November 14, 2003 - 10-Q: Quarterly report pursuant to Section 13 or 15(d) | Huntington Bancshares Incorporated (HBAN) :: Huntington Bancshares Incorporated (HBAN)

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 SEPTEMBER 30, 2003

Commission File Number 0-2525

HUNTINGTON BANCSHARES INCORPORATED

MARYLAND 31-0724920
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) 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 X No
====== =======

There were 228,885,228 shares of Registrant's without par value common stock
outstanding on October 31, 2003.

HUNTINGTON BANCSHARES INCORPORATED

INDEX

2

PART 1. FINANCIAL INFORMATION
FINANCIAL STATEMENTS
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CONSOLIDATED BALANCE SHEETS

See notes to unaudited consolidated financial statements.

3

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CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)

See notes to unaudited consolidated financial statements.

4

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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

See notes to unaudited consolidated financial statements.

5

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CONSOLIDATED STATEMENTS OF CASH FLOWS

See notes to unaudited consolidated financial statements.

6

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements of Huntington
Bancshares Incorporated (Huntington) reflect all adjustments consisting of
normal recurring accruals, which are, in the opinion of management, necessary
for a fair presentation of the consolidated financial position, the results of
operations, and cash flows for the periods presented. These unaudited
consolidated financial statements have been prepared according to the rules and
regulations of the Securities and Exchange Commission and, therefore, certain
information and footnote disclosures normally included in financial statements
prepared in accordance with accounting principles generally accepted in the
United States (GAAP) have been omitted. The Notes to the Consolidated Financial
Statements appearing in Huntington's amended 2002 Annual Report on Form 10-K/A
filed on November 14, 2003, which include descriptions of significant accounting
policies, should be read in conjunction with these interim financial statements.

In preparing financial statements in conformity with GAAP, management of
Huntington is required to make estimates, assumptions, and judgments that affect
the reported amounts of assets and liabilities as of the date of the balance
sheet and reported amounts of revenue and expenses during the reporting period.
An accounting estimate requires assumptions about uncertain matters that could
have a material effect on the financial statements of Huntington if a different
amount within a range of estimates were used or if estimates changed from period
to period. Actual results could differ from those estimates. Certain amounts in
the prior year's financial statements have been reclassified to conform to the
2003 presentation.

NOTE 2 - EARLY ADOPTION OF FASB INTERPRETATION NO. 46 (FIN 46)

In January 2003, the Financial Accounting Standards Board (FASB) issued
Interpretation No. 46, Consolidation of Variable Interest Entities. This
Interpretation of Accounting Research Bulletin No. 51 (ARB 51), Consolidated
Financial Statements, as amended, addresses consolidation by business
enterprises where ownership interests in an entity may vary over time or, in
many cases, of special-purpose entities (SPEs). To be consolidated for financial
reporting, these entities must have certain characteristics. ARB 51 requires
that an enterprise's consolidated financial statements include subsidiaries in
which the enterprise has a controlling financial interest. FIN 46 requires
existing unconsolidated variable interest entities to be consolidated by their
primary beneficiaries if the entities do not effectively disperse risks among
parties involved. An enterprise that holds significant variable interests in
such an entity, but is not the primary beneficiary, is required to disclose
certain information regarding its interests in that entity. FIN 46 applies in
the first fiscal year or interim period ending after December 15, 2003, to
variable interest entities in which an enterprise holds an interest that it
acquired before February 1, 2003. It also applies immediately to variable
interest entities created after January 31, 2003, and to variable interest
entities in which an enterprise obtains an interest after that date. FIN 46 may
be applied (1) prospectively with a cumulative-effect adjustment as of the date
on which it is first applied, or (2) by restating previously issued financial
statements for one or more years with a cumulative-effect adjustment as of the
beginning of the first year restated.

Effective July 1, 2003, Huntington adopted FIN 46. This was an early
adoption applied on a prospective basis resulting in the consolidation of one of
the securitization trusts formed in 2000. The consolidation of this trust
involved recognition of the trust's assets and liabilities, elimination of the
related retained interest and servicing asset, recognition of other related
assets, and establishment of an allowance for loan and lease losses equal to
1.01% of the loan balances. The trust's assets and liabilities consisted of
$1,038.1 million in automobile loan principal and interest receivables, $110.0
million in cash ($51.5 million of which was on deposit at Huntington's bank
subsidiary), and approximately $960.0 million in notes payable and minority
interests. The combined retained interests at market value, a component of
securities available for sale, servicing and other assets of $212.9 million were
eliminated in the consolidation. The reversal of the excess of the market value
of the retained interest over its cost reduced other comprehensive income by
$9.9 million. Additionally, a $10.3 million reserve for loan losses was
recognized and deferred income taxes and other liabilities totaling $12.1
million were reversed.

Reflecting these impacts, the adoption of FIN 46 resulted in a cumulative
effect charge of $13.3 million, or $0.06 per share, in the third quarter, which
is reflected in Huntington's statements of income. This adoption also resulted
in an overall reduction of the ALLL by approximately 3 basis points and lowered
the tangible common equity ratio by 29 basis points. Regulatory capital was
minimally impacted since these related assets were already included in
regulatory risk-based assets.

This adoption also required the deconsolidation of two unrelated business
trusts that had been formed in 1997 and 1998 to issue trust preferred
securities, which qualified as Tier 1 capital for regulatory capital purposes.
The related borrowings by the parent company are now reported in the balance
sheet under the caption "Subordinated notes" and continue to qualify as Tier 1
capital. There was no cumulative effect on retained earnings or Huntington's
capital ratios as a result of this deconsolidation.

7

NOTE 3 - ADOPTION OF FASB INTERPRETATION NO. 45 (FIN 45)

In November 2002, the FASB issued Interpretation No. 45, Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others. FIN 45 changes current practice in the
accounting for, and disclosure of, guarantees requiring certain guarantees to be
recorded at fair value, which differs from the prior practice of recording a
liability generally when a loss is probable and reasonably estimable, as those
terms are defined in FASB Statement No. 5, Accounting for Contingencies. FIN 45
also requires a guarantor to make significant new disclosures, even when the
likelihood of making any payments under the guarantee is remote, which also
differs from current practice.

The recognition requirements of FIN 45 were adopted prospectively January
1, 2003, which for Huntington apply generally to its standby letters of credit.
Standby letters of credit are conditional commitments issued by Huntington to
guarantee the performance of a customer to a third party. These guarantees are
primarily issued to support public and private borrowing arrangements, including
commercial paper, bond financing, and similar transactions. Most of these
arrangements mature within two years. Approximately 53% of standby letters of
credit are collateralized, and nearly 95% are expected to expire without being
drawn upon. The carrying amount of deferred revenue at September 30, 2003, was
$3.9 million.

NOTE 4 - OTHER NEW ACCOUNTING PRONOUNCEMENTS

In December 2002, the FASB issued Statement No. 148, Accounting for
Stock-Based Compensation - Transition and Disclosure. Statement No. 148 amends
Statement No. 123, Accounting for Stock-Based Compensation, to provide
alternative methods of transition to Statement No. 123's fair value method of
accounting for stock-based employee compensation. Statement No. 148 also amends
the disclosure provisions of Statement 123 and Accounting Principles Board (APB)
Opinion No. 28, Interim Financial Reporting, to require disclosure in the
summary of significant accounting policies of the effects of an entity's
accounting policy with respect to stock-based employee compensation on reported
net income and earnings per share in annual and interim financial statements.
While Statement No. 148 does not require companies to account for employee stock
options using the fair value method, the disclosure provisions of Statement No.
148 are applicable to all companies with stock-based employee compensation,
regardless of whether they account for that compensation using the fair value
method of Statement No. 123 or the intrinsic value method of APB Opinion No. 25,
which is the method currently used by Huntington. Huntington will adopt the fair
value method of recording stock options under the transitional guidance of
Statement No. 148. Huntington is currently evaluating which of the three methods
under the transitional guidance it will adopt.

In April 2003, the FASB issued Statement No. 149, Amendment of Statement
133 on Derivative Instruments and Hedging Activities. Statement No. 149 amends
and clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts
(collectively referred to as derivatives) and for hedging activities under
Statement No. 133, Accounting for Derivative Instruments and Hedging Activities.
The changes in Statement No. 149 improve financial reporting by requiring that
contracts with comparable characteristics be accounted for similarly. In
particular, Statement No. 149 (1) clarifies under what circumstances a contract
with an initial net investment meets the characteristic of a derivative
discussed in paragraph 6(b) of Statement No. 133, (2) clarifies when a
derivative contains a financing component, (3) amends the definition of an
"underlying" to conform it to language used in FIN 45, and (4) amends certain
other existing pronouncements. Those changes will result in more consistent
reporting of contracts as either derivatives or hybrid instruments. Statement
No. 149 is substantially effective on a prospective basis for contracts entered
into or modified after June 30, 2003. The impact of this new pronouncement did
not have a material impact on Huntington's financial condition, results of
operations, or cash flows.

In May 2003, the FASB issued Statement No. 150, Accounting for Certain
Financial Instruments with Characteristics of Both Liabilities and Equity.
Statement No. 150 establishes standards for how an issuer such as Huntington
classifies and measures certain financial instruments with characteristics of
both liabilities and equity. It requires that an issuer classify a financial
instrument that is within its scope as a liability (or an asset in some
circumstances). Many of those instruments were previously classified as equity.
Some of the provisions of Statement No. 150 are consistent with the current
definition of liabilities in FASB Concepts Statement No. 6, Elements of
Financial Statements. The remaining provisions of Statement No. 150 are
consistent with the FASB's proposal to revise that definition to encompass
certain obligations that a reporting entity can or must settle by issuing its
own equity shares, depending on the nature of the relationship established
between the holder and the issuer. Statement No. 150 does not apply to features
that are embedded in a financial instrument that is not a derivative in its
entirety. Statement No. 150 is effective for financial instruments entered into
or modified after May 31, 2003, and otherwise is effective at the beginning of
the first interim period beginning after June 15, 2003. The impact of this new
pronouncement did not have a material impact on Huntington's financial
condition, results of operations, or cash flows.

8

NOTE 5 - EARNINGS PER SHARE

Basic earnings per share is the amount of earnings for the period
available to each share of common stock outstanding during the reporting period.
Diluted earnings per share is the amount of earnings available to each share of
common stock outstanding during the reporting period adjusted for the potential
issuance of common shares upon the exercise of stock options. The calculation of
basic and diluted earnings per share for each of the three and nine months ended
September 30 is as follows:

The average market price of Huntington's common stock for the period was
used in determining the dilutive effect of outstanding stock options. Common
stock equivalents are computed based on the number of shares subject to stock
options that have an exercise price less than the average market price of
Huntington's common stock for the period.

Approximately 6.4 million stock options with a weighted-average exercise
price of $23.19 per share were outstanding at September 30, 2003, but were not
included in the computation of diluted earnings per share because the options'
exercise price was greater than the average market price of the common shares
for the period and, therefore, the effect would be antidilutive. At the end of
the same period last year, 6.2 million stock options with a weighted-average
exercise price of $23.02 per share were not included in the computation of
diluted earnings per share.

At September 30, 2003, a total of 539,694 common shares associated with a
2002 acquisition were held in escrow, subject to future issuance contingent upon
meeting certain contractual performance criteria. These shares, which were
included in treasury stock, will be included in the computation of basic and
diluted earnings per share at the beginning of the period when all conditions
necessary for their issuance have been met. Dividends paid on these shares are
reinvested in common stock and are also held in escrow.

9

NOTE 6 - COMPREHENSIVE INCOME

The changes in the components of Huntington's Other Comprehensive Income
in each of the three and nine months ended September 30 were as follows:

Activity in Accumulated Other Comprehensive Income for the nine months
ended September 30, 2003 and 2002 was as follows:

10

NOTE 7- SECURITIES AVAILABLE FOR SALE

Securities available for sale based on contractual maturity at September
30, 2003 and December 31, 2002 were as follows:

NOTE 8 - OPERATING LEASE ASSETS

Operating lease assets at September 30, 2003 and 2002 and December 31,
2002, were as follows:

Depreciation expense related to leased automobiles was $83.1 million and
$272.2 million for the three and nine months ended September 30, 2003,
respectively. For the same respective periods in 2002, depreciation expense was
$112.5 million and $356.1 million.

11

NOTE 9 - RESTRUCTURING CHARGES

During the second quarter 2003, Huntington released $5.3 million of
restructuring reserves through a credit to the restructuring charge line of
non-interest expense in the accompanying unaudited consolidated financial
statements. Released reserves of $3.8 million related to those established in
1998 and $1.5 million related to the strategic refocusing plan established in
2001 and 2002. The 1998 reserve was established for, among other items, the exit
of under performing product lines, including possible third party claims related
to these exits.

As of September 30, 2003, Huntington had remaining reserves for
restructuring of $8.7 million. Huntington expects that these remaining reserves
will be adequate to fund the remaining estimated future cash outlays that are
expected in the completion of the exit activities.

NOTE 10 - RESTATEMENTS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On May 20, 2003, Huntington filed an amended 2002 Annual Report on Form
10-K/A (Amendment No. 1). Amendment No. 1 reflected the restatement of
Huntington's prior period financial results for a reclassification of $2.3
billion of automobile leases at December 31, 2002, from the direct financing
lease method to the operating lease method of accounting.

On November 14, 2003, Huntington filed Amendment No. 2 to its 2002 Annual
Report on Form 10-K/A (Amendment No. 2) and amended its Quarterly Reports on
Form 10-Q/A for the first and second quarters of 2003. These amended reports
reflected the correction and restatement of Huntington's prior period financial
results for a series of voluntary actions related to a formal investigation by
the staff of the Securities and Exchange Commission and an internal accounting
review. The correction and restatement applied, on a retroactive basis, deferral
accounting for loan origination fees and costs and also corrected other certain
timing errors related to origination fees paid to automobile dealers, deferral
of commissions paid to originate deposits, recognition of certain mortgage
origination fee income, recognition of expense for pension settlements,
liabilities related to the sale of an automobile debt cancellation product,
income related to a 1998 sale-leaseback transaction, recognition of a gain on an
interest rate swap initiated in 1992 and sold in 2000, and the recognition of
income on Bank Owned Life Insurance in 2001 and 2002. The correction and
restatement also reclassified tax consulting expenses previously recorded as a
component of income tax expense to professional services. This reclassification
had no impact on net income.

The following tables reflect the financial statement line items of
Huntington's balance sheets and income statements impacted by Amendment No. 1
and Amendment No. 2. Huntington's balance sheet information at December 31,
2002, and income statement information for the three and nine months ended
September 30, 2002, as amended by Amendment No. 1, have been previously reported
in documents filed with the SEC on May 20, 2003. Thus, the amounts included
under the "Previously Reported on May 20, 2003" columns for Huntington's balance
sheet at December 31, 2002, and its income statements for the three and nine
months ended September 30, 2002, reflect the impact of Amendment No. 1. The
changes to Huntington's balance sheet information at September 30, 2002,
resulting from the restatement reflected in Amendment No. 1, have not been
previously reported. Thus, the amounts included under the "Previously Reported
on Nov. 14, 2002" column for Huntington's balance sheet at September 30, 2002,
were derived from Huntington's third quarter 2002 Form 10-Q and do not reflect
the impact of Amendment No. 1. In all cases, the "Restated" columns include the
impact of the restatements reflected in both Amendment No. 1 and Amendment
No. 2.

12

Restated financial information is included in Item 1 of Amendment No. 2
Form 10-K/A and Items 1 and 2 of its Quarterly Reports on Form 10-Q/A for the
first and second quarters of 2003. Financial information included in this report
for the three and nine months ended September 30, 2002, has also been restated.
Net income for the three-month period was reduced by $3.6 million, or $0.02 per
share, and $4.2 million, or $0.02 per share, for the nine-month period.

13

NOTE 11 - SEGMENT REPORTING

Huntington has three distinct lines of business: Regional Banking, Dealer
Sales, and the Private Financial Group (PFG). A fourth segment includes
Huntington's Treasury function and other unallocated assets, liabilities,
revenue, and expense. Line of business results are determined based upon
Huntington's management reporting system, which assigns balance sheet and income
statement items to each of the business segments. The process is designed around
Huntington's organizational and management structure and, accordingly, the
results below are not necessarily comparable with similar information published
by other financial institutions.

Accounting policies for the lines of business are the same as those used
in the preparation of the unaudited consolidated financial statements with
respect to activities specifically attributable to each business line. However,
the preparation of business line results requires management to establish
methodologies to allocate funding costs and benefits, expenses, and other
financial elements to each line of business. Changes are made in these
methodologies utilized for certain balance sheet and income statement
allocations performed by Huntington's management reporting system, as
appropriate. Prior periods are typically not restated for these changes.

The chief decision-makers for Huntington rely on "operating earnings" for
review of performance and for critical decision-making purposes. Operating
earnings are different from net income as reported. Net income as reported is
adjusted to exclude the 2003 cumulative effect of the change in accounting
principle for FIN 46, the 2002 gain from the sale of the Florida operations, the
historical Florida banking and insurance operating results, and restructuring
charges or release of previously established restructuring reserves. See Note 9
to the unaudited consolidated financial statements for further discussions
regarding the 2002 restructuring charges and Note 13 regarding the 2002 sale of
the Florida banking and insurance operations. The financial information that
follows is inclusive of the above adjustments in 2002 on an after-tax basis to
reflect the reconciliation to reported net income.

The following provides a brief description of the four operating segments of
Huntington:

REGIONAL BANKING
This segment provides products and services to retail, business banking,
and commercial customers in six operating regions within the five states of
Ohio, Michigan, Indiana, West Virginia, and Kentucky. This segment's retail and
small business products include home equity loans, first mortgage loans, direct
installment loans, business loans, personal and business deposit products, as
well as sales of investment and insurance services. These products and services
are offered through Huntington's traditional banking network, Direct
Bank--Huntington's customer service center, and Web Bank at www.huntington.com.
Regional Banking also includes middle-market and large commercial banking
relationships which use a variety of banking products and services including,
but not limited to, commercial loans, commercial real estate loans,
international trade, and cash management. These products and services are
delivered through the traditional banking network.

DEALER SALES
This segment finances the purchase of automobiles by customers of
automotive dealerships, purchases automobiles from dealers and simultaneously
leases the automobile under long-term operating and direct financing leases,
finances the dealership's inventory of automobiles, and provides other banking
services to the automotive dealerships and their owners.

PRIVATE FINANCIAL GROUP (PFG)
This segment provides products and services designed to meet the needs of
Huntington's higher wealth customers. Revenue is derived through the sale of
personal trust, asset management, investment advisory, brokerage, insurance, and
deposit and loan products and services. Income and related expenses from the
sale of brokerage and insurance products is shared with the line of business
that generated the sale or provided the customer referral.

TREASURY / OTHER
This segment includes assets, liabilities, equity, revenue, and expense
that are not directly assigned or allocated to one of the lines of business.
Since a match-funded transfer pricing system is used to allocate interest income
and interest expense to other business segments, Treasury / Other results
include the net impact of any over or under allocations arising from centralized
management of interest rate risk. Furthermore, this segment's results include
the net impact of administering Huntington's investment securities portfolio as
part of overall liquidity management, as well as the impact of mezzanine lending
activity conducted through Huntington's Capital Markets Group. Additionally,
amortization expense of intangible assets, the 2002 gain on sale of the Florida
operations, the 2002 restructuring charges, and other gains or losses not
allocated to other business segments are also a component.

14

Listed below is certain reported financial information reconciled to
Huntington's three and nine month 2003 and 2002 operating results by line of
business:

NOTE 12 - STOCK-BASED COMPENSATION

Huntington's stock-based compensation plans are accounted for based on the
intrinsic value method allowed under APB Opinion 25, Accounting for Stock Issued
to Employees, and related interpretations. Compensation expense for employee
stock options is generally not recognized if the exercise price of the option
equals or exceeds the fair value of the stock on the date of grant.

In December 2002, the FASB issued Statement No. 148, Accounting for
Stock-Based Compensation - Transition and Disclosure. Statement No. 148 amends
Statement No. 123, Accounting for Stock-Based Compensation, to provide
alternative methods of transition to Statement No. 123's fair value method of
accounting for stock-based employee compensation. Statement No. 148 also amends
the disclosure provisions of Statement 123 and APB Opinion No. 28, Interim
Financial Reporting, to require disclosure in the summary of significant
accounting policies of the effects of an entity's accounting policy with respect
to stock-based employee compensation on reported net income and earnings per
share in annual and interim financial statements. While Statement No. 148 does
not amend Statement No. 123 to require companies to account for employee stock
options using the fair value method, the disclosure provisions of Statement No.
148 are applicable to all companies with stock-based employee compensation,
regardless of whether they account for that compensation using the fair value
method of Statement No. 123 or the intrinsic value method of APB Opinion No. 25.

16

The following pro forma disclosures for net income and earnings per
diluted common share are presented as if Huntington had applied the fair value
method of accounting of Statement No. 123 in measuring compensation costs for
stock options. The fair values of the stock options granted were estimated using
the Black-Scholes option-pricing model. This model assumes that the estimated
fair value of the options is amortized over the options' vesting periods and the
compensation costs would be included in personnel expense on the income
statement. The following table also includes the weighted-average assumptions
that were used in the option-pricing model for options granted in the three and
nine month periods presented:

NOTE 13 - DIVESTITURES

On July 25, 2003, Huntington sold four banking offices located in eastern
West Virginia. This sale included approximately $50 million of loans and $130
million of deposits. Huntington's pre-tax gain from this sale was $13.1 million
in the third quarter of 2003 and is reflected as a separate component of
non-interest income.

On July 2, 2002, Huntington completed the sale of its Florida insurance
operations, The J. Rolfe Davis Insurance Agency, Inc., to members of its
management. Though the sale affected selected Non-interest income and
Non-interest expense categories, it had no material gain or impact on net
income.

On February 15, 2002, Huntington completed the sale of its Florida
operations to SunTrust Banks, Inc. Included in the sale were $4.8 billion of
deposits and other liabilities and $2.8 billion of loans and other assets.
Huntington received a deposit premium of 15%, or $711.9 million. The total net
pre-tax gain from the sale was $182.5 million and is reflected in Non-interest
income. The after-tax gain was $61.4 million, or $0.25 per share. Income taxes
related to this transaction were $121.0 million, an amount higher than the tax
impact at the statutory rate of 35% because most of the goodwill relating to the
Florida operations was non-deductible for tax purposes.

NOTE 14 - SEC INVESTIGATION

On June 26, 2003, Huntington announced that the Securities and Exchange
Commission (SEC) staff is conducting a formal investigation, and that Huntington
is cooperating fully with the investigation. The investigation is ongoing and
Huntington continues to cooperate fully with the SEC. Actions to date by
management have addressed all known accounting issues.

17

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

INTRODUCTION

Huntington Bancshares Incorporated (Huntington) is a multi-state
diversified financial services company organized under Maryland law in 1966 and
headquartered in Columbus, Ohio. Through its subsidiaries, Huntington is engaged
in providing full-service commercial and consumer banking services, mortgage
banking services, automobile financing, equipment leasing, investment
management, trust services, and brokerage services, as well as underwriting
credit life and disability insurance, and selling other insurance and financial
products and services. Huntington's banking offices are located in Ohio,
Michigan, Indiana, Kentucky, and West Virginia. Selected financial services are
also conducted in other states including Arizona, Florida, Georgia, Maryland,
New Jersey, Pennsylvania, and Tennessee. Huntington also has a foreign office in
the Cayman Islands and a foreign office in Hong Kong. The Huntington National
Bank (the Bank) is Huntington's only bank subsidiary.

The following discussion and analysis provides investors and others
with information that management believes to be necessary for an understanding
of Huntington's financial condition, changes in financial condition, results of
operations, and cash flows, and should be read in conjunction with the financial
statements, notes, and other information contained in this document.

FORWARD-LOOKING STATEMENTS
This interim report, including Management's Discussion and Analysis of
Financial Condition and Results of Operations, contains forward-looking
statements about Huntington. These include descriptions of products or services,
plans, or objectives of management for future operations, and forecasts of
revenues, earnings, cash flows, or other measures of economic performance.
Forward-looking statements can be identified by the fact that they do not relate
strictly to historical or current facts.

By their nature, forward-looking statements are subject to numerous
assumptions, risks, and uncertainties. A number of factors could cause actual
conditions, events, or results to differ significantly from those described in
the forward-looking statements. These factors include, but are not limited to,
those set forth under the heading "Business Risks" included in Item 1 of
Huntington's second amended 2002 Annual Report on Form 10-K/A filed on November
14, 2003 (Amended Form 10-K/A or Amendment No. 2) and other factors described
from time to time in other filings with the Securities and Exchange Commission.

Management encourages readers of this interim report to understand
forward-looking statements to be strategic objectives rather than absolute
forecasts of future performance. Forward-looking statements speak only as of the
date they are made. Huntington assumes no obligation to update forward-looking
statements to reflect circumstances or events that occur after the date the
forward-looking statements were made or to reflect the occurrence of
unanticipated events.

RESTATEMENTS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On May 20, 2003, Huntington filed an amended 2002 Annual Report on Form
10-K/A (Amendment No. 1) that reflected the restatement of its prior period
financial results for a reclassification of $2.3 billion of automobile leases at
December 31, 2002, from the direct financing lease method to the operating lease
method of accounting. The remaining $0.9 billion of automobile leases, as well
as all originations after April 2002, are accounted for using the direct
financing lease methodology.

Huntington announced on July 17, 2003, that it would voluntarily
restate its earnings for timing of the recognition of certain revenues and
expenses related to origination fees paid to automobile dealers, deferral of
commissions paid to originate deposits, certain residential mortgage origination
fee income, the recognition of expense for pension settlements, and liabilities
related to the sale of an automobile debt cancellation product. Additionally,
Huntington reclassified certain tax consulting expenses from income tax expense
to professional services.

On November 14, 2003, Huntington filed Amendment No. 2 that reflected
the correction and restatement of prior period financial results, including the
July 17, 2003 announcement and its October 15, 2003 announcement that it would
apply deferral accounting for loan origination fees and costs on a retroactive
basis. This filing also included the following: (1) a correction of amounts
included in the July 17, 2003 announcement related to Huntington's automobile
debt cancellation product liability; and (2) the a correction of three other
errors: (a) the timing of income recognized on a 1998 sale-leaseback
transaction; (b) the timing of recognition of a gain on an interest rate swap
initiated in 1992 and sold in 2000; and (c) the timing of income recognized on
Bank Owned Life Insurance in 2001 and 2002. The timing of income recognition on
the interest rate swap and the Bank Owned Life Insurance had no cumulative
effect on retained earnings. Net income for the three and nine-months ended
September 30,

18

2002, was decreased by $3.6 million, or $0.02 per share, and $4.2 million, or
$0.02 per share, respectively, as a result of this correction and restatement.
Table 1 below reflects the cumulative impact on retained earnings at June 30,
2003 and on net income for prior periods for each Amendment No. 2 restatement
item:

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TABLE 1 - SUMMARY OF RESTATEMENT IMPACT TO NET INCOME AND RETAINED EARNINGS
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The results of Amendment No. 2 are included in the unaudited consolidated
financial statements, notes to the unaudited consolidated financial statements,
and management's discussion and analysis for all current and prior periods
reported in this Form 10-Q. Note 10 in the notes to the unaudited consolidated
financial statements contains additional detailed information regarding this
restatement.

CRITICAL ACCOUNTING POLICIES
Note 1 to the consolidated financial statements included in
Huntington's Amended Form 10-K/A lists significant accounting policies used in
the development and presentation of its financial statements. These significant
accounting policies, as well as the following discussion and analysis and other
financial statement disclosures, identify and address key variables and other
qualitative and quantitative factors that are necessary for an understanding and
evaluation of Huntington, its financial position, results of operations, and
cash flows.

USE OF ESTIMATES
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States (GAAP) requires Huntington's
management to establish critical accounting policies and make accounting
estimates, assumptions, and judgments that affect amounts recorded and reported
in its financial statements. An accounting estimate requires assumptions about
uncertain matters that could have a material effect on the financial statements
of Huntington if a different amount within a range of estimates were used or if
estimates changed from period to period. Readers of this interim report should
understand that estimates are made under facts and circumstances at a point in
time and changes in those facts and circumstances could produce actual results
that differ from when those estimates were made. Huntington's management has
identified the most significant accounting estimates and their related
application in Huntington's Amended Form 10-K/A.

19

ADOPTION OF FASB INTERPRETATION NO. (FIN) 46 INVOLVING SPECIAL PURPOSE ENTITIES
(SPES)

In January 2003, the Financial Accounting Standards Board (FASB) issued
FIN 46, Consolidation of Variable Interest Entities. This Interpretation of
Accounting Research Bulletin No. 51 (ARB 51), Consolidated Financial Statements,
addresses consolidation by business enterprises where ownership interests in an
entity may vary over time or, in many cases, of SPEs. To be consolidated for
financial reporting, these entities must have certain characteristics. ARB 51
requires that an enterprise's consolidated financial statements include
subsidiaries in which the enterprise has a controlling financial interest. FIN
46, as amended, requires existing unconsolidated variable interest entities to
be consolidated by their primary beneficiaries if the entities do not
effectively disperse risks among parties involved. An enterprise that holds
significant variable interests in such an entity, but is not the primary
beneficiary, is required to disclose certain information regarding its interests
in that entity. FIN 46, as amended, applies in the first fiscal year or interim
period ending after December 15, 2003, to variable interest entities in which an
enterprise holds an interest that it acquired before February 1, 2003. It also
applies immediately to variable interest entities created after January 31,
2003, and to variable interest entities in which an enterprise obtains an
interest after that date. FIN 46 may be applied (1) prospectively with a
cumulative effect adjustment as of the date on which it is first applied, or (2)
by restating previously issued financial statements for one or more years with a
cumulative effect adjustment as of the beginning of the first year restated.

Effective July 1, 2003, Huntington adopted FIN 46. This was an early
adoption applied on a prospective basis resulting in the consolidation of a
securitization trust formed in 2000. The consolidation of this trust involved
recognition of the trust's assets and liabilities, elimination of the related
retained interest and servicing asset, recognition of other related assets, and
establishment of an allowance for loan and lease losses equal to 1.01% of the
loan balances. The trust's assets and liabilities consisted of $1,038.1 million
in automobile loan principal and interest receivables, $110.0 million in cash
($51.5 million of which was on deposit at Huntington's bank subsidiary), and
approximately $960.0 million in notes payable and minority interests. The
combined retained interests at market value, a component of securities available
for sale, servicing and other assets of $212.9 million were eliminated in the
consolidation. The reversal of the excess of the market value of the retained
interest over its cost reduced other comprehensive income by $9.9 million.
Additionally, a $10.3 million reserve for loan losses was recognized and
deferred income taxes and other liabilities totaling $12.1 million were
reversed.

Reflecting these impacts, the adoption of FIN 46 resulted in a
cumulative effect charge of $13.3 million, or $0.06 per share, in the third
quarter, which is reflected in Huntington's statements of income. This adoption
also resulted in an overall reduction of the ALLL by approximately 3 basis
points and lowered the tangible common equity ratio by 29 basis points.
Regulatory capital was minimally impacted since these related assets were
already included in regulatory risk-based assets.

This adoption also required the deconsolidation of two unrelated
business trusts, which had been formed in 1997 and 1998 to issue trust preferred
securities that qualified as Tier 1 capital for regulatory capital purposes.
Funds raised through the issuance of these securities were concurrently borrowed
by Huntington's parent company. These related borrowings by the parent company
are now reported in the balance sheet under the caption "Subordinated notes" and
continue to qualify as Tier 1 capital. There was no cumulative effect on
retained earnings or Huntington's capital ratios as a result of this
deconsolidation.

DERIVATIVES AND OTHER OFF-BALANCE SHEET ARRANGEMENTS
Huntington uses a variety of derivatives, principally interest rate
swaps, in its asset and liability management activities to mitigate the risk of
adverse interest rate movements on either cash flows or market value of certain
assets and liabilities.

Like other financial organizations, Huntington has various commitments
in the ordinary course of business that, under GAAP, are not recorded in the
financial statements. Specifically, Huntington makes various commitments to
extend credit to customers, to sell loans, and to maintain obligations under
operating-type noncancelable leases for its facilities. Derivatives and other
off-balance sheet arrangements are discussed under the "Interest Rate Risk
Management" section of this interim report and in the notes to the unaudited
consolidated financial statements.

RELATED PARTY TRANSACTIONS
Various directors and executive officers of Huntington, and entities
affiliated with those directors and executive officers, are customers of
Huntington's subsidiaries. All such transactions with Huntington's directors and
executive officers and their affiliates are conducted in the ordinary course of
business under normal credit terms, including interest rate and
collateralization, and do not represent more than the normal risk of collection.
A summary of the indebtedness of management can be found in Note 9 to
Huntington's Amended Form 10-K/A. All other related party transactions,
including those reported in Huntington's 2003 Proxy Statement and transactions
subsequent to December 31, 2002, were considered immaterial to Huntington's
financial condition, results of operations, and cash flows.

20

SUMMARY DISCUSSION OF RESULTS

2003 Third Quarter versus 2002 Third Quarter
Huntington's third quarter 2003 earnings were $90.9 million, or $0.39
per common share, up 3% and 8%, respectively, from $88.0 million, or $0.36 per
common share, in the year-ago quarter. This primarily reflected the benefit of a
16% increase in fully taxable equivalent net interest income and a 6% decline in
non-interest expense, partially offset by a 9% decline in non-interest income.
Third quarter 2003 results included a negative $13.3 million after-tax
cumulative effect of change in accounting principle as a result of early
prospective adoption of FIN 46 effective July 1, 2003 as noted above. Before the
cumulative effect of change in accounting principle, third quarter 2003 earnings
were $104.2 million, or $0.45 per common share, up 18% and 25%, respectively
from the year-ago quarter. The higher percent change in per common share
earnings reflected the benefit of repurchased common shares in the first quarter
2003 and prior periods. The return on average assets (ROA) and return on average
equity (ROE) for the recent quarter, based on income before the cumulative
effect of change in accounting principle, were 1.39% and 18.5%, respectively,
compared with 1.35% and 15.8% in the year-ago quarter.

As shown in Table 2, fully taxable equivalent net interest income
increased $30.7 million, or 16%, reflecting a $4.9 billion, or 24%, increase in
average earning assets, partially offset by a 23 basis point, or an effective
6%, decline in the fully taxable equivalent net interest margin to 3.46% from
3.69%. Of the $4.9 billion increase in average earning assets, approximately
$1.0 billion resulted from the FIN 46 consolidation of automobile loans.

Non-interest income decreased $25.8 million, or 9%, primarily due to a
$42.5 million, or 27%, decline in operating lease income, a $24.6 million
Merchant Services gain in the year-ago quarter, and a $5.2 million decline in
investment securities gains, partially offset by a $27.6 million increase in
mortgage banking income, a $13.1 million gain on sale of four West Virginia
banking offices, and a $4.6 million, or 12%, increase in services charges on
deposit accounts. The decline in non-interest expense of $19.3 million, or 6%,
primarily reflected a $32.6 million, or 26%, decline in operating lease expense,
and a $2.0 million, or 26%, decrease in marketing expense, partially offset by a
$12.5 million, or 12%, increase in personnel costs.

2003 Third Quarter versus 2003 Second Quarter
Compared with the second quarter 2003 earnings of $96.5 million, or
$0.42 per common share, third quarter earnings and earnings per common share
were down 6% and 7%, respectively. This decrease reflected the charge of $13.3
million, or $0.06 per share, for the cumulative effect of a change in accounting
principle as a result of adopting FIN 46. Excluding this effect, third quarter
earnings were up 8% compared to second quarter earnings with earnings per common
share up 7%. As shown in Table 2, this primarily reflected the benefit of a 9%
increase in fully taxable equivalent net interest income, partially offset by a
2% decline in non-interest income and a 1% increase in non-interest expense. ROA
and ROE for the 2003 second quarter were 1.38% and 18.0%, respectively.

The $4.2 million, or 2%, decrease in non-interest income resulted from
a prior-quarter gain of $13.5 million on sale of automobile loans; an $11.0
million, or 9%, decline in operating lease income; an $11.0 million decline in
investment securities gains; and a $4.2 million, or 15%, decline in other
income, partially offset by a third quarter gain of $13.1 million on the sale of
four West Virginia banking offices, and a $24.2 million improvement in mortgage
servicing rights (MSR) valuation. The $3.1 million, or 1%, increase in
non-interest expense reflected a $5.3 million release of restructuring reserves
in the second quarter. Excluding this release of restructuring reserves, third
quarter non-interest expense decreased $2.2 million, or 1%, driven by a $9.8
million, or 10%, decline in operating lease expense, and a $2.9 million, or 35%,
decline in marketing expense, which was partially offset by a $7.9 million, or
8%, increase in personnel costs.

21

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TABLE 2 - SELECTED QUARTERLY AND NINE-MONTH INCOME STATEMENT DATA (1)

(1) Each of the quarters in 2002 and the first two quarters in 2003 have been
restated. Please see Note 10 to the unaudited consolidated financial
statements for further information.

(2) Due to the prospective adoption of FASB Interpretation No. 46 for variable
interest entities.

(3) Based on income before cumulative effect of change in accounting
principle, net of tax.

(4) On a fully taxable equivalent basis assuming a 35% tax rate.

(5) Non-interest expense less amortization of intangible assets divided by the
sum of fully taxable equivalent net interest income and non-interest
income excluding securities (losses) gains.

22

2003 First Nine Months versus 2002 First Nine Months
For the first nine months of 2003, net income was $279.1 million, or
$1.21 per common share, up 10% and 17%, respectively, from $254.5 million, or
$1.03 per common share, in the comparable year-ago period. This increase
primarily reflected the benefits of a 14% increase in fully taxable equivalent
net interest income, a 13% decline in non-interest expense, a 4% decline in
provision for loan and lease losses, and a lower effective tax rate, partially
offset by a 23% decline in non-interest income. The 2003 nine-month period
included an after-tax charge of $13.3 million for the cumulative effect of a
change in accounting principle as a result of adopting FIN 46 effective July 1,
2003. Before the cumulative effect, earnings for the first nine months of 2003
were $292.4 million, or $1.26 per common share, up 15% and 22%, respectively
from the comparable year-ago period. Other significant items in the first nine
months of 2003 included $23.8 million of pre-tax gains on the sale of automobile
loans and a $13.1 million pre-tax gain on the sale of four West Virginia banking
offices. The year-ago nine-month period included three significant items. The
first consisted of a $182.5 million pre-tax gain from the sale of the Florida
banking and insurance operations reported in non-interest income. The second was
$56.2 million of restructuring charges related to the strategic initiatives
announced in July 2001 reported in non-interest expense, and the third was a
$24.6 million pre-tax gain from the restructuring of Huntington's ownership
interest in Huntington Merchant Services, LLC. ROA and ROE, based on income
before the cumulative effect of a change in accounting, were 1.37% and 17.9%,
respectively, up from 1.32% and 15.0%, in the year-ago nine-month period.

As shown in Table 2, the $631.4 million of fully taxable equivalent net
interest income increased 14% as a result of a $3.7 billion, or 18%, increase in
average earnings assets, partially offset by a 12 basis point, or an effective
3%, decline in the fully taxable equivalent net interest margin to 3.52% from
3.64%. Of the $3.7 billion increase in average earning assets, $0.3 billion
resulted from the FIN 46 consolidation of automobile loans.

Provision for loan and lease losses for the recent nine-month period
decreased $5.5 million, or 4%, compared with last year and reflected a release
of provision expense associated with the loans sold with Florida banking
operations in 2002, partially offset by higher provision expense due to loan
growth in 2003.

The $247.2 million, or 23%, decline in non-interest income primarily
reflected the impact of the $182.5 million pre-tax gain from the 2002 sale of
the Florida banking operations, a $123.4 million, or 24%, decline in operating
lease income, and the 2002 Merchant Services gain of $24.6 million, partially
offset by a $22.0 million, or 83%, increase in mortgage banking income, $23.8
million of gains on sale of automobile loans in the 2003 nine-month period, a
$17.1 million, or 31%, increase in other income, the $13.1 million gain on the
sale of the West Virginia branch offices, and an $11.0 million, or 10%, increase
in service charges on deposit accounts. The $132.1 million, or 13%, decline in
non-interest expense primarily reflected a $90.6 million, or 23%, decline in
operating lease expense, and a $62.5 million decline in restructuring charges,
partially offset by a $23.7 million, or 8%, increase in personnel costs and a
$6.3 million, or 26%, increase in professional services.

The reduction in tax expense reflects the decline in the effective tax
rate to 26.3% in the current nine-month period, down from 41.1%, in the year-ago
nine-month period. The higher effective tax rate in the year-ago period
reflected the fact that most of the goodwill related to the sold Florida
operations was not deductible for tax purposes.

RESULTS OF OPERATIONS

NET INTEREST INCOME

2003 Third Quarter versus 2002 Third Quarter
Compared with the year-ago quarter, fully taxable equivalent net
interest income increased $30.7 million, or 16%, reflecting the benefit of an
increase in average earning assets, partially offset by a 23 basis point, or an
effective 6%, decline in the net interest margin to 3.46% from 3.69% (See Tables
2 and 3). The decline in the fully taxable equivalent net interest margin was
driven primarily by continued repayments and prepayments of fixed-rate assets,
including mortgages, indirect automobile loans, and mortgage-backed securities.
The asset rate decline was partially offset by declining liability costs,
particularly through lower deposit rates. Average total earning assets increased
$4.9 billion, or 24%, reflecting a $3.3 billion increase in average loans and
leases, including $1.0 billion associated with the FIN 46 consolidation of
automobile loans, a $0.9 billion increase in investment securities, and a $0.6
billion increase in mortgages held for sale. Excluding the consolidation of
automobile loans, average earning assets increased $3.8 billion, or 19%, from
the year-ago quarter.

The increase of $0.9 billion, or 31%, in average investment securities
from the year-ago quarter reflected the investment of deposit inflows and the
reinvestment of a portion of the proceeds from 2003 auto loan sales. Average
mortgages held for sale increased $0.6 billion, more than three times the level
of a year earlier, due to high loan originations of saleable mortgages resulting
from the high level of refinancing activity.

23

Compared with the year-ago quarter, average loans and leases increased
$3.3 billion, or 19%. Of this increase, $1.0 billion resulted from the FIN 46
consolidation of automobile loans. Excluding the impact of this consolidation,
average loans and leases increased $2.2 billion, or 13%. On this same basis,
average automobile loans and leases increased $0.9 billion, or 29%. The growth
of this portfolio is reflective of new leases after April 2002 being recorded as
direct financing leases. Average automobile loans were down $0.2 billion, or 7%,
excluding the $1.0 billion related to the FIN 46 consolidation. As part of
Huntington's plan to reduce automobile loan and lease concentration, $567
million of automobile loans were sold in the second quarter 2003, following the
sale of $556 million in the first quarter 2003. These sales had the impact of
reducing third quarter 2003 automobile loan balances and comparisons to prior
periods. This brought 2003 year-to-date sales to $1.1 billion, materially
impacting third quarter 2003 averages and comparisons to the year-ago quarter.
Excluding the impact of the year-to-date sales and the FIN 46 consolidation,
average automobile loans in the third quarter 2003 were up 33% from the year-ago
quarter.

Average residential mortgages increased $0.6 billion, or 40%, while
average home equity loans and lines grew $0.4 billion, or 14%, reflecting the
positive impact low interest rates had on home borrowing and refinancing demand
and continued emphasis on adjustable rate mortgages. Total average commercial
real estate loans increased $0.4 billion, or 12%. Average commercial loans were
down $0.1 billion, or 2%, reflecting a continued emphasis on reducing
Huntington's credit risk profile by lowering exposure to large corporate credits
and weak credit demand. There were $150 million of loan payoffs on credits
larger than $10 million during the recent quarter. Small business banking loans,
originated through Huntington's retail branch network, increased 9% from the
prior year, reflecting continued emphasis on this sector of the market.

Compared with the year-ago quarter, average core deposits increased
$0.7 billion, or 5%, despite a $0.9 billion, or 26%, decline in retail
certificates of deposits (CDs). Retail CDs, which continued to be a relatively
expensive source of funds, were de-emphasized in Huntington's deposit generation
strategies. Average core deposits, excluding retail CDs, were up $1.6 billion,
or 14%, from the year-ago quarter.

2003 Third Quarter versus 2003 Second Quarter
As shown in Table 2, fully taxable equivalent net interest income in
the third quarter 2003 increased $18.5 million, or 9%, from the second quarter,
reflecting growth in average earning assets only partially offset by a slight
decline in the net interest margin. The fully taxable equivalent net interest
margin declined a modest 1 basis point to 3.46% from 3.47%, as lower asset
yields were offset by reduced funding rates. Average total earning assets
increased $1.9 billion, or 8%, reflecting a $1.3 billion increase in average
loans and leases, including $1.0 billion associated with the FIN 46
consolidation of automobile loans, a $0.4 billion increase in investment
securities, and a $0.3 billion increase in mortgages held for sale. Excluding
the consolidation of automobile loans, average earning assets increased $0.9
billion, or 4%, from the second quarter.

Average investment securities increased $0.4 billion, or 10%, from the
second quarter reflecting the investment of proceeds from the 2003 second
quarter sale of automobile loans. Average mortgages held for sale increased $0.3
billion, or 49%, from the second quarter due to high loan originations of
saleable mortgages from heavy refinancing activity.

Average loans and leases increased $1.3 billion, or 7%, from the second
quarter. Of this increase, $1.0 billion resulted from the FIN 46 consolidation.
Excluding the impact of FIN 46, average loans and leases increased $0.2 billion,
or 1%. The slower growth rate in average loans and leases in the third quarter
was impacted by the sale of $567 million of automobile loans late in the second
quarter and a decline in large commercial and industrial loans in the current
quarter. Average residential mortgages grew 10% and average home equity loans
and lines of credit increased 4%. Average automobile loans and leases rose 25%,
with the FIN 46 consolidation accounting for substantially all of the change.
Excluding this impact, average automobile loans and leases were up slightly,
with the comparison affected by the automobile loans sold late in the second
quarter. Total average commercial real estate loans increased 4%. In contrast,
average commercial loans declined 4%, reflecting declines in larger commercial
credits, offset by 2% growth in small business loans.

Total average core deposits in the third quarter increased $0.4
billion, or 2%, from the second quarter despite a $0.2 billion decline in retail
CDs. Excluding retail CDs, average core deposits increased 5%, evidenced by an
8% growth in interest bearing demand deposits and 6% growth in non-interest
bearing demand deposits.

Table 3 of this report reflects quarterly average balance sheets and
rates earned and paid on Huntington's interest-earning assets and
interest-bearing liabilities.

24

2003 First Nine Months versus 2002 First Nine Months
Net interest income on a fully taxable equivalent basis for the first
nine months of 2003 increased $77.7 million, or 14%, from the comparable
year-ago period (See Table 2). This reflected 18% growth in average earnings
assets, as the fully taxable equivalent net interest margin declined to 3.52%
from 3.64%, down 12 basis points, or an effective 3%. Average total earning
assets increased $3.7 billion, or 18%, reflecting a $2.5 billion, or 15%,
increase in higher average loans and leases, including $0.3 billion due to the
FIN 46 consolidation of automobile loans, a $0.8 billion, or 26%, increase in
average investment securities, and a $0.4 billion increase in average mortgages
held for sale. The higher average balances in securities and mortgages held for
sale reflected the same factors influencing the year-over-year quarterly
comparisons discussed above. Of the 15% increase in average loans and leases,
average automobile loans and leases were up $1.6 billion, or 53%, impacted by
the significant growth in direct financing automobile leases. After excluding
the impact of the $1.1 billion automobile loan sales and the impact of FIN 46,
average automobile loans and leases increased 62% from the year-ago period.
Average residential mortgages were up $0.6 billion, or 43%, while average home
equity loans and lines of credit grew $0.3 billion, or 10%. Average commercial
real estate loans were $0.3 million, or 9%, higher than in the year-ago period,
whereas average commercial loans were down $0.2 billion, or 3%, reflecting the
continued weak demand for commercial credits and planned reductions in large
commercial credits, including shared national credits, partially offset by
growth in small business loans.

Total average core deposits for the first nine months of 2003 were
essentially unchanged compared with the first nine months of 2002, because
deposit growth was offset by the impact of the 2002 sale of $4.7 billion of
deposits sold with the Florida banking operations.

Table 4 of this report reflects year-to-date 2003 and 2002 average
balance sheets, related interest income and expense, and rates earned and paid
on Huntington's interest-earning assets and interest-bearing liabilities.

PROVISION FOR LOAN AND LEASE LOSSES

The provision for loan and lease losses is the expense necessary to
maintain the allowance for loan and lease losses (ALLL) at a level adequate to
absorb management's estimate of inherent losses in the total loan and lease
portfolio. Taken into consideration in the determination of provision expense
are such factors as current period net charge-offs that are charged against the
ALLL, any related estimate of likely losses associated with current period loan
and lease growth based on historical experience, the current economic outlook
and any anticipated changes in the credit quality of existing loans and leases,
and other factors.

2003 Third Quarter versus 2002 Third Quarter
Provision for loan and lease losses in the third quarter was $51.6
million, down $2.7 million, or 5%, from the year-ago quarter. At September 30,
2003, the allowance for loan and lease losses as a percent of period-end loans
and leases was 1.75%, down from 2.08% at the end of last year's third quarter.
The decline in the ratio reflected a 36% reduction in non-performing assets and
lower provision expense associated with growth in lower-risk loans originated
during the recent year. In contrast, as a percent of non-performing assets, the
ALLL increased to 270% at September 30, 2003, from 173% at September 30, 2002.
(See Tables 10 and 11.)

2003 Third Quarter versus 2003 Second Quarter
Provision for loan and lease losses in the third quarter was up $2.4
million, or 5%, from the second quarter due to an $10.7 million increase in
provision expense attributable to loan growth. Net charge-offs between periods
declined $8.3 million, or 20%. The September 30, 2003, ALLL as a percent of
period-end loans and leases was 1.75%, down 4 basis points from 1.79% at June
30, 2003. The adoption of FIN 46 accounted for a 3 basis point reduction in the
ALLL. The allowance for loan and lease losses as a percent of non-performing
assets increased to 270% at September 30, 2003, from 255% at the end of the
immediately preceding quarter.

2003 First Nine Months versus 2002 First Nine Months
Provision for loan and lease losses for the first nine months was
$137.7 million, down $5.5 million, or 4%, reflecting a $7.1 million, or 6%,
decline in net charge-offs, partially offset by loan and lease growth. Net
charge-offs included $3.0 million related to the consolidation of loans
associated with the adoption of FIN 46 on July 1, 2003.

25

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TABLE 3 - CONSOLIDATED QUARTERLY AVERAGE BALANCE SHEETS AND NET INTEREST MARGIN
ANALYSIS

(1) Fully taxable equivalent yields are calculated assuming a 35% tax rate.
(2) Individual loan components include applicable fees.
(3) Loan and deposit average rates include impact of applicable derivatives.

26

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TABLE 4 - CONSOLIDATED NINE-MONTH AVERAGE BALANCE SHEETS AND NET INTEREST MARGIN
ANALYSIS

(in millions)

(1) Fully taxable equivalent yields are calculated assuming a 35% tax rate.
(2) Individual loan components include applicable fees.
(3) Loan and deposit average rates include impact of applicable derivatives.

27

NON-INTEREST INCOME

2003 Third Quarter versus 2002 Third Quarter
Non-interest income in the third quarter 2003 was $272.8 million, down
$25.8 million, or 9%, from $298.6 million in the year-ago quarter. This decline
was driven primarily by a $42.5 million, or 27%, decline in operating lease
income. The decline in operating lease income reflects the continued run-off of
this portfolio, as all new leases are recorded as direct financing leases.
Unlike income on operating leases, the income on direct financing leases is
reflected in net interest income. (See Operating Lease discussion.) Excluding
operating lease income of $117.6 million and $160.2 million from the current and
year-ago quarters, respectively, a $13.1 million gain on the sale of four West
Virginia banking offices in the 2003 third quarter, and a $24.6 million Merchant
Services gain in the year-ago quarter, non-interest income was up $28.1 million,
or 25% (See Table 5).

Mortgage banking income increased $27.6 million, of which $24.4 million
was due to an increase in MSR valuation, which was comprised of a $17.8 million
impairment recovery in the current period compared with a $6.6 million temporary
impairment in the year-ago quarter. The MSR temporary impairment charge in the
2002 third quarter reflected the lower interest rate environment, which
continued to produce high refinancing activity and high mortgage prepayments. In
contrast, the increase in interest rates during the 2003 third quarter, and the
related prospective slowdown in mortgage prepayments, resulted in a longer
estimated life of the MSR cash flows and the increased MSR valuation. At
September 30, 2003, MSRs as a percent of serviced mortgages were 1.07%, up from
0.88% at September 30, 2002. Excluding MSR recovery/impairment, mortgage banking
income was up $3.2 million, or 35%, resulting from higher mortgage originations.
A $4.6 million, or 12%, increase in service charges on deposit accounts was
driven by higher NSF and overdraft fees on retail accounts. Other income rose
$1.3 million, or 6%, due to a variety of factors including increases in auto
lease termination fees and investment banking income, partially offset by
declines in capital markets-related trading and sales activities and lower
securitization income. The adoption of FIN 46 and bringing onto the balance
sheet previously securitized loans significantly reduced securitization income.

Non-interest income included a $5.2 million decline in investment
securities gains, reflecting $4.1 million of securities losses in the 2003 third
quarter compared with securities gains of $1.1 million in the year-ago quarter.
Investment securities are viewed as a natural balance sheet hedge against
changes in MSR valuations with securities gains (losses) used to partially
offset MSR losses (gains). Table 5 shows details of non-interest income for the
three and nine-month periods ended September 30, 2003 and 2002:

2003 Third Quarter versus 2003 Second Quarter
Non-interest income in the third quarter was down $4.2 million, or 2%,
from $277.0 million in the second quarter, including an $11.0 million, or 9%,
decline in operating lease income. Excluding operating lease income of $117.6
million from the current quarter and $128.6 million in the 2003 second quarter,
non-interest income increased $6.8 million, or 5%. This increase included a
$13.1 million gain on the sale of four West Virginia banking offices in the
third quarter, offset by a $13.5 million gain on sale of automobile loans in the
second quarter.

Mortgage banking income increased $23.0 million in the third quarter,
of which $24.2 million was due to an increase in MSR valuation, reflecting a
$17.8 million MSR impairment recovery in the current quarter compared with $6.4
million of MSR temporary impairment in the second quarter. The factors impacting
the change in MSR valuations are the same as those discussed in the
year-over-year results above. Service charges on deposit accounts increased $1.4
million, or 3%, due to higher NSF and overdraft fees on retail accounts.

Partially offsetting these increases were declines in several income
categories including an $11.0 million decline in investment securities gains,
reflecting $4.1 million of securities losses in the current quarter compared
with securities gains of $6.9 million in the second quarter. As discussed above,
investment securities are viewed as a natural balance sheet hedge against
changes in MSR valuations. The $4.2 million, or 15%, decline in other income was
influenced by the same factors identified in the year-over-year third quarter
comparison. Other service charges and fees declined $0.9 million, or 8%, due to
the impact of the national Visa settlement which reduced interchange fees on
debit cards.

2003 First Nine Months versus 2002 First Nine Months
Non-interest income for the first nine months of 2003 was $822.6
million, down $247.2 million, or 23%, from $1,069.6 million in the comparable
year-ago period. This decline reflected the $182.5 million gain from the sale of
the Florida banking and insurance operations and the $24.6 million gain on the
restructuring of Huntington Merchant Services, LLC in the year-ago period, as
well as a $123.4 million, or 24%, decline in operating lease income as this
portfolio runs off. (See Operating Lease discussion.) Excluding the year-ago
gains, as well as operating lease income of $384.4 million and $507.8 million
from the current and year-ago nine-month periods, respectively, non-interest
income was up $83.2 million, or 23%. This increase included $23.8 million of
gains on the sale of automobile loans in the 2003 first and second quarters and
a $13.1 million gain on the sale of West Virginia banking offices in the recent
quarter compared with no such sales in 2002. Mortgage banking income increased
$22.0 million, or 83%, primarily reflecting year-to-date MSR net recoveries
totaling $11.5 million in 2003 compared with $7.2 million of MSR temporary
impairment in the year-ago period. Excluding the impact of MSR valuation in both
periods, mortgage banking income increased $3.4 million, or 10%. Other items
contributing to the increase in non-interest income included a $17.1 million, or
31%, increase in other income; a $10.9 million, or 10%, increase in service
charges on deposit accounts; and a $1.4 million increase in securities gains.
The increase in other income reflected the same factors previously discussed in
the other period comparisons. Partially offsetting these items was a decline in
brokerage and insurance income of $4.7 million, or 10%. This was due to reduced
annuity sales volume slightly offset by an increase in insurance revenue mainly
from higher title insurance revenue reflective of increased mortgage loan
refinancing. Trust services declined $0.9 million, or 2%.

29

NON-INTEREST EXPENSE

2003 Third Quarter versus 2002 Third Quarter
Non-interest expense in the third quarter 2003 was $300.2 million, down
$19.3 million, or 6%, from $319.5 million in the year-ago quarter. This decline
was driven primarily by a $32.6 million, or 26%, decline in operating lease
expense as this portfolio runs off. (See Operating Lease discussion.) Excluding
operating lease expense of $93.1 million and $125.7 million from the current and
year-ago quarters, respectively, non-interest expense was up $13.3 million, or
7% (See Table 6).

This $13.3 million increase reflected a $12.5 million, or 12%, increase
in personnel costs with higher sales commissions, benefit expenses, and, to a
lesser degree, higher salaries contributing to the increase. Personnel costs in
the recent quarter included an increase in pension expense, reflecting a $3.0
million charge for pension settlements. Pension settlement expense represents
the cost recognized for associates who leave the company. An estimate of the
annual expenses was received from actuarial consultants in the third quarter.
This charge represented the year to date expense associated with that estimate.
Full-time equivalent staff at the end of September 2003 was 8,054, down slightly
from 8,117 at the end of the third quarter last year. Outside data processing
and other services increased $2.4 million, or 16%. Professional services expense
increased $1.4 million, or 15%, primarily related to legal expenses associated
with the SEC investigation. Also contributing to the increase in non-interest
expense was higher net occupancy expenses, up $0.9 million, or 6%, due to lower
rental income received, which is netted against occupancy expenses.

These increases were partially offset by lower marketing and equipment
expenses. The $2.0 million, or 26%, decline in marketing expense reflected lower
advertising expenses. Equipment expenses declined $1.1 million, or 6%, due to a
variety of factors including lower lease and maintenance costs.

Table 6 reflects details of non-interest expense for the three and nine
months ended September 30, 2003 and 2002:

30

2003 Third Quarter versus 2003 Second Quarter
Non-interest expense in the current quarter was up $3.1 million, or 1%,
from $297.1 million the second quarter. Two significant items impacted the
quarter-to-quarter comparison. The first item was a $5.3 million release of
restructuring reserves in the second quarter. The second item was the $9.8
million, or 10%, decline in operating lease expense as the operating lease
portfolio runs off. (See Operating Lease discussion.) Excluding the $5.3 million
release of restructuring reserves and the operating lease expense of $93.1
million and $102.9 million from the current and prior quarters, respectively,
non-interest expense was up $7.6 million, or 4%.

Contributing to the $7.6 million increase were higher personnel costs,
up $7.9 million, or 8%, due to the current period recognition of pension
settlement expense, as well as higher medical and incentive accruals. The $1.4
million, or 9%, increase in outside data processing and other services reflected
the timing of contract renewal payments, and the $1.4 million, or 62%, increase
in printing and supplies reflected higher check printing costs. Professional
services increased $1.2 million, or 13%, due to $4.5 million of expenses
associated with the SEC investigation, up from $0.8 million in the second
quarter. Partially offsetting these increases were declines in marketing expense
of $2.9 million, or 35%, due to the timing of advertising production costs, and
a $1.8 million, or 9%, decline in other expenses.

2003 First Nine Months versus 2002 First Nine Months
Non-interest expense for the first nine months of 2003 was $912.8
million, down $132.2 million, or 13%, from $1,044.8 million in the comparable
year-ago period. Two items significantly affected this year-over-year
comparison. The first was a $62.5 million decline in restructuring reserve
charges between periods reflecting a $6.3 million release to reserves in the
2003 nine-month period compared with $56.2 million of charges to reserves in the
comparable year-ago period. The year-ago charges were associated with the
strategic initiatives announced in July 2001, including the sale of the Florida
operations. The second item was a $90.6 million, or 23%, decline in operating
lease expense as the portfolio of operating lease assets runs off. (See
Operating Lease discussion.) Excluding the impact of restructuring charges and
releases, as well as operating lease expense of $307.7 million and $398.2
million from the current and year-ago nine-month periods, respectively,
non-interest expense was up $20.9 million, or 4%.

This $20.9 million increase reflected increases of $23.7 million, or
8%, in personnel costs; a $6.3 million, or 26%, increase in professional
services; and a $1.4 million, or 3%, increase in net occupancy expenses.
Partially offsetting these increases were declines of $1.9 million, or 4%, in
equipment expense; $1.6 million, or 14%, in printing and supplies; and $1.1
million, or 5% in marketing expense. These year-to-date changes reflect the same
factors influencing comparisons between quarters. Other expenses declined $5.6
million, or 9%, as a result of lower state and local taxes.

Huntington's measurement date for its pension assets and liabilities is
September 30. Based on (a) the amortization of net unrecognized losses; (b) the
company's expectations of returns on plan assets; and (c) the discount rate used
in the measurement of plan assets and liabilities, management expects pension
expense to increase in 2004.

OPERATING LEASE ASSETS
Operating lease assets represent automobile leases originated before
May 2002. This operating lease portfolio will run-off over time since automobile
lease originations after April 2002 have been recorded as direct financing
leases and are reported in the automobile loan and lease category in earning
assets. As a result, the non-interest income and non-interest expenses
associated with the operating lease portfolio will also decline over time.
Average operating lease assets in the third quarter 2003 were $1.6 billion, down
40% from the year-ago quarter and 13% from the second quarter 2003.

Operating lease income totaled $117.6 million in the third quarter 2003
and represented 43% of non-interest income in that quarter. Operating lease
income was down $42.5 million, or 27%, from the year-ago quarter and $11.0
million, or 9%, from the second quarter 2003, reflecting declines in average
operating leases of 40% and 13%, respectively. The operating lease asset
balances will continue to decline through both depreciation and lease
terminations. Net rental income was down 27% and 9%, respectively, from the
year-ago quarter and the 2003 second quarter. Fees declined 26% and 1%,
respectively, from the year-ago and prior quarter. Recoveries from early
terminations declined 11% from the year-ago quarter and 2% from the 2003 second
quarter.

Operating lease expense totaled $93.1 million in the third quarter
2003, down $32.6 million, or 26%, from the year-ago quarter and was down $9.8
million, or 10%, from the 2003 second quarter. These declines also reflected the
fact that this portfolio is decreasing over time. Losses on early terminations
declined $2.8 million, or 22%, from the year-ago quarter, and $1.5 million, or
13%, from the prior quarter.

For the first nine months of 2003, operating lease income totaled
$384.4 million, compared with $507.8 million for the same period last year. This
$123.4 million, or 24%, decline reflected 35% lower average operating lease
balances for the comparable periods. Net rental income and fees were both down
24% from a year ago. Recoveries from early terminations declined 28%. Operating
lease expense declined $90.6 million, or 23%, from $398.2 million for the
nine-

31

month period last year to $307.7 million. Losses on early terminations declined
18% from $41.1 million in the year-ago nine-month period to $33.9 million this
year.

Losses on operating lease assets consist of residual losses at
termination and losses on early terminations. Residual losses arise if the
ultimate value or sales proceeds from the automobile are less than Black Book
value, which represents the insured amount under the company's residual value
insurance policies. This situation may occur due to excess wear-and-tear or
excess mileage not collected from the lessee. Losses on early terminations occur
when a lessee, due to credit or other reasons, turns in the automobile before
the end of the lease term. A loss is realized if the automobile is sold for a
value less than the net book value at the date of turn-in. Such losses are not
covered by the residual value insurance policies. To the extent the company is
successful in collecting any deficiency from the lessee, amounts received are
recorded as recoveries from early terminations.

Table 7 details operating lease assets performance for the three and nine
months ended September 30, 2003 and 2002:

- --------------------------------------------------------------------------------
TABLE 7 - OPERATING LEASE ASSETS PERFORMANCE

(1) As a percent of average operating lease assets, quarterly amounts
annualized.

32

(1) As a percent of average operating lease assets, quarterly amounts
annualized.

INCOME TAXES

Income taxes in the third quarter 2003 were $37.2 million and
represented an effective tax rate on income before taxes of 26.3%. Income taxes
increased $9.2 million from the year-ago quarter due to higher pre-tax income
and a higher effective tax rate, as the effective tax rate in the year-ago
quarter was lower at 24.2%. The effective tax rate in the second quarter 2003
was 27.5%. Each quarter, taxes for the full year are re-estimated and
year-to-date tax accrual adjustments are made. A number of factors, such as
year-to-date adjustments, can result in fluctuations in quarterly effective tax
rates.

For the first nine months of 2003, income taxes were $104.5 million and
represented an effective tax rate on income before taxes of 26.3%. This was down
$73.2 million from the comparable year-ago period in which the effective tax
rate was unusually high at 41.1%, reflecting the fact that most of the goodwill
relating to the Florida operations sold in 2002 was non-deductible for tax
purposes.

CREDIT RISK

Huntington's exposure to credit risk is managed through the use of
consistent underwriting standards that emphasize "in-market" lending while
avoiding excessive industry and other concentrations. The credit administration
function employs risk management techniques to ensure that loans and leases
adhere to corporate policy and problem loans and leases are promptly identified.
These procedures provide executive management with the information necessary to
implement policy adjustments where necessary and to take corrective actions on a
proactive basis. Beginning in 2002, management refocused its emphasis on
commercial lending to customers with existing or potential relationships within
Huntington's primary markets while, in turn, de-emphasizing credits outside of
its primary markets. As a result, outstanding shared national credits totaled
$776 million at September 30, 2003, down from $832 million at June 30, 2003, and
$1.0 billion at the same period-end last year, and down from a peak of $1.5
billion at June 30, 2001. Also to decrease credit risk, management has been
lowering commercial loan exposures to very large individual credits.

Huntington implemented a revised internal risk grading methodology for
commercial and commercial real estate credits in the first quarter of this year.
This new methodology incorporates a dual risk grading system that separately
measures (a) the probability of default, and (b) loss in the event of default to
provide Huntington with more specificity in the risk assessment process.

33

LOAN AND LEASE COMPOSITION
Table 8 shows the loan and lease portfolio mix by type of loan or
lease, as well as by business segment. Total loans and leases at September 30,
2003 were $21.2 billion, or $20.1 billion excluding the $1.0 billion of
automobile loans consolidated in the third quarter due to the adoption of
FIN 46.

The loan and lease portfolio by type consisted of 44.8% commercial and
commercial real estate loans, and 55.2% consumer loans. However, excluding the
impact of FIN 46, total commercial and commercial real estate loans at September
30, 2003 represented 47.1% of total loans and leases, down from 50.3% at
December 31, 2002, and 52.0% a year ago. On this same basis, total consumer
loans at September 30, 2003, represented 52.9% of total loans and leases, up
from 49.7% at the end of last year, and 48.0% a year ago. Several factors have
influenced this growth in consumer loans relative to commercial and commercial
real estate loans: (1) the reduction of exposure to large individual commercial
and commercial real estate credits, including efforts to reduce exposure to
large nationally syndicated shared national credits, (2) weak demand for new
commercial credits given overall weak economic conditions, (3) the significant
growth in residential mortgages, as well as home equity loans and lines, and (4)
the rapid growth in automobile direct financing leases as they represent all new
automobile lease originations after April 2002.

- --------------------------------------------------------------------------------
TABLE 8 - LOAN AND LEASE COMPOSITION

The loan and lease portfolio by business segment reflected 64.4% in
Regional Banking, 28.8% in Dealer Sales, 6.0% in the Private Financial Group,
and 0.8% in Treasury / Other at September 30, 2003. Excluding the $1.0 billion
in automobile loans related to implementation of FIN 46 from Dealer Sales, as
well as from total loans and leases, Regional Banking represented 67.7% of total
loans and leases, down slightly from 68.1% at December 30, 2002 and 70.9% a year
earlier. Most of the Regional Banking's relative decline was in the Northern
Ohio region, which was more impacted than other regions by the efforts to reduce
exposure to very large individual commercial, commercial real estate, and
nationally syndicated shared national credits. Dealer Sales, excluding the
impact from FIN 46, represented 25.1% of total loans and leases, unchanged from
December 31, 2002, reflecting the combination of new loan and lease originations
in 2003, offset by

34

the impact of $1.1 billion of automobile loans sold in the first nine months of
2003. It is Huntington's objective to lower the concentration to Dealer Sales.

NET CHARGE-OFFS
Third quarter 2003 net charge-offs were $32.8 million compared with
$41.1 million in the 2003 second quarter and $33.8 million in the year-ago
quarter. This represented an annualized 0.64%, 0.85%, and 0.78% of average loans
and leases, respectively. For the nine-months ended September 30, 2003 and 2002,
net charge-offs were $106.7 million, or 0.73%, and $113.8 million, or 0.89%,
respectively. Net charge-offs and annualized net charge-offs as a percent of
average loans and leases by type of loan are reflected in Table 9 below:

- -------------------------------------------------------------------------------
TABLE 9 - NET LOAN AND LEASE CHARGE-OFFS

Net charge-offs for commercial loans declined to $12.2 million, or an
annualized 0.91% of average commercial loans, for the third quarter of 2003 from
$26.5 million, or an annualized 1.89% of average commercial loans, for the
second quarter 2003, and from $16.8 million, or 1.21%, in the quarter a year
ago. This decrease from the preceding quarter was attributable to the second
quarter charge-off of one new non-performing asset in that period, which
accounted for 45% of total commercial charge-offs in that quarter. Commercial
real estate net charge-offs rose during the third quarter 2003 to $3.6 million,
or an annualized 0.36% of average commercial real estate loans, from $0.6
million, or 0.06%, in the second quarter of this year primarily because of a
charge-off of one credit. This was down, however, from $4.1 million, or 0.45%,
of commercial real estate net change-offs in the third quarter of last year.

35

Third quarter 2003 net charge-offs for consumer loans were $16.9
million, or an annualized 0.61% of average consumer loans, up from $13.9
million, or 0.57%, during the second quarter 2003 and $12.9 million, or 0.62%,
in the third quarter of last year. This increase of $3.0 million, or 22%, from
the prior quarter was driven primarily by the impact from adopting FIN 46 and,
to a lesser degree, by a seasonal rise in automobile loan net charge-offs.
Automobile loan net charge-offs as a percent of average automobile loans rose
from 1.06% to 1.20%. Net charge-offs of automobile direct financing leases were
$1.5 million, substantially unchanged from the prior quarter. This represented
an annualized 0.36% of average direct financing leases, down from 0.44% in the
second quarter 2003 but up from 0.17% in the third quarter in 2002. As this
lease portfolio is relatively new and rapidly growing, management anticipates
that it may take a year or two to reach a mature, stable net charge-off run
rate, and therefore, the net charge-off ratio is likely to increase over this
period.

The economic environment showed signs of improvement in the third
quarter of this year, with an acceleration in final consumer demand. Although
this improvement should result in an improvement in credit quality both for the
commercial and consumer sectors, management is not anticipating any positive
impact on charge-offs for the rest of the year. As such, management expects net
charge-offs for the full-year 2003 to be in the 0.70%-0.80% range.

NON-PERFORMING ASSETS
Non-performing assets (NPAs) consist of loans and leases that are no
longer accruing interest or have been renegotiated to below market rates based
upon financial difficulties of the borrower, and real estate acquired through
foreclosure. When interest accruals are suspended, accrued interest income is
reversed with current year accruals charged to earnings and prior year amounts
charged off as a credit loss. Commercial and commercial real estate loans are
generally placed on non-accrual status the earlier of when collection of
principal or interest is in doubt or when the loan is 90 days past due. Consumer
loans and leases, excluding residential mortgages, are not placed on non-accrual
status but are charged off in accordance with regulatory statutes, which is
generally no more than 120 days past due. Residential mortgages are placed on
non-accrual status within 180 days past due as to principal and 210 days past
due as to interest. A charge-off on a residential mortgage is recorded when the
loan has been foreclosed and the loan balance exceeds the fair value of the real
estate. The fair value of the collateral is then recorded as real estate owned.
When, in management's judgment, the borrower's ability to make periodic interest
and principal payments resumes and collectibility is no longer in doubt, the
loan is returned to accrual status.

Table 10 summarizes NPAs at the end of each of the recent five quarters
in addition to 90-day delinquency information:

- -------------------------------------------------------------------------------
TABLE 10 - NON-PERFORMING ASSETS AND PAST DUE LOANS AND LEASES

Total NPAs were $137.1 million at the end of September 2003 compared
with $133.7 million at June 30, 2003, an increase of $3.4 million, or less than
3%. Total NPAs were $214.1 million a year-ago. This significant decrease in NPAs

36

from last year was due primarily to the sale of NPAs that occurred in the fourth
quarter 2002. NPAs as a percent of total loans and leases and other real estate
were 0.65%, 0.70%, and 1.20% for the same respective periods.

At September 30, 2003, loans and leases past due ninety days or more and
still accruing interest were $66.1 million, or 0.31% of total loans and lease,
up from $55.3 million, or 0.29%, at the end of the second quarter 2003 and $57.3
million, or 0.32%, at the end of the third quarter last year.

Table 11 reflects NPA activity for the recent five quarters:

- -------------------------------------------------------------------------------
TABLE 11 - NON-PERFORMING ASSET ACTIVITY

New NPAs decreased to $52.2 million during the third quarter 2003 from
$83.1 million in the immediately preceding quarter. The second quarter of 2003
included three commercial credits, one in the manufacturing sector with part of
its business supporting automobile manufacturing, another in the
teleconferencing business, and the third in a combination of businesses
including marine shipping, mining, and raw materials, which accounting for
approximately 60% of that quarter's increase. Of these credits, one was charged
off and another sold during the second quarter.

Despite the modest increase in NPAs in the recent quarter, management
expects the level of NPAs to approximate current levels through the end of this
year.

ALLOWANCE FOR LOAN AND LEASE LOSSES (ALLL)
The ALLL was $370.1 million at September 30, 2003, up from $340.9
million at June 30, 2003, but nearly flat compared with $371.0 million at the
end of the third quarter of 2002. At September 30, 2003, the ALLL represented
1.75% of total loans and leases, compared with 1.79% at the end of June 2003 and
2.08% at the end of September last year. The adoption of FIN 46 resulted in an
addition of $10.3 million to the ALLL and the consolidation of approximately
$1.0 billion in automobile loans, which accounted for 3 basis points of the
quarterly decline in the ratio of the ALLL to total loans and leases from June
30, 2003 to September 30, 2003. The period-end ALLL was 270% of NPAs at
September 30, 2003, from 255% at June 30, 2003 and 173% a year earlier.

The activity in the ALLL for the recent five quarters is reflected in
Table 12 below. The $3.5 million and $3.0 million allowance of sold loans in the
second and first quarters of 2003 related primarily to the $567 million and $556
million of automobile loans sold in the respective quarters. The $1.3 million of
allowance related to purchased loans and leases in the third quarter of last
year was attributable to the LeaseNet acquisition.

37

- -------------------------------------------------------------------------------
TABLE 12 - ALLOWANCE FOR LOAN AND LEASE LOSSES AND RELATED STATISTICS

Huntington allocates the ALLL to each loan and lease category based on an
expected loss ratio determined by continuous assessment of credit quality
reflecting portfolio risk characteristics and other relevant factors such as
historical performance, significant acquisitions and dispositions of loans, and
internal controls. For the commercial and commercial real estate credits,
expected loss factors are assigned by credit grade at the individual loan and
lease level at the time the loan or lease is originated, then subsequently
re-evaluated on a periodic basis. The aggregation of these factors represents
management's estimate of the inherent loss in the portfolio.

The portion of the allowance allocated to the more homogeneous consumer
loan and lease segments is determined by expected loss ratios based on the risk
characteristics of the various segments and giving consideration to existing
economic conditions and trends. Expected loss ratios incorporate factors such as
trends in past due amounts, recent loan and lease loss experience, and specific
risk characteristics at the individual loan and lease level. Actual loss ratios
experienced in the future could vary from those expected, as performance is a
function of factors unique to each customer as well as general economic
conditions. While amounts are allocated to various portfolio segments, the total
ALLL, excluding impairment reserves prescribed under provisions of Statement of
Financial Accounting Standard No. 114, is available to absorb losses from any
segment of the portfolio.

INTEREST RATE RISK MANAGEMENT

Huntington seeks to minimize earnings volatility by managing the
sensitivity of net interest income and the fair value of its net assets to
changes in market interest rates. The Board of Directors and the Asset and
Liability Management Committee (ALCO) oversee various risks by establishing
broad policies and specific operating limits that govern a variety of risks
inherent in operations, including liquidity, counterparty credit risk,
settlement, and market risks.

Market risk is the potential for declines in the fair value of
financial instruments due to changes in interest rates, exchange rates, and
equity prices. Interest rate risk is Huntington's primary market risk. It
results from timing differences in the repricing and maturity of assets and
liabilities and changes in relationships between market interest rates and the
yields on assets and rates on liabilities, including the impact of embedded
options.

Interest rate risk management is a dynamic process that encompasses new
business flows onto the balance sheet, wholesale investment and funding, and the
changing market and business environment. Effective management of interest rate
risk begins with appropriately diversified investments and funding sources. To
accomplish overall balance sheet objectives, management regularly accesses
money, bond, futures, and options markets, as well as trading exchanges. In
addition, Huntington contracts with dealers in over-the-counter financial
instruments for interest rate swaps. ALCO regularly monitors position
concentrations and the level of interest rate sensitivity to ensure compliance
with approved risk tolerances. Interest rate risk modeling is performed monthly.
An income simulation model is used to measure the

38

sensitivity of forecasted net interest income to changes in market rates over a
one-year horizon. Although Bank Owned Life Insurance and automobile operating
lease assets are classified as non-interest earning assets, Huntington includes
these portfolios in its interest sensitivity analysis because both have
attributes similar to fixed-rate interest earning assets. Balance sheet growth
assumptions are also considered in the income simulation model.

The baseline scenario for the income simulation, with which all others
are compared, is based on prospective or future interest rates implied by the
prevailing yield curve. Alternative market rate scenarios are then employed to
determine their impact on the baseline scenario. These alternative market rate
scenarios include spot rates remaining unchanged for the entire measurement
period, parallel rate shifts on both a gradual and immediate basis, as well as
movements in rates that alter the shape of the yield curve. Scenarios are also
developed to measure basis risk, such as the impact of LIBOR-based rates rising
or falling faster than the prime rate.

Market value risk (referred to as Economic Value of Equity or EVE) is
measured using a static balance sheet. The models used for this measurement take
into account prepayment speeds on mortgage loans, mortgage-backed securities,
and consumer installment loans, as well as cash flows of other loans and
deposits. Moreover, the models incorporate the effects of embedded options, such
as interest rate caps, floors, and call options, and account for changes in
relationships among interest rates.

When evaluating short-term interest rate risk exposure, management
uses, for its primary measurement, scenarios that model parallel shifts in the
yield curve resulting in a gradual 200 basis point increase/decrease in rates
over the next twelve-month period. However, at December 31, 2002, only the 200
basis point increasing parallel shift in the yield curve was reported because a
200 basis point decrease in the interest rate curve was not feasible given the
absolute low level of interest rates. At September 30, 2003, that plus-200 basis
point scenario modeled net interest income approximately 1.0% lower than the
internal forecast of net interest income over the same time period using the
current level of forward rates. This compared to an approximate 0.7% impact to
net interest income generated by a similar 200 basis point scenario at the end
of 2002. Management believes further declines in market rates would put modest
downward pressure on net interest income, resulting from the implicit pricing
floors in non-maturity deposits.

In previous quarters, the net interest margin has been adversely
impacted by: (1) fixed-rate consumer loan repayments being reinvested at lower
market rates; (2) high repayments and prepayments of residential mortgage loans
and mortgage-backed securities; (3) the implicit floors in retail deposits as
rates declined to historically low levels; (4) the rapid growth of lower-margin
residential adjustable-rate mortgage loans retained on the balance sheet; and
(5) the lower yield on the higher quality automobile loan originations. In the
most recent quarter, the effects of a steeper yield curve and lower deposit
costs dampened some of the negative impact of the above cited effects. However,
the net interest margin is expected to be adversely affected by some of these
factors over the next few quarters.

The primary measurement for EVE at risk assumes an immediate and
parallel increase in rates of 200 basis points. At September 30, 2003, the model
indicated that such an increase in rates would be expected to reduce the EVE at
risk by approximately 7.9% compared with an estimated negative impact of
approximately 3.8% at December 31, 2002. Increased growth of fixed rate loans
and investments contributed much of the increase to EVE at risk. In addition,
the higher interest rate environment in the 2003 third quarter caused the
average maturity of fixed rate mortgage loans and investments to increase and
shortened the expected average maturity of some non-maturity deposits. Both
factors contributed to an increasing EVE at risk.

These models are a useful but simplified representation of Huntington's
underlying interest rate risk profile. Simulations reflect choices of
statistical techniques, functional forms, model parameters, and numerous other
assumptions. Nonetheless, experience has demonstrated and management believes
that these models provide reliable guidance for measuring and managing interest
rate sensitivity.

LIQUIDITY

Liquidity management is a process to ensure that funding is available
to support loan growth, any potential deposit outflows, and normal corporate
activities, under different market conditions. Liquidity management is conducted
under the direction of ALCO, which establishes policies and monitors the overall
liquidity position of Huntington.

The primary source of funding for Huntington is core deposits from its
retail and commercial customers. As of September 2003, these core deposits, of
which 83% are provided by the Regional Banking line of business, funded 63% of
total assets. Core deposits include non-interest bearing and interest bearing
demand deposits, savings accounts and other domestic time deposits, including
certificates of deposit under $100,000 and IRAs. The types and sources of
deposits by business segment at September 30, 2003 and 2002 and December 31,
2002 are detailed in Table 13 below:

39

- --------------------------------------------------------------------------------
TABLE 13 - DEPOSIT LIABILITIES

Policies and limits are established by ALCO on the amount of assets to
be funded by short-term wholesale borrowings and diversification of this funding
by type, source, and maturity. In addition, policies require that there be
sufficient asset liquidity available to cover short-term wholesale funds
maturing within a six month time period. Huntington has a contingency funding
plan that forecasts sources and uses of funds under various scenarios to prepare
Huntington to respond to unexpected liquidity shortages.

Sources of wholesale funding include Federal funds purchased,
Eurodollar deposits, securities sold under repurchase agreement, brokered and
negotiable CDs, FHLB advances, and medium- and long-term debt. Other sources of
liquidity include the sale or maturity of investment securities, the sale or
securitization of loans, and the issuance of common and preferred securities.

Huntington also has available a $6 billion domestic bank note program
through its bank subsidiary, The Huntington National Bank, of which $4.8 billion
was available at September 30, 2003. In addition, the Bank shares a $2 billion
Euronote program with the parent company, of which $1.3 billion was available at
September 30, 2003. In addition, the parent company has $295 million available
under a $750 million medium-term note program.

As a result of the formal SEC investigation announced on June 26, 2003,
one rating agency placed Huntington's debt ratings on "Credit Watch Negative"
pending completion of the investigation. As a result of this action, Huntington
lengthened the maturities of wholesale borrowings by issuing negotiable CDs and
medium-term bank notes. In addition, overnight federal funds borrowing were
reduced. Management believes that sufficient liquidity exists to meet funding
needs of the Bank and parent company.

40

CAPITAL

Capital is managed both at the bank subsidiary and the holding company
level and reflects the relative risks, growth opportunities, as well as
regulatory requirements. Huntington places significant emphasis on the
maintenance of a strong capital position, which promotes investor confidence,
provides access to the national markets under favorable terms, and enhances
business growth and acquisition opportunities. The importance of managing
capital is also recognized and management continually strives to maintain an
appropriate balance between capital adequacy and returns to shareholders.

Shareholders' equity at September 30, 2003 increased $39 million from
June 30, 2003 and $52 million from December 31, 2002. The increase for the
recent quarter outpaced growth for the nine-month period in 2003 primarily due
to the repurchase of 4.3 million common shares at a value of $81.1 million in
the 2003 first quarter. In February 2002, the Board of Directors authorized a
common share repurchase program for up to 22 million common shares and canceled
the previously existing authorization. Under this authorization, a total of 19.4
million common shares were repurchased: 19.2 million in 2002, including 15.1
million common shares purchased in the first nine months of 2002, and 0.2
million in the 2003 first quarter. In mid-January 2003, the Board of Directors
authorized a new common share repurchase program, canceling the 2.6 million
common shares remaining under the February 2002 authorization, and approved a
new common share repurchase authorization for up to 8.0 million common shares.
Under this authorization, 4.1 million common shares were repurchased in the 2003
first quarter. No shares were repurchased in the second and third quarters of
2003, leaving 3.9 million common shares remaining for repurchase at September
30, 2003.

Third quarter 2003 average equity to average assets was 7.51% versus
8.59% for the same period last year. At the end of September 2003, tangible
period-end equity to period-end assets, which excludes intangible assets, was
6.78%, down from 7.65% a year ago. The higher tangible equity to asset ratio in
the year-ago quarter reflected excess capital generated from the sale of the
Florida operations in the first quarter 2002. Management has targeted a
longer-term tangible equity to asset ratio of 6.50% - 6.75%, given the current
asset mix and risk profile.

Risk-based capital guidelines established by the Federal Reserve Board
set minimum capital requirements and require institutions to calculate
risk-based capital ratios by assigning risk weightings to assets and off-balance
sheet items, such as interest rate swaps, loan commitments, and securitizations.
These guidelines further define "well-capitalized" levels for Tier 1, total
capital, and leverage ratio purposes at 6%, 10%, and 5%, respectively, with
Huntington's ratios exceeding those minimums at September 30, 2003. Huntington's
Tier 1 risk-based capital ratio, total risk-based capital ratio, leverage ratio,
risk-adjusted assets, and its tangible equity to assets ratio for the recent
five quarters are shown in Table 14:

- -------------------------------------------------------------------------------
TABLE 14 - END OF PERIOD CAPITAL DATA

Although Huntington's tangible equity to tangible assets ratio has
declined in the periods in the table above, the ratio of tangible equity to
risk-weighted assets has increased during the past two quarters, reflecting
growth in lower risk-weighted assets such as residential mortgages, home equity
loans and lines of credit, and investment securities. Additionally, while the
adoption of FIN 46 reduced the tangible equity to tangible assets ratio by 29
basis points, there was little impact to the ratio of tangible equity to
risk-weighted assets as the additional loans that are included in Huntington's
consolidated financial condition were already included in regulatory
risk-weighted assets.

As Huntington is supervised and regulated by the Federal Reserve, The
Huntington National Bank, Huntington's bank subsidiary, is supervised and
regulated by the Office of the Comptroller of the Currency, which establishes
similar regulatory capital guidelines for banks. The Bank also had regulatory
capital ratios in excess of the levels established for "well-capitalized"
institutions at September 30, 2003.

41

Cash dividends that were declared in the third quarter 2003 and four
prior quarters along with common stock prices (based on NASDAQ intra-day and
closing stock price quotes) are reflected in Table 15 below:

- --------------------------------------------------------------------------------
TABLE 15 - QUARTERLY STOCK SUMMARY

In October 2003, the board of directors declared a dividend of $0.175
per common share for the fourth quarter 2003. The dividend is payable January 2,
2004, to shareholders of record on December 19, 2003. During the second quarter
of 2002, management increased its dividend payout target range to 40%-45% of
earnings from the previous target range of 35%-45%.

LINES OF BUSINESS

Below is a brief description of each line of business and a discussion
of business segment results for the three and nine months ended September 30,
2003 and 2002. Regional Banking, Dealer Sales, and the Private Financial Group
are the major business lines. The fourth segment includes the impact of the
Treasury function and other unallocated assets, liabilities, revenue, and
expense.

For analytical purposes in understanding performance trends, strategic
decision making, determining incentive compensation, and evaluating line of
business performance, chief decision-makers review and analyze certain data on
an "operating basis", which excludes the impact of restructuring charges and
releases and other items, as well as the results of operations from the Florida
banking and insurance operations sold in 2002. Since the items excluded are
associated with exited businesses and/or restructurings that have been completed
and no longer contribute to current or future period performance, management
believes their exclusion for analytical purposes provides a clearer picture of
underlying performance trends, as well as progress made in improving the
company's financial performance.

REGIONAL BANKING
This segment provides products and services to retail, business
banking, and commercial customers in six operating regions within the five
states of Ohio, Michigan, Indiana, West Virginia, and Kentucky. This segment's
retail and small business products include home equity loans, first mortgage
loans, direct installment loans, business loans, personal and business deposit
products, as well as sales of investment and insurance services. These products
and services are offered through Huntington's traditional banking network,
Direct Bank--Huntington's customer service center, and Web Bank at
www.huntington.com. Regional Banking also includes middle-market and large
commercial banking relationships which use a variety of banking products and
services including, but not limited to, commercial loans, commercial real estate
loans, international trade, and cash management. These products and services are
delivered through the traditional banking network.

- -------------------------------------------------------------------------------
TABLE 16 - REGIONAL BANKING

42

Regional Banking's operating earnings for the third quarter 2003
increased 137% to $55.7 million from $23.5 million for the same period a year
ago. This quarterly growth helped push the nine-month results up 35% to $115.9
million for the recent quarter compared with $85.6 million last year.

Net interest income for 2003 third quarter was up $18.4 million, or
13%, from the year-ago quarter. This increase reflected an $853 million, or 7%,
increase in average loans and $671 million, or 4%, increase in average total
deposits. The net interest income on other loan and deposit growth was largely
offset by continued rate declines and the resulting repricing impact of loans
and deposits. This segment implemented a number of strategic pricing decisions
(primarily involving deposits) early in the quarter that helped to minimize
margin compression.

Average total loans in the 2003 third quarter were $13.2 billion, up
$853 million, or 7%, from $12.4 billion in the year-ago quarter. This growth was
driven by a $384 million, or 31%, increase in average residential mortgages, a
$383 million, or 14%, increase in average home equity loans and lines of credit,
and a $376 million, or 11%, increase in average commercial real estate loans.
Average commercial loans, were down $255 million, or 5%, despite a $121 million,
or 8%, increase in average small business banking loans.

Average total deposits in the 2003 third quarter were $15.9 billion, up
$671 million, or 4%, from a year ago. This increase reflected a $1.1 billion, or
23%, increase in interest bearing demand deposits, primarily money market
accounts, and a $0.3 billion, or 13%, increase in non-interest bearing deposits,
partially offset by a $0.9 billion, or 19%, decline in retail CDs. Retail CDs,
which continue to be a relatively expensive source of funds, are currently being
de-emphasized in Regional Banking's deposit generation strategies. Excluding
retail CDs, total average deposits increased $1.6 billion, or 15%.

The provision for loan and lease losses for the third quarter 2003
decreased $3.6 million, or 10%, from the same quarter last year. Net charge-offs
in the 2003 third quarter were $19.8 million, or 0.59% of average loans and
leases. This compared to $24.2 million, or 0.78%, for the prior year's third
quarter. The offsetting provision expense related to loan and lease growth.

Non-interest income for the recent three months increased $34.0
million, or 53%, from the year-ago third quarter. Increased fee based revenue
was favorably impacted by an improvement in the value of mortgage servicing
rights. This increase was partially offset by declines in standby letters of
credit and credit card fee income. The decline in standby letters of credit was
due to the adoption of FASB Interpretation No. 45 on January 1, 2003.

Non-interest expense for the third quarter 2003 increased $6.4 million,
or 5%, compared with the same period a year ago. Higher outside services costs
related to increased mortgage loan volumes and equipment expenses were the
primary drivers of the increase.

Regional Banking contributed 52% and 53% of total revenues and total
operating earnings, respectively, in the third quarter of 2003, and represented
50% of total assets and 83% of total deposits at September 30, 2003.

DEALER SALES
Dealer Sales serves automotive dealerships within Huntington's primary
banking markets, as well as in Arizona, Florida, Georgia, Pennsylvania, and
Tennessee. This segment finances the purchase of automobiles by customers of the
automotive dealerships, purchases automobiles from dealers and simultaneously
leases the automobile under long-term operating and direct financing leases,
finances the dealership's inventory of automobiles, and provides other banking
services to the automotive dealerships and their owners.

Dealer Sales financial results are significantly impacted by the
accounting for automobile leases. As previously noted, automobile leases
originated prior to May 2002 are accounted for as operating leases, and leases
originated since then are accounted for as direct financing leases. Therefore,
the related financial results for automobile leases originated prior to May 2002
are reported as non-interest income and non-interest expense and the cost of
funding these leases is included in interest expense. Such non-interest income,
non-interest expense and interest expense will continue to trend lower in
subsequent periods since new lease originations are not treated as operating
leases, and leases originated prior to May 2002 will continue to run off. For
leases originated after April 2002, revenue is reported in interest income and a
provision for loan and lease losses is recorded in order to maintain an
appropriate level of reserve for loan and lease losses. As a result, net
interest income and the provision for loan and lease losses for the Dealer Sales
line of business should trend higher in future periods.

43

- -------------------------------------------------------------------------------
TABLE 17 - DEALER SALES

Dealer Sales operating earnings were $15.4 million in the third quarter of
2003, an increase of $6.9 million, or 80%, from $8.5 million for the year-ago
quarter. For the nine months, operating earnings were $53.6 million for 2003, up
$34.4 million from $19.2 million for 2002.

Net interest income was $29.2 million in the recent quarter, an
increase of $23.9 million from $5.3 million in the second quarter of 2002. This
increase reflected growth in average loan and direct financing lease balances
from $3.8 billion in 2002 to $5.9 billion in 2003. Of this increase, $1.1
billion was attributed to direct financing leases while $832 million related to
indirect automobile loans. The increase in average automobile loans reflected
the positive impact of underlying growth, as well as the $1.0 billion resulting
from the adoption of FIN 46 effective July 1, 2003. Included in net interest
income for the nine months was $16.2 million of transfer pricing charges to this
segment from Treasury / Other, reflecting the early termination of funding
related to $1.1 billion of indirect automobile loans that were sold in the first
half of 2003.

The provision for loan and lease losses of $16.0 million for the third
quarter 2003 increased $0.6 million from $15.4 million for the same period a
year ago. Net charge-offs totaled $12.4 million for the recent three months, or
an annualized 0.83% of average loans and direct financing leases, compared to
$9.0 million, or 0.93%, during the year-ago quarter.

Total non-interest income declined $44.5 million to $125.5 million for
the third quarter of 2003 from $170.0 for the same period last year. This
decrease primarily reflected a $42.5 million decrease in operating lease income
from the third quarter of 2002. Also, securitization income declined $1.7
million from the year-ago quarter as a result of the adoption of FIN 46.

Non-interest expense decreased $31.7 million to $115.0 million for the
third quarter of 2003 from $146.7 million for the year-ago quarter, primarily
reflecting a $32.6 million decrease in operating lease expense. Personnel
expense increased $0.7 million due to higher benefits costs in the recent
quarter as compared to the year-ago quarter.

Huntington purchases insurance to cover the possibility that it will
not be able to recover its anticipated residual value of its automobiles leased
to customers, which is a component of the total automobile lease balance. Its
purchased policies cover, for each leased automobile, declines in the Black Book
value from the date of sale. This insurance, however, does not cover losses
arising when the proceeds from selling the automobile are less than Black Book
valuation. These losses typically arise when the automobile has excess wear and
tear and/or excess mileage that are not reimbursed by the lessee. For leases
that are accounted for as direct financing leases, Huntington maintains a
valuation reserve for future expected losses, based on its evaluation of several
factors, including vehicle type, lease terms, used automobile market conditions,
new product offerings, expected leased vehicle return rates, and historical
experience. In the third quarter of 2003, and periods prior to 2003, Huntington
estimated the level of the reserve for direct financing leases based on future
expected losses from the portfolio without discounting. This contrasts with the
first and second quarters of 2003 when discounting was used. The valuation
reserve for direct financing leases totaled $1.2 million and $1.4 million at
September 30, 2003 and December 31, 2002, respectively. For leases that are
accounted for as operating leases, Huntington prospectively increases the
depreciation of the asset to its expected realizable value at the end of the
lease.

Dealer Sales contributed 31% of total third quarter 2003 revenues, 15%
of total operating earnings in the 2003 third quarter, and represented 26% of
total assets at September 30, 2003.

44

PRIVATE FINANCIAL GROUP
The Private Financial Group provides products and services designed to
meet the needs of Huntington's higher wealth customers. Revenue is derived
through the sale of personal trust, asset management, investment advisory,
brokerage, insurance, and deposit and loan products and services. Income and
related expenses from the sale of brokerage and insurance products is shared
with the line of business that generated the sale or provided the customer
referral.

- -------------------------------------------------------------------------------
TABLE 18 - PRIVATE FINANCIAL GROUP

Private Financial Group (PFG) operating earnings in the third quarter of
2003 were $5.5 million, up 15% from $4.8 million for the same quarter in 2002
primarily due to growth in net interest income and non-interest income.
Operating earnings for the nine months ended September 30, 2003 and 2002 were
$18.7 million and $17.4 million, respectively. Revenue growth for the three and
nine-month periods was partially offset by increased loan provision expense and
increased non-interest expense.

Net interest income for the recent three months increased $2.2 million,
or 25%, from the prior-year quarter as average loan balances increased 31% to
$1,213 million and average deposits increased 25% to $1,047 million. Most of the
loan growth occurred in personal credit lines and residential real estate loans
largely due to the favorable mortgage rate environment. A majority of the
deposit growth occurred in interest bearing demand accounts, which resulted from
a combination of new business and a customer shift from the Huntington money
market mutual funds to interest-bearing deposit accounts. Margins on loans
remained essentially the same as the prior-year quarter, while deposit margins
declined by 7 basis points due to the continuing pressure of the declining
interest rates.

Provision expense for the third quarter 2003 increased to $2.4 million
from $1.1 million in the year-ago quarter due to a combination of increased net
charge-offs and increased loan and lease loss provision attributable to loan
growth as previously noted. Net charge-offs were $0.7 million for the recent
quarter, an increase of $0.1 million over the same quarter last year. Total net
charge-offs as a percent of total loans declined from 0.25% a year ago to 0.24%
for the current quarter. Non-performing assets also increased from 0.20% to
0.48% of total loans outstanding for the same comparable periods.

Non-interest income increased $1.2 million, or 5%. Adding back the
impact of fee sharing, which was $3.9 million in the current quarter, and $4.1
million in the year-ago quarter, non-interest income was $29.6 million in the
2003 third quarter, up $975 million, or 3%, from a year earlier. This reflected
increases in insurance, trust, and other income, partially offset by a decrease
in brokerage income. Insurance revenue increased $1.4 million, or 50%, mainly
from an increase in title insurance revenue that was reflective of increased
mortgage loan refinancing. Insurance revenue for the recent quarter also
included $0.5 million of revenue from the sale of the new wealth transfer
insurance product. Trust income increased $0.4 million, or 2.5%, mainly due to
increased personal and institutional trust revenue. Brokerage revenue decreased
$1.1 million, or 11%, primarily due to a 13% decline in annuity sales volume.
Annuity sales have decreased as the continued low market rate environment has
reduced market appeal. Mutual fund sales increased significantly from the prior
year, nearly 50%.

Non-interest expense for the 2003 third quarter, increased $1.1
million, or 4%. Personnel expense increased for merit increases, selective staff
additions, and rising employee benefit costs. These cost were partially offset
by reduced sales commissions from the reduction in brokerage sales. Most of the
remaining expense increase was in outside service expense as a result of costs
associated with the increased title insurance business volume.

Private Financial Group contributed 7% and 5% of total revenues and
total operating income, respectively, in the third quarter of 2003, and
represented 5% of total assets and 6% total deposits at September 30, 2003.

TREASURY / OTHER

45

Treasury / Other financial results include income and expense related
to assets, liabilities, and capital not allocated to one of the three segments
and any income/expense, gains/losses that are not specifically allocated to the
other segments. Assets included in this segment include investment securities,
Bank Owned Life Insurance, and mezzanine loans originated through Huntington's
Capital Market Group. Liabilities include all wholesale funding.

Huntington utilizes a maturity match-funded transfer pricing system
that transfers interest rate and liquidity risk from the lines of business to
the Treasury/Other segment. Any income/expense resulting from the management of
interest rate and liquidity risk is included in the Treasury/Other segment.
Furthermore, amortization expense of intangible assets is included in this
segment.

- -------------------------------------------------------------------------------
TABLE 19 - TREASURY / OTHER

Treasury / Other's operating earnings for the third quarter 2003 was down
to $27.6 million from $35.3 million for the same period a year ago. Operating
earnings for the nine-month period ended September 30, 2003 and 2002 were $100.2
million and $93.0 million, respectively.

Net interest income was lower for the comparable three-month periods.
The lower interest rate environment contributed to the decline in net interest
income as older fixed rate loans and investments were replaced at lower current
rates, while the liabilities adjusted to the lower rates more quickly and
already reflected the lower rate environment. Thus, funding rates on loans and
investments fell more than rates on liabilities, causing the decline in Treasury
earnings. Included in net interest income for the nine months was $16.2 million
of transfer pricing credits from the Dealer Sales segment, reflecting the early
termination of funding related to indirect automobile loans that were sold in
the first half of 2003.

Provision for loan and lease loss activity is related to the Capital
Markets Group, which provides commercial and commercial real estate mezzanine
loans to customers.

Third quarter 2003 non-interest income was $23.6 million, down $8.1
million from the comparable period last year. Branch sale gains of $13.1 million
offset by securities losses in the current quarter were the main contributors to
the increase. Non-interest expense for the recent quarter was $20.0 million, up
from $15.1 million last year. This increase reflected higher commissions related
to activities in the Capital Markets Group, higher pension expense, and
professional fees not allocated to other lines of business.

Income tax expense for each of the other business segments is
calculated at a statutory 35% tax rate. However, Huntington's overall effective
tax rate was lower and, as a result, Treasury / Other reflected the reconciling
items to the statutory tax rate in its income taxes.

46

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Quantitative and qualitative disclosures for the current period are found
beginning on page 38 of this report, which includes changes in market risk
exposures from disclosures presented in Huntington's Amended Form 10-K/A.

ITEM 4. CONTROLS AND PROCEDURES

Huntington's management, with the participation of its Chief Executive
Officer and the Chief Financial Officer, evaluated the effectiveness of
Huntington's disclosure controls and procedures (as such term is defined in
Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the
period covered by this report. Based upon such evaluation, Huntington's Chief
Executive Officer and Chief Financial Officer have concluded that, as of the end
of such period, Huntington's disclosure controls and procedures are effective.

There have not been any changes in Huntington's internal control over
financial reporting (as such term is defined in Rules 13a-15(f) ad 15d-15(f)
under the Exchange Act) during the fiscal quarter to which this report relates
that have materially affected, or are reasonably likely to materially affect,
Huntington's internal control over financial reporting.

PART II. OTHER INFORMATION

In accordance with the instructions to Part II, the other specified items
in this part have been omitted because they are not applicable or the
information has been previously reported.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

3. (i)(a). Articles of Restatement of Charter,
Articles of Amendment to Articles of Restatement
of Charter, and Articles Supplementary -
previously filed as Exhibit 3(i) to Annual
Report on Form 10-K for the year ended December
31, 1993, and incorporated herein by reference.

(i)(b). Articles of Amendment to Articles of Restatement
of Charter - previously filed as Exhibit 3(i)(c)
to Quarterly Report on Form 10-Q for the quarter
ended March 31, 1998, and incorporated herein by
reference.

(ii). Amended and Restated Bylaws as of July 16, 2002
- previously filed as Exhibit 3(ii) to Quarterly
Report on Form 10-Q for the quarter ended June
30, 2002, and incorporated herein by reference.

4. Instruments defining the Rights of Security Holders:

Reference is made to Articles Fifth, Eighth and Tenth
of Articles of Restatement of Charter, as amended and
supplemented, previously filed as Exhibit 3(i) to
Annual Report on Form 10-K for the year ended
December 31, 1993 and Exhibit 3(i)(c) to Quarterly
Report on Form 10-Q for the quarter ended March 31,
1998, and incorporated herein by reference. Also,
reference is made to Rights Plan, dated February 22,
1990, previously filed as Exhibit 1 to Registration
Statement on Form 8-A, and incorporated herein by
reference and to Amendment No. 1 to the Rights
Agreement, dated as of August 16, 1995, previously
filed as Exhibit 4(b) to Form 8-K filed with the
Securities and Exchange Commission on August 28,
1995, and

47

incorporated herein by reference. Instruments
defining the rights of holders of long-term debt will
be furnished to the Securities and Exchange
Commission upon request.

12 Earnings to Fixed Charges

31.1 Certification - Chief Executive Officer

31.2 Certification - Chief Financial Officer

32.1 Section 1350 Certification - Chief Executive Officer

32.2 Section 1350 Certification - Chief Financial Officer

(b) Reports on Form 8-K

1. A report on Form 8-K, dated July 17, 2003, was filed
under report item numbers 5, 7, and 9, concerning
Huntington's results of operations for the second
quarter ended June 30, 2003.

2. A report on Form 8-K, dated August 6, 2003, was filed
under report item numbers 5 and 7, regarding
Huntington's announcement that David L. Porteous will
join its board of directors in October 2003, expanding
the board to 12 outside directors.

3. A report on Form 8-K, dated September 16, 2003, was
filed under report item number 9, concerning
Huntington's investor presentation in New York City.

48

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 thereunto duly authorized.

Huntington Bancshares Incorporated
(Registrant)

Date: November 14, 2003 /s/ Thomas E. Hoaglin
--------------------------------------------
Thomas E. Hoaglin
Chairman, Chief Executive Officer and
President

Date: November 14, 2003 /s/ Michael J. McMennamin
-----------------------------------------------
Michael J. McMennamin
Vice Chairman, Chief Financial Officer and
Treasurer (Principal Financial Officer)

49

Form: 10-Q

Documents

10-Q: Quarterly report pursuant to Section 13 or 15(d)