HUNTINGTON BANCSHARES INC /MD/

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. A number of other products expose the Company to credit risk, including investment securities and derivatives. The credit exposure of our derivatives is limited to the aggregate sum of net asset values with counterparties in which we are in a net asset position. Potential credit losses are mitigated by derivatives through central clearing parties, careful evaluation of counterparty credit standing, selection of counterparties from a limited group of high quality institutions, collateral agreements, and other contract provisions.

We focus on the early identification, monitoring, and management of all aspects 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 that utilize external data sources, enhanced modeling technology, and internal stress testing processes. Our disciplined portfolio management processes are central to our commitment to maintaining an aggregate moderate-to-low risk appetite. In our efforts 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 2024 Annual Report on Form 10-K for a description of each portfolio segment.

At September 30, 2025, our loans and leases totaled $138.0 billion, representing a $7.9 billion, or 6%, increase compared to $130.0 billion at December 31, 2024.

The table below provides the composition of our total loan and lease portfolio.

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Our loan and lease portfolio is a managed mix of consumer and commercial credits. We manage the overall credit exposure and portfolio composition via a credit concentration policy. The policy designates specific loan types, collateral types, and loan structures to be formally tracked and assigned maximum exposure limits as a percentage of capital. Commercial lending by NAICS categories, specific limits for CRE project types, loans secured by residential real estate, large dollar exposures, and designated high risk loan categories represent examples of specifically tracked components of our concentration management process. As of September 30, 2025, there were no identified concentrations that exceed the assigned exposure limit. Our concentration management policy is approved by the ROC and is used to ensure a high quality, well-diversified portfolio that is consistent with our overall objective of maintaining an aggregate moderate-to-low risk appetite. Changes to existing concentration limits and incorporating specific information relating to the potential impact on the overall portfolio composition and performance metrics require the approval of the ROC prior to implementation.

The table below provides our total loan and lease portfolio segregated by industry type. The changes in the industry composition from December 31, 2024 are consistent with the portfolio growth metrics.

(1) Includes non-real estate secured commercial loans to REITs, which are classified in the C&I loan category.

(2) Amounts include $4.1 billion and $4.2 billion of auto dealer services loans at September 30, 2025 and December 31, 2024, respectively.

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The following tables present our commercial real estate portfolio by property type and geographic location.

(1) Geographic location based on location of underlying collateral.

Our CRE portfolio totaled $10.7 billion at September 30, 2025, a decrease of $346 million, or 3%, compared to December 31, 2024. The CRE portfolio had an associated allowance coverage of 3.9% and 4.3% at September 30, 2025 and December 31, 2024, respectively.

With declines in demand and property values of office space across the country, the office sector continues to be an area of uncertainty. Our office portfolio, which is predominantly suburban and multi-tenant loans, totaled $1.4 billion, or 1% of total loans and leases, as of September 30, 2025, compared to $1.6 billion, or 1% of total loans and leases, at December 31, 2024. We have established ACL reserves of approximately 11% for our CRE office portfolio at both September 30, 2025 and December 31, 2024. As of September 30, 2025, there was $15 million of outstanding balances in the office portfolio that were 30 or more days past due.

Credit Quality

(This section should be read in conjunction with Note 5 - “Loans and Leases” and Note 6 - “Allowance for Credit Losses” of the Notes to Unaudited Consolidated Financial Statements.)

We believe the most meaningful way to assess overall credit quality performance is through an analysis of specific performance ratios. This approach forms the basis of the discussion in the sections immediately following: NALs and NPAs, ACL, and NCOs. In addition, we utilize delinquency rates, risk distribution and migration patterns, product segmentation, and origination trends in the analysis of our credit quality performance.

Credit quality performance in the third quarter of 2025 reflected NCOs of $75 million, or 0.22% of average total loans and leases, annualized, a decrease of $18 million, compared to $93 million, or 0.30%, in the year-ago quarter. The decrease reflects an $18 million decrease in commercial NCOs to $36 million in the third quarter of 2025. NPAs decreased from December 31, 2024 by $1 million, which included a $28 million decrease in other NPAs, partially offset by increases in residential mortgage of $14 million and commercial real estate of $13 million.

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NALs and NPAs

The following table presents the details of our NALs and NPAs.

(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.

ACL

Our ACL is comprised of two different components, the ALLL and the AULC, both of which in our judgment are appropriate to absorb lifetime expected credit losses in our loan and lease portfolio. We utilize an independent third-party baseline forecast that projects future economic conditions and considers multiple macroeconomic scenarios. These macroeconomic scenarios contain certain variables that are influential to our modeling process, the most significant being unemployment rates and GDP.

The baseline economic scenario used in the September 30, 2025 ACL determination assumes continued tariff uncertainty, but reflects marginal improved performance of the U.S. economy in the near term with minimal change in the overall outlook. In this scenario, the unemployment rate is expected to end 2025 at 4.4%, with peak unemployment of 4.8% through the end of 2026. The Federal Reserve restarted rate cuts in the third quarter of 2025 and is expected to continue with future rate cuts until reaching the federal funds rate of 3% by the end of 2026. The inflation outlook deteriorates slightly as the impacts of tariffs and other trade policies are expected to cascade through the economy, with near-term inflation expected to rise further above the Federal Reserve’s 2% target until the rate begins to decline in the second half of 2026 but still remaining above target. GDP growth, while positive, has slowed to a current level of approximately 1% and is forecasted to remain below 2% through the end of 2026.

The table below is intended to show how the forecasted path of unemployment and GDP in the baseline scenario has changed since the end of 2024.

(1) Values reflect the baseline scenario forecast inputs for each period presented, not updated for subsequent actual amounts.

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Management continues to assess the uncertainty in the macroeconomic environment, including ongoing risks in the commercial real estate environment, current inflation levels, the impacts of U.S. trade policies including tariffs, political uncertainty, and geopolitical instability, considering multiple macroeconomic forecasts that reflect a range of possible outcomes. While we have incorporated estimates of economic uncertainty into our ACL, the ultimate impact that specific challenges will have on the economy remains unknown.

Management develops additional analytics to support adjustments to our modeled results. Our Allowance for Credit Loss Development Methodology Committee reviewed model results of each economic scenario for appropriate usage, concluding that the quantitative transaction reserve will continue to utilize scenario weighting. Given the uncertainty associated with key economic scenario assumptions, the September 30, 2025 ACL included a general reserve that consists of various risk profile components, including profiles to capture uncertainty not addressed within the quantitative transaction reserve.

The most significant risk profiles the Company maintains at September 30, 2025 relate to business banking loans within the C&I portfolio and office loans within the CRE portfolio. The business banking risk profile addresses a modest upward trend in default rates resulting from the current interest rate environment and inflationary impacts on business banking customers. The office portfolio risk profile addresses concerns relating to the current interest rate environment, upcoming maturities, falling property values, and uncertainty about demand for office space.

Our ACL evaluation process includes the on-going assessment of credit quality metrics and a comparison of certain ACL benchmarks to current performance.

The table below reflects the allocation of our ACL among our various loan and lease categories as well as certain coverage metrics of the reported ALLL and ACL.

(1)Percentages represent the percentage of each loan and lease category to total loans and leases.

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At September 30, 2025, the ACL was $2.6 billion, or 1.86% of total loans and leases, compared to $2.4 billion, or 1.88%, at December 31, 2024. The increase in the ACL was driven by loan and lease growth, partially offset by a modest reduction in the ACL coverage ratio. The ACL coverage ratio at September 30, 2025 is reflective of the current macroeconomic forecast and changes in various risk profiles intended to capture uncertainty not addressed within the quantitative reserve.

NCOs

The table below reflects NCO detail.

NCOs were an annualized 0.22% of average loans and leases in the third quarter of 2025, down from 0.30% in the year-ago quarter, largely due to the decrease in NCOs in commercial and industrial loans and net recoveries in commercial real estate loans in the current quarter. NCOs for commercial loans and leases were lower, with annualized commercial loan and lease NCOs of 0.18% in the third quarter of 2025, compared to 0.31% in the year-ago quarter. Annualized consumer loan NCOs of 0.27% in the third quarter of 2025 decreased slightly compared to 0.28% in the year-ago quarter.

NCOs were an annualized 0.23% of average loans and leases for the first nine-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 0.32% in the year-ago period. Annualized consumer loan NCOs of 0.27% were consistent with the year-ago period.

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