##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 FORM 10-Q
 June 30, 2007
 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




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##### 



HUNTINGTON PREFERRED CAPITAL, INC.
  Part I. Financial InformationItem 1.
    
    Financial Statements (Unaudited)Condensed Consolidated Balance Sheets - At June 30, 2007, December 31, 2006, and June 30, 2006
    
    
    3Condensed Consolidated Statements of Income - For the three-months and six-months ended June 30, 2007 and 2006
    
    
    4Condensed Consolidated Statements of Changes in Shareholders Equity - For the six-months ended June 30, 2007 and 2006
    
    
    5Condensed Consolidated Statements of Cash Flows - For the six-months ended June 30, 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
    
    
    24Item 4.
    
    Controls and Procedures
    
    
    24Item 4T.
    
    Controls and Procedures
    
    
    24Part II. Other InformationItem 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    24Item 6.
    
    Exhibits
    
    
    24Signatures
    
    
    26EX-10.1EX-31.1EX-31.2EX-32.1EX-32.2EX-99.1
  2




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##### Table of Contents



Part I. Financial Information
 
 Item 1. Financial Statements
 Huntington Preferred Capital, Inc.
 
 Condensed Consolidated Balance Sheets
 (Unaudited)
 June 30,
    
    
    December 31,
    
    
    June 30,(in thousands, except share data)
    
    2007
    
    
    2006
    
    
    2006AssetsCash and interest bearing deposits with The Huntington
National Bank
        $
    324,182
    
        $
    726,154
    
        $
    308,796Due from The Huntington National Bank
    
    
    
    
    
    
    134,815
    
    
    
    96,616Loan participation interests:Commercial
    
    
    27,239
    
    
    
    31,049
    
    
    
    39,182Commercial real estate
    
    
    3,222,321
    
    
    
    3,108,533
    
    
    
    3,312,787Consumer
    
    
    1,121,128
    
    
    
    845,272
    
    
    
    933,111Residential real estate
    
    
    95,120
    
    
    
    112,355
    
    
    
    130,569Total loan participation interests
    
    
    4,465,808
    
    
    
    4,097,209
    
    
    
    4,415,649Allowance for loan participation losses
    
    
    (57,074
    )
    
    
    (48,703
    )
    
    
    (51,466
    )Net loan participation interests
    
    
    4,408,734
    
    
    
    4,048,506
    
    
    
    4,364,183Premises and equipment
    
    
    15,872
    
    
    
    17,711
    
    
    
    19,642Accrued income and other assets
    
    
    22,741
    
    
    
    22,550
    
    
    
    20,733Total assets
        $
    4,771,529
    
        $
    4,949,736
    
        $
    4,809,970Liabilities and shareholders equityLiabilitiesAllowance for unfunded loan participation commitments
        $
    4,353
    
        $
    3,804
    
        $
    4,002Dividends and distributions payable
    
    
    17,878
    
    
    
    450,000
    
    
    
    9,624Due to The Huntington National Bank
    
    
    121,227
    
    
    
    ---
    
    
    
    ---Other liabilities
    
    
    165
    
    
    
    179
    
    
    
    106Total liabilities
    
    
    143,623
    
    
    
    453,983
    
    
    
    13,732Shareholders 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
    
    
    132,153
    
    
    
    ---
    
    
    
    146,778Total shareholders equity
    
    
    4,627,906
    
    
    
    4,495,753
    
    
    
    4,796,238Total liabilities and shareholders equity
        $
    4,771,529
    
        $
    4,949,736
    
        $
    4,809,970
 See notes to unaudited condensed consolidated financial statements.
 3




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##### Table of Contents



Huntington Preferred Capital, Inc.
 
 Condensed Consolidated Statements of Income
 (Unaudited)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,(in thousands of dollars)
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006Interest and fee incomeInterest on loan participation interests:Commercial
        $
    514
    
        $
    792
    
        $
    1,055
    
        $
    1,638Commercial real estate
    
    
    56,419
    
    
    
    59,841
    
    
    
    112,864
    
    
    
    115,623Consumer
    
    
    17,475
    
    
    
    16,067
    
    
    
    31,940
    
    
    
    32,767Residential real estate
    
    
    1,540
    
    
    
    2,007
    
    
    
    3,157
    
    
    
    4,239Total loan participation interest income
    
    
    75,948
    
    
    
    78,707
    
    
    
    149,016
    
    
    
    154,267Fees from loan participation interests
    
    
    203
    
    
    
    279
    
    
    
    401
    
    
    
    572Interest on deposits with The Huntington National Bank
    
    
    5,113
    
    
    
    3,290
    
    
    
    10,721
    
    
    
    4,781Total interest and fee income
    
    
    81,264
    
    
    
    82,276
    
    
    
    160,138
    
    
    
    159,620Provision for (reduction in) allowances for credit losses
    
    
    1,091
    
    
    
    (5,203
    )
    
    
    (1,602
    )
    
    
    (14,386
    )Interest income after allowances for credit losses
    
    
    80,173
    
    
    
    87,479
    
    
    
    161,740
    
    
    
    174,006Non-interest income:Rental income
    
    
    1,710
    
    
    
    1,591
    
    
    
    3,420
    
    
    
    3,182Collateral fees
    
    
    86
    
    
    
    115
    
    
    
    178
    
    
    
    833Total non-interest income
    
    
    1,796
    
    
    
    1,706
    
    
    
    3,598
    
    
    
    4,015Non-interest expense:Servicing costs
    
    
    2,704
    
    
    
    2,720
    
    
    
    5,154
    
    
    
    5,503Depreciation and amortization
    
    
    903
    
    
    
    999
    
    
    
    1,822
    
    
    
    2,016(Gain) loss on disposal of premises and equipment
    
    
    
    
    
    
    ---
    
    
    
    17
    
    
    
    (31
    )Other
    
    
    213
    
    
    
    202
    
    
    
    407
    
    
    
    372Total non-interest expense
    
    
    3,820
    
    
    
    3,921
    
    
    
    7,400
    
    
    
    7,860Income before provision for income taxes
    
    
    78,149
    
    
    
    85,264
    
    
    
    157,938
    
    
    
    170,161Provision for income taxes
    
    
    418
    
    
    
    310
    
    
    
    811
    
    
    
    595Net income
        $
    77,731
    
        $
    84,954
    
        $
    157,127
    
        $
    169,566Dividends declared on preferred securities
    
    
    (12,438
    )
    
    
    (11,781
    )
    
    
    (24,974
    )
    
    
    (22,788
    )Net income applicable to common shares
        $
    65,293
    
        $
    73,173
    
        $
    132,153
    
        $
    146,778
 See notes to unaudited condensed consolidated financial statements.
 4




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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
    
    
    SecuritiesSix Months Ended June
30, 2006 (Unaudited):Balance, beginning of
period
    
    
    1
    
        $
    1,000
    
    
    
    400
    
        $
    400,000
    
    
    
    2,000
    
        $
    50,000Comprehensive Income:Net incomeTotal
comprehensive
incomeBalance, end of
period (Unaudited)
    
    
    1
    
        $
    1,000
    
    
    
    400
    
        $
    400,000
    
    
    
    2,000
    
        $
    50,000Six Months Ended June
30, 2007 (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
    
        $
    50,000Preferred, Class D
    
    
    Preferred
    
    
    Common
    
    
    Retained(in thousands)
    
    Shares
    
    
    Securities
    
    
    Shares
    
    
    Securities
    
    
    Shares
    
    
    Stock
    
    
    Earnings
    
    
    TotalSix Months Ended June
30, 2006 :Balance, beginning of
period
    
    
    14,000
    
        $
    350,000
    
    
    
    ---
    
        $
    ---
    
    
    
    14,000
    
        $
    3,848,460
    
        $
    ---
    
        $
    4,649,460Comprehensive Income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    169,566
    
    
    
    169,566Total
comprehensive
income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    169,566Dividends declared on
Class A preferred
securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (80
    )
    
    
    (80
    )Dividends declared on
Class B preferred
securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,544
    )
    
    
    (9,544
    )Dividends declared on
Class C preferred
securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,969
    )
    
    
    (1,969
    )Dividends declared on
Class D preferred
securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,195
    )
    
    
    (11,195
    )Balance, end of period
    
    
    14,000
    
        $
    350,000
    
    
    
    ---
    
        $
    ---
    
    
    
    14,000
    
        $
    3,848,460
    
        $
    146,778
    
        $
    4,796,238Six Months Ended June
30, 2007 :Balance, beginning of
period
    
    
    14,000
    
        $
    350,000
    
    
    
    
    
        $
    
    
    
    
    14,000
    
        $
    3,694,753
    
        $
    
    
        $
    4,495,753Comprehensive Income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    157,127
    
    
    
    157,127Total
comprehensive
income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    157,127Dividends declared on
Class A preferred
securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (80
    )
    
    
    (80
    )Dividends declared on
Class B preferred
securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,710
    )
    
    
    (10,710
    )Dividends declared on
Class C preferred
securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,969
    )
    
    
    (1,969
    )Dividends declared on
Class D preferred
securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,215
    )
    
    
    (12,215
    )Balance, end of period
    
    
    14,000
    
        $
    350,000
    
    
    
    
    
        $
    
    
    
    
    14,000
    
        $
    3,694,753
    
        $
    132,153
    
        $
    4,627,906
 See notes to unaudited condensed consolidated financial statements.
 5




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##### Table of Contents



Huntington Preferred Capital, Inc.
 
 Condensed Consolidated Statements of Cash Flows
 (Unaudited)
 
 Six Months EndedJune 30(in thousands)
    
    2007
    
    
    2006Operating activitiesNet income
        $
    157,127
    
        $
    169,566Adjustments to reconcile net income to net
cash provided by operating activities:Reduction of allowances for credit losses
    
    
    (1,602
    )
    
    
    (14,386
    )Depreciation and amortization
    
    
    1,822
    
    
    
    2,016Change in due to/from The Huntington National Bank
    
    
    (227
    )
    
    
    (3,377
    )Other, net
    
    
    1,227
    
    
    
    851Net cash provided by operating activities
    
    
    158,347
    
    
    
    154,670Investing activitiesParticipation interests acquired
    
    
    (1,446,448
    )
    
    
    (1,439,604
    )Sales and repayments of loans underlying
participation interests
    
    
    1,343,225
    
    
    
    1,496,736Proceeds from the sale of premises and equipment
    
    
    
    
    
    
    56Net cash (used in) provided by investing activities
    
    
    (103,223
    )
    
    
    57,188Financing activitiesDividends paid on preferred securities
    
    
    (7,096
    )
    
    
    (13,164
    )Dividends paid on common stock
    
    
    (296,292
    )
    
    
    (279,684
    )Return of capital to common shareholders
    
    
    (153,708
    )
    
    
    (420,316
    )Net cash used in financing activities
    
    
    (457,096
    )
    
    
    (713,164
    )Change in cash and cash equivalents
    
    
    (401,972
    )
    
    
    (501,306
    )Cash and cash equivalents at beginning of year
    
    
    726,154
    
    
    
    810,102Cash and cash equivalents at end of period
        $
    324,182
    
        $
    308,796Supplemental information:Income taxes paid
        $
    1,128
    
        $
    677Dividends and distributions declared, not paid
    
    
    17,878
    
    
    
    9,624Change in loan participation activity with The Huntington National Bank
    
    
    (256,269
    )
    
    
    46,918
 See notes to unaudited condensed consolidated financial statements.
 6




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




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##### Table of Contents



Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)
 FASB Statement No. 157, Fair Value Measurements (Statement No. 157)
 FASB Statement No. 159, The Fair Value Option for Financial Assets and Financial
Liabilitie s (Statement No. 159)
 Note 3  Lending Concentrations and Participations in Non-Performing Assets and Past Due Loans
   June 30,
    
    
    December 31,
    
    
    June 30,(in thousands)
    
    2007
    
    
    2006
    
    
    2006Commercial
        $
    391
    
        $
    687
    
        $
    108Commercial real estate
    
    
    43,263
    
    
    
    19,966
    
    
    
    16,834Consumer
    
    
    3,106
    
    
    
    3,490
    
    
    
    3,545Residential real estate
    
    
    1,163
    
    
    
    1,159
    
    
    
    1,687Total participations in non-performing assets
        $
    47,923
    
        $
    25,302
    
        $
    22,174Participations in accruing loans past due 90 days or more
        $
    3,640
    
        $
    5,392
    
        $
    6,079
 Note 4 - Allowances for Credit Losses (ACL)
  8




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Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,(in thousands)
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006ALPL balance, beginning of period
        $
    50,107
    
        $
    53,586
    
        $
    48,703
    
        $
    57,530ALPL for loan participations acquired
    
    
    9,673
    
    
    
    5,172
    
    
    
    14,974
    
    
    
    11,634Net loan losses
    
    
    (2,956
    )
    
    
    (2,272
    )
    
    
    (4,452
    )
    
    
    (3,445
    )Provision for (reduction in) ALPL
    
    
    250
    
    
    
    (5,020
    )
    
    
    (2,151
    )
    
    
    (14,253
    )ALPL balance, end of period
        $
    57,074
    
        $
    51,466
    
        $
    57,074
    
        $
    51,466AULPC balance, beginning of period
        $
    3,512
    
        $
    4,185
    
        $
    3,804
    
        $
    4,135Provision for (reduction in) AULPC
    
    
    841
    
    
    
    (183
    )
    
    
    549
    
    
    
    (133
    )AULPC balance, end of period
        $
    4,353
    
        $
    4,002
    
        $
    4,353
    
        $
    4,002Total ACL
        $
    61,427
    
        $
    55,468
    
        $
    61,427
    
        $
    55,468
  Note 5  Preferred Dividends
   i.e.
 i.e.,
 9




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Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    June 30,(in thousands)
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006Class A preferred securities
        $
    
    
        $
    ---
    
        $
    80
    
        $
    80Class B preferred securities
    
    
    5,350
    
    
    
    5,000
    
    
    
    10,710
    
    
    
    9,544Class C preferred securities
    
    
    984
    
    
    
    984
    
    
    
    1,969
    
    
    
    1,969Class D preferred securities
    
    
    6,104
    
    
    
    5,797
    
    
    
    12,215
    
    
    
    11,195Total dividends declared
        $
    12,438
    
        $
    11,781
    
        $
    24,974
    
        $
    22,788
 Note 6
- Related Party Transactions
    January 1, 2006thruJune 30, 2007Commercial and commercial real estate
    
    
    0.125
    %Consumer
    
    
    0.650
    %Residential real estate
    
    
    0.267
    %
   10




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##### Table of Contents



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
      11




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##### Table of Contents



Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)
    Note 7
- Commitments and Contingencies
 /
    Note 8
- Segment Reporting
  12




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##### Table of Contents



Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)
 Note 9  Income Taxes
    13




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##### Table of Contents



Item 2. Managementss Discussion and Analysis of Financial Condition and Results of Operations
 INTRODUCTION
    Forward-looking Statements
    Critical Accounting Policies
  Use of Significant Estimates
  14




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##### Table of Contents



SUMMARY DISCUSSION OF RESULTS
     Table 1 - Loan Participation Interests% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % ofJune 30,
    
    
    Total
    
    
    December 31,
    
    
    Total
    
    
    June 30,
    
    
    Total(in thousands)
    
    2007
    
    
    Assets
    
    
    2006
    
    
    Assets
    
    
    2006
    
    
    AssetsGross loan
participation interests:Commercial
        $
    27,239
    
    
    
    0.6
    
        $
    31,049
    
    
    
    0.6
    
        $
    39,182
    
    
    
    0.8Commercial real estate
    
    
    3,222,321
    
    
    
    67.5
    
    
    
    3,108,533
    
    
    
    62.8
    
    
    
    3,312,787
    
    
    
    68.9Consumer
    
    
    1,121,128
    
    
    
    23.5
    
    
    
    845,272
    
    
    
    17.1
    
    
    
    933,111
    
    
    
    19.4Residential real estate
    
    
    95,120
    
    
    
    2.0
    
    
    
    112,355
    
    
    
    2.3
    
    
    
    130,569
    
    
    
    2.7Total
        $
    4,465,808
    
    
    
    93.6
    
        $
    4,097,209
    
    
    
    82.8
    
        $
    4,415,649
    
    
    
    91.8
   15




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##### Table of Contents



QUALIFICATION TESTS
    16




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##### Table of Contents



RESULTS OF OPERATIONS
  Table 2 - Quarterly Statements of Income2007
    
    2006
    
    

2Q
07 vs 2Q 06(in thousands)
    
    Second
    
    
    First
    
    
    Fourth
    
    
    Third
    
    
    Second
    
    
    
    $ Chg
    
    
    % ChgInterest and fee incomeInterest on loan participation interests:Commercial
        $
    514
    
        $
    541
    
        $
    742
    
        $
    772
    
        $
    792
    
    
    
    $
    (278
    )
    
    
    (35.1
    )%Commercial real estate
    
    
    56,419
    
    
    
    56,445
    
    
    
    60,377
    
    
    
    61,475
    
    
    
    59,841
    
    
    
    
    (3,422
    )
    
    
    (5.7
    )Consumer
    
    
    17,475
    
    
    
    14,465
    
    
    
    14,604
    
    
    
    15,338
    
    
    
    16,067
    
    
    
    
    1,408
    
    
    
    8.8Residential real estate
    
    
    1,540
    
    
    
    1,617
    
    
    
    1,762
    
    
    
    1,880
    
    
    
    2,007
    
    
    
    
    (467
    )
    
    
    (23.3
    )Total loan participation interest income
    
    
    75,948
    
    
    
    73,068
    
    
    
    77,485
    
    
    
    79,465
    
    
    
    78,707
    
    
    
    
    (2,759
    )
    
    
    (3.5
    )Fees from loan participation interests
    
    
    203
    
    
    
    198
    
    
    
    265
    
    
    
    227
    
    
    
    279
    
    
    
    
    (76
    )
    
    
    (27.2
    )Interest on deposits with The Huntington National Bank
    
    
    5,113
    
    
    
    5,608
    
    
    
    8,115
    
    
    
    6,129
    
    
    
    3,290
    
    
    
    
    1,823
    
    
    
    55.4Total interest and fee income
    
    
    81,264
    
    
    
    78,874
    
    
    
    85,865
    
    
    
    85,821
    
    
    
    82,276
    
    
    
    
    (1,012
    )
    
    
    (1.2
    )Provision for (reduction in) allowances for credit losses
    
    
    1,091
    
    
    
    (2,693
    )
    
    
    (4,400
    )
    
    
    (3,255
    )
    
    
    (5,203
    )
    
    
    
    6,294
    
    
    
    N.M.Interest income after reduction in allowances
for credit losses
    
    
    80,173
    
    
    
    81,567
    
    
    
    90,265
    
    
    
    89,076
    
    
    
    87,479
    
    
    
    
    (7,306
    )
    
    
    (8.4
    )Non-interest income:Rental income
    
    
    1,710
    
    
    
    1,710
    
    
    
    1,710
    
    
    
    1,591
    
    
    
    1,591
    
    
    
    
    119
    
    
    
    7Collateral fees
    
    
    86
    
    
    
    92
    
    
    
    101
    
    
    
    108
    
    
    
    115
    
    
    
    
    (29
    )
    
    
    (25.2
    )Total non-interest income
    
    
    1,796
    
    
    
    1,802
    
    
    
    1,811
    
    
    
    1,699
    
    
    
    1,706
    
    
    
    
    90
    
    
    
    5.3Non-interest expense:Servicing costs
    
    
    2,704
    
    
    
    2,450
    
    
    
    2,521
    
    
    
    2,611
    
    
    
    2,720
    
    
    
    
    (16
    )
    
    
    (0.6
    )Depreciation and amortization
    
    
    903
    
    
    
    919
    
    
    
    947
    
    
    
    984
    
    
    
    999
    
    
    
    
    (96
    )
    
    
    (9.6
    )(Gain) loss on disposal of premises and equipment
    
    
    
    
    
    
    17
    
    
    
    ---
    
    
    
    ---
    
    
    
    ---
    
    
    
    
    ---
    
    
    
    ---Other
    
    
    213
    
    
    
    194
    
    
    
    198
    
    
    
    201
    
    
    
    202
    
    
    
    
    11
    
    
    
    5.4Total non-interest expense
    
    
    3,820
    
    
    
    3,580
    
    
    
    3,666
    
    
    
    3,796
    
    
    
    3,921
    
    
    
    
    (101
    )
    
    
    (2.6
    )Income before provision for income taxes
    
    
    78,149
    
    
    
    79,789
    
    
    
    88,410
    
    
    
    86,979
    
    
    
    85,264
    
    
    
    
    (7,115
    )
    
    
    (8.3
    )Provision for income taxes
    
    
    418
    
    
    
    393
    
    
    
    386
    
    
    
    332
    
    
    
    310
    
    
    
    
    108
    
    
    
    34.8Net income
        $
    77,731
    
        $
    79,396
    
        $
    88,024
    
        $
    86,647
    
        $
    84,954
    
    
    
    $
    (7,223
    )
    
    
    (8.5
    ) %Dividends declared on preferred securities
    
    
    (12,438
    )
    
    
    (12,536
    )
    
    
    (12,475
    )
    
    
    (12,681
    )
    
    
    (11,781
    )
    
    
    
    (657
    )
    
    
    (5.6
    )Net income applicable to common shares(1)
        $
    65,293
    
        $
    66,860
    
        $
    75,549
    
        $
    73,966
    
        $
    73,173
    
    
    
    $
    (7,880
    )
    
    
    (10.8
    )%
 (1)
   17




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##### Table of Contents



Table 3 - Year-To-Date Statements of IncomeSix Months Ended June 30,
    
    
    
    2007 vs 2006(in thousands)
    
    2007
    
    
    2006
    
    
    
    $ Chg
    
    
    % ChgInterest and fee incomeInterest on loan participation interests:Commercial
        $
    1,055
    
        $
    1,638
    
    
    
    $
    (583
    )
    
    
    (35.6
    )
    
    %Commercial real estate
    
    
    112,864
    
    
    
    115,623
    
    
    
    
    (2,759
    )
    
    
    (2.4
    )Consumer
    
    
    31,940
    
    
    
    32,767
    
    
    
    
    (827
    )
    
    
    (2.5
    )Residential real estate
    
    
    3,157
    
    
    
    4,239
    
    
    
    
    (1,082
    )
    
    
    (25.5
    )Total loan participation interest income
    
    
    149,016
    
    
    
    154,267
    
    
    
    
    (5,251
    )
    
    
    (3.4
    )Fees from loan participation interests
    
    
    401
    
    
    
    572
    
    
    
    
    (171
    )
    
    
    (29.9
    )Interest on deposits with The Huntington National Bank
    
    
    10,721
    
    
    
    4,781
    
    
    
    
    5,940
    
    
    
    N.M.Total interest and fee income
    
    
    160,138
    
    
    
    159,620
    
    
    
    
    518
    
    
    
    0.3Provision for (reduction in) allowances for credit losses
    
    
    (1,602
    )
    
    
    (14,386
    )
    
    
    
    12,784
    
    
    
    88.9Interest income after reduction in allowances
for credit losses
    
    
    161,740
    
    
    
    174,006
    
    
    
    
    (12,266
    )
    
    
    (7.0
    )Non-interest income:Rental income
    
    
    3,420
    
    
    
    3,182
    
    
    
    
    238
    
    
    
    7.5Collateral fees
    
    
    178
    
    
    
    833
    
    
    
    
    (655
    )
    
    
    (78.6
    )Total non-interest income
    
    
    3,598
    
    
    
    4,015
    
    
    
    
    (417
    )
    
    
    (10.4
    )Non-interest expense:Servicing costs
    
    
    5,154
    
    
    
    5,503
    
    
    
    
    (349
    )
    
    
    (6.3
    )Depreciation and amortization
    
    
    1,822
    
    
    
    2,016
    
    
    
    
    (194
    )
    
    
    (9.6
    )(Gain) loss on disposal of premises and equipment
    
    
    17
    
    
    
    (31
    )
    
    
    
    48
    
    
    
    N.M.Other
    
    
    407
    
    
    
    372
    
    
    
    
    35
    
    
    
    9.4Total non-interest expense
    
    
    7,400
    
    
    
    7,860
    
    
    
    
    (460
    )
    
    
    (5.9
    )Income before provision for income taxes
    
    
    157,938
    
    
    
    170,161
    
    
    
    
    (12,223
    )
    
    
    (7.2
    )Provision for income taxes
    
    
    811
    
    
    
    595
    
    
    
    
    216
    
    
    
    36.3Net income
        $
    157,127
    
        $
    169,566
    
    
    
    $
    (12,439
    )
    
    
    (7.3
    )
    
    %Dividends declared on preferred securities
    
    
    (24,974
    )
    
    
    (22,788
    )
    
    
    
    (2,186
    )
    
    
    (9.6
    )Net income applicable to common shares(1)
        $
    132,153
    
        $
    146,778
    
    
    
    $
    (14,625
    )
    
    
    (10.0
    )
    
    %
 (1)
  Interest and Fee Income
  18




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Table 4 - Interest and Fee IncomeThree Months Ended June 30,2007
    
    
    2006Average
    
    
    
    
    
    
    
    
    
    
    Average(in millions)
    
    Balance
    
    
    Income(1)
    
    
    Yield
    
    
    Balance
    
    
    Income(1)
    
    
    YieldLoan participation interests:Commercial
        $
    27.9
    
        $
    0.5
    
    
    
    7.39
    %
        $
    42.3
    
        $
    0.8
    
    
    
    7.53
    %Commercial real estate
    
    
    3,095.6
    
    
    
    56.6
    
    
    
    7.32
    
    
    
    3,350.8
    
    
    
    60.0
    
    
    
    7.18Consumer
    
    
    1,053.5
    
    
    
    17.6
    
    
    
    6.70
    
    
    
    960.9
    
    
    
    16.2
    
    
    
    6.77Residential real estate
    
    
    99.1
    
    
    
    1.5
    
    
    
    6.21
    
    
    
    135.5
    
    
    
    2.0
    
    
    
    5.92Total loan participations
    
    
    4,276.1
    
    
    
    76.2
    
    
    
    7.14
    
    
    
    4,489.5
    
    
    
    79.0
    
    
    
    7.06Interest bearing deposits in the Bank
    
    
    385.3
    
    
    
    5.1
    
    
    
    5.25
    
    
    
    265.0
    
    
    
    3.3
    
    
    
    4.91Total
        $
    4,661.4
    
        $
    81.3
    
    
    
    6.99
    %
        $
    4,754.5
    
        $
    82.3
    
    
    
    6.94
    %
 (1)
 Table 5 - Year-To-Date Interest and Fee IncomeSix Months Ended June 30,2007
    
    
    2006Average
    
    
    
    
    
    
    
    
    
    
    Average(in millions)
    
    Balance
    
    
    Income(1)
    
    
    Yield
    
    
    Balance
    
    
    Income(1)
    
    
    YieldLoan participation interests:Commercial
        $
    28.9
    
        $
    1.1
    
    
    
    7.35
    %
        $
    44.8
    
        $
    1.6
    
    
    
    7.39
    %Commercial real estate
    
    
    3,087.6
    
    
    
    113.0
    
    
    
    7.38
    
    
    
    3,333.3
    
    
    
    115.9
    
    
    
    7.01Consumer
    
    
    969.0
    
    
    
    32.1
    
    
    
    6.70
    
    
    
    983.1
    
    
    
    33.1
    
    
    
    6.78Residential real estate
    
    
    103.2
    
    
    
    3.2
    
    
    
    6.12
    
    
    
    143.2
    
    
    
    4.2
    
    
    
    5.92Total loan participations
    
    
    4,188.7
    
    
    
    149.4
    
    
    
    7.19
    
    
    
    4,504.4
    
    
    
    154.8
    
    
    
    6.93Interest bearing deposits in the Bank
    
    
    406.2
    
    
    
    10.7
    
    
    
    5.25
    
    
    
    198.8
    
    
    
    4.8
    
    
    
    4.78Total
        $
    4,594.9
    
        $
    160.1
    
    
    
    7.02
    %
        $
    4,703.2
    
        $
    159.6
    
    
    
    6.84
    %
 (1)
  Allowances for Credit Losses (ACL)
  19




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##### Table of Contents



Table 6 - Allowances for Credit Loss Activity2007
    
    
    2006(in thousands)
    
    Second
    
    
    First
    
    
    Fourth
    
    
    Third
    
    
    SecondALPL balance, beginning of period
        $
    50,107
    
        $
    48,703
    
        $
    51,729
    
        $
    51,466
    
        $
    53,586Allowance of loan participations acquired
    
    
    9,673
    
    
    
    5,301
    
    
    
    2,715
    
    
    
    5,055
    
    
    
    5,172Net loan lossesCommercial
    
    
    81
    
    
    
    20
    
    
    
    158
    
    
    
    77
    
    
    
    633Commercial real estate
    
    
    (2,201
    )
    
    
    (590
    )
    
    
    (1,411
    )
    
    
    (145
    )
    
    
    (2,162
    )Consumer
    
    
    (836
    )
    
    
    (926
    )
    
    
    (942
    )
    
    
    (780
    )
    
    
    (743
    )Residential real estate
    
    
    
    
    
    
    ---
    
    
    
    ---
    
    
    
    (33
    )
    
    
    ---Total net loan losses
    
    
    (2,956
    )
    
    
    (1,496
    )
    
    
    (2,195
    )
    
    
    (881
    )
    
    
    (2,272
    )Provision for (reduction in) ALL
    
    
    250
    
    
    
    (2,401
    )
    
    
    (3,546
    )
    
    
    (3,911
    )
    
    
    (5,020
    )ALPL balance, end of period
        $
    57,074
    
        $
    50,107
    
        $
    48,703
    
        $
    51,729
    
        $
    51,466AULPC balance, beginning of period
        $
    3,512
    
        $
    3,804
    
        $
    4,658
    
        $
    4,002
    
        $
    4,185Provision for (reduction in) AULPC
    
    
    841
    
    
    
    (292
    )
    
    
    (854
    )
    
    
    656
    
    
    
    (183
    )AULPC balance, end of period
        $
    4,353
    
        $
    3,512
    
        $
    3,804
    
        $
    4,658
    
        $
    4,002Total Allowance for Credit Losses
        $
    61,427
    
        $
    53,619
    
        $
    52,507
    
        $
    56,387
    
        $
    55,468ALPL as a % of total participation interests
    
    
    1.28
    %
    
    
    1.21
    
    %
    
    1.19
    %
    
    
    1.19
    %
    
    
    1.17
    %ACL as a % of total participation interests
    
    
    1.38
    
    
    
    1.29
    
    
    
    1.28
    
    
    
    1.30
    
    
    
    1.26
 Six Months EndedJune 30,(in thousands)
    
    2007
    
    
    2006ALPL balance, beginning of period
        $
    48,703
    
        $
    57,530Allowance for loan participations acquired
    
    
    14,974
    
    
    
    11,634Net loan lossesCommercial
    
    
    101
    
    
    
    889Commercial real estate
    
    
    (2,791
    )
    
    
    (2,938
    )Consumer
    
    
    (1,762
    )
    
    
    (1,364
    )Residential real estate
    
    
    
    
    
    
    (32
    )Total net loan losses
    
    
    (4,452
    )
    
    
    (3,445
    )Reduction in ALPL
    
    
    (2,151
    )
    
    
    (14,253
    )ALPL balance, end of period
        $
    57,074
    
        $
    51,466AULPC balance, beginning of period
        $
    3,804
    
        $
    4,135Provision for (reduction in) AULPC
    
    
    549
    
    
    
    (133
    )AULPC balance, end of period
        $
    4,353
    
        $
    4,002Total Allowance for Credit Losses
        $
    61,427
    
        $
    55,468
  20




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##### Table of Contents



Non-Performing Assets (NPAs)
   Table 7 - Quarterly Non-Performing Assets2007
    
    
    2006(in thousands)
    
    Second
    
    
    First
    
    
    Fourth
    
    
    Third
    
    
    SecondParticipation interests in non-accrual loansCommercial
        $
    391
    
        $
    408
    
        $
    687
    
        $
    143
    
        $
    108Commercial real estate
    
    
    43,263
    
    
    
    23,162
    
    
    
    19,966
    
    
    
    16,784
    
    
    
    16,834Consumer
    
    
    3,106
    
    
    
    3,243
    
    
    
    3,490
    
    
    
    3,375
    
    
    
    3,545Residential real estate
    
    
    1,163
    
    
    
    1,659
    
    
    
    1,159
    
    
    
    1,598
    
    
    
    1,687Total Non-Performing Assets
        $
    47,923
    
        $
    28,472
    
        $
    25,302
    
        $
    21,900
    
        $
    22,174Participations in Accruing Loans
Past Due 90 Days or More
        $
    3,640
    
        $
    3,046
    
        $
    5,392
    
        $
    6,124
    
        $
    6,079NPAs as a % of total
participation interests
    
    
    1.07
    %
    
    
    0.69
    
    %
    
    0.62
    %
    
    
    0.51
    %
    
    
    0.50
    %ALPL as a % of NPAs
    
    
    119
    
    
    
    176
    
    
    
    192
    
    
    
    236
    
    
    
    232ACL as a % of NPAs
    
    
    128
    
    
    
    188
    
    
    
    208
    
    
    
    257
    
    
    
    250
    21




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##### Table of Contents



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.)
  January 1, 2006thruJune 30, 2007Commercial and commercial real estate
    
    
    0.125
    %Consumer
    
    
    0.650
    %Residential real estate
    
    
    0.267
    %
  Provision for Income Taxes
  MARKET RISK
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OFF-BALANCE SHEET ARRANGEMENTS
  LIQUIDITY AND CAPITAL RESOURCES
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##### Table of Contents



Item 3. Quantitative And Qualitative Disclosures About Market Risk
  
 Item 4. Controls and Procedures
   
 Item 4T. Controls and Procedures
  
 PART II. OTHER INFORMATION
  
 Item 4. Submission of Matters to a Vote of Shareholders
  1.
    
    Election of directors to serve as Directors until the next Annual Meeting of
shareholders as follows:
Richard A. Cheap, Stephen E. Dutton, Edward J. Kane, Roger E. Kephart, Donald R.
Kimble, Thomas P. Reed, James D. Robbins, Karen D. Roggenkamp, and Richard I.
Witherow.2.
    
    Ratification of appointment of Deloitte & Touche LLP to serve as the companys
independent registered public accounting firm for the year 2007.
  
 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
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##### Table of Contents



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.10.1
    
    Limited Waiver of Contract Provision, dated August 13, 2007, with
Huntington Preferred Capital Holdings, Inc., Huntington Preferred Capital, Inc.,
and The Huntington National Bank.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 and six months ended
June 30, 2007 and 2006.
 
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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)
 26