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SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-K
 (Mark One)
 þ
    
    Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the fiscal year ended December 31, 2008
 or
 o
    
    Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 Commission file Number 000-33243
 Huntington Preferred Capital, Inc.
  Ohio
    
    31-1356967(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)41 S. High Street, Columbus, OH
    
    43287(Address of principal executive offices)
    
    (Zip Code)
 (614) 480-8300
 None
  Noncumulative Exchangeable Preferred Securities, Class C (Liquidation Amount $25.00 each)
 o þ
 o þ
 þ o
 þ
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ
  Documents Incorporated By Reference




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##### 



HUNTINGTON PREFERRED CAPITAL, INC.
  Part I.Item 1. Business
    
    
    3Item 1A: Risk Factors
    
    
    11Item 1B: Unresolved Staff Comments
    
    
    17Item 2. Properties
    
    
    17Item 3. Legal Proceedings
    
    
    17Item 4. Submission of Matters to a vote of Security Holders
    
    
    17Part II.Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
    
    
    17Item 6. Selected Financial Data
    
    
    18Item 7. Managements Discussion and Analysis of Financial Condition and Results of
Operations
    
    
    19Item 7A. Quantitative and Qualitative Disclosures about Market Risk
    
    
    31Item 8. Financial Statements and Supplementary Data
    
    
    31Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    49Item 9A. Controls and Procedures
    
    
    49Item 9A(T). Controls and Procedures
    
    
    49Item 9B. Other Information
    
    
    49Part III.Item 10. Directors and Executive Officers and Corporate Governance
    
    
    49Item 11. Executive Compensation
    
    
    49Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
    
    
    50Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    
    50Item 14. Principal Accounting Fees and Services
    
    
    50Part IV.Item 15. Exhibits and Financial Statement Schedules
    
    
    50Signatures
    
    
    51Exhibits
    
    
    52EX-12.1EX-24.1EX-31.1EX-31.2EX-32.1EX-32.2EX-99.1
  2




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Huntington Preferred Capital, Inc.
 
 Part I
 
 Item 1: Business
 General
  
 3




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Commercial Real Estate Loans
    Consumer Loans and Residential Real Estate Loans
   4




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Geographic Distribution
  Table 1  Total Loan Participation Interests by Geographic Location of Borrower
 Percentage byAggregate
    
    
    Aggregate(in thousands)
    
    Number
    
    
    Principal
    
    
    PrincipalState
    
    of Loans
    
    
    Balance
    
    
    BalanceOhio
    
    
    14,876
    
    
    $
    2,405,322
    
    
    
    54.6
    %Michigan
    
    
    7,491
    
    
    
    961,571
    
    
    
    21.8Indiana
    
    
    1,964
    
    
    
    370,112
    
    
    
    8.4Kentucky
    
    
    1,421
    
    
    
    201,078
    
    
    
    4.6Pennsylvania
    
    
    235
    
    
    
    114,464
    
    
    
    2.625,987
    
    
    
    4,052,547
    
    
    
    92.0All other locations
    
    
    276
    
    
    
    355,944
    
    
    
    8.0Total loan participation interests
    
    
    26,263
    
    
    $
    4,408,491
    
    
    
    100.0
    %
 Dividend Policy and Restrictions
   5




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Table 2  Capital Ratios for the Bank
 Well-
    
    Adequately-Capitalized
    
    Capitalized
    
    December 31,Minimums
    
    Minimums
    
    2008
    
    2007Tier 1 Risk-Based Capital
    
    
    6.00
    %
    
    
    4.00
    %
    
    
    6.44
    %
    
    
    6.64
    %Total Risk-Based Capital
    
    
    10.00
    
    
    
    8.00
    
    
    
    10.71
    
    
    
    10.17Tier 1 Leverage Ratio
    
    
    5.00
    
    
    
    4.00
    
    
    
    5.99
    
    
    
    5.99
  Conflict of Interests and Related Policies
    6




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Other Management Policies and Programs
 General
  Underwriting Standards
   Asset Acquisition and Disposition Policies
  
    
    are performing, meaning they have no more than two payments past due;
    
    are in accruing status;
    
    are not made to related parties of HPCI, Huntington, or the Bank;
    
    are secured by real property such that they are REIT qualifying; and
    
    have not been previously sold, securitized, or charged-off either in whole or in part.
     7




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Credit Risk Management Policies
  Other Policies
  
    
    invest in the securities of other issuers for the purpose of exercising control over
such issuers;
    
    underwrite securities of other issuers;
    
    actively trade in loans or other investments;
    
    offer securities in exchange for property; or
    
    make loans to third parties, including, its officers, directors, or other affiliates.
    8




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Employees
   Servicing
     9




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Competition
  Segment Reporting
  Regulatory Matters
   Available Information
  10




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Item 1A: Risk Factors
  A decline in the Banks capital levels may result in HPCIs preferred securities being subject to a
conditional exchange into Bank preferred securities at a time when the Banks financial condition
is deteriorating. Consequently, the likelihood of dividend payments, as well as the liquidation
preference, voting rights, and liquidity of securities would be negatively impacted. In addition,
this exchange would most likely be a taxable event to shareholders.
  
    
    the Bank becomes undercapitalized;
    
    the OCC, in its sole discretion, anticipates that the Bank will become
undercapitalized in the near term; or
    
    the Bank is placed in conservatorship or receivership.
       11




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The current economic environment presents heightened risk which could adversely effect our business
and operating results
      12




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
    
    A decrease in the demand for loans;
    
    An increase in the number of customers and counterparties who become delinquent, file
for protection under bankruptcy laws, or default on their loans or other obligations to us.
  Our portfolio of commercial real estate loan participation interests has and will continue to be
affected by the on-going correction in residential real estate prices and reduced levels of home
sales.
  Declines in home values and reduced levels of home sales in our markets could continue to adversely
affect us.
  We rely on the Banks credit underwriting standards and on-going process of credit assessment.
There can be no assurance that the Banks standards and assessments will protect us from
significant credit losses on loans underlying its participation interests.
  We have no control over changes in interest rates and such changes could negatively impact our
financial condition, results of operations, and ability to pay dividends.
  13




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Bank regulators may limit HPCIs ability to implement its business plan and may restrict its
ability to pay dividends.
     HPCI could suffer adverse tax consequences if it failed to qualify as a REIT.
  14




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HPCI is dependent, in virtually every phase of its operations, on the diligence and skill of the
officers and employees of the Bank, the Banks ability to retain
key employees, and its relationship with the Bank may create potential
conflicts of interest.
     15




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HPCIs assets may be used to guarantee certain of the Banks obligations that will have a
preference over the holders of HPCIs preferred securities.
    HPCI may redeem the Class C and Class D preferred securities upon the occurrence of certain special
events and holders of such securities may receive a redemption amount that is different than the
then current market price for the securities.
  
    
    a tax event which occurs when HPCI receives an opinion of counsel to the effect that, as
a result of a judicial decision or administrative pronouncement, ruling, or other action or
as a result of certain changes in the tax laws, regulations, or related interpretations,
there is a significant risk that dividends with respect to HPCIs capital stock will not be
fully deductible by HPCI or it will be subject to a significant amount of additional taxes
or governmental charges;
    
    an investment company event which occurs when HPCI receives an opinion of counsel to the
effect that, as a result of certain changes in the applicable laws, regulations, or related
interpretations, there is a significant risk that HPCI will be considered an investment
company under the Investment Company Act of 1940; and
 16




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
    
    a regulatory capital event which occurs when, as a result of certain changes in the
applicable laws, regulations, or related interpretations, there is a significant risk that
HPCIs Class C preferred securities will no longer constitute Tier 1 capital of the Bank
(other than as a result of limitations on the portion of Tier 1 capital that may consist of
minority interests in subsidiaries of the Bank).
  If Huntingtons stock price declines, goodwill balances will be
evaluated for impairment, and if the values of Huntingtons businesses have declined, Huntington
could recognize an impairment charge for goodwill.
  
 Item 1B: Unresolved Staff Comments
  
 Item 2: Properties
  
 Item 3: Legal Proceedings
  
 Item 4: Submission of Matters to a Vote of Security Holders
  
 Part II
 
 Item 5: Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
    17




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Item 6: Selected Financial Data
  Table 3  Selected Financial Data
 (in thousands)
    
    2008
    
    2007
    
    2006
    
    2005
    
    2004STATEMENTS OF INCOME:Interest and fee income
    
    $
    254,549
    
    
    $
    324,811
    
    
    $
    331,306
    
    
    $
    302,743
    
    
    $
    262,215Provision for (reduction in) allowance
for credit losses
    
    
    (14,855
    )
    
    
    3,390
    
    
    
    (22,041
    )
    
    
    (19,796
    )
    
    
    (31,591
    )Non-interest income
    
    
    3,064
    
    
    
    12,042
    
    
    
    7,525
    
    
    
    9,391
    
    
    
    7,249Non-interest expense
    
    
    11,689
    
    
    
    15,587
    
    
    
    15,322
    
    
    
    17,065
    
    
    
    16,260Net income
    
    $
    260,779
    
    
    $
    316,259
    
    
    $
    344,237
    
    
    $
    314,318
    
    
    $
    284,542Dividends declared on preferred securities
    
    
    36,521
    
    
    
    49,643
    
    
    
    47,944
    
    
    
    34,634
    
    
    
    20,744Net income applicable
to common shares
    
    $
    224,258
    
    
    $
    266,616
    
    
    $
    296,293
    
    
    $
    279,684
    
    
    $
    263,798Dividends and distributions
declared on common stock
    
    $
    225,000
    
    
    $
    300,410
    
    
    $
    450,000
    
    
    $
    700,000
    
    
    $
    600,000BALANCE SHEET HIGHLIGHTS:At year end:Net loan participation interests
    
    $
    4,343,035
    
    
    $
    4,276,764
    
    
    $
    4,048,506
    
    
    $
    4,454,795
    
    
    $
    4,828,127All other assets
    
    
    345,533
    
    
    
    189,110
    
    
    
    901,230
    
    
    
    899,090
    
    
    
    845,464Total assets
    
    
    4,688,568
    
    
    
    4,465,874
    
    
    
    4,949,736
    
    
    
    5,353,885
    
    
    
    5,673,591Total shareholders equity
    
    
    4,461,217
    
    
    
    4,461,959
    
    
    
    4,495,753
    
    
    
    4,649,460
    
    
    
    5,069,776Average balances:Net loan participation interests
    
    $
    4,311,659
    
    
    $
    4,289,099
    
    
    $
    4,349,214
    
    
    $
    4,664,505
    
    
    $
    5,075,815Total assets
    
    
    4,588,530
    
    
    
    4,653,184
    
    
    
    4,816,467
    
    
    
    5,217,640
    
    
    
    5,530,253Total shareholders equity
    
    
    4,562,126
    
    
    
    4,617,576
    
    
    
    4,774,542
    
    
    
    5,197,654
    
    
    
    5,497,479KEY RATIOS AND STATISTICS:Yield on interest earning assets
    
    
    5.51
    %
    
    
    6.98
    %
    
    
    6.94
    %
    
    
    5.84
    %
    
    
    4.74
    %Return on average assets
    
    
    5.68
    
    
    
    6.80
    
    
    
    7.15
    
    
    
    6.02
    
    
    
    5.15Return on average equity
    
    
    5.72
    
    
    
    6.85
    
    
    
    7.21
    
    
    
    6.05
    
    
    
    5.18Average shareholders equity to
average assets
    
    
    99.42
    
    
    
    99.23
    
    
    
    99.13
    
    
    
    99.62
    
    
    
    99.41Preferred dividend coverage ratio
    
    
    7.14
    x
    
    
    6.37
    x
    
    
    7.18
    x
    
    
    9.08
    x
    
    
    13.72
    x
  18




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Item 7: Managements Discussion and Analysis of Financial Condition and Results of Operations
 INTRODUCTION
   Forward-looking Statements
    Critical Accounting Policies and Use of Significant Estimates
   19




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Qualification Tests
    RESULTS OF OPERATIONS
   Interest and Fee Income
  20




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Table 4  Interest and Fee Income
 2008
    
    2007
    
    2006Average
    
    
    
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    
    
    
    Average(in millions)
    
    Balance
    
    Income(1)
    
    Yield
    
    Balance
    
    Income(1)
    
    Yield
    
    Balance
    
    Income(1)
    
    YieldLoan participation interests:Commercial real estate
    
    $
    3,283.0
    
    
    $
    176.8
    
    
    
    5.39
    %
    
    $
    3,178.8
    
    
    $
    231.3
    
    
    
    7.28
    %
    
    $
    3,335.1
    
    
    $
    241.2
    
    
    
    7.22
    %Consumer and
residential real estate
    
    
    1,093.8
    
    
    
    72.5
    
    
    
    6.63
    
    
    
    1,162.8
    
    
    
    77.6
    
    
    
    6.67
    
    
    
    1,067.4
    
    
    
    71.1
    
    
    
    6.66Total loan participations
    
    
    4,376.8
    
    
    
    249.3
    
    
    
    5.70
    
    
    
    4,341.6
    
    
    
    308.9
    
    
    
    7.12
    
    
    
    4,402.5
    
    
    
    312.3
    
    
    
    7.09Interest bearing deposits with
The Huntington National Bank
    
    
    239.2
    
    
    
    5.2
    
    
    
    2.17
    
    
    
    307.2
    
    
    
    15.9
    
    
    
    5.10
    
    
    
    366.3
    
    
    
    19.0
    
    
    
    5.12Total
    
    $
    4,616.0
    
    
    $
    254.5
    
    
    
    5.51
    %
    
    $
    4,648.8
    
    
    $
    324.8
    
    
    
    6.98
    %
    
    $
    4,768.8
    
    
    $
    331.3
    
    
    
    6.94
    %
 (1)
    
    Income includes interest and fees.
   Provision for (reduction in) Allowances for Credit Losses
  Non-Interest Income and Non-Interest Expense
   21




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January 1, 2006throughDecember 31, 2008Commercial and commercial real estate
    
    
    0.125
    %Consumer
    
    
    0.650Residential real estate
    
    
    0.267
  Income Taxes
   MARKET RISK
    22




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Table 5  Total Loan Participation Interests by Interest Rates
 December 31, 2008
    
    Fixed Rate
    

Variable Rate (1)Percentage by
    
    
    
    
    
    
    
    
    
    
    Percentage byAggregate
    
    
    Aggregate
    
    
    
    
    
    
    Aggregate
    
    
    AggregateNumber
    
    
    Principal
    
    
    Principal
    
    
    Number
    
    
    Principal
    
    
    Principal(in thousands)
    
    of Loans
    
    
    Balance
    
    
    Balance
    
    
    of Loans
    
    
    Balance
    
    
    Balanceunder 3.00%
    
    
    28
    
    
    
    1,192
    
    
    
    0.1
    %
    
    
    506
    
    
    
    862,577
    
    
    
    28.4
    %3.00% to 3.99%
    
    
    41
    
    
    
    1,548
    
    
    
    0.1
    
    
    
    1,172
    
    
    
    1,328,934
    
    
    
    43.84.00% to 4.99%
    
    
    625
    
    
    
    39,629
    
    
    
    2.9
    
    
    
    609
    
    
    
    504,378
    
    
    
    16.65.00% to 5.99%
    
    
    3,974
    
    
    
    282,158
    
    
    
    20.6
    
    
    
    511
    
    
    
    92,039
    
    
    
    3.06.00% to 6.99%
    
    
    7,063
    
    
    
    504,473
    
    
    
    36.7
    
    
    
    558
    
    
    
    105,076
    
    
    
    3.57.00% to 7.99%
    
    
    4,892
    
    
    
    356,461
    
    
    
    25.9
    
    
    
    626
    
    
    
    107,165
    
    
    
    3.58.00% to 8.99%
    
    
    2,946
    
    
    
    129,681
    
    
    
    9.4
    
    
    
    218
    
    
    
    28,849
    
    
    
    1.09.00% and over
    
    
    2,468
    
    
    
    59,389
    
    
    
    4.3
    
    
    
    26
    
    
    
    4,942
    
    
    
    0.2Total
    
    
    22,037
    
    
    $
    1,374,531
    
    
    
    100.0
    %
    
    
    4,226
    
    
    $
    3,033,960
    
    
    
    100.0
    %
 December 31, 2007
    
    Fixed Rate
    

Variable Rate (1)Percentage by
    
    
    
    
    
    
    
    
    
    
    Percentage byAggregate
    
    
    Aggregate
    
    
    
    
    
    
    Aggregate
    
    
    AggregateNumber
    
    
    Principal
    
    
    Principal
    
    
    Number
    
    
    Principal
    
    
    Principal(in thousands)
    
    of Loans
    
    
    Balance
    
    
    Balance
    
    
    of Loans
    
    
    Balance
    
    
    Balanceunder 3.00%
    
    
    54
    
    
    
    1,179
    
    
    
    0.1
    %
    
    
    
    
    
    
    
    
    
    
    0.0
    %3.00% to 3.99%
    
    
    58
    
    
    
    1,533
    
    
    
    0.1
    
    
    
    5
    
    
    
    1,559
    
    
    
    0.14.00% to 4.99%
    
    
    734
    
    
    
    52,733
    
    
    
    3.2
    
    
    
    53
    
    
    
    24,268
    
    
    
    0.95.00% to 5.99%
    
    
    4,850
    
    
    
    361,731
    
    
    
    21.7
    
    
    
    260
    
    
    
    108,338
    
    
    
    4.16.00% to 6.99%
    
    
    8,372
    
    
    
    615,245
    
    
    
    37.0
    
    
    
    1,130
    
    
    
    1,099,743
    
    
    
    41.17.00% to 7.99%
    
    
    5,647
    
    
    
    405,850
    
    
    
    24.4
    
    
    
    2,097
    
    
    
    2,307,209
    
    
    
    48.88.00% to 8.99%
    
    
    3,525
    
    
    
    150,369
    
    
    
    9.0
    
    
    
    638
    
    
    
    113,503
    
    
    
    4.29.00% and over
    
    
    3,043
    
    
    
    74,421
    
    
    
    4.5
    
    
    
    113
    
    
    
    21,358
    
    
    
    0.8Total
    
    
    26,283
    
    
    $
    1,663,061
    
    
    
    100.0
    %
    
    
    4,296
    
    
    $
    3,675,978
    
    
    
    100.0
    %
 (1)
    
    The variable rate category includes loan participation interests with variable and adjustable rates.
 CREDIT QUALITY
  Credit Risk
  23




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Table 6  Loan Participation Interests Aging (1)
 Percentage byTotal
    
    
    Aggregate
    
    
    AggregateNumber
    
    
    Principal
    
    
    Principal(in thousands)
    
    of Loans
    
    
    Balance
    
    
    BalanceCurrent
    
    
    24,011
    
    
    $
    4,156,094
    
    
    
    94.3
    %1 to 30 days past due
    
    
    1,516
    
    
    
    147,936
    
    
    
    3.431 to 60 days past due
    
    
    318
    
    
    
    33,368
    
    
    
    0.861 to 90 days past due
    
    
    154
    
    
    
    11,565
    
    
    
    0.3over 90 days past due
    
    
    264
    
    
    
    59,528
    
    
    
    1.2Total
    
    
    26,263
    
    
    $
    4,408,491
    
    
    
    100.0
    %
 (1)
    
    Includes non-accrual loans.
 Commercial Real Estate Credit
    24




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Table 7  Commercial Real Estate Loan Participation Interests by Property Type and Borrower
Location
 At December 31, 2008Geographic Region
    
    
    
    
    
    Percent(in thousands of dollars)
    
    Ohio
    
    Michigan
    
    Indiana
    
    Kentucky
    
    Pennsylvania
    
    Other
    
    Total Amount
    
    of TotalIndustrial and warehouse
    
    $
    404,075
    
    
    $
    180,371
    
    
    $
    52,201
    
    
    $
    18,220
    
    
    $
    4,682
    
    
    $
    42,194
    
    
    $
    701,743
    
    
    
    20.5
    %Retail properties
    
    
    390,256
    
    
    
    80,335
    
    
    
    58,725
    
    
    
    40,560
    
    
    
    26,244
    
    
    
    88,213
    
    
    
    684,333
    
    
    
    19.9Office
    
    
    328,805
    
    
    
    149,729
    
    
    
    34,581
    
    
    
    20,342
    
    
    
    40,484
    
    
    
    57,403
    
    
    
    631,344
    
    
    
    18.4Raw land and other land
uses
    
    
    210,997
    
    
    
    124,824
    
    
    
    33,818
    
    
    
    8,877
    
    
    
    12,246
    
    
    
    22,706
    
    
    
    413,468
    
    
    
    12.0Single family home
builders
    
    
    171,033
    
    
    
    61,423
    
    
    
    18,300
    
    
    
    10,575
    
    
    
    17,995
    
    
    
    41,904
    
    
    
    321,230
    
    
    
    9.4Multi family
    
    
    114,234
    
    
    
    14,558
    
    
    
    83,495
    
    
    
    39,076
    
    
    
    1,237
    
    
    
    22,150
    
    
    
    274,750
    
    
    
    8.0Health care
    
    
    111,012
    
    
    
    7,853
    
    
    
    1,033
    
    
    
    181
    
    
    
    1,011
    
    
    
    16,717
    
    
    
    137,807
    
    
    
    4.0Hotel
    
    
    12,503
    
    
    
    22,880
    
    
    
    6,409
    
    
    
    
    
    
    
    
    
    
    
    319
    
    
    
    42,111
    
    
    
    1.2Other
    
    
    127,819
    
    
    
    38,585
    
    
    
    4,886
    
    
    
    3,059
    
    
    
    9,647
    
    
    
    43,090
    
    
    
    227,086
    
    
    
    6.6Total
    
    $
    1,870,734
    
    
    $
    680,558
    
    
    $
    293,448
    
    
    $
    140,890
    
    
    $
    113,546
    
    
    $
    334,696
    
    
    $
    3,433,872
    
    
    
    100.0
    %
 At December 31, 2007Geographic Region
    
    
    
    
    
    Percent(in thousands of dollars)
    
    Ohio
    
    Michigan
    
    Indiana
    
    Kentucky
    
    Pennsylvania
    
    Other
    
    Total Amount
    
    of TotalIndustrial and
warehouse
    
    $
    354,834
    
    
    $
    207,249
    
    
    $
    25,210
    
    
    $
    19,123
    
    
    $
    4,664
    
    
    $
    95,572
    
    
    $
    706,652
    
    
    
    22.6
    %Retail properties
    
    
    321,453
    
    
    
    87,067
    
    
    
    64,714
    
    
    
    37,806
    
    
    
    8,967
    
    
    
    68,009
    
    
    
    588,016
    
    
    
    18.8Single family home
builders
    
    
    239,246
    
    
    
    101,281
    
    
    
    23,112
    
    
    
    17,527
    
    
    
    1,320
    
    
    
    107,996
    
    
    
    490,482
    
    
    
    15.7Office
    
    
    286,427
    
    
    
    115,742
    
    
    
    21,562
    
    
    
    19,359
    
    
    
    4,854
    
    
    
    30,946
    
    
    
    478,890
    
    
    
    15.3Raw land and other
land uses
    
    
    192,414
    
    
    
    102,674
    
    
    
    27,012
    
    
    
    11,985
    
    
    
    1,826
    
    
    
    5,305
    
    
    
    341,216
    
    
    
    10.9Multi family
    
    
    104,131
    
    
    
    20,718
    
    
    
    76,693
    
    
    
    2,536
    
    
    
    140
    
    
    
    1,047
    
    
    
    205,265
    
    
    
    6.6Health care
    
    
    44,066
    
    
    
    7,872
    
    
    
    1,059
    
    
    
    193
    
    
    
    
    
    
    
    14,886
    
    
    
    68,076
    
    
    
    2.2Hotel
    
    
    14,410
    
    
    
    20,789
    
    
    
    12,899
    
    
    
    
    
    
    
    
    
    
    
    337
    
    
    
    48,435
    
    
    
    1.6Other
    
    
    110,343
    
    
    
    41,554
    
    
    
    20,481
    
    
    
    21,271
    
    
    
    
    
    
    
    402
    
    
    
    194,051
    
    
    
    6.3Total
    
    $
    1,667,324
    
    
    $
    704,946
    
    
    $
    272,742
    
    
    $
    129,800
    
    
    $
    21,771
    
    
    $
    324,500
    
    
    $
    3,121,083
    
    
    
    100.0
    %
  25




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##### Table of Contents



Retail properties
   Single family homebuilders
   Consumer Credit
   Allowances for Credit Losses (ACL)
    26




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##### Table of Contents



Table 8  Allowances for Credit Loss Activity
 (in thousands)
    
    2008
    
    2007
    
    2006
    
    2005
    
    2004ALPL balance, beginning of year
    
    $
    62,275
    
    
    $
    48,703
    
    
    $
    57,530
    
    
    $
    61,146
    
    
    $
    84,532Allowance of loan participations acquired
    
    
    36,284
    
    
    
    26,530
    
    
    
    19,404
    
    
    
    25,071
    
    
    
    21,201Net loan lossesCommercial real estate
    
    
    (12,483
    )
    
    
    (12,001
    )
    
    
    (3,370
    )
    
    
    (3,928
    )
    
    
    (3,438
    )Consumer and residential real estate
    
    
    (7,320
    )
    
    
    (4,295
    )
    
    
    (3,151
    )
    
    
    (4,593
    )
    
    
    (5,793
    )Total net loan losses
    
    
    (19,803
    )
    
    
    (16,296
    )
    
    
    (6,521
    )
    
    
    (8,521
    )
    
    
    (9,231
    )Provision for (reduction in) ALPL
    
    
    (13,924
    )
    
    
    3,338
    
    
    
    (21,710
    )
    
    
    (19,228
    )
    
    
    (35,356
    )Economic Reserve transfer from (to) AULPC
    
    
    624
    
    
    
    
    
    
    
    
    
    
    
    (938
    )
    
    
    ALPL balance, end of year
    
    $
    65,456
    
    
    $
    62,275
    
    
    $
    48,703
    
    
    $
    57,530
    
    
    $
    61,146AULPC balance, beginning of year
    
    $
    3,856
    
    
    $
    3,804
    
    
    $
    4,135
    
    
    $
    3,765
    
    
    $
    Provision for (reduction in) AULPC
    
    
    (931
    )
    
    
    52
    
    
    
    (331
    )
    
    
    (568
    )
    
    
    3,765Economic Reserve transfer (from) to ALPL
    
    
    (624
    )
    
    
    
    
    
    
    
    
    
    
    938
    
    
    
    AULPC balance, end of year
    
    $
    2,301
    
    
    $
    3,856
    
    
    $
    3,804
    
    
    $
    4,135
    
    
    $
    3,765Total Allowances for Credit Losses
    
    $
    67,757
    
    
    $
    66,131
    
    
    $
    52,507
    
    
    $
    61,665
    
    
    $
    64,911ALPL as a % of total participation interests
    
    
    1.48
    %
    
    
    1.44
    %
    
    
    1.19
    %
    
    
    1.27
    %
    
    
    1.25
    %ACL as a % of total participation interests
    
    
    1.54
    
    
    
    1.52
    
    
    
    1.28
    
    
    
    1.37
    
    
    
    1.33
 27




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##### Table of Contents



Table 9  Allowance for Credit Losses by Product (1)
 At December 31,(in thousands)
    
    2008
    
    2007
    
    2006
    
    2005
    
    2004Commercial real estate
    
    $
    59,827
    
    
    
    77.9
    %
    
    $
    56,668
    
    
    
    71.9
    %
    
    $
    42,560
    
    
    
    76.6
    %
    
    $
    48,938
    
    
    
    74.4
    %
    
    $
    53,253
    
    
    
    78.6
    %Consumer and
residential real estate
    
    
    5,629
    
    
    
    22.1
    
    
    
    5,607
    
    
    
    28.1
    
    
    
    6,143
    
    
    
    23.4
    
    
    
    8,592
    
    
    
    25.6
    
    
    
    7,893
    
    
    
    21.4Total ALPL
    
    
    65,456
    
    
    
    100.0
    %
    
    
    62,275
    
    
    
    100.0
    %
    
    
    48,703
    
    
    
    100.0
    %
    
    
    57,530
    
    
    
    100.0
    %
    
    
    61,146
    
    
    
    100.0
    %AULPC
    
    
    2,301
    
    
    
    
    
    
    
    3,856
    
    
    
    
    
    
    
    3,804
    
    
    
    
    
    
    
    4,135
    
    
    
    
    
    
    
    3,765
    
    
    
    Total
    
    $
    67,757
    
    
    
    100.0
    %
    
    $
    66,131
    
    
    
    100.0
    %
    
    $
    52,507
    
    
    
    100.0
    %
    
    $
    61,665
    
    
    
    100.0
    %
    
    $
    64,911
    
    
    
    100.0
    %
 (1)
 Net Charge-offs
  Table 10  Net Charge-offs (1)
 (In thousands)
    
    2008
    
    
    
    
    
    
    2007
    
    
    
    
    
    
    2006
    
    
    
    
    
    
    2005
    
    
    
    
    
    
    2004Commercial real estate
    
    $
    12,483
    
    
    
    0.38
    %
    
    $
    12,001
    
    
    
    0.38
    %
    
    $
    3,370
    
    
    
    0.10
    %
    
    $
    3,928
    
    
    
    0.11
    %
    
    $
    3,438
    
    
    
    0.12
    %Consumer and
residential real estate
    
    
    7,320
    
    
    
    0.68
    
    
    
    4,295
    
    
    
    0.37
    
    
    
    3,151
    
    
    
    0.30
    
    
    
    4,593
    
    
    
    0.42
    
    
    
    5,793
    
    
    
    0.60Total Net Charge-offs
    
    $
    19,803
    
    
    
    0.45
    %
    
    $
    16,296
    
    
    
    0.38
    %
    
    $
    6,521
    
    
    
    0.15
    %
    
    $
    8,521
    
    
    
    0.18
    %
    
    $
    9,231
    
    
    
    0.18
    %
 
 (1)
    
    Percentages represent the percentage in each loan category to average loan participation interests. Non-Performing Assets (NPAs)
  28




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##### Table of Contents



Table 11  Non-Performing Assets
 At December 31,(in thousands)
    
    2008
    
    2007
    
    2006
    
    2005
    
    2004Participation interests in non-accrual loansCommercial real estate
    
    $
    54,246
    
    
    $
    42,060
    
    
    $
    20,653
    
    
    $
    20,893
    
    
    $
    7,415Consumer and residential real estate
    
    
    6,041
    
    
    
    4,136
    
    
    
    4,649
    
    
    
    5,722
    
    
    
    6,897Total Non-Performing Assets
    
    $
    60,287
    
    
    $
    46,196
    
    
    $
    25,302
    
    
    $
    26,615
    
    
    $
    14,312NPAs as a % of total participation interests
    
    
    1.37
    %
    
    
    1.06
    %
    
    
    0.62
    %
    
    
    0.59
    %
    
    
    0.29
    %ALPL as a % of NPAs
    
    
    109
    
    
    
    135
    
    
    
    192
    
    
    
    216
    
    
    
    427ACL as a % of NPAs
    
    
    112
    
    
    
    143
    
    
    
    208
    
    
    
    232
    
    
    
    454Accruing loans past due 90 days or more
    
    $
    9,543
    
    
    $
    4,440
    
    
    $
    5,392
    
    
    $
    3,188
    
    
    $
    11,686
   OFF-BALANCE SHEET ARRANGEMENTS
  LIQUIDITY AND CAPITAL RESOURCES
    29




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##### Table of Contents



RESULTS FOR THE FOURTH QUARTER
 Table 12  Quarterly Statements of Income
 2008

    
    2007
    
    
    
    4Q08 vs 4Q07(in thousands)
    
    Fourth
    
    
    Third
    
    
    Second
    
    
    First
    
    
    Fourth
    
    
    
    $ Chg
    
    
    % ChgInterest and fee incomeInterest on loan participation interests:Commercial real estate
    
    $
    44,591
    
    
    $
    44,375
    
    
    $
    40,551
    
    
    $
    46,531
    
    
    $
    56,238
    
    
    
    $
    (11,647
    )
    
    
    (20.7
    )%Consumer and residential real estate
    
    
    16,614
    
    
    
    17,454
    
    
    
    18,260
    
    
    
    19,689
    
    
    
    20,927
    
    
    
    
    (4,313
    )
    
    
    (20.6
    )Total loan participation interest income
    
    
    61,205
    
    
    
    61,829
    
    
    
    58,811
    
    
    
    66,220
    
    
    
    77,165
    
    
    
    
    (15,960
    )
    
    
    (20.7
    )Fees from loan participation interests
    
    
    277
    
    
    
    274
    
    
    
    333
    
    
    
    314
    
    
    
    162
    
    
    
    
    115
    
    
    
    71.0Interest on deposits with The Huntington National
Bank
    
    
    498
    
    
    
    830
    
    
    
    2,082
    
    
    
    1,876
    
    
    
    3,203
    
    
    
    
    (2,705
    )
    
    
    (84.5
    )Total interest and fee income
    
    
    61,980
    
    
    
    62,933
    
    
    
    61,226
    
    
    
    68,410
    
    
    
    80,530
    
    
    
    
    (18,550
    )
    
    
    (23.0
    )Provision for (reduction in) allowances for credit
losses
    
    
    (1,194
    )
    
    
    (7,437
    )
    
    
    (5,079
    )
    
    
    (1,145
    )
    
    
    10,167
    
    
    
    
    (11,361
    )
    
    
    N.M.Interest income after provision for (reduction in)
allowances for credit losses
    
    
    63,174
    
    
    
    70,370
    
    
    
    66,305
    
    
    
    69,555
    
    
    
    70,363
    
    
    
    
    (7,189
    )
    
    
    (10.2
    )Non-interest income:Rental income
    
    
    16
    
    
    
    17
    
    
    
    16
    
    
    
    17
    
    
    
    1,710
    
    
    
    
    (1,694
    )
    
    
    (99.1
    )Collateral fees
    
    
    745
    
    
    
    744
    
    
    
    733
    
    
    
    776
    
    
    
    4,943
    
    
    
    
    (4,198
    )
    
    
    (84.9
    )Total non-interest income
    
    
    761
    
    
    
    761
    
    
    
    749
    
    
    
    793
    
    
    
    6,653
    
    
    
    
    (5,892
    )
    
    
    (88.6
    )Non-interest expense:Servicing costs
    
    
    2,675
    
    
    
    2,718
    
    
    
    2,707
    
    
    
    2,835
    
    
    
    2,955
    
    
    
    
    (280
    )
    
    
    (9.5
    )Other
    
    
    181
    
    
    
    182
    
    
    
    245
    
    
    
    146
    
    
    
    1,173
    
    
    
    
    (992
    )
    
    
    (84.6
    )Total non-interest expense
    
    
    2,856
    
    
    
    2,900
    
    
    
    2,952
    
    
    
    2,981
    
    
    
    4,128
    
    
    
    
    (1,272
    )
    
    
    (30.8
    )Income before provision for income taxes
    
    
    61,079
    
    
    
    68,231
    
    
    
    64,102
    
    
    
    67,367
    
    
    
    72,888
    
    
    
    
    (11,809
    )
    
    
    (16.2
    )Provision for income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    378
    
    
    
    
    (378
    )
    
    
    N.M.Net income
    
    $
    61,079
    
    
    $
    68,231
    
    
    $
    64,102
    
    
    $
    67,367
    
    
    $
    72,510
    
    
    
    $
    (11,431
    )
    
    
    (15.8
    )%Dividends declared on preferred securities
    
    
    (10,188
    )
    
    
    (7,632
    )
    
    
    (7,439
    )
    
    
    (11,262
    )
    
    
    (12,213
    )
    
    
    
    (2,025
    )
    
    
    (16.6
    )Net income applicable to common shares(1)
    
    $
    50,891
    
    
    $
    60,599
    
    
    $
    56,663
    
    
    $
    56,105
    
    
    $
    60,297
    
    
    
    $
    (9,406
    )
    
    
    (15.6
    )%
 (1)
    
    All of HPCIs common stock is owned by Huntington, HCF, HPCII, and Holdings and
therefore, net income per share is not presented.N.M., Not Meaningful.  30




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##### Table of Contents



Item 7A: Quantitative and Qualitative Disclosures about Market Risk
  
 Item 8: Financial Statements and Supplementary Data
  PageReport of Management
    

    32Report of Independent Registered Public Accounting Firm
    

    34Consolidated Balance Sheets
    

    35Consolidated Statements of Income
    

    36Consolidated Statement of Changes in Shareholders Equity
    

    37Consolidated Statements of Cash Flows
    

    38Notes to Consolidated Financial Statements
    

    39
 31




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##### Table of Contents



Report of Management
   Report of Managements Assessment of Internal Control Over Financial Reporting
 Internal ControlIntegrated Framework
 By:
    
    -s- Donald R. Kimble
    
    
    
    By:
    
    -s- Thomas P. ReedDonald R. Kimble
    
    
    
    
    
    Thomas P. ReedPresident
    
    
    
    
    
    Vice President(Principal Executive Officer)
    
    
    
    
    
    (Principal Financial and Accounting Officer)
  32




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 Internal
ControlIntegrated Framework
    Internal
ControlIntegrated Framework
  
 
 33




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
    Internal ControlIntegrated Framework
 
 
 34




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##### Table of Contents



Huntington
Preferred Capital, Inc.
 
 Consolidated Balance Sheets
 December 31,
    
    December 31,(in thousands, except share data)
    
    2008
    
    2007AssetsCash and interest bearing deposits with The Huntington National Bank
    
    $
    293,009
    
    
    $
    47,464Due from The Huntington National Bank
    
    
    38,423
    
    
    
    121,981Loan participation interests:Commercial real estate
    
    
    3,433,872
    
    
    
    3,121,083Consumer and residential real estate
    
    
    974,619
    
    
    
    1,217,956Total loan participation interests
    
    
    4,408,491
    
    
    
    4,339,039Allowance for loan participation losses
    
    
    (65,456
    )
    
    
    (62,275
    )Net loan participation interests
    
    
    4,343,035
    
    
    
    4,276,764Accrued income and other assets
    
    
    14,101
    
    
    
    19,665Total assets
    
    $
    4,688,568
    
    
    $
    4,465,874Liabilities and shareholders equityLiabilitiesAllowance for unfunded loan participation commitments
    
    $
    2,301
    
    
    $
    3,856Dividends and distributions payable
    
    
    225,000
    
    
    
    Other liabilities
    
    
    50
    
    
    
    59Total liabilities
    
    
    227,351
    
    
    
    3,915Shareholders EquityPreferred securities, Class A, 8.000% noncumulative, non-
exchangeable; $1,000 par and liquidation value per share;
1,000 shares authorized, issued and outstanding
    
    
    1,000
    
    
    
    1,000Preferred securities, Class B, variable-rate noncumulative and
conditionally exchangeable; $1,000 par and liquidation
value per share; authorized 500,000 shares; 400,000
shares issued and outstanding
    
    
    400,000
    
    
    
    400,000Preferred securities, Class C, 7.875% noncumulative and
conditionally exchangeable; $25 par and liquidation
value; 2,000,000 shares authorized, issued, and outstanding
    
    
    50,000
    
    
    
    50,000Preferred securities, Class D, variable-rate noncumulative and
conditionally exchangeable; $25 par and liquidation
value; 14,000,000 shares authorized, issued, and outstanding
    
    
    350,000
    
    
    
    350,000Preferred securities, $25 par, 10,000,000 shares
authorized; no shares issued or outstanding
    
    
    
    
    
    
    Common stock  without par value; 14,000,000 shares authorized,
issued and outstanding
    
    
    3,660,217
    
    
    
    3,660,959Retained earnings
    
    
    
    
    
    
    Total shareholders equity
    
    
    4,461,217
    
    
    
    4,461,959Total liabilities and shareholders equity
    
    $
    4,688,568
    
    
    $
    4,465,874
 See notes to consolidated financial statements.
 35




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##### Table of Contents



Huntington Preferred Capital, Inc.
Consolidated Statements of Income
 Year EndedDecember 31,(in thousands)
    
    2008
    
    2007
    
    2006Interest and fee incomeInterest on loan participation interests:Commercial real estate
    
    $
    176,048
    
    
    $
    230,994
    
    
    $
    240,627Consumer and residential real estate
    
    
    72,017
    
    
    
    77,153
    
    
    
    70,590Total loan participation interest income
    
    
    248,065
    
    
    
    308,147
    
    
    
    311,217Fees from loan participation interests
    
    
    1,198
    
    
    
    779
    
    
    
    1,064Interest on deposits with The Huntington National Bank
    
    
    5,286
    
    
    
    15,885
    
    
    
    19,025Total interest and fee income
    
    
    254,549
    
    
    
    324,811
    
    
    
    331,306Provision for (reduction in) allowances for credit losses
    
    
    (14,855
    )
    
    
    3,390
    
    
    
    (22,041
    )Interest income after allowances for credit losses
    
    
    269,404
    
    
    
    321,421
    
    
    
    353,347Non-interest income:Rental income
    
    
    66
    
    
    
    6,840
    
    
    
    6,483Collateral fees
    
    
    2,998
    
    
    
    5,202
    
    
    
    1,042Total non-interest income
    
    
    3,064
    
    
    
    12,042
    
    
    
    7,525Non-interest expense:Servicing costs
    
    
    10,935
    
    
    
    11,080
    
    
    
    10,635Other
    
    
    754
    
    
    
    4,507
    
    
    
    4,687Total non-interest expense
    
    
    11,689
    
    
    
    15,587
    
    
    
    15,322Income before provision for income taxes
    
    
    260,779
    
    
    
    317,876
    
    
    
    345,550Provision for income taxes
    
    
    
    
    
    
    1,617
    
    
    
    1,313Net income
    
    $
    260,779
    
    
    $
    316,259
    
    
    $
    344,237Dividends declared on preferred securities
    
    
    (36,521
    )
    
    
    (49,643
    )
    
    
    (47,944
    )Net income applicable to common shares
    
    $
    224,258
    
    
    $
    266,616
    
    
    $
    296,293
 See notes to consolidated financial statements.
 36




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##### Table of Contents



Huntington Preferred Capital, Inc.
 
 Consolidated Statements of Changes in Shareholders Equity
 Preferred, Class A
    
    Preferred, Class B
    
    Preferred, Class C(in thousands)
    
    Shares
    
    Amount
    
    Shares
    
    Amount
    
    Shares
    
    AmountBalance, January 1, 2006
    
    
    1
    
    
    $
    1,000
    
    
    
    400
    
    
    $
    400,000
    
    
    
    2,000
    
    
    $
    50,000Comprehensive Income:Net incomeTotal comprehensive incomeBalance, December 31, 2006
    
    
    1
    
    
    $
    1,000
    
    
    
    400
    
    
    $
    400,000
    
    
    
    2,000
    
    
    $
    50,000Comprehensive Income:Net incomeTotal comprehensive incomeBalance, December 31, 2007
    
    
    1
    
    
    $
    1,000
    
    
    
    400
    
    
    $
    400,000
    
    
    
    2,000
    
    
    $
    50,000Comprehensive Income:Net incomeTotal comprehensive incomeBalance, December 31, 2008
    
    
    1
    
    
    $
    1,000
    
    
    
    400
    
    
    $
    400,000
    
    
    
    2,000
    
    
    $
    50,000
 Preferred, Class D
    
    
    Preferred
    
    
    Common
    
    
    Retained(in thousands)
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Earnings
    
    
    TotalBalance, January 1, 2006
    
    
    14,000
    
    
    $
    350,000
    
    
    
    
    
    
    $
    
    
    
    
    14,000
    
    
    $
    3,848,460
    
    
    $
    
    
    
    $
    4,649,460Comprehensive Income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    344,237
    
    
    
    344,237Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    344,237Dividends declared on Class A preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (80
    )
    
    
    (80
    )Dividends declared on Class B preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (20,394
    )
    
    
    (20,394
    )Dividends declared on Class C preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,938
    )
    
    
    (3,938
    )Dividends declared on Class D preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (23,532
    )
    
    
    (23,532
    )Dividends declared on common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (296,293
    )
    
    
    (296,293
    )Return of capital
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (153,707
    )
    
    
    
    
    
    
    (153,707
    )Balance, December 31, 2006
    
    
    14,000
    
    
    $
    350,000
    
    
    
    
    
    
    $
    
    
    
    
    14,000
    
    
    $
    3,694,753
    
    
    $
    
    
    
    $
    4,495,753Comprehensive Income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    316,259
    
    
    
    316,259Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    316,259Dividends declared on Class A preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (80
    )
    
    
    (80
    )Dividends declared on Class B preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (21,300
    )
    
    
    (21,300
    )Dividends declared on Class C preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,938
    )
    
    
    (3,938
    )Dividends declared on Class D preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (24,325
    )
    
    
    (24,325
    )Dividends declared on common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (266,616
    )
    
    
    (266,616
    )Return of capital
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (33,794
    )
    
    
    
    
    
    
    (33,794
    )Balance, December 31, 2007
    
    
    14,000
    
    
    $
    350,000
    
    
    
    
    
    
    $
    
    
    
    
    14,000
    
    
    $
    3,660,959
    
    
    $
    
    
    
    $
    4,461,959Comprehensive Income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    260,779
    
    
    
    260,779Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    260,779Dividends declared on Class A preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (80
    )
    
    
    (80
    )Dividends declared on Class B preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,302
    )
    
    
    (14,302
    )Dividends declared on Class C preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,938
    )
    
    
    (3,938
    )Dividends declared on Class D preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (18,201
    )
    
    
    (18,201
    )Dividends declared on common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (224,258
    )
    
    
    (224,258
    )Return of capital
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (742
    )
    
    
    
    
    
    
    (742
    )Balance, December 31, 2008
    
    
    14,000
    
    
    $
    350,000
    
    
    
    
    
    
    $
    
    
    
    
    14,000
    
    
    $
    3,660,217
    
    
    $
    
    
    
    $
    4,461,217
 See notes to consolidated financial statements.
 37




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##### Table of Contents



Huntington Preferred Capital, Inc.
 
 Consolidated Statements of Cash Flows
 Year EndedDecember 31,(in thousands)
    
    2008
    
    2007
    
    2006Operating activitiesNet income
    
    $
    260,779
    
    
    $
    316,259
    
    
    $
    344,237Adjustments to reconcile net income to net
cash provided by operating activities:Provision for (reduction in) allowances for credit losses
    
    
    (14,855
    )
    
    
    3,390
    
    
    
    (22,041
    )Change in due to/from The Huntington National Bank
    
    
    10,180
    
    
    
    (4,937
    )
    
    
    7Other, net
    
    
    7,736
    
    
    
    6,482
    
    
    
    3,661Net cash provided by operating activities
    
    
    263,840
    
    
    
    321,194
    
    
    
    325,864Investing activitiesParticipation interests acquired
    
    
    (2,955,839
    )
    
    
    (2,964,050
    )
    
    
    (2,613,450
    )Sales and repayments of loans underlying participation interests
    
    
    2,974,065
    
    
    
    2,747,799
    
    
    
    2,951,526Proceeds from the sale of premises and equipment
    
    
    
    
    
    
    
    
    
    
    56Net cash provided by (used for) investing activities
    
    
    18,226
    
    
    
    (216,251
    )
    
    
    338,132Financing activitiesDividends paid on preferred securities
    
    
    (36,521
    )
    
    
    (49,643
    )
    
    
    (47,944
    )Dividends paid on common stock
    
    
    
    
    
    
    (546,488
    )
    
    
    (279,684
    )Return of capital to common shareholders
    
    
    
    
    
    
    (187,502
    )
    
    
    (420,316
    )Net cash used for financing activities
    
    
    (36,521
    )
    
    
    (783,633
    )
    
    
    (747,944
    )Increase (decrease) in cash and cash equivalents
    
    
    245,545
    
    
    
    (678,690
    )
    
    
    (83,948
    )Cash and cash equivalents at beginning of year
    
    
    47,464
    
    
    
    726,154
    
    
    
    810,102Cash and cash equivalents at end of year
    
    $
    293,009
    
    
    $
    47,464
    
    
    $
    726,154Supplemental information:Income taxes paid
    
    $
    
    
    
    $
    2,098
    
    
    $
    2,077Dividends and distributions declared, not paid
    
    
    225,000
    
    
    
    
    
    
    
    450,000Non cash change in loan participation activity with The Huntington National Bank
    
    
    (73,378
    )
    
    
    (17,617
    )
    
    
    88,501Dividend of subsidiary stock
    
    
    
    
    
    
    16,420
    
    
    
    
 See notes to consolidated financial statements.
 38




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##### Table of Contents



Notes to the Consolidated Financial Statements
 Note 1  Significant Accounting Policies
 Basis of Presentation:
  Business:
 Use of Estimates:
 Due from The Huntington National Bank :
 Loan participation interests:
  39




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##### Table of Contents



Allowances for Credit Losses (ACL):
  Accounting by Creditors for Impairment of a Loan Accounting for Contingencies
   40




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##### Table of Contents



Net Income per Share:
 Income Taxes:
 Statement of Cash Flows:
 Note 2  New Accounting Pronouncements
 FASB Statement No. 157, Fair Value Measurements (Statement No. 157)
 FASB Statement No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (Statement No. 159)
 FASB Statement No. 162 The Hierarchy of Generally Accepted Accounting Principles (Statement No.
162)
 41




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##### Table of Contents



Note 3  Loan Participation Interests
  (in thousands)
    
    2008
    
    2007Commercial real estate
    
    $
    3,433,872
    
    
    $
    3,121,083Consumer and residential real estate
    
    
    974,619
    
    
    
    1,217,956Total Loan Participation Interests
    
    $
    4,408,491
    
    
    $
    4,339,039
      Participations in Non-Performing Loans and Past Due Loans
  (in thousands)
    
    2008
    
    2007Commercial real estate
    
    $
    54,246
    
    
    $
    42,060Consumer and residential real estate
    
    
    6,041
    
    
    
    4,136Total Participations in Non-Accrual Loans
    
    $
    60,287
    
    
    $
    46,196Participations in Accruing Loans Past Due 90 Days or More
    
    $
    9,543
    
    
    $
    4,440
  42




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##### Table of Contents



Note 4  Allowances for Credit Losses (ACL)
   (in thousands)
    
    2008
    
    2007
    
    2006ALPL balance, beginning of year
    
    $
    62,275
    
    
    $
    48,703
    
    
    $
    57,530Allowance of loan participations acquired
    
    
    36,284
    
    
    
    26,530
    
    
    
    19,404Net loan losses
    
    
    (19,803
    )
    
    
    (16,296
    )
    
    
    (6,521
    )Provision for (reduction in) ALPL
    
    
    (13,924
    )
    
    
    3,338
    
    
    
    (21,710
    )Economic Reserve transfer from AULPC
    
    
    624
    
    
    
    
    
    
    
    ALPL balance, end of year
    
    $
    65,456
    
    
    $
    62,275
    
    
    $
    48,703AULPC balance, beginning of year
    
    $
    3,856
    
    
    $
    3,804
    
    
    $
    4,135Provision for (reduction in) AULPC
    
    
    (931
    )
    
    
    52
    
    
    
    (331
    )Economic Reserve transfer from ALPL
    
    
    (624
    )
    
    
    
    
    
    
    AULPC balance, end of year
    
    $
    2,301
    
    
    $
    3,856
    
    
    $
    3,804Total ACL
    
    $
    67,757
    
    
    $
    66,131
    
    
    $
    52,507Balance of Impaired Loans, at end of year(1):With specific reserves assigned to the loan balances
    
    $
    35,088
    
    
    $
    30,604
    
    
    $
    5,976With no specific reserves assigned to the loan balances
    
    
    7,733
    
    
    
    2,297
    
    
    
    6,051Total
    
    $
    42,821
    
    
    $
    32,901
    
    
    $
    12,027Average Balance of Impaired Loans for the Year (1)
    
    $
    41,201
    
    
    $
    25,157
    
    
    $
    16,131Allowance for Loan Losses on Impaired Loans (1)
    
    
    11,265
    
    
    
    6,366
    
    
    
    1,065
 
 (1)
    
    Includes impaired commercial real estate loans with outstanding balances greater
than $1 million for business-banking loans, and $500,000 for all other loans. A loan is
impaired when it is probable that HPCI will be unable to collect all amounts due according to
the contractual terms of the loan agreement. The amount of interest recognized on impaired
loans while they were considered impaired was less than $0.1 million in 2008, 2007, and 2006. Note 5
 Dividends
    43




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##### Table of Contents



i.e.
 i.e.
  (in thousands)
    
    2008
    
    
    2007
    
    
    2006Class A preferred securities
    
    $
    80
    
    
    $
    80
    
    
    $
    80Class B preferred securities
    
    
    14,302
    
    
    
    21,300
    
    
    
    20,394Class C preferred securities
    
    
    3,938
    
    
    
    3,938
    
    
    
    3,938Class D preferred securities
    
    
    18,201
    
    
    
    24,325
    
    
    
    23,532Total preferred dividends declared
    
    $
    36,521
    
    
    $
    49,643
    
    
    $
    47,944
    Note 6  Related Party Transactions
   44




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##### Table of Contents



January 1, 2006throughDecember 31, 2008Commercial and commercial real estate
    
    
    0.125
    %Consumer
    
    
    0.650Residential real estate
    
    
    0.267
    Number ofCommon
    
    Number of Preferred SecuritiesShareholder:
    
    Shares
    
    Class A
    
    Class B
    
    Class C
    
    Class DHeld by related parties:HPCII
    
    
    4,550,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    HCF
    
    
    6,580,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Holdings
    
    
    2,870,000
    
    
    
    895
    
    
    
    
    
    
    
    
    
    
    
    14,000,000HPC Holdings-II, Inc.
    
    
    
    
    
    
    
    
    
    
    400,000
    
    
    
    
    
    
    
    Total held by related parties
    
    
    14,000,000
    
    
    
    895
    
    
    
    400,000
    
    
    
    
    
    
    
    14,000,000Other shareholders
    
    
    
    
    
    
    105
    
    
    
    
    
    
    
    2,000,000
    
    
    
    Total shares outstanding
    
    
    14,000,000
    
    
    
    1,000
    
    
    
    400,000
    
    
    
    2,000,000
    
    
    
    14,000,000
   45




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##### Table of Contents



Note 7  Fair Value of Financial Instruments
    Cash and interest-bearing deposits, and due from The Huntington National Bank
 Loan participation interests
 46




---



##### Table of Contents



Note 8  Commitments and Contingencies
 /
    Note 9  Segment Reporting
  Note
10  Income Taxes
     47




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##### Table of Contents



Note
11  Quarterly Results of Operations ( Unaudited )
  (in thousands)
    
    Fourth
    
    Third
    
    Second
    
    First2008Interest and fee income
    
    $
    61,980
    
    
    $
    62,933
    
    
    $
    61,226
    
    
    $
    68,410Reduction in allowances for credit losses
    
    
    (1,194
    )
    
    
    (7,437
    )
    
    
    (5,079
    )
    
    
    (1,145
    )Non-interest income
    
    
    761
    
    
    
    761
    
    
    
    749
    
    
    
    793Non-interest expense
    
    
    2,856
    
    
    
    2,900
    
    
    
    2,952
    
    
    
    2,981Net income
    
    
    61,079
    
    
    
    68,231
    
    
    
    64,102
    
    
    
    67,367Dividends declared on preferred securities
    
    
    (10,188
    )
    
    
    (7,632
    )
    
    
    (7,439
    )
    
    
    (11,262
    )Net income applicable to common shares
    
    $
    50,891
    
    
    $
    60,599
    
    
    $
    56,663
    
    
    $
    56,1052007Interest and fee income
    
    $
    80,530
    
    
    $
    84,143
    
    
    $
    81,264
    
    
    $
    78,874Provision for (reduction in) allowances
for credit losses
    
    
    10,167
    
    
    
    (5,175
    )
    
    
    1,091
    
    
    
    (2,693
    )Non-interest income
    
    
    6,653
    
    
    
    1,791
    
    
    
    1,796
    
    
    
    1,802Non-interest expense
    
    
    4,128
    
    
    
    4,059
    
    
    
    3,820
    
    
    
    3,580Income before provision for income taxes
    
    
    72,888
    
    
    
    87,050
    
    
    
    78,149
    
    
    
    79,789Provision for income taxes
    
    
    378
    
    
    
    428
    
    
    
    418
    
    
    
    393Net income
    
    
    72,510
    
    
    
    86,622
    
    
    
    77,731
    
    
    
    79,396Dividends declared on preferred securities
    
    
    (12,213
    )
    
    
    (12,456
    )
    
    
    (12,438
    )
    
    
    (12,536
    )Net income applicable to common shares
    
    $
    60,297
    
    
    $
    74,166
    
    
    $
    65,293
    
    
    $
    66,860
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##### Table of Contents



Item 9: Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  
 Item 9A: Controls and Procedures
 Disclosure Controls and Procedures
  Internal Controls Over Financial Reporting
  Changes in Internal Control Over Financial Reporting
  
 Item 9A(T): Controls and Procedures
  
 Item 9B: Other Information
  
 Part III
 
 Item 10: Directors and Executive Officers and Corporate Governance
  
 Item 11: Executive Compensation
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##### Table of Contents



Item 12: Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
  
 Item 13: Certain Relationships and Related Transactions, and Director Independence
  
 Item 14: Principal Accounting Fees and Services
  
 Part IV
 
 Item 15: Exhibits and Financial Statement Schedules
 (
 (1)
    
    The report of independent registered public accounting firm and consolidated financial
statements appearing in Item 8.(2)
    
    HPCI is not filing separately financial statement schedules because of the absence of
conditions under which they are required or because the required information is included in
the consolidated financial statements or the notes thereto.(3)
    
    The exhibits required by this item are listed in the Exhibit Index on pages 52 and 53 of this
Form 10-K.
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##### Table of Contents



Signatures
  
 By:
    
    /s/ Donald R. Kimble
    
    By:
    
    /s/ Thomas P. ReedDonald R. Kimble
    
    
    
    Thomas P. ReedPresident and Director
    
    
    
    Vice President and Director(Principal Executive Officer)
    
    
    
    (Principal Financial and Accounting Officer)
  Richard A. Cheap *

Richard A. Cheap
    
    DirectorReginald D. Dickson*

Reginald D. Dickson
    
    DirectorEdward J. Kane *
    
    DirectorEdward J. KaneRoger E. Kephart *
    
    DirectorRoger E. KephartJames D. Robbins *
    
    DirectorJames D. RobbinsKaren D. Roggenkamp *
    
    DirectorKaren D. Roggenkamp/s/ Donald R. Kimble


Donald R. Kimble
 
 *
    
    Attorney-in fact for each of the persons indicated.
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##### Table of Contents



Exhibit Index
  3.1.
    
    Amended and Restated Articles of Incorporation (previously filed as Exhibit 3(a)(ii) to
Amendment No. 4 to Registration Statement of Form S-11 (File No. 333-61182), filed with the
Securities and Exchange Commission on October 12, 2001, and incorporated herein by reference.)
 3.2.
    
    Code of Regulations (previously filed as Exhibit 3(b) to the Registrants Registration
Statement of Form S-11 (File No. 333-61182), filed with the Securities and Exchange Commission
on May 17, 2001, and incorporated herein by reference.)
 4.1.
    
    Specimen of certificate representing Class C preferred securities, previously filed as
Exhibit 4 to the Registrants Amendment No. 1 to Registration Statement of Form S-11 (File No.
333-61182), filed with the Securities and Exchange Commission on May 31, 2001, and
incorporated herein by reference.
 10.1.
    
    Third Amended and Restated Loan Participation Agreement, dated May 12, 2005, between The
Huntington National Bank and Huntington Preferred Capital Holdings, Inc. (previously filed as
Exhibit 10(a) to Quarterly Report on Form 10-Q for the quarter ended March 31, 2005, and
incorporated herein by reference).
 10.2.
    
    Third Amended and Restated Loan Subparticipation Agreement, dated May 12, 2005, between
Huntington Preferred Capital Holdings, Inc. and Huntington Preferred Capital, Inc. (previously
filed as Exhibit 10(b) to Quarterly Report on Form 10-Q for the quarter ended March 31, 2005,
and incorporated herein by reference).
 10.3.
    
    Second Amended and Restated Loan Participation Agreement, dated May 12, 2005, between The
Huntington National Bank and Huntington Preferred Capital, Inc. (previously filed as Exhibit
10(c) to Quarterly Report on Form 10-Q for the quarter ended March 31, 2005, and incorporated
herein by reference).
 10.4.
    
    Subscription Agreement, dated October 15, 2001, for the Class C preferred securities between
Huntington Preferred Capital, Inc., The Huntington National Bank, and Huntington Preferred
Capital Holdings, Inc. (previously filed as Exhibit 10(f) to Annual Report on Form 10-K for
the year ended December 31, 2001, and incorporated herein by reference).
 10.5.
    
    Subscription Agreement, dated October 15, 2001, for the Class D preferred securities between
Huntington Preferred Capital, Inc., The Huntington National Bank, and Huntington Preferred
Capital Holdings, Inc. (previously filed as Exhibit 10(g) to Annual Report on Form 10-K for
the year ended December 31, 2001, and incorporated herein by reference).
 10.6.
    
    Amended and Restated Agreement dated June 1, 2005 between Huntington Preferred Capital Inc.
and Huntington National Bank to govern the terms on which Huntington Preferred Capital Inc.
may pledge certain of its assets as collateral for the Huntington National Banks borrowings
from the Federal Home Loan Bank of Cincinnati under a secured revolving loan facility
(previously filed as Exhibit 99.1 to Form 8-K dated June 1, 2005).
 10.7.
    
    Limited Waiver of Contract Provision, dated August 13, 2007, with Huntington Preferred
Capital Holdings, Inc., Huntington Preferred Capital, Inc., and The Huntington National Bank.
(previously filed as Exhibit 10.1 to Quarterly Report on Form 10-Q for the quarter ended June
30, 2007, and incorporated herein by reference).
 12.1.
    
    Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends.
 14.1.
    
    Code of Business Conduct and Ethics dated January 14, 2003 and revised on February 14, 2006
and Financial Code of Ethics for Chief Executive Officer and Senior Financial Officers,
adopted January 18, 2003 and revised on April 19, 2005, as applicable to all of its affiliated
companies, and ratified by HPCIs Board of Directors on March 25, 2004, are available on
Huntington Bancshares Incorporateds website at
http://www.investquest.com/iq/h/hban/main/cg/cg.htm.
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##### Table of Contents



24.1.
    
    Power of Attorney.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.32.1.
    
    Section 1350 Certification  Chief Financial Officer.99.1.
    
    Consolidated Financial Statements of Huntington Bancshares Incorporated as of December 31,
2008 and 2007 and for the years ended December 31, 2008, 2007, and 2006.
 53