Company: HBAN
Filing Date: 2025-07-29
Form Type: 10-Q
Source: 0000049196-25-000063
Chunk: 91

Company: HUNTINGTON BANCSHARES INC /MD/
Filing Date: 2025-07-29
Form: 10-Q
Item: Part I, Item 2
Chunk 91
---
 year-ago quarter. 

NCOs were an annualized 0.23% of average loans and leases for the first six-month period of 2025, down from 0.30% in the year ago period largely due to net recoveries in commercial real estate loans in the current period. NCOs for the commercial loans and leases were lower, with annualized commercial loan and lease NCOs of 0.20% in the current period, compared to 0.33% in the year-ago period. Annualized consumer loan NCOs of 0.27% in the current period increased slightly compared to 0.26% in the year-ago period.

2025 2Q Form 10-Q     21

Table of Contents

Market Risk

Market risk refers to potential losses arising from changes in interest rates, credit spreads, 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 exposed primarily 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 subsidiaries, foreign exchange positions, equity investments, and investments in securities backed by mortgage loans.

We measure market risk exposure via financial simulation models, which provide management with insights on the potential impact to net interest income and other key metrics as a result of changes in market interest rates. Models are used to simulate cash flows and accrual characteristics of the balance sheet based on assumptions regarding the slope or shape of the yield curve, the direction and volatility of interest rates, and the changing composition and characteristics of the balance sheet resulting from strategic objectives and customer behavior. Our models incorporate market-based assumptions that include the impact of changing interest rates on prepayment rates of assets and runoff rates of deposits. The models also include our projections of the future volume and pricing of various business lines. 

In measuring the financial risks associated with interest rate sensitivity in our balance sheet, we compare a set of alternative interest rate scenarios to the results of a base case scenario derived using market forward rates. The market forward rates reflect the market consensus regarding the future level and slope of the yield curve across a range of tenor points. The standard set of interest rate scenarios includes two types: “shock” scenarios, which are immediate parallel rate shifts, and “ramp” scenarios, where the parallel shift is applied