HPCCP Huntington Preferred Capital - Class C Preferred Stock (MM)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14C INFORMATION

Information Statement Pursuant to Section 14C of the Securities Exchange Act of 1934 (Amendment No. 1)

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HUNGTINGTON PREFERRED CAPITAL, INC.

 

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Huntington Preferred Capital, Inc.		Notice of Annual Meeting
		Information Statement
		Annual Report on Form 10-K

Huntington Preferred Capital, Inc.
Huntington Center
41 South High Street
Columbus, Ohio 43287

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

To Our Common, Class C Preferred, and Class D Preferred Shareholders:

     The 2008 Annual Meeting of Shareholders of Huntington Preferred Capital, Inc. will be held in the Huntington Center, Tenth Floor, 41 South High Street, Columbus, Ohio, on Wednesday, May 14, 2008, at 8:30 a.m. local Columbus, Ohio, time, for the following purposes:

	(1)		To elect nine directors to serve until the Annual Meeting of Shareholders to be held in 2009 and until their successors are elected.
	(2)		To ratify the appointment of Deloitte & Touche LLP to serve as the independent registered public accounting firm for Huntington Preferred Capital, Inc. for the year 2008.
	(3)		To transact any other business which may properly come before the meeting.

Directors and officers of Huntington Preferred Capital, Inc. and representatives of its independent registered public accounting firm will be present at the meeting.

     Attached are Huntington Preferred Capital, Inc.’s Information Statement and Annual Report on Form 10-K for the year 2007.

By Order of the Board of Directors,

Elizabeth B. Moore
Secretary
April 21, 2008

INFORMATION STATEMENT

     This Information Statement is provided to holders of voting stock of Huntington Preferred Capital, Inc. in connection with Huntington Preferred’s Annual Meeting of Shareholders to be held on May 14, 2008, and at any adjournment. This Information Statement will be first sent or given to Huntington Preferred’s voting shareholders on approximately April 23, 2008. Huntington Preferred’s Annual Report on Form 10-K for 2007 is attached and follows this Information Statement.

      WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.

     Holders of record of common stock, Class C Preferred shares, and Class D Preferred shares of Huntington Preferred at the close of business on April 4, 2008, will be entitled to vote at the Annual Meeting. At that date, Huntington Preferred had 14,000,000 shares of common stock outstanding and entitled to vote. Each share of common stock outstanding on the record date entitles the holder to one vote on each matter submitted at the Annual Meeting. Also on the record date, Huntington Preferred had outstanding and entitled to vote 2,000,000 shares of Class C Preferred shares and 14,000,000 shares of Class D Preferred shares. The holders of the Class C and Class D Preferred shares are entitled to 1/10 ^th of one vote per share on all matters submitted at the Annual Meeting.

     The presence in person or by proxy of the holders of a majority in amount of the voting shares of Huntington Preferred outstanding and entitled to vote will constitute a quorum at the meeting. Under the law of Ohio, Huntington Preferred’s state of incorporation, abstentions and broker non-votes are counted for purposes of determining the presence or absence of a quorum. Broker non-votes occur when brokers who hold their customers’ shares in street name submit proxies for such shares on some matters, but not others. Generally, this would occur when brokers have not received any instructions from their customers. In these cases, the brokers, as the holders of record, are permitted to vote on “routine” matters, which typically include the election of directors and ratification of the independent registered public accounting firm, but not on non-routine matters.

     For the election of directors, the nominees receiving the greatest number of favorable votes cast at a meeting at which a quorum is present shall be elected. Only shares that are voted in favor of a particular nominee will be counted toward such nominee’s achievement of a plurality, and thus broker non-votes and abstentions will have no effect. The ratification of the appointment of the independent registered public accounting firm requires the affirmative vote of a majority of all the votes cast at a meeting at which a quorum is present. Abstentions will be counted as votes against the matter. Broker non-votes will not be counted as votes cast and thus will have no effect on this matter. As of the date of this Information Statement, management knows of no other business that will come before the meeting.

Election of Directors

     Directors are elected annually and serve until the next annual meeting of shareholders and until their successors are elected and qualified. Huntington Preferred’s articles of incorporation provide that while any Class C Preferred shares or Class D Preferred shares are outstanding, the Board of Directors shall consist of at least nine persons, three of whom must be “Independent Directors”. The articles of incorporation define “Independent Directors” as those directors who are not current officers or employees of Huntington Preferred or directors, officers, or employees of any direct or indirect subsidiary of Huntington Bancshares Incorporated. See “Corporate Governance” and “Report of the Audit Committee” below for additional information regarding the independence of Huntington Preferred’s directors.

     The Board of Directors has nominated eight of the nine current directors for reelection at the 2008 Annual Meeting of Shareholders. The Board of Directors has also nominated Reginald D. Dickson to serve as a director of Huntington Preferred. Stephen E. Dutton, who has served as a director since November 2001, has determined not to stand for reelection at the 2008 annual meeting. If elected, Roger E. Kephart and James D. Robbins, currently serving as Independent Directors, and Reginald D. Dickson, will satisfy the Independent Director requirement in Huntington Preferred’s articles of incorporation. The following table sets forth certain information concerning each nominee for director.

Name and Principal Occupation		Age		Position Held with Huntington Preferred
Richard A. Cheap		56		Vice President and Director
General Counsel and Secretary,
Huntington Bancshares Incorporated
Reginald D. Dickson		61		Nominee for Director
Chairman/CEO and Majority Owner,
Buford, Dickson, Harper & Sparrow, Inc.
Edward J. Kane		57		Vice President and Director
Executive Vice President and Corporate Tax Director,
Huntington Bancshares Incorporated
Roger E. Kephart		63		Director
Retired Partner,
Kephart & Fisher, L.L.C.
Donald R. Kimble		48		President and Director
Executive Vice President & Chief Financial Officer,
Huntington Bancshares Incorporated
Thomas P. Reed		50		Vice President, Treasurer
Senior Vice President and Controller,				and Director
Huntington Bancshares Incorporated
James D. Robbins		61		Director
Retired Managing Partner,
PricewaterhouseCoopers LLP, Columbus, Ohio office
Karen D. Roggenkamp		53		Vice President and Director
Senior Vice President,
Huntington Bancshares Incorporated
Richard I. Witherow		58		Vice President and Director
Executive Vice President and Executive Director of Credit Administration, The Huntington National Bank

     The business experience for at least the last five years of each nominee for director is further described below. Messrs. Cheap, Kane, Kimble, Reed and Witherow and Ms. Roggenkamp are also the executive officers of Huntington Preferred.

      Richard A. Cheap. Mr. Cheap has served as a Vice President and as a director of Huntington Preferred since April 2001. He also served as Secretary of Huntington Preferred from April 2001 to December 2001. Mr. Cheap has served as General Counsel and Secretary for Huntington Bancshares Incorporated and as Executive Vice President, General Counsel, Secretary, and Cashier of The Huntington National Bank since May 1998. Prior to joining Huntington Bancshares Incorporated and the Bank, Mr. Cheap practiced law with the law firm of Porter, Wright, Morris & Arthur LLP, Columbus, Ohio, from 1981, and as a partner from 1987 to May 1998. While with Porter, Wright, Morris & Arthur LLP, Mr. Cheap represented Huntington Bancshares Incorporated on a variety of matters, including as lead attorney in negotiating the terms and documentation of most of Huntington Bancshares Incorporated’s bank acquisitions during that time.

      Reginald D. Dickson . Mr. Dickson has served as Chairman, Chief Executive Officer and majority owner of Buford, Dickson, Harper & Sparrow, Inc., an investment research and portfolio management firm, since 2002. He has served as Chairman since the firm’s inception in 1995. Buford, Dickson, Harper & Sparrow, Inc. has greater than $125 million under active management and is based in St. Louis, Missouri. Previously, Mr. Dickson served as President and Chief Executive Officer of INROADS, Inc., a national minority career development organization from 1992 to 2002.

      Edward J. Kane. Mr. Kane has served as a Vice President and a director of Huntington Preferred since December 2001. Mr. Kane has served as Corporate Tax Director for Huntington Bancshares Incorporated since joining Huntington in November 2001. Mr. Kane has also served as Executive Vice President of Huntington since October 2007, and served as Senior Vice President of Huntington from November 2001 to October 2007. Prior to joining Huntington Bancshares Incorporated, Mr. Kane served as Vice President, Tax Planning and Tax Compliance for The CIT Group Inc., Livingston, New Jersey, from 1992 to September 2001, and in various other capacities from May 1973 to 1992.

      Roger E. Kephart. Mr. Kephart has served as a director of Huntington Preferred since November 2001. Mr. Kephart co-founded the law firm of Kephart & Fisher in 1991, based in Columbus, Ohio. In addition to practicing law, Mr. Kephart served as his firm’s administrative partner until retiring as of January 2003.

      Donald R. Kimble. Mr. Kimble has served as President and a director of Huntington Preferred since August 2004. Mr. Kimble has served as Chief Financial Officer for Huntington Bancshares Incorporated since August 2004. Mr. Kimble also served as Controller for Huntington Bancshares Incorporated from August 2004 to July 2006. Mr. Kimble joined Huntington Bancshares Incorporated in June 2004 as Executive Vice President of Finance Administration. Prior to joining Huntington Bancshares Incorporated, Mr. Kimble served as Executive Vice President and Controller for AmSouth Bancorporation from December 2000 to June 2004, and previously held various accounting and subsidiary chief financial officer positions with Bank One Corporation from July 1987 to December 2000.

      Thomas P. Reed. Mr. Reed has served as a director of Huntington Preferred since May 2003, as Vice President since May 2004, and as Treasurer since August 2004. Mr. Reed has served as Controller for Huntington Bancshares Incorporated since July 2006 and as Senior Vice President of Huntington Bancshares Incorporated since joining Huntington in September 2000. Mr. Reed has served in various financial positions with Huntington, including Director of Planning and Analysis for Huntington Bancshares Incorporated. Prior to joining Huntington Bancshares Incorporated, Mr. Reed was Vice President of Bank One Corporation from 1991 through September 2000, where he served in various financial capacities.

      James D. Robbins. Mr. Robbins has served as a director of Huntington Preferred since November 2001. Mr. Robbins has served as President of James D. Robbins and Co., a financial advisory and investment company, since July 2001. Prior to that time, Mr. Robbins served as managing partner of PricewaterhouseCoopers LLP, Columbus market (and its predecessor firm, Coopers & Lybrand), from November 1993 until his retirement in June 2001. Mr. Robbins is a certified public accountant in the State of Ohio and the Commonwealth of Kentucky. Mr. Robbins also serves as a director of the public company DSW, Inc.

      Karen D. Roggenkamp. Ms. Roggenkamp has served as a director of Huntington Preferred since August 2004, and as Vice President since May 2003. Ms. Roggenkamp joined Huntington Bancshares Incorporated in December 1999 as Senior Vice President and has served in various financial positions and is currently the Director of Accounting Operations. Prior to joining Huntington Bancshares, Ms. Roggenkamp served as chief financial officer for various lines of business for Bank One Corporation from 1988 through November 1999.

      Richard I. Witherow. Mr. Witherow has served as a director and Vice President of Huntington Preferred since December 2006. Mr. Witherow has served as Executive Director of Credit Administration for The Huntington National Bank since November 2006 and as Executive Vice President of The Huntington National Bank since February 2002. Mr. Witherow joined The Huntington National Bank as Senior Vice President and Regional Credit Officer in February 2001 and served as Senior Lender for The Huntington National Bank from July 2001 until November 2006. Prior to joining Huntington Mr. Witherow held a position with Provident Bank, and prior to that he served as head of commercial banking for Bank One Corporation’s central region from 1990 to 1999.

Corporate Governance

     The Board of Directors has ratified a Code of Business Conduct and Ethics previously adopted by the Board of Directors of Huntington Bancshares Incorporated, which applies to all employees and, where applicable, to directors of Huntington Bancshares Incorporated and its affiliates, including Huntington Preferred. Huntington Preferred’s President (principal executive officer) and Vice President and Treasurer (principal financial officer) are also bound by a Financial Code of Ethics for Chief Executive Officer and Senior Financial Officers. The Code of Business Conduct and Ethics and the Financial Code of Ethics for Chief Executive Officer and Senior Financial Officers are posted on the Investor Relations pages of Huntington Bancshares Incorporated’s website at www.huntington.com.

     Directors of Huntington Preferred are expected to attend the annual shareholders meeting and at least 75% of board and committee meetings. The Board of Directors held a total of six regular and special meetings during 2007. Each director

attended greater than 75% of the meetings of the full board and, if applicable, the Audit Committee, except Mr. Witherow who missed two board meetings due to unavoidable scheduling conflicts. Eight of the nine board members were present for the 2007 Annual Shareholders Meeting.

     The Board of Directors has one standing committee, the Audit Committee which is comprised of Huntington Preferred’s three Independent Directors, Messrs. Dutton, Kephart, and Robbins, Chairman. James D. Robbins qualifies as an “audit committee financial expert” as the term is defined in the rules of the Securities and Exchange Commission. Designation of Mr. Robbins as an audit committee financial expert by the Board of Directors does not impose any duties, obligations or liability on him that are greater than the duties, obligations and liabilities imposed on the other members of the Audit Committee. The Securities and Exchange Commission has determined that a person who is identified as an “audit committee financial expert” will not be deemed an expert for any purpose as a result of such designation.

     The Audit Committee operates pursuant to a written Charter that is posted on the Investor Relations pages of Huntington Bancshares Incorporated’s website at www.huntington.com. The Audit Committee oversees the financial reporting process, the work of Huntington Preferred’s auditors, and any legal, compliance, and ethics programs established by management and the Board of Directors. The Audit Committee met four times in 2007.

     Huntington Preferred is a “controlled company” as that term is defined in the rules of The NASDAQ Stock Market, Inc. because more than 50% of the voting power of Huntington Preferred is held by consolidated subsidiaries of Huntington Bancshares Incorporated. As a controlled company, Huntington Preferred is exempt from the NASDAQ requirement to have a majority of independent directors and certain other related rules. However, the members of Huntington Preferred’s Audit Committee are required to meet the NASDAQ independence standards and the additional criteria for audit committee members. The Board of Directors has determined that directors Stephen E. Dutton, Roger E. Kephart and James D. Robbins and nominee for director Reginald D. Dickson, meet the NASDAQ independence standards and the additional criteria for audit committee members. In making its independence determinations, the Board is aware of the fact that the directors of Huntington Preferred, their immediate family members, and entities affiliated with those directors, may from time to time be customers of Huntington Bancshares Incorporated’s affiliated financial and lending institutions and have transactions and relationships with such affiliates in the ordinary course of business. Such transactions may include loans on substantially the same terms, including interest rates and collateral on loans, as those prevailing at the time for comparable transactions with others and do not involve more than the normal risk of collectibility or present other unfavorable features. Such transactions may also include transactions, relationships or arrangements where Huntington Bancshares Incorporated’s affiliated financial and lending institutions, in the ordinary course of business, act as depository of funds or trustee, or provide similar services.

     As a controlled company, Huntington Preferred is not subject to the requirement under the NASDAQ rules to have a formalized process addressing the nominations of directors by independent board members. Since the majority of the directors are not independent, and likely will continue to be not independent, the Board of Directors has determined that it would be unduly burdensome to have a standing nominating committee. Further, there is currently not a set policy, process, or list of specific criteria or minimum requirements for identifying and evaluating director nominees, or for considering director candidates recommended by shareholders. In addition, no third parties are used to identify or evaluate potential nominees. Director nominees are considered by the President, who is also a director, and other directors with whom the President confers. First-time nominee Reginald D. Dickson was recommended for consideration as a director nominee by a non-management director.

     Huntington Preferred does not maintain a standing compensation committee because Huntington Preferred does not compensate its executive officers or directors who are not Independent Directors. The Audit Committee has the authority to set reasonable and appropriate compensation for the Independent Directors, subject to approval by the Board of Directors. The form and amount of compensation of directors will be guided by the following principles:

	1.		What is customary for similar organizations;
	2.		The amount of time required to fulfill the duties of a director; and
	3.		The personal risks assumed by a director.

The amount and form of compensation payable to Independent Directors was not changed in 2007.

     Shareholders of Huntington Preferred may contact the directors by sending written communications to the attention of the President at Huntington Preferred’s principle executive offices. Such communications will be relayed to the director or directors addressed, except for communications which are inappropriate because they are vulgar, obscene, or otherwise socially offensive.

Report of the Audit Committee

      The following Report of the Audit Committee should not be deemed filed or incorporated by reference into any other document, including Huntington Preferred’s filings under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent Huntington Preferred specifically incorporates this Report into any such filing by reference.

     A primary responsibility of the Audit Committee is to oversee the integrity of Huntington Preferred’s financial statements and disclosures, and internal control over financial reporting. In carrying out its duties, the Audit Committee has reviewed and discussed the audited financial statements for the year ended December 31, 2007, with Huntington Preferred’s management and Huntington Preferred’s independent registered public accounting firm, Deloitte & Touche LLP. This discussion included the selection, application, and disclosure of critical accounting policies. The Audit Committee has also reviewed with Deloitte & Touche LLP its judgment as to the quality, not just the acceptability, of Huntington Preferred’s accounting principles and such other matters required to be discussed under auditing standards generally accepted in the United States, including Statement on Auditing Standards No. 61, as amended, Communication with Audit Committees (AICPA, Professional Standards, Vol. 1. AU section 380).

     In addition, the Audit Committee has reviewed the written disclosures and the letter from Deloitte & Touche LLP required by Independence Standards Board Standard No. 1, Independence Discussions with Audit Committees , and has discussed with Deloitte & Touche LLP its independence from Huntington Preferred. Based on this review and discussion, and a review of the services provided by Deloitte & Touche LLP during 2007, the Audit Committee believes that the services provided by Deloitte & Touche LLP in 2007 are compatible with and do not impair Deloitte & Touche LLP’s independence.

     Based on these reviews and discussions, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in Huntington Preferred’s Annual Report on Form 10-K for the year 2007 for filing with the Securities and Exchange Commission.

Audit Committee
James D. Robbins, Chairman
Stephen E. Dutton
Roger E. Kephart

Compensation of Directors and Executive Officers

     Huntington Preferred does not pay or award any compensation in any form to its executive officers. Huntington Preferred also does not pay or award any compensation to its directors who are not Independent Directors. The table below reflects the compensation paid by Huntington Preferred to its Independent Directors for services as directors in 2007.

Director Compensation

2007

Name		Fees Earned or Paid in Cash ($)				Total ($)
Stephen E. Dutton			37,000				37,000
Roger E. Kephart			37,000				37,000
James D. Robbins			41,500				41,500

     Each Independent Director, as the term is defined in Huntington Preferred’s articles of incorporation, receives retainer payments at an annual rate of $30,000. The chairperson of the Audit Committee receives an additional retainer at an annual rate of $5,000. In addition, each Independent Director receives a meeting fee of $1,500 for each day on which he participates in a board and/or committee meeting, and a meeting fee of $500 for each day on which he participates in a telephonic board and/or committee meeting.

Ownership of Voting Stock

Common Stock

     The following table sets forth, as of December 31, 2007, the number and percentage of outstanding common shares beneficially owned by all persons known by Huntington Preferred to own more than five percent of such shares.

Name and Address		Shares of Common Stock
of Beneficial Owner		Beneficially Owned				Percent of Class
Huntington Capital Financing, LLC			6,580,000				47.0	%
3993 Howard Hughes Parkway, Suite 250 Las Vegas, Nevada 89109
Huntington Preferred Capital Holdings, Inc.			2,851,333				20.4	%
3993 Howard Hughes Parkway, Suite 250 Las Vegas, Nevada 89109
Huntington Preferred Capital II, Inc.			4,550,000				32.5	%
41 South High Street Columbus, Ohio 43215

The remaining 18,667 shares of common stock are owned by Huntington Bancshares Incorporated. None of Huntington Preferred’s directors or executive officers owns any Huntington Preferred common shares. Huntington Capital Financing, LLC, Huntington Preferred Capital Holdings, Inc., and Huntington Preferred Capital II, Inc. are all direct or indirect subsidiaries of The Huntington National Bank.

Preferred Stock

     No person is known by Huntington Preferred to own more than 5% of Huntington Preferred’s Class C Preferred shares. The following table sets forth the beneficial ownership of Huntington Preferred’s Class C Preferred shares by each of Huntington Preferred’s directors, nominees for director, and executive officers, and by the directors and executive officers as a group, as of December 31, 2007.

		Shares of Class C Preferred Shares
Name of Beneficial Owner		Beneficially Owned(1)				Percent of Class
Richard A. Cheap			100				(2	)
Reginald D. Dickson			0				0
Stephen E. Dutton			0				0
Edward J. Kane			0				0
Roger E. Kephart			1,506				(2	)
Donald R. Kimble			0				0
Thomas P. Reed			0				0
James D. Robbins			3,615				(2	)
Karen D. Roggenkamp			0				0
Richard I. Witherow			0				0
Directors and Executive Officers as a group (9 in group)			5,221				(2	)

     As indicated in the table below, as of December 31, 2007, all of Huntington Preferred’s Class D Preferred shares were owned by Huntington Preferred Capital Holdings, Inc.

Name and Address		Shares of Class D Preferred Shares
Of Beneficial Owner		Beneficially Owned				Percent of Class
Huntington Preferred Capital Holdings, Inc.			14,000,000				100	%
3993 Howard Hughes Parkway, Suite 250 Las Vegas, Nevada 89109

As noted above, Huntington Preferred Capital Holdings, Inc. is a subsidiary of The Huntington National Bank.

     Huntington Preferred’s Class A Preferred shares and Class B Preferred shares are non-voting.

     Huntington Preferred is an indirect subsidiary of Huntington Bancshares Incorporated. As of December 31, 2007, many of the directors and executive officers of Huntington Preferred owned shares of Huntington Bancshares Incorporated common stock. These directors and executive officers owned, individually and collectively, less than 1% of the Huntington Bancshares Incorporated common stock outstanding on December 31, 2007.

Transactions with Directors, Executive Officers and Certain Beneficial Owners

     The Audit Committee Charter provides that the Audit Committee reviews and approves all “related party transactions” as defined by the rules of The NASDAQ Stock Market, Inc., which includes transactions required to be disclosed in this Information Statement and transactions between Huntington Preferred and Huntington Bancshares Incorporated, The Huntington National Bank or their affiliates. The Audit Committee may adopt policies governing the terms of transactions between Huntington Preferred and Huntington Bancshares Incorporated, The Huntington National Bank or their affiliates in the ordinary course of Huntington Preferred’s business. “Related party transactions” are brought to the attention of the Audit Committee by management or the directors.

     Huntington Preferred holds participation interests directly, or subparticipation interests indirectly through Huntington Preferred Capital Holdings, Inc., in certain loans originated by The Huntington National Bank and its subsidiaries. The participation interests are in commercial, commercial real estate, residential real estate, and consumer loans that were either directly underwritten by the Bank and its subsidiaries or acquired by the Bank. Huntington Preferred expects to continue to purchase such interests, net of an allowance for loan losses, in the future from Holdings, the Bank, or their affiliates.

     The loans underlying Huntington Preferred’s participation interests are serviced by the Bank pursuant to the terms of (i) the participation agreement between the Bank and Huntington Preferred, or (ii) the participation agreement between the Bank and Holdings and the subparticipation agreement between Holdings and Huntington Preferred. The Bank earned servicing fees from Huntington Preferred of $11.1 million during the year ended December 31, 2007. Pursuant to the terms of the participation and subparticipation agreements, the amount and terms of the loan-servicing fee between the Bank and Huntington Preferred are determined by mutual agreement from time to time during the terms of the agreements. For 2007, the annual servicing fee with respect to commercial and commercial real estate loans underlying Huntington Preferred’s interests is equal to the outstanding principal balance of each loan multiplied by a fee of 0.125%. In lieu of paying higher servicing costs to the Bank with respect to commercial and commercial real estate loans, Huntington Preferred has waived its right to receive any origination fees associated with the participation interests in commercial and commercial real estate loans transferred on or after July 1, 2004. This waiver has been extended until such time as loan servicing fees are reviewed in 2008. Currently, the annual servicing fee with respect to consumer loans is equal to the outstanding principal balance of each loan multiplied by a fee of 0.650% and the annual servicing fee with respect to residential real estate loans is equal to the outstanding principal balance of each loan multiplied by a fee of 0.267%.

     Under the terms of the participation and subparticipation agreements, Huntington Preferred is obligated to make funds or credit available to the Bank, either directly or indirectly through Holdings, so that the Bank may extend credit to any borrowers, or pay letters of credit issued for the account of any borrowers, to the extent provided in the loan agreements underlying Huntington Preferred’s participation interests. The unfunded commitments at December 31, 2007 totaled $539.4 million.

     Personnel of Huntington Bancshares Incorporated and the Bank handle day-to-day operations of Huntington Preferred, such as accounting, financial reporting and analysis, tax reporting, and other administrative functions. On a monthly basis, Huntington Preferred pays Huntington Bancshares Incorporated and the Bank for the costs related to the time spent by employees for performing these functions. The personnel costs were $0.5 million for the year ended December 31, 2007.

     Huntington Preferred maintains and transacts all of its cash activity through the Bank. Typically, cash is invested with the Bank in an interest-bearing account. These interest-bearing balances are invested overnight or may be invested in Eurodollar deposits with the Bank for a term of not more than 30 days at market rates.

     The Bank is eligible to obtain advances from various federal and government-sponsored agencies, such as the Federal Home Loan Bank (FHLB). Huntington Preferred may from time to time be asked to act as guarantor of the Bank’s obligations under such advances and/or pledge all or a portion of its assets in connection with those advances. Any such guarantee or pledge would rank senior to Huntington Preferred’s common and preferred securities upon liquidation. Accordingly, any federal or government-sponsored agencies that make advances to the Bank where Huntington Preferred has acted as guarantor or has pledged all or a portion of its assets as collateral will have a liquidation preference over the holders of Huntington Preferred’s securities. Any such guarantee and/or pledge in connection with the Bank’s advances from the FHLB falls within the definition of Permitted Indebtedness (as defined in Huntington Preferred’s articles of incorporation) and, therefore, Huntington Preferred is not required to obtain the consent of the holders of its common or preferred securities for any such guarantee and/or pledge.

     Currently, Huntington Preferred’s assets have been used to secure only one such facility. The Bank has obtained a line of credit from the FHLB which line was capped by the Bank’s holdings of FHLB stock at $4.8 billion as of December 31, 2007. As of this same date, the Bank had borrowings of $3.1 billion under this facility. Huntington Preferred has entered into an Amended and Restated Agreement with the Bank with respect to the pledge of Huntington Preferred’s assets to collateralize the Bank’s borrowings from the FHLB. The agreement provides that the Bank will not place at risk Huntington Preferrred’s assets in excess of an aggregate dollar amount or aggregate percentage of such assets established from time-to-time by Huntington Preferred’s board of directors, including a majority of the Independent Directors. The pledge limit established by Huntington Preferred’s board is equal to 25% of Huntington Preferred’s total assets, or approximately $1.1 billion as of December 31, 2007, as reflected in the Huntington Preferred’s month-end management report for the previous month. This pledge limit may be changed in the future by the board of directors, including a majority of the Independent Directors. The agreement also provides that the Bank will pay Huntington Preferred a monthly fee based upon the total loans pledged by Huntington Preferred. As of December 31, 2007, Huntington Preferred’s total participation interests pledged was limited to 1-4 family residential mortgage portfolio and consumer second mortgage loans. As of that same date, Huntington Preferred’s participation interests in 1-4 family residential mortgages and second mortgage loans pledged totaled $0.9 billion . The Bank paid Huntington Preferred a total of $5.2 million, $1.0 million, and $3.0 million, in the respective annual periods ended December 31, 2007, 2006, and 2005, as compensation for making such assets available to the Bank. The fee represented thirty-five basis points per year on total pledged loans after April 1, 2006. The fluctuation in collateral fees in 2007 and 2006 is related to $2.1 million of fees on consumer first mortgages from 2006 being recorded in 2007.

     HPCLI, Inc., a wholly owned subsidiary of Huntington Preferred until December 31, 2007, is party to a leasehold improvements lease (the “Lease”) with The Huntington National Bank. Pursuant to the Lease, HPCLI, Inc. leases to the Bank leasehold improvements existing in certain leased offices used by the Bank in the conduct of the Bank’s operations. The Lease was effective as of October 14, 2001 and automatically renewed for a new five-year term beginning October 15, 2006. The annual rent for the new rental period is $6.8 million. In addition, the Bank provides certain accounting and management services for HPCLI, Inc. pursuant to the terms of the Lease for which HPCLI, Inc. pays the Bank an annual management fee of one percent (1%) of the rent for the leasehold improvements, payable on a monthly basis. On December 31, 2007, Huntington Preferred distributed the stock of HPCLI, Inc. as a dividend to Huntington Preferred’s common shareholders, and HPCLI, Inc. became a subsidiary of Huntington Preferred Capital Holdings, Inc.

Section 16(a) Beneficial Ownership Reporting Compliance

     Section 16(a) of the Securities Exchange Act of 1934 requires Huntington Preferred’s officers, directors, and persons who are beneficial owners of more than ten percent of Huntington Preferred’s Class C Preferred Shares to file reports of

ownership and changes in ownership with the SEC. Reporting persons are required by SEC regulations to furnish Huntington Preferred with copies of all Section 16(a) forms filed by them. To the best of its knowledge, and following a review of the copies of Section 16(a) forms received by it, Huntington Preferred believes that, during 2007, all filing requirements applicable for Huntington Preferred’s reporting persons were timely met, except for the late filing of a Form 5 report reflecting shares acquired by inheritance by Mr. Robbins’ wife.

Proposal to Ratify the Appointment of Independent Registered Public Accounting Firm

     The Audit Committee has again selected Deloitte & Touche LLP, independent registered public accounting firm, referred to as IRPAF, as Huntington Preferred’s IRPAF for 2008. Deloitte & Touche LLP has served as Huntington Preferred’s IRPAF since 2004. Although not required, shareholders are being asked to ratify the appointment of Deloitte & Touche LLP as IRPAF for Huntington Preferred for the year 2008. The Audit Committee will reconsider the appointment of Deloitte & Touche LLP if its selection is not ratified by the shareholders. Representatives of Deloitte & Touche LLP will be present at the meeting and will have an opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions.

      Audit Fees. Audit fees are fees for professional services rendered for the audits of Huntington Preferred’s annual financial statements and internal control over financial reporting, review of the financial statements included in Form 10-Q filings, and services that are normally provided by Deloitte & Touche LLP in connection with statutory and regulatory filings or engagements . The aggregate audit fees billed by Deloitte & Touche LLP for the fiscal years ended December 31, 2007 and December 31, 2006, were $106,500 and $98,000, respectively.

     For the fiscal years ended December 31, 2007 and December 31, 2006, Deloitte & Touche LLP did not bill Huntington Preferred for any other services.

     The Audit Committee has a policy that the Committee will pre-approve all audit and non-audit services provided by the IRPAF, and shall not engage the IRPAF to perform the specific non-audit services prescribed by law or regulation. The Audit Committee may delegate pre-approval authority to a member of the Committee. The decisions of the member to whom pre-approval authority is delegated must be presented to the full Committee at its next scheduled meeting. All of the services covered by the fees disclosed above were pre-approved by the Audit Committee.

Other Matters

     Copies of the exhibits to Huntington Preferred’s 2007 Annual Report on Form 10-K may be obtained, at a reasonable charge for copying and mailing, by writing to Investor Relations, Huntington Bancshares Incorporated, Huntington Center, 41 South High Street, Columbus, Ohio 43287.

     A number of brokerage firms have instituted householding. The Securities and Exchange Commission has adopted householding rules which permit companies and intermediaries, such as brokers, to satisfy delivery requirements for proxy statements and annual reports with respect to two or more shareholders sharing the same address by delivering one copy of these materials to these shareholders. If you hold your shares in “street name”, please contact your bank, broker or other holder of record to request information about householding.

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