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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, 2009
 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 Yes þ No
 þ o
 o 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
    
    
    34Item 8. Financial Statements and Supplementary Data
    
    
    34Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    53Item 9A. Controls and Procedures
    
    
    53Item 9A(T). Controls and Procedures
    
    
    53Item 9B. Other Information
    
    
    53Part III.Item 10. Directors and Executive Officers and Corporate Governance
    
    
    53Item 11. Executive Compensation
    
    
    53Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    54Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    
    54Item 14. Principal Accounting Fees and Services
    
    
    54Part IV.Item 15. Exhibits and Financial Statement Schedules
    
    
    54Signatures
    
    
    55Exhibits
    
    
    56Exhibit 12.1Exhibit 24.1Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2Exhibit 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  (in thousands)
 Percentage byAggregate
    
    
    AggregateNumber
    
    
    Principal
    
    
    PrincipalState
    
    of Loans
    
    
    Balance
    
    
    BalanceOhio
    
    
    12,134
    
    
    $
    2,228,845
    
    
    
    57.5
    %Michigan
    
    
    6,044
    
    
    
    813,071
    
    
    
    21.0Indiana
    
    
    1,611
    
    
    
    299,843
    
    
    
    7.7Kentucky
    
    
    1,125
    
    
    
    166,206
    
    
    
    4.3Pennsylvania
    
    
    225
    
    
    
    129,151
    
    
    
    3.321,139
    
    
    
    3,637,116
    
    
    
    93.8All other locations
    
    
    233
    
    
    
    236,537
    
    
    
    6.2Total loan
participation
interests
    
    
    21,372
    
    
    $
    3,873,653
    
    
    
    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
    
    
    2009
    
    
    2008Tier 1 Risk-Based Capital
    
    
    6.00
    %
    
    
    4.00
    %
    
    
    6.66
    %
    
    
    6.44
    %Total Risk-Based Capital
    
    
    10.00
    
    
    
    8.00
    
    
    
    11.08
    
    
    
    10.71Tier 1 Leverage Ratio
    
    
    5.00
    
    
    
    4.00
    
    
    
    5.59
    
    
    
    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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##### Table of Contents



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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Legislative and regulatory actions taken now or in the future to address the current liquidity and
credit crisis in the financial industry may significantly affect our financial condition, results
of operation, liquidity, or stock price.
     12




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A sustained weakness or weakening in business and economic conditions generally or specifically in
the markets in which we do business could adversely affect our business and operating results.
  
    
    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.
   13




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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.
  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).
  
 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)
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005STATEMENTS OF INCOME:Interest and fee income
    
    $
    167,485
    
    
    $
    254,549
    
    
    $
    324,811
    
    
    $
    331,306
    
    
    $
    302,743Provision for (reduction in) allowance
for credit losses
    
    
    171,926
    
    
    
    (14,855
    )
    
    
    3,390
    
    
    
    (22,041
    )
    
    
    (19,796
    )Non-interest income
    
    
    2,569
    
    
    
    3,064
    
    
    
    12,042
    
    
    
    7,525
    
    
    
    9,391Non-interest expense
    
    
    10,116
    
    
    
    11,689
    
    
    
    15,587
    
    
    
    15,322
    
    
    
    17,065(Loss) income before provision for income taxes
    
    $
    (11,988
    )
    
    $
    260,779
    
    
    $
    317,876
    
    
    $
    345,550
    
    
    $
    314,865Provision for income taxes
    
    
    
    
    
    
    
    
    
    
    1,617
    
    
    
    1,313
    
    
    
    547Net (loss) income
    
    $
    (11,988
    )
    
    $
    260,779
    
    
    $
    316,259
    
    
    $
    344,237
    
    
    $
    314,318Dividends declared on preferred securities
    
    
    16,195
    
    
    
    36,521
    
    
    
    49,643
    
    
    
    47,944
    
    
    
    34,634Net (loss) income applicable
to common shares
    
    $
    (28,183
    )
    
    $
    224,258
    
    
    $
    266,616
    
    
    $
    296,293
    
    
    $
    279,684Dividends and distributions
declared on common stock
    
    $
    500,000
    
    
    $
    225,000
    
    
    $
    300,410
    
    
    $
    450,000
    
    
    $
    700,000BALANCE SHEET HIGHLIGHTS:At year end:Net loan participation interests
    
    $
    3,717,222
    
    
    $
    4,343,035
    
    
    $
    4,276,764
    
    
    $
    4,048,506
    
    
    $
    4,454,795All other assets
    
    
    726,133
    
    
    
    345,533
    
    
    
    189,110
    
    
    
    901,230
    
    
    
    899,090Total assets
    
    
    4,443,355
    
    
    
    4,688,568
    
    
    
    4,465,874
    
    
    
    4,949,736
    
    
    
    5,353,885Total shareholders equity
    
    
    3,933,034
    
    
    
    4,461,217
    
    
    
    4,461,959
    
    
    
    4,495,753
    
    
    
    4,649,460Average balances:Net loan participation interests
    
    $
    3,966,491
    
    
    $
    4,311,659
    
    
    $
    4,289,099
    
    
    $
    4,349,214
    
    
    $
    4,664,505Total assets
    
    
    4,503,403
    
    
    
    4,588,530
    
    
    
    4,653,184
    
    
    
    4,816,467
    
    
    
    5,217,640Total shareholders equity
    
    
    4,422,497
    
    
    
    4,562,126
    
    
    
    4,617,576
    
    
    
    4,774,542
    
    
    
    5,197,654KEY RATIOS AND STATISTICS:Yield on interest earning assets
    
    
    3.69
    %
    
    
    5.51
    %
    
    
    6.98
    %
    
    
    6.94
    %
    
    
    5.84
    %Return on average assets
    
    
    (0.26
    )
    
    
    5.68
    
    
    
    6.80
    
    
    
    7.15
    
    
    
    6.02Return on average equity
    
    
    (0.27
    )
    
    
    5.72
    
    
    
    6.85
    
    
    
    7.21
    
    
    
    6.05Average shareholders equity to
average assets
    
    
    98.20
    
    
    
    99.42
    
    
    
    99.23
    
    
    
    99.13
    
    
    
    99.62Preferred dividend coverage ratio
    
    
    (0.74
    )x
    
    
    7.14
    x
    
    
    6.37
    x
    
    
    7.18
    x
    
    
    9.08
    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
    20




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Interest and Fee Income
   Table 4  Interest and Fee Income
 2009
    
    
    2008
    
    
    2007Average
    
    
    
    
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    
    
    
    
    Average(in millions)
    
    Balance
    
    

Income (1)
    
    
    Yield
    
    
    Balance
    
    

Income (1)
    
    
    Yield
    
    
    Balance
    
    

Income (1)
    
    
    YieldLoan participation interests:Commercial real estate
    
    $
    3,195.9
    
    
    $
    110.1
    
    
    
    3.45
    %
    
    $
    3,283.0
    
    
    $
    176.8
    
    
    
    5.39
    %
    
    $
    3,178.8
    
    
    $
    231.3
    
    
    
    7.28
    %Consumer and
residential  real estate
    
    
    848.2
    
    
    
    56.2
    
    
    
    6.62
    
    
    
    1,093.8
    
    
    
    72.5
    
    
    
    6.63
    
    
    
    1,162.8
    
    
    
    77.6
    
    
    
    6.67Total loan participations
    
    
    4,044.1
    
    
    
    166.3
    
    
    
    4.11
    
    
    
    4,376.8
    
    
    
    249.3
    
    
    
    5.70
    
    
    
    4,341.6
    
    
    
    308.9
    
    
    
    7.12Interest bearing deposits with
The Huntington National Bank
    
    
    490.4
    
    
    
    1.2
    
    
    
    0.25
    
    
    
    239.2
    
    
    
    5.2
    
    
    
    2.17
    
    
    
    307.2
    
    
    
    15.9
    
    
    
    5.10Total
    
    $
    4,534.5
    
    
    $
    167.5
    
    
    
    3.69
    %
    
    $
    4,616.0
    
    
    $
    254.5
    
    
    
    5.51
    %
    
    $
    4,648.8
    
    
    $
    324.8
    
    
    
    6.98
    %
 (1)
    
    Income includes interest and fees.   Provision for (reduction in allowances for) Credit Losses
   21




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Noninterest Income and Noninterest Expense
    January 1, 2007throughDecember 31, 2009Commercial and commercial real estate
    
    
    0.125
    %Consumer
    
    
    0.650Residential real estate
    
    
    0.267
  Income Taxes
    22




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MARKET RISK
        23




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Table 5  Total Loan Participation Interests by Interest Rates
 December 31, 2009
    
    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%
    
    
    50
    
    
    
    5,750
    
    
    
    0.5
    %
    
    
    970
    
    
    
    1,693,937
    
    
    
    60.5
    %3.00% to 3.99%
    
    
    28
    
    
    
    1,819
    
    
    
    0.2
    
    
    
    766
    
    
    
    455,710
    
    
    
    16.34.00% to 4.99%
    
    
    528
    
    
    
    33,728
    
    
    
    3.1
    
    
    
    546
    
    
    
    211,845
    
    
    
    7.65.00% to 5.99%
    
    
    3,173
    
    
    
    207,979
    
    
    
    19.5
    
    
    
    405
    
    
    
    212,002
    
    
    
    7.66.00% to 6.99%
    
    
    5,552
    
    
    
    387,650
    
    
    
    36.2
    
    
    
    336
    
    
    
    130,880
    
    
    
    4.57.00% to 7.99%
    
    
    4,012
    
    
    
    283,995
    
    
    
    26.5
    
    
    
    406
    
    
    
    75,700
    
    
    
    2.78.00% to 8.99%
    
    
    2,393
    
    
    
    102,070
    
    
    
    9.5
    
    
    
    152
    
    
    
    17,677
    
    
    
    0.69.00% and over
    
    
    2,035
    
    
    
    48,647
    
    
    
    4.5
    
    
    
    20
    
    
    
    4,264
    
    
    
    0.2Total
    
    
    17,771
    
    
    $
    1,071,638
    
    
    
    100.0
    %
    
    
    3,601
    
    
    $
    2,802,015
    
    
    
    100.0
    %
 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
    %
 (1)
    
    The variable rate category includes loan participation interests
with variable and adjustable rates. CREDIT QUALITY
  Credit Risk
    24




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Table 6  Loan Participation Interests Aging (1)
 December 31, 2009
    
    
    December 31, 2008Percentage by
    
    
    
    
    
    
    
    
    
    
    Percentage byTotal
    
    
    Aggregate
    
    
    Aggregate
    
    
    Total
    
    
    Aggregate
    
    
    AggregateNumber
    
    
    Principal
    
    
    Principal
    
    
    Number
    
    
    Principal
    
    
    Principal(in thousands)
    
    of Loans
    
    
    Balance
    
    
    Balance
    
    
    of Loans
    
    
    Balance
    
    
    BalanceCurrent
    
    
    19,206
    
    
    $
    3,506,912
    
    
    
    90.5
    %
    
    
    24,011
    
    
    $
    4,156,094
    
    
    
    94.3
    %1 to 30 days past due
    
    
    1,343
    
    
    
    201,739
    
    
    
    5.2
    
    
    
    1,516
    
    
    
    147,936
    
    
    
    3.431 to 60 days past due
    
    
    291
    
    
    
    43,760
    
    
    
    1.1
    
    
    
    318
    
    
    
    33,368
    
    
    
    0.861 to 90 days past due
    
    
    135
    
    
    
    17,612
    
    
    
    0.5
    
    
    
    154
    
    
    
    11,565
    
    
    
    0.3over 90 days past due
    
    
    397
    
    
    
    103,630
    
    
    
    2.7
    
    
    
    264
    
    
    
    59,528
    
    
    
    1.2Total
    
    
    21,372
    
    
    $
    3,873,653
    
    
    
    100.0
    %
    
    
    26,263
    
    
    $
    4,408,491
    
    
    
    100.0
    %
 (1)
    
    Includes non-accrual loans. Commercial Real Estate Credit
    25




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##### Table of Contents



Table 7  Commercial Real Estate Loan Participation Interests by Property Type and Borrower Location
 At December 31, 2009Geographic Region
    
    
    
    
    
    
    Percent(in thousands of dollars)
    
    Ohio
    
    
    Michigan
    
    
    Indiana
    
    
    Kentucky
    
    
    Pennsylvania
    
    
    Other
    
    
    Total Amount
    
    
    of TotalRetail properties
    
    $
    416,983
    
    
    $
    96,555
    
    
    $
    43,707
    
    
    $
    30,256
    
    
    $
    30,671
    
    
    $
    71,687
    
    
    $
    689,859
    
    
    
    22.0
    %Industrial and warehouse
    
    
    375,420
    
    
    
    157,435
    
    
    
    62,590
    
    
    
    13,258
    
    
    
    9,557
    
    
    
    36,355
    
    
    
    654,615
    
    
    
    20.9Office
    
    
    304,918
    
    
    
    119,331
    
    
    
    19,017
    
    
    
    12,996
    
    
    
    31,758
    
    
    
    42,429
    
    
    
    530,449
    
    
    
    17.0Raw land and other land uses
    
    
    195,904
    
    
    
    80,422
    
    
    
    27,375
    
    
    
    16,538
    
    
    
    10,265
    
    
    
    15,440
    
    
    
    345,944
    
    
    
    11.1Multi family
    
    
    128,847
    
    
    
    13,355
    
    
    
    67,343
    
    
    
    40,103
    
    
    
    9,116
    
    
    
    12,479
    
    
    
    271,243
    
    
    
    8.7Health care
    
    
    171,363
    
    
    
    42,359
    
    
    
    1,004
    
    
    
    170
    
    
    
    18,031
    
    
    
    14,805
    
    
    
    247,732
    
    
    
    7.9Single family home builders
    
    
    127,263
    
    
    
    30,006
    
    
    
    12,764
    
    
    
    6,961
    
    
    
    12,984
    
    
    
    2,011
    
    
    
    191,989
    
    
    
    6.1Other
    
    
    101,358
    
    
    
    56,453
    
    
    
    6,676
    
    
    
    1,434
    
    
    
    5,874
    
    
    
    25,400
    
    
    
    197,195
    
    
    
    6.3Total
    
    $
    1,822,056
    
    
    $
    595,916
    
    
    $
    240,476
    
    
    $
    121,716
    
    
    $
    128,256
    
    
    $
    220,606
    
    
    $
    3,129,026
    
    
    
    100.0
    %
 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
    
    
    
    4.0Other
    
    
    140,322
    
    
    
    61,465
    
    
    
    11,295
    
    
    
    3,059
    
    
    
    9,647
    
    
    
    43,409
    
    
    
    269,197
    
    
    
    7.8Total
    
    $
    1,870,734
    
    
    $
    680,558
    
    
    $
    293,448
    
    
    $
    140,890
    
    
    $
    113,546
    
    
    $
    334,696
    
    
    $
    3,433,872
    
    
    
    100.0
    %
  Retail properties
   26




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##### Table of Contents



Single family homebuilders
   Consumer Credit
   Please refer to the Nonperforming Assets discussion
for further information regarding the placement of consumer loans on nonaccrual status and the
charging off of balances to the ALPL.
  Allowances for Credit Losses (ACL)
   27




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
    
    Current market conditions, such as higher vacancy rates and lower rents, have driven
commercial real estate values lower and caused loss given default (LGD) experience to rise
significantly over the past year. Management of the Bank believes that factors driving the
higher losses will continue to be evident for at least the next 18 to 24 months, making it
necessary to develop cyclical LGD factors that are collateral specific and based in part on
market projections.
 
    
    Probability of Default (PD) factors have recently migrated higher for commercial and
commercial real estate loans. Based on this change in market conditions, Management has
increased the loss emergence time frame to 24 months from 12 months.
 
    
    Management of the Bank has redefined the general reserve in broader terms to
incorporate: (a) current and likely market conditions along with an assessment of the
potential impact of those conditions, (b) uncertainty in the risk rating process, and (c)
the impact of portfolio performance, portfolio composition, origination channels, and other
factors.
 
    
    PD factors were updated to include current delinquency status across all consumer
portfolios.
    28




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##### Table of Contents



Table 8  Allowances for Credit Loss Activity
 (in thousands)
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005ALPL balance, beginning of year
    
    $
    65,456
    
    
    $
    62,275
    
    
    $
    48,703
    
    
    $
    57,530
    
    
    $
    61,146Allowance of loan participations acquired
    
    
    33,632
    
    
    
    36,284
    
    
    
    26,530
    
    
    
    19,404
    
    
    
    25,071Net loan lossesCommercial real estate
    
    
    (103,261
    )
    
    
    (12,483
    )
    
    
    (12,001
    )
    
    
    (3,370
    )
    
    
    (3,928
    )Consumer and residential real estate
    
    
    (12,016
    )
    
    
    (7,320
    )
    
    
    (4,295
    )
    
    
    (3,151
    )
    
    
    (4,593
    )Total net loan losses
    
    
    (115,277
    )
    
    
    (19,803
    )
    
    
    (16,296
    )
    
    
    (6,521
    )
    
    
    (8,521
    )Provision for (reduction in) ALPL
    
    
    172,620
    
    
    
    (13,924
    )
    
    
    3,338
    
    
    
    (21,710
    )
    
    
    (19,228
    )Economic Reserve transfer from (to) AULPC
    
    
    
    
    
    
    624
    
    
    
    
    
    
    
    
    
    
    
    (938
    )ALPL balance, end of year
    
    $
    156,431
    
    
    $
    65,456
    
    
    $
    62,275
    
    
    $
    48,703
    
    
    $
    57,530AULPC balance, beginning of year
    
    $
    2,301
    
    
    $
    3,856
    
    
    $
    3,804
    
    
    $
    4,135
    
    
    $
    3,765Provision for (reduction in) AULPC
    
    
    (694
    )
    
    
    (931
    )
    
    
    52
    
    
    
    (331
    )
    
    
    (568
    )Economic Reserve transfer (from) to ALPL
    
    
    
    
    
    
    (624
    )
    
    
    
    
    
    
    
    
    
    
    938AULPC balance, end of year
    
    $
    1,607
    
    
    $
    2,301
    
    
    $
    3,856
    
    
    $
    3,804
    
    
    $
    4,135Total Allowances for Credit Losses
    
    $
    158,038
    
    
    $
    67,757
    
    
    $
    66,131
    
    
    $
    52,507
    
    
    $
    61,665ALPL as a % of total participation interests
    
    
    4.04
    %
    
    
    1.48
    %
    
    
    1.44
    %
    
    
    1.19
    %
    
    
    1.27
    %ACL as a % of total participation interests
    
    
    4.08
    
    
    
    1.54
    
    
    
    1.52
    
    
    
    1.28
    
    
    
    1.37
  
    
    Approximately $18 million increase in the judgmental component.
 
    
    Approximately $33 million allocated primarily to the CRE portfolio addressing the severity of
CRE loss-given-default percentages and a longer term view of the loss emergence time period.
 
    
    Approximately $1 million from updating the consumer reserve factors to include the current
delinquency status.
    Table 9  Allowance for Credit Losses by Product (1)
 At December 31,(in thousands)
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005Commercial real estate
    
    $
    147,893
    
    
    
    80.8
    %
    
    $
    59,827
    
    
    
    77.9
    %
    
    $
    56,668
    
    
    
    71.9
    %
    
    $
    42,560
    
    
    
    76.6
    %
    
    $
    48,938
    
    
    
    74.4
    %Consumer and
residential real estate
    
    
    8,538
    
    
    
    19.2
    
    
    
    5,629
    
    
    
    22.1
    
    
    
    5,607
    
    
    
    28.1
    
    
    
    6,143
    
    
    
    23.4
    
    
    
    8,592
    
    
    
    25.6Total ALPL
    
    
    156,431
    
    
    
    100.0
    %
    
    
    65,456
    
    
    
    100.0
    %
    
    
    62,275
    
    
    
    100.0
    %
    
    
    48,703
    
    
    
    100.0
    %
    
    
    57,530
    
    
    
    100.0
    %AULPC
    
    
    1,607
    
    
    
    
    
    
    
    2,301
    
    
    
    
    
    
    
    3,856
    
    
    
    
    
    
    
    3,804
    
    
    
    
    
    
    
    4,135
    
    
    
    Total
    
    $
    158,038
    
    
    
    100.0
    %
    
    $
    67,757
    
    
    
    100.0
    %
    
    $
    66,131
    
    
    
    100.0
    %
    
    $
    52,507
    
    
    
    100.0
    %
    
    $
    61,665
    
    
    
    100.0
    %
 (1)
    
    Percentages represent the percentage of each loan participation
interests category to total loan participation interests.
  29




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##### Table of Contents



Net Charge-offs
  Table 10  Net Charge-offs (1)
 (In thousands)
    
    2009
    
    
    
    
    
    
    2008
    
    
    
    
    
    
    2007
    
    
    
    
    
    
    2006
    
    
    
    
    
    
    2005Commercial real estate
    
    $
    103,261
    
    
    
    3.23
    %
    
    $
    12,483
    
    
    
    0.38
    %
    
    $
    12,001
    
    
    
    0.38
    %
    
    $
    3,370
    
    
    
    0.10
    %
    
    $
    3,928
    
    
    
    0.11
    %Consumer and
residential real estate
    
    
    12,016
    
    
    
    1.42
    
    
    
    7,320
    
    
    
    0.68
    
    
    
    4,295
    
    
    
    0.37
    
    
    
    3,151
    
    
    
    0.30
    
    
    
    4,593
    
    
    
    0.42Total Net Charge-offs
    
    $
    115,277
    
    
    
    2.85
    %
    
    $
    19,803
    
    
    
    0.45
    %
    
    $
    16,296
    
    
    
    0.38
    %
    
    $
    6,521
    
    
    
    0.15
    %
    
    $
    8,521
    
    
    
    0.18
    %
 (1)
    
    Percentages represent the percentage in each loan category to
average loan participation interests. Non-Performing Assets (NPAs)
   Table 11  Non-Performing Assets
 At December 31,(in thousands)
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005Participation interests in non-accrual loansCommercial real estate
    
    $
    165,184
    
    
    $
    54,246
    
    
    $
    42,060
    
    
    $
    20,653
    
    
    $
    20,893Consumer and residential real estate
    
    
    5,554
    
    
    
    6,041
    
    
    
    4,136
    
    
    
    4,649
    
    
    
    5,722Total Non-Performing Assets
    
    $
    170,738
    
    
    $
    60,287
    
    
    $
    46,196
    
    
    $
    25,302
    
    
    $
    26,615NPAs as a % of total participation interests
    
    
    4.41
    %
    
    
    1.37
    %
    
    
    1.06
    %
    
    
    0.62
    %
    
    
    0.59
    %ALPL as a % of NPAs
    
    
    92
    
    
    
    109
    
    
    
    135
    
    
    
    192
    
    
    
    216ACL as a % of NPAs
    
    
    93
    
    
    
    112
    
    
    
    143
    
    
    
    208
    
    
    
    232Accruing loans past due 90 days or more
    
    $
    8,631
    
    
    $
    9,543
    
    
    $
    4,440
    
    
    $
    5,392
    
    
    $
    3,188
   30




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##### Table of Contents



Table 12  Annual ALPL / Loan Participation Coverage Ratio Analysis
 (in thousands)
    
    2009
    
    
    2008Loan participation interests ending balances:Accruing Loans
    
    $
    3,702,915
    
    
    $
    4,348,204Loans subject to reserves measured as a pool
    
    
    40,040
    
    
    
    31,368Loans subject to specific reserves (1)
    
    
    130,698
    
    
    
    28,919Total non-accrual loans
    
    
    170,738
    
    
    
    60,287Total loan participation interests
    
    $
    3,873,653
    
    
    $
    4,408,491Allowance for loan participation interests (ALPL):Accruing Loans
    
    $
    127,405
    
    
    $
    56,570Loans subject to reserves measured as a pool
    
    
    10,270
    
    
    
    1,965Loans subject to specific reserves (1)
    
    
    18,756
    
    
    
    6,921Total non-accrual loans
    
    
    29,026
    
    
    
    8,886Total ALPL
    
    $
    156,431
    
    
    $
    65,456ALPL as a % of loan participation interestsAccruing Loans
    
    
    3.44
    %
    
    
    1.30
    %Loans subject to reserves measured as a pool
    
    
    25.65
    
    
    
    6.26Loans subject to specific reserves (1)
    
    
    14.35
    
    
    
    23.93Total non-accrual loans
    
    
    17.00
    %
    
    
    14.74
    %Total loan participation interests
    
    
    4.04
    %
    
    
    1.48
    %
 (1)
    
    Loans whose ALPL are subject to specific reserves in accordance with Accounting Standards Codification (ASC) 310, Receivables    31




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##### Table of Contents



OFF-BALANCE SHEET ARRANGEMENTS
  LIQUIDITY AND CAPITAL RESOURCES
         32




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##### Table of Contents



RESULTS FOR THE FOURTH QUARTER
 Table 13  Quarterly Statements of Income
 2009
    
    
    2008
    
    
    4Q09 vs 4Q08(in thousands)
    
    Fourth
    
    
    Third
    
    
    Second
    
    
    First
    
    
    Fourth
    
    
    $ Chg
    
    
    % ChgInterest and fee incomeInterest on loan participation interests:Commercial real estate
    
    $
    26,321
    
    
    $
    26,575
    
    
    $
    27,071
    
    
    $
    29,326
    
    
    $
    44,591
    
    
    $
    (18,270
    )
    
    
    (41.0
    )%Consumer and residential real estate
    
    
    12,576
    
    
    
    13,392
    
    
    
    14,278
    
    
    
    15,476
    
    
    
    16,614
    
    
    
    (4,038
    )
    
    
    (24.3
    )Total loan participation interest income
    
    
    38,897
    
    
    
    39,967
    
    
    
    41,349
    
    
    
    44,802
    
    
    
    61,205
    
    
    
    (22,308
    )
    
    
    (36.4
    )Fees from loan participation interests
    
    
    297
    
    
    
    379
    
    
    
    290
    
    
    
    269
    
    
    
    277
    
    
    
    20
    
    
    
    7.2Interest on deposits with The Huntington National Bank
    
    
    454
    
    
    
    395
    
    
    
    284
    
    
    
    102
    
    
    
    498
    
    
    
    (44
    )
    
    
    (8.8
    )Total interest and fee income
    
    
    39,648
    
    
    
    40,741
    
    
    
    41,923
    
    
    
    45,173
    
    
    
    61,980
    
    
    
    (22,332
    )
    
    
    (36.0
    )Provision for (reduction in allowances for) credit losses
    
    
    84,740
    
    
    
    27,701
    
    
    
    40,497
    
    
    
    18,988
    
    
    
    (1,194
    )
    
    
    85,934
    
    
    
    N.M.Interest (loss) income after provision for (reduction in
allowances for) credit losses
    
    
    (45,092
    )
    
    
    13,040
    
    
    
    1,426
    
    
    
    26,185
    
    
    
    63,174
    
    
    
    (108,266
    )
    
    
    N.M.Non-interest income:Rental income
    
    
    16
    
    
    
    17
    
    
    
    16
    
    
    
    16
    
    
    
    16
    
    
    
    
    
    
    
    Collateral fees
    
    
    578
    
    
    
    609
    
    
    
    640
    
    
    
    677
    
    
    
    745
    
    
    
    (167
    )
    
    
    (22.4
    )Total non-interest income
    
    
    594
    
    
    
    626
    
    
    
    656
    
    
    
    693
    
    
    
    761
    
    
    
    (167
    )
    
    
    (21.9
    )Non-interest expense:Servicing costs
    
    
    2,180
    
    
    
    2,264
    
    
    
    2,387
    
    
    
    2,551
    
    
    
    2,675
    
    
    
    (495
    )
    
    
    (18.5
    )Other
    
    
    172
    
    
    
    162
    
    
    
    235
    
    
    
    165
    
    
    
    181
    
    
    
    (9
    )
    
    
    (5.0
    )Total non-interest expense
    
    
    2,352
    
    
    
    2,426
    
    
    
    2,622
    
    
    
    2,716
    
    
    
    2,856
    
    
    
    (504
    )
    
    
    (17.6
    )Net (loss) income
    
    $
    (46,850
    )
    
    $
    11,240
    
    
    $
    (540
    )
    
    $
    24,162
    
    
    $
    61,079
    
    
    $
    (107,929
    )
    
    
    N.M.
    %Dividends declared on preferred securities
    
    
    (2,940
    )
    
    
    (3,507
    )
    
    
    (4,613
    )
    
    
    (5,135
    )
    
    
    (10,188
    )
    
    
    (7,248
    )
    
    
    (71.1
    )Net (loss) income applicable to common shares(1)
    
    $
    (49,790
    )
    
    $
    7,733
    
    
    $
    (5,153
    )
    
    $
    19,027
    
    
    $
    50,891
    
    
    $
    (100,681
    )
    
    
    N.M.
    %
 (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.        33




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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
    
    
    35Report of Independent Registered Public Accounting Firm
    
    
    36Consolidated Balance Sheets
    
    
    38Consolidated Statements of Income
    
    
    39Consolidated Statement of Changes in Shareholders Equity
    
    
    40Consolidated Statements of Cash Flows
    
    
    41Notes to Consolidated Financial Statements
    
    
    42
  34




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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. Reed)Donald R. Kimble
    
    
    
    Thomas P. ReedPresident
    
    
    
    Vice President(Principal Executive Officer)
    
    
    
    (Principal Financial and Accounting Officer)
   35




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 Internal
ControlIntegrated Framework
    Internal
ControlIntegrated Framework
  
 
  36




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
    Internal ControlIntegrated Framework
 
 
  37




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##### Table of Contents



Huntington Preferred Capital, Inc.
 
 Consolidated Balance Sheets
 December 31,
    
    
    December 31,(in thousands, except share data)
    
    2009
    
    
    2008AssetsCash and interest bearing deposits with The Huntington National
Bank
    
    $
    715,663
    
    
    $
    293,009Due from The Huntington National Bank
    
    
    
    
    
    
    38,423Loan participation interests:Commercial real estate
    
    
    3,129,026
    
    
    
    3,433,872Consumer and residential real estate
    
    
    744,627
    
    
    
    974,619Total loan participation interests
    
    
    3,873,653
    
    
    
    4,408,491Allowance for loan participation losses
    
    
    (156,431
    )
    
    
    (65,456
    )Net loan participation interests
    
    
    3,717,222
    
    
    
    4,343,035Accrued income and other assets
    
    
    10,470
    
    
    
    14,101Total assets
    
    $
    4,443,355
    
    
    $
    4,688,568Liabilities and shareholders equityLiabilitiesAllowance for unfunded loan participation commitments
    
    $
    1,607
    
    
    $
    2,301Dividends and distributions payable
    
    
    500,000
    
    
    
    225,000Due to The Huntington National Bank
    
    
    8,640
    
    
    
    Other liabilities
    
    
    74
    
    
    
    50Total liabilities
    
    
    510,321
    
    
    
    227,351Shareholders 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
    
    
    3,160,217
    
    
    
    3,660,217Retained (deficit) earnings
    
    
    (28,183
    )
    
    
    Total shareholders equity
    
    
    3,933,034
    
    
    
    4,461,217Total liabilities and shareholders equity
    
    $
    4,443,355
    
    
    $
    4,688,568
 See notes to consolidated financial statements.
  38




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##### Table of Contents



Huntington Preferred Capital, Inc.
 
 Consolidated Statements of Income
 Year EndedDecember 31,(in thousands)
    
    2009
    
    
    2008
    
    
    2007Interest and fee incomeInterest on loan participation interests:Commercial real estate
    
    $
    109,293
    
    
    $
    176,048
    
    
    $
    230,994Consumer and residential real estate
    
    
    55,722
    
    
    
    72,017
    
    
    
    77,153Total loan participation interest income
    
    
    165,015
    
    
    
    248,065
    
    
    
    308,147Fees from loan participation interests
    
    
    1,235
    
    
    
    1,198
    
    
    
    779Interest on deposits with The Huntington National Bank
    
    
    1,235
    
    
    
    5,286
    
    
    
    15,885Total interest and fee income
    
    
    167,485
    
    
    
    254,549
    
    
    
    324,811Provision for (reduction in allowances for) credit losses
    
    
    171,926
    
    
    
    (14,855
    )
    
    
    3,390Interest (loss) income after provision for (reduction in
allowances for) credit losses
    
    
    (4,441
    )
    
    
    269,404
    
    
    
    321,421Noninterest income:Rental income
    
    
    65
    
    
    
    66
    
    
    
    6,840Collateral fees
    
    
    2,504
    
    
    
    2,998
    
    
    
    5,202Total noninterest income
    
    
    2,569
    
    
    
    3,064
    
    
    
    12,042Noninterest expense:Servicing costs
    
    
    9,382
    
    
    
    10,935
    
    
    
    11,080Other
    
    
    734
    
    
    
    754
    
    
    
    4,507Total noninterest expense
    
    
    10,116
    
    
    
    11,689
    
    
    
    15,587(Loss) income before provision for income taxes
    
    
    (11,988
    )
    
    
    260,779
    
    
    
    317,876Provision for income taxes
    
    
    
    
    
    
    
    
    
    
    1,617Net (loss) income
    
    $
    (11,988
    )
    
    $
    260,779
    
    
    $
    316,259Dividends declared on preferred securities
    
    
    (16,195
    )
    
    
    (36,521
    )
    
    
    (49,643
    )Net (loss) income applicable to common shares
    
    $
    (28,183
    )
    
    $
    224,258
    
    
    $
    266,616
 See notes to consolidated financial statements.
  39




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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, 2007
    
    
    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
    
    
    $
    50,000Comprehensive (loss) income:Net (loss) incomeTotal comprehensive
(loss) incomeBalance, December 31, 2009
    
    
    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, 2007
    
    
    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
    
    
    $
    
    
    
    $
    4,461,217Comprehensive (loss) income:Net (loss) income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,988
    )
    
    
    (11,988
    )Total comprehensive (loss) income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,988
    )Dividends declared on Class A preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (80
    )
    
    
    (80
    )Dividends declared on Class B preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,461
    )
    
    
    (3,461
    )Dividends declared on Class C preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,938
    )
    
    
    (3,938
    )Dividends declared on Class D preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,716
    )
    
    
    (8,716
    )Return of capital
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (500,000
    )
    
    
    
    
    
    
    (500,000
    )Balance, December 31, 2009
    
    
    14,000
    
    
    $
    350,000
    
    
    
    
    
    
    $
    
    
    
    
    14,000
    
    
    $
    3,160,217
    
    
    $
    (28,183
    )
    
    $
    3,933,034
 See notes to consolidated financial statements.
  40




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##### Table of Contents



Huntington Preferred Capital, Inc.
 
 Consolidated Statements of Cash Flows
 Year EndedDecember 31,(in thousands)
    
    2009
    
    
    2008
    
    
    2007Operating activitiesNet (loss) income
    
    $
    (11,988
    )
    
    $
    260,779
    
    
    $
    316,259Adjustments to reconcile net income to net
cash provided by operating activities:Provision for (reduction in allowances for) credit losses
    
    
    171,926
    
    
    
    (14,855
    )
    
    
    3,390Change in due to/from The Huntington National Bank
    
    
    5,927
    
    
    
    10,180
    
    
    
    (4,937
    )Other, net
    
    
    4,069
    
    
    
    7,736
    
    
    
    6,482Net cash provided by operating activities
    
    
    169,934
    
    
    
    263,840
    
    
    
    321,194Investing activitiesParticipation interests acquired
    
    
    (1,538,238
    )
    
    
    (2,955,839
    )
    
    
    (2,964,050
    )Sales and repayments of loans underlying participation interests
    
    
    2,032,153
    
    
    
    2,974,065
    
    
    
    2,747,799Net cash provided by (used for) investing activities
    
    
    493,915
    
    
    
    18,226
    
    
    
    (216,251
    )Financing activitiesDividends paid on preferred securities
    
    
    (16,195
    )
    
    
    (36,521
    )
    
    
    (49,643
    )Dividends paid on common stock
    
    
    (224,258
    )
    
    
    
    
    
    
    (546,488
    )Return of capital to common shareholders
    
    
    (742
    )
    
    
    
    
    
    
    (187,502
    )Net cash used for financing activities
    
    
    (241,195
    )
    
    
    (36,521
    )
    
    
    (783,633
    )Increase (decrease) in cash and cash equivalents
    
    
    422,654
    
    
    
    245,545
    
    
    
    (678,690
    )Cash and cash equivalents at beginning of year
    
    
    293,009
    
    
    
    47,464
    
    
    
    726,154Cash and cash equivalents at end of year
    
    $
    715,663
    
    
    $
    293,009
    
    
    $
    47,464Supplemental information:Income taxes paid
    
    $
    
    
    
    $
    
    
    
    $
    2,098Dividends and distributions declared, not paid
    
    
    500,000
    
    
    
    225,000
    
    
    
    Non cash change in loan participation activity with The
Huntington National Bank
    
    
    (41,136
    )
    
    
    (73,378
    )
    
    
    (17,617
    )Dividend of subsidiary stock
    
    
    
    
    
    
    
    
    
    
    16,420
 See notes to consolidated financial statements.
  41




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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/to The Huntington National Bank :
 Loan participation interests:
    42




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##### Table of Contents



Allowances for Credit Losses (ACL):
     
    
    Current market conditions, such as higher vacancy rates and lower rents, have driven
commercial real estate values lower and caused loss given default (LGD) experience to rise
significantly over the past year. Management of the Bank believes that factors driving the
higher losses will continue to be evident for at least the next 18 to 24
months, making it necessary to develop cyclical LGD factors that are collateral specific and
based in part on market projections.
 
    
    Probability of Default (PD) factors have recently migrated higher for commercial and
commercial real estate loans. Based on this change in market conditions, Management has
increased the loss emergence time frame to 24 months from 12 months.
  43




---



##### Table of Contents




    
    Management of the Bank has redefined the general reserve in broader terms to
incorporate: (a) current and likely market conditions along with an assessment of the
potential impact of those conditions, (b) uncertainty in the risk rating process, and (c)
the impact of portfolio performance, portfolio composition, origination channels, and other
factors.
 
    
    PD factors were updated to include current delinquency status across all consumer
portfolios.
 Net Income per Share:
 Income Taxes:
 Statement of Cash Flows:
 Note 2  Subsequent Events
   Note 3  Accounting Standards Update
 FASB Accounting Standards Codification (ASC) Topic 105  Generally Accepted Accounting Principles
(Statement No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally
Accepted Accounting Principles  a replacement of FASB Statement No. 162) (ASC 105).
  44




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##### Table of Contents



ASC Topic 810  Consolidation (Statement No. 160, Noncontrolling Interests in Consolidated
Financial Statement s  an amendment of ARB No. 51) (ASC 810) .
 ASC Topic 825  Financial Instruments (FSP FAS 107-1 and APB 28-1, Interim Disclosures about Fair
Value of Financial Instruments) (ASC 825).
 ASC Topic 855  Subsequent Events (Statement No. 165, Subsequent Events) (ASC 855) .
 Accounting Standards Update (ASU) 2010-6  Fair Value Measurements and Disclosures (Topic 820):
Improving Disclosures about Fair Value Measurements.
 Note 4  Loan Participation Interests
  (in thousands)
    
    2009
    
    
    2008Commercial real estate
    
    $
    3,129,026
    
    
    $
    3,433,872Consumer and residential real estate
    
    
    744,627
    
    
    
    974,619Total Loan Participation Interests
    
    $
    3,873,653
    
    
    $
    4,408,491
    45




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##### Table of Contents



Participations in Non-Performing Loans and Past Due Loans
  (in thousands)
    
    2009
    
    
    2008Commercial real estate
    
    $
    165,184
    
    
    $
    54,246Consumer and residential real estate
    
    
    5,554
    
    
    
    6,041Total Participations in Non-Accrual Loans
    
    $
    170,738
    
    
    $
    60,287Participations in Accruing Loans Past Due 90 Days
or More
    
    $
    8,631
    
    
    $
    9,543
  Note 5  Allowances for Credit Losses (ACL)
   (in thousands)
    
    2009
    
    
    2008
    
    
    2007ALPL balance, beginning of year
    
    $
    65,456
    
    
    $
    62,275
    
    
    $
    48,703Allowance of loan participations acquired
    
    
    33,632
    
    
    
    36,284
    
    
    
    26,530Net loan losses
    
    
    (115,277
    )
    
    
    (19,803
    )
    
    
    (16,296
    )Provision for (reduction in) ALPL
    
    
    172,620
    
    
    
    (13,924
    )
    
    
    3,338Economic Reserve transfer from AULPC
    
    
    
    
    
    
    624
    
    
    
    ALPL balance, end of year
    
    $
    156,431
    
    
    $
    65,456
    
    
    $
    62,275AULPC balance, beginning of year
    
    $
    2,301
    
    
    $
    3,856
    
    
    $
    3,804Provision for (reduction in) AULPC
    
    
    (694
    )
    
    
    (931
    )
    
    
    52Economic Reserve transfer from ALPL
    
    
    
    
    
    
    (624
    )
    
    
    AULPC balance, end of year
    
    $
    1,607
    
    
    $
    2,301
    
    
    $
    3,856Total ACL
    
    $
    158,038
    
    
    $
    67,757
    
    
    $
    66,131Balance of Impaired Loans, at end of year(1):With specific reserves assigned to the loan balances
    
    $
    82,255
    
    
    $
    35,088
    
    
    $
    30,604With no specific reserves assigned to the loan balances
    
    
    47,834
    
    
    
    7,733
    
    
    
    2,297Total
    
    $
    130,089
    
    
    $
    42,821
    
    
    $
    32,901Average Balance of Impaired Loans for the Year (1)
    
    $
    124,057
    
    
    $
    41,201
    
    
    $
    25,157Allowance for Loan Losses on Impaired Loans (1)
    
    
    17,761
    
    
    
    11,265
    
    
    
    6,366
 (1)
    
    Includes impaired commercial real estate loans with outstanding balances greater
than $1 million. 2008 and prior periods includes impaired commercial and industrial loans and
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 2009, 2008, and 2007.  46




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##### Table of Contents




    
    Approximately $18 million increase in the judgmental component.
    
    Approximately $33 million allocated primarily to the CRE portfolio addressing the severity of
CRE loss-given-default percentages and a longer term view of the loss emergence time period.
    
    Approximately $1 million from updating the consumer reserve factors to include the current
delinquency status.
 Note 6  Dividends
   i.e.
 i.e.
  (in thousands)
    
    2009
    
    
    2008
    
    
    2007Class A preferred securities
    
    $
    80
    
    
    $
    80
    
    
    $
    80Class B preferred securities
    
    
    3,461
    
    
    
    14,302
    
    
    
    21,300Class C preferred securities
    
    
    3,938
    
    
    
    3,938
    
    
    
    3,938Class D preferred securities
    
    
    8,716
    
    
    
    18,201
    
    
    
    24,325Total preferred dividends declared
    
    $
    16,195
    
    
    $
    36,521
    
    
    $
    49,643
   47




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Note 7  Related Party Transactions
    January 1, 2007throughDecember 31, 2009Commercial and commercial real estate
    
    
    0.125
    %Consumer
    
    
    0.650Residential real estate
    
    
    0.267
    48




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##### 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
    
    
    2,870,000
    
    
    
    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
         49




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##### Table of Contents



Note 8  Fair Value of Financial Instruments
         Cash and interest-bearing deposits, and due from The Huntington National Bank
 Loan participation interests
  50




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##### Table of Contents



Note 9  Commitments and Contingencies
 /
    Note 10  Segment Reporting
  Note 11  Income Taxes
      51




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##### Table of Contents



Note 12  Quarterly Results of Operations ( Unaudited )
  (in thousands)
    
    Fourth
    
    
    Third
    
    
    Second
    
    
    First2009Interest and fee income
    
    $
    39,648
    
    
    $
    40,741
    
    
    $
    41,923
    
    
    $
    45,173Provision for (reduction in allowances for) credit losses
    
    
    84,740
    
    
    
    27,701
    
    
    
    40,497
    
    
    
    18,988Non-interest income
    
    
    594
    
    
    
    626
    
    
    
    656
    
    
    
    693Non-interest expense
    
    
    2,352
    
    
    
    2,426
    
    
    
    2,622
    
    
    
    2,716Net (loss) income
    
    
    (46,850
    )
    
    
    11,240
    
    
    
    (540
    )
    
    
    24,162Dividends declared on preferred securities
    
    
    (2,940
    )
    
    
    (3,507
    )
    
    
    (4,613
    )
    
    
    (5,135
    )Net (loss) income applicable to common shares
    
    $
    (49,790
    )
    
    $
    7,733
    
    
    $
    (5,153
    )
    
    $
    19,0272008Interest and fee income
    
    $
    61,980
    
    
    $
    62,933
    
    
    $
    61,226
    
    
    $
    68,410Provision for (reduction 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
    
    
    $
    56,105
  52




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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
   53




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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 56 and 57 of this
Form 10-K.
    54




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##### Table of Contents



Signatures
  
 By:
    
    /s/ Donald R. Kimble

Donald R. Kimble
    
    By:
    
    /s/ Thomas P. Reed

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 *

Edward J. Kane
    
    DirectorRoger E. Kephart *

Roger E. Kephart
    
    DirectorJames D. Robbins *

James D. Robbins
    
    DirectorKaren D. Roggenkamp *

Karen D. Roggenkamp
    
    Director/s/ Donald R. Kimble

Donald R. Kimble
 *
    
    Attorney-in fact for each of the persons indicated.  55




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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, 2008, 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, 2008, 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 October 21, 2009, 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.
  56




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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.32.2.
    
    
    Section 1350 Certification  Chief Financial Officer.99.1.
    
    
    Consolidated Financial Statements of Huntington Bancshares Incorporated as of December 31,
2009 and 2008 and for the years ended December 31, 2009, 2008, and 2007.
  57