##### Table of Contents





United States
 Securities and Exchange
    Commission
 Washington, D.C.
    20549
  Form 10-Q
  QUARTERLY REPORT UNDER
    SECTION 13 OR 15(d)
 OF THE SECURITIES EXCHANGE ACT
    OF 1934
  For the
    quarterly period ended June 30, 2009
  Commission file number
    1-13805
  Harris Preferred Capital
    Corporation
    Maryland(State or other jurisdiction
    of incorporation or organization)

# 36-4183096(I.R.S. Employer
    Identification No.)111 West Monroe Street, Chicago, Illinois(Address of principal executive offices)

60603(Zip Code)   Registrants telephone number, including area code:
 (312) 461-2121
  Securities registered pursuant to Section 12(b) of the
    Act:
  Name of each exchange onTitle of each class

which registered73/8%
    Noncumulative Exchangeable Preferred Stock,
    Series A, par value $1.00 per share

New York Stock Exchange   Securities registered pursuant to Section 12(g) of the
    Act: None
   þ o
   Regulation S-T (232.405
 o o
   12b-2
  Large
    accelerated
    filer o
    Accelerated
    filer o
    Non-accelerated
    filer þ
    Smaller
    reporting
    company o    Rule 12b-2
 o þ




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##### 





HARRIS
    PREFERRED CAPITAL CORPORATION
  TABLE OF
    CONTENTS
   
 Part I

FINANCIAL INFORMATIONItem 1.

Financial Statements:Consolidated Balance Sheets


2Consolidated Statements of Income and Comprehensive Income


3Consolidated Statements of Changes in Stockholders Equity


4Consolidated Statements of Cash Flows


5Notes to Consolidated Financial Statements


6Item 2.

Managements Discussion and Analysis of Financial Condition
    and Results of Operations


9Item 3.

Quantitative and Qualitative Disclosures about Market Risk


25Item 4T.

Controls and Procedures


26PART II

OTHER INFORMATIONItem 6.

Exhibits


27Signatures


29EX-31.1EX-31.2EX-32.1




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##### Table of Contents



HARRIS
    PREFERRED CAPITAL CORPORATIONCONSOLIDATED BALANCE SHEETS
  June 30


December 31


June 302009


2008


2008(unaudited)


(audited)


(unaudited)(in thousands, except share data)AssetsCash on deposit with Harris N.A.

$
729


$
816


$
640Securities purchased from Harris N.A. under agreement to resell


10,672



5,863



11,710Total cash and cash equivalents

$
11,401


$
6,679


$
12,350Notes receivable from Harris N.A.


3,896



4,284



4,755Securities
    available-for-sale,
    at fair valueMortgage-backed


566,047



488,282



469,357U.S. Treasury Bills










Other assets


2,094



1,885



2,063Total assets

$
583,438


$
501,130


$
488,525Liabilities and Stockholders EquityAccrued expenses

$
869


$
112


$
58Deferred state tax liabilities


846



774



Total liabilities

$
1,715


$
886


$
58Commitments and contingenciesStockholders Equity73/8%
    Noncumulative Exchangeable Preferred Stock, Series A
    ($1 par value); liquidation value of $250,000;
    20,000,000 shares authorized, 10,000,000 shares issued
    and outstanding

$
250,000


$
250,000


$
250,000Common stock ($1 par value); 5,000 shares authorized;
    1,180 issued and outstanding at June 30, 2009, and
    1,000 shares authorized, issued and outstanding at
    December 31, 2008 and June 30, 2008


1



1



1Additional paid-in capital


320,733



240,733



240,733Earnings in excess (less than) of distributions


250



(322
)


1,352Accumulated other comprehensive income (loss)  net
    unrealized gains (losses) on
    available-for-sale
    securities


10,739



9,832



(3,619
)Total stockholders equity

$
581,723


$
500,244


$
488,467Total liabilities and stockholders equity

$
583,438


$
501,130


$
488,525   The accompanying notes are an integral part of these
    financial statements.
 2




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##### Table of Contents



HARRIS
    PREFERRED CAPITAL CORPORATIONCONSOLIDATED STATEMENTS OF INCOME
    AND COMPREHENSIVE INCOME
    (Unaudited)
  Quarter Ended June 30,


Six Months Ended June 30,2009


2008


2009


2008(in thousands, except share data)Interest income:Securities purchased from Harris N.A. under agreement to resell

$
8


$
174


$
17


$
808Notes receivable from Harris N.A.


62



78



127



160Securities
    available-for-sale:Mortgage-backed


5,612



5,114



10,994



9,788U.S. Treasury Bills


1



1



1



16Total interest income

$
5,683


$
5,367


$
11,139


$
10,772Operating expenses:Loan servicing fees paid to Harris N.A.

$
3


$
4


$
6


$
8Advisory fees paid to Harris N.A.


41



62



97



102General and administrative


74



63



194



159Total operating expenses

$
118


$
129


$
297


$
269Income before income taxes

$
5,565


$
5,238


$
10,842



10,503Applicable state income taxes


406







791



Net Income

$
5,159


$
5,238


$
10,051


$
10,503Preferred stock dividends


4,609



4,609



9,218



9,218Net income available to common stockholder

$
550


$
629


$
833


$
1,285Basic and diluted earnings per common share

$
466


$
629


$
746


$
1,285Average number of common shares outstanding


1,180



1,000



1,117



1,000Net income

$
5,159


$
5,238


$
10,051


$
10,503Other comprehensive income (loss):Available-for-sale
    securities:Unrealized holding (losses) gains arising during the period, net
    of deferred state taxes

$
(2,728
)

$
(6,985
)

$
907


$
(2,612
)Less reclassification adjustment for realized (gains) losses
    included in net income














Comprehensive income (loss)

$
2,431


$
(1,747
)

$
10,958


$
7,891   The accompanying notes are an integral part of these
    financial statements.
 3




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##### Table of Contents



HARRIS
    PREFERRED CAPITAL CORPORATIONCONSOLIDATED STATEMENTS OF CHANGES IN
    STOCKHOLDERS EQUITY
    (Unaudited)
  Six Months EndedJune 302009


2008(in thousands)Balance at January 1

$
500,244


$
489,794Net income


10,051



10,503Other comprehensive income


907



(2,612
)Capital contribution and issuance of common stock


80,000



Dividends common stock


(261
)


Dividends (preferred stock $0.4609 per share)


(9,218
)


(9,218
)Balance at June 30

$
581,723


$
488,467   The accompanying notes are an integral part of these
    financial statements.
 4




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##### Table of Contents



HARRIS
    PREFERRED CAPITAL CORPORATIONCONSOLIDATED STATEMENTS OF CASH FLOWS
    (Unaudited)
  Six Months Ended June 30,2009


2008(in thousands)Operating Activities:Net income

$
10,051


$
10,503Adjustments to reconcile net income to net cash provided by
    operating activities:Net increase in other assets


(209
)


(534
)Net increase (decrease) in accrued expenses


756



(71
)Net cash provided by operating activities

$
10,598


$
9,898Investing Activities:Repayments of notes receivable from Harris N.A.

$
388


$
580Purchases of securities
    available-for-sale


(261,617
)


(191,612
)Proceeds from maturities/redemptions of securities
    available-for-sale


184,832



188,837Net cash used in investing activities

$
(76,397
)

$
(2,195
)Financing Activities:Cash dividends paid on preferred stock

$
(9,218
)

$
(9,218
)Cash dividends paid on common stock


(261
)


(3,000
)Capital contribution and issuance of common stock


80,000



Net cash provided by (used in) financing activities

$
70,521


$
(12,218
)Net increase (decrease) in cash on deposit with Harris N.A.

$
4,722


$
(4,515
)Cash and cash equivalents with Harris N.A. at beginning of period


6,679



16,865Cash and cash equivalents with Harris N.A. at end of period

$
11,401


$
12,350   The accompanying notes are an integral part of these
    financial statements.
 5




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##### Table of Contents



HARRIS
    PREFERRED CAPITAL CORPORATION
  NOTES
    TO CONSOLIDATED FINANCIAL STATEMENTS
  1.
    Basis of
    Presentation    Form 10-K.
    2.
    Commitments
    and Contingencies    3.
    Securities  FAS 115-2 FAS 124-2, Other-Than-Temporary other-than-temporary available-for-sale held-to-maturity,
  available-for-sale
  June 30, 2009Amortized


Unrealized


Unrealized


FairCost


Gains


Losses


Value(in thousands)Available-for-Sale
    SecuritiesResidential mortgage-backed

$
554,463


$
13,207


$
1,623


$
566,047   6




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##### Table of Contents



HARRIS
    PREFERRED CAPITAL CORPORATION
  December 31, 2008Amortized


Unrealized


Unrealized


FairCost


Gains


Losses


Value(in thousands)Available-for-Sale
    SecuritiesResidential mortgage-backed

$
477,678


$
10,720


$
116


$
488,282   June 30, 2008Amortized


Unrealized


Unrealized


FairCost


Gains


Losses


Value(in thousands)Available-for-Sale
    SecuritiesResidential mortgage-backed

$
472,976


$
1,494


$
5,113


$
469,357   available-for-sale. Available-for-sale available-for-sale
  other-than-temporarily
  June 30, 2009Length of Continuous Unrealized Loss PositionLess than 12 months


12 months or longer


TotalUnrealized





Unrealized





UnrealizedFair Value


Loss


Fair Value


Losses


Fair Value


Losses(in thousands)Residential mortgage-backed

$
146,066


$
1,623


$



$



$
146,066


$
1,623   December 31, 2008Length of Continuous Unrealized Loss PositionLess than 12 months


12 months or longer


TotalUnrealized





Unrealized





UnrealizedFair Value


Loss


Fair Value


Losses


Fair Value


Losses(in thousands)Residential mortgage-backed

$
35,618


$
112


$
16,937


$
4


$
52,555


$
116   June 30, 2008Length of Continuous Unrealized Loss PositionLess than 12 months


12 months or longer


TotalUnrealized





Unrealized





UnrealizedFair Value


Loss


Fair Value


Losses


Fair Value


Losses(in thousands)Residential mortgage-backed

$
234,918


$
3,271


$
99,322


$
1,842


$
334,240


$
5,113  7




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##### Table of Contents



HARRIS
    PREFERRED CAPITAL CORPORATION
  available-for-sale
  June 30, 2009Amortized


FairCost


ValueMaturities:Within 1 year

$
1,003


$
1,0101 to 5 years


57,077



58,1825 to 10 years


147,750



152,945Over 10 years


348,633



353,910Total

$
554,463


$
566,047   4.
    Fair
    Value Measurements  FAS 157-4,
      Fair Value


Fair Value Measurements UsingJune 30, 2009


Level 1


Level 2


Level 3(in thousands)Available-for-sale
    securities

$
566,047


$



$
566,047


$
Residential mortgage-backed   Fair Value


Fair Value Measurements UsingDecember 31, 2008


Level 1


Level 2


Level 3(in thousands)Available-for-sale
    securities

$
488,282


$



$
488,282


$
Residential mortgage-backed   Fair Value


Fair Value Measurements UsingJune 30, 2008


Level 1


Level 2


Level 3(in thousands)Available-for-sale
    securities

$
469,357


$



$
469,357


$
Residential mortgage-backed  8




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##### Table of Contents



HARRIS
    PREFERRED CAPITAL CORPORATION
   5.
    Fair
    Value of Financial Instruments  item-by-item
      available-for-sale
    June 30, 2009Carrying


FairValue


Value(in thousands)AssetsCash on deposit with Harris N.A.

$
729


$
729Securities purchased from Harris N.A. under agreement to resell


10,672



10,672Notes receivable from Harris N.A.


3,896



5,696Securities
    available-for-sale


566,047



566,047Accrued interest receivable


2,094



2,094Total on-balance-sheet financial assets

$
583,438


$
585,238   Item 2.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  Forward-Looking
    Information
  Form 10-Q Form 10-K
 9




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##### Table of Contents



HARRIS
    PREFERRED CAPITAL CORPORATION
  Form S-11 No. 333-40257),
  Results
    of Operations
  Second
    Quarter 2009 Compared with Second Quarter 2008
    available-for-sale
      available-for-sale. Available-for-sale available-for-sale
  other-than-temporary
 10




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##### Table of Contents



HARRIS
    PREFERRED CAPITAL CORPORATION
    Six
    Months Ended June 30, 2009 compared with June 30,
    2008
    available-for-sale available-for-sale
         11




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##### Table of Contents



HARRIS
    PREFERRED CAPITAL CORPORATION
  Liquidity
    Risk Management
          available-for-sale available-for-sale. available-for-sale available-for-sale,
  Market
    Risk Management
    Accounting
    Pronouncements
  FAS 157-4, FAS 107-1 28-1, FAS 115-2 FAS 124-2, Other-Than-Temporary other-than-temporary available-for-sale held-to-maturity,
 12




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##### Table of Contents



HARRIS
    PREFERRED CAPITAL CORPORATION
              Tax
    Matters
   13




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##### Table of Contents



HARRIS
    PREFERRED CAPITAL CORPORATION
    Financial
    Statements of Harris N.A.
   14




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##### Table of Contents



HARRIS
    N.A. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF CONDITION
  June 30


December 31


June 302009


2008


2008(unaudited)


(audited)


(unaudited)(in thousands except share data)ASSETSCash and demand balances due from banks

$
1,102,486


$
1,072,255


$
1,438,130Money market assets:Interest-bearing deposits at banks ($3.0 billion,
    $24.7 billion, and $0 held at Federal Reserve Bank at
    June 30, 2009, December 31, 2008, and June 30,
    2008, respectively)


4,311,466



26,031,291



854,610Federal funds sold and securities purchased under agreement to
    resell


78,538



182,063



562,605Total cash and cash equivalents

$
5,492,490


$
27,285,609


$
2,855,345Securities available-for-sale at fair value (amortized cost of
    $7.5 billion, $9.2 billion and $8.7 billion at
    June 30, 2009, December 31, 2008 and June 30,
    2008, respectively)


7,616,642



9,283,283



8,878,484Trading account assets and derivative instruments


1,336,124



1,367,833



872,568Loans, net of unearned income


24,250,612



26,396,381



28,059,783Allowance for loan losses


(646,184
)


(574,224
)


(471,831
)Net loans

$
23,604,428


$
25,822,157


$
27,587,952Loans held for sale


92,775



29,544



48,226Premises and equipment


527,451



533,516



511,072Bank-owned insurance


1,320,877



1,304,315



1,267,293Goodwill and other intangible assets


766,582



779,444



807,870Other assets


815,350



900,354



865,030Total assets

$
41,572,719


$
67,306,055


$
43,693,840LIABILITIESDeposits in domestic offices  
    noninterest-bearing

$
7,494,673


$
28,059,575


$
6,681,698 interest-bearing (includes $187.4 million, $77.7 million, and $21.4 million measured at fair value at June 30, 2009, December 31, 2008 and June 30, 2008, respectively)


19,130,311



24,374,034



21,999,825Deposits in foreign offices     
    interest-bearing


2,351,579



920,235



751,795Total deposits

$
28,976,563


$
53,353,844


$
29,433,318Federal funds purchased


328,963



78,525



849,135Securities sold under agreement to repurchase


661,927



3,501,758



1,789,876Short-term borrowings


992,516



359,476



778,325Short-term senior notes


400,000



75,000



937,057Accrued interest, taxes and other expenses


194,813



247,825



199,182Accrued pension and post-retirement


109,725



171,933



54,484Other liabilities


450,415



631,487



389,710Long-term notes  senior


2,646,500



2,096,500



2,096,500Long-term notes  subordinated


292,750



292,750



297,750Long-term notes  secured


2,375,000



2,375,000



2,375,000Total liabilities

$
37,429,172


$
63,184,098


$
39,200,337STOCKHOLDERS EQUITYCommon stock ($10 par value); authorized
    40,000,000 shares; issued and outstanding
    17,149,512 shares at June 30, 2009, December 31,
    2008, and June 30, 2008

$
171,495


$
171,495


$
171,495Surplus


2,173,757



2,172,029



2,169,121Retained earnings


1,693,581



1,734,472



1,926,385Accumulated other comprehensive loss


(145,286
)


(206,039
)


(23,498
)Stockholders equity before noncontrolling
    interest  preferred stock of subsidiary

$
3,893,547


$
3,871,957


$
4,243,503Noncontrolling interest  preferred stock of subsidiary


250,000



250,000



250,000Total stockholders equity

$
4,143,547


$
4,121,957


$
4,493,503Total liabilities and stockholders equity

$
41,572,719


$
67,306,055


$
43,693,840   The accompanying notes to consolidated financial statements
    are an integral part of these statements.
 15




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##### Table of Contents



HARRIS
    N.A. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF INCOME
    (Unaudited)
  Quarter Ended


Six Months EndedJune 30,


June 30,2009


2008


2009


2008(in thousands)Interest IncomeLoans

$
273,201


$
368,622


$
561,179


$
748,867Money market assets:Deposits at banks


3,693



4,174



10,079



9,603Federal funds sold and securities purchased under agreements to
    resell


(310
)


3,685



145



11,246Trading assets


2,559



4,560



5,097



7,068Securities available-for-sale:U.S. Treasury and federal agency


25,233



60,805



59,502



138,413State and municipal


13,552



12,983



27,405



25,033Other


5,607



6,346



9,716



11,108Total interest income

$
323,535


$
461,175


$
673,123


$
951,338Interest ExpenseDeposits

$
80,850


$
138,893


$
192,830


$
329,736Short-term borrowings


2,413



15,492



4,310



38,259Short-term senior notes


1,313



7,136



1,319



12,288Long-term notes  senior


8,162



16,267



18,479



36,699Long-term notes  subordinated


1,081



2,572



2,731



6,137Long-term notes  secured


2,495



16,062



5,328



36,724Total interest expense

$
96,314


$
196,422


$
224,997


$
459,843Net Interest Income

$
227,221


$
264,753


$
448,126


$
491,495Provision for loan losses


147,142



129,321



240,236



152,523Net Interest Income after Provision for Loan Losses

$
80,079


$
135,432


$
207,890


$
338,972Noninterest IncomeTrust and investment management fees

$
19,856


$
22,545


$
38,638


$
45,396Net money market and bond trading income, including derivative
    activity


4,776



894



9,209



438Foreign exchange


2,775



1,275



5,400



2,400Service charges and fees


51,815



51,811



99,462



99,256Equity securities gains (losses), net


1,985



(1,424
)


3,937



38,372Net securities gains, other than trading


500



91



28,986



10,928Bank-owned insurance


11,423



14,205



22,526



26,655Letter of credit fees


5,268



3,916



10,362



7,746Loan sale gains, net


9,400



1,632



11,132



2,972Other


10,179



12,621



19,237



22,944Total noninterest income

$
117,977


$
107,566


$
248,889


$
257,107Noninterest ExpensesSalaries and other compensation

$
105,238


$
106,409


$
198,117


$
206,343Pension, profit sharing and other employee benefits


23,575



21,261



54,306



55,062Net occupancy


24,035



23,129



51,019



49,043Equipment


17,079



16,413



34,581



32,256Marketing


9,792



10,425



18,617



21,336Communication and delivery


7,249



8,111



14,896



15,446Professional fees


21,160



25,254



49,378



49,091Outside information processing, database and network fees


8,702



9,769



17,681



19,463FDIC Insurance


28,670



1,275



43,704



2,540Intercompany services, net


(198
)


7,543



(382
)


12,544Visa indemnification reversal














(17,000
)Other


22,789



20,446



41,032



38,842Amortization of intangibles


7,080



7,740



14,186



14,440Total noninterest expenses

$
275,171


$
257,775


$
537,135


$
499,406(Loss) income before income tax (benefit) expense

$
(77,115
)

$
(14,777
)

$
(80,356
)

$
96,673Applicable income taxes (benefit) expense


(37,349
)


(18,139
)


(48,684
)


12,663Net (loss) income before noncontrolling interest 
    dividends on preferred stock of subsidiary

$
(39,766
)

$
3,362


$
(31,672
)

$
84,010Noncontrolling interest  dividends on preferred stock
    of subsidiary


4,609



4,609



9,219



9,219Net (Loss) Income Available for Common Stockholder

$
(44,375
)

$
(1,247
)

$
(40,891
)

$
74,791   The accompanying notes to consolidated financial statements
    are an integral part of these statements.
 16




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##### Table of Contents



HARRIS
    N.A. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF COMPREHENSIVE INCOME
    (Unaudited)
  Quarter Ended


Six Months EndedJune 30,


June 30,2009


2008


2009


2008(in thousands)Net (loss) income available for common stockholder

$
(44,375
)

$
(1,247
)

$
(40,891
)

$
74,791Other comprehensive income (loss):Cash flow hedges:Net unrealized gain on derivative instruments, net of tax
    expense for the quarter of $20,770 in 2009 and $17,381 in 2008
    and net of tax expense for the year-to-date period of $29,918 in
    2009 and $2,848 in 2008


38,573



32,279



55,560



5,291Less reclassification adjustment for realized loss included in
    net (loss) income, net of tax benefit for the quarter of $401 in
    2009 and $1,241 in 2008 and net of tax benefit for the
    year-to-date period of $2,081 in 2009 and $2,879 in 2008


744



2,304



3,866



5,346Pension and postretirement medical benefit plans:Net gain and net prior service cost included in net (loss)
    income, net of tax expense for the quarter of $0 in 2009 and
    2008 and net of tax expense for the year-to-date period of
    $3,531 in 2009 and $511 in 2008










6,556



949Less reclassification adjustment for amortization included in
    net (loss) income, net of tax benefit for the quarter of $367 in
    2009 and $215 in 2008 and net of tax benefit for the
    year-to-date period of $733 in 2009 and $215 in 2008


681



399



1,362



399Available-for-sale securities:Unrealized holding gain (loss) arising during the period, net of
    tax expense (benefit) for the quarter of $6,148 in 2009 and
    ($19,704) in 2008 and net of tax expense (benefit) for the
    year-to-date period of $6,947 in 2009 and ($583) in 2008


11,426



(36,691
)


12,921



(1,058
)Less reclassification adjustment for realized gain included in
    net (loss) income, net of tax expense for the quarter of $473 in
    2009 and $32 in 2008 and net of tax expense for the year-to-date
    period of $10,507 in 2009 and $3,825 in 2008


(877
)


(59
)


(19,512
)


(7,103
)Other comprehensive income (loss)

$
50,547


$
(1,768
)

$
60,753


$
3,824Comprehensive income (loss) available for common
    stockholder

$
6,172


$
(3,015
)

$
19,862


$
78,615   The accompanying notes to consolidated financial statements
    are an integral part of these statements.
 17




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##### Table of Contents



HARRIS
    N.A. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
    (Unaudited)
  2009


2008(in thousands)Balance at January 1

$
4,121,957


$
4,038,342Net (loss) income before dividends on preferred stock of
    subsidiary


(31,672
)


84,010Contributions to capital surplus






386,869Issuance of common stock






16,347Stock options


494



923Tax benefit from stock option exercise


1,234



720Dividends  ($1.80 in 2008 per common share)






(28,000
)Dividends  preferred stock of subsidiary


(9,219
)


(9,219
)Adjustment to initially apply EITF
    06-4






(313
)Other comprehensive income


60,753



3,824Balance at June 30

$
4,143,547


$
4,493,503   The accompanying notes to consolidated financial statements
    are an integral part of these statements.
 18




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##### Table of Contents



HARRIS
    N.A. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
    (Unaudited)
  Six Months Ended June 302009


2008(in thousands)Operating Activities:Net (loss) income available for common stockholder

$
(40,891
)

$
74,791Adjustments to reconcile net income available for common
    stockholder to net cash provided by (used in) operating
    activities:Provision for loan losses


240,236



152,523Depreciation and amortization, including intangibles


56,316



44,574Deferred tax benefit


(20,758
)


(26,490
)Tax benefit from stock options exercise


1,234



720Other than temporary impairment on securities


1,033



Net gains on securities sold, other than trading


(30,019
)


(10,928
)Net equity investments gains


(3,937
)


(38,372
)Increase in bank-owned insurance


(16,562
)


(2,337
)Net decrease (increase) in trading securities


31,672



(785,632
)Net decrease in accrued interest receivable


33,547



26,431Net decrease (increase) in prepaid expenses


5,507



(15,544
)Net decrease in accrued interest payable


(49,683
)


(37,741
)Net increase in other accrued expenses


88,096



15,029Origination of loans held for sale


(688,859
)


(250,608
)Proceeds from sale of loans held for sale


637,246



268,106Net gains on loans held for sale


(11,618
)


(3,029
)Net (gains) losses on sale of premises and equipment


(1,477
)


406Recoveries on charged-off loans


33,124



27,694Net increase in settlement clearing account


(13,875
)


(734
)Net change in pension and post retirement benefits


(51,492
)


(32,286
)Net decrease in foreign exchange contracts


(19,228
)


(35,466
)Net decrease in marked to market hedging derivatives


(88,238
)


(12,009
)Visa indemnification






17,000Other, net


(29,809
)


(70,527
)Net cash provided by (used in) operating activities

$
61,565


$
(694,429
)Investing Activities:Proceeds from sales of securities available-for-sale

$
2,830,608


$
1,174,777Proceeds from maturities of securities available-for-sale


2,245,203



6,757,042Purchases of securities available-for-sale


(3,372,114
)


(7,267,810
)Net decrease (increase) in loans


1,944,369



(1,047,907
)Purchases of premises and equipment


(49,662
)


(19,199
)Sales and retirement of premises and equipment


17,867



9,171Proceeds from Visa redemption






37,800Acquisition, net of cash acquired


(3,423
)


(285,214
)Net cash provided by (used in) investing activities

$
3,612,848


$
(641,340
)Financing Activities:Net decrease in deposits

$
(24,377,281
)

$
(1,738,501
)Net increase (decrease) in Federal funds purchase and securities
    sold under agreement to repurchase


(2,589,393
)


842,857Net increase (decrease) in other short-term borrowings


633,040



(166,067
)Net increase in short-term senior notes


325,000



857,057Proceeds from issuance long-term notes  senior


550,000



Proceeds from issuance long-term notes  subordinated






5,000Proceeds from issuance long-term notes  secured






375,000Net proceeds from stock options


494



923Excess tax expense from stock options exercise


(173
)


(272
)Cash dividends paid on common stock






(28,000
)Cash dividends paid on preferred stock


(9,219
)


(9,219
)Issuance of common stock






16,347Contributions to capital surplus






386,869Net cash (used in) provided by financing activities

$
(25,467,532
)

$
541,994Net decrease in cash and cash equivalents

$
(21,793,119
)

$
(793,775
)Cash and cash equivalents at January 1


27,285,609



3,649,120Cash and cash equivalents at June 30

$
5,492,490


$
2,855,345   The accompanying notes to consolidated financial statements
    are an integral part of these statements.
 19




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##### Table of Contents



HARRIS
    N.A. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS
  1.
    Basis of
    Presentation              2.
    Contingent
    Liabilities and Litigation    3.
    Cash
    Flows   20




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##### Table of Contents



HARRIS
    N.A. AND SUBSIDIARIES
   4.
    Visa
    Indemnification Charge            5.
    Fair
    Value Measurements  FAS 157-4, FAS 107-1 28-1, FAS 115-2 FAS 124-2,
 21




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##### Table of Contents



HARRIS
    N.A. AND SUBSIDIARIES
   6.
    Fair
    Value Option    7.
    Accounting
    for Endorsement Split-Dollar Life Insurance
    Arrangements  No. 06-04,
  8.
    Auction
    Rate Securities Purchase Program      9.
    Noncontrolling
    Interests    10.
    FDIC
    Special Assessment   22




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##### Table of Contents



HARRIS
    N.A. AND SUBSIDIARIES
    11.
    Accounting
    Pronouncements         23




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##### Table of Contents



HARRIS
    N.A. AND SUBSIDIARIES
  FINANCIAL
    REVIEW
  Second
    Quarter 2009 Compared with Second Quarter 2008
  Summary
                 24




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##### Table of Contents



Six
    Months Ended June 30, 2009 Compared with June 30,
    2008
  Summary
      Year-to-date
      Item 3a.
    Quantitative
    and Qualitative Disclosures About Market Risk    available-for-sale
  July 1, 2009 to


Year Ending December 31,








Fair Value atDec. 31, 2009


2010


2011


2012


2013


Thereafter


Total


June 30, 2009Residential mortgage-backedAmortized cost

$
1,004


$
14,767


$
18,417


$



$
15,300


$
504,975


$
554,463


$
566,047Average Yield


4.00
%


4.06
%


4.00
%






4.00
%


4.55
%


4.50
%   25




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##### Table of Contents



Year Ending December 31,








Fair Value at2009


2010


2011


2012


2013


Thereafter


Total


December 31, 2008Residential mortgage-backedAmortized cost

$
43,936


$
41,881


$
22,902


$



$
18,237


$
350,722


$
477,678


$
488,282Average Yield


4.10
%


4.57
%


4.00
%






4.00
%


4.85
%


4.68
%   July 1, 2008 to


Year Ending December 31,








Fair Value atDec. 31, 2008


2009


2010


2011


2012


Thereafter


Total


June 30, 2008Residential mortgage-backedAmortized cost

$



$
56,131


$
45,712


$
24,842


$



$
346,291


$
472,976


$
469,357Average Yield


0.00
%


4.10
%


4.57
%


4.00
%






4.85
%


4.69
%   sub-prime
  Item 4T.
    Controls
    and Procedures  (a)
    Evaluation
    of Disclosure Controls and Procedures    (b)
    Changes
    in Internal Control over Financial Reporting   26




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##### Table of Contents



Part II.
    OTHER INFORMATION  Items 1,
    2, 3, 4 and 5 are being omitted from this Report because such
    items are not applicable to the reporting period.
  Item 1A.
    Risk
    Factors.  Form 10-K
  Dividends
    and operations of the Company are restricted by
    regulation.
          Item 6.
    Exhibits  31.1  Certification of Pamela C. Piarowski pursuant
    to
    rule 13a-14(a)
 27




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##### Table of Contents



31.2  Certification of Paul R. Skubic pursuant to
    rule 13a-14(a)
  32.1  Certification pursuant to 18 U.S.C.
    Section 1350, as adopted pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002
 28




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##### Table of Contents



SIGNATURES     Paul
    R. Skubic
  
   Pamela
    C. Piarowski
  
 29