0000049196 us-gaap:OperatingSegmentsMember hban:OtherRevenueMember hban:CommercialBankingMember 2018-07-01 2018-09-30
Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington,WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
QUARTERLY PERIOD ENDED September 30, 2017
Commission File Number 1-34073
Huntington Bancshares Incorporated
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2019
huntingtonlogo.jpg
Huntington Bancshares Incorporated
(Exact name of registrant as specified in its charter)
Maryland1-3407331-0724920
(State or other jurisdiction of
incorporation or organization)
(Commission
File Number)

(I.R.S. Employer
Identification No.)
Registrant's address: 41 South High Street, Columbus, Ohio43287
Registrant’s telephone number, including area code: (614) 480-8300(614) 480-2265
Securities registered pursuant to Section 12(b) of the Act
Title of class
Trading
Symbol(s)
Name of exchange on which registered
5.875% Series C Non-Cumulative, perpetual preferred stockHBANNNASDAQ
6.250% Series D Non-Cumulative, perpetual preferred stockHBANONASDAQ
Common Stock—Par Value $0.01 per ShareHBANNASDAQ
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days.     x  Yes    ¨☐  No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website (if any) every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     x  Yes    ¨☐  No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. Refer toSee the definitions of “large accelerated filer,” “accelerated filer” andfiler,” “smaller reporting company”company,” and emerging"emerging growth companycompany" in Rule 12b-2 of the Securities Exchange Act. (Check one):
Large accelerated filerAccelerated Filerx Accelerated filer¨☐
      
Non-accelerated filer
¨  (Do not check if a smaller reporting company)
☐ Smaller reporting company¨☐
    Emerging growth company¨☐
If an emerging growth company, indicate by checkmarkcheck mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B)13(a) of the Securities Exchange Act. ¨☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act).     ¨☐  Yes    x  No
There were 1,080,946,3151,032,755,207 shares of the Registrant’s common stock ($0.01 par value) outstanding on September 30, 2017.

2019.

HUNTINGTON BANCSHARES INCORPORATED
INDEX
 
PART I. FINANCIAL INFORMATION
 
Item 1. Financial Statements (Unaudited)
3936
Condensed Consolidated Balance Sheets at September 30, 20172019 and December 31, 20162018
4036
Condensed Consolidated Statements of Income for the three months and nine months ended September 30, 20172019 and 20162018
4137
Condensed Consolidated Statements of Comprehensive Income for the three months and nine months ended September 30, 20172019 and 20162018
4338
Condensed Consolidated Statements of Changes in Shareholders’ Equity for the three months and nine months ended September 30, 20172019 and 20162018
4439
Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 20172019 and 20162018
4541
Notes to Unaudited Condensed Consolidated Financial Statements
4743
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
5
Executive Overview
5
Discussion of Results of Operations
6
Executive OverviewRisk Management and Capital:
616
Discussion of Results of OperationsCredit Risk
716
Market Risk Management and Capital:
1925
CreditLiquidity Risk
1926
MarketOperational Risk
2728
LiquidityCompliance Risk
28
Capital
29
Operational RiskBusiness Segment Discussion
30
Compliance RiskAdditional Disclosures
3134
Capital
31
Fair Value
33
Business Segment Discussion
33
Additional Disclosures
37
Item 3. Quantitative and Qualitative Disclosures about Market Risk
9888
Item 4. Controls and Procedures
9988
PART II. OTHER INFORMATION
 
Item 1. Legal Proceedings
10089
Item 1A. Risk Factors
10089
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
10089
Item 6. Exhibits
10089
Signatures
10391

Glossary of Acronyms and Terms

The following listing provides a comprehensive reference of common acronyms and terms used throughout this document.the document:
 
ABSAsset-Backed Securities
ACL  Allowance for Credit Losses
AFS  Available-for-Sale
ALCOAsset-Liability Management Committee
ALLL  Allowance for Loan and Lease Losses
AOCI 
ANPRAdvance Notice of Proposed Rulemaking
Accumulated Other Comprehensive Income
ASC  Accounting Standards Codification
ATMAutomated Teller Machine
AULC  Allowance for Unfunded Loan Commitments
Basel III  Refers to the final rule issued by the FRB and OCC and published in the Federal Register on October 11, 2013
BHCBank Holding Companies
BHC ActBank Holding Company Act of 1956
C&I  Commercial and Industrial
CCAR  Comprehensive Capital Analysis and Review
CDOCollateralized Debt Obligations
CDs  CertificateCertificates of Deposit
CECL 
Current Expected Credit Loss

CET1  Common equity tier 1 on a transitional Basel III basis
CFPB  Bureau of Consumer Financial Protection Bureau
CISACybersecurity Information Sharing Act
CMO  Collateralized Mortgage Obligations
CRACommunity Reinvestment Act
CRE  Commercial Real Estate
CREVFCommercial Real Estate and Vehicle Finance
DIFDeposit Insurance Fund
Dodd-Frank ActDodd-Frank Wall Street Reform and Consumer Protection Act
EFTElectronic Fund Transfer
EPSEarnings Per Share
EVE  Economic Value of Equity
FASB Financial Accounting Standards Board
FDIC  Federal Deposit Insurance Corporation
FDICIAFederal Deposit Insurance Corporation Improvement Act of 1991
FHAFederal Housing Administration
FHCFinancial Holding Company
FHLB  Federal Home Loan Bank
of Cincinnati
FICO  Fair Isaac Corporation

FirstMeritFirstMerit Corporation
FRB  Federal Reserve Bank
FTE  Fully-Taxable Equivalent
FTP  Funds Transfer Pricing
FVO Fair Value Option
GAAP  Generally Accepted Accounting Principles in the United States of America
HIPHuntington Investment and Tax Savings Plan
HQLAHigh Quality Liquid Asset
HTM  Held-to-Maturity
IRS  Internal Revenue Service
LCR  Liquidity Coverage Ratio
LGDLoss-Given-Default
LIBOR  London Interbank Offered Rate
LIHTC  Low Income Housing Tax Credit
LTVLoan to Value
MBS  Mortgage-Backed Securities
MD&A  Management’s Discussion and Analysis of Financial Condition and Results of Operations
MSAMetropolitan Statistical Area
MSR  Mortgage Servicing Rights
Right
NAICS  North American Industry Classification System
NALs  Nonaccrual Loans
NCO  Net Charge-off
NII  Net InterestNoninterest Income
NIM  Net Interest Margin
NPAs  Nonperforming Assets
OCC  Office of the Comptroller of the Currency
OCI  Other Comprehensive Income (Loss)
OCROptimal Customer Relationship
OLEM  Other Loans Especially Mentioned
OREO  Other Real Estate Owned
OTTI  Other-Than-Temporary Impairment
PCD Purchased-Credit-Deteriorated

PDProbability-Of-Default
PlanHuntington Bancshares Retirement Plan
RBHPCG  Regional Banking and The Huntington Private Client Group
REITReal Estate Investment Trust
ROC Risk Oversight Committee
RWARisk-Weighted Assets
SADSpecial Assets Division
SBASmall Business Administration
SEC  Securities and Exchange Commission

SERPSupplemental Executive Retirement Plan
SRIPSupplemental Retirement Income Plan
TCETangible Common Equity
TDR  Troubled Debt Restructured Loan
Restructuring
U.S. Treasury  U.S. Department of the Treasury
UCS  Uniform Classification System
UPBUnpaid Principal Balance
USDAU.S. Department of Agriculture
VIE  Variable Interest Entity
XBRL  eXtensible Business Reporting Language









PART I. FINANCIAL INFORMATION
When we refer to “we”, “our”, and “us”, "Huntington," and "the Company" in this report, we mean Huntington Bancshares Incorporated and our consolidated subsidiaries, unless the context indicates that we refer only to the parent company, Huntington Bancshares Incorporated. When we refer to the “Bank” in this report, we mean our only bank subsidiary, The Huntington National Bank, and its subsidiaries.
 
Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations
INTRODUCTION
We are a multi-state diversified regional bank holding company organized under Maryland law in 1966 and headquartered in Columbus, Ohio. Through the Bank, we have over 150 years of servicing the financial needs of our customers. Through our subsidiaries, we provide full-service commercial and consumer banking services, mortgage banking services, automobile financing, recreational vehicle and marine financing, equipment leasing,financing, investment management, trust services, brokerage services, insurance programs,products and services, and other financial products and services. Our 958868 full-service branches and private client group offices are located in Ohio, Illinois, Indiana, Kentucky, Michigan, Pennsylvania, and West Virginia, and Wisconsin.Virginia. Select financial services and other activities are also conducted in various other states. International banking services are available through the headquarters office in Columbus, Ohio. Our foreign banking activities, in total or with any individual country, are not significant.
This MD&A provides information we believe necessary for understanding our financial condition, changes in financial condition, results of operations, and cash flows. The MD&A included in our 20162018 Form 10-K should be read in conjunction with this MD&A as this discussion provides only material updates to the 20162018 Form 10-K. This MD&A should also be read in conjunction with the Unaudited Condensed Consolidated Financial Statements, Notes to Unaudited Condensed Consolidated Financial Statements,Statements, and other information contained in this report.

EXECUTIVE OVERVIEW
Summary of 20172019 Third Quarter Results Compared to 20162018 Third Quarter
For the quarter, we reported net income of $275$372 million, or $0.23$0.34 per common share, compared with $127$378 million, or $0.11$0.33 per common share, in the year-ago quarter (see(see Table 1)1). Reported net income was impacted by FirstMerit acquisition-related net expenses totaling $31 million pre-tax, or $0.02 per common share.
Fully-taxable equivalent net interest income was $771$805 million, up $135down $5 million, or 21%1%. The resultsThis reflected a 12 basis point decrease in the FTE net interest margin to 3.20%, partially offset by the benefit from a $13.2the $2.9 billion, or 17%3%, increase in average earning assets and an 11 basis point improvement in the net interest margin to 3.29%. Average earning asset growth included a $7.6 billion, or 12%, increase in average loans and leases, and a $5.6 billion, or 31%, increase in average securities. The net interest margin expansion reflected a 26 basis point increase in earning asset yields, including an approximate 12 basis point impact of purchase accounting, and a 4 basis point increase in the benefit from noninterest-bearing funds, partially offset by a 19 basis point increase in funding costs.assets.
The provision for credit losses decreased $20increased $29 million year-over-year to $44$82 million in the 20172019 third quarter. NCOsquarter. Net charge-offs increased $3$44 million to $43$73 million. The increase was centered in two specific energy credit relationships, which made up nearly three-fourths of the total commercial net charge-offs. Consumer charge-offs have remained consistent over the past year. NCOs represented an annualized 0.25%0.39% of average loans and leases which remains below our long-term expectation of 35 to 55 basis points.in the current quarter, up from 0.16% in the year-ago quarter.
Non-interest income was $330$389 million, up $28$47 million, or 9%. The increase was14%, from the year ago quarter. Mortgage banking income increased $23 million, or 74%, primarily a resultreflecting higher overall salable spreads, and $8 million of income from net MSR risk management-related activities. Capital markets fees increased $10 million, or 38%, driven by increased underwriting activity primarily associated with the FirstMeritHutchinson, Shockey, Erley & Co. acquisition. In addition, cardCard and payment processing income increased due to higher credit$7 million, or 12%, and debit card related income and underlying customer growth. Capital markets feesservice charges on deposit accounts increased $5 million, or 5%, both reflecting our continued strategic focus on expanding the business.increased account activity.
Non-interest expense was $680$667 million, down $32up $16 million, or 4%2%, from the year-ago quarter. Personnel costs increased $18 million, or 5%, primarily reflecting a shift to colleagues supporting our core strategies and the impactimplementation of annual merit increases in the FirstMerit acquisition. Personnel costs decreased primarily related to acquisition-related personnel expense partially offset by an increase in average full-time equivalent employees. Further, professional services, outside2019 second quarter. Outside data processing and other services decreasedincreased $18 million, or 26%, primarily reflecting a net decrease in acquisition-related Significant Items, partially offsetdriven by higher cardtechnology investment costs. Deposit and data processingother insurance expense from increased usage. Partially offsetting these decreases, otherdecreased $10 million, or 56%, due to the discontinuation of the FDIC surcharge in the 2018 fourth quarter. Other expense increaseddecreased $9 million, or 16%, primarily reflecting an increaseas a result of operational losses in donations and sponsorships and equipment lease residual impairments.the third quarter 2018.

The tangible common equity to tangible assets ratio was 7.42%, up 28 basis points from a year-ago. The CET1Common Equity Tier 1 risk-based capital ratio was 9.94% at September 30, 2017, compared to 9.09%10.02%, up from 9.89% a year ago. The regulatory Tier 1 risk-based capital ratio was 11.30%11.41% compared to 10.40%11.33% at September 30, 2016. 2018. All capital ratios were impacted by the repurchase of $12333.4 million of common stock at an average cost of $12.75 per share duringshares over the 2017 third quarter. The total risk-based capital ratio was impacted by the repurchase of trust preferred securities during the 2016 fourth quarter.last four quarters.

Business Overview
General
OurOur general business objectives are:
1.Grow net interest income•Consistent organic revenue and fee income.balance sheet growth.
2.•Invest in our businesses, particularly technology and risk management.
•Deliver positive operating leverage.
3.Increase primary customer relationships across all business segments.•Maintain aggregate moderate-to-low risk appetite.
4.Continue•Disciplined capital management.
Economy
Consumer confidence remains at a high level, and consumers continue to strengthen risk management.
5.Maintain capitalperform well. We experienced strong origination activity in our home lending and liquidity positionsauto finance businesses, while maintaining our underwriting discipline. Consistent with recent economic data pointing toward slowing growth, compounded by uncertainty related to trade and tariffs, we have seen a shift in tone from some of our manufacturing customers, which has impacted certain of their investments and expansions. While our commercial loan pipeline remains consistent with our risk appetite.
Economy
We expect consumer and business optimism to remain high across our footprint. Labor markets and consumer spending are strong with some inflationary pressures. Throughout 2017, consumer loan growth has remained steady. To date manufacturing has benefited the Midwest. Our pipelines supporta year ago, providing us near-term confidence, we have a more measured outlook for commercial loan growth althoughover the commercial lending environment is competitive on both structuresmedium term.
As we have stated the past few quarters, we do not foresee a recession in the near term. Our core earnings power, strong capital, aggregate moderate-to-low risk appetite, and rates.long-term strategic alignment position us to withstand economic headwinds should they emerge.
DISCUSSION OF RESULTS OF OPERATIONS
This section provides a review of financial performance from a consolidated perspective. It also includes a “Significant Items” section that summarizes key issues important for a complete understanding of performance trends. Key Unaudited Condensed Consolidated Balance Sheet and Unaudited Condensed Statement of Income trends are discussed. All earnings per share data are reported on a diluted basis. For additional insight on financial performance, please read this section in conjunction with the “Business“Business Segment Discussion.Discussion”.

Table 1 - Selected Quarterly Income Statement Data (1)
(dollar amounts in thousands, except per share amounts)        
Three Months Ended         
September 30, June 30, March 31, December 31, September 30,Three Months Ended
2017 2017 2017 2016 2016September 30, June 30, March 31, December 31, September 30,
(dollar amounts in millions, share amounts in thousands)2019 2019 2019 2018 2018
Interest income$872,987
 $846,424
 $820,360
 $814,858
 $694,346
$1,052
 $1,068
 $1,070
 $1,056
 $1,007
Interest expense114,554
 101,912
 90,385
 79,877
 68,956
253
 256
 248
 223
 205
Net interest income758,433
 744,512
 729,975
 734,981
 625,390
799
 812
 822
 833
 802
Provision for credit losses43,590
 24,978
 67,638
 74,906
 63,805
82
 59
 67
 60
 53
Net interest income after provision for credit losses714,843
 719,534
 662,337
 660,075
 561,585
717
 753
 755
 773
 749
Service charges on deposit accounts90,681
 87,582
 83,420
 91,577
 86,847
98
 92
 87
 94
 93
Cards and payment processing income53,647
 52,485
 47,169
 49,113
 44,320
Card and payment processing income64
 63
 56
 58
 57
Trust and investment management services44
 43
 44
 42
 43
Mortgage banking income33,615
 32,268
 31,692
 37,520
 40,603
54
 34
 21
 23
 31
Trust and investment management services33,531
 32,232
 33,869
 34,016
 28,923
Capital markets fees36
 34
 22
 34
 26
Insurance income13,992
 15,843
 15,264
 16,486
 15,865
20
 23
 21
 21
 19
Brokerage income14,458
 16,294
 15,758
 17,014
 14,719
Capital markets fees21,719
 16,836
 14,200
 18,730
 14,750
Bank owned life insurance income16,453
 15,322
 17,542
 17,067
 14,452
18
 15
 16
 16
 19
Gain on sale of loans13,877
 12,002
 12,822
 24,987
 7,506
Net securities gains (losses)(33) 135
 (8) (1,771) 1,031
Other noninterest income38,157
 44,219
 40,735
 29,598
 33,399
Gain on sale of loans and leases13
 13
 13
 16
 16
Securities gains (losses)—
 (2) —
 (19) (2)
Other income42
 59
 39
 44
 40
Total noninterest income330,097
 325,218
 312,463
 334,337
 302,415
389
 374
 319
 329
 342
Personnel costs377,088
 391,997
 382,000
 359,755
 405,024
406
 428
 394
 399
 388
Outside data processing and other services79,586
 75,169
 87,202
 88,695
 91,133
87
 89
 81
 83
 69
Net occupancy38
 38
 42
 70
 38
Equipment45,458
 42,924
 46,700
 59,666
 40,792
41
 40
 40
 48
 38
Net occupancy55,124
 52,613
 67,700
 49,450
 41,460
Deposit and other insurance expense8
 8
 8
 9
 18
Professional services15,227
 18,190
 18,295
 23,165
 47,075
16
 12
 12
 17
 17
Marketing16,970
 18,843
 13,923
 21,478
 14,438
10
 11
 7
 15
 12
Deposit and other insurance expense18,514
 20,418
 20,099
 15,772
 14,940
Amortization of intangibles14,017
 14,242
 14,355
 14,099
 9,046
12
 12
 13
 13
 13
Other noninterest expense58,444
 59,968
 57,148
 49,417
 48,339
Other expense49
 62
 56
 57
 58
Total noninterest expense680,428
 694,364
 707,422
 681,497
 712,247
667
 700
 653
 711
 651
Income before income taxes364,512
 350,388
 267,378
 312,915
 151,753
439
 427
 421
 391
 440
Provision for income taxes89,944
 78,647
 59,284
 73,952
 24,749
67
 63
 63
 57
 62
Net income274,568
 271,741
 208,094
 238,963
 127,004
372
 364
 358
 334
 378
Dividends on preferred shares18,903
 18,889
 18,878
 18,865
 18,537
18
 18
 19
 19
 18
Net income applicable to common shares$255,665
 $252,852
 $189,216
 $220,098
 $108,467
$354
 $346
 $339
 $315
 $360
                  
Average common shares—basic1,086,038
 1,088,934
 1,086,374
 1,085,253
 938,578
1,034,940
 1,044,802
 1,046,995
 1,054,460
 1,084,536
Average common shares—diluted1,106,491
 1,108,527
 1,108,617
 1,104,358
 952,081
1,051,273
 1,060,280
 1,065,638
 1,073,055
 1,103,740
Net income per common share—basic$0.24
 $0.23
 $0.17
 $0.20
 $0.12
$0.34
 $0.33
 $0.32
 $0.30
 $0.33
Net income per common share—diluted0.23
 0.23
 0.17
 0.20
 0.11
0.34
 0.33
 0.32
 0.29
 0.33
Cash dividends declared per common share0.08
 0.08
 0.08
 0.08
 0.07
Return on average total assets1.08% 1.09% 0.84% 0.95% 0.58%1.37% 1.36% 1.35% 1.25% 1.42%
Return on average common shareholders’ equity10.5
 10.6
 8.2
 9.4
 5.4
13.4
 13.5
 13.8
 12.9
 14.3
Return on average tangible common shareholders’ equity (2)14.1
 14.4
 11.3
 12.9
 7.0
Net interest margin (3)3.29
 3.31
 3.30
 3.25
 3.18
Efficiency ratio (4)60.5
 62.9
 65.7
 61.6
 75.0
Return on average tangible common shareholders’ equity (1)17.3
 17.7
 18.3
 17.3
 19.0
Net interest margin (2)3.20
 3.31
 3.39
 3.41
 3.32
Efficiency ratio (3)54.7
 57.6
 55.8
 58.7
 55.3
Effective tax rate24.7
 22.4
 22.2
 23.6
 16.3
15.4
 14.6
 15.0
 14.6
 14.1
                  
Revenue—FTE                  
Net interest income$758,433
 $744,512
 $729,975
 $734,981
 $625,390
$799
 $812
 $822
 $833
 $802
FTE adjustment12,209
 12,069
 12,058
 12,560
 10,598
6
 7
 7
 8
 8
Net interest income (3)770,642
 756,581
 742,033
 747,541
 635,988
Net interest income (2)805
 819
 829
 841
 810
Noninterest income330,097
 325,218
 312,463
 334,337
 302,415
389
 374
 319
 329
 342
Total revenue (3)$1,100,739
 $1,081,799
 $1,054,496
 $1,081,878
 $938,403
Total revenue (2)$1,194
 $1,193
 $1,148
 $1,170
 $1,152




        
Table 2 - Selected Year to Date Income Statements (1)
        
 Nine Months Ended September 30, Change
(dollar amounts in thousands, except per share amounts)2017 2016 Amount Percent
Interest income$2,539,771
 $1,817,255
 $722,516
 40 %
Interest expense306,851
 182,918
 123,933
 68
Net interest income2,232,920
 1,634,337
 598,583
 37
Provision for credit losses136,206
 115,896
 20,310
 18
Net interest income after provision for credit losses2,096,714
 1,518,441
 578,273
 38
Service charges on deposit accounts261,683
 232,722
 28,961
 12
Cards and payment processing income153,301
 119,951
 33,350
 28
Mortgage banking income97,575
 90,737
 6,838
 8
Trust and investment management services99,633
 74,258
 25,375
 34
Insurance income45,099
 48,037
 (2,938) (6)
Brokerage income46,510
 44,819
 1,691
 4
Capital markets fees52,755
 40,797
 11,958
 29
Bank owned life insurance income49,317
 40,500
 8,817
 22
Gain on sale of loans38,701
 22,166
 16,535
 75
Net securities gains (losses)

94
 1,687
 (1,593) (94)
Other noninterest income123,110
 99,720
 23,390
 23
Total noninterest income967,778
 815,394
 152,384
 19
Personnel costs1,151,085
 989,369
 161,716
 16
Outside data processing and other services241,957
 216,047
 25,910
 12
Equipment135,082
 105,173
 29,909
 28
Net occupancy175,437
 103,640
 71,797
 69
Professional services51,712
 82,101
 (30,389) (37)
Marketing49,736
 41,479
 8,257
 20
Deposit and other insurance expense59,031
 38,335
 20,696
 54
Amortization of intangibles42,614
 16,357
 26,257
 161
Other noninterest expense175,560
 134,487
 41,073
 31
Total noninterest expense2,082,214
 1,726,988
 355,226
 21
Income before income taxes982,278
 606,847
 375,431
 62
Provision for income taxes227,875
 133,989
 93,886
 70
Net income754,403
 472,858
 281,545
 60
Dividends declared on preferred shares56,670
 46,409
 10,261
 22
Net income applicable to common shares$697,733
 $426,449
 $271,284
 64 %
        
Average common shares—basic1,087,115
 844,167
 242,948
 29 %
Average common shares—diluted1,107,878
 856,934
 250,944
 29
Net income per common share—basic$0.64
 $0.51
 $0.13
 25
Net income per common share—diluted0.63
 0.50
 0.13
 26
Cash dividends declared per common share0.24
 0.21
 0.03
 14
        
Revenue—FTE       
Net interest income$2,232,920
 $1,634,337
 $598,583
 37 %
FTE adjustment36,336
 29,848
 6,488
 22
Net interest income (3)2,269,256
 1,664,185
 605,071
 36
Noninterest income967,778
 815,394
 152,384
 19
Total revenue (3)$3,237,034
 $2,479,579
 $757,455
 31 %
        
Table 2 - Selected Year to Date Income Statements
        
 Nine Months Ended September 30, Change
(dollar amounts in millions, except per share amounts)2019 2018 Amount Percent
Interest income$3,190
 $2,893
 $297
 10 %
Interest expense757
 537
 220
 41
Net interest income2,433
 2,356
 77
 3
Provision for credit losses208
 175
 33
 19
Net interest income after provision for credit losses2,225
 2,181
 44
 2
Service charges on deposit accounts277
 270
 7
 3
Card and payment processing income183
 166
 17
 10
Trust and investment management services131
 129
 2
 2
Mortgage banking income109
 85
 24
 28
Capital markets fees92
 74
 18
 24
Insurance income64
 61
 3
 5
Bank owned life insurance income49
 51
 (2) (4)
Gain on sale of loans and leases39
 39
 —
 —
Securities gains (losses)(2) (2) —
 —
Other income140
 119
 21
 18
Total noninterest income1,082
 992
 90
 9
Personnel costs1,228
 1,160
 68
 6
Outside data processing and other services257
 211
 46
 22
Equipment121
 116
 5
 4
Net occupancy118
 114
 4
 4
Professional services40
 43
 (3) (7)
Marketing28
 38
 (10) (26)
Deposit and other insurance expense24
 54
 (30) (56)
Amortization of intangibles37
 40
 (3) (8)
Other expense167
 160
 7
 4
Total noninterest expense2,020
 1,936
 84
 4
Income before income taxes1,287
 1,237
 50
 4
Provision for income taxes193
 178
 15
 8
Net income1,094
 1,059
 35
 3
Dividends declared on preferred shares55
 51
 4
 8
Net income applicable to common shares$1,039
 $1,008
 $31
 3 %
        
Average common shares—basic1,042,246
 1,090,570
 (48,324) (4)%
Average common shares—diluted1,059,064
 1,116,978
 (57,914) (5)
Net income per common share—basic$1.00
 $0.92
 $0.08
 9
Net income per common share—diluted0.98
 0.90
 0.08
 9
        
Revenue—FTE       
Net interest income$2,433
 $2,356
 $77
 3 %
FTE adjustment20
 22
 (2) (9)
Net interest income (2)2,453
 2,378
 75
 3
Noninterest income1,082
 992
 90
 9
Total revenue (2)$3,535
 $3,370
 $165
 5 %
(1)Comparisons for presented periods are impacted by a number of factors. Refer to the “Significant Items” for additional discussion regarding these key factors.
(2)Net income excluding expense for amortization of intangibles for the period divided by average tangible common shareholders’ equity. Average tangible common shareholders’ equity equals average total common shareholders’ equity less average intangible assets and goodwill. Expense for amortization of intangibles and average intangible assets are net of deferred tax liability, and calculated assuming a 35%21% tax rate.
(3)(2)On a fully-taxable equivalent (FTE)an FTE basis assuming a 35%21% tax rate.
(4)(3)Noninterest expense less amortization of intangibles and goodwill impairment divided by the sum of FTE net interest income and noninterest income excluding securities gains.







Significant Items
Earnings comparisons are impacted by the Significant Items summarized below:
Mergers and Acquisitions. Significant events relating to mergers and acquisitions, and the impacts of those events on our reported results, are as follows:
During the 2017 third quarter, $31 million of noninterest expense was recorded related to the acquisition of FirstMerit. This resulted in a negative impact of $0.02 per common share.

During the 2017 second quarter, $50 million of noninterest expense was recorded related to the acquisition of FirstMerit. This resulted in a negative impact of $0.03 per common share.

During the 2016 third quarter, $159 million of noninterest expense was recorded related to the then pending acquisition of FirstMerit. This resulted in a negative impact of $0.11 per common share.

The following table reflects the earnings impact of the above-mentioned Significant Items for periods affected:
Table 3 - Significant Items Influencing Earnings Performance Comparison
(dollar amounts in thousands, except per share amounts)          
 Three Months Ended
 September 30, 2017 June 30, 2017 September 30, 2016
 Amount EPS (1) Amount EPS (1) Amount EPS (1)
Net income$274,568
   $271,741
   $127,004
  
Earnings per share, after-tax  $0.23
   $0.23
   $0.11
            
Significant Items—favorable (unfavorable) impact:Earnings EPS (1) Earnings EPS (1) Earnings EPS (1)
Mergers and acquisitions, net expenses$(30,733)   $(50,243)   $(158,749)  
Tax impact10,757
   17,585
   52,033
  
Mergers and acquisitions, after-tax$(19,976)
$(0.02)
$(32,658)
$(0.03) $(106,716) $(0.11)

(1)Based upon the quarterly average outstanding diluted common shares.
 Nine Months Ended
 September 30, 2017 September 30, 2016
 Amount EPS (1) Amount EPS (1)
Net income$754,403
   $472,858
  
Earnings per share, after-tax  $0.63
   $0.50
        
Significant Items—favorable (unfavorable) impact:Earnings EPS (1) Earnings EPS (1)
Mergers and acquisitions, net expenses$(152,121)   $(185,944)  
Tax impact53,243
   61,252
  
Mergers and acquisitions, after-tax$(98,878) $(0.09) $(124,692) $(0.14)

(1)Based upon the year to date average outstanding diluted common shares.

Net Interest Income / Average Balance Sheet
The following tables detail the change in our average balance sheet and the net interest margin:
Table 4 - Consolidated Average Balance Sheet and Net Interest Margin Analysis
Table 3 - Consolidated Average Balance Sheet and Net Interest Margin AnalysisTable 3 - Consolidated Average Balance Sheet and Net Interest Margin Analysis
Average Balances    
     Three Months Ended Change
Average Balances    September 30, June 30, March 31, December 31, September 30, 3Q19 vs. 3Q18
(dollar amounts in millions)Three Months Ended Change2019 2019 2019 2018 2018 Amount Percent
September 30, June 30, March 31, December 31, September 30, 3Q17 vs. 3Q16
2017 2017 2017 2016 2016 Amount Percent
Assets:                          
Interest-bearing deposits in Federal Reserve Bank (2)$514
 $518
 $501
 $483
 $—
 $514
 100 %
Interest-bearing deposits in banks$102
 $102
 $100
 $110
 $95
 $7
 8 %149
 135
 109
 97
 83
 66
 80
Loans held for sale678
 525
 415
 2,507
 695
 (17) (2)
Securities:                         

Available-for-sale and other securities:             
Trading account securities137
 161
 138
 131
 82
 55
 67
Available-for-sale securities:            

Taxable12,275
 13,135
 12,801
 13,734
 9,785
 2,490
 25
11,096
 10,501
 10,752
 10,351
 10,469
 627
 6
Tax-exempt3,161
 3,104
 3,049
 3,136
 2,854
 307
 11
2,820
 2,970
 3,048
 3,176
 3,496
 (676) (19)
Total available-for-sale and other securities15,436
 16,239
 15,850
 16,870
 12,639
 2,797
 22
Trading account securities92
 91
 137
 139
 49
 43
 88
Total available-for-sale securities13,916
 13,471
 13,800
 13,527
 13,965
 (49) —
Held-to-maturity securities—taxable8,264
 7,427
 7,656
 5,432
 5,487
 2,777
 51
8,566
 8,771
 8,653
 8,433
 8,560
 6
 —
Other securities437
 466
 536
 565
 567
 (130) (23)
Total securities23,793
 23,756
 23,643
 22,441
 18,175
 5,618
 31
23,056
 22,869
 23,127
 22,656
 23,174
 (118) (1)
Loans and leases: (1)             
Loans held for sale877
 734
 700
 694
 745
 132
 18
Loans and leases: (4)            

Commercial:                         

Commercial and industrial27,643
 27,992
 27,922
 27,727
 24,957
 2,686
 11
30,632
 30,644
 30,546
 29,557
 28,870
 1,762
 6
Commercial real estate:                         

Construction1,152
 1,130
 1,314
 1,413
 1,132
 20
 2
1,165
 1,168
 1,174
 1,138
 1,132
 33
 3
Commercial6,064
 5,940
 6,039
 5,805
 5,227
 837
 16
5,762
 5,732
 5,686
 5,806
 6,019
 (257) (4)
Commercial real estate7,216
 7,070
 7,353
 7,218
 6,359
 857
 13
6,927
 6,900
 6,860
 6,944
 7,151
 (224) (3)
Total commercial34,859
 35,062
 35,276
 34,945
 31,316
 3,543
 11
37,559
 37,544
 37,406
 36,501
 36,021
 1,538
 4
Consumer:                         

Automobile11,713
 11,324
 11,063
 10,866
 11,402
 311
 3
12,181
 12,219
 12,361
 12,423
 12,368
 (187) (2)
Home equity9,960
 9,958
 10,072
 10,101
 9,260
 700
 8
9,353
 9,482
 9,641
 9,817
 9,873
 (520) (5)
Residential mortgage8,402
 7,979
 7,777
 7,690
 7,012
 1,390
 20
11,214
 11,010
 10,787
 10,574
 10,236
 978
 10
RV and marine finance2,296
 2,039
 1,874
 1,844
 915
 1,381
 151
RV and marine3,528
 3,413
 3,296
 3,216
 3,016
 512
 17
Other consumer1,046
 983
 919
 959
 817
 229
 28
1,261
 1,264
 1,284
 1,291
 1,237
 24
 2
Total consumer33,417
 32,283
 31,705
 31,460
 29,406
 4,011
 14
37,537
 37,388
 37,369
 37,321
 36,730
 807
 2
Total loans and leases68,276
 67,345
 66,981
 66,405
 60,722
 7,554
 12
75,096
 74,932
 74,775
 73,822
 72,751
 2,345
 3
Allowance for loan and lease losses(672) (672) (636) (614) (623) (49) 8
(799) (778) (780) (777) (759) (40) (5)
Net loans and leases67,604
 66,673
 66,345
 65,791
 60,099
 7,505
 12
74,297
 74,154
 73,995
 73,045
 71,992
 2,305
 3
Total earning assets92,849
 91,728
 91,139
 91,463
 79,687
 13,162
 17
99,692
 99,188
 99,212
 97,752
 96,753
 2,939
 3
Cash and due from banks1,299
 1,287
 2,011
 1,538
 1,325
 (26) (2)817
 835
 853
 909
 1,330
 (513) (39)
Intangible assets2,359
 2,373
 2,387
 2,421
 1,547
 812
 52
2,240
 2,252
 2,265
 2,288
 2,305
 (65) (3)
All other assets5,455
 5,405
 5,442
 5,559
 4,962
 493
 10
6,216
 5,982
 5,961
 5,705
 5,726
 490
 9
Total assets$101,290
 $100,121
 $100,343
 $100,367
 $86,898
 $14,392
 17 %$108,166
 $107,479
 $107,511
 $105,877
 $105,355
 $2,811
 3 %
Liabilities and Shareholders’ Equity:                         

Deposits:             
Demand deposits—noninterest-bearing$21,723
 $21,599
 $21,730
 $23,250
 $20,033
 $1,690
 8 %
Interest-bearing deposits:            

Demand deposits—interest-bearing17,878
 17,445
 16,805
 15,294
 12,362
 5,516
 45
$19,796
 $19,693
 19,770
 $19,860
 $19,553
 $243
 1 %
Total demand deposits39,601
 39,044
 38,535
 38,544
 32,395
 7,206
 22
Money market deposits20,314
 19,212
 18,653
 18,618
 18,453
 1,861
 10
24,266
 23,305
 22,935
 22,595
 21,547
 2,719
 13
Savings and other domestic deposits11,590
 11,889
 11,970
 12,272
 8,889
 2,701
 30
9,681
 10,105
 10,338
 10,534
 11,434
 (1,753) (15)
Core certificates of deposit2,044
 2,146
 2,342
 2,636
 2,285
 (241) (11)
Total core deposits73,549
 72,291
 71,500
 72,070
 62,022
 11,527
 19
Core certificates of deposit (5)5,666
 5,860
 6,052
 5,705
 4,916
 750
 15
Other domestic time deposits of $250,000 or more432
 479
 470
 391
 382
 50
 13
315
 310
 335
 346
 285
 30
 11
Brokered deposits and negotiable CDs3,563
 3,783
 3,969
 4,273
 3,904
 (341) (9)2,599
 2,685
 3,404
 3,507
 3,533
 (934) (26)
Deposits in foreign offices—
 —
 —
 152
 194
 (194) —
Total deposits77,544
 76,553
 75,939
 76,886
 66,502
 11,042
 17
Total interest-bearing deposits62,323
 61,958
 62,834
 62,547
 61,268
 1,055
 2
Short-term borrowings2,391
 2,687
 3,792
 2,628
 1,306
 1,085
 83
2,331
 3,166
 2,320
 1,006
 1,732
 599
 35
Long-term debt8,949
 8,730
 8,529
 8,594
 8,488
 461
 5
9,536
 8,914
 8,979
 8,871
 8,915
 621
 7
Total interest-bearing liabilities67,161
 66,371
 66,530
 64,858
 56,263
 10,898
 19
74,190
 74,038
 74,133
 72,424
 71,915
 2,275
 3
Demand deposits—noninterest-bearing19,926
 19,760
 19,938
 20,384
 20,230
 (304) (2)
All other liabilities1,661
 1,557
 1,661
 1,833
 1,608
 53
 3
2,336
 2,206
 2,284
 2,180
 2,054
 282
 14
Shareholders’ equity10,745
 10,594
 10,422
 10,426
 8,994
 1,751
 19
11,714
 11,475
 11,156
 10,889
 11,156
 558
 5
Total liabilities and shareholders’ equity$101,290
 $100,121
 $100,343
 $100,367
 $86,898
 $14,392
 17 %$108,166
 $107,479
 $107,511
 $105,877
 $105,355
 $2,811
 3 %

Table 4 - Consolidated Average Balance Sheet and Net Interest Margin Analysis (Continued)
Table 3 - Consolidated Average Balance Sheet and Net Interest Margin Analysis (Continued)Table 3 - Consolidated Average Balance Sheet and Net Interest Margin Analysis (Continued)
                  
Average Yield Rates (2)Average Yield Rates (3)
Three Months EndedThree Months Ended
September 30, June 30, March 31, December 31, September 30,September 30, June 30, March 31, December 31, September 30,
Fully-taxable equivalent basis (3)(1)2017 2017 2017 2016 20162019 2019 2019 2018 2018
Assets:                  
Interest-bearing deposits in Federal Reserve Bank (2)2.19% 2.38% 2.40% 2.33% —%
Interest-bearing deposits in banks1.77% 1.53% 1.09% 0.64% 0.64%2.38
 2.08
 1.75
 1.97
 1.95
Loans held for sale3.83
 3.73
 3.82
 2.95
 3.53
Securities:                  
Available-for-sale and other securities:         
Trading account securities2.36
 1.92
 2.03
 1.94
 0.26
Available-for-sale securities:         
Taxable2.42
 2.38
 2.38
 2.43
 2.35
2.67
 2.73
 2.82
 2.71
 2.61
Tax-exempt3.62
 3.71
 3.77
 3.60
 3.01
3.63
 3.66
 3.69
 4.12
 3.53
Total available-for-sale and other securities2.67
 2.64
 2.65
 2.65
 2.50
Trading account securities0.16
 0.25
 0.11
 0.18
 0.58
Total available-for-sale securities2.87
 2.94
 3.01
 3.04
 2.84
Held-to-maturity securities—taxable2.36
 2.38
 2.36
 2.43
 2.41
2.51
 2.54
 2.52
 2.45
 2.43
Other securities3.15
 3.44
 4.51
 4.24
 4.58
Total securities2.55
 2.55
 2.54
 2.58
 2.47
2.74
 2.79
 2.86
 2.84
 2.73
Loans and leases: (1)         
Loans held for sale3.69
 4.00
 4.07
 4.04
 4.45
Loans and leases: (4)         
Commercial:                  
Commercial and industrial4.05
 4.04
 3.98
 3.83
 3.68
4.57
 4.82
 4.91
 4.81
 4.64
Commercial real estate:                  
Construction4.55
 4.26
 3.95
 3.65
 3.76
5.50
 5.59
 5.58
 5.47
 5.31
Commercial4.08
 3.97
 3.69
 3.54
 3.54
4.67
 4.88
 5.00
 4.99
 4.63
Commercial real estate4.16
 4.02
 3.74
 3.56
 3.58
4.81
 5.00
 5.10
 5.07
 4.74
Total commercial4.07
 4.04
 3.93
 3.78
 3.66
4.61
 4.85
 4.94
 4.86
 4.66
Consumer:                  
Automobile3.60
 3.55
 3.55
 3.57
 3.37
4.09
 4.02
 3.95
 3.88
 3.75
Home equity4.72
 4.61
 4.45
 4.24
 4.21
5.38
 5.56
 5.61
 5.45
 5.21
Residential mortgage3.65
 3.66
 3.63
 3.58
 3.61
3.80
 3.84
 3.86
 3.82
 3.78
RV and marine finance5.43
 5.57
 5.63
 5.64
 5.70
RV and marine4.96
 4.94
 4.96
 5.10
 5.06
Other consumer11.59
 11.47
 12.05
 10.91
 10.93
13.34
 13.29
 13.07
 12.35
 12.16
Total consumer4.32
 4.27
 4.23
 4.13
 3.97
4.72
 4.76
 4.75
 4.67
 4.54
Total loans and leases4.20
 4.15
 4.07
 3.95
 3.81
4.67
 4.80
 4.85
 4.76
 4.60
Total earning assets3.78
 3.75
 3.70
 3.60
 3.52
4.21
 4.35
 4.40
 4.32
 4.16
Liabilities:                  
Deposits:         
Demand deposits—noninterest-bearing—
 —
 —
 —
 —
Interest-bearing deposits:         
Demand deposits—interest-bearing0.23
 0.20
 0.15
 0.11
 0.11
0.57
 0.58
 0.56
 0.48
 0.45
Total demand deposits0.10
 0.09
 0.07
 0.04
 0.04
Money market deposits0.36
 0.31
 0.26
 0.24
 0.24
1.20
 1.15
 1.04
 0.91
 0.77
Savings and other domestic deposits0.20
 0.21
 0.22
 0.25
 0.21
0.22
 0.23
 0.23
 0.23
 0.24
Core certificates of deposit(5)0.73
 0.56
 0.39
 0.29
 0.43
2.17
 2.15
 2.11
 2.00
 1.82
Total core deposits0.30
 0.26
 0.22
 0.20
 0.20
Other domestic time deposits of $250,000 or more0.61
 0.49
 0.45
 0.39
 0.40
1.85
 1.92
 1.82
 1.67
 1.40
Brokered deposits and negotiable CDs1.16
 0.95
 0.72
 0.48
 0.44
2.21
 2.39
 2.38
 2.22
 1.98
Deposits in foreign offices—
 —
 —
 0.13
 0.13
Total deposits0.35
 0.31
 0.26
 0.23
 0.22
Total interest-bearing deposits0.98
 0.97
 0.94
 0.84
 0.73
Short-term borrowings0.95
 0.78
 0.63
 0.36
 0.29
2.28
 2.41
 2.41
 2.49
 1.98
Long-term debt2.65
 2.49
 2.33
 2.19
 1.97
3.59
 3.91
 3.98
 3.82
 3.78
Total interest-bearing liabilities0.68
 0.61
 0.54
 0.48
 0.49
1.36
 1.39
 1.35
 1.23
 1.13
Demand deposits—noninterest-bearing—
 —
 —
 —
 —
Net interest rate spread3.10
 3.14
 3.16
 3.12
 3.03
2.85
 2.96
 3.05
 3.09
 3.03
Impact of noninterest-bearing funds on margin0.19
 0.17
 0.14
 0.13
 0.15
0.35
 0.35
 0.34
 0.32
 0.29
Net interest margin3.29% 3.31% 3.30% 3.25% 3.18%3.20% 3.31% 3.39% 3.41% 3.32%


(1)FTE yields are calculated assuming a 21% tax rate.
(2)Deposits in Federal Reserve Bank were treated as non-earning assets prior to 4Q 2018.
(3)Loan and lease and deposit average yield rates include impact of applicable derivatives, non-deferrable fees, and amortized fees.
(4)For purposes of this analysis, NALs are reflected in the average balances of loans.
(5)Includes consumer certificates of deposit of $250,000 or more.


2019 Third Quarter versus 2018 Third Quarter
FTE net interest income for the 2019 third quarter decreased $5 million, or 1%, from the 2018 third quarter. This reflected a 12 basis point decrease in the NIM to 3.20%, partially offset by the benefit from the $2.9 billion, or 3%, increase in average earning assets. The NIM compression reflected a 23 basis point increase in average interest-bearing liability costs, partially offset by a 5 basis point year-over-year increase in average earning asset yields and a 6 basis point increase in the benefit from noninterest-bearing funds. The increase in average interest-bearing liability costs primarily reflects higher interest bearing deposit costs (up 25 basis points). The increase in earning asset yields was primarily driven by higher consumer loan yields as securities yields were relatively flat (up 1 basis point) and commercial loans decreased modestly (down 5 basis points). Embedded within these yields and costs, FTE net interest income during the 2019 third quarter included $11 million, or approximately 4 basis points, of purchase accounting impact compared to $17 million, or approximately 7 basis points, in the year-ago quarter.
Average earning assets for the 2019 third quarter increased $2.9 billion, or 3%, from the year-ago quarter, primarily reflecting a $2.3 billion, or 3%, increase in average loans and leases. Average C&I loans increased $1.8 billion, or 6%, reflecting growth in corporate banking, asset finance, and dealer floorplan. Average residential mortgage loans increased $1.0 billion, or 10%, driven by the successful expansion of our home lending business within our existing markets and the lower rate environment. Average RV and marine loans increased $0.5 billion, or 17%, reflecting market share increases across our markets, while maintaining our commitment to super prime originations. Held-for-sale and other earning assets increased $0.7 billion, or 86%, primarily due to the inclusion of deposits in Federal Reserve Bank balances. These balances were treated as non-earning assets prior to the fourth quarter 2018. Partially offsetting these increases, average home equity loans and lines of credit decreased $0.5 billion, or 5%, reflecting a shift in consumer preferences.
Average total interest-bearing liabilities for the 2019 third quarter increased $2.3 billion, or 3%, from the year-ago quarter. Average total deposits increased $0.8 billion, or 1%, from the year-ago quarter, while average total core deposits increased $1.7 billion, or 2%. Average money market deposits increased $2.7 billion, or 13%, reflecting the shift in promotional pricing to consumer money market accounts in mid-2018. Average core certificates of deposit increased $0.8 billion, or 15%, reflecting consumer deposit growth initiatives in the third quarter of 2018. Savings and other domestic deposits decreased $1.8 billion, or 15%, primarily reflecting a continued shift in consumer product mix. Average brokered deposits and negotiable CDs decreased $0.9 billion, or 26%, as growth in core deposits reduced reliance on wholesale funding.
2019 Third Quarter versus 2019 Second Quarter
Compared to the 2019 second quarter, FTE net interest income decreased $13 million, or 2%, primarily reflecting the NIM compression of 11 basis points, partially offset by a 1% increase in average earning assets. The NIM contraction reflected a 14 basis point decrease in average earning asset yields and a 3 basis point decrease in average interest-bearing liability costs. The decrease in earning asset yields was primarily driven by the impact of lower LIBOR rates in the quarter on commercial loan yields. The decrease in average interest-bearing liability costs primarily reflects lower short-term borrowing costs. The purchase accounting impact on the NIM was approximately 4 basis points in the 2019 third quarter, down 1 basis point from the prior quarter.
Average earning assets increased $0.5 billion, or 1%, from 2019 second quarter. Average consumer loans were relatively unchanged, as modest increases in residential mortgage and RV and marine loans were largely offset by a decline in home equity loans.
Average total interest-bearing liabilities increased $0.2 billion, or less than 1%. Average total deposits increased $0.5 billion, or 1%, as the $1.0 billion, or 4%, increase in money market accounts more than offset the $0.4 billion, or 4%, decrease in savings deposits, primarily reflecting promotional money market pricing and a continued shift in consumer product mix. Reflecting changes in the wholesale funding mix, average long-term debt increased $0.6 billion, or 7%, due to the $0.8 billion senior note issuance in August, while average short-term borrowings decreased $0.8 billion, or 26%.


Table 4 - Consolidated YTD Average Balance Sheets and Net Interest Margin Analysis
(dollar amounts in millions)           
 YTD Average Balances YTD Average Rates (3)
 Nine Months Ended September 30, Change Nine Months Ended September 30,
Fully-taxable equivalent basis (1)2019 2018 Amount Percent 2019 2018
Assets:           
Interest-bearing deposits in Federal Reserve Bank (2)$511
 $—
 $511
 100 % 2.32% —%
Interest-bearing deposits in banks131
 86
 45
 52
 2.10
 1.95
Securities:    

 

    
Trading account securities146
 84
 62
 74
 2.10
 0.21
Available-for-sale securities:    

 

    
Taxable10,784
 10,817
 (33) —
 2.74
 2.58
Tax-exempt2,945
 3,561
 (616) (17) 3.66
 3.35
Total available-for-sale securities13,729
 14,378
 (649) (5) 2.94
 2.77
Held-to-maturity securities—taxable8,663
 8,713
 (50) (1) 2.52
 2.43
Other securities479
 590
 (111) (19) 3.75
 4.38
Total securities23,017
 23,765
 (748) (3) 2.79
 2.69
Loans held for sale771
 615
 156
 25
 3.90
 4.19
Loans and leases: (4)      

    
Commercial:      

    
Commercial and industrial30,608
 28,661
 1,947
 7
 4.77
 4.48
Commercial real estate:      

    
Construction1,169
 1,149
 20
 2
 5.56
 5.09
Commercial5,727
 6,131
 (404) (7) 4.85
 4.49
Commercial real estate6,896
 7,280
 (384) (5) 4.97
 4.58
Total commercial37,504
 35,941
 1,563
 4
 4.80
 4.50
Consumer:      

    
Automobile12,253
 12,247
 6
 —
 4.02
 3.65
Home equity9,491
 9,948
 (457) (5) 5.51
 5.07
Residential mortgage11,005
 9,682
 1,323
 14
 3.83
 3.71
RV and marine3,413
 2,723
 690
 25
 4.95
 5.09
Other consumer1,270
 1,175
 95
 8
 13.29
 11.91
Total consumer37,432
 35,775
 1,657
 5
 4.74
 4.44
Total loans and leases74,936
 71,716
 3,220
 4
 4.77
 4.47
Allowance for loan and lease losses(786) (737) (49) (7)    
Net loans and leases74,150
 70,979
 3,171
 4
    
Total earning assets99,366
 96,182
 3,184
 3
 4.32% 4.05%
Cash and due from banks835
 1,277
 (442) (35)    
Intangible assets2,252
 2,318
 (66) (3)    
All other assets6,054
 5,640
 414
 7
    
Total assets$107,721
 $104,680
 $3,041
 3 %    
Liabilities and Shareholders’ Equity:      

    
Interest-bearing deposits:      

    
Demand deposits—interest-bearing$19,763
 $19,105
 $658
 3 % 0.57% 0.37%
Money market deposits23,507
 21,059
 2,448
 12
 1.13
 0.61
Savings and other domestic deposits10,039
 11,267
 (1,228) (11) 0.23
 0.22
Core certificates of deposit (5)5,858
 3,677
 2,181
 59
 2.14
 1.57
Other domestic time deposits of $250,000 or more320
 259
 61
 24
 1.86
 1.05
Brokered deposits and negotiable CDs2,893
 3,501
 (608) (17) 2.33
 1.76
Total interest-bearing deposits62,380
 58,868
 3,512
 6
 0.96
 0.59
Short-term borrowings2,605
 3,335
 (730) (22) 2.37
 1.67
Long-term debt9,145
 9,033
 112
 1
 3.82
 3.48
Total interest-bearing liabilities74,130
 71,236
 2,894
 4
 1.36
 1.01
Demand deposits—noninterest-bearing$19,864
 $20,393
 (529) (3) —
 —
All other liabilities2,277
 1,935
 342
 18
    
Shareholders’ equity11,450
 11,116
 334
 3
    
Total liabilities and shareholders’ equity$107,721
 $104,680
 $3,041
 3 %    
Net interest rate spread        2.96
 3.05
Impact of noninterest-bearing funds on margin        0.34
 0.26
Net interest margin        3.30% 3.31%

(1)FTE yields are calculated assuming a 21% tax rate.
(2)Deposits in Federal Reserve Bank were treated as non-earning assets prior to 4Q 2018
(3)Loan and lease and deposit average rates include impact of applicable derivatives, non-deferrable fees, and amortized fees.
(3)FTE yields are calculated assuming a 35% tax rate.


2017 Third Quarter versus 2016 Third Quarter
Fully-taxable equivalent (FTE) net interest income for the 2017 third quarter increased $135 million, or 21%, from the 2016 third quarter. This reflected the benefit from the $13.2 billion, or 17%, increase in average earning assets coupled with an 11 basis point improvement in the FTE net interest margin (NIM) to 3.29%. Average earning asset growth included a $7.6 billion, or 12%, increase in average loans and leases and a $5.6 billion, or 31%, increase in average securities.The NIM expansion reflected a 26 basis point increase related to the mix and yield of earning assets and a 4 basis point increase in the benefit from noninterest-bearing funds, partially offset by a 19 basis point increase in funding costs. FTE net interest income during the 2017 third quarter included $27 million, or approximately 12 basis points, of purchase accounting impact.
Average earning assets for the 2017 third quarter increased $13.2 billion, or 17%, from the year-ago quarter, primarily reflecting the impact of the FirstMerit acquisition. Average securities increased $5.6 billion, or 31%, which included a $0.3 billion increase in direct purchase municipal instruments in our commercial banking segment. Average residential mortgage loans increased $1.4 billion, or 20%, as we continue to see the benefits associated with the expansion of our home lending business. Average RV and marine finance loans increased $1.4 billion, or 151%, reflecting the expansion of the acquired business into 17 new states over the past year.
Average total deposits for the 2017 third quarter increased $11.0 billion, or 17%, from the year-ago quarter, while average total core deposits increased $11.5 billion, or 19%. Average total interest-bearing liabilities increased $10.9 billion, or 19%, from the year-ago quarter. These increases primarily reflect the impact of the FirstMerit acquisition. Average demand deposits increased $7.2 billion, or 22%, comprised of a $5.1 billion, or 24%, increase in average commercial demand deposits and a $2.1 billion, or 20%, increase in average consumer demand deposits. Average long-term borrowings increased $0.5 billion, or 5%, reflecting the issuance of $2.7 billion and maturity of $1.6 billion of senior debt over the past five quarters.
2017 Third Quarter versus 2017 Second Quarter
Compared to the 2017 second quarter, FTE net interest income increased $14 million, or 2%. Average earning assets increased $1.1 billion, or 1%, sequentially, while the NIM decreased 2 basis points.The decrease in the NIM reflected a 7 basis point increase in the cost of interest-bearing liabilities, partially offset by a 3 basis point increase in earning asset yields and a 2 basis point increase in the benefit from noninterest-bearing funds. The purchase accounting impact on the net interest margin was approximately 12 basis points in the 2017 third quarter compared to approximately 15 basis points in the prior quarter.
Compared to the 2017 second quarter, average earning assets increased $1.1 billion, or 1%. Average loans and leases increased $0.9 billion, or 1%, primarily reflecting growth in residential mortgage, automobile, and RV and marine loans partially offset by a decline in average commercial and industrial loans. Average commercial and industrial loans were negatively impacted by the seasonal decline in automobile floorplan lending, a reduction in mortgage warehouse lending, and continued runoff in corporate banking, partially offset by growth in asset finance.
Compared to the 2017 second quarter, average total core deposits increased $1.3 billion, or 2%, primarily reflecting a $1.1 billion, or 6%, increase in money market deposits and a $0.6 billion, or 1%, increase in average demand deposits.


            
Table 5 - Consolidated YTD Average Balance Sheets and Net Interest Margin Analysis
            
(dollar amounts in millions)YTD Average Balances YTD Average Rates (2)
 Nine Months Ended September 30, Change Nine Months Ended September 30,
Fully-taxable equivalent basis (1)2017 2016 Amount Percent 2017 2016
Assets:           
Interest-bearing deposits in banks$102
 $97
 $5
 5 % 1.46% 0.37%
Loans held for sale540
 567
 (27) (5) 3.79
 3.76
Securities:    

 

    
Available-for-sale and other securities:    

 

    
Taxable12,735
 7,781
 4,954
 64
 2.40
 2.37
Tax-exempt3,105
 2,576
 529
 21
 3.70
 3.25
Total available-for-sale and other securities15,840
 10,357
 5,483
 53
 2.65
 2.59
Trading account securities107
 43
 64
 149
 0.17
 0.68
Held-to-maturity securities—taxable7,785
 5,781
 2,004
 35
 2.37
 2.43
Total securities23,732
 16,181
 7,551
 47
 2.55
 2.53
Loans and leases: (3)    

 

    
Commercial:    

 

    
Commercial and industrial27,852
 22,326
 5,526
 25
 4.03
 3.57
Commercial real estate:    

 

    
Construction1,198
 979
 219
 22
 4.24
 3.66
Commercial6,014
 4,621
 1,393
 30
 3.92
 3.50
Commercial real estate7,212
 5,600
 1,612
 29
 3.97
 3.52
Total commercial35,064
 27,926
 7,138
 26
 4.01
 3.56
Consumer:    

 

    
Automobile11,369
 10,430
 939
 9
 3.57
 3.24
Home equity9,983
 8,708
 1,275
 15
 4.60
 4.19
Residential mortgage8,055
 6,406
 1,649
 26
 3.65
 3.65
RV and marine finance2,071
 307
 1,764
 575
 5.54
 5.70
Other consumer997
 670
 327
 49
 11.53
 10.46
Total consumer32,475
 26,521
 5,954
 22
 4.27
 3.86
Total loans and leases67,539
 54,447
 13,092
 24
 4.14
 3.71
Allowance for loan and lease losses(660) (614) (46) 7
    
Net loans and leases66,879
 53,833
 13,046
 24
    
Total earning assets91,913
 71,292
 20,621
 29
 3.75% 3.46%
Cash and due from banks1,530
 1,114
 416
 37
    
Intangible assets2,373
 1,003
 1,370
 137
    
All other assets5,433
 4,446
 987
 22
    
Total assets$100,589
 $77,241
 $23,348
 30 %    
Liabilities and Shareholders’ Equity:           
Deposits:           
Demand deposits—noninterest-bearing$21,684
 $17,634
 $4,050
 23 % —% —%
Demand deposits—interest-bearing17,380
 9,538
 7,842
 82
 0.20
 0.10
Total demand deposits39,064
 27,172
 11,892
 44
 0.09
 0.03
Money market deposits19,399
 19,220
 179
 1
 0.31
 0.24
Savings and other domestic deposits11,815
 6,541
 5,274
 81
 0.21
 0.16
Core certificates of deposit2,176
 2,186
 (10) —
 0.55
 0.67
Total core deposits72,454
 55,119
 17,335
 31
 0.26
 0.21
Other domestic time deposits of $250,000 or more460
 413
 47
 11
 0.51
 0.40
Brokered deposits and negotiable CDs3,770
 3,239
 531
 16
 0.93
 0.41
Deposits in foreign offices—
 222
 (222) —
 —
 0.13
Total deposits76,684
 58,993
 17,691
 30
 0.31
 0.23
Short-term borrowings2,952
 1,161
 1,791
 154
 0.76
 0.32
Long-term debt8,738
 7,866
 872
 11
 2.49
 1.84
Total interest-bearing liabilities66,690
 50,386
 16,304
 32
 0.61
 0.48
All other liabilities1,627
 1,513
 114
 8
    
Shareholders’ equity10,588
 7,708
 2,880
 37
    
Total liabilities and shareholders’ equity$100,589
 $77,241
 $23,348
 30 %    
Net interest rate spread        3.13
 2.98
Impact of noninterest-bearing funds on margin        0.17
 0.14
Net interest margin        3.30% 3.12%

(1)FTE yields are calculated assuming a 35% tax rate.
(2)Loan, lease, and deposit average rates include the impact of applicable derivatives, non-deferrable fees, and amortized deferred fees.
(3)(4)For purposes of this analysis, nonaccrual loansNALs are reflected in the average balances of loans.
(5)Includes consumer certificates of deposit of $250,000 or more.

20172019 First Nine Months versus 20162018 First Nine Months
FTE net interest income for the first nine-month period of 20172019 increased $605$75 million, or 36%3%. This reflected the benefit of a $20.6$3.2 billion, or 29%3%, increase in average total earning assets coupled withand a 1 basis point decrease in the FTE net interest margin, which increasedNIM to 3.30% from 3.12%. Average securities increased $7.6 billion, or 47%, primarily reflecting the acquisition of FirstMerit and an increase in direct purchase municipal instruments in our commercial banking segment. Average loans and leases increased $13.1 $3.2 billion, or 24%4%, primarily reflecting an increase in C&I, lending, residential mortgage loans and RV and marine finance resultinglending. Average earning asset yields increased 27 basis points sequentially, driven by a 30 basis point increase in loan yields. Average funding costs increased 35 basis points, primarily driven by higher cost of interest-bearing deposits (up 37 basis points) and long-term debt (up 34 basis points). Average short-term borrowing costs increased 70 basis points, while the benefit from the acquisition of FirstMerit.noninterest-bearing funding improved 8 basis points.
Provision for Credit Losses
(This section should be read in conjunction with the "Credit Risk" section.)
The provision for credit losses is the expense necessary to maintain the ALLL and the AULC at levels appropriate to absorb our estimate of credit losses inherent in the loan and lease portfolio and the portfolio of unfunded loan commitments and letters-of-credit.
The provision for credit losses for the 20172019 third quarter was $44$82 million, which decreased $20increased $29 million, or 32%55%, compared to the third quarter 2016. NCOs increased $3 million to $43 million compared with the same period in the prior year reflecting an increase in consumer net charge-offs, partially offset by a decrease in commercial net charge-offs. Net charge-offs represented an annualized 0.25% of average loans and leases, which remains below our long-term expectation of 35 to 55 basis points.
2018. On a year-to-date basis, provision for credit losses for the first nine-month period of 20172019 was $136$208 million, an increase of $20$33 million, or 18%19%, compared to the year-ago period, reflecting increased net charge-offs dueperiod. The increase from the 2018 third quarter and prior year-to-date provision for credit losses is attributed to portfolio loan growth.higher commercial losses.
Noninterest Income
The following table reflects noninterest income for each of the periods presented: 
Table 6 - Noninterest Income
Table 5 - Noninterest IncomeTable 5 - Noninterest Income
Three Months Ended 3Q17 vs. 3Q16 3Q17 vs. 2Q17Three Months Ended 3Q19 vs. 3Q18 3Q19 vs. 2Q19
September 30, June 30, September 30, Change ChangeSeptember 30, June 30, September 30, Change Change
(dollar amounts in thousands)2017 2017 2016 Amount Percent Amount Percent
(dollar amounts in millions)2019 2019 2018 Amount Percent Amount Percent
Service charges on deposit accounts$90,681
 $87,582
 $86,847
 $3,834
 4 % $3,099
 4 %$98
 $92
 $93
 $5
 5 % $6
 7 %
Cards and payment processing income53,647
 52,485
 44,320
 9,327
 21
 1,162
 2
Card and payment processing income64
 63
 57
 7
 12
 1
 2
Trust and investment management services44
 43
 43
 1
 2
 1
 2
Mortgage banking income33,615
 32,268
 40,603
 (6,988) (17) 1,347
 4
54
 34
 31
 23
 74
 20
 59
Trust and investment management services33,531
 32,232
 28,923
 4,608
 16
 1,299
 4
Capital markets fees36
 34
 26
 10
 38
 2
 6
Insurance income13,992
 15,843
 15,865
 (1,873) (12) (1,851) (12)20
 23
 19
 1
 5
 (3) (13)
Brokerage income14,458
 16,294
 14,719
 (261) (2) (1,836) (11)
Capital markets fees21,719
 16,836
 14,750
 6,969
 47
 4,883
 29
Bank owned life insurance income16,453
 15,322
 14,452
 2,001
 14
 1,131
 7
18
 15
 19
 (1) (5) 3
 20
Gain on sale of loans13,877
 12,002
 7,506
 6,371
 85
 1,875
 16
Net securities gains (losses)(33) 135
 1,031
 (1,064) (103) (168) (124)
Other noninterest income38,157
 44,219
 33,399
 4,758
 14
 (6,062) (14)
Gain on sale of loans and leases13
 13
 16
 (3) (19) —
 —
Securities gains (losses)—
 (2) (2) 2
 100
 2
 100
Other income42
 59
 40
 2
 5
 (17) (29)
Total noninterest income$330,097
 $325,218
 $302,415
 $27,682
 9 % $4,879
 2 %$389
 $374
 $342
 $47
 14 % $15
 4 %

20172019 Third Quarter versus 20162018 Third Quarter
NoninterestTotal noninterest income for the 20172019 third quarter increased $28$47 million, or 9%14%, from the year-ago quarter,quarter. Mortgage banking income increased $23 million, or 74%, primarily reflecting higher overall salable spreads and $8 million from net MSR risk management. Capital markets fees increased $10 million, or 38%, driven by increased underwriting activity associated with the impact of the FirstMeritHutchinson, Shockey, Erley & Co. acquisition. Card and payment processing income increased $9 million, or 21%, due to higher credit and debit card related income and underlying customer growth. Capital markets fees increased $7 million, or 47%12%, reflecting our ongoing strategic focusand service charges on expanding the business. Gain on sale of loans increased $6 million, or 85%, as a result of continued expansion of our SBA lending business. Other incomedeposit accounts increased $5 million, or 14%5%, both primarily reflecting a $5 million benefit from derivative ineffectiveness and a $3 million increase in servicing income. These increases were partially offset by a $7 million decline in mortgage banking income due to lower spreads on origination volume.increased account activity.

20172019 Third Quarter versus 20172019 Second Quarter
ComparedCompared to the 20172019 second quarter, total noninterest income increased $5$15 million, or 2%4%. Capital markets feesMortgage banking income increased $5$20 million, or 59%, primarily reflecting higher overall salable spreads and a $10 million increase in net MSR risk management. Service charges on deposit accounts increased $6 million, or 7%, primarily reflecting seasonality. Partially offsetting these increases, other income decreased $17 million, or 29%, as a resultprimarily reflecting the $15 million gain on the sale of the previously-mentioned expansion ofWisconsin retail branches and a $5 million mark-to-market adjustment on economic hedges in the business. Conversely, other income decreased2019 second quarter, whereas the 2019 third quarter included a $6 million or 14%, primarily reflecting a decreaseincrease in loan syndication fees.mezzanine gains.

Table 7 - Noninterest Income—2017 First Nine Months vs. 2016 First Nine Months
Table 6 - Noninterest Income—2019 First Nine Months Ended vs. 2018 First Nine Months EndedTable 6 - Noninterest Income—2019 First Nine Months Ended vs. 2018 First Nine Months Ended
       Nine Months Ended September 30, Change
Nine Months Ended September 30, Change
(dollar amounts in thousands)2017 2016 Amount Percent
(dollar amounts in millions)2019 2018 Amount Percent
Service charges on deposit accounts$261,683
 $232,722
 $28,961
 12 %$277
 $270
 $7
 3 %
Cards and payment processing income153,301
 119,951
 33,350
 28
Card and payment processing income183
 166
 17
 10
Trust and investment management services131
 129
 2
 2
Mortgage banking income97,575
 90,737
 6,838
 8
109
 85
 24
 28
Trust and investment management services99,633
 74,258
 25,375
 34
Capital markets fees92
 74
 18
 24
Insurance income45,099
 48,037
 (2,938) (6)64
 61
 3
 5
Brokerage income46,510
 44,819
 1,691
 4
Capital markets fees52,755
 40,797
 11,958
 29
Bank owned life insurance income49,317
 40,500
 8,817
 22
49
 51
 (2) (4)
Gain on sale of loans38,701
 22,166
 16,535
 75
Net securities gains (losses)94
 1,687
 (1,593) (94)
Other noninterest income123,110
 99,720
 23,390
 23
Gain on sale of loans and leases39
 39
 —
 —
Securities gains (losses)(2) (2) —
 —
Other income140
 119
 21
 18
Total noninterest income$967,778
 $815,394
 $152,384
 19 %$1,082
 $992
 $90
 9 %

Noninterest income for the first nine-month period of 20172019 increased $152$90 million, or 19%9%, from the year-ago period primarily reflecting. Mortgage banking income increased $24 million or 28%, driven by higher salable spreads. Other income increased $21 million, or 18%, as a result of the gain on the sale of the Wisconsin retail branches and the impact of the FirstMerit acquisition. Service chargesnew lease accounting standard with regard to the presentation of income for personal property tax on deposit accountsleased assets. Capital market fees increased $29$18 million, or 12%24%, reflectingdriven by increased underwriting activity primarily associated with the benefit of the FirstMeritHutchinson, Shockey, Erley & Co. acquisition and continued new customer acquisition.. Cards and payment processing income increased $33$17 million, or 28%10%, due to an increase in credit and debit card transactions and underlying customer growth. Trust and investment management services increased $25 million, or 34%, primarily reflecting an increase in assets under management as a result of the FirstMerit acquisition.increased account activity.
Noninterest Expense
(This section should be read in conjunction with Significant Items 1.)
The following table reflects noninterest expense for each of the periods presented:
Table 8 - Noninterest Expense
Table 7 - Noninterest ExpenseTable 7 - Noninterest Expense
Three Months Ended 3Q17 vs. 3Q16 3Q17 vs. 2Q17Three Months Ended 3Q19 vs. 3Q18 3Q19 vs. 2Q19
September 30, June 30, September 30, Change ChangeSeptember 30, June 30, September 30, Change Change
(dollar amounts in thousands)2017 2017 2016 Amount Percent Amount Percent
(dollar amounts in millions)2019 2019 2018 Amount Percent Amount Percent
Personnel costs$377,088
 $391,997
 $405,024
 $(27,936) (7)% $(14,909) (4)%$406
 $428
 $388
 $18
 5 % $(22) (5)%
Outside data processing and other services79,586
 75,169
 91,133
 (11,547) (13) 4,417
 6
87
 89
 69
 18
 26
 (2) (2)
Net occupancy38
 38
 38
 —
 —
 —
 —
Equipment45,458
 42,924
 40,792
 4,666
 11
 2,534
 6
41
 40
 38
 3
 8
 1
 3
Net occupancy55,124
 52,613
 41,460
 13,664
 33
 2,511
 5
Deposit and other insurance expense8
 8
 18
 (10) (56) —
 —
Professional services15,227
 18,190
 47,075
 (31,848) (68) (2,963) (16)16
 12
 17
 (1) (6) 4
 33
Marketing16,970
 18,843
 14,438
 2,532
 18
 (1,873) (10)10
 11
 12
 (2) (17) (1) (9)
Deposit and other insurance expense18,514
 20,418
 14,940
 3,574
 24
 (1,904) (9)
Amortization of intangibles14,017
 14,242
 9,046
 4,971
 55
 (225) (2)12
 12
 13
 (1) (8) —
 —
Other noninterest expense58,444
 59,968
 48,339
 10,105
 21
 (1,524) (3)
Other expense49
 62
 58
 (9) (16) (13) (21)
Total noninterest expense$680,428
 $694,364
 $712,247
 $(31,819) (4)% $(13,936) (2)%$667
 $700
 $651
 $16
 2 % $(33) (5)%
Number of employees (average full-time equivalent)15,508
 15,877
 14,511
 997
 7 % (369) (2)%15,659
 15,780
 15,772
 (113) (1)% (121) (1)%


Impacts of Significant Items:
 Three Months Ended
 September 30, June 30, September 30,
(dollar amounts in thousands)2017 2017 2016
Personnel costs$4,362
 $17,934
 $76,199
Outside data processing and other services3,304
 6,246
 27,639
Equipment6,505
 3,994
 4,739
Net occupancy14,255
 14,415
 7,116
Professional services2,038
 3,804
 33,679
Marketing17
 112
 926
Other noninterest expense252
 3,738
 8,451
Total noninterest expense adjustments$30,733
 $50,243
 $158,749
Adjusted Noninterest Expense (See Non-GAAP Financial Measures in the Additional Disclosures section):
 Three Months Ended 3Q17 vs. 3Q16 3Q17 vs. 2Q17
 September 30, June 30, September 30, Change Change
(dollar amounts in thousands)2017 2017 2016 Amount Percent Amount Percent
Personnel costs$372,726
 $374,063
 $328,825
 $43,901
 13 % $(1,337) — %
Outside data processing and other services76,282
 68,923
 63,494
 12,788
 20
 7,359
 11
Equipment38,953
 38,930
 36,053
 2,900
 8
 23
 —
Net occupancy40,869
 38,198
 34,344
 6,525
 19
 2,671
 7
Professional services13,189
 14,386
 13,396
 (207) (2) (1,197) (8)
Marketing16,953
 18,731
 13,512
 3,441
 25
 (1,778) (9)
Deposit and other insurance expense18,514
 20,418
 14,940
 3,574
 24
 (1,904) (9)
Amortization of intangibles14,017
 14,242
 9,046
 4,971
 55
 (225) (2)
Other noninterest expense58,192
 56,230
 39,888
 18,304
 46
 1,962
 3
Total adjusted noninterest expense (Non-GAAP)$649,695
 $644,121
 $553,498
 $96,197
 17 % $5,574
 1 %

20172019 Third Quarter versus 20162018 Third Quarter
ReportedTotal noninterest expense for the 20172019 third quarter increased $16 million, or 2%, from the year-ago quarter. Personnel costs increased $18 million, or 5%, primarily reflecting the shift toward colleagues supporting our core strategies and the implementation of annual merit increases in the 2019 second quarter. Outside data processing and other services increased $18 million, or 26%, primarily driven by higher technology investment costs. Deposit and other insurance expense decreased $32$10 million, or 56%, due to the discontinuation of the FDIC surcharge in the 2018 fourth quarter. Other expense decreased $9 million, or 16%, primarily as a result of operational losses in the third quarter 2018 and reduced OREO and other credit-related expense.
2019 Third Quarter versus 2019 Second Quarter
Total noninterest expense decreased $33 million, or 5%, from the 2019 second quarter. Personnel costs decreased $22 million, or 5%, primarily reflecting the timing of equity compensation expense in the second quarter and lower benefits expense. Other expense decreased $13 million, or 21%, primarily as a result of a $5 million Columbus Foundation donation and other discretionary spend in the 2019 second quarter.
Table 8 - Noninterest Expense—2019 First Nine Months Ended vs. 2018 First Nine Months Ended
        
 Nine Months Ended September 30, Change
(dollar amounts in millions)2019 2018 Amount Percent
Personnel costs$1,228
 $1,160
 $68
 6 %
Outside data processing and other services257
 211
 46
 22
Net occupancy118
 114
 4
 4
Equipment121
 116
 5
 4
Deposit and other insurance expense24
 54
 (30) (56)
Professional services40
 43
 (3) (7)
Marketing28
 38
 (10) (26)
Amortization of intangibles37
 40
 (3) (8)
Other expense167
 160
 7
 4
Total noninterest expense$2,020
 $1,936
 $84
 4 %
Noninterest expense increased $84 million, or 4%, from the year-ago quarter, period. Personnel costs increased $68 million, or 6%, primarily reflecting the year-over-year decrease in FirstMerit acquisition-related Significant Items. Personnel costs decreased $28 million, or 7%, primarily reflecting a $72 million net decrease in acquisition-related personnel expense partially offset by a 7% increase in average full-time equivalent employees. Professional services decreased $32 million, or 68%, reflecting the net decrease in Significant Items. Outside data processingshift toward colleagues supporting our core strategies, and other services decreased $12 million, or 13%, reflecting the $24 million net decrease in Significant Items partially offset by higher card and data processing expense from increased usage. Partially offsetting these decreases, other expense increased $10 million, or 21%, primarily reflecting a $5 million increase in donations and sponsorships and a $3 million impairment of certain equipment lease residuals. The 2017 third quarter noninterest expense also included approximately $12 million of nonrecurring net expense, not included in Significant Items, from personnel, operational, and efficiency improvement efforts, including the previously announced consolidation of 38 full-service branches, 7 drive-through only locations, and 3 corporate offices.
2017 Third Quarter versus 2017 Second Quarter
Reported noninterest expense decreased $14 million, or 2%, from the 2017 second quarter, including a $20 million net decrease in Significant Items. Personnel costs decreased $15 million, or 4%, reflecting a $14 million net decrease in acquisition-related expenses.


Table 9 - Noninterest Expense—2017 First Nine Months vs. 2016 First Nine Months
        
 Nine Months Ended September 30, Change
(dollar amounts in thousands)2017 2016 Amount Percent
Personnel costs$1,151,085
 $989,369
 $161,716
 16 %
Outside data processing and other services241,957
 216,047
 25,910
 12
Equipment135,082
 105,173
 29,909
 28
Net occupancy175,437
 103,640
 71,797
 69
Professional services51,712
 82,101
 (30,389) (37)
Marketing49,736
 41,479
 8,257
 20
Deposit and other insurance expense59,031
 38,335
 20,696
 54
Amortization of intangibles42,614
 16,357
 26,257
 161
Other noninterest expense175,560
 134,487
 41,073
 31
Total noninterest expense$2,082,214
 $1,726,988
 $355,226
 21 %
Impacts of Significant Items:
 Nine Months Ended September 30,
(dollar amounts in thousands)2017 2016
Personnel costs$41,851
 $81,405
Outside data processing and other services24,025
 31,047
Equipment16,262
 4,743
Net occupancy52,012
 7,626
Professional services10,060
 48,676
Marketing945
 1,180
Other noninterest expense9,116
 11,267
Total noninterest expense adjustments$154,271
 $185,944
Adjusted Noninterest Expense (See Non-GAAP Financial Measures in Additional Disclosures section):
 Nine Months Ended September 30, Change
(dollar amounts in thousands)2017 2016 Amount Percent
Personnel costs$1,109,234
 $907,964
 $201,270
 22%
Outside data processing and other services217,932
 185,000
 32,932
 18
Equipment118,820
 100,430
 18,390
 18
Net occupancy123,425
 96,014
 27,411
 29
Professional services41,652
 33,425
 8,227
 25
Marketing48,791
 40,299
 8,492
 21
Deposit and other insurance expense59,031
 38,335
 20,696
 54
Amortization of intangibles42,614
 16,357
 26,257
 161
Other noninterest expense166,444
 123,220
 43,224
 35
Total adjusted noninterest expense (Non-GAAP)$1,927,943
 $1,541,044
 $386,899
 25%

Reported noninterest expense increased $355 million, or 21%, from the year-ago period, primarily reflecting the impact of the FirstMerit acquisition, including Significant Items. Personnel costs increased $162 million, or 16%, primarily reflecting a 21% increase in the number of average full-time equivalent employees largely related to the additional colleagues during the integration and conversion of FirstMerit as well as the in-store branch expansion. Net occupancy expense increased $72 million, or 69%, largely due to an increase of $44 million of acquisition-related expense.annual merit increases. Outside data processing and other services increased $26$46 million, or 12%22%, primarily reflectingdriven by higher cardtechnology investment costs. Other expense increased $7 million, or 4%, primarily as a result of a Columbus Foundation donation in the 2019 second quarter and data processingthe impact of the new lease accounting standard on personal property tax expense fromand increased usage partially offset by a decline in acquisition-related expenses. Depositoperational losses. Offsetting these increases, deposit and other insurance expense increased $21 million, or 54%, reflecting the larger assessment based and the FDIC Large Institution Surcharge implemented during the 2016 third quarter. Other noninterest expense increased $41 million, or 31%, reflecting the impact of the acquisition as well as a $5 million

increase in donations and sponsorships and a $3 million impairment on certain equipment lease residuals. These increases were partially offset by a decrease ofdecreased $30 million, or 37%56%, due to the discontinuation of the FDIC surcharge in professional services the 2018 fourth quarter and marketing expense decreased $10 million, or 26%, reflecting a $39 million decrease in acquisition-related expenses.the number and timing of marketing campaigns and deposit promotions.

Provision for Income Taxes
The provision for income taxes in the 20172019 third quarter was $90$67 million. This compared with a provision for income taxes of $25$62 million in the 20162018 third quarter and $79$63 million in the 20172019 second quarter. The provision for income taxes for the nine monthnine-month periods ended September 30, 20172019 and September 30, 20162018 was $228$193 million and $134$178 million, respectively. All periods included the benefits from tax-exempt income, tax-advantaged investments, general business credits, investments in qualified affordable housing projects, excess tax deductions for stock-based compensation, and capital losses. The effective tax rates for the 20172019 third quarter, 20162018 third quarter, and 20172019 second quarter were 24.7%15.4%, 16.3%14.1%, and 22.4%14.6%, respectively. The effective tax rates for the nine-month periods ended September 30, 20172019 and September 30, 20162018 were 23.2%15.0% and 22.1%14.4%, respectively. The variance between the 20172019 third quarter compared to the 20162018 third quarter, and 2017 second quarter and for the nine-monthnine month period ended September 30, 20172019 compared to the nine-monthnine month period ended September 30, 20162018 in the provision for income taxes and effective tax rates relates primarily to the Significant Items.activity in stock-based compensation. The net federal deferred tax assetliability was $29$213 million and the net state deferred tax asset was $35$34 million at September 30, 2017.2019.
We file income tax returns with the IRS and various state, city, and foreign jurisdictions. Federal income tax audits have been completed for tax years through 2009. TheCertain proposed adjustments resulting from the IRS is currently examiningexamination of our 2010 andthrough 2011 consolidated federal income tax returns.returns have been settled, subject to final approval by the Joint Committee on Taxation of the U.S. Congress. While the statute of limitations remains open for tax years 2012-2016,2012 through 2017, the IRS has advised that tax years 2012-20142012 through 2014 will not be audited, and plans to beginis currently examining the examination of the 2015 and 2016 federal income tax return during the 2017 fourth quarter.returns. Various state and other jurisdictions remain open to examination, including Ohio, Kentucky, Indiana, Michigan, Pennsylvania, West Virginia, Wisconsin, and Illinois.
RISK MANAGEMENT AND CAPITAL
We use a multi-faceted approach to risk governance. It begins with the boardBoard of directorsDirectors defining our risk appetite as aggregate moderate-to-low. Risk awareness, identification and assessment, reporting, and active management are key elements in overall risk management. Controls include, among others, effective segregation of duties, access, authorization and reconciliation procedures, as well as staff education and a disciplined assessment process.
We believe that our primary risk exposures are credit, market, liquidity, operational and compliance oriented.compliance. More information on risk can be found in the Risk Factors section included in Item 1A of our 20162018 Form 10-K and subsequent filings with the SEC. The MD&A included in our 20162018 Form 10-K should be read in conjunction with this MD&A as this discussion provides only material updates to the Form 10-K. This MD&A should also be read in conjunction with the financial statements, notesUnaudited Condensed Consolidated Financial Statements, Notes to Unaudited Condensed Consolidated Financial Statements, and other information contained in this report. Our definition, philosophy, and approach to risk management have not materially changed from the discussion presented in the 20162018 Form 10-K.
Credit Risk
Credit risk is the risk of financial loss if a counterparty is not able to meet the agreed upon terms of the financial obligation. The majority of our credit risk is associated with lending activities, as the acceptance and management of credit risk is central to profitable lending. We also have credit risk associated with our AFS and HTMinvestment securities portfolios (see(see Note 4 "Investment Securities and Note 5Other Securities" of the Notes to the Unaudited Condensed Consolidated Financial Statements). We engage with other financial counterparties for a variety of purposes including investing, asset and liability management, mortgage banking, and trading activities. A variety of derivative financial instruments, principally interest rate swaps, caps, floors, and collars, are used in asset and liability management activities to protect against the risk of adverse price or interest rate movements. Huntington also uses derivatives, principally loan sale commitments, in hedging its mortgage loan interest rate lock commitments and its mortgage loans held for sale. While there is credit risk associated with derivative activity, we believe this exposure is minimal.
We continue to focus on the identification, monitoring, and managingmanagement of our credit risk. In addition to the traditional credit risk mitigation strategies of credit policies and processes, market risk management activities, and portfolio diversification, we use quantitative measurement capabilities utilizing external data sources, enhanced modeling technology, and internal stress testing processes. Our portfolio management resources demonstrate our commitment to maintaining an aggregate moderate-to-low risk profile. In our efforts to continue to identify risk mitigation techniques, we have focused on product design features, origination policies, and solutions for delinquent or stressed borrowers.

Loan and Lease Credit Exposure Mix
Refer to the “Loan and Lease Credit Exposure Mix” section of our 20162018 Form 10-K for a brief description of each portfolioportfolio segment.

The table below provides the composition of our total loan and lease portfolio: 
Table 10 - Loan and Lease Portfolio Composition
Table 9 - Loan and Lease Portfolio CompositionTable 9 - Loan and Lease Portfolio Composition
                                      
(dollar amounts in millions)September 30,
2017		 June 30,
2017		 March 31,
2017		 December 31,
2016		 September 30,
2016		September 30,
2019		 June 30,
2019		 March 31,
2019		 December 31,
2018		 September 30,
2018
Ending Balances by Type:                   
Commercial:                                      
Commercial and industrial$27,469
 40% $27,969
 41% $28,176
 42% $28,059
 42% $27,668
 42%$30,394
 41% $30,608
 41% $30,972
 41% $30,605
 41% $29,196
 40%
Commercial real estate:                                      
Construction1,182
 2
 1,145
 2
 1,107
 2
 1,446
 2
 1,414
 2
1,157
 2
 1,146
 1
 1,152
 2
 1,185
 2
 1,111
 2
Commercial6,024
 9
 6,000
 9
 5,986
 9
 5,855
 9
 5,842
 9
5,698
 8
 5,742
 8
 5,643
 8
 5,657
 8
 5,962
 8
Commercial real estate7,206
 11
 7,145
 11
 7,093
 11
 7,301
 11
 7,256
 11
6,855
 10
 6,888
 9
 6,795
 10
 6,842
 10
 7,073
 10
Total commercial34,675
 51
 35,114
 52
 35,269
 53
 35,360
 53
 34,924
 53
37,249
 51
 37,496
 50
 37,767
 51
 37,447
 51
 36,269
 50
Consumer:                                      
Automobile11,876
 17
 11,555
 17
 11,155
 17
 10,969
 16
 10,791
 16
12,292
 15
 12,173
 16
 12,272
 16
 12,429
 16
 12,375
 17
Home equity9,985
 15
 9,966
 15
 9,974
 15
 10,106
 15
 10,120
 15
9,300
 12
 9,419
 12
 9,551
 13
 9,722
 13
 9,850
 13
Residential mortgage8,616
 13
 8,237
 12
 7,829
 12
 7,725
 12
 7,665
 12
11,247
 15
 11,182
 15
 10,885
 14
 10,728
 14
 10,459
 14
RV and marine finance2,371
 3
 2,178
 3
 1,935
 2
 1,846
 3
 1,840
 3
RV and marine3,553
 5
 3,492
 5
 3,344
 4
 3,254
 4
 3,152
 4
Other consumer1,064
 1
 1,009
 1
 936
 1
 956
 1
 964
 1
1,251
 2
 1,271
 2
 1,260
 2
 1,320
 2
 1,265
 2
Total consumer33,912
 49
 32,945
 48
 31,829
 47
 31,602
 47
 31,380
 47
37,643
 49
 37,537
 50
 37,312
 49
 37,453
 49
 37,101
 50
Total loans and leases$68,587
 100% $68,059
 100% $67,098
 100% $66,962
 100% $66,304
 100%$74,892
 100% $75,033
 100% $75,079
 100% $74,900
 100% $73,370
 100%
Our loan portfolio is composed of a managed mix of consumer and commercial credits. At the corporate level, we manage the overall credit exposure and portfolio composition in part via a credit concentration policy. The policy designates specific loan types, collateral types, and loan structures to be formally tracked and assigned maximum exposure limits as a percentage of capital. C&I lending by NAICS categories, specific limits for CRE project types, loans secured by residential real estate, shared national credit exposure,large dollar exposures, and designated high risk loan definitions represent examples of specifically tracked components of our concentration management process. There are no identified concentrations that exceed the assigned exposure limit. Our concentration management policy is approved by the ROC of the Board of Directors and is one of the strategies used to ensure a high quality, well diversified portfolio that is consistent with our overall objective of maintaining an aggregate moderate-to-low risk profile. Changes to existing concentration limits require the approval of the ROC prior to implementation, incorporating specific information relating to the potential impact on the overall portfolio composition and performance metrics.
Commercial Credit
Refer to the “Commercial Credit”“Commercial Credit” section of our 20162018 Form 10-K for our commercial credit underwriting and on-going credit management processes.
Consumer Credit
Refer to the “Consumer Credit”“Consumer Credit” section of our 20162018 Form 10-K for our consumer credit underwriting and on-going credit management processes.


The table below provides our total loan and lease portfolio segregated by industry type. The changes in the industry composition from December 31, 20162018 are consistent with the portfolio growth.growth metrics.
Table 11 - Loan and Lease Portfolio by Industry Type
Table 10 - Loan and Lease Portfolio by Industry TypeTable 10 - Loan and Lease Portfolio by Industry Type
                   
(dollar amounts in millions)                   September 30,
2019		 June 30,
2019		 March 31,
2019		 December 31,
2018		 September 30,
2018
September 30,
2017		 June 30,
2017		 March 31,
2017		 December 31,
2016		 September 30,
2016
Commercial loans and leases:                                      
Real estate and rental and leasing$7,461
 11% $7,588
 12% $7,482
 12% $7,545
 11% $7,513
 12%$6,826
 9% $6,983
 9% $6,955
 9% $6,964
 9% $7,187
 10%
Manufacturing4,874
 7
 4,916
 7
 5,048
 8
 4,937
 7
 4,931
 7
5,141
 7
 5,329
 7
 5,338
 7
 5,140
 7
 4,817
 7
Retail trade (1)4,643
 7
 4,805
 7
 4,902
 7
 4,758
 7
 4,588
 7
5,031
 7
 5,161
 7
 5,266
 7
 5,337
 7
 4,987
 7
Finance and insurance2,900
 4
 3,051
 4
 2,844
 4
 2,010
 3
 2,289
 3
3,308
 4
 3,473
 5
 3,457
 5
 3,377
 5
 3,345
 5
Health care and social assistance2,727
 4
 2,699
 4
 2,727
 4
 2,729
 4
 2,638
 4
2,604
 3
 2,497
 3
 2,575
 3
 2,533
 3
 2,582
 4
Wholesale trade2,070
 3
 2,058
 3
 2,181
 3
 2,071
 3
 2,009
 3
2,449
 3
 2,604
 3
 2,725
 4
 2,830
 4
 2,609
 4
Accommodation and food services1,653
 2
 1,660
 2
 1,652
 2
 1,678
 3
 1,612
 2
2,008
 3
 1,868
 2
 1,782
 2
 1,709
 2
 1,636
 2
Mining, quarrying, and oil and gas extraction1,375
 2
 1,310
 2
 1,306
 2
 1,286
 2
 1,045
 1
Professional, scientific, and technical services1,347
 2
 1,336
 2
 1,401
 2
 1,344
 2
 1,269
 2
Other services1,265
 2
 1,261
 2
 1,278
 2
 1,223
 2
 1,205
 2
1,324
 2
 1,360
 2
 1,243
 2
 1,290
 2
 1,312
 2
Transportation and warehousing1,255
 2
 1,284
 2
 1,382
 2
 1,366
 2
 1,357
 2
1,242
 2
 1,240
 2
 1,323
 2
 1,320
 2
 1,176
 2
Professional, scientific, and technical services1,230
 2
 1,232
 2
 1,240
 2
 1,264
 2
 1,228
 2
Construction913
 1
 928
 1
 924
 1
 875
 1
 889
 1
973
 1
 892
 1
 973
 1
 924
 1
 986
 1
Mining, quarrying, and oil and gas extraction619
 1
 501
 1
 511
 1
 668
 1
 704
 1
Admin./Support/Waste Mgmt. and Remediation Services687
 1
 681
 1
 690
 1
 737
 1
 664
 1
Arts, entertainment, and recreation530
 1
 469
 1
 506
 1
 556
 1
 437
 1
654
 1
 617
 1
 585
 1
 599
 1
 585
 1
Information619
 1
 527
 1
 522
 1
 441
 1
 346
 —
Educational services509
 1
 570
 1
 544
 1
 501
 1
 495
 1
467
 1
 481
 1
 478
 1
 473
 1
 482
 1
Admin./Support/Waste Mgmt. and Remediation Services484
 1
 444
 1
 427
 1
 429
 1
 409
 1
Information468
 1
 458
 1
 454
 1
 473
 1
 475
 1
Utilities431
 1
 433
 1
 463
 1
 470
 1
 480
 1
419
 1
 445
 1
 428
 1
 454
 1
 459
 —
Unclassified/Other254
 —
 168
 —
 187
 —
 174
 —
 266
 —
Public administration262
 —
 274
 —
 266
 —
 272
 —
 273
 —
237
 1
 247
 —
 249
 —
 253
 —
 253
 —
Agriculture, forestry, fishing and hunting176
 —
 203
 —
 170
 —
 151
 —
 161
 —
172
 —
 174
 —
 171
 —
 174
 —
 178
 —
Unclassified/Other122
 —
 183
 —
 167
 —
 1,288
 2
 1,136
 2
Management of companies and enterprises86
 —
 97
 —
 101
 —
 96
 —
 95
 —
112
 —
 103
 —
 113
 —
 88
 —
 85
 —
Total commercial loans and leases by industry category34,675
 51
 35,114
 52
 35,269
 53
 35,360
 53
 34,924
 53
37,249
 51
 37,496
 50
 37,767
 51
 37,447
 51
 36,269
 50
Automobile11,876
 17
 11,555
 17
 11,155
 17
 10,969
 16
 10,791
 16
12,292
 16
 12,173
 16
 12,272
 16
 12,429
 16
 12,375
 17
Home Equity9,985
 15
 9,966
 15
 9,974
 15
 10,106
 15
 10,120
 15
Home equity9,300
 12
 9,419
 12
 9,551
 13
 9,722
 13
 9,850
 13
Residential mortgage8,616
 13
 8,237
 12
 7,829
 12
 7,725
 12
 7,665
 12
11,247
 15
 11,182
 15
 10,885
 14
 10,728
 14
 10,459
 14
RV and marine finance2,371
 3
 2,178
 3
 1,935
 2
 1,846
 3
 1,840
 3
RV and marine3,553
 5
 3,492
 5
 3,344
 4
 3,254
 4
 3,152
 4
Other consumer loans1,064
 1
 1,009
 1
 936
 1
 956
 1
 964
 1
1,251
 1
 1,271
 2
 1,260
 2
 1,320
 2
 1,265
 2
Total loans and leases$68,587
 100% $68,059
 100% $67,098
 100% $66,962
 100% $66,304
 100%74,892
 100% $75,033
 100% $75,079
 100% $74,900
 100% $73,370
 100%
(1)Amounts include $3.0$3.5 billion, $3.2$3.6 billion, $3.3$3.6 billion, $3.2$3.6 billion and $3.0$3.3 billion of auto dealer services loans at September 30, 2017,2019, June 30, 2017,2019, March 31, 2017,2019, December 31, 20162018 and September 30, 2016,2018, respectively.

Credit Quality
Credit Quality
(This section should be read in conjunction with Note 3 "Loans / Leases and Allowance for Credit Losses" of the Notes to Unaudited Condensed Consolidated Financial Statements.)
We believe the most meaningful way to assess overall credit quality performance is through an analysis of credit qualityspecific performance ratios. This approach forms the basis of most of the discussion in the sections immediately following: NPAs, and NALs, TDRs, ACL, and NCOs. In addition, we utilize delinquency rates, risk distribution and migration patterns, and product segmentation, and origination trends in the analysis of our credit quality performance.

Credit quality performance in the 20172019 third quarter reflected continued overall positive results with stable levelstotal NCOs as a percent of delinquencies and a 7% declineaverage loans, annualized, of 0.39%, an increase from 0.16% in NPAs from the prior year quarter, resulting from higher commercial net charge-offs. Consumer NCOs have remained consistent with the prior year quarter. Total NCOs were $43 million, or 0.25% annualized, of average total loans and leases.  Net charge-offs$73 million. On a linked quarter basis, NCOs increased by $7$25 million from the prior quarter, with $20 million of the increase within the commercial portfolio. NPAs increased from the prior quarter by $22 million due to an increase in the net charge-offs of the consumer portfolios.few high dollar credits. NPAs to total loans and leases remains low at 0.64%. The ACLALLL to total loans and leases ratio declined by 1increased 2 basis pointpoints to 1.10%1.05%.
NPAs, NALs, AND TDRs
(This section should be read in conjunction with Note 3 "Loans / Leases and Allowance for Credit Losses" of the Notes to Unaudited Condensed Consolidated Financial Statements and "Credit Quality" section of our 20162018 Form 10-K.)
NPAs and NALs
Commercial loans are placed on nonaccrual status at 90-days past due, or earlier if repayment of principal and interest is in doubt. Of the $187$303 million of CRE and C&I-relatedcommercial related NALs at September 30, 2017, $1062019, $221 million, or 57%73%, represented loans that were less than 30-days past due, demonstrating our continued commitment to proactive credit risk management. With the exception of residential mortgage loans guaranteed by government organizations which continue to accrue interest, first-lien loans secured by residential mortgage collateral are placed on nonaccrual status at 150-days past due. Junior-lien home equity loans are placed on nonaccrual status at the earlier of 120-days past due or when the related first-lien loan has been identified as nonaccrual. Automobile, RV and marine, and other consumer loans are generally fully charged-off at 120-days past due.TDR recognition at an earlier past due status than summarized above also may result
When loans are placed on nonaccrual, accrued interest income is reversed with current year accruals charged to interest income and prior year amounts generally charged-off as a credit loss. When, in NAL designation.our judgment, the borrower’s ability to make required interest and principal payments has resumed and collectability is no longer in doubt, the loan or lease could be returned to accrual status.
The following table reflects period-end NALs and NPAs detail for each of the last five quarters:
Table 12 - Nonaccrual Loans and Leases and Nonperforming Assets
(dollar amounts in thousands)         
Table 11 - Nonaccrual Loans and Leases and Nonperforming AssetsTable 11 - Nonaccrual Loans and Leases and Nonperforming Assets
September 30,
2017		 June 30,
2017		 March 31,
2017		 December 31,
2016		 September 30,
2016		         
(dollar amounts in millions)September 30,
2019		 June 30,
2019		 March 31,
2019		 December 31,
2018		 September 30,
2018
Nonaccrual loans and leases (NALs):                  
Commercial and industrial$169,751
 $195,279
 $232,171
 $234,184
 $220,862
$291
 $281
 $271
 $188
 $211
Commercial real estate17,397
 16,763
 13,889
 20,508
 21,300
12
 17
 9
 15
 19
Automobile4,076
 3,825
 4,881
 5,766
 4,777
5
 4
 4
 5
 5
Home equity71,353
 67,940
 69,575
 71,798
 69,044
60
 60
 64
 62
 67
Residential mortgage75,251
 80,306
 80,686
 90,502
 88,155
69
 62
 68
 69
 67
RV and marine finance309
 341
 106
 245
 96
RV and marine1
 1
 1
 1
 1
Other consumer108
 2
 2
 —
 —
—
 —
 —
 —
 —
Total nonaccrual loans and leases338,245
 364,456
 401,310
 423,003
 404,234
438
 425
 417
 340
 370
Other real estate:         
Other real estate, net:         
Residential26,449
 26,890
 31,786
 30,932
 34,421
10
 10
 14
 19
 22
Commercial15,592
 16,926
 18,101
 19,998
 36,915
2
 4
 4
 4
 5
Total other real estate42,041
 43,816
 49,887
 50,930
 71,336
Total other real estate, net12
 14
 18
 23
 27
Other NPAs (1)6,677
 6,906
 6,910
 6,968
 —
32
 21
 26
 24
 6
Total nonperforming assets$386,963
 $415,178
 $458,107
 $480,901
 $475,570
$482
 $460
 $461
 $387
 $403
                  
Nonaccrual loans and leases as a % of total loans and leases0.49% 0.54% 0.60% 0.63% 0.61%0.58% 0.57% 0.56% 0.45% 0.50%
NPA ratio (2)0.56
 0.61
 0.68
 0.72
 0.72
0.64
 0.61
 0.61
 0.52
 0.55
(NPA&90+days past due)/(Loans&OREO)0.74
 0.81
 0.87
 0.91
 0.92

(1)Other nonperforming assets includes certain impaired investment securities.
(1)Other nonperforming assets include certain impaired investment securities and/or nonaccrual loans held-for-sale.
(2)Nonperforming assets divided by the sum of loans and leases, other real estate owned, and other NPAs.

20172019 Third Quarter versus 20162018 Fourth Quarter.
Total NPAs decreasedincreased by $94$95 million, or 20%25%, compared with December 31, 2016 primarily as a result of decreases2018, driven by an increase in the commercial portfolio, predominately C&I and residential portfolios NALs and a 17% decrease in OREO. The C&I decline was a result of significant payoffs and return to accrual of large relationships that were identified as NAL in the fourth quarter of 2016.  The residential mortgage decline was in part due to the efforts by our Home Savers Group actively working with our customers.&I.

TDR Loans
(This section should be read in conjunction with Note 3 "Loans / Leases and Allowance for Credit Losses" of the Notes to Unaudited Condensed Consolidated Financial Statements and TDR Loans section of our 20162018 Form 10-K.)
Over the past five quarters, the accruing component of the total TDR balance has been betweenconsistently over 80%, indicating there is no identified credit loss and 84%, asthe borrowers continue to make their monthly payments in accordance with the modified terms.  From a payment standpoint,payments. As of September 30, 2019, over 80%79% of the $500$454 million of accruing TDRs secured by residential real estate (Residential Mortgage(residential mortgage and Home Equityhome equity in Table 13)12) are current on their required payments.  In addition,payments, with over 60%63% of the accruing pool havehaving had no delinquency at all in the past 12 months. There is limited migration from the accruing to non-accruing components, and virtually all of the charge-offs come from the non-accruing TDR balances.
The table below presents our accruing and nonaccruing TDRs at period-end for each of the past five quarters:
Table 13 - Accruing and Nonaccruing Troubled Debt Restructured Loans
(dollar amounts in thousands)         
Table 12 - Accruing and Nonaccruing Troubled Debt Restructured LoansTable 12 - Accruing and Nonaccruing Troubled Debt Restructured Loans
September 30,
2017		 June 30,
2017		 March 31,
2017		 December 31,
2016		 September 30,
2016		         
Troubled debt restructured loans—accruing:         
(dollar amounts in millions)September 30,
2019		 June 30,
2019		 March 31,
2019		 December 31,
2018		 September 30,
2018
TDRs—accruing:         
Commercial and industrial$268,373
 $270,372
 $222,303
 $210,119
 $232,740
$225
 $245
 $270
 $269
 $308
Commercial real estate80,272
 74,429
 81,202
 76,844
 80,553
40
 48
 60
 54
 60
Automobile28,973
 28,140
 27,968
 26,382
 27,843
39
 37
 37
 35
 34
Home equity264,410
 268,731
 271,258
 269,709
 275,601
233
 241
 247
 252
 257
Residential mortgage235,191
 238,087
 239,175
 242,901
 251,529
221
 221
 219
 218
 219
RV and marine finance1,211
 950
 581
 —
 —
RV and marine3
 2
 2
 2
 2
Other consumer6,353
 4,017
 4,128
 3,780
 4,102
10
 10
 9
 9
 10
Total troubled debt restructured loans—accruing884,783
 884,726
 846,615
 829,735
 872,368
Troubled debt restructured loans—nonaccruing:         
Total TDRs—accruing771
 804
 844
 839
 890
TDRs—nonaccruing:         
Commercial and industrial96,248
 89,757
 88,759
 107,087
 70,179
84
 88
 86
 97
 100
Commercial real estate3,797
 3,823
 4,357
 4,507
 5,672
6
 6
 6
 6
 8
Automobile4,076
 4,291
 4,763
 4,579
 4,437
3
 3
 3
 3
 3
Home equity30,753
 28,667
 29,090
 28,128
 28,009
26
 26
 28
 28
 28
Residential mortgage50,428
 55,590
 59,773
 59,157
 62,027
44
 43
 43
 44
 46
RV and marine finance309
 381
 106
 —
 —
RV and marine1
 1
 1
 —
 1
Other consumer103
 109
 117
 118
 142
—
 —
 —
 —
 —
Total troubled debt restructured loans—nonaccruing185,714
 182,618
 186,965
 203,576
 170,466
Total troubled debt restructured loans$1,070,497
 $1,067,344
 $1,033,580
 $1,033,311
 $1,042,834
Total TDRs—nonaccruing164
 167
 167
 178
 186
Total TDRs$935
 $971
 $1,011
 $1,017
 $1,076

AccruingOverall TDRs increased by $55 million compareddecreased slightly in the quarter. Huntington continues to proactively work with December 31, 2016, primarily as a result of the addition of C&I loansour borrowing relationships that require assistance. The resulting loan structures enable our borrowers to meet their commitments and Huntington to retain earning assets. The accruing TDRs meet the well secured definition and have demonstrated a period of satisfactory payment performance.

ACL
(This section should be read in conjunction with Note 3 "Loans / Leases and Allowance for Credit Losses" of the Notes to Unaudited Condensed Consolidated Financial Statements.)
Our total credit reserve is comprised of two different components, both of which in our judgment are appropriate to absorb credit losses inherent in our loan and lease portfolio: the ALLL and the AULC. Combined, these reserves comprise the total ACL. Our ACL Methodology Committeemethodology committee is responsible for developing the methodology, assumptions and estimates used in the calculation, as well as determining the appropriateness of the ACL. The ALLL represents the estimate of incurred losses inherent in the loan portfolio at the reported date. Additions to the ALLL result from recording provision expense for the recognition of loan losses due to new loan originations or funding under existing lines, and increased risk levels resulting from loan risk-rating downgrades or increasing delinquency migrations.  Reductionsqualitative adjustments, while reductions reflect charge-offs (net of recoveries), and decreased risk levelslevels resulting from loan risk-rating upgrades, decreasing delinquencies, or the sale / paydown of loans. The AULC is determined by applying the same quantitative reserve determination process to the unfunded portion of the loan exposures adjusted by an applicable funding expectation.
Loans originated for investment are stated at their principal amount outstanding adjusted for partial charge-offs, and net

deferred loan fees and costs. Acquired loans are those purchased in the FirstMerit acquisition. These loans were recorded at estimated fair value at the acquisition date with no carryover of the related ALLL. The difference between acquired contractual balance and estimated fair value at acquisition date was recorded as a purchase premium or discount.
Our ACL evaluation processprocess includes the on-going assessment of credit quality metrics, and a comparison of certain ACL benchmarks to current performance. While the total ACL balance increased year over year, all of the relevant benchmarks remain strong.
The table below reflects the allocation of our ACLALLL among our various loan categories during each of the past five quarters: 
Table 14 - Allocation of Allowance for Credit Losses (1)
(dollar amounts in thousands)                   
Table 13 - Allocation of Allowance for Credit Losses (1)Table 13 - Allocation of Allowance for Credit Losses (1)
                                      
September 30,
2017		 June 30,
2017		 March 31,
2017		 December 31,
2016		 September 30,
2016
Allowance for Credit Losses                   
(dollar amounts in millions)September 30,
2019		 June 30,
2019		 March 31,
2019		 December 31,
2018		 September 30,
2018
ALLL                   
Commercial                                      
Commercial and industrial$373,821
 40% $367,956
 41% $380,504
 42% $355,424
 42% $333,101
 42%$441
 41% $455
 41% $437
 41% $422
 41% $419
 40%
Commercial real estate100,301
 11
 106,620
 11
 99,804
 11
 95,667
 11
 98,694
 11
120
 10
 105
 9
 108
 10
 120
 10
 124
 10
Total commercial474,122
 51
 474,576
 52
 480,308
 53
 451,091
 53
 431,795
 53
561
 51
 560
 50
 545
 51
 542
 51
 543
 50
Consumer                                      
Automobile50,382
 17
 48,322
 17
 46,402
 17
 47,970
 16
 42,584
 16
54
 15
 53
 16
 53
 16
 56
 16
 52
 17
Home equity57,897
 15
 62,941
 15
 64,900
 15
 65,474
 15
 69,866
 15
47
 12
 47
 12
 53
 13
 55
 13
 54
 13
Residential mortgage29,236
 13
 33,304
 12
 35,559
 12
 33,398
 12
 36,510
 12
22
 15
 22
 15
 23
 14
 25
 14
 24
 14
RV and marine finance13,018
 3
 7,665
 3
 4,022
 2
 5,311
 3
 4,289
 3
RV and marine20
 5
 18
 5
 20
 4
 20
 4
 18
 4
Other consumer50,831
 1
 41,188
 1
 41,389
 1
 35,169
 1
 31,854
 1
79
 2
 74
 2
 70
 2
 74
 2
 70
 2
Total consumer201,364
 49
 193,420
 48
 192,272
 47
 187,322
 47
 185,103
 47
222
 49
 214
 50
 219
 49
 230
 49
 218
 50
Total allowance for loan and lease losses675,486
 100% 667,996
 100% 672,580
 100% 638,413
 100% 616,898
 100%
Allowance for unfunded loan commitments78,566
   85,359
   91,838
   97,879
   88,433
  
Total allowance for credit losses$754,052
   $753,355
   $764,418
   $736,292
   $705,331
  
Total allowance for loan and leases losses as % of:
Total ALLL783
 100% 774
 100% 764
 100% 772
 100% 761
 100%
AULC101
   101
   100
   96
   97
  
Total ACL$884
   $875
   $864
   $868
   $858
  
Total ALLL as a % ofTotal ALLL as a % of
Total loans and leases  0.98%   0.98%   1.00%   0.95%   0.93%  1.05%   1.03%   1.02%   1.03%   1.04%
Nonaccrual loans and leases  200
   183
   168
   151
   153
  179   182   183   228   206
Nonperforming assets  175
   161
   147
   133
   130
Total allowance for credit losses as % of:
Total loans and leases  1.10%   1.11%   1.14%   1.10%   1.06%
Nonaccrual loans and leases  223
   207
   190
   174
   174
Nonperforming assets  195
   181
   167
   153
   148
NPAs  163   168   166   200   189
(1)Percentages represent the percentage of each loan and lease category to total loans and leases.

20172019 Third Quarter versus 20162018 Fourth Quarter
At September 30, 2017,2019, the ALLL was $675$783 million, compared to $638$772 million at December 31, 2016.2018. The $37$11 million or 6%, increase in the ALLL relates to an increase in Criticized/Classified assetsthe growth in the C&I portfolio as well as growthcommercial ALLL levels since the prior year end, partially offset by reductions in reserve levels for the Other Consumer portfolio related to growth and seasoning of the portfolio.
consumer ALLL. The ACLALLL to total loans ratio was 1.10%1.05% at September 30, 20172019 and 1.03% at December 31, 2016. Management believes2018. We believe the ratio is appropriate given the overall moderate-to-low risk profile of our loan portfolio.portfolio and the coverage levels reflect the quality of our portfolio and the current operating environment. We continue to focus on early identification of loans with changes in credit metrics and have proactive action plans for these loans. We believe that our ACL is appropriate and its coverage level is reflective of the quality of our portfolio and the current operating environment.


NCOs
A loanloan in any portfolio may be charged-off prior to the policies described below if a loss confirming event has occurred or in accordance with the policies described below, whichever is earlier.occurred. Loss confirming events include, but are not limited to, bankruptcy (unsecured), continued delinquency, foreclosure, or receipt of an asset valuation indicating a collateral deficiency where that asset is the sole source of repayment. Additionally, discharged, collateral dependent non-reaffirmed debt in Chapter 7 bankruptcy filings will result in a charge-off to estimated collateral value, less anticipated selling costs.costs at the time of discharge.
C&I and CRECommercial loans are either charged-off or written down to net realizable value atby 90-days past due with the exception of Huntington Technology Finance administrative small ticket lease delinquencies. Automobile loans, RV and marine, finance and other consumer loans are generally fully charged-off at 120-days past due. First-lien and junior-lien home equity loans are charged-off to the estimated fair value of the collateral, less anticipated selling costs, at 150-days past due and 120-days past due, respectively. Residential mortgages are charged-off to the estimated fair value of the collateral, less anticipated selling costs, at 150-days past due. The remaining balance is in delinquent status until a modification can be completed, or the loan goes through the foreclosure process.
Table 15 - Quarterly Net Charge-off Analysis
Table 14 - Quarterly Net Charge-off AnalysisTable 14 - Quarterly Net Charge-off Analysis
Three Months EndedThree Months Ended
September 30, June 30, September 30,September 30, June 30, September 30,
(dollar amounts in thousands)2017 2017 2016
(dollar amounts in millions)2019 2019 2018
Net charge-offs (recoveries) by loan and lease type:
Commercial:          
Commercial and industrial$13,317
 $12,870
 $19,225
$40
 $21
 $(1)
Commercial real estate:          
Construction(870) 83
 (271)(1) (1) —
Commercial(3,184) (3,638) (2,427)(1) (2) (3)
Commercial real estate(4,054) (3,555) (2,698)(2) (3) (3)
Total commercial9,263
 9,315
 16,527
38
 18
 (4)
Consumer:          
Automobile9,619
 8,318
 7,769
8
 5
 8
Home equity1,532
 1,218
 2,624
2
 2
 1
Residential mortgage2,057
 1,052
 1,728
1
 1
 2
RV and marine finance3,390
 1,875
 106
RV and marine2
 2
 2
Other consumer17,031
 14,262
 11,311
22
 20
 20
Total consumer33,629
 26,725
 23,538
35
 30
 33
Total net charge-offs$42,892
 $36,040
 $40,065
$73
 $48
 $29
          
Three Months Ended
September 30, June 30, September 30,
2017 2017 2016
Net charge-offs (recoveries)—annualized percentages:
Net charge-offs (recoveries) - annualized percentages:Net charge-offs (recoveries) - annualized percentages:
Commercial:          
Commercial and industrial0.19 % 0.18 % 0.31 %0.52 % 0.27 % (0.01)%
Commercial real estate:          
Construction(0.30) 0.03
 (0.10)(0.40) (0.08) (0.01)
Commercial(0.21) (0.24) (0.19)(0.09) (0.12) (0.18)
Commercial real estate(0.22) (0.20) (0.17)(0.14) (0.12) (0.15)
Total commercial0.11
 0.11
 0.21
0.40
 0.20
 (0.04)
Consumer:          
Automobile0.33
 0.29
 0.27
0.26
 0.17
 0.26
Home equity0.06
 0.05
 0.11
0.11
 0.07
 0.06
Residential mortgage0.10
 0.05
 0.10
0.03
 0.05
 0.07
RV and marine finance0.59
 0.37
 0.05
RV and marine0.23
 0.25
 0.25
Other consumer6.51
 5.81
 5.54
7.07
 6.02
 6.32
Total consumer0.40
 0.33
 0.32
0.38
 0.31
 0.36
Net charge-offs as a % of average loans0.25 % 0.21 % 0.26 %0.39 % 0.25 % 0.16 %

In assessing NCO trends, it is helpful to understand the process of how commercial loans are treated as they deteriorate over time. The ALLL is established consistent with the level of risk associated with the commercial portfolio's original underwriting. As a part of our normal portfolio management process for commercial loans, loans within the portfolio are periodically reviewed and the ALLL is increased or decreased based on the updated risk ratings. For TDRs and individually assessed impaired loans, a specific reserve is established based on the discounted projected cash flows or collateral value of the specific loan. Charge-offs, if necessary, are generally recognized in a period after the specific ALLL is established. Consumer loans are treated in much the same manner as commercial loans, with increasing reserve factors applied based on the risk characteristics of the loan, although specific reserves are not identified for consumer loans, except for TDRs. In summary, if loan quality deteriorates, the typical credit sequence would be periods of reserve building, followed by periods of higher NCOs as the previously established ALLL is utilized. Additionally, an increase in the ALLL either precedes or is in conjunction with increases in NALs. When a loan is classified as NAL, it is evaluated for specific ALLL or charge-off. As a result, an increase in NALs does not necessarily result in an increase in the ALLL or an expectation of higher future NCOs.
2017
2019 Third Quarter versus 20172019 Second Quarter
NCOs were an annualized 0.25%0.39% of average loans and leases in the current quarter, an increaseincreasing from 0.21%0.25% in the 20172019 second quarter, still belowand within our long-term expectationaverage through-the-cycle target range of 0.35% - 0.55%. Commercial - C&IAnnualized NCOs for the commercial portfolios were 0.40% in the current quarter compared to 0.20% in 2019 second quarter. The increase in commercial NCOs was centered in our energy portfolio. Consumer charge-offs were slightly higher for the quarter, but well within our expected performance range. Consumer charge-offs were higher for the quarter, primarily driven by seasonality trends across the consumer portfolio, consistent with our expectations. Given the relatively low level of C&I and CRE NCO’s,NCOs we have experienced and continueon an overall portfolio basis, we would expect to expectsee some continued volatility on a quarter-to-quarter comparison basis.basis, largely driven by the performance of the commercial portfolios.

The table below reflects NCO detail for the nine-month periods ended September 30, 20172019 and 2016:2018:
Table 16 - Year to Date Net Charge-off Analysis
Table 15 - Year to Date Net Charge-off AnalysisTable 15 - Year to Date Net Charge-off Analysis
Nine Months Ended September 30,Nine Months Ended September 30,
(dollar amounts in thousands)2017 2016
Net charge-offs by loan and lease type:   
(dollar amounts in millions)2019 2018
Net charge-offs (recoveries) by loan and lease type:   
Commercial:      
Commercial and industrial$34,283
 $29,441
$92
 $19
Commercial real estate:      
Construction(3,924) (752)(2) (1)
Commercial(5,927) (20,095)(1) (17)
Commercial real estate(9,851) (20,847)(3) (18)
Total commercial24,432
 8,594
89
 1
Consumer:      
Automobile30,344
 18,859
23
 25
Home equity4,412
 7,383
7
 4
Residential mortgage5,704
 4,151
5
 4
RV and marine finance7,628
 106
RV and marine7
 7
Other consumer45,850
 26,279
61
 54
Total consumer93,938
 56,778
103
 94
Total net charge-offs$118,370
 $65,372
$192
 $95
      
Nine Months Ended September 30,
2017 2016
Net charge-offs - annualized percentages:   
Net charge-offs (recoveries) - annualized percentages:   
Commercial:      
Commercial and industrial0.16 % 0.18 %0.40 % 0.09 %
Commercial real estate:      
Construction(0.44) (0.10)(0.19) (0.14)
Commercial(0.13) (0.58)(0.03) (0.34)
Commercial real estate(0.18) (0.50)(0.06) (0.31)
Total commercial0.09
 0.04
0.32
 0.01
Consumer:      
Automobile0.36
 0.24
0.25
 0.27
Home equity0.06
 0.11
0.10
 0.06
Residential mortgage0.09
 0.09
0.06
 0.05
RV and marine finance0.49
 0.05
RV and marine0.29
 0.33
Other consumer6.13
 5.23
6.41
 6.12
Total consumer0.39
 0.29
0.37
 0.35
Net charge-offs as a % of average loans0.23 % 0.16 %0.34 % 0.18 %

20172019 First Nine Months versus 20162018 First Nine Months
NCOs were $118increased $97 million a $53 millionin the first nine-month period of 2019 to $192 million. The increase from the sameyear-ago period was primarily centered in the prior year.commercial portfolio. The increase primarily relates to portfolio growth as2018 commercial NCOs of $1 million included substantial recovery activity whereas, 2019 commercial NCOs were largely driven by a result of the FirstMerit acquisition as well as one large commercial recoveryfew energy credits. The results in the prior year period.consumer portfolio were consistent with expectations across all segments. Given the low level of C&I and CRE NCO’s,NCOs, there will continue to be some volatility on a period-to-period comparison basis.



Market Risk
(This section should be read in conjunction with the “Market Risk” section of our 20162018 Form 10-K for our on-going market risk management processes.)
Market risk refers to potential losses arising from changes in interest rates, foreign exchange rates, equity prices and commodity prices, including the correlation among these factors and their volatility. When the value of an instrument is tied to such external factors, the holder faces market risk. We are primarily exposed to interest rate risk as a result of offering a wide array of financial products to our customers and secondarily to price risk from trading securities, securities owned by our broker-dealer subsidiary,subsidiaries, foreign exchange positions, equity investments, and investments in securities backed by mortgage loans.
Interest Rate Risk
Table 17 - Net Interest Income at Risk
      
 Net Interest Income at Risk (%)
Basis point change scenario-25
 +100
 +200
Board policy limitsN/A
 -2.0 % -4.0 %
September 30, 2017-0.5 % 2.5 % 5.0 %
December 31, 2016-1.0 % 2.7 % 5.6 %
Table 16 - Net Interest Income at Risk
 Net Interest Income at Risk (%)
Basis point change scenario-100
 +100
 +200
Board policy limits (1)-2.0 % -2.0 % -4.0 %
September 30, 2019-1.4 % 0.8 % 2.0 %
December 31, 2018-2.9 % 2.7 % 5.8 %
(1)The policy limit for the -100 basis point scenario changed from -4.0%, which was in effect at December 31, 2018, to -2.0% as of September 30, 2019.

The NII at Risk results included in the table above reflect the analysis used monthly by management. It models gradual -25,-100, +100 and +200 basis point parallel shifts in market interest rates, implied by the forward yield curve over the next twelve months. DueThe decrease in sensitivity was driven by the purchase of interest rate floors as well as additional interest rate swaps, changes to the current low levelactual and forecasted portfolio composition, and the change in forecasted rates from an expectation of short-term interestrising rates the analysis reflects ato declining interest rate scenario of 25 basis points, the point at which many assets and liabilities reach zero percent.rates.
Our NII at Risk is within our boardBoard of director'sDirectors’ policy limits for the -100, +100 and +200 basis point scenarios. There is no policy limit for the -25 basis point scenario. The NII at Risk shows that theour balance sheet is asset sensitive at both September 30, 2017,2019, and December 31, 2016.2018.
Table 18 - Economic Value of Equity at Risk
      
 Economic Value of Equity at Risk (%)
Basis point change scenario-25
 +100
 +200
Board policy limitsN/A
 -5.0 % -12.0 %
September 30, 2017-1.2 % 3.4 % 4.9 %
December 31, 2016-0.6 % 0.9 % 0.2 %
Table 17 - Economic Value of Equity at Risk
 Economic Value of Equity at Risk (%)
Basis point change scenario-100
 +100
 +200
Board policy limits-6.0 % -6.0 % -12.0 %
September 30, 2019-6.0 % 1.4 % — %
December 31, 2018-5.8 % 2.3 % 3.1 %
The EVE results included in the table above reflect the analysis used monthly by management. It models immediate -25,-100, +100 and +200 basis point parallel shifts in market interest rates. Due to the current low level of short-term interest rates, the analysis reflects a declining interest rate scenario of 25 basis points, the point at which deposit costs reach zero percent.
We are within our boardBoard of director'sDirectors’ policy limits for the -100, +100 and +200 basis point scenarios. There is no policy limit forThe EVE depicts a slightly asset sensitive balance sheet profile with additional convexity in the -25+200 basis point scenario. The EVE depicts a moderate leveldecline in asset sensitivity was driven by slower security prepayments, deposit composition changes, and the addition of long-term interest rate risk, which indicates the balance sheet is positioned favorably for rising interest rates. The EVE increase at September 30, 2017 from December 31, 2016 is primarily the result of a change in the average life assumptions for certain loans, depositsswaps and securities.floors mentioned above.

MSRs
(This section should be read in conjunction with Note 6 5 "Mortgage Loan Sales and Servicing Rights" of Notes to the Unaudited Condensed Consolidated Financial Statements.Statements.)
At September 30, 2017,2019, we had a total of $195$180 million of capitalized MSRs representing the right to service $19.6$22 billion in mortgage loans. Of this $195$180 million, $12$8 million was recorded using the fair value method and $183$172 million was recorded using the amortization method.
MSR fair values are sensitive to movements in interest rates as expected future net servicing income depends on the projected outstanding principal balances of the underlying loans, which can be reduced by prepayments. Prepayments usually increase when mortgage interest rates decline and decrease when mortgage interest rates rise. We have employedalso employ hedging strategies to reduce the risk of MSR fair value changes or impairment. However, volatile changes in interest rates can diminish the effectiveness of these economic hedges. We report changes in the MSR value net of hedge-related trading activity in the mortgage banking income category of noninterest income. ChangesDecreases in the recordedfair value of the MSR, between reporting dates arebelow amortized costs, would be recognized as an increase or a decrease in mortgage banking income. Any increase in the fair value, to the extent of prior impairment, would be recognized as an increase in mortgage banking income.

MSRs recorded using the amortization method generally relate to loans originated with historically low interest rates, resulting in a lower probability of prepayments and, ultimately, impairment. MSR assets are included in servicing rights and other intangible assets in the Unaudited Condensed Consolidated Financial Statements.

Price Risk
Price risk represents the risk of loss arising from adverse movements in the prices of financial instruments that are carried at fair value and are subject to fair value accounting. We have price risk from trading securities, securities owned by our broker-dealer subsidiary,subsidiaries, foreign exchange positions, derivative instruments, and equity investments. We have established loss limits on the trading portfolio, on the amount of foreign exchange exposure that can be maintained, and on the amount of marketable equity securities that can be held.
Liquidity Risk
(This section should be read in conjunction with the “Liquidity Risk” section of our 20162018 Form 10-K for our on-going liquidity risk management processes.)
Our primary source of liquidity is our core deposit base. Core deposits comprised approximately 95%97% of total deposits at September 30, 2017.2019. We also have available unused wholesale sources of liquidity, including advances from the FHLB of Cincinnati, issuance through dealers in the capital markets, and access to certificates of deposit issued through brokers. Liquidity is further provided by unencumbered, or unpledged, investment securities that totaled $13.9$19.0 billion as of September 30, 2017.2019.
Bank Liquidity and Sources of Funding
Our primary sources of funding for the Bank are retail and commercial core deposits. At September 30, 2017,2019, these core deposits funded 73% of total assets (109%(106% of total loans). Other sources of liquidity include non-core deposits, FHLB advances, wholesale debt instruments, and securitizations. Demand deposit overdrafts that have been reclassified as loan balances were $24$22 million and $23 million at September 30, 20172019 and December 31, 2016,2018, respectively.

The following table reflects deposit composition detail for each of the last five quarters:
Table 19 - Deposit Composition
(dollar amounts in millions)                   
Table 18 - Deposit CompositionTable 18 - Deposit Composition
September 30, June 30, March 31, December 31, September 30,                   
2017 2017 2017 2016 2016September 30, June 30, March 31, December 31, September 30,
(dollar amounts in millions)2019 2019 2019 (1) 2018 (2) 2018
By Type:                                      
Demand deposits—noninterest-bearing$22,225
 28% $21,420
 28% $21,489
 28% $22,836
 30% $23,426
 30%$20,553
 25% $19,383
 24% $20,036
 24% $21,783
 26% $19,863
 24%
Demand deposits—interest-bearing18,343
 23
 17,113
 23
 18,618
 24
 15,676
 21
 15,730
 20
19,976
 24
 19,085
 24
 19,906
 24
 20,042
 24
 19,615
 24
Money market deposits20,553
 26
 19,423
 26
 18,664
 24
 18,407
 24
 18,604
 24
23,977
 29
 23,952
 30
 22,931
 28
 22,721
 27
 21,411
 26
Savings and other domestic deposits11,441
 15
 11,758
 15
 12,043
 16
 11,975
 16
 12,418
 16
9,566
 12
 9,803
 12
 10,277
 13
 10,451
 12
 11,604
 14
Core certificates of deposit(3)2,009
 3
 2,088
 3
 2,188
 3
 2,535
 3
 2,724
 4
5,443
 7
 5,703
 7
 6,007
 7
 5,924
 7
 5,358
 7
Total core deposits:74,571
 95
 71,802
 95
 73,002
 95
 71,429
 94
 72,902
 94
79,515
 97
 77,926
 97
 79,157
 96
 80,921
 96
 77,851
 95
Other domestic deposits of $250,000 or more418
 1
 441
 1
 524
 1
 394
 1
 391
 1
326
 —
 316
 —
 313
 1
 337
 —
 318
 1
Brokered deposits and negotiable CDs3,456
 4
 3,690
 4
 3,897
 4
 3,785
 5
 3,972
 5
2,554
 3
 2,640
 3
 2,685
 3
 3,516
 4
 3,520
 4
Deposits in foreign offices—
 —
 —
 —
 —
 —
 —
 —
 140
 —
Total deposits$78,445
 100% $75,933
 100% $77,423
 100% $75,608
 100% $77,405
 100%$82,395
 100% $80,882
 100% $82,155
 100% $84,774
 100% $81,689
 100%
Total core deposits:                                      
Commercial$35,516
 48% $32,201
 45% $32,963
 45% $31,887
 45% $32,936
 45%$35,247
 44% $33,371
 43% $33,546
 42% $37,268
 46% $35,455
 46%
Consumer39,055
 52
 39,601
 55
 40,039
 55
 39,542
 55
 39,966
 55
44,268
 56
 44,555
 57
 45,611
 58
 43,653
 54
 42,396
 54
Total core deposits$74,571
 100% $71,802
 100% $73,002
 100% $71,429
 100% $72,902
 100%$79,515
 100% $77,926
 100% $79,157
 100% $80,921
 100% $77,851
 100%
(1)March 31, 2019 includes $845 million of deposits classified as held-for-sale.
(2)December 31, 2018 includes $872 million of deposits classified as held-for-sale.
(3)Includes consumer certificates of deposit of $250,000 or more.

The Bank maintains borrowing capacity at the FHLB and the Federal Reserve Bank Discount Window. The Bank does not consider borrowing capacity from the Federal Reserve Bank Discount Window as a primary source of liquidity. Total loans and securities pledged to the Federal Reserve Discount Window and the FHLB are $32.0 $38.2 billion and $19.7$46.5 billion at September 30, 20172019 and December 31, 2016,2018, respectively.
To the extent we are unable to obtain sufficient liquidity through core deposits, we may meet our liquidity needs through sources of wholesale funding, asset securitization or sale. Sources of wholesale funding include other domestic deposits of $250,000 or more, brokered deposits and negotiable CDs, deposits in foreign offices, short-term borrowings, and long-term debt. At September 30, 2017,2019, total wholesale funding was $14.9 billion, a decreasean increase from $16.2$14.5 billion at December 31, 2016.2018. The decreaseincrease from year-end primarily relates to an increase in short-term borrowings and issuance of long-term debt, partially offset by a decrease in short-term borrowings.brokered deposits and negotiable CDs.
Liquidity Coverage Ratio
On September 3, 2014, the U.S. banking regulators adopted a final LCR for internationally active banking organizations, generally those with $250 billion or more in total assets, and a Modified LCR rule for banking organizations, similar to Huntington, with $50 billion or more in total assets that are not internationally active banking organizations. The LCR is designed to promote the short-term resilience of the liquidity risk profile of banks to which it applies. The Modified LCR requires Huntington to maintain HQLA to meet its net cash outflows over a prospective 30 calendar-day period, which takes into account the potential impact of idiosyncratic and market-wide shocks. The Modified LCR transition period began on January 1, 2016, with Huntington required to maintain HQLA equal to 90 percent of the stated requirement. The ratio increased to 100 percent on January 1, 2017. At September 30, 2017, Huntington was2019, the Bank is in compliance with the Modified LCR requirement.requirements and we believe the Bank has sufficient liquidity to meet its cash flow obligations for the foreseeable future.
Parent Company Liquidity
The parent company’s funding requirements consist primarily of dividends to shareholders, debt service, income taxes, operating expenses, funding of nonbank subsidiaries, repurchases of our stock, and acquisitions. The parent company obtains funding to meet obligations from dividends and interest received from the Bank, interest and dividends received from direct subsidiaries, net taxes collected from subsidiaries included in the federal consolidated tax return, fees for services provided to subsidiaries, and the issuance of debt securities.
At September 30, 2017,2019 and December 31, 2018, the parent company had $1.9$3.6 billion and $2.4 billion, respectively, in cash and cash equivalents, slightly up fromDecember 31, 2016.equivalents.
On October 18, 2017,23, 2019, the boardBoard of directorsDirectors declared a quarterly common stock cash dividend of $0.11$0.15 per common share. The dividend is payable on January 2, 2018,2020, to shareholders of record on December 18, 2017.2019. Based on the current quarterly dividend of $0.11$0.15 per common share, cash demands required for common stock dividends are estimated to be approximately $119$155 million per quarter. On October 18, 2017,23, 2019, the boardBoard of directorsDirectors declared a quarterly Series A, Series B, Series C, Series D, and Series DE Preferred Stock dividend payable on January 15, 20182020 to shareholders of record on January 1, 2018. Based on the current dividend, cash2020. Cash demands required for Series A, Series B are expected to be less than $1 million per quarter. Cash demands required for Series C, Series D and Series D Preferred StockE are estimatedexpected to be approximately $8$2 million, $0.3 million, $1.5$9 million and $9$7 million per quarter, respectively.

During the first nine months of 2017, the Bank returned capital totaling $426 million. Additionally,2019, the Bank paid a preferred dividendand common dividends of $34 million and common stock dividend of $100$430 million, to the holding company duringrespectively. During the first nine months of 2017. 2019, the Bank also repaid subordinate debt of $683 million to the holding company. To meet any additional liquidity needs, the parent company may issue debt or equity securities from time to time.
Off-Balance Sheet Arrangements
In the normal course of business, we enter into various off-balance sheet arrangements. These arrangements include commitments to extend credit, (See Note 14),interest rate swaps and floors, financial guarantees contained in standby letters-of-credit issued by the Bank, (See Note 14), and commitments by the Bank to sell mortgage loans (See Note 14).loans.
Operational Risk
Operational risk is the risk of loss due to human error;error, inadequate or failed internal systems and controls, including the use of financial or other quantitative methodologies that may not adequately predict future results; violations of, or noncompliance with, laws, rules, regulations, prescribed practices, or ethical standards; and external influences such as market conditions, fraudulent activities, disasters, and security risks. We continuously strive to strengthen our system of internal controls to ensure compliance with laws, rules, and regulations, and to improve the oversight of our operational risk. We actively and continuously monitor cyber-attackscyberattacks such as attempts related to online deception and loss of sensitive customer data. We evaluate internal systems, processes and controls to mitigate loss from cyber attackscyber-attacks and, to date, have not experienced any material losses.

Our objective for managing cyber security risk is to avoid or minimize the impacts of external threat events or other efforts to penetrate our systems. We work to achieve this objective by hardening networks and systems against attack, and by diligently managing visibility and monitoring controls within our data and communications environment to recognize events and respond before the attacker has the opportunity to plan and execute on its own goals. To this end we employ a set of defense in-depth strategies, which include efforts to make us less attractive as a target and less vulnerable to threats, while investing in threat analytic capabilities for rapid detection and response. Potential concerns related to cyber security may be escalated to our board-level Technology Committee, as appropriate. As a complement to the overall cyber security risk management, we use a number of internal training methods, both formally through mandatory courses and informally through written communications and other updates. Internal policies and procedures have been implemented to encourage the reporting of potential phishing attacks or other security risks. We also use third-party services to test the effectiveness of our cyber security risk management framework, and any such third parties are required to comply with our policies regarding information security and confidentiality.
To mitigate operational risks, we have a senior managementan Operational Risk Committee, and a senior management Legal, Regulatory, and Compliance Committee, Funds Movement Committee and a Third Party Risk Management Committee. The responsibilities of these committees, among other duties, include establishing and maintaining management information systems to monitor material risks and to identify potential concerns, risks, or trends that may have a significant impact and ensuring that recommendations are developed to address the identified issues. In addition, we have a senior management Model Risk Oversight Committee that is responsible for policies and procedures describing how model risk is evaluated and managed and the application of the governance process to implement these practices throughout the enterprise. These committees report any significant findings and recommendations to the Risk Management Committee. Potential concerns may be escalated to our ROC and the Audit Committee, as appropriate. Significant findings or issues are escalated by the Third Party Risk Management Committee to the Technology Committee of the Board, as appropriate.
The FirstMerit integration was inherently large and complex. Our objective for managing execution risk was to minimize impacts to daily operations. We established an Integration Management Office led by senior management. Responsibilities included central management, reporting, and escalation of key integration deliverables. In addition, a board level Integration Governance Committee was established to assist in the oversight of the integration of people, systems, and processes of FirstMerit with Huntington. While the systems' conversion is now largely completed, continued oversight occurred until all converted systems were fully decommissioned.
The goal of this framework is to implement effective operational risk techniques and strategies,strategies; minimize operational, fraud, and legal losses; minimize the impact of inadequately designed models and enhance our overall performance.performance.
Compliance Risk
Financial institutions are subject to many laws, rules, and regulations at both the federal and state levels. These broad-based laws, rules, and regulations include, but are not limited to, expectations relating to anti-money laundering, lending limits, client privacy, fair lending, prohibitions against unfair, deceptive or abusive acts or practices, protections for military members as they enter active duty, and community reinvestment. Additionally, theThe volume and complexity of recent regulatory changes have increased our overall compliance risk. As such, we utilize various resources to help ensure expectations are met, including a team of compliance experts dedicated to ensuring our conformance with all applicable laws, rules, and regulations. Our colleagues receive training for several broad-based laws and regulations including, but not limited to, anti-money laundering and customer privacy. Additionally, colleagues engaged in lending activities receive training for laws and regulations related to flood disaster protection, equal credit opportunity, fair lending, and/or other courses related to the extension of credit. We set a high standard of expectation for adherence to compliance management and seek to continuously enhance our performance.



Capital
Both regulatory capital and shareholders’ equity are managed at the Bank and on a consolidated basis. We have an active program for managing capital and maintain a comprehensive process for assessing the Company’s overall capital adequacy. We believe our current levels of both regulatory capital and shareholders’ equity are adequate.
The following table presents certain regulatory capital data at both the consolidated and Bank levels for each of the periods presented:
Table 20 - Regulatory Capital Data      
Table 19 - Regulatory Capital Data      
  Basel III  Basel III
(dollar amounts in millions)  September 30,
2017		 June 30,
2017		 December 31,
2016		  September 30,
2019		 June 30,
2019		 September 30,
2018
Total risk-weighted assetsConsolidated $78,631
 $78,366
 $78,263
Consolidated $86,719
 $86,332
 $83,580
Bank 78,848
 78,489
 78,242
Bank 86,831
 86,410
 83,847
Common equity tier I risk-based capitalConsolidated 7,817
 7,740
 7,486
CET I risk-based capitalConsolidated 8,685
 8,530
 8,263
Bank 8,491
 8,367
 8,153
Bank 9,590
 9,583
 8,601
Tier 1 risk-based capitalConsolidated 8,886
 8,809
 8,547
Consolidated 9,893
 9,737
 9,470
Bank 9,362
 9,238
 9,086
Bank 10,466
 10,460
 9,480
Tier 2 risk-based capitalConsolidated 1,638
 1,640
 1,668
Consolidated 1,634
 1,602
 1,697
Bank 1,706
 1,706
 1,732
Bank 1,255
 1,296
 1,895
Total risk-based capitalConsolidated 10,524
 10,449
 10,215
Consolidated 11,527
 11,339
 11,167
Bank 11,068
 10,944
 10,818
Bank 11,721
 11,756
 11,375
Tier 1 leverage ratioConsolidated 8.96% 8.98% 8.70%
Bank 9.44
 9.43
 9.29
Common equity tier I risk-based capital ratioConsolidated 9.94
 9.88
 9.56
CET I risk-based capital ratioConsolidated 10.02% 9.88% 9.89%
Bank 10.77
 10.66
 10.42
Bank 11.05
 11.09
 10.26
Tier 1 risk-based capital ratioConsolidated 11.30
 11.24
 10.92
Consolidated 11.41
 11.28
 11.33
Bank 11.87
 11.77
 11.61
Bank 12.05
 12.11
 11.31
Total risk-based capital ratioConsolidated 13.39
 13.33
 13.05
Consolidated 13.29
 13.13
 13.36
Bank 14.04
 13.94
 13.83
Bank 13.50
 13.60
 13.57
Tier 1 leverage ratioConsolidated 9.34
 9.24
 9.14
Bank 9.88
 9.93
 9.15

At September 30, 2017,2019, we maintained Basel III transitional capital ratios in excess of the well-capitalized standards established by the FRB.
Common Equity Tier 1 (CET1) risk-based capital ratio was 9.94% at September 30, 2017, up from 9.56% at December 31, 2016. The regulatory Tier 1 risk-based capital ratio was 11.30% compared to 10.92% at December 31, 2016. All capital ratios were impacted by the repurchase of $12333.4 million of common stock at an average cost of $12.75 per share duringshares over the 2017 third quarter.last four quarters.
Shareholders’ Equity
We generate shareholders’ equity primarily through the retention of earnings, net of dividends and share repurchases. Other potential sources of shareholders’ equity include issuances of common and preferred stock. Our objective is to maintain capital at an amount commensurate with our risk profile and risk tolerance objectives, to meet both regulatory and market expectations, and to provide the flexibility needed for future growth and business opportunities.
Shareholders’ equity totaled $10.7$11.9 billion at September 30, 2017,2019, an increase of $0.4$0.8 billion when compared with December 31, 2016.2018.
On June 28, 2017,27, 2019, Huntington was notified by the Federal Reserve that it had no objection to Huntington'sannounced proposed capital actions included in Huntington's 2019 capital plan submitted in the 2017 Comprehensive Capital Analysis and Review (CCAR).plan. These actions includedinclude a 38%7% increase in the quarterly dividend per common share to $0.11,$0.15, starting in the fourththird quarter of 2017,2019, the repurchase of up to $308$513 million of common stock over the next four quarters (July 1, 20172019 through June 30, 2018)2020), subject to authorization by the Board of Directors, and maintaining dividends on the outstanding classes of preferred stock and trust preferred securities. Any capital actions, including those contemplated above, are subject to approval by Huntington’s Board of Directors.
On July 19, 2017,17, 2019, the Board of Directors authorized the repurchase of up to $308$513 million of common shares over the four quarters through the 20182020 second quarter. During the 2017 third quarter, Huntington purchased $123 million of common stock at an

average cost of $12.75 per share. Purchases of common stock under the authorization may include open market purchases, privately negotiated transactions, and accelerated repurchase programs.
Dividends
We consider disciplined capital management as a key objective, with dividends representing one component. Our strong capital ratios and expectations for continued earnings growth positions us to continue to actively explore additional capital management opportunities.

Share Repurchases
From time to time the Board of Directors authorizes the Company to repurchase shares of our common stock. Although we announce when the Board of Directors authorizes share repurchases, we typically do not give any public notice before we repurchase our shares. Future stock repurchases may be private or open-market repurchases, including block transactions, accelerated or delayed block transactions, forward transactions, and similar transactions. Various factors determine the amount and timing of our share repurchases, including our capital requirements, the number of shares we expect to issue for employee benefit plans and acquisitions, market conditions (including the trading price of our stock), and regulatory and legal considerations. During the 2019 third quarter, Huntington repurchased a total of 5.2 million shares at a weighted average share price of $13.02
BUSINESS SEGMENT DISCUSSION
Overview
Our business segments are based on our internally-aligned segment leadership structure, which is how we monitor results and assess performance. We have four major business segments: Consumer and Business Banking, Commercial Banking, Vehicle Finance, and Regional Banking and The Huntington Private Client Group (RBHPCG). The Treasury / Other function includes technology and operations, other unallocated assets, liabilities, revenue, and expense.
Business segment results are determined based upon our management practices, which assigns balance sheet and income statement items to each of the business segments. The process is designed around our organizational and management structure and, accordingly, the results derived are not necessarily comparable with similar information published by other financial institutions.
Revenue Sharing
Revenue is recorded in the business segment responsible for the related product or service. Fee sharing is recorded to allocate portions of such revenue to other business segments involved in selling to, or providing service to customers. Results of operations for the business segments reflect these fee sharing allocations.
Expense Allocation
The management process that develops the business segment reporting utilizes various estimates and allocation methodologies to measure the performance of the business segments. Expenses are allocated to business segments using a two-phase approach. The first phase consists of measuring and assigning unit costs (activity-based costs) to activities related to product origination and servicing. These activity-based costs are then extended, based on volumes, with the resulting amount allocated to business segments that own the related products. The second phase consists of the allocation of overhead costs to all four business segments from Treasury / Other. We utilize a full-allocation methodology, where all Treasury / Other expenses, except reported Significant Items, if any, and a small amount of other residual unallocated expenses, are allocated to the four business segments.
Funds Transfer Pricing (FTP)
We use an active and centralized FTP methodology to attribute appropriate net interest income to the business segments. The intent of the FTP methodology is to transfer interest rate risk from the business segments by providing matched duration funding of assets and liabilities. The result is to centralize the financial impact, management, and reporting of interest rate risk in the Treasury / Other function where it can be centrally monitored and managed. The Treasury / Other function charges (credits) an internal cost of funds for assets held in (or pays for funding provided by) each business segment. The FTP rate is based on prevailing market interest rates for comparable duration assets (or liabilities). During 2019, the Company updated and refined its FTP methodology primarily related to the allocation of deposit funding costs.  Prior period amounts presented below have been restated to reflect the new methodology.

Net Income by Business Segment
Net income by business segment for the nine-month periods ending September 30, 2019 and September 30, 2018 is presented in the following table:
Table 20 - Net Income by Business Segment
 Nine Months Ended September 30,
(dollar amounts in millions)2019 2018
Consumer and Business Banking$505
 $355
Commercial Banking421
 453
Vehicle Finance128
 127
RBHPCG87
 90
Treasury / Other(47) 34
Net income$1,094
 $1,059
Treasury / Other
The Treasury / Other function includes revenue and expense related to assets, liabilities, and equity not directly assigned or allocated to one of the four business segments. Assets include investment securities and bank owned life insurance.
Net interest income includes the impact of administering our investment securities portfolios, the net impact of derivatives used to hedge interest rate sensitivity as well as the financial impact associated with our FTP methodology, as described above. Noninterest income includes miscellaneous fee income not allocated to other business segments, such as bank owned life insurance income and securities and trading asset gains or losses. Noninterest expense includes certain corporate administrative, and other miscellaneous expenses not allocated to other business segments. The provision for income taxes for the business segments is calculated at a statutory 21% tax rate, although our overall effective tax rate is lower. As a result, Treasury / Other reflects a credit for income taxes representing the difference between the lower effective tax rate and the statutory tax rate used at the time to allocate income taxes to the business segments.

Consumer and Business Banking
        
Table 21 - Key Performance Indicators for Consumer and Business Banking
 Nine Months Ended September 30, Change
(dollar amounts in millions)2019 2018 Amount Percent
Net interest income$1,371
 $1,254
 $117
 9 %
Provision for credit losses81
 98
 (17) (17)
Noninterest income596
 557
 39
 7
Noninterest expense1,247
 1,263
 (16) (1)
Provision for income taxes134
 95
 39
 41
Net income$505
 $355
 $150
 42 %
Number of employees (average full-time equivalent)8,015
 8,374
 (359) (4)%
Total average assets$25,486
 $24,995
 $491
 2
Total average loans/leases22,226
 21,892
 334
 2
Total average deposits51,505
 47,032
 4,473
 10
Net interest margin3.51% 3.52% (0.01)% —
NCOs$97
 $75
 $22
 29
NCOs as a % of average loans and leases0.58% 0.46% 0.12 % 26
2019 First Nine Months versus 2018 First Nine Months
Consumer and Business Banking, including Home Lending, reported net income of $505 million in the first nine-month period of 2019, an increase of $150 million, or 42%, compared to the year-ago period. Segment net interest income increased $117 million, or 9%, driven by the higher value of deposits, along with a 10% increase in average deposits. The provision for credit losses decreased $17 million, or 17%. Noninterest income increased $39 million, or 7%, primarily due to increased mortgage banking income, card interchange income from higher transaction volumes, along with increased service charge income on deposit accounts. Noninterest expense decreased $16 million, or 1%, due to decreased personnel, occupancy, and equipment expense as a result of branch consolidations and divestitures, along with reduced FDIC insurance expense.

Home Lending, an operating unit of Consumer and Business Banking, reflects the result of the origination, sale, and servicing of mortgage loans less referral fees and net interest income for mortgage banking products distributed by the retail branch network and other business segments. Home Lending reported a gain of $9 million in the first nine-month period of 2019, compared with a net loss of $3 million in the year-ago period. Noninterest income increased $26 million, or 43%, driven primarily by higher salable spreads partially offset by lower net servicing revenue. Noninterest expense increased $13 million, or 11%, as a result of higher allocated indirect costs partially offset by lower personnel expense.

Commercial Banking
        
Table 22 - Key Performance Indicators for Commercial Banking
 Nine Months Ended September 30, Change
(dollar amounts in millions)2019 2018 Amount Percent
Net interest income$798
 $744
 $54
 7 %
Provision for credit losses103
 41
 62
 151
Noninterest income266
 234
 32
 14
Noninterest expense427
 364
 63
 17
Provision for income taxes113
 120
 (7) (6)
Net income$421
 $453
 $(32) (7)%
Number of employees (average full-time equivalent)1,323
 1,240
 83
 7 %
Total average assets$33,678
 $30,954
 $2,724
 9
Total average loans/leases27,204
 26,094
 1,110
 4
Total average deposits21,105
 22,041
 (936) (4)
Net interest margin3.58% 3.47 % 0.11% 3
NCOs (Recoveries)$65
 $(12) $77
 642
NCOs as a % of average loans and leases0.32% (0.06)% 0.38% 633
2019 First Nine Months versus 2018 First Nine Months
Commercial Banking reported net income of $421 million in the first nine-month period of 2019, a decrease of $32 million, or 7%, compared to the year-ago period. Provision for credit losses increased $62 million, or 151%, primarily due to net charge offs of $65 million compared to a net recovery of $12 million in the prior year. Segment net interest income increased $54 million, or 7%, primarily due to an 11 basis point increase in net interest margin driven by a higher value of deposits and a 4% growth in average loans, partially offset by a decrease in loan spread. Noninterest income increased $32 million, or 14%, largely driven by higher capital markets related revenue due to increased underwriting activity, customer interest rate derivatives, and foreign exchange revenue. Noninterest expense increased $63 million, or 17%, primarily due to allocated overhead and personnel expense, which was driven by the acquisition of Hutchinson, Shockey, and Erly & Co. in the 2018 third quarter, and other taxes related to the adoption of the new lease accounting standard, partially offset by lower FDIC insurance expense.  

Vehicle Finance
        
Table 23 - Key Performance Indicators for Vehicle Finance
 Nine Months Ended September 30, Change
(dollar amounts in millions)2019 2018 Amount Percent
Net interest income$291
 $294
 $(3) (1)%
Provision for credit losses27
 36
 (9) (25)
Noninterest income9
 9
 —
 —
Noninterest expense112
 106
 6
 6
Provision for income taxes33
 34
 (1) (3)
Net income$128
 $127
 $1
 1 %
Number of employees (average full-time equivalent)266
 263
 3
 1 %
Total average assets$19,264
 $18,200
 $1,064
 6
Total average loans/leases19,336
 18,250
 1,086
 6
Total average deposits329
 339
 (10) (3)
Net interest margin2.01% 2.15% (0.14)% (7)
NCOs$30
 $31
 $(1) (3)
NCOs as a % of average loans and leases0.21% 0.23% (0.02)% (9)
2019 First Nine Months versus 2018 First Nine Months
Vehicle Finance reported net income of $128 million in the first nine-month period of 2019, an increase of $1 million, or 1%, compared to the year-ago period. Segment net interest income decreased $3 million or 1%, due to a 14 basis point decrease in the net interest margin, which continues to primarily reflect the run off of the higher yielding acquired loan portfolios, the related purchase accounting impact, and higher funding costs. This decrease was offset in part by a $1.1 billion, or 6%, increase in average loan balances primarily reflecting the success of the geographic expansion of RV and marine loans over the past two years, as well as growth of floor plan and other commercial balances. Noninterest income was unchanged, while noninterest expense increased $6 million, or 6%, primarily reflecting higher allocated costs attributed to the increases in loan balances and associated portfolio management and servicing activities.

Regional Banking and The Huntington Private Client Group
        
Table 24 - Key Performance Indicators for Regional Banking and The Huntington Private Client Group
 Nine Months Ended September 30, Change
(dollar amounts in millions)2019 2018 Amount Percent
Net interest income$153
 $148
 $5
 3 %
Provision for credit losses(3) —
 (3) (100)
Noninterest income147
 146
 1
 1
Noninterest expense193
 180
 13
 7
Provision for income taxes23
 24
 (1) (4)
Net income$87
 $90
 $(3) (3)%
Number of employees (average full-time equivalent)1,059
 1,022
 37
 4 %
Total average assets$6,377
 $5,703
 $674
 12
Total average loans/leases6,071
 5,386
 685
 13
Total average deposits5,939
 5,908
 31
 1
Net interest margin3.31% 3.25% 0.06 % 2
NCOs$—
 $—
 $—
 —
NCOs as a % of average loans and leases—% 0.01% (0.01)% (100)
Total assets under management (in billions)—eop$16.8
 $17.2
 $(0.4) (2)
Total trust assets (in billions)—eop117.6
 114.3
 3.3
 3
eop - End of Period.

2019 First Nine Months versus 2018 First Nine Months
RBHPCG reported net income of $87 million in the first nine-month period of 2019, a decrease of $3 million, or 3%, compared to the year-ago period. Segment net interest income increased $5 million, or 3%, due to a 6 basis point increase in net interest margin, reflecting higher deposit spreads, partially offset by a decrease in loan spreads. Average loans increased $0.7 billion, or 13%, primarily due to residential real estate mortgage loans, while average deposits remained relatively flat. Noninterest income increased $1 million, or 1%, due to increased insurance income resulting from life insurance agency sales. Noninterest expense increased $13 million, or 7%, primarily due to strategic hires and increased product allocation costs.
ADDITIONAL DISCLOSURES
Forward-Looking Statements
This report, including MD&A, contains certain forward-looking statements, including, but not limited to, certain plans, expectations, goals, projections, and statements, which are not historical facts and are subject to numerous assumptions, risks, and uncertainties. Statements that do not describe historical or current facts, including statements about beliefs and expectations, are forward-looking statements. Forward-looking statements may be identified by words such as expect, anticipate, believe, intend, estimate, plan, target, goal, or similar expressions, or future or conditional verbs such as will, may, might, should, would, could, or similar variations. The forward-looking statements are intended to be subject to the safe harbor provided by Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of 1995.
While there is no assurance that any list of risks and uncertainties or risk factors is complete, below are certain factors which could cause actual results to differ materially from those contained or implied in the forward-looking statements: changes in general economic, political, or industry conditions; uncertainty in U.S. fiscal and monetary policy, including the interest rate policies of the Federal Reserve Board; volatility and disruptions in global capital and credit markets; movements in interest rates; reform of LIBOR; competitive pressures on product pricing and services; success, impact, and timing of our business strategies, including market acceptance of any new products or services implementing our “Fair Play” banking philosophy; the nature, extent, timing, and results of governmental actions, examinations, reviews, reforms, regulations, and interpretations, including those related to the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Basel III regulatory capital reforms, as well as those involving the OCC, Federal Reserve, FDIC, and CFPB; and other factors that may affect our future results.
All forward-looking statements speak only as of the date they are made and are based on information available at that time. We do not assume any obligation to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements were made or to reflect the occurrence of unanticipated events except as required by federal securities laws. As forward-looking statements involve significant risks and uncertainties, caution should be exercised against placing undue reliance on such statements.
Non-GAAP Financial Measures
This document contains GAAP financial measures and non-GAAP financial measures where management believes it to be helpful in understanding our results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found herein.
Fully-Taxable Equivalent Basis
Interest income, yields, and ratios on a FTE basis are considered non-GAAP financial measures. Management believes net interest income on a FTE basis provides an insightful picture of the interest margin for comparison purposes. The FTE basis also allows management to assess the comparability of revenue arising from both taxable and tax-exempt sources. The FTE basis assumes a federal statutory tax rate of 21 percent. We encourage readers to consider the Unaudited Condensed Consolidated Financial Statements and other financial information contained in this Form 10-Q in their entirety, and not to rely on any single financial measure.
Non-Regulatory Capital Ratios
In addition to capital ratios defined by banking regulators, the Company considers various other measures when evaluating capital utilization and adequacy, including:
Tangible common equity to tangible assets,
Tangible equity to tangible assets, and
Tangible common equity to risk-weighted assets using Basel III definitions.
These non-regulatory capital ratios are viewed by management as useful additional methods of reflecting the level of capital available to withstand unexpected market conditions. Additionally, presentation of these ratios allows readers to

compare our capitalization to other financial services companies. These ratios differ from capital ratios defined by banking regulators principally in that the numerator excludes goodwill and other intangible assets, the nature and extent of which varies among different financial services companies. These ratios are not defined in GAAP or federal banking regulations. As a result, these non-regulatory capital ratios disclosed by the Company are considered non-GAAP financial measures.
Because there are no standardized definitions for these non-regulatory capital ratios, the Company’s calculation methods may differ from those used by other financial services companies. Also, there may be limits in the usefulness of these measures to investors. As a result, we encourage readers to consider the Unaudited Condensed Consolidated Financial Statements and other financial information contained in this Form 10-Q in their entirety, and not to rely on any single financial measure.
Risk Factors
More information on risk is discussed in the Risk Factors section included in Item 1A of our 2018 Form 10-K. Additional information regarding risk factors can also be found in the Risk Management and Capital discussion of this report.
Critical Accounting Policies and Use of Significant Estimates
Our Consolidated Financial Statements are prepared in accordance with GAAP. The preparation of financial statements in conformity with GAAP requires us to establish accounting policies and make estimates that affect amounts reported in our Consolidated Financial Statements. Note 1 of the Notes to Consolidated Financial Statements included in our December 31, 2018 Form 10-K, as supplemented by this report including this MD&A, describes the significant accounting policies we used in our Consolidated Financial Statements.
An accounting estimate requires assumptions and judgments about uncertain matters that could have a material effect on the Consolidated Financial Statements. Estimates are made under facts and circumstances at a point in time, and changes in those facts and circumstances could produce results substantially different from those estimates. Our most significant accounting estimates relate to our ACL, valuation of financial instruments, contingent liabilities, income taxes, and deferred tax assets/liabilities. These significant accounting estimates and their related application are discussed in our December 31, 2018 Form 10-K.
Recent Accounting Pronouncements and Developments
Note 2 "Accounting Standards Update" of the Notes to Unaudited Condensed Consolidated Financial Statements discusses new accounting pronouncements adopted during 2019 and the expected impact of accounting pronouncements recently issued but not yet required to be adopted. To the extent the adoption of new accounting standards materially affects financial condition, results of operations, or liquidity, the impacts are discussed in the applicable section of this MD&A and the Notes to Unaudited Condensed Consolidated Financial Statements.
Fair ValueADDITIONAL DISCLOSURES
At the end of each quarter, we assess the valuation hierarchy for each assetForward-Looking Statements
This report, including MD&A, contains certain forward-looking statements, including, but not limited to, certain plans, expectations, goals, projections, and statements, which are not historical facts and are subject to numerous assumptions, risks, and uncertainties. Statements that do not describe historical or liability measured. As necessary, assets or liabilitiescurrent facts, including statements about beliefs and expectations, are forward-looking statements. Forward-looking statements may be transferred within hierarchy levels dueidentified by words such as expect, anticipate, believe, intend, estimate, plan, target, goal, or similar expressions, or future or conditional verbs such as will, may, might, should, would, could, or similar variations. The forward-looking statements are intended to be subject to the safe harbor provided by Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of 1995.
While there is no assurance that any list of risks and uncertainties or risk factors is complete, below are certain factors which could cause actual results to differ materially from those contained or implied in the forward-looking statements: changes in availability of observable market inputs atgeneral economic, political, or industry conditions; uncertainty in U.S. fiscal and monetary policy, including the measurement date. The fair values measured at each levelinterest rate policies of the fair value hierarchy, additional discussion regarding fair value measurements,Federal Reserve Board; volatility and a brief descriptiondisruptions in global capital and credit markets; movements in interest rates; reform of how fair value is determined for categoriesLIBOR; competitive pressures on product pricing and services; success, impact, and timing of our business strategies, including market acceptance of any new products or services implementing our “Fair Play” banking philosophy; the nature, extent, timing, and results of governmental actions, examinations, reviews, reforms, regulations, and interpretations, including those related to the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Basel III regulatory capital reforms, as well as those involving the OCC, Federal Reserve, FDIC, and CFPB; and other factors that have unobservable inputs,may affect our future results.
All forward-looking statements speak only as of the date they are made and are based on information available at that time. We do not assume any obligation to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements were made or to reflect the occurrence of unanticipated events except as required by federal securities laws. As forward-looking statements involve significant risks and uncertainties, caution should be exercised against placing undue reliance on such statements.
Non-GAAP Financial Measures
This document contains GAAP financial measures and non-GAAP financial measures where management believes it to be helpful in understanding our results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found herein.
Fully-Taxable Equivalent Basis
Interest income, yields, and ratios on a FTE basis are considered non-GAAP financial measures. Management believes net interest income on a FTE basis provides an insightful picture of the interest margin for comparison purposes. The FTE basis also allows management to assess the comparability of revenue arising from both taxable and tax-exempt sources. The FTE basis assumes a federal statutory tax rate of 21 percent. We encourage readers to consider the Unaudited Condensed Consolidated Financial Statements and other financial information contained in this Form 10-Q in their entirety, and not to rely on any single financial measure.
Non-Regulatory Capital Ratios
In addition to capital ratios defined by banking regulators, the Company considers various other measures when evaluating capital utilization and adequacy, including:
Tangible common equity to tangible assets,
Tangible equity to tangible assets, and
Tangible common equity to risk-weighted assets using Basel III definitions.
These non-regulatory capital ratios are viewed by management as useful additional methods of reflecting the level of capital available to withstand unexpected market conditions. Additionally, presentation of these ratios allows readers to

compare our capitalization to other financial services companies. These ratios differ from capital ratios defined by banking regulators principally in that the numerator excludes goodwill and other intangible assets, the nature and extent of which varies among different financial services companies. These ratios are not defined in GAAP or federal banking regulations. As a result, these non-regulatory capital ratios disclosed by the Company are considered non-GAAP financial measures.
Because there are no standardized definitions for these non-regulatory capital ratios, the Company’s calculation methods may differ from those used by other financial services companies. Also, there may be limits in the usefulness of these measures to investors. As a result, we encourage readers to consider the Unaudited Condensed Consolidated Financial Statements and other financial information contained in this Form 10-Q in their entirety, and not to rely on any single financial measure.
Risk Factors
More information on risk is discussed in the Risk Factors section included in Item 1A of our 2018 Form 10-K. Additional information regarding risk factors can also be found in the Risk Management and Capital discussion of this report.
Critical Accounting Policies and Use of Significant Estimates
Our Consolidated Financial Statements are prepared in accordance with GAAP. The preparation of financial statements in conformity with GAAP requires us to establish accounting policies and make estimates that affect amounts reported in our Consolidated Financial Statements. Note 111 of the Notes to Consolidated Financial Statements included in our December 31, 2018 Form 10-K, as supplemented by this report including this MD&A, describes the significant accounting policies we used in our Consolidated Financial Statements.
An accounting estimate requires assumptions and judgments about uncertain matters that could have a material effect on the Consolidated Financial Statements. Estimates are made under facts and circumstances at a point in time, and changes in those facts and circumstances could produce results substantially different from those estimates. Our most significant accounting estimates relate to our ACL, valuation of financial instruments, contingent liabilities, income taxes, and deferred tax assets/liabilities. These significant accounting estimates and their related application are discussed in our December 31, 2018 Form 10-K.
Recent Accounting Pronouncements and Developments
Note 2 "Accounting Standards Update" of the Notes to Unaudited Condensed Consolidated Financial Statements.
BUSINESS SEGMENT DISCUSSION
Overview
Our business segmentsStatements discusses new accounting pronouncements adopted during 2019 and the expected impact of accounting pronouncements recently issued but not yet required to be adopted. To the extent the adoption of new accounting standards materially affects financial condition, results of operations, or liquidity, the impacts are based on our internally-aligned segment leadership structure, which is how we monitor results and assess performance. We have four major business segments: Consumer and Business Banking, Commercial Banking, Commercial Real Estate and Vehicle Finance (CREVF), and Regional Banking and The Huntington Private Client Group (RBHPCG). A Treasury / Other function includes technology and operations, other unallocated assets, liabilities, revenue, and expense.
Business segment results are determined based upon our management accounting practices, which assigns balance sheet and income statement items to each of the business segments. The process is designed around our organizational and management structure and, accordingly, the results derived are not necessarily comparable with similar information published by other financial institutions.
We announced a change within our executive leadership team, which became effective during the 2017 second quarter. As a result, the previously reported Home Lending segment is now included as an operating unit within the Consumer and Business Banking segment. Additionally, the Insurance operating unit previously included in Commercial Banking was realigned to RBHPCG during second quarter. Prior period results have been reclassified to conform to the current period presentation.
Revenue Sharing
Revenue is recordeddiscussed in the business segment responsible for the related product or service. Fee sharing is recorded to allocate portionsapplicable section of such revenue to other business segments involved in selling to, or providing service to customers. Results of operations for the business segments reflect these fee sharing allocations.
Expense Allocation
The management accounting process that develops the business segment reporting utilizes various estimates and allocation methodologies to measure the performance of the business segments. Expenses are allocated to business segments using a two-phase approach. The first phase consists of measuring and assigning unit costs (activity-based costs) to activities related to product origination and servicing. These activity-based costs are then extended, based on volumes, with the resulting amount allocated to business segments that own the related products. The second phase consists of the allocation of overhead costs to all four business segments from Treasury / Other. We utilize a full-allocation methodology, where all Treasury / Other expenses, except reported Significant Items, and a small amount of other residual unallocated expenses, are allocated to the four business segments.

Funds Transfer Pricing (FTP)
We use an active and centralized FTP methodology to attribute appropriate income to the business segments. The intent of the FTP methodology is to transfer interest rate risk from the business segments by providing matched duration funding of assets and liabilities. The result is to centralize the financial impact, management, and reporting of interest rate risk in the Treasury / Other function where it can be centrally monitored and managed. The Treasury / Other function charges (credits) an internal cost of funds for assets held in (or pays for funding provided by) each business segment. The FTP rate is based on prevailing market interest rates for comparable duration assets (or liabilities).
Net Income by Business Segment
Net income by business segment for the nine-month periods ending September 30, 2017 and September 30, 2016 is presented in the following table:
Table 21 - Net Income (Loss) by Business Segment
 Nine Months Ended September 30,
(dollar amounts in thousands)2017 2016
Consumer and Business Banking$314,366
 $234,356
Commercial Banking239,685
 133,470
CREVF162,676
 129,802
RBHPCG66,962
 46,529
Treasury / Other(29,286) (71,299)
Net income$754,403
 $472,858
Treasury / Other
The Treasury / Other function includes revenue and expense related to assets, liabilities, and equity not directly assigned or allocated to one of the four business segments. Other assets include investment securities and bank owned life insurance. The financial impact associated with our FTP methodology, as described above, is also included.
Net interest income includes the impact of administering our investment securities portfoliosthis MD&A and the net impact of derivatives usedNotes to hedge interest rate sensitivity. 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 FirstMerit acquisition-related expenses in 2017 first nine-month period, certain corporate administrative, and other miscellaneous expenses not allocated to other business segments. The provision for income taxes for the business segments is calculated at a statutory 35% tax rate, though our overall effective tax rate is lower. As a result, Treasury / Other reflects a credit for income taxes representing the difference between the lower actual effective tax rate and the statutory tax rate used to allocate income taxes to the business segments.Unaudited Condensed Consolidated Financial Statements.
Consumer and Business Banking
        
Table 22 - Key Performance Indicators for Consumer and Business Banking
 Nine Months Ended September 30, Change
(dollar amounts in thousands unless otherwise noted)2017 2016 Amount Percent
Net interest income$1,255,617
 $911,706
 $343,911
 38%
Provision for credit losses74,270
 43,474
 30,796
 71
Noninterest income544,445
 459,732
 84,713
 18
Noninterest expense1,242,152
 967,417
 274,735
 28
Provision for income taxes169,274
 126,191
 43,083
 34
Net income$314,366
 $234,356
 $80,010
 34%
Number of employees (average full-time equivalent)8,696
 6,997
 1,699
 24%
Total average assets (in millions)$25,461
 $19,921
 $5,540
 28
Total average loans/leases (in millions)20,577
 16,967
 3,610
 21
Total average deposits (in millions)45,478
 33,759
 11,719
 35
Net interest margin3.79% 3.69% 0.10% 3
NCOs$75,064
 $49,873
 $25,191
 51
NCOs as a % of average loans and leases0.48% 0.39% 0.09% 23

2017 First Nine Months versus 2016 First Nine Months
Consumer and Business Banking, including Home Lending, reported net income of $314 million in the first nine-month period of 2017, an increase of $80 million, or 34%, compared to the year-ago period. Results were predominantly impacted by the FirstMerit acquisition. Segment net interest income increased $344 million, or 38%, primarily due to an increase in total average loans and deposits. The provision for credit losses increased $31 million, or 71%, driven by increased NCOs as well as an increase in the allowance. Noninterest income increased $85 million, or 18%, due to an increase in card and payment processing income and service charges on deposit accounts, which were driven by higher debit card-related transaction volumes and an increase in the number of households. In addition, SBA loan sales gains contributed to improved noninterest income. Noninterest expense increased $275 million, or 28%, due to an increase in personnel and occupancy expense related to the addition of FirstMerit branches and colleagues. Higher processing costs related to transaction volumes, along with allocated expenses, also contributed to the increase in noninterest expense.
Home Lending, an operating unit of Consumer and Business Banking, reflects the result of the origination and servicing of mortgage loans less referral fees and net interest income for mortgage banking products distributed by the retail branch network and other business segments. Home Lending reported net income of $6 million in the first nine-month period of 2017, a decrease of $11 million, or 64%, compared to the year-ago period. While total revenues increased $9 million, or 8%, largely due to higher residential loan balances, this increase was offset by an increase in noninterest expenses of $22 million, or 27%, as a result of higher personnel costs related to the FirstMerit acquisition and higher origination volume. Income from lower origination spreads offset higher origination volume.
Commercial Banking
        
Table 23 - Key Performance Indicators for Commercial Banking
 Nine Months Ended September 30, Change
(dollar amounts in thousands unless otherwise noted)2017 2016 Amount Percent
Net interest income$514,900
 $355,263
 $159,637
 45 %
Provision for credit losses21,378
 53,212
 (31,834) (60)
Noninterest income176,609
 150,228
 26,381
 18
Noninterest expense301,385
 246,941
 54,444
 22
Provision for income taxes129,061
 71,868
 57,193
 80
Net income$239,685
 $133,470
 $106,215
 80 %
Number of employees (average full-time equivalent)1,078
 894
 184
 21 %
Total average assets (in millions)$24,026
 $19,012
 $5,014
 26
Total average loans/leases (in millions)19,051
 14,951
 4,100
 27
Total average deposits (in millions)19,206
 14,976
 4,230
 28
Net interest margin3.33% 2.95% 0.38 % 13
NCOs$13,420
 $19,951
 $(6,531) (33)
NCOs as a % of average loans and leases0.09% 0.18% (0.09)% (50)

2017 First Nine Months versus 2016 First Nine Months
Commercial Banking reported net income of $240 million in the first nine-month period of 2017, an increase of $106 million, or 80%, compared to the year-ago period. Results were predominantly impacted by the FirstMerit acquisition. Segment net interest income increased $160 million, or 45%, primarily due to an increase in both average loans and deposits combined with a 38 basis point increase in net interest margin. The provision for credit losses decreased $32 million, or 60%, driven by an improvement in energy related credits and a reduction in NCOs. Noninterest income increased $26 million, or 18%, largely driven by an increase in loan commitment and other fees, capital markets related revenues, and deposit service charges and other treasury management related income partially offset by a reduction in operating lease income. Noninterest expense increased $54 million, or 22%, primarily due to an increase in personnel expense, allocated expenses, and amortization of intangibles, partially offset by a decrease in operating lease expense.  

Commercial Real Estate and Vehicle Finance
        
Table 24 - Commercial Real Estate and Vehicle Finance
 Nine Months Ended September 30, Change
(dollar amounts in thousands unless otherwise noted)2017 2016 Amount Percent
Net interest income$419,556
 $317,704
 $101,852
 32 %
Provision for credit losses40,047
 18,706
 21,341
 114
Noninterest income34,750
 25,951
 8,799
 34
Noninterest expense163,989
 125,254
 38,735
 31
Provision for income taxes87,594
 69,893
 17,701
 25
Net income$162,676
 $129,802
 $32,874
 25 %
Number of employees (average full-time equivalent)406
 330
 76
 23 %
Total average assets (in millions)$24,121
 $19,520
 $4,601
 24
Total average loans/leases (in millions)23,025
 18,433
 4,592
 25
Total average deposits (in millions)1,878
 1,669
 209
 13
Net interest margin2.42% 2.25 % 0.17% 8
NCOs (Recoveries)$28,007
 $(2,146) $30,153
 (1,405)
NCOs as a % of average loans and leases0.16% (0.02)% 0.18% (900)

2017 First Nine Months versus 2016 First Nine Months
CREVF reported net income of $163 million in the first nine-month period of 2017, an increase of $33 million, or 25%, compared to the year-ago period. Results were positively impacted by the FirstMerit acquisition, offset in part by a higher provision for credit losses reflecting significant commercial real estate recoveries benefiting the year ago period. Segment net interest income increased $102 million or 32%, due to both higher loan balances and a 17 basis point increase in the net interest margin primarily reflecting the purchase accounting impact of the acquired loan portfolios. Noninterest income increased $9 million, or 34%, primarily due to an increase in gains on various equity investments associated with mezzanine lending related activities and an increase in net servicing income on securitized automobile loans. Noninterest expense increased $39 million, or 31%, primarily due to an increase in personnel costs and other allocated costs attributed to higher production and portfolio balance levels.
Regional Banking and The Huntington Private Client Group
        
Table 25 - Key Performance Indicators for Regional Banking and The Huntington Private Client Group
 Nine Months Ended September 30, Change
(dollar amounts in thousands unless otherwise noted)2017 2016 Amount Percent
Net interest income$145,089
 $112,473
 $32,616
 29 %
Provision for credit losses510
 490
 20
 4
Noninterest income140,610
 126,245
 14,365
 11
Noninterest expense182,171
 166,645
 15,526
 9
Provision for income taxes36,056
 25,054
 11,002
 44
Net income$66,962
 $46,529
 $20,433
 44 %
Number of employees (average full-time equivalent)1,027
 953
 74
 8 %
Total average assets (in millions)$5,473
 $4,424
 $1,049
 24
Total average loans/leases (in millions)4,779
 3,997
 782
 20
Total average deposits (in millions)5,893
 5,002
 891
 18
Net interest margin3.38% 3.01 % 0.37% 12
NCOs (Recoveries)$1,879
 $(2,392) $4,271
 (179)
NCOs as a % of average loans and leases0.05% (0.08)% 0.13% (163)
Total assets under management (in billions)—eop$18.0
 $17.3
 $0.7
 4
Total trust assets (in billions)—eop106.3
 98.8
 7.5
 8
eop - End of Period.

2017 First Nine Months versus 2016 First Nine Months
RBHPCG reported net income of $67 million in the first nine-month period of 2017, an increase of $20 million, or 44%, compared to the year-ago period. Results were predominantly impacted by the FirstMerit acquisition. Net interest income increased $33 million, or 29%, due to an increase in average total deposits and loans combined with a 37 basis point increase in net interest margin. The increase in average total loans was due to growth in commercial and portfolio mortgage loans, while the increase in average total deposits was due to growth in interest checking balances. The provision for credit losses was essentially unchanged. Noninterest income increased $14 million, or 11%, primarily reflecting increased trust and investment management revenue as a result of an increase in trust assets and assets under management, largely from the FirstMerit acquisition. Noninterest expense increased $16 million, or 9%, as a result of increased personnel expenses and amortization of intangibles resulting from the FirstMerit acquisition.
ADDITIONAL DISCLOSURES
Forward-Looking Statements
This report, including MD&A, contains certain forward-looking statements, including, but not limited to, certain plans, expectations, goals, projections, and statements, which are not historical facts and are subject to numerous assumptions, risks, and uncertainties. Statements that do not describe historical or current facts, including statements about beliefs and expectations, are forward-looking statements. Forward-looking statements may be identified by words such as expect, anticipate, believe, intend, estimate, plan, target, goal, or similar expressions, or future or conditional verbs such as will, may, might, should, would, could, or similar variations. The forward-looking statements are intended to be subject to the safe harbor provided by Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of 1995.
While there is no assurance that any list of risks and uncertainties or risk factors is complete, below are certain factors which could cause actual results to differ materially from those contained or implied in the forward-looking statements: changes in general economic, political, or industry conditions; uncertainty in U.S. fiscal and monetary policy, including the interest rate policies of the Federal Reserve Board; volatility and disruptions in global capital and credit markets; movements in interest rates; reform of LIBOR; competitive pressures on product pricing and services; success, impact, and timing of our business strategies, including market acceptance of any new products or services implementing our “Fair Play” banking philosophy; the nature, extent, timing, and results of governmental actions, examinations, reviews, reforms, regulations, and interpretations, including those related to the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Basel III regulatory capital reforms, as well as those involving the OCC, Federal Reserve, FDIC, and CFPB; the possibility that the anticipated benefits of the merger with FirstMerit Corporation are not realized completely or when expected, including as a result of the impact of, or problems arising from, the strength of the economy and competitive factors in the areas where we do business; and other factors that may affect our future results. Additional factors that could cause results to differ materially from those described above can be found in our Annual Report on Form 10-K for the year ended December 31, 2016, and Quarterly Reports on Form 10-Q for the quarters ended March 31, 2017 and June 30, 2017, which are on file with the Securities and Exchange Commission (the “SEC”) and available in the “Investor Relations” section of our website, http://www.huntington.com, under the heading “Publications and Filings” and in other documents we file with the SEC.
All forward-looking statements speak only as of the date they are made and are based on information available at that time. We do not assume any obligation to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements were made or to reflect the occurrence of unanticipated events except as required by federal securities laws. As forward-looking statements involve significant risks and uncertainties, caution should be exercised against placing undue reliance on such statements.
Non-GAAP Financial Measures
This document contains GAAP financial measures and non-GAAP financial measures where management believes it to be helpful in understanding Huntington’sour results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found herein where applicable.
Significant Items
From time-to-time, revenue, expenses, or taxes are impacted by items judged by us to be outside of ordinary banking activities and/or by items that, while they may be associated with ordinary banking activities, are so unusually large that their outsized impact is believed by us at that time to be infrequent or short-term in nature. We refer to such items as Significant Items. Most often, these Significant Items result from factors originating outside the Company; e.g., regulatory actions / assessments, windfall gains, changes in accounting principles, one-time tax assessments / refunds, litigation actions, etc. In

other cases, they may result from our decisions associated with significant corporate actions outside of the ordinary course of business; e.g., merger / restructuring charges, recapitalization actions, goodwill impairment, etc.
Even though certain revenue and expense items are naturally subject to more volatility than others due to changes in market and economic environment conditions, as a general rule volatility alone does not define a Significant Item. For example, changes in the provision for credit losses, gains / losses from investment activities, asset valuation writedowns, etc., reflect ordinary banking activities and are, therefore, typically excluded from consideration as a Significant Item.
We believe the disclosure of Significant Items provides a better understanding of our performance and trends to ascertain which of such items, if any, to include or exclude from an analysis of our performance; i.e., within the context of determining how that performance differed from expectations, as well as how, if at all, to adjust estimates of future performance accordingly. To this end, we adopted a practice of listing Significant Items in our external disclosure documents; e.g., earnings press releases, investor presentations, Forms 10-Q and 10-K.
Significant Items for any particular period are not intended to be a complete list of items that may materially impact current or future period performance.herein.
Fully-Taxable Equivalent Basis
Interest income, yields, and ratios on a FTE basis are considered non-GAAP financial measures. Management believes net interest income on a FTE basis provides an insightful picture of the interest margin for comparison purposes. The FTE basis also allows management to assess the comparability of revenue arising from both taxable and tax-exempt sources. The FTE basis assumes a federal statutory tax rate of 3521 percent. We encourage readers to consider the consolidated financial statementsUnaudited Condensed Consolidated Financial Statements and other financial information contained in this Form 10-Q in their entirety, and not to rely on any single financial measure.
Non-Regulatory Capital Ratios
In additionaddition to capital ratios defined by banking regulators, the Company considers various other measures when evaluating capital utilizationutilization and adequacy, including:
Tangible common equity to tangible assets,
Tangible equity to tangible assets, and
Tangible common equity to risk-weighted assets using Basel III definitions.
These non-regulatory capital ratios are viewed by management as useful additional methods of reflecting the level of capital available to withstand unexpected market conditions. Additionally, presentation of these ratios allows readers to

compare the Company’sour capitalization to other financial services companies. These ratios differ from capital ratios defined by banking regulators principally in that the numerator excludes preferred securities,goodwill and other intangible assets, the nature and extent of which varies among different financial services companies. These ratios are not defined in GAAP or federal banking regulations. As a result, these non-regulatory capital ratios disclosed by the Company are considered non-GAAP financial measures.
Because there are no standardized definitions for these non-regulatory capital ratios, the Company’s calculation methods may differ from those used by other financial services companies. Also, there may be limits in the usefulness of these measures to investors. As a result, the Company encourageswe encourage readers to consider the consolidated financial statementsUnaudited Condensed Consolidated Financial Statements and other financial information contained in this Form 10-Q in their entirety, and not to rely on any single financial measure.
Risk Factors
InformationMore information on risk is discussed in the Risk Factors section included in Item 1A of our 20162018 Form 10-K. Additional information regarding risk factors can also be found in the Risk Management and Capital discussion of this report.
Critical Accounting Policies and Use of Significant Estimates
Our financial statementsConsolidated Financial Statements are prepared in accordance with GAAP. The preparation of financial statements in conformity with GAAP requires us to establish critical accounting policies and make accounting estimates assumptions, and judgments that affect amounts recorded and reported in our financial statements.Consolidated Financial Statements. Note 1 of the Notes to Consolidated Financial Statements included in our December 31, 20162018 Form 10-K, as supplemented by this report listsincluding this MD&A, describes the significant accounting policies we useused in the development and presentation of our financial statements. This MD&A, the significant accounting policies, and other financial statement disclosures identify and address key variables and other qualitative and quantitative factors necessary for an understanding and evaluation of our company, financial position, results of operations, and cash flows.Consolidated Financial Statements.
An accounting estimate requires assumptions and judgments about uncertain matters that could have a material effect on the financial statements if a different amount within a range of estimates were used or if estimates changed from period to period.Consolidated Financial Statements. Estimates are made under facts and circumstances at a point in time, and changes in those facts and circumstances could produce results that significantly differsubstantially different from when those estimates were made.

estimates. Our most significant accounting estimates relate to our ACL, valuation of financial instruments, contingent liabilities, income taxes, and deferred tax assets.assets/liabilities. These significant accounting estimates and their related application are discussed in our December 31, 20162018 Form 10-K.
Recent Accounting Pronouncements and Developments
Note 2 "Accounting Standards Update" of the Notes to Unaudited Condensed Consolidated Financial Statements discusses new accounting pronouncements adopted during 20172019 and the expected impact of accounting pronouncements recently issued but not yet required to be adopted. To the extent the adoption of new accounting standards materially affectaffects financial condition, results of operations, or liquidity, the impacts are discussed in the applicable section of this MD&A and the Notes to Unaudited Condensed Consolidated Financial Statements.

Fair Value
At the end of each quarter, we assess the valuation hierarchy for each asset or liability measured. As necessary, assets or liabilities may be transferred within hierarchy levels due to changes in availability of observable market inputs at the measurement date. The fair values measured at each level of the fair value hierarchy, additional discussion regarding fair value measurements, and a brief description of how fair value is determined for categories that have unobservable inputs, can be found in Note 11 "Fair Values of Assets and Liabilities" of the Notes to Unaudited Condensed Consolidated Financial Statements.



Item 1: Financial Statements
Huntington Bancshares Incorporated
Condensed Consolidated Balance Sheets
(Unaudited)
(dollar amounts in thousands, except number of shares)September 30, December 31,
2017 2016September 30, December 31,
(dollar amounts in millions)2019 2018
Assets      
Cash and due from banks$1,193,738
 $1,384,770
$1,018
 $1,108
Interest-bearing deposits at Federal Reserve Bank618
 1,564
Interest-bearing deposits in banks50,090
 58,267
122
 53
Trading account securities88,488
 133,295
118
 105
Loans held for sale (includes $584,829 and $438,224 respectively, measured at fair value)(1)651,734
 512,951
Available-for-sale and other securities15,453,061
 15,562,837
Available-for-sale securities14,286
 13,780
Held-to-maturity securities8,688,399
 7,806,939
8,430
 8,565
Loans and leases (includes $99,191 and $82,319 respectively, measured at fair value)(1)68,587,296
 66,961,996
Other securities455
 565
Loans held for sale (includes $963 and $613 respectively, measured at fair value)(1)1,064
 804
Loans and leases (includes $80 and $79 respectively, measured at fair value)(1)74,892
 74,900
Allowance for loan and lease losses(675,486) (638,413)(783) (772)
Net loans and leases67,911,810
 66,323,583
74,109
 74,128
Bank owned life insurance2,459,807
 2,432,086
2,532
 2,507
Premises and equipment853,290
 815,508
775
 790
Goodwill1,992,849
 1,992,849
1,990
 1,989
Other intangible assets359,844
 402,458
Servicing rights229,746
 225,578
Accrued income and other assets2,055,270
 2,062,976
Servicing rights and other intangible assets455
 535
Other assets2,763
 2,288
Total assets$101,988,126
 $99,714,097
$108,735
 $108,781
Liabilities and shareholders’ equity      
Liabilities      
Deposits$78,445,113
 $75,607,717
Deposits (includes $0 and $872 respectively, classified as held-for-sale)$82,395
 $84,774
Short-term borrowings1,829,549
 3,692,654
2,173
 2,017
Long-term debt9,200,707
 8,309,159
9,874
 8,625
Accrued expenses and other liabilities1,813,908
 1,796,421
Other liabilities2,384
 2,263
Total liabilities91,289,277
 89,405,951
96,826
 97,679
Commitments and contingencies (Note 14)      
Shareholders’ equity      
Preferred stock1,071,286
 1,071,227
1,203
 1,203
Common stock10,844
 10,886
10
 11
Capital surplus9,820,600
 9,881,277
8,980
 9,181
Less treasury shares, at cost(35,133) (27,384)(55) (45)
Accumulated other comprehensive loss(369,963) (401,016)(175) (609)
Retained earnings (deficit)201,215
 (226,844)
Retained earnings1,946
 1,361
Total shareholders’ equity10,698,849
 10,308,146
11,909
 11,102
Total liabilities and shareholders’ equity$101,988,126
 $99,714,097
$108,735
 $108,781
Common shares authorized (par value of $0.01)1,500,000,000
 1,500,000,000
1,500,000,000
 1,500,000,000
Common shares issued1,084,366,589
 1,088,641,251
Common shares outstanding1,080,946,315
 1,085,688,538
1,032,755,207
 1,046,767,252
Treasury shares outstanding3,420,274
 2,952,713
4,548,310
 3,817,385
Preferred stock, authorized shares6,617,808
 6,617,808
6,617,808
 6,617,808
Preferred shares issued2,702,571
 2,702,571
Preferred shares outstanding1,098,006
 1,098,006
740,500
 740,500


(1)
Amounts represent loans for which Huntington has elected the fair value option. See Note 11.11 "Fair Values of Assets and Liabilities".
See Notes to Unaudited Condensed Consolidated Financial Statements


Huntington Bancshares Incorporated       
Condensed Consolidated Statements of Income       
(Unaudited)       
(dollar amounts in thousands, except per share amounts)Three Months Ended
September 30,		 Nine Months Ended
September 30,
 2017 2016 2017 2016
Interest and fee income:       
Loans and leases$724,284
 $583,653
 $2,100,056
 $1,516,849
Available-for-sale and other securities       
Taxable74,409
 57,572
 228,986
 138,178
Tax-exempt18,579
 13,687
 55,961
 40,499
Held-to-maturity securities—taxable48,743
 33,098
 138,214
 105,307
Other6,972
 6,336
 16,554
 16,422
Total interest income872,987
 694,346
 2,539,771
 1,817,255
Interest expense:       
Deposits49,611
 26,233
 126,688
 71,575
Short-term borrowings5,713
 959
 16,782
 2,770
Federal Home Loan Bank advances65
 66
 197
 207
Subordinated notes and other long-term debt59,165
 41,698
 163,184
 108,366
Total interest expense114,554
 68,956
 306,851
 182,918
Net interest income758,433
 625,390
 2,232,920
 1,634,337
Provision for credit losses43,590
 63,805
 136,206
 115,896
Net interest income after provision for credit losses714,843
 561,585
 2,096,714
 1,518,441
Service charges on deposit accounts90,681
 86,847
 261,683
 232,722
Cards and payment processing income53,647
 44,320
 153,301
 119,951
Mortgage banking income33,615
 40,603
 97,575
 90,737
Trust and investment management services33,531
 28,923
 99,633
 74,258
Insurance income13,992
 15,865
 45,099
 48,037
Brokerage income14,458
 14,719
 46,510
 44,819
Capital markets fees21,719
 14,750
 52,755
 40,797
Bank owned life insurance income16,453
 14,452
 49,317
 40,500
Gain on sale of loans13,877
 7,506
 38,701
 22,166
Net gains on sales of securities71
 1,031
 3,781
 1,763
Impairment losses on available-for-sale securities(104) —
 (3,687) (76)
Other noninterest income38,157
 33,399
 123,110
 99,720
Total noninterest income330,097
 302,415
 967,778
 815,394
Personnel costs377,088
 405,024
 1,151,085
 989,369
Outside data processing and other services79,586
 91,133
 241,957
 216,047
Equipment45,458
 40,792
 135,082
 105,173
Net occupancy55,124
 41,460
 175,437
 103,640
Professional services15,227
 47,075
 51,712
 82,101
Marketing16,970
 14,438
 49,736
 41,479
Deposit and other insurance expense18,514
 14,940
 59,031
 38,335
Amortization of intangibles14,017
 9,046
 42,614
 16,357
Other noninterest expense58,444
 48,339
 175,560
 134,487
Total noninterest expense680,428
 712,247
 2,082,214
 1,726,988
Income before income taxes364,512
 151,753
 982,278
 606,847
Provision for income taxes89,944
 24,749
 227,875
 133,989
Net income274,568
 127,004
 754,403
 472,858
Dividends on preferred shares18,903
 18,537
 56,670
 46,409
Net income applicable to common shares$255,665
 $108,467
 $697,733
 $426,449
        

Huntington Bancshares Incorporated       
Condensed Consolidated Statements of Income       
(Unaudited)       
Three Months Ended
September 30,		 Nine Months Ended
September 30,		Three Months Ended
September 30,		 Nine Months Ended
September 30,
(dollar amounts in thousands, except per share amounts)2017 2016 2017 2016
       
(dollar amounts in millions, share amounts in thousands)2019 2018 2019 2018
Interest and fee income:       
Loans and leases$889
 $848
 $2,692
 $2,414
Available-for-sale securities       
Taxable74
 68
 222
 209
Tax-exempt20
 24
 64
 71
Held-to-maturity securities—taxable54
 52
 164
 159
Other securities—taxable3
 6
 13
 19
Other12
 9
 35
 21
Total interest income1,052
 1,007
 3,190
 2,893
Interest expense:       
Deposits154
 112
 449
 259
Short-term borrowings13
 9
 46
 42
Subordinated notes and other long-term debt86
 84
 262
 236
Total interest expense253
 205
 757
 537
Net interest income799
 802
 2,433
 2,356
Provision for credit losses82
 53
 208
 175
Net interest income after provision for credit losses717
 749
 2,225
 2,181
Service charges on deposit accounts98
 93
 277
 270
Cards and payment processing income64
 57
 183
 166
Trust and investment management services44
 43
 131
 129
Mortgage banking income54
 31
 109
 85
Capital markets fees36
 26
 92
 74
Insurance income20
 19
 64
 61
Bank owned life insurance income18
 19
 49
 51
Gain on sale of loans and leases13
 16
 39
 39
Net (losses) gains on sales of securities—
 (2) (2) (2)
Other noninterest income42
 40
 140
 119
Total noninterest income389
 342
 1,082
 992
Personnel costs406
 388
 1,228
 1,160
Outside data processing and other services87
 69
 257
 211
Net occupancy38
 38
 118
 114
Equipment41
 38
 121
 116
Deposit and other insurance expense8
 18
 24
 54
Professional services16
 17
 40
 43
Marketing10
 12
 28
 38
Amortization of intangibles12
 13
 37
 40
Other noninterest expense49
 58
 167
 160
Total noninterest expense667
 651
 2,020
 1,936
Income before income taxes439
 440
 1,287
 1,237
Provision for income taxes67
 62
 193
 178
Net income372
 378
 1,094
 1,059
Dividends on preferred shares18
 18
 55
 51
Net income applicable to common shares$354
 $360
 $1,039
 $1,008
Average common shares—basic1,086,038
 938,578
 1,087,115
 844,167
1,034,940
 1,084,536
 1,042,246
 1,090,570
Average common shares—diluted1,106,491
 952,081
 1,107,878
 856,934
1,051,273
 1,103,740
 1,059,064
 1,116,978
Per common share:              
Net income—basic$0.24
 $0.12
 $0.64
 $0.51
$0.34
 $0.33
 $1.00
 $0.92
Net income—diluted0.23
 0.11
 0.63
 0.50
0.34
 0.33
 0.98
 0.90
Cash dividends declared0.08
 0.07
 0.24
 0.21
OTTI losses for the periods presented:       
Total OTTI losses$(104) $—
 $(3,693) $(3,809)
Noncredit-related portion of loss recognized in OCI—
 —
 6
 3,733
Impairment losses recognized in earnings on available-for-sale securities$(104) $—
 $(3,687) $(76)
              
See Notes to Unaudited Condensed Consolidated Financial Statements

Huntington Bancshares Incorporated
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
(dollar amounts in thousands)2017 2016 2017 2016
Net income$274,568
 $127,004
 $754,403
 $472,858
Other comprehensive income, net of tax:       
Unrealized gains (losses) on available-for-sale and other securities:       
Non-credit-related impairment recoveries (losses) on debt securities not expected to be sold265
 1,294
 2,391
 (388)
Unrealized net gains (losses) on available-for-sale and other securities arising during the period, net of reclassification for net realized gains and losses(21,968) (35,036) 25,081
 47,118
Total unrealized gains (losses) on available-for-sale and other securities(21,703) (33,742) 27,472
 46,730
Unrealized gains (losses) on cash flow hedging derivatives, net of reclassifications to income1,318
 (5,232) 1,563
 4,731
Change in accumulated unrealized losses for pension and other post-retirement obligations779
 841
 2,018
 2,522
Other comprehensive income (loss), net of tax(19,606) (38,133) 31,053
 53,983
Comprehensive income$254,962
 $88,871
 $785,456
 $526,841
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
(dollar amounts in millions)2019 2018 2019 2018
Net income$372
 $378
 $1,094
 $1,059
Other comprehensive income, net of tax:       
Unrealized gains (losses) on available-for-sale securities:       
Unrealized net gains (losses) on available-for-sale securities arising during the period, net of reclassification for net realized gains and losses69
 (62) 349
 (264)
Total unrealized gains (losses) on available-for-sale securities69
 (62) 349
 (264)
Change in fair value related to cash flow hedges28
 —
 82
 —
Change in accumulated unrealized losses for pension and other post-retirement obligations1
 1
 3
 3
Other comprehensive income (loss), net of tax98
 (61) 434
 (261)
Comprehensive income$470
 $317
 $1,528
 $798
See Notes to Unaudited Condensed Consolidated Financial Statements



Huntington Bancshares Incorporated
Condensed Consolidated Statements of Changes in Shareholders’ Equity
(Unaudited)
             Accumulated Other Comprehensive Gain (Loss) Retained Earnings (Deficit)  
(dollar amounts in thousands, except per share amounts)Preferred Stock Common Stock Capital Surplus Treasury Stock    
Amount Shares Amount  Shares Amount   Total
Nine Months Ended September 30, 2016                 
Balance, beginning of period$386,291
 796,970
 $7,970
 $7,038,502
 (2,041) $(17,932) $(226,158) $(594,067) $6,594,606
Net income              472,858
 472,858
Other comprehensive income (loss)            53,983
   53,983
FirstMerit Acquisition:                 
Issuance of common stock  285,425
 2,854
 2,764,044
         2,766,898
Issuance of Series C preferred stock100,000
     4,320
         104,320
Net proceeds from issuance of Series D preferred stock584,936
               584,936
Cash dividends declared:                 
Common ($0.21 per share)              (187,710) (187,710)
Preferred Series A ($63.75 per share)              (23,110) (23,110)
Preferred Series B ($25.08 per share)              (890) (890)
Preferred Series C ($11.59 per share)              (1,159) (1,159)
Preferred Series D ($35.42 per share)              (21,250) (21,250)
Recognition of the fair value of share-based compensation      48,568
         48,568
Other share-based compensation activity  5,014
 50
 4,389
       (3,823) 616
Shares sold to HIP  322
 3
 3,207
         3,210
Other  

 

 119
 (908) (9,001)   (229) (9,111)
Balance, end of period$1,071,227
 1,087,731
 $10,877
 $9,863,149
 (2,949) $(26,933) $(172,175) $(359,380) $10,386,765
                  
Nine Months Ended September 30, 2017                 
Balance, beginning of period$1,071,227
 1,088,641
 $10,886
 $9,881,277
 (2,953) $(27,384) $(401,016) $(226,844) $10,308,146
Net income              754,403
 754,403
Other comprehensive income (loss)            31,053
   31,053
Repurchases of common stock  (9,645) (96) (123,108)         (123,204)
Cash dividends declared:                 
Common ($0.24 per share)              (260,919) (260,919)
Preferred Series A ($63.75 per share)              (23,110) (23,110)
Preferred Series B ($28.96 per share)              (1,028) (1,028)
Preferred Series C ($44.07 per share)              (4,407) (4,407)
Preferred Series D ($46.88 per share)              (28,125) (28,125)
Recognition of the fair value of share-based compensation      72,747
         72,747
Other share-based compensation activity  5,361
 53
 (11,928)       (8,499) (20,374)
Other59
 10
 1
 1,612
 (468) (7,749)   (256) (6,333)
Balance, end of period$1,071,286
 1,084,367
 $10,844
 $9,820,600
 (3,421) $(35,133) $(369,963) $201,215
 $10,698,849
(dollar amounts in millions, share amounts in thousands)Preferred Stock Common Stock Capital Surplus Treasury Stock Accumulated Other Comprehensive Loss Retained Earnings  
Amount Shares Amount  Shares Amount   Total
Three Months Ended September 30, 2019                 
Balance, beginning of period$1,203
 1,042,140
 $10
 $9,030
 (4,299) $(52) $(273) $1,750
 $11,668
Net income              372
 372
Other comprehensive income (loss), net of tax            98
   98
Repurchases of common stock  (5,213) —
 (68)         (68)
Cash dividends declared:                 
Common ($0.15 per share)              (158) (158)
Preferred Series B ($12.51 per share)              —
 —
Preferred Series C ($14.69 per share)              (1) (1)
Preferred Series D ($15.63 per share)              (10) (10)
Preferred Series E ($1,425.00 per share)              (7) (7)
Recognition of the fair value of share-based compensation      16
         16
Other share-based compensation activity  376
 —
 2
       


 2
Other        (249) (3) 


 


 (3)
Balance, end of period$1,203
 1,037,303
 $10
 $8,980
 (4,548) $(55) $(175) $1,946
 $11,909
                  
Three Months Ended September 30, 2018                 
Balance, beginning of period$1,203
 1,107,817
 $11
 $10,038
 (3,268) $(40) $(730) $990
 $11,472
Net income              378
 378
Other comprehensive income (loss), net of tax            (61)   (61)
Repurchase of common stock  (43,670) —
 (691)         (691)
Cash dividends declared:                 
Common ($0.14 per share)              (150) (150)
Preferred Series B ($12.84 per share)              (1) (1)
Preferred Series C ($14.69 per share)              (1) (1)
Preferred Series D ($15.63 per share)              (9) (9)
Preferred Series E ($1,425.00 per share)              (7) (7)
Recognition of the fair value of share-based compensation      15
         15
Other share-based compensation activity  1,104
 —
 (4)       (4) (8)
Other        (454) (4) 1
   (3)
Balance, end of period$1,203
 1,065,251
 $11
 $9,358
 (3,722) $(44) $(790) $1,196
 $10,934
                  


(dollar amounts in millions, share amounts in thousands)Preferred Stock Common Stock Capital Surplus Treasury Stock Accumulated Other Comprehensive Loss Retained Earnings  
Amount Shares Amount  Shares Amount   Total
Nine Months Ended September 30, 2019                 
Balance, beginning of period$1,203
 1,050,584
 $11
 $9,181
 (3,817) $(45) $(609) $1,361
 $11,102
Net income              1,094
 1,094
Other comprehensive income (loss), net of tax            434
   434
Repurchases of common stock  (18,390) (1) (244)         (245)
Cash dividends declared:                 
Common ($0.43 per share)              (455) (455)
Preferred Series B ($39.47 per share)              (1) (1)
Preferred Series C ($44.07 per share)              (4) (4)
Preferred Series D ($46.88 per share)              (29) (29)
Preferred Series E ($4,275.00 per share)              (21) (21)
Recognition of the fair value of share-based compensation      64
         64
Other share-based compensation activity  5,109
 —
 (21)       


 (21)
Other      —
 (731) (10) 


 1
 (9)
Balance, end of period$1,203
 1,037,303
 $10
 $8,980
 (4,548) $(55) $(175) $1,946
 $11,909
                  
Nine Months Ended September 30, 2018                 
Balance, beginning of period$1,071
 1,075,295
 $11
 $9,707
 (3,268) $(35) $(528) $588
 $10,814
Cumulative-effect adjustment (ASU 2016-01)            (1) 1
 —
Net income              1,059
 1,059
Other comprehensive income (loss), net of tax            (261)   (261)
Net proceeds from issuance of Preferred Series E Stock495
               495
Repurchases of common stock  (46,677) —
 (739)         (739)
Cash dividends declared:                 
Common ($0.36 per share)              (393) (393)
Preferred Series B ($36.51 per share)              (2) (2)
Preferred Series C ($44.07 per share)              (4) (4)
Preferred Series D ($46.88 per share)              (28) (28)
Preferred Series E ($3,467.50 per share)              (17) (17)
Conversion of Preferred Series A Stock to Common Stock(363) 30,330
   363
         —
Recognition of the fair value of share-based compensation      59
         59
Other share-based compensation activity  6,303
 —
 (32)       (8) (40)
Other  


 


 —
 (454) (9)   


 (9)
Balance, end of period$1,203
 1,065,251
 $11
 $9,358
 (3,722) $(44) $(790) $1,196
 $10,934
                  
See Notes to Unaudited Condensed Consolidated Financial Statements

Huntington Bancshares Incorporated
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended
September 30,		Nine Months Ended September 30,
(dollar amounts in thousands)2017 2016
(dollar amounts in millions)2019 2018
Operating activities  
Net income$754,403
 $472,858
$1,094
 $1,059
Adjustments to reconcile net income to net cash provided by operating activities: 
Adjustments to reconcile net income to net cash provided by (used in) operating activities: 
Provision for credit losses136,206
 115,896
208
 175
Depreciation and amortization307,063
 299,444
308
 350
Share-based compensation expense72,747
 48,568
64
 59
Deferred income tax expense (benefit)36,244
 (18,094)
Net gains on sales of securities(3,781) (1,763)
Impairment losses recognized in earnings on available-for-sale securities3,687
 76
Deferred income tax expense(6) 125
Net change in:      
Trading account securities44,807
 926
(51) 3
Loans held for sale(164,405) (194,735)(356) (384)
Accrued income and other assets(136,485) (169,453)
Accrued expense and other liabilities42,162
 144,496
Other assets(662) (325)
Other liabilities297
 215
Other, net13,647
 (12,413)2
 (133)
Net cash provided by (used for) operating activities1,106,295
 685,806
Net cash provided by (used in) operating activities898
 1,144
Investing activities  
Change in interest bearing deposits in banks20,688
 33,221
(121) 62
Cash paid for acquisition of a business, net of cash received—
 (133,218)
Proceeds from:      
Maturities and calls of available-for-sale and other securities1,081,091
 1,266,031
Maturities of held-to-maturity securities792,996
 850,170
Sales of available-for-sale and other securities1,255,152
 3,893,482
Purchases of available-for-sale and other securities(3,208,608) (5,434,332)
Maturities and calls of available-for-sale securities1,338
 1,539
Maturities and calls of held-to-maturity securities656
 573
Maturities and calls of other securities153
 40
Sales of available-for-sale securities1,746
 381
Purchases of available-for-sale securities(3,174) (1,044)
Purchases of held-to-maturity securities(689,670) —
(516) (71)
Purchases of other securities(5) (5)
Net proceeds from sales of portfolio loans427,142
 352,277
670
 461
Principal payments received under direct finance and sales-type leases544
 —
Net loan and lease activity, excluding sales and purchases(2,159,966) (3,286,238)(1,162) (3,583)
Purchases of premises and equipment(144,637) (63,688)(82) (62)
Proceeds from sales of other real estate25,156
 21,765
Purchases of loans and leases(112,859) (359,208)(311) (318)
Net cash paid for branch disposition(548) —
Other, net11,556
 (249)49
 50
Net cash provided by (used for) investing activities(2,701,959) (2,859,987)
Net cash provided by (used in) investing activities(763) (1,977)
Financing activities      
Increase (decrease) in deposits2,837,396
 853,806
(1,654) 4,648
Increase (decrease) in short-term borrowings(1,865,157) 363,518
196
 (3,613)
Net proceeds from issuance of long-term debt1,773,096
 2,081,643
1,737
 2,171
Maturity/redemption of long-term debt(882,977) (684,746)(684) (1,915)
Dividends paid on preferred stock(56,632) (46,409)(55) (51)
Dividends paid on common stock(261,593) (168,656)(442) (362)
Repurchases of common stock(123,204) —
(245) (739)
Proceeds from stock options exercised9,316
 6,084
Net proceeds from issuance of preferred stock—
 584,936
—
 495
Payments related to tax-withholding for share based compensation awards(25,613) —
(26) (27)
Other, net—
 (1,212)2
 5
Net cash provided by (used for) financing activities1,404,632
 2,988,964
(1,171) 612
Increase (decrease) in cash and cash equivalents(191,032) 814,783
(1,036) (221)
Cash and cash equivalents at beginning of period1,384,770
 847,156
2,672
 1,520
Cash and cash equivalents at end of period$1,193,738
 $1,661,939
$1,636
 $1,299


Nine Months Ended
September 30,		Nine Months Ended September 30,
(dollar amounts in thousands)2017 2016
(dollar amounts in millions)2019 2018
Supplemental disclosures:  
Interest paid$307,493
 $159,357
$758
 $527
Income taxes paid71,165
 3,869
Income taxes paid (refunded)54
 (112)
Non-cash activities  
Loans transferred to held-for-sale from portfolio446,152
 3,204,732
744
 470
Loans transferred to portfolio from held-for-sale4,751
 92,585
14
 49
Transfer of loans to OREO23,691
 18,678
16
 15
Transfer of securities to held-to-maturity from available-for-sale

992,760
 —
Transfer of securities from held-to-maturity to available-for-sale—
 2,833
Transfer of securities from available-for-sale to held-to-maturity—
 2,707
See Notes to Unaudited Condensed Consolidated Financial Statements

Huntington Bancshares Incorporated
Notes to Unaudited Condensed Consolidated Financial Statements
1. BASIS OF PRESENTATION
The accompanying Unaudited Condensed Consolidated Financial Statements of Huntington reflect all adjustments consisting of normal recurring accruals which are, in the opinion of Management, necessary for a fair statement of the consolidated financial position, the results of operations, and cash flows for the periods presented. The year-end condensed consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by GAAP. These Unaudited Condensed Consolidated Financial Statements have been prepared according to the rules and regulations of the SEC and, therefore, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been omitted. The Notes to Consolidated Financial Statements appearing in Huntington’s 20162018 Form 10-K, which include descriptions of significant accounting policies, as updated by the information contained in this report, should be read in conjunction with these interim financial statements.
For statement of cash flow purposes, cash and cash equivalents are defined as the sum of “CashCash and due from banks” which includes amounts on deposit with thebanks and Interest-bearing deposits at Federal Reserve and “Federal funds sold and securities purchased under resale agreements.”Bank.
In conjunction with applicable accounting standards, all material subsequent events have been either recognized in the Unaudited Condensed Consolidated Financial Statements or disclosed in the Notes to Unaudited Condensed Consolidated Financial Statements. No subsequent events were disclosed for the current period.
Certain amounts reported in prior periods have been reclassified to conform to the current period presentation. During the first quarter of 2019, Huntington reclassified loan syndication fees into capital markets fees from other noninterest income. There was no material effect on capital market fees or other noninterest income and no effect on net income as a result of this reclassification.

2. ACCOUNTING STANDARDS UPDATE
Accounting standards adopted in current period
StandardSummary of guidanceEffects on financial statements
ASU 2014-09 - Revenue from Contracts with Customers (Topic 606):
Issued May 2014
- Topic 606 supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance.

- Requires an entity to recognize revenue upon the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

- Also requires additional qualitative and quantitative disclosures relating to the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers

- Guidance sets forth a five step approach for revenue recognition.
- Effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Management intends to adopt the new guidance on January 1, 2018 using the modified retrospective approach.

- Management's analysis includes:
(a) Identification of all revenue streams included in the financial statements;
(b) Determination of scope exclusions to identify ‘in-scope’ revenue streams;
(c) Determination of size, timing, and amount of revenue recognition for in-scope items;
(d) Identification of contracts for further analysis; and
(e) Completion of review of certain contracts to evaluate the potential impact of the new guidance.

- Key revenue streams identified include service charges, credit card and payment processing fees, trust services fees, insurance income, brokerage services, and mortgage banking income.

- The new guidance is not expected to have a significant impact on Huntington’s Unaudited Consolidated Financial Statements.

StandardSummary of guidanceEffects on financial statements
ASU 2016-01 - Recognition and Measurement of Financial Assets and Financial Liabilities.
Issued January 2016

- Improvements to GAAP disclosures including requiring an entity to:
(a) Measure its equity investments with changes in the fair value recognized in the income statement.
(b) Present separately in OCI the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments (i.e., FVO liability).
(c) Use the exit price notion when measuring the fair value of financial instruments for disclosure purposes.
(d) Assess deferred tax assets related to a net unrealized loss on AFS securities in combination with the entity’s other deferred tax assets.
- Effective for the fiscal period beginning after December 15, 2017, including interim periods within those fiscal years.

- Amendments are applied as a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption.

- The amendment is not expected to have a significant impact on Huntington's Unaudited Consolidated Financial Statements.
ASU 2016-02 - Leases.
Issued February 2016


- New lease accounting model for lessorslessees and lessees.lessors. For lessees, virtually all leases will be required to be recognized on the balance sheet by recording a right-of-use asset and lease liability. Subsequent accounting for leases varies depending on whether the lease is classified as an operating lease or a finance lease.


- Accounting applied by a lessor is largely unchanged from that applied under the existingprevious guidance.


- Requires additional qualitative and quantitative disclosures with the objective of enabling users of the financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases.
- Effective for the fiscal period beginning after December 15, 2018, with early application permitted.

- Management intends to adoptadopted the guidance on January 1, 2019, and has formed a working group comprisedelected certain practical expedients offered by the FASB, including foregoing the restatement of associatescomparative periods upon adoption. Management also excluded short-term leases from different disciplines, including Procurement, Real Estate,the recognition of right-of-use asset and Credit Administration, to evaluatelease liabilities. Additionally, Huntington elected the impacttransition relief allowed by FASB in foregoing reassessment of the standard where Huntington is a lesseefollowing: whether any existing contracts were or lessor, as well as any impact to borrower’s financial statements.contained leases, the classification of existing leases, and the determination of initial direct costs for existing leases.

- Management is currently assessing the impact of the new guidance on Huntington's Unaudited Consolidated Financial Statements, including working with associates engaged in the procurement of goods and services used in the entity’s operations, and reviewing contractual arrangements for embedded leases in an effort to identify Huntington’s full lease population.


- Huntington will recognizerecognized right-of-use assets andof approximately $200 million offset by lease liabilities for virtuallyof approximately $250 million upon adoption, representing substantially all of its operating lease commitments.commitments, with the difference attributable to transition adjustments required by ASC Topic 842 relating to previously recognized amounts for deferred rent and lease exit costs (recorded pursuant to ASC Topic 420). Right-of-use assets and lease liabilities were based, primarily, on the present value of unpaid future minimum lease payments. Additionally, the amounts were impacted by assumptions around renewals and/or extensions, and the interest rate used to discount those future lease obligations. Impact to the income statement was not material in the period of adoption.

- Existing sale and leaseback guidance, including the detailed guidance applicable to sale-leasebacks of real estate, was replaced with a new model applicable to all assets, which will apply equally to both lessees and lessors. Under the new standard, if the transaction meets sale criteria, the seller-lessee will recognize the sale based on the new revenue recognition standard (when control transfers to the buyer-lessor), derecognizing the asset sold and replacing it with a right-of-use asset and lease liability for the leaseback. If the transaction is at fair value, the seller-lessee shall recognize a gain or loss on sale at that time.

- Costs related to exiting an operating lease before the end of its contractual term have been historically accounted for pursuant to ASC Topic 420, with the recognition of a liability measured at the present value of remaining lease payments reduced by any expected sublease income upon the exit of that space. ASC Topic 842 changes the accounting for such costs, with entities evaluating the impairment of right-of-use assets using the guidance in ASC Topic 360. Such an impairment analysis would occur once the entity commits to a plan to abandon the space, which may accelerate the timing of these costs.

- The new standard defines initial direct costs as those that would not have been incurred if the lease had not been obtained. Certain incremental costs previously eligible for capitalization, such as internal overhead, will now be expensed.

StandardSummary of guidanceEffects on financial statements
ASU 2019-01 -
Leases (ASC Topic 842): Codification Improvements
Issued: March 2019
- Notes that lessors that are not manufacturers or dealers will apply the fair value exception in a manner similar to what they did prior to the implementation of ASC Topic 842.

- Clarifies that lessors in the scope of ASC Topic 942 (Financial Services - Depository & Lending) must classify principal payments received from sales-type and direct financing leases in investing activities in the statement of cash flows.

- Eliminates certain interim transition disclosure requirements related to the effect of an accounting change on certain interim period financial information.
- The amendments relating to lessor accounting are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years.

- Huntington adopted the guidance concurrent with the adoption of ASU 2016-02 on January 1, 2019. The amendment did not have a material impact on Huntington's Unaudited Condensed Consolidated Financial Statements.






Accounting standards yet to be adopted
StandardSummary of guidanceEffects on financial statements
ASU 2016-13 - Financial Instruments - Credit Losses.
Issued June 2016
- Eliminates the probable recognition threshold for credit losses on financial assets measured at amortized cost.cost, replacing the current incurred loss model with an expected credit loss model.


- Requires those financial assets subject to the new standard to be presented at the net amount expected to be collected (i.e., net of expected credit losses).


- Measurement of expected credit losses should be based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectibility of the reported amount.

–
The standard will require additional quantitative and qualitative disclosures related to the credit risk inherent in Huntington’s portfolio and how management monitors the portfolio’s credit quality.
- Effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2018.


- AppliedAdoption will be applied through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective.


- Management intends towill adopt the guidance on January 1, 2020 and has formed a working group in 2017 comprised of teams from different disciplines including credit, finance, and finance to evaluaterisk management that has evaluated the requirements of the new standard and the impact it will have on our processes.processes, systems and controls. This group is in the later stages of implementing those identified process, system and control changes.


- The earlyHuntington has completed the process of developing credit models with model implementation and validation substantially completed during the third quarter of 2019. In addition, management is in the later stages of this evaluation include a review of existing credit models to identify areas where existing credit models usedimplementing the accounting, reporting, and governance processes to comply with other regulatory requirements may be leveraged and areas wherethe new impairment models may be required.
ASU 2016-15 - Classification of Certain Cash Receipts and Cash Payments.standard.
Issued August 2016
- Clarifies guidanceBased on the classificationportfolio composition as of certain cash receipts and paymentsSeptember 30, 2019, management estimates the adoption of CECL on January 1, 2020 could result in an overall allowance increase of 40% to 50% compared to current ACL levels. The estimated increase in the statementallowance is largely attributable to the consumer portfolio, given the longer asset duration associated with many of cash flows.these products. It is important to note that this is still an estimated impact range. The final adoption impact will be heavily dependent on management's view of existing and forecasted economic conditions and also the composition of the portfolio at the date of adoption.


- Provides consistent principles
–
The standard eliminates the current accounting model for evaluating the classification of cash payments and receiptspurchased-credit-impaired loans, but requires an allowance to be recognized for purchased-credit-deteriorated (PCD) assets (those that have experienced more-than-insignificant deterioration in the statement of cash flowscredit quality since origination). Huntington does not expect a material impact from PCD assets upon adoption.

–
Upon adoption, Huntington does not expect to reduce diversity in practicerecord a material allowance with respect to several typesHTM and AFS securities as the portfolios consist primarily of cash flows.
- Effective using a retrospective transition approach for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period.

- If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal yearagency-backed securities that includes that interim period.

- This Update is not expected toinherently have a significant impact on Huntington's Unaudited Consolidated Financial Statements.minimal nonpayment risk.

StandardSummary of guidanceEffects on financial statements
ASU 2017-04 - Simplifying the Test for Goodwill Impairment.
Issued January 2017
- Simplifies the goodwill impairment test by eliminating Step 2 of the goodwill impairment process, which requires an entity to determine the implied fair value of its goodwill by assigning fair value to all its assets and liabilities.


- Entities will instead recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value.


- Entities will still have the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary.
- Effective for annual and interim goodwill tests performed in fiscal years beginning after December 15, 2019. Early adoption is permitted.


- The amendment is not expected to have a significantmaterial impact on Huntington's Unaudited Condensed Consolidated Financial Statements.


StandardSummary of guidanceEffects on financial statements
ASU 2019-04 -
Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments
Issued: April 2019
 - Clarifies various implementation issues related to Recognition and Measurement of Financial Instruments (ASC Topic 825), Current Expected Credit Losses (ASC Topic 326) and Derivatives and Hedging (ASC Topic 815).

 - Provides additional implementation guidance on CECL issues that include, among others, (a) measurement of credit allowance on accrued interest; (b) treatment of credit allowance upon transfers between classifications or categories for loans and debt securities; (c) inclusion of recoveries in determining credit allowance amounts; (d) using projections of rate change for variable rate instruments; (e) vintage disclosures for lines-of-credit; (f) contractual extensions and renewals; (g) consideration of prepayments in calculating effective interest rate; and (h) consideration of costs to sell if the entity intends to sell the collateral when foreclosure is probable.

 - Clarifies for Topic 815, among others, that (a) only interest rate risk may be hedged in a partial-term fair value hedge; (b) amortization of fair value basis adjustment may begin before the fair value hedge is discontinued; (c) hedged AFS securities should be disclosed at amortized cost for disclosures related to hedged assets; and (d) contractually specified interest rate should be considered when applying hypothetical derivative method while assessing hedge effectiveness.

 - Clarifies for Topic 326, among others, that (a) using observable price under measurement alternative provided by ASC Topic 820 is a non-recurring fair value measurement and entities should adhere to non-recurring fair value disclosure requirements; and (b) equity securities without readily determinable fair value accounted for under measurement alternative should be remeasured using historical exchange rates.
 - Effective dates and transition requirements for amendments related to CECL (ASC Topic 326) are the same as effective dates and transition requirements for ASU 2016-13.

 - Amendments related to Derivatives and Hedging (ASC Topic 815) are effective as of the beginning of first annual period after the issuance date of the Update (ASU 2019-04). Earlier adoption is permitted, including adoption on any date on or after the issuance of the Update.

 - Amendment related to Recognition and Measurement of Financial Instruments (ASC Topic 825) should be applied on a modified-retrospective basis effective for fiscal years, including interim period within those fiscal years, beginning after December 15, 2019. Earlier adoption is permitted.

 - Amendments in the Update are not expected to have a material impact on Huntington's Unaudited Condensed Consolidated Financial Statements.
ASU 2017-072019-05 - ImprovingFinancial Instruments - Credit Losses (Topic 326): Targeted Transition Relief
Issued: May 2019
 - Provides entities that have certain instruments within the Presentationscope of Net Periodic Pension Cost and Periodic Postretirement Benefit Cost.
Issued March 2017
ASC Subtopic 326-20 with an option to irrevocably elect fair value option, applied on instrument-by-instrument basis. The fair value option does not apply to held-to-maturity debt securities.
- Requires that an employer reportEffective dates for the service cost component of the pension cost and postretirement benefit cost inamendment is the same line items as other compensation costs arising from services rendered by the pertinent employees during the period.effective dates in ASU 2016-13. The amendment will be applied on a modified-retrospective basis.


- Other components of the net benefit cost should be presented in the income statement separately from the service cost component.
- Effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted as of the beginning of an annual period for which financial statements have not been issued or made available for issuance.

- This UpdateThe amendment is not expected to have a significantmaterial impact on Huntington's Unaudited Condensed Consolidated Financial Statements.
ASU 2017-09 - Stock Compensation Modification Accounting.
Issued May 2017
- Reduces the current diversity in practice and provides explicit guidance pertaining to the provisions of modification accounting.

- Clarifies that an entity should account for effects of modification unless the fair value, vesting conditions and the classification of the modified award are the same as the original awards immediately before the original award is modified.
- Effective prospectively for annual periods and interim periods within those annual periods, beginning after December 15, 2017. Earlier application is permitted.

- The Update is not expected to have a significant impact on Huntington's Unaudited Consolidated Financial Statements.
ASU 2017-12 - Derivatives and Hedging - Targeted Improvements to Accounting for Hedging Activities.
Issued August 2017
- Aligns the entity’s risk management activities and financial reporting for hedging relationships.

- Requires an entity to present the earnings effect of the hedging instrument in the same income statement line item in which the earnings effect of the hedged item is reported.

- Refines measurement techniques for hedges of benchmark interest rate risk.

- Eliminates the separate measurement and reporting of hedge ineffectiveness.

- Allows stated amount of assets in a closed portfolio to be fair value hedged by excluding proportion of hedged item related to prepayments, defaults and other events.

- Eases hedge effectiveness testing including an option to perform qualitative testing.
- Effective for annual periods and interim periods within those annual periods, beginning after December 15, 2018. For cash flow and net investment hedges, cumulative-effect adjustment related to eliminating the separate measurement of ineffectiveness should be recognized in AOCI with a corresponding adjustment to retained earnings. Earlier application is permitted.

- Huntington is considering adopting the new guidance on January 1, 2018. The Update is not expected to have a significant impact on Huntington's Unaudited Consolidated Financial Statements.



3. LOANS / LEASES AND ALLOWANCE FOR CREDIT LOSSES
Loans and leases which Huntington has the intent and ability to hold for the foreseeable future, or until maturity or payoff, are classified in the Unaudited Condensed Consolidated Balance Sheets as loans and leases. Except for loans which are accounted for at fair value, loans are carried at the principal amount outstanding, netThe total balance of unamortized premiums, and discounts, and deferred loan fees, and costs, recognized as part of loans and purchase accounting adjustments, which resulted inleases, was a net premium of $295$490 million and $120$428 million at September 30, 20172019 and December 31, 2016,2018, respectively.

Loan and Lease Portfolio Composition
The following table provides a detailed listing of Huntington’s loan and lease portfolio at September 30, 20172019 and December 31, 2016.2018.
(dollar amounts in millions)September 30, 2019 December 31, 2018
Loans and leases:   
Commercial and industrial$30,394
 $30,605
Commercial real estate6,855
 6,842
Automobile12,292
 12,429
Home equity9,300
 9,722
Residential mortgage11,247
 10,728
RV and marine3,553
 3,254
Other consumer1,251
 1,320
Loans and leases$74,892
 $74,900
Allowance for loan and lease losses(783) (772)
Net loans and leases$74,109
 $74,128

Equipment Leases
(dollar amounts in thousands)September 30,
2017		 December 31,
2016
Loans and leases:   
Commercial and industrial$27,469,344
 $28,058,712
Commercial real estate7,206,096
 7,300,901
Automobile11,876,033
 10,968,782
Home equity9,984,728
 10,105,774
Residential mortgage8,616,059
 7,724,961
RV and marine finance2,371,065
 1,846,447
Other consumer1,063,971
 956,419
Loans and leases68,587,296
 66,961,996
Allowance for loan and lease losses(675,486) (638,413)
Net loans and leases$67,911,810
 $66,323,583
Huntington leases equipment to customers, and substantially all such arrangements are classified as either sales-type or direct financing leases, which are included in C&I loans. These leases are reported at the aggregate of lease payments receivable and estimated residual values, net of unearned and deferred income, and any initial direct costs incurred to originate these leases. Renewal options for leases are at the option of the lessee, and are not included in the measurement of lease receivables as they are not considered reasonably certain of exercise. Purchase options are typically at fair value, and as such those options are not considered in the measurement of lease receivables or in lease classification.
For leased equipment, the residual component of a direct financing lease represents the estimated fair value of the leased equipment at the end of the lease term. Huntington uses industry data, historical experience, and independent appraisals to establish these residual value estimates. Additional information regarding product life cycle, product upgrades, as well as insight into competing products are obtained through relationships with industry contacts and are factored into residual value estimates where applicable. Upon expiration of a lease, residual assets are remarketed, resulting in an extension of the lease by the lessee, a lease to a new customer, or purchase of the residual asset by the lessee or another party. Huntington also purchases insurance guaranteeing the value of certain residual assets.
Impairment of the residual values of direct financing leases is evaluated quarterly, with impairment arising if the expected fair value is less than the carrying amount. Effective January 1, 2019, as a result of the implementation of ASU 2016-02, Huntington assesses net investments in leases (including residual values) for impairment and recognizes any impairment losses in accordance with the impairment guidance for financial instruments. As such, net investments in leases may be reduced by an allowance for credit losses, with changes recognized as provision expense.

FirstMerit Purchased Credit-Impaired Loans
The following table presents a rollforwardnet investments in lease financing receivables by category at September 30, 2019 and December 31, 2018.
(dollar amounts in millions)September 30,
2019		 December 31,
2018
Commercial and industrial:   
Lease payments receivable$1,743
 $1,747
Estimated residual value of leased assets701
 726
Gross investment in commercial and industrial lease financing receivables2,444
 2,473
Deferred origination costs18
 20
Deferred fees(245) (250)
Total net investment in commercial and industrial lease financing receivables$2,217
 $2,243
The carrying value of the accretable yieldresidual values guaranteed was $91 million as of September 30, 2019. The future lease rental payments due from customers on sales-type and direct financing leases at September 30, 2019, totaled $1.7 billion and were due as follows: $0.6 billion in 2020, $0.5 billion in 2021, $0.3 billion in 2022, $0.1 billion in 2023, $0.1 billion in 2024, and less than $0.1 billion thereafter. Interest income recognized for purchased credit impaired loansthese types of leases was $28 million and $81 million for the three-month and nine-month periodperiods ended September 30, 2017.
  Three Months Ended
September 30,		 Nine Months Ended
September 30,
(dollar amounts in thousands) 2017 2017
Balance, beginning of period $36,509
 $36,669
Accretion (4,343) (13,833)
Reclassification (to) from nonaccretable difference 3,044
 12,374
Balance, end of period $35,210
 $35,210
The following table reflects the ending and unpaid balances of the purchase credit impaired loans at September 30, 2017 and December 31, 2016.
  September 30, 2017 December 31, 2016
(dollar amounts in thousands) Ending
Balance		 Unpaid Principal
Balance		 Ending
Balance		 Unpaid Principal
Balance
Commercial and industrial $48,606
 $72,117
 $68,338
 $100,031
Commercial real estate 16,383
 29,689
 34,042
 56,320
Total $64,989
 $101,806
 $102,380
 $156,351
There was no allowance for loan losses recorded on the purchased credit-impaired loan portfolio at September 30, 2017 and December 31, 2016.2019, respectively.
Nonaccrual and Past Due Loans
Loans are considered past due when the contractual amounts due with respect to principal and interest are not received within 30 days of the contractual due date. See Note 1 “Significant Accounting Policies” to the consolidated financial statementsConsolidated Financial Statements of the Annual Report on Form 10-K for the year ended December 31, 20162018 for a description of the accounting policies related to the NALs.

The following table presents nonaccrual loans (NALs)NALs by loan class at September 30, 20172019 and December 31, 2016.2018.
(dollar amounts in millions)September 30,
2019		 December 31,
2018
Commercial and industrial$291
 $188
Commercial real estate12
 15
Automobile5
 5
Home equity60
 62
Residential mortgage69
 69
RV and marine1
 1
Other consumer—
 —
Total nonaccrual loans$438
 $340
(dollar amounts in thousands)September 30,
2017		 December 31,
2016
Commercial and industrial$169,751
 $234,184
Commercial real estate17,397
 20,508
Automobile4,076
 5,766
Home equity71,353
 71,798
Residential mortgage75,251
 90,502
RV and marine finance309
 245
Other consumer108
 —
Total nonaccrual loans$338,245
 $423,003


The following table presents an aging analysis of loans and leases, including past due loans and leases, by loan class at September 30, 20172019 and December 31, 2016. (1)2018:
September 30, 2017September 30, 2019 
Past Due      Loans Accounted for Under the Fair Value Option Total Loans
and Leases		 90 or
more days
past due
and accruing		 Past Due (1)    Loans Accounted for Under FVO Total Loans
and Leases		 90 or
more days
past due
and accruing		 
(dollar amounts in thousands)30-59
Days		 60-89
 Days		 90 or 
more days		Total Current 
Purchased Credit
Impaired
 
(dollar amounts in millions)30-59
Days		 60-89
 Days		 90 or 
more days		 Total Current  Loans Accounted for Under FVO Total Loans
and Leases		 90 or
more days
past due
and accruing		 
Commercial and industrial$36,505
 $10,654
 $77,835
 $124,994
 $27,295,744
 $48,606
 $—
 $27,469,344
 $14,083
(2)$69
 $30
 $70
 $169
 $30,225
 (2)
Commercial real estate35,444
 2,586
 20,010
 58,040
 7,131,673
 16,383
 —
 7,206,096
 9,550
 9
 —
 7
 16
 6,839
 —
 6,855
 —
 
Automobile79,457
 17,167
 10,449
 107,073
 11,767,782
 —
 1,178
 11,876,033
 10,239
 79
 18
 10
 107
 12,185
 —
 12,292
 8
 
Home equity41,748
 19,601
 63,747
 125,096
 9,857,359
 —
 2,273
 9,984,728
 16,150
 49
 16
 50
 115
 9,184
 1
 9,300
 13
 
Residential mortgage111,722
 45,041
 104,167
 260,930
 8,260,742
 —
 94,387
 8,616,059
 62,832
(3)119
 44
 164
 327
 10,841
 79
 11,247
 125
(3)
RV and marine finance10,303
 2,184
 2,134
 14,621
 2,355,309
 —
 1,135
 2,371,065
 2,063
 
RV and marine11
 3
 2
 16
 3,537
 —
 3,553
 1
 
Other consumer10,180
 4,394
 3,752
 18,326
 1,045,427
 —
 218
 1,063,971
 3,752
 13
 6
 7
 26
 1,225
 —
 1,251
 7
 
Total loans and leases$325,359
 $101,627
 $282,094
 $709,080
 $67,714,036
 $64,989
 $99,191
 $68,587,296
 $118,669
 $349
 $117
 $310
 $776
 $74,036
 $80
 $74,892
 $163
 

December 31, 2016December 31, 2018 
Past Due     Loans Accounted for Under the Fair Value Option Total Loans
and Leases		 90 or
more days
past due
and accruing		 Past Due (1)    Loans Accounted for Under FVO Total Loans
and Leases		 90 or
more days
past due
and accruing		 
(dollar amounts in thousands)30-59
Days		 60-89
 Days		 90 or 
more days		Total Current Purchased
Credit Impaired		 
(dollar amounts in millions)30-59
Days		 60-89
 Days		 90 or 
more days		 Total Current  Loans Accounted for Under FVO Total Loans
and Leases		 90 or
more days
past due
and accruing		 
Commercial and industrial42,052
 20,136
 74,174
 136,362
 27,854,012
 68,338
 —
 28,058,712
 18,148
(2)$72
 $17
 $51
 $140
 $30,465
 (2)
Commercial real estate21,187
 3,202
 29,659
 54,048
 7,212,811
 34,042
 —
 7,300,901
 17,215
 10
 —
 5
 15
 6,827
 —
 6,842
 —
 
Automobile76,283
 17,188
 10,442
 103,913
 10,862,715
 —
 2,154
 10,968,782
 10,182
 95
 19
 10
 124
 12,305
 —
 12,429
 8
 
Home equity38,899
 23,903
 53,002
 115,804
 9,986,697
 —
 3,273
 10,105,774
 11,508
 51
 21
 56
 128
 9,593
 1
 9,722
 17
 
Residential mortgage122,469
 37,460
 116,682
 276,611
 7,373,414
 —
 74,936
 7,724,961
 66,952
(3)108
 47
 168
 323
 10,327
 78
 10,728
 131
(3)
RV and marine finance10,009
 2,230
 1,566
 13,805
 1,831,123
 —
 1,519
 1,846,447
 1,462
 
RV and marine12
 3
 2
 17
 3,237
 —
 3,254
 1
 
Other consumer9,442
 4,324
 3,894
 17,660
 938,322
 —
 437
 956,419
 3,895
 14
 7
 6
 27
 1,293
 —
 1,320
 6
 
Total loans and leases$320,341
 $108,443
 $289,419
 $718,203
 $66,059,094
 $102,380
 $82,319
 $66,961,996
 $129,362
 $362
 $114
 $298
 $774
 $74,047
 $79
 $74,900
 $170
 
(1)NALs are included in this aging analysis based on theirthe loan's past due status.
(2)Amounts include Huntington Technology Finance administrative lease delinquencies.
(3)Amounts include mortgage loans guaranteedinsured by U.S. government organizations.agencies.



Allowance for Credit Losses
Huntington maintains two2 reserves, both of which reflect Management’s judgment regarding the appropriate level necessary to absorb probable and estimable credit losses inherent in our loan and lease portfolio as of the balance sheet date: the ALLL and the AULC. Combined, these reserves comprise the total ACL. The determination of the ACL requires significant estimates, including the timing and amounts of expected future cash flows on impaired loans and leases, consideration of current economic conditions, and historical loss experience pertaining to pools of homogeneous loans and leases, all of which may be susceptible to change. See Note 1 “Significant Accounting Policies” to the consolidated financial statementsConsolidated Financial Statements of the Annual Report on Form 10-K for the year ended December 31, 20162018 for a description of the accounting policies related to the ACL.
The ACLALLL is increased through a provision for credit losses that is charged to earnings, based on Management’s quarterly evaluation and is reduced by charge-offs, net of recoveries, and the ACL associated with loans sold or transferred to held-for-sale.recoveries.

The following table presents ALLL and AULC activity by portfolio segment for the three-month and nine-month periods ended September 30, 20172019 and 2016.2018.
(dollar amounts in thousands) Commercial Consumer Total
Three-month period ended September 30, 2017:      
(dollar amounts in millions) Commercial Consumer Total
Three-month period ended September 30, 2019:      
ALLL balance, beginning of period $474,576
 $193,420
 $667,996
 $560
 $214
 $774
Loan charge-offs (19,278) (45,494) (64,772) (53) (49) (102)
Recoveries of loans previously charged-off 10,015
 11,865
 21,880
 15
 14
 29
Provision for (reduction in allowance) loan and lease losses 8,810
 41,573
 50,383
Allowance for loans sold or transferred to loans held for sale (1) —
 (1)
Provision for loan and lease losses 39
 43
 82
ALLL balance, end of period $474,122
 $201,364
 $675,486
 $561
 $222
 $783
AULC balance, beginning of period $82,827
 $2,532
 $85,359
 $99
 $2
 $101
Provision for (reduction in allowance) unfunded loan commitments and letters of credit (6,528) (265) (6,793)
Provision (reduction in allowance) for unfunded loan commitments and letters of credit —
 —
 —
AULC balance, end of period $76,299
 $2,267
 $78,566
 $99
 $2
 $101
ACL balance, end of period $550,421
 $203,631
 $754,052
 $660
 $224
 $884
Nine-month period ended September 30, 2017:      
Nine-month period ended September 30, 2019:      
ALLL balance, beginning of period $451,091
 $187,322
 $638,413
 $542
 $230
 $772
Loan charge-offs (58,051) (133,884) (191,935) (124) (145) (269)
Recoveries of loans previously charged-off 33,619
 39,946
 73,565
 35
 42
 77
Provision for (reduction in allowance) loan and lease losses 47,539
 107,980
 155,519
Allowance for loans sold or transferred to loans held for sale (76) —
 (76)
Provision for loan and lease losses 108
 95
 203
ALLL balance, end of period $474,122
 $201,364
 $675,486
 $561
 $222
 $783
AULC balance, beginning of period $86,543
 $11,336
 $97,879
 $94
 $2
 $96
Provision for (reduction in allowance) unfunded loan commitments and letters of credit (10,244) (9,069) (19,313)
Provision (reduction in allowance) for unfunded loan commitments and letters of credit 5
 —
 5
AULC balance, end of period $76,299
 $2,267
 $78,566
 $99
 $2
 $101
ACL balance, end of period $550,421
 $203,631
 $754,052
 $660
 $224
 $884
(dollar amounts in millions) Commercial Consumer Total
Three-month period ended September 30, 2018:
ALLL balance, beginning of period $531
 $210
 $741
Loan charge-offs (11) (47) (58)
Recoveries of loans previously charged-off 15
 14
 29
Provision for loan and lease losses 8
 41
 49
ALLL balance, end of period $543
 $218
 $761
AULC balance, beginning of period $90
 $3
 $93
Provision (reduction in allowance) for unfunded loan commitments and letters of credit 5
 (1) 4
AULC balance, end of period $95
 $2
 $97
ACL balance, end of period $638
 $220
 $858
Nine-month period ended September 30, 2018:
ALLL balance, beginning of period $482
 $209
 $691
Loan charge-offs (46) (138) (184)
Recoveries of loans previously charged-off 45
 44
 89
Provision for loan and lease losses 62
 103
 165
ALLL balance, end of period $543
 $218
 $761
AULC balance, beginning of period $84
 $3
 $87
Provision (reduction in allowance) for unfunded loan commitments and letters of credit 11
 (1) 10
AULC balance, end of period $95
 $2
 $97
ACL balance, end of period $638
 $220
 $858
(dollar amounts in thousands) Commercial Consumer Total
Three-month period ended September 30, 2016:
ALLL balance, beginning of period $424,507
 $198,557
 $623,064
Loan charge-offs (24,839) (34,429) (59,268)
Recoveries of loans previously charged-off 8,312
 10,891
 19,203
Provision for (reduction in allowance) loan and lease losses 36,689
 16,834
 53,523
Allowance for loans sold or transferred to loans held for sale (12,874) (6,750) (19,624)
ALLL balance, end of period $431,795
 $185,103
 $616,898
AULC balance, beginning of period $63,717
 $10,031
 $73,748
Provision for (reduction in allowance) unfunded loan commitments and letters of credit 9,739
 543
 10,282
AULC recorded at acquisition 4,403
 —
 4,403
AULC balance, end of period $77,859
 $10,574
 $88,433
ACL balance, end of period $509,654
 $195,677
 $705,331
Nine-month period ended September 30, 2016:
ALLL balance, beginning of period $398,753
 $199,090
 $597,843
Loan charge-offs (70,721) (91,784) (162,505)
Recoveries of loans previously charged-off 62,127
 35,006
 97,133
Provision for (reduction in allowance) loan and lease losses 54,510
 49,437
 103,947
Allowance for loans sold or transferred to loans held for sale (12,874) (6,646) (19,520)
ALLL balance, end of period $431,795
 $185,103
 $616,898
AULC balance, beginning of period $63,448
 $8,633
 $72,081
Provision for (reduction in allowance) unfunded loan commitments and letters of credit 10,008
 1,941
 11,949
AULC recorded at acquisition 4,403
 —
 4,403
AULC balance, end of period $77,859
 $10,574
 $88,433
ACL balance, end of period $509,654
 $195,677
 $705,331


Credit Quality Indicators
See Note 4Note 3 “Loans / Leases and Allowance for Credit Losses” to the consolidated financial statementsConsolidated Financial Statements of the Annual Report on Form 10-K for the year ended December 31, 20162018 for a description of the credit quality indicators Huntington utilizes for monitoring credit quality and for determining an appropriate ACL level.

To facilitate the monitoring of credit quality for commercial loans, and for purposes of determining an appropriate ACL level for these loans, Huntington utilizes the following internally defined categories of credit grades:
•
Pass - Higher quality loans that do not fit any of the other categories described below.
•
OLEM - The credit risk may be relatively minor yet represents a risk given certain specific circumstances. If the potential weaknesses are not monitored or mitigated, the loan may weaken or the collateral may be inadequate to protect Huntington’s position in the future. For these reasons, Huntington considers the loans to be potential problem loans.
•
Substandard - Inadequately protected loans by the borrower’s ability to repay, equity, and/or the collateral pledged to secure the loan. These loans have identified weaknesses that could hinder normal repayment or collection of the debt. It is likely Huntington will sustain some loss if any identified weaknesses are not mitigated.
•
Doubtful - Loans that have all of the weaknesses inherent in those loans classified as Substandard, with the added elements of the full collection of the loan is improbable and that the possibility of loss is high.
Loans are generally assigned a category of "Pass" rating upon initial approval and subsequently updated as appropriate based on the borrower's financial performance.
Commercial loans categorized as OLEM, Substandard, or Doubtful are considered Criticized loans. Commercial loans categorized as Substandard or Doubtful are both considered Classified loans.
The following table presents each loan and lease class by credit quality indicator at September 30, 20172019 and December 31, 2016.
2018.
September 30, 2017September 30, 2019
Credit Risk Profile by UCS Classification
(dollar amounts in thousands)Pass OLEM Substandard Doubtful Total
(dollar amounts in millions)Credit Risk Profile by UCS Classification
Commercial         Pass OLEM Substandard Doubtful Total
Commercial and industrial$25,447,805
 $803,540
 $1,189,789
 $28,210
 $27,469,344
$28,276
 $657
 $1,457
 $4
 $30,394
Commercial real estate6,934,670
 144,122
 126,352
 952
 7,206,096
6,609
 158
 87
 1
 6,855
         
Credit Risk Profile by FICO Score (1), (2)         
750+ 650-749 <650 Other (3) TotalCredit Risk Profile by FICO Score (1), (2)
Consumer         750+ 650-749 <650 Other (3) Total
Automobile$5,939,409
 $4,278,062
 $1,371,574
 $285,810
 $11,874,855
$6,257
 $4,462
 $1,328
 $245
 $12,292
Home equity6,359,778
 2,985,933
 621,817
 14,927
 9,982,455
5,847
 2,815
 592
 45
 9,299
Residential mortgage5,311,993
 2,479,820
 599,055
 130,804
 8,521,672
7,633
 2,796
 600
 139
 11,168
RV and marine finance1,385,176
 853,545
 91,302
 39,907
 2,369,930
RV and marine2,313
 1,027
 111
 102
 3,553
Other consumer404,047
 510,804
 136,346
 12,556
 1,063,753
487
 583
 117
 64
 1,251
 December 31, 2018
(dollar amounts in millions)Credit Risk Profile by UCS Classification
CommercialPass OLEM Substandard Doubtful Total
Commercial and industrial$28,807
 $518
 $1,269
 $11
 $30,605
Commercial real estate6,586
 181
 74
 1
 6,842
          
 Credit Risk Profile by FICO Score (1), (2)
Consumer750+ 650-749 <650 Other (3) Total
Automobile$6,254
 $4,520
 $1,373
 $282
 $12,429
Home equity6,098
 2,975
 591
 56
 9,720
Residential mortgage7,159
 2,801
 612
 78
 10,650
RV and marine2,074
 990
 105
 85
 3,254
Other consumer501
 633
 129
 57
 1,320
 December 31, 2016
 Credit Risk Profile by UCS Classification
(dollar amounts in thousands)Pass OLEM Substandard Doubtful Total
Commercial         
Commercial and industrial$26,211,885
 $810,287
 $1,028,819
 $7,721
 $28,058,712
Commercial real estate7,042,304
 96,975
 159,098
 2,524
 7,300,901
          
 Credit Risk Profile by FICO Score (1), (2)
 750+ 650-749 <650 Other (3) Total
Consumer         
Automobile$5,369,085
 $4,043,611
 $1,298,460
 $255,472
 $10,966,628
Home equity6,280,328
 2,891,330
 637,560
 293,283
 10,102,501
Residential mortgage4,662,777
 2,285,121
 615,067
 87,060
 7,650,025
RV and marine finance1,064,143
 644,039
 72,995
 63,751
 1,844,928
Other consumer346,867
 455,959
 133,243
 19,913
 955,982


(1)Excludes loans accounted for under the fair value option.
(2)Reflects most recentupdated customer credit scores.
(3)Reflects deferred fees and costs, loans in process, loans to legal entities, etc.


Impaired Loans
See Note 1 “Significant Accounting Policies” to the consolidated financial statementsConsolidated Financial Statements of the Annual Report on Form 10-K for the year ended December 31, 20162018 for a description of accounting policies related to impaired loans.
The following tables present the balance of the ALLL attributable to loans by portfolio segment individually and collectively evaluated for impairment and the relatedrelated loan and lease balance at September 30, 20172019 and December 31, 2016.2018.
(dollar amounts in thousands) Commercial Consumer Total
ALLL at September 30, 2017:      
(dollar amounts in millions) Commercial Consumer Total
ALLL at September 30, 2019      
Portion of ALLL balance:            
Purchased credit-impaired loans $—
 $—
 $—
Attributable to loans individually evaluated for impairment 22,838
 13,874
 36,712
 $45
 $7
 $52
Attributable to loans collectively evaluated for impairment 451,284
 187,490
 638,774
 516
 215
 731
Total ALLL balance $474,122
 $201,364
 $675,486
 $561
 $222
 $783
Loan and Lease Ending Balances at September 30, 2017: (1)      
Loan and Lease Ending Balances at September 30, 2019 (1)      
Portion of loan and lease ending balance:            
Purchased credit-impaired loans $64,989
 $—
 $64,989
Individually evaluated for impairment 566,340
 621,808
 1,188,148
 $574
 $579
 $1,153
Collectively evaluated for impairment 34,044,110
 33,190,856
 67,234,966
 36,675
 36,984
 73,659
Total loans and leases evaluated for impairment $34,675,439
 $33,812,664
 $68,488,103
 $37,249
 $37,563
 $74,812

(dollar amounts in millions) Commercial Consumer Total
ALLL at December 31, 2018      
Portion of ALLL balance:      
Attributable to loans individually evaluated for impairment $33
 $10
 $43
Attributable to loans collectively evaluated for impairment 509
 220
 729
Total ALLL balance: $542
 $230
 $772
Loan and Lease Ending Balances at December 31, 2018 (1)      
Portion of loan and lease ending balances:      
Individually evaluated for impairment 516
 591
 1,107
Collectively evaluated for impairment 36,931
 36,783
 73,714
Total loans and leases evaluated for impairment $37,447
 $37,374
 $74,821
(dollar amounts in thousands) Commercial Consumer Total
ALLL at December 31, 2016      
Portion of ALLL balance:      
Purchased credit-impaired loans $—
 $—
 $—
Attributable to loans individually evaluated for impairment $10,525
 $11,021
 $21,546
Attributable to loans collectively evaluated for impairment 440,566
 176,301
 616,867
Total ALLL balance: $451,091
 $187,322
 $638,413
Loan and Lease Ending Balances at December 31, 2016 (1)      
Portion of loan and lease ending balances:      
Purchased credit-impaired loans $102,380
 $—
 $102,380
Individually evaluated for impairment 415,624
 457,890
 873,514
Collectively evaluated for impairment 34,841,609
 31,062,174
 65,903,783
Total loans and leases evaluated for impairment $35,359,613
 $31,520,064
 $66,879,677


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


The following tables present by class the ending balance, unpaid principal balance, and the related ALLL, along with the average balance and interest income recognized only for impaired loans and leases and purchased credit-impaired loans:leases: (1), (2)
 September 30, 2019 Three Months Ended
September 30, 2019		 Nine Months Ended
September 30, 2019
(dollar amounts in millions)
Ending
Balance
 
Unpaid
Principal
Balance (6)
 
Related
Allowance (7)
 
Average
Balance
 
Interest
Income
Recognized
 
Average
Balance
 
Interest
Income
Recognized
With no related allowance recorded:             
Commercial and industrial$205
 $250
 $—
 $204
 $4
 $210
 $16
Commercial real estate31
 33
 —
 30
 2
 34
 6
              
With an allowance recorded:             
Commercial and industrial314
 344
 43
 322
 3
 298
 8
Commercial real estate24
 27
 2
 29
 —
 32
 1
Automobile42
 45
 2
 41
 1
 40
 2
Home equity292
 329
 9
 297
 3
 305
 10
Residential mortgage290
 326
 3
 287
 3
 287
 8
RV and marine4
 4
 —
 3
 —
 3
 —
Other consumer10
 10
 2
 10
 —
 9
 —
              
Total             
Commercial and industrial (3)519
 594
 43
 526
 7
 508
 24
Commercial real estate (4)55
 60
 2
 59
 2
 66
 7
Automobile (2)42
 45
 2
 41
 1
 40
 2
Home equity (5)292
 329
 9
 297
 3
 305
 10
Residential mortgage (5)290
 326
 3
 287
 3
 287
 8
RV and marine (2)4
 4
 —
 3
 —
 3
 —
Other consumer (2)10
 10
 2
 10
 —
 9
 —
 September 30, 2017 Three Months Ended
September 30, 2017		 Nine Months Ended
September 30, 2017
(dollar amounts in thousands)
Ending
Balance
 
Unpaid
Principal
Balance (6)
 
Related
Allowance
 
Average
Balance
 
Interest
Income
Recognized
 
Average
Balance
 
Interest
Income
Recognized
With no related allowance recorded:             
Commercial and industrial$299,349
 $324,474
 $—
 $294,513
 $4,969
 $227,611
 $7,467
Commercial real estate65,382
 92,215
 —
 71,277
 1,825
 80,388
 5,762
Automobile—
 —
 —
 —
 —
 —
 —
Home equity—
 —
 —
 —
 —
 —
 —
Residential mortgage—
 —
 —
 —
 —
 —
 —
RV and marine finance—
 —
 —
 —
 —
 —
 —
Other consumer—
 —
 —
 —
 —
 —
 —
              
With an allowance recorded:             
Commercial and industrial213,520
 245,328
 19,958
 222,745
 1,950
 334,297
 12,712
Commercial real estate53,078
 60,366
 2,880
 40,672
 468
 54,352
 1,388
Automobile33,049
 33,049
 1,683
 32,740
 496
 32,293
 1,576
Home equity335,763
 367,870
 14,486
 330,784
 3,713
 326,932
 11,639
Residential mortgage310,440
 341,724
 8,060
 319,745
 2,837
 329,193
 8,851
RV and marine finance1,520
 1,520
 88
 1,425
 23
 884
 58
Other consumer6,456
 6,456
 1,288
 6,944
 47
 7,117
 184
              
Total             
Commercial and industrial (3)512,869
 569,802
 19,958
 517,258
 6,919
 561,908
 20,179
Commercial real estate (4)118,460
 152,581
 2,880
 111,949
 2,293
 134,740
 7,150
Automobile (2)33,049
 33,049
 1,683
 32,740
 496
 32,293
 1,576
Home equity (5)335,763
 367,870
 14,486
 330,784
 3,713
 326,932
 11,639
Residential mortgage (5)310,440
 341,724
 8,060
 319,745
 2,837
 329,193
 8,851
RV and marine finance (2)1,520
 1,520
 88
 1,425
 23
 884
 58
Other consumer (2)6,456
 6,456
 1,288
 6,944
 47
 7,117
 184


December 31, 2016 Three Months Ended
September 30, 2016		 Nine Months Ended
September 30, 2016		December 31, 2018 Three Months Ended
September 30, 2018		 Nine Months Ended
September 30, 2018
(dollar amounts in thousands)
Ending
Balance
 
Unpaid
Principal
Balance (6)
 
Related
Allowance
 
Average
Balance
 
Interest
Income
Recognized
 
Average
Balance
 
Interest
Income
Recognized
(dollar amounts in millions)
Ending
Balance
 
Unpaid
Principal
Balance (6)
 
Related
Allowance (7)
 
Average
Balance
 
Interest
Income
Recognized
 
Average
Balance
 
Interest
Income
Recognized
With no related allowance recorded:                          
Commercial and industrial$299,606

$358,712

$—

$305,956

$2,235

$290,163

$4,858
$224

$261

$—

$264

$5

$264

$16
Commercial real estate88,817

126,152

—

80,000

907

58,666

2,257
36

45

—

36

2

49

6
Automobile—
 —
 —
 —
 —
 —
 —
Home equity—

—

—

—

—

—

—
Residential mortgage—

—

—

—

—

—

—
RV and marine finance—
 —
 —
 —
 —
 —
 —
Other consumer—

—

—

—

—

—

—
                          
With an allowance recorded:                          
Commercial and industrial406,243
 448,121
 22,259
 281,934
 1,631
 274,262
 5,460
221
 240
 31
 284
 3
 285
 9
Commercial real estate97,238
 107,512
 3,434
 49,140
 521
 49,587
 1,895
35
 39
 2
 49
 1
 48
 2
Automobile30,961
 31,298
 1,850
 31,540
 541
 31,912
 1,643
38
 42
 2
 38
 1
 37
 2
Home equity319,404
 352,722
 15,032
 284,512
 3,453
 267,264
 9,382
314
 356
 10
 326
 3
 330
 11
Residential mortgage327,753
 363,099
 12,849
 344,237
 2,978
 353,259
 9,041
287
 323
 4
 290
 3
 299
 8
RV and marine finance—
 —
 —
 —
 —
 —
 —
RV and marine2
 3
 —
 2
 —
 2
 —
Other consumer3,897
 3,897
 260
 4,454
 58
 4,627
 178
9
 9
 3
 9
 —
 8
 —
                          
Total                          
Commercial and industrial (3)705,849
 806,833
 22,259
 587,890
 3,866
 564,425
 10,318
445
 501
 31
 548
 8
 549
 25
Commercial real estate (4)186,055
 233,664
 3,434
 129,140
 1,428
 108,253
 4,152
71
 84
 2
 85
 3
 97
 8
Automobile (2)30,961
 31,298
 1,850
 31,540
 541
 31,912
 1,643
38
 42
 2
 38
 1
 37
 2
Home equity (5)319,404
 352,722
 15,032
 284,512
 3,453
 267,264
 9,382
314
 356
 10
 326
 3
 330
 11
Residential mortgage (5)327,753
 363,099
 12,849
 344,237
 2,978
 353,259
 9,041
287
 323
 4
 290
 3
 299
 8
RV and marine finance (2)—
 —
 —
 —
 —
 —
 —
RV and marine (2)2
 3
 —
 2
 —
 2
 —
Other consumer (2)3,897
 3,897
 260
 4,454
 58
 4,627
 178
9
 9
 3
 9
 —
 8
 —
(1)These tables do not include loans fully charged-off.
(2)All automobile, RV and marine, finance and other consumer impaired loans included in these tables are considered impaired due to their status as a TDR.
(3)At September 30, 20172019 and December 31, 2016, commercial and industrial2018, C&I loans of $365$309 million and $317$366 million, respectively, were considered impaired due to their status as a TDR.
(4)At September 30, 20172019 and December 31, 2016, commercial real estate2018, CRE loans of $84$46 million and $81$60 million, respectively, were considered impaired due to their status as a TDR.
(5)Includes home equity and residential mortgages considered impaired due to be collateral dependent due todesignation associated with their non-accrual status as well as home equity and mortgage loans considered impaired due to their status as a TDR.
(6)The differences between the ending balance and unpaid principal balance amounts primarily represent partial charge-offs.

(7)Impaired loans in the consumer portfolio are evaluated in pools and not at the loan level. Thus, these loans do not have an individually assigned allowance and as such are all classified as with an allowance in the tables above.
TDR Loans
TDRs are modified loans where a concession was provided to a borrower experiencing financial difficulties. Loan modifications are considered TDRs when the concessions provided arewould not available to the borrower through either normal channels or other sources.otherwise be considered. However, not all loan modifications are TDRs. Acquired, non-purchased credit impaired loans are only considered for TDR reporting for modifications made subsequent to acquisition. See Note 43 “Loans / Leases and Allowance for Credit Losses” to the consolidated financial statementsConsolidated Financial Statements of the Annual Report on Form 10-K for the year ended December 31, 20162018 for an additional discussion of TDRs.

The following table presents, by class and modification type, the number of contracts, post-modification outstanding balance, and the financial effects of the modification for the three-month and nine-month periods ended September 30, 20172019 and 2016.2018.
            
 New Troubled Debt Restructurings During The Three-Month Period Ended (1)
 September 30, 2017 September 30, 2016
(dollar amounts in thousands)
Number of
Contracts
 
Post-modification
Outstanding
Ending Balance
 
Financial effects
of modification (2)
 
Number of
Contracts
 
Post-modification
Outstanding
Ending Balance
 
Financial effects
of modification (2)
Commercial and industrial:           
Interest rate reduction6
 $817
 $—
 2
 $122
 $6
Amortization or maturity date change271
 138,381
 (837) 246
 89,100
 (1,450)
Other—
 —
 —
 6
 711
 (2)
Total Commercial and industrial277
 139,198
 (837) 254
 89,933
 (1,446)
Commercial real estate:           
Interest rate reduction—
 —
 —
 —
 —
 —
Amortization or maturity date change28
 17,811
 133
 30
 11,183
 (546)
Other—
 —
 —
 —
 —
 —
Total commercial real estate:28
 17,811
 133
 30
 11,183
 (546)
Automobile:           
Interest rate reduction5
 72
 3
 4
 26
 3
Amortization or maturity date change487
 3,943
 124
 452
 4,438
 559
Chapter 7 bankruptcy305
 2,562
 69
 236
 1,840
 157
Other—
 —
 —
 —
 —
 —
Total Automobile797
 6,577
 196
 692
 6,304
 719
Home equity:           
Interest rate reduction8
 376
 11
 14
 352
 10
Amortization or maturity date change160
 11,676
 (1,131) 110
 6,740
 (574)
Chapter 7 bankruptcy79
 2,728
 647
 70
 2,395
 1,327
Other—
 —
 —
 —
 —
 —
Total Home equity247
 14,780
 (473) 194
 9,487
 763
Residential mortgage:           
Interest rate reduction—
 —
 —
 2
 134
 (2)
Amortization or maturity date change102
 11,282
 (272) 77
 7,988
 (220)
Chapter 7 bankruptcy20
 1,656
 (2) 17
 1,105
 (63)
Other1
 64
 2
 3
 260
 —
Total Residential mortgage123
 13,002
 (272) 99
 9,487
 (285)
RV and marine finance:           
Interest rate reduction—
 —
 —
 —
 —
 —
Amortization or maturity date change10
 84
 3
 —
 —
 —
Chapter 7 bankruptcy22
 492
 15
 —
 —
 —
Other—
 —
 —
 —
 —
 —
Total RV and marine finance32
 576
 18
 —
 —
 —
Other consumer:           
Interest rate reduction18
 52
 —
 —
 —
 —
Amortization or maturity date change677
 3,106
 1
 1
 16
 —
Chapter 7 bankruptcy4
 24
 1
 1
 6
 —
Other—
 —
 —
 —
 —
 —
Total Other consumer699
 3,182
 2
 2
 22
 —
Total new troubled debt restructurings2,203
 $195,126
 $(1,233) 1,271
 $126,416
 $(795)
 New Troubled Debt Restructurings (1)
 Three Months Ended September 30, 2019
 Number of
Contracts		 Post-modification Outstanding Recorded Investment (2)
(dollar amounts in millions) Interest rate reduction Amortization or maturity date change Chapter 7 bankruptcy Other Total
            
Commercial and industrial119
 $—
 $39
 $—
 $—
 $39
Commercial real estate7
 —
 1
 —
 —
 1
Automobile833
 —
 5
 2
 —
 7
Home equity76
 —
 2
 3
 —
 5
Residential mortgage69
 —
 9
 —
 —
 9
RV and marine46
 —
 1
 —
 —
 1
Other consumer385
 2
 —
 —
 —
 2
Total new TDRs1,535
 $2
 $57
 $5
 $—
 $64
            
 Three Months Ended September 30, 2018
 Number of
Contracts		 Post-modification Outstanding Recorded Investment (2)
(dollar amounts in millions) Interest rate reduction Amortization or maturity date change Chapter 7 bankruptcy Other Total
            
Commercial and industrial131
 $—
 $35
 $—
 $—
 $35
Commercial real estate9
 —
 5
 —
 —
 5
Automobile848
 —
 4
 3
 —
 7
Home equity159
 —
 8
 3
 —
 11
Residential mortgage76
 —
 8
 1
 —
 9
RV and marine40
 —
 —
 —
 —
 —
Other consumer386
 2
 —
 —
 —
 2
Total new TDRs1,649
 $2
 $60
 $7
 $—
 $69

 New Troubled Debt Restructurings During The Nine-Month Period Ended (1)
 September 30, 2017 September 30, 2016
(dollar amounts in thousands)
Number of
Contracts
 
Post-modification
Outstanding
Ending Balance
 
Financial effects
of modification (2)
 
Number of
Contracts
 
Post-modification
Outstanding
Ending Balance
 
Financial effects
of modification (2)
Commercial and industrial:           
Interest rate reduction8
 $854
 $6
 4
 $161
 $5
Amortization or maturity date change735
 418,924
 (8,695) 629
 345,691
 (4,368)
Other4
 380
 (27) 16
 1,801
 (4)
Total Commercial and industrial747
 420,158
 (8,716) 649
 347,653
 (4,367)
Commercial real estate:           
Interest rate reduction—
 —
 —
 1
 84
 —
Amortization or maturity date change71
 74,101
 (682) 90
 60,995
 (1,828)
Other—
 —
 —
 4
 315
 16
Total commercial real estate:71
 74,101
 (682) 95
 61,394
 (1,812)
Automobile:           
Interest rate reduction24
 308
 9
 11
 132
 10
Amortization or maturity date change1,298
 11,097
 302
 1,159
 11,002
 981
Chapter 7 bankruptcy743
 5,878
 116
 797
 6,384
 386
Other—
 —
 —
 —
 —
 —
Total Automobile2,065
 17,283
 427
 1,967
 17,518
 1,377
Home equity:           
Interest rate reduction25
 1,444
 24
 43
 2,363
 103
Amortization or maturity date change401
 25,544
 (2,559) 466
 25,031
 (2,592)
Chapter 7 bankruptcy243
 8,764
 2,049
 215
 8,106
 2,327
Other70
 4,241
 (326) —
 —
 —
Total Home equity739
 39,993
 (812) 724
 35,500
 (162)
Residential mortgage:           
Interest rate reduction2
 110
 (9) 12
 1,195
 (17)
Amortization or maturity date change282
 30,649
 (761) 277
 29,388
 (1,217)
Chapter 7 bankruptcy69
 6,328
 (139) 40
 3,788
 (42)
Other22
 2,448
 19
 4
 424
 —
Total Residential mortgage375
 39,535
 (890) 333
 34,795
 (1,276)
RV and marine finance:           
Interest rate reduction—
 —
 —
 —
 —
 —
Amortization or maturity date change34
 710
 19
 —
 —
 —
Chapter 7 bankruptcy71
 1,246
 25
 —
 —
 —
Other—
 —
 —
 —
 —
 —
Total RV and marine finance105
 1,956
 44
 —
 —
 —
Other consumer:           
Interest rate reduction19
 130
 2
 —
 —
 —
Amortization or maturity date change681
 3,394
 8
 6
 575
 24
Chapter 7 bankruptcy7
 36
 1
 8
 72
 7
Other—
 —
 —
 —
 —
 —
Total Other consumer707
 3,560
 11
 14
 647
 31
Total new troubled debt restructurings4,809
 $596,586
 $(10,618) 3,782
 $497,507
 $(6,209)
 New Troubled Debt Restructurings (1)
 Nine Months Ended September 30, 2019
 Number of
Contracts		 Post-modification Outstanding Recorded Investment (2)
(dollar amounts in millions) Interest rate reduction Amortization or maturity date change Chapter 7 bankruptcy Other Total
            
Commercial and industrial335
 $—
 $114
 $—
 $—
 $114
Commercial real estate21
 —
 12
 —
 —
 12
Automobile2,227
 —
 14
 6
 —
 20
Home equity248
 —
 7
 6
 —
 13
Residential mortgage241
 —
 27
 1
 —
 28
RV and marine finance113
 —
 1
 1
 —
 2
Other consumer972
 6
 —
 —
 —
 6
Total new TDRs4,157
 $6
 $175
 $14
 $—
 $195
            
 Nine Months Ended September 30, 2018
 Number of
Contracts		 Post-modification Outstanding Recorded Investment (2)
(dollar amounts in millions) Interest rate reduction Amortization or maturity date change Chapter 7 bankruptcy Other Total
            
Commercial and industrial641
 $—
 $302
 $—
 $—
 $302
Commercial real estate95
 —
 79
 —
 —
 79
Automobile2,088
 —
 11
 6
 —
 17
Home equity472
 —
 21
 8
 —
 29
Residential mortgage278
 —
 29
 2
 —
 31
RV and marine finance99
 —
 —
 1
 —
 1
Other consumer1,320
 6
 —
 —
 —
 6
Total new TDRs4,993
 $6
 $442
 $17
 $—
 $465
(1)TDRs may include multiple concessions and the disclosure classifications are based on the primary concession provided to the borrower.
(2)Amount represents the financial impact via provision for loan and lease losses as a result of the modification.Post-modification balances approximate pre-modification balances.

The financial effects of modification represent the impact on the provision (recovery) for loan and lease losses. Amounts for the three-month periods ended September 30, 2019 and 2018, were $1 million and $(1) million, respectively. For the nine-month periods ended September 30, 2019 and 2018, the financial effects of modification were $(1) million and $(11) million, respectively.
Pledged Loans and Leases
At September 30, 2017, theThe Bank has access to the Federal Reserve’s discount window and advances from the FHLB – Cincinnati.FHLB. As of September 30, 2017,2019 and December 31, 2018, these borrowings and advances are secured by $32.0$38.2 billion and $46.5 billion, respectively, of loans and securities.



4. AVAILABLE-FOR-SALEINVESTMENT SECURITIES AND OTHER SECURITIES
Listed belowDebt securities purchased in which Huntington has the positive intent and ability to hold to their maturity are the contractual maturities of available-for-saleclassified as held-to-maturity securities.  All other debt and other securities at September 30, 2017 and December 31, 2016.
 September 30, 2017 December 31, 2016
(dollar amounts in thousands)
Amortized
Cost
 Fair Value 
Amortized
Cost
 Fair Value
U.S. Treasury and Federal agency securities:       
U.S. Treasury:       
1 year or less$11,256
 $11,260
 $4,978
 $4,988
After 1 year through 5 years—
 —
 502
 509
After 5 years through 10 years—
 —
 —
 —
After 10 years—
 —
 —
 —
Total U.S. Treasury11,256
 11,260
 5,480
 5,497
Federal agencies: mortgage-backed securities:       
1 year or less—
 —
 —
 —
After 1 year through 5 years32,749
 32,515
 46,591
 46,762
After 5 years through 10 years257,032
 255,488
 173,941
 176,404
After 10 years10,496,277
 10,351,747
 10,630,929
 10,450,176
Total Federal agencies: mortgage-backed securities10,786,058
 10,639,750
 10,851,461
 10,673,342
Other agencies:       
1 year or less4,201
 4,223
 4,302
 4,367
After 1 year through 5 years8,892
 9,034
 5,092
 5,247
After 5 years through 10 years82,692
 83,194
 63,618
 63,928
After 10 years—
 —
 —
 —
Total other agencies95,785
 96,451
 73,012
 73,542
Total U.S. Treasury and Federal agency securities10,893,099
 10,747,461
 10,929,953
 10,752,381
Municipal securities:       
1 year or less163,747
 160,032
 169,636
 166,887
After 1 year through 5 years905,872
 905,075
 933,893
 933,903
After 5 years through 10 years1,656,860
 1,655,384
 1,463,459
 1,464,583
After 10 years703,350
 705,618
 693,440
 684,684
Total municipal securities3,429,829
 3,426,109
 3,260,428
 3,250,057
Asset-backed securities:       
1 year or less—
 —
 —
 —
After 1 year through 5 years80,003
 80,330
 80,700
 80,560
After 5 years through 10 years162,079
 163,439
 223,352
 224,565
After 10 years326,724
 311,422
 520,072
 488,356
Total asset-backed securities568,806
 555,191
 824,124
 793,481
Corporate debt:       
1 year or less3,143
 3,157
 43,223
 43,603
After 1 year through 5 years66,878
 68,450
 78,430
 80,196
After 5 years through 10 years38,471
 39,902
 32,523
 32,865
After 10 years13,211
 14,120
 40,361
 42,019
Total corporate debt121,703
 125,629
 194,537
 198,683
Other:       
1 year or less3,150
 3,144
 1,650
 1,650
After 1 year through 5 years800
 791
 2,302
 2,283
After 5 years through 10 years—
 —
 —
 —
After 10 years—
 —
 10
 10
Nonmarketable equity securities583,019
 583,019
 547,704
 547,704
Mutual funds10,416
 10,416
 15,286
 15,286
Marketable equity securities861
 1,301
 861
 1,302
Total other598,246
 598,671
 567,813
 568,235
Total available-for-sale and other securities$15,611,683
 $15,453,061
 $15,776,855
 $15,562,837

Other securities at September 30, 2017 and December 31, 2016 include non-marketable equity securities of $287 million and $249 million of stock issued by the FHLB and $296 million and $299 million of Federal Reserve Bank stock, respectively. Non-marketable equity securities are recorded at amortized cost.classified as either available-for-sale or other securities.
The following tables provide amortized cost, fair value, and gross unrealized gains and losses recognized in OCI by investment category at September 30, 20172019 and December 31, 2016:
2018:
  Unrealized    Unrealized  
(dollar amounts in thousands)
Amortized
Cost
 
Gross
Gains
 
Gross
Losses
 Fair Value
September 30, 2017       
(dollar amounts in millions)
Amortized
Cost
 
Gross
Gains
 
Gross
Losses
 Fair Value
September 30, 2019       
Available-for-sale securities:       
U.S. Treasury$11,256
 $4
 $—
 $11,260
$10
 $—
 $—
 $10
Federal agencies:              
Mortgage-backed securities10,786,058
 5,851
 (152,159) 10,639,750
Residential CMO6,668
 71
 (15) 6,724
Residential MBS2,355
 39
 (1) 2,393
Commercial MBS1,237
 3
 (1) 1,239
Other agencies95,785
 722
 (56) 96,451
117
 —
 —
 117
Total U.S. Treasury, Federal agency securities10,893,099
 6,577
 (152,215) 10,747,461
Total U.S. Treasury, federal agency and other agency securities10,387
 113
 (17) 10,483
Municipal securities3,429,829
 31,043
 (34,763) 3,426,109
3,147
 35
 (30) 3,152
Asset-backed securities568,806
 2,409
 (16,024) 555,191
588
 8
 (1) 595
Corporate debt121,703
 3,927
 (1) 125,629
50
 2
 —
 52
Other securities598,246
 439
 (14) 598,671
Total available-for-sale and other securities$15,611,683
 $44,395
 $(203,017) $15,453,061
Other securities/Sovereign debt4
 —
 —
 4
Total available-for-sale securities$14,176
 $158
 $(48) $14,286
       
Held-to-maturity securities:       
Federal agencies:       
Residential CMO$1,970
 $41
 $(3) $2,008
Residential MBS2,065
 45
 —
 2,110
Commercial MBS4,075
 66
 —
 4,141
Other agencies316
 5
 —
 321
Total federal agency and other agency securities8,426
 157
 (3) 8,580
Municipal securities4
 —
 —
 4
Total held-to-maturity securities$8,430
 $157
 $(3) $8,584
       
Other securities, at cost:       
Non-marketable equity securities:       
Federal Home Loan Bank stock$104
 $—
 $—
 $104
Federal Reserve Bank stock297
 —
 —
 297
Other securities, at fair value       
Mutual funds53
 —
 —
 53
Marketable equity securities1
 —
 —
 1
Total other securities$455
 $—
 $—
 $455

   Unrealized  
(dollar amounts in millions)Amortized
Cost		 Gross
Gains		 Gross
Losses		 Fair Value
December 31, 2018       
Available-for-sale securities:       
U.S. Treasury$5
 $—
 $—
 $5
Federal agencies:       
Residential CMO7,185
 15
 (201) 6,999
Residential MBS1,261
 9
 (15) 1,255
Commercial MBS1,641
 —
 (58) 1,583
Other agencies128
 —
 (2) 126
Total U.S. Treasury, federal agency and other agency securities10,220
 24
 (276) 9,968
Municipal securities3,512
 6
 (78) 3,440
Asset-backed securities318
 1
 (4) 315
Corporate debt54
 —
 (1) 53
Other securities/Sovereign debt4
 —
 —
 4
Total available-for-sale securities$14,108
 $31
 $(359) $13,780
        
Held-to-maturity securities:       
Federal agencies:       
Residential CMO$2,124
 $—
 $(47) $2,077
Residential MBS1,851
 2
 (42) 1,811
Commercial MBS4,235
 —
 (186) 4,049
Other agencies350
 —
 (6) 344
Total federal agency and other agency securities8,560
 2
 (281) 8,281
Municipal securities5
 —
 —
 5
Total held-to-maturity securities$8,565
 $2
 $(281) $8,286
        
Other securities, at cost:       
Non-marketable equity securities:       
Federal Home Loan Bank stock$248
 $—
 $—
 $248
Federal Reserve Bank stock295
 —
 —
 295
Other securities, at fair value       
Mutual funds20
 —
 —
 20
Marketable equity securities1
 1
 —
 2
Total other securities$564
 $1
 $—
 $565

   Unrealized  
(dollar amounts in thousands)
Amortized
Cost
 
Gross
Gains
 
Gross
Losses
 Fair Value
December 31, 2016       
U.S. Treasury$5,480
 $17
 $—
 $5,497
Federal agencies:       
Mortgage-backed securities10,851,461
 12,548
 (190,667) 10,673,342
Other agencies73,012
 536
 (6) 73,542
Total U.S. Treasury, Federal agency securities10,929,953
 13,101
 (190,673) 10,752,381
Municipal securities3,260,428
 28,431
 (38,802) 3,250,057
Asset-backed securities824,124
 1,492
 (32,135) 793,481
Corporate debt194,537
 4,161
 (15) 198,683
Other securities567,813
 441
 (19) 568,235
Total available-for-sale and other securities$15,776,855
 $47,626
 $(261,644) $15,562,837

The following table provides the amortized cost and fair value of securities by contractual maturity at September 30, 2019 and December 31, 2018. Expected maturities may differ from contractual maturities as issuers may have the right to call or prepay obligations with or without incurring penalties.
 September 30, 2019 December 31, 2018
(dollar amounts in millions)
Amortized
Cost
 
Fair
Value
 
Amortized
Cost
 
Fair
Value
Available-for-sale securities:       
Under 1 year$294
 $291
 $186
 $185
After 1 year through 5 years1,084
 1,074
 1,057
 1,039
After 5 years through 10 years1,708
 1,717
 1,838
 1,802
After 10 years11,090
 11,204
 11,027
 10,754
Total available-for-sale securities$14,176
 $14,286
 $14,108
 $13,780
        
Held-to-maturity securities:       
Under 1 year$—
 $—
 $—
 $—
After 1 year through 5 years18
 19
 11
 11
After 5 years through 10 years329
 335
 362
 356
After 10 years8,083
 8,230
 8,192
 7,919
Total held-to-maturity securities$8,430
 $8,584
 $8,565
 $8,286

The following tables provide detail on investment securities with unrealized gross losses aggregated by investment category and the length of time the individual securities have been in a continuous loss position as ofat September 30, 20172019 and December 31, 2016.2018:
Less than 12 Months Over 12 Months TotalLess than 12 Months Over 12 Months Total
(dollar amounts in thousands)Fair Value 
Unrealized
Losses
 Fair Value 
Unrealized
Losses
 Fair Value 
Unrealized
Losses
September 30, 2017           
(dollar amounts in millions)Fair
Value		 Gross Unrealized
Losses		 Fair
Value		 Gross Unrealized
Losses		 Fair
Value		 Gross Unrealized
Losses
September 30, 2019           
Available-for-sale securities:           
Federal agencies:                      
Mortgage-backed securities$8,283,266
 $(125,950) $1,003,097
 $(26,209) $9,286,363
 $(152,159)
Residential CMO$1,287
 $(3) $1,207
 $(12) $2,494
 $(15)
Residential MBS353
 (1) 9
 —
 362
 (1)
Commercial MBS80
 —
 401
 (1) 481
 (1)
Other agencies11,607
 (56) —
 —
 11,607
 (56)1
 —
 —
 —
 1
 —
Total Federal agency securities8,294,873
 (126,006) 1,003,097
 (26,209) 9,297,970
 (152,215)
Total federal agency and other agency securities1,721
 (4) 1,617
 (13) 3,338
 (17)
Municipal securities1,293,344
 (23,995) 277,157
 (10,768) 1,570,501
 (34,763)403
 (7) 1,238
 (23) 1,641
 (30)
Asset-backed securities199,109
 (1,471) 122,568
 (14,553) 321,677
 (16,024)68
 —
 93
 (1) 161
 (1)
Corporate debt200
 (1) —
 —
 200
 (1)—
 —
 —
 —
 —
 —
Other securities791
 (8) 1,494
 (6) 2,285
 (14)
Total temporarily impaired securities$9,788,317
 $(151,481) $1,404,316
 $(51,536) $11,192,633
 $(203,017)$2,192
 $(11) $2,948
 $(37) $5,140
 $(48)
           
Held-to-maturity securities:           
Federal agencies:           
Residential CMO$160
 $(1) $119
 $(2) $279
 $(3)
Residential MBS—
 —
 —
 —
 —
 —
Commercial MBS—
 —
 27
 —
 27
 —
Other agencies5
 —
 —
 —
 5
 —
Total federal agency and other agency securities165
 (1) 146
 (2) 311
 (3)
Municipal securities4
 —
 —
 —
 4
 —
Total temporarily impaired securities$169
 $(1) $146
 $(2) $315
 $(3)

 Less than 12 Months Over 12 Months Total
(dollar amounts in millions)Fair
Value		 Gross Unrealized
Losses		 Fair
Value		 Gross Unrealized
Losses		 Fair
Value		 Gross Unrealized
Losses
December 31, 2018           
Available-for-sale securities:           
Federal agencies:           
Residential CMO$425
 $(3) $5,943
 $(198) $6,368
 $(201)
Residential MBS259
 (6) 319
 (9) 578
 (15)
Commercial MBS10
 —
 1,573
 (58) 1,583
 (58)
Other agencies—
 —
 124
 (2) 124
 (2)
Total federal agency and other agency securities694
 (9) 7,959
 (267) 8,653
 (276)
Municipal securities1,425
 (24) 1,602
 (54) 3,027
 (78)
Asset-backed securities95
 (2) 117
 (2) 212
 (4)
Corporate debt40
 —
 1
 (1) 41
 (1)
Total temporarily impaired securities$2,254
 $(35) $9,679
 $(324) $11,933
 $(359)
            
Held-to-maturity securities:           
Federal agencies:           
Residential CMO$12
 $—
 $2,004
 $(47) $2,016
 $(47)
Residential MBS16
 —
 1,457
 (42) 1,473
 (42)
Commercial MBS—
 —
 4,041
 (186) 4,041
 (186)
Other agencies113
 (2) 205
 (4) 318
 (6)
Total federal agency and other agency securities141
 (2) 7,707
 (279) 7,848
 (281)
Municipal securities—
 —
 4
 —
 4
 —
Total temporarily impaired securities$141
 $(2) $7,711
 $(279) $7,852
 $(281)
 Less than 12 Months Over 12 Months Total
(dollar amounts in thousands)Fair Value 
Unrealized
Losses
 Fair Value 
Unrealized
Losses
 Fair Value 
Unrealized
Losses
December 31, 2016           
Federal agencies:           
Mortgage-backed securities$8,908,470
 $(189,318) $41,706
 $(1,349) $8,950,176
 $(190,667)
Other agencies924
 (6) —
 —
 924
 (6)
Total Federal agency securities8,909,394
 (189,324) 41,706
 (1,349) 8,951,100
 (190,673)
Municipal securities1,412,152
 (29,175) 272,292
 (9,627) 1,684,444
 (38,802)
Asset-backed securities361,185
 (3,043) 178,924
 (29,092) 540,109
 (32,135)
Corporate debt3,567
 (15) 200
 —
 3,767
 (15)
Other securities790
 (11) 1,492
 (8) 2,282
 (19)
Total temporarily impaired securities$10,687,088
 $(221,568) $494,614
 $(40,076) $11,181,702
 $(261,644)


At September 30, 20172019 and December 31, 2016,2018, the carryingmarket value of investment securities pledged to secure public and trust deposits, trading account liabilities, U.S. Treasury demand notes, and security repurchase agreements totaled $6.2$3.8 billion and $5.0$4.5 billion, respectively. There were no securities of a single issuer, which arewere not governmental or government-sponsored, that exceeded 10% of shareholders’ equity at either September 30, 20172019 or December 31, 2016.

2018.
The following table is a summary of realized securities gains and losses for the three-month and nine-month periods ended September 30, 20172019 and 2016,2018, respectively.
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
(dollar amounts in millions)2019 2018 2019 2018
Gross gains on sales of securities$—
 $—
 $9
 $6
Gross losses on sales of securities—
 (2) (11) (8)
Net (loss) gain on sales of securities$—
 $(2) $(2) $(2)
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
(dollar amounts in thousands)2017 2016 2017 2016
Gross gains on sales of securities$4,201
 $3,770
 $8,311
 $7,161
Gross (losses) on sales of securities(4,130) (2,739) (4,530) (5,398)
Net gain on sales of securities$71
 $1,031
 $3,781
 $1,763
OTTI recognized in earnings(104) —
 (3,687) (76)
Net securities gains (losses)$(33) $1,031
 $94
 $1,687


Security Impairment
Huntington evaluates the available-for-sale securities portfolio for impairment on a quarterly basis for impairment and conducts a comprehensive security-level assessment on all available-for-sale securities. Impairment exists when the present value of the expected cash flows are not sufficient to recover the entire amortized cost basis at the balance sheet date. Under these circumstances, any credit impairment would be recognized in earnings. At the end of the second quarter of 2017, Huntington changed its intent from able and willing to hold to sell sometime in the near future prior to final maturity for the two Reg Diversified CDO securities. Related to this change in intent, Huntington estimated the fair value of these bonds by obtaining bids. As a result of this analysis, Huntington recognized $3.6 million of OTTI on these two securities. In addition, Huntington recognized an additional $0.1 million of OTTI in the 2017 third quarter relating an investment in the Municipal Securities portfolio. For all other securities, Huntington does not intend to sell, nor does it believe it will be required to sell these securities until the amortized cost is recovered, which may be at maturity.
The highest risk investments in the portfolio are the trust-preferred CDO securities which are in the asset-backed securities portfolio. This portfolio is in runoff, and the Company has not purchased these types of securities since 2005. The fair values of the CDO assets have been impacted by various market conditions. The unrealized losses are primarily the result of wider liquidity spreads on asset-backed securities and the longer expected average lives of the trust-preferred CDO securities, due to changes in the expectations of when the underlying securities will be repaid.
Collateralized Debt Obligations are backed by a pool of debt securities issued by financial institutions. The collateral generally consists of trust-preferred securities and subordinated debt securities issued by banks, bank holding companies, and insurance companies. Many collateral issuers have the option of deferring interest payments on their debt for up to five years. A full cash flow analysis is used to estimate fair values and assess impairment for each security within this portfolio. A third-party pricing specialist with direct industry experience in pooled-trust-preferred security evaluations is engaged to provide assistance estimating the fair value and expected cash flows on this portfolio. The full cash flow analysis is completed by evaluating the relevant credit and structural aspects of each pooled-trust-preferred security in the portfolio, including collateral performance projections for each piece of collateral in the security and terms of the security’s structure. The credit review includes an analysis of profitability, credit quality, operating efficiency, leverage, and liquidity using available financial and regulatory information for each underlying collateral issuer. The analysis also includes a review of historical industry default data, current / near-term operating conditions, and the impact of macroeconomic and regulatory changes.  Using the results of the analysis, the Company estimates appropriate default and recovery probabilities for each piece of collateral, then estimates the expected cash flows for each security. The fair value of each security is obtained by discounting the expected cash flows at a market discount rate. The market discount rate is determined by reference to yields observed in the market for similarly rated collateralized debt obligations, specifically high-yield collateralized loan obligations. The relatively high market discount rate is reflective of the uncertainty of the cash flows and illiquid nature of these securities. The large differential between the fair value and amortized cost of some of the securities reflects the high market discount rate and the expectation that the majority of the cash flows will not be received until near the final maturity of the security (the final maturities range from 2032 to 2035).

The following table summarizes the relevant characteristics of the Company's CDO securities portfolio, which are included in asset-backed securities, at September 30, 2017. Each security is part of a pool of issuers and supports a more senior tranche of securities except for the MM Comm III securities, which are the most senior class.
Collateralized Debt Obligation Securities
(dollar amounts in thousands)       
Lowest
Credit
Rating
(2)
 
# of Issuers
Currently
Performing/
Remaining (3)
 
Actual
Deferrals
and
Defaults
as a % of
Original
Collateral
 
Expected
Defaults
as a % of
Remaining
Performing
Collateral
 
Excess
Subordination
(4)
Deal NamePar Value 
Amortized
Cost
 
Fair
Value
 
Unrealized
Loss (1)
     
MM Comm III4,509
 4,308
 3,641
 (667) BB+ 5/8 5 7 34
Reg Diversified25,500
 100
 510
 410
 D 
 — — —
Tropic III31,000
 30,989
 19,976
 (11,013) BB 27/36 16 6 41
Total at September 30, 2017$61,009
 $35,397
 $24,127
 $(11,270)          
Total at December 31, 2016$137,197
 $101,210
 $76,003
 $(25,207)          

(1)The majority of securities have been in a continuous loss position for 12 months or longer.
(2)For purposes of comparability, the lowest credit rating expressed is equivalent to Fitch ratings even where the lowest rating is based on another nationally recognized credit rating agency.
(3)Includes both banks and/or insurance companies.
(4)Excess subordination percentage represents the additional defaults in excess of both current and projected defaults that the CDO can absorb before the bond experiences credit impairment. Excess subordinated percentage is calculated by (a) determining what percentage of defaults a deal can experience before the bond has credit impairment, and (b) subtracting from this default breakage percentage both total current and expected future default percentages.


For the three-month and nine-month periods ended September 30, 2017 and 2016, the following table summarizes by security type the total OTTI losses recognized in the Unaudited Condensed Consolidated Statements of Income for securities evaluated for impairment as described above.
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
(dollar amounts in thousands)2017 2016 2017 2016
Available-for-sale and other securities:       
Collateralized Debt Obligations$—
 $—
 $3,559
 $—
Municipal Securities104
 —
 128
 76
Total available-for-sale and other securities$104
 $—
 $3,687
 $76

The following table presents the OTTI recognized in earnings on debt securities held by Huntington for the three-month and nine-month periods ended September 30, 2017 and 2016, respectively.
  Three Months Ended
September 30,		 Nine Months Ended
September 30,
(dollar amounts in thousands) 2017 2016 2017 2016
Balance, beginning of period $10,821
 $9,831
 $11,796
 $18,368
Reductions from sales (5,373) (76) (9,931) (8,689)
Additional credit losses 104
 —
 3,687
 76
Balance, end of period $5,552
 $9,755
 $5,552
 $9,755

5. HELD-TO-MATURITY SECURITIES
Held-to-maturity securities are debt securities that Huntington has the intent and ability to hold until maturity. The debt securities are carried at amortized cost and adjusted for amortization of premiums and accretion of discounts using the interest method.
During the second quarter of 2017, Huntington transferred $1.0 billion of mortgage-backed and other agency securities from the available-for-sale securities portfolio to the held-to-maturity securities portfolio. The securities were reclassified at fair value at the date of transfer. At the time of the transfer, $13.5 million of unrealized net losses were recognized in OCI. The amounts in OCI will be recognized in earnings over the remaining life of the securities as an offset to the adjustment of yield in a manner consistent with the amortization of the premium on the same transferred securities, resulting in an immaterial impact on net income.

Listed below are the contractual maturities of held-to-maturity securities at September 30, 2017 and December 31, 2016.
 September 30, 2017 December 31, 2016
(dollar amounts in thousands)
Amortized
Cost
 
Fair
Value
 
Amortized
Cost
 
Fair
Value
Federal agencies mortgage-backed securities:       
1 year or less$—
 $—
 $—
 $—
After 1 year through 5 years—
 —
 —
 —
After 5 years through 10 years68,668
 68,478
 41,261
 40,791
After 10 years8,067,957
 8,035,777
 7,157,083
 7,139,943
Total Federal agencies mortgage-backed securities8,136,625
 8,104,255
 7,198,344
 7,180,734
Other agencies:       
1 year or less—
 —
 —
 —
After 1 year through 5 years—
 —
 —
 —
After 5 years through 10 years375,580
 376,393
 398,341
 399,452
After 10 years170,628
 169,741
 204,083
 201,180
Total other agencies546,208
 546,134
 602,424
 600,632
Total Federal agencies8,682,833
 8,650,389
 7,800,768
 7,781,366
Municipal securities:       
1 year or less—
 —
 —
 —
After 1 year through 5 years—
 —
 —
 —
After 5 years through 10 years—
 —
 —
 —
After 10 years5,566
 5,416
 6,171
 5,902
Total municipal securities5,566
 5,416
 6,171
 5,902
Total held-to-maturity securities$8,688,399
 $8,655,805
 $7,806,939
 $7,787,268

The following table provides amortized cost, gross unrealized gains and losses, and fair value by investment category at September 30, 2017 and December 31, 2016.
   Unrealized  
(dollar amounts in thousands)
Amortized
Cost
 
Gross
Gains
 
Gross
Losses
 Fair Value
September 30, 2017       
Federal agencies:       
Mortgage-backed securities$8,136,625
 $14,868
 $(47,238) $8,104,255
Other agencies546,208
 1,697
 (1,771) 546,134
Total Federal agencies8,682,833
 16,565
 (49,009) 8,650,389
Municipal securities5,566
 —
 (150) 5,416
Total held-to-maturity securities$8,688,399
 $16,565
 $(49,159) $8,655,805
   Unrealized  
(dollar amounts in thousands)
Amortized
Cost
 
Gross
Gains
 
Gross
Losses
 Fair Value
December 31, 2016       
Federal agencies:       
Mortgage-backed securities$7,198,344
 $20,883
 $(38,493) $7,180,734
Other agencies602,424
 1,690
 (3,482) 600,632
Total Federal agencies7,800,768
 22,573
 (41,975) 7,781,366
Municipal securities6,171
 —
 (269) 5,902
Total held-to-maturity securities$7,806,939
 $22,573
 $(42,244) $7,787,268

The following tables provide detail on held-to-maturity securities with unrealized gross losses aggregated by investment category and the length of time the individual securities have been in a continuous loss position, at September 30, 2017 and December 31, 2016.
 Less than 12 Months Over 12 Months Total
(dollar amounts in thousands)Fair
Value		 Unrealized
Losses		 Fair
Value		 Unrealized
Losses		 Fair
Value		 Unrealized
Losses
September 30, 2017           
Federal agencies:           
Mortgage-backed securities$5,729,896
 $(38,204) $301,637
 $(9,034) $6,031,533
 $(47,238)
Other agencies248,109
 (1,771) —
 —
 248,109
 (1,771)
Total Federal agencies5,978,005
 (39,975) 301,637
 (9,034) 6,279,642
 (49,009)
Municipal securities—
 —
 5,416
 (150) 5,416
 (150)
Total temporarily impaired securities$5,978,005
 $(39,975) $307,053
 $(9,184) $6,285,058
 $(49,159)
 Less than 12 Months Over 12 Months Total
(dollar amounts in thousands)
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
December 31, 2016           
Federal agencies:           
Mortgage-backed securities$2,855,360
 $(31,470) $186,226
 $(7,023) $3,041,586
 $(38,493)
Other agencies413,207
 (3,482) —
 —
 413,207
 (3,482)
Total Federal agencies3,268,567
 (34,952) 186,226
 (7,023) 3,454,793
 (41,975)
Municipal securities5,902
 (269) —
 —
 5,902
 (269)
Total temporarily impaired securities$3,274,469
 $(35,221) $186,226
 $(7,023) $3,460,695
 $(42,244)

Security Impairment
Huntington evaluates the held-to-maturity securities portfolio on a quarterly basis for impairment. Impairment exists when the present value of the expected cash flows is not sufficient to recover the entire amortized cost basis at the balance sheet date. Under these circumstances, any impairment would be recognized in earnings.basis. As of September 30, 2017, Management2019, the Company has evaluated available-for-sale and held-to-maturity securities with gross unrealized losses for impairment and concluded noless than $1 million and 0 OTTI was required for the three-month periods ended September 30, 2019 and 2018, respectively, and less than $1 million and 0 OTTI was required for the nine-month periods ended September 30, 2019 and 2018, respectively.
Other securities that are carried at cost are reviewed for impairment on a quarterly basis, with valuation adjustments recognized in other noninterest income. As of September 30, 2019, the Company concluded 0 impairment is required.

6. 5. MORTGAGE LOAN SALES AND SECURITIZATIONSSERVICING RIGHTS
Residential Mortgage LoansPortfolio
The following table summarizes activity relating to residential mortgage loans sold with servicing retained for the three-month and nine-month periods ended September 30, 20172019 and 2016.2018:
Three Months Ended
September 30,		 Nine Months Ended
September 30,
Three Months Ended
September 30,		 Nine Months Ended
September 30,
(dollar amounts in thousands)2017 2016 2017 2016
(dollar amounts in millions) 2019 2018 2019 2018
Residential mortgage loans sold with servicing retained$1,178,955
 $1,204,547
 $2,824,707
 $2,552,602
 $1,238
 $1,047
 $3,025
 $2,787
Pretax gains resulting from above loan sales (1)26,880
 32,073
 66,014
 64,804
 26
 24
 61
 64
(1)Recorded in mortgage banking income.

A mortgage servicing right (MSR) is established only when the servicing is contractually separated from the underlying mortgage loans by sale or securitization of the loans with servicing rights retained. At initial recognition, the MSR asset is established at its fair value using assumptions consistent with assumptions used to estimate the fair value of existing MSRs. Subsequent to the initial recognition, MSRs may be measured using either the fair value method or the amortization method. The election of the fair value method or amortization method is made at the time each servicing class is established. Subsequently, servicing rights are accounted for based on the methodology chosen for each respective servicing class. Any

increase or decrease in the fair value of MSRs carried under the fair value method, as well as amortization or impairment of MSRs recorded using the amortization method, during the period is recorded as an increase or decrease in mortgage banking income, which is reflected in noninterest income in the Unaudited Condensed Consolidated Statements of Income.
The following tables summarizetable summarizes the changes in MSRs recorded using either the fair value method or the amortization method for the three-month and nine-month periods ended September 30, 20172019 and 2016.2018:
  Three Months Ended
September 30,		 Nine Months Ended
September 30,
(dollar amounts in millions) 2019 2018 2019 2018
Carrying value, beginning of period $184
 $204
 $211
 $191
New servicing assets created 12
 12
 31
 32
Impairment (charge) recovery (11) —
 (38) 7
Amortization (13) (8) (32) (22)
Carrying value, end of period $172
 $208
 $172
 $208
Fair value, end of period $172
 $222
 $172
 $222
Weighted-average life (years) 4.9
 7.1
 4.9
 7.1
Fair Value Method:Three Months Ended
September 30,		 Nine Months Ended
September 30,
(dollar amounts in thousands)2017 2016 2017 2016
Fair value, beginning of period$12,528
 $13,105
 $13,747
 $17,585
Change in fair value during the period due to:       
Time decay (1)(202) (217) (649) (734)
Payoffs (2)(295) (423) (876) (1,392)
Changes in valuation inputs or assumptions (3)(278) (37) (469) (3,031)
Fair value, end of period:$11,753
 $12,428
 $11,753
 $12,428
Weighted-average life (years)5.5
 5.1
 5.5
 5.1

(1)Represents decrease in value due to passage of time, including the impact from both regularly scheduled loan principal payments and partial loan paydowns.
(2)Represents decrease in value associated with loans that paid off during the period.
(3)Represents change in value resulting primarily from market-driven changes in interest rates and prepayment speeds.
Amortization Method:Three Months Ended
September 30,		 Nine Months Ended
September 30,
(dollar amounts in thousands)2017 2016 2017 2016
Carrying value, beginning of period$176,491
 $121,292
 $172,466
 $143,133
New servicing assets created12,841
 12,434
 30,694
 25,820
Servicing assets acquired—
 15,317
 —
 15,317
Impairment (charge) / recovery688
 2,543
 (318) (21,093)
Amortization and other(6,995) (7,194) (19,817) (18,785)
Carrying value, end of period$183,025
 $144,392
 $183,025
 $144,392
Fair value, end of period$183,583
 $144,623
 $183,583
 $144,623
Weighted-average life (years)7.0
 6.1
 7.0
 6.1


MSRs do not trade in an active, open market with readily-observablereadily observable prices. While sales of MSRs occur, the precise terms and conditions are typically not readily available. Therefore, the fair value of MSRs is estimated using a discounted future cash flow model. The model considers portfolio characteristics, contractually-specified servicing fees and assumptions related to prepayments, delinquency rates, late charges, other ancillary revenues, costs to service, and other economic factors. Changes in the assumptions used may have a significant impact on the valuation of MSRs.
MSR values are highly sensitive to movementsmovement in interest rates as expected future net servicing income depends on the projected outstanding principal balances of the underlying loans, which can be greatly impacted by the level of prepayments. Huntington hedges the value of the MSRs against changes in value attributable to changes in interest rates using a combination of derivative instruments and trading securities.

For MSRs under the fair value method, a summary of key assumptions and the sensitivity of the MSR value at September 30, 2017 and December 31, 2016, to changes in these assumptions is shown in the table below.
 September 30, 2017 December 31, 2016
   Decline in fair value due to   Decline in fair value due to
(dollar amounts in thousands)Actual 
10%
adverse
change
 
20%
adverse
change
 Actual 
10%
adverse
change
 
20%
adverse
change
Constant prepayment rate (annualized)
12.10% $(472) $(910) 10.90% $(501) $(970)
Spread over forward interest rate swap rates813 bps (436) (823) 536 bps (454) (879)

For MSRs under the amortization method, a summary of key assumptions and the sensitivity of the MSR value at September 30, 2017 and December 31, 2016, to changes in these assumptions is shown inat September 30, 2019, and December 31, 2018 follows:
 September 30, 2019 December 31, 2018
    Decline in fair value due to    Decline in fair value due to
(dollar amounts in millions)Actual 10%
adverse
change		 20%
adverse
change		 Actual 10%
adverse
change		 20%
adverse
change
Constant prepayment rate (annualized)
15.60%  $(8) $(15) 9.40%  $(6) $(12)
Spread over forward interest rate swap rates889
bps (5) (9) 934
bps (7) (13)

Additionally, at September 30, 2019 and 2018, Huntington held MSRs recorded using the table below.
 September 30, 2017 December 31, 2016
   Decline in fair value due to   Decline in fair value due to
(dollar amounts in thousands)Actual 10%
adverse
change		 20%
adverse
change		 Actual 10%
adverse
change		 20%
adverse
change
Constant prepayment rate (annualized)
8.40% $(5,172) $(10,038) 7.80% $(4,510) $(8,763)
Spread over forward interest rate swap rates1,041 bps (6,866) (12,934) 1,173 bps (5,259) (10,195)

fair value method of $8 million and $11 million, respectively.
Total servicing, late fees and other ancillary fees included in mortgage banking income amounted to $14was $16 million and $13$15 million for the three-month periods ended September 30, 20172019 and 2016.2018, respectively. For the nine-month periods ended September 30, 20172019 and 2016,2018, total net servicing, late fees and other ancillary fees included in mortgage banking income were $42was $47 million and $36$44 million. The unpaid principal balance of residential mortgage loans serviced for third parties was $19.3$21.7 billion and $18.9$21.0 billion at September 30, 20172019 and December 31, 2016,2018, respectively.
Automobile Loans
6. OPERATING LEASES
At September 30, 2019, Huntington was obligated under noncancelable leases for branch and office space. These leases are all classified as operating primarily due to the amount of time such spaces are occupied relative to the underlying assets useful lives. Many of these leases contain renewal options, most of which are not included in measurement of the right-of-use asset as they are not considered reasonably certain of exercise (i.e., Huntington does not currently have a significant economic incentive to exercise these options). Some leases contain escalation clauses calling for rentals to be adjusted for increased real estate taxes and other operating expenses or proportionately adjusted for increases in the consumer or other price indices.

Occasionally, Huntington will sublease the land and buildings for which it has obtained the right to use; substantially all of those sublease arrangements are classified as operating, with sublease income recognized on a straight-line basis over the contractual term of the arrangement. Huntington has retained servicing responsibilities on sold automobile loanselected not to include non-lease components in the measurement of right-of-use assets, and receives annual servicing feesas such allocates the costs attributable to such components, where those costs are not separately identifiable, via per-square-foot costing analysis developed by the entity for owned and other ancillary fees onleased spaces. Huntington uses a portfolio approach to develop discount rates as its lease portfolio is comprised of substantially all branch space and office space used in the outstanding loan balances. Automobile loan servicing rights are accounted for usingentity’s operations. That rate, an input used in the amortization method. A servicing asset is established at fair value at the timemeasurement of the sale. The servicing asset is then amortized against servicing income. Impairment, if any, is recognized when carrying value exceeds the fair valueentity’s right-of-use assets, leverages an incremental borrowing rate of appropriate tenor and collateralization.
Net lease assets and liabilities at September 30, 2019 are as determined by calculating the present value of expected net future cash flows. The primary risk characteristic for measuring servicing assets is payoff rates of the underlying loan pools. Valuation calculations rely on the predicted payoff assumption and, if actual payoff is quicker than expected, then future value would be impairedfollows:
(dollar amounts in millions) Classification September 30, 2019
Assets    
Operating lease assets Other assets $200
Liabilities    
Lease liabilities Other liabilities $225

Changes in the carrying value of automobile loan servicing rightsNet lease cost for the three-month and nine-month periods ended September 30, 2017 and 2016, and the fair value at the end2019 is as follows:
(dollar amounts in millions) Classification Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019
Operating lease cost Net occupancy $11
 $34
Short term lease cost Net occupancy —
 1
Sublease income Net occupancy (1) (2)
Net lease cost   $10
 $33

Maturity of each period were as shown in the table below.
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
(dollar amounts in thousands)2017 2016 2017 2016
Carrying value, beginning of period$12,524
 $5,458
 $18,285
 $8,771
Amortization and other(2,338) (1,087) (8,099) (4,400)
Carrying value, end of period$10,186
 $4,371
 $10,186
 $4,371
Fair value, end of period$10,398
 $4,366
 $10,398
 $4,366
Weighted-average contractual life (years)3.7
 3.2
 3.7
 3.2

A summary of key assumptions and the sensitivity of the automobile loan servicing rights value to changes in these assumptionslease liabilities at September 30, 20172019 are as follows:
(dollar amounts in millions) Total
Remainder of 2019 $10
2020 50
2021 39
2022 34
2023 29
Thereafter 105
Total lease payments $267
Less: Interest (42)
Total lease liabilities $225

Lease term and December 31, 2016 is shown in the table below.
 September 30, 2017 December 31, 2016
   Decline in fair value due to   Decline in fair value due to
(dollar amounts in thousands)Actual 10%
adverse
change		 20%
adverse
change		 Actual 10%
adverse
change		 20%
adverse
change
Constant prepayment rate (annualized)
23.66% $(586) $(1,112) 19.98% $(1,047) $(2,026)
Spread over forward interest rate swap rates500 bps (14) (27) 500 bps (26) (53)

Servicing income amounted to $4 million and $2 million for the three-month periods endingdiscount rate as of September 30, 2017, and 2016. For the nine-month periods ended September 30, 2017 and 2016, total servicing income was $14 million and $6 million, respectively. The unpaid principal balance of automobile loans serviced for third parties was $1.2 billion and $1.7 billion2019 are as follows:
September 30, 2019
Weighted-average remaining lease term (years)
Operating leases7.41
Weighted-average discount rate
Operating leases4.67%

Cash flow supplemental information at September 30, 2017 and December 31, 2016, respectively.
Small Business Administration (SBA) Portfolio
The following table summarizes activity relating to SBA loans sold with servicing retained for the three-month and nine-month periods ended September 30, 2017 and 2016.
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
(dollar amounts in thousands)2017 2016 2017 2016
SBA loans sold with servicing retained$107,259
 $62,803
 $272,635
 $167,321
Pretax gains resulting from above loan sales (1)8,508
 4,679
 21,435
 12,862

(1)Recorded in gain on sale of loans.

Huntington has retained servicing responsibilities on sold SBA loans and receives annual servicing fees on the outstanding loan balances. SBA loan servicing rights2019 are accounted for using the amortization method. A servicing asset is established at fair value at the time of the sale using a discounted future cash flow model. The servicing asset is then amortized against servicing income. Impairment, if any, is recognized when carrying value exceeds the fair value as determined by calculating the present value of expected net future cash flows.follows:
(dollar amounts in millions) Nine Months Ended September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities  
Operating cash flows from operating leases $(41)
   
Right-of-use assets obtained in exchange for lease obligations  
Operating leases 19
The following tables summarize the changes in the carrying value of the servicing asset for the three-month and nine-month periods ended September 30, 2017 and 2016. The fair value at the end of each period is shown in the table below.
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
(dollar amounts in thousands)2017 2016 2017 2016
Carrying value, beginning of period$23,113
 $19,612
 $21,080
 $19,747
New servicing assets created3,591
 1,879
 9,187
 5,259
Amortization and other(1,923) (1,745) (5,486) (5,260)
Carrying value, end of period$24,781
 $19,746
 $24,781
 $19,746
Fair value, end of period$28,822
 $24,065
 $28,822
 $24,065
Weighted-average life (years)3.3
 3.3
 3.3
 3.3



A summary of key assumptions and the sensitivity of the SBA loan servicing rights value to changes in these assumptions at September 30, 2017 and December 31, 2016 is shown in the table below.
 September 30, 2017 December 31, 2016
   Decline in fair value due to   Decline in fair value due to
(dollar amounts in thousands)Actual 
10%
adverse
change
 
20%
adverse
change
 Actual 
10%
adverse
change
 
20%
adverse
change
Constant prepayment rate (annualized)
7.50% $(385) $(764) 7.40% $(324) $(644)
Discount rate15.00
 (774) (1,516) 15.00
 (1,270) (1,870)
Servicing income amounted to $3 million and $2 million for the three-month periods ending September 30, 2017, and 2016, respectively. For the nine-month periods ended September 30, 2017 and 2016, total servicing income was $8 million and $7 million, respectively. The unpaid principal balance of SBA loans serviced for third parties was $1.3 billion and $1.1 billion at September 30, 2017 and December 31, 2016, respectively.
7. LONG-TERM DEBT
In March 2017,January 2019, the Bank issued $0.7 billion$300 million of senior notes at 99.994%100% of face value. The senior notes mature on March 10, 2020February 5, 2021 and havewill bear interest at a fixed coupon rate of 2.375%per annum, reset quarterly, equal to the three-month LIBOR for U.S. dollar deposits plus 0.55%. The senior notes may be redeemed one month prior to the maturity date at 100% of principal plus accrued and unpaid interest. Also, in March 2017,
In February 2019, the Bank issued $0.3 billion$500 million of senior notes at 100%99.909% of face value. The senior notes mature on March 10, 2020April 1, 2022 and have a variablefixed coupon rate of three3.125%. The senior notes may be redeemed one month LIBOR + 51 basis points.prior to the maturity date at 100% of principal plus accrued and unpaid interest.
In August 2017, the Bank2019, Huntington issued $0.7 billion$800 million of senior notes at 99.762%99.781% of face value. The senior notes mature on August 7, 20226, 2024 and have a fixed coupon rate of 2.50%2.625%. The senior notes may be redeemed one month prior to the maturity date at 100% of principal plus accrued and unpaid interest.
8. OTHER COMPREHENSIVE INCOME
The components of other comprehensive incomeHuntington's OCI for the three-month and nine-month periods ended September 30, 20172019 and 2016,2018, were as shown in the following table.follows:
 Three Months Ended
September 30, 2017
   Tax (Expense)  
(dollar amounts in thousands)Pretax Benefit After-tax
Noncredit-related impairment recoveries (losses) on debt securities not expected to be sold$410
 $(145) $265
Unrealized holding gains (losses) on available-for-sale debt securities arising during the period(42,429) 14,828
 (27,601)
Less: Reclassification adjustment for net losses (gains) included in net income8,715
 (3,082) 5,633
Net change in unrealized holding gains (losses) on available-for-sale debt securities(33,304) 11,601
 (21,703)
Unrealized gains (losses) on derivatives used in cash flow hedging relationships arising during the period1,885
 (660) 1,225
Less: Reclassification adjustment for net (gains) losses included in net income144
 (51) 93
Net change in unrealized gains (losses) on derivatives used in cash flow hedging relationships2,029
 (711) 1,318
Net change in pension and other post-retirement obligations1,198
 (419) 779
Total other comprehensive income (loss)$(30,077) $10,471
 $(19,606)
 Three Months Ended
September 30, 2019
 Tax (expense)
(dollar amounts in millions)Pretax Benefit After-tax
Unrealized gains (losses) on available-for-sale securities arising during the period$81
 $(18) $63
Less: Reclassification adjustment for realized net losses (gains) included in net income8
 (2) 6
Net change in unrealized holding gains (losses) on available-for-sale securities89
 (20) 69
Net change in fair value on cash flow hedges36
 (8) 28
Net change in pension and other post-retirement obligations1
 —
 1
Total other comprehensive income (loss)$126
 $(28) $98
 Three Months Ended
September 30, 2018
 Tax (expense)
(dollar amounts in millions)Pretax Benefit After-tax
Unrealized gains (losses) on available-for-sale securities arising during the period$(82) $18
 $(64)
Less: Reclassification adjustment for realized net losses (gains) included in net income3
 (1) 2
Net change in unrealized gains (losses) on available-for-sale securities(79) 17
 (62)
Net change in pension and other post-retirement obligations2
 (1) 1
Total other comprehensive income (loss)$(77) $16
 $(61)
 Nine Months Ended
September 30, 2019
 Tax (expense)
(dollar amounts in millions)Pretax Benefit After-tax
Unrealized holding gains (losses) on available-for-sale securities arising during the period$428
 $(95) $333
Less: Reclassification adjustment for realized net losses (gains) included in net income21
 (5) 16
Net change in unrealized holding gains (losses) on available-for-sale securities449
 (100) 349
Net change in fair value on cash flow hedges104
 (22) 82
Net change in pension and other post-retirement obligations3
 —
 3
Total other comprehensive income (loss)$556
 $(122) $434

 Nine Months Ended
September 30, 2018
 Tax (expense)
(dollar amounts in millions)Pretax Benefit After-tax
Unrealized holding gains (losses) on available-for-sale securities arising during the period$(359) $78
 $(281)
Less: Reclassification adjustment for realized net losses (gains) included in net income21
 (4) 17
Net change in unrealized holding gains (losses) on available-for-sale securities(338) 74
 (264)
Net change in pension and other post-retirement obligations4
 (1) 3
Total other comprehensive income (loss)$(334) $73
 $(261)

 Three Months Ended
September 30, 2016
 Tax (Expense)
(dollar amounts in thousands)Pretax Benefit After-tax
Noncredit-related impairment recoveries (losses) on debt securities not expected to be sold$2,002
 $(708) $1,294
Unrealized holding gains (losses) on available-for-sale debt securities arising during the period(54,109) 18,604
 (35,505)
Less: Reclassification adjustment for net losses (gains) included in net income726
 (257) 469
Net change in unrealized holding gains (losses) on available-for-sale debt securities(51,381) 17,639
 (33,742)
Unrealized gains (losses) on derivatives used in cash flow hedging relationships arising during the period(8,171) 2,860
 (5,311)
Less: Reclassification adjustment for net (gains) losses included in net income123
 (44) 79
Net change in unrealized gains (losses) on derivatives used in cash flow hedging relationships(8,048) 2,816
 (5,232)
Net change in pension and other post-retirement obligations1,293
 (452) 841
Total other comprehensive income (loss)$(58,136) $20,003
 $(38,133)

 Nine Months Ended
September 30, 2017
   Tax (expense)  
(dollar amounts in thousands)Pretax Benefit After-tax
Noncredit-related impairment recoveries (losses) on debt securities not expected to be sold$3,698
 $(1,307) $2,391
Unrealized holding gains (losses) on available-for-sale debt securities arising during the period19,853
 (6,779) 13,074
Less: Reclassification adjustment for net losses (gains) included in net income18,577
 (6,570) 12,007
Net change in unrealized holding gains (losses) on available-for-sale debt securities42,128
 (14,656) 27,472
Unrealized gains (losses) on derivatives used in cash flow hedging relationships arising during the period1,274
 (446) 828
Less: Reclassification adjustment for net (gains) losses included in net income1,131
 (396) 735
Net change in unrealized gains (losses) on derivatives used in cash flow hedging relationships2,405
 (842) 1,563
Net change in pension and other post-retirement obligations3,104
 (1,086) 2,018
Total other comprehensive income (loss)$47,637
 $(16,584) $31,053

 Nine Months Ended
September 30, 2016
 Tax (expense)
(dollar amounts in thousands)Pretax Benefit After-tax
Noncredit-related impairment recoveries (losses) on debt securities not expected to be sold$(600) $212
 $(388)
Unrealized holding gains (losses) on available-for-sale debt securities arising during the period76,637
 (28,315) 48,322
Less: Reclassification adjustment for net losses (gains) included in net income(2,032) 718
 (1,314)
Net change in unrealized holding gains (losses) on available-for-sale debt securities74,005
 (27,385) 46,620
Net change in unrealized holding gains (losses) on available-for-sale equity securities170
 (60) 110
Unrealized gains (losses) on derivatives used in cash flow hedging relationships arising during the period8,047
 (2,816) 5,231
Less: Reclassification adjustment for net (gains) losses included in net income(769) 269
 (500)
Net change in unrealized gains (losses) on derivatives used in cash flow hedging relationships7,278
 (2,547) 4,731
Net change in pension and other post-retirement obligations3,879
 (1,357) 2,522
Total other comprehensive income (loss)$85,332
 $(31,349) $53,983

The following table presents activityActivity in accumulated other comprehensive income (loss), net of tax,OCI for the nine-monththree and nine month periods ended September 30, 20172019 and 2016.2018, were as follows:
(dollar amounts in millions)
Unrealized gains (losses) on
debt securities (1)
 Change in fair value related to cash flow hedges 
Unrealized gains
(losses) for
pension and
other post-
retirement
obligations
 Total
Three Months Ended September 30, 2019       
Balance, beginning of period$(83) $54
 $(244) $(273)
Other comprehensive income before reclassifications63
 28
 —
 91
Amounts reclassified from accumulated OCI to earnings6
 —
 1
 7
Period change69
 28
 1
 98
Balance, end of period$(14) $82
 $(243) $(175)
        
Three Months Ended September 30, 2018       
Balance, beginning of period$(482) $—
 $(248) $(730)
Other comprehensive income before reclassifications(64) —
 —
 (64)
Amounts reclassified from accumulated OCI to earnings2
 —
 1
 3
Period change(62) —
 1
 (61)
Other1
     1
Balance, end of period$(543) $—
 $(247) $(790)

(dollar amounts in thousands)
Unrealized gains
and (losses) on
debt securities
(1)
 
Unrealized
gains and
(losses) on
equity
securities
 
Unrealized
gains and
(losses) on
cash flow
hedging
derivatives
 
Unrealized gains
(losses) for
pension and
other post-
retirement
obligations
 Total
December 31, 2015$8,361
 $176
 $(3,948) $(230,747) $(226,158)
(dollar amounts in millions)
Unrealized gains (losses) on
debt securities (1)
 Change in fair value related to cash flow hedges 
Unrealized gains
(losses) for
pension and
other post-
retirement
obligations
 Total
Nine Months Ended September 30, 2019       
Balance, beginning of period$(363) $—
 $(246) $(609)
Other comprehensive income before reclassifications47,934
 110
 5,231
 —
 53,275
333
 82
 —
 415
Amounts reclassified from accumulated OCI to earnings(1,314) —
 (500) 2,522
 708
16
 —
 3
 19
Period change46,620
 110
 4,731
 2,522
 53,983
349
 82
 3
 434
September 30, 2016$54,981
 $286
 $783
 $(228,225) $(172,175)
Balance, end of period$(14) $82
 $(243) $(175)
                
December 31, 2016$(192,764) $287
 $(2,634) $(205,905) $(401,016)
Nine Months Ended September 30, 2018       
Balance, beginning of period$(278) $—
 $(250) $(528)
Cumulative-effect adjustments (ASU 2016-01)(1)     (1)
Other comprehensive income before reclassifications15,465
 —
 828
 —
 16,293
(281) —
 —
 (281)
Amounts reclassified from accumulated OCI to earnings12,007
 —
 735
 2,018
 14,760
17
 —
 3
 20
Period change27,472
 —
 1,563
 2,018
 31,053
(264) —
 3
 (261)
September 30, 2017$(165,292) $287
 $(1,071) $(203,887) $(369,963)
Balance, end of period$(543) $—
 $(247) $(790)
(1)Amounts
AOCI amounts at September 30, 20172019, June 30, 2019 and December 31, 2016September 30, 2018 include $97$126 million, $131 millionand $82$141 million, respectively, of net unrealized gainslosses on securities transferred from the available-for-sale securities portfolio to the held-to-maturity securities portfolio. The net unrealized gainslosses will be recognized in earnings over the remaining life of the security using the effective interest method.



The following table presents the reclassification adjustments out of accumulated OCI included in net income and the impacted line items as listed on the Unaudited Condensed Consolidated Statements of Income for the three-month and nine-month periods ended September 30, 20172019 and 2016.2018:
Reclassifications out of accumulated OCIReclassifications out of accumulated OCI
Accumulated OCI componentsAmounts reclassified from accumulated OCI Location of net gain (loss) reclassified from accumulated OCI into earningsAmounts reclassified from accumulated OCI 
Location of net gain (loss) reclassified from
accumulated OCI into earnings
Three Months Ended Three Months Ended 
(dollar amounts in thousands)September 30, 2017 September 30, 2016 
(dollar amounts in millions)September 30, 2019 September 30, 2018 
Gains (losses) on debt securities:        
Amortization of unrealized gains (losses)$(1,498) $(726) Interest income - held-to-maturity securities - taxable$(4) $(3) Interest income - held-to-maturity securities - taxable
Realized gain (loss) on sale of securities(7,113) —
 Noninterest income - net gains (losses) on sale of securities(4) —
 Noninterest income - net gains (losses) on sale of securities
OTTI recorded(104) —
 Noninterest income - net gains (losses) on sale of securities
(8,715) (726) Total before tax
3,082
 257
 Tax (expense) benefit
$(5,633) $(469) Net of tax
Gains (losses) on cash flow hedging relationships:    
Interest rate contracts$(144) $(123) Interest income - loans and leases
Interest rate contracts—
 —
 Noninterest income - other income
(144) (123) Total before tax
51
 44
 Tax (expense) benefit
$(93) $(79) Net of tax
Total before tax(8) (3) 
Tax (expense) benefit2
 1
 
Net of tax$(6) $(2) 
Amortization of defined benefit pension and post-retirement items:    Amortization of defined benefit pension and post-retirement items: 
Actuarial gains (losses)$(1,690) $(1,785) Noninterest expense - personnel costs$(1) $(2) Noninterest income
Prior service credit492
 492
 Noninterest expense - personnel costs
(1,198) (1,293) Total before tax
419
 452
 Tax (expense) benefit
$(779) $(841) Net of tax
Net periodic benefit costs—
 —
 Noninterest income
Total before tax(1) (2) 
Tax (expense) benefit—
 1
 
Net of tax$(1) $(1) 
      
 Reclassifications out of accumulated OCI
Accumulated OCI componentsAmounts reclassified from accumulated OCI Location of net gain (loss) reclassified from accumulated OCI into earnings
 Nine Months Ended  
(dollar amounts in millions)September 30, 2019 September 30, 2018  
Gains (losses) on debt securities:     
Amortization of unrealized gains (losses)$(11) $(9) Interest income - held-to-maturity securities - taxable
Realized gain (loss) on sale of securities(10) (12) Noninterest income - net gains (losses) on sale of securities
Total before tax(21) (21)  
Tax (expense) benefit5
 4
  
Net of tax$(16) $(17)  
Amortization of defined benefit pension and post-retirement items:
Actuarial gains (losses)$(4) $(6) Noninterest income
Net periodic benefit costs1
 2
 Noninterest income
Total before tax(3) (4)  
Tax (expense) benefit—
 1
  
Net of tax$(3) $(3)  


      
      
 Reclassifications out of accumulated OCI
Accumulated OCI componentsAmounts reclassified from accumulated OCI Location of net gain (loss) reclassified from accumulated OCI into earnings
 Nine Months Ended  
(dollar amounts in thousands)September 30, 2017 September 30, 2016  
Gains (losses) on debt securities:     
Amortization of unrealized gains (losses)$(7,388) $478
 Interest income - held-to-maturity securities - taxable
Realized gain (loss) on sale of securities(7,502) 1,630
 Noninterest income - net gains (losses) on sale of securities
OTTI recorded(3,687) (76) Noninterest income - net gains (losses) on sale of securities
 (18,577) 2,032
 Total before tax
 6,570
 (718) Tax (expense) benefit
 $(12,007) $1,314
 Net of tax
Gains (losses) on cash flow hedging relationships:     
Interest rate contracts$(1,131) $770
 Interest income - loans and leases
Interest rate contracts—
 (1) Noninterest income - other income
 (1,131) 769
 Total before tax
 396
 (269) Tax (expense) benefit
 $(735) $500
 Net of tax
Amortization of defined benefit pension and post-retirement items:     
Actuarial gains (losses)$(4,580) $(5,355) Noninterest expense - personnel costs
Prior service credit1,476
 1,476
 Noninterest expense - personnel costs
 (3,104) (3,879) Total before tax
 1,086
 1,357
 Tax (expense) benefit
 $(2,018) $(2,522) Net of tax

9. EARNINGS PER SHARE
Basic earnings per share is the amount of earnings (adjusted for dividends declared on preferred stock) available to each share of common stock outstanding during the reporting period. Diluted earnings per share is the amount of earnings available to each share of common stock outstanding during the reporting period adjusted to include the effect of potentially dilutive common shares. Potentially dilutive common shares include incremental shares issued for stock options, restricted stock units and awards, and distributions from deferred compensation plans, and the conversion of the Company’s convertible preferred stock.plans. Potentially dilutive common shares are excluded from the computation of diluted earnings per share duringin periods in which the effect would be antidilutive.
For the nine months ended September 30, 2018, total diluted earnings per share, net income available toaverage common shares can be affectedissued and outstanding was impacted by using the conversion of the Company’s convertible preferred stock. Where the effect of this conversion would be dilutive, net income available to common shareholders is adjusted by the associated preferred dividends and deemed dividend.

if-converted method. The calculation of basic and diluted earnings per share for the three and nine-month periods ended September 30, 20172019 and 2016,2018 was as shown in the table.follows:
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
(dollar amounts in millions, except per share data, share count in thousands)2019 2018 2019 2018
Basic earnings per common share:       
Net income$372
 $378
 $1,094
 $1,059
Preferred stock dividends(18) (18) (55) (51)
Net income available to common shareholders$354
 $360
 $1,039
 $1,008
Average common shares issued and outstanding1,034,940
 1,084,536
 1,042,246
 1,090,570
Basic earnings per common share$0.34
 $0.33
 $1.00
 $0.92
Diluted earnings per common share:       
Dilutive potential common shares:       
Stock options and restricted stock units and awards11,930
 15,655
 12,681
 17,105
Shares held in deferred compensation plans4,403
 3,549
 4,137
 3,416
Dilutive impact of Preferred Stock—
 —
 —
 5,887
Dilutive potential common shares16,333
 19,204
 16,818
 26,408
Total diluted average common shares issued and outstanding1,051,273
 1,103,740
 1,059,064
 1,116,978
Diluted earnings per common share$0.34
 $0.33
 $0.98
 $0.90
Anti-dilutive awards (1)6,253
 1,616
 4,900
 2,035

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

 Three Months Ended
September 30,		 Nine Months Ended
September 30,
(dollar amounts in thousands, except per share amounts)2017 2016 2017 2016
Basic earnings per common share:       
Net income$274,568
 $127,004
 $754,403
 $472,858
Preferred stock dividends(18,903) (18,537) (56,670) (46,409)
Net income available to common shareholders$255,665
 $108,467
 $697,733
 $426,449
Average common shares issued and outstanding1,086,038
 938,578
 1,087,115
 844,167
Basic earnings per common share$0.24
 $0.12
 $0.64
 $0.51
Diluted earnings per common share:       
Net income available to common shareholders$255,665
 $108,467
 $697,733
 $426,449
Effect of assumed preferred stock conversion—
 —
 —
 —
Net income applicable to diluted earnings per share$255,665
 $108,467
 $697,733
 $426,449
Average common shares issued and outstanding1,086,038
 938,578
 1,087,115
 844,167
Dilutive potential common shares:       
Stock options and restricted stock units and awards17,079
 10,714
 17,515
 10,295
Shares held in deferred compensation plans3,228
 2,654
 3,096
 2,337
Other146
 135
 152
 135
Dilutive potential common shares20,453
 13,503
 20,763
 12,767
Total diluted average common shares issued and outstanding1,106,491
 952,081
 1,107,878
 856,934
Diluted earnings per common share$0.23
 $0.11
 $0.63
 $0.50


For the three-month periods ended September 30, 201710. NONINTEREST INCOME
Huntington earns a variety of revenue including interest and 2016, approximately 1.5 millionfees from customers as well as revenues from non-customers. Certain sources of revenue are recognized within interest or fee income and 3.5 million, respectively, of options to purchase shares of common stock were not included in the computation of diluted earnings per share because the effect would be antidilutive. For the nine-month periods ended September 30, 2017 and 2016, approximately 0.9 million and 3.3 million, respectively, were not included.
10. BENEFIT PLANS
Huntington sponsors a non-contributory defined benefit pension plan covering substantially all employees hired or rehired prior to January 1, 2010. The plan, which was modified in 2013 and no longer accrues service benefits to participants, provides benefits based upon length of service and compensation levels. The funding policy of Huntington is to contribute an annual amount that is at least equal to the minimum funding requirements but not more than the amount deductible under the Internal Revenue Code. There is no required minimum contribution for 2017.
In addition, Huntington has a defined benefit post-retirement plan that provides certain healthcare and life insurance benefits to retired employees who have attained the age of 55 and have at least 10 years of vesting service under this plan.
As partare outside of the FirstMerit acquisition, Huntington agreed to assumescope of ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). Other sources of revenue fall within the scope of ASC 606 and honor all FirstMerit benefit plans. The FirstMerit Pension Plan was frozen for nonvested employees and closed to new entrants after December 31, 2006. Effective December 31, 2012,are generally recognized within noninterest income. These revenues are included within various sections of the FirstMerit Pension Plan was frozen for vested employees. Additionally, FirstMerit had a post-retirement benefit plan which provided medical and life insurance for retired employees.
For additional information on benefit plans, see the Benefit Plan footnote in our 2016 Form 10-K.

Unaudited Condensed Consolidated Financial Statements. The following table shows Huntington’s total noninterest income segregated between contracts with customers within the componentsscope of net periodic (benefit) cost for all plans.ASC 606 and those within the scope of other GAAP Topics.
(dollar amounts in millions) Three Months Ended September 30, Nine Months Ended September 30,
  2019 2018 2019 2018
Noninterest income        
Noninterest income from contracts with customers $240
 $222
 $697
 $654
Noninterest income within the scope of other GAAP topics 149
 120
 385
 338
Total noninterest income $389
 $342
 $1,082
 $992

 Pension Benefits Post-Retirement Benefits
 Three Months Ended September 30, Three Months Ended September 30,
(dollar amounts in thousands)2017 2016 2017 2016
Service cost$640
 $1,425
 $22
 $16
Interest cost7,478
 7,978
 98
 79
Expected return on plan assets(13,803) (12,086) —
 —
Amortization of prior service cost—
 —
 (492) (492)
Amortization of (gain) loss1,747
 1,865
 (55) (72)
Settlements5,049
 3,400
 —
 —
Net periodic (benefit) cost$1,111
 $2,582
 $(427) $(469)
The following table illustrates the disaggregation by operating segment and major revenue stream and reconciles disaggregated revenue to segment revenue presented in Note 15 "Segment Reporting".
 Three Months Ended September 30, 2019
(dollar amounts in millions)Consumer & Business Banking Commercial Banking Vehicle Finance RBHPCG Treasury / Other Huntington Consolidated
Major Revenue Streams     
Service charges on deposit accounts$79
 $16
 $2
 $1
 $—
 $98
Card and payment processing income56
 4
 —
 —
 —
 60
Trust and investment management services9
 1
 —
 34
 —
 44
Insurance income8
 2
 —
 10
 —
 20
Other income8
 7
 2
 1
 —
 18
Net revenue from contracts with customers$160
 $30
 $4
 $46
 $—
 $240
Noninterest income within the scope of other GAAP topics63
 71
 —
 1
 14
 149
Total noninterest income$223
 $101
 $4
 $47
 $14
 $389
            
 Three Months Ended September 30, 2018
(dollar amounts in millions)Consumer & Business Banking Commercial Banking Vehicle Finance RBHPCG Treasury / Other Huntington Consolidated
Major Revenue Streams     
Service charges on deposit accounts$75
 $16
 $1
 $1
 $—
 $93
Card and payment processing income50
 3
 —
 —
 —
 53
Trust and investment management services7
 1
 —
 34
 —
 42
Insurance income8
 1
 —
 10
 —
 19
Other income10
 2
 1
 1
 1
 15
Net revenue from contracts with customers$150
 $23
 $2
 $46
 $1
 $222
Noninterest income within the scope of other GAAP topics44
 58
 1
 —
 17
 120
Total noninterest income$194
 $81
 $3
 $46
 $18
 $342
 Pension Benefits Post-Retirement Benefits
 Nine Months Ended September 30, Nine Months Ended September 30,
(dollar amounts in thousands)2017 2016 2017 2016
Service cost$1,920
 $3,475
 $65
 $16
Interest cost22,433
 21,474
 296
 188
Expected return on plan assets(41,409) (32,533) —
 —
Amortization of prior service cost—
 —
 (1,476) (1,476)
Amortization of (gain) loss5,241
 5,594
 (164) (216)
Settlements10,049
 10,200
 —
 —
Net periodic (benefit) cost$(1,766) $8,210
 $(1,279) $(1,488)


 Nine Months Ended September 30, 2019
(dollar amounts in millions)Consumer & Business Banking Commercial Banking Vehicle Finance RBHPCG Treasury / Other Huntington Consolidated
Major Revenue Streams     
Service charges on deposit accounts$221
 $48
 $5
 $3
 $—
 $277
Card and payment processing income162
 11
 —
 —
 —
 173
Trust and investment management services25
 2
 —
 103
 1
 131
Insurance income25
 5
 —
 33
 1
 64
Other income24
 17
 4
 5
 2
 52
Net revenue from contracts with customers$457
 $83
 $9
 $144
 $4
 $697
Noninterest income within the scope of other GAAP topics139
 183
 —
 3
 60
 385
Total noninterest income$596
 $266
 $9
 $147
 $64
 $1,082
            
 Nine Months Ended September 30, 2018
(dollar amounts in millions)Consumer & Business Banking Commercial Banking Vehicle Finance RBHPCG Treasury / Other Huntington Consolidated
Major Revenue Streams     
Service charges on deposit accounts$215
 $48
 $4
 $3
 $—
 $270
Card and payment processing income146
 8
 —
 —
 —
 154
Trust and investment management services19
 3
 —
 106
 —
 128
Insurance income26
 3
 —
 31
 1
 61
Other income30
 3
 2
 4
 2
 41
Net revenue from contracts with customers$436
 $65
 $6
 $144
 $3
 $654
Noninterest income within the scope of other GAAP topics121
 169
 3
 2
 43
 338
Total noninterest income$557
 $234
 $9
 $146
 $46
 $992

Huntington hasgenerally provides services for customers in which it acts as principal. Payment terms and conditions vary amongst services and customers, and thus impact the timing and amount of revenue recognition. Some fees may be paid before any service is rendered and accordingly, such fees are deferred until the obligations pertaining to those fees are satisfied. Most Huntington contracts with customers are cancelable by either party without penalty or they are short-term in nature, with a defined contribution plan that is available to eligible employees. Huntington matches participant contributions, up tocontract duration of less than one year. Accordingly, most revenue deferred for the first 4% of base pay that is contributed to the defined contribution plan. For 2016, a discretionary profit-sharing contribution equal to 1% of eligible participants’ 2016 base pay was awarded during the 2017 first quarter. Huntington's expense related to the defined contribution plans during the third quarter 2017 and 2016 was $5 million and $9 million, respectively. For the nine-month periodsreporting period ended September 30, 2017 and 2016, expense related2019 is expected to the defined contribution plans was $26 million and $26 million, respectively.be earned within one year.


11.FAIR VALUES OF ASSETS AND LIABILITIES
See Note 1817 “Fair Value of Assets and Liabilities” to the consolidated financial statementsConsolidated Financial Statements of the Annual Report on Form 10-K for the year ended December 31, 20162018 for a description of additionalthe valuation methodologies used for assets and liabilitiesinstruments measured at fair value on a recurring and non-recurring basis.value. Assets and liabilities measured at fair value rarely transfer between Level 1 and Level 2 measurements. There were no such transfers during the three-month and nine-month periods ended September 30, 20172019 and 2016.

2018.
Assets and Liabilities measured at fair value on a recurring basis
Assets and liabilities measured at fair value on a recurring basis at September 30, 20172019 and December 31, 20162018 are summarized in the table below.below:
Fair Value Measurements at Reporting Date Using Netting Adjustments (1) September 30, 2017Fair Value Measurements at Reporting Date Using Netting Adjustments (1) September 30, 2019
(dollar amounts in thousands)Level 1 Level 2 Level 3 
(dollar amounts in millions)Level 1 Level 2 Level 3 Netting Adjustments (1) September 30, 2019
Assets               
Loans held for sale$—
 $584,829
 $—
 $—
 $584,829
Loans held for investment—
 58,708
 40,483
 —
 99,191
Trading account securities:                  
U.S. Treasury securities25
 —
 —
 —
 25
Municipal securities—
 1,481
 —
 —
 1,481
$—
 $89
 $—
 $—
 $89
Other securities86,982
 —
 —
 —
 86,982
29
 —
 —
 —
 29
87,007
 1,481
 —
 —
 88,488
29
 89
 —
 —
 118
Available-for-sale and other securities:         
Available-for-sale securities:         
U.S. Treasury securities11,260
 —
 —
 —
 11,260
10
 —
 —
 —
 10
Federal agencies: Mortgage-backed—
 10,639,750
 —
 —
 10,639,750
Federal agencies: Other agencies—
 96,451
 —
 —
 96,451
Residential CMOs—
 6,724
 —
 —
 6,724
Residential MBS—
 2,393
 —
 —
 2,393
Commercial MBS—
 1,239
 —
 —
 1,239
Other agencies—
 117
 —
 —
 117
Municipal securities—
 468,082
 2,958,027
 —
 3,426,109
—
 58
 3,094
 —
 3,152
Asset-backed securities—
 531,064
 24,127
 —
 555,191
—
 540
 55
 —
 595
Corporate debt—
 125,629
 —
 —
 125,629
—
 52
 —
 —
 52
Other securities/sovereign debt—
 4
 —
 —
 4
10
 11,127
 3,149
 —
 14,286
Other securities11,717
 3,935
 —
 —
 15,652
54
 —
 —
 —
 54
22,977
 11,864,911
 2,982,154
 —
 14,870,042
Loans held for sale—
 963
 —
 —
 963
Loans held for investment—
 53
 27
 —
 80
MSRs—
 —
 11,753
 —
 11,753
—
 —
 8
 —
 8
Derivative assets—
 312,401
 8,425
 (154,562) 166,264
—
 1,112
 11
 (546) 577
Liabilities                  
Derivative liabilities—
 288,191
 5,459
 (234,526) 59,124
—
 628
 3
 (504) 127
Short-term borrowings4
 —
 —
 —
 4

 Fair Value Measurements at Reporting Date Using Netting Adjustments (1) December 31, 2018
(dollar amounts in millions)Level 1 Level 2 Level 3  
Assets         
Trading account securities:         
Municipal securities$1
 $27
 $—
 $—
 $28
Other securities77
 —
 —
 —
 77
 78
 27
 —
 —
 105
Available-for-sale securities:         
U.S. Treasury securities5
 —
 —
 —
 5
Residential CMOs—
 6,999
 —
 —
 6,999
Residential MBS—
 1,255
 —
 —
 1,255
Commercial MBS—
 1,583
 —
 —
 1,583
Other agencies—
 126
 —
 —
 126
Municipal securities—
 275
 3,165
 —
 3,440
Asset-backed securities—
 315
 —
 —
 315
Corporate debt—
 53
 —
 —
 53
Other securities/sovereign debt—
 4
 —
 —
 4
 5
 10,610
 3,165
 —
 13,780
Other securities22
 —
 —
 —
 22
Loans held for sale—
 613
 —
 —
 613
Loans held for investment—
 49
 30
 —
 79
MSRs—
 —
 10
 —
 10
Derivative assets21
 474
 5
 (291) 209
Liabilities         
Derivative liabilities11
 390
 3
 (217) 187
 Fair Value Measurements at Reporting Date Using Netting Adjustments (1) December 31, 2016
(dollar amounts in thousands)Level 1 Level 2 Level 3  
Assets         
Loans held for sale$—
 $438,224
 $—
 $—
 $438,224
Loans held for investment—
 34,439
 47,880
 —
 82,319
Trading account securities:         
Municipal securities—
 1,148
 —
 —
 1,148
Other securities132,147
 —
 —
 —
 132,147
 132,147
 1,148
 —
 —
 133,295
Available-for-sale and other securities:         
U.S. Treasury securities5,497
 —
 —
 —
 5,497
Federal agencies: Mortgage-backed—
 10,673,342
 —
 —
 10,673,342
Federal agencies: Other agencies—
 73,542
 —
 —
 73,542
Municipal securities—
 452,013
 2,798,044
 —
 3,250,057
Asset-backed securities—
 717,478
 76,003
 —
 793,481
Corporate debt—
 198,683
 —
 —
 198,683
Other securities16,588
 3,943
 —
 —
 20,531
 22,085
 12,119,001
 2,874,047
 —
 15,015,133
MSRs—
 —
 13,747
 —
 13,747
Derivative assets—
 414,412
 5,747
 (181,940) 238,219
Liabilities         
Derivative liabilities—
 362,777
 7,870
 (272,361) 98,286
Short-term borrowings474
 —
 —
 —
 474


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


The tables below present a rollforward of the balance sheet amounts for the three-month and nine-month periods ended September 30, 20172019 and 2016,2018, for financial instruments measured on a recurring basis and classified as Level 3. The classification of an item as Level 3 is based on the significance of the unobservable inputs to the overall fair value measurement. However, Level 3 measurements may also include observable components of value that can be validated externally. Accordingly, the gains and losses in the table below include changes in fair value due in part to observable factors that are part of the valuation methodology.
Level 3 Fair Value Measurements
Three Months Ended September 30, 2017		Level 3 Fair Value Measurements
Three Months Ended September 30, 2019
    Available-for-sale securities      Available-for-sale securities  
(dollar amounts in thousands)MSRs 
Derivative
instruments
 
Municipal
securities
 
Asset-backed
securities
 Loans held for investment
(dollar amounts in millions)MSRs 
Derivative
instruments
 
Municipal
securities
 
Asset-backed
securities
 Loans held for investment
Opening balance$12,528
 $3,178
 $2,872,007
 $42,575
 $43,855
$9
 $9
 $3,202
 $—
 $28
Transfers out of Level 3 (1)—
 (1,376) —
 —
 —
—
 (20) —
 —
 —
Total gains/losses for the period:                  
Included in earnings(775) 1,164
 (637) (1,569) 187
(1) 19
 (1) —
 —
Included in OCI—
 —
 (33,781) 5,166
 —
—
 —
 24
 —
 —
Purchases/originations—
 —
 166,514
 —
 —
—
 —
 28
 55
 —
Sales—
 —
 (90) (21,625) —
—
 —
 —
 —
 —
Repayments—
 —
 —
 —
 (3,559)—
 —
 —
 —
 (1)
Settlements—
 —
 (45,986) (420) —
—
 —
 (159) —
 —
Closing balance$11,753
 $2,966
 $2,958,027
 $24,127
 $40,483
$8
 $8
 $3,094
 $55
 $27
Change in unrealized gains or losses for the period included in earnings for assets held at end of the reporting date$(775) $1,164
 $(104) $—
 $—
$(1) $(1) $—
 $—
 $—
Change in unrealized gains or losses for the period included in other comprehensive income for assets held at the end of the reporting period$—
 $—
 $23
 $—
 $—

 Level 3 Fair Value Measurements
Three Months Ended September 30, 2018
     Available-for-sale securities  
(dollar amounts in millions)MSRs 
Derivative
instruments
 
Municipal
securities
 Loans held for investment
Opening balance$11
 $1
 $3,178
 $34
Transfers out of Level 3 (1)—
 (12) —
 —
Total gains/losses for the period:       
Included in earnings—
 9
 (1) —
Included in OCI—
 —
 —
 —
Purchases/originations—
 —
 260
 —
Sales—
 —
 —
 —
Repayments—
 —
 —
 (2)
Settlements—
 3
 (160) —
Closing balance$11
 $1
 $3,277
 $32
Change in unrealized gains or losses for the period included in earnings for assets held at end of the reporting date$—
 $(3) $—
 $—

Level 3 Fair Value Measurements
Three Months Ended September 30, 2016		Level 3 Fair Value Measurements
Nine Months Ended September 30, 2019
    Available-for-sale securities      Available-for-sale securities  
(dollar amounts in thousands)MSRs 
Derivative
instruments
 
Municipal
securities
 
Asset-backed
securities
 Loans held for investment
(dollar amounts in millions)MSRs 
Derivative
instruments
 
Municipal
securities
 
Asset-backed
securities
 Loans held for investment
Opening balance$13,105
 $12,751
 $2,237,975
 $71,379
 $925
$10
 $2
 $3,165
 $—
 $30
Transfers out of Level 3 (1)—
 (1,692) —
 —
 —
—
 (44) —
 —
 —
Total gains/losses for the period:                  
Included in earnings(677) (2,459) 4,166
 —
 (249)(2) 50
 (1) —
 —
Included in OCI—
 —
 (28,272) 2,875
 —
—
 —
 70
 —
 —
Purchases/originations—
 —
 953,639
 10
 56,469
—
 —
 136
 55
 —
Sales—
 —
 

 —
 —
—
 —
 —
 —
 —
Repayments—
 —
 —
 —
 (3,860)—
 —
 —
 —
 (3)
Settlements—
 —
 (262,235) (445) —
—
 —
 (276) —
 —
Closing balance$12,428
 $8,600
 $2,905,273
 $73,819
 $53,285
$8
 $8
 $3,094
 $55
 $27
Change in unrealized gains or losses for the period included in earnings for assets held at end of the reporting date$(677) $(2,459) $—
 $—
 $—
$(2) $6
 $—
 $—
 $—
Change in unrealized gains or losses for the period included in other comprehensive income for assets held at the end of the reporting period$—
 $—
 $68
 $—
 $—

 Level 3 Fair Value Measurements
Nine Months Ended September 30, 2018
     Available-for-sale securities  
(dollar amounts in millions)MSRs 
Derivative
instruments
 
Municipal
securities
 
Asset-
backed
securities
 Loans held for investment
Opening balance$11
 $(1) $3,167
 $24
 $38
Transfers out of Level 3 (1)—
 (26) —
 —
 —
Total gains/losses for the period:         
Included in earnings—
 25
 (3) (2) —
Included in OCI—
 —
 (37) 11
 —
Purchases/originations—
 —
 539
 —
 —
Sales—
 —
 —
 (33) —
Repayments—
 —
 —
 —
 (6)
Settlements—
 3
 (389) —
 —
Closing balance$11
 $1
 $3,277
 $—
 $32
Change in unrealized gains or losses for the period included in earnings for assets held at end of the reporting date$—
 $(1) $—
 $—
 $—

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

 Level 3 Fair Value Measurements
Nine Months Ended September 30, 2017
     Available-for-sale securities  
(dollar amounts in thousands)MSRs 
Derivative
instruments
 
Municipal
securities
 
Asset-backed
securities
 Loans held for investment
Opening balance$13,747
 $(2,123) $2,798,044
 $76,003
 $47,880
Transfers out of Level 3 (1)—
 (3,833) —
 —
 —
Total gains/losses for the period:         
Included in earnings(1,994) 8,922
 (3,612) (5,097) 1,617
Included in OCI—
 —
 (887) 13,936
 —
Purchases/originations—
 —
 414,123
 —
 —
Sales—
 —
 (90) (59,353) —
Repayments—
 —
 —
 —
 (9,014)
Settlements—
 —
 (249,551) (1,362) —
Closing balance$11,753
 $2,966
 $2,958,027
 $24,127
 $40,483
Change in unrealized gains or losses for the period included in earnings for assets held at end of the reporting date$(1,994) $8,922
 $(128) $(3,559) $—
 Level 3 Fair Value Measurements
Nine Months Ended September 30, 2016
     Available-for-sale securities  
(dollar amounts in thousands)MSRs 
Derivative
instruments
 
Municipal
securities
 
Asset-
backed
securities
 Loans held for investment
Opening balance$17,585
 $6,056
 $2,095,551
 $100,337
 $1,748
Transfers out of Level 3 (1)—
 (5,115) —
 —
 —
Total gains/losses for the period:         
Included in earnings(5,157) 7,659
 4,166
 2
 (249)
Included in OCI—
 —
 (8,946) 3,549
 —
Purchases/originations—
 —
 1,237,546
 10
 56,469
Sales—
 —
 (36,657) (27,794) —
Repayments—
 —
 —
 —
 (4,683)
Settlements—
 —
 (386,387) (2,285) —
Closing balance$12,428
 $8,600
 $2,905,273
 $73,819
 $53,285
Change in unrealized gains or losses for the period included in earnings for assets held at end of the reporting date$(5,157) $7,759
 $—
 $2
 $—

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

The tables below summarize the classification of gains and losses due to changes in fair value, recorded in earnings for Level 3 assets and liabilities for the three-month and nine-month periods ended September 30, 20172019 and 2016.2018:
Level 3 Fair Value Measurements
Three Months Ended September 30, 2017		Level 3 Fair Value Measurements
Three Months Ended September 30, 2019
    Available-for-sale securities      Available-for-sale securities
(dollar amounts in thousands)MSRs 
Derivative
instruments
 
Municipal
securities
 
Asset-backed
securities
 Loans held for investment
(dollar amounts in millions)MSRs 
Derivative
instruments
 
Municipal
securities
Classification of gains and losses in earnings:              
Mortgage banking income$(775) $1,164
 $—
 $—
 $—
$(1) $19
 $—
Securities gains (losses)—
 —
 (104) (1,569) —
Interest and fee income—
 —
 (533) —
 —
—
 —
 (1)
Noninterest income—
 —
 —
 —
 187
Total$(775) $1,164
 $(637) $(1,569) $187
$(1) $19
 $(1)
 Level 3 Fair Value Measurements
Three Months Ended September 30, 2018
     Available-for-sale securities
(dollar amounts in millions)MSRs 
Derivative
instruments
 
Municipal
securities
Classification of gains and losses in earnings:     
Mortgage banking income$—
 $9
 $—
Other expense—
 —
 (1)
Total$—
 $9
 $(1)
 Level 3 Fair Value Measurements
Three Months Ended September 30, 2016
     Available-for-sale securities  
(dollar amounts in thousands)MSRs 
Derivative
instruments
 
Municipal
securities
 
Asset-backed
securities
 Loans held for investment
Classification of gains and losses in earnings:         
Mortgage banking income$(677) $(2,459) $—
 $—
 $—
Securities gains (losses)—
 —
 —
 —
 —
Interest and fee income—
 —
 —
 —
 —
Noninterest income—
 —
 4,166
 —
 (249)
Total$(677) $(2,459) $4,166
 $—
 $(249)

 Level 3 Fair Value Measurements
Nine Months Ended September 30, 2019
     Available-for-sale securities
(dollar amounts in millions)MSRs 
Derivative
instruments
 
Municipal
securities
Classification of gains and losses in earnings:     
Mortgage banking income$(2) $50
 $—
Interest and fee income—
 —
 (1)
Total$(2) $50
 $(1)

 Level 3 Fair Value Measurements
Nine Months Ended September 30, 2017
     Available-for-sale securities  
(dollar amounts in thousands)MSRs 
Derivative
instruments
 
Municipal
securities
 
Asset-backed
securities
 Loans held for investment
Classification of gains and losses in earnings:         
Mortgage banking income$(1,994) $8,922
 $—
 $—
 $—
Securities gains (losses)—
 —
 (128) (5,100) —
Interest and fee income—
 —
 (3,484) 3
 —
Noninterest income—
 —
 —
 —
 1,617
Total$(1,994) $8,922
 $(3,612) $(5,097) $1,617

 Level 3 Fair Value Measurements
Nine Months Ended September 30, 2018
     Available-for-sale securities
(dollar amounts in millions)MSRs 
Derivative
instruments
 
Municipal
securities
 
Asset-backed
securities
Classification of gains and losses in earnings:       
Mortgage banking income$—
 $25
 $—
 $—
Securities gains (losses)—
 —
 —
 (2)
Other expense—
 —
 (3) —
Total$—
 $25
 $(3) $(2)
 Level 3 Fair Value Measurements
Nine Months Ended September 30, 2016
     Available-for-sale securities  
(dollar amounts in thousands)MSRs 
Derivative
instruments
 
Municipal
securities
 
Asset-backed
securities
 Loans held for investment
Classification of gains and losses in earnings:         
Mortgage banking income$(5,157) $7,659
 $—
 $—
 $—
Securities gains (losses)—
 —
 —
 —
 —
Interest and fee income—
 —
 —
 —
 —
Noninterest income—
 —
 4,166
 2
 (249)
Total$(5,157) $7,659
 $4,166
 $2
 $(249)


Assets and liabilities under the fair value option
The following table presentstables present the fair value and aggregate principal balance of certain assets and liabilities under the fair value option.option:
 September 30, 2019
(dollar amounts in millions)Total Loans Loans that are 90 or more days past due
Assets
Fair value
carrying
amount
 
Aggregate
unpaid
principal
 Difference 
Fair value
carrying
amount
 
Aggregate
unpaid
principal
 Difference
Loans held for sale$963
 $932
 $31
 $1
 $1
 $—
Loans held for investment80
 86
 (6) 4
 6
 (2)
 December 31, 2018
(dollar amounts in millions)Total Loans Loans that are 90 or more days past due
Assets
Fair value
carrying
amount
 
Aggregate
unpaid
principal
 Difference 
Fair value
carrying
amount
 
Aggregate
unpaid
principal
 Difference
Loans held for sale$613
 $594
 $19
 $—
 $—
 $—
Loans held for investment79
 87
 (8) 6
 7
 (1)
 September 30, 2017
 Total Loans Loans that are 90 or more days past due
(dollar amounts in thousands)
Fair value
carrying
amount
 
Aggregate
unpaid
principal
 Difference 
Fair value
carrying
amount
 
Aggregate
unpaid
principal
 Difference
Assets           
Loans held for sale$584,829
 $564,106
 $20,723
 $602
 $608
 $(6)
Loans held for investment99,191
 107,997
 (8,806) 10,086
 11,781
 (1,695)
 December 31, 2016
 Total Loans Loans that are 90 or more days past due
(dollar amounts in thousands)
Fair value
carrying
amount
 
Aggregate
unpaid
principal
 Difference 
Fair value
carrying
amount
 
Aggregate
unpaid
principal
 Difference
Assets           
Loans held for sale$438,224
 $433,760
 $4,464
 $—
 $—
 $—
Loans held for investment82,319
 91,998
 (9,679) 8,408
 11,082
 (2,674)

The following tables present the net gains (losses) from fair value changes for the three-month and nine-month periods ended September 30, 20172019 and 2016.
2018.
  Net gains (losses) from fair value changes Net gains (losses) from fair value changes
  Three Months Ended
September 30,		 Nine Months Ended
September 30,
(dollar amounts in thousands) 2017 2016 2017 2016
Assets        
Loans held for sale $(1,897) $(4,439) $11,719
 $9,080
Loans held for investment 187
 —
 1,617
 —
  Net gains (losses) from fair value changes Net gains (losses) from fair value changes
(dollar amounts in millions) Three Months Ended September 30, Nine Months Ended September 30,
Assets 2019 2018 2019 2018
Loans held for sale (1) $6
 $(4) $12
 $(1)

(1)The net gains (losses) from fair value changes are included in Mortgage banking income on the Unaudited Condensed Consolidated Statements of Income.
Assets and Liabilities measured at fair value on a nonrecurring basis
Certain assets and liabilities may be required to be measured at fair value on a nonrecurring basis in periods subsequent to their initial recognition. These assets and liabilities are not measured at fair value on an ongoing basis; however, they are subject to fair value adjustments in certain circumstances, such as when there is evidence of impairment. ForThe amounts presented represent the nine months ended September 30, 2017, assetsfair value on the various measurement dates throughout the period. The gains (losses) represent the amounts recorded during the period regardless of whether the asset is still held at period end.

The amounts measured at fair value on a nonrecurring basis at September 30, 2019 were as shown in the table below.follows:
   Fair Value Measurements Using  
(dollar amounts in millions)Fair Value 
Quoted Prices
In Active
Markets for
Identical Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Other
Unobservable
Inputs
(Level 3)
 Total
Gains/(Losses)
Nine Months Ended
September 30, 2019
MSRs$172
 $—
 $—
 $172
 $(38)
Impaired loans20
 —
 —
 20
 (1)
Loans held for sale36
 —
 —
 36
 (13)
   Fair Value Measurements Using  
(dollar amounts in thousands)Fair Value 
Quoted Prices
In Active
Markets for
Identical Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Other
Unobservable
Inputs
(Level 3)
 Total
Gains/(Losses)
Nine Months Ended
September 30, 2017
MSRs$182,043
 $—
 $—
 $182,043
 $(318)
Impaired loans68,159
 —
 —
 68,159
 (3,976)
Other real estate owned42,041
 —
 —
 42,041
 (1,759)


MSRs accounted for under the amortization method are subject to nonrecurring fair value measurement when the fair value is lower than the carrying amount.
Periodically, Huntington records nonrecurring adjustments of collateral-dependent loans measured for impairment when establishing the ACL.ALLL. Such amounts are generally based on the fair value of the underlying collateral supporting the loan. Appraisals are generally obtained to support the fair value of the collateral and incorporate measures such as recent sales prices

for comparable properties and cost of construction. InPeriodically, in cases where the carrying value exceeds the fair value of the collateral less cost to sell, an impairment charge is recognized.
Other real estate-owned propertiesLoans held for sale are included in accrued income and other assets and valuedmeasured at lower of cost or fair value less costs to sell. The fair value of loans held for sale is determined based on appraisals and third-party price opinions, less estimated selling costs.discounted cash flows or based on the fair value of the underlying collateral supporting the loan.
Significant unobservable inputs for assets and liabilities measured at fair value on a recurring and nonrecurring basis
The table below presents quantitative information about the significant unobservable inputs for assets and liabilities measured at fair value on a recurring and nonrecurring basis at September 30, 20172019 and December 31, 2016:2018:
Quantitative Information about Level 3 Fair Value Measurements at September 30, 2017Quantitative Information about Level 3 Fair Value Measurements at September 30, 2019
(dollar amounts in thousands)Fair Value Valuation Technique Significant Unobservable Input Range (Weighted Average)
(dollar amounts in millions)Fair Value Valuation Technique Significant Unobservable Input Range Weighted Average
Measured at fair value on a recurring basis:
MSRs$11,753
 Discounted cash flow Constant prepayment rate 9.0% - 31.0% (12%)$8
 Discounted cash flow Constant prepayment rate 0 %-25% 9%
    Spread over forward interest rate
swap rates		 8.0% - 10.0% (8.1%)    Spread over forward interest rate swap rates 5 %-11% 8%
Derivative assets8,425
 Consensus Pricing Net market price -4.0% - 21.4% (1.8%)11
 Consensus Pricing Net market price (2)%-14% 2%
    Estimated Pull through % 1 %-100% 90%
Derivative liabilities5,459
   Estimated Pull through % 11.0% - 99.0% (79.0%)3
 Discounted cash flow Estimated conversion factor     162%
Municipal securities2,958,027
 Discounted cash flow Discount rate 0.0% - 10.3% (4.0%)
  Cumulative default 0.0% - 42.0% (4.9%)
    Loss given default 5.0% - 80.0% (23.7%)
Asset-backed securities24,127
 Discounted cash flow Discount rate 1.3% - 6.8% (6.5%)
  Cumulative prepayment rate 0.0% - 72% (7.3%)  Estimated growth rate of Visa Class A shares     7%
  Cumulative default 2.9% - 100% (8.6%)   Discount rate     2%
    Loss given default 90% - 100% (97.8%)    Timing of the resolution of the litigation     6/30/2020
Municipal securities3,094
 Discounted cash flow Discount rate 2 %-3% 2%
Asset-backed securities55
 Cumulative default 0 %-64% 4%
    Loss given default 5 %-80% 24%
Loans held for investment40,483
 Discounted cash flow Discount rate 7.0% - 17.7% (8.2%)27
 Discounted cash flow Discount rate 6 %-6% 6%
    Constant prepayment rate 9 %-12% 9%
Measured at fair value on a nonrecurring basis:
MSRs182,043
 Discounted cash flow Constant prepayment rate 6.0% - 21.0% (8%)172
 Discounted cash flow Constant prepayment rate 12 % 33% 16%
  Spread over forward interest rate
swap rates		 1.8% - 20.0% (10.4%)    Spread over forward interest rate swap rates 5 % 11% 9%
Impaired loans68,159
 Appraisal value NA NA20
 Appraisal value NA     NA
Other real estate owned42,041
 Appraisal value NA NA
Loans held for sale36
 Appraisal value NA     NA

 Quantitative Information about Level 3 Fair Value Measurements at December 31, 2018
(dollar amounts in millions)Fair Value Valuation Technique Significant Unobservable Input Range Weighted Average
Measured at fair value on a recurring basis:    
MSRs$10
 Discounted cash flow Constant prepayment rate 6 %-54% 8%
     Spread over forward interest rate swap rates 5 %-11% 8%
Derivative assets5
 Consensus Pricing Net market price (5)%-23% 2%
     Estimated Pull through % 1 %-100% 92%
Derivative liabilities3
 Discounted cash flow Estimated conversion factor     163%
     Estimated growth rate of Visa Class A shares     7%
      Discount rate     4%
     Timing of the resolution of the litigation     6/30/2020
Municipal securities3,165
 Discounted cash flow Discount rate 4 %-4% 4%
     Cumulative default 0 %-39% 3%
     Loss given default 5 %-90% 25%
Loans held for investment30
 Discounted cash flow Discount rate 7 %-9% 9%
     Constant prepayment rate 9 %-9% 9%
Measured at fair value on a nonrecurring basis:    
Impaired loans33
 Appraisal value NA     NA
Loans held for sale121
 Discounted cash flow Discount rate 5 %-6% 5%
 24
 Appraisal value NA     NA
 Quantitative Information about Level 3 Fair Value Measurements at December 31, 2016
(dollar amounts in thousands)Fair Value Valuation Technique Significant Unobservable Input Range (Weighted Average)
Measured at fair value on a recurring basis:
MSRs$13,747
 Discounted cash flow Constant prepayment rate 5.63% - 34.4% (10.9%)
     Spread over forward interest rate
swap rates		 3.0% - 9.2% (5.4%)
Derivative assets5,747
 Consensus Pricing Net market price -7.1% - 25.4% (1.1%)
Derivative liabilities7,870
   Estimated Pull through % 8.1% - 99.8% (76.9%)
Municipal securities2,798,044
 Discounted cash flow Discount rate 0.0% - 10.0% (3.6%)
     Cumulative default 0.3% - 37.8% (4.0%)
     Loss given default 5.0% - 80.0% (24.1%)
Asset-backed securities76,003
 Discounted cash flow Discount rate 5.0% - 12.0% (6.3%)
     Cumulative prepayment rate 0.0% - 73% (6.5%)
     Cumulative default 1.1% - 100% (11.2%)
     Loss given default 85% - 100% (96.3%)
     Cure given deferral 0.0% - 75.0% (36.2%)
Loans held for investment47,880
 Discounted cash flow Discount rate 5.4% - 16.2% (5.6%)
Measured at fair value on a nonrecurring basis:
MSRs171,309
 Discounted cash flow Constant prepayment rate 5.57% - 30.4% (7.8%)
     Spread over forward interest rate
swap rates		 4.2% - 20.0% (11.7%)
Impaired loans53,818
 Appraisal value NA NA
Other real estate owned50,930
 Appraisal value NA NA


The following provides a general description of the impact of a change in an unobservable input on the fair value measurement and the interrelationship between unobservable inputs, where relevant/significant. Interrelationships may also exist between observable and unobservable inputs. Such relationships have not been included in the discussion below.
A significant change in the unobservable inputs may result in a significant change in the ending fair value measurement of Level 3 instruments. In general, prepayment rates increase when market interest rates decline and decrease when market interest rates rise and higher prepayment rates generally result in lower fair values for MSR assets and Asset-backed securities.
Credit loss estimates, such as probability of default, constant default, cumulative default, loss given default, cure given deferral, and loss severity, are driven by the ability of the borrowers to pay their loans and the value of the underlying collateral and are impacted by changes in macroeconomic conditions, typically increasing when economic conditions worsen and decreasing when conditions improve. An increase in the estimated prepayment rate typically results in a decrease in estimated credit losses and vice versa. Higher credit loss estimates generally result in lower fair values. Credit spreads generally increase when liquidity risks and market volatility increase and decrease when liquidity conditions and market volatility improve.
Discount rates and spread over forward interest rate swap rates typically increase when market interest rates increase and/or credit and liquidity risks increase, and decrease when market interest rates decline and/or credit and liquidity conditions improve. Higher discount rates and credit spreads generally result in lower fair market values.
Net market price and pull through percentages generally increase when market interest rates increase and decline when market interest rates decline. Higher net market price and pull through percentages generally result in higher fair values.

Fair values of financial instruments
The following table provides the carrying amounts and estimated fair values of Huntington’s financial instruments that are carried either at fair value or cost at September 30, 20172019 and December 31, 2016:2018:
September 30, 2017 December 31, 2016September 30, 2019
(dollar amounts in thousands)
Carrying
Amount
 Fair Value 
Carrying
Amount
 Fair Value
(dollar amounts in millions)Amortized Cost Lower of Cost or Market 
Fair Value or
Fair Value Option
 Total Carrying Amount Estimated Fair Value
Financial Assets                
Cash and short-term assets$1,243,828
 $1,243,828
 $1,443,037
 $1,443,037
$1,758
 $—
 $—
 $1,758
 $1,758
Trading account securities88,488
 88,488
 133,295
 133,295
—
 —
 118
 118
 118
Available-for-sale securities—
 —
 14,286
 14,286
 14,286
Held-to-maturity securities8,430
 —
 —
 8,430
 8,584
Other securities401
 —
 54
 455
 455
Loans held for sale651,734
 657,270
 512,951
 515,640
—
 101
 963
 1,064
 1,067
Available-for-sale and other securities15,453,061
 15,453,061
 15,562,837
 15,562,837
Held-to-maturity securities8,688,399
 8,655,805
 7,806,939
 7,787,268
Net loans and direct financing leases67,911,810
 67,698,855
 66,323,583
 66,294,639
Net loans and leases (1)74,029
 —
 80
 74,109
 75,234
Derivatives166,264
 166,264
 238,219
 238,219
—
 —
 577
 577
 577
Financial Liabilities                
Deposits78,445,113
 78,422,971
 75,607,717
 76,161,091
82,395
 —
 —
 82,395
 82,398
Short-term borrowings1,829,549
 1,829,549
 3,692,654
 3,692,654
2,173
 —
 —
 2,173
 2,173
Long-term debt9,200,707
 9,402,926
 8,309,159
 8,387,444
9,874
 —
 —
 9,874
 10,075
Derivatives59,124
 59,124
 98,286
 98,286
—
 —
 127
 127
 127
 December 31, 2018
(dollar amounts in millions)Amortized Cost Lower of Cost or Market 
Fair Value or
Fair Value Option
 Total Carrying Amount Estimated Fair Value
Financial Assets         
Cash and short-term assets$2,725
 $—
 $—
 $2,725
 $2,725
Trading account securities—
 —
 105
 105
 105
Available-for-sale securities—
 —
 13,780
 13,780
 13,780
Held-to-maturity securities8,565
 —
 —
 8,565
 8,286
Other securities543
 —
 22
 565
 565
Loans held for sale—
 191
 613
 804
 806
Net loans and leases (1)74,049
 —
 79
 74,128
 73,668
Derivatives—
 —
 209
 209
 209
Financial Liabilities         
Deposits84,774
 —
 —
 84,774
 84,731
Short-term borrowings2,017
 —
 —
 2,017
 2,017
Long-term debt8,625
 —
 —
 8,625
 8,718
Derivatives—
 —
 187
 187
 187
(1)Includes collateral-dependent loans measured for impairment.

The following table presents the level in the fair value hierarchy for the estimated fair values of only Huntington’s financial instruments that are not already on the Unaudited Condensed Consolidated Balance Sheets at fair value at September 30, 20172019 and December 31, 2016:2018:
Estimated Fair Value Measurements at Reporting Date Using September 30, 2017Estimated Fair Value Measurements at Reporting Date Using September 30, 2019
(dollar amounts in thousands)Level 1 Level 2 Level 3 
(dollar amounts in millions)Level 1 Level 2 Level 3 September 30, 2019
Financial Assets             
Trading account securities$29
 $89
 $—
 $118
Available-for-sale securities10
 11,127
 3,149
 14,286
Held-to-maturity securities$—
 $8,655,805
 $—
 $8,655,805
—
 8,584
 —
 8,584
Other securities (1)54
 —
 —
 54
Loans held for sale—
 963
 104
 1,067
Net loans and direct financing leases—
 —
 67,698,855
 67,698,855
—
 80
 75,154
 75,234
Financial Liabilities              
Deposits—
 75,230,127
 3,192,844
 78,422,971
—
 75,707
 6,691
 82,398
Short-term borrowings4
 —
 1,829,545
 1,829,549
—
 —
 2,173
 2,173
Long-term debt—
 8,992,820
 410,106
 9,402,926
—
 9,435
 640
 10,075
 Estimated Fair Value Measurements at Reporting Date Using December 31, 2018
(dollar amounts in millions)Level 1 Level 2 Level 3 
Financial Assets       
Trading account securities$78
 $27
 $—
 $105
Available-for-sale securities5
 10,610
 3,165
 13,780
Held-to-maturity securities—
 8,286
 —
 8,286
Other securities (1)22
 —
 —
 22
Loans held for sale—
 613
 193
 806
Net loans and direct financing leases—
 49
 73,619
 73,668
Financial Liabilities
 
 
  
Deposits—
 76,922
 7,809
 84,731
Short-term borrowings1
 —
 2,016
 2,017
Long-term debt—
 8,158
 560
 8,718

 Estimated Fair Value Measurements at Reporting Date Using December 31, 2016
(dollar amounts in thousands)Level 1 Level 2 Level 3 
Financial Assets       
Held-to-maturity securities$—
 $7,787,268
 $—
 $7,787,268
Net loans and direct financing leases—
 —
 66,294,639
 66,294,639
Financial Liabilities
 
 
  
Deposits—
 72,319,328
 3,841,763
 76,161,091
Short-term borrowings474
 —
 3,692,180
 3,692,654
Long-term debt—
 7,980,176
 407,268
 8,387,444

(1)Excludes securities without readily determinable fair values.
The short-term nature of certain assets and liabilities result in their carrying value approximating fair value. These include trading account securities, customers’ acceptance liabilities, short-term borrowings, bank acceptances outstanding, FHLB advances, and cash and short-term assets, which include cash and due from banks, interest-bearing deposits in banks, andinterest-bearing deposits at Federal Reserve Bank, federal funds sold, and securities purchased under resale agreements. Loan commitments and letters-of-credit generally have short-term, variable-rate features and contain clauses that limit Huntington’s exposure to changes in customer credit quality.

Accordingly, their carrying values, which are immaterial at the respective balance sheet dates, are reasonable estimates of fair value.
Certain assets, the most significant being operating lease assets, bank owned life insurance, and premises and equipment, do not meet the definition of a financial instrument and are excluded from this disclosure. Similarly, mortgage and nonmortgage servicing rights, deposit base, and other customer relationship intangibles are not considered financial instruments and are not included above. Accordingly, this fair value information is not intended to, and does not, represent Huntington’s underlying value. Many of the assets and liabilities subject to the disclosure requirements are not actively traded, requiring fair values to be estimated by Management. These estimations necessarily involve the use of judgment about a wide variety of factors, including but not limited to, relevancy of market prices of comparable instruments, expected future cash flows, and appropriate discount rates.
The following methods and assumptions were used by Huntington to estimate the fair value of the remaining classes of financial instruments:
Held-to-maturity securities
Fair values are determined by using models that are based on security-specific details, as well as relevant industry and economic factors. The most significant of these inputs are quoted market prices, and interest rate spreads on relevant benchmark securities.
Loans and Direct Financing Leases
Variable-rate loans that reprice frequently are based on carrying amounts, as adjusted for estimated credit losses. The fair values for other loans and leases are estimated using discounted cash flow analyses and employ interest rates currently being offered for loans and leases with similar terms. The rates take into account the position of the yield curve, as well as an adjustment for prepayment risk, operating costs, and profit. This value is also reduced by an estimate of expected losses and the credit risk associated in the loan and lease portfolio. The valuation of the loan portfolio reflected discounts that Huntington believed are consistent with transactions occurring in the marketplace.
Deposits
Demand deposits, savings accounts, and money market deposits are, by definition, equal to the amount payable on demand. The fair values of fixed-rate time deposits are estimated by discounting cash flows using interest rates currently being offered on certificates with similar maturities.
Debt
Long-term debt is based upon quoted market prices, which are inclusive of Huntington’s credit risk. In the absence of quoted market prices, discounted cash flows using market rates for similar debt with the same maturities are used in the determination of fair value.
12. DERIVATIVE FINANCIAL INSTRUMENTS
Derivative financial instruments are recorded in the Unaudited Condensed Consolidated Balance Sheets as either an asset or a liability (in accrued income and other assets or accrued expenses and other liabilities, respectively) and measured at fair value.
Derivative financial instruments can be designated as accounting hedges under GAAP. Designating a derivative as an accounting hedge allows Huntington to recognize gains and losses on the hedging instruments in the same income statement line item where the gains and losses on the hedged item are recognized. Gains and losses on derivatives that are not designated in an effective hedge relationship under GAAP immediately impact earnings within the period they occur.
The following table presents the fair values of all derivative instruments included in the Unaudited Condensed Consolidated Balance Sheets at September 30, 20172019 and December 31, 2016.2018. Amounts in the table below are presented gross without the impact of any net collateral arrangements.
September 30, 2017December 31, 2016September 30, 2019December 31, 2018
(dollar amounts in thousands)Asset Liability Asset Liability
(dollar amounts in millions)Asset Liability Asset Liability
Derivatives designated as Hedging Instruments              
Interest rate contracts$32,837
 $93,224
 $46,440
 $99,996
$376
 $19
 $44
 $42
Derivatives not designated as Hedging Instruments              
Interest rate contracts (1)198,471
 112,534
 232,653
 140,475
Interest rate contracts544
 417
 261
 165
Foreign exchange contracts22,354
 21,020
 23,265
 19,576
22
 20
 23
 19
Commodities contracts66,133
 61,695
 108,026
 104,328
178
 172
 172
 168
Equity contracts1,031
 5,177
 9,775
 6,272
3
 3
 —
 10
Total Contracts$320,826
 $293,650
 $420,159
 $370,647
$1,123
 $631
 $500
 $404


The following table presents the amount of gain or loss recognized in income for derivatives not designated as hedging instruments under ASC Subtopic 815-10 in the Unaudited Condensed Consolidated Income Statement for the three-month and nine-month periods ended September 30, 2019 and 2018, respectively.
(1)Includes derivative assets and liabilities used in mortgage banking activities.

  Location of Gain or (Loss) Recognized in Income on Derivative Amount of Gain or (Loss) Recognized in Income on Derivative
   Three Months Ended September 30, Nine Months Ended September 30,
(dollar amounts in millions)   2019 2018 2019 2018
Interest rate contracts: 
        
Customer Capital markets fees $15
 $11
 $38
 $30
Mortgage Banking Mortgage banking income 28
 5
 52
 (3)
Interest Rate Floors Other noninterest income (1) —
 4
 —
Foreign exchange contracts Capital markets fees 7
 6
 22
 18
Commodities contracts Capital markets fees 1
 1
 (3) 3
Equity contracts Other noninterest expense (2) —
 (3) 3
Total   $48
 $23
 $110
 $51

Derivatives used in asset and liability management activities
Huntington engages in balance sheet hedging activity, principally for asset and liability management purposes, to convert fixed rate assets or liabilities into floating rate, or vice versa.purposes. Balance sheet hedging activity is generally arranged to receive hedge accounting treatment and isthat can be classified as either fair value or cash flow hedges. Fair value hedges are purchasedexecuted to convert subordinated and other long-termhedge changes in fair value of outstanding fixed-rate debt from fixed-rate obligations to floating rate.caused by fluctuations in market interest rates. Cash flow hedges are also usedexecuted to convert floatingmodify interest rate characteristics of designated commercial loans into fixedin order to reduce the impact of changes in future cash flows due to market interest rate loans.changes.

The following table presents the gross notional values of derivatives used in Huntington’s asset and liability management activities at September 30, 20172019 and December 31, 2016,2018, identified by the underlying interest rate-sensitive instruments.
 September 30, 2019
(dollar amounts in millions)
Fair Value
Hedges
 Cash Flow Hedges Total
Instruments associated with:     
Loans$—
 $17,150
 $17,150
Investment securities—
 12
 12
Long-term debt7,540
 —
 7,540
Total notional value at September 30, 2019$7,540
 $17,162
 $24,702
      
   December 31, 2018
(dollar amounts in millions)Fair Value Hedges Cash Flow Hedges Total
Instruments associated with:     
Investment securities$—
 $12
 $12
Long-term debt4,865
 —
 4,865
Total notional value at December 31, 2018$4,865
 $12
 $4,877
 September 30, 2017
(dollar amounts in thousands)Fair Value Hedges Cash Flow Hedges Total
Instruments associated with:     
Loans$—
 $1,325,000
 $1,325,000
Subordinated notes950,000
 —
 950,000
Long-term debt7,425,000
 —
 7,425,000
Total notional value at September 30, 2017$8,375,000
 $1,325,000
 $9,700,000
      
 December 31, 2016
(dollar amounts in thousands)Fair Value Hedges Cash Flow Hedges Total
Instruments associated with:     
Loans$—
 $3,325,000
 $3,325,000
Subordinated notes950,000
 —
 950,000
Long-term debt6,525,000
 —
 6,525,000
Total notional value at December 31, 2016$7,475,000
 $3,325,000
 $10,800,000


The following table presents additional information about the interest rate swaps and floors used in Huntington’s asset and liability management activities at September 30, 20172019 and December 31, 2016.2018.
 September 30, 2019
       Weighted-Average Rate
(dollar amounts in millions)Notional Value Average Maturity (years) Fair Value Receive Pay
Asset conversion swaps         
Receive fixed—generic$8,287
 3.5
 $106
 1.69% 1.33%
Liability conversion swaps         
Receive fixed—generic7,540
 2.5
 191
 2.20
 2.08
Total swap portfolio at September 30, 2019$15,827
 3.0
 $297
 1.93% 1.69%
          
 September 30, 2019
        
(dollar amounts in millions)Notional Value Average Maturity (years) Fair Value
Interest rate floors         
Designated interest rate floors$8,875  1.6  $60
Total floors portfolio at September 30, 2019$8,875  1.6  $60
          
 December 31, 2018
       Weighted-Average Rate
(dollar amounts in millions)Notional Value Average Maturity (years) Fair Value Receive Pay
Asset conversion swaps         
Receive fixed—generic$12
 1.2
 $—
 2.20% 2.46%
Liability conversion swaps         
Receive fixed—generic4,865
 2.6
 2
 2.24
 2.54
Total swap portfolio at December 31, 2018$4,877
 2.6
 $2
 2.24% 2.54%
 September 30, 2017
       Weighted-Average Rate
(dollar amounts in thousands)Notional Value Average Maturity (years) Fair Value Receive Pay
Asset conversion swaps         
Receive fixed—generic$1,325,000
 0.1 $(1,239) 0.72% 1.23%
Liability conversion swaps         
Receive fixed—generic8,375,000
 2.8 (59,148) 1.56
 1.29
Total swap portfolio at September 30, 2017$9,700,000
 2.3 $(60,387) 

 

          
 December 31, 2016
       Weighted-Average Rate
(dollar amounts in thousands)Notional Value Average Maturity (years) Fair Value Receive Pay
Asset conversion swaps         
Receive fixed—generic$3,325,000
 0.6 $(2,060) 1.04% 0.91%
Liability conversion swaps         
Receive fixed—generic7,475,000
 3.1 (51,496) 1.49
 0.88
Total swap portfolio at December 31, 2016$10,800,000
 2.3 $(53,556)    



These derivative financial instruments arewere entered into to managefor the purpose of managing the interest rate risk of assets and liabilities. Consequently, netNet amounts receivable or payable on contracts hedging either interest-earninginterest earning assets or interest-bearinginterest bearing liabilities arewere accrued as an adjustment to either interest income or interest expense. The net amounts resulted in an increase (decrease) to net interest income of $3$(16) million and $18$(11) million for the three-month periods ended September 30, 2017,2019, and 2016, respectively. For2018, respectively, and $(44) million and $(25) million for the nine-month periods ended September 30, 2017,2019, and 2016, the net amounts resulted in an increase to net interest income of $20 million and $58 million,2018, respectively.

Fair Value Hedges
The changes in fair value of the fair value hedges are to the extent that the hedging relationship is effective, recorded through earnings and offset against changes in the fair value of the hedged item.
The following table presents the change in fair value for derivatives designated as fair value hedges as well as the offsetting change in fair value on the hedged item for the three-month and nine-month periods ended September 30, 20172019 and 2016.2018.
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
(dollar amounts in thousands)2017 2016 2017 2016
Interest rate contracts       
Change in fair value of interest rate swaps hedging deposits (1)$—
 $—
 $—
 $(82)
Change in fair value of hedged deposits (1)—
 —
 —
 72
Change in fair value of interest rate swaps hedging subordinated notes (2)(2,234) (9,688) (4,665) (2,880)
Change in fair value of hedged subordinated notes (2)3,615
 10,400
 6,782
 3,591
Change in fair value of interest rate swaps hedging other long-term debt (2)(6,431) (45,870) (880) 37,179
Change in fair value of hedged other long-term debt (2)7,152
 42,647
 (1,226) (38,187)

 Three Months Ended
September 30,		 Nine Months Ended September 30,
(dollar amounts in millions)2019 2018 2019 2018
Interest rate contracts       
Change in fair value of interest rate swaps hedging long-term debt (1)$36
 $(11) $165
 $55
Change in fair value of hedged long term debt (1)(32) 12
 (162) (49)
(1)Effective portion of the hedging relationship is recognized
Recognized in Interest expense—depositslong-term debt in the Unaudited Condensed Consolidated Statements of Income. Any resulting ineffective portion of the hedging relationship is recognized in noninterest income in the Unaudited Condensed Consolidated Statements of Income.
(2)Effective portion of the hedging relationship is recognized in Interest expense—subordinated notes and other long-term debt in the Unaudited Condensed Consolidated Statements of Income. Any resulting ineffective portion of the hedging relationship is recognized in noninterest income in the Unaudited Condensed Consolidated Statements of Income.Income.

As of September 30, 2019 and December 31, 2018, the following amounts were recorded on the balance sheet related to cumulative basis adjustments for fair value hedges.
 Carrying Amount of the Hedged Liabilities Cumulative Amount of Fair Value Hedging Adjustment To Hedged Liabilities
(dollar amounts in millions)September 30, 2019 December 31, 2018 September 30, 2019 December 31, 2018
Long-term debt$7,835
 $4,845
 $150
 $(12)
The cumulative amount of fair value hedging adjustments remaining for any hedged assets and liabilities for which hedge accounting has been discontinued was $(104) million and $(127) million at September 30, 2019 and December 31, 2018, respectively.
Cash Flow Hedges
To the extent derivatives designated as cash flow hedges are effective in offsetting the variability of the hedged cash flows, changes in the derivatives’ fair value will not be included in current earnings but are reported as a component of OCI in the Unaudited Condensed Consolidated Statements of Changes in Shareholders’ Equity. These changes in fair value will be included in earnings of future periods when earnings are also affected by the changes in the hedged cash flows. To the extent these derivatives are not effective, changes in their fair values are immediately included in noninterest income.
The following table presents the gains and (losses) recognized in OCI and the location in the Unaudited Condensed Consolidated Statements of Income of gains and (losses) reclassified from OCI into earnings for derivatives designated as effective cash flow hedges for the three-month and nine-month periods ended September 30, 2017 and 2016.
Derivatives in cash flow hedging relationships
Amount of gain or (loss) recognized in OCI on derivatives
(effective portion)
(after-tax)
 
Location of gain or (loss) reclassified from
accumulated OCI into earnings (effective portion)
 
Amount of (gain) or loss
reclassified from
accumulated OCI into earnings
(effective portion)
 Three Months Ended September 30,   Three Months Ended September 30,
(dollar amounts in thousands)2017 2016   2017 2016
Interest rate contracts         
Loans$1,225
 $(5,311) Interest and fee income - loans and leases $144
 $123
Investment Securities—
 —
 Noninterest income - other income —
 —
Total$1,225
 $(5,311)   $144
 $123

Derivatives in cash flow hedging relationships
Amount of gain or (loss) recognized in OCI on derivatives
(effective portion)
(after-tax)
 
Location of gain or (loss) reclassified from
accumulated OCI into earnings (effective portion)
 
Amount of (gain) or loss
reclassified from
accumulated OCI into earnings
(effective portion)
 Nine Months Ended September 30,   Nine Months Ended September 30,
(dollar amounts in thousands)2017 2016   2017 2016
Interest rate contracts         
Loans$828
 $5,231
 Interest and fee income - loans and leases $1,131
 $(770)
Investment Securities—
 —
 Noninterest income - other income —
 1

$828
 $5,231
   $1,131
 $(769)

Gains and losses on swaps related to loans and investment securities are recorded in interest income and interest expense, respectively. During the next twelvefirst nine months of 2019, Huntington expects to reclassify to earnings approximately $(1) million after-tax of unrealized gains (losses) on cash flow hedging derivatives currently in OCI.
The following table presents the gains and (losses) recognized in noninterest income for the ineffective portionentered into $17.2 billion of interest rate contracts for derivativesfloors and swaps. These are designated as cash flow hedges for variable rate commercial loans indexed to LIBOR. The initial premium paid for the threeinterest rate floor contracts represents the time value of the contracts and nine-month periods ended September 30, 2017 and 2016.
Derivatives in cash flow hedging relationshipsThree Months Ended
September 30,		 Nine Months Ended
September 30,
(dollar amounts in thousands)2017 2016 2017 2016
Interest rate contracts       
Loans$359
 $(371) $225
 $6

is not included in the measurement of hedge effectiveness. Any change in fair value related to time value is recognized in OCI. The initial premium paid is amortized on a straight line basis as a reduction to interest income over the contractual life of these contracts.
Derivatives used in mortgage banking activities
Mortgage loan origination hedging activity
Huntington’sHuntington’s mortgage origination hedging activity is related to theeconomically hedging of theHuntington's mortgage pricing commitments to customers and the secondary sale to third parties. The value of a newly originated mortgage is not firm until the interest rate is committed or locked. The interest rate lock commitmentsnet asset (liability) position of these derivatives at September 30, 2019 and December 31, 2018 are derivative positions offset by forward$14 million and $(4) million, respectively. At September 30, 2019 and December 31, 2018, Huntington had commitments to sell loans.residential real estate loans of $2.0 billion and $0.8 billion, respectively. These contracts mature in less than 1 year.
Huntington uses two types of mortgage-backed securities in its forward commitments to sell loans. The first type of forward commitment is a “To Be Announced” (or TBA), the second is a “Specified Pool” mortgage-backed security. Huntington uses these derivatives to hedge the value of mortgage-backed securities until they are sold.
The following table summarizes the derivative assets and liabilities used in mortgage banking activities:
Derivatives used in mortgage banking activitiesSeptember 30, 2017December 31, 2016
(dollar amounts in thousands)Asset Liability Asset Liability
Interest rate lock agreements$8,425
 $282
 $5,747
 $1,598
Forward trades and options1,562
 1,782
 13,319
 1,173
Total derivatives used in mortgage banking activities$9,987
 $2,064
 $19,066
 $2,771

MSR hedging activity
Huntington’s MSR economic hedging activity uses securities and derivatives to manage the value of the MSR asset and to mitigate the various types of risk inherent in the MSR asset, including risks related to duration, basis, convexity, volatility, and yield curve. The hedging instruments include forward commitments, interest rate swaps, and options on interest rate swaps.
The total notional value of thesethe derivative financial instruments, at September 30, 2017 and December 31, 2016, was $188 million and $300 million, respectively. The total notional amount at September 30, 2017 corresponds tocorresponding trading assets with a fair value of $1 million and trading liabilities, with a fair value of $2 million. Netand net trading gains and (losses) related to MSR hedging foractivity is summarized in the three-month periods ended September 30, 2017following table:
(dollar amounts in millions)September 30, 2019December 31, 2018
Notional value$572  $— 
Trading assets30  — 
Trading liabilities(1) — 
    
 Three Months Ended September 30, Nine Months Ended September 30,
(dollar amounts in millions)20192018 20192018
Trading gains (losses)$20
$—
 $44
$(8)

MSR hedging trading assets and 2016, were less than $1 millionliabilities are included in other assets and $(1) million and $1 million and $17 million forother liabilities, respectively, in the nine-month periods ended September 30, 2017 and 2016, respectively. These amountsUnaudited Condensed Balance Sheets. Trading gains (losses) are included in mortgage banking income in the Unaudited Condensed Consolidated StatementsStatement of Income.

Derivatives used in customer related activities
Various derivative financial instruments are offered to enable customers to meet their financing and investing objectives and for their risk management purposes. Derivative financial instruments used in trading activities consist of commodity, interest rate, and foreign exchange contracts. Huntington may enterenters into offsetting third-party contracts with approved, reputable counterparties with substantially matching terms and currencies in order to economically hedge significant exposure related to derivatives used in trading activities.
The interest rate or price risk of customer derivatives is mitigated by entering into similar derivatives having offsetting terms with other counterparties. The credit risk to these customers is evaluated and included in the calculation of fair value. Foreign currency derivatives help the customer hedge risk and reduce exposure to fluctuations in exchange rates. Transactions are primarily in liquid currencies with Canadian dollars and Euros comprising a majority of all transactions. Commodity derivatives help the customer hedge risk and reduce exposure to fluctuations in the price of various commodities. Hedging of energy-related products and base metals comprise the majority of allthese transactions.
The net fair values of these derivative financial instruments, for which the gross amounts are included in accrued income and other assets or accrued expenses and other liabilities at both September 30, 20172019 and December 31, 2016,2018, were $84$87 million and $80$92 million, respectively. The total notional values of derivative financial instruments used by Huntington on behalf of customers, including offsetting derivatives, were $21.4$30 billion and $20.6$26 billion at both September 30, 20172019 and December 31, 2016,2018, respectively. Huntington’s credit risk from interest rate swaps used for trading purposescustomer derivatives was $156$515 million and $196$132 million at the same dates, respectively.
Share Swap Economic Hedge
Huntington acquires and holds shares of Huntington common stock in a Rabbi Trust for the Executive Deferred Compensation Plan. Huntington common stock held in the Rabbi Trust is recorded at cost and the corresponding deferred compensation liability is recorded at fair value using Huntington's share price as a significant input.
During the second quarter of 2017, Huntington entered into an economic hedge with a notional value of $8 million to hedge deferred compensation expense related to the Executive Deferred Compensation Plan. During the third quarter 2017, the previous economic hedge entered into during the second quarter of 2016 of $20 million expired. Also during the third quarter of 2017, Huntington entered into an economic hedge with notional value of $31 million for a total of $39 million at September 30, 2017 to hedge deferred compensation expense related to the Executive Deferred Compensation Plan. The economic hedges are recorded at fair value in other assets or liabilities. Changes in the fair value are recorded directly through other noninterest expense in the Unaudited Condensed Consolidated Statements of Income. At September 30, 2017, the fair value of the share swaps was $1 million.
Visa®-related SwapSwaps
In connection with the sale of Huntington’s Class B Visa® shares, Huntington entered into a swap agreement with the purchaser of the shares. The swap agreement adjusts for dilution in the conversion ratio of Class B shares resulting from changes in the Visa® litigation. In connection with the FirstMerit acquisition, Huntington acquired an additional Visa® related swap agreement. At September 30, 2017,2019, the combined fair value of the swap liabilities of $5$3 million is an estimate of the exposure liability based upon Huntington’s assessment of the potential Visa® litigation losses and timing of the litigation settlement.
Financial assets and liabilities that are offset in the Unaudited Condensed Consolidated Balance Sheets
Huntington records derivatives at fair value as further described in Note 11.11 "Fair Values of Assets and Liabilities".
Derivative balances are presented on a net basis taking into consideration the effects of legally enforceable master netting agreements. Additionally, collateral exchanged with counterparties is also netted against the applicable derivative fair values. Huntington enters into derivative transactions with two2 primary groups: broker-dealers and banks, and Huntington’s customers. Different methods are utilized for managing counterparty credit exposure and credit risk for each of these groups.
Huntington enters into transactions with broker-dealers and banks for various risk management purposes. These types of transactions generally are high-dollarhigh dollar volume. Huntington enters into bilateral collateral and master netting agreements with these counterparties, and routinely exchanges cash and high quality securities collateral. Huntington enters into transactions with

customers to meet their financing, investing, payment and risk management needs. These types of transactions generally are low-dollarlow dollar volume. Huntington enters into master netting agreements with customer counterparties; however, collateral is generally not exchanged.exchanged with customer counterparties.
At September 30, 20172019 and December 31, 2016,2018, aggregate credit risk associated with these derivatives, net of collateral that has been pledged by the counterparty, was $30$46 million and $26$37 million, respectively. The credit risk associated with interest rate swaps is calculated after considering master netting agreements with broker-dealers and banks.

At September 30, 2017,2019, Huntington pledged $144$109 million of investment securities and cash collateral to counterparties, while other counterparties pledged $78$228 million of investment securities and cash collateral to Huntington to satisfy collateral netting agreements. In the event of credit downgrades, Huntington would not be required to provide additional collateral.
The following tables present the gross amounts of these assets and liabilities with any offsets to arrive at the net amounts recognized in the Unaudited Condensed Consolidated Balance Sheets at September 30, 20172019 and December 31, 2016.2018.
Offsetting of Financial Assets and Derivative Assets
    Gross amounts
offset in the unaudited
condensed
consolidated
balance sheets		 Net amounts of
assets
presented in
the unaudited condensed
consolidated
balance sheets		 Gross amounts not offset in the
unaudited condensed consolidated
balance sheets		  
(dollar amounts in millions) 
Gross amounts
of recognized
assets
   
Financial
instruments
 
Cash collateral
received
 Net amount
September 30, 2019Derivatives$1,123
 $(546) $577
 $(15) $(31) $531
December 31, 2018Derivatives500
 (291) 209
 (4) (53) 152
Offsetting of Financial Liabilities and Derivative Assets
    Gross amounts
offset in the
condensed
consolidated
balance sheets		 Net amounts of
assets
presented in
the condensed
consolidated
balance sheets		 
Gross amounts not offset in
the condensed consolidated
balance sheets
  
(dollar amounts in thousands) 
Gross amounts
of recognized
assets
   
Financial
instruments
 
Cash collateral
received
 Net amount
September 30, 2017Derivatives$320,826
 $(154,562) $166,264
 $(23,350) $(16,895) $126,019
December 31, 2016Derivatives420,159
 (181,940) 238,219
 (34,328) (5,428) 198,463

Offsetting of Financial Liabilities and Derivative Liabilities
    
Gross amounts
offset in the unaudited
condensed
consolidated
balance sheets
 
Net amounts of
liabilities
presented in
the unaudited condensed
consolidated
balance sheets
 
Gross amounts not offset in the
unaudited condensed consolidated
balance sheets
  
(dollar amounts in millions) 
Gross amounts
of recognized
liabilities
   
Financial
instruments
 
Cash collateral
delivered
 Net amount
September 30, 2019Derivatives$631
 $(504) $127
 $—
 $(23) $104
December 31, 2018Derivatives404
 (217) 187
 —
 (12) 175
Offsetting of Financial Liabilities and Derivative Liabilities
    
Gross amounts
offset in the
condensed
consolidated
balance sheets
 
Net amounts of
liabilities
presented in
the condensed
consolidated
balance sheets
 
Gross amounts not offset in
the condensed consolidated
balance sheets
  
(dollar amounts in thousands) 
Gross amounts
of recognized
liabilities
   
Financial
instruments
 
Cash collateral
delivered
 Net amount
September 30, 2017Derivatives$293,650
 $(234,526) $59,124
 $—
 $(26,766) $32,358
December 31, 2016Derivatives370,647
 (272,361) 98,286
 (7,550) (23,943) 66,793

13. VIEs
Consolidated VIEs
Consolidated VIEs at September 30, 2017, consisted of certain loan and lease securitization trusts. Huntington has determined that the trusts are VIEs. Huntington has concluded that it is the primary beneficiary of these trusts because it has the power to direct the activities of the entity that most significantly affect the entity’s economic performance and it has either the obligation to absorb losses of the entity that could potentially be significant to the VIE or the right to receive benefits from the entity that could potentially be significant to the VIE.
The following tables present the carrying amount and classification of the consolidated trusts’ assets and liabilities that were included in the Unaudited Condensed Consolidated Balance Sheets at September 30, 2017 and December 31, 2016.
  September 30, 2017
  Huntington Technology Funding Trust Other Consolidated VIEs Total
(dollar amounts in thousands) Series 2014A  
Assets:      
Cash $1,569
 $—
 $1,569
Net loans and leases 33,148
 —
 33,148
Accrued income and other assets —
 269
 269
Total assets $34,717
 $269
 $34,986
Liabilities:      
Other long-term debt $28,120
 $—
 $28,120
Accrued interest and other liabilities —
 269
 269
Total liabilities 28,120
 269
 28,389
Equity:      
Beneficial Interest owned by third party 6,597
 —
 6,597
Total liabilities and equity $34,717
 $269
 $34,986

  December 31, 2016
  Huntington Technology
Funding Trust		 Other Consolidated VIEs Total
(dollar amounts in thousands) Series 2014A  
Assets:      
Cash $1,564
 $—
 $1,564
Net loans and leases 69,825
 —
 69,825
Accrued income and other assets —
 281
 281
Total assets $71,389
 $281
 $71,670
Liabilities:      
Other long-term debt $57,494
 $—
 $57,494
Accrued interest and other liabilities —
 281
 281
Total liabilities 57,494
 281
 57,775
Equity:      
Beneficial Interest owned by third party 13,895
 —
 13,895
Total liabilities and equity $71,389
 $281
 $71,670

The loans and leases were designated to repay the securitized notes. Huntington services the loans and leases and uses the proceeds from principal and interest payments to pay the securitized notes during the amortization period. Huntington has not provided financial or other support that was not previously contractually required.
Unconsolidated VIEs
The following tables provide a summary of the assets and liabilities included in Huntington’s Unaudited Condensed Consolidated Financial Statements, as well as the maximum exposure to losses, associated with its interests related to unconsolidated VIEs for which Huntington holds an interest, but is not the primary beneficiary, to the VIE at September 30, 2017,2019, and December 31, 2016.2018:

September 30, 2017
(dollar amounts in thousands)Total Assets
Total Liabilities
Maximum Exposure to Loss
2016-1 Automobile Trust$8,674
 $—
 $8,674
2015-1 Automobile Trust1,506

—

1,506
Trust Preferred Securities13,919

252,577

—
Low Income Housing Tax Credit Partnerships638,171

348,733

638,171
Other Investments108,556

48,339

108,556
Total$770,826

$649,649

$756,907

September 30, 2019
(dollar amounts in millions)Total Assets
Total Liabilities
Maximum Exposure to Loss
Trust Preferred Securities$14

$252

$—
Affordable Housing Tax Credit Partnerships714

338

714
Other Investments157

64

157
Total$885

$654

$871
 December 31, 2018
(dollar amounts in millions)Total Assets Total Liabilities Maximum Exposure to Loss
Trust Preferred Securities$14
 $252
 $—
Affordable Housing Tax Credit Partnerships708
 357
 708
Other Investments126
 53
 126
Total$848

$662

$834
 December 31, 2016
(dollar amounts in thousands)Total Assets Total Liabilities Maximum Exposure to Loss
2016-1 Automobile Trust$14,770
 $—
 $14,770
2015-1 Automobile Trust2,227
 —
 2,227
Trust Preferred Securities13,919
 252,552
 —
Low Income Housing Tax Credit Partnerships576,880
 292,721
 576,880
Other Investments79,195
 42,316
 79,195
Total$686,991

$587,589

$673,072



The following table provides a summary of automobile transfers to trusts in separate securitization transactions.
(dollar amounts in millions) Year Amount Transferred
2016-1 Automobile Trust 2016 $1,500
2015-1 Automobile Trust 2015 750
The securitizations and the resulting sale of all underlying securities qualified for sale accounting. Huntington has concluded that it is not the primary beneficiary of these trusts because it has neither the obligation to absorb losses of the entities that could potentially be significant to the VIEs nor the right to receive benefits from the entities that could potentially be significant to the VIEs. Huntington is not required and does not currently intend to provide any additional financial support to the trusts. Investors and creditors only have recourse to the assets held by the trusts. The interest Huntington holds in the VIEs relates to servicing rights which are included in servicing rights of Huntington’s Unaudited Consolidated Balance Sheets. The maximum exposure to loss is equal to the carrying value of the servicing asset. See Note 6 for more information.
Trust PreferredTrust-Preferred Securities
Huntington has certain wholly-owned trusts whose assets, liabilities, equity, income, and expenses are not included inwithin Huntington’s Unaudited Condensed Consolidated Financial Statements. These trusts have been formed for the sole purpose of issuing trust-preferred securities, from which the proceeds are then invested in Huntington junior subordinated debentures, which are reflected in Huntington’s Unaudited Condensed Consolidated Balance SheetsSheet as subordinated notes.long-term debt. The trust securities are the obligations of the trusts, and as such, are not consolidated inwithin Huntington’s Unaudited Condensed Consolidated Financial Statements.
A list of trust preferred securities outstanding at September 30, 2017 follows.2019 follows:
(dollar amounts in thousands)Rate 
Principal amount of
subordinated note/
debenture issued to trust (1)
 
Investment in
unconsolidated
subsidiary
(dollar amounts in millions)Rate 
Principal amount of
subordinated note/
debenture issued to trust (1)
 
Investment in
unconsolidated
subsidiary
Huntington Capital I2.01%(2)$69,730
 $6,186
2.79%(2)$70
 $6
Huntington Capital II1.95
(3)32,093
 3,093
2.71
(3)32
 3
Sky Financial Capital Trust III2.74
(4)72,165
 2,165
3.49
(4)72
 2
Sky Financial Capital Trust IV2.70
(4)74,320
 2,320
3.49
(4)74
 2
Camco Financial Trust3.76
(5)4,269
 155
3.42
(5)4
 1
Total  $252,577
 $13,919
  $252
 $14
(1)Represents the principal amount of debentures issued to each trust, including unamortized original issue discount.
(2)Variable effective rate at September 30, 2017,2019, based on three-month LIBOR +0.70%.
(3)Variable effective rate at September 30, 2017,2019, based on three-month LIBOR +0.625%.
(4)Variable effective rate at September 30, 2017,2019, based on three-month LIBOR +1.40%.
(5)
Variable effective rate at September 30, 2017,2019, based on three-month LIBOR +1.33%.

Each issue of the junior subordinated debentures has an interest rate equal to the corresponding trust securities distribution rate. Huntington has the right to defer payment of interest on the debentures at any time, or from time-to-time for a period not exceeding five years provided that no extension period may extend beyond the stated maturity of the related debentures. During any such extension period, distributions to the trust securities will also be deferred and Huntington’s ability to pay dividends on its common stock will be restricted. Periodic cash payments and payments upon liquidation or redemption with respect to trust securities are guaranteed by Huntington to the extent of funds held by the trusts. The guarantee ranks subordinate and junior in right of payment to all indebtedness of the Company to the same extent as the junior subordinated debt. The guarantee does not place a limitation on the amount of additional indebtedness that may be incurred by Huntington.
Low IncomeAffordable Housing Tax Credit Partnerships
Huntington makes certain equity investments in various limited partnerships that sponsor affordable housing projects utilizing the Low Income Housing Tax Credit (LIHTC)LIHTC pursuant to Section 42 of the Internal Revenue Code. The purpose of these investments is to achieve a satisfactory return on capital, to facilitate the sale of additional affordable housing product offerings, and to assist in achieving goals associated with the Community Reinvestment Act. The primary activities of the limited partnerships include the identification, development, and operation of multi-family housing that is leased to qualifying residential tenants. Generally, these types of investments are funded through a combination of debt and equity.
Huntington uses the proportional amortization method to account for all qualifieda majority of its investments in these entities. These investments are included in accrued income and other assets. Investments that do not meet the requirements of the proportional

amortization method are recognizedaccounted for using the equity method. Investment gains/losses related to these investments are included in noninterest income in the Unaudited Condensed Consolidated Statements of Income.
The following table presents the balances of Huntington’s affordable housing tax credit investments and related unfunded commitments at September 30, 20172019 and December 31, 2016.2018.
(dollar amounts in millions)September 30,
2019		 December 31,
2018
Affordable housing tax credit investments$1,219
 $1,147
Less: amortization(505) (439)
Net affordable housing tax credit investments$714
 $708
Unfunded commitments$338
 $357

(dollar amounts in thousands)September 30,
2017		 December 31,
2016
Affordable housing tax credit investments$980,984
 $877,237
Less: amortization(342,813) (300,357)
Net affordable housing tax credit investments$638,171
 $576,880
Unfunded commitments$348,733
 $292,721

The following table presents other information relatedrelating to Huntington’s affordable housing tax credit investments for the three-month and nine-month periods ended September 30, 20172019 and 2016.2018.
  Three Months Ended
September 30,		 Nine Months Ended
September 30,
(dollar amounts in millions) 2019 2018 2019 2018
Tax credits and other tax benefits recognized $26
 $24
 $79
 $70
         
Proportional amortization expense included in provision for income taxes 22
 19
 66
 59

 Three Months Ended
September 30,		 Nine Months Ended
September 30,
(dollar amounts in thousands)2017 2016 2017 2016
Tax credits and other tax benefits recognized$22,471
 $21,200
 $68,426
 $57,634
Proportional amortization method       
Tax credit amortization expense included in provision for income taxes17,292
 13,608
 51,474
 38,513
Equity method       
Tax credit investment (gains) losses included in noninterest income—
 132
 —
 396

Huntington recognized immaterial impairment losses onThere were no material sales of affordable housing tax credit investments during the three-month and nine-month periods ended September 30, 20172019 and 2016. The2018. There was no impairment losses recognized related tofor the fair value of the tax credit investments that were less than carrying value.three-month and nine-month periods ended September 30, 2019 and 2018.
Other InvestmentsVIE's
Other investments determined to be VIEsVIE's include investments in New Market Tax Credit Investments,Small Business Investment Companies, Historic Tax Credit Investments, Small Business Investment Companies, Rural Business Investment Companies, certain equity method investments, renewable energy financings, automobile securitizations, and other miscellaneous investments.
14. COMMITMENTS AND CONTINGENT LIABILITIES
Commitments to extend credit
In the ordinary course of business, Huntington makes various commitments to extend credit that are not reflected in the Unaudited Condensed Consolidated Financial Statements. The contract amounts of these financial agreements at September 30, 20172019 and December 31, 2016,2018, were as listed in the following table.follows:
(dollar amounts in millions)September 30,
2019
December 31,
2018
Contract amount representing credit risk   
Commitments to extend credit:   
Commercial$18,345

$17,149
Consumer14,754

14,974
Commercial real estate1,410

1,188
Standby letters of credit624

676
Commercial letters-of-credit10

14
(dollar amounts in thousands)September 30,
2017
December 31,
2016
Contract amount representing credit risk:   
Commitments to extend credit   
Commercial$16,056,609

$15,190,056
Consumer12,977,175

12,235,943
Commercial real estate1,373,127

1,697,671
Standby letters-of-credit547,689

637,182
Commercial letters-of-credit16,815

4,610


Commitments to extend credit generally have fixed expiration dates, are variable-rate, and contain clauses that permit Huntington to terminate or otherwise renegotiate the contracts in the event of a significant deterioration in the customer’s credit quality. These arrangements normally require the payment of a fee by the customer, the pricing of which is based on prevailing market conditions, credit quality, probability of funding, and other relevant factors. Since many of these commitments are expected to expire without being drawn upon, the contract amounts are not necessarily indicative of future cash requirements.

The interest rate risk arising from these financial instruments is insignificant as a result of their predominantly short-term, variable-rate nature.
Standby letters-of-credit are conditional commitments issued to guarantee the performance of a customer to a third party.third-party. These guarantees are primarily issued to support public and private borrowing arrangements, including commercial paper, bond financing, and similar transactions. Most of these arrangements mature within two years. The carrying amount of deferred revenue associated with these guarantees was $5$10 million and $8$13 million at September 30, 20172019 and December 31, 2016,2018, respectively.
Commercial letters-of-credit represent short-term, self-liquidating instruments that facilitate customer trade transactions and generally have maturities of no longer than 90 days. The goods or cargo being traded normally securessecure these instruments.
Litigation and Regulatory Matters
The following supplements the disclosure in Note 20 - Commitments and Contingencies to sell loans
Activity related to our mortgage origination activity supports the hedgingConsolidated Financial Statements of the mortgage pricingCorporation’s 2018 Annual Report on Form 10-K and in Note 14 - Commitments and Contingencies to the Consolidated Financial Statements of the Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019 (collectively, the prior commitments and contingencies disclosures).
In the ordinary course of business, Huntington is routinely a defendant in or party to customerspending and the secondary sale to third parties. At September 30, 2017 and December 31, 2016, Huntington had commitments to sell residential real estate loans of $1.0 billion and $0.8 billion, respectively. These contracts mature in less than one year.
Litigation
The nature of Huntington’s business ordinarily results in a certain amount of pending as well as threatened claims, litigation, investigations, regulatory and legal and administrative cases, mattersregulatory actions and proceedings, all of which are considered incidental to the normal conduct of business. When the Company determines it has meritorious defenses to the claims asserted, it vigorously defends itself. The Company considers settlement of cases when, in Management’s judgment, it is in the best interests of both the Company and its shareholders to do so.proceedings.
On at least a quarterly basis, Huntington assesses its liabilities and contingencies in connection with threatened and outstanding legal cases, matters and proceedings, utilizing the latest information available. For cases, matters and proceedings where it is both probable the Company will incur a loss and the amount can be reasonably estimated, Huntington establishes an accrual for the loss. Once established, the accrual is adjusted as appropriate to reflect any relevant developments. For cases, matters or proceedings where a loss is not probable or the amountIn view of the lossinherent difficulty of predicting the outcome of such matters, particularly where the claimants seek very large or indeterminate damages or where the matters present novel legal theories or involve a large number of parties,

Huntington generally cannot be estimated, no accrual is established.
In certain cases, matters and proceedings, exposure to loss exists in excesspredict what the eventual outcome of the accrual topending matters will be, what the extent such loss is reasonably possible, but not probable. Management believes an estimatetiming of the aggregate range of reasonably possible losses, in excess of amounts accrued, for current legal proceedings is up to $65 million at September 30, 2017. For certain other cases, and matters, Management cannot reasonably estimate the possible loss at this time. Any estimate involves significant judgment, given the varying stages of the proceedings (including the fact that many of them are currently in preliminary stages), the existence of multiple defendants in several of the current proceedings whose share of liability has yet to be determined, the numerous unresolved issues in many of the proceedings, and the inherent uncertainty of the various potential outcomes of such proceedings. Accordingly, Management’s estimate will change from time-to-time, and actual losses may be more or less than the current estimate.
While the final outcome of legal cases, matters, and proceedings is inherently uncertain, based on information currently available, advice of counsel, and available insurance coverage, Management believes that the amount it has already accrued is adequate and any incremental liability arising from the Company’s legal cases, matters, or proceedings will not have a material negative adverse effect on the Company’s consolidated financial position as a whole. However, in the event of unexpected future developments, it is possible that the ultimate resolution of these matters will be, or what the eventual loss, fines or penalties related to each matter may be.
Huntington establishes an accrued liability when those matters present loss contingencies that are both probable and estimable. In such cases, there may be an exposure to loss in excess of any amounts accrued. Huntington thereafter continues to monitor the matter for further developments that could affect the amount of the accrued liability that has been previously established.
For certain matters, Huntington is able to estimate a range of possible loss. In cases in which Huntington possesses information to estimate a range of possible loss, that estimate is aggregated and proceedings, if unfavorable,disclosed below. There may be other matters for which a loss is probable or reasonably possible but such an estimate of the range of possible loss may not be possible. For those matters where an estimate of the range of possible loss is possible, management currently estimates the aggregate range of possible loss is $0 to $20 million at September 30, 2019 in excess of the accrued liability (if any) related to those matters. This estimated range of possible loss is based upon currently available information and is subject to significant judgment and a variety of assumptions, and known and unknown uncertainties. The matters underlying the estimated range will change from time to time, and actual results may vary significantly from the current estimate. The estimated range of possible loss does not represent Huntington’s maximum loss exposure.
Based on current knowledge, management does not believe that loss contingencies arising from pending matters will have a material adverse effect on the consolidated financial position of Huntington. Further, management believes that amounts accrued are adequate to address Huntington’s contingent liabilities. However, in light of the inherent uncertainties involved in these matters, some of which are beyond Huntington’s control, and the large or indeterminate damages sought in some of these matters, an adverse outcome in one or more of these matters could be material to the Company’s consolidated financial position in aHuntington’s results of operations for any particular period.
Meoli v. The Huntington National Bank (Cyberco Litigation). The Bank has been named a defendant in a lawsuit arising from the Bank’s commercial lending, depository, and equipment leasing relationships with Cyberco Holdings, Inc. (Cyberco), Cyberco allegedly defrauded equipment lessors and financial institutions, including Huntington, in financing the purchase of computer equipment from Teleservices Group, Inc. (Teleservices), which itself later proved to be a shell corporation. Bankruptcy proceedings for both Cyberco and Teleservices ensued.
In an adversary proceeding brought by the bankruptcy trustee for Teleservices in the U.S. District Court for the Western District of Michigan, judgment was rendered against Huntington in the amount of $72 million plus costs and pre- and post-judgment interest. Huntington appealed the judgment to the U.S. Sixth Circuit Court of Appeals, which reversed the judgment in part and remanded the case for further proceedings. The case is currently before the bankruptcy court again. The parties have completed briefing on liability and the appropriate calculation of damages, and await the scheduling of a hearing on the issue.
Powell v. Huntington National Bank.  Huntington is a defendant in a class action filed on October 15, 2013 alleging Huntington charged late fees on mortgage loans in a method that violated West Virginia law and the loan documents. Plaintiffs seek statutory civil penalties, compensatory damages and attorney’s fees. Huntington filed a motion for summary judgment on

the plaintiffs’ claims, which was granted by the U.S. District Court on December 28, 2016.  Plaintiffs have appealed to the U.S. Fourth Circuit Court of Appeals. Oral arguments were held on October 24, 2017.
FirstMerit Overdraft Litigation. Commencing in December 2010, two separate lawsuits were filed in the Summit County Court of Common Pleas and the Lake County Court of Common Pleas against FirstMerit. The complaints were brought as class actions on behalf of Ohio residents who maintained a checking account at FirstMerit and who incurred one or more overdraft fees as a result of the alleged re-sequencing of debit transactions. The parties have reached a global settlement for approximately $9 million cash to a common fund plus an additional $7 million in debt forgiveness. Attorneys' fees will be paid from the fund, with any remaining funds going to charity. FirstMerit’s insurer has reimbursed Huntington 49% of the approximately $9 million, which totals approximately $4.4 million. The court preliminarily approved the settlement on December 5, 2016 and the cash portion of the settlement was funded on December 12, 2016. The settlement received final approval on June 2, 2017 and there has been no appeal, so the settlement is final. Huntington is in the process of issuing settlement checks, forgiving the agreed-upon debt, and taking other actions as agreed upon in the settlement agreement. Because the settlement is in the process of being concluded, we anticipate no further reporting on this matter.period.
15. SEGMENT REPORTING
OurHuntington's business segments are based on our internally-aligned segment leadership structure, which is how we monitormanagement monitors results and assessassesses performance. We have fourThe Company has 4 major business segments: Consumer and Business Banking, Commercial Banking, Commercial Real Estate and Vehicle Finance, (CREVF), Regional Banking and The Huntington Private Client Group (RBHPCG). The Treasury / Other function includes our technology and operations, other unallocated assets, liabilities, revenue, and expense.
Business segment results are determined based upon ourHuntington's management reporting system, which assigns balance sheet and income statement items to each of the business segments. The process is designed around ourthe organizational and management structure and, accordingly, the results derived are not necessarily comparable with similar information published by other financial institutions. Additionally, because of the interrelationships of the various segments, the information presented is not indicative of how the segments would perform if they operated as independent entities.
Revenue is recorded in the business segment responsible for the related product or service. Fee sharing is recorded to allocate portions of such revenue to other business segments involved in selling to, or providing service to customers. Results of operations for the business segments reflect these fee-sharing allocations.
The management accounting process that develops the business segment reporting utilizes various estimates and allocation methodologies to measure the performance of the business segments. Expenses are allocated to business segments using a two-phase approach. The first phase consists of measuring and assigning unit (activity-based) costs (activity-based costs) to activities related to product origination and servicing. These activity-based costs are then extended, based on volumes, with the resulting amount allocated to business segments that own the related products. The second phase consists of the allocation of overhead costs to all four4 business segments from Treasury / Other. We utilizeHuntington utilizes a full-allocation methodology, where all Treasury / Other expenses, except reported Significant Items, if any, and a small amount of other residual unallocated expenses, are allocated to the four4 business segments.
The management accounting policies and processes utilized in compiling segment financial information are highly subjective and, unlike financial accounting, are not based on authoritative guidance similar to GAAP. As a result, reported segment results are not necessarily comparable with similar information reported by other financial institutions. Furthermore, changes in management structure or allocation methodologies and procedures result in changes in reported segment
financial data. Accordingly, certain amounts have been reclassified to conform to the current period presentation.
We useHuntington uses an active and centralized Funds Transfer Pricing (FTP)FTP methodology to attribute appropriate net interest income to the business segments. The intent of the FTP methodology is to transfer interest rate risk from the business segments by providing matched duration funding of assets and liabilities. The result centralizesis to centralize the financial impact, management, and reporting of interest rate risk in the Treasury / Other function where it can be centrally monitored and managed. The Treasury / Other function charges (credits) an internal cost of funds for assets held in (or pays for funding provided by) each business segment. The FTP rate is based on prevailing market interest rates for comparable duration assets (or liabilities). During 2019, the Company
We announced a change in our executive leadership team, which became effective during
updated and refined its FTP methodology primarily related to the second quarterallocation of 2017. As a result,deposit funding costs. Prior period amounts presented below have been restated to reflect the previously-reported Home Lending segment is now included as an operating unit in the new methodology.
Consumer and Business Banking segment. Additionally, the Insurance operating unit previously included in Commercial Banking was realigned to RBHPCG during second quarter. Prior period results have been reclassified to conform to the current period presentation.

Consumer and Business Banking - The Consumer and Business Banking segment, including Home Lending, provides a wide array of financial products and services to consumer and small business customers including but not limited to checking accounts, savings accounts, money market accounts, certificates of deposit, mortgage loans, consumer loans, credit cards, and small business loans and investment products. Other financial services available to consumer and small business customers include insurance, interest rate risk protection, foreign exchange, and treasury management. Business Banking is defined as serving companies with revenues up to $20 million and consists of approximately 254,000 businesses.million. Home Lending supports origination and servicing of consumer loans and mortgages for customers who are generally located in our primary banking markets across all segments.
Commercial Banking - Through a relationship banking model, this segment provides a wide array of products and services to the middle market, large corporate, real estate and government public sector customers located primarily within our geographic footprint. The segment is divided into six6 business units: Middle Market, Large Corporate, Specialty Banking, Asset Finance, Capital Markets and Treasury Management.
Markets/Institutional Corporate Banking, Commercial Real Estate and Treasury Management.
Vehicle Finance - This segment provides lending and other banking products and services to customers outside of our traditional retail and commercial banking segments. Our products and services include providing financing to consumers for the purchase of automobiles, light-duty trucks, recreational vehicles and marine craft at franchised and other select dealerships, and providing financing to franchised dealerships for the acquisition of new and used vehicle inventory of franchised automotive dealerships, and financing for land, buildings, and other commercial real estate owned or constructed by real estate developers, automobile dealerships, or other customers with real estate project financing needs.inventory. Products and services are delivered through highly specialized relationship-focused bankers and product partners.
Regional Banking and The Huntington Private Client Group - The core business of The Huntington Private Client Group is The Huntington Private Bank, which consists of Private Banking, Wealth & Investment Management, and Retirement Plan Services. The Huntington Private Bank provides high net-worth customers with deposit, lending (including specialized lending options), and banking services. The Huntington Private Bank also delivers wealth management and legacy planning through investment and portfolio management, fiduciary administration, and trust services. This group also provides retirement plan services to corporate businesses. The Huntington Private Client Group provides corporate trust services and institutional and mutual fund custody services and insurance services.
Listed in the table below is certain operating basis financial information reconciled to Huntington’s September 30, 2017,2019, December 31, 2016,2018, and September 30, 2016,2018, reported results by business segment.
            
 Three Months Ended September 30,
Income StatementsConsumer & Business Banking Commercial Banking CREVF RBHPCG Treasury / Other Huntington Consolidated
(dollar amounts in thousands)     
2017           
Net interest income$426,752
 $171,448
 $139,870
 $49,596
 $(29,233) $758,433
Provision for (reduction in allowance) credit losses24,089
 9,580
 9,705
 216
 —
 43,590
Noninterest income189,378
 59,121
 10,969
 46,215
 24,414
 330,097
Noninterest expense415,874
 100,003
 55,354
 58,237
 50,960
 680,428
Income taxes61,658
 42,345
 30,022
 13,076
 (57,157) 89,944
Net income$114,509
 $78,641
 $55,758
 $24,282
 $1,378
 $274,568
2016           
Net interest income$349,283
 $143,023
 $126,489
 $41,971
 $(35,376) $625,390
Provision for (reduction in allowance) credit losses12,724
 23,788
 25,615
 1,663
 15
 63,805
Noninterest income177,234
 54,744
 8,001
 45,339
 17,097
 302,415
Noninterest expense349,470
 87,892
 44,331
 57,473
 173,081
 712,247
Income taxes57,513
 30,130
 22,590
 9,861
 (95,345) 24,749
Net income$106,810
 $55,957
 $41,954
 $18,313
 $(96,030) $127,004
            
 Three Months Ended September 30,
Income StatementsConsumer & Business Banking Commercial Banking Vehicle Finance RBHPCG Treasury / Other Huntington Consolidated
(dollar amounts in millions)     
2019           
Net interest income$433
 $263
 $100
 $48
 $(45) $799
Provision (benefit) for credit losses35
 36
 12
 (1) —
 82
Noninterest income223
 101
 4
 47
 14
 389
Noninterest expense421
 142
 36
 63
 5
 667
Provision (benefit) for income taxes42
 39
 12
 7
 (33) 67
Net income (loss)$158
 $147
 $44
 $26
 $(3) $372
2018           
Net interest income$445
 $259
 $97
 $51
 $(50) $802
Provision (benefit) for credit losses41
 (1) 13
 —
 —
 53
Noninterest income194
 81
 3
 46
 18
 342
Noninterest expense424
 121
 35
 60
 11
 651
Provision (benefit) for income taxes38
 46
 11
 6
 (39) 62
Net income (loss)$136
 $174
 $41
 $31
 $(4) $378

 Nine Months Ended September 30,
Income StatementsConsumer & Business Banking Commercial Banking CREVF RBHPCG Treasury / Other Huntington Consolidated
(dollar amounts in thousands)     
2017           
Net interest income$1,255,617
 $514,900
 $419,556
 $145,089
 $(102,242) $2,232,920
Provision for credit losses74,270
 21,378
 40,047
 510
 1
 136,206
Noninterest income544,445
 176,609
 34,750
 140,610
 71,364
 967,778
Noninterest expense1,242,152
 301,385
 163,989
 182,171
 192,517
 2,082,214
Income taxes169,274
 129,061
 87,594
 36,056
 (194,110) 227,875
Net income$314,366
 $239,685
 $162,676
 $66,962
 $(29,286) $754,403
2016           
Net interest income$911,706
 $355,263
 $317,704
 $112,473
 $(62,809) $1,634,337
Provision for credit losses43,474
 53,212
 18,706
 490
 14
 115,896
Noninterest income459,732
 150,228
 25,951
 126,245
 53,238
 815,394
Noninterest expense967,417
 246,941
 125,254
 166,645
 220,731
 1,726,988
Income taxes126,191
 71,868
 69,893
 25,054
 (159,017) 133,989
Net income$234,356
 $133,470
 $129,802
 $46,529
 $(71,299) $472,858
 Nine Months Ended September 30,
Income StatementsConsumer & Business Banking Commercial Banking Vehicle Finance RBHPCG Treasury / Other Huntington Consolidated
(dollar amounts in millions)     
2019           
Net interest income$1,371
 $798
 $291
 $153
 $(180) $2,433
Provision (benefit) for credit losses81
 103
 27
 (3) —
 208
Noninterest income596
 266
 9
 147
 64
 1,082
Noninterest expense1,247
 427
 112
 193
 41
 2,020
Provision (benefit) for income taxes134
 113
 33
 23
 (110) 193
Net income (loss)$505
 $421
 $128
 $87
 $(47) $1,094
2018           
Net interest income$1,254
 $744
 $294
 $148
 $(84) $2,356
Provision (benefit) for credit losses98
 41
 36
 —
 —
 175
Noninterest income557
 234
 9
 146
 46
 992
Noninterest expense1,263
 364
 106
 180
 23
 1,936
Provision (benefit) for income taxes95
 120
 34
 24
 (95) 178
Net income (loss)$355
 $453
 $127
 $90
 $34
 $1,059
 Assets at Deposits at
(dollar amounts in millions)September 30,
2019		 December 31,
2018		 September 30,
2019		 December 31,
2018
Consumer & Business Banking$25,418
 $27,486
 $51,671
 $50,300
Commercial Banking34,368
 34,818
 21,088
 23,185
Vehicle Finance19,414
 19,435
 363
 346
RBHPCG6,593
 6,540
 6,101
 6,809
Treasury / Other22,942
 20,502
 3,172
 4,134
Total$108,735
 $108,781
 $82,395
 $84,774

 Assets at Deposits at
(dollar amounts in thousands)September 30,
2017		 December 31,
2016		 September 30,
2017		 December 31,
2016
Consumer & Business Banking$25,989,043
 $25,332,635
 $45,694,477
 $45,355,745
Commercial Banking24,199,091
 24,121,689
 20,795,143
 18,053,208
CREVF24,723,324
 23,576,832
 2,052,274
 1,893,072
RBHPCG5,695,880
 5,327,622
 5,944,240
 6,214,250
Treasury / Other21,380,788
 21,355,319
 3,958,979
 4,091,442
Total$101,988,126
 $99,714,097
 $78,445,113
 $75,607,717




Item 3: Quantitative and Qualitative Disclosures about Market Risk
Quantitative and qualitative disclosures for the current period can be found in the Market Risk section of this report, which includes changes in market risk exposures from disclosures presented in Huntington’s 20162018 Form 10-K.
Item 4: Controls and Procedures
Disclosure Controls and Procedures
Huntington maintains disclosure controls and procedures designed to ensure that the information required to be disclosed in the reports that it files (or submits)or submits under the Securities Exchange Act of 1934, as amended (the Exchange Act), are recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Huntington’s Management, with the participation of its Chief Executive Officer and the Chief Financial Officer, evaluated the effectiveness of Huntington’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report.September 30, 2019. Based upon such evaluation, Huntington’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period,September 30, 2019, Huntington’s disclosure controls and procedures were effective.
There have not been any changes in Huntington’sour internal controlscontrol over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relatesended September 30, 2019, that have materially affected, or are reasonably likely to materially affect, Huntington’s internal control over financial reporting.

PART II. OTHER INFORMATION
In accordance with the instructions to Part II, the other specified items in this part have been omitted because they are not applicable or the information has been previously reported.
Item 1: Legal Proceedings
Information required by this item is set forth in Note 14 "Commitments and Contingent Liabilities" of the Notes to Unaudited Condensed Consolidated Financial Statements included in under the caption "Litigation and Regulatory Matters" and is incorporated into this Item 1 of this report and incorporated herein by reference.
Item 1A: Risk Factors
Information required by this item is set forth in Part 1 Item 2- Management’s Discussion and Analysis of Financial Condition and Results of Operations of this report and incorporated herein by reference.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
(a) and (b)
Not Applicable
(c)
(c)
PeriodTotal Number of Shares Purchased (1) Average
Price Paid
Per Share		 Maximum Number of Shares (or Approximate Dollar Value) that May Yet Be Purchased Under the Plans or Programs (2)
July 1, 2019 to July 31, 201959,000
 $14.42
 $512,149,127
August 1, 2019 to August 31, 20195,154,176
 13.01
 445,099,835
September 1, 2019 to September 30, 2019—
 —
 445,099,835
Total5,213,176
 $13.02
 $445,099,835
PeriodTotal
Number of
Shares
Purchased (1)		 Average
Price Paid
Per Share		 Maximum Number of Shares (or
Approximate Dollar Value) that
May Yet Be Purchased Under
the Plans or Programs (2)
July 1, 2017 to July 31, 20171,122,116
 $13.20
 $293,164,850
August 1, 2017 to August 31, 20176,046,079
 12.81
 215,621,231
September 1, 2017 to September 30, 20172,476,746
 12.43
 184,795,094
Total9,644,941
 $12.75
 $184,795,094
(1)The reported shares were repurchased pursuant to Huntington’s publicly-announced stockshare repurchase authorizations.authorization.
(2)The number shown represents, as of the end of each period, the maximum number of shares (or approximate dollar value)value of Common Stock that may yet be purchased under publicly-announced stockshare repurchase authorizations. The shares may be purchased, from time-to-time, depending on market conditions.

On June 28, 2017, Huntington was notified by the Federal Reserve that it had no objection to Huntington's proposed capital actions included in Huntington's capital plan submitted in the 2017 Comprehensive Capital Analysis and Review (CCAR). These actions included a 38% increase in the quarterly dividend per common share to $0.11, starting in the fourth quarter of 2017, the repurchase of up to $308 million of common stock over the next four quarters (July 1, 2017 through June 30, 2018), subject to authorization byJuly 17, 2019, the Board of Directors and maintaining dividends on the outstanding classes of preferred stock and trust preferred securities.
On July 19, 2017, the Board authorized the repurchase of up to $308$513 million of common shares over the four quarters through the 2020 second quarter. During the 2019 third quarter, Huntington repurchased a total of 2018. Purchases 5.2 million shares at a weighted average share price of common stock under the authorization may include open market purchases, privately-negotiated transactions, and accelerated repurchase programs.$13.02.

Item 6. Exhibits
Exhibit Index
ThisThis report incorporates by reference the documents listed below that we have previously filed with the SEC. The SEC allows us to incorporate by reference information in this document. The information incorporated by reference is considered to be a part of this document, except for any information that is superseded by information that is included directly in this document.
This information may be read and copied at the Public Reference Room of the SEC at 100 F Street, N.E., Washington, D.C. 20549. The SEC also maintains an Internet websiteweb site that contains reports, proxy statements, and other information about issuers, like us, who file electronically with the SEC. The address of the site is http://www.sec.gov. The reports and other information filed by us with the SEC are also available free of charge at our Internet web site. The address of the site is http://www.huntington.com. Except as specifically incorporated by reference into this Quarterly Report on Form 10-Q, information on those websitesweb sites is not part of this report. Reports,You also should be able to inspect reports, proxy statements, and other information about us can also be inspected at the offices of the NASDAQ Nasdaq National Market at 33 Whitehall Street, New York, New York.York 10004.

Exhibit
Number
 Document Description Report or Registration Statement 
SEC File or
Registration
Number
 
Exhibit
Reference
 
3.1 (P) Articles of Restatement of Charter. Annual Report on Form 10-K for the year ended December 31, 1993 000-02525 3
(i) 
          
3.2 
Articles of Amendment to Articles of Restatement of Charter.
 
Current Report on Form 8-K dated May 31, 2007
 
000-02525
 
3.1

  
          
3.3 
Articles of Amendment to Articles of Restatement of Charter.
 
Current Report on Form 8-K dated May 7, 2008
 
000-02525
 
3.1

  
          
3.4 
Articles of Amendment to Articles of Restatement of Charter.
 
Current Report on Form 8-K dated April 27, 2010
 
001-34073
 
3.1

  
          
3.5 
Articles Supplementary of Huntington Bancshares Incorporated, as of April 22, 2008.
 
Current Report on Form 8-K dated April 22, 2008
 
000-02525
 
3.1

  
          
3.6 
Articles Supplementary of Huntington Bancshares Incorporated, as of April 22. 2008.
 
Current Report on Form 8-K dated April 22, 2008
 
000-02525
 
3.2

  
          
3.7 
Articles Supplementary of Huntington Bancshares Incorporated, as of November 12, 2008.
 
Current Report on Form 8-K dated November 12, 2008
 
001-34073
 
3.1

  
          
3.8 
Articles Supplementary of Huntington Bancshares Incorporated, as of December 31, 2006.
 
Annual Report on Form 10-K for the year ended December 31, 2006
 
000-02525
 
3.4

 
          
3.9 
Articles Supplementary of Huntington Bancshares Incorporated, as of December 28, 2011.
 
Current Report on Form 8-K dated December 28, 2011
 
001-34073
 
3.1

 
          
3.10 
Articles Supplementary of Huntington Bancshares Incorporated, as of March 18, 2016.
 
Current Report on Form 8-K dated March 21, 2016
 
001-34073
 
3.1

 
          
3.11 
Articles Supplementary of Huntington Bancshares Incorporated, as of May 3, 2016.
 
Current Report on Form 8-K dated May 5, 2016
 
001-34073
 
3.2

 
          
3.12 
Articles Supplementary of Huntington Bancshares Incorporated, effective as of August 15, 2016.
 
Registration Statement on Form 8-A dated August 15, 2016
 
001-34073
 
3.12

 
          
3.13 
Bylaws of Huntington Bancshares Incorporated, as amended and restated, as of July 19, 2017.
 
Current Report on Form 8-K dated July 21, 2017
 
001-34073
 
3.1

 
          
4.1(P) Instruments defining the Rights of Security Holders—reference is made to Articles Fifth, Eighth, and Tenth of Articles of Restatement of Charter, as amended and supplemented. Instruments defining the rights of holders of long-term debt will be furnished to the Securities and Exchange Commission upon request.       
          
31.1 
*Rule 13a-14(a) Certification – Chief Executive Officer.
       
          
31.2 
*Rule 13a-14(a) Certification – Chief Financial Officer.
       
          
32.1 
**Section 1350 Certification – Chief Executive Officer.
       
          

32.2
**Section 1350 Certification – Chief Financial Officer.
101*The following material from Huntington’s Form 10-Q Report for the quarterly period ended September 30, 2017, formatted in XBRL: (1) Unaudited Condensed Consolidated Balance Sheets, (2) Unaudited Condensed Consolidated Statements of Income, (3) Unaudited Condensed Consolidated Statements of Comprehensive Income (4) Unaudited Condensed Consolidated Statement of Changes in Shareholders’ Equity, (5) Unaudited Condensed Consolidated Statements of Cash Flows, and (6) the Notes to Unaudited Condensed Consolidated Financial Statements.
Exhibit
Number
Document DescriptionReport or Registration Statement
SEC File or
Registration
Number
Exhibit
Reference
3.1
Articles Supplementary of Huntington Bancshares Incorporated, as of January 18, 2019.
Current Report on Form 8-K dated January 16, 2019.
001-34073
3.1
3.2
Articles of Restatement of Huntington Bancshares Incorporated, as of January 18, 2019.
Current Report on Form 8-K dated January 16, 2019.
001-34073
3.2
3.3
Bylaws of Huntington Bancshares Incorporated, as amended and restated on January 16, 2019.
Current Report on Form 8-K dated January 16, 2019.
001-34073
3.3
4.1(P)Instruments defining the Rights of Security Holders—reference is made to Articles Fifth, Eighth, and Tenth of Articles of Restatement of Charter, as amended and supplemented. Instruments defining the rights of holders of long-term debt will be furnished to the Securities and Exchange Commission upon request.   
10.1
Second Amendment to the Huntington Supplemental 401(k) Plan, dated October 22, 2019
   
10.2
First Amendment to The Huntington Bancshares Supplemental Retirement Income Plan, dated October 23, 2019
   
31.1
*Rule 13a-14(a) Certification – Chief Executive Officer.
   
31.2
*Rule 13a-14(a) Certification – Chief Financial Officer.
   
32.1
**Section 1350 Certification – Chief Executive Officer.
   
32.2
**Section 1350 Certification – Chief Financial Officer.
   
101.INS***The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document   
101.SCH*Inline XBRL Taxonomy Extension Schema Document   
101.CAL*Inline XBRL Taxonomy Extension Calculation Linkbase Document   
101.DEF*Inline XBRL Taxonomy Extension Definition Linkbase Document   
101.LAB*Inline XBRL Taxonomy Extension Label Linkbase Document   
101.PRE*Inline XBRL Taxonomy Extension Presentation Linkbase Document   
 
*Filed herewith
**Furnished herewith
***
The following material from Huntington’s Form 10-Q Report for the quarterly period ended September 30, 2019, formatted in Inline XBRL: (1) Unaudited Condensed Consolidated Balance Sheets, (2) Unaudited Condensed Consolidated Statements of Income, (3) Unaudited Condensed Consolidated Statements of Comprehensive Income (4) Unaudited Condensed Consolidated Statement of Changes in Shareholders’ Equity, (5) Unaudited Condensed Consolidated Statements of Cash Flows, and (6) the Notes to Unaudited Condensed Consolidated Financial Statements.

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrantregistrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
Huntington Bancshares IncorporatedHUNTINGTON BANCSHARES INCORPORATED
(Registrant)
 
    
Date:October 30, 201728, 2019 /s/ Stephen D. Steinour
   Stephen D. Steinour
   Chairman, President, and Chief Executive Officer and President(Principal Executive Officer)
   
Date:October 30, 201728, 2019 /s/ Howell D. McCullough III
   Howell D. McCullough III
   
Chief Financial Officer
(Principal Financial Officer)




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