LOANS / LEASES

9 Months Ended

Sep. 30, 2020

Loans and leases which Huntington has the intent and ability to hold for the foreseeable future, or until maturity or payoff, are classified in the Unaudited Condensed Consolidated Balance Sheets as loans and leases. The total balance of unamortized premiums, discounts, fees, and costs, recognized as part of loans and leases, was a net premium of $454 million and $525 million at September 30, 2020 and December 31, 2019, respectively.

Loan and Lease Portfolio Composition

The following table provides a detailed listing of Huntington’s loan and lease portfolio at September 30, 2020 and December 31, 2019.


(dollar amounts in millions)	September 30, 2020		December 31, 2019


















Loans and leases:
Commercial and industrial	$	34,895	$	30,664
Commercial real estate	7,209		6,674
Automobile	12,925		12,797
Home equity	8,904		9,093
Residential mortgage	12,031		11,376
RV and marine	4,146		3,563
Other consumer	1,046		1,237
Loans and leases	$	81,156	$	75,404
Allowance for loan and lease losses	(1,796)		(783)
Net loans and leases	$	79,360	$	74,621

Equipment Leases

Huntington leases equipment to customers, and substantially all such arrangements are classified as either sales-type or direct financing leases, which are included in C&I loans. These leases are reported at the aggregate of lease payments receivable and estimated residual values, net of unearned and deferred income, and any initial direct costs incurred to originate these leases.

Huntington assesses net investments in leases (including residual values) for impairment and recognizes any impairment losses in accordance with the impairment guidance for financial instruments. As such, net investments in leases may be reduced by an allowance for credit losses, with changes recognized as provision expense.

The following table presents net investments in lease financing receivables by category at September 30, 2020 and December 31, 2019.


(dollar amounts in millions)	September 30, 2020		December 31, 2019
Commercial and industrial:
Lease payments receivable	$	1,751	$	1,841
Estimated residual value of leased assets	687		728
Gross investment in commercial and industrial lease financing receivables	2,438		2,569
Deferred origination costs	21		19
Deferred fees	(203)		(249)
Total net investment in commercial and industrial lease financing receivables	$	2,256	$	2,339

The carrying value of residual values guaranteed was $97 million and $95 million as of September 30, 2020 and December 31, 2019, respectively. The future lease rental payments due from customers on sales-type and direct financing leases at September 30, 2020, totaled $1.8 billion and were due as follows: $0.6 billion in 2021, $0.5 billion in 2022, $0.3 billion in 2023, $0.2 billion in 2024, $0.1 billion in 2025, and $0.1 billion thereafter. Interest income recognized for these types of leases was $26 million and $28 million for the three-month periods ended September 30, 2020 and 2019, respectively. For the nine-month periods ended September 30, 2020 and 2019, interest income recognized was $81 million and $81 million, respectively.

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. See Note 1 “Significant Accounting Policies” to the Consolidated Financial Statements of the Annual Report on Form 10-K for the year ended December 31, 2019 for a description of the accounting policies related to the NALs.

The following table presents NALs by loan class at September 30, 2020 and December 31, 2019 (1):


	September 30, 2020				December 31, 2019
(dollar amounts in millions)	Nonaccrual loans with no ACL		Total nonaccrual loans		Nonaccrual loans with no ACL		Total nonaccrual loans
Commercial and industrial	$	65	$	388	$	109	$	323
Commercial real estate	9		16		2		10
Automobile	—		5		—		4
Home equity	—		71		—		59
Residential mortgage	—		88		—		71
RV and marine	—		1		—		1
Other consumer	—		—		—		—
Total nonaccrual loans	$	74	$	569	$	111	$	468

(1) Generally excludes loans that were under payment deferral or granted other assistance, including amendments or waivers of financial covenants in response to the COVID-19 pandemic.

The following table presents an aging analysis of loans and leases, including past due loans and leases, by loan class at September 30, 2020 and December 31, 2019:


	September 30, 2020
	Past Due (1)(2)										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	$	54	$	21	$	113	$	188	$	34,707	$	—	$	34,895	$	10	(3)
Commercial real estate	6		3		12		21		7,188		—		7,209		—
Automobile	61		20		12		93		12,832		—		12,925		8
Home equity	23		11		58		92		8,811		1		8,904		11
Residential mortgage	104		32		202		338		11,602		91		12,031		142		(4)
RV and marine	11		3		3		17		4,129		—		4,146		2
Other consumer	8		3		2		13		1,033		—		1,046		2
Total loans and leases	$	267	$	93	$	402	$	762	$	80,302	$	92	$	81,156	$	175


	December 31, 2019
	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	$	65	$	31	$	69	$	165	$	30,499	$	—	$	30,664	$	11	(3)
Commercial real estate	3		1		7		11		6,663		—		6,674		—
Automobile	95		19		11		125		12,672		—		12,797		8
Home equity	50		19		51		120		8,972		1		9,093		14
Residential mortgage	103		49		170		322		10,974		80		11,376		129		(4)
RV and marine	13		4		2		19		3,544		—		3,563		2
Other consumer	13		6		7		26		1,211		—		1,237		7
Total loans and leases	$	342	$	129	$	317	$	788	$	74,535	$	81	$	75,404	$	171

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

(2)At September 30, 2020, the principal balance of loans in payment deferral programs offered in response to the COVID-19 pandemic which are performing according to their modified terms are generally not considered delinquent.

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

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

Credit Quality Indicators

See Note 3 “Loans / Leases and Allowance for Credit Losses” to the Consolidated Financial Statements of the Annual Report on Form 10-K for the year ended December 31, 2019 for a description of the credit quality indicators Huntington utilizes for monitoring credit quality and for determining an appropriate ACL level.

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

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

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

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

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

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

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

For all classes within the consumer loan portfolio, loans are assigned pool level PD factors based on the FICO range within which the borrower’s credit bureau score falls. A credit bureau score is a credit score developed by FICO based on data provided by the credit bureaus. The credit bureau score is widely accepted as the standard measure of consumer credit risk used by lenders, regulators, rating agencies, and consumers. The higher the credit bureau score, the higher likelihood of repayment and therefore, an indicator of higher credit quality.

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

The following table presents each loan and lease class by vintage and credit quality indicator at September 30, 2020:


	As of September 30, 2020
	Term Loans Amortized Cost Basis by Origination Year												Revolver Total at Amortized Cost Basis		Revolver Total Converted to Term Loans
(dollar amounts in millions)	2020		2019		2018		2017		2016		Prior						Total (3)
Commercial and industrial
Credit Quality Indicator (1):
Pass	$	12,017	$	5,057	$	3,019	$	1,621	$	1,106	$	1,084	$	8,408	$	2	$	32,314
OLEM	362		134		120		35		42		22		212		—		927
Substandard	296		171		167		215		90		182		525		—		1,646
Doubtful	2		—		5		—		—		1		—		—		8
Total Commercial and industrial	$	12,677	$	5,362	$	3,311	$	1,871	$	1,238	$	1,289	$	9,145	$	2	$	34,895

Commercial real estate
Credit Quality Indicator (1):
Pass	$	1,366	$	1,629	$	1,203	$	566	$	601	$	635	$	675	$	—	$	6,675
OLEM	61		74		73		56		20		23		1		—		308
Substandard	21		48		13		40		44		20		38		—		224
Doubtful	—		—		—		—		—		2		—		—		2
Total Commercial real estate	$	1,448	$	1,751	$	1,289	$	662	$	665	$	680	$	714	$	—	$	7,209

Automobile
Credit Quality Indicator (2):
750+	$	2,145	$	2,185	$	1,293	$	880	$	406	$	126	$	—	$	—	$	7,035
650-749	1,528		1,546		878		465		224		78		—		—		4,719
<650	224		334		274		183		104		52		—		—		1,171

Total Automobile	$	3,897	$	4,065	$	2,445	$	1,528	$	734	$	256	$	—	$	—	$	12,925

Home equity
Credit Quality Indicator (2):
750+	$	502	$	29	$	31	$	36	$	97	$	498	$	4,493	$	192	$	5,878
650-749	96		12		8		12		31		181		2,006		186		2,532
<650	—		1		1		1		7		76		304		103		493

Total Home equity	$	598	$	42	$	40	$	49	$	135	$	755	$	6,803	$	481	$	8,903

Residential mortgage
Credit Quality Indicator (2):
750+	$	2,416	$	1,545	$	1,060	$	1,229	$	862	$	1,429	$	—	$	—	$	8,541
650-749	758		516		363		313		194		526		—		—		2,670
<650	25		74		101		102		73		354		—		—		729

Total Residential mortgage	$	3,199	$	2,135	$	1,524	$	1,644	$	1,129	$	2,309	$	—	$	—	$	11,940

RV and marine
Credit Quality Indicator (2):
750+	$	988	$	557	$	629	$	360	$	163	$	270	$	—	$	—	$	2,967
650-749	264		231		217		147		69		141		—		—		1,069
<650	4		15		23		23		12		33		—		—		110

Total RV and marine	$	1,256	$	803	$	869	$	530	$	244	$	444	$	—	$	—	$	4,146

Other consumer
Credit Quality Indicator (2):
750+	$	71	$	64	$	28	$	8	$	4	$	10	$	324	$	2	$	511
650-749	29		64		21		7		2		5		300		31		459
<650	1		9		3		1		1		2		28		31		76

Total Other consumer	$	101	$	137	$	52	$	16	$	7	$	17	$	652	$	64	$	1,046

(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.

(3)The total amount of accrued interest recorded for these loans at September 30, 2020, presented in other assets within the Condensed Consolidated Balance Sheets, was $132 million and $125 million of commercial and consumer, respectively.

The following table presents each loan and lease class by credit quality indicator at December 31, 2019.


	December 31, 2019
(dollar amounts in millions)	Credit Risk Profile by UCS Classification
Commercial	Pass		OLEM		Substandard		Doubtful		Total
Commercial and industrial	$	28,477	$	634	$	1,551	$	2	$	30,664
Commercial real estate	6,487		98		88		1		6,674

			Credit Risk Profile by FICO Score (1), (2)
Consumer			750+		650-749		<650		Total
Automobile			$	6,759	$	4,661	$	1,377	$	12,797
Home equity			5,763		2,772		557		9,092
Residential mortgage			7,976		2,742		578		11,296
RV and marine			2,391		1,053		119		3,563
Other consumer			546		571		120		1,237

(1)Excludes loans accounted for under the fair value option.

(2)Reflects updated customer credit scores.

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. Commercial collateral-dependent loans are generally secured by business assets and/or commercial real estate. Consumer collateral-dependent loans are primarily secured by residential real estate.

TDR Loans

TDRs are modified loans where a concession was provided to a borrower experiencing financial difficulties. Loan modifications are considered TDRs when the concessions provided would not otherwise be considered. However, not all loan modifications are TDRs. See Note 3 “Loans / Leases and Allowance for Credit Losses” to the Consolidated Financial Statements of the Annual Report on Form 10-K for the year ended December 31, 2019 for an additional discussion of TDRs.

On March 22, 2020 and April 7, 2020, the federal bank regulatory agencies including the FRB and OCC released statements encouraging financial institutions to work prudently with borrowers that may be unable to meet their contractual obligations because of the effects of COVID-19. The statements go on to explain that, in consultation with the FASB staff, the federal bank regulatory agencies concluded that short-term modifications (e.g. six months) made on a good faith basis to borrowers who were current as of the implementation date of a relief program are not TDRs. Section 4013 of the CARES Act further addresses COVID-19 related modifications and specifies that COVID-19 related modifications on loans that were current as of December 31, 2019 are not TDRs.

For COVID-19 related loan modifications which occurred from March 1, 2020 through September 30, 2020, and met the loan modification criteria under the CARES Act, Huntington elected to suspend TDR accounting for such loan modifications. For loan modifications not eligible for the CARES Act, Huntington applied the interagency regulatory guidance that was clarified on April 7, 2020. Accordingly, insignificant concessions (related to the current COVID-19 crisis) granted through payment deferrals, fee waivers, or other short-term modifications (generally 6 months or less) and provided to borrowers less than 30 days past due at March 17, 2020 were not deemed to be TDRs. Therefore, modified loans that met the required guidelines for relief are excluded from the TDR disclosures below.

The following table presents, by class and modification type, the number of contracts, post-modification outstanding balance, and the financial effects of the modification for the three-month and nine-month periods ended September 30, 2020 and 2019.


	New Troubled Debt Restructurings (1)
	Three Months Ended September 30, 2020
	Number of Contracts	Post-modification Outstanding Recorded Investment (2)
(dollar amounts in millions)		Interest rate reduction		Amortization or maturity date change		Chapter 7 bankruptcy		Other		Total
Commercial and industrial	39	$	—	$	28	$	—	$	—	$	28
Commercial real estate	2	—		—		—		—		—
Automobile	726	—		5		2		—		7
Home equity	90	—		2		3		1		6
Residential mortgage	242	—		40		2		—		42
RV and marine	30	—		1		—		—		1
Other consumer	122	1		—		—		—		1
Total new TDRs	1,251	$	1	$	76	$	7	$	1	$	85

	Three Months Ended September 30, 2019
	Number of Contracts	Post-modification Outstanding Recorded Investment (2)
(dollar amounts in millions)		Interest rate reduction		Amortization or maturity date change		Chapter 7 bankruptcy		Other		Total

Commercial and industrial	119	$	—	$	39	$	—	$	—	$	39
Commercial real estate	7	—		1		—		—		1
Automobile	833	—		5		2		—		7
Home equity	76	—		2		3		—		5
Residential mortgage	69	—		9		—		—		9
RV and marine	46	—		1		—		—		1
Other consumer	385	2		—		—		—		2
Total new TDRs	1,535	$	2	$	57	$	5	$	—	$	64



	New Troubled Debt Restructurings (1)
	Nine Months Ended September 30, 2020
	Number of Contracts	Post-modification Outstanding Recorded Investment (2)
(dollar amounts in millions)		Interest rate reduction		Amortization or maturity date change		Chapter 7 bankruptcy		Other		Total
Commercial and industrial	277	$	—	$	116	$	—	$	58	$	174
Commercial real estate	11	—		3		—		—		3
Automobile	2,582	—		26		5		—		31
Home equity	216	—		5		6		2		13
Residential mortgage	448	—		62		5		—		67
RV and marine finance	126	—		4		—		—		4
Other consumer	513	3		—		—		—		3
Total new TDRs	4,173	$	3	$	216	$	16	$	60	$	295

	Nine Months Ended September 30, 2019
	Number of Contracts	Post-modification Outstanding Recorded Investment (2)
(dollar amounts in millions)		Interest rate reduction		Amortization or maturity date change		Chapter 7 bankruptcy		Other		Total
Commercial and industrial	335	$	—	$	114	$	—	$	—	$	114
Commercial real estate	21	—		12		—		—		12
Automobile	2,227	—		14		6		—		20
Home equity	248	—		7		6		—		13
Residential mortgage	241	—		27		1		—		28
RV and marine finance	113	—		1		1		—		2
Other consumer	972	6		—		—		—		6
Total new TDRs	4,157	$	6	$	175	$	14	$	—	$	195

(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.

The financial effects of modification on the provision (recovery) for loan and lease losses for the three-month periods ended September 30, 2020 and 2019, were $1 million and $1 million respectively. For the nine-month periods ended September 30, 2020 and 2019, the financial effects of modification were $6 million and $(1) million, respectively.

Pledged Loans and Leases

The Bank has access to the Federal Reserve’s discount window and advances from the FHLB. As of September 30, 2020 and December 31, 2019, these borrowings and advances are secured by $43.4 billion and $39.6 billion, respectively, of loans.