##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
QUARTERLY PERIOD ENDED September 30, 2009
 Commission File Number: 000-33243
 Huntington Preferred Capital, Inc.
 Ohio
    
    31-1356967(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 41 South High Street, Columbus, Ohio 43287
 (614) 480-8300
 þ Yes o No
 o Yes o No
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
(Do not check if a smaller reporting company)
    
    Smaller reporting company o
 o þ




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##### 



HUNTINGTON PREFERRED CAPITAL, INC.
 INDEX
 Part 1. FINANCIAL INFORMATIONItem 1. Financial Statements (Unaudited)Condensed Balance Sheets at September 30, 2009, December 31, 2008, and September 30, 2008
    
    
    3Condensed Statements of Income for the three months and nine months ended September 30, 2009 and 2008
    
    
    4Condensed Statements of Changes in Shareholders Equity for the nine months ended September 30, 2009 and 2008
    
    
    5Condensed Statements of Cash Flows for the nine months ended September 30, 2009 and 2008
    
    
    6Notes to Unaudited Condensed Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    16Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    31Item 4. Controls and Procedures
    
    
    31Item 4T. Controls and Procedures
    
    
    31PART II. OTHER INFORMATIONItem 6. Exhibits
    
    
    31Signatures
    
    
    32Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2Exhibit 99.1
   2




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##### Table of Contents



Part 1. Financial Information
 
 Item 1.
    
    Financial Statements
 Huntington Preferred Capital, Inc.
 
 Condensed Balance Sheets
 (Unaudited)
 September 30,
    
    
    December 31,
    
    
    September 30,(in thousands, except share data)
    
    2009
    
    
    2008
    
    
    2008AssetsCash and interest bearing deposits with The Huntington National
Bank
    
    $
    653,865
    
    
    $
    293,009
    
    
    $
    45,930Due from The Huntington National Bank
    
    
    56,589
    
    
    
    38,423
    
    
    
    82,165Loan participation interests:Commercial real estate
    
    
    3,073,289
    
    
    
    3,433,872
    
    
    
    3,554,080Consumer and residential real estate
    
    
    790,829
    
    
    
    974,619
    
    
    
    1,023,069Total loan participation interests
    
    
    3,864,118
    
    
    
    4,408,491
    
    
    
    4,577,149Allowance for loan participation losses
    
    
    (97,331
    )
    
    
    (65,456
    )
    
    
    (72,073
    )Net loan participation interests
    
    
    3,766,787
    
    
    
    4,343,035
    
    
    
    4,505,076Accrued income and other assets
    
    
    10,552
    
    
    
    14,101
    
    
    
    15,881Total assets
    
    $
    4,487,793
    
    
    $
    4,688,568
    
    
    $
    4,649,052Liabilities and shareholders equityLiabilitiesAllowance for unfunded loan participation commitments
    
    $
    1,649
    
    
    $
    2,301
    
    
    $
    3,423Dividends and distributions payable
    
    
    3,257
    
    
    
    225,000
    
    
    
    10,232Other liabilities
    
    
    63
    
    
    
    50
    
    
    
    71Total liabilities
    
    
    4,969
    
    
    
    227,351
    
    
    
    13,726Shareholders EquityPreferred securities, Class A, 8.000% noncumulative, non-
exchangeable; $1,000 par and liquidation value per share;
1,000 shares authorized, issued and outstanding
    
    
    1,000
    
    
    
    1,000
    
    
    
    1,000Preferred securities, Class B, variable-rate, noncumulative, and
conditionally exchangeable; $1,000 par and liquidation
value per share; authorized 500,000 shares; 400,000
shares issued and outstanding
    
    
    400,000
    
    
    
    400,000
    
    
    
    400,000Preferred securities, Class C, 7.875% noncumulative and
conditionally exchangeable; $25 par and liquidation value
per share; 2,000,000 shares authorized, issued, and
outstanding
    
    
    50,000
    
    
    
    50,000
    
    
    
    50,000Preferred securities, Class D, variable-rate, noncumulative, and
conditionally exchangeable; $25 par and liquidation value
per share; 14,000,000 shares authorized, issued, and
outstanding
    
    
    350,000
    
    
    
    350,000
    
    
    
    350,000Preferred securities, $25 par, 10,000,000 shares
authorized; no shares issued or outstanding
    
    
    
    
    
    
    
    
    
    
    Common stock  without par value; 14,000,000 shares authorized,
issued, and outstanding
    
    
    3,660,217
    
    
    
    3,660,217
    
    
    
    3,660,959Retained earnings
    
    
    21,607
    
    
    
    
    
    
    
    173,367Total shareholders equity
    
    
    4,482,824
    
    
    
    4,461,217
    
    
    
    4,635,326Total liabilities and shareholders equity
    
    $
    4,487,793
    
    
    $
    4,688,568
    
    
    $
    4,649,052
 See notes to unaudited condensed financial statements.
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Huntington Preferred Capital, Inc.
 
 Condensed Statements of Income
 (Unaudited)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(in thousands)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Interest and fee incomeInterest on loan participation interests:Commercial real estate
    
    
    26,575
    
    
    
    44,375
    
    
    
    82,972
    
    
    
    131,457Consumer and residential real estate
    
    
    13,392
    
    
    
    17,454
    
    
    
    43,146
    
    
    
    55,403Total loan participation interest income
    
    
    39,967
    
    
    
    61,829
    
    
    
    126,118
    
    
    
    186,860Fees from loan participation interests
    
    
    379
    
    
    
    274
    
    
    
    938
    
    
    
    921Interest on deposits with The Huntington National Bank
    
    
    395
    
    
    
    830
    
    
    
    781
    
    
    
    4,788Total interest and fee income
    
    
    40,741
    
    
    
    62,933
    
    
    
    127,837
    
    
    
    192,569Provision for (reduction in allowances for) credit losses
    
    
    27,701
    
    
    
    (7,437
    )
    
    
    87,186
    
    
    
    (13,661
    )Interest income after provision for (reduction in
allowances for) credit losses
    
    
    13,040
    
    
    
    70,370
    
    
    
    40,651
    
    
    
    206,230Noninterest income:Rental income
    
    
    17
    
    
    
    17
    
    
    
    49
    
    
    
    50Collateral fees
    
    
    609
    
    
    
    744
    
    
    
    1,926
    
    
    
    2,253Total noninterest income
    
    
    626
    
    
    
    761
    
    
    
    1,975
    
    
    
    2,303Noninterest expense:Servicing costs
    
    
    2,264
    
    
    
    2,718
    
    
    
    7,202
    
    
    
    8,260Other
    
    
    162
    
    
    
    182
    
    
    
    562
    
    
    
    573Total noninterest expense
    
    
    2,426
    
    
    
    2,900
    
    
    
    7,764
    
    
    
    8,833Net income
    
    $
    11,240
    
    
    $
    68,231
    
    
    $
    34,862
    
    
    $
    199,700Dividends declared on preferred securities
    
    
    (3,507
    )
    
    
    (7,632
    )
    
    
    (13,255
    )
    
    
    (26,333
    )Net income applicable to common shares
    
    $
    7,733
    
    
    $
    60,599
    
    
    $
    21,607
    
    
    $
    173,367
 See notes to unaudited condensed financial statements.
  4




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Huntington Preferred Capital, Inc.
 
 Condensed Statements of Changes in Shareholders Equity
 (Unaudited)
 Preferred, Class A
    
    
    Preferred, Class B
    
    
    Preferred, Class C(in thousands)
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    AmountNine Months Ended September 30, 2008:Balance, beginning of period
    
    
    1
    
    
    $
    1,000
    
    
    
    400
    
    
    $
    400,000
    
    
    
    2,000
    
    
    $
    50,000Comprehensive Income:Net incomeTotal comprehensive incomeBalance, end of the period
    
    
    1
    
    
    $
    1,000
    
    
    
    400
    
    
    $
    400,000
    
    
    
    2,000
    
    
    $
    50,000Nine Months Ended September 30, 2009:Balance, beginning of period
    
    
    1
    
    
    $
    1,000
    
    
    
    400
    
    
    $
    400,000
    
    
    
    2,000
    
    
    $
    50,000Comprehensive Income:Net incomeTotal comprehensive incomeBalance, end of the period
    
    
    1
    
    
    $
    1,000
    
    
    
    400
    
    
    $
    400,000
    
    
    
    2,000
    
    
    $
    50,000
 Preferred, Class D
    
    
    Preferred
    
    
    Common
    
    
    Retained(in thousands)
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Earnings
    
    
    TotalNine Months Ended September 30, 2008:Balance, beginning of period
    
    
    14,000
    
    
    $
    350,000
    
    
    
    
    
    
    $
    
    
    
    
    14,000
    
    
    $
    3,660,959
    
    
    $
    
    
    
    $
    4,461,959Comprehensive Income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    199,700
    
    
    
    199,700Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    199,700Dividends declared on Class A preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (80
    )
    
    
    (80
    )Dividends declared on Class B preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,152
    )
    
    
    (10,152
    )Dividends declared on Class C preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,953
    )
    
    
    (2,953
    )Dividends declared on Class D preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,148
    )
    
    
    (13,148
    )Balance, end of the period
    
    
    14,000
    
    
    $
    350,000
    
    
    
    
    
    
    $
    
    
    
    
    14,000
    
    
    $
    3,660,959
    
    
    $
    173,367
    
    
    $
    4,635,326Nine Months Ended September 30, 2009:Balance, beginning of period
    
    
    14,000
    
    
    $
    350,000
    
    
    
    
    
    
    $
    
    
    
    
    14,000
    
    
    $
    3,660,217
    
    
    $
    
    
    
    $
    4,461,217Comprehensive Income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    34,862
    
    
    
    34,862Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    34,862Dividends declared on Class A preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (80
    )
    
    
    (80
    )Dividends declared on Class B preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,177
    )
    
    
    (3,177
    )Dividends declared on Class C preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,953
    )
    
    
    (2,953
    )Dividends declared on Class D preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,045
    )
    
    
    (7,045
    )Balance, end of the period
    
    
    14,000
    
    
    $
    350,000
    
    
    
    
    
    
    $
    
    
    
    
    14,000
    
    
    
    3,660,217
    
    
    
    21,607
    
    
    $
    4,482,824
 See notes to unaudited condensed financial statements.
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Huntington Preferred Capital, Inc.
 
 Condensed Statements of Cash Flows
 (Unaudited)
 Nine Months EndedSeptember 30,(in thousands)
    
    2009
    
    
    2008Operating activitiesNet income
    
    $
    34,862
    
    
    $
    199,700Adjustments to reconcile net income to net cash provided by operating activities:Provision for (reduction in allowances for) credit losses
    
    
    87,186
    
    
    
    (13,661
    )Change in due to/from The Huntington National Bank
    
    
    5,083
    
    
    
    7,775Other, net
    
    
    3,562
    
    
    
    5,918Net cash provided by operating activities
    
    
    130,693
    
    
    
    199,732Investing activitiesParticipation interests acquired
    
    
    (1,151,578
    )
    
    
    (2,182,061
    )Sales and repayments of loans underlying participation interests
    
    
    1,616,739
    
    
    
    1,996,896Net cash provided by (used for) investing activities
    
    
    465,161
    
    
    
    (185,165
    )Financing activitiesDividends paid on preferred securities
    
    
    (9,998
    )
    
    
    (16,101
    )Dividends paid on common stock
    
    
    (224,258
    )
    
    
    Return of capital to common shareholders
    
    
    (742
    )
    
    
    Net cash used for financing activities
    
    
    (234,998
    )
    
    
    (16,101
    )Increase (decrease) in cash and cash equivalents
    
    
    360,856
    
    
    
    (1,534
    )Cash and cash equivalents at beginning of year
    
    
    293,009
    
    
    
    47,464Cash and cash equivalents at end of period
    
    $
    653,865
    
    
    $
    45,930Supplemental information:Dividends and distributions declared, not paid
    
    $
    3,257
    
    
    $
    10,232Non cash change in loan participation activity with The
Huntington National Bank
    
    
    23,249
    
    
    
    (32,041
    )
 See notes to unaudited condensed financial statements.
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Notes to Unaudited Condensed Financial Statements
 Note 1  Organization
    Note 2  Basis of Presentation and New Accounting Pronouncements
     FASB Accounting Standards Codification (ASC) Topic 810  Consolidation (Statement No. 160, Noncontrolling Interests in Consolidated Financial Statement s  an amendment of ARB No. 51) (ASC
810) .
  7




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ASC Topic 825 Financial Instruments (FSP FAS 107-1 and APB 28-1, Interim Disclosures about Fair
Value of Financial Instruments) (ASC 825) .
 ASC Topic 855  Subsequent Events (Statement No. 165, Subsequent Events) (ASC 855) .
 ASC Topic 105  Generally Accepted Accounting Principles (Statement No. 168, The FASB Accounting
Standards Codification and the Hierarchy of Generally Accepted Accounting Principles  a
replacement of FASB Statement No. 162) (ASC 105).
 Note 3  Lending Concentrations and Participations in Non-Performing Assets and Past Due Loans
   September 30,
    
    
    December 31,
    
    
    September 30,(in thousands)
    
    2009
    
    
    2008
    
    
    2008Commercial real estate
    
    $
    192,661
    
    
    $
    54,246
    
    
    $
    59,701Consumer and residential real estate
    
    
    5,467
    
    
    
    6,041
    
    
    
    6,834Total participations in non-performing assets
    
    $
    198,128
    
    
    $
    60,287
    
    
    $
    66,535Participations in accruing loans past due 90
days or more
    
    $
    10,294
    
    
    $
    9,543
    
    
    $
    8,315
 Note 4  Allowance for Credit Losses (ACL)
   8




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Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(in thousands)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008ALPL balance, beginning of period
    
    $
    95,748
    
    
    $
    66,876
    
    
    $
    65,456
    
    
    $
    62,275ALPL for loan participations acquired
    
    
    9,331
    
    
    
    15,828
    
    
    
    18,134
    
    
    
    31,824Net loan losses
    
    
    (36,080
    )
    
    
    (2,347
    )
    
    
    (74,097
    )
    
    
    (8,798
    )Provision for (reduction in allowance for) credit
losses
    
    
    28,332
    
    
    
    (8,284
    )
    
    
    87,838
    
    
    
    (13,228
    )ALPL balance, end of period
    
    $
    97,331
    
    
    $
    72,073
    
    
    $
    97,331
    
    
    $
    72,073AULPC balance, beginning of period
    
    $
    2,280
    
    
    $
    2,576
    
    
    $
    2,301
    
    
    $
    3,856Provision for (reduction in) AULPC
    
    
    (631
    )
    
    
    847
    
    
    
    (652
    )
    
    
    (433
    )AULPC balance, end of period
    
    $
    1,649
    
    
    $
    3,423
    
    
    $
    1,649
    
    
    $
    3,423Total ACL
    
    $
    98,980
    
    
    $
    75,496
    
    
    $
    98,980
    
    
    $
    75,496
  Note 5  Preferred Dividends
   i.e.
 i.e.,
  9




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Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(in thousands)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Class A preferred securities
    
    $
    
    
    
    $
    
    
    
    $
    80
    
    
    $
    80Class B preferred securities
    
    
    588
    
    
    
    2,788
    
    
    
    3,177
    
    
    
    10,152Class C preferred securities
    
    
    984
    
    
    
    984
    
    
    
    2,953
    
    
    
    2,953Class D preferred securities
    
    
    1,935
    
    
    
    3,860
    
    
    
    7,045
    
    
    
    13,148Total dividends declared
    
    $
    3,507
    
    
    $
    7,632
    
    
    $
    13,255
    
    
    $
    26,333
  Note 6  Related Party Transactions
    10




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January 1, 2008throughSeptember 30, 2009Commercial real estate
    
    
    0.125
    %Consumer
    
    
    0.650
    %Residential real estate
    
    
    0.267
    %
    Number ofCommon
    
    
    Number of Preferred SecuritiesShareholder:
    
    Shares
    
    
    Class A
    
    
    Class B
    
    
    Class C
    
    
    Class DHeld by related parties:HPCII
    
    
    4,550,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    HCF
    
    
    6,580,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Holdings
    
    
    2,870,000
    
    
    
    895
    
    
    
    
    
    
    
    
    
    
    
    14,000,000HPC Holdings-II, Inc.
    
    
    
    
    
    
    
    
    
    
    400,000
    
    
    
    
    
    
    
    Total held by related
parties
    
    
    14,000,000
    
    
    
    895
    
    
    
    400,000
    
    
    
    
    
    
    
    14,000,000Other shareholders
    
    
    
    
    
    
    105
    
    
    
    
    
    
    
    2,000,000
    
    
    
    Total shares outstanding
    
    
    14,000,000
    
    
    
    1,000
    
    
    
    400,000
    
    
    
    2,000,000
    
    
    
    14,000,000
    11




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Note 7  Fair Value of Financial Instruments
  Level 1
 Level 2
 Level 3
     12




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Cash and interest-bearing deposits, and due from The Huntington National Bank
 Loan participation interests
 Note 8  Commitments and Contingencies
 /
    13




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Note 9  Segment Reporting
   14




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations.
 INTRODUCTION
    Forward-looking Statements
    Risk Factors
   16




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Update to Risk Factors
 During the first nine months of 2009, the Banks and HPCIs commercial and residential real
estate and real estate-related portfolios continued to be affected by the ongoing reduction in real
estate values and reduced levels of sales and, more generally, HPCIs participation interest
portfolio has been affected by the sustained economic weakness of the Midwest markets and the
impact of higher unemployment rates. The continued economic weakness could adversely impact HPCIs
business, financial condition, liquidity, capital, and results of operations, as well as the Banks
financial condition, liquidity, capital, capital ratios, and results of operations.
   Critical Accounting Policies
  Use of Significant Estimates
   17




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Total Allowances for Credit Losses (ACL)
   QUALIFICATION TESTS
    18




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RESULTS OF OPERATIONS
   Table 1  Quarterly Statements of Income
 2009
    
    
    2008
    
    
    3Q09 vs 3Q08(in thousands)
    
    Third
    
    
    Second
    
    
    First
    
    
    Fourth
    
    
    Third
    
    
    $ Chg
    
    
    % ChgInterest and fee incomeInterest on loan participation interests:Commercial real estate
    
    $
    26,575
    
    
    $
    27,071
    
    
    $
    29,326
    
    
    $
    44,591
    
    
    $
    44,375
    
    
    $
    (17,800
    )
    
    
    (40.1
    )%Consumer and residential real estate
    
    
    13,392
    
    
    
    14,278
    
    
    
    15,476
    
    
    
    16,614
    
    
    
    17,454
    
    
    
    (4,062
    )
    
    
    (23.3
    )Total loan participation interest income
    
    
    39,967
    
    
    
    41,349
    
    
    
    44,802
    
    
    
    61,205
    
    
    
    61,829
    
    
    
    (21,862
    )
    
    
    (35.4
    )Fees from loan participation interests
    
    
    379
    
    
    
    290
    
    
    
    269
    
    
    
    277
    
    
    
    274
    
    
    
    105
    
    
    
    38.3Interest on deposits with the Bank
    
    
    395
    
    
    
    284
    
    
    
    102
    
    
    
    498
    
    
    
    830
    
    
    
    (435
    )
    
    
    (52.4
    )Total interest and fee income
    
    
    40,741
    
    
    
    41,923
    
    
    
    45,173
    
    
    
    61,980
    
    
    
    62,933
    
    
    
    (22,192
    )
    
    
    (35.3
    )Provision for (reduction in
allowances for) credit losses
    
    
    27,701
    
    
    
    40,497
    
    
    
    18,988
    
    
    
    (1,194
    )
    
    
    (7,437
    )
    
    
    35,138
    
    
    
    N.M.Interest income after provision for
(reduction in allowances for) credit losses
    
    
    13,040
    
    
    
    1,426
    
    
    
    26,185
    
    
    
    63,174
    
    
    
    70,370
    
    
    
    (57,330
    )
    
    
    (81.5
    )Noninterest income:Rental income
    
    
    17
    
    
    
    16
    
    
    
    16
    
    
    
    16
    
    
    
    17
    
    
    
    
    
    
    
    Collateral fees
    
    
    609
    
    
    
    640
    
    
    
    677
    
    
    
    745
    
    
    
    744
    
    
    
    (135
    )
    
    
    (18.1
    )Total noninterest income
    
    
    626
    
    
    
    656
    
    
    
    693
    
    
    
    761
    
    
    
    761
    
    
    
    (135
    )
    
    
    (17.7
    )Non-interest expense:Servicing costs
    
    
    2,264
    
    
    
    2,387
    
    
    
    2,551
    
    
    
    2,675
    
    
    
    2,718
    
    
    
    (454
    )
    
    
    (16.7
    )Other
    
    
    162
    
    
    
    235
    
    
    
    165
    
    
    
    181
    
    
    
    182
    
    
    
    (20
    )
    
    
    (11.0
    )Total noninterest expense
    
    
    2,426
    
    
    
    2,622
    
    
    
    2,716
    
    
    
    2,856
    
    
    
    2,900
    
    
    
    (474
    )
    
    
    (16.3
    )Net income (loss)
    
    $
    11,240
    
    
    $
    (540
    )
    
    $
    24,162
    
    
    $
    61,079
    
    
    $
    68,231
    
    
    $
    (56,991
    )
    
    
    (83.5
    )Dividends declared on preferred securities
    
    
    (3,507
    )
    
    
    (4,613
    )
    
    
    (5,135
    )
    
    
    (10,188
    )
    
    
    (7,632
    )
    
    
    4,125
    
    
    
    54.0Net income (loss) applicable to common shares(1)
    
    $
    7,733
    
    
    $
    (5,153
    )
    
    $
    19,027
    
    
    $
    50,891
    
    
    $
    60,599
    
    
    $
    (52,866
    )
    
    
    (87.2
    )%
 (1)
    
    All of HPCIs common stock is owned by HPCII, HCF, and Holdings and, therefore, net
income per share is not presented.   19




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##### Table of Contents



Table 2  Year-To-Date Statements of Income
 Nine Months EndedSeptember 30,
    
    
    2009 vs 2008(in thousands)
    
    2009
    
    
    2008
    
    
    $ Chg
    
    
    % ChgInterest and fee incomeInterest on loan participation interests:Commercial real estate
    
    $
    82,972
    
    
    $
    131,457
    
    
    $
    (48,485
    )
    
    
    (36.9
    )%Consumer and residential real estate
    
    
    43,146
    
    
    
    55,403
    
    
    
    (12,257
    )
    
    
    (22.1
    )Total loan participation interest income
    
    
    126,118
    
    
    
    186,860
    
    
    
    (60,742
    )
    
    
    (32.5
    )Fees from loan participation interests
    
    
    938
    
    
    
    921
    
    
    
    17
    
    
    
    1.8Interest on deposits with The Bank
    
    
    781
    
    
    
    4,788
    
    
    
    (4,007
    )
    
    
    (83.7
    )Total interest and fee income
    
    
    127,837
    
    
    
    192,569
    
    
    
    (64,732
    )
    
    
    (33.6
    )Provision for (reduction in allowances for) credit losses
    
    
    87,186
    
    
    
    (13,661
    )
    
    
    100,847
    
    
    
    N.M.Interest income after reduction in allowances
for credit losses
    
    
    40,651
    
    
    
    206,230
    
    
    
    (165,579
    )
    
    
    (80.3
    )Non-interest income:Rental income
    
    
    49
    
    
    
    50
    
    
    
    (1
    )
    
    
    (2.0
    )Collateral fees
    
    
    1,926
    
    
    
    2,253
    
    
    
    (327
    )
    
    
    (14.5
    )Total non-interest income
    
    
    1,975
    
    
    
    2,303
    
    
    
    (328
    )
    
    
    (14.2
    )Non-interest expense:Servicing costs
    
    
    7,202
    
    
    
    8,260
    
    
    
    (1,058
    )
    
    
    (12.8
    )Other
    
    
    562
    
    
    
    573
    
    
    
    (11
    )
    
    
    (1.9
    )Total non-interest expense
    
    
    7,764
    
    
    
    8,833
    
    
    
    (1,069
    )
    
    
    (12.1
    )Net income
    
    $
    34,862
    
    
    $
    199,700
    
    
    $
    (164,838
    )
    
    
    (82.5
    )%Dividends declared on preferred securities
    
    
    (13,255
    )
    
    
    (26,333
    )
    
    
    13,078
    
    
    
    49.7Net income applicable to common shares(1)
    
    $
    21,607
    
    
    $
    173,367
    
    
    $
    (151,760
    )
    
    
    (87.5
    )%
 (1)
    
    All of HPCIs common stock is owned by HPCII, HCF, and Holdings and therefore, net
income per share is not presented. Interest and Fee Income
   20




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##### Table of Contents



Table 3  Interest and Fee Income
 Three Months Ended September 30,2009
    
    
    2008Average
    
    
    
    
    
    
    
    
    
    
    Average(in millions)
    
    Balance
    
    
    Income(1)
    
    
    Yield
    
    
    Balance
    
    
    Income(1)
    
    
    YieldLoan participation interests:Commercial real estate
    
    $
    3,116.7
    
    
    $
    26.9
    
    
    
    3.42
    %
    
    $
    3,459.9
    
    
    $
    44.6
    
    
    
    5.12
    %Consumer and residential real estate
    
    
    814.3
    
    
    
    13.4
    
    
    
    6.56
    
    
    
    1,045.5
    
    
    
    17.5
    
    
    
    6.68Total loan participations
    
    
    3,931.0
    
    
    
    40.3
    
    
    
    4.07
    
    
    
    4,505.4
    
    
    
    62.1
    
    
    
    5.48Interest bearing deposits in the Bank
    
    
    618.2
    
    
    
    0.4
    
    
    
    0.25
    
    
    
    162.5
    
    
    
    0.8
    
    
    
    2.00Total
    
    $
    4,549.2
    
    
    $
    40.7
    
    
    
    3.55
    %
    
    $
    4,667.9
    
    
    $
    62.9
    
    
    
    5.36
    %
 (1)
    
    Income includes interest and fees. Table 4  Year-To-Date Interest and Fee Income
 Nine Months Ended September 30,2009
    
    
    2008Average
    
    
    
    
    
    
    
    
    
    
    Average(in millions)
    
    Balance
    
    
    Income(1)
    
    
    Yield
    
    
    Balance
    
    
    Income(1)
    
    
    YieldLoan participation interests:Commercial real estate
    
    $
    3,230.5
    
    
    $
    83.6
    
    
    
    3.46
    %
    
    $
    3,212.5
    
    
    $
    132.0
    
    
    
    5.49
    %Consumer and residential real estate
    
    
    874.8
    
    
    
    43.4
    
    
    
    6.64
    
    
    
    1,112.2
    
    
    
    55.8
    
    
    
    6.70Total loan participations
    
    
    4,105.3
    
    
    
    127.0
    
    
    
    4.14
    
    
    
    4,324.7
    
    
    
    187.8
    
    
    
    5.80Interest bearing deposits in the Bank
    
    
    416.4
    
    
    
    0.8
    
    
    
    0.25
    
    
    
    261.1
    
    
    
    4.8
    
    
    
    2.41Total
    
    $
    4,521.7
    
    
    $
    127.8
    
    
    
    3.78
    %
    
    $
    4,585.8
    
    
    $
    192.6
    
    
    
    5.61
    %
 (1)
    
    Income includes interest and fees.  Provision for (reduction in allowance for) credit losses
   21




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##### Table of Contents



Noninterest Income and Noninterest Expense
 (See Note 8 to the unaudited condensed financial statements for more information
regarding use of HPCIs assets as collateral for the Banks advances from the FHLB.)
  January 1, 2008throughSeptember 30, 2009Commercial real estate
    
    
    0.125
    %Consumer
    
    
    0.650
    %Residential real estate
    
    
    0.267
    %
  Provision for Income Taxes
   CREDIT EXPOSURE MIX
   22




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##### Table of Contents



Credit Risk
    Commercial Real Estate Credit
    Table 5  Commercial Real Estate Loans by Property Type and Property Location
 At September 30, 2009Geographic Region
    
    
    
    
    
    
    Percent(in thousands of dollars)
    
    Ohio
    
    
    Michigan
    
    
    Indiana
    
    
    Kentucky
    
    
    Pennsylvania
    
    
    Other
    
    
    Total Amount
    
    
    of TotalRetail properties
    
    $
    409,608
    
    
    $
    91,778
    
    
    $
    58,726
    
    
    $
    36,121
    
    
    $
    29,856
    
    
    $
    76,993
    
    
    $
    703,082
    
    
    
    22.8
    %Industrial and warehouse
    
    
    386,978
    
    
    
    153,888
    
    
    
    67,812
    
    
    
    13,529
    
    
    
    5,931
    
    
    
    35,857
    
    
    
    663,995
    
    
    
    21.6Office
    
    
    277,679
    
    
    
    114,250
    
    
    
    18,471
    
    
    
    19,144
    
    
    
    31,323
    
    
    
    41,934
    
    
    
    502,801
    
    
    
    16.4Raw land and other land
uses
    
    
    188,105
    
    
    
    79,462
    
    
    
    21,278
    
    
    
    10,963
    
    
    
    10,238
    
    
    
    14,306
    
    
    
    324,352
    
    
    
    10.6Multi family
    
    
    116,880
    
    
    
    10,972
    
    
    
    67,928
    
    
    
    40,736
    
    
    
    9,180
    
    
    
    12,541
    
    
    
    258,237
    
    
    
    8.4Single family home
builders
    
    
    133,038
    
    
    
    40,914
    
    
    
    12,072
    
    
    
    7,530
    
    
    
    13,795
    
    
    
    8,255
    
    
    
    215,604
    
    
    
    7.0Health care
    
    
    152,149
    
    
    
    13,487
    
    
    
    1,011
    
    
    
    173
    
    
    
    14,660
    
    
    
    14,811
    
    
    
    196,291
    
    
    
    6.4Other
    
    
    115,181
    
    
    
    56,980
    
    
    
    6,184
    
    
    
    1,722
    
    
    
    5,940
    
    
    
    22,920
    
    
    
    208,927
    
    
    
    6.8Total
    
    $
    1,779,618
    
    
    $
    561,731
    
    
    $
    253,482
    
    
    $
    129,918
    
    
    $
    120,923
    
    
    $
    227,617
    
    
    $
    3,073,289
    
    
    
    100.0
    %
  23




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##### Table of Contents



Retail properties
   Single family homebuilders
   Consumer and Residential Real Estate
   Allowance for Credit Losses (ACL)
   24




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##### Table of Contents



Table 6  Allowances for Credit Loss Activity
 2009
    
    
    2008(in thousands)
    
    Third
    
    
    Second
    
    
    First
    
    
    Fourth
    
    
    ThirdALPL balance, beginning of period
    
    $
    95,748
    
    
    $
    79,889
    
    
    $
    65,456
    
    
    $
    72,073
    
    
    $
    66,876Allowance of loan participations acquired
    
    
    9,331
    
    
    
    4,673
    
    
    
    4,130
    
    
    
    4,461
    
    
    
    15,828Net loan lossesCommercial real estate
    
    
    (32,138
    )
    
    
    (26,901
    )
    
    
    (6,742
    )
    
    
    (9,100
    )
    
    
    (179
    )Consumer and residential real estate
    
    
    (3,942
    )
    
    
    (2,622
    )
    
    
    (1,752
    )
    
    
    (1,905
    )
    
    
    (2,168
    )Total net loan losses
    
    
    (36,080
    )
    
    
    (29,523
    )
    
    
    (8,494
    )
    
    
    (11,005
    )
    
    
    (2,347
    )Provision for (reduction in) ALPL
    
    
    28,332
    
    
    
    40,709
    
    
    
    18,797
    
    
    
    (697
    )
    
    
    (8,284
    )Reserve transfer from AULPC
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    624
    
    
    
    ALPL balance, end of period
    
    $
    97,331
    
    
    $
    95,748
    
    
    $
    79,889
    
    
    $
    65,456
    
    
    $
    72,073AULPC balance, beginning of period
    
    $
    2,280
    
    
    $
    2,492
    
    
    $
    2,301
    
    
    $
    3,423
    
    
    $
    2,576Provision for (reduction in) AULPC
    
    
    (631
    )
    
    
    (212
    )
    
    
    191
    
    
    
    (498
    )
    
    
    847Reserve transfer to ALPL
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (624
    )
    
    
    AULPC balance, end of period
    
    $
    1,649
    
    
    $
    2,280
    
    
    $
    2,492
    
    
    $
    2,301
    
    
    $
    3,423Total Allowance for Credit Losses
    
    $
    98,980
    
    
    $
    98,028
    
    
    $
    82,381
    
    
    $
    67,757
    
    
    $
    75,496ALPL as a % of total participation interests
    
    
    2.52
    %
    
    
    2.41
    %
    
    
    1.91
    %
    
    
    1.48
    %
    
    
    1.57
    %ACL as a % of total participation interests
    
    
    2.56
    
    
    
    2.47
    
    
    
    1.97
    
    
    
    1.54
    
    
    
    1.65
 Nine Months EndedSeptember 30,(in thousands)
    
    2009
    
    
    2008ALPL balance, beginning of period
    
    $
    65,456
    
    
    $
    62,275Allowance for loan participations acquired
    
    
    18,134
    
    
    
    31,824Net loan lossesCommercial real estate
    
    
    (65,781
    )
    
    
    (3,383
    )Consumer and residential real estate
    
    
    (8,316
    )
    
    
    (5,415
    )Total net loan losses
    
    
    (74,097
    )
    
    
    (8,798
    )Provision for (reduction in) ALPL
    
    
    87,838
    
    
    
    (13,228
    )ALPL balance, end of period
    
    $
    97,331
    
    
    $
    72,073AULPC balance, beginning of period
    
    $
    2,301
    
    
    $
    3,856Provision for (reduction in) AULPC
    
    
    (652
    )
    
    
    (433
    )AULPC balance, end of period
    
    $
    1,649
    
    
    $
    3,423Total Allowance for Credit Losses
    
    $
    98,980
    
    
    $
    75,496
    25




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##### Table of Contents



Non-Performing Assets (NPAs)
   Table 7  Quarterly Non-Performing Assets
 2009
    
    
    2008(in thousands)
    
    Third
    
    
    Second
    
    
    First
    
    
    Fourth
    
    
    ThirdParticipation interests in non-accrual loansCommercial real estate
    
    $
    192,661
    
    
    $
    166,810
    
    
    $
    100,675
    
    
    $
    54,246
    
    
    $
    59,701Consumer and residential real estate
    
    
    5,467
    
    
    
    6,588
    
    
    
    7,035
    
    
    
    6,041
    
    
    
    6,834Total Non-Performing Assets
    
    $
    198,128
    
    
    $
    173,398
    
    
    $
    107,710
    
    
    $
    60,287
    
    
    $
    66,535Participations in Accruing Loans
Past Due 90 Days or More
    
    $
    10,294
    
    
    $
    6,113
    
    
    $
    4,909
    
    
    $
    9,543
    
    
    $
    8,315NPAs as a % of total
participation interests
    
    
    5.13
    %
    
    
    4.36
    %
    
    
    2.57
    %
    
    
    1.37
    %
    
    
    1.45
    %ALPL as a % of NPAs
    
    
    49
    
    
    
    55
    
    
    
    74
    
    
    
    109
    
    
    
    108ACL as a % of NPAs
    
    
    50
    
    
    
    57
    
    
    
    76
    
    
    
    112
    
    
    
    113
   26




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##### Table of Contents



Table 8  Quarterly ALPL / Loan Participation Coverage Ratio Analysis
 2009
    
    
    2008(in thousands)
    
    Third
    
    
    Second
    
    
    First
    
    
    Fourth
    
    
    ThirdLoan participation interests ending balances:Accruing Loans
    
    $
    3,665,990
    
    
    $
    3,800,218
    
    
    $
    4,077,200
    
    
    $
    4,348,204
    
    
    $
    4,510,614Impaired loan evaluated on a pool basis
    
    
    40,838
    
    
    
    44,008
    
    
    
    28,068
    
    
    
    31,368
    
    
    
    15,258Impaired loans evaluated under ASC 310 (1)
    
    
    157,290
    
    
    
    129,390
    
    
    
    79,642
    
    
    
    28,919
    
    
    
    51,277Total non-accrual loans
    
    
    198,128
    
    
    
    173,398
    
    
    
    107,710
    
    
    
    60,287
    
    
    
    66,535Total loan participation interests
    
    $
    3,864,118
    
    
    $
    3,973,616
    
    
    $
    4,184,910
    
    
    $
    4,408,491
    
    
    $
    4,577,149Allowance for loan participation interests (ALPL):Accruing Loans
    
    $
    69,449
    
    
    $
    66,661
    
    
    $
    62,788
    
    
    $
    56,570
    
    
    $
    60,372ALPL associated with impaired loans evaluated
on a pool basis
    
    
    3,109
    
    
    
    3,707
    
    
    
    2,103
    
    
    
    1,965
    
    
    
    1,279ALPL determined in accordance with ASC 310 (1)
    
    
    24,773
    
    
    
    25,380
    
    
    
    14,998
    
    
    
    6,921
    
    
    
    10,422Total non-accrual loans
    
    
    27,882
    
    
    
    29,087
    
    
    
    17,101
    
    
    
    8,886
    
    
    
    11,701Total ALPL
    
    $
    97,331
    
    
    $
    95,748
    
    
    $
    79,889
    
    
    $
    65,456
    
    
    $
    72,073ALPL as a % of loan participation intererstsAccruing Loans
    
    
    1.89
    %
    
    
    1.75
    %
    
    
    1.54
    %
    
    
    1.30
    %
    
    
    1.34
    %Impaired loan evaluated on a pool basis
    
    
    7.61
    
    
    
    8.42
    
    
    
    7.49
    
    
    
    6.26
    
    
    
    8.38Impaired loans evaluated under ASC 310 (1)
    
    
    15.75
    
    
    
    19.62
    
    
    
    18.83
    
    
    
    23.93
    
    
    
    20.32Total non-accrual loans
    
    
    14.07
    
    
    
    16.77
    
    
    
    15.88
    
    
    
    14.74
    
    
    
    17.59Total loan participation interests
    
    
    2.52
    %
    
    
    2.41
    %
    
    
    1.91
    %
    
    
    1.48
    %
    
    
    1.57
    %
 (1)
    
    Accounting Standards Codification Topic 310, Receivables    27




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##### Table of Contents



MARKET RISK
    OFF-BALANCE SHEET ARRANGEMENTS
   28




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##### Table of Contents



LIQUIDITY AND CAPITAL RESOURCES
        29




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##### Table of Contents



Table 9  Regulatory Capital Ratios
 2009
    
    
    2008Third
    
    
    Second
    
    
    First
    
    
    Fourth
    
    
    ThirdTier 1 Leverage Ratio (5.00% well-capitalized)
    
    
    6.48
    %
    
    
    6.46
    %
    
    
    5.95
    %
    
    
    5.99
    %
    
    
    6.36
    %Tier 1 Risk-based Capital Ratio (6.00%
well-capitalized)
    
    
    7.46
    
    
    
    7.14
    
    
    
    6.79
    
    
    
    6.44
    
    
    
    7.01Total Risk-based Capital Ratio (10.00%
well-capitalized)
    
    
    11.75
    
    
    
    11.35
    
    
    
    11.00
    
    
    
    10.71
    
    
    
    10.25
     30




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures about Market Risk
  
 Item 4. Controls and Procedures
   
 Item 4T. Controls and Procedures
  
 PART II. OTHER INFORMATION
  
 Item 6. Exhibits
  http://www.sec.gov http://www.huntington.com
  3.1.
    
    
    Amended and Restated Articles of Incorporation (previously
filed as Exhibit 3(a)(ii) to Amendment No. 4 to Registration Statement of Form
S-11 (File No. 333-61182), filed with the Securities and Exchange Commission on
October 12, 2001, and incorporated herein by reference.)3.2.
    
    
    Code of Regulations (previously filed as Exhibit 3(b) to the
Registrants Registration Statement of Form S-11 (File No. 333-61182), filed
with the Securities and Exchange Commission on May 17, 2001, and incorporated
herein by reference.)4.1
    
    
    Specimen of certificate representing Class C preferred
securities, previously filed as Exhibit 4 to the Registrants Amendment No. 1
to Registration Statement of Form S-11 (File No. 333-61182), filed with the
Securities and Exchange Commission on May 31, 2001, and incorporated herein by
reference.31.1.
    
    
    Rule 13a  14(a) Certification  President (chief executive officer).31.2.
    
    
    Rule 13a  14(a) Certification  Vice President (chief financial officer).32.1.
    
    
    Section 1350 Certification  President (chief executive officer).32.2.
    
    
    Section 1350 Certification  Vice President (chief financial officer).99.1.
    
    
    Unaudited Condensed Consolidated Financial Statements of
Huntington Bancshares Incorporated as of and for the three month and nine month
periods ended September 30, 2009 and 2008.
 
  31




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##### Table of Contents



SIGNATURES
  
 By:
    
    /s/ Donald R. Kimble

Donald R. Kimble 

President and Director

(Principal Executive Officer)
    
    
    
    By:
    
    /s/ Thomas P. Reed

Thomas P. Reed 

Vice President and Director

(Principal Financial and Accounting Officer)
  32