##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
  Form 10-K
   ANNUAL REPORT UNDER
    SECTION 13 or 15(d)
 OF THE SECURITIES EXCHANGE ACT
    OF 1934
 For the fiscal year ended December 31, 2009
  Commission file number 1-13805
 Harris Preferred Capital
    Corporation
 (Exact name of registrant as
    specified in its charter)
  Maryland

# 36-4183096(State or other jurisdiction
    of incorporation or organization)

(I.R.S. Employer
    Identification No.)111 West Monroe Street, Chicago, Illinois

60603(Address of principal executive
    offices)

(Zip Code)   Registrants telephone number, including area code:
 (312) 461-2121
 Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Each Class

Name of Each Exchange on Which Registered73/8%
    Noncumulative Exchangeable
    Preferred Stock, Series A, par value
    $1.00 per share

New York Stock Exchange   Securities registered pursuant to Section 12(g) of the
    Act:
 None
  o þ
  o þ
  Regulation S-T o o
  þ o
  Regulation S-K Form 10-K Form 10-K. þ
  12b-2
  Large
    accelerated
    filer o
    Accelerated
    filer o
    Non-accelerated
    filer þ
    Smaller
    reporting
    company o   Rule 12b-2 o þ




---



##### 





Harris
    Preferred Capital Corporation
  TABLE OF
    CONTENTS
  
  Part IItem 1.


Business


2Item 1A.


Risk Factors


7Item 1B.


Unresolved Staff Comments


13Item 2.


Properties


13Item 3.


Legal Proceedings


13Item 4.


Reserved


13Part IIItem 5.


Market for the Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


13Item 6.


Selected Financial Data


14Item 7.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


15Item 7A.


Quantitative and Qualitative Disclosures About
    Market Risk


19Item 8.


Financial Statements and Supplementary Data


19Item 9.


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


19Item 9A.


Controls and Procedures


19Item 9B.


Other Information


20Part IIIItem 10.


Directors, Executive Officers and Corporate
    Governance


20Item 11.


Executive Compensation


23Item 12.


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


23Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


24Item 14.


Principal Accounting Fees and Services


25Part IVItem 15


Exhibits, Financial Statement Schedules


25(a) Exhibits31.1 Certification of Pamela C. Piarowski pursuant to
    Rule 13a-14(a)31.2 Certification of Paul R. Skubic pursuant to
    Rule 13a-14(a)32.1 Certification pursuant to 18 U.S.C. Section 1350(b) Reports on
    Form 8-KNoneSignatures


28EX-24EX-31.1EX-31.2EX-32.1   1




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PART I  Forward-Looking
    Information
  Form 10-K
  ITEM 1.
    BUSINESS  General
    3 8 3 8
 2




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pari passu
        Business
   3




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4




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and/or
      day-to-day
 5




---



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Employees
    Environmental
    Matters
  clean-up, clean-up clean-up.
  Qualification
    as a REIT
   6




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##### Table of Contents



Year Ended December 31, 2009Price














Amount inper share


# of Shares


Declared Date


Record Date


Paid Date


ThousandsPreferred Dividends

$
.46094



10,000,000



03/05/2009



03/15/2009



03/30/2009


$
4,609.46094



10,000,000



06/11/2009



06/15/2009



06/30/2009



4,609.46094



10,000,000



09/02/2009



09/15/2009



09/30/2009



4,610.46094



10,000,000



12/02/2009



12/15/2009



12/30/2009



4,610$
18,438Common Stock Dividends

$
221



1,180



05/28/2009



06/15/2009



06/22/2009


$
2611,695



1,180



12/02/2009



12/15/2009



12/30/2009



2,000$
2,261   Year Ended December 31, 2008Price














Amount inper share


# of Shares


Declared Date


Record Date


Paid Date


ThousandsPreferred Dividends

$
.46094



10,000,000



03/05/2008



03/15/2008



03/30/2008


$
4,609.46094



10,000,000



05/29/2008



06/15/2008



06/30/2008



4,609.46094



10,000,000



09/03/2008



09/15/2008



09/30/2008



4,609.46094



10,000,000



12/02/2008



12/15/2008



12/30/2008



4,611$
18,438Common Stock Dividends

$
650



1,000



09/03/2008



09/01/2008



09/15/2008


$
6502,000



1,000



12/02/2008



12/15/2008



12/30/2008



2,000$
2,650   ITEM 1A.
    RISK
    FACTORS  No. 333-40257)),
  Declining
    interest rates will reduce earnings of the Company
     7




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Dividends
    may not be authorized quarterly by our Board of Directors and
    dividends not authorized will not be paid
    Dividends
    and operations of the Company restricted by
    regulation
        Automatic
    exchange for Bank Preferred Shares could occur when value of
    Bank Preferred Shares is impaired
   8




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Bank
    Preferred Shares will not be listed on any exchange and markets
    may not be liquid
    Adverse
    consequences of failure to qualify as a REIT
      REIT
    requirements with respect to stockholder
    distributions
   9




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Redemption
    upon occurrence of a Tax Event
    Illinois
    Tax Law Change
    Automatic
    exchange upon occurrence of the Exchange Event
  one-for-one
  Relationship
    with the Bank and its affiliates; conflicts of
    interest
  day-to-day and/or and/or
  and/or
 10




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and/or
  Risk
    of future revisions in policies and strategies by Board of
    Directors
    Possible
    leverage
    Additional
    issuances of preferred stock could have dilutive
    effect
    RISK
    FACTORS RELATING TO THE BANK
    Possible
    adverse effects of economic conditions
   11




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loan-to-value sub-prime
  Increase
    in interest rates may adversely affect operating
    results
    Competition
    Government
    regulation
    ITEM 1B.
    UNRESOLVED
    STAFF COMMENTS   12




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ITEM 2.
    PROPERTIES    ITEM 3.
    LEGAL
    PROCEEDINGS    ITEM 4.
    RESERVED PART II  ITEM 5.
    MARKET
    FOR THE REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER
    MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES       13




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ITEM 6.
    SELECTED
    FINANCIAL DATA    For the Years Ended December 312009


2008


2007


2006


2005(In thousands, except per share data)Statement of Operations Data:Interest income

$
22,635


$
21,296


$
22,524


$
21,442


$
19,458Non-interest income


















Operating expenses:Loan servicing fees paid to Harris N.A.


12



15



18



23



31Advisory fees paid to Harris N.A.


196



208



119



127



122General and administrative


399



374



300



342



287Total operating expenses

$
607


$
597


$
437


$
492


$
440Applicable state income taxes

$
1,608


$



$



$



$
Net income


20,420



20,699



22,087



20,950



19,018Preferred stock dividends


18,438



18,438



18,438



18,438



18,438Net income available to common stockholder

$
1,982


$
2,261


$
3,649


$
2,512


$
580Basic and diluted earnings per common share

$
1,680


$
2,261


$
3,649


$
2,512


$
580Distributions per preferred share

$
1.8438


$
1.8438


$
1.8438


$
1.8438


$
1.8438Balance Sheet Data (end of period):Total assets

$
583,574


$
501,130


$
492,923


$
487,340


$
479,875Total liabilities

$
1,084


$
886


$
3,129


$
4,731


$
129Total stockholders equity

$
582,490


$
500,244


$
489,794


$
482,609


$
479,746Cash Flows Data:Net cash provided by operating activities

$
20,419


$
20,326


$
22,235


$
20,760


$
19,152Net Cash (used in) provided by investing activities

$
(63,483
)

$
(6,424
)

$
(3,603
)

$
232


$
(421
)Net cash proivided by (used in) financing activities

$
59,301


$
(24,088
)

$
(23,560
)

$
(16,408
)

$
(18,438
)  14




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##### Table of Contents



ITEM 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS    Summary
  Year
    Ended December 31, 2009 Compared to December 31,
    2008
    available-for-sale
    Year
    Ended December 31, 2008 Compared to December 31,
    2007
    available-for-sale
   15




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Quarter
    Ended December 31, 2009 Compared to Quarter Ended
    December 31, 2008
    available-for-sale
      Allowance
    for Loan Losses
    Concentrations
    of Credit Risk
      Interest
    Rate Risk
    Competition
   16




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Liquidity
    Risk Management
          available-for-sale available-for-sale. available-for-sale available-for-sale
  Accounting
    Pronouncements
       17




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##### Table of Contents



2009-05, 2009-05) 2009-05 2009-05
  Tax
    Matters
    Subsequent
    Events
  Form 10-Q
 18




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##### Table of Contents



ITEM 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK      Year Ending December 31








Fair Value at2010


2011


2012


2013


2014


Thereafter


Total


December 31, 2009Residential mortgage-backedAmortized cost

$
10,641


$
14,839


$



$
12,449


$
7,248


$
456,685


$
501,862


$
515,190Average Yield


4.06%



4.00%







4.00%



4.00%



4.52%



4.52%US TreasuriesAmortized cost

$
40,000






















$
40,000


$
39,999       ITEM 8.
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA    ITEM 9.
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE    ITEM 9A.
    CONTROLS
    AND PROCEDURES  Disclosure
    Controls and Procedures
  Rules 13a-15(e) 15d-15(e))
 19




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Managements
    Report on Internal Control over Financial Reporting
  Rule 13a-15(f).
        Changes
    in Internal Control over Financial Reporting
    ITEM 9B.
    OTHER
    INFORMATION   PART III  ITEM 10.
    DIRECTORS,
    EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE  and/or
   20




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Name

Age

Position and Offices HeldPaul R. Skubic


61


Chairman of the Board, PresidentPamela C. Piarowski


50


Chief Financial Officer, TreasurerMargaret M. Sulkin


51


Assistant TreasurerDelbert J. Wacker


78


DirectorDavid J. Blockowicz


67


DirectorForrest M. Schneider


62


DirectorFrank M. Novosel


63


Director     Form 10-K.
  40-year Form 10-K.
  33-year Form 10-K.
  Form 10-K.
 21




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##### Table of Contents



25-year Form 10-K.
        Independent
    Directors
      Audit
    Committee
    Investment
    Committee
   22




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Compensation
    of Directors
    Non-QualifiedNon-Equity


DeferredFees Earned


Stock


Option


Incentive Plan


Compensation


All Otheror Paid in


Awards


Awards


Compensation


Earnings


CompensationName

Cash


($)


($)


($)


($)


($)


TotalDelbert J. Wacker *

$
21,000






















$
21,000David J. Blockowicz *


21,000























21,000Forrest M. Schneider *


21,000























21,000Frank M. Novosel **


33,000























33,000$
96,000






















$
96,000     *
    
    Represents $17,000 in compensation received as Independent
    Director and $4,000 in compensation received as an Audit
    Committee Member.**
    
    Represents $17,000 in compensation received as a Non Bank
    Director and $16,000 in compensation received as an Investment
    Committee Member following his retirement from the Company and
    the Bank in November, 2008.    Section 16(a)
    Beneficial Ownership Reporting Compliance
    ITEM 11.
    EXECUTIVE
    COMPENSATION    ITEM 12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED STOCKHOLDER MATTERS  (a)
    Security
    ownership of certain beneficial owners  3 8
 23




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##### Table of Contents



(b)
    Security
    Ownership of Management  3 8
  Name of

Amount of

PercentTitle of Class

Beneficial Owner

Beneficial Ownership

of ClassPreferred Stock

Paul R. Skubic

8,625 Shares


.032
%Preferred Stock

Forrest Schneider

8,965 Shares


.033
%Preferred Stock

David J. Blockowicz

2,900 Shares


.011
%Preferred Stock

Frank M. Novosel

3,500 Shares


.013
%Preferred Stock

Delbert Wacker

3,000 Shares


.011.
%   ITEM 13.
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
    INDEPENDENCE  (a)
    Transactions
    with Related Persons  -
        (b)
    Review,
    Approval or Ratification of Transactions with Related
    Persons    (c)
    Director
    Independence   24




---



##### Table of Contents



ITEM 14.
    PRINCIPAL
    ACCOUNTING FEES AND SERVICES  Audit
    Fees
  Form 10-Q
  Audit-Related
    Fees
    Tax
    Fees
    All Other
    Fees
    Pre-Approval
    Policies and Procedures
   PART IV  ITEM 15.
    EXHIBITS,
    FINANCIAL STATEMENT SCHEDULES        Form 10-K
    *3(a)(I)

Articles of Incorporation of the Company, as amended**3(b)

Bylaws of the Company***4

Specimen of certificate representing Series A Preferred
    Shares***10(a)

Form of Servicing Agreement between the Company and the Bank***10(b)

Form of Advisory Agreement between the Company and the Bank***10(c)

Form of Bank Loan Agreement between the Company and the Bank***10(d)

Form of Mortgage Loan Assignment Agreement between the Company
    and the Bank14

Code of Ethics for Senior Officers (Incorporated by reference to
    Exhibit 14 to the Companys Annual Report on
    Form 10-K
    for the year ended December 31, 2003) 25




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##### Table of Contents



24

Power of attorney31.1

Certification of Pamela C. Piarowski pursuant to
    Rule 13a  14(a)31.2

Certification of Paul R. Skubic pursuant to
    Rule 13a  14(a)32.1

Certification pursuant to 18 U.S.C. Section 1350     *
    
    Incorporated by reference to Exhibit 3.1 filed with the
    Companys
    Form 8-K
    dated March 4, 2009.**
    
    Incorporated by reference to Exhibit 3.1 filed on the
    Companys Form 8-K dated August 31, 2007.***
    
    Incorporated by reference to the exhibit of the same number
    filed with the Companys Registration Statement on
    Form S-11
    (Securities and Exchange Commission file number
    333-40257) 26




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##### Table of Contents



Index to
    Consolidated Financial Statements
  Form 10-K:
  Harris Preferred Capital CorporationConsolidated Financial StatementsReport of Independent Registered Public Accounting FirmConsolidated Balance SheetsConsolidated Statements of Income and Comprehensive IncomeConsolidated Statements of Changes in Stockholders EquityConsolidated Statements of Cash FlowsNotes to Consolidated Financial StatementsHarris N.A.Financial ReviewConsolidated Financial StatementsIndependent Auditors ReportConsolidated Statements of ConditionConsolidated Statements of OperationsConsolidated Statements of Comprehensive Income (Loss)Consolidated Statements of Changes in Stockholders EquityConsolidated Statements of Cash FlowsNotes to Consolidated Financial Statements    27




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##### Table of Contents



SIGNATURES    PAUL
    R. SKUBIC
     PAMELA
    C. PIAROWSKI
       David J. Blockowicz

Forrest M. SchneiderFrank M. Novosel

Delbert J. WackerPaul R. SkubicAttorney-In-Fact      28




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM           
    29




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##### Table of Contents



Harris
    Preferred Capital Corporation



Consolidated
    Balance Sheets  December 312009


2008(In thousands, except share data)ASSETSCash on deposit with Harris N.A.

$
916


$
816Securities purchased from Harris N.A. under agreement to resell


22,000



5,863Total cash and cash equivalents

$
22,916


$
6,679Notes receivable from Harris N.A.


3,584



4,284Securities
    available-for-sale,
    at fair valueMortgage-backed


515,190



488,282U.S. Treasury


39,999



Other assets


1,885



1,885Total assets

$
583,574


$
501,130LIABILITIES AND STOCKHOLDERS EQUITYAccrued expenses

$
111


$
112Deferred tax liabilities


973



774Total liabilities

$
1,084


$
886Stockholders Equity73/8%
    Noncumulative Exchangeable Preferred Stock, Series A
    ($1 par value);liquidation value of $250,000; 20,000,000 shares
    authorized, 10,000,000 shares issued and outstanding

$
250,000


$
250,000Common stock ($1 par value); 5,000 shares authorized;
    1,180 shares issued and outstanding at December 31,
    2009, and 1,000 shares authorized, issued and outstanding
    at December 31, 2008


1



1Additional paid-in capital


320,733



240,733Earnings in excess of (less than) distributions


(601
)


(322
)Accumulated other comprehensive income  net
    unrealized gains on
    available-for-sale
    securities


12,357



9,832Total stockholders equity

$
582,490


$
500,244Total liabilities and stockholders equity

$
583,574


$
501,130    30




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##### Table of Contents



Harris
    Preferred Capital Corporation



Consolidated
    Statements of Income

and
    Comprehensive Income  For the Years EndedDecember 312009


2008


2007(In thousands)Interest income:Securities purchased from Harris N.A. under agreement to resell

$
31


$
963


$
3,950Notes receivable from Harris N.A.


246



302



364Securities
    available-for-sale:Mortgage-backed


22,356



20,011



17,929U.S. Treasury


2



20



281Total interest income

$
22,635


$
21,296


$
22,524Operating expenses:Loan servicing fees paid to Harris N.A.


12



15



18Advisory fees paid to Harris N.A.


196



208



119General and administrative


399



374



300Total operating expenses

$
607


$
597


$
437Income before income taxes

$
22,028


$
20,699


$
22,087Applicable state income taxes


1,608







Net Income

$
20,420


$
20,699


$
22,087Preferred stock dividends


18,438



18,438



18,438Net income available to common stockholder

$
1,982


$
2,261


$
3,649Basic and diluted earnings per common share

$
1,680


$
2,261


$
3,649Average number of common shares outstanding


1,148



1,000



1,000Net income

$
20,420


$
20,699


$
22,087Other comprehensive income:Available-for-sale
    securities:Unrealized holding gains arising during the period, net of state
    taxes

$
2,525


$
10,839


$
7,047Less reclassification adjustment for realized gains included in
    net income

$



$



$
Comprehensive income

$
22,945


$
31,538


$
29,134    31




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##### Table of Contents



Harris
    Preferred Capital Corporation



Consolidated
    Statements of Changes in Stockholders Equity

For the
    Years Ended December 31, 2009, 2008 and 2007  (Distributions inExcess of


AccumulatedAdditional


Earnings) Earnings


Other


TotalPreferred


Common


Paid-in


in Excess of


Comprehensive


StockholdersStock


Stock


Capital


Distributions


Income (Loss)


Equity(In thousands except per share data)Net income

$



$



$



$
22,087


$



$
22,087Other comprehensive income


















7,047



7,047Dividends declared on common stock ($3,511 per share)














(3,511
)






(3,511
)Dividends declared on preferred stock ($1.8438 per share)














(18,438
)






(18,438
)Balance at December 31, 2007

$
250,000


$
1


$
240,733


$
67


$
(1,007
)

$
489,794Net income

$



$



$



$
20,699


$



$
20,699Other comprehensive income


















10,839



10,839Dividends declared on common stock ($2,650 per share)














(2,650
)






(2,650
)Dividends declared on preferred stock ($1.8438 per share)














(18,438
)






(18,438
)Balance at December 31, 2008

$
250,000


$
1


$
240,733


$
(322
)

$
9,832


$
500,244Net income

$



$



$



$
20,420


$



$
20,420Other comprehensive income


















2,525



2,525Capital contribution and issuance of common stock










80,000











80,000Dividends declared on common stock ($2,261 per share)














(2,261
)






(2,261
)Dividends declared on preferred stock ($1.8438 per share)














(18,438
)






(18,438
)Balance at December 31, 2009

$
250,000


$
1


$
320,733


$
(601
)

$
12,357


$
582,490    32




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##### Table of Contents



Harris
    Preferred Capital Corporation



Consolidated
    Statements of Cash Flows  For the Years Ended December 312009


2008


2007(In thousands)Operating Activities:Net income

$
20,420


$
20,699


$
22,087Adjustments to reconcile net income to net cash provided by
    operating activities:Net (increase) decrease in other assets






(356
)


139Net (decrease) increase in accrued expenses


(1
)


(17
)


9Net cash provided by operating activities

$
20,419


$
20,326


$
22,235Investing Activities:Repayments of notes receivable from Harris N.A.


700



1,051



1,177Purchases of securities
    available-for-sale


(336,736
)


(265,238
)


(358,745
)Proceeds from maturities/redemptions of securities
    available-for-sale


272,553



257,763



360,620Net cash (used in) provided by investing activities

$
(63,483
)

$
(6,424
)

$
3,052Financing Activities:Cash dividends paid on preferred stock

$
(18,438
)

$
(18,438
)

$
(23,049
)Cash dividends paid on common stock


(2,261
)


(5,650
)


(511
)Capital contribution and issuance of common stock


80,000







Net cash provided by (used in) financing activities

$
59,301


$
(24,088
)

$
(23,560
)Net increase (decrease) in cash on deposit with Harris N.A.

$
16,237


$
(10,186
)

$
1,727Cash and cash equivalents with Harris N.A. at beginning of year


6,679



16,865



15,138Cash and cash equivalents with Harris N.A. at end of year

$
22,916


$
6,679


$
16,865    33




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##### Table of Contents



Harris
    Preferred Capital Corporation



Notes
    to consolidated Financial Statements  1.
    Organization
    and Basis of Presentation  Sections 856-860. 3 8
        2.
    Summary
    of Significant Accounting Policies  Cash
    and Cash Equivalents
    Allowance
    for Loan Losses
   34




---



##### Table of Contents



Harris
    Preferred Capital Corporation
  Notes
    to consolidated Financial
    Statements  (Continued)
  Income
    Taxes
  Sections 856-860
      Securities
  available-for-sale, Available-for-sale
      available-for-sale
  other-than-temporary
 35




---



##### Table of Contents



Harris
    Preferred Capital Corporation
  Notes
    to consolidated Financial
    Statements  (Continued)
    New
    Accounting Pronouncements
      2009-05, 2009-05) 2009-05 2009-05
  Managements
    Estimates
    3.
    Notes
    Receivable from the Bank     36




---



##### Table of Contents



Harris
    Preferred Capital Corporation
  Notes
    to consolidated Financial
    Statements  (Continued)
          4.
    Securities  320-10-65-1 FAS 115-2 FAS 124-2 other-than-temporary available-for-sale held-to-maturity,
  available-for-sale
  December 31, 2009


December 31, 2008Amortized


Unrealized


Unrealized


Fair


Amortized


Unrealized


Unrealized


FairCost


Gains


Losses


Value


Cost


Gains


Losses


Value(In thousands)Available-for-Sale
    SecuritiesResidential mortgage-backed

$
501,861


$
14,214


$
885


$
515,190


$
477,678


$
10,720


$
116


$
488,282U.S. Treasury Bills


40,000







1



39,999















Total Securities

$
541,861


$
14,214


$
886


$
555,189


$
477,678


$
10,720


$
116


$
488,282    37




---



##### Table of Contents



Harris
    Preferred Capital Corporation
  Notes
    to consolidated Financial
    Statements  (Continued)
  other-than-temporarily
  December 31,
    2009
  Length of Continuous Unrealized Loss PositionLess than 12 months


12 months or longer


TotalUnrealized





Unrealized





UnrealizedFair Value


Loss


Fair Value


Losses


Fair Value


Losses(In thousands)Residential
    mortgage-backed

$
104,988


$
885










$
104,988


$
885U.S. Treasury bills


39,999



1











39,999



1Total

$
144,987


$
886


$



$



$
144,987


$
886   December 31,
    2008
  Length of Continuous Unrealized Loss PositionLess than 12 months


12 months or longer


TotalUnrealized





Unrealized





UnrealizedFair Value


Losses


Fair Value


Losses


Fair Value


Losses(In thousands)Residential
    mortgage-backed

$
35,618


$
112


$
16,937


$
4


$
52,555


$
116Total

$
35,618


$
112


$
16,937


$
4


$
52,555


$
116   available-for-sale
  December 31, 2009Amortized


FairCost


Value(In thousands)Maturities:Within 1 year

$
50,641


$
50,7601 to 5 years


34,535



35,2765 to 10 years


129,541



135,046Over 10 years


327,144



334,107Total Securities

$
541,861


$
555,189   5.
    Fair
    Value Measurements  ASC 820-10 FAS 157-4 825-10 FAS 107-1 28-1, 320-10
 38




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##### Table of Contents



Harris
    Preferred Capital Corporation
  Notes
    to consolidated Financial
    Statements  (Continued)
  FAS 115-2 FAS 124-2 Other-Than-Temporary available-for-sale held-to-maturity,
      Fair Value


Fair Value Measurements Using12/31/09


Level 1


Level 2


Level 3(In thousands)Available-for-sale securities:Residential mortgage-backed

$
515,190


$



$
515,190


$
U.S. Treasury


39,999



39,999







$
555,189


$
39,999


$
515,190


$
   Fair Value


Fair Value Measurements Using12/31/08


Level 1


Level 2


Level 3(In thousands)Available-for-sale securities:Residential mortgage-backed

$
488,282


$



$
488,282


$
   6.
    Fair
    Value of Financial Instruments  item-by-item
     39




---



##### Table of Contents



Harris
    Preferred Capital Corporation
  Notes
    to consolidated Financial
    Statements  (Continued)
  available-for-sale
    December 31, 2009


December 31, 2008Carrying


Fair


Carrying


FairValue


Value


Value


Value(In thousands)AssetsCash on deposit with Harris N.A.

$
916


$
916


$
816


$
816Securities purchased from Harris N.A. under agreement to resell


22,000



22,000



5,863



5,863Notes receivable from Harris N.A.


3,584



4,908



4,284



8,592Securities
    available-for-sale


555,189



555,189



488,282



488,282Accrued interest receivable


1,885



1,885



1,885



1,885Total on-balance-sheet financial assets

$
583,574


$
584,898


$
501,130


$
505,438   7.
    Common
    and Preferred Stock  Form S-11.
  3 8
   40




---



##### Table of Contents



Harris
    Preferred Capital Corporation
  Notes
    to consolidated Financial
    Statements  (Continued)
    8.
    Transactions
    with Affiliates  day-to-day
        9.
    Operating
    Segment    10.
    Commitments
    and Contingencies   41




---



##### Table of Contents



Harris
    Preferred Capital Corporation
  Notes
    to consolidated Financial
    Statements  (Continued)
   11.
    Quarterly
    Financial Information (unaudited)    Year Ended December 31, 2009


Year Ended December 31, 2008First


Second


Third


Fourth


First


Second


Third


FourthQuarter


Quarter


Quarter


Quarter


Quarter


Quarter


Quarter


Quarter(In thousands except per share data)Total interest income

$
5,456


$
5,683


$
5,860


$
5,636


$
5,406


$
5,367


$
5,274


$
5,249Total operating expenses


179



118



134



176



141



129



134



193Net income before income taxes

$
5,277


$
5,565


$
5,726


$
5,460


$
5,265


$
5,238


$
5,140


$
5,056Applicable state income taxes


385



406



418



399















Net Income

$
4,892


$
5,159


$
5,308


$
5,061


$
5,265


$
5,238


$
5,140


$
5,056Preferred dividends


4,609



4,609



4,610



4,610



4,609



4,609



4,610



4,610Net income available to common stockholder

$
283


$
550


$
698


$
451


$
656


$
629


$
530


$
446Basic and diluted earnings per common share

$
268


$
466


$
593


$
381


$
656


$
629


$
530


$
447   Financial Statements of Harris N.A.
    pooling-of-interests
 42




---



##### Table of Contents



MANAGEMENTS
    DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  2009
    Compared to 2008
  Summary
    available-for-sale
             43




---



##### Table of Contents



2008
    Compared to 2007
  Summary
                 44




---



##### Table of Contents



Independent
    Auditors Report
           
    44A




---



##### Table of Contents



Harris
    N.A. and Subsidiaries
  Consolidated
    Statements of Condition
  December 312009


2008(In thousands except share date)AssetsCash and demand balances due from banks

$
904,865


$
1,072,255Money market assets:Interest-bearing deposits at banks ($8.4 billion and
    $24.7 billion held at Federal Reserve Bank at
    December 31, 2009 and 2008, respectively)


9,231,581



26,031,291Federal funds sold and securities purchased under agreement to
    resell


174,979



182,063Total cash and cash equivalents

$
10,311,425


$
27,285,609Securities
    available-for-sale
    at fair value


5,898,831



9,031,048Trading account assets and derivative instruments


1,353,509



1,367,833Loans, net of unearned income


23,175,717



26,396,381Allowance for loan losses


(680,782
)


(574,224
)Net loans

$
22,494,935


$
25,822,157Loansheld for sale


29,974



29,544Premises and equipment


526,623



533,516Bank-owned insurance


1,339,657



1,304,315Goodwill and other intangible assets


817,507



779,444Other assets


1,199,166



1,152,589Total assets

$
43,971,627


$
67,306,055LiabilitiesDeposits in domestic offices  noninterest-bearing

$
9,704,773



S 28,059,575 interest-bearing
    (includes $707.4 and $77.7 million measured at fair value
    at December 31, 2009 and 2008, respectively)


18,968,058



24,374,034Deposits in foreign offices  interest-bearing


1,622,410



920,235Total deposits

$
30,295,241


$
53,353,844Federal funds purchased


236,099



78,525Securities sold under agreement to repurchase


2,512,490



3,501,758Short-term borrowings


717,050



359,476Short-term senior notes






75,000Accrued interest, taxes and other expenses


172,618



247,825Accrued pension and post-retirement


58,393



171,933Other liabilities


643,289



631,487Long-term notes  senior/unsecured


2,396,500



2,096,500Long-term notes  senior/secured


2,375,000



2,375,000Long-term notes  subordinated


292,750



292,750Total liabilities

$
39,699,430


$
63,184,098Stockholders EquityCommon stock ($10 par value); authorized
    40,000,000 shares; issued and outstanding 17,534,512 and
    17,149,512 shares at December 31, 2009 and
    December 31, 2008, respectively

$
175,345


$
171,495Surplus


2,322,917



2,172,029Retained earnings


1,621,719



1,734,472Accumulated other comprehensive loss


(97,784
)


(206,039
)Stockholders equity before noncontrolling
    interest  preferred stock of subsidiary

$
4,022,197


$
3,871,957Noncontrolling interest  preferred stock of subsidiary


250,000



250,000Total stockholders equity

$
4,272,197


$
4,121,957Total liabilities and stockholders equity

$
43,971,627


$
67,306,055    45




---



##### Table of Contents



Harris
    N.A. and Subsidiaries
  Consolidated
    Statements of Operations
  For The Years Ended December 312009


2008


2007(In thousands)Interest IncomeLoans

$
1,152,281


$
1,452,034


$
1,627,545Money market assets:Deposits at banks


19,418



30,469



21,839Federal funds sold and securities purchased under agreements to
    resell


151



16,326



41,554Trading account assets


9,009



20,338



8,473Securities
    available-for-sale:U.S. Treasury and federal agency


100,689



246,674



447,558State and municipal


54,174



52,387



37,162Other


15,427



19,473



25,837Total interest income

$
1,351,149


$
1,837,701


$
2,209,968Interest ExpenseDeposits

$
307,166


$
609,830


$
978,470Short-term borrowings


7,982



61,295



238,924Short-term senior notes


1,726



15,483



21,251Long-term notes  senior/unsecured


88,276



68,190



86,400Long-term notes  senior/secured


49,183



67,621



13,825Long-term notes  subordinated


4,005



10,795



17,154Total interest expense

$
458,338


$
833,214


$
1,356,024Net Interest Income

$
892,811


$
1,004,487


$
853,944Provision for loan losses


544,413



589,108



90,000Net Interest Income after Provision for Loan Losses

$
348,398


$
415,379


$
763,944Noninterest IncomeTrust and investment management fees

$
78,724


$
87,164


$
92,827Net money market and bond trading income, including derivative
    activity


20,270



7,737



10,422Foreign exchange trading gains, net


11,462



6,900



3,750Service charges and fees


202,156



202,362



187,099Equity securities gains, net


8,365



49,884



5,067Net securities gains, other than trading


35,037



10,956



1,271Other-than-temporary
    impairment on securities


(1,350
)


(4,571
)


Bank-owned insurance


45,047



52,054



53,808Letter of credit fees


20,674



16,035



18,682Net gains on loans held for sale


21,680



4,471



3,689Net losses on loan sales to affiliates






(9,453
)


Other


40,971



39,794



35,579Total noninterest income

$
483,036


$
463,333


$
412,194Noninterest ExpensesSalaries and other compensation

$
407,958


$
409,751


$
364,110Pension, profit sharing and other employee benefits


103,006



103,887



110,490Net occupancy


100,651



99,149



86,304Equipment


68,055



69,137



64,525Marketing


41,411



47,655



37,915Communication and delivery


29,546



31,458



27,648Professional fees


90,855



105,724



81,057Outside information processing, database and network fees


34,803



39,927



34,548FDIC Insurance


61,977



16,165



3,404Intercompany services, net


(1,503
)


20,384



39,672Restructuring (reversal) charge


(702
)


(2,664
)


18,760Visa indemnification (reversal) charge


(3,000
)


(16,300
)


34,000Auction rate security charge






21,825



Amortization of intangibles


25,409



27,865



25,627Other


83,780



85,772



64,391Total noninterest expenses

$
1,042,246


$
1,059,735


$
992,451(Loss) income before income tax (benefit) expense

$
(210,812
)

$
(181,023
)

$
183,687Applicable income tax (benefit) expense


(116,497
)


(96,219
)


22,024Net (loss) income

$
(94,315
)

$
(84,804
)

$
161,663Less: noncontrolling interest  dividends on preferred
    stock of subsidiary


18,438



18,438



18,438Net (Loss) Income Available for Common Stockholder

$
(112,753
)

$
(103,242
)

$
143,225    46




---



##### Table of Contents



Harris
    N.A. and Subsidiaries
  Consolidated
    Statements of Comprehensive Income (Loss)
  For The Years Ended December 312009


2008


2007(In thousands)Net (loss) income

$
(94,315
)

$
(84,804
)

$
161,663Other comprehensive income (loss):Cash flow hedges:Net unrealized gain (loss) on derivative instruments, net of tax
    expense (benefit) of $31,935 in 2009, ($68,427) in 2008 and
    ($11,936) in 2007


59,307



(127,075
)


(22,170
)Reclassification adjustment for realized loss included in net
    (loss) income, net of tax benefit of $3,447 in 2009, $5,090 in
    2008 and $4,787 in 2007


6,402



9,452



8,889Pension and postretirement medical benefit plans:Net gain (loss) and net prior service cost, net of tax expense
    (benefit) of $18,182 in 2009, ($54,953) in 2008 and $26,774 in
    2007


33,764



(102,256
)


49,724Reclassification adjustment for amortization included in net
    (loss) income, net of tax benefit of $1,466 in 2009, $431 in
    2008 and $2,865 in 2007


2,723



800



5,320Unrealized gains on available-for-sale securities:Unrealized holding gains arising during the period, net of tax
    expense of $9,844 in 2009, $24,931 in 2008, and $15,814 in 2007


28,833



47,283



29,380Reclassification adjustment for realized gains included in net
    (loss) income, net of tax expense of $12,263 in 2009, $3,835 in
    2008, and $445 in 2007


(22,774
)


(7,121
)


(826
)Other comprehensive income (loss)

$
108,255


$
(178,917
)

$
70,317Comprehensive (loss) income


13,940



(263,721
)


231,980Comprehensive income related to noncontrolling interest


18,438



18,438



18,438Comprehensive (loss) income available for common stockholder


(4,498
)


(282,159
)


213,542    47




---



##### Table of Contents



Harris
    N.A. and Subsidiaries
  Consolidated
    Statements of Changes in Stockholders Equity
  Accumulated


NoncontrollingOther


Interest -


TotalCommon





Retained


Comprehensive


Preferred Stock


StockholdersStock


Surplus


Earnings


Loss


of Subsidiary


Equity(In thousands except per share data)Balance at December 31, 2006

$
143,034


$
1,489,521


$
1,811,497


$
(97,639
)

$
250,000


$
3,596,413Stock option exercise






1,601















1,601Tax benefit from stock option exercise






7,464















7,464Net income










143,225







18,438



161,663Dividends  ($4.84 per common share)










(75,000
)










(75,000
)Dividends  preferred stock of subsidiary


















(18,438
)


(18,438
)Other comprehensive income














70,317







70,317Issuance of common stock and contribution to capital surplus


12,114



280,286















292,400Adoption to initially apply FASB ASC 740






1,737



185











1,922Balance at December 31, 2007

$
155,148


$
1,780,609


$
1,879,907


$
(27,322
)

$
250,000


$
4,038,342Stock option exercise






1,972















1,972Tax benefit from stock option exercise






1,779















1,779Net (loss) income










(103,242
)






18,438



(84,804
)Dividends  ($2.37 per common share)










(38,000
)










(38,000
)Dividends  preferred stock of subsidiary


















(18,438
)


(18,438
)Other comprehensive loss














(178,917
)






(178,917
)Issuance of common stock and contribution to capital surplus


16,347



387,669















404,016Adoption to initially apply FASB ASC
    715-60










(313
)










(313
)Adoption of measurement date provisions of FASB ASC 715, net of
    tax of $2,090










(3,880
)


200







(3,680
)Balance at December 31, 2008

$
171,495


$
2,172,029


$
1,734,472


$
(206,039
)

$
250,000


$
4,121,957Stock option exercise






1,824















1,824Tax benefit from stock option exercise






2,914















2,914Net (loss) income










(112,753
)






18,438



(94,315
)Dividends  preferred stock of subsidiary


















(18,438
)


(18,438
)Other comprehensive income














108,255







108,255Issuance of common stock and contribution to capital surplus


3,850



146,150















150,000Balance at December 31, 2009

$
175,345


$
2,322,917


$
1,621,719


$
(97,784
)

$
250,000


$
4,272,197    48




---



##### Table of Contents



Harris
    N.A. and Subsidiaries
  Consolidated
    Statements of Cash Flows
  For The Years Ended December 312009


2008


2007Cash Flows from Operating Activities:Net (loss) income

$
(94,315
)

$
(84,804
)

$
161,663Less: noncontrolling interest  dividends on preferred
    stock of subsidiary


18,438



18,438



18,438Net (loss) income available for common stockholder


(112,753
)


(103,242
)


143,225Adjustments to determine net cash flows provided by (used in)
    operating activities:Provision for loan losses


544,413



589,108



90,000Depreciation and amortization, including intangibles


99,123



94,602



43,818Deferred tax expense (benefit)


33,256



1,505



(47,618
)Tax benefit from stock options exercise


2,914



1,779



9,201Other-than-temporary
    impairment on securities


1,350



4,571



Net gains on securities, other than trading


(35,037
)


(10,956
)


(1,271
)Net equity investment gains


(8,365
)


(49,884
)


(5,067
)Increase in bank-owned insurance


(35,342
)


(39,359
)


(43,937
)Net increase in trading securities


(6,367
)


(1,231,304
)


(308,213
)Decrease in accrued interest receivable


42,958



42,695



36,873(Increase) decrease in prepaid expenses


(111,301
)


(3,417
)


6,182(Decrease) increase in accrued interest payable


(62,672
)


(25,945
)


60,888Increase (decrease) in other accrued expenses


88,556



(15,892
)


(34,388
)Net change in pension and post retirement benefits


(57,405
)


(72,462
)


6,790Origination of loans held for sale


(1,379,863
)


(417,250
)


(366,363
)Proceeds from sale of loans held for sale


1,401,113



454,872



341,808Net gains on loans held for sale


(21,680
)


(4,471
)


(3,689
)Net (gains) losses on sale of premises and equipment


(2,605
)


399



(970
)Net losses on loan sales to affiliates






9,453



Recoveries on charged-off loans


72,918



48,160



32,039Net change in due from parent


3,845



741



3,909Visa indemnification (reversal) charge


(3,000
)


(16,300
)


34,000Other, net


(68,358
)


15,763



(44,584
)Net cash provided by (used in) operating activities

$
385,698


$
(726,834
)

$
(47,367
)Cash Flows from Investing Activities:Proceeds from sales of securities
    available-for-sale

$
3,454,572


$
1,263,951


$
11,051,799Proceeds from maturities of securities
    available-for-sale


4,469,289



10,869,711



19,668,971Purchases of securities
    available-for-sale


(4,777,802
)


(11,805,326
)


(28,908,032
)Net decrease (increase) in loans


2,911,334



(220,773
)


651,383Proceeds from loans sold to affiliates


502,711



472,477



Purchases of premises and equipment


(84,782
)


(84,062
)


(77,849
)Sales of premises and equipment


28,699



15,154



27,308Proceeds from Visa redemption






37,800



Acquisitions, net of cash acquired


(681,442
)


(285,214
)


(222,852
)Net cash provided by investing activities

$
5,822,579


$
263,718


$
2,190,728Cash flows from Financing Activities:Net (decrease) increase in deposits

$
(23,695,855
)

$
22,182,025


$
(1,539,038
)Net increase in deposits measured at fair value


629,767







Net (decrease) increase in Federal funds purchased and
    securities sold under agreement to repurchase


(831,694
)


1,784,129



(2,371,213
)Net increase (decrease) in other short-term borrowings


357,574



(584,916
)


(554,139
)Net decrease in short-term senior notes


(75,000
)


(5,000
)


(20,000
)Proceeds from issuance long-term notes 
    senior/unsecured


550,000







1,100,000Repayment of long-term notes  senior/unsecured


(250,000
)






Proceeds from issuance long-term notes  senior/secured






375,000



2,000,000Net proceeds from stock options exercise


1,824



1,972



1,601Excess tax expense from stock options exercise


(639
)


(1,183
)


(7,638
)Capital contributions for acquisitions


150,000



404,016



292,400Cash dividends paid on common stock






(38,000
)


(75,000
)Cash dividends paid on preferred stock


(18,438
)


(18,438
)


(23,049
)Net cash (used in) provided by financing activities

$
(23,182,461
)

$
24,099,605


$
(1,196,076
)Net (decrease) increase in cash and cash equivalents

$
(16,974,184
)

$
23,636,489


$
947,285Cash and cash equivalents at January 1


27,285,609



3,649,120



2,701,835Cash and cash equivalents at December 31

$
10,311,425


$
27,285,609


$
3,649,120 49




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##### Table of Contents



Harris
    N.A. and Subsidiaries
  Consolidated
    Statements of Cash Flows  (Continued)
  For The Years Ended December 312009


2008


2007Supplemental Disclosures of Cash Flow Information:Cash paid (received) during the year for:Interest

$
521,010


$
825,709


$
1,350,610Income taxes

$
(167,848
)

$
92,410


$
99,710Financing activity affecting assets and liabilities but not
    resulting in cash flows:Net increase in assets and liabilities due to contribution of
    parents banking assets

$
681,442


$
285,214


$
222,852Supplemental Disclosures of Noncash Activities:In 2009, the fair values of noncash assets acquired and
    liabilities assumed were $0.4 million and zero, respectively, in
    the acquisition of Givens, $710 million and $94.1 million, in
    the acquisition of Diners Club.In 2008, the fair values of noncash assets acquired and
    liabilities assumed were $1.4 billion and $1.3 billion,
    respectively, in the acquisition of Merchants and Manufacturers
    Bancorporation, $812.8 million and $681.6 million, respectively,
    in the acquisition of Ozaukee Bank.In 2007, the fair values of noncash assets acquired and
    liabilities assumed in the acquisition of First National Bank
    and Trust were $1.4 billion and $1.2 billion, respectively.Noncash transfers to OREO totaled $7.8 million, $10.0 million
    and $13.6 million in 2009, 2008 and 2007, respectively.    50




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##### Table of Contents



HARRIS
    N.A AND SUBSIDIARIES
  Notes
    to Consolidated Financial Statements
  1.
    Summary
    of Significant Accounting Policies  Principles
    of consolidation and nature of operations
      not-for-profit
  Basis
    of accounting
    Noncontrolling
    interest in subsidiary preferred stock
  810-10-65)
  Foreign
    currency and foreign exchange contracts
    Derivative
    financial instruments
     51




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##### Table of Contents



HARRIS
    N.A AND SUBSIDIARIES
  Notes
    to Consolidated Financial
    Statements  (Continued)
                  Securities
  available-for-sale. Available-for-sale
 52




---



##### Table of Contents



HARRIS
    N.A AND SUBSIDIARIES
  Notes
    to Consolidated Financial
    Statements  (Continued)
    Available-for-sale
  other-than-temporary other-than-temporary
  FAS 115-2 FAS 124-2, Other-Than-Temporary 320-10-65) other-than-temporary available-for-sale held-to-maturity,
  Loans
           53




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##### Table of Contents



HARRIS
    N.A AND SUBSIDIARIES
  Notes
    to Consolidated Financial
    Statements  (Continued)
          310-30, Loans and Debt Securities Acquired with Deteriorated Credit
    Quality.
  Allowance
    for loan losses / Losses on commitments
     54




---



##### Table of Contents



HARRIS
    N.A AND SUBSIDIARIES
  Notes
    to Consolidated Financial
    Statements  (Continued)
  Premises
    and Equipment
    Leases
    Bank-owned
    insurance
    No. 06-04, 715-60)
  Intangible
    Assets
    Income
    Taxes
       55




---



##### Table of Contents



HARRIS
    N.A AND SUBSIDIARIES
  Notes
    to Consolidated Financial
    Statements  (Continued)
    Cash
    flows
    Managements
    estimates
  other-than-temporary
  Recent
    accounting standards
         56




---



##### Table of Contents



HARRIS
    N.A AND SUBSIDIARIES
  Notes
    to Consolidated Financial
    Statements  (Continued)
    FAS 132R-1, 715-20-65)
  2.
    Securities  available-for-sale
  December 31, 2009


December 31, 2008Amortized


Unrealized


Unrealized


Fair


Amortized


Unrealized


Unrealized


FairCost


Gains


Losses


Value


Cost


Gains


Losses


Value(In thousands)U.S. Treasury

$
40,250


$



$
(1
)

$
40,249


$
172,602


$
27,901


$



$
200,503U.S. government agency


2,869,073



15,850



(494
)


2,884,429



3,830,904



34,355



(4,907
)


3,860,352U.S. government sponsored mortgage-backed


712,912



21,629



(894
)


733,647



2,856,034



52,541



(619
)


2,907,956State and municipal


1,549,003



44,685



(2,996
)


1,590,692



1,547,327



24,555



(12,337
)


1,559,545Non-mortgage asset backed


36,489



8,237







44,726



238,293







(3,747
)


234,546Foreign government debt securities


500,499



1,441







501,940



200,746



4







200,750Other


103,148











103,148



67,396











67,396Total securities

$
5,811,374


$
91,842


$
(4,385
)

$
5,898,831


$
8,913,302


$
139,356


$
(21,610
)

$
9,031,048   available-for-sale available-for-sale available-for-sale
 57




---



##### Table of Contents



HARRIS
    N.A AND SUBSIDIARIES
  Notes
    to Consolidated Financial
    Statements  (Continued)
  other-than-temporary
  Length of Continuous Unrealized Loss PositionLess than 12 months


12 months or longer


TotalUnrealized





Unrealized


Number of





UnrealizedFair Value


Losses


Fair Value


Losses


Securities


Fair Value


Losses(In thousands)December 31, 2009U.S. Treasury

$
40,249


$
(1
)

$



$







$
40,249


$
(1
)U.S. government agency


184,279



(20
)


514,526



(474
)


6



698,805



(494
)U.S. government sponsored mortgage-backed


105,003



(885
)


1,237



(9
)


7



106,240



(894
)State and municipal


144,519



(1,768
)


24,179



(1,228
)


88



168,698



(2,996
)Temporarily impaired securities 
    available-for-sale

$
474,050


$
(2,674
)

$
539,942


$
(1,711
)


101


$
1,013,992


$
(4,385
)December 31, 2008U.S. Treasury

$



$



$



$







$



$
U.S. government agency


1,052,155



(2,238
)


267,125



(2,669
)


2



1,319,280



(4,907
)U.S. government sponsored mortgage-backed


92,858



(506
)


4,814



(113
)


5



97,672



(619
)State and municipal


241,543



(10,975
)


25,637



(1,362
)


85



267,180



(12,337
)Non-mortgage asset backed


234,492



(3,747
)














234,492



(3,747
)Temporarily impaired securities 
    available-for-sale

$
1,621,048


$
(17,466
)

$
297,576


$
(4,144
)


92


$
1,918,624


$
(21,610
)   available-for-sale
  December 31, 2009Amortized


FairCost


Value(In thousands)Maturities:Within 1 year

$
2,391,465


$
2,401,2241 to 5 years


1,949,326



1,978,1475 to 10 years


669,660



691,153Over 10 years


637,137



651,546Other securities without stated maturity


163,786



176,761Total securities

$
5,811,374


$
5,898,831      58




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##### Table of Contents



HARRIS
    N.A AND SUBSIDIARIES
  Notes
    to Consolidated Financial
    Statements  (Continued)
    available-for-sale
    available-for-sale
  available-for-sale
  available-for-sale
 59




---



##### Table of Contents



HARRIS
    N.A AND SUBSIDIARIES
  Notes
    to Consolidated Financial
    Statements  (Continued)
   3.
    Loans    December 312009


2008(In thousands)Domestic loans:Commercial, financial, agricultural, brokers and dealers

$
3,360,579


$
4,717,846Real estate construction


561,351



1,116,379Real estate mortgages


13,985,641



15,574,352Installment


4,517,429



4,789,295Credit card


704,604



2,060Lease financing, net (unearned discount of $0.1 million and
    $0.2 million at December 31, 2009 and
    December 31, 2008, respectively)


15,603



18,386Foreign loans:Other, primarily commercial and industrial


30,637



178,357Total loans

$
23,175,844


$
26,396,675Less unearned income


127



294Loans, net of unearned income

$
23,175,717


$
26,396,381Less allowance for loan losses


680,782



574,224Loans, net of allowance for loan losses

$
22,494,935


$
25,822,157     December 312009


2008(In thousands)Nonaccrual loans

$
485,996


$
317,986Nonperforming restructured loans


22,070



Total nonperforming loans

$
508,066


$
317,986Other real estate owned


10,868



9,921Total nonperforming assets

$
518,934


$
327,907Gross amount of interest income that would have been recorded if
    year-end nonperforming loans had been accruing interest at their
    original terms

$
23,660


$
15,059Interest income actually recognized


4,743



8,048Interest shortfall

$
18,917


$
7,01190-day past
    due loans, still accruing interest (all domestic)

$
116,107


$
75,045Nonperforming loans to total loans at year-end


2.20
%


1.21
%Nonperforming assets to total loans at year-end


2.25
%


1.25    60




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##### Table of Contents



HARRIS
    N.A AND SUBSIDIARIES
  Notes
    to Consolidated Financial
    Statements  (Continued)
    310-30, Loans and Debt Securities Acquired with Deteriorated Credit
    Quality. 310-30
  310-30.
    December 312009

2008(In thousands)Contractual outstanding balance

$
42,372


$
86,006Carrying amount


29,170



59,761     4.
    Allowance
    for Loan Losses    Years Ended December 312009


2008(In thousands)Balance, beginning of year

$
574,224


$
367,525Charge-offs


(510,773
)


(462,256
)Recoveries


72,918



48,160Net charge-offs

$
(437,855
)

$
(414,096
)Provisions charged to expense


544,413



589,108Acquired reserves from acquisition






31,687Balance, end of year

$
680,782


$
574,224  61




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##### Table of Contents



HARRIS
    N.A AND SUBSIDIARIES
  Notes
    to Consolidated Financial
    Statements  (Continued)
    Impaired Loans


Impaired Loansfor Which There


for Which There


Totalis a Related


is No Related


ImpairedAllowance


Allowance


Loans(In thousands)December 31, 2009Balance





$
128,665


$
130,260


$
258,925Related allowance






58,479







58,479Balance, net of allowance





$
70,186


$
130,260


$
200,446December 31, 2008Balance





$
130,746


$
187,240


$
317,986Related allowance






14,242







14,242Balance, net of allowance





$
116,504


$
187,240


$
303,744   Years Ended December 312009


2008(In thousands)Average impaired loans

$
401,150


$
522,006Total interest income on impaired loans recorded on a cash basis

$
4,743


$
8,048     Years Ended December 312009


2008(In thousands)Balance, beginning of year

$
4,923


$
4,592Provisions charged to expense


1,053



331Balance, end of year

$
5,976


$
4,923  62




---



##### Table of Contents



HARRIS
    N.A AND SUBSIDIARIES
  Notes
    to Consolidated Financial
    Statements  (Continued)
   5.
    Premises
    and Equipment    December 312009


2008(In thousands)Land

$
104,370


$
105,368Buildings


325,559



319,062Computer equipment and software


501,767



467,871Other equipment


111,514



112,071Leasehold improvements


99,035



96,008Total

$
1,142,245


$
1,100,380Accumulated depreciation and amortization


615,622



566,864Premises and equipment

$
526,623


$
533,516       6.
    Goodwill
    and Other Intangible Assets         63




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##### Table of Contents



HARRIS
    N.A AND SUBSIDIARIES
  Notes
    to Consolidated Financial
    Statements  (Continued)
    2009


2008(In thousands)Goodwill at beginning of year

$
689,158


$
449,097Acquisitions during the year


17,807



238,746Other(1)


(1,674
)


1,315Goodwill at end of year

$
705,291


$
689,158     (1)
    
    Includes the effect of accounting adjustments related to
    non-current year acquisitions.        December 31December 31, 2009


2009


2008Gross Carrying


Accumulated


Net Carrying


Net CarryingAmount


Amortization


Value


Value(In thousands)Branch network

$
145,000


$
(130,500
)

$
14,500


$
24,167Core deposits


124,924



(73,631
)


51,293



66,045Purchased credit card relationships


44,340







44,340



Customer relationships


3,000



(917
)


2,083



Other


1,310



(1,310
)






74Total finite life intangibles

$
318,574


$
(206,358
)

$
112,216


$
90,286       Year

Amount(In thousands)2010

$
25,5402011


20,3832012


15,2672013


13,2972014


10,489Thereafter


27,240Total

$
112,216  64




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##### Table of Contents



HARRIS
    N.A AND SUBSIDIARIES
  Notes
    to Consolidated Financial
    Statements  (Continued)
  Mortgage
    servicing rights
        2009


2008(In thousands)MSR carrying amount at beginning of year

$
22,063


$
17,813Originations


14,309



4,690Acquired in acquisitions






4,195Disposals






(249
)Amortization


(5,774
)


(4,386
)MSR carrying amount at end of year

$
30,598


$
22,063Fair value at beginning of year

$
26,129


$
22,721Fair value at end of year


31,210



26,129   7.
    Deposits    December 312009


2008(In thousands)Demand deposits

$
9,704,773


$
28,059,575Interest-bearing checking deposits


236,172



346,981Money market accounts


10,728,563



8,909,751Statement savings accounts


2,233,326



2,347,111Savings certificates


5,003,757



7,287,605Time deposits


766,240



5,482,586Deposits in foreign offices


1,622,410



920,235Total deposits

$
30,295,241


$
53,353,844  65




---



##### Table of Contents



HARRIS
    N.A AND SUBSIDIARIES
  Notes
    to Consolidated Financial
    Statements  (Continued)
    Year

Amount(In thousands)2010

$
4,441,8412011


1,715,1892012


184,0412013


349,1182014


225,640Thereafter


476,578Total

$
7,392,407     825-10) step-up
  8.
    Securities
    Purchased Under Agreement to Resell, Securities Sold Under
    Agreement to Repurchase, Federal Funds, Commercial Paper and
    Securities Lending Activities     66




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##### Table of Contents



HARRIS
    N.A AND SUBSIDIARIES
  Notes
    to Consolidated Financial
    Statements  (Continued)
        9.
    Senior
    Notes and Long-Term Notes    December 312009


2008


Rate

Reprice(In thousands)Floating rate senior note to BMO subsidiary due June 15,
    2010

$



$
250,000


12bps + 90 day LIBOR

QuarterlyFloating rate senior note to BMO subsidiary due June 13,
    2011


746,500



746,500


14bps + 90 day LIBOR

QuarterlyFloating rate senior note to BMO subsidiary due August 14,
    2012


1,100,000



1,100,000


14bps + 90 day LIBOR

QuarterlyFloating rate senior note to BMO subsidiary due September 29,
    2011


550,000






14bps + 90 day LIBOR

QuarterlyTotal long-term notes  senior/ unsecured

$
2,396,500


$
2,096,500Floating rate secured note to FHLB due October 30, 2017

$
1,000,000


$
1,000,000


30 day LIBOR

MonthlyFloating rate secured note to FHLB due November 13, 2017


500,000



500,000


30 day LIBOR

MonthlyFloating rate secured note to FHLB due November 28, 2017


500,000



500,000


30 day LIBOR

MonthlyFloating rate secured note to FHLB due February 20, 2018


375,000



375,000


30 day LIBOR

MonthlyTotal long-term notes  senior/ secured

$
2,375,000


$
2,375,000Floating rate subordinated note to Bankcorp due
    December 23, 2012

$
28,500


$
28,500


50bps + 90 day LIBOR

QuarterlyFloating rate subordinated note to Bankcorp due May 30, 2013


34,000



34,000


50bps + 90 day LIBOR

QuarterlyFloating rate subordinated note to Bankcorp due
    November 26, 2013


24,000



24,000


50bps + 90 day LIBOR

QuarterlyFloating rate subordinated note to Bankcorp due
    February 26, 2014


6,250



6,250


50bps + 90 day LIBOR

QuarterlyFloating rate subordinated note to Bankcorp due May 31, 2014


100,000



100,000


35bps + 90 day LIBOR

QuarterlyFloating rate subordinated note to Bankcorp due May 31, 2016


100,000



100,000


38bps + 90 day LIBOR

QuarterlyTotal long-term notes -subordinated

$
292,750


$
292,750Total long-term notes  subordinated,senior and secured

$
5,064,250


$
4,764,250  67




---



##### Table of Contents



HARRIS
    N.A AND SUBSIDIARIES
  Notes
    to Consolidated Financial
    Statements  (Continued)
            10.
    Fair
    Value of Financial Instruments and Fair Value
    Measurements  Fair
    Value of Financial Instruments
  Financial Instruments,
    available-for-sale,
   68




---



##### Table of Contents



HARRIS
    N.A AND SUBSIDIARIES
  Notes
    to Consolidated Financial
    Statements  (Continued)
           69




---



##### Table of Contents



HARRIS
    N.A AND SUBSIDIARIES
  Notes
    to Consolidated Financial
    Statements  (Continued)
    December 312009


2008Carrying


Fair


Carrying


FairValue


Value


Value


Value(In thousands)AssetsCash and demand balances due from banks

$
904,865


$
904,865


$
1,072,255


$
1,072,255Money market assets:Interest-bearing deposits at banks


9,231,581



9,231,581



26,031,291



26,031,291Federal funds sold and securities purchased under agreement to
    resell


174,979



174,979



182,063



182,063Securities
    available-for-sale


5,898,831



5,898,831



9,031,048



9,031,048Trading account assets


1,113,460



1,113,460



1,095,699



1,095,699Loans, net of unearned income and allowance for loan losses


22,494,935



22,661,518



25,822,157



25,862,332Loans held for sale


29,974



30,553



29,544



30,742Accrued interest receivable


105,169



105,169



148,127



148,127Derivative instruments


254,417



254,417



286,631



286,631Total on-balance-sheet financial assets

$
40,208,211


$
40,375,373


$
63,698,815


$
63,740,188LiabilitiesDeposits:Demand deposits

$
22,902,834


$
22,902,834


$
39,638,890


$
39,638,890Time deposits


7,392,407



7,507,644



13,714,954



13,813,865Federal funds purchased


236,099



236,099



78,525



78,525Securities sold under agreement to repurchase


2,512,490



2,512,490



3,501,758



3,501,758Short-term borrowings


717,050



717,050



359,476



359,476Short-term senior notes










75,000



75,000Derivative instruments


387,517



387,517



484,179



484,179Trading account liabilities


144,657



144,657



177,797



177,797Accrued interest payable


24,681



24,681



87,352



87,352Long-term notes  senior/unsecured


2,396,500



2,396,500



2,096,500



2,096,500Long-term notes  senior/secured


2,375,000



2,375,000



2,375,000



2,375,000Long-term notes  subordinated


292,750



292,750



292,750



292,750Total on-balance-sheet financial liabilities

$
39,381,985


$
39,497,222


$
62,882,181


$
62,981,092Off-Balance-Sheet Credit Facilities (positive
    positions/(obligations))Loan commitments

$
24,063


$
24,063


$
39,565


$
39,565Standby letters of credit


(1,775
)


(1,775
)


(1,720
)


(1,720
)Total off-balance-sheet credit facilities

$
22,288


$
22,288


$
37,845


$
37,845   Fair
    Value Measurements
  Fair Value
    Measurements and Disclosures, 820-10-55
 70




---



##### Table of Contents



HARRIS
    N.A AND SUBSIDIARIES
  Notes
    to Consolidated Financial
    Statements  (Continued)
  820-10-35 2009-05, Measuring Liabilities at Fair Value 2009-05) 2009-05 2009-05
        over-the-counter over-the-counter
   71




---



##### Table of Contents



HARRIS
    N.A AND SUBSIDIARIES
  Notes
    to Consolidated Financial
    Statements  (Continued)
    December 31, 2009Fair Value Measurements Using


Total atLevel 1


Level 2


Level 3


Fair Value(In thousands)AssetsSecurities available-for-saleU.S. Treasury

$
40,249


$



$



$
40,249U.S. government agency






2,884,429







2,884,429U.S. government sponsored mortgage-backed






733,647







733,647State and municipal






1,561,800



28,892



1,590,692Non-mortgage asset backed






5



44,721



44,726Foreign government debt securities






501,940







501,940Other






103,148







103,148Total securities available-for-sale


40,249



5,784,969



73,613



5,898,831Trading account assets






1,113,460







1,113,460Derivative instruments






253,010



1,407



254,417Total assets

$
40,249


$
7,151,439


$
75,020


$
7,266,708LiabilitiesStructured CDs (included in interest-bearing deposits)

$



$
707,435


$



$
707,435Trading account liabilities (included in other liabilities)


144,657











144,657Derivative instruments (included in other liabilities)






387,414



103



387,517Total liabilities

$
144,657


$
1,094,849


$
103


$
1,239,609   December 31, 2008Fair Value Measurements Using


Total atLevel 1


Level 2


Level 3


Fair Value(In thousands)AssetsSecurities available-for-saleU.S. Treasury

$
200,503


$



$



$
200,503U.S. government agency






3,860,352







3,860,352U.S. government sponsored mortgage-backed






2,907,956







2,907,956State and municipal






1,534,163



25,382



1,559,545Non-mortgage asset backed






204,868



29,678



234,546Foreign government debt securities






200,750







200,750Other






67,396







67,396Total securities available-for-sale


200,503



8,775,485



55,060



9,031,048Trading account assets






1,095,699







1,095,699Derivative instruments






284,198



2,433



286,631Total assets

$
200,503


$
10,155,382


$
57,493


$
10,413,378LiabilitiesStructured CDs (included in interest-bearing deposits)

$



$
77,668


$



$
77,668Trading account liabilities (included in other liabilities)


177,797











177,797Derivative instruments (included in other liabilities)






483,327



852



484,179Commitment to purchase ARS (included in other liabilities)










2,015



2,015Total liabilities

$
177,797


$
560,995


$
2,867


$
741,659  72




---



##### Table of Contents



HARRIS
    N.A AND SUBSIDIARIES
  Notes
    to Consolidated Financial
    Statements  (Continued)
    Trading


Securities








CommitmentAccount


Available-


Derivative


Derivative


to PurchaseAssets


for-sale


Assets


Liabilities


ARS(In thousands)Fair value at January 1, 2008

$







$



$
396


$
Realized and unrealized (losses) gains included in earnings(1)






(19,184
)


2,433



2,377



(10,804
)Unrealized losses included in OCI






(7,731
)










Purchases, sales, issuances, settlements






81,975







(1,921
)


12,819Fair value at December 31, 2008

$




55,060


$
2,433


$
852


$
2,015Gains (losses) included in earnings relating to assets and
    liabilities held at December 31, 2008

$




19,184


$
2,433


$
852


$
Fair value at January 1, 2009

$




55,060


$
2,433


$
852


$
2,015Realized and unrealized gains included in earnings(1)






1,397



12,055



749



Unrealized gains included in OCI






20,706











Purchases, sales, issuances, settlements






(3,550
)


(13,081
)






(2,015
)Fair value at December 31, 2009

$




73,613


$
1,407


$
103


$
Gains (losses) included in earnings relating to assets and
    liabilities held at December 31, 2009

$




1,796


$
1,407


$
103


$
     (1)
    
    Included in trading income for trading account assets; net
    securities gains (losses) for AFS securities; other noninterest
    income for derivative assets and liabilities; ARS charge for
    commitment to purchase ARS.   73




---



##### Table of Contents



HARRIS
    N.A AND SUBSIDIARIES
  Notes
    to Consolidated Financial
    Statements  (Continued)
    December 31, 2009Fair Value Measurements UsingLevel 1


Level 2


Level 3


Losses(In thousands)AssetsNonmarketable securities

$



$



$
18,322


$
1,350Collateral-dependent impaired loans










58,047



39,083Other real estate owned










9,240



603Total assets

$



$



$
85,609


$
41,036   11.
    Financial
    Instruments with Off-Balance-Sheet Risk    Credit
    facilities
          case-by-case
 74




---



##### Table of Contents



HARRIS
    N.A AND SUBSIDIARIES
  Notes
    to Consolidated Financial
    Statements  (Continued)
          Financial
    Guarantees
          Securities
    activities
     75




---



##### Table of Contents



HARRIS
    N.A AND SUBSIDIARIES
  Notes
    to Consolidated Financial
    Statements  (Continued)
      Commitments
    to Invest in Equity Securities
    12.
    Derivative
    Financial Instruments  over-the-counter
  point-in-time
    Types
    of Derivatives
  Swaps
             76




---



##### Table of Contents



HARRIS
    N.A AND SUBSIDIARIES
  Notes
    to Consolidated Financial
    Statements  (Continued)
      Forwards
    and Futures
  over-the-counter
  over-the-counter
  Options
  over-the-counter
    Derivative-Related
    Risks
  Over-the-counter
 77




---



##### Table of Contents



HARRIS
    N.A AND SUBSIDIARIES
  Notes
    to Consolidated Financial
    Statements  (Continued)
    Uses
    of Derivatives
  Trading
    Derivatives
                Hedging
    Derivatives
     78




---



##### Table of Contents



HARRIS
    N.A AND SUBSIDIARIES
  Notes
    to Consolidated Financial
    Statements  (Continued)
            Hedge
    Accounting
  Cash Flow
    Hedges
  available-for-sale
      Fair
    Value Hedges
  available-for-sale
 79




---



##### Table of Contents



HARRIS
    N.A AND SUBSIDIARIES
  Notes
    to Consolidated Financial
    Statements  (Continued)
        Pretax Gain (loss) Recordedin Other Noninterest Income2009


2008(In thousands)Hedging derivatives:Interest rate contracts

$
(1,655
)

$
(2,683
)Hedged items:Fixed rate AFS securities


(2,701
)


20,844Fixed rate deposits


1,370



(21,668
)Other assets






127     Effective Portion of

Ineffective Portion of

Reclassification of GainPre-Tax Gain (Loss)

Gain (Loss) Recorded in

(Loss) from AOCI to netRecorded in OCI

Other Noninterest Income

Interest Income2009

2008

2009

2008

2009

2008(In thousands)

(In thousands)

(In thousands)Interest rate contracts

$
66,722


$
(185,667
)

$
(2
)

$
232


$
(9,849
)

$
(14,542
)     2009


2008(In thousands)Interest rate contracts

$
1,713


$
30,047Foreign exchange contracts


11,462



6,900Equity contracts


10,165



310Total

$
23,340


$
37,257  80




---



##### Table of Contents



HARRIS
    N.A AND SUBSIDIARIES
  Notes
    to Consolidated Financial
    Statements  (Continued)
    Gross Assets


Gross Liabilities2009


2008


2009


2008(In thousands)


(In thousands)Trading derivatives(1):Interest rate contracts

$
288,830


$
497,457


$
294,733


$
469,838Foreign exchange contracts


12,435



41,894



12,176



41,856Equity contracts


36,176



1,954



25,482



1,424Hedging derivatives(2):Interest rate contracts/cash flow hedges


12,960



6,913



153,040



206,212Interest rate contracts/fair value hedges






5,150







38,181Total fair value

$
350,401


$
553,368


$
485,431


$
757,511     (1)
    
    Trading derivatives are recorded in trading assets and other
    liabilities.(2)
    
    Hedging derivatives are recorded in other assets and other
    liabilities.    2009


2008(In thousands)Trading derivatives:

$
12,443,474


$
12,604,888Interest rate contractsForeign exchange contracts


1,366,632



1,918,546Equity contracts


816,666



6,850Hedging derivatives:Interest rate contracts/cash flow hedges


3,381,000



3,056,000Interest rate contracts/fair value hedges






577,655Total

$
18,007,772


$
18,163,939   13.
    Concentrations
    of Credit Risk in Financial Instruments    Midwestern
    Geographic Area
   81




---



##### Table of Contents



HARRIS
    N.A AND SUBSIDIARIES
  Notes
    to Consolidated Financial
    Statements  (Continued)
    14.
    Employee
    Benefit Plans            FAS 132R-1, 715-20-65)
   82




---



##### Table of Contents



HARRIS
    N.A AND SUBSIDIARIES
  Notes
    to Consolidated Financial
    Statements  (Continued)
  out-of-pocket
     83




---



##### Table of Contents



HARRIS
    N.A AND SUBSIDIARIES
  Notes
    to Consolidated Financial
    Statements  (Continued)
    Pension Benefits


Postretirement Medical Benefits2009**


2008**


2007**


2009**


2008**


2007**(In thousands)Change in benefit obligation*Benefit obligation at beginning of year

$
415,035


$
430,891


$
446,204


$
59,723


$
60,988


$
78,881Service cost


19,020



21,897



21,800



1,920



1,994



3,392Interest cost


24,916



25,071



24,996



3,586



3,639



4,182Transfer adjustment










(10,350
)










Plan amendments






















(6,441
)Benefits paid


(32,797
)


(41,771
)


(41,407
)


(3,167
)


(2,624
)


(2,624
)Medicare drug legislation














(1,188
)


841



1,035Actuarial (gain) loss


(4,380
)


(21,590
)


(10,352
)


7,857



(6,523
)


(17,437
)Change in measurement date






537











1,408



Benefit obligation at end of year

$
421,794


$
415,035


$
430,891


$
68,731


$
59,723


$
60,988Change in plan assetsFair value of plan assets at beginning of year

$
309,712


$
380,294


$
322,341


$
43,051


$
64,979


$
46,607Actual return on plan assets


69,738



(123,769
)


81,284



10,451



(23,181
)


9,674Transfer adjustment










(6,590
)










8,698Employer contribution


70,179



99,521



24,666











Benefits paid


(32,797
)


(41,771
)


(41,407
)










Change in measurement date






(4,563
)










1,253



Fair value of plan assets at end of year ***

$
416,832


$
309,712


$
380,294


$
53,502


$
43,051


$
64,979Funded Status at end of year

$
(4,962
)

$
(105,322
)

$
(50,597
)

$
(15,229
)

$
(16,672
)

$
3,991Assets (liabilities) recognized in the Statements of
    Condition consist of:Other assets

$
24,906


$
24,906


$
24,906


$
4,587


$
4,587


$
4,587Accrued pension and post-retirement liabilities


(29,868
)


(130,228
)


(75,503
)


(19,816
)


(21,259
)


(596
)Net as sets (liabilities) recognized

$
(4,962
)

$
(105,322
)

$
(50,597
)

$
(15,229
)

$
(16,672
)

$
3,991Amounts recognized in Accumulated Other Comprehensive Income
    (Loss) consist of:Net loss or (gain)

$
107,584


$
153,771


$
27,563


$
4,506


$
4,843


$
(18,022
)Prior service cost


1,791



2,255



2,835











Transition obligation














1,329



1,858



2,585Amounts recognized in AOCI

$
109,375


$
156,026


$
30,398


$
5,835


$
6,701


$
(15,437
) 84




---



##### Table of Contents



HARRIS
    N.A AND SUBSIDIARIES
  Notes
    to Consolidated Financial
    Statements  (Continued)
  Pension Benefits


Postretirement Medical Benefits2009**


2008**


2007**


2009**


2008**


2007**(In thousands)Components of net periodic benefit costService cost

$
19,020


$
21,897


$
21,800


$
1,920


$
1,994


$
3,392Interest cost


24,916



25,071



24,996



3,586



3,639



4,182Expected return on plan assets


(31,477
)


(25,941
)


(22,436
)


(3,444
)


(5,013
)


(4,406
)Amortization of prior service cost


464



464



461











169Amortization of transition obligation














529



525



1,743Amortization of actuarial loss or (gain)


3,546



1,530



5,998







(958
)


Net periodic benefit cost

$
16,469


$
23,021


$
30,819


$
2,591


$
187


$
5,080Other Changes in Plan Assets and Benefit Obligations
    recognized in Other Comprehensive IncomeNet (gain) loss

$
(42,641
)

$
128,120


$
(72,662
)

$
(337
)

$
21,667


$
(22,313
)Amortization of (loss) gain


(3,546
)


(1,912
)


(5,998
)






1,198



Prior service cost (credit) arising during period






















(319
)Amortization of prior service (cost) credit


(464
)


(580
)


(461
)










(169
)Transition (obligation) arising during period






















(5,708
)Amortization of transition obligation














(529
)


(656
)


(1,743
)Total recognized in OCI

$
(46,651
)

$
125,628


$
(79,121
)

$
(866
)

$
22,209


$
(30,252
)     *
    
    Benefit obligation is projected for Pension Benefits and
    accumulated for Postretirement Medical Benefits.**
    
    Plan assets and obligation measured as of December 31.***
    
    The actual allocation of plan assets by category is as follows:  Pension


Postretirement Medical2009


2008


2007


2009


2008


2007Equity securities


50
%


54
%


73
%


50
%


54
%


73
%Fixed income securities


49
%


32
%


27
%


49
%


32
%


27
%Cash Equivalents


1
%


14
%






1
%


14
%


      85




---



##### Table of Contents



HARRIS
    N.A AND SUBSIDIARIES
  Notes
    to Consolidated Financial
    Statements  (Continued)
    Equity securities


50
%Fixed income securities


50
%   Pension Benefits


Postretirement Medical Benefits2009


2008


2007


2009


2008


2007Weighted-average assumptions used to determine benefit
    obligation as of December 31Discount rate


5.90
%


6.20
%


6.00
%


5.90
%


6.20
%


6.00
%Rate of compensation increase


2.00
%


3.80
%


3.80
%


N/A



N/A



N/AWeighted-average assumptions used to determine net benefit
    cost for years ended December 31Discount rate


6.20
%


6.00
%


5.75
%


6.20
%


6.00
%


5.75
%Expected return on plan assets


8.00
%


8.00
%


8.00
%


8.00
%


8.00
%


8.00
%Rate of compensation increase


3.80
%


3.80
%


3.80
%


N/A



N/A



N/A           Pension Plan Assets at December 31, 2009Fair Value Measurements Using


Total atLevel 1


Level 2


Level 3


Fair Value(In thousands)Asset categoryCash and money market funds

$
4,913


$



$



$
4,913Equity securities


119,076











119,076U.S. Treasury securities


2,207











2,207U.S. government agency securities






8,153







8,153Corporate bonds and notes






100,119







100,119Mutual funds


182,752











182,752Derivative instruments


(388
)










(388
)Total plan assets at fair value

$
308,560


$
108,272


$



$
416,832   86




---



##### Table of Contents



HARRIS
    N.A AND SUBSIDIARIES
  Notes
    to Consolidated Financial
    Statements  (Continued)
  Postretirement Plan Assets at December 31, 2009Fair Value Measurements Using


Total atLevel 1


Level 2


Level 3


Fair Value(In thousands)Asset categoryCash and money market funds

$
630


$



$



$
630Equity securities


15,284











15,284U.S. Treasury securities


283











283U.S. government agency securities






1,047







1,047Corporate bonds and notes






12,851







12,851Mutual funds


23,457











23,457Derivative instruments


(50
)










(50
)Total plan assets at fair value

$
39,604


$
13,898


$



$
53,502       1 Percentage1 Percentage

Point2009

Point Increase

Decrease(In thousands)Effect on total of service and interest cost components

$
636


$
(545
)Effect on postretirement benefit obligation

$
8,310


$
(7,059
)  87




---



##### Table of Contents



HARRIS
    N.A AND SUBSIDIARIES
  Notes
    to Consolidated Financial
    Statements  (Continued)
    Supplemental Unfunded Retirement Benefits2009


2008


2007(In thousands)Change in benefit obligationBenefit obligation at beginning of year

$
10,360


$
12,781


$
18,969Service cost


845



997



1,560Interest cost


540



636



911Benefits paid


(3,491
)


(3,273
)


(3,073
)Actuarial gain


(3,309
)


(724
)


(5,586
)Change in measurement date






(57
)


Benefit obligation at end of year

$
4,945


$
10,360


$
12,781Change in plan assetsFair value of plan assets at beginning of year

$



$



$
Employer contribution


3,491



3,738



3,073Benefits paid


(3,491
)


(3,273
)


(3,073
)Change in measurement date






(465
)


Fair value of plan assets at end of year

$



$



$Funded Status at end of year

$
(4,945
)

$
(10,360
)

$
(12,781
)Contributions made between measurement date (September
    30) and end of year










465Liabilities recognized in the Statements of Condition consist
    of:Accrued pension and post-retirement liabilities

$
(4,945
)

$
(10,360
)

$
(12,316
)Net liabilities recognized

$
(4,945
)

$
(10,360
)

$
(12,316
)Amounts recognized in Accumulated Other Comprehensive Income
    (Loss) consist of:Net (gain) or loss

$
(2,468
)

$
157


$
1,181Prior service cost


(1,269
)


(1,599
)


(2,011
)Amounts recognized in AOCI

$
(3,737
)

$
(1,442
)

$
(830
)Components of net periodic benefit costService cost

$
845


$
997


$
1,560Interest cost


540



636



911Amortization of prior service cost


(330
)


(330
)


(330
)Amortization of actuarial loss










102Net periodic benefit cost

$
1,055


$
1,303


$
2,243Other Changes in Plan Assets and Benefit Obligations
    recognized in Other Comprehensive IncomeNet gain

$
(2,625
)

$
(1,024
)

$
(5,581
)Amortization of loss










(102
)Amortization of prior service credit


330



412



330Total recognized in OCI

$
(2,295
)

$
(612
)

$
(5,353
)   88




---



##### Table of Contents



HARRIS
    N.A AND SUBSIDIARIES
  Notes
    to Consolidated Financial
    Statements  (Continued)
  Supplemental Unfunded RetirementBenefits2009


2008


2007Weighted-average assumptions used to determine benefit
    obligation as of December 31Discount rate


5.20
%


5.50
%


5.25
%Rate of compensation increase


2.00
%


3.80
%


3.80
%Weighted-average assumptions used to determine net benefit
    cost for years ended December 31Discount rate


5.50
%


5.25
%


5.00
%Rate of compensation increase


3.80
%


3.80
%


3.80
%       Postretirement Medical Benefits


SupplementalPension


Before Medicare


Medicare


RetirementYear

Benefits


Subsidy


Subsidy(1)


Benefits(In thousands)2010

$
28,059


$
4,096


$
389


$
1,0242011


29,557



4,373



438



1,0802012


31,288



4,536



504



1,0392013


30,763



4,770



564



7902014


33,110



5,056



638



892Thereafter


173,331



29,873



4,518



4,240     (1)
    
    Medicare subsidies expected to be received.  15.
    Stock-Based
    Compensation Plans    Stock
    Option Program
   89




---



##### Table of Contents



HARRIS
    N.A AND SUBSIDIARIES
  Notes
    to Consolidated Financial
    Statements  (Continued)
            Year Ended December 31, 2009Wtd. Avg.Wtd. Avg.


Aggregate Intrinsic


RemainingOptions

Shares


Exercise Price


Value


Contractual Life(In millions)Outstanding at beginning of year


2,494,946


$
35.34


$
1.1



4.62 yearsGranted


174,653



50.90Exercised


(541,535
)


29.16Forfeited, cancelled






Transferred (1)


22,527



41.40Outstanding at December 31, 2009


2,150,591



43.64


$
23.5



4.63 yearsOptions exercisable at December 31, 2009


1,452,407


$
40.85


$
19.4



3.05 years     (1)
    
    Transferred shares represent the net impact of employees moving
    between BMO and the Bank.  90




---



##### Table of Contents



HARRIS
    N.A AND SUBSIDIARIES
  Notes
    to Consolidated Financial
    Statements  (Continued)
  Year Ended December 31, 2008Wtd. Avg.Wtd. Avg.


Aggregate Intrinsic


RemainingOptions

Shares


Exercise Price


Value


Contractual Life(In millions)Outstanding at beginning of year


2,751,938


$
43.57


$
155.0



4.75 yearsGranted


234,701



27.88Exercised


(348,728
)


27.77Forfeited, cancelled


(63,733
)


24.65Transferred (1)


(79,232
)


49.31Outstanding at December 31, 2008


2,494,946



35.34


$
1.1



4.62 yearsOptions exercisable at December 31, 2008


1,769,740


$
32.51


$
1.1



3.19 years     (1)
    
    Transferred shares represent the net impact of employees moving
    between BMO and the Bank.    Wtd. Avg.Grant DateFair ValueOptions

Shares


per ShareNonvested at beginning of year


725,206


$
6.87Granted


174,653



9.48Vested


(198,757
)


7.05Transferred(1)


(2,918
)


7.45Nonvested at December 31, 2009


698,184


$
7.31     (1)
    
    Transferred shares represent the net impact of employees moving
    between BMO and the Bank.    Wtd. Avg.Grant DateFair ValueOptions

Shares


per ShareNonvested at beginning of year


665,917


$
7.98Granted


234,701



4.50Vested


(158,434
)


8.44Transferred(1)


(16,978
)


7.82Nonvested at December 31, 2008


725,206


$
6.87     (1)
    
    Transferred shares represent the net impact of employees moving
    between BMO and the Bank.    2009


2008


2007Risk-free interest rate


2.86
%


2.61
%


4.11
%Expected life, in years


6.5



6.5



7.3Expected volatility


27.48
%


23.84
%


19.24
%Expected dividend yield


6.59
%


5.85
%


4.20
%  91




---



##### Table of Contents



HARRIS
    N.A AND SUBSIDIARIES
  Notes
    to Consolidated Financial
    Statements  (Continued)
  Mid-Term
    Incentive Plan
            Employee
    Share Purchase Plan
    16.
    Lease
    Expense and Obligations   92




---



##### Table of Contents



HARRIS
    N.A AND SUBSIDIARIES
  Notes
    to Consolidated Financial
    Statements  (Continued)
          Year

Amount(In thousands)2010

$
33,2932011


32,0932012


27,8172013


26,7492014


26,108Thereafter


264,834Total minimum future rentals

$
410,894    93




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##### Table of Contents



HARRIS
    N.A AND SUBSIDIARIES
  Notes
    to Consolidated Financial
    Statements  (Continued)
   17.
    Income
    Taxes    Federal


State


Total(In thousands)2009:Current

$
(153,525
)

$
3,772


$
(149,753
)Deferred


38,888



(5,632
)


33,256Total

$
(114,637
)

$
(1,860
)

$
(116,497
)2008:Current

$
(96,539
)

$
(1,185
)

$
(97,724
)Deferred


(14,021
)


15,526



1,505Total

$
(110,560
)

$
14,341


$
(96,219
)2007:Current

$
71,549


$
(1,907
)

$
69,642Deferred


(41,123
)


(6,495
)


(47,618
)Total

$
30,426


$
(8,402
)

$
22,024  94




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##### Table of Contents



HARRIS
    N.A AND SUBSIDIARIES
  Notes
    to Consolidated Financial
    Statements  (Continued)
    December 312009


2008


2007(In thousands)Deferred tax assets:Allowance for loan losses

$
264,377


$
233,062


$
153,868Deferred expense and prepaid income


18,613



22,586



34,812Deferred employee compensation


25,179



21,979



24,811Pension and medical trust










15,597Amortizable intangibles










3,951State tax loss carryforward


29,479



11,971



Federal tax credit carryforward


1,947







Other assets


5,615



6,532



14Gross deferred tax assets

$
345,210


$
296,130


$
233,053Valuation Allowance


(37,241
)


(26,285
)


Deferred tax assets, net of valuation allowance

$
307,969


$
269,845


$
233,053Deferred tax liabilities:Depreciable assets

$
(47,457
)

$
(48,769
)

$
(60,836
)Pension and medical trust


(80,035
)


(10,113
)


Amortizable intangibles


(9,993
)


(5,036
)


Other liabilities


(1,373
)


(1,332
)


(1,262
)Gross deferred tax liabilities

$
(138,858
)

$
(65,250
)

$
(62,098
)Net deferred tax assets

$
169,111


$
204,595


$
170,955Tax effect of fair value adjustments on
    available-for-sale
    securities, pension liabilities and hedging transactions
    recorded directly to stockholders equity


58,323



111,480



14,716Net deferred tax assets

$
227,434


$
316,075


$
185,671      95




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##### Table of Contents



HARRIS
    N.A AND SUBSIDIARIES
  Notes
    to Consolidated Financial
    Statements  (Continued)
    Years Ended December 312009


2008


2007Federal statutory rate:


35.0
%


35.0
%


35.0
%Increase (reduction) in income taxes due to:Bank-owned insurance


6.8



9.1



(11.4
)Valuation allowance change for state deferred taxes, net of
    federal effect


(4.8
)


(13.2
)


State income taxes, excluding valuation allowance, net of
    federal effect


5.3



8.5



(3.3
)Tax-exempt municipal income


7.7



8.8



(7.6
)Other, net


0.8







0.6Actual income tax rate


50.8
%


48.2
%


13.3
%         18.
    Regulatory
    Capital         96




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##### Table of Contents



HARRIS
    N.A AND SUBSIDIARIES
  Notes
    to Consolidated Financial
    Statements  (Continued)
            Minimum RequirementsFor Capital


Minimum RequirementsActual


Adequacy Purposes


To Be Well CapitalizedCapital


Capital


Capital


Capital


Capital


CapitalAmount


Ratio


Amount


Ratio


Amount


Ratio(In thousands)As of December 31, 2009Total Capital to Risk-Weighted Assets

$
4,160,567



13.55
%

3
    $
2,456,423



38.00
%

3
    $
3,070,529



310.00
%Tier 1 Capital to Risk-Weighted Assets

$
3,520,984



11.46
%

3
    $
1,228,965



34.00
%

3
    $
1,843,447



36.00
%Tier 1 Capital to Average Assets

$
3,520,984



8.82
%

3
    $
1,596,818



34.00
%

3
    $
1,996,023



35.00
%As of December 31, 2008Total Capital to Risk-Weighted Assets

$
4,309,774



12.69
%

3
    $
2,716,958



38.00
%

3
    $
3,396,197



310.00
%Tier 1 Capital to Risk-Weighted Assets

$
3,590,854



10.57
%

3
    $
1,358,885



34.00
%

3
    $
2,038,328



36.00
%Tier 1 Capital to Average Assets

$
3,590,854



7.24
%


3
    S 1,983,897



34.00
%

3
    $
2,479,872



35.00
%   19.
    Investments
    in Subsidiaries and Statutory Restrictions     97




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##### Table of Contents



HARRIS
    N.A AND SUBSIDIARIES
  Notes
    to Consolidated Financial
    Statements  (Continued)
      20.
    Contingent
    Liabilities and Litigation    21.
    Accumulated
    Other Comprehensive Loss    Unrealized


Unrealized


Unrealized


AccumulatedGain on


Loss on Pension


Loss on


OtherAvailable-For-


and Postretirement


Hedge


ComprehensiveSale Securities


Medical Plans


Activity


Loss(In thousands)Balance at December 31, 2009

$
60,522


$
(74,904
)

$
(83,402
)

$
(97,784
)Balance at December 31, 2008

$
54,463


$
(111,391
)

$
(149,111
)

$
(206,039
)Balance at December 31, 2007

$
14,301


$
(10,135
)

$
(31,488
)

$
(27,322
)  98




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##### Table of Contents



HARRIS
    N.A AND SUBSIDIARIES
  Notes
    to Consolidated Financial
    Statements  (Continued)
   22.
    Foreign
    Activities (by Domicile of Customer)    Foreign


Domestic


Consolidated(In thousands)2009Total operating income

$
26,788


$
1,807,397


$
1,834,185Total expenses


32,196



2,012,801



2,044,997Loss before taxes

$
(5,408
)

$
(205,404
)

$
(210,812
)Applicable income tax benefit


(2,149
)


(114,348
)


(116,497
)Net loss

$
(3,259
)

$
(91,056
)

$
(94,315
)Identifiable assets at year-end

$
1,434,674


$
42,536,953


$
43,971,6272008Total operating income

$
36,075


$
2,264,959


$
2,301,034Total expenses


93,673



2,388,384



2,482,057Loss before taxes

$
(57,598
)

$
(123,425
)

$
(181,023
)Applicable income tax benefit


(22,892
)


(73,327
)


(96,219
)Net loss

$
(34,706
)

$
(50,098
)

$
(84,804
)Identifiable assets at year-end

$
1,757,762


$
65,548,293


$
67,306,0552007Total operating income

$
38,631


$
2,583,531


$
2,622,162Total expenses


156,493



2,281,982



2,438,475(Loss) income before taxes

$
(117,862
)

$
301,549


$
183,687Applicable income taxes


(46,844
)


68,868



22,024Net (loss) income

$
(71,018
)

$
232,681


$
161,663Identifiable assets at year-end

$
1,133,241


$
40,347,042


$
41,480,283     23.
    Business
    Combinations   99




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##### Table of Contents



HARRIS
    N.A AND SUBSIDIARIES
  Notes
    to Consolidated Financial
    Statements  (Continued)
  travel-and-entertainment
  high-net-worth
           100




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##### Table of Contents



HARRIS
    N.A AND SUBSIDIARIES
  Notes
    to Consolidated Financial
    Statements  (Continued)
    2009


2008


2007Pierce


Diners


Merchants and





FirstGivens


Club


Manufacturers


Ozaukee


National(In thousands)Cash and cash equivalents

$



$



$
36,223


$
52,125


$
68,514Securities










135,116



116,404



295,021Loans, net






704,605



1,031,275



532,507



856,270Premises and equipment






4,547



35,162



14,297



25,327Bank owned life insurance










9,221



9,579



Goodwill






17,807



112,049



125,022



143,813Indentifiable intangible assets


3,000



44,340



10,985



11,736



31,200Other assets


423



848



46,063



9,723



44,691Total assets

$
3,423


$
772,147


$
1,416,094


$
871,393


$
1,464,836Deposits

$



$
7,485


$
1,047,570


$
595,461


$
952,919Borrowings










154,399



82,453



215,528Accrued expenses










19,746



5,541



5,023Note payable










53,611







Other liabilities






86,643



4,071



4,594



Total liabilities

$



$
94,128


$
1,279,397


$
688,049


$
1,173,470Purchase price

$
3,423


$
678,019


$
136,697


$
183,344


$
291,366   24.
    Related
    Party Transactions    and/or
 101




---



##### Table of Contents



HARRIS
    N.A AND SUBSIDIARIES
  Notes
    to Consolidated Financial
    Statements  (Continued)
    and/or
           102




---



##### Table of Contents



HARRIS
    N.A AND SUBSIDIARIES
  Notes
    to Consolidated Financial
    Statements  (Continued)
    Interest Expense


Loan BalanceYear Ended December 31


December 312009


2008


2009


2008


Rate

Reprice(In thousands)Long-term notes  senior/unsecuredFloating rate senior note to BMO subsidiary due June 15,
    2010

.$
2,526


$
8,362


$



$
250,000


12bps + 90 day LIBOR


QuarterlyFloating rate senior note to BMO subsidiary due June 13,
    2011


12,096



25,469



746,500



746,500


14bps + 90 day LIBOR


QuarterlyFloating rate senior note to BMO subsidiary due August 14,
    2012


8,722



34,359



1,100,000



1,100,000


14bps + 90 day LIBOR


QuarterlyFloating rate senior note to BMO subsidiary due
    September 29, 2011


7,092







550,000






14bps + 90 day LIBOR


QuarterlyTotal long-term notes  senior/unsecured

$
30,436


$
68,190


$
2,396,500


$
2,096,500Long-term notes  subordinatedFloating rate subordinated note to Bankcorp due
    December 23, 2012

.$
424


$
1,108


$
28,500


$
28,500


50bps + 90 day LIBOR


QuarterlyFloating rate subordinated note to Bankcorp due May 30,
    2013


498



1,261



34,000



34,000


50bps + 90 day LIBOR


QuarterlyFloating rate subordinated note to Bankcorp due
    November 26, 2013


347



879



24,000



24,000


50bps + 90 day LIBOR


QuarterlyFloating rate subordinated note to Bankcorp due
    February 26, 2014


91



229



6,250



6,250


50bps + 90 day LIBOR


QuarterlyFloating rate subordinated note to Bankcorp due May 31, 2014


1,310



3,557



100,000



100,000


35bps + 90 day LIBOR


QuarterlyFloating rate subordinated note to Bankcorp due May 31, 2016


1,335



3,583



100,000



100,000


38bps + 90 day LIBOR


QuarterlyTotal long-term notes  subordinated

$
4,005


$
10,617


$
292,750


$
292,750Total long-term notes

.$
34,441


$
78,807


$
2,689,250


$
2,389,250   Interest Expense Year Ended

Certificate of Deposit BalanceDecember 31

December 312009

2008

2009

2008(In thousands)Certificates of depositCertificate of deposit to BMO subsidiary due on March 18,
    2008

$



$
4,883


$



$



8bps + 90 day LIBOR


QuarterlyCertificate of deposit to BMO subsidiary due on June 30,
    2008






14,298










2.84%


FixedCertificate of deposit to BMO subsidiary due on March 31,
    2009


4,534



18,713







427,655


4.30%


FixedCertificate of deposit to BMO subsidiary due on May 29, 2009


632



1,038







100,000


35bps + 90 day LIBOR


QuarterlyCertificate of deposit to BMO subsidiary due on June 30,
    2009


484



1,300







100,000


35bps + 90 day LIBOR


QuarterlyCertificate of deposit to BMO subsidiary due on July 31,
    2009


696



1,190







100,000


38bps + 90 day LIBOR


Quarterly 103




---



##### Table of Contents



HARRIS
    N.A AND SUBSIDIARIES
  Notes
    to Consolidated Financial
    Statements  (Continued)
  Interest Expense Year Ended

Certificate of Deposit BalanceDecember 31

December 312009

2008

2009

2008(In thousands)Certificate of deposit to BMO subsidiary due on August 28,
    2009


1,281



2,096







200,000


38bps + 90 day LIBOR


QuarterlyCertificate of deposit to BMO subsidiary due on
    September 28, 2009


7,016



36,205







1,000,000


6bps + 90 day LIBOR


QuarterlyCertificate of deposit to BMO subsidiary due on April 6,
    2010


17







1,300






0.50%


FixedCertificate of deposit to BMO subsidiary due on October 10,
    2010


2







125






0.25%


FixedCertificate of deposit to BMO subsidiary due on January 28,
    2010


2







3,121






0.12%


FixedCertificate of deposit to BMO subsidiary due on July 29,
    2011


11,804



16,170



950,000



950,000


93bps + 90 day LIBOR


QuarterlyCertificate of deposit to BMO subsidiary due on
    September 29, 2011


9,468



12,609







950,000


145bps + 90 day LIBOR


QuarterlyTotal certificates of deposit

$
35,936


$
108,502


$
954,546


$
3,827,655   25.
    Restructuring
    Charge          Severance-Related


Premises-RelatedCharges


Charges


Total(In thousands)Balance at December 31, 2007

$
7,050


$



$
7,050Restructuring reversals during the year


(2,649
)


(15
)

$
(2,664
)(Paid), reversed during the year


(3,539
)


15


$
(3,524
)Balance at December 31, 2008

$
862


$



$
862Restructuring reversals during the year


(702
)






(702
)(Paid), reversed during the year


(160
)






(160
)Balance at December 31, 2009

$



$



$
  104




---



##### Table of Contents



HARRIS
    N.A AND SUBSIDIARIES
  Notes
    to Consolidated Financial
    Statements  (Continued)
   26.
    Visa
    Indemnification Charge            27.
    Other
    Assets    other-than-temporary
   105




---



##### Table of Contents



HARRIS
    N.A AND SUBSIDIARIES
  Notes
    to Consolidated Financial
    Statements  (Continued)
        other-than-temporary other-than-temporary other-than-temporary
  available-for-sale
      28.
    Subsequent
    Events   106