##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
QUARTERLY PERIOD ENDED September 30, 2005
 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 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 September 30, 2005, December 31, 2004, and September 30, 2004
    
    
    3Condensed Consolidated Statements of Income -
For the three-months and nine-months ended September 30, 2005 and 2004
    
    
    4Condensed Consolidated Statements of Changes in Shareholders Equity -
For the nine-months ended September 30, 2005 and 2004
    
    
    5Condensed Consolidated Statements of Cash Flows -
For the nine-months ended September 30, 2005 and 2004
    
    
    6Notes to Unaudited Condensed Consolidated Financial Statements
    
    
    7Item 2.
    
    Managements Discussion and Analysis of
Financial Condition and Results of Operations
    
    
    15Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    25Item 4.
    
    Controls and Procedures
    
    
    25Part II. Other InformationItem 5.
    
    Other Information
    
    
    26Item 6.
    
    Exhibits
    
    
    27Signatures
    
    
    28EX-31.1EX-31.2EX-32.1EX-32.2
  2




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##### Table of Contents



Part I. Financial Information
 
 Item 1. Financial Statements
 Huntington Preferred Capital, Inc.
 
 Condensed Consolidated Balance Sheets
 September 30,
    
    December 31,
    
    September 30,(in thousands of dollars, except share data)
    
    2005
    
    2004
    
    2004(Unaudited)
    
    
    
    
    
    (Unaudited)AssetsCash and interest bearing deposits with The Huntington National Bank
    
    $
    590,733
    
    
    $
    800,253
    
    
    $
    788,149Due from The Huntington National Bank
    
    
    93,597
    
    
    
    175
    
    
    
    1,323Loan participation interests:Commercial
    
    
    57,350
    
    
    
    106,179
    
    
    
    151,787Commercial real estate
    
    
    3,455,398
    
    
    
    3,738,930
    
    
    
    3,746,356Consumer
    
    
    935,139
    
    
    
    819,250
    
    
    
    698,652Residential real estate
    
    
    170,422
    
    
    
    224,914
    
    
    
    239,547Total loan participation interests
    
    
    4,618,309
    
    
    
    4,889,273
    
    
    
    4,836,342Allowance for loan losses
    
    
    (56,866
    )
    
    
    (61,146
    )
    
    
    (67,668
    )Net loan participation interests
    
    
    4,561,443
    
    
    
    4,828,127
    
    
    
    4,768,674Premises and equipment
    
    
    22,732
    
    
    
    26,635
    
    
    
    28,025Accrued income and other assets
    
    
    19,222
    
    
    
    18,401
    
    
    
    17,146Total assets
    
    $
    5,287,727
    
    
    $
    5,673,591
    
    
    $
    5,603,317Liabilities and shareholders equityLiabilitiesAllowance for unfunded loan participation commitments
    
    $
    3,565
    
    
    $
    3,765
    
    
    $
    3,151Dividends and distributions payable
    
    
    9,299
    
    
    
    600,000
    
    
    
    3,940Other liabilities
    
    
    174
    
    
    
    50
    
    
    
    38Total liabilities
    
    
    13,038
    
    
    
    603,815
    
    
    
    7,129Shareholders 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
    
    
    4,268,776
    
    
    
    4,268,776
    
    
    
    4,604,978Retained earnings
    
    
    204,913
    
    
    
    
    
    
    
    190,210Total shareholders equity
    
    
    5,274,689
    
    
    
    5,069,776
    
    
    
    5,596,188Total liabilities and shareholders equity
    
    $
    5,287,727
    
    
    $
    5,673,591
    
    
    $
    5,603,317
 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
    
    Nine Months EndedSeptember 30,
    
    September 30,(in thousands of dollars)
    
    2005
    
    2004
    
    2005
    
    2004Interest and fee incomeInterest on loan participation interests:Commercial
    
    $
    1,006
    
    
    $
    2,136
    
    
    $
    3,650
    
    
    $
    6,131Commercial real estate
    
    
    54,013
    
    
    
    45,305
    
    
    
    154,748
    
    
    
    135,116Consumer
    
    
    15,465
    
    
    
    12,353
    
    
    
    44,077
    
    
    
    37,335Residential real estate
    
    
    2,420
    
    
    
    3,247
    
    
    
    7,963
    
    
    
    10,405Total loan participation interest income
    
    
    72,904
    
    
    
    63,041
    
    
    
    210,438
    
    
    
    188,987Fees from loan participation interests
    
    
    539
    
    
    
    469
    
    
    
    1,659
    
    
    
    1,732Interest on deposits with The Huntington National Bank
    
    
    4,439
    
    
    
    1,781
    
    
    
    8,482
    
    
    
    2,268Total interest and fee income
    
    
    77,882
    
    
    
    65,291
    
    
    
    220,579
    
    
    
    192,987Reduction in allowances for credit losses
    
    
    (8,106
    )
    
    
    (6,874
    )
    
    
    (15,387
    )
    
    
    (18,438
    )Interest income after reduction in allowance for credit
losses
    
    
    85,988
    
    
    
    72,165
    
    
    
    235,966
    
    
    
    211,425Non-interest income:Rental income
    
    
    1,590
    
    
    
    1,590
    
    
    
    4,772
    
    
    
    4,912Collateral fees
    
    
    907
    
    
    
    180
    
    
    
    2,053
    
    
    
    569Total non-interest income
    
    
    2,497
    
    
    
    1,770
    
    
    
    6,825
    
    
    
    5,481Non-interest expense:Servicing costs
    
    
    2,717
    
    
    
    2,854
    
    
    
    8,480
    
    
    
    7,188Depreciation and amortization
    
    
    1,086
    
    
    
    1,339
    
    
    
    3,325
    
    
    
    4,038Loss on disposal of fixed assets
    
    
    45
    
    
    
    
    
    
    
    578
    
    
    
    63Other
    
    
    205
    
    
    
    196
    
    
    
    615
    
    
    
    676Total non-interest expense
    
    
    4,053
    
    
    
    4,389
    
    
    
    12,998
    
    
    
    11,965Income before provision for income taxes
    
    
    84,432
    
    
    
    69,546
    
    
    
    229,793
    
    
    
    204,941Provision for income taxes
    
    
    173
    
    
    
    88
    
    
    
    296
    
    
    
    195Net income
    
    $
    84,259
    
    
    $
    69,458
    
    
    $
    229,497
    
    
    $
    204,746Dividends declared on preferred securities
    
    
    (9,023
    )
    
    
    (5,406
    )
    
    
    (24,584
    )
    
    
    (14,536
    )Net income applicable to common shares
    
    $
    75,236
    
    
    $
    64,052
    
    
    $
    204,913
    
    
    $
    190,210
 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
    
    SecuritiesNine Months Ended September 30,
2004 (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
    
    
    $
    50,000Nine Months Ended September 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
    
    
    $
    50,000
 Preferred, Class D
    
    Preferred
    
    Common
    
    Retained(in thousands)
    
    Shares
    
    Securities
    
    Shares
    
    Securities
    
    Shares
    
    Stock
    
    Earnings
    
    TotalNine Months Ended September 30, 2004 (Unaudited):Balance, beginning of period
    
    
    14,000
    
    
    $
    350,000
    
    
    
    
    
    
    $
    
    
    
    
    14,000
    
    
    $
    4,604,978
    
    
    $
    
    
    
    $
    5,405,978Comprehensive Income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    204,746
    
    
    
    204,746Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    204,746Dividends declared on Class A preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (80
    )
    
    
    (80
    )Dividends declared on Class B preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,860
    )
    
    
    (3,860
    )Dividends declared on Class C preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,953
    )
    
    
    (2,953
    )Dividends declared on Class D preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,643
    )
    
    
    (7,643
    )Balance, end of period (Unaudited)
    
    
    14,000
    
    
    $
    350,000
    
    
    
    
    
    
    $
    
    
    
    
    14,000
    
    
    $
    4,604,978
    
    
    $
    190,210
    
    
    $
    5,596,188Nine Months Ended September 30, 2005 (Unaudited):Balance, beginning of period
    
    
    14,000
    
    
    $
    350,000
    
    
    
    
    
    
    $
    
    
    
    
    14,000
    
    
    $
    4,268,776
    
    
    $
    
    
    
    $
    5,069,776Comprehensive Income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    229,497
    
    
    
    229,497Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    229,497Dividends declared on Class A preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (80
    )
    
    
    (80
    )Dividends declared on Class B preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,219
    )
    
    
    (9,219
    )Dividends declared on Class C preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,953
    )
    
    
    (2,953
    )Dividends declared on Class D preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,332
    )
    
    
    (12,332
    )Balance, end of period(Unaudited)
    
    
    14,000
    
    
    $
    350,000
    
    
    
    
    
    
    $
    
    
    
    
    14,000
    
    
    $
    4,268,776
    
    
    $
    204,913
    
    
    $
    5,274,689
 See notes to unaudited condensed consolidated financial statements.
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Huntington Preferred Capital, Inc.
 
 Condensed Consolidated Statements of Cash Flows  (Unaudited)
 Nine Months EndedSeptember 30,(in thousands of dollars)
    
    2005
    
    2004Operating activitiesNet Income
    
    $
    229,497
    
    
    $
    204,746Adjustments to reconcile net income to net
cash provided by operating activities:Reduction of allowances for credit losses
    
    
    (15,387
    )
    
    
    (18,438
    )Depreciation and amortization
    
    
    3,325
    
    
    
    4,038Deferred income tax expense (benefit)
    
    
    53
    
    
    
    (812
    )Loss on disposal of fixed assets
    
    
    578
    
    
    
    63(Increase) decrease in due from The Huntington National Bank
    
    
    (26,716
    )
    
    
    12,329Increase in other liabilities
    
    
    124
    
    
    
    38Other, net operating activities
    
    
    315
    
    
    
    2,777Net cash provided by operating activities
    
    
    191,789
    
    
    
    204,741Investing activitiesParticipation interests acquired
    
    
    (2,137,775
    )
    
    
    (3,184,804
    )Sales and repayments of loans underlying
participation interests
    
    
    2,351,751
    
    
    
    3,654,723Net cash provided by investing activities
    
    
    213,976
    
    
    
    469,919Financing activitiesDividends paid on preferred securities
    
    
    (15,285
    )
    
    
    (10,596
    )Dividends paid on common stock
    
    
    (263,798
    )
    
    
    Return of capital to common shareholders
    
    
    (336,202
    )
    
    
    Net cash used for financing activities
    
    
    (615,285
    )
    
    
    (10,596)Change in cash and cash equivalents
    
    
    (209,520
    )
    
    
    664,064Cash and cash equivalents at beginning of year
    
    
    800,253
    
    
    
    124,085Cash and cash equivalents at end of period
    
    $
    590,733
    
    
    $
    788,149Supplemental information:Income taxes paid
    
    $
    
    
    
    $
    1,496Dividends declared, not paid
    
    
    9,299
    
    
    
    3,940Loan participation activity settled to due from Huntington
National Bank
    
    
    91,046
    
    
    
    
 See notes to unaudited condensed consolidated financial statements.
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##### Table of Contents



Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)
 Note 1  Organization
  
 7




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Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)
 Note 2  Basis of Presentation and New Accounting Pronouncements
     AICPA Statement of Position No. 03-3, Accounting for Certain Loans or Debt Securities Acquired in a
Transfer (SOP 03-3):
 FASB Interpretation No. 47, Accounting for Conditional Asset Retirement Obligations (FIN 47)  Accounting for Asset Retirement Obligations
 8




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Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)
 Note 3  Participations in Non-Performing Assets and Past Due Loans
  September 30,
    
    December 31,
    
    September 30,(in thousands of dollars)
    
    2005
    
    2004
    
    2004Commercial
    
    $
    746
    
    
    $
    425
    
    
    $
    973Commercial real estate
    
    
    17,735
    
    
    
    6,990
    
    
    
    10,460Consumer
    
    
    2,028
    
    
    
    2,692
    
    
    
    2,692Residential real estate
    
    
    3,695
    
    
    
    4,205
    
    
    
    4,749Total participations in non-performing assets
    
    $
    24,204
    
    
    $
    14,312
    
    
    $
    18,874Participations in accruing loans past due 90
days or more
    
    $
    3,382
    
    
    $
    11,686
    
    
    $
    8,466
  Note 4  Allowances for Credit Losses (ACL)
  Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,(in thousands of dollars)
    
    2005
    
    2004
    
    2005
    
    2004ALL balance, beginning of period
    
    $
    60,987
    
    
    $
    72,524
    
    
    $
    61,146
    
    
    $
    84,532Allowance for loan participations
acquired
    
    
    5,875
    
    
    
    2,738
    
    
    
    18,396
    
    
    
    11,916Net loan losses
    
    
    (2,975
    )
    
    
    (1,461
    )
    
    
    (7,489
    )
    
    
    (7,191
    )Reduction in ALL
    
    
    (7,021
    )
    
    
    (6,133
    )
    
    
    (14,249
    )
    
    
    (21,589
    )Economic reserve transfer to AULPC
    
    
    
    
    
    
    
    
    
    
    (938
    )
    
    
    ALL balance, end of period
    
    $
    56,866
    
    
    $
    67,668
    
    
    $
    56,866
    
    
    $
    67,668AULPC balance, beginning of period
    
    $
    4,650
    
    
    $
    3,892
    
    
    $
    3,765
    
    
    $
    Provision for (reduction in) AULPC
    
    
    (1,085
    )
    
    
    (741
    )
    
    
    (1,138
    )
    
    
    3,151Economic reserve transfer from ALL
    
    
    
    
    
    
    
    
    
    
    938
    
    
    
    AULPC balance, end of period
    
    $
    3,565
    
    
    $
    3,151
    
    
    $
    3,565
    
    
    $
    3,151Total ACL
    
    $
    60,431
    
    
    $
    70,819
    
    
    $
    60,431
    
    
    $
    70,819
  9




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Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)
 Note 5  Preferred Dividends
   i.e.
 i.e.,
  Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,(in thousands of dollars)
    
    2005
    
    2004
    
    2005
    
    2004Class A preferred securities
    
    $
    
    
    
    $
    
    
    
    $
    80
    
    
    $
    80Class B preferred securities
    
    
    3,529
    
    
    
    1,600
    
    
    
    9,219
    
    
    
    3,860Class C preferred securities
    
    
    984
    
    
    
    984
    
    
    
    2,953
    
    
    
    2,953Class D preferred securities
    
    
    4,510
    
    
    
    2,822
    
    
    
    12,332
    
    
    
    7,643Total dividends declared
    
    $
    9,023
    
    
    $
    5,406
    
    
    $
    24,584
    
    
    $
    14,536
 Note 6  Related Party Transactions
  10




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Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)
    July 1, 2005
    
    July 1, 2004
    
    January 1, 2004thru
    
    thru
    
    thruSeptember 30, 2005
    
    June 30, 2005
    
    June 30, 2004Commercial & Commercial Real Estate
    
    
    0.125
    %
    
    
    0.125
    %
    
    
    0.125
    %Consumer
    
    
    0.650
    %
    
    
    0.750
    %
    
    
    0.320
    %Residential Real Estate
    
    
    0.267
    %
    
    
    0.267
    %
    
    
    0.299
    %
    11




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Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)
 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
      /
 12




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##### Table of Contents



Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)
   Note 7  Commitments and Contingencies
     Note 8  Formal Regulatory Supervisory Agreements
  13




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##### Table of Contents



Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)
   Note 9  Segment Reporting
  14




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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
    Formal Regulatory Supervisory Agreements
   15




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##### Table of Contents



Critical Accounting Policies
  Use of Significant Estimates
  SUMMARY DISCUSSION OF RESULTS
    Table 1  Loan Participation Interests
 % of
    
    
    
    
    
    % of
    
    
    
    
    
    % ofSeptember 30,
    
    Total
    
    December 31,
    
    Total
    
    September 30,
    
    Total(in thousands of dollars)
    
    2005
    
    Assets
    
    2004
    
    Assets
    
    2004
    
    AssetsGross loan participation
interests:Commercial
    
    $
    57,350
    
    
    
    1.1
    
    
    $
    106,179
    
    
    
    1.9
    
    
    $
    151,787
    
    
    
    2.7Commercial real estate
    
    
    3,455,398
    
    
    
    65.3
    
    
    
    3,738,930
    
    
    
    65.9
    
    
    
    3,746,356
    
    
    
    66.8Consumer
    
    
    935,139
    
    
    
    17.7
    
    
    
    819,250
    
    
    
    14.4
    
    
    
    698,652
    
    
    
    12.5Residential real estate
    
    
    170,422
    
    
    
    3.2
    
    
    
    224,914
    
    
    
    4.0
    
    
    
    239,547
    
    
    
    4.3Total
    
    $
    4,618,309
    
    
    
    87.3
    
    
    $
    4,889,273
    
    
    
    86.2
    
    
    $
    4,836,342
    
    
    
    86.3
  16




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QUALIFICATION TESTS
    17




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##### Table of Contents



RESULTS OF OPERATIONS
   Table 2  Quarterly Statements of Income
 2005
    
    2004
    
    
    3Q05 vs 3Q04(in thousands of dollars)
    
    Third
    
    Second
    
    First
    
    Fourth
    
    Third
    
    
    $ Chg
    
    % ChgInterest and fee incomeInterest on loan participation interests:Commercial
    
    $
    1,006
    
    
    $
    1,264
    
    
    $
    1,380
    
    
    $
    1,679
    
    
    $
    2,136
    
    
    
    $
    (1,130
    )
    
    
    (52.9
    )%Commercial real estate
    
    
    54,013
    
    
    
    51,982
    
    
    
    48,753
    
    
    
    46,931
    
    
    
    45,305
    
    
    
    
    8,708
    
    
    
    19.2Consumer
    
    
    15,465
    
    
    
    14,687
    
    
    
    13,925
    
    
    
    13,208
    
    
    
    12,353
    
    
    
    
    3,112
    
    
    
    25.2Residential real estate
    
    
    2,420
    
    
    
    2,647
    
    
    
    2,896
    
    
    
    3,069
    
    
    
    3,247
    
    
    
    
    (827
    )
    
    
    (25.5
    )Total loan participation interest income
    
    
    72,904
    
    
    
    70,580
    
    
    
    66,954
    
    
    
    64,887
    
    
    
    63,041
    
    
    
    
    9,863
    
    
    
    15.6Fees from loan participation interests
    
    
    539
    
    
    
    491
    
    
    
    629
    
    
    
    605
    
    
    
    469
    
    
    
    
    70
    
    
    
    14.9Interest on deposits with The Huntington National
Bank
    
    
    4,439
    
    
    
    2,570
    
    
    
    1,473
    
    
    
    3,736
    
    
    
    1,781
    
    
    
    
    2,658
    
    
    
    N.M.Total interest and fee income
    
    
    77,882
    
    
    
    73,641
    
    
    
    69,056
    
    
    
    69,228
    
    
    
    65,291
    
    
    
    
    12,591
    
    
    
    19.3Reduction in allowances for credit losses
    
    
    (8,106
    )
    
    
    (3,840
    )
    
    
    (3,441
    )
    
    
    (13,153
    )
    
    
    (6,874
    )
    
    
    
    (1,232
    )
    
    
    (17.9
    )Interest income after reduction in
allowance for credit losses
    
    
    85,988
    
    
    
    77,481
    
    
    
    72,497
    
    
    
    82,381
    
    
    
    72,165
    
    
    
    
    13,823
    
    
    
    19.2Non-interest income:Rental income
    
    
    1,590
    
    
    
    1,591
    
    
    
    1,591
    
    
    
    1,591
    
    
    
    1,590
    
    
    
    
    
    
    
    
    Collateral fees
    
    
    907
    
    
    
    965
    
    
    
    181
    
    
    
    177
    
    
    
    180
    
    
    
    
    727
    
    
    
    N.M.Total non-interest income
    
    
    2,497
    
    
    
    2,556
    
    
    
    1,772
    
    
    
    1,768
    
    
    
    1,770
    
    
    
    
    727
    
    
    
    41.1Non-interest expense:Servicing costs
    
    
    2,717
    
    
    
    2,899
    
    
    
    2,864
    
    
    
    2,735
    
    
    
    2,854
    
    
    
    
    (137
    )
    
    
    (4.8
    )Depreciation and amortization
    
    
    1,086
    
    
    
    1,102
    
    
    
    1,137
    
    
    
    1,235
    
    
    
    1,339
    
    
    
    
    (253
    )
    
    
    (18.9
    )Loss on disposal of fixed assets
    
    
    45
    
    
    
    388
    
    
    
    145
    
    
    
    155
    
    
    
    
    
    
    
    
    45
    
    
    
    Other
    
    
    205
    
    
    
    169
    
    
    
    241
    
    
    
    170
    
    
    
    196
    
    
    
    
    9
    
    
    
    4.6Total non-interest expense
    
    
    4,053
    
    
    
    4,558
    
    
    
    4,387
    
    
    
    4,295
    
    
    
    4,389
    
    
    
    
    (336
    )
    
    
    (7.7
    )Income before provision for income taxes
    
    
    84,432
    
    
    
    75,479
    
    
    
    69,882
    
    
    
    79,854
    
    
    
    69,546
    
    
    
    
    14,886
    
    
    
    21.4Provision for income taxes
    
    
    173
    
    
    
    25
    
    
    
    98
    
    
    
    58
    
    
    
    88
    
    
    
    
    85
    
    
    
    96.6Net income
    
    $
    84,259
    
    
    $
    75,454
    
    
    $
    69,784
    
    
    $
    79,796
    
    
    $
    69,458
    
    
    
    $
    14,801
    
    
    
    21.3
    %Dividends declared on preferred securities
    
    
    (9,023
    )
    
    
    (8,256
    )
    
    
    (7,305
    )
    
    
    (6,208
    )
    
    
    (5,406
    )
    
    
    
    (3,617
    )
    
    
    (66.9
    )Net income applicable to common shares(1)
    
    $
    75,236
    
    
    $
    67,198
    
    
    $
    62,479
    
    
    $
    73,588
    
    
    $
    64,052
    
    
    
    $
    11,184
    
    
    
    17.5
    %
 (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. 18




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Table 3  Year-To-Date Statements of Income
 Nine Months EndedSeptember 30,
    
    
    2005 vs 2004(in thousands of dollars)
    
    2005
    
    2004
    
    
    $ Chg
    
    % ChgInterest and fee incomeInterest on loan participation interests:Commercial
    
    $
    3,650
    
    
    $
    6,131
    
    
    
    $
    (2,481
    )
    
    
    (40.5
    )%Commercial real estate
    
    
    154,748
    
    
    
    135,116
    
    
    
    
    19,632
    
    
    
    14.5Consumer
    
    
    44,077
    
    
    
    37,335
    
    
    
    
    6,742
    
    
    
    18.1Residential real estate
    
    
    7,963
    
    
    
    10,405
    
    
    
    
    (2,442
    )
    
    
    (23.5
    )Total loan participation interest income
    
    
    210,438
    
    
    
    188,987
    
    
    
    
    21,451
    
    
    
    11.4Fees from loan participation interests
    
    
    1,659
    
    
    
    1,732
    
    
    
    
    (73
    )
    
    
    (4.2
    )Interest on deposits with The Huntington National Bank
    
    
    8,482
    
    
    
    2,268
    
    
    
    
    6,214
    
    
    
    N.M.Total interest and fee income
    
    
    220,579
    
    
    
    192,987
    
    
    
    
    27,592
    
    
    
    14.3Reduction in allowances for credit losses
    
    
    (15,387
    )
    
    
    (18,438
    )
    
    
    
    3,051
    
    
    
    16.5Interest income after reduction in
allowances for credit losses
    
    
    235,966
    
    
    
    211,425
    
    
    
    
    24,541
    
    
    
    11.6Non-interest income:Rental income
    
    
    4,772
    
    
    
    4,912
    
    
    
    
    (140
    )
    
    
    (2.9
    )Collateral fees
    
    
    2,053
    
    
    
    569
    
    
    
    
    1,484
    
    
    
    N.M.Total non-interest income
    
    
    6,825
    
    
    
    5,481
    
    
    
    
    1,344
    
    
    
    24.5Non-interest expense:Servicing costs
    
    
    8,480
    
    
    
    7,188
    
    
    
    
    1,292
    
    
    
    18.0Depreciation and amortization
    
    
    3,325
    
    
    
    4,038
    
    
    
    
    (713
    )
    
    
    (17.7
    )Loss on disposal of fixed assets
    
    
    578
    
    
    
    63
    
    
    
    
    515
    
    
    
    N.M.Other
    
    
    615
    
    
    
    676
    
    
    
    
    (61
    )
    
    
    (9.0
    )Total non-interest expense
    
    
    12,998
    
    
    
    11,965
    
    
    
    
    1,033
    
    
    
    8.6Income before provision for income taxes
    
    
    229,793
    
    
    
    204,941
    
    
    
    
    24,852
    
    
    
    12.1Provision for income taxes
    
    
    296
    
    
    
    195
    
    
    
    
    101
    
    
    
    51.8Net income
    
    $
    229,497
    
    
    $
    204,746
    
    
    
    $
    24,751
    
    
    
    12.1
    %Dividends declared on preferred securities
    
    
    (24,584
    )
    
    
    (14,536
    )
    
    
    
    (10,048
    )
    
    
    (69.1
    )Net income applicable to
common shares(1)
    
    $
    204,913
    
    
    $
    190,210
    
    
    
    $
    14,703
    
    
    
    7.7
    %
 (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
   19




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Table 4  Quarterly Average Balance Sheets and Net Interest Margin Analysis
 Three Months Ended September 30,2005
    
    2004Average
    
    
    
    
    
    
    
    
    
    Average(in millions of dollars)
    
    Balance
    
    Income(1)
    
    Yield
    
    Balance
    
    Income(1)
    
    YieldLoan participation interests:Commercial
    
    $
    61.8
    
    
    $
    1.0
    
    
    
    6.50
    %
    
    $
    140.2
    
    
    $
    2.1
    
    
    
    6.06
    %Commercial real estate
    
    
    3,540.8
    
    
    
    54.4
    
    
    
    6.09
    
    
    
    3,942.7
    
    
    
    45.6
    
    
    
    4.60Consumer
    
    
    914.7
    
    
    
    15.7
    
    
    
    6.79
    
    
    
    708.2
    
    
    
    12.5
    
    
    
    7.04Residential real estate
    
    
    178.8
    
    
    
    2.4
    
    
    
    5.42
    
    
    
    248.0
    
    
    
    3.2
    
    
    
    5.24Total loan participations
    
    
    4,696.1
    
    
    
    73.5
    
    
    
    6.21
    
    
    
    5,039.1
    
    
    
    63.4
    
    
    
    5.02Interest bearing deposits with
The Huntington National Bank
    
    
    519.6
    
    
    
    4.4
    
    
    
    3.39
    
    
    
    508.9
    
    
    
    1.8
    
    
    
    1.39Total
    
    $
    5,215.7
    
    
    $
    77.9
    
    
    
    5.93
    %
    
    $
    5,548.0
    
    
    $
    65.2
    
    
    
    4.68
    %
 (1)
    
    Income includes interest and fees.
 Table 5  Year-To-Date Average Balance Sheets and Net Interest Margin Analysis
 Nine Months Ended September 30,2005
    
    2004Average
    
    
    
    
    
    
    
    
    
    Average(in millions of dollars)
    
    Balance
    
    Income(1)
    
    Yield
    
    Balance
    
    Income(1)
    
    YieldLoan participation interests:Commercial
    
    $
    84.9
    
    
    $
    3.7
    
    
    
    5.79
    %
    
    $
    166.9
    
    
    $
    6.2
    
    
    
    4.92
    %Commercial real estate
    
    
    3,627.2
    
    
    
    155.8
    
    
    
    5.74
    
    
    
    4,140.1
    
    
    
    136.2
    
    
    
    4.39Consumer
    
    
    868.4
    
    
    
    44.6
    
    
    
    6.87
    
    
    
    684.8
    
    
    
    38.0
    
    
    
    7.41Residential real estate
    
    
    197.7
    
    
    
    8.0
    
    
    
    5.37
    
    
    
    266.7
    
    
    
    10.4
    
    
    
    5.20Total loan participations
    
    
    4,778.2
    
    
    
    212.1
    
    
    
    5.93
    
    
    
    5,258.5
    
    
    
    190.8
    
    
    
    4.84Interest bearing deposits with
The Huntington National Bank
    
    
    369.1
    
    
    
    8.5
    
    
    
    3.07
    
    
    
    234.8
    
    
    
    2.3
    
    
    
    1.29Total
    
    $
    5,147.3
    
    
    $
    220.6
    
    
    
    5.73
    %
    
    $
    5,493.3
    
    
    $
    193.1
    
    
    
    4.69
    %
 (1)
    
    Income includes interest and fees.
  Allowances for Credit Losses (ACL)
  20




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Table 6  Allowances for Credit Loss Activity
 2005
    
    2004(in thousands of dollars)
    
    Third
    
    Second
    
    First
    
    Fourth
    
    ThirdALL balance, beginning of period
    
    $
    60,987
    
    
    $
    62,461
    
    
    $
    61,146
    
    
    $
    67,668
    
    
    $
    72,524Allowance of loan participations acquired
    
    
    5,875
    
    
    
    6,880
    
    
    
    5,641
    
    
    
    9,285
    
    
    
    2,738Net loan lossesCommercial
    
    
    159
    
    
    
    312
    
    
    
    544
    
    
    
    964
    
    
    
    848Commercial real estate
    
    
    (2,083
    )
    
    
    (2,705
    )
    
    
    13
    
    
    
    (1,271
    )
    
    
    (588
    )Consumer
    
    
    (1,004
    )
    
    
    (1,123
    )
    
    
    (1,523
    )
    
    
    (1,482
    )
    
    
    (1,666
    )Residential real estate
    
    
    (47
    )
    
    
    (6
    )
    
    
    (26
    )
    
    
    (251
    )
    
    
    (55
    )Total net loan losses
    
    
    (2,975
    )
    
    
    (3,522
    )
    
    
    (992
    )
    
    
    (2,040
    )
    
    
    (1,461
    )Reduction in ALL
    
    
    (7,021
    )
    
    
    (3,894
    )
    
    
    (3,334
    )
    
    
    (13,767
    )
    
    
    (6,133
    )Economic reserve transfer to AULPC
    
    
    
    
    
    
    (938
    )
    
    
    
    
    
    
    
    
    
    
    ALL balance, end of period
    
    $
    56,866
    
    
    $
    60,987
    
    
    $
    62,461
    
    
    $
    61,146
    
    
    $
    67,668AULPC balance, beginning of period
    
    $
    4,650
    
    
    $
    3,658
    
    
    $
    3,765
    
    
    $
    3,151
    
    
    $
    3,892(Reduction in) provision for AULPC
    
    
    (1,085
    )
    
    
    54
    
    
    
    (107
    )
    
    
    614
    
    
    
    (741
    )Economic reserve transfer from ALL
    
    
    
    
    
    
    938
    
    
    
    
    
    
    
    
    
    
    
    AULPC balance, end of period
    
    $
    3,565
    
    
    $
    4,650
    
    
    $
    3,658
    
    
    $
    3,765
    
    
    $
    3,151Total Allowance for Credit Losses
    
    $
    60,431
    
    
    $
    65,637
    
    
    $
    66,119
    
    
    $
    64,911
    
    
    $
    70,819ALL as a % of total participation
interests
    
    
    1.23
    %
    
    
    1.28
    %
    
    
    1.29
    %
    
    
    1.25
    %
    
    
    1.40
    %ACL as a % of total participation
interests
    
    
    1.31
    
    
    
    1.38
    
    
    
    1.37
    
    
    
    1.33
    
    
    
    1.46
   Non-Performing Assets (NPAs)
  21




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##### Table of Contents



Table 7  Quarterly Non-Performing Assets
 (in thousands of dollars)
    
    2005
    
    2004Third
    
    Second
    
    First
    
    Fourth
    
    ThirdParticipation interests in non-accrual loansCommercial
    
    $
    746
    
    
    $
    1,069
    
    
    $
    373
    
    
    $
    425
    
    
    $
    973Commercial real estate
    
    
    17,735
    
    
    
    17,965
    
    
    
    10,641
    
    
    
    6,990
    
    
    
    10,460Consumer
    
    
    2,028
    
    
    
    2,252
    
    
    
    2,178
    
    
    
    2,692
    
    
    
    2,692Residential real estate
    
    
    3,695
    
    
    
    4,652
    
    
    
    4,068
    
    
    
    4,205
    
    
    
    4,749Total Non-Performing Assets
    
    $
    24,204
    
    
    $
    25,938
    
    
    $
    17,260
    
    
    $
    14,312
    
    
    $
    18,874Participations in Accruing Loans
Past Due 90 Days or More
    
    $
    3,382
    
    
    $
    12,036
    
    
    $
    14,178
    
    
    $
    11,686
    
    
    $
    8,466NPAs as a % of total participation interests
    
    
    0.52
    %
    
    
    0.54
    %
    
    
    0.36
    %
    
    
    0.29
    %
    
    
    0.39
    %ALL as a % of NPAs
    
    
    235
    
    
    
    235
    
    
    
    362
    
    
    
    427
    
    
    
    359ACL as a % of NPAs
    
    
    250
    
    
    
    253
    
    
    
    383
    
    
    
    454
    
    
    
    375
     Non-Interest Income and Non-Interest Expense
  22




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##### Table of Contents



July 1, 2005
    
    July 1, 2004
    
    January 1, 2004thru
    
    thru
    
    thruSeptember 30, 2005
    
    June 30, 2005
    
    June 30, 2004Commercial & Commercial Real Estate
    
    
    0.125
    %
    
    
    0.125
    %
    
    
    0.125
    %Consumer
    
    
    0.650
    %
    
    
    0.750
    %
    
    
    0.320
    %Residential Real Estate
    
    
    0.267
    %
    
    
    0.267
    %
    
    
    0.299
    %
  Provision for Income Taxes
  MARKET RISK
    23




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##### Table of Contents



OFF-BALANCE SHEET ARRANGEMENTS
  LIQUIDITY AND CAPITAL RESOURCES
       24




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##### Table of Contents



Item 3. Quantitative And Qualitative Disclosures About Market Risk
  
 Item 4. Controls and Procedures
   25




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##### Table of Contents



PART II. OTHER INFORMATION
  
 Item 5. Other Information
 Update to Business Risks
    Under-
    
    September 30,
    
    December 31,capitalized
    
    2005
    
    2004Tier 1 RBC ratio
    
    
    <4
    %
    
    
    6.83
    %
    
    
    6.08
    %Total RBC ratio
    
    
    <8
    %
    
    
    10.71
    %
    
    
    10.16
    %Tier 1 leverage ratio
    
    
    <4
    %
    
    
    6.18
    %
    
    
    5.66
    %
   
    
    Part II, Item 8 of Annual Report on Form 10-K for the year ended December 31, 2004;
    
    Part I, Item 1 of Quarterly Report on Form 10-Q for the quarters ended March 31, 2005,
June 30, 2005, and September 30, 2005.
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##### Table of Contents



Item 6. Exhibits
 (a)
 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.10.
    
    Material Contracts:(a).
    
    Limited Waiver of Contract Provision, dated
August 11, 2005, with Huntington Preferred Capital Holdings, Inc.,
Huntington Preferred Capital, Inc., and The Huntington National Bank
(previously filed as Exhibit 10(e) to Quarterly Report on Form 10-Q for
the quarter ended June 30, 2005, and incorporated herein by reference).31.1.
    
    Rule 13a  14(a) Certification  signed by Donald R. Kimble, President.31.2.
    
    Rule 13a  14(a) Certification  signed by Thomas P. Reed, Vice President.32.1.
    
    Section 1350 Certification  signed by Donald R. Kimble, President.32.2.
    
    Section 1350 Certification  signed by Thomas P. Reed, Vice President.
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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)
 28