Company: HBAN
Filing Date: 2025-04-29
Form Type: 10-Q
Source: 0000049196-25-000038
Chunk: 78

Company: HUNTINGTON BANCSHARES INC /MD/
Filing Date: 2025-04-29
Form: 10-Q
Item: Part I, Item 2
Chunk 78
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2025 to October 2027.

(3)Forward-starting swaps effective starting from April 2025 to June 2026.

(4)The weighted-average fixed rates for floor spreads are the weighted-average strike rates for the upper and lower bounds of the instruments.

(5)Forward-starting floor spreads effective from October 2025 to May 2026.

(6)Basis swaps have variable pay and variable receive resets. Weighted-average fixed rate column represents pay rate reset. 

(7)Forward-starting swaps effective starting from January 2025 to June 2026.

Use of Derivatives to Manage Credit Risk

We may utilize credit derivatives as a tool to manage credit risk within the portfolio by purchasing credit protection over certain types of loan products. When we purchase credit protection, such as a CDS, we pay a fee to the seller, or CDS counterparty, in return for the right to receive a payment if a specified credit event occurs. 

2025 1Q Form 10-Q     21

MSRs

(This section should be read in conjunction with Note 6 - “Mortgage Loan Sales and Servicing Rights” of Notes to the Unaudited Consolidated Financial Statements.)

At March 31, 2025, we had a total of $564 million of capitalized MSRs representing the right to service $33.9 billion in mortgage loans. 

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 and declines in credit quality. Prepayments usually increase when mortgage interest rates decline and decrease when mortgage interest rates rise. We also employ hedging strategies to reduce the risk of MSR fair value changes. 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. 

MSR assets are included in servicing rights and other intangible assets in the Unaudited 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 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