<PAGE>

                                  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 June 30, 2002


                        Commission File Number: 000-33243


                       HUNTINGTON PREFERRED CAPITAL, INC.



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


                   41 SOUTH HIGH STREET, COLUMBUS, OHIO 43287


                  Registrant's telephone number (614) 480-8300


Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days.


 Yes    X                No
     =======                =======



All common stock is held by affiliates of the registrant as of June 30, 2002. As
of July 31, 2002, 14,000,000 shares of common stock without par value were
outstanding.


<PAGE>
                       HUNTINGTON PREFERRED CAPITAL, INC.

                                      INDEX

<TABLE>
<CAPTION>
PART I.    FINANCIAL INFORMATION

Item 1.      Financial Statements
<S>                                                                                      <C>
                 Consolidated Balance Sheets -
                 June 30, 2002 and 2001, and December 31, 2001                                     3

                 Consolidated Statements of Income -
                 For the three and six months ended June 30, 2002 and 2001                         4

                 Consolidated Statements of Changes in Shareholders' Equity -
                 For the six months ended June 30, 2002 and 2001                                   5

             Consolidated Statements of Cash Flows -
                 For the six months ended June 30, 2002 and 2001                                   6

             Notes to Unaudited Consolidated Financial Statements                                  7

Item 2.     Management's Discussion and Analysis of
                Financial Condition and Results of Operations                                     12

Item 3.     Quantitative and Qualitative Disclosures about Market Risk                            20


PART II.  OTHER INFORMATION

Item 4.     Submission of Matters to a Vote of Security Holders                                  21

Item 6.     Exhibits and Reports on Form 8-K                                                     22

Signatures                                                                                       23
</TABLE>

<PAGE>
PART I. FINANCIAL INFORMATION
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------

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

                                                                              JUNE 30,      DECEMBER 31,      JUNE 30,
(in thousands of dollars, except share data)                                    2002            2001            2001
------------------------------------------------------------------------------------------------------------------------------
                                                                             (Unaudited)     (Restated)      (Unaudited)
                                                                                                             (Restated)
<S>                                                                          <C>             <C>             <C>
ASSETS
Cash and due from The Huntington National Bank                               $   39,367      $       --      $   64,193
Interest bearing deposits with The Huntington National Bank                     823,068         364,912         633,003
Due from Huntington Preferred Capital Holdings, Inc. and The
   Huntington National Bank                                                      66,183         293,809         227,076
Loan participation interests
   Commercial                                                                   507,108         646,509         524,297
   Consumer                                                                     693,714         783,735       1,053,293
   Residential mortgage                                                         199,988         270,671         586,347
   Commercial mortgage                                                        3,849,495       3,678,061       4,107,659
------------------------------------------------------------------------------------------------------------------------------
                                                                              5,250,305       5,378,976       6,271,596
     Less allowance for loan losses                                             163,359         175,690          90,724
------------------------------------------------------------------------------------------------------------------------------
Net loan participation interests                                              5,086,946       5,203,286       6,180,872
------------------------------------------------------------------------------------------------------------------------------
Premises and equipment                                                           41,332          44,641             789
Accrued income and other assets                                                  44,095          42,111          51,189
------------------------------------------------------------------------------------------------------------------------------

TOTAL ASSETS                                                                 $6,100,991      $5,948,759      $7,157,122
------------------------------------------------------------------------------------------------------------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
   Dividends payable                                                         $    8,176      $       --      $       --
   Other liabilities                                                                  6              31              --
------------------------------------------------------------------------------------------------------------------------------
      Total Liabilities                                                           8,182              31              --
------------------------------------------------------------------------------------------------------------------------------

SHAREHOLDERS' EQUITY
     Preferred stock, Class A, 8.000% noncumulative, non-exchangeable;
          $1,000 par and liquidation value per share;
          1,000 shares authorized, issued and outstanding                         1,000           1,000           1,000
     Preferred stock, Class B, variable-rate noncumulative and
          conditionally exchangeable; $1,000 par and liquidation
          value per share; authorized 500,000 shares; 400,000
          shares issued and outstanding                                         400,000         400,000         400,000
     Preferred stock, Class C, 7.875% noncumulative and
          conditionally exchangeable; $25 par and liquidation
          value; authorized 2,000,000 shares; 2,000,000; 2,000,000; and
          no shares issued and outstanding, respectively                         50,000          50,000              --
     Preferred stock, Class D, variable-rate noncumulative and
          conditionally exchangeable; $25 par and liquidation
          value; authorized 14,000,000 shares; 14,000,000; 14,000,000;
          and no shares issued and outstanding, respectively                    350,000         350,000              --
     Preferred stock, $25 par value, 10,000,000 shares
          authorized; no shares issued or outstanding                                --              --              --
     Common stock - without par value; 14,000,000 shares
          authorized, issued, and outstanding                                 5,082,511       5,082,511       6,341,717
     Retained earnings                                                          209,298          65,217         414,405
------------------------------------------------------------------------------------------------------------------------------
     Total Shareholders' Equity                                               6,092,809       5,948,728       7,157,122
------------------------------------------------------------------------------------------------------------------------------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                   $6,100,991      $5,948,759      $7,157,122
------------------------------------------------------------------------------------------------------------------------------
</TABLE>



See notes to unaudited consolidated financial statements.


                                                                               3

<PAGE>

CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
                                                                       THREE MONTHS ENDED                     SIX MONTHS ENDED
                                                                           JUNE 30,                              JUNE 30,
-----------------------------------------------------------------------------------------------------------------------------------
(in thousands of dollars)                                           2002                  2001            2002           2001
-----------------------------------------------------------------------------------------------------------------------------------
                                                                                      (Restated)                        (Restated)
<S>                                                            <C>                  <C>             <C>             <C>
Interest and fee income
   Interest on loan participation interests
      Commercial                                                  $ 6,440              $ 10,211        $ 13,749        $ 22,173
      Consumer                                                     18,882                24,189          38,926          47,316
      Residential mortgage                                          3,851                12,232           8,411          21,504
      Commercial mortgage                                          54,290                78,247         108,170         160,623
-----------------------------------------------------------------------------------------------------------------------------------
                                                                   83,463               124,879         169,256         251,616
   Fees from loan participation interests                           2,737                 3,030           5,178           4,759
   Interest bearing deposits with The Huntington
      National Bank                                                 3,284                 5,041           5,162          17,311
-----------------------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST AND FEE INCOME                                      89,484               132,950         179,596         273,686

Provision for loan losses                                           3,000                 6,751          19,839          10,678
-----------------------------------------------------------------------------------------------------------------------------------

INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES                    86,484               126,199         159,757         263,008
-----------------------------------------------------------------------------------------------------------------------------------

Non-interest income                                                 1,806                    14           3,341              28
Non-interest expense                                                3,257                 2,156           6,896           4,187
-----------------------------------------------------------------------------------------------------------------------------------

INCOME BEFORE INCOME TAXES                                         85,033               124,057         156,202         258,849
Income taxes                                                           25                   ---             (92)            ---
-----------------------------------------------------------------------------------------------------------------------------------

NET INCOME BEFORE PREFERRED DIVIDENDS                              85,008               124,057         156,294         258,849
DIVIDENDS ON PREFERRED STOCK                                        6,231                   ---          12,213             ---
-----------------------------------------------------------------------------------------------------------------------------------

NET INCOME APPLICABLE TO COMMON SHARES                           $ 78,777             $ 124,057       $ 144,081       $ 258,849
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

See notes to unaudited consolidated financial statements.

                                                                               4
<PAGE>

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>

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


                                                  PREFERRED, CLASS A             PREFERRED, CLASS B             PREFERRED, CLASS C
                                               ---------------------------    --------------------------   ------------------------
(in thousands)                                    SHARES           STOCK         SHARES          STOCK         SHARES     STOCK
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                               <C>         <C>              <C>        <C>                           <C>
Six Months Ended June 30, 2001:
Balance, beginning of period                          1           $ 1,000          400        $ 400,000            ---      $ ---
    Net income

-----------------------------------------------------------------------------------------------------------------------------------
Balance, end of period                                1           $ 1,000          400        $ 400,000            ---      $ ---
-----------------------------------------------------------------------------------------------------------------------------------

SIX MONTHS ENDED JUNE 30, 2002:
BALANCE, BEGINNING OF PERIOD                          1           $ 1,000          400        $ 400,000          2,000   $ 50,000
    NET INCOME
DIVIDENDS DECLARED ON CLASS A PREFERRED STOCK
DIVIDENDS DECLARED ON CLASS B PREFERRED STOCK
DIVIDENDS DECLARED ON CLASS C PREFERRED STOCK
DIVIDENDS DECLARED ON CLASS D PREFERRED STOCK

-----------------------------------------------------------------------------------------------------------------------------------
BALANCE, END OF PERIOD                                1           $ 1,000          400        $ 400,000          2,000   $ 50,000
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>


<TABLE>
<CAPTION>

                                                               PREFERRED, CLASS D                  PREFERRED
                                                        -------------------------------    ------------------------------
(in thousands)                                             SHARES           STOCK             SHARES             STOCK
----------------------------------------------------------------------------------------------------------------------------
<S>                                                       <C>             <C>               <C>              <C>
Six Months Ended June 30, 2001:
Balance, beginning of period                                     ---             $ ---              ---            $ ---
    Net income
Common shares issued in 18,666.66667-to-1 stock split

----------------------------------------------------------------------------------------------------------------------------
Balance, end of period                                           ---             $ ---              ---            $ ---
----------------------------------------------------------------------------------------------------------------------------

SIX MONTHS ENDED JUNE 30, 2002:
Balance, beginning of period                                  14,000          $350,000              ---            $ ---
    Net income
Dividends declared on Class A preferred stock
Dividends declared on Class B preferred stock
Dividends declared on Class C preferred stock
Dividends declared on Class D preferred stock

----------------------------------------------------------------------------------------------------------------------------
Balance, end of period                                        14,000          $350,000              ---            $ ---
----------------------------------------------------------------------------------------------------------------------------

<CAPTION>

                                                                      COMMON
                                                        -----------------------------------     RETAINED
(in thousands)                                             SHARES              STOCK            EARNINGS             TOTAL
--------------------------------------------------------------------------------------------------------------------------------
<S>                                                         <C>            <C>                 <C>              <C>
Six Months Ended June 30, 2001 (Restated):
Balance, beginning of period                                         1         $ 6,341,717         $ 155,556        $ 6,898,273
    Net income                                                                                       258,849            258,849
Common shares issued in 18,666.66667-to-1 stock split           13,999                 ---                                  ---

--------------------------------------------------------------------------------------------------------------------------------
Balance, end of period                                          14,000         $ 6,341,717         $ 414,405        $ 7,157,122
--------------------------------------------------------------------------------------------------------------------------------

SIX MONTHS ENDED JUNE 30, 2002:
Balance, beginning of period                                    14,000         $ 5,082,511          $ 65,217        $ 5,948,728
    Net income                                                                                       156,294            156,294
Dividends declared on Class A preferred stock                                                            (80)               (80)
Dividends declared on Class B preferred stock                                                         (3,904)            (3,904)
Dividends declared on Class C preferred stock                                                         (1,970)            (1,970)
Dividends declared on Class D preferred stock                                                         (6,259)            (6,259)

--------------------------------------------------------------------------------------------------------------------------------
Balance, end of period                                          14,000         $ 5,082,511         $ 209,298        $ 6,092,809
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>




See notes to unaudited consolidated financial statements.


                                                                               5

<PAGE>

CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
                                                                                                     SIX MONTHS ENDED
                                                                                                          JUNE 30,
---------------------------------------------------------------------------------------------------------------------------------
(in thousands of dollars)                                                                      2002                     2001
---------------------------------------------------------------------------------------------------------------------------------
                                                                                                                        (Restated)
OPERATING ACTIVITIES
<S>                                                                                             <C>                     <C>
     Net Income                                                                                 $ 156,294               $258,849

     Adjustments to reconcile net income to net cash
     provided by operating activities
               Provision for Loan Losses                                                           19,839                 10,678
               Depreciation                                                                         3,309                      7
               Decrease (increase) in Due from/to Huntington Preferred Capital
                   Holdings, Inc. and The Huntington National Bank                                227,626                 (2,525)
               Net increase in accrued interest and other assets / accounts
                   payable and other liabilities                                                 (153,624)              (229,542)
---------------------------------------------------------------------------------------------------------------------------------
     NET CASH PROVIDED BY OPERATING ACTIVITIES                                                    253,444                 37,467
---------------------------------------------------------------------------------------------------------------------------------

INVESTING ACTIVITIES
     (Increase) decrease in interest bearing deposits in banks                                   (458,156)               185,869
     Participation interests acquired                                                          (1,956,624)            (3,412,328)
     Sales and repayments on loans underlying participation interests                           2,204,740              3,192,579
     Purchase of premises and equipment                                                               ---                   (797)
---------------------------------------------------------------------------------------------------------------------------------
     NET CASH USED FOR INVESTING ACTIVITIES                                                      (210,040)               (34,677)
---------------------------------------------------------------------------------------------------------------------------------

FINANCING ACTIVITIES
     Dividends paid on preferred stock                                                             (4,037)                   ---
---------------------------------------------------------------------------------------------------------------------------------
     NET CASH USED FOR FINANCING ACTIVITIES                                                        (4,037)                   ---
---------------------------------------------------------------------------------------------------------------------------------
     CHANGE IN CASH AND DUE FROM BANKS                                                             39,367                  2,790
     CASH AND DUE FROM BANKS AT BEGINNING OF PERIOD                                                   ---                 61,403
---------------------------------------------------------------------------------------------------------------------------------
     CASH AND DUE FROM BANKS AT END OF PERIOD                                                    $ 39,367               $ 64,193
---------------------------------------------------------------------------------------------------------------------------------

     Supplemental information:
        Dividends declared, not paid, on preferred stock                                          $ 8,176                    ---
        Income taxes paid                                                                             ---                    ---
        Interest paid                                                                                 ---                    ---
</TABLE>

See notes to unaudited consolidated financial statements.

                                                                               6
<PAGE>


NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION

     Huntington Preferred Capital, Inc. (HPCI or "the company") is a real estate
investment trust (REIT) organized under Ohio law in 1992. HPCI is a subsidiary
of Huntington Preferred Capital Holdings, Inc. (Holdings), an Indiana
corporation. Holdings is a subsidiary of The Huntington National Bank (the
Bank), a national banking association organized under the laws of the United
States and headquartered in Columbus, Ohio. The Bank is a wholly owned
subsidiary of Huntington Bancshares Incorporated (Huntington), a Maryland
corporation also headquartered in Columbus, Ohio. HPCI has one subsidiary,
HPCLI, Inc. (HPCLI).


NOTE 2 - BASIS OF PRESENTATION

     The unaudited interim consolidated financial statements reflect all
adjustments, consisting of normal and/or recurring accruals, which are, in the
opinion of management, necessary for a fair presentation of the consolidated
financial position, the results of operations, and cash flows for the periods
presented. These unaudited consolidated financial statements have been prepared
in accordance with accounting principles generally accepted in the United States
(GAAP). As permitted by the Securities and Exchange Commission, certain
information and footnote disclosures normally included in financial statements
have been omitted. The Notes to the Consolidated Financial Statements appearing
in HPCI's 2001 amended Annual Report on Form 10-K/A (2001 Annual Report), which
include descriptions of significant accounting policies, should be read in
conjunction with these interim financial statements. Financial information for
the six months ended June 30, 2001 has been restated.

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


NOTE 3 - LOAN PARTICIPATION INTERESTS

     Participation interests in loans, which are predominantly secured by real
estate, are generally acquired from the Bank by Holdings at the Bank's carrying
value, which is the principal amount outstanding plus accrued interest, net of
unearned income, if any, and an allowance for loan losses. Similarly,
participation interests in loans are generally acquired from Holdings by HPCI at
Holdings' carrying value. By the nature of this entity's status as a REIT, the
composition of the loans underlying the participation interests are highly
concentrated in real estate. Underlying loans are also concentrated in the
Bank's primary markets of Ohio, Michigan, Indiana, and Kentucky. Loans in these
markets comprise 95.7% of the Bank's portfolio at June 30, 2002. There are,
however, no underlying loans outstanding which would be considered a
concentration of lending in any particular industry, group of industries, or
business activity.

     In July 2001, Huntington announced a comprehensive strategic and financial
restructuring plan, which included divesting its Florida retail and corporate
banking businesses. In September 2001, Huntington announced that it entered into
an agreement to sell its Florida operations to SunTrust Banks, Inc. (SunTrust).
In December 2001, HPCI distributed participation interests in Florida-related
loans to its common shareholders, Holdings and Huntington. This distribution
approximated $1.3 billion and consisted of cash and the net book value of
participation interests in loans and related accrued interest, net of $18.6
million of allowance for loan losses (ALL), which were included in the sale to
SunTrust. This distribution represented approximately 17% of HPCI's total assets
as of December 31, 2001. The sale by Huntington closed in February 2002.


                                                                               7

<PAGE>
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 4 - ALLOWANCE FOR LOAN LOSSES

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

     The following table sets forth a summary of the transactions in the
allowance for loan losses for the periods indicated:

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
                                                      THREE MONTHS ENDED                   SIX MONTHS ENDED
                                                            JUNE 30,                            JUNE 30,
----------------------------------------------------------------------------------------------------------------------------
(in thousands of dollars)                          2002             2001               2002            2001
----------------------------------------------------------------------------------------------------------------------------
<S>                                                 <C>             <C>                <C>               <C>
BALANCE, BEGINNING OF PERIOD                        $171,007        $ 98,046           $ 175,690         $91,826
Allowance for loan participations acquired, net       10,700          (6,857)             17,261            (266)
Net loan losses                                      (21,348)         (7,216)            (49,431)        (11,514)
Provision for loan losses                              3,000           6,751              19,839          10,678
----------------------------------------------------------------------------------------------------------------------------
BALANCE, END OF PERIOD                              $163,359        $ 90,724           $ 163,359         $90,724
----------------------------------------------------------------------------------------------------------------------------
</TABLE>


NOTE 5 - ISSUANCE OF PREFERRED SECURITIES

     In October 2001, HPCI created three new classes of preferred securities,
Class C and Class D preferred securities and blank check preferred securities
(which are unclassified as to term, dividends, voting rights, etc). HPCI issued
the Class C and D preferred securities in October 2001 to Holdings and received
a capital contribution and $452.6 million of participation interests in
performing and non-performing commercial loans, including commercial real estate
loans, and consumer loans, with $86.5 million of specific loan loss reserves,
$45.4 million of leasehold improvements, and $3.5 million of accrued interest
that Holdings had acquired from the Bank. The underlying consumer loans included
a combination of automobile, truck, and equipment loans. The company transferred
the leasehold improvements to HPCLI in exchange for its common shares. Holdings
then sold the Class C preferred securities to the public in November 2001 for
cash consideration of $25 per share totaling $50 million. HPCI did not receive
any of Holdings' proceeds from the sale of the securities.


NOTE 6 - DIVIDENDS AND STOCK SPLIT

     Holders of Class A preferred securities are entitled to receive, if, when,
and as declared by the Board of Directors of HPCI out of funds legally
available, dividends at a rate of $80.00 per share per annum of the initial
liquidation preference ($1,000.00 per share). Dividends on the Class A preferred
securities, if declared, are payable annually in December to holders of record
on the respective record dates fixed for such purpose by the Board of Directors
in advance of payment. In March 2002, dividends on the Class A preferred
securities were declared and set apart for payment in December 2002 to the
holders of the Class A preferred securities.

                                                                             8
<PAGE>
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


     The holder of the Class B preferred securities, HPC Holdings-II, Inc., a
direct non-bank subsidiary of Huntington, is entitled to receive, if, when, and
as declared by the Board of Directors of HPCI out of funds legally available,
dividends at a variable rate based on the three-month LIBOR published on the
first day of each calendar quarter. Dividends on the Class B preferred
securities, which are declared quarterly, are payable annually and are
non-cumulative. No dividend, except payable in common shares, may be declared or
paid upon Class B preferred securities unless dividend obligations are satisfied
on the Class A, Class C, and Class D preferred securities. The Board of
Directors of HPCI declared quarterly dividends of $2.0 million based on a LIBOR
rate of 2.04% in June 2002 and $1.9 million based on a LIBOR rates of 1.86375%
in March 2002, in each case payable in December 2002. No dividends were declared
or paid for the same periods in the prior year.

     Holders of Class C preferred securities are entitled to receive, if, when,
and as declared by the Board of Directors of HPCI out of funds legally
available, dividends at a fixed rate of 7.875% per annum, payable quarterly.
Dividends accrue in each quarterly period from the first day of each period,
whether or not dividends are paid with respect to the preceding period.
Dividends are not cumulative and if no dividend is paid on the Class C preferred
securities for a quarterly dividend period, the payment of dividends on HPCI's
common stock and other HPCI-issued securities ranking junior to the Class C
preferred securities (i.e., Class B preferred securities) will be prohibited for
that period and at least the following three quarterly dividend periods. In
March and May 2002, the Board of Directors declared quarterly dividends
totalling $984,375 for each period. These dividends were paid April 1, 2002, and
July 1, 2002, respectively. No dividends were declared or paid for the same
periods in the prior year because these securities were not outstanding in those
periods.

     The holder of Class D preferred securities, Holdings, is entitled to
receive, if, when, and as declared by the Board of Directors of HPCI out of
funds legally available, dividends at a variable rate established at the
beginning of each calendar quarter equal to LIBOR plus 1.625%, payable
quarterly. Dividends accrue in each quarterly period from the first day of each
period, whether or not dividends are paid with respect to the preceding period.
Dividends are not cumulative and if no dividend is paid on the Class D preferred
securities for a quarterly dividend period, the payment of dividends on HPCI's
common stock and other HPCI-issued securities ranking junior to the Class D
preferred securities (i.e., Class B preferred securities) will be prohibited for
that period and at least the following three quarterly dividend periods.
Dividends of $3.2 million and $3.1 million were declared by HPCI's Board of
Directors in the second and first quarters of 2002, respectively. No dividends
were declared or paid for the same periods in the prior year because these
securities were not outstanding in those periods.

     In April 2001, the Board of Directors declared a 18,666.67-for-1 stock
split on its common stock outstanding. The result of the transaction increased
the number of authorized, issued, and outstanding common shares from 750 to 14
million in order for Holdings to maintain 80% voting control for corporate
matters.


NOTE 7 - RELATED PARTY TRANSACTIONS

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

     Under HPCI's subparticipation agreement with Holdings and Holdings'
participation agreement with the Bank, the Bank performs the servicing of the
commercial, commercial mortgage, residential mortgage, and consumer loans
underlying the participations held by HPCI in accordance with normal


                                                                               9
<PAGE>
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

industry practice. The servicing fee the Bank charges is 0.125% per year of the
outstanding principal balances of the commercial, commercial mortgage, and
consumer loans underlying the participation interests and 0.282% per year of the
interest income collected on the underlying residential mortgages. Servicing fee
expense paid to the Bank totaled $1.7 million and $3.4 million for the three and
six months ended June 30, 2002, respectively. Servicing fee expense paid for the
same periods in the prior year amounted to $2.1 million and $4.1 million. In its
capacity as servicer, the Bank collects and holds the commercial and mortgage
loan payments received on behalf of HPCI until the end of each month. At month
end, the payments are transferred to HPCI and accordingly, HPCI does not reflect
any receivables for payments from the Bank in the accompanying unaudited
consolidated financial statements.

     HPCI, Huntington, and Holdings share personnel with the Bank and Huntington
to handle day-to-day operations of the company such as accounting, financial
analysis, tax reporting, and other administrative functions. On a monthly basis,
HPCI reimburses the Bank for the cost related to the time spent by employees for
performing these functions. The personnel costs were approximately $40,000 for
each quarterly period in 2002 and 2001.

     In February 2001, Huntington purchased 18,667 shares of the 14 million
outstanding common shares of HPCI from Holdings (after adjusting for the April
2001 18,666.67-for-1 stock split). On July 1, 2002, Huntington Preferred Capital
II, Inc. (HPCII), a subsidiary of Holdings, exchanged two classes of its
preferred stock for 4.55 million common shares of HPCI and certain assets from
Holdings. As a result of that transaction, Holdings owns 67.4%, HPCII owns
32.5%, and HBI owns the remaining 0.1% of the outstanding common stock of HPCI.
For all periods presented prior to February 2001 in the unaudited consolidated
financial statements, Holdings was the owner of 100% of the outstanding common
stock of HPCI.

     Of the outstanding shares of Class A preferred securities, 89.1% are owned
by Holdings while present and past employees of Huntington and its subsidiaries
own 10.9%. The Class A preferred securities are non-voting. All of the Class B
preferred securities are owned by HPC Holdings-II, Inc. In 2001, the Class C
preferred securities were issued to Holdings in exchange for certain assets and
Holdings sold them to the public in an underwritten offering. Various board
members and executive officers of HPCI purchased some of these shares in the
offering or in the open market. At June 30, 2002, a total of 5,205 shares, or
0.26%, were beneficially owned by the group as a whole. All of the Class D
preferred securities are owned by Holdings for possible sale to the public in
the future.

     HPCI's premises and equipment were acquired from the Bank through Holdings
in 2000 and 2001. Leasehold improvements were subsequently contributed to HPCLI
for its common shares. HPCLI charges rent to the Bank for use of various
facilities. The amount of rental income received by HPCLI during the first and
second quarters of 2002 was $1.5 million each and is reflected as a component of
non-interest income in the unaudited consolidated statements of income.

     HPCI has a receivable due from Holdings amounting to $66.2 million and
$227.1 million at June 30, 2002 and 2001, respectively. These balances represent
unsettled cash transactions involving its participation interests that occurred
in the ordinary course of business.

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

                                                                              10
<PAGE>

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

------------------------------------------------------------------------------
                                                          At June 30,
------------------------------------------------------------------------------
(in thousands of dollars)                           2002            2001
------------------------------------------------------------------------------
Non-interest bearing                                 $ 39,367        $ 64,193
Interest bearing                                      823,068         633,003
------------------------------------------------------------------------------
   Total deposits with the Bank                     $ 862,435       $ 697,196
------------------------------------------------------------------------------


NOTE 8 - COMMITMENTS AND CONTINGENCIES


     The Bank is eligible to obtain advances from various federal and
government-sponsored agencies, such as the Federal Home Loan Bank of Cincinnati
(FHLBC). From time to time, HPCI may be asked to act as co-borrower or guarantee
the Bank's obligations under such advances and/or pledge all or a portion of its
assets in connection with those advances. Any such borrowing, guarantee, and/or
pledge would rank senior to HPCI's common and preferred securities upon
liquidation. Accordingly, any federal or government-sponsored agencies that make
advances to the Bank where HPCI has acted as co-borrower or guarantor or has
pledged its assets as collateral will have a liquidation preference over the
holders of HPCI's securities. Any such borrowing, guarantee, and/or pledge in
connection with the Bank's advances from federal or government-sponsored
agencies falls within the definition of Permitted Indebtedness (as defined in
HPCI's articles of incorporation) and, therefore, HPCI is not required to obtain
the consent of the holders of its common or preferred securities for any such
borrowing, guarantee, and/or pledge.


     The Bank is currently eligible to obtain one or more advances from the
FHLBC based upon the amount of FHLBC capital stock owned by the Bank. As of June
30, 2002, the Bank's total borrowing capacity under this facility was capped at
$1.292 million. As of that same date, there were no borrowings under this
facility. However, there was a standby letter of credit outstanding in the
amount of $10.1 million that has not been drawn upon.


     HPCI has entered into an agreement with the Bank with respect to the pledge
of HPCI's assets to collateralize the Bank's borrowings from the FHLBC. The
agreement provides that the Bank will never place at risk HPCI's assets in
excess of an aggregate amount or percentage of such assets established from time
to time by HPCI's board of directors, including a majority of HPCI's independent
directors. HPCI's board has set this limit at $1 billion, which limit may be
changed in the future by the board of directors, including a majority of HPCI's
independent directors. The agreement also provides that the Bank will pay HPCI a
monthly fee based upon the eligible collateral held by HPCI. As of June 30,
2002, HPCI's pledged collateral was limited to 1-4 family residential mortgages
and second mortgage loans. As of that same date, HPCI's participation interests
in such 1-4 family residential mortgages and second mortgage loans aggregated
$0.7 billion. The Bank paid $273,000 to HPCI in the second quarter of 2002 as
compensation for making such assets available to the Bank as collateral since
February 2002 for possible advances under this FHLBC facility.



NOTE 9 - SEGMENT REPORTING

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

NOTE 10 -- RESTATEMENT OF OPERATING RESULTS AND FINANCIAL CONDITIONS


     On August 19, 2002, HPCI restated its consolidated financial statements for
the first quarter of 2002, and the years of 2001, 2000, and 1999 after it
discovered and corrected a discrepancy in the systems and methodology used to
allocate interest income, fees, expenses, loan losses and related provision
expense between The Huntington National Bank (the Bank) and HPCI. Specifically,
the system allocating this financial information between the Bank and HPCI was
modified in October 1999 to determine such allocations as of the third business
day before the end of each month. This change was made to facilitate a more
timely closing of HPCI's books. The unintended result was that certain interest
income, fees, charge-offs, and related provision expense from that date through
the end of the month were incorrectly not reported in HPCI's financial results,
beginning in the fourth quarter of 1999 through the first quarter of 2002.
Since HPCI and the Bank are fully consolidated subsidiaries of Huntington, and
the impact of all inter-company allocations was properly eliminated in
preparing the Huntington financial statements, this restatement had no impact
on Huntington's previously reported consolidated results of operations or
financial condition. Financial information is included in Item 1 of HPCI's
amended Annual Report on Form 10-K/A.


                                                                              11
<PAGE>


ITEM 2. MANAGEMENTS'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS


INTRODUCTION

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

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

Participation and Subparticipation Agreements
         A participation agreement between the Bank and Holdings and a
subparticipation agreement between Holdings and HPCI require the Bank to service
loans underlying its participation portfolio in a manner substantially the same
as for similar work performed by the Bank for transactions on its behalf. HPCI,
however, has retained the right to elect to foreclose on mortgaged properties
and the Bank has agreed to follow any such direction from HPCI in this regard.
The Bank also collects and remits principal and interest payments, maintains
perfected collateral positions, and submits and pursues insurance claims. In
addition, the Bank provides to HPCI accounting, tax, financial, reporting, and
other administrative services as required. The Bank is required to pay all
expenses related to the performance of its duties under the participation and
subparticipation agreements. Loan participation interests were all acquired from
Holdings and Holdings acquired them from the Bank.

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

         By their nature, forward-looking statements are subject to numerous
assumptions, risks, and uncertainties. A number of factors, including but not
limited to, those set forth under the heading "Business Risks" included in
Item 1 of HPCI's 2001 amended Annual Report on Form 10-K/A (2001 Annual Report)
and other factors described from time to time in the company's other filings
with the Securities and Exchange Commission, could cause actual conditions,
events, or results to differ significantly from those described in the
forward-looking statements. Forward-looking statements speak only as of the date
they are made. HPCI does not update forward-looking statements to reflect
circumstances or events that occur after the date the forward-looking statements
are made or to reflect the occurrence of unanticipated events.

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

Significant Accounting Policies
         Note 3 to the consolidated financial statements included in the 2001
Annual Report lists significant accounting policies used in the development and
presentation of the financial statements. This discussion and analysis, the
significant accounting policies, and other financial statement disclosures

                                                                              12

<PAGE>

identify and address key variables and other qualitative and quantitative
factors that are necessary for an understanding and evaluation of HPCI and its
results of operations.

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

Distribution of Florida Loan Participation Interests
         On July 12, 2001, Huntington announced a comprehensive strategic and
financial restructuring plan, which included, among other things, divesting its
Florida retail and corporate banking businesses. On September 26, 2001,
Huntington announced that it had entered into an agreement to sell its Florida
operations to SunTrust Banks, Inc. (SunTrust). On December 31, 2001, in
anticipation of the sale of the Florida operations by Huntington, which closed
February 15, 2002, HPCI completed a $1.3 billion distribution to its common
shareholders, Holdings and Huntington. This distribution consisted of cash and
the net book value of participation interests in loans that were included in the
sale to SunTrust, including the related accrued interest and allowance for loan
losses, representing approximately 17% of total assets as of December 31, 2001.

BASIS OF PRESENTATION


         On August 19, 2002, HPCI restated its consolidated financial statements
for the first quarter of 2002 and the years of 2001, 2000, and 1999 after it
discovered and corrected a discrepancy in the systems and methodology used to
allocate interest income, fees, expenses, loan losses and related provision
expense between The Huntington National Bank (the Bank) and HPCI. Specifically,
the system allocating this financial information between the Bank and HPCI was
modified in October 1999 to determine such allocations as of the third business
day before the end of each month. This change was made to facilitate a more
timely closing of HPCI's books. The unintended result was that certain interest
income, fees, charge-offs, and related provision expense from that date through
the end of the month were incorrectly not reported in HPCI's financial results,
beginning in the fourth quarter of 1999 through the first quarter of 2002.
Since HPCI and the Bank are fully consolidated subsidiaries of Huntington, and
the impact of all inter-company allocations was properly eliminated in
preparing the Huntington financial statements, this restatement had no impact
on Huntington's previously reported consolidated results of operations or
financial condition. Financial information is included in Item 1 of HPCI's 2001
amended Annual Report on Form 10-K/A.


OVERVIEW

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

         HPCI had net income of $85.0 million before preferred dividends and
$78.8 million available to common shareholders for the second quarter of 2002.
This compared with $124.1 million for the same period last year as there were no
preferred dividends declared in the second quarter of 2001. For the six months
ended June 30, net income before preferred dividends was $156.3 million and
$144.1 million available to common shareholders for 2002. In 2001, net income
was $258.8 million. The decrease in both periods of 2002 versus 2001 was the
result of lower participation interests from runoff and distribution of Florida
loan participation interests coupled with the lower interest rate environment.

         At June 30, 2002, HPCI had total assets and total equity (including
preferred stock) of $6.1 billion. This compares to $7.2 billion of total assets
and total equity at the end of the same period a year ago. The change from the
prior year is due primarily to the distribution of participation interests in
Florida loans, which was completed in connection with Huntington's restructuring
plan. At the end of the most recent quarter, $5.3 billion, or 86.1%, of total
assets consisted of 99% participation interests in loans.

         Gross loan participation interests (before the allowance for loan
losses), by type, and the percentage of total assets is presented in the
following table:

                                                                              13
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
                                    AT JUNE 30, 2002                    AT JUNE 30, 2001
---------------------------------------------------------------------------------------------------
                                              % of Total                          % of Total
(in thousands of dollars)       Amount          Assets              Amount          Assets
---------------------------------------------------------------------------------------------------
<S>                               <C>                <C>              <C>                <C>
   Commercial                    $  507,108          8.3 %          $   524,297          7.3 %
   Consumer                         693,714         11.4              1,053,293         14.7
   Residential mortgage             199,988          3.3                586,347          8.2
   Commercial mortgage            3,849,495         63.1              4,107,659         57.4
---------------------------------------------------------------------------------------------------
      Total                      $5,250,305         86.1 %          $ 6,271,596         87.6 %
---------------------------------------------------------------------------------------------------
</TABLE>


                  Interest-bearing and non-interest bearing cash balances on
deposit with the Bank were $862.4 million at June 30, 2002, up from $364.9
million at December 31, 2001 and $697.2 million at June 30, 2001. Interest
bearing balances are invested overnight or in Eurodollar deposits with the Bank
for a term of not more than 30 days. Average rates earned on these deposits were
1.76% and 1.78% for the three and six months ended June 30, 2002, compared with
4.31% and 5.10% for the same periods last year.

         Amounts due from Holdings and the Bank at June 30, 2002, declined to
$66.2 million from $293.8 million at December 31, 2001, and $227.1 million at
the end of the second quarter last year. These represent amounts due from or due
to Holdings and/or the Bank that arise in the ordinary course of business for
unsettled transactions involving participation interests, fees, and other
related costs.

         Shareholders' equity (including preferred stock) was $6.1 billion at
June 30, 2002, down from $7.2 billion at June 30, 2001, reflecting a $1.3
billion distribution of the Florida-related participations at December 31, 2001,
and the aggregate dividend payments on the common and preferred securities
during 2001 and the first half of 2002 offset by $400 million received from the
issuance of the Class C and D preferred securities in the last quarter of 2001.

RESULTS OF OPERATIONS

INTEREST AND FEE INCOME
         HPCI's primary source of revenue is interest and fee income on its
participation interests in loans. At present, HPCI does not have any
interest-bearing liabilities and related interest expense. HPCI's capital
structure has provided funding for the acquisition of participation interests
and the continued cash flows from these participation interests in loans
provides sufficient funding such that outside borrowings are not required.
Interest and fee income is impacted by changes in the level of interest rates
and earning assets. The yield on earning assets is the percentage of interest
and fee income to average earning assets. Average balances, interest and fee
income, and yields are presented below for the three- and six- month periods
ended June 30:

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
                                                THREE MONTHS ENDED                         SIX MONTHS ENDED
                                                   JUNE 30, 2002                          JUNE 30, 2002
                                 -----------------------------------------    ----------------------------------------
                                    AVERAGE                                     AVERAGE
(in millions of dollars)            BALANCE          INCOME       YIELD         BALANCE        INCOME        YIELD
--------------------------------------------------------------------------------------------------------------------------
<S>                                     <C>             <C>          <C>           <C>           <C>             <C>
Loan participation interests:
   Commercial                         $   533.8         $ 6.4        4.84 %      $   570.3      $  13.7          4.86 %
   Consumer                               712.6          18.9       10.63            737.8         38.9         10.64
   Residential mortgage                   222.9           3.9        6.91            240.3          8.4          7.00
   Commercial mortgage                  3,843.1          54.3        5.67          3,788.7        108.2          5.76
--------------------------------------------------------------------------------------------------------------------------
      Total loan participations         5,312.4          83.5        6.30          5,337.1        169.2          6.39
--------------------------------------------------------------------------------------------------------------------------
Interest bearing deposits
   in banks                               747.4           3.3        1.76            586.1          5.2          1.78
Fees from loan participation
   interests                                              2.7                                       5.2
--------------------------------------------------------------------------------------------------------------------------

Total                                 $ 6,059.8         $89.5        5.92 %      $ 5,923.2      $ 179.6          6.11 %
--------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                                                              14
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
                                               THREE MONTHS ENDED                           SIX MONTHS ENDED
                                                 JUNE 30, 2001                                 JUNE 30, 2001
                                 -----------------------------------------     -------------------------------------
                                    AVERAGE                                      AVERAGE
(in millions of dollars)            BALANCE         INCOME        YIELD          BALANCE        INCOME       YIELD
------------------------------------------------------------------------------------------------------------------------
<S>                                    <C>             <C>           <C>            <C>           <C>          <C>
Loan participation interests:
   Commercial                         $  557.9         $ 10.2        7.34 %        $  581.3       $ 22.2       7.69 %
   Consumer                            1,043.3           24.2        9.30           1,019.0         47.3       9.36
   Residential mortgage                  706.7           12.2        6.92             577.5         21.5       7.45
   Commercial mortgage                 4,111.4           78.3        7.63           4,052.9        160.6       7.99
------------------------------------------------------------------------------------------------------------------------
      Total loan participations        6,419.3          124.9        7.80           6,230.7        251.6       8.14
------------------------------------------------------------------------------------------------------------------------
Interest bearing deposits
   in banks                              469.0            5.0        4.31             684.1         17.3       5.10
Fees from loan participation
   interests                                              3.0                                        4.8
------------------------------------------------------------------------------------------------------------------------

Total                                 $6,888.3         $132.9        7.74 %        $6,914.8       $273.7       7.84 %
------------------------------------------------------------------------------------------------------------------------
</TABLE>

         Interest and fee income was $89.5 million and $132.9 million for the
three months ended June 30, 2002 and 2001, respectively. The decline in interest
and fee income was due to the previously mentioned distribution of
Florida-related participations and the reduction of yields on the remaining
portfolio of participation interests. As shown in the table above, the yield on
participation interests declined from 7.80% to 6.30% in comparable second
quarter periods. For the six months ended June 30, the yield on participations
declined from 8.14% to 6.39%. The table above includes interest received on
participations in non-accrual loans in the individual portfolios. Yields on
these participation interests would be higher but were adversely impacted by the
level of interest and fee income received on these non-accrual loans.

         The table below exhibits the changes in interest and fee income for the
six-month periods ended June 30 due to volume and rate variances for each
category of earning assets. The change in interest not solely due to changes in
volume or rates has been allocated in proportion to the absolute dollar amounts
of the change in volume and rate.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
                                                        2002                                            2001
---------------------------------------------------------------------------------------------------------------------------
                                                Increase (Decrease) From                     Increase (Decrease) From
                                                 Previous Year Due To:                         Previous Year Due To:
---------------------------------------------------------------------------------------------------------------------------
                                                        Yield/                                        Yield/
(in millions of dollars)                  Volume         Rate          Total              Volume       Rate        Total
---------------------------------------------------------------------------------------------------------------------------
<S>                                    <C>          <C>           <C>                  <C>        <C>          <C>
Interest bearing deposits in The
   Huntington National Bank                   $(2.2)       $ (9.9)       $ (12.1)             $8.3       $(1.3)       $7.0
Loan participation interests:
   Commercial                                  (0.4)         (7.9)          (8.3)             (7.4)       (2.7)      (10.1)
   Consumer                                   (14.5)          6.0           (8.5)              9.6         2.0        11.6
   Residential mortgage                       (12.1)         (1.2)         (13.3)            (10.7)        1.7        (9.0)
   Commercial mortgage                        (10.1)        (41.8)         (51.9)              9.2        (2.6)        6.6
---------------------------------------------------------------------------------------------------------------------------
     INTEREST AND FEE INCOME                 $(39.3)      $ (54.8)       $ (94.1)             $9.0       $(2.9)       $6.1
---------------------------------------------------------------------------------------------------------------------------
</TABLE>


PROVISION AND ALLOWANCE FOR LOAN LOSSES
         The provision for loan losses is the charge to earnings necessary to
maintain the ALL at a level adequate to absorb management's estimate of inherent
losses in the loan portfolio. Provision expense was $3.0 million and $19.8
million for the second quarter and the first six months of 2002, respectively,
based on management's analysis of the ALL. Provision expense was $6.8 million
and $10.7 million for the same respective periods in the prior year.

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

         At June 30, 2002, the ALL was $163.4 million, down from $175.7 million
at December 31, 2001, and up from $90.7 million at the end of the second quarter
last year. This represents 3.11%, 3.27%, and

                                                                              15

<PAGE>





1.45% of total loan participations at the end of each of the respective periods.
The ALL increased from June 2001 because of the acquisition of participation
interests in performing and non-performing loans in the fourth quarter of 2001,
offset by the distribution of the participation interests in Florida-related
loans at the end of 2001. The ALL covered 106.60% of the participations in
non-performing loans at June 30, 2002, compared with 88.9% and 127.3% at
December 31, 2001 and June 30, 2001, respectively. Additional information
regarding the ALL and asset quality appears in the "Credit Quality" section. The
following table shows the activity in the ALL for the three- and six-month
periods ended June 30:

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
                                                   THREE MONTHS ENDED                 SIX MONTHS ENDED
                                                       JUNE 30,                           JUNE 30,
--------------------------------------------------------------------------------------------------------------
(in thousands of dollars)                        2002             2001              2002             2001
--------------------------------------------------------------------------------------------------------------
<S>                                           <C>              <C>               <C>             <C>
BALANCE, BEGINNING OF PERIOD                      $171,007         $ 98,046          $175,690        $ 91,826
Allowance of loan participations acquired, net      10,700           (6,857)           17,261            (266)
Loan (losses) recoveries:
   Commercial                                      (12,058)          (3,659)          (26,261)         (6,515)
   Consumer                                         (4,896)          (1,148)          (12,767)         (1,617)
   Residential mortgage                                ---              ---               ---             ---
   Commercial mortgage                              (4,394)          (2,409)          (10,403)         (3,382)
--------------------------------------------------------------------------------------------------------------
      Total net loan losses                        (21,348)          (7,216)          (49,431)        (11,514)
--------------------------------------------------------------------------------------------------------------
Provision for loan losses                            3,000            6,751            19,839          10,678
--------------------------------------------------------------------------------------------------------------
BALANCE, END OF PERIOD                            $163,359         $ 90,724          $163,359        $ 90,724
--------------------------------------------------------------------------------------------------------------
</TABLE>

         Total net loan losses for the second quarter of 2002 were $21.3
million, or 1.61% (annualized) of average participation interests, up from $7.2
million, or 0.45%, for the same period last year but down from net loan losses
for the first three months of this year of $28.1 million, or 2.12%. Trends in
credit quality and net loan losses typically lag in their timing to changes in
general economic conditions. Although there are certain indications that general
economic conditions may be slowly improving, management believes that net loan
losses in the next two quarters will be comparable to the past several quarters
with possible improvement beyond that horizon.

         HPCI, through reliance on methods utilized by Huntington, allocate the
ALL to each loan or loan participation category based on an expected loss ratio
determined by continuous assessment of credit quality based on portfolio risk
characteristics and other relevant factors such as historical performance,
internal controls, and impacts from mergers and acquisitions. For the commercial
and commercial mortgage loan participations, expected loss factors are assigned
by credit grade at the individual underlying loan level. The aggregation of
these factors represents management's estimate of the inherent loss. The portion
of the allowance allocated to the more homogeneous underlying consumer loan
segments is determined by developing expected loss ratios based on the risk
characteristics of the various segments and giving consideration to existing
economic conditions and trends.

         Projected loss ratios incorporate factors such as trends in past due
and non-accrual amounts, recent loan loss experience, current economic
conditions, risk characteristics, and concentrations of various loan categories.
Actual loss ratios experienced in the future, however, could vary from those
projected as a loan's performance is a function of not only economic factors but
also other factors unique to each customer. The dollar exposure could
significantly vary from estimated amounts due to losses from large dollar single
client exposures, industry, product, or geographic concentrations, or changes in
general economic conditions. To ensure adequacy to a higher degree of
confidence, a portion of the ALL is considered unallocated. While amounts are
allocated to various portfolio segments, the total ALL, excluding impairment
reserves prescribed under provisions of Statement of Financial Accounting
Standard No. 114, is available to absorb losses from any segment of the
portfolio. The estimated total unallocated reserves was approximately 19% at
June 30, 2002.


                                                                              16
<PAGE>


NON-INTEREST INCOME AND NON-INTEREST EXPENSE
         Non-interest income was $1.8 million for the second quarter of 2002.
This represents rental income of $1.5 million received from the Bank related to
land and land improvements, and buildings acquired in 2000, and leasehold
improvements acquired by HPCI in 2001. The remaining portion of non-interest
income, which amounted to $0.3 million, was related to new fees received from
the Bank for the pledge of HPCI's assets eligible for use as collateral for the
Bank's borrowings from the Federal Home Loan Bank. More information regarding
this arrangement can be found in Note 8 to the unaudited consolidated financial
statements. On a year-to-date basis, non-interest income was $3.3 million and
$28,000 for 2002 and 2001, respectively.

         Non-interest expense was $3.3 million for the three months ended June
30, 2002 and $2.2 million for the same period a year ago. Fees paid to the Bank
for servicing the loans underlying the participation interests amounted to $1.7
million and $2.1 million for the second quarter of 2002 and 2001, respectively.
The service fee with respect to the commercial mortgage, commercial, and
consumer loans is equal to the outstanding principal balance of each loan
multiplied by an annual fee of 0.125% and the service fee for residential
mortgage loans is equal to 0.282% of the interest income collected. Non-interest
expense for the most recent three months of 2002 also included depreciation on
premises and equipment of $1.4 million. For the six months ended June 30,
non-interest expense was $6.9 million for 2002 and $4.2 million for 2001.

PROVISION FOR INCOME TAXES
         HPCI has elected to be treated as a REIT for Federal income tax
purposes and intends to maintain compliance with the provisions of the Code and
therefore is not subject to income taxes. HPCI's subsidiary, HPCLI, elected to
be treated as a taxable REIT subsidiary. HPCLI incurred a net loss for the first
six months of 2002 and therefore, a credit for income taxes is reflected in the
accompanying consolidated financial statements.




                                                                              17

<PAGE>
INTEREST RATE RISK MANAGEMENT

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

         HPCI's interest rate risk is not managed separately as interest rate
risk management at Huntington is conducted on a centralized basis. A key
element used in interest rate risk management is an income simulation model,
which includes, among other things, assumptions for loan prepayments on the
existing portfolio and new loan volumes. Using that model for HPCI as of June
30, 2002 and assuming no new loan volumes, interest income for the next 12
month period would be expected to increase by 6.2% if rates rose 200 basis
points gradually and with a parallel shift of the yield curve above the forward
rates implied in the June 30, 2002 yield curve. Interest income would be
expected to decline 6.0% in the event of a gradual 200 basis point decline in
rates from the forward rates implied in the June yield curve.

CREDIT QUALITY

         Credit risk exposure as it relates to HPCI is managed by the Bank
through the use of consistent underwriting standards, practices that minimize
exposure to higher risk credits (e.g. highly leveraged transactions or
nationally syndicated credits), and a strategy of diversification of exposure by
industry sector, geographic region, or other concentrations. The Bank's credit
administration function employs extensive risk management techniques, including
forecasting, to ensure loans adhere to corporate policy and problem loans are
promptly identified. These procedures provide executive management of the Bank
with the information necessary to implement policy adjustments where necessary,
and take corrective actions on a proactive basis. These procedures also include
evaluating the adequacy of the ALL, which includes an analysis of specific
credits and the application of relevant reserve factors that represent relative
risk, based on portfolio trends, current and historic loss experience, and
prevailing economic conditions, to specific portfolio segments.



                                                                              18
<PAGE>

         Non-performing assets (NPAs), consist of participation interests in
underlying loans that are no longer accruing interest. Underlying commercial,
commercial mortgage, and residential mortgage loans are placed on non-accrual
status and stop accruing interest when collection of principal or interest is in
doubt or generally when the underlying loan is 90 days past due. When interest
accruals are suspended, accrued interest income is reversed with current year
accruals charged to earnings and prior year amounts generally charged off as a
credit loss. Consumer loans are not placed on non-accrual status but they are
charged off in accordance with regulatory statutes governing the Bank, which is
generally no more than 120 days.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
NON-PERFORMING ASSETS                                                 AT JUNE 30,
----------------------------------------------------------------------------------------------
(in thousands of dollars)                                   2002                 2001
----------------------------------------------------------------------------------------------
<S>                                                     <C>                    <C>
Participation interests in non-accrual loans
   Commercial                                              $ 106,330              $40,526
   Real Estate
      Commercial                                              41,103               22,747
      Residential                                              5,816                8,011
----------------------------------------------------------------------------------------------
TOTAL NON-PERFORMING ASSETS                                $ 153,249             $ 71,284
----------------------------------------------------------------------------------------------

NON-PERFORMING ASSETS AS A % OF TOTAL
   PARTICIPATION INTERESTS                                     2.92%                1.14%

ALLOWANCE FOR LOAN LOSSES AS A % OF  NON-
   PERFORMING ASSETS                                         106.60%              127.27%
</TABLE>


         At June 30, 2002, total NPAs declined 14% to $153.2 million, from
$177.9 million at March 31, 2002. Total NPAs were $197.6 million at December 31,
2001, and $71.3 million at June 30, 2001. The underlying non-performing loans
represented 2.92% of total participation interests at the most recent quarter
end, compared with 3.67% and 1.14% at December 31, 2001 and June 30, 2001,
respectively. The increase in NPAs from a year ago was due to the aforementioned
acquisition of participation interests in performing and non-performing loans in
the fourth quarter of 2001 and the general deterioration of the economy. The
amount of participation interests in non-performing Florida-related loans
distributed at the end of 2001 approximated $4.6 million. Management believes
that NPAs will continue to improve in the latter portion of 2002.

         Underlying loans past due ninety days or more but continuing to accrue
interest were $22.7 million, down from $28.3 million at March 31, 2002 and $24.5
million at the end of recent year.

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

SIGNIFICANT CONCENTRATIONS OF CREDIT RISK

         Concentration of credit risk generally arises with respect to
participation interests when a number of underlying loans have borrowers engaged
in similar business activities or activities in the same geographical region.
Concentration of credit risk indicates the relative sensitivity of performance
to both positive and negative developments affecting a particular industry.
There are no significant concentrations of underlying loans to borrowers engaged
in similar business activities. However, by the nature of this entity's status
as a REIT, the composition of the loans underlying the participation interests
is highly concentrated in real estate. Underlying loans are also concentrated in
the Bank's primary markets of Ohio, Michigan, Indiana, and Kentucky. At June 30,
2002, 95.7% of the underlying loans in all participation interests were located
in these states. This balance sheet exposure to geographic concentrations
directly

                                                                              19
<PAGE>


affects the credit risk of the underlying loans within the participation
interests. Consequently, the portfolio of underlying loans may experience a
higher default rate in the event of adverse economic, political, or business
developments or natural hazards in these states that may affect the ability of
borrowers to make payments of principal and interest on the underlying loans.


LIQUIDITY AND CAPITAL RESOURCES

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

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

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

         On December 31, 2001, HPCI distributed cash and its participation
interests in Florida-related loans to its common shareholders, Holdings and
Huntington, in anticipation of the sale of the Florida operations by Huntington,
which closed on February 15, 2002. This distribution approximated $1.3 billion.

         In May 2002, HPCI's board of directors declared dividends on its
preferred securities. HPCI accrued for these dividend obligations to its
preferred security holders and paid dividends on the Class C and D preferred
securities on July 1, 2002. Dividends on the Class B preferred securities were
declared and are expected to be paid in December of this year along with the
dividends on the Class A preferred securities that were declared in the first
quarter of 2002. The amount of dividends accrued for the second quarter of 2002
on the Class B preferred securities was $2.0 million, $984,375 on the Class C
preferred securities, and $3.2 million on the Class D securities.

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

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


         Quantitative and qualitative disclosures for the current period are
found beginning on page 18 of this report, which includes changes in market
risk exposures from disclosures presented in HPCI's 2001 amended Annual Report
on Form 10-K/A.



                                                                              20
<PAGE>


PART II.  OTHER INFORMATION

In accordance with the instructions to Part II, the other specified items in
this part have been omitted because they are not applicable or the information
has been previously reported.

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

         Huntington Preferred Capital, Inc held its annual meeting of
         shareholders on May 20, 2002. At that meeting, shareholders approved
         the following management proposals:

<TABLE>
<CAPTION>
                                                                        ABSTAIN/       BROKER
                                           FOR             AGAINST      WITHHELD       NONVOTES
                                           ---             -------      --------       --------
<S>                                     <C>                <C>         <C>          <C>
1.  Election of directors
    to serve as Directors until
    the next Annual Meeting of
    Shareholders as follows:

    Richard A. Cheap                     13,981,800
    Stephen E. Dutton                    13,981,800
    R. Larry Hoover                      13,981,800
    Edward J. Kane                       13,981,800
    Roger E. Kephart                     13,981,800
    Michael J. McMennamin                13,981,800
    James D. Robbins                     13,981,800
    Paul V. Sebert                       13,981,800
    John D. VanFleet                     13,981,800

2.  Ratification of Ernst &
    Young LLP to serve as
    independent auditors for
    the Corporation for the
         year 2002                       13,981,800
</TABLE>



                                                                              21
<PAGE>


Item 6.    Exhibits and Reports on Form 8-K

         (a)      Exhibits

                  10.      Material contracts:

                           (a)      Pledge and Security Agreement between
                                    Huntington Preferred Capital, Inc. and the
                                    Federal Home Loan Bank of Cincinnati.

                  99.1     Principal Executive Officer Certification

                  99.2     Principal Financial Officer Certification

         (b)      Reports on Form 8-K

                           None.


                                                                              22

<PAGE>




                                   SIGNATURES
                                   ----------



Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



                       Huntington Preferred Capital, Inc.
                       ----------------------------------
                                  (Registrant)




Date:    August 19, 2002                 /s/ Michael J. Mcmennamin
                                            ---------------------------
                                             Michael J. McMennamin
                                             President
                                             (principal executive officer)



Date:    August 19, 2002                 /s/ John D. Van Fleet
                                           -----------------------------------
                                           John D. Van Fleet
                                           Vice President
                                           (principal financial officer)


                                                                              23