HUNTINGTON PREFERRED CAPITAL INC

The special event that allows us to redeem the Class C preferred securities is a regulatory capital event. A regulatory capital event is defined in our Articles as our determination, based on an opinion of counsel experienced in such matters, that as a result of certain changes in the applicable laws, regulations, or related interpretations, there is a significant risk that our Class C preferred securities will no longer constitute Tier 1 capital of the Bank, other than as a result of limitations on the portion of Tier 1 capital that may consist of minority interests in subsidiaries of the Bank.

On July 2, 2013, the Federal Reserve Board voted to adopt final Basel III capital rules for U.S. Banking organizations. The final rules establish an integrated regulatory capital framework that will implement, in the United States, the Basel III regulatory capital reforms from the Basel Committee on Banking Supervision and certain changes required by the Dodd-Frank Act.

Following the Redemption Date, HPCI will not declare or pay any future quarterly dividends with respect to the Class C preferred securities, the Class C preferred securities will cease to be outstanding, and the former holders of Class C preferred securities will have no rights with respect to their ownership of such Class C preferred securities other than the right to receive the redemption price. The redemption price will not include the regular quarterly dividend that was declared on November 7, 2013, as that dividend will have been paid immediately prior to the redemption of the Class C preferred securities.

While there is no assurance that any list of risks and uncertainties or risk factors is complete, below are certain factors which could cause actual results to differ materially from those contained or implied in the forward-looking statements: (1) worsening of credit quality performance due to a number of factors such as the underlying value of the collateral could prove less valuable than otherwise assumed and assumed cash flows may be worse than expected; (2) changes in general economic, political, or industry conditions; uncertainty in U.S. fiscal and monetary policy, including the interest rate policies of the Federal Reserve Board; volatility and disruptions in global capital and credit markets; (3) movements in interest rates; (4) competitive pressures on the Bank’s product pricing and services; (5) success, impact, and timing of the Bank’s business strategies; (6) changes in accounting policies and principles and the accuracy of our assumptions and estimates used to prepare our financial statements; (7) extended disruption of vital infrastructure; (8) the final outcome of significant litigation, (9) the nature, extent, timing, and results of governmental actions, examinations, reviews, reforms, regulations, and interpretations, including those related to the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Basel III regulatory capital reforms, as well as those involving the OCC, Federal Reserve, and the CFPB; and (10) the outcome of judicial and regulatory decisions regarding practices in the residential mortgage industry, including among other things, the processes followed for foreclosing residential mortgages. Additional factors that could cause results to differ materially from those described above can be found in our 2012 Form 10-K, and documents subsequently filed by us with the SEC.

Interest rate risk measurement is performed quarterly. Two broad approaches to modeling interst rate risk are employed. These are income similation and economic value simulation. An income simulation analysis is used to measure the sensitivity of forecasted net interest income to changes in market rates over a one-year time period. Economic value of equity (EVE) analysis is used to measure the sensitivity of the values of period-end assets and liabilities to changes in market interest rates. EVE serves as a complement to income simulation modeling as it provides risk exposure estimates for time periods beyond the one-year simulation horizon.

On July 2, 2013, the Federal Reserve Board voted to adopt final Basel III capital rules for U.S. Banking organizations. The final rules establish an integrated regulatory capital framework that will implement, in the United States, the Basel III regulatory capital reforms from the Basel Committee on Banking Supervision and certain changes required by the Dodd-Frank Act.

Based on our review of the final rules and an opinion of outside counsel dated November 6, 2013, we have determined that there is a significant risk that our Class C preferred securities will no longer constitute Tier 1 capital for the Bank for purposes of the capital adequacy guidelines or policies of the OCC, when Basel III becomes effective for Huntington Bancshares Incorporated and its affiliates. As a result, a regulatory capital event has occurred. On November 7, 2013, the board of directors approved the redemption of Class C preferred securities effective on December 31, 2013 (the Redemption Date). All required regulatory approvals have been received. The redemption will not have a material impact on regulatory capital ratios.