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 June 30, 2004

 

Commission File Number: 000-33243

 

 

HUNTINGTON PREFERRED CAPITAL, INC.

 

 

Ohio   31-1356967

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

41 South High Street, Columbus, Ohio 43287

 

Registrant’s telephone number (614) 480-8300

 

 

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days.    Yes   x     No   ¨

 

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).    Yes   ¨     No   x

 

As of July 31, 2004, 14,000,000 shares of common stock without par value were outstanding, all of which were held by affiliates of the registrant.

 

HUNTINGTON PREFERRED CAPITAL, INC.

 

INDEX

 

Part I.

   Financial Information     
Item 1.    Financial Statements     
     Condensed Consolidated Balance Sheets - At June 30, 2004, December 31, 2003, and June 30, 2003    3
     Condensed Consolidated Statements of Income - For the three-months and six-months ended June 30, 2004 and 2003    4
     Condensed Consolidated Statements of Changes in Shareholders’ Equity - For the six-months ended June 30, 2004 and 2003    5
     Condensed Consolidated Statements of Cash Flows - For the six-months ended June 30, 2004 and 2003    6
     Notes to Unaudited Condensed Consolidated Financial Statements    7
Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations    12
Item 3.    Quantitative and Qualitative Disclosures about Market Risk    21
Item 4.    Controls and Procedures    21
Part II.    Other Information     
Item 4.    Submission of Matters to a Vote of Security Holders    22
Item 5.    Other Information    22
Item 6.    Exhibits and Reports on Form 8-K    22
Signatures    23

 

2

Part I. Financial Information

Item 1. Financial Statements

Huntington Preferred Capital, Inc.

Condensed Consolidated Balance Sheets

 

(in thousands of dollars, except share data)

   June 30,
2004
    December 31,
2003
    June 30,
2003
 
     (Unaudited)           (Unaudited)  

Assets

                        

Cash with The Huntington National Bank

   $ 234,870     $ 124,085     $ 59,191  

Interest bearing deposits with The Huntington National Bank

     150,000       —         423,579  

Due from affiliates

     1,315       13,652       11,616  

Loan participation interests:

                        

Commercial

     140,424       147,211       233,579  

Commercial real estate

     4,060,435       4,245,092       4,077,395  

Consumer

     723,410       622,575       534,711  

Residential real estate

     254,600       288,190       376,641  
    
 
 

Total loan participation interests

     5,178,869       5,303,068       5,222,326  

Allowance for loan losses

     (72,524 )     (84,532 )     (110,127 )
    
 
 

Net loan participation interests

     5,106,345       5,218,536       5,112,199  
    
 
 

Premises and equipment

     29,364       32,126       34,980  

Accrued income and other assets

     16,630       17,579       20,153  
    
 
 

Total Assets

   $ 5,538,524     $ 5,405,978     $ 5,661,718  
    
 
 

Liabilities

                        

Allowance for unfunded loan participation commitments

   $ 3,892     $ —       $ —    

Dividends payable and other liabilities

     2,496       —         3,288  
    
 
 

Total Liabilities

     6,388       —         3,288  
    
 
 

Shareholders’ Equity

                        

Preferred 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       1,000  

Preferred 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       400,000  

Preferred 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       50,000  

Preferred 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       350,000  

Preferred securities, $25 par, 10,000,000 shares authorized; no shares issued or outstanding

     —         —         —    

Common stock - without par value; 14,000,000 shares authorized, issued and outstanding

     4,604,978       4,604,978       4,715,351  

Retained earnings

     126,158       —         142,079  
    
 
 

Total Shareholders’ Equity

     5,532,136       5,405,978       5,658,430  
    
 
 

Total Liabilities and Shareholders’ Equity

   $ 5,538,524     $ 5,405,978     $ 5,661,718  
    
 
 

 

See notes to unaudited condensed consolidated financial statements.

 

3

Huntington Preferred Capital, Inc.

Condensed Consolidated Statements of Income

(Unaudited)

 

     Three Months Ended
June 30,
   

Six Months Ended

June 30,

 

(in thousands of dollars)

   2004
    2003
    2004
    2003
 

Interest and fee income

                                

Interest on loan participation interests:

                                

Commercial

   $ 1,901     $ 2,979     $ 3,995     $ 6,934  

Commercial real estate

     44,751       45,879       89,811       92,836  

Consumer

     12,969       12,388       24,982       25,767  

Residential real estate

     3,475       3,000       7,158       5,251  
    
 
 
 

Total loan participation interest income

     63,096       64,246       125,946       130,788  

Fees from loan participation interests

     652       2,609       1,263       5,342  

Interest on deposits with The Huntington

                                

National Bank

     198       2,015       487       3,869  
    
 
 
 

Total interest and fee income

     63,946       68,870       127,696       139,999  
    
 
 
 

Reduction of allowances for credit losses

     (9,301 )     (15,000 )     (11,564 )     (15,000 )
    
 
 
 

Interest income after reduction of allowances for credit losses

     73,247       83,870       139,260       154,999  
    
 
 
 

Non-interest income:

                                

Rental income

     1,853       1,463       3,322       3,269  

Collateral fees

     192       146       389       306  
    
 
 
 

Total non-interest income

     2,045       1,609       3,711       3,575  
    
 
 
 

Non-interest expense:

                                

Servicing costs

     2,199       1,750       4,335       3,326  

Depreciation

     1,346       1,383       2,699       2,784  

Loss on disposal of fixed assets

     26       —         63       325  

Other

     374       95       479       150  
    
 
 
 

Total non-interest expense

     3,945       3,228       7,576       6,585  
    
 
 
 

Income before provision for income taxes

     71,347       82,251       135,395       151,989  

Provision for income taxes

     84       24       107       49  
    
 
 
 

Net income

   $ 71,263     $ 82,227     $ 135,288     $ 151,940