##### 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 March 31, 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 March 31, 2006, December 31, 2005, and March 31, 2005
    
    
    3Condensed Consolidated Statements of Income -
For the three-months ended March 31, 2006 and 2005
    
    
    4Condensed Consolidated Statements of Changes in Shareholders Equity -
For the three-months ended March 31, 2006 and 2005
    
    
    5Condensed Consolidated Statements of Cash Flows -
For the three-months ended March 31, 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
    
    
    22Item 4.
    
    Controls and Procedures
    
    
    22Part II. Other InformationItem 5.
    

Other
Information
    
    
    22Item 6.
    
    Exhibits
    
    
    22Signatures
    
    
    23EX-31.1EX-31.2EX-32.1EX-32.2EX-99.A
  2




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##### Table of Contents



Part I. Financial Information
 
 Item 1. Financial Statements
Huntington Preferred Capital, Inc.
 
 Condensed Consolidated Balance Sheets
 March 31,
    
    December 31,
    
    March 31,(in thousands of dollars, except share data)
    
    2006
    
    2005
    
    2005(Unaudited)
    
    
    
    
    
    (Unaudited)AssetsCash and interest bearing deposits with The Huntington National Bank
    
    $
    185,367
    
    
    $
    810,102
    
    
    $
    328,258Due from The Huntington National Bank
    
    
    60,214
    
    
    
    46,321
    
    
    
    1,075Loan participation interests:Commercial
    
    
    45,750
    
    
    
    46,559
    
    
    
    98,291Commercial real estate
    
    
    3,322,402
    
    
    
    3,311,275
    
    
    
    3,681,594Consumer
    
    
    987,707
    
    
    
    997,094
    
    
    
    839,421Residential real estate
    
    
    143,073
    
    
    
    157,397
    
    
    
    208,176Total loan participation interests
    
    
    4,498,932
    
    
    
    4,512,325
    
    
    
    4,827,482Allowance for loan losses
    
    
    (53,586
    )
    
    
    (57,530
    )
    
    
    (62,461
    )Net loan participation interests
    
    
    4,445,346
    
    
    
    4,454,795
    
    
    
    4,765,021Premises and equipment
    
    
    20,641
    
    
    
    21,683
    
    
    
    25,352Accrued income and other assets
    
    
    20,711
    
    
    
    20,984
    
    
    
    18,928Total assets
    
    $
    4,732,279
    
    
    $
    5,353,885
    
    
    $
    5,138,634Liabilities and shareholders equityLiabilitiesAllowance for unfunded loan participation commitments
    
    $
    4,185
    
    
    $
    4,135
    
    
    $
    3,658Dividends and distributions payable
    
    
    4,624
    
    
    
    700,000
    
    
    
    2,650Other liabilities
    
    
    405
    
    
    
    290
    
    
    
    71Total liabilities
    
    
    9,214
    
    
    
    704,425
    
    
    
    6,379Shareholders 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
    
    
    73,605
    
    
    
    
    
    
    
    62,479Total shareholders equity
    
    
    4,723,065
    
    
    
    4,649,460
    
    
    
    5,132,255Total liabilities and shareholders equity
    
    $
    4,732,279
    
    
    $
    5,353,885
    
    
    $
    5,138,634
 See notes to unaudited condensed consolidated financial statements.
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Huntington Preferred Capital, Inc.
 
 Condensed Consolidated Statements of Income  (Unaudited)
 Three Months EndedMarch 31,(in thousands of dollars)
    
    2006
    
    2005Interest and fee incomeInterest on loan participation interests:Commercial
    
    $
    846
    
    
    $
    1,380Commercial real estate
    
    
    55,782
    
    
    
    48,753Consumer
    
    
    16,700
    
    
    
    13,925Residential real estate
    
    
    2,232
    
    
    
    2,896Total loan participation interest income
    
    
    75,560
    
    
    
    66,954Fees from loan participation interests
    
    
    293
    
    
    
    629Interest on deposits with The Huntington National Bank
    
    
    1,491
    
    
    
    1,473Total interest and fee income
    
    
    77,344
    
    
    
    69,056Reduction in allowances for credit losses
    
    
    (9,183
    )
    
    
    (3,441
    )Interest income after reduction in allowances for credit losses
    
    
    86,527
    
    
    
    72,497Non-interest income:Rental income
    
    
    1,591
    
    
    
    1,591Collateral fees
    
    
    718
    
    
    
    181Total non-interest income
    
    
    2,309
    
    
    
    1,772Non-interest expense:Servicing costs
    
    
    2,783
    
    
    
    2,864Depreciation and amortization
    
    
    1,017
    
    
    
    1,137(Gain) loss on disposal of fixed assets
    
    
    (31
    )
    
    
    145Other
    
    
    170
    
    
    
    241Total non-interest expense
    
    
    3,939
    
    
    
    4,387Income before provision for income taxes
    
    
    84,897
    
    
    
    69,882Provision for income taxes
    
    
    285
    
    
    
    98Net income
    
    $
    84,612
    
    
    $
    69,784Dividends declared on preferred securities
    
    
    (11,007
    )
    
    
    (7,305
    )Net income applicable to common shares
    
    $
    73,605
    
    
    $
    62,479
 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
    
    SecuritiesThree Months Ended March 31, 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
    
    
    $
    50,000Three Months Ended March 31, 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
    
    TotalThree Months Ended March 31, 2005 (Unaudited):Balance, beginning of period
    
    
    14,000
    
    
    $
    350,000
    
    
    
    
    
    
    $
    
    
    
    
    14,000
    
    
    $
    4,268,776
    
    
    $
    
    
    
    $
    5,069,776Comprehensive Income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    69,784
    
    
    
    69,784Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    69,784Dividends declared on Class A preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (80
    )
    
    
    (80
    )Dividends declared on Class B preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,570
    )
    
    
    (2,570
    )Dividends declared on Class C preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (984
    )
    
    
    (984
    )Dividends declared on Class D preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,671
    )
    
    
    (3,671
    )Balance, end of period (Unaudited)
    
    
    14,000
    
    
    $
    350,000
    
    
    
    
    
    
    $
    
    
    
    
    14,000
    
    
    $
    4,268,776
    
    
    $
    62,479
    
    
    $
    5,132,255Three Months Ended March 31, 2006 (Unaudited):Balance, beginning of period
    
    
    14,000
    
    
    $
    350,000
    
    
    
    
    
    
    $
    
    
    
    
    14,000
    
    
    $
    3,848,460
    
    
    $
    
    
    
    $
    4,649,460Comprehensive Income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    84,612
    
    
    
    84,612Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    84,612Dividends declared on Class A preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (80
    )
    
    
    (80
    )Dividends declared on Class B preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,545
    )
    
    
    (4,545
    )Dividends declared on Class C preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (984
    )
    
    
    (984
    )Dividends declared on Class D preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,398
    )
    
    
    (5,398
    )Balance, end of period(Unaudited)
    
    
    14,000
    
    
    $
    350,000
    
    
    
    
    
    
    $
    
    
    
    
    14,000
    
    
    $
    3,848,460
    
    
    $
    73,605
    
    
    $
    4,723,065
 See notes to unaudited condensed consolidated financial statements.
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Huntington Preferred Capital, Inc.
 
 Condensed Consolidated Statements of Cash Flows  (Unaudited)
 Three Months EndedMarch 31,(in thousands of dollars)
    
    2006
    
    2005Operating activitiesNet Income
    
    $
    84,612
    
    
    $
    69,784Adjustments to reconcile net income to net
cash provided by operating activities:Reduction of allowances for credit losses
    
    
    (9,183
    )
    
    
    (3,441
    )Depreciation and amortization
    
    
    1,017
    
    
    
    1,137Deferred income tax expense
    
    
    
    
    
    
    367(Gain) loss on disposal of fixed assets
    
    
    (31
    )
    
    
    145Increase in due from The Huntington National Bank
    
    
    (1,014
    )
    
    
    (900
    )Increase in other liabilities
    
    
    115
    
    
    
    21Other, net
    
    
    693
    
    
    
    (540
    )Net cash provided by operating activities
    
    
    76,209
    
    
    
    66,573Investing activitiesParticipation interests acquired
    
    
    (781,309
    )
    
    
    (764,978
    )Sales and repayments of loans underlying
participation interests
    
    
    786,692
    
    
    
    831,065Proceeds from the sale of premises and equipment
    
    
    56
    
    
    
    Net cash provided by investing activities
    
    
    5,439
    
    
    
    66,087Financing activitiesDividends paid on preferred securities
    
    
    (6,383
    )
    
    
    (4,655
    )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
    
    
    (706,383
    )
    
    
    (604,655
    )Change in cash and cash equivalents
    
    
    (624,735
    )
    
    
    (471,995
    )Cash and cash equivalents at beginning of year
    
    
    810,102
    
    
    
    800,253Cash and cash equivalents at end of period
    
    $
    185,367
    
    
    $
    328,258Supplemental information:Income taxes paid
    
    $
    180
    
    
    $
    Dividends and return of capital declared, not paid
    
    
    4,624
    
    
    
    2,650Change in loan participation activity due from The Huntington National Bank
    
    
    12,879
    
    
    
    
 See notes to unaudited condensed consolidated financial statements.
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Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)
 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)
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Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)
 Note 3  Participations in Non-Performing Assets and Past Due Loans
  March 31,
    
    December 31,
    
    March 31,(in thousands of dollars)
    
    2006
    
    2005
    
    2005Commercial
    
    $
    108
    
    
    $
    147
    
    
    $
    373Commercial real estate
    
    
    20,133
    
    
    
    20,746
    
    
    
    10,641Consumer
    
    
    3,282
    
    
    
    2,799
    
    
    
    2,178Residential real estate
    
    
    2,144
    
    
    
    2,923
    
    
    
    4,068Total Participations in Non-Performing Assets
    
    $
    25,667
    
    
    $
    26,615
    
    
    $
    17,260Participations in Accruing Loans Past Due 90
Days or More
    
    $
    3,402
    
    
    $
    3,188
    
    
    $
    14,178
  Note 4  Allowances for Credit Losses (ACL)
  Three Months EndedMarch 31,(in thousands of dollars)
    
    2006
    
    2005ALL balance, beginning of period
    
    $
    57,530
    
    
    $
    61,146Allowance for loan participations acquired
    
    
    6,462
    
    
    
    5,641Net loan losses
    
    
    (1,173
    )
    
    
    (992
    )Reduction in ALL
    
    
    (9,233
    )
    
    
    (3,334
    )ALL balance, end of period
    
    $
    53,586
    
    
    $
    62,461AULPC balance, beginning of period
    
    $
    4,135
    
    
    $
    3,765Provision for (reduction in) AULPC
    
    
    50
    
    
    
    (107
    )AULPC balance, end of period
    
    $
    4,185
    
    
    $
    3,658Total ACL
    
    $
    57,771
    
    
    $
    66,119
 Note 5  Preferred Dividends
  8




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Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)
  i.e.
 i.e.,
  Three Months EndedMarch 31,(in thousands of dollars)
    
    2006
    
    2005Class A preferred securities
    
    $
    80
    
    
    $
    80Class B preferred securities
    
    
    4,545
    
    
    
    2,570Class C preferred securities
    
    
    984
    
    
    
    984Class D preferred securities
    
    
    5,398
    
    
    
    3,671Total dividends declared
    
    $
    11,007
    
    
    $
    7,305
 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
    
    thruMarch 31, 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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Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)
     /
  Note 7  Commitments and Contingencies
    11




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




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




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SUMMARY DISCUSSION OF RESULTS
     Table 1  Loan Participation Interests
 % of
    
    
    
    
    
    % of
    
    
    
    
    
    % ofMarch 31,
    
    Total
    
    December 31,
    
    Total
    
    March 31,
    
    Total(in thousands of dollars)
    
    2006
    
    Assets
    
    2005
    
    Assets
    
    2005
    
    AssetsGross loan participation interests:Commercial
    
    $
    45,750
    
    
    
    1.0
    
    
    $
    46,559
    
    
    
    0.9
    
    
    $
    98,291
    
    
    
    1.9Commercial real estate
    
    
    3,322,402
    
    
    
    70.2
    
    
    
    3,311,275
    
    
    
    61.8
    
    
    
    3,681,594
    
    
    
    71.6Consumer
    
    
    987,707
    
    
    
    20.9
    
    
    
    997,094
    
    
    
    18.6
    
    
    
    839,421
    
    
    
    16.3Residential real estate
    
    
    143,073
    
    
    
    3.0
    
    
    
    157,397
    
    
    
    2.9
    
    
    
    208,176
    
    
    
    4.1Total
    
    $
    4,498,932
    
    
    
    95.1
    
    
    $
    4,512,325
    
    
    
    84.2
    
    
    $
    4,827,482
    
    
    
    93.9
     14




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QUALIFICATION TESTS
    RESULTS OF OPERATIONS
  15




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Table 2  Quarterly Statements of Income
 2006
    
    2005
    
    
    1Q06 vs 1Q05(in thousands of dollars)
    
    First
    
    Fourth
    
    Third
    
    Second
    
    First
    
    
    $ Chg
    
    % ChgInterest and fee incomeInterest on loan participation interests:Commercial
    
    $
    846
    
    
    $
    982
    
    
    $
    1,006
    
    
    $
    1,264
    
    
    $
    1,380
    
    
    
    $
    (534
    )
    
    
    (38.7
    )%Commercial real estate
    
    
    55,782
    
    
    
    55,053
    
    
    
    54,013
    
    
    
    51,982
    
    
    
    48,753
    
    
    
    
    7,029
    
    
    
    14.4Consumer
    
    
    16,700
    
    
    
    16,268
    
    
    
    15,465
    
    
    
    14,687
    
    
    
    13,925
    
    
    
    
    2,775
    
    
    
    19.9Residential real estate
    
    
    2,232
    
    
    
    2,341
    
    
    
    2,420
    
    
    
    2,647
    
    
    
    2,896
    
    
    
    
    (664
    )
    
    
    (22.9
    )Total loan participation interest income
    
    
    75,560
    
    
    
    74,644
    
    
    
    72,904
    
    
    
    70,580
    
    
    
    66,954
    
    
    
    
    8,606
    
    
    
    12.9Fees from loan participation interests
    
    
    293
    
    
    
    320
    
    
    
    539
    
    
    
    491
    
    
    
    629
    
    
    
    
    (336
    )
    
    
    (53.4
    )Interest on deposits with The Huntington National Bank
    
    
    1,491
    
    
    
    7,200
    
    
    
    4,439
    
    
    
    2,570
    
    
    
    1,473
    
    
    
    
    18
    
    
    
    1.2Total interest and fee income
    
    
    77,344
    
    
    
    82,164
    
    
    
    77,882
    
    
    
    73,641
    
    
    
    69,056
    
    
    
    
    8,288
    
    
    
    12.0Reduction in allowances for credit losses
    
    
    (9,183
    )
    
    
    (4,409
    )
    
    
    (8,106
    )
    
    
    (3,840
    )
    
    
    (3,441
    )
    
    
    
    (5,742
    )
    
    
    N.M.Interest income after reduction in allowances
for credit losses
    
    
    86,527
    
    
    
    86,573
    
    
    
    85,988
    
    
    
    77,481
    
    
    
    72,497
    
    
    
    
    14,030
    
    
    
    19.4Non-interest income:Rental income
    
    
    1,591
    
    
    
    1,590
    
    
    
    1,590
    
    
    
    1,591
    
    
    
    1,591
    
    
    
    
    
    
    
    
    Collateral fees
    
    
    718
    
    
    
    976
    
    
    
    907
    
    
    
    965
    
    
    
    181
    
    
    
    
    537
    
    
    
    N.M.Total non-interest income
    
    
    2,309
    
    
    
    2,566
    
    
    
    2,497
    
    
    
    2,556
    
    
    
    1,772
    
    
    
    
    537
    
    
    
    30.3Non-interest expense:Servicing costs
    
    
    2,783
    
    
    
    2,730
    
    
    
    2,717
    
    
    
    2,899
    
    
    
    2,864
    
    
    
    
    (81
    )
    
    
    (2.8
    )Depreciation and amortization
    
    
    1,017
    
    
    
    1,045
    
    
    
    1,086
    
    
    
    1,102
    
    
    
    1,137
    
    
    
    
    (120
    )
    
    
    (10.6
    )(Gain) loss on disposal of fixed assets
    
    
    (31
    )
    
    
    4
    
    
    
    45
    
    
    
    388
    
    
    
    145
    
    
    
    
    (176
    )
    
    
    N.M.Other
    
    
    170
    
    
    
    288
    
    
    
    205
    
    
    
    169
    
    
    
    241
    
    
    
    
    (71
    )
    
    
    (29.5
    )Total non-interest expense
    
    
    3,939
    
    
    
    4,067
    
    
    
    4,053
    
    
    
    4,558
    
    
    
    4,387
    
    
    
    
    (448
    )
    
    
    (10.2
    )Income before provision for income taxes
    
    
    84,897
    
    
    
    85,072
    
    
    
    84,432
    
    
    
    75,479
    
    
    
    69,882
    
    
    
    
    15,015
    
    
    
    21.5Provision for income taxes
    
    
    285
    
    
    
    251
    
    
    
    173
    
    
    
    25
    
    
    
    98
    
    
    
    
    187
    
    
    
    N.M.Net income
    
    $
    84,612
    
    
    $
    84,821
    
    
    $
    84,259
    
    
    $
    75,454
    
    
    $
    69,784
    
    
    
    $
    14,828
    
    
    
    21.2
    %Dividends declared on preferred securities
    
    
    (11,007
    )
    
    
    (10,050
    )
    
    
    (9,023
    )
    
    
    (8,256
    )
    
    
    (7,305
    )
    
    
    
    (3,702
    )
    
    
    (50.7
    )Net income applicable to common shares(1)
    
    $
    73,605
    
    
    $
    74,771
    
    
    $
    75,236
    
    
    $
    67,198
    
    
    $
    62,479
    
    
    
    $
    11,126
    
    
    
    17.8
    %
 
 (1)
    
    All of HPCIs common stock is owned by Huntington, HPCII, HCF, and Holdings and
therefore, net income per share is not presented.N.M.  Not Meaningful. Interest and Fee Income
  16




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Table 3  Quarterly Average Balance Sheets and Net Interest Margin Analysis
 Three Months Ended March 31,2006
    
    2005Average
    
    
    
    
    
    
    
    
    
    Average(in millions of dollars)
    
    Balance
    
    Income(1)
    
    Yield
    
    Balance
    
    Income(1)
    
    YieldLoan participation interests:Commercial
    
    $
    47.4
    
    
    $
    0.8
    
    
    
    7.26
    %
    
    $
    103.7
    
    
    $
    1.4
    
    
    
    5.45
    %Commercial real estate
    
    
    3,315.5
    
    
    
    56.0
    
    
    
    6.84
    
    
    
    3,705.4
    
    
    
    49.2
    
    
    
    5.39Consumer
    
    
    1,005.7
    
    
    
    16.8
    
    
    
    6.79
    
    
    
    822.2
    
    
    
    14.1
    
    
    
    6.94Residential real estate
    
    
    150.9
    
    
    
    2.2
    
    
    
    5.92
    
    
    
    216.9
    
    
    
    2.9
    
    
    
    5.34Total loan participations
    
    
    4,519.5
    
    
    
    75.8
    
    
    
    6.80
    
    
    
    4,848.2
    
    
    
    67.6
    
    
    
    5.65Interest bearing deposits in banks
    
    
    131.8
    
    
    
    1.5
    
    
    
    4.52
    
    
    
    237.1
    
    
    
    1.5
    
    
    
    2.52Total
    
    $
    4,651.3
    
    
    $
    77.3
    
    
    
    6.74
    %
    
    $
    5,085.3
    
    
    $
    69.1
    
    
    
    5.50
    %
 
 (1)
    
    Income includes interest and fees.  Allowances for Credit Losses (ACL)
  17




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Table 4  Allowances for Credit Loss Activity
 2006
    
    2005(in thousands of dollars)
    
    First
    
    Fourth
    
    Third
    
    Second
    
    FirstALL balance, beginning of period
    
    $
    57,530
    
    
    $
    56,866
    
    
    $
    60,987
    
    
    $
    62,461
    
    
    $
    61,146Allowance of loan participations acquired
    
    
    6,462
    
    
    
    6,675
    
    
    
    5,875
    
    
    
    6,880
    
    
    
    5,641Net loan lossesCommercial
    
    
    256
    
    
    
    232
    
    
    
    159
    
    
    
    312
    
    
    
    544Commercial real estate
    
    
    (776
    )
    
    
    (400
    )
    
    
    (2,083
    )
    
    
    (2,705
    )
    
    
    13Consumer
    
    
    (621
    )
    
    
    (712
    )
    
    
    (1,004
    )
    
    
    (1,123
    )
    
    
    (1,523
    )Residential real estate
    
    
    (32
    )
    
    
    (152
    )
    
    
    (47
    )
    
    
    (6
    )
    
    
    (26
    )Total net loan losses
    
    
    (1,173
    )
    
    
    (1,032
    )
    
    
    (2,975
    )
    
    
    (3,522
    )
    
    
    (992
    )Reduction in ALL
    
    
    (9,233
    )
    
    
    (4,979
    )
    
    
    (7,021
    )
    
    
    (3,894
    )
    
    
    (3,334
    )Economic reserve transfer to AULPC
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (938
    )
    
    
    ALL balance, end of period
    
    $
    53,586
    
    
    $
    57,530
    
    
    $
    56,866
    
    
    $
    60,987
    
    
    $
    62,461AULPC balance, beginning of period
    
    $
    4,135
    
    
    $
    3,565
    
    
    $
    4,650
    
    
    $
    3,658
    
    
    $
    3,765Provision for (reduction in) AULPC
    
    
    50
    
    
    
    570
    
    
    
    (1,085
    )
    
    
    54
    
    
    
    (107
    )Economic reserve transfer from ALL
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    938
    
    
    
    AULPC balance, end of period
    
    $
    4,185
    
    
    $
    4,135
    
    
    $
    3,565
    
    
    $
    4,650
    
    
    $
    3,658Total Allowance for Credit Losses
    
    $
    57,771
    
    
    $
    61,665
    
    
    $
    60,431
    
    
    $
    65,637
    
    
    $
    66,119ALL as a % of total participation interests
    
    
    1.19
    %
    
    
    1.27
    %
    
    
    1.23
    %
    
    
    1.28
    %
    
    
    1.29
    %ACL as a % of total participation interests
    
    
    1.28
    
    
    
    1.37
    
    
    
    1.31
    
    
    
    1.38
    
    
    
    1.37
     Non-Performing Assets (NPAs)
  18




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Table 5  Quarterly Non-Performing Assets
 2006
    
    2005(in thousands of dollars)
    
    First
    
    Fourth
    
    Third
    
    Second
    
    FirstParticipation interests in non-accrual loansCommercial
    
    $
    108
    
    
    $
    147
    
    
    $
    746
    
    
    $
    1,069
    
    
    $
    373Commercial real estate
    
    
    20,133
    
    
    
    20,746
    
    
    
    17,735
    
    
    
    17,965
    
    
    
    10,641Consumer
    
    
    3,282
    
    
    
    2,799
    
    
    
    2,028
    
    
    
    2,252
    
    
    
    2,178Residential real estate
    
    
    2,144
    
    
    
    2,923
    
    
    
    3,695
    
    
    
    4,652
    
    
    
    4,068Total Non-Performing Assets
    
    $
    25,667
    
    
    $
    26,615
    
    
    $
    24,204
    
    
    $
    25,938
    
    
    $
    17,260Participations in Accruing Loans
Past Due 90 Days or More
    
    $
    3,402
    
    
    $
    3,188
    
    
    $
    3,382
    
    
    $
    12,036
    
    
    $
    14,178NPAs as a % of total
participation interests
    
    
    0.57
    %
    
    
    0.59
    %
    
    
    0.52
    %
    
    
    0.54
    %
    
    
    0.36
    %ALL as a % of NPAs
    
    
    209
    
    
    
    216
    
    
    
    235
    
    
    
    235
    
    
    
    362ACL as a % of NPAs
    
    
    225
    
    
    
    232
    
    
    
    250
    
    
    
    253
    
    
    
    383
     Non-Interest Income and Non-Interest Expense
  19




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July 1, 2005
    
    January 1, 2005thru
    
    thruMarch 31, 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
     20




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##### Table of Contents



OFF-BALANCE SHEET ARRANGEMENTS
  LIQUIDITY AND CAPITAL RESOURCES
      21




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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 5.
Other information
  
 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.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.(a).
    
    Condensed Consolidated Financial Statements of Huntington Bancshares
Incorporated as of and for the three-month period ended March 31, 2006 and 2005.
 22




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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)
 23