestry, fishing, and hunting	418		—		455		—
Mining, quarrying, and oil and gas extraction	145		—		196		—
Management of companies and enterprises	126		—		127		—
Unclassified/other	261		—		229		—
Total commercial loans and leases by industry category	68,143		56		67,013		56
Residential mortgage	23,138		19		22,226		19
Automobile	12,819		11		13,154		11
Home equity	10,135		8		10,375		9
RV and marine	5,640		5		5,376		4
Other consumer loans	1,350		1		1,379		1
Total loans and leases	$	121,225	100	%	$	119,523	100	%

(1) Non-real estate secured commercial loans to REITs, which are classified in the C&I loan category, are included in the real estate, finance and insurance, and health care industry types.

(2) Amounts include $2.6 billion and $2.3 billion of auto dealer services loans at June 30, 2023 and December 31, 2022, respectively.

Credit Quality

(This section should be read in conjunction with Note 4 “Loans and Leases” and Note 5 “Allowance for Credit Losses” of the Notes to Unaudited 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, 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 2023 second quarter reflected NCOs of $49 million, or 0.16% of average total loans and leases, annualized, an increase of $41 million, compared to $8 million, or 0.03%, in the year-ago quarter. The increase was driven by a $38 million increase in commercial NCOs to $27 million in the 2023 second quarter, compared to net credit recoveries in the prior year period. NPAs decreased from December 31, 2022 by $37 million, or 6%, largely driven by a decrease in commercial NALs.

20 Huntington Bancshares Incorporated

Table of Contents

NPAs and NALs

(This section should be read in conjunction with Note 4 “Loans and Leases” and Note 5 “Allowance for Credit Losses” of the Notes to Consolidated Financial Statements and “Credit Quality” section appearing in Huntington’s 2022 Annual Report on Form 10-K.)

NPAs and NALs

Commercial loans and leases are placed on nonaccrual status at 90-days past due, or earlier if repayment of principal and interest is in doubt. Of the $357 million of commercial related NALs at June 30, 2023, $207 million, or 58%, represent loans and leases 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 10 - Nonaccrual Loans and Leases and Nonperforming Assets

(dollar amounts in millions)	At June 30, 2023			At December 31, 2022
Nonaccrual loans and leases (NALs):
Commercial and industrial	$	267		$	288
Commercial real estate	75			92
Lease financing	15			18
Residential mortgage	73			90
Automobile	4			4
Home equity	75			76
RV and marine	1			1

Total nonaccrual loans and leases	510			569



Other real estate, net	18			11
Other NPAs (1)	29			14
Total nonperforming assets	$	557		$	594

Nonaccrual loans and leases as a % of total loans and leases	0.42		%	0.48		%
NPA ratio (2)	0.46			0.50

(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.

ACL

(This section should be read in conjunction with Note 5 “Allowance for Credit Losses” of the Notes to Unaudited 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.

We use statistically-based models that employ assumptions about current and future economic conditions throughout the contractual life of the loan. The process of estimating expected credit losses is based on three 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.

Future economic conditions consider multiple macroeconomic scenarios provided to us by an independent third party and are reviewed through the appropriate committee governance channels described below. These macroeconomic scenarios contain certain variables that are influential to our modeling process, the most significant being unemployment rates and GDP. The probability weights assigned to each scenario are generally expected to be consistent from period to period and determined through our ACL process. 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.

2023 2Q Form 10-Q 21

Table of Contents

The baseline scenario used for the 2023 second quarter assumes weakening of the labor market is underway and will continue through the end of 2024 causing the unemployment rate to gradually increase, peaking at 4.2% by the end of 2024. The overnight federal funds rate is forecasted to have peaked at a rate of approximately 5.1% during the second quarter of 2023, remaining at this terminal level until the end of 2023 as the Federal Reserve continues to address elevated inflation levels. The expectation is that the Federal Reserve would then start to cut rates early in 2024, although monetary policy remains restrictive until the end of 2025. The federal funds rate returns to its neutral rate in early 2026. Inflation is forecasted to drop from an average of 8.0% in 2022, to 3.9% in 2023 and to 2.5% in 2024 as a result of the Federal Reserve’s actions, and as inflation pressures stemming from U.S labor market conditions, the housing market and global energy prices continue to soften. The GDP forecast for the second half of 2023 into 2024 has fallen somewhat from year end, a result of elevated interest rates and tightening credit conditions. GDP is now forecasted to be 2.3% by the fourth quarter of 2024.

Management uses a probability-weighted approach that incorporates a baseline, an adverse and a more favorable economic scenario when formulating that quantitative estimate for the allowance The table below is intended to show how the forecasted path of unemployment and GDP in the baseline scenario has changed since the end of 2022:


Table 11 - Forecasted Key Macroeconomic Variables
Baseline scenario forecast	2022		2023				2024
	Q4		Q2		Q4		Q2		Q4


Unemployment rate (1)
4Q 2022	3.7	%	3.9	%	4.1	%	4.1	%	3.9	%

2Q 2023	N/A		3.4		3.8		4.0		4.2


Gross Domestic Product (1)
4Q 2022	(0.1)	%	0.4	%	2.0	%	2.3	%	2.7	%

2Q 2023	N/A		1.6		1.1		2.1		2.3


(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, including geopolitical instability and current inflation levels, considering multiple macroeconomic forecasts that reflected a range of possible outcomes. While we have incorporated estimates of economic uncertainty into our ACL, the ultimate impact of recent inflation levels and attempts to lower inflation through Federal Reserve rate actions will have on the economy remains unknown.

Management develops 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 will continue to utilize scenario weighting. Given the uncertainty associated with key economic scenario assumptions, the June 30, 2023 ACL included a general reserve that consists of various risk profile components, including profiles to capture uncertainty not addressed within the quantitative transaction reserve.

Our ACL evaluation process includes the on-going assessment of credit quality metrics, and a comparison of certain ACL benchmarks to current performance. For further information, including the ALLL and AULC activity by portfolio segment, refer to Note 5 “Allowance for Credit Losses” of the Notes to the Unaudited Consolidated Financial Statements.

22 Huntington Bancshares Incorporated

Table of Contents

The table below reflects the allocation of our ALLL among our various loan and lease categories and the reported ACL:


Table 12 - Allocation of Allowance for Credit Losses

(dollar amounts in millions)	At June 30, 2023						At December 31, 2022
	Allocation of Allowance		% of Total ALLL		% of Total Loans and Leases (1)		Allocation of Allowance		% of Total ALLL		% of Total Loans and Leases (1)
Commercial
Commercial and industrial	$	994	46	%	41	%	$	939	45	%	41	%
Commercial real estate	442		20		11		433		20		11
Lease financing	47		2		4		52		2		4
Total commercial	1,483		68		56		1,424		67		56
Consumer
Residential mortgage	194		9		19		187		8		19
Automobile	144		7		11		141		7		11
Home equity	119		5		8		105		5		9
RV and marine	145		7		5		143		7		4
Other consumer	92		4		1		121		6		1
Total consumer	694		32	%	44	%	697		33	%	44	%
Total ALLL	2,177						2,121
AULC	165						150
Total ACL	$	2,342					$	2,271
Total ALLL as a % of
Total loans and leases	1.80%						1.77%
Nonaccrual loans and leases	427						373
NPAs	391						357
Total ACL as % of
Total loans and leases	1.93%						1.90%
Nonaccrual loans and leases	459						400
NPAs	420						382

(1)Percentages represent the percentage of each loan and lease category to total loans and leases.

At June 30, 2023, the ACL was $2.3 billion, or 1.93% of total loans and leases, compared to $2.3 billion, or 1.90%, at December 31, 2022. The increase in the total ACL was driven by a combination of loan and lease growth and modest deterioration in the current macro-economic forecast. The ACL coverage ratio at June 30, 2023 is reflective of the current macro-economic environment including recognition of the near-term recessionary risks.

2023 2Q Form 10-Q 23

Table of Contents

NCOs

The table below reflects NCO detail for each of the periods presented:


Table 13 - Net Charge-off Analysis
	Three months ended			Six months ended
	June 30,				June 30,			June 30,			June 30,
(dollar amounts in millions)	2023				2022			2023			2022
Net charge-offs (recoveries) by loan and lease type:
Commercial:
Commercial and industrial	$	20			$	(4)		$	36		$	(27)
Commercial real estate	7				(4)			25			4
Lease financing	—				(3)			(5)			2
Total commercial	27				(11)			56			(21)
Consumer:
Residential mortgage	1				(1)			1			(1)
Automobile	3				—			8			—
Home equity	—				(2)			(1)			(3)
RV and marine	2				1			4			4
Other consumer	16				21			38			48
Total consumer	22				19			50			48
Total net charge-offs	$	49			$	8		$	106		$	27




Net charge-offs (recoveries) - annualized percentages:
Commercial:
Commercial and industrial	0.15		%		(0.04)		%	0.14		%	(0.12)		%



Commercial real estate	0.23				(0.13)			0.37			0.06
Lease financing	—				(0.24)			(0.19)			0.08
Total commercial	0.16				(0.07)			0.16			(0.07)
Consumer:
Residential mortgage	0.01				(0.02)			0.01			(0.01)
Automobile	0.10				—			0.12			—
Home equity	(0.02)				(0.08)			(0.02)			(0.05)
RV and marine	0.13				0.10			0.16			0.15
Other consumer	5.17				6.60			5.76			7.53
Total consumer	0.17				0.15			0.19			0.19
Net charge-offs as a % of average loans and leases	0.16		%		0.03		%	0.17		%	0.05		%

NCOs were an annualized 0.16% of average loans and leases in the current quarter, up from 0.03% in the 2022 second quarter. NCOs for the commercial portfolios were higher, with annualized net charge-offs of 0.16% in the current quarter, compared to net recoveries of 0.07% in the year-ago quarter, reflecting the continued normalization of net charge-offs. Consumer charge-offs were modestly higher in the quarter, compared to the year-ago quarter.

NCOs were an annualized 0.17% of average loans and leases for the first six-month period of 2023, up from 0.05% in the year ago period. NCOs for the commercial portfolios were higher with annualized net charge-offs of 0.16% in the current period compared to net recoveries of 0.07% in the year-ago period. Consumer charge-offs remained consistent in the period, compared to the year-ago period.

24 Huntington Bancshares Incorporated

Table of Contents

Market Risk

(This section should be read in conjunction with the “Market Risk” section appearing in Huntington’s 2022 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.

We measure 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. Our models incorporate market-based assumptions that include the impact of changing interest rates on prepayment rates of assets and runoff rates of deposits. The models also include our projections of the future volume and pricing of various business lines.

In measuring the financial risks associated with interest rate sensitivity in our balance sheet, we compare 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 immediate 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, we presume 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.

We use two approaches to model interest rate risk: Net interest income at risk (NII at risk) and economic value of equity at risk modeling sensitivity analysis (EVE at Risk).


Table 14 - Net Interest Income at Risk

	Net Interest Income at Risk (%)
Basis point change scenario	-200	-100	+100	+200

At June 30, 2023	-5.4	-2.6	2.8	6.4
At December 31, 2022	-4.1	-2.0	2.0	4.0

NII at Risk is used by management to measure the risk and impact to earnings over the next 12 months, using a variety of interest rate scenarios. The NII at Risk results included in the table above reflect the analysis used monthly by management. It models gradual “ramp” -200, -100, +100 and +200 basis point parallel shift scenarios, implied by the forward yield curve over the next 12 months.

The NII at Risk shows that the balance sheet is asset sensitive at both June 30, 2023, and December 31, 2022. A key driver of the change in sensitivity can be attributed to hedging activity, which has supported an increase to asset sensitivity in rising rate scenarios, while minimizing the impact to falling rate scenarios. Other drivers to the change in sensitivity include changes in the funding mix, deposit modeling assumptions, and market rates.

2023 2Q Form 10-Q 25

Table of Contents


Table 15 - Economic Value of Equity at Risk

	Economic Value of Equity at Risk (%)
Basis point change scenario	-200	-100	+100	+200

At June 30, 2023	0.3	1.4	-3.3	-7.4
At December 31, 2022	9.0	5.9	-8.0	-17.3

EVE at Risk provides a sensitivity analysis on shareholder’s equity for longer-term interest rate risk in the banking book. The EVE results included in the table above reflect the analysis used monthly by management. It models immediate -200, -100, +100 and +200 basis point parallel “shock” scenarios.

The change in sensitivity from December 31, 2022 was driven primarily by updated deposit modeling assumptions, market rates and continued yield curve inversion, as well as changes in the funding mix and hedging activity.

To address the discontinuance of LIBOR, we established a LIBOR transition team and project plan under the oversight of the CRO and CFO, providing periodic updates to the ROC. Huntington has outstanding LIBOR-based instruments that mature after June 30, 2023, including, loans and leases and notional derivatives. Contract remediation efforts coordinated by the LIBOR transition team are complete as of June 2023. Upon the discontinuation of LIBOR, all loans and leases that reference LIBOR have transitioned to a SOFR-based replacement rate as set forth in the related contract. For further details on the transition of notional derivatives, refer to the Use of Derivatives to Manage Interest Rate Risk section below. Source systems have been updated to support alternative reference rates. At this time alternative reference rates are predominantly SOFR based. As such, we have developed a SOFR-enabled interest rate risk monitoring framework and a strategy for managing interest rate risk during the transition from LIBOR to SOFR.

Use of Derivatives to Manage Interest Rate Risk

An integral component of our interest rate risk management strategy is the 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, collars, forward contracts, and forward starting interest rate swaps.

Table 16 shows all swap, swaption, swaption collar 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 13 “Derivative Financial Instruments” of the Notes to Unaudited Consolidated Financial Statements.

During the second quarter of 2023, all cleared derivatives that referenced LIBOR have transitioned from LIBOR to a SOFR-based replacement rate in accordance with the conventions established by the applicable clearinghouse. Upon the discontinuation of LIBOR, all over-the-counter derivatives that reference LIBOR will transition to a SOFR-based replacement rate as set forth in the related contract. Those derivatives that do not have a clearly defined or practicable replacement benchmark rate set forth in the related contract will use the LIBOR Act to replace LIBOR with a SOFR-based rate established by FRB rulemaking. For every LIBOR referenced instrument with a reset date after the LIBOR cessation date, counterparties would receive a LIBOR referenced instrument maturing on the first reset date after the LIBOR cessation date, and a forward starting SOFR instrument. The instruments received through the transition are economically similar to the instruments held prior to the transition. The LIBOR referenced instruments seen in the table below are those instruments that were received in the transition and have a corresponding forward starting SOFR referenced instrument. Both instruments are included in the table which results in a one-time increase in the notional amounts outstanding as the LIBOR referenced instruments will mature in the 2023 third quarter.

26 Huntington Bancshares Incorporated

Table of Contents

The following table presents additional information about the interest rate swaps, swaptions, swaption collars, and floors used in Huntington’s asset and liability management activities at June 30, 2023 and December 31, 2022.


Table 16 - Weighted-Average Maturity, Receive Rate and SOFR/LIBOR Reset Rate on Asset Liability Management Instruments

			Average Maturity (years)			Weighted-Average Fixed Rate		Weighted-Average Reset Rate
(dollar amounts in millions)	Notional Value			Fair Value
At June 30, 2023
Asset conversion swaps
Securities (1):
Pay Fixed - Receive 1 month LIBOR (2)	$	7,908	0.06	$	17	0.94	%	5.16	%
Pay Fixed - Receive SOFR	2,883		4.21	154		2.54		5.07
Pay Fixed - Receive SOFR - forward starting (3)	8,836		3.95	768		1.14		—
Loans:
Receive Fixed - Pay SOFR - forward starting (4)	2,950		2.77	(92)		1.97		—
Receive Fixed - Pay 1 month LIBOR (2)	1,550		0.04	(5)		1.13		5.18
Receive Fixed - Pay SOFR	10,350		3.43	(462)		2.74		5.07


Liability conversion swaps
Receive Fixed - Pay 1 month LIBOR (2)	1,331		0.03	2		2.01		5.19
Receive Fixed - Pay SOFR	6,240		4.44	(256)		3.16		3.49

Receive Fixed - Pay SOFR - forward starting (5)	1,331		1.35	(53)		2.01		—


Purchased floors
Purchased Floor Spread - SOFR (6)	5,000		2.79	37		3.97 / 2.97		—

Basis swaps

Pay SOFR- Receive Fed Fund (economic hedges) (7)	174		3.08	—		5.07		5.07
Pay Fed Fund - Receive SOFR (economic hedges) (7)	1		12.31	—		5.11		5.07
Purchased swaptions
Pay Fixed - Receive SOFR Swaptions (economic hedges)	9,550		0.59	48		4.59		—
Total swap portfolio	$	58,104		$	158





At December 31, 2022
Asset conversion swaps
Securities (1):
Pay Fixed - Receive 1 month LIBOR	$	8,024	3.89	$	834	0.93	%	4.37	%
Pay Fixed - Receive SOFR	366		7.02	49		1.46		3.82
Pay Fixed - Receive 1 month LIBOR - forward starting (8)	91		7.31	12		1.62		—
Pay Fixed - Receive SOFR - forward starting (9)	1,926		6.17	85		2.17		—
Loans:
Receive Fixed - Pay SOFR - forward starting (10)	2,950		4.91	(109)		2.64		—
Receive Fixed - Pay 1 month LIBOR	7,875		1.41	(390)		1.21		4.20
Receive Fixed - Pay SOFR	8,700		3.55	(351)		2.57		3.90
Liability conversion swaps
Receive Fixed - Pay 1 month LIBOR	1,430		1.85	(60)		2.01		4.25
Receive Fixed - Pay SOFR	6,299		4.91	(201)		3.16		3.36
Purchased swaption collars
Purchased Interest Rate Swaption Collars (6)	4,800		0.27	(6)		2.87 / 4.05		—
Basis swaps
Pay SOFR- Receive Fed Fund (economic hedges) (7)	174		3.58	—		4.33		4.31
Pay Fed Fund - Receive SOFR (economic hedges) (7)	1		12.81	—		4.35		4.33
Total swap portfolio	$	42,636		$	(137)

(1)Amounts include interest rate swaps as fair value hedges of fixed-rate investment securities using the portfolio layer method.

(2)LIBOR swap instruments are instruments received from LIBOR transition of clearinghouses and mature in July 2023.

(3)Forward starting swaps effective starting from July 2023 to October 2027.

(4)Forward starting swaps effective starting from July 2023 to January 2025.

(5)Forward starting swaps effective July 2023.

(6)The weighted average fixed rates for floor spread and swaption collars are the weighted average strike rates for the upper and lower bounds of the instruments.

(7)Swaps have variable pay and variable receive resets. Weighted average fixed fate column represents pay rate reset.

(8)Forward starting swaps effective starting from January 2023 to February 2023.

(9)Forward starting swaps effective starting from January 2023 to October 2027.

(10)Forward starting swaps effective starting from January 2023 to July 2024.

2023 2Q Form 10-Q 27

Table of Contents

During the six months ended June 30, 2023, we entered into $9.6 billion of interest rate swaptions with an average strike price of 4.59% to reduce the impact on capital from rising rates. These swaptions are economic hedges of interest rate risk attributable to our investment securities with the change in value of these instruments recorded in other noninterest income.

MSRs

(This section should be read in conjunction with Note 6 “Mortgage Loan Sales and Servicing Rights” of Notes to the Unaudited Consolidated Financial Statements.)

At June 30, 2023, we had a total of $505 million of capitalized MSRs representing the right to service $32.7 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 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 2022 Annual Report on Form 10-K for our on-going liquidity risk management processes.)

Liquidity risk is the possibility of us being unable to meet current and future financial obligations in a timely manner. The goal of liquidity management is to ensure adequate, stable, reliable, and cost-effective sources of funds to satisfy changes in loan and lease demand, unexpected levels of deposit withdrawals, investment opportunities, and other contractual obligations. We consider core earnings, strong capital ratios, and credit quality essential for maintaining high credit ratings, which allows us cost-effective access to market-based liquidity. We mitigate liquidity risk by maintaining liquid assets in the form of cash and cash equivalents and securities. In addition, we maintain a large, stable core deposit base and a diversified base of readily available wholesale funding sources, including advances from the FHLB through pledged borrowing capacity, issuance through dealers in the capital markets, and access to certificates of deposit issued through brokers. Liquidity risk is reviewed and managed continuously for the Bank and the parent company, as well as its subsidiaries. At June 30, 2023, management believes current sources of liquidity are sufficient to meet Huntington’s on and off-balance sheet obligations.

28 Huntington Bancshares Incorporated

Table of Contents

We maintain a contingency funding plan that provides for liquidity stress testing, which assesses the potential erosion of funds in the event of an institution-specific event or systemic financial market crisis. Examples of institution specific events could include a downgrade in our public credit rating by a rating agency, a large charge to earnings, declines in profitability or other financial measures, declines in liquidity sources including reductions in deposit balances or access to contingent funding sources, or a significant merger or acquisition. Examples of systemic events unrelated to us that could have an effect on our access to liquidity would be terrorism or war, natural disasters, political events, seizure of a major financial institution, or the default or bankruptcy of a major, corporation, mutual fund, or hedge fund. Similarly, market speculation or rumors about us, or the banking industry in general, may adversely affect the cost and availability of normal funding sources. The contingency funding plan outlines the process for addressing a liquidity crisis and provides for an evaluation of funding sources under various market conditions. It also assigns specific roles and responsibilities and communication protocols for effectively managing liquidity through a problem period.

Our largest source of liquidity on a consolidated basis is core deposits, which provide stable and lower-cost funding. Core deposits were $142.9 billion at June 30, 2023 which comprised 97% of total deposits, compared to $142.1 billion, and 96% of total deposits, at December 31, 2022. The $728 million increase in core deposits, compared to December 31, 2022, was primarily driven by an increase in consumer core deposits, partially offset by a decrease in commercial core deposits driven by shifts to off-balance sheet liquidity solutions we provide for our customers. Our core deposits come from a base of primary bank customer relationships and we continue to focus on acquiring and deepening those relationships resulting in our granular and diversified deposit base.

The following table reflects deposit composition detail.


Table 17 - Deposit Composition

(dollar amounts in millions)	At June 30, 2023				At December 31, 2022
Total deposits by type:
Demand deposits—noninterest-bearing	$	33,340	23	%	$	38,242	26	%
Demand deposits—interest-bearing	40,387		27		43,136		29
Money market deposits	40,534		28		36,082		24
Savings and other domestic deposits	18,294		12		20,357		14
Core certificates of deposit (1)	10,314		7		4,324		3
Total core deposits:	142,869		97		142,141		96
Other domestic deposits of $250,000 or more	381		—		220		—
Negotiable CDs, brokered and other deposits	4,778		3		5,553		4

Total deposits	$	148,028	100	%	$	147,914	100	%









Total core deposits:
Commercial	$	61,450	43	%	$	64,107	45	%
Consumer	81,419		57		78,034		55
Total core deposits	$	142,869	100	%	$	142,141	100	%

Total deposits (insured/uninsured):
Insured deposits	$	104,912	71	%	$	100,631	68	%


Uninsured deposits (2)	43,116		29		47,283		32

Total deposits	$	148,028	100	%	$	147,914	100	%

(1)Includes consumer certificates of deposit of $250,000 or more.

(2)Represents consolidated Huntington uninsured deposits, determined by adjusting the amounts reported in the Bank Call Report (FFIEC 031) by inter-company deposits, which are not customer deposits and are therefore eliminated through consolidation. As of June 30, 2023, the Bank Call Report uninsured deposit balance was reported gross at $58.0 billion, which includes $3.8 billion of inter-company parent affiliate deposits and $11.1 billion of inter-company bank subsidiary deposits. As of December 31, 2022, the Bank Call Report uninsured deposit balance was $50.9 billion, which includes $3.6 billion of inter-company parent affiliate deposits and excludes $33.7 billion of inter-company bank subsidiary deposits.

Cash and cash equivalents were $11.1 billion and $6.7 billion at June 30, 2023 and December 31, 2022, respectively. The $4.4 billion increase in cash and cash equivalents is primarily due to an increase in interest-bearing deposits at the Federal Reserve Bank to support short-term liquidity.

2023 2Q Form 10-Q 29

Table of Contents

Total securities were $40.9 billion at June 30, 2023, compared to $41.3 billion at December 31, 2022. The $434 million decrease in securities compared to December 31, 2022, was primarily due to runoff and sales, partially offset by an increase in FHLB stock during the period. At June 30, 2023, the duration of the securities portfolio was 4.7 years, or 3.7 years net of hedging. Securities are pledged to secure borrowing capacity with the FHLB and the Federal Reserve, discussed further in the Bank Liquidity and Sources of Funding section below. At June 30, 2023, securities with market value of $6.5 billion were unpledged.

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. Our wholesale funding totaled $21.6 billion at June 30, 2023, compared to $17.5 billion at December 31, 2022. The increase from year-end is primarily due to an increase in long-term FHLB borrowings. As of June 30, 2023, long-term FHLB borrowings have a weighted average life of 2.2 years.

Bank Liquidity and Sources of Funding

Our primary sources of funding for the Bank are consumer and commercial core deposits. At June 30, 2023, these core deposits funded 76% of total assets (118% of total loans and leases). To the extent we are unable to obtain sufficient liquidity through core deposits and cash and cash equivalents, we may meet our liquidity needs through sources of wholesale funding and asset securitization or sale.

The Bank maintains borrowing capacity at both the FHLB and the Federal Reserve secured by pledged loans and securities. The Bank does not consider borrowing capacity at the Federal Reserve a primary source of funding, however, it could be used as a potential source of liquidity in a stressed environment or during a market disruption. At June 30, 2023, the Bank’s available contingent borrowing capacity at the FHLB and Federal Reserve totaled $77.2 billion, compared to $53.5 billion at December 31, 2022. The increase reflects our optimization of contingent borrowing capacity through the pledge of incremental assets. The amount of available contingent borrowing capacity may fluctuate based on the level of borrowings outstanding and level of assets pledged.

Following the first quarter 2023 bank failures, the Federal Reserve Bank established the Bank Term Funding Program as an additional source of available liquidity to support depository institutions through pledging qualifying assets as collateral. The Bank has taken steps to support readiness but has not participated through June 30, 2023.

At June 30, 2023, we believe the Bank has sufficient liquidity and capital resources to meet its cash flow obligations over the next 12 months and 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.

The parent company had $3.7 billion and $3.5 billion at June 30, 2023 and December 31, 2022 in cash and cash equivalents, respectively.

On July 19, 2023, our Board of Directors declared a quarterly common stock cash dividend of $0.155 per common share. The dividend is payable on October 2, 2023, to shareholders of record on September 18, 2023. 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 July 19, 2023, our Board of Directors declared a quarterly Series B, Series E, Series F, Series G, Series H, and Series J Preferred Stock dividend payable on October 16, 2023 to shareholders of record on October 1, 2023. On June 15, 2023, our Board of Directors declared a quarterly dividend for the Series I Preferred Stock payable on September 1, 2023 to shareholders of record on August 15, 2023. Total cash demands required for preferred stock dividends are expected to be approximately $38 million per quarter.

During the first six months of 2023, the Bank paid preferred and common dividends to the parent company of $22 million and $753 million, respectively. To meet any additional liquidity needs, the parent company may issue debt or equity securities.

30 Huntington Bancshares Incorporated

Table of Contents

At June 30, 2023, we believe the Company has sufficient liquidity and capital resources to meet its cash flow obligations over the next 12 months and for the foreseeable future.

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, caps and floors, swaption collars, 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 cyberattacks 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 has the option to work 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.

To govern 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 our Audit Committee, as appropriate. Significant findings or issues are escalated by the Third Party Risk Management Committee to the Technology Committee of the Board of Directors, as appropriate.

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.

2023 2Q Form 10-Q 31

Table of Contents

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 hold ourselves to a high standard for adherence to compliance management and seek to continuously enhance our performance.

Capital

We consider disciplined capital management as a key objective. 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 our overall capital adequacy. We believe our current levels of both regulatory capital and shareholders’ equity are adequate.

The following table presents certain regulatory capital data at both the consolidated and Bank levels for each of the periods presented:


Table 18 - Regulatory Capital Data (1)

(dollar amounts in millions)		At June 30, 2023			At December 31, 2022
Total risk-weighted assets	Consolidated	$	141,432		$	141,940
	Bank	141,320			141,571
CET1 risk-based capital	Consolidated	13,885			13,290
	Bank	14,617			14,133
Tier 1 risk-based capital	Consolidated	16,379			15,467
	Bank	15,830			15,334
Tier 2 risk-based capital	Consolidated	3,161			3,106
	Bank	2,368			2,313
Total risk-based capital	Consolidated	19,540			18,573
	Bank	18,198			17,647
CET1 risk-based capital ratio	Consolidated	9.82		%	9.36		%
	Bank	10.34			9.98
Tier 1 risk-based capital ratio	Consolidated	11.58			10.90
	Bank	11.20			10.83
Total risk-based capital ratio	Consolidated	13.82			13.09
	Bank	12.88			12.47
Tier 1 leverage ratio	Consolidated	9.01			8.60
	Bank	8.40			8.54

(1) Huntington elected to temporarily delay certain effects of CECL on regulatory capital for two years, followed by a three-year transition period which began January 1, 2022 pursuant to a rule that allows bank holding companies and banks to delay for two years 100% of the day-one impact of adopting CECL and 25% of the cumulative change in the reported allowance for credit losses since adopting CECL. As of June 30, 2023 and December 31, 2022, we have phased in 50% and 25%, respectively, of the cumulative CECL deferral with the remaining impact to be recognized over the remainder of the three-year transition period.

At June 30, 2023, at both the consolidated and Bank level, we maintained Basel III capital ratios in excess of the well-capitalized standards established by the Federal Reserve. The increase in the consolidated CET1 risk-based capital ratio, compared to the prior year end, was primarily driven by current period earnings, partially offset by dividends and the CECL transitional amount.

32 Huntington Bancshares Incorporated

Table of Contents

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 $18.8 billion at June 30, 2023, an increase of $1.1 billion, or 6%, when compared with December 31, 2022. The increase was primarily driven by earnings, net of dividends, and the issuance of perpetual preferred stock.

Huntington is authorized to make capital distributions that are consistent with the requirements in the Federal Reserve’s capital rule, inclusive of the SCB requirement. Huntington’s SCB requirement associated with its 2022 Capital Plan is 3.3%, and is effective for the period of October 1, 2022 through September 30, 2023. On April 5, 2023, Huntington submitted its 2023 Capital Plan to the Federal Reserve for supervisory review. By notice dated June 28, 2023, the Federal Reserve informed Huntington that its indicative SCB requirement associated with its 2023 Capital Plan is 3.2%, and is effective for the period of October 1, 2023 through September 30, 2024. Although Huntington was not subject to the Federal Reserve’s 2023 supervisory stress test, Huntington’s indicative SCB was updated for 2023 based on the dividend add-on component of the SCB.

Share Repurchases

From time to time our 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 January 18, 2023, our Board authorized the repurchase of up to $1.0 billion of common shares within the eight quarter period ending December 31, 2024, subject to the Federal Reserve’s capital regulations. Purchases of common stock under the authorization may include open market purchases, privately negotiated transactions, and accelerated share repurchase programs. During the six months ended June 30, 2023, Huntington repurchased no shares of common stock under the current repurchase authorization. As part of the 2023 capital plan and our current expectation that organic capital will be used for funding loan and lease growth, we do not expect to utilize the share repurchase program during 2023. However, we may at our discretion resume share repurchases at any time while considering factors including, but not limited to, capital requirements and market conditions.

BUSINESS SEGMENT DISCUSSION

Overview

To align with our strategic priorities, during the second quarter 2023, we completed an organizational realignment and now report on two business segments: Consumer & Regional Banking and Commercial Banking. The Treasury / Other function includes technology and operations, other unallocated assets, liabilities, revenue, and expense. Huntington’s business segments are based on our internally-aligned segment leadership structure, which is how management monitors results and assesses performance. The organizational realignment primarily involved consolidating our previously reported Consumer and Business Banking, Vehicle Finance and RBHPCG, into one new business segment called Consumer & Regional Banking. Prior period results have been adjusted to conform to the new segment presentation.

Following is a description of our business segments and the Treasury/Other function:

Consumer & Regional Banking - The Consumer & Regional Banking segment provides a wide array of financial products and services to consumer and business customers including, but not limited to, deposits, lending, payments, mortgage banking, dealer financing, investment management, trust, brokerage, insurance, and other financial products and services. We serve our customers through our network of channels, including branches, online banking, mobile banking, telephone banking, and ATMs.

2023 2Q Form 10-Q 33

Table of Contents

We have a “Fair Play” banking philosophy: providing differentiated products and services, built on a strong foundation of customer friendly products and advocacy. Our brand resonates with consumers and businesses, helping us acquire new customers and deepen relationships with current customers. Our Fair Play banking suite of products includes 24-Hour Grace®, Perks and Asterisk-Free Checking®, Money Scout℠, $50 Safety Zone℠, Standby Cash®, Early Pay, Instant Access, The Hub, and Huntington Heads Up®.

Consumer & Regional Banking offers a comprehensive set of digitally powered consumer and business financial solutions to Consumer Lending, Regional Banking, Branch Banking, and Wealth Management customers.

Consumer Lending provides direct and indirect consumer loans, as well as dealer finance loans and deposits. The direct consumer loan products, including mortgage and home equity, are originated through branch, online, and third-party channels. Indirect consumer loans are originated through deep relationships with dealerships to finance consumer purchases of automobiles, recreational vehicles, marine craft, and powersports. We also provide dealer finance loans (including floorplan loans), deposits, and other financial products to these dealerships and their owners.

Regional Banking, along with our business and specialty banking offerings, is a dynamic part of our business and we are committed to being the bank of choice for businesses in our markets. Regional Banking is defined as serving small to mid-sized businesses. Beyond conventional lending solutions, Huntington offers access to capital markets, practice finance and SBA lending capabilities. We are the #1 SBA lender in the nation in units as of federal fiscal year end September 30, 2022. In addition, our payments business provides credit and debit cards and treasury management services to our customers. Huntington continues to develop products and services that are designed specifically to meet the needs of business customers and looks for ways to help companies find solutions to their financing needs.

Branch Banking provides a full range of financial products and services to consumer and business customers through our extensive branch and ATM network. The branch network offers full-service branches that are primarily located in Ohio, Colorado, Illinois, Indiana, Kentucky, Michigan, Minnesota, Pennsylvania, West Virginia, and Wisconsin.

Wealth Management has a comprehensive product offering, including private banking, wealth management and legacy planning through investment and portfolio management, fiduciary administration and trust services, institutional custody services, and full-service retail brokerage investments.

Commercial Banking - The Commercial Banking segment provides expertise through bankers, capabilities, and digital channels, and includes a comprehensive set of product offerings. Our target clients span from mid-market to large corporates across a national footprint. The Commercial Banking segment leverages internal partnerships for wealth management, trust, insurance, payments, and treasury management capabilities. In particular, our payments capabilities continue to expand as we develop unique solutions for our diverse client segments, including Huntington ChoicePay. This segment includes customers in Middle Market Banking, Corporate, Specialty, and Government Banking, Asset Finance, Commercial Real Estate Banking, and Capital Markets.

Middle Market Banking serves the banking needs of mid-sized clients who reside in our geographic footprint. We leverage our local presence to serve our clients, extending our full suite of banking products including lending, liquidity, treasury management and other payment services, and capital markets.

Corporate, Specialty, and Government Banking serves medium to large enterprises. We focus on specific industry verticals such as government and non-profits, healthcare, technology and telecommunications, franchises, financial sponsors, and global services. Our expertise in these markets allows us to uniquely serve our clients’ sophisticated banking, capital markets, and payments requirements.

Asset Finance serves our clients’ capital expenditure and working capital needs through equipment financing, asset-based lending, distribution finance, structured lending, and municipal financing solutions. Our relationship with large manufacturers is bolstered by a strong commitment to their dealers and financing needs.

Commercial Real Estate Banking provides banking solutions to commercial real estate developers and institutional sponsors across the nation. Within this group, Huntington Community Development improves the quality of life for our communities and the residents of low-to-moderate income neighborhoods by developing and delivering innovative products and services to support affordable housing and neighborhood stabilization, including tax credit investments.

34 Huntington Bancshares Incorporated

Table of Contents

Capital Markets delivers corporate risk management, institutional sales and trading, capital and equity raising, and advisory services.

Treasury / Other - 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.

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 the business segments from Treasury / Other. We utilize a full-allocation methodology, where all Treasury / Other expenses, except reported acquisition-related expenses, if any, and a small amount of other residual unallocated expenses, are allocated to the 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 modeled 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 by Business Segment

Net income by business segment for the six-month periods ending June 30, 2023 and June 30, 2022 is presented in the following table:


Table 19 - Net Income by Business Segment
	Six months ended June 30,
(dollar amounts in millions)	2023		2022
Consumer & Regional Banking	$	1,086	$	313
Commercial Banking	657		555



Treasury / Other	(582)		131
Net income attributable to Huntington	$	1,161	$	999

2023 2Q Form 10-Q 35

Table of Contents


Consumer & Regional Banking

Table 20 - Key Performance Indicators for Consumer & Regional Banking
	Six months ended June 30,						Change
(dollar amounts in millions)	2023			2022			Amount			Percent
Net interest income	$	2,358		$	1,341		$	1,017		76	%
Provision for credit losses	110			167			(57)			(34)
Noninterest income	646			674			(28)			(4)
Noninterest expense	1,519			1,452			67			5
Provision for income taxes	289			83			206			NM
Net income attributable to Huntington	$	1,086		$	313		$	773		NM
Number of employees (average full-time equivalent)	11,868			12,038			(170)			(1)	%
Total average assets	$	70,361		$	68,627		$	1,734		3
Total average loans/leases	64,497			62,085			2,412			4
Total average deposits	104,373			106,457			(2,084)			(2)
Net interest margin	4.48		%	2.49		%	1.99		%	80
NCOs	$	69		$	56		$	13		23
NCOs as a % of average loans and leases	0.21		%	0.18		%	0.03		%	17
Total assets under management (in billions)—eop	$	22.8		$	21.0		$	1.8		9
Total trust assets (in billions)—eop	156.7			129.3			27.4			21

Consumer & Regional Banking reported net income of $1.1 billion in the six-month period of 2023, an increase of $773 million compared to the year-ago period. Segment net interest income increased $1.0 billion, or 76%, primarily due to a 199 basis point increase in NIM driven by the higher rate environment. The provision for credit losses decreased $57 million, or 34%, primarily due to consumer recessionary risk profiles added in second quarter 2022. Average loans and leases increased $2.4 billion, or 4%. Average deposits decreased $2.1 billion, or 2%. Noninterest income decreased $28 million, or 4%, primarily due to decreases in service charges primarily reflecting impact from program changes, lower mortgage banking income primarily reflecting lower salable volume, and in gain on sale of loans resulting from the strategic decision to retain the guaranteed portion of SBA loans at origination, partially offset by a $57 million gain on the sale of our RPS business and an increase in card and payment processing income. Noninterest expense increased $67 million, or 5%, primarily due to gains from branch sales in the six-month period of 2022, higher personnel expense, and increased overhead allocations.

36 Huntington Bancshares Incorporated

Table of Contents


Commercial Banking

Table 21 - Key Performance Indicators for Commercial Banking
	Six months ended June 30,						Change
(dollar amounts in millions)	2023			2022			Amount			Percent
Net interest income	$	1,140		$	837		$	303		36	%
Provision for credit losses	67			(75)			142			NM
Noninterest income	323			290			33			11
Noninterest expense	552			494			58			12
Provision for income taxes	177			149			28			19
Income attributable to non-controlling interest	10			4			6			NM
Net income attributable to Huntington	$	657		$	555		$	102		18	%
Number of employees (average full-time equivalent)	2,240			2,026			214			11	%
Total average assets	$	64,477		$	57,532		$	6,945		12
Total average loans/leases	56,148			50,229			5,919			12
Total average deposits	36,019			33,451			2,568			8
Net interest margin	3.92		%	3.19		%	0.73		%	23
NCOs	$	36		$	(28)		$	64		NM
NCOs as a % of average loans and leases	0.13		%	(0.11)		%	0.24		%	NM

Commercial Banking reported net income of $657 million in the six-month period of 2023, compared to $555 million in the year-ago period. Segment net interest income increased $303 million, or 36%, primarily due to a 73 basis point increase in NIM, driven by the higher rate environment resulting in an increase in spreads and an increase in average loans and leases, partially offset by an increase in average deposits. The provision for credit losses increased $142 million, due to reserve releases in second quarter of 2022 along with modest deterioration in the macroeconomic environment in the current period. Noninterest income increased $33 million, or 11%, primarily due to an increase in capital markets fees, primarily due to higher advisory fees supported by the impact of the Capstone Partners acquisition, partially offset by lower service charges on deposit accounts and a decrease in leasing revenue. Noninterest expense increased $58 million, or 12%, primarily due to an increase in personnel costs reflecting the impact of the Capstone Partners acquisition and an increase in average full-time equivalent employees, partially offset by lower lease financing equipment depreciation, equipment expense, and outside data and other processing services.

Treasury / Other

The Treasury / Other function includes revenue and expense related to assets, liabilities, derivatives, and equity not directly assigned or allocated to one of the two 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 corporate administrative, acquisition-related expenses, if any, 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.

Treasury / Other reported a net loss of $582 million in the six-month period of 2023, a decrease of $713 million, compared to the year-ago period, driven by a decrease in net interest income, partially offset by a decrease in provision for income tax. Treasury / Other net interest income decreased $972 million, primarily due to an increase in FTP credit rates on deposits allocated to the business segments.

2023 2Q Form 10-Q 37

Table of Contents

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; deterioration in business and economic conditions, including persistent inflation, supply chain issues or labor shortages, instability in global economic conditions and geopolitical matters, as well as volatility in financial markets; the impact of pandemics, including the COVID-19 pandemic and related variants and mutations, and their impact on the global economy and financial market conditions and our business, results of operations, and financial condition; the impacts related to or resulting from recent bank failures and other volatility, including potential increased regulatory requirements and costs, such as FDIC special assessments, long-term debt requirements and heightened capital requirements, and potential impacts to macroeconomic conditions, which could affect the ability of depository institutions, including us, to attract and retain depositors and to borrow or raise capital; unexpected outflows of uninsured deposits which may require us to sell investment securities at a loss; rising interest rates which could negatively impact the value of our portfolio of investment securities; the loss of value of our investment portfolio which could negatively impact market perceptions of us and could lead to deposit withdrawals; the effects of social media on market perceptions of us and banks generally; cybersecurity risks; uncertainty in U.S. fiscal and monetary policy, including the interest rate policies of the Federal Reserve; volatility and disruptions in global capital and credit markets; movements in interest rates; transition away from 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; 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 an FTE basis are considered non-GAAP financial measures. Management believes net interest income on an 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 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.

38 Huntington Bancshares Incorporated

Table of Contents

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 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.

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 2022 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 critical accounting policies include the allowance for credit losses, fair value measurement, and goodwill. The policies, assumptions, and judgments related to fair value measurement and goodwill are described in the Critical Accounting Policies and Use of Significant Estimates section within the MD&A of Huntington’s 2022 Annual Report on Form 10-K. The following details the policies, assumption, and judgments related to the allowance for credit losses.

Allowance for Credit Losses

Our ACL at June 30, 2023 represents our current estimate of the lifetime credit losses expected from our loan and lease portfolio and our unfunded lending commitments.

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 unemployment rates and GDP. 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.

2023 2Q Form 10-Q 39

Table of Contents

However, to illustrate a hypothetical sensitivity analysis, management calculated a quantitative allowance using a 100% weighting applied to an adverse scenario. This scenario contemplates persisting inflation concerns at the Federal Reserve causing the federal funds rate to remain elevated through third quarter of 2023, ongoing banking industry uncertainty and the tightening of lending standards. Increased geopolitical tensions between China and Taiwan impact the supply chain for semiconductors. The threat of a wider conflict causes consumer confidence to fall. Additionally, the Russian invasion lasts longer than in the baseline scenario further impacting the supply chain. The combination of elevated inflation, banking industry uncertainty, increasing supply chain shortages, political tensions and the federal funds rate remaining elevated cause the stock market to fall. The economy falls into a recession in the third quarter of 2023. Under this scenario, as an example, the unemployment rate increases from baseline levels and remains elevated for a prolonged period, the rate is estimated at 7.1% and 7.3% at the end of 2023 and 2024, respectively. This forecast reflects unemployment rates that are approximately 3.3% and 3.1% higher than baseline scenario projections of 3.8% and 4.2%, respectively, for the same time periods.

To demonstrate the sensitivity to key economic parameters used in the calculation of our ACL at June 30, 2023, management calculated the difference between our quantitative ACL and this 100% adverse scenario. Excluding consideration of qualitative adjustments, this sensitivity analysis would result in a hypothetical increase in our ACL of approximately $1.2 billion at June 30, 2023. This hypothetical increase is reflective of the sensitivity of the rate of change in the unemployment variable on our models.

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 geopolitical instability or risks of inflation including a near-term recession, 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 geopolitical instability and risks of inflation 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 Consolidated Financial Statements.

40 Huntington Bancshares Incorporated

Table of Contents

Item 1: Financial Statements

Huntington Bancshares Incorporated

Consolidated Balance Sheets

(Unaudited)


	At June 30,		At December 31,
(dollar amounts in millions)	2023		2022
Assets
Cash and due from banks	$	1,636	$	1,796
Interest-bearing deposits at Federal Reserve Bank	9,443		4,908
Interest-bearing deposits in banks	210		214
Trading account securities	128		19
Available-for-sale securities	23,233		23,423
Held-to-maturity securities	16,578		17,052


Other securities	975		854
Loans held for sale (includes $543 and $520 respectively, measured at fair value)(1)	545		529
Loans and leases (includes $175 and $185 respectively, measured at fair value)(1)	121,225		119,523
Allowance for loan and lease losses	(2,177)		(2,121)
Net loans and leases	119,048		117,402
Bank owned life insurance	2,757		2,753
Accrued income and other receivables	1,471		1,573
Premises and equipment	1,128		1,156
Goodwill	5,561		5,571
Servicing rights and other intangible assets	690		712
Other assets	5,102		4,944
Total assets	$	188,505	$	182,906
Liabilities and shareholders’ equity
Liabilities
Deposits:
Demand deposits—noninterest-bearing	$	33,340	$	38,242
Interest-bearing	114,688		109,672
Total deposits	148,028		147,914
Short-term borrowings	1,680		2,027
Long-term debt	14,711		9,686
Other liabilities	5,248		5,510
Total liabilities	169,667		165,137
Commitments and Contingent Liabilities (Note 15)
Shareholders’ Equity
Preferred stock	2,484		2,167
Common stock	15		14
Capital surplus	15,335		15,309
Less treasury shares, at cost	(92)		(80)
Accumulated other comprehensive income (loss)	(3,006)		(3,098)
Retained earnings	4,052		3,419
Total Huntington shareholders’ equity	18,788		17,731
Non-controlling interest	50		38
Total equity	18,838		17,769
Total liabilities and equity	$	188,505	$	182,906
Common shares authorized (par value of $0.01)	2,250,000,000		2,250,000,000

Common shares outstanding	1,447,882,434		1,443,068,036
Treasury shares outstanding	7,429,675		6,322,052
Preferred stock, authorized shares	6,617,808		6,617,808

Preferred shares outstanding	882,500		557,500

(1)Amounts represent loans for which Huntington has elected the fair value option. See Note 12 “Fair Values of Assets and Liabilities”.

See Notes to Unaudited Consolidated Financial Statements

2023 2Q Form 10-Q 41

Table of Contents


Huntington Bancshares Incorporated
Consolidated Statements of Income
(Unaudited)
	Three months ended June 30,				Six months ended June 30,
(dollar amounts in millions, except per share data, share count in thousands)	2023		2022		2023		2022
Interest and fee income:
Loans and leases	$	1,679	$	1,078	$	3,258	$	2,082
Available-for-sale securities
Taxable	252		123		484		213
Tax-exempt	26		15		49		32
Held-to-maturity securities—taxable	102		90		204		156
Other securities—taxable	11		6		21		11

Other	155		19		237		32
Total interest income	2,225		1,331		4,253		2,526
Interest expense:
Deposits	570		25		976		36
Short-term borrowings	74		7		134		14

Long-term debt	235		38		388		69

Total interest expense	879		70		1,498		119
Net interest income	1,346		1,261		2,755		2,407
Provision for credit losses	92		67		177		92
Net interest income after provision for credit losses	1,254		1,194		2,578		2,315
Service charges on deposit accounts	87		105		170		202
Card and payment processing income	102		96		195		182
Capital markets fees	57		54		116		96
Trust and investment management services	68		63		130		128
Mortgage banking income	33		44		59		93
Leasing revenue	25		27		51		62
Insurance income	30		27		64		58
Gain on sale of loans	8		12		11		40
Bank owned life insurance income	16		11		32		28
Net (losses) gains on sales of securities	(5)		—		(4)		—

Other noninterest income	74		46		183		95
Total noninterest income	495		485		1,007		984
Personnel costs	613		577		1,262		1,157
Outside data processing and other services	148		153		299		318
Equipment	64		61		128		142
Net occupancy	54		58		114		122
Marketing	32		24		57		45
Professional services	21		19		37		38
Deposit and other insurance expense	23		20		43		38
Amortization of intangibles	13		13		26		27
Lease financing equipment depreciation	8		11		16		25

Other noninterest expense	74		82		154		159
Total noninterest expense	1,050		1,018		2,136		2,071
Income before income taxes	699		661		1,449		1,228
Provision for income taxes	134		120		278		225
Income after income taxes	565		541		1,171		1,003
Income attributable to non-controlling interest	6		2		10		4
Net income attributable to Huntington	559		539		1,161		999
Dividends on preferred shares	40		28		69		56

Net income applicable to common shares	$	519	$	511	$	1,092	$	943
Average common shares—basic	1,446,372		1,441,200		1,444,820		1,439,814
Average common shares—diluted	1,465,720		1,463,293		1,467,500		1,463,810
Per common share:
Net income—basic	$	0.36	$	0.35	$	0.76	$	0.65
Net income—diluted	0.35		0.35		0.74		0.64



See Notes to Unaudited Consolidated Financial Statements

42 Huntington Bancshares Incorporated

Table of Contents

Huntington Bancshares Incorporated

Consolidated Statements of Comprehensive Income

(Unaudited)


	Three months ended June 30,				Six months ended June 30,
(dollar amounts in millions)	2023		2022		2023		2022
Net income attributable to Huntington	$	559	$	539	$	1,161	$	999
Other comprehensive income (loss), net of tax:



Net unrealized gains (losses) on available-for-sale securities	(190)		(820)		104		(1,999)
Net impact of fair value hedges on available-for-sale securities	107		123		(33)		455
Net change related to cash flow hedges on loans	(169)		(86)		20		(326)


Translation adjustments, net of hedges	1		(2)		1		(2)
Change in accumulated unrealized gains for pension and other post-retirement obligations	—		1		—		3
Other comprehensive income (loss), net of tax	(251)		(784)		92		(1,869)
Comprehensive income (loss) attributable to Huntington	308		(245)		1,253		(870)
Comprehensive income attributed to non-controlling interest	6		2		10		4
Comprehensive income (loss)	$	314	$	(243)	$	1,263	$	(866)

See Notes to Unaudited Consolidated Financial Statements

2023 2Q Form 10-Q 43

Table of Contents

Huntington Bancshares Incorporated

Consolidated Statements of Changes in Shareholders’ Equity

(Unaudited)


(dollar amounts in millions, share amounts in thousands)	Preferred Stock		Common Stock			Capital Surplus		Treasury Stock			AOCI		Retained Earnings		Huntington Shareholders’ Equity		Non-controlling		Total
	Amount		Shares	Amount				Shares	Amount								Interest		Equity
Three months ended June 30, 2023
Balance, beginning of period	$	2,484	1,450,080	$	15	$	15,332	(6,465)	$	(82)	$	(2,755)	$	3,764	$	18,758	$	53	$	18,811
Net income													559		559		6		565
Other comprehensive income (loss), net of tax											(251)				(251)				(251)







Cash dividends declared:
Common ($0.155 per share)													(228)		(228)				(228)
Preferred													(40)		(40)				(40)
Recognition of the fair value of share-based compensation						23									23				23

Other share-based compensation activity			5,232	—		(20)							(3)		(23)				(23)

Other						—		(965)	(10)				—		(10)		(9)		(19)
Balance, end of period	$	2,484	1,455,312	$	15	$	15,335	(7,430)	$	(92)	$	(3,006)	$	4,052	$	18,788	$	50	$	18,838

Three months ended June 30, 2022
Balance, beginning of period	$	2,167	1,445,386	$	14	$	15,255	(6,211)	$	(78)	$	(1,314)	$	2,408	$	18,452	$	29	$	18,481

Net income													539		539		2		541
Other comprehensive (loss) income, net of tax											(784)				(784)				(784)










Cash dividends declared:
Common ($0.155 per share)													(228)		(228)				(228)
Preferred													(28)		(28)				(28)

Recognition of the fair value of share-based compensation						23									23				23

Other share-based compensation activity			3,499	—		(17)							—		(17)				(17)
Other						—		(480)	(7)				—		(7)		(2)		(9)
Balance, end of period	$	2,167	1,448,885	$	14	$	15,261	(6,691)	$	(85)	$	(2,098)	$	2,691	$	17,950	$	29	$	17,979

See Notes to Unaudited Consolidated Financial Statements

44 Huntington Bancshares Incorporated

Table of Contents



(dollar amounts in millions, share amounts in thousands)	Preferred Stock		Common Stock			Capital Surplus		Treasury Stock			AOCI		Retained Earnings		Huntington Shareholders’ Equity		Non-controlling Interest		Total Equity
	Amount		Shares	Amount				Shares	Amount
Six months ended June 30, 2023
Balance, beginning of period	$	2,167	1,449,390	$	14	$	15,309	(6,322)	$	(80)	$	(3,098)	$	3,419	$	17,731	$	38	$	17,769

Net income													1,161		1,161		10		1,171
Other comprehensive income (loss), net of tax											92				92				92




Net proceeds from issuance of Series J Preferred Stock	317														317				317



Cash dividends declared:
Common ($0.31 per share)													(456)		(456)				(456)
Preferred													(69)		(69)				(69)

Recognition of the fair value of share-based compensation						48									48				48
Other share-based compensation activity			5,922	1		(22)							(3)		(24)				(24)

Other						—		(1,108)	(12)		—		—		(12)		2		(10)
Balance, end of period	$	2,484	1,455,312	$	15	$	15,335	(7,430)	$	(92)	$	(3,006)	$	4,052	$	18,788	$	50	$	18,838

Six months ended June 30, 2022
Balance, beginning of period	$	2,167	1,444,040	$	14	$	15,222	(6,298)	$	(79)	$	(229)	$	2,202	$	19,297	$	21	$	19,318

Net income													999		999		4		1,003
Other comprehensive income (loss), net of tax											(1,869)				(1,869)				(1,869)








Cash dividends declared:
Common ($0.31 per share)													(454)		(454)				(454)
Preferred													(56)		(56)				(56)

Recognition of the fair value of share-based compensation						63									63				63
Other share-based compensation activity			4,845	—		(24)							—		(24)				(24)

Other						—		(393)	(6)				—		(6)		4		(2)
Balance, end of period	$	2,167	1,448,885	$	14	$	15,261	(6,691)	$	(85)	$	(2,098)	$	2,691	$	17,950	$	29	$	17,979

See Notes to Unaudited Consolidated Financial Statements

2023 2Q Form 10-Q 45

Table of Contents

Huntington Bancshares Incorporated

Consolidated Statements of Cash Flows

(Unaudited)


	Six months ended June 30,
(dollar amounts in millions)	2023		2022
Operating activities
Net income	$	1,171	$	1,003
Adjustments to reconcile net income to net cash provided by operating activities:

Provision for credit losses	177		92
Depreciation and amortization	344		207
Share-based compensation expense	48		63
Deferred income tax expense	38		108


Net change in:
Trading account securities	(109)		12
Loans held for sale	(79)		485

Other assets	(617)		(206)
Other liabilities	(213)		67


Other, net	—		(7)
Net cash provided by operating activities	760		1,824
Investing activities
Change in interest bearing deposits in banks	5		321
Net cash (paid) received from business combinations	—		(223)
Proceeds from:
Maturities and calls of available-for-sale securities	1,060		2,401
Maturities and calls of held-to-maturity securities	710		1,699
Maturities and calls of other securities	337		812
Sales of available-for-sale securities	736		—
Sales of other securities	142		9
Purchases of available-for-sale securities	(1,549)		(5,246)
Purchases of held-to-maturity securities	(254)		(2,409)
Purchases of other securities	(600)		(936)

Net proceeds from sales of portfolio loans and leases	266		704
Principal payments received under direct finance and sales-type leases	950		902
Net loan and lease activity, excluding sales and purchases	(3,012)		(5,858)

Purchases of premises and equipment	(57)		(123)

Purchases of loans and leases	(25)		(493)
Net accrued income and other receivables activity	116		(818)


Other, net	43		53
Net cash (used in) provided by investing activities	(1,132)		(9,205)
Financing activities
(Decrease) increase in deposits	114		2,172
Increase in short-term borrowings	(207)		3,209

Net proceeds from issuance of long-term debt	13,594		2,075
Maturity/redemption of long-term debt	(8,536)		(1,158)
Dividends paid on preferred stock	(57)		(56)
Dividends paid on common stock	(449)		(449)



Net proceeds from issuance of preferred stock	317		—


Other, net	(29)		(26)
Net cash provided by financing activities	4,747		5,767
Increase (decrease) in cash and cash equivalents	4,375		(1,614)
Cash and cash equivalents at beginning of period	6,704		5,522
Cash and cash equivalents at end of period	$	11,079	$	3,908

46 Huntington Bancshares Incorporated

Table of Contents


	Six months ended June 30,
(dollar amounts in millions)	2023		2022
Supplemental disclosures:
Interest paid	$	1,433	$	113
Income taxes (received) paid	93		(110)

Non-cash activities
Loans transferred to held-for-sale from portfolio	246		569
Loans transferred to portfolio from held-for-sale	12		31


Transfer of securities from available-for-sale to held-to-maturity	—		4,225

See Notes to Unaudited Consolidated Financial Statements

2023 2Q Form 10-Q 47

Table of Contents

Huntington Bancshares Incorporated

Notes to Unaudited Consolidated Financial Statements

1. BASIS OF PRESENTATION

The accompanying Unaudited 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 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 2022 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.

During the 2023 second quarter, Huntington revised its process for assessing and monitoring the risk and performance of non-real estate secured commercial loans, primarily loans to REITs. These loans were reclassified from commercial real estate to the commercial and industrial loan category to align reporting with this process revision. All prior period results have been adjusted to conform to the current presentation.

During the 2023 second quarter, Huntington completed an organizational realignment and now reports on two business segments: Consumer & Regional Banking and Commercial Banking. The Treasury / Other function includes technology and operations, other unallocated assets, liabilities, revenue, and expense. Huntington’s business segments are based on our internally-aligned segment leadership structure, which is how management monitors results and assesses performance. The organizational realignment primarily involved consolidating our previously reported Consumer and Business Banking, Vehicle Finance and RBHPCG, into one new business segment called Consumer & Regional Banking. Prior period results have been adjusted to conform to the new segment presentation. See Note 16 “Segment Reporting” for a description of our business segments.

Effective January 1, 2023, Huntington adopted ASU 2022-02 Financial Instruments - Credit Losses (Topic 326) Troubled Debt Restructurings (TDR) and Vintage Disclosures, which removed the existing measurement and disclosure requirements for TDR loans and added additional disclosure requirements related to modifications provided to borrowers experiencing financial difficulty. Prior to adoption a change in contractual terms of a loan where a borrower was experiencing financial difficulty and received a concession not available through other sources the loans was required to be disclosed as a TDR, whereas now a borrower that is experiencing financial difficulty and receives a modification in the form of principal forgiveness, interest rate reduction, an other-than-insignificant payment delay or a term extension in the current period needs to be disclosed. Huntington may modify loans to borrowers experiencing financial difficulty as a way of managing risk and mitigating credit loss from the borrower. Huntington may make various types of modifications and may in certain circumstances use a combination of modification types in order to mitigate future loss. The amount of defined modifications given to borrowers experiencing financial difficulty is disclosed in the Notes to the Consolidated Financial Statements, along with the financial impact of those modifications.

In conjunction with applicable accounting standards, all material subsequent events have been either recognized in the Unaudited Consolidated Financial Statements or disclosed in the Notes to Unaudited Consolidated Financial Statements. There were no material subsequent events to disclose for the current period.

48 Huntington Bancshares Incorporated

Table of Contents

2. ACCOUNTING STANDARDS UPDATE

Accounting standards adopted in the current period

Standard

Summary of guidance

Effects on financial Statements

ASU 2022-02- Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures Issued March 2022

•The amendments in this update eliminate TDR accounting while enhancing disclosure requirements for certain loan modifications when a borrower is experiencing financial difficulty. The ASU also requires disclosure of current period gross charge-offs by year of origination for financing receivables and net investments in leases.

•Management adopted the guidance during the first quarter 2023.

•The ASU has been applied prospectively, except the portion of the standard related to the recognition and measurement of TDRs where we elected to use a modified retrospective transition method.

•The adoption did not result in a material impact on Huntington’s Unaudited Consolidated Financial Statements.


Accounting standards yet to be adopted

Standard

Summary of guidance

Effects on financial statements

ASU 2023-02 Investments - Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method Issued: March 2023

•Permits the election of the proportional amortization method for any tax equity investment that meets specific criteria.

•Requires that the election be made on a tax-credit-program-by-tax-credit-program basis.

•Receipt of tax credits must be accounted for using the flow through method.

•Required that a liability be recorded for delayed equity contributions.

•Expands disclosure requirements for the nature of investments and financial statement effect.

•Effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years.

•Early adoption is permitted in any interim period.

•If adopted in an interim period, it shall be adopted as if adopted at the beginning of the fiscal year.

•The amendments can be applied in retrospective or modified retrospective basis, with a cumulative effect adjustment reflected in retained earnings.

•Huntington does not expect adoption of the standard to have a material impact on its Unaudited Consolidated Financial Statements.

2023 2Q Form 10-Q 49

Table of Contents

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 June 30, 2023 and December 31, 2022:


			Unrealized
(dollar amounts in millions)	Amortized Cost (1)(2)		Gross Gains		Gross Losses		Fair Value
At June 30, 2023
Available-for-sale securities:
U.S. Treasury	$	5	$	—	$	—	$	5
Federal agencies:
Residential CMO	3,742		—		(434)		3,308
Residential MBS	13,789		1		(1,979)		11,811
Commercial MBS	2,551		—		(653)		1,898
Other agencies	176		—		(8)		168
Total U.S. Treasury, federal agency, and other agency securities	20,263		1		(3,074)		17,190
Municipal securities	3,778		2		(244)		3,536
Private-label CMO	138		—		(15)		123
Asset-backed securities	410		—		(41)		369
Corporate debt	2,230		94		(313)		2,011
Other securities/Sovereign debt	4		—		—		4
Total available-for-sale securities	$	26,823	$	97	$	(3,687)	$	23,233

Held-to-maturity securities:
Federal agencies:
Residential CMO	$	5,012	$	—	$	(722)	$	4,290
Residential MBS	9,835		—		(1,294)		8,541
Commercial MBS	1,613		—		(245)		1,368
Other agencies	116		—		(9)		107
Total federal agency and other agency securities	16,576		—		(2,270)		14,306
Municipal securities	2		—		—		2
Total held-to-maturity securities	$	16,578	$	—	$	(2,270)	$	14,308

Other securities, at cost:
Non-marketable equity securities:
Federal Home Loan Bank stock	$	412	$	—	$	—	$	412
Federal Reserve Bank stock	516		—		—		516
Equity securities	14		—		—		14
Other securities, at fair value:
Mutual funds	32		—		—		32
Equity securities	1		—		—		1
Total other securities	$	975	$	—	$	—	$	975

(1)Amortized cost amounts exclude accrued interest receivable, which is recorded within accrued income and other receivables on the Consolidated Balance Sheets. At June 30, 2023, accrued interest receivable on available-for-sale securities and held-to-maturity securities totaled $62 million and $38 million, respectively.

(2)Excluded from the amortized cost are portfolio level basis adjustments for securities designated in fair value hedges under the portfolio layer method. The basis adjustments totaled $843 million and represent a reduction to the amortized cost of the securities being hedged. The securities being hedged under the portfolio layer method are primarily Residential CMO and Residential MBS securities.

50 Huntington Bancshares Incorporated

Table of Contents


			Unrealized
(dollar amounts in millions)	Amortized Cost (1)(2)		Gross Gains		Gross Losses		Fair Value
At December 31, 2022
Available-for-sale securities:
U.S. Treasury	$	103	$	—	$	—	$	103
Federal agencies:
Residential CMO	3,336		—		(422)		2,914
Residential MBS	14,349		4		(2,090)		12,263
Commercial MBS	2,565		—		(612)		1,953
Other agencies	190		1		(9)		182
Total U.S. Treasury, federal agency, and other agency securities	20,543		5		(3,133)		17,415
Municipal securities	3,527		1		(238)		3,290
Private-label CMO	146		—		(18)		128
Asset-backed securities	416		—		(44)		372
Corporate debt	2,467		132		(385)		2,214
Other securities/Sovereign debt	4		—		—		4
Total available-for-sale securities	$	27,103	$	138	$	(3,818)	$	23,423

Held-to-maturity securities:
Federal agencies:
Residential CMO	$	4,970	$	4	$	(714)	$	4,260
Residential MBS	10,295		—		(1,375)		8,920
Commercial MBS	1,652		—		(204)		1,448
Other agencies	133		—		(9)		124
Total federal agency and other agency securities	17,050		4		(2,302)		14,752
Municipal securities	2		—		—		2
Total held-to-maturity securities	$	17,052	$	4	$	(2,302)	$	14,754

Other securities, at cost:
Non-marketable equity securities:
Federal Home Loan Bank stock	$	312	$	—	$	—	$	312
Federal Reserve Bank stock	500		—		—		500
Equity securities	10		—		—		10
Other securities, at fair value:
Mutual funds	31		—		—		31
Equity securities	1		—		—		1
Total other securities	$	854	$	—	$	—	$	854

(1)Amortized cost amounts exclude accrued interest receivable, which is recorded within accrued income and other receivables on the Consolidated Balance Sheets. At December 31, 2022, accrued interest receivable on available-for-sale securities and held-to-maturity securities totaled $64 million and $39 million, respectively.

(2)Excluded from the amortized cost are portfolio level basis adjustments for securities designated in fair value hedges under the portfolio layer method. The basis adjustments totaled $849 million and represent a reduction to the amortized cost of the securities being hedged. The securities being hedged under the portfolio layer method are primarily Residential CMO and Residential MBS securities.

2023 2Q Form 10-Q 51

Table of Contents

The following table provides the amortized cost and fair value of securities by contractual maturity at June 30, 2023 and December 31, 2022. Expected maturities may differ from contractual maturities as issuers may have the right to call or prepay obligations with or without incurring penalties.


	At June 30, 2023				At December 31, 2022
(dollar amounts in millions)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Available-for-sale securities:
Under 1 year	$	524	$	514	$	518	$	511
After 1 year through 5 years	2,456		2,273		2,182		2,033
After 5 years through 10 years	2,734		2,507		3,106		2,814
After 10 years	21,109		17,939		21,297		18,065
Total available-for-sale securities	$	26,823	$	23,233	$	27,103	$	23,423

Held-to-maturity securities:
Under 1 year	$	2	$	2	$	—	$	—
After 1 year through 5 years	58		55		72		68
After 5 years through 10 years	75		70		71		66
After 10 years	16,443		14,181		16,909		14,620
Total held-to-maturity securities	$	16,578	$	14,308	$	17,052	$	14,754

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 June 30, 2023 and December 31, 2022:


	Less than 12 Months				Over 12 Months				Total
(dollar amounts in millions)	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
At June 30, 2023
Available-for-sale securities:
Federal agencies:
Residential CMO	$	1,249	$	(56)	$	2,059	$	(378)	$	3,308	$	(434)
Residential MBS	778		(38)		10,883		(1,941)		11,661		(1,979)
Commercial MBS	387		(64)		1,512		(589)		1,899		(653)
Other agencies	22		—		70		(8)		92		(8)
Total federal agency and other agency securities	2,436		(158)		14,524		(2,916)		16,960		(3,074)
Municipal securities	789		(49)		2,566		(195)		3,355		(244)
Private-label CMO	6		—		97		(15)		103		(15)
Asset-backed securities	—		—		369		(41)		369		(41)
Corporate debt	—		—		2,011		(313)		2,011		(313)

Total temporarily impaired available-for-sale securities	$	3,231	$	(207)	$	19,567	$	(3,480)	$	22,798	$	(3,687)

Held-to-maturity securities:
Federal agencies:
Residential CMO	$	612	$	(12)	$	3,678	$	(710)	$	4,290	$	(722)
Residential MBS	1,118		(60)		7,407		(1,234)		8,525		(1,294)
Commercial MBS	43		(3)		1,324		(242)		1,367		(245)
Other agencies	—		—		108		(9)		108		(9)
Total federal agency and other agency securities	1,773		(75)		12,517		(2,195)		14,290		(2,270)

Total temporarily impaired held-to-maturity securities	$	1,773	$	(75)	$	12,517	$	(2,195)	$	14,290	$	(2,270)

52 Huntington Bancshares Incorporated

Table of Contents


	Less than 12 Months				Over 12 Months				Total
(dollar amounts in millions)	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
At December 31, 2022
Available-for-sale securities:
Federal agencies:
Residential CMO	$	2,096	$	(224)	$	818	$	(198)	$	2,914	$	(422)
Residential MBS	2,455		(286)		9,490		(1,804)		11,945		(2,090)
Commercial MBS	1,090		(249)		863		(363)		1,953		(612)
Other agencies	40		(1)		56		(8)		96		(9)
Total federal agency and other agency securities	5,681		(760)		11,227		(2,373)		16,908		(3,133)
Municipal securities	2,298		(174)		807		(64)		3,105		(238)
Private-label CMO	64		(13)		43		(5)		107		(18)
Asset-backed securities	174		(10)		199		(34)		373		(44)
Corporate debt	727		(105)		1,487		(280)		2,214		(385)

Total temporarily impaired available-for-sale securities	$	8,944	$	(1,062)	$	13,763	$	(2,756)	$	22,707	$	(3,818)

Held-to-maturity securities:
Federal agencies:
Residential CMO	$	1,702	$	(238)	$	2,283	$	(476)	$	3,985	$	(714)
Residential MBS	4,151		(462)		4,711		(913)		8,862		(1,375)
Commercial MBS	1,201		(154)		247		(50)		1,448		(204)
Other agencies	124		(9)		—		—		124		(9)
Total federal agency and other agency securities	7,178		(863)		7,241		(1,439)		14,419		(2,302)

Total temporarily impaired held-to-maturity securities	$	7,178	$	(863)	$	7,241	$	(1,439)	$	14,419	$	(2,302)

At June 30, 2023 and December 31, 2022, the carrying value of investment securities pledged: (i) to secure certain uninsured deposits, trading account liabilities, U.S. Treasury demand notes, and security repurchase agreements, and (ii) to support borrowing capacity, totaled $33.1 billion and $26.9 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 June 30, 2023 or December 31, 2022. At June 30, 2023, all HTM debt securities are considered investment grade. In addition, there were no HTM debt securities considered past due at June 30, 2023.

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 of cash flows, as of June 30, 2023, Huntington has concluded that it expects to receive all contractual cash flows from each security held in its AFS and HTM debt securities portfolio. There was no allowance related to investment securities as of June 30, 2023 or December 31, 2022. A $4 million charge-off was recognized during the 2022 first quarter for one municipal bond classified as an AFS debt security.

2023 2Q Form 10-Q 53

Table of Contents

4. LOANS AND LEASES

The following table provides a detailed listing of Huntington’s loan and lease portfolio at June 30, 2023 and December 31, 2022.


(dollar amounts in millions)	At June 30, 2023		At December 31, 2022


















Commercial loan and lease portfolio:
Commercial and industrial	$	49,834	$	48,121
Commercial real estate	13,166		13,640
Lease financing	5,143		5,252
Total commercial loan and lease portfolio	68,143		67,013
Consumer loan portfolio:
Residential mortgage	23,138		22,226
Automobile	12,819		13,154
Home equity	10,135		10,375
RV and marine	5,640		5,376
Other consumer	1,350		1,379
Total consumer loan portfolio	53,082		52,510
Total loans and leases (1)(2)	121,225		119,523
Allowance for loan and lease losses	(2,177)		(2,121)
Net loans and leases	$	119,048	$	117,402

(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 $(86) million and $3 million at June 30, 2023 and December 31, 2022, respectively.

(2)The total amount of accrued interest recorded for these loans and leases at June 30, 2023, was $306 million and $195 million of commercial and consumer loan and lease portfolios, respectively, and at December 31, 2022, was $274 million and $186 million of commercial and consumer loan and lease portfolios, respectively. Accrued interest is presented in accrued income and other receivables within the Consolidated Balance Sheets.

Lease Financing

The following table presents net investments in lease financing receivables by category at June 30, 2023 and December 31, 2022.


(dollar amounts in millions)	At June 30, 2023		At December 31, 2022

Lease payments receivable	$	4,830	$	4,916
Estimated residual value of leased assets	797		788
Gross investment in lease financing receivables	5,627		5,704
Deferred origination costs	52		46
Deferred fees, unearned income and other	(536)		(498)
Total lease financing receivables	$	5,143	$	5,252

The carrying value of residual values guaranteed was $483 million and $466 million as of June 30, 2023 and December 31, 2022, respectively. The future lease rental payments due from customers on sales-type and direct financing leases at June 30, 2023, totaled $4.8 billion and were due as follows: $856 million in 2023, $853 million in 2024, $764 million in 2025, $784 million in 2026, $747 million in 2027, and $826 million thereafter. Interest income recognized for these types of leases was $70 million and $39 million for the three-month periods ended June 30, 2023 and 2022, respectively. For the six-month periods ended June 30, 2023 and 2022, interest income recognized for these types of leases was $138 million and $77 million, respectively.

54 Huntington Bancshares Incorporated

Table of Contents

Nonaccrual and Past Due Loans and Leases

The following table presents NALs by class at June 30, 2023 and December 31, 2022:


	At June 30, 2023				At December 31, 2022
(dollar amounts in millions)	Nonaccrual loans and leases with no ACL		Total nonaccrual loans and leases		Nonaccrual loans and leases with no ACL		Total nonaccrual loans and leases
Commercial and industrial	$	49	$	267	$	49	$	288
Commercial real estate	32		75		63		92
Lease financing	—		15		—		18
Residential mortgage	—		73		—		90
Automobile	—		4		—		4
Home equity	—		75		—		76
RV and marine	—		1		—		1

Total nonaccrual loans and leases	$	81	$	510	$	112	$	569

The following tables present an aging analysis of loans and leases, by class at June 30, 2023 and December 31, 2022:


	Past Due (1)										Loans Accounted for Under FVO		Total 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		Total		Current
At June 30, 2023
Commercial and industrial	$	42	$	21	$	86	$	149	$	49,685	$	—	$	49,834	$	7	(2)
Commercial real estate	1		—		35		36		13,130		—		13,166		—
Lease financing	28		17		18		63		5,080		—		5,143		12		(3)
Residential mortgage	229		71		167		467		22,497		174		23,138		121		(4)
Automobile	75		19		9		103		12,716		—		12,819		6
Home equity	54		23		73		150		9,984		1		10,135		18
RV and marine	13		4		2		19		5,621		—		5,640		2
Other consumer	10		3		3		16		1,334		—		1,350		3
Total loans and leases	$	452	$	158	$	393	$	1,003	$	120,047	$	175	$	121,225	$	169
At December 31, 2022
Commercial and industrial	$	53	$	19	$	108	$	180	$	47,941	$	—	$	48,121	$	23	(2)
Commercial real estate	2		1		9		12		13,628		—		13,640		—
Lease financing	36		18		10		64		5,188		—		5,252		9		(3)
Residential mortgage	246		69		199		514		21,528		184		22,226		146		(4)
Automobile	88		20		11		119		13,035		—		13,154		9
Home equity	56		30		66		152		10,222		1		10,375		15
RV and marine	15		5		3		23		5,353		—		5,376		3
Other consumer	13		3		3		19		1,360		—		1,379		2
Total loans and leases	$	509	$	165	$	409	$	1,083	$	118,255	$	185	$	119,523	$	207

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

(2)Amounts include SBA loans and leases.

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

(4)Amounts include mortgage loans insured by U.S. government agencies.

2023 2Q Form 10-Q 55

Table of Contents

Credit Quality Indicators

See Note 5 “Loans and Leases” to the Consolidated Financial Statements appearing in Huntington’s 2022 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.

For all classes within the consumer loan portfolios, borrower credit bureau scores are monitored as an indicator of credit quality. 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.

56 Huntington Bancshares Incorporated

Table of Contents

The following tables present the amortized cost basis of loans and leases by vintage and credit quality indicator at June 30, 2023 and December 31, 2022 respectively:


	At June 30, 2023
	Term Loans Amortized Cost Basis by Origination Year												Revolver Total at Amortized Cost Basis		Revolver Total Converted to Term Loans
(dollar amounts in millions)	2023		2022		2021		2020		2019		Prior						Total
Commercial and industrial
Credit Quality Indicator (1):
Pass	$	9,983	$	12,540	$	4,863	$	2,602	$	1,552	$	1,701	$	14,156	$	4	$	47,401
OLEM	107		214		79		16		7		25		159		—		607
Substandard	219		318		144		179		130		288		547		—		1,825
Doubtful	—		—		—		—		—		1		—		—		1
Total Commercial and industrial	$	10,309	$	13,072	$	5,086	$	2,797	$	1,689	$	2,015	$	14,862	$	4	$	49,834
Commercial real estate
Credit Quality Indicator (1):
Pass	$	972	$	3,794	$	2,451	$	1,247	$	1,330	$	1,556	$	638	$	—	$	11,988
OLEM	35		243		71		17		47		24		—		—		437
Substandard	164		128		90		23		151		183		2		—		741

Total Commercial real estate	$	1,171	$	4,165	$	2,612	$	1,287	$	1,528	$	1,763	$	640	$	—	$	13,166
Lease financing
Credit Quality Indicator (1):
Pass	$	948	$	1,631	$	1,057	$	757	$	341	$	197	$	—	$	—	$	4,931
OLEM	13		20		11		20		10		7		—		—		81
Substandard	8		46		32		14		20		10		—		—		130
Doubtful	—		—		1		—		—		—		—		—		1
Total Lease financing	$	969	$	1,697	$	1,101	$	791	$	371	$	214	$	—	$	—	$	5,143
Residential mortgage
Credit Quality Indicator (2):
750+	$	1,127	$	3,953	$	6,215	$	3,442	$	791	$	2,375	$	—	$	—	$	17,903
650-749	459		1,137		1,054		547		208		837		—		—		4,242
<650	7		61		65		65		87		534		—		—		819

Total Residential mortgage	$	1,593	$	5,151	$	7,334	$	4,054	$	1,086	$	3,746	$	—	$	—	$	22,964
Automobile
Credit Quality Indicator (2):
750+	$	1,417	$	2,330	$	1,885	$	988	$	558	$	198	$	—	$	—	$	7,376
650-749	819		1,616		1,153		498		250		112		—		—		4,448
<650	89		311		304		143		86		62		—		—		995

Total Automobile	$	2,325	$	4,257	$	3,342	$	1,629	$	894	$	372	$	—	$	—	$	12,819
Home equity
Credit Quality Indicator (2):
750+	$	223	$	458	$	547	$	574	$	19	$	282	$	4,541	$	233	$	6,877
650-749	74		108		71		60		8		111		2,051		238		2,721
<650	—		3		3		4		2		49		347		128		536

Total Home equity	$	297	$	569	$	621	$	638	$	29	$	442	$	6,939	$	599	$	10,134
RV and marine
Credit Quality Indicator (2):
750+	$	683	$	1,052	$	945	$	651	$	326	$	693	$	—	$	—	$	4,350
650-749	126		270		271		173		101		237		—		—		1,178
<650	1		9		21		18		15		48		—		—		112

Total RV and marine	$	810	$	1,331	$	1,237	$	842	$	442	$	978	$	—	$	—	$	5,640
Other consumer
Credit Quality Indicator (2):
750+	$	118	$	99	$	51	$	25	$	24	$	56	$	388	$	3	$	764
650-749	50		55		21		8		8		16		354		14		526
<650	2		5		4		1		2		1		33		12		60

Total Other consumer	$	170	$	159	$	76	$	34	$	34	$	73	$	775	$	29	$	1,350

(1)Consistent with the credit quality disclosures, indicators for the Commercial portfolio are based on internally defined categories of credit grades.

(2)Consistent with the credit quality disclosures, indicators for the Consumer portfolio are based on updated customer credit scores refreshed at least quarterly.

2023 2Q Form 10-Q 57

Table of Contents


	At December 31, 2022
	Term Loans Amortized Cost Basis by Origination Year												Revolver Total at Amortized Cost Basis		Revolver Total Converted to Term Loans
(dollar amounts in millions)	2022		2021		2020		2019		2018		Prior						Total
Commercial and industrial
Credit Quality Indicator (1):
Pass	$	18,092	$	6,742	$	3,332	$	2,107	$	1,156	$	1,186	$	13,060	$	3	$	45,678
OLEM	108		139		72		21		49		26		113		—		528
Substandard	368		183		203		212		142		256		550		—		1,914
Doubtful	—		—		—		—		—		1		—		—		1
Total Commercial and industrial	$	18,568	$	7,064	$	3,607	$	2,340	$	1,347	$	1,469	$	13,723	$	3	$	48,121
Commercial real estate
Credit Quality Indicator (1):
Pass	$	4,022	$	3,115	$	1,562	$	1,662	$	829	$	1,020	$	519	$	—	$	12,729
OLEM	61		53		1		43		6		9		—		—		173
Substandard	231		116		92		74		84		140		1		—		738

Total Commercial real estate	$	4,314	$	3,284	$	1,655	$	1,779	$	919	$	1,169	$	520	$	—	$	13,640
Lease financing
Credit Quality Indicator (1):
Pass	$	1,930	$	1,291	$	952	$	447	$	186	$	143	$	—	$	—	$	4,949
OLEM	32		9		15		18		6		3		—		—		83
Substandard	65		37		74		24		9		11		—		—		220

Total Lease financing	$	2,027	$	1,337	$	1,041	$	489	$	201	$	157	$	—	$	—	$	5,252
Residential mortgage
Credit Quality Indicator (2):
750+	$	3,666	$	6,274	$	3,566	$	846	$	469	$	2,070	$	—	$	—	$	16,891
650-749	1,394		1,172		617		211		137		777		—		—		4,308
<650	49		68		61		95		90		480		—		—		843

Total Residential mortgage	$	5,109	$	7,514	$	4,244	$	1,152	$	696	$	3,327	$	—	$	—	$	22,042
Automobile
Credit Quality Indicator (2):
750+	$	2,770	$	2,212	$	1,243	$	777	$	289	$	98	$	—	$	—	$	7,389
650-749	1,944		1,508		683		367		162		52		—		—		4,716
<650	307		352		173		115		67		35		—		—		1,049

Total Automobile	$	5,021	$	4,072	$	2,099	$	1,259	$	518	$	185	$	—	$	—	$	13,154
Home equity
Credit Quality Indicator (2):
750+	$	463	$	573	$	611	$	23	$	20	$	301	$	4,787	$	252	$	7,030
650-749	131		88		68		9		8		122		2,129		261		2,816
<650	3		3		3		2		2		51		335		129		528

Total Home equity	$	597	$	664	$	682	$	34	$	30	$	474	$	7,251	$	642	$	10,374
RV and marine
Credit Quality Indicator (2):
750+	$	1,148	$	1,031	$	731	$	361	$	354	$	438	$	—	$	—	$	4,063
650-749	290		315		200		118		113		169		—		—		1,205
<650	5		18		15		17		17		36		—		—		108

Total RV and marine	$	1,443	$	1,364	$	946	$	496	$	484	$	643	$	—	$	—	$	5,376
Other consumer
Credit Quality Indicator (2):
750+	$	207	$	64	$	35	$	34	$	13	$	52	$	393	$	3	$	801
650-749	71		30		12		15		4		14		355		16		517
<650	3		3		2		3		1		2		33		14		61

Total Other consumer	$	281	$	97	$	49	$	52	$	18	$	68	$	781	$	33	$	1,379

(1)Consistent with the credit quality disclosures, indicators for the Commercial portfolio are based on internally defined categories of credit grades.

(2)Consistent with the credit quality disclosures, indicators for the Consumer portfolio are based on updated customer credit scores refreshed at least quarterly.

58 Huntington Bancshares Incorporated

Table of Contents

The following tables present the gross charge-offs of loans and leases by vintage.


	Term Loans Gross Charge-offs by Origination Year												Revolver Gross Charge-offs		Revolver Converted to Term Loans Gross Charge-offs
(dollar amounts in millions)	2023		2022		2021		2020		2019		Prior						Total
Three months ended June 30, 2023
Commercial and industrial	$	1	$	4	$	14	$	—	$	8	$	10	$	—	$	1	$	38
Commercial real estate	—		3		—		—		5		5		—		—		13
Lease Financing	—		1		1		—		—		—		—		—		2
Residential mortgage	—		—		—		—		—		1		—		—		1
Automobile	—		3		4		2		2		—		—		—		11
Home equity	—		—		—		—		—		1		—		1		2
RV and marine	—		1		—		—		—		3		—		—		4
Other consumer	2		5		3		2		2		1		—		6		21
Total	$	3	$	17	$	22	$	4	$	17	$	21	$	—	$	8	$	92
Six months ended June 30, 2023
Commercial and industrial	$	2	$	18	$	17	$	6	$	12	$	10	$	4	$	1	$	70
Commercial real estate	—		3		19		—		5		5		—		—		32
Lease Financing	—		1		1		—		—		1		—		—		3
Residential mortgage	—		—		1		—		—		2		—		—		3
Automobile	—		6		8		4		3		2		—		—		23
Home equity	—		—		—		—		—		1		1		2		4
RV and marine	—		1		1		1		1		4		—		—		8
Other consumer	3		13		8		3		3		5		—		13		48
Total	$	5	$	42	$	55	$	14	$	24	$	30	$	5	$	16	$	191

Modifications to Debtors Experiencing Financial Difficulty

Effective January 1, 2023, Huntington adopted ASU 2022-02- Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. For additional information on the adoption, refer to both Note 1 “Basis of Presentation” and Note 2 “Accounting Standards Update.”

Huntington will modify the contractual terms of loans to a borrower experiencing financial difficulties as a way to mitigate loss, proactively work with borrowers in financial difficulty, or to comply with regulations regarding the treatment of certain bankruptcy filing and discharge situations.

A debtor is considered to be experiencing financial difficulty when there is significant doubt about the debtor’s ability to make required payments on the debt or to get equivalent financing from another creditor at a market rate for similar debt. A loan placed on nonaccrual because the borrower is experiencing financial difficulty may be returned to accrual status when all contractually due interest and principal has been paid and the borrower demonstrates the financial capacity to continue to pay as agreed, with the risk of loss diminished.

Reported Modification Types

Modifications in the form of principal forgiveness, an interest rate reduction, an other than insignificant payment delay or a term extension that have occurred in the current reporting period to a borrower experiencing financial difficulty are disclosed along with the financial impact of the modifications.

2023 2Q Form 10-Q 59

Table of Contents

Huntington will generally try other forms of relief before principal forgiveness but would define any contractual reduction in the amount of principal due without receiving payment or assets as forgiveness. For the purpose of the disclosure Huntington considers any contractual change in interest rate that results in the borrower receiving a below market rate to be an interest rate reduction. Many factors can go into what is considered an other than insignificant payment delay such as the significance of the restructured payment amount relative to the normal loan payment or the relative significance of the delay to the original loan terms. Generally, Huntington would consider any delay in payment of greater than 90 days in the last 12 months to be significant. For the purpose of the disclosure modification of contingent payment features or covenants that would have accelerated payment are not considered term extensions.

Following is a description of what is considered a borrower experiencing financial difficulty by the different loan types:

Commercial loan modifications – Our strategy involving commercial borrowers generally includes working with these borrowers to allow them time to improve their financial position and remain a Huntington customer through restructuring their notes or to restructure elsewhere if necessary. Borrowers that are rated substandard or worse in accordance with the regulatory definition, or that cannot otherwise restructure at market terms and conditions, are considered to be experiencing financial difficulty. A subsequent restructuring or modification of a loan may occur when either the loan matures according to the terms of the modified agreement, or the borrower requests a change to the loan agreements. It is subjected to the normal underwriting standards and processes for other similar credit extensions, both new and existing. The restructured note is evaluated to determine if it is considered a new loan or a continuation of the prior loan.

Consumer loan modifications – Consumer loans in which a borrower requires a modification as a result of negative changes to their financial condition or to avoid default, generally indicate the borrower is experiencing financial difficulty. The primary modifications made to consumer loans are amortization, maturity date and interest rate changes. Consumer borrowers identified as experiencing financial difficulty are unable to refinance their loans through the Company’s normal origination channels or through other independent sources. Most, but not all, of the loans may be delinquent. The Company’s primary loan categories that receive modifications are residential mortgage, automobile, home equity, RV and marine, and other consumer loans.

Impact on Credit Quality of Borrowers Experiencing Financial Difficulty

Huntington’s ALLL is influenced by loan level characteristics that inform the assessed propensity to default. As such, the provision for credit losses is impacted primarily by changes in such loan level characteristics, such as payment performance. Commercial borrowers experiencing financial difficulty are risk rated to reflect the increase in default characteristics so that that the ALLL reflects the future risk of loss. Borrowers experiencing financial difficulty can be classified as either accrual or nonaccrual loans.

60 Huntington Bancshares Incorporated

Table of Contents

The following table summarizes the amortized cost basis of loans modified during the reporting period to borrowers experiencing financial difficulty, disaggregated by class of financing receivable and type of modification.


	Amortized Cost
(dollar amounts in millions)	Interest rate reduction		Term extension		Payment deferral		Combo - interest rate reduction and term extension		Total		% of total loan class (1)
Three months ended June 30, 2023
Commercial and industrial	$	—	$	138	$	—	$	—	$	138	0.28	%
Commercial real estate	—		134		—		—		134		1.02
Residential mortgage	—		12		2		1		15		0.06
Automobile	—		4		—		1		5		0.04
Home equity	—		1		—		3		4		0.04

Other consumer	1		—		—		—		1		0.07
Total loans to borrowers experiencing financial difficulty in which modifications were made	$	1	$	289	$	2	$	5	$	297	0.24	%
Six months ended June 30, 2023
Commercial and industrial	$	35	$	198	$	—	$	3	$	236	0.47	%
Commercial real estate	—		148		—		—		148		1.12
Residential mortgage	—		35		2		2		39		0.17
Automobile	—		7		—		1		8		0.06
Home equity	—		1		—		5		6		0.06
RV and marine	—		1		—		—		1		0.02
Other consumer	1		—		—		—		1		0.07
Total loans to borrowers experiencing financial difficulty in which modifications were made	$	36	$	390	$	2	$	11	$	439	0.36	%

(1)Represents the amortized cost of loans modified during the reporting period as a percentage of the period-end loan balance by class.

2023 2Q Form 10-Q 61

Table of Contents

The following table describes the financial effect of the modification made to borrowers experiencing financial difficulty.


	Interest Rate Reduction				Term Extension
	Weighted-average contractual interest rate				Weighted-average years added to the life
	From		To
Three months ended June 30, 2023
Commercial and industrial					0.7
Commercial real estate					0.5
Residential mortgage	5.55	%	4.42	%	8.8
Automobile	6.58		6.22		2.0
Home equity	8.55		6.05		14.6


Six months ended June 30, 2023
Commercial and industrial	7.68	%	6.94	%	0.9
Commercial real estate					0.5
Residential mortgage	5.54		4.29		7.2
Automobile	6.59		6.24		2.0
Home equity	8.37		5.86		15.5

The performance of loans made to borrowers experiencing financial difficulty in which modifications were made is closely monitored to understand the effectiveness of modification efforts. Loans are considered to be in payment default at 90 or more days past due. The following table depicts the performance of loans that have been modified during the reporting period.


	At June 30, 2023
	Past Due
(dollar amounts in millions)	30-59 Days		60-89 Days		90 or more days		Total		Current		Total
Commercial and industrial	$	1	$	1	$	—	$	2	$	234	$	236
Commercial real estate	—		—		—		—		148		148
Residential mortgage	7		3		4		14		25		39
Automobile	1		—		—		1		7		8
Home equity	1		—		—		1		5		6
RV and marine	—		—		—		—		1		1
Other consumer	—		—		—		—		1		1
Total loans to borrowers experiencing financial difficulty in which modifications were made in the six months ended June 30, 2023	$	10	$	4	$	4	$	18	$	421	$	439

TDR Loans

The following provides additional disclosures previously required by ASC Subtopic 310-40, Receivables—Troubled Debt Restructurings by Creditors, related to the three-month and six-month period ended June 30, 2022.

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 1 “Significant Accounting Policies” and Note 5 “Loans and Leases” to the Consolidated Financial Statements appearing in Huntington’s 2022 Annual Report on Form 10-K for additional discussion of TDRs.

62 Huntington Bancshares Incorporated

Table of Contents

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 six-month period ended June 30, 2022.


	New Troubled Debt Restructurings (1)

	Number of Contracts	Post-modification Outstanding Recorded Investment (2)
(dollar amounts in millions)		Interest rate reduction		Amortization or maturity date change		Chapter 7 bankruptcy		Other		Total
Three months ended June 30, 2022
Commercial and industrial	88	$	19	$	12	$	—	$	1	$	32
Commercial real estate	4	37		—		—		—		37

Residential mortgage	238	—		32		3		—		35
Automobile	469	—		3		—		—		3
Home equity	70	—		3		2		—		5
RV and marine	35	—		—		—		—		—
Other consumer	23	—		—		—		—		—
Total new TDRs	927	$	56	$	50	$	5	$	1	$	112





Six months ended June 30, 2022
Commercial and industrial	46	$	30	$	15	$	—	$	1	$	46
Commercial real estate	5	37		—		—		—		37

Residential mortgage	445	—		60		4		—		64
Automobile	1,094	—		7		1		—		8
Home equity	112	—		4		3		—		7
RV and marine	74	—		1		—		—		1
Other consumer	53	—		—		—		—		—
Total new TDRs	1,829	$	67	$	87	$	8	$	1	$	163

(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 June 30, 2023 and December 31, 2022, these borrowings and advances are secured by $99.2 billion and $70.9 billion, respectively, of loans.

2023 2Q Form 10-Q 63

Table of Contents

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 six-month periods ended June 30, 2023 and 2022.


(dollar amounts in millions)	Commercial		Consumer		Total
Three months ended June 30, 2023
ALLL balance, beginning of period	$	1,457	$	685	$	2,142

Loan and lease charge-offs	(53)		(39)		(92)
Recoveries of loans and leases previously charged-off	26		17		43
Provision for loan and lease losses	53		31		84


ALLL balance, end of period	$	1,483	$	694	$	2,177
AULC balance, beginning of period	$	75	$	82	$	157

Provision for unfunded lending commitments	3		5		8


AULC balance, end of period	$	78	$	87	$	165
ACL balance, end of period	$	1,561	$	781	$	2,342
Six months ended June 30, 2023
ALLL balance, beginning of period	$	1,424	$	697	$	2,121

Loan and lease charge-offs	(105)		(86)		(191)
Recoveries of loans and leases previously charged-off	49		36		85
Provision for loan and lease losses	115		47		162


ALLL balance, end of period	$	1,483	$	694	$	2,177
AULC balance, beginning of period	$	71	$	79	$	150

Provision for unfunded lending commitments	7		8		15


AULC balance, end of period	$	78	$	87	$	165
ACL balance, end of period	$	1,561	$	781	$	2,342



(dollar amounts in millions)	Commercial		Consumer		Total
Three months ended June 30, 2022
ALLL balance, beginning of period	$	1,514	$	504	$	2,018

Loan and lease charge-offs	(12)		(40)		(52)
Recoveries of loans and leases previously charged-off	24		20		44
Provision (benefit) for loan and lease losses	(184)		248		64


ALLL balance, end of period	$	1,342	$	732	$	2,074
AULC balance, beginning of period	$	57	$	34	$	91

Provision (benefit) for unfunded lending commitments	(4)		7		3


AULC balance, end of period	$	53	$	41	$	94
ACL balance, end of period	$	1,395	$	773	$	2,168
Six months ended June 30, 2022
ALLL balance, beginning of period	$	1,462	$	568	$	2,030

Loan and lease charge-offs	(44)		(89)		(133)
Recoveries of loans and leases previously charged-off	65		41		106
Provision (benefit) for loan and lease losses	(141)		212		71


ALLL balance, end of period	$	1,342	$	732	$	2,074
AULC balance, beginning of period	$	41	$	36	$	77

Provision for unfunded lending commitments	12		5		17


AULC balance, end of period	$	53	$	41	$	94
ACL balance, end of period	$	1,395	$	773	$	2,168

At June 30, 2023, the ACL was $2.3 billion, an increase of $71 million compared to December 31, 2022.

64 Huntington Bancshares Incorporated

Table of Contents

The commercial ACL was $1.6 billion at June 30, 2023 and $1.5 billion at December 31, 2022. The increase of $66 million since year end was driven by a combination of loan and lease growth and modest deterioration in the macro-economic forecast.

The consumer ACL was $781 million, relatively flat compared to the December 31, 2022 balance of $776 million.

The baseline economic scenario used in the June 30, 2023 ACL determination included the federal funds rate projected to peak at approximately 5.1% in the third quarter of 2023 as the Federal Reserve continues to address elevated inflation levels. As a result, inflation is forecast to drop from an estimated 8.0% in 2022 to 2.5% by 2024. However, unemployment is expected to gradually increase to a projected level of 4.2% by Q4 2024.

The economic scenarios used included elevated levels of economic uncertainty associated with geopolitical instability, high inflation readings, and the expected path of interest rate increases by the Federal Reserve. Given the uncertainty associated with key economic scenario assumptions, the June 30, 2023 ACL included a general reserve that consists of various risk profile components to capture uncertainty not addressed within the quantitative transaction reserve.

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 six-month periods ended June 30, 2023 and 2022:


	Three months ended June 30, 2023				Six months ended June 30, 2023
(dollar amounts in millions)	2023		2022		2023		2022
Residential mortgage loans sold with servicing retained	$	1,117	$	1,313	$	1,979	$	3,247
Pretax gains resulting from above loan sales (1)	15		40		22		99

(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 six-month periods ended June 30, 2023 and 2022:


	Three months ended June 30, 2023				Six months ended June 30, 2023
(dollar amounts in millions)	2023		2022		2023		2022
Fair value, beginning of period	$	485	$	416	$	494	$	351


New servicing assets created	18		18		31		47
Change in fair value during the period due to:
Time decay (1)	(6)		(5)		(12)		(10)
Payoffs (2)	(7)		(10)		(11)		(20)
Changes in valuation inputs or assumptions (3)	15		44		3		95
Fair value, end of period	$	505	$	463	$	505	$	463

(1)Represents decrease in value due to passage of time, including the impact from both regularly scheduled principal payments and partial loan paydowns.

(2)Represents decrease in value associated with loans that paid off during the period.

(3)Represents change in value resulting primarily from market-driven changes in interest rates.

A summary of key assumptions and the sensitivity of the MSR value to changes in these assumptions at June 30, 2023, and December 31, 2022 follows:


	At June 30, 2023							At December 31, 2022
				Decline in fair value due to							Decline in fair value due to
(dollar amounts in millions)	Actual			10% adverse change		20% adverse change		Actual			10% adverse change		20% adverse change
Constant prepayment rate (annualized)	7.60	%		$	(13)	$	(25)	7.05	%		$	(13)	$	(25)
Spread over forward interest rate swap rates	571		bps	(11)		(22)		578		bps	(12)		(22)

2023 2Q Form 10-Q 65

Table of Contents

Total servicing, late and other ancillary fees included in mortgage banking income was $24 million and $23 million for the three-month periods ended June 30, 2023 and 2022, respectively. Total servicing, late and other ancillary fees included in mortgage banking income was $48 million and $45 million for the six-month periods ended June 30, 2023 and 2022, respectively. The unpaid principal balance of residential mortgage loans serviced for third parties was $32.7 billion and $32.4 billion at June 30, 2023 and December 31, 2022, respectively.

7. BORROWINGS

Borrowings with original maturities of one year or less are classified as short-term and were comprised of the following at June 30, 2023 and December 31, 2022, respectively:


(dollar amounts in millions)	At June 30, 2023		At December 31, 2022
Federal funds purchased and securities sold under agreements to repurchase	$	646	$	253
FHLB advances	1,000		1,700

Other borrowings	34		74
Total short-term borrowings	$	1,680	$	2,027

Huntington’s long-term debt consisted of the following at June 30, 2023 and December 31, 2022, respectively:


(dollar amounts in millions)	At June 30, 2023		At December 31, 2022
The Parent Company:
Senior Notes	$	2,908	$	3,005





Subordinated Notes	751		975







Total notes issued by the parent	3,659		3,980
The Bank:
Senior Notes	4,146		4,272











Subordinated Notes	651		651


Total notes issued by the bank	4,797		4,923
FHLB Advances	5,708		211

Other	547		572





Total long-term debt	$	14,711	$	9,686

66 Huntington Bancshares Incorporated

Table of Contents

8. OTHER COMPREHENSIVE INCOME

The components of Huntington’s OCI for the three-month and six-month periods ended June 30, 2023 and 2022, were as follows:


(dollar amounts in millions)	Pretax		Tax (expense) benefit		After-tax
Three months ended June 30, 2023

Unrealized gains (losses) on available-for-sale securities arising during the period	$	(282)	$	65	$	(217)
Reclassification adjustment for realized net losses included in net income	35		(8)		27
Total unrealized gains (losses) on available-for-sale securities	(247)		57		(190)

Net impact of fair value hedges on available-for-sale securities	139		(32)		107
Unrealized gains (losses) on cash flow hedges during the period	(266)		65		(201)
Reclassification adjustment for cash flow hedges included in net income	34		(2)		32
Net change related to cash flow hedges on loans	(232)		63		(169)


Translation adjustments, net of hedges (1)	1		—		1

Other comprehensive income (loss)	$	(339)	$	88	$	(251)
Three months ended June 30, 2022

Unrealized gains (losses) on available-for-sale securities arising during the period	$	(1,147)	$	264	$	(883)
Reclassification adjustment for realized net losses included in net income	82		(19)		63
Total unrealized gains (losses) on available-for-sale securities	(1,065)		245		(820)



Net impact of fair value hedges on available-for-sale securities	161		(38)		123
Net change related to cash flow hedges on loans	(111)		25		(86)


Translation adjustments, net of hedges (1)	(2)		—		(2)
Change in accumulated unrealized gains for pension and other post-retirement obligations	2		(1)		1
Other comprehensive income (loss)	$	(1,015)	$	231	$	(784)
Six months ended June 30, 2023

Unrealized gains (losses) on available-for-sale securities arising during the period	$	97	$	(22)	$	75
Reclassification adjustment for realized net losses included in net income	38		(9)		29
Total unrealized gains (losses) on available-for-sale securities	135		(31)		104

Net impact of fair value hedges on available-for-sale securities	(43)		10		(33)
Unrealized gains (losses) on cash flow hedging relationships arising during the period	(35)		12		(23)
Reclassification adjustment for cash flow hedges included in net income	46		(3)		43
Net change related to cash flow hedges	11		9		20


Translation adjustments, net of hedges (1)	1		—		1

Other comprehensive income (loss)	$	104	$	(12)	$	92
Six months ended June 30, 2022

Unrealized gains (losses) on available-for-sale securities arising during the period	$	(2,687)	$	618	$	(2,069)
Reclassification adjustment for realized net losses included in net income	91		(21)		70
Total unrealized gains (losses) on available-for-sale securities	(2,596)		597		(1,999)

Net impact of fair value hedges on available-for-sale securities	592		(137)		455


Net change related to cash flow hedges	(421)		95		(326)


Translation adjustments, net of hedges (1)	(2)		—		(2)
Change in accumulated unrealized gains for pension and other post-retirement obligations	5		(2)		3
Other comprehensive income (loss)	$	(2,422)	$	553	$	(1,869)

(1)Foreign investments are deemed to be permanent in nature and, therefore, Huntington does not provide for taxes on foreign currency translation adjustments.

2023 2Q Form 10-Q 67

Table of Contents

Activity in accumulated OCI for the three-month and six-month periods ended June 30, 2023 and 2022, were as follows:


(dollar amounts in millions)	Unrealized gains (losses) on available-for-sale securities (1)		Net impact of fair value hedges on available-for-sale securities		Net change related to cash flow hedges on loans		Translation adjustments, net of hedges		Unrealized gains (losses) for pension and other post- retirement obligations		Total
Three months ended June 30, 2023
Balance, beginning of period	$	(2,708)	$	614	$	(443)	$	(8)	$	(210)	$	(2,755)

Other comprehensive income (loss) before reclassifications	(217)		107		(201)		1		—		(310)
Amounts reclassified from accumulated OCI to earnings	27		—		32		—		—		59
Period change	(190)		107		(169)		1		—		(251)
Balance, end of period	$	(2,898)	$	721	$	(612)	$	(7)	$	(210)	$	(3,006)

Three months ended June 30, 2022
Balance, beginning of period	$	(1,332)	$	421	$	(177)	$	(3)	$	(223)	$	(1,314)

Other comprehensive income (loss) before reclassifications	(883)		123		(86)		(2)		—		(848)
Amounts reclassified from accumulated OCI to earnings	63		—		—		—		1		64
Period change	(820)		123		(86)		(2)		1		(784)

Balance, end of period	$	(2,152)	$	544	$	(263)	$	(5)	$	(222)	$	(2,098)

Six months ended June 30, 2023
Balance, beginning of period	$	(3,002)	$	754	$	(632)	$	(8)	$	(210)	$	(3,098)
Other comprehensive income (loss) before reclassifications	75		(33)		(23)		1		—		20
Amounts reclassified from accumulated OCI to earnings	29				43		—		—		72
Period change	104		(33)		20		1		—		92
Balance, end of period	$	(2,898)	$	721	$	(612)	$	(7)	$	(210)	$	(3,006)

Six months ended June 30, 2022
Balance, beginning of period	$	(153)	$	89	$	63	$	(3)	$	(225)	$	(229)
Other comprehensive income (loss) before reclassifications	(2,069)		455		(326)		(2)		—		(1,942)
Amounts reclassified from accumulated OCI to earnings	70		—		—		—		3		73
Period change	(1,999)		455		(326)		(2)		3		(1,869)
Balance, end of period	$	(2,152)	$	544	$	(263)	$	(5)	$	(222)	$	(2,098)

(1)AOCI amounts at June 30, 2023 and June 30, 2022 include $62 million and $73 million, respectively, of net unrealized losses (after-tax) 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.

68 Huntington Bancshares Incorporated

Table of Contents

9. SHAREHOLDERS' EQUITY

Preferred Stock

The following is a summary of Huntington’s non-cumulative, non-voting, perpetual preferred stock outstanding.



(dollar amounts in millions)				Carrying Amount
Series	Issuance Date	Shares Outstanding	Dividend Rate	Earliest Redemption Date (1)	At June 30, 2023		At December 31, 2022
Series B (2)	12/28/2011	35,500	3-mo. LIBOR + 270 bps (3)	1/15/2017	$	23	$	23



Series E (4)	2/27/2018	5,000	3-mo. LIBOR + 288 bps (5)	4/15/2023	495		495
Series F (4)	5/27/2020	5,000	5.625	7/15/2030	494		494
Series G (4)	8/3/2020	5,000	4.45	10/15/2027	494		494
Series H (2)	2/2/2021	500,000	4.50	4/15/2026	486		486
Series I (6)	6/9/2021	7,000	5.70	12/01/2022	175		175
Series J (2)	3/6/2023	325,000	6.875	4/15/2028	317		—
Total		882,500			$	2,484	$	2,167

(1) Redeemable at Huntington’s option on the date stated or on a quarterly basis thereafter.

(2) Series B, H, and J preferred stock have a liquidation value and redemption price per share of $1,000, plus any declared and unpaid dividends.

(3) Series B converts to 3-month CME Term SOFR + 26 bps LIBOR spread adjustment + 270 bps effective July 15, 2023.

(4) Series E, F, and G preferred stock have a liquidation value and redemption price per share of $100,000, plus any declared and unpaid dividends.

(5) Series E converts to 3-month CME Term SOFR + 26 bps LIBOR spread adjustment + 288 bps effective July 15, 2023.

(6) Series I preferred stock has a liquidation value and redemption price per share of $25,000, plus any declared and unpaid dividends.

The following table presents the dividends declared for each series of Preferred shares for the three-month and six-month periods ended June 30, 2023 and 2022:


	Three months ended June 30,								Six months ended June 30,
(amounts in millions, except per share data)	2023				2022				2023				2022
	Cash Dividend Declared Per Share				Cash Dividend Declared Per Share				Cash Dividend Declared Per Share				Cash Dividend Declared Per Share
Preferred Series			Amount ($)				Amount ($)				Amount ($)				Amount ($)
Series B	$	19.90	$	—	$	13.03	$	—	$	38.72	$	(1)	$	22.39	$	—


Series E	2,035.07		(10)		1,425.00		(7)		3,460.07		(17)		2,850.00		(14)
Series F	1,406.25		(7)		1,406.25		(7)		2,812.50		(14)		2,812.50		(14)
Series G	1,112.50		(6)		1,112.50		(6)		2,225.00		(12)		2,225.00		(12)
Series H	11.25		(6)		11.25		(6)		22.50		(12)		22.50		(12)
Series I	356.25		(3)		356.25		(2)		712.50		(5)		712.50		(4)
Series J	24.64		(8)		—		—		24.64		(8)		—		—
Total			$	(40)			$	(28)			$	(69)			$	(56)

10. EARNINGS PER SHARE

Basic earnings per share is the amount of earnings (adjusted for dividends declared on preferred stock) 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.

2023 2Q Form 10-Q 69

Table of Contents

The calculation of basic and diluted earnings per share for the three-month and six-month periods ended June 30, 2023 and 2022 was as follows:


	Three months ended June 30,				Six months ended June 30,
(dollar amounts in millions, except per share data, share count in thousands)	2023		2022		2023		2022
Basic earnings per common share:
Net income attributable to Huntington	$	559	$	539	$	1,161	$	999
Preferred stock dividends	40		28		69		56

Net income available to common shareholders	$	519	$	511	$	1,092	$	943
Average common shares issued and outstanding	1,446,372		1,441,200		1,444,820		1,439,814
Basic earnings per common share	$	0.36	$	0.35	$	0.76	$	0.65
Diluted earnings per common share:




Average dilutive potential common shares:
Stock options and restricted stock units and awards	12,213		15,545		15,913		17,587
Shares held in deferred compensation plans	7,136		6,548		6,767		6,409


Average dilutive potential common shares	19,349		22,093		22,680		23,996
Total diluted average common shares issued and outstanding	1,465,720		1,463,293		1,467,500		1,463,810
Diluted earnings per common share	$	0.35	$	0.35	$	0.74	$	0.64
Anti-dilutive awards (1)	15,413		11,550		12,226		6,333

(1)Reflects the total number of shares related to outstanding options that have been excluded from the computation of diluted earnings per share because the impact would have been anti-dilutive.

11. 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 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 June 30,				Six months ended June 30,
Noninterest income	2023		2022		2023		2022
Noninterest income from contracts with customers	$	332	$	322	$	709	$	630
Noninterest income within the scope of other GAAP topics	163		163		298		354
Total noninterest income	$	495	$	485	$	1,007	$	984

70 Huntington Bancshares Incorporated

Table of Contents

The following table illustrates the disaggregation by operating segment and major revenue stream and reconciles disaggregated revenue to segment revenue presented in Note 16 “Segment Reporting”.


(dollar amounts in millions)	Consumer & Regional Banking		Commercial Banking		Treasury / Other		Huntington Consolidated
Major Revenue Streams
Three months ended June 30, 2023
Service charges on deposit accounts	$	69	$	18	$	—	$	87
Card and payment processing income	89		7		—		96
Trust and investment management services	61		7		—		68
Insurance income	27		3		—		30
Capital markets fees	4		20		—		24
Other noninterest income	7		21		(1)		27
Net revenue from contracts with customers	257		76		(1)		332
Noninterest income within the scope of other GAAP topics	45		91		27		163
Total noninterest income	$	302	$	167	$	26	$	495
Three months ended June 30, 2022
Service charges on deposit accounts	$	83	$	22	$	—	$	105
Card and payment processing income	84		5		—		89
Trust and investment management services	61		2		—		63
Insurance income	26		2		(1)		27
Capital markets fees	4		7		—		11
Other noninterest income	6		21		—		27
Net revenue from contracts with customers	264		59		(1)		322
Noninterest income within the scope of other GAAP topics	68		91		4		163
Total noninterest income	$	332	$	150	$	3	$	485
Six months ended June 30, 2023
Service charges on deposit accounts	$	133	$	37	$	—	$	170
Card and payment processing income	169		13		—		182
Trust and investment management services	123		7		—		130
Insurance income	59		5		—		64
Capital markets fees	7		46		—		53
Other noninterest income	70		41		(1)		110
Net revenue from contracts with customers	561		149		(1)		709
Noninterest income within the scope of other GAAP topics	85		174		39		298
Total noninterest income	$	646	$	323	$	38	$	1,007
Six months ended June 30, 2022
Service charges on deposit accounts	$	157	$	45	$	—	$	202
Card and payment processing income	158		11		—		169
Trust and investment management services	126		2		—		128
Insurance income	54		4		—		58
Capital markets fees	6		11		—		17
Other noninterest income	13		43		—		56
Net revenue from contracts with customers	514		116		—		630
Noninterest income within the scope of other GAAP topics	160		174		20		354
Total noninterest income	$	674	$	290	$	20	$	984

2023 2Q Form 10-Q 71

Table of Contents

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 June 30, 2023 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 June 30, 2023 was determined to be immaterial.

12. FAIR VALUES OF ASSETS AND LIABILITIES

See Note 19 “Fair Value of Assets and Liabilities” to the Consolidated Financial Statements appearing in Huntington’s 2022 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 six-month periods ended June 30, 2023 and 2022.

Assets and Liabilities measured at fair value on a recurring basis


	Fair Value Measurements at Reporting Date Using						Netting Adjustments (1)		At June 30, 2023
(dollar amounts in millions)	Level 1		Level 2		Level 3
Assets
Trading account securities:
U.S. Treasury securities	$	90	$	—	$	—	$	—	$	90


Municipal securities	—		33		—		—		33
Corporate debt	—		5		—		—		5
Total trading account securities	90		38		—		—		128
Available-for-sale securities:
U.S. Treasury securities	5		—		—		—		5
Residential CMO	—		3,308		—		—		3,308
Residential MBS	—		11,811		—		—		11,811
Commercial MBS	—		1,898		—		—		1,898
Other agencies	—		168		—		—		168
Municipal securities	—		40		3,496		—		3,536
Private-label CMO	—		103		20		—		123
Asset-backed securities	—		294		75		—		369
Corporate debt	—		2,011		—		—		2,011
Other securities/sovereign debt	—		4		—		—		4
Total available-for-sale securities	5		19,637		3,591		—		23,233
Other securities	32		1		—		—		33
Loans held for sale	—		543		—		—		543
Loans held for investment	—		142		33		—		175
MSRs	—		—		505		—		505
Other assets:
Derivative assets	—		2,159		5		(1,715)		449
Assets held in trust for deferred compensation plans	168		—		—		—		168
Liabilities



Derivative liabilities	—		2,039		7		(1,111)		935

72 Huntington Bancshares Incorporated

Table of Contents


	Fair Value Measurements at Reporting Date Using						Netting Adjustments (1)		At December 31, 2022
(dollar amounts in millions)	Level 1		Level 2		Level 3
Assets
Trading account securities:

Municipal securities	$	—	$	19	$	—	$	—	$	19


Available-for-sale securities:
U.S. Treasury securities	103		—		—		—		103
Residential CMOs	—		2,914		—		—		2,914
Residential MBS	—		12,263		—		—		12,263
Commercial MBS	—		1,953		—		—		1,953
Other agencies	—		182		—		—		182
Municipal securities	—		42		3,248		—		3,290
Private-label CMO	—		108		20		—		128
Asset-backed securities	—		298		74		—		372
Corporate debt	—		2,214		—		—		2,214
Other securities/sovereign debt	—		4		—		—		4
Total available-for-sale securities	103		19,978		3,342		—		23,423
Other securities	31		1		—		—		32
Loans held for sale	—		520		—		—		520
Loans held for investment	—		169		16		—		185
MSRs	—		—		494		—		494
Other assets:
Derivative assets	—		2,161		3		(1,808)		356
Assets held in trust for deferred compensation plans	155		—		—		—		155
Liabilities
Derivative liabilities	—		2,332		5		(1,345)		992

(1)Amounts represent the impact of legally enforceable master netting agreements that allow the Company to settle positive and negative positions and cash collateral held or placed with the same counterparties.

The following tables present a rollforward of the balance sheet amounts measured at fair value on a recurring basis and classified as Level 3. The classification of an item as Level 3 is based on the significance of the unobservable inputs to the overall fair value measurement. However, Level 3 measurements may also include observable components of value that can be validated externally. Accordingly, the gains and losses in the table below include changes in fair value due in part to observable factors that are part of the valuation methodology.

2023 2Q Form 10-Q 73

Table of Contents


	Level 3 Fair Value Measurements
					Available-for-sale securities						Loans held for investment
(dollar amounts in millions)	MSRs		Derivative instruments		Municipal securities		Private- label CMO		Asset-backed securities
Three months ended June 30, 2023
Opening balance	$	485	$	3	$	3,339	$	20	$	74		$	15
Transfers into Level 3	—		—		—		—		—			19
Transfers out of Level 3 (1)	—		(8)		—		—		—			—
Total gains/losses for the period:
Included in earnings:
Mortgage banking income	15		3		—		—		—			—

Interest and fee income	—		—		—		—		—			—
Included in OCI	—		—		(7)		—		1			—
Purchases/originations	18		—		378		—		—			—

Repayments	—		—		—		—		—			(1)

Settlements	(13)		—		(214)		—		—			—
Closing balance	$	505	$	(2)	$	3,496	$	20	$	75		$	33
Change in unrealized gains or losses for the period included in earnings for assets held at end of the reporting date	$	15	$	(1)	$	—	$	—	$	—		$	—
Change in unrealized gains or losses for the period included in other comprehensive income for assets held at the end of the reporting period	—		—		(13)		—		—			—
Three months ended June 30, 2022
Opening balance	$	416	$	(10)	$	3,282	$	19	$	62		$	18

Transfers out of Level 3 (1)	—		7		—		—		—			—
Total gains/losses for the period:
Included in earnings:
Mortgage banking income	44		(2)		—		—		—			—
Interest and fee income	—		—		—		(1)		—			—

Included in OCI	—		—		(88)		—		—			—
Purchases/originations	18		—		386		4		—			—

Repayments	—		—		—		—		—			(1)

Settlements	(15)		—		(203)		—		(18)			—
Closing balance	$	463	$	(5)	$	3,377	$	22	$	44		$	17
Change in unrealized gains or losses for the period included in earnings for assets held at end of the reporting date	$	44	$	7	$	—	$	—	$	—		$	—
Change in unrealized gains or losses for the period included in other comprehensive income for assets held at the end of the reporting period	—		—		(90)		—		—			—
(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.

74 Huntington Bancshares Incorporated

Table of Contents



	Level 3 Fair Value Measurements
					Available-for-sale securities						Loans held for investment
(dollar amounts in millions)	MSRs		Derivative instruments		Municipal securities		Private- label CMO		Asset-backed securities
Six months ended June 30, 2023
Opening balance	$	494	$	(2)	$	3,248	$	20	$	74	$	16
Transfers into Level 3	—		—		—		—		—		19
Transfers out of Level 3 (1)	—		(10)		—		—		—		—
Total gains/losses for the period:
Included in earnings:
Mortgage banking income	3		10		—		—		—		—
Interest and fee income	—		—		—		(1)		—		—

Included in OCI	—		—		(4)		—		1		—
Purchases/originations	31		—		555		1		—		—

Repayments	—		—		—		—		—		(2)

Settlements	(23)		—		(303)		—		—		—
Closing balance	$	505	$	(2)	$	3,496	$	20	$	75	$	33
Change in unrealized gains or losses for the period included in earnings for assets held at end of the reporting date	$	3	$	4	$	—	$	—	$	—	$	—
Change in unrealized gains or losses for the period included in other comprehensive income for assets held at the end of the reporting period	—		—		(10)		—		—		—
Six months ended June 30, 2022
Opening balance	$	351	$	4	$	3,477	$	20	$	70	$	19


Total gains/losses for the period:
Included in earnings
Mortgage banking income	95		(9)		—		—		—		—
Interest and fee income	—		—		(2)		(2)		—		—
Provision for credit losses	—		—		(4)		—		—		—
Included in OCI	—		—		(208)		—		(1)		—
Purchases/originations	48		—		558		4		—		—

Repayments	—		—		—		—		—		(2)

Settlements	(31)		—		(444)		—		(25)		—
Closing balance	$	463	$	(5)	$	3,377	$	22	$	44	$	17
Change in unrealized gains or losses for the period included in earnings for assets held at end of the reporting date	$	95	$	(9)	$	—	$	—	$	—	$	—
Change in unrealized gains or losses for the period included in other comprehensive income for assets held at the end of the reporting period	—		—		(205)		—		—		—
(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.

2023 2Q Form 10-Q 75

Table of Contents

Assets and liabilities under the fair value option

The following table presents the fair value and aggregate principal balance of certain assets and liabilities under the fair value option:


	Total Loans						Loans that are 90 or more days past due
(dollar amounts in millions)	Fair value carrying amount		Aggregate unpaid principal		Difference		Fair value carrying amount		Aggregate unpaid principal		Difference
At June 30, 2023

Loans held for sale	$	543	$	536	$	7	$	—	$	—	$	—
Loans held for investment	175		183		(8)		2		2		—
At December 31, 2022

Loans held for sale	$	520	$	513	$	7	$	—	$	—	$	—
Loans held for investment	185		190		(5)		11		11		—

The following table presents the net gains (losses) from fair value changes.



	Three months ended June 30,				Six months ended June 30,
(dollar amounts in millions)	2023		2022		2023		2022
Loans held for sale (1)	$	—	$	10	$	—	$	(34)
Loans held for investment	(3)		—		(3)		1

(1)The net gains (losses) from fair value changes are included in Mortgage banking income on the Unaudited Consolidated Statements of Income.

Assets and Liabilities measured at fair value on a nonrecurring basis

Certain assets and liabilities may be required to be measured at fair value on a nonrecurring basis in periods subsequent to their initial recognition. These assets and liabilities are not measured at fair value on an ongoing basis; however, they are subject to fair value adjustments in certain circumstances, 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 were as follows:


	Fair Value Measurements Using Significant Other Unobservable Inputs (Level 3)				Total Losses
					Three months ended June 30,				Six months ended June 30,
(dollar amounts in millions)	At June 30, 2023		At December 31, 2022		2023		2022		2023		2022

Collateral-dependent loans	$	35	$	16	$	(1)	$	—	$	(7)	$	(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.

76 Huntington Bancshares Incorporated

Table of Contents

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:


	Quantitative Information about Level 3 Fair Value Measurements
			At June 30, 2023 (1)							At December 31, 2022 (1)
(dollar amounts in millions)	Valuation Technique	Significant Unobservable Input	Range					Weighted Average		Range					Weighted Average
Measured at fair value on a recurring basis:
MSRs	Discounted cash flow	Constant prepayment rate	5	%	-	28	%	8	%	5	%	-	40	%	7	%
		Spread over forward interest rate swap rates	5	%	-	13	%	6	%	5	%	-	13	%	6	%






Municipal securities and asset-backed securities	Discounted cash flow	Discount rate	5	%	-	6	%	6	%	5	%	-	5	%	5	%
		Cumulative default	—	%	-	64	%	7	%	—	%	-	64	%	7	%
		Loss given default	20	%	-	20	%	20	%	20	%	-	20	%	20	%

(1) Certain disclosures related to quantitative level 3 fair value measurements do not include those deemed to be immaterial.

The following provides a general description of the impact of a change in an unobservable input on the fair value measurement and the interrelationship between unobservable inputs, where relevant/significant. Interrelationships may also exist between observable and unobservable inputs.

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.

Fair values of financial instruments

Many of the assets and liabilities subject to the disclosure requirements are not actively traded, requiring fair values to be estimated by management. These estimations necessarily involve the use of judgment about a wide variety of factors, including but not limited to, relevancy of market prices of comparable instruments, expected future cash flows, and appropriate discount rates.

The short-term nature of certain assets and liabilities result in their carrying value approximating fair value. These include trading account securities, customers’ acceptance liabilities, short-term borrowings, bank acceptances outstanding, FHLB advances, and cash and short-term assets, which include cash and due from banks, interest-bearing deposits in banks, interest-bearing deposits at Federal Reserve Bank, and federal funds sold. Loan commitments and letters-of-credit generally have short-term, variable-rate features and contain clauses that limit Huntington’s exposure to changes in customer credit quality. Accordingly, their carrying values, which are immaterial at the respective balance sheet dates, are reasonable estimates of fair value.

Certain assets, the most significant being operating lease assets, bank owned life insurance, and premises and equipment, do not meet the definition of a financial instrument and are excluded from this disclosure. Similarly, mortgage servicing rights and relationship intangibles are not considered financial instruments and are not included in following tables. Accordingly, this fair value information is not intended to, and does not, represent Huntington’s underlying value.

2023 2Q Form 10-Q 77

Table of Contents

The following table provides the carrying amounts and estimated fair values of Huntington’s financial instruments:


(dollar amounts in millions)	Amortized Cost		Lower of Cost or Market		Fair Value or Fair Value Option		Total Carrying Amount		Estimated Fair Value
At June 30, 2023
Financial Assets
Cash and short-term assets	$	11,289	$	—	$	—	$	11,289	$	11,289
Trading account securities	—		—		128		128		128
Available-for-sale securities	—		—		23,233		23,233		23,233
Held-to-maturity securities	16,578		—		—		16,578		14,308
Other securities	942		—		33		975		975
Loans held for sale	—		2		543		545		545
Net loans and leases (1)	118,873		—		175		119,048		114,587
Derivative assets	—		—		449		449		449
Assets held in trust for deferred compensation plans	—		—		168		168		168
Financial Liabilities
Deposits	148,028		—		—		148,028		147,911
Short-term borrowings	1,680		—		—		1,680		1,680
Long-term debt	14,711		—		—		14,711		14,407
Derivative liabilities	—		—		935		935		935
At December 31, 2022
Financial Assets
Cash and short-term assets	$	6,918	$	—	$	—	$	6,918	$	6,918
Trading account securities	—		—		19		19		19
Available-for-sale securities	—		—		23,423		23,423		23,423
Held-to-maturity securities	17,052		—		—		17,052		14,754
Other securities	822		—		32		854		854
Loans held for sale	—		9		520		529		529
Net loans and leases (1)	117,217		—		185		117,402		112,591
Derivative assets	—		—		356		356		356
Assets held in trust for deferred compensation plans	—		—		155		155		155
Financial Liabilities
Deposits	147,914		—		—		147,914		147,796
Short-term borrowings	2,027		—		—		2,027		2,027
Long-term debt	9,686		—		—		9,686		9,564
Derivative liabilities	—		—		992		992		992

(1)Includes collateral-dependent loans.

78 Huntington Bancshares Incorporated

Table of Contents

The following table presents the level in the fair value hierarchy for the estimated fair values at June 30, 2023 and December 31, 2022:


	Estimated Fair Value Measurements at Reporting Date Using						Netting Adjustments (1)		Presented Balance
(dollar amounts in millions)	Level 1		Level 2		Level 3
At June 30, 2023
Financial Assets
Trading account securities	$	90	$	38	$	—			$	128
Available-for-sale securities	5		19,637		3,591				23,233
Held-to-maturity securities	—		14,308		—				14,308
Other securities (2)	32		1		—				33
Loans held for sale	—		545		—				545
Net loans and leases	—		142		114,445				114,587
Derivative assets	—		2,159		5		$	(1,715)	449
Financial Liabilities
Deposits	—		135,562		12,349				147,911
Short-term borrowings	—		1,680		—				1,680
Long-term debt	—		8,048		6,359				14,407
Derivative liabilities	—		2,039		7		(1,111)		935
At December 31, 2022
Financial Assets
Trading account securities	$	—	$	19	$	—			$	19
Available-for-sale securities	103		19,978		3,342				23,423
Held-to-maturity securities	—		14,754		—				14,754
Other securities (2)	31		1		—				32
Loans held for sale	—		520		9				529
Net loans and leases	—		169		112,422				112,591
Derivative assets	—		2,161		3		$	(1,808)	356
Financial Liabilities
Deposits	—		142,081		5,715				147,796
Short-term borrowings	—		2,027		—				2,027
Long-term debt	—		8,680		884				9,564
Derivative liabilities	—		2,332		5		(1,345)		992

(2)Excludes securities without readily determinable fair values.

13. DERIVATIVE FINANCIAL INSTRUMENTS

Derivative financial instruments are recorded in the Unaudited 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.

2023 2Q Form 10-Q 79

Table of Contents

The following table presents the fair values and notional values of all derivative instruments included in the Unaudited Consolidated Balance Sheets at June 30, 2023 and December 31, 2022. Amounts in the table below are presented gross without the impact of any net collateral arrangements.


	At June 30, 2023						At December 31, 2022
(dollar amounts in millions)	Notional Value		Asset		Liability		Notional Value		Asset		Liability
Derivatives designated as Hedging Instruments
Interest rate contracts	$	48,379	$	1,020	$	910	$	42,461	$	1,008	$	1,145
Foreign exchange contracts	215		2		—		202		2		—
Derivatives not designated as Hedging Instruments
Interest rate contracts	58,048		992		973		37,562		968		1,008
Foreign exchange contracts	4,343		69		62		4,889		68		68
Commodities contracts	828		81		78		762		114		113
Equity contracts	709		—		23		636		4		3
Total contracts	$	112,522	$	2,164	$	2,046	$	86,512	$	2,164	$	2,337

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 Consolidated Income Statement for the three-month and six-month periods ended June 30, 2023 and 2022, respectively.


	Location of Gain or (Loss) Recognized in Income on Derivative	Amount of Gain or (Loss) Recognized in Income on Derivative
		Three months ended June 30,				Six months ended June 30,
(dollar amounts in millions)		2023		2022		2023		2022
Interest rate contracts:
Customer	Capital markets fees	$	10	$	15	$	17	$	25
Mortgage banking	Mortgage banking income	—		(33)		9		(80)

Interest rate swaptions	Other noninterest income	18		—		17		—
Foreign exchange contracts	Capital markets fees	13		10		25		20
Commodities contracts	Capital markets fees	1		2		3		3

Equity contracts	Other noninterest expense	(4)		(4)		(5)		(3)
Total		$	38	$	(10)	$	66	$	(35)

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.

80 Huntington Bancshares Incorporated

Table of Contents

The following table presents the gross notional values of derivatives used in Huntington’s asset and liability management activities at June 30, 2023 and December 31, 2022, identified by the underlying interest rate-sensitive instruments.



(dollar amounts in millions)	Fair Value Hedges		Cash Flow Hedges		Economic Hedges		Total
At June 30, 2023
Instruments associated with:
Investment securities	$	19,627	$	—	$	9,550	$	29,177
Loans	—		19,850		175		20,025


Long-term debt	8,902		—		—		8,902

Total notional value	$	28,529	$	19,850	$	9,725	$	58,104



At December 31, 2022
Instruments associated with:
Investment securities	$	10,407	$	—	$	—	$	10,407
Loans	—		24,325		175		24,500


Long-term debt	7,729		—		—		7,729
Total notional value	$	18,136	$	24,325	$	175	$	42,636

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 premiums for collars and floors that were not included in the measurement of hedge effectiveness, as well as the amounts related to terminated hedges reclassified from AOCI. The net amounts resulted in a decrease to net interest income of $64 million and an increase of $48 million for the three-month periods ended June 30, 2023, and 2022, respectively. For the six-month periods ended June 30, 2023, and 2022, the net amounts resulted in a decrease to net interest income of $116 million and an increase of $87 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 $18.3 billion of interest rate swaps as fair value hedges of fixed-rate investment securities using the portfolio 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 portfolio level basis adjustment on our hedged mortgage-backed securities portfolio has not been attributed to the individual available-for-sale securities in our Unaudited Consolidated Statements of Financial Condition. Huntington has also designated $1.3 billion of interest rate swaps as fair value hedges of fixed-rate corporate bonds.

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 six-month periods ended June 30, 2023 and 2022.


	Three months ended June 30,				Six months ended June 30,
(dollar amounts in millions)	2023		2022		2023		2022
Interest rate contracts
Change in fair value of interest rate swaps hedging investment securities (1)	$	138	$	168	$	(44)	$	586
Change in fair value of hedged investment securities (1)	(139)		(160)		42		(590)


Change in fair value of interest rate swaps hedging long-term debt (2)	(138)		(38)		(22)		(136)
Change in fair value of hedged long term debt (2)	138		39		22		137

(1)Recognized in Interest income—available-for-sale securities—taxable in the Unaudited Consolidated Statements of Income.

(2)Recognized in Interest expense—long-term debt in the Unaudited Consolidated Statements of Income.

2023 2Q Form 10-Q 81

Table of Contents

As of June 30, 2023 and December 31, 2022, the following amounts were recorded on the balance sheet related to cumulative basis adjustments for fair value hedges.


	Amortized Cost				Cumulative Amount of Fair Value Hedging Adjustment To Hedged Items
(dollar amounts in millions)	At June 30, 2023		At December 31, 2022		At June 30, 2023		At December 31, 2022
Assets
Investment securities (1)	$	18,976	$	18,029	$	(937)	$	(979)

Liabilities
Long-term debt (2)	6,998		7,175		(278)		(256)

(1)Amounts include the amortized cost basis of closed portfolios used to designate hedging relationships under the portfolio layer method. The hedged item is a layer of the closed portfolio which is expected to be remaining at the end of the hedging relationship. As of June 30, 2023, the amortized cost basis of the closed portfolios used in these hedging relationships was $18.3 billion, the cumulative basis adjustments associated with these hedging relationships was $843 million, and the amounts of the designated hedging instruments were $18.3 billion.

(2)Excluded from the above table are the cumulative amount of fair value hedge adjustments remaining for long-term debt for which hedge accounting has been discontinued in the amounts of $(71) million at June 30, 2023 and $(70) million at December 31, 2022.

Cash Flow Hedges

At June 30, 2023, Huntington has $19.9 billion of interest rate swaps, swaption collars, and floors. These are designated as cash flow hedges for variable rate commercial loans. 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 collar and floor contracts represents the time value of the contracts and is not included in the measurement of hedge effectiveness. The initial premium paid is amortized on a straight line basis as a reduction to interest income over the contractual life of these contracts.

At June 30, 2023, the net losses recognized in AOCI that are expected to be reclassified into earnings within the next 12 months were $176 million.

Economic Hedges

During the six-month period ended June 30, 2023, Huntington entered into $9.6 billion of interest rate swaptions to reduce the impact on capital from rising rates. These swaptions are economic hedges of interest rate risk attributable to our investment securities with the change in value of these instruments recorded in other noninterest income.

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 position of these derivatives at June 30, 2023 and December 31, 2022 were a net asset of $12 million and a net liability of $3 million, respectively. At June 30, 2023 and December 31, 2022, Huntington had commitments to sell residential real estate loans of $1.2 billion and $766 million, 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.

82 Huntington Bancshares Incorporated

Table of Contents

MSR hedging trading assets and liabilities are included in other assets and other liabilities, respectively, in the Unaudited Balance Sheets. Trading gains (losses) are included in mortgage banking income in the Unaudited Consolidated Statement of Income. The notional value of the derivative financial instruments, the corresponding trading assets and liabilities positions, and net trading gains (losses) related to MSR hedging activity is summarized in the following tables:



(dollar amounts in millions)	At June 30, 2023		At December 31, 2022
Notional value	$	1,610	$	1,120
Trading assets	3		4
Trading liabilities	(78)		(78)


	Three months ended June 30,				Six months ended June 30,
(dollar amounts in millions)	2023		2022		2023		2022
Trading losses	$	(15)	$	(33)	$	(6)	$	(80)

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 June 30, 2023 and December 31, 2022, were $58 million and $59 million, respectively. The total notional values of derivative financial instruments used by Huntington on behalf of customers, including offsetting derivatives, were $50.0 billion and $40.7 billion at June 30, 2023 and December 31, 2022, respectively. Huntington’s credit risk from customer derivatives was $94 million and $118 million at the same dates, respectively.

Financial assets and liabilities that are offset in the Unaudited Consolidated Balance Sheets

Huntington records derivatives at fair value as further described in Note 12 “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.

2023 2Q Form 10-Q 83

Table of Contents

In addition to the customer derivative credit exposure, aggregate credit risk associated with broker-dealer and bank derivative transactions was net credit risk of $337 million and $227 million at June 30, 2023 and December 31, 2022, respectively. The net credit risk associated with derivatives is calculated after considering master netting agreements and is reduced by collateral that has been pledged by the counterparty.

At June 30, 2023, Huntington pledged $226 million of investment securities and cash collateral to counterparties, while other counterparties pledged $858 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 Consolidated Balance Sheets at June 30, 2023 and December 31, 2022.


Offsetting of Financial Assets and Derivative Assets
			Gross amounts offset in the unaudited consolidated balance sheets		Net amounts of assets presented in the unaudited consolidated balance sheets		Gross amounts not offset in the unaudited consolidated balance sheets
(dollar amounts in millions)	Gross amounts of recognized assets						Financial instruments		Cash collateral received		Net amount
At June 30, 2023	$	2,164	$	(1,715)	$	449	$	(108)	$	(24)	$	317
At December 31, 2022	2,164		(1,808)		356		(7)		(56)		293


Offsetting of Financial Liabilities and Derivative Liabilities
			Gross amounts offset in the unaudited consolidated balance sheets		Net amounts of liabilities presented in the unaudited consolidated balance sheets		Gross amounts not offset in the unaudited consolidated balance sheets
(dollar amounts in millions)	Gross amounts of recognized liabilities						Financial instruments		Cash collateral delivered		Net amount
At June 30, 2023	$	2,046	$	(1,111)	$	935	$	—	$	(113)	$	822
At December 31, 2022	2,337		(1,345)		992		(79)		(118)		795

14. Variable Interest Entities

Unconsolidated VIEs

The following tables provide a summary of the assets and liabilities included in Huntington’s Unaudited 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 June 30, 2023, and December 31, 2022:


	At June 30, 2023
(dollar amounts in millions)	Total Assets		Total Liabilities		Maximum Exposure to Loss
Affordable Housing Tax Credit Partnerships	$	2,186	$	1,304	$	2,186
Trust Preferred Securities	14		248		—
Other Investments	675		146		675
Total	$	2,875	$	1,698	$	2,861


	At December 31, 2022
(dollar amounts in millions)	Total Assets		Total Liabilities		Maximum Exposure to Loss
Affordable Housing Tax Credit Partnerships	$	2,036	$	1,260	$	2,036
Trust Preferred Securities	14		248		—
Other Investments	522		141		522
Total	$	2,572	$	1,649	$	2,558

84 Huntington Bancshares Incorporated

Table of Contents

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 are included in Other noninterest income in the Unaudited Consolidated Statements of Income.

The following table presents the balances of Huntington’s affordable housing tax credit investments and related unfunded commitments at June 30, 2023 and December 31, 2022.


(dollar amounts in millions)	At June 30, 2023		At December 31, 2022
Affordable housing tax credit investments	$	3,142	$	2,891
Less: amortization	(956)		(855)
Net affordable housing tax credit investments	$	2,186	$	2,036
Unfunded commitments	$	1,304	$	1,260

The following table presents other information relating to Huntington’s affordable housing tax credit investments for the three-month and six-month periods ended June 30, 2023 and 2022.


	Three months ended June 30,				Six months ended June 30,
(dollar amounts in millions)	2023		2022		2023		2022
Tax credits and other tax benefits recognized	$	65	$	53	$	131	$	107

Proportional amortization expense included in provision for income taxes	54		44		109		86

There were no sales of affordable housing tax credit investments during the three-month and six-month periods ended June 30, 2023 and 2022. There was no impairment recognized for the three-month and six-month periods ended June 30, 2023 and 2022.

Trust-Preferred Securities

Huntington has certain wholly-owned trusts whose assets, liabilities, equity, income, and expenses are not included within Huntington’s Unaudited 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 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 Consolidated Financial Statements.

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.

2023 2Q Form 10-Q 85

Table of Contents

15. 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 Consolidated Financial Statements. The contract amounts of these financial agreements at June 30, 2023 and December 31, 2022, were as follows:


(dollar amounts in millions)	At June 30, 2023		At December 31, 2022
Contract amount representing credit risk
Commitments to extend credit:
Commercial	$	32,589	$	32,500
Consumer	19,496		19,064
Commercial real estate	2,929		3,393
Standby letters of credit and guarantees on industrial revenue bonds	749		714
Commercial letters of credit	10		15

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 $22 million and $27 million at June 30, 2023 and December 31, 2022, 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.

86 Huntington Bancshares Incorporated

Table of Contents

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 $20 million at June 30, 2023 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.

Following the recent failure of two financial institutions and resulting losses to the FDIC’s Deposit Insurance Fund, the FDIC approved a notice of proposed rulemaking in May 2023 that would implement a special assessment to recover the cost associated with protecting uninsured depositors as part of those financial institution failures. We continue to assess the impact of the special assessment to our future operating results and expect to record the impact when the final rule is enacted.

16. 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 two business segments: Consumer & Regional Banking and Commercial Banking. The Treasury / Other function includes technology and operations, other unallocated assets, liabilities, revenue, and expense. See Note 1 “Basis of Presentation” for a description of the changes made during the second quarter 2023. Prior period results have been adjusted to conform to the new segment presentation.

Consumer & Regional Banking - Consumer & Regional Banking offers a comprehensive set of digitally powered consumer and business financial solutions to Consumer Lending, Regional Banking, Branch Banking, and Wealth Management customers. The Consumer & Regional Banking segment provides a wide array of financial products and services to consumer and business customers including, but not limited to, deposits, lending, payments, mortgage banking, dealer financing, investment management, trust, brokerage, insurance, and other financial products and services. We serve our customers through our network of channels, including branches, online banking, mobile banking, telephone banking, and ATMs.

2023 2Q Form 10-Q 87

Table of Contents

Listed in the following tables is certain operating basis financial information reconciled to Huntington’s June 30, 2023, December 31, 2022, and June 30, 2022, reported results by business segment.



Income Statements	Consumer & Regional Banking		Commercial Banking		Treasury / Other		Huntington Consolidated
(dollar amounts in millions)
Three months ended June 30, 2023
Net interest income	$	1,192	$	577	$	(423)	$	1,346
Provision for credit losses	64		28		—		92
Noninterest income	302		167		26		495
Noninterest expense	765		274		11		1,050
Provision (benefit) for income taxes	140		93		(99)		134
Income attributable to non-controlling interest	—		6		—		6
Net income (loss) attributable to Huntington	$	525	$	343	$	(309)	$	559
Three months ended June 30, 2022
Net interest income	$	710	$	422	$	129	$	1,261
Provision (benefit) for credit losses	272		(205)		—		67
Noninterest income	332		150		3		485
Noninterest expense	714		246		58		1,018
Provision (benefit) for income taxes	13		111		(4)		120
Income attributable to non-controlling interest	—		2		—		2
Net income attributable to Huntington	$	43	$	418	$	78	$	539
Six months ended June 30, 2023
Net interest income	$	2,358	$	1,140	$	(743)	$	2,755
Provision for credit losses	110		67		—		177
Noninterest income	646		323		38		1,007
Noninterest expense	1,519		552		65		2,136
Provision (benefit) for income taxes	289		177		(188)		278
Income attributable to non-controlling interest	—		10		—		10
Net income (loss) attributable to Huntington	$	1,086	$	657	$	(582)	$	1,161
Six months ended June 30, 2022
Net interest income	$	1,341	$	837	$	229	$	2,407
Provision (benefit) for credit losses	167		(75)		—		92
Noninterest income	674		290		20		984
Noninterest expense	1,452		494		125		2,071
Provision (benefit) for income taxes	83		149		(7)		225
Income attributable to non-controlling interest	—		4		—		4
Net income attributable to Huntington	$	313	$	555	$	131	$	999


	Assets at				Deposits at
(dollar amounts in millions)	June 30, 2023		December 31, 2022		June 30, 2023		December 31, 2022
Consumer & Regional Banking	$	71,423	$	70,268	$	106,502	$	105,064
Commercial Banking	64,505		63,611		36,459		36,807


Treasury / Other	52,577		49,027		5,067		6,043
Total	$	188,505	$	182,906	$	148,028	$	147,914

88 Huntington Bancshares Incorporated

Table of Contents

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 2022 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 June 30, 2023. Based upon such evaluation, Huntington’s Chief Executive Officer and Chief Financial Officer have concluded that, as of June 30, 2023, Huntington’s disclosure controls and procedures were effective.

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 June 30, 2023, 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 15 “Commitments and Contingent Liabilities” of the Notes to Unaudited Consolidated Financial Statements under the caption “Litigation and Regulatory Matters” and is incorporated into this Item by reference.

Item 1A: Risk Factors

In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the risk factors discussed in Part I, “Item 1A. Risk Factors” in our 2022 Annual Report on Form 10-K, which could materially affect our business, financial condition, or results of operations.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) and (b)

Not Applicable

(c)


Period	Total Number of Shares Purchased	Average Price Paid Per Share		Maximum Number of Shares (or Approximate Dollar Value) that May Yet Be Purchased Under the Plans or Programs (1)
April 1, 2023 to April 30, 2023	—	$	—	$	1,000,000,000
May 1, 2023 to May 31, 2023	—	—		1,000,000,000
June 1, 2023 to June 30, 2023	—	—		1,000,000,000
Total	—	$	—

(1)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.

2023 2Q Form 10-Q 89

Table of Contents

Item 5. Other Information

On April 28, 2023, Richard A. Pohle, our Chief Credit Officer, adopted a trading plan intended to satisfy the conditions under Rule 10b5-1(c) of the Exchange Act. Mr. Pohle’s plan is for the sale of up to 93,290.0445 shares of our common stock in amounts and prices determined in accordance with formulae set forth in the plan and terminates on the earlier of the date all the shares under the plan are sold and August 1, 2024.

Table of Contents

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 Description	Report or Registration Statement	SEC File or Registration Number	Exhibit Reference
3.1	Articles Supplementary of Huntington Bancshares Incorporated, as of January 18, 2019.	Current Report on Form 8-K dated January 16, 2019.	001-34073	3.1
3.2	Articles of Restatement of Huntington Bancshares Incorporated, as of January 18, 2019.	Current Report on Form 8-K dated January 16, 2019.	001-34073	3.2
3.3	Articles Supplementary of Huntington Bancshares Incorporated, as of May 28, 2020.	Current Report on Form 8-K dated May 28, 2020.	001-34073	3.1
3.4	Articles Supplementary of Huntington Bancshares Incorporated, as of August 5, 2020.	Current Report on Form 8-K dated August 10, 2020.	001-34073	3.1
3.5	Bylaws of Huntington Bancshares Incorporated, as amended and restated on January 16, 2019.	Current Report on Form 8-K dated January 16, 2019.	001-34073	3.3
3.6	Articles Supplementary of Huntington Bancshares Incorporated, as of February 5, 2021	Current Report on Form 8-K dated February 5, 2021.	001-34073	3.1
3.7	Articles Supplementary of Huntington Bancshares Incorporated, as of June 8, 2021	Current Report on Form 8-K dated June 8, 2021	001-34073	3.1
3.8	Articles of Amendment of Huntington Bancshares Incorporated to Articles of Restatement of Huntington Bancshares Incorporated, as of June 8, 2021	Current Report on Form 8-K dated June 8, 2021	001-34073	3.2
3.9	Articles Supplementary of Huntington Bancshares Incorporated, as of March 3, 2023.	Current Report on Form 8-K dated March 2, 2023	001-34073	3.1
3.10	Bylaws of Huntington Bancshares Incorporated, as amended and restated on July 19, 2023.	Current Report on Form 8-K dated July 21, 2023	001-34073	3.2
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.
10.1	*Separation Agreement dated May 16, 2023, by and between The Huntington National Bank and Michael Jones.
31.1	*Rule 13a-14(a) Certification – Chief Executive Officer.
31.2	*Rule 13a-14(a) Certification – Chief Financial Officer.
32.1	**Section 1350 Certification – Chief Executive Officer.
32.2	**Section 1350 Certification – Chief Financial Officer.
101.INS	***The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document
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
104	*Cover Page Interactive Data File (formatted as Inline XBRL and contained within Exhibit 101 attachments)

* Filed herewith

** Furnished herewith

*** The following material from Huntington’s Form 10-Q Report for the quarterly period ended June 30, 2023 formatted in Inline XBRL: (1) Unaudited Consolidated Balance Sheets, (2) Unaudited Consolidated Statements of Income, (3) Unaudited Consolidated Statements of Comprehensive Income (4) Unaudited Consolidated Statement of Changes in Shareholders’ Equity, (5) Unaudited Consolidated Statements of Cash Flows, and (6) the Notes to Unaudited Consolidated Financial Statements.

Table of Contents

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:	July 28, 2023	/s/ Stephen D. Steinour
		Stephen D. Steinour
		Chairman, President, and Chief Executive Officer (Principal Executive Officer)

Date:	July 28, 2023	/s/ Zachary Wasserman
		Zachary Wasserman
		Chief Financial Officer (Principal Financial Officer)

Positive
Negative
Uncertain
Constraining
Legalese
Litigous
Readability	H.S. freshman Avg

Huntington Bancshares (HBAN) 10-Q2023 Q2 Quarterly report

Content analysis