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What changed in HUNTINGTON BANCSHARES INC /MD/'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of HUNTINGTON BANCSHARES INC /MD/'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+573 added−534 removedSource: 10-K (2024-02-16) vs 10-K (2023-02-17)

Top changes in HUNTINGTON BANCSHARES INC /MD/'s 2023 10-K

573 paragraphs added · 534 removed · 376 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

112 edited+63 added−57 removed73 unchanged
Biggest changeThe Community Plan builds on the goals of our previous community plans, with expanded commitments focusing on increasing lending and services to address economic, social, environmental, and racial equity areas of need as follows: • Huntington committed to providing $24 billion in affordable housing financing and consumer lending. • Huntington expanded its Small Business lending programs into its new footprint and committed $10 billion to the programs. • Huntington committed $6.5 billion in loans and investments to establish programs and services that foster equity in areas such as affordable housing, small business financing, and community services. • Embedded in the areas of need above is a $16 billion commitment for Diversity, Equity, and Inclusion initiatives, with allocation of funds to diverse borrowers and communities to advance systemic change.
Biggest changeOur Community Plan was developed to support communities by enabling and improving financial opportunities for people, businesses, and neighborhoods through commitments focusing on increasing lending, investing, and services to address economic, social, environmental, and racial equity areas of need as follows: • Huntington committed to providing $24 billion in affordable housing financing and consumer lending.
For risk-based capital requirements, Huntington, as a large BHC, is provided an SCB by the Federal Reserve that is determined annually based on the greater of (i) the difference between its starting and minimum projected CET1 Risk-Based Capital Ratio under the severely adverse scenario in the supervisory stress test, plus the sum of the dollar amount of Huntington’s planned common stock dividends for each of the fourth through seventh quarters of the planning horizon as a percentage of risk-weighted assets, or (ii) 2.5%.
SCB Requirements For risk-based capital requirements, Huntington, as a large BHC, is provided an SCB by the Federal Reserve that is determined annually based on the greater of (i) the difference between its starting and minimum projected CET1 Risk-Based Capital Ratio under the severely adverse scenario in the supervisory stress test, plus the sum of the dollar amount of Huntington’s planned common stock dividends for each of the fourth through seventh quarters of the planning horizon as a percentage of risk-weighted assets, or (ii) 2.5%.
Our business segments are based on our internally-aligned segment leadership structure, which is how we monitor results and assess performance. For each of our four business segments, we expect the combination of our business model, investment in products and capabilities, and exceptional service to provide a competitive advantage that supports revenue and earnings growth.
Business Segments Our business segments are based on our internally-aligned segment leadership structure, which is how we monitor results and assess performance. For each business segment, we expect the combination of our business model, investment in products and capabilities, and exceptional service to provide a competitive advantage that supports revenue and earnings growth.
As discussed in the Capital Planning section above, a BHC may pay dividends and repurchase stock only in accordance with a capital plan that has been reviewed by the Federal Reserve and as to which the Federal Reserve has not objected.
As discussed in the Capital Planning section above, in general, a BHC may pay dividends and repurchase stock only in accordance with a capital plan that has been reviewed by the Federal Reserve and as to which the Federal Reserve has not objected.
Please refer to the SCB Requirements section below for further details. 18 Huntington Bancshares Incorporated Table of Contents The Federal Reserve expects BHCs subject to CCAR, such as Huntington, to have sufficient capital to withstand a highly adverse operating environment and to be able to continue operations, maintain ready access to funding, meet obligations to creditors and counterparties, and serve as credit intermediaries.
Please refer to the SCB Requirements section below for further details. 14 Huntington Bancshares Incorporated Table of Contents The Federal Reserve expects BHCs subject to CCAR, such as Huntington, to have sufficient capital to withstand a highly adverse operating environment and to be able to continue operations, maintain ready access to funding, meet obligations to creditors and counterparties, and serve as credit intermediaries.
Additionally, the Federal Reserve could prohibit or limit the payment of dividends by a BHC if it determines that payment of the dividend would constitute an unsafe or unsound practice.
The Federal Reserve could prohibit or limit the payment of dividends by a BHC if it determines that payment of the dividend would constitute an unsafe or unsound practice.
On October 3, 2022, the Federal Reserve finalized a rule that amends Regulation II to, among other things, specify that debit card issuers should enable all debit card transactions, including card-not-present transactions such as online payments, to be processed on at least two unaffiliated payment card networks. The final rule becomes effective July 1, 2023.
On October 3, 2022, the Federal Reserve finalized a rule that amends Regulation II to, among other things, specify that debit card issuers should enable all debit card transactions, including card-not-present transactions such as online payments, to be processed on at least two unaffiliated payment card networks. The final rule became effective July 1, 2023.
While the Federal Reserve is no longer allowed to object to the capital plan of a large and non-complex BHC, such as Huntington, on a qualitative, as opposed to quantitative, basis, the Federal Reserve may evaluate the strength of Huntington’s qualitative capital planning process through the regular supervisory process and targeted horizontal reviews of particular aspects of capital planning.
Although the Federal Reserve is no longer allowed to object to the capital plan of a large and non-complex BHC, such as Huntington, on a qualitative, as opposed to quantitative, basis, the Federal Reserve may evaluate the strength of Huntington’s qualitative capital planning process through the regular supervisory process and targeted horizontal reviews of particular aspects of capital planning.
Federal law also makes it a criminal offense, except in limited circumstances, to obtain or attempt to obtain customer information of a financial nature by fraudulent or deceptive means. 22 Huntington Bancshares Incorporated Table of Contents Data privacy and data protection are areas of increasing state legislative focus.
Federal law also makes it a criminal offense, except in limited circumstances, to obtain or attempt to obtain customer information of a financial nature by fraudulent or deceptive means. 18 Huntington Bancshares Incorporated Table of Contents Data privacy and data protection are areas of increasing state legislative focus.
A key strategic emphasis has been for our business segments to operate in cooperation to provide products and services to our customers and to build stronger and more profitable relationships using our OCR sales and service process, which align to our vision to be the leading people-first, digitally powered bank.
A key strategic emphasis has been for our business segments to operate in cooperation to provide products and services to our customers and to build stronger and more profitable relationships using our OCR sales and service process, which aligns to our vision to be the leading people-first, digitally powered bank.
Please refer to the SCB Requirements section below for further details. The Bank is subject to a CCB of 2.5%.
Refer to the SCB Requirements section below for further details. The Bank is subject to a CCB of 2.5%.
The scope and content of compensation regulation in the financial industry are continuing to develop, and we expect that these regulations and resulting market practices will continue to evolve over a number of years. 2022 Form 10-K 23 Table of Contents The federal bank regulatory agencies have issued joint guidance on executive compensation designed to ensure that the incentive compensation policies of banking organizations, such as Huntington and the Bank, do not encourage imprudent risk taking and are consistent with the safety and soundness of the organization.
The scope and content of compensation regulation in the financial industry are continuing to develop, and we expect that these regulations and resulting market practices will continue to evolve over a number of years. 2023 Form 10-K 19 Table of Contents The federal bank regulatory agencies have issued joint guidance on executive compensation designed to ensure that the incentive compensation policies of banking organizations, such as Huntington and the Bank, do not encourage imprudent risk taking and are consistent with the safety and soundness of the organization.
If the Federal Reserve were to apply the same or a very similar well-capitalized standard to BHCs as that applicable to the Bank, Huntington’s capital ratios as of December 31, 2022, would exceed such revised well-capitalized standard.
If the Federal Reserve were to apply the same or a very similar well-capitalized standard to BHCs as that applicable to the Bank, Huntington’s capital ratios as of December 31, 2023, would exceed such revised well-capitalized standard.
In addition, provided that Huntington is otherwise in compliance with automatic restrictions on distributions under the Federal Reserve’s capital rules, Huntington will no longer be required to seek prior approval to make capital distributions in excess of those included in its capital plan. Restrictions on Dividends Huntington is a legal entity separate and distinct from its banking and non-banking subsidiaries.
Provided that Huntington is otherwise in compliance with automatic restrictions on distributions under the Federal Reserve’s capital rules, Huntington is no longer required to seek prior approval to make capital distributions in excess of those included in its capital plan. Restrictions on Dividends Huntington is a legal entity separate and distinct from its banking and non-banking subsidiaries.
Basel III capital rules, Huntington and the Bank must maintain the applicable capital buffer (SCB or CCB) requirements to avoid becoming subject to restrictions on capital distributions and certain discretionary bonus payments to management. Huntington is subject to a SCB of 3.3% effective for the period October 1, 2022 through September 30, 2023.
Basel III capital rules, Huntington and the Bank must maintain the applicable capital buffer (SCB or CCB) requirements to avoid becoming subject to restrictions on capital distributions and certain discretionary bonus payments to management. Huntington is subject to a SCB of 3.2% effective for the period October 1, 2023 through September 30, 2024.
The address of the site is http://www.sec.gov. The reports and other information, including any related amendments, filed by us with, or furnished by us to, the SEC are also available free of charge at our Internet web site as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC.
The reports and other information, including any related amendments, filed by us with, or furnished by us to, the SEC are also available free of charge at our Internet web site as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC. The address of the site is http://www.huntington.com.
We have highly engaged colleagues committed to looking out for each other and our customers with a balanced focus on “what we do” and “how we do it.” This synergy has proven to positively impact colleague performance and satisfaction. 2022 marked the ninth consecutive year we conducted a company-wide engagement survey to measure our colleagues’ experience with a strategic focus on culture, trust, and engagement – and the results were reaffirming.
We have highly engaged colleagues committed to looking out for each other and our customers with a balanced focus on “what we do” and “how we do it.” This synergy has proven to positively impact colleague performance and satisfaction. 2023 marked the tenth consecutive year we conducted a company-wide engagement survey to measure our colleagues’ experience with a strategic focus on culture, trust, and engagement – and the results were reaffirming.
The Tier 1 Leverage Ratio is not impacted by the SCB or CCB, and a banking institution may be considered well-capitalized while remaining out of compliance with the SCB or CCB. 2022 Form 10-K 17 Table of Contents The following table presents the minimum regulatory capital ratios, minimum ratio plus the capital buffer, and well-capitalized minimums compared with Huntington’s and the Bank’s regulatory capital ratios as of December 31, 2022, calculated using the regulatory capital methodology applicable as of the end of 2022.
The Tier 1 Leverage Ratio is not impacted by the SCB or CCB, and a banking institution may be considered well-capitalized while remaining out of compliance with the SCB or CCB. 2023 Form 10-K 13 Table of Contents The following table presents the minimum regulatory capital ratios, minimum ratio plus the capital buffer, and well-capitalized minimums compared with Huntington’s and the Bank’s regulatory capital ratios as of December 31, 2023, calculated using the regulatory capital methodology applicable as of the end of 2023.
We value the feedback colleagues choose to share and use the information to drive our talent management strategy, which focuses on four key areas and a commitment to diversity, equity, and inclusion: • Engagement • Development • Retention, and • Attraction of top talent 2022 Form 10-K 11 Table of Contents Engagement At Huntington, we have taken steps to ensure our values, beliefs, and behaviors align with those of our colleagues.
We value the feedback colleagues choose to share and use the information to drive our talent management strategy, which focuses on four key areas and a commitment to diversity, equity, and inclusion: • Engagement • Development • Retention, and • Attraction of top talent 2023 Form 10-K 23 Table of Contents Engagement At Huntington, we have taken steps to ensure our values, beliefs, and behaviors align with those of our colleagues.
As discussed in the “ Risk Management and Capital ” section of the MD&A, the Bank currently has a written governance framework and associated controls. 2022 Form 10-K 21 Table of Contents Anti-Money Laundering The Bank Secrecy Act and the Patriot Act contain anti-money laundering and financial transparency provisions intended to detect and prevent the use of the U.S. financial system for money laundering and terrorist financing activities.
As discussed in the “ Risk Management and Capital ” section of the MD&A, the Bank currently has a written governance framework and associated controls. 2023 Form 10-K 17 Table of Contents Anti-Money Laundering The Bank Secrecy Act and the Patriot Act contain anti-money laundering and financial transparency provisions intended to detect and prevent the use of the U.S. financial system for money laundering and terrorist financing activities.
Supervision, Examination and Enforcement A principal objective of the U.S. bank regulatory regime is to protect depositors and customers, the DIF, the U.S. banking and financial system, and financial markets as a whole by ensuring the financial safety and soundness of BHCs and banks, including Huntington and the Bank. Bank regulators regularly examine the operations of BHCs and banks.
A principal objective of the U.S. bank regulatory regime is to protect depositors and customers, the DIF, the U.S. banking and financial system, and financial markets as a whole by ensuring the financial safety and soundness of BHCs and banks, including Huntington and the Bank. Bank regulators regularly examine the operations of BHCs and banks.
In addition, effective April 1, 2022, the Federal Reserve, OCC and FDIC issued a rule that, among other things, requires a banking organization to notify its primary federal regulators within 36 hours after identifying a “computer-security incident” that the banking organization believes in good faith could materially disrupt, degrade or impair its business or operations in a manner that would, among other things, jeopardize the viability of its operations, result in customers being unable to access their deposit and other accounts, result in a material loss of revenue, profit or franchise value, or pose a threat to the financial stability of the United States.
In addition, effective April 1, 2022, the Federal Reserve, OCC and FDIC issued a rule that, among other things, requires a banking organization to notify its primary federal regulator within 36 hours after identifying a “computer-security incident” that the banking organization believes in good faith could materially disrupt, degrade or impair its business or operations in a manner that would, among other things, jeopardize the viability of its operations, result in customers being unable to access their deposit and other accounts, result in a material loss of revenue, profit or franchise value, or pose a threat to the financial stability of the U.S.
Huntington may increase its capital distributions in excess of the amount included in their capital plan without seeking prior approval from the Federal Reserve as long as it otherwise complies with the automatic restrictions on distributions under the Federal Reserve’s capital rules.
Huntington may increase certain types of capital distributions in excess of the amount included in its capital plan without seeking prior approval from the Federal Reserve as long as it otherwise complies with the automatic restrictions on distributions under the Federal Reserve’s capital rules.
We proactively seek out a diverse candidate pool during the recruitment process across all levels. We are focused on identifying, supporting, and promoting qualified diverse candidates in leadership roles. As of December 31, 2022, our combined middle, senior, and executive management levels were 47% diverse and our total workforce was 67% diverse.
We proactively seek out a diverse candidate pool during the recruitment process across all levels. We are focused on identifying, supporting, and promoting qualified diverse candidates in leadership roles. As of December 31, 2023, our combined middle, senior, and executive management levels were 48% diverse and our total workforce was 67% diverse.
Our Board members approve the strategy, risk appetite, and ethical standards for the entire organization, and our ELT ensures our business and enterprise functions operate with high legal, ethical, and moral standards through clearly stated policies and procedures.
Our Board sets the strategy, risk appetite, and ethical standards for the entire organization, and our ELT ensures our business and enterprise functions operate with high legal, ethical, and moral standards through clearly stated policies and procedures.
As of December 31, 2022, we have phased in 25% of the cumulative CECL deferral with the remaining impact to be recognized through the first quarter 2025. The total minimum regulatory capital ratios and well-capitalized minimum ratios are reflected in the table below in this section.
As of December 31, 2023, we have phased in 50% of the cumulative CECL deferral with the remaining impact to be recognized through the first quarter 2025. The total minimum regulatory capital ratios and well-capitalized minimum ratios are reflected in the table below in this section.
The program includes practices that enable colleagues multiple paths to achieving balance, including: flexible scheduling (staggered hours, compressed workweeks, part-time schedules, and job-sharing), flexible work location (remote, hybrid, and on-site), and both health and financial wellness support beyond the typical medical/visual/dental programs (adoption and fertility, parental leave, on-site fitness and fitness discounts, mental health and financial counseling services, support for chronic conditions).
The program includes certain practices that enable colleagues multiple paths to achieving balance, when available and appropriate, including: flexible scheduling (staggered hours, compressed workweeks, part-time schedules, and job-sharing), flexible work location (remote, hybrid, and on-site), and both health and financial wellness support beyond the basic medical/visual/dental programs (adoption and fertility, parental leave, on-site fitness and fitness discounts, mental health and financial counseling services, support for chronic conditions).
Collectively, these practices position colleagues to be their best self both at work and outside of work. Huntington’s commitment to pay equity is unwavering to ensure that gender, race, and ethnicity are not determining factors in salaries, bonuses, and stock-based awards.
Collectively, these practices are designed to position colleagues to be their best self both at work and outside of work. Huntington’s commitment to pay equity works to ensure that gender, race, and ethnicity are not determining factors in salaries, bonuses, and stock-based awards.
Additionally, our leaders set the tone at the top and oversee compliance with our standards and direct the company’s financial reporting and internal controls. At the end of 2022, our Board consisted of 15 directors, comprised of our Chairman/President/CEO as well as our Huntington National Bank Chairman, and 13 independent directors.
Additionally, our leaders set the tone at the top and oversee compliance with our standards and direct the company’s financial reporting and internal controls. At the end of 2023, our Board consisted of 15 directors, comprised of our Chairman/President/CEO, our Huntington National Bank Chairman, and 13 independent directors.
As of December 31, 2022, our 1,032 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.
As of December 31, 2023, our 999 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.
Huntington is subject to the Federal Reserve’s LFI Rating System, to align its supervisory rating system, which places a greater emphasis on capital and liquidity, including related planning and risk management practices as compared to the supervisory rating system applicable to smaller BHCs. These ratings will remain confidential.
Huntington is subject to the Federal Reserve’s LFI Rating System, which places a greater emphasis on capital and liquidity, including related planning and risk management practices, as compared to the supervisory rating system applicable to smaller BHCs. These ratings are confidential.
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.
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. 12 Huntington Bancshares Incorporated Table of Contents Under the U.S.
Item 1: Business We are a multi-state diversified regional bank holding company organized under Maryland law in 1966 and headquartered in Columbus, Ohio. Through the Bank, we are committed to making people’s lives better, helping businesses thrive, and strengthening the communities we serve and have over 150 years of servicing the financial needs of our customers.
Item 1: Business General Business Description We are a multi-state diversified regional bank holding company organized under Maryland law in 1966 and headquartered in Columbus, Ohio. Through the Bank, we are committed to making people’s lives better, helping businesses thrive, and strengthening the communities we serve, and we have been servicing the financial needs of our customers since 1866.
We continue to identify and implement effective practices to promote pay equity, including pay analyses, additional hiring practices that protect pay equity, and training managers on explicit and implicit bias in compensation and promotion decisions. Huntington seeks to maintain approximately 100% pay equity.
We continue to identify and implement effective practices to promote pay equity, including pay analyses, additional hiring practices that protect pay equity, and training managers on explicit and implicit bias in compensation and promotion decisions.
Liquidity Requirements Under the Capital and Liquidity Tailoring Rule, Huntington, as a Category IV banking organization with less than $50 billion in weighted short-term wholesale funding, is exempt from the LCR and net stable funding ratio requirements but will continue to be subject to internal liquidity stress tests and standards.
Liquidity Requirements Huntington, as a Category IV banking organization with less than $50 billion in weighted short-term wholesale funding, is exempt from the LCR and net stable funding ratio requirements but continues to be subject to internal liquidity stress tests and standards.
The regulators have the power to, among other things, prohibit unsafe or unsound practices, require affirmative actions to correct any violation or practice, issue administrative orders that can be judicially enforced, direct increases in capital, direct the sale of subsidiaries or other assets, limit dividends and distributions, restrict growth, assess civil monetary penalties, remove officers and directors, and terminate deposit insurance.
The regulators have the power to, among other things, (1) prohibit unsafe or unsound practices, (2) require affirmative actions to correct any violation or practice, (3) issue administrative orders that can be judicially enforced, (4) direct increases in capital, (5) direct the sale of subsidiaries or other assets, (6) limit dividends and distributions, (7) restrict growth, (8) assess civil monetary penalties, (9) remove officers and directors, and (10) terminate deposit insurance.
For the purpose of reporting the aforementioned data, we acknowledge diverse individuals as those who are identified as women, or as being racially/ethnically diverse. Our commitment to creating an inclusive, diverse environment through embracing different skills, backgrounds, and perspectives, both in our communities and at work is demonstrated through our DEI Strategy and Operating Plan.
For the purpose of reporting the aforementioned data, we acknowledge diverse individuals as those who are identified as women, or as being racially/ethnically diverse. Our commitment to creating an inclusive, diverse environment involves embracing different skills, backgrounds, and perspectives, both in our communities and at work.
Through our subsidiaries, we provide full-service commercial and consumer deposit, lending, and other banking services. This includes, but not limited to, payments, mortgage banking, automobile, recreational vehicle and marine financing, investment banking, capital markets, advisory, equipment financing, distribution finance (formerly referred to as inventory finance), investment management, trust, brokerage, insurance and other financial products and services.
Through our subsidiaries, we provide full-service commercial and consumer deposit, lending, and other banking services. These include, but are not limited to, payments, mortgage banking, automobile, recreational vehicle and marine financing, investment banking, capital markets, advisory, equipment financing, distribution finance, investment management, trust, brokerage, insurance, and other financial products and services.
We also consider the competitive pricing pressures in each of our markets. 2022 Form 10-K 13 Table of Contents We compete for deposits similarly on the basis of value and service and by providing convenience through a banking network of branches and ATMs within our markets and our website at www.huntington.com.
We also consider the competitive pricing levels in each of our markets. We compete for deposits similarly on the basis of value and service and by providing convenience through a banking network of branches and ATMs within our markets and our website at www.huntington.com.
Interstate Banking Under the Riegle-Neal Act, a BHC may acquire banks in states other than its home state, subject to any state requirement that the bank has been organized and operating for a minimum period of time, not to exceed five years, and the requirement that the BHC not control, prior to or following the proposed acquisition, more than 10% of the total amount of deposits of insured depository institutions nationwide or, unless the acquisition is the BHC’s initial entry into the state, more than 30% of such deposits in the state (or such lesser or greater amount set by the state).
Investors should be aware of these requirements when acquiring shares in our stock. 2023 Form 10-K 11 Table of Contents Interstate Banking Under the Riegle-Neal Act, a BHC may acquire banks in states other than its home state, subject to any state requirement that the bank has been organized and operating for a minimum period of time, not to exceed five years, and the requirement that the BHC not control, prior to or following the proposed acquisition, more than 10% of the total amount of deposits of insured depository institutions nationwide or, unless the acquisition is the BHC’s initial entry into the state, more than 30% of such deposits in the state (or such lesser or greater amount set by the state).
Under the Change in Bank Control Act, a person or entity generally must provide prior notice to the Federal Reserve before acquiring the power to vote 10% or more of our outstanding common stock. Investors should be aware of these requirements when acquiring shares in our stock.
Under the Change in Bank Control Act, a person or entity generally must provide prior notice to the Federal Reserve before acquiring the power to vote 10% or more of our outstanding common stock.
The Volcker Rule regulations impose significant compliance and reporting obligations on banking entities, such as Huntington. We have put in place the compliance programs required by the Volcker Rule and have either divested or received extensions for any holdings in illiquid covered funds.
The Volcker Rule regulations impose significant compliance and reporting obligations on banking entities, such as Huntington. We have put in place the compliance programs required by the Volcker Rule and any holdings in illiquid covered funds are in compliance with the Volcker Rule.
You also should be able to inspect reports, proxy statements, and other information about us at the offices of the Nasdaq National Market at 33 Whitehall Street, New York, New York 10004. 2022 Form 10-K 25 Table of Contents
You also should be able to inspect reports, proxy statements, and other information about us at the offices of the Nasdaq National Market at 33 Whitehall Street, New York, New York 10004. 26 Huntington Bancshares Incorporated Table of Contents
Collectively, these strategies create a colleague experience that entices colleagues to stay and fulfill their goals with Huntington. 12 Huntington Bancshares Incorporated Table of Contents Attraction of top talent We are dedicated to attracting top talent with an emphasis on experience and behaviors that align with our Purpose and our core values of ‘Can Do Attitude, Forward Thinking, and Service Heart.’ The diversity of our colleagues is a key component of our success as an organization as it allows us to have a workforce that is representative of the communities we serve and is critical to our sustained success and growth.
Attraction of top talent We are dedicated to attracting top talent with an emphasis on experience and behaviors that align with our Purpose and our core values of ‘Can Do Attitude, Forward Thinking, and Service Heart.’ The diversity of our colleagues is a key component of our success as an organization as it allows us to have a workforce that is representative of the communities we serve and is critical to our sustained success and growth.
The address of the site is http://www.huntington.com. Except as specifically incorporated by reference into this Annual Report on Form 10-K, information on those web sites is not part of this report.
Except as specifically incorporated by reference into this Annual Report on Form 10-K, information on those web sites is not part of this report.
Minimum Regulatory Capital Ratio Minimum Ratio + Capital Buffer (1) Well-Capitalized Minimums (2) At December 31, 2022 Actual Ratios: CET1 risk-based capital ratio Consolidated 4.50 % 7.80 % N/A 9.36 % Bank 4.50 7.00 6.50 % 9.98 Tier 1 risk-based capital ratio Consolidated 6.00 9.30 6.00 10.90 Bank 6.00 8.50 8.00 10.83 Total risk-based capital ratio Consolidated 8.00 11.30 10.00 13.09 Bank 8.00 10.50 10.00 12.47 Tier 1 leverage ratio Consolidated 4.00 N/A N/A 8.60 Bank 4.00 N/A 5.00 8.54 (1) Reflects a SCB of 3.3% for Huntington and CCB of 2.5% for the Bank.
Minimum Regulatory Capital Ratio Minimum Ratio + Capital Buffer (1) Well-Capitalized Minimums (2) At December 31, 2023 Actual Ratios: CET1 risk-based capital ratio Consolidated 4.50 % 7.70 % N/A 10.25 % Bank 4.50 7.00 6.50 % 10.60 Tier 1 risk-based capital ratio Consolidated 6.00 9.20 6.00 11.98 Bank 6.00 8.50 8.00 11.47 Total risk-based capital ratio Consolidated 8.00 11.20 10.00 14.17 Bank 8.00 10.50 10.00 13.09 Tier 1 leverage ratio Consolidated 4.00 N/A N/A 9.32 Bank 4.00 N/A 5.00 8.51 (1) Reflects a SCB of 3.2% for Huntington and CCB of 2.5% for the Bank.
Under the stress buffer requirements final rule adopted in 2020, the CCAR process is used to determine a BHC’s SCB requirement.
Under the stress buffer requirements, the CCAR process is used to determine a BHC’s SCB requirement.
These measures fall under our approach of “Fair Play Banking.” The table below shows our competitive ranking and market share based on deposits of FDIC-insured institutions as of June 30, 2022, in the top 10 MSAs in which we compete: MSA Rank Deposits (in millions) Market Share Columbus, OH 1 $ 36,779 37 % Detroit, MI 4 17,394 9 Cleveland, OH 2 14,486 12 Chicago, IL 12 9,112 2 Minneapolis-St.
These measures fall under our approach of “Fair Play Banking.” The table below shows our competitive ranking and market share based on deposits of FDIC-insured institutions as of June 30, 2023, in the top 10 MSAs in which we compete: MSA Rank Deposits (in millions) Market Share Columbus, OH 1 $ 41,638 40 % Detroit, MI 4 16,844 9 Cleveland, OH 2 14,254 11 Chicago, IL 11 9,149 2 Minneapolis-St.
Under the Tailoring Rules, Huntington and the Bank each qualify as a Category IV banking organization subject to the least restrictive of the requirements applicable to firms with $100 billion or more in total consolidated assets. Our business, however, remains subject to extensive regulation and supervision.
Huntington and the Bank each qualify as a Category IV banking organization subject to the least restrictive of the requirements applicable to firms with $100 billion or more in total consolidated assets.
The Bank as a National Bank The Bank is a national banking association chartered under the laws of the United States. As a national bank, the activities of the Bank are limited to those specifically authorized under the National Bank Act and OCC regulations. The Bank is subject to comprehensive primary supervision, regulation, and examination by the OCC.
As a national bank, the activities of the Bank are limited to those specifically authorized under the National Bank Act and OCC regulations. The Bank is subject to comprehensive primary supervision, regulation, and examination by the OCC. As a member of the DIF, the Bank is also subject to regulation and examination by the FDIC.
In addition, BHCs and banks are subject to periodic reporting and filing requirements. 2022 Form 10-K 15 Table of Contents The Federal Reserve, OCC, and FDIC have broad supervisory and enforcement authority with regard to BHCs and banks, including the power to conduct examinations and investigations, impose nonpublic supervisory agreements, issue cease and desist orders, impose fines and other civil and criminal penalties, terminate deposit insurance, and appoint a conservator or receiver.
The Federal Reserve, OCC, and FDIC have broad supervisory and enforcement authority with regard to BHCs and banks, including the power to conduct examinations and investigations, impose nonpublic supervisory agreements, issue cease and desist orders, impose fines and other civil and criminal penalties, terminate deposit insurance, and appoint a conservator or receiver.
We align our corporate strategy to our purpose of helping others and building upon our market-leading, purpose-driven bank through focused efforts on the environmental, social and governance issues most important to our business and our stakeholders. 10 Huntington Bancshares Incorporated Table of Contents Following the acquisition of TCF, in June 2021, we committed $40 billion toward a Community Plan to strengthen small businesses and foster economic justice through our footprint over the next five years.
We align our corporate strategy to our purpose of helping others and building upon our market-leading, purpose-driven bank through focused efforts on the environmental and social issues most important to our business and our stakeholders. In June 2021, we made a five-year $40 billion commitment toward our Community Plan to strengthen small businesses and foster economic justice throughout our footprint.
Furthermore, the U.S. banking agencies may issue additional rules to tailor the application of certain other regulatory requirements to BHCs and banks, including Huntington and the Bank.
Our business, however, remains subject to extensive regulation and supervision, and the U.S. banking agencies may issue additional rules to tailor the application of certain other regulatory requirements to BHCs and banks, including Huntington and the Bank.
No assurances can be given that the Bank will, in any circumstances, pay dividends to Huntington. 2022 Form 10-K 19 Table of Contents Huntington’s ability to declare and pay dividends to our shareholders is similarly limited by federal banking law and Federal Reserve regulations and policy.
Certain contractual restrictions also may limit the ability of the Bank to pay dividends to Huntington. No assurances can be given that the Bank will, in any circumstances, pay dividends to Huntington. Huntington’s ability to declare and pay dividends to our shareholders is similarly limited by federal banking law and Federal Reserve regulations and policy.
As a result, Huntington is subject to more stringent standards, including liquidity and capital requirements, leverage limits, stress testing, resolution planning, and risk management standards, than those applicable to smaller institutions. Certain larger banking organizations are subject to additional enhanced prudential standards.
Enhanced Prudential Standards BHCs with consolidated assets of more than $100 billion, such as Huntington, are currently subject to certain enhanced prudential standards. As a result, Huntington is subject to more stringent standards, including liquidity and capital requirements, leverage limits, stress testing, resolution planning, and risk management standards, than those applicable to smaller institutions.
Huntington and the Bank must maintain the applicable capital buffer requirements to avoid becoming subject to restrictions on capital distributions, including dividends. For more information on the capital buffer requirements, see the SCB Requirements and the Regulatory Capital Requirements sections above.
Huntington and the Bank must maintain the applicable capital buffer requirements to avoid becoming subject to restrictions on capital distributions, including dividends.
The FDIC may increase the Bank’s insurance premiums based on various factors, including the FDIC’s assessment of its risk profile. The FDIC also requires large insured depository institutions, including the Bank, to maintain enhanced deposit account recordkeeping and related information technology system capabilities to facilitate prompt payment of insured deposits if such an institution were to fail.
The FDIC also requires large insured depository institutions, including the Bank, to maintain enhanced deposit account recordkeeping and related information technology system capabilities to facilitate prompt payment of insured deposits if such an institution were to fail.
These programs include an online library which allows colleagues to take ownership of their development via direct access to role-based content. The content is divided into three key areas of development: learning and growth, maximizing performance, and protecting the company. All of the programming offered includes diversity, equity, and inclusion content.
Development We have created specialized programs to help our colleagues grow and develop. These programs include an online library which allows colleagues to take ownership of their development via direct access to role-based content. The content is divided into three key areas of development: learning and growth, maximizing performance, and protecting the company.
The following discussion describes certain elements of the comprehensive regulatory framework applicable to us. This discussion is not intended to describe all laws and regulations applicable to Huntington, the Bank, and Huntington’s other subsidiaries.
The following discussion describes certain elements of the comprehensive regulatory framework applicable to us. This discussion is not intended to describe all laws and regulations applicable to Huntington, the Bank, and Huntington’s other subsidiaries. Supervision, Examination and Enforcement Huntington is a BHC under the BHC Act that has elected to be a FHC.
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.
Regulatory Capital Requirements 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 U.S., as well as certain provisions of the Dodd-Frank Act.
We believe that building connections between colleagues, their families and our communities create a meaningful, fulfilling, and enjoyable colleague experience. During 2022, Huntington colleagues provided over 35,000 volunteer hours to over 1,300 organizations across our footprint, including foodbanks, homeless shelters, local schools, senior housing, and afterschool programs. Development We have created specialized programs to help our colleagues grow and develop.
At Huntington, living our shared Purpose extends beyond our daily work. We believe that building connections between colleagues, their families and our communities create a meaningful, fulfilling, and enjoyable colleague experience. During 2023, Huntington colleagues provided almost 36,000 volunteer hours to over 1,300 organizations across our footprint, including foodbanks, homeless shelters, local schools, senior housing, and afterschool programs.
We believe that our diverse workforce, supported by a culture of inclusiveness, enriches the experience of colleagues, and enhances our ability to perform as a company. We engage with our colleagues to gain valuable feedback on a wide range of subjects related to the experience of working at Huntington, with a strategic focus on culture, trust, and engagement.
We engage with our colleagues to gain valuable feedback on a wide range of subjects related to the experience of working at Huntington, with a strategic focus on culture, trust, and engagement.
Debit Interchange Fees We are subject to a statutory requirement that interchange fees for electronic debit transactions that are paid to or charged by payment card issuers, including the Bank, be reasonable and proportional to the cost incurred by the issuer.
Reporting of the collected data will not be required until 2027. 20 Huntington Bancshares Incorporated Table of Contents Debit Interchange Fees We are subject to a statutory requirement that interchange fees for electronic debit transactions that are paid to or charged by payment card issuers, including the Bank, be reasonable and proportional to the cost incurred by the issuer.
Resolution Planning As a Category IV banking organization, Huntington is not required to submit a resolution plan to the Federal Reserve. As an insured depository institution, the Bank is required by FDIC regulation to file a resolution plan on a triennial basis.
Resolution Planning As a Category IV banking organization, Huntington is not required to submit a resolution plan to the Federal Reserve. As an insured depository institution, the Bank is required to file a resolution plan with the FDIC, and the Bank submitted its most recent resolution plan to the FDIC on November 30, 2022.
Depositor Preference The FDIA provides that, in the event of the liquidation or other resolution of an insured depository institution, including the Bank, the claims of depositors of the institution (including the claims of the FDIC as subrogee of insured depositors) and certain claims for administrative expenses of the FDIC as a receiver would have priority over other general unsecured claims against the institution.
Acting as a conservator or receiver, the FDIC would have broad powers to transfer any assets or liabilities of the institution without the approval of the institution’s creditors. 16 Huntington Bancshares Incorporated Table of Contents Depositor Preference The FDIA provides that, in the event of the liquidation or other resolution of an insured depository institution, including the Bank, the claims of depositors of the institution (including the claims of the FDIC as subrogee of insured depositors) and certain claims for administrative expenses of the FDIC as a receiver would have priority over other general unsecured claims against the institution.
As discussed in the Regulatory Environment section above, under the EPS Tailoring Rule, Huntington, as a Category IV banking organization, is subject to the least restrictive enhanced prudential standards applicable to firms with $100 billion or more in total consolidated assets.
Certain larger banking organizations are subject to additional enhanced prudential standards. As a Category IV banking organization, Huntington is subject to the least restrictive enhanced prudential standards applicable to firms with $100 billion or more in total consolidated assets.
FDIC Insurance The DIF provides insurance coverage for certain deposits, up to a standard maximum deposit insurance amount of $250,000 per depositor and is funded through assessments on insured depository institutions, based on the risk each institution poses to the DIF. The Bank accepts customer deposits that are insured by the DIF and, therefore, must pay insurance premiums.
Similar state laws may impose additional requirements on us and our subsidiaries. FDIC Insurance The DIF provides insurance coverage for certain deposits, up to a standard maximum deposit insurance amount of $250,000 per depositor, and is funded through assessments on insured depository institutions, based on the risk each institution poses to the DIF.
The following represents how ESG is governed and integrated throughout the Company: Board Nominating and ESG Committee Board Risk Oversight Committee Executive Leadership Team Chief ESG Officer Risk Management Committee ESG Strategy Team ESG Enterprise Working Group Climate Risk Management Team ESG Strategy Team The ESG Strategy Team, led by our Chief ESG Officer, is responsible for advancing the ESG strategy and facilitating implementation of the strategy at the segment- and business unit-level; ensuring consistent understanding of ESG strategy throughout the Company; and assisting with ESG goal setting, reporting, and monitoring.
The following represents how ESG is governed and integrated throughout the Company: Board Nominating and ESG Committee Board Risk Oversight Committee Executive Leadership Team Chief ESG Officer Climate Risk Director Chief ESG Officer and Strategy Team Our Chief ESG Officer leads an ESG Strategy Team, responsible for (1) advancing enterprise ESG strategy and facilitating implementation of the strategy at the business levels; (2) ensuring consistent understanding of ESG strategy throughout the Company; (3) leading ESG regulatory compliance efforts; and (4) overseeing ESG goal setting, reporting, and monitoring.
Use of such data is regulated under the FCRA, and the FCRA also regulates reporting information to credit bureaus, prescreening individuals for credit offers, sharing of information between affiliates, and using affiliate data for marketing purposes. Similar state laws may impose additional requirements on us and our subsidiaries.
Like other lenders, the Bank and other of our subsidiaries use credit bureau data in their underwriting activities. Use of such data is regulated under the FCRA, and the FCRA also regulates reporting information to credit bureaus, prescreening individuals for credit offers, sharing of information between affiliates, and using affiliate data for marketing purposes.
Business Banking is defined as serving companies with annual revenues up to $20 million. Beyond conventional lending solutions, Huntington offers access to capital markets, treasury management, practice finance and SBA lending capabilities. We are the #1 SBA lender in the nation in units as of federal fiscal year end September 30, 2022.
Regional Banking is defined as serving small to mid-sized businesses. Beyond conventional lending solutions, Huntington offers access to capital markets, practice finance, and SBA lending capabilities. We are the #1 SBA lender in the nation by loan volume as of federal fiscal year end September 30, 2023.
Our expertise in these markets allows us to uniquely serve our clients’ sophisticated banking, capital markets, and payments requirements. Asset Finance serves our clients’ capital expenditure and working capital needs through equipment financing, asset-based lending, distribution finance, structured lending, and municipal financing solutions. Our relationship with large manufacturers is bolstered by a strong commitment to their dealers and financing needs.
Asset Finance serves our clients’ capital expenditure and working capital needs through equipment financing, asset-based lending, distribution finance, structured lending, and municipal financing solutions. Our relationship with large manufacturers is bolstered by a strong commitment to their dealers and financing needs. Commercial Real Estate Banking provides banking solutions to commercial real estate developers and institutional sponsors across the nation.
Huntington is subject to primary supervision, regulation, and examination by the Federal Reserve, which serves as the primary regulator of our consolidated organization. The primary regulators of our non-bank subsidiaries directly regulate the activities of those subsidiaries, with the Federal Reserve exercising a supervisory role. Such non-bank subsidiaries include, for example, broker-dealers and investment advisers both registered with the SEC.
The primary regulators of our non-bank subsidiaries directly regulate the activities of those subsidiaries, with the Federal Reserve exercising a supervisory role. Such non-bank subsidiaries include, for example, broker-dealers and investment advisers both registered with the SEC. The Bank is a national banking association chartered under the laws of the U.S.
The objectives of OCR are to: • Use a consultative and advisory sales approach to provide solutions that are specific to each customer. • Leverage each business segment in terms of its products and expertise to benefit customers. • Develop prospects who may want to have multiple products and services as part of their relationship with us. 2022 Form 10-K 7 Table of Contents Following is a description of our four business segments and the Treasury / Other function: • Commercial Banking: The Commercial Banking segment provides expertise through bankers, capabilities, and digital channels, and includes a comprehensive set of product offerings.
The objectives of OCR are to: • Use a consultative and advisory sales approach to provide solutions that are specific to each customer; • Leverage each business segment in terms of its products and expertise to benefit customers; and • Develop prospects who may want to have multiple products and services as part of their relationship with us.
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.
Our target clients span from mid-market to large corporates across a national footprint. The Commercial Banking segment leverages internal partnerships for wealth management, trust, insurance, payments, and treasury management capabilities. In particular, our payments capabilities continue to expand as we develop unique solutions for our diverse client segments, including Huntington ChoicePay.
Cybersecurity The GLBA requires financial institutions to implement a comprehensive information security program that includes administrative, technical, and physical safeguards to ensure the security and confidentiality of customer records and information.
Cybersecurity The GLBA requires financial institutions to implement a comprehensive information security program that includes administrative, technical, and physical safeguards to ensure the security and confidentiality of customer records and information. The CISA is intended to improve cybersecurity in the U.S. by enhanced sharing of information about security threats among the U.S. government and private sector entities, including financial institutions.
In addition to laws and regulations, state and federal bank regulatory agencies may issue policy statements, interpretive letters, and similar written guidance applicable to Huntington and its subsidiaries. Any change in the statutes, regulations, or regulatory policies applicable to us, including changes in their interpretation or implementation, could have a material effect on our business or organization.
Any change in the statutes, regulations, or regulatory policies applicable to us, including changes in their interpretation or implementation, could have a material effect on our business or organization.
In the event of Huntington’s bankruptcy, any commitment by Huntington to a federal bank regulatory agency to maintain the capital of the Bank would be assumed by the bankruptcy trustee and entitled to a priority of payment. 20 Huntington Bancshares Incorporated Table of Contents FDIC as Receiver or Conservator of Huntington Upon the insolvency of an insured depository institution, such as the Bank, the FDIC may be appointed as the conservator or receiver of the institution.
In the event of Huntington’s bankruptcy, any commitment by Huntington to a federal bank regulatory agency to maintain the capital of the Bank would be assumed by the bankruptcy trustee and entitled to a priority of payment.
Many of our nonfinancial institution competitors have fewer regulatory constraints, broader geographic service areas, greater capital, and, in some cases, lower cost structures. In addition, competition for quality customers has intensified as a result of changes in regulation, advances in technology and product delivery systems, and consolidation among financial service providers. FinTechs continue to emerge in key areas of banking.
In addition, competition for quality customers has intensified as a result of changes in regulation, advances in technology and product delivery systems, and consolidation among financial service providers. FinTechs continue to emerge in key areas of banking. In addition, larger established technology platform companies continue to evaluate, and in some cases, create businesses focused on banking products.
This plan encompasses four focus areas, workplace inclusion, workforce diversity, community engagement, and supplier diversity. We execute this strategy and operating plan in multiple ways. Our Chief Diversity, Equity, Inclusion and Culture Officer ensures Diversity, Equity, and Inclusion perspectives are an integral part of executive decisions made at Huntington.
Our DEI Strategy and Operating Plan encompasses four focus areas, workplace inclusion, workforce diversity, community engagement, and supplier diversity. We execute this strategy and operating plan in multiple ways.
The Bank received the highest possible overall CRA rating of “Outstanding” in its most recent examination. In June 2022, the Federal Reserve, FDIC, and OCC issued a joint proposal to amend their regulations implementing the CRA.
The Bank received the highest possible overall CRA rating of “Outstanding” in its most recent examination. In October 2023, the U.S. banking agencies issued a final rule to amend their regulations implementing the CRA.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeA successful penetration or circumvention of system security could cause us serious negative consequences, including our loss of customers and business opportunities, costs associated with maintaining business relationships after an attack or breach; significant business disruption to our operations and business, misappropriation, exposure, or destruction of our confidential information, intellectual property, funds, and/or those of our customers; or damage to our or our customers’ and/or third parties’ computers or systems, and could result in a violation of applicable privacy laws and other laws, litigation exposure, regulatory fines, penalties or intervention, loss of confidence in our security measures, reputational damage, reimbursement or other compensatory costs, additional compliance costs, and could adversely impact our results of operations, liquidity and financial condition.
Biggest changeA successful penetration or circumvention of system security could cause us serious negative consequences, including: loss of customers and business opportunities; costs associated with maintaining business relationships after an attack or breach; significant business disruption to our operations and business, misappropriation, exposure, or destruction of our confidential information, intellectual property, funds, and/or those of our customers; or damage to our or our customers’ and/or third parties’ computers or systems.
These conditions could result in one or more of the following: • A decrease in the demand for loans and other products and services offered by us; • A decrease in customer savings generally and in the demand for savings and investment products offered by us; and • An increase in the number of customers and counterparties who become delinquent, file for protection under bankruptcy laws, or default on their loans or other obligations to us. • An increase in the number of delinquencies, bankruptcies, or defaults could result in a higher level of NPAs, NCOs, provision for credit losses, and valuation adjustments on loans held for sale.
These conditions could result in one or more of the following: • A decrease in the demand for loans and other products and services offered by us; • A decrease in customer savings generally, and in the demand for savings and investment products offered by us; • An increase in the number of customers and counterparties who become delinquent, file for protection under bankruptcy laws, or default on their loans or other obligations to us; and • An increase in the number of delinquencies, bankruptcies, or defaults could result in a higher level of NPAs, NCOs, provision for credit losses, and valuation adjustments on loans held for sale.
The federal bank regulatory agencies have proposed regulations that would enhance cyber risk management standards, which would apply to a wide range of large financial institutions and their third-party service providers, including us and the Bank, and would focus on cyber risk governance and management, management of internal and external dependencies, and incident response, cyber resilience, and situational awareness.
The federal bank regulatory agencies have proposed regulations that would enhance cyber risk management standards, which would apply to a wide range of large financial institutions and their third-party service providers, including us and the Bank, and would focus on cyber risk governance and management, management of internal and external dependencies, incident response, cyber resilience, and situational awareness.
When entering a third-party relationship, the risks associated with that activity are not passed to the third-party but remain our responsibility. The Technology Committee of the board of directors provides oversight related to the overall risk management process associated with third-party relationships. Management is accountable for the review and evaluation of all new and existing third-party relationships.
When entering a third-party relationship, the risks associated with that activity are not passed to the third-party but remain our responsibility. The Risk Oversight Committee of the Board of Directors provides oversight related to the overall risk management process associated with third-party relationships. Management is accountable for the review and evaluation of all new and existing third-party relationships.
At December 31, 2022, the book value of our goodwill was $5.6 billion, substantially all of which was recorded at the Bank. Any such write down of goodwill or other acquisition related intangibles will reduce Huntington’s earnings, as well. Climate change manifesting as physical or transition risks could adversely affect our operations, businesses, and customers.
At December 31, 2023, the book value of our goodwill was $5.6 billion, substantially all of which was recorded at the Bank. Any such write down of goodwill or other acquisition related intangibles will reduce Huntington’s earnings, as well. Climate change manifesting as physical or transition risks could adversely affect our operations, businesses, and customers.
We rely on third-party service providers to leverage subject matter expertise and industry best practice, provide enhanced products and services, and reduce costs. Although there are benefits in entering into third-party relationships with vendors and others, there are risks associated with such activities.
We rely on third-party service providers, both domestically and offshore, to leverage subject matter expertise and industry best practice, provide enhanced products and services, and reduce costs. Although there are benefits in entering into third-party relationships with vendors and others, there are risks associated with such activities.
FinCEN, a unit of the Treasury Department that administers the Bank Secrecy Act, is authorized to impose significant civil money penalties for violations of those requirements and has recently engaged in coordinated enforcement efforts with the federal bank regulatory agencies, as well as the United States Department of Justice, Drug Enforcement Administration, and IRS.
FinCEN, a unit of the Treasury Department that administers the Bank Secrecy Act, is authorized to impose significant civil money penalties for violations of those requirements and has recently engaged in coordinated enforcement efforts with the federal bank regulatory agencies, as well as the U.S. Department of Justice, Drug Enforcement Administration, and IRS.
Remote work further increases the risk that we may experience cyber incidents as a result of our employees, vendors, and other third parties with which we interact working remotely on less secure systems and environments. The risk of a security breach caused by a cyber-attack at a vendor or by unauthorized vendor access has also increased in recent years.
Remote work further increases the risk that we may experience cyber incidents as a result of our employees, vendors, and other third parties with which we interact working remotely on less secure systems and environments. 32 Huntington Bancshares Incorporated Table of Contents The risk of a security breach caused by a cyber-attack at a vendor or by unauthorized vendor access has also increased in recent years.
Our ACL of $2.3 billion at December 31, 2022, represented management’s estimate of the current expected losses in our loan and lease portfolio (ALLL) as well as our unfunded lending commitments (AULC). We regularly review our ACL for appropriateness.
Our ACL of $2.4 billion at December 31, 2023, represented management’s estimate of the current expected losses in our loan and lease portfolio (ALLL) as well as our unfunded lending commitments (AULC). We regularly review our ACL for appropriateness.
Instability in global economic conditions and geopolitical matters, as well as volatility in financial markets, could have a material adverse effect on our results of operations and financial condition. The macroeconomic environment in the United States is susceptible to global events and volatility in financial markets.
Instability in global economic conditions and geopolitical matters, as well as volatility in financial markets, could have a material adverse effect on our results of operations and financial condition. The macroeconomic environment in the U.S. is susceptible to global events and volatility in financial markets.
Therefore, dilution of our tangible book value and net income per common share could occur in connection with any future transaction. Failure to maintain effective internal controls over financial reporting could impair our ability to accurately and timely report our financial results or prevent fraud, resulting in loss of investor confidence and adversely affecting our business and our stock price.
Therefore, dilution of our tangible book value and net income per common share could occur in connection with any future transaction. 34 Huntington Bancshares Incorporated Table of Contents Failure to maintain effective internal controls over financial reporting could impair our ability to accurately and timely report our financial results or prevent fraud, resulting in loss of investor confidence and adversely affecting our business and our stock price.
Acquisitions may be subject to the receipt of approvals from certain governmental authorities, including the Federal Reserve, the OCC, and the United States Department of Justice, as well as the approval of our shareholders and the shareholders of companies that we seek to acquire.
Acquisitions may be subject to the receipt of approvals from certain governmental authorities, including the Federal Reserve, the OCC, and the U.S. Department of Justice, as well as the approval of our shareholders and the shareholders of companies that we seek to acquire.
For more information regarding the Bank Secrecy Act, Patriot Act, anti-money laundering requirements and OFAC-administered sanctions, refer to Item 1: Business - “ Regulatory Matters .” Strategic Risk: We operate in a highly competitive industry which depends on our ability to successfully execute our strategic plan and adapt our products and services to evolving industry standards and consumer preferences.
For more information regarding the Bank Secrecy Act, Patriot Act, anti-money laundering requirements and OFAC-administered sanctions, refer to Item 1: Business - “ Regulatory Matters .” 38 Huntington Bancshares Incorporated Table of Contents Strategic Risk: We operate in a highly competitive industry which depends on our ability to successfully execute our strategic plan and adapt our products and services to evolving industry standards and consumer preferences.
The markets we serve are dependent on industrial and manufacturing businesses and, thus, are particularly vulnerable to adverse changes in economic conditions affecting these sectors. 26 Huntington Bancshares Incorporated Table of Contents A U.S. government debt default would have a material adverse impact on our business and financial performance, including a decrease in the value of Treasury bonds and other government securities held by us, which could negatively impact the Bank’s capital position and its ability to meet regulatory requirements.
The markets we serve are dependent on industrial and manufacturing businesses and, thus, are particularly vulnerable to adverse changes in economic conditions affecting these sectors. 2023 Form 10-K 27 Table of Contents A U.S. government debt default would have a material adverse impact on our business and financial performance, including a decrease in the value of Treasury bonds and other government securities held by us, which could negatively impact the Bank’s capital position and its ability to meet regulatory requirements.
Even if the underlying assumptions and historical correlations used in our models are adequate, our models may be deficient due to errors in computer code, inaccurate data, misuse of data, or the use of a model for a purpose outside the scope of the model’s design. 34 Huntington Bancshares Incorporated Table of Contents All models have certain limitations.
Even if the underlying assumptions and historical correlations used in our models are adequate, our models may be deficient due to errors in computer code, inaccurate data, misuse of data, or the use of a model for a purpose outside the scope of the model’s design. All models have certain limitations.
The Bank conducts most of our operations, and Huntington depends upon dividends from the Bank to service Huntington’s debt and to pay dividends to Huntington’s shareholders. The availability of dividends from the Bank is limited by various statutes and regulations.
Huntington is an entity separate and distinct from the Bank. The Bank conducts most of our operations, and Huntington depends upon dividends from the Bank to service Huntington’s debt and to pay dividends to Huntington’s shareholders. The availability of dividends from the Bank is limited by various statutes and regulations.
Additional information regarding dividend restrictions is provided in Item 1: Business - Regulatory Matters . 2022 Form 10-K 29 Table of Contents If we lose access to capital markets, we may not be able to meet the cash flow requirements of our depositors, creditors, and borrowers, or have the operating cash needed to fund corporate expansion and other corporate activities.
Additional information regarding dividend restrictions is provided in Item 1: Business - “ Regulatory Matters .” If we lose access to capital markets, we may not be able to meet the cash flow requirements of our depositors, creditors, and borrowers, or have the operating cash needed to fund corporate expansion and other corporate activities.
This could affect our growth, profitability, and financial condition, including liquidity. Instability in global economic conditions and geopolitical matters, as well as volatility in financial markets, could have a material adverse effect on our results of operations and financial condition.
This could affect our growth, profitability, and financial condition, including liquidity. 30 Huntington Bancshares Incorporated Table of Contents Instability in global economic conditions and geopolitical matters, as well as volatility in financial markets, could have a material adverse effect on our results of operations and financial condition.
For further discussion, see Note 2 - “ Accounting Standards Update ” to the Consolidated Financial Statements. 2022 Form 10-K 35 Table of Contents Impairment of goodwill could require charges to earnings, which could result in a negative impact on our results of operations. Our goodwill could become impaired in the future.
For further discussion, see Note 2 - “ Accounting Standards Update ” to the Consolidated Financial Statements. Impairment of goodwill could require charges to earnings, which could result in a negative impact on our results of operations. Our goodwill could become impaired in the future.
For more information regarding cybersecurity and data privacy, refer to Item 1: Business - “ Regulatory Matters .” We receive, maintain, and store non-public personal information of our customers and counterparties, including, but not limited to, personally identifiable information and personal financial information.
For more information regarding cybersecurity and data privacy, refer to Item 1: Business - “ Regulatory Matters .” 2023 Form 10-K 33 Table of Contents We receive, maintain, and store non-public personal information of our customers and counterparties, including, but not limited to, personally identifiable information and personal financial information.
We are subject to supervision, regulation, and examination by various federal and state regulators, including the Federal Reserve, OCC, SEC, CFPB, FDIC, FINRA, and various state regulatory agencies.
The banking industry is highly regulated. We are subject to supervision, regulation, and examination by various federal and state regulators, including the Federal Reserve, OCC, SEC, CFPB, FDIC, FINRA, and various state regulatory agencies.
These laws and regulations, among other matters, prescribe minimum capital requirements, impose limitations on our business activities (including foreclosure and collection practices), limit the dividend or distributions that we can pay, restrict the ability of institutions to guarantee our debt, and impose certain specific accounting requirements that may be more restrictive and may result in greater or earlier charges to earnings or reductions in our capital than accounting principles generally accepted in the United States.
These laws and regulations, many of which are discussed in Item 1: Business - “ Regulatory Matters ,” among other matters, prescribe minimum capital requirements, impose limitations on our business activities (including foreclosure and collection practices), limit the dividend or distributions that we can pay, restrict the ability of institutions to guarantee our debt, and impose certain specific accounting requirements that may be more restrictive and may result in greater or earlier charges to earnings or reductions in our capital than accounting principles generally accepted in the U.S.
Replacing a third-party service provider could also take a long period of time and result in increased expenses. Changes in accounting policies, standards, and interpretations could affect how we report our financial condition and results of operations.
Replacing a third-party service provider could also take a long period of time and result in increased expenses. 2023 Form 10-K 35 Table of Contents Changes in accounting policies, standards, and interpretations could affect how we report our financial condition and results of operations.
In addition to volatility associated with interest rates, the Company also has exposure to equity markets related to the investments within the benefit plans and other income from client-based transactions. 2022 Form 10-K 27 Table of Contents Inflation could negatively impact our business, our profitability, and our stock price.
In addition to volatility associated with interest rates, the Company also has exposure to equity markets related to the investments within the benefit plans and other income from client-based transactions. 28 Huntington Bancshares Incorporated Table of Contents Inflation could negatively impact our business, our profitability, and our stock price.
Liquidity Risks: Changes in Huntington’s financial condition or in the general banking industry, or changes in interest rates, could result in a loss of depositor confidence. Liquidity is the ability to meet cash flow needs on a timely basis at a reasonable cost.
For more information, refer to “ Competition ” section of Item 1: Business. Liquidity Risks: Changes in Huntington’s financial condition or in the general banking industry, or changes in interest rates, could result in a loss of depositor confidence. Liquidity is the ability to meet cash flow needs on a timely basis at a reasonable cost.
While we make significant efforts to consider and plan for hypothetical disruptions in our deposit funding, market-related, geopolitical, or other events could impact the liquidity derived from deposits. We are a holding company and depend on dividends by our subsidiaries for most of our funds. Huntington is an entity separate and distinct from the Bank.
While we make significant efforts to consider and plan for hypothetical disruptions in our deposit funding, market-related, geopolitical, or other events could impact the liquidity derived from deposits. 2023 Form 10-K 29 Table of Contents We are a holding company and depend on dividends by our subsidiaries for most of our funds.
If an impairment loss is recorded, it will have little or no impact on the tangible book value of our Common Stock, or our regulatory capital levels, but such an impairment loss could significantly reduce the Bank’s earnings and thereby restrict the Bank’s ability to make dividend payments to us without prior regulatory approval, because Federal Reserve policy states the bank holding company dividends should be paid from current earnings.
If an impairment loss is recorded, it will have little or no impact on the tangible book value of our Common Stock, or our regulatory capital levels, but such an impairment loss could significantly reduce the Bank’s earnings and thereby restrict the Bank’s ability to make dividend payments to us without prior regulatory approval, which in turn could impact our ability to pay dividends.
In addition, if we do not appropriately comply with current or future legislation and regulations, especially those that apply to our consumer operations, which has been an area of heightened focus, we may be subject to fines, penalties or judgments, or material regulatory restrictions on our businesses, which could adversely affect operations and, in turn, financial results.
In addition, if we do not appropriately comply with current or future legislation and regulations, especially those that apply to our consumer operations, which has been an area of heightened focus, we may be subject to fines, penalties or judgments, or material regulatory restrictions on our businesses, which could adversely affect operations and, in turn, financial results. 2023 Form 10-K 37 Table of Contents We expect the current administration will continue to implement a regulatory reform agenda that is significantly different than that of the former administration.
Other negative impacts could be volatile capital markets, an adverse impact on the U.S. economy and the U.S. dollar, as well as increased default rates among borrowers in light of increased economic uncertainty.
Other negative impacts of a U.S. government debt default, budget deficit concerns, government shutdown, or related credit ratings downgrades could include volatile capital markets, an adverse impact on the U.S. economy and the U.S. dollar, as well as increased default rates among borrowers in light of increased economic uncertainty.
We face security risks, including denial of service attacks, hacking, social engineering attacks targeting our colleagues and customers, malware intrusion or data corruption attempts, and identity theft that could result in the disclosure of confidential information, adversely affect our business or reputation, and create significant legal and financial exposure.
In addition, we may not have adequate insurance coverage to compensate for losses from a major interruption. 2023 Form 10-K 31 Table of Contents We face security risks, including denial of service attacks, hacking, social engineering attacks targeting our colleagues and customers, malware intrusion or data corruption attempts, and identity theft that could result in the disclosure of confidential information, adversely affect our business or reputation, and create significant legal and financial exposure.
Any unrealized loss from these portfolios impacts OCI, shareholders’ equity, and the Tangible Common Equity ratio. Any realized loss from these portfolios impacts regulatory capital ratios. In a rising interest rate environment, pension and other post-retirement obligations somewhat mitigate negative OCI impacts from securities and financial instruments. For more information, refer to “ Market Risk ” of the MD&A.
Rising interest rates reduce the value of our fixed-rate securities. Any unrealized loss from these portfolios impacts OCI, shareholders’ equity, and the Tangible Common Equity ratio. Any realized loss from these portfolios impacts regulatory capital ratios. For more information, refer to “ Market Risk ” section of the MD&A.
In addition, transactional income, including trust income, brokerage income, and gain on sales of loans can vary significantly from period-to-period based on a number of factors, including the interest rate environment.
In addition, transactional income, including trust income, brokerage income, and gain on sales of loans can vary significantly from period-to-period based on a number of factors, including the interest rate environment. A decline in interest rates could result in declining net interest margins if longer duration assets reprice faster than deposits.
In addition, we may not have adequate insurance coverage to compensate for losses from a cybersecurity event. Cybersecurity and data privacy are areas of heightened legislative and regulatory focus.
In addition, we may not have adequate insurance coverage to compensate for losses from a cybersecurity event. For more information regarding the Company’s process for assessing, identifying, and managing material risks from cybersecurity threats, refer to Item 1C: Cybersecurity . Cybersecurity and data privacy are areas of heightened legislative and regulatory focus.
We are exposed to many types of operational risks, including the risk of fraud or theft by colleagues or outsiders, unauthorized transactions by colleagues or outsiders, operational errors by colleagues, business disruption, and system failures.
We face significant operational risks which could lead to financial loss, expensive litigation, and loss of confidence by our customers, regulators, and capital markets. We are exposed to many types of operational risks, including the risk of fraud or theft by colleagues or outsiders, unauthorized transactions by colleagues or outsiders, operational errors by colleagues, business disruption, and system failures.
If cybersecurity, data privacy, data protection, data transfer, or data retention laws are implemented, interpreted, or applied in a manner inconsistent with our current practices, we may be subject to fines, litigation, or regulatory enforcement actions or ordered to change our business practices, policies, or systems in a manner that adversely impacts our operating results. 2022 Form 10-K 33 Table of Contents We face significant operational risks which could lead to financial loss, expensive litigation, and loss of confidence by our customers, regulators, and capital markets.
If cybersecurity, data privacy, data protection, data transfer, or data retention laws are implemented, interpreted, or applied in a manner inconsistent with our current practices, we may be subject to fines, litigation, or regulatory enforcement actions or ordered to change our business practices, policies, or systems in a manner that adversely impacts our operating results.
Under the supervision of the CFPB, our Consumer and Business Banking products and services are subject to heightened regulatory oversight and scrutiny with respect to compliance under consumer laws and regulations.
Further, any new laws, rules, and regulations could make compliance more difficult or expensive or otherwise adversely affect our business and financial condition. Under the supervision of the CFPB, our Consumer and Business Banking products and services are subject to heightened regulatory oversight and scrutiny with respect to compliance under consumer laws and regulations.
Both the scope of the laws and regulations and the intensity of the supervision to which we are subject increased in response to the financial crisis, as well as other factors such as technological and market changes. Regulatory enforcement and fines have also increased across the banking and financial services sector.
Both the scope of the laws and regulations and the intensity of the supervision to which we are subject may increase in times of financial crisis, as well as a result of other factors such as technological and market changes.
Furthermore, the public perception that a cyber-attack on our systems has been successful, whether or not this perception is correct, may damage our reputation with customers and third parties with whom we do business. Hacking of personal information and identity theft risks, in particular, could cause serious reputational harm.
Cyber-attacks or other information or security breaches, whether directed at us or third parties, may result in a material loss or have material consequences. Furthermore, the public perception that a cyber-attack on our systems has been successful, whether or not this perception is correct, may damage our reputation with customers and third parties with whom we do business.
Additionally, these changes require us to adapt our product and services, as well as our distribution of them, to evolving industry standards and customer preferences.
Additionally, these changes require us to adapt our product and services, as well as our distribution of them, to evolving industry standards and customer preferences. Failure to address competitive pressures could make it more difficult for us to attract and retain customers across our businesses.
The widespread adoption of technologies will continue to require substantial investments to modify or adapt existing products and services and to develop new product or services.
Our success depends, in part, on our ability to successfully implement our strategic plan as well as adapt existing products and services and develop competitive new products and services demanded by our customers. The widespread adoption of technologies will continue to require substantial investments to modify or adapt existing products and services and to develop new product or services.
In addition, to access our network, products, and services, our customers and other third parties may use personal mobile devices or computing devices that are outside of our network environment and are subject to their own cybersecurity risks. 2022 Form 10-K 31 Table of Contents We, our customers, regulators, and other third parties, including other financial services institutions and companies engaged in data processing, have been subject to, and are likely to continue to be the target of, cyber-attacks.
In addition, to access our network, products, and services, our customers and other third parties may use personal mobile devices or computing devices that are outside of our network environment and are subject to their own cybersecurity risks.
Compliance Risks: We operate in a highly regulated industry, and the laws and regulations that govern our operations, corporate governance, executive compensation and financial accounting, or reporting, including changes in them, or our failure to comply with them, may adversely affect us. The banking industry is highly regulated.
While the timing and severity of climate change may not be entirely predictable and our risk management processes may not be effective in mitigating climate risk exposure, we continue to build capabilities to identify, assess, and manage climate risks. 36 Huntington Bancshares Incorporated Table of Contents Compliance Risks: We operate in a highly regulated industry, and the laws and regulations that govern our operations, corporate governance, executive compensation and financial accounting, or reporting, including changes in them, or our failure to comply with them, may adversely affect us.
There can be no assurance that the Federal Reserve or OCC will respond favorably to our capital plans, planned capital actions, or stress test results, and the Federal Reserve, OCC, or other regulatory capital requirements may limit or otherwise restrict how we utilize our capital, including common stock dividends and stock repurchases.
There can be no assurance that the Federal Reserve or OCC will respond favorably to our capital plans, planned capital actions, or stress test results, and the Federal Reserve, OCC, or other regulatory capital requirements may limit or otherwise restrict how we utilize our capital, including common stock dividends and stock repurchases. 2023 Form 10-K 39 Table of Contents We are also required to maintain minimum capital ratios and the Federal Reserve and OCC may determine that Huntington and/or the Bank, based on size, complexity, or risk profile, must maintain capital ratios above these minimums in order to operate in a safe and sound manner.
Some of these impacts might occur even in the absence of an actual default but as a consequence of extended political negotiations around the threat of such a default and a government shutdown. Market Risks: Changes in interest rates could reduce our net interest income, reduce transactional income, and negatively impact the value of our loans, securities, and other assets.
Some of these impacts might occur even in the absence of an actual default or government shutdown as a consequence of extended political negotiations around the threat of such a default or government shutdown.
Likewise, if interest bearing liabilities mature or reprice more quickly than interest earning assets in a rising interest rate environment, net interest income could be adversely impacted. Changes in interest rates can affect the value of loans, securities, assets under management, and other assets, including mortgage servicing rights.
If our interest earning assets mature or reprice faster than interest bearing liabilities in a declining interest rate environment, net interest income could be materially adversely impacted. Likewise, if interest bearing liabilities mature or reprice more quickly than interest earning assets in a rising interest rate environment, net interest income could be adversely impacted.
Any third-party technology failure, cyber-attack, or other information or security breach, termination, or constraint could, among other things, adversely affect our ability to effect transactions, service our clients, manage our exposure to risk, or expand our business. 32 Huntington Bancshares Incorporated Table of Contents Cyber-attacks or other information or security breaches, whether directed at us or third parties, may result in a material loss or have material consequences.
This consolidation, interconnectivity, and complexity increases the risk of operational failure. Any third-party technology failure, cyber-attack, or other information or security breach, termination, or constraint could, among other things, adversely affect our ability to effect transactions, service our clients, manage our exposure to risk, or expand our business.
Several states have also proposed or adopted cybersecurity legislation and regulations, which require, among other things, notification to affected individuals when there has been a security breach of their personal data.
Laws in all 50 states generally require, among other things, notification to affected individuals when there has been a security breach of their personal data under certain circumstances.
This could have an adverse impact on our cash flows, financial condition, results of operations, and capital. Our results of operations depend substantially on net interest income, which is the difference between interest earned on interest earning assets (such as investments and loans) and interest paid on interest bearing liabilities (such as deposits and borrowings).
Our results of operations depend substantially on net interest income, which is the difference between interest earned on interest earning assets (such as investments and loans) and interest paid on interest bearing liabilities (such as deposits and borrowings). Interest rates are highly sensitive to many factors, including governmental monetary policies, inflation, and domestic and international economic and political conditions.
Operational risk exposures could adversely impact our operations, liquidity, and financial condition, as well as cause reputational harm. In addition, we may not have adequate insurance coverage to compensate for losses from a major interruption.
Operational risk exposures could adversely impact our operations, liquidity, and financial condition, as well as cause reputational harm.
In addition, global demand for products may exceed supply during the economic recovery from the COVID-19 pandemic, and such shortages may cause prolonged inflation, adversely impact consumer and business confidence, and adversely affect the economy as well as our financial condition and results. 30 Huntington Bancshares Incorporated Table of Contents Operational Risks: Our operational or security systems or infrastructure, or those of third parties, could fail or be breached, which could disrupt our business and adversely impact our operations, liquidity, and financial condition, as well as cause legal or reputational harm.
Operational Risks: Our operational or security systems or infrastructure, or those of third parties, could fail or be breached, which could disrupt our business and adversely impact our operations, liquidity, and financial condition, as well as cause legal or reputational harm.
We may, from time-to-time, consider using our existing liquidity position to opportunistically retire outstanding securities in privately negotiated or open market transactions. A reduction in our credit rating could adversely affect our access to capital and could increase our cost of funds.
We may, from time-to-time, consider using our existing liquidity position to opportunistically retire outstanding securities in privately negotiated or open market transactions. Capital markets disruptions can directly impact the liquidity of Huntington and the Bank. Our ability to access the capital markets, if needed, will depend on a number of factors, including the state of the financial markets.
Interest rates are highly sensitive to many factors, including governmental monetary policies, inflation, and domestic and international economic and political conditions. Conditions such as inflation, deflation, recession, unemployment, money supply, and other factors beyond our control may also affect interest rates.
Conditions such as inflation, deflation, recession, unemployment, money supply, and other factors beyond our control may also affect interest rates. In addition, the Federal Reserve’s monetary policies, including changes in the federal funds rate and increasing or reducing the size of its balance sheet, may also affect interest rates.
For example, trade negotiations between the U.S. and other nations remain uncertain and could adversely impact economic and market conditions for the Company and its clients and counterparties.
For example, global conflicts (including the continuing conflicts involving Ukraine and the Russian Federation and those in the Middle East) or other similar events, as well as government actions of other restrictions in connection with such events, and trade negotiations between the U.S. and other nations could adversely impact economic and market conditions for the Company and its clients and counterparties.
It is too early for us to assess the extent to which these policies would be implemented and what their impact on our business will be. 2022 Form 10-K 37 Table of Contents The resolution of significant pending litigation, if unfavorable, could have an adverse effect on our results of operations for a particular period.
The failure of other banks and financial institutions and the measures taken by governments and regulators in response to these events could adversely impact our business, financial condition, and results of operations. The resolution of significant pending litigation, if unfavorable, could have an adverse effect on our results of operations for a particular period.
Our ability to attract and retain customers, clients, investors, and employees is affected by our reputation.
For more information regarding CCAR, stress testing, and capital and liquidity requirements, refer to Item 1: Business - “ Regulatory Matters .” Reputation Risk: Damage to our reputation could significantly harm our business, including our competitive position and business prospects. Our ability to attract and retain customers, clients, investors, and employees is affected by our reputation.
Removed
In addition, decisions by the Federal Reserve to increase or reduce the size of its balance sheet or to engage in tapering its purchase of assets may also affect interest rates. If our interest earning assets mature or reprice faster than interest bearing liabilities in a declining interest rate environment, net interest income could be materially adversely impacted.
Added
Market Risks: Changes in interest rates could reduce our net interest income, reduce transactional income, and negatively impact the value of our loans, securities, and other assets. This could have an adverse impact on our cash flows, financial condition, results of operations, and capital.
Removed
A decline in interest rates along with a flattening yield curve limits our ability to reprice deposits given the current historically low level of interest rates and could result in declining net interest margins if longer duration assets reprice faster than deposits. Rising interest rates reduce the value of our fixed-rate securities.
Added
Changes in interest rates can affect the value of loans, securities, assets under management, and other assets, including mortgage servicing rights.
Removed
For more information, refer to “ Competition ” section of Item 1: Business. The transition away from LIBOR may adversely affect our business. Central banks around the world, including the Federal Reserve, have commissioned committees and working groups of market participants and official sector representatives to replace LIBOR and replace or reform other interest rate benchmarks.
Added
Rising interest rates, disruptions in financial markets, negative perceptions of our business or our financial strength, negative perceptions of the overall banking industry or of other regional banks, or other factors may impact our ability to raise additional capital, if needed, on terms acceptable to us.
Removed
The publication of most LIBOR rates ceased as of the end of December 2021, while certain U.S. dollar LIBOR tenors are expected to continue to be published until June 30, 2023.
Added
For example, in the event of future turmoil in the banking industry or other idiosyncratic events, there is no guarantee that the U.S. government will invoke the systemic risk exception, create additional liquidity programs, or take any other action to stabilize the banking industry or provide liquidity.
Removed
A transition away from the widespread use of LIBOR to alternative rates and other potential interest rate benchmark reforms has begun and will continue over the course of the next few years. These reforms may cause such rates to perform differently than in the past, or to disappear entirely, or have other consequences which cannot be predicted.
Added
Any diminished ability to access short-term funding or capital markets to raise additional capital, if needed, could subject us to liability, restrict our ability to grow, require us to take actions that would affect our earnings negatively or otherwise adversely affect our business and our ability to implement our business plan, capital plan and strategic goals.
Removed
A group of market participants convened by the Federal Reserve, the Alternative Reference Rate Committee (ARRC), has selected SOFR as its recommended alternative to LIBOR. The Federal Reserve Bank of New York started to publish SOFR in April 2018.
Added
A reduction in our credit rating could adversely affect our access to capital and could increase our cost of funds.
Removed
SOFR is a broad measure of the cost of overnight borrowings collateralized by Treasury securities that was selected by the ARRC due to the depth and robustness of the U.S. Treasury repurchase market. In January of 2020, Huntington was added as an ARRC member.
Added
In addition, global supply chain disruptions may cause prolonged inflation, adversely impact consumer and business confidence, and adversely affect the economy as well as our financial condition and results.
Removed
The passage of the Adjustable Interest Rate (LIBOR) Act by Congress, and the Federal Reserve’s implementing rule, should decrease the risk of contracts that are not remediated prior to the cessation deadline by providing the terms for a transition to SOFR. 28 Huntington Bancshares Incorporated Table of Contents The market transition away from LIBOR to an alternative reference rate, such as SOFR, is complex and could have a range of adverse effects on our business, financial condition, and results of operations.
Added
We, our customers, regulators, and other third parties, including other financial services institutions and companies engaged in data processing, have been subject to, and are likely to continue to be the target of, cyber-attacks.
Removed
In particular, any such transition could: • Adversely affect the interest rates paid or received on, the revenue and expenses associated with or the value of Huntington’s LIBOR-based assets and liabilities, which include certain variable rate loans, Huntington’s Series B preferred stock, certain of Huntington’s junior subordinated debentures, certain of the Bank’s senior notes and certain other securities or financial arrangements; • Adversely affect the interest rates paid or received on, the revenue and expenses associated with or the value of other securities or financial arrangements, given LIBOR’s role in determining market interest rates globally; • Prompt inquiries or other actions from regulators in respect of Huntington’s preparation and readiness for the replacement of LIBOR with an alternative reference rate; and • Result in disputes, litigation, or other actions with counterparties regarding the interpretation and enforceability of certain fallback language in LIBOR-based contracts and securities.
Added
Hacking of personal information and identity theft risks, in particular, could cause serious reputational harm.
Removed
Huntington implemented a LIBOR transition plan in 2018. As of December 31, 2021, the company ceased issuance of new LIBOR loans. Alternative reference rates at this time are predominantly SOFR-based. Systems, products, and analytics have been effectively transitioned away from LIBOR and are utilizing alternative reference rates.
Added
The occurrence of any of these events could result in a violation of applicable privacy laws and other laws, litigation exposure, regulatory fines, penalties or intervention, loss of confidence in our security measures, reputational damage, reimbursement or other compensatory costs, additional compliance costs, and could adversely impact our results of operations, liquidity and financial condition.
Removed
Remaining LIBOR transition project activities include remediation of remaining LIBOR products, including acquired products from TCF by June of 2023. We continue to assess the impact on our customers, with any needed LIBOR exceptions escalated to ELT for approval.
Added
For example, under California state law, the CCPA broadly defines personal information and substantially increases the rights of California residents to understand how their personal information is collected, used, and otherwise processed by commercial businesses, such as affording them the right to access and request deletion of their information and to opt out of certain sharing and sales of personal information.
Removed
The manner and impact of the transition from LIBOR to an alternative reference rate, as well as the effect of these developments on our funding costs, loan, and investment and trading securities portfolios, asset-liability management, and business, is uncertain.
Added
The evolving regulatory and supervisory environment and uncertainty about the timing and scope of future laws, regulations and policies may contribute to decisions we may make to suspend, reduce, or withdraw from existing businesses, activities, or initiatives, which may result in potential lost revenue or significant restructuring or related costs or exposures.
Removed
Capital markets disruptions can directly impact the liquidity of Huntington and the Bank. The inability to access capital markets funding sources as needed could adversely impact our financial condition, results of operations, cash flows, and level of regulatory-qualifying capital.

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Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3: Legal Proceedings Information required by this item is set forth in Note 22 - “ Commitments and Contingent Liabilities ” of the Notes to Consolidated Financial Statements under the caption “Litigation and Regulatory Matters” and is incorporated into this Item by reference. Item 4: Mine Safety Disclosures Not applicable. 2022 Form 10-K 41 Table of Contents PART II
Biggest changeItem 3: Legal Proceedings Information required by this item is set forth in Note 22 - “ Commitments and Contingent Liabilities ” of the Notes to Consolidated Financial Statements under the caption “Litigation and Regulatory Matters” and is incorporated into this Item by reference. Item 4: Mine Safety Disclosures Not applicable. 42 Huntington Bancshares Incorporated Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe plotted points represent the cumulative total return on the last trading day of the fiscal year indicated. 2017 2018 2019 2020 2021 2022 HBAN $100 $85 $111 $99 $126 $120 S&P 500 100 95 125 148 190 155 KBW Bank Index 100 82 112 100 138 109 For information regarding securities authorized for issuance under Huntington’s equity compensation plans, see Part III, Item 12 .
Biggest changeThe plotted points represent the cumulative total return on the last trading day of the fiscal year indicated. 2018 2019 2020 2021 2022 2023 HBAN $100 $132 $117 $149 $142 $136 S&P 500 100 131 156 200 164 207 KBW Bank Index 100 136 122 169 133 132 For information regarding securities authorized for issuance under Huntington’s equity compensation plans, see Part III, Item 12 .
The KBW Bank Index is a market capitalization-weighted bank stock index published by Keefe, Bruyette & Woods. The index is composed of the largest banking companies and includes all money center banks and regional banks, including Huntington. An investment of $100 on December 31, 2017, and the reinvestment of all dividends, are assumed.
The KBW Bank Index is a market capitalization-weighted bank stock index published by Keefe, Bruyette & Woods. The index is composed of the largest banking companies and includes all money center banks and many regional banks, including Huntington. An investment of $100 on December 31, 2018, and the reinvestment of all dividends, are assumed.
The following graph shows the changes, over the five-year period, in the value of $100 invested in (i) shares of Huntington’s Common Stock; (ii) the Standard & Poor’s 500 Stock Index (the S&P 500 Index) and (iii) Keefe, Bruyette & Woods Bank Index, for the period December 31, 2017, through December 31, 2022.
The following graph shows the changes, over the five-year period, in the value of $100 invested in (i) shares of Huntington’s Common Stock; (ii) the Standard & Poor’s 500 Stock Index (the S&P 500 Index) and (iii) Keefe, Bruyette & Woods Bank Index, for the period December 31, 2018, through December 31, 2023.
Item 5: Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities The common stock of Huntington Bancshares Incorporated is traded on the Nasdaq Global Stock Market under the symbol “HBAN.” As of January 31, 2023, we had 30,985 shareholders of record.
Item 5: Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities The common stock of Huntington Bancshares Incorporated is traded on the Nasdaq Global Stock Market under the symbol “HBAN.” As of January 31, 2024, we had 29,674 shareholders of record.
Added
Item 6: [Reserved] 2023 Form 10-K 43 Table of Contents

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeLegislative and Regulatory A comprehensive discussion of legislative and regulatory matters affecting us can be found in Item 1: Business - “ Regulatory Matters ” section of this Form 10-K. 44 Huntington Bancshares Incorporated Table of Contents Table 1 - Selected Year to Date Income Statement Data Year Ended December 31, Change from 2021 Change from 2020 (amounts in millions, except per share data) 2022 Amount Percent 2021 Amount Percent 2020 Interest income $ 5,969 $ 1,778 42 % $ 4,191 $ 544 15 % $ 3,647 Interest expense 696 607 NM 89 (334) (79) 423 Net interest income 5,273 1,171 29 4,102 878 27 3,224 Provision for credit losses 289 264 NM 25 (1,023) (98) 1,048 Net interest income after provision for credit losses 4,984 907 22 4,077 1,901 87 2,176 Service charges on deposit accounts 384 12 3 372 71 24 301 Card and payment processing income 374 40 12 334 86 35 248 Capital markets fees 252 101 67 151 26 21 125 Trust and investment management services 249 17 7 232 43 23 189 Mortgage banking income 144 (165) (53) 309 (57) (16) 366 Leasing revenue 126 27 27 99 78 NM 21 Insurance income 117 12 11 105 8 8 97 Gain on sale of loans 57 48 NM 9 (33) (79) 42 Bank owned life insurance income 56 (13) (19) 69 5 8 64 Net gains (losses) on sales of securities — (9) NM 9 10 NM (1) Other noninterest income 222 22 11 200 61 44 139 Total noninterest income 1,981 92 5 1,889 298 19 1,591 Personnel costs 2,401 66 3 2,335 643 38 1,692 Outside data processing and other services 610 (240) (28) 850 466 121 384 Equipment 269 21 8 248 68 38 180 Net occupancy 246 (31) (11) 277 119 75 158 Marketing 91 2 2 89 51 134 38 Professional services 77 (36) (32) 113 58 105 55 Deposit and other insurance expense 67 16 31 51 19 59 32 Amortization of intangibles 53 5 10 48 7 17 41 Lease financing equipment depreciation 45 4 10 41 40 NM 1 Other noninterest expense 342 19 6 323 109 51 214 Total noninterest expense 4,201 (174) (4) 4,375 1,580 57 2,795 Income before income taxes 2,764 1,173 74 1,591 619 64 972 Provision for income taxes 515 221 75 294 139 90 155 Income after income taxes 2,249 952 73 1,297 480 59 817 Income attributable to non-controlling interest 11 9 NM 2 2 NM — Net income attributable to Huntington Bancshares Inc 2,238 943 73 1,295 478 59 817 Dividends on preferred shares 113 (18) (14) 131 31 31 100 Impact of preferred stock redemption — (11) NM 11 11 NM — Net income applicable to common shares $ 2,125 $ 972 84 % $ 1,153 $ 436 61 % $ 717 Average common shares—basic 1,441 179 14 % 1,262 245 24 % 1,017 Average common shares—diluted 1,465 178 14 1,287 254 25 1,033 Net income per common share—basic $ 1.47 $ 0.56 62 % $ 0.91 $ 0.20 28 % $ 0.71 Net income per common share—diluted 1.45 0.55 61 0.90 0.21 30 0.69 Cash dividends declared 0.62 0.015 2 0.605 0.005 1 0.60 Revenue and Net Interest Income—FTE (Non-GAAP) Net interest income $ 5,273 $ 1,171 29 % $ 4,102 $ 878 27 % $ 3,224 FTE adjustment (1) 31 6 24 25 4 19 21 Net interest income, FTE (non-GAAP)(1) 5,304 1,177 29 4,127 882 27 3,245 Noninterest income 1,981 92 5 1,889 298 19 1,591 Total revenue, FTE (non-GAAP)(1) $ 7,285 $ 1,269 21 % $ 6,016 $ 1,180 24 % $ 4,836 (1) On an FTE basis assuming a 21% tax rate. 2022 Form 10-K 45 Table of Contents DISCUSSION OF RESULTS OF OPERATIONS This section provides a review of financial performance on a consolidated basis.
Biggest changeFor the reporting updates discussed above, prior period results have been adjusted to conform to the current presentation. 2023 Financial Performance Review Selected Financial Data Table 1 - Selected Year to Date Income Statement Data Year Ended December 31, Change from 2022 Change from 2021 (amounts in millions, except per share data) 2023 Amount Percent 2022 Amount Percent 2021 Interest income $ 8,916 $ 2,947 49 % $ 5,969 $ 1,778 42 % $ 4,191 Interest expense 3,477 2,781 400 696 607 682 89 Net interest income 5,439 166 3 5,273 1,171 29 4,102 Provision for credit losses 402 113 39 289 264 NM 25 Net interest income after provision for credit losses 5,037 53 1 4,984 907 22 4,077 Noninterest income 1,921 (60) (3) 1,981 92 5 1,889 Noninterest expense 4,574 373 9 4,201 (174) (4) 4,375 Income before income taxes 2,384 (380) (14) 2,764 1,173 74 1,591 Provision for income taxes 413 (102) (20) 515 221 75 294 Income after income taxes 1,971 (278) (12) 2,249 952 73 1,297 Income attributable to non-controlling interest 20 9 82 11 9 NM 2 Net income attributable to Huntington Bancshares Inc 1,951 (287) (13) 2,238 943 73 1,295 Dividends on preferred shares 142 29 26 113 (18) (14) 131 Impact of preferred stock repurchases and redemptions (8) (8) NM — (11) NM 11 Net income applicable to common shares $ 1,817 $ (308) (14) % $ 2,125 $ 972 84 % $ 1,153 Average common shares—basic 1,446 5 — % 1,441 179 14 % 1,262 Average common shares—diluted 1,468 3 — 1,465 178 14 1,287 Net income per common share—basic $ 1.26 $ (0.21) (14) % $ 1.47 $ 0.56 62 % $ 0.91 Net income per common share—diluted 1.24 (0.21) (14) 1.45 0.55 61 0.90 Cash dividends declared 0.62 — — 0.62 0.015 2 0.605 Revenue and Net Interest Income—FTE (Non-GAAP) Net interest income $ 5,439 $ 166 3 % $ 5,273 $ 1,171 29 % $ 4,102 FTE adjustment(1) 42 11 35 31 6 24 25 Net interest income, FTE (non-GAAP)(1) 5,481 177 3 5,304 1,177 29 4,127 Noninterest income 1,921 (60) (3) 1,981 92 5 1,889 Total revenue, FTE (non-GAAP)(1) $ 7,402 $ 117 2 % $ 7,285 $ 1,269 21 % $ 6,016 (1) On an FTE basis assuming a 21% tax rate.
The committee is charged with evaluating Huntington’s capability to properly perform all technology functions necessary for its business plan, including projected growth, technology capacity, planning, operational execution, product development, and management capacity. Our Technology Committee provides oversight of technology investments and plans to drive efficiency as well as to meet defined standards for risk, information security, and redundancy.
The Technology Committee is charged with evaluating Huntington’s capability to properly perform all technology functions necessary for its business plan, including projected growth, technology capacity, planning, operational execution, product development, and management capacity. Our Technology Committee provides oversight of technology investments and plans to drive efficiency as well as to meet defined standards for risk, information security, and redundancy.
If our assessment of the guarantor’s credit strength yields an inherent capacity to perform, we will seek repayment from the guarantor as part of the collection process and have done so successfully. Substantially all loans categorized as Classified (See Note 5 “ Loans / Leases ” of the Notes to Consolidated Financial Statements) are managed by FRG.
If our assessment of the guarantor’s credit strength yields an inherent capacity to perform, we will seek repayment from the guarantor as part of the collection process and have done so successfully. Substantially all loans categorized as Classified (See Note 5 - “ Loans and Leases ” of the Notes to Consolidated Financial Statements) are managed by FRG.
Noninterest income includes miscellaneous fee income not allocated to other business segments, such as bank owned life insurance income and securities and trading asset gains or losses. Noninterest expense includes certain corporate administrative, acquisition-related expenses, if any, and other miscellaneous expenses not allocated to other business segments.
Noninterest income includes miscellaneous fee income not allocated to other business segments, such as bank owned life insurance income and securities and trading asset gains or losses. Noninterest expense includes certain corporate administrative, acquisition-related, if any, and other miscellaneous expenses not allocated to other business segments.
Treasury / Other The Treasury / Other function includes revenue and expense related to assets, liabilities, derivatives (including mark-to-market of interest rate caps, as applicable), and equity not directly assigned or allocated to one of the four business segments. Assets include investment securities and bank owned life insurance.
Treasury / Other The Treasury / Other function includes revenue and expense related to assets, liabilities, derivatives (including mark-to-market of interest rate caps, as applicable), and equity not directly assigned or allocated to one of the business segments. Assets include investment securities and bank owned life insurance.
A variety of derivative financial instruments, principally interest rate swaps, caps and floors, swaption collars, forward contracts, and forward starting interest rate swaps are used in asset and liability management activities to protect against the risk of adverse price or interest rate movements.
A variety of derivative financial instruments, principally interest rate swaps, caps, swaptions, swaption collars, floors, forward contracts, and forward starting interest rate swaps are used in asset and liability management activities to protect against the risk of adverse price or interest rate movements.
Generally, we: (1) limit our loans to 80% of the appraised value of the commercial real estate at origination, (2) require net operating cash flows to be 120% of required interest and principal payments, and (3) if the commercial real estate is non-owner occupied, require that pre-leasing generate break-even interest-only debt service.
Generally, we: (1) limit our loans to 80% of the appraised value of the commercial real estate at origination, (2) require net operating cash flows to be 120% of required interest and principal payments, and (3) if the commercial real estate is non-owner occupied, require that pre-leasing generates break-even interest-only debt service.
We actively monitor project-type concentrations and both geographic and project-type performance metrics of all CRE loan types, with a focus on loans identified as higher risk based on the risk rating methodology. Both macro-level and loan-level stress-test scenarios based on existing and forecast market conditions are part of the on-going portfolio management process for the CRE portfolio.
We actively monitor property-type concentrations and both geographic and property-type performance metrics of all CRE loan types, with a focus on loans identified as higher risk based on the risk rating methodology. Both macro-level and loan-level stress-test scenarios based on existing and forecast market conditions are part of the on-going portfolio management process for the CRE portfolio.
The exposure outside of our core footprint states represents 18% of the total exposure, with no individual state representing more than 6%. Applications are underwritten using an automated underwriting system that applies consistent policies and processes across the portfolio. Home equity – Home equity lending includes both home equity loans and lines-of-credit.
The exposure outside of our core footprint states represents 17% of the total exposure, with no individual state representing more than 6%. Applications are underwritten using an automated underwriting system that applies consistent policies and processes across the portfolio. Home equity – Home equity lending includes both home equity loans and lines-of-credit.
Our origination policies for the C&I portfolio include loan product-type specific policies such as LTV and debt service coverage ratios, as applicable. 58 Huntington Bancshares Incorporated Table of Contents The C&I portfolio continues to have solid origination activity while we maintain a focus on high quality originations.
Our origination policies for the C&I portfolio include loan product-type specific policies such as LTV and debt service coverage ratios, as applicable. 60 Huntington Bancshares Incorporated Table of Contents The C&I portfolio continues to have solid origination activity while we maintain a focus on high quality originations.
Allowance for Credit Losses Our ACL at December 31, 2022 represents our current estimate of the lifetime credit losses expected from our loan and lease portfolio and our unfunded lending commitments. Management estimates the ACL by projecting probability of default, loss given default and exposure at default conditional on economic parameters, for the remaining contractual term.
Allowance for Credit Losses Our ACL at December 31, 2023 represents our current estimate of the lifetime credit losses expected from our loan and lease portfolio and our unfunded lending commitments. Management estimates the ACL by projecting probability of default, loss given default and exposure at default conditional on economic parameters, for the remaining contractual term.
The loans are underwritten centrally using an application and decisioning system similar to automobile loans. The current portfolio includes 26% of the balances within our core footprint states. Other consumer – Other consumer loans primarily consists of consumer loans not secured by real estate, including credit cards, personal unsecured loans, and overdraft balances.
The loans are underwritten centrally using an application and decisioning system similar to automobile loans. The current portfolio includes 24% of the balances within our core footprint states. Other consumer – Other consumer loans primarily consists of consumer loans not secured by real estate, including credit cards, personal unsecured loans, and overdraft balances.
As a complement to the overall cyber security risk management, we use a number of internal training methods, both formally through mandatory courses and informally through written communications and other updates. Internal policies and procedures have been implemented to encourage the reporting of potential phishing attacks or other security risks.
As a complement to the overall cybersecurity risk management, we use a number of internal training methods, both formally through mandatory courses and informally through written communications and other updates. Internal policies and procedures have been implemented to encourage the reporting of potential phishing attacks or other security risks.
At December 31, 2022, we believe the Company has sufficient liquidity and capital resources to meet its cash flow obligations over the next 12 months and for the foreseeable future. Off-Balance Sheet Arrangements In the normal course of business, we enter into various off-balance sheet arrangements.
At December 31, 2023, we believe the Company has sufficient liquidity and capital resources to meet its cash flow obligations over the next 12 months and for the foreseeable future. Off-Balance Sheet Arrangements In the normal course of business, we enter into various off-balance sheet arrangements.
CRE construction loans are loans to developers, companies, or individuals used for the construction of a commercial or residential property for which repayment will be generated by the sale or permanent financing of the property. Our CRE construction portfolio primarily consists of multi-family, retail, office, and warehouse project types.
CRE construction loans are loans to developers, companies, or individuals used for the construction of a commercial or residential property for which repayment will be generated by the sale or permanent financing of the property. Our CRE construction portfolio primarily consists of multi-family, retail, and warehouse property types.
The provision for credit losses increased $24 million due to a combination of loan and lease growth in 2022 and a reduction in ACL coverage ratios over the course of 2021, as there was more clarity around the economic impacts of COVID-19.
The provision for credit losses increased $6 million due to a combination of loan and lease growth in 2022 and a reduction in ACL coverage ratios over the course of 2021, as there was more clarity around the economic impacts of COVID-19.
As of October 1, 2022, a 100 basis point increase in discount rates would reduce estimated entity level fair value by approximately $2 billion and would not result in any impairment, as each reporting unit’s fair value would still exceed its carrying value.
As of October 1, 2023, a 100 basis point increase in discount rates would reduce estimated entity level fair value by approximately $2 billion and would not result in any impairment, as each reporting unit’s fair value would still exceed its carrying value.
Excluding consideration of qualitative adjustments, this sensitivity analysis would result in a hypothetical increase in our ACL of approximately $1 billion at December 31, 2022. This hypothetical increase is reflective of the sensitivity of the rate of change in the unemployment variable on our models.
Excluding consideration of qualitative adjustments, this sensitivity analysis would result in a hypothetical increase in our ACL of approximately $1.1 billion at December 31, 2023. This hypothetical increase is reflective of the sensitivity of the rate of change in the unemployment variable on our models.
Based on our annual impairment analysis of goodwill as of October 1, it was determined that the fair value of each reporting unit was in excess of its respective carrying value as of October 1, 2022; therefore goodwill is considered not impaired.
Based on our annual impairment analysis of goodwill as of October 1, 2023, it was determined that the fair value of each reporting unit was in excess of its respective carrying value as of October 1, 2023; therefore, goodwill is considered not impaired.
Critically important is our self-assessment process, in which each business segment produces an analysis of its risks and the strength of its risk controls. The segment analyses are combined with assessments by our risk management organization of major risk sectors (e.g., credit, market, liquidity, operational, compliance, strategic, and reputation) to produce an overall enterprise risk assessment.
Critically important is our self-assessment process, in which each first-line business segment produces an analysis of its risks and the strength of its risk controls. The segment analyses are combined with assessments by our second-line risk management organization of major risk sectors (e.g., credit, market, liquidity, operational, compliance, strategic, and reputation) to produce an overall enterprise risk assessment.
We also have four executive level committees to manage risk: ALCO, Credit Policy and Strategy, Risk Management, and Capital Management. Each committee focuses on specific categories of risk and is supported by a series of subcommittees that are tactical in nature. We believe this structure helps ensure appropriate escalation of issues and overall communication of strategies.
We also have executive level committees to manage and oversee risk, including: ALCO, Credit Policy and Strategy, Risk Management, and Capital Management. Each committee focuses on specific categories of risk and is supported by a series of subcommittees that are tactical in nature. We believe this structure helps ensure appropriate escalation of issues and overall communication of strategies.
To this end we employ a set of defense in-depth strategies, which include efforts to make us less attractive as a target and less vulnerable to threats, while investing in threat analytic capabilities for rapid detection and response. Potential concerns related to cyber security may be escalated to our board-level Technology Committee, as appropriate.
To this end we employ a set of defense in-depth strategies, which include efforts to make us less attractive as a target and less vulnerable to threats, while investing in threat analytic capabilities for rapid detection and response. Potential concerns related to cybersecurity may be escalated to our board-level Technology Committee, as appropriate.
Recent Accounting Pronouncements and Developments Note 2 - “ Accounting Standards Update ” of the Notes to Consolidated Financial Statements discusses new accounting pronouncements adopted during 2022 and the expected impact of accounting pronouncements recently issued but not yet required to be adopted.
Recent Accounting Pronouncements and Developments Note 2 - “ Accounting Standards Update ” of the Notes to Consolidated Financial Statements discusses new accounting pronouncements adopted during 2023 and the expected impact of accounting pronouncements recently issued but not yet required to be adopted.
These macroeconomic scenarios contain certain variables that are influential to our modeling process, the most significant being unemployment rates and GDP. The probability weights assigned to each scenario are generally expected to be consistent from period to period and determined through our ACL process. Any changes in probability weights must be supported by appropriate documentation and approval of senior management.
These macroeconomic scenarios contain certain variables that are influential to our modeling process, the most significant being unemployment rates and GDP. The probability weights assigned to each scenario are generally expected to be consistent from period to period. Any changes in probability weights must be supported by appropriate documentation and approval of senior management.
Dedicated real estate professionals originate and manage the portfolio. The portfolio is diversified by project type and loan size, and this diversification represents a significant portion of the credit risk management strategies employed for this portfolio.
Dedicated real estate professionals originate and manage the portfolio. The portfolio is diversified by property-type and loan size, and this diversification represents a significant portion of the credit risk management strategies employed for this portfolio.
Examples of derivative instruments that we may use as part of our interest rate risk management strategy include interest rate swaps, caps and floors, forward contracts, and forward starting interest rate swaps. Table 15 shows all swap, swaption collar and floor positions that are utilized for purposes of managing our exposures to the variability of interest rates.
Examples of derivative instruments that we may use as part of our interest rate risk management strategy include interest rate swaps, caps and floors, collars, forward contracts, and forward starting interest rate swaps. Table 17 shows all swap, swaption, swaption collar and floor positions that are utilized for purposes of managing our exposures to the variability of interest rates.
At December 31, 2022, we believe the Bank has sufficient liquidity and capital resources to meet its cash flow obligations over the next 12 months and for the foreseeable future.
At December 31, 2023, we believe the Bank has sufficient liquidity and capital resources to meet its cash flow obligations over the next 12 months and for the foreseeable future.
Noninterest expense increased $270 million, or 34%, primarily reflecting the impact of the TCF and Capstone Partners acquisitions, which led to higher personnel costs and allocated overhead.
Noninterest expense increased $269 million, or 34%, primarily reflecting the impact of the TCF and Capstone Partners acquisitions, which led to higher personnel costs and allocated overhead.
The extent to which the geopolitical instability, risks of inflation, and the COVID-19 pandemic will continue to negatively impact our businesses, financial condition, liquidity, and results will depend on future developments, which are highly uncertain and cannot be forecasted with precision at this time.
The extent to which the geopolitical instability and risks of inflation will continue to negatively impact our businesses, financial condition, liquidity, and results will depend on future developments, which are highly uncertain and cannot be forecasted with precision at this time.
For additional insight on financial performance, please read this section in conjunction with the “ Business Segment Discussion .” For a discussion of our results of operations for 2021 versus 2020, see “Part II, Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations” Discussion of Results of Operations included in our 2021 Form 10-K, filed with the SEC on February 18, 2022.
For additional insight on financial performance, please read this section in conjunction with the “ Business Segment Discussion .” For a discussion of our results of operations for 2022 versus 2021, see “Part II, Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations” Discussion of Results of Operations included in our 2022 Form 10-K, filed with the SEC on February 17, 2023.
Noninterest income decreased $28 million, or 3%, primarily due to lower mortgage banking income reflecting lower salable volume and secondary marketing spreads, partially offset by the impact of the TCF acquisition and an increase in gain on sale of loans, primarily due to sales of SBA loans during the first through third quarters of 2022.
Noninterest income decreased $17 million, or 1%, primarily due to lower mortgage banking income reflecting lower salable volume and secondary marketing spreads, partially offset by the impact of the TCF acquisition and an increase in gain on sale of loans, primarily due to sales of SBA loans during the first through third quarters of 2022.
Internal factors that impact the quarterly allowance estimate include the level of outstanding balances, the portfolio performance and assigned risk ratings. One of the most significant judgments influencing the ACL estimate is the macroeconomic forecasts. Key external economic parameters that directly impact our loss modeling framework include forecasted unemployment rates and Gross Domestic Product.
Internal factors that impact the quarterly allowance estimate include the level of outstanding balances, the portfolio performance and assigned risk ratings. One of the most significant judgments influencing the ACL estimate is the macroeconomic forecasts. Key external economic parameters that directly impact our loss modeling framework include forecasted unemployment rates and GDP.
It begins with the Board of Directors defining our risk appetite as aggregate moderate-to-low, through-the-cycle. This does not preclude engagement in select higher risk activities. Rather, the definition is intended to represent an aggregate view of where we want our overall risk to be managed.
It begins with the Board of Directors, which has defined our risk appetite as aggregate moderate-to-low, through-the-cycle. This does not preclude engagement in select higher risk activities. Rather, the definition is intended to represent an aggregate view of where we want our overall risk to be managed.
Under this scenario, as an example, the unemployment rate increases from baseline levels and remains elevated for a prolonged period, the rate is estimated at 7.7% and 6.6% at the end of 2023 and 2024, respectively.
Under this scenario, as an example, the unemployment rate increases from baseline levels and remains elevated for a prolonged period, the rate is estimated at 7.6% and 6.9% at the end of 2024 and 2025, respectively.
We continuously strive to strengthen our system of internal controls to ensure compliance with significant contracts, agreements, laws, rules, and regulations, and to improve the oversight of our operational risk. We actively monitor cyberattacks such as attempts related to online deception and loss of sensitive customer data.
We continuously strive to test and strengthen our system of internal controls to ensure compliance with significant contracts, agreements, laws, rules, and regulations, to reduce our exposure to fraud, and to improve the oversight of our operational risk. We actively monitor cyberattacks such as attempts related to online deception and loss of sensitive customer data.
This forecast reflects unemployment rates that are approximately 3.6% and 2.7% higher than baseline scenario projections of 4.1% and 3.9%, respectively for the same time periods. To demonstrate the sensitivity to key economic parameters used in the calculation of our ACL at December 31, 2022, management calculated the difference between our quantitative ACL and this 100% adverse scenario.
This forecast reflects unemployment rates that are approximately 3.6% and 2.9% higher than baseline scenario projections of 4.0% and 4.0%, respectively, for the same time periods. To demonstrate the sensitivity to key economic parameters used in the calculation of our ACL at December 31, 2023, management calculated the difference between our quantitative ACL and this 100% adverse scenario.
(2) Calculated assuming a 21% tax rate. 46 Huntington Bancshares Incorporated Table of Contents Table 3 - Consolidated Average Balance Sheet and Net Interest Margin Analysis Year ended 2022 2021 Change from 2021 Average Interest Yield/ Average Interest Yield/ Average Balances (dollar amounts in millions) Balances Income (FTE) (1) Rate (2) Balances Income (FTE) (1) Rate (2) Amount Percent Assets: Interest-bearing deposits at Federal Reserve Bank $ 4,626 $ 75 1.63 % $ 8,129 $ 11 0.14 % $ (3,503) (43) % Interest-bearing deposits in banks 226 8 3.15 372 1 0.04 (146) (39) Securities: Trading account securities 32 1 4.14 50 1 3.32 (18) (36) Available-for-sale securities: Taxable 21,994 576 2.62 19,767 261 1.32 2,227 11 Tax-exempt 2,842 94 3.32 2,916 71 2.42 (74) (3) Total available-for-sale securities 24,836 670 2.70 22,683 332 1.46 2,153 9 Held-to-maturity securities—taxable 16,509 351 2.13 10,000 174 1.74 6,509 65 Other securities 845 27 3.16 556 10 1.75 289 52 Total securities 42,222 1,049 2.48 33,289 517 1.55 8,933 27 Loans held for sale 973 41 4.24 1,398 41 2.96 (425) (30) Loans and leases: (3) Commercial: Commercial and industrial 43,118 1,875 4.35 36,898 1,446 3.92 6,220 17 Commercial real estate 15,768 683 4.33 11,412 362 3.17 4,356 38 Lease financing 4,974 251 5.04 3,739 186 4.98 1,235 33 Total commercial 63,860 2,809 4.40 52,049 1,994 3.83 11,811 23 Consumer: Residential mortgage 20,907 661 3.16 15,953 479 3.00 4,954 31 Automobile 13,454 472 3.51 13,008 471 3.62 446 3 Home equity 10,409 532 5.11 10,018 391 3.90 391 4 RV and marine 5,322 227 4.26 4,672 199 4.27 650 14 Other consumer 1,314 126 9.51 1,118 112 10.04 196 18 Total consumer 51,406 2,018 3.92 44,769 1,652 3.69 6,637 15 Total loans and leases 115,266 4,827 4.19 96,818 3,646 3.77 18,448 19 Total earning assets 163,313 6,000 3.67 140,006 4,216 3.01 23,307 17 Cash and due from banks 1,666 1,356 310 23 Goodwill and other intangible assets 5,688 4,108 1,580 38 All other assets 10,184 8,804 1,380 16 Allowance for loan and lease losses (2,083) (1,993) (90) (5) Total assets $ 178,768 $ 152,281 $ 26,487 17 % Liabilities and Shareholders’ Equity: Interest-bearing deposits: Demand deposits—interest-bearing $ 41,779 $ 158 0.38 % $ 32,708 $ 12 0.04 % $ 9,071 28 % Money market deposits 33,733 112 0.33 30,039 21 0.07 3,694 12 Savings and other domestic deposits 21,316 5 0.02 17,357 5 0.03 3,959 23 Core certificates of deposit (4) 2,439 12 0.50 2,368 1 0.03 71 3 Other domestic deposits of $250,000 or more 233 1 0.47 353 1 0.21 (120) (34) Negotiable CDs, brokered and other deposits 3,838 75 1.96 3,525 5 0.16 313 9 Total interest-bearing deposits 103,338 363 0.35 86,350 45 0.05 16,988 20 Short-term borrowings 2,485 46 1.86 278 1 0.20 2,207 NM Long-term debt (5) 8,724 287 3.29 7,479 43 0.57 1,245 17 Total interest-bearing liabilities 114,547 696 0.61 94,107 89 0.09 20,440 22 Demand deposits—noninterest-bearing 41,574 37,960 3,614 10 All other liabilities 4,353 3,205 1,148 36 Total Huntington Bancshares Inc shareholders’ equity 18,263 16,997 1,266 7 Non-controlling interest 31 12 19 NM Total equity 18,294 17,009 1,285 8 Total liabilities and shareholders’ equity $ 178,768 $ 152,281 $ 26,487 17 % Net interest rate spread 3.06 2.92 Impact of noninterest-bearing funds on margin 0.19 0.03 Net interest margin/NII $ 5,304 3.25 % $ 4,127 2.95 % (1) FTE yields are calculated assuming a 21% tax rate.
(4) Includes consumer certificates of deposit of $250,000 or more. 48 Huntington Bancshares Incorporated Table of Contents Table 2 - Consolidated Average Balance Sheet and Net Interest Margin Analysis (Continued) Year Ended December 31, 2022 2021 Average Interest Income Yield/ Average Interest Income Yield/ Change from 2021 Average Balances (dollar amounts in millions) Balances (FTE) (1) Rate (2) Balances (FTE) (1) Rate (2) Amount Percent Assets: Interest-earning deposits with banks $ 4,852 $ 83 1.70 % $ 8,501 $ 12 0.13 % $ (3,649) (43) % Securities: Trading account securities 32 1 4.14 50 1 3.32 (18) (36) Available-for-sale securities: Taxable 21,994 576 2.62 19,767 261 1.32 2,227 11 Tax-exempt 2,842 94 3.32 2,916 71 2.42 (74) (3) Total available-for-sale securities 24,836 670 2.70 22,683 332 1.46 2,153 9 Held-to-maturity securities—taxable 16,509 351 2.13 10,000 174 1.74 6,509 65 Other securities 845 27 3.16 556 10 1.75 289 52 Total securities 42,222 1,049 2.48 33,289 517 1.55 8,933 27 Loans held for sale 973 41 4.24 1,398 41 2.96 (425) (30) Loans and leases: (3) Commercial: Commercial and industrial 45,362 1,956 4.31 38,294 1,476 3.86 7,068 18 Commercial real estate 13,524 602 4.45 10,016 332 3.31 3,508 35 Lease financing 4,974 251 5.04 3,739 186 4.98 1,235 33 Total commercial 63,860 2,809 4.40 52,049 1,994 3.83 11,811 23 Consumer: Residential mortgage 20,907 661 3.16 15,953 479 3.00 4,954 31 Automobile 13,454 472 3.51 13,008 471 3.62 446 3 Home equity 10,409 532 5.11 10,018 391 3.90 391 4 RV and marine 5,322 227 4.26 4,672 199 4.27 650 14 Other consumer 1,314 126 9.51 1,118 112 10.04 196 18 Total consumer 51,406 2,018 3.92 44,769 1,652 3.69 6,637 15 Total loans and leases 115,266 4,827 4.19 96,818 3,646 3.77 18,448 19 Total earning assets 163,313 6,000 3.67 140,006 4,216 3.01 23,307 17 Cash and due from banks 1,666 1,356 310 23 Goodwill and other intangible assets 5,688 4,108 1,580 38 All other assets 10,184 8,804 1,380 16 Allowance for loan and lease losses (2,083) (1,993) (90) (5) Total assets $ 178,768 $ 152,281 $ 26,487 17 % Liabilities and Shareholders’ Equity: Interest-bearing deposits: Demand deposits—interest-bearing $ 41,779 $ 158 0.38 % $ 32,708 $ 12 0.04 % $ 9,071 28 % Money market deposits 33,733 112 0.33 30,039 21 0.07 3,694 12 Savings and other domestic deposits 21,316 5 0.02 17,357 5 0.03 3,959 23 Core certificates of deposit (4) 2,439 12 0.50 2,368 1 0.03 71 3 Other domestic deposits of $250,000 or more 233 1 0.47 353 1 0.21 (120) (34) Negotiable CDs, brokered and other deposits 3,838 75 1.96 3,525 5 0.16 313 9 Total interest-bearing deposits 103,338 363 0.35 86,350 45 0.05 16,988 20 Short-term borrowings 2,485 46 1.86 278 1 0.20 2,207 794 Long-term debt (5) 8,724 287 3.29 7,479 43 0.57 1,245 17 Total interest-bearing liabilities 114,547 696 0.61 94,107 89 0.09 20,440 22 Demand deposits—noninterest-bearing 41,574 37,960 3,614 10 All other liabilities 4,353 3,205 1,148 36 Total liabilities 160,474 135,272 25,202 19 Total Huntington shareholders’ equity 18,263 16,997 1,266 7 Non-controlling interest 31 12 19 158 Total equity 18,294 17,009 1,285 8 Total liabilities and shareholders’ equity $ 178,768 $ 152,281 $ 26,487 17 % Net interest rate spread 3.06 2.92 Impact of noninterest-bearing funds on margin 0.19 0.03 Net interest margin/NII (FTE) $ 5,304 3.25 % $ 4,127 2.95 % (1) FTE yields are calculated assuming a 21% tax rate.
Noninterest income increased $147 million, or 28%, reflecting the impact of the TCF acquisition in addition to an increase in capital markets fees, primarily due to higher advisory fees supported by the impact of the Capstone Partners acquisition, loan syndication fees, foreign exchange fees, and interest rate derivatives fees.
Noninterest income increased $148 million, or 29%, reflecting the impact of the TCF acquisition in addition to an increase in capital markets and advisory fees, primarily due to higher advisory fees supported by the impact of the Capstone Partners acquisition, loan syndication fees, foreign exchange fees, and interest rate derivatives fees.
Outcomes of the process include a determination of the quality of the overall control process, the direction of risk, and our position compared to the defined risk appetite. Management also utilizes a wide series of metrics (key risk indicators) to monitor risk positions throughout the Company.
Outcomes of the process include a determination of the quality of the overall control environment, the direction of risk, and our position compared to the Board’s defined risk appetite. Management also utilizes a wide range of metrics (key risk indicators) to monitor risk positions throughout the Company.
Financial impacts are realized through changes in the interest rates of balance sheet assets and liabilities (net interest margin) or directly through valuation changes of capitalized MSR and/or trading assets (noninterest income); • Liquidity risk , which is the risk to current or anticipated earnings or capital arising from an inability to meet obligations when they come due.
Financial impacts are realized through changes in the interest rates of balance sheet assets and liabilities (net interest margin) or directly through valuation changes of capitalized MSR and/or trading assets (noninterest income); 54 Huntington Bancshares Incorporated Table of Contents • Liquidity risk , which is the risk to current or anticipated earnings or capital arising from an inability to meet obligations when they come due.
In general, a range for each metric is established, which allows the Company, in aggregate, to operate within an aggregate moderate-to-low, through-the-cycle risk appetite. Deviations from the range will indicate if the risk being measured exceeds desired tolerance, which may then necessitate corrective action.
In general, thresholds for each metric are established, which allows the Company to operate within an aggregate moderate-to-low, through-the-cycle risk appetite. Deviations from the thresholds will indicate if the risk being measured exceeds desired tolerance, which may then necessitate corrective action.
Changes to existing concentration limits, incorporating specific information relating to the potential impact on the overall portfolio composition and performance metrics, require the approval of the ROC prior to implementation. The table below provides our total loan and lease portfolio segregated by industry type.
Changes to existing concentration limits, incorporating specific information relating to the potential impact on the overall portfolio composition and performance metrics, require the approval of the ROC prior to implementation. 58 Huntington Bancshares Incorporated Table of Contents The table below provides our total loan and lease portfolio segregated by industry type.
The changes in the industry composition from December 31, 2021 are consistent with the portfolio growth metrics.
The changes in the industry composition from December 31, 2022 are consistent with the portfolio growth metrics.
The provision for credit losses increased $169 million, primarily due to reserve releases in 2021 as the economic environment was improving, contrasted with reserve builds in 2022 that recognize the increased near-term recessionary risks.
The provision for credit losses increased $258 million, primarily due to reserve releases in 2021 as the economic environment was improving, contrasted with reserve builds in 2022 that recognized the increased near-term recessionary risks.
Liquidity risk also results from the failure to recognize or address changes in market conditions that affect our ability to liquidate assets quickly and with minimal loss in value; 2022 Form 10-K 53 Table of Contents • Operational risk , which is the risk of loss arising from inadequate or failed internal processes or systems, including information security breaches or cyberattacks, human errors or misconduct, or adverse external events.
Liquidity risk also results from the failure to recognize or address changes in market conditions that affect our ability to liquidate assets quickly and with minimal loss in value; • Operational risk , which is the risk of loss arising from inadequate or failed internal processes or systems, including information security breaches or cyberattacks, human errors or misconduct, or adverse external events.
This committee also oversees our capital management and planning process, ensures that the amount and quality of capital are adequate in relation to expected and unexpected risks, and that our capital levels exceed “well-capitalized” requirements. • Our Technology Committee assists our Board in fulfilling its oversight responsibilities with respect to all technology, cyber security, and third-party risk management strategies and plans.
This committee also oversees our capital management and planning process, ensures that the amount and quality of capital are adequate in relation to expected and unexpected risks, and that our capital levels exceed “well-capitalized” requirements. • Our Technology Committee assists our Board in fulfilling its oversight responsibilities with respect to all technology and cybersecurity strategies and plans.
Our objective for managing cyber security risk is to avoid or minimize the impacts of external threat events or other efforts to penetrate our systems.
Our objective for managing cybersecurity risk is to avoid or minimize the impacts of external threat events or other efforts to penetrate our systems.
Also, when a borrower with discharged non-reaffirmed debt in a Chapter 7 bankruptcy is identified and the loan or lease is determined to be collateral dependent, the loan is placed on nonaccrual status. Commercial loans and leases are placed on nonaccrual status at 90-days past due, or earlier if repayment of principal and interest is in doubt.
Also, when a borrower with discharged non-reaffirmed debt in a Chapter 7 bankruptcy is identified and the loan or lease is determined to be collateral dependent, the loan is placed on nonaccrual status. 2023 Form 10-K 63 Table of Contents Commercial loans and leases are placed on nonaccrual status at 90-days past due, or earlier if repayment of principal and interest is in doubt.
We have continued to consistently execute our value proposition and take advantage of available market opportunities. Importantly, we have maintained our high credit quality standards while expanding the portfolio. RV AND MARINE PORTFOLIO Our strategy in the RV and Marine portfolio focuses on high quality borrowers, combined with appropriate LTVs, terms, and profitability.
We have continued to consistently execute our value proposition and take advantage of available market opportunities. Importantly, we have maintained our high credit quality standards while also maintaining strong origination volume. RV AND MARINE PORTFOLIO Our strategy in the RV and Marine portfolio focuses on high quality borrowers, combined with appropriate LTVs, terms, and profitability.
Liquidity risk is reviewed and managed continuously for the Bank and the parent company, as well as its subsidiaries. In addition, liquidity working groups meet regularly to identify and monitor liquidity positions, provide policy guidance, review funding strategies, and oversee the adherence to, and maintenance of, the contingency funding plans. Our primary source of liquidity is our core deposit base.
Liquidity risk is reviewed and managed continuously for the Bank and the parent company, as well as its subsidiaries. In addition, liquidity working groups meet regularly to identify and monitor liquidity positions, provide policy guidance, review funding strategies, and oversee the adherence to, and maintenance of, contingency funding plans.
In our efforts to identify risk mitigation techniques, we have focused on product design features, origination policies, and solutions for delinquent or stressed borrowers. The maximum level of credit exposure to individual credit borrowers is limited by policy guidelines based on the perceived risk of each borrower or related group of borrowers.
In our efforts to identify risk mitigation techniques, we have focused on product design features, origination policies, and solutions for delinquent or stressed borrowers. 2023 Form 10-K 55 Table of Contents The maximum level of credit exposure to individual credit borrowers is limited by policy guidelines based on the perceived risk of each borrower or related group of borrowers.
As of December 31, 2022, we have phased in 25% of the cumulative CECL deferral with the remaining impact to be recognized through the first quarter 2025.
As of December 31, 2023 and December 31, 2022, we have phased in 50% and 25%, respectively, of the cumulative CECL deferral with the remaining impact to be recognized through the first quarter 2025.
Note 1 - “ Significant Accounting Policies ” of the Notes to Consolidated Financial Statements, which is incorporated by reference into this MD&A, describes the significant accounting policies we used in our Consolidated Financial Statements. 2022 Form 10-K 83 Table of Contents An accounting estimate requires assumptions and judgments about uncertain matters that could have a material effect on the Consolidated Financial Statements.
Note 1 - “ Significant Accounting Policies ” of the Notes to Consolidated Financial Statements, which is incorporated by reference into this MD&A, describes the significant accounting policies we used in our Consolidated Financial Statements. An accounting estimate requires assumptions and judgments about uncertain matters that could have a material effect on the Consolidated Financial Statements.
For further information, including the notional amount and fair values of these derivatives, refer to Note 20 “ Derivative Financial Instruments ” of the Notes to Consolidated Financial Statements. 2022 Form 10-K 67 Table of Contents The following tables present additional information about the interest rate swaps, swaption collars, and floors used in Huntington’s asset and liability management activities.
For further information, including the notional amount and fair values of these derivatives, refer to Note 20 - “ Derivative Financial Instruments ” of the Notes to Consolidated Financial Statements. 2023 Form 10-K 69 Table of Contents The following presents additional information about the interest rate swaps, swaptions, swaption collars, and floors used in Huntington’s asset and liability management activities.
Additionally, on January 18, 2023, our Board of Directors declared a quarterly Series B, Series E, Series F, Series G, and Series H Preferred Stock dividend payable on April 17, 2023 to shareholders of record on April 1, 2023.
Additionally, on January 17, 2024, our Board of Directors declared a quarterly Series B, Series E, Series F, Series G, Series H, and Series J Preferred Stock dividend payable on April 15, 2024 to shareholders of record on April 1, 2024.
In 2022, a $3 million decrease in the provision for state income taxes, net of federal tax effect, was recorded for the portion of state deferred tax assets that are not more likely than not to be realized, compared to an increase of $7 million, net of federal tax effect, in 2021.
In 2023, a decrease of $1 million in the provision for state income taxes, net of federal tax effect, was recorded for the portion of state deferred tax assets that are not more likely than not to be realized, compared to a decrease of $3 million, net of federal tax effect, in 2022.
Examples of systemic events unrelated to us that could have an effect on our access to liquidity would be terrorism or war, natural disasters, political events, or the default or bankruptcy of a major corporation, mutual fund, or hedge fund.
Examples of systemic events unrelated to us that could have an effect on our access to liquidity could include terrorism or war, natural disasters, political events, failure of a major financial institution, or the default or bankruptcy of a major corporation, mutual fund, or hedge fund.
We consider core earnings, strong capital ratios, and credit quality essential for maintaining high credit ratings, which allows us cost-effective access to market-based liquidity. We mitigate liquidity risk by maintaining liquid assets in the form of cash, deposits at the Federal Reserve Bank, and investment securities.
We consider core earnings, strong capital ratios, and credit quality essential for maintaining high credit ratings, which allows us cost-effective access to market-based liquidity. We mitigate liquidity risk by maintaining liquid assets in the form of cash, cash equivalents, and securities.
As a result, management uses a probability-weighted approach that incorporates a baseline, an adverse and a more favorable economic scenario when formulating the quantitative estimate. However, to illustrate a hypothetical sensitivity analysis, management calculated a quantitative allowance using a 100% weighting applied to an adverse scenario.
As a result, management uses a probability-weighted approach that incorporates a baseline, an adverse, and a more favorable economic scenario when formulating the quantitative estimate. 86 Huntington Bancshares Incorporated Table of Contents However, to illustrate a hypothetical sensitivity analysis, management calculated a quantitative allowance using a 100% weighting applied to an adverse scenario.
For example, we do not extend additional credit to delinquent borrowers except in certain circumstances that substantially improve our overall repayment or collateral coverage position. Loan and Lease Credit Exposure Mix At December 31, 2022, our loans and leases totaled $119.5 billion, representing a $8.3 billion, or 7%, increase compared to $111.3 billion at December 31, 2021.
For example, we do not extend additional credit to delinquent borrowers except in certain circumstances that substantially improve our overall repayment or collateral coverage position. Loan and Lease Credit Exposure Mix At December 31, 2023, our loans and leases totaled $122.0 billion, representing a $2.5 billion, or 2%, increase compared to $119.5 billion at December 31, 2022.
The parent company had $3.5 billion and $2.8 billion, at December 31, 2022 and December 31, 2021, in cash and cash equivalents, respectively. On January 18, 2023, our Board of Directors declared a quarterly common stock cash dividend of $0.155 per common share. The dividend is payable on April 3, 2023, to shareholders of record on March 20, 2023.
The parent company had cash and cash equivalents of $4.0 billion and $3.5 billion at December 31, 2023 and December 31, 2022, respectively. On January 17, 2024, our Board of Directors declared a quarterly common stock cash dividend of $0.155 per common share. The dividend is payable on April 1, 2024, to shareholders of record on March 18, 2024.
The effective tax rates for 2022 and 2021 were 18.6% and 18.5%, respectively. Both years included the benefits from general business credits, capital losses, tax-exempt income, tax-exempt bank owned life insurance income, and investments in qualified affordable housing projects.
The effective tax rates for 2023 and 2022 were 17.3% and 18.6%, respectively. Both years included the benefits from general business credits, tax-exempt income, tax-exempt bank owned life insurance income and investments in qualified affordable housing projects.
The consumer portfolio is comprised primarily of automobile loans, home equity lines-of-credit, residential mortgages, and RV and marine finance (see Consumer Credit discussion) . 2022 Form 10-K 55 Table of Contents Residential mortgage – Residential mortgage loans represent loans to consumers for the purchase or refinance of a residence.
The consumer portfolio is comprised primarily of residential mortgages, automobile loans, home equity loans and lines-of-credit, and RV and marine finance (see Consumer Credit discussion) . Residential mortgage – Residential mortgage loans represent loans to consumers for the purchase or refinance of a residence.
We utilize a full-allocation methodology, where all Treasury / Other expenses, except reported acquisition-related expenses, if any, and a small amount of other residual unallocated expenses, are allocated to the four business segments. 78 Huntington Bancshares Incorporated Table of Contents Funds Transfer Pricing (FTP) We use an active and centralized FTP methodology to attribute appropriate net interest income to the business segments.
We utilize a full-allocation methodology, where all Treasury / Other expenses, except reported acquisition-related expenses, if any, and a small amount of other residual unallocated expenses, are allocated to the business segments. 2023 Form 10-K 81 Table of Contents Funds Transfer Pricing (FTP) We use an active and centralized FTP methodology to attribute appropriate net interest income to the business segments.
Management continues to assess the uncertainty in the macroeconomic environment, including geopolitical instability and current inflation levels, considering multiple macroeconomic forecasts that reflected a range of possible outcomes.
Management continues to assess the uncertainty in the macroeconomic environment, including ongoing risks in the commercial real estate environment, current inflation levels, political uncertainty, and geopolitical instability, considering multiple macroeconomic forecasts that reflected a range of possible outcomes.
Similarly, market speculation or rumors about us, or the banking industry in general, may adversely affect the cost and availability of normal funding sources. The contingency funding plan outlines the process for addressing a liquidity crisis. The plan provides for an evaluation of funding sources under various market conditions.
Similarly, market speculation or rumors about us, or the banking industry in general, may adversely affect the cost and availability of normal funding sources. The contingency funding plan, which is reviewed and approved by the ROC at least annually, outlines the process for addressing a liquidity crisis and provides for an evaluation of funding sources under various market conditions.
The ACL was $2.3 billion, or 1.90% of total loans and leases, at December 31, 2022, compared to $2.1 billion, or 1.89% of total loans and leases, at December 31, 2021.
The ACL was $2.4 billion, or 1.97% of total loans and leases, at December 31, 2023, compared to $2.3 billion, or 1.90% of total loans and leases, at December 31, 2022.
C&I loans are generally underwritten individually and secured with the assets of the company and/or the personal guarantee of the business owners. The financing of owner-occupied facilities is considered a C&I loan even though there is improved real estate as collateral.
We focus on borrowers doing business within our geographic markets. C&I loans are generally underwritten individually and secured with the assets of the company and/or the personal guarantee of the business owners. The financing of owner-occupied facilities is considered a C&I loan even though there is improved real estate as collateral.
See Note 22 - “ Commitments and Contingent Liabilities ” of the Notes to Consolidated Financial Statements for more information. 2022 Form 10-K 73 Table of Contents COMMITMENTS TO SELL LOANS Activity related to our mortgage origination activity supports the hedging of the mortgage pricing commitments to customers and the secondary sale to third parties.
See Note 22 - “ Commitments and Contingent Liabilities ” of the Notes to Consolidated Financial Statements for more information. 76 Huntington Bancshares Incorporated Table of Contents COMMITMENTS TO SELL LOANS Activity related to our mortgage origination activity supports the hedging of the mortgage pricing commitments to customers and the secondary sale to third parties.
(2) Average yield/rates include the impact of applicable derivatives. Loan and lease and deposit average yield/rates also include impact of applicable non-deferrable and amortized fees. (3) For purposes of this analysis, NALs are reflected in the average balances of loans and leases. (4) Includes consumer certificates of deposit of $250,000 or more.
(2) Yield/rates include the impact of applicable derivatives. Loan and lease and deposit average yield/rates also include impact of applicable non-deferrable and amortized fees. (3) For purposes of this analysis, NALs are reflected in the average balances of loans and leases.
Of the $398 million of commercial related NALs at December 31, 2022, $270 million, or 68%, represent loans and leases that were less than 30-days past due, demonstrating our continued commitment to proactive credit risk management.
Of the $498 million of commercial related NALs at December 31, 2023, $260 million, or 52%, represent loans and leases that were less than 30-days past due, demonstrating our continued commitment to proactive credit risk management.
Our commercial loan portfolio is diversified by product type, customer size, and geography, and is comprised of the following ( see Commercial Credit discussion) : C&I – C&I loans are made to commercial customers for use in normal business operations to finance working capital needs, equipment purchases, or other projects. We focus on borrowers doing business within our geographic markets.
Our commercial loan portfolio is diversified by product type, customer size, and geography, and is comprised of the following ( see Commercial Credit discussion) : C&I – C&I loans are made to commercial customers for use in normal business operations to finance working capital needs, equipment purchases, or other projects, and to institutional sponsors supporting REITs.
Segment net interest income increased $910 million, or 55%, primarily due to a 69 basis point increase in NIM driven by the higher rate environment and an increase in average assets reflecting the impact of the TCF acquisition, partially offset by a decrease in accelerated PPP loan fees recognized upon forgiveness payments from the SBA.
Segment net interest income increased $110 million, or 4%, primarily due to an increase in average assets reflecting organic growth and the impact of the TCF acquisition, partially offset by a 32 basis point decrease in NIM driven by higher cost of funds and a decrease in accelerated PPP loan fees recognized upon forgiveness payments from the SBA.
The resulting difference is not intended to represent an expected increase in allowance levels for a number of reasons including the following: • Management uses a weighted approach applied to multiple economic scenarios for its allowance estimation process; • The highly uncertain economic environment; • The difficulty in predicting the inter-relationships between the economic parameters used in the various economic scenarios; and • The sensitivity estimate does not account for any general reserve components and associated risk profile adjustments incorporated by management as part of its overall allowance framework. 84 Huntington Bancshares Incorporated Table of Contents We regularly review our ACL for appropriateness by performing on-going evaluations of the loan and lease portfolio.
The resulting difference is not intended to represent an expected increase in allowance levels for a number of reasons including the following: • Management uses a weighted approach applied to multiple economic scenarios for its allowance estimation process; • The highly uncertain economic environment; • The difficulty in predicting the inter-relationships between the economic parameters used in the various economic scenarios; and • The sensitivity estimate does not account for any general reserve components and associated risk profile adjustments incorporated by management as part of its overall allowance framework.
We also use third-party services to test the effectiveness of our cyber security risk management framework, and any such third parties are required to comply with our policies regarding information security and confidentiality. 74 Huntington Bancshares Incorporated Table of Contents To govern operational risks, we have an Operational Risk Committee, a Legal, Regulatory, and Compliance Committee, a Funds Movement Committee, and a Third Party Risk Management Committee.
We also use third-party services to test the effectiveness of our cybersecurity risk management framework, and any such third parties are required to comply with our policies regarding information security and confidentiality. 2023 Form 10-K 77 Table of Contents To govern operational risks, we have an Operational Risk Committee, a Legal, Regulatory, and Compliance Committee, a Funds Movement Committee, a Fraud Risk Committee, an Information and Technology Risk Committee, and a Third Party Risk Management Committee.
Subsequent to closing, results reflect all post-acquisition activity. For further information, refer to Note 3 “ Business Combinations ” of the Notes to Consolidated Financial Statements. In May 2022, Huntington completed the acquisition of Torana, now known as Huntington Choice Pay, a digital payments business focused on business to consumer payments.
For further information, refer to Note 3 - “ Business Combinations ” of the Notes to Consolidated Financial Statements. In May 2022, Huntington completed the acquisition of Torana, now known as Huntington ChoicePay, a digital payments business focused on business to consumer payments.
The following table presents risk-weighted assets and other financial data necessary to calculate certain financial ratios, including CET1, which we use to measure capital adequacy. 2022 Form 10-K 75 Table of Contents Table 22 - Capital Under Current Regulatory Standards (Basel III) At December 31, (dollar amounts in millions) 2022 2021 CET1 risk-based capital ratio: Total shareholders’ equity $ 17,731 $ 19,297 Regulatory capital adjustments: CECL transitional amount (1) 328 437 Shareholders’ preferred equity and related surplus (2,177) (2,177) Accumulated other comprehensive loss 3,098 230 Goodwill and other intangible assets, net of taxes (5,663) (5,484) Deferred tax assets that arise from tax loss and credit carryforwards (27) (54) CET1 capital 13,290 12,249 Additional tier 1 capital Shareholders’ preferred equity and related surplus 2,177 2,177 Tier 1 capital 15,467 14,426 Long-term debt and other tier 2 qualifying instruments 1,424 1,539 Qualifying allowance for loan and lease losses 1,682 1,281 Tier 2 capital 3,106 2,820 Total risk-based capital $ 18,573 $ 17,246 RWA $ 141,940 $ 131,266 CET1 risk-based capital ratio 9.36 % 9.33 % Other regulatory capital data: Tier 1 risk-based capital ratio 10.90 10.99 Total risk-based capital ratio 13.09 13.14 Tier 1 leverage ratio 8.60 8.56 (1) Huntington and the Bank elected to temporarily delay certain effects of CECL on regulatory capital until January 1, 2022 pursuant to a rule that allowed BHCs and banks to delay for two years 100% of the day-one impact of adopting CECL and 25% of the cumulative change in the reported allowance for credit losses since adopting CECL.
The following table presents risk-weighted assets and other financial data necessary to calculate certain financial ratios, including CET1, which we use to measure capital adequacy. 78 Huntington Bancshares Incorporated Table of Contents Table 23 - Capital Under Current Regulatory Standards (Basel III) At December 31, (dollar amounts in millions) 2023 2022 CET1 risk-based capital ratio: Total shareholders’ equity $ 19,353 $ 17,731 Regulatory capital adjustments: CECL transitional amount (1) 219 328 Shareholders’ preferred equity and related surplus (2,404) (2,177) Accumulated other comprehensive loss 2,676 3,098 Goodwill and other intangible assets, net of taxes (5,591) (5,663) Deferred tax assets that arise from tax loss and credit carryforwards (41) (27) CET1 capital 14,212 13,290 Additional tier 1 capital Shareholders’ preferred equity and related surplus 2,404 2,177 Tier 1 capital 16,616 15,467 Long-term debt and other tier 2 qualifying instruments 1,306 1,424 Qualifying allowance for loan and lease losses 1,735 1,682 Tier 2 capital 3,041 3,106 Total risk-based capital $ 19,657 $ 18,573 RWA $ 138,706 $ 141,940 CET1 risk-based capital ratio 10.25 % 9.36 % Other regulatory capital data: Tier 1 risk-based capital ratio 11.98 10.90 Total risk-based capital ratio 14.17 13.09 Tier 1 leverage ratio 9.32 8.60 (1) Huntington and the Bank elected to temporarily delay certain effects of CECL on regulatory capital until January 1, 2022 pursuant to a rule that allowed BHCs and banks to delay for two years 100% of the day-one impact of adopting CECL and 25% of the cumulative change in the reported allowance for credit losses since adopting CECL.
Beyond the reasonable and supportable period (two to three years), the economic variables revert to a historical equilibrium at a pace dependent on the state of the economy reflected within the economic scenario. Future economic conditions consider multiple macroeconomic scenarios provided to us by an independent third party and are reviewed through the appropriate committee governance channels described below.
Beyond the reasonable and supportable period (two to three years), the economic variables revert to a historical equilibrium at a pace dependent on the state of the economy reflected within the economic scenario. 64 Huntington Bancshares Incorporated Table of Contents Future economic conditions consider multiple macroeconomic scenarios provided to us by an independent third party and are reviewed through the Allowance for Credit Loss Development Methodology Committee described below.
In consumer lending, credit risk is managed from a segment (i.e., loan type, collateral position, geography, etc.) and vintage performance analysis. All portfolio segments are continuously monitored for changes in delinquency trends and other asset quality indicators.
This allows Huntington to maintain a current view of the customer for credit risk management and ACL purposes. In consumer lending, credit risk is managed from a segment (i.e., loan type, collateral position, geography, etc.) and vintage performance analysis. All portfolio segments are continuously monitored for changes in delinquency trends and other asset quality indicators.
We manage the overall credit exposure and portfolio composition via a credit concentration policy. The policy designates specific loan types, collateral types, and loan structures to be formally tracked and assigned maximum exposure limits as a percentage of capital.
The policy designates specific loan types, collateral types, and loan structures to be formally tracked and assigned maximum exposure limits as a percentage of capital.

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