<PAGE>
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549


                                   FORM 10-K/A


(Mark One)
   [X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
       Act of 1934


                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001


                                       or

   [ ] 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.
                       ----------------------------------
             (Exact name of registrant as specified in its charter)

            OHIO                                                31-1356967
            ----                                                ----------
(State or other jurisdiction of                              (I.R.S. Employer
incorporation or organization)                               Identification No.)

    HUNTINGTON CENTER, 41 S. HIGH STREET, COLUMBUS, OH           43287
    --------------------------------------------------         ---------
    (Address of principal executive offices)                   (Zip Code)

        Registrant's telephone number, including area code (614) 480-8300
                                                           --------------

        Securities registered pursuant to Section 12(b) of the Act: NONE

               Securities registered pursuant to Section 12(g) of the Act:

  NONCUMULATIVE EXCHANGEABLE PREFERRED SECURITIES, CLASS C (LIQUIDATION AMOUNT
  ----------------------------------------------------------------------------
                                  $25.00 EACH)
                                  ------------
                                (Title of class)

    Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. [X] Yes [ ] No


    Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]


    All common stock is held by affiliates of the registrant as of December 31,
2001. As of February 28, 2002, 14,000,000 shares of common stock without par
value were outstanding.

    The aggregate market value of the common stock held by non-affiliates of the
registrant as of the close of business on February 28, 2002: N/A

Documents Incorporated By Reference
-----------------------------------

    Part III of this Form 10-K incorporates by reference certain information
from the registrant's definitive Information Statement for the 2002 Annual
Shareholders' Meeting.


<PAGE>

                       HUNTINGTON PREFERRED CAPITAL, INC.

                                      INDEX


<TABLE>

<S>               <C>                                                                       <C>
Part I.

     Item 1.      Business                                                                     3

     Item 2.      Properties                                                                  17

     Item 3.      Legal Proceedings                                                           17

     Item 4.      Submission of Matters to a Vote of Security Holders                         17

Part II.

     Item 5.      Market for Registrant's Common Equity and Related Shareholder Matters       18

     Item 6.      Selected Financial Data                                                     18

     Item 7.      Management's Discussion and Analysis of Financial Condition
                  and  Results of Operations                                                  19

     Item 7A.     Quantitative and Qualitative Disclosures About Market Risk                  29

     Item 8.      Financial Statements and Supplementary Data                                 29

     Item 9.      Changes in and Disagreements with Accountants on Accounting and
                  Financial Disclosure                                                        30
Part III.

     Item 10.     Directors and Executive Officers of the Registrant                          30

     Item 11.     Executive Compensation                                                      30

     Item 12.     Security Ownership of Certain Beneficial Owners and Management              30

     Item 13.     Certain Relationships and Related Transactions                              30

Part IV.

     Item 14.     Exhibits, Financial Statement Schedules, and Reports on Form 8-K            30

Signatures                                                                                    31

Audited Financial Statements

                  Report of Management and Report of Independent Auditors                    F-1

                  Consolidated Balance Sheets -- Restated
                  December 31, 2001 and 2000                                                 F-2

                  Consolidated Statements of Income -- Restated
                  Twelve Months Ended December 31, 2001, 2000 and 1999                       F-3

                  Consolidated Statements of Changes in Shareholders' Equity -- Restated
                  Twelve Months Ended December 31, 2001, 2000 and 1999                       F-4

                  Consolidated Statements of Cash Flows -- Restated
                  Twelve Months Ended December 31, 2001, 2000 and 1999                       F-5

                  Notes to Consolidated Financial Statements -- Restated                     F-6

</TABLE>


<PAGE>
                       HUNTINGTON PREFERRED CAPITAL, INC.
                       ----------------------------------


RESTATEMENT OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION

         Huntington Preferred Capital, Inc. (HPCI) restated its financial
results for 2001, 2000, and 1999 after it discovered and corrected a discrepancy
in the systems and methodology used to allocate interest income, fees,
expenses, loan losses, and related provision expense between The Huntington
National Bank (the Bank) and HPCI. Specifically, the system allocating this
financial information between the Bank and HPCI was modified in October 1999 to
determine such allocations as of the third business day before the end of each
month. This change was made to facilitate a more timely closing of HPCI's
books. The unintended result was that certain interest income, fees,
charge-offs, and related provision expense from that date through the end of
the month were incorrectly not reported in HPCI's financial results, beginning
in the fourth quarter of 1999 through the first quarter of 2002. The correction
resulted in a cumulative increase of $65.2 million in HPCI's reported net
income for 1999, 2000, and 2001, and equity at December 31, 2001. HPCI's
restated financial information is reflected in this amended Form 10-K. Since
HPCI and the Bank are fully consolidated subsidiaries of Huntington and the
impact of all intercompany allocations was properly eliminated in preparing the
Huntington financial statements, this restatement had no impact on Huntington's
previously reported consolidated results of operations or financial condition.
Further information regarding the impact of this restatement to HPCI's results
of operations and financial condition can be found in Management's Discussion
and Analysis and in Note 12 to the consolidated financial statements.



                                     PART I

ITEM 1: BUSINESS

GENERAL


         HPCI is an Ohio corporation incorporated in July 1992 under the name
Airbase Realty, Inc. The name was changed to Huntington Preferred Capital, Inc.
in May 2001. HPCI's principal business objective is to acquire, hold, and manage
mortgage assets and other authorized investments that will generate net income
for distribution to its shareholders. Since May 1998, HPCI has been operating as
a real estate investment trust (REIT) for federal income tax purposes. HPCI has
one wholly owned subsidiary, HPCLI, Inc. (HPCLI), an Ohio corporation, which
holds certain non-interest-earning assets.

         HPCI is consolidated as a direct subsidiary of Huntington Preferred
Capital Holdings, Inc. (Holdings), an Indiana corporation that is consolidated
as a subsidiary of the Bank. The Bank is an interstate national banking
association organized under the laws of the United States and headquartered in
Columbus, Ohio. The Bank is the only bank subsidiary of Huntington Bancshares
Incorporated (Huntington). The Bank owns 99.9% of the outstanding shares of
Holdings and Huntington owns the remaining 0.1%. Holdings owns 99.87% of HPCI's
common shares, 88.9% of HPCI's Class A preferred securities, and 100% of HPCI's
Class D preferred securities. Huntington owns the remaining portion of HPCI's
common shares. The remaining portion of HPCI's Class A preferred securities are
restricted and owned by past and present employees of Huntington. HPCI's Class B
preferred securities are owned by HPC Holdings-II, Inc., a non-bank subsidiary
of Huntington. All of HPCI's Class C preferred securities were sold to Holdings,
which were subsequently sold by Holdings to the public in an underwritten public
offering that closed on November 7, 2001. The following chart outlines the
relationship among affiliated entities at December 31, 2001.



<TABLE>

<S>                                                                                                        <C>

                      --------------------------------------------
                      |   Huntington Bancshares Incorporated     |
                      --------------------------------------------
                                            |
         -----------------------------------|---------------------
         |                   |              |                    |
         |100% Common        |              |                    |  100% Common
---------------------        |              |           ----------------------
|The Huntington     |        |              |           |HPC Holdings-II, Inc.|
|  National Bank    |        |              |           |                     |
---------------------        |              |           ----------------------
         |                   |0.1% Common   |                    |
         |99.9% Common       |              |                    | 100% B Preferred
         ---------------------              |                    |
                   |                        |                    |                  Public & Private Preferred
                   |                        |                    |                         Shareholders
          ----------------------            |                    |                             |
          |Huntington Preferred|            |0.13% Common        |                             |
          | Capital Holdings,  |            |                    |                             | 11.1% A Preferred
          |       Inc.         |            |                    |                             |  100% C Preferred
          ----------------------            |                    |                             |
                   |                        |                    |                             |
                   |  99.87% Common         |                    |                             |
                   |  88.9% A Preferred     |                    |                             |
                   |  100% D Preferred*     |                    |                             |
                   -------------------------|--------------------------------------------------
                                            |
                                 -----------------------
                                 |Huntington Preferred |
                                 |   Capital, Inc.     |
                                 -----------------------
                                            |
                                            |100% Common
                                 ----------------------
                                 |    HPCLI, Inc.     |
                                 ----------------------
</TABLE>




--------
*Holdings may sell to third party investors at some future date.



         HPCI's Class B, Class C, and Class D preferred securities will be
exchanged, without any approval or action on the part of the security holders,
for Class B, Class C, and Class D preferred securities of the Bank, if such an
exchange is directed by the Office of the Comptroller of the Currency (OCC) in
the event the Bank becomes or may in the near term become undercapitalized or if
the Bank is placed in conservatorship or receivership. The preferred securities
of the Bank have substantially equivalent terms as to dividends, liquidation
preference, and



<PAGE>

redemption as to the preferred securities of HPCI. The Bank's financial
statements and those of Huntington's are substantially the same. The financial
statements of Huntington are available to the public over the Internet at the
web site of the Securities and Exchange Commission (SEC) at http://www.sec.gov
or at the SEC's public reference rooms at 450 Fifth Street, N.W., Washington,
D.C. 20549.

         In July 2001, Huntington announced a comprehensive strategic and
financial restructuring plan designed to refocus its operations on core
activities in the Midwest. As part of the plan, in September 2001, Huntington
entered into an agreement for the sale of its Florida retail and commercial
operations. The sale closed on February 15, 2002. On December 31, 2001, in
anticipation of the eventual sale of the Florida operations by Huntington, HPCI
completed its distribution of participation interests in Florida-related loans
to its common shareholders, Holdings and Huntington. This distribution
approximated $1.3 billion and consisted of cash and the net book value of
participation interests in loans that were included in the sale, including the
related accrued interest and allowance for loan losses, representing
approximately 17% of HPCI's total assets as of December 31, 2001.

GENERAL DESCRIPTION OF ASSETS

         The Internal Revenue Code requires a REIT to invest at least 75% of the
total value of its assets in real estate assets, which includes residential
mortgage loans and commercial mortgage loans, including participation interests
in residential or commercial mortgage loans, mortgage-backed securities eligible
to be held by REITs, cash, cash equivalents which includes receivables,
government securities, and other real estate assets (REIT Qualified Assets).
REITs may invest up to 25% of the value of its total assets in
non-mortgage-related securities as defined in the Investment Company Act. Under
the Investment Company Act, the term "security" is defined broadly to include,
among other things, any note, stock, treasury stock, debenture, evidence of
indebtedness, or certificate of interest or participation in any profit sharing
agreement or a group or index of securities. The Internal Revenue Code also
requires that the value of any one issuer's securities, other than those
securities included in the 75% test, may not exceed 5% by value of the total
assets of the REIT. In addition, under the Internal Revenue Code, the REIT may
not own more than 10% of the voting securities nor more than 10% of the value of
the outstanding securities of any one issuer, other than those securities
included in the 75% test and the securities of wholly-owned, qualified REIT
subsidiaries.


         As of December 31, 2001, 88.2% of HPCI's assets were invested in REIT
Qualifying Assets and 11.8% were invested in commercial and consumer loans and
other assets that were not REIT Qualifying Assets. HPCI does not hold any
securities nor intends to hold securities in any one issuer that exceed 5% of
its total assets or more than 10% of the voting securities of any one issuer
other than its permitted investment in its wholly owned subsidiary, HPCLI.
HPCI's assets consisted of the following at December 31, 2001:



<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                                                                                                           Percentage
                                                                                                             of Total
(in thousands of dollars)                                                                      Amount          Assets
----------------------------------------------------------------------------------------------------------------------

<S>                                                                                            <C>               <C>
Loan participation interests:
      Commercial mortgage                                                                  $ 3,678,061          61.8%
      Commercial                                                                               646,509          10.9%
      Consumer secured by real property                                                        637,375          10.7%
      Residential mortgage                                                                     270,671           4.6%
      Consumer not secured by real property                                                    146,360           2.5%
Allowance for loan losses                                                                     (175,690)         -3.0%
Interest bearing deposits with The Huntington National Bank                                    364,912           6.1%
Other assets                                                                                   380,561           6.4%
</TABLE>



         Commercial and Commercial Mortgage Loans. HPCI owns participation
interests in commercial loans predominantly secured by non-real property such as
accounts receivable, industrial equipment, aircraft, livestock, furniture and
fixtures, and inventory. Participation interests acquired in commercial
mortgage loans are secured by real property such as office buildings,
multi-family properties of five units or more, industrial, warehouse, and
self-storage properties, office and industrial condominiums, retail space,
strip shopping centers, mixed use commercial properties, mobile home parks,
nursing homes, hotels and motels, churches, and farms. Commercial and
commercial mortgage loans may not be fully amortizing. This means that the
loans may have a significant principal balance or "balloon" payment due on
maturity. Additionally, there is no requirement regarding the percentage of any
commercial or commercial real




                                       4


<PAGE>

estate property that must be leased at the time HPCI acquires a participation
interest in a commercial or commercial mortgage loan secured by such property
nor are commercial loans required to have third party guarantees.

         The credit quality of a commercial or commercial mortgage loan may
depend on, among other factors, the existence and structure of underlying
leases; the physical condition of the property, including whether any
maintenance has been deferred; the creditworthiness of tenants; the historical
and anticipated level of vacancies; rents on the property and on other
comparable properties located in the same region; potential or existing
environmental risks; the availability of credit to refinance the loan at or
prior to maturity; and, the local and regional economic climate in general.
Foreclosures of defaulted commercial or commercial mortgage loans generally are
subject to a number of complicating factors, including environmental
considerations, which are not generally present in foreclosures of residential
mortgage loans.

         At December 31, 2001, $2.9 billion, or 67.7%, of the commercial and
commercial mortgage loans underlying HPCI's participation interests in such
loans were secured by a first mortgage or first lien.

         Consumer Loans. HPCI owns participation interests in consumer loans
secured by automobiles, trucks, equipment, or a first or junior mortgage
primarily on the borrower's primary residence. Many of these mortgage loans were
made for reasons such as home improvements, acquisition of furniture and
fixtures, and debt consolidation. These loans are predominately repaid on an
installment basis and income is accrued based on the outstanding balance of the
loan over terms that range from 6 to 360 months. Of the loans underlying the
consumer loan participations, most bear interest at fixed rates.

         Residential Mortgage Loans. HPCI owns participation interests in
adjustable rate, fixed rate, conforming, and nonconforming residential mortgage
loans. Conforming residential mortgage loans comply with the requirements for
inclusion in a loan guarantee or purchase program sponsored by either the FHLMC
or FNMA. Under current regulations, the maximum principal balance allowed on
conforming residential mortgage loans ranges from $275,000 for one-unit
residential loans to $528,700 for four-unit residential loans. Nonconforming
residential mortgage loans are residential mortgage loans that do not qualify in
one or more respects for purchase by FNMA or FHLMC under their standard
programs. A majority of the nonconforming residential mortgage loans underlying
the participation interests acquired by HPCI to date are nonconforming because
they have original principal balances which exceeded the requirements for FHLMC
or FNMA programs, the original terms are shorter than the minimum requirements
for FHLMC or FNMA programs at the time of origination, the original balances are
less than the minimum requirements for FHLMC or FNMA programs, or generally
because they vary in certain other respects from the requirements of such
programs other than the requirements relating to creditworthiness of the
mortgagors. A substantial portion of nonconforming residential mortgage loans
are expected to meet the requirements for sale to national private mortgage
conduit programs or other investors in the secondary mortgage market.

         Each residential mortgage loan is evidenced by a promissory note
secured by a mortgage or deed of trust or other similar security instrument
creating a first or second lien on single-family residential properties.
Residential real estate properties underlying residential mortgage loans consist
of individual dwelling units, individual condominium units, two- to four-family
dwelling units, and townhouses.

         Geographic Distribution. The following table shows the geographic
location of the properties securing the loans underlying HPCI's loan
participations at December 31, 2001:


<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
                                                                                                         Percentage by
                                                                                           Aggregate         Aggregate
                                                                           Number          Principal         Principal
State                             (in thousands of dollars)               of Loans           Balance           Balance
-----------------------------------------------------------------------------------------------------------------------

<S>                                                                         <C>             <C>                  <C>
Ohio                                                                        37,061          $ 3,016,059          56.1%
Michigan                                                                    13,841            1,559,722          29.0%
Indiana                                                                      2,407              339,101           6.3%
Kentucky                                                                     1,887              228,597           4.2%
-----------------------------------------------------------------------------------------------------------------------
                                                                            55,196            5,143,479          95.6%
All other locations                                                            652              235,497           4.4%
-----------------------------------------------------------------------------------------------------------------------
   Total loan participation interests                                       55,848          $ 5,378,976         100.0%
-----------------------------------------------------------------------------------------------------------------------
</TABLE>



                                       5
<PAGE>

         Principal Balances. The following table shows data with respect to the
principal balance of the loans underlying HPCI's loan participations at December
31, 2001:

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
                                                                                         Aggregate       Percentage by
                                                                                         Principal           Aggregate
                                                                         Number           Balance            Principal
Size                                                                    of Loans           (000s)              Balance
-----------------------------------------------------------------------------------------------------------------------

<S>                                                                         <C>              <C>                 <C>
Less than $50,000                                                           44,655         $   719,453           13.4%
Greater than $50,000 to $100,000                                             4,483             309,787            5.8%
Greater than $100,000 to $250,000                                            3,237             511,603            9.5%
Greater than $250,000 to $500,000                                            1,629             572,089           10.6%
Greater than $500,000 to $1,000,000                                            933             655,295           12.2%
Greater than $1,000,000 to $3,000,000                                          662           1,095,969           20.4%
Greater than $3,000,000 to $5,000,000                                          142             541,638           10.1%
Greater than $5,000,000 to $10,000,000                                          76             508,114            9.4%
Greater than $10,000,000                                                        31             465,028            8.6%
-----------------------------------------------------------------------------------------------------------------------
   Total loan participation interests                                       55,848         $ 5,378,976          100.0%
-----------------------------------------------------------------------------------------------------------------------
</TABLE>

         Interest Rate. Some of the loans underlying HPCI's loan participations
bear interest at fixed rates and some bear interest at variable rates based on
indices such as LIBOR and the prime rate. The following table shows data with
respect to interest rates of the loans underlying HPCI's loan participations at
December 31, 2001:

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                              Fixed Rate                                          Variable Rate
                            ------------------------------------------------  ------------------------------------------------------
                                                               Percentage by                                           Percentage by
                                               Aggregate           Aggregate                           Aggregate           Aggregate
(in thousands of              Number           Principal           Principal        Number             Principal           Principal
dollars)                     of Loans           Balance              Balance       of Loans             Balance              Balance
------------------------------------------------------------------------------------------------------------------------------------

<S>                              <C>         <C>                   <C>            <C>             <C>                     <C>
under 5.00%                      62          $    26,255              1.7%           1,325           $ 1,852,541             48.3%
5.00% to 5.99%                  203               17,628              1.1%           1,319               479,050             12.5%
6.00% to 6.99%                  599               82,898              5.4%           1,594               418,522             10.9%
7.00% to 7.99%                4,696              417,711             27.0%           2,319               528,610             13.8%
8.00% to 8.99%                9,526              457,466             29.6%           2,445               321,821              8.4%
9.00% to 9.99%                7,706              288,387             18.7%           1,568               118,376              3.1%
10.00% to 10.99%              5,511              156,722             10.1%             357                12,375              0.3%
11.00% to 11.99%              2,380               56,637              3.7%              85                 1,582              0.0%
over 12.00%                   1,666               41,104              2.7%          12,487               101,291              2.7%
------------------------------------------------------------------------------------------------------------------------------------
   Total                     32,349          $ 1,544,808            100.0%          23,499           $ 3,834,168            100.0%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>


         Loan Delinquencies. The following table provides delinquency
information for the loans underlying HPCI's loan participations at December 31,
2001.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                                Fixed Rate                                       Variable Rate
                           ----------------------------------------------------  ---------------------------------------------------
                                                                 Percentage by                                    Percentage by
                                                 Aggregate           Aggregate                       Aggregate        Aggregate
(in thousands of               Number            Principal           Principal     Number            Principal        Principal
dollars)                      of Loans            Balance              Balance    of Loans            Balance           Balance
------------------------------------------------------------------------------------------------------------------------------------
<S>                            <C>             <C>                   <C>           <C>             <C>                  <C>
Current                        26,683          $ 1,322,127           85.6%         15,545          $ 3,356,587            87.5%
1 to 30 days                    3,702              139,496            9.0%          5,272              325,962             8.5%
31 to 60 days                     815               24,121            1.6%          1,533               58,570             1.5%
61 to 90 days                     371                7,141            0.5%            470               11,450             0.3%
over 90 days                      778               51,923            3.3%            679               81,599             2.2%
------------------------------------------------------------------------------------------------------------------------------------
   Total                       32,349          $ 1,544,808          100.0%         23,499          $ 3,834,168           100.0%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>





                                       6


<PAGE>



         Other Assets. Cash and due from the Bank represent cash received by the
Bank from borrowers for the payment of principal and interest on the underlying
loans deposited in a demand deposit account of the Bank. Interest bearing
deposits in the Bank consist of available funds invested nightly in an
investment product that provides HPCI with a market return for overnight loans.
These funds are available for the acquisition of additional participation
interests. Due from Holdings represents unsettled cash transactions involving
HPCI's participation interests in loans that occur in the ordinary course of
business. Other assets include premises and equipment related to real property
located in Indiana and also accrued interest on the loans underlying its loan
participation interests, which is calculated by the Bank's loan accounting
systems.


DIVIDEND POLICY AND RESTRICTIONS

         HPCI expects to pay an aggregate amount of dividends with respect to
the outstanding shares of its capital stock equal to substantially all of its
REIT taxable income, which excludes capital gains. In order to remain qualified
as a REIT, HPCI must distribute annually at least 90% of its REIT taxable income
to shareholders. Dividends are declared at the discretion of the board of
directors after considering its distributable funds, financial condition, and
capital needs, the impact of current and pending legislation and regulations,
economic conditions, tax considerations, its continued qualification as a REIT,
and other factors. Although there can be no assurances, HPCI expects that both
its cash available for distribution and its REIT taxable income will be in
excess of amounts needed to pay dividends on the preferred securities in the
foreseeable future because substantially all of HPCI's mortgage assets and other
authorized investments are interest-bearing; all outstanding preferred
securities represent in the aggregate only approximately 14% of HPCI's
capitalization; HPCI does not anticipate incurring any indebtedness other than
permitted indebtedness; which includes acting as a co-borrower or guarantor of
certain obligations of the Bank that HPCI does not anticipate will involve a
pledge of more than 25% of its assets; and, HPCI expects its interest-earning
assets will continue to exceed the liquidation preference of its preferred
securities.

         Payment of dividends on the preferred securities could also be subject
to regulatory limitations if the Bank becomes "undercapitalized" for purposes of
regulations issued by the OCC. Under these regulations, the Bank will be deemed
"undercapitalized" if it has a total risk-based capital ratio of less than 8.0%;
a Tier 1 risk-based capital ratio of less than 4.0%; and a leverage ratio of
less than 4.0% or less than 3% if the institution has been awarded the highest
supervisory rating. At December 31, 2001, the Bank's total risk-based capital
ratio was 10.29%, its Tier 1 risk-based capital ratio was 6.34%, and its
leverage ratio was 6.58%. The Bank currently intends to maintain its capital
ratios in excess of the "well-capitalized" levels under these regulations.
However, there can be no assurance that the Bank will be able to maintain its
capital in excess of the "well-capitalized" levels. The exercise of the OCC's
power to restrict dividends on preferred securities would, however, also have
the effect of restricting the payment of dividends on common shares. The
inability to pay dividends on common shares would prevent HPCI from meeting the
statutory requirement for a REIT to distribute 90% of its taxable income and,
therefore, would cause HPCI to fail to qualify for the favorable tax treatment
accorded to REITs.

CONFLICT OF INTERESTS AND RELATED POLICIES

         The Bank continues to control 98.5% of the voting power of HPCI's
outstanding securities. Accordingly, the Bank will continue to have the right to
elect all of HPCI's directors, including its independent directors, unless HPCI
fails to pay dividends on its Class C and Class D preferred securities. In
addition, all of HPCI's officers and six of its nine directors are also officers
and directors of the Bank or its affiliates. Because of the nature of HPCI's
relationship with Holdings and the Bank, conflicts of interest have arisen and
may arise in the future with respect to certain transactions, including without
limitation, HPCI's acquisition of assets from the Bank, HPCI's disposition of
assets to the Bank, servicing of the loans underlying HPCI's participation
interests, particularly with respect to loans placed on nonaccrual status, as
well as the modification of the participation agreement between the Bank and
Holdings and the subparticipation agreement between Holdings and HPCI. Any
future modification of these agreements will require the approval of a majority
of HPCI's independent directors. HPCI's board of directors also has broad
discretion to revise its investment and operating strategy without shareholder
approval.

         It is the intention of HPCI and the Bank that any agreements and
transactions between them be fair to all parties and consistent with market
terms for such types of transactions. The requirement in HPCI's articles of
incorporation that certain actions be approved by a majority of HPCI's
independent directors also is intended to ensure fair dealings among HPCI,
Holdings, and the Bank. HPCI's independent directors serve on its audit
committee and review transactions among HPCI, Holdings, the Bank, and their
respective affiliates.

         There are no provisions in HPCI's articles of incorporation limiting
any of its officers, directors, shareholders, or affiliates from having any
direct or indirect pecuniary interest in any asset to be acquired or


                                       7
<PAGE>

disposed of by HPCI or in any transaction in which it has an interest or from
engaging in acquiring, holding, and managing its assets. It is expected that the
Bank will have direct interests in transactions with HPCI including, without
limitation, the sale of assets to HPCI; however, it is not anticipated that any
of HPCI's officers or directors will have any interests in such assets, other
than as borrowers or guarantors of loans underlying HPCI's participation
interests, in which case such loans would be on substantially the same terms,
including interest rates and collateral on loans, as those prevailing at the
time for comparable transaction with others and would not involve more than the
normal risk of collectibility or present other unfavorable features.

OTHER MANAGEMENT POLICIES AND PROGRAMS


         General. In administering HPCI's participation interests and other
authorized investments, the Bank has a high degree of autonomy. HPCI, however,
has certain policies to guide its administration with respect to the Bank's
underwriting standards, the acquisition and disposition of assets, credit risk
management, and certain other activities. These policies, which are discussed
below, may be amended or revised or exceptions made from time to time at the
discretion of HPCI's board of directors, subject in certain circumstances to the
approval of a majority of HPCI's independent directors, but without a vote of
its shareholders.


         Underwriting Standards. The Bank has represented to Holdings, and
Holdings has represented to HPCI, that most of the loans underlying HPCI's
participation interests were originated generally in accordance with
underwriting policies customarily employed by the Bank during the period in
which the loans were originated. The Bank emphasizes "in-market" lending, which
means lending to borrowers that are located where the Bank or its affiliates
have branches or loan origination offices. The Bank avoids transactions
perceived to have unacceptably high risk, as well as excessive industry and
other concentrations.

         Some of the loans, however, were acquired by the Bank in connection
with the acquisition of other financial institutions. Prior to acquiring any
financial institution, the Bank performed a number of due diligence procedures
to, among other things, assess the overall quality of the target institution's
loan portfolio. These procedures included the examination of underwriting
standards used in the origination of loan products by the target institution,
the review of loan documents and the contents of selected loan files, and the
verification of the past due status and payment histories of selected borrowers.
Through its due diligence procedures, the Bank obtained a sufficient level of
comfort pertaining to the underwriting standards used by the target institution
and their influence on the quality of the portfolio. Even though the Bank did
not and does not warrant those standards, the Bank found them acceptable in
comparison to HPCI's underwriting standards in cases where the Bank had made a
favorable decision to acquire the institution as a whole.


         Asset Acquisition And Disposition Policies. Consistent with Holding's
policy, it is generally HPCI's policy to purchase from the Bank participation
interests in loans that:


         -  are performing, meaning they have no more than two payments past
            due, if any,

         -  are in accruing status,

         -  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.

HPCI's policy also allows for investment in assets that are not REIT-Qualified
Assets up to but not exceeding the statutory limitations imposed on
organizations that qualify as REITs. In the past, Holdings has purchased from
the Bank and sold to HPCI participation interests in loans not secured by real
property because of available proceeds from loan repayments and pay-offs.
Management, under this policy, also has the discretion to purchase other assets
to maximize its return to shareholders.

         It is anticipated that from time to time HPCI will receive
participation interests in additional mortgage loans from the Bank on a basis
consistent with secondary market standards pursuant to the loan participation
and subparticipation agreements, out of proceeds received in connection with the
repayment or disposition of loan participation interests in HPCI's portfolio.
Although HPCI is permitted to do so, it has no present plans or intentions to
purchase loans or loan participation interests from unaffiliated third parties.
It is currently anticipated that participation interests in additional loans
acquired by HPCI will be of the types described above under the heading "General
Description of Assets," although HPCI is not precluded from purchasing
additional types of loans or loan participation interests.

         HPCI may continue to acquire from time to time limited amounts of
participation interests in loans that are not commercial or residential loans,
such as automobile loans and equipment loans, or other authorized investments.


                                       8


<PAGE>

Although currently there is no intention to acquire any mortgage-backed
securities representing interests in or obligations backed by pools of mortgage
loans that will be secured by single-family residential, multi-family, or
commercial real estate properties located throughout the United States, HPCI is
not restricted from doing so. HPCI does not intend to acquire any interest-only
or principal-only mortgage-backed securities. HPCI also will not be precluded
from investing in mortgage-backed securities when the Bank is the sponsor or
issuer. At December 31, 2001, HPCI did not hold any mortgage-backed securities.

         HPCI currently anticipates that it will not acquire the right to
service any loan underlying a participation interest that it acquires in the
future and that the Bank will act as servicer of any such additional loans. HPCI
anticipates that any servicing arrangement that it enters into in the future
with the Bank will contain fees and other terms that would be substantially
equivalent to or more favorable to HPCI than those that would be contained in
servicing arrangements entered into with third parties unaffiliated with HPCI.

         HPCI's current policy is not to acquire any participation interest in
any commercial mortgage loan that constitutes more than 5.0% of the total book
value of HPCI's mortgage assets at the time of acquisition. In addition, HPCI's
current policy prohibits the acquisition of any loan or any interest in a loan
other than an interest resulting from the acquisition of mortgage-backed
securities, which loan is collateralized by real estate located in West Virginia
or that is made to a municipality or other tax-exempt entity.

         HPCI's current policy is to reinvest the proceeds of its assets in
other interest-earning assets such that its Funds from Operations (FFO) over any
period of four fiscal quarters will be anticipated to equal or exceed 150% of
the amount that would be required to pay full annual dividends on the Class A,
Class C, and Class D preferred securities, except as may be necessary to
maintain its status as a REIT. HPCI's articles of incorporation provide that it
cannot amend or change this policy with respect to the reinvestment of proceeds
without the consent or affirmative vote of the holders of at least two thirds of
the Class C preferred securities and two thirds of the Class D preferred
securities, voting as separate classes.

         Credit Risk Management Policies. It is expected that participation
interests in each commercial or residential mortgage loan acquired in the future
will represent a first lien position and will be originated by the Bank, one of
its affiliates, or an unaffiliated third party in the ordinary course of its
real estate lending activities based on the underwriting standards generally
applied by or substantially similar to those applied by the Bank at the time of
origination for its own account. It is also expect that all loans will be
serviced by or through the Bank pursuant to the participation agreement and
subparticipation agreement, which require servicing in conformity with any loan
servicing guidelines promulgated by HPCI and, in the case of residential
mortgage loans, with FNMA and FHLMC guidelines and procedures.

         Other Policies. HPCI intends to operate in a manner that will not
subject it to regulation under the Investment Company Act. HPCI does not intend
to:

         -  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.

         The Investment Company Act exempts entities that, directly or through
majority-owned subsidiaries, are "primarily engaged in the business of
purchasing or otherwise acquiring mortgages and other liens on and interests in
real estate" (Qualifying Interests). Under current interpretations by the staff
of the SEC, in order to qualify for this exemption, HPCI, among other things,
must maintain at least 55% of its assets in Qualifying Interests and also may be
required to maintain an additional 25% in Qualifying Interests or other real
estate-related assets. The assets that HPCI may acquire therefore may be limited
by the provisions of the Investment Company Act. HPCI has established a policy
of limiting authorized investments that are not Qualifying Interests to no more
than 20% of the value of its total assets.

         HPCI has no present intention of repurchasing any of its capital
securities, and any such action would be taken only in conformity with
applicable federal and state laws and regulations and the requirements for
qualifying as a REIT.

         HPCI intends to distribute to its shareholders, in accordance with the
Securities and Exchange Act of 1934, as amended, annual reports containing
financial statements prepared in accordance with generally accepted



                                       9


<PAGE>

accounting principles and certified by its independent auditors. HPCI's articles
of incorporation provide that it will maintain its status as a reporting company
under the Exchange Act for so long as any of the Class C preferred securities
are outstanding and held by unaffiliated shareholders.

         HPCI currently makes investments and operates its business in such a
manner consistent with the requirements of the Internal Revenue Code to qualify
as a REIT. However, future economic, market, legal, tax, or other considerations
may cause its board of directors, subject to approval by a majority of its
independent directors, to determine that it is in HPCI's best interest and the
best interest of its shareholders to revoke HPCI's REIT status. The Internal
Revenue Code prohibits HPCI from electing REIT status for the four taxable years
following the year of such revocation.

EMPLOYEES

         HPCI has six executive officers and two additional officers, but no
other employees. Day-to-day activities and the servicing of the loans underlying
HPCI's participation interests are administered by the Bank. All of HPCI's
officers are also officers or employees of Huntington, the Bank, and/or
Holdings. HPCI maintains corporate records and audited financial statements that
are separate from those of Huntington, the Bank, and Holdings.

         Although there are no restrictions or limitations contained in HPCI's
articles of incorporation or bylaws, HPCI does not anticipate that its officers
or directors will have any direct or indirect pecuniary interest in any asset to
be acquired or disposed of by HPCI or in any transaction in which HPCI has an
interest or will engage in acquiring, holding, and managing assets, other than
as borrowers or guarantors of loans underlying HPCI's participation interests,
in which case such loans would be on substantially the same terms, including
interest rates and collateral on loans, as those prevailing at the time for
comparable transaction with others and would not involve more than the normal
risk of collectibility or present other unfavorable features.

SERVICING

        The loans underlying HPCI's participation interests are serviced by the
Bank pursuant to the terms of the participation agreement between the Bank and
Holdings and the subparticipation agreement between Holdings and HPCI. The Bank
has delegated servicing responsibility of the residential mortgage loans to The
Huntington Mortgage Company, a wholly-owned subsidiary of the Bank.

        The participation and subparticipation agreements require the Bank to
service the loans underlying HPCI's participation interests in a manner
substantially the same as for similar work performed by the Bank for
transactions on its own behalf. The Bank or its affiliates collect and remit
principal and interest payments, maintain perfected collateral positions, and
submit and pursue insurance claims. The Bank and its affiliates also provide
accounting and reporting services required by HPCI for its participation
interests. HPCI also may direct the Bank to dispose of any loans that become
classified, placed in a non-performing status, or are renegotiated due to the
financial deterioration of the borrower. The Bank is required to pay all
expenses related to the performance of its duties under the participation and
subparticipation agreements, including any payment to its affiliates for
servicing the loans. The Bank or its affiliates may institute foreclosure
proceedings at the direction of HPCI, exercise any power of sale contained in
any mortgage or deed of trust, obtain a deed in lieu of foreclosure, or
otherwise acquire title to a mortgaged property underlying a mortgage loan by
operation of law or otherwise in accordance with the terms of the participation
and subparticipation agreement.

        Under the participation and subparticipation agreements, the Bank has
the right in its discretion to give consents, waivers, and modifications of the
loan documents to the same extent as if the loans were wholly owned by the Bank;
provided, however, without the written consent of Holdings, the Bank may not
waive any payment default, extend the maturity of the loans, reduce the rate or
rates of interest with respect to the loans, forgive or reduce the principal sum
of the loans, increase the lending formula or advance rates, or amend or modify
the financial covenants contained in the loan documents in any way that would
make such financial covenants less restrictive.

        The Bank has the right to accept payment or prepayment of the whole
principal sum and accrued interest in accordance with the terms of the loans,
waive prepayment charges in accordance with the Bank's policy for loans in which
no participation interest has been granted, and accept additional security for
the loans. No specific term is specified in the participation agreement and
subparticipation agreement; the agreements may be terminated by mutual agreement
of the parties at any time, without penalty. Due to the relationship among HPCI,
Holdings, and the Bank, it is not anticipated that these agreements will be
terminated by any party in the foreseeable future.



                                       10


<PAGE>

        The Bank, in its role as servicer under the terms of the loan
participation agreement, receives a loan servicing fee designed as a
reimbursement for costs incurred to service the underlying loan. The amount and
terms of the fee are determined by mutual agreement of the Bank, Holdings, and
HPCI from time to time during the term of the participation agreement and
subparticipation agreement. Periodically, a review and analysis of loan
servicing operations is conducted by the Bank. As a result, among other things,
the cost to service an individual loan is calculated and is used as a basis to
determine fair compensation for services rendered. The loan servicing fee is
subject to adjustment annually based upon the Bank's review and analysis at the
end of each calendar year during the term of the participation agreement.

        HPCI paid servicing fees of $8.3 million for the year ended December 31,
2001, and $7.8 million for each of the years ended December 31, 2000 and 1999.
In 2001, the annual servicing fee with respect to the commercial mortgage,
commercial, and consumer loans was equal to the outstanding principal balance of
each loan multiplied to a fee of 0.125% and the annual servicing fee with
respect to residential mortgages is equal to 0.282% of the interest income
collected. Neither the participation agreement nor the subparticipation
agreement limits or caps the servicing fees that are paid to the Bank.

COMPETITION

         Competition in the form of price and service from other banks and
financial companies such as savings and loans, credit unions, finance companies,
and brokerage firms is intense in most of the markets served by Huntington and
its subsidiaries. Mergers between and the expansion of financial institutions
both within and outside Ohio have provided significant competitive pressure in
major markets. Since 1995, when federal interstate banking legislation became
effective that made it permissible for bank holding companies in any state to
acquire banks in any other state, and for banks to establish interstate branches
(subject to certain limitations by individual states), actual or potential
competition in each of Huntington's markets has been intensified. This
competition impacts Huntington's ability to attract new business, particularly
in the form of loans secured by real estate, and, therefore, also affects HPCI's
availability to invest in participation interests in such loans.

REGULATORY MATTERS

         HPCI is an indirect subsidiary of the Bank and therefore, regulatory
authorities have the right to examine HPCI and its activities and, under certain
circumstances, to impose restrictions on the Bank or HPCI. The Bank is subject
to examination and supervision by the OCC. In addition to the impact of federal
and state regulation, the Bank is affected significantly by the actions of the
Federal Reserve Board as it attempts to control the money supply and credit
availability in order to influence the economy.

BUSINESS RISKS

         Like all other REITs, HPCI's business and results of operations are
subject to a number of risks, many of which are outside of its control. In
addition to the other information in this report, readers should carefully
consider that the following important factors, among others, could materially
impact HPCI's business and future results of operations.

A DECLINE IN THE BANK'S CAPITAL LEVELS MAY RESULT IN 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 returns from a shareholder's investment in HPCI's preferred
securities will be dependent to a significant extent on the performance and
capital of the Bank. A decline in the performance and capital levels of the Bank
or the placement of the Bank into conservatorship or receivership could result
in the exchange, if so directed by the OCC, of HPCI's preferred securities for
Bank preferred securities, without shareholder approval or any shareholder
action. This would represent an investment in the Bank and not in HPCI. Under
these circumstances, there would likely be a significant loss associated with
this investment. Also, since preferred shareholders of HPCI would become
preferred shareholders of the Bank at a time when the Bank's financial condition
has deteriorated, it is unlikely that the Bank would be in a financial position
to make any dividend payments on the Bank preferred securities.

         In the event of a liquidation of the Bank, the claims of depositors and
creditors of the Bank would be entitled to priority in payment over the claims
of holders of equity interests such as the Bank preferred securities,



                                       11


<PAGE>

and, therefore, preferred shareholders likely would receive substantially less
than would have been received had the preferred securities not been exchanged
for Bank preferred securities.

         The exchange of the preferred securities for Bank preferred securities
would most likely be a taxable event to shareholders under the Internal Revenue
Code and, in that event, shareholders would incur a gain or loss, as the case
may be, measured by the difference between the basis in the preferred securities
and the fair market value of the Bank preferred securities received in the
exchange.

         Although the terms of the Bank preferred securities are substantially
similar to the terms of HPCI's preferred securities, there are differences, such
as the Bank preferred securities do not have any voting rights or any right to
elect independent directors if dividends are missed. In addition, the Bank
preferred securities will not be listed on the NASDAQ Stock Market or any
exchange and a market for them may never develop.

BANK REGULATORS MAY LIMIT HPCI'S ABILITY TO IMPLEMENT ITS BUSINESS PLAN AND MAY
RESTRICT ITS ABILITY TO PAY DIVIDENDS.

         Because HPCI is an indirect subsidiary of the Bank, regulatory
authorities will have the right to examine HPCI and its activities and, under
certain circumstances, to impose restrictions on the Bank or HPCI which could
impact HPCI's ability to conduct business pursuant to its business plan and
which could adversely effect its financial condition and results of operations.

         If the OCC determines that the Bank's relationship with HPCI results in
an unsafe and unsound banking practice, the OCC and other regulators of the Bank
have the authority to restrict HPCI's ability to transfer assets, restrict its
ability to make distributions to shareholders or redeem preferred securities, or
to require the Bank to sever its relationship with HPCI or divest its ownership
in HPCI. Certain of these actions by the OCC would likely result in HPCI's
failure to qualify as a REIT.

         Payment of dividends on the preferred securities could also be subject
to regulatory limitations if the Bank becomes "undercapitalized" for purposes of
regulations issued by the OCC. Under these regulations, the Bank will be deemed
"undercapitalized" if it has a total risk-based capital ratio of less than 8.0%;
a Tier 1 risk-based capital ratio of less than 4.0%; and a leverage ratio of
less than 4.0% or less than 3% if the institution has been awarded the highest
supervisory rating. At December 31, 2001, the Bank's total risk-based capital
ratio was 10.29%, its Tier 1 risk-based capital ratio was 6.34%, and its
leverage ratio was 6.58%. The Bank currently intends to maintain its capital
ratios in excess of the "well-capitalized" levels under these regulations.
However, there can be no assurance that the Bank will be able to maintain its
capital in excess of the "well-capitalized" levels. The exercise of the OCC's
power to restrict dividends on preferred securities would, however, also have
the effect of restricting the payment of dividends on common shares. The
inability to pay dividends on common shares would prevent HPCI from meeting the
statutory requirement for a REIT to distribute 90% of its taxable income and,
therefore, would cause HPCI to fail to qualify for the favorable tax treatment
accorded to REITs.

         If HPCI had to be treated for tax purposes in the same manner as the
other consolidated subsidiaries of the Bank rather than as a REIT, the loss of
tax benefits would directly and immediately affect the Bank. In addition,
because HPCI holds a substantial part of the Bank's mortgage assets and HPCI's
dividend flow is a substantial part of the Bank's total income, HPCI's inability
to transmit resources to the Bank by means of dividends would deprive the Bank
of liquidity necessary for the efficient and profitable management of its loan
and investment portfolios, thus adversely affecting the Bank's financial
condition.

         Legal and regulatory limitations on the payment of dividends by the
Bank could also affect HPCI's ability to pay dividends to unaffiliated third
parties, including the preferred shareholders. Since HPCI and Holdings are
members of the Bank's consolidated group, payment of common and preferred
dividends by the Bank and/or any member of its consolidated group to
unaffiliated third parties, including payment of dividends to the shareholders
of preferred securities, would require regulatory approval if aggregate
dividends on a consolidated basis exceed certain limitations. Regulatory
approval is required prior to the Bank's declaration of any dividends in excess
of available retained earnings. The amount of dividends that may be declared
without regulatory approval is further limited to the sum of net income for the
current year and retained net income for the preceding two years, less any
required transfers to surplus or common stock.





                                       12


<PAGE>


DIVIDENDS ARE NOT CUMULATIVE AND THEREFORE, PREFERRED SHAREHOLDERS ARE NOT
ENTITLED TO RECEIVE DIVIDENDS UNLESS DECLARED BY HPCI'S BOARD OF DIRECTORS.

         Dividends on the preferred securities are not cumulative. Consequently,
if the board of directors does not declare a dividend on the preferred
securities for any quarterly period, including if prevented by bank regulators,
preferred shareholders will not be entitled to receive that dividend whether or
not funds are or subsequently become available. The board of directors may
determine that it would be in HPCI's best interests to pay less than the full
amount of the stated dividends on the preferred securities or no dividends for
any quarter even though funds are available. Factors that would generally be
considered by the board of directors in making this determination are the amount
of distributable funds, HPCI's financial condition and capital needs, the impact
of current and pending legislation and regulations, economic conditions, tax
considerations, and HPCI's continued qualification as a REIT. If full dividends
on the Class A, Class C, and Class D preferred securities have not been paid for
six full dividend periods, the holders of the Class C and Class D preferred
securities, voting together as one class, will have the right to elect two
independent directors in addition to those already on the board.

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.

         The Bank is involved in virtually every aspect of HPCI's existence. All
of its officers and six of its nine directors are also officers or directors of
the Bank or its affiliates. Officers that are common with the Bank devote less
than 5% of their time to managing HPCI's business. The Bank has the right to
elect all of HPCI's directors, including independent directors, except under
limited circumstances if it fails to pay future dividends. The Bank and its
affiliates have interests that are not identical to HPCI's and, therefore,
conflicts of interest could arise in the future with respect to transactions
between or among the Bank, Holdings, and HPCI.

         The Bank administers HPCI's day-to-day activities under the terms of a
participation agreement between the Bank and Holdings and a subparticipation
agreement between Holdings and HPCI. The parties to the participation agreement
and the subparticipation agreement are all affiliated. Accordingly, these
agreements were not the result of arms-length negotiations and may be modified
at any time in the future. Although the modification of the participation
agreement or subparticipation agreement requires the approval of a majority of
independent directors, the Bank, through its ownership of substantially all of
Holdings' common stock and Holdings' ownership of substantially all of HPCI's
common stock, controls the election of all of the directors, including
independent directors. HPCI cannot assure shareholders that such modifications
will be on terms as favorable to it as those that could have been obtained from
unaffiliated third parties.

         Huntington, the owner of all the Bank's common shares, may have
investment goals and strategies that differ from those of the holders of HPCI's
preferred securities. In addition, neither Huntington nor the Bank has a policy
addressing the treatment of new business opportunities. Thus, new business
opportunities identified by Huntington or the Bank may be directed to affiliates
other than HPCI. HPCI's board of directors has broad discretion to revise its
investment and operating strategy without shareholder approval. The Bank,
through its ownership of substantially all of Holdings' common stock and
Holdings' ownership of substantially all of HPCI's common stock, controls the
election of all of HPCI's directors, including independent directors.
Consequently, HPCI's investment and operating strategies will largely be
directed by Huntington and the Bank.

         HPCI is dependent on the diligence and skill of the officers and
employees of the Bank for the selection and structuring of the loans underlying
its participation interests and other authorized investments. The Bank selected
the amount, type, and price of loan participation interests and other assets
that were acquired from the Bank and its affiliates. In the immediate future,
HPCI anticipates acquiring all or substantially all of its assets from the Bank
or its affiliates. Although these acquisitions are made within investment
policies, neither HPCI nor the Bank obtained any third-party valuations. HPCI
does not intend to do so in the future. Although HPCI's board of directors has
adopted certain policies to guide the acquisition and disposition of assets,
these policies may be revised or exceptions may be approved from time to time at
the discretion of the board of directors without a vote of shareholders. Changes
in or exceptions made to these policies could permit the acquisition of lower
quality assets.

         HPCI is dependent on the Bank and others for monitoring and servicing
the loans underlying its participation interests. Conflicts could arise as part
of such servicing, particularly with respect to loans that are placed on
nonaccrual status. While HPCI believes that the Bank will diligently pursue
collection of any non-performing assets, HPCI cannot assure shareholders that
this will occur. HPCI's ability to make timely payments of dividends on the
preferred and common securities will depend in part upon the Bank's prompt
collection efforts on its behalf. HPCI pays substantial servicing fees to the
Bank through Holdings. HPCI paid servicing fees of $8.3 million in 2001, and
$7.8 million in each of the years ended December 31, 2000 and 1999.



                                       13


<PAGE>

         The Bank may seek to exercise its influence over HPCI's affairs so as
to cause the sale of its assets and their replacement by lesser quality assets
acquired from the Bank or elsewhere. This could adversely affect HPCI's business
and its ability to make timely payment of dividends on the preferred and common
securities.

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.

         The Bank is eligible to obtain advances from various federal agencies,
such as the Federal Home Loan Bank (FHLB). HPCI may in the future be asked to
act as co-borrower or guarantee the Bank's obligations under such advances
and/or pledge all or a portion of its assets in connection with those advances.
Any such borrowing, guarantee, or pledge would rank senior to preferred
securities upon liquidation. Accordingly, any governmental agencies that make
advances to the Bank where HPCI has acted as co-borrower or guarantor or has
pledged its assets as collateral will have a preference over the holders of
HPCI's preferred securities. These holders would receive their liquidation
preference only to the extent there are assets available after satisfaction of
HPCI's indebtedness, if any. To date, HPCI has never acted as co-borrower or
guarantor of any of the Bank's obligations under such advances or otherwise and
has never pledged any of its assets. The Bank, however, has obtained a line of
credit from the FHLB. At any one time, advances under this line are not to
exceed $800 million in the aggregate. It is expected that up to 25% of HPCI's
assets could serve as collateral for such advances. Any agreement setting forth
these obligations will be approved by HPCI's directors. A default by the Bank on
its obligations to the FHLB could adversely affect HPCI's business and its
ability to make timely dividend payments on preferred and common securities.

NEW, OR CHANGES IN EXISTING, TAX, ACCOUNTING, AND REGULATORY LAWS, REGULATIONS,
RULES, AND STANDARDS COULD SIGNIFICANTLY IMPACT STRATEGIC INITIATIVES, RESULTS
OF OPERATIONS, FINANCIAL CONDITION, AND ABILITY TO PAY DIVIDENDS.

         Governmental regulations may sometimes impose significant limitations
on HPCI's operations. These regulations, along with the currently existing tax
and accounting laws, regulations, rules, and standards, control the methods by
which financial institutions and their subsidiaries conduct business; implement
strategic initiatives, as well as past, present, and contemplated tax planning;
and govern financial disclosures. These laws, regulations, rules, and standards
are constantly evolving and may change significantly over time. Current events
that may not have a direct impact on HPCI, such as the Enron Corporation
bankruptcy and the September 11, 2001 terrorist attacks, may result in
legislators, regulators, and authoritative bodies, such as the Financial
Accounting Standards Board, to respond by adopting substantive revisions to the
laws, regulations, rules, and standards. The nature, extent, and timing of the
adoption of significant new laws, changes in existing laws, or repeal of
existing laws may have a material impact on HPCI's business, results of
operations, financial condition, and ability to pay dividends; however, it is
impossible to predict at this time the extent to which any such adoption,
change, or repeal would impact HPCI.

THE EXTENDED DISRUPTION OF HUNTINGTON'S VITAL INFRASTRUCTURE COULD NEGATIVELY
IMPACT HPCI'S BUSINESS, RESULTS OF OPERATIONS, FINANCIAL CONDITION, AND ABILITY
TO PAY DIVIDENDS.

         HPCI's operations depend upon, among other things, Huntington's
infrastructure, including its equipment and facilities. Extended disruption of
Huntington's vital infrastructure by fire, power loss, natural disaster,
telecommunications failure, computer hacking and viruses, terrorist activity or
the domestic and foreign response to such activity, or other events outside of
Huntington's control could have a material adverse impact on the financial
services industry as a whole and on HPCI's business, results of operations,
financial condition, and ability to pay dividends in particular.

HPCI HAS NO CONTROL OVER CHANGES IN INTEREST RATES AND SUCH CHANGES COULD
NEGATIVELY IMPACT ITS FINANCIAL CONDITION, RESULTS OF OPERATIONS, AND ABILITY TO
PAY DIVIDENDS.

         HPCI's income consists primarily of interest payments on the loans
underlying its participation interests. At December 31, 2001, 28.7% of the loans
underlying its participation interests, as measured by the aggregate outstanding
principal amount, bore interest at fixed rates and the remainder bore interest
at adjustable rates. Adjustable-rate loans decrease the risks to a lender
associated with changes in interest rates but involve other risks. As interest
rates rise, the payment by the borrower rises to the extent permitted by the
terms of the loan, and the increased payment increases the potential for
default. At the same time, the marketability of the underlying property may be
adversely affected by higher interest rates. In a declining interest rate
environment, there may be an increase in prepayments on the loans underlying
HPCI's participation interests as the borrowers refinance their mortgages at
lower interest rates. Under these circumstances, HPCI may find it more difficult
to acquire additional participation



                                       14


<PAGE>

interests with rates sufficient to support the payment of the dividends on the
preferred securities. Because the rate at which dividends are required to be
paid on the Class A and C preferred securities is fixed, there can be no
assurance that a declining interest rate environment would not adversely affect
HPCI's ability to pay full, or even partial, dividends on its preferred
securities.

THE LOANS UNDERLYING PARTICIPATION INTERESTS ARE SUBJECT TO LOCAL ECONOMIC
CONDITIONS THAT COULD NEGATIVELY AFFECT THE VALUE OF THE COLLATERAL SECURING
SUCH LOANS AND/OR THE RESULTS OF HPCI'S OPERATIONS.

         The value of the collateral underlying HPCI's loans and/or the results
of its operations could be affected by various conditions in the economy, all of
which are beyond its control. These include local and other economic conditions
affecting real estate and other collateral values; the continued financial
stability of a borrower and the borrower's ability to make loan principal and
interest payments, which may be adversely affected by job loss, recession,
divorce, illness, or personal bankruptcy. These also include the ability of
tenants to make lease payments; the ability of a property to attract and retain
tenants, which may be affected by conditions such as an oversupply of space or a
reduction in demand for rental space in the area, the attractiveness of
properties to tenants, competition from other available space, and the ability
of the owner to pay leasing commissions, provide adequate maintenance and
insurance, pay tenant improvement costs, and make other tenant concessions.
Furthermore, interest rate levels and the availability of credit to refinance
loans at or prior to maturity and increased operating costs, including energy
costs, real estate taxes, and costs of compliance with environmental controls
and regulations are also various conditions in the economy that effect the value
of the underlying collateral and the result of HPCI's operations.

THE LOANS UNDERLYING HPCI'S PARTICIPATION INTERESTS ARE CONCENTRATED IN FOUR
STATES, AND ADVERSE CONDITIONS IN THOSE STATES, IN PARTICULAR, COULD NEGATIVELY
IMPACT RESULT OF OPERATIONS.

         At December 31, 2001, 95.6% of the properties underlying HPCI's loan
participation interests (as a percentage of loan principal balances) were
located in Ohio, Michigan, Indiana, and Kentucky. Because of the concentration
of its interests in those states, in the event of adverse economic conditions in
those states, HPCI would likely experience higher rates of loss and delinquency
on its loan participation interests than if the underlying loans were more
geographically diversified. Additionally, the loans underlying its loan
participation interests may be subject to a greater risk of default than other
comparable loans in the event of adverse economic, political, or business
developments or natural hazards that may affect Ohio, Michigan, Indiana, or
Kentucky and the ability of property owners in those states to make payments of
principal and interest on the underlying loans. In the event of any adverse
development or natural disaster, HPCI's ability to pay dividends on preferred
and common securities could be adversely affected.

HPCI'S ACQUISITION OF PARTICIPATION INTERESTS IN COMMERCIAL MORTGAGE LOANS
SUBJECTS IT TO RISKS THAT ARE NOT PRESENT IN PARTICIPATION INTERESTS IN
RESIDENTIAL MORTGAGE LOANS.


         At December 31, 2001, 61.8% of HPCI's assets, as measured by aggregate
outstanding principal amount, consisted of participation interests in commercial
mortgage loans. Commercial mortgage loans generally tend to have shorter
maturities than residential mortgage loans and may not be fully amortizing,
meaning that they may have a significant principal balance or "balloon" payment
due on maturity. Commercial real estate properties tend to be unique and are
more difficult to value than single-family residential real estate properties.
They are also subject to relatively greater environmental risks and to the
corresponding burdens and costs of compliance with environmental laws and
regulations. Due to these risks, HPCI may experience higher rates of default on
its participation interests in commercial mortgage loans than if its
participation interests were more diversified and included a greater number of
underlying residential and other loans.


HPCI'S FINANCIAL STATEMENTS CONFORM WITH ACCOUNTING PRINCIPLES GENERALLY
ACCEPTED IN THE UNITED STATES, WHICH REQUIRE MANAGEMENT TO MAKE ESTIMATES AND
ASSUMPTIONS THAT AFFECT AMOUNTS REPORTED IN THE FINANCIAL STATEMENTS. ACTUAL
RESULTS COULD DIFFER FROM THOSE ESTIMATES.

         HPCI's financial statements include estimates related to accruals of
income and expenses. These estimates are based on information available at the
time the estimates are made. Factors involved in these estimates could change in
the future leading to a change of those estimates, which could be material to
HPCI's results of operations or financial condition.



                                       15


<PAGE>

HPCI COULD SUFFER ADVERSE TAX CONSEQUENCES IF IT FAILED TO QUALIFY AS A REIT.

         No assurance can be given that HPCI will be able to continue to operate
in such a manner so as to remain qualified as a REIT. Qualification as a REIT
involves the application of highly technical and complex tax law provisions for
which there are only limited judicial or administrative interpretations and
involves the determination of various factual matters and circumstances not
entirely within its control. No assurance can be given that new legislation or
new regulations, administrative interpretations, or court decisions will not
significantly change the tax laws in the future with respect to qualification as
a REIT or the federal income tax consequences of such qualification in a way
that would materially and adversely affect HPCI's ability to operate. Any such
new legislation, regulation, interpretation, or decision could be the basis of a
tax event that would permit HPCI to redeem all or any preferred securities. If
HPCI were to fail to qualify as a REIT, the dividends on preferred securities,
would not be deductible for federal income tax purposes. HPCI would face a
greater tax liability that could consequently result in a reduction in HPCI's
net earnings after taxes. A reduction in net earnings after taxes could
adversely affect its ability to add interest-earning assets to its portfolio and
pay dividends to its preferred security holders.

         If in any taxable year HPCI fails to qualify as a REIT, unless it is
entitled to relief under certain statutory provisions, it would also be
disqualified from treatment as a REIT for the four taxable years following the
year its qualification was lost. As a result, the amount of funds available for
distribution to shareholders would be reduced for the year or years involved.

         As a REIT, HPCI generally will be required each year to distribute as
dividends to its shareholders at least 90% of REIT taxable income, excluding
capital gains. Failure to comply with this requirement would result in earnings
being subject to tax at regular corporate rates. In addition, HPCI would be
subject to a 4% nondeductible excise tax on the amount by which certain
distributions considered as paid with respect to any calendar year are less than
the sum of 85% of ordinary income for the calendar year, 95% of capital gains
net income for the calendar year, and 100% of undistributed taxable income from
prior periods. Qualification as a REIT also involves application of other
specific provisions of the Internal Revenue Code. Two specific provisions are an
income test and an asset test. At least 75% of HPCI's gross income, excluding
gross income from prohibited transactions, for each taxable year must be derived
directly or indirectly from investments relating to real property or mortgages
on real property. Additionally, at least 75% of HPCI's total assets must be
represented by real estate assets. At December 31, 2001, HPCI had qualifying
income and qualifying assets that exceeded 75%.

         Although HPCI intends to operate in a manner designed to qualify as a
REIT, future economic, market, legal, tax, or other considerations may cause it
to determine that it is in its best interests and the best interests of holders
of common and preferred securities to revoke the REIT election. As long as any
class of preferred securities are outstanding, any such determination may be
made without shareholder approval, but will require the approval of a majority
of independent directors.

ENVIRONMENTAL LIABILITIES ASSOCIATED WITH REAL PROPERTY SECURING LOANS
UNDERLYING HPCI'S PARTICIPATION INTERESTS COULD REDUCE THE FAIR MARKET VALUE OF
ITS PARTICIPATION INTERESTS AND MAKE THE PROPERTY MORE DIFFICULT TO SELL.

         In its capacity as servicer, the Bank at the direction of HPCI may be
forced to foreclose on a defaulted commercial mortgage and/or residential
mortgage loan to recover its investment in the mortgage loan. The Bank may be
subject to environmental liabilities in connection with the underlying real
property, which could exceed the value of the real property. Although the Bank
exercises due diligence to discover potential environmental liabilities prior to
the acquisition of any property through foreclosure, hazardous substances or
wastes, contaminants, pollutants, or their sources may be discovered on
properties during the Bank's ownership or after a sale to a third party. Even
though HPCI may sell to the Bank, at fair value, the participation interest in
any loan at the time the real property securing that loan becomes foreclosed
property, the discovery of these liabilities, any associated costs for removal
of hazardous substances, wastes, contaminants, or pollutants, and the difficulty
in selling the underlying real estate, could have a material adverse effect on
the fair value of that loan and therefore HPCI may not recover any or all of its
investment in the underlying loan.



                                       16


<PAGE>


HPCI MAY REDEEM THE CLASS C AND CLASS D PREFERRED SECURITIES UPON THE OCCURRENCE
OF CERTAIN SPECIAL EVENTS.

         At any time following the occurrence of certain special events, HPCI
will have the right to redeem the Class C and Class D preferred securities in
whole, subject to the prior written approval of the OCC. The occurrence of such
an event will not, however, give a preferred shareholder any right to request
that such Class C or Class D preferred securities be redeemed. A special event
includes:

         -  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

         -  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).


GUIDE 3 INFORMATION

         Information required by Industry Guide 3 relating to statistical
disclosure by real estate investment trusts is set forth in Items 7 and 8.


ITEM 2: PROPERTIES

         HPCI does not own any material physical property or real estate.


ITEM 3: LEGAL PROCEEDINGS

         HPCI is not the subject of any material litigation. HPCI is not
currently involved in nor, to management's knowledge, is currently threatened
with any material litigation with respect to the loans underlying its
participation interests other than routine litigation arising in the ordinary
course of business.


ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         No matters were submitted to a vote of security holders during the
period covered by this report.





                                       17


<PAGE>


                                     PART II
                                     -------

ITEM 5:  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

         In February 2001, Huntington purchased 18,667 common shares of HPCI
from Holdings (restated to reflect the April 2001 18,666.66667-for-1 stock
split) for approximately $8.4 million and one common share of Holdings from the
Bank for approximately $6.7 million. Huntington owns 0.1% and Holdings owns
99.9% of the issued and outstanding common shares of HPCI. There is no
established public trading market for HPCI's common stock. During 2001, 2000,
and 1999, dividends of $539.2 million, $458.3 million, and $413.8 million were
paid to common shareholders, respectively.

         Information regarding restrictions on dividends, as required by this
item, is set forth in Item 1 "Dividend Policy and Restrictions".


ITEM 6. SELECTED FINANCIAL DATA


         The data presented below represents selected financial data relative to
HPCI for, and as of the end of, the years ended December 31, 2001, 2000, 1999,
1998 and 1997 (in thousands of dollars):

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
                                                 2001             2000            1999            1998          1997
---------------------------------------------------------------------------------------------------------------------
<S>                                            <C>              <C>              <C>             <C>            <C>
STATEMENTS OF INCOME:

Interest and fee income                       $  526,445       $  549,718       $  497,527       $  298,420      $--
Provision for loan losses                         48,510            2,293              ---               --       --
Non-interest income                                1,646              ---              ---               --       --
Non-interest expense                              10,015            7,983            8,234            4,551       26
Net income before preferred dividends            469,540          539,442          489,293          293,869       17
Dividends on preferred stock                      21,827               80               80               --       --
Net income applicable to common shares           447,713          539,362          489,213          293,869       17
Average yield on earning assets                    7.46%            8.28%            7.84%            8.48%       --

BALANCE SHEETS:

Loan participation interests, net of
   allowance for loan losses                  $5,203,286       $5,744,822       $5,939,286       $5,850,857      $--
All other assets                                 745,473        1,153,451          280,076          150,041       39
Total assets                                   5,948,759        6,898,273        6,219,362        6,000,898       39
Total shareholders' equity                     5,948,728        6,898,273        6,218,632        5,868,373       30
</TABLE>







                                       18


<PAGE>

ITEM 7. MANAGEMENTS'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS


INTRODUCTION

         Huntington Preferred Capital, Inc. (HPCI or "the company") is an Ohio
corporation that was incorporated in July 1992 under the name Airbase Realty,
Inc. The company changed its name to Huntington Preferred Capital, Inc. in May
2001. The company's principal business objective is to acquire, hold, and manage
mortgage assets and other authorized investments that will generate net income
for distribution to its shareholders. Since May 1998, the company has been
operating as a real estate investment trust (REIT), for federal income tax
purposes.

         The company is a subsidiary of Huntington Preferred Capital Holdings,
Inc. (Holdings), which is owned by The Huntington National Bank (the Bank) and
Huntington Bancshares Incorporated (Huntington). All of HPCI's day-to-day
activities and the servicing of the loans underlying its participation interests
are administered by the Bank. HPCI has one wholly-owned subsidiary, HPCLI, Inc.
(HPCLI).

         A participation agreement between the Bank and Holdings and a
subparticipation agreement between Holdings and HPCI require the Bank to service
HPCI's loan portfolio in a manner substantially the same as for similar work
performed by the Bank for transactions on its own behalf. The Bank collects and
remits principal and interest payments, maintains perfected collateral
positions, and submits and pursues insurance claims. The Bank also provides to
HPCI accounting and reporting services as required. The Bank is required to pay
all expenses related to the performance of its duties under the participation
and subparticipation agreements. These participation interests were all acquired
from Holdings and Holdings acquired them from the Bank.




FORWARD-LOOKING STATEMENTS
         This report, including management's discussion and analysis of
financial condition and results of operations, contains forward-looking
statements about HPCI, including descriptions of products or services, plans, or
objectives of its management for future operations, and forecasts of its
revenues, earnings, or other measures of economic performance. Forward-looking
statements can be identified by the fact that they do not relate strictly to
historical or current facts.

         By their nature, forward-looking statements are subject to numerous
assumptions, risks, and uncertainties. A number of factors, including but not
limited to, those set forth under the heading "Business Risks" included in Item
1 of this report and other factors described from time to time in HPCI's other
filings with the Securities and Exchange Commission, could cause actual
conditions, events, or results to differ significantly from those described in
the forward-looking statements.

         Forward-looking statements speak only as of the date they are made.
HPCI does not update forward-looking statements to reflect circumstances or
events that occur after the date the forward-looking statements are made or to
reflect the occurrence of unanticipated events.

         The following discussion and analysis, the purpose of which is to
provide investors and others with information that the company's management
believes to be necessary for an understanding of its financial condition,
changes in financial condition, and results of operations, should be read in
conjunction with the financial statements, notes, and other information
contained in this document.


RESTATEMENT OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION

         HPCI restated its financial results for 2001, 2000, and 1999. A
discrepancy was discovered and corrected in the systems and methodology used to
allocate interest income, fees, expenses, loan losses, and related provision
expense between the Bank and HPCI. Specifically, the system allocating this
financial information between the Bank and HPCI was modified in October 1999 to
determine such allocations as of the third business day before the end of each
month. This change was made to facilitate a more timely closing of HPCI's books.
The unintended result was that certain interest income, fees, charge-offs, and
related provision expense from that date through the end of the month were
incorrectly not reported in HPCI's financial results, beginning in the fourth
quarter of 1999 through the first quarter of 2002. The correction resulted in a
cumulative increase of $65.2 million in HPCI's reported net income for 1999,
2000, and 2001, and equity at December 31, 2001. The higher loan losses were
covered by a provision for loan losses and $11 million was added to the
allowance for loan losses (ALL) at the end of 2001. Since HPCI and the bank are
fully consolidated subsidiaries of Huntington and the impact of all intercompany
allocations was properly eliminated in preparing the Huntington financial
statements, this restatement had no impact on Huntington's previously reported
consolidated results of operations or financial condition.

         The following analysis shows the previously reported results and
selected balance sheet information with corresponding adjustments for interest
income, fees, loan losses, and related provision expense.




                                       19
<PAGE>


<TABLE>
<CAPTION>
                                                            2001                                          2000
                                          ----------------------------------------       ---------------------------------------
                                          Previously                                     Previously
(in thousands of dollars)                  Reported     Adjustments       Restated        Reported     Adjustments      Restated
----------------------------------        ----------    -----------       --------       ----------    -----------      --------
<S>                                      <C>            <C>             <C>             <C>             <C>           <C>
 Interest income on loan
    participations                        $442,023        $ 45,068        $487,091        $451,913        $59,567       $511,480
 Fees from loan
    participations                           7,857           3,639          11,496           4,092          1,051          5,143
 Interest bearing deposits
    with banks                              27,858                          27,858          33,095                        33,095
                                          --------        --------        --------        --------        -------       --------
 Total interest and fee
    income                                 477,738          48,707         526,445         489,100         60,618        549,718
 Provision for loan losses                     371          48,139          48,510              --          2,293          2,293
 Noninterest income                          1,646                           1,646              --                            --
 Noninterest expense                        10,015                          10,015           7,983                         7,983
                                          --------        --------        --------        --------        -------       --------
 Income before taxes                       468,998             568         469,566         481,117         58,325        539,442
 Income taxes                                   26                              26              --                            --
                                          --------        --------        --------        --------        -------       --------
 Net Income                               $468,972        $    568        $469,540        $481,117        $58,325       $539,442
                                          ========        ========        ========        ========        =======       ========

 Loan participations ($MM):
   Average                                $  6,369                        $  6,369        $  6,086                      $  6,086
   End of Period                             5,379                           5,379           5,837                         5,837

 ALL                                      $164,690        $ 11,000        $175,690        $ 91,826        $    --       $ 91,826
 ALL/Loan participations                     3.06%                           3.27%           1.57%                         1.57%

 Net Charge-offs (NCOs)                   $ 22,194        $ 37,139        $ 59,333        $  2,891        $ 2,293       $  5,184
 NCOs/Loan participations                     0.35%                           0.93%           0.05%                         0.09%

 Nonperforming assets (NPAs)              $197,598                        $197,598        $ 41,934                      $ 41,934
 ALL/NPAs                                   83.35%                          88.91%         218.98%                       218.98%


</TABLE>



<TABLE>
<CAPTION>
                                                                               1999
                                                          ------------------------------------------------
                                                           Previously
(in thousands of dollars)                                   Reported         Adjustments         Restated
------------------------------                             ---------         -----------         --------
<S>                                                        <C>                <C>                <C>
Interest income on loan
   participations                                          $ 470,049          $ 6,324            $ 476,373
Fees from loan
   participations                                              7,043               --                7,043
Interest bearing deposits
   with banks                                                 14,111                                14,111
                                                           ---------          -------            ---------
Total interest and fee
   income                                                    491,203            6,324              497,527
Provision for loan losses                                         --               --                   --
Noninterest income                                                --                                    --
Noninterest expense                                            8,234                                 8,234
                                                           ---------          -------            ---------
Income before taxes                                          482,969            6,324              489,293
Income taxes                                                      --                                    --
                                                           ---------          -------            ---------
Net Income                                                 $ 482,969          $ 6,324            $ 489,293
                                                           =========          =======            =========

Loan Participations ($MM):
  Average                                                  $   6,070                             $   6,070
  End of Period                                                6,043                                 6,043

ALL                                                        $ 104,151                             $ 104,151
ALL/Loan participations                                        1.72%                                 1.72%

Net Charge-offs (NCOs)                                     $   9,636                             $   9,636
NCOs/Loan participations                                       0.16%                                 0.16%

Nonperforming assets (NPAs)                                $  38,469                             $  38,469
ALL/NPAs                                                     270.74%                               270.74%
</TABLE>




                                       20
<PAGE>

         Methodologies for allocating income and expense have been corrected.
HPCI's restated financial information is reflected in management's discussion
and analysis, financial statements, notes, and other information.


SIGNIFICANT ACCOUNTING POLICIES

         Note 3 to HPCI's consolidated financial statements lists significant
accounting policies used in the development and presentation of its financial
statements. This discussion and analysis, the significant accounting policies,
and other financial statement disclosures identify and address key variables and
other qualitative and quantitative factors that are necessary for an
understanding and evaluation of HPCI and its results of operations.


ISSUANCE OF PREFERRED SECURITIES

         In October 2001, HPCI issued to Holdings 2,000,000 shares of Class C
preferred securities and 14,000,000 shares of Class D preferred securities and
received a capital contribution of common equity in exchange for $452.6 million
of gross participation interests in certain loans, $86.5 million of related
specific loan loss reserves, $45.4 million of net leasehold improvements, and
$3.5 million of accrued interest. These participation interests were in
commercial, commercial real estate, and consumer loans. The underlying consumer
loans included a combination of automobile, truck, and equipment loans. HPCI
intends to hold these participation interests as long-term investments.
Approximately 24% of these participation interests were non-performing in
nature. The company transferred the leasehold improvements to HPCLI in exchange
for its common shares. Holdings subsequently sold all of the Class C preferred
securities in an underwritten public offering. HPCI did not receive any of
Holdings' proceeds from the sale.


DISTRIBUTION OF FLORIDA LOAN PARTICIPATION INTERESTS

         On July 12, 2001, Huntington announced a comprehensive strategic and
financial restructuring plan, which included, among other things, divesting its
Florida retail and corporate banking businesses. On September 26, 2001,
Huntington announced that it had entered into an agreement to sell its Florida
operations to SunTrust Banks, Inc. (SunTrust). On December 31, 2001, in
anticipation of the eventual sale of the Florida operations by Huntington, HPCI
completed its $1.3 billion distribution to common shareholders, Holdings and
Huntington. This distribution consisted of cash and the net book value of
participation interests in loans that were included in the sale to SunTrust,
including the related accrued interest and allowance for loan losses,
representing approximately 17% of HPCI's total assets as of December 31, 2001.


OVERVIEW

         HPCI's income is primarily derived from its participation interests in
loans acquired from the Bank through Holdings. Income varies based on the level
of these assets and their relative interest rates. The cash flows from these
assets are used to satisfy HPCI's preferred dividend obligations. The preferred
stock is considered equity and therefore, the dividends are not reflected as
interest expense.


         HPCI reported net income before preferred dividends of $469.5 million
for 2001, compared with $539.4 million and $489.3 million for 2000 and 1999,
respectively. Net income available to common shareholders was $447.7 million,
$539.4 million, and $489.2 million for the same respective periods. Average
assets approximate average shareholders' equity (including preferred stock) and
therefore, return on average assets (ROA) and return on average equity (ROE)
were the same for all annual periods presented. ROA and ROE were 6.67% for 2001,
versus 8.14% for 2000, and 7.78% for 1999.

         At December 31, 2001 and 2000, HPCI had total assets and total equity
(including preferred stock) of $5.9 billion and $6.9 billion, respectively. At
the most recent year end, an aggregate of $5.4 billion, or 90.5%, of total
assets consisted of 99% participation interests in loans. Before the allowance
for loan losses, participation interests in commercial and commercial mortgage
loans were $4.3 billion, or 72.7% of total assets, $0.8 billion, or 13.2%, in
consumer loans, and $270.7 million, or 4.6%, in residential mortgage loans.


<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
(in thousands of dollars)                                 2001                 2000                    1999                 1998
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                   <C>                  <C>                     <C>                  <C>
Gross loan participation interests:
   Commercial                                         $   646,509          $  614,956              $   813,809          $ 1,110,669
   Consumer                                               783,735             971,594                  791,396              698,328
   Residential mortgage                                   270,671             355,571                  749,563              903,076
   Commercial mortgage                                  3,678,061           3,894,527                3,688,669            3,226,583
------------------------------------------------------------------------------------------------------------------------------------
      Total                                           $ 5,378,976          $5,836,648              $ 6,043,437          $ 5,938,656
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>



                                       21
<PAGE>

         Interest-bearing and non-interest bearing cash balances on deposit with
the Bank were $364.9 million and $880.3 million at December 31, 2001 and 2000,
respectively. Interest bearing balances are invested overnight or in Eurodollar
deposits with the Bank for a term of not more than 30 days. Amounts due from
Holdings at December 31, 2001 and 2000, were $293.8 million and $224.6 million,
respectively. These represent amounts due from or due to Holdings and/or the
Bank that arise in the ordinary course of business for unsettled transactions
involving participation interests, fees, and other related costs.

         Shareholders' equity (including preferred stock) declined from $6.9
billion at December 31, 2000, to $5.9 billion at December 31, 2001, reflecting
the $1.3 billion distribution of the Florida-related participations and the
aggregate dividend payments on the common and preferred securities during the
recent year offset by the $400 million received from the issuance of the Class C
and D preferred securities in 2001.


RESULTS OF OPERATIONS


INTEREST AND FEE INCOME
-------------------
         HPCI's primary source of revenue is interest and fee income on its
participation interests in loans. At December 31, 2001, HPCI does not have any
interest-bearing liabilities and no related interest expense. HPCI's capital
structure has provided funding for acquisition of participation interests and
the continued cash flows from its participation interests in loans provide
sufficient funding such that outside borrowings are not required. Interest
income is impacted by changes in the level of interest rates and earning assets.
The yield on earning assets is the percentage of interest and fee income to
average earning assets.


         HPCI's average balances, interest and fee income, and yields are
presented below for the twelve-month periods ended December 31:


<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                                                     2001                                      2000
                                 ---------------------------------------   -------------------------------------------
                                   AVERAGE                                    AVERAGE
(in millions of dollars)           BALANCE        INCOME       YIELD          BALANCE         INCOME       YIELD
----------------------------------------------------------------------------------------------------------------------

<S>                                  <C>            <C>          <C>            <C>            <C>           <C>
Loan participation interests:
   Commercial                        $  560.1       $ 40.5       7.24 %         $   721.9      $  62.5       8.66 %
   Consumer                           1,068.0        100.8       9.43               865.8         78.3       9.04
   Residential mortgage                 558.2         41.2       7.38               689.2         46.4       6.73
   Commercial mortgage                4,182.5        304.5       7.28             3,809.1        324.3       8.51
----------------------------------------------------------------------------------------------------------------------
      Total loan participations       6,368.8        487.0       7.65             6,086.0        511.5       8.40
----------------------------------------------------------------------------------------------------------------------
Interest bearing deposits
   in banks                             692.8         27.9       4.02               556.9         33.1       5.94
Fees from loan participation
   interests                                          11.5                                         5.1
----------------------------------------------------------------------------------------------------------------------
Total                                $7,061.6       $526.4       7.46 %         $ 6,642.9      $ 549.7       8.28 %
----------------------------------------------------------------------------------------------------------------------
</TABLE>



<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                                                                                             1999
                                                                        ----------------------------------------------
                                                                              AVERAGE
(in millions of dollars)                                                      BALANCE         INCOME       YIELD
----------------------------------------------------------------------------------------------------------------------

<S>                                                                             <C>            <C>           <C>
Loan participation interests:
   Commercial                                                                   $   963.6      $  76.8       7.97 %
   Consumer                                                                         724.7         65.8       9.08
   Residential mortgage                                                             811.2         59.6       7.35
   Commercial mortgage                                                            3,570.6        274.1       7.68
----------------------------------------------------------------------------------------------------------------------
      Total loan participations                                                   6,070.1        476.3       7.85
----------------------------------------------------------------------------------------------------------------------
Interest bearing deposits in banks                                                  276.7         14.1       5.10
Fees from loan participation interests                                                             7.1
----------------------------------------------------------------------------------------------------------------------

Total                                                                           $ 6,346.8      $ 497.5       7.84 %
----------------------------------------------------------------------------------------------------------------------
</TABLE>


                                       22
<PAGE>

         Interest and fee income was $526.4 million for the twelve months ended
December 31, 2001. Interest and fee income declined $23.3 million from the
immediately preceding year as the yield on earning assets contracted from 8.28%
for the year ended December 31, 2000 to 7.46% for the recent year. In the
table above, individual components include participations in non-accrual loans
and related interest received. For the twelve months ended December 31, 2001,
the amount of interest and fee income that would have been recorded under
original terms for participations in loans classified as non-accrual was $5.8
million. Amounts actually received and recorded as interest income for these
participations totaled $2.8 million.

         The declines experienced during 2001 were due to decreases in interest
earned on participation interests, which was indicative of the changes in the
interest rate environment in the periods. The rate earned on participation
interests declined 75 basis points for 2001 while slightly higher fees helped to
offset some of this decline.




         The table below shows changes in interest and fee income for the twelve
months due to volume and rate variances for each category of earning assets. The
change in interest and fees not solely due to changes in volume or rates has
been allocated in proportion to the absolute dollar amounts of the change in
volume and rate.

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
                                                              2001                                            2000
-----------------------------------------------------------------------------------------------------------------------------
                                                      Increase (Decrease) From                   Increase (Decrease) From
                                                        Previous Year Due To:                      Previous Year Due To:
-----------------------------------------------------------------------------------------------------------------------------
                                                             Yield/                                       Yield/
(in millions of dollars)                    Volume            Rate              Total          Volume      Rate        Total
-----------------------------------------------------------------------------------------------------------------------------

<S>                                          <C>             <C>              <C>              <C>        <C>         <C>
Interest bearing deposits in
  The Huntington National Bank               $  7.0          $ (12.3)         $  (5.3)         $16.3      $  2.7      $ 19.0
Loan participation interests:
   Commercial                                 (12.9)            (8.7)           (21.6)         (20.7)        5.9       (14.8)
   Consumer                                    19.3              4.4             23.7           12.9        (0.5)       12.4
   Residential mortgage                        (9.6)             4.8             (4.8)          (8.6)       (4.9)      (13.5)
   Commercial mortgage                         30.3            (45.6)           (15.3)          19.3        29.8        49.1
-----------------------------------------------------------------------------------------------------------------------------
     TOTAL EARNING ASSETS                      34.1            (57.4)           (23.3)          19.2        33.0        52.2
-----------------------------------------------------------------------------------------------------------------------------

     TOTAL INTEREST-BEARING LIABILITIES         ---              ---              ---            ---         ---         ---
-----------------------------------------------------------------------------------------------------------------------------
     INTEREST AND FEE INCOME                 $ 34.1          $ (57.4)         $ (23.3)         $19.2      $ 33.0      $ 52.2
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>






PROVISION FOR LOAN LOSSES AND ALLOWANCE FOR LOAN LOSSES
-------------------------------------------------------
         The provision for loan losses is the charge to earnings necessary to
maintain the allowance for loan losses (ALL) at a level adequate to absorb
management's estimate of inherent losses in the loan portfolio. The provision
for loan losses was $48.5 million for the year ended December 31, 2001, and $2.3
million for the prior year.

         An ALL is transferred from the Bank to Holdings and from Holdings to
HPCI on loans underlying the participations at the time the participations are
acquired. Prior to the fourth quarter of 2001, HPCI transferred a portion of
the ALL related to loan paydowns and other similar transactions underlying the
participation interests back to the Bank. Subsequently, with concerns over the
general economy and the deteriorating credit quality in the loan participation
portfolio, HPCI ceased transferring the allowance for such transactions.

         The ALL was $175.7 million at December 31, 2001, up from $91.8 million
the end of 2000. This represents 3.27% of total 2001 loan participations
compared with 1.57% of total loan participations at the end of last year. The
ALL increased as a result of the acquisition of participation interests in
performing and non-performing loans in the fourth quarter of 2001, as mentioned
above, offset by the distribution of the participation interests in
Florida-related loans at the end of 2001. Non-performing loans were covered by
the ALL 0.9 times at the end of 2001, versus 2.2 times at the end of last year.
Additional information regarding the ALL and asset quality appears in the
"Credit Quality" section. The following table shows the activity in HPCI's ALL.



<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
(in thousands of dollars)                                          2001                 2000               1999              1998
----------------------------------------------------------------------------------------------------------------------------------

<S>                                                               <C>                 <C>               <C>              <C>
BALANCE, BEGINNING OF YEAR                                        $  91,826           $104,151          $  87,799        $    ---
Allowance of loan participations acquired, net                      113,291             (9,434)            25,988          88,789
Distribution of participations in Florida-related
   loans                                                            (18,604)               ---                ---             ---
Net loan losses
   Commercial                                                       (32,959)            (1,274)            (1,203)            (58)
   Consumer                                                         (18,800)            (2,589)            (5,673)           (531)
   Residential mortgage                                                 ---                ---                ---             ---
   Commercial mortgage                                               (7,574)            (1,321)            (2,760)           (401)
Provision for loan losses                                            48,510              2,293                ---             ---
----------------------------------------------------------------------------------------------------------------------------------
BALANCE, END OF YEAR                                              $ 175,690           $ 91,826          $ 104,151        $ 87,799
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>


                                       23
<PAGE>



         Total net charge-offs in 2001 were 0.93% of average loan
participations, up from 0.09% in 2000. Net charge-offs related to participations
in commercial loans were 5.9% in the recent year versus 0.18% in 2000, while net
charge-offs related to consumer loans were 1.76% in 2001 compared with 0.30% in
the preceding year. Net charge-offs were 0.18% and 0.03% for participations in
commercial mortgage loans in 2001 and 2000, respectively. HPCI's management
expects unfavorable trends in credit quality and net charge-offs may continue at
or above current levels in all portfolios, particularly in the first half of
2002, until general economic conditions begin to improve. Trends in credit
quality typically lag in their timing to changes in general economic conditions.

         HPCI, through reliance on methods utilized by Huntington, allocates the
ALL to each loan or loan participation category based on an expected loss ratio
determined by continuous assessment of credit quality based on portfolio risk
characteristics and other relevant factors such as historical performance,
internal controls, and




<PAGE>

impacts from mergers and acquisitions. For the commercial and commercial
mortgage loan participations, expected loss factors are assigned by credit grade
at the individual underlying loan level. The aggregation of these factors
represents management's estimate of the inherent loss. The portion of the
allowance allocated to the more homogeneous underlying consumer loan segments is
determined by developing expected loss ratios based on the risk characteristics
of the various segments and giving consideration to existing economic conditions
and trends.

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
                                                 2001                               2000                             1999
-----------------------------------------------------------------------------------------------------------------------------------
                                                          % OF                              % OF                            % OF
                                                          LOAN                              LOAN                            LOAN
                                                        PART. TO                          PART. TO                         PART. TO
(in thousands of dollars)                 ALL             TOTAL              ALL            TOTAL             ALL           TOTAL
-----------------------------------------------------------------------------------------------------------------------------------

<S>                                    <C>                 <C>             <C>              <C>            <C>               <C>
Commercial                             $ 103,119           12.0 %          $ 38,327         10.5 %         $ 38,270          13.5 %
Consumer                                  17,030           14.6              25,793         16.6             31,693          13.1
Residential mortgage                       1,766            5.0               1,305          6.1              1,936          12.4
Commercial mortgage                       33,886           68.4              12,381         66.8             12,923          61.0
-----------------------------------------------------------------------------------------------------------------------------------
Total Allocated                          155,801          100.0              77,806        100.0             84,822         100.0
Total Unallocated                         19,889            ---              14,020          ---             19,329           ---
-----------------------------------------------------------------------------------------------------------------------------------
Total Allowance for Loan Losses        $ 175,690          100.0 %          $ 91,826        100.0 %         $104,151         100.0 %
-----------------------------------------------------------------------------------------------------------------------------------
% of loan participations                    3.27 %                             1.57 %                          1.72 %
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>



         Projected loss ratios incorporate factors such as trends in past due
and non-accrual amounts, recent underlying loan loss experience, current
economic conditions, risk characteristics, and concentrations of various
underlying loan categories. Actual loss ratios experienced in the future,
however, could vary from those projected as an underlying loan's performance is
a function of not only economic factors but also other factors unique to each
customer. The diversity in size of the underlying commercial and commercial
mortgage loans can be significant as well. The dollar exposure could
significantly vary from estimated amounts due to diversity. Additionally, the
impact from recent economic events, including the recession and events of
September 11, 2001, on individual customers may not yet be known. To ensure
adequacy to a higher degree of confidence, a portion of the ALL is considered
unallocated. While amounts are allocated to various portfolio segments, the
total ALL, excluding impairment reserves prescribed under provisions of
Statement of Financial Accounting Standard No. 114, is available to absorb
losses from any segment of the portfolio.

NON-INTEREST INCOME AND NON-INTEREST EXPENSE
--------------------------------------------
         Non-interest income was $1.6 million for 2001. This represents rental
income received from the Bank related to land and land improvements, and
buildings acquired in 2000, and leasehold improvements acquired by HPCI in 2001.

         Non-interest expense was $10.0 million for 2001. Non-interest expense
for 2000 was $8.0 million and $8.2 million for 1999. Non-interest expense
includes fees paid to the Bank for servicing the loans underlying the
participation interests. On an annual basis, the service fee with respect to the
commercial mortgage, commercial, and consumer loans is equal to the outstanding
principal balance of each loan multiplied by a fee of 0.125% and the service fee
for residential mortgage loans is equal to 0.282% of the interest income
collected. The increase in 2001 was due largely to depreciation on premises and
equipment of $1.5 million.

                                       24


<PAGE>
PROVISION FOR INCOME TAXES
--------------------------
         HPCI has elected to be treated as a REIT for Federal income tax
purposes and intends to maintain compliance with the provisions of the Code and
therefore is not subject to income taxes. HPCI's subsidiary, HPCLI, elected to
be treated as a taxable REIT subsidiary and therefore, a provision for income
taxes on its taxable income is included in the accompanying consolidated
financial statements.


INTEREST RATE RISK MANAGEMENT






         The table below represents the maturity of HPCI's interest-earning
assets at December 31, 2001. Assets that immediately reprice are placed in the
overnight column.



<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
                                              WITHIN ONE     ONE TO THREE    THREE TO FIVE     OVER FIVE
(in thousands)              OVERNIGHT            YEAR            YEARS           YEARS           YEARS               TOTAL
---------------------------------------------------------------------------------------------------------------------------------

<S>                           <C>                <C>             <C>             <C>             <C>                 <C>
Interest bearing
  deposits                    $   364,912        $     ---       $     ---       $     ---       $      ---          $   364,912
Loan participations:
  Fixed rate                          ---          206,806         402,556         283,590          651,856            1,544,808
  Variable rate                 1,701,518          269,300         299,822         261,847        1,301,681            3,834,168
---------------------------------------------------------------------------------------------------------------------------------
     Total                    $ 2,066,430        $ 476,106       $ 702,378       $ 545,437       $1,953,537          $ 5,743,888
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>













         HPCI's income consists primarily of interest and fee income on
participation interests in commercial, consumer, residential mortgage, and
commercial mortgage loans. If there is a decline in market interest rates, the
company may experience a reduction in interest income on its participation
interests and a corresponding decrease in funds available to be distributed to
shareholders. The reduction in interest income may result from downward
adjustments of the indices upon which the interest rates on variable rate loans
are based and from prepayments of loans with fixed interest rates.

         HPCI's interest rate risk is not managed separately as interest rate
risk management at Huntington is conducted on a centralized basis. A key
element used in interest rate risk management is an income simulation model,
which includes, among other things, assumptions for loan prepayments on the
existing portfolio and new loan volumes. Using that model for HPCI as of
December 31, 2001, and assuming no new loan volumes, interest income for the
next 12 month period would be expected to increase by 5.3% if rates rose 200
basis points gradually and with a parallel shift of the yield curve above the
forward rates implied in the December 31, 2001 yield curve. Interest income
would be expected to decline 5.2% in the event of a gradual 200 basis point
decline in rates from the forward rates implied in the December yield curve.



CREDIT QUALITY

         HPCI's exposure to credit risk is managed by personnel of the Bank
through its use of consistent underwriting standards that emphasize "in-market"
lending while avoiding highly leveraged transactions as well as excessive
industry and business activity concentrations. The Bank's credit administration
function employs extensive risk management techniques, including forecasting, to
ensure that loans adhere to corporate policy and problem loans are promptly
identified. These procedures provide executive management of the Bank and HPCI
with the information necessary to implement policy adjustments where necessary,
and take corrective actions on a proactive basis. These procedures also include
evaluating the adequacy of the ALL, which includes an analysis of specific
credits and the application of relevant reserve factors that represent relative
risk, based on portfolio trends, current and historic loss experience, and
prevailing economic conditions, to specific portfolio segments.

         Concentration of credit risk generally arises with respect to
participation interests when a number of underlying loans have borrowers engaged
in similar business activities or activities in the same geographical region.
Concentration of credit risk indicates the relative sensitivity of performance
to both positive and negative developments affecting a particular industry.
HPCI's balance sheet exposure to geographic concentrations directly affects the
credit risk of the underlying loans within the participation interests. The
majority of the loans underlying the participation interests are located in
Ohio, Michigan, Indiana, and Kentucky. Borrowers obligated in loans underlying
HPCI's participation interests, however, do not represent a particular
concentration of similar business activity. At December 31, 2001, 95.6% of the
underlying loans in all participation interests consisted of loans located in
these four states. Consequently, the portfolio may experience a higher default
rate in the event of adverse economic, political, or business developments or
natural hazards in these states and may affect the ability of borrowers to make
payments of principal and interest on the underlying loans.

         Certain industries have been identified as being particularly
vulnerable to the weakening economic environment such as hotels, restaurants,
amusements/recreation, insurance, and airlines. At December 31, 2001, these
industries comprised only 7% of the total underlying commercial and commercial
real estate loans.

         Non-performing assets (NPAs), consist of participation interests in
underlying loans that are no longer accruing interest. Underlying commercial,
commercial mortgage, and residential mortgage loans are placed on non-accrual
status and stop accruing interest when collection of principal or interest is in
doubt or generally when the underlying loan is 90 days past due. When interest
accruals are suspended, accrued interest income is reversed with current year
accruals charged to earnings and prior year amounts generally charged off as a
credit loss. Consumer loans are not placed on non-accrual status; rather they
are charged off in accordance with regulatory statutes governing the Bank, which
is generally no more than 120 days.


                                       25
<PAGE>

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
NON-PERFORMING ASSETS                                                                 AT DECEMBER 31,
                                                       ----------------------------------------------------------------------------
(in thousands of dollars)                                  2001                 2000                   1999                 1998
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                                      <C>                  <C>                    <C>                  <C>
Participation interests in non-accrual loans
   Commercial                                            $156,874             $ 16,025               $ 14,684             $4,880
   Real Estate
      Commercial                                           32,492               19,638                 23,465             10,918
      Residential                                           8,232                6,271                    320              1,247
-----------------------------------------------------------------------------------------------------------------------------------
TOTAL NON-PERFORMING ASSETS                              $197,598             $ 41,934               $ 38,469           $ 17,045
-----------------------------------------------------------------------------------------------------------------------------------

NON-PERFORMING ASSETS AS A % OF TOTAL
   PARTICIPATION INTERESTS                                  3.67%                0.72%                  0.64%              0.29%

ALLOWANCE FOR LOAN LOSSES AS A % OF  NON-
   PERFORMING ASSETS                                       88.91%              218.98%                270.74%            515.10%
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>





         Total NPAs were $197.6 million at December 31, 2001 and $41.9 million
at December 31, 2000. As of the same dates, the underlying non-performing loans
represented 3.67% and 0.72% of total participation interests. The increase in
the recent year was due to the aforementioned acquisition of participation
interests in performing and non-performing loans in the fourth quarter 2001 in
exchange for the capital contribution and issuance of preferred equity. The
amount of participation interests in non-performing Florida-related loans
distributed in 2001 approximated $4.6 million. Given the weakened economic
conditions, HPCI expects that NPAs may increase in 2002, particularly in the
first half of the year. Typically, trends in credit quality lag in their timing
to changes in general economic conditions.


         Underlying loans past due ninety days or more but continuing to accrue
interest were $24.3 million at December 31, 2001, down from $32.3 million at the
end of the immediately preceding quarter.


         Under the participation and subparticipation agreements, HPCI may
direct the Bank to dispose of any underlying loan that becomes classified, is
placed in a non-performing status, or is renegotiated due to the financial
deterioration of the borrower. The Bank may institute foreclosure proceedings,
exercise any power of sale contained in any mortgage or deed of trust, obtain a
deed in lieu of foreclosure, or otherwise acquire title to a property underlying
a mortgage loan by operation of law or otherwise in accordance with the terms of
the participation and subparticipation agreement. Any underlying loan is sold to
the Bank at fair market value where the security is either repossessed or goes
into foreclosure proceedings. The Bank then incurs all costs associated with
repossession and foreclosure.


LIQUIDITY AND CAPITAL RESOURCES

         The objective of HPCI's liquidity management is to ensure the
availability of sufficient cash flows to meet all of its financial commitments
and to capitalize on opportunities for business expansion. In managing
liquidity, management takes into account various legal limitations placed on a
REIT.

         HPCI's principal liquidity needs are to pay operating expenses and
dividends and acquire additional participation interests as the underlying loans
in its portfolio paydown or mature. Operating expenses and dividends are
expected to be funded through cash generated by operations, while the
acquisition of additional participation interests in loans is intended to be
funded with the proceeds obtained from repayment of principal balances by
individual borrowers. HPCI intends to pay dividends on its preferred stock and
common stock in amounts necessary to continue to preserve its status as a REIT
under the Internal Revenue Code.


         As mentioned previously, HPCI issued to Holdings Class C and D
preferred securities and received a capital contribution of common equity in
exchange for the fair market value of participation interests in certain loans
and leasehold improvements in 2001, which approximated $400 million. The company
transferred the leasehold improvements to HPCLI in exchange for its common
shares. Holdings subsequently sold all of the Class C preferred securities in an
underwritten public offering. HPCI did not receive any of Holdings' proceeds
from the sale.


         On December 31, 2001, HPCI distributed its participation interests in
Florida-related loans to its common shareholders, Holdings and Huntington, in
anticipation of the eventual sale of the Florida operations by Huntington. This
distribution, which approximated $1.3 billion, consisted of cash and the net
book value of participation interests in loans.


                                       26
<PAGE>
         To the extent that the board of directors determines that additional
funding is required, management may raise such funds through additional equity
offerings, debt financings, or retention of cash flow, or a combination of these
methods. However, any cash flow retention must be consistent with the provisions
of the Internal Revenue Code requiring the distribution by a REIT of at least
90% of its REIT taxable income, excluding capital gains, and must take into
account taxes that would be imposed on undistributed income. Management does not
anticipate that additional funding will be required for at least the next twelve
months.


RESULTS FOR THE FOURTH QUARTER


         Fourth quarter 2001 net income was $89.1 million. After the declaration
and payment of preferred stock dividends of $6.7 million, net income applicable
to common shares was $82.4 million. This compares with $139.4 million for the
last quarter of 2000 after applicable preferred dividends. The lower interest
rate environment directly impacted the performance of the company's portfolio of
participation interests in loans in the recent year. Total provision for loan
losses was $31.4 million for the fourth quarter of 2001 and $0.3 million for
the same period one year ago.

         Total assets declined to $5.9 billion at December 31, 2001, compared
with $7.3 billion at September 30, 2001. HPCI completed its distribution of
participation interests in Florida-related loans to its common shareholders,
Holdings and Huntington, on December 31, 2001. This distribution approximated
$1.3 billion and consisted of cash and the net book value of participation
interests in loans, which were included in Huntington's sale of its Florida
operations to SunTrust, which subsequently closed February 15, 2002. This
decline was partially mitigated by an early fourth quarter acquisition from the
Bank through Holdings of participation interests in performing and
non-performing loans and leasehold improvements in exchange for preferred
equity, as previously mentioned. The company transferred the leasehold
improvements to HPCLI in exchange for its common shares. As a result of these
transactions, the allowance for loan losses increased to 3.27% of total loan
participation interests at year-end versus 1.44% at the end of the prior
quarter. Net charge-offs in the fourth quarter were $38.9 million, compared with
$1.1 million in the same period last year. The increase was due to the general
decline in economic conditions along with the higher concentration of interests
in non-performing loans. HPCI's management expects unfavorable trends in credit
quality to continue at or above current levels, particularly in the first half
of 2002.







                                       27
<PAGE>




<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
QUARTERLY STATEMENTS OF INCOME
-----------------------------------------------------------------------------------------------------------------------------------


                                                                2001                                        2000
                                              -------------------------------------------  ----------------------------------------
(in thousands of dollars)                     FOURTH       THIRD     SECOND      FIRST     FOURTH     THIRD      SECOND     FIRST
-----------------------------------------------------------------------------------------------------------------------------------

<S>                                           <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>
Interest and fee income
   Interest on loan participation interests
      Commercial                              $  9,489   $  8,881   $ 10,211   $ 11,962   $ 14,410   $ 15,715   $ 16,012   $ 16,351
      Consumer                                  28,349     25,102     24,189     23,127     21,947     20,180     18,496     17,704
      Residential mortgage                       9,259     10,438     12,232      9,272      5,248     10,568     15,008     15,597
      Commercial mortgage                       68,082     75,875     78,247     82,376     85,379     82,828     79,311     76,726
-----------------------------------------------------------------------------------------------------------------------------------
                                               115,179    120,296    124,879    126,737    126,984    129,291    128,827    126,378
-----------------------------------------------------------------------------------------------------------------------------------
   Fees from loan participation interests        3,034      3,703      3,030      1,729      1,727      1,304      1,553        559
   Interest bearing deposits in banks            4,432      6,115      5,041     12,270     12,901      9,886      6,578      3,730
-----------------------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST AND FEE INCOME                  122,645    130,114    132,950    140,736    141,612    140,481    136,958    130,667
-----------------------------------------------------------------------------------------------------------------------------------

Provision for loan losses                       31,404      6,428      6,751      3,927        309        ---        568      1,416
-----------------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME
  AFTER PROVISION FOR LOAN LOSSES               91,241    123,686    126,199    136,809    141,303    140,481    136,390    129,251
-----------------------------------------------------------------------------------------------------------------------------------

Non-interest income
   Rental income                                 1,603         15         14         14        ---        ---        ---        ---

Non-interest expense
   Management fees                               2,155      2,056      2,110      1,973      1,827      1,961      1,996      2,036
   Depreciation                                  1,517          4          4          4        ---        ---        ---        ---
   Other                                            54         42         42         54         40         41         41         41
-----------------------------------------------------------------------------------------------------------------------------------
                                                 3,726      2,102      2,156      2,031      1,867      2,002      2,037      2,077
-----------------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES                      89,118    121,599    124,057    134,792    139,436    138,479    134,353    127,174
Income taxes                                        26        ---        ---        ---        ---        ---        ---        ---
-----------------------------------------------------------------------------------------------------------------------------------

NET INCOME BEFORE PREFERRED DIVIDENDS           89,092    121,599    124,057    134,792    139,436    138,479    134,353    127,174

DIVIDENDS ON PREFERRED STOCK                     6,737     15,090        ---        ---         80        ---        ---        ---
-----------------------------------------------------------------------------------------------------------------------------------
NET INCOME APPLICABLE TO
  COMMON SHARES                               $ 82,355   $106,509   $124,057   $134,792   $139,356   $138,479   $134,353   $127,174
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>



ITEM 7A: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         Information required by this item is set forth in Item 7 on page 25
under the caption "Interest Rate Risk Management."

ITEM 8:  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The following consolidated financial statements of HPCI at December 31,
2001 and 2000 and for the years ended December 31, 2001, 2000, and 1999 are
included in this report at the pages indicated.

                                                                            Page
                                                                            ----

          Independent Auditors' Report                                      F-1
          Consolidated Balance Sheets--Restated                             F-2
          Consolidated Statements of Income--Restated                       F-3
          Consolidated Statements of Changes in Shareholders'
            Equity--Restated                                                F-4
          Consolidated Statements of Cash Flows--Restated                   F-5
          Notes to Consolidated Financial Statements--Restated              F-6



                                       29
<PAGE>
         As a result of the acquisition of leasehold improvements, HPCLI
received from the Bank rent of $1.6 million, which is reflected in non-interest
income. Non-interest expense included depreciation expense for all premises and
equipment, which amounted to $1.5 million for the last quarter of 2001.
Management fees for the fourth quarter 2001 paid by HPCI were $2.2 million,
compared with $1.8 million for the same period a year ago. HPCLI is a taxable
REIT subsidiary and therefore, a provision of $26,000 for income taxes applied
to its taxable income is reflected in the fourth quarter 2001 results.

         HPCI declared and paid cash dividends of $80.00 per share on its Class
A preferred stock, paid $44.225 per share on its Class B preferred stock, paid
$0.4265625 per share on its Class C preferred stock, and paid $0.22885 per share
on its Class D preferred stock. The latter two classes of preferred stock were
issued in the fourth quarter 2001. HPCI paid these dividends, as required, on
December 31, 2001 to shareholders of record on December 21, 2001. HPCI also paid
common stock dividends of $539.2 million in 2001.






                                       28

<PAGE>


ITEM 9:  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

         There have been no changes in or disagreements with accountants on any
matter of accounting principles, practices or financial statement disclosure.

                                    PART III

ITEM 10:  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         Information required by this item is set forth under the caption
"Election of Directors" on pages 1 through 3 and under the caption "Section
16(a) Beneficial Ownership Reporting Compliance" on page 7 of HPCI's 2002
Information Statement, and is incorporated herein by reference.

ITEM 11:  EXECUTIVE COMPENSATION

         Information required by this item is set forth under the caption
"Compensation of Directors and Executive Officers" on page 4 of HPCI's 2002
Information Statement and is incorporated herein by reference.

ITEM 12:   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         Information required by this item is set forth under the caption
"Ownership of Voting Stock" on page 5 of HPCI's 2002 Information Statement and
is incorporated herein by reference.

ITEM 13:  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Information required by this item is set forth under the caption
"Transactions with Directors and Officers" on page 4 and "Transactions with
Certain Beneficial Owners" on pages 6 and 7 of HPCI's 2002 Information Statement
and is incorporated herein by reference.

                                     PART IV

ITEM 14:   EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)   The following documents are filed as part of this report:

      (1) The report of independent auditors 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
          page 32 of this Form 10- K.


(b)   Reports on Form 8-K.

          During the quarter ended December 31, 2001, HPCI filed one Current
          Report on Form 8-K. This report, dated December 31, 2001, was filed
          under Item 2, concerning HPCI's distribution of its participation
          interests in Florida-related loans to its common shareholders.


(c)   The exhibits to this Form 10-K are on page 32.


(d)   See Item 14 (a) (2) above.




                                       30
<PAGE>

                                   SIGNATURES
                                   ----------


      Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this amendment to the
report to be signed on its behalf by the undersigned, thereunto duly authorized,
on the 19th day of August, 2002.


                       HUNTINGTON PREFERRED CAPITAL, INC.
                                  (Registrant)




By:  /s/ Michael J. McMennamin           By:  /s/ John D. Van Fleet
    ------------------------------           ----------------------------------
      Michael J. McMennamin                      John D. Van Fleet
      President                                  Vice President
      (Principal Executive Officer)              (Principal Financial Officer)



      Pursuant to the requirements of the Securities Exchange Act of 1934, this
amendment to the Registrant's report has been signed below by the following
persons on behalf of the Registrant and in the capacities indicated on the 19th
day of August, 2002.




Richard A. Cheap *                                   Director
--------------------------------------------
Richard A. Cheap


Stephen E. Dutton  *                                 Director
--------------------------------------------
Stephen E. Dutton


R. Larry Hoover   *                                  Director
--------------------------------------------
R. Larry Hoover


Edward J. Kane *                                     Director
--------------------------------------------
Edward J. Kane


Roger E. Kephart *                                   Director
--------------------------------------------
Roger E. Kephart


James D. Robbins  *                                  Director
--------------------------------------------
James D. Robbins


Paul V. Sebert *                                     Director
--------------------------------------------
Paul V. Sebert


* /s/ Michael J. McMennamin
---------------------------------------------
      Michael J. McMennamin
      Attorney-in fact for each of the persons indicated




                                       31


<PAGE>



                                  EXHIBIT INDEX
                                  -------------


3(i)     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(ii)    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        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(a)    Loan Participation Agreement, dated May 1, 1998 between The Huntington
         National Bank and Huntington Preferred Capital Holdings, Inc. (f/k/a
         Airbase Realty Holding Company) (previously filed as Exhibit 10(a) to
         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.)

  (b)    Amendment to Loan Participation Agreement, dated March 1, 2001, between
         The Huntington National Bank and Huntington Preferred Capital Holdings,
         Inc. (f/k/a Airbase Realty Holding Company) (previously filed as
         Exhibit 10(b) to 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.)

  (c)    Loan Subparticipation Agreement, dated May 1, 1998, between Huntington
         Preferred Capital Holdings, Inc. (f/k/a Airbase Realty Holding Company)
         and Huntington Preferred Capital, Inc. (f/k/a Airbase Realty Company)
         (previously filed as Exhibit 10(c) to 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.)

  (d)    Amendment to Loan Subparticipation Agreement, dated March 1, 2001,
         between Huntington Preferred Capital Holdings, Inc. (f/k/a Airbase
         Realty Holding Company) and Huntington Preferred Capital, Inc. (f/k/a
         Airbase Realty Company) (previously filed as Exhibit 10(d) to
         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.)

  (e)    Amendment to Loan Subparticipation Agreement, dated May 16, 2001,
         between Huntington Preferred Capital Holdings, Inc. and Huntington
         Preferred Capital, Inc. -- previously filed as Exhibit 10(e) to Annual
         Report on Form 10-K for the year ended December 31, 2001, and
         incorporated herein by reference.

  (f)    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.

  (g)    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.

  (h)    Amendment to Loan Participation Agreement, dated March 27, 2002,
         between The Huntington National Bank and Huntington Preferred Capital
         Holdings, Inc. -- previously filed as Exhibit 10(h) to Annual Report on
         Form 10-K for the year ended December 31, 2001, and incorporated herein
         by reference.


                                       32
<PAGE>
                                  EXHIBIT INDEX
                                  -------------

  (i)    Amendment to Loan Subparticipation Agreement, dated March 27, 2002,
         between Huntington Preferred Capital Holdings, Inc. and Huntington
         Preferred Capital, Inc. -- previously filed as Exhibit 10(i) to Annual
         Report on Form 10-K for the year ended December 31, 2001, and
         incorporated herein by reference.

  21     List of Subsidiary -- previously filed as Exhibit 21 to Annual
         Report on Form 10-K for the year ended December 31, 2001, and
         incorporated herein by reference.


  24     Power of Attorney -- previously filed as Exhibit 24 to Annual Report on
         Form 10-K for the year ended December 31, 2001, and incorporated herein
         by reference.



  99.1   Principal Executive Officer Certification

  99.2   Principal Financial Officer Certification




















                                       33
<PAGE>

REPORT OF MANAGEMENT


     The management of HPCI is responsible for the financial information and
representations contained in the consolidated financial statements and other
sections of this report. The consolidated financial statements, as restated,
have been prepared in conformity with accounting principles generally accepted
in the United States. In all material respects, they reflect the substance of
transactions that should be included based on informed judgments, estimates, and
currently available information.


     HPCI utilizes accounting and other control systems maintained by Huntington
Bancshares Incorporated that, in the opinion of management, provide reasonable
assurance that (1) transactions are properly recorded on the books and records,
and (2) that the assets are properly safeguarded. The systems of internal
accounting controls include the careful selection and training of qualified
personnel, appropriate segregation of responsibilities, communication of written
policies and procedures, and a broad program of internal audits. The costs of
the controls are balanced against the expected benefits. During 2001, the Audit
Committee of the Board of Directors met with management, Huntington's internal
auditors, and the independent auditors, Ernst & Young LLP, to review the scope
of the audits and to discuss the evaluation of internal accounting controls and
financial reporting matters. The independent and internal auditors have free
access to and meet confidentially with the Audit Committee to discuss
appropriate matters.

     The independent auditors are responsible for expressing an informed
judgment as to whether the consolidated financial statements present fairly, in
accordance with accounting principles generally accepted in the United States,
the financial position, results of operations and cash flows of HPCI. They
obtained an understanding of HPCI's internal accounting controls and conducted
such tests and related procedures as they deemed necessary to provide reasonable
assurance, giving due consideration to materiality, that the consolidated
financial statements contain neither misleading nor erroneous data. Their report
appears below.

 /s/ Michael J. McMennamin              /s/ John D. Van Fleet
-------------------------------       -----------------------------------
     Michael J. McMennamin                 John D. Van Fleet
     President                             Vice President


REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS


To the Board of Directors and Shareholders
Huntington Preferred Capital, Inc. and Subsidiary

     We have audited the accompanying consolidated balance sheets of Huntington
Preferred Capital, Inc. and Subsidiary as of December 31, 2001 and 2000, and the
related consolidated statements of income, changes in shareholders' equity, and
cash flows for each of the three years in the period ended December 31, 2001.
These financial statements are the responsibility of the company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

     We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Huntington
Preferred Capital, Inc. and Subsidiary at December 31, 2001 and 2000, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 2001, in conformity with accounting principles
generally accepted in the United States.


                                                        /s/ Ernst & Young LLP

Columbus, Ohio
January 18, 2002, except for Note 12,
   as to which the date is August 19, 2002




                                      F-1
<PAGE>


<TABLE>

--------------------------------------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS -- RESTATED
--------------------------------------------------------------------------------------------------------------

<CAPTION>
--------------------------------------------------------------------------------------------------------------

                                                                                   DECEMBER 31,    DECEMBER 31,
(in thousands of dollars, except share data)                                           2001            2000
--------------------------------------------------------------------------------------------------------------
                                                                                   (Restated)       (Restated)
<S>                                                                                 <C>             <C>
ASSETS
Cash and due from The Huntington National Bank                                      $      ---      $   61,403
Interest bearing balances with The Huntington National Bank                            364,912         818,872
Due from Huntington Preferred Capital Holdings, Inc.                                   293,809         224,551
Loan participation interests
   Commercial                                                                          646,509         614,956
   Consumer                                                                            783,735         971,594
   Residential mortgage                                                                270,671         355,571
   Commercial mortgage                                                               3,678,061       3,894,527
--------------------------------------------------------------------------------------------------------------
                                                                                     5,378,976       5,836,648
     Less allowance for loan losses                                                    175,690          91,826
--------------------------------------------------------------------------------------------------------------
Net loan participation interests                                                     5,203,286       5,744,822
--------------------------------------------------------------------------------------------------------------
Premises and equipment                                                                  44,641             ---
Accrued income and other assets                                                         42,111          48,625
--------------------------------------------------------------------------------------------------------------

TOTAL ASSETS                                                                        $5,948,759      $6,898,273
--------------------------------------------------------------------------------------------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
   Accounts payable and other liabilities                                           $       31      $      ---
--------------------------------------------------------------------------------------------------------------
      Total Liabilities                                                                     31             ---
--------------------------------------------------------------------------------------------------------------

SHAREHOLDERS' EQUITY
     Preferred stock, Class A, 8.000% noncumulative, non-exchangeable; $1,000
          par and liquidation value per share;
          1,000 shares authorized, issued and outstanding in 2001 and 2000               1,000           1,000
     Preferred stock, 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 in 2001 and 2000                                      400,000         400,000
     Preferred stock, Class C, 7.875% noncumulative and
          conditionally exchangeable; $25 par and liquidation
          value; authorized 2,000,000 shares; 2,000,000 shares issued and
          outstanding in 2001 and no shares issued and outstanding in 2000              50,000             ---
     Preferred stock, Class D, variable-rate noncumulative and
          conditionally exchangeable; $25 par and liquidation
          value; authorized 14,000,000 shares; 14,000,000 shares issued
          and outstanding in 2001 and no shares issued and outstanding in 2000         350,000             ---
     Preferred stock, $25 par value, 10,000,000 shares
          authorized; no shares issued or outstanding in 2001 and 2000                     ---             ---
     Common stock - without par value; shares authorized, issued, and
          outstanding: 14,000,000 in 2001; 750 in 2000                               5,082,511       6,341,717
     Retained earnings                                                                  65,217         155,556
--------------------------------------------------------------------------------------------------------------
          Total Shareholders' Equity                                                 5,948,728       6,898,273
--------------------------------------------------------------------------------------------------------------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                          $5,948,759      $6,898,273
--------------------------------------------------------------------------------------------------------------
</TABLE>




See notes to consolidated financial statements.


                                      F-2
<PAGE>


<TABLE>
------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF INCOME -- Restated
------------------------------------------------------------------------------------------------------------------------
<CAPTION>


                                                                              TWELVE MONTHS ENDED DECEMBER 31,
                                                               ---------------------------------------------------------
(in thousands of dollars)                                                2001                2000                1999
------------------------------------------------------------------------------------------------------------------------
                                                                      (Restated)         (Restated)           (Restated)
<S>                                                                   <C>                 <C>                 <C>
Interest and fee income
   Interest on loan participation interests
      Commercial                                                      $  40,543           $  62,488           $  76,807
      Consumer                                                          100,767              78,327              65,832
      Residential mortgage                                               41,201              46,421              59,599
      Commercial mortgage                                               304,580             324,244             274,135
------------------------------------------------------------------------------------------------------------------------
                                                                        487,091             511,480             476,373
------------------------------------------------------------------------------------------------------------------------
   Fees from loan participation interests                                11,496               5,143               7,043
   Interest bearing deposits in banks                                    27,858              33,095              14,111
------------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST AND FEE INCOME                                           526,445             549,718             497,527
------------------------------------------------------------------------------------------------------------------------

Provision for loan losses                                                48,510               2,293                 ---
------------------------------------------------------------------------------------------------------------------------
INTEREST INCOME
  AFTER PROVISION FOR LOAN LOSSES                                       477,935             547,425             497,527
------------------------------------------------------------------------------------------------------------------------

Non-interest income                                                       1,646                 ---                 ---
Non-interest expense                                                     10,015               7,983               8,234
------------------------------------------------------------------------------------------------------------------------

INCOME BEFORE INCOME TAXES                                              469,566             539,442             489,293
Income taxes                                                                 26                 ---                 ---
------------------------------------------------------------------------------------------------------------------------

NET INCOME BEFORE PREFERRED DIVIDENDS                                   469,540             539,442             489,293

DIVIDENDS ON PREFERRED STOCK                                             21,827                  80                  80
------------------------------------------------------------------------------------------------------------------------
NET INCOME APPLICABLE TO COMMON SHARES                                $ 447,713           $ 539,362           $ 489,213
------------------------------------------------------------------------------------------------------------------------
</TABLE>











See notes to consolidated financial statements.




                                      F-3
<PAGE>

<TABLE>
---------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY -- Restated
---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
                                                    PREFERRED, CLASS A        PREFERRED, CLASS B      PREFERRED, CLASS C
                                                  -----------------------   ---------------------  ------------------------
(in thousands of dollars, except per share data)     SHARES      STOCK         SHARES      STOCK        SHARES       STOCK
---------------------------------------------------------------------------------------------------------------------------

<S>                                               <C>          <C>            <C>        <C>            <C>        <C>
Balance, December 31, 1998                             ---     $    ---          ---     $    ---          ---     $    ---
Comprehensive Income:
    Net income
      Total comprehensive income
Issuance of Class A preferred stock                      1        1,000

---------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1999                               1        1,000          ---          ---          ---          ---
---------------------------------------------------------------------------------------------------------------------------

Comprehensive Income:
    Net income
      Total comprehensive income
Issuance of Class B preferred stock                                              400      400,000

---------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2000                               1        1,000          400      400,000          ---          ---
---------------------------------------------------------------------------------------------------------------------------

COMPREHENSIVE INCOME:
    NET INCOME
      TOTAL COMPREHENSIVE INCOME
ISSUANCE OF CLASS C PREFERRED STOCK                                                                      2,000       50,000

---------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 2001                               1     $  1,000          400     $400,000        2,000     $ 50,000
---------------------------------------------------------------------------------------------------------------------------
</TABLE>




<TABLE>
<CAPTION>

                                                                          PREFERRED, CLASS D              PREFERRED
                                                                      ---------------------------   -------------------------
(in thousands of dollars, except per share data)                       SHARES        STOCK           SHARES      STOCK
-----------------------------------------------------------------------------------------------------------------------------

<S>                                                                     <C>            <C>           <C>         <C>
Balance, December 31, 1998                                                ---          $ ---          ---        $ ---
Comprehensive Income:
    Net income


      Total comprehensive income


Issuance of Class A preferred stock
Dividends declared on Class A preferred stock ($80 per share)
Dividends declared on common stock
Capital contribution in consideration for the acquisition of
   loan participations, net

-----------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1999                                                ---            ---          ---          ---
-----------------------------------------------------------------------------------------------------------------------------

Comprehensive Income:
    Net income


      Total comprehensive income


Issuance of Class B preferred stock
Dividends declared on Class A preferred stock ($80 per share)
Dividends declared on common stock
Capital contribution in consideration for the acquisition of
   loan participations, net

-----------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2000                                                ---            ---          ---          ---
-----------------------------------------------------------------------------------------------------------------------------

COMPREHENSIVE INCOME:
    Net income


      Total comprehensive income


Issuance of Class C preferred stock
Issuance of Class D preferred stock                                    14,000        350,000
Dividends declared on Class A preferred stock ($80 per share)
Dividends declared on Class B preferred stock ($44.225 per share)
Dividends declared on Class C preferred stock ($0.4265625 per share)
Dividends declared on Class D preferred stock ($0.22885 per share)
Dividends declared on common stock
Common shares issued in 18,666.66667-to-1 stock split
Distribution of participation interests in Florida loans
Capital contribution in consideration for the acquisition of
   loan participations, net

-----------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2001                                             14,000       $350,000          ---        $ ---
-----------------------------------------------------------------------------------------------------------------------------


<CAPTION>


                                                                                COMMON           RETAINED
                                                                        ----------------------   EARNINGS
(in thousands of dollars, except per share data)                         SHARES       STOCK      (DEFICIT)        TOTAL
-------------------------------------------------------------------------------------------------------------------------
                                                                                                 (Restated)  (Restated)
<S>                                                                    <C>       <C>            <C>          <C>
Balance, December 31, 1998                                                  1    $ 5,868,297    $   (924)    $ 5,867,373
Comprehensive Income:
    Net income                                                                                   489,293         489,293
                                                                                                            -------------
      Total comprehensive income                                                                                 489,293
                                                                                                            -------------
Issuance of Class A preferred stock                                                                                1,000
Dividends declared on Class A preferred stock ($80 per share)                                        (80)            (80)
Dividends declared on common stock                                                              (413,760)       (413,760)
Capital contribution in consideration for the acquisition of
   loan participations, net                                                          274,806                     274,806

-------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1999                                                  1      6,143,103      74,529       6,218,632
-------------------------------------------------------------------------------------------------------------------------

Comprehensive Income:
    Net income                                                                                   539,442         539,442
                                                                                                            -------------
      Total comprehensive income                                                                                 539,442
                                                                                                            -------------
Issuance of Class B preferred stock                                                                              400,000
Dividends declared on Class A preferred stock ($80 per share)                                        (80)            (80)
Dividends declared on common stock                                                              (458,335)       (458,335)
Capital contribution in consideration for the acquisition of
   loan participations, net                                                          198,614                     198,614

-------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2000                                                  1      6,341,717     155,556       6,898,273
-------------------------------------------------------------------------------------------------------------------------

COMPREHENSIVE INCOME:
    Net income                                                                                   469,540         469,540
                                                                                                            -------------
      Total comprehensive income                                                                                 469,540
                                                                                                            -------------
Issuance of Class C preferred stock                                                                               50,000
Issuance of Class D preferred stock                                                                              350,000
Dividends declared on Class A preferred stock ($80 per share)                                        (80)            (80)
Dividends declared on Class B preferred stock ($44.225 per share)                                (17,690)        (17,690)
Dividends declared on Class C preferred stock ($0.4265625 per share)                                (853)           (853)
Dividends declared on Class D preferred stock ($0.22885 per share)                                (3,204)         (3,204)
Dividends declared on common stock                                                    (1,118)   (538,052)       (539,170)
Common shares issued in 18,666.66667-to-1 stock split                  13,999                                        ---
Distribution of participation interests in Florida loans                          (1,273,059)                 (1,273,059)
Capital contribution in consideration for the acquisition of
   loan participations, net                                                           14,971                      14,971

-------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2001                                             14,000    $ 5,082,511    $ 65,217     $ 5,948,728
-------------------------------------------------------------------------------------------------------------------------
</TABLE>



See notes to consolidated financial statements.



                                      F-4
<PAGE>


<TABLE>
---------------------------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS -- RESTATED

---------------------------------------------------------------------------------------------------------------------

<CAPTION>
                                                                             TWELVE MONTHS ENDED DECEMBER 31,
                                                               ------------------------------------------------------
(in thousands of dollars)                                             2001                2000                1999
---------------------------------------------------------------------------------------------------------------------
                                                                 (Restated)           (Restated)          (Restated)
<S>                                                               <C>                 <C>                 <C>
OPERATING ACTIVITIES
     Net Income                                                   $   469,540         $   539,442         $   489,293
     Adjustments to reconcile net income to net
       cash provided by operating activities:
        Provision for loan losses                                      48,510               2,293                 ---
        Depreciation expense                                            1,529                 ---                 ---
        Increase in accrued interest and other assets                (439,992)           (456,704)           (715,058)
        Increase in due from/to Huntington
           Preferred Capital Holdings, Inc.                           (69,258)           (218,957)             (7,279)
        Increase in accounts payable and other
           liabilities                                                     31                 ---                 ---
---------------------------------------------------------------------------------------------------------------------
     NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES              10,360            (133,926)           (233,044)
---------------------------------------------------------------------------------------------------------------------

INVESTING ACTIVITIES
     Decrease (increase) in interest bearing deposits
        in The Huntington National Bank                               453,960            (751,801)            (67,071)
     Participation interests acquired                              (5,909,528)         (6,747,027)         (6,589,409)
     Sales and repayments on loans underlying
        participation interests                                     5,974,296           7,585,437           7,478,648
     Purchase of premises and equipment                                  (797)                ---                 ---
---------------------------------------------------------------------------------------------------------------------
     NET CASH PROVIDED BY INVESTING ACTIVITIES                        490,931              86,609             822,168
---------------------------------------------------------------------------------------------------------------------

FINANCING ACTIVITIES
     Proceeds from issuance of Class A preferred
        stock                                                             ---                 ---               1,000
     Proceeds from issuance of Class B preferred
        stock                                                             ---             400,000                 ---
     Dividends paid on common stock                                  (539,170)           (458,335)           (545,600)
     Dividends paid on preferred stock                                (21,827)                (80)                (80)
     Return of capital to Huntington Bancshares
        Incorporated                                                   (1,697)                ---                 ---
---------------------------------------------------------------------------------------------------------------------
     NET CASH USED FOR FINANCING ACTIVITIES                          (562,694)            (58,415)           (544,680)
---------------------------------------------------------------------------------------------------------------------

     CHANGE IN CASH AND DUE FROM BANKS                                (61,403)           (105,732)             44,444
     CASH AND DUE FROM BANKS:
       AT BEGINNING OF PERIOD                                          61,403             167,135             122,691
---------------------------------------------------------------------------------------------------------------------
       AT END OF PERIOD                                           $       ---         $    61,403         $   167,135
---------------------------------------------------------------------------------------------------------------------

     Supplemental information:
        Net capital contributions from common
           stockholder in the form of participation
           interests in loans                                     $    14,971         $   198,614         $   274,806
        Capital contributions from preferred
           stockholders in the form of participation
           interests in loans and leasehold improvements              400,000                 ---                 ---
        Capital distribution to common stockholders
           in the form of participation interests in loans         (1,271,362)                ---                 ---
        Income taxes paid                                                 ---                 ---                 ---
        Interest paid                                                     ---                 ---                 ---
</TABLE>





     See notes to consolidated financial statements.



                                      F-5
<PAGE>





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- RESTATED



1.   ORGANIZATION

     Huntington Preferred Capital, Inc. (HPCI) is a real estate investment trust
(REIT) organized under Ohio law in 1992. HPCI is a subsidiary of Huntington
Preferred Capital Holdings, Inc. (Holdings), an Indiana corporation. Holdings is
a subsidiary of The Huntington National Bank (the Bank), a national banking
association organized under the laws of the United States and headquartered in
Columbus, Ohio. The Bank is a wholly owned subsidiary of Huntington Bancshares
Incorporated (Huntington). HPCI has one subsidiary, HPCLI, Inc. (HPCLI), formed
in March 2001 for the purpose of holding certain assets (primarily leasehold
improvements).

     HPCI was initially formed to acquire, hold, and manage property acquired by
the Bank in foreclosure (Other Real Estate Owned or OREO property). All of the
OREO property was sold prior to May 1998 and HPCI has not held OREO property
since that time. In May 1998, HPCI began to acquire, hold, and manage
participation interests in mortgage assets and other authorized investments in a
manner so as to qualify as a REIT for federal income tax purposes under the
Internal Revenue Code of 1986, as amended. As a REIT, HPCI is generally not
subject to federal income tax on net income and capital gains that it
distributes to its shareholders.


     Holdings has a loan participation agreement, as amended, with the Bank that
grants Holdings 99% participation interests in various commercial, consumer, and
mortgage loans identified from time to time by the Bank. HPCI has a loan
subparticipation agreement, as amended, with Holdings that grants a 100%
participation interest in Holdings' participation interests in those same
loans.


     In January 1999, HPCI issued 1,000 Class A preferred securities, at a
liquidation preference of $1,000 per share. The Class A preferred securities are
non-voting and have a dividend rate of $80.00 per share per year. In December
2000, HPCI issued 400,000 Class B preferred securities, at a liquidation
preference of $1,000 per share. HPC Holdings-II, Inc., a non-bank subsidiary of
Huntington, owns all of the Class B preferred securities. The Class B preferred
securities have a variable dividend rate based on London Interbank Offered Rate
(LIBOR) which is determined quarterly.

     In February 2001, Huntington purchased 18,667 common shares of HPCI from
Holdings (restated to reflect the April 2001 18,666.66667-for-1 stock split) for
approximately $8.4 million and one common share of Holdings from the Bank for
approximately $6.7 million. Huntington owns 0.1% and Holdings owns 99.9% of the
issued and outstanding common shares of HPCI.

2.   ISSUANCE OF PREFERRED SECURITIES


     In October 2001, HPCI created three new classes of preferred securities,
Class C and Class D preferred securities and blank check preferred securities.
HPCI issued the Class C and D preferred securities to Holdings and received
common equity in October 2001 in exchange for $452.6 million of participation
interests in performing and non-performing commercial loans, including
commercial real estate loans, and consumer loans, with $86.5 million of specific
loan loss reserves, $45.4 million of leasehold improvements, and $3.5 million of
accrued interest that Holdings had acquired from the Bank. The underlying
consumer loans included a combination of automobile, truck, and equipment loans.
The company transferred the leasehold improvements to HPCLI in exchange for its
common shares. Holdings then sold the Class C preferred securities to the public
in November 2001 for cash consideration of $25 per share. HPCI did not receive
any of Holdings' proceeds from the sale of the securities.


3.   SIGNIFICANT ACCOUNTING POLICIES

     BASIS OF PRESENTATION: The consolidated financial statements include the
accounts of HPCI and its subsidiary and are presented in conformity with
accounting principles generally accepted in the United States (GAAP). The
consolidated financial statements reflect all adjustments, consisting of normal
recurring accruals, which are, in the opinion of management, necessary for a
fair presentation of the consolidated financial position, the results of
operations, and cash flows for the periods presented. All significant
intercompany accounts and transactions have been eliminated in consolidation.




                                      F-6
<PAGE>


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- RESTATED (CONTINUED)


     The preparation of consolidated financial statements in conformity with
GAAP requires management to make estimates and assumptions that affect amounts
reported in the financial statements. Actual results could differ from those
estimates.

     LOAN PARTICIPATION INTERESTS: Participation interests in loans are acquired
from the Bank by Holdings at the Bank's carrying value, which is the principal
amount outstanding plus accrued interest, net of unearned income, if any, less
an allowance for loan losses. Similarly, participation interests in loans are
acquired from Holdings by HPCI at Holdings' carrying value.

     Interest income is primarily accrued based on unpaid principal balances of
the underlying loans as earned. The underlying commercial and real estate loans
are placed on non-accrual status and stop accruing interest when collection of
principal or interest is in doubt. When interest accruals are suspended, accrued
interest income is reversed with current year accruals charged to earnings and
prior year amounts generally charged off as a credit loss. Consumer loans are
not placed on non-accrual status; rather they are charged off in accordance with
regulatory statutes governing the Bank. Consistent with these statutes, consumer
loans are charged off when the Bank, as servicer, determines that a loan is
doubtful of collection. Generally, this occurs when a loan is 120 days past due.
HPCI uses the cost recovery method in accounting for cash received on
non-accrual loans. Under this method, cash receipts are applied entirely against
principal until the loan has been collected in full, after which time any
additional cash receipts are recognized as interest income. When, in
management's judgment, the borrower's ability to make periodic interest and
principal payments resumes, the loan is returned to accrual status.


     Net deferred loan fees and costs, when material, are amortized as an
adjustment of the related loan yields using the interest method.

     ALLOWANCE FOR LOAN LOSSES: An allowance for loan losses (ALL) is
transferred to HPCI from the Bank through Holdings on loans underlying
the participations at the time the participations are acquired. Prior to the
fourth quarter of 2001, HPCI transferred a portion of the ALL related to loan
paydowns and other similar transactions underlying the participation interests
back to the Bank. Subsequently, with concerns over the general economy and the
deteriorating credit quality in the loan participation portfolio, HPCI ceased
transferring the allowance for such transactions. The allowance
for loan losses reflects management's judgment as to the level considered
appropriate to absorb inherent losses in the loan participation portfolio. This
judgment is based on a review of individual loans underlying the participations,
historical loss experience of similar loans owned by the Bank, economic
conditions, portfolio trends, and other factors. When necessary, the allowance
for loan losses will be adjusted through a provision for loan losses charged to
earnings. Loan losses are charged against the allowance when management believes
the loan balance, or a portion thereof, is uncollectible. Subsequent recoveries,
if any, are credited to the allowance.


     The allowance for loan losses consists of an allocated portion and an
unallocated portion. The components of the allowance for loan losses represent
estimates developed pursuant to Statement of Financial Accounting Standard
(SFAS) No. 5, Accounting for Contingencies, and SFAS No. 114. The allocated
portion of the allowance for loan losses reflects expected losses resulting from
analyses developed through historical loss experience and specific credit
allocations at the individual loan level for commercial and commercial real
estate loan participations. The specific credit allocations are based on a
regular analysis of all underlying loans by credit rating. The historical loan
loss element is determined quantitatively using a loss migration analysis that
examines both the likelihood of default and the loss factor in event of default
by underlying loan category and internal credit rating. The loss migration
analysis is performed periodically and loss factors are updated regularly based
on actual experience. The allocated component of the allowance for loan losses
also includes management's determination of the amounts necessary for
concentrations and changes in portfolio mix and volume. The portion of the
allowance allocated to underlying homogeneous consumer loans is determined by
applying expected loss ratios to various segments of the loan portfolio giving
consideration to existing economic conditions and trends. The unallocated
portion of the allowance is determined based on management's assessment of
general economic conditions, as well as specific economic conditions in the
individual markets in which Huntington operates. This determination inherently
involves a higher degree of uncertainty and considers current risk factors that
may not have yet manifested themselves in HPCI's historical loss factors used to
determine the allocated portion of the allowance.

     PREMISES AND EQUIPMENT: Premises and equipment, primarily leasehold
improvements, are stated at cost, less accumulated depreciation. Depreciation is
computed principally by the straight-line method over the estimated useful lives
of the related assets. Estimated useful lives employed are on average 30 years
for buildings, 10 to 20 years for building improvements, 10 years for land
improvements, 3 to 7 years for equipment, and 10 years for furniture and
fixtures.


                                      F-7
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- RESTATED (CONTINUED)





     EARNINGS PER SHARE: All of HPCI's common stock is owned by Huntington and
Holdings and therefore, earnings per common share information is not presented.

     INCOME TAXES: HPCI has elected to be treated as a REIT for Federal income
tax purposes and intends to comply with the provisions of the Code. Accordingly,
HPCI will not be subject to Federal income tax to the extent it distributes its
earnings to stockholders and as long as certain asset, income and stock
ownership tests are met in accordance with the Code. As HPCI expects to maintain
its status as a REIT for Federal income tax purposes, only a provision for
income taxes is included in the accompanying financial statements for its
subsidiary's taxable income. HPCLI is a taxable REIT subsidiary for federal
income tax purposes.

     STATEMENT OF CASH FLOWS: Cash and cash equivalents are defined as "Cash and
due from banks". There were no interest payments or Federal income tax payments
made in any year presented.

4.   LOAN PARTICIPATION INTERESTS

     At December 31, loan participation interests were comprised of the
following:

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
(in thousands of dollars)                                                                      2001                  2000
------------------------------------------------------------------------------------------------------------------------------

<S>                                                                                       <C>                     <C>
Commercial                                                                                $   646,509             $   614,956
Consumer                                                                                      783,735                 971,594
Residential real estate                                                                       270,671                 355,571
Commercial real estate                                                                      3,678,061               3,894,527
------------------------------------------------------------------------------------------------------------------------------
Total loan participations                                                                 $ 5,378,976             $ 5,836,648
------------------------------------------------------------------------------------------------------------------------------
</TABLE>

     There are no underlying loans outstanding which would be considered a
concentration of lending in any particular industry, group of industries, or
business activity. Underlying loans are, however, concentrated in the four
states of Ohio, Michigan, Indiana, and Kentucky and comprise 95.6% of the
portfolio at December 31, 2001.

     On July 12, 2001, Huntington announced a comprehensive strategic and
financial restructuring plan, which included divesting its Florida retail and
corporate banking businesses. On September 26, 2001, Huntington announced that
it has entered into an agreement to sell its Florida operations to SunTrust
Banks, Inc. On December 31, 2001, in anticipation of the eventual sale, HPCI
distributed participation interests in Florida-related loans to its common
shareholders, Holdings and Huntington. This distribution approximated $1.3
billion and consisted of cash and the net book value of participation interests
in loans, net of $18.6 million of ALL, which were included in the sale to
SunTrust, including the related accrued interest. This distribution represented
approximately 17% of HPCI's total assets as of December 31, 2001.

5.   ALLOWANCE FOR LOAN LOSSES

     A summary of the transactions in the allowance for loan losses follows for
each of the three years ended December 31:


<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
(in thousands of dollars)                                                      2001                2000                1999
------------------------------------------------------------------------------------------------------------------------------

<S>                                                                           <C>                  <C>                 <C>
BALANCE, BEGINNING OF YEAR                                                  $  91,826           $ 104,151           $  87,799
Allowance of loan participations acquired, net                                113,291              (9,434)             25,988
Distribution of participations in Florida-related loans                       (18,604)                ---                 ---
Net loan losses                                                               (59,333)             (5,184)             (9,636)
Provision for loan losses                                                      48,510               2,293                 ---
------------------------------------------------------------------------------------------------------------------------------
BALANCE, END OF YEAR                                                        $ 175,690           $  91,826           $ 104,151
------------------------------------------------------------------------------------------------------------------------------
</TABLE>



     An allowance for loan losses (ALL) is transferred to HPCI from the Bank
through Holdings on loans underlying the participations at the time the
participations are acquired. Prior to the fourth quarter of 2001, HPCI
transferred a portion of the ALL related to loan paydowns and other similar
transactions underlying the participation interests back to the Bank.
Subsequently, with concerns over the general economy and the deteriorating
credit quality in the loan participation portfolio, HPCI ceased transferring
the allowance for such transactions.







                                      F-8
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- RESTATED (CONTINUED)



     During October 2001, HPCI acquired participation interests in $452.6
million of performing and non-performing commercial and real estate loans from
Holdings, along with specific loan losses reserves of $86.5 million, $45.4
million of leasehold improvements, and $3.5 million of accrued interest in
exchange for its Class C and D preferred securities.


     An underlying loan involved in a participation acquired by HPCI is
considered impaired when, based on current information and events, it is
determined that estimated cash flows are less than the cash flows estimated at
the date of purchase. A loan originated by the Bank is considered impaired when,
based on current information and events, it is probable that it will be unable
to collect the scheduled payments of principal or interest when due according to
the contractual terms of the loan agreement. Factors considered by management in
determining impairment include payment status, collateral value, and the
probability of collecting scheduled principal and interest payments when due.
Loans that experience insignificant payment delays and payment shortfalls
generally are not classified as impaired. Management determines the significance
of payment delays and payment shortfalls on a case-by-case basis, taking into
consideration all of the circumstances surrounding the loan and the borrower.
This includes the length of the delay, the reasons for the delay, the borrower's
prior payment record, and the amount of the shortfall in relation to the
principal and interest owed. Loan impairment is measured on a loan-by-loan basis
by comparing the recorded investment in the loan to the present value of
expected future cash flows discounted at the loan's effective interest rate, the
loan's obtainable market price, or the fair value of the collateral if the loan
is collateral dependent. Loans totaling $197.6 million at December 31, 2001,
compared with $41.9 million at December 31, 2000, and $38.5 million at year-end
1999, which have been identified as impaired and were on nonaccrual status, have
been measured by the fair value of existing collateral. At December 31, 2001,
total participation interests in impaired loans was 3.7% of total loan
participations.

6.   PREMISES AND EQUIPMENT

     At December 31, 2001 and 2000, premises and equipment stated at cost were
comprised of the following:

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
(in thousands of dollars)                                                                       2001            2000
-----------------------------------------------------------------------------------------------------------------------
<S>                                                                                          <C>                <C>
Land and land improvements                                                                   $    365           $ ---
Buildings                                                                                         533             ---
Leasehold improvements                                                                        110,967             ---
-----------------------------------------------------------------------------------------------------------------------
    Total premises and equipment                                                              111,865             ---
Less accumulated depreciation and amortization                                                 67,224             ---
-----------------------------------------------------------------------------------------------------------------------
NET PREMISES AND EQUIPMENT                                                                   $ 44,641           $ ---
-----------------------------------------------------------------------------------------------------------------------
</TABLE>


Depreciation expense charged to expense was:

<TABLE>
<CAPTION>
                                                                                         TWELVE MONTHS ENDED
                                                                                             DECEMBER 31,
----------------------------------------------------------------------------------------------------------------------
(in thousands of dollars)                                                        2001          2000           1999
----------------------------------------------------------------------------------------------------------------------

<S>                                                                              <C>          <C>            <C>
Total depreciation of premises and equipment                                     $ 1,529      $ ---          $ ---
----------------------------------------------------------------------------------------------------------------------
</TABLE>




7.   DIVIDENDS AND STOCK SPLIT

     Holders of Class A preferred securities are entitled to receive, if, when
and as authorized and declared by the board of directors of HPCI out of funds
legally available, dividends at a rate of $80.00 per share per annum of the
initial liquidation preference ($1,000.00 per share). Dividends on the Class A
preferred securities, if authorized and declared, are payable annually in
December to holders of record on the respective record dates fixed for such
purpose by the board of directors in advance of payment. Dividends paid to the
holders of the Class A preferred securities totaled $80,000 in each of the years
ended December 31, 2001, 2000 and 1999.

     The holder of the Class B preferred securities, HPC Holdings-II, Inc., is
entitled to receive dividends at a variable rate based on the three-month LIBOR
published on the first day of each calendar quarter. Dividends on the Class B
preferred securities are declared quarterly and payable annually and are
non-cumulative. The board of directors may declare dividends on Class B
preferred securities and may set apart funds for payment of dividends at the
time of declaration. Any dividend when and if declared by the board of directors
out of funds legally available


                                      F-9
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- RESTATED (CONTINUED)


shall be payable annually on a date fixed by the board of directors. No
dividend, except payable in common shares, shall be declared or paid upon Class
B preferred securities unless dividend obligations are satisfied on the Class A
preferred securities. Dividends paid to the holder of the Class B preferred
securities totaled $17.7 million, or $44.225 per share, in the year ended
December 31, 2001.


     For the Class C preferred securities, dividends are payable if, when, and
as declared by the board of directors of HPCI. If declared, dividends are
payable quarterly in arrears. Dividends accrue in each quarterly period from the
first day of each period, whether or not dividends are paid with respect to the
preceding period. Dividends are not cumulative and if no dividend is paid on the
Class C preferred securities for a quarterly dividend period, the payment of
dividends (i) on HPCI's common stock and (ii) on other HPCI-issued securities
ranking junior to the Class C preferred securities will be prohibited for that
period and at least the following three quarterly dividend periods. Dividends
paid to the holders of the Class C preferred securities totaled $853,000, or
$0.4265625 per share, in the year ended December 31, 2001.

     For the Class D preferred securities, dividends are established at the
beginning of each calendar quarter at a variable rate equal to LIBOR plus
1.625%. Dividends on the Class D preferred securities are paid quarterly in
arrears when declared. Dividends are not cumulative and if full dividends are
not paid on the Class D preferred securities for a quarterly dividend period,
the payment of dividends on the common shares or other shares ranking junior to
the Class D preferred securities will be prohibited for that period and at least
the following three quarterly dividend periods. Dividends paid to the holder of
the Class D preferred securities totaled $3.2 million, or $0.22885 per share, in
the year ended December 31, 2001.


     For HPCI to meet its statutory requirement for a REIT to distribute 90% of
its taxable income to its shareholders, the holders of common shares received
dividends declared by the board of directors, subject to any preferential
dividend rights of the outstanding preferred securities. Dividends on common
stock declared for each of the years ended December 31, 2001, 2000, and 1999,
were $539.2 million, $458.3 million, and $413.8 million, respectively.

     In April 2001, the board of directors declared a 18,666.67-for-1 stock
split on its common stock outstanding. The result of the transaction increased
the number of authorized, issued, and outstanding common shares from 750 to 14
million.


8.   RELATED PARTY TRANSACTIONS

     HPCI holds a 100% subparticipation interest in Holdings' 99% participation
interests in loans originated by the Bank and its subsidiaries. The
participation and subparticipation interests are in commercial, commercial
mortgage, residential real estate, and consumer loans secured by real property
that were either directly underwritten by the Bank and its subsidiaries or
acquired by the Bank. HPCI expects to continue to purchase such interests, net
of ALL, in the future from Holdings. See note 4 for the amount of the
participations outstanding.


     HPCI entered into servicing agreements with the Bank whereby the Bank
performs the servicing of the commercial, commercial mortgage, residential
mortgage, and consumer loans underlying the participations held by HPCI in
accordance with normal industry practice. The servicing fee the Bank charges is
0.125% per year of the outstanding principal balances of the commercial,
commercial mortgage, and consumer loans underlying the participation interests
and 0.282% per year of the interest income collected on the underlying
residential mortgages. Servicing fee expense paid to the Bank totaled $8.3
million for the year ended December 31, 2001, and $7.8 million for each of the
years ended December 31, 2000 and 1999. In its capacity as servicer, the Bank
collects and holds the commercial and mortgage loan payments received on behalf
of HPCI until the end of each month. At month end, the payments are transferred
to HPCI and accordingly, HPCI does not reflect any receivables for payments from
the Bank in the accompanying consolidated financial statements.

     HPCI, Huntington, and the Bank share personnel to handle day-to-day
operations of the company such as accounting, financial analysis, tax reporting,
and other administrative functions. On a monthly basis, HPCI reimburses the Bank
and Huntington for the cost related to the time spent by employees for
performing these functions. The personnel costs were $162,000 for each of the
years ended December 31, 2001, 2000 and 1999.


                                      F-10
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- RESTATED (CONTINUED)


     In February 2001, Huntington purchased 18,667 shares of the 14 million
outstanding common shares of HPCI from Holdings (after adjusting for the April
2001 18,666.67-for-1 stock split). For all previous periods presented in the
consolidated financial statements, Holdings was the owner of 100% of the
outstanding common stock of HPCI. Accordingly, Huntington received $719,000 in
common dividends in 2001 while Holdings received common dividends of $538.5
million for the twelve months ended December 31, 2001. Holdings received $458.3
million and $413.8 million for the years ended December 31, 2000 and 1999,
respectively.

     Of the outstanding shares of Class A preferred securities, 88.9% are owned
by Holdings while present and past employees of Huntington and its subsidiaries
own 11.1%. The Class A preferred securities are non-voting and have a dividend
rate of $80.00 per share per year. All of the Class B preferred securities are
owned by HPC Holdings-II, Inc., a non-bank subsidiary of Huntington. The Class B
preferred securities have a variable dividend rate based on LIBOR, which is
determined quarterly. In 2001, the Class C preferred securities were sold to
Holdings, who sold them to the public. Various board members and executive
officers of HPCI purchased these shares in the open market. At December 31,
2001, a total of 3,700 shares, or 0.185%, were beneficially owned by the group
as a whole. Dividends on this class of stock are paid quarterly at a fixed rate
of 7.875%. All of the Class D preferred securities are owned by Holdings for
possible sale to the public in the future. The Class D preferred securities have
a variable dividend rate based on LIBOR plus 1.625% that is determined
quarterly. See note 7 for dividends paid on these preferred securities.

     HPCI's premises and equipment were acquired from the Bank through Holdings.
Leasehold improvements were subsequently contributed to HPCLI for its common
shares. HPCLI charges rent to the Bank for use of applicable facilities by the
Bank. The amount of rental income received by HPCLI during 2001 was $1.6 million
and is reflected as the only component of non-interest income in the
consolidated statements of income.


     HPCI has a non-interest bearing receivable from Holdings amounting to
$293.8 million and $224.6 million at December 31, 2001 and 2000, respectively.
These balances represent unsettled cash transactions involving its participation
interests that occur in the ordinary course of business.


     HPCI maintains and transacts all of its cash activity through a
non-interest bearing demand deposit account with the Bank. In addition, HPCI
invests available funds in Eurodollar deposits with the Bank for a term of not
more than 30 days, the following amounts were on deposit with the Bank:

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                                                                                                   AT DECEMBER 31,
(in thousands of dollars)                                                                       2001           2000
----------------------------------------------------------------------------------------------------------------------

<S>                                                                                         <C>             <C>
Non-interest bearing                                                                        $     ---       $  61,403
Interest bearing                                                                              364,912         818,872
----------------------------------------------------------------------------------------------------------------------
   Total deposits with the Bank                                                             $ 364,912       $ 880,275
----------------------------------------------------------------------------------------------------------------------
</TABLE>


9. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

     The following is a summary of the unaudited quarterly results of operations
for the years ended December 31, 2001 and 2000:

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
(in thousands of dollars)                            FIRST           SECOND          THIRD          FOURTH
------------------------------------------------------------------------------------------------------------

<S>                                                 <C>             <C>             <C>             <C>
2001
Interest income                                     $140,736        $132,950        $130,114        $122,645
Provision for loan losses                              3,927           6,751           6,428          31,404
Non-interest income                                       14              14              15           1,603
Non-interest expense                                   2,031           2,156           2,102           3,726
------------------------------------------------------------------------------------------------------------
Income before income taxes                           134,792         124,057         121,599          89,118
Income taxes                                             ---             ---             ---              26
------------------------------------------------------------------------------------------------------------
Net income before preferred dividends                134,792         124,057         121,599          89,092
Dividends on preferred stock                             ---             ---          15,090           6,737
------------------------------------------------------------------------------------------------------------
Net income applicable to common shareholders        $134,792        $124,057        $106,509        $ 82,355
------------------------------------------------------------------------------------------------------------

2000
Interest income                                     $130,667        $136,958        $140,481        $141,612
Provision for loan losses                              1,416             568             ---             309
Non-interest income                                      ---             ---             ---             ---
Non-interest expense                                   2,077           2,037           2,002           1,867
------------------------------------------------------------------------------------------------------------
Income before income taxes                           127,174         134,353         138,479         139,436
Income taxes                                             ---             ---             ---             ---
------------------------------------------------------------------------------------------------------------
Net income before preferred dividends                127,174         134,353         138,479         139,436
Dividends on preferred stock                             ---             ---             ---              80
------------------------------------------------------------------------------------------------------------
Net income applicable to common shareholders        $127,174        $134,353        $138,479        $139,356
------------------------------------------------------------------------------------------------------------
</TABLE>



                                      F-11
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  -- RESTATED (CONTINUED)



10.   FAIR VALUE OF FINANCIAL INSTRUMENTS

     The following methods and assumptions were used by HPCI to estimate the
fair value of the classes of financial instruments:

     Cash and due from The Huntington National Bank and interest bearing
deposits in The Huntington National Bank - The carrying value approximates the
fair value for cash and short-term investments.

     Loan participation interests - Variable rate loans that reprice frequently
are based on carrying amounts, as adjusted for estimated credit losses. The fair
values for other loans are estimated using discounted cash flow analyses and
employ interest rates currently being offered for loans with similar terms. The
rates take into account the position of the yield curve, as well as an
adjustment for prepayment risk, operating costs, and profit. This value is also
reduced by an estimate of probable losses in the loan portfolio. Based upon the
calculations, the carrying values disclosed in the accompanying consolidated
financial statements approximate fair value.


11. COMMITMENTS AND CONTINGENCIES

     In the ordinary course of business, there are various legal proceedings
pending against Huntington and its subsidiaries, including HPCI, Holdings and
the Bank. In the opinion of management, the aggregate liabilities, if any,
arising from such proceedings are not expected to have a material adverse effect
on HPCI's consolidated financial position.

     The Bank is eligible to obtain advances from various federal agencies such
as the Federal Home Loan Bank (FHLB). In the future, HPCI may be asked to act as
co-borrower or guarantee the Bank's obligations under such advances and/or
pledge all or a portion of its assets in connection with those advances. Any
such borrowing, guarantee, or pledge would rank senior to HPCI's common and
preferred securities upon liquidation. At December 31, 2001, the Bank had $17.0
million in outstanding FHLB borrowings. At any one time, this line of credit and
advances are not to exceed $800 million in the aggregate from the FHLB. Although
HPCI may have up to 25% of its assets serve as collateral for such advances, to
date, HPCI has never acted as co-borrower or guarantor of any of the Bank's
obligations under such advances and has never pledged any assets. Any such
borrowing, guarantee, and/or pledge will not require HPCI to obtain the consent
of the holders of its common or preferred securities in order to complete the
Bank's transaction.


12. RESTATEMENT OF OPERATING RESULTS AND FINANCIAL CONDITION

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
                                                  2001                           2000                           1999
                                    -----------------------------  ------------------------------  -----------------------------
                                     PREVIOUSLY                       PREVIOUSLY                     PREVIOUSLY
(in thousands of dollars)             REPORTED         RESTATED        REPORTED       RESTATED        REPORTED        RESTATED
--------------------------------------------------------------------------------------------------------------------------------

<S>                                   <C>             <C>             <C>             <C>             <C>             <C>
BALANCE SHEET:
Due from Holdings and the
   Bank                               $  217,592      $  293,809      $  159,902      $  224,551
Allowance for Loan Losses                164,690         175,690          91,826          91,826
Net loan participation interests       5,214,286       5,203,286       5,744,822       5,744,822
Total Assets                           5,883,542       5,948,759       6,833,624       6,898,273
Retained earnings                            ---          65,217          90,907         155,556
Total shareholders' equity             5,883,511       5,948,728       6,833,624       6,898,273
Total Liabilities and
   Shareholders' Equity                5,883,542       5,948,759       6,833,624       6,898,273

OTHER INFORMATION:
   Net Charge-offs                    $   22,194      $   59,333      $    2,891      $    5,184
INCOME STATEMENT:
Interest and fee income               $  477,738      $  526,445      $  489,100      $  549,718      $  491,203      $  497,527
Provision for loan losses                    371          48,510             ---           2,293             ---             ---
Income before income taxes               468,998         469,566         481,117         539,442         482,969         489,293
Net income before preferred
   dividends                             468,972         469,540         481,117         539,442         482,969         489,293
Net income applicable to
   common shareholders                   447,145         447,713         481,037         539,362         482,889         489,213
</TABLE>

     On August 19, 2002, HPCI restated its consolidated financial statements for
2001, 2000 and 1999 after it discovered and corrected a discrepancy in the
systems and methodology used to allocate interest income, fees, expenses, loan
losses, and related provision expense between the Bank and HPCI. Specifically,
the system allocating this financial information between the Bank and HPCI was
modified in October 1999 to determine such allocations as of the third business
day before the end of each month. This change was made to facilitate a more
timely closing of HPCI's books. The unintended result was that certain interest
income, fees, charge-offs, and related provision expense from that date through
the end of the month were incorrectly not reported in HPCI's financial results,
beginning in the fourth quarter of 1999 through the first quarter of 2002.
Since HPCI and the Bank are fully consolidated subsidiaries of Huntington and
the impact of all intercompany allocations was properly eliminated in preparing
the Huntington financial statements, this restatement had no impact on
Huntington's previously reported consolidated results of operations or
financial condition. The table above reflects the previously reported amounts
and the restated results by financial statement line item in HPCI's balance
sheets at December 31 and income statements for the years ended December 31.




                                      F-12
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- RESTATED (CONTINUED)



13. SEGMENT REPORTING

     HPCI's operations consist of acquiring, holding, and managing its
participation interests. Accordingly, HPCI only operates in one segment. HPCI
has no external customers and transacts all of its business with the Bank
through Holdings.





                                      F-13