##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-K
  þ
    
    Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the fiscal year ended December 31, 2007
 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
 o
  o o þ o
  o þ
  Documents Incorporated By Reference




---



##### 



HUNTINGTON PREFERRED CAPITAL, INC.
  Part I.Item 1. Business
    
    
    3Item 1A. Risk Factors
    
    
    11Item 1B. Unresolved Staff Comments
    
    
    16Item 2. Properties
    
    
    16Item 3. Legal Proceedings
    
    
    16Item 4. Submission of Matters to a Vote of Security Holders
    
    
    16Part II.Item 5. Market for Registrants Common Equity, Related Stockholder Matters, and Issuer
Purchases of Equity Securities
    
    
    16Item 6. Selected Financial Data
    
    
    17Item 7. Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
    
    18Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    
    
    30Item 8. Financial Statements and Supplementary Data
    
    
    30Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
    
    
    47Item 9A. Controls and Procedures
    
    
    47Item 9A(T). Controls and Procedures
    
    
    47Item 9B. Other Information
    
    
    47Part III.Item 10. Directors and Executive Officers and Corporate Governance
    
    
    47Item 11. Executive Compensation
    
    
    47Item 12. Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters
    
    
    48Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    
    48Item 14. Principal Accounting Fees and Services
    
    
    48Part IV.Item 15. Exhibits and Financial Statement Schedules
    
    
    48Signatures
    
    
    49ExhibitsEX-12.1EX-24.1EX-31.1EX-31.2EX-32.1EX-32.2EX-99.1
  2




---



##### Table of Contents



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




---



##### Table of Contents



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




---



##### Table of Contents



Geographic Distribution
  Table 1  Total Loan Participation Interests by Geographic Location of Borrower
 (in thousands)
    
    
    
    
    
    
    
    
    
    Percentage byAggregate
    
    AggregateNumber
    
    Principal
    
    PrincipalState
    
    of Loans
    
    Balance
    
    BalanceOhio
    
    
    17,202
    
    
    $
    2,347,295
    
    
    
    54.0
    %Michigan
    
    
    9,121
    
    
    
    1,048,214
    
    
    
    24.2Indiana
    
    
    2,205
    
    
    
    366,667
    
    
    
    8.5Kentucky
    
    
    1,726
    
    
    
    215,028
    
    
    
    5.030,254
    
    
    
    3,977,204
    
    
    
    91.7All other locations
    
    
    325
    
    
    
    361,835
    
    
    
    8.3Total loan participation interests
    
    
    30,579
    
    
    $
    4,339,039
    
    
    
    100.0
    %
 Dividend Policy and Restrictions
   5




---



##### Table of Contents



Table 2  Capital Ratios for the Bank
 Well-
    
    Adequately-Capitalized
    
    Capitalized
    
    December 31,Minimums
    
    Minimums
    
    2007
    
    2006Tier 1 Risk-Based Capital
    
    
    6.00
    %
    
    
    4.00
    %
    
    
    6.64
    %
    
    
    6.47
    %Total Risk-Based Capital
    
    
    10.00
    
    
    
    8.00
    
    
    
    10.17
    
    
    
    10.44Tier 1 Leverage Ratio
    
    
    5.00
    
    
    
    4.00
    
    
    
    5.99
    
    
    
    5.81
  Conflict of Interests and Related Policies
    6




---



##### Table of Contents



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




---



##### Table of Contents



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




---



##### Table of Contents



Employees
   Servicing
     9




---



##### Table of Contents



Competition
  Segment Reporting
  Regulatory Matters
  Available Information
  10




---



##### Table of Contents



Item 1A: Risk Factors
  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.
  11




---



##### Table of Contents



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.
   12




---



##### Table of Contents



HPCI is dependent, in virtually every phase of its operations, on the diligence and skill of the
officers and employees of the Bank, and its relationship with the Bank may create potential
conflicts of interest.
      13




---



##### Table of Contents



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.
    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, taxation, voting rights, and liquidity of securities would be negatively impacted.
  
    
    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.
  14




---



##### Table of Contents



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 less 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
 15




---



##### Table of Contents




    
    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).
  
 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
    16




---



##### Table of Contents



Item 6: Selected Financial Data
  Table 3  Selected Financial Data
 (in thousands)
    
    2007
    
    2006
    
    2005
    
    2004
    
    2003STATEMENTS OF INCOME:Interest and fee income
    
    $
    324,811
    
    
    $
    331,306
    
    
    $
    302,743
    
    
    $
    262,215
    
    
    $
    274,401Provision for (reduction in) allowance
for credit losses
    
    
    3,390
    
    
    
    (22,041
    )
    
    
    (19,796
    )
    
    
    (31,591
    )
    
    
    (41,219
    )Non-interest income
    
    
    12,042
    
    
    
    7,525
    
    
    
    9,391
    
    
    
    7,249
    
    
    
    6,901Non-interest expense
    
    
    15,587
    
    
    
    15,322
    
    
    
    17,065
    
    
    
    16,260
    
    
    
    13,886Net income
    
    
    316,259
    
    
    
    344,237
    
    
    
    314,318
    
    
    
    284,542
    
    
    
    308,539Dividends declared on preferred securities
    
    
    49,643
    
    
    
    47,944
    
    
    
    34,634
    
    
    
    20,744
    
    
    
    18,911Net income applicable
to common shares
    
    
    266,616
    
    
    
    296,293
    
    
    
    279,684
    
    
    
    263,798
    
    
    
    289,628Dividends declared on common stock
    
    
    266,616
    
    
    
    296,293
    
    
    
    279,684
    
    
    
    263,798
    
    
    
    289,628BALANCE SHEET HIGHLIGHTS:At period end:Net loan participation interests
    
    $
    4,276,764
    
    
    $
    4,048,506
    
    
    $
    4,454,795
    
    
    $
    4,828,127
    
    
    $
    5,218,536All other assets
    
    
    189,110
    
    
    
    901,230
    
    
    
    899,090
    
    
    
    845,464
    
    
    
    187,442Total assets
    
    
    4,465,874
    
    
    
    4,949,736
    
    
    
    5,353,885
    
    
    
    5,673,591
    
    
    
    5,405,978Total shareholders equity
    
    
    4,461,959
    
    
    
    4,495,753
    
    
    
    4,649,460
    
    
    
    5,069,776
    
    
    
    5,405,978Average balances:Net loan participation interests
    
    $
    4,289,099
    
    
    $
    4,349,214
    
    
    $
    4,664,505
    
    
    $
    5,075,815
    
    
    $
    5,027,857Total assets
    
    
    4,653,184
    
    
    
    4,816,467
    
    
    
    5,217,640
    
    
    
    5,530,253
    
    
    
    5,647,772Total shareholders equity
    
    
    4,617,576
    
    
    
    4,774,542
    
    
    
    5,197,654
    
    
    
    5,497,479
    
    
    
    5,643,692KEY RATIOS AND STATISTICS:Yield on interest earning assets
    
    
    6.98
    %
    
    
    6.94
    %
    
    
    5.84
    %
    
    
    4.74
    %
    
    
    4.77
    %Return on average assets
    
    
    6.80
    
    
    
    7.15
    
    
    
    6.02
    
    
    
    5.15
    
    
    
    5.46Return on average equity
    
    
    6.85
    
    
    
    7.21
    
    
    
    6.05
    
    
    
    5.18
    
    
    
    5.47Dividend payout ratio
    
    
    100.00
    
    
    
    100.00
    
    
    
    100.00
    
    
    
    100.00
    
    
    
    100.00Average shareholders equity to
average assets
    
    
    99.23
    
    
    
    99.13
    
    
    
    99.62
    
    
    
    99.41
    
    
    
    99.93Preferred dividend coverage ratio
    
    
    6.37
    x
    
    
    7.18
    x
    
    
    9.08
    x
    
    
    13.72
    x
    
    
    16.32
    x
  17




---



##### Table of Contents



Item 7: Managementss Discussion and Analysis of Financial Condition and Results of Operations
 INTRODUCTION
   Forward-looking Statements
    Critical Accounting Policies and Use of Significant Estimates
   18




---



##### Table of Contents



Qualification Tests
    RESULTS OF OPERATIONS
   Interest and Fee Income
  19




---



##### Table of Contents



Table 4  Interest and Fee Income
 2007
    
    2006
    
    2005Average
    
    
    
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    
    
    
    Average(in millions)
    
    Balance
    
    Income (1)
    
    Yield
    
    Balance
    
    Income (1)
    
    Yield
    
    Balance
    
    Income (1)
    
    YieldLoan participation interests:Commercial
    
    $
    26.7
    
    
    $
    1.9
    
    
    
    7.32
    %
    
    $
    39.9
    
    
    $
    3.2
    
    
    
    7.93
    %
    
    $
    77.1
    
    
    $
    4.7
    
    
    
    6.05
    %Commercial real estate
    
    
    3,152.1
    
    
    
    229.4
    
    
    
    7.28
    
    
    
    3,295.2
    
    
    
    238.0
    
    
    
    7.22
    
    
    
    3,566.4
    
    
    
    211.1
    
    
    
    5.92Consumer and
residential real estate
    
    
    1,162.8
    
    
    
    77.6
    
    
    
    6.67
    
    
    
    1,067.4
    
    
    
    71.1
    
    
    
    6.66
    
    
    
    1,081.3
    
    
    
    71.3
    
    
    
    6.60Total loan participations
    
    
    4,341.6
    
    
    
    308.9
    
    
    
    7.12
    
    
    
    4,402.5
    
    
    
    312.3
    
    
    
    7.09
    
    
    
    4,724.8
    
    
    
    287.1
    
    
    
    6.08Interest bearing deposits
withThe Huntington National
Bank
    
    
    307.2
    
    
    
    15.9
    
    
    
    5.10
    
    
    
    366.3
    
    
    
    19.0
    
    
    
    5.12
    
    
    
    457.4
    
    
    
    15.6
    
    
    
    3.43Total
    
    $
    4,648.8
    
    
    $
    324.8
    
    
    
    6.98
    %
    
    $
    4,768.8
    
    
    $
    331.3
    
    
    
    6.94
    %
    
    $
    5,182.2
    
    
    $
    302.7
    
    
    
    5.84
    %
 (1)
   Provision for (reduction in) Allowances for Credit Losses
  Non-Interest Income and Non-Interest Expense
   20




---



##### Table of Contents



July 1, 2005
    
    January 1, 2005through
    
    throughDecember 31, 2007
    
    June 30, 2005Commercial and commercial real estate
    
    
    0.125
    %
    
    
    0.125
    %Consumer
    
    
    0.650
    
    
    
    0.750Residential real estate
    
    
    0.267
    
    
    
    0.267
  Income Taxes
  MARKET RISK
      21




---



##### Table of Contents



Table 5  Total Loan Participation Interests by Interest Rates
 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 5.00%
    
    
    843
    
    
    $
    54,787
    
    
    
    3.2
    %
    
    
    61
    
    
    $
    26,475
    
    
    
    1.0
    %5.00% to 5.99%
    
    
    4,852
    
    
    
    364,892
    
    
    
    21.5
    
    
    
    258
    
    
    
    105,599
    
    
    
    4.06.00% to 6.99%
    
    
    8,372
    
    
    
    647,456
    
    
    
    38.2
    
    
    
    1,130
    
    
    
    1,067,346
    
    
    
    40.47.00% to 7.99%
    
    
    5,615
    
    
    
    405,151
    
    
    
    23.8
    
    
    
    2,129
    
    
    
    1,307,722
    
    
    
    49.58.00% to 8.99%
    
    
    3,516
    
    
    
    149,413
    
    
    
    8.8
    
    
    
    647
    
    
    
    114,429
    
    
    
    4.39.00% to 9.99%
    
    
    1,888
    
    
    
    50,129
    
    
    
    3.0
    
    
    
    79
    
    
    
    11,101
    
    
    
    0.410.00% to 10.99%
    
    
    807
    
    
    
    16,992
    
    
    
    1.0
    
    
    
    25
    
    
    
    5,177
    
    
    
    0.211.00% to 11.99%
    
    
    236
    
    
    
    4,375
    
    
    
    0.3
    
    
    
    9
    
    
    
    3,485
    
    
    
    0.112.00% and over
    
    
    110
    
    
    
    2,872
    
    
    
    0.2
    
    
    
    2
    
    
    
    1,638
    
    
    
    0.1Total
    
    
    26,239
    
    
    $
    1,696,067
    
    
    
    100.0
    %
    
    
    4,340
    
    
    $
    2,642,972
    
    
    
    100.0
    %
 December 31, 2006
    
    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 5.00%
    
    
    893
    
    
    $
    62,183
    
    
    
    4.6
    %
    
    
    94
    
    
    $
    35,897
    
    
    
    1.3
    %5.00% to 5.99%
    
    
    4,991
    
    
    
    365,366
    
    
    
    27.1
    
    
    
    428
    
    
    
    103,526
    
    
    
    3.86.00% to 6.99%
    
    
    6,217
    
    
    
    438,679
    
    
    
    32.7
    
    
    
    847
    
    
    
    420,408
    
    
    
    15.37.00% to 7.99%
    
    
    4,076
    
    
    
    284,263
    
    
    
    21.1
    
    
    
    1,994
    
    
    
    1,527,821
    
    
    
    55.68.00% to 8.99%
    
    
    3,340
    
    
    
    128,190
    
    
    
    9.5
    
    
    
    1,315
    
    
    
    601,284
    
    
    
    21.89.00% to 9.99%
    
    
    1,810
    
    
    
    43,432
    
    
    
    3.2
    
    
    
    284
    
    
    
    46,563
    
    
    
    1.710.00% to 10.99%
    
    
    828
    
    
    
    17,529
    
    
    
    1.3
    
    
    
    62
    
    
    
    12,101
    
    
    
    0.411.00% to 11.99%
    
    
    287
    
    
    
    5,376
    
    
    
    0.4
    
    
    
    16
    
    
    
    1,833
    
    
    
    0.112.00% and over
    
    
    167
    
    
    
    1,972
    
    
    
    0.1
    
    
    
    6
    
    
    
    786
    
    
    
    Total
    
    
    22,609
    
    
    $
    1,346,990
    
    
    
    100.0
    %
    
    
    5,046
    
    
    $
    2,750,219
    
    
    
    100.0
    %
 (1)
 CREDIT QUALITY
 Credit Risk
     22




---



##### Table of Contents



Table 6  Loan Participation
Interests Aging
 Percentage byTotal
    
    Aggregate
    
    AggregateNumber
    
    Principal
    
    Principal(in thousands)
    
    of Loans
    
    Balance
    
    BalanceCurrent
    
    
    28,248
    
    
    $
    4,087,456
    
    
    
    94.2
    %1 to 30 days past due
    
    
    1,761
    
    
    
    196,946
    
    
    
    4.631 to 60 days past due
    
    
    273
    
    
    
    10,488
    
    
    
    0.261 to 90 days past due
    
    
    111
    
    
    
    5,993
    
    
    
    0.1over 90 days past due (1)
    
    
    186
    
    
    
    38,156
    
    
    
    0.9Total
    
    
    30,579
    
    
    $
    4,339,039
    
    
    
    100.0
    %
 (1)
 Commercial Credit
       23




---



##### Table of Contents



Table 7  Commercial and Commercial Real Estate Loan Participation Interests by Property Type and Borrower Location
 At December 31, 2007Geographic Region
    
    Total
    
    Percent of(in thousands of dollars)
    
    Indiana
    
    Kentucky
    
    Michigan
    
    Ohio
    
    Other
    
    Amount
    
    TotalIndustrial and warehouse
    
    $
    25,210
    
    
    $
    19,123
    
    
    $
    207,249
    
    
    $
    354,834
    
    
    $
    100,236
    
    
    $
    706,652
    
    
    
    22.6
    %Retail properties
    
    
    64,714
    
    
    
    37,806
    
    
    
    87,067
    
    
    
    321,453
    
    
    
    76,976
    
    
    
    588,016
    
    
    
    18.8Single family home builders
    
    
    23,112
    
    
    
    17,527
    
    
    
    101,281
    
    
    
    239,246
    
    
    
    109,316
    
    
    
    490,482
    
    
    
    15.7Office
    
    
    21,562
    
    
    
    19,359
    
    
    
    115,742
    
    
    
    286,427
    
    
    
    35,800
    
    
    
    478,890
    
    
    
    15.3Raw land and other land
uses
    
    
    27,012
    
    
    
    11,985
    
    
    
    102,674
    
    
    
    192,414
    
    
    
    7,131
    
    
    
    341,216
    
    
    
    10.9Multi family
    
    
    76,693
    
    
    
    2,536
    
    
    
    20,718
    
    
    
    104,131
    
    
    
    1,187
    
    
    
    205,265
    
    
    
    6.6Health care
    
    
    1,059
    
    
    
    193
    
    
    
    7,872
    
    
    
    44,066
    
    
    
    14,886
    
    
    
    68,076
    
    
    
    2.2Hotel
    
    
    12,899
    
    
    
    
    
    
    
    20,789
    
    
    
    14,410
    
    
    
    337
    
    
    
    48,435
    
    
    
    1.6Other
    
    
    20,481
    
    
    
    21,271
    
    
    
    41,554
    
    
    
    110,343
    
    
    
    402
    
    
    
    194,051
    
    
    
    6.3Total
    
    $
    272,742
    
    
    $
    129,800
    
    
    $
    704,946
    
    
    $
    1,667,324
    
    
    $
    346,271
    
    
    $
    3,121,083
    
    
    $
    100.0
    %
 Consumer Credit
   Allowances for Credit Losses (ACL)
    24




---



##### Table of Contents



Table 8  Allowances for Credit Loss Activity
 (in thousands)
    
    2007
    
    2006
    
    2005
    
    2004
    
    2003ALPL balance, beginning of year
    
    $
    48,703
    
    
    $
    57,530
    
    
    $
    61,146
    
    
    $
    84,532
    
    
    $
    140,353Allowance of loan participations acquired
    
    
    26,530
    
    
    
    19,404
    
    
    
    25,071
    
    
    
    21,201
    
    
    
    45,397Net loan (losses) recoveriesCommercial
    
    
    168
    
    
    
    1,124
    
    
    
    1,247
    
    
    
    1,594
    
    
    
    (20,973
    )Commercial real estate
    
    
    (12,169
    )
    
    
    (4,494
    )
    
    
    (5,175
    )
    
    
    (5,032
    )
    
    
    (13,525
    )Consumer and residential real estate
    
    
    (4,295
    )
    
    
    (3,151
    )
    
    
    (4,593
    )
    
    
    (5,793
    )
    
    
    (25,501
    )Total net loan losses
    
    
    (16,296
    )
    
    
    (6,521
    )
    
    
    (8,521
    )
    
    
    (9,231
    )
    
    
    (59,999
    )Provision for (reduction in) ALPL
    
    
    3,338
    
    
    
    (21,710
    )
    
    
    (19,228
    )
    
    
    (35,356
    )
    
    
    (41,219
    )Economic Reserve transfer to AULPC
    
    
    
    
    
    
    
    
    
    
    (938
    )
    
    
    
    
    
    
    ALPL balance, end of year
    
    $
    62,275
    
    
    $
    48,703
    
    
    $
    57,530
    
    
    $
    61,146
    
    
    $
    84,532AULPC balance, beginning of year
    
    $
    3,804
    
    
    $
    4,135
    
    
    $
    3,765
    
    
    $
    
    
    
    $
    Provision for (reduction in) AULPC
    
    
    52
    
    
    
    (331
    )
    
    
    (568
    )
    
    
    3,765
    
    
    
    Economic Reserve transfer from ALL
    
    
    
    
    
    
    
    
    
    
    938
    
    
    
    
    
    
    
    AULPC balance, end of year
    
    $
    3,856
    
    
    $
    3,804
    
    
    $
    4,135
    
    
    $
    3,765
    
    
    $
    Total Allowances for Credit Losses
    
    $
    66,131
    
    
    $
    52,507
    
    
    $
    61,665
    
    
    $
    64,911
    
    
    $
    84,532ALPL as a % of total participation
interests
    
    
    1.44
    %
    
    
    1.19
    %
    
    
    1.27
    %
    
    
    1.25
    %
    
    
    1.59
    %ACL as a % of total participation interests
    
    
    1.52
    
    
    
    1.28
    
    
    
    1.37
    
    
    
    1.33
    
    
    
    1.59
 25




---



##### Table of Contents



Table 9  Allowance for Credit Losses by Product (1)
 At December 31,(in thousands)
    
    2007
    
    2006
    
    2005
    
    2004
    
    2003Commercial
    
    $
    1,086
    
    
    
    0.5
    %
    
    $
    430
    
    
    
    0.8
    %
    
    $
    635
    
    
    
    1.0
    %
    
    $
    9,148
    
    
    
    2.2
    %
    
    $
    25,375
    
    
    
    2.8
    %Commercial real estate
    
    
    55,582
    
    
    
    71.4
    
    
    
    42,130
    
    
    
    75.9
    
    
    
    48,303
    
    
    
    73.4
    
    
    
    44,105
    
    
    
    76.4
    
    
    
    47,561
    
    
    
    80.1Consumer and
residential real estate
    
    
    5,607
    
    
    
    28.1
    
    
    
    6,143
    
    
    
    23.3
    
    
    
    8,592
    
    
    
    25.6
    
    
    
    7,893
    
    
    
    21.4
    
    
    
    11,596
    
    
    
    17.1Total ALPL
    
    
    62,275
    
    
    
    100.0
    %
    
    
    48,703
    
    
    
    100.0
    %
    
    
    57,530
    
    
    
    100.0
    %
    
    
    61,146
    
    
    
    100.0
    %
    
    
    84,532
    
    
    
    100.0
    %AULPC
    
    
    3,856
    
    
    
    
    
    
    
    3,804
    
    
    
    
    
    
    
    4,135
    
    
    
    
    
    
    
    3,765
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    66,131
    
    
    
    100.0
    %
    
    $
    52,507
    
    
    
    100.0
    %
    
    $
    61,665
    
    
    
    100.0
    %
    
    $
    64,911
    
    
    
    100.0
    %
    
    $
    84,532
    
    
    
    100.0
    %
 (1)
 Net Charge-offs
  Table 10  Net Charge-offs (1)
 (In thousands)
    
    2007
    
    
    
    
    
    
    2006
    
    
    
    
    
    
    2005
    
    
    
    
    
    
    2004
    
    
    
    
    
    
    2003Commercial
    
    $
    (168
    )
    
    
    (0.63)
    %
    
    $
    (1,124
    )
    
    
    (2.82)
    %
    
    $
    (1,247
    )
    
    
    (1.62)
    %
    
    $
    (1,594
    )
    
    
    (1.01)
    %
    
    $
    20,973
    
    
    
    8.41
    %Commercial real
estate
    
    
    12,169
    
    
    
    0.39
    
    
    
    4,494
    
    
    
    0.14
    
    
    
    5,175
    
    
    
    0.15
    
    
    
    5,032
    
    
    
    0.12
    
    
    
    13,525
    
    
    
    0.33Consumer and
residential real
estate
    
    
    4,295
    
    
    
    0.37
    
    
    
    3,151
    
    
    
    0.30
    
    
    
    4,593
    
    
    
    0.42
    
    
    
    5,793
    
    
    
    0.60
    
    
    
    25,501
    
    
    
    3.07Total Net Charge-offs
    
    $
    16,296
    
    
    
    0.38
    %
    
    $
    6,521
    
    
    
    0.15
    %
    
    $
    8,521
    
    
    
    0.18
    %
    
    $
    9,231
    
    
    
    0.18
    %
    
    $
    59,999
    
    
    
    1.17
    %
 
 (1)
 26




---



##### Table of Contents



Non-Performing Assets (NPAs)
   Table 11  Non-Performing Assets
 At December 31,(in thousands)
    
    2007
    
    2006
    
    2005
    
    2004
    
    2003Participation interests in non-accrual loansCommercial
    
    $
    137
    
    
    $
    687
    
    
    $
    147
    
    
    $
    425
    
    
    $
    5,176Commercial real estate
    
    
    41,923
    
    
    
    19,966
    
    
    
    20,746
    
    
    
    6,990
    
    
    
    12,987Consumer and residential real estate
    
    
    4,136
    
    
    
    4,649
    
    
    
    5,722
    
    
    
    6,897
    
    
    
    4,157Total Non-Performing Assets
    
    $
    46,196
    
    
    $
    25,302
    
    
    $
    26,615
    
    
    $
    14,312
    
    
    $
    22,320NPAs as a % of total participation interests
    
    
    1.06
    %
    
    
    0.62
    %
    
    
    0.59
    %
    
    
    0.29
    %
    
    
    0.42
    %ALPL as a % of NPAs
    
    
    135
    
    
    
    192
    
    
    
    216
    
    
    
    427
    
    
    
    379ACL as a % of NPAs
    
    
    143
    
    
    
    208
    
    
    
    232
    
    
    
    454
    
    
    
    379Accruing loans past due 90 days or more
    
    $
    4,440
    
    
    $
    5,392
    
    
    $
    3,188
    
    
    $
    11,686
    
    
    $
    13,362
   27




---



##### Table of Contents



OFF-BALANCE SHEET ARRANGEMENTS
  LIQUIDITY AND CAPITAL RESOURCES
       28




---



##### Table of Contents



RESULTS FOR THE FOURTH QUARTER
 Table 12  Quarterly Statements of Income
 2007

    
    2006
    
    
    

    4Q07 vs 4Q06(in thousands)
    
    Fourth
    
    
    Third
    
    
    Second
    
    
    First
    
    
    Fourth
    
    
    
    $ Chg
    
    
    % ChgInterest and fee incomeInterest on loan participation interests:Commercial
    
    $
    414
    
    
    $
    487
    
    
    $
    514
    
    
    $
    541
    
    
    $
    742
    
    
    
    $
    (328
    )
    
    
    (44.2)
    %Commercial real estate
    
    
    55,824
    
    
    
    60,350
    
    
    
    56,419
    
    
    
    56,445
    
    
    
    60,377
    
    
    
    
    (4,553
    )
    
    
    (7.5
    )Consumer and residential real estate
    
    
    20,927
    
    
    
    21,129
    
    
    
    19,015
    
    
    
    16,082
    
    
    
    16,366
    
    
    
    
    4,561
    
    
    
    27.9Total loan participation interest income
    
    
    77,165
    
    
    
    81,966
    
    
    
    75,948
    
    
    
    73,068
    
    
    
    77,485
    
    
    
    
    (320
    )
    
    
    (0.4
    )Fees from loan participation interests
    
    
    162
    
    
    
    216
    
    
    
    203
    
    
    
    198
    
    
    
    265
    
    
    
    
    (103
    )
    
    
    (38.9
    )Interest on deposits with The
Huntington National Bank
    
    
    3,203
    
    
    
    1,961
    
    
    
    5,113
    
    
    
    5,608
    
    
    
    8,115
    
    
    
    
    (4,912
    )
    
    
    (60.5
    )Total interest and fee income
    
    
    80,530
    
    
    
    84,143
    
    
    
    81,264
    
    
    
    78,874
    
    
    
    85,865
    
    
    
    
    (5,335
    )
    
    
    (6.2
    )Provision
for (reduction in) allowances for credit losses
    
    
    10,167
    
    
    
    (5,175
    )
    
    
    1,091
    
    
    
    (2,693
    )
    
    
    (4,400
    )
    
    
    
    14,567
    
    
    
    N.M.Interest income after provision for (reduction
in)
allowances for credit losses
    
    
    70,363
    
    
    
    89,318
    
    
    
    80,173
    
    
    
    81,567
    
    
    
    90,265
    
    
    
    
    (19,902
    )
    
    
    (22.0
    )Non-interest income:Rental income
    
    
    1,710
    
    
    
    1,710
    
    
    
    1,710
    
    
    
    1,710
    
    
    
    1,710
    
    
    
    
    
    
    
    
    Collateral fees
    
    
    4,943
    
    
    
    81
    
    
    
    86
    
    
    
    92
    
    
    
    101
    
    
    
    
    4,842
    
    
    
    N.M.Total non-interest income
    
    
    6,653
    
    
    
    1,791
    
    
    
    1,796
    
    
    
    1,802
    
    
    
    1,811
    
    
    
    
    4,842
    
    
    
    N.M.Non-interest expense:Servicing costs
    
    
    2,955
    
    
    
    2,971
    
    
    
    2,704
    
    
    
    2,450
    
    
    
    2,521
    
    
    
    
    434
    
    
    
    17.2Depreciation
    
    
    874
    
    
    
    892
    
    
    
    903
    
    
    
    919
    
    
    
    947
    
    
    
    
    (73
    )
    
    
    (7.7
    )(Gain) loss on disposal of fixed assets
    
    
    105
    
    
    
    
    
    
    
    
    
    
    
    17
    
    
    
    
    
    
    
    
    105
    
    
    
    Other
    
    
    194
    
    
    
    196
    
    
    
    213
    
    
    
    194
    
    
    
    198
    
    
    
    
    (4
    )
    
    
    (2.0
    )Total non-interest expense
    
    
    4,128
    
    
    
    4,059
    
    
    
    3,820
    
    
    
    3,580
    
    
    
    3,666
    
    
    
    
    462
    
    
    
    12.6Income before provision for income taxes
    
    
    72,888
    
    
    
    87,050
    
    
    
    78,149
    
    
    
    79,789
    
    
    
    88,410
    
    
    
    
    (15,522
    )
    
    
    (17.6
    )Provision for income taxes
    
    
    378
    
    
    
    428
    
    
    
    418
    
    
    
    393
    
    
    
    386
    
    
    
    
    (8
    )
    
    
    (2.1
    )Net income
    
    $
    72,510
    
    
    $
    86,622
    
    
    $
    77,731
    
    
    $
    79,396
    
    
    $
    88,024
    
    
    
    $
    (15,514
    )
    
    
    (17.6
    )Dividends declared on preferred securities
    
    
    (12,213
    )
    
    
    (12,456
    )
    
    
    (12,438
    )
    
    
    (12,536
    )
    
    
    (12,475
    )
    
    
    
    262
    
    
    
    2.1Net income applicable to
common shares(1)
    
    $
    60,297
    
    
    $
    74,166
    
    
    $
    65,293
    
    
    $
    66,860
    
    
    $
    75,549
    
    
    
    $
    (15,252
    )
    
    
    (20.2)
    %
 (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.
    29




---



##### Table of Contents



Item 7A: Quantitative and Qualitative Disclosures about Market Risk
  
 Item 8: Financial Statements and Supplementary Data
  PageReport of Management
    
    
    31Report of Independent Registered Public Accounting Firm
    
    
    33Consolidated Balance Sheets
    
    
    34Consolidated Statements of Income
    
    
    35Consolidated Statement of Changes in Shareholders Equity
    
    
    36Consolidated Statements of Cash Flows
    
    
    37Notes to Consolidated Financial Statements
    
    
    38
 30




---



##### 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)
  31




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 Internal
ControlIntegrated Framework
    Internal
ControlIntegrated Framework
   
 32




---



##### Table of Contents



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




---



##### Table of Contents



Huntington Preferred Capital, Inc.
 
 Consolidated Balance Sheets
 December 31,
    
    December 31,(in thousands, except share data)
    
    2007
    
    2006AssetsCash and interest bearing deposits with The Huntington National Bank
    
    $
    47,464
    
    
    $
    726,154Due from The Huntington National Bank
    
    
    121,981
    
    
    
    134,815Loan participation interests:Commercial
    
    
    22,526
    
    
    
    31,049Commercial real estate
    
    
    3,098,557
    
    
    
    3,108,533Consumer and residential real estate
    
    
    1,217,956
    
    
    
    957,627Total loan participation interests
    
    
    4,339,039
    
    
    
    4,097,209Allowance for loan participation losses
    
    
    (62,275
    )
    
    
    (48,703
    )Net loan participation interests
    
    
    4,276,764
    
    
    
    4,048,506Premises and equipment
    
    
    661
    
    
    
    17,711Accrued income and other assets
    
    
    19,004
    
    
    
    22,550Total assets
    
    $
    4,465,874
    
    
    $
    4,949,736Liabilities and shareholders equityLiabilitiesAllowance for unfunded loan participation commitments
    
    $
    3,856
    
    
    $
    3,804Dividends and distributions payable
    
    
    
    
    
    
    450,000Other liabilities
    
    
    59
    
    
    
    179Total liabilities
    
    
    3,915
    
    
    
    453,983Shareholders 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
    
    
    3,660,959
    
    
    
    3,694,753Retained earnings
    
    
    
    
    
    
    Total shareholders equity
    
    
    4,461,959
    
    
    
    4,495,753Total liabilities and shareholders equity
    
    $
    4,465,874
    
    
    $
    4,949,736
 See notes to consolidated financial statements.
 34




---



##### Table of Contents



Huntington Preferred Capital, Inc.
 
 Consolidated Statements of Income
 Year EndedDecember 31,(in thousands)
    
    2007
    
    2006
    
    2005Interest and fee incomeInterest on loan participation interests:Commercial
    
    $
    1,956
    
    
    $
    3,152
    
    
    $
    4,632Commercial real estate
    
    
    229,038
    
    
    
    237,475
    
    
    
    209,801Consumer and residential real estate
    
    
    77,153
    
    
    
    70,590
    
    
    
    70,649Total loan participation interest income
    
    
    308,147
    
    
    
    311,217
    
    
    
    285,082Fees from loan participation interests
    
    
    779
    
    
    
    1,064
    
    
    
    1,979Interest on deposits with The Huntington National Bank
    
    
    15,885
    
    
    
    19,025
    
    
    
    15,682Total interest and fee income
    
    
    324,811
    
    
    
    331,306
    
    
    
    302,743Provision for (reduction in) allowances for credit losses
    
    
    3,390
    
    
    
    (22,041
    )
    
    
    (19,796
    )Interest income after allowances for credit losses
    
    
    321,421
    
    
    
    353,347
    
    
    
    322,539Non-interest income:Rental income
    
    
    6,840
    
    
    
    6,483
    
    
    
    6,362Collateral fees
    
    
    5,202
    
    
    
    1,042
    
    
    
    3,029Total non-interest income
    
    
    12,042
    
    
    
    7,525
    
    
    
    9,391Non-interest expense:Servicing costs
    
    
    11,080
    
    
    
    10,635
    
    
    
    11,210Depreciation and amortization
    
    
    3,588
    
    
    
    3,947
    
    
    
    4,370(Gain) loss on disposal of premises and equipment
    
    
    122
    
    
    
    (31
    )
    
    
    582Other
    
    
    797
    
    
    
    771
    
    
    
    903Total non-interest expense
    
    
    15,587
    
    
    
    15,322
    
    
    
    17,065Income before provision for income taxes
    
    
    317,876
    
    
    
    345,550
    
    
    
    314,865Provision for income taxes
    
    
    1,617
    
    
    
    1,313
    
    
    
    547Net income
    
    $
    316,259
    
    
    $
    344,237
    
    
    $
    314,318Dividends declared on preferred securities
    
    
    (49,643
    )
    
    
    (47,944
    )
    
    
    (34,634
    )Net income applicable to common shares
    
    $
    266,616
    
    
    $
    296,293
    
    
    $
    279,684
 See notes to consolidated financial statements.
 35




---



##### 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, 2005
    
    
    1
    
    
    $
    1,000
    
    
    
    400
    
    
    $
    400,000
    
    
    
    2,000
    
    
    $
    50,000Comprehensive Income:Net incomeTotal comprehensive incomeBalance, December 31, 2005
    
    
    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
    
    
    $
    50,000
 Preferred, Class D
    
    
    Preferred
    
    
    Common
    
    
    Retained(in thousands)
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Earnings
    
    
    TotalBalance, January 1, 2005
    
    
    14,000
    
    
    $
    350,000
    
    
    
    
    
    
    $
    
    
    
    
    14,000
    
    
    $
    4,268,776
    
    
    $
    
    
    
    $
    5,069,776Comprehensive Income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    314,318
    
    
    
    314,318Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    314,318Dividends declared on Class A preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (80
    )
    
    
    (80
    )Dividends declared on Class B preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,296
    )
    
    
    (13,296
    )Dividends declared on Class C preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,938
    )
    
    
    (3,938
    )Dividends declared on Class D preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17,320
    )
    
    
    (17,320
    )Dividends declared on common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (279,684
    )
    
    
    (279,684
    )Return of capital
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (420,316
    )
    
    
    
    
    
    
    (420,316
    )Balance, December 31, 2005
    
    
    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
    
    
    $
    
    
    
    $
    4,461,959
 See notes to consolidated financial statements.
 36




---



##### Table of Contents



Huntington Preferred Capital, Inc.
 
 Consolidated Statements of Cash Flows
 Year EndedDecember 31,(in thousands)
    
    2007
    
    2006
    
    2005Operating activitiesNet income
    
    $
    316,259
    
    
    $
    344,237
    
    
    $
    314,318Adjustments to reconcile net income to net
cash provided by operating activities:Provision for (reduction in) allowances for credit losses
    
    
    3,390
    
    
    
    (22,041
    )
    
    
    (19,796
    )Depreciation and amortization
    
    
    3,588
    
    
    
    3,947
    
    
    
    4,370Deferred income tax (benefit) expense
    
    
    (401
    )
    
    
    (682
    )
    
    
    178Decrease (increase) in due from The Huntington National Bank
    
    
    (4,937
    )
    
    
    7
    
    
    
    (24,404
    )(Decrease) increase in other liabilities
    
    
    (63
    )
    
    
    (111
    )
    
    
    239Other, net
    
    
    3,358
    
    
    
    507
    
    
    
    (568
    )Net cash provided by operating activities
    
    
    321,194
    
    
    
    325,864
    
    
    
    274,337Investing activitiesParticipation interests acquired
    
    
    (2,964,050
    )
    
    
    (2,613,450
    )
    
    
    (2,885,454
    )Sales and repayments of loans underlying
participation interests
    
    
    2,747,799
    
    
    
    2,951,526
    
    
    
    3,255,600Proceeds from the sale of premises and equipment
    
    
    
    
    
    
    56
    
    
    
    Net cash (used for) provided by investing activities
    
    
    (216,251
    )
    
    
    338,132
    
    
    
    370,146Financing activitiesDividends paid on preferred securities
    
    
    (49,643
    )
    
    
    (47,944
    )
    
    
    (34,634
    )Dividends paid on common stock
    
    
    (546,489
    )
    
    
    (279,684
    )
    
    
    (263,798
    )Return of capital to common shareholders
    
    
    (187,501
    )
    
    
    (420,316
    )
    
    
    (336,202
    )Net cash used for financing activities
    
    
    (783,633
    )
    
    
    (747,944
    )
    
    
    (634,634
    )Change in cash and cash equivalents
    
    
    (678,690
    )
    
    
    (83,948
    )
    
    
    9,849Cash and cash equivalents at beginning of year
    
    
    726,154
    
    
    
    810,102
    
    
    
    800,253Cash and cash equivalents at end of year
    
    $
    47,464
    
    
    $
    726,154
    
    
    $
    810,102Supplemental information:Income taxes paid
    
    $
    2,098
    
    
    $
    2,077
    
    
    $
    40Dividends and distributions declared, not paid
    
    
    
    
    
    
    450,000
    
    
    
    700,000Non-cash change in loan participation activity with The Huntington National Bank
    
    
    (17,617
    )
    
    
    88,501
    
    
    
    21,742Dividend of subsidiary stock
    
    
    16,420
    
    
    
    
    
    
    
    
 See notes to consolidated financial statements.
 37




---



##### 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:
   38




---



##### Table of Contents



Allowances for Credit Losses (ACL):
  Accounting by Creditors for Impairment of a Loan Accounting for Contingencies
   39




---



##### Table of Contents



Premises and Equipment:
 Net Income per Share:
 Income Taxes:
 Statement of Cash Flows:
 Note 2  New Accounting Pronouncements
 FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (FIN 48) Accounting for Uncertainty in Income Taxes Accounting for Income Taxes
 FASB Statement No. 157, Fair Value Measurements (Statement No. 157)
 FASB Statement No. 159, The Fair Value Option for Financial Assets and Financial Liabilitie s
(Statement No. 159)
 Note 3  Loan Participation Interests
  (in thousands)
    
    2007
    
    2006Commercial
    
    $
    22,526
    
    
    $
    31,049Commercial real estate
    
    
    3,098,557
    
    
    
    3,108,533Consumer and residential real estate
    
    
    1,217,956
    
    
    
    957,627Total Loan Participation Interests
    
    $
    4,339,039
    
    
    $
    4,097,209
  40




---



##### Table of Contents



Participations in Non-Performing Loans and Past Due Loans
  (in thousands)
    
    2007
    
    2006Commercial
    
    $
    137
    
    
    $
    687Commercial real estate
    
    
    41,923
    
    
    
    19,966Consumer and residential real estate
    
    
    4,136
    
    
    
    4,649Total Participations in Non-Accrual Loans
    
    $
    46,196
    
    
    $
    25,302Participations in Accruing Loans Past Due 90 Days or More
    
    $
    4,440
    
    
    $
    5,393
  Note 4  Allowances for Credit Losses (ACL)
   (in thousands)
    
    2007
    
    2006
    
    2005ALPL balance, beginning of year
    
    $
    48,703
    
    
    $
    57,530
    
    
    $
    61,146Allowance of loan participations acquired
    
    
    26,530
    
    
    
    19,404
    
    
    
    25,071Net loan losses
    
    
    (16,296
    )
    
    
    (6,521
    )
    
    
    (8,521
    )Provision for (reduction in) ALPL
    
    
    3,338
    
    
    
    (21,710
    )
    
    
    (19,228
    )Transfer to AULPC
    
    
    
    
    
    
    
    
    
    
    (938
    )ALPL balance, end of year
    
    $
    62,275
    
    
    $
    48,703
    
    
    $
    57,530AULPC balance, beginning of year
    
    $
    3,804
    
    
    $
    4,135
    
    
    $
    3,765Provision for (reduction in) AULPC
    
    
    52
    
    
    
    (331
    )
    
    
    (568
    )Economic reserve transfer from ALL
    
    
    
    
    
    
    
    
    
    
    938AULPC balance, end of year
    
    $
    3,856
    
    
    $
    3,804
    
    
    $
    4,135Total ACL
    
    $
    66,131
    
    
    $
    52,507
    
    
    $
    61,665Balance of Impaired Loans, at end of year(1):With specific reserves assigned to the loan balances
    
    $
    30,604
    
    
    $
    5,976
    
    
    $
    15,038With no specific reserves assigned to the loan balances
    
    
    2,297
    
    
    
    6,051
    
    
    
    7,816Total
    
    $
    32,901
    
    
    $
    12,027
    
    
    $
    22,854Average Balance of Impaired Loans for the Year (1)
    
    $
    25,157
    
    
    $
    16,131
    
    
    $
    13,863Allowance for Loan Losses on Impaired Loans (1)
    
    
    6,366
    
    
    
    1,065
    
    
    
    4,802
 41




---



##### Table of Contents



(1)
    
    Includes total loan participation interests of impaired commercial and commercial real estate loans with outstanding
balances greater than $500,000. 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 2007, 2006 and 2005.  Note 5  Premises and Equipment
  (in thousands)
    
    2007
    
    2006Land and land improvements
    
    $
    340
    
    
    $
    340Buildings
    
    
    533
    
    
    
    533Leasehold improvements
    
    
    
    
    
    
    101,026Total premises and equipment
    
    
    873
    
    
    
    101,899Accumulated depreciation and amortization
    
    
    (212
    )
    
    
    (84,188
    )Net Premises and Equipment
    
    $
    661
    
    
    $
    17,711
  Note 6  Dividends
   i.e.
 i.e.
 42




---



##### Table of Contents



(in thousands)
    
    2007
    
    2006
    
    2005Class A preferred securities
    
    $
    80
    
    
    $
    80
    
    
    $
    80Class B preferred securities
    
    
    21,300
    
    
    
    20,394
    
    
    
    13,296Class C preferred securities
    
    
    3,938
    
    
    
    3,938
    
    
    
    3,938Class D preferred securities
    
    
    24,325
    
    
    
    23,532
    
    
    
    17,320Total preferred dividends declared
    
    $
    49,643
    
    
    $
    47,944
    
    
    $
    34,634
    Note 7  Related Party Transactions
    July 1, 2005
    
    January 1, 2005through
    
    throughDecember 31, 2007
    
    June 30, 2005Commercial and commercial real estate
    
    
    0.125
    %
    
    
    0.125
    %Consumer
    
    
    0.650
    
    
    
    0.750Residential real estate
    
    
    0.267
    
    
    
    0.267
  43




---



##### Table of Contents



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
    
    
    2,851,333
    
    
    
    895
    
    
    
    
    
    
    
    
    
    
    
    14,000,000HPC Holdings-II, Inc.
    
    
    
    
    
    
    
    
    
    
    400,000
    
    
    
    
    
    
    
    Huntington
    
    
    18,667
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    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
     44




---



##### Table of Contents



Note 8  Quarterly Results of Operations ( Unaudited )
  (in thousands)
    
    Fourth
    
    Third
    
    Second
    
    First2007Interest 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
    
    
    $
    66,8602006Interest and fee income
    
    $
    85,865
    
    
    $
    85,821
    
    
    $
    82,276
    
    
    $
    77,344Reduction in allowance for credit losses
    
    
    (4,400
    )
    
    
    (3,255
    )
    
    
    (5,203
    )
    
    
    (9,183
    )Non-interest income
    
    
    1,811
    
    
    
    1,699
    
    
    
    1,706
    
    
    
    2,309Non-interest expense
    
    
    3,666
    
    
    
    3,796
    
    
    
    3,921
    
    
    
    3,939Income before provision for income taxes
    
    
    88,410
    
    
    
    86,979
    
    
    
    85,264
    
    
    
    84,897Provision for income taxes
    
    
    386
    
    
    
    332
    
    
    
    310
    
    
    
    285Net income
    
    
    88,024
    
    
    
    86,647
    
    
    
    84,954
    
    
    
    84,612Dividends declared on preferred securities
    
    
    (12,475
    )
    
    
    (12,681
    )
    
    
    (11,781
    )
    
    
    (11,007
    )Net income applicable to common shares
    
    $
    75,549
    
    
    $
    73,966
    
    
    $
    73,173
    
    
    $
    73,605
 Note 9  Fair Value of Financial Instruments
  Cash and interest-bearing deposits, and due from The Huntington National Bank
 Loan participation interests
 45




---



##### Table of Contents



Note 10  Commitments and Contingencies
 /
    Note 11  Segment Reporting
  Note 12  Income Taxes
    46




---



##### 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
  47




---



##### 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
 (a)
    
    The following documents are filed as part of this report:
 (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 50 and 51 of this
Form 10-K.
 (b)
    
    The exhibits to this Form 10-K begin on page 52.(c)
    
    See Item 15 (a) (2) above.
 48




---



##### Table of Contents



Signatures
  
 By:
    
    /s/ Donald R. Kimble
    
    
    
    By:
    
    /s/ Thomas P. ReedDonald R. Kimble
    
    
    
    
    
    Thomas P. ReedPresident and Director
(Principal Executive Officer)
    
    
    
    
    
    Vice President and Director
(Principal Financial and Accounting Officer)
  Richard A. Cheap *
    
    DirectorRichard A. CheapStephen E. Dutton *
    
    DirectorStephen E. DuttonEdward J. Kane *
    
    DirectorEdward J. KaneRoger E. Kephart *
    
    DirectorRoger E. KephartJames D. Robbins *
    
    DirectorJames D. RobbinsKaren D. Roggenkamp *
    
    DirectorKaren D. RoggenkampRichard I. Witherow *
    
    DirectorRichard I. Witherow/s/ Donald R. KimbleDonald R. Kimble
 
 * Attorney-in fact for each of
the persons indicated.
 49




---



##### 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
 50




---



##### Table of Contents



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.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,
2007 and 2006 and for the years ended December 31, 2007, 2006, and 2005.
 51