SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
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Date of Report: December 31, 2001
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HUNTINGTON PREFERRED CAPITAL, INC.
(Exact Name of Registrant as Specified in its Charter)
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OHIO 000-33243 31-1356967
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(State or Other (Commission File No.) (IRS employer
Jurisdiction of identification number)
Incorporation or
Organization)
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Huntington Center
41 South High Street
Columbus, Ohio 43287
(614) 480-8300
(Address, Including Zip Code, And Telephone Number
Including Area Code of Registrant's
Principal Executive Offices)
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Item 2. Acquisition or Disposition of Assets.
On December 31, 2001, in anticipation of the eventual sale of the Florida
operations of Huntington Bancshares Incorporated ("HBI") to SunTrust Banks,
Inc. ("SunTrust"), which is expected to close in the first quarter of 2002,
Huntington Preferred Capital, Inc. ("HPCI") completed its previously announced
distribution of participation interests in Florida-related loans to its common
shareholders, Huntington Preferred Capital Holdings, Inc. ("Holdings") and HBI.
Holdings is HPCI's parent company. This distribution approximated $1.273
billion and consisted of cash and the net book value of participation interests
in loans which are expected to be included in the sale to SunTrust, including
the related accrued interest and allowance for loan losses, representing
approximately 17% of HPCI's total assets. After the distribution, HPCI's pro
forma total assets as of September 30, 2001, were $6.335 billion.
Item 7. Financial Statements and Exhibits
(b) Pro Forma Financial Information.
Pro forma financial information reflecting the effect of the
distribution as described in Item 2 above are included in this Current Report on
Form 8-K on pages F-1 through F-5 attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
HUNTINGTON PREFERRED CAPITAL, INC.
Date: January 15, 2002 By: /s/ John Van Fleet
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John Van Fleet, Vice President
and Treasurer
HUNTINGTON PREFERRED CAPITAL, INC.
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The unaudited pro forma consolidated financial statements give effect
to the distribution of HPCI's participation interests in Florida-related loans
in anticipation of HBI's sale of Florida operations to SunTrust Banks, Inc.
HPCI's distribution of $1.273 billion consisted of cash and the net book value
of participation interests, along with related allowance for loan losses and
accrued interest, representing 17% of its total assets. These unaudited pro
forma consolidated financial statements reflect the distribution, which
occurred on December 31, 2001.
The unaudited pro forma consolidated financial statements on the
following pages present:
- the historical consolidated balance sheet of HPCI as of
September 30, 2001, giving effect to the distribution of the
participation interests in Florida-related loans as if it
had occurred on that date; and
- the issuance of HPCI's Class C and Class D preferred
securities in exchange for loan participation interests and
other assets that occurred in October 2001, and
- the historical consolidated statements of income of HPCI for
the nine months ended September 30, 2001, and for the twelve
months ended December 31, 2000, in each case giving effect to
the distribution of the participation interests in
Florida-related loans, return of capital to HPCI's common
shareholders and the preferred dividends on all classes of
preferred securities as if it had been effected at the
beginning of the periods presented.
These unaudited pro forma results include management's best estimate of
the impact of the distribution of the participation interests in
Florida-related loans and the issuance of Class C and Class D preferred
securities. These estimates may not be indicative of the financial position or
results of operations that actually would have occurred had the transaction
been consummated during the periods or as of the dates indicated, or which will
be attained in the future. The unaudited pro forma consolidated financial
statements should be read in conjunction with the historical financial
statements included in HPCI's Registration Statement on Form S-11, file number
333-61182, as declared effective on October 15, 2001, and all amendments
thereto, and HPCI's Quarterly Report on Form 10-Q for the period ended
September 30, 2001.
F-1
HUNTINGTON PREFERRED CAPITAL, INC.
Pro Forma Consolidated Balance Sheet
At September 30, 2001
(Unaudited)
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Exchange of Distribution
Assets for of
Preferred HPCI Florida HPCI
(in thousands of dollars) HPCI Securities Pro Forma Participations Pro Forma
- ------------------------------------------------ ------------- ----------- ------------- -------------- -------------
(A) (B)
ASSETS
Cash and due from banks $ 46,699 $ 46,699 $ (1,697) $ 45,002
Interest bearing deposits in banks 614,378 614,378 614,378
Due from Huntington Preferred
Capital Holdings, Inc. 194,822 194,822 194,822
Loan participations 6,378,463 $ 452,580 6,831,043 (1,283,034) 5,548,009
Less allowance for loan losses 91,931 86,525 178,456 (18,604) 159,852
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Net loan participations 6,286,532 366,055 6,652,587 (1,264,430) 5,388,157
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Premises and equipment 785 45,373 46,158 46,158
Accrued income and other assets 50,045 3,543 53,588 (6,932) 46,656
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TOTAL ASSETS $ 7,193,261 $ 414,971 $ 7,608,232 $ (1,273,059) $ 6,335,173
============= =========== ============= ============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Dividends payable on Class B preferred
stock $ 15,090 $ 15,090 $ --- $ 15,090
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Total Liabilities 15,090 15,090 --- 15,090
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Shareholders' equity
Preferred shares, $25 par value --- --- ---
Class A Preferred stock, $1,000 par value 1,000 1,000 1,000
Class B Preferred stock, $1,000 par value 400,000 400,000 400,000
Class C preferred shares, $25 par value --- $50,000 50,000 50,000
Class D preferred shares, $25 par value --- 350,000 350,000 350,000
Common stock - without par value 6,341,717 14,971 6,356,688 (1,273,059) 5,083,629
Retained earnings 435,454 435,454 435,454
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Total Shareholders' Equity 7,178,171 414,971 7,593,142 (1,273,059) 6,320,083
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 7,193,261 $ 414,971 $ 7,608,232 $ (1,273,059) $ 6,335,173
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ASSET QUALITY DATA
Non-performing assets 83,812 192,431 187,303
Non-performing loans as a % of total
loan participations 1.31% 2.82% 3.38%
Non-performing loans as a % of total
assets 1.17% 2.53% 2.96%
Allowance for loan losses as a % of non-
performing loans underlying participations 109.69% 92.74% 85.34%
Allowance for loan losses as a % of
total loan participations 1.44% 2.61% 2.88%
See Notes to Unaudited Pro Forma Consolidated Financial Statements.
F-2
HUNTINGTON PREFERRED CAPITAL, INC.
Pro Forma Consolidated Statement of Income
For the Nine Months Ended September 30, 2001
(Unaudited)
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Exchange of Distribution
Assets for of
(in thousands of dollars, Preferred HPCI Florida HPCI
except per share amounts) HPCI Securities Pro Forma Participations Pro Forma
- --------------------------------------- -------------- --------------- -------------- ---------------- --------------
(A) (B)
Interest and fee income
Interest on loan participations $ 337,169 $ 27,108 $ 364,277 $ (74,581) $ 289,696
Fees 5,659 455 6,114 (1,252) 4,862
Interest bearing deposits in banks 23,426 --- 23,426 --- 23,426
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TOTAL INTEREST AND FEE INCOME 366,254 27,563 393,817 (75,833) 317,984
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NET INTEREST INCOME 366,254 27,563 393,817 (75,833) 317,984
Provision for loan losses 371 --- 371 --- 371
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NET INTEREST INCOME
AFTER PROVISION FOR LOAN LOSSES 365,883 27,563 393,446 (75,833) 317,613
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Non-interest income 43 4,767 4,810 --- 4,810
Non-interest expense 6,289 5,045 11,334 (1,398) 9,936
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INCOME BEFORE INCOME TAXES 359,637 27,285 386,922 (74,435) 312,487
Provision for income taxes --- --- --- --- ---
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NET INCOME $ 359,637 $ 27,285 $ 386,922 $ (74,435) $ 312,487
============== =============== ============== =============== ===============
PREFERRED STOCK DIVIDENDS $ 15,090 $ 29,134 $ 29,134
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NET INCOME APPLICABLE TO
COMMON SHARES $ 344,547 $ 357,789 $ 283,354
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PER COMMON SHARE (1)
Net income
Basic & Diluted $24.61 $25.56 $20.24
Cash Dividends $ --- $ --- $ ---
AVERAGE COMMON SHARES (1)
Basic & Diluted 14,000,000 14,000,000 14,000,000
(1) Adjusted for the 18,666.66667-to-1 stock split in April 2001.
See Notes to Unaudited Pro Forma Consolidated Financial Statements.
F-3
HUNTINGTON PREFERRED CAPITAL, INC.
Pro Forma Consolidated Statement of Income
For the Twelve Months Ended December 31, 2000
(Unaudited)
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Exchange of Distribution
Assets for of
(in thousands of dollars, Preferred HPCI Florida HPCI
except per share amounts) HPCI Securities Pro Forma Participations Pro Forma
- --------------------------------------- ---------------- --------------- --------------- ---------------- ---------------
(A) (B)
Interest and fee income
Interest on loan participations $ 451,913 $ 36,144 $488,057 $ (99,441) $ 388,616
Fees 4,092 327 4,419 (900) 3,519
Interest bearing deposits in banks 33,095 --- 33,095 --- 33,095
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TOTAL INTEREST AND FEE INCOME 489,100 36,471 525,571 (100,341) 425,230
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NET INTEREST INCOME 489,100 36,471 525,571 (100,341) 425,230
Provision for loan losses --- --- --- --- ---
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NET INTEREST INCOME
AFTER PROVISION FOR LOAN LOSSES 489,100 36,471 525,571 (100,341) 425,230
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Non-interest income --- 6,356 6,356 --- 6,356
Non-interest expense 7,983 6,678 14,661 (1,721) 12,940
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INCOME BEFORE INCOME TAXES 481,117 36,149 517,266 (98,620) 418,646
Provision for income taxes --- --- --- --- ---
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NET INCOME $ 481,117 $ 36,149 $517,266 $ (98,620) $ 418,646
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PREFERRED STOCK DIVIDENDS $ 36,495 $ 36,495
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NET INCOME APPLICABLE TO
COMMON SHARES $480,771 $ 382,151
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PER COMMON SHARE(1)
Net income
Basic & Diluted $34.36 $34.34 $27.30
Cash Dividends $ --- $ --- $ ---
AVERAGE COMMON SHARES(1)
Basic & Diluted 14,000,000 14,000,000 14,000,000
(1) Adjusted for the 18,666.66667-to-1 stock split in April 2001.
See Notes to Unaudited Pro Forma Consolidated Financial Statements.
F-4
HUNTINGTON PREFERRED CAPITAL, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(A) Issuance of Noncumulative Exchangeable Perpetual Preferred Securities,
Class C, at $25 par value, and Noncumulative Exchangeable Perpetual
Preferred Securities, Class D, at $25 par value, to Holdings. For pro
forma presentation purposes, dividends per share on Class A preferred
securities are $80,000 per year, 4.4225% on the Class B preferred
securities, 7.875% on the Class C preferred securities, and 4.225% on
the Class D preferred securities. The pro forma consolidated statement
of income for the nine months ended September 30, 2001 and twelve
months ended December 31, 2000 present the dividend obligations
assuming the preferred stock was outstanding for the entire period
presented.
These pro forma financial statements show that Holdings purchased all
2,000,000 Class C preferred securities and all 14,000,000 Class D
preferred securities in exchange for the fair market value of the
participation interests and leasehold improvements, which approximated
$415 million, paid to HPCI by Holdings. Holdings paid $25 per Class C
and Class D preferred security.
Holdings' payment for the two classes of preferred securities was in
the form of additional participation interests in the fair market
value of commercial loans, including commercial real estate loans, and
consumer loans, as well as leasehold interests. The underlying
consumer loans included a combination of automobile, truck, and
equipment loans. HPCI transferred the leasehold improvements to its
wholly owned subsidiary, HPCLI, Inc. in exchange for common shares of
HPCLI, Inc. HPCI intends to hold these participation interests as long
term investments. Approximately 24% of the assets that were purchased
from Holdings in exchange for the issuance of the preferred stock were
non-performing in nature. The pro forma financial results include
estimated income from these assets assumed under performing status,
which may not be indicative of future results.
Holdings, a statutory underwriter, sold the Class C preferred
securities through an underwriting syndicate to the public for cash
consideration of $25 per share. HPCI did not receive any of Holdings'
proceeds from the sale. The proceeds, before expenses and commissions
received by Holdings from the sale of the Class C preferred securities,
was $50 million.
Holdings paid all expenses and underwriting discounts and commissions
involved with the offering to the public. The pro forma results of
operations for the nine and twelve month periods include the interest
income and servicing expense impacts of the participations purchased
and depreciation for the leasehold improvements assuming the assets
were transferred at the beginning of each period presented.
(B) On July 12, 2001, HBI announced a comprehensive strategic and financial
restructuring plan. Under the plan, HBI signed a definitive agreement
on September 26, 2001, to divest its Florida retail and corporate
banking business. Approximately $1.3 billion of loans underlying HPCI's
participation interests, representing 17% of its total assets, will be
included in this sale.
F-5