##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
QUARTERLY PERIOD ENDED June 30, 2006
 Commission File Number: 000-33243
 Huntington Preferred Capital, Inc.
 Ohio
    
    31-1356967(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 41 South High Street, Columbus, Ohio 43287
 (614) 480-8300
 þ o
  o o þ
 o þ




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##### 



HUNTINGTON PREFERRED CAPITAL, INC.
  Part I. Financial InformationItem 1.
    
    Financial Statements (Unaudited)Condensed Consolidated Balance Sheets  At June 30, 2006, December 31, 2005, and June 30, 2005
    
    
    3Condensed Consolidated Statements of Income  For the three-months and six-months ended June 30, 2006 and 2005
    
    
    4Condensed Consolidated Statements of Changes in Shareholders Equity  For the six-months ended June 30, 2006 and 2005
    
    
    5Condensed Consolidated Statements of Cash Flows  For the six-months ended June 30, 2006 and 2005
    
    
    6Notes to Unaudited Condensed Consolidated Financial Statements
    
    
    7Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    13Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    23Item 4.
    
    Controls and Procedures
    
    
    23Part II. Other InformationItem 4.
    
    Submission of Matters to a Vote of Shareholders
    
    
    23Item 6.
    
    Exhibits
    
    
    23Signatures
    
    
    25EX-31(A)EX-31(B)EX-32(A)EX-32(B)EX-99(A)
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##### Table of Contents



Part I. Financial Information
 
 Item 1. Financial Statements
 Huntington Preferred Capital, Inc.
 
 Condensed Consolidated Balance Sheets
 June 30,
    
    December 31,
    
    June 30,(in thousands, except share data)
    
    2006
    
    2005
    
    2005(Unaudited)
    
    
    
    
    
    (Unaudited)AssetsCash and interest bearing deposits with The Huntington National Bank
    
    $
    308,796
    
    
    $
    810,102
    
    
    $
    458,480Due from The Huntington National Bank
    
    
    96,616
    
    
    
    46,321
    
    
    
    1,812Loan participation interests:Commercial
    
    
    39,182
    
    
    
    46,559
    
    
    
    72,310Commercial real estate
    
    
    3,312,787
    
    
    
    3,311,275
    
    
    
    3,614,633Consumer
    
    
    933,111
    
    
    
    997,094
    
    
    
    896,201Residential real estate
    
    
    130,569
    
    
    
    157,397
    
    
    
    188,407Total loan participation interests
    
    
    4,415,649
    
    
    
    4,512,325
    
    
    
    4,771,551Allowance for loan losses
    
    
    (51,466
    )
    
    
    (57,530
    )
    
    
    (60,987
    )Net loan participation interests
    
    
    4,364,183
    
    
    
    4,454,795
    
    
    
    4,710,564Premises and equipment
    
    
    19,642
    
    
    
    21,683
    
    
    
    23,862Accrued income and other assets
    
    
    20,733
    
    
    
    20,984
    
    
    
    19,573Total assets
    
    $
    4,809,970
    
    
    $
    5,353,885
    
    
    $
    5,214,291Liabilities and shareholders equityLiabilitiesAllowance for unfunded loan participation commitments
    
    $
    4,002
    
    
    $
    4,135
    
    
    $
    4,650Dividends and distributions payable
    
    
    9,624
    
    
    
    700,000
    
    
    
    9,922Other liabilities
    
    
    106
    
    
    
    290
    
    
    
    265Total liabilities
    
    
    13,732
    
    
    
    704,425
    
    
    
    14,837Shareholders EquityPreferred securities, Class A, 8.000% noncumulative, non-
exchangeable; $1,000 par and liquidation value per share;
1,000 shares authorized, issued and outstanding
    
    
    1,000
    
    
    
    1,000
    
    
    
    1,000Preferred securities, Class B, variable-rate noncumulative and
conditionally exchangeable; $1,000 par and liquidation
value per share; authorized 500,000 shares; 400,000
shares issued and outstanding
    
    
    400,000
    
    
    
    400,000
    
    
    
    400,000Preferred securities, Class C, 7.875% noncumulative and
conditionally exchangeable; $25 par and liquidation
value; 2,000,000 shares authorized, issued, and outstanding
    
    
    50,000
    
    
    
    50,000
    
    
    
    50,000Preferred securities, Class D, variable-rate noncumulative and
conditionally exchangeable; $25 par and liquidation
value; 14,000,000 shares authorized, issued, and outstanding
    
    
    350,000
    
    
    
    350,000
    
    
    
    350,000Preferred securities, $25 par, 10,000,000 shares
authorized; no shares issued or outstanding
    
    
    
    
    
    
    
    
    
    
    Common stock  without par value; 14,000,000 shares authorized,
issued and outstanding
    
    
    3,848,460
    
    
    
    3,848,460
    
    
    
    4,268,776Retained earnings
    
    
    146,778
    
    
    
    
    
    
    
    129,678Total shareholders equity
    
    
    4,796,238
    
    
    
    4,649,460
    
    
    
    5,199,454Total liabilities and shareholders equity
    
    $
    4,809,970
    
    
    $
    5,353,885
    
    
    $
    5,214,291
 See notes to unaudited condensed consolidated financial statements.
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##### Table of Contents



Huntington Preferred Capital, Inc.
 
 Condensed Consolidated Statements of Income
 (Unaudited)
 Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,(in thousands)
    
    2006
    
    2005
    
    2006
    
    2005Interest and fee incomeInterest on loan participation interests:Commercial
    
    $
    792
    
    
    $
    1,264
    
    
    $
    1,638
    
    
    $
    2,644Commercial real estate
    
    
    59,841
    
    
    
    51,982
    
    
    
    115,623
    
    
    
    100,737Consumer
    
    
    16,067
    
    
    
    14,687
    
    
    
    32,767
    
    
    
    28,612Residential real estate
    
    
    2,007
    
    
    
    2,647
    
    
    
    4,239
    
    
    
    5,543Total loan participation interest income
    
    
    78,707
    
    
    
    70,580
    
    
    
    154,267
    
    
    
    137,536Fees from loan participation interests
    
    
    279
    
    
    
    491
    
    
    
    572
    
    
    
    1,119Interest on deposits with The Huntington National Bank
    
    
    3,290
    
    
    
    2,570
    
    
    
    4,781
    
    
    
    4,043Total interest and fee income
    
    
    82,276
    
    
    
    73,641
    
    
    
    159,620
    
    
    
    142,698Reduction in allowances for credit losses
    
    
    (5,203
    )
    
    
    (3,840
    )
    
    
    (14,386
    )
    
    
    (7,281
    )Interest income after reduction in allowances for credit losses
    
    
    87,479
    
    
    
    77,481
    
    
    
    174,006
    
    
    
    149,979Non-interest income:Rental income
    
    
    1,591
    
    
    
    1,591
    
    
    
    3,182
    
    
    
    3,181Collateral fees
    
    
    115
    
    
    
    965
    
    
    
    833
    
    
    
    1,146Total non-interest income
    
    
    1,706
    
    
    
    2,556
    
    
    
    4,015
    
    
    
    4,327Non-interest expense:Servicing costs
    
    
    2,720
    
    
    
    2,899
    
    
    
    5,503
    
    
    
    5,762Depreciation and amortization
    
    
    999
    
    
    
    1,102
    
    
    
    2,016
    
    
    
    2,239(Gain) loss on disposal of premises and equipment
    
    
    
    
    
    
    388
    
    
    
    (31
    )
    
    
    533Other
    
    
    202
    
    
    
    169
    
    
    
    372
    
    
    
    409Total non-interest expense
    
    
    3,921
    
    
    
    4,558
    
    
    
    7,860
    
    
    
    8,943Income before provision for income taxes
    
    
    85,264
    
    
    
    75,479
    
    
    
    170,161
    
    
    
    145,363Provision for income taxes
    
    
    310
    
    
    
    25
    
    
    
    595
    
    
    
    124Net income
    
    $
    84,954
    
    
    $
    75,454
    
    
    $
    169,566
    
    
    $
    145,239Dividends declared on preferred securities
    
    
    (11,781
    )
    
    
    (8,256
    )
    
    
    (22,788
    )
    
    
    (15,561
    )Net income applicable to common shares
    
    $
    73,173
    
    
    $
    67,198
    
    
    $
    146,778
    
    
    $
    129,678
 See notes to unaudited condensed consolidated financial statements.
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Huntington Preferred Capital, Inc.
 
 Condensed Consolidated Statements of Changes in Shareholders Equity
 Preferred, Class A
    
    Preferred, Class B
    
    Preferred, Class C(in thousands)
    
    Shares
    
    Securities
    
    Shares
    
    Securities
    
    Shares
    
    SecuritiesSix Months Ended June 30, 2005 (Unaudited):Balance, beginning of period
    
    
    1
    
    
    $
    1,000
    
    
    
    400
    
    
    $
    400,000
    
    
    
    2,000
    
    
    $
    50,000Comprehensive Income:Net incomeTotal comprehensive incomeBalance, end of period (Unaudited)
    
    
    1
    
    
    $
    1,000
    
    
    
    400
    
    
    $
    400,000
    
    
    
    2,000
    
    
    $
    50,000Six Months Ended June 30, 2006 (Unaudited):Balance, beginning of period
    
    
    1
    
    
    $
    1,000
    
    
    
    400
    
    
    $
    400,000
    
    
    
    2,000
    
    
    $
    50,000Comprehensive Income:Net incomeTotal comprehensive incomeBalance, end of period(Unaudited)
    
    
    1
    
    
    $
    1,000
    
    
    
    400
    
    
    $
    400,000
    
    
    
    2,000
    
    
    $
    50,000
 Preferred, Class D
    
    Preferred
    
    Common
    
    Retained(in thousands)
    
    Shares
    
    Securities
    
    Shares
    
    Securities
    
    Shares
    
    Stock
    
    Earnings
    
    TotalSix Months Ended June 30, 2005 (Unaudited):Balance, beginning of period
    
    
    14,000
    
    
    $
    350,000
    
    
    
    
    
    
    $
    
    
    
    
    14,000
    
    
    $
    4,268,776
    
    
    $
    
    
    
    $
    5,069,776Comprehensive Income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    145,239
    
    
    
    145,239Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    145,239Dividends declared on Class A preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (80
    )
    
    
    (80
    )Dividends declared on Class B preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,690
    )
    
    
    (5,690
    )Dividends declared on Class C preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,969
    )
    
    
    (1,969
    )Dividends declared on Class D preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,822
    )
    
    
    (7,822
    )Balance, end of period (Unaudited)
    
    
    14,000
    
    
    $
    350,000
    
    
    
    
    
    
    $
    
    
    
    
    14,000
    
    
    $
    4,268,776
    
    
    $
    129,678
    
    
    $
    5,199,454Six Months Ended June 30, 2006 (Unaudited):Balance, beginning of period
    
    
    14,000
    
    
    $
    350,000
    
    
    
    
    
    
    $
    
    
    
    
    14,000
    
    
    $
    3,848,460
    
    
    $
    
    
    
    $
    4,649,460Comprehensive Income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    169,566
    
    
    
    169,566Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    169,566Dividends declared on Class A preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (80
    )
    
    
    (80
    )Dividends declared on Class B preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,544
    )
    
    
    (9,544
    )Dividends declared on Class C preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,969
    )
    
    
    (1,969
    )Dividends declared on Class D preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,195
    )
    
    
    (11,195
    )Balance, end of period(Unaudited)
    
    
    14,000
    
    
    $
    350,000
    
    
    
    
    
    
    $
    
    
    
    
    14,000
    
    
    $
    3,848,460
    
    
    $
    146,778
    
    
    $
    4,796,238
 See notes to unaudited condensed consolidated financial statements.
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Huntington Preferred Capital, Inc.
 
 Condensed Consolidated Statements of Cash Flows
 (Unaudited)
 Six Months EndedJune 30,(in thousands)
    
    2006
    
    2005Operating activitiesNet income
    
    $
    169,566
    
    
    $
    145,239Adjustments to reconcile net income to net
cash provided by operating activities:Reduction of allowances for credit losses
    
    
    (14,386
    )
    
    
    (7,281
    )Depreciation and amortization
    
    
    2,016
    
    
    
    2,239Deferred income tax expense (benefit)
    
    
    65
    
    
    
    (216
    )(Gain) loss on disposal of premises and equipment
    
    
    (31
    )
    
    
    533Increase in due from The Huntington National Bank
    
    
    (3,377
    )
    
    
    (1,637
    )(Decrease) increase in other liabilities
    
    
    (184
    )
    
    
    215Other, net
    
    
    1,001
    
    
    
    (176
    )Net cash provided by operating activities
    
    
    154,670
    
    
    
    138,916Investing activitiesParticipation interests acquired
    
    
    (1,439,604
    )
    
    
    (1,599,095
    )Sales and repayments of loans underlying
participation interests
    
    
    1,496,736
    
    
    
    1,724,045Proceeds from the sale of premises and equipment
    
    
    56
    
    
    
    Net cash provided by investing activities
    
    
    57,188
    
    
    
    124,950Financing activitiesDividends paid on preferred securities
    
    
    (13,164
    )
    
    
    (5,639
    )Dividends paid on common stock
    
    
    (279,684
    )
    
    
    (263,798
    )Return of capital to common shareholders
    
    
    (420,316
    )
    
    
    (336,202
    )Net cash used for financing activities
    
    
    (713,164
    )
    
    
    (605,639
    )Change in cash and cash equivalents
    
    
    (501,306
    )
    
    
    (341,773
    )Cash and cash equivalents at beginning of year
    
    
    810,102
    
    
    
    800,253Cash and cash equivalents at end of period
    
    $
    308,796
    
    
    $
    458,480Supplemental information:Income taxes paid
    
    $
    677
    
    
    $
    Dividends and distributions declared, not paid
    
    
    9,624
    
    
    
    9,922Change in loan participation activity due from The Huntington National Bank
    
    
    46,918
    
    
    
    
 See notes to unaudited condensed consolidated financial statements.
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Notes to the Unaudited Condensed Consolidated Financial Statements
 Note 1  Organization
  Note 2  Basis of Presentation and New Accounting Pronouncements
     Financial Accounting Standards Board (FASB) Statement No. 154, Accounting Changes and Error
Corrections  a replacement of APB Opinion No. 20 and FASB Statement No. 3 (Statement No. 154) Accounting Changes Reporting Accounting Changes in Interim Financial Statements
 7




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Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)
 Note 3  Participations in Non-Performing Assets and Past Due Loans
  June 30,
    
    December 31,
    
    June 30,(in thousands)
    
    2006
    
    2005
    
    2005Commercial
    
    $
    108
    
    
    $
    147
    
    
    $
    1,069Commercial real estate
    
    
    16,834
    
    
    
    20,746
    
    
    
    17,965Consumer
    
    
    3,545
    
    
    
    2,799
    
    
    
    2,252Residential real estate
    
    
    1,687
    
    
    
    2,923
    
    
    
    4,652Total participations in non-performing assets
    
    $
    22,174
    
    
    $
    26,615
    
    
    $
    25,938Participations in accruing loans past due 90 days or more
    
    $
    6,079
    
    
    $
    3,188
    
    
    $
    12,036
  Note 4  Allowances for Credit Losses (ACL)
  Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,(in thousands)
    
    2006
    
    2005
    
    2006
    
    2005ALL balance, beginning of period
    
    $
    53,586
    
    
    $
    62,461
    
    
    $
    57,530
    
    
    $
    61,146Allowance for loan participations acquired
    
    
    5,172
    
    
    
    6,880
    
    
    
    11,634
    
    
    
    12,521Net loan losses
    
    
    (2,272
    )
    
    
    (3,522
    )
    
    
    (3,445
    )
    
    
    (4,514
    )Reduction in ALL
    
    
    (5,020
    )
    
    
    (3,894
    )
    
    
    (14,253
    )
    
    
    (7,228
    )Economic reserve transfer to AULPC
    
    
    
    
    
    
    (938
    )
    
    
    
    
    
    
    (938
    )ALL balance, end of period
    
    $
    51,466
    
    
    $
    60,987
    
    
    $
    51,466
    
    
    $
    60,987AULPC balance, beginning of period
    
    $
    4,185
    
    
    $
    3,658
    
    
    $
    4,135
    
    
    $
    3,765Provision for (reduction in) AULPC
    
    
    (183
    )
    
    
    54
    
    
    
    (133
    )
    
    
    (53
    )Economic reserve transfer from ALL
    
    
    
    
    
    
    938
    
    
    
    
    
    
    
    938AULPC balance, end of period
    
    $
    4,002
    
    
    $
    4,650
    
    
    $
    4,002
    
    
    $
    4,650Total ACL
    
    $
    55,468
    
    
    $
    65,637
    
    
    $
    55,468
    
    
    $
    65,637
 Note 5
 Preferred Dividends
  8




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Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)
  i.e.
 i.e.,
  Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,(in thousands)
    
    2006
    
    2005
    
    2006
    
    2005Class A preferred securities
    
    $
    
    
    
    $
    
    
    
    $
    80
    
    
    $
    80Class B preferred securities
    
    
    5,000
    
    
    
    3,120
    
    
    
    9,544
    
    
    
    5,690Class C preferred securities
    
    
    984
    
    
    
    984
    
    
    
    1,969
    
    
    
    1,969Class D preferred securities
    
    
    5,797
    
    
    
    4,152
    
    
    
    11,195
    
    
    
    7,822Total dividends declared
    
    $
    11,781
    
    
    $
    8,256
    
    
    $
    22,788
    
    
    $
    15,561
 Note 6  Related Party Transactions
   9




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Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)
   July 1, 2005
    
    January 1, 2005thru
    
    thruJune 30, 2006
    
    June 30, 2005Commercial and commercial real estate
    
    
    0.125
    %
    
    
    0.125
    %Consumer
    
    
    0.650
    %
    
    
    0.750
    %Residential real estate
    
    
    0.267
    %
    
    
    0.267
    %
    Number ofCommon
    
    
    Number of Preferred SecuritiesShareholder:
    
    Shares
    
    
    Class A
    
    
    Class B
    
    
    Class C
    
    
    Class DHeld by related parties:HPC II
    
    
    4,550,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    HCF
    
    
    6,580,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Holdings
    
    
    2,851,333
    
    
    
    895
    
    
    
    
    
    
    
    
    
    
    
    14,000,000HPC Holdings-II, Inc.
    
    
    
    
    
    
    
    
    
    
    400,000
    
    
    
    
    
    
    
    Huntington
    
    
    18,667
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total held by related parties
    
    
    14,000,000
    
    
    
    895
    
    
    
    400,000
    
    
    
    
    
    
    
    14,000,000Other shareholders
    
    
    
    
    
    
    105
    
    
    
    
    
    
    
    2,000,000
    
    
    
    Total shares outstanding
    
    
    14,000,000
    
    
    
    1,000
    
    
    
    400,000
    
    
    
    2,000,000
    
    
    
    14,000,000
  10




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##### Table of Contents



Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)
        Note 7  Commitments and Contingencies
 /
  11




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##### Table of Contents



Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)
   Note 8  Segment Reporting
  12




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##### Table of Contents



Item 2. Managementss Discussion and Analysis of Financial Condition and Results of Operations
 INTRODUCTION
    Forward-looking Statements
    Critical Accounting Policies
  13




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##### Table of Contents



Use of Significant Estimates
  SUMMARY DISCUSSION OF RESULTS
     Table 1  Loan Participation Interests
 % of
    
    
    
    
    
    % of
    
    
    
    
    
    % ofJune 30,
    
    Total
    
    December 31,
    
    Total
    
    June 30,
    
    Total(in thousands)
    
    2006
    
    Assets
    
    2005
    
    Assets
    
    2005
    
    AssetsGross loan participation interests:Commercial
    
    $
    39,182
    
    
    
    0.8
    
    
    $
    46,559
    
    
    
    0.9
    
    
    $
    72,310
    
    
    
    1.4Commercial real estate
    
    
    3,312,787
    
    
    
    68.9
    
    
    
    3,311,275
    
    
    
    61.8
    
    
    
    3,614,633
    
    
    
    69.3Consumer
    
    
    933,111
    
    
    
    19.4
    
    
    
    997,094
    
    
    
    18.6
    
    
    
    896,201
    
    
    
    17.2Residential real estate
    
    
    130,569
    
    
    
    2.7
    
    
    
    157,397
    
    
    
    2.9
    
    
    
    188,407
    
    
    
    3.6Total
    
    $
    4,415,649
    
    
    
    91.8
    
    
    $
    4,512,325
    
    
    
    84.2
    
    
    $
    4,771,551
    
    
    
    91.5
  14




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QUALIFICATION TESTS
    15




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##### Table of Contents



RESULTS OF OPERATIONS
  Table 2  Quarterly Statements of Income
 2006
    
    2005
    
    
    2Q06 vs 2Q05(in thousands)
    
    Second
    
    First
    
    Fourth
    
    Third
    
    Second
    
    
    $ Chg
    
    % ChgInterest and fee incomeInterest on loan participation interests:Commercial
    
    $
    792
    
    
    $
    846
    
    
    $
    982
    
    
    $
    1,006
    
    
    $
    1,264
    
    
    
    $
    (472
    )
    
    
    (37.3
    )%Commercial real estate
    
    
    59,841
    
    
    
    55,782
    
    
    
    55,053
    
    
    
    54,013
    
    
    
    51,982
    
    
    
    
    7,859
    
    
    
    15.1Consumer
    
    
    16,067
    
    
    
    16,700
    
    
    
    16,268
    
    
    
    15,465
    
    
    
    14,687
    
    
    
    
    1,380
    
    
    
    9.4Residential real estate
    
    
    2,007
    
    
    
    2,232
    
    
    
    2,341
    
    
    
    2,420
    
    
    
    2,647
    
    
    
    
    (640
    )
    
    
    (24.2
    )Total loan participation interest income
    
    
    78,707
    
    
    
    75,560
    
    
    
    74,644
    
    
    
    72,904
    
    
    
    70,580
    
    
    
    
    8,127
    
    
    
    11.5Fees from loan participation interests
    
    
    279
    
    
    
    293
    
    
    
    320
    
    
    
    539
    
    
    
    491
    
    
    
    
    (212
    )
    
    
    (43.2
    )Interest on deposits with The Huntington National Bank
    
    
    3,290
    
    
    
    1,491
    
    
    
    7,200
    
    
    
    4,439
    
    
    
    2,570
    
    
    
    
    720
    
    
    
    28.0Total interest and fee income
    
    
    82,276
    
    
    
    77,344
    
    
    
    82,164
    
    
    
    77,882
    
    
    
    73,641
    
    
    
    
    8,635
    
    
    
    11.7Reduction in allowances for credit losses
    
    
    (5,203
    )
    
    
    (9,183
    )
    
    
    (4,409
    )
    
    
    (8,106
    )
    
    
    (3,840
    )
    
    
    
    (1,363
    )
    
    
    (35.5
    )Interest income after reduction in allowances
for credit losses
    
    
    87,479
    
    
    
    86,527
    
    
    
    86,573
    
    
    
    85,988
    
    
    
    77,481
    
    
    
    
    9,998
    
    
    
    12.9Non-interest income:Rental income
    
    
    1,591
    
    
    
    1,591
    
    
    
    1,590
    
    
    
    1,590
    
    
    
    1,591
    
    
    
    
    
    
    
    
    Collateral fees
    
    
    115
    
    
    
    718
    
    
    
    976
    
    
    
    907
    
    
    
    965
    
    
    
    
    (850
    )
    
    
    (88.1
    )Total non-interest income
    
    
    1,706
    
    
    
    2,309
    
    
    
    2,566
    
    
    
    2,497
    
    
    
    2,556
    
    
    
    
    (850
    )
    
    
    (33.3
    )Non-interest expense:Servicing costs
    
    
    2,720
    
    
    
    2,783
    
    
    
    2,730
    
    
    
    2,717
    
    
    
    2,899
    
    
    
    
    (179
    )
    
    
    (6.2
    )Depreciation and amortization
    
    
    999
    
    
    
    1,017
    
    
    
    1,045
    
    
    
    1,086
    
    
    
    1,102
    
    
    
    
    (103
    )
    
    
    (9.3
    )(Gain)loss on disposal of premises and equipment
    
    
    
    
    
    
    (31
    )
    
    
    4
    
    
    
    45
    
    
    
    388
    
    
    
    
    (388
    )
    
    
    N.M.Other
    
    
    202
    
    
    
    170
    
    
    
    288
    
    
    
    205
    
    
    
    169
    
    
    
    
    33
    
    
    
    19.5Total non-interest expense
    
    
    3,921
    
    
    
    3,939
    
    
    
    4,067
    
    
    
    4,053
    
    
    
    4,558
    
    
    
    
    (637
    )
    
    
    (14.0
    )Income before provision for income taxes
    
    
    85,264
    
    
    
    84,897
    
    
    
    85,072
    
    
    
    84,432
    
    
    
    75,479
    
    
    
    
    9,785
    
    
    
    13.0Provision for income taxes
    
    
    310
    
    
    
    285
    
    
    
    251
    
    
    
    173
    
    
    
    25
    
    
    
    
    285
    
    
    
    N.M.Net income
    
    $
    84,954
    
    
    $
    84,612
    
    
    $
    84,821
    
    
    $
    84,259
    
    
    $
    75,454
    
    
    
    $
    9,500
    
    
    
    12.6
    %Dividends declared on preferred securities
    
    
    (11,781
    )
    
    
    (11,007
    )
    
    
    (10,050
    )
    
    
    (9,023
    )
    
    
    (8,256
    )
    
    
    
    (3,525
    )
    
    
    (42.7
    )Net income applicable to common shares (1)
    
    $
    73,173
    
    
    $
    73,605
    
    
    $
    74,771
    
    
    $
    75,236
    
    
    $
    67,198
    
    
    
    $
    5,975
    
    
    
    8.9
    %
 (1)
    
    All of HPCIs common stock is owned by Huntington, HPCII, HCF, and Holdings and
therefore, net income per share is not presented.
  16




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Table 3  Year-To-Date Statements of Income
 Six Months Ended June 30,
    
    
    2006 vs 2005(in thousands)
    
    2005
    
    2005
    
    
    $ Chg
    
    % ChgInterest and fee incomeInterest on loan participation interests:Commercial
    
    $
    1,638
    
    
    $
    2,644
    
    
    
    $
    (1,006
    )
    
    
    (38.0
    )%Commercial real estate
    
    
    115,623
    
    
    
    100,737
    
    
    
    
    14,886
    
    
    
    14.8Consumer
    
    
    32,767
    
    
    
    28,612
    
    
    
    
    4,155
    
    
    
    14.5Residential real estate
    
    
    4,239
    
    
    
    5,543
    
    
    
    
    (1,304
    )
    
    
    (23.5
    )Total loan participation interest income
    
    
    154,267
    
    
    
    137,536
    
    
    
    
    16,731
    
    
    
    12.2Fees from loan participation interests
    
    
    572
    
    
    
    1,119
    
    
    
    
    (547
    )
    
    
    (48.9
    )Interest on deposits with The Huntington National Bank
    
    
    4,781
    
    
    
    4,043
    
    
    
    
    738
    
    
    
    18.3Total interest and fee income
    
    
    159,620
    
    
    
    142,698
    
    
    
    
    16,922
    
    
    
    11.9Reduction in allowances for credit losses
    
    
    (14,386
    )
    
    
    (7,281
    )
    
    
    
    (7,105
    )
    
    
    (97.6
    )Interest income after reduction in allowances
for credit losses
    
    
    174,006
    
    
    
    149,979
    
    
    
    
    24,027
    
    
    
    16.0Non-interest income:Rental income
    
    
    3,182
    
    
    
    3,181
    
    
    
    
    1
    
    
    
    0.0Collateral fees
    
    
    833
    
    
    
    1,146
    
    
    
    
    (313
    )
    
    
    (27.3
    )Total non-interest income
    
    
    4,015
    
    
    
    4,327
    
    
    
    
    (312
    )
    
    
    (7.2
    )Non-interest expense:Servicing costs
    
    
    5,503
    
    
    
    5,762
    
    
    
    
    (259
    )
    
    
    (4.5
    )Depreciation and amortization
    
    
    2,016
    
    
    
    2,239
    
    
    
    
    (223
    )
    
    
    (10.0
    )(Gain) loss on disposal of premises and equipment
    
    
    (31
    )
    
    
    533
    
    
    
    
    (564
    )
    
    
    N.M.Other
    
    
    372
    
    
    
    409
    
    
    
    
    (37
    )
    
    
    (9.0
    )Total non-interest expense
    
    
    7,860
    
    
    
    8,943
    
    
    
    
    (1,083
    )
    
    
    (12.1
    )Income before provision for income taxes
    
    
    170,161
    
    
    
    145,363
    
    
    
    
    24,798
    
    
    
    17.1Provision for income taxes
    
    
    595
    
    
    
    124
    
    
    
    
    471
    
    
    
    N.M.Net income
    
    $
    169,566
    
    
    $
    145,239
    
    
    
    $
    24,327
    
    
    
    16.7
    %Dividends declared on preferred securities
    
    
    (22,788
    )
    
    
    (15,561
    )
    
    
    
    (7,227
    )
    
    
    (46.4
    )Net income applicable to common shares(1)
    
    $
    146,778
    
    
    $
    129,678
    
    
    
    $
    17,100
    
    
    
    13.2
    %
 (1)
    
    All of HPCIs common stock is owned by Huntington, HPCII, HCF and Holdings and
therefore, net income per share is not presented.
  Interest and Fee Income
  17




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Table 4  Quarterly Average Balance Sheets and Net Interest Margin Analysis
 Three Months Ended June 30,2006
    
    2005Average
    
    
    
    
    
    
    
    
    
    Average(in millions)
    
    Balance
    
    Income(1)
    
    Yield
    
    Balance
    
    Income(1)
    
    YieldLoan participation interests:Commercial
    
    $
    42.3
    
    
    $
    0.8
    
    
    
    7.53
    %
    
    $
    89.5
    
    
    $
    1.3
    
    
    
    5.69
    %Commercial real estate
    
    
    3,350.8
    
    
    
    60.0
    
    
    
    7.18
    
    
    
    3,637.1
    
    
    
    52.3
    
    
    
    5.77Consumer
    
    
    960.9
    
    
    
    16.2
    
    
    
    6.77
    
    
    
    867.3
    
    
    
    14.9
    
    
    
    6.88Residential real estate
    
    
    135.5
    
    
    
    2.0
    
    
    
    5.92
    
    
    
    197.7
    
    
    
    2.6
    
    
    
    5.36Total loan participations
    
    
    4,489.5
    
    
    
    79.0
    
    
    
    7.06
    
    
    
    4,791.6
    
    
    
    71.1
    
    
    
    5.95Interest bearing deposits in the Bank
    
    
    265.0
    
    
    
    3.3
    
    
    
    4.91
    
    
    
    347.6
    
    
    
    2.6
    
    
    
    2.97Total
    
    $
    4,754.5
    
    
    $
    82.3
    
    
    
    6.94
    %
    
    $
    5,139.2
    
    
    $
    73.7
    
    
    
    5.75
    %
 (1)
    
    Income includes interest and fees.
 Table 5  Year-To-Date Average Balance Sheets and Net Interest Margin Analysis
 Six Months Ended June 30,2006
    
    
    2005Average
    
    
    
    
    
    
    
    
    
    
    Average(in millions)
    
    Balance
    
    
    Income(1)
    
    
    Yield
    
    
    Balance
    
    
    Income(1)
    
    
    YieldLoan participation interests:Commercial
    
    $
    44.8
    
    
    $
    1.6
    
    
    
    7.39
    %
    
    $
    96.6
    
    
    $
    2.7
    
    
    
    5.56
    %Commercial real estate
    
    
    3,333.3
    
    
    
    115.9
    
    
    
    7.01
    
    
    
    3,671.1
    
    
    
    101.5
    
    
    
    5.58Consumer
    
    
    983.1
    
    
    
    33.1
    
    
    
    6.78
    
    
    
    844.9
    
    
    
    29.0
    
    
    
    6.91Residential real estate
    
    
    143.2
    
    
    
    4.2
    
    
    
    5.92
    
    
    
    207.3
    
    
    
    5.5
    
    
    
    5.35Total loan participations
    
    
    4,504.4
    
    
    
    154.8
    
    
    
    6.93
    
    
    
    4,819.9
    
    
    
    138.7
    
    
    
    5.80Interest bearing deposits in the Bank
    
    
    198.8
    
    
    
    4.8
    
    
    
    4.78
    
    
    
    292.7
    
    
    
    4.0
    
    
    
    2.79Total
    
    $
    4,703.2
    
    
    $
    159.6
    
    
    
    6.84
    %
    
    $
    5,112.6
    
    
    $
    142.7
    
    
    
    5.63
    %
 (1)
  Allowances for Credit Losses (ACL)
  18




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##### Table of Contents



Table 6  Allowances for Credit Loss Activity
 2006
    
    2005(in thousands)
    
    Second
    
    First
    
    Fourth
    
    Third
    
    SecondALL balance, beginning of period
    
    $
    53,586
    
    
    $
    57,530
    
    
    $
    56,866
    
    
    $
    60,987
    
    
    $
    62,461Allowance of loan participations acquired
    
    
    5,172
    
    
    
    6,462
    
    
    
    6,675
    
    
    
    5,875
    
    
    
    6,880Net loan lossesCommercial
    
    
    633
    
    
    
    256
    
    
    
    232
    
    
    
    159
    
    
    
    312Commercial real estate
    
    
    (2,162
    )
    
    
    (776
    )
    
    
    (400
    )
    
    
    (2,083
    )
    
    
    (2,705
    )Consumer
    
    
    (743
    )
    
    
    (621
    )
    
    
    (712
    )
    
    
    (1,004
    )
    
    
    (1,123
    )Residential real estate
    
    
    
    
    
    
    (32
    )
    
    
    (152
    )
    
    
    (47
    )
    
    
    (6
    )Total net loan losses
    
    
    (2,272
    )
    
    
    (1,173
    )
    
    
    (1,032
    )
    
    
    (2,975
    )
    
    
    (3,522
    )Reduction in ALL
    
    
    (5,020
    )
    
    
    (9,233
    )
    
    
    (4,979
    )
    
    
    (7,021
    )
    
    
    (3,894
    )Economic reserve transfer to AULPC
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (938
    )ALL balance, end of period
    
    $
    51,466
    
    
    $
    53,586
    
    
    $
    57,530
    
    
    $
    56,866
    
    
    $
    60,987AULPC balance, beginning of period
    
    $
    4,185
    
    
    $
    4,135
    
    
    $
    3,565
    
    
    $
    4,650
    
    
    $
    3,658Provision for (reduction in) AULPC
    
    
    (183
    )
    
    
    50
    
    
    
    570
    
    
    
    (1,085
    )
    
    
    54Economic reserve transfer from ALL
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    938AULPC balance, end of period
    
    $
    4,002
    
    
    $
    4,185
    
    
    $
    4,135
    
    
    $
    3,565
    
    
    $
    4,650Total Allowance for Credit Losses
    
    $
    55,468
    
    
    $
    57,771
    
    
    $
    61,665
    
    
    $
    60,431
    
    
    $
    65,637ALL as a % of total participation interests
    
    
    1.17
    %
    
    
    1.19
    %
    
    
    1.27
    %
    
    
    1.23
    %
    
    
    1.28
    %ACL as a % of total participation interests
    
    
    1.26
    
    
    
    1.28
    
    
    
    1.37
    
    
    
    1.31
    
    
    
    1.38
     Non-Performing Assets (NPAs)
  19




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##### Table of Contents



Table 7  Quarterly Non-Performing Assets
 2006
    
    
    
    
    
    2005(in thousands)
    
    Second
    
    First
    
    
    
    
    
    Fourth
    
    Third
    
    SecondParticipation interests in non-accrual loansCommercial
    
    $
    108
    
    
    $
    108
    
    
    
    
    
    
    $
    147
    
    
    $
    746
    
    
    $
    1,069Commercial real estate
    
    
    16,834
    
    
    
    20,133
    
    
    
    
    
    
    
    20,746
    
    
    
    17,735
    
    
    
    17,965Consumer
    
    
    3,545
    
    
    
    3,282
    
    
    
    
    
    
    
    2,799
    
    
    
    2,028
    
    
    
    2,252Residential real estate
    
    
    1,687
    
    
    
    2,144
    
    
    
    
    
    
    
    2,923
    
    
    
    3,695
    
    
    
    4,652Total Non-Performing Assets
    
    $
    22,174
    
    
    $
    25,667
    
    
    
    
    
    
    $
    26,615
    
    
    $
    24,204
    
    
    $
    25,938Participations in Accruing Loans
Past Due 90 Days or More
    
    $
    6,079
    
    
    $
    3,402
    
    
    
    
    
    
    $
    3,188
    
    
    $
    3,382
    
    
    $
    12,036NPAs as a % of total
participation interests
    
    
    0.50
    %
    
    
    0.57
    %
    
    
    
    
    
    
    0.59
    %
    
    
    0.52
    %
    
    
    0.54
    %ALL as a % of NPAs
    
    
    232
    
    
    
    209
    
    
    
    
    
    
    
    216
    
    
    
    235
    
    
    
    235ACL as a % of NPAs
    
    
    250
    
    
    
    225
    
    
    
    
    
    
    
    232
    
    
    
    250
    
    
    
    253
     Non-Interest Income and Non-Interest Expense
 (See Note 7 to the unaudited condensed consolidated financial statements for more
information regarding use of HPCIs assets as collateral for the Banks advances from the FHLB.)
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##### Table of Contents



July 1, 2005
    
    January 1, 2005thru
    
    thruJune 30, 2006
    
    June 30, 2005Commercial and commercial real estate
    
    
    0.125
    %
    
    
    0.125
    %Consumer
    
    
    0.650
    %
    
    
    0.750
    %Residential real estate
    
    
    0.267
    %
    
    
    0.267
    %
  Provision for Income Taxes
  MARKET RISK
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##### Table of Contents



OFF-BALANCE SHEET ARRANGEMENTS
  LIQUIDITY AND CAPITAL RESOURCES
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##### Table of Contents



Item 3. Quantitative And Qualitative Disclosures About Market Risk
  
 Item 4. Controls and Procedures
   
 PART II. OTHER INFORMATION
  
 Item 4. Submission of Matters to a Vote of Shareholders
  1.
    
    Election of directors to serve as Directors until the next Annual Meeting of
shareholders as follows:
Richard A. Cheap, Stephen E. Dutton, R. Larry Hoover, Edward J. Kane, Roger E.
Kephart, Donald R. Kimble, Thomas P. Reed, James D. Robbins, and Karen D. Roggenkamp.2.
    
    Ratification of appointment of Deloitte & Touche LLP to serve as the companys
independent registered public accounting firm for the year 2006.
  
 Item 6. Exhibits
  3.(i).
    
    
    Amended and Restated Articles of Incorporation (previously filed as Exhibit
3(a)(ii) to Amendment No. 4 to Registration Statement of Form S-11 (File No.
333-61182), filed with the Securities and Exchange Commission on October 12,
2001, and incorporated herein by reference.)3.(ii).
    
    Code of Regulations (previously filed as Exhibit 3(b) to the Registrants
Registration Statement of Form S-11 (File No. 333-61182), filed with the
Securities and Exchange Commission on May 17, 2001, and incorporated herein by
reference.)4.
    
    
    Specimen of certificate representing Class C preferred
securities, previously filed as Exhibit 4 to the Registrants Amendment No. 1 to
Registration Statement of Form S-11 (File No. 333-61182), filed with the
Securities and Exchange Commission on May 31, 2001, and incorporated herein by
reference.
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##### Table of Contents



31.(a).
    
    
    Rule 13a  14(a) Certification  President (chief executive officer).31.(b).
    
    
    Rule 13a  14(a) Certification  Vice President (chief financial officer).32.(a).
    
    
    Section 1350 Certification  President (chief executive officer).32.(b).
    
    
    Section 1350 Certification  Vice President (chief financial officer).99.(a).
    
    
    Unaudited Condensed Consolidated Financial Statements of Huntington
Bancshares Incorporated as of and for the three-month and six-month periods
ended June 30, 2006 and 2005.
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##### Table of Contents



Signatures
  
 By:
    
    /s/ Donald R. Kimble
    
    
    
    By:
    
    /s/ Thomas P. ReedDonald R. Kimble
    
    
    
    
    
    Thomas P. ReedPresident and Director
    
    
    
    
    
    Vice President and Director(Principal Executive Officer)
    
    
    
    
    
    (Principal Financial and Accounting Officer)
 25