Company: HBAN
Filing Date: 2025-02-14
Form Type: 10-K
Source: 0000049196-25-000020
Chunk: 67

Company: HUNTINGTON BANCSHARES INC /MD/
Filing Date: 2025-02-14
Form: 10-K
Item: Item 8
Chunk 67
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 estimation to determine fair value, in which case the fair values are classified as Level 3. The Level 3 positions predominantly consist of direct purchase municipal securities. A significant change in the unobservable inputs for these securities may result in a significant change in the ending fair value measurement of these securities.Direct purchase municipal securities, in addition to certain private-label CMOs and asset-backed securities, are classified as Level 3 and require estimates to determine fair value which results in greater subjectivity. The fair value is determined by utilizing a discounted cash flow valuation technique employed by a third-party valuation specialist. The third-party specialist uses assumptions related to yield, prepayment speed, conditional default rates and loss severity based on certain factors such as, credit worthiness of the counterparty, prevailing market rates, and analysis of similar securities. Huntington evaluates the fair values provided by the third-party specialist for reasonableness.Derivative assets and liabilitiesDerivatives classified as Level 2 primarily consist of interest rate contracts, which are valued using a discounted cash flow method that incorporates current market interest rates. In addition, Level 2 includes foreign exchange and commodity contracts, which are valued using exchange traded swaps, exchange traded options, and futures market data. Level 2 also includes exchange traded options and forward commitments to deliver mortgage-backed securities, which are valued using quoted prices.Derivatives classified as Level 3 consist of interest rate lock agreements related to mortgage loan commitments,  the Visa® share swap, and credit default swaps.

2024 Form 10-K     139

Table of Contents

MSRsMSRs are accounted for using the fair value method and are classified as Level 3. Refer to Note 6 - “Mortgage Loan Sales and Servicing Rights” for information on valuation methodology.Long-term debtHuntington has elected to apply the fair value option for CLNs structured as long-term debt. CLNs are classified as Level 2 using quoted prices for similar liabilities in active markets, quoted prices of similar liabilities in markets that are not active, and inputs that are observable for the assets, either directly or indirectly, for substantially the full term of the financial instrument.Assets and Liabilities measured at fair value on a recurring basisThe following table presents our assets and liabilities measured at fair value on a recurring basis, including instruments we have elected the fair value option.Fair Value Measurements at Reporting Date UsingNetting Adjustments (1)Total(dollar amounts in millions)Level 1Level 2Level 3At