##### 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, 2007
 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




---



##### 



HUNTINGTON PREFERRED CAPITAL, INC.
  Part I. Financial InformationItem 1. Financial Statements (Unaudited)Condensed Consolidated Balance Sheets -
At March 31, 2007, December 31, 2006, and March 31, 2006
    
    
    3Condensed Consolidated Statements of Income -
For the three-months ended March 31, 2007 and 2006
    
    
    4Condensed Consolidated Statements of Changes in Shareholders Equity -
For the three-months ended March 31, 2007 and 2006
    
    
    5Condensed Consolidated Statements of Cash Flows -
For the three-months ended March 31, 2007 and 2006
    
    
    6Notes to The 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
    
    
    22Item 4T. Controls and Procedures
    
    
    22Part II. Other InformationItem 6. Exhibits
    
    
    22Signatures
    
    
    23EX-31.1EX-31.2EX-32.1EX-32.2EX-99.1
  2




---



##### Table of Contents



Huntington Preferred Capital, Inc.
 
 Condensed Consolidated Balance Sheets
 (Unaudited)
 March 31,
    
    December 31,
    
    March 31,(in thousands, except share data)
    
    2007
    
    2006
    
    2006AssetsCash and interest bearing deposits with The Huntington
National Bank
    
    $
    464,325
    
    
    $
    726,154
    
    
    $
    185,367Due from The Huntington National Bank
    
    
    
    
    
    
    134,815
    
    
    
    60,214Loan participation interests:Commercial
    
    
    29,072
    
    
    
    31,049
    
    
    
    45,750Commercial real estate
    
    
    3,043,252
    
    
    
    3,108,533
    
    
    
    3,322,402Consumer
    
    
    971,353
    
    
    
    845,272
    
    
    
    987,707Residential real estate
    
    
    102,818
    
    
    
    112,355
    
    
    
    143,073Total loan participation interests
    
    
    4,146,495
    
    
    
    4,097,209
    
    
    
    4,498,932Allowance for loan participation losses
    
    
    (50,107
    )
    
    
    (48,703
    )
    
    
    (53,586
    )Net loan participation interests
    
    
    4,096,388
    
    
    
    4,048,506
    
    
    
    4,445,346Premises and equipment
    
    
    16,775
    
    
    
    17,711
    
    
    
    20,641Accrued income and other assets
    
    
    21,351
    
    
    
    22,550
    
    
    
    20,711Total assets
    
    $
    4,598,839
    
    
    $
    4,949,736
    
    
    $
    4,732,279Liabilities and shareholders equityLiabilitiesAllowance for unfunded loan participation commitments
    
    $
    3,512
    
    
    $
    3,804
    
    
    $
    4,185Dividends and distributions payable
    
    
    12,536
    
    
    
    450,000
    
    
    
    4,624Due to The Huntington National Bank
    
    
    19,477
    
    
    
    
    
    
    
    Other liabilities
    
    
    701
    
    
    
    179
    
    
    
    405Total liabilities
    
    
    36,226
    
    
    
    453,983
    
    
    
    9,214Shareholders 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
    
    
    3,694,753
    
    
    
    3,694,753
    
    
    
    3,848,460Retained earnings
    
    
    66,860
    
    
    
    
    
    
    
    73,605Total shareholders equity
    
    
    4,562,613
    
    
    
    4,495,753
    
    
    
    4,723,065Total liabilities and shareholders equity
    
    $
    4,598,839
    
    
    $
    4,949,736
    
    
    $
    4,732,279
 See notes to unaudited condensed consolidated financial statements.
 3




---



##### Table of Contents



Huntington Preferred Capital, Inc.
 
 Condensed Consolidated Statements of Income
 (Unaudited)
 Three Months EndedMarch 31,(in thousands)
    
    2007
    
    2006Interest and fee incomeInterest on loan participation interests:Commercial
    
    $
    541
    
    
    $
    846Commercial real estate
    
    
    56,445
    
    
    
    55,782Consumer
    
    
    14,465
    
    
    
    16,700Residential real estate
    
    
    1,617
    
    
    
    2,232Total loan participation interest income
    
    
    73,068
    
    
    
    75,560Fees from loan participation interests
    
    
    198
    
    
    
    293Interest on deposits with The Huntington National Bank
    
    
    5,608
    
    
    
    1,491Total interest and fee income
    
    
    78,874
    
    
    
    77,344Reduction in allowances for credit losses
    
    
    (2,693
    )
    
    
    (9,183
    )Interest income after reduction in allowances for credit losses
    
    
    81,567
    
    
    
    86,527Non-interest income:Rental income
    
    
    1,710
    
    
    
    1,591Collateral fees
    
    
    92
    
    
    
    718Total non-interest income
    
    
    1,802
    
    
    
    2,309Non-interest expense:Servicing costs
    
    
    2,450
    
    
    
    2,783Depreciation and amortization
    
    
    919
    
    
    
    1,017(Gain) loss on disposal of premises and equipment
    
    
    17
    
    
    
    (31
    )Other
    
    
    194
    
    
    
    170Total non-interest expense
    
    
    3,580
    
    
    
    3,939Income before provision for income taxes
    
    
    79,789
    
    
    
    84,897Provision for income taxes
    
    
    393
    
    
    
    285Net income
    
    $
    79,396
    
    
    $
    84,612Dividends declared on preferred securities
    
    
    (12,536
    )
    
    
    (11,007
    )Net income applicable to common shares
    
    $
    66,860
    
    
    $
    73,605
 See notes to unaudited condensed consolidated financial statements.
 4




---



##### Table of Contents



Huntington Preferred Capital, Inc.
 
 Condensed Consolidated Statements of Changes in Shareholders Equity
 (Unaudited)
 Preferred, Class A
    
    
    Preferred, Class B
    
    
    Preferred, Class C(in thousands)
    
    Shares
    
    Securities
    
    Shares
    
    Securities
    
    Shares
    
    SecuritiesThree Months Ended March 31, 2006: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
    
    
    $
    50,000Three Months Ended March 31, 2007: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
    
    
    Securities
    
    
    Shares
    
    
    Securities
    
    
    Shares
    
    
    Stock
    
    
    Earnings
    
    
    TotalThree Months Ended March 31, 2006: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 the period
    
    
    14,000
    
    
    $
    350,000
    
    
    
    
    
    
    $
    
    
    
    
    14,000
    
    
    $
    3,848,460
    
    
    $
    73,605
    
    
    $
    4,723,065Three Months Ended March 31, 2007:Balance, beginning of period
    
    
    14,000
    
    
    $
    350,000
    
    
    
    
    
    
    $
    
    
    
    
    14,000
    
    
    $
    3,694,753
    
    
    $
    
    
    
    $
    4,495,753Comprehensive Income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    79,396
    
    
    
    79,396Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    79,396Dividends declared on Class A preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (80
    )
    
    
    (80
    )Dividends declared on Class B preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,360
    )
    
    
    (5,360
    )Dividends declared on Class C preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (984
    )
    
    
    (984
    )Dividends declared on Class D preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,112
    )
    
    
    (6,112
    )Balance, end of the period
    
    
    14,000
    
    
    $
    350,000
    
    
    
    
    
    
    $
    
    
    
    
    14,000
    
    
    $
    3,694,753
    
    
    $
    66,860
    
    
    $
    4,562,613
 See notes to unaudited condensed consolidated financial statements.
 5




---



##### Table of Contents



Huntington Preferred Capital, Inc.
 
 Condensed Consolidated Statements of Cash Flows
 (Unaudited)
 Three Months EndedMarch 31,(in thousands)
    
    2007
    
    2006Operating activitiesNet income
    
    $
    79,396
    
    
    $
    84,612Adjustments to reconcile net income to net
cash provided by operating activities:Reduction of allowances for credit losses
    
    
    (2,693
    )
    
    
    (9,183
    )Depreciation and amortization
    
    
    919
    
    
    
    1,017Deferred income tax benefit
    
    
    (163
    )
    
    
    Change in due from/to The Huntington National Bank
    
    
    (1,616
    )
    
    
    (1,014
    )Increase in other liabilities
    
    
    522
    
    
    
    115Other, net
    
    
    1,954
    
    
    
    662Net cash provided by operating activities
    
    
    78,319
    
    
    
    76,209Investing activitiesParticipation interests acquired
    
    
    (540,184
    )
    
    
    (781,309
    )Sales and repayments of loans underlying participation interests
    
    
    650,036
    
    
    
    786,692Proceeds from the sale of premises and equipment
    
    
    
    
    
    
    56Net cash provided by investing activities
    
    
    109,852
    
    
    
    5,439Financing activitiesDividends paid on preferred securities
    
    
    
    
    
    
    (6,383
    )Dividends paid on common stock
    
    
    (296,292
    )
    
    
    (279,684
    )Return of capital to common shareholders
    
    
    (153,708
    )
    
    
    (420,316
    )Net cash used for financing activities
    
    
    (450,000
    )
    
    
    (706,383
    )Decrease in cash and cash equivalents
    
    
    (261,829
    )
    
    
    (624,735
    )Cash and cash equivalents at beginning of year
    
    
    726,154
    
    
    
    810,102Cash and cash equivalents at end of period
    
    $
    464,325
    
    
    $
    185,367Supplemental information:Income taxes paid
    
    $
    55
    
    
    $
    180Dividends and distributions declared, not paid
    
    
    12,536
    
    
    
    4,624Change in loan participation activity with The Huntington National Bank
    
    
    (155,908
    )
    
    
    12,879
 See notes to unaudited condensed consolidated financial statements.
 6




---



##### Table of Contents



Notes to the Unaudited Condensed Consolidated Financial Statements
 Note 1  Organization
  Note 2  Basis of Presentation and New Accounting Pronouncements
     Financial Accounting Standards Board (FASB) Interpretation No. 48 (FIN 48), Accounting for
Uncertainty in Income Taxes Accounting for Uncertainty in
Income Taxes Accounting for Income Taxes
 7




---



##### Table of Contents



Notes
to the Unaudited Condensed Consolidated Financial Statements
(Continued)
 Note 3  Lending Concentrations and Participations in Non-Performing Assets and Past Due
Loans
   March 31,
    
    December 31,
    
    March 31,(in thousands)
    
    2007
    
    2006
    
    2006Commercial
    
    $
    408
    
    
    $
    687
    
    
    $
    108Commercial real estate
    
    
    23,162
    
    
    
    19,966
    
    
    
    20,133Consumer
    
    
    3,243
    
    
    
    3,490
    
    
    
    3,282Residential real estate
    
    
    1,659
    
    
    
    1,159
    
    
    
    2,144Total participations in non-performing assets
    
    $
    28,472
    
    
    $
    25,302
    
    
    $
    25,667Participations in accruing loans past due 90 days or more
    
    $
    3,046
    
    
    $
    5,392
    
    
    $
    3,402
 Note 4  Allowances for Credit Losses (ACL)
   Three Months EndedMarch 31,(in thousands)
    
    2007
    
    2006ALPL balance, beginning of period
    
    $
    48,703
    
    
    $
    57,530ALPL for loan participations acquired
    
    
    5,301
    
    
    
    6,462Net loan losses
    
    
    (1,496
    )
    
    
    (1,173
    )Reduction in ALPL
    
    
    (2,401
    )
    
    
    (9,233
    )ALPL balance, end of period
    
    $
    50,107
    
    
    $
    53,586AULPC balance, beginning of period
    
    $
    3,804
    
    
    $
    4,135Provision for (reduction in) AULPC
    
    
    (292
    )
    
    
    50AULPC balance, end of period
    
    $
    3,512
    
    
    $
    4,185Total ACL
    
    $
    53,619
    
    
    $
    57,771
  8




---



##### Table of Contents



Notes
to the Unaudited Condensed Consolidated Financial Statements
(Continued)
 Note 5  Preferred Dividends
   i.e.
 i.e.,
  Three Months EndedMarch 31,(in thousands)
    
    2007
    
    2006Class A preferred securities
    
    $
    80
    
    
    $
    80Class B preferred securities
    
    
    5,360
    
    
    
    4,545Class C preferred securities
    
    
    984
    
    
    
    984Class D preferred securities
    
    
    6,112
    
    
    
    5,398Total dividends declared
    
    $
    12,536
    
    
    $
    11,007
 Note 6  Related Party Transactions
  9




---



##### Table of Contents



Notes
to the Unaudited Condensed Consolidated Financial Statements (Continued)
   January 1, 2006thruMarch 31, 2007Commercial and commercial real estate
    
    
    0.125
    %Consumer
    
    
    0.650
    %Residential real estate
    
    
    0.267
    %
 rd
   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




---



##### Table of Contents



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




---



##### Table of Contents



Notes
to the Unaudited Condensed Consolidated Financial Statements
(Continued)
    Note 8  Segment Reporting
  Note 9  Income Taxes
    12




---



##### Table of Contents



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




---



##### Table of Contents



SUMMARY DISCUSSION OF RESULTS
       Table 1  Loan Participation Interests
  % of
    
    
    
    
    
    % of
    
    
    
    
    
    % ofMarch 31,
    
    Total
    
    December 31,
    
    Total
    
    March 31,
    
    Total(in thousands)
    
    2007
    
    Assets
    
    2006
    
    Assets
    
    2006
    
    AssetsGross loan
participation
interests:Commercial
    
    $
    29,072
    
    
    
    0.6
    
    
    $
    31,049
    
    
    
    0.6
    
    
    $
    45,750
    
    
    
    1.0Commercial real estate
    
    
    3,043,252
    
    
    
    66.2
    
    
    
    3,108,533
    
    
    
    62.8
    
    
    
    3,322,402
    
    
    
    70.2Consumer
    
    
    971,353
    
    
    
    21.1
    
    
    
    845,272
    
    
    
    17.1
    
    
    
    987,707
    
    
    
    20.9Residential real estate
    
    
    102,818
    
    
    
    2.2
    
    
    
    112,355
    
    
    
    2.3
    
    
    
    143,073
    
    
    
    3.0Total
    
    $
    4,146,495
    
    
    
    90.1
    
    
    $
    4,097,209
    
    
    
    82.8
    
    
    $
    4,498,932
    
    
    
    95.1
  rd
  14




---



##### Table of Contents



QUALIFICATION TESTS
    15




---



##### Table of Contents



RESULTS OF OPERATIONS
    Table 2  Quarterly Statements of Income
  2007
    
    2006
    
    
    1Q07 vs 1Q06(in thousands)
    
    First
    
    Fourth
    
    Third
    
    Second
    
    First
    
    
    $ Chg
    
    % ChgInterest and fee incomeInterest on loan participation interests:Commercial
    
    $
    541
    
    
    $
    742
    
    
    $
    772
    
    
    $
    792
    
    
    $
    846
    
    
    
    $
    (305
    )
    
    
    (36.1
    )%Commercial real estate
    
    
    56,445
    
    
    
    60,377
    
    
    
    61,475
    
    
    
    59,841
    
    
    
    55,782
    
    
    
    
    663
    
    
    
    1.2Consumer
    
    
    14,465
    
    
    
    14,604
    
    
    
    15,338
    
    
    
    16,067
    
    
    
    16,700
    
    
    
    
    (2,235
    )
    
    
    (13.4
    )Residential real estate
    
    
    1,617
    
    
    
    1,762
    
    
    
    1,880
    
    
    
    2,007
    
    
    
    2,232
    
    
    
    
    (615
    )
    
    
    (27.6
    )Total loan participation interest income
    
    
    73,068
    
    
    
    77,485
    
    
    
    79,465
    
    
    
    78,707
    
    
    
    75,560
    
    
    
    
    (2,492
    )
    
    
    (3.3
    )Fees from loan participation interests
    
    
    198
    
    
    
    265
    
    
    
    227
    
    
    
    279
    
    
    
    293
    
    
    
    
    (95
    )
    
    
    (32.4
    )Interest on deposits with The Huntington National Bank
    
    
    5,608
    
    
    
    8,115
    
    
    
    6,129
    
    
    
    3,290
    
    
    
    1,491
    
    
    
    
    4,117
    
    
    
    N.M.Total interest and fee income
    
    
    78,874
    
    
    
    85,865
    
    
    
    85,821
    
    
    
    82,276
    
    
    
    77,344
    
    
    
    
    1,530
    
    
    
    2.0Reduction in allowances for credit losses
    
    
    (2,693
    )
    
    
    (4,400
    )
    
    
    (3,255
    )
    
    
    (5,203
    )
    
    
    (9,183
    )
    
    
    
    6,490
    
    
    
    70.7Interest income after reduction in allowances
for credit losses
    
    
    81,567
    
    
    
    90,265
    
    
    
    89,076
    
    
    
    87,479
    
    
    
    86,527
    
    
    
    
    (4,960
    )
    
    
    (5.7
    )Non-interest income:Rental income
    
    
    1,710
    
    
    
    1,710
    
    
    
    1,591
    
    
    
    1,591
    
    
    
    1,591
    
    
    
    
    119
    
    
    
    7Collateral fees
    
    
    92
    
    
    
    101
    
    
    
    108
    
    
    
    115
    
    
    
    718
    
    
    
    
    (626
    )
    
    
    (87.2
    )Total non-interest income
    
    
    1,802
    
    
    
    1,811
    
    
    
    1,699
    
    
    
    1,706
    
    
    
    2,309
    
    
    
    
    (507
    )
    
    
    (22.0
    )Non-interest expense:Servicing costs
    
    
    2,450
    
    
    
    2,521
    
    
    
    2,611
    
    
    
    2,720
    
    
    
    2,783
    
    
    
    
    (333
    )
    
    
    (12.0
    )Depreciation and amortization
    
    
    919
    
    
    
    947
    
    
    
    984
    
    
    
    999
    
    
    
    1,017
    
    
    
    
    (98
    )
    
    
    (9.6
    )(Gain) loss on disposal of premises and equipment
    
    
    17
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (31
    )
    
    
    
    48
    
    
    
    N.M.Other
    
    
    194
    
    
    
    198
    
    
    
    201
    
    
    
    202
    
    
    
    170
    
    
    
    
    24
    
    
    
    14.1Total non-interest expense
    
    
    3,580
    
    
    
    3,666
    
    
    
    3,796
    
    
    
    3,921
    
    
    
    3,939
    
    
    
    
    (359
    )
    
    
    (9.1
    )Income before provision for income taxes
    
    
    79,789
    
    
    
    88,410
    
    
    
    86,979
    
    
    
    85,264
    
    
    
    84,897
    
    
    
    
    (5,108
    )
    
    
    (6.0
    )Provision for income taxes
    
    
    393
    
    
    
    386
    
    
    
    332
    
    
    
    310
    
    
    
    285
    
    
    
    
    108
    
    
    
    37.9Net income
    
    $
    79,396
    
    
    $
    88,024
    
    
    $
    86,647
    
    
    $
    84,954
    
    
    $
    84,612
    
    
    
    $
    (5,216
    )
    
    
    (6.2
    )%Dividends declared on preferred securities
    
    
    (12,536
    )
    
    
    (12,475
    )
    
    
    (12,681
    )
    
    
    (11,781
    )
    
    
    (11,007
    )
    
    
    
    (1,529
    )
    
    
    (13.9
    )Net income applicable to common shares(1)
    
    $
    66,860
    
    
    $
    75,549
    
    
    $
    73,966
    
    
    $
    73,173
    
    
    $
    73,605
    
    
    
    $
    (6,745
    )
    
    
    (9.2
    )%
 
 (1)
    
    All of HPCIs common stock is owned by Huntington, HPCII, HCF, and Holdings
and, therefore, net income per share is not presented.  16




---



##### Table of Contents



Interest and Fee Income
     Table 4  Interest and Fee Income
  Three Months Ended March 31,2007
    
    2006Average
    
    
    
    
    
    
    
    
    
    Average(in millions)
    
    Balance
    
    Income(1)
    
    Yield
    
    Balance
    
    Income(1)
    
    YieldLoan participation interests:Commercial
    
    $
    30.0
    
    
    $
    0.5
    
    
    
    7.33
    %
    
    $
    47.4
    
    
    $
    0.8
    
    
    
    7.26
    %Commercial real estate
    
    
    3,079.6
    
    
    
    56.6
    
    
    
    7.45
    
    
    
    3,315.5
    
    
    
    56.0
    
    
    
    6.84Consumer
    
    
    883.5
    
    
    
    14.6
    
    
    
    6.69
    
    
    
    1,005.7
    
    
    
    16.8
    
    
    
    6.79Residential real estate
    
    
    107.3
    
    
    
    1.6
    
    
    
    6.03
    
    
    
    150.9
    
    
    
    2.2
    
    
    
    5.92Total loan participations
    
    
    4,100.4
    
    
    
    73.3
    
    
    
    7.24
    
    
    
    4,519.5
    
    
    
    75.8
    
    
    
    6.80Interest bearing deposits in the Bank
    
    
    427.2
    
    
    
    5.6
    
    
    
    5.25
    
    
    
    131.8
    
    
    
    1.5
    
    
    
    4.52Total
    
    $
    4,527.6
    
    
    $
    78.9
    
    
    
    7.06
    %
    
    $
    4,651.3
    
    
    $
    77.3
    
    
    
    6.74
    %
 
 (1) Income includes interest and fees.  Allowances for Credit Losses (ACL)
  17




---



##### Table of Contents



Table 5  Allowances for Credit Loss Activity
  2007
    
    
    2006(in thousands)
    
    First
    
    
    Fourth
    
    
    Third
    
    
    Second
    
    
    FirstALPL balance, beginning of period
    
    $
    48,703
    
    
    $
    51,729
    
    
    $
    51,466
    
    
    $
    53,586
    
    
    $
    57,530Allowance of loan participations acquired
    
    
    5,301
    
    
    
    2,715
    
    
    
    5,055
    
    
    
    5,172
    
    
    
    6,462Net loan lossesCommercial
    
    
    20
    
    
    
    158
    
    
    
    77
    
    
    
    633
    
    
    
    256Commercial real estate
    
    
    (590
    )
    
    
    (1,411
    )
    
    
    (145
    )
    
    
    (2,162
    )
    
    
    (776
    )Consumer
    
    
    (926
    )
    
    
    (942
    )
    
    
    (780
    )
    
    
    (743
    )
    
    
    (621
    )Residential real estate
    
    
    
    
    
    
    
    
    
    
    (33
    )
    
    
    
    
    
    
    (32
    )Total net loan losses
    
    
    (1,496
    )
    
    
    (2,195
    )
    
    
    (881
    )
    
    
    (2,272
    )
    
    
    (1,173
    )Reduction in ALL
    
    
    (2,401
    )
    
    
    (3,546
    )
    
    
    (3,911
    )
    
    
    (5,020
    )
    
    
    (9,233
    )ALPL balance, end of period
    
    $
    50,107
    
    
    $
    48,703
    
    
    $
    51,729
    
    
    $
    51,466
    
    
    $
    53,586AULPC balance, beginning of period
    
    $
    3,804
    
    
    $
    4,658
    
    
    $
    4,002
    
    
    $
    4,185
    
    
    $
    4,135Provision for (reduction in) AULPC
    
    
    (292
    )
    
    
    (854
    )
    
    
    656
    
    
    
    (183
    )
    
    
    50AULPC balance, end of period
    
    $
    3,512
    
    
    $
    3,804
    
    
    $
    4,658
    
    
    $
    4,002
    
    
    $
    4,185Total Allowance for Credit Losses
    
    $
    53,619
    
    
    $
    52,507
    
    
    $
    56,387
    
    
    $
    55,468
    
    
    $
    57,771ALPL as a % of total participation interests
    
    
    1.21
    %
    
    
    1.19
    %
    
    
    1.19
    %
    
    
    1.17
    %
    
    
    1.19
    %ACL as a % of total participation interests
    
    
    1.29
    
    
    
    1.28
    
    
    
    1.30
    
    
    
    1.26
    
    
    
    1.28
    Non-Performing Assets (NPAs)
  18




---



##### Table of Contents



Table 6  Quarterly Non-Performing Assets
  2007
    
    
    2006(in thousands)
    
    First
    
    
    Fourth
    
    
    Third
    
    
    Second
    
    
    FirstParticipation interests in non-accrual loansCommercial
    
    $
    408
    
    
    $
    687
    
    
    $
    143
    
    
    $
    108
    
    
    $
    108Commercial real estate
    
    
    23,162
    
    
    
    19,966
    
    
    
    16,784
    
    
    
    16,834
    
    
    
    20,133Consumer
    
    
    3,243
    
    
    
    3,490
    
    
    
    3,375
    
    
    
    3,545
    
    
    
    3,282Residential real estate
    
    
    1,659
    
    
    
    1,159
    
    
    
    1,598
    
    
    
    1,687
    
    
    
    2,144Total Non-Performing Assets
    
    $
    28,472
    
    
    $
    25,302
    
    
    $
    21,900
    
    
    $
    22,174
    
    
    $
    25,667Participations in Accruing Loans
Past Due 90 Days or More
    
    $
    3,046
    
    
    $
    5,392
    
    
    $
    6,124
    
    
    $
    6,079
    
    
    $
    3,402NPAs as a % of total
participation interests
    
    
    0.69
    %
    
    
    0.62
    %
    
    
    0.51
    %
    
    
    0.50
    %
    
    
    0.57
    %ALPL as a % of NPAs
    
    
    176
    
    
    
    192
    
    
    
    236
    
    
    
    232
    
    
    
    209ACL as a % of NPAs
    
    
    188
    
    
    
    208
    
    
    
    257
    
    
    
    250
    
    
    
    225
     Non-Interest Income and Non-Interest Expense
 (See Note 7 to the unaudited condensed consolidated financial statements for more
information regarding use of HPCIs assets as collateral for the Banks advances from the FHLB.)
  19




---



##### Table of Contents



January 1, 2006thruMarch 31, 2007Commercial and commercial real estate
    
    
    0.125
    %Consumer
    
    
    0.650
    %Residential real estate
    
    
    0.267
    %
 rd
 Provision for Income Taxes
  MARKET RISK
     20




---



##### Table of Contents



OFF-BALANCE SHEET ARRANGEMENTS
  LIQUIDITY AND CAPITAL RESOURCES
      21




---



##### 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 6. Exhibits
  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 periods ended
March 31, 2007 and 2006.
 22




---



##### 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