Exhibit 99.2

HUNTINGTON BANCSHARES INCORPORATED

Quarterly Financial Review
December 2004

Table of Contents

         
Consolidated Balance Sheets
     1  
Loan and Lease Composition
     2  
Deposit Composition
     3  
Consolidated Quarterly Average Balance Sheets
     4  
Consolidated Quarterly Net Interest Margin Analysis
     5  
Selected Quarterly Income Statement Data
     6  
Quarterly Credit Reserves and Net Charge-Off Analysis
     7  
Quarterly Non-Performing Assets and Past Due Loans and Leases
     8  
Quarterly Stock Summary, Capital, and Other Data
     9  
Quarterly Operating Lease Performance
     10  
Consolidated Annual Average Balance Sheets
     11  
Consolidated Annual Net Interest Margin Analysis
     12  
Selected Annual Income Statement Data
     13  
Annual Credit Reserves and Net Charge-Off Analysis
     14  
Annual Operating Lease Performance
     15  

Note:

The preparation of financial statements in conformity with accounting principals generally accepted in the United States requires management to make estimates and assumptions that affect amounts reported in the financial statements. Actual results could differ from those estimates. Certain prior period amounts have been reclassified to conform to the current year’s presentation.

 

 

Huntington Bancshares Incorporated

Consolidated Balance Sheets
                                           
                              Change  
    December 31,     September 30,     December 31,       December’ 04 vs ’03  
(in thousands, except number of shares)   2004     2004     2003       Amount     Percent  
    (Unaudited)     (Unaudited)                            
Assets
                                          
Cash and due from banks
   $ 877,320     $ 1,053,358     $ 899,689       $ (22,369 )     (2.5 )%
Federal funds sold and securities purchased under resale agreements
     628,040       838,833       96,814         531,226       N.M.  
Interest bearing deposits in banks
     22,398       36,155       33,627         (11,229 )     (33.4 )
Trading account securities
     309,630       120,334       7,589         302,041       N.M.  
Loans held for sale
     223,469       205,913       226,729         (3,260 )     (1.4 )
Securities
     4,238,945       4,150,044       4,929,060         (690,115 )     (14.0 )
Loans and leases (1)
     23,560,277       22,587,259       21,075,118         2,485,159       11.8  
Allowance for loan and lease losses
     (271,211 )     (282,650 )     (299,732 )       28,521       (9.5 )
 
                                
Net loans and leases
     23,289,066       22,304,609       20,775,386         2,513,680       12.1  
 
                                
Operating lease assets
     587,310       717,411       1,260,440         (673,130 )     (53.4 )
Bank owned life insurance
     963,059       954,911       927,671         35,388       3.8  
Premises and equipment
     355,115       356,438       349,712         5,403       1.5  
Goodwill and other intangible assets
     215,807       216,011       217,009         (1,202 )     (0.6 )
Customers’ acceptance liability
     11,299       8,787       9,553         1,746       18.3  
Accrued income and other assets
     844,039       845,436       786,047         57,992       7.4  
 
                                
Total Assets
   $ 32,565,497     $ 31,808,240     $ 30,519,326       $ 2,046,171       6.7 %
 
                                
 
                                          
Liabilities and Shareholders’ Equity
                                          
Deposits (2)
   $ 20,768,161     $ 20,109,025     $ 18,487,395       $ 2,280,766       12.3 %
Short-term borrowings
     1,207,233       1,215,887       1,452,304         (245,071 )     (16.9 )
Federal Home Loan Bank advances
     1,271,088       1,270,454       1,273,000         (1,912 )     (0.2 )
Other long-term debt
     4,016,004       4,094,185       4,544,509         (528,505 )     (11.6 )
Subordinated notes
     1,039,793       1,040,901       990,470         49,323       5.0  
Allowance for unfunded loan commitments and letters of credit
     33,187       30,007       35,522         (2,335 )     (6.6 )
Bank acceptances outstanding
     11,299       8,787       9,553         1,746       18.3  
Deferred federal income tax liability
     783,628       723,525       654,534         129,094       19.7  
Accrued expenses and other liabilities
     897,466       854,552       797,037         100,429       12.6  
 
                                
Total Liabilities
     30,027,859       29,347,323       28,244,324         1,783,535       6.3  
 
                                
 
                                          
Shareholders’ equity
                                         
Preferred stock - authorized 6,617,808 shares; none outstanding
     —       —       —         —       —  
Common stock - - without par value; authorized 500,000,000 shares; issued 257,866,255 shares; outstanding 231,605,281; 230,153,486 and 229,008,088 shares, respectively.
     2,484,204       2,482,904       2,483,542         662       0.0  
Less 26,260,974; 27,712,769 and 28,858,167 treasury shares, respectively
     (499,259 )     (526,967 )     (548,576 )       49,317       (9.0 )
Accumulated other comprehensive income (loss)
     (10,903 )     (13,812 )     2,678         (13,581 )     N.M.  
Retained earnings
     563,596       518,792       337,358         226,238       67.1  
 
                                
Total Shareholders’ Equity
     2,537,638       2,460,917       2,275,002         262,636       11.5  
 
                                
Total Liabilities and Shareholders’ Equity
   $ 32,565,497     $ 31,808,240     $ 30,519,326       $ 2,046,171       6.7 %
 
                                
N.M. - Not Meaningful.

(1) See Page 2 for detail of Loans and Leases.
 
    (2) See Page 3 for detail of Deposits.

1

 

Huntington Bancshares Incorporated

Loans & Leases Portfolio Composition (Direct Financing and Operating)
                                                                   
                                                      Change  
    December 31, 2004     September 30, 2004     December 31, 2003       December ’04 vs ’03  
(in thousands)   Balance     %     Balance     %     Balance     %       Amount     Percent  
    (Unaudited)             (Unaudited)                                            
By Type
                                                                  
Commercial
                                                                  
Middle market commercial and industrial (1)
   $ 4,666,125       19.3     $ 4,358,377       18.7     $ 4,415,872       19.7       $ 250,253       5.7 %
Middle market real estate: (1)
                                                                  
Construction
     1,601,565       6.6       1,547,336       6.6       1,263,910       5.6         337,655       26.7  
Commercial
     1,916,665       7.9       1,933,453       8.3       1,919,158       8.6         (2,493 )     (0.1 )
 
                                                  
Total middle market real estate
     3,518,230       14.6       3,480,789       14.9       3,183,068       14.2         335,162       10.5  
 
                                                  
Small business commercial and industrial and commercial real estate
     2,118,623       8.8       2,074,538       8.9       1,886,660       8.4         231,963       12.3  
 
                                                  
Total Commercial
     10,302,978       42.7       9,913,704       42.5       9,485,600       42.4         817,378       8.6  
 
                                                  
Consumer
                                                                  
Automobile loans
     1,948,667       8.1       1,884,924       8.1       2,991,642       13.4         (1,042,975 )     (34.9 )
Automobile leases
     2,443,455       10.1       2,316,801       9.9       1,902,170       8.5         541,285       28.5  
Home equity (2) (4)
     4,554,540       18.9       4,429,626       19.0       3,733,861       16.7         820,679       22.0  
Residential mortgage (3)
     3,829,234       15.9       3,565,670       15.3       2,530,665       11.3         1,298,569       51.3  
Other loans (4)
     481,403       2.0       476,534       2.0       431,180       1.9         50,223       11.6  
 
                                                  
Total Consumer
     13,257,299       54.9       12,673,555       54.4       11,589,518       51.8         1,667,781       14.4  
 
                                                  
Total Loans and Direct Financing Leases
   $ 23,560,277       97.6     $ 22,587,259       96.9     $ 21,075,118       94.2       $ 2,485,159       11.8  
 
                                                  
 
                                                                  
Operating lease assets
     587,310       2.4       717,411       3.1       1,260,440       5.6         (673,130 )     (53.4 )
Securitized loans
     —       —       —       —       37,337       0.2         (37,337 )     N.M.  
 
                                                  
Total Credit Exposure
   $ 24,147,587       100.0     $ 23,304,670       100.0     $ 22,372,895       100.0       $ 1,774,692       7.9 %
 
                                                  
 
                                                                  
 
                                                  
Total Automobile Exposure (5)
   $ 4,979,432       20.6     $ 4,919,136       21.1     $ 6,191,589       27.7       $ (1,212,157 )     (19.6 )%
 
                                                  
 
                                                                  
By Business Segment (6)
                                                                  
Regional Banking
                                                                  
Central Ohio
   $ 6,227,634       25.8     $ 5,944,288       25.5     $ 4,652,072       20.8       $ 1,575,562       33.9 %
Northern Ohio
     2,856,458       11.8       2,808,724       12.1       2,578,969       11.5         277,489       10.8  
Southern Ohio / Kentucky
     1,895,549       7.8       1,826,034       7.8       1,676,930       7.5         218,619       13.0  
West Michigan
     2,271,313       9.4       2,235,619       9.6       2,076,734       9.3         194,579       9.4  
East Michigan
     1,430,169       5.9       1,387,543       6.0       1,267,682       5.7         162,487       12.8  
West Virginia
     881,470       3.7       866,120       3.7       801,938       3.6         79,532       9.9  
Indiana
     961,700       4.0       862,833       3.7       730,620       3.3         231,080       31.6  
 
                                                  
Total Regional Banking
     16,524,293       68.4       15,931,161       68.4       13,784,945       61.7         2,739,348       19.9  
 
                                                  
Dealer Sales
     5,933,538       24.6       5,774,482       24.8       7,095,900       31.7         (1,162,362 )     (16.4 )
Private Financial Group
     1,487,753       6.2       1,395,223       6.0       1,296,412       5.8         191,341       14.8  
Treasury / Other
    202,003       0.8       203,804       0.8       195,638       0.8         6,365       3.3  
 
                                                  
Total Credit Exposure
   $ 24,147,587       100.0     $ 23,304,670       100.0     $ 22,372,895       100.0       $ 1,774,692       7.9 %
 
                                                  
N.M. - Not Meaningful

(1)  Effective June 30, 2004, $282 million of commercial and industrial loans were reclassified to commercial real estate to conform to the classification of these loans with the presentation of similar loans.
 
(2)    Home equity includes personal lines of credit and other consumer loans secured by first or junior mortgages on residential property originated and underwritten through the company’s retail banking channel. Reclassification of prior period balances has been made to conform to this presentation, resulting in an increase to previously reported home equity loans and a decrease to previously reported residential mortgage loans.
 
(3)    Residential mortgage includes loans secured by first mortgages on residential property originated and underwritten through the company’s mortgage banking channel. Reclassification of prior period balances has been made to conform to this presentation, resulting in an increase to previously reported home equity loans and a decrease to previously reported residential mortgage loans.
 
(4)  Effective December 31, 2004, unsecured personal credit line loans were reclassified from “Home equity loans” to “Other loans” in all periods presented.
 
(5)    Sum of automobile loans and leases, operating lease assets, and securitized loans.
 
(6)    Prior period amounts have been reclassified to conform to the current period business segment structure.

2

 

Huntington Bancshares Incorporated

Deposit Composition
                                                                   
                                                      Change  
    December 31, 2004     September 30, 2004     December 31, 2003       December ’04 vs ’03  
(in thousands)   Balance     %     Balance     %     Balance     %       Amount     Percent  
    (Unaudited)             (Unaudited)                                            
By Type
                                                                  
Demand deposits
                                                                  
Non-interest bearing
   $ 3,392,123       16.3     $ 3,264,145       16.2     $ 2,986,992       16.2       $ 405,131       13.6 %
Interest bearing
     7,786,377       37.5       7,471,779       37.2       6,411,380       34.7         1,374,997       21.4  
Savings deposits
     2,977,204       14.3       2,982,836       14.8       2,959,993       16.0         17,211       0.6  
Retail certificates of deposit
     2,466,965       11.9       2,441,387       12.1       2,461,531       13.3         5,434       0.2  
Other domestic time deposits
     525,348       2.5       587,658       2.9       631,205       3.4         (105,857 )     (16.8 )
                       
Total Core Deposits
     17,148,017       82.6       16,747,805       83.3       15,451,101       83.6         1,696,916       11.0  
                       
Domestic time deposits of $100,000 or more
     1,081,660       5.2       997,952       5.0       789,341       4.3         292,319       37.0  
Brokered time deposits and negotiable CDs
     2,097,537       10.1       1,896,135       9.4       1,771,738       9.6         325,799       18.4  
Foreign time deposits
     440,947       2.1       467,133       2.3       475,215       2.6         (34,268 )     (7.2 )
                       
 
                                                                  
Total Deposits
   $ 20,768,161       100.0     $ 20,109,025       100.0     $ 18,487,395       100.0       $ 2,280,766       12.3 %
                       
 
                                                                  
Core Deposits:
                                                                  
Commercial
   $ 5,293,666       30.9     $ 5,227,613       31.2     $ 4,254,904       27.5       $ 1,038,762       24.4 %
Personal
     11,854,351       69.1       11,520,192       68.8       11,196,197       72.5         658,154       5.9  
                       
 
                                                                  
Total Core Deposits
   $ 17,148,017       100.0     $ 16,747,805       100.0     $ 15,451,101       100.0       $ 1,696,916       11.0 %
                       
 
                                                                  
By Business Segment (1)
                                                                  
Regional Banking
                                                                  
Central Ohio
   $ 4,700,301       22.6     $ 4,399,547       21.9     $ 4,183,982       22.6       $ 516,319       12.3 %
Northern Ohio
     4,068,926       19.6       4,014,703       20.0       3,505,457       19.0         563,469       16.1  
Southern Ohio / Kentucky
     1,745,910       8.4       1,601,147       8.0       1,441,875       7.8         304,035       21.1  
West Michigan
     2,643,546       12.7       2,699,172       13.4       2,457,296       13.3         186,250       7.6  
East Michigan
     2,225,832       10.7       2,169,538       10.8       1,988,200       10.8         237,632       12.0  
West Virginia
     1,375,060       6.6       1,380,823       6.9       1,314,450       7.1         60,610       4.6  
Indiana
     664,022       3.2       665,683       3.3       647,662       3.5         16,360       2.5  
                       
Total Regional Banking
     17,423,597       83.8       16,930,613       84.3       15,538,922       84.1         1,884,675       12.1  
                       
Dealer Sales
     76,335       0.4       69,924       0.3       77,408       0.4         (1,073 )     (1.4 )
Private Financial Group
     1,172,577       5.6       1,124,894       5.6       1,164,020       6.3         8,557       0.7  
Treasury / Other (2)
     2,095,652       10.2       1,983,594       9.8       1,707,045       9.2         388,607       22.8  
                       
 
                                                                  
Total Deposits
   $ 20,768,161       100.0     $ 20,109,025       100.0     $ 18,487,395       100.0       $ 2,280,766       12.3 %
                       
N.M. - Not Meaningful

    (1) Prior period amounts have been reclassified to conform to the current period business segment structure.
 
    (2) Comprised largely of brokered deposits and negotiable CDs.

3

 

Huntington Bancshares Incorporated

Consolidated Quarterly Average Balance Sheets
(Unaudited)
                                                           
         
    Average Balances               Change  
         
(in millions)           2004             2003       4Q04 vs 4Q03  
               
Fully Taxable Equivalent Basis   Fourth     Third     Second     First     Fourth       Amount     Percent  
               
Assets
                                                          
Interest bearing deposits in banks
   $ 60     $ 55     $ 69     $ 79     $ 83       $ (23 )     (27.7 )%
Trading account securities
     228       148       28       16       11         217       N.M.  
Federal funds sold and securities purchased under resale agreements
     695       318       168       92       117         578       N.M.  
Loans held for sale
     229       283       254       207       295         (66 )     (22.4 )
Investment securities:
                                                          
Taxable
     3,858       4,340       4,861       4,646       4,093         (235 )     (5.7 )
Tax exempt
     404       398       410       437       421         (17 )     (4.0 )
                 
Total Investment Securities
     4,262       4,738       5,271       5,083       4,514         (252 )     (5.6 )
                 
Loans and Leases:
                                                          
Commercial:
                                                          
Middle market commercial and industrial
     4,508       4,303       4,564       4,450       4,493         15       0.3  
Middle market real estate:
                                                          
Construction
     1,587       1,523       1,281       1,285       1,265         322       25.5  
Commercial
     1,887       1,949       1,950       1,903       1,882         5       0.3  
                 
Total middle market real estate
     3,474       3,472       3,231       3,188       3,147         327       10.4  
                 
Small business commercial and industrial and commercial real estate
     2,086       2,031       1,969       1,925       1,869         217       11.6  
                 
Total Commercial
     10,068       9,806       9,764       9,563       9,509         559       5.9  
                 
Consumer:
                                                          
Automobile loans
     1,913       1,857       2,337       3,041       3,529         (1,616 )     (45.8 )
Automobile leases
     2,388       2,250       2,139       1,988       1,802         586       32.5  
                 
Automobile loans and leases
     4,301       4,107       4,476       5,029       5,331         (1,030 )     (19.3 )
                 
Home equity (1) (3)
     4,489       4,337       4,107       3,810       3,624         865       23.9  
Residential mortgage (2)
     3,695       3,484       2,986       2,674       2,501         1,194       47.7  
Other loans (3)
     479       461       434       426       441         38       8.6  
                 
Total Consumer
     12,964       12,389       12,003       11,939       11,897         1,067       9.0  
                 
Total Loans and Leases
     23,032       22,195       21,767       21,502       21,406         1,626       7.6  
                 
Allowance for loan and lease losses
     (283 )     (288 )     (310 )     (313 )     (350 )       67       19.1  
                 
Net Loans and Leases
     22,749       21,907       21,457       21,189       21,056         1,693       8.0  
                 
Total Earning Assets
     28,506       27,737       27,557       26,979       26,426         2,080       7.9  
                 
Operating lease assets
     648       800       977       1,166       1,355         (707 )     (52.2 )
Cash and due from banks
     880       928       772       740       766         114       14.9  
Intangible assets
     216       216       216       217       217         (1 )     (0.5 )
All other assets
     2,094       2,066       2,101       2,046       2,009         85       4.2  
                 
Total Assets
   $ 32,061     $ 31,459     $ 31,313     $ 30,835     $ 30,423       $ 1,638       5.4 %
                 
 
                                                          
Liabilities and Shareholders’ Equity
                                                          
Deposits:
                                                          
Non-interest bearing deposits
   $ 3,401     $ 3,276     $ $3,223     $ 3,017     $ 3,131       $ 270       8.6 %
Interest bearing demand deposits
     7,658       7,384       7,168       6,609       6,466         1,192       18.4  
Savings deposits
     2,819       2,841       2,839       2,819       2,824         (5 )     (0.2 )
Retail certificates of deposit
     2,454       2,414       2,400       2,399       2,492         (38 )     (1.5 )
Other domestic time deposits
     576       595       600       637       631         (55 )     (8.7 )
                 
Total Core Deposits
     16,908       16,510       16,230       15,481       15,544         1,364       8.8  
                 
Domestic time deposits of $100,000 or more
     990       886       795       788       828         162       19.6  
Brokered time deposits and negotiable CDs
     1,948       1,755       1,737       1,907       1,851         97       5.2  
Foreign time deposits
     465       476       542       549       522         (57 )     (10.9 )
                 
Total Deposits
     20,311       19,627       19,304       18,725       18,745         1,566       8.4  
                 
Short-term borrowings
     1,302       1,342       1,396       1,603       1,433         (131 )     (9.1 )
Federal Home Loan Bank advances
     1,270       1,270       1,270       1,273       1,273         (3 )     (0.2 )
Subordinated notes and other long-term debt, including preferred capital securities
     5,099       5,244       5,623       5,557       5,432         (333 )     (6.1 )
                 
Total Interest Bearing Liabilities
     24,581       24,207       24,370       24,141       23,752         829       3.5  
                 
All other liabilities
     1,598       1,564       1,397       1,399       1,312         286       21.8  
Shareholders’ equity
     2,481       2,412       2,323       2,278       2,228         253       11.4  
                 
Total Liabilities and Shareholders’ Equity
   $ 32,061     $ 31,459     $ $31,313     $ 30,835     $ 30,423       $ 1,638       5.4 %
                 

N.M. - Not Meaningful

(1)   Home equity includes personal lines of credit and other consumer loans secured by first or junior mortgages on residential property originated and underwritten through the company’s retail banking channel. Reclassification of prior period balances has been made to conform to this presentation, resulting in an increase to previously reported home equity loans and a decrease to previously reported residential mortgage loans.
 
(2)   Residential mortgage includes loans secured by first mortgages on residential property originated and underwritten through the company’s mortgage banking channel. Reclassification of prior period balances has been made to conform to this presentation, resulting in an increase to previously reported home equity loans and a decrease to previously reported residential mortgage loans.
 
(3)   Effective December 31, 2004, unsecured personal credit line loans were reclassified from “Home equity loans” to “Other loans” in all periods presented.

 4 

 

Huntington Bancshares Incorporated

Consolidated Quarterly Net Interest Margin Analysis
(Unaudited)
                                         
    Average Rates (2)  
    2004     2003  
Fully Taxable Equivalent Basis (1)   Fourth     Third     Second     First     Fourth  
Assets
                                        
Interest bearing deposits in banks
     1.61 %     0.91 %     1.05 %     0.71 %     0.60 %
Trading account securities
     4.15       4.44       3.02       3.98       2.39  
Federal funds sold and securities purchased under resale agreements
     1.99       1.53       1.21       1.41       1.30  
Loans held for sale
     5.69       5.25       5.17       5.33       5.31  
Investment securities:
                                        
Taxable
     3.77       3.83       3.83       4.06       4.24  
Tax exempt
     6.89       7.06       7.07       6.88       6.91  
         
Total Investment Securities
     4.07       4.10       4.09       4.30       4.49  
         
Loans and Leases:
                                        
Commercial:
                                        
Middle market commercial and industrial
     4.80       4.46       4.05       4.33       4.71  
Middle market real estate:
                                        
Construction
     4.65       4.13       3.73       3.68       4.21  
Commercial
     4.81       4.45       4.20       4.31       4.55  
         
Total middle market real estate
     4.74       4.31       4.02       4.05       4.41  
         
Small business commercial and industrial and commercial real estate
     5.69       5.47       5.35       5.49       5.56  
         
Total Commercial
     4.96       4.62       4.30       4.47       4.78  
         
Consumer:
                                        
Automobile loans
     7.31       7.65       7.20       6.93       6.90  
Automobile leases
     5.00       5.02       5.06       4.94       4.98  
         
Automobile loans and leases
     6.02       6.21       6.17       6.14       6.25  
         
Home equity (3)(5)
     5.30       4.84       4.75       4.69       5.09  
Residential mortgage (4)
     5.53       5.48       5.40       5.51       5.77  
Other loans (5)
     6.87       6.54       6.21       5.83       6.87  
         
Total Consumer
     5.66       5.54       5.49       5.52       5.64  
         
Total Loans and Leases
     5.34       5.12       4.95       5.04       5.26  
         
 
                                        
         
Total Earning Assets
     5.05 %     4.89 %     4.76 %     4.89 %     5.11 %
         
 
                                        
Liabilities and Shareholders’ Equity
                                        
Deposits:
                                        
Non-interest bearing deposits
     — %     — %     — %     — %     — %
Interest bearing demand deposits
     1.21       1.06       0.94       0.88       0.91  
Savings deposits
     0.86       0.83       0.82       0.94       1.22  
Retail certificates of deposit
     3.38       3.32       3.27       3.47       3.54  
Other domestic time deposits
     3.20       3.22       3.19       3.48       3.69  
         
Total Core Deposits
     1.62       1.52       1.45       1.53       1.65  
         
Domestic time deposits of $100,000 or more
     2.51       2.40       2.37       2.14       2.37  
Brokered time deposits and negotiable CDs
     2.26       1.84       1.57       1.51       1.52  
Foreign time deposits
     0.98       0.83       0.76       0.72       0.75  
         
Total Deposits
     1.73       1.58       1.48       1.53       1.64  
         
Short-term borrowings
     1.17       0.92       0.80       0.83       0.78  
Federal Home Loan Bank advances
     2.68       2.60       2.52       2.50       2.24  
Subordinated notes and other long-term debt
     2.67       2.62       2.24       2.33       2.63  
         
Total Interest Bearing Liabilities
     1.94 %     1.82 %     1.66 %     1.71 %     1.85 %
         
 
                                        
Net interest rate spread
     3.11 %     3.07 %     3.10 %     3.18 %     3.26 %
Impact of non-interest bearing funds on margin
     0.27       0.23       0.19       0.18       0.16  
         
Net Interest Margin
     3.38 %     3.30 %     3.29 %     3.36 %     3.42 %
         
(1)   Fully taxable equivalent (FTE) yields are calculated assuming a 35% tax rate. See page 6 for the FTE adjustment.
 
(2)   Loan, lease, and deposit average rates include impact of applicable derivatives and non-deferrable fees.
 
(3)   Home equity includes personal lines of credit and other consumer loans secured by first or junior mortgages on residential property originated and underwritten through the company’s retail banking channel. Reclassification of prior period balances has been made to conform to this presentation, resulting in an increase to previously reported home equity loans and a decrease to previously reported residential mortgage loans.
 
(4)   Residential mortgage includes loans secured by first mortgages on residential property originated and underwritten through the company’s mortgage banking channel. Reclassification of prior period balances has been made to conform to this presentation, resulting in an increase to previously reported home equity loans and a decrease to previously reported residential mortgage loans.
 
(5)   Effective December 31, 2004, unsecured personal credit line loans were reclassified from “Home equity loans” to “Other loans” in all periods presented.

5

 

Huntington Bancshares Incorporated

Selected Quarterly Income Statement Data
(Unaudited)
                                                           
    2004   2003     4Q04 vs 4Q03  
(in thousands, except per share amounts)   Fourth     Third     Second     First   Fourth     Amount     Percent  
Interest Income
   $ 359,215     $ 338,002     $ 324,167     $ 325,931     $ 335,097       $ 24,118       7.2 %
Interest Expense
     120,147       110,944       101,604       103,246       110,782         9,365       8.5  
             
Net Interest Income
     239,068       227,058       222,563       222,685       224,315         14,753       6.6  
Provision for credit losses
     12,654       11,785       5,027       25,596       26,341         (13,687 )     (52.0 )
             
Net Interest Income After
                                                          
Provision for Credit Losses
     226,414       215,273       217,536       197,089       197,974         28,440       14.4  
             
Operating lease income
     55,106       64,412       78,706       88,867       105,307         (50,201 )     (47.7 )
Service charges on deposit accounts
     41,747       43,935       43,596       41,837       44,763         (3,016 )     (6.7 )
Trust services
     17,315       17,064       16,708       16,323       15,793         1,522       9.6  
Brokerage and insurance income
     12,879       13,200       13,523       15,197       14,344         (1,465 )     (10.2 )
Bank owned life insurance income
     10,484       10,019       11,309       10,485       10,410         74       0.7  
Other service charges and fees
     10,617       10,799       10,645       9,513       9,237         1,380       14.9  
Mortgage banking
     8,822       4,448       23,322       (4,296 )     9,677         (855 )     (8.8 )
Securities gains (losses)
     2,100       7,803       (9,230 )     15,090       1,280         820       64.1  
Gain on sales of automobile loans
     —       312       4,890       9,004       16,288         (16,288 )     N.M.  
Other
     23,870       17,899       24,659       25,619       19,411         4,459       23.0  
             
Total Non-Interest Income
     182,940       189,891       218,128       227,639       246,510         (63,570 )     (25.8 )
             
Personnel costs
     122,738       121,729       119,715       121,624       115,762         6,976       6.0  
Operating lease expense
     48,320       54,885       62,563       70,710       85,609         (37,289 )     (43.6 )
Net occupancy
     26,082       16,838       16,258       16,763       14,925         11,157       74.8  
Outside data processing and other services
     18,563       17,527       17,563       18,462       15,957         2,606       16.3  
Equipment
     15,733       15,295       16,228       16,086       16,840         (1,107 )     (6.6 )
Professional services
     9,522       12,219       7,836       7,299       12,175         (2,653 )     (21.8 )
Marketing
     5,581       5,000       8,069       7,839       6,895         (1,314 )     (19.1 )
Telecommunications
     4,596       5,359       4,638       5,194       5,272         (676 )     (12.8 )
Printing and supplies
     3,148       3,201       3,098       3,016       3,417         (269 )     (7.9 )
Amortization of intangibles
     205       204       204       204       204         1       0.5  
Restructuring reserve releases
     —       (1,151 )     —       —       (351 )       351       N.M.  
Loss on early extinguishment of debt
     —       —       —       —       15,250         (15,250 )     N.M.  
Other
     26,526       22,317       25,981       18,457       25,510         1,016       4.0  
             
Total Non-Interest Expense
     281,014       273,423       282,153       285,654       317,465         (36,451 )     (11.5 )
             
Income Before Income Taxes
     128,340       131,741       153,511       139,074       127,019         1,321       1.0  
Provision for income taxes
     37,201       38,255       43,384       34,901       33,758         3,443       10.2  
             
Net Income
   $ 91,139     $ 93,486     $ 110,127     $ 104,173     $ 93,261       $ (2,122 )     (2.3 )%
             
 
                                                          
Average common shares - diluted
     235,462       234,348       232,659       232,915       231,986         3,476       1.5 %
 
                                                          
Per Common Share:
                                                          
Net Income - Diluted
   $ 0.39     $ 0.40     $ 0.47     $ 0.45     $ 0.40         (0.01 )     (2.5 )
Cash Dividends Declared
     0.200       0.200       0.175       0.175       0.175         0.025       14.3  
 
                                                          
Return on:
                                                          
Average total assets (1)
     1.13 %     1.18 %     1.41 %     1.36 %     1.22 %       (0.09 )%     (7.4 )
Average total shareholders’ equity (1)
     14.6       15.4       19.1       18.4       16.6         (2.0 )     (12.0 )
Net interest margin (2)
     3.38       3.30       3.29       3.36       3.42         (0.04 )     (1.2 )
Efficiency ratio (3)
     66.4       66.3       62.3       65.1       67.1         (0.7 )     (1.0 )
Effective tax rate
     29.0       29.0       28.3       25.1       26.6         2.4       9.0  
 
                                                          
Revenue - Fully Taxable Equivalent (FTE)
                                                          
Net Interest Income
   $ 239,068     $ 227,058     $ 222,563     $ 222,685     $ 224,315       $ 14,753       6.6  
FTE Adjustment (2)
     2,847       2,864       2,919       3,023       2,954         (107 )     (3.6 )
             
Net Interest Income
     241,915       229,922       225,482       225,708       227,269         14,646       6.4  
Non-Interest Income
     182,940       189,891       218,128       227,639       246,510         (63,570 )     (25.8 )
             
Total Revenue
   $ 424,855     $ 419,813     $ 443,610     $ 453,347     $ 473,779       $ (48,924 )     (10.3 )%
             
N.M. - Not Meaningful.
 
(1)   Based on income before cumulative effect of change in accounting principle, net of tax.
 
(2)   On a fully taxable equivalent (FTE) basis assuming a 35% tax rate.
 
(3)   Non-interest expense less amortization of intangibles divided by the sum of FTE net interest income and non-interest income excluding securities gains (losses).

6

 

Huntington Bancshares Incorporated

Quarterly Credit Reserves and Net Charge-off Analysis
(Unaudited)
                                         
    2004     2003  
(in thousands)   Fourth     Third     Second     First     Fourth  
Allowance for Loan and Leases Losses, Beginning of Period
   $ 282,650     $ 286,935     $ 295,377     $ 299,732     $ 336,398  
 
                                        
Loan and lease losses
     (31,737 )     (26,366 )     (30,845 )     (37,167 )     (68,023 )
Recoveries of loans previously charged off
     10,824       9,886       18,330       8,540       12,880  
       
Net loan and lease losses
     (20,913 )     (16,480 )     (12,515 )     (28,627 )     (55,143 )
       
Provision for credit losses
     12,654       11,785       5,027       25,596       26,341  
Net change in allowance for unfunded loan commitments and letters of credit
     (3,180 )     1,186       896       3,433       (1,785 )
Allowance of assets sold and securitized
     —       (776 )     (1,850 )     (4,757 )     (6,079 )
       
Allowance for Loan and Lease Losses, End of Period
   $ 271,211     $ 282,650     $ 286,935     $ 295,377     $ 299,732  
       
 
                                        
Allowance for Unfunded Loan Commitments and Letters of Credit, Beginning of Period
   $ 30,007     $ 31,193     $ 32,089     $ 35,522     $ 33,737  
Net change
     3,180       (1,186 )     (896 )     (3,433 )     1,785  
       
Allowance for Unfunded Loan Commitments and Letters of Credit, End of Period
   $ 33,187     $ 30,007     $ 31,193     $ 32,089     $ 35,522  
       
 
                                        
Total Allowances for Credit Losses
   $ 304,398     $ 312,657     $ 318,128     $ 327,466     $ 335,254  
       
 
                                        
Allowance for loan and lease losses (ALLL) as % of:
                                        
Transaction reserve
     0.78       0.84       0.86       0.91       0.88  
Economic reserve
     0.32       0.33       0.36       0.38       0.40  
Specific reserve
     0.05       0.08       0.10       0.10       0.14  
       
Total Loans and Leases
     1.15 %     1.25 %     1.32 %     1.39 %     1.42 %
       
Non-performing loans and leases (NPLs)
     424       417       464       383       397  
Non-performing assets (NPAs)
     250       351       384       322       343  
 
                                        
Total allowances for credit losses (ACL) as % of:
                                        
Total loans and leases
     1.29 %     1.38 %     1.46 %     1.55 %     1.59 %
Non-performing loans and leases
     476       461       515       425       444  
Non-performing assets
     280       389       426       357       384  
 
                                        
Net Charge-offs by Loan and Lease Type:
                                        
Commercial:
                                        
Middle market commercial and industrial
   $ 1,239     $ (102 )   $ (3,642 )   $ 4,425     $ 28,321  
Middle market real estate:
                                        
Construction
     704       (19 )     276       1,504       686  
Commercial
     1,834       1,490       2,222       (40 )     3,566  
       
Total middle market real estate
     2,538       1,471       2,498       1,464       4,252  
       
Small business commercial and industrial and commercial real estate
     1,386       1,195       1,281       1,704       4,356  
       
Total Commercial
     5,163       2,564       137       7,593       36,929  
       
Consumer:
                                        
Automobile loans
     4,406       5,142       5,604       13,422       11,346  
Automobile leases
     3,104       2,415       2,159       3,159       1,936  
       
Automobile loans and leases
     7,510       7,557       7,763       16,581       13,282  
       
Home equity (3)
     5,346       4,259       2,569       2,900       2,484  
Residential mortgage
     608       534       302       316       174  
Other loans (3)
     2,286       1,566       1,744       1,237       2,274  
       
Total Consumer
     15,750       13,916       12,378       21,034       18,214  
       
 
                                        
Total Net Charge-offs
   $ 20,913     $ 16,480     $ 12,515     $ 28,627     $ 55,143  
       
 
                                        
Net Charge-offs — Annualized Percentages:
                                        
Commercial:
                                        
Middle market commercial and industrial
     0.11 %     (0.01 )%     (0.32 )%     0.40 %     2.52 %
Middle market real estate:
                                        
Construction
     0.18       —       0.09       0.47       0.22  
Commercial
     0.39       0.31       0.46       (0.01 )     0.76  
       
Total middle market real estate
     0.29       0.17       0.31       0.18       0.54  
       
Small business commercial and industrial and commercial real estate
     0.27       0.24       0.26       0.35       0.93  
       
Total Commercial
     0.21       0.10       0.01       0.32       1.55  
       
Consumer:
                                        
Automobile loans
     0.92       1.11       0.96       1.77       1.29  
Automobile leases
     0.52       0.43       0.40       0.64       0.43  
       
Automobile loans and leases
     0.70       0.74       0.69       1.32       1.00  
       
Home equity (1) (3)
     0.48       0.39       0.25       0.30       0.27  
Residential mortgage (2)
     0.07       0.06       0.04       0.05       0.03  
Other loans (3)
     1.91       1.36       1.62       1.17       2.06  
       
Total Consumer
     0.49       0.45       0.41       0.70       0.61  
       
 
                                        
Net Charge-offs as a % of Average Loans
     0.36 %     0.30 %     0.23 %     0.53 %     1.03 %
       
(1)   Home equity includes personal lines of credit and other consumer loans secured by first or junior mortgages on residential property originated and underwritten through the company’s retail banking channel. Reclassification of prior period balances has been made to conform to this presentation, resulting in an increase to previously reported home equity loans and a decrease to previously reported residential mortgage loans.
 
(2)   Residential mortgage includes loans secured by first mortgages on residential property originated and underwritten through the company’s mortgage banking channel. Reclassification of prior period balances has been made to conform to this presentation, resulting in an increase to previously reported home equity loans and a decrease to previously reported residential mortgage loans.
 
(3)   Effective December 31, 2004, unsecured personal credit line charge-offs were reclassified from “Home equity loans” to “Other loans” in all periods presented.

7

 

Huntington Bancshares Incorporated

Quarterly Non-Performing Assets and Past Due Loans and Leases
(Unaudited)
                                         
    2004   2003
(in thousands)   December 31,     September 30,     June 30,     March 31,     December 31,  
         
Non-accrual loans and leases:
                                        
Commercial and industrial
   $ 24,179     $ 20,098     $ 24,336     $ 36,854     $ 33,745  
Commercial real estate
     4,582       14,717       11,122       16,097       18,434  
Small business commercial and industrial and commercial real estate
     14,601       12,087       12,368       12,124       13,607  
Residential mortgage
     13,545       13,197       13,952       12,052       9,695  
Home equity (1)
     7,055       7,685       —       —       —  
       
Total Non-Performing Loans and Leases
     63,962       67,784       61,778       77,127       75,481  
 
                                        
Other real estate, net:
                                        
Residential
     8,822       9,418       9,421       9,654       7,401  
Commercial (2)
     35,784       3,274       3,497       4,913       4,504  
       
Total other real estate, net
     44,606       12,692       12,918       14,567       11,905  
 
                                      
         
 
                                        
Total Non-Performing Assets
   $ 108,568     $ 80,476     $ 74,696     $ 91,694     $ 87,386  
       
 
                                        
Non-performing loans and leases as a % of total loans and leases
     0.27 %     0.30 %     0.28 %     0.36 %     0.36 %
 
                                        
Non-performing assets as a % of total loans and leases and other real estate
     0.46       0.36       0.34       0.43       0.41 %
 
                                        
Accruing loans and leases past due 90 days or more (1)
   $ 54,283     $ 53,456     $ 51,490     $ 59,697     $ 55,913  
 
                                        
Accruing loans and leases past due 90 days or more as a percent of total loans and leases
     0.23 %     0.24 %     0.24 %     0.28 %     0.27 %
                                         
    Quarter Ending  
    2004     2003  
(in thousands)   December 31,     September 30,     June 30,     March 31,     December 31,  
         
Non-Performing Assets, Beginning of Period
   $ 80,476     $ 74,696     $ 91,694     $ 87,386     $ 137,077  
New non-performing assets (1) (2)
     61,684       22,740       25,727       27,208       38,367  
Returns to accruing status
     (2,248 )     —       (1,493 )     (54 )     (454 )
Loan and lease losses
     (8,578 )     (5,424 )     (12,872 )     (10,463 )     (39,657 )
Payments
     (8,829 )     (10,202 )     (13,571 )     (10,717 )     (22,710 )
Sales
     (13,937 )     (1,334 )     (14,789 )     (1,666 )     (25,237 )
       
Non-Performing Assets, End of Period
   $ 108,568     $ 80,476     $ 74,696     $ 91,694     $ 87,386  
       

(1)   Includes $7.7 million of nonperforming loans secured by residential real estate. As of September 30, 2004, the Company adopted a policy, consistent with its policy for residential mortgage loans, of placing home equity loans and lines on nonaccrual status when they become greater than 180 days past due. In prior quarters, these balances were included in “Accruing loans and leases past due 90 days or more.”
 
(2)   At December 31, 2004, other real estate owned included $35.7 million of properties that relate to the work-out of $5.9 million of mezzanine loans. These properties are subject to $29.8 million of non-recourse debt to another financial institution. Both properties are in contract for sale in the first half of 2005.

8

 

Huntington Bancshares Incorporated

Quarterly Stock Summary, Capital, and Other Data
(Unaudited)

Quarterly Common Stock Summary

                                         
 
    2004     2003  
(in thousands, except per share)   Fourth     Third     Second     First     Fourth  
Common Stock Price, Per Share
                                        
High (1)
   $ 25.380     $ 25.150     $ 23.120     $ 23.780     $ 22.550  
Low (1)
     23.110       22.700       20.890       21.000       19.850  
Close
     24.740       24.910       22.980       22.030       22.500  
Average Closing Price
     24.241       24.105       22.050       22.501       21.584  
 
                                        
Dividends, Per Share
                                        
Cash dividends declared on common stock
   $ 0.200     $ 0.200     $ 0.175     $ 0.175     $ 0.175  
 
                                        
Common shares outstanding
                                        
Average — Basic
     231,147       229,848       229,429       229,227       228,902  
Average — Diluted
     235,462       234,348       232,659       232,915       231,986  
Ending
     231,605       230,153       229,476       229,410       229,008  
Book value per share
   $ 10.96     $ 10.69     $ 10.40     $ 10.31     $ 9.93  
 
                                        
Common Share Repurchase Program
                                        
Number of shares repurchased
     —       —       —       —       —  
 
                                        
 

Capital Data

                                         
    2004     2003  
(dollars in thousands)   December 31,     September 30,     June 30,     March 31,     December 31,  
Total risk-adjusted assets (2)
   $ 29,516,000     $ 28,679,142     $ 28,415,519     $ 28,247,258     $ 28,164,181  
 
                                        
Tier 1 leverage ratio (2)
     8.41 %     8.36 %     8.20 %     8.07 %     7.98 %
Tier 1 risk-based capital ratio (2)
     9.09       9.10       8.98       8.74       8.53  
Total risk-based capital ratio (2)
     12.38       12.53       12.56       12.13       11.95  
 
                                        
Tangible equity / Asset ratio
     7.18       7.11       6.95       6.97       6.79  
Tangible equity / Risk-weighted assets ratio (2)
     7.87       7.83       7.64       7.60       7.31  
Average equity / Average assets
     7.74       7.67       7.42       7.39       7.32  
 
                                        
Other Data:
                                        
Number of employees (full-time equivalent)
     7,812       7,906       8,045       7,915       7,983  
 
                                        
Number of domestic full-service banking offices (3)
     342       341       341       337       338  
 
                                        
 
(1)  High and low stock prices are intra-day quotes obtained from NASDAQ.
(2)  Fourth quarter 2004 figures are estimated.
(3)  Includes three Private Financial Group offices in Florida.

9

 

Huntington Bancshares Incorporated

Quarterly Operating Lease Performance
(Unaudited)
                                                           
            2004                     2003       4Q04 vs 4Q03  
               
(in thousands)   Fourth     Third     Second     First     Fourth       Amount     Percent  
               
Balance Sheet
                                                          
 
                                                          
Average operating lease assets outstanding
   $ 647,970     $ 800,145     $ 976,626     $ 1,166,146     $ 1,355,330       $ (707,360 )     (52.2 )%
               
 
                                                          
Income Statement
                                                          
Net rental income
   $ 51,016     $ 60,267     $ 72,402     $ 83,517     $ 98,223       $ (47,207 )     (48.1 )%
Fees
     2,111       2,965       4,838       3,543       5,204         (3,093 )     (59.4 )
Recoveries - early terminations
     1,979       1,180       1,466       1,807       1,880         99       5.3  
               
Total Operating Lease Income
     55,106       64,412       78,706       88,867       105,307         (50,201 )     (47.7 )
               
               
Depreciation and residual losses at termination
     45,293       49,917       57,412       63,823       76,768         (31,475 )     (41.0 )
Losses - early terminations
     3,027       4,968       5,151       6,887       8,841         (5,814 )     (65.8 )
               
Total Operating Lease Expense
     48,320       54,885       62,563       70,710       85,609         (37,289 )     (43.6 )
               
Net Earnings Contribution
   $ 6,786     $ 9,527     $ 16,143     $ 18,157     $ 19,698       $ (12,912 )     (65.5 )%
               
               
Earnings ratios (1)
                                                          
Net rental income
     31.5 %     30.1 %     29.7 %     28.6 %     29.0 %       2.5 %     8.6 %
Depreciation and residual losses at termination
     28.0       25.0       23.5       21.9       22.7         5.3       23.4  
               
 

Definition of term(s):
Net rental income includes the lease payments earned on the equipment and vehicles that Huntington leases to its customers under operating leases. Fees include late fees, early payment fees and other non-origination fees. Recoveries represent payments received on a cash basis subsequent to a customer’s default on an operating lease and a recognition of an impairment loss on the lease. Depreciation represents the periodic depreciation of equipment and vehicles to their residual value owned by Huntington under operating leases and any accelerated depreciation where Huntington expects to receive less than the residual value from the sale of the vehicle and from insurance proceeds at the end of the lease term. Losses represent impairments recognized on equipment and vehicles where the lessee has defaulted on the operating lease.

(1) As a percent of average operating lease assets, quarterly and year-to-date amounts annualized.

10

 

Huntington Bancshares Incorporated

Consolidated Annual Average Balance Sheets
(Unaudited)
                                                           
        Change  
(in millions)   Annual Average Balances       2004 vs 2003  
             
Fully Taxable Equivalent Basis   2004     2003     2002     2001     2000       Amount     Percent  
         
Assets
                                                          
Interest bearing deposits in banks
   $ 66     $ 37     $ 33     $ 7     $ 6       $ 29       78.4 %
Trading account securities
     105       14       7       25       15         91       N.M.  
Federal funds sold and securities purchased under resale agreements
     319       87       72       107       87         232       N.M.  
Loans held for sale
     243       564       322       360       109         (321 )     (56.9 )
Investment securities:
                                                          
Taxable
     4,425       3,533       2,859       3,144       4,316         892       25.2  
Tax exempt
     412       334       135       174       273         78       23.4  
       
Total Investment Securities
     4,837       3,867       2,994       3,318       4,589         970       25.1  
       
Loans and Leases:
                                                          
Commercial:
                                                          
Middle market commercial and industrial
     4,456       4,633       4,810       5,075       4,938         (177 )     (3.8 )
Middle market real estate:
                                                          
Construction
     1,420       1,219       1,151       1,040       976         201       16.5  
Commercial
     1,922       1,800       1,670       1,522       1,380         122       6.8  
       
Total middle market real estate
     3,342       3,019       2,821       2,562       2,356         323       10.7  
       
Small business commercial and industrial and commercial real estate
     2,003       1,787       1,642       2,574       2,526         216       12.1  
       
Total Commercial
     9,801       9,439       9,273       10,211       9,820         362       3.8  
       
Consumer:
                                                          
Automobile loans
     2,285       3,260       2,744       N.M.       N.M.         (975 )     (29.9 )
Automobile leases
     2,192       1,423       452       N.M.       N.M.         769       54.0  
       
Automobile loans and leases
     4,477       4,683       3,196       2,839       3,123         (206 )     (4.4 )
       
Home equity (1) (3)
     4,187       3,441       3,029       3,334       2,921         746       21.7  
Residential mortgage (2)
     3,212       2,026       1,438       1,048       1,379         1,186       58.5  
Other loans (3)
     450       435       481       654       599         15       3.4  
       
Total Consumer
     12,326       10,585       8,144       7,875       8,022         1,741       16.4  
       
Total Loans and Leases
     22,127       20,024       17,417       18,086       17,842         2,103       10.5  
       
Allowance for loan and lease losses
     (298 )     (330 )     (344 )     (286 )     (256 )       32       (9.7 )
       
Net Loans and Leases
     21,829       19,694       17,073       17,800       17,586         2,135       10.8  
       
Total Earning Assets
     27,697       24,593       20,845       21,903       22,648         3,104       12.6  
       
Operating lease assets
     897       1,697       2,602       2,970       2,751         (800 )     (47.1 )
Cash and due from banks
     843       774       757       912       1,008         69       8.9  
Intangible assets
     216       218       293       736       709         (2 )     (0.9 )
All other assets
     2,078       2,020       1,910       1,891       1,729         58       2.9  
       
Total Assets
   $ 31,433     $ 28,972     $ 26,063     $ 28,126     $ 28,589         2,461       8.5 %
       
 
                                                          
Liabilities and Shareholders’ Equity
                                                          
Deposits:
                                                          
Non-interest bearing deposits
   $ 3,230     $ 3,080     $ 2,902     $ 3,304     $ 3,421         150       4.9 %
Interest bearing demand deposits
     7,207       6,193       5,161       5,005       4,291         1,014       16.4  
Savings deposits
     2,829       2,802       2,853       3,478       3,563         27       1.0  
Retail certificates of deposit
     2,417       2,702       3,619       4,980       4,930         (285 )     (10.5 )
Other domestic time deposits
     602       660       730       903       942         (58 )     (8.8 )
       
Total Core Deposits
     16,285       15,437       15,265       17,670       17,147         848       5.5  
       
Domestic time deposits of $100,000 or more
     865       802       851       1,280       1,502         63       7.9  
Brokered time deposits and negotiable CDs
     1,837       1,419       731       128       502         418       29.5  
Foreign time deposits
     508       500       337       283       539         8       1.6  
       
Total Deposits
     19,495       18,158       17,184       19,361       19,690         1,337       7.4  
       
Short-term borrowings
     1,410       1,600       1,856       2,099       1,966         (190 )     (11.9 )
Federal Home Loan Bank advances
     1,271       1,258       279       19       13         13       1.0  
Subordinated notes and other long-term debt, including preferred capital securities
     5,379       4,559       3,335       3,411       4,005         820       18.0  
       
Total Interest Bearing Liabilities
     24,325       22,495       19,752       21,586       22,253         1,830       8.1  
       
All other liabilities
     1,504       1,201       1,170       905       723         303       25.2  
Shareholders’ equity
     2,374       2,196       2,239       2,331       2,192         178       8.1  
       
Total Liabilities and Shareholders’ Equity
   $ 31,433     $ 28,972     $ 26,063     $ 28,126     $ 28,589         2,461       8.5 %
       

N.M. — Not Meaningful. 
 
(1)   Home equity includes personal lines of credit and other consumer loans secured by first or junior mortgages on residential property originated and underwritten through the company’s retail banking channel. Reclassification of prior period balances has been made to conform to this presentation, resulting in an increase to previously reported home equity loans and a decrease to previously reported residential mortgage loans.
 
(2)   Residential mortgage includes loans secured by first mortgages on residential property originated and underwritten through the company’s mortgage banking channel. Reclassification of prior period balances has been made to conform to this presentation, resulting in an increase to previously reported home equity loans and a decrease to previously reported residential mortgage loans.
 
(3)   Effective December 31, 2004, unsecured personal credit line loans were reclassified from “Home equity loans” to “Other loans” in all periods presented.

11

 

Huntington Bancshares Incorporated

Consolidated Annual Net Interest Margin Analysis
(Unaudited)
                                         
  Annual Average Rates (2)  
Fully Taxable Equivalent Basis (1)   2004     2003     2002     2001     2000  
 
Assets
                                        
Interest bearing deposits in banks
     1.05 %     1.53 %     2.38 %     3.43 %     5.03 %
Trading account securities
     4.15       4.02       4.11       5.13       7.11  
Federal funds sold and securities purchased under resale agreements
     1.73       1.80       1.56       4.19       6.33  
Loans held for sale
     5.35       5.32       6.35       6.95       7.96  
Investment securities:
                                        
Taxable
     3.88       4.52       6.06       6.58       6.24  
Tax exempt
     6.98       7.04       7.42       7.49       7.61  
 
Total Investment Securities
     4.14       4.73       6.12       6.63       6.33  
 
 
Loans and Leases:
                                        
Commercial:
                                        
Middle market commercial and industrial
     4.41       4.95       5.45       6.96       8.39  
Middle market real estate:
                                        
Construction
     4.09       4.09       4.57       6.99       8.98  
Commercial
     4.44       4.84       5.91       7.44       8.36  
 
Total middle market real estate
     4.29       4.54       5.36       7.26       8.62  
 
Small business commercial and industrial and commercial real estate
     5.50       5.91       6.73       7.96       9.13  
 
Total Commercial
     4.59       5.00       5.65       7.29       8.64  
 
Consumer:
                                        
Automobile loans
     7.22       7.38       8.67       N.M       N.M  
Automobile leases
     5.00       5.09       5.14       N.M       N.M  
 
Automobile loans and leases
     6.14       6.68       8.17       8.94       8.67  
 
Home equity (3) (5)
     4.91       5.14       5.96       8.23       8.52  
Residential mortgage (4)
     5.48       5.85       6.55       8.19       8.00  
Other loans (5)
     6.38       6.71       7.40       8.40       10.14  
 
Total Consumer
     5.56       5.93       6.98       8.44       8.57  
 
Total Loans and Leases
     5.11       5.49       6.27       7.79       8.61  
 
 
Total Earning Assets
     4.89 %     5.35 %     6.23 %     7.58 %     8.13 %
 
 
                                        
Liabilities and Shareholders’ Equity
                                        
Deposits:
                                        
Non-interest bearing deposits
     — %     — %     — %     — %     — %
Interest bearing demand deposits
     1.03       1.18       1.71       2.64       3.30  
Savings deposits
     0.86       1.49       1.77       3.07       4.09  
Retail certificates of deposit
     3.36       3.68       4.58       5.65       5.72  
Other domestic time deposits
     3.27       3.86       4.05       5.34       5.52  
 
Total Core Deposits
     1.53       1.94       2.70       3.95       4.52  
 
Domestic time deposits of $100,000 or more
     2.37       2.50       3.39       5.22       6.01  
Brokered time deposits and negotiable CDs
     1.80       1.70       2.36       5.12       6.35  
Foreign time deposits
     0.82       0.92       1.47       3.82       6.31  
 
Total Deposits
     1.58       1.91       2.69       4.06       4.77  
 
Short-term borrowings
     0.93       0.98       1.56       4.57       5.75  
Federal Home Loan Bank advances
     2.57       1.94       2.00       6.17       6.32  
Subordinated notes and other long-term debt
     2.46       2.82       3.70       5.52       6.74  
 
Total Interest Bearing Liabilities
     1.79 %     2.03 %     2.75 %     4.34 %     5.22 %
 
 
Net interest rate spread
     3.10 %     3.32 %     3.48 %     3.24 %     2.91 %
Impact of non-interest bearing funds on margin
     0.23       0.17       0.14       0.05       0.09  
 
Net Interest Margin
     3.33 %     3.49 %     3.62 %     3.29 %     3.00 %
 
N.M. - Not Meaningful
 
(1)   Fully taxable equivalent (FTE) yields are calculated assuming a 35% tax rate. See page 13 for the FTE adjustment.
 
(2)   Loan and lease and deposit average rates include impact of applicable derivatives and non-deferrable fees.
 
(3)   Home equity includes personal lines of credit and other consumer loans secured by first or junior mortgages on residential property originated and underwritten through the company’s retail banking channel. Reclassification of prior period balances has been made to conform to this presentation, resulting in an increase to previously reported home equity loans and a decrease to previously reported residential mortgage loans.
 
(4)   Residential mortgage includes loans secured by first mortgages on residential property originated and underwritten through the company’s mortgage banking channel. Reclassification of prior period balances has been made to conform to this presentation, resulting in an increase to previously reported home equity loans and a decrease to previously reported residential mortgage loans.
 
(5)   Effective December 31, 2004, unsecured personal credit line loans were reclassified from “Home equity loan” to “Other loans” in all periods presented.

12

 

Huntington Bancshares Incorporated

Selected Annual Income Statement Data
(Unaudited)
                                                           
                                              Change  
      2004 vs 2003  
(in thousands of dollars, except per share amounts)   2004     2003     2002     2001     2000       Amount     Percent  
       
Interest Income
   $ 1,347,315     $ 1,305,756     $ 1,293,195     $ 1,654,789     $ 1,833,388       $ 41,559       3.2 %
Interest Expense
     435,941       456,770       543,621       939,501       1,163,278         (20,829 )     (4.6 )
       
Net Interest Income
     911,374       848,986       749,574       715,288       670,110         62,388       7.3  
Provision for credit losses
     55,062       163,993       194,426       257,326       61,464         (108,931 )     (66.4 )
       
Net Interest Income After Provision for Credit Losses
     856,312       684,993       555,148       457,962       608,646         171,319       25.0  
       
Operating lease income
     287,091       489,698       657,074       691,733       623,835         (202,607 )     (41.4 )
Service charges on deposit accounts
     171,115       167,840       153,564       165,012       161,426         3,275       2.0  
Trust services
     67,410       61,649       62,051       60,298       53,613         5,761       9.3  
Brokerage and insurance income
     54,799       57,844       62,109       79,034       61,871         (3,045 )     (5.3 )
Bank owned life insurance income
     42,297       43,028       43,123       41,123       39,544         (731 )     (1.7 )
Other service charges and fees
     41,574       41,446       42,888       48,217       43,883         128       0.3  
Mortgage banking
     32,296       58,180       32,033       54,518       32,772         (25,884 )     (44.5 )
Securities gains
     15,763       5,258       4,902       723       37,101         10,505       N.M.  
Gain on sales of automobile loans
     14,206       40,039       —       —       —         (25,833 )     (64.5 )
Gain on sale of branch offices
     —       13,112       —       —       —         (13,112 )     N.M.  
Gain on sale of Florida operations
     —       —       182,470       —       —         —       —  
Merchant Services gain
     —       —       24,550       —       —         —       —  
Other
     92,047       91,059       76,940       59,284       69,157         988       1.1  
       
Total Non-Interest Income
     818,598       1,069,153       1,341,704       1,199,942       1,123,202         (250,555 )     (23.4 )
       
Personnel costs
     485,806       447,263       418,037       454,210       396,230         38,543       8.6  
Operating lease expense
     236,478       393,270       518,970       558,626       494,800         (156,792 )     (39.9 )
Net occupancy
     75,941       62,481       59,539       76,449       75,197         13,460       21.5  
Outside data processing and other services
     72,115       66,118       67,368       69,692       62,011         5,997       9.1  
Equipment
     63,342       65,921       68,323       80,560       78,069         (2,579 )     (3.9 )
Professional services
     36,876       42,448       33,085       32,862       22,721         (5,572 )     (13.1 )
Marketing
     26,489       27,490       27,911       31,057       34,884         (1,001 )     (3.6 )
Telecommunications
     19,787       21,979       22,661       27,984       26,225         (2,192 )     (10.0 )
Printing and supplies
     12,463       13,009       15,198       18,367       19,634         (546 )     (4.2 )
Amortization of intangibles
     817       816       2,019       41,225       39,207         1       0.1  
Restructuring reserve (releases) charges
     (1,151 )     (6,666 )     48,973       79,957       —         5,515       (82.7 )
Loss on early extinguishment of debt
     —       15,250       —       —       —         (15,250 )     N.M.  
Other
     93,281       80,780       92,063       91,438       34,153         12,501       15.5  
       
Total Non-Interest Expense
     1,122,244       1,230,159       1,374,147       1,562,427       1,283,131         (107,915 )     (8.8 )
       
Income Before Income Taxes
     552,666       523,987       522,705       95,477       448,717         28,679       5.5  
Provision (benefit) for income taxes
     153,741       138,294       198,974       (39,319 )     126,299         15,447       11.2  
       
Income before cumulative effect of change in accounting principle
     398,925       385,693       323,731       134,796       322,418         13,232       3.4  
Cumulative effect of change in accounting principle, net of tax (1)
     —       (13,330 )     —       —       —         13,330       N.M.  
       
Net Income
   $ 398,925     $ 372,363     $ 323,731     $ 134,796     $ 322,418       $ 26,562       7.1 %
       
Per Common Share
                                                          
Income before cumulative effect of change in accounting principle - Diluted
   $ 1.71     $ 1.67     $ 1.33     $ 0.54     $ 1.29       $ 0.04       2.4 %
Net Income - Diluted
     1.71       1.61       1.33       0.54       1.29         0.10       6.2  
Cash Dividends Declared
     0.750       0.670       0.640       0.720       0.760         0.080       11.9  
       
       
       
       
Return on:
                                                          
Average total assets (2)
     1.27 %     1.33 %     1.24 %     0.48 %     1.13 %       (0.06 )%     (4.5 )%
Average total shareholders’ equity (2)
     16.8       17.6       14.5       5.8       14.7         (0.8 )     (4.5 )
Net interest margin (3)
     3.33       3.49       3.62       3.29       3.00         (0.16 )     (4.6 )
Efficiency ratio (4)
     65.0       63.9       65.6       79.2       70.5         1.1       1.7  
Effective tax rate
     27.8       26.4       38.1       (41.2 )(5)     28.1         1.4       5.3  
       
       
       
       
Revenue - Fully Taxable Equivalent (FTE)
                                                          
Net Interest Income
   $ 911,374     $ 848,986     $ 749,574     $ 715,288     $ 670,110       $ 62,388       7.3 %
FTE Adjustment (3)
     11,653       9,684       5,205       6,352       8,310         1,969       20.3  
       
Net Interest Income
     923,027       858,670       754,779       721,640       678,420         64,357       7.5  
Non-Interest Income
     818,598       1,069,153       1,341,704       1,199,942       1,123,202         (250,555 )     (23.4 )
       
Total Revenue
   $ 1,741,625     $ 1,927,823     $ 2,096,483     $ 1,921,582     $ 1,801,622       $ (186,198 )     (9.7 )%
       
N.M. — Not Meaningful.
 
(1)   Due to the adoption of FASB Interpretation No. 46 for variable interest entities.
 
(2)   Based on income before cumulative effect of change in accounting principle, net of tax.
 
(3)   On a fully taxable equivalent (FTE) basis assuming a 35% tax rate.
 
(4)   Non-interest expense less amortization of intangibles divided by the sum of FTE net interest income and non-interest income excluding securities gains.
 
(5)   Reflects a $32.5 million reduction related to the issuance of $400 million REIT subsidiary preferred stock, of which $50 million was sold to the public.

13

 

Huntington Bancshares Incorporated

Annual Credit Reserves and Net Charge-off Analysis
Unaudited
                                         
 
(in thousands)   2004     2003     2002     2001     2000  
 
Allowance for Loan and Leases Losses, Beginning of Period
   $ 299,732     $ 300,503     $ 345,402     $ 246,758     $ 255,642  
 
                                        
Loan and lease losses
     (126,115 )     (201,534 )     (234,352 )     (174,540 )     (85,825 )
Recoveries of loans previously charged off
     47,580       39,725       37,440       28,271       24,178  
 
Net loan and lease losses
     (78,535 )     (161,809 )     (196,912 )     (146,269 )     (61,647 )
 
Provision for credit losses
     55,062       163,993       194,426       257,326       61,464  
Net change in allowance for unfunded loan commitments and letters of credit
     2,335       623       (12,215 )     (5,759 )     118  
Allowance of assets sold and securitized
     (7,383 )     (3,578 )     (30,198 )     (6,654 )     (8,819 )
 
 
                                        
Allowance for Loan and Lease Losses, End of Period
   $ 271,211     $ 299,732     $ 300,503     $ 345,402     $ 246,758  
 
 
                                        
Allowance for Unfunded Loan Commitments and Letters of Credit, Beginning of Period
   $ 35,522     $ 36,145     $ 23,930     $ 18,171     $ 18,289  
 
                                        
Net change
     (2,335 )     (623 )     12,215       5,759       (118 )
 
Allowance for Unfunded Loan Commitments and Letters of Credit, End of Period
   $ 33,187     $ 35,522     $ 36,145     $ 23,930     $ 18,171  
 
 
                                        
Total Allowances for Credit Losses
   $ 304,398     $ 335,254     $ 336,648     $ 369,332     $ 264,929  
 
 
                                        
Net Charge-offs by Loan and Lease Type:
                                        
 
                                        
Commercial:
                                        
Middle market commercial and industrial
   $ 1,920     $ 75,803     $ 104,703     $ 45,338     $ 6,959  
Middle market real estate:
                                        
Construction
     2,465       2,928       4,216       789       (1 )
Commercial
     5,506       5,019       11,968       1,420       636  
 
Total middle market real estate
     7,971       7,947       16,184       2,209       635  
 
Small business commercial and industrial and commercial real estate
     5,566       11,625       14,516       15,750       7,545  
 
Total Commercial
     15,457       95,375       135,403       63,297       15,139  
 
Consumer:
                                        
Automobile loans
     28,574       40,266       39,115       N.M.       N.M.  
Automobile leases
     10,837       5,728       1,431       N.M.       N.M.  
 
Automobile loans and leases
     39,411       45,994       40,546       55,071       32,280  
 
Home equity (3)
     15,074       12,114       11,840       11,458       3,879  
Residential mortgage
     1,760       832       872       785       1,007  
Other loans (3)
     6,833       7,494       8,251       15,658       9,342  
 
Total Consumer
     63,078       66,434       61,509       82,972       46,508  
 
 
Total Net Charge-offs
   $ 78,535     $ 161,809     $ 196,912     $ 146,269     $ 61,647  
 
 
                                        
Net Charge-offs — Annualized Percentages:
                                        
 
                                        
Commercial:
                                        
Middle market commercial and industrial
     0.04 %     1.64 %     2.18 %     0.89 %     0.14 %
Middle market real estate:
                                        
Construction
     0.17       0.24       0.37       0.08       —  
Commercial
     0.29       0.28       0.72       0.09       0.05  
 
Total middle market real estate
     0.24       0.26       0.57       0.09       0.03  
 
Small business commercial and industrial and commercial real estate
     0.28       0.65       0.88       0.61       0.30  
 
Total Commercial
     0.16       1.01       1.46       0.62       0.15  
 
Consumer:
                                        
Automobile loans
     1.25       1.24       1.43       N.M.       N.M.  
Automobile leases
     0.49       0.40       0.32       N.M.       N.M.  
 
Automobile loans and leases
     0.88       0.98       1.27       1.94       1.03  
 
Home equity (1)(3)
     0.36       0.35       0.39       0.34       0.13  
Residential mortgage (2)
     0.05       0.04       0.06       0.07       0.07  
Other loans (3)
     1.52       1.72       1.72       2.39       1.56  
 
Total Consumer
     0.51       0.63       0.76       1.05       0.58  
 
 
                                        
Net Charge-offs as a % of Average Loans
     0.35 %     0.81 %     1.13 %     0.81 %     0.35 %
 
    N.M. — Not Meaningful
    (1) Home equity includes personal lines of credit and other consumer loans secured by first or junior mortgages on residential property originated and underwritten through the company’s retail banking channel. Reclassification of prior period balances has been made to conform to this presentation, resulting in an increase to previously reported home equity loans and a decrease to previously reported residential mortgage loans.
    (2) Residential mortgage includes loans secured by first mortgages on residential property originated and underwritten through the company’s mortgage banking channel. Reclassification of prior period balances has been made to conform to this presentation, resulting in an increase to previously reported home equity loans and a decrease to previously reported residential mortgage loans.
    (3) Effective December 31, 2004, unsecured personal credit line charge-offs were reclassified from “Home equity loans” to “Other loans” in all periods presented.

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Huntington Bancshares Incorporated
Annual Operating Lease Performance
(Unaudited)
                                         
 
(in thousands)   2004     2003     2002     2001     2000  
 
Balance Sheet:
                                        
Average operating lease assets outstanding
   $ 896,773     $ 1,696,535     $ 2,601,666     $ 2,969,902     $ 2,751,058  
 
 
                                        
Income Statement:
                                        
Net rental income
   $ 267,202     $ 458,644     $ 615,453     $ 654,625     $ 596,821  
Fees
     13,457       21,623       28,542       27,573       23,511  
Recoveries — early terminations
     6,432       9,431       13,079       9,535       3,503  
 
Total Operating Lease Income
     287,091       489,698       657,074       691,733       623,835  
 
 
                                        
Depreciation and residual losses at termination
     216,445       350,550       463,783       506,267       470,079  
Losses — early terminations
     20,033       42,720       55,187       52,359       24,721  
 
Total Operating Lease Expense
     236,478       393,270       518,970       558,626       494,800  
 
Net Earnings Contribution
   $ 50,613     $ 96,428     $ 138,104     $ 133,107     $ 129,035  
 
 
                                        
Earnings ratios (1)
                                        
Net rental income
     29.8 %     27.0 %     23.7 %     22.0 %     21.7 %
Depreciation and residual losses at termination
     24.1       20.7       17.8       17.0       17.1  
 
 

Definition of terms:
Net rental income includes the lease payments earned on the equipment and vehicles that Huntington leases to its customers under operating leases. Fees include late fees, early payment fees and other non-origination fees. Recoveries represent payments received on a cash basis subsequent to a customer’s default on an operating lease and a recognition of an impairment loss on the lease. Depreciation represents the periodic depreciation of equipment and vehicles to their residual value owned by Huntington under operating leases and any accelerated depreciation where Huntington expects to receive less than the residual value from the sale of the vehicle and from insurance proceeds at the end of the lease term. Losses represent impairments recognized on equipment and vehicles where the lessee has defaulted on the operating lease.
    (1) As a percent of average operating lease assets, quarterly and year-to-date amounts annualized.

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