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, 2005

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 þ No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes o No þ

As of July 31, 2005, 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 (Unaudited)
Condensed Consolidated Balance Sheets — At June 30, 2005, December 31, 2004, and June 30, 2004			3
Condensed Consolidated Statements of Income — For the three-months and six-months ended June 30, 2005 and 2004			4
Condensed Consolidated Statements of Changes in Shareholders’ Equity — For the six-months ended June 30, 2005 and 2004			5
Condensed Consolidated Statements of Cash Flows — For the six-months ended June 30, 2005 and 2004			6
Notes to Unaudited Condensed Consolidated Financial Statements			7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			14
Item 3. Quantitative and Qualitative Disclosures about Market Risk			25
Item 4. Controls and Procedures			25
Part II. Other Information
Item 4. Submission of Matters to a Vote of Shareholders			26
Item 6. Exhibits			26
Signatures			28
EX-10.E
EX-31.1
EX-31.2
EX-32.1
EX-32.2

Part I. Financial Information

Item 1. Financial Statements

Huntington Preferred Capital, Inc.

Condensed Consolidated Balance Sheets

		June 30,				December 31,				June 30,
(in thousands of dollars, except share data)		2005				2004				2004
		(Unaudited)								(Unaudited)
Assets
Cash with The Huntington National Bank		$	62,980			$	48,253			$	234,870
Interest bearing deposits with The Huntington National Bank			395,500				752,000				150,000
Due from The Huntington National Bank			1,812				175				1,315
Loan participation interests:
Commercial			72,310				106,179				140,424
Commercial real estate			3,614,633				3,738,930				4,060,435
Consumer			896,201				819,250				723,410
Residential real estate			188,407				224,914				254,600
Total loan participation interests			4,771,551				4,889,273				5,178,869
Allowance for loan losses			(60,987	)			(61,146	)			(72,524	)
Net loan participation interests			4,710,564				4,828,127				5,106,345
Premises and equipment			23,862				26,635				29,364
Accrued income and other assets			19,573				18,401				16,630
Total Assets		$	5,214,291			$	5,673,591			$	5,538,524
Liabilities
Allowance for unfunded loan participation commitments		$	4,650			$	3,765			$	3,892
Dividends and distributions payable			9,922				600,000				2,340
Other liabilities			265				50				156
Total Liabilities			14,837				603,815				6,388
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			4,268,776				4,268,776				4,604,978
Retained earnings			129,678				—				126,158
Total Shareholders’ Equity			5,199,454				5,069,776				5,532,136
Total Liabilities and Shareholders’ Equity		$	5,214,291			$	5,673,591			$	5,538,524

See notes to unaudited condensed consolidated financial statements.

Huntington Preferred Capital, Inc.

Condensed Consolidated Statements of Income
(Unaudited)

		Three Months Ended								Six Months Ended
		June 30,								June 30,
(in thousands of dollars)		2005				2004				2005				2004
Interest and fee income
Interest on loan participation interests:
Commercial		$	1,264			$	1,901			$	2,644			$	3,995
Commercial real estate			51,982				44,751				100,737				89,811
Consumer			14,687				12,969				28,612				24,982
Residential real estate			2,647				3,475				5,543				7,158
Total loan participation interest income			70,580				63,096				137,536				125,946
Fees from loan participation interests			491				652				1,119				1,263
Interest on deposits with The Huntington National Bank			2,570				198				4,043				487
Total interest and fee income			73,641				63,946				142,698				127,696
Reduction in allowances for credit losses			(3,840	)			(9,301	)			(7,281	)			(11,564	)
Interest income after reduction in allowance for credit losses			77,481				73,247				149,979				139,260
Non-interest income:
Rental income			1,591				1,853				3,181				3,322
Collateral fees			965				192				1,146				389
Total non-interest income			2,556				2,045				4,327				3,711
Non-interest expense:
Servicing costs			2,899				2,199				5,762				4,335
Depreciation and amortization			1,102				1,346				2,239				2,699
Loss on disposal of fixed assets			388				26				533				63
Other			169				374				409				479
Total non-interest expense			4,558				3,945				8,943				7,576
Income before provision for income taxes			75,479				71,347				145,363				135,395
Provision for income taxes			25				84				124				107
Net income		$	75,454			$	71,263			$	145,239			$	135,288
Dividends declared on preferred securities			(8,256	)			(4,488	)			(15,561	)			(9,130	)
Net income applicable to common shares		$	67,198			$	66,775			$	129,678			$	126,158

See notes to unaudited condensed consolidated financial statements.

Huntington Preferred Capital, Inc.

Condensed Consolidated Statements of Changes in Shareholders’ Equity

		Preferred, Class A								Preferred, Class B								Preferred, Class C
(in thousands)		Shares				Securities				Shares				Securities				Shares				Securities
Six Months Ended June 30, 2004 (Unaudited):
Balance, beginning of period			1			$	1,000				400			$	400,000				2,000			$	50,000
Comprehensive Income:
Net income
Total comprehensive income
Balance, end of period (Unaudited)			1			$	1,000				400			$	400,000				2,000			$	50,000
Six Months Ended June 30, 2005 (Unaudited):
Balance, beginning of period			1			$	1,000				400			$	400,000				2,000			$	50,000
Comprehensive Income:
Net income
Total comprehensive income
Balance, end of period (Unaudited)			1			$	1,000				400			$	400,000				2,000			$	50,000

		Preferred, Class D								Preferred								Common								Retained
( in thousands)		Shares				Securities				Shares				Securities				Shares				Stock				Earnings				Total
Six Months Ended June 30, 2004 (Unaudited):
Balance, beginning of period			14,000			$	350,000				—			$	—				14,000			$	4,604,978			$	—			$	5,405,978
Comprehensive Income:
Net income																											135,288				135,288
Total comprehensive income																															135,288
Dividends declared on Class A preferred securities																											(80	)			(80	)
Dividends declared on Class B preferred securities																											(2,260	)			(2,260	)
Dividends declared on Class C preferred securities																											(1,969	)			(1,969	)
Dividends declared on Class D preferred securities																											(4,821	)			(4,821	)
Balance, end of period (Unaudited)			14,000			$	350,000				—			$	—				14,000			$	4,604,978			$	126,158			$	5,532,136
Six Months Ended June 30, 2005 (Unaudited):
Balance, beginning of period			14,000			$	350,000				—			$	—				14,000			$	4,268,776			$	—			$	5,069,776
Comprehensive Income:
Net income																											145,239				145,239
Total comprehensive income																															145,239
Dividends declared on Class A preferred securities																											(80	)			(80	)
Dividends declared on Class B preferred securities																											(5,690	)			(5,690	)
Dividends declared on Class C preferred securities																											(1,969	)			(1,969	)
Dividends declared on Class D preferred securities																											(7,822	)			(7,822	)
Balance, end of period (Unaudited)			14,000			$	350,000				—			$	—				14,000			$	4,268,776			$	129,678			$	5,199,454

See notes to unaudited condensed consolidated financial statements.

Huntington Preferred Capital, Inc.

Condensed Consolidated Statements of Cash Flows
(Unaudited)

		Six Months Ended
		June 30,
(in thousands of dollars)		2005				2004
Operating Activities
Net Income		$	145,239			$	135,288
Adjustments to reconcile net income to net cash provided by operating activities:
Reduction of allowances for credit losses			(7,281	)			(11,564	)
Depreciation and amortization			2,239				2,699
Deferred income tax benefit			(216	)			(472	)
Loss on disposal of fixed assets			533				63
(Increase) decrease in due from The Huntington National Bank			(1,637	)			12,337
Increase in other liabilities			215				26
Other, net operating activities			(176	)			2,896
Net Cash Provided by Operating Activities			138,916				141,273
Investing Activities
Participation interests acquired			(1,599,095	)			(2,411,066	)
Sales and repayments of loans underlying participation interests			1,724,045				2,537,368
Net Cash Provided by Investing Activities			124,950				126,302
Financing Activities
Dividends paid on preferred securities			(5,639	)			(6,790	)
Dividends paid on common stock			(263,798	)			—
Ret