##### 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, 2009
 Commission File Number: 000-33243
 Huntington Preferred Capital, Inc.
 Ohio
(State or other jurisdiction of 
incorporation or organization)
    
    31-1356967
(I.R.S. Employer
Identification No.)
 41 South High Street, Columbus, Ohio 43287
 (614) 480-8300
 þ Yes o No
 o Yes o No
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o Yes þ No




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##### 



HUNTINGTON PREFERRED CAPITAL, INC.
 INDEX
 Part 1. FINANCIAL INFORMATIONItem 1. Financial Statements (Unaudited)
    
    
    3Condensed Balance Sheets at June 30, 2009, December 31, 2008, and June 30, 2008
    
    
    3Condensed Statements of Income for the three months and six months ended June 30, 2009 and 2008
    
    
    4Condensed Statements of Changes in Shareholders Equity for the six months ended June 30, 2009 and 2008
    
    
    5Condensed Statements of Cash Flows for the six months ended June 30, 2009 and 2008
    
    
    6Notes to Unaudited Condensed Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    14Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    29Item 4. Controls and Procedures
    
    
    29Item 4T. Controls and Procedures
    
    
    29PART II. OTHER INFORMATIONItem 4. Submission of Matters to a Vote of Shareholders
    
    
    29Item 6. Exhibits
    
    
    30Signatures
    
    
    31Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2Exhibit 99.1
   2




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##### Table of Contents



Part I. Financial Information
 
 Item 1. Financial Statements
 Huntington Preferred Capital, Inc.
 
 Condensed Balance Sheets
 (Unaudited)
 June 30,
    
    
    December 31,
    
    
    June 30,(in thousands, except share data)
    
    2009
    
    
    2008
    
    
    2008AssetsCash and interest bearing deposits with The Huntington National Bank
    
    $
    540,104
    
    
    $
    293,009
    
    
    $
    379,239Due from The Huntington National Bank
    
    
    51,527
    
    
    
    38,423
    
    
    
    Loan participation interests:Commercial real estate
    
    
    3,134,805
    
    
    
    3,433,872
    
    
    
    3,290,246Consumer and residential real estate
    
    
    838,811
    
    
    
    974,619
    
    
    
    1,070,496Total loan participation interests
    
    
    3,973,616
    
    
    
    4,408,491
    
    
    
    4,360,742Allowance for loan participation losses
    
    
    (95,748
    )
    
    
    (65,456
    )
    
    
    (66,876
    )Net loan participation interests
    
    
    3,877,868
    
    
    
    4,343,035
    
    
    
    4,293,866Accrued income and other assets
    
    
    10,608
    
    
    
    14,101
    
    
    
    15,319Total assets
    
    $
    4,480,107
    
    
    $
    4,688,568
    
    
    $
    4,688,424Liabilities and shareholders equityLiabilitiesAllowance for unfunded loan participation commitments
    
    $
    2,280
    
    
    $
    2,301
    
    
    $
    2,576Dividends and distributions payable
    
    
    2,669
    
    
    
    225,000
    
    
    
    7,444Due to The Huntington National Bank
    
    
    
    
    
    
    
    
    
    
    103,619Other liabilities
    
    
    67
    
    
    
    50
    
    
    
    58Total liabilities
    
    
    5,016
    
    
    
    227,351
    
    
    
    113,697Shareholders EquityPreferred securities, Class A, 8.000% noncumulative, non-
exchangeable; $1,000 par and liquidation value per share;
1,000 shares authorized, issued and outstanding
    
    
    1,000
    
    
    
    1,000
    
    
    
    1,000Preferred securities, Class B, variable-rate, noncumulative, and
conditionally exchangeable; $1,000 par and liquidation
value per share; authorized 500,000 shares; 400,000
shares issued and outstanding
    
    
    400,000
    
    
    
    400,000
    
    
    
    400,000Preferred securities, Class C, 7.875% noncumulative and
conditionally exchangeable; $25 par and liquidation value
per share; 2,000,000 shares authorized, issued, and outstanding
    
    
    50,000
    
    
    
    50,000
    
    
    
    50,000Preferred securities, Class D, variable-rate, noncumulative, and
conditionally exchangeable; $25 par and liquidation value
per share; 14,000,000 shares authorized, issued, and outstanding
    
    
    350,000
    
    
    
    350,000
    
    
    
    350,000Preferred securities, $25 par, 10,000,000 shares
authorized; no shares issued or outstanding
    
    
    
    
    
    
    
    
    
    
    Common stock  without par value; 14,000,000 shares authorized,
issued, and outstanding
    
    
    3,660,217
    
    
    
    3,660,217
    
    
    
    3,660,959Retained earnings
    
    
    13,874
    
    
    
    
    
    
    
    112,768Total shareholders equity
    
    
    4,475,091
    
    
    
    4,461,217
    
    
    
    4,574,727Total liabilities and shareholders equity
    
    $
    4,480,107
    
    
    $
    4,688,568
    
    
    $
    4,688,424
 See notes to unaudited condensed financial statements.
  3




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Huntington Preferred Capital, Inc.
 
 Condensed Statements of Income
 (Unaudited)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,(in thousands)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Interest and fee incomeInterest on loan participation interests:Commercial real estate
    
    $
    27,071
    
    
    $
    40,551
    
    
    $
    56,397
    
    
    $
    87,082Consumer and residential real estate
    
    
    14,278
    
    
    
    18,260
    
    
    
    29,754
    
    
    
    37,949Total loan participation interest income
    
    
    41,349
    
    
    
    58,811
    
    
    
    86,151
    
    
    
    125,031Fees from loan participation interests
    
    
    290
    
    
    
    333
    
    
    
    559
    
    
    
    647Interest on deposits with The Huntington National Bank
    
    
    284
    
    
    
    2,082
    
    
    
    386
    
    
    
    3,958Total interest and fee income
    
    
    41,923
    
    
    
    61,226
    
    
    
    87,096
    
    
    
    129,636Provision for (reduction in) allowances for credit losses
    
    
    40,497
    
    
    
    (5,079
    )
    
    
    59,485
    
    
    
    (6,224
    )Interest income after provision for (reduction in) allowances for credit losses
    
    
    1,426
    
    
    
    66,305
    
    
    
    27,611
    
    
    
    135,860Noninterest income:Rental income
    
    
    16
    
    
    
    16
    
    
    
    32
    
    
    
    33Collateral fees
    
    
    640
    
    
    
    733
    
    
    
    1,317
    
    
    
    1,509Total noninterest income
    
    
    656
    
    
    
    749
    
    
    
    1,349
    
    
    
    1,542Noninterest expense:Servicing costs
    
    
    2,387
    
    
    
    2,707
    
    
    
    4,938
    
    
    
    5,542Other
    
    
    235
    
    
    
    245
    
    
    
    400
    
    
    
    391Total noninterest expense
    
    
    2,622
    
    
    
    2,952
    
    
    
    5,338
    
    
    
    5,933Net income (loss)
    
    $
    (540
    )
    
    $
    64,102
    
    
    $
    23,622
    
    
    $
    131,469Dividends declared on preferred securities
    
    
    (4,613
    )
    
    
    (7,439
    )
    
    
    (9,748
    )
    
    
    (18,701
    )Net income (loss) applicable to common shares
    
    $
    (5,153
    )
    
    $
    56,663
    
    
    $
    13,874
    
    
    $
    112,768
 See notes to unaudited condensed financial statements.
  4




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Huntington Preferred Capital, Inc.
 
 Condensed Statements of Changes in Shareholders Equity
 (Unaudited)
 Preferred, Class A
    
    
    Preferred, Class B
    
    
    Preferred, Class C(in thousands)
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    AmountSix Months Ended June 30, 2008:Balance, beginning of period
    
    
    1
    
    
    $
    1,000
    
    
    
    400
    
    
    $
    400,000
    
    
    
    2,000
    
    
    $
    50,000Comprehensive Income:Net incomeTotal comprehensive incomeBalance, end of the period
    
    
    1
    
    
    $
    1,000
    
    
    
    400
    
    
    $
    400,000
    
    
    
    2,000
    
    
    $
    50,000Six Months Ended June 30, 2009:Balance, beginning of period
    
    
    1
    
    
    $
    1,000
    
    
    
    400
    
    
    $
    400,000
    
    
    
    2,000
    
    
    $
    50,000Comprehensive Income:Net incomeTotal comprehensive incomeBalance, end of the period
    
    
    1
    
    
    $
    1,000
    
    
    
    400
    
    
    $
    400,000
    
    
    
    2,000
    
    
    $
    50,000
 Preferred, Class D
    
    
    Preferred
    
    
    Common
    
    
    Retained(in thousands)
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Earnings
    
    
    TotalSix Months Ended June 30, 2008:Balance, beginning of period
    
    
    14,000
    
    
    $
    350,000
    
    
    
    
    
    
    $
    
    
    
    
    14,000
    
    
    $
    3,660,959
    
    
    $
    
    
    
    $
    4,461,959Comprehensive Income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    131,469
    
    
    
    131,469Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    131,469Dividends declared on Class A preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (80
    )
    
    
    (80
    )Dividends declared on Class B preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,364
    )
    
    
    (7,364
    )Dividends declared on Class C preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,969
    )
    
    
    (1,969
    )Dividends declared on Class D preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,288
    )
    
    
    (9,288
    )Balance, end of the period
    
    
    14,000
    
    
    $
    350,000
    
    
    
    
    
    
    $
    
    
    
    
    14,000
    
    
    $
    3,660,959
    
    
    $
    112,768
    
    
    $
    4,574,727Six Months Ended June 30, 2009:Balance, beginning of period
    
    
    14,000
    
    
    $
    350,000
    
    
    
    
    
    
    $
    
    
    
    
    14,000
    
    
    $
    3,660,217
    
    
    $
    
    
    
    $
    4,461,217Comprehensive Income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23,622
    
    
    
    23,622Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23,622Dividends declared on Class A preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (80
    )
    
    
    (80
    )Dividends declared on Class B preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,590
    )
    
    
    (2,590
    )Dividends declared on Class C preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,968
    )
    
    
    (1,968
    )Dividends declared on Class D preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,110
    )
    
    
    (5,110
    )Balance, end of the period
    
    
    14,000
    
    
    $
    350,000
    
    
    
    
    
    
    $
    
    
    
    
    14,000
    
    
    
    3,660,217
    
    
    
    13,874
    
    
    $
    4,475,091
 See notes to unaudited condensed financial statements.
  5




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Huntington Preferred Capital, Inc.
 
 Condensed Statements of Cash Flows
 (Unaudited)
 Six Months EndedJune 30,(in thousands)
    
    2009
    
    
    2008Operating activitiesNet income
    
    $
    23,622
    
    
    $
    131,469Adjustments to reconcile net income to net
cash provided by operating activities:Provision for (reduction in) allowances for credit losses
    
    
    59,485
    
    
    
    (6,224
    )Change in due to/from The Huntington National Bank
    
    
    5,037
    
    
    
    9,125Other, net
    
    
    3,510
    
    
    
    5,575Net cash provided by operating activities
    
    
    91,654
    
    
    
    139,945Investing activitiesParticipation interests acquired
    
    
    (724,528
    )
    
    
    (1,088,993
    )Sales and repayments of loans underlying participation interests
    
    
    1,112,048
    
    
    
    1,292,080Net cash provided by investing activities
    
    
    387,520
    
    
    
    203,087Financing activitiesDividends paid on preferred securities
    
    
    (7,079
    )
    
    
    (11,257
    )Dividends paid on common stock
    
    
    (224,258
    )
    
    
    Return of capital to common shareholders
    
    
    (742
    )
    
    
    Net cash used for financing activities
    
    
    (232,079
    )
    
    
    (11,257
    )Increase in cash and cash equivalents
    
    
    247,095
    
    
    
    331,775Cash and cash equivalents at beginning of year
    
    
    293,009
    
    
    
    47,464Cash and cash equivalents at end of period
    
    $
    540,104
    
    
    $
    379,239Supplemental information:Dividends and distributions declared, not paid
    
    $
    2,669
    
    
    $
    7,444Non cash change in loan participation activity with The Huntington National Bank
    
    
    18,141
    
    
    
    (216,475
    )
 See notes to unaudited condensed financial statements.
  6




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Notes to Unaudited Condensed Financial Statements
 Note 1  Organization
   Note 2  Basis of Presentation and New Accounting Pronouncements
     FASB Statement No. 160, Noncontrolling Interests in Consolidated Financial Statement s  a n
amendment of ARB No. 51 (Statement No. 160)
 FSP FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments (FSP FAS
107-1 and APB 28-1) .
  7




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FASB Statement No. 165, Subsequent Events (Statement No. 165)
 FASB Statement No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally
Accepted Accounting Principles - a replacement of FASB Statement No. 162 The Hierarchy of Generally Accepted Accounting
Principles (Statement No. 162)
 Note 3  Lending Concentrations and Participations in Non-Performing Assets and Past Due Loans
   June 30,
    
    
    December 31,
    
    
    June 30,(in thousands)
    
    2009
    
    
    2008
    
    
    2008Commercial real estate
    
    $
    166,810
    
    
    $
    54,246
    
    
    $
    52,406Consumer and residential real estate
    
    
    6,588
    
    
    
    6,041
    
    
    
    6,063Total participations in non-performing assets
    
    $
    173,398
    
    
    $
    60,287
    
    
    $
    58,469Participations in accruing loans past due 90
days or more
    
    $
    6,113
    
    
    $
    9,543
    
    
    $
    6,214
 Note 4  Allowance for Credit Losses (ACL)
   8




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Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,(in thousands)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008ALPL balance, beginning of period
    
    $
    79,889
    
    
    $
    63,799
    
    
    $
    65,456
    
    
    $
    62,275ALPL for loan participations acquired
    
    
    4,673
    
    
    
    12,123
    
    
    
    8,803
    
    
    
    15,996Net loan losses
    
    
    (29,523
    )
    
    
    (3,779
    )
    
    
    (38,017
    )
    
    
    (6,451
    )Provision for ALPL
    
    
    40,709
    
    
    
    (5,267
    )
    
    
    59,506
    
    
    
    (4,944
    )ALPL balance, end of period
    
    $
    95,748
    
    
    $
    66,876
    
    
    $
    95,748
    
    
    $
    66,876AULPC balance, beginning of period
    
    $
    2,492
    
    
    $
    2,388
    
    
    $
    2,301
    
    
    $
    3,856Provision for (reduction in) AULPC
    
    
    (212
    )
    
    
    188
    
    
    
    (21
    )
    
    
    (1,280
    )AULPC balance, end of period
    
    $
    2,280
    
    
    $
    2,576
    
    
    $
    2,280
    
    
    $
    2,576Total ACL
    
    $
    98,028
    
    
    $
    69,452
    
    
    $
    98,028
    
    
    $
    69,452
  Note 5  Preferred Dividends
   i.e.
 i.e.,
  9




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Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,(in thousands)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Class A preferred securities
    
    $
    
    
    
    $
    
    
    
    $
    80
    
    
    $
    80Class B preferred securities
    
    
    1,177
    
    
    
    2,684
    
    
    
    2,590
    
    
    
    7,364Class C preferred securities
    
    
    984
    
    
    
    984
    
    
    
    1,968
    
    
    
    1,969Class D preferred securities
    
    
    2,452
    
    
    
    3,771
    
    
    
    5,110
    
    
    
    9,288Total dividends declared
    
    $
    4,613
    
    
    $
    7,439
    
    
    $
    9,748
    
    
    $
    18,701
  Note 6  Related Party Transactions
    January 1, 2008throughJune 30, 2009Commercial real estate
    
    
    0.125
    %Consumer
    
    
    0.650
    %Residential real estate
    
    
    0.267
    %
   10




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Number ofCommon
    
    
    Number of Preferred SecuritiesShareholder:
    
    Shares
    
    
    Class A
    
    
    Class B
    
    
    Class C
    
    
    Class DHeld by related parties:HPCII
    
    
    4,550,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    HCF
    
    
    6,580,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Holdings
    
    
    2,870,000
    
    
    
    895
    
    
    
    
    
    
    
    
    
    
    
    14,000,000HPC Holdings-II, Inc.
    
    
    
    
    
    
    
    
    
    
    400,000
    
    
    
    
    
    
    
    Total held by related parties
    
    
    14,000,000
    
    
    
    895
    
    
    
    400,000
    
    
    
    
    
    
    
    14,000,000Other shareholders
    
    
    
    
    
    
    105
    
    
    
    
    
    
    
    2,000,000
    
    
    
    Total shares outstanding
    
    
    14,000,000
    
    
    
    1,000
    
    
    
    400,000
    
    
    
    2,000,000
    
    
    
    14,000,000
      11




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Note 7  Fair Value of Financial Instruments
  Level 1
 Level 2
 Level 3
   Accounting by Creditors for
Impairment of a Loan
  12




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##### Table of Contents



Cash and interest-bearing deposits, and due from The Huntington National Bank
 Loan participation interests
 Note 8  Commitments and Contingencies
 /
    Note 9  Segment Reporting
   13




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 INTRODUCTION
    Forward-looking Statements
     14




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Risk Factors
  Update to Risk Factors
 During the first six months of 2009, the Banks and HPCIs commercial and residential real
estate and real estate-related portfolios continued to be affected by the ongoing reduction in real
estate values and reduced levels of sales and, more generally, HPCIs participation interest
portfolio has been affected by the sustained economic weakness of the Midwest markets and the
impact of higher unemployment rates. The continued economic weakness could adversely impact HPCIs
business, financial condition, liquidity, capital, and results of operations, as well as the Banks
financial condition, liquidity, capital, capital ratios, and results of operations.
   Critical Accounting Policies
   15




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Use of Significant Estimates
  QUALIFICATION TESTS
     16




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RESULTS OF OPERATIONS
   Table 1  Quarterly Statements of Income
 2009
    
    
    2008
    
    
    2Q09 vs 2Q08(in thousands)
    
    Second
    
    
    First
    
    
    Fourth
    
    
    Third
    
    
    Second
    
    
    $ Chg
    
    
    % ChgInterest and fee incomeInterest on loan participation interests:Commercial real estate
    
    $
    27,071
    
    
    $
    29,326
    
    
    $
    44,591
    
    
    $
    44,375
    
    
    $
    40,551
    
    
    $
    (13,480
    )
    
    
    (33.2
    )%Consumer and residential real estate
    
    
    14,278
    
    
    
    15,476
    
    
    
    16,614
    
    
    
    17,454
    
    
    
    18,260
    
    
    
    (3,982
    )
    
    
    (21.8
    )Total loan participation interest income
    
    
    41,349
    
    
    
    44,802
    
    
    
    61,205
    
    
    
    61,829
    
    
    
    58,811
    
    
    
    (17,462
    )
    
    
    (29.7
    )Fees from loan participation interests
    
    
    290
    
    
    
    269
    
    
    
    277
    
    
    
    274
    
    
    
    333
    
    
    
    (43
    )
    
    
    (12.9
    )Interest on deposits with the Bank
    
    
    284
    
    
    
    102
    
    
    
    498
    
    
    
    830
    
    
    
    2,082
    
    
    
    (1,798
    )
    
    
    (86.4
    )Total interest and fee income
    
    
    41,923
    
    
    
    45,173
    
    
    
    61,980
    
    
    
    62,933
    
    
    
    61,226
    
    
    
    (19,303
    )
    
    
    (31.5
    )Provision for (reduction in)
allowances for credit losses
    
    
    40,497
    
    
    
    18,988
    
    
    
    (1,194
    )
    
    
    (7,437
    )
    
    
    (5,079
    )
    
    
    45,576
    
    
    
    N.M.Interest income after (reduction in)
provision for allowances for credit losses
    
    
    1,426
    
    
    
    26,185
    
    
    
    63,174
    
    
    
    70,370
    
    
    
    66,305
    
    
    
    (64,879
    )
    
    
    (97.8
    )Noninterest income:Rental income
    
    
    16
    
    
    
    16
    
    
    
    16
    
    
    
    17
    
    
    
    16
    
    
    
    
    
    
    
    Collateral fees
    
    
    640
    
    
    
    677
    
    
    
    745
    
    
    
    744
    
    
    
    733
    
    
    
    (93
    )
    
    
    (12.7
    )Total noninterest income
    
    
    656
    
    
    
    693
    
    
    
    761
    
    
    
    761
    
    
    
    749
    
    
    
    (93
    )
    
    
    (12.4
    )Non-interest expense:Servicing costs
    
    
    2,387
    
    
    
    2,551
    
    
    
    2,675
    
    
    
    2,718
    
    
    
    2,707
    
    
    
    (320
    )
    
    
    (11.8
    )Other
    
    
    235
    
    
    
    165
    
    
    
    181
    
    
    
    182
    
    
    
    245
    
    
    
    (10
    )
    
    
    (4.1
    )Total noninterest expense
    
    
    2,622
    
    
    
    2,716
    
    
    
    2,856
    
    
    
    2,900
    
    
    
    2,952
    
    
    
    (330
    )
    
    
    (11.2
    )Net income (loss)
    
    $
    (540
    )
    
    $
    24,162
    
    
    $
    61,079
    
    
    $
    68,231
    
    
    $
    64,102
    
    
    $
    (64,642
    )
    
    
    N.M.Dividends declared on preferred securities
    
    
    (4,613
    )
    
    
    (5,135
    )
    
    
    (10,188
    )
    
    
    (7,632
    )
    
    
    (7,439
    )
    
    
    2,826
    
    
    
    38.0Net income (loss) applicable to common shares(1)
    
    $
    (5,153
    )
    
    $
    19,027
    
    
    $
    50,891
    
    
    $
    60,599
    
    
    $
    56,663
    
    
    $
    (61,816
    )
    
    
    N.M.
    %
 (1)
    
    All of HPCIs common stock is owned by HPCII, HCF, and Holdings and, therefore, net income per share is not presented.N.M.  Not Meaningful.  17




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##### Table of Contents



Table 2  Year-To-Date Statements of Income
 Six Months Ended June 30,
    
    
    2009 vs 2008(in thousands)
    
    2009
    
    
    2008
    
    
    $ Chg
    
    
    % ChgInterest and fee incomeInterest on loan participation interests:Commercial real estate
    
    $
    56,397
    
    
    $
    87,082
    
    
    $
    (30,685
    )
    
    
    (35.2
    )%Consumer and residential real estate
    
    
    29,754
    
    
    
    37,949
    
    
    
    (8,195
    )
    
    
    (21.6
    )Total loan participation interest income
    
    
    86,151
    
    
    
    125,031
    
    
    
    (38,880
    )
    
    
    (31.1
    )Fees from loan participation interests
    
    
    559
    
    
    
    647
    
    
    
    (88
    )
    
    
    (13.6
    )Interest on deposits with The Bank
    
    
    386
    
    
    
    3,958
    
    
    
    (3,572
    )
    
    
    (90.2
    )Total interest and fee income
    
    
    87,096
    
    
    
    129,636
    
    
    
    (42,540
    )
    
    
    (32.8
    )Provision for (reduction in) allowances for credit
losses
    
    
    59,485
    
    
    
    (6,224
    )
    
    
    65,709
    
    
    
    N.M.Interest income after reduction in allowances
for credit losses
    
    
    27,611
    
    
    
    135,860
    
    
    
    (108,249
    )
    
    
    (79.7
    )Non-interest income:Rental income
    
    
    32
    
    
    
    33
    
    
    
    (1
    )
    
    
    (3.0
    )Collateral fees
    
    
    1,317
    
    
    
    1,509
    
    
    
    (192
    )
    
    
    (12.7
    )Total non-interest income
    
    
    1,349
    
    
    
    1,542
    
    
    
    (193
    )
    
    
    (12.5
    )Non-interest expense:Servicing costs
    
    
    4,938
    
    
    
    5,542
    
    
    
    (604
    )
    
    
    (10.9
    )Other
    
    
    400
    
    
    
    391
    
    
    
    9
    
    
    
    2.3Total non-interest expense
    
    
    5,338
    
    
    
    5,933
    
    
    
    (595
    )
    
    
    (10.0
    )Net income
    
    $
    23,622
    
    
    $
    131,469
    
    
    $
    (107,847
    )
    
    
    (82.0
    )%Dividends declared on preferred securities
    
    
    (9,748
    )
    
    
    (18,701
    )
    
    
    8,953
    
    
    
    47.9Net income applicable to common shares(1)
    
    $
    13,874
    
    
    $
    112,768
    
    
    $
    (98,894
    )
    
    
    (87.7
    )%
 (1)
    
    All of HPCIs common stock is owned by HPCII, HCF, and Holdings and therefore, net income per share is not presented.N.M.  Not Meaningful.  18




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##### Table of Contents



Interest and Fee Income
   Table 3  Interest and Fee Income
 Three Months Ended June 30,2009
    
    
    2008Average
    
    
    
    
    
    
    
    
    
    
    Average(in millions)
    
    Balance
    
    
    Income (1)
    
    
    Yield
    
    
    Balance
    
    
    Income (1)
    
    
    YieldLoan participation interests:Commercial real estate
    
    $
    3,194.5
    
    
    $
    27.2
    
    
    
    3.42
    %
    
    $
    3,095.5
    
    
    $
    40.7
    
    
    
    5.28
    %Consumer and residential real estate
    
    
    871.3
    
    
    
    14.4
    
    
    
    6.62
    
    
    
    1,105.1
    
    
    
    18.4
    
    
    
    6.68Total loan participations
    
    
    4,065.8
    
    
    
    41.6
    
    
    
    4.11
    
    
    
    4,200.6
    
    
    
    59.1
    
    
    
    5.65Interest bearing deposits in the Bank
    
    
    449.7
    
    
    
    0.3
    
    
    
    0.25
    
    
    
    396.3
    
    
    
    2.1
    
    
    
    2.08Total
    
    $
    4,515.5
    
    
    $
    41.9
    
    
    
    3.72
    %
    
    $
    4,596.9
    
    
    $
    61.2
    
    
    
    5.34
    %
 (1)
    
    Income includes interest and fees. Table 4  Year-To-Date Interest and Fee Income
 Six Months Ended June 30,2009
    
    
    2008Average
    
    
    
    
    
    
    
    
    
    
    Average(in millions)
    
    Balance
    
    
    Income (1)
    
    
    Yield
    
    
    Balance
    
    
    Income (1)
    
    
    YieldLoan participation interests:Commercial real estate
    
    $
    3,288.4
    
    
    $
    56.7
    
    
    
    3.48
    %
    
    $
    3,087.4
    
    
    $
    87.5
    
    
    
    5.71
    %Consumer and residential real estate
    
    
    905.6
    
    
    
    30.0
    
    
    
    6.68
    
    
    
    1,145.9
    
    
    
    38.2
    
    
    
    6.73Total loan participations
    
    
    4,194.0
    
    
    
    86.7
    
    
    
    4.17
    
    
    
    4,233.3
    
    
    
    125.7
    
    
    
    5.99Interest bearing deposits in the Bank
    
    
    313.8
    
    
    
    0.4
    
    
    
    0.24
    
    
    
    311.0
    
    
    
    4.0
    
    
    
    2.53Total
    
    $
    4,507.8
    
    
    $
    87.1
    
    
    
    3.90
    %
    
    $
    4,544.3
    
    
    $
    129.7
    
    
    
    5.75
    %
 (1)
    
    Income includes interest and fees.  Provision for (reduction in) allowance for credit losses
   19




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##### Table of Contents



Noninterest Income and Noninterest Expense
 (See
Note 8 to the unaudited condensed financial statements for more information regarding use of HPCIs
assets as collateral for the Banks advances from the FHLB.)
  January 1, 2008throughJune 30, 2009Commercial real estate
    
    
    0.125
    %Consumer
    
    
    0.650
    %Residential real estate
    
    
    0.267
    %
  Provision for Income Taxes
   CREDIT EXPOSURE MIX
   20




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##### Table of Contents



Credit Risk
    Commercial Real Estate Credit
    Table 5  Commercial Real Estate Loans by Property Type and Property Location
 At June 30, 2009Geographic Region
    
    
    
    
    
    
    Percent(in thousands of dollars)
    
    Ohio
    
    
    Michigan
    
    
    Indiana
    
    
    Kentucky
    
    
    Pennsylvania
    
    
    Other
    
    
    Total Amount
    
    
    of TotalIndustrial and warehouse
    
    $
    378,095
    
    
    $
    163,636
    
    
    $
    59,568
    
    
    $
    13,717
    
    
    $
    5,594
    
    
    $
    41,408
    
    
    $
    662,018
    
    
    
    21.1
    %Retail properties
    
    
    365,947
    
    
    
    72,407
    
    
    
    57,011
    
    
    
    43,805
    
    
    
    38,049
    
    
    
    82,518
    
    
    
    659,737
    
    
    
    21.0Office
    
    
    324,185
    
    
    
    142,662
    
    
    
    22,733
    
    
    
    19,805
    
    
    
    31,399
    
    
    
    56,052
    
    
    
    596,836
    
    
    
    19.0Raw land and other land
uses
    
    
    197,470
    
    
    
    102,066
    
    
    
    34,664
    
    
    
    11,281
    
    
    
    9,878
    
    
    
    7,922
    
    
    
    363,281
    
    
    
    11.6Single family home
builders
    
    
    140,310
    
    
    
    47,354
    
    
    
    12,829
    
    
    
    8,710
    
    
    
    16,315
    
    
    
    32,138
    
    
    
    257,656
    
    
    
    8.2Multi family
    
    
    114,094
    
    
    
    13,371
    
    
    
    65,555
    
    
    
    35,916
    
    
    
    1,197
    
    
    
    12,577
    
    
    
    242,710
    
    
    
    7.7Health care
    
    
    111,228
    
    
    
    6,745
    
    
    
    1,019
    
    
    
    176
    
    
    
    5,672
    
    
    
    15,094
    
    
    
    139,934
    
    
    
    4.6Other
    
    
    120,648
    
    
    
    52,791
    
    
    
    6,280
    
    
    
    1,539
    
    
    
    10,301
    
    
    
    21,074
    
    
    
    212,633
    
    
    
    6.8Total
    
    $
    1,751,977
    
    
    $
    601,032
    
    
    $
    259,659
    
    
    $
    134,949
    
    
    $
    118,405
    
    
    $
    268,783
    
    
    $
    3,134,805
    
    
    
    100.0
    %
  21




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##### Table of Contents



Retail properties
   Single family homebuilders
   Consumer and Residential Real Estate
   Allowance for Credit Losses (ACL)
   22




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##### Table of Contents



Table 6  Allowances for Credit Loss Activity
 2009
    
    
    2008(in thousands)
    
    Second
    
    
    First
    
    
    Fourth
    
    
    Third
    
    
    SecondALPL balance, beginning of period
    
    $
    79,889
    
    
    $
    65,456
    
    
    $
    72,073
    
    
    $
    66,876
    
    
    $
    63,799Allowance of loan participations acquired
    
    
    4,673
    
    
    
    4,130
    
    
    
    4,461
    
    
    
    15,828
    
    
    
    12,123Net loan lossesCommercial real estate
    
    
    (26,901
    )
    
    
    (6,742
    )
    
    
    (9,100
    )
    
    
    (179
    )
    
    
    (2,007
    )Consumer and residential real estate
    
    
    (2,622
    )
    
    
    (1,752
    )
    
    
    (1,905
    )
    
    
    (2,168
    )
    
    
    (1,772
    )Total net loan losses
    
    
    (29,523
    )
    
    
    (8,494
    )
    
    
    (11,005
    )
    
    
    (2,347
    )
    
    
    (3,779
    )Provision for (reduction in) ALPL
    
    
    40,709
    
    
    
    18,797
    
    
    
    (697
    )
    
    
    (8,284
    )
    
    
    (5,267
    )Reserve transfer from AULPC
    
    
    
    
    
    
    
    
    
    
    624
    
    
    
    
    
    
    
    ALPL balance, end of period
    
    $
    95,748
    
    
    $
    79,889
    
    
    $
    65,456
    
    
    $
    72,073
    
    
    $
    66,876AULPC balance, beginning of period
    
    $
    2,492
    
    
    $
    2,301
    
    
    $
    3,423
    
    
    $
    2,576
    
    
    $
    2,388Provision for (reduction in) AULPC
    
    
    (212
    )
    
    
    191
    
    
    
    (498
    )
    
    
    847
    
    
    
    188Reserve transfer to ALPL
    
    
    
    
    
    
    
    
    
    
    (624
    )
    
    
    
    
    
    
    AULPC balance, end of period
    
    $
    2,280
    
    
    $
    2,492
    
    
    $
    2,301
    
    
    $
    3,423
    
    
    $
    2,576Total Allowance for Credit Losses
    
    $
    98,028
    
    
    $
    82,381
    
    
    $
    67,757
    
    
    $
    75,496
    
    
    $
    69,452ALPL as a % of total participation
interests
    
    
    2.41
    %
    
    
    1.91
    %
    
    
    1.48
    %
    
    
    1.57
    %
    
    
    1.53
    %ACL as a % of total participation
interests
    
    
    2.47
    
    
    
    1.97
    
    
    
    1.54
    
    
    
    1.65
    
    
    
    1.59
 Six Months EndedJune 30,(in thousands)
    
    2009
    
    
    2008ALPL balance, beginning of period
    
    $
    65,456
    
    
    $
    62,275Allowance for loan participations acquired
    
    
    8,803
    
    
    
    15,996Net loan lossesCommercial real estate
    
    
    (33,643
    )
    
    
    (3,204
    )Consumer and residential real estate
    
    
    (4,374
    )
    
    
    (3,247
    )Total net loan losses
    
    
    (38,017
    )
    
    
    (6,451
    )Provision for (reduction in) ALPL
    
    
    59,506
    
    
    
    (4,944
    )Economic reserve transfer to AULPC
    
    
    
    
    
    
    ALPL balance, end of period
    
    $
    95,748
    
    
    $
    66,876AULPC balance, beginning of period
    
    $
    2,301
    
    
    $
    3,856Provision for (reduction in) AULPC
    
    
    (21
    )
    
    
    (1,280
    )AULPC balance, end of period
    
    $
    2,280
    
    
    $
    2,576Total Allowance for Credit Losses
    
    $
    98,028
    
    
    $
    69,452
   23




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##### Table of Contents



Non-Performing Assets (NPAs)
   Table 7  Quarterly Non-Performing Assets
 2009
    
    
    2008(in thousands)
    
    Second
    
    
    First
    
    
    Fourth
    
    
    Third
    
    
    SecondParticipation interests in non-accrual loansCommercial real estate
    
    $
    166,810
    
    
    $
    100,675
    
    
    $
    54,246
    
    
    $
    59,701
    
    
    $
    52,406Consumer and residential real estate
    
    
    6,588
    
    
    
    7,035
    
    
    
    6,041
    
    
    
    6,834
    
    
    
    6,063Total Non-Performing Assets
    
    $
    173,398
    
    
    $
    107,710
    
    
    $
    60,287
    
    
    $
    66,535
    
    
    $
    58,469Participations in Accruing LoansPast Due 90 Days or More
    
    $
    6,113
    
    
    $
    4,909
    
    
    $
    9,543
    
    
    $
    8,315
    
    
    $
    6,214NPAs as a % of total
participation interests
    
    
    4.36
    %
    
    
    2.57
    %
    
    
    1.37
    %
    
    
    1.45
    %
    
    
    1.34
    %ALPL as a % of NPAs
    
    
    55
    
    
    
    74
    
    
    
    109
    
    
    
    108
    
    
    
    114ACL as a % of NPAs
    
    
    57
    
    
    
    76
    
    
    
    112
    
    
    
    113
    
    
    
    119
   24




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##### Table of Contents



Table 8  Quarterly ALPL / Loan Participation Coverage Ratio Analysis
 2009
    
    
    2008(in thousands)
    

Second
    
    
    First
    
    
    Fourth
    
    
    Third
    
    
    SecondLoan participation interests ending balances:Accruing Loans
    
    $
    3,800,218
    
    
    $
    4,077,200
    
    
    $
    4,348,204
    
    
    $
    4,510,614
    
    
    $
    4,302,273Impaired
loans evaluated on a pool basis
    
    
    44,008
    
    
    
    28,068
    
    
    
    31,368
    
    
    
    15,258
    
    
    
    12,738Impaired
loans evaluated under Statement No. 114
    
    
    129,390
    
    
    
    79,642
    
    
    
    28,919
    
    
    
    51,277
    
    
    
    45,731Total non-accrual loans
    
    
    173,398
    
    
    
    107,710
    
    
    
    60,287
    
    
    
    66,535
    
    
    
    58,469Total loan participation interests
    
    $
    3,973,616
    
    
    $
    4,184,910
    
    
    $
    4,408,491
    
    
    $
    4,577,149
    
    
    $
    4,360,742Allowance for loan participation interests (ALPL):Accruing Loans
    
    $
    66,661
    
    
    $
    62,788
    
    
    $
    56,570
    
    
    $
    60,372
    
    
    $
    56,146ALPL
associated with impaired loans evaluated on a pool basis
    
    
    3,707
    
    
    
    2,103
    
    
    
    1,965
    
    
    
    1,279
    
    
    
    1,041ALPL
determined in accordance with Statement No. 114
    
    
    25,380
    
    
    
    14,998
    
    
    
    6,921
    
    
    
    10,422
    
    
    
    9,689Total non-accrual loans
    
    
    29,087
    
    
    
    17,101
    
    
    
    8,886
    
    
    
    11,701
    
    
    
    10,730Total ALPL
    
    $
    95,748
    
    
    $
    79,889
    
    
    $
    65,456
    
    
    $
    72,073
    
    
    $
    66,876ALPL as a % of loan participation interestsAccruing Loans
    
    
    1.75
    %
    
    
    1.54
    %
    
    
    1.30
    %
    
    
    1.34
    %
    
    
    1.31
    %Impaired
loans evaluated on a pool basis
    
    
    8.42
    
    
    
    7.49
    
    
    
    6.26
    
    
    
    8.38
    
    
    
    8.17Impaired
loans evaluated under Statement No. 114
    
    
    19.62
    
    
    
    18.83
    
    
    
    23.93
    
    
    
    20.32
    
    
    
    21.19Total non-accrual loans
    
    
    16.77
    
    
    
    15.88
    
    
    
    14.74
    
    
    
    17.59
    
    
    
    18.35Total loan participation interests
    
    
    2.41
    %
    
    
    1.91
    %
    
    
    1.48
    %
    
    
    1.57
    %
    
    
    1.53
    %
 Accounting by Creditors for Impairment of a Loan
  25




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##### Table of Contents



MARKET RISK
     OFF-BALANCE SHEET ARRANGEMENTS
   26




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##### Table of Contents



LIQUIDITY AND CAPITAL RESOURCES
        27




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##### Table of Contents



Table 9  Regulatory Capital Ratios
 2009
    
    
    2008Second
    
    
    First
    
    
    Fourth
    
    
    Third
    
    
    SecondTier 1 Leverage Ratio (5.00% well-capitalized)
    
    
    6.46
    %
    
    
    5.95
    %
    
    
    5.99
    %
    
    
    6.36
    %
    
    
    6.37
    %Tier 1 Risk-based Capital Ratio (6.00% well-capitalized)
    
    
    7.14
    
    
    
    6.79
    
    
    
    6.44
    
    
    
    7.01
    
    
    
    7.10Total Risk-based Capital Ratio (10.00% well-capitalized)
    
    
    11.35
    
    
    
    11.00
    
    
    
    10.71
    
    
    
    10.25
    
    
    
    10.32
    28




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures about Market Risk
  
 Item 4. Controls and Procedures
   
 Item 4T. Controls and Procedures
  
 PART II. OTHER INFORMATION
  
 Item 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, Reginald D. Dickson, Edward J. Kane, Roger E. Kephart, Donald R.
Kimble, Thomas P. Reed, James D. Robbins, Karen D. Roggenkamp, and Timothy R.
Barber.
 2.
    
    Ratification of appointment of Deloitte & Touche LLP to serve as the companys
independent registered public accounting firm for the year 2009.
   29




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##### Table of Contents



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




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##### Table of Contents



SIGNATURES
  
 By:
    
    /s/ Donald R. Kimble

Donald R. Kimble
    
    By:
    
    /s/ Thomas P. Reed

Thomas P. ReedPresident and Director
    
    
    
    Vice President and Director(Principal Executive Officer)
    
    
    
    (Principal Financial and Accounting Officer)
  31




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Description31.1.
    
    
    Rule 13a  14(a) Certification  President (chief executive officer).31.2.
    
    
    Rule 13a  14(a) Certification  Vice President (chief financial officer).32.1.
    
    
    Section 1350 Certification  President (chief executive officer).32.2.
    
    
    Section 1350 Certification  Vice President (chief financial officer).99.1.
    
    
    Unaudited Condensed Consolidated Financial Statements of Huntington Bancshares
Incorporated as of and for the three month and six month periods ended June 30, 2009 and 2008.
  32