Item 8. Financial Statements and Supplementary Data

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Item 8. Financial Statements and Supplementary Data

Information required by this item is set forth in the Reports of Independent Registered Public Accounting Firm (PCAOB ID 238), Consolidated Financial Statements and Notes to Consolidated Financial Statements, which is incorporated by reference into this item. The selected quarterly financial data is no longer required. There were no material retrospective changes to any quarters in the two most recent fiscal years that would require this

disclosure.

86 Huntington Bancshares Incorporated

REPORT OF MANAGEMENT’S EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

The Management of Huntington Bancshares Incorporated (Huntington or the Company) is responsible for the financial information and representations contained in the Consolidated Financial Statements and other sections of this report. The Consolidated Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States. In all material respects, they reflect the substance of transactions that should be included based on informed judgments, estimates, and currently available information. Management maintains a system of internal accounting controls, which includes the careful selection and training of qualified personnel, appropriate segregation of responsibilities, communication of written policies and procedures, and a broad program of internal audits. The costs of the controls are balanced against the expected benefits. During 2022, the audit committee of the board of directors met regularly with Management, Huntington’s internal auditors, and the independent registered public accounting firm, PricewaterhouseCoopers LLP, to review the scope of their audits and to discuss the evaluation of internal accounting controls and financial reporting matters. The independent registered public accounting firm and the internal auditors have free access to, and meet confidentially with, the audit committee to discuss appropriate matters. Also, Huntington maintains a disclosure review committee. This committee’s purpose is to design and maintain disclosure controls and procedures to ensure that material information relating to the financial and operating condition of Huntington is properly reported to its chief executive officer, chief financial officer, chief auditor, and the audit committee of the board of directors in connection with the preparation and filing of periodic reports and the certification of those reports by the chief executive officer and the chief financial officer.

REPORT OF MANAGEMENT’S ASSESSMENT OF INTERNAL CONTROL OVER FINANCIAL REPORTING

Management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934, as amended. Huntington’s Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2022. In making this assessment, Management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework (2013). Based on that assessment, Management concluded that, as of December 31, 2022, the Company’s internal control over financial reporting is effective based on those criteria. The Company’s internal control over financial reporting as of December 31, 2022 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report appearing on the next page.

Stephen D. Steinour – Chairman, President, and Chief Executive Officer

Zachary Wasserman – Senior Executive Vice President and Chief Financial Officer

February 17, 2023

2022 Form 10-K 87

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of

Huntington Bancshares Incorporated

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Huntington Bancshares Incorporated and its subsidiaries (the “Company”) as of December 31, 2022 and 2021, and the related consolidated statements of income, of comprehensive income, of changes in shareholders' equity and of cash flows for each of the three years in the period ended December 31, 2022, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Change in Accounting Principle

As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it accounts for the allowance for credit losses as of January 1, 2020.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Report of Management's Assessment of Internal Control over Financial Reporting. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

88 Huntington Bancshares Incorporated

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Valuation of the General Reserve of the Allowance for Credit Losses

As described in Notes 1 and 6 to the consolidated financial statements, management’s estimate of the allowance for credit losses of $2.3 billion as of December 31, 2022 includes a general reserve that consists of various risk-profile reserve components. The risk-profile components consider items unique to the Company’s structure, policies, processes, and portfolio composition, as well as qualitative measurements and assessments of the Company’s loan portfolios including, but not limited to, economic uncertainty, concentrations, portfolio composition, industry comparisons, and internal review functions.

The principal considerations for our determination that performing procedures relating to the valuation of the general reserve of the allowance for credit losses is a critical audit matter are (i) the significant judgment by management when determining the general reserve, which in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence relating to the methodology and assumptions used to determine the general reserve, and (ii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls related to the valuation of the general reserve of the allowance for credit losses. These procedures also included, among others, testing management’s process for determining the general reserve, including evaluating the appropriateness of management’s methodology, testing the completeness and accuracy of data utilized by management and evaluating the reasonableness of assumptions relating to the general reserve. Evaluating management’s assumptions related to the general reserve involved evaluating whether the assumptions used were reasonable considering portfolio composition, relevant market data, and indicators of economic uncertainty. Professionals with specialized skill and knowledge were used to assist in evaluating the appropriateness of management’s methodology and assumptions related to the general reserve.

PricewaterhouseCoopers LLP

Columbus, Ohio

February 17, 2023

We have served as the Company’s auditor since 2015.

2022 Form 10-K 89

Huntington Bancshares Incorporated

Consolidated Balance Sheets


	At December 31,
(dollar amounts in millions)	2022		2021
Assets
Cash and due from banks	$	1,796	$	1,811
Interest-bearing deposits at Federal Reserve Bank	4,908		3,711
Interest-bearing deposits in banks	214		392
Trading account securities	19		46
Available-for-sale securities	23,423		28,460
Held-to-maturity securities	17,052		12,447


Other securities	854		648

Loans held for sale (includes $520 and $1,270 respectively, measured at fair value)(1)	529		1,676








Loans and leases (includes $185 and $171 respectively, measured at fair value)(1)	119,523		111,267
Allowance for loan and lease losses	(2,121)		(2,030)
Net loans and leases	117,402		109,237
Bank owned life insurance	2,753		2,765
Accrued income and other receivables	1,573		1,319
Premises and equipment	1,156		1,164
Goodwill	5,571		5,349
Servicing rights and other intangible assets	712		611
Other assets	4,944		4,428
Total assets	$	182,906	$	174,064
Liabilities and shareholders’ equity
Liabilities
Deposits:
Demand deposits—noninterest-bearing	$	38,242	$	43,236
Interest-bearing	109,672		100,027

Total deposits	147,914		143,263
Short-term borrowings	2,027		334
Long-term debt	9,686		7,108
Other liabilities	5,510		4,041
Total liabilities	165,137		154,746
Commitments and Contingent Liabilities (Note 22)
Shareholders’ equity
Preferred stock	2,167		2,167
Common stock	14		14
Capital surplus	15,309		15,222
Less treasury shares, at cost	(80)		(79)
Accumulated other comprehensive (loss) gain	(3,098)		(229)
Retained earnings	3,419		2,202
Total Huntington Bancshares Inc shareholders’ equity	17,731		19,297
Non-controlling interest	38		21
Total equity	17,769		19,318
Total liabilities and shareholders’ equity	$	182,906	$	174,064
Common shares authorized (par value of $0.01)	2,250,000,000		2,250,000,000
Common shares outstanding	1,443,068,036		1,437,742,172
Treasury shares outstanding	6,322,052		6,298,288
Preferred stock, authorized shares	6,617,808		6,617,808
Preferred shares outstanding	557,500		557,500

(1)Amounts represent loans for which Huntington has elected the fair value option. See Note 19 “Fair Values of Assets and Liabilities.”

See Notes to Consolidated Financial Statements

90 Huntington Bancshares Incorporated

Huntington Bancshares Incorporated

Consolidated Statements of Income


	Year Ended December 31,
(dollar amounts in millions, except per share data, share amounts in thousands)	2022		2021		2020
Interest and fee income:
Loans and leases	$	4,816	$	3,636	$	3,085
Available-for-sale securities
Taxable	576		261		237
Tax-exempt	74		56		61
Held-to-maturity securities-taxable	351		174		215
Other securities-taxable	27		10		6
Other interest income	125		54		43
Total interest income	5,969		4,191		3,647
Interest expense
Deposits	363		45		197
Short-term borrowings	46		1		13

Long-term debt	287		43		213
Total interest expense	696		89		423
Net interest income	5,273		4,102		3,224
Provision for credit losses	289		25		1,048
Net interest income after provision for credit losses	4,984		4,077		2,176
Service charges on deposit accounts	384		372		301
Card and payment processing income	374		334		248
Capital markets fees	252		151		125
Trust and investment management services	249		232		189
Mortgage banking income	144		309		366
Leasing revenue	126		99		21
Insurance income	117		105		97
Gain on sale of loans	57		9		42
Bank owned life insurance income	56		69		64
Net gains (losses) on sales of securities	—		9		(1)
Other noninterest income	222		200		139
Total noninterest income	1,981		1,889		1,591
Personnel costs	2,401		2,335		1,692
Outside data processing and other services	610		850		384
Equipment	269		248		180
Net occupancy	246		277		158
Marketing	91		89		38
Professional services	77		113		55
Deposit and other insurance expense	67		51		32
Amortization of intangibles	53		48		41
Lease financing equipment depreciation	45		41		1

Other noninterest expense	342		323		214
Total noninterest expense	4,201		4,375		2,795
Income before income taxes	2,764		1,591		972
Provision for income taxes	515		294		155
Income after income taxes	2,249		1,297		817
Income attributable to non-controlling interest	11		2		—
Net income attributable to Huntington Bancshares Inc	2,238		1,295		817
Dividends on preferred shares	113		131		100
Impact of preferred stock redemption	—		11		—
Net income applicable to common shares	$	2,125	$	1,153	$	717



Average common shares—basic	1,441,279		1,262,435		1,017,117
Average common shares—diluted	1,465,220		1,286,733		1,032,683
Per common share:
Net income—basic	$	1.47	$	0.91	$	0.71
Net income—diluted	1.45		0.90		0.69

See Notes to Consolidated Financial Statements

2022 Form 10-K 91

Huntington Bancshares Incorporated

Consolidated Statements of Comprehensive Income


	Year Ended December 31,
(dollar amounts in millions)	2022		2021		2020
Net income attributable to Huntington Bancshares Inc	$	2,238	$	1,295	$	817
Other comprehensive income, net of tax:



Net unrealized (losses) gains on available-for-sale securities	(2,849)		(341)		216
Net impact of hedges on available-for-sale securities	665		87		2
Change in fair value of cash flow hedges on loans	(695)		(192)		232
Translations adjustments, net of hedges	(5)		(3)		—
Change in accumulated unrealized gains (losses) for pension and other post-retirement obligations	15		28		(2)
Other comprehensive (loss) income, net of tax	(2,869)		(421)		448
Comprehensive (loss) income attributable to Huntington Bancshares	(631)		874		1,265
Comprehensive income attributed to non-controlling interest	11		2		—
Comprehensive (loss) income	$	(620)	$	876	$	1,265

See Notes to Consolidated Financial Statements

92 Huntington Bancshares Incorporated

Huntington Bancshares Incorporated

Consolidated Statements of Changes in Shareholders’ Equity


	Preferred Stock			Common Stock												AOCI						Non-controlling
(dollar amounts in millions, except per share data, share amounts in thousands)				Capital		Treasury Stock							Retained					Total
Amount			Shares		Amount			Surplus			Shares		Amount			Earnings		Total		Interest		Equity
Year Ended December 31, 2022
Balance, beginning of year	$	2,167		1,444,040		$	14		$	15,222		(6,298)		$	(79)	$	(229)	$	2,202	$	19,297	$	21	$	19,318

Net income																		2,238		2,238		11		2,249
Other comprehensive (loss) income, net of tax																(2,869)				(2,869)				(2,869)







Cash dividends declared:
Common ($0.62 per share)																		(908)		(908)				(908)

Preferred																		(113)		(113)				(113)
Recognition of the fair value of share-based compensation									105											105				105
Other share-based compensation activity				5,350					(19)											(19)				(19)
Other									1			(24)		(1)						—		6		6
Balance, end of year	$	2,167		1,449,390		$	14		$	15,309		(6,322)		$	(80)	$	(3,098)	$	3,419	$	17,731	$	38	$	17,769


	Preferred Stock			Common Stock												AOCI						Non-controlling
(dollar amounts in millions, except per share data, share amounts in thousands)				Capital		Treasury Stock							Retained					Total
Amount			Shares		Amount			Surplus			Shares		Amount			Earnings		Total		Interest		Equity
Year Ended December 31, 2021
Balance, beginning of year	$	2,191		1,022,258		$	10		$	8,781		(5,062)		$	(59)	$	192	$	1,878	$	12,993	$	—	$	12,993
Net income																		1,295		1,295		2		1,297
Other comprehensive (loss) income, net of tax																(421)				(421)				(421)
TCF Financial Corp Acquisition:
Issuance of common stock				458,171		5			6,993					(37)						6,961				6,961
Issuance of Series I Preferred Stock	175								10											185				185
Non-controlling interest acquired																						22		22
Net proceeds from issuance of Series H Preferred Stock	486																			486				486
Redemption of preferred stock	(685)								(4)									(11)		(700)				(700)
Repurchases of common stock				(43,139)		—			(650)											(650)				(650)
Cash dividends declared:
Common ($0.605 per share)																		(826)		(826)				(826)

Preferred																		(131)		(131)				(131)
Recognition of the fair value of share-based compensation									129											129				129
Other share-based compensation activity				6,750		(1)			(37)									—		(38)				(38)
Other									—			(1,236)		17				(3)		14		(3)		11
Balance, end of year	$	2,167		1,444,040		$	14		$	15,222		(6,298)		$	(79)	$	(229)	$	2,202	$	19,297	$	21	$	19,318

2022 Form 10-K 93


	Preferred Stock			Common Stock												AOCI						Non-controlling
(dollar amounts in millions, except per share data, share amounts in thousands)				Capital		Treasury Stock							Retained					Total
Amount			Shares		Amount			Surplus			Shares		Amount			Earnings		Total		Interest		Equity
Year Ended December 31, 2020
Balance, beginning of year	$	1,203		1,024,541		$	10		$	8,806		(4,537)		$	(56)	$	(256)	$	2,088	$	11,795	$	—	$	11,795
Cumulative-effect of change in accounting principle, net of tax																		(306)		(306)				(306)
Net income																		817		817		—		817
Other comprehensive income, net of tax																448				448				448
Net proceeds from issuance of Preferred Stock	988																			988				988

Repurchases of common stock				(7,504)		—			(92)											(92)				(92)
Cash dividends declared:
Common ($0.60 per share)																		(621)		(621)				(621)
Preferred																		(100)		(100)				(100)
Recognition of the fair value of share-based compensation									77											77				77
Other share-based compensation activity				5,372		—			(9)									—		(9)				(9)
Other				(151)		—			(1)			(525)		(3)				—		(4)				(4)
Balance, end of year	$	2,191		1,022,258		$	10		$	8,781		(5,062)		$	(59)	$	192	$	1,878	$	12,993	$	—	$	12,993

See Notes to Consolidated Financial Statements

94 Huntington Bancshares Incorporated

Huntington Bancshares Incorporated

Consolidated Statements of Cash Flows


	Year Ended December 31,
(dollar amounts in millions)	2022		2021		2020
Operating activities
Net income	$	2,249	$	1,297	$	817
Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Provision for credit losses	289		25		1,048
Depreciation and amortization	484		391		367
Share-based compensation expense	105		129		77
Deferred income tax expense (benefit)	319		(76)		(93)

Net change in:
Trading account securities	27		16		37
Loans held for sale	675		(56)		(534)
Other assets	(1,156)		366		(1,077)
Other liabilities	1,024		27		683
Other, net	11		(57)		(2)
Net cash provided by operating activities	4,027		2,062		1,323
Investing activities
Change in interest bearing deposits in banks	332		716		(81)
Net cash (paid) received from business acquisition	(223)		466		—
Proceeds from:
Maturities and calls of available-for-sale securities	4,053		7,275		5,697
Maturities and calls of held-to-maturity securities	2,803		4,151		3,042
Maturities and calls of other securities	832		—		—
Sales of available-for-sale securities	—		5,892		392

Purchases of available-for-sale securities	(7,107)		(19,936)		(11,104)
Purchases of held-to-maturity securities	(3,229)		(4,777)		—
Purchases of other securities	(1,080)		(126)		(68)

Net proceeds from sales of portfolio loans and leases	995		517		1,113
Principal payments received under direct finance and sales-type leases	1,882		1,055		704
Net loan and lease activity, excluding sales and purchases	(10,169)		3,303		(6,844)

Purchases of premises and equipment	(214)		(247)		(119)

Purchases of loans and leases	(610)		(1,197)		(1,506)
Net accrued income and other receivables activity	(66)		(653)		—
Net cash paid for branch disposition	—		(618)		—

Other, net	192		217		135
Net cash used in investing activities	(11,609)		(3,962)		(8,639)
Financing activities
Increase in deposits	4,651		6,501		16,601
Increase (decrease) in short-term borrowings	2,161		(1,245)		(2,373)

Net proceeds from issuance of long-term debt	11,004		775		1,386
Maturity/redemption of long-term debt	(8,017)		(3,404)		(3,052)
Dividends paid on preferred stock	(113)		(138)		(84)
Dividends paid on common stock	(897)		(750)		(614)
Repurchases of common stock	—		(650)		(92)


Payment to repurchase preferred stock	—		(700)		—
Net proceeds from issuance of preferred stock	—		486		988


Other, net	(25)		(48)		(19)
Net cash provided by financing activities	8,764		827		12,741
Increase (decrease) in cash and cash equivalents	1,182		(1,073)		5,425
Cash and cash equivalents at beginning of period	5,522		6,595		1,170
Cash and cash equivalents at end of period	$	6,704	$	5,522	$	6,595


	Year Ended December 31,
(dollar amounts in millions)	2022		2021		2020
Supplemental disclosures:
Interest paid	$	627	$	185	$	453
Income taxes (refunded) paid	(109)		269		81

Non-cash activities
Loans transferred to held-for-sale from portfolio	748		872		1,139
Loans transferred to portfolio from held-for-sale	126		102		53


Transfer of securities from available-for-sale to held-to-maturity	4,225		3,007		2,842


Business Combination (1)

(1) In the year ended 2021, the TCF acquisition included fair value of tangible assets acquired of $46.3 billion, goodwill and other intangible assets of $3.5 billion, liabilities assumed $42.6 billion, preferred stock of $185 million, and common stock of $7.0 billion.

See Notes to Consolidated Financial Statements

95 Huntington Bancshares Incorporated

Huntington Bancshares Incorporated

Notes to Consolidated Financial Statements

1. SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations — Huntington Bancshares Incorporated (Huntington or the Company) is a multi-state diversified regional bank holding company organized under Maryland law in 1966 and headquartered in Columbus, Ohio. Through its subsidiaries, including its bank subsidiary, The Huntington National Bank (the Bank), Huntington is engaged in providing full-service commercial and consumer banking services, mortgage banking services, automobile financing, recreational vehicle and marine financing, investment banking, capital markets, and advisory services, equipment financing, distribution finance (formerly referred to as inventory finance), investment management, trust services, brokerage services, insurance products and services, and other financial products and services. Huntington’s 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 other states.

Basis of Presentation — The Consolidated Financial Statements include the accounts of Huntington and its majority-owned subsidiaries and are presented in accordance with GAAP. All intercompany transactions and balances are eliminated in consolidation. Entities in which Huntington holds a controlling financial interest are consolidated. For a voting interest entity, a controlling financial interest is generally where Huntington holds, directly or indirectly, more than 50 percent of the outstanding voting shares. For a VIE, a controlling financial interest is where Huntington has the power to direct the activities of an entity that most significantly impact the entity’s economic performance and has an obligation to absorb losses or the right to receive benefits from the VIE. For consolidated entities where Huntington holds less than a 100% interest, Huntington recognizes non-controlling interest (included in shareholders’ equity) for the equity held by minority shareholders and non-controlling profit or loss (included in income attributable to non-controlling interest) for the portion of the entity’s earnings attributable to minority interests. Investments in companies that are not consolidated are accounted for using the equity method when Huntington has the ability to exert significant influence. Investments in non-marketable equity securities for which Huntington does not have the ability to exert significant influence are generally accounted for using the cost method adjusted for impairment and other changes in observable prices. Investments in private investment partnerships that are accounted for under the equity method or the cost method are included in other assets and Huntington’s earnings in equity investments are included in other noninterest income. Investments accounted for under the cost and equity methods are periodically evaluated for impairment.

Effective in the 2022, a new classification within the Consolidated Balance Sheet of accrued income and other receivables was established comprised of activity that was previously classified as loans and leases (other consumer loans and leases) and other assets. All prior period amounts and all related metrics have been reclassified to conform to the current presentation.

Use of Estimates —The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that significantly affect amounts reported in the Consolidated Financial Statements. Huntington utilizes processes that involve the use of significant estimates and the judgments of management in determining the amount of its allowance for credit losses, income taxes, as well as fair value measurements of investment securities, derivative instruments, goodwill, other intangible assets, pension assets and liabilities, short-term borrowings, mortgage servicing rights, and loans held for sale. As with any estimate, actual results could differ from those estimates.

Cash and cash equivalents —For statements of cash flows purposes, cash and cash equivalents are defined as the sum of cash and due from banks and interest-bearing deposits at Federal Reserve Bank.

2022 Form 10-K 96

Securities — Securities purchased with the intention of recognizing short-term profits or which are actively bought and sold are classified as trading account securities and reported at fair value. The unrealized gains or losses on trading account securities are recorded in other noninterest income. Debt securities purchased that Huntington has the positive intent and ability to hold to their maturity are classified as held-to-maturity securities. Held-to-maturity securities are recorded at amortized cost. All other debt securities are classified as available-for-sale securities. Available-for-sale securities are recognized and measured at fair value with any change in the fair value recognized in other comprehensive income. All equity securities are classified as other securities.

Securities transactions are recognized on the trade date (the date the order to buy or sell is executed). The carrying value plus any related accumulated OCI balance of sold securities is used to compute realized gains and losses. Interest on securities, including amortization of premiums and accretion of discounts using the effective interest method over the period to maturity, is included in interest income.

Non-marketable equity securities include stock held for membership and regulatory purposes, such as FHLB stock and Federal Reserve Bank stock. These securities are accounted for at cost, evaluated for impairment, and are included in other securities. Other securities also include mutual funds and other marketable equity securities. These securities are carried at fair value, with changes in fair value recognized in other noninterest income.

Loans and Leases — Loans for which Huntington has the intent and ability to hold for the foreseeable future, or until maturity or payoff, except loans for which the fair value option has been elected, are carried at the principal amount outstanding, net of charge-offs, unamortized deferred loan origination fees and costs, premiums and discounts, and unearned income. Direct financing leases are reported at the aggregate of lease payments receivable and estimated residual values, net of unearned and deferred income, and any initial direct costs incurred to originate these leases. Renewal options for leases are at the option of the lessee and are typically not included in the measurement of the lease receivable as they are not considered reasonably certain of exercise. Purchase options are typically at fair value, and as such those options are not considered in the measurement of lease receivables or in lease classification. Interest income is accrued as earned using the interest method. Huntington defers the fees it receives from the origination of loans and leases, as well as the direct costs of those activities. Huntington also acquires loans at premiums and/or discounts to their contractual values. Huntington amortizes loan discounts, premiums, and net loan origination fees and costs over the contractual lives of the related loans using the effective interest method.

Troubled debt restructurings are loans for which the original contractual terms have been modified to provide a concession to a borrower experiencing financial difficulties. Loan modifications are considered TDRs when the concessions provided are not available to the borrower through either normal channels or other sources. However, not all loan modifications are TDRs. Modifications resulting in troubled debt restructurings may include changes to one or more terms of the loan, including, but not limited to, an interest rate concession, an extension of the repayment period, a reduction in payment amount, and partial forgiveness or deferment of principal or accrued interest.

Impairment of the residual values of direct financing leases is evaluated quarterly, with impairment arising if the expected fair value is less than the carrying amount. Huntington assesses net investments in leases (including residual values) for impairment and recognizes impairment losses in accordance with the impairment guidance for financial instruments. As such, net investments in leases may be reduced by an allowance for credit losses, with changes recognized as provision expense.

For leased equipment, the residual component of a direct financing lease represents the estimated fair value of the leased equipment at the end of the lease term. Huntington uses industry data, historical experience, and independent appraisals to establish these residual value estimates. Upon expiration of a lease, residual assets are remarketed, resulting in an extension of the lease by the lessee, a lease to a new customer, or purchase of the residual asset by the lessee or another party. Huntington also purchases insurance guaranteeing the value of certain residual assets.

Loans Held for Sale — Loans in which Huntington does not have the intent and ability to hold for the foreseeable future are classified as loans held for sale. Loans held for sale are carried at (a) the lower of cost or fair value less costs to sell, or (b) fair value where the fair value option is elected. The fair value option is generally elected for mortgage loans originated with the intent to sell.

97 Huntington Bancshares Incorporated

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

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

All classes within the commercial loan and lease portfolio are placed on nonaccrual status at 90-days past due. First-lien home equity loans are placed on nonaccrual status at 150-days past due. Junior-lien home equity loans are placed on nonaccrual status at the earlier of 120-days past due or when the related first-lien loan has been identified as nonaccrual. Automobile, RV and marine, and other consumer loans are generally fully charged-off at 120-days past due, and if not fully charged-off are placed on non-accrual. Residential mortgage loans are placed on nonaccrual status at 150-days past due, with the exception of residential mortgages guaranteed by government agencies which continue to accrue interest at the rate guaranteed by the government agency.

For all classes within all loan portfolios, when a loan is placed on nonaccrual status, any accrued interest is reversed and charged against interest income.

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

Management monitors several factors to evaluate a borrower’s financial condition and their ability to make principal and interest payments. When, in management’s judgment, the borrower’s ability to make required principal and interest payments resumes and collectability is no longer in doubt, supported by sustained repayment history, the loan is returned to accrual status. For loans that are returned to accrual status, cash receipts are applied according to the contractual terms of the loan.

Collateral-dependent Loans — Certain commercial and consumer loans for which repayment is expected to be provided substantially through the operation or sale of the loan collateral are considered to be collateral-dependent.

Allowance for Credit Losses — Huntington performs an ACL evaluation on its loan and lease portfolio, held-to-maturity securities as well as on available-for-sale securities. The ACL on loan and lease portfolio and held-to-maturity securities are provided through an expected loss methodology referred to as CECL methodology. The ACL on AFS securities is provided when a credit loss is deemed to have occurred for securities which Huntington does not intend to sell or is not required to sell. The CECL methodology also applies to credit exposures on off-balance-sheet loan commitments, financial guarantees not accounted for as insurance, including standby letters of credit, and other similar instruments not recognized as derivative financial instruments.

On January 1, 2020, Huntington adopted ASC Topic 326 using the modified retrospective method for all financial assets in scope of the standard. Upon adoption, Huntington recorded an increase to the ACL of $393 million and a corresponding decrease to retained earnings of $306 million, net of tax.

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Loans - The ACL is deducted from the amortized cost basis of a financial asset or a group of financial assets so that the balance sheet reflects the net amount Huntington expects to collect. Amortized cost is the principal balance outstanding, net of purchase premiums and discounts, fair value hedge accounting adjustments, and deferred fees and costs. Subsequent changes (favorable and unfavorable) in expected credit losses are recognized immediately in net income as a credit loss expense or a reversal of credit loss expense. Management estimates the allowance by utilizing models dependent upon loan risk characteristics and economic parameters. Commercial loan risk characteristics include but are not limited to risk ratings, industry type and maturity type. Consumer loan risk characteristics include but are not limited to FICO scores, LTV, and loan vintages. The economic parameters are developed using available information relating to past events, current conditions, and reasonable and supportable forecasts. Huntington’s reasonable and supportable forecast period reverts to a historical norm based on inputs within approximately two to three years. The reversion period is dependent on the state of the economy at the beginning of the forecast. Historical credit experience provides the basis for the estimation of expected credit losses, with adjustments made for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, delinquency levels and terms, as well as for changes in the micro- and macroeconomic environments. The contractual terms of financial assets are adjusted for expected prepayments and any extensions outside of Huntington’s control.

The ACL is measured on a collective basis when similar risk characteristics exist. Loans that are determined to have unique risk characteristics are evaluated on an individual basis by management. If a loan is determined to be collateral dependent or meets the criteria to apply the collateral dependent practical expedient, expected credit losses are determined based on the fair value of the collateral at the reporting date, less costs to sell as appropriate.

Management believes the products within each of the entity’s portfolio classes exhibit similar risk characteristics. Huntington has identified its portfolio classes as disclosed in Note 5 - “Loans and Leases.”

In addition to the transactional reserve described above, Huntington also maintains a general reserve that consists of various risk-profile reserve components. The risk-profile components consider items unique to Huntington’s structure, policies, processes, and portfolio composition, as well as qualitative measurements and assessments of the loan portfolios including, but not limited to, economic uncertainty, concentrations, portfolio composition, industry comparisons and internal review functions.

Huntington has elected to exclude accrued interest receivable from the measurement of its ACL given the well-defined non-accrual policies in place for all loan portfolios which results in timely reversal of outstanding interest through interest income.

The estimate for the off-balance sheet exposures, the AULC, is determined using the same procedures and methodologies as used for the loan and lease portfolio supplemented by the information related to future draws and related credit loss expectations. The AULC is recorded in other liabilities in the Consolidated Balance Sheets.

HTM Securities - The allowance for held-to-maturity debt securities is estimated using a CECL methodology. Any expected credit loss is provided through the allowance for credit loss on HTM securities and is deducted from the amortized cost basis of the security so that the balance sheet reflects the net amount Huntington expects to collect. Nearly all of Huntington’s HTM debt securities are issued by U.S. government entities and agencies. These securities are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major rating agencies, and have a long history of no credit losses. Accordingly, there is a zero credit loss expectation on these securities.

99 Huntington Bancshares Incorporated

AFS Securities - Huntington evaluates its available-for-sale investment securities portfolio on a quarterly basis for indicators of impairment. Huntington assesses whether an impairment has occurred when the fair value of a debt security is less than the amortized cost at the balance sheet date. Management reviews the amount of unrealized loss, the credit rating history, market trends of similar security classes, time remaining to maturity, and the source of both interest and principal payments to identify securities which could potentially be impaired. For those debt securities that Huntington intends to sell or is more likely than not required to sell, before the recovery of their amortized cost basis, the difference between fair value and amortized cost is considered to be impaired and is recognized in provision for credit losses. For those debt securities that Huntington does not intend to sell or is not more likely than not required to sell, prior to expected recovery of amortized cost basis, the credit portion of the impairment is recognized through an allowance in provision for credit losses while the noncredit portion is recognized in OCI. In determining the credit portion, Huntington uses a discounted cash flow analysis, which includes evaluating the timing and amount of the expected cash flows. Non-credit-related impairment results from other factors, including increased liquidity spreads and higher interest rates.

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

Commercial loans and leases are generally either charged-off or written down to net realizable value at 90-days past due. Automobile, RV and marine, and other consumer loans are generally charged-off at 120-days past due. First-lien and junior-lien home equity loans are charged-off to the estimated fair value of the collateral, less anticipated selling costs, at 150-days past due and 120-days past due, respectively. Residential mortgages are charged-off to the estimated fair value of the collateral at 150-days past due.

Collateral — Huntington pledges assets as collateral as required for various transactions including security repurchase agreements, public deposits, loan notes, derivative financial instruments, short-term borrowings, and long-term borrowings. Assets that have been pledged as collateral, including those that can be sold or repledged by the secured party, continue to be reported on the Consolidated Balance Sheets.

Huntington also accepts collateral, primarily as part of various transactions including derivative instruments and security resale agreements. Collateral received is excluded from the Consolidated Balance Sheets.

The market value of collateral accepted or pledged is regularly monitored and additional collateral is obtained or provided as necessary to ensure appropriate collateral coverage in these transactions.

Premises and Equipment — Premises and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation is computed principally by the straight-line method over the estimated useful lives of the related assets. Buildings and building improvements are depreciated over an average of 30 to 40 years and 10 to 30 years, respectively. Land improvements and furniture and fixtures are depreciated over an average of 5 to 20 years, while equipment is depreciated over a range of 3 to 10 years. Leasehold improvements are amortized over the lesser of the asset’s useful life or the lease term, including any renewal periods for which renewal is reasonably assured. Premises and equipment are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.

Mortgage Servicing Rights — Huntington recognizes the rights to service mortgage loans as an asset when servicing is contractually separated from the underlying mortgage loans by sale or securitization of the loans with servicing rights retained or when purchased. MSRs are included in servicing rights and other intangible assets in the Consolidated Balance Sheets. All MSR assets are recorded using the fair value method. Any change in the fair value of MSRs during the period is recorded in mortgage banking income.

2022 Form 10-K 100

Goodwill and Other Intangible Assets — Under the acquisition method of accounting, the net assets of entities acquired by Huntington are recorded at their estimated fair value at the date of acquisition. The excess cost of consideration paid over the fair value of net assets acquired is recorded as goodwill. Goodwill is evaluated for impairment on an annual basis at October 1st of each year or whenever events or changes in circumstances indicate the carrying value may not be recoverable. Other intangible assets with finite useful lives are amortized either on an accelerated or straight-line basis over their estimated useful lives. Other intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.

Operating Leases (Lessee) — Huntington has elected not to include non-lease components in the measurement of right-of-use assets, and as such allocates the costs attributable to such components, where those costs are not separately identifiable, via per-square-foot costing analysis developed by the entity for owned and leased spaces. Huntington uses a portfolio approach to develop discount rates as its lease portfolio is comprised of substantially all branch space and office space used in the entity’s operations. That rate, an input used in the measurement of the entity’s right-of-use assets, leverages an incremental borrowing rate of appropriate tenor and collateralization.

Derivative Financial Instruments — A variety of derivative financial instruments, principally interest rate swaps, caps, floors, and swaption collars, are used in asset and liability management activities to protect against the risk of adverse price or interest rate movements. These instruments provide flexibility in adjusting Huntington’s sensitivity to changes in interest rates without exposure to loss of principal and higher funding requirements.

Huntington also uses derivatives, principally loan sale commitments, in hedging its mortgage loan interest rate lock commitments and its mortgage loans held for sale. Mortgage loan sale commitments and the related interest rate lock commitments are carried at fair value on the Consolidated Balance Sheets with changes in fair value reflected in mortgage banking income. Huntington also uses certain derivative financial instruments to offset changes in value of its MSRs. These derivatives consist primarily of forward interest rate agreements and forward mortgage contracts. The derivative instruments used are not designated as qualifying hedges. Accordingly, such derivatives are recorded at fair value with changes in fair value reflected in mortgage banking income.

Derivative financial instruments are recorded in the Consolidated Balance Sheets as either an asset or a liability (in other assets and other liabilities, respectively) and measured at fair value. Accounting for changes in fair value of derivatives depends on whether the derivative is designated and qualifies in a hedging relationship. At inception a derivative contract can be designated as:

a qualifying hedge of the fair value of a recognized asset or liability or of an unrecognized firm commitment (fair value hedge);
a qualifying hedge of the variability of cash flows to be received or paid related to a recognized asset, liability or forecasted transaction (cash flow hedge); or
a qualifying hedge of Huntington’s investment in non-U.S. dollar functional currency entities (net investment hedge).

Changes in the fair value of a derivative that has been designated and qualifies as a fair value hedge, along with the changes in the fair value of the hedged asset or liability that is attributable to the hedged risk, are recorded in current period earnings. Changes in the fair value of a derivative that has been designated and qualifies as a cash flow hedge are recorded in other comprehensive income, net of income taxes, and reclassified into earnings in the period during which the hedged item affects earnings. Changes in the fair value of derivatives that have been designated as net investment hedges are recorded in other comprehensive income, net of income taxes, and reclassified into earnings during the period the foreign entity is substantially liquidated or other elements of the currency translation adjustment are reclassified into earnings. Changes in the fair value of derivatives held for trading purposes or which do not qualify for hedge accounting are reported in current period earnings.

For those derivatives to which hedge accounting is applied, Huntington formally documents the hedging relationship and the risk management objective and strategy for undertaking the hedge. This documentation identifies the hedging instrument, the hedged item or transaction, the nature of the risk being hedged, and, unless the hedge meets all of the criteria to assume there is no ineffectiveness, the method that will be used to assess the effectiveness of the hedging instrument. Huntington typically assesses effectiveness using statistical regression at inception and on an ongoing basis.

101 Huntington Bancshares Incorporated

Hedge accounting is discontinued prospectively when:

the derivative is no longer effective or expected to be effective in offsetting changes in the fair value, cash flows or changes in net investment of a hedged item (including firm commitments or forecasted transactions);
the derivative expires, is sold, terminated, or exercised;
the forecasted transaction is no longer probable of occurring by the end of the originally specified time period;
the hedged firm commitment no longer meets the definition of a firm commitment; or
the designation of the derivative as a hedging instrument is removed.

When hedge accounting is discontinued and the derivative no longer qualifies as an effective fair value, cash flow or net investment hedge, the derivative continues to be carried on the balance sheet at fair value and changes in fair value will be recorded in current period earnings unless re-designated.

Like other financial instruments, derivatives contain an element of credit risk, which is the possibility that Huntington will incur a loss because the counterparty fails to meet its contractual obligations. Notional values of interest rate swaps and other off-balance sheet financial instruments significantly exceed the credit risk associated with these instruments and represent contractual balances on which calculations of amounts to be exchanged are based. Credit exposure is limited to the sum of the aggregate fair value of positions that have become favorable to Huntington, including any accrued interest receivable due from counterparties. Potential credit losses are mitigated by derivatives through central clearing parties, careful evaluation of counterparty credit standing, selection of counterparties from a limited group of high quality institutions, collateral agreements, and other contract provisions. Huntington considers the value of collateral held and collateral provided in determining the net carrying value of derivatives.

Huntington offsets the fair value amounts recognized for derivative instruments and the fair value for the right to reclaim cash collateral or the obligation to return cash collateral arising from derivative instruments recognized at fair value executed with the same counterparty under a master netting arrangement.

Fair Value Measurements — The Company records or discloses certain of its assets and liabilities at fair value. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Fair value measurements are classified within one of three levels in a valuation hierarchy based upon the observability of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows:

*•*Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

*•*Level 2 – inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

*•*Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value measurement.

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

Bank Owned Life Insurance — Huntington’s bank owned life insurance policies are recorded at their cash surrender value. Huntington recognizes tax-exempt income from the periodic increases in the cash surrender value of these policies and from death benefits. A portion of the cash surrender value is supported by holdings in separate accounts. Book value protection for the separate accounts is provided by the insurance carriers and a highly rated major bank.

Transfers of Financial Assets and Securitizations — Transfers of financial assets in which we have surrendered control over the transferred assets are accounted for as sales. In assessing whether control has been surrendered, Huntington considers whether the transferee would be a consolidated affiliate, the existence and extent of any continuing involvement in the transferred financial assets, and the impact of all arrangements or agreements made

2022 Form 10-K 102

contemporaneously with, or in contemplation of, the transfer, even if they were not entered into at the time of transfer. Control is generally considered to have been surrendered when (i) the transferred assets have been legally isolated from Huntington or any of its consolidated affiliates, even in bankruptcy or other receivership, (ii) the transferee (or, if the transferee is an entity whose sole purpose is to engage in securitization or asset-backed financing that is constrained from pledging or exchanging the assets it receives, each third-party holder of its beneficial interests) has the right to pledge or exchange the assets (or beneficial interests) it received without any constraints that provide more than a trivial benefit to Huntington, and (iii) neither Huntington nor its consolidated affiliates and agents have (a) both the right and obligation under any agreement to repurchase or redeem the transferred assets before their maturity, (b) the unilateral ability to cause the holder to return specific financial assets that also provides Huntington with a more-than-trivial benefit (other than through a cleanup call) or (c) an agreement that permits the transferee to require Huntington to repurchase the transferred assets at a price so favorable that it is probable that it will require Huntington to repurchase them.

If the sale criteria are met, the transferred financial assets are removed from the balance sheet and a gain or loss on sale is recognized. If the sale criteria are not met, the transfer is recorded as a secured borrowing in which the assets remain on the balance sheet and the proceeds from the transaction are recognized as a liability. For the majority of financial asset transfers, it is clear whether or not Huntington has surrendered control. For other transfers, such as in the case of complex transactions or where Huntington have continuing involvement, we generally obtain a legal opinion as to whether the transfer results in a true sale by law.

Gains and losses on the loans and leases sold and servicing rights associated with loan and lease sales are determined when the related loans or leases are sold to either a securitization trust or third-party. For loan or lease sales with servicing retained, a servicing asset is recorded at fair value for the right to service the loans sold.

Pension and Other Postretirement Benefits — Huntington recognizes the funded status of the postretirement benefit plans on the Consolidated Balance Sheets. Net postretirement benefit cost charged to current earnings related to these plans is predominantly based on various actuarial assumptions regarding expected future experience.

Certain employees are participants in various defined contribution and other non-qualified supplemental retirement plans. Contributions to defined contribution plans are charged to current earnings.

In addition, Huntington maintains a 401(k) plan covering substantially all employees. Employer contributions to the plan are charged to current earnings.

Noninterest Income — Huntington recognizes revenue when the performance obligations related to the transfer of goods or services under the terms of a contract are satisfied. Some obligations are satisfied at a point in time while others are satisfied over a period of time. Revenue is recognized as the amount of consideration to which Huntington expects to be entitled to in exchange for transferring goods or services to a customer. When consideration includes a variable component, the amount of consideration attributable to variability is included in the transaction price only to the extent it is probable that significant revenue recognized will not be reversed when uncertainty associated with the variable consideration is subsequently resolved. Generally, the variability relating to the consideration is explicitly stated in the contracts, but may also arise from Huntington’s customer business practices, for example, waiving certain fees related to customer’s deposit accounts such as NSF fees. Huntington’s contracts generally do not contain terms that require significant judgement to determine the variability impacting the transaction price.

Revenue is segregated based on the nature of product and services offered as part of contractual arrangements. Revenue from contracts with customers is broadly segregated as follows:

*•*Service charges on deposit accounts include fees and other charges Huntington receives to provide various services, including, but not limited to, maintaining an account with a customer, providing overdraft services, wire transfer, transferring funds, and accepting and executing stop-payment orders. The consideration includes both fixed (e.g., account maintenance fee) and transaction fees (e.g., wire-transfer fee). The fixed fee is recognized over a period of time while the transaction fee is recognized when a specific service (e.g., execution of wire-transfer) is rendered to the customer. Huntington may, from time to time, waive certain fees (e.g., NSF fee) for customers but generally does not reduce the transaction price to reflect variability for

103 Huntington Bancshares Incorporated

future reversals due to the insignificance of the amounts. Waiver of fees reduces the revenue in the period the waiver is granted to the customer.

*•*Card and payment processing income includes interchange fees earned on debit cards and credit cards. All other fees (e.g., annual fees), and interest income are recognized in accordance with ASC 310. Huntington recognizes interchange fees for services performed related to authorization and settlement of a cardholder’s transaction with a merchant. Revenue is recognized when a cardholder’s transaction is approved and settled.

Certain volume or transaction based interchange expenses (net of rebates) paid to the payment network reduce the interchange revenue and are presented net on the income statement. Similarly, rewards payable under a reward program to cardholders are recognized as a reduction of the transaction price and are presented net against the interchange revenue.

*•*Capital markets fees includes advisory fees, interest rate derivative fees, underwriting fees, foreign exchange fees and loan syndication fees. We recognize these fees when the related transaction closes.

*•*Trust and investment management services includes fee income generated from personal, corporate, and institutional customers. Huntington also provides investment management services, cash management services and tax reporting to customers. Services are rendered over a period of time, over which revenue is recognized. Huntington may also recognize revenue from referring a customer to outside third-parties including mutual fund companies that pay distribution (12b-1) fees and other expenses. 12b-1 fees are recognized in the period earned, this is generally upon initial placement into the fund and at specified future dates as long as the customer remains invested in the fund.

*•*Insurance income includes agency commissions that are recognized when Huntington sells insurance policies to customers. Huntington is also entitled to renewal commissions and, in some cases, profit sharing which are recognized in subsequent periods. The initial commission is recognized when the insurance policy is sold to a customer. Renewal commission is variable consideration and is recognized in subsequent periods when the uncertainty around variable consideration is subsequently resolved (i.e., when customer renews the policy). Profit sharing is also variable consideration that is not recognized until the variability surrounding realization of revenue is resolved (i.e., Huntington has reached a minimum volume of sales).

*•*Other noninterest income includes a variety of other revenue streams including miscellaneous consumer fees, marketing allowance revenue, and leasing revenue (including income from operating lease payments, other lease revenue, gain and losses on sales-type leases and sales of leased equipment). Revenue is recognized when, or as, the performance obligation is satisfied. Inherent variability in the transaction price is not recognized until the uncertainty affecting the variability is resolved.

Control is transferred to a customer either at a point in time or over time. A performance obligation is deemed satisfied when the control over goods or services is transferred to the customer. To determine when control is transferred at a point in time, Huntington considers indicators, including, but not limited to, the right to payment for the asset, transfer of significant risk and rewards of ownership of the asset and acceptance of the asset by the customer.

Revenue is recorded in the business segment responsible for the related product or service. Fee sharing arrangements exist to allocate portions of such revenue to other business segments involved in selling to, or providing service to, customers. Business segment results are determined based upon management’s reporting system, which assigns balance sheet and income statement items to each of the business segments. The process is designed around Huntington’s organizational and management structure and, accordingly, the results derived are not necessarily comparable with similar information published by other financial institutions.

Income Taxes — Income taxes are accounted for under the asset and liability method. Accordingly, deferred tax assets and liabilities are recognized for the future book and tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are determined using enacted tax rates expected to apply in the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income at the time of enactment of such change in tax rates.

2022 Form 10-K 104

Any interest or penalties due for payment of income taxes are included in the provision for income taxes. To the extent we do not consider it more likely than not that a deferred tax asset will be recovered, a valuation allowance is recorded. All positive and negative evidence is reviewed when determining how much of a valuation allowance is recognized on a quarterly basis. In determining the requirements for a valuation allowance, sources of possible taxable income are evaluated including future reversals of existing taxable temporary differences, future taxable income exclusive of reversing temporary differences and carryforwards, taxable income in appropriate carryback years, and tax-planning strategies. Huntington applies a more likely than not recognition threshold for all tax uncertainties.

Share-Based Compensation — Huntington uses the fair value based method of accounting for awards of HBAN stock granted to employees under various share-based compensation plans. Share-based compensation costs are recognized prospectively for all new awards granted under these plans. Compensation expense relating to stock options is calculated using a methodology that is based on the underlying assumptions of the Black-Scholes option pricing model and is charged to expense over the requisite service period (e.g., vesting period) taking into account retirement eligibility . Compensation expense relating to restricted stock awards is based upon the fair value of the awards on the date of grant and is charged to earnings over the requisite service period (e.g., vesting period) taking into account the retirement eligibility of the award.

Stock Repurchases — Acquisitions of Huntington stock are recorded at cost.

2. ACCOUNTING STANDARDS UPDATE

Accounting standards adopted in the current period


Standard	Summary of guidance	Effects on financial Statements
ASU 2021-08-Business Combinations (Topic 805) Issued October 2021	•The amendments in this update require that an acquirer apply topic 606 to the recognition and measurement of revenue contract assets and liabilities acquired in a business combination.	•Management adopted the guidance during the second quarter 2022. •The ASU has been applied to all business combinations occurring during 2022 and will be applied prospectively to all future business combinations. •The adoption did not result in a material impact on Huntington’s Consolidated Financial Statements.
ASU 2022-01-Derivatives and Hedging (Topic 815): Fair Value Hedging - Portfolio Layer Method Issued March 2022	•The amendments in this update expand the current last-of-layer method to allow for multiple hedge layers in a single closed portfolio. To reflect the expansion, the last-of-layer method has been renamed the portfolio layer method. The standard also expands the scope of the portfolio layer method to nonprepayable financial assets.	•Management early adopted the guidance during the second quarter of 2022 using the modified retrospective basis. There was no impact to Huntington’s Consolidated Financial Statements as a result of the adoption. Amendments related to disclosures were applied prospectively from the initial adoption date. •Huntington did not elect to reclassify debt securities classified in the held-to-maturity category at the date of adoption to the available-for-sale category.


Accounting standards yet to be adopted


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 for entities that have adopted Update 2016-13, while enhancing disclosure requirements for certain loan modifications when a borrower is experiencing financial difficulty. The ASU also requires disclosure of current period gross write-offs by year of origination for financing receivables and net investment in leases.	•Effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. •Adoption of the ASU will be applied prospectively, except for the portion of the standard related to the recognition and measurement of TDRs an entity may elect to use a modified retrospective transition method with a cumulative effect adjustment to retained earnings at the beginning of the period of adoption. •Huntington adopted the standard effective January 1, 2023, using the modified retrospective method the impact of the adoption on the Consolidated Financial Statements was not material.

105 Huntington Bancshares Incorporated

3. BUSINESS COMBINATIONS

Capstone Partners

On June 15, 2022, Huntington acquired Capstone Partners, a leading middle market investment bank and advisory firm dedicated to servicing middle market companies throughout their full business lifecycle. The acquisition resulted in $192 million of goodwill, allocated to the Commercial segment, which approximates total consideration. The goodwill recognized is deductible for tax purposes. As of December 31, 2022, management completed its review of information relating to events or circumstances existing at the acquisition date.

TCF Financial Corporation

On June 9, 2021, Huntington closed the acquisition of TCF Financial Corporation in an all-stock transaction valued at $7.2 billion. TCF was a financial holding company headquartered in Detroit, Michigan with operations across the Midwest. The acquisition brought increased scale and market density, as well as added new markets and capabilities.

Under the terms of the agreement, TCF shareholders received 3.0028 shares of Huntington common stock for each share of TCF common stock. Holders of TCF common stock also received cash in lieu of fractional shares. In addition, each outstanding share of 5.70% Series C Non-Cumulative Perpetual Preferred Stock of TCF was converted into one share of a newly created series of preferred stock of Huntington, Series I Preferred Stock.

The acquisition of TCF constituted a business combination. We recorded the estimate of fair value based on initial valuations available at June 9, 2021, the acquisition date. The determination of estimated fair value required management to make assumptions related to discount rates, expected future cash flows, market conditions and other future events that are highly subjective in nature. As of December 31, 2021, management completed its review of information relating to events or circumstances existing at the acquisition date.

2022 Form 10-K 106

The following table provides the allocation of consideration paid for the fair value of assets acquired and liabilities and equity assumed from TCF as of June 9, 2021.


	TCF
(dollar amounts in millions)	UPB		Fair Value
Assets acquired:
Cash and due from banks			$	466
Interest-bearing deposits at Federal Reserve Bank			719
Interest-bearing deposits in banks			312
Available-for-sale securities			8,900

Other securities			358
Loans held for sale			363
Loans and leases:
Commercial:
Commercial and industrial	$	12,726	12,441
Commercial real estate	8,125		7,869
Lease financing	2,929		2,912
Total commercial	23,780		23,222
Consumer:
Residential mortgage	6,267		6,273
Automobile	322		317

Home equity	2,644		2,607
RV and marine	581		570
Other consumer	179		167
Total consumer	9,993		9,934
Total loans and leases	$	33,773	33,156
Bank owned life insurance			181
Premises and equipment			360
Core deposit intangible			92
Other intangible assets			6
Servicing rights			59
Servicing rights and other intangible assets			157
Other assets			1,441
Total assets acquired			46,413
Liabilities and equity assumed:
Deposits			38,663
Short-term borrowings			1,306
Long-term debt			1,516
Other liabilities			1,082
Total liabilities			42,567
Non-controlling interest			22
Net assets acquired			$	3,824

Consideration:

Fair value of common stock issued			$	6,998
Fair value of preferred stock exchange			185
Total consideration			7,183
Goodwill			$	3,359

In connection with the acquisition, the Company recorded approximately $3.4 billion of goodwill. The goodwill was the result of expected synergies, operational efficiencies, and other factors. Information regarding the allocation of goodwill recorded as a result of the acquisition to the Company’s reportable segments, as well as the carrying amounts and amortization of core deposit and other intangible assets, are provided in Note 8 “Goodwill and Other Intangible Assets” of the Notes to Consolidated Financial Statements.

107 Huntington Bancshares Incorporated

The following is a description of the methods used to determine the fair values of significant assets and liabilities presented above.

Cash and due from banks and interest-bearing deposits in banks: The carrying amount of these assets is a reasonable estimate of fair value based on the short-term nature of these assets.

Securities: Fair values for securities are based on quoted market prices, where available. If quoted market prices are not available, fair value estimates are based on observable inputs including quoted market prices for similar instruments, quoted market prices that are not in an active market or other inputs that are observable in the market. In the absence of observable inputs, fair value is estimated based on pricing models and/or discounted cash flow methodologies.

Loans and leases: Fair values for loans and leases are based on a discounted cash flow methodology that considered factors including the type of loan and lease and related collateral, classification status, fixed or variable interest rate, term, amortization status and current discount rates. Loans and leases are grouped together according to similar characteristics when applying various valuation techniques. The discount rates used for loans and leases are based on current market rates for new originations of comparable loans and leases and include adjustments for liquidity. The discount rate does not include a factor for credit losses as that has been included as a reduction to the estimated cash flows.

CDI: This intangible asset represents the low cost of funding acquired core deposits provide relative to the Company’s marginal cost of funds. The fair value was estimated based on a discounted cash flow methodology that gave appropriate consideration to expected customer attrition rates, net maintenance cost of the deposit base, alternative cost of funds, and the interest costs associated with customer deposits. The CDI is being amortized over 10 years based upon the period over which estimated economic benefits are estimated to be received.

Deposits: The fair values used for the demand and savings deposits by definition equal the amount payable on demand at the acquisition date. The fair values for time deposits are estimated using a discounted cash flow calculation that applies interest rates currently being offered to the contractual interest rates on such time deposits.

Debt: The fair values of long-term debt instruments are estimated based on quoted market prices for the instrument if available, or for similar instruments if not available, or by using discounted cash flow analyses, based on current incremental borrowing rates for similar types of instruments.

Premises and equipment: The fair values of premises are based on a market approach, with Huntington obtaining third-party appraisals and broker opinions of value for land, office, and branch space.

Servicing rights: Servicing rights are valued using an option-adjusted spread valuation model to project cash flows over multiple interest rate scenarios which are then discounted at risk-adjusted rates. The model considers portfolio characteristics, prepayment rates, delinquency rates, contractually specified servicing fees, late charges, other ancillary revenue, costs to service and other economic factors.

PCD loans and leases

Purchased loans and leases that reflect a more-than-insignificant deterioration of credit from origination are considered PCD. For PCD loans and leases, the initial estimate of expected credit losses is recognized in the ALLL on the date of acquisition using the same methodology as other loans and leases held-for-investment. The following table provides a summary of loans and leases purchased as part of the TCF acquisition with credit deterioration at acquisition:


(dollar amounts in millions)	Commercial		Consumer		Total
Par value (UPB)	$	7,931	$	1,333	$	9,264
ALLL at acquisition	(374)		(58)		(432)
Non-credit (discount)	(219)		(68)		(287)
Fair value	$	7,338	$	1,207	$	8,545

2022 Form 10-K 108

Huntington's operating results for the years ended December 31, 2022 and December 31, 2021 include the operating results of the acquired assets and assumed liabilities of TCF Financial Corporation subsequent to the acquisition on June 9, 2021. Due to the conversions of TCF systems occurring throughout 2021, as well as other streamlining and integration of the operating activities into those of the Company, historical reporting for the former TCF operations is impracticable and thus disclosures of the revenue from the assets acquired and income before income taxes is impracticable for the period subsequent to acquisition.

The following table presents unaudited pro forma information as if the acquisition of TCF had occurred on January 1, 2020 under the “Unaudited Pro Forma” columns. The pro forma adjustments give effect to any change in interest income due to the accretion of the discount (premium) associated with the fair value adjustments to acquired loans and leases, any change in interest expense due to estimated premium amortization/discount accretion associated with the fair value adjustment to acquired interest-bearing deposits and long-term debt and the amortization of the CDI that would have resulted had the deposits been acquired as of January 1, 2020. Pro forma results include Huntington acquisition-related expenses which primarily included, but were not limited to, severance costs, professional services, data processing fees, marketing and advertising expenses totaling $701 million for the year ended December 31, 2021. Pro forma results also include adjustments for the elimination of TCF’s accretion of the discount (premium) associated with the fair value adjustments to acquired loans and leases, deposits and long-term debt, elimination of TCF's intangible amortization expense, and related income tax effects. The pro forma information does not necessarily reflect the results of operations that would have occurred had Huntington acquired TCF on January 1, 2020. Furthermore, cost savings and other business synergies related to the acquisition are not reflected in the pro forma amounts.


		Unaudited Pro Forma for
	Year Ended December 31,
(dollar amounts in millions)			2021		2020
Net interest income			$	4,713	$	4,774
Noninterest income			2,112		2,127
Net income attributable to Huntington Bancshares Inc			1,624		834

109 Huntington Bancshares Incorporated

4. 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.


			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.

2022 Form 10-K 110


			Unrealized
(dollar amounts in millions)	Amortized Cost (1)		Gross Gains		Gross Losses		Fair Value
At December 31, 2021
Available-for-sale securities:
U.S. Treasury	$	5	$	—	$	—	$	5
Federal agencies:
Residential CMO	4,649		40		(40)		4,649
Residential MBS	15,533		135		(160)		15,508
Commercial MBS	1,896		7		(38)		1,865
Other agencies	248		1		(1)		248
Total U.S. Treasury, federal agency, and other agency securities	22,331		183		(239)		22,275
Municipal securities	3,497		62		(33)		3,526
Private-label CMO	106		1		(1)		106
Asset-backed securities	385		1		(4)		382
Corporate debt	2,183		22		(38)		2,167
Other securities/Sovereign debt	4		—		—		4
Total available-for-sale securities	$	28,506	$	269	$	(315)	$	28,460

Held-to-maturity securities:
Federal agencies:
Residential CMO	$	2,602	$	35	$	(20)	$	2,617
Residential MBS	7,475		41		(59)		7,457
Commercial MBS	2,175		45		(5)		2,215
Other agencies	193		5		—		198
Total federal agency and other agency securities	12,445		126		(84)		12,487
Municipal securities	2		—		—		2
Total held-to-maturity securities	$	12,447	$	126	$	(84)	$	12,489

Other securities, at cost:
Non-marketable equity securities:
Federal Home Loan Bank stock	$	52	$	—	$	—	$	52
Federal Reserve Bank stock	512		—		—		512
Equity securities	12		—		—		12
Other securities, at fair value
Mutual funds	65		—		—		65
Equity securities	6		1		—		7
Total other securities	$	647	$	1	$	—	$	648

(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, 2021, accrued interest receivable on available-for-sale securities and held-to-maturity securities totaled $62 million and $26 million, respectively.

111 Huntington Bancshares Incorporated

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


	At December 31,
	2022				2021
(dollar amounts in millions)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Available-for-sale securities:
Under 1 year	$	518	$	511	$	377	$	374
After 1 year through 5 years	2,182		2,033		1,888		1,880
After 5 years through 10 years	3,106		2,814		3,166		3,180
After 10 years	21,297		18,065		23,075		23,026
Total available-for-sale securities	$	27,103	$	23,423	$	28,506	$	28,460

Held-to-maturity securities:
Under 1 year	$	—	$	—	$	2	$	2
After 1 year through 5 years	72		68		162		164
After 5 years through 10 years	71		66		44		45
After 10 years	16,909		14,620		12,239		12,278
Total held-to-maturity securities	$	17,052	$	14,754	$	12,447	$	12,489

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.


	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)

2022 Form 10-K 112


	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, 2021
Available-for-sale securities:
Federal agencies:
Residential CMO	$	2,925	$	(40)	$	—	$	—	$	2,925	$	(40)
Residential MBS	13,491		(160)		—		—		13,491		(160)
Commercial MBS	1,251		(38)		—		—		1,251		(38)
Other agencies	140		(1)		—		—		140		(1)
Total federal agency and other agency securities	17,807		(239)		—		—		17,807		(239)
Municipal securities	859		(22)		319		(11)		1,178		(33)
Private-label CMO	78		(1)		—		—		78		(1)
Asset-backed securities	237		(4)		—		—		237		(4)
Corporate debt	1,766		(38)		—		—		1,766		(38)

Total temporarily impaired available-for-sale securities	$	20,747	$	(304)	$	319	$	(11)	$	21,066	$	(315)

Held-to-maturity securities:
Federal agencies:
Residential CMO	$	1,453	$	(20)	$	—	$	—	$	1,453	$	(20)
Residential MBS	5,837		(59)		—		—		5,837		(59)
Commercial MBS	318		(5)		—		—		318		(5)

Total federal agency and other agency securities	7,608		(84)		—		—		7,608		(84)

Total temporarily impaired held-to-maturity securities	$	7,608	$	(84)	$	—	$	—	$	7,608	$	(84)

During 2022 and 2021, Huntington transferred $4.2 billion and $3.0 billion, respectively, of securities from the AFS portfolio to the HTM portfolio. At the time of the transfers, AOCI included $58 million of net unrealized losses and $2 million of unrealized gains, respectively, attributed to these securities. The gain or loss will be amortized into interest income over the remaining life of the securities.

At December 31, 2022 and December 31, 2021, the carrying value of investment securities pledged to secure public and trust deposits, trading account liabilities, U.S. Treasury demand notes, security repurchase agreements and to support borrowing capacity totaled $26.9 billion and $21.7 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 December 31, 2022 or December 31, 2021. At December 31, 2022, all HTM debt securities are considered AAA rated. In addition, there were no HTM debt securities considered past due at December 31, 2022.

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 December 31, 2022, Huntington has concluded that except for one municipal bond classified as an AFS debt security for which a charge-off of $4 million was recognized during 2022, 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 securities as of December 31, 2022 or December 31, 2021.

113 Huntington Bancshares Incorporated

5. LOANS AND LEASES

The following table provides a detailed listing of Huntington’s loan and lease portfolio.


	At December 31,
(dollar amounts in millions)	2022		2021


















Commercial loan and lease portfolio:
Commercial and industrial	$	45,127	$	41,688
Commercial real estate	16,634		14,961
Lease financing	5,252		5,000
Total commercial loan and lease portfolio	67,013		61,649
Consumer loan portfolio:
Residential mortgage	22,226		19,256
Automobile	13,154		13,434
Home equity	10,375		10,550
RV and marine	5,376		5,058
Other consumer	1,379		1,320
Total consumer loan portfolio	52,510		49,618
Total loans and leases (1)(2)	119,523		111,267
Allowance for loan and lease losses	(2,121)		(2,030)
Net loans and leases	$	117,402	$	109,237

(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 premium (discount) of $3 million and $(111) million at December 31, 2022 and 2021, respectively.

(2)The total amount of accrued interest recorded for these loans and leases at December 31, 2022, was $274 million and $186 million of commercial and consumer loan and lease portfolios, respectively, and at December 31, 2021, was $148 million and $150 million of commercial and consumer loan and lease portfolios, respectively. Accrued interest is presented in accrued income and other receivables within the Condensed Consolidated Balance Sheets.

Lease Financing

The following table presents net investments in lease financing receivables by category.


	At December 31,
(dollar amounts in millions)	2022		2021

Lease payments receivable	$	4,916	$	4,620
Estimated residual value of leased assets	788		774
Gross investment in lease financing receivables	5,704		5,394
Deferred origination costs	46		36
Deferred fees, unearned income and other	(498)		(430)
Total lease financing receivables	$	5,252	$	5,000

The carrying value of residual values guaranteed was $466 million and $473 million as of December 31, 2022 and December 31, 2021, respectively. The future lease rental payments due from customers on sales-type and direct financing leases at December 31, 2022, totaled $4.9 billion and were due as follows: $834 million in 2023, $781 million in 2024, $749 million in 2025, $725 million in 2026, $730 million in 2027, and $1.1 billion thereafter. Interest income recognized for these types of leases was $249 million, $193 million, and $106 million for the years 2022, 2021, and 2020, respectively.

2022 Form 10-K 114

Nonaccrual and Past Due Loans and Leases

The following table presents NALs by class.


	At December 31, 2022				At December 31, 2021
(dollar amounts in millions)	Nonaccrual loans with no ACL		Total nonaccrual loans		Nonaccrual loans with no ACL		Total nonaccrual loans
Commercial and industrial	$	49	$	288	$	81	$	370
Commercial real estate	63		92		80		104
Lease financing	—		18		3		48
Residential mortgage	—		90		—		111
Automobile	—		4		—		3
Home Equity	—		76		—		79
RV and marine	—		1		—		1

Total nonaccrual loans and leases	$	112	$	569	$	164	$	716

The total amount of interest recorded to interest income for NAL loans was $23 million, $10 million, and $6 million in 2022, 2021, and 2020, respectively.

The following tables present an aging analysis of loans and leases, by class.


	At 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
Commercial and industrial	$	53	$	19	$	108	$	180	$	44,947	$	—	$	45,127	$	23	(2)
Commercial real estate	2		1		9		12		16,622		—		16,634		—
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


	At December 31, 2021
	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
Commercial and industrial	$	72	$	69	$	107	$	248	$	41,440	$	—	$	41,688	$	13	(2)
Commercial real estate	9		1		9		19		14,942		—		14,961		—
Lease financing	39		13		17		69		4,931		—		5,000		11		(3)
Residential mortgage	151		49		233		433		18,653		170		19,256		157		(4)
Automobile	79		18		8		105		13,329		—		13,434		6
Home equity	48		35		76		159		10,390		1		10,550		17
RV and marine	14		4		3		21		5,037		—		5,058		3
Other consumer	13		2		3		18		1,302		—		1,320		3
Total loans and leases	$	425	$	191	$	456	$	1,072	$	110,024	$	171	$	111,267	$	210

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

(2)Amounts include PPP and other SBA loans and leases.

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

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

115 Huntington Bancshares Incorporated

Credit Quality Indicators

To facilitate the monitoring of credit quality for commercial loans, and for purposes of determining an appropriate ACL level for these loans, Huntington utilizes the following internally defined categories of credit grades:

Pass - Higher quality loans that do not fit any of the other categories described below.
OLEM - The credit risk may be relatively minor yet represents a risk given certain specific circumstances. If the potential weaknesses are not monitored or mitigated, the loan may weaken or the collateral may be inadequate to protect Huntington’s position in the future. For these reasons, Huntington considers the loans to be potential problem loans.
Substandard - Inadequately protected loans resulting from the borrower’s ability to repay, equity, and/or the collateral pledged to secure the loan. These loans have identified weaknesses that could hinder normal repayment or collection of the debt. It is likely Huntington will sustain some loss if any identified weaknesses are not mitigated.
Doubtful - Loans that have all of the weaknesses inherent in those loans classified as Substandard, with the added elements of the full collection of the loan is improbable and that the possibility of loss is high.

Loans are generally assigned a category of “Pass” rating upon initial approval and subsequently updated as appropriate based on the borrower’s financial performance.

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

For all classes within the consumer loan portfolios, 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.

2022 Form 10-K 116

The following tables present the amortized cost basis of loans and leases by vintage and credit quality indicator.


	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	$	16,480	$	6,597	$	3,279	$	2,040	$	1,068	$	1,163	$	12,077	$	3	$	42,707
OLEM	108		139		72		21		49		26		112		—		527
Substandard	364		181		189		212		141		255		550		—		1,892
Doubtful	—		—		—		—		—		1		—		—		1
Total Commercial and industrial	$	16,952	$	6,917	$	3,540	$	2,273	$	1,258	$	1,445	$	12,739	$	3	$	45,127
Commercial real estate
Credit Quality Indicator (1):
Pass	$	5,634	$	3,260	$	1,616	$	1,728	$	917	$	1,044	$	1,502	$	—	$	15,701
OLEM	61		53		1		43		6		9		—		—		173
Substandard	235		118		105		75		85		140		2		—		760

Total Commercial real estate	$	5,930	$	3,431	$	1,722	$	1,846	$	1,008	$	1,193	$	1,504	$	—	$	16,634
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

117 Huntington Bancshares Incorporated


	At December 31, 2021
	Term Loans Amortized Cost Basis by Origination Year												Revolver Total at Amortized Cost Basis		Revolver Total Converted to Term Loans
(dollar amounts in millions)	2021		2020		2019		2018		2017		Prior				Total
Commercial and industrial
Credit Quality Indicator (1):
Pass	$	15,435	$	5,677	$	3,682	$	1,983	$	1,080	$	1,134	$	9,945	$	3	$	38,939
OLEM	183		178		87		83		38		73		166		—		808
Substandard	336		203		344		206		125		167		552		—		1,933
Doubtful	5		1		1		1		—		—		—		—		8
Total Commercial and industrial	$	15,959	$	6,059	$	4,114	$	2,273	$	1,243	$	1,374	$	10,663	$	3	$	41,688
Commercial real estate
Credit Quality Indicator (1):
Pass	$	4,144	$	2,367	$	2,593	$	1,456	$	761	$	1,124	$	798	$	—	$	13,243
OLEM	76		48		42		83		73		19		—		—		341
Substandard	224		362		448		115		151		46		30		—		1,376
Doubtful	—		—		—		1		—		—		—		—		1
Total Commercial real estate	$	4,444	$	2,777	$	3,083	$	1,655	$	985	$	1,189	$	828	$	—	$	14,961
Lease financing
Credit Quality Indicator (1):
Pass	$	1,851	$	1,441	$	809	$	417	$	226	$	131	$	—	$	—	$	4,875
OLEM	8		32		12		4		2		—		—		—		58
Substandard	6		23		19		2		9		8		—		—		67

Total Lease financing	$	1,865	$	1,496	$	840	$	423	$	237	$	139	$	—	$	—	$	5,000
Residential mortgage
Credit Quality Indicator (2):
750+	$	5,532	$	3,857	$	978	$	554	$	687	$	1,704	$	—	$	—	$	13,312
650-749	1,862		993		409		269		254		1,028		—		—		4,815
<650	48		56		104		120		99		532		—		—		959

Total Residential mortgage	$	7,442	$	4,906	$	1,491	$	943	$	1,040	$	3,264	$	—	$	—	$	19,086
Automobile
Credit Quality Indicator (2):
750+	$	2,993	$	1,927	$	1,381	$	666	$	345	$	129	$	—	$	—	$	7,441
650-749	2,393		1,237		736		380		168		55		—		—		4,969
<650	380		234		178		128		70		34		—		—		1,024

Total Automobile	$	5,766	$	3,398	$	2,295	$	1,174	$	583	$	218	$	—	$	—	$	13,434
Home equity
Credit Quality Indicator (2):
750+	$	645	$	701	$	32	$	31	$	34	$	387	$	4,772	$	272	$	6,874
650-749	129		94		15		13		13		161		2,324		324		3,073
<650	3		2		2		1		1		67		361		165		602

Total Home equity	$	777	$	797	$	49	$	45	$	48	$	615	$	7,457	$	761	$	10,549
RV and marine
Credit Quality Indicator (2):
750+	$	1,257	$	933	$	470	$	468	$	268	$	319	$	—	$	—	$	3,715
650-749	393		273		171		157		106		150		—		—		1,250
<650	6		11		13		18		18		27		—		—		93

Total RV and marine	$	1,656	$	1,217	$	654	$	643	$	392	$	496	$	—	$	—	$	5,058
Other consumer
Credit Quality Indicator (2):
750+	$	211	$	34	$	50	$	13	$	10	$	27	$	326	$	3	$	674
650-749	88		52		50		23		17		41		295		24		590
<650	2		2		5		2		—		1		27		17		56

Total Other consumer	$	301	$	88	$	105	$	38	$	27	$	69	$	648	$	44	$	1,320

(1)Consistent with the credit quality disclosures, indicators for the Commercial portfolio are based on internally defined categories of credit grades which are generally refreshed at least semi-annually.

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

2022 Form 10-K 118

TDR Loans

TDR Concession Types

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

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

Commercial loan TDRs – Our strategy involving commercial TDR borrowers includes working with these borrowers to allow them to refinance elsewhere, as well as allow them time to improve their financial position and remain a Huntington customer through refinancing their notes according to market terms and conditions in the future. A subsequent refinancing or modification of a loan may occur when either the loan matures according to the terms of the TDR-modified agreement, or the borrower requests a change to the loan agreements. At that time, the loan is evaluated to determine if the borrower is creditworthy. It is subjected to the normal underwriting standards and processes for other similar credit extensions, both new and existing. The refinanced note is evaluated to determine if it is considered a new loan or a continuation of the prior loan.

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

TDR Impact on Credit Quality

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, rather than the TDR classification. TDRs can be classified as either accrual or nonaccrual loans. Nonaccrual TDRs are included in NALs whereas accruing TDRs are excluded from NALs as it is probable that all contractual principal and interest due under the restructured terms will be collected.

The Company’s TDRs may include multiple concessions and the disclosure classifications are presented based on the primary concession provided to the borrower.

119 Huntington Bancshares Incorporated

The following table presents, by class and modification type, the number of contracts, post-modification outstanding balance, and the financial effects of the modification.


	New Troubled Debt Restructurings (1)

	Number of Contracts		Post-modification Outstanding Recorded Investment (2)
(dollar amounts in millions)		Interest rate concession			Amortization or maturity date concession			Chapter 7 bankruptcy			Other			Total

Year Ended December 31, 2022
Commercial and industrial	313		$	92		$	62		$	—		$	15		$	169
Commercial real estate	26		62			27			—			—			89

Residential mortgage	806		—			109			5			—			114
Automobile	2,368		—			17			3			—			20
Home equity	228		—			8			4			—			12
RV and marine	137		—			2			1			—			3
Other consumer	127		—			—			—			1			1
Total new TDRs	4,005		$	154		$	225		$	13		$	16		$	408




Year Ended December 31, 2021
Commercial and industrial	76		$	29		$	25		$	—		$	—		$	54
Commercial real estate	5		—			—			—			—			—
Residential mortgage	320		—			39			6			—			45
Automobile	2,442		—			16			4			—			20
Home equity	214		—			4			7			—			11
RV and marine	138		1			2			1			—			4
Other consumer	270		—			—			—			1			1
Total new TDRs	3,465		$	30		$	86		$	18		$	1		$	135

(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 December 31, 2022 and 2021, these borrowings and advances are secured by $70.9 billion and $61.1 billion, respectively, of loans.

2022 Form 10-K 120

6. ALLOWANCE FOR CREDIT LOSSES

The following table presents ACL activity by portfolio segment.


(dollar amounts in millions)	Commercial		Consumer		Total
Year ended December 31, 2022:
ALLL balance, beginning of period	$	1,462	$	568	$	2,030

Loan and lease charge-offs	(129)		(184)		(313)
Recoveries of loans and leases previously charged-off	114		78		192
Provision (benefit) for loan and lease losses	(23)		235		212


ALLL balance, end of period	$	1,424	$	697	$	2,121
AULC balance, beginning of period	$	41	$	36	$	77

Provision for unfunded lending commitments	30		43		73

AULC balance, end of period	$	71	$	79	$	150
ACL balance, end of period	$	1,495	$	776	$	2,271

Year ended December 31, 2021:
ALLL balance, beginning of period	$	1,236	$	578	$	1,814

Loan and lease charge-offs	(243)		(139)		(382)
Recoveries of loans and leases previously charged-off	83		84		167
Provision (benefit) for loan and lease losses	12		(13)		(1)
Allowance on PCD loans and leases at acquisition	374		58		432
ALLL balance, end of period	$	1,462	$	568	$	2,030
AULC balance, beginning of period	$	34	$	18	$	52

Provision for unfunded lending commitments	8		18		26
Unfunded lending commitment losses	(1)		—		(1)
AULC balance, end of period	$	41	$	36	$	77
ACL balance, end of period	$	1,503	$	604	$	2,107

Year ended December 31, 2020:
ALLL balance, beginning of period	$	552	$	231	$	783
Cumulative-effect of change in accounting principle for financial instruments - credit losses (1)	180		211		391
Loan and lease charge-offs	(374)		(166)		(540)
Recoveries of loans and leases previously charged-off	32		59		91
Provision for loan and lease losses	846		243		1,089

ALLL balance, end of period	$	1,236	$	578	$	1,814
AULC balance, beginning of period	$	102	$	2	$	104
Cumulative-effect of change in accounting principle for financial instruments - credit losses (1)	(38)		40		2
Provision (benefit) for unfunded lending commitments	(17)		(24)		(41)
Unfunded lending commitment losses	(13)		—		(13)
AULC balance, end of period	$	34	$	18	$	52
ACL balance, end of period	$	1,270	$	596	$	1,866

(1)Relates to day one impact of the CECL adjustment as a result of the implementation of ASU 2016-13.

At December 31, 2022, the ACL was $2.3 billion, an increase of $164 million from the December 31, 2021 balance of $2.1 billion. The increase was primarily driven by loan and lease growth of $8.3 billion, but also recognizes the increased near-term recessionary risks at the end of 2022.

The Commercial ACL was $1.5 billion at both December 31, 2022 and December 31, 2021. The impacts of strong commercial loan and lease growth of $5.4 billion and a generally more pessimistic economic forecast were offset by reductions in qualitative reserves related to the CRE portfolio as more clarity with respect to COVID-related impacts emerged throughout 2022.

The Consumer ACL balance was $776 million at December 31, 2022, an increase of $172 million from the December 31, 2021 balance of $604 million. The increase is attributable to a combination of strong consumer loan growth over the course of 2022 of $2.9 billion, while also reflecting a deterioration in the economic forecast resulting in increased near-term recessionary risks for the consumer portfolio.

121 Huntington Bancshares Incorporated

The baseline economic scenario used in the December 31, 2022 ACL determination included the Federal Funds Rate projected to peak at approximately 4.6% in the second quarter of 2023 as the Federal Reserve continues to address the elevated inflation levels. As a result, inflation is expected to drop from an average of 8.1% in 2022 to an average of 2.4% by 2024. However, slowing economic growth is anticipated in the short term and unemployment is expected to gradually increase to a projected level of 4.1% by Q4 2023. It is also expected that consumers will continue to experience increased payment stress due to the interest rate increases, some of which is reflected in a deterioration in the projected HPI forecast. As a result of all these factors, there is an increased risk of a near-term recession in 2023.

Economic scenarios included elevated levels of economic uncertainty associated with geopolitical instability, high inflation readings, the U.S labor market and the expected path of interest rate increases by the Federal Reserve. Given the uncertainty associated with key economic scenario assumptions, the December 31, 2022 ACL included a general reserve that consists of various risk profile components to address uncertainty not measured within the quantitative transaction reserve.

7. MORTGAGE LOAN SALES AND SERVICING RIGHTS

Residential Mortgage Portfolio

The following table summarizes activity relating to residential mortgage loans sold with servicing retained.


	Year Ended December 31,
(dollar amounts in millions)	2022		2021		2020
Residential mortgage loans sold with servicing retained	$	5,686	$	9,702	$	8,436
Pretax gains resulting from above loan sales (1)	137		356		311

(1)Recorded in mortgage banking income.

The following table summarizes the changes in MSRs recorded using the fair value method:


	Year Ended December 31,
(dollar amounts in millions)	2022		2021
Fair value, beginning of period	$	351	$	210

Servicing assets obtained in acquisition	—		59
New servicing assets created	85		135
Change in fair value during the period due to:
Time decay (1)	(22)		(15)
Payoffs (2)	(34)		(65)
Changes in valuation inputs or assumptions (3)	114		27
Fair value, end of period	$	494	$	351

(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.

MSRs do not trade in an active, open market with readily observable prices. Therefore, the fair value of MSRs is estimated using a discounted future cash flow model. Changes in the assumptions used may have a significant impact on the valuation of MSRs. MSR values are sensitive to movement in interest rates as expected future net servicing income depends on the projected outstanding principal balances of the underlying loans, which are impacted by the level of prepayments.

The following table summarizes the key assumptions and the sensitivity of the MSR value to changes in these assumptions.


	At December 31, 2022							At December 31, 2021
				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)	7.05	%		$	(13)	$	(25)	12.28	%		$	(17)	$	(32)
Spread over forward interest rate swap rates	578		bps	(12)		(22)		466		bps	(7)		(13)

2022 Form 10-K 122

Total servicing, late and other ancillary fees included in mortgage banking income was $91 million, $79 million, and $64 million for the years ended December 31, 2022, 2021, and 2020, respectively. The unpaid principal balance of residential mortgage loans serviced for third parties was $32.4 billion, $31.0 billion, and $23.5 billion at December 31, 2022, 2021, and 2020, respectively.

8. GOODWILL AND OTHER INTANGIBLE ASSETS

Business segments are based on segment leadership structure, which reflects how segment performance is monitored and assessed. We have four major business segments: Consumer and Business Banking, Commercial Banking, Vehicle Finance, and Regional Banking and The Huntington Private Client Group (RBHPCG). The Treasury / Other function includes technology and operations, other unallocated assets, liabilities, revenue, and expense.

A rollforward of goodwill by business segment for which goodwill is allocated is presented in the table below. No goodwill impairment was recorded in 2022 or 2021.



	Consumer &		Commercial				Huntington
(dollar amounts in millions)	Business Banking		Banking		RBHPCG		Consolidated
Balance, January 1, 2020	$	1,393	$	427	$	170	$	1,990
TCF acquisition	2,026		1,272		61		3,359


Balance, December 31, 2021	3,419		1,699		231		5,349
Acquisitions	—		222		—		222


Balance, December 31, 2022	$	3,419	$	1,921	$	231	$	5,571

For additional information on the acquisitions, refer to Note 3 “Business Combinations.”

Huntington’s other intangible assets consisted of the following:


(dollar amounts in millions)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Value
At December 31, 2022
Core deposit intangible	$	385	$	(216)	$	169
Customer relationship	107		(81)		26

Total other intangible assets	$	492	$	(297)	$	195
At December 31, 2021
Core deposit intangible	$	389	$	(175)	$	214
Customer relationship	108		(80)		28

Total other intangible assets	$	497	$	(255)	$	242

The estimated amortization expense of other intangible assets for the next five years is as follows:


(dollar amounts in millions)	Amortization Expense
2023	$	51
2024	47
2025	44
2026	29
2027	10

123 Huntington Bancshares Incorporated

9. PREMISES AND EQUIPMENT

Premises and equipment were comprised of the following:


	At December 31,
(dollar amounts in millions)	2022		2021
Land and land improvements	$	337	$	335
Buildings	776		807
Leasehold improvements	269		219
Equipment	896		852
Total premises and equipment	2,278		2,213
Less accumulated depreciation and amortization	(1,122)		(1,049)
Net premises and equipment	$	1,156	$	1,164

Depreciation and amortization charged to expense and rental income credited to net occupancy expense were as follows:


	Year Ended December 31,
(dollar amounts in millions)	2022		2021		2020
Total depreciation and amortization of premises and equipment	$	182	$	178	$	119
Rental income credited to net occupancy expense	10		9		10

10. OPERATING LEASES

At December 31, 2022, Huntington was obligated under non-cancelable leases for branch and office space. These leases are all classified as operating due to the amount of time such spaces are occupied relative to the underlying assets useful lives. Many of these leases contain renewal options, most of which are not included in measurement of the right-of-use asset as they are not considered reasonably certain of exercise (i.e., Huntington does not currently have a significant economic incentive to exercise these options).

Net lease assets and liabilities are as follows:


		At December 31,
(dollar amounts in millions)	Classification	2022		2021
Assets
Operating lease assets	Other assets	$	279	$	316



Liabilities






Lease liabilities	Other liabilities	$	401	$	441

Net lease cost are as follows:


		Year Ended December 31,
(dollar amounts in millions)	Classification	2022		2021
Operating lease cost	Net occupancy	$	81	$	102
Short-term lease cost	Net occupancy	2		3



Net lease cost		$	83	$	105

Maturity of lease liabilities at December 31, 2022 are as follows:


(dollar amounts in millions)	Total
2023	$	70
2024	67
2025	58
2026	43
2027	36
Thereafter	262
Total lease payments	536
Less: Interest	(135)
Total lease liabilities	$	401

2022 Form 10-K 124

Additional supplemental information related to the Company’s operating leases is as follows:


	Year Ended December 31,
(dollar amounts in millions)	2022			2021
Cash paid for amounts included in the measurement of lease liabilities for operating cash flows	$	(80)		$	(50)




Right-of-use assets obtained in exchange for lease obligations for operating leases	22			174


Weighted-average remaining lease term (years) for operating leases	11.48			11.24



Weighted-average discount rate for operating leases	4.64		%	3.87		%

11. BORROWINGS

Borrowings with original maturities of one year or less are classified as short-term and were comprised of the following:


	At December 31,
(dollar amounts in millions)	2022		2021
Federal funds purchased and securities sold under agreements to repurchase	$	253	$	320
FHLB advances	1,700		—
Other borrowings	74		14
Total short-term borrowings	$	2,027	$	334

125 Huntington Bancshares Incorporated

Huntington’s long-term debt consisted of the following:


	At December 31,
(dollar amounts in millions)	2022		2021
The Parent Company:
Senior Notes:
2.67% Huntington Bancshares Incorporated senior notes due 2024	$	762	$	812
4.05% Huntington Bancshares Incorporated senior notes due 2025	481		527
4.51% Huntington Bancshares Incorporated senior notes due 2028	704		—
2.60% Huntington Bancshares Incorporated senior notes due 2030	679		744
5.08% Huntington Bancshares Incorporated senior notes due 2033	379		—
Subordinated Notes:
3.55% Huntington Bancshares Incorporated subordinated notes due 2023	225		227
Huntington Capital I Trust Preferred 5.47% junior subordinated debentures due 2027 (1) (8)	69		69
Huntington Capital II Trust Preferred 5.39% junior subordinated debentures due 2028 (2) (8)	32		32
Sky Financial Capital Trust III 6.17% junior subordinated debentures due 2036 (3) (8)	72		72
Sky Financial Capital Trust IV 6.17% junior subordinated debentures due 2036 (3) (8)	74		74
2.49% Huntington Bancshares Incorporated subordinated notes due 2036	1		554

2.53% Huntington Bancshares Incorporated subordinated notes due 2036	502		—
Total notes issued by the parent	3,980		3,111
The Bank:
Senior Notes:
2.55% Huntington National Bank senior notes due 2022	—		703
3.16% Huntington National Bank senior notes due 2022	—		500
1.83% Huntington National Bank senior notes due 2023	—		483
3.60% Huntington National Bank senior notes due 2023	735		748
5.42% Huntington National Bank senior notes due 2025	299		—
4.11% Huntington National Bank senior notes due 2025	486		—
5.70% Huntington National Bank senior notes due 2025	1,094		—
4.55% Huntington National Bank senior notes due 2028	766		—
5.76% Huntington National Bank senior notes due 2030	892		—
Subordinated Notes:

0.64% Huntington National Bank subordinated notes due 2022	—		113
0.96% Huntington National Bank subordinated notes due 2025	129		142
3.86% Huntington National Bank subordinated notes due 2026	218		226
3.03% Huntington National Bank subordinated notes due 2029	153		161
3.75% Huntington National Bank subordinated notes due 2030	151		169
Total notes issued by the bank	4,923		3,245
FHLB Advances:
1.04% weighted average rate, varying maturities greater than one year	211		215
Other:
Huntington Technology Finance nonrecourse debt, 3.93% weighted average interest rate, varying maturities	337		287

2.09% Huntington Preferred Capital II - Class F securities	—		75
6.65% Huntington Preferred Capital II - Class G securities (4)	50		50
6.77% Huntington Preferred Capital II - Class I securities (5)	50		50
6.90% Huntington Preferred Capital II - Class J securities (6)	75		75
7.40% Huntington Preferred Capital II - Class L Securities (7)	60		—

Total long-term debt	$	9,686	$	7,108

(1)Variable effective rate at December 31, 2022, based on three-month LIBOR +0.70%.

(2)Variable effective rate at December 31, 2022, based on three-month LIBOR +0.625%.

(3)Variable effective rate at December 31, 2022, based on three-month LIBOR +1.40%.

(4)Variable effective rate at December 31, 2022, based on three-month LIBOR +1.88%.

(5)Variable effective rate at December 31, 2022, based on three-month LIBOR +2.00%.

(6)Variable effective rate at December 31, 2022, based on three-month SOFR +2.60%.

(7)Variable effective rate at December 31, 2022 based on three-month SOFR +3.10%.

(8)Represents the outstanding amount of debentures issued to each trust and related trust-preferred securities. Refer to Note 21 “Variable Interest Entity” for trust-preferred securities details.

2022 Form 10-K 126

Amounts above are net of unamortized discounts and adjustments related to hedging with derivative financial instruments. We use interest rate swaps to hedge interest rate risk of certain fixed-rate debt by converting the debt to a variable rate. See Note 20 - “Derivative Financial Instruments“ for more information regarding such financial instruments.

Long-term debt maturities for the next five years and thereafter are as follows:


(dollar amounts in millions)	2023		2024		2025		2026		2027		Thereafter		Total
The Parent Company:
Senior notes	$	—	$	800	$	500	$	—	$	—	$	1,900	$	3,200
Subordinated notes	225		—		—		—		70		739		1,034
The Bank:
Senior notes	724		—		1,900		—		—		1,700		4,324
Subordinated notes	—		—		130		239		—		300		669
FHLB Advances	1		—		200		—		—		1		202
Other	85		106		97		137		143		5		573
Total	$	1,035	$	906	$	2,827	$	376	$	213	$	4,645	$	10,002

These maturities are based upon the par values of the long-term debt.

The terms of certain long-term debt obligations contain various restrictive covenants including limitations on the acquisition of additional debt, dividend payments, and the disposition of subsidiaries. As of December 31, 2022, Huntington was in compliance with all such covenants.

127 Huntington Bancshares Incorporated

12. OTHER COMPREHENSIVE INCOME

The components of Huntington’s OCI were as follows:


(dollar amounts in millions)	Pretax		Tax (expense) benefit		After-tax
Year Ended December 31, 2022

Unrealized losses on available-for-sale securities arising during the period	$	(3,799)	$	873	$	(2,926)
Reclassification adjustment for realized net losses included in net income	100		(23)		77
Total unrealized losses on available-for-sale securities	(3,699)		850		(2,849)
Net impact of hedges on available-for-sale securities	865		(200)		665


Change in fair value of cash flow hedges on loans	(896)		201		(695)
Foreign currency translation adjustment (1)	(15)		—		(15)
Net unrealized gains (losses) on net investment hedges	10		—		10
Translation adjustments, net of hedges (1)	(5)		—		(5)
Change in accumulated unrealized gains for pension and other post retirement obligations	19		(4)		15
Other comprehensive loss	$	(3,716)	$	847	$	(2,869)
Year Ended December 31, 2021

Unrealized losses on available-for-sale securities arising during the period	$	(474)	$	107	$	(367)
Reclassification adjustment for realized net losses included in net income	34		(8)		26
Total unrealized losses on available-for-sale securities	(440)		99		(341)
Net impact of hedges on available-for-sale securities	113		(26)		87


Change in fair value of cash flow hedges on loans	(257)		65		(192)
Foreign currency translation adjustment (1)	(12)		—		(12)
Net unrealized gains (losses) on net investment hedges	9		—		9
Translation adjustments, net of hedges (1)	(3)		—		(3)
Change in accumulated unrealized gains for pension and other post retirement obligations	36		(8)		28
Other comprehensive income	$	(551)	$	130	$	(421)
Year Ended December 31, 2020

Unrealized losses on available-for-sale securities arising during the period	$	235	$	(52)	$	183
Reclassification adjustment for realized net losses included in net income	42		(9)		33
Total unrealized losses on available-for-sale securities	277		(61)		216
Net impact of hedges on available-for-sale securities	3		(1)		2


Change in fair value of cash flow hedges on loans	299		(67)		232



Change in accumulated unrealized gains for pension and other post retirement obligations (2)	(3)		1		(2)
Other comprehensive income	$	576	$	(128)	$	448

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

(2)Includes a settlement gain recognized in other noninterest income on the Consolidated Statements of Income.

2022 Form 10-K 128

Activity in accumulated OCI were as follows:


(dollar amounts in millions)	Unrealized (losses) gains on debt securities (1)		Net impact of hedges on available-for-sale securities		Change in fair value of cash flow hedges on loans		Translation adjustments, net of hedges		Unrealized (losses) gains for pension and other post-retirement obligations		Total
December 31, 2019	$	(28)	$	—	$	23	$	—	$	(251)	$	(256)
Other comprehensive income before reclassifications	183		2		232		—		—		417
Amounts reclassified from accumulated OCI to earnings	33		—		—		—		(2)		31
Period change	216		2		232		—		(2)		448
December 31, 2020	188		2		255		—		(253)		192

Other comprehensive income (loss) before reclassifications	(367)		87		(192)		(3)		—		(475)
Amounts reclassified from accumulated OCI to earnings	26		—		—		—		28		54
Period change	(341)		87		(192)		(3)		28		(421)

December 31, 2021	(153)		89		63		(3)		(225)		(229)

Other comprehensive income before reclassifications	(2,926)		665		(695)		(5)		—		(2,961)
Amounts reclassified from accumulated OCI to earnings	77		—		—		—		15		92
Period change	(2,849)		665		(695)		(5)		15		(2,869)

December 31, 2022	$	(3,002)	$	754	$	(632)	$	(8)	$	(210)	$	(3,098)

(1)AOCI amounts at December 31, 2022, 2021, and 2020 include $66 million, $27 million, and $53 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.

13. SHAREHOLDERS’ EQUITY

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 Optional Redemption Date (1)	December 31, 2022		December 31, 2021
Series B (2)	12/28/2011	35,500	3-mo. LIBOR + 270 bps	1/15/2017	$	23	$	23



Series E (3)	2/27/2018	5,000	5.70	4/15/2023	495		495
Series F (3)	5/27/2020	5,000	5.625	7/15/2030	494		494
Series G (3)	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 (4)	6/9/2021	7,000	5.70	12/01/2022	175		175
Total		557,500			$	2,167	$	2,167

(1)Redeemable at Huntington’s option on the date stated or on a quarterly basis thereafter. Earlier redemption is solely at Huntington’s option, subject to any required prior approval of Federal Reserve.

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

(3)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.

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

129 Huntington Bancshares Incorporated

The following table presents the dividends declared for each series of Preferred shares.


	Year Ended December 31,
	2022					2021					2020
(amounts in millions, except per share data)	Cash Dividend Declared Per Share					Cash Dividend Declared Per Share					Cash Dividend Declared Per Share
Preferred Series			Amount ($)			Amount ($)				Amount ($)
Series B	$	46.68		$	(2)	$	28.69	$	(1)		$	35.91	$	(1)
Series C	—			—		44.07		(4)			58.76		(6)
Series D	—			—		31.25		(18)			62.50		(37)
Series E	5,700.00			(29)		5,700.00		(29)			5,700.00		(29)
Series F	5,625.00			(28)		5,625.00		(28)			3,468.75		(17)
Series G	4,450.00			(22)		4,450.00		(23)			1,915.97		(10)
Series H	45.00			(22)		42.00		(21)			—		—
Series I	1,425.00			(10)		1,068.75		(7)			—		—
Total				$	(113)			$	(131)				$	(100)

On July 15, 2021, all $600 million of outstanding 6.250% Series D Non-Cumulative Perpetual Preferred Stock, par value $0.01 per share, were redeemed.

On October 15, 2021, all $100 million of outstanding 5.875% Series C Non-Cumulative Perpetual Preferred Stock, par value $0.01 per share, were redeemed.

Treasury shares

Treasury shares includes shares held for deferred compensation plans, at cost, of $80 million at December 31, 2022 and $79 million at December 31, 2021.

Non-controlling Interest in Subsidiaries

Through the acquisition of TCF, Huntington acquired a joint venture in which Huntington maintains a 55% ownership interest. As Huntington has a controlling financial interest, its financial results are consolidated in Huntington's financial statements and the other party’s 45% ownership interest is reported as a non-controlling interest within equity.

14. EARNINGS PER SHARE

Basic earnings per share is the amount of earnings (adjusted for dividends declared on preferred stock and impact of preferred stock redemption) available to each share of common stock outstanding during the reporting period. Diluted earnings per share is the amount of earnings available to each share of common stock outstanding during the reporting period adjusted to include the effect of potentially dilutive common shares. Potentially dilutive common shares include incremental shares issued for stock options, restricted stock units and awards, and distributions from deferred compensation plans. Potentially dilutive common shares are excluded from the computation of diluted earnings per share in periods in which the effect would be antidilutive.

2022 Form 10-K 130

The calculation of basic and diluted earnings per share is as follows:


	Year Ended December 31,
(dollar amounts in millions, except per share data, share count in thousands)	2022		2021		2020
Basic earnings per common share:
Net income attributable to Huntington Bancshares Inc	$	2,238	$	1,295	$	817
Dividends on preferred shares	113		131		100
Impact of preferred stock redemption	—		11		—
Net income available to common shares	$	2,125	$	1,153	$	717
Average common shares issued and outstanding	1,441,279		1,262,435		1,017,117
Basic earnings per common share	$	1.47	$	0.91	$	0.71
Diluted earnings per common share:





Dilutive potential common shares
Stock options and restricted stock units and awards	17,534		18,185		10,613
Shares held in deferred compensation plans	6,407		6,113		4,953


Dilutive potential common shares	23,941		24,298		15,566
Total diluted average common shares issued and outstanding	1,465,220		1,286,733		1,032,683


Diluted earnings per common share	$	1.45	$	0.90	$	0.69

Anti-dilutive awards (1)	5,303		2,674		9,760

(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.

15. 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 Consolidated Financial Statements. Refer to Note 1, “Significant Accounting Policies” for details of these revenues. 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.


	Year Ended December 31,
(dollar amounts in millions)	2022		2021		2020
Noninterest income
Noninterest income from contracts with customers	$	1,318	$	1,113	$	884
Noninterest income within the scope of other GAAP topics	663		776		707
Total noninterest income	$	1,981	$	1,889	$	1,591

The following table illustrates the disaggregation by operating segment and major revenue stream and reconciles disaggregated revenue to segment revenue presented in Note 25 - “Segment Reporting”:

131 Huntington Bancshares Incorporated


	Year Ended December 31, 2022
(dollar amounts in millions)	Commercial Banking		Consumer & Business Banking		Vehicle Finance		RBHPCG		Treasury / Other		Huntington Consolidated
Major Revenue Streams
Service charges on deposit accounts	$	85	$	288	$	7	$	4	$	—	$	384
Card and payment processing income	24		324		—		—		—		348
Capital markets fees	90		8		2		2		(3)		99
Trust and investment management services	4		67		—		178		—		249
Insurance income	9		59		—		50		(1)		117
Other noninterest income	94		26		1		2		(2)		121
Net revenue from contracts with customers	$	306	$	772	$	10	$	236	$	(6)	$	1,318
Noninterest income within the scope of other GAAP topics	364		245		3		3		48		663
Total noninterest income	$	670	$	1,017	$	13	$	239	$	42	$	1,981


	Year Ended December 31, 2021
(dollar amounts in millions)	Commercial Banking		Consumer & Business Banking		Vehicle Finance		RBHPCG		Treasury / Other		Huntington Consolidated
Major Revenue Streams
Service charges on deposit accounts	$	85	$	278	$	6	$	3	$	—	$	372
Card and payment processing income	19		292		—		—		—		311
Capital markets fees	16		6		2		1		—		25
Trust and investment management services	3		63		—		166		—		232
Insurance Income	7		48		—		49		1		105
Other noninterest income	29		20		1		7		11		68
Net revenue from contracts with customers	$	159	$	707	$	9	$	226	$	12	$	1,113
Noninterest income within the scope of other GAAP topics	364		338		4		1		69		776
Total noninterest income	$	523	$	1,045	$	13	$	227	$	81	$	1,889


	Year Ended December 31, 2020
(dollar amounts in millions)	Commercial Banking		Consumer & Business Banking		Vehicle Finance		RBHPCG		Treasury / Other		Huntington Consolidated
Major Revenue Streams
Service charges on deposit accounts	$	74	$	217	$	6	$	4	$	—	$	301
Card and payment processing income	15		221		—		—		—		236
Capital markets fees	10		5		2		1		—		18
Trust and investment management services	5		44		—		140		—		189
Insurance Income	7		43		—		46		1		97
Other noninterest income	12		21		—		10		—		43
Net revenue from contracts with customers	$	123	$	551	$	8	$	201	$	1	$	884
Noninterest income within the scope of other GAAP topics	241		394		1		—		71		707
Total noninterest income	$	364	$	945	$	9	$	201	$	72	$	1,591

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 December 31, 2022 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 December 31, 2022 was determined to be immaterial.

2022 Form 10-K 132

16. SHARE-BASED COMPENSATION

Share-based awards are eligible for issuance under the Huntington Bancshares Incorporated 2018 Long Term Incentive Plan. This plan provides for the granting of stock options, restricted stock awards, restricted stock units, performance share units and other awards to officers, directors, and other employees. In connection with the TCF acquisition in 2021, equity awards granted under the TCF equity plans were assumed subject to the same terms and conditions applicable to such awards prior to the date of acquisition. At December 31, 2022, 21 million shares were available for future grants.

Huntington issues shares to fulfill share-based award vesting from available authorized common shares. At December 31, 2022, Huntington believes there are adequate authorized common shares to satisfy anticipated share-based award vesting in 2023.

The following table presents total share-based compensation expense and related tax benefit.


	Year Ended December 31,
(dollar amounts in millions)	2022		2021		2020
Share-based compensation expense (1)	$	119	$	138	$	77
Tax benefit	20		22		13

(1)Compensation costs are included in personnel costs on the Consolidated Statements of Income.

Stock Options

Stock options, awarded by Huntington, are granted at the closing market price on the date of the grant and vest ratably over four years or when other conditions are met. Options assumed in the TCF acquisition vest ratably over a five-year period. Stock options, which represented a portion of the grant values, have no intrinsic value until the stock price increases. All options have a contractual term of ten years from the date of grant.

Huntington’s stock option activity and related information was as follows:


(dollar amounts in millions, except per share and options amounts in thousands)	Options	Weighted- Average Exercise Price		Weighted-Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
Outstanding at January 1, 2022	14,466	$	12.34
Granted	74	15.54

Exercised	(912)	10.08
Forfeited/expired	(170)	13.20
Outstanding at December 31, 2022	13,458	$	12.50	6.0	$	28
Expected to vest (1)	4,076	$	12.09	7.5	$	11
Exercisable at December 31, 2022	9,336	$	12.68	5.3	$	17

(1)The number of options expected to vest reflect an estimate of 46,000 shares expected to be forfeited.

Restricted Stock Awards, Restricted Stock Units and Performance Share Units

Restricted stock units and performance share units awarded by Huntington are granted at the closing market price on the date of the grant. Restricted stock units and awards can be settled in shares or cash depending on the award. Restricted stock units, for the most part, provide either accumulated cash dividends during the vesting period or, accrue a dividend equivalent that is paid upon vesting. Both restricted stock awards and restricted stock units are subject to certain service restrictions. Performance share units are payable contingent upon Huntington achieving certain predefined performance objectives over a three-year measurement period. The fair value of these awards and units reflects the closing market price of Huntington’s common stock on the grant or assumption date.

133 Huntington Bancshares Incorporated

The following table summarizes the status of Huntington’s restricted stock awards, restricted stock units, and performance share units as of December 31, 2022, and activity for the year ended December 31, 2022:


	Restricted Stock Awards			Restricted Stock Units			Performance Share Units
(amounts in thousands, except per share amounts)	Quantity	Weighted- Average Grant Date Fair Value Per Share		Quantity	Weighted- Average Grant Date Fair Value Per Share		Quantity	Weighted- Average Grant Date Fair Value Per Share
Nonvested at January 1, 2022	356	$	14.46	19,098	$	12.85	3,126	$	12.06
Granted	—	—		12,592	13.37		1,743	14.39

Vested	(212)	14.72		(5,848)	14.31		(1,342)	13.72
Forfeited	(20)	14.39		(1,621)	12.69		(58)	13.50
Nonvested at December 31, 2022	124	$	14.37	24,221	$	12.70	3,469	$	12.40

The weighted-average fair value at grant date of nonvested shares granted for the years ended December 31, 2022, 2021, and 2020 were $13.47, $15.78, and $8.90, respectively. The total fair value of awards vested during the years ended December 31, 2022, 2021, and 2020 was $105 million, $135 million, and $86 million, respectively. As of December 31, 2022, the total unrecognized compensation cost related to nonvested shares was $151 million with a weighted-average expense recognition period of 2.7 years.

17. BENEFIT PLANS

Huntington sponsors a non-contributory defined benefit pension plan covering substantially all employees hired or rehired prior to January 1, 2010. The Plan, which was modified in 2013, no longer accrues service benefits to participants and provides benefits based upon length of service and compensation levels. Huntington’s funding policy is to contribute an annual amount that is at least equal to the minimum funding requirements but not more than the amount deductible under the Internal Revenue Code. There were no required minimum contributions during 2022.

The following table shows the weighted-average assumptions used to determine the benefit obligation and the net periodic benefit cost:


	At December 31,
	2022		2021
Weighted-average assumptions used to determine benefit obligations
Discount rate	5.41	%	2.86	%

Weighted-average assumptions used to determine net periodic benefit cost
Discount rate	2.86		2.50
Expected return on plan assets	4.50		4.50

The following table reconciles the beginning and ending balances of the benefit obligation of the Plan with the amounts recognized in the consolidated balance sheets:


	At December 31,
(dollar amounts in millions)	2022		2021
Projected benefit obligation at beginning of measurement year	$	956	$	1,026
Changes due to:
Service cost	3		3
Interest cost	22		19
Benefits paid	(32)		(30)
Settlements	(29)		(25)

Actuarial gains	(228)		(37)
Total changes	(264)		(70)
Projected benefit obligation at end of measurement year	$	692	$	956

2022 Form 10-K 134

The following table reconciles the beginning and ending balances of the fair value of Plan assets:


	At December 31,
(dollar amounts in millions)	2022		2021
Fair value of plan assets at beginning of measurement year	$	1,007	$	1,050
Changes due to:
Actual return on plan assets	(197)		15

Settlements	(38)		(28)
Benefits paid	(32)		(30)
Total changes	(267)		(43)
Fair value of plan assets at end of measurement year	$	740	$	1,007

As of December 31, 2022, the difference between the accumulated benefit obligation and the fair value of Plan assets was $48 million and is recorded in other assets.

The following table shows the components of net periodic benefit costs recognized:


	Year Ended December 31, (1)
(dollar amounts in millions)	2022		2021		2020
Service cost	$	3	$	3	$	3
Interest cost	22		19		26
Expected return on plan assets	(41)		(40)		(42)

Amortization of loss	9		12		9
Settlements	15		8		5
Benefit costs	$	8	$	2	$	1

(1) The pension costs are recognized in other noninterest income in the Consolidated Statements of Income.

At December 31, 2022 and 2021, The Huntington National Bank, as trustee, held all Plan assets. The Plan assets consisted of investments in a variety of cash equivalent, corporate and government fixed income, and equity investments as follows:


	Fair Value at December 31,
(dollar amounts in millions)	2022				2021
Cash equivalents:
Mutual funds-money market	$	23	3	%	$	45	5	%

Fixed income:
Corporate obligations	414		57		559		55
U.S. Government obligations	154		21		208		21

Municipal obligations	3		—		5		—

Collective trust funds	62		8		13		1
Equities:

Common stock	—		—		52		5


Limited liability companies	9		1		36		4
Collective trust funds	27		4		30		3
Limited partnerships	48		6		58		6
Fair value of plan assets	$	740	100	%	$	1,007	100	%

135 Huntington Bancshares Incorporated

Investments of the Plan are accounted for at cost on the trade date and are reported at fair value. The valuation methodologies used to measure the fair value of pension plan assets vary depending on the type of asset. At December 31, 2022, mutual money market funds are valued at the closing price reported from an actively traded exchange and are classified as Level 1. Fixed income investments are valued using unadjusted quoted prices from active markets for similar assets are classified as Level 2. Common stock is valued using the year-end closing price as determined by a national securities exchange and are classified as Level 1. Collective trust funds and limited liability companies are valued at net asset value per unit as a practical expedient, which is calculated based on the fair values of the underlying investments held by the fund less its liabilities as reported by the issuer of the fund. The investment in the limited partnerships is reported at net asset value per share as determined by the general partners of each limited partnership, based on their proportionate share of the partnership’s fair value as recorded in the partnership’s audited financial statements.

The investment objective of the Plan is to maximize the return on Plan assets over a long-time period, while meeting the Plan obligations. At December 31, 2022, Plan assets were invested 3% in cash equivalents, 11% in equity investments, and 86% in fixed income investments, with an average duration of 10.9 years on investments. The estimated life of benefit obligations was 10.3 years. Although it may fluctuate with market conditions, Huntington has targeted a long-term allocation of Plan assets of 10% in equity investments and 90% in bond investments. The allocation of Plan assets between equity investments and fixed income investments will change from time to time.

At December 31, 2022, the following table shows when benefit payments are expected to be paid:


(dollar amounts in millions)	Pension Benefits
2023	$	50
2024	50
2025	50
2026	50
2027	50
2027 through 2030	239

Huntington has a defined contribution plan that is available to eligible employees. Huntington’s expense related to the defined contribution plans for the years ended December 31, 2022, 2021, and 2020 was $58 million, $70 million, and $47 million, respectively.

The following table shows the number of shares, market value, and dividends received on shares of Huntington stock held by the defined contribution plan:


	At December 31,
(dollar amounts in millions, share amounts in thousands)	2022		2021
Shares in Huntington common stock	9,451		9,526
Market value of Huntington common stock	$	133	$	147
Dividends received on shares of Huntington stock	6		6

18. INCOME TAXES

The following is a summary of the provision for income taxes:


	Year Ended December 31,
(dollar amounts in millions)	2022		2021		2020
Current tax provision (benefit)
Federal	$	129	$	356	$	236
State	62		13		12
Foreign	5		1		—
Total current tax provision	196		370		248
Deferred tax provision (benefit)
Federal	319		(104)		(103)
State	—		28		10

Total deferred tax provision (benefit)	319		(76)		(93)
Provision for income taxes	$	515	$	294	$	155

2022 Form 10-K 136

The following is a reconciliation for provision for income taxes:


	Year Ended December 31,
(dollar amounts in millions)	2022		2021		2020
Provision for income taxes computed at the statutory rate	$	580	$	334	$	204
Increases (decreases):
General business credits	(164)		(126)		(99)
Capital loss	(60)		(32)		(25)
Tax-exempt income	(21)		(18)		(17)
Tax-exempt bank owned life insurance income	(11)		(14)		(13)

Affordable housing investment amortization, net of tax benefits	129		102		78
State income taxes, net	49		32		17


Other	13		16		10
Provision for income taxes	$	515	$	294	$	155

The significant components of deferred tax assets and liabilities were as follows:


	At December 31,
(dollar amounts in millions)	2022		2021
Deferred tax assets:
Fair value adjustments	$	917	$	65
Allowances for credit losses	526		518
Purchase accounting and other intangibles	167		107
Net operating and other loss carryforward	136		143
Lease liability	96		143
Pension and other employee benefits	68		46



Tax credit carryforward	59		194
Other assets	13		14
Total deferred tax assets	1,982		1,230
Deferred tax liabilities:
Lease financing	955		712
Operating assets	133		116
Mortgage servicing rights	112		84
Loan origination costs	97		115
Right-of-use asset	67		113
Securities adjustments	42		40





Other liabilities	10		14
Total deferred tax liabilities	1,416		1,194
Net deferred tax asset (liability) before valuation allowance	566		36
Valuation allowance	(32)		(35)
Net deferred tax asset	$	534	$	1

At December 31, 2022, Huntington’s net deferred tax asset related to loss and other carryforwards was $195 million. This was comprised of federal net operating loss carryforwards of $60 million, which will begin expiring in 2025, state net operating loss carryforwards of $48 million, which will begin expiring in 2023, a federal capital loss carryforward of $22 million, which will expire in 2025, state capital loss carryforwards of $6 million, which will begin expiring in 2023, and general business credits of $59 million, which will expire in 2042.

The Company has established a valuation allowance on its state deferred tax assets as it believes it is more likely than not, portions will not be realized.

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various state, city, and foreign jurisdictions. Federal income tax audits have been completed for tax years through 2009. The 2010-2017

tax years remain open as Huntington is currently appealing certain IRS positions related to these years. The 2018-

2021 tax years remain open under the standard statute of limitations. Also, with few exceptions, the Company is no longer subject to state, city, or foreign income tax examinations for tax years before 2018.

137 Huntington Bancshares Incorporated

The following table provides a reconciliation of the beginning and ending amounts of gross unrecognized tax benefits:


	Year Ended December 31,
(dollar amounts in millions)	2022		2021
Unrecognized tax benefits at beginning of year	$	93	$	46

Gross increases for tax positions taken during prior years	1		47


Unrecognized tax benefits at end of year	$	94	$	93

Due to the complexities of some of these uncertainties, the ultimate resolution may result in a liability that is materially different from the current estimate of the tax liabilities. Certain proposed adjustments resulting from the IRS examination of our 2010 through 2011 tax returns have received approval by the Joint Committee on Taxation of the U.S. Congress. The Company is currently working with the IRS to finalize settlement calculations and anticipate all unrecognized tax benefits associated with the exam will be settled within the next twelve months.

Any interest and penalties on income tax assessments or income tax refunds are recognized in the Consolidated Statements of Income as a component of provision for income taxes. The amounts of accrued tax-related interest and penalties were immaterial at December 31, 2022 and 2021. Further, the amount of net interest and penalties related to unrecognized tax benefits was immaterial for all periods presented. All of the gross unrecognized tax benefits would impact the Company’s effective tax rate if recognized.

At December 31, 2022, retained earnings included approximately $182 million of base year reserves of acquired thrift institutions, for which no deferred federal income tax liability has been recognized. Under current law, if these bad debt reserves are used for purposes other than to absorb bad debt losses, they will be subject to federal income tax at the corporate rate enacted at the time. The amount of unrecognized deferred tax liability relating to the cumulative bad debt deduction was approximately $38 million at December 31, 2022.

19. FAIR VALUES OF ASSETS AND LIABILITIES

Following is a description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy. Assets and liabilities measured at fair value rarely transfer between Level 1 and Level 2 measurements. There were no such transfers during the years ended December 31, 2022 and 2021.

Loans held for sale

Huntington has elected to apply the fair value option for mortgage loans originated with the intent to sell which are included in loans held for sale. Mortgage loans held for sale are classified as Level 2 and are estimated using security prices for similar product types.

Loans held for investment

Certain mortgage loans originated with the intent to sell for which the FVO was elected have been reclassified to mortgage loans held for investment. These loans continue to be measured at fair value. The fair value is determined using fair value of similar mortgage-backed securities adjusted for loan specific variables.

2022 Form 10-K 138

Available-for-sale and trading account securities

Securities accounted for at fair value include both the available-for-sale and trading account portfolios. Huntington determines the fair value of securities utilizing quoted market prices obtained for identical or similar assets, third-party pricing services, third-party valuation specialists and other observable inputs such as recent trade observations. AFS and trading securities classified as Level 1 use quoted market prices (unadjusted) in active markets for identical securities at the measurement date. Level 1 positions in these portfolios consist of U.S. Treasury securities. When quoted market prices are not available, fair values are classified as Level 2 using quoted prices for similar assets in active markets, quoted prices of identical or similar assets in markets that are not active, and inputs that are observable for the asset, either directly or indirectly, for substantially the full term of the financial instrument. Level 2 positions in these portfolios consist of U.S. Government and agency debt securities, agency mortgage backed securities, private-label asset-backed securities, certain municipal securities, and other securities. For Level 2 securities Huntington primarily uses prices obtained from third-party pricing services to determine the fair value of securities. Huntington independently evaluates and corroborates the fair value received from pricing services through various methods and techniques, including references to dealer or other market quotes, by reviewing valuations of comparable instruments, and by comparing the prices realized on the sale of similar securities. If relevant market prices are limited or unavailable, valuations may require significant management judgment or estimation to determine fair value, in which case the fair values are classified as Level 3. The Level 3 positions predominantly consist of direct purchase municipal securities. A significant change in the unobservable inputs for these securities may result in a significant change in the ending fair value measurement of these securities.

The direct purchase municipal securities are classified as Level 3 and require estimates to determine fair value which results in greater subjectivity. The fair value is determined by utilizing a discounted cash flow valuation technique employed by a third-party valuation specialist. The third-party specialist uses assumptions related to yield, prepayment speed, conditional default rates and loss severity based on certain factors such as, credit worthiness of the counterparty, prevailing market rates, and analysis of similar securities. Huntington evaluates the fair values provided by the third-party specialist for reasonableness.

Derivative assets and liabilities

Derivatives classified as Level 2 consists of interest rate contracts, which are valued using a discounted cash flow method that incorporates current market interest rates. In addition, Level 2 includes foreign exchange and commodity contracts, which are valued using exchange traded swaps, exchange traded options, and futures market data. Level 2 also includes exchange traded options and forward commitments to deliver mortgage-backed securities, which are valued using quoted prices.

Derivatives classified as Level 3 consist of interest rate lock agreements related to mortgage loan commitments and the Visa® share swap.

139 Huntington Bancshares Incorporated

MSRs

MSRs are accounted for using the fair value method and are classified as Level 3. Refer to Note 7, “Mor t gage Loan Sales an d Servicing Rights” for information on valuation methodology.

Assets and Liabilities measured at fair value on a recurring basis


	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 CMO	—		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

2022 Form 10-K 140


	Fair Value Measurements at Reporting Date Using						Netting Adjustments (1)		At December 31, 2021
(dollar amounts in millions)	Level 1		Level 2		Level 3
Assets
Trading account securities:



Municipal securities	$	—	$	46	$	—	$	—	$	46


Available-for-sale securities:
U.S. Treasury securities	5		—		—		—		5
Residential CMOs	—		4,649		—		—		4,649
Residential MBS	—		15,508		—		—		15,508
Commercial MBS	—		1,865		—		—		1,865
Other agencies	—		248		—		—		248
Municipal securities	—		49		3,477		—		3,526
Private-label CMO	—		86		20		—		106
Asset-backed securities	—		312		70		—		382
Corporate debt	—		2,167		—		—		2,167
Other securities/sovereign debt	—		4		—		—		4
Total available-for-sale securities	5		24,888		3,567		—		28,460

Other securities	65		7		—		—		72
Loans held for sale	—		1,270		—		—		1,270
Loans held for investment	—		152		19		—		171
MSRs	—		—		351		—		351
Other assets:
Derivative assets	—		1,055		10		(465)		600
Assets held in trust for deferred compensation plans	156		—		—		—		156
Liabilities


Derivative liabilities	—		737		6		(624)		119

(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.

141 Huntington Bancshares Incorporated

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


	Level 3 Fair Value Measurements
					Available-for-sale securities						Loans held for investment
(dollar amounts in millions)	MSRs		Derivative instruments		Municipal securities		Private- label CMO		Asset- backed securities
Year Ended December 31, 2022
Opening balance	$	351	$	4	$	3,477	$	20	$	70	$	19

Transfers out of Level 3 (1)	—		(3)		—		—		—		—
Total gains/losses for the period:
Included in earnings:
Mortgage banking income	114		(3)		—		—		—		1

Interest and fee income	—		—		(5)		(3)		—		—
Provision for credit losses	—		—		(4)		—		—		—


Included in OCI	—		—		(262)		—		(1)		—
Purchases/originations	85		—		1,087		4		31		—

Repayments	—		—		—		—		—		(4)

Settlements	(56)		—		(1,045)		(1)		(26)		—
Closing balance	$	494	$	(2)	$	3,248	$	20	$	74	$	16
Change in unrealized gains or losses for the period included in earnings for assets held at end of the reporting date	$	114	$	(8)	$	—	$	—	$	—	$	—
Change in unrealized gains or losses for the period included in other comprehensive income for assets held at the end of the reporting period	—		—		(257)		—		(1)		—


	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
Year Ended December 31, 2021
Opening balance	$	210	$	41	$	2,951	$	9	$	10	$	23

Transfers out of Level 3 (1)	—		(132)		—		—		—		—
Total gains/losses for the period:
Included in earnings:
Mortgage banking income	27		88		—		—		—		—

Interest and fee income	—		—		(1)		(2)		—		—


Included in OCI	—		—		(46)		—		—		—
Purchases/originations/acquisitions	194		7		1,835		11		115		—
Sales	—		—		(369)		—		—		—
Repayments	—		—		—		—		—		(4)

Settlements	(80)		—		(893)		2		(55)		—
Closing balance	$	351	$	4	$	3,477	$	20	$	70	$	19
Change in unrealized gains or losses for the period included in earnings for assets held at end of the reporting date	$	27	$	(41)	$	—	$	—	$	—	$	—
Change in unrealized gains or losses for the period included in other comprehensive income for assets held at the end of the reporting period	—		—		(47)		—		—		—

2022 Form 10-K 142


	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
Year Ended December 31, 2020
Opening balance	$	7	$	6	$	2,999	$	2	$	48	$	26
Fair value election for servicing assets previously measured using the amortized method	205		—		—		—		—		—
Transfers out of Level 3 (1)	—		(198)		—		—		—		—
Total gains/losses for the period:
Included in earnings:
Mortgage banking income	(104)		233		—		—		—		—
Interest and fee income	—		—		(2)		—		—		—
Included in OCI	—		—		65		—		—		—
Purchases/originations	102		—		623		7		28		—

Repayments	—		—		—		—		—		(3)
Settlements	—		—		(734)		—		(66)		—
Closing balance	$	210	$	41	$	2,951	$	9	$	10	$	23
Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets held at end of the reporting date	$	(104)	$	34	$	—	$	—	$	—	$	—
Change in unrealized gains or losses for the period included in other comprehensive income for assets held at the end of the reporting period	—		—		68		—		—		—

(1) Transfers out of Level 3 represent the settlement value of the derivative instruments (i.e., interest rate lock agreements) that are transferred to loans held for sale, which is classified as Level 2.

Assets and liabilities under the fair value option

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



	Total Loans						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 December 31, 2022
Assets
Loans held for sale	$	520	$	513	$	7	$	—	$	—	$	—
Loans held for investment	185		190		(5)		11		11		—
At December 31, 2021
Assets
Loans held for sale	$	1,270	$	1,237	$	33	$	—	$	—	$	—
Loans held for investment	171		177		$	(6)	4		4		—

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


	Net (losses) gains from fair value changes Year Ended December 31,
(dollar amounts in millions)	2022		2021		2020
Assets
Loans held for sale (1)	$	(26)	$	(31)	$	38
Loans held for investment	1		(1)		1

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

143 Huntington Bancshares Incorporated

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 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 Gains/(Losses) Year Ended
(dollar amounts in millions)	December 31, 2022		December 31, 2021		December 31, 2022		December 31, 2021		December 31, 2020
Collateral-dependent loans	$	16	$	39	$	(1)	$	(4)	$	(43)

Loans held for sale	—		—		—		—		(63)

Huntington records nonrecurring adjustments of collateral-dependent loans held for investment. Such amounts are generally based on the fair value of the underlying collateral supporting the loan. Appraisals are generally obtained to support the fair value of the collateral and incorporate measures such as recent sales prices for comparable properties and cost of construction. Periodically, in cases where the carrying value exceeds the fair value of the collateral less cost to sell, an impairment charge is recognized in the form of a charge-off.

Significant unobservable inputs for assets and liabilities measured at fair value on a recurring and nonrecurring basis

The following table 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 December 31, 2022(1)							At December 31, 2021(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	%	-	40	%	7	%	8	%	-	23	%	12	%
		Spread over forward interest rate swap rates	5	%	-	13	%	6	%	3	%	-	11	%	5	%






Municipal securities and asset-backed securities	Discounted cash flow	Discount rate	5	%	-	5	%	5	%	—	%	-	2	%	1	%
		Cumulative default	—	%	-	64	%	7	%	—	%	-	64	%	5	%
		Loss given default	20	%	-	20	%	20	%	5	%	-	80	%	23	%

(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.

2022 Form 10-K 144

Discount rates and spread over forward interest rate swap rates typically increase when market interest rates increase and/or credit and liquidity risks increase, and decrease when market interest rates decline and/or credit and liquidity conditions improve. Higher discount rates and credit spreads generally result in lower fair market values.

Fair values of financial instruments

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

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

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

145 Huntington Bancshares Incorporated

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 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
At December 31, 2021
Financial Assets
Cash and short-term assets	$	5,914	$	—	$	—	$	5,914	$	5,914
Trading account securities	—		—		46		46		46
Available-for-sale securities	—		—		28,460		28,460		28,460
Held-to-maturity securities	12,447		—		—		12,447		12,489
Other securities	576		—		72		648		648
Loans held for sale	—		406		1,270		1,676		1,621
Net loans and leases (1)	109,066		—		171		109,237		109,695
Derivative assets	—		—		600		600		600
Assets held in trust for deferred compensation plans	—		—		156		156		156
Financial Liabilities
Deposits	143,263		—		—		143,263		143,574
Short-term borrowings	334		—		—		334		334
Long-term debt	7,108		—		—		7,108		7,319
Derivative liabilities	—		—		119		119		119

(1)Includes collateral-dependent loans.

2022 Form 10-K 146

The following table presents the level in the fair value hierarchy for estimated fair values:


	Estimated Fair Value Measurements at Reporting Date Using						Netting		Presented Balance
(dollar amounts in millions)	Level 1		Level 2		Level 3		Adjustments (1)
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
At December 31, 2021
Financial Assets
Trading account securities	$	—	$	46	$	—	$	—	$	46
Available-for-sale securities	5		24,888		3,567		—		28,460
Held-to-maturity securities	—		12,489		—		—		12,489
Other securities (2)	65		7		—		—		72
Loans held for sale	—		1,270		351		—		1,621
Net loans and leases	—		152		109,543		—		109,695
Derivative assets	—		1,055		10		(465)		600
Financial Liabilities
Deposits	—		139,047		4,527		—		143,574
Short-term borrowings	—		334		—		—		334
Long-term debt	—		6,441		878		—		7,319
Derivative liabilities	—		737		6		(624)		119

(2)Excludes securities without readily determinable fair values.

20. DERIVATIVE FINANCIAL INSTRUMENTS

Derivative financial instruments are recorded in the 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.

147 Huntington Bancshares Incorporated

The following table presents the fair values and notional values of all derivative instruments included in the Consolidated Balance Sheets. Amounts in the table below are presented gross without the impact of any net collateral arrangements.


	At December 31, 2022						At December 31, 2021
(dollar amounts in millions)	Notional Value		Asset		Liability		Notional Value		Asset		Liability
Derivatives designated as Hedging Instruments
Interest rate contracts	$	42,461	$	1,008	$	1,145	$	21,306	$	258	$	32
Foreign exchange contracts	202		2		—		210		1		—
Derivatives not designated as Hedging Instruments
Interest rate contracts	37,562		968		1,008		45,286		587		498
Foreign exchange contracts	4,889		68		68		3,524		29		31
Commodities contracts	762		114		113		1,077		178		177
Equity contracts	636		4		3		685		12		5
Total Contracts	$	86,512	$	2,164	$	2,337	$	72,088	$	1,065	$	743

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 Consolidated Income Statement.


	Location of Gain or (Loss) Recognized in Income on Derivatives

		Year Ended December 31,
(dollar amounts in millions)		2022			2021			2020
Interest rate contracts:
Customer	Capital markets fees		$	47		$	50		$	47
Mortgage banking	Mortgage banking income		(109)			(26)			52
Interest rate floors	Interest and fee income on loans and leases		—			(8)			(2)
Interest rate caps	Interest expense on long-term debt		—			89			5
Foreign exchange contracts	Capital markets fees		45			32			27
Commodities contracts	Capital markets fees		5			3			4
Equity contracts	Other noninterest expense		(9)			(8)			(4)
Total			$	(21)		$	132		$	129

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.

2022 Form 10-K 148

The following table presents the gross notional values of derivatives used in Huntington’s asset and liability management activities, identified by the underlying interest rate-sensitive instruments:


	At December 31, 2022
(dollar amounts in millions)	Fair Value Hedges		Cash Flow Hedges		Economic Hedges		Total
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 at December 31, 2022	$	18,136	$	24,325	$	175	$	42,636


	At December 31, 2021
(dollar amounts in millions)	Fair Value Hedges		Cash Flow Hedges		Economic Hedges		Total
Instruments associated with:
Investment securities	$	8,228	$	—	$	—	$	8,228
Loans	—		11,150		271		11,421


Long-term debt	1,928		—		—		1,928
Total notional value at December 31, 2021	$	10,156	$	11,150	$	271	$	21,577

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 swaption collars, floors, and forward-starting floors that were excluded from the hedge effectiveness, changes in the fair value of economic hedges, as well as the amounts related to terminated hedges reclassified from AOCI. The net amounts resulted in an increase to net interest income of $76 million, $337 million, and $239 million for the years ended December 31, 2022, 2021, and 2020, 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 $9.5 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 Consolidated Statements of Financial Condition. Huntington has also designated $869 million 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.


	Year Ended December 31,
(dollar amounts in millions)	2022		2021		2020
Interest rate contracts
Change in fair value of interest rate swaps hedging investment securities (1)	$	875	$	108	$	6
Change in fair value of hedged investment securities (1)	(862)		(114)		3
Change in fair value of interest rate swaps hedging long-term debt (2)	(300)		(184)		113
Change in fair value of hedged long term debt (2)	300		187		(118)

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

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

149 Huntington Bancshares Incorporated

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
	At December 31,				At December 31,
(dollar amounts in millions)	2022		2021		2022		2021
Assets
Investment securities (1)	$	18,029	$	17,150	$	(979)	$	(117)
Liabilities

Long-term debt (2)	7,175		1,981		(256)		45

(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 December 31, 2022, the amortized cost basis of the closed portfolios used in these hedging relationships was $17.2 billion, the cumulative basis adjustments associated with these hedging relationships was $849 million and represented a reduction to the amortized cost, and the amounts of the designated hedging instruments were $9.5 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 $(70) million at December 31, 2022 and $17 million at December 31, 2021.

Cash Flow Hedges

At December 31, 2022, Huntington had $24.3 billion of interest rate swaps and swaption collars. 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 swaption collar contracts represents the time value of the contracts and is not included in the measurement of hedge effectiveness. Any change in fair value related to time value is recognized in OCI. The initial premium paid is amortized on a straight line basis as a reduction to interest income over the contractual life of these contracts.

Gains and (losses) on interest rate floors, floor spreads, and swaps recognized in other comprehensive income (loss) after-tax were $(695) million and $(192) million for the year ended December 31, 2022 and December 31, 2021, respectively.

At December 31, 2022, the net gains recognized in AOCI that are expected to be reclassified into earnings within the next 12 months were $10 million.

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 was a net liability of $3 million and a net asset of $15 million at December 31, 2022 and December 31, 2021, respectively. At December 31, 2022 and December 31, 2021, Huntington had commitments to sell residential real estate loans of $766 million and $2.1 billion, respectively. These contracts mature in less than one year.

MSR hedging activity

Huntington’s MSR economic hedging activity uses securities and derivatives to manage the value of the MSR asset and to mitigate the various types of risk inherent in the MSR asset, including risks related to duration, basis, convexity, volatility, and yield curve. The hedging instruments include forward commitments, TBA securities, Treasury futures contracts, interest rate swaps, and options on interest rate swaps.

2022 Form 10-K 150

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


			At December 31,
(dollar amounts in millions)			2022		2021
Notional value			$	1,120	$	1,330
Trading assets			4		19
Trading liabilities			(78)		—

	Year December 31,
(dollar amounts in millions)	2022		2021		2020
Trading (losses) gains	$	(109)	$	(26)	$	52

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 customer related 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 customer related 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 December 31, 2022 and December 31, 2021, were $59 million and $51 million, respectively. The total notional values of derivative financial instruments used by Huntington on behalf of customers, including offsetting derivatives, were $40.7 billion and $45.1 billion at December 31, 2022 and December 31, 2021, respectively. Huntington’s credit risk from customer derivatives was $118 million and $551 million at the same dates, respectively.

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

Huntington records derivatives at fair value as further described in Note 19 “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.

151 Huntington Bancshares Incorporated

In addition to the customer derivative credit exposure, aggregate credit risk associated with broker-dealer and bank derivative transactions, net of collateral that has been pledged by the counterparty, was $227 million and $44 million at December 31, 2022 and December 31, 2021, respectively. The 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 December 31, 2022, Huntington pledged $236 million of investment securities and cash collateral to counterparties, while other counterparties pledged $574 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 Consolidated Balance Sheets.


Offsetting of Financial Assets and Derivative Assets
			Gross amounts offset in the consolidated balance sheets		Net amounts of assets presented in the consolidated balance sheets		Gross amounts not offset in the consolidated balance sheets
(dollar amounts in millions)	Gross amounts of recognized assets				Financial instruments		Cash collateral received		Net amount
At December 31, 2022	$	2,164	$	(1,808)	$	356	$	(7)	$	(56)	$	293
At December 31, 2021	1,065		(465)		600		(65)		(31)		504


Offsetting of Financial Liabilities and Derivative Liabilities
			Gross amounts offset in the consolidated balance sheets		Net amounts of liabilities presented in the consolidated balance sheets		Gross amounts not offset in the consolidated balance sheets
(dollar amounts in millions)	Gross amounts of recognized liabilities				Financial instruments		Cash collateral delivered		Net amount
At December 31, 2022	$	2,337	$	(1,345)	$	992	$	(79)	$	(118)	$	795
At December 31, 2021	743		(624)		119		(3)		(116)		—

21. Variable Interest Entities

Unconsolidated VIEs

The following tables provide a summary of the assets and liabilities included in Huntington’s 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 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


	At December 31, 2021
(dollar amounts in millions)	Total Assets		Total Liabilities		Maximum Exposure to Loss
Affordable Housing Tax Credit Partnerships	$	1,652	$	949	$	1,652
Trust Preferred Securities	14		248		—

Other Investments	484		146		484
Total	$	2,150	$	1,343	$	2,136

2022 Form 10-K 152

Trust-Preferred Securities

Huntington has certain trusts whose assets, liabilities, equity, income, and expenses are not included within Huntington’s 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 Consolidated Balance Sheet as long-term debt. Refer to Note 11 “Borrowings” for the outstanding amount of debentures issued to each trust and corresponding trust securities. The trust securities are the obligations of the trusts, and as such, are not consolidated within Huntington’s Consolidated Financial Statements.

Each issue of the junior subordinated debentures has an interest rate equal to the corresponding trust securities distribution rate. Huntington has the right to defer payment of interest on the debentures at any time, or from time-to-time for a period not exceeding five years provided that no extension period may extend beyond the stated maturity of the related debentures. During any such extension period, distributions to the trust securities will also be deferred and Huntington’s ability to pay dividends on its common stock will be restricted. Periodic cash payments and payments upon liquidation or redemption with respect to trust securities are guaranteed by Huntington to the extent of funds held by the trusts. The guarantee ranks subordinate and junior in right of payment to all indebtedness of the Company to the same extent as the junior subordinated debt. The guarantee does not place a limitation on the amount of additional indebtedness that may be incurred by Huntington.

Affordable Housing Tax Credit Partnerships

Huntington makes certain equity investments in various limited partnerships that sponsor affordable housing projects utilizing the LIHTC pursuant to Section 42 of the Internal Revenue Code. The purpose of these investments is to achieve a satisfactory return on capital, to facilitate the sale of additional affordable housing product offerings, and to assist in achieving goals associated with the Community Reinvestment Act. The primary activities of the limited partnerships include the identification, development, and operation of multi-family housing that is leased to qualifying residential tenants. Generally, these types of investments are funded through a combination of debt and equity.

Huntington uses the proportional amortization method to account for a majority of its investments in these entities. These investments are included in other assets. Investments that do not meet the requirements of the proportional amortization method are accounted for using the equity method. Investment losses are included in Other noninterest income in the Consolidated Statements of Income.

The following table presents the balances of Huntington’s affordable housing tax credit investments and related unfunded commitments.


	At December 31,
(dollar amounts in millions)	2022		2021
Affordable housing tax credit investments	$	2,891	$	2,376
Less: amortization	(855)		(724)
Net affordable housing tax credit investments	$	2,036	$	1,652
Unfunded commitments	$	1,260	$	949

The following table presents other information relating to Huntington’s affordable housing tax credit investments.


	Year Ended December 31,
(dollar amounts in millions)	2022		2021		2020
Tax credits and other tax benefits recognized	$	203	$	144	$	113
Proportional amortization expense included in provision for income taxes	170		126		97

There was no impairment recognized for the years ended December 31, 2022 and 2021, and 2020.

Other Investments

Other investments determined to be VIE’s include investments in Small Business Investment Companies, Historic Tax Credit Investments, certain equity method investments, renewable energy financings, and other miscellaneous investments.

153 Huntington Bancshares Incorporated

22. 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 Consolidated Financial Statements. The contract amounts of these financial agreements were as follows:


	At December 31,
(dollar amounts in millions)	2022		2021
Contract amount representing credit risk
Commitments to extend credit:
Commercial	$	32,500	$	27,933
Consumer	19,064		18,513
Commercial real estate	3,393		3,042
Standby letters of credit and guarantees on industrial revenue bonds	714		694
Commercial letters of credit	15		36

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 $27 million and $7 million at December 31, 2022 and December 31, 2021, 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 or may be 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.

2022 Form 10-K 154

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 $10 million at December 31, 2022 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.

23. OTHER REGULATORY MATTERS

Huntington and the Bank are subject to certain risk-based capital and leverage ratio requirements under the U.S. Basel III capital rules adopted by the Federal Reserve, for Huntington, and by the OCC, for the Bank. These rules implement the Basel III international regulatory capital standards in the United States, as well as certain provisions of the Dodd-Frank Act. These quantitative calculations are minimums, and the Federal Reserve and OCC may determine that a banking organization, based on its size, complexity, or risk profile, must maintain a higher level of capital in order to operate in a safe and sound manner. Under the U.S. Basel III capital rules, Huntington’s and the Bank’s assets, exposures and certain off-balance sheet items are subject to risk weights used to determine the institutions’ risk-weighted assets.

Failure to be well-capitalized or to meet minimum capital requirements could result in certain mandatory and possible additional discretionary actions by regulators that, if undertaken, could have an adverse material effect on our operations or financial condition. Failure to be well-capitalized or to meet minimum capital requirements could also result in restrictions on Huntington’s or the Bank’s ability to pay dividends or otherwise distribute capital or to receive regulatory approval of applications.

In addition to meeting the minimum capital requirements, under the U.S. Basel III capital rules Huntington and the Bank must also maintain the applicable capital buffer requirements, SCB or CCB, to avoid becoming subject to restrictions on capital distributions and certain discretionary bonus payments to management.

155 Huntington Bancshares Incorporated

As of December 31, 2022, Huntington’s and the Bank’s regulatory capital ratios were above the well-capitalized standards and met the applicable capital buffer requirements. Please refer to the table below for a summary of Huntington’s and the Bank’s regulatory capital ratios.


		Minimum		Minimum Ratio+						Basel III
		Regulatory		Capital Buffer (1)				Well-		At December 31,
		Capital		At December 31,				Capitalized		2022				2021
(dollar amounts in millions)		Ratios		2022		2021		Minimums		Ratio		Amount		Ratio		Amount


CET1 risk-based capital	Consolidated	4.50	%	7.80	%	7.00	%	N/A		9.36	%	$	13,290	9.33	%	$	12,249
	Bank	4.50		7.00		7.00		6.50	%	9.98		14,133		10.15		13,261
Tier 1 risk-based capital	Consolidated	6.00		9.30		8.50		6.00		10.90		15,467		10.99		14,426
	Bank	6.00		8.50		8.50		8.00		10.83		15,334		11.06		14,445
Total risk-based capital	Consolidated	8.00		11.30		10.50		10.00		13.09		18,573		13.14		17,246
	Bank	8.00		10.50		10.50		10.00		12.47		17,647		12.58		16,427
Tier 1 leverage	Consolidated	4.00		N/A		N/A		N/A		8.60		15,467		8.56		14,426
	Bank	4.00		N/A		N/A		5.00		8.54		15,334		8.60		14,445

(1) The SCB, applicable to Huntington, was 3.3% and 2.5% at December 31, 2022 and December 31, 2021, respectively. The CCB, applicable to the Bank, was 2.5% at both December 31, 2022 and December 31, 2021.

Huntington and its subsidiaries are also subject to various regulatory requirements that impose restrictions on cash, debt, and dividends. The Bank is required to maintain cash reserves based on the level of certain of its deposits. This reserve requirement may be met by holding cash in banking offices or on deposit at the Federal Reserve Bank. At December 31, 2022, the balance of these deposits was $4.9 billion.

Under current Federal Reserve regulations, the Bank is limited as to the amount and type of loans it may make to the parent company and nonbank subsidiaries. At December 31, 2022, the Bank could lend $1.8 billion to a single affiliate, subject to the qualifying collateral requirements defined in the regulations.

Dividends from the Bank are one of the major sources of funds for the Company. These funds aid the Company in the payment of dividends to shareholders, expenses, and other obligations. Payment of dividends and/or return of capital to the parent company is subject to various legal and regulatory limitations. Also, there are statutory and regulatory limitations on the ability of national banks to pay dividends or make other capital distributions.

24. PARENT-ONLY FINANCIAL STATEMENTS

The parent-only financial statements, which include transactions with subsidiaries, are as follows:


Balance Sheets	At December 31,
(dollar amounts in millions)	2022		2021
Assets
Cash and due from banks	$	3,525	$	2,832
Due from The Huntington National Bank	969		297
Due from non-bank subsidiaries	25		35
Investment in The Huntington National Bank	17,384		19,297
Investment in non-bank subsidiaries	242		217
Accrued interest receivable and other assets	664		544
Total assets	$	22,809	$	23,222
Liabilities and shareholders’ equity
Long-term borrowings	$	3,980	$	3,111
Dividends payable, accrued expenses, and other liabilities	1,098		815
Total liabilities	5,078		3,926
Shareholders’ equity (1)	17,731		19,296
Total liabilities and shareholders’ equity	$	22,809	$	23,222

(1)See Consolidated Statements of Changes in Shareholders’ Equity.

2022 Form 10-K 156


Statements of Income	Year Ended December 31,
(dollar amounts in millions)	2022		2021		2020
Income
Dividends from:
The Huntington National Bank	$	1,566	$	1,394	$	1,527
Non-bank subsidiaries	19		19		36
Interest from:
The Huntington National Bank	16		3		4
Non-bank subsidiaries	1		1		1
Other	(1)		—		11
Total income	1,601		1,417		1,579
Expense
Personnel costs	8		6		17
Interest on borrowings	107		60		115
Other	169		230		123
Total expense	284		296		255
Income before income taxes and equity in undistributed net income of subsidiaries	1,317		1,121		1,324
Provision (benefit) for income taxes	(44)		(56)		(46)
Income before equity in undistributed net income of subsidiaries	1,361		1,177		1,370
Increase (decrease) in undistributed net income (loss) of:
The Huntington National Bank	853		97		(547)
Non-bank subsidiaries	24		21		(6)
Net income	$	2,238	$	1,295	$	817
Other comprehensive (loss) income (1)	(2,869)		(421)		448
Comprehensive (loss) income	$	(631)	$	874	$	1,265

(1)See Consolidated Statements of Comprehensive Income for other comprehensive (loss) income detail.

157 Huntington Bancshares Incorporated


Statements of Cash Flows	Year Ended December 31,
(dollar amounts in millions)	2022		2021		2020
Operating activities
Net income	$	2,238	$	1,295	$	817
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in undistributed net income of subsidiaries	(877)		(118)		553
Depreciation and amortization	(22)		23		—

Other, net	(55)		(217)		89
Net cash provided by operating activities	1,284		983		1,459
Investing activities
Repayments from subsidiaries	14		8		8
Advances to subsidiaries	(503)		(59)		(256)
(Purchases)/Proceeds from sale of securities	(20)		(28)		(1)
Net cash received from business combination	(194)		248		—

Other, net	(1)		—		—
Net cash (used for) provided by investing activities	(704)		169		(249)
Financing activities

Net proceeds from issuance of medium-term notes	1,144		513		747




Payment of long-term debt	—		(1,508)		(800)
Dividends paid on common and preferred stock	(1,010)		(888)		(698)
Repurchases of common stock	—		(650)		(92)
Net proceeds from issuance of preferred stock	—		486		988

Payment to repurchase preferred stock	—		(700)		—
Other, net	(21)		(39)		(8)
Net cash provided by (used for) financing activities	113		(2,786)		137
Increase (decrease) in cash and cash equivalents	693		(1,634)		1,347
Cash and cash equivalents at beginning of year	2,832		4,466		3,119
Cash and cash equivalents at end of year	$	3,525	$	2,832	$	4,466
Supplemental disclosure:
Interest paid	$	89	$	71	$	113

25. SEGMENT REPORTING

Huntington’s business segments are based on our internally-aligned segment leadership structure, which is how management monitors results and assesses performance. The Company has four major business segments: Commercial Banking, Consumer and Business Banking, Vehicle Finance, Regional Banking and The Huntington Private Client Group (RBHPCG). The Treasury / Other function includes technology and operations, other unallocated assets, liabilities, revenue, and expense.

Business segment results are determined based upon Huntington’s management reporting system, which assigns balance sheet and income statement items to each of the business segments. The process is designed around the organizational and management structure and, accordingly, the results derived are not necessarily comparable with similar information published by other financial institutions. Additionally, because of the interrelationships of the various segments, the information presented is not indicative of how the segments would perform if they operated as independent entities.

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.

2022 Form 10-K 158

The management process that develops the business segment reporting utilizes various estimates and allocation methodologies to measure the performance of the business segments. Expenses are allocated to business segments using a two-phase approach. The first phase consists of measuring and assigning unit costs (activity-based costs) to activities related to product origination and servicing. These activity-based costs are then extended, based on volumes, with the resulting amount allocated to business segments that own the related products. The second phase consists of the allocation of overhead costs to all four business segments from Treasury / Other. Huntington utilizes a full-allocation methodology, where all Treasury / Other expenses, except reported acquisition-related net expenses, if any, and a small amount of other residual unallocated expenses, are allocated to the four business segments.

The management policies and processes utilized in compiling segment financial information are highly subjective and, unlike financial accounting, are not based on authoritative guidance similar to GAAP. As a result, reported segment results are not necessarily comparable with similar information reported by other financial institutions. Furthermore, changes in management structure or allocation methodologies and procedures result in changes in reported segment financial data. Accordingly, certain amounts have been reclassified to conform to the current period presentation.

Huntington uses an active and centralized FTP methodology to attribute appropriate net interest income to the business segments. The intent of the FTP methodology is to transfer interest rate risk from the business segments by providing matched duration funding of assets and liabilities. The result is to centralize the financial impact, management, and reporting of interest rate risk in the Treasury / Other function where it can be centrally monitored and managed. The Treasury / Other function charges (credits) an internal cost of funds for assets held in (or pays for funding provided by) each business segment. The FTP rate is based on prevailing market interest rates for comparable duration assets (or liabilities).

Commercial Banking - The Commercial Banking segment provides expertise through bankers, capabilities, and digital channels, which include a comprehensive set of product offerings. Our target clients span from mid-market to large corporate (greater than $2 billion in revenue) across a national footprint. The Commercial Banking segment leverages internal partnerships for wealth management, trust, insurance, payments, and treasury management capabilities. The segment is divided into five business units: (1) Middle Market Banking, (2) Corporate, Specialty, and Government Banking, (3) Asset Finance, (4) Commercial Real Estate Banking, and (5) Capital Markets.

Consumer and Business Banking - The Consumer and Business Banking segment provides a wide array of financial products and services to consumer and small business customers including, but not limited to, checking accounts, savings accounts, money market accounts, CDs, investments, consumer loans, credit cards, and small business loans. Other financial services available to customers include mortgages, insurance, interest rate risk protection, foreign exchange, and treasury management. Business Banking is defined as serving companies with revenues up to $20 million. Consumer and Business Banking also supports origination and servicing of consumer loans and mortgages for customers who are generally located in our primary banking markets across all segments.

Vehicle Finance - Our products and services include providing financing to consumers for the purchase of automobiles, light-duty trucks, recreational vehicles, marine craft, and powersports at franchised and other select dealerships, and providing financing to franchised dealerships for the acquisition of new and used inventory. Products and services are delivered through highly specialized relationship-focused bankers and product partners.

Regional Banking and The Huntington Private Client Group - The core business of The Huntington Private Client Group is The Huntington Private Bank, which consists of Private Banking, Wealth & Investment Management, and Retirement Plan Services. The Huntington Private Bank provides high net-worth customers with deposit, lending (including specialized lending options), and banking services. The Huntington Private Bank also delivers wealth management and legacy planning through investment and portfolio management, fiduciary administration, and trust services. This group also provides retirement plan services to corporate businesses. The Huntington Private Client Group provides corporate trust services and institutional and mutual fund custody services.

159 Huntington Bancshares Incorporated

Listed in the table below is certain operating basis financial information reconciled to Huntington’s, reported results by business segment.


Income Statements (dollar amounts in millions)	Commercial Banking		Consumer & Business Banking		Vehicle Finance		RBHPCG		Treasury / Other		Huntington Consolidated
Year Ended December 31, 2022
Net interest income	$	1,879	$	2,577	$	477	$	232	$	108	$	5,273
Provision for credit losses	28		161		83		17		—		289
Noninterest income	670		1,017		13		239		42		1,981
Noninterest expense	1,061		2,434		165		320		221		4,201
Provision (benefit) for income taxes	307		210		51		28		(81)		515
Income attributable to non-controlling interest	10		—		—		—		1		11
Net income attributable to Huntington Bancshares Inc	$	1,143	$	789	$	191	$	106	$	9	$	2,238
Year Ended December 31, 2021
Net interest income	$	1,284	$	1,667	$	468	$	159	$	524	$	4,102
Provision for credit losses	4		91		(86)		16		—		25
Noninterest income	523		1,045		13		227		81		1,889
Noninterest expense	791		2,231		163		300		890		4,375
Provision (benefit) for income taxes	212		82		85		15		(100)		294
Income attributable to non-controlling interest	2		—		—		—		—		2
Net income attributable to Huntington Bancshares Inc	$	798	$	308	$	319	$	55	$	(185)	$	1,295
Year Ended December 31, 2020
Net interest income	$	903	$	1,436	$	430	$	160	$	295	$	3,224
Provision for credit losses	626		265		146		11		—		1,048
Noninterest income	364		945		9		201		72		1,591
Noninterest expense	542		1,774		141		243		95		2,795
Provision for income taxes	21		72		32		22		8		155
Net income	$	78	$	270	$	120	$	85	$	264	$	817


	Assets at December 31,				Deposits at December 31,
(dollar amounts in millions)	2022		2021		2022		2021
Commercial Banking	$	63,812	$	57,071	$	37,509	$	31,845
Consumer & Business Banking	38,561		39,929		93,676		95,352
Vehicle Finance	21,461		20,752		1,136		1,401
RBHPCG	10,045		8,325		9,550		10,162

Treasury / Other	49,027		47,987		6,043		4,503
Total	$	182,906	$	174,064	$	147,914	$	143,263

2022 Form 10-K 160

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